The new government will continue working closely with the Bank of Japan, at least more frequently than the previous administration did, in order to fend off deflation, newly appointed Finance Minister Taro Aso said Friday.
Speaking during a joint interview with The Japan Times and other media outlets, the former prime minister, who also doubles as financial services minister in the new Liberal Democratic Party administration, was quick to snipe at the previous government, led by the Democratic Party of Japan.
“How many times did the finance minister meet with the BOJ governor under the previous administration? No one knows, because it was so rare,” Aso said, suggesting that lack of mutual communication between the two was a reason deflation wasn’t curbed during the previous 3½ years.
The government and the BOJ “are like a married couple,” Aso said. “They need to meet often or else a kind of distrust will begin to grow.”
Earlier in the day, the finance minister held his first meeting with BOJ Gov. Masaaki Shirakawa to exchange views on economic policies. “The media may write about the independence of the BOJ from the government, but we will keep in touch very closely,” he said.
Aso, 72, had been laying low since stepping down as prime minister in September 2009 following the LDP’s trouncing at the hands of the DPJ in the general election a month earlier. But the dapper cigar-lover was appointed finance minister by new LDP Prime Minister Shinzo Abe, with whom he shares similar views on the economy, including the need for aggressive monetary easing driven by massive fiscal spending.
Less than 48 hours since taking his post, Aso has already said that the government will not stay within the DPJ-set ¥44 trillion cap on new bond issuance, that the consumption tax will not be raised if the economy doesn’t recover and that there will be an “extensive” supplementary budget within weeks aimed at stimulating the economy.
Regarding Japan’s bloated debt, Aso said Friday that the new administration will “keep in mind” the need to maintain fiscal balance. But the key question now is how to boost the economy quickly and bring Japan out of its economic funk.
“It’s questionable how spending on public works is considered evil, while passing out child allowances is good,” Aso said, again slamming the ousted DPJ’s policies. “It is pointless if the parents decide to pocket the allowances,” he said, adding there is a pressing need for construction work across Japan.
“The tragic accident at the Sasago tunnel is an example,” Aso said, effectively alleging that budget cuts by the DPJ directly limited maintenance work and were partially to blame for the never-closely inspected tunnel’s ceiling collapse that killed nine people earlier this month. He made no mention of the now-defunct, vastly corrupt quasi-governmental national highway corporation the LDP created and ultimately broke up, during its previous long-unbroken rule, into separate highway operations left to manage the various sections of the nation’s road network, including the tunnel, which opened in the 1970s.
The LDP government is pushing forward a decade-long plan to spend ¥200 trillion on public works in the name of “strengthening” the land, Abe said, adding, “What we need is a budget that will encourage private investment, hiring of people and spending by consumers.”
Asked how much the government will go beyond the ¥71 trillion cap on key policy spending in the fiscal annual budget, the finance minister declined to give a specific amount.
“The ministries will forgo the yearend holidays and come up with their budget requests,” Aso said. The government will then do “what is necessary,” but does not yet have a particular size of the budget yet, he said.