CLOSER THAN YOU THINK

Report of the 7th Australia-Japan Young Political Leaders Exchange Program
5 - 14 October 1997

FOCUS points:
Role of Non-profit Organisations in Japan
Women in Japanese politics
Japanese Foreign Policy

Attachments:
A Australian delegation and hosts
B Program
C Report Summary

Changing Values

Until the 1990’s, Japan had a focussed political goal - initially to ‘catch up’ to the West, and more recently, to ‘match’ the West. During the nineties however, these imperatives have not struck a chord in a society that is increasingly turning its mind to social values.

The current political turmoil in Japan must be observed in the context of the global economic position Japan has achieved. In itself, this achievement constitutes the aspirations of a nation. The design and nature of Japanese administrative and political structures reflects this goal of economic development, even dominance. The clarity of this goal has been critical in Japan’s corporate and economic success.

The recent upheavals in domestic politics reflect the changing nature of this national aspiration. The ability of the political parties to adapt and evolve both in their structure and policy platforms will be a determining factor in their future success.

Reform is a common theme espoused by all parties with whom we met. Reform in Japanese domestic politics has been identified as the panacea for all that is wrong with the administration, economic growth and political accountability.

In this regard, there have been three themes that have emerged throughout our discussions with representatives of the Diet, Ministries, Bureaucrats, Academics and Industry.

The credibility and relevance of the political system (Will Hashimoto Survive)

Issues of propriety are affecting the stability of the Hashimoto Government, and are shaping the way each party articulates their respective reform agendas. Given the commonality amongst parties, scandal ascends the scale of what provides distinction between the major parties.

The economic challenge of maintaining growth (Going Global)

The economic reforms include a great emphasis on the deficit reduction program and the challenge of maintaining growth. The ‘Big Bang’ economic reform program of the Hashimoto Government seeks changes to the structures underpinning the Japanese economy within a very tight timeframe.

Dealing with a dominant bureaucracy (The Reform Agenda)

The bureaucracy is seen by all parties to be implicated in perpetuating improper relationships between the political and administrative arms of Government.

It is not seen as an effective agent for change.

Hence the chapters in this report follow these themes. However there are a number of factors that contextualise these themes that are worthy of exploration in the first instance.

The Japanese economy is highly regulated and arguably under-exposed to the global economic influences. Issues such as the trade surplus have dominated trade negotiations and have led to broader pressure on Japan to deal with the administrative structures that underpin the high level of regulation. In particular, the US has taken an interest in developments in the area of both economic and administrative reform and the pace of change in this area has become a measure of Japan's commitment to their trading undertakings.

Will Hashimoto Survive?

The credibility and relevance of the political system is being continually challenged. Issues of propriety are affecting the stability of the Hashimoto Government, and are shaping the way each party articulates their respective reform agendas. Given the commonality amongst parties, scandal ascends the scale of what provides distinction between the major parties.

Japan installed a new electoral system in 1994 which features 300 single member electorates and 11 proportional representation electorates. This new system created confusion and led to some interesting outcomes, particularly since many candidates who stood and lost in the single member contests had their political careers revived in under proportional representation.

The following table gives an indication of the vast range of representation within the upper and lower houses of the Japanese Diet, as of 28 September 1998.

The Liberal Democratic Party formed a ruling coalition with Sakigake and the Social Democratic Party, giving them 267 - a majority. However, when this coalition was formed, the LDP did not have 250 members. Since January 1996, enough members defected from the NFP to give them the numbers. The Opposition coalition consists of NFP, Taiyo and the DPJ, with 191 in the House of Representatives.

All of this manoeuvring seems to have heightened public distaste for the current political parties. Old rivals joining in coalition (LDP and SDP) and the ability of political leaders to change allegiances on an overtly strategic, as opposed to policy, basis give an indication as to the current instability of Japanese domestic politics.

The almost universal response to this widespread dissatisfaction from the major parties is a reform agenda. The parties campaign on their ability to be effective agents of change. The LDP, surprisingly, given their history of complicity with the seemingly intransigent Japanese bureaucracy, are currently winning the PR race in the reform stakes.

Hashimoto's 'Big Bang' financial reforms established a clear path for his leadership - Hashimoto himself hitched his political survival to his ability to progress reforms very quickly. In June 1997, the first glimpse of the plans to overhaul Japan's financial markets were released. Greater competition and deregulation formed their basis, however in November, with the collapse of a major bank and a major investment house, latent anxiety about the pace of change surfaced in the market. The principles of non-intervention were later virtually trashed as Hashimoto moved quickly to install an emergency task force, headed up by former Prime Minister Kiichi Miyazawa to stabilise the financial markets.

Prime Minister Hashimoto's initial popularity suffered irreparable damage when he appointed Koko Sato to his cabinet. Opinion polls following his decision showed a massive decline in support: 53% to 35%. These events did more than just tarnish the image of Hashimoto, with the opponents of the reform agenda seizing the opportunity to emerge fighting. Some of the more serious opposition emerged within his own party, the LDP. One such critic, Kenji Manabe, challenged the status of the Reform Council in relation to the collective opinion of the ruling alliance. The faltering in the financial markets also added fuel to these factional fires.

Subsequent commentary indicated that March 1998 would be Hashimoto's watershed, however, he is still in place largely through lack of an obvious replacement.

FOCUS

Role of Non-Profit Organisations (NPO's) in Japan

Japan’s exposure to international movements is far less than comparable democracies. Their role in society appears not to have been fully analysed and the significance of their presence remains a mystery to many mainstream political parties.

As dissatisfaction with the current Government and the mainstream parties continues to grow, these organisations offer new ideas which break the boundaries that constrain public debate. The global perspective taken by many provide a point of distinction between these new movements and the other parties. The non-profit status immediately invokes the perception that these organisations are 'incorruptible'. This status rates highly in a domestic political scene where the vast majority of voting Japanese presume some degree of corruption exists.

The NPO movement in Japan was boosted in the wake of the tragic Kobe earthquake. The activities of 1.3 million volunteers were coordinated by NPO's and for the first time Government and bureaucracy were confronted with the existence of millions of Japanese in the body politic whose day to day lives are outside the corporatist structure and therefore outside their political comfort zone.

The broader views espoused on issues as diverse as nursing care for the elderly, world peace and environment protection are yet to be embraced by any of the larger political parties. The risk is that the appeal of these forward-looking, philosophically based groups will be transferred into an alternative political power that grows stronger as long as mainstream domestic politics is wreaked by scandal.

We did not have the opportunity to explore the policies of the Japanese Communist Party - Kyosanto. This party's success in recent metropolitan prefectural elections and a trend growth in support suggest that they have seen the opportunity in pushing global social justice issues to the forefront of their policy platform and the US-driven economic reform agenda to the back.

In recent publications, the left wing trade union peak body, Zenroren, asserted that Kyosanto's agenda is winning wider support, particularly with those in the community who perceive themselves as being alienated by economic rationalism and the corresponding contraction of Government services.

The focus on children's welfare is prominent within many of the non-profit organisations, further reinforcing their humanitarian credentials. For women and young people, the voice of the NPO is a rarity in the political landscape and as such worthy of consideration.

Chapter 2

Going Global

How do you globalise the economy, reduce the deficit and maintain growth all at the same time? These highly ambitious stated aims of the Government form the political justification for harsh and quite radical economic reforms.

Economic rationalist theory places these lofty aims within reach of the Japanese Government. However, economic reality shows that such theories are not a science. The plethora of excuses for Hashimoto's continued failure to achieve the aims of his economic plan, despite adhering this theory, expose the failings of the theory.

Additionally, how can such an agenda be implemented by a government that is perceived by many in the finance sector as being only marginal in terms of influence and control?

The ‘Big Bang’ economic reform program of the Hashimoto Government seeks to reduce the budget deficit from 93% of GDP to 3% of GDP in three years. This policy was announced in a climate of cautious optimism, with growth at 3% in the March (97) quarter, and an annual growth estimate revised to 1.5%.

However, the next quarter exposed a massive slump of –2.9%, shattering the confidence of the markets and forcing re-analysis. This negative growth calculates into an annualised figure of –11.2%, sending economists scurrying for explanations.

Many expressed scepticism at the figures and have sought to provide explanations. Not surprisingly, the political response has been polarised with opposition parties quick to use the figures as proof of the failings of the LDP to progress reform at a fast enough pace.

In contrast to this opportunism, the Government first sought to restore confidence, which is a prerequisite if they are to be in a strong position to actually pursue their reform agenda. Hence, their frantic explanation pointed firstly to the artificiality of the magnitude of the previous quarter’s growth - the logic being that if these figures had been accurate, the differential would have been reduced and the ‘shock’ factor minimalised. Reasons given to explain the 3% growth in GDP include the focussed campaign to buy up commodities before the GST hike (from 3% to 5% in March).

This decision to increase the GST was part of the deficit reduction program. The unforeseen effects of marketing campaigns tailored specifically to capitalise on pre-GST rises in all commodities were hugely successful led to this false high. Subsequently, however, this led to a massive slump in domestic consumption in the second quarter.

To offset the losses from a slow domestic market, the corporate response was to focus intensely on their export markets. Interestingly, this still doesn't explain the massive drop and subsequently fuels the scepticism about the drop. A close look at the value of the Yen around this time provides some explanation as to the inability of an export focus to fuel growth adequately. Nonetheless it did serve to highlight the trade surplus and draw the angst of trading partners like the US.

Other political decisions that impacted upon domestic consumption included a bad consumer reaction to the termination of a special income tax break (worth Y400 trillion to government representing 4% of GDP).

Health cuts were worth Y1 trillion. Along with the GST hike, Y7 trillion was taken out of consumers’ households. The Hashimoto led Government was banking on the June/July corporate bonuses to boost domestic consumption and pull back the negative growth figures. However, the third quarter indicators showed only a marginal improvement.

Current growth estimates for the optimists stand at 2.6% of GDP in 1998. The revised outlook for 1997 stands at 0.5%. Since these figures were espoused, the forecasts offered by the LTCB Research Institute are for fiscal year 1997: 0.1% and for 1998: 0.8%. Comment from the institute accompanying these forecasts says the 'We believe that the recent deterioration in consumer sentiments and business confidence cannot be easily rectified.' They anticipate an ongoing period of Yen weakness, only foreshortened by a predicted weakening in the US economy late in the 1998 fiscal year.

The high risk Government response to this economic situation was couched in terms of fostering of private sector dynamism proceeding with fiscal and structural reform. Corporate confidence polling is open to interpretation and only time will determine the success of this strategy. However, with the internal political pressures described in the previous chapter, that may be something that Mr Hashimoto and his supporters may not have.

The initial corporate response was one of support for the fiscal reform agenda. Deregulation is seen as providing many windfalls, with privatisation and outsourcing being seen by the private sector as opportunities to secure profitable enterprises and utilities. However, the collapse of major financial institutions sent shock waves through the private sector, causing the Government to falter on their single-minded path to reform.

The Government will use asset sales as a source of revenue to assist in the realisation of the deficit reduction plan. Competition policy theoretically underpins these reforms, so corporate Japan has on their respective boardroom tables either the spectre of smaller profit margins or downsizing, reduced bonuses or wages and conditions of employment.

The pressures being brought to bear on Hashimoto fall into two main camps. One call is for patience (40%), and not to revert to previous practices of pump-priming (Hashimoto reduced capital works expenditure by 7%). The other is to institute measures to buy confidence through a corporate tax cut and to lengthen the fiscal reform agenda to soften its harsher impacts on the private sector (60%).

These countervailing pressures sit within a wider split forming in the ruling coalition that has the potential to drive the NFP to the opposition party groupings and potentially cost Hashimoto the leadership, as discussed in Chapter 1. Through November, it appeared that the reform agenda prevailed.

In this context the dramatic reversal in fiscal policy in December, when Hashimoto announced the reintroduction of tax breaks to the value of Y2 trillion stunned even the LDP. The corporate sector had got its way. However, a subdued response in the financial sector shattered the confidence turnaround the measure was supposed to generate. The revenue pressures accompanying such a move led to further criticism of economic mismanagement from the opposition.

Economic commentary has turned against Hashimoto and is likely to remain negative until the market strengthens. This strengthening is highly contingent on the US economy and relative trade figures as well as Asian import demand for Japanese product. This once again demonstrates that the degree of control exercised by the Government is marginal. Emergency economic packages and twiddling the internal fiscal policy levers will not change these factors.

FOCUS

Women in Japanese politics

Women represent eight per cent of the Japanese Diet, with even smaller representation at Prefectural and Local Government levels. Despite much speculation, the recent changes to the electoral system led to largely an unremarkable result, apart from the fact that double the number of women were elected. (153, from 70 at the 1993 election).

Interestingly, women are presenting an extraordinary electoral challenge, as many have progressed beyond the confines of the traditional issues occupying the agendas of the mainstream political parties. Many Japanese women have, by virtue of the patriarchal, corporatist nature of Japanese society, established their own social identity, which is yet to be tapped into by the parties.

The issues pursued by non-corporate women include global peace and environmental protection. This style of activism was witnessed in an event the delegation attended in Tokyo. It is characterised by active participation in non-government, not-for-profit organisations. This kind of political activism is threatening because it has not developed a relationship with a political party operating within mainstream politics. The recent success of the Japanese Communist Party, which in mid 1996 had a greater proportion of members serving in prefectural governments than any other single party.

Some recent commentary on Japanese feminism points to an awareness Japanese women have developed over the years that cannot be characterised by western feminist definitions. This awareness relates specifically to social issues of a global magnitude including the environment, peace and overseas aid movements. These movements are also engaging the youth of Japan and provide a positive outlet for political activism that is totally detached from the disillusioning, scandal ridden domestic political scene.

The broad political agendas that are experiencing growth in support are relating to global movements or trends. A gender and age-based analysis of the recent success of the Communist Party (Kyosanto) would provide an interesting insight to this general observation.

The following colloquialism is indicative of the scepticism and cynicism with which young Japanese view politics: There are three prerequisites to achieving political office: Family (in politics) Funds (campaign finance) and/or Fame (popularity). Without at least one, the system is seen as inaccessible.

A statistical breakdown of the most recent election reinforces some of the entrenched trends that perpetuate this view. Out of the 1500 candidates, 'nisei' or second generation candidates constituted 10%; 23% were former local politicians, and 8% were government bureaucrats. These proportions have hardly shifted from previous elections.

Chapter 3

The Reform Agenda

When Ryutoro Hashimoto came to power, it was on a platform of such comprehensive reform that his future is likely to be contingent on his ability to deliver rapidly these promises of significant reform.

The relationship between the respective political parties and the bureaucracy is an interesting focus. The pressures of the bureaucratic 'establishment' on the political agenda appear already to have some clout, with powerful factions in the LDP advocating a softer line of reform. The bureaucracy's ability to stifle this almost universal call for administrative reform has the potential to make or break the government, as well as shape the nature of foreign relations dialogue.

This is particularly relevant with respect to the US, which views the pace of such reforms as an indicator of Japan's ability to achieve trading targets. Another US influence can be seen as options being canvassed as to what will establish an effective agent of change include making political appointments to the bureaucracy - reflecting the American system.

Every party with which we met strongly advocated administrative reform. Devolution of power from the central Government to Prefectural Assemblies was seen as a way to introduce accountability to public expenditure and involve constituencies. Primarily through the local representatives making investment decisions and setting priorities in terms of expenditure.

The opportunity to meet with the prefectural assembly representatives and business representatives in the Ishikawa Prefecture provided a unique insight into the frustration felt by regional representatives because of the highly centralised administration of Government departments.

Prefectural management of a number of issues was contained in a bill that was passed whilst we were in Japan, handing over a series of administrative functions form the Central Government to the prefectural Assemblies. This bill also redefined the status for cities who would be deemed as eligible to take over such responsibility from those of a population of 1 million or more to those with 450,000 or more, hence giving medium sized centres greater opportunity to determine regional priorities.

In Japan there is less opportunity to scrutinise due process in the public sector than there is in the private sector. The bureaucracy is tainted with a reputation of being at worst corrupt, at best stifling. As a result, advocating privatisation has a completely different connotation. Calling for privatisation is euphemistic for reducing both perceived or real corruption in processes and outcomes.

The bureaucracy is not seen as an effective agent for change and for this reason alone, all political parties have linked major administrative reform with their economic and social reform agendas. It also means that administrative reform is seen as an essential pre-requisite for successful reform in these other areas.

This explains the fervent pursuance of devolution of power, privatisation and outsourcing as a means of improving public accountability of capital expenditure, procurement decisions and provision of Government services.

Towards a New Era

The extraordinary feat of changing Japan from a feudal state into a democracy in one generation and the remarkable post war industrial and economic positioning has shown that Japan has been capable of moving swiftly and effectively to establish a place of global relevance.

The question is, are the motivating factors still present for Japan to once again consolidate as a nation around a specific goal, to the virtual exclusion of other priorities?

Part of the answer to this question lies in the domestic political trend that shows a previously untapped constituency asserting themselves. This constituency arises from the seedbed of international movements and therefore cannot be contained within the Japanese national psyche. This trend will make it impossible for any ruling party to implement a social agenda that establishes the preconditions for a narrowly focussed, introverted economic strategy.

Another part of the answer lies in the privatisation and contracting out of Government utilities and services which further disables the ability a Government has to effect necessary changes. This contradiction has not been reconciled within the reform agenda: the more the Government deregulates, privatises and outsources, the more the Government is rendered an ineffective agent of change.

Yet another part of the answer lies in the diminishing ability of any administration to impose direction upon multi-national corporate entities. Any influence that exists today is being exponentially reduced through the globalisation of capital and labour.

Both of these external factors work against Japan being able to once again change direction rapidly and effectively. Any reform agenda therefore needs to factor in such influences in the first instance.

The domestic political turmoil illustrates the search for this elusive collective psyche that provided the key to change in previous generations. The political parties continually metamorphose under the fickle aspirations of a citizenry that is generationally divided.

This divide can be broadly described as those with a memory of what can be achieved through the power of collectivism under strong leadership; and baby boomers who are plagued by the paradoxical comfort found in the establishment and the need for change that logic dictates.

Another divide exists between these groups and those who are influenced by global movements. Youth and women (particularly women of the baby boomer generation, who have, by exclusion from corporatist structures, been free to explore and progress new political ideas) seek new values which are based in the acceptance of political responsibility for the social and physical environment of future generations.

The political parties lack of specific ideology can be explained partly through this analysis as these different generations. All have specific and tangible aspirations. By playing to a general feeling of dissatisfaction, each party or coalition hopes to find the 'value added' factor that will distinguish them. Hashimoto's initial success and subsequent plummet in the polls demonstrates the electoral value of credibility. Therefore it is credibility, not policy, that provides the point of distinction.

As the lives of people get busier and technological progression and convergence pushes the physical ability of human beings to absorb information, political parties have to compete more forcefully for attention. Political parties from many countries have sought corporate marketing solutions to package and 'sell' their ideals. The resulting distillation of ideals into appealing grabs makes the message digestible. On the other hand, however, the simplicity insults the intelligence of the voting public who know that solutions are as complex as the problems.

Ultimately, how political parties communicate their message and interact with the community is a critical determinant for their success in any democracy. Prevailing international pressures and the complexity of global relations introduce external elements that require constant explanation.

Japan sits in the glare of the spotlight on the global economic stage. With the US acting as stage manager, they can move but they can't hide. This unrelenting pressure will serve to galvanise like-minded parties, more out of sheer frustration than goodwill, but only when there is a break in the glare will there be a change of leadership. At that point perhaps a glance behind the spotlight will show a stage manager not nearly as worthy of attention as the social justice needs of a nation.

There are many parallels between Australian and Japanese domestic politics - our two nations are closer than you think and we will continue to learn so much from each other.

Attachment A

Australian Labor Party
Senator Kate Lundy - Australian Capital Territory
(Delegation Leader)
Mr David Price - State Secretary Tasmanian Branch
Mrs Marianne Saliba - State Policy Convenor, Immigration and Ethnic Affairs
Ms Christine Hawkins - Electorate Officer to Senator for NSW

Liberal Party of Australia
Mrs Marie Ficarra  - Member for Georges River NSW Parliament
(Deputy Leader of Delegation)
Ms Kate Gunn  - ACT Branch Member
Mr Peter Poggioli - State Secretary, Victoria

National Party of Australia
Mr Garner Smith - Victorian Branch Member

Australian Parliamentary Exchange Council (APEC)

Ms Tricia Rigg  Executive Officer

Japan Centre for International Exchange (JCIE) - Host Organisation

Mr Hiroshi Takaku Chief Program Officer
Mr Yoshinori Bunya Program Officer
Miss Maiko Isa Program Assistant

Attachment B

This schedule contains a listing of those with whom the delegation met.

Other corporate and cultural visits during the program:

Changing Values

Party realignments and an unprecedented level of scandal are proving to be a catalyst for rejection by Japanese people, with participation (non-compulsory) voting is at an all-time low. Promises of reform at an administrative and economic level prevail as the means by which parties hope to secure popular support. Younger politicians are challenging the establishment and bringing new ideas for change in a desperate attempt to keep up with the tide of changing values in Japanese society.

Will Hashimoto Survive?

FOCUS: Role of Non-profit Organisations in Japan
Japan’s exposure to international movements is far less than comparable democracies.

Going Global

FOCUS: Women in Japanese politics
Women represent eight percent of the Japanese Diet, with even smaller representation at Prefectural and Local Government levels.

The Reform Agenda

FOCUS: Japanese Foreign Policy
Australia is becoming less important to Japan in economic terms, but a closer look at foreign relations shows stronger ties than ever to Australia.

Towards a New Era

Whether it is public sector reform, deficit reduction or political scandal, there are many issues that are common between Australia and Japan. As social movements develop, pressure will be bought to bear on traditional party and administrative structures. The parties that harness this community activism and adapt their policies to suit these aspirations will be the ones to take Japan into the next millennium.