|Author Name||AKAI Nobuo (Faculty Fellow)
|Creation Date/NO.||March 2006 06-J-022|
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Government authority must always rest at the proper locations to respond to the changing times and the changing needs of citizens in a mature society. The division of roles between the public and private sectors, and within the public sector, must constantly be reviewed and clarified. This paper discusses desirable business methods and management structures from the perspective of the division of roles between the public and private sectors in public transportation.
Specifically, after discussing the outline of public corporations (in Section 2), the paper examines (in Section 3) standards for the roles of public corporations from the perspective of having the government support and make the greatest possible use of private sector know-how. The paper proceeds to discuss (in Section 4) the governance of public corporations, and then focuses on Japan's public transportation (buses and subways), which provides a relatively unified range of services, to present the current state, impediments to improving efficiency, and effects of reforms.
The paper then concludes with the following policy recommendations derived from these discussions. First is the need to reform the division of roles between the public and private sectors. The division of powers needs to be rectified using diverse contract methods to make the greatest possible use of private sector know-how while securing the public interest. However, external governance over both the public and private sectors is required to make these reforms feasible and sustainable. Second is the need to reform the division of roles between the central and local governments. Considering how the unclear division of roles within the public sector is hindering efforts to reform that between the public and private sectors, the division of roles between the central and local governments needs to be clarified. It is desirable that areas which should be under the purview of the central government be financed using a simple subsidy system, with clear standards for guaranteeing funding sources or other involvement; and that areas which should be under the purview of local governments be operated under self-financing by the local governments.