Why it's time to look beyond budget 'sweeteners'

March 12, 2019 17:58
The government needs to integrate the two pressing issues -- land shortages and soaring public demand for social welfare services -- and try to find a solution in a synergistic fashion when it comes to budgetary measures, Eugene Chan writes. Photo: CNSA

In his 2007/08 Budget, the then Financial Secretary John Tsang Chun-wah first laid out a proposal of offering some “sweeteners” to the public.

Since then, questions such as how the government should hand out such benefits, the quantum of the measures, and who the beneficiaries should be, have become topics for much heated debate in society.

But now, as the government no longer has a HK$100 billion-plus fiscal surplus, the city is finding that it can hardly afford to shower cash and other lavish doles to members of the public.

As a matter of fact, 13 years into its implementation, the marginal utility of the “sweetener” policy has been eroded almost completely.

Amid this situation, I am of the opinion that the government needs to integrate the two pressing issues -- land shortages and soaring public demand for social welfare services -- and try to find a solution in a synergistic fashion, if it wants to create a win-win situation and fully utilize the leverage function of the annual Budget.

“Sweeteners” refer to one-off and short-term policy initiatives such as tax concessions or distribution of benefits aimed at alleviating poverty, stimulating consumption or boosting the economy.

In 2007, when Hong Kong was gradually recovering from the economic downturn following the Asian financial crisis, the SARS epidemic and the social turbulence caused by the attempted enactment of Article 23 of the Basic Law, the government introduced “sweeteners” in order to “share the fruits of economic prosperity with the community”.

Since the measure was well-received among society, “sweeteners” have become routine in the years that followed regardless of the ups and downs of the economy.

Intriguingly though, despite the fact that the policy has been in place for 13 consecutive years, the government has continued to refer to it as an “one-off” measure every time it is giving out sweeteners, and refused to regularize it over the years.

Worse still, by continuing to devise different rhetorical descriptions and justifications for sticking to this “one-off” measure, our government is virtually dodging the responsibility for bearing long-term policy commitments to society.

For example, given the city’s acute land shortages, it is getting increasingly difficult for the government to find new land to build social welfare facilities in order to meet soaring public demand.

As a result, the average waiting time for applicants for many of our social welfare services has been continuing to lengthen in recent years.

For instance, as of the end of February this year, the average waiting time for a place in subvented homes or contract homes stood at 39 months.

Looking at other things, it took an average of 137.7 months, or over 11 years, for a patient with moderate mental disabilities to be allocated a place in hostels for moderately mentally handicapped persons in 2016-17.

In 2017-18 alone, a total of 6,611 seniors died while still on the waiting list for places in subsidized residential care homes for the elderly.

To address the problem, the government has proposed in its latest Budget the it will allocate HK$20 billion for purchasing 60 properties over the next three years in order to provide over 130 welfare facilities such as child day care centers, neighborhood elderly centers, as well as on-site pre-school rehabilitation services.

It is estimated that around 86,000 people would benefit from this policy initiative.

Even though the combined floor areas of the properties which the government is planning to buy would total nearly 40,000 square meters, the implications for the local private property market are likely to be minimal, since they only account for around 0.1 percent of the total floor areas of all commercial buildings in Hong Kong.

However, the administration needs to be very careful when planning for the purchases in order to avoid falling under suspicions of public-private collusion and transfer of benefits, given the current political atmosphere.

Buying private premises to provide social welfare service facilities is a great idea. The problem is that their numbers are too small, which means they can hardly meet the growing demand of the society’s aging population

And the issue is further compounded by the fact that the government lacks long-term planning in its social welfare policies.

Given this, I believe there is an urgent necessity for the administration to do a better job in policy planning and public consultation in order to fully understand the needs of the community and make good use of facilities.

This article appeared in the Hong Kong Economic Journal on March 2

Translation by Alan Lee

[Chinese version 中文版]

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President of the Association of Hong Kong Professionals