[Title] Press Conference by Prime Minister Yoshihiko Noda

CABINET PUBLIC AFFAIRS SECRETARY: We will now begin the press conference by Prime Minister Yoshihiko Noda. Prime Minister, your opening statement please.

Opening Statement by Prime Minister Yoshihiko Noda

PRIME MINISTER NODA: This morning a Cabinet Decision was made on the Fundamental Reform of the Taxation System Bill, and the bill was submitted to the Diet. There has been a great deal of discussion on this matter up to this point, particularly in the ruling parties and centering on the Chair of the Policy Research Council of the Democratic Party of Japan (DPJ). Enthusiastic discussion has been carried on from a great many different perspectives over a series of late nights that have gone on for a long time. I offer my heartfelt gratitude to all of my fellow members of the DPJ who participated in this discussion for days and days. I thank the leadership of the party, and the Chair of the Policy Research Council in particular.

In terms of the process up until this point, at the end of the year two years ago, a headquarters to discuss the comprehensive reform of social security and taxation systems was established. Debate continued for approximately half a year, and then in June of last year the final draft proposal was approved by the Government and ruling parties. In the presidential election of the Democratic Party of Japan (DPJ) at the end of August last year, I emphatically promised the people of Japan that I would realize concrete progress on this proposal and submit legislation based on the proposal to the Diet. In light of this, there was a lively debate conducted within the party over the New Year's period, and we created a draft plan of legislation and made a Cabinet Decision on the outline of this bill. Debate from there moved forward based on that outline, and in line with concrete provisions, we discussed each item of the bill point by point within the DPJ. Through this process, we came to a conclusion to incorporate as many of the different opinions on the matter as we could.

This is an issue with a very difficult theme. The result of the serious debate we had was that we decided on the basic timeframe for the bill, agreeing that we would submit it to the Diet within this fiscal year. When I think that we were able to come to a conclusion within the period for compilation that we had set, I feel proud of my fellow party members.

In incorporating various opinions, the party shed light on the different issues that would arise with the raising of consumption tax and within the entire taxation system in general, and I intend to address these issues steadily.

Through this process, I feel that the government and ruling parties have come up with a conclusion at a time when a conclusion was needed. From here on we will enter the stage of debate between the ruling and opposition parties. This bill must be passed through discussion in the Diet, or through meetings between the ruling and opposition parties. The bill is in the interest of the nation and the people of Japan. It is not an issue that we can run away from or put off to the future. We will have a lengthy discussion, and in the end we must pass this bill.

I believe that there are many in the opposition parties as well who understand the need to secure stable financing through consumption tax in order to stabilize and enrich social security. Accordingly, if we think of "the big picture" rather than "the political picture" , I believe it will be quite possible for us to join arms in a kind of policy scrum. I want to continue to resolutely call on opposition party members to this end and in this way from now on. Within debate on this issue between the ruling and opposition parties, and as that debate deepens, what is indispensable is the understanding of the people of Japan.

I would like to speak for a moment about the significance of the comprehensive reform of social security and taxation systems. As I am always saying, I want to create a society in which the people believe that tomorrow will be better than today. I want to create a society that possesses conviction for this and that really feels that this is true. I believe that at the end of the road to such a society is the sustainability of social security, an issue of anxiety for the public. The young are anxious about whether they will find a job after finishing their education. Working women are anxious about raising children, they are fighting alone in a society in which they are unsure if they will have some place that they can take their children to be cared for if they choose to work after giving birth. Everyone is anxious about what will happen once they become old. I believe that the fundamental basis for our becoming a society in which everyone feels that tomorrow will be better than today is the resolution of these anxieties.

In particular, the most important perspective to consider in moving forward with this reform, is that Japanese society is changing - the structure of the population is shifting greatly, we are quickly moving from being a population pyramid to an inverted population pyramid, and so we need to consider whether or not we can respond to this situation. The greatest issue related to the sustainability of our society is whether burdens and benefits can be shared in a more equal way. The current structure is one in which benefits go mainly to the elderly while the cost of such benefits is born mainly by the working population. We cannot sustain this structure. It is of the utmost importance that we move from a structure in which benefits are centered on the elderly and pay attention to social security for those in the former half of their lives, allowing the supporting side of social security to feel its blessings. A pillar of this will be the new system for children and childrearing. In the event of raising consumption tax, all will be appropriated to enhance social security. Within the enhancement of social security, 700 billion yen will be set aside for the enhancement of the new system for children and childrearing. I believe that we must carry out this reform quickly.

Our efforts shall not just focus on those who earn benefits, but also on equality among those who bear the burden for social security. Up until now, the working class has been the main contributor to social security through the payment of insurance fees and income tax. Once that was no longer sufficient, Japan began to dip into the pockets of future generations, growing the national debt to support social security. This is the kind of deformed structure that we have been continuing on with. We must enhance the amount of fundamental taxes collected if we are going to change this.

I believe that among those fundamental taxes fairest tax through which to achieve and from which we secure stable fiscal resources is consumption tax. Consumption tax is the most appropriate for enhancing social security in a way that will see all Japanese people helping and supporting each other. Compared to corporate tax and income tax, it is not influenced as much by economic trends or the population structure. From that perspective as well, I believe that the increase of consumption tax is indispensible as a means of enriching and stabilizing social security.

Of course, in enriching and stabilizing social security, we will bolster the system's redistribution functions. With regard to the consumption tax, ss many have noted, there is after all a need to implement countermeasures for those with low incomes. We must act upon this need. The introduction of the identification number system will be an opportunity to start policy toward the introduction of a tax exemption system via the allocation of benefits. We must make progress on designing such a system. In the period until we have the tax exemption system in place, we will take measures to provide simple benefits. I believe that we also must consider the scheme for this system seriously.

The reform of the social security system is needed in order to have the people believe that tomorrow will be better than today. However, that is only one issue. More than anything, we need economic measures - those that increase the size of the pie. In addition to the comprehensive reform, we must make comprehensive progress on the revitalization of the Japanese economy and measures to overcome deflation. To this end, within the various debates this time, I proposed that the average nominal GDP growth for the 10 years between 2011 and 2020 be 3%, and that we should aim for real GDP growth of 2%. These goals are not preconditions, but they are goals for the government. We must exert every effort to achieve these goals at an early stage. While accelerating the implementation of the New Growth Strategy and then the Strategy for Rebirth of Japan to be compiled mid-year, and while fully mobilizing a variety of other policies, I will exert myself to the utmost toward the achievement of these goals. In particular, we will work closely with the Bank of Japan, and sharing our understanding of the issues, we will together overcome deflation and carry out initiatives toward economic revitalization.

These are the conditions for having the people of Japan feel that tomorrow will be better than today. Another issue is trust in politics. I think that public lack trust upon the capability of politics in Japan no to put off work on the issue when a problem occurs but instead to take the lead to solve the problem. I believe that the symbolic themes of resolute politics and politics that considers the future are contained within the comprehensive reform of social security and taxation systems. The initial goal of submitting a bill within the fiscal year this time was finally achieved thanks to the resolve of the Government and ruling parties. Now the question is, I think, whether the Diet won't put off a conclusion on this issue. While incorporating the opinions of the opposition parties to the greatest extent possible, I want to give my all to the enactment of the bill for the comprehensive reform of social security and taxation systems, which has truly been created for the benefit of the people of Japan.

One other issue that has been pointed out by many of my colleagues, who I think are speaking for the people, is the need to resolutely implement reforms that put legislators themselves on the line. On this point, concerning administrative reform, I have proposed a 7.8% cut to the remunerations of national public servants in order to fund reconstruction. Ever since the change in political administrations, we have achieved an approximately 10% reduction in personnel costs. However, this is still not enough. I want to see bigger results, including the reform of the public servant system, which also involves abstention from taking on new hires and other issues related to the fixed number of government personnel. In addition to this, I want to resolutely carry out various measures, such as the reform of special accounting - reducing the number of special accounts from 17 accounts to 11 accounts, as well as cutting down the number of independent administrative agencies by 40 percent and other measures. And in addition to the issues I just mentioned, I have also created the Headquarters for Administrative Reform Implementation. With this Headquarters at the core of our efforts, we have already been working toward a reduction in expenditures. Gritting our teeth on this issue, we will continue forward with administrative reform and the further reduction of expenditures. I feel it is important that we carry through with this matter resolutely before consumption tax is first raised to 8% in April 2014.

Undertaking the actions we call on others to take. We must not ignore the reform of politics as well. Along with the matters I just spoke of, we must also work to realize absolutely a reduction in the number of seats in the Diet. Discussion is now moving forward on this among the ruling and opposition parties.

From here on out, as we enter April, I want to see full-on discussions among the ruling and opposition parties. My basic belief is that once the Government proposes a bill we must not just sit idly by and wait to see what happens - we should instead make every effort toward the enacting of the bill. Resolute politics, politics that does not waver, politics that does not budge, politics that does not run away, politics that does not put off work - making a start on this kind of politics is our major theme. We will overcome the great issues before us, earn the trust of the people, and in order to protect their livelihoods and ensure the sustainability of social security, we will bring this grand reform to a conclusion. I will end my opening statement by saying it once again, we will exert every effort.

CABINET PUBLIC AFFAIRS SECRETARY: We will now move on to the Q&A session. When you are called on, we would appreciate it if you would first state your name and affiliation. Mr. Hayashi, please.

REPORTER: I am Hayashi of the Hokkaido Shimbun. I would like to ask a question about the Fundamental Reform of the Taxation System Bill. I wish to hear from you once again whether there is any change in your intent to have this bill passed during the current Diet session, which ends on June 21, without considering an extension of the Diet session.

This bill cannot be passed without cooperation from the opposition parties in the House of Councillors. What are your current views regarding the appropriateness of amending the bill?

The Liberal Democratic Party (LDP) among others is calling for the dissolution of the House of Representatives before the bill is adopted. I assume that you will now be pursuing all possibilities towards the passage of the bill, and I would like to hear your views on whether or not you will exclude options such as a grand coalition, or dissolution based on consultations with the opposition parties.

PRIME MINISTER NODA: I think that you mentioned a wide range of subjects in your questions. I intend that we, the Government and the ruling parties together as one, will put all our efforts toward achieving the adoption of the legislation during this Diet session. It is still the end of March and the Diet session lasts until June, so I have not yet considered extending the Diet session. The basic attitude is that we will seek to pass this bill as well as all the other bills that the government is submitting during this session.

It is true that we need to gain the understanding of the opposite parties in order to have the bills passed. As I already mentioned briefly, on this issue, I think that there are many parties and Diet members who believe that it is necessary to eliminate concerns about the social security system. There are some parties that stated in their campaign platforms that consumption tax could be the fiscal source to support the social security system, and I believe that many Diet members share the same idea. I talked earlier about forming a policy scrum. Though there may be differences when it comes to the various details, I believe that there are many people in both the ruling parties and the opposition parties who believe that we must overcome this challenge and that the problem must be solved. As we form a scrum with these people and engage in a constructive debate, it is obviously necessary that proposals that we think are good be adopted.

You referred to consultations for a grand coalition. I wish to engage myself for the passage of this bill without considering such political moves or otherwise distracting myself, while the government and ruling parties join hands, working together and debating the matter.

CABINET PUBLIC AFFAIRS SECRETARY: Next, Mr. Takada, please.

REPORTER: I am Takada of Fuji TV. I wish to continue on related to the bill for consumption tax. After the Cabinet Decision there is a movement within the Group of Mr. Ozawa, former president of the DPJ, where appointees to the minister, senior vice-minister, and/or parliamentary secretary ranks are expressing their intent to resign, and multiple Diet members are indicating that they will revolt when the time comes to take a vote. Given this situation, how do you intend to persuade party members going forward? Also, do you have an intention to meet with former party representative Ozawa? Moreover, this is not only an issue within your party, but also within the People's New Party (PNP). Your government coalition partner, President Shizuka Kamei of the PNP today served you notice that he would be dropping out of the coalition, although Mr. Shozaburo Jimi, Minister of State for Financial Services, did put his signature on the cabinet decision. With the PNP in a state of disarray, how are you coming to terms with the notification from Mr. Kamei, the PNP leader, that he would drop out of the coalition, and what are your views about the future state of the coalition with the PNP?

PRIME MINISTER NODA: First of all, I have not heard anything concrete about resignations. Also, I know that there have been reports that there are those who will not vote for the bill in the Diet, but I do not know anything concrete about this either.

However, as I noted a moment ago, there were many stages in this process - first we had the final draft proposal, and then a draft plan of legislation, an outline, and then the submission of legislation. We always intended to have a substantially careful debate. And I think that we substantially incorporated many opinions. At each stage we needed to come out with a conclusion. Once there is a conclusion, I think everyone must work to realize the ideas of that conclusion accordingly; I feel there is the birth of such a political culture within the DPJ. You have just pointed out many worries based on this hypothetical question, but our basic stance is that the Government and ruling parties will work as one and exert every effort to have this bill passed.

As for President Kamei, yesterday, for about two hours at night I had a conversation with him. I met him again in the early morning. President Kamei stated that there is nothing that can be done about the point that he is of a different opinion than I am on the issue of consumption tax. And because of this he proposed the dissolution of our alliance. He has worked over two and a half years with three of our administrations, first with the Hatoyama administration, then the Kan administration and finally with me. He has been our alliance partner and worked with us together until now. And so I said that I wanted to continue working with him and requested that we continue to maintain our alliance. But we failed to reach agreement yesterday. And then today during the Cabinet Meeting when we were discussing how to handle the signature of Minister Jimi, there was a notification from President Kamei of the dissolution of our alliance. Other members of the Noda Cabinet from the People's New Party agreed to maintain the alliance. It is not my place to interpret discussion within the PNP or their decision making process. However, I can say that at the time of the Cabinet Meeting this morning, Minister Jimi signed the Cabinet Decision as a member of the Noda Cabinet. I said this in today's ministerial discussions following the Cabinet meeting as well, but my heart swells with gratitude for his decision to do this.

CABINET PUBLIC AFFAIRS SECRETARY: Next, Mr. Yamaguchi, please.

REPORTER: I am Yamaguchi of NHK. I would like to ask about the reforms that put legislators themselves on the line. You have often said that this reform and consumption tax reform go hand in hand, but you have not yet submitted a bill to the Diet calling for the reduction of 80 Diet seats even today. I believe that you face many difficult problems, but I also think that if you had set your mind to it, you could have submitted the bill today. When will you be submitting the bill?

PRIME MINISTER NODA: Suppose that we were to follow through with the beliefs of the DPJ on the reduction of the number of seats in the Diet and submit a bill on this. It may pass through the House of Representatives, and if we cannot obtain the understanding of the House of Councillors, the understanding of each party at that stage, the bill would fail. I am not sure if it would be right to watch it being shelved. Right now discussion between the ruling and opposition parties is about disparity in the relative weight of one vote, the reduction of the number of Diet seats, and election system reform. Each party has its own opinions on each of these issues, and in this light there is a need to push forward with a reduction in the number of Diet seats. We should not take up the attitude that it is all right as long as these reforms reward us politically. I think that we must reach a conclusion on this. I want to come to a conclusion on this.

In terms of coming to a conclusion, in that sense, there is not a bill for this issue now, and I so I think that we must come to a conclusion through thorough discussion among the opposition and ruling parties. At the very least, as I said a moment ago, I want to move forward with debate under the assumption that by the time we first raise consumption tax in April 2014, we will have pushed through the reduction in the number of Diet members.

CABINET PUBLIC AFFAIRS SECRETARY: Next, Mr. Hiyama, please.

REPORTER: I am Hiyama of AFP. I have a question about the possibility of restarting operations at nuclear power stations. In preparation for the shortage of electric power in the summer, I understand that the Government will be making efforts to persuade the local communities. Is there a possibility that a political decision will be made either to restart or not restart nuclear power stations when the communities' understanding has not been obtained? While it appears that the public's understanding has increased regarding the wide-area disposal of the debris from the disaster-affected areas, it also appears that few people actively support the restarting of operations at nuclear power stations.

Yesterday, in relation to the execution of the death penalty, the Minister of Justice mentioned the public's support for the death penalty system. At this moment in time, what is your view regarding the progress made in advancing the public's understanding on the safety or danger of nuclear power stations?

PRIME MINISTER NODA: I believe there were two issues, nuclear power stations and the death penalty. With regard to the restarting of operations at nuclear power stations, this is just as it has been explained before. First, a nuclear operator conducts a stress test that has been reviewed by the International Atomic Energy Agency (IAEA). The results are confirmed and assessed by the Nuclear and Industrial Safety Agency (NISA) and then are checked by the Nuclear Safety Commission (NSC). Following these processes, including whether the local community's understanding has been obtained, four relevant ministers meet and agree on, for example, the approach to take for providing an explanation to the community. Based on that, a decision will be made, including whether to ask for the restarting of operations. However, none (of the nuclear power stations) have reached this step. I very well understand that the public has a strong interest in the issue of the restarting of operations. I do believe that a decision needs to be made taking this also into consideration. In this context, you noted about the supply and demand of electric power. It does not mean we will be restarting operations by whim out of concerns for the supply and demand of electric power. We are committed to conducting thorough safety checks, and what I mentioned a moment ago, making a decision on the basis of whether the community's understanding has been obtained.

And speaking about the supply and demand of electric power, demand peaked in the summer two years ago. It is said that if there is similar demand this year and that no measures are taken, this will create about a 10% gap in the supply and demand of electric power. Given this situation, we need to at least take budgetary measures or undertake regulatory and institutional reform. While employing these and many other policies, efforts need to be made to fill in this supply and demand gap. Even then, however, I believe we will still need to ask for substantial power-savings. Regarding the specific policy and initiatives, that is, the steps that will be taken by the summer, we hope to compile concrete measures after reviewing the forecasts for the supply and demand of electric power by some time before or after the (Golden Week) holiday. That is the current schedule.

And was it the death penalty system? With regard to the death penalty system, yesterday, the death penalty was carried out based on the authority and responsibility of the Minister of Justice. The death penalty system has bearings on the foundation of the criminal justice system of Japan, and I believe its modality must be examined carefully from a variety of perspectives, including bringing justice to society, while also fully taking into account the public's opinion. Although the Minister of Justice happened to mention a public opinion poll, the Government has regularly conducted a public opinion poll on this matter. According to the results of the public opinion poll the Cabinet Office conducted in December 2009, I understand that in terms of continuing or abolishing the death penalty system, 85.6% of respondents said, "The death penalty is inevitable in certain cases." Nevertheless, let's not focus only on public opinion polls and so on. At any rate, there are a variety of opinions among the people. Bearing this in mind, or in view also of the fact that there is still no decline in or end to atrocious crimes, I recognize that it will be difficult to abolish the death penalty immediately. There is no change to the fact that Japan does not have a policy to abolish the death penalty.

CABINET PUBLIC AFFAIRS SECRETARY: Next person, please. Yes, Mr. Nanao.

REPORTER: I am Nanao of Nico Nico Douga.

PRIME MINISTER NODA: Yes.

REPORTER: My question slightly overlaps with the previous question. A moment ago, you discussed the framework of the procedures for restarting operations at nuclear power stations. Regarding the specifics pertaining to the restarting of operations of Units No. 3 and 4 of Oi Nuclear Power Station, the NSC, as well as Governor Keiji Yamada of Kyoto Prefecture and others, are expressing the view that a primary assessment alone is insufficient for a comprehensive safety assessment and that up to the secondary assessment should be conducted. In making a political decision going forward, does the Government intend to obtain the community's understanding based only on the primary assessment? Also, can you share with us what you consider as the scope of the community at this moment in time?

PRIME MINISTER NODA: Units No. 3 and 4 of Oi Nuclear Power Station have arrived precisely at the stage in the process where they have gone through the NSC's check. Now, the relevant ministers are confirming whether adequate safety checks have been conducted. After this confirmation is completed, the four ministers will be discussing what to do. Basically, as I said in my response to someone's question earlier, the primary stress test assesses the degree of the margin of safety against possible core melt in the event of an earthquake or tsunami similar to Fukushima. We will be carrying out the process on this basis.

On the matter of the secondary assessment and so forth, well of course I believe there is no upper limit to conducting safety checks. Initiatives that have no upper limit must be pursued. However, I believe examining the degree of the margin to withstand at least a tsunami or earthquake like Fukushima's is, while this is a primary assessment, also one of the points to check for safety. Therefore, this confirmation is now being carried out.

As to the (scope of the community), this has to do with geographical requirements and is not a mechanical matter. However, if interested municipalities, such as Kyoto or Shiga, request an explanation on what is going on, we will of course provide explanations. We would like to continue to do this carefully.

CABINET PUBLIC AFFAIRS SECRETARY: We are running out of time so I would like to make the next question the last. Mr. Sato, please.

REPORTER: I am Sato of Asahi Shimbun. You have said that you will put your political career on the line for the enactment of the consumption tax bill during the current Diet session. On the other hand, you also mentioned about parting from politics incapable of making decisions. If the bill is not enacted during the current Diet session, is it correct to understand that you intend to dissolve the Diet and go straight to the people, or that you will resign from you post?

PRIME MINISTER NODA: Please don't simplify too much. When I say "putting my political career on the line," I would like you take it literally. Isn't it unsophisticated to discuss the interpretation of these words? In fact, I am putting my political career on the line. What I will do in the future will be my decision. But I am not preparing myself right now for a hypothetical worst case scenario in which the bill is not enacted.

CABINET PUBLIC AFFAIRS SECRETARY: With that, I will bring the press conference to a close. Thank you for your cooperation.