Misuse of money

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source : Japan Times .
Friday, Oct. 26, 2012

Misuse of disaster 'reconstruction' money runs rampant

Expert finds 25% going toward projects that won't benefit Tohoku


A year and a half after the Tohoku region was devastated by the Great East Japan Earthquake and monster tsunami, shocking revelations are deepening the sorrow and frustration of the survivors and throwing a harsh light on the government and the Diet.

To help hundreds of thousands of people mainly in Miyagi, Iwate and Fukushima prefectures, the government has allocated as much as ¥19 trillion for "reconstruction," asking taxpayers to bear the extra burden to support the disaster victims and help them reconstruct their local infrastructure.

But much of the disaster recovery money has been allocated for projects that have little to do with the disaster victims, media reports have revealed.

These projects include ¥500 million for road construction work in Okinawa, ¥330 million for repairs to the National Stadium in Tokyo's Yoyogi district and ¥10.7 billion in subsidies for a government-linked nuclear power research organization, much of which will be used to study nuclear fusion.

The Justice Ministry meanwhile secured about ¥30 million to purchase power shovels for prisons in Hokkaido and Saitama prefectures, and the fisheries ministry was given ¥2.3 billion for countermeasures against the Sea Shepherd antiwhaling group.

Yoshimitsu Shiozaki, a professor at Ritsumeikan University in Kyoto who is an expert on reconstruction of disaster areas, has examined the third supplementary budget for fiscal 2011, which included ¥9.2 trillion for 488 "reconstruction" projects.

He found that about ¥2.45 trillion, or a quarter of the total, was allocated for projects outside Iwate, Miyagi and Fukushima, or for national projects he concluded are unlikely to directly benefit anyone in the three hardest-hit prefectures.

"Legally speaking, there are no problems with these projects. Similar things happened after the (1995) Great Hanshin Earthquake, when reconstruction funds were used for other purposes," Shiozaki said.

"But this time (the funds ) are being used in a more deceptive way."

Of the ¥19 trillion earmarked for reconstruction, the government will come up with ¥10.5 trillion by keeping higher rates for income, corporate and residential taxes by up to 25 years.

"Taxpayers accepted the tax hikes because (they thought) the money would be used for helping disaster victims. And disaster victims were thanking them," Upper House member Kuniko Tanioka of the parliamentary group Midori no Kaze said during a recent Audit Committee session to scrutinize reconstruction spending.

"But it has turned out that (the funds) have been used for (projects) they never imagined. . . . It has dampened the disaster victims' will to rebuild their lives," she said.

Under a budget guideline originally proposed by the Democratic Party of Japan-led administration in May 2011, the government would have been allowed to use reconstruction funds only for projects directly related to the stricken areas.

But later, responding to demands from opposition lawmakers, the ruling parties agreed to revise the guideline so the ¥19 trillion will also be used to "reinvigorate Japan," leaving geographical boundaries unclear and widening the scope of use for the "reconstruction" funds.

The budget guideline also called for "disaster prevention" measures across the country based on lessons from the Tohoku tragedy.

This has allowed, for example, the government to spend ¥12 billion to strengthen the quake resistance of various government buildings outside the Tohoku prefectures.

Takayoshi Igarashi, a professor at Hosei University and an expert on public works spending, said bureaucrats by nature try to use up all the money available as there is no incentive for them to save taxpayer funds.

"That's a fundamental characteristic of bureaucrats. It is the Diet that should check how money is used, but the Diet hasn't put any effort into it," Igarashi said.

During the 2009 Lower House election campaign, the DPJ scored well with voters by pledging to thoroughly scrutinize government spending and drastically cut waste, public works projects in particular. As it turned out, the DPJ defeated the Liberal Democratic Party, which had been long criticized for its government budgets bloated with pork-barrel public works spending.

"But this time, the DPJ behaved the same as the LDP. So the feeling of disappointment among the public is now much bigger" than it would have been under an LDP-led administration, Igarashi said.

The fisheries ministry argues that the budget to counter Sea Shepherd will eventually benefit areas in and around the city of Ishinomaki, Miyagi Prefecture, where about 1,200 people work in whaling-related industries.

The Justice Ministry has insisted that buying power shovels for the Hokkaido and Saitama prisons will eventually benefit the disaster-hit areas because the machines will be used to train prisoners for future jobs and thus help ease the shortage of such workers in the Tohoku region.

Meanwhile, Tohoku coastal towns severely hit by last year's tsunami are still suffering from money shortages as well as manpower, according to Shiozaki, who has analyzed how reconstruction funds were used after the Hanshin quake.

Such facts should be remembered when discussing allocation of the reconstruction budget, he said.

Municipalities that lost many of their officials are too short on manpower to handle the massive amount of work necessary to recover from the disasters, he said.

Shiozaki also said many residents who lost their jobs and homes are financially struggling, making the task of rebuilding their lives even harder.

Under the law to help disaster victims' restore their livelihoods, the government is supposed to provide up to ¥3 million in cash to each household that lost a home in the March 11 disasters.

That amount is far from enough to rebuild a house, Shiozaki pointed out.

"If that amount was doubled, more people would be able to think of ways to reconstruct their lives," he said.

"Up until now, less than ¥300 billion has been distributed under the system. So even if (the government) were to double the amount paid, it would only be ¥600 billion, which is nothing compared with ¥19 trillion," Shiozaki said.

He stressed that Diet members as well as bureaucrats actually need to go to disaster sites and come up with ways not only to cut wasteful spending but also to direct money where it is most needed.

"They can't study ways to provide funding for places truly in need merely by reviewing documents," he said. Lawmakers and officials "must go to the devastated areas. Problems are occurring in the disaster zone, not in Kasumigaseki," the government center in Tokyo.

Now that it is facing harsh criticism, the administration has pledged to review reconstruction spending and says it will hammer out new approaches in early November.

Yutaka Harada, an economics professor at Waseda University, said the best and cheapest way to reconstruct the disaster areas is to hand cash directly to the victims.

"In that way, a ¥4 trillion budget would be enough," he said. "Everybody says it would create a moral hazard, but the ¥19 trillion reconstruction budget is already a moral hazard."





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