• Sun
  • Dec 28, 2014
  • Updated: 9:33pm
CY Leung policy address 2014
NewsHong Kong

'Hong Kong could run out of money within 20 years', warns John Tsang ahead of budget

Financial chief says surpluses will not last forever, days after chief executive's welfare splurge

PUBLISHED : Monday, 20 January, 2014, 5:09am
UPDATED : Monday, 20 January, 2014, 4:46pm

Financial Secretary John Tsang Chun-wah warned yesterday that fears public spending was rising too fast were "not without reason" - doing little to ease talk of a split with Chief Executive Leung Chun-ying.

Leung used his policy address last week to announce a huge increase in recurrent spending, much of it on welfare, and insisted that the government could afford the bill of up to HK$20 billion per year. Writing on his blog yesterday, Tsang (pictured) said that while the government could afford the cost for the foreseeable future, the day would come when surpluses turned to deficits.

But one of Asia's richest men, Sun Hung Kai Properties co-chairman Thomas Kwok Ping-kwong, said the government "deserves much praise" for its poverty alleviation plans.

In his post, Tsang warned that recurrent spending, once implemented, could be difficult to cut, and said spending could snowball if factors such as inflation and a growing number of beneficiaries were taken into account.

Tsang wrote that "the day when the budget turns into deficit and fiscal reserves are used up will not be in the distant future, though not while the current administration is still in office [its term runs until 2017]".

"I will spare no effort to maintain a budget surplus in my remaining term to save more and fight for more time to tackle these structural problems," he wrote.

Talk of a split between Leung and Tsang arose on Friday, when Leung's No2, Chief Secretary Carrie Lam Cheng Yuet-ngor, said extra spending in the policy speech would cost half the HK$20 billion Tsang claimed.

Tsang announces his budget next month, and is expected to warn that the city's fiscal reserves risk drying up in 20 years due to costs associated with the ageing population. His comments will be based on the findings of a team of economists.

Tsang warned on his blog last month: "One day we will have to deploy our reserves to maintain our public expenditure. And eventually, reserves will be used up." He said revenue from taxes might have to rise.

The government's spending, including an allowance for low-income working families, won praise from tycoon Kwok.

"The government has indeed done a good job in helping the poor and it encourages people to work," said Kwok, who served on the commission that set the city's first minimum wage at HK$28 in 2010. "I wouldn't say it is welfarism; the government has a responsibility to help the poor and Hong Kong is financially sound."

On the government's pledge to bring 470,000 public and private homes on line in the next decade, Kwok said a clear target would help market players make decisions, and reduce the risk of big price swings. He said a pilot arbitration scheme for premiums paid by developers for change of land use would help provide an extra 4,000 to 5,000 flats a year.


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This article is now closed to comments

Oh dear, we better immediately stop the construction of the HKD 67 billion most expensive railway ever built, the HKD 12 billion bridge to nowhere (oh sorry, I meant Zhuhai), and definitely not even think about a HKD 130 billion third runway.

And I guess a HKD 6k per person handout for 7 million people (HKD 42 billion, ka-ching!) was not such a great idea either then Johnnyboy?

Also, on the revenue side - here is a little creative idea. We currently charge 26 dollars for every passenger departing by sea, and 120 bucks for every passenger departing from the airport. How about a departure tax for those departing over land? Let's make it HKD 80 shall we? 80 times 50 million mainland visitors makes HKD 4 billion every year. That can go a long way to finance the latest HKD 3bn welfare 'splurge.'
The only reason Johnny is still serving as FS is because he (like his ex-boss Donald) is a servant of the tycoon class. He is completely out of touch with HK society in general and his only claim to greatness is that he has generated surpluses (when in fact any monkey could, given HK's several years of soaring revenues from land/property transactions).
The best thing that can happen to HK is to have Johnny come back with some leg pain and retire.
This FS is useless. Helping the poor and less fortunate. is a must in any society. His job as FS is look at how to optimise costs & spending - readers' comments above already indicate a wasteful government in terms of spending. He is also to look for new avenues of revenue by looking at what right investments can help Hong Kong with new industries and businesses. All he does is complain and make threats about over-spending. If he is a Chief Financial Officer of any major business, with his record of poor forecasting of budget surplus/deficits, he should be fired. Earning what he does as a comfortable civil servant, he should look for ways to reduce costs and look for new avenues for revenue, instead of just making complaints. Go do your job, FS !
Of course the day of reckoning will arrive and money could run out. However, that's precisely why we need the FS and his team here. For a start, don't lay blame on the massive expenditure items if they improve the quality of life for HK people especially the poor. Take a hard look at some insane infrastructure projects that are of little use to us economically. Also, train government officials, low, middle and high-ranking to not waste money on needless expenditure just because its not their own money. The prevailing culture in government is to spend, spend and spend to avoid taking flak for errors committed. Let the Audit Commission provide training courses for those who hold the purse strings.
It seems that every project that the Govt invests in balloons to 10 times the amount of initial forecast at completion. The reason always seems to be the ever increasing cost of raw materials. These guys that do the project forecasting have got to be replaced...
this guy is a total duffer with his repeat stupid comments
Obviously he is not paid enough & his crystal ball is a copy made in Zhuhai
Whatever happened to taxing shareholder dividends for a start ?
Stop building concrete white elephants
Meanwhile it takes a long time to get through our 1.5 trillion $ reserves
When did the duffer and duffer department ever get the Budget forecast right or even within 20% of their prediction ?? never
You can see 20 years ahead really? You gotta be kidding and have to be so naive in making predictions that far.
Do you know anyone who made a prediction for 20 years and turned out to be correct?
To John,
I don’t know what a knee-cap job is. But I will get out of your way if a gun is involved. When that happens, John Tsang most likely is the first one to have a knee-cap job done to an alumni from Kennedy School of Government, Harvard University. What a case study and what a waste. I mean a place at the school.
John Adams
Instead of "No money no talk" it seems our FS can only say " Must talk -no money"
That's about the limit of his vocabulary.
it would be much cheaper to rent a tape recorder.
PS: But I must say Tsang has got the "I'm very worried" look down to a fine art based on the SCMP's stock photos they attach to "chicken little/ cry wolf" articles like this , which these days appear several times per week
Here is the painful truth.............the only thing that John Tsang is capable of, is to try to save money and not spend anything that will create a deficit or make him present a report card that doesn't have a "nice" surplus..........his only goal and objective is his to make himself look good in his job................Wake up idiot!...........a government does not need to run on a surplus every year. There will be years when spending to the point of a deficit is required and there will be years of surplus when spending can be low.......It really depends on the economic cycle.
Tsang's biggest problem is that he is not competent nor knowledgeable enough to take on the FS job...........his biggest concern is not being able to deliver a surplus..............please retire early and let's hope the next FS has more brains and balls than Tsang.



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