[Title] Policy Speech by Prime Minister Ryutaro Hashimoto to the 136th Session of the National Diet

Having been designated Prime Minister at the previous session of the Diet, I am keenly aware of the grave responsibilities entailed in taking the helm of government at this crucial period as we enter a time of major changes at home and internationally, and I am determined to devote my every effort to the tasks of government.

At the outset, I would like once again to express my deepest condolences to the victims and the bereaved families of those who perished in the Great Hanshin-Awaji Earthquake, which struck on 17 January 1995. At the same time, let me express my heartfelt encouragement to the many people who are still struggling to put their lives back in order. The government is devoting its utmost efforts to reconstructing the areas damaged by the earthquake, and to helping those whose lives were torn asunder to recover. Furthermore, in light of the lessons that we have learned through this trial, I intend to give my all in the creation of disaster response measures.

Reform is Japan's most pressing need today. When I was first elected to the Diet back in 1963, there were only 153 people 100 or older nationwide. Today, there are over 6,000. In the same period, the number of babies born every year has plummeted from 1.65 million to about 1.20 million. By the start of the next century, one in five Japanese will be 65 or older, and this will soon be one in four. We are clearly becoming an aged society. With this outlook and the unprecedented speed at which the Japanese society is aging, it is imperative that we overhaul those social arrangements premised upon a life span of twoscore and ten to suit our new expected life span of fourscore. At the same time, there are also many changes that must be made, like it or not, in all aspects of Japanese society to cope with the collapse of Cold War structures, the borderless-action of the economy, Japan's enhanced global status, and other international changes.

The kind of society and state I want to achieve is one in which each and every person has his or her own ambitions and dreams for the future, is conscious of his or her heritage and glad to be Japanese, and, together with the rest of the people of the world, generates shared global values.

The mission entrusted to me is to bring about a Japanese society replete with vigor and confidence by taking this ideal to heart and looking ahead to the next century, moving boldly forth implementing steadfast changes in politics, administration, the economy, and the society, and creating a new system appropriate to the 21st century.

I have thus enumerated this Cabinet's missions as those of change and creation and, the relations of trust among our coalition's three parties now more solid than ever before, have set the Cabinet's four top priorities as (i) rebuilding a resilient Japanese economy, (ii) building a society for the elderly in which people can be glad to have lived so long, (iii) developing a proactive foreign policy position for the furthering of peace and prosperity, and (iv) effecting the administrative and fiscal reforms needed to make all of this possible.

Those of us at the helm of government at this period straddling two centuries have especially grave responsibilities. My political creed being that of making decisions and taking responsibility, I am determined to devote my every effort and to stake my political future on accomplishing the policy agenda outlined herein.

Rebuilding and Reforming the Economy

One of the most important issues before this Cabinet is that of restoring the Japanese economy's resilience. If we are to dispel the gloom that hangs over the economy and to develop a brighter outlook for the future, it is important that we work on this task dividing the remaining five years of this century into three stages - the first stage being that of achieving a full-blooded recovery, the second that of fundamentally reforming our economic structure, and the third that of creatively laying the foundations for the economy and society in the 21st century. While the measures to be taken in these different stages will have targets one year, three years, and five years hence, it goes without saying that they are all closely interrelated and must all be started promptly and promoted resolutely.

Achieving Full-blooded Economic Recovery

Looking at economic conditions of late, the recoveries in personal consumption and plant and capital investment have been joined by a brighter outlook for manufacturing. While the economy thus seems to be slowly extracting itself from the time-marking stage, things are still very grim for employment and for small and medium enterprises. It is imperative that we make this year a year of economic recovery, consolidating the favorable outlook for recovery that has already started and linking it to sustained development for the Japanese economy over the longer term. Accordingly, the budget bill for the next fiscal year puts priority emphasis on improvements in such areas as research and development, telecommunications, and other infrastructure for economic and social restructuring, just as it pays special consideration to tax issues, including providing for carrying the special income tax cuts over for another year and for a comprehensive review of the land tax system. Monitoring foreign exchange rate movements, the government will work for constantly appropriate economic management.

Resolving the Bad Debt Problem

Resolving the problem posed by the financial institutions' bad debts is an indispensable prerequisite to rebuilding and restructuring the Japanese economy, and I will make every effort to resolve this issue as quickly as possible while paying maximum heed to the demands of depositor protection and sustaining the credit structure.

The so-called jusen problem is both a symbol of and a particularly pressing part of this bad-debt problem, and the government has, after the most careful deliberation, decided upon a very concrete course of action including the use of government funds so as to put the economy firmly back on the growth path while ensuring the Japanese financial system's stability and credibility at home and abroad as well as contributing to depositor protection. We have already provided information on the jusen companies' financial situation and more, and I will, while seeking the understanding and cooperation of both Houses of the Diet, make every effort for the fullest possible disclosure.

At the same time, we are putting an organization in place that will be able to forcefully collect these debts by promptly and resourcefully employing all of the debt-collection means in the Jusen Resolution Organization's legal arsenal under the direction of the Deposit Insurance Corporation. The police and the prosecutor's office are now looking into the possibility of illegalities in connection with these debts and have set up liaison committees and action teams, and we will deal strictly with everyone involved, not only the lenders and borrowers but everyone else as well. Working to ensure transparency and to identify the causes and responsibilities for thisjusenproblem, I will make every possible effort to gain popular understanding for our chosen course of action.

Likewise, we will conduct an overall review of past financial policies and the system for inspections and audits and will work to have the principle of self-responsibility unquestioningly accepted at all financial institutions, and will also work to devise a new, high-transparency financial system in which market discipline is fully exercised.

Promoting Economic Restructuring

With the increasing speed of cross-border economic activity, the rise of the Asian economies, and other developments, the world economy has entered what might be termed an age of mega-competition and companies are choosing what countries they want to operate in. Within this, structural issues such as the disparity between Japanese and international prices and other high-cost structural elements are undermining Japan's attractiveness as a place to do business and there are increasing fears of industrial hollowing. The need to achieve a breakthrough for Japan's economic future is thus another reason why it is imperative that we move quickly to implement dramatic structural reforms in line with the new economic plan adopted last year.

The first structural reform here is that of thorough-going deregulation. Our basic approach being that of assuming economic deregulation and retaining regulations only in exceptional cases and of winnowing social regulations down to the bare minimum consistent with their original purpose, we will conduct a thorough review of the regulations to weed out any that may have become ends in their own right and any that have been perverted into citadels of protection for vested interests. As well as working to rectify the high-cost structure, we will, seeking to eliminate barriers impeding the development of new growth sectors and to promote the revitalization of the economy, move resolutely to deregulate with priority attention to land and housing, information and telecommunications, distribution and transport, finance and securities, employment and labor, and other areas that underpin consumer and corporate economic activity.

Free and fair competition in the private sector is, like deregulation, indispensable to promoting dynamic economic activity. As well as vigorously developing competition policy by strengthening and enlarging the Fair Trade Commission Secretariat for more vigorous enforcement of the Antimonopoly Act, we will review the regulations on stockholding and other legal restrictions on inter-corporate linkages and will work to make the labor market more amenable to entry and mid-course movement.

Creating venture corporations is also prerequisite to infusing the Japanese economy with increased vitality, and we will extend all due support to the development of such new operations, including enhanced support on the capital procurement side, so that they can take fullest advantage of their flexibility and creativity.

In seeking to reform the economy and industry, it is important that we not forget the multi-faceted role that agricultural, forestry, and fisheries play and the peace of mind and sense of restfulness that such rural villages convey, and the sound development of these industries and these villages is prerequisite to our efforts. Working for the integrated implementation of the measures relating to the Uruguay Round Agricultural Agreement and more, we want to make agriculture, forestry, and fisheries attractive professions that people can pursue with pride in the years ahead.

Improving the Developmental Infrastructure for a Free and Creative Society and Economy

If we are to create a richly creative society and economy suited to the 21st century, it is imperative that we take full advantage of our people's wit and wisdom as our most valuable resource, foster the kind of people and intellectual resources needed for the future, and push back the economic frontiers.

To invest in science and technology is to invest in a future in which the shared dreams of all mankind come true. As well as working for the early attainment of the plans to double government spending on research and development, we will also promote break-through basic research and development through industry-academia-government cooperation, will seek to train and secure the necessary pool of scientific talent by supporting and using younger researchers and adopting policies to bring young people back to science, and will otherwise vigorously promote science and technology so as to make Japan a country whose prosperity is grounded in scientific and technological creativity.

December's accident at theMonjuexperimental fast breeder reactor holds great lessons for us in this connection. The development and application of cutting-edge technologies is inevitably accompanied by unexpected difficulties. The important thing is to face up to such situations, to lay the facts before the people and scientific experts, to seek out the causes and implement the most thorough safety policies, and to make a good-faith effort to develop new technologies. I intend to make every effort to win the understanding and trust of not only the local population but all of the people through continuing to work for enhanced safety and practicing proactive disclosure of all the facts.

The building of an advanced information and telecommunications society that contributes importantly to enhancing productivity and creating new industries by massively eliminating time and space constraints and transforming the flow of information and products and that creates a high standard of living and sophisticated industrial activity is another important area where we must accelerate our efforts looking ahead to the 21st century. We will thus vigorously promote the greater use of information in business and government, the enhancement of information and telecommunications infrastructure hardware and software, and the development of advanced information and telecommunications technologies.

For a Society Where People are Glad to Grow Old

The second priority imperative is that of creating a society in which people are glad to grow old. The Japanese average life span is today the longest in the world. This represents the attainment of a long-term goal for all of us, and it is something we can all be proud of, but the issue from here on is how society can support these old people and how we can create a society where people are glad to have grown old. In the superannuated society of the 21st century, with the middle-aged and older population growing larger and the younger population growing smaller, how well we are able to sustain and grow the nation's vitality will depend on how well we facilitate more active participation in society by women and older people, and this in turn is a question of what support society is able to provide on caring for the elderly, child-care, and other issues that have traditionally been handled in the home, how we approach and devise the costing modalities, what kind of home-alternative environment we are able to create for children, and many other critical issues, and it is imperative that we create the systems needed to deal with these issues. The clear imperative is today to conduct a comprehensive review of the welfare, education, and social participation modalities for creating an aged society in which all of the people - young and old, male and female - can lead lives of mutual help and support and shared growth while still being proactive and independent.

Looking especially at the issue of care, which is the main source of popular anxiety about growing old, we will, as well as promoting the New Gold Plan and the Plan for the Disabled and working to strengthen the bases for care service so that the elderly and the disabled can lead happy, personally rewarding lives, make every effort to create new systems of care for the aged using social insurance that provides comprehensive and integrated preventive and restorative medical care and social services. In tandem with this, as well as reforming the medical insurance systems to provide quality medical services efficiently appropriate to the aged society, we will also make every effort on the AIDS issue to achieve an early settlement through reconciliation and will do everything possible to identify the causes and assign responsibility and otherwise to ensure that there are no more cases of medical and pharmaceutical supplies proving detrimental to people's health. Likewise, we will steadfastly promote the Angel Plan including establishing child-care leave provisions and better child-care facilities, so as to create a climate in which children, our hopes for the future, can be born and grow up in good health. In this same vein, we will, as well as reviewing domestic action plans for the creation of a gender-blind society in which men and women alike take part in sustaining the society and both are able to participate as equals in the full range of social concerns, promptly draw up an action plan for human rights education, promote integrated human rights measures, and otherwise work to create a fair and non-discriminatory society that respects everyone's rights.

Efforts for Self-discovery Education and a Culture-based Society

Children with individuality and creativity, a sense a responsibility and empathy for others, and dreams for the future that they speak of animatedly are children to be treasured in Japan. Education also has an infinitely important role to play in enabling people to respond flexibly and unerringly to internationalization, the information revolution, and scientific and technological advances. We will thus promote educational reform so as to implement education that puts even greater emphasis on individuality and creativity for the 21st century and teaches people not just to solve problems they are given but to identify problems and to solve them on their own, this also being important in responding to the problem of hazing and harassment at schools and the issues raised by the Aum-related incidents in which young people unable to find their place in society turn instead to anti-social activity.

Promoting culture, the arts, and sports is also important, since these areas are not only what makes life worth living for many people but are the essential foundation of a nation's being. Looking ahead, Japan will strive to become a culture-based society which, even as it preserves its venerable cultural traditions, moves to create and develop outstanding new arts and culture and strives to convey this excellence to the rest of the world.

At Harmony with the Environment

It is imperative that we rethink our mass-production, mass-consumption, mass-disposal social and economic activity and lifestyle and consider how we can best pass the rich bounties of nature on to future generations just as they were bequeathed to us. As well as making every effort to promote comprehensive measures for the creation of a better relationship between ourselves and our environment in line with the Basic Environmental Plan, Japan will also actively seek to play a role commensurate with its international standing in solving the global warming and other global environmental issues.

On the Minamata problem, an issue that the Murayama Cabinet succeeded in finally resolving, we will promote the necessary measures in good faith and will seek to have the harsh lessons learned inform future environmental policy.

Likewise on policies for the ever-increasing amounts of waste disposal, we will, with the cooperation of consumers, producers, and local communities alike, work to implement comprehensive support measures for the creation of a recycling society that discards less and recycles more.

Strengthening Crisis Management for Civil Safety

With the major earthquake last year, the Aum-related incidents, and other violent crime, a cloud has come over the civil safety in which Japan took such pride, and it is thus important to strengthen crisis management so as to keep our society safe. It being difficult to anticipate what crises will occur when and where, people and systems are the important thing in crisis management, and we will make every effort to buttress safety measures and crisis management arrangements.

Disaster-proofing our communities and our country is fundamental to creating a society in which people can lead anxiety-free lives. Although a year has passed since the Great Hanshin-Awaji Earthquake, the entire government will continue to work as one for the full rebuilding of that area. Learning valuable lessons from this disastrous earthquake, the government is resolved to work not just on disaster-forecasting but also on enhancing the overall disaster response capability, including information collection, communication, and decision-making, and on strengthening the crisis management arrangements.

In addition, besides making a total government effort to counter terrorism as with strengthened international cooperation and other means in response to the grim civil safety situation of late, we will also seek to alleviate the people's safety concerns and to create a safe society as by promoting comprehensive firearms control measures, both to keep firearms out of Japan and to seize those that are here, and by making a major effort to control stimulants and other narcotics.

Another imperative for creating comfortable and relaxed living in Japan is that of promptly resolving the housing, commuting, and other issues that are most immediate for many of the people. Rectifying the unipolarization that underlies so many of these issues, we must thus work to disaster-proof Japan and to achieve balanced development nationwide while paying all due heed to the demands of internationalization and the need to create lively communities. Accordingly, we will work to improve the social infrastructure with special attention to those aspects that impact everyday life, including housing and commuting and the structuring of communities where people can live near where they work. Exchanging views with people from all walks of life, we will move actively to draw up a New National Plan including the creation of multiple axes and foci and will continue to work for Hokkaido and Okinawa's further development.

Proactive Foreign Policy for Peace and Prosperity

In the field of foreign policy, my basic stance is to take a proactive approach. Rather than continuing to take the international political and economic situation as a given, Japan should, advancing beyond the traditional concept of international contribution, take active initiatives on its own for world stability and development while postulating ideals that the rest of the international community will embrace. This is also, I am confident, the best way to ensure our own security and prosperity in today's increasingly interdependent world.

Promoting United Nations Reform

The international community still faces a myriad of serious problems, including regional conflicts, the proliferation of weapons of mass destruction, environmental degradation, and poverty. This year marks the 40th year since Japan became a member of the United Nations, and it is essential that the United Nations play a crucial role in resolving these problems. Japan thus intends to cooperate with the other member states and to continue to work on financial reform, reforms in the economic and social spheres, reform of the Security Council, and other reforms to realize as concrete results as possible by this fall. With regard to the question of permanent membership on the Security Council, Japan intends to approach this issue on the basis of the reforms achieved in the United Nations and the support of its Asian neighbors and other members of the international community as well as the further understanding of the Japanese people.

Creative Approaches to Solving Regional Conflicts and Disarmament and Non-proliferation

Threats to world peace in our post-Cold War era, regional conflicts are not only problems for the immediate regions concerned but are also global issues that could affect the international community's entire framework. Japan will make diplomatic efforts, provide humanitarian and redevelopment assistance, and contribute actively to the activities of the United Nations Peace-keeping Operations by providing personnel and financial support so as to prevent and resolve such regional conflicts.

The conflict in former Yugoslavia in particular poses a test of the effectiveness of our new international cooperation. Japan will thus take an active part in the international community's efforts for peace and reconstruction so as to ensure that the major progress made in the recent comprehensive peace agreement leads to lasting peace in that region. In the Middle East, Israel and the PLO reached agreement last September on expanding interim self-government there. While the assassination of Israeli Prime Minister Rabin was a major shock to all of us, there is still a strong momentum in favor of peace. Japan is contributing actively to this peace process. In addition to providing personnel and material support for the international observation team in support of the recent Palestinian Council election, Japan is also providing a contingent of Self-Defense Forces and other personnel for the UN Disengagement Observer Force in the Golan Heights in February.

We are also working to promote disarmament and non-proliferation in nuclear weapons and other weapons of mass destruction and to restrain conventional arms transfers. As the only country ever to have experienced nuclear devastation, Japan urges all of the nuclear weapon states to make a sincere effort for nuclear disarmament toward the ultimate elimination of nuclear weapons, and the resolutions that Japan proposed on nuclear disarmament and the cessation of nuclear testing were adopted by the United Nations General Assembly last year. It is deplorable that certain countries are conducting repeated nuclear tests even today, and Japan, along with calling strongly for the cessation of all nuclear tests, will make every effort for the completion of negotiations on a Comprehensive Nuclear Test Ban Treaty this spring and its signing this fall.

Ensuring security in the Asia-Pacific region including Japan is also very important for global peace. Along with adhering to the basic ideals of devoting ourselves to an exclusively defense-oriented policy under the Constitution and not becoming a military power which might pose a threat to other countries, the government is determined to firmly maintain the Japan-U.S. security arrangements, to uphold civilian control, and to adhere to the three non-nuclear principles. In line with the New National Defense Program Outline and the New Mid-term Defense Program adopted late last year, Japan seeks to streamline its defense capability and make it more effective and compact while enhancing its functions and making qualitative improvements so as to be able to respond effectively to a variety of contingencies.

Creating a Framework for Global Prosperity

Given Japan's standing in the international community, creating a new framework for global prosperity is especially important for us. It is essential that we work for the balanced expansion of trade and investment through further strengthening the multilateral free trading system under the WTO for the further development of the world economy. Looking ahead to this year's First WTO Ministerial Meeting, we will work for the development of new rules for regional integration, for trade policy's relationship to investment, the environment, and competition policy, and for other issues and will also endeavor to strengthen the WTO's dispute settlement mechanism.

On our support for the developing countries' development, Japan has proclaimed in the United Nations and elsewhere the need to formulate a new development strategy as a new framework of cooperation for the international community, and we intend to continue to contribute to these efforts. In line with the Official Development Assistance Charter, we will promote overall economic cooperation with a comprehensive approach integrating assistance with trade and investment so as to contribute to enhancing economic dynamism in Asia and elsewhere. Similarly, the efforts to shift to market-oriented economies are of global importance. It is also important for Japan to provide assistance that is optimally attuned to each country's stage of development while paying every heed to the efforts to promote democratization and to introduce market-oriented economies in the developing countries.

Global issues such as the environment, population, hunger, human rights, refugees, and AIDS are becoming increasingly important. Japan will thus continue to make every effort in line with its world-class technologies and its own experience to build a shared recognition and framework for the entire international community. In addition, in an effort to promote environmentally harmonious economic and social development worldwide, Japan will also complement its long-standing efforts with a vigorous effort for the development and adoption of new energy resources, research and development contributing to reducing the burden on the environment, the creation of new industries, and more. Seeking the early conclusion of the United Nations Convention on the Law of the Sea providing a comprehensive legal order for the seas and oceans, we are also making the necessary preparations for bringing Japan's own laws and regulations into line with the Convention.

Fully aware of Japan's role in the world economy, I am determined to make every effort to restore Japan's economic resilience and to contribute to the further revitalization of the world economy. Ensuring domestic-demand-led stable growth and improving market access, we will continue to work to achieve significant reductions in our current account surplus and to forge harmonious economic relations with other countries.

Promoting Cooperative Relations in the Asia-Pacific Region

We intend to further our cooperative relations with our neighbors in the Asia-Pacific region, which is annually becoming more important both for Japan and for the world economy. Last year, Japan hosted the APEC Osaka Meetings, and APEC has, with the adoption of the Osaka Action Agenda setting forth a comprehensive road map for the liberalization and facilitation of trade and investment and the promotion of economic and technical cooperation, moved from the vision stage to the action stage. This year will be another important year of challenge for APEC, and it is essential that Japan play a major role in promoting the region's further development by drawing up a substantial Action Plan that will strengthen cooperation among APEC members. Likewise in the realm of security, we will contribute to confidence-building within the region by taking an active part in the political and security dialogue in the ASEAN Regional Forum and other fora so as to maintain the peace and stability that underlie the region's development.

Developing Friendly Bilateral Relations

It is axiomatic that developing friendly and cooperative bilateral relations with other countries should be the basis of our foreign policy efforts. With relations with the United States as the foundation and paying particular attention to the Asia-Pacific nations with which we have such close geographical and economic relations, I intend to promote diplomacy achieving heart-to-heart relations among nations so that cultural and other differences do not provoke a clash but are recognized and accepted.

Reaffirming that Japan-U.S. relations are the most important bilateral relationship not only for Japan but for the world at large and that they are the cornerstone of peace and stability for the Asia-Pacific region and the world, I am determined to take the opportunity of President Clinton's visit to Japan to further strengthen Japan-U.S. cooperative relations. In particular, I intend to firmly maintain the security arrangements with the United States, which arrangements provide the political foundation for our wide-ranging cooperative relationship and are indispensable to the peace and prosperity of the Asia-Pacific region.

On the question of the U.S. military facilities and areas in Okinawa, I am determined to make every effort and to proceed with the realignment, consolidation, and reduction of these facilities and areas and to achieve tangible improvements in noise, safety, training, and other issues in the recently established Special Action Committee and other fora in harmony with the objectives of the Japan-U.S. Security Treaty so as to further enhance the bonds of trust between Japan and the United States as well as to find a solution paying maximum consideration to the sorrow and suffering of the people of Okinawa over the years.

Regarding our economic relations with the United States, I will continue to make my best efforts to manage this relationship appropriately, consistent with international rules, based upon such efforts as the steady implementation by both Japan and the United States of the measures decided upon in the recent Japan-U.S. Framework Talks.

On our relations with China, we will continue to support China's policies of reform and openness to contribute to the development of stable relations of friendship and cooperation while enhancing the dialogue on nuclear disarmament and other issues of interest to the international community.

Our policy toward the Korean Peninsula continues to be based on friendly and cooperative relations with the Republic of Korea. On relations with North Korea, we will deal with this issue in close contact with the Republic of Korea and other countries concerned in keeping with our desire to contribute to peace and stability on the Korean Peninsula. On the issue of North Korea's development of nuclear weapons, we will, together with the United States, the Republic of Korea, and other parties concerned, continue to cooperate positively in the Korean Peninsula Energy Development Organization so that the U.S.-North Korea Agreed Framework can be faithfully implemented.

This year marking the 40th anniversary of the Japan-Soviet Joint Declaration that opened the way for the resumption of diplomatic relations between the two countries, we will, watching the political situation in Russia carefully, make even greater efforts to resolve the Northern Territories issue, thereby achieving a full normalization of relations, based on the Tokyo Declaration, and we very much hope the government of Russia will also make a serious effort to address this issue.

It is obvious that Japan must work to promote positive relations of cooperation not just with the Asia-Pacific region but also with all the regions of the world. Maintaining and developing wide-ranging relations of cooperation with Europe is especially important as the European Union expands and integrates to become an increasingly important player in the international community. The First Asia-Europe Meeting is scheduled to be held in Thailand in March, and we intend to take that opportunity to contribute to the strengthening of dialogue and cooperation between our two regions.

Reforms for a 21st-century Administrative System

In seeking to resolve all of these domestic and international issues, it is essential that the government administration itself first achieve a major transformation of its values in line with the changing times. I believe the kind of government we need for the 21st century is one that is democratically open to the people and is able to exercise decisive leadership in times of crisis -- one that is able to pay all due heed to the policies the people truly need while still giving full rein to market principles, leaving the affairs of daily life to the local governments closest to the people, and being slimly efficient. If the reforms to create such a government are not to lose sight of their purpose and are to achieve these seemingly contradictory aims, it is essential that they be promoted from the popular perspective continually asking what the aims of government are and who the reforms are for. This is the kind of administrative reform that I seek - not reform for the sake of reform but reform for the sake of addressing fundamental issues.

Harking back to our founding principles that the people are sovereign and that civil servants are the servants of all the people, it is essential that we move forward with such administrative reform fundamentally reviewing all of our administrative systems and operations in light of the changes in Japanese and the international society and listening respectfully to the voices of people from different parts of the spectrum.

Resolute Administrative Reform

The first principle of administrative reform has to be determined deregulation. Promoting planned deregulation in line with the Deregulation Action Program, we will effect the first updating of this Program by the end of this fiscal year. As well as including a vigorous package of new deregulation measures following the recent recommendations of the Commission on Administrative Reform to the utmost and responsive to requests from Japan and overseas, this updating will also see an effort made to secure the strong leadership needed for the reforms' implementation.

In the relations between the national and local governments, we must achieve, in deed as well as in word, the overriding principle of local government that government closest to the people's lives should be the responsibility of the local officials directly elected by the people involved and that the local governments should handle these things. With the interim report of the Decentralization Promotion Committee this March and its subsequent fleshing out, the government will move promptly to draw up a Decentralization Promotion Program and will move resolutely to accelerate decentralization, including reducing and eliminating work local governments do at the national government's behest and other forms of government intervention, fundamentally reviewing proxy operations, enhancing local tax and other fiscal resources, and strengthening local government in preparation for this transfer of authority.

Reform of the central government bureaucracy is a core element of administrative reform. We must therefore engage in serious deliberation about how our central government offices should be structured, in light of the progress made in deregulation and the reallocation of administrative functions in line with the Decentralization Promotion Program, to prevent the abuses arising from an over-compartmentalized structure and to implement fundamental administrative reform. Likewise, we will submit amendments to the Cabinet Law to this session of the Diet providing for the post of Advisor to the Prime Minister and other changes so as to strengthen the Cabinet system.

It is also extremely important that we achieve transparent and efficient administration. As well as promoting studies and deliberations for the Commission on Administrative Reform's report this year in favor of the prompt enactment of a Public Information Disclosure Law, we will also work for greater transparency in deliberative councils and other areas. Seeking to keep administration efficient and to prevent its bloating, we will promote the greater use of information technologies, including the planned phase-in of a government-wide network, and will move resolutely to reduce civil service staffing in a planned manner. It is in the same spirit that we will move on reforming special public corporations by seeking the consolidation and privatization of nine such corporations and by promoting continuing reforms including vigorous disclosure of financial and other information about all of these corporations.

Moving the capital functions is also a very important issue in terms of reforming Japanese politics, administration, business, and society. With the Study Commission on Relocating the Diet submitting its report last December, the next step is for the Cabinet to make a serious effort on this as one of its priority issues and to seek to further flesh out the Commission's recommendations.

It is extremely important in implementing the appropriate administrative reforms that we deal with deregulation, decentralization, capital relocation, reform of the central bureaucracy, and other issues in an integrated manner, and I intend to work to ensure that these issues are seen as a single whole.

Fiscal Reform

Fiscal reform is an issue that must be discussed and promoted in constant tandem with administrative reform.

It is no exaggeration to say that Japanese finances are perilous indeed, given that the total national debt outstanding at the end of fiscal 1996 is forecast at 241 trillion yen and that the outlook for tax revenues is unfavorable. There is thus an urgent need to put Japanese finances back on a sound footing so that we will have the fiscal flexibility to respond to the population's rapid aging, our increasing responsibilities in the international community, and other social and economic changes and so that we will be able to allocate the necessary funds for essential policy areas. It should go without saying that national finances in reality belong to the people, with money spent to benefit the people and with everything paid for by the people. It is essential that each and every politician work, as the representative of the people, to restore fiscal discipline as quickly as possible. On taxes, constant efforts for reform are needed in keeping with the basic principles of fairness, neutrality, and simplicity so that we can have an aged yet active society. On the consumption tax rate, which is by law scheduled to go to 5%, we are taking a hard look at this and expect to have a decision by the law's September deadline in light of the fiscal demands for providing social security benefits and other needs and the progress made in administrative and fiscal reform.

Relations between politicians and the bureaucracy are often cited as an issue in promoting administrative reform. I do not see politics and the bureaucracy as being in conflict. Rather, I see them as cooperative, politicians exercising determined will and leadership for sweeping reforms and the bureaucracy providing the specialist expertise needed to complement this political will. Ultimately, the final responsibility for these reforms falls to us politicians as the people responsible for the government. I am very concerned about the general distrust of government and the political apathy shown in last year's Upper House elections and local government elections. If we are to rectify this situation and to restore popular trust of and interest in politics, it is essential that we work untiringly to clean up politics and that we be seen in the Diet and elsewhere to be conducting policy debate in the national and the people's interest. This is, I firmly believe, the sort of political reform that we really need, and it is only by effecting such political reform that we will be able to effect true administrative reform.

Conclusion

It is now more than 50 years since the war ended, and this year 1996 is a year of new challenges as we attempt to lay the foundations for the 21st century and to achieve a vision of the next hundred years. The coming century will probably be - and should be - a time when the ideals of freedom and responsibility take precedent over those of regulation and protection, when qualitative enhancement is seen as more important than quantitative expansion, and when the community and home take precedent over the company or other economic organization. The kind of society that we seek to achieve is, I believe, one in which each and every person can live in peace and fulfillment and all of the people can thus have confidence and pride in Japan and we can once more achieve our hopes and our dreams for the future.

Yet the actual doing will prove far harder than the describing. We cannot evade our responsibilities for either the past or the future. Reform will not be easy, and may well be painful for many. Yet it is essential that we pluck up our courage and exercise creative reform of the national government, the bureaucracy, and the economic system in response to the times so that we can leave future generations a Japan of hope and pride.

As both Prime Minister responsible for the government at this crucial time of reform and personally as a politician, I am determined to make every possible effort on all of these issues.

In this, I ask sincerely for the understanding and cooperation of the people and my fellow members of the Diet.