Chief Executive Leung Chun-ying warned that Hong Kong is facing a "fiscal cliff" due to the delayed passage of the budget caused by filibustering in the Legislative Council.
However, Leung said he will not enter into any deal with the four radical lawmakers to end it. Speaking during a 1-hour question-and-answer session in Legco yesterday, Leung said that if the budget is not passed by the middle of this month, the consequences will be "dire" and "irreversible."
At the same time, he said it is inappropriate to negotiate a deal with the lawmakers from People Power and League of Social Democrats in exchange for them to abandon their delaying tactics.
"We can't allow several people to resort to a filibuster in order to demand a deal with the government just because they are dissatisfied with some issues," Leung said in reply to a question from Ip Kwok-him of the Democratic Alliance for the Betterment and Progress of Hong Kong. "I totally agree with those who say we will face a fiscal cliff [if the budget bill is not passed before mid-May].
"The [negative] impact on public finances, citizens' livelihoods and all society cannot be evaluated if the budget is not passed on time."
But he stopped short on how the government will handle the looming fiscal crisis. If the budget is still not passed by Wednesday, the government will activate contingency measures and grant funds only for urgent matters such as civil servants' payrolls and Comprehensive Social Security Assistance.
All department heads have submitted details of their cash flows to the Financial Services and the Treasury Bureau so urgent items can be evaluated.
The warning came ahead of a meeting between Financial Secretary John Tsang Chun-wah and the radicals today. In a letter to lawmakers, Tsang said public services including health care and the granting of funding to the Hospital Authority and schools will be hit if the budget is not passed on time.
On other issues, Leung said the government will launch a public consultation on political reform relating to 2017 CE election at the appropriate time.
On the controversy over a HK$100 million government donation to Sichuan earthquake relief efforts, Leung said he realizes there are concerns about corruption in the mainland. But he said Beijing has stepped up its crackdown on graft and fierce criticism of the donation will only harm close relations between Hong Kong and the mainland.
Turning to visitors, Leung said the government will study the setting up of special shopping zones for mainlanders in view of their huge demand for Hong Kong goods. Such zones could be set up in the northern New Territories and Lantau Island, he said. Leung said Lantau will be the first stop for tourists arriving via the Hong Kong-Zhuhai- Macau mega bridge, set for completion in 2016.
Baby milk powder importers are mulling plans to guarantee sufficient supplies for local mothers and their suggestions will be considered when the law restricting exports is reviewed in October, he said.
Neo-Democrats' Gary Fan Kwok- wai was expelled by Legco president Jasper Tsang Yok-sing after he insisted on standing in protest against the arrest of Occupy Central volunteer Melody Chan Yuk-fung. The radicals - People Power's Albert Chan Wai-yip, Raymond Wong Yuk-man and Chan Chi-chuen and the league's Leung Kwok-hung - were ejected for disrupting the session.