By David Pilling and Michiyo Nakamoto in TokyoPublished: September 27 2007 06:05 | Last updated: September 27 2007 06:05
Public approval for the new cabinet of Yasuo Fukuda, prime minister, leapt to 58 per cent, according to a poll on Wednesday, indicating that Japanese voters are giving the Liberal Democratic party a new chance under its new leadership.
The survey by the Kyodo news agency put support 17 percentage points higher than that for for Mr Abe’s previous cabinet and nearly 30 points higher than one taken in August. New cabinets usually produce a rise in approval ratings in Japan, though the effect is not always lasting.
“There has been some criticism that the LDP has gone back to the old regime,” said Takashi Omori, chief economist at UBS, referring to Mr Fukuda’s selection of faction chiefs for top positions. But, he said, factions were more meritocratic than they used to be.
Heizo Takenaka, economy minister under Junichiro Koizumi, the former prime minister, said Mr Fukuda was not likely to make “bold reforms”, adding: “He is . . . good at coordinating various opinions rather than exercising strong leadership.”
But he played down suggestions that the new cabinet would sharply increase spending to address growing social inequality, anger at which was a big factor behind the LDP’s recent election defeat. Rather, he said: “I expect that effort to improve fiscal consolidation will advance in his cabinet.”
Both Sadakazu Tanigaki and Bunmei Ibuki, LDP policy chief and secretary-general respectively, were former finance ministry officials, Mr Takenaka said, giving the fiscally conservative ministry “tremendous power”. “The MoF will have tremendous power,” he added, referring to the ministry’s reputation for seeking fiscal rectitude.
Opinions differ sharply as to whether the political need to address social hardships will cause Mr Fukuda to ease restrictions on public spending. The LDP’s junior coalition partner, the Buddhist-backed Komeito party, has raised the possibility of delaying a pledge to reach primary fiscal balance by 2011.
Mr Omori said: “There could be some slippage as the new administration addresses the side effects of reform.” But he said the effect would not be too pronounced.
Fukushiro Nukaga, finance minister, on Wednesday brought up the issue of covering revenue shortfalls caused by a planned delay to increasing the amount elderly patients pay for their healthcare. The LDP agreed to a Komeito request to freeze the planned increase, originally due to come in next year.
Mr Nukaga sought to reassure sceptics that the measure did not presage a spending spree. “We must push ahead with the reform of spending and revenues to achieve a budget surplus by 2011,” he said. “For that purpose we have to set a spending cap.”
Budget discussions for fiscal 2008 are due to begin in parliament early next month.
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