(Reuters) – Japan’s ruling Democratic Party, having failed to win a majority in an upper house election, faces political deadlock unless it can find new allies to help enact bills to help curb debt and engineer sustainable growth.
Market players are focusing on a possible tie-up with the opposition Your Party, which advocates small government, market-friendly policies and more aggressive central bank steps to end deflation, although the party has so far rejected the idea of joining the government.
Your Party now has 11 seats in the upper house after Sunday’s election, enough to enable it to submit bills to parliament.
But even if it joins the government, the ruling coalition would still fall one seat short of a majority in the chamber. In addition, Your Party’s policies are diametrically opposed to those of the DPJ’s current ally, the People’s New Party.
Your Party leader Yoshimi Watanabe has said it would offer policy cooperation as long as the government or other parties can agree on and support the tiny party’s policy agenda.
Following are Your Party’s key policy proposals:
* Aim for more than 4 percent annualised economic growth in nominal terms to raise incomes by 50 percent in 10 years. To do so, the party will push various policies in three different stages.
1) In the short term, it will seek to overcome deflation by expanding money supply through more aggressive monetary policy. The law governing the Bank of Japan should be revised so that the government and the central bank share policy goals and set a target for price stability. The BOJ should choose specific tools and the timing of such steps independently.
2) In the medium term, Japan should seek to benefit from growing demand in Asia and aim to obtain a quarter of the estimated $8 trillion demand for infrastructure in the region over the next 10 years.
3) In the long term, it is important to seek a revival in Japan’s science and technology capability.
* Push forward deregulation and seek a smaller central government. Give regional communities more power over policy and reduce bureaucrats’ control over policy. Cut total personnel costs for central and regional government employees by more than 20 percent. Reduce the number of lower house lawmakers by 180 to 300 and upper house lawmakers by 142 to 100.
* Push forward the privatisation of the country’s postal system, including creating a system to better channel some 300 trillion yen ($3,384 billion) held by its banking and insurance services into financial markets and seeking profits by selling shares of Japan Post currently held by the government.
* Aim to bring down outstanding net debt — gross debt minus government assets — to less than 50 percent of Japan’s gross domestic product (GDP) in five years. Bring the primary budget balance into the black 10 years from now.
* No tax hikes over the next three years, during which Japan should focus on eliminating wasteful spending. After that, consider ways to fund social security costs including reviewing income, sales and inheritance taxes. Cut the corporate tax, which at around 40 percent is the highest among major economies, to 20-29 percent.
* Overhaul the way the state budget is compiled and seek a total of more than 30 trillion yen in additional revenues over three years by tapping into reserves in special budget accounts such as one that holds Japan’s foreign reserves, selling government assets and cutting bureaucrats’ salaries. ($1=88.66 Yen) (Reporting by Yoko Nishikawa; Editing by Michael Watson)
Obama to delay Australia trip
US president Barack Obama will delay his trip to Asia and Australia and there is a possibility he could cancel the trip altogether.
It all rests on the fate of Mr Obama’s healthcare reform.
The president was due to leave Washington late next week, travelling to Guam, Indonesia and Australia.
His spokesman Robert Gibbs says that is still the itinerary.
“We can’t lead in this region of the world without string bilateral relationships with Indonesia and Australia,” he said.
“They’re key in our ability to grow our country economy through increases export, and they’re key to tackling big challenges.”
The White House has portrayed this trip as an important moment for the president’s foreign policy agenda and just yesterday indicated there would be no delay.
But health care is more important for the president right now and the chances of a house vote by the White House deadline of March 18 appear unrealistic.
“We’ve been talking about this for more than a year,” Mr Gibbs said.
“I think the president wants – members of congress want – a vote as soon as possible that will lead to improved health care for millions of Americans.
“I will leave deadlines up to the speaker.”
Mr Obama met with Democrat leaders who agreed that the trip was important because of the large Muslim population in Indonesia and the important trading and defence ties with Australia.
Ron Brownstein, who writes for the Atlantic and National journal thinks there is still a possibility the trip could be cancelled.
“There’s no confusion in the White House about what the stakes are in this vote, not only in the historic sense of pursuing healthcare reform, which has defeated every president who has attempted it for 70 years, but also the broader implications for his presidency, for his ability to drive forward an agenda they understand,” he said.
“If they fail on this vote, their capacity to move forward on other issues is going to be severely diminished as well.”
Commentators were already suggesting his decision to take his family would require some skilful spin from the White House PR team.
Mr Gibbs says the changes to the itinerary meant the president’s daughters would miss school, so the decision was made to leave them at home.
Walter Lohman from the conservative think-tank The Heritage Foundation says there is nothing wrong with planning a trip where there is no concrete agreements to be signed or issues that must be resolved immediately.
“He is going to Bali,” he said. “It’s not exactly hardship duty, so he’ll have to limit the number of shots he takes from the beach.
“I think it’s fine for it to be largely symbolic. He’s got to start somewhere and that’s where he needs to start.
“I think putting too much pressure, especially on the Indonesia part of this, to come back with deliverables would be a mistake.”
The foundation’s Ted Bromund says the president needs to work on developing the kind of closeness George W Bush shared with some leaders.
“In addition to broader national and White House perspectives, if this trip leads to the creation of stronger personal relationships – which are a tremendous assistance in diplomacy – between the US and Australia and US and Indonesia, I think that would be all for the good,” he said.
The White House is yet to say whether the delay will affect the timing of his speech to the Australian Parliament, which is scheduled for Tuesday, March 23.
With the trip details still up in the air, Prime Minister Kevin Rudd will just have to keep his diary flexible.