John Tsang Chun-wah must be feeling the heat as budget day draws near. Having been the financial secretary for nearly seven years, he knows perfectly well how to manage one of the world's most-envied economies. But the pressure arising from the budget this year is particularly strong in that it comes after the chief executive has rolled out a raft of measures to help the poor in his policy address. The multibillion-dollar package has not only left little leeway for Tsang to manoeuvre, it has also prompted the middle class to ask for its fair share from the government. The finance chief has to respond carefully lest relations with this social strata will be damaged further.
How Tsang rises to the challenge will continue to be the focus in the run-up to February 26, when he gives his seventh budget speech to the Legislative Council. Bombarded by a plethora of tax relief and spending proposals from different sectors in society, he has sought to dampen hopes of another giveaway budget. If recent media reports are any reference, the budget surplus in the current financial year is likely to be lower than last year's. Unlike the numerous one-off sweeteners in previous budgets, taxpayers can expect fewer goodies this year.
Managing public expectations is as challenging as managing public finances. As part of the strategy, it is understandable for the finance minister to talk down expectations at this stage. But politically, Tsang knows very well that he cannot walk away without providing some targeted initiatives for the middle class. He was accused of ignoring their needs when he delivered the first budget of the new government last year. As the public finances are in good shape and economic growth robust, the government is in a position to do more. It would hardly be acceptable if the middle class was left out again.
The middle class may not wield strong political influence like the rich and powerful; nor are they as vocal as the grass roots in clamouring for handouts and subsidies. But this silent majority is pivotal to social and political stability. No government can afford to lose their support.
Chief Executive Leung Chun-ying rightly said that what the middle class needed was a good living environment to achieve their goals. That means the government should redouble its efforts to improve education, health care and the environment. But Leung is only half right. The middle class is also weighed down by heavy tax bills, property mortgage payments and other spending priorities. They look to the government for measures that could help relieve their burden.