Invest in education, not handouts

President William Lai (賴清德) in August announced that a NT$10,000 (US$305.25) cash handout would be included in next year’s central government budget, but that is only half of what opposition parties are demanding. The Chinese Nationalist Party (KMT) leadership is calling for the passage of a bill to raise the handout to NT$20,000 before the local nine-in-one elections later this month. Meanwhile, National Taiwan University president Chen Wen-chang (陳文章) urged the government to instead spend more to support education and attract and retain talent, a plea deserves serious consideration.

While the ruling and opposition parties have proposed universal cash handouts costing more than NT$200 billion, the special budget for higher education has been just NT$20 billion over the past three years, Chen said. With elementary and high schools facing severe teacher shortages, the government should prioritize talent development alongside cash handouts, he added.

Chen’s remarks highlight the scarcity of education resources and the need to review fiscal spending priorities. Taiwan’s academic sector is facing a challenging environment, with long-term funding shortages hindering talent recruitment. Meanwhile, elementary and high schools are struggling to find teachers, while rising turnover threatens the development of talent. The government’s focus on distributing cash handouts and its reluctance to allocate funds to long-term talent development are worrying.

Research has shown that universal cash handouts provide only a brief, one-off economic boost with a weak multiplier effect and limited contribution to GDP. Opposition parties have said that surplus tax revenue should be returned to the people. However, tax revenue exceeding budget projections is not a windfall that the public is entitled to.

Universal cash handouts reflect a fundamental, philosophical choice in fiscal policy: Should the government aim to build a sustainable system or should it allow fiscal policy to become a political tool?

Education is a long-term investment that cultivates talent and spurs social progress. Regardless of how strained public finances might be, education funding must not be cut. This is especially true given that the government can still afford universal cash handouts.

Why can it not allocate more funding to education? Public funds contributed by taxpayers must not be reduced to market bidding wars or a vote-buying competition during elections. Government spending should take opportunity costs into account to maximize public benefits. A responsible government must do more than win public support with cash — it must also take a forward-looking approach to fiscal planning.

When politicians use financial incentives to win voters over at the expense of long-term development, public welfare ultimately pays the price. If the ruling and opposition parties are so eager to share economic dividends that they neglect talent development, what can we expect of Taiwan’s future?