(Provisional Translation)

1 January 1998

Happy New Year.

It is now only three years until the 21st century. Looking back 35 years ago to 1963, when I was first elected to the House of Representatives, I recall the great sense of energy which pervaded the entire nation in the lead-up to the Tokyo Olympics to be held the next year. Every one was looking ahead to the Japan that would emerge from the plan to double the nation's income. That was truly a time when people embraced the dream of an affluent Japan, studying and laboring toward their goals. At the same time, that year was also the first in which the word "Elderly" was used as a legal term in Japanese legislation, and the first year the government conducted a population survey on those 100 years or older. From that time to the present, I have been engaged in my life's work of responding to the challenge of an aging society amidst the realization of economic prosperity. Today, at the opening of a new year, I would like to speak frankly about the kind of society I would like to build and how I am seeking to promote current measures and the Six Reforms toward that end.

Tangible progress has already been made on each of the Six Reforms. At the fall session of the Diet last year, legislation was passed on nursing care insurance to ensure that society as a whole supports care for the elderly, as well as a special measures law for fiscal structure reform. In addition, the groundwork was laid for strengthening Cabinet functions toward more responsiveness, including crisis management, and for reorganizing central government toward more efficient administration. As for reform of the economic structure and the financial system, concrete action, including sweeping deregulation plans, has already been implemented. In the area of educational reform, work has already begun toward, for example, merging junior and senior high school education and introducing a 5-day school week.

On the other hand, the collapse of Japanese financial institutions since last fall has lowered confidence, both at home and abroad, in Japan's financial functions. Financial system failures disrupt people's lives and place a serious drag on industrial activity. I will not allow any financial or economic panic originating in Japan. The financial system is the heart of the economy and I will do whatever it takes to stabilize this, put the economy back on the recovery track and restore confidence in the future. I would like to state my strong resolve at the outset.

And I want the people to have confidence as well. Japan has individual financial assets of 1,200 trillion yen, net foreign assets of 800 billion dollars, and the world's largest foreign reserves at more than 200 billion dollars. There is no cause for concern.

The foundation of finance is confidence. Ten trillion yen in government bonds and 20 trillion yen in government guarantees, a total of 30 trillion yen in funds, will be made available to protect depositors, stabilize the financial system, liquidate failed financial institutions and expand the net capital ratios of properly-functioning banks. To deal with the credit crunch, we will ready funds of 25 trillion yen for government financial institutions and make the application of prompt corrective action more flexible. This will make the necessary money available to enterprises with sound management. To promote economic recovery, we will implement the Emergency Economic Measures, including large-scale deregulation. In terms of the tax system, we are taking a broad range of measures; a special income tax cut of two trillion yen will be implemented, with corporate tax rates lowered, securities transaction taxes halved, and the levying of land value tax suspended. I appeal to the people of Japan to rest assured and to understand and support these measures.

I do not side at all with pessimists who question the prospects for the Japanese economy. There is no country with a higher level of education or a better work ethic. When Japan liberalized its trade and investment and set sail on the rough seas of international competition, business such as coal and aluminum refining declined. But the Japanese people worked together to build up new industries, such as automobiles, electrics and electronics and machinery, which prevailed in international competition. Our predecessors include the likes of Soichiro Honda and Masaru Ibuka, who launched many great enterprises. The silicon diode, prototype for the semiconductor, which is now considered the staple of high-tech industry, was developed at Tohoku University. The major pharmaceutical interferon was discovered at the Contagious Disease Research Institute of Tokyo University in 1949 shortly after the war. We failed, however, to turn this into a viable commercial enterprise. Why?

I recently met Mr. Bill Gates, who is now at the top of the world's software industry after having set up his own business venture at the age of 20. Why could the United States produce people like this? Because many investors and users recognize a young person's ability, set him or her to work and provide the necessary funds for this. Because the United States is a tolerant and receptive society which allows the full development of individual talents. Japan has many industrial sectors with growth potential, including information and telecommunications, finance, environment, medical services and welfare. Japan is blessed with abundant assets and capital, outstanding human resources and technologies able to pave the way to a new era. We need to work together to create a society that takes advantage of this potential.

The international community has undergone major transformation since the collapse of the Berlin Wall and the end of the East-West standoff. In the Asia-Pacific region, the Russian Federation will take part in the open regional cooperation framework of the APEC this year, further strengthening both political and economic relations. The majority of countries around the world are striving to build nations based on democracy and market economy, with these efforts beginning to bear fruit. This is clearly the result of a major change in world values triggered by the end of the Cold War.

Turning to Japan, it is probably more difficult to maintain a national identity and common values now than when people shared the goal of achieving richer lives through economic growth. As national borders to the flow of people, goods, capital and information are forced to open around the world, and as Japan's population continues to age rapidly with fewer children being born, how to enhance the vitality of society as a whole becomes an issue of more importance than ever before. There will be some who agree and some who disagree with my views, but I believe we must first of all become a country that enables the full development of individual abilities in order to prevail in international competition. Furthermore, we must create a society where we respect our elders, where families sit together around the dinner table, and where parents teach their children the importance of heart and the wisdom they need to live their lives. Thirdly, we must build a nation that preserves and develops its rich natural endowments, as well as its arts, crafts and other traditions and culture, all areas in which we can hold our heads up high internationally. This is the path that will enable Japan to achieve coexistence and co-prosperity with all the countries of the world.

Since I was appointed Prime Minister, I have reiterated that the goal of my administration is to create a society that enables each and every person to fully develop their creativity and spirit of challenge and to pursue their hopes and dreams for the future - a society that promotes mutual understanding between the people of Japan and the people of other nations, allowing mutual support - while at the same time cohesively achieving the Six Reforms. This is my creed as well as my vision for Japan's future.

Last July, when a "Children's Diet" was held to commemorate the 50th anniversary of the House of Councilors, elementary and junior high school students from around the country came together for an earnest debate. It was a real time slip watching these children and comparing it with my own childhood when I spent summer vacation absorbed in fishing or swimming in the Tama River or threw myself into baseball and boy scout activities. Each and every child is precious. Each has different hopes and dreams, different strengths and different interests. The young can discover what they really want to do and what really makes them happy. What do they want to be in the future? What do they want to learn to do that? Some may want to go into politics, some into business, others into culture or sports. Some may want to focus on volunteer activities. They will make up their own minds about what they want to do and work wholeheartedly toward their dreams and goals. These pursuits should be mutually respected. I firmly believe that the strength of our youth will support our country in the future. Young people have fresh ideas that take us beyond preconceived notions and the commonsense of adults, and they also have the ability to act. If one out of ten or one out of one hundred produces something great - whether it be technological innovation or lifestyle-related, including consumer behavior - it could help to vitalize society as a whole. Takao Doi, the first Japanese to float in space, actually dreamed of going into space as a child. At the end of his trip, he said he wanted to go to the moon next. I urge young people to have the courage to work toward their goals. I hope they will continue to constantly challenge themselves. This is my sincere belief, and I will do my utmost to make this possible.

At the same time, I want children to see themselves as members of their families and communities and to realize that their dreams and goals can only be realized through mutual help and support. I want them to show consideration and kindness toward the vulnerable and to have the courage and sense of justice to stand up against bullying and cruelty. I want them to treat society as a whole with respect. Families and communities must work with schools to bring out this sense of self in young people. This is a difficult task, but I would like to think about this with you.

The working generation, the mothers and fathers, forms the core of society and has perhaps the toughest responsibilities. I think there are many people out there concerned about making ends meet, their children's education and looking after their parents. It is the responsibility of governance to meet these concerns. This means in particular supporting those who are donating their time as providers, building a system that will offer a broader range of work opportunities suited to different abilities and interests, and creating an environment that enables working fathers and mothers to hold jobs and raise their children comfortably. At the same time, we have to think about how to fairly distribute the burden among different generations in the early 21st century when the baby-boomers start to receive their pension benefits. What level should public pension benefits and contributions be set at? Conclusions to questions such as these need to be derived from broad debate among the people. In order to create a society where women and men can participate together, I would also like to discuss and consider responses to a wide range of issues from social customs to individual values, including employment practices premised on stereotyped gender roles. I want to ask for the cooperation of everyone in this endeavor.

Today, the term "aging" has come to have negative connotations. Should this really be the case? I think the elderly are unified in their desire to work as long as they can no matter how age they are, and to do what they can for society, their communities and their families. Moreover, it is the knowledge and experiences of the elderly, when passed down to younger generations, that enables society to move forward. How can we increase employment for the elderly who want to work? I want to think seriously about how we can encourage participation in community activities, beginning with exchange between older and younger generations.

To enable people to remain independent in their old age and to encourage support between family members and neighbors when necessary, I would like to review the boundaries of medical care, pensions and welfare and promote reforms while protecting the national insurance and pension systems.

Let me share my thoughts and ideas on this new year.

This year, I will do everything in my power to stabilize the financial system and restore the economy. Right now, we must be resolute in protecting Japan's financial system. The responsibility of government is precisely to ensure secure lives for the people. I will do my utmost to protect the national livelihood. Moreover, devoting all my energies to the Six Reforms, including the formation of basic legislation that sets the course for central government reorganization, I want to create a society which enables the full development of individual talents and a tolerant society where people respect each other's efforts.

Reform is accompanied by sacrifice. But if we neglect reform for fear of the difficulties immediately before us, we will leave our children and our grandchildren with a debilitated economy and society. I want the coming generations to enjoy affluent lives and to have abundant contact with culture and arts that feed the soul. I earnestly want this country to be one where people and companies from throughout the world gather, a country of great vitality and confidence, respected by the world as a member of the international community.

I am resolved to do my utmost toward a bright future for the people of Japan. Let me end my New Year's speech by asking once again for your support and cooperation in this effort. Thank you.