Japan PM Vows to Create Jobs, Fair Market Rules

Prime Minister Taro Aso vowed on Wednesday to rescue Japan's economy from recession and create 1.6 million new jobs, while warning about the risks of a bare-knuckle capitalism that he said had contributed to the global crisis.

Koji Sasahara / AP

"The crisis can also be an opportunity," Aso said in a policy speech to parliament. "Changes come with pain, but we cannot fear that. It is the role of politics to show the light at the end of the tunnel."

Aso's speech was a sharp contrast to his first address as premier last September, when he came out swinging at the opposition and their policies as a prelude to a snap election he had been expected to call last year.

With a divided parliament where opposition parties control the upper house and can delay bills, implementing policies is proving tough.

Aso's approval ratings have also fallen below 20 percent after a spate of policy flip-flops and gaffes. Surveys suggest the main opposition Democratic Party may well win a general election expected by September, making the premier wary of an early poll that could oust his long-ruling conservative party.

In the latest sign of the stalemate, Aso's speech was delayed by bickering with opposition parties over a 4.79 trillion yen ($54 billion) extra budget.

Aso reiterated that Japan would try to be the first country in the world to pull out of recession and stressed the need to quickly enact budget bills to finance measures including fresh spending and tax cuts worth 12 trillion yen ($135 billion).

He pledged to create 1.6 million new jobs over the next three years through a new 400 billion yen fund and other incentives to boost employment in areas such as nursing care.

But while the extra budget for the current fiscal year was enacted on Tuesday, bills to implement spending are still stuck in the opposition-controlled upper house. Debate on a record 88.5 trillion yen budget for 2009/10 is expected to start next week.
     
Market Free-For-All

In a sign of a shift from the pro-market, small government favored by popular former Prime Minister Junichiro Koizumi during his 2001-2006 term, Aso said leaving markets to themselves had contributed to current global economic woes, and called for fair and transparent rules to ensure economic development.

"As governments got too big, societies lost vitality. So many industrialized nations sought small governments, heightening a sense of vitality by allowing individuals and corporations to act freely," Aso said.

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"But entrusting everything to markets won't make things better," he added, citing the subprime loan problem and the global economic downturn that followed.

On the controversial issue of when to raise Japan's consumption tax from its current 5 percent to help finance the rising welfare costs in a fast-aging society, Aso said the government would prepare legal steps by the fiscal year starting in April 2011.

"The government will decide when to implement such tax reforms by closely monitoring the economy. But I will do my utmost to make sure the economy will recover toward fiscal 2011."

Some in Aso's own Liberal Democratic Party (LDP) had balked at the premier's proposal to raise the tax from 2011 if the economy recovers. But the two sides reached a compromise last week, avoiding a rebellion that would have further damaged Aso's wavering grip over his party.

Aso, whose two predecessors quit abruptly after failing to break the political deadlock, urged opposition parties not to block or delay policies as the economy rapidly worsens.

The opposition Democrats and their allies control the upper house and can delay bills. "What the Japanese people want is not a simple confrontation. Rather, they want politics that can reach conclusions quickly," Aso said. "We cannot afford to delay conclusions for no purpose."

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