Responsible budgeting
Myopia will never be considered a healthy condition for the eyes, nor will be hyperopia. This same rule applies to public policies, particularly major ones including public finances. In this sense, the Hong Kong SAR Government’s fiscal Budget for 2015-16 presented by Financial Secretary John Tsang on Wednesday is a desirable one. It strikes a balance between the short-term and longer-term needs of society.
With the government’s yearly Budget outlook regularly producing unexpected surpluses in recent years, expectations and pressures are running high in the community for the government to hand out generous “sweeteners” to citizens.
Against this ever-rising pressure, the financial chief has rightly reasserted the conservative and prudent fiscal management style of the SAR government. This philosophy of public finance has been the key pillar underpinning Hong Kong’s sound fiscal position, which, in turn, has helped the city’s open economy survive bouts of crises caused by external shocks over the past two decades.
The scenario that structural deficits will surface within 10 years as a result of an aging population and slowing economic growth, as predicted by the government’s Working Group on Long-Term Fiscal Planning, has made it all the more imperative for the government to continue to rigorously pursue financial prudence. In line with this logic, the financial chief has wisely decided to retain a large portion — nearly half — of the estimated HK$63.8 billion fiscal surplus for the fiscal year ending next month.
To cope with a two-fold challenge in the future — an anticipated drop in fiscal revenue because of a shrinking workforce and the expected soaring cost of healthcare services — the financial chief has agreed, and taken steps, to establish a Future Fund, which will serve as long-term savings and be placed in longterm investments for higher returns.
While preoccupied with concerns for anticipated future financial commitments, the financial chief hasn’t overlooked the short-term needs of the community. Some HK$34 billion, or over 50 percent of the estimated fiscal surplus, will be doled out in various relief measures to alleviate imminent economic hardships of the disadvantaged as well as the middle class. Support measures have also been proposed to help sectors affected by the illegal “Occupy Central” movement last year.
Like many other public policies, the Budget is always a contentious one because of the existence of differing interests in the community. It goes without saying that the latest government Budget will not please everyone. But by taking into account both the short-term and long-term needs of Hong Kong, the financial chief ’s budgeting is balanced and responsible.