Policy Speech By Prime Minister Junichiro Koizumi to the 151st Session of the Diet

7 May 2001
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Aiming for Restoration in a New Century

Humbly accepting your support, I have taken office as Prime Minister of our nation. The pressure and tension of this office are greater than I could have imagined, but I am resolved to devote myself entirely to managing the affairs of state and to measuring up to the support and expectations with which the people of our nation and the distinguished members of the Diet have given me this noble task.

After the Second World War Japan achieved dynamic economic development, resulting in a tremendous increase in the standard of living enjoyed by our people. Indeed, today more than 127 million people enjoy a high standard of living in this small nation with scarce natural resources. We should be proud of what we have accomplished in such a short period of time.

Since the outset of the 1990s, however, the Japanese economy has been unable to break free from long-term stagnation as trust in the political leadership has been eroded and our society has become enveloped with disillusionment. It is now apparent that the structures that hitherto served us so well may not be appropriate for our society in the 21st century.

Given this context, the top priority that I must address is to rebuild our economy and reconstruct our society into ones full of pride and confidence. Moreover, Japan must fulfill a constructive role as a member of the global community. In the belief that "without structural reform there can be no rebirth for Japan," I am resolved to ceaselessly advance structural reforms, including economic reforms, fiscal reforms, administrative reforms, social reforms and political reforms. We have to bring in an era dedicated to reforms worthy of being called the "New Century Restoration." We must embrace difficulties ahead, overcome barriers of vested interests and free ourselves of past limitations as we create an economic social structure befitting the 21st century in the spirit of "No fear, no hesitation, and no constraint."

I formed my 'Ceaseless Reform Cabinet' in order to achieve the New Century Restoration based on strong mutual trust among the Liberal Democratic Party, New Komeito and the New Conservative Party. We will cooperate in implementing structural reforms, leaving no sacred areas exempt from these reforms. I further promise to strengthen various forms of dialogues with the people as we move forward with sweeping reforms. Through strengthened dialogues, my Cabinet will ensure transparency in policy deliberation processes in order to gain wide understanding among the people and share the perception of issues with the people, thereby achieving my goal of bringing back "politics of trust."

The series of unfortunate scandals have significantly eroded people's trust in the government. Each and every one of us involved in politics and administration must sincerely and solemnly hear the criticism from the people and as we earnestly strive to carry out our missions of public service. We must work to restore people's faith in politics.

Moreover, it is essential that we expand avenues for participation in politics by the people. Towards this end, an advisory council will be promptly established to draft concrete proposals on modalities for the direct election of the Prime Minister.

Aiming for Economic Revitalization

The top priority for our nation is to achieve an economic rebirth. The first task for the Koizumi Cabinet will be to implement promptly the Emergency Economic Package compiled under the administration of former Prime Minister Yoshiro Mori. These economic measures will steer our nation along the path from traditional demand-driven policies to active policies focusing on the disposal of non-performing loans and structural reforms of our capital markets.

Various discussions and proposals have been offered as the right prescription needed to achieve a rebirth of the Japanese economy. Crafted with a view to meeting the needs of this age of global competition and creating a self-sustaining economy, these proposals have met with the approval of many and are in line with my long-held position that "without structural reforms there can be no economic recovery."

The prescription has been written and awaits dispensing. In order to truly realize a rebirth of the Japanese economy, my duty is to implement decisively.

Economic and Fiscal Structural Reforms--Without Structural Reforms There Can Be No Economic Recovery

Since the outset of the 1990s the Japanese economy has been suffering from a complex illness resulting from the confluence of various factors. Comprehensive structural reforms are imperative in order to solve these problems. The Koizumi Cabinet will ceaselessly implement the following three key economic and fiscal structural reforms.

First of all, we will aim for final disposal of non-performing loans within the coming two to three years. That will be achieved by creating a framework for a final disposal of non-performing loans. The government will formulate guidelines along which banks and other concerned parties deliberate on how to restore corporations.

Furthermore, concrete measures will be drawn up to place a limit on shareholdings of banks and to lead the way toward the creation of the Bank Equity Purchasing Corporation (BEPC). These measures will be premised on ensuring harmony between stabilization of financial systems and market mechanisms.

Secondly, we must create a competitive economic system befitting the environment of the 21st century. Such structural reforms will enhance the great potential for development inherent in the Japanese economy. In order to usher in a competitive industrial society, we will promote the creation of new industries and employment opportunities. We will ensure the effective functioning of the Council for Comprehensive Regulatory Reform and carry out regulatory reforms spanning all of our economic and social structures. Furthermore, we will strengthen the structure of the Fair Trade Commission, which should serve as the guardian of the market, thereby establishing competition policies appropriate for the 21st century.

In order to activate the securities market, we must promptly implement wide-ranging systemic reforms, including tax measures that will stimulate more active market participation by individual investors.

In terms of promoting the information technology revolution (IT Revolution), you are all aware that we have set ourselves the ambitious goal of making our nation the most advanced IT state in the world within five years. In order to ensure we achieve this goal, I will steadily implement the "e-Japan Priority Policy Program." As a mid-term goal, I also intend to formulate the "IT 2002 Program."

Moreover, with the Council for Science and Technology Policy, which I chair, at the center of efforts, I intend for Japan to be a "nation built on the promotion of science and technology." In this context, I will promote strategic investments in research and development in science and technology areas that form the foundation of industrial competitiveness, thus ensuring a high-quality standard of living for our people. I will also strive to reform our research and development systems.

By revitalizing our cities and creating greater liquidity in real estate transactions, we will make our cities more attractive and enhance international competitiveness. With that in mind, I intend to establish promptly the "Urban Rejuvenation Headquarters," which I will chair myself.

Fiscal structural reforms are the third key area. During recent years the Government has taken demand-driven measures such as increasing public works spending and reducing taxes in order to respond to the ongoing economic stagnation. However, we have been forced to maintain these policies for too long a time, and this has left Japan with a tremendous fiscal deficit. The goal of our fiscal structural reforms will be to improve this situation and establish a simple and efficient government structure that will meet the needs of the 21st century.

I will implement these structural reforms through a two-phased approach. First, as an initial step toward fiscal soundness, new government bond issues will be targeted to less than 30 trillion yen in the FY2002 budget. At the same time, vigorous efforts will be made to review government expenditures. Subsequently we will seek a sustainable fiscal balance by comprehensively rebuilding our fiscal structures, through steps such as setting the goal of not relying on new borrowing for expenditures other than interest payments on past loans.

In the process of implementing such structural reforms, we will need to scrap and build inefficient sectors in order to achieve rejuvenation of certain sectors, and this process may result in some pains in our society. I intend to enhance policies to relieve anxieties about employment, such as measures to assist the unemployed to re-enter the workforce and to take financial measures to assist small- and medium- enterprises and to help companies to innovate their management practices.

The economy and society that we aim to achieve are ones in which each and every individual, as well as our corporations and local regions, can freely realize their great potentials, and even expand their potentials. It is in just such a nation that I envision our economy; a nation truly rich, proud and independent. The Council on Economic and Fiscal Policy (CEFP), which I chair, aims to draft basic guidelines on future economic and fiscal management and further economic and social structural reforms in June.

Administrative Structural Reforms--All That Can Be Accomplished by the Private Sector Should be Left in its Hands, and All That Can be Delegated to Local Governments Should Be Delegated to Them

The reorganization of the central government at the beginning of this year was merely the beginning of administrative reforms. I believe that we must start from scratch in ceaselessly reforming the very modalities under which we conduct administration. As I move forward with administrative structural reforms, I will conduct a thorough review of the rationality and necessity of all operations carried out by the national government under the principle that "all that can be accomplished by the private sector should be left in its hands, and all that can be delegated to local governments, should be delegated to them."

A thorough review of all special public institutions will be made without exception, with a view to greatly reducing government expenditures. Furthermore, sweeping reforms will be made of public service corporations. The three postal businesses will be reorganized as public corporations in the year 2003 as planned. Future modalities for those operations will be considered by an advisory council that will be promptly established to consider all options, including privatization, and will be presented as concrete proposals to the people.

Furthermore, I will actively promote decentralization, including the one on fiscal resources, and will strive to effect civil service reforms. With a view to bringing even greater transparency to government administration and enhancing the people's confidence in the government, I will review and improve the public accounting systems, including those for special accounts, and by ensuring greater disclosure of information and actively conducting policy evaluations.

It is also imperative that we reform our judicial system so that we can make a transition to a 'after-the-fact check and relief society' based firmly on clearly established rules and the principle of self-responsibility. This is another important issue that I will address. Bearing in mind the final opinion of the Judicial Reform Council, I will advance reform aiming to establish a system appropriate to the needs of a new era that is trusted by both the Japanese people and the international community.

I also view with due severity the fact that as a result of a deplorable incident, the government has lost the people's confidence in appropriately using "hosho-hi" (a kind of budget item). As such, we must refocus on the initial purpose of "hosho-hi", which is to support the smooth implementation of our nation's domestic and foreign policies, and conduct a thorough review as we strictly implement the FY2001 budget, including the possibility of reducing the amount.

Social Structural Reforms--Realizing a Society in Which People Can Live Worthwhile Lives with a Sense of Security

In order to realize "a society in which people can live worthwhile lives with a sense of security," it is vital that we conduct systemic reforms of our education, social welfare and environmental sectors and achieve a transformation in the way we view these areas.

Educational reforms will be implemented so that we can raise youngsters with pride and self-awareness as Japanese, and with skills necessary to rebuild our nation. I intend to promote a national debate on how we are to move ahead with a review of the Fundamental Law of Education.

Our social welfare system gives our people security and provides stability for their lives. This century our nation will face an unprecedented situation, with fewer children and an aging society. We will no longer be able to provide "abundant benefits while maintaining low burden levels". I am determined to base the three pillars of social welfare -- pensions, medical care and nursing -- on "a spirit of self-help and self-sufficiency," and to ensure balance in the ratio of benefits to burdens shared among generations so that we can continue to support one another by rebuilding our systems so that they will be sustainable and continue to provide our people with security long into the future. I intend to explain clearly the path that we are to follow to the people and to gain their understanding and cooperation as we move forward with reforms. Moreover, I intend to reach out widely to local community residents, volunteers, and non-profit organizations (NPOs) to create a society sustained through mutual assistance in taking care of the sick, elderly and children.

As I assembled my Cabinet I selected five women as ministers. This reflects my commitment to make our society truly gender equal. In order for men and woman to contribute to society together and to infuse our society with greater dynamism, it is essential that our people be able to remain fully employed as they raise their children. In order to actively assist them to do so and to establish clearly defined goals and timeframes for meeting them, my Cabinet will take measures aimed at ensuring that there are sufficient day care facilities for all children so that no one has to wait for a day care place, and creating facilities to provide care for children after the end of a school day in all areas where they are needed.

I want our children to live in a 21st century that is blessed with a beautiful and abundant environment and to live in a society co-existing with nature.

Clean water to drink. Clean air to breathe. Safe food to eat. Homes that give us serenity. Beautiful nature. These are some of the things that we desire in our lives. I will ensure that the efforts for coexistence with nature translate into a catalyst for new growth and lead to an economy and society of high quality. That is why I intend to actively promote the development and dissemination of science and technology, which empower us to overcome the limitations of our environment.

In tackling environmental issues, it is of foremost importance for everyone to start by doing what they can do. That is why, in principle, all government automobiles will be replaced with low-emission vehicles.

I will do my utmost to address the issue of global warming, with a view to making the Kyoto Protocol enter into force by the year 2002. In order to establish a recycling society, I will take steps to limit waste, promote recycling and prevent illegal dumping. Furthermore, in order to greatly reduce the amount of waste, the cabinet will advocate a Zero Waste Operation. For example, specific consideration will given to the new concept of turning urban areas unable to dispose of large volumes of their own waste into Zero Waste Cities.

In order to realize a recycling society and increase the self-sufficiency ratio in our nation's food supply, I will advance structural reforms of our agricultural, forestry and fishery industries and seek to unleash new possibilities for farming, mountainous and fishing villages.

Ensuring that Japan is a safe nation in which our people can live in security will provide a foundation for implementing structural reforms that must be undertaken. We must ensure that our society is free of barriers, so that anyone can enjoy a comfortable lifestyle. Effective measures will be taken to counter the increasingly high level of violent crimes and to strengthen immigration control structures in order to renew the faith of the Japanese people that they live in a society that enjoy the highest level of safety in the world. Moreover, disaster prevention measures will be taken, and when disasters do occur, I will exert efforts to assist the victims and to ensure a full recovery and restoration.

21st Century Diplomacy and National Security

In order for Japan to continue to enjoy prosperity in peace, it is essential that we steadfastly devote ourselves to international cooperation. Japan must never again isolate itself from the international community and must never again wage war. Indeed, the prosperity that Japan enjoys is based upon the Japan-US relationship that has functioned effectively. Based on the foundation of the Japan-US alliance, we must maintain and enhance Japan's friendly relations with its neighbors, including the People's Republic of China, the Republic of Korea and the Russian Federation. As one of the leading nations shouldering responsibilities of the international community, Japan will demonstrate its leadership in constructing an international system appropriate for the 21st century. In that context, Japan will take the initiative in seeking to reform the United Nations, strengthening the multilateral free trading system centered on the World Trade Organization (WTO), and in addressing global issues, including environmental ones.

In our bilateral relations with the United States, I will work to ensure that the Japan-US Security Arrangements function even more effectively. Furthermore, I will seek new ways to enhance bilateral dialogue on economic and trade issues and strengthen dialogue and cooperation on matters pertaining to political and national security issues. Moreover, while earnestly striving to promote growth and development in Okinawa, I intend to concentrate my fullest efforts on the steady implementation of the Final Report of the Special Action Committee on Okinawa (SACO), including the relocation and return of Futenma Air Station and to make efforts to alleviate the burden borne by the people of Okinawa Prefecture.

Our relations with the People's Republic of China are one of the most important bilateral relationships for Japan. I hope that China will fulfill an even more constructive role in the international community, through such opportunities as the Asia-Pacific Economic Cooperation (APEC) Leaders Meeting scheduled for this autumn in Shanghai. I intend to continue to deepen our cooperative relations with China.

Japan shares the values of democracy with its closest geographic neighbor, the Republic of Korea, and the importance of this relationship cannot be overstated. I intend to work hand-in-hand with the Republic of Korea to maintain and strengthen this relationship and to ensure the success of next year's joint hosting of the World Cup Soccer tournament and The Year of Japan-Republic of Korea National Exchange, also to be held in 2002.

Last year there were many noteworthy developments on the Korean Peninsula, including the North-South Summit. While maintaining close cooperation among Japan, the United States and the Republic of Korea, I intend to continue to persevere in the normalization talks between Japan and North Korea in a manner that contributes to the peace and stability of Northeast Asia. Moreover, I intend to devote my fullest efforts toward resolving, through dialogue, the humanitarian issues and security issues with North Korea.

As for Japan's relations with the Russian Federation, I intend to firmly carry forward the results that have been achieved up to the recent Japan-Russia Summit Meeting in Irkutsk. Based on the consistent position that we should conclude a peace treaty by resolving the issue of the attribution of the four islands, I intend to earnestly carry forward the negotiations, while simultaneously making progress on cooperation in economic fields and cooperation in the international arena, in order to advance our relations across a broad spectrum.

We must not allow ourselves to be complacent with peace and become oblivious to the possibility of disturbances. Indeed, it is the fundamental responsibility of politics to plan for all eventualities and be ready to respond to any situation. I believe that it is the duty of the political leadership to consider what kind of structure should be created in the event that the state or the people are exposed to crises and I intend to move forward with consideration on Emergency Legislation, bearing fully in mind the views expressed by the ruling party last year.


Through active and honest dialogues with the public, with the cooperation and support of the people, I intend to take steady steps needed to give rise to a new society and lead to the creation of a new future for our nation. During the next six months, I will hold town meetings to be attended by relevant cabinet members and others in all prefectures. I will also launch a "Koizumi Cabinet Mail Magazine." These, and other efforts, will foster momentum among the people to participate in policy formulation.

Let us remember that at the beginning of the Meiji era, the Nagaoka Region was in a state of severe poverty. As a gesture of assistance, an offering of 100 sacks of rice were sent to the region. If consumed immediately, this would have been enough to fill the hungry stomachs of the regional people for a few days. However, the wise leader of the Region chose to forgo the immediate satisfaction of feeding his people in favor of selling the food and investing the proceeds in the establishment of a school to educate the people, thereby ensuring a future harvest of thousands and even tens of thousands of sacks of rice. In fact, the school that was established went on to train many of the leaders who later contributed to Japan's nation-building. More than anything else is needed for us today is the spirit of persevering. With this spirit, we can move forward with reforms through the present difficulties to build a better tomorrow. Whether we can create a hopeful Japan in the new century depends on the determination and will of each and every one of us, the Japanese people to carry out the reforms that are needed.

I am resolved that my cabinet will ceaselessly advance structural reforms, while leaving no areas in Japan's social and economic structures exempt from reforms. I stand here before you today, disciplining myself, fully ready to devote my entire being to fulfilling my duty as Prime Minister of Japan.

I call upon each and every member of the Diet to rise to the challenges at hand and, responding to the winds of change in this era of reforms, to join me in undertaking the trustworthy political action.

Here I humbly ask for the support and cooperation of the people of Japan and the members of the Diet.

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