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JR Hokkaido confronts the harsh realities of financing rail lines in depopulated areas

by Philip Brasor

Contributing Writer

Privatization of public enterprises is a core tenet of neoliberalism, and probably the most representative domestic development in this regard was the privatization of Japanese National Railways (JNR) in 1987. The resulting rail companies, distinguished primarily by region, have demonstrated differing degrees of success. In some cases, especially for new shinkansen lines, they rely on input from the government, which assumed the JNR debt, but the inevitable rationalization that accompanies privatization has affected the domestic rail industry in startling ways, given how central rail culture is to Japanese life.

JR Hokkaido has become the most embattled of the former JNR entities, and one can sense in media coverage of its existential problems a conflict over whether privatization is still a good thing for a service that was once taken for granted despite its chronic tendency to lose money.

As discussed in an April 28 article in the Nihon Keizai Shimbun, something like one half of all lines belonging to JR Hokkaido are unprofitable, and the railway is trying to work with local governments situated along these lines, comprising approximately 1,200 kilometers of track, to come up with solutions. About two-thirds of lines operated by JR Hokkaido have considered seeking financial assistance in order to keep their respective routes open, while the remaining third are leaning toward shutting their lines down due to a dearth of passengers.

On April 9, JR Hokkaido announced it would work with local governments that want to increase patronage and replace the other lines with alternative transportation services, such as buses. Residents of regions in the latter category have already protested, saying they will be isolated without train services. Professor Naohiro Taniguchi of the Hokkaido University of Science told the newspaper there was no other option but to halt operation, since there are no industries or employment opportunities along these lines, adding that residents have been conditioned to think that the central government will always step in to save them.

The model in this case is the city of Yubari, which decided to shut down the Yubari branch of JR Hokkaido’s Sekisho Line several years ago at the suggestion of its mayor, Naomichi Suzuki, who was elected governor of Hokkaido in April. The Yubari branch of the Sekisho Line, which was built in 1892 to transport coal from the area’s mines, closed down officially on April 1. In league with JR Hokkaido, the city has replaced the train with a bus line, which provides twice as many round-trips, and is developing a “complex facility” centered on a bus terminal that is slated to open this December.

The Nihon Keizai Shimbun’s tone in discussing the matter is common sense: There is no economic justification for train lines that continually run in the red and, as the Yubari example shows, local governments that despair of losing transportation links to other areas need to reconsider their priorities, which in Yubari’s case is urban redevelopment that can attract new business (tourist-oriented, in this case). Other Hokkaido towns in similar situations are now contemplating doing the same thing.

The Asahi Shimbun’s more comprehensive coverage of JR Hokkaido’s troubles takes a different tone. The newspaper contextualizes the railway’s failures within the overarching narrative of what happened to all the former JNR lines, which, as one transport ministry official said in an article published last July, are still in a state of “renovation.” JR Hokkaido just happens to be the most “incomplete” in terms of evolving into a successful private company. The rail company could be effectively bankrupt in 2020, and last year it asked the central government for “several hundred billion yen” in loans until 2030. The transport ministry had already pledged more than ¥40 billion for 2019 and 2020, and said it will see if JR Hokkaido makes an appropriate effort before deciding on further funds.

The upshot of this position is that the government wants to see if JR Hokkaido halts operations on nonperforming lines. If it does, then it will be more inclined to help. The implication, according to the Asahi Shimbun, is that taxpayers who don’t live in Hokkaido will be subsidizing its train lines.

In an April 10 article, the Asahi Shimbun revised the amount of public money requested by JR Hokkaido to ¥280 billion from both central and local governments. In line with that request, the rail company will increase fares in October and streamline work efficiency. The company will also fortify its real estate business as the new Hokkaido Shinkansen Line is extended to Sapporo Station in 2030.

What’s clear from the Asahi reports is that whatever solutions come about, they will likely be determined by government authorities and JR Hokkaido, and not necessarily with input from affected residents. It’s worth noting that the Yubari solution was initiated and engineered by Suzuki, an erstwhile Tokyo bureaucrat who is credited with pulling the bankrupt city back from the brink. When he was first elected in 2011, he was only 30 years old, and his political success has been credited to the boldness of youth and solidly neoliberal policies. His victory last month in the Hokkaido gubernatorial race came with the support of the ruling Liberal Democratic Party, meaning he will likely follow the central government’s line to the letter.

The residents who will inevitably lose access to rail service are caught in the middle. The Asahi Shimbun’s coverage, like the Nihon Keizai Shimbun’s, focuses on dwindling passenger numbers and financial solutions to financial issues — taking advantage of inbound tourism, bus replacements and so on — but it also gives voice to people who wonder what happened to the public sector. The mayor of Urakawa, which may lose its local train line, complained that the provision of public transportation nowadays depends solely on “cost effectiveness.” Nothing else seems to matter.