• Thu
  • Sep 18, 2014
  • Updated: 7:15pm
CommentInsight & Opinion

Hong Kong can't afford officials' neurotic prudence in public spending

Mike Rowse calls on officials to use surpluses to address social needs

PUBLISHED : Monday, 06 January, 2014, 3:28am
UPDATED : Monday, 06 January, 2014, 5:40am

"The sky is falling" is a famous catchphrase from an old folk tale. A young chick becomes convinced that disaster is imminent when an acorn falls on his head. Chicken Little, as he is known, persuades other creatures to panic with him quite unnecessarily.

The moral of the story is we should not exaggerate danger; rather, we should assess situations calmly, address them appropriately and generally face up to them with courage.

I sometimes wonder if the spirit of Chicken Little has not lingered rather too long in our community after the end of the colonial era.

For the entire century and a half of British administration of Hong Kong, there was a legitimate question mark over the territory's future. This feeling of uncertainty grew stronger after the second world war and the civil war in China.

The British were particularly keen not to lumber themselves with policies here that might possibly lead back to a drain on their country's own resources.

This spirit affected our city in a number of ways, particularly in the areas of social policy and public financing. It became an article of faith within the government that it should not take on ideas that would carry with them enduring financial implications. In short, one-off or capital expenditures were fine, recurrent commitments would be disastrous.

I am not trying to rewrite history here, or downplay the fact that prudent management of public finances has served Hong Kong well over the years and left us in an enviable position.

But the situation has changed fundamentally since July 1, 1997, while our attitudes have not kept pace. The resumption by China of the exercise of sovereignty over Hong Kong has paid off the debt to history and stopped the clock.

We are now an integral part of China. The uncertainties that lay ahead are no longer unique to Hong Kong's special situation; they are essentially the same as those faced by citizens all over the world.

So while we should continue to be prudent in the way we spend public money, we should also plan for the long term. Instead of clocking up massive surpluses year after year and squirreling them away indefinitely, we should proceed on the basis of broadly breaking even over the course of the whole economic cycle, by running up both deficits and surpluses as we ride out short-term fluctuations.

To its credit, the Leung administration has recognised this in the field of housing and is drawing up proposals to increase the stock and improve the quality, plans that run for decades ahead. The contrast between this approach and the frantic zigzagging of the Tung Chee-hwa and Donald Tsang Yam-kuen eras are striking.

We now need to bring this approach into other areas of social policy. For the elderly, why can't we plan for and implement a proper universal pension scheme? Must we remain stuck forever with the dreadful Mandatory Provident Fund, which is little more than social welfare for the financial services sector?

On health, why did we cut back earlier this century on the number of hospital beds? Why do we leave some families on the brink of penury by refusing to fully meet the costs of treatment for those with chronic illnesses?

There are critical and urgent issues to be tackled in the fields of poverty alleviation and the environment also, and we have the resources to do so.

One does not need to agree with everything Leo Goodstadt writes in his recent book, Poverty in the Midst of Affluence, to realise that what we must do first is shrug off this psychological burden we have been carrying for too long.

Stop panicking, guys: the sky is not falling.

Mike Rowse is managing director of Stanton Chase International and an adjunct professor at the Chinese University of Hong Kong. mike@rowse.com.hk


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This article is now closed to comments

Generally agreed but honestly I think you are far too gentle on the 'administration' which has just presided over HK's lost decade.
'Stop panicking, guys: the sky is not falling.' A timely piece right at the heel of FS's stern warning annoucement.
So not guys, but guy -- our FS John Tsang. It was Donald Tsang before and with him.
Nevertheless, let me interject here that during the last days of the colonial rule, the very expansive construction cost for HSBC Headquarters and the Airport were extraordinary way how Hong Kong money benefitted Britain. May be it is alright since we have in return two marvelous architecture achievements finally sitting incongruently as they are among all the typically shabby buildings except for the BOC Tower.
Allow me to expand what has been commented here so far.
HSBC is a private company runs by Scotish interests. The building design called for prefabrication parts. They were as I had learned all made in Scotland and shipped to Hong Kong for assembly only. The construction cost by square feet is four times of Bank of China Tower. So use your judgement why HSBC invested for such an expansive building in Hong Kong when the future of Hong Kong in the 80s was still foggy.
As I write, it occures to me that all the parts of the building actually can be deassembled and move to anywhere HSBC wants it to go. Clever. All except for the 6 stories of basement floors where the mechanicals are located.
I am quite at peace to have said what I first commented here. Again, what a marvelous piece of architecture designed by Lord Foster, a British architect of which HSBC Headquarters launched his profession career.
Just in today's news:
Deng Xiaoping urged London to persuade HSBC to stay in Hong Kong.
I don't think you need to be quite so begrudging over Chek Lap Kok! The oft-repeated threat that HK will be marginalised as China rises would probably have actually occurred if we were still dependent on Kai Tak.
To lex...
Begrudging is your word and sentiment. I think the airport is a masterpiece in concept and details. I am saying this not because I spent time there during the construction phase.
If China opposed the new airport at that time -- for the large investment to justify the fringe location of Hong Kong relative to mainland, a bit early as it may but eventually would catch up. In fact, I am afraid it has already begun. But still we have a marvelous piece of work.
Hi John: fair enough. I was just reacting to your words which, prima facie, suggested that CLK was built to serve British purposes.
Reprint from previous comment:
Hong Kong, a city, and merely with a population of 7 million doesn’t need a financial secretary on its payroll. New York City of 8 million has a comptroller whose job qualification is an accountant and whose job is to keep a record what has received and what has spent of city’s tax revenue. And the mayor is his boss. I don’t think many locals even know who their comptroller is. Hong Kong after the hangover, might want to streamline its government structure and get a comptroller whose royalty is not to UK before the hangover or Central China now but to his boss the Chief Executive. Administratively more efficient and financially less costly too. And CY Leung needs not to pretend to be the boss.


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