John Tsang's troubling lack of economic vision for Hong Kong

Financial Secretary John Tsang Chun-wah deserves full credit as a tried-and-true custodian of public finance. Since assuming office in 2007, thanks to luck or his tough control of public spending, he has managed to chalk up a surplus every year, often far exceeding his own predictions.

Year after year, he has been saddled with the enviable task of offloading the government's embarrassingly large surpluses by handing the people one-off tax rebates or double welfare payments - the so-called "sweeteners". So much so that this time of the year, guessing the extent of the sweeteners in the annual budget has become the most popular game in town.

Good times are unlikely to last forever, however. With that in mind, in his latest budget, Tsang tried to wean people off the sweeteners and warned of a "structural budget deficit" within 15 years as economic growth slows and public expenditure in education, social welfare and health care is expected to soar. A structural deficit could occur as early as seven years from now, Tsang cautioned, if services were to be enhanced at about 3 per cent in these three areas.

A dyed-in-the-wool bureaucrat schooled in fiscal prudence, Tsang cannot be faulted for sounding the alarm about possible financial armageddon. It may be an inconvenient truth to politicians bent on currying favour with a city addicted to short-term palliatives, but it's a necessary duty of the highest-ranking public official charged with safeguarding public coffers. Every year, it is the same tiresome story of the people, politicians or possibly even the chief executive pushing the financial secretary to spend and Tsang resisting.

This annual drama, however, masks some more fundamental inadequacies of Tsang's stewardship of the economy. After all, the overall economic tsar of the city has a duty not only to prudently manage public finance, but also to grow the economy, to intervene in the markets where necessary and to use the visible hand of the government to restructure, redirect and redistribute resources to achieve greater social justice and harmony.

Tsang falls short in this latter task. In fairness to him, it may simply be too big a task for a public official who has had no other training than balancing the books, and no nobler goal than handing over hefty savings to future generations.

Since 1997, successive financial secretaries have fallen short in two specific areas. First, Tsang has failed to spell out an economic policy positioning Hong Kong for growth in the 21st century. Quite rightly, Tsang kicked off his budget by talking about the importance of enhancing Hong Kong's competitiveness and responded to long-standing appeals from the industry for greater support for research and development. More support is to be given to schools to groom talent in information technology.