Opinion | Good policies, not scare stories, are expected of John Tsang and company
Philip Bowring says the financial secretary's dire warning about Hong Kong's depleting reserves only masks official incompetence in tackling the city's key challenges
The worst senior appointment made by Chief Executive Leung Chun-ying was the retention of John Tsang Chun-wah as financial secretary. In his first five years in the job, Tsang exhibited widely inaccurate budget forecasts and, worse, presided over a series of mini-measures and one-off handouts of cash, rate rebates and the like that exacerbated the imbalances in the fiscal system.
Tsang is the epitome of the all-change-is-dangerous mentality of top bureaucrats.
Now we have him making dire warnings about welfare spending and future deficits without a shred of analysis to back them up. Some committee of tame academics has added to his roster of rubbish by suggesting that Hong Kong needs to ring-fence its capital revenue from recurrent spending.
Some acquaintance with the facts would help, Mr Tsang. For more than 30 years, almost all capital revenue has been siphoned off into the separate Capital Works Reserve Fund, introduced by the colonial government as a way of disguising surpluses. So not only has the ring fence long been in existence but it has had damaging results, thanks to the willingness of officials to agree to fund projects with no clear economic or even social return - the HK$36 billion for the Wan Chai-Central bypass, for one.
Far from needing to protect capital spending, it is now recurrent spending that needs protecting from Tsang's concrete-pouring boondoggles, most of which over-run their budgets.
Tsang's 2013-14 budget documents show just how destructive these boondoggles are. This year, spending from the Capital Works Reserve Fund is forecast to exceed revenue. And, in the following four years, it will total HK$364 billion against capital works revenue of HK$199 billion. In other words, a deficit of HK$165 billion will, all else being equal, be met by squeezing recurrent spending!
Thus, the appeals by Tsang and his tame advisers are nothing more than an attempt to squeeze spending on health and welfare to fund projects created for political reasons or to please bureaucratic or commercial interests. Of course, these capital revenue projections are probably wrong, but one can only use Tsang's figures to address Tsang's claims. And they show the dishonest intent behind the scare stories.