THE 2013-14 BUDGET

Safety first again for prudent Tsang

Health, job retraining and fun parks get a boost, while finance chief stresses importance of language skills with an extra HK$5b funding

PUBLISHED : Thursday, 28 February, 2013, 12:00am
UPDATED : Thursday, 28 February, 2013, 5:53am

The government will spend more on public services, Financial Secretary John Tsang Chun-wah said, with much of it going to health and job training.

Tsang outlined plans to spend more on language skills to keep Hong Kong competitive. He also announced investments at the two major theme parks, including a world-first attraction at Disneyland.

"The importance of education is beyond question. Investing in education … provides an economic driver," he said.

The importance of education is beyond question. Investing in education … provides an economic driver

One step in this direction is an extra HK$5 billion for a fund to improve students' language proficiency. Another is a scholarship programme for study at universities overseas.

More will be spent on improving public health, with the budget rising HK$2.7 billion to HK$49 billion.

A further HK$15 billion will be pumped into the Employees Retraining Board.

And the government will lend HK$2.3 billion to Ocean Park to build an all-weather Water World park. Hong Kong Disneyland, of which the government is the majority shareholder, will launch a night-time parade and a zone dedicated to Marvel superheroes. Marvel has produced hit films including last year's blockbuster The Avengers.

To pay for the overseas scholarships, HK$480 million will be set aside to fund a Government Scholarship Fund. Form Seven graduates will compete for 20 places. The winners will get up to HK$300,000 a year, in return for which they will have to teach at government schools for a certain period when they return.

Preference will be given to studies that train students in teaching English or working in the pre-primary education field.

Critics have noted the lack of diversification in Hong Kong's economy - with its focus on finance and logistics - and a lack of talent in important sectors such as education.

Estimated education expenditure for next year is HK$76.9 billion, down 1.2 per cent year-on-year. It accounts for 16.5 per cent of total public spending, down from 18.9 per cent in 2012-13.

Tsang injected HK$5 billion into the Language Fund, for language training, saying: "Hong Kong is an international city. Our people should possess good language proficiency."

The fund was set up in 1994 to promote bilingualism - and trilingualism in Cantonese, Putonghua and English after the handover. Commentators noted a lack of detail on how the new cash would be used.

Hui Wai-tin, a senior lecturer in education studies at Baptist University, said: "Is the situation in such a crisis that we need to inject such an amount of money into it? What is the detailed plan?"

Gail Yuen Wai-kwan, an assistant professor in education policy and leadership at the Hong Kong Institute of Education, questioned whether the overseas tuition scholarship would attract students best suited to teaching.

"Teachers have certain characteristics," she said, noting that finding a good teacher involved more than selecting the top achievers. Yuen said there was a shortage of good teachers because of the tough working environment and uncompetitive pay, particularly in kindergartens.

As for medical care, Professor Liu Su, of Chinese University's School of Public Health and Primary Care, said structural changes were needed - to deal with the ageing population and more complex diseases - rather than a linear budget increase.

While the HK$2.7 billion increase in recurrent spending to HK$49 billion was welcome, it was not enough to establish integrated health services to cater for the needs of the public.


John Tsang explains his budget priorities and the financial challenges looming for the city

On the needs of the middle class:

"I think I do understand the middle class, because I am also [part of the] middle class."

On the timing of tax reforms:

"I think any time is a good time, and any time is a bad time."

On the pragmatic approach to the public finances:

"A politician once said, 'Keep your eyes on the stars, and your feet on the ground'. This comes as a timely reminder for today's Hong Kong. Put simply, we must take the pragmatic way."

On the Hong Kong spirit:

"Call it hectic or even chaotic; in Hong Kong, everyone is free to live his own way and make his own choice. While our seven million people may have seven million different lifestyles seemingly unconnected to [one another], we share the same vision and values that unite us and drive us to forge ahead."

On whether the fiscal reserve is too big:

"The fiscal reserve's level is not too important. What's more important is the level of expenditure, and I have said this year's expenditure has increased considerably."

On the challenges of an ageing population:

"With an increase in the number of the elderly, a shrinking working population, reduction in the number of taxpayers and slowing economic growth, I expect that the growth of government revenue will drop substantially if our tax regime remains unchanged."


Where the money will go

Revised estimates for 2012-13

Surplus HK$64.9 billion.

Fiscal reserves expected to be HK$734 billion by end March.

Estimates for 2013-14

GDP growth: 1.5-3.5 per cent.

Inflation: average headline rate 4.5 per cent, underlying rate 4.2 per cent.

Government expenditure: HK$440 billion, up 15.6 per cent.

Government revenue: HK$435.1 billion.

Deficit HK$4.9 billion.

Reserves HK$729.1 billion by end March 2014.


Child allowance raised from HK$63,000 to HK$70,000.

Salaries tax and tax under personal assessment for 2012-13 cut by 75 per cent, subject to HK$10,000 cap.

Profits tax cut by 75 per cent, subject to HK$10,000 cap.

HK$1,800 electricity subsidy per household.

Rates waived for year subject to HK$1,500 cap.

Extra month's allowance for recipients of social security, old age and disability allowances.

Poverty relief

HK$15 billion into Community Care Fund.


HK$8.3 billion for Old Age Living Allowance to benefit more than 400,000 people in need.

Extra HK$164 million to subsidise various places in intensive care.

HK$73 million to add 600 subsidised residential care places.

Health care

HK$25 billion to redevelop Queen Mary, Kwong Wah, and United Christian hospitals.

HK$203 million for home care services for the severely disabled.


HK$4 billion for a sea-water desalination plant in Tseung Kwan O.

Land supply

Add 28 residential sites to the land-sale list, raising total to 46.

Release commercial space in Central by speeding up redevelopment of Murray Road multi-storey car-park building.

HK$4.5 billion for studies and design work for reclamation outside Victoria Harbour, new towns and rock cavern developments.


Expand government bond programme from HK$100 billion to HK$200 billion.

Issue iBonds up to HK$10 billion.


Develop 12 hectares of land in Tuen Mun and Tsing Yi for logistics facilities.


Offer HK$2.3 billion loan to Ocean Park to build Water World.

Hong Kong Disneyland to launch night-time parade and "Marvel Heroes" theme area.


Taskforce to seek ways to increase labour supply for retail industry to meet tourism growth.

HK$15 billion into Employees Retraining Board.


HK$70 billion set aside for continuing capital works projects.


HK$5 billion for Language Fund.

HK$480 million to set up scholarships for 20 outstanding students to study overseas then return to teach.

Joyce Ng