Chief Executive Leung Chun-ying will find it more difficult to govern in the face of a middle-class backlash over the city's rising spending on welfare, a former top government adviser says.
Professor Lau Siu-kai, former head of the Central Policy Unit, a key official think tank, said the billions of dollars promised to the poor in the policy address had sparked concerns about "creeping welfarism" and the sustainability of public finances among middle-class Hongkongers, who shoulder the lion's share of the city's tax burden.
He warned that Leung's spending plans may be sowing the seeds of conflict between the middle class and low-income residents.
"People of middle-class background generally feel they get little benefit from the policy address," Lau said. "The anxiety and grievance among the middle class will intensify the conflict between them and low-income groups."
Lau, now a professor emeritus of sociology at Chinese University, said previous studies conducted by the university found the middle class were generally in favour of social justice but had reservations about big rises in welfare spending.
He said the poverty alleviation measures announced in the policy address, such as the HK$3 billion-per-year Low-Income Working Family Allowance, would condition underprivileged groups to expect more government handouts.
Depending on the hours they work, families whose income falls below the poverty line - drawn at 50 per cent of median household income (HK$22,500) - will receive either HK$600 or HK$1,000 a month, plus HK$400 or HK$800 a month for each dependent child.
Lau attributed the luke-warm response to Leung's second policy address to middle-class resistance. Polls conducted by the University of Hong Kong's public opinion programme on January 16 and 17 found Hongkongers gave the blueprint an average mark of 48.1 out of 100, six points lower than the result of an instant survey carried out directly after the address.
Advisers to Financial Secretary John Tsang Chun-wah estimate that government expenditure might outstrip revenue in 10 years. Tsang is expected to announce in his budget speech this month that the city's fiscal reserves of HK$734 billion will run dry in about 20 years if nothing is done to ease the financial burden of its ageing population.
"The government is facing more difficulty in its governance in the wake of shrinking fiscal resources and the escalating political tension arising from the debate on political reform," Lau said.
He echoed Executive Council convenor Lam Woon-kwong's views that public sweeteners are not a recipe for boosting the government's popularity.
"The experience of the past few years has indicated a diminishing political return from doling out sweeteners. The government must come up with sensible policies to facilitate economic development and boost housing supply," Lau said.
But Lau noted the government was facing a no-win situation as it drafted the budget. "It would not draw much applause from the middle class if it offered [them] sweeteners in the budget. But it would certainly spark an outcry from the middle class if it scrapped or substantially scaled down sweeteners."