Park Hong-keun, Minister of Planning and Budget, said the government will consider ways to make up for shrinking fire service funding caused by declining cigarette consumption during the National Assembly's review of next year's budget.
Visiting the ministry's press room on the 21st, Park said in response to questions about fire service finances that he "agrees on the need to look into this more closely." He added, however, that no specific improvement measures have been discussed internally yet.
Park said he would examine with the Presidential Office, the Ministry of the Interior and Safety, the National Fire Agency and local governments the impact of lower individual consumption tax revenue on local finances. "While assessing the fiscal capacity of local governments and whether central government support is sufficient, we will review which areas need to be supplemented during the National Assembly's deliberations," he said.
Calls for stronger state support have grown after a firefighter died in the line of duty in a recent factory fire in Bucheon. Yet the fire safety grant in next year's government budget proposal was set at 760.5 billion won, down 289.8 billion won, or 27.6%, from this year. The cut reflects expectations of lower tax revenue as cigarette sales decline. The grant is funded by 45% of total individual consumption tax revenue on cigarettes.
President Lee Jae-myung had earlier instructed officials to review a plan to pay subsidies upfront to loss-making companies in solar power, wind power and secondary batteries, and later deduct those payments from production tax credits they receive. On this, Park said, "Discussions are under way within the government, so we should be able to reach an agreed position soon."
Asked about skepticism that the Future Response Fund may struggle to deliver returns 1.7 percentage points above three-year government bond yields, Park said the figure was based on the average returns of pension funds. At a parliamentary audit on the 8th, Park had said the government was working on the assumption that the fund could generate returns at least 1.7 percentage points above three-year government bonds, responding to criticism that the fund's investment returns could fall short of government borrowing costs.
Park said the fund must secure both returns and safety while outperforming the interest paid on government bonds, but added, "Its more central role is to serve as a fiscal reservoir for future strategic investment, rather than to focus on returns themselves." He said the ministry would design the detailed investment approach after comprehensively reviewing whether to use professional asset managers or the pension fund investment pool, as well as investment horizons and asset allocation.
On the "2045 National Long-Term Strategy," Park said a draft is being prepared with a target of releasing it at the end of the year. He said the ministry would gather views from the public, related ministries and the National Assembly, noting that officials "have not yet given the president an interim report."