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Saturday, July 14, 2007

UPPER HOUSE SHOWDOWN

PENSIONS, TAX HOLD CENTER STAGE

Constitution pushed out of campaign


Staff writer

The pension records fiasco and concerns about a consumption tax hike have upstaged what Prime Minister Shinzo Abe most wanted to focus on during campaigning for the July 29 Upper House poll — revising the Constitution.

Abe and the Liberal Democratic Party have been on the defensive since May, when the opposition started attacking the ruling bloc over the Social Insurance Agency's mishandling of 50 million public pension payments, part of 250 million payments that could not immediately be matched with their contributors when a new system was adopted years ago.

The discovery has triggered public outrage and brought charges of sloppy management that has caused many retirees to receive fewer benefits than they are entitled to.

"I have declared that (the LDP) will establish a trustworthy pension system," Abe said in an interview before campaigning started Thursday. "And in order to do so, all of the problems regarding the (unidentified) pension records must be settled."

All the parties's campaigns call remedying the pension fiasco the priority.

The LDP has promised to have the 50 million records identified within a year and to replace the pension records management system in around 2011. It also said the SIA, also in trouble for spending pension money on housing and entertainment for its bureaucrats, will be replaced by a new government-owned corporation to be run by company employees and not civil servants.

Some political analysts say the LDP's pledge doesn't offer anything new. Its platform repeats things that have already been changed by laws the ruling bloc railroaded through the Diet recently. They also say the party is just trying to fill in holes in the system exposed by the opposition in the final weeks of the last Diet session.

"This manifesto is not enough for the LDP to regain public trust" in the few weeks until the election, said Hidekazu Kawai, a professor of political science at Chubu University. He said it will not help boost Abe's approval ratings, which have plunged due to a number of political scandals.

Democratic Party of Japan leader Ichiro Ozawa charged that the LDP's pledges are "too little, too late."

Ozawa, whose party first grilled the government over the pension fiasco, said Abe should have taken action when he found out about the pension record debacle in December. Instead, he said, Abe waited until he was backed into a corner when the DPJ took up the issue in the Diet.

"The pension problem is symbolic (of Abe's government): It doesn't have much interest in the lives of people," Ozawa said in a recent interview. "Pensions directly affect the lives of people in the public, but (Abe's government) just tried to hide (the problems) and deceive" people.

The DPJ is promising to make the government check all of the public pension records — not just the 50 million unidentified payments — before the SIA is dismantled in 2010.

The DPJ is also proposing that pension books, similar to bank books, be issued to contributors so all their pension payments can be recorded.

The DPJ position on the consumption tax is to keep it unchanged at 5 percent and use all of its revenue to fund most of the pension program.

According to the DPJ's campaign platform, a consumption tax hike — which the LDP often hints is needed to pay for rising social welfare costs — would not be necessary because, in its calculation, the government can save more than 15 trillion yen by administrative reforms and streamlining its expenditures.

Abe, who has avoided saying outright if the LDP wants a consumption tax hike and has put off any discussion until after the election, has called the DPJ's plan unrealistic.

"I believe (the DPJ's policies) are vague when considering the grounds of actually putting (the policies) into action," Abe said. "Whether the party can become a ruling party depends on whether its policies are" realistic.

As for the consumption tax, the LDP platform merely states that the party will have a thorough discussion for a tax system overhaul starting this fall, taking into consideration the future social security costs amid the nation's demographic changes, and aim to reach a conclusion by the March end of the fiscal year.

Chuo University's Kawai said the DPJ's promise to use the sales tax revenue to cover the cost of the public pension program "is sure to get voters' support." He said the LDP is hiding the consumption tax issue because the idea of raising it is very unpopular, but it needs to clarify its position on the issue before voters cast their ballots.

Kazuhiko Nishizawa, a senior economist at Japan Research Institute Ltd., also criticized the LDP for being vague on the tax issue.

Now that the decision has been made to increase government funding of the pension program by 2009, Nishizawa said he thinks the LDP already has made the decision to raise the levy to cover the costs. He said the LDP should tell the public its position before the election.

However, he said the DPJ's proposals for pension reform are not very realistic, either.

"The DPJ's plan would change the pension system fundamentally," Nishizawa said. Japan has a contribution-based pension system "in which those who pay premiums will receive pensions," but the DPJ's plan would change that by funding it with consumption tax revenues.

These two issues have completely pushed aside Abe's goal of making revising the Constitution a campaign issue.

Since he took office in September, Abe has said he wants to change the Constitution. The LDP-New Komeito ruling bloc took a major step toward that goal in the last Diet session by by enacting a law setting out the process to have a referendum on amending the charter. The law will take effect in three years.

But in a recent interview, Abe did not bring up the Constitution. When he was asked his party's position, he replied that it was in the LDP's platform. The party's campaign platform says it aims to revise the Constitution in 2010 and campaign for public support to completely overhaul it.

"Abe's original plan to bring up the revision of the Constitution as an issue has completely changed" as he has had to concentrate on the pension fiasco, Chuo University's Kawai said, adding Abe "should never have brought it up (as a campaign issue) in the first place because the LDP needs the cooperation of the DPJ to achieve its goal to revise the Constitution."

The DPJ has not made a clear stand on the constitutional revision issue. But it does criticize the LDP's position on amending the charter. It says the Abe Cabinet should not be using the issue to force traditional values on the public.

Revising the Constitution is a touchy issue in the LDP's relationship with its coalition partner, New Komeito.

However, for the first time New Komeito has added the issue to its platform, saying it aims to draft clauses or articles to the charter within the next three years.

But the party, backed by Soka Gakkai, the nation's largest lay Buddhist lay organization and one that is strongly pacifist, is likely to clash with the LDP over the war-renouncing Article 9, which is what all the Constitution talk is really about.

While the LDP is determined to revise Article 9 to expand the Self-Defense Forces' ability to operate as a legitimate military, New Komeito chief Akihiro Ota has made it clear his party does not want to change clause 1 or clause 2 in the article. These clauses state Japan does not have the right to belligerency and cannot possess a military force, even though it does.

However, Ota said New Komeito is discussing whether new clauses should be added to clarify the legal position of the SDF and how Japan should cooperate in international peace operations.

The smaller opposition parties are using the Constitution issue to gain voter support.

The Social Democratic Party and Japanese Communist Party are strongly against changing Article 9, saying it would open the door for the government to use the military in overseas conflicts.

Kokumin Shinto (People's New Party), led by ex-LDP lawmaker Tamisuke Watanuki, said it wants a new Constitution after thorough public debate, but would keep the spirit of the preamble and Article 9.

The head of New Party Nippon, former Nagano Gov. Yasuo Tanaka, said he would add a third clause to Article 9 to create an "international rescue team" that would "help areas facing convulsions of nature, such as earthquakes or tsunami, or civil war and starvation."

What LDP, DPJ say on key issues

The following are the Liberal Democratic Party and Democratic Party campaign pledges on three key issues:

PENSIONS

LDP: Complete the identification of the 50 million unassigned pension payments within one year.

Introduce a new pension records management system in about 2011, abolish the Social Insurance Agency and create a new state-owned organization not run by the civil service.

Raise the state contribution to the pension system to half from one-third by 2009.

DPJ: Check all pension records in the database against all microfilm and booklets and then dismantle the SIA.

Issue pension books to all contributors that show the history of their premium payments.

Merge all pension programs into one system and use all consumption tax revenue as the main funding for the pension system.

CONSUMPTION TAX

LDP: Hold thorough discussions on tax reform, starting in the fall, and aim for a major overhaul of the tax system by the end of fiscal 2007.

DPJ: Maintain the 5 percent consumption tax and cut back on government spending.

CONSTITUTION

LDP: Aim to make changes to the Constitution in 2010 and start a national movement backing its complete revisal.

DPJ: Hold thorough discussions on whether the Constitution needs to be changed.



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