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'Hard to please all', Hong Kong finance chief says about use of budget surplus as he hints at medical system boost for …

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More funding might be on the way to “strengthen” the medical system “for the ageing population”, Hong Kong’s financial secretary hinted on Sunday amid discussion over the city’s considerable budget surplus.

In a blog post, Paul Chan Mo-po stressed the need to “save for a rainy day”, but added that “present-day needs” should not be ignored.

Chan also hinted that there would be no cash handouts for Hongkongers, unlike in 2011. But help would be in the form of various measures for specific groups under a theme of “caring and sharing”.

Why are Hong Kong bureaucrats such miserly fiscal spenders?

“Whatever the budget measures will be, it will be hard to make everyone happy,” he said.

Chan will deliver his budget address on Wednesday, the first for the administration of Chief Executive Carrie Lam Cheng Yuet-ngor. In her campaign manifesto last year, Lam highlighted her “new fiscal philosophy” which she said would wisely use surpluses for the good of the community.

Hong Kong is set for a massive budget surplus of nearly HK$160 billion (US$20.4 billion) this year, much larger than the original estimate of HK$16.3 billion for 2017/18.

Chan also posed a question on his blog: “Should the government actively plan to strengthen ancillary facilities of the medical system when its finance is sound and good, to cope with the challenges of an ageing population?

“These plans may not have immediate impacts. But if we do not prepare during the good days, it will be even more difficult to do so during a time when our finance is tight. The result is that those in need will not get the proper care at the most difficult time.”

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The proportion of the population aged 65 or older rose from 12 per cent in 2006 to a new high of 16 per cent in 2016, according to summary results of the 2016 by-census by the Census and Statistics Department. In 1986 the figure was 8 per cent.

Chan stressed the importance of preparing for future challenges. “It does not mean we can ignore the needs of the present day. We have seen the problems society is facing today. We must have a vision for our future and the challenges can only be addressed when there is money and a heart to tackle them.”

Chan said he held more than 40 rounds of consultations with people from all walks of life in the past few months for his budget address.

Hong Kong’s budget surplus has been underestimated for almost 10 years in a row, largely due to a windfall in land sales and stamp duty revenues from a booming property market.

As of last November, the city already had a cumulative surplus of HK$57.2 billion for the year, four times the original estimate of HK$16.3 billion for the whole of 2017/18. Fiscal reserves ballooned to HK$1.7 trillion by December 31 last year.

Meanwhile, at the RTHK City Forum on Sunday, Franklin Lam Fan-keung, founder of private think-tank HKGolden50, agreed that the government should invest more in improving medical services amid an ageing population.

Bureaucrats are not known for making the right decisions

Professor Francis Lui Ting-ming, HKUST

“If you give, say, HK$6,000 to people, those who are already very rich won’t be much happier. Some young people may use the money to buy a new mobile phone and they may be happier for several months.

“But if you use this money to build a new hospital, all Hongkongers will be happy in the future for many years since they can get the services they need,” Lam said.

He said many of the social problems that the city faced, such as those pertaining to the housing and medical sectors, were a result of the government not using the surplus to invest in these areas some 10 years ago.

But, another speaker at the event, Professor Francis Lui Ting-ming, an economist from the Hong Kong University of Science and Technology, argued that it would be better to let people decide how the surplus should be used.

“Bureaucrats are not known for making the right decisions. And even at times when they can make good choices, money would be wasted because of red tape in formulating and executing policies,” Lui said.

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