1. Basic Stance

The financial crisis that began in the US has led to the unusual occurrence of a worldwide recession and shown the unsustainabliity of both a unipolar system centered on the United States and an over-reliance on financial markets that leads to financial bubbles. The impact of the financial crisis is also being felt in Japan, and we are being forced to reexamine long-standing economic structures which have continually relied upon the support of overseas demand.

It is now essential for Japan to make a transition from an economy that is over-reliant on exports to an economic structure led by domestic demand, an issue that has been on the table for the past 20 years. In order to achieve this, we need to implement bold policies that will increase the amount of money households are free to spend, that is to say policies that will result in higher disposable household income. Based on a core policy of completely eliminating the wasteful expenditure of tax revenues and social insurance premiums (since tax and social insurance payments place a burden on family budgets) we must also review out-of-date tax systems and various regulations and other systems which place a burden on household and corporate finances.
It is also essential that we take rapid action to strengthen the social safety net composed of medical care, nursing care and pensions in order to increase the confidence of the public in their own finances, give people more ability and incentive to switch from excessive savings to greater consumption and achieve increases in real disposable income.

Medium-sized and small businesses, which are the bedrock of our economy, are suffering severe difficulties due to the current financial instability and falling demand. Such businesses support the competitiveness of the Japanese economy while at the same time supporting our employment markets. As the Japanese economy cannot flourish without successful medium-sized and small businesses, we must focus our resources on them.

herefore, we believe that the best stimulus we can give the economy is to implement the policies listed by the DPJ under our mission to "put people's lives first". The DPJ will shift Japan's economic structure towards one led by internal demand by implementing policies that will have continual and synergistic internal demand-boosting effects. We plan to spend 8.4 trillion yen in the initial stage of these policies and 20.5 trillion yen over 4 years. We will fund these measures by comprehensively modifying the overall national budget including the special accounts. In contrast to the indiscriminate spending and ill-thought out short-term measures proposed by the government, the DPJ, by thoroughly transforming the way in which we distribute our resources, will work to stabilize people's lives, reinvigorate the economy and open up a path towards the future.

2. The DPJ's Economic Measures

(1) Increasing the Amount Households are Free to Spend

竭? Provide a Monthly "Child Allowance" of 26,000 Yen per Child
The DPJ will make a monthly payment of 26,000 yen per child (annual amounts of 312,000 yen) until the child reaches the end of their compulsory education. This allowance will increase disposable household income by 4.6 trillion yen based on a comparison with the current "child allowance".

The DPJ's calculations indicate that this measure will have an economic benefit of 0.94% (in the third year after the policy implementation).

We will also reduce household educational expenses by making public high schools completely free and providing support to pupils attending private high schools.

竭｡ Establish a New System of Income Subsidies for Individual Farming Families
The DPJ will create a new 1-trillion yen system of subsidies for farming families who sell their produce. This measure will achieve a significant increase in farming family incomes.

竭｢ Increase the Minimum Wage While Providing Support for Small and Medium-Sized Businesses
While providing appropriate fiscal and financial support for small and medium-sized businesses, we will aim to achieve the national average minimum wage of 1000 yen within approximately 3 years.

竭｣ Achieve Equal Treatment for Part-Time and Limited Term Contract Employees
As well as banning employment agencies from dispatching employees for periods of less than two months, we will achieve equal treatment for all employees doing the same job regardless of their employment status.

竭､ Provide Support for Young People Who Are Not in Stable Employment
In order to promote employment among young people who do not have stable work (so-called "freeters") the DPJ will provide opportunities for job training with private-sector companies and where necessary provide a monthly payment (of around 30,000 yen). We will also provide support through housing allowances and other payments until the trainee is in stable employment.

竭･ Increase Funds That Can Be Freely Spent by Local Authorities
Instead of providing subsidies for individual issues, the DPJ will provide local authorities with lump sum payments that can be used at their discretion. We would also abolish the system of having local authorities bear some of the costs for projects directly administered by central government, increasing the amount of money local authorities are free to spend.

(2) Reducing costs for households and corporations

竭? Eliminate the Provisional Tax Rate and Reduce the Basic Tax Rate on Taxes Designated to Funding Roads
The DPJ would reduce the tax burden on the public by 2.6 trillion yen by abolishing the provisional tax rate on taxes dedicated to funding road-related projects (gasoline tax, diesel transaction tax, vehicle weight tax, vehicle purchase tax and other taxes). The DPJ calculates that this measure will have an economic benefit of 0.53% (in the third year after the policy implementation). These measures will achieve a particularly significant reduction in living costs in those areas where the degree of dependence on automobile transport is high and can therefore be expected to help reduce inequality between regions.

竭｡ Eliminate tolls for expressways (freeways)
By eliminating tolls for expressways with the exception of the urban cities such as the Tokyo Metropolitan expressway and the Hanshin Expressway linking Osaka and Kobe, we can reduce the tax burden on the general public by 2 trillion yen. The DPJ calculates that this measure will have an economic benefit of 0.41% (in the third year after the policy implementation), and also expect that it will benefit the tourism industry and local industries.

竭｢ Fuel tax measures
For Class A heavy fuel oils and light oils used in agriculture and fishing, which will not see price reductions as a result of the abolishment of the provisional tax rate on gasoline and other products, we will provide subsidies to reduce the current price down to the same level as September 2005, a month in which emergency support measures for these products were enacted.

(3) Strengthen Safety nets

竭? Comprehensive Reform of Pensions System
As well as comprehensively changing the current public pension system, which is not trusted by the public, into a new and transparent system, we will stabilize the pension system's finances by using 100% of the revenue from consumption tax to finance pensions. We will prohibit the use of pension premiums to fund other projects. The DPJ will also reinstate the system of pensioner taxation (public pension exemption, old-age exemption) that was in place prior to the 2004 amendments and thoroughly revise the practices for investing the pension reserve, which has lost 5.8 trillion yen annually, to achieve stable, reliable returns.

竭｡ Eliminate the Health Insurance Scheme for Persons Age 75 and Over and Address Doctor Shortages
We will invest resources of approximately 1.9 trillion yen to restore public trust in the medical profession by eliminating the health insurance scheme for persons aged 75 and over and solving current doctor shortages. We will also ensure that there are no children in Japan who are not covered by National Health Insurance.

竭｢ Ensure Adequate Measures Are in Place for Supplying Caregiving Personnel by Raising Caregivers Wages
We will increase caregivers wages by around 20,000 yen per month. We will also abolish the plan to reduce bed numbers for recuperating patients and create systems that will ensure people can benefit from good quality caregiving.

(4) Concentrate Resources in Small and Medium-Sized Businesses

竭? Expand Credit Guarantee Availability for Small and Medium-Sized Companies
The DPJ will reinstate the "special credit guarantee" system, and secure 20 trillion yen in credit guarantees. In addition to allowing businesses to extend their payback period for existing loans offered under the safety net financing program (which aimed to alleviate the cost of rising oil prices), we will also expand the number of business categories available for safety guarantees to 900 (businesses which have been operating for three years or more). We will also abolish the need for the owners of medium and small-sized businesses to personally guarantee loans from government-affiliated financial institutions.

竭｡ Reduce the Corporate Tax Rate for Small and Medium-Sized Businesses
The DPJ will, for the time being, halve the corporate tax rate for small and medium-sized businesses.

竭｢ Reduce Taxes for Small and Medium-Sized Business Owners
The DPJ will eliminate current regulations which state that salaries of executives at special family-controlled corporations do not qualify as tax deductible expenses.

竭｣ Establish a Fair Competitive Environment
The DPJ will establish a law to protect small and medium-sized companies from unfair demands by larger companies including unreasonable demands for price cuts and demands to purchase certain products. We will increase by 10% target percentage for small and medium-sized business contracts under the public procurement law. We will implement various other policies to invigorate small and medium-sized businesses.
We will also work to reach early decisions on the adoption of various other measures for supporting small and medium-sized businesses from a tax standpoint including raising the percentage of corporate entertainment expenses that are tax deductible, raising the maximum amount of facilities investment that qualifies for immediate depreciation, making the depreciation time limits for such assets more flexible and expanding the range of building maintenance expenses that are tax deductible.

3. DPJ's Measures for Responding to the Financial Crisis

The DPJ has drawn up countermeasures to respond to the financial instability that has accelerated since the collapse of the Lehman Brothers and has repeatedly called on the government to put such measures into practice. The DPJ's basic stance is outlined in the "DPJ's Proposal for Financial Crisis Countermeasures" (Provisional Translation, approved by the Next Cabinet on October 15, 2008). The document calls on the government to rapidly implement the following proposals in order to ensure smooth and regular financing, especially for small and medium-sized businesses.

(1) Re-Establish the Law for Strengthening Financial Systems

In order to prevent the growth of further financial instability, restricted loan availability and refinancing, the government should rapidly move to reinstate the Law for Strengthening Financial Systems. That is one of the reasons why we must take appropriate action to clarify responsibility for slipshod management practices.

(2) Review the Financial Inspection Manual

An inappropriate financial inspection manual is standing in the way of smooth financing for small and medium-sized businesses, and therefore we will rapidly carry out the required review of procedures for changing credit ratings following changes to financing and loan repayment conditions and work to ensure knowledge of those changes is widespread.

(3) Establish Financial Access Law

The DPJ will establish a financial access law (law to promote smooth financing for regional communities), which would require financial institutions to disclose the extent of their regional contributions and financing conditions for small and medium-sized businesses. This law would promote appropriate competition in line with the actual role financial institutions should play in local communities.

(4) Review Practices for Debt Servicing

Debt collection activities by debt servicers may prevent companies and individuals from rebuilding their finances. Overzealous debt collection has become a social problem. We will restrict debt collection activities that infringe human rights and review how debt servicers operate in order to achieve smooth business revitalizations.

4. DPJ Measure for Market Stabilization

(1) Reducing Rapid Market Fluctuations Which Cause Confusion for Business Activities

Since rapid fluctuations in exchange rates, stock prices and interest rates cause confusion for business activities, we must build international cooperative structures to reduce these fluctuations and consider intervening where necessary in the foreign exchange market. We will also consider further regulations on short-selling if deemed necessary after examining the effects of current regulations and future market movements.

(2) Improving Market Vitality and Transparency

We will reform stock exchanges to increase the diversity of listed products and improve information disclosure. In order to improve the transparency of financial products, we will establish a new system for settling CDS and other derivatives transactions.

(3) Interim Review of Corporate Accounting

In order to avoid the confusion caused by reflecting rapid market fluctuations into the real economy and corporate profitability, we will provisionally implement a review of mark-to-market accounting. We will consider putting a temporary freeze on mark-to-market accounting for stocks held by financial institutions.

(4) Actively Investigate Regulations on International Currency Speculation

We will build international regulatory frameworks governing speculative investors including hedge funds. We will actively contribute to the construction of 21st-century international financial frameworks (a new Bretton Woods system) including a Finance Summit. When Japan provides financial aid to other countries and international institutions, we will recommend that the party receiving the aid issue yen-denominated bonds.