Parties wrangled until the last minute over how to fund the cost of expanding the free child care program to include children aged 3-5 before passing the budget for next year by the Dec. 2 legal deadline.
The main opposition New Politics Alliance for Democracy demanded the government shoulder the full amount estimated at 523 billion won ($470 million), while the ruling Saenuri Party insisted on having the administration cover only what regional education offices could not afford. They eventually worked out a compromise under which the central government would be made to pay 506.4 billion won, lifting the obstacle to approving the 2015 state budget by the deadline set by law for the first time in 12 years.
This wrangling might have been avoided if a set of measures designed to prevent the illegal receipt and use of state subsidies, which was approved at a meeting of economic ministers Thursday, had come earlier. Financial officials predict the measures will ultimately save about 1 trillion won every year, which could be used to fund the expanded child care program without spending additional taxpayers’ money.
Under the plan, a committee comprised of 20 experts from both the public and private sectors will be launched to keep a close eye on how tens of trillions of won in state subsidies are being used. Those found to have received subsidies in an illicit manner will be banned permanently from benefiting from government-subsidized programs and subject to fines five times larger than the sum granted to them. The committee will also review all subsidized projects every three years to decide whether to continue them.
In addition, a system will be set up to link all information on subsidy spending by different government agencies.
Financial officials emphasize these measures will help improve fiscal efficiency. But the public is now raising the rational question of why they have left these loopholes open for so long.
State subsidies granted to municipalities and private-sector businesses, which amounted to 30 trillion won in 2006, increased to 52.5 trillion won this year, accounting for about 15 percent of the annual national budget.
Criticism has mounted that state subsidy programs are ill-managed due to a lack of thorough monitoring and supervision, allowing taxpayers’ money to be squandered instead of being used where it is most needed.
A joint investigation conducted by the prosecution and police over the past year has found that 5,552 people illicitly received or misappropriated more than 311 billion won in state subsidies. The amount is nearly double the government’s previous estimate of about 170 billion won.
Officials at the Finance Ministry began working on measures to improve the efficiency of subsidy programs only after President Park Geun-hye addressed the problem in a Cabinet meeting in August.
Financial authorities should carry out the measures announced this week in a thorough and persistent manner to make up for their neglect of duty in the past. It is sensible to prevent taxpayers’ money from being squandered before seeking to raise tax revenues.
