[Q&A] Park Honggeun: "The Future Response Fund Is Not a Government Slush Fund...A Valuable Resource to Lead the AI Transformation"

Direct Rebuttal to "Permanent Supplementary Budget" Criticism
Emphasizes the Necessity of Strategic Reinvestment of Additional Tax Revenue

The government will establish a "Future Response Fund" to strategically reinvest the large-scale additional tax revenue generated by improvements in the semiconductor market and other factors into high-tech industries and future generations. In addition, the traditional "mechanical linkage to 20.79% of national tax revenue" method, which has kept the Local Education Finance Grant (Education Grant) system unchanged for more than half a century since the 1970s, will be revised to allow investments in early childhood, as well as higher and lifelong education sectors.

Kim Minjae, Vice Minister of the Ministry of the Interior and Safety (from left), Park Honggeun, Minister of Planning and Budget, and Choi Gyojin, Minister of Education, greet each other after completing a joint briefing on the reform of local education finance grants with related ministries at the Government Seoul Building in Jongno-gu, Seoul, on the 21st. Photo by Yonhap News.

On August 21, the government held the "1st Fiscal Management Strategy Council" at the Government Complex Seoul, presided over by Park Honggeun, Minister of the Ministry of Planning and Budget, to discuss these plans. Minister Park emphasized, "The additional tax revenue this time is a valuable resource for us, who stand at the forefront of the great transformation of artificial intelligence (AI)," and added, "The next two to three years, when we must redesign the entire national system to accommodate the full-scale expansion of AI, will be the optimal time to invest for reopening the growth plate of our economy."

The following is a summary of the main questions and answers exchanged between Minister of Planning and Budget Park Honggeun, Minister of Education Choi Gyojin, and members of the press.

▲ What is the anticipated size of the Future Response Fund? Among the four investment areas of youth, growth engines, regions, and educational talent, what are the specific business concepts for the youth sector? There are also criticisms that this fund may function as a "permanent supplementary budget" executed without parliamentary approval. How do you respond to such concerns?

=(Minister Park Honggeun) The specific size of the fund is directly linked to the formulation of next year's budget. After completing the final stage of the budget process, we plan to submit it to the National Assembly soon, and at that time, we will provide detailed disclosure on its concrete size and next year’s expenditure breakdown. Although there is much speculation in the media, it will be a significant amount.

The four major areas are broadly divided into fostering future growth engines and investing in the youth. The goal for growth engines is to use the additional tax revenue—possibly temporary, generated from a semiconductor boom—to make focused investments in future high-tech industries beyond semiconductors and to achieve tangible results. In the youth sector, while we have already addressed support for other vulnerable groups intensively in next year’s budget through the general account, we determined that investment in the youth generation should not simply be support for a particular demographic, but rather a strategic investment at the national level, warranting a separate account. The regional and education/talent accounts were newly created to make reinvestments corresponding to the reform of the grant tax and grant fund systems.

For the youth sector, the "Youth Culture and Arts Pass," which currently targets those aged 19 to 20, will be substantially expanded to cover the entire legal youth age group, and the scope of support will extend beyond cultural and artistic activities to include athletics and sports. A comprehensive youth policy covering employment and housing support will be announced soon.

Criticism that this is a slush fund designed to circumvent the need for supplementary budgets in the National Assembly is entirely unfounded. It is inappropriate to use the large-scale financial resources generated over several years either in a temporary, consumptive manner, or to devote everything solely to fiscal soundness—if we did so, a budget deficit would reemerge during slowdowns, requiring additional national bonds. Now is the perfect time to create a virtuous cycle by strategically investing to boost potential growth rates, expand revenue, and reinvest. Even with the establishment of the fund, all executions are carried out strictly in accordance with the National Finance Act and the Fund Management Act, with rigorous statistics, procedures, and statutory reviews in the National Assembly—meaning the government cannot operate it arbitrarily.

▲ In the end, the mechanical linkage to national tax revenue will be abolished, and even the portion for elementary and secondary education is not separately guaranteed within the Future Response Fund. Some assess that the Education Minister’s promise to safeguard elementary and secondary education finances (even at the risk of his position) was not reflected in the final plan, and that, despite safety provisions, weight is shifted toward high school and lifelong education, particularly given the increasing rigidity of personnel expenses, thus abandoning the elementary and secondary field. What specific grounds support the claim that elementary and secondary education finances have been preserved?

=(Minister Choi Gyojin) More than 300 education-related organizations and superintendents have expressed their concerns that elementary and secondary education finances should not be damaged or reduced. While we support the intention to expand investment into high school, lifelong, and early childhood education, we fully recognize the voices worrying about the challenges facing the elementary and secondary education field.

When we began discussions with the Ministry of Planning and Budget, the first agreement we reached was, "Under no circumstances will we allow the budget for supporting elementary, middle, and high school students to be reduced to the extent that it does not keep pace with inflation or rising personnel expenses." Accordingly, the law will specify a provision for the state to be responsible for making up any shortfall when the education grant budget is lower than the previous year owing to fiscal deterioration.

Even with the new calculations applied, the budget for the Local Education Finance Grant to be used by elementary, middle, and high schools is designed to increase substantially and in stages from 2027 to 2030. Specific figures will be transparently disclosed during upcoming consultations with the National Assembly and the education sector.

=(Minister Park Honggeun) As the head of the fiscal authority, let me be clear. The education budget for early childhood, elementary, and secondary students will never decrease. The old rigid structure mechanically linked to national tax revenues made education finances highly vulnerable to tax revenue fluctuations, causing significant confusion and burden on local education offices, especially during the large shortfalls of 2023 and 2024. We cannot allow such instability to persist.

This content was produced with the assistance of AI translation services.