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Press Conference by the Chief Cabinet Secretary

Tuesday, November 18, 2014 (AM)

Press Conference by the Chief Cabinet Secretary (Excerpt)

[Provisional Translation]

Opening Statement by Chief Cabinet Secretary Suga
I would like to give an overview of the Cabinet meeting. The meeting approved 20 general and other measures, as well as the promulgation of legislation, cabinet orders and personnel decisions. In ministerial discussions following the Cabinet meeting, Prime Minister Abe and the Minister of Finance both made statements concerning the use of the FY2013 Audit Report.

Q&As

  • The second quarter of negative growth in the GDP
  • The issue vitalizing the local economy
  • The issue regarding the dissolution of the Diet

REPORTER: Following the second quarter of negative growth in the GDP growth rate, the opposition parties have stepped up their criticisms that Abenomics has failed. What are your thoughts about such opinions?

CHIEF CABINET SECRETARY SUGA: Firstly, I do not know from what perspectives such criticisms are being levelled, but I would begin by pointing out that just before the Abe administration was inaugurated there had been three consecutive quarters of negative GDP growth. Through the implementation of the “three arrows” of Abenomics, the situation surrounding the economy has changed significantly. It was as a result of these changes that we were able to raise the consumption tax rate to 8 percent. Is it not therefore a fact that thanks to the consumption tax raise, the additional tax revenue of more than 8 trillion yen has played a significant role in efforts towards realizing fiscal consolidation? Furthermore, is it not a fact that although the dampening effect of the recent consumption tax rise has persisted, Abenomics has itself undoubtedly contributed to this economic recovery? This situation is completely different from the previous administration, when there were three consecutive quarters of negative GDP growth under the Democratic Party of Japan (DPJ). Under such circumstances it would have been impossible to raise the consumption tax rate. It is thanks to Abenomics that the Japanese economy has recovered, making it possible to raise the consumption tax rate by three percent, resulting in more than 8 trillion yen of additional tax revenue. This additional tax revenue is playing a large role in efforts towards fiscal consolidation. Although raising the consumption tax by three percent may have impacted the growth rate, all things considered, it is an undoubted fact that the economy is on an upward track. Although the recoil reduction in demand due to the three percent rate tax raise and poor weather conditions of the summer months has resulted in negative growth in the recent quarter, on the whole the economy is on a trend of steady recovery, and movement towards revitalization of the Japanese economy under Abenomics remains stable. Even in the recent quarterly estimates for GDP growth, nominal employee compensation is up 2.6 percent over the previous year. This is the first such rise in 17 years. Therefore, a high rate of growth is being demonstrated, which indicates the gradual improvement in the employment and income-related environments. In that sense, I believe that the positive cycle of growth is continuing. I would like to state unequivocally that I do not believe the criticisms of the opposition parties to be valid.

REPORTER: You have just enumerated the results of Abenomics, but do you think that the Government will gain the understanding of the public for the continued implementation of Abenomics?

CHIEF CABINET SECRETARY SUGA: I believe we will gain public understanding. For example, in terms of real and pressing problems, prior to the inauguration of the Abe administration, the yen-dollar rate looked as if it would go beyond 75 yen to the dollar. Since then, the correction of the strong yen has continued and share prices are now roughly double what they were at that time. At the same time, investment returns on public pension funds have generated 25 trillion yen and the return on equity (ROE) for listed companies is 1.5 times what it was at the time of the inauguration of the Abe administration. In that sense, corporate income has also increased. As I just mentioned, in the recent quarterly estimate, nominal employee compensation was up 2.67 percent year-on-year for the first time in 17 years. It is for such reasons that it can be understood that the economy is undoubtedly on a trend of steady recovery. I believe that the public will understand these facts.

REPORTER: You have just repeatedly mentioned the three percent increase in the consumption tax, noting that its impact is persisting, that it may have impacted the growth rate and that there was a recoil reduction in demand. Was it not in fact a mistake to raise the consumption tax rate to 8 percent?

CHIEF CABINET SECRETARY SUGA: No, it was not a mistake. As I just noted, although the recoil reduction effect of raising the consumption tax rate from five to eight percent and poor weather conditions of the summer months have had a downward effect on the economy, overall the economy is still fundamentally on a trend of steady recovery. As I also previously noted, nominal employee compensation is also increasing, which amply demonstrates that the decision to raise the consumption tax was by no means a mistaken one.

REPORTER: I have a related question. You just mentioned that the three percent rate rise has contributed to an increase in tax revenue. Is it still the case that the potential increase in tax revenue that would be gained by raising the consumption tax rate by a further two percent is a major consideration when considering whether to implement the remaining two percent rise?

CHIEF CABINET SECRETARY SUGA: In addition to the additional tax revenue from the three percent increase in the consumption tax rate, thanks to Abenomics, tax revenues were better than expected, resulting in a further increase in revenues of 3 trillion yen, bringing the total increase to 11 trillion yen. Given that the Abe administration is one that seeks to achieve the difficult double feat of exiting from deflation and rehabilitating finances, we have stated that exiting from deflation is one of priorities to ensure that the economy does not relapse. The administration is therefore engaged in economic management to that end.

REPORTER: I have a related question. It is expected that as soon as today Prime Minister Abe will examine economic measures and the state of the economy in the meeting of the Council on Economic and Fiscal Policy, and give instructions. What are the concepts of the administration with regard to the necessity for current economic measures?

CHIEF CABINET SECRETARY SUGA: I am not in a position to state what the Prime Minister will or will not do, but what I will say is that the economy is on a trend of steady recovery, and that the fundamentals relating to revitalization of the Japanese economy remain stable.

REPORTER: You just stated that the decision to raise the consumption tax rate to eight percent was not mistaken. How do you evaluate at the current point the effects of the 5.5 trillion yen measures that were announced at the time of the rate rise to counteract a recoil reduction in demand?

CHIEF CABINET SECRETARY SUGA: As I have already stated, nominal employee compensation is up year-on-year by 2.6%, the highest growth rate for 17 years, which would, without a doubt, indicate that such measures have had an effect.

REPORTER: Mr. Takeshi Onaga, who was recently elected as Governor of Okinawa Prefecture, stated yesterday to members of the press that he would like to have a meeting with you at the earliest possible opportunity in order to convey his ideas and goals. He also noted that he had received indirect contact from the Prime Minister’s Office, so what is the current status of arrangements for such a meeting?

CHIEF CABINET SECRETARY SUGA: I have not heard anything whatsoever about this matter.

REPORTER: If Mr. Onaga seeks to have a meeting, would you be agreeable?

CHIEF CABINET SECRETARY SUGA: I have not heard anything about what ideas Mr. Onaga has and how he wishes to proceed. In any case, he has not yet actually been appointed governor.

REPORTER: I have a question concerning your meeting with the mayor of Takeo City yesterday. In a door-step interview after the meeting, the mayor spoke about running in the Saga Prefecture gubernatorial election, stating that he had reported his intention to you and that he was currently in the process of reaching a final decision. However, in yesterday afternoon’s press conference, when asked about the gubernatorial election, you stated that nothing of this nature had been discussed in your meeting with the mayor. Which is correct with regard to this matter?

CHIEF CABINET SECRETARY SUGA: I believe that my statement is correct. As I stated yesterday, I recognize the mayor to be a highly capable person, who is engaged in various measures to vitalize the local economy, working to create promising business ideas and implementing wide-ranging deregulation. He has spoken about these initiatives throughout the country. I know the mayor from the time he worked at the Ministry of Internal Affairs and Communications, and yesterday I asked him about his ideas for vitalizing local economies. However, with regard to the matter that you mentioned, we did not speak about anything specific, only referring in passing to the rumor that Governor Furukawa, the current governor of Saga Prefecture, may be intending to run for a seat in the House of Representatives.

REPORTER: May I ask another question? In a recorded program on November 14 on the BS Asahi channel, former Prime Minister Yasuo Fukuda stated that in July this year when he met with President Xi Jinping of China, he was accompanied by Secretary General of the National Security Secretariat Shotaro Yachi. However, in your press conference on October 14, when asked whether Mr. Yachi had accompanied Mr. Fukuda, you stated that there was no truth to such reports. In regard to this matter, which is correct?

CHIEF CABINET SECRETARY SUGA: There is no truth to such reports, and I have heard nothing to suggest otherwise.

REPORTER: I have a question that may be difficult for you to respond to concerning the dissolution of the Diet. Over the weekend, Minister Ishiba stated that the Liberal Democratic Party (LDP) and New Komeito must absolutely succeed in gaining a stable majority in the next election. Given that a serving Cabinet minister has spoken in this way about an actual target for the number of Diet seats, can we assume this to be the official view of the Government?

CHIEF CABINET SECRETARY SUGA: Rather than speaking from his position as a Cabinet minister, I think it was rather the case that he was stating his personal opinion. I would advise you to ask Minister Ishiba himself. There has been absolutely no discussion within the Cabinet about the dissolution of the Diet.

REPORTER: I have a related question. At a gathering of New Komeito yesterday, the Prime Minister quoted from a text that dates back to the time of the Battle of Tsushima during the Russo-Japanese War, stating: “Weather today fine but high waves.” The line before this quotation states, “…the Combined Fleet will immediately commence action and attempt to attack and destroy….” Are we to assume that this constitutes the Prime Minister’s opening salvo in an election battle?

CHIEF CABINET SECRETARY SUGA: I would like to refrain from offering any comment about a statement made by the Prime Minister to another political party. I am not aware of the statement and therefore unable to respond.

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