JPRI Working paper No. 36: August 1997
Administrative Reform: Searching for the "Hashimoto Vision"
by Ronald Bevacqua

Prime Minister Hashimoto Ryutaro has laid out an ambitious policy agenda encompassing "six great reforms": administrative, fiscal, economic, financial, social security, and educational. Administrative reform is the linchpin of the entire process, without which the other aspects of reform cannot be expected to succeed since they are predicated on a reduction and reorganization of bureaucratic power. Yet while Prime Minister Hashimoto has expressed his strong determination to push ahead with reform even if he becomes "engulfed in flames," below the surface the administrative reform process has been controlled from the beginning by the bureaucrats who are its ostensible object.

The division of the reform effort into formal and informal processes was illustrated in the lead article in the October, 1996, issue of the monthly magazine Foresight. Journalist Ikuta Tadahide, a veteran reporter on Kasumigaseki, interviewed several bureau chiefs and top officials (shingikan) in the main ministries, and concluded that many are indeed in favor of administrative reform. With regard to the actual reform plan, however, Ikuta quotes a top official (kanbu) from one of the economic ministries as saying; "First, we'll put together a plan for reform, and quietly seek a consensus (nemawashi). Then, the politicians will publicize it as much as possible. We [bureaucrats] will make a public showing of opposition. During that time, the mass media will write that 'bureaucrats oppose reform,' but that is no problem. It is a scenario in which the politicians will push us to the limit (oshikiru)."

There is no way to prove that this scenario is indeed the way the reform process is unfolding, but the quote demonstrates how the political process in Japan is often stage-managed, and how easy it is to misread events by following only the formal process, what the Japanese call tatemae. Regardless of whether the scenario described above is actually taking place or not, a close look at the process of reform does indeed reveal that the informal process of reform differs greatly from official statements. It also demonstrates that neither the prime minister nor the LDP leadership is willing or able to bring about a real change in how power is exercised and by whom.

Historical Context

Administrative reform is an umbrella term that refers to reform of the bureaucracy, either because it is too powerful, inefficient (due to bureaucratic sectionalism or tatewari gyosei), rigid (due to excessive regulation), or expensive. While the structure of the bureaucracy has been changed many times since the end of the war, serious administrative reform efforts in the post-war period date back to the first Ad Hoc Commission for Administrative Reform ("Rincho"), held between February, 1962, and September, 1964. At that time, however, ministerial power was at its zenith, with former bureaucrats installed as prime minister, cabinet officials, leading politicians and leaders of the business community. The Rincho commission recommended measures to strengthen the cabinet's ability to oversee the bureaucracy, but the reforms were never enacted.

A second attempt at administrative reform began with the formation of the Second Ad Hoc Commission for Administrative Reform ("Second Rincho") in March, 1981, which came primarily in response to the huge increase in government debt after the oil shock and the advent of Tanaka Kakuei's "money politics" in the early 1970s. Under the leadership of Keidanren Chairman Doko Toshio and backed by the political support of Prime Minister Nakasone Yasuhiro, the recommendations that emerged from the Second Rincho ultimately led to the privatization of Nippon Telephone and Telegraph (NTT), Japan National Railways (JNR), and Japan Tobacco (JT), and to the creation of the Management and Coordination Agency (MCA, created by merging the Administrative Management Agency with the Prime Minister's Office) in order to give the prime minister greater power to oversee the bureaucracy. But while the Second Rincho was formally at the center of a comprehensive reform movement, the informal process itself was largely influenced by the bureaucracy. Retired and active bureaucrats sat on the Rincho's various advisory councils and largely neutralized efforts that would have diminished their authority. For example, in classic bureaucratic style, they redefined deregulation as limiting the growth of the size of the ministries and a reorganization of their functions rather than reducing their authority over the private sector.

Although the Second Rincho was disbanded in March, 1983, the formal process of reform continued. To ensure the implementation of the recommendations, a special Administrative Reform Promotion Council (ARPC) was created in July, 1983, and was also chaired by Doko. This was followed by a second ARPC in April, 1987.

A third ARPC was inaugurated in October, 1990, under the leadership of Suzuki Eiji, a prominent businessman and director of the Japan Employers' Federation (Nikkeiren). The council met 120 times before issuing its final report in October, 1993. During that time, an unexpected turn of events had the potential to truly change the direction of administrative reform efforts under Suzuki and the third ARPC: a large faction split from the LDP, and in the July, 1993, general elections the LDP lost its majority in the Lower House of the Diet for the first time in 38 years.

The political opposition was led by Ozawa Ichiro, who publicly espoused the kinds of reforms many observers, both inside and outside of Japan, believed the country sorely needed. With Hosokawa Morihiro installed as prime minister in August, 1993, Ozawa began pushing a 3-point plan for shifting decision-making power from the bureaucracy to politicians by (1) ending the practice whereby bureaucrats answer questions in the Diet on behalf of politicians; (2) upgrading to the level of deputy ministers the Diet-designated vice-ministers (seimu jikan), who formally supervise the ministries to which they are assigned, and (3) appointing more than 100 politicians to the ministries with a rank similar to that of bureau chief (under the current system, the prime minister appoints only the cabinet ministers and the political vice- ministers) (Nikkei Weekly, October 11, 1993).

The "Ozawa Plan" was considered a real--and credible--threat to bureaucratic power, and Suzuki's ARPC report on administrative reform would have been the first opportunity to have those ideas reflected in terms of actual policy. However, when the council released its recommendations on October 28, even Suzuki himself called them a disappointment. The fact that the report did not include the reforms being pushed by Ozawa suggests that the change of hands in the Diet had no major impact on the actual policy-making process. While on the surface Suzuki was leading the charge toward administrative reform, in reality he was doing nothing of the sort. Suzuki's council was staffed partly by bureaucrats, and encountered great resistance from the Management and Coordination Agency, which by that time had been largely "colonized" by MoF bureaucrats seconded to the agency (Shukan Dayamondo, March 2, 1996). MCA officials who served on the ARPC staff intervened on behalf of MoF in order to dissuade the commission from proposing an independent financial regulatory agency (Steven K. Vogel, Freer Markets, More Rules, 1996, p. 187). Inamori Kazuo, a member of the ARPC and chairman of Kyocera, admitted that bureaucrats, particularly those from the MoF, held key positions in the Cabinet Councillors' Office on Internal Affairs, from which they could monitor the panel's every move and prepare a counter-attack. Suzuki and other panel members frequently and loudly complained about bureaucratic interference. At the farewell reception for the committee on October 28, 1993, Suzuki himself admitted that such interference had led to a watered-down report (Nikkei Weekly, November 8, 1993).

The Nikkei Weekly also reported that Hashimoto, then a powerful member of the LDP leadership, had intervened in the ARPC's deliberations in order to protect the special public corporations (SPCs) under the jurisdiction of the Ministry of Agriculture (November 8, 1993). This is an ominous sign for the current reform effort, because the recommendations of Suzuki's report form the foundations for all the major initiatives being undertaken by Hashimoto: the Suzuki committee report called for decentralization, privatization or elimination of 34 of 92 SPCs in order to cut down on collusion and corruption in public works and to reduce the deficit, and the creation of a third-party "ombudsman" from the private sector to oversee the bureaucracy. Perhaps the most important point raised by the Suzuki report was the need to reduce the administrative inefficiencies resulting from inter-ministerial turf battles: "as much as possible, the ministries and agencies of the central government should undergo a grand consolidation" by merging the 21 ministries of the central government into six large organizations along functional lines. (Nikkei Weekly, November 8, 1993). It is likely that this "grand consolidation" plan itself was introduced and pushed by a former MoF bureaucrat, Nagaoka Shin who, at the time, was head of the Securities Exchange Commission (Shukan Dayamondo, November 30, 1996).

The "Hashimoto Reform Vision"

After Suzuki's report was released, administrative reform continued to be discussed, and was raised to a new level of prominence once Hashimoto became prime minister in January, 1996. Hashimoto announced an administrative reform plan on May 10, 1996, and dubbed it the "Hashimoto Reform Vision." The basic framework for the reform effort was to reduce the number of ministries by restructuring the bureaucracy based on seven different functions. The reform program was not spelled out in great detail, however, leading some observers to suspect that it was leaked on purpose at that time in order to distract attention from the MoF reform debate, which was then in full swing (Nikkei, May 16, 1996). A detailed plan was finally released three months later, on August 10, calling for the consolidation of the current 22 ministries into 14, organized along functional lines, with policy planning functions separated from the administrative (policy implementing) functions of the ministries and assigned to independent "external agencies" attached to each ministry. A vague plan to "strengthen" the Prime Minister's Office was also included.

The basic framework was clearly based on the recommendations Suzuki's commission had made three years earlier. As mentioned above, the Suzuki report was by and large a product of the ministries, Hashimoto himself intervened to protect the interests of the Ministry of Agriculture, and the most important recommendation--the "grand consolidation" of the bureaucracy--was probably the work of a former MoF bureaucrat. The task of reviving the Suzuki plan for Hashimoto was handled by two prominent LDP politicians: Mizuno Kiyoshi and Yanagisawa Hakuo who, at the time, were respectively chairman and secretary-general of the LDP's Administrative Reform Promotion Headquarters. Mizuno is a former reporter for NHK who became an LDP politician, and has been involved in the reform process for years. Yanagisawa, however, was a MoF bureaucrat from 1961 to 1979 before entering politics.

The announcement of the "Hashimoto Vision," combined with the reputation he had earned as a "tough negotiator" as MITI minister during the auto trade talks in 1995, instantly transformed Hashimoto in the eyes of domestic and international observers into Japan's greatest hope for reform. Hashimoto played upon those expectations, stressing the importance of prime ministerial leadership (kantei shudo) and making his now famous statement that he would pursue reform "even if [he] became engulfed in flames." The reform plan was credible enough to boost Hashimoto and his party's fortunes in the general election of October 20, 1996, after which the LDP had to form a minority government.

Hashimoto had originally intended to tackle administrative reform by establishing a third Rincho modeled on the one under Nakasone (Nikkei, March 1, 1996). However, in order to establish a third Rincho, the four existing committees already working on various aspects of administrative reform would have had to be reorganized into a "working group" of the Rincho executive council. The leaders of those advisory bodies opposed this because they did not want their status downgraded. Eventually, Hashimoto abandoned the plan, defending his decision by arguing publicly that establishing a Rincho would require special legislation that would take too much time to pass (Tokyo Shimbun, October 29, 1996).

The Administrative Reform Council

Unable to press ahead with the establishment of a Rincho, Hashimoto created the Administrative Reform Council, an executive body under his direct supervision (chokuzoku) charged with implementing reforms. At the opening session on November 28, 1996, he stressed that "achieving administrative reform requires strong political will." The Council members consisted of 14 people drawn from the private sector and academia, with Hashimoto as chairman and Muto Kabun (a third-generation politician and newly appointed head of the MCA) as acting chairman. In order to reassure the members of the other groups working on reform that their influence would not be diminished, the committee included the chairmen of two other reform councils (Iida Yotaro, chair of the Administrative Reform Committee, and Moroi Ken, chair of the Decentralization Promotion Committee).

The Administrative Reform Council:
Chairman: Hashimoto Ryutaro, Prime Minister
Acting Chairman: Muto Kabun, Director of the Management and Coordination Agency

Regular members:
Ashida Jinnosuke, chairman, Japan Trade Unions Confederation
Arima Akito, professor emeritus, Tokyo University
Fujita Tokiyasu, professor, Tohoku University
Iida Yotaro, advisor to Mitsubishi Heavy Industries (Ad Hoc Committee chairman)
Inoguchi Kuniko, professor, Sophia University
Kawai Hayao, president, International Japanese Culture Study Center
Kawaguchi Mikio, chairman, Nihon Hoso Kyokai (NHK)
Moroi Ken, vice chairman, Japan Federation of Employers Associations
Sato Koji, professor, Kyoto University Graduate School
Shionoya Yuichi, professor emeritus, Hitotsubashi University
Toyoda Shoichiro, chairman, Keidanren
Watanabe Tsuneo, president, Yomiuri Shimbun

The line-up for the Administrative Reform Council should immediately raise eyebrows regarding Hashimoto's willingness to pursue real reform. First, among the regular members, expertise on administrative issues is very thin. Writing again in Foresight, journalist Ikuta asserted that the only members with detailed knowledge of the issues are professors Sato Koji of Kyoto University and Fujita Tokiyasu of Tohoku University (Foresight, May 1997), and a leading businessman said that the regular members were chosen because they were considered unlikely to make trouble, and ultimately reflected the interests of the bureaucracy (Nikkei, December 20, 1996).

Second, bureaucratic influence is hidden but nonetheless palpable. In announcing the membership of the new Administrative Reform Council, Hashimoto and the LDP leadership stressed the fact that neither retired nor active bureaucrats were included. Yet 16 of the 35 members of the powerful secretariat are bureaucrats. The secretariat is headed by Mizuno Kiyoshi, who was moved over from the chairmanship of the LDP's Administrative Reform Promotion Headquarters. His assistant is Yagi Toshimichi, a career MCA bureaucrat who has experience working on other administrative reform efforts and has close ties to MoF (Foresight, May 1997). Yagi's assistants include another MCA bureaucrat, one representative of the Prime Minister's Office and, as of early April, 1997, the MoF's Oofuji Yoshiaki, who is charged with coordinating the hearings between the Council and the various government agencies (Nikkei, April 2, 1997). The remaining 13 bureaucrats in the secretariat are on loan from each of the major ministries and agencies of the bureaucracy and therefore represent their interests to the reform council.

Hashimoto has publicly acknowledged the presence of bureaucrats in the secretariat but argues that their expertise is needed to investigate the issues and write the legislation, which is really an admission that the LDP does not possess the capability to do this independent of the ministries. Hashimoto also tried to answer critics by pointing out that the bureaucrats in the secretariat are junior officials in their thirties and forties instead of presumably more conservative senior officials. But according to one government official, the mid-level bureaucrats were chosen precisely because they are on track to become administrative vice-ministers, which means they have proven (and have incentive to continue to prove) their loyalties to their ministries (Nikkei, November 28, 1996). The presence of bureaucrats in the secretariat is crucial, since it is they who will ultimately work out specific measures to reorganize the bureaucracy and write the reform legislation.

The ubiquity of the bureaucracy is also evident in other areas of the reform process. At the LDP's Administrative Reform Promotion Headquarters, Mizuno was replaced with LDP veteran Sato Koko, but former MoF OB [i.e., "old boy"] Yanagisawa remains secretary-general, giving him significant influence over the LDP's own reform initiatives. Surrounding the prime minister himself are more career bureaucrats. Two of Hashimoto's five secretaries hail from MITI, including his leading assistant, Eda Kenji (MITI entering class of 1979), who was also his assistant when he held the MITI portfolio in 1994-95. As policy affairs secretary, Eda's main job is to contact other politicians and handle political funds as well as advise the prime minister on policy issues (Yomiuri, April 2, 1997). A member of the Prime Minister's Office admitted that the main characteristic (tokucho) of the Hashimoto administration is his close working relationship with his secretaries, all of whom are career bureaucrats seconded from their ministries (Nikkei, December 20, 1996). In particular, Secretary General Mizuno of the Administrative Reform Council is said to have a very close working relationship with Eda, leading to complaints that the reform process is being dominated by MITI (Sentaku, June 1997).

The Administrative Reform Council in Action

The Administrative Reform Council's first task was to map out a plan for how it would tackle reform, and the intransigence of the bureaucrats in the secretariat was apparent from the very beginning. The regular members called for moving directly into concrete discussions, but at a meeting on December 19, 1996, the secretariat recommended holding "hearings" of concerned and interested parties on the subject. The secretariat warned that if the committee began concrete discussions "abruptly" (ikinari), opposition from the ministries and LDP backbenchers (zoku) would be inevitable, and warned against a "lack of logical preparedness.

The bureaucrats in the secretariat won the day. The schedule for the Council was established as follows:

1996

November 11

opening meeting

1997

January 31

questionnaires on reform sent to gov't agencies

late February

replies received

March 5

announce "major specific issues" to be discussed

April 30

interim report issued

May 7 - June 25

hearings held with each gov't agency to discuss their opinions on reform

August

deliberations on results of the hearings

late August

interim report

late November

final report

1998

January

reform bills submitted to Diet

June 30

dissolution of Diet and final disposition of bills

Source: Nikkei, March 1, 1997

The questionnaires and hearings are a classic example of bureaucratic stalling. They effectively allow the ministries themselves to take the initiative when it comes to formulating concrete policy proposals. According to the Yomiuri (February 5, 1997), neither Hashimoto nor Muto, who are nominally in charge of the council, were shown the questionnaires in advance. Similarly, when preparing for the "hearings," the secretariat drew up the list of questions to be asked without consulting the Council's regular members (Yomiuri, April 15, 1997; Mainichi, April 17, 1997).

Since both the questionnaires and the hearings amount to bureaucrats in the secretariat asking bureaucrats in the ministries from which they hail their "opinion" on certain aspects of reform, the questions tended to be softballs and the answers vague or simply negative. Given the virtually unanimous negative responses the Council received during the hearings, it asked the ministries to submit their own reform plans but received few concrete proposals (Nikkei, May 12, 1997; Tokyo Shimbun, May 15, 1997).

By March 1997, with the hearings going slowly, the Council began to consider abandoning its goal of compiling a detailed policy proposal by November, 1997. Instead, it now says it will publish an outline and recommend that a new organ be attached to the Prime Minister's Office to hammer out the details, delaying the process until July, 1998. Moreover, Nikkei reports that the new body, rather than being staffed by "experts" as is the Administrative Reform Council, will likely be a larger version of the Council's secretariat, staffed primarily with active bureaucrats seconded from their ministries (Nikkei, March 11, 1997, evening edition).

When the hearings were recently completed, the Council adopted a "basic policy line" for reorganizing the ministries that called for keeping the ministries of Finance, Justice, Foreign Affairs, and Defense intact, but consolidating the remaining 18 agencies into six or eight along functional lines. The criteria for consolidation were not spelled out. As for MoF, the Yomiuri reported that "the prevailing view on the breakup of MoF's fiscal and financial functions, one of the agenda items proposed at the outset of the reform deliberations, is that the issue should be put on hold, stemming from the judgment that it is necessary to be in step with other industrialized countries regarding such an administrative system." (Yomiuri, June 26, 1997).

Conclusion

Having observed Hashimoto's reform effort, a Justice Ministry official cynically concluded that "the only posts that may be eliminated [as a result of administrative reform] will be those of cabinet ministers" (Asahi, November 29, 1996). Hashimoto has based his reform policy on a proposal that was largely drawn up by bureaucrats, and for the most part bureaucrats and former bureaucrats in the LDP dominate the current round of reform deliberations. It goes without saying that bureaucrats will almost certainly write the reform legislation and implement it. Under such circumstances, it is difficult to imagine a scenario in which the ministries will lose power through the reform process. In fact, the opposite may occur: the former head of Tohoku University, Nishizawa Junichi, advised Hashimoto that a consolidation of the ministries without an attempt truly to reduce the scope of their activities will ultimately make them more powerful and more impenetrable (Asahi, January 17, 1997).

Rather than an effort by politicians to rein in bureaucratic power, the administrative reform process thus seems to have become a clash between rival ministries for power in a restructured government. This clash is being played out via (and given legitimacy by) the public reform process, and explains why there is a constant stream of rumors regarding the battle between MITI (led by Eda in the Prime Minister's Office) and MoF (spearheaded by Yanagisawa in the LDP and Oofuji in the Administrative Reform Committee) to control the reform process.

Similarly, the Administrative Reform Council's consideration of a plan to merge the MCA, Home Affairs Ministry and Prime Minister's Office is, along with various efforts to beef up the prime minister's "crisis management" capabilities, less designed to increase the ability of the prime minister to oversee and control the bureaucracy than an attempt by other ministries to create a counterweight to the influence of MoF and MITI. These efforts, led in part by the LDP's Gotoda Masaharu, are vaguely suggestive of an effort to recreate a ministry akin to the old Naimusho (Ministry of Home Affairs, broken up by the Occupation after the war). According to Shukan Dayamondo (April 20, 1996), the Prime Minister's Office is already the most important power base for the five former ministries that once comprised the Naimusho (the Ministry of Home Affairs, National Police Agency, Ministry of Labor, Ministry of Construction, and the Ministry of Health and Welfare). Gotoda himself is a former bureaucrat from the Naimusho and National Police Agency, and the current Ministry of Home Affairs (devoted to local government) is said often to call for joint meetings of the five bureaucracies. An expanded Prime Minister's Office incorporating the Ministry of Home Affairs could be a move toward recreating such a ministry.

What does the reform process mean for the economy? As noted in the introduction, administrative reform is the linchpin of the other major reform initiatives, including economic reform and deregulation, because the success of such efforts depends in part upon a reduction in bureaucratic power. But as this essay has sought to illustrate, rather than leading to a diminished role for the bureaucracy, the administrative reform process is largely being dominated by bureaucrats and may even lead to an increase in their power. This does not necessarily mean that economic reform or deregulation will not take place. However, it is very likely that any change which does occur will be at a pace set by the ministries and aimed at goals determined by them.

Recent evidence already shows that a reduction in bureaucratic power and regulation of the economy is unlikely. Data compiled by the MCA shows that in the year to March 1996, the bureaucracy eliminated 706 regulations and permits, but added 929 new regulations, leading to the first increase in the number of regulations since fiscal year 1992. A freer, more open economy still seems a long way off.

Number of Regulations and Permits by Ministry as of March 31, 1996

 

FY85

FY92
(Peak)

FY94

FY95

Change
FY94-95

MITI

1870

1986

1780

1841

+61

Transport

2017

1893

1607

1573

-34

MoF

1116

1387

1374

1460

+86

Agriculture

1263

1427

1400

1394

-6

Health&Welfare

938

1221

1221

1262

+41

Construction

742

910

841

863

+22

Labor

532

631

633

645

+12

Post&Telecoms

265

319

292

303

+11

Others

1313

1628

1612

1642

+30

Total

10054

11402

10760

10983

+223

Source: Management and Coordination Agency


The Case of the Management and Coordination Agency, or Does Hashimoto Really Want To Increase Political Control of the Bureaucracy?

The main institution via which politicians oversee the bureaucracy is the Management and Coordination Agency (MCA). The MCA was created in 1984 under the Nakasone administration by combining the former Administrative Management Agency and the Office of the Prime Minister. The goal was to strengthen the prime minister's ability to control both personnel and structural issues in the bureaucracy. Yet in practice the MCA has proven to be little more than a "colony" of the Ministry of Finance (Shukan Dayamondo, March 2, 1996) and has hindered more than helped the various attempts to reform the bureaucracy. As noted in the main section of this essay, during the reform efforts of the mid- and late-1980s, MCA officials derailed or watered down many reform proposals, and intervened on behalf of MoF in order to dissuade the Suzuki commission from proposing an independent financial regulatory agency.

Moreover, the section of the MCA that is charged with inspecting regular administrative activities by government agencies and issuing corrective recommendations, the Administrative Inspection Bureau (AIB), is largely ineffectual. According to the AIB training manual entitled "Arguments on Pragmatic Negotiations," when the AIB requests a government agency to submit documents needed for an inspection, the government agencies that receive such requests "are reluctant to submit data. Even if they cooperate, they show them just for reference." As a result, the training manual helpfully recommends that inspectors "should not from the beginning demand submission of data that the other side is unlikely to submit." (Sankei, February 26, 1997)

The MCA is not required to inform the cabinet of the results of investigations carried out by the AIB (Asahi, January 27, 1997). As for making recommendations for reform, the manual notes that government agencies are usually uncooperative: "When we issue a recommendation plan to a government agency, the agency in question often requests us to 'totally delete those recommendations,' citing, the existence of 'factual errors.'" As a result, the AIB typically conducts three negotiating sessions with the ministry in question "to adjust views" on recommendations (Sankei, February 26, 1997) which of course result in their being watered-down. Moreover, when the AIB conducts a follow-up inspection, it is limited by the fact that it is often outranked by the agencies it is inspecting (Sankei, February 26, 1997). Perhaps most important, the AIB does not have the authority to order ministries to revise their practices. The recent scandal involving builders and managers of nursing homes who bribed top Ministry of Health and Welfare officials in exchange for subsidies was the subject of an AIB investigation and recommendation in 1992 (Nikkei Weekly, March 17, 1997).

Frustrated with the weakness of the MCA, the Democratic Party has called for the creation of an organization to oversee the bureaucracy under Diet control. When the regular Diet session began on January 20, 1997, the Democrats began pushing for a law to create an institution similar to the U.S. Congress's Government Accounting Office (GAO), and secured the support of another new party, the Sun Party, a splinter of the New Frontier Party. The proposal would abolish the Management and Coordination Agency's (MCA) Administrative Inspection Bureau, which (as described above) is nominally charged with overseeing the bureaucracy. The GAO idea had its roots in a proposal put forth by Democratic Party politician Kan Naoto, who proposed separating the Administrative Inspection Bureau from the MCA in 1994 when he was head of policy affairs for the Sakigake Party. Kan was also instrumental in working the idea of a Japanese GAO into the Democrats' party platform when the party was formed in September, 1996. To back up its efforts, two Democratic Party politicians publicized portions of the training manual of the MCA's Administrative Inspection Bureau, to demonstrate the toothlessness of the MCA's oversight capabilities.

The Democrats' proposal was, in an indirect way, an admission that the Diet lacks the ability to oversee the ministries nominally under its control. Without such power, any effort to reorganize the bureaucracy will probably not lead to a reduction in bureaucratic strength or an increase in politicians' influence over policy-making. Yet Prime Minister Hashimoto, while stressing his determination to push ahead with administrative reform, has not only defended the MCA's jurisdiction but also allowed the MCA to influence the current administrative reform process despite evidence that the MCA has torpedoed past administrative reform efforts.

Responding to the Democrats' proposals to create a Japanese version of the American GAO during Diet questioning, Hashimoto said that splitting oversight from the "government" and giving it to the legislature was unnecessary (Nikkei, January 28, 1997). Moreover, Hashimoto's lieutenant in the administrative reform process, veteran LDP politician and MCA chief Muto Kabun, allowed the head of the MCA's Administrative Inspection Bureau, Kan Yoshinori, to circulate a memo arguing that any increase in the Diet's ability to oversee or audit the bureaucracy posed a "constitutional problem." This angered Kan Naoto, and eventually the Cabinet Legislative Affairs Bureau was forced to state publicly that the proposed GAO legislation was not inconsistent with constitutional law. The MCA retreated, but later circulated another document to Diet members urging them to keep the MCA intact (Yomiuri, February 25, 1997).

On January 26, 1997, Muto moved to further derail the Democrats' proposal by announcing efforts to "strengthen" the MCA's oversight capabilities. In particular, he said that the MCA would end the practices of revealing the contents to and negotiating the wording of their investigations with the ministry in question before finalizing the report and delivering it to the ministry (Asahi, January 27, 1997). This is, in reality, a meaningless reform since most major ministries have seconded bureaucrats working in the MCA and therefore still have access to this information before it is finalized. The following day, Muto announced that the MCA would establish an advisory organ to review the contents of their investigations and recommend changes. In order to avoid criticism that the new organ would be just another bureaucratically-controlled council, the new organization would be established under the direct supervision of the politically appointed head of the MCA. But while the MCA conducts about 20 investigations a year, the new advisory body would be equipped to review only four to six of them. Muto also announced vague plans to strengthening "follow-up" procedures to check compliance with the results of the investigations; and he said MCA would "consider" informing the cabinet of the contents of its investigation report when the case was considered "important" (Nikkei, January 28, 1997; Yomiuri, January 29, 1997).

Finally, LDP politicians in the Upper House also helped torpedo the Democrats' proposal. In late February, Inoue Takashi, the chair of the Upper House's Administrative, Fiscal and Political Organizations and Administrative Inspection Research Council and former Ministry of Construction administrative vice-minister, outlined a draft proposal that purported to strengthen the Diet's ability to oversee the bureaucracy by establishing an administrative monitoring committee in the Upper House. It would have ombudsman functions and the power to investigate the results of the MCA's administrative oversight inspections, but Inoue's proposal would still leave the MCA's Administrative Inspection Bureau intact, which was its intent (Mainichi, February 26, 1997; Asahi, February 26, 1997; Yomiuri, March 2, 1997). The LDP eventually gained the support of both the SDPJ and Sakigake, effectively ensuring the defeat of the Democrats' proposal (Yomiuri, May 14, 1997).

The GAO episode is instructive for several reasons: first, it indicates that politicians lack any direct means of overseeing the operations of the bureaucracy. Second, the administrative oversight capabilities that do exist in the Japanese government are largely meaningless. Third, the MCA, which is the main bureaucratic player involved with administrative reform and staffs many of the mid-level positions in the various reform committees, shows little interest in changing the current system. Finally, and most important, it shows that the LDP leadership is more interested in protecting the interests of the MCA (and, by extension, the bureaucracy in general) than in seriously carrying out reform aimed at reining in bureaucratic power.

RONALD BEVACQUA is a senior research economist for Merrill Lynch Japan based in Tokyo. He was one of the founders of the Dead Fukuzawa Society and its well- known Internet discussion forum concerning Japanese affairs (for information on DFS, see its web site at "http://www.twics.com/~briank/fukuzawa.html). He also contributes occasional columns to The Daily Yomiuri and is often quoted by the international business press on developments in the Japanese political economy.


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