Shinzo Abe, Japan's Prime Minister.
In today’s reshuffle, Abe made Yasuhisa Shiozaki health minister, giving him a mandate to change the Government Pension Investment Fund, the world’s largest retirement fund, to let it buy more risky assets. He also appointed a record number of female ministers in a step toward his goal of having women in 30 percent of management positions by 2020.
“Abe is also ready to deliver on reforms,” said
Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo and former central bank official. “The appointment of Shiozaki shows that he wants to reform the ministry most resistant to change.”
The changes to Japan’s longest-serving unchanged cabinet since World War II come 20 months after Abe took office pledging to reflate the economy. Even with the Topix (TPX) index rising more than 50 percent under Abe, wages have failed to keep pace with inflation and public support for the cabinet has drifted below 50 percent from highs of more than 70 percent in April last year.
Abe kept his senior team of Chief Cabinet Secretary Yoshihide Suga, Finance Minister Taro Aso and Economy Minister Akira Amari. Foreign Minister Fumio Kishida also remains.
Tax Raise
JPMorgan’s Adachi said this would mean no substantial change in policies, including the pledge to further raise the sales tax to 10 percent next year, especially with the appointment of Sadakazu Tanigaki as secretary-general of the ruling Liberal Democratic Party.Tanigaki was the party’s leader in opposition when it signed a deal in 2012 with the then-ruling Democratic Party of Japan for a two-stage increase in the tax to help reduce a debt burden more than twice the size of the economy.
Etsuro Honda, a government adviser, and Kozo Yamamoto, a ruling party lawmaker, have been reported as calling for postponement of the planned tax hike in October next year after recent weak economic data.
An increase in the levy to 8 percent from 5 percent in April caused the economy to contract the most last quarter since the 2011 earthquake and tsunami. Household spending and retail sales dropped in July, pointing to weakness this quarter.
Tanigaki told reporters in Tokyo today that the government should basically increase the sales tax in line with a law that states it will be raised to 10 percent. A tax rise would contribute to fiscal stability and help expand policy options, he said.
Promoting Women
Finance Minister Taro Aso, who retained his post as deputy prime minister, said Tanigaki’s appointment was “not a negative” for raising the tax. Barclays Plc. economists Kyohei Morita and Yuichiro Nagai said in a report today it would further strengthen the prospects of passage.Abe has made promoting women a centerpiece of his economic policy. Yuko Obuchi, dubbed by monthly magazine Sapio as the “next prime minister-but-one,” will oversee the nuclear industry in the Ministry of Economy, Trade and Industry post.
In addition to Obuchi, Abe appointed Sanae Takaichi as communications minister, Midori Matsushima as justice minister, Eriko Yamatani as minister in charge of the abduction issue, and Haruko Arimura as minister for promoting women. Tomomi Inada was named LDP policy chief.
Former Vice-Defense Minister Akinori Eto was appointed defense minister and minister in charge of passing a raft of security bills to reinterpret Japan’s pacifist constitution to enable collective self-defense. Shigeru Ishiba, the previous secretary-general who ran against Abe for leadership of the LDP two years ago, took a new post in charge of regional economic revitalization.
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