HIGHLIGHTS 3-Japan PM-elect Kan quotes from news conference
(For more on Japanese politics click [ID:nPOLJP], for stories on the economy click [ID:nECONJP])
TOKYO, June 4 (Reuters) - Finance Minister Naoto Kan, a fiscal conservative with an image as a challenger to the status quo, was elected as Japan's next premier on Friday, improving the ruling party's chances in a national election and raising hopes of bolder steps to fix tattered finances.
Following are key quotes from Kan's first news conference as prime minister-elect:
"Up until now, I have commented on (the sales tax) in my capacity as finance minister ... and also based on my personal views.
"But going forward, now that I am the party leader and will be prime minister once sworn in, I want to set a direction on this issue, including how to phrase our stance, after forming the new cabinet and naming the top party posts."
"I would like to show the way to achieve economic growth, fiscal reconstruction and reliable social security at the same time."
"In the 1960s, public spending boosted productivity. But from the 1980s on, they built an airport in every prefecture but failed to create a hub airport in Japan, making (South Korea's) Incheon the hub airport (for Japan). There has been so much misuse of public money.
"The Koizumi government took deflationary policies when there was a shortage of demand ...
"They said the economy would be reborn if companies carried out restructuring ... But in reality, there were job losses. They took deflationary policies when the economy was in deflation, only to make it last longer like this.
"We'll avoid these mistakes. We will try to increase demand and employment."
"Our fiscal spending will focus on boosting demand and creating jobs ... This will lead to overcoming deflation and to economic growth.
"Of course there's the question of whether to finance it by tax or debt.
"The crisis in Greece happened because financial markets lost confidence.
"But if we don't make mistakes in making fiscal spending effective and sustainable, the Japanese economy can grow more.
"I have agreed (with People's New Party leader Shizuka Kamei) that we will enact the postal bill by the end of the current session of parliament. I want to do my best for this agreement."
TIES WITH ASIA
"Asia is the region leading global growth ... We can have relations with China, India, Vietnam and other developing countries in which we complement each other in technology and economic structuring ...
"In China now, big projects are going to European (companies).
"Why? There was an expression during (former prime minister Junichiro) Koizumi's cabinet of Japan-China relations that economic ties were hot but political ties were cold.
"But in reality, economic ties cannot be hot when political ties are cold."
"In making the budget for this fiscal year, we had a lot of constraints, such as limited time after the general election, the economic downturn after the collapse of Lehman Brothers and falling tax revenue.
"The budget for the next fiscal year will be our first real step to rectify policy mistakes of the past 20 years.
UPPER HOUSE ELECTION
"What I want to tell voters in the upper house election is that our reforms are becoming more concrete.
"The hopes voters had for the Democratic Party are not just ending up as a mere dream. They will be realised. That's what I want people to know for the election.
"The Japan-U.S. agreement is an agreement between governments or between countries, and that is an agreement formed under the Hatoyama government. It is our responsibility to take special notice of that agreement.
"We need to tackle the issue while keeping in mind that lessening burden on Okinawa is an important part of the agreement. (Reporting by Hideyuki Sano, Kiyoshi Takenaka and Chisa Fujioka)