One-dimensional thinking afflicts Hong Kong's budget
There seems to be fixated, one-dimensional thinking among our officials. Whenever they fret about our declining competitiveness, they inevitably cite tourism and information technology like magical chants, as the panacea to all our economic ills.
You have a perfect example of that in finance chief John Tsang Chun-wah's budget yesterday. However, expenditure items such as public health care and education are treated like they are liabilities. Perhaps as accounting items.
But what if it's the other way round? Well, let's stop using meaningless words like world-class. But suppose our systems of public health care and education are of such a high quality and compare favourably with those in the most advanced economies in the world. If the health of our citizens is taken good care of and our children, whether rich or poor, are getting the kind of education that would make them globally competitive, would that not make us far better off? Would that not be a straightforward goal that would make our city far more liveable and competitive, and cause less social tensions than expanding tourism - read mainland tourism - or creating an IT industry we never had and have no idea how to develop?
But the way Tsang the fiscal hawk talked about it, you almost think health care, welfare and education will imperil our future if we don't bring down their costs.
His working group estimates - it sounds to me like scare tactics - we will have a structural deficit in 15 years even if we don't spend an extra cent on education, welfare and health care; eight to 10 years if we increase their spending by 1 to 2 per cent; and just seven years if we follow the historical trend of a 3 per cent increase. For someone like Tsang, scenario one is bad enough; the other two will spell the end of the world. So you either expand government revenue or cut spending.
Someone like Tsang will never consider raising existing taxes or creating new ones. So that pretty much leaves cuts. I have no idea if Tsang's fiscal predictions are correct; this is the guy who never got one right from year to year. But I think we can safely predict that, as our public education and health services deteriorate, our society as a whole will become more divided and also less competitive.