As most mainstream economists would tell you, there is nothing wrong with an occasional fiscal deficit. It’s probably unavoidable. That Hong Kong had more than a decade of surpluses – before the double whammy of last year’s social unrest and this year’s pandemic – puts us in an unusual fiscal situation. But let’s be cautious about sounding deficit warnings at the drop of a hat. What should concern people is when you have a structural deficit that is tough to get rid of. So far, there is no evidence of that. Unfortunately, it’s a favourite tactic of Hong Kong’s financial secretaries to use temporary drops in current government revenue and the reserves as signs of a structural deficit to come. It’s the fiscal version of crying wolf. This was the favourite trick of former finance chief John Tsang Chun-wah. His successor, Paul Chan Mo-po, was an improvement, being more willing to commit to social services and one-off stimulus measures. Some of those added-on welfare benefits do incur recurrent spending. So now Chan has warned that recurrent spending has soared by 25 per cent over the past three financial years to hit an expected HK$486.6 billion. To put that in perspective, that’s less than each of the past three years of government revenue. The current year is projected to take in HK$572.5 billion, just 3 per cent less than the previous year. A few bloom years can easily take care of the budget hole, as the economy is expected to recover, from both China’s economic uptake and an end to the pandemic. As Chan himself admits, the HK$120 billion he spent on relief measures was mostly a one-off, likewise the three rounds of additional measures. So what’s the point of warning about deficits and how fiscal responsibility remains a top priority? If the government is so bent on preserving its reserves, you have to wonder why it is so dead set on going ahead with the Lantau Tomorrow Vision , the massive reclamation project that will cost anywhere from half a trillion to a trillion Hong Kong dollars, equivalent to half or the whole of the current fiscal reserves. I expect in the coming years, fiscal responsibility will mean something rather different. It’s not that we have to keep a surplus, but to save on everything, including entitlement programmes, to spend on the Lantau project. That is the “top priority” now.