Unclear, repetitive spending plans on Korean New Deal raises concerns

Deputy Prime Minister and Finance Minister Hong Nam-ki attends a standing committee on budget at the National Assembly in Yeouido, Seoul, Friday. Yonhap

By Lee Kyung-min

Many state-run projects that had their budgets allocated as part of the Korean New Deal have little to no relevance to the broader policy objectives, fanning concerns that taxpayers' money could be wasted on repetitive work without accountability, an Assembly Committee report said Friday.

The Korean New Deal is the key growth initiative of the Moon Jae-in administration, defined by its plans to spend 160 trillion won ($142 billion) over the next five years, a dramatic increase from 76 trillion won announced in June. The government plans to foster digital and green initiatives and strengthen the social safety net, while expecting around 1.9 million jobs will be created in the process by 2025.

But according to a report from the National Assembly Special Committee on Budget and Accounts, seven out of 10 projects worth 21.3 trillion won to be spent in 2021 are similar to previous ones. Some projects in the amount of 6 trillion won have been allocated again, despite the clear failure of their predecessors in recent years. Failure is defined as projects for which less than 70 percent of the related budget has been executed over the past four years

“Most projects have no specific plans to bolster sustainability, the core initiative the government seeks to achieve,” the report said.

The report criticized the government further saying its plan to invest 114.1 trillion by 2025 has no follow-ups as to “how to achieve that grand plan.”

It added, “No plan has been outlined on a yearly basis thus far, a highly concerning situation given the immense amount of spending planned.”

The concern adds to the worrisome status quo whereby of over 4.8 trillion won allocated as part of the third extra budget, only slightly half, or 53.5 percent, has been executed as of September. Fifty-one projects are still yet to be initiated, meaning a much more stringent budget screening process is needed for the effective and efficient use of taxpayers' money.

The report criticized the poor design of the government's consumption-boosting measure ― notably giving cash-equivalent coupons accepted at certain stores mostly in traditional markets.

It said the coupons are given on a first-come-first-serve basis, and they are likely to be claimed by people who are tech-savvy and connected online, while those in need will be excluded.

“Some people can receive as many coupons as they want because there simply is no limit. A necessary system should be set up to prevent opportunistic behaviors,” the report said.

The committee members will continue reviewing next year's budget of 555.8 trillion won through next week. The record-high budget for 2021 is up 8.5 percent, or 43.5 trillion won, from this year's 512.3 trillion won.