Press Conference by the Chief Cabinet Secretary (Excerpt)

Q&As

• The issue concerning the primary balance
• The venue for the 2020 Tokyo Olympic Games
• The issue concerning the dissolution of the Diet

REPORTER: I have an additional question concerning the primary balance, which came up in this morning’s press conference. In the summer the Cabinet Office issued the Economic and Fiscal Projections for Medium to Long-term Analysis. It was calculated that if the consumption tax rate was raised to 10 percent on schedule in October 2015, the average annual growth rate would reach approximately 2 percent in real and 3 percent in nominal terms, with the primary balance remaining in deficit in fiscal 2020 by approximately 11 trillion yen. Given this situation, the introduction of a reduced tax rate for certain items is likely to make the achievement of the target to eliminate the deficit in the primary balance by fiscal 2020 very difficult, although I imagine the specific items in question are yet to be decided. What are your views with regard to this matter?

CHIEF CABINET SECRETARY SUGA: Firstly, in his press conference on November 18, Prime Minister Abe stated that concrete plans would be drawn up by the summer of 2015 towards the goal of achieving fiscal soundness by 2020. The Government will press forward with this. Also, the Liberal Democratic Party (LDP) and New Komeito have reached agreement concerning the reduced tax rate, and if you peruse the agreement document you will find that it clearly contains a commitment to swiftly advance concrete considerations concerning stable financial resources. You can therefore understand that the ruling parties are already giving thought to measures relating to financial resources and we do not foresee any expansion of the fiscal deficit due to such measures.

REPORTER: The stated aim is to draw up plans by next summer, but what is the reason for such a schedule?

CHIEF CABINET SECRETARY SUGA: The outlook for the GDP annual growth rate will become apparent as we go forward. After taking into account the growth rate for the October-December quarter, concrete plans will be drawn up by summer next year towards eliminating the fiscal deficit by 2020.

(Introduction of a reduced tax rate)
REPORTER: You have just mentioned that concrete considerations on measures to achieve stable financial resources will be implemented swiftly. If you were to put it another way, could it be implied that a reduced tax rate could not be introduced until stable financial resources can be secured?

CHIEF CABINET SECRETARY SUGA: I am truly quite mystified as to why you would ask such a question. The introduction of a reduced tax rate is naturally something that would be considered together with the issue of stable financial resources, and this is a matter that the LDP and New Komeito have agreed to move quickly to consider. That is all.

REPORTER: Is the plan for achieving the 2020 target that will be compiled by summer next year premised on realizing a surplus in the primary balance? Or will it be premised on a deficit of 11 trillion yen that is the projected deficit at the current point?

CHIEF CABINET SECRETARY SUGA: The Prime Minister has stated that the Government aims to achieve a surplus in the primary balance. Therefore figures will be devised in the plan towards the realization of that target.

(Venues for the 2020 Tokyo Olympic Games)
REPORTER: I have a question concerning the 2020 Tokyo Olympic Games. The Tokyo Metropolitan Government announced recently that the building of three new venues has been cancelled. International Olympic Committee (IOC) Coordination Commission Chairman John Coates has also indicated that a number of events could be moved to other regions of Japan, including Osaka, for example. Former Prime Minister Mori, President of the Tokyo Organising Committee of the Olympic and Paralympic Games has also mentioned that arrangements are being made for a number of events to be held in Osaka. What is the view of the Government with regard to this matter?

CHIEF CABINET SECRETARY SUGA: Firstly, we are aware of the comments made by Vice President Coates, who was visiting Japan until yesterday. In any event, I hear that the Organising Committee will be submitting its basic policy concerning the holding of events to the IOC in February next year and the committee will come to a decision on venues before the submission of the policy.

The Government seeks to make the Tokyo Olympics a games for the entire Japan. Furthermore, given that the Vice President has stated that the IOC will take a flexible approach the Organising Committee will give consideration to measures that will save money on construction and lead the Olympic Games in Japan to success.

REPORTER: You have just stated that the Government’s concept is to make the games one for the entire nation of Japan. Does the Government therefore welcome these specific moves towards holding events in cities other than Tokyo?

CHIEF CABINET SECRETARY SUGA: Rather, what I mean is that the role of the Government is to ensure that the Olympics Games create excitement around the nation, not just in Tokyo, making this a games for the entire nation. We will wait for decisions by the Organising Committee with regard to specific matters.

REPORTER: With regard to the dissolution of the Diet tomorrow and the holding of an election, in an address to the National Convention of the Central Federation of Societies of Commerce and Industry the Prime Minister has stated that he is prepared for a tough election campaign ahead. Is it really likely to be that tough?

CHIEF CABINET SECRETARY SUGA: Of course. The current status of the House of Representatives is that the ruling parties hold in excess of 300 seats. It is against this backdrop that the Prime Minister has determined to dissolve the Diet and hold an election. Given that there is no such thing as an easy election, I imagine that the Prime Minister was expressing the necessity to promote the Government’s various policies in light of severe circumstances and gain the understanding of the people of Japan.

REPORTER: I have a related question. The Prime Minister has stated that this election is for the purpose of questioning the electorate on whether Abenomics is correct or wrong. If he is confident that Abenomics is the right way forward then from a layperson’s perspective I cannot really see how it could be expected that the election will be a tough one. What are your thoughts?

CHIEF CABINET SECRETARY SUGA: It is not necessarily the case that what is right will translate into a victory in the polls. The Prime Minister has set out the results of Abenomics to date and has expressed his intention to continue to advance such policies, based on the view that this is the only way forward. In addition, as exiting deflation is one of the priority policies of the administration, the Prime Minister has decided to postpone the two percent rise in the consumption tax rate for 18 months. He has also stated that legislative amendments will be required. As such when it is time to implement the two percent consumption tax increase we will proceed without the supplementary provision relating to the state of the economy and ensure that there will be no going back. In any event, Abenomics has already generated one million jobs, among other results, and through the election campaign, the Prime Minister wishes to promote these policies and ascertain whether they have been objectively understood by the electorate. Having the people decide is one way of being able to proceed with policies with confidence. That is the meaning that the Prime Minister was seeking to convey in his statements on this matter.

REPORTER: I have a question concerning the supplementary budget. I believe that today the ruling parties submitted various proposals to the Prime Minister’s Office. Could you tell us what kind of economic measures are being currently contemplated and their scale?

CHIEF CABINET SECRETARY SUGA: I would like to refrain from making any comment about the scale of measures. However, I believe that the proposals from the ruling parties included a large number of policies focusing on measures relating to yen depreciation, regional revitalization and support for the socially vulnerable. The Government has received these proposals and will accord them the serious consideration they deserve.

REPORTER: I have a related question. How will the financial resources required for the supplementary budget be funded? Will it be possible to cover the cost through surpluses and the increased tax revenues without having to issue new government bonds, or will the issuance of government bonds be necessary?

CHIEF CABINET SECRETARY SUGA: The scale has yet to be decided. We will of course closely examine the content of the various proposals before deciding how to proceed.