One way of wasting public money

October 5, 2012

250 million yen wasted on doubled real-estate fees for evacuee housing

http://mainichi.jp/english/english/newsselect/news/20121005p2a00m0na012000c.html

Municipalities wasted some 250 million yen of taxpayers' money by doubly paying real-estate agents introduction fees for evacuee housing in Iwate, Miyagi and Fukushima prefectures, a probe by the Board of Audit of Japan has found.

The board uncovered the double payments across some 10,000 contracts in the three prefectures, which were hit hardest by the March 2011 earthquake and tsunami disaster and ensuing nuclear crisis. As of Oct. 1, there were 73,675 government-rented apartments offered around the country for evacuees.

The Board of Audit, which reported its findings to the Diet on Oct. 4, says the problem is that the Disaster Relief Act is out of touch with reality.

The board said a notice on the act released by the Ministry of Welfare in 1947 stated that "relief should be given in the form of materials, and cash should only be handed out when it has to be." This prevents disaster evacuees who rent their own apartments from receiving money to cover the rent, so municipalities rent apartments for evacuees instead.

In April last year, the Ministry of Health, Labor and Welfare (MHLW) decided that when municipalities rent apartments where disaster evacuees are already living, they will cover the evacuees' payments for rent and contract fees up until then. This resulted in municipalities paying both their own fees for making the contracts and the fees of the evacuees.

The Board of Audit examined payments in seven prefectures and discovered many instances of double payments. According to sources, there were around 5,000 cases in Miyagi Prefecture, around 4,500 in Fukushima Prefecture, and a few hundred in Iwate Prefecture. In all three prefectures the introduction fees were equivalent to half a month's rent, and for an individual contract the fee was around 25,000 yen.

The MHLW has released a notice asking municipalities not to make double payments, but one municipality official says, "In contractual procedures with real-estate agents, we have no option but make the double payments."

The Board of Audit views the principal of giving assistance in the form of materials rather than cash as the problem, and in its report it concluded, "It is necessary to include a loosening of this principal in future considerations."

A MHLW representative commented, "We will issue calls against double payments, but at this time we are not planning a review of the principal of giving assistance in material form."

In addition to double payments, the Board of Audit's investigation found that municipalities had fallen behind on rent payments in some cases, and that there had been delays in evacuees entering the apartments. These problems occurred because local municipalities were overburdened, causing delays across the board. A Board of Audit official says, "Financial rent assistance (for evacuees), which is a simpler process, should be considered."

However, a MHLW representative noted, "There are people including elderly residents who can't find housing on their own. To provide sound relief to disaster victims, it is important to give housing, not money, which may be spent on things besides rent."

A Hyogo Prefectural government employee who experienced the 1995 Great Hanshin Earthquake says, "Considering the administrative abilities of local governments, I think that financial assistance for self-rented apartments would be better, but there are pros and cons for both approaches, and there is no right answer."