Delivering a budget with new thinking has proved to be a challenge for John Tsang Chun-wah. While the veteran finance chief managed to provide some short-term relief for the needy without losing sight of the need to invest for a better future, his first budget after his reappointment remains overly cautious. With a record HK$734 billion reserves in hand, he could have taken bolder steps to tackle the challenges ahead.
Tsang deserves credit for trying to tackle the immediate, medium- and long-term problems. Instead of just dishing out sweeteners as in the past, he has rightly put the spotlight on the impact of public finance arising from an ageing population. Apart from a modest HK$33 billion relief package to appease a demanding public, there is no shortage of initiatives to strengthen the economy and improve infrastructure and the quality of the workforce. It is good that he has moved beyond the usual giveaway tactics to focus on long-term needs.
But the finance chief remains woefully conservative in tackling outstanding problems. The injection of another HK$15 billion into the much-criticised Community Care Fund shows his lack of innovative thinking to alleviate poverty. He is also unlikely to win much applause from the middle class. Tsang said he heard their voices and had done enough to help, citing the one-off tax reduction and increase in tax allowance as examples. He might think he was being compassionate when describing himself as middle class in a press conference yesterday. But given his HK$368,220-a-month salary, taxpayers can be excused for feeling offended or even outraged.
To many, Tsang has yet to give a convincing case for cutting back on handouts and not investing more while the public coffers continue to swell. He sought to justify the need for sizeable reserves, referring to soaring public spending and the painful lessons from the two financial crises. Whether he can swing critics remains to be seen. But he has not shied away from ringing the alarm bell over the increasingly unsustainable economy and tax regime arising from an ageing population. Hopefully, it can instil a sense of urgency in the community to debate the necessary reforms.
Wrapping up his sixth budget speech, the finance chief quoted US president Theodore Roosevelt - "keep your eyes on the stars, and your feet on the ground". Tsang may think his blueprint is pragmatic. But with public finances at their best in recent years, there is room to aim higher and do more.