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Budget needs to go beyond sweeteners

Donald Tsang
Chris Yeung

In contrast to government practice in colonial days and the early years after the handover, the rule of confidentiality over the contents of the budget has changed markedly.

In the past few years the media has reported bits and pieces about the budget, citing unnamed sources in the know, a week or so before the budget is delivered in the Legislative Council.

A few weeks ago, Apple Daily carried a front-page story saying the financial secretary, John Tsang Chun-wah, would announce a HK$5,000 tax rebate in his budget on Wednesday.

On Friday, Ming Pao Daily News reported a government assessment that Hong Kong would slip into a 'budget deficit era' for at least three years. It said the government would not 'splash out its total savings' in the face of uncertain economic times. Instead, it would 'save part of the ammunition' for Chief Executive Donald Tsang Yam-kuen's policy address in October.

Also on Friday, the government-run RTHK quoted sources as saying the government would cap the tax rebate at between HK$5,000 and HK$10,000 and grant a rates waiver of one to two quarters. On the same day, Cable TV news said the government was considering raising the tobacco tax.

Several newspapers carried similar pre-budget stories yesterday giving a bleak picture of public finances and the economic outlook.

Three days before Mr Tsang delivers the budget, public expectations of anything approaching the please-all budget last year - which featured a package of tax cuts and subsidies worth HK$75 billion - have been significantly dampened.

The game plan is not difficult to understand. By lowering expectations, Mr Tsang and his boss are likely to face less criticism when the budget delivers modest relief measures as reported. They could even enjoy the bonus of a moderate improvement in the public mood if relief measures turn out to be more generous than expected.

But are tax relief and sweeteners the only thing people expect from the budget? The answer, arguably, is no.

True, families on low incomes are reeling under economic hardship as times get tougher, and middle-income earners are suffering cuts in salaries and benefits. They would no doubt welcome tax relief, however modest, that helps lessen their financial burden.

From a media perspective, stories about who gets what, with figures, make juicy headlines.

But the danger for the government in dancing to the tune of the media in budget drafting is that it risks failing to answer the bigger questions people are asking.

Given the scale and complexity of the economic crisis, the government can be forgiven for failing to give a clear answer on when the worst will be over and the process of recovery will begin. People are resigned to the reality of tough economic times in the next two to three years that will see the jobless rate rising and household incomes falling.

But almost six months after the Wall Street crisis precipitated the global recession, people expect the next budget to contain not just fiscal measures to solve short-term problems but a full analysis on the state of the economy and a set of strategies in the medium and long term.

In times of crisis, public aspirations for leadership have risen given the simple fact that the government, with its massive resources, can make things happen. Job creation is one example.

A community that is facing its second economic crisis in a decade well understands that the government cannot solve the problem of unemployment on its own.

Hopes are high, nevertheless, that the government will be able to imbue a sense of hope and confidence by giving a sombre analysis on the economic outlook while presenting a package of ideas and strategies to deal with the unknowns and lift the city out of the economic abyss.

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