Park Hong-keun vows bold reforms to overcome structural crisis, tackle labor, education and pension overhauls

Ministry of Planning and Budget Minister Park Hong-keun said Thursday that "what we prepare and how we execute it over the next one to two years will determine the shape of South Korea," pledging that the ministry would "overcome structural crises through bold reform and turn new opportunities into a great leap forward."

Park made the remarks in an opening address at the National Assembly's Finance and Economy Planning Committee national audit — the first such audit since the ministry was established.

Park said the country faces structural challenges demanding fundamental responses — including rising economic and social burdens from demographic change and deepening polarization across regions, generations and income groups. At the same time, he said, the AI-driven transformation and the reshaping of global industrial and trade orders are opening opportunities for the South Korean economy to advance to the next level.

He identified the development of a national growth strategy as the first priority in addressing those challenges and opportunities. Park said the ministry would "draw a vision of South Korea in 2045 as a leading nation that raises its economic growth potential, ensures all citizens share equitably in the fruits of that growth, and shapes change in the international community."

He added that the ministry would craft "a living national development strategy" — one that pairs an inspiring public vision with concrete action plans and is continuously updated to reflect changing conditions.

The ministry will also pursue broad structural reform across the economy and society. Park said it would "take a wide look at areas requiring reform — including labor, education and pension — and work with related ministries to draw up specific implementation plans," adding that while it would build public consensus through sufficient social dialogue, reforms necessary for the next generation would be pursued responsibly.

Fiscal management will focus on expanding growth potential and stabilizing livelihoods. The ministry will provide full support for three mega-projects and AI, and will intensively develop seven national strategic core technologies, including nuclear fusion, small modular reactors, quantum technology and aerospace. Youth will be designated a core investment target, with strengthened support across all aspects of life — education and employment, assets and residential needs, marriage, childbirth and child-rearing, and lifestyle and culture.

The fiscal role in easing K-shaped polarization and stabilizing livelihoods will also be expanded. The ministry plans to support the self-reliance of low-income groups, stable retirement for the elderly, and the daily lives and social participation of people with disabilities, while reinforcing the social safety net. Housing, employment and financial services for ordinary citizens will be designated the three core social policy areas, with tailored support strengthened at each stage of life.

"To sustain the fiscal role, the fiscal foundation must also be solid," Park said. He pledged to establish a virtuous cycle in which active fiscal policy drives growth and the resulting gains feed back into expanded tax revenues, while simultaneously pursuing bold spending restructuring to improve fiscal sustainability.

The Future Response Fund will serve as a key instrument underpinning both active fiscal policy and long-term fiscal sustainability. Park said the ministry would establish the fund — a strategic investment platform to raise the potential growth rate and a fiscal stabilization mechanism to improve the efficiency and stability of fiscal management — so that additional fiscal room generated by a semiconductor boom would not be spent in a single year but instead channeled into investment in youth, growth engines, local governments, and education and talent development.

On spending restructuring, Park said that in drafting next year's budget, the ministry reviewed all fiscal programs from a zero base and "boldly reorganized low-performing and inefficient programs." Going forward, he said, unnecessary spending would be cut without exception based on rigorous performance evaluations, and mandatory expenditures would be fundamentally reformed to reflect changed economic and social conditions — beginning with an overhaul of local education finance grants.

Public and regional participation in fiscal decision-making will be expanded. Park said the ministry would pursue "people's sovereignty in fiscal affairs" — broadening citizen participation and communication with the National Assembly across the full cycle of budget formulation, execution and evaluation. It also plans to build an integrated platform consolidating central government, local government and education finance information in one place to raise the transparency and credibility of fiscal management.

In addition, the ministry intends to increase fiscal autonomy for local governments so they can set their own priorities and advance needed projects, and to support region-led growth through a resource allocation framework that favors local governments.