Chairman Hong Moon-pyo of the National Assembly Special Committee on Budget & Accounts

By Oh Chung-sook

Old habits die hard. In recent years, the National Assembly has come under public criticism for failing to approve the budget for the following year on time, sometimes dragging it out well into the following year. 

The parliament is still at a complete standstill. The opposition New Politics Alliance for Democracy party insists on preconditions related to the Sewol Ferry disaster before it opens the plenary session.

This year may be different. 

The government submitted the 2014 budget proposal, set at 376 trillion won, for approval from the parliament. Chairman Hong Moon-pyo of the National Assembly Special Committee on Budget & Accounts said, “Ruling and opposition parties will likely deliberate the 2015 budget bill in a smooth fashion and in the same way they have already agreed to approve the 2015 budget accounts bill. 

“Starting this year, budget deliberation should be completed by Nov. 30, in accordance with the revision of the act on advancing parliamentary activities to standards of advanced countries. If the parties fail to make the deadline, the bill will be automatically referred to the plenary session for approval on Dec. 1,” Hong said. “We’ll go all out in approving the budget on time. Our committee is making preparations lest budget deliberation be done in a slipshod manner.  I bet that the National Assembly should not be trapped in bipartisan strife in deliberating the budget comprising taxpayers’ money,” he said. 

Chmn. Hong, hailing from Hongseong, Chungcheongnam-do, a rural constituency, is an advocate of what he calls agricultural revolution in Korea through which the nation could lead to rise to the ranks of advanced countries. He said the current government has reorganized the Ministry for Food, Agriculture, Forestry, and Fisheries into the Ministry of Agriculture, Food, and Rural Affairs to promote the development of the food industry on his recommendation.

He warned of food and water crises that may hit the nation in the future, adding that countries are scrambling for weaponizing grains, and Korea depends on imports for top four grains, except rice, and the nation is one of the countries lacking well water. “If climate change do not bring much water down the road, what a catastrophe for a nation which too much depends on surface water like Korea,” he said.

The following are excerpts of an interview between NewsWorld and Chmn. Hong in which he spoke of the direction of his committee’s budget deliberation and prospects of the nation’s mid- and long-term fiscal sustainability.

Chairman Hong Moon-pyo of the National Assembly Special Committee on Budget & Accounts gives a speech at a National Assembly session.

Question: Will you tell our readers about how your committee will deliver the 2015 budget bill?

Answer:  We will act on the 2015 budget measure in accordance with three principles –deliberation of a budget for a balanced development of the Republic of Korea, for ensuring safety of the nation, and for improving people’s welfare. 

The deliberations of the 2015 budget proposal will be made in accordance with the implementation of active, preemptive fiscal policies to restore economic growth momentum. Reinvigorating of the national economy, realization of a safe society, stabilizing of public livelihood, enhancing of public trust over state finance through fiscal reform, and establishment of a foundation for restoring fiscal sustainability are of our essential concern. 

The parliamentary deliberation of each fiscal year’s budget has been so far done on the basis of a government budget proposal.  

But the parliament is introducing a ‘public participation system’ to lend an ear to public voices in the course of budget deliberation, the first such move in parliamentary history. Committee members will tour a selection of six to seven metropolitan city governments in mid-October to reflect voices of on-the-site people’s voice in deliberating their low-income welfare budgets. Welfare loopholes, welfare for senior citizens and welfare demands for the handicapped will be referred to the government for budgeting. The compilation of the budget should be done the way on-the-scene voices are reflected.  

We’ll strive to reflect people’s voices in deliberating the budget so that active, preemptive fiscal policies to regain economic dynamics can be implemented.

Q:  Will you elaborate on the current status and prospects of ruling and opposition parties’ negotiations for budget deliberation?

A:  Starting this year, budget deliberation should be completed by Nov. 30 in accordance with the revision of the act on advancing parliamentary activities to standards of advanced countries, but if both parties fail to make it on time, the budget bill will be automatically submitted to the plenary session for approval on Dec. 1. 

The reality is that budget deliberation is launched one month earlier than previous years and worry is mounting in consideration of the current political situation. We’ll go all out in acting the budget bill on time. Our committee is making preparations in a full-fledged manner lest budget deliberation be done in a slipshod manner.  

I bet that the National Assembly should not be trapped in bipartisan strife in deliberating the budget comprising taxpayers’ money. Compiling the 2015 budget into one designed to reinvigorate the national economy and cater to low-income people in a tightly-knitted fashion is the parliament’s mission. Our committee will devote itself to deliberating the budget lest any penny of taxpayers’ money be wasted away.  

Q: Does the nation need to expand its R&D budget, as opposed to that of advanced countries?

A: I consider it necessary to expand the R&D budget to translate into action the Park Geun-hye government’s national agenda of realizing the creative economy. It is more significant to concentrate investments into essential areas through in-depth scrutiny. 

The R&D budget for all ministries was compiled at 18.8245 trillion won for this year, up 5.9 percent or an increase of 1.0453 trillion won over last year. The 2015 budget increase rate is a litter higher than the government’s total expenditure increase rate of 5.9 percent. The R&D budget will focus into the creation of new industries and new markets for the realization of the creative economy, support for SMEs and mid-size companies, and industry R&D activities. We’ll scrutinize the 2015 R&D budget proposal to flesh out the creative economy. 

Korea ranks sixth in terms of the portion of the R&D budget of GDP following the United States, Japan, Germany, France and the United Kingdom, but the nation places lowest levels among OECD countries in the private sector’s R&D investments. 

Q: Will you speak about the 14 trillion won safety-related budget proposal for next year?

A: Public demand and expectations for ensuring safety of society is mounting, but people’s satisfaction over safety has been dropping in the wake of the Sewol Ferry disaster. Security risks against North Korea persist, and a series of barracks accidents have undermined public trust toward the military.

The safety-related budget proposal sets aside 14.6 trillion won, a 17.9 percent surge or an increase of 2.2 trillion won over last year.  The budget expansion comes in keeping with the government’s step to prevent accidents by focusing investments into repairing or fortifying school facilities, roads, tunnels, railways, and bridges, which are closely related to safety. We’ll do our utmost to ensure the safety of the nation so budget can be compiled into safety-related fields in a timely and properly fashion.

Among the major safety-related budget proposals are 50 billion won for unifying telecommunications facilities among safety-related government agencies, including police and fire stations,; additional installation of 13,000 CCTV units,; 1.3 trillion won for repairing or restoring accident-prone road facilities,; an increase of 600 billion to 2 trillion in repairing or fortifying school and other disaster-vulnerable facilities,; and augmentation of 3, 869 police and coast guards.

Q: Will you comment on the 2 trillion won budget proposal related to local merchants, self-employed businessmen and SMEs?

A: Figures made available in 2013 showed that some 45 percent of the self-employed businessmen and non-regular workers were found to be unsatisfied with their jobs due to job insecurity, temporary positions and management woes. Excessive competition are making self-employed businesses short-lived, and compensation differences between non-regular workers and regular employees are widening. In an effort to fix the vicious cycle, the government augmented the budget for local merchants, self-employed businessmen and SMEs to a record high of 2 trillion for next year, a jump from 1.2 trillion won in 2014. 

For an instance, the 2015 budget bill newly allocated 2 trillion won for promoting traditional markets through refurbishment and improvement of environment to help them woo customers from large-scale retailers.

The National Assembly plans to attach priority in budget deliberation to stabilizing the livelihood of low-income earners and those in the middle income bracket. 

Q: Will you explain the social overhead capital (SOC)-related budget proposal?

A: The government has reversed a decision to cut down on the SOC budget to implement projects related to President Park Geun-hye’s public pledges made during her presidential election, but increased the SOC budget proposal to boost the national economy by a range of 3 percent, which is lower to a 5.7 percent growth rate of the 2015 total budget and a 8.5 percent increase rate of the welfare budget proposal. 

SOC investments, which have far-reaching economic effects, including employment and production induction, are expected to reinvigorate the national economy. An increase of 700 billion won to 2.1 trillion won in the SOC budget will be poured into a safety-related budget for repairing or replacing shabby bridges, tunnels and railroads, having double effects of making the nation safe and boosting the national economy. Job creation and economic stimulus effect via SOC investments tend to end up short-lived, so we will scrutinize SOC investment proposals into whether they will contribute to balanced national development. 

Q:  How the 2015 budget proposal will affect fiscal sustainability?

A: Some people worry about the exacerbation of fiscal sustainability and a fiscal catastrophe, but this view is not true. Korea is in a good and manageable fiscal situation, compared to major advanced countries, having an ample room to adopt expansionary fiscal policies. 

Korea, adopting operational budget balance, is in a better fiscal situation, compared to other countries, depending on consolidated central government balance, which is more lenient than the former. Korea’s government debt vs. GDP stands at some one-third of the average of the OECD countries, and the nation’s debts, including public entity debts, are the lowest levels among the OECD states. 

Of late, the international ratings agency Standards & Poors has raised Korea’s sovereign rating from A+ and its “stable” outlook to A+ and “positive,” citing its sound fiscal sustainability. If the timely implementation of the new economic team’s expansionary macroeconomic policies pays off, it will likely lead to better mid- and long-term fiscal sustainability.   

Chairman Hong Moon-pyo of the National Assembly Special Committee on Budget & Accounts poses with 

NewsWorld President-Publisher Elizabeth M. Oh and Managing Editor George S.Y.  Kim following an interview 

at the chairman’s office at the National Assembly.