CY Leung unlikely to open purse strings in policy address

As the days count down to Chief Executive Leung Chun-ying's maiden policy address, all eyes will be on how he can use the platform to turn the corner and revive his flagging popularity.

He will not have to look hard for ideas - political parties and concern groups are putting all manner of options on the table, including controversial proposals such as the unions' long-cherished idea of setting standard working hours, and the prospect of a universal pension scheme.

But Leung has been widely tipped to focus on "safe options" - such as schemes to help solve the city's housing problems. And he has made it clear there will be no cash handouts or "sweeteners" in Wednesday's speech.

Some believe Leung is merely trying to manage the public's expectations. But the state of public accounts may offer other clues as to his reluctance to pledge new spending.

For the current financial year ending on March 31, the government is budgeting to spend HK$393.7 billion, equivalent to about 21.4 per cent of the city's gross domestic product. The budget for recurrent spending was up to HK$264.3 billion, with education spending accounting for the biggest share, some 22.6 per cent of the total. Education, social welfare and health spending make up more than 56 per cent of the total between them.

And Leung's government has already added a large, recurring piece of expenditure - the old-age living allowance, which will see up to 400,000 seniors over the age of 65 receive a monthly stipend of HK$2,200. The annual cost of the scheme is HK$6.2 billion, significantly increasing the proportion of the budget dedicated to social welfare.

But few noticed that the allowance would take up most of the "new money" - extra revenue due to growth in GDP - that is expected to become available in the coming financial year.