Budget snooze

HKFP’s Budget round-up. Quick summary: a lack of any original thinking.

We must scrap various stamp duties on property transactions in an attempt to push housing prices up, thus – in theory – enabling government to go back to relying heavily on land and development rights for revenue. What we really need is cheaper government and a broader, less distorting tax base. (In fairness, there’s a slight bump in the top rate of salaries tax, though apparently to offset a small cut for lower earners).

And we must spend money on trying to attract bigger and bigger numbers of tourists through ‘mega-events’ and monthly drone/fireworks shows. The Mainland-tourist obsession dates back 20 years to post-SARS recovery. Today, we have a shortage of labour – so why try pumping up a space-hungry low-value economic activity? Why can’t anyone just say that we don’t need more visitors? (Though, confusingly, there’s restoration of a small tax on hotel stays, to balance things out.)

Mized picture on boondoggles. Slight postponement of the Lantau reclamation project. Financial Secretary Paul Chan says it will definitely go ahead. (Wanna bet on that?) But HK$2 billion for an ‘InnoLife Healthtech Hub’ at the ‘Hong Kong Shenzhen Innovation and Technology Park’ – ie the Lok Ma Chau Loop.

And possible reductions in travel subsidies for the elderly and disabled. There’s some logic to this, especially with an aging population – why should someone like me spend just HK$2 to take the HK$45 Central-Peng Chau ferry at the weekend? But it will go down like a cup of cold sick if they actually scrap the subsidies for existing beneficiaries. I’d guess they’ll gradually increase the cut-rate fares and push up the qualification age to 70, or something.

A quick search through the FS’s speech – not one mention of ‘national security’. The edgiest thing about the whole Budget.

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17 Responses to Budget snooze

  1. wmjp says:

    So many hubs, where are all the wheels?

  2. Stanley Lieber says:

    The ceremony itself embodies the lack of original thinking.

    “Everybody does it every year, so let’s do it again.”

    It is an empty spectacle that should have been scrapped years ago.

    Can’t they just send over a .pdf document?

  3. Joe Blow says:

    The world’s most unaffordable housing market just became more unaffordable.

    Give that man a Grand Bauhinia Medal.

  4. Been Here Too Long says:

    Glad to see the back of the spicy measures. I think tying up so much middle class money, and making it so hard for people to get on the housing ladder, was a major source of frustration to many. I personally point the finger at Lee Shau-kee, aka Uncle Four, as being Patient Zero for the spicy measures. From memory, it was his boast about how well one of new Midlevels properties was selling that forced Donald Tsang to act with his Special Stamp Duty in 2010. I think the property was on Conduit Road and had the usual bells and whistles, including no floors numbered four or 13. As to where the housing market heads now, I don’t know. The removal of the measures should increase liquidity and, if you increase liquidity in a falling market, the market should fall. But most flat owners aren’t stretched financially. As empty nesters, we had been considering trading down but we need to wait until liquidity returns to see what our flat – and other smaller flats in the area – are actually worth.

  5. Paul Lewis says:

    The government only has itself to blame for the blowout in costs for the $2 scheme.
    They had all the data beforehand about how many people were eligible and would use it.
    Then Carrie Lam promised to bring the age back 5 years to 60.
    That was the problem.
    But now the government has forced everyone to apply for the JoyYou photo ID Octopus card, they can easily separate people by age, if they are recieving benefits or still paying salaries tax.
    But there will be a lot of people upset when they cut the qualifications, and put the fares up which we all know is exactly what they will do.
    What about all the great benefits the scheme was going to bring, and that the government promised us all?
    Any admissions that it was a failure and there was a lack of proper planning?

  6. James O says:

    Yes indeed Paul. To be cynical, the extension down to 60 was the justification for the photo ID requirement for the senior citizen benefit (before that, anybody, even tourists, could just buy an elderly Octopus and enjoy $2 everywhere).
    I still have fond memories of the press conference at this was announced, though, at which the Secretary for Welfare actually stayed until there were no more questions. A model for officials (especially in Transport where even follow-up questions on non-answers are not allowed).
    Right now, they’re desperately gathering data to try to show the $2 scheme is being abused. Body-cammed guards at Kowloon Tong are checking anyone who looks younger than they claim. Which is odd, because aside from the First Class checks, these are the only fare enforcement campaigns I’ve ever seen in HK. I’ve watched them for a while (the body cams freaked me out and I was curious what they were up to)… they’re only checking those who beep in an elderly card and who are not obviously frail white haired old ladies, so that’s obviously what it’s all about. If they check enough of those they’ll find the data they’re looking for, I’m sure, and it’s legitimate sayonara to subsidy.

  7. Chinese Netizen says:

    “InnoLife Healthtech Hub”. Sounds like a fancy pants, veeery exclusive and pricey gym with lots of space for retail outlets (fashionable “sports” wear while lounging about, juice bars, prete a salad and vitamin shops).

  8. MC says:

    “making it so hard for people to get on the housing ladder, was a major source of frustration to many”

    They’re going to be even more frustrated now they have to compete with foreign capital and investors with multiple properties.

    I understand from the whimpering of the hospitality industry that what it needs is ‘higher value tourism’. Can’t see these big spenders changing their plans to see firework displays.

  9. Bruce Willis says:

    Hong Kong’s initial attraction as a tourist destination was as an idiosyncratic accident of history that left a miraculous speck of Western freedoms in a sea of Eastern backwardness. That ship has sailed.

    Hong Kong’s more recent attraction as a tourist destination was as a retail money laundering centre for mainlanders via gold shops and as a source of high-end luxury goods for conspicuous consumption that benefited from an import tax arbitrage, but the Xi regime has put a stop to that, too.

    What’s left to see?

  10. Been Here Too Long says:

    @MC I understand your point but the spicy measures also cut liquidity during a rising market and pushed up prices. And the downpayments needed became so onerous that the only flats most people could afford were micro flats, with special downpayment terms, directly from the developer. Most flat owners just held and kept paying down their mortgages, cutting secondary market supply. As a result, the secondary market just went into a death spiral. Trading up and trading down wasn’t really an option as the tax had to be paid and – due the lack of liquidity – nobody knew the real price.

  11. True patriots want to know says:

    So, since in this “budget” there is no allocation for ‘national security’ must we assume that the hk government is not supporting it anymore. Why did none of the patriots ask?

  12. Bruce Willis says:

    Also, Hong Kong genuinely used to be “East Meets West” but, in case anyone hasn’t noticed, the heart of the West left during the past few years due to the combination of the NSL and the maniacal Covid restrictions, and there’s little sign they’re ever coming back. Would you like to open a retail shop in the Gweilo Ghetto? You can have your pick in Castle Road, Caine Road and all the side streets leading down into Central.

  13. functionalbitches says:

    Isn’t this what happens when you force a “union” format onto a capitalist city? I am referring to the trade unions and constituencies that act like lobbying groups for the well-heeled and that turn policy into pocketbook change. Seems like the plan is going according to plan.

  14. Mark Bradley says:

    Pretty sure this budget does include funds for national security. Without any real oversight of course.

  15. Hermes says:

    Here’s a thought : let the retired 60 to 65 year olds keep the $2 fare benefit. Those still working can afford to pay the full fare. In case of doubt, the tax department has a record of how much people are earning.

    Incidentally, I’ve heard anecdotally that the amount the government pays to the transport companies is inflated as JoyYou card holders rarely bother to adjust the fares lower when they get into a minibus since the machine only deducts $2 anyway.

  16. justsayin says:

    @Bruce, what, is Ocean Park nothing to you?

  17. wmjp says:

    @Mark Bradley
    Pretty sure this budget does include funds for national security.

    I saw a reference (but can’t remember where) comparing the transport subsidy to $28 billion for the po-po and $14 billion for the secret po-po in the budget.

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