Born of a dysfunctional family

PUBLISHED : Saturday, 26 February, 2011, 12:00am
UPDATED : Saturday, 26 February, 2011, 12:00am

If proof were required of the dysfunction that lies at the heart of the Hong Kong government, we need look no further than the budget delivered this week. Only a non-elected bureaucrat could have produced a budget of this kind and been so gloriously lacking in self-awareness of its shortcomings.

Budget-making lies at the heart of government activity because it deals with the allocation of public resources, quantifies the burden which members of the public have to assume to pay for these resources, and contains a significant element of fiscal and economic planning.

In Hong Kong, the budget is preceded by an almost entirely spurious period of so-called public consultation. It is then announced in a flurry of declarations about 'giveaways' and 'concessions'. The mindset which frames a budget in these terms is troubling to say the least. For a start, the government cannot give away that which it does not own, that is, the public's money. It can only regulate how much it will take and how much will be returned.

Secondly, thinking of a budget in terms of a succession of 'concessions' inevitably implies very short-term thinking and expedient measures which duck tackling long-standing issues.

This is most clearly seen in the government's approach to the problem of poverty in Hong Kong. Real, grinding poverty affects literally hundreds of thousands of people in this supposedly prosperous society. Both the poverty gap and absolute levels of poverty are growing. This surely suggests the need for a coherent policy, yet all the government offers are piecemeal 'gifts' of cash for this and that, plus some hollow declarations of concern.

Hong Kong people, despairing of ever acquiring the security of owning their own homes, are told that they are being helped by small tweaks to the land sale programme and a tiny sum of cash for repairing old buildings. None of this propels a significant section of the population towards home ownership.

In place of plans to resolve fundamental problems, we have a proliferation of slogans about prudence, free trade and free markets that no doubt cause excitement in the depths of US-based think tanks but are meaningless because, for every free market in Hong Kong, there is a web of monopolies, and for all this talk of free enterprise, there is a plethora of bureaucratic controls.

When it comes to planning the distribution of public resources, the bureaucrats who run the government, and pride themselves on their bureaucratic genius, consistently get their estimates not merely wrong, but wildly wrong. Predictions of deficits turn out to be wide of the mark by many billions of dollars, cost estimates for major projects run wild, and the like.

Precisely because bureaucrats run things, there is a morbid fear of long-term projects unless they involve bricks and mortar, because constructing buildings is a finite exercise with a clear objective and timescale. Fixing problems in the education system or the public health system requires real vision and planning which carries the pitfalls of unpredictability and, thus, error. Bureaucrats generally prefer to do nothing rather than attempt anything ambitious which leads to pitfalls.

The bureaucrats could, of course, devolve some of this responsibility but Hong Kong has a centrally controlled, top-down system which gives practically no scope for local initiative or genuine public involvement in decision-making; public consultation exercises are mere window dressing, very rarely do they result in genuine policy formulation.

So it would be unfair to blame the financial secretary alone for the shortcomings of the system and the malaise that has produced yet another disappointing budget, because it is a product of a dysfunctional system.

It may be argued that most government systems contain a large element of dysfunction but this is tempered by the fact that, elsewhere in the world, governments have to face elections. Therefore they cannot, as they do in Hong Kong, allow the views of the powerful minority to always overrule the wishes of the majority.

Yet, as seen in this budget and others, it is clear that the government remains fearful of public wrath, so it throws around palliatives in the hope that people will overlook the big problem and revel in, say, a bit of a rate rebate or something of this kind.

And this is a system with no real accountability because even legislators are powerless to modify the budget; all they can do is use the blunderbuss of voting the entire programme down, something that has never happened.

If they were all elected, and so was the government, things would have to change. It won't fix everything but, as the Australian Democrats like to say, it 'keeps the bastards honest'. That, at any rate, is the hope. Surely, sophisticated Hong Kong is entitled to hope for better.

Stephen Vines is a Hong Kong-based journalist and entrepreneur