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The decentralization and reform promotion committee, recently set up in the Cabinet Office, has started discussions with the aim of submitting proposals to Prime Minister Shinzo Abe within three years. The committee, inaugurated under a law enacted in December 2006, will work out concrete proposals to transfer power and revenue sources from the central government to local governments, among other things.

Mr. Abe plans to submit a bill incorporating the committee’s proposals to the Diet also within three years. Resistance from the ministries and agencies of the central government is very likely because, in principle, the proposals will reduce their power. It is hoped that the committee will overcome possible resistance from the central government organizations and come up with rational proposals.

The administration of former Prime Minister Junichiro Koizumi pushed the “trinity reform,” focusing on reduction of subsidies from the central government, transfer of revenue sources and a review of grant-in-aid from tax money for local governments. But it failed to bring about tangible results. The reduction of subsidies, whose use is strictly regulated by the central government, did not go smoothly. While grant-in-aid from tax money was slashed, transfer of tax revenue sources was insufficient. This has resulted in financial deterioration at local governments.

The committee’s biggest task will be strengthening the financial basis of local governments by transferring revenue sources. But the central government ministries and agencies say that priority should be given to local governments’ effort to economize. In order to present a convincing argument, the committee must work out a clear principle concerning how the central and local governments should divide functions. Finding facts and listening to the opinions of officials and workers of local government will become important. The committee will also need to develop a scheme under which local governments will handle financial matters in a disciplined manner. The ultimate goal should be to help them smoothly carry out policy measures that respond to the needs of local people.

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