How Hong Kong can cut wasteful spending and boost revenue

The government and general public alike should have deep concerns about the potential impact on our economy and livelihoods of Hong Kong’s projected budget deficit for the current financial year, which Financial Secretary Paul Chan Mo-po said was expected to be around HK$100 billion (US$12.8 billion).

This would be the third consecutive year in which the city has seen a deficit of more than HK$100 billion. Chan has also said that the city’s reserves are projected to drop to HK$685 billion by the end of March, the lowest level in more than a decade.

In such a critical situation, a responsible government that truly cares about Hong Kong and its residents must come up with effective measures to avoid further losses and earn more revenue from known and untapped sources. It must also do so within a shorter time frame than the three to four years Chan has said it would take to bring the budget out of the red.

The public coffers have heavily subsidised many services in recent years, including medical care, social needs and education. Officials must find the most effective and meaningful ways to limit expenditure while ensuring those public services are not adversely affected.

Even middle-level managers know that, beyond boosting revenue, keeping any entity financially healthy requires identifying wasteful spending which can be addressed quickly. There have been suggestions that the salaries of civil servants and lawmakers be cut to help reduce the deficit, but such plans have been called counterproductive.

Instead, Chan should focus on finding wasteful utilities spending first, such as with electricity and fuel. Reducing unnecessary consumption and enhancing energy efficiency will bring dual benefits, saving money and reducing greenhouse gas emissions which will aid the fight against climate change.

  

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