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Results of the FY2010 "Survey on the Strategic Maintenance and Management of Social Capital Stock in the Future, etc." — Roads
— Over 90% of local governments in Japan recognize that the cost of renewing, maintaining and managing roads will become a fiscal issue in the next 10 years —

October 7, 2010

  • Almost all local governments in Japan are experiencing a shortage of funds for the maintenance, repair and renewal of roads and 90% recognize that this will become a fiscal issue within the next 10 years
  • Local governments are responding to the growth of road maintenance, repair and renewal costs with cost savings and efforts to ensure thorough implementation of preventive maintenance
  • Around 70% of local governments would outsource maintenance and management to the private sector on a comprehensive basis if this would reduce costs, but also voice concerns over risk management in the event of outsourcing maintenance and management work to the private sector

In July-August 2010, The Japan Research Institute, Limited (JRI) conducted a survey among the road management divisions of 856 local government bodies around Japan, of city level and above, regarding the strategic maintenance and management of roads (including bridges and tunnels) in the future.

A large proportion of Japan's social capital was constructed during the period of rapid economic growth, and will be reaching the age at which it requires renewal at around the same time. However, while the building of new social capital, such as roads, has been planned and methodical, subsequent maintenance and management has not always been carried out in the same manner. Moreover, the fiscal problems that have faced local governments in recent years mean that spending on maintenance and management, which should normally have to rise, has, if anything, been falling. It is likely that much of the social capital managed by local governments around Japan has not been properly maintained and managed, owing to fiscal difficulties, and is already in a dangerous state.

The "New Growth Strategy — a Scenario for Revitalizing Japan" approved by the Cabinet in June notes that there is concern that Japan will be unable to renew its social capital in the future due to fiscal constraints at national and regional level and that there is a need for strategic maintenance and management of social capital stock. It also takes the view that, in light of Japan’s difficult fiscal circumstances, active use should be made of private finance initiatives and public-private partnerships to ensure effective and efficient maintenance and management, as well as the creation of new facilities.

Starting from the assumption that the comprehensive outsourcing of road management work to the private sector, which would be difficult under current legislation, would be an effective measure against the anticipated rise in the cost of maintaining, managing and renewing roads, bridges and tunnels, JRI conducted a survey among the road management departments of local government bodies. The survey included questions on current issues relating to road maintenance, management and renewal, on the countermeasures currently envisaged and on intention to outsource road maintenance and management to the private sector, and problems relating to outsourcing.

For more information on the content of this report, please contact Yoshitaka Konagai, the Japan Research Institute, Limited.

E-mail:200010-info@ml.jri.co.jp

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