Japan's parties spar over economic plan ahead of polls

Japanese opposition leader Katsuya Okada attending a Parliament session for a no-confidence motion against Prime Minister Shinzo Abe's cabinet on May 31.
Japanese opposition leader Katsuya Okada attending a Parliament session for a no-confidence motion against Prime Minister Shinzo Abe's cabinet on May 31. PHOTO: REUTERS

Opposition argues that delayed sales tax hike signals failure of 'Abenomics'

TOKYO • Japan's ruling and opposition parties are sparring over the country's economic strategy ahead of next month's Upper House elections.

Opposition leader Katsuya Okada declared that "Abenomics has hit a wall" amid growing fears that the country's public debt burden will worsen following a delay to a scheduled sales tax increase.

Prime Minister Shinzo Abe announced on Wednesday that the sales tax increase will be delayed by 21/2 years. It is the second time he has delayed an increase in the sales tax to 10 per cent from 8 per cent, after a rise from 5 per cent in April 2014 tipped the economy back into recession.

Mr Abe said he made the call to reduce the burden on Japan's economy amid uncertainty over the global outlook, reported Kyodo News.

"The Democratic Party and Japanese Communist Party are in agreement that I should step down because Abenomics has failed, but there's no doubt that the policies are having positive effects," Mr Abe said in Iwaki, Fukushima prefecture. "In making a new promise to the people, we must seek their mandate. I want to properly explain the tax hike decision through the Upper House election."

The opposition camp has said the sales tax delay signalled the failure of the premier's 'Abenomics' economic stimulus policies. Mr Okada also called on the Cabinet to resign for failing to keep its pledge not to postpone the tax increase a second time.

In response, Mr Okada said in Okazaki, Aichi prefecture, that the "new promise" is nothing more than an attempt to put off tackling Japan's economic woes.

"Prosperity isn't reaching each and every citizen. Most of the public don't feel the economy is recovering," he said.

The opposition camp has said the sales tax delay signalled the failure of the premier's "Abenomics" economic stimulus policies.

Mr Okada also called on the Cabinet to resign for failing to keep its pledge not to postpone the tax increase a second time.

Mr Abe, whose premiership will end when his term as party president of the ruling Liberal Democratic Party (LDP) finishes in September 2018, had repeatedly said he would raise the tax as planned unless the economy faced a shock from a financial crisis or natural disaster.

On Thursday, the Japanese government approved an economic growth strategy that failed to show how it will plug a hole in finances caused by delaying the sales tax increase, reported Reuters.

The strategy will raise wages for low-income earners and improve access to daycare, but many of these policies were flagged earlier this year and economists have said they were not enough to narrow income disparity or address economic pressures building due to Japan's ageing and declining population.

Despite the criticism against Abenomics, the LDP yesterday pledged in its campaign platform to "push Abenomics to its upper limit" to revive the nation's stagnant economy, reported Kyodo News.

Mr Abe has also raised the bar for the ruling coalition in the polls. He said the LDP and its coalition partner Komeito should aim to win a majority of the 121 seats up for grabs in the July 10 elections. This would mean winning at least 61 of the contested seats, up from the 46 seats he had alluded to during a press conference earlier this year, according to Japanese media.

Under Japan's electoral system, half of the 242 seats in the Upper House are contested every three years. The ruling coalition holds 76 seats that will not be contested in the upcoming elections. This means that it would need to win only 46 in the upcoming elections to secure a majority in the Chamber.

Mr Abe apparently did not inform Komeito of his revised target.

"That was the first I'd heard of it," a Komeito executive told the Yomiuri Shimbun. "I wish he'd discussed that with us before setting a higher hurdle."

And in a show of unity, opposition parties have agreed to endorse one opposition candidate for each of the 32 contested single-member electoral districts.

A version of this article appeared in the print edition of The Straits Times on June 04, 2016, with the headline 'Japan's parties spar over economic plan ahead of polls'. Print Edition | Subscribe