Lottery administrators get their comeuppance (so what?)

May 26th, 2010 by Philip Brasor & Masako Tsubuku

And what does Mizuho get out of it?

And what does Mizuho get out of it?

Last week the Government Revitalization Unit, which is holding public hearings on wasteful spending by government-related organs and receiving a lot of positive media attention for it, recommended that certain public corporations related to the lottery (Takarakuji) system be abolished.

The lottery system is run under the auspices of the internal affairs ministry, which permits prefectures and larger cities to sell lottery tickets through “agents,” which in this case is Mizuho Bank. According to ministry figures, sales of lottery tickets in 2008 amounted to about ¥1.42 trillion. About 46 percent of that money, or ¥476 billion, was distributed as prize money; 40 percent (¥418 billion) was distributed to local governments to be used for “public projects”; and about ¥148 billion was used for administrative expenses, including ¥18 billion by the Japan Lottery Association for “promotional activities.”

The watchdog panel found that a lot of the promotional activities carried out by the various public corporations are not only redundant but pointless. “Promotion” essentially means granting money from Takarakuji revenues to needless projects like ugly public statues or free DVDs celebrating a village’s roof-thatching activities and then having the Takarakuji logo imprinted somewhere on accompanying signs or packaging. And, of course, the public corporation retains some sort of administration costs for doing this. Consequently, much of the money earmarked for these “public projects” is siphoned off by the public corporations, through which it passes before going to local governments via multiple routes. Moreover, the heads of these corporations are almost all retired bureaucrats from the internal affairs ministry whose average salary is ¥20 million a year, much more than those of the mayors to whom they deliver the funds. One TV station likened the practice of distributing the money to that of a yakuza boss distributing favors.

Everybody seems happy that these greedy internal affairs “old boys” are getting their comeuppance, but there’s something a little frustrating about the way the watchdog group came down so hard on the lottery system, which is not, after all, paid for with tax money. People buy lottery tickets voluntarily, and though many of those people may be righteously miffed at the way the system is administered, their only real concern is whether or not they win. Nobody buys a lottery ticket because they want to support local governments. If they’re angry, it’s probably because the money that goes into ex-bureaucrats’ pockets could conceivably go toward larger cash prizes — or more cash prizes. The watchdog group is currently looking at public corporations that directly get funds from money-making schemes rather than taxes, but it isn’t within its power to suggest that moneys from lottery sales be specifically earmarked for more useful endeavors, like education (which is what lotteries in other countries usually subsidize) or infrastructure improvements. Its role is to suggest cuts that will reduce the government’s massive amount of red ink, and so far the number of cuts suggested for tax-subsidized bureaucracies has been far below what needs to be done. Making a big deal out of the lottery seems like grandstanding.


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