John Tsang’s handouts revisited

The Secretariat of Hong Kong’s Legislative Council releases research into who benefited most from the government’s money-scattering one-off relief measures over the last seven years. The headline result is that private home-owners ended up with the largest share of the handouts, which came from Financial Secretary John Tsang’s unbudgeted but consistent and huge surpluses. This is not very surprising, but it highlights the often-overlooked role of housing arrangements in deciding the relative outcomes for players in our distorted and unequal economy.

As befits a Western-style polity of the sort rejected by China’s Communist one-party state, Hong Kong has separation of powers (Beijing has emergency override buttons just in case). The Legco Secretariat is therefore not part of the government: it works for the people we pay to monitor the executive branch and hold the purse strings. So looking through the report is, at least by the standards of these things, slightly surreal. It looks and feels like the mendacious propaganda-waffle churned out by the administration, but it contains hard facts, many of which confirm that fiscal policy has been a total mess since 2007.

The one-off relief measures, we will recall, provided rebates on electricity bills, property rates, salaries tax and public housing rents, extra welfare payments and several other handouts, including the utterly desperate HK$6,000 payment to every adult human in town (or at least every permanent resident). There are lots of possible ways to divide up recipients – by income bracket, for example. The Legco Secretariat has simply done it by target group, and they’ve ended up with this…

Obviously, most of us fall into more than one box. The disadvantaged, for example, are probably low-income, and possibly public housing tenants too; private flat owners may well also be taxpayers; and we are all the general public. So you can add the sums up to see how much John Tsang sent you in total.

Disappointed! Despite the monthly, quarterly and annual thrill of seeing deductions on my electricity, rates and tax bills, my total take from John’s giveaways comes out at around HK$16,000 – barely two grand a year. It’s not only less than I spend in a month, but a lot less than I have left over every month after flinging disposable income around to my heart’s delight. For me and a lot of other people, the whole thing was a pointless and ridiculous waste of money – as we knew, but at least this is a reminder.

Many will be struck by the pitiful amount of the total of handouts targeted at the disadvantaged. Another way of looking at it is the large proportion aimed at property owners, mostly via rebates on rates. People who owned multiple properties would have done especially well, being landlords already reclaiming the levy from tenants via rents.

If the inequity seems a bit grotesque, that’s because a) it is, and b) you must be new to Hong Kong. It’s just a hint of the huge gap between housing ‘haves’ and housing ‘have-nots’. For many people in the Big Lychee, housing makes a bigger difference between being well-off and being poor than employment or taxation. A blue-collar worker in public housing has cash to spare at the end of the month; his colleague in a private rental may well run out. A professional who paid off his mortgage years ago can’t avoid having a good 85% of his income left in his pocket after paying for the key necessities of tax and housing; his counterpart making monthly payments to the bank or a landlord might be worse off than Americans or Europeans facing infamous 40% or whatever marginal tax rates.

For many, the quality of kids’ schooling or the prospects of a comfortable retirement flow from this. Our housing arrangements are a function of earning power, timing, family circumstance, planning skills, foresight, and much else – but a lot must come down to sheer fate. You happened to be able to buy at the right time, and you actually did, and you paid it off with much of your working life still ahead? Conversely, you or your folks were too poor at the right time and managed to become lifetime/hereditary public housing tenants on peppercorn rents despite since becoming a stockbroker? Congratulations: you win. Otherwise: you didn’t. And John Tsang’s handouts made little difference.

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