Housing policy has always been high on the agenda of Hong Kong’s leader Leung Chun-ying. In his newly released Long Term Housing Strategy, the chief executive raised the total housing supply target for the next ten years to 480,000 units, with 10,000 more units under the Home Ownership Scheme (HOS).
Anthony Cheung Bing-leung, the Secretary for Transport and Housing, said in an article published in this newspaper Wednesday that the administration’s goal is to provide appropriate and affordable flats that meet public needs. Inevitably, the bill for this massive undertaking has to come from public money.
Sources say Financial Secretary John Tsang has estimated that the government needs to earmark around HK$20 billion annually in order to deliver that promise, and it will cost around HK$100 billion totally over the next few years.
Compared to other long term commitments like the Old Age living Allowance, which only costs 6 billion a year, the challenge posed by the increase in public housing supply must not be underestimated. Tsang will shortly announce his new funding arrangement for the Housing Authority, which will come into effect in this year’s budget proposal.
It is believed that the government would rather earmark the funds on a year-by-year basis rather than make a lump-sum payment given the huge size of the project. dollars. However, the government is yet to come up with the exact amount of money it has to earmark because it is still open to question whether the Housing Authority can generate enough revenue by selling HOS flats and whether the rental rates of Public Rental Housing (PRH) flats will rise in the short run.
As far as the financial secretary himself is concerned, he always stands closely by the sacred rules of “spending within one’s means” and “fiscal discipline”. And the Working Group on Long-Term Fiscal Planning has recently warned that a structural deficit may arise in as soon as seven years if government expenditure continues to rise at the existing pace.
In his last budget the financial secretary already substantially reduced the size of the so-called “candies”, by ending the government electricity subsidies and the exemption of business registration fee, and all that was left were the exemption of PRH rent for one month and government rates payment for only two seasons. It is said that the administration is still pondering whether to cut down further on these one-off subsidies in the next budget.
However, according to government sources, even if the administration is ready to cut these benefits, it will not be easy to push the bill through Legco. And there are other interests that need to be taken care of under the changing public expectations in the post-Occupy Movement period.
Tsang met with more than 20 pro-establishment lawmakers at the dinner table Wednesday, during which some suggested that the government strengthen its support for small businesses and rebuild the confidence of foreign investors. Yet the financial secretary didn’t respond to these suggestions directly, only promising that he will “study them thoroughly”.
Under the current political environment, it certainly requires political wisdom and flexibility more than ever for our finance chief “to look after the government’s books”.
This article appeared in the Hong Kong Economic Journal on Dec. 18.
Translation by Alan Lee
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