Long-term gains worthwhile, Paul Chan says amid budget sweetener complaints

Hong Kong’s financial chief has defended his latest budget against public criticism over the lack of sweeteners, stressing that the government must balance its finances with long-term investments for the city’s benefit. Financial Secretary Paul Chan Mo-po said on Thursday he would brief credit-rating agencies and the International Monetary Fund next month on his budget, including the proposed HK$150 billion (US$19.2 billion) transfer from the Exchange Fund to support infrastructure projects. His remarks at a radio forum followed Wednesday’s budget announcement to transfer investment income from the fund, which has raised concerns about the city’s financial stability. During the forum, callers complained that the budget offered too little support for the general public. “I am disappointed that giving out money or consumption vouchers has fallen off the radar. You hold a consultation every year, but you never listen … the budget consultation is meaningless,” a resident surnamed Tang said. Chan explained that the government had used different approaches to put more money back into people’s pockets, including increasing tax allowances, offering tax reductions and organising more events to lure tourists. “It can boost businesses, creating more job opportunities and higher incomes for residents. We remain committed to that, as it also brings long-term benefits,” he said. He added that the tax relief measures could help a family with two children save about HK$10,000 a year. The middle class also raised concerns. Another resident surnamed Chan, who has a child and a combined monthly income of around HK$70,000 with his wife, said he hoped the government would offer more support to families not eligible for many welfare benefits. “We cannot buy subsidised housing as we have passed the asset limit, so we buy a private flat. After deducting all the expenses, we can only save about HK$10,000 to HK$20,000 per month,” he said. Secretary Chan responded that the government had proposed a significant increase in the basic and child tax allowances and would support residents as much as possible within its capacity. “At the end of the day, we’re still in the stage of economic recovery. We’ll need to issue bonds in the future, so we have to strike a balance,” he said. Chan added that the government’s relief measures reached HK$22 billion and that it needed to remain financially cautious. Another resident, surnamed Tsang, asked why the government chose to invest in the Northern Metropolis megaproject that would benefit the other side of the border instead of supporting the general public. Chan stressed that it was “worthwhile” to invest in the project, which aims to transform 30,000 hectares of land near the city’s border with the mainland into an economic powerhouse and housing hub. “Previously, when we invested in research and development and universities for technology and innovation development, all the commercialised production went to mainland China. Shenzhen and the Greater Bay Area pocketed all the economic benefits,” Chan said. “Now, the Northern Metropolis is the future innovation and technology hub. We will attract enterprises to Hong Kong. The tax return is ours, employment is ours, commercialisation is ours.” Asked whether bond issuance was no longer sufficient to cover infrastructure expenses, prompting the government to seek a transfer from the Exchange Fund, Chan said he was considering both options to support the metropolis’ development. “We have many money pockets … Last year, the Exchange Fund investment return was very good, with over HK$330 billion. Whether the money is in the Exchange Fund or used for infrastructure in the Northern Metropolis, both are investments,” he said.