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Compete or Lose Funds Is Japan’s Message to the Countryside

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The Abe government’s chief for regional Japan looks into the future and sees enterprising communities that maintain their grip on state funding and flourish, and stragglers that are cut loose.

“Am I telling them to compete? Yes, I am,” Shigeru Ishiba, the minister responsible for regional revival, said in an interview in Tokyo. “Does that mean wider gaps among the regions? You bet. If we equalize things among those who make an effort and those who don’t, the whole nation will collapse.”

With Japan’s debt topping 1,000 trillion yen ($8.5 trillion), the government can’t keep bringing prosperity to the countryside via public works, according to Ishiba. His comments come ahead of local elections in the spring, and as municipalities prepare submissions for subsidies for the fiscal year starting in April 2016.

“Each village, town and city needs to work out how to revive their community,” said Ishiba, 57, sitting in the Cabinet Office on Jan. 21 with books spread out in front of him titled “Farm Villages Won’t Disappear” and “The Extinction of the Regions.”

Japan’s population peaked in 2008 and is projected to fall to 124 million in 2020, according to the National Institute of Population and Social Security Research. In five years, even Tokyo’s population is projected to start shrinking, according to the institute’s estimates.

Warning Residents

“Regional municipalities are challenged to show what they have done to halt population decline, and some of them will go down in 10 or 20 years if they do nothing,” said Yutaka Okada, an economist at Mizuho Research Institute in Tokyo. “The central government is calling for action before we reach that stage. This is a warning to residents.”

Ishiba, who has previously served as minister in the defense and agriculture portfolios, isn’t trying to stop the demographic decline. His role is to help Japan manage the problem.

Japan’s long-term goal is to keep its population above 100 million.

The central government set aside 1.4 trillion yen of its 96.34 trillion yen budget for the 12 months starting this April for regional revitalization, and held public works spending unchanged at 5.97 trillion yen.

Public works spending has dropped to about half the level of its peak in 1998, data from the finance ministry shows.

Innovative Districts

Some innovative districts have found a way to get more revenue through a program known as furusato nozei, an initiative allowing tax deductions for people who donate money to their hometowns, or any other adoptive location.

Half of Japan’s almost 1,800 local authorities are pitching gifts or other incentives to get donors and the number of benefactors has more than tripled since the program was introduced in 2008.

“They have to think on their own rather than doing what the nation tells them to do,” said Ishiba, who lost to Prime Minister Shinzo Abe in a contest to lead the Liberal Democratic Party three years ago.

Abe’s government also aims to create 300,000 jobs in regional areas for young people and to stop population inflows into Tokyo in the next five years, according to a plan released in December.

“We’re already late” in addressing the demographic crisis, said Ishiba. “Now is our last opportunity to prevent it from getting out of control.”

(Updates with comment from economist in sixth paragraph.)
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