Hong Kong Budget 2018-2019

Does Hong Kong have what it takes to attract talented researchers and can it close the wealth gap?

While the HK$2,000 grant to students from low-income families may not seem like a lot of money, it is a crucial step towards equality in the city

PUBLISHED : Wednesday, 28 February, 2018, 9:08pm
UPDATED : Wednesday, 28 February, 2018, 11:55pm

Hong Kong is a very wealthy city, and yet suffers from a high degree of wealth inequality. The ironic thing is the Hong Kong government has accumulated more than sufficient fiscal reserves which clearly indicate that it is either too conservative or too stingy in distributing public funds to the needy.

As the community grows impatient with the government’s inability to use fiscal reserves to alleviate wealth inequality and considerably improve livelihood, the demand for more handouts from the current budget grows stronger every day.

Oxfam scandal highlights the real sickness in society: worsening wealth inequality 

While John Tsang Chun-wah, the former financial secretary, was partly blamed for ever-mounting fiscal reserves, the fact of the matter is that our government has benefited from more than expected land premium sand stamp duties due to a gigantic housing bubble that has been growing for the past five to six years. As a result, these windfalls substantially inflate the true amount of fiscal reserves.

Even if we do not account for the huge windfalls embedded in the fiscal reserves, the current Financial Secretary Paul Chan Mo-po still has plenty of money to carry out timely measures to alleviate both short- and long-term problems.

Of course, people do not expect that one budget can solve all the problems. However, people have already been waiting for a long time for the new budget to address some pressing issues, such as wealth inequality, skyrocketing housing prices, education, ageing population and so on. From this perspective, Chief Executive Carrie Lam Yuet-ngor’s government has big shoes to fill.

Hong Kong’s property cartel is pushing wealth inequality to the brink

Chan addressed the Legislative Council in his annual budget speech on Wednesday. One of the main themes of this budget focuses on “investing for the future”, which shows a voluminous amount of money will be used to invest in research and development. It appears to many people that at the present stage Hong Kong does not produce enough local researchers to make this policy successful. Undoubtedly, the shortage of home-grown researchers can be, to some extent, alleviated by setting up an appropriate scheme to attract foreign experts in the area. However, we must ask ourselves whether Hong Kong has the right conditions to attract such talent.

It appears that many people, including myself, do not believe many talented scientists would consider Hong Kong as an ideal place to conduct top-notch research, let alone further their career here.

Chan proposed many policies in the budget. Among them, I would like to point out one particular aspect that deserves readers’ attention. In this budget, the government will offer a one-off grant of HK$2,000 (US$260) to students from poor families. While HK$2,000 may not sound a lot to many well-off families, this grant may make a difference to relatively low-income families, in particular to those families who live under the poverty line.

Hong Kong people can find solutions for the mess they created in housing and wealth gap

Recently, a few research studies have found that part of the problem of wealth inequality is related to inequality of opportunity, namely those students from low-income families tend to have significantly lower success rates in enrolling in universities than those of high-income families. Interestingly, a local researcher has also produced similar findings for Hong Kong.

From the available results in this area, it is imperative that our government should give more cash transfers to poor students to increase their chances of getting into universities. By doing so, this may eventually lower the degree of the inequality of both wealth and opportunity.

Andy Kwan is director at the think tank, ACE Centre for Business and Economic Research