Government Reform in Japan

July 1999

By

Ms. Yuko Kaneko
Management & Coordination Agency
Government of Japan

July 19991

If you have any question or comment on this paper, please do not hesitate to contact
me at the following E-mail address.

ykaneko@stat.go.jp

2Introduction
In April 1999, the Obuchi Cabinet submitted to the Diet (Japanese Parliament) 17 bills
to restructure and streamline central government ministries and agencies and tostrengthen the Cabinet’s functions and the Prime Minister’s leadership. Under the bills,
the current central government structure, which consists of the Prime Minister’s Officeand 22 ministerial-level organizations under the Cabinet, will be changed into the Cabinet
Office and 12 ministerial-level organizations. The Diet has just passed those bills thismonth as proposed by the Cabinet. The new government structure is planned to start on
January 1, 2001, the beginning of the new century.
Such a drastic restructuring of central government has never been experienced inJapan in peacetime. In this paper, I would like to briefly describe the content of current
government reform efforts, especially reorganization, as well as the background of thereform.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The views expressed are those of the author and do not commit or necessarily reflect those of theGovernment of Japan. The author thanks Mr. Masahiro Horie, Director-General of the Statistical
Standards Department for his very valuable advice and suggestions. Without his advice, this paper
could not have been produced.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I. Background of the Reform
Five decades have passed since the end of the World War II. During these fifty years,
the Japanese government made every effort hand in hand with the people to reconstructeconomy and society and upgrade the living standard of the people. As a result, theJapanese economy came to occupy a substantial share of the World’s economy and thepeople now enjoy a high standard of living. It can be said that the Japanese system of
public administration has functioned successfully during this period. It has been very
suitable for setting national goals or visions and mobilizing public and private resourcesand energies to achieve these goals.
However, the Japanese society has changed. Conditions surrounding the Japanesesociety and government have also changed considerably, leading us into an
unexperienced age. Existing structures and systems of government have become
unsuitable to these changes and ineffective. Piece-meal adjustments have been made. But
in contrast to enormous efforts to reorganize within each ministry without expanding its
size and other efforts to deregulate and adjust systems to changes, an inter-ministerial
reorganization has been rarely implemented except for creating new coordinatingorganizations.
As a result, the relationship among a ministry, its clienteles under its jurisdiction andother parties concerned became so strongly established that they have formed a kind ofclose-knit community that tends to strive to protect existing interests. Personnel
management systems and practices seem to have contributed to reinforce such aministerial territory and wall. To make a decision on a matter which involves many
ministries needs a time–consuming procedure among ministries guarded by the walls.
Moreover, insufficient assistance and support systems and organizations for the
Cabinet and the Prime Minister have made it rather difficult for political leaders to3

override the policy initiatives prepared within the framework of jurisdiction of existing
ministries and agencies and to speedily implement policies.
It is now widely recognized that organizations, systems and practices need drasticchanges and reforms so that the government as a whole can make well-coordinateddecisions and implement them, under the leadership of the Prime Minister and the
Cabinet, as speedily as possible in response to changes and necessity.
The necessity of such changes and reforms has been pointed out for a long time. But
to break ministerial walls requires persuading parties concerned and the abolition orrevision of existing establishment laws or the enactment of new establishment laws,
which needs enormous political energies to overcome obstacles and difficulties. Thus, aninter-ministerial reorganization has become a kind of political taboo. Very few
politicians dared to challenge this “political taboo” or “untouchable”. Prime Minister
Hashimoto, who has the strong conviction and rich experiences, challenged this difficult
task.

II. Process of the Reform
In November 1996 soon after the general election, the Administrative Reform Council
was established under the leadership of Prime Minister Hashimoto. Headed by the Prime
Minister himself, which is very rare for such an advisory body, its mission was to study
the roles and functions of the government for the 21st century, to examine how the central
government Ministries and Agencies should be reorganized, and to consider how tostrengthen the function of the Prime Minister and the Cabinet.
In December 1997, the final report of the Administrative Reform Council was
submitted. The Hashimoto Cabinet decided to fully take account of the report and began
to take necessary steps to implement reforms. The Basic Law for the Reform of
Ministries and Agencies was submitted in February and enacted in June 1998. It
prescribes fundamental principles of reorganizing Ministries and Agencies, the scheduleof reform, measures to strengthen the function of the Prime Minister and the Cabinet,
principles of reorganization and streamlining, and measures to improve efficiency of
government organizations. Among other things, the law provides specifically that thecabinet office, 12 ministerial-level organizations shall be established by thegovernment-wide reshuffling of existing ministries and agencies and that a system of“independent administrative corporation”, a relatively independent entity to implement
government programs, shall be introduced.
In July 1998, soon after the Basic Law was enacted, the Headquarters for the Central
Government Reform, headed by the Prime Minister and composed of all the Ministers ofState, was established in accordance with the Basic Law and started to prepare necessary
bills such as new Ministries establishment laws and specific plans for reorganization andother reforms. Even though Prime Minister Hashimoto stepped down because of theresults of the election of the House of Councilors last July, succeeding Prime Minister
Obuchi made it clear that he would implement the reform according to the schedule set by
the Basic Law. Mr. Seiichi Ohta, a young and aggressive member of the House ofRepresentatives, was appointed as the Director-General of the Management andCoordination Agency and the Minister of State for Administrative Reform responsible forthe works of the Headquarters.

4

After the intensive and difficult works of ten months, the Headquarters prepared 17
bills along with basic policies and plans to implement the reform. The Cabinet decided on
the bills on April 27 this year and submitted them to the current session of the Diet.
The bills for reorganizing central government ministries and agencies were passed
through the House of Representatives in June and the House of Councilors in July. All
the Ministries and Agencies are preparing budget requests, internal organization plansand other matters for January 1, 2001 which is in the next fiscal year.

III. Major Points of Current Government Reform
1) Reinforcing the Cabinet functions and leadership of the Prime Minister
The number of Ministers except for the Prime Minister shall be reduced frommaximum 20 at present to from 14 to 17. The Cabinet will be operated more flexibly,
having Ministers with special responsibilities which will be specifically decided in
response to the needs of the times.
To ensure the stronger leadership of the Prime Minister and the Cabinet, the Cabinet
Secretariat is to be given the authority not only to coordinate but also to initiate basic
policy-making. The Cabinet Office with several hundreds staff in its head office will be
newly created to support the Prime Minister and the Cabinet. Advisory Councils on
Economic and Fiscal Policies, and on Comprehensive Science and Technology Policies,
etc. are to be created. The Prime Minister is expected to appoint his supporting staff more
freely on his own initiative not only from within the Government but also from outside
the Government.
2) Drastic Restructuring of Ministries and Agencies
Under the bills, the current 23 ministerial-level organizations will be re-structured into
one office (the Cabinet Office) and 12 ministerial-level organizations. The comparison
between the current structure and the proposed one is shown in the Table on page seven.
The basic idea of this reorganization is to break the organizational walls among
existing ministries and agencies and merge interrelated or similar functions so that theseinterrelated functions can be well-coordinated as speedily as possible within a ministrywith wider jurisdiction and the duplication and redundancies of similar programs can be
reduced as much as possible. The Ministry of Health and Welfare and the Ministry ofLabour will be merged. The Science and Technology Agency and the Ministry of
Education with many national universities and their affiliated research institutes under its
charge will be merged. The Ministry of Transport, the Ministry of Construction, theNational Land Agency and the Hokkaido Development Agency will be merged. The
status of environment protection organization will be raised from Agency to Ministry,acquiring the waste treatment administration from the Ministry of Health and Welfare.
3) Reinforcing political leadership in every ministerial-level organization
The deputy-minister system will be introduced in place of the parliamentary
vice-minister system. One, two or three deputy-ministers who are supposed to bepoliticians will be appointed to the Cabinet Office and each Ministry. They are to bepositioned between the minister and the administrative vice-minister.
Eachdeputy-minister will act for the Minister and take substantial responsibilities in theministry. In addition, the system of political aides to the Minister will also be introduced.
Political aides will be appointed in every ministerial-level organization to participate in5

specific policy-making and planning and also to deal with political affairs. Under thesesystems, the political leadership in every ministry is expected to be strengthened.
4) Slimming and streamlining government organizations and operationsa) Government-operated enterprises
Postal Services will be separated to become a semi-independent external organ(Agency) of the Ministry of General Affairs and, after that, will be transformed into the
Postal Services Public Corporation. The Printing Office and the Mint of the Ministry of
Finance will be transformed into independent administrative corporations. The National
Forest Service will be streamlined, even though it will remain as an external organ(Agency) of the Ministry of Agriculture, Forestry and Fisheries.
b) “Independent administrative corporation” system
The “independent administrative corporation” system will be created. It will have an
independent legal status outside Ministry or Agency. The government will transfer
policy-implementing and other functions of ministries and agencies to this new corporate
type organization. Functions to be transferred are research activities, national hospitals,
national museums, mint and printing operations, export-import insurance activities andother operational activities such as motor vehicle inspection.
The executive agency system in the United Kingdom gave a hint in inventing this new
system in Japan.
Under the independent administrative corporation system, the flexible management is
to be secured. The chief executive or management personnel can be recruited fromoutside the government and the daily management of the operation is left to thecorporation itself. Each corporation is to prepare a mid-term plan of its business or otherkind of activities to achieve mid-term objectives or goals set by the Minister in charge. An
evaluation committee of the supervising Ministry and a central evaluation organ of the
Ministry of General Affairs review and evaluate the results of operation. The primary
purpose of this system is to separate policy-making functions and policy-implementing
functions and to improve the efficiency and quality of services toward the people bygranting more autonomy and responsibilities to a corporation and also to ensure thetransparency of the operation.
c) Reduction of organizations of ministerial-level organizations
Internal organizations of the ministerial-level organizations will be reduced to
streamline organizations as well as to ensure the wider policy coordination. Bureau level
units will be reduced from 128 to 96. Division level units will be cut back from 1200 to1000 on January 1, 2001 and further reduction will be achieved in five years. Regional
and local offices of Ministries will also be streamlined.
d) Reduction of full-time employees
The government will make a reduction-in-force plan of at least 10% reduction of the
full-time employees of ministries and agencies for a ten-year period starting from January
2001. The government also reduces personnel by creating independent administrative
corporations and by other ways. All in all, the government is expected to reduce 25% of
its employees in ten years. The government shall fundamentally review its present
functions and programs to implement such large-scale reduction.
6e) Deregulation and the reform of the subsidy and public works administration
The deregulation and regulatory reform, and the reform of subsidy and public works
administration will be promoted further to streamline the central government activities, tobuild a more free and transparent market, to promote the decentralization and to ensure
more efficient and transparent decision-making.

5) Other issues
To realize expected results of structural changes and other reforms mentioned above,
the reform of civil service systems and practices is indispensable. The government is
expected to establish a new government-wide system of personnel management as well asa system that enables most-qualified persons to be posted in the Cabinet Secretariat, theCabinet Office and Ministries. The recruitment and promotion system will be improved.
In addition, the exchange of personnel among ministries will be promoted further.
It is also indispensable to strengthen policy and performance evaluation function of
the government. Each ministerial level organization should establish a unit responsible
for policy evaluation to feedback valuable results to policy-planning units as well as toimprove the transparency of the administration by disclosing the evaluation results. In
addition, a central evaluation organ will be established in the Ministry of General Affairs.

IV. Conclusion
It is almost 15 years since the last case of inter-ministerial reorganization; namely theestablishment of the Management and Coordination Agency by consolidating theAdministrative Management Agency and the part of the Prime Minister's Office.
Unlike this last case of inter-ministerial reorganization, the reorganization of this time
involves all the ministries and agencies, namely 23 ministerial-level organizations will be
restructured into 13 organizations. Such a fundamental restructuring of this scale has
never been experienced in Japan in peacetime.
In any developed countries, it is very difficult for various reasons to substantially carryout the abolition or consolidation of ministerial-level organizations. While establishing
new ministries/departments is a common phenomenon observed in many countries, few
countries, especially where the establishment or abolition of ministerial-level
organizations is regulated by law, have been successful in abolishing or consolidating
ministerial-level organizations. This fact alone tells us the difficulty of reorganizing
ministerial-level organizations.
As mentioned above, the current government reform efforts in Japan are so
wide-ranging and cover almost every important aspect of public administration. There
are various reasons, including the stringent financial condition of the Government, why
the current government reform has become so drastic and wide-ranging. This paper
focused mainly on the reform of the structure of the central government. Naturally, there
is a criticism about the details of the current government reform. However, in view of thefact that the re-structuring of ministries has been almost taboo in Japan for a long time,
the reform of this time should be highly appreciated. If the current efforts to implement
inter-ministerial reorganization and other reforms turn out successful, an inter-ministerial
reorganization will not be regarded as taboo any more.
7

We should also bear in mind that organizational changes as well as personnel changes
are expected to result in changes in the framework and the process of decision making
and such changes, in turn, are expected to result in changes in the content of decisions aswell as in the speed of decision-making.
In conclusion, I would like to emphasize several important points to make the current
government reform as meaningful and fruitful as possible.
1) Changes in the mentality, attitude and culture of civil servants, politicians andthe people
Every system and organization is operated by human being. If people concerned do
not fully understand the meaning and importance of reform, and if they do not change
their mentality or consciousness, attitude and the culture, expected results may not be
produced.
2) Strengthening the role of politicians in the decision-making process andconstructing the cooperative relationship between politicians and administrators
The role of politicians will become more crucial and they will be forced to be more
responsible for major decision-making under a new structure. But they cannot doeverything by themselves. Civil servants cannot, of course, do everything by themselves,either. They need each other. So, the cooperative relationship should be constructed
between them, each sharing appropriate roles and responsibilities.
3) Follow-up of the reform efforts by the mass media and the public
The mass media as well as the public should continuously watch the progress andresults of reform. They should resort, if necessary, to the Law on Access to Government
Information (the Japanese version of the Freedom of Information Act), which wasenacted last May. It makes the government more responsible for implementing the reformas promised.
4) Public disclosure of the results of the reform
The government should make every effort to disseminate the progress and results of
the reform to ensure the support of the general public as well as the parties concerned.

8

Table Major Structural Changes of Ministries and Agencies<New><Current>

from January 1, 2001

CabinetCabinetCabinet Secretariat

Cabinet Secretariat

Prime Minister's OfficeCabinet Office

National Public Safety Commission

National Public Safety Commission(Police Agency)(Police Agency)

Defense Agency

Management and Coordination Agency
Hokkaido Development Agency
Defense Agency
Economic Planning Agency
Science and Technology Agency
Environment Agency
Okinawa Development Agency
National Land Agency
Financial Reconstruction Commission(Financial Supervision Agency)
Ministry of Justice

Ministry of General Affairs

Ministry of Foreign Affairs

Ministry of Justice

Ministry of Finance

Ministry of Foreign Affairs

Ministry of Education

Ministry of Treasury

Ministry of Health and Welfare

Ministry of Economy and Industry

Ministry of Agriculture, Forestry and Fisheries

Ministry of National Land and Transport

Ministry of International Trade and Industry

Ministry of Agriculture, Forestry and Fisheries

Ministry of Transport

Ministry of Environment

Ministry of Posts and Telecommunications

Ministry of Welfare and Labour

Ministry of Labour

Ministry of Education and Science

Ministry of Construction
Ministry of Home Affairs* Translation of the names of new ministries aretentative

9