(Bloomberg) -- Japanese Prime Minister Shigeru Ishiba promised Monday to restore political stability in a bid to maintain power, after his ruling coalition lost its majority in the lower house for the first time since 2009.
“We have to humbly listen to the voices of criticism,” Ishiba said at a press briefing in Tokyo. “I want to take responsibility by protecting people’s daily lives, and protecting Japan.”
Ishiba’s comments indicate his intention to continue as prime minister and forge ahead with putting together an administration despite the coalition’s poor showing. The premier said he wasn’t considering expanding the ruling coalition, but said he had signed a policy agreement with existing partner Komeito following the result.
His decision to continue as premier comes after his gamble to go ahead with an early election backfired. While the LDP still won the most votes in the election, it lost 56 seats, leaving the ruling coalition 18 seats short of a majority of 233.
“The LDP is in a very difficult situation as it looks to the upper house election next year,” said Mieko Nakabayashi, a professor at Waseda University in Tokyo and a former lawmaker, referring to the next general election the ruling party will face. “It’s possible that they’re in such a difficult spot they may just leave things to Ishiba for now.”
Ishiba said he will analyze the reasons behind the loss of the majority in the election, while acknowledging that voters are deeply dissatisfied with his party’s handling of a slush fund scandal.
“I believe the primary reason for this outcome is that the doubts, suspicions and anger regarding politics and money have not been dispelled,” he said, vowing to hold talks over political reforms with other parties.
There is rising speculation that the LDP will seek to partner with either the Democratic Party for the People, which secured 28 seats, or the Japan Innovation Party, which won 38 seats.
The leaders of both parties have dismissed the idea of joining the ruling coalition, but DPP head Yuichiro Tamaki has shown willingness to work with the LDP on individual issues. Tamaki said Monday that he’ll keep seeking a tax rule change that would benefit lower income workers, adding that there could be various ways the party could respond to the premiership vote in parliament.
“There are parties that have greatly increased their parliamentary seats,” Ishiba said. “We have to look at what kind of arguments these parties made during the election and what resonated with the public,” he added.
Ishiba also said his government needs to implement a meaningful economic package and put together an additional budget as soon as possible, incorporating measures from other parties if they’re popular with the public.
What Bloomberg Economics Says...
“It’s tough to draw policy implications at this early stage. Still, two appear likely. First, Ishiba is likely to face pressure to ramp up fiscal support for households struggling with rising costs of living, given policy stances of opposition parties he may approach. Second, the Bank of Japan could face pressure to refrain from raising borrowing costs further this year.”
— Taro Kimura, economist
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The package will include actions to address rising energy and food prices, as well as support for small and medium-sized companies to hike salaries and adopt labor-saving technologies, he said. Ishiba previously indicated that he’s looking for measures that exceed the size of last year’s package, which was funded by a ¥13 trillion ($84.7 billion) extra budget.
The step from Ishiba potentially suggests he’s trying to preempt moves from within his own party to try and oust him, by projecting the need that there’s work to be done, instead of infighting.
After the election on Sunday, campaign chief Shinjiro Koizumi resigned from his position to take responsibility for the results, and two other cabinet ministers lost their seats. Ishiba said he needs to appoint their replacements as soon as possible, emphasizing that “not a moment’s delay in domestic politics can be tolerated.”
Both houses of parliament are set to convene within 30 days of the general election to choose a prime minister. If nobody gets a majority, a runoff will be held between the top two candidates, with the winner taking the top job. The upper house of parliament, currently controlled by the LDP-led coalition, separately picks a prime minister, but the lower house’s decision takes precedence if the two bodies choose different people.
The biggest gainer in the election was the Constitutional Democratic Party. The largest opposition party boosted its seat count from 98 before the vote to 148. CDP leader Yoshihiko Noda said he would seek to take over the government if the coalition lost its majority.
“I have my doubts about whether the Ishiba administration will last that long,” said Taro Saito, head of economic research at NLI Research Institute. “Many in the LDP think that it’ll be difficult to win the next election with Ishiba at the helm. There’ll be voices trying to kick him out, not for his economic policy etc., but as an election strategy.
--With assistance from Shadab Nazmi and Yoshiaki Nohara.
(Updates with more details, economist comments.)
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