AAP staff report
TOKYO (October 1, 2010) – Japan Prime Minister Naoto Kan delivered a policy speech last Friday before the Members the 176th Extraordinary Session of the Diet. Four months have passed since PM Kan became Prime Minister following the resignation of Prime Minister Yukio Hatoyama in June 2010. He was also reelected President of the Democratic Party of Japan in September.
Kan said that the past months have been busy with reappointing cabinet and party posts, and that he has now launched a new administration in earnest. His priority concerns are with achieving a new economic growth strategy; cutting government waste and implementing a fiscal management strategy; reforming Social Security; advancing regional sovereignty reforms; implementing active diplomacy at a critical time; and instituting political reform of regulations and systems and reduction in the number of Diet Members.
“In a word, these will be the important policy agendas that have been postponed so far,” said Kan in his speech. “There is a deepening sense that society is caught in an impasse: Economic stagnation has gone on for twenty years, the unemployment rate is on the rise, the numbers of suicides and solitary deaths are increasing, and measures to counter the falling birthrate and the aging of society have been slow in coming.
Kan would not place blame on any past administration for current issues but said that at this impasse it is time to move on agendas that have been put off for too long, achieving solutions rather than handing down the problems to the next generation.
To achieving economic growth Kan said that it would require nation building through growth and employment. Domestic consumption is afflicted by conditions of insufficient demand, where the supply side works to reduce costs but ends up in deflationary price competition.
“The economy cannot recover in this situation,” he said. “We must bring about a shift from supplier-based standards and view things from the perspective of the consumer.”
Kan said the government would take the lead in boosting employment to drive the gears of the economy. It would focus on jobs in medical care, nursing care, services related to childrearing, and the environment. He pointed to “New Public Commons” measures to improve social stability by addressing unstable forms of employment decline.
A year long three-phase approach of uninterrupted economic measures would focus on growth and employment, starting with the newly established Council on the Realization of the New Growth Strategy to respond to deflationary conditions.
“The Government and the Bank of Japan carried out intervention in the foreign exchange markets,” he said. “We will take decisive measures as needed in the future as well.”
Kan said the second phase is the most important. It would direct government efforts in conjunction with the Bank of Japan toward the employment of new graduates and a nationwide system to provide one-stop employment services. These deflationary reducing measures include a vital supplementary budget from the Diet to fund the five pillar priorities.
The government would institute programs to increase the use of renewable energy to include “total buyback systems” and relaxed regulations for large-scale solar power generation, new energy sources, and reduced energy consumption.
The New Growth Strategy is the compilation of the next fiscal budget with “special funding” and the reform of tax systems to bring the burden in line with manufacturing countries to boost research and development, and human resource training.
Without cutting government waste, Kan said Japan’s fiscal situation would eventually become unsustainable. The government secured about 2 trillion in fiscal resources by screening 449 government programs in 2009.
“The strategy is to halve the primary deficit as a percentage of GDP by fiscal 2015 from fiscal 2010 levels and to achieve a primary surplus by fiscal 2020,” he said. “These are ambitious goals, but we will seek to achieve them one step at a time, while at the same time also seeking economic growth and expansion of employment.”
The reforms also address the civil servant system to include a 20 percent reduction in overall personnel costs. This will be done by streamlining the structures and staff of each government ministry, including the elimination or merger of ministerial branch offices.
“I would like to again call on our nation’s civil servants to give priority to their duties as administrative professionals,” said Kan.
The reforms to social security system need to ensure people it will continue to function or it will cause anxiety about the future, said Kan, who advocated for the government shouldering a slightly heavier burden to provide security for all, calling it more reliable as opposed to leaving social security to the discretion of the individual.
“We will need to ensure that our pension system and medical, nursing care, and welfare services are adequate,” he said. “Because of the graying of the Japanese population, expenditures on social security will increase by over 1 trillion yen per year even if the current level of services is maintained.”
Piecemeal responses will not lead to fundamental solutions, he added. The government intends to present the Japanese people with choices that are easy to understand regarding the overall reform of our social security system, including the level and content of services that are thought to be needed for elderly, children and pre-natal care.
Kan said there are three important policy agendas related to greater regional sovereignty. He said this generation should pave the way for local communities to play a leading role in deciding their own distinctive industries and providing social services that truly meet the needs of their residents.
A system of block grants would act lieu of categorical subsidies offered today. The 2011 budget would go beyond the framework of each ministry to revise the system of local grants to allow a greater degree of freedom.
“I would like to see local governments devise their own development models, rather than being tied down to the concepts issued by the national government,” he said.
The international community faces major changes regarding national security and the economy and Kan called this a watershed moment in history. To implement active diplomacy means to follow the shifts in power relations and be on guard in light of uncertainties and instabilities that exist in the Pacific region.
Kan said Japan is dependent on the outside world for natural resources, energy, and markets but still must secure peace and prosperity. He said Japan must be open to incorporating the vitality of the world, while also taking the lead in contributing to solutions to issue of the international community.
He said Japan would continue reassessing its National Defense Program Guidelines and within a year find an appropriate and effective defensive capability.
“Reacting passively will not be enough,” he said. “All of our citizens need to regard this as a problem that affects them directly, and we need to work together as a nation to develop an active foreign policy.”
Kan said the Japan-U.S, alliance is the cornerstone of foreign and national security policy. In his recent meeting with President Barack Obama, he said the two countries would reaffirmed their partnership for the twenty-first century, the stability and prosperity of the Asia-Pacific region and the world.
“On the issue of relocating the US Marine Corps Air Station Futenma, we will proceed according to the Japan-US agreement reached in May this year, at the same time working to reduce the burden currently borne disproportionately by Okinawa,” said Kan.
Japan and China relations are also of critical importance to the region and the world, he said, noting that Japan is impressed with China’s rise to prominence but has concerns with the lack of transparency in its defensive capabilities and an increasingly ambitious maritime mission from the Indian Ocean to the East China Sea.
“The Senkaku Islands are an integral part of Japanese territory, recognized as such by history and by international law,” said Kan. “No territorial dispute exists.”
Kan said Japan would play an increasing role with agreements on transnational issues of economy, security, human rights, biological diversity, environment and global warming. He will take part with the Conference of the Parties this fall in Japan, the 18th APEC Economic Leaders’ Meeting, Economic partnership agreements and others.