We still haven’t finished whining about the 2011-2012 one

The 2012-13 Budget will be unveiled on Wednesday. Our visionary leaders are managing expectations with all their usual subtlety via leaks, off-the-record blather and even Financial Secretary John Tsang’s blog, which also warns that Hong Kong is next in line after Greece, Portugal and Italy if the government doesn’t keep expenditure under tight control.

By Tsang’s standards, it looks set to be an only-averagely dimwitted fiscal plan. There will be no repeat of the HK$6,000 giveaway to every resident; that wasn’t part of the script last year – just a panicky reaction to fend off irate teeming masses. Instead, the tiny number of us who pay a vaguely serious amount of tax (say 10-15% of salary) will get our perennial, and bigger, rebate from the administration that frets about the narrowness of its revenue base. We’re the last people who need it, but we complain more loudly, and, I like to think, persuasively than everyone else, so tough. Public spending, the Standard says, will rise to improve quality of life. This means that health and welfare budgets will more or less keep up with inflation, so the deterioration of (for example) maternity services inundated with pregnant Mainlanders will remain nice and steady.

In his modesty, the Financial Secretary declares that he will ‘stabilize the economy, safeguard livelihoods and invest in the future’. ‘Safeguarding livelihoods’ means the boost to social spending, while ‘investing in the future’ of course means chucking hundreds of billions down the toilet on pointless infrastructure projects. We can only wonder how exactly he proposes to ‘stabilize the economy’ when it seems pretty stable, global circumstances considered, and he only has five months left before Chief Executive Tang takes office and, presumably, finds an equally adventurous and dazzling figure to run our finances.

As usual, the government will find itself sitting on a massive budget surplus, privately estimated this time round at HK$50 billion. Tsang says it is essential to keep revenue and spending at sustainable levels in order to avoid imposing a ‘long-term burden on society’. Yet how can the continued confiscation and accumulation of our wealth – now totaling one-point-something trillion bucks stuffed under the government’s mattress – be anything other than a burden? And the guy has the nerve to criticize the Europeans for not being able to balance books.

Meek and mild ‘think tank’ SynergyNet has produced a (Chinese-only) report suggesting, in essence, that the government establish a fiscal stabilization fund to convert some of the reserves into a source of recurrent income, which can then be matched to long overdue increases in spending on health care, environmental clean-ups, or your other favourite features of a decent, civilized community. In fact, something like this already happens, with interest and investment income from the reserves from time to time being moved into the government pot. They thus form part of the inevitable annual surplus, and thence end up being stuffed back under the mattress to generate yet more returns so the whole pointless process can carry on.

SynergyNet is what we might call the extreme pro-government wing of the opposition (its top advisor Anthony Cheung sits on the Executive Council), and its proposals tend to buy into official assumptions, however questionable. In this case, they are embracing the idea that officials would love to increase social spending if only it were prudently possible.

This is baloney: as well as stuffing wads of our cash away for a Noah-scale ‘rainy day’, the Hong Kong government directly and indirectly oversees the diversion of large amounts of the wealth the population creates into the wallets of a small group of tycoons. (Partly through the aforementioned infrastructure spending, and even more by enabling what are essentially hidden taxes we all pay to the property and other cartels. I believe this is due to be discussed in nauseating detail in a forthcoming feature in Time Out.) The money is there, flowing out of our pockets, already – it’s just being used to amass huge family- (and state-) owned investment portfolios instead of cutting hospital waiting lists, cleaning the air, etc, etc. This not some sort of accident, as SynergyNet seems to think. It’s government policy. It’s deliberate.

On a slightly hopeful note: one of my first colleagues in Hong Kong used to express anger at how the freest and most democratic Chinese society on earth was run by the British. Maybe she feels better these days, especially after watching a new tear-jerking video rejoicing at the noble wondrousness of the Taiwanese political system. It also poses a question: How many more Henry Tangs will there be? Ewwww… what a horrible thought.

Meanwhile, a new word of anxiety from the people who assure us that Hong Kong is going to ‘lose out’ for want of a Formula 1 car-racing circuit or more golf courses…

Click to hear ‘One Hundred Years From Now’ by the Byrds!

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7 Responses to We still haven’t finished whining about the 2011-2012 one

  1. PropertyDeveloper says:

    You certainly have a great deal of courage, not in pointing out the barefaced quarter-truths that are trotted out, year in year out, but in finding new ways to show the inanity of the financial platitudes.

    Even at the time, I wondered how the Eurozone governments could so blithely ignore the balancing of the budget, give or take 3%, that we were assured was the keystone of the whole edifice. It now transpires that the European Commissionner’s protests were overruled for political reasons.

    In an uncanny parallel, the Basic Law stipulates, somewhere, the balancing of HK’s budget: how come no-one has noticed this violation of one of the most sacred tenets; and who is going to get the trillions under the mattress?

  2. gunlaw says:

    The Civil Service pension liability is entirely unfunded. GST was supposed to pay for it but couldn’t; so an annual surplus is designed to fund pensions averaging about 3 times the norm for the private sector.

  3. darovia says:

    My advice to the FS. let’s buy Greece: lock, stock and parthenon thingy. Then we could all go there for our hols on a timeshare basis, say one million at a time so it feels like home.
    My advice for the rest of us: lets teem and whine again this year so he gives us HK$12K in readies this time. That would help a lot with our airfares to Athens.

  4. Probably says:

    Is it not public knowledge already that the millions stuffed underneath the HK matress is just sitting there ready to bail out or to be gifted to the mainland whenever they decide it is the most appropriate time to do so?

  5. Wag says:

    Surely there must be an alternative analysis of Hong Kong to the tedious property cartel/civil service conspiracy you have propounded ad nauseam the past ten years?

    It’s getting to be like a fetish with you!

  6. Real Tax Payer says:

    What amazex me is that the cost of the new 3rd runway at CLK is given as 136.1 Billion

    It’s not the amout that amzes me, but rather that the figure is quoted to 4 significant figures

    This based on the fact that almost every infrastructure over- runs by 200 – 300% and our totally imbecile FS gets his budgets wrong by the same several hundred % EVERY YEAR WITHOUT FAIL.

    In any normal company such inaccurate financial planning would have have had him fired from day one

  7. Jon Dica says:

    In agreement with Probably. What’s going to happen when that surplus is suddenly folded into mainland reserves, most likely when a “national crisis” is declared? What takes precedence at that point: the one country or the two systems?

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