Paul Chan

We must invest in Hong Kong’s future, not dish out sweeteners, finance chief says

Paul Chan Mo-po reveals a bumper surplus expected in coming budget but says onus is on officials to think long term

PUBLISHED : Saturday, 13 January, 2018, 5:41pm
UPDATED : Saturday, 13 January, 2018, 11:28pm

A huge surplus expected in Hong Kong’s budget will be invested in the long-term development of the city, with priority given to elderly care, medical services, research and creative industries, the financial secretary revealed on Saturday.

Paul Chan Mo-po also ruled out introducing a sales tax to widen the city’s narrow revenue base, saying it would be inappropriate in the current financial and political climate.

He promised to consider offering larger tax breaks, issuing more inflation-indexed government iBonds and dishing out cash handouts to all residents again, but said the government had a responsibility to invest in the city’s future rather than one-off sweeteners.

“The government does not want to give away sweeteners just to win applause,” Chan said at an RTHK forum in Kowloon Tong.

“The surplus will allow us to spend and allocate resources to improve people’s livelihoods.”

The forum was attended by about 100 people selected by the University of Hong Kong’s polling centre as a way to give ordinary Hongkongers an opportunity to challenge the finance chief and air their views.

Chan said the government would see a “considerably high” surplus this year due to increased revenues from land sold to developers to build flats. Land sales this year will provide space for 24,000 new properties – a 35 per cent rise on the 18,000 last year. Revenue was also boosted by stamp duty from a booming property market.

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There was a HK$11.1 billion surplus last year, which, added to the forecast surplus this year, would allow the government “to do something”, Chan said.

Spending priorities would be livelihood issues such as elderly care services and poverty alleviation, he said, while investments would be made in the future of the health care system to ease the burden brought by the city’s ageing population.

“We must stay alert to this challenge. We need to develop a good economy by encouraging creativity, research and development,” Chan said. “We also need to prepare our medical and elderly services to tackle the problem.”

Other than pouring resources into public hospitals to increase the number of beds and facilities, he said it would be important to increase the number of doctors and improve training.

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The government would also continue to boost spending on research and development, with an aim of raising it from 0.75 per cent of gross domestic product to 1.5 per cent, he said.

When asked whether the government would broaden its tax base to support this long-term expenditure, Chan said a sales tax was not on the cards but admitted relying on land sales revenue was unstable. A sales tax would be politically difficult in the current climate, he said.

“This government term has begun rather peacefully and we need to focus on doing something practical and minimising debate,” he said.

Chan said he was very upset about “super high” property prices, but added that it might not be appropriate for the government to help people enter the market now as the risks were also high.

“We might end up doing a bad thing by helping them, passing these people a sizzling hot bar,” he said.

Cooling measures introduced to stabilise the market were here to stay, he warned.

Suggestions for Chan from attendees at the forum included that the government improve public hospital services, support students from low-income families and provide transport support for the poor, all of which Chan promised he would look into.