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Budget Consultation

The consultation exercise for the upcoming Budget is in full swing. Recently, I attended the RTHK's programme "Voices from the Hall", and a Budget consultation event "Junior Financial Secretaries" targeted mainly at secondary students. In these consultation sessions, I met with a total of some 200 residents and senior secondary students, who were considerably representative of different age groups, walks of life and backgrounds. Their interests covered such multifarious areas as public finance, economic development, social welfare, land and housing, education, and healthcare, reflecting the diversified concerns, views, perspectives, visions and ideas of our community. They have provided us with valuable reference for preparing the Budget.

I attended the RTHK's programme "Voices from the Hall" yesterday to converse with some 100 members of the public from different walks of life and backgrounds and gauge their views on the upcoming Budget.

From these and some other consultation sessions, we have learnt that members of the community do share some common views and concerns despite their different backgrounds. First, many residents consider that in managing public finances, the Government should seek to achieve a fiscal balance. Second, we should seize the opportunity to go all out to boost the economy and strive for development, with a view to injecting new growth impetus for Hong Kong. Third, there is a need to further improve people's livelihood.

In fact, the Government has deployed substantial resources to combat the pandemic over the past few years. At the same time, there has been a rapid increase in public expenditure. Government expenditure must now enter a period of consolidation.

We are determined to consolidate public finances and gradually restore fiscal balance by controlling expenditure and increasing revenue. Maintaining a healthy fiscal position is one of the keys to ensuring sustainable and steady development of our economy and society. The process, however, must go hand in hand with reality and with the concerted efforts of the community through ample communication. It cannot proceed too slowly or too hastily. During the process, we need to carefully assess the tolerance level of different sectors of society, and the operating conditions of different industries. For the most vulnerable groups in the community, we must ensure that they receive the necessary support and basic public services under the social security system.

The Government must take appropriate measures to increase revenue. That said, at a time when we are striving to boost economic development and attract enterprises and talent, we must take the actual circumstances and current development into account when we consider measures to raise government revenue. For example, we need to maintain Hong Kong's competitiveness in the international market and continue to attract enterprises and investments; we need to maintain and reinforce business confidence while avoiding impeding the momentum of local economic recovery; and we need to maintain the advantages of our simple and low tax regime and bear in mind the burden of our residents.

For example, some fees and charges for certain public services have not been adjusted for a long time; while income from certain services provided under the "user-pays" principle has been falling far short of cost recovery. It is, perhaps, time for review.

I attended the "Young Financial Secretaries" consultation event earlier and met with dozens of senior secondary students from different schools to learn about young people's views on the Budget.

In the long run, the key to increasing government revenue lies in vibrant economic development. We must promote high-quality development in Hong Kong and facilitate the upgrading of traditional industries and explore new economic growth potentials, with the aim of growing Hong Kong's economic pie and building a more resilient growth momentum to bring benefits to different sectors of the community. It is only through these efforts that we can expand and diversify the sources of government revenue to better serve the needs of social development and public services.

For promoting high-quality development of Hong Kong's economy, it is essential that we actively integrate ourselves into national development and align with national development strategies. We must consolidate and enhance Hong Kong's development in the "eight centres", and seize the opportunities arising from the development of the Guangdong-Hong Kong-Macao Greater Bay Area and the Belt and Road Initiative. Here, two points are important:

(1) For the existing industries with clear advantages, such as finance, trade and high value-added services sector, we will continue to enhance our competitiveness, seek new breakthroughs, develop new growth potentials and tap into new markets in order to achieve higher and more robust growth with greater sustainability.

(2) We will step up the development of new industries where we enjoy clear advantages, in particular the innovation and technology, by attracting strategic enterprises and relevant talent, allocating resources to support research and development (R&D), as well as promoting the commercialisation of R&D outcomes and development of industries.

Meanwhile, we also have to invest in the expansion of Hong Kong's development capacity. Past experience has suggested that, for long-term development, we must maintain consistency in the formulation and implementation of policies. Obviously, we will take appropriate measures to respond to the short-term market conditions as the circumstances may require. Nevertheless, efforts on creating land reserve, building transport infrastructure and maintaining stable housing supply should not be slowed down, let alone stopped, due to short-term market conditions, so as to enable the Government to make flexible deployments to address market needs and public aspirations. This is pivotal to achieving not only our stable and sustainable development, but also the continuous improvement of people's livelihood.

It is true that long-term infrastructure projects require longer-term investments. By fomulating appropriate financing arrangements and leveraging market capital, such as investing with private investors and long-term investment funds in individual projects, we can mobilise different sources of funds to jointly support Hong Kong's development.

During the rest of the Budget consultation period, we will continue to humbly listen to opinions from all sectors of the community, pay close attention to latest changes in the social and economic landscapes, and assess the trends in the external political and economic environment. We will strive to ensure that our resource planning for the coming year will provide us with the necessary support to embrace challenges as opportunities and turn difficulties into strength, thereby enabling Hong Kong to grasp new opportunities and forge ahead steadily.

January 7, 2024