Five years after voters in the city of Osaka narrowly voted down a referendum on consolidating its 24 wards into five with more autonomy and eliminating the municipal assembly and mayor, another referendum is set for later this year.

The merger is the chief political goal of Osaka Ishin no Kai (One Osaka), the local party founded expressly for that purpose.

Here is where the plan stands right now.

Why is there a push to merge the city’s wards and who is behind it?

Merging Osaka’s wards has been a long-term goal of many residents and businesses concerned about bureaucratic redundancies between the city and Osaka Prefecture. Proponents believe consolidation would cut costs, make municipal services more efficient and lower taxes. They hope corporate taxes will drop to the point that Osaka can better compete not only with Tokyo and other Japanese cities seeking to attract new businesses but also with cities in East Asia.

Politically, the main driver of the referendum is Osaka Ishin no Kai, headed by Osaka Mayor Ichiro Matsui and Osaka Gov. Hirofumi Yoshimura. Osaka Ishin is just shy of a majority in the Osaka Municipal Assembly and must work with other parties, especially Komeito, to get legislation passed.

When is the referendum expected to take place and what is being voted on?

At the moment, the plan is to hold a November referendum on merging Osaka’s 24 wards, which have a combined population of about 2.7 million, into four large, semi-autonomous wards that would each have between 600,000 and 750,000 residents.

The largest would be Kita Ward in the northern part of the city, where major train stations linked to other parts of Kansai are situated and where Osaka City Hall sits.

Yodogawa Ward, a largely industrial area along the Yodogawa river, would be the smallest, with just under 600,000 residents. But it would have both Shin-Osaka Station, where bullet trains stop, and Yumeshima Island in Osaka Bay, where the 2025 Expo will be held.

The other two wards would cover the central and southern areas of the city.

The merger would abolish the Osaka Municipal Assembly and its representatives from the 24 wards, and also eliminate the mayor’s position. Instead, each of the four special wards would have its own elected head and assembly, both of which would have more autonomy. The prefecture itself, however, would remain in place with Osaka’s governor and the prefectural assembly.

What would the merger mean in practical terms for individuals and businesses?

Many details of how the system would work in practice have not been decided.

For example, it’s not yet clear how discount rail and bus passes for people over 70 or citywide aid for families who want to enroll children in “cram schools” will be handled. Another unknown is whether children in one ward will be able to attend schools in another ward after the merger. On what basis would nursery schools, for example, accept children from another ward is a question that will have to be worked out after the referendum.

Nor have Osaka Ishin officials been able to explain in detail what a merger might mean in terms of taxes and other benefits for entrepreneurs and businesses, including foreign ones, interested in moving to Osaka.

What would be the economic effect?

Merger proponents say that, over a 10-year period afterward, the merger would mean an extra ¥1.1 trillion that would not have been available otherwise. But this figure is hotly disputed by its opponents, including many in the local chapters of the Liberal Democratic Party and Komeito.

Although the LDP originally was against the merger referendum, it signaled in May 2019 that it would approve efforts to hold another one at least, after suffering losses to Osaka Ishin during the April elections for governor, mayor, and the municipal and prefectural assemblies. Komeito has also agreed to a referendum.

But merger opponents in all parties say the assumptions on which the ¥1.1 trillion figure are based are far too rosy and that rather than saving money, a merger could actually end up raising taxes to meet the increased welfare needs of Japan’s graying and declining society. Especially if it fails to attract many new residents and businesses.

In terms of political support, how will this year’s referendum differ from 2015?

In May 2015, a city-wide referendum was held on whether to merge Osaka into five large wards, each with a population between 340,000 and 700,000. The referendum was defeated by less than 11,000 votes out of 1.4 million cast.

The strongest support came from residents in the generally more prosperous northern part of the city, where there are extensive connections to Kyoto and Kobe and where many major corporations and financial institutions are based. They supported the merger as a way to reduce bureaucratic costs, which they hoped would lead to lower corporate taxes.

The greatest opposition came from the city’s less prosperous southern regions, where there are many older people and small businesses and less modern transportation links. Many who rely on the city’s social welfare services and other forms of financial assistance feared a merger would lead to a cut in those services because they would find themselves living in a ward with a smaller tax base as compared with the more prosperous wards.

In this year’s referendum, while the strongest supporter remains Osaka Ishin no Kai, which can count on all of its supporters to vote yes, actual support for the ward merger among local LDP and Komeito members as well as swing voters is not entirely clear.

In 2015, Osaka Ishin’s plan was opposed by the LDP, Komeito, the former Democratic Party of Japan and the Japanese Communist Party. Many of them still oppose a merger, at least privately. Given the narrow margin of defeat in 2015, how hard the LDP and Komeito try before November to convince residents to back it could determine whether it finally passes or once again fails.

How might the results of the referendum affect the national political scene, the 2025 Expo or Osaka’s quest for a casino resort?

Osaka Mayor Matsui is also the leader of Osaka Ishin’s national party, Nippon Ishin no Kai, an opposition force very close to the ruling LDP on the issue of constitutional revision.

Matsui himself has good personal relations with both Prime Minister Shinzo Abe and Chief Cabinet Secretary Yoshihide Suga, a potential Abe successor.

But as the Osaka chapter of the LDP has opposed Osaka Ishin’s merger plan, its relations with Osaka Ishin locally are tense at best. Abe must walk a fine line between not upsetting the Osaka LDP members and making sure he can count on Nippon Ishin, and its Osaka Ishin base, to continue to support his quest to revise the Constitution before he leaves office next year.

At the same time, Matsui must maintain good relations with the national LDP to ensure maximum state funding and support for both the 2025 Expo and Osaka’s quest to build an integrated casino resort, which it wants to open around the same time as the Expo.

If November’s result is a majority for the merger, it will politically strengthen the hand of Matsui and Osaka Ishin locally and give more confidence to Nippon Ishin during negotiations in the Diet. But it could also create further tensions between Abe and the local LDP chapters and a loss of local support for LDP candidates in Osaka who run in national elections.

If voters reject the merger for a second time, that would likely force Matsui and Yoshimura to resign and hold snap elections for Osaka governor and mayor. If Osaka Ishin loses either post to another party, it would end its dominance in Osaka and likely weaken Nippon Ishin’s influence in the Diet.

Losses in Osaka to ruling party-backed candidates would probably little affect funding for Expo or the bid for the casino, but Nippon Ishin members might try to distance themselves from the LDP and vote differently on the LDP’s policies, which they have so far supported, in an attempt to avoid getting voted out of office in the next general election.

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