[Editorial] Wasteful trip

Lawmakers travel to Europe to learn its fiscal rules after wasting 30 months

Five lawmakers from the ruling and opposition parties on the Strategy and Finance Committee set out on a nine-day business travel to Europe on Tuesday. They said they would visit France, Spain and Germany to learn about their fiscal rules.

Of course, lawmakers are free to travel abroad for policy research. But at least they should have decency.

The ruling and opposition parties wasted two years and six months neglecting the legislation of fiscal rules. Recently they agreed unanimously on a bill that will likely waste public funds. Then their lawmakers went to Europe to learn about frugality.

In October 2020, the Moon Jae-in administration presented its fiscal rules. The then ruling Democratic Party of Korea opposed them, citing the COVID-19 pandemic. The government needed to increase expenditures in response to the pandemic.

The Moon administration wanted the fiscal rules to take effect from 2025. The Moon administration and the Democratic Party do not seem to have wanted cost control on their populist policies while in power.

Negotiations between the ruling and opposition parties over the rules fizzled out in the pandemic.

Then the Yoon Suk Yeol administration came up with fiscal rules that restrict the managed fiscal deficit to within 3 percent of the gross domestic product. A related bill was proposed in September of last year but it has not been passed yet.

Last week, in a subcommittee of the Finance and Strategy Committee, the ruling People Power Party and the Democratic Party unanimously passed a bill to ease feasibility tests for state-funded infrastructure projects. Under the bill, the threshold under which mandatory feasibility tests are exempt will be raised from 50 billion won ($37.5 million) to 100 billion won. Practically, the ruling and opposition parties agreed to eliminate the hurdles for most of the pork-barrel projects that will please their electorates. With criticism mounting, though, they put its final passage on hold.

When it comes to a spending bill that curries favor with voters, they made the rare move of being united. However, when it comes to getting spending under control, they are back on different wavelengths.

The Democratic Party has attached a condition to the legislation of fiscal rules. It demands the ruling party agree on its bill to provide up to 7 trillion won in annual assistance to social enterprises. Former political activists who side with the opposition party are said to control most of these businesses. Based on this, the opposition party doesn’t seem to care about national finances. Its eyes are only on the upcoming general election. More or less, the same is true of the ruling party.

They frittered away 30 months like this. Not many would nod in agreement at hearing of their business trip to Europe. Data and research reports on fiscal rules abound in Korea. It is doubtful that the lawmakers will learn much from the trip.

With little progress made in the legislation of fiscal rules, government debt topped 1,000 trillion won late last year. Particularly for the three years from 2020 to 2022, it increased sharply -- about 100 trillion won each year. This year, government debt is expected to increase by more than 60 trillion won. Tax revenue will likely fall 20 trillion to 30 trillion won short due to the economic slowdown.

Fiscal rules are essential from a demographic standpoint as well. Korea has the lowest fertility rate in the world. It is becoming an aging society at a fast rate. It is expected to become a super-aged society by 2025. Korea cannot neglect fiscal rules any longer. According to the IMF, about 100 countries have at least one fiscal rule.

If the lawmakers really intended to curb public debt -- growing at about 100 million won per minute -- they should not have gone on the trip. Now that they are already in Europe, their trip should yield results. They must legislate fiscal rules in a provisional session of the National Assembly next month.

By Korea Herald(khnews@heraldcorp.com)