A sensible budget that invests in Hong Kong’s future
Financial Secretary Paul Chan has wisely avoided the temptation to offer more handouts and has instead earmarked huge surplus for long-term benefit
For those who expected Paul Chan Mo-po to outdo his predecessor’s largesse, the financial secretary’s maiden budget may not at first glance appear impressive. Compared to those delivered by John Tsang Chun-wah, it may even seem equally conservative, if not more so. The new financial secretary now faces a tough job in selling his first and possibly last budget. Having been in his post for just five weeks, Chan found himself walking a tightrope. He had to address the ever-increasing aspirations of various sectors in society without compromising on the principles of financial prudence and sustainability in a volatile economic environment.
Even though the government’s finances again performed better than expected, there was every reason for Chan to remain prudent with public money.
With the budget surplus at HK$92.8 billion and fiscal reserves hitting a new high at HK$935.7 billion, the expectations on Chan to dish out more sweeteners and concessions was higher than ever. But the former accountant sensibly resisted the temptation of outdoing his predecessor. The tax rebates and other relief measures account for HK$35.1 billion of the surplus, compared to Tsang’s HK$38.8 billion in last year’s budget. Chan also committed to spending two-thirds of the surplus on improving care for the elderly and disabled, education and sports facilities.
Despite the administration having just four months remaining in its term, Chan has not lost sight of the need to invest in a better future. This includes setting aside HK$10 billion for innovation and technology development, along with the establishment of a committee to “re-industrialise” the sector. The tax policy unit that will be set up to strengthen the city’s competitiveness and support the development of new industries is also a positive step forward.
Chan understands that no budget is complete without defining fiscal policy. His three public finance objectives – to develop the economy and improve people’s livelihood; invest for the future; and make good use of resources to build a fair and just society – may seem mundane. But when they are conscientiously practised, the city and its people stand to benefit. But as Chan said, the goals may take more than one or two budgets, or even one or two terms of government, to achieve.
Like his predecessors, Chan faces the dilemma of meeting public demands while adhering to the principle of fiscal prudence laid down in the Basic Law. Yesterday’s speech marked the start of a long battle to win public and lawmakers’ approval for the budget. Whether this was Chan’s swansong budget or the first of many to come depends on how he rises to the challenge.