[Title] Policy Speech by Prime Minister Ryutaro Hashimoto to the 140th Session of the National Diet

(Introduction)

I would like, at the opening of the 140th Session of the Diet, to state my views on the major policy issues before us.

At the outset, I must say that it is most regrettable that no solution has yet been achieved in the occupation of the Japanese Ambassador's Residence in Peru. My heart goes out to those who have been taken hostage, as well as to their families, when I think of the hardships and anxieties that they are enduring. Refusing to yield to terrorism, the Government is working tenaciously, in the realization that the sanctity of life is uppermost, to achieve a peaceful solution and the early release of all the hostages. The international community is united in standing firm against terrorism. I place my fullest confidence in President Alberto Fujimori, and I intend to remain in close contact with the Government of Peru and concerned countries as I devote my utmost efforts to attaining a peaceful resolution to this incident as soon as possible and to realizing the release of all the hostages.

Acts of terrorism are a grave challenge to all states and societies, and it is essential that the international community respond with one voice. Japan, too, based on international agreements, will advance a full range of antiterrorism measures both at home and abroad as it further expands its capacity to respond to incidents such as acts of terrorism which can have a serious impact on the peace and safety of the country.

(Reform and Creativity)

I recently visited the nations of Southeast Asia. During that visit, I witnessed how that region, based on democracy and an open and free market economy, has developed into the so-called "center of world growth," and I actually had a palpable sense of the dynamism and confidence in their future that pervades those societies. Meanwhile, the United States is revitalizing its economy through deregulation and technological innovation, while Europe, advancing monetary union in addition to market integration, responds to global integration.

Let me repeat that the society I want to create is one in which each and every person can have dreams and aspirations for the future and can fully realize his or her creativity and spirit of challenge, and in which values are evolved which we share with the people of the entire world.

During the fifty years since the end of World War II, Japan has aimed to achieve an affluent standard of living for its people, while seeking equality among all walks of life and across all of its regions. Our current systems - namely, administrative systems, regulations of private-sector activities, social security and welfare structures, educational administration, and relations between the central and regional governments have in general functioned effectively for a long time in achieving that goal. As such, those systems are deeply rooted in the Japanese society.

However, we are now in an era when the world is rapidly becoming integrated and when people, products, capital and information flow freely, and it is clear that the current framework is an obstacle to the vigorous development of our country. As soon as possible, therefore, we must create an economic and social system which can lead the global trend. Changing systems that are deeply rooted in our society will only happen with great difficulty. What is more, these systems are intricately interlinked. That is why I say that we must take a bold and integrated approach to implement reform in six areas: administration, budget, social security, economy, and the financialsystem, as well as education.

Changing the structures of our society alone will not realize the kind of society which I hope to create. I believe that it is the role of politics to create an environment in which all of the people living in our country can uphold justice and fairness, show compassion to others and especially to the weak, respect their elders, and love with all their hearts their hometowns, their nation and our irreplaceable earth.

Since I became Prime Minister, I have been tackling issues related to Okinawa as the top priority of our national policy. Taking the position that the burden which has been borne by the people of Okinawa should be shared equally by all of the people of Japan, I will continue to do my best on this issue.

Based on this fundamental recognition, with coordination that is founded on the tri-party agreement, I will gather together the creativity and passion for the future of all those who share my views, and I will strive in both foreign and domestic policy to ensure that the whole Japanese people can greet the twenty-first century with feelings of hope.

(Foreign Policy)

In both historical and geographical terms, Japan is a member of the Asia-Pacific. It is extremely important for Japan's foreign policy that the Asia-Pacific region maintain a positive cycle of political stability and economic development based on open regional cooperation. At the same time, whether or not the region can overcome various issues, such as those concerning population, food, energy and the environment, will be of grave consequence to the world in the twenty-first century.

Japan is undertaking cooperation with the United States on global issues, and in the future, it is important that Japan strengthen similar approaches with countries in Asia. Recognizing this, in my recent meetings with the leaders of the members of the Association of Southeast Asian Nations (ASEAN), I proposed that we strengthen our joint approaches. I intend to make use of the Asia-Pacific Economic Cooperation (APEC) forum and other fora to strengthen such cooperation, as we strive toward further liberalization of trade and investment, economic and technical cooperation in various sectors, and the promotion of policy dialogue.

The continued engagement of the United States in the Asia-Pacific region is desirable for the entire region, both in security and socioeconomic spheres. Together with President Bill Clinton, beginning his second term in office today, I intend to make my utmost efforts to further strengthen the good Japan-U.S. relationship as the foundation of Japan's foreign policy. In particular, recognizing that the Japan-U.S. Security Arrangements are not only essential for the peace and security of Japan but are also extremely important for the overall Asia-Pacific region, I intend to work to further increase their credibility through such measures as a review of the Guidelines for Japan-U.S. Defense Cooperation. In keeping with the basic idea of an exclusively defense-oriented policy under the Constitution and of never becoming a military power which might pose a threat to other countries, the Government is determined to firmly uphold civilian control and adhere to the three non-nuclear principles. In line with the New National Defense Program Outline and the New Mid-Term Defense Program, Japan seeks to streamline its defense capability and to make it more effective and compact, while enhancing its functions and making qualitative improvements. Likewise, for confidence-building in the realm of security in the Asia-Pacific region, we will promote security dialogue, beginning with the ASEAN Regional Forum, as well as various defense exchanges.

One of the top priority items of my Cabinet is to proceed with the realignment, consolidation and reduction of United States military facilities and areas in Okinawa while maintaining harmony with the objectives of the Japan-U.S. Security Treaty. I intend to bring all of my resources to bear on steadily and promptly implementing the content of the Final Report of the Special Action Committee on Okinawa (SACO), beginning with the return of Futenma Air Station. Concerning the revitalization of the economy in Okinawa, while securing budget to act upon the proposals of the Okinawa Council on Local Municipalities with U.S. Military Bases, the Government will undertake earnest consideration together with Okinawa.

I recognize that progress in any of the bilateral relationships among Japan, the United States and the People's Republic of China contributes to the overall peace and stability of the Asia-Pacific region. I welcome the fact that relations between the United States and China are moving toward improvement, and so that the peoples of both Japan and China can heartily celebrate this year of the twenty-fifth anniversary of the normalization of relations, I intend to work for further development in our country's relations based on mutual trust, and at the same time to promote further coordination between China and the international community through such measures as supporting China's early accession to the WTO.

Looking at the Korean Peninsula, I intend to further strengthen the friendly and cooperative relations with the Republic of Korea, through such meetings as the upcoming summit this weekend, while at the same time, in keeping with our desire to contribute to peace and stability on the Korean Peninsula, we will deal with relations with North Korea in close contact with the Republic of Korea.

As for Japan's relations with countries in Europe, I intend to advance the broad range of cooperation between Japan and Europe while at the same time further developing the Asia-Europe Meeting (ASEM) so that Asia and Europe can share responsibility in the international community and enhance their mutual benefit.

As for our relations with the Russian Federation, I intend to further strengthen the dialogue and cooperation which is becoming active across a wide range of areas, and in particular, I will continue to work tenaciously to resolve the Northern Territories issue based on the Tokyo Declaration, to conclude a peace treaty, and to achieve full normalization of our relations.

Beginning this year, Japan will be serving as a non-permanent member of the United Nations Security Council. In seeking a solution to the various issues the international community is facing, Japan will lead in the international community and will play an even more proactive role in the United Nations and other fora. In order for the United Nations to fulfill a role that meets the needs of the times, Japan intends to work to carry out reform of the United Nations as a whole in a balanced manner, and with regard to the question of permanent membership on the Security Council, Japan intends to approach that issue on the basis of the reforms achieved in the United Nations and the support of the international community, beginning with its neighbor countries in Asia, as well as the further understanding of the Japanese people.

Furthermore, Japan will also act proactively through positive participation in United Nations peace-keeping operations, and others, aiming to prevent and resolve regional conflict in the Middle East and other areas and to respond to increasingly severe refugee issues in Africa and elsewhere. In order to promote disarmament and nonproliferation of weapons of mass destruction and conventional arms, Japan, as the only country ever to have experienced nuclear devastation, will make efforts toward initiating negotiations on a treaty to prohibit the production of nuclear materials used in the production of nuclear weapons, and will lead the international effort to create a world that is free of nuclear weapons.

Assisting the development efforts of developing countries not only promotes peace and prosperity around the globe, but also benefits Japan. With the understanding of the Japanese people, I intend to implement official development assistance (ODA) in an even more efficient manner. At the same time, in order to accurately respond to the changes taking place in the issues faced by developing countries, the Government will examine how ODA should be from various angles, fixing its sights on qualitative improvement of development assistance.

Furthermore, Japan has communicated to countries overseas its own experiences, focusing primarily on its success in postwar economic development. However, beginning with our environmental issues, we must henceforth not present only our successes but our failures too, as well as the difficulties and efforts we have faced in the process of overcoming them, so that the international community may be spared having to repeat our errors. The East Asia Ministerial Conference on Caring Societies, sponsored by Japan at the end of last year, was the embodiment of this spirit in the sectors of social security and welfare. Based on my Initiative for a Caring World, I intend to take every opportunity to share experiences together with other countries.

(Fiscal Structural Reform)

With the long-term debt of the central and local governments now reaching a combined total of 42 trillion yen this March, it is essential that, in order to make our fiscal system sound, we implement structural reform in terms of both outlays and revenues. Recognizing this, I have designated fiscal 1997 as the first year of fiscal structural reform, and have drafted the fiscal 1997 budget in this light.

In terms of revenues, I am resolutely determined to carry out an increase in the consumption tax rate and the introduction of a regional consumption tax on schedule, and I will not be implementing any special tax reduction. Given that the failure to immediately address the expanding deficit would result in the ruin of our fiscal system, in order to secure the fiscal resources needed to shore up our outlying regions and expand social welfare while at the same time reducing the burden on the working generation, we must ensure that these burdens are shared widely and implement tax reform that will contribute to economic structural reform as well. The necessary measures are prepared to protect those individuals greatly affected by this tax reform, such as lower-income senior citizens at or over the age of 65.

In terms of budgetary outlays, by keeping growth in ordinary expenses to the level of 1.5 percent, which is much lower than the nominal growth rate, we will keep expenses within a range that can be covered by tax revenue, with the exception of the cost of the national debt, and thereby take the first step toward putting our fiscal state in order. With an eye to the business climate, I will work for appropriate economic management by making efforts to ensure that, together with the fiscal 1997 budget, the fiscal 1996 supplementary budget is approved at an early date and implemented smoothly.

Fiscal 1997 is the year we take our first step toward rebuilding our fiscal system, and even more strenuous efforts will be required in the future. Aiming to maintain sound fiscal policies, as soon as possible before fiscal 2005, we will reduce the combined national and regional fiscal deficit to less than 3% of GDP, and we will set the objective to break away from a dependence in the general accounts on special public bonds, and reduce the level of dependence on public bonds. For realizing that objective, a Fiscal Structural Reform Conference will be established, and therein the Government and the ruling party will work together to immediately consider specific methods of reforming and reducing expenditures. The results will be reflected at the stage of budgetary requests, beginning with those for fiscal 1998, and in drafting that year's budget, I intend to make further advances in reforming and reducing expenditures, while at the same time drafting a legislative framework for fiscal reconstruction and submitting it to the Diet for consideration at the earliest opportunity. I intend to lead the deliberations personally, with a view to drafting a budget for fiscal 1998 that is welcomed. At the same time, as our society ages and birth rates fall, keeping an eye on concerns that an increased burden on the working generation and on corporations would have a stifling effect on the economy, I will make every possible effort to limit the burdens which will be placed on both the present and future generations. Beginning in fiscal 1998, I will also take concrete measures to fundamentally resolve the serious situation of the more than 7 trillion yen of long-term debt issued by the Japanese National Railways.

Proceeding with the basic policy of reforming the public financing of loans and investments, from the perspective that the public sector should be complementing private-sector activities in the eligible sectors and corporations, a review will be conducted with an eye to the certitude of redemption of such loans and investments, and an efficient and focused distribution of capital will thereby be ensured.

(Educational Reform)

The internationally high standards of our educational level are the fruit of the passion of our people for education. Still, in order for all of our people to lead a fulfilling life, we must change the current state of affairs in which a person's educational background determines his entire life, and we must create a society in which each and every one of us, based on aptitude, can advance his or her capacity, and continue to be active throughout his or her life based on his or her own efforts. Moreover, as globalization and information progress, it is increasingly important to foster people active in the global society. Recognizing this, I intend to reform our educational system, which currently focuses on equality and homogeneity, into one in which diverse capacities can be developed and which accords respect to lifelong education that stresses creativity and a spirit of challenge.

It is my wish that the next generation, which must carry our country into the future, will strive to achieve its own goals and aspirations, and at the same time, that it will take positive action with an eye to the international perspective, having its own dreams for the future of our country and our region. To foster such a people, in addition to an educational system that poses questions with predetermined answers, we need education which will foster individuals who retain a spirit of inquiry and find their own answers, and who strike the proper balance among knowledge, insight and conscience so that they may endeavor to turn their answers into action. We must therefore broaden the options available in our educational system so that our children can make efforts to pursue their own diverse dreams and aspirations. Recognizing this, while we will proceed with preparations to shift to a five-day school week, I intend to create an educational system which maximizes the potential of each child, and imbues him or her with a passion for life, through reviewing our school systems and educational processes, and giving consideration to combining junior and senior high schools into an integrated education. I will provide greater assistance so that an integrated approach which involves the home, the school and the community can be taken to problems such as bullying and juvenile delinquency, in accordance with the circumstances of each region.

Seeking to make Japan a country grounded in scientific and technological creativity and which can enrich the world with intellectual assets that advance social progress and improve people's lives, I strive to promote scientific and technological development, through augmenting our system to conduct research and development in creative and basic science, promoting cooperation among industry, the academe and the Government, expanding the horizons of neuroscience and genetic research and others. Furthermore, I will work to build a society in which everyone can live a worthwhile life, promoting the creation of open universities, expanding lifelong education through self-enlightenment and public professional training, supporting sports, culture, and art activities, and augmenting cultural cooperation and cultural exchanges with foreign countries, including expanding exchanges of foreign students.

We will steadily implement the action plan to achieve a society in which men and women can participate equally, and I will move forward toward the creation of a new Council for this. Further, I will submit to this Session of the Diet the necessary legislation to eliminate sexual discrimination against working women, and at the same time allow women to fully realize their potential while respecting their motherhood.

Furthermore, in order to protect human rights and create a fair society without discrimination, I will advance measures to protect human rights through promoting education, greater awareness of human rights, and others. Moreover, I will promote the Ainu culture and greater public understanding of it.

(Structural Reform of Social Security)

As our people age and have fewer children, creating a social security system which balances benefits with burdens is a grave issue related to the level of the public burden borne by the people. Still, whether borne by the individual or by the corporation, and without regard to whether the central and local governments shoulder the burden by levying taxes, the costs of social security must ultimately be paid for. Firmly setting a vertical axis of respect for the individual and efforts at self-help and self-support, and a horizontal axis of a spirit of social solidarity, by promoting further market entry by the private sector while responding to the choices of people, I will create a social security system which can efficiently provide high quality service.

The creation of a nursing insurance system to respond to the nursing issue of the elderly is the first step in reforming our social security structure, and I will focus all of my efforts on passing the necessary legislation during this Session of the Diet. Furthermore, there is no question of ignoring the massive deficit inherent in our health insurance system. While maintaining a structure of health insurance for all of the people, I will reform the entire structure of provision of medical care and medical insurance, submitting the bills to this Session of the Diet as a point of departure, so that people can have access to appropriate andefficient health care services. Furthermore, steady advances will be made under the New Gold Plan and the Plan for Persons with Disabilities, so that the elderly and persons with disabilities can overcome their handicaps and, as much as possible, live independent lives.

Today, the trend toward having fewer children is firmly entrenched, and double-income families have become the norm, and it has become difficult to work and raise children without the support of society. During this Session of the Diet, I intend to make systemic revisions to provide options in child care services to respond to the various needs of families with children.

(Economic Structural Reform)

The kind of economy which I am aiming at in Japan is one which follows a path of steady growth driven by private-sector demand, and expands opportunities for high-quality employment. It is under such an economy that it is possible to achieve an affluent standard of living for the people and have a sound fiscal structure. In order to rebuild a hardy Japanese economy, we must, considering capital, technology, human resources and other factors, create an environment that will support the development of new industries, which is crucial to bringing about affluence and to creating new jobs, and we must develop comprehensive policies in accordance with the sectors in which growth is expected. At the same time, it is essential that by repealing and relaxing regulations with a large economic impact, reforming the corporate tax system, and repealing the prohibition of holding companies, we create an attractive corporate environment which increases economic efficacy and flexibility and heightens industrial competitiveness.

At the same time that there is a shift to the service sectors, the manufacturing sector remains the foundation of the Japanese economy, and it is imperative that we preserve and cultivate accumulation of technology and know-how in the regions which support the production of goods, for example, in parts industries and others which support advanced-technology industries. At the same time, it is very important to support small and medium enterprises, which are striving for innovative methods of management.

Recognizing this, the Government clarified the approach it would take to implementing sweeping economic structural reform in the Economic Structural Reform Stimulating Program that it adopted at the end of last year. In particular, this Program stipulates the specific goal of making the cost-effectiveness and level of services in the sectors of distribution, energy and telecommunication the foundation of industrial activities second to none in the world by the year 2001. In particular, in the telecommunications sector, we aim to initiate advancement of international telecommunications services by NTT and to develop telecommunications infrastructure. I intend to work tenaciously to launch this program, including making efforts for the approval of the necessary legislation. I will see to it that the approach taken to the issues indicated in the basic outline of the program is as substantial as possible, and in order to realize those goals, a Government action plan will be drafted by this coming spring.

We must urge structural reform for agriculture, as well. The situation facing farmers and agricultural villages has greatly changed since the 1950s, when the Basic Law on Agriculture was drafted, and as such I intend to proceed with real consideration toward the creation of a new Basic Law that will achieve agricultural policy which is in accordance with the WTO regime, through fostering ambitious farmers, and leading to the rebuilding of dynamic agricultural villages. In the fisheries industry, I intend to strive for the early signing of a new fisheries treaty with the Republic of Korea and the People's Republic of China, for implementing resource management and promoting the fish breeding industry.

The fair, transparent, multilateral international economic system supports these economic structural reforms, and I intend to resolve trade related international disputes under the WTO Agreement and to take a positive approach toward creating new rules.

(Reform of the Financial System)

Reform of our financial system that aims to lead the advances in international liberalization and innovations in information technology and to restore Tokyo's position as an international financial center alongside New York and London is imperative in order to enhance the international standing of the yen and to maintain the economic dynamism of our country as we approach the era of a truly aged society. Beginning with the submission to this Session of the Diet of legislation to fundamentally liberalize transborder financial transactions, I intend to implement reforms step-by-step up to the year 2001, through facilitating market entry into the banking, securities and insurance sectors, revising regulations to allow for profitable management of the individual financial assets of the people, which amount to more than, 200 trillion yen, and creating a legislative system that responds to the internationalization of our society.

Such reform will make it possible for people to choose from among diverse products and services. However, this means that individuals conducting transactions involving risk must act responsibly, and management that is complacently dependent upon regulations will not be tolerated. In order to respond accurately to such a situation, the Government will ensure transparent and open financial administration through thorough disclosure and clarification of the rules. At the same time, recognizing that financial crises can at any time sweep across the international scene, a close system of international cooperation will be established. Together, while taking every measure to ensure the stability of Japan's financial system, I will concentrate my efforts on quickly settling the problems of bad debt held by Japanese financial institutions.

Furthermore, in order to respond to a new financial administration, I expect that, during this Diet session, we will pass a bill to reform our financial administrative organizations and a bill to reform the Bank of Japan into an open and independent central bank.

(Securing a Safe Society and Ensuring the Lifestyle of the People)

The Great Hanshin-Awaji Earthquake which occurred two years ago killed or injured many people and inflicted horrible damage. The landslides which occurred near Himegawa-Kabarasara at the end of last year, too, resulted in the loss of precious lives. I would like once again to express my deep condolences to the victims and their bereaved families, and based on these lessons, I intend to make every effort to strengthen our disaster measures and our capacity for crisis control in times of catastrophe. Through a supplementary budget and fiscal measures taken in the fiscal 1997 budget, no effort will be spared to rebuild the lives of the people in the areas affected by the Great Hanshin-Awaji Earthquake, reinvigorate the economy, rebuild safe regions and expand national disaster prevention measures.

Furthermore, bearing in mind the lessons of the Great Hanshin-Awaji Earthquake, and considering the over-concentration in the Tokyo metropolitan area, I will actively seek the creation of a Nation-wide Comprehensive Development Plan and shift the functions of the capital from the center to the outlying regions.

As for social capital, in order to utilize our limited fiscal resources in the most efficient manner possible, budgetary allocations will be focused on areas directly linked to improving the quality of the lives of the people, such as the improvement of residential and urban areas and environmental sanitation, as well as sectors which form the foundation of development in the next generation, such as international airport hubs and the construction of high-standard highways. At the same time, acknowledging the severity of criticism against public works projects, I intend to create and implement as soon as possible an action plan for effecting a major reduction in the construction costs of such projects.

Furthermore, in reviewing those areas under consideration for future expansion of Shinkansen lines, but where no construction has begun, a strict decision will be made after confirming on a regional basis that such basic conditions have been met as profitability, the agreement of the local government to the division of the management of existing parallel train lines, and the consent of the Japan Railways.

Turning my attention to urban environments, in order to improve our cities and the residents of surrounding areas, we will conduct urban structural reform, including building a pleasant dwelling environment incorporating both business and residential zoning and making improvements to intensely populated urban areas. At the same time, land policies will be shifted to an emphasis on users in order to encourage the effective use of land and transactions based on actual demand, and a new Land Policy Outline will be drafted as soon as possible.

Furthermore, aiming for national land that is affluent, fertile and abundantly verdant, I will make efforts to promote agricultural, mountain and fishing villages, and bearing in mind the multifaceted functions of our forests, I will give consideration to various modalities for our forestry industry.

This year, which will see the holding of a Special Session of the United Nations General Assembly on Environment and Development, marks the fifth year since the Earth Summit, at which the world's leaders were in accord on the importance of sustainable development, and will be a year in which Japan must make great advances in its approach to environmental issues. In particular, the international conference to be held in Kyoto in December is a vital meeting to decide upon an international framework to prevent global warming in the twenty-first century, and I will enthusiastically call upon all countries to cooperate so that the conference is effective and so that a fair and feasible agreement can be reached. At the same time, the peaceful use of nuclear power is essential to prevent global warming, and is vital for Japan, which has a weakness in the area of energy supply. I therefore intend to strive for greater disclosure of information, premised upon securing thorough safety measures, and to work steadily to gain the understanding of the people in this regard. Furthermore, aiming to create a society which recycles its resources, I believe that we must implement the necessary systemic reform in order to promote the recycling of waste, restrict emissions, ensure the appropriate disposal of industrial waste, and prevent illegal dumping, and I will therefore submit to this Session of the Diet the necessary legislation related to a system for environmental assessment.

The oil spill resulting from the accident in the Sea of Japan has spread along a wide swath of our coastline, and there are concerns about the impact it will have upon the natural environment and the fishing industry. The Government will maintain close cooperation with local governments in working as quickly as possible to reassure the residents and volunteers who are working to recover the oil in the regions affected, and with the cooperation of the private sector, the concerned ministries and agencies will act together to prevent the further spread of the damage.

I will also focus my efforts on measures to prevent the use of guns and the abuse of drugs, which threaten the safety and the lives of our people, measures to counter organized crime, and measures to ensure traffic safety.

(Administrative Reform)

If we are to gain the support and cooperation of the people for my Cabinet's resolve to achieve the kind of reform and creation which I have outlined, the Government itself must lead the way with reform. That is the essence of the responsibility of politics.

Focusing with a discerning eye on the role that government should play, as sought by the people, who are the users of administrative services, I believe that the objective of administrative reform is to build an administration which can provide the services sought by the people at the minimum cost, and an administration which can respond flexibly to the changes in our economic society so that our country can develop with dynamism. To meet this objective, we will undertake a comprehensive review of our administration, with no areas treated as sacrosanct, that bears the following three points in mind: whether or not we can abolish interference in private-sector practices by central government and local government regulations; whether or not the services offered by the public sector, such as the government itself and public corporations, cannot be left to the private sector; and whether or not, for those cases in which the administration must be involved, we can shift the primary role from the central government to local governments.

I will implement a review of the division of labor between government and the private sector, paying respect to the principle of market competition and using, to the fullest extent possible, the criteria established by the Administrative Reform Committee. Public regulations will be reduced to the minimum level necessary, by once again revising the Deregulation Action Program by the end of March; by repealing, in principle, all economic regulations; and by reviewing from scratch all social regulations.

In terms of the Government's relationship with local governments, in order to increase the autonomy and self-reliance of the outlying regions, we will proceed with a transfer of authority; repeal the system of execution of affairs of State by a local official under the supervision and direction of a competent Minister, which exemplifies our over-centralized administrative system; and at the same time rationalize subsidies and expand the local tax base in accordance with the division of roles between the central Government and the local governments. Strongly calling upon local governments to organize their administrative structures, beginning with voluntary consolidation, and to conduct thorough reform of their administrative, fiscal and political systems, I will make a draft of an Action Program for Decentralization at the soonest possible date before the conclusion of the Ordinary Session of the Diet in 1998, and pursue comprehensive and planned decentralization. During fiscal 1997, the Government will seek to submit to the Diet an Information Disclosure Act. Furthermore, I will actively explain administrative activities and policies, including greater disclosure concerning special corporations, and make efforts to realize an open administration. I aim to ensure improvements in the quality of administrative service through the introduction of "one-stop service" which will make it possible to conduct multiple administrative procedures at a single location, and by providing administrative information using information technologies.

Based on the ideas that I have been describing, the Conference on Administrative Reform will compile a draft plan for reform of the central ministries and agencies by the end of November. To carry that out through political responsibility in proceeding with administrative reform, it is essential that we recover faith in politics. Regarding the concern over cleaning up politics, a full discussion will be undertaken among all of the parties and factions on political funds and our election system, and an appropriate response will be taken that bears in mind the results of that consideration. At the same time, I will firmly deal with the situation in such a way that neither politics nor the administration is accused of overly protecting the interests of any specific region or industry. Further, I call upon the Cabinet ministers to transcend the narrow concerns of their respective portfolios and display wisdom and leadership, and I call upon civil servants to overcome the barriers of the overcompartmentalized vertical structure and to focus their entire energies on effecting administrative reform for the people. Furthermore, in order to recover faith in our administration, I will see to it that the ethics standards established by each ministry and agency are thoroughly obeyed by public officials based on the realization that they serve the whole. I will, as well, reexamine the systems of all the ministries and agencies for administrative implementation, and will take every measure to root out improper practices. I will also conduct a comprehensive review of our civil service system.

(Conclusion)

These, then, are my views on the issues before us.

Reforming our economic and social systems which have become extremely elaborate and rigid in the fifty years since the end of the war and creating new systems will incur great pain, and will require more wisdom and boldness than only creating new systems.

Once regulations are repealed, industries which have been protected under the umbrella of regulations will be exposed to the maelstrom of competition, and consumers will be called upon to take responsibility in their selection of products and services. As a result of the streamlining of our fiscal policies, individuals who depend on them will be placed in a difficult situation. It behooves each individual to maintain an indomitable spirit and, if they falter after encountering adversity, to regain their stride. The necessary measures will be taken to reach out to those who truly need a helping hand; however, slackening or postponing the pace of reform out of a fear of pain will not be forgiven. All of us living today bear a responsibility to create a good society and to hand it down to the next generation.

The mission of politics is to exhibit leadership in overcoming difficulties and to achieve reform and creation. To lead the way in a new direction; to lend an earnest and humble ear to the opinions and proposals of the people and to discuss, decide and implement them; and to offer every ounce of my energy in that endeavor: These are the goals that I vow to you to pursue. In this, I ask sincerely for the understanding and cooperation of the people and my fellow members of the Diet.