Hon KP Chan on the Resumption of 2nd Reading of the Appropriation Bill of 2011 (Synopsis)
• The Budget this year is problematic. It started with adverse responses to the proposed cash injection to MPF accounts. Political parties then organized rallies and threatened to disprove the budget. Although public sentiments are still unsettled, I trust the revised budgetary proposals are welcome by the majority.
• Public sentiments turned tide following the Financial Secretary’s decision to distribute the $6,000 per head in cash instead. In the same evening of the announcement, I updated a dinner gathering with the news, and atmosphere changed from boredom to excitement. All applauded with joy. When I met wardens and cleaners of my apartment at the foyer, they all said “thank you” with a smile. This reflects to a certain level the views of the majority of citizens.
• It is the right decision to change course from MPF injection of $6,000 to cash payment. A social crisis was defused. However, the Financial Secretary’s handling of the matter is debatable. At the outset, he reiterated that cash distribution was undesirable because it was inflationary. When the public was dissatisfied, he swung from MPF injection of $24 billion to cash payment and tax rebate of $42.3 billion in total. Again the public was astonished. Listening to the public is praiseworthy but such an abrupt policy swing might indicate recklessness of the Government and would damage credibility of the FS.
• The Government must give convincing arguments for this cash payment and lay down future policies. In subsequent years, people would have due expectations for similar payments. At good times of the economy, people would ask for sharing of prosperity. As bad times of the economy, people would ask for public assistance. If the Government does not respond, there would be discontent. It would be a great challenge to future Administrations, and even a time bomb for the next term. I urge the FS to manage public expectations with good policy arguments for the cash payment of this year. He should clarify unequivocally that the Government is not a “big spender”. It would remain prudent in public finance and also be responsive to public desires of good causes.
• As we know, the FS consulted pro-establishment legislators before announcing the change in course, as a means of soliciting adequate support. This is appreciated. However, he did not inform the pan-democratic camp in advance, giving rise to political disputes and the defeat of interim funding bill. The Government could have done better. The whole incident reflects inadequacy of the Government in monitoring public pulse. In future, the Government should seek public views and consult political parties on major policy decisions with a view to fine-tuning particulars before announcement. As such, public policies would not betray public sentiments and there would be adequate support in the legislature.
• There is a distinction between Policy Address and the Budget. The Policy Address deals with macro directions. The Budget provides financial support for policies and reliefs to the needy. Views on long term policy initiatives like revival of homeownership scheme should be directed to Policy Bureaus and the Chief Executive, not the Financial Secretary. The public should not confuse differences between Policy Address and the Budget in function.
• In this year’s Budget, the pubic has focused unduly on cash payment. Many measures on improving livelihood are overlooked. These include expansion of the Hospital Authority Drug Formulary, extension of elderly health voucher with increased value, raising allowances for dependent parents/grandparents and children, and issuance of inflation-linked retail bonds. In my view, these are commendable measures but lack deserved attention.
• This year’s Budget though controversial has many good initiatives. I am sure that ordinary people are mostly pleased. I support the Bill.