‘New fiscal philosophy’ of SAR govt in action

In her election campaign manifesto last year, Chief Executive Carrie Lam Cheng Yuet-ngor put forward what she dubbed “a new fiscal philosophy”, which emphasizes forward-looking, strategic financial management principles in public finance. The 2018-19 Budget unveiled by Financial Secretary Paul Chan Mo-po on Wednesday, the first for the current-term Hong Kong Special Administrative Region Government, is manifestly clear evidence that this philosophy is already at work.

“Forward-looking and strategic financial management” is essentially about taking care of both the present-day and future needs of Hong Kong society.

The new budget might not be able to please everyone; the absence of cash handouts, in particular, might have disappointed some residents. But great efforts are being made to meet the community’s present-day needs, particularly in relieving people’s financial burden. About HK$50 billion, or nearly 40 percent of the surplus from fiscal year 2017-18, has been set aside for various relief measures, including income tax and profit tax reductions, extra allowances for the poor, the elderly and the disadvantaged, waived rates, funding for improving elderly, rehabilitation and child-care services, as well as provision for abolition of the Mandatory Provident Fund offsetting mechanism. These measures will benefit almost every family and individual, particularly the needy.

Aside from relieving residents’ financial burden, the budget also seeks to significantly improve the city’s livability. A total of HK$400 billion has been set aside for improving healthcare services including HK$300 billion for the second 10-year hospital development plan; and the government has raised its health expenditure budget for 2018-19 by a significant 13.3 percent to HK$71 billion. Efforts have also been made to boost land and housing supply to mitigate the housing crunch, the biggest drag on the city’s overall livability.

As another part of the binary new fiscal philosophy, investing in the future to meet Hong Kong society’s long-term needs is given equal weight in the budget. That necessarily means more effort to diversify and drive economic development by promoting emerging industries, particularly innovation and technology sectors, while strengthening the competitiveness of traditional pillar industries.

There is no gold standard in allocation of public resources for the common good. But by taking care of both the present-day and future needs of Hong Kong society and observing financial prudence, the new budget has struck a good balance.