[Title] Press Conference by PRIME MINISTER ABE

CABINET PUBLIC AFFAIRS SECRETARY: We will now begin the press conference by Prime Minister Shinzo Abe.

PRIME MINISTER ABE will first deliver an opening statement, after which we will open the floor to questions from the press.

Mr. Prime Minister, your opening statement, please.

Opening statement by Prime Minister Shinzo Abe

PRIME MINISTER ABE: Today, I dissolved the House of Representatives. This dissolution is “the Abenomics dissolution.” Will we press forward on Abenomics or bring it to a halt? That is what this election will test. Every day, the opposition parties reiterate nothing other than “Abenomics has failed” and other criticisms. Through this election campaign, I wish to ask the public if our economic policy is mistaken or correct, and whether or not any other alternatives really exist.

I would like you to think back to two years ago. At that time, four years had already passed since the Lehman Shock and the global economy was poised to recover. Yet despite this, only Japan was embroiled in deflation, with three consecutive quarters of negative growth.

The excessive appreciation of the yen relegated a large number of companies to overseas and the hollowing-out of Japanese industry progressed further. In Yamaguchi Prefecture, where I come from, a large plant employing more than 500 young people had no choice but to close its doors because of the yen’s excessive appreciation. It didn’t matter how hard everyone tried, how tirelessly everyone worked, or how good the ideas they came up with—they were unable to remain competitive because of the excessive appreciation of the yen. A large number of jobs were also lost [during that era]. The number of unemployed people increased, and jobs dried up for subcontractors. The term “chain reaction bankruptcies” came to be used all throughout Japan. At the time, I was leading an opposition party, and even now, I cannot forget that wherever I went, people said to me, “Abe-san, we need you to do something about this economy.”

The strong sense of crisis that blanketed all of Japan led to the change of government in which we came to hold the reins. “Restore a strong economy.” Believing that was the voice of the people expressed in the general election, I continued to hammer out the policy of the “three arrows” and ran the administration with the economy as our highest priority.

As a result, employment has expanded by more than 1 million people, and the percentage of graduating high school students receiving offers of employment has increased by 10 percentage points. As of the end of September, more than half of graduating students had already been given job offers. This was the first time to attain this level in 15 years. This past spring, we realized the highest rate of wage increases in 15 years. When companies raise their earnings in a reliable manner, they are able to increase their number of employees and raise wages. It is Abenomics that will put this economic virtuous circle into motion.

In order to ensure that Abenomics succeeds, I have taken the decision to postpone by 18 months the raising of the consumption tax rate to 10 per cent.

Postponing the raising of the consumption tax rate makes it necessary to review the schedule for enhancing social security. However, we are unwavering in our determination to support the generation raising children. The new systems for supporting children and child-rearing will go into effect this upcoming April as scheduled. We will eliminate childcare waiting lists by preparing childcare arrangements for 200,000 children within two years and for 400,000 within five years. We will moreover break through the "first grade wall” [whereby mothers often quit their jobs when their children enter elementary school] and eliminate waiting lists for after-school day care as well. That schedule will not change at all. We will bring about a society in which women shine. We will continue to hold aloft the banner that the Abe Cabinet has raised.

In this extraordinary Diet session, regrettably, we failed to receive the cooperation of the opposition parties on the bill to promote the active engagement of women in society, and the bill was thus scrapped. However, I will most certainly bring about its passage. I am determined that we will enact this legislation unfailingly during next year’s ordinary Diet session.

There are some who say that since every opposition party concurs with us regarding postponing the raising of the consumption tax rate, this is not an issue in this election. However, this is incorrect. When will the members of the opposition parties raise the rate to 10 per cent? I have not heard anything suggesting that they have clearly stated the timing for that. That is an extremely important point. We have a responsibility to reconstruct our public finances and pass down to the next generation a social security system that is one of the best in the world. We, the ruling coalition of the LDP and New Komeito, will carry out that responsibility reliably.

For that reason, we will raise the consumption tax rate to 10 per cent from April 2017 with absolute certainty. We will eliminate the provision allowing decision-making based on the economic climate, which enables a postponement after assessing the economic outlook, as was used this time. Will the economy really be in good shape three years from now? Getting that accomplished is our mission, and our economic policy.

This week, the Chairman of Keidanren (Japan Business Federation) stated that business circles wish to raise wages again next year and contribute to creating an economic virtuous circle. In addition, wages will be raised the following year and again the year after that. I am certain that if we are able to continue implementing Abenomics, we will definitely be able to bring this into realization.

I am also aware that there are many who say that these good reports are all about large companies and that the winds of Abenomics have yet to reach small- and medium-sized companies. They are having a hard time because a weaker yen has resulted in the prices of gasoline and raw materials rising. We will respond to this situation thoroughly in our upcoming economic countermeasures.

However, with the launch of Abenomics, the excessive appreciation of the yen has been rectified. Against that backdrop, the era of the hollowing out of Japanese industry has come to an end and jobs have finally returned to Japan. Nissan Motor Company was about to transfer its engine manufacturing to a plant in the United States, but decided to manufacture the engines in the city of Iwaki, Fukushima Prefecture. This preserved almost 600 jobs. Canon, having observed the changes of the past two years, has decided to restore its proportion of domestic production to 50 per cent—half its total production. I understand that the production of printers and other items that had left for Asia will take place in Ibaraki and Shiga Prefectures. Investments that had slipped away to overseas have begun shifting into motion here in Japan.

Domestic investments by large companies give rise to jobs for small- and medium-sized enterprises that make parts and materials. At present, the number of corporate bankruptcies is down by as much as 20 per cent from the days of the DPJ-led government. This is the first time in 24 years that there have been a low number of bankruptcies. If there were to be some sort of reversion to the excessive appreciation of the yen we had before, we would again see a hollowing out of industry and a complete vanishing of jobs. Having a job is the most important thing for people.

During this extraordinary session of the Diet, the Basic Act for building up local regions was enacted, enabling us to take a major step forward. People who live in hilly and mountainous areas, on remote islands, and in other parts of our local regions are preserving our traditional hometowns and helping to maintain a beautiful Japan. I believe that Abenomics will only be complete when we are able to bring the warm winds of economic recovery to the regional economies, which are still facing serious conditions. We will push through to the end without fail, to help the people in Japan’s regions live more affluent lives.

I am also well aware that some claim the disparity between our cities and our regional areas is widening and that only large corporations are receiving any benefits. In response, I ask, are there any magic economic policies that will line the pockets of the general public before Japan’s companies squarely raise their earnings? And would you revive the practice of just doling out handouts? The source of funds when giving out those benefits is again taxes. If companies do not increase their earnings and salaries do not rise, how will you secure tax revenue? Isn’t that the exact landscape we were in until two years ago?

We approach this differently. We will turn the economy around, create the conditions by which companies increase their earnings, and then have those earnings return to your pockets. We will forcefully set this economic virtuous cycle into continuing motion so that this economic recovery comes to be felt tangibly throughout the entire country. This is the only path forward.

Economic recovery is the only road for us to follow. Through this election campaign, I intend to continue to appeal to the public tenaciously on this matter. By winning the trust and cooperation of the public and moving forward steadily with the Growth Strategy, which has both pros and cons and has also met with substantial resistance, I am determined to bring affluence to people’s lives.

I will end my opening statement here.

Questions and Answers

CABINET PUBLIC AFFAIRS SECRETARY: We will now open the floor to questions from the press.

Please first state your name and affiliation before asking your question.

I will begin with a representative of a company coordinating the press club. Yes, go ahead.

REPORTER (TAKAHASHI, NHK): I am Takahashi, with NHK, one of the companies coordinating the press club.

First of all, I would like to ask about the reason for the dissolution. The opposition parties are toughening their adversarial stance, saying this is a dissolution without a reason, which conceals the failure of Abenomics. Do you believe that this dissolution of the House of Representatives has gained the understanding of the public?

I would also like to ask about the line separating victory from defeat in this election, which just now you indicated would be the ruling parties winning a simple majority. That would mean that even a reduction of close to 90 seats from the number currently held would be a victory. Within the ruling parties, some say you should aim at 266 seats for an absolute stable majority, or, at a minimum, 249 seats for a stable majority. I would like to know how you regard this matter.

PRIME MINISTER ABE: First of all, the idea that this is concealing [the outcomes of] Abenomics is incorrect. As I stated just now, I said that this dissolution is “the Abenomics dissolution,” and we will in fact confidently go to the people to ask if this policy is correct or mistaken, or if there are any other options.

Also, when all is said and done, as I mentioned just now, this election [will take up the fact that] we have postponed the raising of the consumption tax rate by 18 months. There have been criticisms that the LDP did not include this in its policy pledges. Precisely for this reason, we will hold an election. The starting point for a democracy is its tax system. I believe that, having made a major change to the tax system, we now must hold an election. And, through this election campaign, we will thoroughly appeal to the public about our economic policy, and I hope to gain the people’s understanding about the reason for this election as well. I believe that we will only become able to accomplish our challenging and difficult reforms by seeking the voices of the people and gaining their support through the election.

As for the line of success, victory or defeat in the election is a matter of choosing the party to hold the reins of government, and [the election of] the House of Representatives is choosing who should hold those reins. [In the campaign to see] which party will obtain a majority, the LDP and New Komeito will appeal to the public on policies we hold in common as the ruling parties. Naturally, I consider the fork in the road to be choosing which party to hold power. When Prime Minister Koizumi dissolved the House to achieve postal privatization, he too said, if the LDP and New Komeito win a majority I will continue on with this policy, and if we fail to get a majority I will step down. During our time as an opposition party, the LDP had only 119 seats in the House of Representatives. Saying that I would not be able to carry out my responsibilities unless we increase this number, not by 90 or even 100, I pledged to more than double our number of seats and take the reins of government.

However, in an election campaign, of course, I am the leader of the LDP. We hold close to 300 seats [in the House of Representatives]. Naturally I will aim at all our candidates being successfully elected.

CABINET PUBLIC AFFAIRS SECRETARY: Next I would like to take another question from a company coordinating the press club. Yes, go ahead.

REPORTER (MIYAZAKI, NISHINIPPON SHIMBUN): I am Miyazaki with the Nishinippon Shimbun.

I would like to inquire about election issues. Mr. Prime Minister, in the press conference you held on the 18th, and again in this press conference, you stated that you will ask the voters about your decision to postpone the raising of the consumption tax rate as well as the pros and cons of continuing with Abenomics. Yet at the same time, there are topics such as last year’s Special Intelligence Protection Act, the Cabinet Decision taken this past July to allow the exercise of the right of collective self-defense, and the restart of nuclear power plants expected at roughly the beginning of 2015, about which the public’s views are divided into two clear-cut groups. Mr. Prime Minister, during this election campaign, do you intend to actively position these topics as election issues—not simply including them in the LDP’s pledges, but actively taking them up?

Also, regarding the timing of April 2017 for increasing the consumption tax rate again, at the press conference held on the 18th, you declared that you would not postpone the increase again, and at today’s press conference as well you said you would raise the tax rate without fail. Does this mean that you will raise the consumption tax rate without exception, no matter what the situation?

Those are my two questions.

PRIME MINISTER ABE: First of all, in last year’s House of Councillors election, as well as in the general election in 2012, we pledged to the Japanese people that we would properly create a system and domestic legal structure governing information security. We also made pledges regarding the exercise of the right of collective self-defense and nuclear power and energy. We engaged in those election campaigns fully setting forth those pledges. That is the fundamental position of us, the LDP, towards elections and towards politics. Naturally, in this election as well, we intend to appeal to the public regarding all of these matters.

And, from April 2017 we will raise the consumption tax rate to 10 per cent. This time, the agreement reached by the three parties, that is to say, the law that was enacted, included a proviso for making a decision based on the economic climate. Based on that clause for making a judgment based on economic conditions, this time we assessed the economic situation and postponed the increase by 18 months. Next year, we will delete this proviso for a decision based on economic conditions within the bill we will submit to the Diet. It goes without saying that we will not again postpone the increase because of a decision based on the economic climate as we did this time. This is entirely clear.

CABINET PUBLIC AFFAIRS SECRETARY: Next, I would like to take a question from someone other than the companies coordinating the press club. Please raise your hand if you would like to ask a question. When you are called on, please first state your name and affiliation before asking your question.

Mr. Takemoto, please go ahead.

REPORTER (TAKEMOTO, REUTERS): I am Takemoto, with Reuters. Thank you for taking my question.

There has not been much of an upsurge at all in consumer spending. The Abe administration is, I believe, moving forward boldly in reducing the corporate tax rate for companies. What sort of stimulus policy, for example, a reduction in income taxes, does your administration intend to pursue for the personal sector? If you are not thinking of pursuing a stimulus policy, then what kind of countermeasures do you have in mind in order to increase spending by the personal sector?

PRIME MINISTER ABE: We consider it necessary to respond with a sense of speed, and we squarely targeted weak parts of the economy, such as by stimulating consumption in the local regions, within our recent economic countermeasures. From that standpoint, in order to do so, we intend to provide support by establishing subsidies that will take advantage of the creativity and innovation of each locality. We also intend to bolster personal consumption. In particular, we would like to give proper attention to the local regions.

As for income taxes, as you inquired about just now, it goes without saying that a reduction in income taxes would have no effect on those who already pay no income taxes. We believe it is instead important to focus on low-income individuals.

CABINET PUBLIC AFFAIRS SECRETARY: Now I would like to take the next question. Mr. Enman, please.

REPORTER (ENMAN, ASAHI SHIMBUN): I am Enman, with the Asahi Shimbun. Thank you for taking my question.

Mr. Prime Minister, just now, you said that energy would be part of the [LDP’s election] pledges. It is said that Sendai Nuclear Power Station in Kagoshima Prefecture will restart operations as early as next year, and I believe that security legislation including the right of collective self-defense will be incorporated into the legal structure beginning next spring. I would like you to use this opportunity to speak in concrete terms about your views on such matters as these.

PRIME MINISTER ABE: First of all, as I have been saying all along, regarding the restart of nuclear power plants, for plants which the Nuclear Regulation Authority has judged to be safe, we will restart operations upon obtaining the understanding of the people of the local area and the people in the host community. This is no different from what I have been saying all along. We intend to move forward in executing this, based on this approach.

As for the security-related legal structure, in accordance with the Cabinet Decision of this past July 1, we will put into place a seamless legal structure that will secure the lives of the people and their livelihood. While this will be an extensive legal revision, I believe it is necessary to carry this out in an integrated manner. I also believe that this approach makes it easier for the public to understand. We are currently preparing that legal structure and I would like to submit it to the ordinary Diet next year.

CABINET PUBLIC AFFAIRS SECRETARY: Because of time, this might be the last question. Mr. Takeuchi, please go ahead.

REPORTER (TAKEUCHI, NIPPON TELEVISION NETWORK): I am Takeuchi with the Nippon Television Network.

It has been estimated that postponing the increase in the consumption tax rate will reduce tax revenues by approximately 1.5 trillion yen within the budget for fiscal 2015. Mr. Prime Minister, you stated in the press conference and elsewhere that you will be carrying out support for child-rearing and other types of assistance. If that is so, then financial resources will be stretched somewhat tightly in the context of an expected decrease in tax revenues. I think that this will be impossible to follow through on over time unless there is some balance struck. How do you intend to respond regarding this matter?

PRIME MINISTER ABE: When we say that the consumption tax rate will not be raised, considering the balance between the benefits and the burden, social security will also necessitate a burden in order to provide benefits. From the perspective of that relationship as well, I think it will be difficult to do everything. However, this is an important reinforcement of social security. We are not saying that we will not increase the tax rate indefinitely. We are saying we will not do so for an 18-month period. To what extent can we secure services during those 18 months? I would like to work to the greatest extent possible towards reinforcing the system. However, against that backdrop, we will provide support for those who are raising children. We intend to provide this support in a thorough manner. As I mentioned earlier, we will properly prepare childcare arrangements for 200,000 children over two years and for 400,000 children over five years. I would like to pledge this clearly.

CABINET PUBLIC AFFAIRS SECRETARY: As we have now reached the end of our scheduled time, I would like to bring Prime Minister Shinzo Abe's press conference to a close. Thank you very much for your cooperation.

PRIME MINISTER ABE: Thank you very much.