DPJ to exit ruling bloc welfare reform talks

Coalition snubs calls to agree on pension base before tax hike

Kyodo, JIJI

The Democratic Party of Japan will exit talks with the ruling bloc on social security reforms to protest the unlikelihood that any of its goals will be achieved, lawmakers said Monday.

But the DPJ, the main opposition party, will still participate in trilateral talks on tax reform with the Liberal Democratic Party-New Komeito ruling bloc.

However, since the DPJ has long insisted that reform of the social security system ought to precede the consumption tax hike, the party’s exit from the talks could affect overall discussions on raising the levy.

In June 2012 when the DPJ was in power, it got the LDP and New Komeito to agree to discuss welfare reforms and to increase the sales tax next April to 8 percent to finance the system.

They planned to streamline the social security system, which has come under growing pressure from the aging population, and the DPJ specifically pressed for introducing a guaranteed minimum monthly pension and ending the public medical insurance system for people aged over 75.

On Monday, DPJ policy chief Mitsuru Sakurai held talks with Akihisa Nagatsuma, a former welfare minister, and other party members involved in the working-level talks. They agreed the party should exit the discussions.

When the parties agreed in June 2012 to amend the tax hike bill, they decided to continue discussing DPJ proposals on welfare reform at the National Council on Social Security System Reform and the three-party talks.

The deadline to conclude the talks was set for Aug. 21, a year after the Upper House passed the social security and tax reform bills of then-DPJ Prime Minister Yoshihiko Noda’s team. Under them, the sales tax would be hiked to 8 percent next April and to 10 percent in October 2015.

The three-party talks have stalled, however, because the ruling bloc, which came to power in December under Prime Minister Shinzo Abe, wants the current social security system maintained, sources said. The DPJ has been demanding drastic reforms.

Chief Cabinet Secretary Yoshihide Suga criticized the DPJ Monday. “How can they break away from the talks just because their policy, such as introducing a guaranteed minimum monthly pension, is unlikely to be realized?” he said.

The coalition inherited the DPJ’s framework after it took power in December and plans to proceed with the two-step tax hike to finance the surging social security costs.