(Provisional Translation)

Opening Statement by Prime Minister Junichiro Koizumi at the Press Conference on the Occasion of First Anniversary since Appointment as the Prime Minister

Friday, 26 April 2002

Today marks the first anniversary since my appointment as Prime Minister of Japan. During that period, with the support of the people of Japan I have been able to actively acquit my duties as Prime Minister. This is thanks to the support and cooperation of the people of Japan, and I would like to once again offer my most sincere appreciation. Since my appointment, I have taken a path and a stance of "no growth without reforms." This has remained steadfast, at times when support has been high, and also when support has fallen lower, and this policy will remain unchanged. I will not budge an inch from my reform track of "no growth without structural reform." This is what I want to convey to you first. In May last year I made my first policy speech to the Diet, in which I presented an outline of my policies as Prime Minister to the people of Japan. First of all, given that economic revitalization is the single most significant mission facing the Koizumi Cabinet, I have made a great shift on economic and fiscal policy to date. How has this shift been achieved? Originally, the issuance of government bonds had been increased each time the economy had taken a downturn. Instead, I set a policy whereby the issuance of government bonds for the budget for FY2002 should not exceed 30 trillion yen. This means that I shifted away from a track where it had been all too easy to choose measures to increase issuance of government bonds. In doing this I have placed importance on reducing expenditure despite various voices that are critical of cutting public works projects in this time of recession, and voices that have called for the 30 trillion yen ceiling on bond issuance to be dumped and for bond issuance to be increased. I am committed to sticking to the track I have set and reducing unnecessary budgetary expenditure. However, I have also stated that necessary budgetary items will be increased. While I have reduced expenditure on public works projects and decreased expenditure on Official Development Assistance (ODA) by 10%, I have increased the budgetary areas that will be required by society in the future. In specific terms, there will be extra budget for childcare and child-rearing. We currently face a situation in which about 150,000 people would like to leave their children in childcare facilities, but are unable to do so because there is no space. This fact prompted me to take up a campaign of a zero waiting list for nursery schools, and over the course of three years I will ensure that these 150,000 children can gain a place in childcare facilities. Support for this campaign is elucidated in the FY2002 budget and the appropriate budgetary measures are already being implemented. First of all in FY2002 places will be secured for 50,000 children, then 100,000 in FY2003, then 150,000 in FY2004. This is expected to continue to grow steadily as I have predicted earlier. Concerning care houses for the elderly, based on the principle that all that can be done by the private sector shall be left in its hands, and that those private-sector concerns with the will and good faith should be involved in public services, things are being steadily advanced. Nursing homes are currently under construction that will provide care to the elderly at a cost that is affordable with the pensions that they are receiving. As for education, budget cuts are not the cure-all solution. It is inconceivable that if a child loses both parents in an accident then that child has to stop going to school. Based on the idea that for such children, for those with a desire to learn, we should take measures to return them to school, we have increased the current budget for a scholarship system and the number of children covered under this project when compared to the previous year is up by 50,000. Furthermore, if children are not interested in what they are taught at school, this would increase the number of non attendance at school. We want that all children be provided basic skills in the three R's - reading, writing and arithmetic. To this end, I believe that we should consider streaming classes according to the level of understanding. There is no need to stick to the class size of 40 children. It could be 20 or 30. I believe that flexibility is required in forming classes for those children who have difficulties in learning in order to enhance their understanding. Measures such as these are already underway. We are also increasing the education-related budget to involve persons who have no teaching qualification, but have some experience in taking care of children at school as volunteers to support teachers. This project, while making use of people's good-will, would also serve as a employment measure. In addition, based on my policy that it is incumbent upon us to ensure that economy and the environment can co-exist, immediately upon my appointment as Prime Minister I announced that all vehicles used by government-related organizations would be changed to low emissions vehicles within three years. Immediately upon my announcement, carmakers have started investment in facilities and R&D, thinking that if the government would buy such low emissions vehicles, even if they were expensive, then development of such vehicles would be advanced. In terms of non-emission fuel cell vehicles, of which carmakers are now competing globally to develop, once I announced the plan to transfer to low emissions vehicles in the next three years, although it has been said that this may cost hundreds of millions of yen and take ten years to achieve, carmakers have already announced that it will be possible to test fuel cell cars next year. Responding to the announcement, in the Cabinet meeting today we decided that if fuel cell cars were available and in the market next year, then the government would buy such a car. Such vehicles are zero emission and so would have a global impact on enhancing environmental and energy policy, as well as in the area of the industrial competitiveness of our country. This is now actually underway. Today, President of the European Union Romano Prodi has visited Japan and delivered a speech to the Diet. What was his message? He spoke about the need for Japan to believe in itself to have confidence in the future. He pointed out that in any area, including the economy, technology, science and marketing, Japan's capabilities are remarkable and stressed that these assets would never disappear. President Prodi also stated that Japan is a large economic power and will continue to be such and that we should not fall into the easy trap of taking a pessimistic view of Japan's future. He pointed out that many of the challenges facing Japan are those faced by all mature economies. These things are not comments that I have made. These were all spoken by President Prodi of the European Union at the Diet, addressing the people of Japan as a whole. While I believe that we should not be over-confident, I am also convinced that we should not be totally devoid of confidence. At any rate, I believe that since my appointment as Prime Minister, every day has been one under an emergency situation. I cannot leave the pressure and tensions behind at home if I am to fulfill my duties as Prime Minister. I am earnestly fulfilling my responsibilities with a sense of mission that we must pursue reform. I believe that Japan is entitled to have confidence. From July last year, voices were raised over concerns that the economic policy of the Koizumi Cabinet had come to a dead end, with the acceleration of the disposal of non-performing loans causing bankruptcies and unemployment. The doomsayers predicted financial and economic crisis, saying that "September crisis" would come. 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 see the end of the Koizumi Administration." It is now April and no financial crisis has occurred. My resolve has demonstrated itself in specific steps. The disposal of non-performing loans is steadily proceeding. Special inspections are also being enhanced. This however, alone is not enough. I too have a sense of crisis and we must impress upon financial institutions the need for them to become more stable and sound. We must build a firm financial system. My resolve in this regard remains unwavering. I have announced that over the course of five years 5.3 million jobs will be created and that Japan will become the world's leading information and communications technology (IT) country. We have also created a Council for Science and Technology Policy, and a comprehensive measures are under preparation. It is a fact that we are in severe circumstances. Last year in the construction industry and many other industries a total of 370,000 jobs were lost. However, even under this minus growth we see a rise in employment in the service industry of 500,000 persons. Some people talk about crisis all the time. I myself share a sense of crisis but we should not invite anxiety in this way. Japan should be more confident of itself. Foreign ratings agencies have recently downgraded Japan, due to issuing too many government bonds, which is only an aspect of Japanese economy. It is true that the additional issuance of bonds will not necessarily lead to economic recovery. However, some people misunderstand that these ratings represent Japan's economic power as a nation. I do not buy that view. While it is currently the case that too many bonds have been issued and too much money borrowed, it is inconceivable that Japan's national economic power as a whole is below that of some countries in South America and Africa to whom we are extending aid. It is true that corporate results are bad and the fiscal situation is unfavourable, but Japan does not owe money to any other country in the world. It may be lending money, but not borrowing. We are indeed the world's largest creditor. Our people have financial assets amounting to 1400 trillion yen and there is no such country in the world other than Japan. So when the foreign ratings agencies downgrade our government bonds, I think it is a fundamental misunderstanding to take it as a sign of reduction in Japan's economic power as a nation. In fact, I am continuing to steadily progress with reforms. Before I was appointed as Prime Minister, has anyone here today thought the Liberal Democratic Party (LDP) would really endorse my plan to privatize the Japan Highway Public Corporation? No one. Many of you thought that Koizumi would give in to the resistance. But the LDP has changed and is now cooperating with me. The LDP supported the privatization of Japan Highway Public Corporation and helped the privatization bill go through the Diet. Moreover, there were many voices opposing the abolition of the government Housing Loan Corporation as out of the question, particularly when private financial institutions are not in good shape in the climate of prolonged business stagnation. But I declared to reform Special Public Corporations and announced the plans to abolish the Japan National Oil Corporation as well as the Housing Loan Corporation under the principle that all that can be done by the private sector should be left in its hands. As soon as I declared my intention to abolish the Housing Loan Corporation, private-sector financial institutions, which originally insisted that they could not manage on their own, came up with housing loan products that offered consumers better terms than offerings of the Housing Loan Corporation. We can do it as you clearly see. We recently have had a string of scandals and incidents involving politicians. These are undermining public confidence in politics. This is a serious situation. In order to regain confidence in politics, I have instructed officials of the ruling coalition parties to further consultations on measures in such areas as modalities of various systems, legislation to make it a crime for politicians to profit from abusing their good offices, or issues related to public works contracts. By securing tripartite cooperation among the LDP, the New Komeito and the New Conservative Party, I intend to push ahead with political reform and various reforms so that we can move forward step by step. Practically everyday, one leader after another of a foreign country visits Japan. As much as we Japanese would like to have our economy grow, many foreign countries are hoping to see the Japanese economy resume its growth. Since assuming office, I myself traveled to many other countries, probably more frequently than the Ministers for Foreign Affairs. Almost every month, I have met with presidents and other leaders of foreign governments or have taken part in important international conferences. Those opportunities brought home to me how important Japan's role is and how important Japan's economic growth is for the rest of the world. I would like to continue to perform my duties, fully aware of this importance of Japan's role. The Japanese people tend to be down when times are bad, while they seem overzealous when things are going in their favor. One good example is stock prices. In late 1989, stock prices (the Nikkei average) topped 38,000 yen. Many people were saying then that it was only a matter of time that the stock price index would break through the 40,000 yen mark. The market is now down in the doldrums. When the Nikkei index fell through 10,000 yen, everybody seemed scared away by a gloomy prospect of it sinking further to 9,000 yen or even to 8,000, saying we would be ruined. I know that we are still in a bad situation. We cannot let our guard down yet. Last December, Japan's unemployment rate topped 5.5%. At the time, many people pessimistically cautioned that the jobless rate would exceed 6%, and could even reach near 10% by February or March this year, with the number of corporate bankruptcies also surging. Fortunately, however, the unemployment rate actually fell to 5.3% in February and inched down to 5.2% in March, with the number of employers also rising. Although there is still not much room for optimism, I am firmly resolved to carry on my track of "no growth without reform" and want to demonstrate through action that my resolve toward reforms will not waiver, regardless however much the popularity ratings of the Koizumi Cabinet may change. Today in the Cabinet we decided on the draft bill to make it possible for private-sector service providers to enter markets of postal businesses, a bill that has been so strongly opposed by both the LDP itself and other ruling coalition and opposition parties. This was in fact without preliminary review by the LDP. This is a most unusual case in that although the submission of the bill has been agreed, its content has not. The issue of private providers entering the postal business markets will test the LDP to see if it can really reform itself; the bill will reveal the attitudes of the LDP as well as the ruling coalition and opposition parties towards reform. Some seem to argue that the submission of the bill is enough for them, it would eventually be destroyed in the deliberations at the Diet. That is not true. If the LDP were to crush the postal services draft bill, it would be tantamount to crushing the Koizumi Cabinet, and if it were the case that the LDP were to crush the Koizumi Cabinet, then battle lines would be drawn between the Koizumi Cabinet and the LDP. I am sure that LDP members would reflect on these things. These issues are at the very heart of the structural reforms. Starting from the privatization of the Japan Highway Public Corporation, followed by the abolition of the government Housing Loan Corporation, the abolition of Japan National Oil Corporation, and the revision of government-affiliated financial institutions, and finally with the reform of the postal business, the action of the reform has been initiated. Over the course of the last year I have been proceeding steadily with structural reforms that have not been acceptable to the LDP. We are about to set on a course. Contrary to your expectation that the LDP might be crushed, rather, the LDP is coming around to the way of thinking of the Koizumi Cabinet, cooperating with me. My resolve for reforms will not waver. I will say it once again to the people of Japan that however much the popularity ratings may change, the track of reform of the Koizumi Cabinet will never change. I would like you all to understand that Koizumi's resolve and determination will not budge one jot and tittle.