Secretary must steer steady course
THE reign of Sir Hamish Macleod as Hong Kong's Financial Secretary should not end with a bang, but a whimper.
Now is not the time for fireworks.
Hong Kong is facing a number of uncertainties. These are nothing the territory cannot and will not overcome, but now we need the certainty of a stable economy and the reassurance from its chief financial officer that everything is on track.
Stability will be the theme of this year's budget presentation; a stable economy with stable growth at five to six per cent, steady revenues, an inflation rate that is not increasing, (although any indication of anticipated decreases would be very welcome), and finally a degree of stability in spending patterns that keep government expenditure (operating and capital) as a percentage of Gross Domestic Product at 14.5 per cent.
There has been much speculation that government revenues this year are likely to fall short of expectations.
More likely is the prospect that the cushions that Sir Hamish and his predecessor, Sir Piers Jacobs, invariably provided simply have been eroded, not extinguished.
We shall, therefore, be left this year praising Sir Hamish for having set probably as accurate a budget in 1994 as we have seen for many years.
The predicted revenues of $177 billion for 1994-95 will, I believe, be achieved and create a double-digit surplus.
The amount of surplus will depend much more on the levels of expenditure achieved (including appropriations to 'other' accounts) rather than any overall shortfall in revenues.
The main account that makes up the Consolidated Budget of Hong Kong is the General Revenue Account.
Anticipated revenues, at $148 billion, were set at only a two to three per cent increase over those achieved in 1993-94.
The next largest contributor to government revenues are the appropriations to Capital Works Account resulting from land premiums.
For 1994-94 that, too, was set reflecting only a small increase over the actual figures achieved in 1993-94 ($22 billion over $18 billion).
The property slowdown will, admittedly, have affected the revenues, but accounting procedures will have already accounted for half of the anticipated $22 billion.
All in all, therefore, still a healthy and positive position for Sir Hamish to report on Wednesday.
No need for any changes, although I do anticipate a further round of salary tax cuts and giveaways to complement his first three budgets.
Even more than ever, the approach should be 'steady as she goes', a nautical expression that will not be lost on the Financial Secretary.
Hong Kong will be better off, and much relieved, to remember him fondly as 'Sir Whimper', not 'Sir Bang'! Marshall H. Byres is chairman of tax services with Ernst & Young.