Now all John Tsang has to do is come up with a long-term fiscal plan
The public could be excused for feeling unimpressed by yesterday's budget. With fewer sweeteners and a less rosy forecast, the blueprint failed to instil much feel-good sentiment. That the speech's message was heavily leaked also made it one of the least exciting in years. That, however, does not mean it is irrelevant to the public. In a step in the right direction, Financial Secretary John Tsang Chun-wah posed a challenge to the people - how to maintain fiscal discipline in the long run.
It is true that the budget does not taste as sweet as in previous years. Waivers of public housing rents and property rates have been halved, while there will be no more electricity subsidy. It would not be surprising if the middle class and the underprivileged feel left out, while the public coffers continue to be flooded with piles of cash.
There are initiatives to enhance competitiveness and welfare services, though. These include setting aside land for hotels and housing, developing information technology and boosting job retraining. Tsang rightly said manpower, land supply and an ageing population are the major constraints to future development. Whether the measures can make up for the lack of immediate relief for the masses remains to be seen.
Tsang could have continued the largesse to win applause. But he took the unpopular course. In the worst-case scenario of a government working group, a structural deficit may occur within seven years. Even if no new services are provided, such a deficit would surface within 15 years. The forecasts are hardly reassuring. If government spending growth outpaces economic and revenue growth, a deficit is bound to emerge.
The warning that our public finances are not as healthy as appears is a timely one. Under the Basic Law, government spending should be kept within the limits of revenues and not run into deficit. As expected, Tsang denied the problem stemmed from reckless public spending over the years. But identifying the symptoms is just part of the task. It does not help when the diagnosis does not come with a prescription. It confuses things further when there appears to be no clear plan to curb public spending or raise revenues in the long run.
Tsang ended his speech with a quote from philosopher Edmund Burke: "Society is a partnership." We trust he is prepared to work with the community to meet the challenges ahead. The public awaits his strategies to ensure today's spending will not become a burden for future generations.