Scrutiny of policies that cost over HK$100 million is unnecessary, says think tank

Think tank chief queries idea that government departments should prove new policies costing HK$100m or more a year are cost-effective

PUBLISHED : Thursday, 06 March, 2014, 3:01am
UPDATED : Thursday, 06 March, 2014, 9:34am

A think tank leader has called into question a proposal that would require government departments to prove new policies costing HK$100 million or more a year are cost-effective.

SynergyNet vice-chairman Dr Brian Fong Chi-hang said the idea, floated this week by a task force looking for ways to rein in government spending and avoid budget deficits, might create unnecessary work and deter officials from launching needed public services.

"Public services provided by the government are not always cost-effective. There are grey areas where the private sector is reluctant to provide the services," Fong said. "The measure would be ineffective if it became a stumbling block for departments that want to contribute more."

Under the proposal, put forward by the government's working group on long-term fiscal planning, all spending initiatives with recurrent costs exceeding the threshold would have to undergo an assessment.

Such assessments would look at whether the policies offered value for money. They would take into account the "cumulative impact" of policies.

Small items proposed in this year's policy address, such as sending 9,800 students on overseas exchange programmes at a cost of HK$130 million a year, and the doubling of subsidies for 11 uniformed groups including the Scout Association and the Association of Hong Kong Flag-guards at a cost of HK$107 million a year, would have to undergo such an assessment if the mechanism was put in place.

The government's advisers said that Hong Kong faced a budget deficit of HK$1.54 trillion by 2041 if the city's spending grew at its current pace and nothing was done to mitigate the impact of an ageing population. The group did not raise the possibility of a goods and services tax, as some have suggested.

Fong said tightening control over the government's future outlays was acceptable but that the low threshold would create unnecessary work for departments. More importantly, he said, it would force them to judge a policy by statistics alone.

He suggested raising the threshold by setting it at a certain percentage of gross domestic product or total government expenditure, to reflect the impact of the policies on public finances in the long term.

Working group member Marcellus Wong Yui-keung said the HK$100 million threshold was subject to public discussion.

"It's just a starting point, a figure that's worth attention," he said. "We want to deliver the message that the government should track whether the growth rate of expenditure will exceed growth in revenue."

Wong said the measures would help the government set priorities by creating competition among departments.

The Financial Services and Treasury Bureau said the HK$100 million figure was put forward by the working group as an example.

Asked about the measure, a spokeswoman said government spending could still grow if it were adopted. "The government will have to prioritise and pay greater regard to long-term affordability and cost effectiveness," she said.