KP Chan on Motion on Urging the Government to Take Measures for Ameliorating Inflation and Alleviating People’s Livelihood Pressure
• 2011 has just begun, but we have seen a wave of price rises in society. The two power companies’ tariffs, the Tai Lam Tunnel toll, auto LPG price and aviation passenger fuel surcharge have all been increased. The Eastern Harbour Tunnel, Kowloon Motor Bus, tram and taxis have all applied one after another. Meanwhile, fast-food chains and the food and beverage industry indicated that they would raise their prices. This year will obviously be a “price hike year”!
• The wave of price rises this year will certainly push up the headline inflation to a peak. Some academics have even estimated that inflation will exceed 5%. To the grassroots, the inflation index means the misery index. With a soaring misery index this year, the general public will certainly have a miserable year!
• As Members may be aware, the causes of inflation are not simple, especially in Hong Kong given its unique characteristics. With China as our hinterland, Hong Kong depends very much on the Mainland for staple food supplies. As Mainland consumer prices on the rise is with high economic growth year on year, the prices of goods supplied to Hong Kong will of course be seriously affected. As the movement of the Hong Kong dollar is restricted by the Linked Exchange Rate System, the continuous appreciation of the Renminbi means diminishing purchasing power of the Hong Kong dollar. Members of the public therefore have to pay more to purchase Chinese products in Hong Kong dollars. This is the so-called imported inflation. The problem cannot be tackled unless we abolish the linked rate in Hong Kong.
• Another factor causing inflation is the quantitative easing policies launched by various countries in the world, especially the United States, in the wake of the financial tsunami. It has resulted in hot money flooding the market. Hong Kong has also seen a massive capital inflow, pushing up asset prices and fuelling inflation. The economic upturn should normally be viewed in a positive light, but it actually paints a very grim picture for the grassroots, for the benefits brought by economic growth are concentrated mainly in the financial market, property sector and the knowledge-based industries. The grassroots in general will benefit not much from it, but they also have to bear the brunt of inflation that comes along with economic growth.
• Besides, the Treasury is flooded with cash. The accountancy sector predicted that this year’s fiscal surplus will range from $62.1 billion to $70.1 billion, the third highest surplus recorded since the reunification. As we are short of means to curb inflation, the Government, which is flooded with cash, should return wealth to the people and introduce inflation relief measures to meet people’s immediate needs!
• Today’s motion has given us an opportunity to debate on the most pressing problem in the community currently. I met with the Financial Secretary on the Budget this Monday. I hope he will propose effective measures ― especially relief measures that are one-off, intensive and innovative ― with emphasis on easing the pressure on workers living in poverty and the “three noughts” (People who are neither CSSA recipients, property owners nor taxpayers).
• The amendments to the motion today cover a number of measures to relieve the pressure of inflation and living on the people. I agree to many of these proposals, such as the original motion’s proposals of providing an electricity consumption subsidy, rates concession, and rent concession for public housing residents, as well as the prompt resumption of the Home Ownership Scheme. These measures can provide direct assistance to the people in need. In addition, I support the idea of raising the tax allowances, namely the child allowance and the dependent parent allowance, to a suitable level as they have remained unchanged for several years. However, I am worried about the proposal of abolishing the standard tax rate without thorough studies.
• Premier WEN Jiabao of the State Council earlier appeared on radio and answered the problem of inflation on the Mainland, Premier WEN said this problem hurt his heart. I do not know if the problem of inflation in Hong Kong will also hurt the Chief Executive’s heart. I only hope that the SAR officials will heed our views and take them to heart to really work out some solutions.