Comparison of Party Platforms (2): Economic Measures, Growth Strategy

This time, let us summarize the main parties’ policy on economic measures and growth strategy based on the parties’ official platforms.

Liberal Democratic Party

https://special.jimin.jp/political_promise/bank/index.html

Komeito

http://www.komei.or.jp/campaign/shuin2014/manifesto/manifesto2014.pdf

Democratic Party of Japan

http://www.dpj.or.jp/global/downloads/manifesto2014.pdf

Japan Restoration Party

https://ishinnotoh.jp/election/shugiin/201412/pdf/manifest.pdf

Party for Future Generations

http://jisedai.jp/news/20141122.html

Japan Communist Party

http://www.jcp.or.jp/web_policy/html/2014-sousenkyo.html

1.         Economic measures

LDP	Measures considering the inflating fuel prices and reducing rice prices l  Specific measures to be taken promptly (support to investment in new energy, appropriate cost-transference of uprising cost, etc.) l  Emergent measures to be taken promptly given the uprising fuel cost (support to highly fuel-reliant industries such as agriculture and transport, expansion of income insurance as safety net, etc.) l  Continuance of reduced tax on housing loans, decreasing interest rates of loans of Housing Support Agency, creation of residential eco-points, etc.
Komeito	Emergent measures to stimulate recovery of individual consumption and investment in eye of positive economic cycle l  Measures to deliver fruits of economic growth to family, SME and local economy and to connect corporate profits to employment and wages l  Support to low and mid income brochures such as expansion of simple subsidy l  Support measures to acquiring houses such as reducing housing loans l  Reconsideration of the green tax on vehicles l  Support to spontaneous efforts by the local governments in cold and depopulating areas such as provision of gasoline and kerosene to hospitals and social welfare facilities l  Support to highly fuel-dependent industries such as agriculture and transport and small-sized corporations (safety net corresponding to uprising fuel cost, continuance of discounts of highway fees, introduction and expansion of surcharge, etc.) l  Further measures toward energy conservation and renewable energy l  Support to finance of SMEs (safety net loans and insurance, flexible implementation of loans in case of disaster, etc.)
DPJ	Countermeasures to increasing fuel cost and weakening yen (subsidy targeted at SMEs, agriculture, etc.)
JRP	Economic measures overcoming the distributive public works projects l  Expansion of reduced tax on economical housing l  Measures on weakening yen (reducing the gasoline tax, etc.) l  Provision of education voucher to low income brochures l  Creation of exemption system of gift tax subject to marriage and child-rearing money l  Welfare: temporary subsidy to corporations which increased employment l  Promotion of the smart community projects such as local assumption of natural energy and co-generation l  Life support to the needy
Future	---
Communist	Prompt measures on the rice price

2.         Growth Strategy

LDP	Further expansion of the positive economic cycle to every community by swift implementation of the Japan Revitalization Strategy l  Corporate tax reform: reducing the corporate tax rate to 20s in several years l  Creation of environment toward private-led economy: drilling the bedrock regulations in two years and expansion of the National Strategic Special Zones l  Legal support to real estate industry, stimulation of investment, promotion of residential reform and used-housing industry l  Enhancement of corporate governance l  Construction of no.1 monetary market in Asia l  Necessary measures to be considered and taken on growth money and safety net money l  Comprehensive measures to stimulate industrial metabolism and acceleration of ventures l  R&D enhancement, human resource, matching of industry-university-government, etc. l  Tourism, Cool Japan strategy, IR l  Disaster-resilience l  Formation of high-speed railway networks including shinkansen and linear car, container ports, enhancement of the Haneda and Narita airports, etc. l  Local revitalization in which local governments play the main role (decentralization reform, correction of financial gaps, compact city, etc.) l  Local revitalization through regulatory reform, creation of local employment and industry l  Revitalization of agriculture emphasizing local originalities and resources l  Comprehensive support to management of construction, transport and shipbuilding industries which carry out the local economy l  Agriculture to be transformed to growth industry, doubling income of farmers and villages through deceasing production cost and expanding size, utilization of robots and computers, branding, etc.
Komeito	Firm implementation of the growth strategy l  Raising the energy and environment (renewable energy, low CO2 society, etc.) l  Raising the health care and nursery (innovative technology, ICT, development of robot nursery devices, etc.) l  Aggressive agriculture (specific export strategy, branding through 6th industry, farmland concentration, etc.) l  Industrial competitiveness of dairy farming, fishery and forestry l  Action plan toward promotion of robot industry l  Vital, warm community to be maintained through local revitalization (long-term vision on local revitalization, local employment, transference of the central government function, compact city, etc.) l  Support to SMEs as carrier of energy/environment and heath care/nursery l  Support to succession of SMEs (matching of companies without successor and business operators, reducing burden of gift tax and inheritance tax, etc.)
DPJ	Policy resources to be concentrated at green, life, agriculture and SMEs. l  Disposable income to be increased through investment to people which changes anxiety to hope such as child-rearing, employment and retirement life l  Corporate tax to be reduced after securing alternative tax resources l  Creation of comprehensive subsidy to local governments, decentralization reform bill to be proposed to accelerate transference of function and budget of the central government, simplification of procedures l  Promotion of innovation of regenerative medicine, bio, ICT. Marine and space development l  Support to business startup, SME support to be integrated under a newly nominated minister l  Local revitalization and employment to be realized through renewable energy and SME support. Basic Act on promotion of decentralized energy to be proposed. l  Enhancement of the life industry l  Individual compensation to farmers to be legislated, number and income of farmers to be increased through promotion of agriculture l  Promotion of domestic woods, stabilization of fishery management l  Formation of compact city, promotion of reform business of used-residents,
JRP	Thorough competition policy to become “earning nation” l  Thorough implementation of competition policy in all the industries l  Medical care and social welfare to be transformed to growth strategy (standardization of medic through utilization of big data, lifting ban of mixed diagnosis, corporate entry, etc.) l  Agriculture to be shifted to growth industry, JA reform, farmland act to be revised (abolishment of rice production adjustment and promotion of rice export, privatization and division of JA, stimulation of entry by allowing corporate ownership of farmlands, etc.) l  Necessary legislative measures to be taken to open the governmentally-founded infrastructure business l  Opening of the communication industry (complete privatization of NTT, capital division between infrastructure and services, revision of the radio act, etc.) l  Tourism and culture to be new money-making icons (Singapore-type integrated resort to be realized, selection and concentration of local airports, privatization of airport management, etc.)
Future	Regulatory reform and defeating the vested interests by doshu-divided efforts l  Stimulation of entry into the agriculture, health/nursery care and energy by overcoming the bedrock regulations l  Shift into least-necessary regulation/rules to sustain free and fair market while securing the national life and health l  Construction of a capital/labor market which distributes production resources freely and fairly, creation of safety net which enables re-challenges l  Thorough competition policy “from subsidy to vouchers” l  Expansion of free trade zones l  Capital regulation including a targeting-zone system on main currencies l  Agriculture to be transformed to attractive, internationally-competitive industry
Communist	Stopping runaway of the Abenomics: shifting to life first will recover the economics l  Tax reform which demands certain burden on major companies l  Economic reform that utilizes the internal reserves of major companies to increase the national income l  Shifting to support measures in eye of all SMEs as the main pillar of the economy l  Agriculture to be restored by retreating from the TPP negotiations (drastic enhancement of price and income compensation by recognizing the agriculture as the primary industry)

(charts drafted by PPPC)

Comparison of Party Platforms (1): Policy on Consumption Tax and Finance

The Lower House general election was officially announced on December 2 and the political parties entered the ballot race. The ruling and opposition parties will struggle over 475 seats (295 small districts, 180 proportional representation in 11 blocs) for 12 days until December 14.

The main policy issues for the election include the continuance of the Abenomics, national security legislation including exercising the right to collective self-defense, resuming operation of the nuclear power plants, etc.

This week, let us summarize the parties’ policy on the consumption tax and financial reconstruction which Prime Minister Abe recognizes as the top-priority issue in the campaign.

Liberal Democratic Party

https://special.jimin.jp/political_promise/bank/index.html

Komeito

http://www.komei.or.jp/campaign/shuin2014/manifesto/manifesto2014.pdf

Democratic Party of Japan

http://www.dpj.or.jp/global/downloads/manifesto2014.pdf

Japan Restoration Party

https://ishinnotoh.jp/election/shugiin/201412/pdf/manifest.pdf

Party for Future Generations

http://jisedai.jp/news/20141122.html

Japan Communist Party

http://www.jcp.or.jp/web_policy/html/2014-sousenkyo.html

1.         Consumption Tax

LDP	l  To be hiked to 10% in April 2017 l  Reduced tax rate to be introduced at the time of tax-hike after considerations on the subject item, finance and revenue and acquiring consents of relevant actors and the public l  All the revenue from the consumption tax to be spent for social security
Komeito	l  Reduced tax rate to be introduced at the time of tax-hike to 10% in April 2017 l  Subject item, finance and revenue of reduced tax rate to be considered
DPJ	l  Consumption tax-hike to 10% to be extended (reasons include the worsened economy due to the Abenonomics, non-execution of social security stabilization and Diet-members cutback) l  Consideration on tax-exemption combined with subsidy as measures for low-income brochures l  Revenue from consumption tax to be limited to social security
JRP	l  Consumption tax-hike to 10% to be suspended l  Opposition to deletion of the “economy provision” that leaves room for extension of the tax-hike l  Consumption tax to be shifted to local tax. Setting of the rate to be delegated to the local governments as primary tax revenue l  Tax-exemption combined with subsidy to be realized on assumption of the “my number” system (because of the low cost-benefit performance of reduced tax rate and all-out subsidy)
Future	l  Consumption tax-hike to 10% to be extended l  Securing fairness of the consumption tax by invoice system l  Following conditions to be met as premise for tax-hike ①       More transparency of finance through financial and accounting reforms ②       Social security reform such as rationalization ③       Economic and social reform to realize sustainable economic growth l  Consumption tax to be shifted to local tax
Communist	Consumption tax-hike to 10% to be suspended, ways not to depend on the consumption tax to be groped

2.         Financial Reconstruction

LDP	l  Simultaneous realization of economic growth and financial reconstruction l  Primary balance to be shifted to surplus by 2020, and financial deficit to GDP will be accordingly decreased steadily l  Specific plans to be decided by the next summer l  Administrative and financial reform will be continued
Komeito	l  Primary balance to be shifted to surplus by 2020 l  “mid-term plan” will be drafted for realization of the goal
DPJ	l  Act on promotion of the financial healthiness to be submitted, primary balance to be shifted to surplus by 2020 l  Promotion of “appropriation reform”, “growth strategy” and “revenue reform” l  Relooking on the distributive public works, and steadily implementing the infrastructure works for reconstruction or which are truly needed
JRP	l  Act on Financial Responsibility to be submitted l  Schedule toward the “primary balance zero” premised on “appropriation reform”, “growth strategy” and “revenue reform” to be drafted l  Revenue to be created through “self-cutting reforms” and “administrative reforms” 30% cut on the Diet expenses, Diet seats, cost cuts on the central government personnel fees, downsizing of the independent administrative agencies and public-private funds, disposition of government assets, integration of tax-collection agencies into Revenue Agency, etc.
Future	l  Act on Financial Responsibility toward realization of public accounting reforms l  Mid- and long-term financial plans to be drafted toward strategic financial management l  Large cutback on the transferred appropriateness which are causing wastes and distributive budgets and relooking on the tax
Communist	l  Tax reform penetrating the principle of capability by revising the tax-exemption to the wealthy brochures and major companies l  Appropriation on public works projects or military expenses to be reduced l  Tax-increase to be sought through economic reforms that increases the national income by utilizing the financial reserves of the major companies

(charts drafted by PPPC)

Unreasonable Abuse by Critique

(TAKAHASHI Yoichi, PPPC Chairman)

With regard to my article in Gendai Business on November 24 (http://gendai.ismedia.jp/articles/-/41199), Mr. Nobuo Ikeda slandered me by saying that the graphs are groundless (http://ikedanobuo.livedoor.biz/archives/51920669.html).

While the comments are already deleted at the present, so far there is no apology to me. What an impoliteness.

Let’s confirm the numbers which are simply calculated from the official statistics provided by the Cabinet Office (http://www.esri.cao.go.jp/jp/sna/data/data_list/sokuhou/files/2014/qe143/gdemenuja.html) by using the Excel.

The real GDP rate compared to the previous quarter in the 2013 July-September to October-December, 2014 January-March which witnessed the dashing-on demands, April-June which saw its reactionary effect and income decrease are, respectively, +2.4%, -1.6%, +6.7%, -7.3% and -1.6% (chart)

Real GDP Growth Rate (comparison to the previous quarter)

(graph drafted by PPPC)

While the mass media looks at these figures alone, in order to understand the trend correctly, the attention should be paid to their ratio from the same quarter in the previous year. The corresponding numbers would be respectively +2.5%, +2.3%, +2.9%, -0.2% and -1.2%.

 

Real GDP Growth Rate (comparison to the same quarter in the previous year)

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　(graph drafted by PPPC)

A simple glance at the graph reminds us of the fact that while the economy had continued to grow by more or less 2% before this April, the economy turned to negative growth since this April when the consumption tax rate was hiked to 8%.

Perhaps the growth rate alone doesn’t provide enough evidence, so it would be helpful to refer to the real amount of GDP (adjusted, calculated onto annual base) to understand the economic trend. It also enables to calculate the hypothetical economic growth based on an assumption that there was no tax-hike and that the economy continued the 2% of growth.

Effect of Consumption Tax-Hike

(trial calculation by the author, graph drafted by PPPC)

It suggests that we lost 15 trillion yen of GDP due to the tax-hike. Probably the tax revenue lost by the central and local governments would amount to some 3 trillion yen in total. It means a worst scenario that the tax was raised, the economy deteriorated and the revenue was lost.

I had made the right economic prediction, so it is just ridiculous that critiques in favor of a tax-hike, such as Mr. Ikeda, slander me while setting aside the fact that they failed to foresee the negative economic effects of the tax-hike and the current economic recession.

In What Case a Tax-Hike is Acceptable?

(TAKAHASHI Yoichi, PPPC Chairman)

My prediction in the previous column (Experts’ Meeting on Tax-Hike and Possibility of Snap Election) seems to have been right. At the moment, many media rumor a schedule of Lower House dissolution on November 19 (taian) – election on December 14 (tomobiki).

It is needless to say that Prime Minister has the exclusive authority over Lower House dissolution, so we have to wait for Prime Minister Abe to come back from his trip abroad. But Nagata-cho has already been busy preparing for a next election and it seems to be difficult to hit brakes to the momentum.

In any case, GDP in the July-September quarter, whose first flash will be released on November 17, will greatly attract the public attentions. Assuming that the consumption tax rate is to be really hiked to 10 percent, how much GDP should be attainable?

Let’s try some calculation. The real GDP (annual base) in the January-March and April-June quarters in 2014 was respectively 535.0 trillion yen and 525.3 trillion yen. There was a dashing-on demand in the January-March quarter before the tax-hike and the April-June quarter saw a decreased demand as its reactionary effect.

If there wasn’t the tax-hike to 8% in this April, there should have been around 2% of growth in both the Jan-Mar and Apr-Jun quarters compared to the previous year. To note, both the July-September and October-December quarters in 2013 had actually witnessed 2.4% of positive growth. If that was the case, the real GDP in the Jan-Mar and Apr-Jun quarters should have been, respectively, 531.5 trillion yen and 536 trillion yen. It means that the dashing-on demand before the tax-hike amounted to 535 trillion (the actual rate) - 531.5 trillion (supposed rate) = 3.5 trillion yen. The same amount would have been decreased in the Apr-Jun quarter as its reactionary effect. Yet, more than that, the whole GDP rate has been decreased by 7.3 trillion yen, which should be considered as the negative economic effect of the consumption tax hike in April.

Dashing-on Demand and its Reactionary Effect, Income Decrease by the Tax-Hike

(Chart: drafted by PPPC)

This negative effect of the tax-hike should be continuing to the same extent in the Jul-Sep quarter. The GDP should have been 538.4 trillion yen if not for the tax-hike, but it will possibly be around 531.1 trillion yen smaller than that by 7.3 trillion yen for the negative effect of the tax-hike. Although the rate is still smaller than the rate which should have been gained, those in favor of the tax-hike will likely OK the number which is +4.5% from the previous quarter. To repeat, those in favor of the tax-hike will admit another tax-hike to 10% if the GDP in the Jul-Sep quarter is to be announced as around +4.5%.

Of course, such a rate is not at all permissible to the author having voiced avoiding the tax-hike. The author cannot agree with the tax-hike unless the GDP in the Jul-Sep quarter amounts to 538.4 trillion yen which should have been gained if not for the tax-hike plus +2% from the same quarter in the previous year. It is equivalent with +10% from the previous quarter.

Goal of “TFR 1.8%”

(HARA Eiji, PPPC President)

The government’s Council on Overcoming Population Decline and Vitalizing Local Economy in Japan, composed of 12 members, in eye of releasing its “long-term vision” and “comprehensive strategy” in December, announced their respective outlines on November 6.

One of the most important issues regarding the local revitalization is the population. One starting viewpoint of the government is that quite a few local governments will disappear someday by the declining population and population flow-out to urban areas as long as the population continues to decline at the current speed.

With regard to this point, the outline of the “long-term vision” released this time showed the following “future directions” to be sought.

1.         To hit brakes to the population-decline to secure “100 million 50 years later.” To that end, improvements to “TFR (Total Fertility Rate) 1.8%” will be sought (which more than half of the OECD countries have accomplished).

2.         To correct the over-concentration in Tokyo.

The reason behind the second point <correct the over-concentration in Tokyo> is the government’s perspective that the “over-concentration in Tokyo is causing the decline of TFR.”

However, although it is true that TFR in urban areas exceed that in rural areas currently, there is no inevitability that “TFR are low in urban areas” from international comparisons. Rather, the issue of declining population should be controllable if proper countermeasures to the population problem are to be taken in urban areas, hence the issue of over-concentration in Tokyo and its appropriateness should be a different point of discussions.

The issue of “over-concentration in Tokyo” will be discussed some other time, and this time, let’s discuss the issue of TFR.

Many developed countries have accomplished more than 1.8% of TFR (France 2.01, U.K. 2.00, Sweden 1.98, U.S. 1.93 in 2010) and compared to the fact the number have improved largely in the recent 10-20 years in France, U.K., and Sweden, it is true that Japan’s 1.4 has a lot to be dealt with.

(See, for example, Cabinet Office http://www.kantei.go.jp/jp/singi/sousei/souseikaigi/dai1/sankou.pdf p.19)

Yet, the problem is how to achieve that goal.

Looking at the present data;

①       There are no major changes in the number of children which a couple desires to have and actually has in the recent 30-40 years.

(Number of average number of children which couples desire to have and actually schedule to have
Source: White Paper on Declining Number of Children 2014)

①       On the other hand, the rate of unmarried persons in their thirtieth increased largely from around 7% to 30% in the recent 30 years. This is the major factor accelerating the decreasing number of children.

(Rate of unmarried female in ages
Source: White Paper on Declining Number of Children 2014)

Based on these facts, countermeasures to the issue of shrinking number of children should be considered in course of solving the following two points.

i.              Many couples give up having as many children as they had originally desired for economic reasons

(Reasons for not having the number of children they had desired to; according to wife’s ages
Source: White Paper on Declining Number of Children 2014)

i.              People (esp. male) who cannot step into marriage for stability reasons are becoming the main cause of declining children

(Reasons for not having the number of children they had desired to; according to wife’s ages
Source: White Paper on Declining Number of Children 2014)

Specifically, measures covering such points as the following must be considered;

l  Lowering the child-rearing costs through expansion of allowances/supports and tax measures

l  Improvement of the child-rearing environment, e.g., eliminating the nursery waiting list (equal-footing of private companies and social welfare corporations, relooking of the standard of childcare workers, etc.)

l  Labor reform (improvement of the youth’s working environment by realizing the principle of same work, same wages, building of the working environment in which one can get back to the work after leaving the office for having birth of children, etc.)

Especially, the efforts should not include just the budget measures but the ones that challenge the so-called “bedrock regulations” in the fields of nursery or labor. It will be the test whether the “TFR 1.8%” will be no more than a flowery slogan or the serious goal to be accomplished.

Experts’ Meeting on Tax-Hike and Possibility of Snap Election

(TAKAHASHI Yoichi, PPPC Chairman)

The Cabinet Office on October 29 announced to hold meeting with experts to discuss validity of the next consumption tax hike to 10% scheduled in October 2015 from November 4 at the Cabinet Office. The experts are 42 figures, around half of which were reshuffled from the last year’s members. Still, it is predicted that many, more or less 70%, will likely voice in favor of the tax-hike.

The meeting are scheduled on November 4, 13, 14, 17, 18. What requires attentions is the release of GDP update in July-Sep period scheduled on November 17. Taking the schedule into consideration, discussions will likely flow into such a bureaucratic-prone scenario that the experts first voice necessity of the tax-hike, then negative effects of the past tax-hike will be confirmed by the latest GDP update, then someone will insist urgency of economic measures to mitigate the negative economic impacts.

In the meantime, in the political arena, there is a possibility of Lower House dissolution and a snap election on the issue of whether to suspend the scheduled tax-hike alone. It is possible that the Cabinet compiles outline of the next fiscal year’s budget by suspending the tax-hike and calls a sudden election; lesson from the experience of the Aso administration which was pressured into the Lower House dissolution and consequently lost the power.

More specifically, the schedules are rumored to be Lower House dissolution on November 19 (taian: lucky day on the Japanese calendar) -> election on December 14, one that resembles two years ago when LDP came back to power (Lower House dissolution on November 16 -> election on December 16). After hearing opinions of the experts until November 18, Abe calls on an election by stating he wants to hear opinions of the national public.

The Sundays in December and their auspiciousness are 7 (sensho: a day on which bold actions are supposed to turn out well), 14 (tomobiki: a day on which one's bad luck is thought to affect one's friends), 21 (senbu: a day on which it is supposed to be better to avoid disputes and hurried actions) and 28 (taian). December 28 is the lucky day but it is difficult to do elections in the year-end. Because Dec 21 is the senbu, December 14 will be the right day to call an election, and by calculating back the date November 19 will be the day to dissolve the Lower House; right after the meetings with the experts are finished.

Another alternative is to call a snap election in mid- or end-January by shortly extending the current Diet session scheduled to end on November 30.

The recent Cabinet reshuffle was a temporary one until the next full-scale lineup in the next year, however, the scenario has been upset by resignation of the two female Cabinet members. Still, thanks to the damage-control efforts, the Cabinet and ruling party approval rate has been on the uptick, respectively 50% and 40%. So now the possibility of a snap election has been rumored.