Speaker 1:

Osaka, the second biggest city in the world's second biggest economy. Each year, the single Japanese city generates goods and services worth nearly $700 billion. At first glance, Osaka seems as prosperous and powerful as ever, but peel away the glitz and you can find Osaka and Japan's dirty little secret. A legacy of government mismanagement and economy decay.

Speaker 2:

It was a failure fundamentally of management of political leadership that took us from a big blowout to a crisis of dimensions that we haven't seen for seven or eight decades.

Speaker 1:

It's 5 a.m. in Kamagasaki, a short drive from the city centre. Thousands of unemployed men have gathered in a vain search for work. Kamagasaki is a world away from the popular image of Japan. Many of these men helped build Japan's wealth, or what's left of it. They came here as day labourers for the construction industry, which one time work was plentiful, but a decade of economic stagnation has taken its toll.

Speaker 3:

[foreign language]

Speaker 4:

[foreign language]

Speaker 1:

In a nearby park, some of Osaka's 15,000 homeless cue for a free meal. It's the only food some of them will get for several days. Volunteers do the work. The government provides virtually nothing. The men speak of resignation.

Speaker 5:

[foreign language]

Speaker 1:

Their bitterness and shame is all too clear.

Speaker 3:

[foreign language]

Speaker 1:

The poverty and misery here, reflects the falling of Japan's past, but it's also important of it's future. Many Japanese people simply don't believe this problem exists, but they won't be able to ignore it for much longer. It's going to get a lot worse. The Japanese economy is in serious trouble, and the large part of the problem is the industry that once employed many of these men, construction. Success of Japanese governments have tried to revive the anaemic economy by pouring trillions of dollars into public works. The tactic has backfired and its legacy is a nation that is now being crushed under a mountain of debt, and a landscape littered with roads, dams, and bridges that make no economy sense at all.

In a land full of white elephants, the biggest and widest is an hour's drive from Osaka. The Akashi Bridge is the longest, tallest, most expensive and most pointless suspension bridge ever built.

Speaker 6:

This is one of the most wasteful examples [inaudible] in this country. Features the most expensive type and they just they deal with the tunnel at the entrance and they didn't have to dig the tunnel. Just all they have to do, just go over the hill. They made that cost ever higher.

Speaker 1:

[Akio Agawa] is one of Japan's leading experts on public works. He says that despite all the yen and all the concrete that is being poured into the bridge's construction, hardly anyone uses it. It's a bridge to nowhere, linking Japan's main island, Honshu, with Shikoku, a much smaller island with a shrinking population, described in guidebooks as a rural backwater. What's even more remarkable though, is that there were already two other bridges connecting the island.

Speaker 6:

Engineers wanted just one bridge along this small [inaudible]. But there are three pre-fixtures facing this in [inaudible], so people especially politicians and business people wanted their own bridge, so there are now three.

Speaker 1:

The men who built the bridge expected it to generate extra traffic, but all it's done is take business away from the once thriving very industry.

Speaker 7:

[foreign language]

Speaker 1:

Local jobs have been lost and traffic has sparse, but there's an even bigger problem weighing on this bridge. The authority that built it now has debts totaling four trillion yen.

Speaker 2:

They're the most expensive concrete per square foot ever in humanity. They're on a delusionary scale of the dimension of the pyramid.

Speaker 1:

The bridge to nowhere is not the construction industry's only delusion. Japan has been addicted to concrete for decades, and despite these tough economic times, it refuses to kick the habit. Across the nation, massive tunnels are being carved out of mountainsides where perfectly [inaudible] ones already exist. Major freeways have been built between miner villages and river beds have been concreted to make the water run better.

Alex Kerr:

Depending on how you calculate, we're close to 60% of the entire coastline lined with concrete at this point.

Speaker 1:

Alex Kerr has spent the last 30 years watching the countryside get concreted over. He's written two best selling books on Japan's fading beauty. Kerr points out that Japan now spends 30% more on public works than America, Canada, Germany, France, Italy, and Britain combined.

Alex Kerr:

That means that Japan has essentially laid 30 times the amount of concrete per square foot that America does in one year.

Speaker 1:

And there are plans on the drawing board that make the Akashi Bridge look like a drop in the ocean.

Speaker 6:

Our latest national development programme embedded as new capital city and work ...

Speaker 1:

A new capital city?

Speaker 6:

Yes, new capital city at some place far away from Tokyo. While they argue that Tokyo is too crowded and so they need a new capital.

Speaker 1:

After the second World War, this frenzy of construction made perfect sense. But these days, it's in no one's interest, except the politicians.

Alex Kerr:

Traditionally, a certain percentage, it's often said three percent of most government construction projects, the money flows into the coffers through bribes and paybacks and other ways of the political parties, so Japan's political parties, all of them not just the LDP, are funded through construction.

Speaker 1:

The people that reel the real power are in on the act too. There are 70,000 bureaucrats working in the land and transport ministry. They control 80% of the public work's budget.

Alex Kerr:

One of the sources of Japan's corruption is the fact that the bureaucracies of Japan are allowed to profit from the businesses under their control. People from the construction ministry, own some of the companies who build and manage the dams, and who are given contracts with no bidding. Then after retirement, they then are hired as Amakudari, that expression that means 'drop from heaven.' Yes, so after retirement they're then hired by construction firms.

Speaker 1:

This iron triangle of bureaucrats, politicians, and business has pushed one of the world's richest countries to the brink of financial ruin. Because of its public work's spending, Japan now owes more money than any other country in history.

Speaker 6:

National government can't print money, so well yes but in Euro sense, this is a private company. It's already bankrupt.

Speaker 1:

And on the debts of public corporations, such as the one responsible for the Akashi bridge and the amount of money owed becomes truly mountainous. The problem is that the mountain of debt could explode at any time, and it's up to this man to diffuse the situation. Prime Minster Junichiro Koizumi is a rarity in Japanese politics. He's the first Japanese leader to have a perm. The first to be divorced, and the first to render school girls weak at the knees. But most significantly, he's the first to declare war on the construction state. Koizumi has promised to cut Japan's debt by slashing public work spending, even if that means taking on his own political machine.

Junichiro K.:

[foreign language]

Speaker 1:

But despite his huge populous support, the political forces aligned against him are powerful, more powerful perhaps than the Prime Minister himself.

Speaker 2:

Current prime minister has in a sense been like a breath of oxygen. At least he said, "We've got to change course." Real issue is, is he going to be able to do it. Does he have the power within his party to change course? That is still at best a very moot point.

Speaker 1:

To see just how moot, we travelled to Nagano, northwest of Tokyo. A popular tourist destination, Nagano was host to the 1998 winter games. New venues, freeways and train lines were built at massive cost. But now the stadium stand empty, and the city has debts totalling more than $10 billion. In desperation, Nagano has turned to its own version of Junichiro Koizumi, Yasuo Tanaka, independent candidate, racy novelist, and media darling. During the campaign Tanaka promised a new era of openness and has been true to his word, moving his office to the ground floor and behind glass so that the public can see him at work.

Yasuo Tanaka:

It's a very open minded, where [inaudible] this crystal room, so local people just come here to the hall and see, "Oh, what kind of people talking with Mr. Tanaka?" The newspaper will write tomorrow morning what kind of discussion. How we're now been making Japanese democracy, I think.

Speaker 1:

Like Koizumi, Tanaka is trying to take a wrecking ball to the construction industry. Most controversially, the governor has pulled the plug on plans for nine dams.

Yasuo Tanaka:

It's a very mountainous prefecture, so we have our letter of concrete dams and on the other side and now our prefectural we have very [tragedical] 130600 billion yen of debt. It's a debt.

Speaker 1:

High up in the mountains that surround Nagano, is a piece of land that has been untouched by the construction industry until now.

Speaker 11:

[foreign language]

Speaker 1:

[inaudible] is anti dam activist and strong supporter of Governor Tanaka. He's researched the devastating impact construction would have on the environment, and the fact that scientists say the ground here is not stable. The dam supporters say it's necessary to prevent a once in a hundred years flood, even though the river itself is hardly a raging torrent.

Speaker 11:

[foreign language]

Speaker 1:

Tanaka might be a hero with the public, but his decision has put him at odds with the shadowing men who run Japan's construction state. [Tamatzu Shimazaki] is one of Tanaka's fiercest critics in the local assembly. He also happens to run a construction company.

Tamatzu S.:

[foreign language]

Yasuo Tanaka:

[foreign language]

Speaker 1:

Governor Tanaka doesn't have the numbers on the local assembly and his enemies have put the dam back on the agenda.

Alex Kerr:

In Nagano, they've basically lost the battle. The local prefectural councilman and the construction ministry itself, the actual bureaucrats of the central ministry have joined hand in hand to fight this thing, and it pretty well succeeded, because the governor cannot move without the support of the prefectural council.

Speaker 1:

Junichiro Koizumi is preparing for a similar battle with the iron triangle, and the stakes are even higher. The economy is contracting, confidence is winding, and the stock market keeps sliding. It's shed one quarter of its value since the prime minister took over.

Speaker 2:

To get to where we have to be, Prime Minster is going to have to break some of the alliances that brought him to power, and make alliances with people who are on the other side of the aisle. If he can do that, while keeping a position as a majority prime minister, and then push through these reforms, Japan has a chance to pull this off without a real implosion. But this is really the last chance. It's five minutes to midnight and the clock is ticking.

Speaker 1:

The problem has become so serious that no matter what road Japan takes, many more people will end up in places like Kamagasaki, if the government fails to treat the concrete cancer, its debt will keep growing and economic decay could turn into economic collapse and social dislocation. But if the new prime minister does turn off the cemented tap, then the consequences could be just as dire.

Alex Kerr:

It's an addiction in Japan at this point. I mean I think it's heroine. Japan is well and truly addicted to these public works, and the pain of coming off that addiction is going to be severe. I truly think the entire society will collapse and everybody knows that, because at this point, the economy well and truly depends on the construction. You'd have tends of millions of people out of work. It would be absolutely devastating.