19 June 1997

(OPENING STATEMENT)

Yesterday the 140th session of the Diet came to a close. I would like to open today's press conference by reflecting back on the accomplishments of this session, while also referring to the tasks ahead. Firstly, the FY1997 budget draft and the many bills and treaties proposed by the Government were intensely debated in both Houses, with the budget approved before the current fiscal year started. In addition, 90 bills were passed, and 16 treaties were approved. I would like to take this occasion to express my sincere thanks for these efforts.

The incident involving the seizure of the Japanese Ambassador's Residence in Peru which occurred at the end of last year was concluded with the loss of three precious lives but the safe release of most of the hostages. I would again like to express my deepest condolences to the families of the victims, as well as my heartfelt thanks for the efforts of President Alberto Fujimori of the Republic of Peru and the Peruvian Government, the support of the international community and of the people of Japan. Both Houses passed resolutions immediately following the start of the Diet, as well as resolutions of gratitude after the incident had been resolved. I am very grateful that both Houses were able to put aside party and factional differences to support the position of the Government.

An investigative report has been released on the incident, and, learning an invaluable lesson from this incident, the Government of Japan will seek to respond with its best efforts in the future.

Of the bills which were passed in this session, the amendment to the Special Measures Law to ensure continued utilization of U.S. military facilities and areas was, for me, a decision which went right down to the wire. On the one hand, I was extremely sensitive to the burden and the pain which the people of Okinawa have borne, while on the other, I wanted to ensure the stable utilization of the U.S. military facilities and areas based on the Japan-U.S. Security Treaty. I struggled with these two aspects in my mind, eventually deciding to put through the minimum legal amendment, and this bill was passed in both Houses with significant majorities. However, for the Government of Japan, the real test is yet to come in terms of dealing with the Okinawa issue. In order to ensure a fresh start for Okinawa this year, the 25th anniversary of Okinawa's reversion to Japan, I have resolved to further develop the Cabinet's efforts toward the reorganization and reduction of U.S. military facilities and areas and toward boosting Okinawa's economic vitality.

Further, in regard to the Japan-U.S. Security Arrangements, the other day I fulfilled a promise by announcing the results, to date, of the review of the Guidelines for Japan-U.S. Defense Cooperation. These Guidelines are an essential element in increasing confidence in the Japan-U.S. Security Arrangements. With the understanding of the people of Japan, my intention is to push forward in an open manner with consideration of what kind of cooperation Japan can undertake within the framework of the Constitution in terms of cooperation on a daily basis, cooperation in the event of an armed attack on Japan and cooperation in the event of a situation occurring in the area around Japan which could have a significant impact on Japan's peace and security. We are aiming to conclude the review process in autumn of this year. I also intend to ensure the transparency of this work in the eyes of China, the Republic of Korea and Japan's other neighbors.

This Diet session was the point of departure for the six reforms which I am advancing. Concrete progress is being seen in all areas of reform. With regard to fiscal structural reform in particular, the Conference on Fiscal Structural Reform reached a conclusion on the reform and reduction of expenditures over the period of intensive reform which will start in 1998, and this was immediately decided on by the Cabinet.

We would not leave a debt for our children and our grandchildren. On the basis of this resolve, we must rebuild the finances of the central and local governments, which are currently on the verge of bankruptcy. Based on the above Cabinet decision, over the summer ahead, we will look at ways to cut general expenditures in the FY1998 budget to below the level of FY1997 and to shape a well-balanced budget. We must engage in intensive work on assessing approximate budget requests in order to compile a budget by the end of the year. At the same time, I would also like to draft a bill for fiscal structural reform and submit it to the next Diet.

Reform of the social security system, which is closely linked to public finance, has taken the first step forward with the passage of a bill on reform of medical insurance. At the next Diet session, I look forward to the early passage of the bill on care insurance, which unfortunately at this session became subject to continued deliberation. I am also determined to undertake a cross-sectional review ranging across medical care, pension and social welfare, starting with the drastic reform of the medical insurance system, including a review on pharmaceutical price standards, and to push forward with reforms aimed at developing a social security system which can effectively provide high-quality social security services.

Economic structural reform is also essential if the economy and national living standard are to continue to develop strongly, and also if we are to achieve sound finance and high-quality welfare. As exemplified at the current Diet session, where bills were passed on issues such as the reorganization of NTT and the lifting of the ban on cross-holding companies, I am pushing forward with bold reforms of distribution, energy and telecommunications, which are the foundations for economic activity. The aim of these reforms is to raise these services to a high international standard by the year 2001, as well as to facilitate the creation of new industries in the 15 areas where Japan's economic future lies.

Factors such as the progress in information and telecommunications technology has spurred forward globalization, while in 1999, a new currency, the Euro, will emerge. Amidst these tremendous changes which we are seeing, reform of financial systems is also an urgent task. At the Diet session, Foreign Exchange Law amendments, which are regarded as the leading reform measure in this area, were completed, while the stock option system was also revised. Moreover, just last week, we clarified the overall picture for reform of such elements of the financial systems as banking, securities and insurance, that is to say, the specific measures and schedules for these sectors. For example, as the first stage in the deregulation of brokerage commissions for stock trading, the areas of liberalization will be expanded in April 1998, and liberalization will be completed by the end of 1999. I have advocated the three principles of free, fair and global. With respect to the present situation, rule violations will be met with a strict response under clear rules, stressing the aspect of fairness in the process of reforms, and we will increase the transparency of and confidence in the market. We will also look into the most desirable method of finance-related taxation systems.

With regard to education as well, I feel that we have to hasten systemic reforms in order to create systems appropriate for the 21st century, based on the report to be released by the Central Council for Education and incorporating a wide range of views from the general public.

Turning to administrative reform, a bill for the establishment of a Finance Monitoring Agency and a bill to realize the openness and autonomy of the Bank of Japan were both passed at this Diet session, and work will be launched on the reorganization of the central ministries and agencies what could be described as the core of administrative reform. The Administrative Reform Council is currently conducting hearings with the ministries and agencies. I strongly hope that ministries and agencies will take this opportunity to positively contribute their wisdom to Japan as a nation, which will mean giving serious thought to the future of our country without getting sidetracked by ministry and agency interests.

Once the hearings have been completed, as the Chair of the Council, I am determined to take the lead in an intensive debate aimed at finalizing a draft proposal by the end of November which will contribute to the future of our country. I also want to push forward consideration, with a steady flow of results, on the division of roles between the government and the private sector, on special corporations and on deregulation, based on the principle of leaving as much to the private sector as possible.

At the same time, the promotion of decentralization is an extremely important task, on par with the reorganization of central ministries and agencies. While seeking efforts by local public bodies toward administrative reform, once we have the recommendations to be submitted by the Decentralization Promotion Committee, the Government will draft promotive plan and execute it as soon as possible. Naturally, these results will and must be reflected in the formulation of measures for reorganization of the central ministries and agencies.

The ultimate objective of the six reforms or, in other words, the reform of the entire economic and social systems which have taken deep root in our country for the 50 years since WWII is to create a society in which the efforts of each individual in seeking to realize his or her dreams and desires are rewarded. The major presumption behind these reforms is self-responsibility. It is a fact that there will be harsh aspects to these reforms. Clearly, we should not place top priority on competition only; we should also have respect for the family and the community; needless to say, we should also treat Japanese culture and tradition with care. Yet there is no mistaking the fact that as the world becomes one, if Japan does not shift away from protection through regulation and dependence on central and local finance, Japan's dynamism will fade.

Simultaneously, it cannot be denied that many people have believed that going to a good school and joining a major organization was the key to happiness, which has led to a standardized educational system and excessive pressure on proceeding to higher education. It will become increasingly important to move toward a situation in which people with a broad perspective, foresight and the ability to act can fully exercise their abilities.

This is not simply an economic issue. It will also be important to place value on the field of the arts, which provide people with an emotional richness, and on the performance of athletes on the international stage. Moreover, we must create a society where people seek to preserve traditional skills by making the effort to learn them, and where people respect each other's efforts in the areas of their choice, including contributing to local communities as they can, such as through volunteer activities; this is the way toward Japan becoming recognized as a friendly nation, which is broad-based and rich in diversity.

The six reforms aim to create such a country, and to lay the course for such a bright future. At the same time, these reforms have barely been launched, and particularly during the reform transition period, they will be accompanied by a great deal of pain. Nonetheless, we must not hesitate for fear of pain. Together with all persons of like mind, I desire to transcend this pain and push these six reforms forward in one clean sweep.

After I have finished this press conference today, I will depart for the United States and Europe. At the Summit which will be held in Denver, there will in all likelihood be discussions on a wide range of issues, such as global environmental issues, development issues (including Africa), anti-terrorism measures, as well as other issues which face all of the advanced countries, such as aging and unemployment. I look forward to engaging in a frank exchange of views with the other leaders, including a discussion of regional situations such as the upcoming reversion of Hong Kong, and will endeavor to produce fruitful results.

At the United Nations Special Session on the Environment which will be held immediately afterward, I will work toward further promoting international efforts on serious environmental issues, such as global warming measures. In particular, Japan will take the chair for this year's Third Conference of the Parties to the Framework Convention on Climate Change (COP III). This meeting will be held in Kyoto this December. In this regard too, the United Nations Special Session will be an extremely important forum, and I think that among the discussions of the leaders of the advanced countries, as well, environmental issues will suddenly take on a weight far beyond that which they have had in the past. After this, I will be meeting with EU leaders, and going on to engage in dialogue with the leaders of Northern Europe, which, to my surprise, will apparently be a first. I hope to contribute to widening Japan's diplomacy by even a little.

I have offered my frank impressions on the occasion of the closing of this ordinary Diet session, and would once again like to take the opportunity to thank the various parties, the Diet members of the various factions, and the people of Japan for their understanding and cooperation during this session. I would also appeal to you from my heart for your continued and strong support for the Cabinet as it puts all of its energies into accomplishing national reform.