Few handouts expected in next budget
Financial Secretary John Tsang Chun-wah is expected to use his next budget speech to announce measures to make Hong Kong more competitive, and fiscal stimulus measures to help the city ride out the global economic downturn.
But there will be no repeat of the big handouts to households that were a feature of his budgets this year and in 2008, although the government is not ruling out some modest relief measures. In a speech two weeks ago, the financial secretary said the government did not see offering sweeteners as a solution to Hong Kong's economic problems.
Tsang will begin consultations on next year's budget today with a briefing to lawmakers on the latest economic situation. He will hold the first of several meetings with political parties and unionists tomorrow.
The government has doled out HK$87.6 billion since February last year. Tsang's maiden budget included measures worth HK$44.11 billion, which the financial secretary characterised as returning wealth to the people. In July last year, the government announced measures worth HK$11 billion to address inflation.
Last year's budget, delivered in the wake of the global financial crisis, included measures worth HK$10 billion targeting jobs, competitiveness and economic development, though Tsang did not describe them as stimulus measures. They included salaries tax rebates of up to HK$6,000 per taxpayer and a waiver of property rates.
In May, the government announced further relief measures, largely extensions or reruns of those in one or more of the three previous packages, which Tsang characterised as the fourth phase of a stimulus package.
A person familiar with the government's position said continuing such big handouts would create a dependence on the government that would not be conducive to sustained economic growth. 'We hope to set out the principles regarding fiscal prudence in the next budget,' the person said. 'What is more important is how to revitalise our economy.'
Tsang is expected to maintain an expansionary fiscal policy - meaning higher spending or lower taxes, or a combination of both - to counter the effects of the downturn.
In his blog posted on the government website yesterday, the financial secretary pledged to take seriously the views of the public, and noted that the first drafts of his budgets had each undergone more than 100 changes.
'Every additional or deleted item was based on the opinion I obtained from consultation meetings, district forums and letters from citizens,' Tsang wrote. 'Although I may not be able to satisfy everyone, I will certainly do my best to balance the interests of different parties and [make decisions] based on the [wider interests] of Hong Kong.'
In its annual report on Hong Kong's economic situation released on Thursday, the International Monetary Fund said the government had indicated it may continue to provide some degree of fiscal support to the economy in the coming year.
Thanks to a rebound in the property and stock markets, the budget deficit in the current financial year will be lower than the government predicted. In the budget, the financial secretary predicted a HK$39.9 billion deficit this financial year.
The IMF said it expected the deficit to be much smaller than that, given the faster-than-expected economic recovery and improvement in financial markets.
A government advert will start to run on television stations tonight that includes footage of Tsang in fencing gear. The financial secretary, who underwent heart surgery three months ago, is a fan of the sport.
Tsang was coy about the thinking behind the advertisement. His press secretary declined to shed any light on the matter.