Finance ministry blasts pre-election welfare promises
By Kim Tong-hyung
As the National Assembly and presidential elections approach, the list of welfare promises produced by political parties is beginning to read longer than Tolstoy. Now, the Ministry of Strategy and Finance says it has had enough.
Executing the slew of welfare proposals over the next five years could cost the country up to 340 trillion won (about $302 billion) or one-third of an entire year’s gross domestic product (GDP), according to the ministry’s estimation.
This had Vice Finance Minister Kim Dong-yeon questioning whether either the ruling Saenuri Party or main opposition Democratic United Party (DUP) would be able to finish what they started when push comes to shove.
“Our analysis on the welfare-related ideas produced by the Saenuri Party and DUP shows that acting on such proposals would require the country to spend 43 to 67 trillion won more a year and 220 to 340 trillion won over the next five years,” Kim told reporters after chairing a meeting of a government task force launched to study the feasibility of pre-election welfare proposals.
The ministry said it eliminated the overlaps in campaign pledges between the parties in forecasting the costs. It didn’t include their planned spending on infrastructure and supporting small- and medium-sized businesses because these efforts are closer to the category of employment than welfare.
The ministry has set aside 92.6 trillion won for its welfare budget for this year, which represents an increase from last year’s 86.4 trillion won and accounts for about 28.5 percent of the government’s planned annual expenditure.
The job of the new task force, Kim said, is to review whether the new ideas suggested by politicians would be affordable, work as prescribed and motivate people to work.
“The wave of proposals currently made in the political arena poses a serious threat to fiscal sustainability. Introducing a wave of unpolished welfare policies at a time when financial resources are restrained may backfire as we could be forced to cut our spending on areas that are actually essential for low-income earners needing help,” he said.
“The current environment makes it crucial for us to study the ideas being discussed and look at their feasibility, including the sourcing of finance and the effectiveness of the policies. We will continue to concentrate our efforts on implementing welfare policies that are sustainable and benefit people who are working or committed to do so.”
Welfare promises have been flying left and right between politicians these days as they attempt to massage the egos of voters in a country where public discontent is growing over a widening rich-poor gap, unemployment and diminishing social mobility.
The Saenuri Party has pledged to relieve the financial debts of college students who borrowed to pay for their tuition as well as those of school leavers and graduates who find work at small firms.
It is also promising a government that fully finances school meals, cost of education up to high school, even suggesting raising the monthly payment of men serving their compulsory military duty from the current 90,000 won to 400,000 won.
The DUP is making similar vows on school meals while promising full financial support to parents sending their children to preschools and kindergartens.
Its other ideas include halving tuitions at universities, introducing monthly benefits for jobseekers, expanding health insurance coverage on hospitalization costs to 90 percent, and raising the level of monthly pension payments to people over 65.
According to the ministry, it would take an extra 4 trillion won a year to redo the country’s basic state old-age pension, 1.6 trillion won to raise soldiers’ pay and 2 trillion won to lower university tuitions by half.
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