Free childcare service should continue.
It was very good to see that the central government expanded the scope of beneficiaries of free childcare service and childcare allowance payment across all income brackets. Note, however, that local governments started having difficulty in securing the budget for free childcare service. On June 19, Gyeonggi Governor Kim Moon-soo, Incheon Mayor Song Young-gil, and I met and agreed to take a joint step in asking the central government to provide the necessary funds.
Let me clarify several things that many people appear to misunderstand.
1. First of all, the central government’s decision to expand the scope of beneficiaries of free childcare service increased local governments’ financial burden. In Seoul Metropolitan Government, for instance, the budget required for free childcare service stood at 547.4 billion won in 2012. This increased to 1.066 trillion won in 2013. The amount that should be borne additionally by Seoul Metropolitan Government is 371.1 billion won, i.e., 71% of the increased portion. The problem is that the policy was adopted with the central government and the National Assembly taking the lead, but Seoul Metropolitan Government is forced to bear the burden of double the amount for last year.
2. The additional burden of free childcare service is a problem that is shared by all local governments. The budget required for free childcare service increased by 2.420 trillion won nationwide, and the additional burden to be shouldered by local government reaches 1.434 trillion won.
The situation is most serious in Seoul. With the expansion of the scope of beneficiaries of free childcare service, 210,000 infants newly joined the list of those eligible for the service. The figure is larger than the total of all the other metropolises and provinces, with Gyeonggi-do not included.
We at Seoul Metropolitan Government raised this problem together with the other metropolises and provinces. In September 2012, Prime Minister Kim Hwang-sik promised that local governments would bear no additional financial burden even with the expansion of the scope of free childcare service.
The promise was not kept. Local governments are asked to shoulder the additional financial burden. Regarding Seoul Metropolitan Government’s childcare service, support from the national treasury stands at a mere 20% (compared to 50% in the case of Gyeonggi-do and Incheon Metropolitan City). At this rate, Seoul Metropolitan Government should shoulder 758.3 billion won, i.e., 71% of this year’s free childcare service budget of 1.066 trillion won.
3. The current budget situation of Seoul Metropolitan Government renders it unable to shoulder such amount for free childcare service. The central government’s tax operation structure meant a decrease in the amount to be paid to local governments.
In the wake of the worldwide financial crisis in 2008, there has been drastic recession in real estate transactions. Such exacerbated local governments’ financial situation. It is difficult to secure funds for free childcare service since there has been a sharp increase in other welfare budget requirements.
4. The central government should provide support for free childcare service. All it has to do is amend The Infant Care Act to raise the percentage of fund paid from the national treasury (20%→40% for Seoul and 50%→70% for other local governments). The amendment bill passed the Health and Welfare Committee of the National Assembly in November 2013. It has been deliberated on at the Legislation and Judiciary Committee of the National Assembly for seven months now.
The central government should keep its promise that the reshuffle in childcare service will not impose additional financial burden on local governments. It should pay the fund allocated for local governments for free childcare service (560 billion won, including 135.5 billion won for Seoul) right away to avoid interruption in said service.
Right after her election as President, Mrs. Park Geun-hye, at an informal meeting with Mayors and Do-Governors, stressed that the central government should take responsibility for a program carried out at the national level, including childcare service.
The central government should put a stop to this controversy and come up with a measure that will consider local governments’ difficult financial situation for uninterrupted childcare service.