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Japanese PM vows to tackle fiscal mess, revitalize quake-hit regions

(Xinhua)

08:37, September 14, 2011

Japanese Prime Minister Yoshihiko Noda delivers a policy speech at a session of the House of Representatives in Tokyo on Sept. 13, 2011. Yoshihiko Noda said in the speech that the new government would spare no efforts to make Japan recover from the March quake and tsunami disasters. (Xinhua/Ji Chunpeng)

TOKYO, Sept. 13 (Xinhua) -- Japanese Prime Minister Yoshihiko Noda said on Tuesday his government's primary focus is on revitalizing regions devastated by the March disasters and rescuing the nation from its dire financial predicament.

In his first major policy speech given at a special session of the Diet in Tokyo, Noda, Japan's third prime minister in two years, struck an emotional chord, vowing to deliver a watertight strategy by the end of this year to kick start the nation's sluggish economy and enhance restoration efforts in the wake of the March disasters that pummeled key infrastructures and left 20,000 people dead or unaccounted for.

"While overcoming the twin crises of the 'Great East Japan Earthquake' and the global economic crisis, we must invest in this country's future so people are filled with hope and each and every citizen can be proud and feel, 'I am glad I was born in this country'," said the prime minister, sworn in less than two weeks ago.

Noda called for the participation and cooperation from all parties involved in policy debate and planning to come together so that the necessary bills for reconstruction funds, social security and tax can be swiftly passed through a divided parliament in which the opposition bloc hold power in the upper house.

Noda's predecessor, Naoto Kan, failed to garner opposition support in his tenure as prime minister and leader of the Democratic Party of Japan (DPJ), meaning the Liberal Democratic Party-led opposition bloc could create policy deadlock to force the DPJ to oust their unpopular leader and compromise on key policy initiatives.

The new prime minister has hand-picked a Cabinet and a string of ministers to quell the DPJ in-fighting that plagued both Kan and Yukio Hatoyama who led the DPJ and the country before him.

"I will steadily carry out specific measures one by one," Noda said referring to restoration efforts in areas on the pacific basin leveled by the March's 9.0-magnitude earthquake and ensuing tsunami.

Noda also pledged to take "three tough paths" toward cuts in spending, increases in tax revenue by revitalizing the economy, and changes in the state revenue structure through a greater financial burden on the public, referring to his plans for the nation's fiscal rehabilitation.

The Japanese government is expected to submit to parliament in October a massive, yet essential reconstruction funding bill, expected to top 130 billion U.S. dollars, but Noda, known as a fiscal hawk in his previous position as Japan's finance minister, said he would also comprehensively address Japan's fundamental economic maladies, which currently threaten the nation's financial well-being for generations to come.

"Japan's credibility is on the verge of being severely damaged due to industry hollowing out and deteriorating fiscal conditions, " Noda said.

"We cannot carry on forever with a kind of fiscal management where debt keeps piling up in a snowball effect," said the prime minister in relation to the nation's ballooning public debt, now double the size of its five trillion U.S. dollar economy and set to grow as the population continues to decrease and the number of retirees needing state support swell.

The yen's recent surge, a bane of Noda's previous tenure as chief of the finance ministry as the currency has peaked at record post-Word War II highs, is also firmly in Noda's sight, as a persistently strong yen threatens to derail the nation's fragile export-led economic recovery.

"The yen's historic rise, coupled with catch-ups by emerging nations, has caused a crisis of unprecedented industrial hollowing- out," Noda reiterated.

"We hear screams from exporters and from the small and mid- sized companies that have led our country's industries. If things carry on like this, domestic industries could go downhill and jobs could be lost," the prime minister added.

"If that happens, it would be almost impossible to break out of deflation and reconstruct areas hit by the disaster," said Noda.

Japan has made three forays into currency markets to stem the yen's rise, all of which made little impact and forced some of Japan's blue-chip exporters to downwardly revise their earnings outlook.

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