Press Conference by Taro Aso, Prime Minister
* Related Information
Countermeasures for the economy and people's daily lives
Japan cannot avoid the tsunami of global recession. But by taking bold measures, we aim to extricate ourselves from this recession the earliest of all countries.
Please look at this diagram. In October we passed the first [fiscal 2008] supplementary budget. Following that, the specifics of the second supplementary budget [government proposal] were determined the other day. And today, the fiscal 2009 budget [government proposal] has been completed. We will proceed with the three sets of measures in a seamless manner, as if they were a three-stage rocket.
The total scale of the three packages reaches 75 trillion yen. The total of fiscal spending and tax reductions amounts to 12 trillion yen. Twelve trillion yen is equivalent to 2 percent of gross domestic production (GDP). The scale of these measures is among the very largest of measures undertaken by any country.
I'll begin with employment. We will secure housing for workers whose jobs, given to them through temporary staff placement service companies, have been terminated. Employment-promotion housing facilities have already begun to accommodate such people, with decisions already reached on who will live in some 1,000 housing units.
Business managers who extend regular employment contracts to temporary staff, students whose tentative employment offers have been cancelled and "freeters" (irregular and part-time or casual employees) who are relatively older will be awarded subsidies of between 500 thousand and 1 million yen. Employment insurance premiums will also be reduced. The reduction for an average household will be around 20,000 yen a year.
Furthermore, a fund of 400 billion yen will be established for the purpose of creating new jobs. The fund would nurture businesses in future-oriented fields, such as in the areas of nursing care or catering services for the elderly.
I will now turn to the fixed-sum stipend. Twelve thousand yen will be provided per person, with children and the elderly instead receiving 20,000 yen per person. A four-person household with two children will receive 64,000 yen. By all means, please use this money. We hope that the stipend will help to alleviate the pressure on family budgets, even a little.
Countermeasures against the declining birthrate are also important. All 14 maternity check-ups will be provided without charge. The one-off childbirth and child-rearing allowance will be raised by 40,000 yen to 420,000 yen. I wish to eliminate the need to have cash at hand at the time of childbirth.
Next, on tax reductions. Tax reductions on mortgages will be increased to a maximum of six million yen, the highest level ever. Tax breaks will also be given in cases where people use their own financial resources, not loans, to modify their homes so as to conserve energy or make them "barrier-free".
In addition, automobile weight and automobile acquisition taxes will be reduced for purchases of eco-friendly cars. For example, a new two million-yen hybrid car will be exempt from these taxes whereas 146,700 yen will be imposed on a standard car of the same price at the time of purchase.
Small and medium-sized enterprises will be made exempt from inheritance and gift taxes in cases where a business is passed on to a succeeding owner without cutting jobs. This will make it easier to keep local societies and communities intact.
[Budget allocation for promoting major policies]
We will pay particular attention to addressing the shortage of medical doctors and deficiencies in emergency medical care. For this we will increase the number of helicopters used for medical emergencies and increase assistance to hospitals providing emergency care. The scope of countermeasures against intractable diseases will be broadened, to include those against pandemic influenza.
A Consumer Services Agency will be created to reinforce governmental administration in the area of consumer welfare. Through this I hope to enhance the public's peace of mind about what they consume.
Raising the self-sufficiency ratio of food is another important challenge. Assistance will be given to increasing the planting of wheat and other crops in rice paddies and to efforts to resolve the issue of arable land no longer under cultivation.
In addition, I intend to allocate funds on a priority basis to research in advanced technologies such as those concerning induced pluripotent stem cells (iPS cells) and regenerated cells, research areas now inviting a great deal of discussion.
Reallocation of fiscal revenues earmarked for road-related spending to general spending purposes
In other words, the rule that revenues from petrol taxes shall be used exclusively for road building and maintenance will be abolished, which will make it possible to use these revenues for other purposes as well. And indeed, they will be used for social security expenditures as well.
Fiscal resources, the Mid-term Programme and administrative reform
1. Regarding tax revenues
2. Fiscal resources for Emergency Countermeasures
In addition, the proportion of basic pensions funded by the government will be raised to a half. This pledge is also intended to stabilise the finances of the pension system. Here too for funding we will utilise reserves that have accumulated in the special-purpose budget account for the Fiscal Investment and Loan Program rather than issue deficit-financing bonds.
However, these are all merely temporary sources of funds and cannot be called stable funding sources. In particular, the greatest challenge will be how to secure stable funding resources for the social security system so that it can give peace of mind to the public.
3. The Mid-term Programme
These tax increases are to foster peace of mind among the public concerning the social security system, pensions, medical care and nursing care. They are intended to avoid passing the bill on to posterity.
I intend to proceed with boldness over the short term and with responsibility over the medium term. I believe that we have succeeded in taking the first step in translating this into concrete form.
4. Administrative reform
We will be slashing expenditures on public interest corporations by approximately 40% from the 940 billion yen appropriated in fiscal 2006. We will dissolve the independent administrative corporation "Employment and Human Resource Development Organization of Japan" and transfer its functions elsewhere. This is to include a cessation of the Vocational Museum's operations.
I will present these budgets to the regular session of the Diet, which is scheduled to be convened on 5 January. I should like them to be approved as soon as possible. It is my strong conviction that the early passage and execution of these budgets will constitute the best possible economic countermeasures. This will determine the future of Japan's economy and, indeed, the future of Japan as a nation.
The next Diet session can be expected to be very different from Diet sessions in the past. The Diet's ability to take decisions will be put to the test. I submit that the question that the public puts to the Diet is whether or not the Diet can defend their daily lives amidst this economic crisis. The Diet's political will and resolve are being tested.
The government and the ruling coalition have formulated what we consider the best possible proposal. We are certainly willing to discuss any good proposals that the opposition parties may have. However, there is simply no time for wasteful delay before reaching a final decision.
I am well aware that some argue for an election, a coalition government, or political realignment. However, we are now in the midst of an economic crisis said to occur only once in a century. This is not the time for such talk, nor in my opinion are such things even possible.
I will do everything in my power to defend the daily lives of the people. I am determined to see this crisis through. I have renewed my resolve to take on this crisis, leading the way without fear of criticism. I ask the Japanese people for their encouragement, guidance and understanding.
This completes my opening remarks.
QUESTION: First of all, with regard to the Mid-term Programme, approved some hours ago by the Cabinet and which you referred to just now, the Cabinet approved a programme that includes a fundamental reform of the tax system from fiscal 2010, including that of the consumption tax, so as to ensure peace of mind among the Japanese people regarding social security. Specifically by how much are you thinking of raising the consumption tax rate?
Minister [of Economic and Fiscal Policy Kaoru] Yosano stated the other day on television that by 2015 he would like the consumption tax raised to around 8.5-10%. In concrete terms, to what extent do you anticipate raising the consumption tax rate?
In addition, some within the ruling coalition, in particular the New Komeito, have expressed reservations on a consumption tax rate rise. How do you plan to persuade them and coordinate on this matter? Those are my two questions.
And as for the extent of the increase in the consumption tax, about which you asked, that is a matter for the government and the ruling coalition to examine from now on, and at this stage we have not yet determined what that percentage might be.
Regarding the New Komeito, the decision on the Mid-term Programme was taken with the New Komeito's support. So this is not going to be something we'll be debating back and forth.
Furthermore, if the DPJ does not allow the interpellations to be held, it is likely that parties will become increasingly confrontational and an imbroglio would ensue in the Diet. You mentioned just now your strong resolve, but in that regard I wonder to what extent you intend to take a strong hand in conducting these affairs, such as by having both Diet chambers deliberate the budget proposals simultaneously, and whether in the case of an impasse you are prepared to go so far as to dissolve the House of Representatives. I would like you to explain your attitude and your resolve.
It is frankly impossible to say how the Diet session will go, as we just won't know until the actual time. It is a question of what transpires at the Diet Affairs Committee, the Steering Committees of the two Houses and other fora.
In addition, it is beyond my imagination to think of protracted confrontation on bills including those on tax reductions, since they are an extremely important issue for the daily lives of the people of this country. In any event, the budget proposal was formulated as we thought best, and from the point of view of defending people's daily lives, I am firmly convinced that the earliest possible passage of this bill would constitute the foremost economic countermeasure as we aim to lead the world in extricating our country from the wave of a great recession.
Also, it would seem that achieving a fiscal primary balance surplus in fiscal 2011 is practically impossible. What are your thoughts on this?
If we also discuss the mid-term, as I said just a moment ago, we are dealing squarely with what we might call our "responsibility" to undertake fundamental reform of the tax system, with an eye on 2011.
In that regard, while I understand what you mean by asking your questions, we will be making exceptional responses to abnormal economic circumstances. I believe that otherwise it would be extremely difficult to extricate ourselves from this recession. Various research agencies and institutions, among others, have announced projections that economic activity next year will drop precipitously all over the world. And looking at past data for Japan, the degree to which our economic activity will slump will be the sharpest of any time in our country's 60-year postwar history.
Consequently we compiled these budget proposals thinking that we must undertake drastic measures in response to such a situation.
As for the timing of a tax rate increase, we have incorporated the prerequisite of giving due consideration to the economic situation over the next three years. Based on this I will make a request to the public as a case of responsible political conduct.
As you know, we raised the consumption tax rate last time to 5% when the economy was said to be at its peak, and the economy fell sharply after that. In the past our estimate was wide off the mark, and we need to learn from such experience.