Takaichi Delivers Policy Speech at 222nd Diet Session

The speech begins from the recognition that the international order is changing, countries are competing in industrial policy, and competition over advanced technology, talent, and investment is intensifying. The Prime Minister described protecting a free and open international order based on rules, and making early investments to address shared global risks and challenges as well as growth investment, as the reason she first aspired to serve as Prime Minister.

The speech is guided throughout by the ideal of “governing for the people’s welfare”: protecting people’s livelihoods through economic strength and building a Japan where everyone can look to tomorrow with hope were presented as the highest priorities. The Prime Minister said she would make and implement policy decisions for the people, including workers, families raising children, older adults, and people living in regional areas, and ensure the results reach every part of Japan.

The government said it has implemented measures including abolishing the provisional tax rates on gasoline and diesel, fuel subsidies, and support for electricity and gas bills. It said that, partly as a result of these policies, inflation has settled at the lowest level in the G7, while real wage growth has been positive for 8 consecutive months and is the highest in the G7.

The speech said that TSMC’s entry into Kumamoto has spurred a concentration of semiconductor-related companies, creating new jobs, income, and research and development investment. It described public-private investment promotion measures as beginning to produce results, including increased tax revenue.

For fiscal management, the government will move away from reliance on supplementary budgets and include ongoing measures in the initial budget. It will establish a “Strong and Prosperous Japan Investment Framework,” based on multi-year plans without spending caps, and manage separately through special accounts fields important to economic security. It will review special tax measures, subsidies, and funds, while making a stable reduction in the debt-to-GDP ratio its core target and managing the primary balance over multiple years.

The government will refine a public-private investment roadmap covering 17 strategic fields and 62 products and other items, and formulate the “Japan Growth Strategy Implementation Plan” by the end of the year, setting out a path for domestic investment over the next 5 years. The plan will include support for eight cross-cutting challenges, such as supplying talent and funding, talent development and education reform, putting startup technologies into practical use across society, improving labor efficiency and productivity at small and medium-sized enterprises, and facilitating price pass-through and fair transactions. Regulatory reform will also move forward.

Crisis-management investment will cover energy and resources, food, health and medical care, cybersecurity, disaster preparedness, oceans, and space. The government will accelerate GX on two pillars: diversifying procurement sources and reducing risks, and advancing the energy transition, expanding supply capacity, and improving efficiency. It will also address electricity demand from AI and data centers. A new strategy under the “Comprehensive Package for Strengthening the Resilience of Energy Supply and Demand Structures (POWERR GX),” which integrates systems and budgets, will be finalized by the end of the year.

Wages rose in the 5% range for the third consecutive year in the spring labor-management negotiations, and private-sector capital investment reached 128 trillion yen in FY2025, a record-high level. The government views this momentum as a turning point for creating a virtuous cycle of corporate investment, wage growth, and expanded consumption. It aims for a “virtuous cycle under GDP expansion” linking potential growth, employment, income, consumption, earnings, and tax revenue.

Growth investment will attract domestic investment and talent to fields such as AI, semiconductors, quantum technology, content, and fusion energy, advancing efforts in an integrated way from research and development through practical deployment. The Regional Future Strategy will promote industrial concentration through three types of initiatives: strategic industry cluster plans, regional industry cluster plans, and local industry growth plans. More than 50 plans are already underway. The government will double the number of plans formulated and announced by year-end, and set out support policies for the next 5 years and a domestic investment map by next spring.

Measures to address rising prices will include local government action based on the Priority Support Local Allocation Tax and reducing income tax burdens through year-end tax adjustments. The government is preparing a “Consumption Tax and Support Fund Bill” to directly ease the burden on middle- and low-income people, combining tax relief on food and beverages with support payments based on income. It also stated that it will secure funding without relying on special deficit-financing bonds.

To address population decline, the government will formulate a “Comprehensive Population Strategy” by year-end, presenting future simulations of population trends and response measures. It will also consider the basic approach to accepting foreign nationals. To address labor shortages, it will advance the practical deployment of AX to support healthcare and nursing care, logistics, public transportation, and other services, while strengthening the government’s coordinating function to promote the development and use of safe and trustworthy AI.

In diplomacy, the government will maintain and strengthen an international order based on the rule of law and play a role in the peaceful resolution of conflicts. It will evolve FOIP and strengthen cooperation with allies, like-minded countries, and countries across the region. With the Japan-US alliance as its cornerstone, it will deepen relations with South Korea, ASEAN, and the Global South. With China, it will continue dialogue while stating Japan’s positions where necessary, and it will work to resolve the abduction issue and address the Northern Territories issue.

To fundamentally strengthen defense capabilities, the government will review the “Three Strategic Documents” by year-end and improve the treatment of Self-Defense Forces personnel, as well as support for retired personnel and their families. The “National Intelligence Council” and “National Intelligence Bureau” will strengthen cross-ministry collection and analysis of information. The government plans to regulate transfers of land ownership near defense facilities and on border islands, and establish a registration system for information on the beneficial owners of corporations.

The Disaster Management Agency will be launched this November, establishing a central command structure responsible end to end, from preparedness before disasters in normal times to rescue after a disaster, infrastructure restoration, evacuation shelter and supply arrangements, and recovery and reconstruction. For recovery from the Kumamoto Earthquake, the government will support survivors’ lives and livelihoods, advance measures to prevent casualties from torrential rains, and address bear-related damage. It will also work on Fukushima’s reconstruction and ensuring the continuity of central government functions.