Press Conference by Yoshimi Watanabe, Minister for Financial Services

(Excerpt)

September 4, 2007

[Minister's Statement]

Good morning. As of today's cabinet meeting, information is being made available for you about the independent administrative agency reform. Ministries submitted their reform proposals at the end of last month. My conclusion is that these proposals were insufficient and should be reconsidered. On the other hand, the Council of Advisers to the Government on Administrative Streamlining and Efficiency will separately review all of the 101 independent administrative agencies. Ministry-by-ministry reform proposals are being screened at the Secretariat of the Headquarter for Administrative Reform. Let me outline these proposals. Only the Japan Green Resources Agency has been slated for elimination. Only the Nippon Automated Cargo Clearance System Operations Organization has been slated for reorganization under certain conditions. As for the National Statistics Center and the National Hospital Organization, proposals have called for consideration of a system wherein its directors and employees are required to be non-public servant officials. 34 agencies are slated for partial retrenchment of operations or are being considered for such retrenchment. In any case, we will use the double-track approach for the independent administrative agency reform. That concludes my statement.

[Questions and Answers]

Q.

I would like to ask three questions in relation to Mr. Endo's resignation as Minister of Agriculture, Forestry and Fisheries yesterday. He was the fifth Cabinet minister to resign since the inauguration of the Abe Cabinet. Firstly, what is your view on the Prime Minister's responsibility for having appointed such a problematic person to a ministerial post? After all, the latest Cabinet reshuffle came after thorough personal checkups. Do you believe that Mr. Endo's resignation indicates some limits on personal checkups? Lastly, regarding the problem of political funds, a proposal has called for requiring the submission of receipts for all political fund expenses worth 1 yen or more for lawmakers' political funds reports. Would you once again give us your view on this proposal?

A.

First of all, the Prime Minister himself has remarked on his own responsibility. I have nothing to add. As regards the limits on ''personal checkups,'' I have no way of commenting because I don't know details of these ''personal checkups.'' I made some comments on receipts for expenses worth one yen or more when I assumed this ministerial portfolio. We keep receipts on hand for filing tax returns and we may have to provide them in cases of tax investigations. As for political funds, we are required to attach copies of receipts to political funds reports, with no investigations expected. It is very regrettable that some false receipts have been fabricated for political funds reports. If we are required to provide receipts to political funds reports for all expenses worth one yen or more, I don't know how to treat expenses for which receipts cannot be obtained. Disbursement vouchers could be provided in place of receipts. In any case, a huge volume of receipts may have to be attached to any political funds report. If paper receipts were to be submitted, procedures would be cumbersome, and pose difficulties for election boards in terms of storage. If the relevant people were prepared to face such difficulties without complaints, there would be no problem. At any rate, as I have reiterated, believe that further innovation in the field of information technology is required for the handling of political funds. There is no software package specifically designed for managing political funds. Therefore, I would like to see such a software package developed and upgraded for political fund management. With such software, we may be able to easily process political funds. The time may come when computerization will allow us to disclose details even without the use of paper receipts. I have recently asked software experts to check the software that I have been using, which, as it turns out, just meets the legal requirements. The software can produce only statutory ledger sheets and revenue-expenditure reports, while unable to turn out cashbooks. In this case, verification is very difficult. Therefore, I would like to have package software developed for the purpose of integrally managing all data and turning out cashbooks, statutory ledger sheets and revenue-expenditure reports. Such software would be very helpful.

Q.

The Shinkumi Federation Bank, or the central bank for shinkumi bank credit cooperatives, is considering providing capital assistance to Yamanashikenmin Shinkumi, a major credit cooperative. What is your evaluation of bank recapitalization schemes such as this in which no public funds are used? How many more cases of capital-short regional financial institutions do you expect to see?

A.

The Shinkumi Federation Bank, which is a kind of mutual aid organization, is recapitalizing a member organization that is short of capital. I think this is a very desirable development. Industries implement self-help efforts as a first step, and in this case a national federation of shinkumi banks is to provide capital to a member. This is natural and desirable. I will refrain from making specific comments on whether any financial institutions are liable to become short of capital. Generally speaking, I believe that any institution that is about to suffer a capital shortfall should first and foremost implement self-help measures. Following this, it should approach its umbrella association (e.g. the Shinkumi Federation Bank) with a recapitalization scheme, for credit cooperatives or the Shinkin Central Bank for shinkin bank credit associations, before filing for government aid. Mutual aid within a federation should be done first.

Q.

Media reports have emerged about a survey on investment and lending by regional financial institutions in regard to the U.S. subprime mortgage problem. Financial industry regulation authorities may have conducted surveys regarding the problem since July. Would you give us specific numbers in relation to investment and lending by financial institutions, if you have any such information?

A.

I have no specific numbers. There may well be newspaper reports concerning a questionnaire survey or the like. The authorities will not be making any comments on surveys such as these. In any case, financial institutions are to be releasing such data through their respective earnings reports for the first half of the fiscal year to September and their quarterly disclosure reports. We would like to carefully watch these reports. As I said upon my assumption of this ministerial portfolio, I believe that the problem will fall short of impacting Japan's financial system directly.

Q.

Regarding independent administrative agencies, I would like to hear from you about the factors behind the inadequate reform proposals given by government ministries. As concerns the reconsideration of proposals, are you setting a deadline for the submission of revised proposals?

A.

First of all, the proposals have fallen within our expectations. Even if we ask ministries to streamline themselves, it may be difficult for them to do so in the initial phase of bargaining. Therefore, we will utilize the Council of Advisers to the Government on Administrative Streamlining and Efficiency to promote reform, while encouraging ministries to reconsider their proposals. A factor behind inadequacies in the proposals may be that such reforms may fail to make progress if individual ministries are left to consider reform proposals on their own. Since the deadline for compiling independent administrative agency reform proposals is set for the end of this year, the Council of Advisers to the Government on Administrative Streamlining and Efficiency may narrow its reform targets.

Q.

You have deemed the latest proposals to be inadequate. Have you found any proposal that can be regarded as satisfactory or that do not require reconsideration?

A.

I have yet to hear details on these and would henceforth like to begin screening the proposals.

Q.

Would you give us more reasons for your having deemed the proposals as inadequate and the details of the agency subjected to elimination?

A.

I have yet to check up on each of the 101 independent administrative agencies. Only one has been subjected to elimination, namely the Japan Green Resources Agency. However, its elimination was first planned by the first Abe Cabinet. The fact that no further agencies have been slated for elimination indicates that the proposals in general are inadequate.

Q.

You may have intended to hold Cabinet ministers accountable for the reform proposals while warding off the possible resistance from bureaucrats. Nevertheless, the proposals have been inadequate. Don't you think this means that the ministers lack the ability to lead their respective ministries?

A.

We made a Cabinet decision on August 10 to have ministries submit independent administrative agency reform proposals over a period of some three weeks, or by the end of August. The relevant ministers may have had no time to seriously consider the reform proposals. However, the Cabinet has decided on a basic reform policy. Based on this policy, I would like to aggressively promote reform.

Q.

I have a relevant question. Do you consider the proposals to be inadequate due to the fact that only one agency has been subjected to elimination? Are you implying that your reason for deeming the proposals as inadequate is that their targets for elimination have been limited?

A.

I think there are various means and methods for conducting restructuring. Some agencies do not have to be public entities and should be privatized. Such fundamental reform proposals have yet to be seen. It is in this context that I have made known my view that the latest proposals are inadequate.

Q.

Following Mr. Endo's resignation yesterday, the cabinet may come under fire from the public. Would you care to give us your view on this?

A.

The result was highly regrettable. At any rate, I believe that the system for compliance with laws and regulations in the tax-financed political area should be implemented in a stringent fashion.

Q.

Regarding the previously mentioned matter, what is your view on the impact of Mr. Endo's resignation on the Abe Cabinet? On a television program broadcast the day after the cabinet reshuffle, you stated that ''I thought Mr. Endo was best suited the post of Minister of Agriculture, Forestry and Fisheries.'' What do you have to say about this remark?

A.

Regrettably, I had not been aware of the problem at that time. Mr. Endo was well-versed in agriculture policy. He has been an agriculture policy expert and exhibited positive reformist views. In this sense, I held him in high regard upon his assumption of the agriculture portfolio. However, he has since been forced to resign. We cannot say with any certainty that this will not affect the Abe Cabinet. This replacement has just been implemented. I hope that Mr. Wakabayashi, in his role Mr. Endo's successor, will precipitate a fast recover from the damage.

Q.

Lawmakers have been divided in their responses to their respective political money scandals. Some have resigned from their ministerial posts and others have quit their parties. Does this mean that standards in regards to responding to political money scandals have been unclear?

A.

I don't know the details of all such cases, and therefore I cannot discuss why lawmakers have been divergent in their responses.

Q.

Regarding personal checkups, problems have emerged following post-appointment checkups. Prior to the latest cabinet reshuffle, personal checkups of ministerial candidates were conducted. Do you believe that some standards should be established for personal checkups of candidates prior to their appointment? There have been calls for a system based on the standards in the U.S. or on other such systems. What system or rule would you favor for pre-appointment checkups?

A.

It is most likely that Japan does not have manuals for such checkups. If personal checkup manuals were to be developed, computerized tomography, clinical examination and other activities would be conducted by dedicated teams, according to such manuals. Japan maintains repeated trials and errors in the absence of such manuals. It would be a good idea to develop manuals for personal checkups.

(End)