The government allocates the 'Local extinction response fund' to local governments with declining populations. It amounts to 1 trillion won annually. This is intended to support the population inflow policies established by local governments.
However, the actual amount spent from the received funds is only about half. This is due to the fund being primarily used for construction projects to build facilities, limiting the immediate use of funds. Consequently, as comments such as 'money received but not used' emerged from local governments, the government noted on the 1st that it would expand the fund's purposes and improve the verification system.
◇ Of the 2.8 trillion won in funds sent over four years, the actual amount used is 1.5 trillion won
The Ministry of the Interior and Safety receives business plans for the Local extinction response fund projects from 107 local governments annually since the fund was created in 2022. The targets are 89 areas with declining populations and 18 areas of interest.
As of this year, the total Local extinction response fund received by basic local governments is about 2.8 trillion won. Of this, the actual amount executed by June is 1.53 trillion won. The execution rate is 55%.
The reason the execution rate has been about half is that the business plans submitted by local governments are focused on construction projects. The Local fund management law specifies the purpose of the Local extinction response fund as 'establishing related infrastructure for local extinction response.'
Construction of buildings typically takes several years. In this process, unexpected issues may arise. There are also cases where the initial stage of land acquisition does not go as planned. As a result, some local governments have execution rates remaining in single digits each year. For example, Gyeonggi's Gapyeong County allocated 6.4 billion won for the 'Creation of the Baengyong River millennium ferry route project' last year but has only utilized 3.1% (240 million won) so far.
◇ Ministry of the Interior and Safety: "Funding usage to be shifted from 'facility investment' to 'population inflow programs'"
In response, the Ministry of the Interior and Safety is said to be reviewing a plan to reform the utilization of the Local extinction response fund starting next year. It plans to amend the fund management law, which specifies only infrastructure establishment, to include 'population inflow programs' and others. For example, support for 'middle-aged and elderly relocation,' 'tourism promotion programs,' 'indirect support for initial investment costs for young entrepreneurs,' and 'labor costs for essential medical personnel' could also be pursued with the Local extinction response fund.
For instance, Iksan City in North Jeolla Province is one of the local governments actively operating programs for settling returning farmers and residents. It holds returning farmers' fairs in cities such as Seoul and Daejeon, and provides temporary housing facilities and agricultural education services to ensure sufficient preparation and practice before settling. Iksan, a region of interest for population decline, saw an increase of 7,065 returning farmers and residents over three years starting in 2022.
◇ Has the fund been used properly?… Evaluation criteria focused on 'large-scale facility investment' rather than 'population inflow'
Some express concerns about the shortcomings of the verification system regarding whether the Local extinction response fund's intent to promote population inflow has been effective.
This year's evaluation criteria for the Local extinction response fund are composed of ▲ investment plans 80% ▲ execution results 10% ▲ policy linkage 3% ▲ quantitative indicators (population decline index + investment agreement performance) 7%. Among these, the indicators that can reflect the project's performance include 'execution results' and 'quantitative indicators,' accounting for 17%. Within the 10% that execution results occupy, the appropriateness of the plans and efforts hold a major portion, while the reflection proportion of objective indicators such as 'contribution to population inflow' is low.
In this context, the government is providing additional points to local governments that meet criteria such as 'total project cost exceeding 20 billion won'. Consequently, most local governments are said to submit annual plans focused on large facility projects. A local government official said, 'Even if we want to use the fund for small-scale software-type or cash support projects, it is not approved.'
Regarding this, a Ministry of the Interior and Safety official stated, 'We will establish criteria that can primarily evaluate how much there has been an effect on population inflow, such as residential populations and working populations, based on projects.'