Japan's ruling Liberal Democratic Party and the second-largest opposition Japan Innovation Party reached a coalition agreement on the 20th, reviving the "Osaka secondary capital plan."
The secondary capital plan is an alternative to prevent a paralysis of the nation's core functions if a major disaster or terror attack occurs in the capital, Tokyo. The core is for Osaka to serve as a replacement for the capital to disperse administrative functions and to secure the legal status of "second capital."
The Japan Innovation Party made legislation for its long-cherished project an absolute condition for the coalition, and the Liberal Democratic Party accepted it. The coalition agreement signed by the Liberal Democratic Party and the Japan Innovation Party on the 20th specified that a bill designating Osaka as the secondary capital would pass the regular Diet session next year.
The Osaka secondary capital plan began to be raised in earnest after the Great East Japan Earthquake. After the March 2011 earthquake made real the fears of a paralysis of the Tokyo metropolitan area's functions, then-Tokyo Gov. Ishihara Shintaro and then-Osaka Prefecture Gov. Hashimoto Toru (founder of the Japan Innovation Party) agreed on the basic principle of "Tokyo as the capital, Osaka as the secondary capital." However, after political ups and downs, it sank below the surface and has resurfaced after 14 years with the latest coalition talks.
The Japan Innovation Party argues that Tokyo-centered metropolitan overconcentration must be eased and that the country should shift to a polycentric, decentralized structure. Asahi Shimbun reported on the 19th that "the Japan Innovation Party cites disaster preparedness and correction of Tokyo's excessive centralization (東京一極集中) as the justification for the secondary capital plan."
The ultimate goal is to grow the Osaka area into a to (metropolis) on par with Tokyo. According to the secondary capital bill prepared by the Japan Innovation Party, the requirements for designation include "establishing special wards (特別區) under the Act on Special Wards Established in Metropolitan Areas."
Establishing special wards is a plan to abolish the current Osaka City and reorganize administrative districts into multiple special wards like the Tokyo Metropolis, then elevate the administrative unit Osaka Prefecture to "Osaka Metropolis." If this plan is realized, Japan would have a second to (metropolis) after the Tokyo Metropolis. This Osaka Metropolis plan was already voted down twice in Osaka referendums in 2015 and 2020. Experts said the Japan Innovation Party aims to use the national agenda of a "secondary capital" as leverage to secure the momentum and justification for a third referendum. Quoting experts the same day, Yomiuri Shimbun analyzed that "the secondary capital bill presupposes the Osaka Metropolis plan, which abolishes Osaka City and establishes special wards."
On the 20th, when news of the coalition agreement broke, expectations were reflected first in the Tokyo stock market. Shares of rail and construction-related corporations based in Osaka rose across the board. Hankyu Hanshin Holdings at one point hit a new yearly high. Daiwa Securities chief technical analyst Kinouchi Eiji said, "The Japan Innovation Party is quite the strategist," adding it is "a tactic to prevent a drop in approval ratings by delivering on campaign pledges."
The problem is the massive funding. The Japan Innovation Party is not specifying the concrete expense needed for the secondary capital plan. The figure drawing market attention is about 7.5 trillion yen (about 75 trillion won). This is an estimate envisioned at a 1997 Ministry of Land, Infrastructure, Transport and Tourism roundtable, assuming "half of the central government agencies" would transfer from Tokyo to another city. At the time, it was estimated that 4 trillion yen would be needed if only the Diet were relocated, and more than 12 trillion yen if all administrative agencies were relocated.
The 7.5 trillion yen is equivalent to 3% of Japan's annual consumption tax revenue (about 25 trillion yen). Nomura Research Institute chief economist Kiuchi Takahide warned of side effects, saying, "Given the considerable expense, a cautious cost-benefit review is needed." Kiuchi added, "If population and corporations become excessively concentrated in Osaka, it could create 'new big-city concentration harms,' such as surging real estate prices or administrative inefficiency."
Sankei Shimbun reported on the 20th that "it is unclear whether broad understanding can be gained from voters outside the Kansai (Osaka area) region at a time when easing the public's burden amid rising prices is an urgent task."