Cash handouts no budget panaceaEditorial | Mary Ma 2 Dec 2019
Hot on the heels of the Lunar New Year holidays comes Financial Secretary Paul Chan Mo-po's budget. Some bits and pieces have been announced early in a bid to pacify a society rattled by civil unrest.
Will there be more to be added to what is already a lengthy list of relief for businesses and individuals?
Some are calling for cash handouts because they were excluded from relief measures announced over the past six months. They are also envious that - just as Hong Kong entered its fifth month of unrest - Macau said it was again handing out cash to both permanent and non-permanent residents.
Chan would be advised not to follow suit. I seriously doubt cash handouts would help end the ongoing crisis as this is not one of the five demands insisted on by anti-government protesters. Plus, if the farcical delay in distributing HK$4,000 to the public as experienced in an earlier exercise were repeated, it could be disastrous in wake of the social tension.
The civil service is better advised to leave the job of handing out money to charities. For example, the Li Ka Shing Foundation set a laudable example by releasing HK$1 billion to businesses in need. Federation of Trade Unions president Stanley Ng Chau-pei's criticism of Li's move was hypocritical.
Hong Kong already has a social safety net for the poorest, while tax rebates and rate concessions over the years have benefited the middle class.
It may be argued that, although Hong Kong does not really own its own monetary policy due to the currency peg to the US dollar, it is free to devise fiscal policies to achieve political aims in order to stabilize society.
The problem with this argument is that it would not answer the protesters' five demands which include an independent investigation into alleged police brutality and universal suffrage for electing the chief executive and legislature - but nothing about fiscal spending.
Looking ahead, the economy is looking increasingly gloomy, with Hong Kong already in recession. Have you noticed that administration officials have now stopped referring to it as a "technical recession"? But the plain truth is that Hong Kong is in a real recession - unless Chan or other top financial officials can confidently assert otherwise.
There were numerous warnings near the end of 2018 that 2019 would be a difficult year - and that was well before the disastrous extradition bill was announced. Thankfully, so far the job market together with the stock and property sectors have remained relatively steady.
Social tension may have eased a little after the district council election but the crisis is far from over.
As nobody can predict what will happen next, would it be wiser for Chan to hold back and monitor developments so that he has the means to intervene in a timely manner to support the local economy when the need arises?
It's going to be a very challenging budget amidst very challenging times.