Policy Speech by Prime Minister Taro Aso
This year marks the twenty-first year of the Heisei era. Thus, a full twenty years have passed since the accession of His Majesty the Emperor. Together with the people of Japan, I extend my most sincere congratulations.
I. The Society to which We Aspire
The world is now on the verge of a new era. As this unfolds, Japan should contribute to the creation of a new order. Meanwhile, Japan itself must also successfully ride the changes in the times. We should aspire to "a society of peace of mind and vitality".
How should Japan contribute to the creation of a new world? And what must we do to build a new Japan? I should like to offer my thoughts on these questions.
Contributions to the Creation of a New Order
The current financial crisis is said to be a once-in-a-century occurrence. However, a crisis is also an opportunity. Whether a crisis breeds turbulence or opens the way to a new era depends on our handling of it.
We must not forget the lessons of the Great Depression of 1929. Countries around the world put their own national interests above all else and retreated to protectionism. That caused a contraction of the global economy and also led to the Second World War.
Learning from this, countries built cooperative relations after the War. The world economy continued to grow for half a century. Yet, the present crisis demonstrates the limitations of the structures now in place now that our economy has globalised to an extent far beyond expectations.
At the financial summit held in Washington, DC last November, I explained to the other leaders Japan's past financial crisis and its experience in overcoming it. In addition, I called for strengthened functions of the International Monetary Fund (IMF), and announced Japan's contribution in the form of an offer to lend a maximum of USD 100 billion to the Fund. Together with these, I also advocated the following points: first, the importance of international collaboration concerning the supervision and regulation of financial institutions, and second, the importance of expanding global trade and the global economy, whilst avoiding a descent into protectionism.
These proposals are now being carried forward with support from the other countries. Japan, as the world's second-largest economy, must contribute actively to the creation of new rules for the global economy. Of course, such a role should not be limited to the economy. Twenty years have passed since the end of the Cold War between the East and the West. We must also actively take part in the creation of a new order to bring about the peace and stability in the international community.
A Society of Peace of Mind and Vitality
At the same time, Japan is at a turning point in changing the "shape of this country".
We have experienced crisis situations twice over the last two centuries. Japan's history has been one of transforming our way of life at each time of crisis and emerging with breathtaking success. The first was the opening of our country to the world and the Meiji Restoration. Having been left behind as a result of its policy of national isolation, Japan changed course towards the promotion of industry. We achieved rapid industrialisation and became the sole non-Western world power. The second was defeat in war (the Second World War) and postwar reforms. Japan, which was reduced to burnt-out ruins, shed its militarism and shifted its emphasis to the economy. We grew to become the second economy in the world and built a society that is both stable and egalitarian.
We are now obliged to make a third transformation. A rapidly dwindling birthrate and ageing population, new social disparities and anxieties, constraints related to natural resources and the environment, and a social system that has become obsolete-these are the challenges that we must overcome. People grow by overcoming hardships, and society evolves by overcoming turbulence. A crisis is in fact an opportunity to leap forward.
This time too, we must choose our own way of life and forge the "shape of this country". We must aim to become a "society of peace of mind and vitality". This means a society in which we can enjoy peace of mind, with society as a whole supporting our population which is ageing to an extent without parallel in the world. It also means a vibrant society which overcomes global challenges through ingenuity and technology.
What must the government do to bring this about? We have already learnt many things in that regard. That is, catchphrases such as "shifting from the public sector to the private sector" and a dichotomous mode of thinking such as "big government or small government" will not alone provide the vision we seek.
When government grew too large, the vitality of society was drained away. Many industrialised nations thus aimed at smaller government, fostering vitality by having individuals and companies operate freely. However, not everything will turn out well by simply entrusting it to the free market. The sub-prime loan problem and the global recession illustrate this fact. Now, one of the roles being asked of the government is to lay down impartial and transparent rules and to guide economic development.
Another role of the government is to create a society in which everyone can participate and bring about one that gives people peace of mind.
Japan is a country which attaches high value to industriousness. It is this virtue that created our current prosperity. In order to preserve this, it is important to create a society with good working environments for the elderly, people with handicaps, and women, and a society in which effort is rewarded. In addition, it is important to support people left behind in competition and to enable them to take on challenges once again.
We have to admit that Japan is still lacking in this regard. Japan's governmental administration was successful in fostering industry. In the future, it needs to transfer its main focus to supporting people in their daily lives.
If we consider the peace of mind of our citizens, we find that a government is not better the smaller it is. We need to make Japan's social safety nets dependable and stable. And if we seek to provide an intermediate level of social welfare, there must be an intermediate level of burden-sharing. After we have made progress with economic recovery and governmental reforms, I will be asking our people to bear the necessary burden.
It is we who created the Japan of abundance and security that we now enjoy. It is also we who shall create the Japan of the future. Just as in the past two instances, transformation will not be without pain. However, we must not fear that. Showing that there is a bright future at the end of the dark tunnel-that is the role of politics. Engaging in reforms so as to preserve and to enhance good traditions-that is the true conservatism to which I aspire.
Thus on Japan's role in the world, I seek to contribute to the creation of a new order, while at home, I aim at a society of peace of mind and vitality.
II. A Vibrant Society
Next I shall refer to challenges we face in the near term and the government's efforts in this regard. The first challenge is the creation of a vibrant society.
Countermeasures for Business Activity and Countermeasures for Unemployment
I have been saying that in the near term, emphasis will be on reviving business activity; in the mid-term, rebuilding government finances; and in the mid- to long term, economic growth through reforms. We must first press ahead with countermeasures for the revival of business activity.
The world is all at once entering an unprecedented recession. Japan, too, is unable to avoid this global downturn. However, by taking bold countermeasures, we will aim to be the first to emerge from the recession. Abnormal economic circumstances demand exceptional responses.
We are moving forward with the first and second supplementary budgets for fiscal 2008 and the budget for fiscal 2009 as three seamless parts of what can be likened to a "three-stage rocket". The total scale of the economic countermeasures is approximately 75 trillion yen. The total of fiscal spending and reduced taxes will reach 12 trillion yen. This latter sum is about two percent of Japan's gross domestic product (GDP). The scale of these countermeasures is among the largest of any country.
In formulating them, we have focused on three areas, namely, people's daily lives, small and medium-sized enterprises (SMEs), and the regions. They aim at protecting people's daily lives and their employment, as opposed to being composed of public works projects and other conventional types of economic countermeasures. I wish to call the budget for fiscal 2009 a "bold, action-oriented budget to defend people's daily lives".
Since the end of 2008, we swiftly began providing housing at employment-promotion housing facilities and elsewhere to temporary agency workers whose jobs have been terminated. In order to make it easier for workers who are non-regular employees to receive unemployment insurance benefits, we will shorten the applicability criterion for receiving these benefits to expected employment of six months, rather than expected employment of one year or more. We will also reduce unemployment insurance premiums. This reduction will amount to about 20,000 yen annually for the average household.
We will review the worker dispatch system so as to, among other revisions, prohibit the hiring of temporary agency workers on a day-to-day basis. Subsidies will be provided to business owners who extend regular employment contracts to temporary agency workers, to students whose tentative employment offers have been cancelled or to "freeters" (irregular and part-time or casual employees) who are relatively older in age. A fund of 400 billion yen will be established in the regions for the purpose of creating new jobs. This fund would nurture businesses in fields with demand potential in the future, such as in nursing care or catering services for the elderly. These measures are expected to provide employment for 1.6 million workers over three years.
A fixed-sum stipend of 12,000 yen will be provided per person, with children and the elderly instead receiving 20,000 yen per person. A four-person household with two children would therefore receive 64,000 yen. Tax reductions will also be implemented on a scale of one trillion yen. As for tax reductions on mortgages, we will raise the maximum deductible amount to six million yen, the highest level ever. Tax breaks will be given also in cases where people use their own financial resources to modify their homes so as to conserve energy or make them "barrier-free".
As for small and medium enterprises (SMEs), we delivered assistance in response to approximately 220,000 requests, or of a total of 4.5 trillion yen up to the end of 2008, including both emergency credit guarantees and special loans, which has greatly helped to improve their cash flow. In addition, through the second supplementary budget for fiscal 2008, we will be raising the maximum total level of these guarantees and loans to 30 trillion yen. Also, the corporate tax rate for SMEs will be reduced to 18 percent for two years, and SMEs will be made exempt from inheritance and gift taxes in cases where a business is passed on to a succeeding owner without cutting jobs.
Responsible Management of Public Finances
Insofar as we are boldly to mobilise fiscal spending, it is imperative that we clarify our responsibilities concerning public finances. And in order to put in place a sustainable social security system, the financial burden needs to be commensurate with the level of benefits to be received. It is for this reason that the Cabinet approved a Mid-term Programme concerning social security and public finances from tax revenues. We will take necessary legal measures by fiscal 2011, on the premise that economic recovery would be achieved by that time, in order to undertake in stages and without delay fundamental reform of the tax system, including that of the consumption tax. While the timing of actual implementation of this reform shall be determined upon a thorough assessment of the economic situation, I will be devoting all of my energies for economic recovery by fiscal 2011.
The foregoing is to make the social security system one that provides peace of mind-one that does not pass the requisite burden on to posterity.
Major prerequisites to asking the Japanese people to share this burden are ceaseless administrative reforms and the continued, thorough elimination of waste. For example, we will be cutting expenditures on public interest corporations by approximately forty percent compared with fiscal 2006. We will halt operations that have been indicated as wasteful, such as those of the Vocational Museum. The regular number of staff of government agencies will see a net reduction of approximately fifteen thousand, including the positions to be cut as a result of the abolition of the Social Insurance Agency. All fiscal revenues earmarked for road-related spending will be re-allocated to general spending purposes.
In order to eliminate the functional duplication of the national government's regional offices with other administrative bodies, the operations and authority of those offices will be transferred to local governments and they will be consolidated or abolished on a large scale. In order to rectify the deficiencies of the government's vertically-segmented administrative structure, we will implement reforms at an accelerated pace, establishing a Cabinet Personnel Bureau while also formulating an overall schedule of reforms of the civil service system. We will also strictly address practices criticised as privileges of civil servants, such as amakudari, and eradicate pressure tactics in job-searching on behalf of retiring officials.
Economic Growth through Reforms
The world is now facing structural changes seen never before in the history of humankind, such as rapid population growth, the economic growth of emerging nations, and increasing constraints related to natural resources and the environment. In anticipation of the future, Japan will take the lead in resolving the issues the world now faces. Creating products and models conducive to this end will result in Japan's sustained growth.
To achieve this, we will draw up a new growth strategy. This strategy will have three pillars that focus on the creation of employment and of markets, and will be based on the New Economic Growth Strategy formulated in autumn 2008. In concrete terms, the first is a "low-carbon revolution", in which we strive to achieve the world's highest standards in environmental technologies and social systems. The second pillar is "good health and longevity", under which we make use of cutting-edge medical research such as that on induced pluripotent stem cells (iPS cells) and make medical and nursing care services available that are both gentle and efficient. The third is "demonstrating Japan's latent power and vitality", under which we take advantage of our quintessentially Japanese "soft power", whether it be, for example, to do with attractive areas in the regions, anime (animation) and other types of software content, commercial brand power in fashion and other areas, or delicious and safe food. In the next two or three years, in addition to the integrated pursuit of intensive infrastructure development, research and development, and regulatory and institutional reform, we will formulate a strategy for information and communication technologies to support growth.
Asia is the growth centre of the world. In order to make Asia's self-sustaining growth lead to growth in Japan, we will promote strategic international cooperation towards the reinforcement of Asia's capacity for growth as well as towards the expansion of Japanese domestic demand, making use inter alia of the Economic Research Institute for ASEAN and East Asia (ERIA). We will also strive for the early conclusion of the Doha Round negotiations of the World Trade Organisation (WTO) and undertake negotiations on economic partnership agreements (EPAs).
Japan will promote new agricultural policy reforms. We are at a turning point concerning agriculture. In order to ensure safety and peace of mind concerning food and increase our rate of self-sufficiency, we must transform our conventional mode of thinking and review our policies in their entirety. First of all, we will submit to the current Diet session a "Heisei Era Agrarian Land Reform" bill. This is to promote change from mere ownership to utilisation of farmland. In addition, we will promote entry into this sector by motivated young people and companies as well as support farmers by means of managerial assistance. Further, we will make this the first year in the transformation to full utilisation of our rice paddies. This will involve, among other efforts, a fully-fledged promotion of rice production for rice flour and animal feed, and the increased production of wheat and soybeans in which Japan has low rates of self-sufficiency. Through these measures, we will generate employment opportunities and liveliness in rural districts.
The impacts of the downturn in business activity on the economy and employment are particularly serious in the regions. Local governments need to be given financial resources and authority in order to enable them to revitalise their local areas. In addition to compensating for decreases in both local tax collection and national tax revenues allocated to local governments, the national government will increase the latter by one trillion yen. In order to develop infrastructure, we will establish "Grants to Create the Foundations for Vibrant Local Areas", which local governments will be able to use in a flexible manner.
A decentralised society is the shape of Japan which we should pursue. We must make it possible for governors and mayors to give full play to their abilities as managers of their regions. Based on the recommendations of the Decentralisation Reform Promotion Committee, we will review obligations imposed by the national government and enlarge the degree of local autonomy.
III. A Society That Enjoys Peace of Mind
The second challenge is providing peace of mind in our daily lives.
Peace of mind in our daily lives can only be attained by having confidence in our social security systems, including those for pensions, medical care and nursing services.
Trust in the public pension system has eroded as a result of the pension records problem. I apologise once more to the entire public for this situation. All those among the working population currently enrolled in the pension programme and all those receiving a pension have been sent a special letter concerning their pensions. In this letter we are asking them confirm how their records stand. From April, we will also be sequentially sending out records of standard remuneration. We will proceed with the recovery of records in a systematic and efficient way, including through comparisons with people's personal pension ledgers.
To address problems to do with medical care in the regions, such as the shortage of medical doctors, we increase the number of doctors to be trained and also improve the working environment of hospital doctors. In the area of emergency medical care, we will ensure that patients are can be admitted to medical facilities when necessary through such means as collaboration between the fire-fighting and medical services. Discussions are to continue on the advanced age medical care system (for people aged 75 and over) and the system shall be reviewed so that we may also gain its acceptance by our elder citizens. Remuneration for nursing care will be increased in April so as to improve the working conditions of nursing care personnel.
To address the declining birthrate, all fourteen maternity checkups will be provided without charge and the one-off childbirth and child-rearing allowance will be raised to 420,000 yen. Among other measures, we will increase the number of child-care centres, providing openings for an additional 150,000 children by fiscal 2010.
Safety and Peace of Mind
In 2008 there was a succession of incidents threatening our food safety and the safety in our daily lives. In order to protect the interests of consumers, we will work swiftly to enact three related bills so as to establish an Agency for Consumer Affairs at the earliest possible time. Together with this, local governments will increase the number of consumer consultation centres and improve their ability to provide well-tailored responses.
There were just over 5,100 traffic accident fatalities in 2008, a figure which we were able to reduce to less than a third of the total in 1970 when such fatalities peaked. Over the next decade we will further reduce the present figure by half. By promoting new countermeasures for crime, we will strive to become "Japan, the world's safest country". Yet, the number of suicide victims exceeds 30,000 a year. We must build a society in which all our citizens find it easy to live. We will also accelerate implementation of work to enhance the earthquake resistance of school facilities.
The number of foreign nationals settling permanently in Japan and their children is increasing. We will provide assistance in local areas through a responsible government body which was newly created. We will draft a new law that would assist struggling young people, such as NEETs (young people Not in Education, Employment or Training) and hikikomori (socially withdrawn youth).
The lay judge system will start in May. This reform is intended to make the judicial process more familiar to the public through their participation in criminal trials.
The essence of nation-building lies in human resources development.
A part of the new official guidelines of schoolteaching for primary and junior high schools will be introduced in April, prior to the full guidelines. When this takes place the number of class hours in science, mathematics and other subjects will increase by about a tenth. These changes will improve scholastic levels, enrich the mind and foster healthy bodies among pupils. In addition, we will prohibit bringing mobile phones to primary and junior high schools in order to protect pupils from harmful information and "cyberbullying".
It was a landmark event last year when four Japanese were awarded Nobel Prizes. Maido I, a small satellite which is packed with the technical skills and dreams of small factories in Osaka, is now flying in outer space. In addition to enhancing basic research, we will be awarding grants-in-aid for scientific research and other funds totalling approximately 90 billion yen, thereby developing environments in which young researchers and diverse human resources can flourish. We will also be reinforcing our universities' international competitiveness by promoting courses of study in which all degree requirements can be completed in English only as well as programmes for research centres of excellence at the global level.
Furthermore, looking to the future of Japan, the Meeting on Education Rebuilding will move forward in its consideration of a wide variety of topics, including on how to enable students to continue receiving education without worry even amidst austere economic circumstances and on fostering human resources capable of flourishing internationally.
We will also work to assist efforts to bring the 2016 Olympic Games to Japan.
We of the present day have the responsibility to resolve the issue of global warming. At the same time, efforts to address environmental issues are also the seeds that generate new economic demand and employment. We will bring about a low-carbon, sound material-cycle society that is compatible with growth.
It is necessary for Japan further to enhance its world-leading environmental and energy technologies. We will promote the development and dissemination of solar power generation technologies and environmentally-friendly cars. An effective Japanese-style model of emissions trading will be created through a trial implementation of emissions trading. Furthermore, a mid-term reduction target for greenhouse gas emissions will be determined after weighing the issue from both scientific and comprehensive perspectives.
At the end of this year, an international conference will be held to decide upon a post-2012 framework for addressing global warming. Japan will be actively engaged in the process to establish an equitable and effective framework in which all major economies participate.
IV. Contributions to the World
The third challenge lies in the contributions Japan should make to the peace and stability of the world.
The peace and stability of the international community are essential to the development of not only Japan but also the entire world. I will devote myself to the utmost to the creation of peace and stability, with the Japan-US alliance as the cornerstone of Japanese foreign policy, and by having partnerships with the other countries of Asia and the Pacific as well as international cooperation through the United Nations and other fora as the main pillars.
The Japan-US Alliance and the Asia-Pacific region
First of all, as for relations with the United States, I will work together with President Barack Obama to reinforce our alliance relationship. We will collaborate in efforts to address global issues, not least the financial crisis and others including the fight against terrorism, nuclear disarmament and non-proliferation, and climate change. We will continue steady implementation of the realignment of US Forces in Japan, listening to the voices of Okinawa and other local communities and making all-out efforts for regional development.
Recently, the Japan-China-Republic of Korea (ROK) Trilateral Summit Meeting was held independently of other meetings for the first time, which represented a major step forward in promoting comprehensive cooperation in a future-oriented manner. Japan will contribute to the peace and stability of Asia and the world through the creation of a "mutually beneficial relationship based on common strategic interests" with China and a "mature partnership" with the ROK.
With Russia, in order to build a relationship between important partners in the Asia-Pacific region, we will advance negotiations towards the final settlement of the Northern Territories issue while developing relations across wide-ranging fields.
As for North Korea, Japan shall strive to normalise relations with North Korea, through a settlement of the unfortunate past and a comprehensive resolution of the outstanding issues of concern, including the nuclear, abduction and missile issues. While advancing the denuclearisation process of North Korea through the Six-Party Talks, we will continue strongly to urge North Korea to take concrete actions so that a full investigation into the abduction issue will be commenced anew at an early date in order to enable the return of all abductees to Japan at the earliest possible time.
Support for Freedom and Prosperity and Countermeasures against Terrorism and Piracy
I have one strong conviction. In aspiring to economic prosperity and democracy one can be certain ultimately to attain peace and happiness. This is also the path that Japan has followed since the end of the Second World War. As expressed by the concept "Arc of Freedom and Prosperity", we will actively support the efforts of young democratic nations which have liberty, the market economy, and respect for human rights as their fundamental values.
Japan will play a proactive role as a responsible member of the international community and moreover as a non-permanent member of the United Nations Security Council since this January. By utilising its official development assistance (ODA), Japan shall contribute to stability and development in the countries of Africa and other developing countries, in the fight against terrorism, and to the resolution of poverty and such global problems as environmental and water issues. We will advance our resource and energy diplomacy. We will also continue our replenishment support activities in the Indian Ocean and contribute actively to international peace cooperation activities.
Attacks by pirates in the vicinity of Somalia and other areas constitute a threat to the international community including Japan. This issue requires an urgent response. In cooperation with relevant countries we will expeditiously formulate feasible countermeasures, and we will consider the preparation of new legislation.
The further deceleration of the global economy is causing a rapid decline in the Japanese economy as well. To halt the setbacks in the business climate and emerge from the recession, it is imperative that we swiftly enact the budgets and their related bills. These will determine the economy, and indeed the future, of Japan. Without economic growth, neither the rebuilding of government finances nor a stable social security system will be possible.
Now is the time for us in politics to discharge our duties. The Diet's political will and resolve are being tested. The question which the people are now asking of politicians is whether or not they can defend people's daily lives from the tsunami of financial crisis.
It is only natural that there should be differences of opinion between the ruling and opposition parties. However, what the people hope for is not opposition for opposition's sake, but rather politics that reaches its conclusions expeditiously. The government and the ruling coalition have formulated what we consider the best possible proposal. We are certainly willing to discuss any good proposals that the opposition parties may have. However, there is simply no time for wasteful delay before reaching a conclusion.
There are some who always tend to see the world in a pessimistic way. But take a moment to reflect. Japan has maintained peace and prosperity for half a century. This is one model for success regarded with much respect by other nations. Moreover, Japan, with its exceptional technologies and an appealing culture, among other fortes, is itself a brand, which people the world over admire. We should indeed have confidence and pride. The latent power and vitality of Japan will most certainly bring us to overcome this difficult situation. We will return Japan to a nation that is both positive and strong.
Standing on the foundation of the coalition government between the Liberal Democratic Party and the New Komeito, I will devote every effort to building a new nation. I will not shirk this responsibility. I will move forward steadily, together with the Japanese people.
I sincerely request the understanding and the cooperation of my fellow citizens and of the honourable members of the Diet.