Japan's recovery is still 'unpredictable,' PM says

“The financial and economic crisis has had a serious impact on the economy and unemployment, and things are still in an unpredictable state,” Hatoyama said, according to the text of his first speech to parliament, which opened a special session Monday. “We're standing at a crossroads whether to go down a declining path by holding onto traditional thinking or find a new road fostered by new aspiration and ideas.”

Hatoyama's Democratic Party of Japan in August ousted the Liberal Democratic Party from half a century of government control. The new administration inherited an economy struggling with soaring welfare coasts, record government debt and an aging, shrinking population. Economists expect the unemployment rate to rise to an unprecedented 6 percent next year.

The new premier reiterated his pledge to implement policies to boost household incomes and make public high school tuition free. He has already frozen almost 3 trillion yen (US$33 billion) in spending that was part of an LDP-formulated extra budget, and won international praise for his pledge to cut greenhouse gas emissions by 25 percent.

The administration's “most important agenda” will be to help regional economies and aid businesses to support the economic recovery, Hatoyama said. He pledged to submit a bill to help small and medium-sized firms gain greater access to business loans, he said.

“It's now clear that the idea to have the strong thrive and to pursue economic efficiency at the sacrifice of people's lives doesn't work,” said Hatoyama. “I'd like to call for a shift toward an 'economy for human beings.'”

The DPJ won two parliamentary by-elections Sunday, underscoring Hatoyama's popularity and boosting his mandate ahead of a special Diet session that begins Monday.

His administration will face questions from the former ruling party on its decision to scrap plans to privatize the postal system, U.S.-Japan relations and Hatoyama's admission that his political fund-raising body falsified portions of campaign finance reports, which he apologized for Monday.

“I seriously accept public criticism regarding my political fund,” Hatoyama said. “I sincerely regret the issue led to public mistrust of politics.”

“Hatoyama started well by making changes the public wants, and people are committed to supporting the DPJ,” said Tomoaki Iwai, political science professor at Nihon University in Tokyo. “Now he faces a series of challenges starting from the parliament session where the opposition LDP will attack his fund issue.”

Hatoyama and the DPJ have called for a more equal relationship with the U.S., and they disagree with the Obama administration over where to relocate an American military base on the island of Okinawa. U.S. Defense Secretary Robert Gates last week in Tokyo urged Japan to stick to the existing agreement to relocate the Futenma Air Base to another location on the island.

Hatoyama reiterated Monday that the government won't extend its naval refueling mission in support of the U.S.-led war operations in Afghanistan. Japan will consider other support such as agriculture aid, job training and measures to strengthen the Afghan police force, he said.

Hatoyama said he will deepen ties with the U.S. through a “multi-stratum alliance.”

Hatoyama remains popular. Seventy-two percent of respondents support his Cabinet, compared with 77 percent last month, the Mainichi newspaper said on Oct. 19. The paper polled 1,067 voters on Oct. 17-18, and didn't provide a margin of error.

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