Japan No.2 opposition: grand coalition hard (Reuters)

TOKYO (Reuters) – A grand coalition between the ruling Democratic Party, which on Monday chose Finance Minister Yoshihiko Noda as Japan's new premier, and main opposition parties would be difficult to form now, the head of the second-biggest opposition party said.

The strained relationship between the Democrats, led by outgoing Prime Minister Naoto Kan, and feisty opposition parties has complicated policymaking as Japan deals with a resurgent yen, rebuilding from the huge tsunami, and a murky energy outlook in the wake of the Fukushima nuclear disaster.

Noda, picked to become Japan's sixth premier in five years, faces a divided parliament in which the opposition controls the upper chamber and can block bills. Votes from the ruling bloc and the second-biggest opposition party, the New Komeito, would be enough to clear bills in the upper house.

"We won't flat out oppose one (a grand coalition). But realistically thinking, the likelihood of it succeeding is small and there are more factors that are likely to make it fail," Natsuo Yamaguchi, the head of the New Komeito, told Reuters in an interview.

He added that the main opposition Liberal Democratic Party (LDP), which is calling for a snap election, would not be able to form a coalition with its rival the Democratic Party of Japan (DPJ).

The DPJ, in an agreement this month with the LDP and the New Komeito, said it will revise its key campaign pledges from when it swept to power in 2009, which the opposition called wasteful spending, and Yamaguchi called for the new prime minister to respect this.

Noda, who will be confirmed by parliament on Tuesday, said in a news conference his party must first build trust with the opposition before discussing the possibility of a coalition.

A major task Noda faces is to compile a third extra budget for the fiscal year to March to kick-start full-fledged reconstruction efforts in the areas struck by a magnitude 9 earthquake and a huge tsunami in March on the northeast coast.

Yamaguchi called for a speedy compilation of the extra budget and said his party will work to form an agreement with the Democrats on this.

"The priority is rebuilding and reconstruction from the disaster. Needless to say, we will put in efforts for a third extra budget as well as to enact relevant bills."

Noda, a fiscal hawk, has said Japan will need to raise taxes temporarily to help pay for rebuilding, though he has grown wary about the timing of any rises.

Yamaguchi said the government should first consider cutting spending and selling assets before debating the possibility of raising taxes.

"There are various issues that need to be considered prior to bringing up a tax raise," he said, adding that income, corporate and inheritance taxes may be hiked but not sales tax as it would impact those in the disaster-struck zones.

(Additional reporting by Sumio Ito, Tetsushi Kajimoto; Editing by Chris Gallagher)

View the original article here