(Provisional Translation)

Opening Statement by Prime Minister Junichiro Koizumi at the Press Conference

January 4, 2002

Let me first of all wish you a Happy New Year. I would like to pray, together with the people of Japan, that the coming year be a better one. Today I paid a visit to Ise Jingu, Japan's premier Shinto shrine. Standing within the grounds of that sacred place I could sense the aura that flows in the natural world, indifferent to and above the ordinariness of everyday life and I felt myself inspired with renewed energy. Fortunately today we were blessed with fine weather around Ise region, where Ise Jingu is located. At I the shrine I hoped that the coming year be as serene and peaceful as the weather there. Last year was an extremely severe one. Still, we were fortunate enough to greet the birth of Her Imperial Highness the Princess Aiko. The news brought joy to the people of our nation. I would like to join together with the people of Japan in celebrating her birth and in praying for the healthy growth of Princess Aiko. Here in Japan we are welcoming the New Year. However let us not forget that even at this moment personnel of the Self-Defense Forces (SDF) are on duty in the Indian Ocean. Since the terrorist attacks that occurred last year, Japan has shown its firm resolve to stand for the eradication of terrorism. I would like to pay both great respect and gratitude to the SDF personnel whose actions embody the resolve of our nation. This year, with regard to economic aspects as well as in the context of ensuring our security, both internationally and domestically, we will continue to face the difficult challenges that have been present since the terrorist attacks. Still, even with the difficult situation both at home and elsewhere, I believe that this should be a year during which we will earnestly implement structural reform in order to lay a firm foundation for economic revitalization. On the international front, Japan will firmly maintain its initiatives in the context of international coordination to stand firmly against terrorism, and thereby help to ensure that the efforts of the international community do indeed bear fruit. As I look back upon the last year I believe that with the support of so many people of our nation, we have steadily advanced reform. In particular, despite rising rates of unemployment, from which a lot of people have experienced difficult problems, due to the extremely severe economic climate, I have been greatly encouraged by the outpouring of support from so many people who have expressed their understanding and expectations of the Koizumi Cabinet's stance that "there can be no growth without structural reform". I am resolved to forge on in the year ahead with further reform in sincere response to that support. To those who criticize that the Koizumi Reform is not making headway I tell then that we have steadily advanced reform since I assumed the Presidency of the Liberal Democratic Party (LDP) and became Prime Minister of Japan in April of last year. First of all, before I assumed the premiership was there anyone among the powerful politicians of our nation, among those who were thought to be candidates for the LDP Presidency, or even among the heads of the opposition parties, who dared point out the need to privatize the Japan Highway-related Public Corporations? Was there anyone who believed that we could abolish the Government Housing Loan Corporation? Did anyone imagine that we could abolish the Japan National Oil Corporation and the Urban Development Corporation or achieve a one trillion yen reduction in the FY2002 fiscal outlays to special public institutions? On all of these challenges that were thought impossible I have already gained the approval with the support of the LDP for my policies. There might be some who possess a sense of crisis that matters were settled through compromise in the face of strong resistance, or things did not go as planned, but I believe that there has been a sea change in that we now have the cooperation and support of those who opposed us on the reforms that were hitherto believed impossible. At the end of last year a decision was taken to conduct a review of eight governmental financial institutions. Although there are some who have leveled criticism that this had been pushed back, we are making steady progress on this front as well. The Liberal Democratic Party of Japan is steadily changing. Think of those people who since April of last year have claimed that the Japan Highway-related Public Corporations could not be privatized who now see privatization as a natural conclusion. There has been a clear change. Even the experts were clearly divided between the yea-sayers and the naysayers regarding the Government Housing Loan Corporation. Some have said that the services provided by the corporation cannot be done through private-sector financial institutions. Now that the Government Housing Loan Corporation, which was said to be absolutely necessary, has been clearly slated for abolition, we have already seen private-sector financial institutions develop services that compete favorably with the offerings of the corporation. Think about governmental financial institutions. At the end of last year, at the general meeting of the Liberal Democratic Party Administrative Reform Promotion Headquarters held in December, a policy was decided that went against any revision. Under such a policy, governmental financial institutions would have been untouchable. Ultimately however, the Secretary-General; Chairmen of General Council, Policy Research Council, General Assembly of the LDP Members of the House of Councilors; and Secretary-General of the Members of the House of Councilors of the LDP, together with former Prime Minister Ryutaro Hashimoto and myself, unanimously adopted the decision to have a review undertaken under the auspices of Chairman of the Liberal Democratic Party Administrative Reform Promotion Headquarters Seiichi Ota. A change has taken place within the LDP. When I think of these achievements I believe that reform is steadily making progress. I also see that the LDP has changed. The transformation of opposition forces into collaborators was indeed made possible by the fact that the LDP took a clear look at the situation and the needs of the people, and realized that we must move forward along the way of reform. Indeed, the LDP is now cooperating with less resistance than anyone had imagined. We must not overlook this. There are some who criticized that in order to win over those who opposed privatization of the Japan Highway Public Corporation, we had to compromise by changing the redemption period from 30 years to 50 years. That is simply not true. Now that a decision has been made to privatize, changing the redemption period from 30 years to 50 years is not a matter of compromising, but rather the recognition that we must build those roads that are necessary. A decision was also made to ensure that no public allocations are made from the earmarked revenue of 300 billion yen. That is why the extension of the redemption period from 30 years to 50 years, or why the maximum redemption period is to be kept to within 50 years, had nothing to do with compromise. Everyone agrees that those roads that are necessary should in fact be built. I think it is incorrect to focus in on one point and allege that it amounts to a compromise or setback. Indeed, without relaxing the hand of reform, I will continue to make my utmost efforts to ensure that the policies that I have maintained since becoming Prime Minister are steadily implemented. Furthermore, given the severe employment situation, we will put in place solid employment measures. The First Supplementary Budget bill has already been passed and the Second Supplementary Budget bill will be submitted during the course of this month. These encompass budgetary provisions for the necessary employment measures required to ease the pains of reform. In addition, we were able to defend the framework of keeping new government bond issuances to less than 30 trillion yen. There are some people who have criticized this as an austerity budget in a deflationary recession. I beg to differ. In a situation where there is only 47 trillion yen in tax revenue, the fact that approval was granted for the issuance of the 30 trillion yen in government bond issues hardly amounts to an austerity budget. All the more so when one considers that combined outstanding debt from the national and local governments in Japan amounts to more than 690 trillion yen. That is why, as far as I am concerned anyone who says that with only 47 trillion yen in tax revenues coming in, the issuance of 30 trillion yen in government bonds amounts to an austerity budget is suffering from a serious condition of debt dependency. Although I know that if we were to issue more government bonds in order to temporarily alleviate the symptoms of debt dependency the cries to issue more debt might temporarily die down, I believe that it would only amount to a temporary fix and would not result in any fundamental reform of the situation. The reforms that the Koizumi Cabinet is currently advancing will lead to sustainable economic growth. Indeed, considering the high levels of fiscal liabilities already outstanding, and in light of the fact that tax revenues amount to only 47 trillion yen, the very fact that taxes have not been raised and 30 trillion yen in new debt is being issued demonstrates that consideration has been given to the economy, and that this budget is designed to promote structural reform. I would like you all to understand this. Furthermore, in addition to measures to alleviate the pain of unemployment, what is most important is to create jobs for the unemployed. Employment creation is what matters. That is why we have come up with a clear policy that will lead to the creation of 5.3 million new jobs over five years. Indeed, we can see many indications that the situation is improving. Since my inauguration as Prime Minister I have promoted the policy that within three years all government automobiles should be replaced by low-emission vehicles. When I started as Prime Minister, of the nearly 7,000 vehicles used by governmental institutions, only three hundred or so were low-emission vehicles. At the time of the announcement that all 7,000 would be replaced with low-emission vehicles within three years, private-sector corporations were already deeply involved in development of low-emission vehicles. Our policy calls for all vehicles used by governmental institutions to be replaced with low-emission vehicles, amounting to 7,000 vehicles over a three-year period. The necessary budgetary measures have been taken to ensure that. However it won't stop there. According to private-sector calculations ten years from now there will be ten million low-emission vehicles in operation. Furthermore, the importance of having decisive policies in place can be seen in the case of the abolition of the Government Housing Loan Corporation, of which I spoke earlier. Immediately after the announcement of the policy to abolish the Government Housing Loan Corporation within five years, Johnan Shinkin Bank and other major city banks announced services more attractive than the offerings of the Government Housing Loan Corporation, despite the fact that private sector institutions had been deemed unable to offer such services. This illustrates that policy alone can lead to market entry by the private sector. Postal services are another good example. Here again, I intend to propose to this year's Ordinary Session of the Diet that private-sector corporations be allowed full market entry to all postal services. As it stands, from April 2003 private-sector corporations will be allowed to enter this market segment. Indeed, there are some private-sector corporations that have already prepared for and made the capital investments necessary to allow them to enter this market. Furthermore, some corporations have begun to take employment measures to secure the personnel they will need to implement this. Once again, by simply indicating what the policy will be, we see the private sector taking note and acting. Since the private sector sees increased business opportunities, without the use of any tax monies, the private sector uses its own capital to make the necessary investment and moves ahead with its own employment measures. This is an example of what I see as a very important role that the political sector can play in creating the necessary environment. In that context, when thinking about how to achieve economic revitalization for Japan, we should remember that our nation has stood out among other advanced nations with the highest level of public spending, and we have borrowed so much that we simply cannot borrow any more. Moreover the government has provided an environment with zero interest rates and utmost fiscal measures and finance measures. Still, why is it that our economy is not reborn and we have not seen a recovery of our businesses? I believe the reason is that there are structural problems with our current government and our bureaucracy. This is why we have proceeded with our policy of "no growth without reform", recognizing that there shall be no economic revitalization without structural reform. It was in April that I assumed the post of Prime Minister and in May that I gave my policy address to the Diet. I would like to highlight that we have steadily advanced reform precisely along the lines provided for therein. In the year to come I intend to continue to devote my utmost to ensuring that these reforms bear fruit. Looking back ten years ago at the Bubble Period, it appears to me that Japan was enveloped in a sort of over confidence. Despite the fact that the total landmass of our nation is less than the State of California in the United States, the assessed value of Japan's land exceeded that of all 50 states combined. Japanese corporations purchased buildings in the United States. They bought hotels. They bought golf courses. The yen appreciated. We were on a roll. It seems to me that we were overconfident. Now, ten years later we have, conversely, lost our confidence. I believe that Japan still has great latent potential. If you compare Japan to many countries it is clear we have sufficient latent potential. Structural reform is the key to unleashing the power that will channel our latent potential into actual growth. We must not be over confident, and at the same time we must not lose our confidence. With greater confidence in the Japanese economy and full of hope, the Koizumi Cabinet will strive sincerely in the full implementation of employment measures that will lead to the creation of 5.3 million new jobs in the coming five years, while we will continue to devote our utmost this year to ensuring the continued revitalization of the Japanese economy. In this I ask for your understanding and cooperation.