FACTBOX-Will Japan's PM keep his election pledges?

Mon Nov 30, 2009 11:11pm EST

Dec 1 (Reuters) - Japanese Prime Minister Yukio Hatoyama vowed to put more money into the hands of consumers rather than companies before his Democratic Party swept to a landslide election victory in August.

A fragile economic recovery could make it hard for Hatoyama to meet this and other election promises, thus delaying what is essentially a rebalancing of Japan's economy. But this might not necessarily damage his support ratings as media polls show voters would tolerate backtracking on policies to save money because of Japan's ballooning public debt.

Following are some of the government's major pledges and what is being said about them given Japan's economic situation:

CHILD ALLOWANCES

The Democrats pledged to pay a monthly cash allowance to families for every child aged 15 or under, starting in April 2010 with 13,000 yen ($151) per head and rising to 26,000 yen, a policy economists say could buoy GDP for a while.

The party estimated this policy, partly a bid to boost birth rates by reducing the financial burden on parents, would cost 2.7 trillion yen in the first year and 5.5 trillion yen a year thereafter. [ID:nT2248]

But concerns over a public debt approaching 200 percent of GDP have prompted voter backing for suggestions allowances be reserved for families on lower incomes.

Hatoyama has said he wants to push ahead with a universal allowance and would probably be reluctant to alter a policy that was a centrepiece of his campaign pledges.

His party has also promised to introduce free high school education from April 2010, at an annual cost of 500 billion yen.

FUEL TAX

Hatoyama's party promised to abolish an unpopular decades-old surcharge of about 25 yen per litre on gasoline, an idea welcomed by about 54 percent of respondents to a poll last week in the Sankei newspaper. Residents of car-dependent rural areas would benefit.

But abolishing the tax would lose the government 2.5 trillion yen in annual revenues, something it can ill afford when overall tax revenues are slumping as a result of the slow economy.

The government may fulfill its promise, but claw back most of the lost income and quell criticism from environmentalists by replacing the temporary tax with a "green" tax of 20 yen per litre on gasoline as soon as April, the Yomiuri newspaper said on Sunday. [ID:nT17881]

ABOLISHING HIGHWAY TOLLS

Another promise was to phase out expensive highway tolls starting in April to try to put more money into consumers' pockets and boost the economy by making it cheaper to transport goods.

But the policy would cost about 1.3 trillion yen annually, and has been widely criticised by the public. Even transport firms have expressed concern increased traffic congestion might outweigh lower costs.

The Sankei newspaper poll found 77.3 percent of voters disapproved of the idea, which would likely harm train and airline companies and increase emissions of greenhouse gases.

There have been calls for tolls to be abandoned only in relatively remote areas where public transport is not available. It is not clear how the government will respond.

GLOBAL WARMING

Hatoyama won praise around the world for promising to target a 25 percent cut in greenhouse gas emissions on 1990 levels by 2020, but the target will only apply if all major emitters agree on an ambitious climate pact. [ID:nT104080]

Japan's biggest business lobby has warned the pledge could damage economic growth.

In a poll published in the Nikkei daily on Monday, just 25 percent of voters said the policy should be revised. The eventual decision will depend on international agreements.

CUTTING PUBLIC WORKS

The government has promised to freeze construction on 48 dams, saying the move will save about 1.3 trillion yen. It has also promised to review other public works projects in what it says is a new focus on people rather than concrete.

Cutting waste is popular with many voters, but some rural communities are vehemently opposed to halting dam construction because they depend heavily on such projects for jobs and income.

Media reports say reimbursing local governments who have contributed to such projects could in some cases be more expensive than completing them, so it is not clear how far the pledge will be kept.

($1=86 yen) (For more on Japanese politics, click on ID:nPOLJP) (Editing by Dean Yates and Jerry Norton) ((isabel.reynolds@thomsonreuters.com; +813-6441-1883; Reuters Messaging isabel.reynolds.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

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