Interview: Koizumi unlikely to deliver on reform of post

Shigefumi Matsuzawa, governor of Kanagawa Prefecture, co-authored a book with Prime Minister Junichiro Koizumi several years ago that proposed ways to privatize the postal system, which includes massive savings and insurance operations as well as mail delivery.

The book was published in 1999, when Matsuzawa was a Democratic Party of Japan member of the lower house, and the nation had not yet pinned its hopes on a self-styled maverick politician.

The Nihon Keizai Shimbun recently spoke with Matsuzawa about prospects for the planned privatization. Excerpts from the interview follow:

Q: The Council on Economic and Fiscal Policy is due to begin debate on privatization of the postal system in late January. What do you think the outcome is going to be?

A: I'm worried that the government might end up doing nothing, just as it failed to achieve any meaningful reforms in the area of expressway construction. The government decided to continue building highways as planned, and failed to implement any useful measures to privatize road-construction agencies. The lobby (inside the Liberal Democratic Party) representing construction interests got what it wanted, and I'm worried that the same thing is going to happen regarding the postal system.

The manifesto that the LDP drew up as part of the lower house election campaign in November only says that the party favors privatization of the postal system. And I'm afraid Mr. Koizumi will simply turn postal operations into a private company without tackling vital reforms, such as the way postal savings and insurance funds are invested in public projects or revamping public corporations that serve the postal system. He might pass off this privatization as a successful reform even though nothing would change.

Q: To what extent should the postal system be reformed?

A: The most radical approach would abolish the postal savings and insurance businesses. These, however, purchase large amounts of government bonds. Even if these operations can't be abolished because of their bond purchases, they should still be scaled down as much as possible. The maximum amount of money that can be deposited in a postal savings account should be limited to around 5 million yen (instead of the current 10 million yen). Postal insurance operations aren't necessary because there's no need for the government to offer the existing type of insurance service. Only limited functions of the insurance operation, such as those needed to ensure payment of pension benefits to senior citizens residing in remote areas, should be maintained.

Q: Economy and Financial Services Minister Heizo Takenaka says the government should make active use of the existing network of post offices in implementing postal reform. Do you have any ideas on how to reform the post office network?

A: I think the number of post offices will drop temporarily after the mail service is liberalized. But once private companies enter the field, the number of mailboxes will likely increase and new services will become available. That is the beauty of a free economy. People might opt to run a coffee shop or convenience store inside a post office. A post office could opt to offer a large variety of products and services.

Q: What do you think is the most significant obstacle blocking the private sector's entry into the postal service?

A: The association of independent contractors operating regional post offices is the biggest obstacle. They are unwilling to let go of their status as national public servants and the advantage of being part of the state-run operation. The LDP's postal lobby is also quite powerful. These two groups will make it difficult for the LDP to do little more than state its intention to turn the postal operations into a private company when it draws up a new manifesto for the July upper house election.

Q: You yourself are having a difficult time implementing various reforms because you face formidable opposition from the prefectural assembly. Tell us about your situation as governor.

A: I used to be a member of an opposition party so this is the first time I'm in a position to implement my own policies. But whenever I try to do something new, I face enormous resistance from both the assembly and other groups. I've also learned that drawing the public's attention to prefectural politics is more difficult than with national politics. And all that does is make my job even tougher.

I often think that the realities I face as governor are totally different from what I had imagined when I ran for the office.

You have to negotiate everything with other people and the economic slump certainly isn't helping. If I achieve just 50% of what I set out to do, I'll consider myself a success.