The opposition Constitutional Democratic Party of Japan will push for taxable ¥20,000 ($135) cash handouts to be included in the upcoming extra budget, the party leader said, framing it as a key test of whether deeper cooperation with the ruling coalition is possible.
"Including the cash handout in the extra budget should be the top priority,” Constitutional Democratic Party leader Yoshihiko Noda said in an interview on Friday.
"Only then can we see if real cooperation with the ruling bloc is possible — but at this point, I don’t see much of a chance,” he added. He also ruled out the possibility of joining the coalition.
Noda’s comments come as the ruling Liberal Democratic Party prepares to elect a new leader on Saturday. Whoever wins is expected to become Japan’s next prime minister, but they will have to
seek support from opposition parties to pass key legislation after the LDP lost its majority in both houses of parliament.
The CDP holds the most number of seats among opposition parties, but has struggled to get other parties to coalesce around it.
While all five LDP leadership contenders have said economic measures are needed to support households, many have backed away from the concept of one-off cash handouts. The party campaigned on them in July’s Upper House elections and had dismal results.
Noda, a former prime minister who was in power in the early 2010s, emphasized the CDP’s goal of regime change in the next general election. At the same time, he signaled he’s not expecting to become premier himself this time, given the fragmentation among opposition parties.
Among the five LDP leadership candidates, Noda showed preference for those aligned with outgoing Prime Minister Shigeru Ishiba. "We discussed policies under Ishiba, and if the next leader is someone who carries those decisions forward, we see more opportunity for real policy dialogue and implementation,” he said.
Those comments suggested he favors agricultural minister Shinjiro Koizumi and Chief Cabinet Secretary Yoshimasa Hayashi, contenders from the current Cabinet. Noda distanced himself from pro-stimulus candidate Sanae Takaichi, who has floated a combined tax credit and handout policy similar to the CDP’s more longer-term plan.
"The LDP and Komeito are currently negotiating with us, and securing financial resources is of course one of the issues they’re considering,” he said. Takaichi’s thinking on financing is "totally different,” he said.
Earlier this week, Noda instructed CDP leaders to compile an economic package proposal to be submitted during the upcoming parliamentary session.
He said the plan will build on price measures proposed ahead of the Upper House election, include a one-year suspension of the sales tax on food. The estimated ¥5 trillion cost for the tax cut can be funded through non-tax revenue, surplus government funds and other sources, Noda said.
Noda, who also once served as finance minister, pointed to the weak yen as a major factor behind persistent inflation, suggesting the Bank of Japan should take it into account in deciding policy. Given the current economic conditions, "the environment is in place” for the BOJ to start raising rates, Noda said.
"Real interest rates are still too low,” he added, referencing economists’ view that a 1% real neutral rate should be the benchmark.
He also called for a revision of the 2013 joint statement between the government and BOJ, which committed to continued easing until inflation stabilized at 2%. Noda suggested a more flexible target, arguing the current goal lacks adaptability. The party suggested 1% to 3% as an alternative target.
Separately, the BOJ announced last month that it will begin gradually unwinding its massive holdings of exchange-traded funds, which total more than ¥70 trillion in market value.
"There’s no need for ETF sales to take 100 years,” Noda said. He reiterated the CDP’s proposal from last year to redirect BOJ ETF dividends toward child care spending.
"If the BOJ’s profits are used only for debt repayment and defense spending, the public sees no benefit. If we consider it a funding source, we need to broaden how it’s used.”