Use the budget to make sure our city has a bright economic future
Paul Chan Mo-po should resist the temptation to splash the cash in his first budget, and instead look to the long term
On Wednesday, Financial Secretary Paul Chan Mo-po will present the government’s budget to the Legislative Council. What will set it apart from previous ones is that it will be the maiden budget of a new finance minister in an outgoing administration. Blessed with huge fiscal reserves and a relatively stable economic backdrop, Chan is lucky to have room to manoeuvre. But with the possibility of a second term looming on the horizon, the unpopular minister may be tempted to appease the public with a giveaway budget instead of making use of the money to invest for a better future.
Watch: Why the Hong Kong government has so much money saved up
There is every reason for Chan to resist the temptation. It is true that his predecessor, John Tsang Chun-wah, enjoyed pretty high popularity. But during his nine-year stint, he was more known for dishing out tax rebates and waivers rather than for being economically farsighted and socially compassionate. Problems like sluggish economic growth, a widening wealth gap and an ageing population have not been addressed as vigorously as they should. Tsang’s laid-back image and conservative fiscal approach remain as baggage in his bid to be chief executive.
The budgetary process began as early as the first half of last year. Having been in the post for just a month, Chan cannot possibly invalidate everything and start all over again. That does not mean the blueprint will not have his input, though. The former accountant has led the development bureau over the past four years, but he has yet to expound his economic vision and public finance management philosophy. The public is looking forward to hearing more from him on Wednesday.
Given the financial year is likely to close with yet another better-than-expected surplus, the public will demand some sweeteners or relief measures. Last year, Tsang forecast that there would be a surplus of HK$11 billion. If estimates by major accounting firms are any reference, the final figure could swell to between HK$70 billion and HK$85 billion.
Chan stopped short of dropping any hints when writing his blog last week. But he pledged to spend public money wisely and to allow the public to enjoy genuine benefits. All measures should be financially sustainable, he said.
Whether there will be another term for Chan remains unclear at this stage. In or out, it is incumbent upon the financial secretary to steer the city to a brighter economic future while addressing the needs of society. Chan has to prove that he can take on the challenge.