By Chikafumi Hodo
TOKYO (MaceNews) – Japanese Prime Minister Sanae Takaichi has announced that she will dissolve the House of Representatives on Friday, seeking to justify with a dual fiscal policy mandate yet another snap election less than 16 months after her predecessor called and lost a majority.
The conservative politician with right-wing views on women’s rights and wartime history ended weeks of speculation by making her plan public at a time when her cabinet has high approval ratings but voter support for the scandal-tainted Liberal Democratic Party is waning.
Takaichi told a news conference on Monday evening that she needs to seek public approval of her policy by calling an election because she has not yet received a direct electoral mandate since taking office in late October.
The LDP plans a major policy shift in cooperation with its new coalition partner, the Japan Innovation Party (Ishin no Kai) and aims to secure enough support to advance legislation, she said.
“Including a new approach to economic and fiscal policy, these represent a major shift in key policies,” Takaichi said. “It is the duty of a national leader to present major policy shifts to the public and openly seek the people’s judgment on whether they should be accepted.”
Takaichi said she will campaign on fiscal spending, tax cuts and a revised security strategy amid strained diplomatic ties with China, adding that her goal is for the ruling coalition to retain its narrow majority in the lower house, instead of seeking a landslide and thus keeping her ambitions low.
Ahead of the lower house election that Takaichi said will take place on Feb. 8, Japanese stock markets have already hit record highs on news reports on Jan. 9 that the prime minister was considering dissolving the lower chamber at the start of the 150-day ordinary session of the Diet on Jan. 23. The term for lower house lawmakers is four years.
The market reaction reflects hopes that a general election win for the conservative ruling party that has been sitting on a shaky coalition would stabilize the government and allow Takaichi to pursue her “responsible” (restraining large-scale debt issuance) but “proactive” (boosting spending on public programs) fiscal policy. At the same time, the yield on long-term government bonds surged to a 27-year high of 2.185% on Friday on fears that a further expansion in already large fiscal spending plans would make borrowing costs higher.
Bonds sold off further on Monday, sending the 10-year bond yield to 2.275%, the highest level since February 1999 and up about 20 basis points over the past 10 business days, according to the Nikkei business daily.
Market analysts estimate that a two-year suspension of the sales tax on food, which has already been reduced to 8% from 10%, would slash tax revenue by about 5 trillion yen ($31.7 billion) a year.
Takaichi declined to comment directly on either the bond yield spike or the yen’s depreciation but said, “Japan will monitor the markets closely and be ready to take appropriate measures when excessive speculative moves arise.” Her remarks are in line with those from senior Finance Ministry officials who have been warning that the ministry can intervene in the market any time to sell dollars for yen.
Despite the high approval ratings, the prime minister faces a fragile parliamentary position, with the ruling coalition holding a slim majority of 233 seats in the 465-member House of Representatives. The LDP controls only 199 seats and now relies on cooperation from Ishin to maintain a working majority.
Takaichi said the LDP had already agreed with the coalition partner, Ishin, in October to suspend the 10% sales tax on food for two years, noting that despite some debate within the LDP, the measure has been included in the party’s campaign pledges.
She added that the election would also seek a mandate for fundamental changes to bolster Japan’s economic and defense policies, stressing that a country must be able to help itself.
The LDP is already facing a threat from the Centrist Reform Alliance, the product of the last-minute pre-election merger between the Constitutional Democratic Party of Japan, the largest opposition party whose predecessor pushed the LDP out of power in 2009 to rule the country for three years, and the Buddhist-backed Komeito that ended 26 years of partnership with the LDP in October over the slow progress in cleaning up the money politics. They hold a combined 172 seats.
A weekend telephone poll by the Asahi Shimbun daily released on Sunday showed that 36% of respondents supported Takaichi’s decision to call a general election at this timing while 50% was opposed. The survey also showed that 52% said it would be preferable for the ruling coalition to retain a majority after the election, compared with 35% who said they should not.
Meantime, support for the LDP as a proportional representation vote choice stood at 34%, the largest opposition party, Centrist Reform Alliance, drew 28%, not far behind.
The House of Representatives comprises 289 single seats and 176 proportional representation seats.