Six months ago we highlighted the importance of the forthcoming July Upper House elections.
No factor offers greater prospects for reform than a two-house majority by the DPJ. There is no question that a long period in opposition will help to preserve this coalition together, as well as increasing their zeal for reform. A greater deal of voter support I think can also be expected, particularly given the frustrations with the LDP.
During this period PM Hatoyama needed to convince the electorate of his leadership skills in order to secure a majority of the Upper House. This would have given him control of both houses, which would have allowed him to achieve substantive reform in Japan.
Critics will argue that Hatoyama was a 'lame duck' PM. If I allow myself to be generous, I suspect that he tried to be uncontroversial in these first 6 months in the hope that he would win popular support by avoiding controversy. This strategy has clearly failed him. On the 2nd June 2010 Hatoyama resigned as PM.
His failings were that he allowed seemingly uncontroversial issues like the relocation of Futenma air base, as well as party funding anomalies to define his administration. I think this created the perception that he lacked depth. He was trying 'safely' to secure both houses of parliament. Yet, I think it was the most honest Japanese political administration in a long time. If we reflect on what he did achieve - they were:
1. Child allowance
2. Abolition of public school fees
Clearly these policies were for the liberals in Japan. I suspect though that once a two-house majority had been secured, we might have seen significant reform.
Both Hatoyama courted controversy by receiving large sums of money from his mother without paying gift taxes. Hardly a huge breach of ethics given that it was for a public purpose, and in most countries political donations are tax-deductible.
The resignation of Hatoyama and Ichiro Ozawa allow for a fresh stand before the Upper House elections. The question is whether the new PM can achieve the community support he needs to win the Upper House. This is a big ask just a month out from an election. The leader will need to do a lot of campaigning. Any politician does start out with good ratings, though they also start with some history.
The most likely new PM is Naoto Kan, who served as DPJ president in the past, has been deemed by some as the top contender to lead the nation.
Another option is Foreign Minister Katsuya Okada.
Kan, a former health minister who rose to fame for exposing in 1996 the ministry's responsibility for the spread of tainted blood, has kept his distance from the contentious Futenma air base relocation issue (unlike Okada and land minister Seiji Maehara).
It will be interesting to see if the Social Democratic Party rejoin the ruling coalition, as the DPJ currently have a slim majority in the Upper House. In the DPJ's favour is that the LDP has also experienced its own form of controversy with a series of defections and internal bickering. The new leader will need to win over the hearts and wins of swinging voters dismayed by both sides of politics. Cabinet's approval rating has fallen from over 70% after the election to just 20% today.
So what would Kan do for the party. He has indicated little change in the direction of the party, which is a positive. He remains committed to the US alliance, and his focus will be job creation in daycare services for children and the elderly. This party is attempting to be the voice of the young, trying to achieve generational change.
Tarutoko, also vying for the PM role, has pledged to reduce the number of Lower House legislators by 80. Transport minister Seiji Maehara intends to support Kan. Senior Vice Finance Minister Yoshihiko Noda, leader of an important faction critical of Ozawa, is also supporting Kan.
The new PM will be established by 11 a.m. Friday to be voted in as prime minister, so a new cabinet will be announced soon after. The DPJ holds a strong majority in the Lower House. The fact that Kan will have so little time, will not aid his cause, but he at least over other candidates, has a lot of parliamentary and leadership history to be judged upon, and not so controversial. Kan has signalled that he will increase taxes to reduce the growing public debt. Kan will also be one of the few PM's not to come from a political dynasty, i.e. The last since LDP lawmaker Yoshiro Mori in 2000.
Given that Kan has signalled higher taxes, and these were always expected, it will be interesting to see where the increased tax burden will fall.
