Partisan contention continues in Taiwan, with the Democratic Progressive Party (DPP) clashing with the Kuomintang (KMT) and Taiwan People’s Party (TPP) in the legislature over the budget and other legal provisions shortly before the Lunar New Year recess. In the end, this led to the passage of a NT$2.93 trillion (US$89 billion) budget that froze or cut NT$207.5 billion from the original version of the budget proposed by the Executive Yuan.
The clash between the two sides over the budget is not new. In November, the KMT and its smaller ally, the TPP, blocked the national budget six times before finally reaching an agreement. Though the issue at hand was ostensibly logging compensation for Indigenous lands, as there had not previously been any major controversy about such compensation, the fundamental point of contention was whether the executive or legislative branch holds the power to draw up and review the budget.
The two sides eventually passed the budget in November, but another disagreement over the government’s fiscal arrangements emerged almost immediately. In December, the KMT used its majority in the legislature to push through a bill to allocate greater funding to local governments, which are mostly controlled by the pan-Blue camp. The KMT claimed that the bill was aimed at addressing the disparity in resources between the central and local governments, with the changes resulting in a 60-40 split. The DPP, however, stated that because of subsidies provided by the central government to the local governments, the ratio was already 60 percent to 40 percent.
In the latest development, the KMT and TPP pushed through substantial budget cuts in January. These measures are the largest series of budgetary cuts in Taiwanese history. Though the KMT has asserted that the cuts amount to only 6.63 percent of government spending, the DPP has countered that 34 percent of available government spending will be cut or frozen, as subsidies from the central government to local governments and salaries of public servants cannot be cut. The DPP has alleged that the KMT is attempting to mislead the public with this use of statistics.
Even if the cuts are only 6 percent of government spending, as the KMT says, this is still close to three times the budgetary cuts that the KMT pushed for under the Chen Shui-bian administration in the 2000s, the last time Taiwan had a DPP president and a KMT-controlled legislature. The KMT only pushed for 2.27 percent in cuts in 2006.
Most international attention has focused on the cuts to Taiwan’s defense budget. With the cuts, 50 percent of funding for the domestic submarine program will be frozen. The KMT has slammed the domestic submarine program as wasteful expenditure and an “iron coffin” that could cost lives. The KMT claims that plans to build a submarine fleet should be delayed until Taiwan’s first domestic submarine built to date, the Narwhal, sees results.
While there have been some criticisms of the submarine program as a “big ticket” symmetric warfare item when Taiwan should instead focus on asymmetric defense, Taiwan’s efforts to build up asymmetric warfare capacity will also be impacted by the budget cuts. Thirty percent of funding for a large-scale drone training facility, where 50 companies are located as part of a defense industry cluster, will be cut. The cluster was established at the end of 2023, but plans for the construction of the training facility were only announced last month.
In addition, 30 percent of defense-related operational expenses will be frozen, affecting the procurement of ammunition, fuel, and spare parts for military equipment. Taiwan’s Ocean Affairs Council has warned that with the cuts, the Coast Guard may not have enough money to pay shipbuilders at a time when the service increasingly needs to respond to Chinese gray-zone activity in the form of incursions into Taiwan’s waters.
Fifteen percent of funding for international exchanges will be cut, impacting Taiwan’s ability to conduct exchanges with other militaries. Beyond this, 60 percent of publicity funding for the military will also be cut, impacting Taiwan’s ability to advertise for the recruitment of soldiers.
Cuts to other government ministries will also have an impact on Taiwan’s defense. Government bodies that play a role in Taiwan’s efforts to tackle disinformation and maintain cybersecurity, such as the Ministry of Digital Affairs (MODA), National Communications Commission (NCC), and the Ministry of National Defense’s Political Warfare division will see cuts to funding, with the MODA’s funding cut by 40 percent and the NCC’s by 50 percent. The Political Warfare division’s funding comes from the MND’s publicity funding.
Funds under MODA meant for strengthening the digital resilience of the government to cyberattacks will be reduced from NT$170 million to NT$34 million. That cut will impact funds for building up satellite internet capacity to deal with submarine cable cuts in wartime – mere weeks after Taiwan has seen a number of incidents in which submarine cables were cut after suspicious activity by Chinese-owned vessels. Cybersecurity monitoring and protection for Taiwan’s electricity grid, water system, stock market, and telecommunications will also see reduced funding.
Civil defense efforts, too, are likely to be targeted by the KMT going forward. Taiwan’s best-known civil defense organization, the Kuma Academy, has been hit with accusations by the KMT that it is a money pit for the DPP. In turn, the Kuma Academy has accused the KMT of acting at the behest of the CCP. The Kuma Academy has been singled out by China’s Taiwan Affairs Office (TAO) on its list of pro-independence separatists, and two of its core figures are on the TAO’s list of ten most wanted separatists.
In the diplomatic sphere, the Ministry of Foreign Affairs will be slashed by 50 percent. That could undermine strengthening diplomatic relations between Taiwan and the international community. The Mainland Affairs Council will see 30 percent in cuts.
With the KMT leaning into claims that the DPP has used the government as an institution to propagandize to the public, 60 percent of publicity funding for all government ministries will be cut. This will affect the ability of the government to advertise public services, ranging from anti-fraud efforts to vaccination and blood drives.
Further cuts pushed for by the KMT target cultural policy. The Ministry of Culture will see 15 percent in cuts, with NT$23 million removed from the budget and NT$570 million frozen for public broadcaster PTS. English-language network Taiwan Plus in particular has received a great deal of criticism from the KMT, which has labelled it a propaganda network for the DPP. It is expected that Taiwanese Hokkien programming on PTS may also be affected.
The Council of Indigenous Peoples was de-funded by the KMT in a separate move in December, so serving on the council is no longer a paid position. The move was carried out by KMT Indigenous lawmakers, but was criticized by Indigenous civil society groups as weakening Indigenous representation in government.
The Control Yuan, the branch of government that acts as an oversight body, will have its budget slashed by 90 percent. The National Human Rights Commission, which is part of the Control Yuan, has likely become a target because of its programs memorializing the White Terror, the period of repression that took place when the KMT ruled as the sole party in Taiwan’s authoritarian period.
The budget cuts also include the cancellation of NT$100 billion in subsidies to Taiwan’s state-owned electricity utility, Taipower. Critics say that may be aimed at driving up electricity prices in the hopes that the public blames the DPP for the rise in prices.
The KMT originally proposed reducing the budget of the Mainland Affairs Council, Ministry of Digital Affairs, and Ministry of Agriculture to a single Taiwanese dollar. As such, the KMT has already walked back from some of its original cuts. Nevertheless, the DPP has accused the KMT of keeping its planned budget cuts secret until immediately before voting in the legislature on several occasions.
The KMT has claimed that the cuts are necessary for Taiwan’s fiscal security. That said, Taiwan saw a three-year high in GDP growth this year, resulting in record-high tax revenue that the government could use for programs. Moreover, shortly before pushing for the budget cuts, the KMT passed measures to raise pensions for groups that have traditionally supported the party, such as police and firefighters, while calling for pensions for public servants to also be raised.
Similarly, last year, the KMT had no qualms about fiscal security when it pushed for the extension of the high-speed railway across Taiwan’s eastern coast, although the cost would have come to between NT$1.5 billion and 2.5 billion. The extended high-speed rail would have likely been financially unviable, based on the example of the railway on the western coast. A full 90 percent of Taiwan’s population lives in the western part of the island, yet even here high-speed rail construction had to be highly subsidized by the government due to lack of profitability.
With the newly inaugurated Trump administration having threatened to cut support for Taiwan if Taipei does not increase defense spending, it is unclear whether the KMT’s actions in the legislature will lead to backlash.
It is to be seen what steps the DPP takes next. The DPP may seek an injunction on the KMT’s cuts. The DPP legislative caucus may further appeal to the Constitutional Court, on the grounds that the KMT’s attempt to block the budget infringes upon the separation of powers.
In the meantime, while there was no outbreak of large-scale protests against the KMT’s push for cuts, a series of recall campaigns have begun targeting all current KMT legislators. The KMT has in turn initiated its own series of recalls, but these are relatively limited in number, mostly targeting young DPP legislators who entered electoral politics after the Sunflower Movement.
The attempt to recall the entire slate of KMT legislators amounts to a de facto vote of no confidence in the current legislature. If so, this would be without precedent in Taiwanese politics.
Adding to the confusion, the KMT passed the third reading of legislation aimed at erecting legal barriers to holding a recall, but these laws have not yet gone into effect. Thus it is unclear which set of laws would be used for the recalls – the original laws or the new changes. That the KMT views pushing these barriers into law as a matter of priority is evident: This was its last major move in the legislature before breaking for the Lunar New Year recess. The surprise move was condemned by the Executive Yuan, which has stated that it will send the bill back for reconsideration to the legislature.
A battle in Taiwan’s Constitutional Court is likely regarding Taiwan’s recall laws, just as the DPP may seek a constitutional challenge to the KMT’s wide-ranging budget cuts. However, the KMT has in the same timeframe sought to freeze Taiwan’s Constitutional Court to prevent it from issuing rulings – including striking down KMT legislation. Taiwan may face a series of constitutional crises in the near future, pertaining to the budget, recall laws, and the fate of the Constitutional Court itself.
