Japan's Hatoyama wins tough leadership role
Updated
Japan's new government under prime minister designate Yukio Hatoyama has promised to boost household incomes and help the poor and to do that he will have to untie Japan's famous red tape and stimulate the sluggish economy. Mr Hatoyama says he will conduct politics for the people. But in a country not known to readily embrace change how ready are the people for the changes ahead?
Presenter: Karon Snowdon
Speakers: Jasper Koll, president, Tantallon Research, Tokyo; Richard Jerram, chief economist, Macquarie Securities; Simon Crean, Australian trade minister
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SNOWDON: With the landslide election win for the Democrats Japanese voters have shown they are sick of the corruption, ineptitude and arrogance of the Liberal Democratic Party, which ruled for an almost unbroken five decades.
But are they ready for the big changes necessary to get the world's second largest economy out of its worst recession since the war?
With unemployment at a record and approaching six per cent, consumer and business confidence at rock bottom, and public debt twice the size of the economy, a lot of things will have to change.
KOLL: It's Japan's last chance.
SNOWDON: Jasper Koll is the president of Tantallon Research in Tokyo.
KOLL: The incoming prime minister Mr Hatoyama has got a fantastic opportunity to actually make the deep rooted changes that are necessary to get Japan back on an economic growth track.
SNOWDON: Is he brave enough?
KOLL: Hatoyama certainly has got the right ideas. For example, increasing the purchasing power of the people by giving more money for the people to allocate themselves and funding that by cutting government waste is the right idea and he certainly should have enough of parliamentary strength to get the job done.
SNOWDON: Japan's export economy remains struggling at the whim of the global trading system.
The new government's immediate focus will be on the domestic economy with promises to cut taxes and with help for the poor including 26,000 yen, or $US280 a month for each child.
Richard Jerram is the Tokyo based chief economist with Macquarie Securities.
JERRAM: In some ways it's hard to know where they're going to start, they've made so many promises. I think the first economic issues are going to be putting through a budget for next year and also trying to come up with the money to fund their programmes.
SNOWDON: What has to give [in order] to fund programmes like that?
JERRAM: Well, they're saying they can find cost savings in wasteful parts of the government in order to fund it. I think there's a very high degree of scepticism that really will be the case so it seems more likely that at least partially they have to fund it through more borrowing .
SNOWDON: The cabinet will be chosen in the next couple of weeks. And the choice of the finance minister we can expect to be a crucial one. Any ideas who its likely to be?
JERRAM: There are a few interesting names around perhaps the most interesting one is perhaps a chap named Fuji who was finance minister before about 15 years ago briefly. So the hope is he will actually know how to control the finance ministry in terms of budget formation and to make some of these cost savings that will be necessary.
SNOWDON: Richard Jerram says the fate of long winded negotiations between Australia and Japan for a free trade agreement are now uncertain because agriculture will be definitely off the table.
JERRAM: They have so many domestic tasks and possibly foreign policy tasks its hard to see they really want to expend much effort on free trade agreements. It may simply be they decide its just too difficult.
SNOWDON: Japan remains Australia's major trading partner and trade minister Simon Crean says the relationship remains important and healthy with or without a free trade agreement.
CREAN: The importance of the two economies to each is unquestioned. We have also in the past 18 months made important contact with the new government.
