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Fiscal Reform Subcommittee Preliminary Report (June 2001)(1/3)

Fiscal Reform Subcommittee
Preliminary Report

June 2001

~ Submission of the Fiscal Reform Subcommittee's Preliminary Report ~

June 8, 2001
Fiscal System Council Chairman
Fiscal System Committee Chairman
Takashi. Imai

  I hereby present with remarks and opinions the Preliminary Report from the Fiscal Reform Subcommittee of the Fiscal System Committee.

  Japan's delay in undertaking structural reforms of its economy and society and the Japanese people's resulting feelings of being trapped have been the greatest problems of the past decade. The government must draw up a grand design for the future and lay out the course of reforms as soon as possible.
  From the standpoint of sound fiscal consolidation in particular, Japan has fallen tremendously behind the advanced countries of Europe and the United States. Fiscal structural reform is therefore an issue that will brook no delay.
  Under the forceful slogan "we cannot rejuvenate and develop Japan without structural reform," Prime Minister Koizumi's cabinet views the final resolution of non-performing loans and creation of a competitive economic system as two sides of the same coin and has declared its resolve to implement fiscal reforms.
  I welcome this undertaking.
  I am pleased to present the Preliminary Report of the Fiscal Reform Subcommittee as a significant milestone report that provides a basis for future reforms.
  It is my hope that the Council on Economic and Fiscal Policy will take this Preliminary Report into consideration, and follow its every word to present Japan with a sturdy grand design for reform.
  The Fiscal System Council's Fiscal System Committee has also received the "solid policy framework" prepared by the above council and will address creation of specific measures for future fiscal reform.

Fiscal Reform Subcommittee Preliminary Report

June 8, 2001

Minister of Finance, Mr. Masajuro Shiokawa

Fiscal System Council Chairman
Fiscal System Committee Chairman
Takashi Imai

  The Fiscal System Council's Fiscal System Committee has deliberated on the topic of Japan's fiscal structure and the future direction of fiscal reforms based upon overseas and local surveys. We have prepared the Fiscal Reform Subcommittee Preliminary Report presented here based on the results of those discussions.
  It is our hope that the government will make this report the foundation for future fiscal management.

Fiscal System Committee, Fiscal Reform Subcommittee
List of Members

As of June 8th, 2001
Chairman Masaaki Honma Osaka University Graduate School of Economics, Professor
Acting Chairman Toshiki Tomita Nomura Research Institute, Executive Fellow
Members Yoshihisa Akiyama The Kansai Electric Power Co., Chairman of the Board of Directors
Keimei Kaizuka Chuo University Department of Political Science, Professor
Yoko Kimura Local Public Finance Council, Member
Haruo Shimada Keio University Economics Department, Professor
Taizo Nishimuro Toshiba Corporation, Chairman of the Board
Koichi Minaguchi Nomura Research Institute, Advisor
Etsuya Washio Japanese Trade Union Confederation, President
Special Members Keiichi Iwasaki The Sankei Shimbun, Deputy Chief Editorial Writer
Moriyoshi Sase The Tokyo Shimbun, Editorial Writer
Eiji Tajika Hitotsubashi University Graduate School of Economics, Professor
Kazuhiro Tamaki The Mainichi Newspapers, Executive Editorial Writer
Sakuya Fujiwara Bank of Japan, Deputy Govenor
Takehiko Mizushiro Japan Broadcasting Corporation, News Commentator
Hiroshi Yasuda Japan Bank for International Cooperation, Governor
Hiroshi Yoshikawa University of Tokyo Faculty of Economics, Professor of Economics
Kazuo Yoshida Kyoto University Graduate School of Economics, Professor
Masaru Yoshitomi Asian Development Bank Institute, Dean
Technical Members Takashi Ikahata Takushoku University, Guest Professor
Yasushi Iwamoto Kyoto University Institute of Economic Research, Associate Professor
Masayasu Kitagawa Mie Prefecture, Governor
Naoki Tanaka Economic Analyst
Koutaro Tawara Critic
Yoshihiko Yoshino Trust Sixty Foundation, Chairman
Tsuneo Watanabe The Yomiuri Shimbun, President/Editor-in-chief

The Deliberation Process of the Fiscal Reform Subcommittee

Wednesday, February 7, 2001
  Discussion topic  Procedures for future deliberations

< Local Surveys >

  - Thursday, March 15 ~ Friday, March 16, 2001 - - - - Shikoku

  - Thursday, March 22 ~ Friday, March 28, 2001 - - - - Hokkaido

  - Tuesday, March 27 ~ Wednesday, March 28, 2001 - - Kinki

< Overseas Surveys >

  - Monday, April 2 ~ Friday, April 6, 2001 - - Germany, France, Sweden

  - Thursday, April 5 ~ Tuesday, April 10, 2001 - - - Italy

< Local Symposia >

  - Thursday, March 15, 2001 - - - - Takamatsu

  - Thursday, March 22, 2001 - - - - Sapporo

  - Tuesday, March 27, 2001 - - - - Osaka

< Internet Questionnaire >

  - Tuesday, March 27 ~ Tuesday, April 17, 2001

Thursday, May 17, 2001
  Discussion topics: Report on the overseas survey, report on the local surveys, report on the results of the opinion questionnaire survey concerning fiscal matters, other topics

Monday, May 28, 2001
  Discussion topic: International comparison and changes to macro fiscal structures

Friday, May 28, 2001
  Discussion topic: Structural issues and directions in various fields in Japan

Wednesday, June 6, 2001
  Discussion topic: Preliminary Report (rough draft)

Friday, June 8, 2001
  Discussion topic: Vote on the Preliminary Report

Table of Contents


I  Outline
1. International Comparison and Changes to Macro Fiscal Structures
(1) Overview
(2) Comparison of the Three Principal Sectors
(3) Summary
2. Concepts Concerning Fiscal Management ~ Looking at fiscal management in the 1990s ~
(1) Fiscal Management and Economic Trends in Japan in the 1990s
1) Issues
2) Effects of the Expansionary Fiscal Policy in the 1990s
3) Relationship between Fiscal Management in 1997 and Economic Conditions
4) Relationship between Fiscal Reform and Economic Conditions
(2) Orientation of Fiscal Management Reforms (Concepts that should be reaffirmed)
1) Ideal Economic Stabilization Policies
2) Appropriate Fiscal Management for Efficient Allocation of Resources
(3) Ensuring Sustainability

II  Individual Issues
< Social Security>
1. Medical Care
2. Long-term Care
3. Pensions
4. Child Care Services
5. Employment


 Public Investment>
1. Issues Concerning Public Investment
2. Levels of Public Investment
3. Increasing the Efficiency and Transparency of Investment Activities
4. Prioritizing the Public Works Budget
5. Reducing Public Works Costs


 Local Government Finances>
1. How Local Governments Should be Managed, and the Direction of Local Fiscal Reform
2. Approach Required for the Consolidation of Local Government Finances
3. Measures that are Required Immediately


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