Japanese Prime Minister Naoto Kan said on Friday he remained committed to fiscal reform despite his ruling party's defeat in this month's election, adding that he will focus on creating jobs and growth in a budget for next year, according to Reuters. Kan's Democratic Party of Japan (DPJ) and its tiny ally lost their upper house majority in a July 11 election after Kan, who has made fiscal reform a priority, floated a possible doubling of the 5 percent sales tax to rein in Japan's huge public debt. "Regardless of who is prime minister or which party is in charge, no one can avoid the issue of fiscal reform. I would like to work hard on fiscal reform from now on, too," Kan told a news conference. Kan also vowed to cut waste and focus on creating jobs and engineering growth in the state budget for the next fiscal year from April 2011. In its budget outline for fiscal 2011/12, the government has vowed to cap spending and new bond issuance at this year's level in an effort to fix Japan's tattered finances. Kan, his public support ratings slipping following his party's election defeat, is fighting for his political life ahead of a DPJ leadership election in September. On Thursday, he apologised to his party members for the election loss, saying his pre-election sales tax talk was ill-prepared. But Kan and his supporters in the party still see the need to discuss drastic tax reform, including a politically touchy rise in the sales tax, as the country needs to cope with public debt, which is nearly twice the size of Japan's $5 trillion economy, and soaring social welfare costs for a rapidly ageing society. Still, Kan was cautious and told the news conference that the sales tax would not be his focus in the party leadership race. Many suspect party powerbroker Ichiro Ozawa, who was sidelined during the upper house poll in an effort to woo voters put off by his scandal-tainted image, may be preparing a challenge to Kan -- already Japan's fifth premier in three years. Kan also told the news conference he was not considering dissolving parliament's lower house for a general election. No lower house poll needs be held until 2013. The Democrats remain in power by virtue of their huge majority in parliament's powerful lower house, but the coalition's loss of control of the upper chamber means they need to find new allies to enact bills, including legislation to implement the 2011/12 budget. While voter support for Kan's government has fallen sharply since he took office in June, many see no need for Kan to quit, a sign that voters no longer want revolving-door prime ministers. But Kan faces a rocky road ahead with a hung parliament. Opposition parties are likely to grill Kan about his plans to discuss a possible future hike in the sales tax in an extra session of parliament that started on Friday. Kan asked opposition parties to work with the government as needed for the sake of the Japanese people. "I would like to ask those in the opposition parties (for cooperation). The situation Japan is in now -- long term economic stagnation, massive public debt, uncertain social security system -- can all be seen as national crisis." "If policies are helpful for the Japanese people, we will sincerely listen and we would like to work on them if we could reach an agreement."
