[Provisional Translation]

CABINET PUBLIC AFFAIRS SECRETARY: We will now begin the press conference by Prime Minister Yoshihiko Noda. Prime Minister, your opening statement please.

Opening Statement by Prime Minister Yoshihiko Noda

PRIME MINISTER NODA: Today, legislation relating to the comprehensive reform of social security and taxation systems was approved and passed at the plenary session of the House of Councillors.

Before I address the significance of the comprehensive reform, I must first offer my apologies on two counts.

When we, the Democratic Party of Japan (DPJ), won the general elections of 2009, the manifesto did not specify or state that consumption tax would be raised or that the people would be asked to bear such a burden. On this, I would like to take this opportunity to express my profound apologies to the people of Japan.

Secondly, this legislation asks small, medium and micro-enterprises and others who toil each day to finance their businesses, as well as people who are struggling to make ends meet in their household finances, to bear the burden equally.

As politicians, asking people to bear a burden is a disheartening topic we always wish to avoid, to turn our backs away from, and to defer as much as possible during our terms of office. When we decrease taxes, we may stand with our heads held high. However, it is a truly heart wrenching matter to increase taxes. I feel this way strongly now. Having these two feelings of remorse, why do I believe that the comprehensive reform of social security and taxation systems is needed now? I would like to explain from a variety of viewpoints.
 
First, our social security system is in a state in which financial resources must be secured quickly to sustain its services. 

Unfortunately, in our long life, anyone at times may fall prey to sickness or injury. Humans are destined to gradually age. How can our livelihoods be maintained when such circumstances befall us? It is at such times when the benefit of social security comes into play. It is the fate of all of us, at some point in our lives, to enjoy the benefit of social security services, including universal pension, universal health insurance, and nursing care insurance.

Social security is directly linked to the livelihoods of the people. The declining birthrate and aging of society are advancing in Japan at an unprecedented speed, one of the fastest in the world. As a result, social security costs continue to swell by around one trillion yen every year. Somebody must bear the burden of sustaining social security. There is no provision of services without people to bear the burden for them. There is no magic wand we can wave to create money for this.

The legislation asks the people to bear a burden in the form of increased consumption taxes. The portion of the revenue increase from increased consumption taxes will be returned to the people as social security. I want to promise that the whole amount will be utilized for social security.

The second viewpoint is that it is not suitable or appropriate to exploit the future.

Social security will never be sustainable if the elderly mostly receive social security services, while the burden of funding services is mostly borne by the income tax and insurance premium payments of the current working generation. Social security will never be sustainable if, because the burden borne by the current working generation alone is not sufficient, we pass on the costs and reach into the pockets of future generations in order to sustain the current social security system.

The legislation was compiled based on the principle of the reform of achieving fairness across generations, both in terms of provision of services and burden sharing. A society that exploits the future will always feel anxieties about the future and continue to feel  no hope for it. I would like the people to understand that the reform is intended to change this trend.

The third viewpoint is that in order to maintain our stable lives, we cannot afford to lose Japan's credibility.

At the moment, the world around us is concerned about the European debt crisis. We see firsthand that when a country loses the world's confidence in its finances, this leads to financial uncertainty, economic uncertainty, and credit uncertainty. We see that once such uncertainties spread, a country must implement austere policies if it wishes to cope with them quickly, including cutting pensions and other social security benefits, reducing the remuneration of public servants, and taking measures that have enormous adverse impacts on the lives of the people. We cannot let this happen in Japan.

Japan's long-term debt balance is the highest in the world. Nevertheless, interest rates remains low, and amidst this situation, it is critical that we start taking steps from now to both secure stable financial resources for social security and restore fiscal health. This is another element I ask the people to understand.

The fourth viewpoint is the belief that it is not an easy task to receive the approval of many people given that the resolution of these issues entails such challenges. That is precisely why this comprehensive reform was long postponed, even while many politicians were aware that these issues needed to be tackled.

What is demanded today is decisive politics that makes the necessary decisions without delays and procrastination. Reforming politics to make decisions when decisions are needed is, I believe, the ultimate political reform. Stemming from this need, the comprehensive reform was examined at the Diet and the legislation was passed today.

Engaging in this reform is truly extremely difficult. The politicians who preceded me endured enormous, indescribable hardships when they introduced the consumption tax or increased the tax rate. I am aware of this. For me, as well, the road to today's passage was met with difficulties beyond my imagination.

People ask me why I often say that I will put my political career on the line for this reform and not put my political career on the line for the reconstruction from the Great East Japan Earthquake, the fight against the nuclear power station accident, or the revitalization of the economy. Whether it be the reconstruction from the earthquake disaster, the fight against the nuclear power station accident, the revitalization of the economy, or administrative reform, these are all themes that everybody must address, regardless of whether they are from the ruling or opposition parties. These are themes which we must tackle with all of our strength. I believe most people in Japan agree with me. On the other hand, the comprehensive reform which asks people to bear a burden is a theme that could divide public opinion. Unless I was resolved to put my political career on the line, we may have wavered, deferred, avoided, or hesitated to take action. For this reason, I stated my unwavering resolve to put my political career on the line for this theme.

With the passage of the legislation today, I would like to express my heart-filled appreciation to all members of the Diet, including those who pooled their wisdom and worked hard for the three-party agreement, those who approved the legislation and gave instructions through deliberations, and those who did not approve the legislation but participated in the discussions from multiple angles.

The work does not end here with the comprehensive reform. The deliberations at the Diet have presented us with a lot of homework and issues to review. These issues, too, must be thoroughly addressed moving forward. At the same time, along with the comprehensive reform, I believe the people wish or expect us to comprehensively pursue economic revitalization, political reform, and administrative reform. I will continue to engage in politics that thoroughly meets these expectations.

Lastly, if I may change the topic, today, President Lee Myung-bak of the Republic of Korea (ROK) visited Takeshima. His visit to Takeshima runs counter to Japan's position that Takeshima is an inherent part of the territory of Japan both in the light of historical facts and based on international law, and is unacceptable by any measure. President Lee and I were making a range of efforts to forge future-oriented bilateral relations, and so it is extremely regrettable that the visit took place in such a context.

The Government of Japan must take resolute measures in response. Today, as part of these measures, Minister for Foreign Affairs Koichiro Gemba lodged a strong protest with the ROK. In addition, in order to express our intention of protest, we have decided to call Japanese Ambassador to the ROK Masatoshi Muto back to Japan today.

With this, I would like to conclude my opening statement.

Q&As

CABINET PUBLIC AFFAIRS SECRETARY: We will now move on to the Q&A session. When you are called on, we would appreciate it if you could first state your name and affiliation. Mr. Fujita, please.

REPORTER: I am Fujita of NHK.

I have two questions. The first concerns the timing of the dissolution of the House of Representatives. I believe that with the passage of the legislation today, one of the conditions for the dissolution of the Diet has been met, as agreed in the recent meeting of the leaders of the three major political parties. Since you state that you will dissolve  the Diet in  the "near term", are you considering dissolution by autumn at the latest? In addition, you have indicated that you wish to achieve the passage of legislation relating to deficit-covering bonds and the reform of the electoral system for the House of Representatives during the current session of the Diet. Is it your intention not to dissolve the Diet until this draft legislation has been passed?

My next question concerns the leadership election for the Democratic Party of Japan (DPJ). There are people within the DPJ leadership who are supporting your reelection, so when do you intend to announce your candidacy for the election? Is there a possibility that you will not stand? If you do stand, what issues will you raise as matters of priority? These are my two questions.

PRIME MINISTER NODA: Firstly, with regard to what was agreed at the meeting of party leaders two days ago, one of these was the passage of legislation relating to the comprehensive reform of social security and taxation systems at the earliest juncture, based on agreement among the three parties, and this objective was achieved today. The agreement was that once the passage had been achieved, we would go to the country in a general election in the near term. With regard to the timing of the "near future," you asked whether this would be autumn or not, and I believe that it is not appropriate to point clearly and specifically to a particular time. What was agreed was that an election would be held in the near term, nothing more and nothing less, and I would like to refrain from commenting about an interpretation of this wording.

Your next question concerned legislation for deficit-covering bonds, the bill on special measures for government bonds and political reform.

It is essential that we correct the disparity in the relative weight of one vote. This is a situation that is both unconstitutional and illegal and cannot simply be exchanged for something else. We must give comprehensive consideration to correcting the disparity in the relative weight of one vote, reducing the number of Diet members and reforming the electoral system. These are things that we must do without further delay.

Also, with regard to the bill on special measures for government bonds, this too is something that cannot be left alone for any longer. If we continue to leave the situation as it currently stands, the execution of the budget will become gradually more and more constrained. In order also to ensure that there is no adverse impact on people's lives and the economy, I believe that we must respond to these issues without delay and ensure that this legislation is passed by the Diet.

Finally, with regard to your questions concerning the leadership election, the situation is that the Diet session is scheduled to continue until September 8 and, as you pointed out, there is a variety of important legislation that remain outstanding. I believe that it is my responsibility to ensure that the variety of important legislation is concluded and dealt with during the current Diet session and therefore I am not giving any thought to the DPJ leadership election.

CABINET PUBLIC AFFAIRS SECRETARY: Next please, Mr. Ikeda.

REPORTER: I am Ikeda of Nishinippon Shimbun.

With regard to the approval of the legislation relating to the comprehensive reform of social security and taxation systems by the House of Councilors today and also to the no-confidence motion that was submitted yesterday, in both cases there were a number of dissenters within the ranks of the DPJ. As president of the DPJ, how do you intend to deal with such dissenters?

In addition, yesterday DPJ Secretary General Azuma Koshiishi made a statement in which he indicated that if the leaders of both the DPJ and the Liberal Democratic Party (LDP) were to change as a result of leadership elections in September, then the items agreed on by you and LDP President Sadakazu Tanigaki in your recent meeting would become void, as these items represent an agreement between the two of you. Do you believe that inter-party agreements would be invalidated by a change in leadership? Please tell us your thoughts.

Finally, I have a question with regard to the landing on Takeshima by President Lee Myung-bak of the Republic of Korea, which you also mentioned in your opening statement. It would appear that the statement made by Minister of Defense Satoshi Morimoto has proved problematic. Are there any plans that the minister to be replaced?

PRIME MINISTER NODA: First of all, with regard to the voting actions of Diet members who were formerly affiliated to the DPJ in the no-confidence motion submitted to the House of Representatives yesterday, this is a matter that will be confirmed by the party leadership, led by the Secretary General, and ultimately a policy will be determined by the Standing Officers Council. This is the process that will be followed.

With regard to the comment by Secretary General Koshiishi that you mentioned, I have not asked the person in question about his intentions regarding the statement, but my understanding is that it was a comment by which he meant to imply that there would be little sense in responding to a hypothetical question from a journalist with an equally hypothetical answer.

As you have directed your question to me, my response is that such talk is hypothetical in nature and therefore there is no necessity to respond to such questions.

With regard to the comment by the Minister of Defense today, my understanding of his words is the same as I stated in my opening remarks, namely that Takeshima is an inherent part of the territory of Japan. This is clearly evident, both in the light of historical facts and based on international law. As this is something that Minister Morimoto is also expected to be well aware of, there is naturally no perceivable way he spoke of Takeshima in terms of a domestic issue for the Republic of Korea. I believe that he was speculating that the president's actions may have been prompted due to internal political reasons and domestic circumstances. With regard to those parts of Minister Morimoto's comments that were not put across properly, I hear that he has since clarified his statement in the second press conference today and has also provided an explanation to the Committee on Foreign Affairs and Defense of the House of Councilors. I would like the minister to provide a thorough explanation and clear up any misunderstanding.

CABINET PUBLIC AFFAIRS SECRETARY: Next, Ms. Sieg, please.

REPORTER: I am Sieg of Reuters. It has been almost three years since the historic triumph of the DPJ and change of government in 2009. I believe that many people feel that neither the ruling nor opposition parties have met the expectations and hopes of the Japanese people.

The passing of the legislation for the comprehensive reform of the social security and taxation systems is an achievement for which the government can be given some credit in the sense that it accomplished something that it previously could not; however, it is not uncommon to hear people criticize that there has not yet been a change of attitude toward putting the benefits of individual households ahead of vested interests even given the new way that governance is being undertaken and under the new political leadership. What is your response to such criticisms?

PRIME MINISTER NODA: I believe that the principle of placing the lives of people first, something that the DPJ has always upheld, and the basic policies including those putting children first, regional autonomy, leadership by politicians, and new public commons, are leading us in the right direction. I acknowledge that some of the pledges of the manifesto that was founded on those principles and policies have not yet been fulfilled, however my determination to achieve as many of those pledges as possible during my term has not diminished. I would like to make it clear to the people of Japan that I maintain this determination.

As for taxation and social security, the ruling and opposition parties have now reached an agreement. Both parties have been able to engage in open discussions to pass legislation relating to a number of measures for disaster reconstruction. For these pledges that we still believe but have yet to fulfill, I would like to make use of this willingness to hold discussions and engage in dialog toward gaining support for agreements.

CABINET PUBLIC AFFAIRS SECRETARY: Next, Mr. Uesugi, please.

REPORTER: I am Uesugi, a freelance journalist. As we speak, once again an anti-nuclear demonstration is taking place in front of the Prime Minister's Office. It has been reported that you once described one of the protests as a "loud sound"; I would first like to confirm whether or not this report was actually true.

Reportedly, you are planning to meet the representatives of 13 anti-nuclear organizations. When are you planning to meet these representatives? Or, are you in fact not planning to meet with them? Could you please share your intentions with us?

Thirdly, on a perhaps irrelevant but important topic, we are now approaching August 15, the anniversary of the end of World War II, and two ministers have expressed their intent to visit Yasukuni Shrine. As part of the opposition when the Koizumi administration was in power, you submitted a written question in 2005 in which you stated something to the effect of "Class A war criminals are not criminals" and expressed some degree of approval for Koizumi's visits. With these facts in mind, could you please let us know of your thoughts on the two ministers intentions and where you personally stand in relation to visiting the shrine.

PRIME MINISTER NODA: I believe there were three questions. Have I ever described the voices of the people demonstrating in front of my office as sound? No, I have not. No, I have not. I can't begin to understand why that was reported. Of course I believe there is a difference between mere sounds and voices. I never said such things.

I was initially trying to arrange to meet with the representatives of the demonstrators today, or rather, not today, but sometime this week; however due to other political matters requiring my attention, which you are all aware of, I was not able to arrange a meeting. Perhaps it will be difficult to hold a meeting with them during summer holidays, so sometime after the holidays I will try to adjust my schedule in order to meet with the representatives.

There are a number of different positions one can take. Some support nuclear power while others are against it. I would like to lend my ear to all sides of the discussion. Concerning this matter, I would like to let you know that I am in the process of adjusting my schedule.

On visits to Yasukuni Shrine, last September at the time of the inauguration of the Noda Cabinet, we established a policy that we will refrain from officially visiting Yasukuni Shrine. I therefore believe that I and the other ministers will follow this policy.

CABINET PUBLIC AFFAIRS SECRETARY: We are now out of time and I would like to bring this press conference to a close. Thank you very much.