Financial Secretary John Tsang Chun-wah's budget came under heavy attack from virtually all quarters almost as soon as it was unveiled. This is understandable since it contains no long-term plan to cope with Hong Kong's multiple problems and no vision of the future.
Tsang's budget, like many previous budgets, confirms the government's inability to make accurate forecasts. This time, the deficit of HK$25 billion forecast by the financial secretary was transformed into a surplus of HK$71 billion. The year before that, a predicted HK$40 billion deficit turned into a HK$26 billion surplus. It may be a virtue for financial secretaries to err on the side of caution, but these errors are so flagrant that they render the assumptions behind the budget suspect.
This year, Tsang's budget contained no tax rebates, despite the huge surplus, on the grounds that they would spur inflation. But there is little evidence that a tax rebate will be inflationary.
In fact, tax rebates in the past did not result in serious inflation and academics have estimated that the inflationary impact would be minimal. So, why has Tsang been so against such a rebate?
Furthermore, again because of the fear of inflation, Tsang announced that an injection of HK$6,000 would be made into each Mandatory Provident Fund account so that the account holders could only access these funds once they retire. But working people need help today - and this is not being given to them.
It would be much better if Hong Kong were to adopt the Macau approach and simply give HK$6,000 to each identity card holder, regardless of whether the person has an MPF account. That would make matters much simpler and reduce red tape.
The MPF proposal conspicuously ignores the welfare of those aged 65 and over, who no longer have MPF accounts but who in many cases are still working in an attempt to make ends meet. What rationale is there for neglecting this sector of society, which accounts for over a million people?