Japan’s government aims to complete earthquake reconstruction in the next 10 years to help the nation recover from March’s record temblor.
Finance Minister Yoshihiko Noda said at a press conference in Tokyo today that most of the rebuilding will be completed in five years. The government plans to spend 19 trillion yen ($243 billion) over that period, according to a draft government proposal obtained by Bloomberg News.
Kan’s efforts to rebuild the northern region have been complicated by growing calls for him to resign and a falling approval rating. The spending blueprint that Noda said will be released by the end of the month may not win lawmaker support, given that they are focused on pushing Kan out of office, according to analyst Takeshi Minami.
“Kan’s lack of support sets a high hurdle,” said Minami, chief economist at Norinchukin Research Institute Co. in Tokyo. “Policies tend to change under new leadership so we don’t know how much weight these proposals hold.”
The spending pledged includes the 6 trillion yen Kan has already drafted in two supplementary budgets. The government will need to raise 10.3 trillion yen through tax increases and reduce spending on programs including childcare handouts by 2.4 trillion yen, according to the proposal.
A panel charged with making recommendations for rebuilding has suggested raising taxes temporarily to help pay for damages the government estimates are around 16.9 trillion yen. The group also called for setting up special disaster relief zones where preferential rules and financial assistance will be provided to help the nation recover from a temblor that has left more than 20,000 dead or missing.
Komatsu Ltd., the world’s second-largest construction machinery maker, said Japanese orders increased more than 30 percent in the second quarter from a year earlier, spurred by reconstruction demand, Chief Executive Officer Kunio Noji said.
Political infighting has hampered reconstruction efforts, with the government’s response lagging previous efforts to rebuild the nation after the Tokyo earthquake of 1923 and Kobe’s 1995 disaster, Makoto Iokibe, head of the government rebuilding panel, said in an interview this month.
Kan yesterday won parliamentary approval for his second extra budget, the first in three legislative goals he says must be achieved before fulfilling his pledge to resign. He is also trying to pass laws for renewable energy and deficit-covering bonds needed for this year’s budget.
The prime minister’s approval rating fell to 17.1 percent from 23.2 in June, according to a Kyodo News survey published yesterday. Kan’s disapproval rating was at 70.6 percent, according to the report. Kyodo gave no margin of error for the poll.
Vice Finance Minister Fumihiko Igarashi said yesterday the government may sell some of its stake in Nippon Telegraph & Telephone Corp. and Japan Tobacco Inc, adding that any equity sales wouldn’t be significant. The government’s ability to pay for damages has been limited by its growing public debt burden.
The boost the economy will get from reconstruction demand may be hampered by the yen’s gains against the dollar. Japan’s currency has surged more than 4 percent in the past three months. It traded at 78.09 against the dollar as of 12:23 p.m. in Tokyo. The Bank of Japan has said power shortages caused by the nuclear accident in Fukushima that led to subsequent closing of other plans in the country may hamper growth in the longer term.
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