The first budget of the new Tsang administration was politically astute but, in reality, stunningly mean. It also displayed those two ever-present characteristics of the bureaucracy - prevarication and surrender to elite interest groups. The mostly effusive media coverage is testimony to its political merits, as journalists were swept up in the public relations spin that everyone in Hong Kong was getting goodies from a generous financial secretary determined to give back this year's surplus to the people.
Much attention was paid to the volume of words in the speech on small schemes to help the underprivileged and to the overall size of the handouts via rates cuts and a power subsidy, and the one-off payment into Mandatory Provident Fund accounts. It was even given the gloss of helping lower-income earners and addressing Hong Kong's ever-growing income divide.
But do the sums and you will find that the catchphrase 'Leaving Wealth with the People' amounts to further increasing the income divide when inflation is hurting the lower-income groups more than others. Of the measures, only the power subsidy and public housing rent concessions significantly address this issue. Most of the rest of the budget 'generosity' goes to those least in need.
The biggest giveaway by far is to salaries- and personal-tax payers. Add together the tax waivers (HK$12.4 billion), wider tax bands (HK$1 billion), increased allowances (HK$1.3 billion) and a lower standard rate (HK$960 million), and the total comes to over HK$15.6 billion. Yet, the roughly half of income earners who are at the median level will receive none of this. By far, most of the concessions will go to the 400,000 or so in the HK$300,000 to HK$600,000 annual income brackets.
Contrast this generosity to the top 20 per cent of earners with the penny pinching towards the old, sick and lower-50-per-cent income groups. The sum total of increased (mostly one-off) payments will be around HK$5.7 billion. These consist of one month extra payments to social security and old-age allowance recipients (HK$2.7 billion), housing rent relief (HK$1 billion) and roughly half the HK$4 billion being given to all households as an electricity subsidy.
The generosity to the upper income earners came on top of rates concessions totalling HK$11 billion, a benefit unevenly spread across households and businesses.
As bad as the figures are, even worse was the attitude displayed by Financial Secretary John Tsang Chun-wah, who implicitly warned that the old-age allowance, and other benefits, would have to be cut back in future. Note this extraordinary paragraph: 'If the existing social security system were to remain unchanged it is expected that expenditure relating to the CSSA ... would increase from the present HK$13.1 billion to HK$31.8 billion in 2033.'