Campaigning for the House of Councillors election will officially kick off on Wednesday. We ask each party to show voters potent recipes for rejuvenating the economy and to conduct a profound debate.
The biggest issue is to make a judgment on Abenomics - the economic policy package carried out by the administration of Prime Minister Shinzo Abe over the past 3 1-2 years.
Abe emphasized the fruits of Abenomics during a recent stump speech, saying, Employment has increased by 1.1 million and the job availability ratio has hit its highest level in 24 years.
Democratic Party President Katsuya Okada struck back, saying: Abenomics has reached its limits. Most people cannot perceive an economic recovery.
The essence of the Abenomics economic policy package is to conduct the administrations growth strategy and raise the nations potential growth rate using the time afforded by the Bank of Japans bold monetary easing and the governments flexible fiscal stimulus measures.
There is no doubt that monetary easing and fiscal stimulus have resulted in a depreciation of the yen and strong share prices, helping companies to significantly improve their performance.
On the other hand, the economic policy package has not succeeded in getting companies to invest in plants and equipment, or in activating consumer spending. Consequently, Abes goal of creating a virtuous economic cycle is not even at the starting point.
Growth strategy is the key to the success of Abenomics, but the administration is still just halfway through implementing it.
The Liberal Democratic Party promised to rev up the Abenomics engine to the maximum in its campaign pledges for the upper house election. This includes measures such as boosting productivity by utilizing artificial intelligence and doubling the number of foreign visitors to Japan to 40 million by 2020.
The ruling party plans to increase the nations gross domestic product to 600 trillion yen (about $5 trillion), which would be the largest since World War II, and make the economic pie bigger.
However, there was almost no mention of how to utilize companies internal reserves and household savings to kick-start a virtuous economic cycle.
The LDP also failed to show concrete measures on deregulation, which is expected to draw out the potential of the private sector. The party only said it will force through ceaseless regulatory reform.
We have to say that these campaign pledges are not enough for a ruling party.
There are a lot of measures to be carried out, including easing regulations that hamper corporate participation in such growth sectors as farming and medical treatment, and also introducing a system whereby wages are not paid by the hour.
The LDP should present these measures for reinforcing Abenomics in campaign debates for the upcoming upper house election.
As a measure to boost consumer confidence, the LDPs coalition partner Komeito lists the issuance of premium gift certificates and travel vouchers in its campaign pledges.
Such a measure can serve as a temporary shot in the arm, but it would be difficult for them to boost personal consumption in a sustainable way. It is necessary to scrutinize their cost-effectiveness and pursue better fiscal policies.
In its campaign pledges, the DP put forth a policy of balancing redistribution and growth.
As investments in people, the major opposition party calls for raising the monthly salary for nursery school teachers by 50,000 yen and increasing pensions for low-pension recipients by up to 60,000 yen a year. As for wealthy people, the party proposes an income tax hike.
The DP thinks growth can be achieved if personal consumption is increased by boosting the redistribution policy and correcting the income gap.
However, too much emphasis on redistribution will lead to a handout policy. Only after growth is realized will it be possible to secure fiscal resources for redistribution.
Seeking to raise the income tax without much consideration would dampen peoples desire to work hard and come up with innovative ideas, thereby adversely affecting economic revitalization. We cannot ignore this concern.
The Japanese Communist Party, which is committed to full-fledged election cooperation with the DP, calls for abandoning the consumption tax increase instead of postponing it. The JCP also argues for halting cuts in social security spending, which has been ballooning amid an aging population, and shifting to increasing such expenditures.
For this reason, the JCP denounces tax incentives for research and development and the consolidated tax payment system, among others, as benefiting big businesses, and promises a sweeping review.
There is strong concern that the JCPs policy proposals will lower the international competitiveness of Japanese firms and eventually impede economic growth.
Postponement of the consumption tax hike was unavoidable in light of the harsh economic situation at home and abroad.
The fact that personal savings have been increasing amid sluggish consumption is attributed partly to peoples anxieties about the future of Japan, including the sustainability of the social security system.
To dispel these anxieties, it is indispensable to put state finances on a sound footing by overcoming the worst fiscal balance among advanced nations. The combined debt of the central and local governments tops 1 quadrillion yen.
Both the LDP and the DP say they will adhere to a target of achieving a primary balance surplus in fiscal 2020.
It is considered extremely difficult to achieve fiscal reconstruction while putting off a consumption tax hike. All the parties should present concrete policies for securing substitute fiscal resources and carrying out spending cuts.