[Provisional Translation]
[Opening Statement by Prime Minister Takaichi]
Good evening, everyone, and thank you for being here.
About a year ago, at the time of the House of Councillors election last July, I was simply one member of the House of Representatives, not holding an official post in either the Government or the House. Even so, many candidates asked me to deliver speeches in support of their campaigns, and as I traveled across the country, I repeatedly heard young people say that the policies of the Liberal Democratic Party lacked a vision for the future.
Amid rising prices, rice shortages, and declining industrial competitiveness, I was acutely aware of the indefinable sense of stagnation that had come to pervade Japan as a whole. A conviction began to well up within me: Japan is capable of far more than this; we must somehow make changes to the status quo; and unless we act now, it will be too late.
I subsequently decided to make one more attempt in the Liberal Democratic Party presidential election, which was, unexpectedly, held last autumn.
I wanted to transform the anxiety the people of Japan feel about their lives today and their future into hope, and ensure that young people will have places where they can work and build their futures.
The world was at a major turning point. In the Middle East, the situation in Gaza was spilling over into the wider region, while Russia’s aggression against Ukraine was becoming protracted. Advanced countries were making a decisive shift away from leaving matters to the market and toward strategic industrial policies pursued through public-private cooperation. Japan, too, was being called upon to formulate a national strategy that squarely confronts these historic changes.
I prevailed in the LDP presidential election against just such a backdrop. I then approached the House of Representatives election in February -- the election in which the people chose which party would govern -- with my own position as Prime Minister at stake. As a key campaign pledge, I set out a course of responsible and proactive fiscal policy. I appealed strongly to the Japanese people that unless we undertake major policy shifts now, it will be too late, and I sought their mandate. It was truly an election fought with the aim of setting the Japanese economy visibly and powerfully in motion.
The result was that the people entrusted us with a large number of seats in the House and gave us a powerful mandate to carry these important policy shifts through to completion, whatever it might take. I have devoted myself fully to this special session of the Diet, believing that my mission is to steadily deliver on those pledges.
During this Diet session, all 64 bills submitted by the Government were enacted, including the Act on the Establishment of the National Intelligence Council and the amended Imperial House Law. I understand that, among ordinary Diet sessions and special sessions of comparable scope, this is only the fourth time since the end of the Second World War that every Government-sponsored bill has been enacted.
A great many important laws have now been enacted -- laws that will strengthen Japan's industrial competitiveness while protecting the lives and livelihoods of the people. These include the amended Strengthening Industrial Competitiveness and the amended Industrial Technology Enhancement Act, which substantially enhance support for regional investment and strategic technologies such as AI and quantum technology; legislation promoting the recycling of solar panels by introducing waste disposal regulations for large-scale solar power operators; and the amended Health Insurance Act, which advances measures that include effectively eliminating out-of-pocket expenses for standard childbirth costs.
They also include legislation expanding tuition support for high school students, which makes high school tuition effectively free; the amended Sewerage Act, which promotes the renewal of aging sewerage infrastructure; and legislation establishing the Disaster Management Agency to centralize command functions for disaster preparedness and emergency response in order to better protect the public from earthquakes and other natural disasters.
In addition, to deter crime and maintain public safety, we enacted amendments to the Act on Prevention of Transfer of Criminal Proceeds and legislation strengthening identity verification requirements for mobile phone contracts to prevent their improper use, which will contribute to the eradication of anonymous and fluid criminal groups.I extend my sincere gratitude to members of both the ruling and opposition parties, as well as to the staff at all our ministries and agencies, for their tremendous efforts.
Measures to address the rising cost of living now facing the public have been the highest priority of the Takaichi administration since its inauguration last October.
It was in that context that, shortly after the special session of the Diet began, the situation in the Middle East became increasingly unstable following the United States’ attack on Iran. The closure of the Strait of Hormuz subsequently disrupted the supply of goods and materials both globally and here in Japan.
The Takaichi Cabinet has responded with its utmost efforts to protect the lives and livelihoods of the people and to prevent disruption to economic activity.
We convened the Ministerial Meeting on the Situation in the Middle East on a total of 11 occasions and adopted measures flexibly in response to evolving circumstances. By securing alternative sources of crude oil and naphtha and making agile releases from national stockpiles of crude oil and medical gloves, among other steps, we reliably secured the necessary overall supply volumes. We also duly resolved individual bottlenecks in distribution by methodically addressing them one by one.
For example, concerns expressed by sole-proprietor tradespeople and others regarding supplies of paint and thinner have declined by more than 80 percent following the introduction of arrangements under which manufacturers sell these products directly to building contractors and other users.
In the case of medical gloves, the number of medical institutions receiving distributions in response to requests has fallen by more than 90 percent.
We are also providing subsidies for gasoline, diesel fuel, heavy fuel oil, kerosene, and other fuels as an emergency measure to mitigate drastic price fluctuations.
Through these measures, we have kept the nationwide average price of gasoline in Japan at approximately 170 yen per liter, while prices in parts of Europe have exceeded the equivalent of 300 yen. We have also supported public transportation and the agriculture, forestry, and fisheries sectors.
Support is also being provided to assist with the cost of electricity and natural gas consumed during the period from July through September.
At present, implementation is proceeding on the economic package formulated at the end of last year, which incorporates support worth more than 80,000 yen for a standard household.
In addition to the abolition in April of the provisional tax rate on gasoline, payments under the Child Support Allowance for Coping with Rising Prices, which provides 20,000 yen per child, are expected to begin in every municipality by the end of this month.
Moreover, grants to local regions for prioritized assistance under the supplementary budget for fiscal 2025 reached the stage where all municipalities had begun implementing at least some of their projects only this June. The next funding decisions for the portion financed by the fiscal 2026 supplementary budget are scheduled for late August.
In addition to these, we are drawing on both the supplementary budget for fiscal 2025 and the initial budget for fiscal 2026 to implement a broad range of measures to address rising prices. These include the regularly scheduled revisions to the reimbursements provided for medical and nursing care services, measures to make high school education effectively free, fundamental reforms to substantially reduce the financial burden of school lunches on households, and measures to create an environment that enables wage increases at small- and medium-sized enterprises and micro-businesses.
Furthermore, there are numerous other measures to address rising prices whose benefits have not yet reached people, such as income tax reductions at the end of 2026 that will result in 30,000 to 60,000 yen being returned to each taxpayer.
Partly as a result of these measures, Japan’s rate of price increases has been kept in check at 1.7 percent, the lowest rate among the G7 countries, while the rate of increase in real wages stands at 1.8 percent, the highest level in the G7.
Real wages have risen year on year for five consecutive months, while this year’s spring wage negotiations between labor and management resulted in increases exceeding 5 percent for the third consecutive year. These are some of the encouraging signs we have begun to see.
The rise in share prices since I assumed office as Prime Minister is providing the public with some assurance, including by contributing to the financial stability of the pension system. It is also making it easier for companies to raise funds and improving the environment for capital investment and wage increases.
I believe that the Japanese economy is now truly beginning to gain momentum in a tangible way. Going forward, we will continue to take all necessary measures flexibly and firmly to address rising prices, including through the use of the 2.5 trillion yen in contingency funds for responding to the situation in the Middle East and other developments.
Now, staying faithful to the campaign pledges advocated during the general election, the Takaichi administration is advancing its examination of refundable tax credits. We are at the same time considering reducing the consumption tax rate on food and beverages, to serve as an interim support measure until the tax credits get underway. These initiatives are designed to lighten the burden borne by low- and middle-income citizens.
Discussions are currently underway in working-level meetings of the National Council for Social Security. I wish to express my heartfelt appreciation to all those involved who have engaged in various efforts to coordinate this, and I look forward to an early conclusion of those discussions.
This is an important topic that will impact the daily lives of the Japanese people, and I understand that careful discussions are still ongoing even now because there are substantial differences in views on this matter. That said, once a conclusion is reached, we intend to move quickly to submit legislation that will enable people to feel for themselves the effects of this lighter burden at the earliest possible time.
Regarding social security as well, under our policy of halting increases in insurance premium rates for the working generation and then lowering those rates, within this fiscal year we will bring our reforms to fruition and clearly set out an implementation schedule in order to continue our efforts to bring reforms to both the benefit and the burden sides.
Furthermore, we have steadily imparted concrete shape to pursuing responsible and proactive public finances, strengthening the nation's intelligence capabilities, and fundamentally reinforcing our security policies, the critical policy shifts laid out in our governing pledges.
We have already successfully materialized important pledges we made to the Japanese people. Notably, we have compiled Japan’s Growth Strategy and our Strategy for the Future of Regions, both of which will promote strategic investments that enhance resilience against potential crises and advance growth investments; established the National Intelligence Council and the National Intelligence Bureau; launched the Committee on Foreign Investment in Japan; and revised the so-called five categories under the Three Principles of Transfer of Defense Equipment and Technology, among other achievements.
In addition, the members of my Cabinet are also hard at work to advance each of the items in our pledged governing platform one by one, namely promoting Japan's world-class exports of agricultural, forestry, and fishery products and foodstuffs; providing assistance to improve the quality of education and support young people, with a view to bolstering our human resource capabilities; providing support for children and child-rearing so that human resources can be fully utilized; supporting women's health throughout their entire lives; promoting proactive preventive medicine; responding to our population decline; ensuring the provision of essential services; maintaining and improving the nation's disaster preparedness; promoting the preventive maintenance of aging infrastructure; advancing disaster reconstruction; ensuring public law and order and public safety; and realizing a society of well-ordered and harmonious coexistence with foreign nationals.
The Takaichi Cabinet has consistently advocated for using responsible and proactive public finances to draw out the latent power of Japan and the Japanese people, bolster our strength as a nation, and ensure that the Japanese people lead prosperous lives. The fiscal 2027 budget will be the first in which we have reflected the approach of responsible and proactive public finances throughout the budget formulation process as a whole. This truly positions 2027 as the first year for responsible and proactive public finances.
Japan's potential growth rate has been sluggish in comparison to other major advanced nations, but it is not the case that Japan's strengths have eroded. Instead, what we lacked was sufficient investment and the national resolve to believe in the latent power of the Japanese people, cultivate that potential extensively, and link it to Japan's economic growth.
As I mentioned at the beginning of my remarks, when we look around the world, there has been a major trend to embrace new industrial policies in which the government takes the initiative to act first, aiming at resolving key social issues with public and private sector entities working hand in hand.
If we fail to take on these major policy transitions and we postpone making investments toward the future, Japan's technologies, human resources, and industrial infrastructure will weaken and we will lose opportunities for growth.
A country that never takes on challenges has no future.
Politics seeking only to maintain the status quo will never give rise to hope.
If we are to break free from the excessive austerity mindset that has gripped us for many years and put Japan on a growth trajectory with domestic investment as the starting point, we must take action immediately, or else it will be too late.
Japan’s Growth Strategy and our Strategy for the Future of Regions will serve as the compass for these efforts.
Japan has a wide array of outstanding technologies. These include fields such as semiconductors and shipbuilding that will serve as dependable sources of revenue in the near term, fields such as physical AI, plant factories, and land-based aquaculture, where we are proceeding with demonstrations earlier than other countries and which we expect to become our next moneymakers, and fields such as quantum technologies and fusion energy, which will begin from research and development assistance as the seeds for growth extending into the future. Beyond that, Japan also enjoys a large number of regional resources with great potential, such as non-gluten food items and tourism resources.
In order to fully unleash the strengths Japan enjoys, we had 186 experts and corporate representatives participate in numerous truly in-depth discussions through cooperation among industry, academia, and government, taking perspectives such as the necessity of lowering various risks such as those related to economic security, the possibility of gaining overseas markets, and international competitive advantages within relevant technologies. Through these discussions we chose to narrow the focus of Japan’s Growth Strategy to 17 strategic fields and 62 products and technologies.
The Takaichi Cabinet's Growth Strategy is not only for Tokyo or a small handful of major corporations. Japan's greatest potential for growth lies in our regions.
We will pursue our Strategy for the Future of Regions through three types of plans: Strategic Industrial Cluster Plans, in which national government regional offices work in coordination with local authorities to establish wide-area industrial cluster plans which have their start in large-scale investments by companies related to the 17 strategic fields; Regional Industrial Cluster Plans, in which the prefectures and municipalities lay out plans for utilizing and developing local resources and forming industrial clusters; and Local Industry Growth Plans.
The Government will provide active and sustained support throughout the process, not as one-off assistance but instead through multi-year plans, with the aim of establishing wide-area, high-quality industrial agglomerations that extend from supply chains to the development of ecosystems for fostering human resources.
Additionally, we will steadily implement tangible measures to address the eight cross-sectoral topics identified within Japan's Growth Strategy, such as fostering human resources, cyber security, and startups, and we will expand trailblazing public-private investment all throughout Japan within the 17 strategic fields and the industrial cluster plans.
In order to induce the greatest possible amount of public-private investment, it is imperative that we make it possible for companies and local governments to have predictability over multiple years as they engage in operations. We must also provide support in a flexible manner at the scale necessary to lead to the results we desire. For that reason, we will implement fundamental reforms to the way government budgets are formulated.
First of all, measures that are needed as a matter of routine government planning will, in principle, be funded through the fiscal year's initial budget. We will increase predictability for businesses and local governments by breaking away from the reliance we have had on funding through supplementary budgets.
We will also establish a “Strong and Prosperous Japan” Investment Framework targeting measures that significantly increase domestic private-sector capital investment or the potential growth rate. This Investment Framework will not impose predetermined request limits known as "ceilings" upon ministries and agencies at the stage they submit their policy proposals. This is to ensure we do not close any doors on new proposals necessary for future economic growth or the security of the Japanese people before they can even be considered.
Naturally, this does not mean that all proposed projects will be budgeted for as requested. During the budget formulation process, we will place priority on allocating funds to measures that are truly effective. When measures are necessary, the Government will become one that carves out paths toward implementation, overcoming institutional barriers and precedent-related obstacles rather than dismissing unprecedented approaches out of hand.
The projects subjected to this budgeting process will be, as a general rule, ones based on plans which extend across multiple fiscal years. Alongside this, for fields that are particularly significant in terms of economic security, we will secure adequate funding over multiple fiscal years and moreover manage such funding separately, within special accounts.
Will we take on challenges such as this, or will we postpone investment in the future as we sit idly by? The Takaichi Cabinet chooses to meet these challenges head on.
We aim to have 250 trillion yen in domestic private-sector capital investment and GDP approaching 1,100 trillion yen in fiscal year 2040. This 250 trillion yen target is the figure resulting from the business community adding 50 trillion yen to its earlier target of 200 trillion yen, in response to the Government's policy of vigorously backing private sector investment.
We also intend to firmly establish the real GDP growth rate at a level above 1 percent and the nominal growth rate at a level exceeding 3 percent at the earliest possible time, and then raise those rates further.
Through Japan’s Growth Strategy and our Strategy for the Future of Regions, we will induce public-private investment, strengthen our supply capacities, increase employment and incomes, improve consumer sentiment, and realize a virtuous cycle under expanding GDP, in which business profits rise and tax revenues increase naturally, even without raising tax rates.
This challenge we are taking on does not mean there will be extravagant fiscal outlays. The Public-Private Investment Roadmap establishes key performance indicators to gauge progress, clearly sets out who, what, where, when, why, and how investments are made, and applies the PDCA cycle to flexibly review and revise ineffective measures.
In response to our approach, some have also pointed out that the words "fiscal soundness" have disappeared from the Basic Policy on Economic and Fiscal Management and Reform or that proactive public finances will result in the loss of fiscal discipline. The important point is not whether the words "fiscal soundness" appear within the Basic Policy, but rather that, in the same manner as the IMF, the OECD, the World Bank, the EU, and others, we indicate in concrete terms which indicators we will use to assess our fiscal sustainability and the course by which we will realize it.
At the very heart of the Takaichi Cabinet's fiscal management goal is the steady reduction of the debt-to-GDP ratio. In that context, we will conduct a careful examination of the scale of fiscal spending that will be possible, and we will ensure fiscal sustainability by, among other actions, laying out in specific terms the total amount of sovereign debt to be issued over the year.
In fact, since I took office, we have set clear priorities when drawing up the budget, and we have been able to keep the total amount of newly issued sovereign bonds in check. In order to raise our growth potential and safeguard the daily lives of our citizens, we have resolutely carried out necessary investments while also ensuring fiscal sustainability over the medium to long term. That is responsible and proactive public finances. It is not a matter of choosing between growth on one hand and fiscal discipline on the other. The realization of both simultaneously is the meaning of the word "responsible" in that expression.
As we press forward in our shift toward responsible and proactive public finances, we will engage in communication with the markets in a highly transparent and prudent manner. By doing so, we will also maintain market confidence. The Takaichi Cabinet will see this challenge through to the end, no matter what.
Turning to the increasingly unstable international landscape, we face an urgent need to respond to the large-scale use of unmanned systems as well as other new forms of warfare, as well as challenges in the cyber, cognitive, and economic domains. Threats have already begun to emerge in Japan. These include the illicit transfer of advanced technological information to foreign intelligence operatives, cyberattacks targeting critical information held by both the public and private sectors, and the spread of disinformation aimed at manipulating public opinion in ways that serve the interests of foreign states. In response, we have made all-out efforts to strengthen the nation's intelligence capabilities, enhance our national security policy, and pursue a robust diplomacy.
With regard to bolstering our intelligence capabilities, we will establish the National Intelligence Council and the National Intelligence Bureau on July 31. In addition, the Committee on Foreign Investment in Japan has already been established and has held its inaugural meeting. These initiatives, however, represent only the first steps in our intelligence reform efforts. We will continue to examine various measures, including those for strengthening our foreign intelligence capabilities and enhancing our ability to prevent undue foreign interference, while giving proper consideration to maintaining an appropriate balance with the freedoms and human rights of the Japanese people.
With regard to reinforcing our national security policy, we will be better able to meet expectations toward our defense equipment by revising what is often referred to as the "five categories" of defense equipment and technology eligible for transfer. This will help enhance the defense capabilities of our allies and like-minded partners, which in turn contributes to deterring the outbreak of conflict. It will also facilitate the mutual provision of parts and other equipment in times of contingency, further strengthening Japan's own national security.
Furthermore, in order to ensure that Japan is fully prepared to defend itself, we will accelerate our review of the Three Strategic Documents, with the aim of completing the revision by the end of this year, taking into account the recommendations of the governing coalition. This review will focus on further strengthening our deterrence and response capabilities, including by reinforcing our defense industrial base through such measures as the establishment of a new entity dedicated to supporting defense production.
Precisely because the international environment is becoming increasingly uncertain and unstable, it is essential that we strengthen cooperation with our allies and like-minded partners. Japan will, through its own initiative, continue to advance and further develop the Free and Open Indo-Pacific (FOIP), which is based on principles such as freedom, openness, diversity, inclusiveness, and the rule of law.
In response to the situation in the Middle East, the Takaichi Administration launched “POWERR Asia” as the first flagship initiative under the updated Free and Open Indo-Pacific (FOIP). Through this initiative, we will work with countries across the Indo-Pacific, including those in Asia, to strengthen cooperation in securing supplies of crude oil and other essential resources and maintaining resilient supply chains. We will also promote the establishment of a regional system for the coordinated stockpiling and release of strategic petroleum reserves across Asia and advance efforts to diversify energy sources. At the G7 Summit, we likewise confirmed our commitment to cooperate on the joint stockpiling of critical minerals.
The 316 seats entrusted to us by the Japanese people in the House of Representatives election this February represent an immense responsibility. I am keenly aware of the weight of that mandate each and every day as I carry out my duties. We will devote our utmost efforts to delivering on the pledges we have made. Politics that cannot realize even that most fundamental responsibility will lose the trust of the people in an instant.
During the recent special session of the Diet, we devoted our full efforts to delivering on the commitments we made to the Japanese people during the election campaign. And even though the Diet session has concluded, our work to fulfill those commitments will not stop. On the contrary, I am determined to accelerate our efforts. Our work has only just begun. As we strive to achieve meaningful results, we may well encounter significant opposition. Yet I remain unwavering in my commitment to deliver on the promises we have made. I once again sincerely ask for the understanding and continued support of the Japanese people as the Takaichi Administration moves forward with the next phase of its efforts.
I will end my opening remarks here. Thank you.