TOKYO (MNI) – Japanese Prime Minister Naoto Kan on Tuesday repeated
his call for slashing Japan’s large public debt and improving its social
security, both of which he sees as crucial in moving the economy out of
two decades of stagnation toward a more vigorous growth path.

Since the bursting of the asset bubble of the late 1980s, the
Japanese have been mired in a depressed state socially and economically,
he hold an inaugural news conference after he was officially sworn in
earlier today.

“I wish to shake Japan out of this state and turn it into a more
cheerful country, a country from which more young people can spread
their wings around the world,” he declared.

“For this, we must rebuild our economy, fiscal conditions and
social security and unify them with a strong economy, fiscal conditions
and social security.”

Kan said Japan has missed out on some big opportunities to offer
its goods and services for ecologically friendly projects in global
markets while Japanese firms are laggards in dynamic changes in Asia,
particularly China.

“The lack of political leadership in the past 20 years has created
this situation,” he said.

“We plan to allocate fiscal resources based on our new growth
strategy that takes advantage of green and life-science innovations and
Asian growth for Japan’s growth.”

He blamed past Liberal Democratic Party administrations for
continuing to borrow heavily from the public and failing to raise taxes
in the past two decades in order to invest in many inefficient public
works projects, which the politicians believed would reflate the
economy.

This, combined with rising social security costs caused by the
rapid aging of Japanese society, is the core of the current fiscal
imbalance, he explained.

“A weak fiscal position means we cannot undertake any dynamic
activities. Rebuilding the fiscal position is an essential condition for
developing the economy,” said Kan.

“The mainstream idea in the past was that improved social security
would hinder economic growth because of the higher cost. But as seen in
Sweden and many other countries, an improvement in social security has
created jobs and offered a more secure environment for young people to
study or do research,” he said.

“If we take the view that many areas of social security are also
areas that will boost the economy, we can open up the way for boosting
the economy, fiscal conditions and social security at the same time.”

Politicians should focus on reducing war, poverty and other
misfortunes to a minimum, said the new prime minister.

Asked if the government plans to extend the current 150-day
ordinary parliamentary session, Kan replied that he still has to consult
his aides and coalition partner. Some say he should extend the session
to seek Diet approval of remaining legislative proposals while others
say he should postpone the debate of key postal reform bills until after
July’s upper house elections.

The Democratic Party of Japan, led by Kan, and its small ruling
coalition partner, the People’s New Party, have agreed to push for the
passage of bills that will reverse the drastic privatization of the
national post office’s postal and financial services started under the
LDP’s rule.

The DPJ scored a landslide win in House of Representative elections
last summer, taking power away from the LDP. The DPJ and its allies
already had a majority in the House of Councillors after an election
victory in 2007 but the ruling bloc has lost it since the departure this
month of the Social Democratic Party from the coalition over a row on
relocating the U.S. military base on Okinawa.

In response to questions, Kan also said he has no plans to dissolve
the lower house and call an election for the chamber at this point,
adding that the public must first judge the new government in the
upcoming upper house elections.

Kan has taken over from Yukio Hatoyama, who announced his
resignation on Wednesday after failing to deliver the key election
campaign promise to relocate a controversial U.S. air base outside of
Okinawa.

Kan, 63, was elected the 94th prime minister of Japan in parliament
on Friday and formed his cabinet earlier on Tuesday.

msato@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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