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Passage of the budget for fiscal year 2014 - Press Conference by Prime Minister Abe

Thursday, March 20, 2014

[Provisional Translation]

CABINET PUBLIC AFFAIRS SECRETARY: We will now begin the press conference by Prime Minister Shinzo Abe.  Prime Minister Abe will first deliver an opening statement.

   Mr. Prime Minister, your opening statement please.

   Opening Statement by Prime Minister Shinzo Abe 

PRIME MINISTER ABE: Today, thanks to the cooperation of all parties involved, the budget for fiscal 2014 was passed.  This is a result of the close-knit unity of the ruling coalition of the LDP and New Komeito, and I would like to express my appreciation to all those who have been involved [in the budget approval process].  Moreover, I wish to thank not only the members of the ruling parties but also the members of the opposition parties for their cooperation in holding Diet deliberations that were efficient and rich in substance.  We were presented with a great deal of constructive input in the course of these deliberations.  Taking these views also into account, we will carry out all possible measures to execute the fiscal 2014 budget so that it achieves ample results.

   This was the third-swiftest passage of a budget since the end of World War II.  I am firmly convinced that this will provide great momentum as we work to ensure that the economy travels securely along a recovery track.  I have been saying for some time that it is not someone else who will build a strong Japan, but rather we ourselves.  Breaking away from the deflation that has continued for more than 15 years is a national undertaking.  There are neither “ruling parties” nor “opposition parties.”  In that sense, I consider this early passage of the budget to have demonstrated to people both in Japan and around the world the strong will of the Diet, which is the highest organ of state power, to cast off deflation.

   But this is more than simply a Diet matter.  The business community has also taken a significant step forward towards overcoming deflation.  I think we can even say that these past few years, we had forgotten the very existence of the expression “across-the-board wage increases.”  And yet in this year’s spring wage negotiations, the automotive, electronics, iron and steel, and distribution industries are just some of the wide range of industries now realizing wage increases at a level seen only rarely in recent years.  According to a tally compiled by RENGO, also known as the Japanese Trade Union Confederation, as of last week, monthly salaries will increase by nearly 6,500 yen on average.  I believe that we can say that the winds of wage hikes have truly begun to blow.  We will have a greater number of people than last year keenly feel the economic recovery resulting from the “three arrows” of economic revival.  I believe that this spring, an economic virtuous cycle has clearly begun to arise.

   The public will shoulder an 8 per cent consumption tax rate beginning April 1st.  It has been 17 years since the last time the consumption tax rose.  During that time, the number of elderly people aged 65 or above has increased by 13 million people, while social security benefits have increased by 40 trillion yen.  At the same time, the population of the working generation has decreased by almost 10 million people.  This is a decrease in the number of people in the working generation supporting one elderly person by roughly half, from 4.4 to 2.4.  Some 17 years have now passed as the people suffered under prolonged deflation and successive administrations stood idly by, and now the aging society coupled with a falling birthrate has reached a state in which there is no time to lose.

   The financial resources that will be generated through raising the consumption tax will be used to bring stability to the financing of pensions.  We will enhance medical and nursing services so that elderly people are able to live their lives in the communities that are familiar and dear to them.  We will strengthen our measures that assist children and others suffering from intractable illnesses.  We will eliminate childcare waiting lists and create a Japan where parents can raise their children with peace of mind.  We will enhance and also bring stability to our social security system.  We will properly pass down to the next generation our universal health insurance system and universal pension coverage, which are among the most widely acclaimed anywhere in the world.  This is not something that someone else will do on our behalf.  It is something that we ourselves must do.  We will also take measures to address the transition [to the new consumption tax rate] squarely.  I once again ask for the understanding and the cooperation of the public regarding this matter.
   We must not lose hold of this major opportunity to break free from deflation that we have gotten hold of at long last.  Without a robust economy, there can be neither an enhancement of social security nor fiscal reconstruction.  Fortunately, the financial condition of companies has improved compared to 17 years ago.

   Non-performing loans have decreased and the financial system is stable.  We will ensure sustained economic growth by taking economic countermeasures at a scale of 5.5 trillion yen and tax measures at a scale of 1 trillion yen


   In addition, we will carry out projects related to the major elements within the supplementary budget at an accelerated pace to the greatest extent possible in order to have them fully executed by September.  We will also ensure that the budget for fiscal 2014 is executed at an early time, with clear targets set forth.

   We will continue to watch economic conditions carefully and manage public finances flexibly going forward.

   In any case, we will minimize the adverse impacts of the consumption tax rate increase on the economy and take all possible measures so that the economy returns to the recovery track as quickly as possible. The Growth Strategy will also move into full-scale implementation.

  We will indicate the districts for the National Strategic Economic Growth Areas in concrete terms within this month and set them in motion.  We will make the best use of this system of National Strategic Economic Growth Areas to punch holes in the regulations that had until now been [impenetrable like] bedrock, such as those concerning the utilization of non-Japanese human resources.


   Negotiations on the Trans-Pacific Partnership (TPP) Agreement are also in their final phase.  What remains are issues of political will.  I have stated repeatedly that the TPP Agreement will be a provident masterstroke.  I am determined to aim for the early conclusion of negotiations in the form that best serves Japan’s national interests.

   We will formulate a Basic Energy Policy and develop responsible energy policies that support both people’s daily lives and economic activities.


   In addition, in June we will reinforce the Growth Strategy further.  We must break through all forms of walls that hinder the active participation of women.  We will support the entry and participation of women in the workforce.

We will move forward in considering tax reforms that will enable companies to succeed in global competition.  Another major issue is a review of the labor system, giving consideration to a work-life balance in which women, the elderly, and others within a diverse range of human resources are able to work in a manner harmonious with their own lifestyles.


   The revitalization of local areas is the next major pillar of the Growth Strategy.  The central core of regional economies is agriculture.  After we review the policy of reducing rice acreage known as the "gentan" system, we will press forward with a full spectrum of reforms designed to make agriculture attractive to young people.

   I would also like to provide bold support for proprietors of local small- and medium-sized enterprises and micro enterprises as well as local municipalities that are working to make use of aspects exclusive to their local areas, such as unique local specialty goods and tourist attractions.

   The mission of Abenomics is to make these winds of wage increases that first arose this spring spread out even further, until they reach every corner of the nation.  I consider the restoration of a robust economy to continue to be the policy area having the utmost priority for the Abe Cabinet as we go forward.

   Tomorrow is Vernal Equinox Day.  Since ancient times, on that day, people have rejoiced at the arrival of spring and prayed that the autumn would bring a rich harvest.  Today, I am determined to spare no effort in order for the fiscal 2014 budget that passed today to yield results of abundance for the Japanese economy.  I intend to continue to walk forward together with the Japanese people in order to restore a strong Japan.

   With that, I will end my opening statement.


CABINET PUBLIC AFFAIRS SECRETARY: We will now open the floor to questions from the press.  Please raise your hand if you would like to ask a question.

   When you are called on, please first state your name and affiliation before asking your question.

   Please make your questions concise, as we would like to take questions from as many people as possible.

   Who would like to ask a question?  Yes, please go ahead.

REPORTER (ADACHI, TV ASAHI): I am Adachi, with TV Asahi, a company coordinating the press club.  Thank you for taking my question.

   With today’s passage of the budget, the focus of the latter half of the Diet session will shift to discussions on allowing the exercise of the right to collective self-defense.  There continue to be calls from not only the opposition parties but also [members of] the LDP and New Komeito, urging ample discussions.  Will you take a Cabinet decision on changing the interpretation of the Constitution during the current Diet session?  Or will that decision be taken after the close of the current Diet session?

   If that Cabinet decision is to be taken after the Diet session concludes, will sufficient time be spent on deliberations, as you promised in the Diet?

PRIME MINISTER ABE: The Advisory Panel on Reconstruction of the Legal Basis for Security is engaged in the final stages of its discussions at this very moment regarding the right to collective self-defense and other matters and the relationship to the Constitution, keeping various concrete cases firmly in mind.  Rather than have a deadline of a particular date, I intend first of all to wait for [the outcome of] the discussions within this Advisory Panel.

   Given that, if I were to make a statement, after receiving the report submitted by the Advisory Panel, and also taking the views of the Cabinet Legislation Bureau into account and after considering how to handle the matter through consultations with the ruling parties, I would like for the government to take a Cabinet decision and have the Diet take up debate on the matter.

   Furthermore, even if, the interpretation of the Constitution were to be changed, in order for us actually to exercise the right to collective self-defense, it will be necessary to revise a series of related laws, and we will have discussions in the Diet regarding these matters.

   In any event, with regard to the issue of the right to collective self-defense and other such matters, various types of discussion are already underway at present in the Diet and the government is answering questions in a thoroughgoing manner.  Should there be a request from the Diet, we will naturally go to the Diet and answer questions.  I consider this to be only natural.

CABINET PUBLIC AFFAIRS SECRETARY: I’ll take the next question now.

REPORTER (ENMAN, ASAHI SHIMBUN): I am Enman with the Asahi Shimbun, another coordinator of the press club.

   I would like to ask about the situation in Ukraine.  The antagonism between the United States and Russia regarding the annexation of Crimea is intensifying.  Mr. Prime Minister, as someone who has forged a relationship with President Putin, what kind of role do you intend to play towards a peaceful resolution, while acting in cooperation with the G7? The other day, you used the phrase “further measures” at the Diet, and you have made mention of additional sanctions by Japan.  What do you intend for these to entail, in concrete terms?

   Also, please tell us what sort of impact you view the recent situation as having on negotiations regarding the Northern Territories.

PRIME MINISTER ABE: Russia recognizing the independence of the Autonomous Republic of Crimea and signing a treaty to incorporate Crimea into Russia infringe on the unity, sovereignty, and territorial integrity of Ukraine.  Japan can never overlook an attempt to change the status quo with force in the background.

   Japan has first of all suspended consultations for simplifying visa regulations and has also frozen the launching of negotiations to conclude three new international agreements, namely a new investment agreement, an outer space cooperation agreement and an agreement for the prevention of dangerous military activities.  We intend to continue to act in cooperation with other countries including the G7 and examine further measures against Russia in the time to come.

   The United States government has proposed that an informal G7 summit meeting be held on the sidelines of the upcoming Nuclear Security Summit in The Hague, where the leaders of the G7 nations will come together.  I too will attend this summit meeting and I intend to deal with the situation in a suitable manner, acting in cooperation with the countries of the G7.

   As for our response towards Russia, the other day I dispatched Mr. [Shotaro] Yachi, Secretary General of the National Security Secretariat, to Russia.  There, he urged a peaceful settlement of the situation in his talks with Minister for Foreign Affairs Mr. [Sergey] Lavrov and Secretary of the Security Council Mr. [Nikolai] Patrushev.  We will continue to urge Russia strongly on this matter.

   I intend to continue to work in close cooperation with various countries while urging a peaceful resolution of the situation.

CABINET PUBLIC AFFAIRS SECRETARY: Next, I would like to take a question from someone other than the companies coordinating the press club, including members of the foreign press.  Ms. Reynolds, please.

REPORTER (REYNOLDS, BLOOMBERG NEWS): I am Reynolds, with Bloomberg News.

   I would like to inquire about a reduction in the effective corporate tax rate.  Do you intend to initiate such a reduction from fiscal 2015?  And, with regard to the level [of reduction], there are proposals that the rate should be lowered to 25 per cent.  What are your thoughts on that point?

PRIME MINISTER ABE: There are various opinions regarding reducing the effective corporate tax rate.  With regard to corporate tax, we have already decreased the [effective] corporate tax rate by 2.4 per cent while also substantially expanding reductions in the tax rates on capital investment and on research and development, with these taking effect this April.  As I stated at the Davos meeting in January this year, we have recently decided to start in on further corporate tax reform and discussions have already been launched in this regard within the Government Tax Commission.

   While no conclusions have been reached, the standpoint of corporations’ international competitiveness is, at the same time, also important, in order to safeguard employment and continue to foster growth.  Lively discussions were also held at the recent meeting of the Council on Economic and Fiscal Policy, from the viewpoint of the vitality of the Japanese economy.  In the future, I would like us to conduct sweeping discussions that also encompass the structure of industry, and I also want us to consider such aspects as competition within the global economy.  I intend at the same time for us to deepen our discussions about, and move forward in our examinations of, such areas as, for example, the ideal situation for Japan’s effective corporate tax rate and the modalities of our tax base, as well as an inspection of the effects of policies, and relationships with other areas of taxation.

CABINET PUBLIC AFFAIRS SECRETARY: All right, I’ll take the next question.  Mr. Kawakami, go ahead.

REPORTER (KAWAKAMI, YOMIURI SHIMBUN): I am Kawakami, with the Yomiuri Shimbun.

   I would like to ask about Japan’s relations with North Korea.  Japan and North Korea have now reached a stage where intergovernmental consultations between them will resume in the near future.  I would like you to share with us how you regard this state of affairs and also your views on what sort of policy the Japanese government should adopt when resuming these talks.

PRIME MINISTER ABE: I consider it to have been a very important step forward that on the occasion of the recent Japan-North Korea Red Cross talks we reached agreement on the understanding that our two countries will proceed with coordination towards the path to a resumption of Japan-North Korea intergovernmental consultations.  The forthcoming Japan-North Korea intergovernmental consultations will be held for the first time since November 2012, so they have not been held for quite some time, but we intend to move forward expeditiously in coordinating the consultations in concrete terms, and we will seek to resume these consultations at the earliest possible time.  I believe that is what a great many people are hoping for.

   There are outstanding issues of concern between Japan and North Korea that must be resolved, making use of this kind of opportunity.  I am determined to make every possible effort in order to resolve these outstanding issues, acting in cooperation with the United States, the Republic of Korea, and other members of the international community.

CABINET PUBLIC AFFAIRS SECRETARY: We have now reached the end of the scheduled time, so I would like to bring this press conference by Prime Minister Abe to a close.  Thank you all very much for your cooperation.


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