(Provisional Translation)

Opening Statement by Prime Minister Junichiro Koizumi at the Press Conference on the Passage of the FY2002 Budget

27 March 2002

Thanks to the cooperation of all parties involved, today the FY2002 budget was passed. This was the result of the unified cooperation of all of the ruling parties and I would like to express my heartfelt gratitude to all of the members of the ruling parties in both the House of Councilors and the House of Representatives for their cooperation. Ensuring the passage of this budget before the end of the current fiscal year was the single most important task facing the Koizumi Cabinet. Despite many difficulties that we faced, I believe the fact that we were able to smoothly realize the passage of the budget within the current fiscal year bodes well indeed for the future, especially when we consider the economic measures that we must still implement, the measures against deflation and what we must do to improve the lives of the people. As we move forward with structural reforms, I intend to focus my utmost efforts for the smooth implementation of this budget. Unlike previous budgets, the FY2002 budget reflects a reduction of 5 trillion yen, with an allocation of 2 trillion yen as a budget for priority areas. The General Account Budget is approximately 81 trillion yen, reflecting a decrease of 10% in public works projects and a decrease of 10% in Official Development Assistance (ODA) compared to the previous year. On the other hand, budget allocations have been increased for social welfare, education, science and technology, Information Technology (IT) and the environment. Although it was said to be impossible, we have achieved a reduction of 1 trillion yen in fiscal expenditures to special public institutions. I believe that we have managed to compile a budget that clearly reflects the priorities of our policies. It is essential that the Government work together with the Bank of Japan in taking measures to counter deflation and to revitalize the economy. There were many skeptics who warned of an impending "February crisis," only to change their tone to predictions of a "March financial crisis." Nevertheless, firmly maintaining the Koizumi Cabinet policy of not creating financial instability and never triggering any financial crisis, and by taking all necessary measures, I intend to remain vigilant in advancing reform and steadily implement measures to counter deflation and proceed towards economic revival. I intend to take all necessary measures to ensure that no uncertainty arises as a result of the introduction of the Pay-Off system in April. Although we have made strides forward in advancing regulatory reform, in order to revitalize the economy, it is of utmost importance that we further advance regulatory reform. In the social welfare sector, efforts must be made to advance regulatory reform concerning the construction of nursing schools, as well as the construction of care houses for our senior citizens so that we can take an even more serious approach to advancing Structural Reform in Lifestyle. In particular, recently there has been a dramatic transformation of the demographics of our nation, and nowadays 75% of women married to male corporate employees are part of the workforce. Indeed, house wives are working outside. There are also more and more elderly people living on their own. Considering this situation, I believe that it is extremely important for us to effect a structural reform of our lifestyles so that we can ensure that our people live more fulfilled lives, through steps such as providing support to families raising children and building care houses for the elderly. It is also of particular importance that we advance the disposal of non-performing loans. In that process, we must also be sure to take all necessary employment measures across an even broader spectrum in order to reassure the people that their jobs are secure. It is important to note that although there are many who take the negative view that structural reform will lead to corporate failures and rising unemployment rates, the fact is that during the last year since the establishment of the Koizumi Cabinet, we have provided for employment measures that are currently being implemented steadily with the goal of creating 5.3 million new jobs over the coming five years. In fact, last year, despite the extremely difficult prevailing economic conditions, we saw the creation of 500,000 new jobs in the service sector, and I believe that our goal of creating 5.3 million new jobs in the coming five years is not at all impossible to attain. This is "the year of reform in full bloom." Critics in the opposition parties allege that we are not doing anything and that we have not made any progress on anything. However, the fact is that compared to a year ago, a great deal has been steadily achieved in many areas. For example, preparations are underway for a bill to provide for privatization of the Japan Highway Public Corporation. Regarding our efforts to effect reform of our medical systems, many people who were once opposed to what we are trying to do have now come around and are cooperating to determine the direction for fundamental reform so that we will be able to implement reforms which will allow for the efficient management of medical insurance systems through which we can support each other. As we implement regulatory reform I intend to steadily advance the policy of allowing the private sector to enter the operations of the postal service. The very fact that steady advances are being made in reforms hitherto thought impossible should be a source of renewed confidence for the people of Japan. There still are many who think that it simply cannot be done, but we must be vigilant and avoid the pitfalls of such pessimism. Often when I speak with foreigners visiting Japan, and when I meet people on my travels abroad, I hear the same kind of unfounded tales that one often sees in Japan's newspapers, claiming that the Japanese economy is doomed and that we are on the verge of financial instability. That is simply not the case. In July of last year, a short while after I assumed office, there were tales of a "September crisis." When the "September crisis" did not materialize, people warned of the coming "October crisis." As there was no "October crisis," people became anxious that there would be a "year-end crisis." At the end of the year, there were concerns over a "New Year's crisis," followed by the feared "February crisis" and then cries that "March would be disastrous." And yet the "crises" never happened, did they? The latent potential of the Japanese economy is indeed formidable. The more we can shift those things that have traditionally been handled by government to the private sector and implement the policy of "all that can be done by the private sector should be left in its hands," the more we can identify areas that habour potential for activating the economy. Although that is currently underway, it is not something that can be achieved in ten months or in one year. Indeed, in the United Kingdom it took five or six years before results became apparent from the policies implemented by the Thatcher Administration. In fact, during the first two years of that Administration, the economy in the United Kingdom contracted. The same was true under the Reagan Administration in the United States, where it took five or six, indeed, as many as ten years, for results to be achieved.Viewed from that perspective, I think it is clear that we are making steady progress in our reforms. This is the true face of the Koizumi Cabinet. We are not just paying lip service. We are in fact steadily implementing reforms. I guess the view from the sidelines might have been more interesting if voices of the forces of resistance had been larger in recent days; the fact is that the forces of resistance are now cooperating with us. I am sure that many people have enjoyed the battle between the resistance and Koizumi. However, in the end, the forces of resistance came to their senses and are now cooperating based on the realization that without structural reform, there can be no revival of the Japanese economy. I suppose that we will continue to see differences of opinion in the future. Still, I believe that in the end, the naysayers will come to realize that unless we move forward now with reforms we cannot revitalize our nation, and I am sure that they will come around and cooperate with the Koizumi Cabinet. My mission is to steadily advance structural reform and to realize economic revival as soon as possible by creating an environment in which Japan can boldly develop its economy and display a vitality that is commensurate with the high expectations that are placed on our nation. From my heart, I would like to ask you all for your cooperation.