Monday, January 20, 2014, 07:55
CE’s Policy Address deals with some urgent issues
By Leung Lap-yan

Chief Executive Leung Chun-ying on Wednesday presented his second Policy Address since taking office. Many people were waiting for this, albeit with different expectations. Those who support him hoped he would find a new path to ease public discontent, unite society and create opportunities in Hong Kong.  His detractors couldn’t wait to discover things in the Policy Address with which to attack him and use in the upcoming constitutional reform battle. It is gratifying to see Leung handle the matter with poise and dignity, delivering a well-structured Policy Address with clear goals. His prescriptions will not only relieve some of Hong Kong’s problems, but reinvigorate society. Even his fiercest critics could not initially find any major flaws in the Policy Address.

In the Policy Address, Leung focused on helping the poor — committing considerably more resources to providing financial assistance for low-income households, senior citizens and better education for children and young people.  In addition to the existing Comprehensive Social Security Allowance scheme, the government will offer low-income working households a monthly living allowance of HK$600-1,000; and HK$800 a month to each qualified child or young person for education expenses. The existing Old Age Living Allowance scheme will be extended to senior Hong Kong residents living in Guangdong. The value of medical care vouchers for senior citizens will be doubled to HK$2,000 this year. The government also plans to purchase quotas for elderly homes in Shenzhen and other places in Guangdong to ease the shortage in Hong Kong.

Education was a key area which obtained increased financial assistance this year. The Policy Address included a plan to raise pre-school education vouchers for each family from HK$17,500 to HK$20,000 a year; a 30 percent increase in the Learning Support Grant for Secondary Schools and other needed spending.

It was also aims to help special-needs students by adding 4,000 more places a year so associate degree students can be upgraded for standard degree programs.

The Policy Address also unveiled measures to increase land supply for residential housing developments. This will boost residential supply for 470,000 units in the next 10 years, while curbing speculative property transactions and purchases by non-local investors with heavy taxes. The government will also raise the amount of recurrent social welfare expenses from HK$40 billion or so (before Leung took office) to nearly HK$60 billion a year. This is greater than any increases in spending made by Leung’s predecessor, Donald Tsang, during his time in office.

This Policy Address changed the penny-pinching image which previous governments had given the public. It is, therefore, expected to win many people’s hearts. Leung’s popularity should grow significantly as a result.

Of course, some people are concerned that a sudden rise in social welfare spending may overwhelm the public finances. Finance expert Francis T. Lui estimates that if government revenue increases at roughly the same pace as GDP, increased spending will likely result in fiscal deficit by 2022. He is concerned that the fiscal reserves could be exhausted by 2030.

However, Hong Kong’s abundant fiscal reserves show no signs of being depleted at present. This suggests government finances should face no problems for at least the next 10 years. A lot of changes can take place in a decade and people’s worries about dwindling reserves will disappear if the economy performs better in the future.

Currently, Hong Kong suffers from widening income gap and popular discontent is rising. So if the government had failed to take immediate measures to relieve poverty it could have soon found itself in a crisis. The Chief Executive had enough resolve to boost social welfare spending significantly. It is certainly not enough to end many people’s financial woes, but it is definitely an intelligent move in terms of helping the needy, now.

The author is a veteran current affairs commentator.