Financial Secretary Paul Chan Mo-po presented his budget on Wednesday against the backdrop of a significant fall in Hong Kong’s fiscal surplus and uncertainty over the city’s economic prospects, but insisted he would not be too frugal with public spending.
He announced HK$150 billion (US$19 billion) worth of initiatives and funding in a two-hour speech with the theme, “supporting enterprises, safeguarding jobs, stabilising the economy, strengthening livelihoods”.
Here are six main takeaways from his spending blueprint:
1. The government’s coffers not so full
Chan expects a fiscal surplus of HK$58.7 billion for 2018-19, down by 57 per cent from the previous year. He attributed this partly to reduced revenue from stamp duties and land sales, after the government withdrew sites to be sold to private developers for building public housing.
But the reserves are still expected to reach HK$1,161.6 billion by March.
Chan forecast economic growth of 2-3 per cent in real terms for Hong Kong in 2019, noting uncertainties in the global economic outlook and slowed growth in mainland China.
Inflation is forecast at 2.5 per cent, and the unemployment rate to remain at 2.8 per cent.
“I have adhered to the new fiscal philosophy of the current-term government of adopting forward-looking and strategic financial management principles to invest for Hong Kong and relieve people’s burden on the premise of ensuring healthy public finances,” he said.
2. Little sweeteners but no big giveaway
Salaries tax and profits tax will both be reduced by 75 per cent with a cap of HK$20,000, down from last year’s HK$30,000.
Rates will be waived for the year, subject to a ceiling HK$1,500 per quarter for each property. Last year’s cap was HK$2,500.
One month’s worth of extra allowances for welfare recipients, including Comprehensive Social Security Assistance payments, old-age allowance and disability allowance for the poor and elderly. Last year they were given two months of allowances.
A new initiative worth HK$890 million for students will offer a one-off grant of HK$2,500 to those in need of support for learning.
The government will pay entrance fees, as it did last year, for school candidates who sit the Hong Kong Diploma of Secondary Education Examination.
And elderly citizens will each get an additional HK$1,000 worth of health vouchers this year, on top of their yearly HK$2,000 endowment.
3. Support for smaller businesses
Noting the uncertainties in global trade had affected Hong Kong’s many small and medium-sized enterprises (SMEs), Chan unveiled a basket of measures to support them.
Business registration fees for 1.4 million business operators will be waived.
A technology voucher programme will be regularised to encourage enterprises to adopt technology to improve efficiency, while the funding ceiling for each enterprise will be doubled to HK$400,000.
HK$1 billion will be injected into a dedicated fund on “branding, upgrading and domestic sales”.
Enterprises will be encouraged to make use of the fund not only in mainland China and Asean countries, but also in all economies that have entered into a free-trade agreement with Hong Kong.
To help SMEs face liquidity problems, guarantee fee rates have already been reduced by 50 per cent under a financing guarantee scheme by the Mortgage Corporation, while the maximum loan amount has been raised to HK$15 million and the maximum loan guarantee period lengthened to seven years. These special concessionary measures will be extended to 2020.
4. Promenades and public toilets
Chan has earmarked HK$6 billion for developing new promenades and open space around Hong Kong’s iconic Victoria Harbour. The length of the promenades will be expanded from the current 20km to 34km in about a decade, and provide 35 hectares of open space on both sides of the harbour.
A HK$200 million Urban Forestry Support Fund will be set up to promote proper tree care and raise the professional standards of practitioners, given the problems the city has been having with tree management.
The government will also push ahead with an idea that was floated earlier and received popular support – to refurbish 240 public toilets across the city in the coming five years.
5. Cash injection for suffering medical sector
Responding to an acute staffing crisis at the city’s public hospitals, which has been exacerbated by the peak flu season, Chan will inject HK$80.6 billion into the system, an increase of 10.9 per cent from last year and accounting for 18.3 per cent of the total recurrent expenditure.
The most eye-catching initiative is the establishment of a HK$10 billion Public Healthcare Stabilisation Fund to tackle any additional expenditure incurred by the Hospital Authority during rough economic times. It was a suggestion first floated by Professor Yuen Kwok-yung, the University of Hong Kong’s top microbiologist.
Chan is also addressing the plight of overworked medical staff in public hospitals and dishing out a series of measures to boost morale and hold on to talent.
This includes a recurrent injection of HK$700 million to raise the allowance for on-call doctors, nurses and support staff, and a one-off HK$5 billion to upgrade medical equipment as well as introduce advanced medical devices for treating cancer and those who require specialist care.
Another HK$500 million recurrent subvention will be introduced to expand the list of subsidised drugs.
Chan has also allocated HK$1.2 billion to establish the Hong Kong Genome Institute to promote innovative scientific research on genomic medicine.
6. Care facilities for children and the elderly
In a bid to address the dire demand for elderly and child care services, Chan has a new initiative: purchasing existing properties to cater to their needs.
Chan noted that the shortage of venues was a particularly prevalent problem in densely-populated areas, where demand for such services is acute.
HK$20 billion has been allocated to buy 60 properties for accommodating more than 130 welfare facilities, including day child care centres, neighbourhood elderly centres, and on-site, preschool rehabilitation services.
A government source said the administration would spend three years purchasing properties such as vacant plazas, and another year to turn such premises into day care centres instead of residential nursing homes.
More from South China Morning Post:
- Hong Kong’s finance minister offers HK$150 billion in targeted spending on health, welfare and IT
- Hong Kong’s ailing public hospitals to get HK$5 billion injection in Financial Secretary Paul Chan’s budget for investing in advanced equipment
- Hong Kong finance chief Paul Chan dials down budget relief measures after smaller surplus
This article Hong Kong budget 2019: six key takeaways, from tax relief to help for struggling businesses first appeared on South China Morning Post