Anyone who stayed awake through Donald Tsang Yam-kuen's policy address yesterday would have noticed his speech was remarkable for one thing only: it was completely devoid of any new policy ideas to tackle the most pressing issue of the day, the painful recession that threatens Hong Kong's economy. Mr Tsang tried hard to be reassuring. He harped on about Tuesday's decision to guarantee all bank deposits, and promised to tighten regulation of investment sales following the minibonds scandal. But these hardly count as policies. The first is simply a fire-fighting measure, and in any case was compelled by the introduction of similar guarantees elsewhere. Hong Kong had to offer blanket deposit protection, or risk a destabilising outflow of cash as depositors closed their accounts and shifted them to jurisdictions offshore already providing 100 per cent guarantees. Meanwhile, the pledge of tougher financial services supervision, although a good thing in the long term, smacks unfortunately of shutting the stable door after the horse has gorged itself on hay and then decided to go off for a wander. Anyway, both were narrow measures aimed primarily at bolstering short-term confidence in the financial markets. Neither will do anything to alleviate the pain inflicted on ordinary people by the coming downturn in the real economy. This could have been a policy address announcing bold counter-cyclical initiatives to boost demand and relieve the rise in unemployment which will inevitably hit Hong Kong next year. And unemployment certainly will rise. As the first chart below shows, jobless numbers tripled during the Asian crisis 10 years ago and increased again with the Sars outbreak of 2003. This time will be the same, with the unemployment rate likely to exceed 5 per cent. But Mr Tsang ducked the issue, promising only that he will 'soon establish and chair a task force to continually monitor and assess the impact of the financial tsunami ... and provide timely evaluation of its impact on the local economy and our major industries.' This is disturbing stuff, which must surely have prompted those listeners still awake to wonder exactly what the chief executive has been doing for the last 14 months since the credit crisis first hit. He is, after all, a former financial secretary who is supposed to understand these matters. To boost demand and employment, Mr Tsang appears to be relying on the grandiose infrastructure projects announced last year, which the government claims will create 250,000 new jobs and add HK$100 billion a year to the economy. These are dubious figures. If they really did create 250,000 new jobs, it would be impressive. That's more than the official number of unemployed in the depths of the Asian crisis. In any case, many of those out of work will be bankers and real estate agents. Some will be willing to shift down-market, but it is hard to imagine them all working on Mr Tsang's building sites. The HK$100 billion number is even more unlikely. Hong Kong has so much infrastructure already that the marginal return from building even more roads and bridges is minimal. There is no multiplier effect. Unfortunately, Mr Tsang's ideas cupboard appears to be bare. If he had wanted to be really bold he could, for example, have killed two birds with one stone and announced a major project to completely electrify Hong Kong's public transport system. The spending would help stimulate the economy, and electrification would drastically improve our energy efficiency while massively reducing pollution at the roadside, which is where it does most damage. Alternatively, he could have relieved the pain of unemployment by announcing an extensive funding programme to help laid-off workers acquire the new skills they will need when the economy finally picks up again. With HK$500 billion in accumulated fiscal surpluses (see the second chart), Hong Kong could afford either measure despite the inevitable fall in government revenues during the coming downturn. Hong Kong has kept its powder dry against just such an eventuality. Now is the time to deploy some fiscal firepower. But for all the bold new initiatives Mr Tsang came up with yesterday, he might just as well have put on a dreadlock wig and sung Bobby McFerrin's Don't Worry, Be Happy. That at least would have kept people awake.