Paul Chan's budget disappoints on housing

March 01, 2019 12:12
Hong Kong's 2019-20 Budget failed to address the city's housing problem, among some other key issues, in an adequate manner, critics say. Photo: CNSA

Apart from some routine sweeteners, such as property rates concession and tax rebates, the budget unveiled by Financial Secretary Paul Chan Mo-po on Wednesday was a lackluster affair that didn't contain positive surprises or interesting points. 

What is also frustrating about this budget is the government's projected land sales.

According to Chan, a total of 15 residential sites would be put up for sale under the 2019-20 Land Sale Programme, helping create an estimated 8,800 housing units.

Together with other housing projects spearheaded by the MTR, the Urban Renewal Authority and private property developers as well as renewal projects by private developers, the potential number of new units available over the next financial year is expected to stand at around 15,500.

If we compare the figure with that of the previous fiscal year, we can actually find that the potential number of new residential flats available in 2019/20 would be down by over 10,000 units, or 40 percent, during the year.

That brings us to the question: why did the government’s solemn pledge to provide more new homes for the citizens to ease their housing woes turn out to be such a damp squib?

While the financial chief has announced that the government has earmarked HK$2 billion to support non-governmental organizations in constructing transitional housing, everybody can tell it is merely a drop in the ocean.

Even more mind-boggling is that Chan will bring a HK$82.4-billion accumulated balance in the Housing Reserve, a fund set up back in 2014 by the previous administration to finance a 10-year program for public housing and other related infrastructure, back into the government’s fiscal reserves.

The money to be brought back will be spread over the current term of the administration until 2022-23, or a period of four financial years.

As the Housing Reserve is flush with cash, it raises another question: why did authorities allow the fund to virtually stand idle and keep rolling over throughout the past four years rather than draw on it to truly fund new public housing projects?

Overall, one can assume that the government is merely talking the talk, such as initiating the “big debate” on land supply, but isn't actually walking the walk when it comes to providing more new homes for the citizens.

This article appeared in the Hong Kong Economic Journal on Feb 28

Translation by Alan Lee

[Chinese version 中文版]

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Hong Kong Economic Journal