Bumpy road ahead for Mr. Noda

Prime Minister Yoshihiko Noda, at a new year news conference Jan. 4, expressed his determination to push a two-stage raise of the consumption tax as well as to reform the social welfare system, and called for the opposition forces to join consultations with his Democratic Party of Japan over the issue. He pointed out that no administration can put off tackling this issue — a package of the consumption tax raise and social welfare system reform — which he called a “just cause.”

But the opposition forces (except two minor parties) said that they will not take part in the consultations. They will increase their pressure on Mr. Noda to dissolve the Lower House and call a snap election since the current term of Lower House members expires in slightly more than 1½ years and since they think that the tax raise plan will work to the DPJ’s disadvantage in the snap election.

It would be a miscalculation if the prime minister thinks that he will get people’s support if he repeatedly insists that raising the consumption tax to reform the social welfare system is a moral obligation for future generations.

First, proposals for social welfare system reform look superficial. He also does not seem to realize that people are suspicious of him and the DPJ because they have broken important promises in the DPJ’s manifesto for the 2009 Lower House election, which brought the party to power, without giving sufficient explanations, even though the manifesto is not perfect in terms of feasibility. Among such promises are stopping the construction of the Yanba dam in Gunma Prefecture, which the DPJ thought was a symbol of wasteful large public works projects, and the universal child allowance irrespective of the income levels of recipient families.

People will also think that Mr. Noda has not done sufficient ground work to raise the consumption tax — bringing to light and destroying the self-perpetuating system within bureaucracy that wastefully uses public money, including some independent administrative agencies and their cozy relationships with organizations where retired bureaucrats have landed jobs.

On the other hand, the opposition forces need to realize that they will not be able to receive support from people just by nitpicking at government’s actions and policies.

The Budget Committee of the Upper House is the main battlefield for the ruling and opposition parties since the opposition controls the Diet chamber. But in most cases, discussions there are far from constructive. In the last extraordinary Diet session, which passed the ¥12 trillion, third supplementary budget for fiscal 2011 to raise funds for reconstruction from the March 11 triple disaster, only 34 percent of bills submitted to the Diet were enacted. This shows that Japan’s politics are not fully functioning.

Mr. Noda mentioned reconstruction from the March 11 triple disaster, compensation for sufferers from the Fukushima nuclear crisis and decontamination of areas contaminated with radioactive substances from the crippled nuclear power plant as important issues he will seriously tackle, in addition to the consumption tax raise and social welfare system reform. But he will face obstacles both inside and outside his party.

On Dec. 29, the DPJ adopted a plan to raise the consumption tax to 8 percent from the current 5 percent in April 2014 and eventually to 10 percent in October 2015. But the previous day, nine DPJ Lower House members and one DPJ Upper House member had left the party, expressing their opposition to the tax raise plan. Former DPJ leader Ichiro Ozawa has expressed his criticism of the tax raise plan.

Even if Mr. Noda’s determination to push the tax raise plan is strong, the fact that the Upper House is controlled by the opposition forces remains. Unless things change drastically, a bill to raise the consumption tax is likely to be killed by the Diet chamber. The possibility cannot be ruled out that as the prime minister tries harder to have a consumption tax raise bill enacted, more DPJ lawmakers may rebel against him or leave the party.

Mr. Noda said that as the preconditions for raising the consumption tax, he will reduce the number of Diet members and the wages for national public servants. But these measures fail to touch on the core problem of Japan’s bureaucracy — a mechanism embedded in bureaucracy to perpetuate wasteful use of money and fatten bureaucracy’s vested interests.

The Liberal Democratic Party refuses to take part in joint consultations with the DPJ on the consumption tax raise plan. But the LDP itself called for raising the consumption tax to 10 percent in the 2010 Upper House election.

The DPJ and the LDP must pay attention to the possibility that just raising the consumption tax may torpedo economic recovery as well as help perpetuate vested interests within bureaucracy. They also should consider ways to strengthen the social welfare system by means other than the consumption tax raise, such as raising social insurance premiums and changing the income tax system.

By overcoming partisan interests, both the ruling and opposition forces must produce results that will strengthen the foundation for people’s lives. Otherwise people may opt to support populist forces outside the established parties. This will cause serious confusion in Japan’s politics since they may not be true to democratic principles.