Policy address crucially overlooks plight of the middle class

PUBLISHED : Wednesday, 16 January, 2013, 6:44pm
UPDATED : Wednesday, 16 January, 2013, 11:06pm

The privilege of an “executive-led” government is its supposed ability to take a long-term view and tackle deep-seated problems comprehensively. Leung Chun-ying has certainly taken that approach in his maiden policy address. It’s not clear whether that is moral courage or foolhardiness.

Given his plunging popularity and credibility gap, it’s almost certain he will not have the public support needed to carry out many of his core policies announced on Wednesday – the most important of which is housing and land supply.

Increasing their supply is central to his diagnosis of the sources of the underlying malaise and discontent in our society – and their resolution. But this will take a multi-year policy commitment while when he has far more immediate governance problems to worry about.

The series of measures and proposals in Wednesday’s address will do little to resolve entrenched resistance to his rule, especially among various interest groups and pan-democrats.

“The top priority of the current-term government is to tackle the housing problem,” Leung said.

It has no real appeal to the middle class, a crucial base of support, as many of its families are increasingly dissatisfied with rising medical costs, falling education standards and rising costs of living

“We recognise that problems stemming from property prices and rental, cage homes, cubicle apartments and subdivided units cannot be solved overnight. But we must acknowledge these problems, understand the gravity of the situation, and take the first step forward to resolve them.”

He may have trouble taking even this first step. Even he admits some of his proposals are aiming at the medium to longer terms. For example, his election campaign promise of 100,000 new public rental units over five years – or 20,000 units annually – will not be achieved until after 2018, well after his current term ends.

His various proposals aim to aggressively increase land supply to provide some 128,700 new homes from now to the end of this decade, with measures such as converting 13 green-belt zones and land reclamation to create a sizeable artificial island. Powerful green groups and harbour protection activists will object.

Other proposals include converting industrial and commercial zones into residential areas. This is certainly sensible, as our industrial base has long ago migrated to the mainland’s Pearl River Delta region. It may probably be carried out without too much controversy.

There are wide tracts of land across the New Territories, but these are partly held hostage by the colonial-era small-house policy that indefinitely enables indigenous villagers to claim land for housing. This policy is a big headache, but it’s unlikely to change because of basic law guarantees.

The big developers also own extensive land banks. But unlike most advanced economies, they pay no taxes for holding their land idle and will not start building until the time is right to maximise their profits. That simply runs counter to Leung’s goal of bringing down flat prices and stabilising the property market.

Leung may have his heart in the right place, and his new policies aim to take care of the public interest. But that also means it does not offer immediate rewards to particular groups or classes other than the poor and elderly.

It has no real appeal to the middle class, a crucial base of support, as many of its families are increasingly dissatisfied with rising medical costs, falling education standards and rising costs of living.

Their children – sometimes labelled the post-80s and ‘90s generations – have less social mobility than their parents and face living in cramped quarters and poorer job prospects. Many demand democratic reforms, which Leung has not even begun to address.

Leung has most support from the low-income earners, those less educated and the elderly. Providing more public housing and some sweeteners such as the elderly care vouchers will please them, but it will not help improve his political standing.

Leung will probably muddle through in the next five years, but is unlikely to resolve what he calls “the deep-seated problems of Hong Kong”.