Last week I wrote to applaud the consumption vouchers, the guaranteed loans to the unemployed, and the job creation initiative announced by the financial secretary. They are all steps in the right direction and are certainly commendable, but they all should be beefed up in order to meet the needs of the community.
The proposed consumption vouchers, to be offered to all Hong Kongers including new immigrants over the age of 18, did not get the favorable reception that the government had hoped for. The greatest complaint among many Hong Kong people is that they have to wait till at least summer for the scheme to take effect. Many people are now under tremendous financial stress and badly need relief now. When they learned that the HK$5,000 ($645) consumption vouchers would be handed out over five months they grew even more dissatisfied.
Mr Paul Chan Mo-po, the financial secretary, explained that dividing the HK$5,000 over five months would produce the greatest impact on total consumption. The idea is that when purchasing bigger items that cost more than HK$1,000, users of the vouchers will have to open up their purse and spend additional amounts. So the HK$1,000 is not just replacing spending that would have occurred anyway, but will likely lead to more spending.
It would not be stimulative of spending if each HK$1,000 simply replaces spending that would come about anyway. If so, the HK$1,000 consumption voucher would end up indirectly as additions to savings. Exactly because of this possibility, and because of the common worry that the money would be spent in large supermarkets and benefit big businesses, South Korea’s consumption voucher scheme disallows the use of the vouchers in large supermarkets. South Korea even would not allow the use of the vouchers in department stores. But unlike the supermarkets, department stores in Hong Kong have been hit by the pandemic seriously. So I would argue Hong Kong should allow use in department stores.
To me, basic jobs should be financed with a recurrent budget that should increase as needed. Basic job salaries are not a handout. They not only give people the dignity that they deserve, but also give them the opportunity to serve society
Some people may want to buy more expensive items, and HK$1,000 per month may not be that helpful. In order to stimulate additional spending, instead of limiting the face value of the vouchers to HK$1,000 per month, the government may consider allowing people to use up to HK$5,000 at one shot, as long as their own spending matches the spending from the vouchers. Thus people would be allowed to buy a refrigerator worth HK$5,000, for example, with HK$2,500 from their own pockets and HK$2,500 from the consumption vouchers, or an air conditioner worth HK$10,000 with HK$5,000 from the consumption vouchers and another HK$5,000 from their own pocket. In order to stimulate more immediate spending, the matching ratio can be bigger in the first month and smaller later: bigger meaning a bigger proportion paid with the consumption voucher. This suggestion notwithstanding, the vouchers can be used to pay for the full amount of items worth less than HK$1,000.
I understand that the financial secretary wants to use this opportunity to give a boost to electronic payments in Hong Kong, but if this means a delay or greater difficulty for some disadvantaged people (such as the handicapped or the elderly who may be more comfortable with physical coupons) it would not be worth it. Mr Chan says that he is worried about counterfeiting. But I am not worried at all, as the vouchers may be designed to require validation.
For the government-guaranteed loans to the unemployed, I hope the government can (1) raise the amount significantly to HK$30,000 per month for six months; (2) allow those with a large salary cut or suspended salary to benefit. If the government truly wants to provide relief to those suffering financial stress, it has to be more generous and reach out to all those who need the relief. A loan at six times the average salary subject to a ceiling of HK$80,000 will not be helpful to someone who had a middle-income job but lost all or much of his income and cannot pay his rent or mortgage payments.
Finally, for the job creation initiative, I am disappointed that only HK$6.6 billion is allocated to create around 30,000 jobs and that they are all “time-limited”. Actually, spending on “basic jobs” does not “go down the drain”. The jobs are productive jobs, and thus they add value to society. They also reduce spending on Comprehensive Social Security Allowance and other social service payments and even healthcare and policing costs. Without jobs, people are likely to be mentally stressed, and some could even resort to crime, and fall victim to drug abuse. There could be more domestic violence, leading to other social service expenses. To me, basic jobs should be financed with a recurrent budget that should increase as needed. Basic job salaries are not a handout. They not only give people the dignity that they deserve, but also give them the opportunity to serve society. They can help improve the city’s public health (for example, help with the fight against rats and mosquitoes) and public safety (for example, help with identifying dangerous trees and billboards), and restore grass where lack of management and oversight has resulted in the loss of top soil and grass (such as what happened on Grass Island, or Tap Mun).
The author is a senior research fellow at Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University.
The views do not necessarily reflect those of China Daily.
