Date
23 July 2018
Financial Secretary Paul Chan has given the same sweeteners dished out  in previous budgets such as income tax rebates and property rate concessions. Photo: HKEJ
Financial Secretary Paul Chan has given the same sweeteners dished out in previous budgets such as income tax rebates and property rate concessions. Photo: HKEJ

Paul Chan’s budget is mediocre, but Carrie Lam is happy

Shortly after Financial Secretary Paul Chan Mo-po announced his budget for the 2018/19 fiscal year, Chief Executive Carrie Lam Cheng Yuet-ngor publicly praised it to high heavens, calling it “a complete embodiment of the new governing approach, the new role and the new fiscal philosophy adopted by the incumbent administration”.

Carrie Lam might be very satisfied with Chan’s work, but in our opinion, this year’s budget is mediocre because our new financial secretary has failed to come up with any major breakthrough when it comes to government expenditure.

Still, we should at least give him some credit for introducing more flexibility to public finance management by ditching the long-standing and rigid doctrine of keeping government spending within 20 percent of the local GDP under all circumstances.

In his budget, Chan broke the unwritten rule and raised government spending to slightly over 21 percent of GDP. With the extra money, the government is increasing funding for health care to HK$71.2 billion, from HK$62.8 billion in the previous year.

Apart from that, however, we really can’t see any other surprise or innovation in this year’s budget. All the financial chief did is give out the same sweeteners given in the previous budgets such as income tax rebates and property rate concessions.

As far as certain pressing issues like housing and land supply are concerned, Chan has barely touched on them in his budget. There was nothing on the much-talked-about tax deduction for flat tenants.

The secretary has taken steps in the right direction by increasing spending on health care. He has earmarked HK$300 billion for renovating existing public hospitals and building new ones. But it appears he has failed to address the root problem of our public health care service, which is the acute shortage of doctors and nurses.

Chan said his new funding initiatives will provide an extra 3,000 to 4,000 hospital beds. The problem is, our universities can only at best turn out 2,000 medical school graduates over the next five years.

So what’s the point in pouring tens of billions of dollars in public money into building new hospitals and medical facilities when there aren’t enough qualified healthcare personnel to man them?

That the newly built and well-equipped North Lantau Hospital and the Tin Shui Wai Hospital are both unable to come into full operation due to staff shortage is in fact an indictment of our government’s health care policy, which has been focused overwhelmingly on building new facilities while neglecting the importance of training more doctors and nurses.

The same mistake can be found in the government’s plan to facilitate the long-term development of our tech and innovation industry.

Chan has pledged to set aside HK$50 billion for the sector, of which HK$20 billion will be spent on building basic infrastructure and amenities in the first phase of the Hong Kong-Shenzhen Innovation and Technology Park at the Lok Ma Chau Loop.

Nevertheless, as we all know, the key to success in developing the tech industry is the nurturing of talent rather than the construction of high-tech facilities.

If our administration continues to ignore the “human factor” like it has on health care, the new innovation and technology park may end up being just another North Lantau Hospital where there are plenty of beds and equipment but not enough doctors.

What Chan is trying to do in his budget is to “pepper” resources on as many sectors as possible in an apparent effort to please everybody.

But under the current political environment in Hong Kong, where “gotcha” politics reigns supreme, any policy initiative put forward by the government, including the annual budget, can be considered successful as long as it didn’t spark any major controversy or provoke too much public repulsion.

That said, if we look at things from this perspective, Secretary Paul Chan, a man who always plays safe, is undoubtedly a good partner of the chief executive.

This article appeared in the Hong Kong Economic Journal on March 1

Translation by Alan Lee

[Chinese version 中文版]

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RT/CG

Hong Kong Economic Journal

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