On February 9, the Ministry of Land, Infrastructure, Transport and Tourism announced plans to make additional sections of the nation’s expressway network toll-free. This was in keeping with an election pledge made by the Democratic Party of Japan (DJP) when it came into power in 2009. While maintaining the sections already designated toll-free last year, the ministry will experiment in eliminating tolls on 329 additional kilometers (205 miles) of expressways from June 1 this year for vehicles of all types at all times.

　　　The move will bring to 1,981 kilometers (1,340 miles) the combined distance of toll-free sections – some 22% of all the expressways across the Japanese archipelago. The ministry is reportedly looking into the possibility of coming up with a further 1,493 kilometers (930 miles) of expressway sections to be made toll-free specifically for medium-sized and larger vehicles, such as trucks and buses, traveling at night on the expressways in areas centering around Hokkaido, the Tohoku region, the Japan Sea side of the Hokuriku region, as well as the west coast of Kyushu.

　　　Meanwhile, tolls amounting to 50% of the previous sum will be collected on expressways in Okinawa Prefecture on weekdays starting on June 1 as a step to ameliorate severe traffic jams resulting from the earlier eliminating of tolls.

　　　To make for a series of expressway-related budgets, the DPJ government of Premier Naoto Kan has appropriated 120 billion yen (some $1.45 billion) for the year 2011 in addition to 100 billion yen ($1.20 billion) ear-marked for last year. However, no bright prospects are in sight for this costly “social experiment.” If the government is serious about ultimately making all expressways in Japan toll-free as an authentic national policy, the experiment certainly needs thorough preliminary discussions exploring the extent of the burden taxpayers must shoulder, as well as matters pertaining to budgetary support. And yet, the DPJ has so far been sadly lacking in this vital aspect of the  experiment. It is a blatant waste of tax money to randomly continue the experiment without bothering to discuss the very essential issue of whether or not it is sensible to make expressways toll-free in the first place. Actually, such a budget-gobbling project should have been among the first to be sorted out in the DPJ’s much-publicized budget screening process.

　　　Discounts on expressway tolls suddenly took on a new dimension in March 2009 under the LPD administration of Taro Aso, as it put a 1,000 yen ($12) sealing on holiday tolls on all passenger cars for an unlimited distance. The DPJ criticized the move as “throwing roses to the crowds” in preparation for the Lower House elections slated for August 30 that year, in which the DPJ subsequently scored a resounding victory over the incumbent LDP.

　　　The step towards toll discounts taken by the Aso administration was attributable to the bureaucratic self interest of the Road Bureau of the ministry, which desperately desired to keep within its reach a significant portion of the more than 5 trillion yen ($60 billion) in varied automobile-related taxes, such as motor vehicle weight tax, gasoline tax and revenues from expressway tolls, which had automatically flowed into its special account but which, beginning in 2008, would now move to the general account budget.

　　　Amid a fierce inter-ministerial contest for a larger share of the general account budget, the Road Bureau managed to secure 2.5 trillion yen ($30 billion) over a 10-year period on the pretext that the funds would be used to increase the conveniences of the nation’s expressways. It was further decided then that 500 billion yen ($6 billion) be appropriated to expressways while continuing the experiment with the 1,000 yen holiday tolls over the next two years. That was how the Aso administration coped with situation.

　　　The DPJ had plausible reasons to criticize the LDP measures as “rose strewing.” However, I dare point out that the ministry had indeed worked out well-thought-out legal and budgetary measures – although its logic was understandably self-serving.

Consummate Rose Strewing

　　　The Japan Expressway Holding and Debt Repaying Agency (hereafter, the Agency), an independent administrative agency, is bound by law to oversee the operations of the six highway companies born out of the privatization of the former highway corporations, charge them fees for the lease of expressway assets, appropriate the fees collected to repayment of the debts inherited from their predecessors (which initially amounted to a whopping 40 trillion yen, or $480 billion), and complete full repayment of the debt within 45 years. The lease fees each of these companies pays the Agency derive from the tolls paid by highway users. Therefore, the logic of the Aso administration was that, if the expressway tolls had to be discounted under the government’s policy, then the balance due should naturally be paid off by the government with tax money.

　　　During deliberations at the LDP government’s Expressway Privatization Committee under the administration of former premier Junichiro Koizumi, whether or not tax money should be invested in highway corporations was hotly debated, and the matter was finally settled when the committee voted “no” to the proposition. However, as the Aso administration subsequently decided to go ahead with toll discounts, the vital premise kept by the Japanese government until then – that tax money should not be invested in expressway companies – crumbled under its own weight.

　　　What concrete steps did the Aso administration take to implement its policy? First, the administration had the Agency appropriate 3 trillion yen ($36 billion) which the state supplied to help it repay part of the debt, revising the redemption chart (i.e., repayment plan) at 3 trillion yen ($36 billion) less. Based on the new numbers, the Agency discounted the fees it charged each of the companies for the lease of expressway assets. Next, the companies lowered expressway tolls accordingly. Thus, the LDP government came up with what looked like a logical and feasible plan to implement its policy. However, the LDP cannot escape blame for having broken the grand principle of not investing tax money in highway corporations. In this vein, its modus operandi fell into the category of “orderly disorder” after all.

　　　In the meantime, the expressway administration of the DPJ has continued to meander in various directions. In 2009, in compliance with the wishes of the then party secretary Ichiro Ozawa and those around him, the DPJ even considered diverting part of the 2.5 trillion yen ($30 billion) left as the financial source for toll discounts in order to create a new revenue source for construction of new expressways. This plot eventually did not see the light of day, as the law  constituting the basis for such a move could not be revised. However, there is no denying that the DPJ in this instance was trying brazenly to break another major party principle from its foundation – that of not building unprofitable new expressways.

　　　Also, in forging ahead with the experiment with toll-free expressways, a scheme begun in June 2010, the DPJ chose to invest directly in the respective highway companies a total of 100 billion yen ($12 billion) in tax money – the combined amount required to make tolls altogether or partly free. This does not make sense by any yardstick. Highway companies are private corporations. What legitimate reason did the government have for investing tax money directly in them? How can the government possibly account for it before the nation? The whole idea is simply preposterous.

　　　I can only conclude that the “orderly rose strewing” by the Aso administration has been degraded into “consummate rose strewing” by the DPJ. Let us now try to figure out what the social experiment pursued by the DPJ since last June is all about. First of all, it can be emphatically stated that the experiment constitutes a policy to bully the weak. As has already been pointed out, the experiment to make expressways toll-free is sustained by tax money invested in highway companies. The scheme unfairly affects ordinary citizens who generally do not use expressways and therefore are not beneficiaries of expressways – presumably senior citizens and women in most cases: they have to bear the burden, by paying tax.

　　　I may be running a risk of being criticized for unduly describing these people as the weak, but there is no denying that the DPJ experiment has grossly deflected from the benefit principle – that the principal beneficiaries should bear the cost.

DPJ’s Warped Highway Administration

　　　On the controversial social experiment pushed by the DPJ, Transport Minister Akihiro Ohata had this to say last month: “I am ready to probe the results of this experiment thoroughly, and decide on the specific future course of action within the next two to three years.” (The Yomiuri Shimbun, January 22, 2011)

　　　However, I strongly believe that any experiment – or any probe for that matter – would be absolutely meaningless unless the DPJ first and foremost makes clear whether or not it considers unreasonable its manifesto promising to make the nation’s expressways toll-free in principle. First of all, in view of the tight national budget situation which shows no signs of improvement, it would be extremely difficult – nor does it make sense at all – to continue the experiment over the next two to three years. In contrast to the Aso administration, which implemented the toll discount after somehow securing revenue sources over a ten-year period, the DPJ has dared to choose a method of scrambling for revenue on a yearly basis. It is absolutely unthinkable that, with so shaky a strategy, the DPJ will ever be able to carry through adequate highway policies, which constitute the very foundation of the nation’s infrastructure.

　　　What the DPJ should do now is this: they should immediately call off the “social experiment” which has turned into the ultimate rose strewing, with virtually no prospects of success, and take a fresh look at their expressway policy from its foundation up. The present set of problems having to do with Japan’s expressway administration is originally traceable to Naoki Inose, Deputy Mayor of Tokyo, who, while being a member of the government’s Highway Privatization Committee under the Koizumi administration, set forth a privatization policy based on fallacious premises. After all, a fiction is a fiction, no matter what improvement measures are worked out – so long as the basic premises are on the wrong track to begin with.

　　　On February 14, the “Association to Probe the Nation’s Expressway Problems,” of which I am a member, made public a proposal that the toll-free experiment be called off and that fundamental solutions to the problems be reexamined instead. The proposal was presented to the Ministry of Land, Infrastructure, Transport and Tourism on the same day. Toshiaki Koizumi, a ministry secretary who met our representatives, declared that the ministry is determined to look into every possibility of enabling vigorous revitalization of Japan. He particularly stressed that the top-ranking officials of the ministry – the Minister, two Deputy Ministers and three Secretaries – will be sure to ponder the problems involving the nation’s expressways with no preconceived notions, and grapple squarely with them. It is earnestly hoped that this proposal of ours will constitute the first step towards an improvement of the nation’s warped expressway administration, leading to formulation of a rational government policy.

　　　Lastly, I wish to recommend a book entitled “Road Dictatorship” by Masao Hoshino, an economic writer for the Asahi Shimbun (Kodansha, Tokyo; 2009),  as a good read that will help the reader come to grips with the dubiousness of Japan’s expressway privatization at present. I would be grateful if you would also spare some time to peruse one of my books, entitled “Clown of Power” (PHP;2009), in which I express my candid views of the problems with Japan’s highway privatization, including ample references to how I see Mr. Inose has failed to live up to the expectations of the public.

(Editor’s Note: Dollar figures in this column reflect the latest yen-dollar conversation rate.)

(Translated from “Renaissance Japan” column no. 449 in the February 24, 2011 issue of The Weekly Shincho.)