Brian Hioeby Brian Hioe
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Photo Credit: Lai Ching-te/Facebook
THE NATIONAL BUDGET seems set to be a continued issue of tension between the DPP and KMT in the upcoming year. Notably, the review of the budget has been stalled, affecting financial planning for the year. Normally, the budget would have long since been reviewed and passed by now.
In the event of a stalled budget due to the inability of political parties to come to a consensus, the Taiwanese government reverts to the previous annual budget. As such, Taiwan is at no risk of a government shutdown, such as occurs in countries such as the US. Even so, the lack of finalizing the budget is concerning.
A specific object of contention continues to be whether it is the Executive Yuan or the Legislative Yuan that has power over the budget. This is why Premier Cho Jung-tai refused to countersign legislation passed by the KMT-controlled legislature that would allocate more funding from the central government to local governments. The KMT drastically cutting the Taiwanese government budget last year in what was the largest set of cuts in history was understood as a move similarly aimed at seizing power over the budget from the legislature.
Further contention has taken place regarding efforts by the KMT to undo the Tsai administration’s pension reforms, which were carried out in order to avoid the pension system going bankrupt. Pensions are a longstanding pork barrel issue for the KMT’s support base, in that public servants, members of the police, and veterans enjoyed generous pensions from the government as a reward for political loyalty during authoritarian times. As such, these groups have historically supported the KMT, which knew that it needed to maintain support from such groups in order to establish political control during authoritarian times, and so sought to reward them generously.
Although the KMT does not intend to undo controversial measures such as the 18% preferential rates, last year, the KMT pushed through legal shifts raising the maximum income replacement ratio to 80 percent for pensions of members of the coast guard, firefighters, police, and members of the National Air Service Corps. The KMT then called for the income replacement rate to be increased to a similar amount for civil servants.
In the meantime, the DPP has criticized the KMT’s attempts to undo pension reforms as potentially leading to the bankruptcy of the pension system. Likewise, the Executive Yuan has taken the view that the KMT’s moves are unconstitutional and filed for a constitutional interpretation by the Constitutional Cour, even as it did countersign the legislature. Consequently, the Executive Yuan has refused to budget the KMT’s attempt to rollback pension reforms. Yet in countersigning the bill, the Executive Yuan seems to indicating that it will only exercise its newly appropriated veto power in extreme situations.
Either way, as has received more attention, the KMT has also continued to block the special expenditure budget sought by the Lai administration for defense spending. The KMT has now voted down the budget a total of six times. The fifth time that the KMT voted down defense spending occurred in the midst of Chinese military drills that took place around Taiwan over the new year in the series of exercises termed “Justice Mission 2025” by the People’s Liberation Army (PLA).
It is not surprising that the KMT would continue to vote down defense spending. KMT chair Cheng Li-wun, known for her outspoken pro-China views, reportedly plans to meet with Chinese president Xi Jinping before the end of the month.
Cheng has repeatedly leaned into the claim that the Lai administration is provoking China through attempts to cement ties with the US, including by means of arms purchases. In this sense, Cheng has suggested that Taiwan could meet a similar fate to Ukraine, having framed Russia’s war of aggression against Ukraine as a defensive war that it had no other choice to undertake because of Ukraine attempting to become part of NATO. Despite having tried to frame itself as less pro-China than the KMT, all indications are that the TPP will embrace a similar line, with TPP founder Ko Wen-je casting doubt on arms sales from the US and the development of TSMC facilities in the US in recent comments.
Though the KMT has simply tried to block all defense spending, it is to be seen if the KMT would target specific weapons systems in future efforts. Drones and Taiwan’s domestic submarine program were among the items that appeared to be particular targets of the KMT in the past, perhaps pointing to their strategic importance for Taiwan’s defense. The imagery released by the PLA in the course of “Justice Mission 2025” singled out HIMARS and early-warning detection systems as strategic targets for the PLA in the course of military activity directed at Taiwan.