Deficit bond bill tops agenda for new Cabinet


With only two months left before the government’s cash runs out, enacting a bill to allow issuance of deficit-covering bonds is the top priority of the reshuffled Cabinet of Prime Minister Yoshihiko Noda.

To cope with the money shortage, the Noda administration decided last month to postpone spending around ¥5 trillion under its fiscal 2012 budget, the first such move since the end of World War II.

Still, the government’s funds are expected to run out at the end of November.

The deficit bond bill was approved by the Lower House during the Diet session that ended in early September but failed to clear the Upper House, which is controlled by the opposition camp. Opposition parties boycotted Upper House deliberations after a censure motion against Noda was adopted by the chamber in late August.

The government aims to have the bill enacted during an extraordinary session expected to convene later this month.

The Liberal Democratic Party appears ready to support the deficit bond bill if the government agrees to cut some of the fiscal 2012 spending.

“To enact the bill is our top priority, and I will make every effort to have it passed as soon as possible,” Koriki Jojima, now the finance minister in the reshuffled Cabinet launched Monday afternoon, told a news conference after its first meeting later in the day.

“We should take the LDP’s request for the budget cut seriously” to gain its support for the deficit bond bill, Jojima also said.

Noda, who is also head of the Democratic Party of Japan, will likely seek common ground on the issue at a meeting he plans to hold soon with new LDP leader Shinzo Abe and Natsuo Yamaguchi, head of New Komeito, sources said.

Another focus at the meeting will be whether Noda, Abe and Yamaguchi can reconfirm the plan to establish a so-called national council on social security reform based on an agreement in June between the three parties and whether Noda can obtain the opposition chiefs’ support for the launch of a study on measures to ease the impact of the upcoming consumption tax hikes on low-income earners, the sources said.

The tax rate, now 5 percent, is set to be raised to 8 percent in April 2014 and to 10 percent in October 2015 based on bills enacted in August as part of legislation related to comprehensive reforms of the tax and social security systems.

Meanwhile, Yukio Edano, who was retained as trade and industry minister, will continue working on specific measures under the new energy and environment strategy, which includes the goal of reducing Japan’s nuclear power reliance to zero in the 2030s.

The government also plans to draw up measures by the end of the year to reform electricity businesses.

Still, it is uncertain how far the government will proceed with the contentious energy issues amid a looming general election.

Another key challenge facing the new Cabinet is how to deal with issues related to the Trans-Pacific Partnership free-trade framework.

While Noda is open to Japan joining the ongoing multilateral negotiations on expanding the TPP, his government has been unable to make a decision on whether to pursue full-fledged membership.

Former Foreign Minister Seiji Maehara, who favors Japan’s participation in the TPP talks, is now the national policy minister and will be responsible for coordinating opinions on the TPP within the Cabinet.

Business leaders are worried about a delay in the government’s work on the matter. Noda is now expected to defer his decision until next year.