BPA endorses the Budget for being pragmatic and forward-looking, which will eventually enhance Hong Kong’s competitiveness.
The Financial Secretary, Mr. John Tsang, in his Budget today highlighted for the first time the potential structural deficit. He also proposed a series of initiatives to strengthen Hong Kong’s competitiveness in several sectors. BPA endorses the Budget for being pragmatic and forward-looking, which will eventually enhance our competitiveness. The Budget aligns with BPA’s theme of the year – ‘Creativity and Upward Mobility-Brightening Hong Kong’s Future.’ Ensuring the sustainability of economic growth and upward mobility are the keys to tackle Hong Kong’s structural deficit in the long run.
Housing and Infrastructure
The Government has set the goal to increase housing land supply with a view to providing 470,000 residential flats in the coming ten years, while public housing takes up 60 per cent of the new housing target. It is estimated that the government has to spend over HK$200 billion to achieve the goal, based on the cost of building an apartment for around HK$800,000 to HK$1 million. Furthermore, the Budget also proposes planning for a three-runway airport system, railways, IT solutions, etc. It is expected that the fiscal pressure of the government will be overwhelming. BPA praises the Budget on requesting the Housing Authority to conclude assessment on additional financial resources needed in the future. We also urge the government to optimise the Supplementary Labour Scheme to tackle the current shortage of manpower which would affect adversely the delivery time and cost of infrastructure projects.
Promoting Economic Development
In view of the future substantial public expenditure with an ageing population and a shrinking workforce, BPA agrees to the Budget proposals focusing on development and competitiveness. As regards tourism, we welcome the government for adopting our proposal for allocating additional resources for the Hong Kong Tourism Board to draw convention and exhibition visitors, as well as to offer more diverse choices of quality hotel accommodation and tourist spots. Nevertheless, the Government should also resolve the inadequacy of exhibition and convention venues and over-concentration on visitors which exert pressure on our society.
Fueling Innovation and Technology
“Innovation” and “talents” are the keys to Hong Kong’s brighter future. The Budget proposed to set up an Enterprise Support Scheme to support R&D activities. It will also collaborate with local R&D institutions and universities and will launch an interactive portal to support the college students and start-ups. The Budget’s rationale matches with BPA’s proposal on supporting R&D and start-ups. Besides, the proposed occupation and business knowledge training can help nurture more local talents which will eventually increase Hong Kong’s competitiveness.
Gearing Up to Consolidate Financial Sector
BPA is in support of the main direction proposed by the Financial Secretary on the measures to uphold Hong Kong as an international financial centre. The Government shall reconcile the different views in the financial industry on its development, especially the hardship faced by small and medium securities dealers. An enabling environment will flourish if the Government strengthens the communication with the financial sector on tax reduction, proper regulations, promoting transparency and efficiency.
Enhancing competitiveness of SMEs
SMEs and middle-class are the pillars of economic development. BPA welcomes again for including our suggestions in the Budget, including (i) extending period for SME Financing Guarantee Scheme and Microfinance Scheme; (ii) increasing budget for the Small Business Policy scheme; and (iii) promoting cloud computing applications among SMEs. We believe these measures can increase cost effectiveness of SMEs and magnify their role in a diversified economy and R&D sector.
Supporting the Middle Class
We agree to the proposal for progressively reducing one-off relief measures, with a view to assuring that our public finances will remain stable. But the reduction of relief measures would cast shadows over society which the government shall not omit. Many middle-class families expressed concern on waiving rates. For instance, for a 700-square-foot apartment, the rate for a family is around HK$9,000 under the current relief measures. Upon the relief reduction and increasing estimated annual rental value, the rates would increase substantially to over HK$13,000.
It is noteworthy that rate is only one of the tax liabilities, the middle-class families also have to meet other necessary expenditure, such as mortgage, medical and educational expense. BPA holds the view that it is beneficial for the Government to the support the middle-class families so that they can contribute to social stability, economic development and tax revenue. Hence, BPA urges the Government to provide further assistance to relieve the burden of the middle class, including reducing rates, providing tax deduction for health insurance, implementation of allowance to those in rental private housing.
Conclusion
The Chief Executive delivered his Policy Address last month which is mainly supporting the needy, while the Budget provided long-term fiscal commitments and proposed revenue-raising and expenditure-cutting measures for our future, including investing in infrastructure to enhance Hong Kong’s competitiveness. Encouraging self-reliance is an appropriate direction to refrain Hong Kong from being a welfare state. BPA stresses that economic development is crucial to increase revenue and relieve the pressure to increase existing tax rates or introduce new taxes.
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