Provisional Translation

Policy Speech by Prime Minister Ryutaro Hashimoto
to the 141st Session of the National Diet

(29 September 1997)

I would like, at the opening of the 141st Session of the Diet, to state my views on the major policy issues before us.

At the outset, I must recognize the fact that the people of Japan responded with sharp criticism to the designation of the Director-General of the Management and Coordination Agency in the recent Cabinet reshuffling. I have reflected deeply on the fact that I did not give sufficient consideration to the weight of public opinion, which is calling for a high ethical level in politics. I would like to express my apologies for the trouble which this has caused. I am determined in the future to pay full heed to the voice of the people, and to devote myself wholeheartedly to achieving the six reforms at hand (Administrative Reform; Fiscal Structural Reform; Reform of the Social Security System; Economic Structural Reform; Financial System Reform; and Educational Reform), in particular, realizing administrative reform in a manner which will meet with the appreciation of the people. At the same time, I intend to engage in consultations with the heads of the three coalition parties on political reform, covering such matters as political ethics and donations from corporations and organizations, and to arrive at a solid conclusion.

I have actively pursued these Six Areas of Reforms, which will effect reform of all of the systems of our nation, the top priority of my Cabinet. I have until this very day devoted my utmost efforts to achieving this goal. I have been driven by the realization that, in a country in which society is aging, birthrates falling and globalization of the economy proceeding even faster than predicted, unless we achieve these reforms, our society will lose its dynamism, and there will be no tomorrow for our nation. Among the Six Areas of Reforms, there are areas such as economic structural reform and financial system reform in which we are seeing concrete progress. Still, the real challenge is only just beginning. I have designated the remaining three years in this century as a "period of intensive reform," and the entire Cabinet will devote itself to ensuring the success of these reforms so that all our people can greet the arrival of the 21st century with pride and confidence.

In particular, the time from this Special Session of the Diet to the completion of the next Ordinary Session of the Diet is a critical period in which we will determine the fate of administrative reform and fiscal reform. I ask you all, from the bottom of my heart, for your understanding and cooperation in this great endeavor.

The issues involving Okinawa will continue to be the utmost priority for this Cabinet. The issue of relocating Futenma Air Station, and the realignment, consolidation and reduction of the United States military facilities and areas in Okinawa will be tackled by the entire Government with the particular cooperation of Okinawa Prefecture and other related local governments. Concerning the revitalization of Okinawa, I intend to devote my utmost efforts to deepening the considerations in the Okinawa Policy Council and to see through the compilation of measures to promote Okinawa, which take full advantage of its particular geographic characteristics, and its traditions and culture. Furthermore, aiming to promote the development of Okinawa into the 21st century, the Government will hold the Ceremonies on the 25th Anniversary of Okinawa's Return in Okinawa Prefecture in November of this year.

(Firmly Launching the Six Areas of Reforms)
It is clear that the administrative systems of our nation have reached a critical point. Precisely because our administrative systems functioned so effectively in the process of development which carried our nation so far, the roots of those systems have taken hold across the entire landscape of our society. That is why although there is a general consensus on the necessity of reform, we see opposition wherever we speak of concrete and specific matters to be reformed. However, I am convinced that without administrative reform, there is no way that I can gain the trust of the people of our nation. I am resolved to keep my sights firmly fixed on the bright future which awaits us beyond this period of reform, and to devote myself wholeheartedly to carrying us through the friction and the pain which we will encounter.

In order to build an administration which can respond flexibly to changes both at home and abroad, and crises as they arise, we must strengthen the functions of the Cabinet, and reorganize the central ministries and agencies. We will create a system in which the Prime Minister is able to yield increased leadership; the Cabinet is able to respond flexibly and decisively to emergency situations, and make strategic decisions on diverse policy issues; and the ministries and agencies are able to effectively implement policy. The Interim Report of the Council on Administrative Reform lays out the basic direction for reform which can be carried out with this spirit in mind. By the end of November of this year, final proposals will be formulated working from the framework contained in that Interim Report, and I intend for the necessary bills to be submitted to the next Ordinary Session of the Diet.

In order to create a simple and efficient administration, we must comprehensively review the role of government while simultaneously pushing forth a sweeping relaxation and repeal of regulations, and effecting a transfer of operations and authority from the government to the private sector, and from the central to the local governments. Indeed, we must pare down to the minimum necessary level the organization, personnel and budget of the Government. We must strive to reduce those operations currently entrusted to the central ministries and agencies, and separate policy planning sections from implementation sections, and we must proceed with reform of special public corporations. While advancing such reform, we must review the sectors and projects which receive government investment and loans, and the very modalities of the deposit system. As soon as the Fourth Recommendation of the Committee on the Promotion of Decentralization is issued, I intend to take a comprehensive a pproach to formulating the Action Program for Decentralization. In this, the basic principle will be leaving operations and authority to the fullest extent possible up to the cities, towns and villages, which are closer to local residents. This Action Program will be drafted at the earliest time possible, at the latest before the closing of the next Ordinary Diet Session, and it will form the basis of comprehensive and planned promotion of decentralization. Hence, I strongly call upon the local governments to thoroughly carry out their own administrative and fiscal reforms, and thereby strengthen the administrative and fiscal foundations of local governments, which will have to bear new responsibilities. At the same time, I will positively encourage and support those local cities, towns and villages which take the initiative to merge together with nearby administrative districts.

Trust in government comes from the honor and courage to fix what must be fixed. Aiming for just such an administration, I intend to strive to ensure that policy planning, the creation of proposals and their implementation be undertaken in a manner that is as open as possible. Toward this end, preparation is underway for submission to the Diet during this fiscal year of an information disclosure act.

The most important bill the Cabinet submits to this session of the Diet will be a bill to advance fiscal structural reform. At the end of this fiscal year, the combined total long-term debt of the central and local governments will reach 476 trillion yen. With current projections for a natural increase in outlays which will inevitably result from the aging of our society and our falling birthrates, it is clear that if we do not reform our fiscal structure, our economic vitality will wane, and we will pass on to the future an unbearable burden. Such an act would amount to nothing less than a shunting of our responsibility to future generations. The bill includes specific interim objectives, including a requirement that by FY2003, the ratio of total fiscal deficit to GDP central and local governments combined be reduced to 3 percent or less, that we break away from a dependence on deficit-financing bonds, and that we reduce the level of dependence on public bonds. Moreover, in order to achieve that, the bill designates the three years beginning with FY1998 as a period of intensive reform, and stipulates that there will be no sacred areas, while outlining the basic policy for reform, quantitative reduction targets and the content of the institutional reform which must be implemented. I ask for your cooperation to promptly enact this bill.

In the budget for FY1998, which will be the first year in the period of intensive reform, there is a reduction from FY1997 of the general account, which is a policy outlay, and efforts are concentrated in sectors which will contribute to effecting economic structural reform by conducting a review of the very structure of government outlays. The matter of long-term debt succeeded from Japan National Railways, which amounts to 28 trillion yen, and improvement of the management of National Forestry Operations, which have more than three trillion yen in outstanding debt, will be examined from all angles, and I expect that within this year we will be able to draft a plan which will gain the understanding of all of the people. Furthermore, in the FY1998 Plan for Government Investment and Loans, the principles of supplementary private-sector enterprise and certitude of redemption will be thoroughly adhered to, with the scale to be further reduced.

As the environment continues to change with the rapid aging of our society and falling birthrates, as well as the falling economic growth rate, we must respond to the changing needs of social welfare, and create a system which can provide efficient and high-quality services on a stable basis. That is the very core of social welfare structural reform. In order to ensure that the national burden, including fiscal deficit, does not exceed 50 percent, we must review from a broad perspective the relations between entitlements and burdens across all of our systems and effect the necessary reform as soon as possible. In particular, under the nursing insurance system, our entire society provides for health care for the elderly, which is one of the major concerns of our people in their retirement years. This system makes possible the effective provision of services across the health, medical and welfare services, and I earnestly ask for your cooperation toward its enactment in this session of the Diet. Sweeping reform will be promoted in a comprehensive and phased manner in the medical sector based on such measures as the reform plan of the three coalition parties, in both the medical insurance system, including the Insurance System for the Aged, and the overall health care provision system.

I believe the fact that we do not feel the strength of the ongoing moderate economic recovery as we normally would is an indication of the structural issues which remain. We must move forward with structural reform without hesitation in order to increase trust in the Japanese economy. In order to strengthen the vitality of corporations, which serve as the driving force in domestic private-sector demand, we must create as soon as possible an attractive business environment for new business sectors which will create new jobs and markets, and for manufacturers which possess competitive technologies and skills. In addition to steadily implementing the Government Action Plan on Economic Structural Reform drafted in May of this year, I intend to focus the entire Cabinet on forcefully advancing economic structural reform by concentrating our efforts on the repeal and relaxation of regulations, and through a follow-up program to be conducted within this year including, wherever possible, accelerate implementation of deregulation, as well as additional measures. Furthermore, in order to provide technological support to the creation of new businesses, research and development will be promoted through cooperation among industry, academia and government, and efforts will be made to promote the use of the results of that cooperation. Bearing in mind the need to further advance economic structural reform, corporate tax will be reviewed and consideration will be undertaken with a view to making the taxation base more appropriate and reducing tax rates, and a conclusion will be reached on tax system reform in FY1998. Furthermore, it is important to our nation s economy that we respond to land issues. Bearing in mind the land situation in recent years, we must consider ways to promote the effective utilization of land and to activate land transactions.

A concrete schedule has already been outlined for financial system reform, aiming for reform to create an open and fair financial system which is attractive to users and can smoothly supply capital to growth sectors beginning with new businesses. During this session of the Diet, bills and other legislative measures will be submitted with a view to creating a holding company system, and in tax system reform during FY1998, consideration will be made to modalities for tax systems covering the financial sector, including the securities transaction tax.

Turning our attention to the very important issue of education, we must recognize that bullying and refusal to attend school, which leave indelible scars in the hearts of our children, and the recent shocking incidents fundamentally call into question our educational system. Now, more than ever before, schools, families and local communities must join together to enhance an education of the mind, cultivate individuality in our children, liberate our schools from regimentation and expand the range of options in our curriculum. At the same time, we must respond to the expectations of parents and the local community and give schools the authority and responsibility to undertake activities which make the most out of the local educational environment. Furthermore, we must effect sweeping reform of higher educational institutions in order to create world-class universities in terms both of human resource cultivation and of academic research. Moreover, in order to build a society in which each and every one of us can live a full and active life, together with reform of our educational system, we must take actions to review employment practices such as an overemphasis on academic qualifications in the recruiting process and systems and practices which make it difficult to change jobs. In this ende avor, I appeal far and wide to corporate executives and to other related individuals for their cooperation.

(Ensuring a Safe and Secure Life)
The Government has built upon the lessons of the Great Hanshin-Awaji Earthquake to enhance its crisis-control structure. However, as evidenced by the occupation of the Residence of the Japanese Ambassador to Peru and the oil spill of the Nakhodka, natural disasters and accidents which can exert a grave influence on the lives of the people cannot be predicted. We must be untiring in our efforts to enhance our crisis-control capacities, including anti-disaster measures, while maintaining a sense of urgency as we make every preparation so that we can best respond to crises as they occur.

Recently, there has been a series of criminal incidents involving so-called sokaiya. The link between such antisocial forces and our corporate society is a threat to the justice of our society. In order to eliminate such links resolutely, we will provide for harsher penalties and thorough regulations. Furthermore, we must respond harshly to organized crime conducted by violent groups and foreign criminal organizations, the use of guns and the abuse of drugs.

(Foreign Policy)
As a result of the end of the confrontation between the United States and the Soviet Union, the world has become integrated throughout both the political and economic spheres. Still, there remains a danger that regional conflicts may occur. Securing the safety of our nation and the peace and stability of the Asia-Pacific region in such a situation is the most critical challenge for Japan s foreign policy at the moment.

In order to meet this challenge, I believe that we must increase the level of credibility in the Japan-U.S. relationship, the foundation of Japan s foreign policy, and specifically in the Japan-U.S. Security Arrangements, which form the core of that relationship. In April 1996, President William Clinton of the United States and I reached an agreement to conduct a review of the Guidelines for Japan-U.S. Defense Cooperation, and recently, new Guidelines were issued. The basic premise of these Guidelines is of course that there will be no change in Japan's exclusively defense-oriented policy and its role within the limitations under the Constitution, nor will there be any change to the rights and obligations under the Japan-U.S. Security Treaty and its related agreements, nor to the fundamental framework of the Japan-U.S. alliance. I intend to make efforts to gain the understanding of the people of Japan and of neighboring countries for the contents of the new Guidelines. At the same time, the Government will continue to consider emergency response measures to allow it to respond to situations which could have an important influence on the peace and security of Japan. Bearing in mind the results which will come forth out of these considerations, I intend to take the necessary measures, including legislative ones, moving ahead swiftly to ensure the effectiveness of the new Guidelines.

In Europe, efforts are underway to build a framework to achieve even greater stability and prosperity in both the security and economic spheres centering on the North Atlantic Treaty Organization (NATO) and the European Union (EU). I firmly believe this moment to be a good opportunity for Japan, which stands at the eastern edge of Asia, to keep a close watch on these developments as it formulates and implements a new foreign policy viewed from the Pacific, which I have dubbed "Eurasian diplomacy." I intend to strengthen our bonds of trust with the Russian Federation, the People s Republic of China, the Republic of Korea and other countries, and to make efforts to build even broader and deeper cooperative relations.

In Japan s relations with the Russian Federation, it is important to solve the Northern Territories issue, conclude the peace treaty and achieve a full normalization of the relations between our countries. At the Denver Summit in June, I stressed to President Boris Yeltsin the importance of moving steadily forward in implementing the Tokyo Declaration, and when I meet the President again in November of this year, I intend to lay a foundation to open the path for development in a new Japan-Russia relationship based on the three principles of "trust," "mutual benefit" and "long-term perspective."

This year, indeed today, marks precisely 25 years since the normalization of relations between Japan and the People s Republic of China, and next year will mark the 20th anniversary since the conclusion of the Treaty of Peace and Friendship between Japan and China. I recently visited China, where I exchanged views with the Chinese leaders. This will be followed by the upcoming scheduled visit to Japan by the Chinese leaders this autumn and thereafter. I intend to take this opportunity to increase the frequency of dialogue between the leaders of Japan and China, to deepen dialogue at various levels beginning with the security area, and to strengthen our relations of trust, thereby building an even firmer friendship between Japan and China which will contribute to the development of the Asia-Pacific region, and to the world as a whole.

Turning our eyes to the Korean Peninsula, what is of basic importance is to enhance the friendly cooperative relations with the Republic of Korea. Currently, we have seen some measure of progress in talks on the issue of reopening negotiations on normalizing relations between Japan and North Korea, and on other matters of concern between Japan and North Korea. I intend to coordinate closely with the Republic of Korea and others as I continue working toward peace and stability on the Korean Peninsula.

In addition to these bilateral relations, I intend to work to strengthen regional frameworks such as Asia-Pacific Economic Cooperation (APEC) and the ASEAN Regional Forum (ARF) in order to further build a positive interrelation between economic prosperity and political stability in the Asia-Pacific region.

From this year until the end of next, Japan is serving as a non-permanent member of the United Nations Security Council. In this capacity, Japan will actively participate in overcoming the various challenges faced by the international community in this post-Cold War era, including regional conflicts, disarmament, non-proliferation, terrorism, development, the global environment and energy. In particular, Japan will work to enhance international cooperation through the United Nations. At the same time, now that movement toward reform of the United Nations has become active as demonstrated by the proposals of the United Nations Secretary General I intend to strive to achieve reform of the United Nations in an overall balanced manner, including the question of Japan's permanent membership in the United Nations Security Council in order to ensure that the United Nations will be able to fulfill a role appropriate to the needs of these times.

Among the challenges which the international community faces, global warming is a matter of the utmost importance, requiring a response by the entire world. At the Third Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP III) to be held in Kyoto in December of this year, as the host, Japan will make its utmost effort to achieve agreement on meaningful, equitable and feasible objectives to prevent global warming. At the same time, domestically, we must take whatever measures we can toward that goal, certainly in our industrial sector, but also in our commercial, residential and transportation sectors. I must ask all of the people of our country to understand the importance of this issue and to cooperate in reconsidering their lifestyles and doing whatever possible to address this situation.

These, then, are my views on the issues before us.

The Six Areas of Reforms will change the structures and concepts to which we have been accustomed for a long time. This is not something which can be achieved overnight. Still, it is a fact that our society is aging, our birthrates are falling and the economy is becoming increasingly globalized. In order to regain our dynamism and confidence, we cannot permit reform to be deferred. At the same time, I recognize that without the strong support of public opinion, we will not be able to overcome the burdens and advance reform. Keenly sensing the grave responsibility vested in me at the helm of our national government, I intend to aim for policy-oriented politics. I am determined to carry out my responsibility to lend an earnest and humble ear to the opinions and proposals of the people and to discuss, decide and implement them; and based on cooperative relations among the three coalition parties, gain the cooperation of all parties depending on the policy matter at hand.

In this, I ask sincerely for the support and cooperation of the people and my fellow members of the Diet.