Yet another ho-hum budget with no new thinking

February 28, 2019 07:07
Financial Secretary Paul Chan has warned of tough times ahead. Photo: Bloomberg

Most Hong Kong people would agree it is agonizing to watch budget speeches by our financial secretaries. They last too long, are read out in monotone, and are written in the most unimaginative way possible. As a long-time journalist, I should sit through budget speeches in their entirety. But I admit I have dozed off every year.

This is in no way meant as criticism of our current financial secretary, Paul Chan Mo-po, for whom I have great respect. He is just following a painfully outdated budget tradition that dates back to colonial times. The same can be said for the annual policy speeches by our chief executives.

Chief Executive Carrie Lam Cheng Yuet-ngor tried to break free from the old tradition by only reading out a shortened version of her actual policy address. That helped lessen the yawns in the Legislative Council chamber and from viewers at home.

But a shortened length cannot salvage speeches that lack connectivity with the audiences, emotion, long-term vision, bravado, and yes, even humor. Annual policy and budget speeches are, in fact, boring, but it is up to our chief executives and financial secretaries to inject life into them to inspire people to sit up and listen.

In my many years as a journalist, I cannot remember ever being captivated by a policy or budget speech, except perhaps for one or two by former governor Chris Patten. But then, he is a polished politician who made his mark as governor by doing things differently from his colonial predecessors.

Policy speeches here are Hong Kong’s version of the State of the Union addresses by US presidents. Donald Trump is in no way a skilled speaker compared to his predecessor Barack Obama or even George W. Bush. But his State of the Union speech earlier this month had such a captivating mix of body language, audience connectivity, and humor that I watched the whole thing.

Last May, I watched on live TV the annual policy speech by Singapore Prime Minister Lee Hsien Loong. It was the first time I watched a Singapore prime minister’s annual policy speech.

He spoke with emotion about unifying his country’s diverse racial groups, equality for all, the importance of English, the humble asset of dressing simply, and he even made members of parliament laugh with taunting jokes about how the rich showed off their wealth. I asked myself why our own leaders lacked the skill to make speeches like that.

I didn’t expect an inspiring budget speech by the financial secretary on Wednesday, and I didn’t get one. As in past years, many of the key points had already been leaked to the media, including the shrunken size of the budget surplus to HK$58.7 billion, some sweeteners, no cash handouts, extra funds to ease the crisis at our hospitals, education subsidies for needy students, HK$6 billion to enhance Hong Kong’s waterfront, and even money to improve the city’s public toilets.

But yesterday’s budget came across to me as yet another cookie-cutter shape of previous budgets, with just the figures changed, and far fewer sweeteners because of the shrunken surplus. To me, the extra funding of HK$5 billion plus a HK$10 billion stabilization fund to ease our hospital crisis is nothing more than a band-aid. It is a disgrace that, as one of the richest cities in the world, Hong Kong’s hospitals are so overfull every flu season that patients have to wait for hours to see a doctor and those admitted have to sleep in corridors.

Paul Chan’s predecessor, John Tsang Chun-wah, amassed huge surpluses during his ten years as financial secretary. But every year he stuck to the same budget template, handing out one-off sweeteners yet holding fast against increasing recurrent government expenditure. We now have HK$1.16 trillion in reserves yet have third-world hospitals.

Tsang, mocked as a miser by critics, insisted he needed to save for a rainy day. That rainy day stared him in the face in the form of a widening wealth gap, a million-plus people living below Hong Kong’s poverty line, and vanishing upward mobility. But he didn’t see that as a rainy day.

Maybe Tsang’s Scrooge-like budgets will be exonerated now that Hong Kong has taken a major hit from the US-China trade war, China’s slowing economy, and instability in the global economy that has slowed Hong Kong’s economic growth. His successor Chan has warned of tough times ahead and may take comfort from the massive reserves Tsang helped build but he still forecast a HK$16.8 billion surplus for next year.

That means Chan shouldn’t follow in Tsang’s footsteps by taking the safe path instead of making bold decisions. It is easy for ordinary people to spend money but hard for them to save money. The opposite is true for our government, which finds it easy to save huge surpluses but hard to spend the money on the people, to whom the money belongs.

If Chan wants to leave a legacy, he must cut a new bold path for himself. He needs to escape the traditional way of doing budgets. Yes, there is great uncertainty about Hong Kong’s economy caused by external forces. And yes, Chan needs to be prudent with fiscal reserves. But I believe the huge reserves Hong Kong has amassed can see us through difficulties yet allow our government to be bolder in deciding how it should invest its money in a structured and targeted way that can improve lives in the long-term rather than squander it on short-term sweeteners, such as Wednesday’s rates waivers although I support his tax relief of up to HK$20,000 for salary and profits tax.

Our government needs also to be bolder in telling the people relying mostly on unpredictable land and flat sales and stamp duties for revenue cannot sustain Hong Kong forever. Only a fraction of Hong Kong people pay income tax. Most registered businesses do not pay taxes. Aside from land sales and stamp duties, government revenues depend on the highest-income taxpayers and large companies.

Hong Kong needs to change its revenue structure. It’s time to reconsider a sales tax. Hong Kong people need to understand they cannot have a free ride forever. Chan will face resistance from a populist chief executive, Carrie Lam Cheng Yuet-ngor. But he needs to tell it like it is: our tax regime needs a structural overhaul.

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A Hong Kong-born American citizen who has worked for many years as a journalist in Hong Kong, the USA and London.