Hong Kong shifts aim from the virus to property: Andy Mukherjee

-- If the quantum of public spending alone decided the seriousness with which small, open Asian economies are fighting the coronavirus, then Hong Kong’s HK$120 billion package ought to be three times punchier than rival Singapore’s.

The S$6.4 billion anti-viral budget recently announced by Singapore also has a cash component. But for high-income earners and property owners without young children, it comes to just S$100 — less than HK$600. Although the needy and elderly will get more, the bulk of Singapore’s extra spending will support firms and shore up health expenditure.

The headline figures could be deceptive, though, considering that even this year’s deficit was largely a meaningless number. It included money set aside for a HK$30 billion anti-epidemic fund, which will only be used next fiscal year to give a one-time special allowance to low-income households and subsidies for students. Strip that out, and Hong Kong’s first budget shortfall in 15 years was basically an optical illusion.

What the government earns from stamp duties — some of which are meant to keep housing prices in check — will rise. So will revenue from land sales to developers, especially when the city with some of the world’s least-affordable real estate starts hawking parcels under the controversial Lantau Tomorrow program. The 4.8% deficit could end up much lower, but long-term public finances would be that much more reliant on property prices.

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