[Opening remarks by Prime Minister Shinzo Abe]

PRIME MINISTER SHINZO ABE: The Diet session came to a close today. During this session, we were able to pass the FY2007 budget within the 2006 fiscal year. In this budget, we succeeded in totally eliminating ordinary "scattered" spending, as a result of which we were able to realize a record reduction of 4.5 billion yen in the issuance of government bonds. During the current Diet session we were also able to pass a number of important bills that will open up the future. Among these are the bills for rebuilding education.

We face problems with bullying. There have been a number of extremely sad, heartbreaking cases of children ending their own lives after having suffered from bullying. The most serious aspect of this bullying issue is that class members, schools, and boards of education have all turned a blind eye. We must carry out reforms that go back to the very basis of education in order to resolve fundamentally issues that the education of our country is facing, including the bullying issue.

Accordingly, during last year's extraordinary Diet session, we revised the Fundamental Law of Education for the first time in the 59 years since its establishment, stipulating precepts for education such as moral values, a spirit of public-mindedness, self-discipline, the importance of life, family values, and attachment to and affection for the community and country where we have been born and raised. Then, during the current Diet session, we presented -- and enacted -- three education bills, with the revised Fundamental Law of Education serving as their basis. In these bills we were able to provide for the introduction of a renewal system for teaching licenses and clarify the purpose and obligations of boards of education.

As part of our education rebuilding efforts, we must make moral education a school subject and improve classroom teaching. We must also improve the nation's international competitiveness by proceeding with reform of universities and graduate schools.

Furthermore, children must be properly taught what they should do voluntarily as well as what they should not do. My vision for education rebuilding is to guarantee every child in the country the opportunity to acquire a high academic capability and strong sense of discipline. The education rebuilding that I pursue is a reform that will leave no child behind.

A nation cannot be vitalized unless its regions are vitalized. This is the basic policy of my Cabinet. During the current Diet session, we were able to enact a package of nine bills for regional revitalization. I am determined to continue to devote myself wholeheartedly to advancing regional initiatives for revitalization and community building efforts.

This Diet session was extended by 12 days. The extension provided sufficient time for the Diet to pass into law the Social Insurance Agency reform bill, the bill for abolishing the statute of limitation on pensions, and the bill for reforming the civil servant system. We must build a trustworthy pension system, and to that end the problems surrounding the nation's pension records must be resolved.

I am aware of the people's strong anger that these problems have occurred. I too share that anger, and strongly question the conduct of the Social Insurance Agency. As the head of the current administration, I apologize to the nation for this problematic situation.

These are problems that the Social Insurance Agency has put off dealing with since ten years ago, when multiple pension numbers were integrated into one basic number for each individual. My Cabinet must resolve these issues. I have two missions for the resolution of these problems. The first mission is to continue our checks until the very last record has been verified and ensure that everyone dutifully making pension contributions receives the full pension that is due them. I have stated that the Government will complete its work of matching the 50 million unidentified pension records with contributors' listed names within a year. When I announced my commitment to this timeframe there were claims from the opposition that it absolutely was not possible. However, a thorough study by experts, conducted upon my instruction, revealed that the work could be completed even earlier than one year. If additional records are discovered we will notify the people concerned and provide them with an easy-to-understand explanation.

A Pension Benefits Bulletin Special Notification Service will inform each and every individual, whether a current pensioner or a subscriber -- in other words, the entire population -- of his or her payment history.

Although it may take us some time, please be assured that pensions will be paid in full and everyone will be notified of their pension records individually. The extension of the Diet session allowed for the enactment of the bill for abolishing the statute of limitation on pensions.

Under the previous system, pensioners' entitlement to receive unpaid pension payments became void -- even if government mismanagement of records is at its root -- after the limitation of five years has expired, at which time they become ineligible to receive back payments. The new legislation now makes it possible to receive all outstanding payments without limitation in time.

Let me stress once again that the Government guarantees to pay pensions to all those who made their pension contributions dutifully and with all sincerity.

There are people whose payment records have not been correctly recorded in the Social Insurance Agency's system, but who have not kept receipts issued some 20 to 30 years ago. I established a third-party committee to investigate the records for these people. The Government will ensure that even those without receipts will receive their pensions in full as long as the committee confirms that they deserve payment. The committee, which is deeply attentive, takes the position of the general public and works together with the people. I expect that in the near future it will announce specific, key examples in which payments are applicable.

We are fully determined to take all necessary action to resolve the pension record problems.

My second mission is to make clear the causes of and the responsibility for these pension problems. To that effect, I established an investigation committee and appointed the former Prosecutor-General as the committee chair. I pledge to identify the locus of responsibility for the current situation and see to it that responsibility is duly taken.

The existence of many different identification numbers has been one cause of the pension recordkeeping problems. I often hear people say, "I have a health insurance card and a nursing-care insurance card. It is all too bothersome."

In responding to people's needs, I will see to it that the Government constructs a simple, convenient and reliable system by integrating these cards into a single social security card.

It is clear that long-entrenched habits developed within the Social Insurance Agency are the major cause of the current pension problems. The strong assumption that the Government will take care of everything, poor labor practices that attempted to avoid hard work, an inattentive response at information counters, and collusion between labor and management -- all of these are mechanisms, habits or systems that the Social Insurance Agency has developed over the more than 60 years after World War II. My initiative to make a clean break with the postwar regime is specifically intended to sweep these practices away. I will carry out my responsibility vigorously in this endeavor.

We cannot claim to have solved the pension record problems fundamentally unless we reform the Social Insurance Agency.

Only motivated staff members will remain on in the soon-to-be-established Japan Pensions Organization. The Social Insurance Agency calls to mind the former Japan National Railways with its poor labor practices, collusion between labor and management, and inattentive response to passengers. Since privatization, however, the private sector's wisdom and vitality has completely changed the quality of service provided.

To ensure that only motivated people remain on and the wisdom and vitality of the private sector are introduced -- this is to reform the Social Insurance Agency into the Japan Pensions Organization.

When I look at the Social Insurance Agency as it operates today, I feel it is only natural that the number of pension subscribers has not been increasing.

Just as the privatization of the former Japan National Railways led to a total change in service quality, the introduction of the wisdom and vitality of the private sector to the Japan Pensions Organization will certainly improve the pension subscriber ratio. Pension finances will also be improved and stabilized, which will be linked to pension benefits as well.

Countermeasures for the declining birthrate and economic growth are essential in order to stabilize pension finances. As the economy has recovered, pension finances have improved by 12 trillion yen over the past three years of 2003 to 2005 alone, surpassing the initial estimation. And in the mere nine months since the Abe Cabinet was formed, pension finances have risen by four trillion yen through fund management. To make sure that this upward trend continues, we must proceed with the New Economic Growth Strategy, a strategy to achieve economic growth against the backdrop of the shrinking population by way of openness and innovation.

In the diplomatic arena, I have advanced my advocacy of "proactive diplomacy." Proactive diplomacy does not mean insisting loudly on the national interest without due consideration for the world situation. To state our vision of and ideas about what Japan should do for the world -- that is proactive diplomacy.

Last month I presented "Cool Earth 50," Japan's proposal for global warming countermeasures, to the world leaders gathered together at the Heiligendamm Summit. I explained to them the basic element of the proposal, for emissions to be reduced by 50% by 2050 we must create a framework in which all major emitters, including the United States, China, and India, participate. I also stressed to the leaders the necessity of achieving compatibility between environmental protection and economic growth.

As a result, Japan's proposal was incorporated into the G8 statement, which indicated that each country will "consider seriously" Japan's proposal. Japan, as the host nation of the 2008 Hokkaido Toyako Summit, will display leadership in the international efforts against global warming. This is what I mean by "proactive diplomacy."

A wide range of difficult tasks will be waiting for us, but regardless of the difficulties, I will tackle these tasks to the best of my abilities and with courage for the creation of "a beautiful country, Japan."

QUESTION 1: The official announcement of the House of Councillors election is now only one week away. At present, you are facing a tough situation with the Cabinet approval rating stagnating at a very low level as a result of the pension issue, the resignation of Mr. Kyuma, and so forth. Between now and the election day, what are your plans for turning this situation around, what do you intend to communicate to the public, and how do you think you can gain their understanding? I would also like to ask you whether you see the coming election as more of an interim election or as an opportunity to ask the public to choose between your Administration and one headed by Mr. Ozawa.

PRIME MINISTER ABE: I am aware that the present situation is very difficult in view of the election. I believe, however, that we are certain to win as long as we can convey during the campaign in a firm and easy-to-understand manner precisely what we have achieved, the shape of the Japan we are aiming at, and our concrete policies for accomplishing our goals.

When I took office as Prime Minister last year, I declared that I would embark on a new nation building effort towards the goal of creating "a beautiful country, Japan" and that we would break away from the postwar regime. At last year's extraordinary Diet session, my Cabinet succeeded in revising the Fundamental Law of Education for the first time in 59 years, which I believe represents a giant step towards the opening up of a new era in education. We also elevated the Defense Agency to a ministry. These developments clearly show that Japan is now confident of the maturity of our democracy and civilian control and demonstrate our will to make contributions to the world.

We have also passed a bill to promote the decentralization of power from central to local government. My Cabinet has clarified its will to implement decentralization of authority and has indicated a program to that end. We will move away from traditional community building and regional revitalization measures led entirely by the central government, and towards ones in which the regions themselves play the leading roles and take advantage of their own wisdom and vitality.

In the current Diet session we have succeeded in passing nine bills on revitalizing the regions and three on rebuilding education. The national referendum bill, which provides a procedure for revising the Constitution, has also been enacted, 60 years after the enactment of the Constitution. I am convinced that the foundation is being steadily built for the creation of a new country and that nation building is moving firmly forward.

I promised that my Cabinet would proceed with reforms and promote the growth of the economy through the New Economic Growth Strategy so that the people would truly sense the economic growth for themselves and the favorable economic climate would spread widely throughout the nation's regions and households.

Between last September, when I became Prime Minister, and this July, we have increased employment by 600,000 people. The unemployment rate fell to less than 4 percent for the first time in nine years, and is now at 3.8 percent. We have implemented 237 "challenge again" initiatives with a budget of 172 billion yen. While we had set a goal of 250,000 people as the number of "freeters" (job-hopping part-timers) who would land a regular job, the actual number who did so was 350,000, exceeding the goal by 100,000 people. We are certainly drawing closer to a society of opportunity that guarantees everybody the chance to challenge again and again. I am firmly determined not to allow the current situation, in which the favorable outcome of the economic recovery is extending, to slide backwards. I will convey this determination and the Cabinet's track record in the election campaign.

Which side is right, the Liberal Democratic Party and the ruling coalition -- in other words the Abe Administration -- or the opposition parties? I want to make this question clear.

QUESTION 2: Immediately before the closing of the recent Diet session, Defense Minister Kyuma resigned because of his remarks about the atomic bombings. In May, then Minister for Agriculture, Forestry and Fisheries Matsuoka, who was facing accusations related to "politics and money" issues, passed away in unfortunate circumstances. Concerning the various Cabinet members who have been accused of problems, including Health, Labour and Welfare Minister Yanagisawa, who commented that women were "birth-giving machines," in each instance you consistently said that there was no need for a resignation. Looking back, three Cabinet members have been replaced during the last nine months, including Minister of State Sata, who resigned at the end of last year. In relation to these developments, what do you think of your responsibility for their appointments? Do you think you have sufficient leadership over your Cabinet and its members? On a related note, the replacement of three Cabinet members is not a very desirable situation. Do you have a plan to reshuffle the Cabinet or the LDP executive officers after the House of Councillors election in the interest of personnel change? These are the two questions I would like to ask you.

PRIME MINISTER ABE: It is a matter of great regret that three Cabinet members had to be replaced. Naturally, the responsibility for their appointments lies with me. At the same time, however, I have the important mission of moving ahead with reforms, and moreover, of the creation of a new country. I have reaffirmed my determination to accomplish this mission at all costs. Mr. Yoshimi Watanabe, the newly appointed Minister of State for Regulatory Reform, drew up and enacted a bill for reforming the civil servant system, which met with extremely strong resistance. This bill fundamentally changes the way in which the bureaucracy has been operating so far, and it is no exaggeration to say that most of the government agencies objected to it. For example, as far as the public is concerned, the re-employment of retiring civil servants in the private sector through intrusive intermediation is, quite simply, the re-employment of civil servants through intrusive intermediation, whatever you choose to call it. There is no question about that. Unfortunately, however, this bill did not pass the administrative vice-ministers' meeting. It had been the case that bills that the vice-ministers did not pass would not be approved in a Cabinet meeting. I, however, adopted in the Cabinet an idea that had not passed the administrative vice-ministers' meeting, and then submitted the bill to the Diet and enacted it as legislation. Minister of State Watanabe has demonstrated the ability to make breakthroughs, as I expected of him.

Regarding agriculture, I have set a goal of building a system based on "aggressive agricultural administration," in which motivated farming households or agricultural leaders will draw on their eagerness and wisdom to build the future. Our goal is to achieve exports of agricultural products worth one trillion yen by 2013. This month, we achieved the first export of rice to China. Did anyone imagine, say, ten years ago, that Japan could ever export rice? They say Japanese rice priced at 90,000 yen a bag tastes very good. I believe that we have changed the public's view of agriculture significantly.

I would like Minister Norihiko Akagi, who took over Mr. Matsuoka's position, to continue to open the way for the future of agriculture, forestry and fisheries industries by continuing this "aggressive agricultural administration."

Before I appointed her Minister of Defense, Ms. Yuriko Koike had been assisting me in her capacity as the Special Advisor to the Prime Minister in charge of security affairs. She has made many official overseas trips and is personally acquainted with the ministers of state, foreign affairs and defense and the security advisors of many countries. I look to her to take full advantage of this network of hers to fulfill her important mission of protecting the lives and assets of the people of Japan.

Post-election personnel matters remain to be decided. In the meantime, I will do all I can to win the House of Councillors election.

QUESTION 3: You have emphasized a number of achievements. Some people point out that the "politics and money" issue has not been sufficiently discussed from the voters' point of view. On the diplomatic front, the abduction issue, into which you have been pouring a great deal of effort, has not seen any significant progress. I fully recognize the achievements you have already made, and would like you to mention any points you have reflected on concerning the current Diet session.

PRIME MINISTER ABE: I always feel the need for day-to-day reflection. I intend to work on politics and to fulfill my duties by reflecting on what I have done in an attempt to make tomorrow a better day than today.

We regard the political funding issue as one not attributable to Mr. Matsuoka alone, but rather as an issue that needs to be tackled from the broader perspective of the political funding system as a whole. Based on this recognition, we submitted to the Diet and enacted a bill for regulating political funding. At first different views were expressed even within the ruling parties, but in the end the attachment of receipts for expenditures of 50,000 yen or more has been made mandatory. I am convinced that the enactment of the legislation has drastically improved the transparency of the political funding system.

I have been working on the abduction issue for a very long time. I have been aware of this issue perhaps since before the person who just asked this question became aware of it, and I was working on it before anyone else took it up.

I have held 70 summit meetings so far, and in each of them I have explained the issue to the respective national leader and asked for the support and understanding of Japan's position, resulting in the gaining of understanding and support from all the countries. Consequently, there is now a much deeper understanding of the abduction issue in the international community.

The cooperation of the international community is essential to resolving the abduction issue. It is precisely because the issue cannot be resolved through Japan's efforts alone that we have been cooperating with other countries.

Was there such cooperation, say, five years ago? No there was not. But the cooperation has certainly developed further in the last nine months.

Although this is an extremely difficult issue, I have renewed my determination to address it with an iron will for the sake of the return of all the abductees, including Ms. Megumi Yokota.

It has been 30 years since Ms. Yokota was abducted. After all this time she has still been unable to set foot on her native soil and her parents are unable to hold her in their arms. This makes me feel truly ashamed. The important thing in politics is to look back on one's past conduct to regret what needs to be regretted in the interest of further stepping up our efforts towards the future.

QUESTION 4: Mr. Ozawa, the President of the Democratic Party of Japan, said today in a media interview that he would step down from his position as president if the opposition parties failed to gain a majority of seats in the House of Councillors in the election. You have always said you are aiming for victory in all constituencies. With just one week to go before the announcement of the election, do you intend to clearly indicate your responsibility by announcing a victory/defeat line and cutting off your retreat in order to fight in the election?

PRIME MINISTER ABE: What I should communicate in the election, and what any political party should fundamentally communicate, is "what we will do," and the point at issue must be "what we have done."

That is why I have been saying: What does "a responsible party" mean? What does it mean to be the ruling party? It means that the party must only say what it can deliver on. It means that it must carry out its word. I make it a point to implement any policy I pledge myself to, and I have in fact implemented those policies. That should be the point at issue.

I will not talk based on the premise of defeat before the fight has begun. I intend to win and carry out my pledges. What is required of a politician is to implement policies as they have been pledged. I would like people to seriously consider how reliable policies are-whether they are really responsible, well grounded and fully funded.

QUESTION 5: I can fully appreciate that the Prime Minister wishes to make an appeal to the country concerning his policies during the election campaign. However, in a debate with Mr. Ozawa at the National Commission for the Creation of New Japan on July 1 you said, "Which one of us, Mr. Ozawa or myself, is more suitable as a Prime Minister? I ask the nation to make the judgment." I took the implication of this remark to be that the Prime Minister is, after all, positioning this election as one that will determine the administration. I would like to ask you about that point again.

PRIME MINISTER ABE: It is a matter of course for the people to question the leadership and reliability of party leaders. And questioning a policy also means asking whether or not a party leader's stated policy is and will be conducted as he stated, and whether that person is reliable or not.

The upcoming election will be an opportunity for the people to determine which of the two -- Mr. Ozawa or I -- is the more persuasive, who has more substantial underpinnings, whether they lack the financial backing and are bluffing, and whose policies are the correct ones.

QUESTION 6: Related to the previous question, if you are asking the people who they think is more suitable as Prime Minister between you and Mr. Ozawa, in my opinion, one can't say that the people have chosen Prime Minister Abe unless the number of seats obtained by the ruling parties in the House of Councillors after the election exceeds the number obtained by the opposition. Please let us know of your opinion on this.

PRIME MINISTER ABE: I have no intention whatsoever of speaking based on the assumption that we have lost.

What is important for us is to explain to people our down-to-earth, well-substantiated, and time-proven policies in a way that is easy for them to understand so that we can win in every constituency. Then we will accept the result as it is.

Although the upcoming election will be a very tough fight, I am confident that we will obtain victory without fail insofar as we explain our policies properly and in an easy-to-understand fashion.