Park Honggeun: "Firefighting Budget Measures to Be Reviewed by Assembly... Future Fund Is No 'Slush Fund'" (Updated)

Minister of Planning and Budget Park Honggeun said on October 21 that, regarding cuts to central government funding for firefighting, "During the National Assembly's review of the budget bill, we will take a comprehensive look at the impact of the individual consumption tax, local governments' fiscal capacity, and the adequacy of central government support, and consider what areas need to be supplemented."

Visiting the Ministry of Planning and Budget press room at the Government Complex Sejong that day, Minister Park said, "It is the state's responsibility to create an environment in which those who have sacrificed and devoted themselves to the country and its people can perform their duties more safely." He made the remarks in that context.

After a factory fire in Bucheon, Gyeonggi Province, recently killed Fire Lieutenant Kim Jinseok in the line of duty, a remark by Gyeonggi Province Governor Choo Mi-ae during a parliamentary audit—that "firefighting seems like the biggest fiscal drain"—sparked controversy. Public interest in firefighting finances has since grown.

Park Honggeun, Minister of Planning and Budget, answers reporters' questions at the ministry's press room in Building 5 of the Government Complex Sejong on the afternoon of the 21st. Ministry of Planning and Budget.

Fire Safety Grant Tax Plunges 27.6%... Minister Park Says "We Agree That Review Is Needed as the Fiscal Burden on Local Governments Grows"

Firefighters became national government employees in 2020, but local governments still shoulder most firefighting expenses, including personnel costs. According to the National Assembly Research Service, central government funds accounted for just 11.4% of the nation's KRW 8.5949 trillion firefighting budget this year.

Even that support is expected to decline further next year. The Fire Safety Grant Tax is funded by 45% of the total individual consumption tax levied on tobacco, and tobacco consumption continues to fall. Under the Ministry of Planning and Budget's 2027 budget proposal, the Fire Safety Grant Tax is set at KRW 760.5 billion for next year. That is KRW 289.7 billion, or 27.6%, less than this year's budget of KRW 1.0502 trillion.

"It is true that the fiscal burden on local governments has grown as the total individual consumption tax has fallen amid the recent decline in tobacco consumption," Minister Park said. "I understand that various proposals are also being considered within the ruling party, and the government strongly agrees that this issue needs to be examined closely in light of the recent public concern."

The government plans to coordinate among ministries on specific measures to shore up funding. "Internal discussions have not yet reached a conclusion, and we will need to examine the matter with the Presidential Office, the Ministry of the Interior and Safety, the National Fire Agency, and local governments," Minister Park said. "We will comprehensively assess the actual impact of the decline in grant tax revenues on local governments, the capacity of each local government's special firefighting account, and the adequacy of central government support, and actively consider measures to address the issue during the National Assembly's budget review."

Minister of Planning and Budget Park Honggeun answers reporters' questions at the ministry's press room in Building 5 of the Government Complex Sejong on the afternoon of the 21st. Ministry of Planning and Budget.

Minister Rejects Claims Future Response Fund Is a "Slush Fund": "It Serves as a Fiscal Dam for Proactive Responses to AI"

Minister Park also firmly rejected criticism in the National Assembly that the Future Response Fund was a "slush fund." "Neither the president nor I can withdraw and spend the money at will. It is absolutely not structured that way, and I have never thought of it that way," he said. "Under the National Finance Act, funds are designed to be managed flexibly for specific purposes," he said, adding that "safeguards are in place to prevent the government from increasing on its own the budgets for projects cut by the National Assembly."

He pointed to the fund's unique structure to explain why the government had set its internal reallocation limit at 30%, higher than the 20% limit for ordinary funds. "The Future Response Fund is a hybrid fund with both project-based and financial accounts," Minister Park said. "For next year, the project-based portion accounts for only about 28% (KRW 45.4 trillion), while more than 70% is in financial accounts, so it is reasonable to grant reallocation authority of around 30%." He added, "New models emerge in the AI sector every six months, creating a need for urgent investment," and said the aim was to "respond proactively and swiftly to external uncertainties."

"The Future Response Fund is focused less on generating returns for their own sake than on serving as a 'fiscal dam' to support strategic investment in the future," Minister Park said. "We will develop the fund after comprehensively reviewing whether to establish a separate outsourced chief investment officer (OCIO) structure or use the investment pool for public pension funds, as well as how to allocate assets over the short, medium, and long term."

"2045 Mid- to Long-Term Strategy to Be Announced at Year-End Will Reflect Young People's Voices"

Regarding the target he mentioned during the parliamentary audit of earning returns 1.7 percentage points above those on three-year government bonds, Minister Park said, "My point at the time was that such a return might be achievable, given the average returns of pension funds." He said, "The fund bill has not yet passed, and we are still gathering expert opinions, so it is difficult to make a definitive statement," adding that "we need to carefully assess revenue variables, including the scale of excess tax revenue and the semiconductor cycle, as well as the nature of expenditures."

Asked whether the government would use the tax revenue generated by the semiconductor boom to further reduce the amount of government bonds issued, Minister Park said, "We are monitoring market conditions for now," adding that "we can adjust the issuance volume as needed."

Minister Park said interministerial discussions were under way on a plan to provide subsidies to loss-making companies that are ineligible for domestic production tax credits. "Tax credits fall under the Ministry of Finance and Economy, while subsidy spending is the responsibility of the Ministry of Planning and Budget, so the ministries are coordinating closely," he said. "We will reach an agreement soon, taking market conditions and technological competitiveness into comprehensive consideration, with a focus on six to seven product groups, including electric vehicles and solar power."

Regarding the "2045 National Mid- to Long-Term Strategy," scheduled to be announced at year-end, Minister Park said, "We are refining the draft with researchers in their 30s and 40s at the Korea Development Institute (KDI) playing a leading role, and incorporating the views of young people, government ministries, and political parties through town hall meetings and surveys." He added, "We will present a thoroughly developed final proposal after an interim briefing to the president in the near future."

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