Child care, and budget, hanging in balance

In the middle of a struggle to achieve a balanced budget for 2013, Finance Minister Bahk Jae-wan is mulling measures to make the government’s budget for free childcare sustainable in the wake of a political controversy over budget shortages in providing childcare subsidies for infants under the age of two.

Bahk hinted on Saturday that the system may be reworked, saying the government will come up with further measures to make it financially sustainable.

“Ministry officials will make sure the system is not halted by putting their heads together with lawmakers from both camps,” he said, adding that a new measure should be in the offing this month.

The move to provide subsidies to all households with babies younger than two is at risk of being halted only four months after it was implemented in February, as local governments have started to complain about budget shortages. The Ministry of Strategy and Finance has now started deliberating on the budgets demanded by each government agency for next year.

A total of 346.6 trillion won ($303.2 billion) in submissions have been sent to the finance ministry’s budget office, up 6.5 percent from the 2012 budget. The welfare sector, including the childcare subsidies, required a 5.3-percent increase in next year’s budget, the ministry said.

After announcing the budget list last week, lawmakers from the ruling Saenuri Party pledged to expand the current subsidy system for toddlers and children aged up five as one of its pledges for the upcoming presidential election, which will be held in December.

In doing so, Lee Han-gu, floor leader of the ruling party, pressed the finance ministry to increase financial resources for the childcare measure, criticizing the ministry for ignoring the current situation of local governments that are suffering financial shortfalls.

Lee said local governments have fallen short by up to 800 billion won. Last year, the government estimated that about 700,000 children would go to childcare centers. That estimation proved conservative as the number soared to 780,000.

At present, the central government provides just half of the total budget needed for the free childcare subsidies. The rest is paid by local governments.

The finance minister, whose current top priority is striking a balance between expenditures and revenues for next year, is being blamed for refraining from allocating a larger budget for the childcare system.

“The ministry is investigating local governments about how much they need to make up for the shortages,” an official at the ministry said.

The official, however, hinted that the ministry won’t accept the lawmakers’ “populist” demands that the central government should fill up the shortages by using its reserves.

According to the JoongAng Ilbo’s exclusive analysis of government documents related to the free childcare system last year, the finance ministry and National Assembly failed to predict the budget shortfalls at local governments, as well as increases in the number of children being sent to childcare centers.

Senior members of the special committee on appropriations at the 18th National Assembly agreed to provide full subsidies for children under the age of two at all households regardless of their income class, as they earmarked 369.7 billion won for this purpose on Dec. 30.

Lawmakers and the finance minister argued about the scope of the measure, but not about the exact amount needed, according to the analysis.
By Song Su-hyun [ssh@joongang.co.kr]