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Hong Kong economy

No cash handout likely from next budget as Hong Kong government faces surplus one-third of this year’s, says executive councillor

  • Cabinet member Wong Kwok-kin says gloomy economic outlook means less money to go around but still expects one-off relief measures in February’s budget
  • Pro-democracy lawmakers urge government not to use drop in revenue as a reason to make health care cuts
PUBLISHED : Saturday, 15 December, 2018, 2:19pm
UPDATED : Saturday, 15 December, 2018, 11:05pm

A generous cash handout could be missing from the Hong Kong government’s upcoming budget plan, as the government’s surplus is expected to drop to about a third of the HK$138 billion (US$17.7 billion) figure last year, an executive councillor revealed on Saturday.

The chief executive’s cabinet member, Wong Kwok-kin, who is also a lawmaker with the pro-Beijing Federation of Trade Unions, made the disclosure on Commercial Radio on Saturday. This follows his meeting with Financial Secretary Paul Chan Mo-po late last month.

Chan is set to reveal the new budget plan at the Legislative Council on February 27.

Wong said his party had not called for a cash handout due to the gloomy economic outlook, when he was asked on the programme to give his views on the coming budget.

“From what I gather, this year’s government revenue will be significantly lower … about one third of last year’s,” Wong said.

“I don’t think it is possible to give a big cash handout.”

The lack of a cash handout from Chan’s original budget plan last year sparked an outcry, when lawmakers from both sides of the political divide criticised the finance chief for failing to share the HK$138 billion surplus with Hongkongers.

Finance minister hints at budget relief measures for Hongkongers

A cash handout of up to HK$4,000 for 2.8 million people was eventually announced as a remedy, but the scheme has not yet been implemented.

Chan had also predicted a HK$46.6 billion surplus for this financial year in his previous budget plan.

But Wong expected that the forthcoming budget plan would still offer one-off relief measures for low-income households, such as subsidies for electricity, health care services and public housing rents.

Appearing on the same programme, pro-democracy lawmaker Joseph Lee Kok-long said the government should not cut spending on health care due to a reduced surplus.

“[It should not only invest] in the Hospital Authority, but also in primary health care,” Lee said.

He added it was important to maintain a supply of manpower in the sector, or risk lengthening waiting times in public hospitals.

Talking to the Post separately, Democratic Party chairman Wu Chi-wai said the government will have to maintain people’s living standards as the economy contracts.

Asked if the lack of a cash handout might draw criticism, Wu said: “If the government’s income drop this year, I think people will have a different view (of cash handouts).”

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He also wondered if the government should continue to invest heavily in infrastructure projects.

Manpower in the construction industry is already strained by current housing development projects, Wu said.

In her latest policy address release in October, Chief Executive Carrie Lam Cheng Yuet-ngor announced an ambitious plan to create 1,700 hectares of land by reclamation off Lantau Island.

The plan aims to house 1.1 million, while costing upwards of HK$500 billion and taking decades to realise.

Chinese University economist Terence Chong Tai-leung agreed that the surplus is likely to fall this year.

He said the government’s tax income had shrunk, after the budget plan last year introduced a 75 per cent relief in profits tax, capping it at HK$30,000.

The drop in volume of trade in stocks is also expected to reduce income from stamp duty.

Poorer land sales are also expected to contribute to a lower surplus, he added.

In October, the government pulled an expensive plot on The Peak from sale, as tenders could not match the HK$48.5 billion expected price.