| Author Name | KAINOU Kazunari (Fellow, RIETI) |
|---|---|
| Creation Date/NO. | October 2009 09-J-026 |
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Abstract
With respect to the management of local public corporations, there are many problems, including a generally lower business efficiency compared with private companies and the constant dependence on subsidies from local governments. Meanwhile, local governments are implementing various measures to raise the business efficiency of public corporations to improve the current situation.
In this paper, by using the Management Reform Program of the Niigata Bureau of Public Enterprise as a specific case, we tried to quantitatively assess the impact of measures implemented by local governments to improve the business efficiency of local public corporations, based on various economic approaches, using management indicators for the industrial water project and the electricity project.
As a result of an analysis based on a comparison of the actual operating results of each business in the Management Reform Program during the period from fiscal 2005 to fiscal 2008 with those during the preceding period from fiscal 2001 to fiscal 2004, we discovered that the cost-benefit difference is positive in both the industrial water project and the electricity project. Therefore, it is assumed that an increase in surplus production has improved the economic welfare of the region. In the industrial water project, as the annual average cost-benefit difference was approximately 200 million yen versus annual business of approximately 1.7 billion yen, due mainly to the development of new demand, it was estimated that improved business efficiency was achieved relative to the higher risk of a disruption in the water supply.
In the electricity project, as the annual average cost-benefit difference was approximately 400 million yen versus annual business of approximately 4.7 billion yen, attributable chiefly to the effect of reducing the supply costs through the moderation of personnel and the reduction of personnel expenses, it was assessed that improved business efficiency was achieved against the risk of a disruption in power generation due to accidents, malfunctions, natural disasters, etc.
Regarding efforts to continue to improve business efficiency and enhance economic welfare, it seems necessary to implement comprehensive measures, such as the promotion of rationalization and outsourcing through the cooperation among businesses, prefectures, and municipalities, the reduction of contract industrial water charges, and the assessment of electric power generation sales, in addition to utilizing existing measures.
