Press Conference by the Chief Cabinet Secretary (Excerpt)

Q&As

• The preliminary estimates of GDP for the Jul-Sep quarter
• The Okinawa gubernatorial election

REPORTER: The Cabinet Office has released the preliminary estimates of GDP for the July-September quarter. The figures are highly unfavorable. GDP has fallen 0.4% from the April-June quarter, an annualized rate of 1.6%. Can you please share your comments?

CHIEF CABINET SECRETARY SUGA: According to the latest quarterly estimates, real GDP for the July-September 2014 quarter contracted by an annualized rate of 1.6%, marking the second consecutive quarter of negative growth. The negative growth was in part due to decreased inventory investment by private companies adjusting for inventory accumulation during the April-June quarter. Due to declining consumer confidence, the effects of this summer’s bad weather, and other reasons, private consumption rose only moderately from the previous quarter, considering the significant decrease in the previous quarter. Nevertheless, if the negative contribution of inventory investment is excluded, demand in fact grew. The Government will need to closely monitor the economic trends, including the progress of inventory adjustments, and we will be taking appropriate measures accordingly.      

(Abridged)

REPORTER: Based on these results, the opposition parties will likely assess that Abenomics was a failure. What is your view?

CHIEF CABINET SECRETARY SUGA: First of all, in order to restore a strong Japanese economy and to make the overall economic pie bigger, the Abe Cabinet launched the three arrows of Abenomics in rapid succession, which comprises a bold policy package. The Abe Cabinet has made the economy its top priority. Thanks in part to these efforts, the ratio of job offers to applicants is at its highest level in 22 years. This year’s wages have risen by 2.07% to their highest level in 15 years. Furthermore, with respect to ordinary profits, the so-called return on equity of listed companies has increased by approximately 1.5 times since the inauguration of the Abe administration and is at record high levels. We deem that the ability of companies to earn a profit is increasing. We have made steady achievements overall, especially in the areas of employment and corporate earnings.

Nonetheless, the recoil following a surge in demand ahead of the consumption tax increase in April has affected not only consumption, but also inventory investment, capital investment, and housing investment. These prolonged impacts of the consumption tax increase are considered to have contributed to the negative growth. In any case, the Council on Economic and Fiscal Policy will promptly review the situation, including these items.

REPORTER: Chief Cabinet Secretary, you have explained that the Prime Minister will wait until the release of the second preliminary estimates on December 8 to make the decision about increasing the consumption tax. It is hard to imagine that there will be any dramatic turnaround in the figures. Do you see a need to wait until December 8?

CHIEF CABINET SECRETARY SUGA: In any case, the Prime Minister will first hear the opinions of the Council on Economic and Fiscal Policy, as I stated moments ago, as well as opinions raised at the hearings of practitioners and experts in response to today’s results.

REPORTER: GDP fell at an annualized rate of 1.6%. Please be honest, was the GDP growth lower than you expected?

CHIEF CABINET SECRETARY SUGA: I understand that it was considerably lower than private and other forecasts.

REPORTER: Looking at the breakdown, it seems that there was somewhat of a slow recovery in private consumption, which makes up about 60% of GDP. Some analysts contend that the economic climate is not yet ripe for a consumption tax increase, which directly affects consumer sentiment. What is your view regarding this?

CHIEF CABINET SECRETARY SUGA: As I stated a short while ago, there is no mistake that the recoil following the consumption tax increase has affected not only consumption, but also inventory investment, capital investment, and housing investment. In any case, we will consider whether or not to increase the consumption tax rate based on the opinions of experts and the discussions at the Council on Economic and Fiscal Policy, while closely monitoring the situation.

REPORTER: I would like to ask a related question. It would seem to me that if the figures are this bad, there will be growing calls for the Government to quickly implement economic measures and to immediately decide to postpone the consumption tax increase. If the figures are this bad, perhaps you do not even need to seek a popular mandate. What is your view in this regard?

CHIEF CABINET SECRETARY SUGA: I am not aware of the details. In any case, these figures were released. We will be reviewing what to do based on the opinions of experts raised at the ongoing study meeting and based on the discussions at the Council on Economic and Fiscal Policy.   

(Abridged)

REPORTER: In yesterday’s Okinawa gubernatorial election, Mr. Onaga, an opponent of the plan to relocate the U.S. Forces’ Futenma Air Station to Henoko in Nago City, won his first ever gubernatorial election, and did so by an astounding 100,000-vote lead over Mr. Nakaima, the incumbent who supports the Henoko relocation plan. First, what is your reaction to this outcome? Secondly, what do you think caused the defeat of the candidate backed by the ruling party, the Liberal Democratic Party (LDP)?

CHIEF CABINET SECRETARY SUGA: In my capacity as Government spokesperson, I would like to refrain from commenting on the results of an election of the head of a local government. That said, the relocation of Futenma Air Station to Henoko is the only viable solution in view of maintaining the deterrence of the U.S. Forces and in view of the dangers posed by Futenma. The Government and Okinawa Prefecture share a common view that we must not allow Futenma Air Station to remain at its current location indefinitely. In this context, it was determined that the relocation to Henoko is the only viable solution. This has been the consistent view of the Government. Furthermore, late last year, Governor Nakaima gave his approval for the land reclamation work for the Futenma Replacement Facility. The Government perceives that Governor Nakaima’s decision was made in accordance with the relevant laws and ordinances of a law-abiding country. Therefore, the Government will do its utmost to alleviate the burden shouldered by Okinawa Prefecture. At the same time, the Government will make every effort to realize the return of Futenma Air Station as quickly as possible. We will steadily proceed with the relocation to Henoko.

REPORTER: I have a related question. Chief Cabinet Secretary, you have been stating that the Government will steadily proceed with the relocation to Henoko. However, in the latest election, unlike the previous election, the focal point was clearly on whether the relocation plan should or should not be supported. As it turns out, the people in Okinawa voted “No” to the relocation plan. Does the Government have any comments regarding this?

CHIEF CABINET SECRETARY SUGA: The candidates campaigned on a variety of platforms and we accept the result of the election.

REPORTER: You said you would accept the results. How will you be doing this? 

CHIEF CABINET SECRETARY SUGA: Henoko was not the only issue on which candidates ran their campaigns. The candidates proposed a variety of policies. The election result was based on the people’s consideration of all of the issues.

REPORTER: I have a related question. In this election, Mr. Onaga captured a majority of the votes and secured an overwhelming victory. And yet the Government is still set on steadily proceeding with its plan. Do you consider it acceptable to not respect the public opinion demonstrated by the election? 

CHIEF CABINET SECRETARY SUGA: As I noted moments ago, Henoko was not the only issue in the election. People were not only voting to express support for or opposition to the relocation. They voted on the candidates’ platforms regarding a variety of issues, including the base issue as well as Okinawa’s promotion and development measures, and this resulted in the election’s outcome. In this sense, the Government will do its utmost to alleviate the burden shouldered by Okinawa Prefecture. At the root of this issue are removing the dangers posed by Futenma Air Station, and not allowing Futenma Air Station to remain at its current location indefinitely. Taking all of these factors into consideration, the relocation to Henoko is the only viable solution. Based on this understanding, last year, Governor Nakaima gave his approval. Therefore, it remains unchanged that the Government will steadily proceed with the relocation to Henoko.

REPORTER: If the political climate for the relocation changes, then it is not unusual for the Government to modify its policies. If the political climate changes, then it makes sense for the Government to modify its policies. The election demonstrated the opinion of the Okinawan people. Will the Japanese Government or the Japanese and U.S. Government nevertheless not be reconsidering the relocation plan?

CHIEF CABINET SECRETARY SUGA: In asking this question, I am sure you are very knowledgeable about the background, but let me explain once again. Futenma Air Station is surrounded by residential buildings, and also an elementary school. As such, one could even say that it is the most dangerous U.S. base in the entire world. Based on these circumstances, 19 years ago, Japan and the United States agreed to remove the dangers posed by Futenma Air Station and not to allow Futenma Air Station to remain at its current location indefinitely. Two years later, if I am not mistaken, the Governor of Okinawa Prefecture and the Mayor of Nago City expressed that Nago would host the Futenma Replacement Facility. While there have been various twists and turns in proceeding with the plan since then, last year, Governor Nakaima approved the land reclamation for the replacement facility. Accordingly, the Government’s intention as a law-abiding country is to steadily proceed with the relocation. There is no change to this.  

REPORTER: I would like to ask a question regarding the procedures to be taken as a law-abiding country. Mr. Onaga, who will be newly appointed as Governor, has said that he is prepared to negate Governor Nakaima’s approval of the land reclamation work, after carefully reviewing the land reclamation application. What are your thoughts regarding this?

CHIEF CABINET SECRETARY SUGA: I do not know how Mr. Onaga intends to go about this. Nevertheless, Japan is a law-abiding country, and the land reclamation application was approved in accordance with the law. These procedures apply not only to lands in Okinawa but also to lands throughout the country.

REPORTER: What are your thoughts on negating the approval?

CHIEF CABINET SECRETARY SUGA: As I said, the position of the Government has not changed at all. It remains entirely unchanged that the Government will steadily execute the plan in accordance with the appropriate procedures.

REPORTER: As was noted earlier, the construction work may fall behind schedule due to the circumstances in Okinawa Prefecture. Meanwhile, I believe the Government promised to Okinawa Prefecture that the dangers posed by Futenma would be removed by February 2019. How will the realization of this promise be affected?

CHIEF CABINET SECRETARY SUGA: As I said, the Government is fully committed to closing Futenma Air Station at the strong request of Governor Nakaima, and we are making efforts to do so. This remains entirely unchanged.

REPORTER: I have another question in connection with this matter. What impacts will the gubernatorial election have on the budget formulation, including the budget for Okinawa-related programs, as well as on the Government’s targets, such as the termination of Futenma’s operations within five years? Will the Government be making any changes to its plans?

CHIEF CABINET SECRETARY SUGA: In any case, the Government will of course steadily do what it needs to, upon carefully listening to the views of the elected Governor regarding the promotion and development of Okinawa and other matters.

REPORTER: In that case, will you personally be meeting with Governor-elect Onaga in the near future?

CHIEF CABINET SECRETARY SUGA: Leaving aside whether this will be me or someone else, if requested to do so, the Government must of course listen to the Governor-elect’s overall views regarding Okinawa.

REPORTER: I have a related question. Governor-elect Onaga has hinted at not even approving the change in the land reclamation construction method that the Government is now applying for. Are you not concerned about delays in the construction work?

CHIEF CABINET SECRETARY SUGA: The Government will steadily proceed with the plan in accordance with the law. This remains entirely unchanged.

REPORTER: My question is in regard to the deterrence of the U.S. Forces. The operational units of the U.S. Marine Corps in Okinawa spend about half of the year outside Okinawa making overseas rounds. Although you refer to deterrence, what deterrence do the Marine Corps provide strategically in your opinion?

CHIEF CABINET SECRETARY SUGA: The security environment surrounding Japan is extremely severe. Under such circumstances, the U.S. Marine Corps are stationed in Okinawa in accordance with the Japan-U.S. Security Treaty. That is what I meant by deterrence. Meanwhile, the people of Okinawa Prefecture are currently being asked to shoulder a large burden. It is the role of the Government to do its utmost to reduce this burden. The Prime Minister has appointed me as the Minister in charge of Alleviating the Burden of the Bases in Okinawa. It has already been decided that as a result of the relocation to Henoko, 9,000 Marine Corps personnel, or about half of the personnel stationed in Okinawa, will be relocated outside Okinawa Prefecture to other countries. Furthermore, lands hosting 70% of the U.S. bases are set to be returned to Japan. These lands account for approximately 80% of the population of Okinawa. This was also agreed upon between Japan and the United States. It is important that these items are steadily carried out. 

REPORTER: I would like to return to the subject of GDP. What economic measures do you think will be necessary to deal with the effects on consumption, capital investment, and housing investment observed in the latest estimates?

CHIEF CABINET SECRETARY SUGA: As I stated, experts are holding a study meeting as we speak. The Prime Minister will return to Japan this evening. He will be briefed about the severe economic situation, and based on this, will determine the steps to be taken.  

(Abridged)