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Paul Chan’s big-spending budget is right for Hong Kong – this is our rainy day
- The most far-reaching budget in decades includes generous cash handouts to ordinary Hongkongers, vital to keep the money circulating
- Hong Kong’s recession is an early indicator of what’s to come for other economies in these extraordinary times
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Hong Kong’s Financial Secretary Paul Chan Mo-po has exceeded giveaway expectations in his budget – all the more impressive as it is the most proactive move to come out of the government in the past decade. The icing on the cake is that the handouts reach the lower levels of society – something government budgets have dodged for decades.
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Perhaps he has been listening to the old investment manager’s mantra, which is, “if you are going to panic, then panic early”. For it does seem the right thing to do. Hong Kong is leading the pack, in that we started our recession last year when the government’s lack of response to the people’s protest marches caused an economic slump.
It has given the financial secretary some time to think about what to do. We are not in normal times; we are staring recession in the face, and this is the time to act. The question is whether he went far enough, given Hong Kong’s enormous fiscal resources of HK$1.1 trillion (US$130 billion)?
There will be many who say that we are giving away too much. I would remind them that the projected HK$139 billion deficit is similar to the surplus from 2018 alone. It is a drop in the ocean. This is the rainy day that we have been saving for. We are one of the very few territories in the world with a massive surplus – no net government debt, no interest bills to service.
The government has previously listened only to the fat cats; the kind of people officials would have round at their dinner parties. Property, hotel and tourism billionaires cried crocodile tears after the protests. Subsidies for the rich have typically been a way of softening a recession.
This is why the giveaway of HK$10,000 to each permanent resident in Hong Kong is so important. It puts money straight into the hands of those who are going to spend it.
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