As Chief Executive Carrie Lam's term ends, the current government has poured money into various policy areas. As of the end of March this year, the government's fiscal reserves are estimated to be 946.7 billion yuan, a slight decrease from about 950 billion yuan when the government took over.
However, if you look closely at the government's use of money today, it can be said that there is "no stop". Although the cost of coping with the new crown epidemic is in the hundreds of billions of yuan, even the basic expenditure has continued unabated, especially in social welfare and medical care.
Ye Liu Shuyi, member of the Executive Council and chairman of the New Democracy Party, believes that although the government spends a lot of money, it fails to achieve its goals. For example, the education expenditure is huge, but the graduates trained do not match the job market, and the social welfare expenditure involves a large amount of distribution. Qian, describing the results of poverty alleviation as "dispatched", does not really help people get rid of poverty.
Zhuang Tailiang, associate professor of the Department of Economics of the Chinese University of China and executive director of the Lau Chor-de Institute of Global Economics and Finance, said that there is no need to worry too much about the government's financial reserves. He pointed out that Hong Kong's economic structure is different from other places, and whether the government's finances can remain stable depends on whether an industry is prosperous or not. .
A total of 250.9 billion yuan has been injected into the Anti-epidemic Fund
According to the Budget released in February this year, the current government's fiscal reserves exceeded 950 billion yuan when it took over, and it reached a new high of 1.17 trillion yuan in 2018-19.
However, with the outbreak of the new crown epidemic, the government injected up to 250.9 billion yuan into the "Anti-epidemic Fund" and launched large-scale counter-cyclical measures.
In terms of fighting the epidemic alone, it is enough to "return to the original state" of the fiscal reserves. The Budget estimates that when the current government expires, the fiscal reserves will remain at about 946.7 billion yuan, a decrease of about 10 billion yuan compared with the time of taking over.
A total of 250.9 billion yuan has been injected into the Epidemic Prevention and Anti-epidemic Fund.
(File photo/Photo by Ou Jiale)
Epidemic affects government revenue, land price income fluctuates greatly
The revenue of the Hong Kong government has always been divided into several major parts. In 2021-22, the overall revenue is 682.7 billion yuan, with profits tax accounting for 23.3%, stamp duty accounting for 14.8%, salaries tax accounting for 10.7%, and land value revenue of about 141.1 billion yuan. accounted for 20.7%.
Among them, the land price income is particularly volatile. Depending on the land sales situation in the year, for example, in the first full financial year after the outbreak of the epidemic in 2020-21, the land price income is only 88.7 billion yuan, and the proportion of the overall income also drops to 15.7%.
From 2021 to 2022, the revised estimate of government revenue has greatly increased from 564.2 billion yuan in the previous year to 682.7 billion yuan, which is 15.5% higher than the original estimate. .
The new crown epidemic has caused the current government's fiscal reserves to fluctuate, as can be seen from the details of revenue and expenditure.
Zhuang Tailiang said that although there will be voices asking for money when the economy is good, the government should give priority to allocating funds to various funds to deal with expenses in times of economic adversity.
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Zhuang Tailiang advocates the establishment of funds and stamp duty
"Fortunately, there is money left in Hong Kong." Zhuang Tailiang has mentioned many times that Hong Kong is "a good day to bury rainwood", which means that when the economy is good, the government has a lot of revenue to prepare for the economic downturn, the epidemic or other emergencies from time to time. need.
The outside world often refers to the amount of land sold by the government, which has a great impact on the government’s budget, but Zhuang Tailiang is not worried about the lack of income from land sales. As for salaries tax, many wage earners in Hong Kong do not pay tax, and it only accounts for 10% of their overall income. Has little effect.
He believes that if the government wants to increase revenue, it can consider increasing the stamp duty. He believes that the stamp duty is a "painless tax", and companies that come to Hong Kong to do financial transactions will still come to Hong Kong for business even if the tax is increased, and it will not have a big impact on the public.
When the economy is good, the Hong Kong government can record a surplus of 100 billion yuan. Zhuang Tailiang pointed out that in the past few years, the government set up a "future fund", etc., which is exactly the performance of "good weather burying rainwood"; if we have to deal with future epidemics Or other disasters, the government can set up a long-term epidemic prevention fund and other funds, inject capital when the economy is good, and the money will be available when the crisis comes.
Education expenditure in Hong Kong is not low, and the budget for 2022-23 exceeds 100 billion yuan.
(File photo/Photo by Su Weiran)
The current government's recurrent expenditure has increased by nearly 30%
The current-term government's recurrent expenditure has increased significantly, from $361.8 billion in 2017-18 to $467.1 billion in 2020-21, an increase of 29.1%.
The biggest increase was in education, social welfare and health expenditure, which accounted for 58% of current expenditure.
Education spending increased by 21% and exceeded 100 billion in 2022-23
In terms of education expenditure, the revised estimate for 2021-22 is $97.171 billion, an increase of 21.25% from the $80.141 billion in 2017-18 (based on the revised estimate for 2018-2019). 101.936 billion yuan.
Ye Liu Shuyi believes that although Hong Kong's education expenditure is large, the results are not good, and she proposes that vocational education should be promoted.
(File photo/Photo by Zheng Zifeng)
Although the education expenditure is not good, Liu criticizes the poor results and advocates the promotion of vocational education
Ye Liu Shuyi, a member of the Legislative Council of the New People's Party, believes that the government's expenditure on education is undoubtedly huge, but the resources have not been put to good use.
She gave an example. Currently, secondary school students want to go to university after graduating, but few people enroll in vocational education. "There are only a few students in some disciplines, and some are even more unattended."
On the other hand, some industries actually only require higher diploma qualifications, such as auto repair and ship repair, and the income is good, "better than graduates from certain university disciplines".
The current path to higher education not only makes students tend to "go to university" as the only way out, but also leaves many industries lacking new recruits. Even in the information technology (IT) industry, which has been the focus in recent years, some types of jobs are also facing shortages.
So the government spends a lot of money, but the results have been poor.
Mrs. Ye said that to change this situation, the government has to explain to parents and students that there is actually a good way out for vocational education.
Health expenditure of 98 billion excluding anti-epidemic fund allocation
Government health expenditure has also continued to grow. The revised estimate for 2021-22 is 98.015 billion yuan, an increase of 37.6% from 71.234 billion yuan in 2017-18.
The budget does not include allocations from the Anti-epidemic Fund, but rather recurring medical expenses such as the public healthcare system and district health centres.
Law Chi-kwong, secretary of the Labour and Welfare Bureau, said on his blog last year that although the spending on elderly services has increased significantly, it is still "lag behind".
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Social welfare spending soared by 49%
As for the social welfare recurrent expenditure that has increased the most, it has increased by 49.1% from the 65.35 billion yuan in 2017-18 to the revised estimate of 97.449 billion yuan in 2021-22. The "Policy Address" also revealed that the final expenditure amounted to 1,057 yuan. billion, an increase of 62%.
In terms of various government expenditures, social welfare alone accounts for about 20% of the government's overall recurrent expenditure.
The SWD's expenditure accounts for more than 90% of the recurrent social welfare expenditure. Looking at the SWD's data, the largest increase was in elderly services, which increased by 89.3% compared to when the government took over.
However, the Secretary for Labour and Welfare, Law Chi-kwong, wrote on his blog last year that even with such a large increase, elderly services are still only "catching up".
Ye Liu: The achievement of poverty alleviation is only due to the question of whether it will be sustainable
Ye Liu Shuyi believes that the current results of supporting the poor are only the result of the distribution of money, and doubts whether it can be sustained.
The government introduced a high OALA and combined it with the ordinary OALA, whichever is higher, and raised the CSSA. Ye Liu Shuyi pointed out that these measures are all money-distributing measures, and they fail to provide the skills for citizens to lift themselves out of poverty.
Ip Lau Suk-yee is the chairman of the Legislative Council's Subcommittee on Reform Poverty Alleviation Policies and Strategies. She quoted the meeting as saying that Members have debated the government's definition of poverty, pointing out that the median household income is inaccurate, for example, some households have incomes higher than the median But living in subdivided housing, and only counting income, excluding assets is also insufficient.
She pointed out that the United Nations definition of poverty includes "living without dignity" and having a sense of security, etc. The government spends a lot of money on poverty alleviation work, but fails to achieve its goals.
As the population ages, social welfare and health care spending is expected to continue to rise.
(File photo/Photo by Hong Kong 01 reporter)
Retirement peak spending expected to grow again due to aging population
The ageing population is the biggest challenge for Hong Kong's social welfare expenditure, especially elderly care expenditure.
According to the Census and Statistics Department, the population reaching retirement age continues to increase. By the end of 2021, there will be 507,700 people aged 65 to 69, accounting for 6.9% of the overall population.
There are 6.144 million people in the 60-64 age group, accounting for 8.3% of the overall population.
And there are 618,700 people aged 55 to 59, accounting for 8.4% of the overall population, which is the largest age group.
It can be seen that Hong Kong has entered the peak period of the retirement population, and social welfare and health expenditures will inevitably increase under pressure.
Due to factors such as an aging population, it can be expected that government spending on social welfare and medical care will continue to rise in the future.
Chen Maobo also predicted in the "Financial Budget" that the proportion of education, social welfare and medical expenses in the current expenditure in 2022-23 will increase from 58% to 60%, reaching 341.6 billion yuan.
Among them, health expenditure is expected to more than double from 2017-18.
The estimated recurrent expenditure on social welfare also rose by more than 10% year-on-year to $111.813 billion.
Ip Lau Suk-yee believes that the HA needs to be reformed to increase efficiency and improve the morale of public medical staff.
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Advocating to improve medical efficiency Ye Liu: The HA needs to be reformed
Ye Liu Shuyi pointed out that after the handover, the growth of government expenditure in the SAR has been higher than the growth of income for a long time, "making more money than pushing money".
The recurrent government expenditure in 1997-98 was $149.4 billion, which has surged to $467.1 billion in 2021-22.
She pointed to the fact that government recurrent expenditure has grown significantly over the years and is concerned about whether such a large amount can be sustained.
However, as more people enter retirement age, it is difficult to reduce welfare and medical expenses.
Mrs. Ye suggested that the HA should reform its management, not just ask the government for money, but also increase efficiency.
She said that the salary of doctors in public hospitals in Hong Kong is not low compared with that of the United States, and it is also better than that of the United Kingdom, but manpower continues to be lost. She believes that it is important to maintain the morale of public hospital staff.
Zhuang Tailiang said that as long as the financial industry continues to grow, Hong Kong can cope with future increases in government spending.
(File photo/Photo by Liang Pengwei)
Scholars not worried about structural fiscal deficit as financial development supports income growth
Zhuang Tailiang is not worried about the increase in government spending, nor does he think there will be a structural deficit.
He said that Hong Kong's economic structure is special. Other places are dominated by manufacturing and retail industries. Small and medium-sized enterprises are very important, but Hong Kong's pillar industry is the financial industry. Therefore, although the growth of gross domestic product (GDP) has been slow in the past, the government's fiscal revenue keep going up.
He suggested that when studying the government's economic revenue, special attention should be paid to the situation of the financial industry. He pointed out that the increase in government revenue in recent years was largely due to the financial transactions carried out by international institutions and large banks in Hong Kong.
Since financial transactions are very important to Hong Kong's finances, Zhuang Tailiang believes that the government must have policies to facilitate companies to come to Hong Kong to do financial transactions. He mentioned that the epidemic prevention policy hinders foreign talents from coming to Hong Kong, which may weaken Hong Kong's advantages in this regard.
In addition, Chuang Tailiang mentioned that, in addition to requiring the SAR government's budget to be within the means within its means, Article 107 of the Basic Law also strives to balance revenue and expenditure and avoid deficits. It also mentions that the budget should be in line with the growth rate of the Gross Domestic Product (GDP). .
He joked that Hong Kong's GDP growth has been sluggish, and the economy is close to 3 trillion yuan, but the development of financial transactions has increased government revenue, and the "Big Valley" fiscal budget has made the fiscal budget account for an increasing proportion of GDP. The Basic Law!"
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