Return of volatility to Japan's politics

If the Parliament is dissolved in late October, it would give Noda time to handle key policy issues.

Japanese politics is again heading towards a flux. The volatility seems to be never ending with prime minister Noda Yashihiko indicating to the head of the main opposition Liberal Democratic Party (LDP) Sadakazu Tanigaki, and LDP secretary-general Nobuteru Ishihara, the party’s No. 2 official, that he plans to hold a general election in early November.

While the ruling Democratic Party of Japan (DPJ) enjoys a majority in the lower House, the opposition LDP has majority in the upper House and passing of bills, therefore, is a huge challenge for the Noda administration.

Noda needs the support of the opposition to save a hard-fought deal to double Japan’s broad sales tax by 2015 and therefore had to pledge in return to hold a general election ‘soon.’ His push to bring the tax to 10 per cent by 2015 was billed as a test of Japan’s resolve to tackle its snowballing debt that tops two years’ worth of its economic output, a record among industrialised nations.

The DPJ which surged to power in 2009 pledging to change how Japan is governed, looks set to lose that election, spelling more policy confusion as Japan grapples with a stagnant economy, rocky ties with China and South Korea on territorial issues, and declining global competitiveness. It may be remembered that it is just three years since the DPJ, a mix of conservatives, centre-left lawmakers and ex-socialists, rode to power on a backlash against more than 50 years of almost non-stop LDP rule.

The Democrats then descended quickly into infighting, with Noda being the party’s third prime minister in three years. The Democratic Party now faces a similar backlash over broken promises. The party’s handling of last year’s tsunami and nuclear crisis and Noda’s embrace of unpopular causes such as the tax hike and the restart of nuclear reactors have not endeared the Japanese people.

Finance minister Jun Azumi says that unless the funding bill passes, the government could run out of money by the end of October. Lower house members’ terms run to August next year but most of them are betting on polls before the end of this year. It is speculated that Noda has November 4 or November 11 in mind.

The LDP, however, is not expected to cooperate with the DPJ. There are speculations in the media that Noda is even considering October 7 as the election date. The LDP seems to be unwilling to leave the governing of Japan to the Democrats any longer. The LDP’s position is that despite three years and three prime ministers since the DPJ swept to power in August 2009, the party has largely failed to deliver on its promises to reduce bureaucrats’ control over policymaking and pay more heed to consumers and workers.

Noda cut the tax deal with the LDP at a heavy political price as it has ruptured his party, with 50 members defecting over the increase in July 2012. If the parliament is dissolved in late October, it would give Noda time to handle key policy items, including a bill to allow the government to issue bonds needed to finance the fiscal 2012 budget. The time would also allow Noda to host a Tokyo meeting of the G7 finance ministers from October 12 to 14. Both the government and the opposition are thought to want to avoid displaying political chaos for an international audience during the G-7 meeting.

Even if Noda decides to gamble, there is virtual consensus amongst politicians and analysts that the Democrats will face sure defeat. But it is equally uncertain whether the LDP and junior ally New Komeito can win a majority given widespread voter dissatisfaction with mainstream parties. That dissatisfaction is reflected in support for populist Osaka Mayor Toru Hashimoto, whose Ishin no Kai party hopes to win some seats in parliament. This means the next government could be a weak coalition, spelling more confusion.

If elections are held in November as speculated, the major issue will be how the DPJ will revise its manifesto, a document cynically called ‘a synonym for lies’ that has disgraced the party. The main campaign issues in the next lower house election are shaping up to be the consumption tax rate increase, Japan’s possible participation in the Trans-Pacific Partnership free trade negotiations, and the nation’s nuclear and energy policies. As is the norm prior to elections, the ruling party hastily cobbles together policies which tend to be ‘discount sales’ smacking populism and that goes against voters’ interests.

The DPJ ought to realise how its 2009 manifesto was flawed when it did not mention consumption tax hike but made pledges that required 16.8 trillion yen in fiscal resources to implement its policy pledges through such measures as overhauling budget allocations. There was never any prospect this could be achieved. Keeping this glaring miscalculation, the DPJ needs to re-look its new manifesto to present to the people when elections are held. 

(The writer is a former senior fellow at IDSA, New Delhi)