Govt growth panel must draw on private expertise
The vast wisdom accumulated by private-sector experts should be fully utilized to help restore the growth potential of the Japanese economy.
On Thursday, a key government panel on new growth strategies held its inaugural meeting.
During the meeting, Prime Minister Naoto Kan instructed Cabinet members to study ways to realize his administration's new growth strategy.
One issue on the table is a cut in the effective rate of corporate taxation--the ratio of the corporate sector's national and local tax payments to its taxable income. This nation's effective corporate tax rate is much higher than those in many other countries.
The prime minister also told his Cabinet to consider tax reductions aimed at helping create more corporate jobs.
Chaired by the prime minister, the growth strategy council includes Cabinet ministers involved with the economy and top academics and experts, as well as the Bank of Japan governor and the chiefs of the nation's three main business organizations. The blue-ribbon panel will spearhead government efforts to devise and implement specific policies in line with the growth strategy adopted in June.
Go beyond growth strategy
The council--a mix of talented figures from various sectors--should not be limited just to addressing topics related to the growth strategy.
The defunct Council on Economic and Fiscal Policy may be illuminating in this respect. This panel took the lead in crafting and implementing government polices under the then ruling coalition of the Liberal Democratic Party and New Komeito.
The growth strategy council needs to serve as a forum for discussions on a wide range of issues, including the urgent matter of how to rectify the recent upsurge in the value of the yen. Other topics include such fiscal and financial policies as medium- and long-term reform of the fiscal and social security systems.
The government's new growth strategy seeks a swift resolution to the ongoing deflationary crisis while also ensuring that the nation's average annual growth rate in the next decade reaches a hefty 3 percent in nominal terms and 2 percent in real terms.
The Kan administration also has said it will strive to generate new demand worth more than 120 trillion yen and create about 5 million jobs through government support for environmental protection, health care and other growth fields, combined with efforts to encourage investment in other Asian markets.
High hurdles must be cleared to achieve these targets.
The growth strategy council will work to smooth differences among the various policies formulated by different ministries, while also issuing instructions to each office concerning specific measures to be implemented.
We hope the new panel will work to end the bureaucratic turf battle among government offices seeking greater authority, and remedy the lack of coordination among them in implementing government policies.
These hurdles only serve to undercut workable policies.
Also, the respective roles of the growth strategy panel and the National Policy Unit must be clearly defined.
The important thing is to marshal conflicting positions among the ministries, and facilitate a consensus on each divisive issue.
Lend ear to business world
Divided opinions can be seen, for example, on the issue of lowering the corporate tax rate. The Economy, Trade and Industry Ministry and the Finance Ministry are sharply divided over this matter--the former wants to reduce the rate, but the latter fears doing so could lessen tax revenue. Kan will be tested as to whether his administration can lead the way to reducing the tax rate as soon as possible.
Indications are the growth strategy panel will make its presence strongly felt as a vehicle for reflecting the opinions of the business community in government policy.
The government of former Prime Minister Yukio Hatoyama alienated itself from financial circles, hammering out various policies that could dampen the economy.
The economy is still suffering from the aftereffects of the unsatisfactory relationship between the Hatoyama administration and the business community.
The Kan administration must listen to financial circles' and experts' opinions about the debatable policies adopted by his predecessor, including a ban on temporary workers being dispatched to manufacturing companies and a self-imposed goal for a large cut in greenhouse gas emissions. If necessary, the government must reconsider such policies.
The market is experiencing a rapid rise in the yen's value and a sharp fall in stock prices.
There has been no government forum that included both the prime minister and the central bank governor, because of the Hatoyama administration's decision to abolish the Council on Economic and Fiscal Policy.
We hope the launch of the growth strategy council will smooth policy coordination between the government and the central bank.
(From The Yomiuri Shimbun, Sept. 10, 2010)