Last week, Hong Kong released its hardest budget yet. It’s hard because of the need for austerity measures that most previous budgets didn’t face.
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This city used to have reserves other economies could only dream of. Some may remember when the budget spotlight used to be on accusing the financial secretary of being a miser, for hoarding the incredible surplus and not sharing enough of the wealth with people.
For the sake of our younger readers and those with shorter memories, let’s indulge in a quick trip down memory lane. Once upon a time in Hong Kong, our budget surpluses – like our budget deficits of recent years – were often underestimated, so much so it became a joke. Former financial secretary John Tsang Chun-wah would poke fun at himself for consistently getting it wrong.
At a meeting a decade ago, where executives discussed ways of generating sufficient revenue in the face of an ageing population and dwindling tax base, Tsang joked that “the answer is to continue to have me as financial secretary”, since with him, we could count on having more than expected.
The most ridiculous budget estimate was for 2010, when the government forecast a HK$25.2 billion deficit and ended up with a HK$75.1 billion surplus. Ending up with five or six times more than expected was the norm then.
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To give credit to our current financial chief, Paul Chan Mo-po only underestimated our latest deficit by HK$39.1 billion: he predicted a HK$48.1 billion deficit last year and it turned out to be HK$87.2 billion (US$11.2 billion) instead.