Park Honggeun: "Youth Support Is a Strategic Investment Beyond Simple Welfare... Annual 'Culture and Arts Pass' Support Extended Until Age 34"

Large-Scale Fiscal Investment Planned for Youth Jobs and Housing
Government Stresses Need to Overhaul Education Grants for the First Time in 54 Years

Park Honggeun, Minister of Planning and Budget, stated on the 21st, "Investment in the younger generation is not merely a form of welfare but a national strategic investment," adding, "We will establish a 'fiscal reservoir' to accumulate excess funds when tax revenue is strong, and will focus these resources on future growth engines as well as absorb shocks during economic downturns."

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

Appearing on the KBS 7 o’clock news program that day, Minister Park outlined the background behind the government’s announcement of the new “Future Response Fund” and presented a detailed blueprint for the planned reform of the local education finance grant system—the first overhaul of its kind in 54 years. His plan is to develop a strategic investment platform that leverages additional tax revenue from the recent semiconductor boom to drive up the nation’s potential growth rate, with concentrated fiscal input into youth employment, housing, and fostering talent in higher education.

Highlighting the rapidly growing number of young people who have left the workforce, Minister Park emphasized the need for a fundamental shift in the youth support paradigm. He said, "Young people are presently facing very difficult circumstances. Not only are we planning massive investments in programs that increase job opportunities and help boost employment capabilities, but we will also drastically strengthen the housing ladder, such as substantially increasing the supply of housing near public transit stations."

In particular, as a flagship policy directly targeting youth experiences, he formalized a radical expansion of the “Culture and Arts Pass.” Currently, the government-run Youth Culture and Arts Pass provides individuals aged 19 or 20 with a one-time annual benefit of approximately KRW 150,000 to 200,000. Minister Park explained, "The existing approach, in which youth could use a one-time benefit at ages 19 or 20 to view exhibitions or performances, will be completely redesigned next year to support every legally defined youth under the Basic Youth Act—up to age 34—annually." He was referring to a core measure included in the youth package (covering jobs, housing, assets, marriage, and childbirth) that the Ministry finalized during the first Fiscal Operation Strategy Council meeting held the same day.

When discussing the scale and operation of the Future Response Fund, Minister Park made clear the dual-track objectives of “fiscal stabilization” and “expanding growth engines.” In response to market forecasts estimating the fund at KRW 100 trillion to 200 trillion, he said, "We have established a variety of internal projections and scenarios. A considerable amount will be accumulated, and a substantial portion of this will be directly invested in next year's budget."

Addressing criticism that surplus tax revenue is not being used to repay national debt, Park explained, "The fund will act as a 'reservoir' to accumulate surplus funds during tax windfalls brought by the 3-to-5-year economic cycles, such as those in the semiconductor industry. In addition, the national debt-to-GDP ratio has been improving as the nominal growth rate increases, and through strong expenditure restructuring and strategic use of funds, we intend to reduce the annual issuance of government bonds and thus better maintain fiscal soundness."

According to the government’s proposal, the Future Response Fund will be funded by additional and surplus tax revenue that exceeds the long-term projections for domestic taxes, as well as any remaining fiscal surpluses. If next year’s national tax revenue exceeds KRW 500 trillion, the fund’s inaugural year could see resources reach at least KRW 100 trillion plus alpha. These resources would be extensively deployed for building frontier-level artificial intelligence and data center infrastructure, advancing seven SEED technologies such as small modular reactors (SMR) and nuclear fusion, and for bolstering local living infrastructure and basic rural incomes.

He also underscored the necessity of an overhaul to the education grants, which were mechanically linked to domestic tax revenue. To address the steep drop in school-age population due to low birth rates, the government will abolish the existing formula that automatically tied 20.79% of domestic taxes to the grants. Instead, the new formula will factor in the previous year’s grant plus the three-year average nominal growth rate and the rate of change in the school-age population (at 35%).

Minister Park pointed out, "Compared to the OECD average, investment in primary and secondary education stands at 166%, but investment in higher education such as universities is only 60%. We will continue investing in primary and secondary education with a focus on AI-centered curriculum, care, and improvement of aging facilities, but resources should be more evenly distributed to foster high-level talent that is directly linked to national competitiveness."

He added, "Because of the linkage to domestic tax revenue, the education budget has frozen abruptly six times over the past 20 years whenever there was a revenue shortfall. The resources secured through the grant reform will be redirected to the education and talent account of the Future Response Fund, which will focus on science and technology talent development and strengthening university competitiveness. A safeguard would provide supplementation from the fund if the total amount of the grants decreases."

Furthermore, Minister Park stressed, “With the potential national growth rate declining, there is a pressing need for a strategic investment platform to reverse this trend. We will cut unnecessary expenditures and boldly allocate fiscal resources to areas that will unlock future engines of growth.”

Meanwhile, the government will finalize the Future Response Fund plan and the education grant reform, both discussed at the first Fiscal Operation Strategy Council, for inclusion in next year’s national budget. After a detailed briefing next week and Cabinet approval, the proposal will be formally submitted to the National Assembly.

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