Wasteful spending in Tohoku

Along the beaches of Kesennuma, Miyagi Prefecture, which used to boast popular resorts, a colossal seawall is nearing completion, measuring 14.7 meters high, 9 meters thick at the base and 5 km long. This is but one of many wasteful construction projects being carried out under the pretext of rebuilding the areas in northern Japan devastated by the March 2011 earthquake and tsunami.

Almost five years after the disasters, there are many projects under way that waste huge sums of taxpayer money and benefit only a handful of construction firms and individuals who have sold their land to make way for such ventures. As if by coincidence, law enforcement authorities have taken action over bid rigging among paving companies involved in expressway construction.

Why is such a huge seawall being built in an area of Kesennuma that is mostly rice paddies? A local source confides it is because municipal assembly members, local powerful figures and those close to them sold the land to the central government at a high price. An estimated ¥2.5 billion is said to have been paid by the government to the property owners for the otherwise worthless land on which the seawall is being built.

The total cost for building the 5-km seawall was initially set at ¥23 billion but has now ballooned to ¥36 billion. This is but a small portion of an overall coastal seawall construction project stretching over 400 km in Iwate, Miyagi and Fukushima prefectures, the total cost of which is budgeted at ¥1 trillion.

As of last fall, only 17 percent of the project had been completed. Even though more than 80 percent of it can still be canceled, neither the central government nor the prefectural and municipal governments have any intention of suspending the project.

Another wasteful reconstruction scheme relates to relocating tsunami victims to higher ground. One such project being pushed by the city of Higashi-Matsushima, Miyagi Prefecture, envisages developing a hillside area to accommodate 450 houses. But the cost for the land redevelopment alone is ¥40 billion, or some ¥100 million per house — a figure that befits only the most luxurious residential area.

Even if this project is completed, there are many people who initially welcomed the plan but have found it impossible to build their own house in the area. This is because, according to a member of an association of tsunami victims, the cost to build a house has gone up 50 percent from the initial estimate of ¥15 million.

The Miyagi Prefectural Government, meanwhile, is building 15,000 houses under a seven-year, ¥180 billion plan. As of the end of last year, about half had been completed. But 16 of the 21 municipalities where those houses were built are plagued with vacancies since many of the more than 20,0000 quake victims currently living in rent-free temporary housing facilities are refusing to move into these permanent houses. As construction work continues on the remaining 7,000-plus houses, the vacancy rate is bound to increase, rendering it foolish to put any more money into the project.

A total of ¥3.5 trillion in public money is to be poured into areas devastated by the quake and tsunami to build housing facilities or to move people to higher ground. But the results of this spending spree are characterized by huge seawalls resembling prison walls, redeveloped highland areas where only a small number of houses have been built and housing with high vacancy rates.

Another sector in which public money is being wasted is road construction. Many plans for new roads, which had been submitted before the 2011 disasters, are now resurfacing as if to ride on the coattails of the massive reconstruction projects.

One example is a 100-km road to connect the inland city of Morioka and the coastal city of Miyako, both in Iwate Prefecture. Local residents had clamored in vain for the new road for more than two decades. After the disasters, however, money was suddenly allocated for the road, ostensibly for the purpose of securing emergency transport.

Similarly, the Ministry of Land, Infrastructure, Transport and Tourism is pushing a new coastal “reconstruction highway” linking Miyagi and Aomori prefectures.

Such reconstruction projects have brought big benefits to many players in the construction industry — and not just major general contractors but also smaller regional firms. Hashimototen Co., for one, has grown rapidly in the post-earthquake years to become the second-largest contractor in Miyagi Prefecture in terms of completed construction projects, thanks to its close connection with a powerful Liberal Democratic Party Lower House member — Akihiro Nishumura, a former vice minister of reconstruction — and other LDP lawmakers.

A suspicion has reportedly arisen that Hashimototen conspired with third-ranking Maruhon Gumi Corp. to split a pair of tunnel contracts so that each could build one for about ¥1 billion.

Major general contractors are also suspected of collusion. In the immediate aftermath of the earthquake, Hazama Corp. and Maeda Corp., both of which have footholds in the Tohoku region, won many contracts for debris removal. According to a local construction industry insider, this prompted leading general contractors to ask LDP lawmakers to coordinate construction orders for reconstruction projects.

As if to prove that notion, contracts for huge reconstruction projects have all been won by majors like Kajima Corp., Shimizu Corp. and Taisei Corp. Local firms that have been chosen as subcontractors by the majors have prospered so much that their executives are buying expensive cars like Mercedes to reduce their tax payments, says an insider close to a major general contractor.

The very root of this and other unethical conduct in the tsunami-hit areas appears to lie in the staggering ¥26 trillion to be spent by the central government in the first five years following the disasters. If the local governments are not required to bear any cost, it is logical that they won’t worry if the money is going to waste.

Last year, the Reconstruction Agency sought to oblige the prefectures and municipalities to bear part of the cost but faced bitter opposition and was criticized for “bullying the disaster victims.” In the end, it was decided that they will shoulder no more than 3 percent of the total spending. For example, the construction cost of the Sanriku Expressway linking Sendai with Miyako will be wholly shouldered by the central government. A member of the Miyagi Prefectural Assembly, speaking on condition of anonymity, said that the ¥26 trillion has “spoiled” the three prefectures hit hardest by the disasters — Fukushima, Miyagi and Iwate.

The situation in Fukushima Prefecture is complicated by the nuclear crisis, which forced residents near the affected power plant to flee. Even though the evacuation order was lifted last September for the town of Naraha, more than 2,000 former residents had not returned as of Jan. 14, choosing instead to remain in the city of Iwaki.

Currently they are receiving monthly compensation of ¥100,000. A local newspaper reporter said that many of those continuing to remain in temporary housing units are likely to become public welfare recipients after they have used up the compensation money.

It is true that there are local residents who are still suffering from the effects of the March 2011 disasters. But now that five years will soon have passed, attention should not be turned away from the reality of the devastated areas. Continuing to lavish funds on the victimized areas will only result in money collected from taxpayers from all over the country disappearing into the dark — a world that has nothing to do with reconstruction in the true sense of the word.

This is an abridged translation of an article from the February issue of Sentaku, a monthly magazine covering political, social and economic scenes.