In announcing the HK$16.8 billion relief package last week, Financial Secretary John Tsang Chun-wah reminded us that the relief measures introduced in the past two budgets - plus a one-off measure announced by the chief executive last July - cost the public purse HK$87.6 billion. That represents 5.2 per cent of gross domestic product, compared to the international average of 2.3 per cent that other governments have spent to prop up their economies and help those affected by the financial crisis. Yet, the question is not about the magnitude of the sum, but whether the money will be spent to the greatest effect and in an equitable manner.
There is no dispute that the government should lend the business sector a bigger helping hand. The exemption of business registration fees and the waiving of licence fees for selected sectors, such as tourism, catering and transport, are certainly timely.
Likewise, the government is right to increase its support for the SME Loan Guarantee Scheme, both in raising the government guarantee from 70 per cent to 80 per cent, and in doubling the amount each small and medium-sized enterprise can borrow, from HK$6 million to HK$12 million.
This should ease the credit squeeze that these enterprises are facing. Although some SME organisations still feel that the administration could play a more active role in persuading the banks to meet their borrowing needs, the government has probably reached the limit of its direct support without interfering with normal market operations.
Regarding the measures for individuals, most are justified on their own merits. For example, the HK$1,000 subsidy for students of needy families and the two-year deferment of tertiary student loan payments aim to provide relief where it is needed.
Interestingly, it is the extra month's allowance for Comprehensive Social Security Scheme recipients that attracted adverse public reaction from both middle- and low-income earners. Middle-income earners question whether it is necessary to spend the money, while low-wage workers say the move is unfair to them.
This relief measure is not new. It was first introduced in Mr Tsang's 2008/2009 budget, in the context of sharing Hong Kong's economic prosperity with the people. Then, in July last year, Chief Executive Donald Tsang Yam-kuen gave CSSA recipients another month's allowance in his HK$11 billion package under a different tag - to alleviate the hardship brought about by high inflation. But, doing it a third time leads people to question the merits of the case.