Press Conference by the Chief Cabinet Secretary (Excerpt)

Opening Statement by Chief Cabinet Secretary Fujimura

• An overview of the Cabinet meeting
• The decision on the use of Government reserves for economic crisis response and regional revitalization
• The meeting of the Headquarters for the Smooth and Appropriate Application of Consumption Tax
• The Prime Minister's plan to visit Iwate Prefecture

CHIEF CABINET SECRETARY FUJIMURA: Firstly I would like to give an overview of the Cabinet Meeting. The meeting approved seven general measures, cabinet orders and personnel decisions. With regard to statements by ministers, Prime Minister Noda made a statement concerning the decision on the use of Government reserves for economic crisis response and regional revitalization, the Minister of Finance made a statement concerning the decision on the utilization of Government reserves and the reconstruction budget, Minister Maehara made a statement concerning the development of economic measures now that there has been a decision on the utilization of Government reserves, Deputy Prime Minister Okada made a statement concerning the promotion of regulatory and institutional reform, Minister Hirano made a statement concerning the reconstruction budget, and the Minister for Internal Affairs and Communications made a statement concerning the consumer price index.

Next, I would like to speak on the decision regarding the use of Government reserves for economic crisis response and regional revitalization. Today's Cabinet Meeting approved the utilization of Government reserves for economic crisis response and regional revitalization. In light of the current economic situation, this decision has been made to ensure that the following policies can be implemented seamlessly: 1) Acceleration of policies, including the three priority areas identified by the Comprehensive Strategy for the Rebirth of Japan; 2) Implementation of urgent policies, particularly those necessary for quick recovery and reconstruction from the Great East Japan Earthquake, and those policies related to the development of large-scale disaster prevention and preparedness. The stimulus will total in excess of 750 billion yen with over 400 billion yen being funded by national expenditure. The Prime Minister expressed his intention to finalize this economic measure, headed by the Minister of State for Economic and Fiscal Policy, before the end of next month at the latest, in order to break out of deflation and accelerate initiatives to revitalize the Japanese economy. Please ask the Ministry of Finance or the National Policy Unit if you would like to know any further details on this matter.

Secondly, following the Cabinet Meeting, the meeting of the Headquarters for the Smooth and Appropriate Application of Consumption Tax was held. As of today's meeting, the name "Headquarters" was changed to "Headquarters for the Promotion of Measures" in order to ensure the effective implementation of measures related to smooth and appropriate application of consumption tax. Following the Cabinet Meeting, the first meeting of the Headquarters for the Promotion of Measures for the Smooth and Appropriate Application of Consumption Tax took place. During today's meeting, we approved the basic guidelines for the smooth and appropriate application of consumption tax and price indication that supersede the interim plan originally approved on May 31. Today's decision means that the relevant ministries and agencies are required to work toward crystallizing their measures. I believe that the head of the Headquarters for the Promotion of Measures for the Smooth and Appropriate Application of Consumption Tax, Deputy Prime Minister Okada, is currently announcing the details of this matter in his press conference.

Finally, Prime Minister Noda is planning to visit Iwate Prefecture on Saturday, October 27. He is planning to visit Miyako City and Yamada Town to inspect the damage and the state of recovery and reconstruction, and also to meet victims of the disaster. I have been informed that a detailed schedule is currently being prepared.

Q&As

• The decision on the use of Government reserves
• Press reports on the DPJ Secretary General's comments about the dissolution of the Diet

REPORTER: I would like to ask a question in regard to the economic measures approved today. I understand that today's decision on the utilization of Government reserves has been made while the bill on special measures for the issuance of government bonds has yet to pass, and budgetary restraints are called for. What level of economic effect does the Government expect, and how do you view this decision?

CHIEF CABINET SECRETARY FUJIMURA: The decision on the use of Government reserves for specific measures was made in light of the current economic situation in order to ensure uninterrupted implementation of economic measures. The reserves have been allocated with priority given to supporting innovative projects in sectors that are expected to experience increased demand and employment, and sectors that are expected to see immediate increases in demand and employment. Through this it is hoped that, in addition to the creation of demand, the project will contribute to the enhancement of growth fields and reconstruction of earthquake affected regions. The Government expects to use this as a means of breaking out of currency deflation and to spur economic activity.

REPORTER: I believe there is no doubt that through such Government spending we can expect some kind of effect, however I would like to ask how the Government views the fact that effects may be limited due to budget restraints.

CHIEF CABINET SECRETARY FUJIMURA: The Cabinet Office estimates the stimulus to have a positive economic effect of just over 0.1% of real GDP by the end of fiscal year 2012. In terms of employment creation, it is estimated that the stimulus could create as many as 40,000 new employment opportunities. The Government views this stimulus, together with the economic measures that are to be finalized by the end of next month and the FY 2013 budget, as an opportunity to ensure uninterrupted implementation of measures that will break Japan out of deflation at an early point and revitalize the economy. The Government is of course aware of the current restrictive budgetary situation but hopes that everyone understands that the allocation of these funds has been extremely selective.

(Abridged)

REPORTER: I believe that you have previously stated that this month's Monthly Economic Report does not fully take into consideration the deterioration of Japan-China relations. While Japan-China relations remain unstable, has this decision on the use of Government reserves included any measures to counter the negative economic impact of the deterioration of relations?

CHIEF CABINET SECRETARY FUJIMURA: With such expectations, the Cabinet Office has estimated that the stimulus will counter the impact of the economic environment and contribute just over 0.1% to GDP.

REPORTER: The allocation of reserves has now been finalized and I would like to ask if today's decision includes any specific measures that were developed with the state of Japan-China relations or the deterioration of the economic relationship in mind.

CHIEF CABINET SECRETARY FUJIMURA: The Government anticipates that the stimulus will take effect across the whole economy rather than targeting specific issues. The deterioration of the economy is of course not solely dependent on the state of Japan-China relations.

REPORTER: I would like to ask a question on a related topic. It is said that because the bill for special measures for government bonds has not been passed, national financial resources will run dry as early as the end of November. Am I right to understand that this decision to utilize Government reserves will move forward when the Government runs out of funds?

CHIEF CABINET SECRETARY FUJIMURA: In excess of 400 billion yen will be sourced from Government resources, therefore although I expect the impact to be moderate, it will of course mean a hastening rather than delaying of the drying up of national reserves.

(Abridged)

REPORTER: During an interview with Mainichi Shimbun newspaper, Secretary General Koshiishi of the Democratic Party of Japan expressed his view that there is no chance that the dissolution of the House of Representatives will occur before the end of the year. Given that this is a comment from the Secretary General of the ruling party, how should we understand these comments?

CHIEF CABINET SECRETARY FUJIMURA: As I always say, dissolution is a matter that both the ruling and opposition parties have opinions on, and I view the Secretary General's comment as one of various opinions. As I have said many times, there is no constitutional requirement on the timing of dissolution, and I believe it is very well understood that the Prime Minister has the exclusive right to dissolve the Diet. Therefore I view the Secretary General's comment as one of various opinions.

(Abridged)