The government has released the results of its inspections into its own fund projects and its measures for revising the state fund system.
That certainly amounts to an initial step for setting right the runaway manner that fund projects have ballooned in cost, but much more remains to be done.
Effective rules should be set and an institutional arrangement for keeping watch on the fund system should be strengthened, to prevent state budgets from being squandered.
Thought should also be given to developing a relevant legal system.
Government fund projects are setups that allow ministries and agencies to set aside budgets in a lump sum so the latter can be expended over multiple fiscal years.
The novel coronavirus pandemic prompted similar fund projects to mushroom in a disorderly way and expand into such fields as decarbonization and economic security.
The total size of government fund projects grew sevenfold over three years to a combined outstanding balance of about 17 trillion yen ($109.81 billion) as of the end of fiscal 2022.
In more than a few instances, the actual spending was far short of projections, which had been overestimated, or huge sums continued to be expended aimlessly and without being subjected to critical scrutiny.
It has also been found that, in certain cases, core duties of a government fund project, such as the screening of subsidies to be disbursed from the fund, were outsourced to a private company.
We are dumbfounded by the way that relevant officials lack the awareness that they are handling public money.
The complicit ministries and agencies, and the politicians who pushed the projects, carry serious responsibilities for the development.
Government officials said that, in taking account of the latest inspection, they have decided to scrap 15 of the 200 state fund projects and to have an additional 240 billion yen or so, which is not likely to be used any time soon, returned to government coffers.
Those measures are all too reasonable, but they are still too modest in their reach in comparison with the way that state fund projects have ballooned over the past several years. The government fund system should remain under continual inspection.
The officials said that government fund projects will be obligated, in the years to come, to set a termination date of 10 years or less, in principle, define concrete outcome goals and review their achievements.
An upper limit of three years’ worth will be set for budgets to be allocated henceforth, the officials added.
The direction they have set is adequate, but what matters more is whether the officials will carry it through.
The planned revision is expected to face resistance from the ministries and agencies involved, as well as from the ruling parties. There are therefore lingering concerns that the funds could set their own goals, and review their own attainment levels, in a self-serving manner.
Transparency should be ensured, to prevent that from happening, by having a third party involved. An arrangement should also be developed for reducing, or scrapping, government fund projects that fail to achieve their goals.
The requirements for allowing similar funds to be set up should also be toughened.
The existing rules provide that eligible for establishment are state-funded projects wherein, for example, expenditures should be made flexibly because it is difficult to foretell the amount that should be spent in each fiscal year.
The ambiguity in those provisions, however, has allowed the government funds to mushroom in this disorderly manner.
The Constitution says that state budgets should undergo the Diet’s “deliberation and decision” for each fiscal year. The government fund projects, in light of the objectives of that provision, should be seen as an exceptional setup.
The requirements for establishing funds and the rules for operating them, however, have only been spelled out in Cabinet orders and Cabinet decisions, and they have turned into a mere formality.
Laws should be developed to define a basis for the government fund system and to impose tougher discipline on it.
As recently as last autumn, the government set aside, in a supplementary budget, more than 4 trillion yen for state fund projects, partly to support the semiconductor industry.
Officials should face up to the harmful effects of investing huge sums into government funds and fundamentally part with the way they have been doing so all too easily.
Abuse of the government fund system could eviscerate fiscal democracy, which says the way that taxpayers’ money is used should be controlled by representatives of the public.
The Diet and the Board of Audit should realize the serious nature of the problem and toughen their watch over the fund project system.
--The Asahi Shimbun, April 24
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