Emergency relief fund should not turn into populism

Amid the ongoing discord between the ruling Democratic Party of Korea and the Ministry of Economy and Finance over the issue of providing both selective aid and stimulus checks to all people as part of the fourth round of pandemic relief funds, some regional governments, including Ulsan and Gyeonggi, have begun handing out their own stimulus checks. Residents of some local governments, which are not providing stimulus checks, are complaining without considering the degree of damage and financial situation caused by COVID-19.

More than half of the residents of Gyeonggi Province, which has secured 1.4 trillion won to provide 100,000 won to each resident, have applied for the stimulus checks within a week. In Ulsan, 60% of the entire 468,500 residents have already applied for the stimulus checks. The city of Seoul, where the mayor post is vacant, announced a plan early this month to selectively hand out a total of 1.4852 trillion won to its citizens but is considering a change of plan as ruling party lawmakers, which secured a majority of the seats on the city council, is pushing for universal payment. Twenty-five out of 226 lower-level local governments have jumped on a universal payment bandwagon. The heads of the rest of the local governments are taking heed of the voices of their residents ahead of the local elections slated for June next year.

Stimulus checks from local governments could be necessary if they have rich local coffers. However, it is problematic if local governments with better financial resources, such as Gyeonggi Province and Ulsan, which have the fiscal independence ratio of 59% and 52%, respectively, take the lead in providing universal support and other financially-distressed local governments follow suit. In South Jeolla Province, which has the lowest fiscal independence ratio in the country, 12 out of 22 lower-level governments promised their residents to pay 100,000-250,000 won per person. Most of them have the fiscal independence ratio of around 10%. With coronavirus relief funds gutting local coffers, the disaster management funds of municipal governments set aside for natural disasters reduced in half last year.

Of the 7.3841 trillion won handed out to residents of local governments across the country last year, 5.2913 trillion won, or 72%, was provided as universal assistance. Even if the released money has some effect on boosting local consumption, handing out money to all residents does not fit the original purpose of the COVID-19 relief fund. Heads of local governments, who are concerned about the future of their local community, should not make excuses by saying, “I cannot help it because it is the call of the residents.” They should avoid the temptation of populism and first persuade their residents so that money can go to those who need it most.