Forget handouts, Macau needs social spending and diversification

PUBLISHED : Wednesday, 21 November, 2012, 12:00am
UPDATED : Wednesday, 21 November, 2012, 2:55am

Macau's residents have become used to the government's giveaways that line their pockets with cash and reduce taxes. The huge budget surpluses from gaming tax revenue make for an embarrassment of riches that next year will amount to about 9.8 billion patacas in subsidies, leading to the biggest handouts since 2008. A ritual has evolved around the chief executive's policy address each November, with expectations of a windfall being not a matter of if, but how much. As benevolent as such payments may seem, though, it is poor financial management; authorities should be thinking about tomorrow, not simply today.

They are certainly aware of that need. Residents have long complained of the lack of social infrastructure like health care and transport and the overbearing influence on the economy of the gaming industry. The city of 580,000 people has 36 casinos, yet only one public hospital. Shuttle buses clog roads, property prices have increased by 50 per cent since last year and grocery bills are approaching double what is paid in Hong Kong.

A quarter of the population works in the gaming and hotel industry, which accounts for more than half of GDP. Most revenue comes from mainland gamblers, who numbered 28 million last year. Such reliance means that whenever the mainland or global economy slows, or there is a health scare, such as with bird flu, that hits travel, Macau's economy falters. There have long been calls for economic diversification and the central government advised in the 12th five-year plan a transformation into an international tourism and entertainment destination and a service centre for Portuguese-speaking countries, but there has been little apparent progress.

Residents are eager for change - regular protests prove that - but they also do not object to the idea of wealth-sharing. Next year, those with permanent status will each receive 8,000 patacas and those who are non-permanent 4,800 patacas. Among a long list of other handouts are a 10 per cent increase in the cash subsidy for the elderly to 6,600 patacas and bigger subsidies for students. All are gratefully received, but the cash would be better spent directly confronting Macau's challenges.

Hong Kong tried wealth sharing and has thankfully not repeated it. Excess public funds should be used to plan for the future, not given away on a whim. Macau would do well to shift course by making economic diversification a priority and clearly defining its challenges and goals.