Use today's public wealth for a better tomorrow
While Chief Executive Donald Tsang Yam-kuen is in Beijing for the National People's Congress, officials are contemplating how to restore the government's credibility after its humiliating U-turn on the budget. But first they must explain how they will distribute a HK$36 billion handout that was supposed to be impossible.
The circumstances are connected. After the budget received a hostile reception, Tsang faced the prospect of public unrest in Hong Kong during a national summit which ritually affirms the importance of stability and harmony. As a result, it seems, political considerations have overtaken the (unconvincing) argument that handouts from the government's massive fiscal surplus risk stoking rising inflationary pressures.
Now, to defuse public anger, there is to be a HK$6,000 handout to all permanent residents. So hasty was the U-turn that the government announced it without details of its distribution. The handout may achieve its purpose, but it has not derailed plans for a protest in the city today. None of this need have happened if the government did not hoard the people's money for a rainy day without a vision for putting it to good use to ensure the city also has a bright future. The government is to be commended for its caution about spending the people's money. However, that does not mean it lacks scope to spend it for the future. Indeed, the idea is surely to provide the opportunity for that.
We have seen what can happen when those in charge lack a coherent vision of how to deliver a social dividend from saving the public's wealth. Dishing out handouts creates an expectation of more of the same, or at least a desire for money that is not being put to good use to be returned to the people.
The integrity of the budget goes to the heart of the government's credibility. So unprecedented is the flip-flop executed last week that we trust officials - and the chief executive to be elected next year - heed its lessons. The public's reaction shows the government has to strike a better balance between hoarding for a rainy day and providing for the future.