HK$10 billion discrepancy over welfare bill after policy address

Despite repeated reassurances that the generous welfare package rolled out in Wednesday's policy address is "financially sustainable", top officials appear unsure of what the total bill will be.

Confusion lingered yesterday over whether the splurge on allowances and welfare funding would cost an extra HK$10 billion or HK$20 billion a year.

The HK$20 billion figure was quoted on Wednesday by Chief Executive Leung Chun-ying and Financial Secretary John Tsang Chun-wah.

But yesterday Chief Secretary Carrie Lam Cheng Yuet-ngor said the estimate should be slashed in half.

Secretary for Financial Services and the Treasury Professor Chan Ka-keung rejected neither version, saying it depended on how the calculation was made.

"If you draw a timeline [in a financial year] when doing the calculation, a very rough estimate stands at around HK$20 billion," Chan said. "But if you only pay attention to the new policies, regardless of which financial year their implementation falls into, it would cost around HK$10 billion."

The batch of new policies includes a cash allowance scheme for low-income working families costing HK$3 billion per year and an extension of the HK$2 public transport fare concession for elderly people to cover green minibuses, which would cost HK$174 million annually.

The HK$20 billion figure was introduced to the media on Wednesday by the finance minister immediately after the chief executive had finished his speech.

"We have yet to have a comprehensive account [of the total increase in recurrent expenditure]," Tsang said.

"Simply speaking, this year's expenditure exceeds that of the previous year by around HK$20 billion."

Leung did not deny the figure in the subsequent press conference and media briefing on Wednesday.

But a person familiar with the address document later told the South China Morning Post that the HK$20 billion included HK$8.3 billion to fund the Old Age Living Allowance, carried forward from last year's policy address, and the effect of inflation.

Yesterday Lam said the extra recurrent expenditure would add up to about HK$10 billion.

"But the final figure can only be confirmed with the announcement of the budget."

On his relationship with Tsang, who will present the budget next month, Leung said they were on the same track.

"We're exactly on the same page, driving the same direction. And the financial secretary and everyone in Hong Kong knows that we had cash in government coffers, so much so that we handed out big payouts in the past. And so there's no difference in our approach and philosophy in handling public finance."

Asked whether he expected Tsang to remain in office until the end of his term in 2017, Leung answered: "Yes, I do."

The chief executive added that Tsang had appointed a working group to look at Hong Kong's long-term public "financial health", and would share the group's projection soon.