'HK at high risk of structural deficit'

Stacy Shi and Rachael Ng

Hong Kong is at significant risk of entering a structural fiscal deficit, according to Wendy Hong Wen, a lawmaker from the Election Committee sector.

She expressed doubt that the government will be able to balance its budget in the next two to three years.

Instead, Hong recommended that both the government and people prepare for a long-term fiscal deficit and develop a comprehensive 10-year reform proposal aimed at adjusting the government's expenditure and revenue structure.

She proposed several measures, including controlling construction costs.

Hong argued that if Hong Kong could halve its construction costs, government spending could potentially be reduced from about HK$100 billion to HK$50 billion.

To achieve this, she suggested updating approval procedures and streamlining over 300 guidelines and more than 1,000 procedures.

In terms of reducing civil service salaries, Hong noted the need to enhance the efficiency of the vetting and approval process for applications while also considering a reduction in the size of the civil service.

Lawmaker Gary Zhang Xinyu supported prioritizing the Northern Metropolis and housing development projects, while suggesting that the Lantau Tomorrow mega project should be given a lower priority.

"As the government's primary income in the future will come from the Northern Metropolis, projects that add value to the area should be prioritized," Zhang said.

However, he recommended postponing the Kau Yi Chau reclamation project to help reduce government expenditures.

"The ongoing planning and designs for the project will not be wasted. The next stages will depend on the progress of the Northern Metropolis and the government's financial situation," he said.

Zhang added that the future of the project will hinge on Hong Kong's population growth and industry development.

He also indicated that infrastructure projects, such as bridges and road widening, that do not add value to land will be delayed.

Lawrence Ng San-wa, president of the Hong Kong Construction Sub-contractors Association, estimated that the average annual expenditure on infrastructure over the next five years will remain around HK$90 billion as proposed by the government, with no significant decrease anticipated.

"Thus, prioritizing projects will not have a substantial impact on the industry," Ng said.

He suggested that the government encourage private companies to participate in the Northern Metropolis development, which he believes could stimulate private market investment.

stacy.shi@singtaonewscorp.com

rachael.ng@singtaonewscorp.com