Measures unlikely to alleviate city's sense of doom and gloom

PUBLISHED : Thursday, 26 February, 2009, 12:00am
UPDATED : Thursday, 26 February, 2009, 12:00am

Despite huge spending on infrastructure and community projects, a plan to create 62,000 jobs and an economic relief package, it is unlikely the budget will provide a big boost to a community gripped by the fear of lingering economic uncertainty.

Whereas projects such as a cross-border bridge and rail links are probably too distant to help jump-start the economy in the short term, the practical effect of the temporary job and graduate internship programmes is also questionable.

Although Financial Secretary John Tsang Chun-wah sought to argue against comparing the giveaways in last year's budget with this year's measures, people can be forgiven for feeling the package offers them little.

As the HK$6,000 in salaries tax will not be reimbursed immediately and the rates waiver will not take effect until later in the year, the economic relief measures will do little to imbue feel-good sentiments, let alone bolster confidence.

Mr Tsang noted he had been criticised for being too conservative, but was adamant he had struck an appropriate balance. It is not difficult to understand why the government preferred to err on the side of caution when drawing from the reserves.

With an imminent cycle of budget deficits expected to deplete the reserves by HK$100 billion - a fifth of the total - before surpluses return, Mr Tsang is aware of the importance of maintaining a sizeable war chest.

More importantly, the government has admitted it does not have the faintest idea of the economic outlook. A senior government source said: 'No one knows when the economy will bottom out and, thereafter, whether recovery will be V-shaped or L-shaped ... The government needs to prepare for different scenarios.'

However uncertain the economic outlook, Mr Tsang knows well that government inaction and a wait-and-see attitude are non-starters. This would carry the risk of deepening the feelings of anxiety and uncertainty, further denting confidence. Mindful of the dangers of political fallout from a protracted economic recession, Mr Tsang and the ruling team are critically aware of the importance of bolstering confidence by leading a 'can do' administration.

From economic strategies to infrastructure projects, Mr Tsang is keen to rekindle hope and shore up confidence that the government is tackling problems, and knows where Hong Kong should go in the long-run and how to get there.

Admittedly, expectations for big, pleasant surprises in the budget were dampened through leaks to the media in the past fortnight. Given that, it will be no small achievement if the blueprint helps to moderate the feelings of doom and gloom.


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