Record budget clears Diet, Hatoyama still faces hurdles ahead

TOKYO, March 24 Kyodo -
A record 92.3 trillion yen budget for the new fiscal year from April 1 cleared
the House of Councillors at its plenary session Wednesday with the support of
the majority bloc led by the Democratic Party of Japan.
The government of Prime Minister Yukio Hatoyama hopes to enact key remaining
pieces of legislation -- the child allowance and senior high school tuition
waiver bills -- by March 31, the end of the current fiscal year.
The measures would embody the key promises of Hatoyama's DPJ during the
national election campaign last summer and are aimed at appealing to voters
with the government's ''people's lives first'' slogan ahead of the key upper
house election this summer.
''It was very good and I'm thankful that the budget cleared the Diet early when
I'm concerned that the economy hasn't completely taken off,'' Hatoyama told
reporters in the evening. ''This is the start and I'm hoping that each and
every person will feel the benefit of each program in the budget, such as the
child allowances and the free senior high school.''
Concerns remain over the nation's fiscal health, however, because borrowing
will have exceeded tax revenues from the beginning of a fiscal year for the
first time in postwar Japan.
''Although the biggest issue we have is getting out of deflation, we must think
about restoring fiscal health,'' Hatoyama said at a session of the upper house
Budget Committee before the panel voted to approve the budget.
''Creating a virtuous circle in which employment and demand are produced
through a growth strategy will lead to combating deflation,'' he said, adding,
''We will exert our maximum power by working in concert with the Bank of
Japan.''
Regardless of Hatoyama's intention, the opposition is expected to intensify its
''politics and money'' campaign against the DPJ-led ruling bloc, particularly
over the funding scandals involving Hatoyama and DPJ Secretary General Ichiro
Ozawa.
The government is likely to face a crisis if it fails to resolve by the end of
May the contentious issue of where to relocate the U.S. Marines' Futemma Air
Station in Okinawa, with the main opposition Liberal Democratic Party demanding
Hatoyama's resignation in that event.
In Wednesday's vote, the LDP and two other major opposition parties, the New
Komeito party and the Japanese Communist Party, opposed the budget.
The first budget crafted by the Hatoyama government, which was launched last
September through a historic change of power, is designed to be partially
funded by a record government bond issuance of 44.3 trillion yen.
The bond issuance will grow because tax revenues are projected to fall to 37.4
trillion yen due to the stagnant economy.
Social welfare expenditures will grow 9.8 percent from what was planned in the
initial budget for fiscal 2009 to 27.3 trillion yen, while spending on public
works projects will drop 18.3 percent to 5.8 trillion yen, the lowest level in
32 years.
Budget-related legislation aimed at maintaining fuel tax surcharges and raising
cigarette taxes was also enacted at Wednesday's plenary session.
The budget cleared the more powerful House of Representatives early this month
with the approval of the DPJ and its two junior coalition partners, the Social
Democratic Party and the People's New Party.
==Kyodo