[Joo Young-jin's News Briefing]
When quoting this interview, please explicitly cite the program name 'SBS <Joo Young-jin's News Briefing>'. Copyright belongs to SBS.
■ Broadcast: SBS <Joo Young-jin's News Briefing> Mon–Fri (14:00 – 15:20)
■ Host: Anchor Joo Young-jin
■ Guest: Park Hong-keun, Minister of Planning and Budget
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● Interview with Minister of Planning and Budget Park Hong-keun
"Record Spending Growth Next Year... Projected Use of Unprecedented Semiconductor Tax Windfall"
"Spending Unprecedented Revenues Consumptively in a Single Year Is Inefficient Investment"
"Creating Future Response Fund for Strategic Spending... Strategic Investment Platform and Stabilization Mechanism"
"Nation Facing Optimal Timing for Investment... Failing to Invest Now Means Missing Golden Window for Growth"
"Three Major Mega Projects Are Investment Areas Decisive for Nation's Destiny... Will Provide Active Support"
"Investing in 'Post-Semiconductor' Industries Beyond Chips"
"Using Funds to Ease Youth Problem and Polarization... Fruits of Growth to All Citizens"
"Youth Employment Indicators Worsening... Youth Issues Are Not Individual Problems"
"Strengthening Primary and Secondary Education, Balanced Investment in Higher and Lifelong Education"
"Educational Finance Criticized for Lax Spending... Will Catch Two Rabbits of Stability and Balanced Investment"
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▷ Joo Young-jin / Anchor: Until not too long ago, when introducing this person, we would say he served as a four-term lawmaker and floor leader of the Democratic Party. But now he is in charge of our nation's budget and state finances. He has become the Minister of Planning and Budget. Minister Park Hong-keun is here with us. Welcome.
▶ Park Hong-keun / Minister of Planning and Budget: Nice to meet you.
▷ Joo Young-jin / Anchor: How busy have you been?
▶ Park Hong-keun / Minister of Planning and Budget: Physically twice as busy, and psychologically three times as busy as when I was a lawmaker—at least two to three times busier overall.
▷ Joo Young-jin / Anchor: As I look at social media posts by politicians, I often see photos posted saying, 'I met with Minister Park Hong-keun and explained budget projects for our region.' It seems so many people really want to meet with you right now.
▶ Park Hong-keun / Minister of Planning and Budget: Since I also have to do my own work, I simply don't have enough time to meet everyone, so I established a set of principles. Of course, I must meet with government ministers, as well as ministerial-level officials and heads of major agencies. Second, I need to meet lawmakers, who are constitutional bodies.
▷ Joo Young-jin / Anchor: Members of the National Assembly.
▶ Park Hong-keun / Minister of Planning and Budget: And I also meet with provincial governors and metropolitan mayors. However, since I really don't have time to meet heads of basic local governments or heads of individual associations, I ask for their understanding and request that they convey their opinions through provincial governors or lawmakers.
▷ Joo Young-jin / Anchor: Is the budget work for the new year's national budget almost complete? Since the regular session of the National Assembly is opening soon, it will likely be submitted to Parliament shortly.
▶ Park Hong-keun / Minister of Planning and Budget: That is correct. By law, I received budget requests for next year from each ministry by the end of May. Based on that, we held consultations with each ministry in June and July and are now in the final stage of reviewing them. We plan to finalize the government's proposal by the end of August and submit it to the National Assembly in early September. Then, during the regular session, the National Assembly will conduct a full review, and the budget proposal for next year will undergo final approval in early December.
▷ Joo Young-jin / Anchor: It feels like the entire national finances run at a breathless pace within a tightly structured schedule. Once the budget proposal is drawn up, you'll have to be at the National Assembly every day during the regular session for review, and once it passes, you have to monitor execution while already preparing the next year's budget.
▶ Park Hong-keun / Minister of Planning and Budget: And there is also the budget settlement process in between.
▷ Joo Young-jin / Anchor: There is also the settlement. Outlooks suggest that next year's national budget will, as always, be the largest in history. Is that correct? What is the outlook?
▶ Park Hong-keun / Minister of Planning and Budget: As I have already mentioned through my work report to the President and at the National Fiscal Strategy Meeting, and as disclosed to the media and the public, next year will likely see the largest increase in spending in history, as well as the largest total budget size. Unprecedented tax revenues are currently expected due to factors like the semiconductor boom.
▷ Joo Young-jin / Anchor: Right.
▶ Park Hong-keun / Minister of Planning and Budget: Utilizing that, for next year's budget—this year's budget was 728 trillion won.
▷ Joo Young-jin / Anchor: 728 trillion won.
▶ Park Hong-keun / Minister of Planning and Budget: And including the supplementary budget, it came to 753 trillion won. Next year, it will be 800 trillion won plus alpha. It will likely well exceed 800 trillion won. Regarding total spending, we once exceeded a 10% increase rate during the past global financial crisis, and we are currently projecting and preparing a spending growth rate that somewhat exceeds that level.
▷ Joo Young-jin / Anchor: The semiconductor boom and the recent grand announcement of the three major mega projects have drawn high interest, with many wondering, 'What about our region?' and 'Will SK Hynix or Samsung Electronics come to our region?' How does the Ministry of Planning and Budget intend to utilize this? How do you plan to handle this unprecedented tax windfall—will it be spent immediately, or accumulated wisely for future generations? What is your vision?
▶ Park Hong-keun / Minister of Planning and Budget: If an individual or household comes into a lump sum of money and just spends it traveling and buying items, they end up right back where they started.
▷ Joo Young-jin / Anchor: It just disappears.
▶ Park Hong-keun / Minister of Planning and Budget: A nation must naturally make more strategic investments. Next year's internal tax revenues—which usually refer to corporate taxes and income taxes... We initially expected 390 trillion won to come in this year, but more is coming in. That is why we already drew up a 25 trillion won supplementary budget, and it appears even more funds beyond that will enter. Next year, even higher tax revenues are expected. While our original plan or forecast for this year was 390 trillion won, we now expect revenues to far exceed 500 trillion won. If we were to spend all these revenues in a single year on consumption simply because they came in through semiconductors, that would be an extremely inefficient investment for the nation. Therefore, we believe this money must be saved and used properly. Instead of spending everything in a single year on consumptive items, we plan to create a Future Response Fund to allocate it more strategically.
▷ Joo Young-jin / Anchor: Future Response Fund.
▶ Park Hong-keun / Minister of Planning and Budget: That is correct. As the name suggests, this Future Response Fund comes at a time when Korea's potential growth rate has dropped significantly—down to the mid-1% range, and some say it could drop to the 0% level. That is a serious situation. Fortunately, a once-in-a-lifetime opportunity has arrived. Because a lot of revenue is coming in due to semiconductors, this Future Response Fund serves as a platform to make strategic investments through these resources. On the other hand, tax revenue conditions will not always remain this good.
▷ Joo Young-jin / Anchor: That's true.
▶ Park Hong-keun / Minister of Planning and Budget: So when tax revenue shortfalls occur or difficult economic situations arise where a supplementary budget is suddenly needed, we are preparing to use this Future Response Fund as a fiscal stabilization tool to supplement our fiscal capacity.
▷ Joo Young-jin / Anchor: So, your idea is to set aside a certain portion of the large tax revenue windfall into a Future Response Fund and utilize this fund depending on the situation as it arises?
▶ Park Hong-keun / Minister of Planning and Budget: "Setting aside" has two aspects. First, I cannot state the exact size here today. In any case, we will accumulate a substantial amount.
▷ Joo Young-jin / Anchor: Why can't you state the amount?
▶ Park Hong-keun / Minister of Planning and Budget: Because by law, we are required to re-estimate tax revenues in September this year. Also, we can only determine the exact size of this fund once we know how much tax revenue will come in for next year. We have not reached that stage yet. However, we will use the created fund as follows. As I mentioned earlier, we will make strategic investments.
▷ Joo Young-jin / Anchor: Right.
▶ Park Hong-keun / Minister of Planning and Budget: What is strategic? First is the youth generation. Second is growth engines. Third is regional areas, and fourth is education and human resources. We will strategically invest in these four areas. So, rather than leaving the accumulated fund completely untouched, one aspect is investing part of it in these strategic fields. Another aspect is that we will entrust these funds through asset managers to invest in bonds, stocks, and other vehicles that generate returns higher than current interest rates. Then, as mentioned earlier, if a tax shortfall occurs or a supplementary budget becomes necessary, I will be able to utilize these surplus funds. We plan to operate this fund in these two directions.
▷ Joo Young-jin / Anchor: Understood. Minister Park, you have explained the Future Response Fund in detail. In any case, under the Democratic Party administration—specifically the Lee Jae-myung administration—there is an interpretation that the basic principle and direction of our fiscal policy is expansionary fiscal policy, actively spending to improve citizens' lives and keep the economy moving smoothly. Is that correct? What is the stance?
▶ Park Hong-keun / Minister of Planning and Budget: It is not just because it is the Lee Jae-myung administration; it is because of the current moment. Good opportunities do not come around constantly. In other words, fierce competition among countries and corporations over AI supremacy has begun. We view this as being at the center of a monumental civilization-level transformation.
▷ Joo Young-jin / Anchor: A monumental civilization-level transformation.
▶ Park Hong-keun / Minister of Planning and Budget: In this shift, the question is whether we will lead, follow along, or fall behind altogether. Naturally, we must lead. That means we must make strategic investments accordingly, and we believe we must invest at the right time to open up growth engines further. In that sense, we view right now as the optimal time for the state to invest.
▷ Joo Young-jin / Anchor: The state is facing the optimal timing for investment.
▶ Park Hong-keun / Minister of Planning and Budget: However, if we fail to do so... I already learned from the previous administration. For example, if funds are used only to pay off debt, and despite the need for supplementary budgets, they are avoided while pursuing tax cuts instead, we usually refer to that as a vicious cycle of austerity.
▷ Joo Young-jin / Anchor: A vicious cycle of austerity.
▶ Park Hong-keun / Minister of Planning and Budget: In the end, that weakened the overall momentum of the economy. Furthermore, severe tax revenue shortfalls occurred. Consequently, all of this led to a worsening of state finances once again. That is why we want to properly invest in economic growth. This performance will eventually lead to increased tax revenues, creating a virtuous cycle that restores fiscal soundness. We believe this is the responsibility of the state and the role of fiscal authorities right now.
▷ Joo Young-jin / Anchor: Regarding what you just mentioned, the Yoon Suk Yeol administration and the People Power Party have consistently argued that 'an expansionary fiscal stance places a heavy burden on future generations.' That voice is likely to be strong again this time, and it may be the question you receive most during the Assembly's budget review.
▶ Park Hong-keun / Minister of Planning and Budget: That is correct. But I plan to address this with confidence. If we do not invest now, looking ahead 20 or 30 years into South Korea's future, we would be voluntarily missing the golden window for the nation's development and growth. In that regard, I believe this is not a matter of left vs. right, progressive vs. conservative, or ruling vs. opposition parties. We should debate how to invest properly, but I am convinced now is not the time to shy away from investing or take a passive stance.
▷ Joo Young-jin / Anchor: In that context, what the public is most curious about is that while expansionary fiscal policy sounds good, where are the national budget priorities? Where will the largest investments and spending go? You will need to explain this clearly.
▶ Park Hong-keun / Minister of Planning and Budget: That is correct. Broadly speaking, we are thinking about three main areas. First, as recently announced, there are the three major mega projects. These involve semiconductors, AI-related data centers, and creating related ecosystems. I believe these are crucial investment areas that will determine South Korea's fate. We will actively support them. By law, what the government can do is build foundational infrastructure.
▷ Joo Young-jin / Anchor: Indeed.
▶ Park Hong-keun / Minister of Planning and Budget: For example, transportation, power, industrial water, and creating living conditions—we will invest unsparingly in these.
▷ Joo Young-jin / Anchor: Because those also require state funds.
▶ Park Hong-keun / Minister of Planning and Budget: That's right. Second, beyond semiconductors, we need to find and foster new future growth engines. In that sense, post-semiconductors—while we must continue to advance next-generation semiconductors on one hand—we must properly invest in how to foster industries beyond semiconductors. Naturally, this includes AI semiconductors, biotech, cultural industries, and many others where South Korea has competitiveness. Third, the fruits of growth should not go only to large conglomerates. They must reach all citizens evenly. In that sense, we use the expression 'growth for all,' but K-shaped polarization is deepening. That is, non-capital regions, local areas, youth when viewed by generation, low-income groups, and small and medium-sized enterprises are facing increasingly difficult conditions. We must make proper investments in these areas to ease such polarization.
▷ Joo Young-jin / Anchor: Easing polarization seems to be a truly important topic.
▶ Park Hong-keun / Minister of Planning and Budget: Absolutely.
▷ Joo Young-jin / Anchor: Every administration talks about it, but resolving polarization is actually one of the hardest tasks.
▶ Park Hong-keun / Minister of Planning and Budget: I am particularly interested in the youth sector. I spent a long time involved in youth civic movements in the past. I served as a youth committee chair, led a parliamentary group studying youth issues for the first time, and helped enact the Framework Act on Youth. Today, youth issues are not individual problems. Youth employment indicators have severely deteriorated, and the number of 'inactive' youth who are simply taking a break has hit an all-time high. Therefore, the youth issue is no longer about benefits or support for a specific generation. It is a matter of national investment policy. That is why we have prepared a comprehensive package covering education, jobs, asset formation, housing, as well as childbirth and childcare across different growth stages. I will report this to the President soon, and if given the opportunity, I intend to share it with the public in advance.
▷ Joo Young-jin / Anchor: Will that also be reflected in next year's budget immediately?
▶ Park Hong-keun / Minister of Planning and Budget: I am preparing all of it in connection with fiscal allocation.
▷ Joo Young-jin / Anchor: Looking up news articles before your appearance, I suddenly saw articles related to university presidents. When searching for Minister Park Hong-keun, I wondered why university president articles came up, and it turned out to be related to the reorganization of local education grants. There seems to be some pushback from universities—what is going on with this?
▶ Park Hong-keun / Minister of Planning and Budget: It is not pushback from universities; on the contrary, universities are strongly cheering for and supporting me.
▷ Joo Young-jin / Anchor: Are universities actually cheering for you?
▶ Park Hong-keun / Minister of Planning and Budget: It is superintendents of education who are opposing it. However, I believe this is a structural reform task that can no longer be delayed.
▷ Joo Young-jin / Anchor: A part of structural reform.
▶ Park Hong-keun / Minister of Planning and Budget: Because the system linked to internal taxes was introduced back in 1972, a time when 1 million babies were born a year.
▷ Joo Young-jin / Anchor: Right.
▶ Park Hong-keun / Minister of Planning and Budget: Today, only around 200,000 are born. While the school-age population and student numbers have shrunk in the meantime, internal tax revenues have grown, so local education grants alone stand at around 75 trillion won this year.
▷ Joo Young-jin / Anchor: Because local grants account for about 20% of internal taxes.
▶ Park Hong-keun / Minister of Planning and Budget: So it is time to reform this. That said, primary education is also important. To strengthen it, we have consistently increased funding year after year.
▷ Joo Young-jin / Anchor: Naturally, as budget proposals and revenues grow.
▶ Park Hong-keun / Minister of Planning and Budget: We intend to keep increasing it to enhance the quality of primary and secondary education. However, South Korea's investment in primary and secondary education is already among the highest in the OECD. On the other hand, higher education spending stands at only about 68% or 69% of the OECD average. Therefore, we plan to use these saved funds for balanced investment across overall education, including higher education, lifelong education—especially job transition training—and early childhood education, where we are relatively vulnerable. Superintendents of education argue that this is a symbolic system that should be guaranteed for stability, but what they are advocating actually impairs stability. Looking at grants over the past 20 years, there were 6 years where grants actually decreased compared to the previous year. This happened because of the linked structure. During the Yoon Suk Yeol administration in particular, planned grant payouts fell significantly short in two consecutive years. That created immense difficulty for local education offices. So even as we reform the system, I assure them that we will guarantee the historical trend, so there is no need to worry. It is not a reduction or a cut, and I am persuading them accordingly.
▷ Joo Young-jin / Anchor: But do you mean you will adjust the scope or recipients of the grant allocations? What is the plan?
▶ Park Hong-keun / Minister of Planning and Budget: We will adjust them to reflect the school-age population.
▷ Joo Young-jin / Anchor: In other words, a system created in an era of 1 million births needs to change in a world where annual births have dropped to 200,000. Is that what you mean?
▶ Park Hong-keun / Minister of Planning and Budget: Yes. There have already been many points raised by the Board of Audit and Inspection, the National Assembly, and the media. While lax spending in some areas provided a cause, setting that aside, the core purpose is to use limited national fiscal resources more efficiently and in a balanced manner. We aim to secure stability while achieving balanced investment in educational finance—catching two rabbits at once.
▷ Joo Young-jin / Anchor: The Ministry of Planning and Budget did not exist as a separate ministry until last year, correct?
▶ Park Hong-keun / Minister of Planning and Budget: It was part of the Ministry of Economy and Finance.
▷ Joo Young-jin / Anchor: Right.
▶ Park Hong-keun / Minister of Planning and Budget: I served as the head of the government reorganization team on the State Planning Committee last year. I drew up the plan to separate it, and after a previous candidate withdrew earlier this year, I was suddenly asked to take on this role while busily preparing for the Seoul mayoral election. So I took over this organization—launched on January 2 this year—in late March, and I have been working here for five months now.
▷ Joo Young-jin / Anchor: Working every day, you must constantly remind yourself not to get buried in numbers, right?
▶ Park Hong-keun / Minister of Planning and Budget: Absolutely. The day before yesterday, the President spent 7 and a half hours...
▷ Joo Young-jin / Anchor: Right after returning from an overseas trip.
▶ Park Hong-keun / Minister of Planning and Budget: Yes, right after returning from a nearly 10-day tour. Watching that made me realize a lot. He even spared time going to the restroom and ate a box lunch late while continuing to ask questions. Seeing the President try to save every single minute and second, those of us working alongside him must run even harder. So as I said, with the mindset of pouring out my all, just as the President feels he must change South Korea's destiny, we also intend to support him faithfully.
▷ Joo Young-jin / Anchor: Understood. That was our interview with Minister of Planning and Budget Park Hong-keun. Thank you for your time.
▶ Park Hong-keun / Minister of Planning and Budget: Thank you.
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