Tokyo - Japan's Prime Minister Taro Aso unveiled on Thursday a nearly $300bn package for Asia's largest economy to weather the global economic crisis, signalling he would hold off on high-risk elections.
Aso, trailing in polls and under pressure from the opposition to call snap elections, instead pressed parliament for quick approval of the ¥26.9 trillion plan, including ¥5 trillion in new spending.
With the economy teetering on recession, the package's highlight is sending back a total of ¥2 trillion to all households.
"The global financial crisis is a once-in-a-century event," Aso told a nationally televised news conference.
"An overwhelming majority of people put importance on policies, especially economic measures, rather than political affairs," he said.
The package includes cuts in tolls on expressways, tax breaks for housing loans and capital gains, along with support for child care, elderly care and regional economies.
Aso also pledged help for the growing number of young Japanese without steady jobs by giving businesses incentives to provide stable work to some 600 000 people.
Demand for exports slumps
"In this kind of situation, we need to relieve people's insecurities. We should not be fearful of the violent storm, nor should we just stand and let the typhoon blow us away," Aso said.
But Credit Suisse economist Hiromichi Shirakawa doubted the package could stop Japan's slowdown, saying that unemployment would likely rise as US and other countries' demand for Japanese exports slumps.
"With tax breaks in a climate of heightened employment insecurity, we expect only limited stimulus effects on individual consumption and housing investment," he wrote in a report.
Aso, who took over a month ago from the unpopular Yasuo Fukuda, breaks with predecessors in his Liberal Democratic Party (LDP) with his advocacy of government spending to boost the economy.
But Aso said the government would not issue any new bonds, which would worsen Japan's already ballooning public debt.
The package was far larger than some ¥1.81 trillion in new spending announced in late August by Fukuda to ease the impact of soaring commodity prices.
Parliament approved the package earlier this month, with the opposition supporting it. But the opposition has warned that further legislation will not have such an easy ride through parliament if Aso refuses to call elections.
Empty promises
The opposition lashed out at Aso for saying he was ready to raise taxes - a step many economists feel is vital for public finances - in three years, presuming the economy has recovered by then.
"He will make a large hike in the consumption tax in three years but give tax cuts before that. Does he really think this is the way to boost consumption and purchasing power?" senior opposition leader Yukio Hatoyama said.
The LDP chose Aso, a flamboyant campaigner, with a mission to lead them into elections, which must take place by September 2009.
In another hint he would not call elections now, Aso noted that the United States, the world's largest economy, was undergoing a transition period between presidents.
"I don't think the world thinks it's the best to see both the number one economic power in the world and the number two economic power, Japan, messing around with elections and what not," Aso said.
But analysts said that the LDP's main concern was losing. The party has been in power for all but 10 months since 1955 but has had four premiers over the past two years as it reels from corruption scandals and a slowing economy.
"At least Aso could give voters the impression that he may do something to ease the economic difficulties they face," said Hiroshi Hirano, professor of politics at Gakushuin University.
"But elections at a later time could backfire with a further dwindling of public support."
The Nikkei business daily estimated that the LDP would lose about 130 seats in the 480-member lower house if the election were held now, with the opposition taking the majority.
- AFP