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Financial Crisis Action Plan

Provisional Translation


April 8, 2009

DPJ's "Emergency Economic Measures for Livelihoods, the Environment and the Future" (Outline) (8 April, 2009)

1.Basic Policy

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Our basic philosophies are 窶弃utting People窶冱 Lives First窶 and 窶廬mproving People窶冱 Lives will Improve the Economy窶?

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We aim to realise economic recovery and an increase in employment by spending approximately 21 trillion yen (in real terms) of public money over 2 years.

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We will increase the amount of money that can be freely using by households (disposable income), in particular by households suffering from economic uncertainty and young households.

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We will engage in a radical expansion of the safety net (pensions, medical care, nursing care), reduce people窶冱 current anxieties and increase their confidence regarding the future.

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We will reduce the demand-supply gap by transforming the economic structure to one that is 窶彭omestic demand-led窶? and nurture industries that look to the future.

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We will eliminate inefficient public works projects such as those that are fostered by a dependency on vested interests, and old-style public works projects, and engage in a comprehensive budgetary reconstruction (radical reform of the use of tax money) in order to realise policies for livelihoods, the environment and the future.

2.Basic Scenario

(1) 

Increase the amount of money that can be used freely by households (disposable income)

(2) 

Support the realisation of new lifestyles and new values

(3) 

Reduce people窶冱 current anxieties and increase their confidence in the future

(4) 

Increase consumption, nurture new industries and maintain and increase stable employment

3.Detailed Policies

(1) 

Increase the amount of money that can be used freely by households (disposable income) (Approximately ツ・14 trillion)

We will increase the amount of money that can be used freely by households by expanding direct payments to households, by tax cuts, and by reducing living expenses. In addition, we will increase the amount of money that can be used freely by the regions, and support improvements in living conditions that correspond to the circumstances in each region.

*Child allowance
We will pay a monthly child allowance of ツ・26 000 per child until graduation from junior high school.

*De facto elimination of tuition fees for high school education
We will provide a grant equivalent to the cost of tuition fees for households with children attending state high schools, thus making such education free in real terms. We will provide a grant of between ツ・120 000 to ツ・240 000 to households with children attending private high schools.

*Dramatically increase the provision of scholarships to university students
We will provide interest-free scholarship loans, corresponding to tuition fees at both public and private universities, to children from households with yearly incomes of 8 million yen or less. We will also provide scholarships equivalent to the amount needed for living expenses to children from households with yearly incomes of 4 million yen or less. Furthermore, we will increase subsidies and financial assistance to universities that implement reductions in tuition fees for low-income students.

*Review taxes on pensions
We will scrap the 窶徨eduction in the tax exemption for state pensions窶 and 窶彗bolition of the tax exemption for the elderly窶 stipulated in the 2004 reform of the tax system, and return the situation to the state of affairs prior to this reform.

*Elimination of motorway tolls
We will in principle eliminate all motorway tolls, apart from those on the Shuto expressway and the Hanshin expressway. This will reduce living expenses, as well as promoting regional vitality.

*Abolition of provisional tax rates, and abolition of the financial burden placed on the regions for public works carried out directly by central government
In addition to implementing tax cuts of 2.5 trillion yen, we will abolish the financial burden placed on local governments for public works carried out directly by central government, and by increasing the autonomous revenues possessed by the regions, assist improvements in living conditions that correspond to the circumstances in each region.

*Reduction in the rate of corporation tax for small and medium sized enterprises (SMEs)
We will reduce the rate of corporation tax levied on SMEs to 11%.

*Abolition of taxation of sole-proprietor SMEs
We will abolish the so-called 窶徭ystem for taxation of sole-proprietors窶 levied on sole-proprietor enterprises.

*Assistance for SMEs and individuals with home loans
As a temporary measure (for 2 years in principle), we will relax the conditions for loan repayments placed on SMEs that are suffering the effects of bankruptcies amongst companies they do business with, and on individuals who are having difficulty in making repayments on their home loan due to their employer going bankrupt or to redundancy. In order to achieve this, we will implement financing from both the financial and public sectors for financial institutions that respond flexibly to change.

Where possible, we will implement the above policies in (1) before the end of the year.

(2) 

Support the realisation of new lifestyles and new values (Approximately ツ・1.6 trillion)

In addition to the above fiscal policies, we will nurture new markets and industries that respond to the public窶冱 changing lifestyles and values, by implementing wide-ranging policies including the speedy introduction of a fixed price purchase system in the renewable energy sector.

*Promoting the installation of solar panels
We will implement economic assistance for the introduction of renewable energy sources such as subsidizing half of the price of installing solar panels on residential homes.

*Assisting the purchase of next generation automobiles
We will implement an incentive policy applicable when trading in one窶冱 current vehicle for an environmentally-friendly car that fulfils certain conditions, such as a fuel-efficient car or a hybrid car, with incentive payments of up to ツ・300 000 being payable on purchases of around 2 million of such cars.

*Energy-saving and other home improvements
(Details under discussion)

We will implement the above policies in (2) as speedily as possible.

(3) 

Reduce people窶冱 current anxieties and increase their confidence in the future (Approximately ツ・4.5 trillion)

We will stimulate the use of ツ・1400 trillion in individual financial assets by alleviating people窶冱 anxieties and building their confidence through strengthening the safety net.

*Make employment insurance applicable to all workers
We will make employment insurance applicable to all workers in principle, as well as ensuring that the proportion of employment insurance payments borne by the national treasury is the legally recommended 25% (currently it stands at 13.75%).

*Elimination of medical bills for all children until graduation from junior high school
(Details under discussion)

*Elimination of shortages of doctors, nurses, and medical clerks (Estimated cost ツ・0.5 trillion yen)
We will ensure creation of trustworthy medical care, by improving the working environment for medical professionals through such measures as expansion of subsidies to improve working conditions for doctors involved in the emergency, pre- and post-natal and surgical fields, promoting the return of those with nursing qualifications to the profession by improving the working environment, and increasing the numbers of medical support staff and clerical staff.

*Promotion of the introduction of 窶廛octor Heli窶 services
We will endeavour to increase the number of 窶廛octor Helis窶 [emergency rescue via helicopter staffed with medical professionals] that have been producing marked results in the field of emergency medicine. In conjunction with this, we will proceed with the stationing of 窶徂igh standard窶 ambulances and vehicles equipped with emergency response equipment and further enhance the emergency medical treatment system.

*Improvement of working conditions for nursing care workers and ensuring sufficient human resources in this field
We will improve pay conditions for nursing care workers and ensure sufficient human resources in the care industry by paying an amount equivalent to 7% of total nursing care fees from tax revenues, and establish stable provision and improvements in quality of nursing care services.

*Acceleration of the earthquake-proofing of schools and hospitals
We will accelerate the earthquake-proofing of elementary and junior high schools that needs to be dealt with urgently (including private institutions) and of hospitals that do not meet the new earthquake-proofing provisions.

*Introduction of technology into schools
We will accelerate the provision of PCs in elementary and junior high schools (one PC for every teacher and one PC for every 3.6 students), and promote the use of technology in education, starting with the digitalization of textbooks.

*Enhancement of communication education
We will develop strongholds for communication education in order to create large numbers of people who are creative and capable of cooperating and working together in the international community with people from a variety of different value systems.

*Station school counselors in all elementary and junior high schools
We will station school counselors in all elementary and junior high schools to provide life counseling and career counseling (currently the ratio is one counselor to every three schools).

*Establishment of a job seeker assistance system
We will implement occupational training (giving priority to next-generation industries including the farming, forestry and fishing industries) for the long-term unemployed who are no longer able to receive employment insurance payments, irregular workers who are not eligible for employment insurance, and the self-employed who have been forced out of business. In order to ensure stable living conditions during occupational training, such workers will receive a monthly allowance of ツ・100 000. Furthermore, we will endeavour to reduce the burden on those who are finding it difficult to pay their medical insurance bills having been made redundant.

*Expansion of consumer advisers
We will improve working conditions for local consumer advisers and the National Consumer Affairs Center of Japan, as well as ensuring the supply of human resources in this field.

We will implement the above policies in (3) as speedily as possible.

(4) 

Increase consumption, nurture new industries and maintain and increase stable employment (Approximately ツ・1 trillion)

We will aim to create stable employment by supporting the growth of new markets created from the increased purchasing power of households who have experienced a growth in their disposable income and from assistance given to new lifestyles, and by proceeding to nurture human resources capable of responding to the needs of these new markets.

*Assistance for purchases of energy-efficient home appliances and of digital terrestrial broadcasting devices
(Details under discussion)

*Establishment of an individual income support system for households in the agricultural, forestry and fishery industries
We will designate the agricultural, forestry and fishery industries as future-orientated new industries, and as a foundation for this we will create an individual income support system that will pay a subsidy based on the difference between actual production cost and the market price to farming households (we will establish a similar system for the forestry, fishery and livestock industries). We will realise an increase in the food self-sufficiency ratio, revitalisation of rural areas and an increase in employment by achieving the transformation of such rural areas into centres for a new industrial category known as the sixth sector in Japan [this sector combines elements of primary, secondary and tertiary industries].

*Creation of a Green Innovation Framework
We will establish a 窶廨reen Innovation Framework窶 (provisional title) to serve as an organisation to support the environmental and energy enterprises that are now being developed nationwide. We will actively invest in agricultural production companies that are engaged in accepting and offering occupational training for new recruits to the agricultural industry, and encourage an increase in employment in the agricultural industry.

*Promotion of research into environment and energy technologies
We will engage in investment in order to promote research into next generation environment and energy technologies such as hydrogen fuel cells, coal gas electric power generation and technologies for purifying salt water.

*Nurture of human resources to support next generation technologies
We will nurture and secure human resources by providing career support for those on post-doctorates, and inviting talented young researchers from overseas. As well as consolidating strongholds to ensure that our research system is of world-class quality in such important fields as innovative materials, nanotechnology and cutting edge medicine, we will create a medium to long term research fund.

*Job seekers support system (identical to that in (3) above)
We will implement occupational training (giving priority to next-generation industries including the farming, forestry and fishing industries) for the long-term unemployed who are no longer able to receive employment insurance payments, irregular workers who are not eligible for employment insurance, and the self-employed who have been forced out of business. In order to ensure stable living conditions during occupational training, such workers will receive a monthly allowance of ツ・100 000. Furthermore, we will endeavour to reduce the burden on those who are finding it difficult to pay their medical insurance bills having been made redundant.

*Implementation of occupational training and vocational training for personnel
We will support efforts to return to school by those who dropped out of high school before graduation, and we will subsidise part of the cost borne by those who are attending university or vocational college while working in order to improve their vocational skills (obtain qualifications and the like) or to obtain new occupational skills (including skills related to the agricultural, forestry and fishing industries) with a view to changing jobs.

We will implement the above policies in (4) as speedily as possible.

4.Scale and Source of Funding

*We will spend approximately ツ・21 trillion in real terms over 2 years.
*We will secure sources of funding by enacting policies such as 窶徨educing public procurement expenses by abolishing amakudari and the like窶? 窶彗bolishing, in principle, independently administered corporations and special corporations窶? 窶徨educing total personnel costs for civil servants employed by central government窶? 窶徨eviewing public works projects carried out directly by central government窶 and 窶彗bolishing, in principle, tied subsidies and moving over to lump sum subsidies窶?
In order to secure such funds, the DPJ, through the various sections of the Next Cabinet, has already investigated the accounts of (and classified) all of the work窶冱 projects carried out by the nation.
*Measures to be carried out in 2009 will be financed by the 窶彙uried treasure窶 [special accounts etc possessed by the ministries] and by using 窶彳conomic emergency response reserve funds窶?

Note:

Total amount of 窶彙uried treasure窶?br> 窶弋reasury investment and loan special account窶 = ツ・6.5 trillion
窶廡oreign exchange fund special account窶 = ツ・19.6 trillion

*In addition to involving emergency measures to respond to current economic conditions, these policies are not intended merely as interim measures, and will transition smoothly into permanent measures designed to realise improvements in people窶冱 lives, a fundamental reform of the social security system, and a shift toward an economy driven by domestic demand. Funds will be secured by implementing a comprehensive restructuring of the budget (fundamental reform of the use of tax money).

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