Difference between responsible, responsive
The general public greeted Financial Secretary Paul Chan Mo-po’s 2018-19 Budget on Wednesday with mixed feelings — it contains many ideas they appreciate but one eagerly awaited item was missing — a one-off cash handout. Apparently the decision to skip cash handouts came as almost a shock, considering expectations from across the socio-political spectrum before the budget release, and given that we have just achieved a record-high surplus. And we were not surprised at all by the anger some opposition lawmakers exhibited during a question and answer session with Chan at the Legislative Council on Thursday. Some people may wonder why the current-term special administrative region government decided against the obvious choice of responding to widespread public demand for cash handouts positively, but they really should ask, “Why not?”
Conventional wisdom has it that cash handouts should be a standard exercise for the government every time it has a huge budget surplus, as is the case with our neighbor Macao almost every year. However, we all know that comparing Hong Kong and Macao is like matching apples and oranges. It is also a golden tradition for the government to practice financial prudence in Hong Kong, which is the No 1 reason why it has been enjoying annual surpluses so consistently over the years. Besides, there are more important matters to spend money on than pleasing people with one-off cash handouts, such as securing future economic growth by advancing a diversified growth pattern.
In case someone did not pay enough attention to the details of Chief Executive Carrie Lam Cheng Yuet-ngor’s first Policy Address, she listed as a top priority of the SAR government turning Hong Kong into a hotbed for innovation and technology by investing substantially in necessary infrastructure and attracting the best talents from around the world to Hong Kong in the coming years; while also boosting funding for local schools and universities to improve the quality of education. Other key areas for fiscal spending include health services, social security reform and welfare upgrades. All those undertakings are crucial to the wellbeing of 7 million local residents and require continuous funding. The budget surplus may be huge this year but it is best used to build a better future for Hong Kong society as a whole.
Let’s also not forget Hong Kong’s budget surplus depends very much on land sales and tax revenue from the speculation-driven real-estate market, which is nothing if not volatile and irrational. The property market can sharply reduce or even cancel the budget surplus with one big dive, which has happened more than once with horrible aftermath. The best way to prevent such tragedies from occurring again is to end the city’s over-dependence on the speculative property market for its growth impetus as soon as possible. That is why the SAR government is working so hard to develop more growth engines for the Hong Kong economy these days. It is always much easier to be responsive than responsible; but the difference between them is not always as obvious.