NRI Papers
No. 185 May 1, 2013
  The Pursuit of Small Government to Rebuild Infrastructure Businesses and Create New Growth Industries
— Suggestions based on the experiences of the UK and Australia —
 
Shingo MOCHIMARU and Tomoki KITAZAKI

In the UK, the privatization of infrastructure services such as those in the water and sewerage, electricity and gas sectors, which began in the early 1980s, led to switching the government role from one of a "service provider" to one of a "service commission" that is responsible for regulating and supervising service providers. As a result of the privatization, the infrastructure market has been opened up to a variety of providers from both the UK and overseas, leading to vitalization of the market and improvement of the levels of service.

Since the 1990s, Australia has also undertaken the privatization of infrastructure services such as power generation, road networks and airports. Privatization has contributed to the enhancement of infrastructure with a lower financial burden on the part of the government, and has also led to the creation of a number of companies engaged in infrastructure services such as operating companies and investment management companies, which have eventually become well versed in infrastructure services. Some of these companies have grown to take part in the development and operation of infrastructure projects overseas, particularly in Europe.

Japan is faced with the need to operate and manage a vast amount of infrastructure with a total value of social capital stock in excess of JPY 700 trillion. To meet such a need, it is necessary to attract and select service providers that can operate infrastructure in the most efficient way while maintaining a constant level of service and minimizing the financial burden on the populace. For this purpose, the government should restrict its role to applying the minimum necessary amount of regulation and supervision. At the same time, by establishing explicit rules and opening up the market to companies from around the world, the government should nurture infrastructure businesses as industries so that infrastructure can be managed and operated as efficiently as possible.

Contents
I Significance of "Small Government" in a Mature Country
II "Small Government" Efforts and Achievements in the UK
III "Small Government" Efforts and Achievements in Australia
IV Suggestions for Japan in View of the Experiences of the UK and Australia

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