Speech by Kazuhiro Haraguchi, Minister of Internal Affairs and Communications (Provisional)
May 3, 2010 CFR
1. Recognition of current conditions
○ How do you do. I am Kazuhiro Haraguchi, Japan’s Minister of Internal Affairs and Communications. I am very grateful to have been given this opportunity to speak to all of you, including the members of CFR.
○ The Democratic Party of Japan won the most seats in last year’s House of Representatives election in Japan. That marked the start of a new era in which a new government came to power.
In this new administration, the Minister of Internal Affairs and Communications was given the assignment of exercising authority over issues involving a wide range of sectors, including regional sovereignty, local governments, governmental management and assessments, and information and communications. It is indeed a ministry that shapes the nation.
(Identification of war responsibility)
○ Today, I’d like to talk about just one of the policies I am actively involved with at the ministry. Before that, however, I’d like to tell you about my core philosophy, which lies at the root of my policies.
Three years ago, the Yomiuri Shimbun, a Japanese newspaper, sponsored a forum on the identification of war responsibility. It had two major topics:
1. Why were we unable to stop the war for three years and eight months?
2. Why did we plunge into war to begin with?
They examined the records of Diet deliberations at the time to find the point of no return. What was the point at which there was no going back?
○ Surprisingly, the Japanese government published a book in 1937 called Kokutai no Hongi, or The Essence of Our Polity. One passage cited the extreme danger of Nazi Germany. Yet a few years later, Japan had formed an alliance with Nazi Germany and plunged into war.
○ Why did that happen? It is not possible to determine from the Diet records which were the main body of government administration. Many different arguments were recorded, and the people were not told the truth. Journalism was slanted in one direction, and the gap expanded.
As that gap grew, fascism provided the energy for the resentments that existed in that gap, as well as the sadness that resulted from animosities or discrimination between people. The expansion continued, and no one was able to stop it.
○ In short, governance was no longer effective. The country lost sight of who would take responsibility and conduct political activity.
Japan’s economic society must have sound governance in the future to seek world peace with your country, our alliance partner.
That’s why it’s critical to guarantee the communication rights of the citizens. This is linked to building the foundation of democracy and peace.
○ After taking power, the Democratic Party of Japan government has listened carefully to the voice of the people. Under political leadership, the politicians are identifying their responsibility and determining the fundamental course of the nation.
（The economic society in Japan today）
○ Now for a look at current conditions in Japan’s economic society. The economy is stagnant and tax revenues have sharply declined in the wake of the global economic downturn following the financial crisis symbolized by the collapse of Lehmann Brothers. The aggregate long-term debt of the national and local governments at the end of FY 2010 is projected to be 862 trillion yen. It is just one of the pressing issues for achieving economic growth and fiscal restructuring.
Under the name of reform, the previous administration caused serious harm to the finances of regional governments. The regions have been battered by such issues as the simultaneous loss of population and the extreme aging of that population.
○ In 1998, Japan’s Ministry of Finance conducted a trial calculation of the nation’s finances over the medium term. The premise of these calculations was a nominal growth rate of 1.75% to 3.5%. With the value of elasticity for tax revenue at 1.1, they came up with a forecast for national tax revenue.
Had that 3.5% growth rate continued, our current national tax revenue would have been 93 trillion yen. In fact, however, it is no more than 37 trillion yen, based on National Tax Agency projections in FY 2010. It is in fact a case of no tax revenue without growth, or now financial reconstruction without growth.
(Concerns of falling to number eight in global GDP rankings by 2050)
○ For many years, Japan has had the second highest GDP in the world, and has been called an economic superpower. Now, however, China, India, and other newly developing countries are rapidly catching up.
○ According to a 2007 report from a leading American financial institution, Japanese GDP is projected to be overtaken by that of Russia and Indonesia and to fall to number eight in the world.
(A growth strategy is required for regional sovereignty (Rising Sun Project))
○ What would happen if we failed to take action? The gaps would expand, and it is possible that we could face an abnormal situation of the kind that prevailed before the war.
It is my viewpoint that Japan has now become introspective. It is essential that Japan turn outward and more fully utilize its latent qualities and resources.
I think that by turning outward, we will both create a path for our own growth and the co-prosperity of the world’s nations. As a result, that will lead to the achievement of world peace.
○ Based on this viewpoint, I am aiming for first, the establishment of regional sovereignty with a government close to the citizens. Local public bodies would have independent and comprehensive authority, and the citizens of the community would handle local issues based on their own judgment and responsibility.
In addition to a new growth strategy from the regions, we are formulating a growth strategy from a global perspective that utilizes ICT, an indispensable infrastructural element for today’s society and economy. I have given these strategies the name of the Rising Sun Project.
2. Rising Sun Project
○ There are three specific core elements in the Rising Sun Project. They are:
1. Midori no Bunken Kaikaku
2. The ICT restoration vision
3. Japan Post reform
2-1 Midori no Bunken Kaikaku
○ The Midori no Bunken Kaikaku project is to utilize the resources in each region to the maximum extent. These include a rich natural environment, recyclable clean energy, safe and plentiful food, historical and cultural resources, and funds with aspirations.
The project will elicit the dynamism of communities and restore community ties. It will achieve a conversion from a social structure with centralized authority in which people and money flow out of the communities, to a community-centered society that increases the capacity of the communities to be self-sufficient and create wealth through decentralization and independence, local production and consumption, and low carbon technology.
○ Japan’s centralized authority development model of the past functioned extremely effectively as a model to catch up to the advanced countries. The system of centralized authority and “convoy” group behavior that resulted in strong, long-term growth is incapable of building a new country, however.
○ In this context, promoting community-centered reform is required to switch to a dispersed development model based on the new principle of citizen initiative, in which the citizens assume the responsibility for the future of the community in which they live. This will replace the mechanism in which the wealth created from exports or in big cities such as Tokyo is redistributed throughout the nation, and a pyramid development model in which lifting one area naturally lifts them all.
○ One philosophy for economic and fiscal management, the trickle-down theory of economic and fiscal management, holds that if the overall economic pie expands by providing more dynamic and focused investment to specific sectors and bodies, the benefits will trickle down. But that method has no hope of reducing the gaps that are currently an issue, and the conditions of the communities will continue to deteriorate.
The objective of a sustainable society requires the construction of regional economies that can create wealth in each community which erupts like a fountain. That means empowering human resources by valuing each individual.
・Last fiscal year, 3.9 billion yen was included in the second supplementary national budget as an emergency stimulus for an outsourced survey to gain an understanding of clean energy resources and specific ways they can be utilized.
・Also included in the initial 2010 FY budget was the consignment to local public bodies conducting forward-looking, full-scale efforts that can become a model for reform, and conducting surveys to implement and development those efforts.
2-2 The ICT restoration vision
○ Next is the ICT restoration vision. ICT is the foundation for all social and economic activity, and is the driver of economic growth. Based on this recognition, we unveiled the ICT restoration vision to achieve solid growth through ICT
（”New Broadband Super Highway (Hikari-no-Michi)”）
○ Previously, concrete roads were an important element of the infrastructure for social and economic activities, but a “New Broadband Super Highway (Hikari-no-Michi)” will assume that role in the future. The objective is to achieve the 100% implementation of a “Hikari-no-Michi” by 2015, in which all households can use broadband service.
A flower is attached to my business cards. Those flowers were pressed and given to me by challenged people. For each one of those cards I distribute, 50 yen goes to facilities for those people.
President Kennedy from your country once had a slogan of turning the challenged into taxpayers. That is also my ideal.
The disability is not with those people, but with society. What a person cannot do is not a problem. What they can do is important. That is my belief.
It is essential to ensure the access of all people, including the challenged, to the “Hikari-no-Michi”, to make that ideal and that belief a reality.
(Cooperative education / Achieving 3% growth with ICT)
○ We are aiming to achieve 3% growth by promoting the Japan By ICT strategy, which will utilize the Hikari no Michi infrastructure and employ ICT in all industrial sectors.
We think the use of ICT in human resource development and the education sector is extremely important. I propose the achievement of cooperative education in which children teach each other and learn from each other.
During the Meiji Period, our grandparents’ generation succeeded in using education reform to move from an agricultural society to an industrial society. In the same way, we will build the foundation that creates the human resources to support the knowledge and information society in the future.
○ Further, in promotion of ICT introduction in various industrial fields, it can be considered that cloud computing technology will play a major role. It is important to have a consensus on cloud service standardization and protection of personal information, so deepening of debate in the U.S. as well is desirable.
(Coping with global warming, etc.)
○ Countermeasures against the global warming problem have become a shared issue worldwide. ICT enables energy efficiency improvement and greater efficiency in the movement of people and goods, and could contribute substantially to resolution of these issues.
Here, a reduction target of 10% or more in CO2 emission volume has been set, driven by the power of ICT.
○ In the world today, there is competition in ICT-related standardization and international rules.
Going forward as well, policy collaboration is desirable to enable member countries like the U.S. to cooperate in creating world standards in ICT.
○ In this way, it is characteristic of my "ICT Restoration Vision" that it incorporates an approach for worldwide development using ICT to resolve global issues and is not simply a matter of bringing about economic growth in Japan.
2-3 Reform of postal services
○ Next is postal reform.
(Postal reform objectives and necessity)
○ In Japan, the previous government decided on postal privatization and implemented it in October 2007.
But it was done by means of internal companies, damaging citizens' convenience. And in regard to the financial services provided at post offices, after 10 years following privatization there will be no systemic guarantees, and from local/regional residents in particular there are many expressions of uncertainty.
○ It is believed that what is indispensable are revision of internal company privatization, systemic provision of postal service, savings and insurance as universal services, and guarantees of the rights of citizens in postal operations.
○ At present, the three businesses of post (postal service, savings and insurance) are in more difficult management straits than envisioned at the time of privatization. But in revamping the posts, what is important is not investing taxes but enabling maintenance of the post office network by means of securing management independence and autonomous management.
(1) Commission income of the two financial companies is about 82% of the Japan Post Network Company's earnings.(Bank commissions ¥648.1 billion, insurance commissions ¥415.2 billion, posts ¥213.2 billion)
(2) Comparison of approved targets (September 10, 2007) and FY 2008 operating results (net profit)￥Postal service ¥34 billion à ¥29.8 billion, post offices ¥50 billion à ¥40.8 billion, Japan Post Bank ¥321.0 billion à ¥229.3 billion, Kampo Life Insurance¥41 billion à ¥38.3 billion
(Viewpoint: Improvement of global economic vitality)
○ It is believed that these postal reforms will contribute to improving global economic vitality. First, there is the aspect of making effective use of Yucho and Kampo funds. Following privatization, they continued to be invested mainly in government bonds, as usual. In fact, about 80% of postal savings and about 70% of Kampo funds have been so invested.
For this reason profitability is low, and there is no progress in changing the flow of funds from the public to the private sector.
○ While taking account of safety, I believe it desirable to supply Yucho and Kampo funds toward regional stimulation and to fields that contribute to further improvement in global economic vitality.
○ How to build portfolios for what kinds of investments? Of course, these are not matters for government directives, but for the independent judgment of Yucho Bank and Kampo Life themselves, but what is important is the standpoint that investment management be linked to profitability improvement.
○ Supply of funds for "growth," for example. I believe investments should be made in fields for which future growth is anticipated -- infrastructure preparation being undertaken worldwide, as well as medical and nursing, environment and communications.
○ Another possibility is making investments and loans in a mechanism that provides micro-financing to micro and small enterprises with latent growth potential. One example of this is the Microfinance Growth Fund created by President Obama.
○ Another point is the international distribution field. Prior to privatization, the Japan Postal Corporation tried to establish a joint venture in a tieup with Holland's TNT with a view to advancing into the international distribution business, but in the end the project was not implemented.
Still, with the international flow of goods now becoming more active, Japan Post Services Co., Ltd. is expected to form links with businesses in various foreign countries, including FedEx, UPS and others in your country, and develop its international distribution business, enabling expectations for contributions to distribution to accommodate economic globalization and borderless activity.
October 31, 2005
With a view to advancing into the international distribution business, the Japan Post Public Corporation announced establishment of a strategic partnership with TNT (including a joint venture company).
June 28, 2006
In a press conference, Governor Ikuta announced postponement of establishment of the joint venture company with TNT.
○ Through this postal reform, I believe it desirable to make practical use of the Japan Post group's capabilities in the world. By means of tieups in the postal and distribution fields, effective use of savings and Kampo funds, and so forth, I desire to cooperate to bring about a win-win relation with foreign countries, including the U.S.
○ That concludes my talk on some of the policies I am currently promoting.
○ Japan began its journey on the road to modernization after being visited by Commodore Perry’s black ships from the US in the second half of the nineteenth century. Since then, Japan has experienced two major world wars, including the war in the Pacific I mentioned earlier.
I am keenly aware that one important responsibility our generation has been entrusted with is to never again raise war, and instead, firmly establish for future generations, a peaceful Japan that will contribute to international society.
○ It is said that the administration under the Democratic Party of Japan will attach much more importance on relations with China.
However, with Japan’s alliance with the United States at its core, it is my wish that the utilization of Japan’s Rising Sun Project can blaze down upon countries that advocate freedom, such as India where the number of mobile phones is increasing by 18 million handsets every month, or in South America where the Japanese format of terrestrial digital broadcasting continues to become widespread, and as a result, all nations around the globe will become equal and society will evolve to sufficiently respect human dignity.
Thank you for your attention.