Japan PM reshuffles cabinet in budget push

Japan’s Prime Minister Naoto Kan added new faces to his cabinet on Friday in a bid to appease opposition parties, help his push to mend the country’s tattered finances and boost free trade to spur growth.

Among the changes in Kan’s third cabinet since becoming prime minister were new fiscal policy, trade, justice and transport ministers, but the premier kept other key posts such as foreign, finance and defence portfolios unchanged.

Other changes see Kan having bowed to pressure from the conservative opposition in order to help secure the passage of bills to finance the 2011 budget, as he seeks to energise an economy mired in deflation, huge debt and burdened by a rapidly greying population.

Warning of the need to overcome “huge, critical situations,” for Japan, Kan in a speech cited “economic doldrums for the past two decades, deterioration of public finances, social security uncertainty and diplomatic problems”. Kan has seen his support ratings tumble after only seven months as premier, and his Democratic Party of Japan (DPJ) is gearing up for a tough 150-day parliamentary session starting this month.

Opposition parties threatened to boycott sessions and delay the passage of key legislation unless Yoshito Sengoku was removed as Chief Cabinet Secretary, citing what was seen as his mishandling of a territorial row with China.

Yukio Edano replaces Sengoku, who takes a top party post.

Kan appointed 72-year-old conservative former finance minister, fiscal hawk Kaoru Yosano, as his new fiscal policy minister, also putting him in charge of tax and social welfare.

His brief will be to help balance state finances in Japan, where the public debt is now twice the size of the $5 trillion economy, and where the rapid ageing of the population will put more pressure on the public purse.

Yosano advocates raising the consumption tax to boost revenue and eventually help reduce debt. “The appointment of Yosano symbolises Kan’s determination to push for fiscal reforms,” Shinichi Nishikawa, professor of politics at Tokyo’s Meiji University, told AFP.

Kan replaced his trade minister, Akihiro Ohata, who has been reluctant to support the premier’s initiative to join the US-backed Trans-Pacific Partnership being debated by nine countries.

Membership in the trade pact now taking shape has been strongly backed by Japanese industrial lobbies, but opposed by politically powerful farmers’ groups who fear floods of cheap imports, especially rice.

Ohata will be replaced by Banri Kaieda, who previously served as fiscal policy minister. Satsuki Eda takes on the role of Justice Minister.

The foreign and defence ministers retained their posts, as did Finance Minister Yoshihiko Noda, as the new cabinet was sworn in by Emperor Akihito Friday afternoon. The moves were welcomed by Japan’s largest business lobby Nippon Keidanren.

But analysts said the premier’s hand was forced by the conservative opposition, which had threatened to hold up crucial budget financing bills unless Kan sacked two cabinet members against whom it has launched censure motions.

The two — Sengoku and the Land, Infrastructure, Transport and Tourism Minister Sumio Mabuchi — left the cabinet. Former trade minister Ohata stayed on to replace Mabuchi.

The opposition last year passed non-binding censure motions against Sengoku and Mabuchi over what it said was their mishandling of a heated row with China over a maritime incident in disputed waters involving Japan’s Coast Guard.

“The reshuffle was chiefly motivated by the opposition warning,” Professor Nishikawa said. “But the replacement does not guarantee smooth parliament procedures. Tough times are still ahead for Kan.”

Analysts say Edano’s appointment also signals Kan’s determination to drive out his party enemy Ichiro Ozawa, a veteran powerbroker embroiled in a political funds scandal. Edano has spearheaded efforts against Ozawa.