Monitor | Spending on old folks isn't the problem - it's the solution
Our finance chief may fret, but let's use HK's massive surplus to set up a Health and Welfare Fund, and then we can retire off talk of tax rises
Financial Secretary John Tsang Chun-wah believes the Hong Kong government's accumulated fiscal reserves could be run down to nothing over the coming decades by paying for the care of the city's growing number of elderly.
What an excellent idea! Way to go, John!
After years of running hefty surpluses, the government is now sitting on something like HK$1.5 trillion in excess reserves.
Of course, prudence dictates that the government should set some money aside for a rainy day. But we don't need HK$1.5 trillion. During the long slump that lasted from the Asian crisis to Sars, the government ran up a cumulative deficit of HK$186 billion, or just over 14 per cent of Hong Kong's annual economic output at the time.
That suggests the most we need to set aside now to tide us through the next down-cycle would be HK$300 billion.
That leaves us with an HK$1.2 trillion. This is money the government has sucked out of Hong Kong's economy over recent years, to the detriment of everyone's income. Now it is time to put it to work.
The government should ring-fence the cash in a new Health and Welfare Fund, to be managed by the Exchange Fund and dedicated to providing a social safety net for the city's growing population of elderly.