Hong Kong budget: talk of split between John Tsang and CY Leung likely to resurface

Talk of a split between Financial Secretary John Tsang Chun-wah and Chief Executive Leung Chun-ying over how to manage public finances is expected to surface again when the finance chief unveils his budget on February 25.

Calls for more spending on the city’s long-term development are expected after Tsang announces a fiscal surplus of at least HK$60 billion amid bolstered revenue from measures to cool the property market, particularly the doubling of stamp duty to 15 per cent for most transactions.

The talk emerged shortly after Leung unveiled initiatives in his policy address in January last year that would cost taxpayers more than HK$10 billion per year. The measures include the low-income working family allowance, which costs HK$3 billion per year.

A few days after the announcement of the costly initiatives, Tsang warned that fears that public spending was rising too fast were “not without reason”.

Tsang warned that recurrent spending could snowball if factors such as inflation and a growing number of beneficiaries were taken into account.

Leung said in an interview with the South China Morning Post in June 2012 that his administration would find social and economic investments to make better use of the government’s fiscal reserve, such as addressing the problem of the ageing population and promoting economic growth sectors.

A senior government official said the financial secretary had reservations about spending substantial amounts from the fiscal reserve on social and economic investments.