Controversy erupts over DP's cash handouts to refugees in Korea

The inclusion of refugees as beneficiaries in the liberal-backed "cash handout bill" passed on Aug. 2 has sparked criticism from conservatives, who accuse the legislation of wasting tax money on foreigners.

The Special Act for the Livelihood Recovery Support Funds passes on Aug. 2 in the National Assembly plenary session, with 186 out of 187 attending members voting in favor, and one against, out of the 300 total members. [JEON MIN-GYU]

The inclusion of refugees as beneficiaries in the liberal-backed "cash handout bill" passed on Aug. 2 has sparked criticism from conservatives, who accuse the legislation of wasting tax money on foreigners.

The DP-led Special Act for the Livelihood Recovery Support Funds stipulates the provision of 250,000 ($181.9) to 350,000 won per person in gift cards that can be used in each region. The bill, proposed by former Democratic Party (DP) leader Lee Jae-myung on the first day of the current 22nd National Assembly session, was promoted as the liberal party's top legislative agenda.

DP floor leader Park Chan-dae asserted that the measure would "improve the stagnant domestic economy." The conservative People Power Party (PPP) opposed the bill, with PPP floor leader Choo Kyung-ho denouncing it as a "cash scattershot" that "ruins" the economy.

According to the special act, the funds will be paid to Korean nationals with resident registration, as well as permanent residents, "marriage immigrants" and refugees. Marriage immigrants are people who reside in Korea as spouses of Korean nationals.

Long-term overseas residents and individuals in correctional facilities are excluded.

The decision to extend the funds to permanent residents, marriage immigrants and refugees stems from their participation in the domestic workforce and consumption.

"To boost consumption, it is necessary to provide these funds to foreigners who reside in the country semi-permanently," a DP official explained.

During the Covid-19 pandemic in 2020 and 2021, emergency relief funds were also given to permanent residents and marriage immigrants. Refugees have been newly included this time, per the provision of the Framework Act on Treatment of Foreigners Residing in Korea, which states that "refugees are treated equally to marriage immigrants."

Critics say the bill provides benefits to foreigners who do not fulfill basic civic duties.

"People like permanent residents are not obligated to serve in the military," PPP Rep. Cho Bae-sook argued during the legislative review, adding that "livelihood recovery support funds are a welfare benefit given by the state to its citizens, and it is problematic to support everyone indiscriminately."

As of 2022, there are 176,107 permanent residents, 136,266 marriage immigrants and 36,446 refugees in Korea, totaling 348,819 individuals, according to Statistics Korea. Providing 250,000 won to each would cost 87.2 billion won.

The actual effectiveness of the consumption boost also remains a point of contention.

The Covid-19 relief funds in 2020 and 2021 boosted consumption by 26.2 to 36.1 percent in credit card usage and 19.2 to 36.8 percent in debit card usage, according to the Korea Development Institute. The livelihood recovery support funds are anticipated to generate a consumption boost effect of around 30 percent, meaning that injecting 13 trillion won could result in a 4 trillion won effect. The PPP will likely condemn this as a waste of public funds, while the DP may argue that it's better than doing nothing.

Providing 250,000 won per person to the entire population of 51.27 million people, as of May, would cost 12.8 trillion won, according to the National Assembly Budget Office, while providing 350,000 won per person would cost 17.9 trillion won. Issuing government bonds through a revised supplementary budget would be inevitable.

"When we have suffered from chronic fiscal deficits for the past six years, pursuing expansionary fiscal policies is far from normal fiscal management," Prof. Lee Chul-in of Seoul National University’s Department of Economics said. "Given the unclear consumption boost effect of the support funds, we might not achieve the desired results despite injecting substantial fiscal resources."

BY KIM HYO-SEONG [seo.jieun1@joongang.co.kr]