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President Lee Jae-myung’s flagship policy, the ‘basic income’ pilot project, is proceeding after being exempted from a preliminary feasibility review. It has been confirmed that the head of the institution responsible for the final appropriateness review publicly declared support for President Lee during the last presidential election.
Concerns are emerging over whether a fair review of the 1.7 billion Korean won project is possible.
According to Rep. Jeong Hee-yong of the People Power Party on the 9th, the ‘rural basic income pilot project,’ set to begin next year, passed a Cabinet meeting on August 18 as an exemption from the preliminary feasibility review. Two days later, the exemption was finalized by the Fiscal Review Committee under the Ministry of Economy and Finance.
The preliminary feasibility review (hereafter, PFR) is a procedure to assess the economic viability and social impact of public projects exceeding a certain budget scale to prevent wasteful spending. The government raised the PFR threshold in August, from a total project cost of 50 billion won to 100 billion won, and from 30 billion won in national funding to 50 billion won.
Although the 1.7 billion won rural basic income pilot project should have undergone a PFR under the revised criteria, it was exempted due to its status as a flagship policy of the Lee Jae-myung administration.
The project involves selecting six counties out of 69—excluding cities and districts—among 89 regions at risk of population decline, and providing monthly payments of 150,000 won to all residents. Despite the PFR exemption, the Korea Institute of Public Finance is reviewing the budget’s appropriateness, including its scale, per regulations. If the review concludes that the budget is excessively allocated or that detailed guidelines deviate from the project’s purpose, corrections can be made. In principle, the review could even recommend re-examining the exemption itself from scratch.
The issue lies in the external research institution participating in the appropriateness review. According to Rep. Jeong, the Korea Institute of Public Finance publicly recruited external experts and selected the ‘Agricultural Policy Research Center,’ a private organization. The center, established in 2005, is headed by former Rural Economic & Institutional Research Institute director Kim Hong-sang.
Director Kim was appointed head of the Rural Economic & Institutional Research Institute in August 2019 under the Moon Jae-in administration and served until April 2023. He declared support for Democratic Party of Korea presidential candidate Lee Jae-myung in May 2022, during the last election. The Korea Institute of Public Finance received applications for external institutions from the 5th to the 15th of last month and finalized the Agricultural Policy Research Center as the review body the next day, on the 16th.
While internal researchers from the Korea Institute of Public Finance also participate in the review, concerns persist that objective evaluation is difficult given the significant influence of external experts. If the review deems it necessary to scale down the project, budget reductions could follow. However, questions arise over whether such an objective and precise review is feasible.
Rep. Jeong Hee-yong stated, “There are doubts whether the center was selected in exchange for declaring support for candidate Lee Jae-myung,” adding, “It is worrying whether the appropriateness review by a potentially biased individual is appropriate, or if it will devolve into a ‘fixed-answer’ style evaluation where the conclusion is predetermined.”
