The Winners and Losers From Hong Kong’s Budget 2019
(Bloomberg) -- Hong Kong’s Financial Secretary Paul Chan unveiled a modest budget that included cash for tech, a boost for healthcare and a hefty handout to clean up the city’s public toilets, as he juggled a much smaller pile of cash than he had last year.
Chan on Wednesday announced the available fiscal surplus this year was HK$58.7 billion ($7.48 billion) — a figure well down on last year's HK$149 billion, thanks to a slowdown in the economy in the wake of the U.S.-China trade war and a cooling property market which dented land sale revenues. Still, the figure was higher than Chan’s original estimate of HK$46.6 billion made last year.
These are some of the groups that will benefit from the number crunching — and those who have been left out in the cold.
Chan earmarked HK$5.5 billion for a further phase of development at Cyberport, a hub for startups and a center for Hong Kong’s efforts to rebrand itself as a tech leader, as it plays catchup to Shenzhen across the border. He also announced HK$16 billion for refurbishment of R&D facilities at universities as the government attempts to nurture local talent.
Hong Kong’s public health care system has become so stretched that some patients are forced to wait months to see specialists. Chan offered an additional 10.9% of funding to the Hospital Authority, taking the total to HK$80.6 billion in 2019/20. In addition he announced HK$5 billion to update medical equipment and boost training, and a HK$10 billion healthcare stabilization fund to prepare for additional expenditure which may be incurred in case of unexpected circumstances.
Chan announced a one-off grant of $2,500 for each student to support learning. In addition, secondary school students sitting public exams in 2020 will have their exam fees paid.
Vouchers worth HK$1,000 were earmarked for the elderly, as well as an extra allowance for recipients of social security. The government earned criticism last month for changes to elderly welfare policies that they later backtracked on.
Public toilet users
Perhaps taking a cue from Chinese President Xi Jinping’s campaign to improve sanitary conditions on the mainland, Chan said the government would spend HK$600 million in the coming five years on upgrading Hong Kong’s 240 public toilets, which are often slammed for being smelly, dirty and clogged. Critics, however, say cash must also be put into maintenance and cleaning, and civil education, to stop them from quickly deteriorating again.
Tourists and joggers
The Financial Secretary set aside HK$6 billion to develop new harborfront spaces — popular with tourists and locals alike — extending the length of promenades running along Victoria Harbour from around 20 kilometers to 34 kilometers within the next decade.
After tens of thousands of trees in the city fell during last year’s Typhoon Mangkhut, sparking a major cleanup operation, Chan announced a $200 million fund to promote urban forestry and tree protection, with one aim being to encourage more students to pursue studies in arboriculture.
Electric car owners
Good news for electric car owners looking to juice up their vehicles, Hong Kong will spend HK$120 million on expanding electric car charging stations. But there won’t be tax incentives for drivers to shell out for EVs this year.
Salaries tax and tax under personal assessment to be reduced by 75 percent up to a maximum HK$20,000 for the fiscal year 2018-2019. Last year’s cut was the same but the cap was set at $30,000. The slightly less generous reduction — putting the rebate back to the 2016/17 level — affects 1.9 million residents.
Chan reiterated that the government has no plans to ease existing property-cooling measures. He also poured cold water on expectations that the loan-to-value ratio on mortgages could be eased to help first-time homebuyers. Home prices in the city have fallen about 9% from their August peak.
Hong Kong’s bank balance
The Financial Secretary underlined the government's support for a proposal to build housing for up to 700,000 people on yet-to-be-built artificial islands. That idea has been slammed on environmental grounds, and on the basis that it will be a waste of the government's reserves, which currently stand at HK$1.15 trillion.
©2019 Bloomberg L.P.