Policy Implementation Problems Haunts Lee MB Gov`t

“Policy fatigue” is setting in within the ruling Grand National Party after its crushing by-election defeat last week.

This is the irony of the Lee Myung-bak administration’s philosophy of placing policy before politics, but this does not mean the party is against the president’s philosophy. The problem is implementation.

Minbon 21, a group of progressive members of the party, criticized President Lee for pushing policies “like a bulldozer” and adopting a “biased” policy paradigm, complaining of the president’s failures in policy implementation.

The party believes the biggest problem is one-way communication; the president did not come up with a “policy mix,” or using all means to complement values sacrificed for one policy or to maximize the effect of the policy’s implementation.

One source of contention is a ban on classes by private academic institutes after 10 p.m. proposed by the chairman of the Presidential Commission for Future State Planning, Kwak Seung-jun. The ruling party opposes this.

Negotiations between the party and the administration scheduled for today were postponed indefinitely. Kwak apparently seeks to use a stick rather than a carrot to curtail private education in the country.

To this, the party’s chief policymaker Yim Tae-hee said, “If you suppress demand for private education, it must be addressed elsewhere.” In other words, the policy is imperfect because it does not tackle the problem of demand.

The government also proposed to eliminate double capital gains taxes on people who own three homes or more to balance the tax system and revitalize the real estate market.

Levying different taxes on the same tax target (houses) is considered an incorrect tax principle. The government claims that high taxes exceeding 50 percent is not punitive taxes but rather a fine.

The policy, however, received a cold response from the public because of rising fears over housing inflation due to tax cuts. The Lee administration seeks to expand the housing supply, lift the development ban on greenbelts, and develop areas around subway stations. The real estate tax system, however, hasn`t seen any progress.

Even ruling floor leader Hong Joon-pyo criticized the policy, saying, “The government is granting tax cuts to real estate speculators.”

The proposed extension of the work period for temporary workers was proposed after the government predicted one million of the workers would be laid off by July. The idea was blasted from the start as critics cited no evidence supporting the forecast.

Others asked why the contract period needs extension since banks and large companies can make non-regular workers permanent. The government should have avoided misunderstanding by categorizing measures on this issue by industry and company size.

Tax cuts for new car purchases are always considered good for consumers. The government, however, did not expect a backlash over fairness. Since buyers of small cars have qualified for a tax cut, this new measure is of no help to them.

This is why the government is under fire for ignoring low-income households and increasing support only for the car industry.

Abolishing education taxes and easing regulations in the Seoul metropolitan area are also cited as failures because of incorrect timing despite complementary measures prepared by the government.

The government had planned to allocate 20 percent of internal taxes to make up for a shortfall in tax revenues for education while eliminating education taxes to fix earmarked taxes. Failure to promote the plan, however, drew the ire of schools and provincial governments.

The government and ruling party said they will raise the allocation to 20.5 percent to secure an additional 140 billion won (109 million dollars) but the backlash continues.

Deregulation measures for the Seoul metropolitan area was announced before those for the provinces, which also caused controversy.

On the lack of policy combination, some cite the government’s ideological orientation. Ruling party lawmaker Kwon Yeong-jin said, “The government worked hard to correct left-leaning policies but failed to pay attention to neutral and non-ideological matters.

Cambridge University professor Chang Ha-joon said, “Conservative philosophy must be realized based on social stability and class integration must be assumed. This is why the conservative Lee administration must pay more attention to welfare and better understand low-income households.”

koh@donga.com