Seven policy proposals for HK’s next chief executive

20-Dec-2016 Intellasia | SCMP | 6:00 AM Print This Post

Early in 2012, when it was still unclear whether it would be CY Leung or Henry Tang who would get anointed as the Hong Kong government’s next chief executive, the South China Morning Post offered seven policy proposals for the new guy’s first day in office. It wasn’t that any one expected the new chief executive actually to pick up the suggestions and put them into action. Rather the objective was to draw attention to the complete failure of either candidate to discuss policies to address Hong Kong’s problems. With the exception of Henry Tang’s notion that raising the height limit on New Territories small houses from three storeys to nine could help solve the city’s housing shortage (no joke), the campaign seemed utterly bereft of new policy ideas.

Five years on, little has changed. Regina Ip does have an idea. But it can hardly be described as new. She wants to put into effect Article 23 of the Basic Law, under which the Hong Kong government is meant to “enact laws… to prohibit any act of treason, secession, sedition, subversion against the central people’s government” of China. When she tried that before in 2003 as Secretary of Security she brought more than 500,000 demonstrators on to the streets in a protest that cost both her and her boss their jobs. Now, in the absence of any new ideas, it seems she wants to try again.

Given that Hong Kong’s politicians are so lamentably poor at coming up with policies either to strengthen the city’s economy or to improve the quality of life for its residents, it is worth dusting off those seven first day policy proposals from 2012 in the hope – probably forlorn – that they might inspire the territory’s next chief executive to do a little original thinking on the policy front.

1) Cut the profits tax to 15 per cent. The idea here is to enhance Hong Kong’s competitiveness and stimulate the economy. The government won’t miss the revenue. It has consistently run budget surpluses in recent years, and at the last count was sitting on some HK$1.5 trillion in excess reserves.

2) Halt work on all new infrastructure projects. Unfortunately, it is now too late to cancel monstrous money pits like the Zhuhai bridge, the high-speed rail link to Shenzhen, and the Kai Tak cruise ship terminal. But for future mega-projects the government should double the projected cost and halve the expected revenue. If the project then fails to generate a 4 per cent annual return, it should be scrapped entirely.

3) Ban buses and trucks with dirty diesel engines. Credit where credit is due – the government has made some progress in recent years towards improving roadside air quality. Nevertheless, there are still far too many polluting vehicles on Hong Kong’s streets. The new chief executive should rigorously enforce the latest fuel and engine standards, with stiff fines for owners who do not comply.

4) Slap a tax on empty flats. Everyone talks about Hong Kong’s housing shortage, but in reality there is no such thing. According to government data there are 190,000 homes in the city sitting empty. Even if that is an exaggeration, a punitive tax on empty properties would bring many back into the housing market, going a long way to solve the accommodation crisis.

5) Resume regular land auctions, charge developers a ground rent rather than an upfront fee, and tax undeveloped land banks. These measures would lower barriers to entry in the city’s property sector, boost competition, and break the ability of the developers’ cartel to squeeze the market. The end result should be more affordable and better quality housing.

6) Scrap the small-house policy. It is a colonial-era anachronism that arbitrarily enriches one special interest group.

7) Scrap the stamp duty on stocks and replace it with taxes on capital gains and dividends. This would have the dual merit of strengthening Hong Kong’s position as a financial centre while imposing a tax on the city’s tycoons, who currently pay no tax on their incomes.

Needless to say, in his five years in office CY pursued none of these policy ideas, nor – it could be argued – any policies aimed at improving life in Hong Kong at all. As a result, each proposal remains as valid as it was five years ago. Of course, many readers will disapprove of some of these ideas, and doubtless many could come up with seven policy proposals of their own at least as good, if not better. The truth is there are all sorts of potential policy prescriptions for Hong Kong’s problems, and plenty of resources to put them into action. Unfortunately it seems Hong Kong’s politicians just don’t care.


Category: Hong Kong

Print This Post

Comments are closed.