Understandably, public demand for bailouts and handouts to be announced in the new government budget is the strongest ever. Hong Kong society, especially the disadvantaged quarters, is on the verge of despair under great anguish brought by the two-year-long COVID-19 pandemic. The new budget comes to their rescue, offering them much-needed relief.
The new budget strikes a balance between the short- and longer-term needs of Hong Kong society
There might never be an amount that is considered to be sufficient. But the more than HK$54 billion ($6.92 billion) in resources allocated for one-time relief measures will go a long way in mitigating residents’ hardships under the ravages of the pandemic. These include a reduction in the salaries tax, a rates concession for domestic properties, electricity subsidies, additional allowances for social security recipients, and HK$10,000 in electronic vouchers for each of the 6.6 million eligible residents.
For businesses, support measures involving a total amount of public funds of about HK$12 billion are expected to help ease their operating pressure, ensuring the survival of thousands of small and medium-sized enterprises struggling to keep their heads above water, which in turn is crucial to sustaining the livelihoods of thousands of households. Coupled with funding of HK$13.2 billion earmarked for creating temporary jobs under the government’s Anti‑epidemic Fund, these measures are likely to ease significantly the unemployment situation due to the pandemic and the anti-pandemic measures.
In recognition of the overriding priority of overcoming the pandemic, the fundamental solution to Hong Kong’s current predicament, additional funding of HK$72 billion has been allocated in the budget to fighting COVID-19.
While responding to the immediate needs of overcoming the raging pandemic and relieving residents of their hardship, the financial chief has not overlooked the city’s needs for medium- and long-term socioeconomic development.
Countercyclical measures costing a total of over HK$170 billion included in the budget, together with spending in infrastructure projects and other items, will lift local economic growth by about 3 percentage points, according to the financial secretary’s estimate.
And a plethora of initiatives and measures have also been proposed in the budget for strengthening the city’s capacity to promote further socioeconomic development in the longer term, including expanding land resources, nurturing talent and developing industries. The most significant initiative is the setup of a dedicated fund to expedite the Northern Metropolis development, with HK$100 billion earmarked for the implementation of infrastructure works relating to land, housing and transportation within the area.
Countercyclical measures were also launched in the previous two budgets, which, together with the relief measures under the Anti-epidemic Fund, involved financial commitment of over HK$460 billion.
While there is a genuine need for Hong Kong to maintain fiscal prudence as the city’s small open economy remains vulnerable to increasing political and economic upheavals around the world, the continuation of an expansionary fiscal policy in the new budget is justified by the city’s current situation. All in all, the new budget strikes a balance between the short- and longer-term needs of Hong Kong society.