THE DIVISION IN THE GOVERNMENT

Almost six months have passed since Prime Minister Fukuda Yasuo was inaugurated on September 26, 2007. Ever since its formation, the Fukuda cabinet has had to contend with a divided government because last summer the opposition won a majority in the House of Councillors, the upper house of the National Diet.

The House of Representatives takes precedence over the House of Councillors under the Constitution, and this primacy is especially strong in relation to bills on the budget and international treaties. When it comes to ordinary laws, however, the situation is less clear-cut. If a bill passed by the House of Representatives is rejected by the House of Councillors, the decision of the lower house takes precedence only if the bill is passed again by a majority of two-thirds or more of the Diet members present.

The ruling coalition, made up of the Liberal Democratic Party and the New Kômeitô, currently holds a strong position in the lower house, where it controls more than two-thirds of the seats, and so it has the option of enacting legislation by overriding the upper house in this manner. But this is not an easy route to take. The reasons for this are twofold. First, overuse of this tactic is liable to give the impression that the coalition is pushing its weight around, provoking a public backlash. Second, it can take considerable time to pass a bill using this method. If the upper house votes to reject a bill sent from the lower house, it is possible to submit the bill for a second lower house vote immediately. If deliberations in the upper house draw on without reaching a vote, however, the situation becomes more complicated. The Constitution stipulates that once 60 days have passed since a bill was sent to the House of Councillors from the House of Representatives, the bill may be regarded as having been rejected by the upper house and may therefore be resubmitted. This set of provisions means that bills passed by the lower house toward the end of a Diet session risk being tabled and discarded due to lack of time if the session cannot be extended. What is more, bills to extend limited-term measures must be passed by the House of Representatives at least 60 days before the expiry date to ensure that the measures in question do not lapse.

The divided government caused Prime Minister Fukuda a lot of trouble in the extraordinary session that ended on January 15. The Antiterrorism Special Measures Law, which had set the legal basis for the refueling operation that Japan had been conducting for US and other countries’ naval vessels in the Indian Ocean, lapsed on November 1 because the ruling coalition was unable to secure enough time for the upper house to discuss the law before resorting to an override with the two-thirds majority. The Fukuda cabinet thus submitted a new law, the Replenishment Support Special Measures Law, which the ruling parties did manage to force through by the two-thirds-majority override, though only after extending the Diet session by a considerable margin.

The prime minister faces two serious challenges in the ordinary Diet session that opened on January 20. One is to enact the tax reform bill that includes amendments to revise so-called special taxation measures (consisting primarily of tax concessions for corporations and individuals). The other is to gain Diet approval of the cabinet’s nominee for governor of the Bank of Japan.

Abe Yasuhisa outlines the details of the special taxation measures amendments in an article in this section. The key political point is that the tax reform bill includes an extension to the provisional higher rates of gasoline and other road-related taxes, the revenue from which is earmarked for road construction and maintenance. Most of these provisional rates are due to expire at the end of March this year, so they will lapse if the government cannot get the bill through the House of Councillors by that date. There is thus a risk that the government will be unable to secure some of the road-related revenues that have been included in its draft budget for the new fiscal year starting this April.

At the start of the ordinary Diet session the opposition parties, led by the Democratic Party of Japan, adopted the tactic of forcing the Fukuda cabinet into a corner by opposing the tax reform bill. Sensing a potential crisis, in late January the LDP submitted a stopgap bill to extend the road-related provisional tax rates until the end of May. The party’s aim was to prepare for the possibility that upper house deliberations on the tax reform bill would extend into April; this meant that the only way to ensure an extension of the provisional tax rates was by sending a bill to the upper house before the end of January, thereby allowing its enactment through a second lower house vote 60 days later. The DPJ responded by changing its tactics and engaging in negotiations with the LDP regarding how the tax reform bill would be handled in the Diet. Through these talks, the two parties eventually agreed to a suggestion by the speakers of both houses of the Diet, acting as mediators, to reach a conclusion by the end of the fiscal year on revenue-related bills. The LDP then withdrew the stopgap bill.

Common sense would suggest that under this agreement the DPJ will allow the tax reform bill to reach a vote in the House of Councillors by the end of March even if it disagrees with its content, thus enabling the override by the House of Representatives. It is, however, by no means certain that the DPJ will abide by this agreement.

Meanwhile, Prime Minister Fukuda needs to obtain Diet approval for his nominee as the next BOJ governor by March 19. This is the date when the term of the current governor, Fukui Toshihiko, expires. On March 7, the Fukuda cabinet officially proposed to the Diet Deputy Governor Mutô Toshirô as his replacement. The DPJ, however, is reluctant to approve Mutô, a former Ministry of Finance official, for this post, although the Diet is yet to make an official vote on his approval. With just a few days of Fukui’s term remaining as of the time of this writing, the identity of the next BOJ governor remains uncertain.

The divided government increases uncertainty in the policymaking process, delaying the work of passing and implementing legislation. And below we carry an article from the editorial board of the monthly magazine Ronza noting that this is not the only problem. Since the DPJ increased its presence in the House of Councillors, officials of various government ministries and Diet secretariats have had to spend vastly more time than before answering the party’s requests for materials and cooperating in its drafting of bills.

What can be done to ease the legislative logjam? Japan has experienced divided government before; this is not a one-time phenomenon. For the medium and long term, as Machidori Satoshi points out in his article below, it may be necessary to change the role of the House of Councillors by gradually establishing new political practices and perhaps reforming the electoral system. Such long-range reforms are not an answer to the current deadlock, however.

It is worth noting that some of the trouble Prime Minister Fukuda has faced in dealing with the divided government stems from his own policies and stances. The Japanese public wants the government to implement real reforms. If Prime Minister Fukuda aroused public support by putting forward reform policies that people could easily understand, he would likely be able to break through much of the resistance from the opposition-controlled upper house. Even the DPJ would have difficulty resisting government policies supported by public opinion. However, the prime minister is reluctant to implement reforms. As has been noted before in Japan Echo, the old LDP is enjoying a renaissance under Fukuda. Structural reform has been completely cast aside, and there are signs in the fiscal 2007 supplementary budget and the fiscal 2008 budget that pork-barrel politics may be making a full comeback. In another of the articles in this section, Takenaka Heizô criticizes the Fukuda cabinet for its "reactionary policies" and urges a continuation of the reforms initiated when he was minister of state for economic and fiscal policy in the cabinet of Prime Minister Koizumi Jun’ichirô.

Public opinion has been swift to react to the difference between their wishes and Fukuda’s inaction on the reform front. The cabinet’s approval ratings have been declining steadily, and in a poll published in the Asahi Shimbun on March 4, the 32% of the public that expressed approval of the cabinet were outnumbered by the 50% expressing disapproval. These numbers are likely to deteriorate further, making the prime minister’s position even more difficult. His failure to set out a reform program has triggered a vicious circle of declining support.

Some observers advocate dissolving the House of Representatives and calling a general election as a way to break the current deadlock. Needless to say, however, such a move offers no way for the ruling parties to regain a majority in the House of Councillors. Nor will it be easy for the ruling coalition to retain its two-thirds majority in the House of Representatives in the next general election. Holding an election when the cabinet’s approval rating is low always carries enormous risks for a ruling party. That is why senior figures in the LDP have recently been calling for the idea of dissolution to be put off until next year.

If Fukuda could revive the now-shelved idea of a grand coalition with the DPJ, he might be able to break the current impasse. The further the cabinet’s popularity falls, and the closer the lower house’s current term comes to its September 2009 expiry, the more difficult it will be to form such a coalition, though.

It is hard to see any way for the prime minister to achieve a dramatic breakthrough. In April the focus of Diet business will switch to committee deliberations of proposed bills; Fukuda will continue to face an uphill battle to enact legislation. (Takenaka Harukata, Associate Professor, National Graduate Institute for Policy Studies)

© 2008 Japan Echo Inc.