The territory's well-tried formula for success would be eroded if the Government constantly offered financial subsidies and favourable terms at the expense of taxpayers, the Financial Secretary warned yesterday.
Defending the dearth of new spending to stimulate the economy in the Policy Address, Donald Tsang Yam-kuen said it was more important for the Government to be prudent in handling public wealth during bad times.
He said the administration should not ignore deficits and the long-term interests of Hong Kong by acceding to demands for more government subsidies and by 'handing out gifts' at regular intervals.
'By doing so, we will gradually depart from the provisions about keeping expenditure within our means in the Basic Law. Investors will doubt whether we have deviated from our proven effective fiscal management principles.
'More importantly, it will change the formula behind our past success,' Mr Tsang said. He was speaking in reply to legislators during the traditional Motion of Thanks debate on Tung Chee-hwa's Policy Address.
He said the administration shared the public aspiration for quick fixes.
'Let's not talk about whether the Government has the skills of a magician and can always play magic by bringing out one rabbit after another from our pocket.' As a principled government, the administration must minimise spending in face of high deficits and the tight financial situation, Mr Tsang said. A $36.5 billion deficit has been forecast for this year.