On 16 November, Prime Minister Yoshihiko Noda dissolved the Lower House and called for an early general election on 16 December. The decision aims to end a situation of political gridlock that the country has suffered since July. Back then, the two main parties agreed to call a snap election in return for opposition support for a sales tax reform in the Upper House, where Noda lacks a majority. Noda has finally agreed to a new vote after the Upper House gave the final approval to a long-awaited debt-issuance bill necessary to finance around 40% of the current fiscal year's budget. The measure allows the government to issue bonds without parliamentary approval until April 2015. Moreover, the Lower House also passed a controversial electoral reform bill which seeks to correct vote disparities between urban and rural election districts and a bill to reduce pension benefits. Latest polls show that the Liberal Democratic Party (LDP) of former Prime Minister Shinzo Abe is well ahead of the Democratic Party of Japan (DPJ) led by Noda. In addition, former Governor of Tokyo Shintaro Ishihara and Mayor of Osaka Toru Hashimoto merged into the new Japan Restoration Party (JRP), which aims to become one of the largest political forces in the country. According to a survey conducted by Kyodo News on 24-25 November, the LDP would garner 18.7% of votes, against 8.4% for the ruling DPJ. The JRP would come in second with 10.3% of votes. Nuclear energy will be one of the key issues in the campaign after the Fukushima accident in March 2011. Noda supports ending nuclear power generation, although he did not mention any specific target date. On the other hand, Abe opposes abandoning nuclear power and pledges to restart all idled nuclear reactors within three years. Monetary policy also took centre stage when, on 20 November, Abe called for further credit easing as well as for a closer collaboration between the Central Bank and the government in order to beat deflation. In this regard, Abe advocates an inflation target of 2%, up from the current 1% set by the Bank of Japan. However, this measure came under criticism as it would imply greater control over the Central Bank.
Noda calls snap election to end political gridlock
November 16, 2012
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Japan Economic News
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