Speeches and Statements by Prime Minister Prime Minister of Japan and His Cabinet top page

Press Conference by Prime Minister Naoto Kan

January 14, 2011
[Provisional Translation]

CABINET PUBLIC RELATIONS SECRETARY (MODERATOR): We shall now begin the press conference by Prime Minister Naoto Kan. We will begin with an opening statement from the Prime Minister. Mr. Prime Minister, please.

Opening Statement by Prime Minister Naoto Kan

Today I reshuffled my Cabinet and I have just now completed the attestation ceremony for the Ministers of State at the Imperial Palace. I would like to begin by explaining to the public why I undertook a reshuffling of this sort, as well as how I intend to engage with the Diet henceforth.

Present-day Japan finds itself in a highly critical situation, facing economic stagnation that has lasted twenty years, worsening public finances, and an unstable social security system, as well as failure to make progress in expanding local sovereignty and multiple issues in its foreign affairs. In overcoming these crises, I wish to impart upon the structures of both the party and my Cabinet the greatest possible ability to tackle such crises as we head into the ordinary Diet session. It is from that perspective that I undertook this Cabinet reshuffle. Continuing with this, I also intend to engage in the reinforcement of several points with regard to party executives, including tomorrow and the following day.

In particular, during the press conference of January 4 I stated three principles, namely that we must undertake a 21st-century opening up of Japan, that I will aim to achieve a society in which human suffering is reduced to a minimum, and that I wish to conduct politics that rectifies absurdities. To put this in still more concrete terms, a major issue at present is a social security system regarding which we can have peace of mind going forward, meaning what modalities the system should take and, at the same time, how we can ensure sustainable fiscal resources for it. It will be necessary to hold discussions on these matters.

Mr. [Kaoru] Yosano has joined this Cabinet as Minister of State for Economic and Fiscal Policy. This is because I wish to accelerate discussion among the public regarding these aspects. In particular, Mr. Yosano created the Council for the Realization of a Reassuring Society when he was a member of the LDP and has been a central figure examining the modalities of this kind of social security system and of associated fiscal resources.

In addition, a large number of the members of the group the DPJ convened to examine this issue were also members of the Council for the Realization of a Reassuring Society. In light of this and other facts, I believe that we hold policies with substantial degrees of common ground.

Moreover, I feel that a common recognition exists among the various political parties regarding this issue, rather than necessarily having a large gap among us. I would like you to regard Mr. Yosano taking on responsibility for this issue, including with regard to such points, as emblematic of one of the major elements of this Cabinet reshuffle.

I have appointed Mr. [Banri] Kaieda as Minister of Economy, Trade and Industry, and I intend for him to resolutely set forth a course ahead that achieves in a compatible way economic partnerships and the reform of Japanese agriculture, of course also through the ongoing efforts of Minister of Agriculture, Forestry and Fisheries [Michihiko] Kano.

On that basis, after this I will be having the new Chief Cabinet Secretary propose to the directors of the Committees on Rules and Administration of both the House of Representatives and the House of Councillors that the ordinary session of the Diet be convened from the 24th. I very much wish to ask something of the Japanese public and appeal to them regarding this ordinary session of the Diet, specifically that this Diet session not be one of simply the ruling and opposition parties but rather one in which the public joins us in our discussions. How should we proceed in order to overcome the current risks to the nation that I mentioned just now? As the ruling and opposition parties engage in dialogue on this issue at the Diet, I would like the public to listen to these discussions and weigh up what approaches there are. There are a number of issues that have been put off until later, and I feel we should together move forward on these. With regard to these discussions as well, I would like to proceed such that the discussions between the governing and the opposition parties come to be talked about among the public, with people saying, "well, if that is their stance, then I think party A's position is the best," or "I think party B's approach is better."

In addition, let me say that in order to make this possible, if we were for example to convene among the heads of the political parties at the earliest possible time a debate including a "question time", I would be very much interested in pursuing that.

As a further point, while needless to say, we will be deliberating the budget for the upcoming fiscal year during this ordinary Diet session. We have presented this budget in full confidence that this is a budget with the potential to be the first step in breaking through the critical situation in which Japan now finds herself.

In [fostering] economic growth for example, we are expanding the budget for science and technology while also submitting as part of this budget a stimulatory [revision to the] tax system for companies located domestically, in order to prevent corporations from transferring overseas.

We will also eliminate childcare waiting lists for those now raising children and those who are planning to have children. We already set aside a budget of 20 billion yen for this purpose in the current fiscal year and over the next few years we will be pushing ahead gradually to eliminate waiting lists for childcare.

Regional sovereignty is something which has been spoken about for many years now, and yet we have never succeeded in changing individual subsidies from the various ministries to block grants and so on. Only 2.8 billion yen was proposed at first from the various ministries and agencies, but the budget for the upcoming fiscal year provides for implementing the transition to block grants at a scale exceeding 500 billion yen. I wish to discuss such a budget very much in the public eye, in a format in which we connect the budget to what Japan will be like in the future.

In light of this, we intend to put forth our greatest possible efforts to ensure that the upcoming ordinary session of the Diet, which I plan to ask to be convened on the 24th, becomes a Diet in which the public participates together with us. I would also like to take this opportunity to ask those in the opposition parties to approach the Diet taking that kind of stance. I will conclude my opening statement here.

Thank you very much for listening.


CABINET PUBLIC RELATIONS SECRETARY: With that, I would like to move into questions. I will designate who will ask the questions. Please first state your media affiliation and name before posing your question.
Mr. Abiru, please.

REPORTER: I am Abiru with the Sankei Shimbun. In this reshuffle, Mr. Yosano has assumed the position of Minister of State for Economic and Fiscal Policy and Mr. [Hirohisa] Fujii has become Deputy Chief Cabinet Secretary. I think it can be said that a lineup inclined towards a raise in the consumption tax rate has been put into place.
However, the DPJ said in its Manifesto for the 2009 House of Representatives election that 16.8 trillion yen could be secured by cutting governmental waste and tapping hidden reserves, and a large number of voters chose to have a change of government in that belief. You clearly stated in the run-up to the House of Councillors election last July that the timing for increasing the consumption tax rate would be after obtaining the public's understanding, in the next general election.
The DPJ has recently stated that it would review its Manifesto. In that case, then would the scenario not be to dissolve the House of Representatives to once again seek a popular mandate?

PRIME MINISTER NAOTO KAN: I have to say that the question just raised is one that fosters misunderstandings to a great extent. What we have been saying is that we would like to have thorough discussions on whether the current social security system can be maintained as is and whether it will be possible to enhance it further, and, together with that, we also naturally seek to discuss the modalities of the fiscal resources necessary to maintain the system into the future and whether or not the current situation is sufficient. I don't consider it fair for you to regard this as a discussion for the purpose of raising the consumption tax rate and substitute that into the question.
As I stated at the previous press conference as well, for example, in 1999 the fundamental approach to the tax system was determined, by which the national tax portion of the current consumption tax is applied to medical care, nursing care, and pensions for the elderly. However, in 1999 the national tax portion of the consumption tax—the portion constituting revenue for the national government—was roughly seven trillion yen, while necessary expenditures were approximately 8.5 trillion yen. Thus it is true that medical care, nursing care, and pensions for the elderly had been largely covered by the national tax portion of the consumption tax. However, in 2010, we already had expenditures of 17 trillion yen even though revenues were unchanged at seven trillion yen. So, as for how this gap of 10 trillion yen is being addressed, it is essentially being filled through deficit-financing bonds—that is, through debt.
We need to undertake thorough discussions on whether this situation is sustainable, as a matter within the discussion on the social security system. When I make this sort of statement and then, without any reference whatsoever to social security, a comment is made suggesting that I am trying to have some sort of discussion on the consumption tax, I think that this sends a materially incorrect message to the public, and this is why I am making a point of responding with such a statement.

CABINET PUBLIC RELATIONS SECRETARY: All right, let's move on to the next person. Mr. Yamashita, please.

REPORTER: I'm Yamashita with the Hokkaido Shimbun.
Mr. Prime Minister, you said at yesterday's DPJ party meeting that this Cabinet reshuffle was not because censures had been issued. I find it extremely difficult to understand why after only four months you would change the "true-to-its-word Cabinet" that you had just reshuffled last September. Would you have intended to replace [departing] Chief Cabinet Secretary [Yoshito] Sengoku with [Yukio] Edano even if there had not been a censure motion? Also, there have until now been some issues regarding the legal grounds. Will this new personnel lineup not lead to the creation of a precedent by which a Cabinet member resigns upon being censured?
Also, while you have spoken of "a Cabinet of 412" [(encompassing all 412 DPJ members of the House of Representatives and House of Councillors)], no one tapped for the new Cabinet lineup is close to former [DPJ] President [Ichiro] Ozawa. Is this because no suitable people were to be found around Mr. Ozawa? Or was it that you had some sort of intention to exclude such people?

PRIME MINISTER NAOTO KAN: As I said earlier, and as I also stated at the party convention, I have undertaken, or am seeking to undertake, this reshuffling of the Cabinet and the party organization from the viewpoint of overcoming a crisis facing Japan, rather than overcoming a crisis facing the DPJ. My rational for this is that in overcoming the major issues within the crises facing Japan, I considered for example participation by Mr. Yosano also necessary at present, as I stated a few minutes ago.
At the same time, we must also expand still further the various activities being undertaken by the party, for example tie-ups with think tanks and various non-profit organizations that can be called a "New Concept of Public Commons." Such things cannot easily be done by the Cabinet alone. I consider Mr. Sengoku as possessing great capabilities relevant to bringing a dramatic broadening of scope to these activities. In this regard, as I considered the overall picture, I am creating the strongest framework for overcoming Japan's critical situation. I pushed forward with these changes taking this approach.
In addition, there are comments to the effect that I have undertaken this by tapping only certain groups, but this is entirely incorrect. This is something that I stated during the September party presidential election to the ordinary party members and supporters [cf. http://www.dpj.or.jp/english/sp/election2010_voters.html], all local assembly members, and all Diet members: I will be conducting clean and open politics. Furthermore, I was elected party president by those very same people. Therefore, if people are to cooperate in bringing about that pledge, then let us do it together through the cooperation of any and all members. For example, when the Obama presidency came into being, it is only natural that people come together who will cooperate in putting President Obama's pledges into reality. In that light, with the party coming together in unity we will grapple with these crises facing Japan, centered on my pledges in the party presidential election and on such types of thinking. It was from this standpoint that I am undertaking, or seeing to undertake, this Cabinet reshuffling and the strengthening of the party leadership.
Within that, persons dubbed the so-called "Ozawa group" have already served in particular as senior vice ministers and parliamentary secretaries in substantial numbers also under the previous Cabinet, and within my Cabinet there are already some who did not necessarily support me during the party presidential elections. Essentially I wish to have the participation of all those who agree with, and will work jointly towards, the party's basic principles and the clean and open government that I have stated. I would like to state clearly that this is the stance through which I am approaching these matters.


REPORTER: I'm Sakajiri of the Asahi Shimbun.
Mr. Prime Minister, just now you said that you will be investing your energies into the reform of the social security system. I would like to ask you to talk about this in more specific terms. I believe that one major pillar of social security reform is the issue of pension system reform. Regarding this pension system, newly-appointed Mr. Yosano has indicated from quite some time ago his stance that at present, the system of paying social insurance premiums is the most rational at the present time.
In contrast, the DPJ-led government has been promoting, including in its 2009 Manifesto, the establishment of a minimum guaranteed pension funded entirely through tax revenue. Having appointed Mr. Yosano in this reshuffle, are you now, depending on Mr. Yosano's way of moving this issue forward, considering as an option no longer strongly advocating the method by which pensions are funded entirely through tax revenue, which the DPJ endorses? And, if that is the case, how do you intend to explain to the public the contradiction with the DPJ Manifesto?

PRIME MINISTER NAOTO KAN: As I mentioned this earlier, there are a variety of ways of thinking about the social security system including pensions. In addition, will we be able to cope with the situation of the aging population as the Baby Boomer Generation, of which I am a member, finally crosses the 60 or 65 year mark, through the reforms to the pension system that have been discussed conventionally? We have thus far been discussing this situation quite considerably within the DPJ as well, and over the next three to five years, changes in the real demographic structure will include some extremely drastic aspects.
Therefore, while I do believe that naturally it is necessary for discussions to be based on what the DPJ has proposed and discussed thus far, even as we take such discussions as the base, having a variety of opinions discussed in the future as we work towards full-fledged reform is something I consider to be entirely acceptable.

CABINET PUBLIC RELATIONS SECRETARY: All right, I'll take the next question. Mr. Yamaguchi, please.

REPORTER: I'm Yamaguchi with NHK.
Mr. Prime Minister, you have pinned your expectations on Mr. Yosano in appointing him. You stated in your "Cabinet of 412" approach that there were any number of talented people within the DPJ, so did you not think about identifying and appointing candidates from within that group?

PRIME MINISTER NAOTO KAN: As I said earlier, after the recent party presidential election was held, and when I first assumed this office, with the "Cabinet of 412" in mind I asked people to take on not only Cabinet positions but also senior vice minister and parliamentary secretary appointments under an approach of putting the right person in the right post, in keeping with that orientation. In addition, I revived the [DPJ] Policy Research Committee and brought the Chair of the Committee in as a member of the Cabinet, thereby providing a structure by which discussions conventionally held within the governing party can also be reflected in the Cabinet in a proactive way. I hope you can appreciate that the Cabinet has that degree of breadth. In the case of the ruling party, discussions held within the party are not wrapped up simply within the party, and in light of that, although the roles of the party and the Cabinet are separate, if you consider the form of the "Cabinet of 412" in overall terms, you can see how it has come to take this form. Naturally, within that approach I intend to have persons with capabilities and experience in each particular field playing in great measure the central roles.

CABINET PUBLIC RELATIONS SECRETARY: All right then, I'll field the next question. The gentleman in the back, please.

REPORTER: I'm Monahan of Dow Jones Newswires.
I would like to ask you about discussions on the TPP. Minister Kaieda, known to be an advocate of the TPP, has been appointed Minister of Economy, Trade and Industry. As expressions of opposition to the TPP have arisen from both within and outside of the DPJ, notably from those involved in agriculture, how will you win over those opposed to it?

PRIME MINISTER NAOTO KAN: This is another area that I have been speaking about for some time recently. We are in a situation in which agricultural reform cannot be avoided, even if we consider it entirely separately from the issue of trade liberalization. Insofar as the average age of people employed in agriculture is 66, even if we were to halt trade liberalization entirely at exactly where it is now, after another five or ten years, Japanese agriculture will not be viable if it continues on like this. With this sense of crisis, I have set up a Headquarters for Agricultural Reform which I myself head, and we are now beginning major discussions on the direction for such reforms.
At the same time, as for the modalities for economic partnerships including the TPP, if we were, for example, to enter into such partnerships and start bringing them into implementation, [there would be issues of] what kinds of agricultural reform and what kinds of measures to assist the agricultural industry would be necessary, as well as whether monetary allowances would be necessary. We are now approaching this issue with the stance that we should examine such issues thoroughly in advance.
Within the context of that comprehensive examination, I think it is entirely possible to have agriculture in which young people actively enter the field and food which is the best-tasting and safest in the world—I have been told by many people that Japanese food is delicious as well as that Japanese food is safe—and to spread our cuisine and food throughout the world. I believe that by moving ahead in this fashion we will be able to obtain the assent of the public.

CABINET PUBLIC RELATIONS SECRETARY: The next person, then. Mr. Inudo, please.

REPORTER: I'm Inudo with the Nikkei Shimbun.
Mr. Prime Minister, just now you spoke about social security, and I have a few points which I would like to confirm. First you spoke about your thinking with regard to the modalities of the social security system and discussions on consultations between the ruling and opposition parties. The first point is whether the approach you indicated is to engage in consultations between the ruling and opposition parties taking a two-step methodology, first through holding discussions on not fundamental reform of the tax system but rather the desirable state of social security, after which you want to have discussions that include the issue of the consumption tax. The second point is that you said that even while taking the discussions of the DPJ thus far as the base, holding discussions that incorporate a variety of opinions is also acceptable. In other words, did you say that the basis for discussions will be an approach to pension reform in which the basic pension is financed entirely through tax revenues, but that you will not necessarily insist rigidly on that point?
Finally, with regard to Mr. Yosano serving at the core [of these discussions], you mentioned the [DPJ] Policy Research Committee just now. What shape will the relationship take between Mr. Yosano and [DPJ Policy Research Committee Chair and Minister for National Policy] Mr. [Koichiro] Gemba? I think there is the matter of coordination between the Minister of State for Economic and Fiscal Policy and the Minister for National Policy. I would like you to explain in an easily understandable way how the coordination between their approaches will be handled.

PRIME MINISTER NAOTO KAN: As for your first question, fundamentally, yes, what you stated is correct. In other words, discussions will be held on the modalities of the social security system. There is no intention whatsoever of setting the modalities of the social security system off to the side to instead discuss something else. Discussions are to address the desirable state of the social security system. At that time, as I mentioned earlier, for example the general rule is to apply the national tax portion of the overall consumption tax to medical care and other expenditures for the elderly, but in actuality, this already costs 17 trillion against 7 trillion in revenue. In considering the social security system, including such issues as this, it will be impossible to create peace of mind in the social security system unless we also of course discuss at the same time whether or not that is sustainable. Therefore fundamentally we need also to discuss the state of such necessary sustainable fiscal resources in the process of considering the modalities of the social security system. That is my approach.
Next, various individual issues exist within the pension system. You used the expression ea basic pensionc financed entirely through tax revenues,' but in fact our approach is that of a minimum guaranteed pension. That is, the DPJ is now talking about a minimum guaranteed portion [of the overall pension], which does not necessarily mean covering the pension in its entirety through tax revenues—and this is also the stance we have taken from the very beginning. As a result, as I myself mentioned just now, in the past—roughly five years ago—we had various discussions on this, I remember quite well, and as we consider the changes in the demographic composition over these five years, and then another five or ten years into the future, at that time, will the thinking on which we have premised the system be suitable in its current form? We need to consider this situation including such aspects. This is simply a matter of course, in my opinion.

CABINET PUBLIC RELATIONS SECRETARY: I'll take the next question. Mr. Nanao in the back, please.

REPORTER: I'm Nanao of Nico Nico Douga. I would like to read to you a question on behalf of one of our viewers.

At the beginning of 2011, Japan's three major economic organizations gave the Kan administration a passing grade. In specific terms, Nippon Keidanren (Japan Business Federation) gave a passing score without stating an exact point value, which I interpret as a passing grade given comprehensively viewing a number of their perspectives. At the same time, very critical voices are found within public opinion and the tone of the media. What do you consider to be the cause of the gap between these and the assessment by Nippon Keidanren? Also, how do you intend to fill this gap going forward?

Thank you.

PRIME MINISTER NAOTO KAN: Going beyond a basis of what the business community has said, I think that what the DPJ, or what the DPJ-led administration, has done over the last year and a half since the change of government has for the most part been essentially correct. However, unfortunately, as we have not succeeded in having this fact thoroughly understood by the public, there is an image of us in which it is said that we have not done things or not succeeded in accomplishing things, or that we engage in pork-barrel politics. I believe that we have not sufficiently conveyed to the public that this is in fact not the case. Let me offer the child allowance as an example.
I said this at yesterday's convention as well, but what is the actual state of Japan's demographic composition? The average age in Vietnam is, if I remember correctly, 27. In Japan it is now 45. Japan of course also had a much lower average age in roughly 1965 when I was about 20 years old. In that era we created a variety of allowances for the elderly. However, we did not necessarily have sufficient allowances, shall we say—the social follow-through—in the areas of having and raising children. While that is not the only factor, the result has been a continuing decline in the birthrate.
So what is to be done in response? It was from that viewpoint that we proposed the child allowance. First of all we launched a child allowance of 13,000 yen [per month] in its first fiscal year, which is half the level of our initial goal. Therefore labeling this as "pork-barrel politics" and dismissing this with a single phrase is entirely different [from the true situation]. We will transform the social security system, which until now has been relatively generous towards the elderly yet quite tightfisted towards children, to become one that is solidly well-balanced. Another part of this has been making [public] senior high school tuition effectively free.
Therefore, in this sense as well, we have not been successful in properly conveying the situation to the public. Taking the budget for the upcoming fiscal year as another example, this too is something that I mentioned a bit earlier, but specifically we have been making a timetable for progress in our work to eliminate childcare waiting lists and also secured a budget. I believe that if the public understands such things thoroughly, then I will receive passing marks from the public as well.

CABINET PUBLIC RELATIONS SECRETARY: Now I'll take the next question. Next, Mr. Matsuura.

REPORTER: I'm Matsuura with Kyodo News.
Mr. Prime Minister, you made a very strong statement yesterday that, should the opposition parties not participate in consultations on the tax and social security systems, it would be [equivalent to] a rebellion against history, and the opposition parties immediately started to protest against this. Amidst conditions in which the cooperation of the opposition is necessary at any cost, why did you make such a provocative statement? And do you have any intention to retract that statement?

PRIME MINISTER NAOTO KAN: When I said that at the party convention, if I remember correctly, immediately beforehand I had just introduced the book Defure no Shoutai ("The True Nature of Deflation") which I had read, a book that is still widely talked about. What I had said is that the age distribution is now changing quite drastically.
Regarding the fact that we have been late in generating policy responses to a change of such great magnitude, even though it is true that at the time I was in the position of the opposition party for many years, I also served as the Minister of Health and Welfare, and there is a feeling of regret, a feeling I myself share, that response measures focused on such dramatic changes in the age distribution have been delayed. In that light, I was thinking of the fact that we, including the opposition parties, are all in such a situation, and as for my use of the word "history," the author was saying that this is an occurrence of only once in two thousand years within the history of Japan.
That is, the author was saying that within Japanese history, except for a few years two thousand years ago, it is the first time at least since the dawn of recorded history or known history that the population is decreasing. With that in mind, I stated that it is an absolute imperative for we politicians alive today to discuss these issues in a proper manner, and to fail to do so is, in a sense, discounting this history. I have no particular plans to retract that comment or do anything else of that nature.

CABINET PUBLIC RELATIONS SECRETARY: We have now gone beyond our scheduled time, so this will be the last question. Mr. Tanaka, please.

REPORTER: I'm Tanaka of the Mainichi Shimbun.
I have a question regarding the relationship between the censure motions and this reshuffle. There are three ministers who left the Cabinet in this reshuffle, of which two were persons against whom censure motions had been passed and one who had reached the stage of having had a censure motion filed against her, and thus all three were related to the censure issue. Mr. Prime Minister, you said that there was no connection between the censure issue and the reshuffling, but the opposition parties are deepening their distrust as a result. Please tell us once more about whether or not you anticipated incurring such a situation upon reshuffling your Cabinet and how you sorted out the situation to arrive at this reshuffling.

PRIME MINISTER NAOTO KAN: Well, I believe I have already stated the essential facts earlier. Stated another way, it is not the case that I completely ignored the crisis facing the party or responses to the Diet. It is naturally a matter of course to consider such things in an integrated manner. I stated that, rather than consider the situation in terms of such categories, I considered what would be the most potent structure, as well as what structure would better enable us to carry out our responsibilities, for both the Cabinet and the party in order for us to overcome the critical situation facing present-day Japan.
As for my thinking regarding the issue of the censures, various discussions have taken place recently. I too have introduced such discussions here as well on several occasions. However, today I will refrain from presenting the details of those discussions on this occasion, as this reshuffle was not undertaken on the basis of such matters, as I have just said.

REPORTER: What name would you give to this reshuffled Cabinet?

PRIME MINISTER NAOTO KAN: I feel that the time has come to show in concrete terms the fruits of my "true-to-its-word Cabinet," the term which I have been using until now. Therefore my approach is one of pressing forward with this "true-to-its-word Cabinet."

CABINET PUBLIC RELATIONS SECRETARY: I will now bring the press conference to a close. Thank you for your cooperation.