Press Conference by the Chief Cabinet Secretary (Excerpt)

Opening Statement by Chief Cabinet Secretary Suga

I would like to give an overview of the extraordinary Cabinet meeting. At the meeting the Basic Principles of FY2014 Budget Formulation and the FY2013 General Account Supplementary Budget and other matters were approved. With regard to statements by ministers, Prime Minister Abe and Senior Vice Minister of Cabinet Office Nishimura made statements concerning the Basic Principles of FY2014 Budget Formulation; the Minister of Finance made a statement concerning the FY2013 supplementary budget; Minister Inada made a statement concerning FY2014 budget formulation and the FY2013 supplementary budget; and I made a statement concerning FY2014 budget formulation.

Prior to the Cabinet meeting, a meeting of the National Security Council (NSC) was held. In this meeting the major items concerning the contents of the FY2013   Build-up of Defense Capability were deliberated and approved, the details of which have been distributed to you in a press handout. For specific details about individual items of equipment, please contact the Ministry of Defense.

Q&As

• The issue related to the Basic Principles of FY2014 Budget Formulation
• The issue related to National Security Council
• The issue related to the Air Defense Identification Zone
• The character of the year
• The issue related to ruling parties' Tax Reform Outline
• The issue related to the legislation on special intelligence protection

REPORTER: I have a question concerning the Basic Principles of FY2014 Budget Formulation that you have just mentioned. With regard to the reimbursement of medical fees, in the recent draft of the basic principles, it was written that the Government would work to strictly restrain any new burden on the public. However, in the basic principles that have just been approved, the wording has been changed to  that the Government will make efforts to ensure that there is no new burden on the public. I get the impression that this is a slight step back.

CHIEF CABINET SECRETARY SUGA: I believe that the Basic Principles of Budget Formulation that were recently approved by the Cabinet set out a path that will stimulate a positive cycle of exiting deflation, revitalizing the economy, and achieving fiscal consolidation, which are priority issues for the Abe Cabinet. We are working on the formulation of the budget so that it will be able to be declared as the budget of the Abe administration. In particular, with regard to the reimbursement of medical fees that you have just pointed out and other matters, it has been determined that in the formulation of the FY2014 budget, a comprehensive review with no sanctuary will be conducted, including reviews of mandatory spending such as social security-related budget items. Based on this, measures that will contribute to economic growth will be prioritized. The Government seeks to formulate a budget that is focused, rather than seeking to simply re-mobilize increases in tax revenue that have been acquired through economic growth. I believe it is under these principles that the budget formulation is being carried out and these principles have been decided among the Government and ruling parties. Therefore, changes in phrasing are not limited to this instance, rather they are natural and should be expected.

(Abridged)

REPORTER: In terms of the format of today's NSC meeting, which ministers were in attendance?

CHIEF CABINET SECRETARY SUGA: It was the so-called meeting of nine ministers.

REPORTER: I have a question concerning the Air Defense Identification Zone (ADIZ). It appears that the Government of the Republic of Korea (ROK) has overturned its existing policy with regard to the ADIZ and condones the submission of flight plans to Chinese authorities. Could I ask for your thoughts on this and whether the policy of the Government of Japan will remain unchanged?

CHIEF CABINET SECRETARY SUGA: First of all, I would like to refrain from making any comment on behalf of the Government of Japan. The facts relating to this matter have yet to be confirmed. However, the Government is not contemplating any change to its operation policy in accordance with existing rules. Whatever the case, the Government naturally considers that the safety of civil aviation should be ensured. The ADIZ announced by China unduly infringes the freedom of flight in international airspace, which is a general principle of international law. There is absolutely no change in the Government's policy of continuing to cooperate with other countries concerned, and demanding China to revoke any measures that could infringe upon the freedom of flight in international airspace.

(Abridged)

REPORTER: On a different topic, the Chinese character "rin" (circle) has today been selected as the character of the year for 2013. Please first tell us your thoughts and impressions about the selection of this character.

CHIEF CABINET SECRETARY SUGA: First, given that this was the year in which many people from the Government, Japanese Olympic Committee (JOC) and the general public came together as one to bring the 2020 Olympics to Tokyo, and that this was the year in which the "circle" of assistance grew ever wider in terms of reconstruction from the Great East Japan Earthquake, and also in response to the various other natural disasters that occurred, I personally believe that the choice of "circle" was the right one. I think that in this present era in which the Japanese people come together as one to face various situations, this is an appropriate character.

REPORTER: On a related note, Prime Minister Abe has stated that his character of the year would be "yume" (dream). If you were to sum up the past year in one character, what would it be?

CHIEF CABINET SECRETARY SUGA: Given that this has been a year in which the stock price index has doubled, and also in which the phrase "bai-gaeshi" (double payback) has become hugely popular, my first thought was of the character "bai" (double). However, I think that for me the character "soku" (swift, prompt) would be appropriate. As I believe that the Government must always strive for prompt decisions and swift implementation, my choice for a character would therefore be "soku."

REPORTER: I have a question concerning the ruling parties' Tax Reform Outline that was approved today, in which income tax hikes for high-income earners were approved. The Abe administration has been to request the business sector to implement wage increases towards the creation of a positive cycle of the economy.  Could you provide an explanation about how you rationalize wage increases with increases in income tax?

CHIEF CABINET SECRETARY SUGA: The Abe Cabinet is one that is seeking to achieve the difficult double feat of exiting from deflation and rehabilitating finances. Therefore, I believe that what you have just mentioned is in line with the concept of the Cabinet's policy.

REPORTER: The increase of the consumption tax announced in October and the bringing forward of the abolishment of the special corporate tax for reconstruction were decided in a process led by the Prime Minister and the Prime Minister's Office. However, the process for deliberating tax reform on this occasion has used conventional methods, centering around the ruling parties' tax commission and the Ministry of Finance. Could you tell us why deliberations on tax reform were conducted using conventional methods? Also, on the subject of reducing the effective corporate tax rate, given that the Tax Reform Outline merely calls for continued discussions, the Prime Minister appears to have back-tracked somewhat. Could you give us your thoughts on this matter also?

CHIEF CABINET SECRETARY SUGA: I do not think that is the case at all. As I have already stated, this is because the Abe Cabinet is attempting to simultaneously achieve an exit from deflation and rehabilitation of finances, two truly very difficult challenges. In light of this, the Government's concept on tax reform is naturally one that I believe is firmly shared and understood by the Government and ruling parties.

REPORTER: What are your thoughts about the use of conventional processes?

CHIEF CABINET SECRETARY SUGA: Bringing forward the abolishment of the special corporate tax for reconstruction one year ahead of the schedule will result in a reduction in corporate tax next year. On that basis, the Cabinet will look at the entire picture and when necessary will duly set forth a direction. I believe that this tax reform was necessary as a means to resolve the two issues of exiting deflation and rehabilitating finances.

REPORTER: With regard to the Tax Reform Outline, the outline is stating that the reduced tax rate will be introduced when the consumption tax rate is raised to 10 percent. This statement could be interpreted in ways that are favorable for both the Liberal Democratic Party (LDP) and New Komeito. Chief Cabinet Secretary, what are your views on this matter?

CHIEF CABINET SECRETARY SUGA: I believe that this was a matter that both parties could strongly agree upon during the process of final coordination among the ruling parties.

REPORTER: With regard to the legislation on special intelligence protection, I understand that the legislation is scheduled to be promulgated tomorrow, and will enter into force one year from tomorrow. Could you once again share with us your thoughts on what kind of measures the Government intends to engage in over that one year span?

CHIEF CABINET SECRETARY SUGA: Following the promulgation of legislation, there is a period of preparation before the legislation enters into force. During that period the Government will seek to engage in preparations, while making thorough explanations about why the bill was necessary and why there is no need whatsoever for the public to be concerned about the legislation.

(Abridged)