Japan's new prime minister Yoshihiko Noda reaffirmed his commitment to curbing public debt today and warned taxes will have to rise, while reaching out to the opposition for help in tackling the multitude of problems the country faces.
Mr Noda, who became the nation's sixth premier in five years early this month, did not offer any specific new policies in his first speech to parliament since taking office. But he reiterated the government and the central bank needed to do everything possible to tame the yen's strength, which is driving companies abroad.
The 54-year-old former finance minister takes over six months after the deadly March 11th earthquake and tsunami ravaged the country's northeast, leaving 20,000 dead or missing and triggering the world's worst nuclear accident in 25 years.
The government has yet to bring the crippled Fukushima nuclear plant under control, while Mr Noda needs opposition help in a divided parliament to secure funding for Japan's biggest rebuilding effort since the end of World War Two.
"Let me ask from the bottom of my heart for the participation of each party in policy debate on social security and tax reforms, so that we can form a consensus necessary for the bills' passage," Mr Noda said.
The government is expected to submit the main reconstruction funding bill, which is likely to exceed 10 trillion yen ($130 billion), to parliament next month.
Sprinkling his speech with references to "hope and pride," Mr Noda called on the country to look to the future.
"While overcoming the twin crises of the 'Great East Japan Earthquake' and the global economic crisis, we must invest in this country's future so people are filled with hope and each and every citizen can be proud and feel, 'I am glad I was born in this country'," Mr Noda said.
Mr Noda, who hails from the more conservative wing of his Democratic Party, also urged Japan not to turn inward as it grapples with domestic challenges, called for deeper ties with security ally Washington, and urged rival China to play a role as a "responsible member of international society."
Mr Noda took over the reins from deeply unpopular Naoto Kan with high support ratings of 60 per cent or more.
But his cabinet got off to rocky start as his trade minister was forced to quit after just eight days in office following reports he joked with reporters on the sensitive subject of radiation from the Fukushima plant after a trip to the area.
Opposition parties have said they will grill the new leader in parliament on his personnel choices.
Mr Noda stressed that curbing the public debt, twice the size of the $5 trillion economy, could not wait and economic growth was necessary to salvage public finances creaking under the strain of a growing army of retirees.
"Japan's credibility is on the verge of being severely damaged due to industry 'hollowing out' and deteriorating fiscal conditions," he said. "We cannot carry on forever with a kind of fiscal management where debt keeps piling up in a snowball effect."
Moody's Investors Service last month cut Japan's credit rating by one notch to Aa3, blaming a build-up of debt since the 2009 global recession and revolving-door political leadership that has hampered effective economic strategies.
Higher taxes, spending cuts and higher revenues generated through economic growth were all needed to achieve fiscal reforms, said Mr Noda, the ruling Democratic Party's main advocate of fiscal discipline.
He said the government planned to prepare a new growth strategy by the end of the year and a new energy policy by summer 2012 to better account for the impact of the March disaster and radiation crisis on the economy.
Mr Noda, who as finance minister led three yen-selling currency market interventions in the past 12 months, again voiced alarm over the yen's persistent strength.
"(The yen) is making exporters, who have been a driving force behind Japanese industry, and mid-sized and small companies, scream. If that doesn't change, chances are domestic industry will wither and jobs will be lost," Mr Noda said.
"In order to stop industry 'hollowing out' and keep domestic employment, we need to collaborate with the Bank of Japan ... and take all policy steps available."
The world's third-largest economy is likely to pull out of a brief post-quake recession this quarter, but the yen's strength and faltering global growth cloud the outlook for the months ahead.
Reuters