Another deficit of clear thinking, Financial Blog Corliss Online Group
Philip Bowring is appalled by the report on fiscal planning that seeks to preserve the status quo, to protect mega infrastructure spending, yet utterly fails to address our critical challenges
In 40 years of covering Hong Kong budgets and fiscal issues, I have never seen a document as misleading and contentious as the report of the Working Group on Long Term Fiscal Planning. It is a crude attack on health and welfare spending in order to find money for already bloated infrastructure spending.
To add insult to injury, the group is mainly comprised of officials and academics enjoying huge health and pension featherbeds at public expense.
The starting point for the report is true enough - that Hong Kong has an ageing population and one that is growing only slowly. This has been known long enough. The government has been aware that years of having a very low fertility rate has been a major factor in ageing - but has done nothing to address it.
The document goes on to present a scare story of ever rising deficits caused by a stagnating workforce and rising demands for health and welfare spending. Yet it accompanies this with projections for sustained increases in capital works. The non sequitur is backed by references to guidelines laid down by Philip Haddon-Cave in the 1970s - that public spending should be no more than 20 per cent of gross domestic product, and that there should be a significant surplus on the operating budget to provide funds for capital works (in addition to capital works paid by capital revenue).
Haddon-Cave, a realist, not an ideologue, would be appalled by official inability to see what has changed. Then, Hong Kong had a young, fast-growing workforce and the need for more infrastructure to support an economy based on manufacturing and merchandise trade. Today, we have no manufacturing, a port which is past its peak, and financial and other high-value services whose input needs are not primarily related to concrete.
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