Press Conference by Prime Minister Taro Aso
1. Countermeasures to Address the Economic Crisis
Today, the government and the ruling coalition have decided on a new set of economic countermeasures. I should like to give an overview and explain my thoughts to the public.
These measures are "countermeasures to address the economic crisis". Over a period of just over half a year, I have launched countermeasures on three occasions whose total project scale reaches 75 trillion yen. These are steadily showing positive results in such areas as cash-flow for small- and medium-sized enterprises as well as countermeasures against unemployment.
However, the Japanese economy continues to experience a severe downturn, with exports and production levels falling dramatically. In addition, the employment situation has also been deteriorating rapidly. Japan's situation may well be called an "economic crisis".
At the London Summit convened the other day, Japan and the other participating countries reaffirmed that they would undertake the greatest possible countermeasures in the areas of both fiscal and financial policy. I will take decisive measures in order to defend the daily lives of the public and to counter this crisis with the other countries of the world.
Japan cannot avoid the tsunami of global recession. But by taking bold measures, we aim to extricate ourselves from this recession the earliest of all countries.
The measures I am announcing today are "countermeasures to address the economic crisis". Their foremost objective is to prevent economic activity from breaking the bottom. However, rather than merely create additional demand to boost the economy, we give emphasis to the following two considerations.
The first is to give ordinary people peace of mind in their daily lives. This means taking countermeasures to help those people who are directly bearing the brunt of this recession. We will thus place emphasis on employment, social security and child-raising assistance.
The second is to make the measures conducive to future economic growth. We have designed a growth policy that looks ahead to the state of our society after economic recovery. For that reason, the countermeasures extend over multiple fiscal years, rather than just the current one.
The key words are "peace of mind" and "the future", in addition to "economic activity".
The total project scale of the countermeasures is approximately 57 trillion yen, with new fiscal outlays, commonly called "fresh water", of 15 trillion yen. This set of measures is the largest in history. I will highlight the main areas.
The first is preventing business activity from breaking the bottom. The main pillars are countermeasures for unemployment and measures to ensuring companies have adequate cash-flow.
Countermeasures for unemployment include first of all employment adjustment subsidies. These are funds to support companies that do not dismiss employees. Last February alone, these subsidies successfully helped to maintain the employment of 1.87 million workers. We will expand them dramatically by providing a further 600 billion yen in funding.
We will also create a fund of 700 billion yen for the next three years to help people who are out of work but are not eligible for unemployment insurance. This fund will expand job training while also provide people with a social safety net as they undertake this training.
In addition, as measures to ease corporate cash flow, the maximum level of guarantees for small and medium-sized enterprises will be increased to thirty trillion yen from the current twenty trillion yen. At the same time, we will increase the maximum level of safety-net lending by government-affiliated financial institutions to 17 trillion yen from the current 10 trillion yen. We will also increase by 20 trillion yen the risk management operations for large and second-tier companies by the Development Bank of Japan (DBJ) and the Shoko Chukin Bank.
Besides these measures, government-related agencies have developed a mechanism by which corporate shares and other forms of assets can be purchased from the market, backed by 50 trillion yen in government guarantees. This is to prepare against exceptional cases, such as when the stock market suffers continued critical impairment of its price-discovery function.
The second main area is bringing about peace of mind and vitality.
Children are the future of Japan. It is of paramount importance that we should protect the future of our children, even amidst this economic crisis.
We will increase the size of the Fund for Raising Children with Peace of Mind to 250 billion yen from the current 100 billion yen. This will enhance childcare services while also provide support for job training and home-based employment for single mothers. For example, monthly living expenses of approximately 140,000 yen will be provided to low-income single mothers undergoing job training for the entirety of their training period.
As a special allowance to support child-raising, from fiscal 2009 we will provide, beginning with the first child in a family, 36,000 yen in support over the three years immediately prior to elementary school.
Arrears in tuition payments at private schools have recently been increasing sharply. To support the students concerned, we will extend emergency assistance for tuition reductions and exemptions as well as for scholarships.
Also, to address the problem of female-specific cancers, we will provide financial assistance for cancer screenings.
I now turn to medical care and nursing services.
We will establish a total of 310 billion yen in grants in order to revive medical care in the regions. We will support the provision of medical services that are both efficient and sufficient by promoting role-sharing among the various medical institutions and medical personnel on a regional basis.
In addition, a 400 billion-yen fund will be created in order to improve the working conditions of nursing care staff, which are an oft-heard topic. I intend to raise the salaries of nursing care staff who are currently engaged in difficult work for low pay.
The third main area is growth towards the future.
These countermeasures will be the first step under a mid- to long-term growth strategy.
Subsidies will be granted for installing solar panels at residences and offices in order to advance a "low-carbon revolution". Furthermore, to promote the installation of solar panels at public elementary and junior high schools, we will boldly allocate the budget so as to enable the installation of panels at 12,000 schools over the coming three years. This total is ten times the number of schools that have been equipped with solar panels thus far.
A subsidy of 100,000 yen will be provided upon the purchase of new, eco-friendly cars. In addition, a subsidy of 250,000 will be granted when a car that has been used for 13 years or more is scrapped and replaced through the purchase of a car meeting certain standards of fuel efficiency.
We also intend to utilise the "eco-points" system to promote wider use of "green" consumer electronics. Five percent of the purchase price will be returned in the form of "eco-points" upon the purchase of energy-saving home appliances such as air conditioners or refrigerators, and a further 5% will be given back upon the purchase of televisions equipped to receive terrestrial digital broadcasting.
Over the next three to five years, we will choose some thirty research topics and also create a fund of 270 billion yen in order strongly to support research activities at the world's leading edge.
We will link up the country geographically by connecting, in the ring roads surrounding Japan's three major metropolitan areas and other parts of the road network, sections that remain uncompleted, which are referred to as "missing links". Towards this end, after discussions by the National Development Arterial Expressway Construction Council we will advance the construction, for example, of the Tokyo Outer Ring Road, a project that will span a number of fiscal years.
To promote these projects, the national government will also provide backing to ease the financial burden of local public authorities. This assistance will consist of 1.4 trillion yen for the alleviation of the regions' financial burden from public works projects and 1 trillion yen as grants to revitalise the regions, reaching a total of 2.4 trillion yen.
Finally, I shall discuss revisions to the tax system.
We will be raising the existing gift tax exemption threshold so that, when someone receives a gift of funds towards the purchase of a residence, no gift tax shall be levied on gifts up to a maximum of 40 million yen if he or she elects to use the "unified gift/inheritance tax system". And if the recipient elects not to use the unified system, an exemption threshold of 6.1 million yen shall apply.
The fiscal resources to fund these countermeasures will include accumulated reserves in the budget account for the Fiscal Investment and Loan Programme, the reserve budget for countermeasures against the economic emergency, and the issuance of government bonds. As a result, the amount of public bond instruments to be issued will exceed the 33 trillion yen included in the principal budget of fiscal 2009.
As I have said repeatedly, boldness is in order in the short term while responsibility is essential over the medium term.
Since we are engaging in such bold fiscal outlays this time, it is imperative that we should discharge proper responsibility over the medium term.
In order to avoid passing on large debts to our children, we will definitely undertake a fundamental reform of the tax system, including that of the consumption tax, on the premise that economic recovery shall have been achieved.
This completes an overview of these new countermeasures. I would call it an all-out mobilisation of policy to ensure peace of mind and growth.
The current crisis is the biggest since the war and is a challenge that must be met with the total efforts of the entire nation.
In formulating these countermeasures, I gathered the views of many eminent persons on ways to overcome this difficult situation.
These countermeasures incorporate approximately 60% of their recommendations. We will continue to consider the remaining viewpoints at the Council on Economic and Fiscal Policy (CEFP) and at other appropriate fora.
In order to implement these countermeasures, I intend swiftly to formulate and submit to the Diet the necessary supplementary budget and related bills.
I will urgently seek their enactment, with the understanding of the opposition.
This will result in reviving economic activity and defending people's daily lives.
Today, after this press conference, I will leave for Thailand in order to attend a number of summit meetings with various leaders, including those of the ASEAN countries, China, the Republic of Korea, India, Australia, and New Zealand.
Many countries in East Asia have been achieving high rates of economic growth. However, as the global economy undergoes a crisis, the economies of East Asia also currently find themselves at a major turning point.
On the occasion of this meeting, I shall propose firstly that countries should cooperate in addressing the crisis we now face, such as in securing necessary funds and in resolutely preventing protectionism. Secondly, I shall propose as a response over the mid- to long term a growth initiative aimed at doubling the size of the Asian economy, an initiative intended to strengthen the capacity for growth and to expand each county's domestic demand.
Asia has the greatest potential in the world, and is a centre of growth which is open to the world.
We need to believe that Japan will continue to grow together with Asia. I intend to assert the leadership required.
Finally, I should also like to refer to Japanese measures concerning North Korea.
North Korea has failed to show any change whatsoever in its attitude towards the resolution of outstanding issues, including the abduction, nuclear and missile issues.
Moreover, it has proceeded with the launch of a missile, showing total disregard for calls for restraint by the international community.
In response, today the Japanese government took a Cabinet decision to extend by one year:
(i) a ban on North Korean vessels from entering Japanese ports; and
(ii) a ban on imports from North Korea.
In addition, it announced sanctions related to the transfer of funds.
The Japanese government once again strongly demands that North Korea swiftly take concrete actions towards the resolution of the abduction, nuclear and missile issues.
The Japanese government also expresses its intention to undertake its utmost efforts towards this end, in cooperation with the international community.
I request the understanding and cooperation of the Japanese people.
This brings me to the end of my opening statement.
Also, as this will involve an enormous amount of fiscal spending amidst difficult fiscal conditions, please tell us what course will be taken towards rebuilding government finances in the future.
PRIME MINISTER TARO ASO: When formulating these countermeasures, we did not have a pre-determined figure [concerning the total amount of new fiscal outlays] in mind, such as two or three percent [of GDP], from which we calculated [the required budget of the individual measures] backwards. First of all, we must definitely prevent economic activity from breaking the bottom. We also must secure employment and ease the pain of the people. At the same time, it is important to boost Japan's growth in the future. These are what I consider essential, and are thus the areas which we will emphasise. [The total of] 15 trillion yen in fiscal outlays, or three percent of GDP, the largest level ever, was reached as a result of aggregating [the fiscal outlays required for] each policy measure.
At the same time, since we are making such bold fiscal outlays now, we must duly demonstrate responsibility for public finances in the medium-term [future]. This too is a point I have been making from the past. In order to avoid leaving large debts to our children, we must definitely undertake a fundamental reform of the tax system, including that of the consumption tax, on the premise that economic recovery shall have been achieved. As far as your question is concerned, I have been referring to the need for fiscal reform in the medium term since the very beginning. I believe I need to practice precisely what I have been preaching.
QUESTION: I have a question regarding the launch of a ballistic missile by North Korea. You said earlier that Japan will undertake its utmost efforts [on this issue] in cooperation with the international community. Japan is calling for a new [UN Security Council] resolution, but I believe that the situation has now become more difficult for Japan, with for example the US having submitted a proposal for a [Security Council] presidential statement. How does the Japanese government intend to proceed?
Also, you will be leaving for Thailand tonight, with a Japan-China bilateral summit scheduled to take place there. Please tell us how you will approach the Chinese side on that occasion.
PRIME MINISTER TARO ASO: As far as the recent missile launch is concerned, it is clear that North Korea totally disregarded calls for restraint by the international community and took action that violates UN [Security Council] Resolutions 1695 and 1718.
In response, I consider it absolutely imperative that the United Nations should express the strong will of the entire international community at an early date and convey a clear and correct message to North Korea.
As negotiations are now in progress, I refrain from commenting on the positions of other countries. Japan's position is that various alternatives exist, including a presidential statement and a resolution. Even if a resolution is passed, it would be pointless if the content is lenient. With this and other thoughts in mind, in any event we will do our best. As for your question on China, I will indeed be holding talks with Premier Wen Jiabao in Thailand, and I believe I should communicate the Japanese position clearly to Premier Wen Jiabao as well.
QUESTION: Earlier you spoke about the fundamental reform of the tax system, including that of the consumption tax, and I presume this would involve revisions to the Mid-term Programme [concerning social security and public finances from tax revenues]. In concrete terms, in what way are you thinking of revising this Programme? For example, on the timing you have said this reform would be after the economy recovers, and on the manner of the increase [of the consumption tax rate], yesterday a group of female legislators recommended that the tax rate on food should be lowered when the overall tax rate is raised. Are you not prepared to offer more detailed ideas on the actual way in which the tax rate will be raised?
PRIME MINISTER TARO ASO: Many things have happened since the Mid-term Programme was agreed at the end of last year, such as [the implementation of] successive sets of economic countermeasures, a deterioration of economic and fiscal conditions beyond expectations, as well as a drop in expected tax revenues. I believe it necessary to revise the Mid-term Programme in light of such worsening conditions.
That said, I have not taken any decision in any concrete sense on the timing of such a revision or the areas to be revised. I consider your question to be entirely pertinent but this is something that I shall need to examine as we go forwards.
QUESTION: There was a question earlier on a Security Council resolution on North Korea, and my question overlaps with that to some extent. I believe that it is of paramount importance that the international community should send a unified message. In that sense, if a presidential statement were to be adopted, would you see that as simply a matter of yielding to the inevitable? I should like to press you once more on this.
PRIME MINISTER TARO ASO: Japan's position is that a binding resolution is preferable as the means by which to convey the views of the international community. This is frankly the case. At the same time however, it would be pointless as I said earlier if the very insistence on a resolution were to result in a document whose content is ambiguous. I believe that the message must be a clear one.
The primary goal is to maintain the peace and safety of the northeast Asian region including Japan. We will therefore exert our utmost efforts as we go forwards in order to reach the most appropriate conclusion. While there are various alternatives, such as a presidential statement and a resolution, I believe that the most important point for Japan is that an apposite message from the international community should be conveyed [to North Korea].
QUESTION: My question is on the issue of politics and money.
I think that this will be among the important issues to be contested in the next general election. The Democratic Party of Japan (DPJ) has decided on a policy of a total ban on corporate and organisational donations in the future. In order to dispel public distrust in politics, it seems to me that the government and the ruling coalition should also put forth a concrete proposal of some sort. What are your thoughts on this?
PRIME MINISTER TARO ASO: As you know Mr Abe, this is an old yet current topic. I consider it a good thing for each political party to discuss how political donations should be, and this too is something that I have been saying consistently for a long time.
Yet once the relevant law has been passed after discussions among the various parties, each politician needs to abide by it. That is the most critical point, in my view.
QUESTION: I have just one question concerning the general election upon dissolution [of the House of Representatives]. Yesterday you said at the Japan National Press Club that no issues of contention over policy matters would remain should the DPJ agree completely to the additional economic countermeasures. Can we take this mean that you now have no intention whatsoever to dissolve [the House of Representatives] in agreement [with the opposition parties etc on the timing]? Or, are you not ruling out that possibility?
PRIME MINISTER TARO ASO: Yours is a hypothetical question, since we cannot foresee what course of action the opposition parties will take. So it is virtually impossible for me to answer. I have been saying that an election is for the people to decide who should govern, and that is what the system of single-seat constituencies is designed to do, thus in that light, it is entirely appropriate to seek the will of the people after clarifying the issues of contention.
As for the timing of the dissolution, various people are now making a host of statements, and Jiji Press has also written various things on this topic. I am well aware of the range of opinions that exist. However, I will be the one who ultimately takes the decision at the appropriate time, taking all such factors fully into account. This is the only way I can answer your question, and I have never said anything different. It is I who will take the decision at the appropriate time.
QUESTION: At yesterday's press conference too, you hinted at making these economic countermeasures the axis around which the parties' opposing stances would emerge. Yet the DPJ is also compiling in similar fashion a package of emergency economic countermeasures, whose scale is 21 trillion yen over two years. In what way do you think that the countermeasures you announced today are superior to the DPJ's, and do you believe this could constitute an axis around which opposing stances would emerge? Also, I ask you frankly whether or not you are determined to dissolve [the House of Representatives] in the event the opposition does not vote for your economic countermeasures?.
PRIME MINISTER TARO ASO: If the question is whether or not I have confidence in our countermeasures and our policies, the answer is a resounding "Yes". And as for the fiscal basis, we have proposed proper means to back our proposals. In the past, I think we can generally say that in these types of discussions-and by that I mean when supplementary budgets were discussed-the lion's share of measures [in the budgets] consisted of public works. However, in this proposal, the proportion allocated to public works is only 2.4 trillion yen, roughly one-sixth of the 15 trillion yen total.
Therefore, although I have not compared every part of the two plans closely, we are confident about the supplementary budget we are proposing, as we have shown the necessary fiscal backing, and for other reasons. We also believe it is far more effective than the one put forward by the DPJ, and our proposal is one for which we can be duly responsible.
A general election without clear and critical differences over policy is not desirable. Rather, it is right that the public should choose the next government thinking, for example, which political group offers greater peace of mind and freedom from anxiety, because after all, at stake is how to use the money that the public has paid. Yet in reality elections are not determined simply by such rational factors. There are a variety of cases where a candidate is elected because he/she is somehow better-looking or merely younger than his/her rivals, or even where the reason is totally unclear. Given this, the policy issues on which elections are contested are an extremely important matter for us. If the policies among the candidates are similar, and the choice is made because his/her election poster photograph looks somehow better than those of other candidates, this would produce unfortunate results. I feel it better for the democracy to mature and for maintaining the single-seat constituency system if elections are contested with clearly-defined policy differences. We decided after extensive debate among all concerned to introduce a single-seat constituency system in order to make changes in government possible. Thus it is only right that there should be substantial debate about policies that have the potential to bring about a change in government-not only economic policy, but also foreign policy, national defence policy and so on. We should have elections in which the positions in the various policy areas can be properly compared.
Those are my views on this topic. Some people argue for a dissolution in agreement with the opposition [on the timing] after they have agreed to this [supplementary budget] proposal. But there is really no way for me to respond to such ideas as words have taken a life of their own and I frankly do not really understand what is being suggested, that is, what the topics and conditions of negotiations with the opposition should be. When a general election is held based on a single-seat constituency system, it is preferable to have the public make their choice after making a proper comparison of the visions and policies that the two major parties present for their proposed administrations. That is how democracy is better achieved under a single-seat constituency system, in my view.