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Hong Kong Budget 2018-2019

Grass roots got more this year, Hong Kong finance chief says in defence of budget

Calls for cash handouts continue, but lawmakers deny these are aimed at winning votes ahead of the March 11 by-election

PUBLISHED : Friday, 02 March, 2018, 12:34pm
UPDATED : Friday, 02 March, 2018, 11:46pm

Lawmakers across the political divide ramped up demands on Friday for cash handouts two days after the budget was unveiled, with a member of the chief executive’s cabinet suggesting ways in which Financial Secretary Paul Chan Mo-po could be more generous.

Executive councillor Regina Ip Lau Suk-yee, head of the New People’s Party, called on the government to give HK$3,000 (US$380) each to permanent residents aged 18 and above who “pay no tax and have no properties”.

Around 1.1 million to 1.9 million residents would benefit, her party estimated.

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“Other pro-establishment parties are also very disappointed that the budget failed to benefit all citizens. They got complaints from the district level,” Ip said, noting that many low-income young people had not received any “goodies” from the basket of sweeteners that Chan laid out in his spending blueprint.

The pro-Beijing Federation of Trade Unions, which had lobbied Chan to share the wealth through cash handouts from a record surplus of HK$138 billion, said it was open to Ip’s proposal. But it suggested that giving out money to all might no longer be pragmatic in light of the other relief measures Chan had announced.

Instead, the federation said, the government should do more to help workers earning between HK$10,000 to HK$30,000 a month.

The Democratic Party urged Chan to hand out HK$6,000 in allowances to all citizens, but include tax breaks in the calculation.

In its latest proposal, the city’s largest pro-establishment party, the Democratic Alliance for the Betterment and Progress of Hong Kong, asked the government to waive one-month’s rent for public housing tenants, subsidise electricity bills for all, and cut loan repayments for post-secondary students.

For “N-nothing” households – those who earn too much to qualify for subsidised housing or welfare assistance but not enough to buy their own homes or benefit from tax breaks – the government should relax the income ceiling so they could apply for one-off living allowances, the party said.

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In his 2018/19 spending blueprint on Wednesday, Chan announced salary and profits tax rebates and increased old age and disability allowances for at least two million Hongkongers.

But he was accused of unevenly distributing sweeteners, with more than 80 per cent of the HK$50 billion (US$6.4 billion) spending package going to the middle class and less to those who neither paid taxes nor received allowances.

A survey found that only 26 per cent of respondents were satisfied with the budget – the lowest satisfaction rate in four years.

On a radio show on Friday, Chan said the city’s grass roots had received more benefits in this budget than in previous years. He cited initiatives such as an extra two months of Comprehensive Social Security Assistance, a one-off grant of HK$2,000 for students in need, and a fee waiver for candidates in next year’s Diploma of Secondary Education examination.

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“When this sum is compared to previous years, the grass roots will receive more in absolute [terms],” he said. “We cannot focus on the sharing of the surplus alone, we have to look at it in totality.”

Chan said the additional education resources for low-income families, alongside the sports and cultural promotions announced in his budget, would also benefit the grass roots.

To Democratic Party lawmaker Ted Hui Chi-fung, who phoned in during the programme to suggest handouts, Chan said there was no strong economic reason to dole out cash.

“We want to use the money wisely on a targeted basis,” he said.

In 2011, then financial chief John Tsang Chun-wah gave out HK$6,000 each to six million Hong Kong residents, but the move drew more criticisms than applause.

Polytechnic University political scientist Chung Kim-wah attributed this year’s call for handouts to a different environment, with many people feeling that the distribution of goodies was uneven despite a record surplus. There was also more mistrust towards the government, he said.

“Some people think the government is incapable of investing in the future anyway, so they think it is better to return the money to all,” Chung said.

He added that parties were also seeking political mileage from the cash calls to “follow public opinion ... and become populists” ahead of the March 11 by-election.

But when the suggestion was posed to her, Ip said she had supported the cash handouts in 2011 even when there were no polls looming.

Ip’s party colleague Judy Chan Ka-pui is up against pro-democracy candidate Au Nok-hin for a seat in the Hong Kong Island constituency, where voters have the highest education levels and incomes in the city.

Chinese University political scientist Dr Ma Ngok said it was hard to predict if the government would cave in to the demands for handouts.

“It’s a mess anyway,” Ma said. “The government has to consider that the cash handouts would set a precedent and the public would then expect them each time the surplus reaches a certain point.”

Ma said the demands could be because people did not understand the reason for some budget initiatives, such as a one-off exam fee waiver and paying for 10,000 free tickets for students to visit Ocean Park.

“Some may wonder if the new fiscal philosophy means no philosophy at all,” Ma said, adding that the election factor might not matter in the government’s final decision, as there was not much time left and parties would not be able to milk the situation to garner more votes.