CABINET PUBLIC AFFAIRS SECRETARY: We will now begin the press conference by Prime Minister Shinzo Abe.

We will begin with a statement from the Prime Minister. Mr. Prime Minister, your opening statement, please.

Opening Statement by Prime Minister Shinzo Abe

We have just now decided upon emergency economic stimulus measures through the second meeting of the Headquarters for Japan's Economic Revitalization and the Cabinet meeting that followed. I would like to explain briefly the position that these measures hold as well as key aspects of the contents of the package.

The Abe administration considers the revival of the economy to be the area which comes first and foremost among its policies. It will be absolutely crucial for us to break away from prolonged deflation and the appreciating yen if we are to restore a respectable society that is sure to reward those who work hard. Unfortunately, DPJ administrations consistently placed emphasis on how to distribute the pieces of the economic "pie" while giving insufficient attention to how the country as a whole can profit, or how to make the economic pie itself bigger as a whole or how to expand it. I think it is fair to say that they were lacking in ideas.

The Abe administration will first of all change the basic philosophy of government policies. We will boldly transition away from redistribution against a backdrop of diminishing equilibrium towards the creation of wealth through growth. We will bid farewell to an economy that continues to wither and aim to create a robust economy generating innovations and new freedoms one after the other, resulting in expanding employment and income. I believe that in order to restore a robust economy we must develop simultaneously the three prongs of bold monetary policy, flexible fiscal policy, and a growth strategy that encourages private sector investment.

Bold monetary policy achieved through the cooperation of the government and the Bank of Japan will be indispensable for breaking away from deflation and the appreciating yen. In addition, it will be important to utilize money supplied by the Bank of Japan. For that reason, first of all the government must itself take the initiative in fostering demand and prevent business activity from slumping further.

At the same time, it is impossible for the finances of the national government to go on creating demand indefinitely. In order to enjoy sustained growth, we must generate a virtuous circle in which companies borrow money and invest it assertively to boost turnover, and then in turn increase employment and wages. In this light, it is critically important to have a growth strategy enabling us to look to the future with definite expectations that the Japanese economy will grow. We will at the same time work to achieve a surplus in the primary balance.

The measures compiled today are the first stage of a policy package that is to be implemented in a unified and powerful manner to a degree altogether different from what has come before. As for what the package entails, it is composed of the three priority areas of, first of all, reconstruction and disaster prevention, and then the creation of wealth through growth, with the third being securing safety of people's livelihood and regional revitalization.

A distinctive aspect of this package is that we are placing priority on these three areas. For example, we will engage in the reconstruction of infrastructure to safeguard people's lives and livelihoods, with roughly 500,000 urgent inspections to be performed in the maintenance of national roads alone.

This package also demonstrates our stance of giving a high degree of consideration to people's day-to-day lives. To cite some specific examples, to assist young people, we will create a system for supporting companies that are eager to take on workers as regular employees. To help working women, we will put measures in place for the temporary care of children and for job placement assistance for nursery teachers while enhancing assistance for child-rearing in the local regions. For the sake of children and the elderly, we will also engage in efforts to ensure the safety of roads which children use to go to school and increase the degree to which society is "barrier-free." For forward-looking small local factories, we will also reinstate subsidies in the area of manufacturing that had been abolished under the review of government programs under the DPJ administrations and provide assistance for developing prototypes and other corporate endeavors. Through these measures we will reach 10,000 companies.

In addition, in the area of tax reform, in order to assist people who work hard, we will undertake measures to expand the wages companies pay. For the elderly, I would like to incorporate measures to make educational funds that are donated by grandparents to grandchildren exempt from taxes. In this way, today's package includes a great variety of measures that address in a thoroughgoing way a wide range of situations people encounter in their lives.

Looking at the size, the total project scale exceeds 20 trillion yen, with government spending of 13 trillion yen coming from the supplementary budget, making this package the largest scale in history, aside from the provisional, extraordinary response at the time of the Lehman Shock. These measures will boost real GDP by roughly 2% and create employment for approximately 600,000 people. I consider this to be a package of full-fledged economic measures that demonstrate our strong resolve and our clear commitment to economic revival.

While we hear some criticism that this is just the distribution of wasteful public works projects as the LDP used to do in days gone by, this is not the case. I would like to make it clear that this is not rapid pork-barrel spending. We have truly broken away from the ways of the old-style LDP. We will place priority on projects that safeguard the people's daily lives and projects that stimulate growth and the revitalization of local areas. We will make the contents of the package transparent and make it possible to see a comparison of the costs versus the effects to ensure that these efforts do not result in the wasteful use of money.

In addition, the package places priority on public works projects for which there is a high degree of need, which can also be implemented in the near future. Also appearing throughout the package are ideas designed to draw out economic impacts quickly. I intend for the government to come together from now in making efforts towards implementing these policies at an early time and explaining the contents in an easy to understand fashion. I intend for us to follow up thoroughly on whether or not these measures have successfully led to improvements in people's livelihood.

In my first press conference of the new year, I stated that I am determined to get off to a fast and powerful start towards economic revival. From early in the new year I launched the Headquarters for Japan's Economic Revitalization and reinstated the Council on Economic and Fiscal Policy. These recent measures are also part of our implementation of policies with this sense of speed. I would like to express once again my thanks to the Cabinet ministers, legislators from the ruling parties, personnel at the various ministries and agencies, and various others who worked so hard to achieve this package, giving up their holidays before and during the New Year season.

In addition to these measures, I intend to move forward as quickly as possible in formulating the budget for the next fiscal year and working to revise the tax system. I will forge a path forward towards realizing the dual matters of Japan's economic revitalization and its sustainable public finances over the medium to long term.

I will end my opening remarks here.

Q&As

CABINET PUBLIC AFFAIRS SECRETARY: We will now move on to the Q&A session. When you are called on, please first state your name and affiliation before asking your question. Mr. Hayashi, please.

REPORTER: I am Hayashi with the Asahi Shimbun. Mr. Prime Minister, thank you for taking my question.

Mr. Prime Minister, you mentioned just now that you have put forth some ideas to generate economic benefits early on, but in concrete terms, how do you expect them to be reflected positively within household finances in the immediate future?

At the same time, I would like to know how you view the deterioration of government finances that will result from taking on new debt, a rise in long-term interest rates, and other such concerns that have been pointed out by private sector members of the Council on Economic and Fiscal Policy.

I would also like you to discuss in concrete terms your views regarding medium- to long-term fiscal discipline against such a backdrop, as well as your thoughts on how you as prime minister will implement and ensure fiscal discipline.

PRIME MINISTER ABE: I too consider the matters covered in your question to be extremely important points. I intend to foster improvements in corporate profits and then carry that into expanded employment and increased wages. Taking advantage of this opportunity today, I would also like to ask corporate managers to cooperate in this regard.

In addition, I would like to provide assistance in terms of the tax system in order to facilitate such a transition. We will follow up thoroughly on whether or not these efforts are leading to improvements in people's livelihood.

I also recognize fiscal discipline as being critically important, and we will aim to achieve a surplus in the primary balance.

However, without the revival of a robust economy, there can in fact be no rebuilding of government finances nor any future for Japan. We have set the economic measures in this package at the decisive scale of 13.1 trillion yen in government spending in order to exert powerful leverage against concerns about the future of the economy. The contents of the package have been compiled giving priority to measures which have a high degree of immediate impact and which are particularly effective in creating demand.

As this package anticipates a 2% boost to real GDP and the creation of employment for approximately 600,000 people, when we formulate the budget for the next fiscal year over the coming months, I intend for us to examine a course forward for realizing the dual goals of reviving Japan's economy and implementing sustainable medium- to long-term fiscal measures. This will be in addition to making efforts to revive the economy while taking into account the goal of putting public finances on a sound footing.

CABINET PUBLIC AFFAIRS SECRETARY: I'll take the next question now. Mr. Adachi, please go ahead.

REPORTER: I am Adachi with TV Asahi.

Mr. Prime Minister, this afternoon you will be heading to the Kansai area, during which time you will also explain these economic measures. During your trip, in Osaka you will be meeting with Osaka Mayor Mr. Toru Hashimoto of the Japan Restoration Party. I understand that you consider yourself to share similar views with the Japan Restoration Party and you have expressed your expectations for cooperation in your area of particular interest, the reform of the Constitution.

Please share with us your intentions as you hold a meeting with Mayor Hashimoto at this time, with preparations underway to convene the ordinary Diet session. Also, please tell us what sorts of topics you would like to have an exchange of views on.

Also, leading up to the summer House of Councillors election, there is some movement by the Japan Restoration Party to seek out a united front with the DPJ and "third force" political parties in order to counter the ruling parties. How do you regard this and how do you intend to address it?

PRIME MINISTER ABE: First of all, I consider Osaka and the Kansai area to be extremely important, as together with Tokyo they pull the Japanese economy forward. It is within that context that I will visit Kansai and I consider it only natural to meet with the prefectural governor and with the mayor and listen to the actual circumstances there as well as their requests.

At the same time, when meeting with Mayor Hashimoto, one of the leaders of the Japan Restoration Party, and also Governor [Ichiro] Matsui, I would like to talk with them regarding how truly vital it is for business activity, the economy, and the development of local areas that the supplementary budget be passed at an early time within this ordinary Diet session. So, I would also like to request their cooperation.

Also, as we head to the summer House of Councillors election, I regard it as only natural for each political party to make strategic plans within the context of how to expand their potential to be elected. We have said consistently that the LDP and New Komeito will be engaged in stable administration. We will aim to achieve majorities in the House of Representatives and the House of Councillors and then advance stable economic policies and restore Japan's strength and a robust Japan. I would like to state that there have been no changes to this fundamental approach.

CABINET PUBLIC AFFAIRS SECRETARY: The next question will be the last for today, as we are running out of time. Mr. Foster, please.

REPORTER: I am Foster, with the Associated Press.

I would like to ask you about foreign policy. You will be visiting Southeast Asia on your first overseas tour since assuming office. What are you seeking to achieve in doing so? Will there be cooperation between Japan and those countries regarding China's advances within the region? Japanese companies suffered considerable damage in China and the Japanese economy was also impacted by the deterioration in Japan-China relations that has surrounded the situation of the Senkaku Islands. What sort of balance do you believe is ideal between demonstrating a strong stance regarding sovereignty over the Senkaku Islands on the one hand and protecting Japanese companies and the economy on the other?

PRIME MINISTER ABE: First of all, I selected ASEAN as the region for my first overseas visit. ASEAN is working to establish the ASEAN Community in 2015. That is to say, insofar as it will emerge as a large economic zone and its population is also expanding, I will work to deepen our cooperation with this expanding ASEAN as an economic zone. This is true in the area of the economy, but I also wish to deepen cooperation in the fields of energy and security.

The area that I will visit within this ASEAN region, namely the countries of Viet Nam, Indonesia, and Thailand, can properly be called a partner of Japan, in my view. By strengthening our cooperation, we will reinforce our diplomatic capacity while simultaneously working to advance economic development and growth. In addition, I expect that moving ahead with still more exchanges will contribute to the stability of the region. In light of these facts, for me, this visit to ASEAN will be an extremely important one. In the course of the visit I would like to speak about my approach to diplomatic policy as well as diplomacy towards Asia.

Also, the Republic of Korea has selected Ms. Park Geun-hye as its president-elect. A new leader has come into being in the ROK, while in Japan there has also been a change in administrations. Japan and the ROK are both countries which share the values of freedom and democracy, basic human rights, and the rule of law. I would like to strengthen our relationship as two countries holding those values in common as President-elect Park Geun-hye and I work together to build a relationship of trust at the earliest possible time.

Looking also at China, with regard to the Senkaku Islands, there has been no change whatsoever in my stance of resolutely defending our sea and territory. I have already stated that there is no room for negotiations on this issue.

I would like to state clearly that the problem is that, as a responsible nation in the international community, it was wrong to wreak damage on Japanese-affiliated companies located in China that make contributions to China's economy and society and inflict damage upon Japanese in China in order to achieve a political goal. It is not only detrimental to bilateral relations but also imparts major negative impacts upon the Chinese economy and society as well. Understanding this fact and respecting this relationship on both sides are part of a "mutually beneficial relationship based on common strategic interests," and I would like to improve the Japan-China bilateral relationship, returning to the "mutually beneficial relationship based on common strategic interests."

CABINET PUBLIC AFFAIRS SECRETARY: With that, I would like to bring this press conference to a close. Thank you all very much.

PRIME MINISTER ABE: Thank you very much.