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Budget in HK's best interests

February 24, 2017

Financial Secretary Paul Chan has defended his decision not to hand out more sweeteners in his 2017-18 Budget, saying the Government must exercise fiscal responsibility and do what is in Hong Kong's best interests.

 

Taking Budget questions on his radio show today, Mr Chan said he does not favour permanent tax cuts as the Government's annual expenditure will grow to $600 billion in five years.

 

"The pressure on the Government's expenditure increase is tremendous. In 2012-13, total Government spending was in the order of $377 billion. In 2017-18, it is in the order of over $460 billion. It is almost a $100 billion increase in five years. Five years later, it will grow to over $600 billion."

 

The Government must exercise caution when creating new recurrent expenditure, citing the example of the cost of the two-dollar concessionary travel fare scheme for the elderly ballooning from $300 million at the time of its launch a few years ago to $1.2 billion now.

 

"We need to have strong fiscal reserves as they can be depleted very quickly."

 

On why the Government spends more on infrastructure than education and social welfare, Mr Chan said infrastructure spending is on local transport and community facilities instead of cross-boundary links.

 

"All these bridges to China and cross rails are projects committed by the previous Government and fully implemented in this term. It does not make sense to stop them in the middle of the project."

 

He said it is not fair to compare infrastructure spending with that for social and education projects, saying education, social and medical expenditure is $210 billion in total.

 

On a caller's request for tax rebates on private education spending, he said the issue is not a priority item for the new tax policy unit to consider.

 

"The Government cannot afford to give vouchers to every parent to [send their children] to a private school. It is important to have [school] choices so parents can send their children to private, public or Direct Subsidy Scheme schools. In terms of raising children, at the moment the relief is in terms of a children allowance [for taxpayers]."

 

On the suggestion the Government should consider doing for education what it is considering doing for health, namely, encouraging people to use private healthcare by giving them tax rebates for insurance premiums, Mr Chan said he will ask the Education Bureau to study the idea.

 

He added he will diversify the economy to offer more quality jobs to young people.

 

On a caller's concern about inadequate hospitals, he said he has set aside $200 billion for hospital development and redevelopment.

 

"A new hospital is being built in Kai Tak with over 2,400 beds with cutting-edge facilities. We will have no hesitation to inject additional resources to improve medical services as we are facing the ageing population [issue]."

 

Mr Chan said he empathises with the "helplessness" of families living in congested quarters, saying the administration is working to increase land supply and will add one more tier of subsidised housing.

 

"I hope the community will be with us in terms of recognising this is really a capacity constraint affecting not just our economic growth, but the livelihood of people. We have to continue to tackle and confront this so one day land supply will not be something still restraining our community development and even twisting the value system of people. This is so unhealthy."



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