(Unofficial translation)

Fellow Koreans, the Honorable Speaker and distinguished members of the National Assembly,

I will present to the public and the National Assembly the Government’s budget proposal for fiscal year 2019 and ask for your cooperation in passing it. I hope it will become an opportunity to reexamine the lives of the people together.

The national budget is a harvest produced by hardworking people and businesses. I am grateful to them for having honestly paid taxes. Moreover, I hope they will pay keen attention to how the harvest is being and should be used.  

I will begin by explaining the direction and goals of next year’s budget plan. They are precisely the direction and goals that our society should pursue.

We all should prosper together. When all the people thrive in their respective positions, individuals and communities can gain happiness.

A vision for common prosperity has become a driving force behind the development of democracy and the economy. With the belief that everyone can become better off, we were able to find strength during tough daily ordeals and advance our communities.

Thanks to the endeavors of our people, the dream of becoming better off has come true to a certain extent. However, the dream of prospering “together” is still a distant goal. 

As a matter of fact, our achievements in economic development are astounding. This year, our exports are projected to surpass US$600 billion for the first time ever, setting a new record. In terms of export figures alone, Korea is the sixth largest exporting powerhouse in the world. 

In addition, Korea’s economic growth rate still stands in territory higher than that of those countries with an economic status similar to or above our own. 
The world marvels at our economic growth. We deserve to take pride in ourselves.

Nonetheless, despite the external achievements and scale of our economy, the reality is that the majority of ordinary citizens still find their lives hard.

This is because the socioeconomic divide has intensified while we have been focusing too much on growth. Among advanced countries, Korea has become the nation with the worst case of economic inequality. Now Korea is not an equitable society. Inequality has led to unfairness in its entirety. Inequality and unfairness have escalated to the point where they undermine the cohesion of our society and impede sustainable development.

I believe that previous administrations were aware of this fact and worked continuously on various efforts to improve welfare. They, however, failed to catch up with the pace of the widening socioeconomic divide. That is because they never changed economic policies that merely followed old templates for growth. We have to face up to this hard truth.

Now we should narrow the economic inequality gap and move toward a fairer, more unified society. I am convinced that this is a path to sustainable growth.

The past year and a half was a time for us to strive to transform our economic and social structures at their roots to achieve common prosperity.

We have established a people-centered economic policy to invigorate the lives of everyday people. As a growth strategy aimed at common prosperity, we have pushed for income-driven growth, innovative growth and a fair economy. 

A structural shift has begun, but there is still a long way to go. Manufacturing, one of the traditional flagship industries, continues to remain stagnant, and unresolved difficulties with employment also persist. As financial market volatility has increased due to the uncertainty of external conditions fueled by a hike in interest rates in the United States and the U.S.-China trade dispute, we should examine the situation more rigorously. In the process of an economic policy transition, some have fallen on hard times, including small merchants, self-employed business owners and the elderly.

Nevertheless, our efforts and policy stance to “prosper together” should stay on course. While bringing the macroeconomic situation under stable management, we will step up complementary efforts to address difficulties arising in the process of implementing policy.

Such structural problems as low growth, jobless growth, the polarization of wealth and income inequality, a low birthrate and an aging population as well as changes in the industrial structure are daunting tasks to be resolved in a short span of time. It will inevitably take time until our economic fundamentals and social structure improve substantially and achievements begin to be seen.

We cannot afford to turn back to the old methods that aggravate economic inequality. Water reaches the sea only after the puddles are full.

Together, we will prevail over suffering that arises from the transition process. While sharing the burden and working together, every one of us will assuredly be able to live with dignity and in harmony.

When the state takes responsibility for people’s welfare throughout their different life stages, when businesses fulfill their social responsibilities and when individuals find happiness in their jobs, we can prosper together.

To that end, we should bring changes to our society. Our nation should become a place where people feel at ease within a social safety net and welfare system. It should become a country that guarantees fair opportunities and just results. It should become a country in which not a single citizen is discriminated against. 

An inclusive state in which all people prosper together – this is the path we should take and the calling of this time entrusted to my Administration.

The World Bank, IMF, OECD and many other international organizations and countries have already begun to talk of inclusiveness. They advocate welfare, a fair economy, and inclusive growth in which the resulting gains are distributed equally to everyone and income increases among mid- to low-income earners.

The inclusiveness pursued by my Administration embraces the same concept. From inclusive society and inclusive growth to inclusive prosperity and inclusive democracy, when an inclusiveness free of exclusions becomes our society’s value and philosophy, we will be able to thrive together. 

I hope the National Assembly will join together and draw upon insights. The 2019 budget proposal is to fund a country where all people prosper together. It will be an important first step toward an inclusive state.

My fellow Koreans, distinguished members of the National Assembly,

You may not feel the true sense of how an inclusive state affects our lives. Budgetary figures such as several hundred billion won and tens of trillion won may not resonate with you personally.

Today, I would like to offer an example of a four-member household to show how lives can be changed should the 2019 budget plan be implemented. 

A hardworking woman and man in their 30s meet and make a home together. Living with one of their mothers, they have many things to prepare as well as many concerns about her childbirth. 

In an inclusive state, childbirth and childrearing are a source of joy for all, including the family and the country. Therefore, the relevant burden should be shared with the government. 

So far, only those workers covered by employment insurance have been eligible for maternity leave benefits, but starting next year, even temporary employees, self-employed business owners and independent workers in certain fields who give birth will be provided 500,000 won each month by the Government for up to a maximum of 90 days.

The new mother can receive postnatal care services from health consultants. The new father can take paid paternity leave for 10 days, up from existing three days. For small and medium-sized enterprises, the Government will provide wage subsidies covering five workdays.

If the mother and the father take childcare leave one after the other, the second parent taking a leave will be entitled to more benefits. He or she will be paid an increased maximum of 2.5 million won in parental leave benefits over the first three months. Over the following nine months, he or she will receive 50 percent of his or her average monthly salary. 

Beginning in September this year, a monthly child benefit of 100,000 won per child has been provided, reducing worries about the cost of baby formula and diapers.

Rental units and "hope towns" for newlyweds, which will be introduced next year, will help them realize their dreams of owning a house earlier. The Government will cover some of the interest charges so that they can borrow at an interest rate of 1.2 percent at its lowest. By making it possible to pay back a loan in installments over 30 years, the burden of borrowing will be eased. 

If the husband or wife gets a new job in a small or medium-sized enterprise this year, he or she can put money into a youth reserve fund that compensates essential personnel at SMEs. After three years, it will be possible for the account holders to collect a large sum up to 30 million won.

If they want a better job, they can receive up to two million won for training expenses per year by using a "worker vocational training card." 

Since the mother-in-law is over 65, she can receive a monthly basic pension of 250,000 won. The project to create social service jobs for senior citizens to start next year could help revitalize her life further. The wages will be about twice that currently paid for existing jobs for the elderly.

Additional earnings of more than one million won have been generated to augment the monthly incomes of the couple and mother-in-law in the sample household. Public housing will be available for purchase in 10 years so that the renters will be able to own them.  

A government budget focused on building an inclusive state has been playing a considerable role. From marriage to childbirth, the burdens on the shoulders of typical newlyweds will be significantly eased.

My fellow citizens and members of the National Assembly,

Now, I am going to speak about the features and main content of the budget plan for 2019.

Total expenditure stands at 470.5 trillion won, a 9.7 percent increase from this year's budget.

It is the largest budget increase since the 2009 budget.

Korea achieved economic growth hovering around 3 percent last year, but the rate decreased to the 2 percent range again this year. It is highly likely that the low growth trend below 3 percent, which started many years ago, will become the norm.  

External conditions are not good either. Due to the spread of protectionism, trade disputes and the interest rate hike in the United States, the global economy is on a downward spiral. This can become a huge burden on our economy, which is highly dependent on trade. Therefore, now is the time for fiscal spending to play a more active role.

Last year and this year have seen back-to-back annual tax revenue surpluses exceeding 20 trillion won. Regrettably, however, increased national tax revenues have not been fully utilized for economic recovery.

If we have sufficient fiscal means, we have to preemptively prepare for the risk of an economic slowdown through aggressive fiscal operations and respond in earnest to structural problems related to jobs, polarization, a low birthrate and an aging population. 

International organizations such as the IMF and OECD recommend that countries with sufficient financial resources implement an expansionary fiscal policy.

In the budget plan for next year, which is based on a stable and realistic tax revenue estimate, total expenditures have been increased in proportion to the rise in tax revenue.

Korea has a low sovereign debt-to-GDP ratio relative to other countries. Nevertheless, I want to note that this budget, for the sake of fiscal soundness, has been prepared in a way that enables us to carry out fiscal spending requirements without increasing the sovereign debt ratio. 

The budget plan for the next year is geared for building an inclusive state. 

My Administration will help everyone achieve their dreams through jobs and push ahead with innovative growth in earnest. 

A priority has been placed on supporting the vulnerable for an inclusive society as well as expanding the social safety net. 

Considerable emphasis has been placed on efforts to improve pubic safety and the quality of life in line with the era of a US$30,000 per capita income. 

First, the budget earmarked for job creation was set at 23.5 trillion won, a 22 percent increase from that of this year. 

A job is the foundation for each and every citizen to live a decent life. Therefore, the focus has been put on creating job opportunities for the vulnerable in society, including young people, women, the elderly, the “new middle-aged” and people with disabilities. 

A subsidy for additional youth employment has been greatly increased to 700 billion won. The number of beneficiaries will increase to 188,000, including 90,000 new beneficiaries this year. When a business hires a new young person, it is possible to receive up to nine million won annually for three years.

The number of people eligible for the youth reserve funds has more than doubled to 230,000 from 110,000. If one lands a job at an SME or a middle-market company, it is possible to collect a maximum 30 million won over three years. 

New middle-aged workers who want to find new jobs or re-enter the workforce after quitting a job will be provided with tailored training. Jobs for the elderly will increase to 610,000, and the number of jobs taking care of young children, senior citizens and people with disabilities will be increased to 136,000. 

By newly creating 2,500 jobs for those with disabilities, the number of available jobs will be expanded to 20,000. The supported employment programs that link on-site training for severely disabled people with their employment will benefit an additional 2,500 people, bringing the total number assisted to 5,000. 

Second, the budget for innovative growth has been significantly increased. The Government will foster competitive SMEs and business ventures, which will be conducive to economic growth and job creation. The total R&D budget stands at 20.4 trillion won, exceeding 20 trillion won for the first time in history. Investments in basic research, far-sighted investments in future original technologies and investments in R&D closely linked to citizens’ everyday lives have been increased by large margins.   

To further promote innovative growth, a total budget of 5.1 trillion won will be injected into three strategic areas, namely data, artificial intelligence and the hydrogen economy as well as eight pace-setting industries, including smart factories, self-driving cars, drones and fintech.  

Innovative startups are the basic foundation for innovative growth. As of August, a total of 70,000 new corporations were created this year, and a new venture investment of 2.2 trillion won was made.

In the face of difficult economic conditions, record highs have been accomplished in all regards. In particular, new venture investments have increased significantly. These are promising indicators not just for innovative growth but for the nation's economy as a whole. 

My Administration will help an increasing number of young people harbor a dream to start a new business. They will be able to receive a maximum of 100 million won in the form of vouchers for their production of prototypes and marketing activities. 

Customized support for different stages such as the foundation of a business, growth and relaunching a business will be strengthened. Funds for the facilitation of job creation will be newly established, and support through a startup success package will be expanded, thereby providing assistance to revitalize the ecosystem for starting a business. 

For the sake of innovative growth, my Administration will accelerate deregulation. So far, deregulations have been carried out in the sectors of medical equipment, internet banks and the data economy. The Korean-type regulatory sandbox system will support the swift release of new business technologies and products. 

Third, the budget aimed at increasing household income and strengthening the social safety net has been greatly increased. 

The Earned Income Tax Credit (EITC), an incentive for working low-income families, contributes to income-driven growth and is a key policy for building an inclusive state.  

The budget for the EITC has been greatly increased to 3.8 trillion won from this year's 1.2 trillion won. The age limit has been eliminated, and criteria concerning the income and assets have been eased, so the number of eligible households has greatly increased to 3.34 million from 1.66 million. Among them, 1.15 million self-employed will come to enjoy these benefits. The maximum financial support will be raised to 1.5 million won from 850,000 won for single-person households, to 2.6 million won from 2 million won for single-earner households and to 3 million won from 2.5 million won for double-income households.   

The budget for guaranteeing basic living related to livelihood, healthcare, housing and education has been increased to 12.7 trillion won from this year's 11 trillion won. 

The monthly basic pension and the pension for those with disabilities will be increased earlier than scheduled so that a total of 1.5 million senior citizens in the lowest 20 percent income bracket and 160,000 people with disabilities who receive the allowance for living and healthcare will receive 300,000 won a month starting in April next year.  

Up to now, several areas have not been given the Government’s appropriate attention. 

The childrearing allowance for single-parent families has been increased to 200,000 won from 130,000 won. The limit on the age of the children targeted has been raised from 14 to 18, thereby increasing the number of beneficiaries. Notably, the child-rearing allowance given to a household headed by a single young adult who is younger than 24 has been increased to 350,000 won from 180,000 won.

One out of four youths discharged from orphanages after their eligible care ends winds up in poverty. In addition to support from local governments, 300,000 won will be provided every month to help them stand on their own feet as a way of fulfilling the responsibility of the state. 

A comprehensive plan customized for the different stages of life for people with developmental disabilities has been established this year. Related expenditures have also been allocated. 

Microbusiness and other self-employed business owners are important members of our economy. To help them overcome hardships caused by an increase in the minimum wage, a 2.8 trillion won job stabilization fund has been reflected again in next year’s budget. 

To reduce the burden from credit card processing fees, a simple payment system for microbusiness owners will be set up to cover one million businesses initially next year. A total of 2 trillion won will be offered in low-interest special loans, and credit guarantees will be expanded to 2 trillion won. The number of self-employed individuals owning a one-person microbusiness entitled to employment insurance subsidies will be drastically increased, and the duration of subsidies provided will be extended to three years from two years. 

Fourth, budget expenditures designed to improve the people’s safety and quality of life have been meticulously prepared. 

A total of 2.2 trillion won has been allocated for three major projects to protect the lives of the people: suicide prevention, industrial accident prevention and traffic safety reinforcement. Infrastructure related to everyday life will improve the living conditions and quality of life. A total of 160 neighborhood gymnasiums will be created, and at least one small library will be opened in every district, city and county. The facilities of 450 traditional markets will be modernized, and parking lots will be expanded. As part of the Fishing Community New Deal 300 project, modernization assistance will be provided next year to the first batch of 70 fishing communities and ports. Urban regeneration as well as assistance for improving basic living conditions in farming and fishing communities will help revitalize old city centers and farming areas. 

To this end, 8.7 trillion won, a 50-percent increase from this year’s budget, will be provided next year to build infrastructure pertaining to everyday life.   

The number of children eligible for state-funded in-home care services will be doubled, and the number of service hours will be raised to 720 hours from the current 600 hours a year.   

There is still a severe shortage of national and public daycare centers and kindergartens. An additional 450 national and public daycare centers will be opened next year. The date for adding 1,000 classes to national and public kindergartens will be moved up to next year. In addition, a child’s right to learn will be guaranteed, and working conditions for teachers will be improved to ensure the provision of a better education. Extended after-school daycare programs for elementary school pupils will be drastically expanded. 

Fellow Koreans and members of the National Assembly,      

Together with inclusiveness, another important pillar supporting a sustainable Republic of Korea is peace on the Korean Peninsula. 

In the past year, three inter-Korean summits and the historic North Korea-U.S. summit have taken place. 

Through the agreement reached in the military domain, South and North Korea have completely eliminated the risk of inter-Korean military clashes on the Peninsula. 

Residents on the five northwestern border islands in the West Sea will be able to safely sail further out to catch blue crabs. The border area that includes Paju, Yeoncheon, Cheorwon and Goseong will be transformed from a danger zone into an area for exchanges and cooperation. 

Now, South and North Korea and the United States will achieve complete denuclearization and permanent peace on the Korean Peninsula based on steadfast trust. 

The second North Korea-U.S. summit is right ahead of us. Chairman Kim Jong Un’s visit to Russia and Chinese President Xi Jinping’s visit to North Korea are expected to take place soon. There is also the possibility of a North Korea-Japan summit. Chairman Kim Jong Un’s reciprocal visit to Seoul will also likely happen in the near future. 

Right ahead of us lies a historic starting line leading to common prosperity on the Korean Peninsula and in Northeast Asia. We will cross the Eurasian continent by train and move forward to embrace a multilateral peace and security regime through the East Asian Railroad Community. 

This opportunity has risen like a miracle. It is an opportunity that should never be missed. I will move forward to achieve peace with robust security and strong national defense. Peace will become a new growth engine for our economy. 

To this end, next year’s national defense budget will be increased 8.2 percent from this year. Self-reliant national defense capabilities will be enhanced by expanding investment in core combat systems, including Korea’s three-axis system, and increasing the R&D budget for national defense. Support for military personnel who serve in inhospitable areas will be improved, and the military medical care system will be upgraded in order to enhance service conditions. 

Cooperative projects agreed between the two Koreas, including the connection of inter-Korean railroads and roads, collaboration on forestry and reunions for families separated by the Korean War, will be given support as planned through the Inter-Korean Cooperation Fund when conditions are met. 

The Honorable Speaker and members of the National Assembly,  

Creating a properly functioning country and a just Republic of Korea are the firm national policy goals of our Administration. The people aspire to a society in which even trivial unfairness and minor irregularities in daily life are never tolerated. 

In response to the requests of the people, the Government will eradicate not only deep-rooted evils committed by those in power but also the ones perpetrated in everyday life. I ask the National Assembly to join in the efforts to create a fair society throughout which foul play and privileges do not exist.

The modification of laws and systems aimed at normalizing law enforcement authorities can no longer be delayed. The Government has drawn an agreement to coordinate the investigatory authority of prosecutors and police for the first time in history. I ask the National Assembly to conclude this matter.   

I also ask the National Assembly to pass a bill to establish an agency to investigate crimes among senior government officials as soon as possible.  

The National Intelligence Service has pursued reforms on its own, including ceasing to collect domestic intelligence. I hope that the National Assembly will conclude the amendment to the National Intelligence Service Act so that it will be reborn as an intelligence agency that truly serves the public. 

The people have high expectations for this regular session of the National Assembly. I hope that it will be able to ease the anguish of low-income families, microbusiness owners and the self-employed who are going through hardships. I expect bipartisan cooperation for the bills designed to improve the livelihood of the people. 

The target rate for rice subsidies needs to be set again for the first time in five years, as required by law. The Administration has no choice but to submit a target rate based on the current standard for now. I hope that the rate of inflation will be reflected in the target rate in order to stabilize the income level of farmers. In addition, the Administration will modify the rice subsidy system in a way that promotes the public interest. I ask for your cooperation so that a target price is set at an appropriate level. 

When legislative proposals for economic democratization make progress, an institutional framework for a fair economy can be prepared. Bills related to regulatory reform are absolutely necessary to expedite innovative growth. To promote balanced national development and decentralization, the administrative works of the Central Government need to be transferred in totality to local governments, and the genuine autonomy of local governments and the autonomy of residents should be expanded. I hope that related bills will be quickly reviewed and passed by the National Assembly. 

In addition, I sincerely request that we respect ourselves more on our own accord as the world is paying close attention to the Korean Peninsula.  

I ask the National Assembly to join efforts toward denuclearization and the peace process on the Korean Peninsula, for which our Government and the U.S. Government are endeavoring together with North Korea. I hope that the National Assembly will gather its strength in order to make the most of this opportunity that has come to us like a miracle. 

If we miss this opportunity, the crises on the Peninsula will be destined to intensify further. I ask you to come together in great concern that every effort possible should be made with an aim to make sure that such things never happen.

I hope that an inter-Korean parliamentary meeting will proceed successfully. My Administration will not spare any support. 

The Administration, the National Assembly, and the ruling and opposition parties cannot have different views when it comes to making the people’s lives better and establishing peace on the Korean Peninsula. I hope that a standing state affairs consultative body among the ruling and opposition parties and the Government, which was promised to be launched in November, will become an excellent framework for cooperative politics. 

We all should prosper together. We can all prosper together. 

I sincerely hope that the people’s aspiration for peace and prosperity on the Korean Peninsula and an inclusive state will start to blossom here from the National Assembly.  

Thank you.