Widening income gap, rather than population aging, is biggest challenge
Updated: 2014-03-12 07:18
By Hong Liang(HK Edition)
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Financial Secretary John Tsang is sounding more and more like a nervous Nellie. He keeps telling us the same old wives' tales to justify his penny-pinching proposal to cut the payout of what many Hong Kong people feel is their rightful share of the budget surplus.
Of course, nobody can accuse Tsang of a lack of vision. He did set the theme of "Hong Kong's competitiveness" for his budget speech. But there is not a single thing he said that shows the government has a bold plan that can excite or inspire the public.
One thing he did mention, more than once, in his budget speech is the study that confirms the well-worn notion that our population is aging. To put it in perspective, it's not a phenomenon unique to Hong Kong. Shanghai is facing similar problems, and so are Singapore and many other relatively more advanced cities and economies around the world.
While those cities are trying to solve their respective aging population problems with aggressive policies to entice young talent from outside, Tsang uses it as a convenient pretext to cut the one-off benefits despite the budget windfall.
To be sure, the argument that Hong Kong needs to save money to meet the estimated increases in expenditure to care for the growing population of retirees and seniors seems to make sense. But the government has not shown the public how it is planning to use the money at its disposal to address the aging population issue.
In his latest budget speech, Tsang cited predictions and estimates made in the population study that suggest massive public funds will be needed to care for elderly people much sooner than expected. If the government has a plan, it is keeping it close to its chest.
What's more, some social analysts have challenged the findings of the study which, they said, failed to take into account the fact that the problem arising from the exceptionally low-birth rate is mitigated by new immigrants allowed under the existing arrangement. These analysts hold the view that the widening income gap, rather than aging population, presents the greatest challenge to Hong Kong.
The government can be in a better position to address these two problems not by hoarding the budgetary surplus, but rather by seeking ways to increase revenue. Tsang avoided the issue in his budget speech, saying instead that he has not ruled out tax increases or broadening the tax base sometime in the future.
Tsang noted the potential controversy of any tax proposal. Indeed, previous proposals to introduce a form of sales tax was met with stiff objections from the business sector for obvious reasons as well as many social activists, who contend that such a levy would place too harsh a burden on low-income groups.
Nobody doubts the high standard of the government's budgetary discipline as reflected in its determination to keep recurrent expenditure in check at all times. But such a passive policy can no longer meet the needs of the future. Sooner or later, the government will have to find a way to diversify its revenue sources. If the population study is to be taken seriously, that time has come.
The author is a senior editor with China Daily. [email protected]
(HK Edition 03/12/2014 page1)