The National Assembly this week undertook deliberations on the government-proposed budget for 2021, which is set at a record 555.8 trillion won ($489.2 billion), up 8.5 percent from this year.
On Monday, the Assembly’s special committee on budget and accounts hosted a public hearing on the proposed spending plan. A two-day parliamentary session is being held through Thursday for lawmakers to ask questions of Cabinet members on a range of policies planned to be implemented next year. It will be followed by reviews of the specific budgetary plans of government agencies next week. Thereafter, a subpanel of the budget and accounts committee will put the final touches on the budget bill, which is required by law to get parliamentary approval by Dec. 2.
Needless to say, it is the first and foremost duty of Assembly members to verify that taxpayers’ money will be spent appropriately. This time, lawmakers from the ruling and opposition parties alike are urged to subject the biggest-ever spending bill to particularly thorough scrutiny.
In his parliamentary speech on the proposed budget last week, President Moon Jae-in stressed the need to continue expansionary fiscal policies to help reinvigorate the economy and win the fight against the coronavirus pandemic. He described a full economic recovery and a win against the virus as “two rabbits” that the country must catch at the same time without fail.
The ruling Democratic Party of Korea has adhered to the position that the spending plan should be kept intact to back Moon’s policy efforts. The main opposition People Power Party, however, has pledged to scrutinize the budget bill submitted by the Moon administration, turning its attention to the nation’s worsening fiscal soundness.
As representatives of the people burdened with increasingly heavy tax obligations, lawmakers of both parties should do their work from a balanced viewpoint to ensure that increased government spending is effective in bolstering the economy and containing the pandemic while avoiding harm to the country’s fiscal health.
First they need to make a thorough check of the appropriateness and efficiency of planned spending on programs to be carried out under an economic revival initiative that Moon has described as the Korean version of the New Deal.
The initiative is aimed at transforming the nation into a “pace-setting” economy in the post-pandemic era by focusing on future-oriented investments designed to establish digital infrastructure and promote environmentally friendly industries. The National Assembly Budget Office noted in a recent report that it would be necessary to merge similar or overlapping programs and set up a system to ensure a strict assessment of accomplishments in the New Deal project, to which the proposed budget for 2021 has allotted 21.3 trillion won.
Through the deliberation process, politically motivated spending plans should also be redressed.
Next year, mayoral by-elections will be held in the country’s two largest cities, Seoul and Busan, followed by a presidential vote in March 2022. Lawmakers, particularly those from the ruling party, need to refrain from allocating excessive financial resources to certain sectors and regions to secure electoral advantages.
Assembly members should depart from narrow-eyed partisanship and focus on ensuring that taxpayers’ money is spent to help people suffering difficulties in the prolonged pandemic crisis, and to enhance industrial competitiveness. It must not be squandered on showcase projects or on overlapping endeavors.
The government plans to issue nearly 90 trillion won in state bonds, the largest figure on record, to finance next year’s spending plan, amid a continuous decline in tax revenues. The amount represents a whopping 48.8 percent increase from this year.
Accordingly, Korea’s national debt is estimated to soar to 945 trillion won in 2021 from 805.2 trillion won this year. The country’s national debt as a percentage of gross domestic product is also projected to increase from 43.9 percent to 46.7 percent over the cited period.
Finance Ministry officials have insisted that next year’s budget bill has been drawn up within the country’s fiscal capabilities. But the steep increase in annual budget figures since Moon took office in May 2017 might well raise concerns over the nation’s fiscal soundness.
In his parliamentary speech last week, Moon pledged not to be negligent in efforts to maintain fiscal health through a “bone-cutting” restructuring of budget expenditures. His remarks sound hollow as his administration has stuck to ill-conceived policies, including the income-led growth drive and the phasing out of nuclear power generation, which critics say have wasted taxpayers’ money and increased the national debt.