Welfare war was all about votes, not budget

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Welfare war was all about votes, not budget

As local governments bitterly complain about budget shortages for welfare benefits, Saenuri Party Chairman Kim Moo-sung made a blunt warning Monday during a party leadership meeting.

“We should be selective in choosing welfare policies due to budgetary strains,” the head of the ruling party said. “As politicians, we need to think from the perspective of common people at a time when welfare promises like free school lunches, free day care and free housing are getting out of control.”

Kim’s remark was interpreted as a clear message that the ruling party will no make welfare promises without considering the budget.

This was a total U-turn from the party’s position three years earlier when it faced general and presidential elections the following year and welfare promises seemed a sure ticket to victory .

In November 2011, Hwang Woo-yea, chairman of the Grand National Party (GNP), the precursor to the Saenuri, announced a welfare program that would provide free day care for toddlers under the age of four by the end of 2014, saying it would lead to a rise in the country’s low birth rate.

Hwang, now education minister, said the country should pay for day care even for families in the top 30 percent income bracket because “the existence of the country will be in jeopardy if its low birthrate were to continue.”

The GNP’s campaign for free day care was its response to the Democrats’ successfully campaign to offer free lunches in schools. That program cost the ruling party the Seoul mayoral office after a referendum on the issue, which it lost.

The loss of the Seoul mayoralty stung the GNP because of the political significance it represented. The governing party badly needed its own welfare promise to counter the resurgent Democrats riding on public approval of its wider embrace of a welfare society.

At the time, the Lee Myung-bak administration expressed its concerns about expanding welfare, citing a potential budgetary fallout.

“While the government agrees that free day care benefits should be expanded to cover more families, we will expand the program step-by-step with budgetary considerations,” remarked then-Welfare Minister Lim Che-min during a parliamentary welfare committee meeting on Nov.1, 2011.

Despite the government’s warning, both the ruling and opposition parties agreed to earmark an additional 369.7 billion won in the day care budget to cover children under the age of three. There was no objection from either party. The agreement was made on Dec. 30 2011, when the general election was four months away and the presidential election less than a year away. The bipartisan agreement to cover kids under the age of three was an extension of an original plan that would have only covered five year olds.

“Then-Finance Minister Park Jae-wan recommended the government support a half day care service instead of full day care because of budgetary concerns. And I also agreed with that,” recalled a Saenuri lawmaker who was involved in the budget process two years ago, who spoke on the condition of anonymity.

“But despite all that, the leaderships of both the ruling party and the opposition commanded its lawmakers on the parliamentary budget planning committee to approve the extended day care proposal.

“Major elections were all less than a year away. The political establishment had already reached a consensus to give all welfare promises. And it was difficult for me to defy the party’s decision.”

In the presidential campaign of 2012, Park Geun-hye, Moon Jae-in and Ahn Cheol-soo all promised free day care service for kids under the age of six.

A year after Park’s victory, her administration issued an executive order mandating that local education offices should pay for the free day care expenses on their own without central government financial support.

Over the past months, education offices around the country have started refusing to follow the central government’s demand that they find ways to pay for free day care. On Oct. 28, 17 education offices issued a joint statement making it clear they will not earmark any money for next year to fund the services if the central government stays uncommitted to helping them out.

Political parties are trying to avoid getting involved and have offered no solutions to the ongoing standoff between education offices and the Park Geun-hye government. Analysts say the standoff is a result of the political establishment’s pursuit of votes without worrying about the budgetary chickens coming home to roost.

And now the chickens are back.

“At the center of the problem is that politicians rushed to introduce a pile of welfare policies too quickly without consideration of any potential fallout,” said researcher Yoon Hee-sook at the Korea Development Institute. “Under the common objective that we need to increase women’s role in the economy, we need to find a social consensus on what extent such free welfare program will be applied.”

BY KWON HO, KANG JIN-KYU [jkkang2@joongang.co.kr]
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