UPDATE 2-New Japan PM Kan bolsters ruling party support

* Support for PM Kan’s government at 61.5% in media poll

* Democrats may still fall short of outright
majority-experts

* Kan sees rocky start, minister denies office fees
misreport
(Adds defence minister quote on U.S. base in paragraphs 12-16)

By Yoko Kubota

TOKYO, June 9 (BestGrowthStock) – Support for Japan’s ruling
Democratic Party has jumped after the launch of new Prime
Minister Naoto Kan’s government, improving its chances in an
election likely next month, a survey showed on Wednesday.

But the Democrats may still fall short of a majority in the
upper house vote expected in July, meaning they would need help
from current or new coalition partners, complicating
decision-making on policies including fiscal reform.

A survey by the Kyodo news agency put support for Kan’s
government at 61.5 percent, more than 40 points higher than the
rating at the end of May for his predecessor Yukio Hatoyama,
who quit last week.

Almost 44 percent of respondents said they backed the
Democrats, up nearly 8 points from just last week.
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Graphic on voting intentions:
http://link.reuters.com/jev83j

For a table of voter surveys, click [ID:nTOE656067]

Graphic on global govt debt: http://r.reuters.com/neh98h

For more stories on Japanese politics click [ID:nPOLJP]
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The Kyodo poll also showed that 43.8 percent planned to
vote for the Democrats in the upper house poll, up 11.2 points
from the last survey at the end of May.

That compared with 21.6 percent who plan to cast their
ballots for the main opposition Liberal Democratic Party,
ousted last year after more than a half-century of almost
unbroken rule.

“If they build on the current momentum, it (an outright DPJ
majority) doesn’t look as impossible as it used to, but it
doesn’t look likely,” said Koichi Nakano, a professor at
Tokyo’s Sophia University.

BIG SPENDING

The Democrats need to win the upper house election to break
free from a tiny coalition partner that favours big spending
and avoid having to find more allies to pass bills easily.

Kan has vowed to tackle a debt that is already twice the
size of GDP and his government is set to unveil this month mid-
and long-term plans to reduce dependence on borrowing, as well
as a strategy to engineer growth in an ageing society.
[ID:nTOE65702H]

The Democrats have pledged not to raise Japan’s 5 percent
sales tax before the next general election for the lower house,
which must be held by late 2013, but party fiscal reformers
want to state clearly their intention to do so before that.

The Kyodo survey showed 57.7 percent of respondents would
support raising the consumption tax, a sign voters worried
about creaking pension and health care systems are less
sensitive to such a step than in the past.

Kan also faces problems managing ties with close ally the
United States, since an agreement to keep a U.S. airbase on
Okinawa island — forged amid controversy in Hatoyama’s final
days — faces stiff opposition from residents.

Kan has said that U.S-Japan ties will remain the core of
Japan’s diplomacy and that he would honour the bilateral deal
while trying to reduce the burden on Okinawa, reluctant host to
about half the U.S. forces in the country.

But Defence Minister Toshimi Kitazawa expressed doubts on
how smoothly the deal would proceed.

“I do not necessarily think that we can get an agreement by
the end of August from Okinawa,” Kitazawa told a news
conference on Wednesday.

Washington and Tokyo have agreed to work out by end-August
details on the relocation of the U.S. Marines’ Futenma airbase
within Okinawa prefecture, such as the exact location and
construction methods for the new facility.

Kan’s new government got off to something of a rocky start
on Wednesday, when National Strategy Minister Satoshi Arai had
to deny reports that a support group had misreported office
expenses. [ID:nTOE65803E]

Kan’s efforts to present his government as both clean and
competent while distancing himself from scandal-tainted party
powerbroker Ichiro Ozawa, who quit as DPJ No.2 last week, are
vital to improving the Democrats’ chances at the polls.

“I think the best bet … is that they won’t have a
majority of their own and they will have to look around and see
what coalition partners are available to fill the gaps,” said
Steven Reed, a political science professor at Tokyo’s Chuo
University.

“The other thing that is exceedingly likely is that they
win more seats than any other party,” he said.

Investment
(Additional reporting by Linda Sieg and Kiyoshi Takenaka;
Editing by Alex Richardson)

UPDATE 2-New Japan PM Kan bolsters ruling party support