Prime Minister Sanae Takaichi delivered her first policy speech to the extraordinary Diet session on October 24. She emphasized that her administration would make the Japanese economy and Japan itself stronger. However, it was not at all clear how she would do so or how Japan will fare under her leadership. One thing that was clear was her commitment to follow the policies of the former Shinzo Abe administration, which she greatly admires.
“I will strive to build a robust economy, turning people’s unease and apprehension over their current lives and the future into hope and foster a Japan that is stronger and more prosperous,” Takaichi said. She was adamant that she would restore Japanese diplomacy so that it “flourishes on the world’s center stage” – a term coined by Abe when he advocated for an active role for Japan in the world.
One question remains: What exactly is a strong economy? A “responsible and proactive public finances” is Takaichi’s main concept. She calls for bold governmental spending, which, she says, will raise incomes, transform people’s mindsets regarding consumption, and boost tax revenues without raising tax rates as business earnings increase. She aims to curb the growth of Japan’s outstanding debt so as not to exceed the rate of economic growth and lower Japan’s ratio of outstanding government debt to GDP.
This concept does not differ in any significant way from the “economic virtuous cycle” that former administrations had hoped to achieve. However, neither Abe nor other prime ministers were able to grow real wages. As these administrations poured money into the market by issuing government bonds, wages could not catch up with price hikes. While Takaichi and her allies have great nostalgia for Abenomics, that policy was a remedy for deflation, not for inflation from which the Japanese public is now suffering.
When she talks about responsibility for economic policies, Takaichi must show fiscal resources that will give effect to her policies. She promised in her policy speech that her administration would pass a bill in the current session of the Diet to remove the provisional gasoline tax rate. But she did not propose how she would find the fiscal resources to make up for lost revenue.
Takaichi listed several policies her administration would pursue, including subsidies for the wages of workers in medical services and nursing care facilities, for local communities to support small and mid-size entrepreneurs, and for payments to high schools for school lunches. But she never explained how she would pay for them. It is notable that, during her campaign for the presidency of the Liberal Democratic Party (LDP), Takaichi did not rule out issuing government bonds to fund her economic policies.
Takaichi also introduced the concept of “crisis management investment.” She defines it as strategic investments “to address various risks and social issues, including economic security, food security, energy security, health and medical security, and measures to enhance national resilience” with coordination between the private sector and the government. Another goal is to advance Japan as “the world’s best country to develop and use AI.” To implement this economic agenda, she proposed establishing a “Council for Japan’s Growth Strategy.”
LDP governments have long used disaster management to justify expenditures for infrastructure construction. Mirroring the views of her immediate predecessor, Shigeru Ishiba, Takaichi stressed the need to prepare for the Nankai Trough Great Earthquake and to continue reconstruction following the great earthquakes in northeast Japan in 2011 and Noto Peninsula in 2024.
Takaichi’s respect for Abe comes through in her diplomatic policies. A “Free and Open Asia-Pacific (FOAP)” is at the center of her foreign policy. Abe proposed FOAP in 2016 to counter Chinese advances in the region. Takaichi appointed Ministry for Foreign Affairs (MOFA) official, Keiichi Ichikawa, to be the new Secretary General of the National Security Secretariat. Ichikawa originated the idea of FOAP in MOFA.
Takaichi also declared that she would take “front-loaded measures” to increase the defense budget to two percent of GDP within FY2025. Former Prime Minister Fumio Kishida assumed that income tax, corporate tax, and tobacco tax revenues would fund the two percent commitment. Takaichi has yet to adopt that view, and she has not indicated how she would pay for the increase in the defense budget.
As a practical matter, the most important agenda item for the Takaichi administration is how to ensure the survival of her current minority government. Yet, she did not meaningfully address the priority policy of her coalition partner, the Japan Innovation Party (JIP) – a reduction in the number of Diet seats. This reduction was the “absolute condition” for the JIP to enter a coalition with the LDP. In her speech, Takaichi did not mention any reduction at all, instead referring to the policy as social security reform. But it is nothing more to her than a topic to “discuss quickly.”
Takaichi also omitted any mention of campaign financing reform, namely the prohibition of donations from companies and organizations. The LDP’s resistance to reform was the greatest reason Komeito left the coalition with the LDP. Indeed, far from pursuing reform, Takaichi appointed lawmakers who had been involved in the kickback fund scandal, to positions in her government and on the LDP board. Her indifference to political reform may engender some criticism.
By Takuya Nishimura, Senior Fellow, Asia Policy Point
Japan’s Diet elected Liberal Democratic Party (LDP) president Ms. Sanae Takaichi the country’s 104th prime minister. Although her success was due to the establishment of a new coalition between the LDP and the conservative nationalist Japan Innovation Party (JIP, 日本維新 の会, Nippon Ishin no Kai; Japan Restoration Association), JIP decided not to send a minister to Takaichi’s Cabinet. JIP will exert its influence indirectly to ensure hawkish policies in the new administration.
Takaichi’s election was not certain after the LDP’s long-time partner Komeito left the leading coalition. The next coalition possibility, the Democratic Party for the People (DPP), refrained from forming a coalition with the LDP because even together they could not achieve a simple majority in the Diet. Takaichi then reached out to JIP to form a new coalition. On October 20, after five days of negotiation, the LDP and JIP reached a twelve-point agreement for their coalition.
Komeito’s departure made it easier for the LDP to approach JIP because both parties have closely aligned conservative platforms. Although JIP has previously sought to cooperate formally with the LDP, notably during the Shinzo Abe administration, Komeito blocked JIP from the coalition because of political differences. Komeito kept a liberal position in the coalition. With Komeito’s departure, the LDP was unleashed from Komeito’s rein.
The LDP’s rightward move is embedded in the coalition agreement. Both parties decided to revise the three security documents, approved by the Fumio Kishida administration in 2022, to further increase the defense budget. They plan to allow greater exports of defense equipment by easing export controls in five categories– rescue, transport, warning, surveillance, and sea minesweeping. Takaichi expects to explain the impact of these policies to the U.S. President Donald Trump during his visit to Tokyo later this month.
The LDP and JIP are firm advocates for several constitutional amendments. Both parties plan to submit to the Diet by the end of FY2026 a draft amendment that would add an emergency clause to maintain the legislative branch in a contingency. The parties also will discuss amending the pacifism principle in Article 9. They agreed as well to revise the Imperial House Law to encourage imperial succession only by males in the male line.
During the two parties’ policy talks, JIP abruptly shifted its focus from social security reform and the sub-capital initiative to the reduction of Diet seats. The LDP accepted the idea of a 10 percent reduction in Lower House seats in the current session of the Diet. The opposition parties oppose it, arguing that a reduction in Diet seats must have comprehensive approval of parties with representatives in the Lower House.
As for the sub-capital initiative, which would establish an alternative to Tokyo in case the capital suffers from a major disaster, the LDP and JIP aim to enact it in the ordinary session of the Diet in 2026. There is no time limit on discussions between the two parties on elimination of the consumption tax on food for two years. JIP had earlier demanded that this be part of the Diet’s urgent agenda.
JIP’s most controversial decision was to give the LDP a two-year delay on the enactment of a prohibition on contributions from companies and organizations. The two parties’ agreement states that the Diet will affect the ban only by the end of Takaichi’s term as LDP president in September 2027. It is notable that the coalition agreement between the LDP, the Liberal Party and Komeito in 1999 included a commitment to enact the prohibition in the Diet session of that year. In the event, the LDP did not act on it for 26 years. In fact, any provision in the LDP-JIP agreements is nothing more than a target subject to future discussion.
With these policy agreements in place, the two parties were able to elect Takaichi as prime minister. Takaichi won in the Lower House with 237 votes out of 465, or 51% -- enough to avoid a run-off. The leader of the Constitutional Democratic Party of Japan, Yoshihiko Noda, came a distant second with 149 votes. The opposition parties could not unite for an alternative candidate. Takaichi also defeated Noda by 125 votes to 46 in a run-off in the Upper House. These votes made Takaichi the first female prime minister of Japan.
Takaichi started her political career as an independent lawmaker of the House of Representatives in 1993. She participated in establishment of the New Frontier Party in 1994, and joined the LDP in 1996. Affiliation with the Seiwa Policy Group, one of the factions in the LDP, determined her course in politics, which was conservative.
She supported two leaders of Seiwa group who were her mentors: former prime ministers Yoshiro Mori and Shinzo Abe. She supported unpopular prime minister Mori as a “volunteer advisor” in 2000. When Abe ran for LDP president in 2012 against Nobutaka Machimura, who was the head of Seiwa group, Takaichi left the faction to support Abe. Her relationship with Mori and Abe helped her advance politically.
Takaichi is known to have a rivalry with another woman LDP lawmaker, Seiko Noda, whose is relatively liberal. Both won the Lower House election for the first time in 1993. Noda’s first appointment to cabinet minister and first marriage were earlier than Takaichi’s. Abe simultaneously picked Takaichi for LDP policy chief and Noda for chairwoman of LDP General Council to let them compete each other in his second administration starting in 2012. Takaichi appears to have won the competititon.
However, the Japanese people are not very enthusiastic about her premiership. It is true that the main reason behind expectations about Takaichi is that she is a woman – rather than that she has particular political views one way or another. But she was less popular among women than among men in LDP presidential election. She opposes the possibility of a female emperor as well as a separate surname system. She is identified not merely as conservative, but as rightwing.
Her cabinet reflects her political obligations and biases. She appointed Minoru Kihara as Chief Cabinet Secretary, Toshimitsu Motegi as Minister for Foreign Affairs, and Shinjiro Koizumi as Minister of Defense. Yoshimasa Hayashi will be Minister for Internal Affairs and Communications. Takaichi thus included in her cabinet or on the LDP board all the other four candidates in the LDP presidential election.
For Minister of Finance, Takaichi picked Satsuki Katayama as one of the female cabinet members. Ryosei Akazawa, Japan’s top negotiator in tariff negotiations with the U.S. and a close ally of former premier Shigeru Ishiba, remains Minister of Economy, Trade, and Industry; he is expected to continue managing trade negotiations with the U.S. These appointments seem to be an attempt to reintegrate the LDP. But appointment of female ministers was limited to two people instead of the expected five.
While it agreed to a firm coalition with the LDP, JIP did not join the Takaichi Cabinet. It is an unusual decision. A junior partner in a leading coalition typically will have at least one member in the cabinet. In its coalition with the LDP, Komeito sent a minister to the cabinet every year since 1999, except during DPJ government between 2009 and 2012. There is one precedent for JIP’s decision: in 1996, the Social Democratic Party and New Party Sakigake left LDP’s Ryutaro Hashimoto Cabinet but maintained a cooperative relationship with the LDP.
The leader of JIP, Hirofumi Yoshimura, indicated that his party did not have enough experience to join the cabinet. But it is likely that the party has reserved a choice to leave the coalition if the LDP fails to live up to the coalition agreement.
Cooperation outside the cabinet is a weaker form of a coalition government than a traditional one. The cabinet attains its policy goals through cabinet decisions. Each decision is made with the unanimous approval of all the ministers. If a minister refuses to sign onto a cabinet decision, the prime minister can force him or her to leave the cabinet.
JIP’s decision to distance itself from the Takaichi cabinet has two aspects. First, JIP will not be responsible for each decision of the Takaichi Cabinet. Second, without a representative in the cabinet, JIP cannot directly use the cabinet decision-making process to turn its policies into law. JIP is not without influence, though; the LDP will be constantly concerned by policy differences that would cause JIP to leave the coalition.
The coalition agreement does not refer to cooperation in elections. The LDP lawmakers from the Osaka area, where JIP has a stronghold, are worried about cooperation with JIP. How the two parties can cooperate in elections in each district may determine the fortune of their coalition.
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| Takaichi April 2015 |
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