[Title] Policy Speech by Prime Minister Yoshihiko Nodato the 179th Session of the Diet

1. Introduction

On the occasion of the opening of the 179th session of the Diet I would like to present the policies of the Government of Japan.

Today we stand at a juncture where the preparedness and caliber of politicians are being called into question in the disaster-affected regions that have started their path to reconstruction following the Great East Japan Earthquake; in agricultural and fisheries communities around the country that are demonstrating passion in reforms; in communities that are home to small and medium enterprises, which are coping with the issues caused by the historic appreciation of the yen; and in the international financial markets that are being beset by the economic tempest that originated in Europe.

What this Diet must achieve is patently clear. In order to significantly accelerate the reconstruction efforts in the disaster-affected areas, bring the nuclear power station accident to a conclusion, and rebuild the Japanese economy, we must compile a final draft as soon as possible of the third supplementary budget and its relevant legislation and move to implement such legislation. This must be a joint effort, under taken by the ruling coalition parties of the Government and all other parties and parliamentary groups. Is it not now time for us to work together to fulfill our responsibility to the people of Japan who are working diligently to survive in the face of adversity, and to our descendants, to whom we will entrust the future of the nation?

There is an overwhelming desire throughout the entire country to assist people who are facing hardship. Above all, we should remember that it was the people affected by the disaster who worked themselves to allocate and distribute relief supplies at evacuation centers. We should also remember the approximately 800,000 people to date who have participated in volunteer assistance activities in the disaster-affected areas, and the contributions to relief funds that now exceed 300 billion yen. It is this desire to reach out and assist others in adversity that exemplifies the high-minded spirit of the Japanese people, and is something which we can proudly demonstrate to the world.

However, a high-minded spirit alone will not be sufficient to reconstruct the regions affected by this unprecedented disaster and rebuild the Japanese economy. In order to return the communities and livelihoods of the disaster-affected regions back to how they were and ensure that reconstruction is set on a sure footing, preliminary calculations show that nearly 20 trillion yen will be required over a five-year period. Without a resolution by the Diet it will not be possible to allocate such an enormous amount of funds.

The "resolve of the Diet" rests with none other than the esteemed members of the Diet, who sit in this chamber as representatives of the people. Must we not now capitalize on the discussions that have been held to date to finalize draft bills, and work together to bring this important work to a conclusion for the people of Japan, something that only we can do?

2. Working to Significantly Accelerate Reconstruction in Disaster-affected Regions

The World Heritage site of Hiraizumi, which is a beacon in our history, was born out of reconstruction efforts in the Tohoku region following the ravages of war and conflict at the end of the Heian Era. Following the great fires in the Meiji Era, which burned the towns of Kawagoe and Takaoka, the people of those towns devised and promoted the "Kura-zukuri" (stone-built warehouse) style of fire-resistant architecture, examples of which were left to posterity and still stand beautifully in the townscapes where they were built. Following the Great Kanto Earthquake, rubble and debris were used to create landfill in the sea, changing the shape of Yamashita Park, one of Yokohama's famous landmarks. While beset by repeated wars and natural disasters, our forebears looked to the future, spreading "seeds of hope," which have grown rich and strong. The recent Great East Japan Earthquake is no exception to these examples.

For affected local governments that have been engaged in repeated face-to-face consultations with residents and have each worked diligently to create their own reconstruction plans, the Government will first of all provide solid support in the form of financial resources. In accordance with the concept of reforms for increasing local sovereignty, in addition to establishing grants that can be easily accessed by affected local governments, we will provide full support to projects independently implemented by the communities and ensure that there is effectively zero financial burden on local governments in various kinds of subsidy programs.

For many of the people affected who have moved into temporary accommodation, the next cause for worry is finding a place to work. We will provide support to ensure that the people affected may have security in their lives from now, through such efforts as the full-fledged recovery of infrastructure, including roads and ports; increases to employment creation funds and group-based subsidy programs for small and medium enterprises; and strengthened measures for employment support. In addition, by cleaning the salt from the farmlands that were assailed by the tsunami and ensuring the return of fishing vessels and fish farms, we will work to realize the strong resurgence of the agriculture, forestry and fishery industries in the disaster-affected regions, where people have lived in harmony and with a deep affinity for the land and the abundant oceans.

Inflexible rules by the central government must not be allowed to obstruct reconstruction plans. We will establish special zones for reconstruction that allow for bold deregulation and special taxation measures, ensuring that reconstruction efforts are accelerated and providing institutional support for the creation of cutting-edge model regions that capitalize on the strengths inherent in the disaster-affected regions. Furthermore, by establishing unprecedented measures that will exempt companies from paying corporate tax for a five-year period in the special zones for reconstruction, we will attract new corporate investment in the region from Japan and overseas.

The Reconstruction Agency that will be newly established will provide a one-stop response to requests, with branches located in each of the affected regions, which will have strong coordinating and implementing power that will transcend the vertical structures within the central government in Kasumigaseki. The Reconstruction Agency will be a body that combines warm and close links to the affected regions with decisive implementing capabilities that are free from the shackles of past precedents. It will form strong bonds between the central government and the disaster-affected regions.

Moreover, making use of the lessons gained from the recent great disaster, we will formulate legislation for the creation of communities that are resistant to tsunami disasters, seeking to create natural disaster-resilient communities in the affected regions and around the entire country.

3. Bringing the Nuclear Power Station Accident to a Conclusion Without Delay

Without the revival of Fukushima Prefecture there can be no revival for Japan. This earnest desire and staunch resolve is something that I repeat any number of times. In order to bring the nuclear power station accident to a conclusion without delay, the nation's resolve remains unwavering to begin by achieving the cold shutdown of the reactors by the end of this year and making every effort to steadily implement the Roadmap.

To date, the volume of radioactive materials being released has significantly reduced from the time of the initial accident and we have also been able to lift the designation of the Evacuation-Prepared Areas in Case of Emergency. However, the struggle to bring the accident to a conclusion will not be over until the day that the people in the vicinity of the power station can return to their home towns with peace of mind and regain their former daily livelihoods.

"I want to be able to soon play tag and run relay races outside."

"I want to search for acorns and collect pretty leaves with my friends."

These words, spoken by care-free and smiling kindergarten pupils in Fukushima, whose front teeth had just fallen out, is something that remains in the back of my mind.

An urgent and pressing challenge is to engage in thorough decontamination operations in the various areas affected, not just in public spaces and facilities, but also in the living spaces of local residents. The entire Government will work to prepare a response structure, taking responsibility for gaining an accurate understanding of the situation and implementing large-scale decontamination operations, as we work to eliminate the worries and concerns of the local residents and the public as a whole as soon as possible.

Furthermore, we will establish an independent fund for the revitalization of Fukushima, and work together with local communities to promote new initiatives, including the development of an international medical center.

Is it not now time to implement the third supplementary budget and give back the young people of Fukushima their future, so that they do not have to refer to "being born in my hometown in Fukushima and spending my entire life there" merely as a dream?

The Government will comprehensively disclose the information it possesses concerning the status of dispersal of radioactive materials and the impact on health. In order to ensure that reconstruction of the affected regions is not obstructed by unfounded reputational damages, is it not we politicians who should take the lead in encouraging the public to respond considerately?

4. Rebuilding the Japanese Economy

Due to the historic appreciation of the yen, the crisis of the hollowing-out of industry is continuing. If large corporations relocate their bases overseas, the small and medium enterprises that are their business partners would be obliged to follow, making it a real possibility that precious places of employment that would normally remain in Japan will be lost. In order to avoid such a situation, based on the recent "Comprehensive Measures Against Yen Appreciation," with the cooperation of the Bank of Japan we will take every possible policy measures, including a response to the strong yen itself.

In order to put our resolve to halt the hollowing-out of industry into action, we will prepare location subsidies amounting to 500 billion yen, approximately three times the cumulative amount of subsidy measures implemented to date. Furthermore, through the provision of 200 billion yen in energy-saving eco-friendly subsidies we will create anticipatory demand for cutting-edge technologies, thus further elevating Japan's outstanding technological capabilities in the fields of environment and energy. To the companies that are endeavoring to overcome the hardship imposed by the appreciation of the yen, we will ease the conditions for employment adjustment subsidies and implement measures for small and medium enterprises amounting to a total of approximately 700 billion yen, focusing on expanding financial assistance.

By implementing the third supplementary budget should we not aim to fight against hollowing-out pressures and give solid hope to those business owners who are gritting their teeth in an effort to maintain operations in Japan, and to the personnel who support each and every workplace?

5. Towards Responsible Reconstruction

Expenditures for the third supplementary budget are to be more than 12 trillion yen, including the aforementioned assistance measures, as well as response to the recent settlement reached on the hepatitis B problem and so on. We must secure financial resources to support the execution of these expenditures.

First and foremost, with firm resolve we will endeavor to achieve overall Government expenditure cuts and secure non-tax revenues.

In order to further cut personnel costs for national civil servants, we have already submitted a bill to the Diet that would reduce civil servant salaries by approximately 8%, and it is vital that the bill be passed as quickly as possible. I have also started a sweeping revision of civil servant housing, including the issue of housing in Asaka. In the Government Revitalization Unit, "proposal-based policy review" will be implemented on policies and institutions with the mindset of the general public, in addition to carrying out tenacious efforts to eradicate wasteful and inefficient administrative measures.

With the view to the bills related to postal reforms to be passed, government assets that can be sold, such as stock in Japan Post Holdings and Japan Tobacco, will be sold in efforts to gather as many non-tax revenues as possible.

Regional sovereignty reforms are important for empowering regions to make locally-based decisions, and these reforms will also be effective to promote reduction of wasteful administrative measures on the national level. We will promote a reform to integrate local subsidies and other funding into the form of block grants and abolish the ministerial branch offices in principle, while listening to the views of the local communities. We will also work to pass the legislation related to the reform of the system of national civil servants in order to ensure that administrative services are efficient and high-quality.

Politicians must also take the initiative to tighten their belts. Issai Sato, a Confucianist from the Edo Period, once said, "Treat others like the spring breeze, guard yourself against temptation like the autumn frost." People that represent citizens by involving themselves in politics and government administration are looked on to conduct themselves in an "austere manner like the autumn frost." Concerning the salaries of myself and the ministers, senior vice-ministers, and parliamentary secretaries, I made the decision that we would all return a portion of our salaries without waiting for the bill to pass that would reduce civil servant salaries. Moreover, I strongly count on the ruling and opposition parties to advance discussion on measures to rectify the difference in weight attached to votes, which is currently a violation of the Constitution, reducing the number of Diet members, and on the modality of the election system.

Next, we will pursue "a path of revenue increases" through economic growth.

Since long ago, great predecessors that successfully achieved fiscal reform have done so by adopting a policy where ingenuity is used to develop industry and increase tax revenues. In Japan, where the population is now declining, there is no miracle policy that would double the size of the economy and tax revenues over the course of just a few years. The only thing that we can do is to steadily resolve the issues that have stagnated the Japanese economy for so long, one at a time, then assess the appropriate path for Japan to take once the immediate crisis has been overcome, and implement it.

As a precursor to that, the entire Government will take responsibility to steadily put into action the "Basic Policy and Action Plan for the Revival of the Food, Agriculture, Forestry, and Fishery Industries in Japan," which has already been formulated. This will allow workers in these industries, which will be responsible for the future generations, the leeway to make efforts to revive the industries that very well could become growth industries during the twenty-first century.

In the newly established Council on National Strategy and Policy, we will be compiling a basic strategy for revitalizing Japan by the end of the year and stepping up efforts to promote active undertakings aimed at cultivating new industries and harnessing global growth potential. Moreover, the Council will shape a mid-to long-term national vision that includes revising energy strategy so as to reduce dependency on nuclear power as much as possible and realize an energy structure that citizens are comfortable with, as well as countermeasures to global warming and policies aimed at developing new frontiers. We will draw together the wisdom of the industrial, public, and academic sectors in giving shape to this strategy.

With regard to the development and promotion of Okinawa, which has a great potential to become a gateway to the growing region of Asia, we will be wrapping up the promotion plan, which is set to expire at the end of this fiscal year, and establish a highly flexible lump sum grant with no usage restrictions as a new promotional policy.

Finally, "the path of revenue reform" comes in to compensate for resources that could not be attained through "the path of expenditure cuts" and "the path of revenue increases". The proposal on financial resources for reconstruction stipulates that we will ask citizens to bear a certain financial burden by temporarily raising core taxes; that include income tax, corporate tax, and resident tax.

The background to this is the harsh situation of national finances.

The dynamics of global economic markets have caused the progression of a historical situation where "national credibility" is being severely questioned. The crisis in Europe is spreading and this can by no means be considered a fire on the other side of the river. Every child that is born today already shoulders national debt of more than seven million yen. If the working generation continues to decrease in size, the per capita burden will continue to increase. We cannot continue to indefinitely postpone a response to these issues.

I ask that everyone work with me on serving this greater cause of preserving "national credibility", by realizing policies that secure financial resources for reconstruction and doing what we can to reduce the burden on future generations.

6. Towards Resolute Diplomacy and Security

In the recent session of the United Nations General Assembly, I expressed my gratitude to countries around the world for their assistance in response to the Great East Japan Earthquake, and stated that Japan was determined to repay the world by contributing to a better future for all of humankind. We will unfailingly put those words into action.

First, we will provide the necessary assistance to countries that have suffered damage from natural disasters, including the large-scale flooding in Thailand and the earthquake that has left so many casualties in Turkey. We will also materialize assistance for reform and democratization efforts underway in the Middle East and North Africa, where a revolution called the Arab Spring is currently taking place, including ODA yen loans amounting to approximately US$1 billion. With regard to the United Nations peacekeeping operations (PKO) in South Sudan, we will promptly reach a conclusion concerning the dispatch of the Japan Ground Self-Defense Force (JGSDF) engineering unit in light of the results of the survey conducted by an onsite survey team.

State-level relationships are constructed upon an accumulation of personal relationships. I have gotten off to a great start by forming personal relationships with various national leaders, including meeting with United States President Barack Obama and other leaders from major nations at the venue of the United Nations General Assembly, and earnest talks with President Lee Myung-bak based on our convictions as politicians during my recent visit to the Republic of Korea (ROK).

Autumn will be a season for diplomacy. At the approaching G20, Japan will pledge its contributions to containing the global economic crisis that has grown out of Europe. At the APEC Summit Meeting, which is to be held in the United States, we will take further steps toward realizing the principles outlined in the Yokohama Vision, which provides a future course of the Asia-Pacific region, and utilize those achievements to enhance ties between the United States and Japan. We will also participate in meetings with ASEAN member countries where we will discuss ways to strengthen relations so as to work in concert on developing an affluent and stable future for Asia.

We will be promoting high-level economic partnerships with a wider range of countries, and this will be carried out in a strategic and multifaceted manner. At the recent Japan-ROK summit meeting, agreement was reached on accelerating working-level talks on an economic partnership agreement (EPA). Furthermore, moving forward, we will also aim to further promote Japan-Australia negotiations, as well as seek the early start of negotiations between Japan and the European Union (EU), and among Japan, China, and the ROK. At the same time, Japan will continue to engage in serious discussion on the participation in negotiations for the Trans-Pacific Partnership (TPP) agreement and will reach a conclusion at the earliest stage possible.

With regard to the issue of the relocation of Futenma Air Station, the basic stance of my Cabinet is that we will work to reduce the burden on Okinawa while based ourselves on the agreements made between Japan and the United States. We will do everything in our power to ensure the relocation of Futenma Air Station, while carefully listening to the views of the people of Okinawa, and also providing them with honest explanations and requesting their understanding.

The other day I talked with family members of abductees. That experience renewed my belief that the Government's most important role is to protect the lives and property of its citizens, as well as its sovereignty. I pledge that the Government will make a concerted effort to ensuring that all abductees return to Japan as quickly as possible. Furthermore, we will be exerting every effort to respond to the issue of crisis management, and remain continuously vigilant in addressing relevant issues, including countermeasures to terrorism and cyber attacks, in addition to natural disasters.

7. Conclusion: Seeking to Embrace Solid Hope

The passage of the third supplementary budget and relevant legislation will be a significant step for the new Japan towards tomorrow that seeks to rise from the great earthquake disaster.

"Everytime I say happy, my words become flowers, and so I am going to spread the seeds that I would like to see and hear,

After all, small, small seeds will become big, big flowers if I grow them together with you."

This is a line from a poem written following the disaster by a young Sendai poet, Ms. Katsura Ohgoe, and which was sung in a choral piece in the disaster-affected regions. Ms. Ohgoe is disabled and unable to use her voice, living day by day in her bed. She says that she first learned to communicate using the written words at the age of 13. In less than 10 years she has now become a poet whose words bring comfort and support to the disaster-affected regions.

I believe that anyone, under any kind of circumstances, can therefore have hope and in turn give hope to others.

Let us sow the "seeds of hope." Then let us nurture the small "buds of hope" that will be born in the affected regions and grow them big and strong. Eventually they will become "flowers of hope," that will give courage to all the people of Japan.

Esteemed members of the ruling coalition, including the People's New Party, and all honorable members of the Diet, I say to you: on behalf of the people of Japan, should we not now show our preparedness and caliber as politicians, by working together at the vanguard of joint actions to "create hope"?

I am resolved to expend every effort I have in me to implement, with sincere spirit and just intent, concrete policies that will overcome the national crisis we face, strenuously cultivating the land every day and toiling in sweat and dirt to ensure that the "flowers of hope" can indeed bloom for the people of Japan.

I close my policy speech by reiterating my request for the understanding and cooperation of the members of the Diet and my fellow citizens.