Update | It’s time to swallow some bitter pills, John Tsang warns in budget speech
One-off sweeteners cut 40pc as finance chief prepares for greying society and HK$12b surplus
Financial chief John Tsang Chun-wah tightened the purse strings yesterday and pledged to consider higher water tariffs and a "future fund" as he set out a worst-case scenario for public finances: a structural deficit in seven years.
Tsang estimated a budget surplus of just HK$12 billion to justify trimming one-off relief measures 40 per cent, from HK$33 billion to HK$20 billion, saying he was preparing for an ageing population.
I believe the present generation recognises the importance of fiscal prudence: that is, to avoid making today's spending a burden for the next generation
Independent analysts have estimated a surplus of up to HK$40 billion for 2013-2014.
"I believe the present generation recognises the importance of fiscal prudence: that is, to avoid making today's spending a burden for the next generation," he said. But, he added: "We should neither take the problem lightly nor over-worry. Our public finances are still in good shape."
Citing dire warnings from economists advising him on long-term policy, Tsang said: "[If] we take effective actions, we can prevent the projected results from surfacing and avoid subjecting future generations to irreversible fiscal plight."
Tsang scrapped a HK$1,800 electricity subsidy in place since 2008, cut the rent-free period for public-housing tenants from two months to one and offered a property rate waiver for two quarters, rather than the full year.
He said the abolition of the sweeteners would contribute to a 6 per cent cut in spending and a predicted surplus of HK$9.1 billion in 2014-15.