The NPU meeting to decide on the strategy consisted of the prime minister, deputy prime minister, chief cabinet secretary and all the government ministers, as well as ‘team support’ from seven DPJ Lower House Diet members. The former MIAC administrative vice-minister-turned deputy chief cabinet secretary also participated.
Subtitled ‘Toward a Radiant Japan’, the 29-page document immediately brings to mind former LDP Prime Minister Abe’s 2006 book entitled Towards a Beautiful Country, and ex-LDP politician, Takemura Masayoshi’s 1994 book, Japan: A Small but Shining Country.
The elevated prose does not stop at the subtitle. The strategy is replete with the international language of strategic planning fashionable amongst governments, which conveniently ignores the day-to-day economic realities and hard choices that have to be made in actual decision-making. This is despite the strategy’s espousal of the trendy ‘Plan-Do-Check-Action’ (PDCA) cycle to evaluate and verify the extent to which its policy goals have been attained. The main function of such strategic ‘management speak’ appears to be as political rhetoric, not as an actual guide to action. The major growth targets the strategy incorporates are so distant (over 10 years or by 2020) that the DPJ will be absolved from any accountability in not achieving them.
The document represents a more detailed elaboration of the DPJ’s stated policy of demand-led growth, which it pretentiously (and not originally) describes as a ‘third way’, as opposed to the LDP’s ‘first way’ (dependence on public works) and ‘second way’ (market fundamentalism – a reference to Prime Minister Koizumi’s structural reforms).
The new strategy promises over ¥100 trillion in demand-led growth in three key sectors – environment, health and tourism – and the creation of 4.76 million extra jobs. It anticipates an increase in the average annual economic growth rate to more than 3 per cent in nominal terms (and more than 2 per cent in real terms) over the next 10 years until 2020. An editorial in the Nikkei, however, notes that ‘Japan’s potential economic growth capacity has fallen to just around 0.5 per cent a year. To make 2 per cent real economic growth a reality, more than just the creation of new demand must be accomplished – industry must also be transformed to spur competition and boost productivity’. This means significant deregulation in the tourism (airlines), health (medical care) and energy (electric power) sectors.
A major disconnect in the document lies between ends and means: the 2020 ‘goals’ and the ‘measures’ outlined to achieve them. For example, the strategy talks about ‘Opening New Frontiers’ in ‘Asia and in Tourism and Local Revitalisation’. The ‘Asia’ targets are:
- – the creation of an APEC FTAAP (Free Trade Area of the Asia-Pacific)
- – a doubling of the flow of people, goods and money
- – a doubling of incomes in Asia
The principal means (i.e. measures) to achieve these goals are:
- – the establishment of international safety standards together with Asian countries
- – building infrastructure in Asia in areas like rail transport, water supply and energy
- – making Haneda Airport a 24-hr international hub facility
- – carrying out the strategic development of ports
It would take a giant leap of faith to believe that these proposed measures could actually deliver on the targeted goals.
Other goals are simply unrealistic.
Increasing food self-sufficiency to 50 per cent on a calorie basis (from the present level of 39 per cent) under the broad heading of ‘Tourism and Local Revitalisation’ is an objective that has proved elusive for two decades despite continuing agricultural subsidies and protection. The present target is 45 per cent by 2015.
Achieving the 50 per cent rate would need, amongst other things, a complete reversal of several current trends: declining rice consumption, agricultural productivity, area of cultivated land and agricultural workforce. The 50 per cent food self-sufficiency rate also sits uneasily alongside the APEC Free Trade goal, given the increased levels of farm support and protection it would need for the goal to be achieved. In practice the free trade goal is far enough off for it not to place any immediate pressures on the Hatoyama government for agricultural trade liberalisation.
The New Growth Strategy also smacks of LDP-style pork-barrelling, namely the statement that ‘we will identify public infrastructure including airports and ports that can be Japanese dynamos open to the world and will invest intensively in them’. As economic journalist Machida Tetsu points out, there are already 100 airports in Japan, many of which previous LDP governments wasted money on constructing and which are now in the red. In his view, the growth strategy is redolent of the kind of easy pork barrel spending that will inevitably increase taxpayer and corporate tax burdens. The strategy also refers to ‘Revitalising forests and the forestry industry through road network improvement, etc.’. Building forest roads was a favoured area of public works construction under the LDP as was port development.
Machida also points out that the strategy takes no account of and has not been coordinated with the independently produced growth strategies being drawn up in the Ministry of Economy Trade (METI) and Industry; Ministry of Internal Affairs and Communications (MIAC) and Ministry of Land, Infrastructure, Transport and Tourism (MLIT). MIAC’s ‘Haraguchi Vision’, for example, came out prior to the NPU document and is a far superior strategy in terms of concrete implementation plans and timetables. Machida concludes that the government’s strategy reflects both Hatoyama’s lack of leadership and coordination ability.
To me, it brings to mind a comment made by Australia’s leader of the opposition – Tony Abbott – about Prime Minister Rudd’s government: ‘it over-promises and under-delivers’. The Hatoyama administration would need to take immediate, concrete steps to implement its strategic goals to make them credible.