In his budget speech in February last year, Financial Secretary John Tsang Chun-wah forecast the government would turn in a HK$3.4 billion deficit for the fiscal year that ends next month.
Monitor was doubtful. "Far from running a deficit next year, the government will once again turn in a handsome surplus," it predicted.
In an attempt to put a number on the likely size of that surplus, Monitor looked back at how Tsang had underestimated the government's final balance in each of his four preceding budgets. On past form, the column concluded, instead of ending up in the red come March 2013, Tsang would actually find himself in the black to the tune of HK$60 billion.
Sure enough, last week the government said its balance for the nine months to December was HK$40 billion in surplus.
Considering that for the past few years the government has typically run a consolidated surplus of about HK$15 billion in the January-March quarter, or about 20 per cent of its full-year surplus, on March 31, Tsang is indeed likely to end up with a budget in the black by somewhere between HK$50 billion and HK$60 billion (see the first chart).
Tsang's woeful inability to make accurate forecasts for his own budget, repeatedly predicting deficits when he actually generates fat surpluses, has cost Hong Kong heavily. His excessive conservatism reduces the government to handing out short-term budget giveaways on a one-off basis, while preventing it from making more effective long-term fiscal plans, for example by cutting the rate of profits tax to boost business activity and private investment.
The reason for this failure is straightforward. In any year, the government generates a sizeable chunk of its income from land revenues, either by selling sites for development at auction, or by collecting hefty fees from developers who want to change the terms on leases they hold, for example so that they can build flats on former agricultural land.
The trouble is that the way the government has structured the property market makes this income all but impossible to forecast accurately.
Since 1999 the government has no longer conducted regular land auctions. Now it waits for developers to trigger sales through its application list or tender system.
But for the most part developers do not initiate sales, preferring instead to watch the shortage of available building plots push up the value of their land banks.
And when developers do trigger sales, or pay to alter the land-use terms of sites they hold, the money hits the government's coffers in a lump sum, rather than as a steady income stream.
As a result, land revenues vary enormously; anywhere between HK$17 billion and HK$85 billion - from 5 to 20 per cent of total government revenue - since Tsang has been in the financial secretary's job (see the second chart).
And when the money comes in, the government immediately socks it away in its Capital Reserve Works Fund, decreeing it can only be spent on expensive and largely unnecessary infrastructure projects.
It is high time the government overhauls this outdated and dysfunctional system.
The Lands Department should resume regular auctions. And instead of pocketing up-front lump sums, it should demand the bulk of its payment in the form of market rents on the land it sells, or that it allows developers to convert to residential use.
This would not only erode the power of Hong Kong's property cartel, making housing in the city more affordable.
It would also replace the government's current intermittent land revenues with a regular and predictable income stream, paid into its general revenue account.
And that would make Tsang's job of budget forecasting far easier, finally allowing for some long-term fiscal planning.