- Piecemeal handouts and economic reliefs are in the past. The government must overhaul its conservative fiscal policy and boost social safety nets across the board
Hong Kong is facing a perfect storm, a social-economic-political crisis the likes of which we have never seen. If the old cliche about crisis and opportunity holds, now is a chance for the government to spend big, overhaul its conservative fiscal policy and boost social safety nets across the board.
As Western central bankers and treasury officials liked to say during the global financial crisis, "bring out the bazooka"; "do whatever it takes". No, they didn't mean blowing away the protesters, but bringing in full financial resources that could be committed to restore public confidence.
The time for piecemeal handouts and economic reliefs is past. They look like scattershot rather than a planned, concentrated shot at recovery. The government must hammer home with every message that it will do whatever it takes to restore the economy and bring back calm to the streets. That's elementary, but officials haven't been doing it. Go figure.
The government has just launched the fourth round of measures aimed at helping ordinary taxpayers and small-and-medium-sized companies that are projected to cost HK$4 billion. But that's a drop in the bucket. Even tallying roughly HK$21 billion in sweeteners the government has committed over the past four months, it's still far from convincing. OK, they are in the right direction and include waivers on government fees for companies, fuel subsidies for the logistics and recycling industries, cash incentives for travel agents, and allowances for students and low-income groups.
The International Monetary Fund said the government needed far greater handouts and fiscal stimulus to pull the economy out of its worst slump since the Sars crisis of 2003. It has recommended spending an extra 1.5 per cent of GDP each year by widening social safety nets, such as new subsidies in education, housing and infrastructure, as well as retraining for the newly unemployed. That should bring the total spending to 8 percentage points of GDP from 2019 to 2024, the IMF said.
My own pet projects: legislate minimum living space in private rentals and the waiting time for public housing.
At the end of March 2019, fiscal reserves stood at HK$1.17 trillion. That doesn't include the Exchange Fund of HK$4.16 trillion, as at the end of August, used to support the US dollar peg.
The wealth that the government sits on contributes to the impoverishing of locals. Spend more of it, and there will be fewer poor people. Bring out the bazooka.
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