Parliament passes welfare-laden budget

The National Assembly on Tuesday approved a 342 trillion won budget for this year which includes the nation’s largest-ever amount of social spending in line with President-elect Park Geun-hye’s plans to improve health, education and welfare for low-income households.

About 100 trillion won, nearly one-third of the total, has been set aside for welfare, buttressing Seoul’s move toward a welfare state.

The president-elect has vowed to strengthen the social safety net and improve people’s livelihoods in response to a mounting call to narrow gap between the rich and poor and take care of families driven to extreme poverty by a prolonged economic slowdown.

Korea’s spending on welfare in comparison to its GDP size has been one of the lowest among major industrialized nations as it focused on economic growth for decades.

The parliament passed the budget bill during the main floor session in a 202-40 votes, six hours after the nation celebrated the first day of the New Year. This was the first time in the county’s constitutional history that a budget bill has been approved after a new fiscal year dawns.

The ruling Saenuri Party and the main opposition Democratic United Party had agreed on major issues on Monday. The two sides, however, locked horns in the last minutes over how to finance sources for a naval base on Jeju, the country’s southern resort island. They later found a compromise on the issue, allowing them to pass the entire budget bill.

The total budget was slightly less than the 342.5 trillion won proposed by the government as lawmakers slashed some spending on national defense and SOC projects and added more weight into welfare programs instead. The welfare budget permits the government to carry out some of Park’s campaign pledges, including free childcare for all families with children aged under 5, increased state support for college tuition and expanding social security insurance coverage for low-income earners.

Her welfare plans were able to get the parliament’s approvals as they were similar to campaign pledges made by her rival Moon Jae-in of the opposition DUP.

“Short-term measures to stimulate the economy were considered as an economic downturn is expected, but measures to unite the nation and increase potential growth on mid- and long-term basis were also on the plan,“ a Saenuri official said.

The National Assembly set aside 3.5 trillion won on free childcare service, 1.5 trillion won more in the initial government proposal. With increased state support, parents will be given the option of free attendance at day care centers or a monthly allowance of up to 200,000 won, regardless of their income level.

The parliament added 500 billion won more for state scholarship programs to 2.7 trillion won to help reduce tuition costs for families with college students. Students from families with incomes in the lower 70 percent bracket will have their tuition burdens halved under the new state support program. Park vowed to release the financial burdens from families suffering from skyrocketing tuition costs not only during her presidential race but also in the general election in April.

With the parliament’s approval, the new government is expected to expand social security for low income earners and senior citizens. The rival parties have agreed to increase support for irregular workers whose salaries are lower than 1.3 million a month by halving their payments for employment security and pension programs. Soldiers will also see their salaries increase by 20 percent this year.

This year’s increased budget on welfare is likely to continue for next year, as the President-elect and the Saenuri Party vowed to focus on stabilizing people’s livelihood for the next five years. Park pledged to introduce a Korean version of a lifecycle health and welfare system with programs tailored to all age groups from newborns to senior citizens.

Other welfare pledges including providing full medical support for patients with four major diseases -- cancer, cerebrovascular and cardiac disorders, and terminal illness -- and allowing health insurance to cover dental implant surgery for senior citizens will be added to the 2014 budget, Saenuri officials said.

Along with the budget bill, the parliament also passed a separate bill that would regulate operating hours for discount retailers mostly owned and run by the country’s conglomerates. The bill bans mega-sized retail chains from operating from midnight to 10 in the morning and forces them to close down for two days every month.

Lawmakers also passed another controversial bill that redefines taxi as a mass transit.

The bill, supported by both sides of the Assembly, intends to recognize taxis as public transportation, like buses and the subway, making them eligible for state subsidies worth about 1.9 trillion a year. The government has been opposed to the bill citing a lack of resources.

By Cho Chung-un
(christory@heraldcorp.com)