JAPANESE MINISTER QUITS GOVT OVER BUDGET GAFFE

IN a bid to prevent a row over a gaffe delaying the enactment of an extra budget, Japan's justice minister has resigned but hurdles remain for Prime Minister Naoto Kan as he struggles with a divided parliament.

The 4.4 trillion yen (32.8 billion) extra budget will pass by mid-December at the latest, given the ruling Democratic Party's majority in the lower house, but the Democrats want to complete parliamentary passage earlier to bolster the economy.

Opposition parties have threatened to stall debate and had called for the Justice Minister, Minoru Yanagida, to be replaced after he made comments that critics said made light of deliberations in parliament.

While Yanagida's resignation removes one headache for Kan, the affair has further damaged an administration whose voter ratings are already sagging below 30 per cent.

'The difficulties in getting through bills such as the supplementary budget are related to the hung parliament, and that is hardly changed by the addition or subtraction of one cabinet minister,' Reuters quoted Nicholas Smith, director of equity research at MF Global FXA Securities in Tokyo.

Support for Kan's five-month-old government has already been eroded by voter discontent with his handling of territorial rows with China and Russia and a funding scandal dogging a ruling party powerbroker.

A survey by the Mainichi newspaper released on Monday showed support for Kan's government at 26 percent, down 23 points from the previous poll in October.

The same poll also showed the gap in support for his Democratic Party and the main opposition Liberal Democratic Party (LDP) had narrowed, with 20 per cent supporting the Democrats and 18 percent backing the LDP.   Despite the justice minister's resignation, the LDP has rejected the Democrats' request for the opposition-controlled upper house to vote on the extra budget tomorrow, Kyodo news agency said.

The LDP is now considering submitting non-binding but embarrassing censure motions against the chief cabinet secretary and the transport minister, Kyodo added, citing a party official.

'Kan's cabinet members, not just Yanagida, don't understand the seriousness of what they say,' LDP secretary-general Nobuteru Ishihara told reporters.

The extra budget for the year to next March will pass because budget bills, even if rejected by the opposition-controlled upper house, become law within 30 days of approval by the more powerful lower house, which approved it last Tuesday.

The measure aims to support growth as the impact from past

stimulus fades and a rising yen threatens corporate earnings.

But analysts said the outlook for other bills, including those to implement the budget for 2011/12 starting next April, was unclear.

Although delaying the budget process risks public ire for the opposition, Kan's weak voter support has discouraged rivals from cooperating with him on policies.

'We can't be optimistic … The fundamental issues have not been resolved and talks between the ruling and opposition parties are not working,' said Tomoaki Iwai, a political science professor at Nihon University.

But some analysts doubt that opposition parties would go so far as to block bills for the 2011/12 budget. Such a move could force Kan to call a snap election.

'The LDP could very well hold the 2011/12 budget hostage and make demands, but what will it ask for?' said Hiroshi Hirano, a political science professor at Tokyo's Gakushuin University.

'Not everyone in the LDP is confident that the party can win if an election is held so soon.'

Kan's Democratic Party swept to power last year on a wave of voter discontent with the long-ruling conservative LDP, but has struggled over several issues, forcing Kan's predecessor to quit in June.