Property tycoon Ronnie Chan Chi-chung stepped up his war of words with John Tsang Chun-wah yesterday, claiming the financial secretary's dishing out of sweeteners worth nearly HK$200 billion in recent years was "foolish".
SCMP, July 19
Much as I find it curious that a main board director and audit committee member of the disastrously failed Enron Corporation should so publicly offer advice on financial prudence, I have to agree with Ronnie Chan in this case.
I think he was perhaps a little assertive in calling it foolish. Ill-advised might be a better way of putting things. Far be it from me to accuse our financial secretary of taking any decision except on advice.
But, yes, this crude practice of keeping people happy by scattering largesse dates back to the cynical ways of ancient Rome or, in more modern times, to the populist follies of an Eva Peron. Surely we have more refined ways of conducting public policy now.
Perhaps I should not be so certain, however, under a man whose ideas of public policy were acquired in Kennedy family election campaigns in the US. Bread and circuses was also their style, well, circuses anyway.
My point here is a simple one. If a government wants its people to have more money in their hands, its best course of action is not to take their money from them in the first place. Public expenditure should be restrained to necessary expenditure that can only be made through the public purse.
I recognise the counter-argument - Tsang's giveaways returned money to people in low-income brackets, who needed it and who would not otherwise have had it. Fiscal revenues were better than expected and why not use the surplus to alleviate income disparity in that case?
I don't buy it. Firstly, it does not seem to have worked. All the studies suggest that income disparity has steadily widened in recent years despite the financial secretary's efforts.
More to the point, I do not believe it ever works. The bottom stones of the pyramid always carry the greatest weight. It is lower-income working people who always bear the burden of public expenditure. The rich only adjust their investment yield expectations or move away. Give the poor a big handout and their employers say, "Well, that's so much less that we have to pay them."
You can't get around it. If government wants to relieve the burden on the poor then it should pay closer attention to its own expenditures. The benefits of this will inevitably trickle down to the poor just as the burdens of heavier government expenditure always do.
And it would be disingenuous of Tsang to pretend that all his handouts come in the form of social benefits. More by far has gone to hugely expensive and pointless infrastructure projects such as high-speed rail to the border, the Macau bridge, and highways to serve a declining port. These will certainly be a burden to the poor and dribbling coins into their hands will not make up for it.
If Tsang doesn't really need the money, he should stop taking it away from us just to give it back again.
And he doesn't need it. We are still running a fiscal surplus at an annual rate HK$80 billion and, as the chart shows, we have now amassed free fiscal savings equivalent of HK$220,000 for every man, woman and child of our population. It's time to change course.
But I still think Ronnie Chan an unlikely champion of the cause. How might Enron's dismayed shareholders have thanked you, Sir, if you had devoted as much attention to their company's accounts as you now do to Hong Kong's?