South China Morning Post
Comment›Insight & Opinion
Graeme Maxton says John Tsang failed to show any mettle in his budget, preferring to tinker at the edges and pander to tourists and the wealthy rather than help the majority of Hongkongers
In the brief moments I spent chatting to him last year before we both spoke at a conference, I think I can say that I liked John Tsang Chun-wah. He seemed a decent sort and well-meaning.
Though he spoke in that horribly confusing style that finance ministers around the world seem to prefer, he came across as someone who was trying very hard. He was doing a difficult job, too often constrained by the political tides that dragged him to and fro like driftwood.
The trouble, for me, was that Tsang was just a little bit too nice and his budget yesterday has done nothing to change this view. He needs to become much bolder if he is to have the impact he and Chief Executive Leung Chun-ying really want.
Let’s start where they should, and look at the big picture. Here, I think we can agree with Tsang that things are getting better, at least a little bit. The economy is growing healthily and the outlook is generally good. So, spending on public housing should go up and there are plans to make a little more land available.
The government will also undertake further efforts to tackle the appalling air pollution problems.
This is an opportune time, it seems, to promote cloud computing and to develop an “interactive portal to bring together the start-up community”, whatever that means.
But let’s get real. We live in one of the richest places in the world, in terms of gross domestic product per head, and 40 per cent of the population still lives in subsidised housing. The minimum wage is too low to live off. A third of Hong Kong’s elderly struggle to meet their basic nutritional needs while a quarter of our children do not get three meals a day.
We have the eighth worst air pollution in the world in terms of mortality rate, according to the World Health Organisation – a higher rate than even mainland China, India and Bangladesh. We also have the highest rate of inequality of any developed economy and some of the longest working hours. In public housing, living space averages just 121 square feet per person, one of the smallest levels in the world.
There is also almost no upward social mobility any longer. There is no “dream” for those without property, which is why we only rank the 73rd happiest place in the world, far below the rest of China.
Moreover, as Tsang pointed out, Hong Kong’s population is growing and ageing, with more than two million of us expected to be over the age of 65 just 17 years from now.
In other words, we have some very big challenges and so we need to make some very big changes. All that is needed is some courage, which is what Tsang still needs to develop, it seems.
As we now know, the budget surplus is huge. So this is not the time for him to cut expenditure, lower stamp duty on financial transactions or cut profits tax and income tax rates. He needs to boost spending and tell us it will rise even further.
All this nonsense about the money running out in 15 years – or even seven years – is just silly scaremongering. Hong Kong has the capacity to raise billions if it chooses to do so. It could easily raise much more money on the bond markets. It could tax people crossing the land border into the mainland (to balance out the airport departure tax) and – shock horror – it could increase the rate of tax it applies to the property sector and the super-rich without anyone really noticing. It could also tax its finance sector properly.
For decades, we have been pretending that we are still an economic firework, a fast and free-wheeling economy where the touch of regulation is super-light. We have been the economic teenager of the world, running free of any responsibility, thinking we never need to grow up.
Those times are over. Instead of being the increasingly poor cousin to mainland China – where people are actually happier, on average, than here – we need to set an example. The average Hong Kong citizen has four major concerns, none of which Tsang really got to grips with in his budget. People are worried about poverty, about the cost of housing, about air pollution and about too many mainland tourists.
Instead of addressing these concerns properly, Tsang chose to tinker at the margins, to encourage even more tourism and to support the tiny percentage of very rich people who can only think about how to make even more money and then keep it.
I still like Tsang, I think, but I also want to shake him. Stop being so nice, I want to shout. Find the courage to be bold. Buck up and find a spine next time – please – and then you and Leung could actually help the majority of people in Hong Kong improve their lives.
Graeme Maxton is a member of the Club of Rome