Press Conference by the Chief Cabinet Secretary (Excerpt)

Opening Statement by Chief Cabinet Secretary Fujimura

CHIEF CABINET SECRETARY FUJIMURA: I would like to give an overview of the extraordinary Cabinet meeting. The meeting approved 3 general measures. With regard to statements by ministers, Minister Motohisa Furukawa made a statement concerning the Strategy for Rebirth of Japan. The Minister of Finance made a statement concerning the partial amendment of the FY2012 Tax Reform Outline and on the FY2012 draft budget. The Minister for Internal Affairs and Communications made a statement concerning the outcomes of the review of government organizations and personnel number in FY2012.

In ministerial discussions following the Cabinet meeting, I made a statement concerning the bills which are planned to be submitted to the next ordinary Diet session.

Next, I would like to speak about the FY2012 draft budget. The Cabinet approved the FY2012 draft budget. In formulating the FY2012 budget, all the while making thorough efforts to eliminate waste, we have boldly set out clear priorities for the budget by allocating for the Program to Prioritize the Revival of Japan that cover four areas, including new frontiers and through reflecting the outcomes of the policy review of the Government Revitalization Unit, among other considerations. In addition, in order to continue to make every effort to advance reconstruction from the Great East Japan Earthquake, the Great East Japan Earthquake Reconstruction Special Account (provisional title) has been established and the necessary budget has been earmarked. Also, in order to secure market confidence, the budget ensures fiscal discipline, for example, by firmly adhering to the goals on primary balance expenses and the amount of government bonds newly issued in FY2012 as set forth in the Medium-term Fiscal Framework.

With regard to tax reform, the Cabinet approved a partial amendment of the FY2012 Tax Reform Outline a moment ago to add the tax system related to Okinawa. With respect to the Okinawa-related tax system, measures will be taken, such as enhancing the taxation systems of special zones, including raising of the income tax credit rate, and creating a center of international distribution industries. Moving forward, a FY2012 tax reform bill will be prepared in line with the outline.

Also, a meeting of the National Security Council was held prior to the Cabinet meeting. The Council deliberated two items today. The first was related to the situation and other matters following the death of Chairman Kim Jong-Il of the National Defense Commission, and the second was related to the main items of the contents of the build-up of defense forces in FY2012. With regard to the main items of the contents of the build-up of defense forces in FY2012, the Council made decisions as stated in the material distributed to you. With regard to the situation and other matters following the death of Chairman Kim Jong-Il of the National Defense Commission, information was obtained from the ministries and agencies. Also, the ministers concerned were asked to continue to work to gather and share information and fully prepare for contingencies. Due to the nature of this matter, I would like to refrain from responding to the specifics. As for the main items of the contents of the build-up of defense forces, please direct your questions concerning the specifics about individual equipments to the Ministry of Defense.

Additionally, a meeting of the Okinawa Policy Council was convened following the Cabinet meeting. Prime Minister Noda also attended this meeting of the Council, which last met in September 2010. At that time, the Council had resumed for the first time in five years. Today's meeting marked the second meeting since that meeting, and the first meeting since Prime Minister Noda took office. At today's meeting, the Government reported on the Cabinet's enormous efforts with regard to the FY2012 Government's draft budget and draft tax reform related to Okinawa promotion, improving the implementation of the Japan-United States (U.S.) Status of Forces Agreement in the area of criminal jurisdiction, and reducing the burden of U.S. bases through the relocation of trainings to Guam and other places, among other measures. Governor Hirokazu Nakaima of Okinawa Prefecture appreciated the efforts to a certain extent. Lastly, I noted that going forward, the Cabinet will continue to make best efforts to make further progress on the promotion of Okinawa and the reduction of the burden of the U.S. bases on Okinawa.

Q&As

REPORTER: I would like to ask a question regarding the draft budget which the Cabinet approved today and the tax reform outline from two weeks ago. How is the policy to enlarge the middle income bracket, which Prime Minister Noda attaches significant importance to, incorporated in the budget and the tax reform outline?

CHIEF CABINET SECRETARY FUJIMURA: Let me just outline the main points if I may. Based on the Program to Prioritize the Revitalization of Japan, which sets out that growth is essential for enlarging the middle class, various measures have been taken in the budget. For example, it was decided that close to 700 billion yen will be allocated to growth. Also, around 340 billion yen, including funds for reconstruction, have been earmarked to take all possible measures to support small- and medium-sized enterprises (SMEs). This is a 70% increase from the previous fiscal year. In addition, the employment insurance premium will be increased. Also, if I can give you one specific example, the wages and remuneration of nursing care professionals who had to bear with low wages until now will be increased by close to 1.2%. The budget also includes the implementation of a scholarship program that allows students to pay back their scholarship funds after they have advanced in their careers, as well as a budget for vocational training. With regard to the taxation system, the Government is now working to strengthen the functions of social security and secure financial resources for social security, through the comprehensive reform of social security and taxation systems. The Government would like to create a fairer and more equitable taxation system through enhancing the progressive function of income tax, among other measures. For further details, please forward your questions to the Ministry of Finance.

I apologize, I had meant to say "decreased" with regard to the employment insurance premium.

(Abridged)

REPORTER: The Prime Minister will be visiting China from tomorrow for the Japan-China summit meeting. I believe North Korea and other issues will be the major themes of the agenda. Can you discuss the status of the Japanese Government's consideration at this stage with respect to the specific requests it will make to China at the summit meeting regarding the Six-Party Talks for making headway on the Japanese concerns related to North Korea's nuclear, missile, and abduction issues?

CHIEF CABINET SECRETARY FUJIMURA: Based on the current situation, the Prime Minister, too, recognizes that it is vital for an exchange of views on North Korea issues to take place with China's leadership. In this context, I believe, in view of the importance of not letting the situation negatively affect the peace and stability in the Korean Peninsula, Japan will convey to China, the Chair of the Six-Party Talks, that China's role is extremely important, and confirm that Japan and China will closely share information and work together.