Sound budget should give Hong Kong the boost it has been looking for
Paul Chan resists the short-term gain of cash handouts for all and invests in the future of a modern caring society, but still finds something for everyone
Financial Secretary Paul Chan Mo-po rightly set out at the very beginning of his budget speech that no abundance of resources would ever enable the government to satisfy the needs of everyone. Fortunately, the minister holds the key to the city’s coffers that have been overflowing in recent years. And it seems that he is making reasonably good use of the cash to put Hong Kong on a stronger footing for future challenges, while sharing the fruit of the economic success with the people.
Having been in the job for a year, Chan appears to have a better grasp of what Hong Kong needs in the short and longer terms. His two-hour address at the Legislative Council yesterday was rich in substance, focusing on diversifying the economy, investing for the future as well as caring and sharing.
They are what is expected of a new government that prides itself as daring and caring. But given the Legislative Council by-elections are less than two weeks away, the criticisms from political parties are to be expected.
Like his predecessor John Tsang Chun-wah, Chan has come under fire for his wrong budget surplus estimates. But it is probably a mistake that Chan and his global counterparts would love to see.
After all, the record surplus – a staggering HK$138 billion – has given the new government more leeway to manoeuvre.
As promised by Chief Executive Carrie Lam Cheng Yuet-ngor earlier, the budget had a few surprises, underpinned by her new style of governance and fiscal philosophy. From investing in innovation and technology to strengthening financial services, from boosting tourism to nurturing talents, from expanding health care services and support for ethnic minorities to promoting arts, culture and sports, Chan managed to find something for almost every sector – yet without losing sight of the fiscal discipline stipulated in the Basic Law.
Investing for future
In a much-needed innovation and technology boost, at least HK$50 billion has been earmarked for initiatives that focus on four areas, namely biotechnology, artificial intelligence, smart city and financial technologies. The lion’s share goes to the development of the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop.
A financial academy, coupled with programmes to attract overseas enterprises to issue bonds in Hong Kong and to develop green bond issuance for public works projects, is a positive step to develop new areas of growth. To complement the country’s “Belt and Road Initiative” and Greater Bay Area development, the Trade Development Council has been given HK$250 million to help local firms tap into opportunities.
It is good that Chan is also well aware of the need to invest in talents and to improve health care. The extra funding for the Hospital Authority and other medical services and support are what our ageing society badly needs. The education initiatives, including enhancing teachers’ training and the matching grants to augment fundraising by post-secondary institutions, are also good measures.
Caring and Sharing
Chan was understandably under pressure to follow in his predecessor’s footsteps and to table a giveaway budget. But he has, to his credit, resisted the clamour for handouts for all, which would only instil a short lived feel-good sentiment. Instead, the HK$2,000 subsidy for students in need, along with salaries and profits tax adjustments and rebates, are more sensible responses.
To avoid being seen as biased towards the middle class, he also asked the Community Care Fund to explore ways to help those who are neither taxpayers, public housing tenants nor welfare recipients.
The largesse is only made possible because of the prevailing robust finances. With no less than HK$1 trillion left in the reserves, there is still much more the government can do. But officials also have to make sure the money earmarked for different purposes will be used effectively.
Unlike in the past when public expenditure stayed within one-fifth of the GDP, the percentage is to slightly surpass 21 per cent in coming years.
The last thing taxpayers want is to create an array of spending initiatives just to make the surplus figure less jaw-dropping. There was no shortage of examples of funding schemes challenged by the Audit Commission in the past.
Those who expected the government to be just as innovative in tackling the housing conundrum are entitled to feel disappointed, though.
Yesterday, Chan said it was not yet time for introducing new housing and land supply measures. We hope he is not just still counting on a steady supply in the near and medium future to stabilise the market.
The lack of initiatives in reining runaway property prices shows the government cannot do much on this front. The pressure will only surge if it cannot deliver.
If the finance chief was seen as conservative by opting for a steady-as-it-goes approach in his first budget last year, he was no doubt more ambitious and confident this time. Unlike the relationship between his predecessor and former chief executive Leung Chun-ying, Chan and Lam are evidently on the same page. With a full five-year term ahead of him, it is to be hoped that he can achieve more.
Thanks to the national and global economies, the outlook for Hong Kong is the best in years. As Chan said, the wind beneath our wings will bear the city far and high if we tap the opportunities. Now that a sound blueprint has been tabled, hopefully the momentum for Hong Kong to take off again is back.