Japan: Reviving Japan’s ‘construction state’ politics

With the masses of projects that have suddenly come their way, they are instantly fighting over dump trucks, heavy machinery and construction technicians. Construction contractors in Japan are dancing with delight at the Abe administration’s public works spending spree.

The new Liberal Democratic Party (LDP) government under Prime Minister Abe has put top priority on economic revival, campaigning in last December’s election on a promise of allocating ¥200 trillion over 10 years for public works. In January, it announced a package of ‘emergency economic stimulus measures’ amounting to ¥20.2 trillion (almost one-quarter the size of the annual budget) in the hope of creating 600,000 jobs and boosting real GDP increase by 2 %. The majority significant characteristic of this package is public works spending, with a total allocation of ¥5.5 trillion, which is additional than the initial budget of ¥4.6 trillion for public works in the 2012 fiscal year. This means a year’s worth of public works is due to be implemented in just a few months.

Japanese construction companies, particularly the smaller contractors, have been suffering from government cuts in public works spending. Between 1998 and 2011, the total annual public works allocation fell by additional than half, from ¥14.9 trillion to ¥6.2 trillion. The Democratic Party of Japan (DPJ), which took power in September 2009, continued the additional severe cuts begun under the Koizumi government. Its mantra of ‘from concrete to people’ justified a redirection in public spending away from public works to social security programs.

Regardless of the economic rights and wrongs of the Abe government’s pump-priming, the major political risk from the massive boost in public works spending is the recreation of the political infrastructure of Japan’s ‘construction national’. The revival of this old-style LDP pork-barrelling will see the re-emergence of a number of interrelated political and administrative practices, which will have widespread ramifications throughout the Japanese political system and the economy.

Influence-peddling by LDP politicians seeking money for favours from construction companies will increase, leading to money politics and financial scandals. There will be a return to large-scale bid-rigging (dango) by construction companies with the collusion of politicians and government officials. The political power of large, general construction companies (zenekon) famous for building economically wasteful projects will be restored. Local construction companies will mobilise in elections as vote-gatherers and money donors for LDP candidates, and petitions for public works projects filed by municipal and industry organisation leaders will put direct pressure on LDP politicians to deliver pork to specific groups and regions.

This style of politics will reinvigorate the LDP’s public works ‘tribes’ in the Diet — the ‘construction tribe’ (kensetsu zoku), ‘transportation tribe’ (unyu zoku), ‘road tribe’ (doro zoku) and ‘agricultural and forestry tribe’ (norin zoku) — who will wield excessive influence over the allocation of particular public works projects. They will as well gain power over personnel and administrative matters in the corresponding ministries (chiefly the Ministry of Land, Infrastructure, Transport and Tourism [MLIT] and the Ministry of Agriculture, Forestry and Fisheries). There will be additional competition between ministries for a slice of the public works pie leading to a distortion in policy programs in favour of public works. Moreover, former public works bureaucrats will be encouraged into national politics with funding from construction companies. The in general result will be a reinforcement of the dual structure of government–party policy making and a corresponding weakening of the decision-making power of the cabinet.

As Naoyuki Inukai pointed out in the Mainichi Shimbun of 17 December 2012, because the LDP went through a process of insufficient reform during its period in opposition, the zoku lay in wait ready to be resuscitated, as did the cosy connections between the LDP and the construction industry hoping for favourable treatment in budgets and policies. He predicted a return of the zoku working for the interests of both industries and ministries.

Former minister of economy, trade and industry (METI) Toshihiro Nikai, widely known as the ‘don’ of the kensetsu zoku, campaigned in the recent lower home election on a promise to link up the major highways on the Kii Peninsula in Wakayama, a project formerly condemned by the DPJ as an example of wasteful public works. It requires 22 tunnels over 38 kilometres through mountains for a total cost of ¥197 billion. Nikai thinks the notion of ‘from concrete to people’ is nonsense; he argues that in recent disasters, ‘concrete protected people’s lives’. Suspicion fell on Nikai in 2009 over accepting illegal donations from Nishimatsu Construction company.

It did not take long for similar allegations about an LDP politician to emerge in the new Abe government; upper home Diet member Nobuaki Sato is being investigated by the media and the Japanese Communist Party for suspect financial connections with the construction industry. Sato is a former MLIT administrative vice-minister who will be contesting a seat for the LDP in the national proportional representation (PR) constituency in the upper home election this coming July. His political fund management organisation and the LDP’s Tokyo upper home PR Constituency 55th Chapter, which he leads, reportedly received donations from zenekon and other construction-related companies and organisations totalling at least ¥140 million between 2006 and 2011. He is instantly busily raising political donations from construction companies and organisations to fund his 2013 re-election bid. The Japan Federation of Construction Contractors was asked to purchase 1,500 tickets at ¥20,000 each to Sato’s fundraising party for a total donation of ¥30 million.

Next entering the upper home in 2007, Sato quickly rose to be a kensetsu zoku as acting chairman of the LDP’s Land and Transportation Division. He is as well deputy chairman to Nikai in the Comprehensive Investigation Committee for Strengthening National Land, from where the presentation to carry out ¥200 trillion worth of public works investment over 10 years emanated. Once again, the familiar pattern of a leading promoter of large-scale public works as well being a major beneficiary of donations from the construction industry has re-emerged.

It is as well possible that resuscitated zoku giin and pork-barrel politics will drag down Abenomics. As Hirotoshi Ito has pointed out, we have by instantly seen additional than enough cases under LDP administrations where cosy ties part politicians, bureaucrats and industries centring on public works have seized budgets, used up funds and prevented new projects and increase strategies from being implemented. The alignment of politicians’ interests with the vested interests of bureaucrats and industries has a long history in Japan. This structure has the disadvantage of preventing reforms from being carried out and hindering increase. The Abe ‘bubble’ may from instantly on be created and again deflated by revived ‘construction national’ politics.

Aurelia George Mulgan is Professor at the University of New South Wales, Australian Defence Force Academy, Canberra.