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This year will be an important one for pushing devolution. Increasing the power of local governments was one of the Democratic Party of Japan’s campaign promises. Its election manifesto calls for abolishing conditional subsidies to local governments, eliminating in principle the regional bureaus of government ministries, and relieving local governments of the obligation to shoulder part of the cost of public works projects carried out by the central government.

The Hatoyama administration appears to be on its way toward fulfilling this promise. It has established a “local sovereignty strategy conference,” chaired by Prime Minister Yukio Hatoyama and including concerned Cabinet members and experts from the private sector. A government panel on devolution established under the government of the Liberal Democratic Party and Komeito handed its last recommendations to Mr. Hatoyama in November, ending its activities.

In accordance with requests from six organizations representing local governments and assemblies, including the associations of prefectural governors and city mayors and the associations of chairpersons of prefectural and city assemblies, the administration will submit a bill to the Diet to give legal footing to a conference at which leaders of the central and local governments will exchange views on policy matters.

Already a team composed of central and local government representatives has started discussing what shape the planned conference should take. This conference should not become a venue for local government leaders to submit requests to the central government on budgetary matters.

Local government representatives have proposed that central and local government leaders at the conference make policy-related proposals as equal partners and discuss how to get rid of waste in administration.

Another conference to examine local administrative and financial matters will hold its meeting this month. It will be chaired by Internal Affairs Minister Kazuhiro Haraguchi and attended by his ministry’s senior vice minister and parliamentary secretary (who are elected lawmakers), prefectural governors, local assembly chairpersons and experts from the private sector.

In talks with the Finance Ministry over the fiscal 2010 budget, Mr. Haraguchi succeeded in increasing the amount of tax-funded grants in aid to local governments by ¥1.073 trillion from the previous year to ¥16.893 trillion. This was the first increase of more than ¥1 trillion in 11 years.

To promote devolution, the Hatoyama administration will also submit to the Diet various bills designed to: provide a legal footing for a “local sovereignty strategy conference,” reduce restrictions imposed by the central government on local governments in implementing administrative services for local residents, relieve local governments of their obligation to pay the maintenance costs related to public works projects implemented by the central government beginning in fiscal 2011, and revise the Local Autonomy Law to remove the ceiling on the number of local assembly members.

Japan is now facing a multitude of problems at the local level because of the graying and dwindling population and the current economic downturn. They include the weakening of local economies, accumulation of debt by local governments, and the continuing depopulation of local communities, especially in mountainous areas.

The three conferences pushed by the Hatoyama administration will play an important role in helping local governments solve these problems and in increasing the power of local governments. It is hoped that the conferences will come up with measures that brighten prospects for local residents.

The administration will announce next summer an outline of a strategy to promote “local sovereignty.” It will feature plans for (1) converting, in fiscal 2011, current subsidies to local governments — to which strings are usually attached — to grants in aid that local governments in principle can use freely, and (2) eliminating in principle the regional bureaus of government ministries to eradicate redundancy in administrative matters between the central and local governments and to increase local governments’ autonomy in administrative decisions.

After the announcement of the outline, the administration will discuss what kind of system should be developed to provide the new grants in aid to local governments. It should carefully listen to local government opinions in devising the new system.

The financial conditions of local governments, as a backdrop for the various new measures, are not good. Outstanding debts owed by local governments have topped ¥200 trillion. The central government should consider transferring some tax revenue sources to local governments.

Given the current overall economic difficulties that Japan is now experiencing, strengthening the finances of local government will be a difficult job.

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