In the press
Updated: 2013-01-22 05:39
(HK Edition)
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Ng Ming-Luk
CY is pragmatic on poverty
In his first Policy Address (PA), Chief Executive Leung Chun-ying presented in details his thoughts and policies on four important areas - economic development, housing, poverty alleviation and environmental protection. It is a pragmatic and forward-thinking PA that deserves our applause. A public opinion poll conducted after Leung delivered the PA showed respondents who are satisfied with the address outnumbered those who were unsatisfied by 12 percentage points, indicating the public generally accepted the PA.
Of course some people are critical of the PA, particularly on the poverty issue, which they believe has not seen as concrete measures as the housing issue does. This is understandable, because Hong Kong's income gap is a deep-rooted problem that has been plaguing local society for decades. Surveys by non-government organizations, including the Hong Kong Council of Social Service, found about 1.2 million or 17 percent of the 7 million Hong Kong residents live in relative poverty; while the city has the most serious wealth gap among developed economies in a UN study based on the Gini coefficient.
These facts are no doubt embarrassing to a well-to-do community like Hong Kong and naturally put poverty relief high on every SAR government's to-do list as well as at the center of public concern, but it is an extremely difficult achievement to pull off. All previous SAR governments attempted to narrow the income gap with little success, if any. Therefore it is unrealistic to expect Leung to come up with all the answers in his first PA. It is comforting to see Leung has not avoided the thorny issue, but promised to formulate feasible poverty amelioration measures aimed at the heart of the problem instead.
The goal of the SAR government's policies is quite clear and pragmatic: to create opportunities for privileged members of the community to take care of the under-privileged through allocation of public resources.
Keeping in mind Hong Kong's unique economic structure and development model, Leung has decided against offering cash handouts and stated "we cannot adopt welfare policies based on high tax rates." This philosophy on quality of life improvement is both courageous and wise given the popularity of welfarism these days. It is particularly commendable that the CE remains guarded against populist demands that will strain public finances, such as a universal retirement protection system.
The author is a current affairs commentator. This is an excerpted translation of his article published in Ta Kung Pao on Jan 21.
Cautious with vacancy tax
CE Leung Chun-ying warned on Sunday that the government may impose a vacancy tax on unsold new homes to stop developers from hoarding properties to the determent of the city's housing needs. If there are real cases of newly built residential flats deliberately held back from the market to keep prices high, a vacancy tax is certainly worth considering.
The authority is advised, however, to be cautious about such a levy, for it is likely not only to affect the business environment of Hong Kong, but also will dampen developers' interest to bid for land for construction of residential units. Indeed, collecting vacancy taxes is an exercise of government intervention in some foreign countries to prevent developers from stockpiling flats to manipulate housing prices. Land is a vital social resource and hoarding apartments to jack up market price constitutes serious waste of this precious public resource.
That said, Hong Kong follows the free-market principle and property vacancy may be merely a short-term marketing tactic of developers in response to current market conditions. Authorities therefore must practice extreme caution before implementing a vacancy tax to avoid killing developers' interest in acquiring land for residential development, which would only aggravate the shortage of housing units.
Interest rates have reached their lowest level. The US is expected to raise lending rates next year or the year after, and developers need to complete residential housing projects as quickly as possible to speed up capital flow to fund new ones. In view of the growing risks in the housing market, hoarding is considered a very costly gamble and rarely adopted by developers.
Low interest rates and a shortage of land are the ultimate causes of sky-high property prices. Even if there is strong evidence that developers are hoarding to drive prices up, the government should find other ways to increase land supply for residential development while considering vacancy tax as a means to secure normal market supply.
This is an excerpted translation of a Wen Wei Po editorial published on Jan 21.
(HK Edition 01/22/2013 page4)