Seoul searches for path to welfare state After its phenomenal ascent from agrarian poverty to advanced industrial power, South Korea appears to the rest of the world like a straightforward success story. But within the country, the narrative is much more complex - as the country's new president is only too aware. Park Geun-hye, who took office this week as South Korea's first female leader, told a crowd outside the parliament building that she would open a "new era of hope," with more support for those who have seen least benefit from the country's economic transformation. From childcare to old-age pensions, Ms Park wants to ramp up social spending by $125bn over the next five years as she responds to growing complaints that the proceeds of growth have been skewed towards the rich and the chaebol conglomerates that dominate the economy. Ms Park is presenting this as a turning point after decades of small government. While the country is, by some measures, as prosperous as Italy or New Zealand, its spending on public services remains far lower than in most developed countries. Ms Park believes that this must change as the nation enters the next stage of its development. But do her sums add up? There is a certain irony to Ms Park's promises to overhaul the country's long-established model, through which successive governments minimised their intervention in the economy, while giving the chaebol free rein to drive it forward. The system was instituted by her father, the military strongman Park Chung-hee, who fostered economic growth while overseeing terrible human rights violations. On the streets of South Korean cities, as December's election approached, Ms Park's supporters and detractors alike talked about her primarily in terms of her father. So it is no surprise that Ms Park wants to make her own mark on the country with her "economic democratisation" drive. Moreover, she could not have won last year's election without tacking to the left. The economic slowdown of the past five years has hugely damaged public confidence in the ability of market-led growth to "lift all boats." The welfare drive is likely to start with a supplementary budget in the next month or two, rumoured to be worth about $10bn. But Ms Park insists that it will not come at the cost of other fiscal priorities. It will not prompt tax hikes, she promises, nor an increase in the national debt - even though the latter remains modest, at about a third of gross domestic product. Instead, 60 per cent of the $25bn annual funding cost - which amounts to about 2 per cent of GDP - will come from eliminating wasteful government expenditure, although Ms Park has given no details of where these savings can be made. The remaining 40 per cent, she says, will come from regularising and taxing South Korea's informal economy, which she believes to account for a quarter of GDP. In short, Ms Park will fund her programme through measures that sound attractive to everyone. But until she gives more detailed proposals, there will be plenty of scepticism over whether this can really yield the sums required. And the latter could be bigger than Ms Park admits. Last month, the Korea Institute for Health and Social Affairs said that her plans to fully fund treatment of four major diseases and to introduce a universal old-age pension would cost more than double what she had estimated. Ms Park subsequently scaled back the disease treatment plan and made the pension means-tested. Ms Park's doubters expect that she will continue to chip away at the lofty promises that helped her win office, as it becomes clear that they are unaffordable - especially so if the global economy undershoots expectations, dragging down South Korean exports and tax revenues. But a wholesale retreat would be a mistake for she is right to identify the need for increased spending in these areas. The rate of suicide among elderly people has quintupled in the past 20 years, as the tradition of children caring for their aged parents comes under strain. Many mothers of young children are put off returning to work because of the high cost of childcare. Medical costs and university fees are contributing to one of the world's highest rates of household debt. Youth unemployment has steadily crept up as the economy has slowed. It is time that these problems are addressed. Ms Park's policies would mark a big step in that direction. But now she must demonstrate that she knows how to pay for them.