The government is tackling the urgent tasks of revitalizing local economies and reducing the gap between prosperous urban regions and economically weak rural regions. Prime Minister Yasuo Fukuda has established a "rural regions revitalization headquarters," serving as its head; all the Cabinet ministers will serve as members. The headquarters is expected to formulate an effective strategy by overcoming financial difficulties and inter-ministry rivalries.
Many rural regions lacking strong local industries have been impoverished by the Koizumi administration's reduction of public works programs under the policy of structural reform. Many shops in rural city centers have been forced to close following the opening of large suburban retail shops. The government's rice field reduction policy also has weakened agricultural regions.
The Koizumi administration was not aware of these problems. It established a regional revitalization headquarters, an urban revitalization headquarters, a city-center revitalization headquarters and a headquarters to push for special zones for the promotion of structural reform. But these entities were rendered ineffective by jurisdictional overlap and inter-ministry rivalries. Mr. Fukuda has integrated these headquarters.
Internal affairs minister Hiroya Masuda is the effective leader of the new headquarters. While governor of Iwate Prefecture, he promoted agriculture, forestry and fishery without relying on public works. Mr. Masuda says he will examine past measures for rural regions and develop new measures without being hampered by "walls" between government ministries.
Government ministries should stop asking for separate budgets for measures that have the same policy goals and instead integrate these measures. The government also must consider revising the overall tax structure — including distribution of revenues from corporate and consumption taxes — so that more money will flow to impoverished rural regions.