The ViewHong Kong should clone this one brilliant idea from Singapore
A super fund could provide wealth and employment for decades to come
The second best joke about accountants is, “why do accountants make good lovers?” “Because they’re great with figures.”
The best joke was the worry that the Hong Kong Institute of Certified Public Accountants displayed after the budget last week about potential budget deficits in Hong Kong. This column has pointed out that unless we start running a big annual deficit – perhaps as much as HK$50 billion annually, our current reserves of around HK$870 billion will be nowhere near exhausted before 2047.
Some of this worry seems to stem from the government’s working group on long-term fiscal planning (WGOLTFP for short). Their forecasts appear on the Financial Services and Treasury Bureau website and show Hong Kong going into a deficit in the early 2020s, at which point we would have to borrow on the capital markets to pay our expenses – like most other economies.
The real opportunity is for the future fund to be used aggressively to develop an asset management centre of excellence in our city
The website illustrates costs rising over time (as they do) but revenues staying largely flat from 2008 for the next 33 years! Those assumptions might just sneak a pass at A level for effort but I hope that the government did not pay too much for that analytical rigour.
It is most unusual for a city to have such massive reserves. We should not be planning for a species threatening plague, or a financial meltdown that will take us back into the Stone Age – which by the way, will make our reserves worthless. We should be planning creatively for the future.
This columnist has repeatedly called for the government to use its enormous reserves, and (in normal times) our large annual budget surplus to establish a series of hypothecated funds, which could be used to build a funded future for education, health, and pensions. Singapore’s HK$1.7 trillion Central Provident Fund is an excellent example of a large store of wealth serving a maturing community.
The financial secretary made a good start in the budget last week by announcing the establishment of a future fund, recommended by the WGOLTFP (WG for short). I feel smug and it really is a very good idea. In principle. However we have no details of how our seed money of HK$220 billion is to be invested despite the fact that the WG have been chewing their pencils over it for a couple of years. The devil is in the detail.