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Japan PM picks fiscal hawk as deputy in reshuffle

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Noda also chose Naoki Tanaka, an upper house lawmaker from the ruling Democratic party, to replace gaffe-prone Defence Minister Yasuo Ichikawa, the top government spokesman said in announcing a cabinet revamp.

"From a global perspective, changing cabinet members regularly gives people reason to say Japanese politics is unstable," Finance Minister Jun Azumi told reporters ahead of the reshuffle.

"However, we need some rules to create consensus between the ruling and opposition parties. We have to strengthen our organisation and work hard to approve the sales tax hike in what is sure to be a difficult parliament session."

Noda hopes drafting Okada, who has held key government and party posts in the past, will boost the government's chances of pushing through an increase in Japan's 5 percent sales tax to fund swelling social welfare costs.

The government plans to submit bills by March to double the sales tax in two stages by 2015.

But with major opposition parties refusing even to join talks on tax and social security reform and instead pressing for an early general election, analysts question whether the move would be a game-changer for Noda, whose popularity rates have sunk since he took office in September.

Many members of Noda's own Democratic Party of Japan (DPJ), which swept to power in 2009 promising to slash waste before raising taxes, are also leery of approving a tax hike ahead of a general election that must be held by 2013.

Japan's sales tax rate is one of the lowest among major economies, but raising it has long been politically touchy. The last rise in the tax, in 1997, was blamed by some for triggering a recession that led to a long period of deflation.

Okada's appointment is unlikely to go down well with detractors, many of whom back former party leader Ichiro Ozawa, a party heavyweight now on trial over a funding scandal.

Noda took care in his first cabinet line-up to balance the often-feuding factions inside the DPJ, leaving him open to criticism that he had valued party harmony over competence.

In Friday's reshuffle he also replaced the head of the National Public Safety Commission, who, along with Ichikawa, had been censured by the upper house.

TAKING SIDES

"Noda has gone from being 'No-side Noda' to taking sides. He has found out it is difficult to navigate the 'twisted Diet' (parliament), especially if you don't have your own ducks in a row," said Jeffrey Kingston, director of Asian studies at Temple University's Japan campus.

"But we are not looking at real relief to the prevailing political gridlock."

Okada, 58, is known for his clean, serious image, a stubborn streak and his support for raising the sales tax to help curb public debt already twice the size of the $5 trillion economy.

He held the post of Democratic Party leader when the party was in opposition and has since served as foreign minister and party secretary-general.

The 71-year-old Tanaka, who takes over the defense portfolio, is the son-in-law of former prime minister Kakuei Tanaka and the wife of Makiko Tanaka, an outspoken former foreign minister. He is also a former head of an upper house panel on foreign policy and security matters.

Tanaka will face a tough task of coping with the unpredictable North Korea and China's rapid military buildup, while trying to win local consent for the planned relocation of the US Marines' Futenma airbase within Japan's southern Okinawa island.

Noda in September became Japan's sixth premier in five years, promising to rein in massive public debt and spearhead the country's reconstruction after a deadly earthquake and tsunami struck northeastern Japan last March.

His support rating has since tumbled, with voters divided on his tax proposals and doubtful whether he can accomplish more than his five predecessors in the face of a divided parliament.

Although tax hike talk is traditionally a jinx for Japan's ruling party, some analysts say Noda may be able to win voter support if he demonstrates leadership by sticking to his policy.

Others doubt whether he can break Japan's prolonged cycle of political paralysis as the world's third-biggest economy struggles with a fast-ageing population and confronts nimbler regional rivals such as China and South Korea.

"Maybe Okada can add a certain gravitas to the cabinet," said Sophia University political science professor Koichi Nakano. "But the opposition want an election this year, so it's almost a lost cause.

Finance Minister Jun Azumi and Foreign Minister Koichiro Gemba kept their posts in the reshuffle, in which a total of five new ministers were appointed.

Copyright Reuters, 2012