Village of 3,000 Uses ¥1 Billion Digital Grant for New Projects

Unnecessary DX is not needed at all

Professor Konno strengthens his tone, stating, “The issue lies with the system of the Digital Rural City National Concept Promotion Subsidy itself.”

“First of all, I think the national policy is problematic.

For example, in this subsidy system, one of the target projects is initiatives involving the use of data infrastructure and the implementation of multiple services. Most models that meet this criterion are likely to be formulated under the leadership of DX vendors or consultants.

As I mentioned in a paper before, I think there is a significant possibility of collusion taking place. IT companies, DX vendors, and consulting firms view the series of DX policies promoted by the government as a business opportunity. Collusion is a possible scenario.

However, as long as the government has established such a system, local governments will inevitably raise their hands.”

There is also no lack of issues with the local governments applying for the subsidy.

Regional revitalization, which started in 2014, was later transformed into the Digital Rural City project, and 10 years have passed. During this period, there has been increasing criticism that local governments’ dependence on the national government has grown stronger.

“Government grants related to regional revitalization, including the Digital Rural City National Concept (Deji-den), are basically intended as initial-stage support for local governments to smoothly launch projects, with the premise that these projects will become self-sustaining in the future. It becomes very important to consider how local government leaders view the long-term potential of a project.

For example, the grant rate for Deji-den grants is typically between half to two-thirds of the total project cost indicated by the local government, so the grant does not cover the full cost. The remainder must be covered by the local government’s own funds.

The real issue arises after the grant period ends. For example, if a satellite office is created but not used, the local government will end up shouldering maintenance and management costs for what may turn out to be another wasteful empty building. This could not only fail to benefit the community but also leave a negative legacy for future generations. If a local government leader chooses to apply for these grants, they should be fully aware of these implications.”

It’s not just about wasteful infrastructure. Professor Konno emphasizes, “In this era of declining birth rates, an aging population, and population decrease, we absolutely do not need unnecessary digital transformation (DX).”

“While I do believe digitalization of administrative tasks is necessary, especially as the number of local government employees decreases, there is no need for unnecessary DX or wasted regional revitalization efforts. I want to strongly emphasize this.”

The problem lies in the government’s policy of continuously distributing money

A resident audit request was made in the case of the smart city project in Toyono Town, Osaka, which was selected for the Digital Rural City National Initiative Grant Program. The request sought approximately ¥135 million from the former mayor after the corporate donations expected to fund the project were not paid, causing financial damage to the town. This was reported by Asahi Shimbun Digital in January of last year.

“The issue in Toyono Town later developed into a resident lawsuit, where the former mayor was asked to pay about ¥39 million in damages, as recommended by the audit committee for creating a hole in the town’s finances. There are concerns that similar problems may occur across the country in the future,” said the source.

The resident audit request submitted by residents of Toyono Town is a system in which residents, if they believe there has been illegal or unjust financial or accounting behavior by the local government leaders or employees, can request the audit committee to take necessary actions. However, the question remains: how effective is this system?

“A resident audit request can be made by just one resident. Once the request is made, the audit committee must take action.

Even if the resident audit request is rejected, if the result is unsatisfactory, a resident lawsuit can be filed in court.

Even without reaching a resident lawsuit, I believe that the resident audit request is effective in making the mayor and local government staff aware of the eyes of the residents.”