TOKYO - Large parts of Japanese public life will grind to a halt unless lawmakers manage to break a political deadlock and pass a new financing bill, Prime Minister Yoshihiko Noda warned Monday.
In an appeal for cross-party consensus Noda said at the start of an extraordinary session of parliament that the day-to-day running of government will seize up without agreement on the bill allowing Tokyo to issue new bonds to cover its spending.
“If the current situation continues, bread-and-butter administrative services will stall to the extent that it will have a great impact on people’s lives, which in turn could be an obstacle to economic recovery,” he told parliament.
“No government will be able to finance its workings without a special public-bond bill,” he said.
“Already we see limits on carrying out budgeted local government policies.”
A bill to expand the amount of money that Japan can borrow has fallen foul of politicking, with the opposition refusing to co-operate until they have extracted a definite promise from Noda on when he will call elections.
“Will we return to a futile factional confrontation which prioritises the fight over political power, or will we take the action that needs to be taken and have a debate focused on policies?” said Noda.
“We have to seek legislation as soon as possible, while having candid discussions among ruling and opposition blocs to seek a solution.
“Let’s stop the bad habit of taking the annual bond bill hostage and using it for political leverage.”
Japan relies heavily on borrowing to finance its regular spending, creating an ever-worsening public debt problem. The International Monetary Fund says it will owe the equivalent of 245 per cent of its approximately $5 trillion gross domestic product next year, the highest among industrialised nations.
Tokyo has a budget deficit of 10 per cent and the government began warning in September that it was facing a severe cash crunch because of the political deadlock.
Then-Finance Minister Jun Azumi said public reserves would “mostly dry up at the end of November”.
Tokyo has not been forced to halt budgetary spending due to a funding shortage since the end of World War II, according to the finance ministry.
The affected spending includes tax grants to municipalities, aid for universities and support for government-linked companies, the ministry said in September.
Payments to service debts and funding of social security, defence, policing, maritime security, and disaster handling would continue.
The opposition-controlled upper house in August censured Noda as part of its campaign to bounce him into elections.
The non-binding motion was a symbolic wrist slap signalling their refusal to work with his cabinet, and has tied up passage of any new law.
Noda is under pressure after spending a lot of his political capital over the summer as he forced through a bill on doubling sales tax—in part to begin closing Japan’s yawning debt hole.
Despite the fact that most independent commentators, academics and international bodies agreed it was a sensible thing to do, the opposition had to be cajoled into supporting it.
The prime minister swapped a vague promise of an election “sometime soon” in exchange for their votes, but his unwillingness to flesh out that promise has irritated his opponents.
Opinion polls suggest his ill-disciplined Democratic Party of Japan will fare badly at the ballot box, with voters disillusioned by their three years in power.
However, the main opposition Liberal Democratic Party has largely failed to capitalise on Noda’s sinking approval ratings and many observers predict a popular vote will prove inconclusive.
The current extraordinary session of parliament is due to run until November 30.