SCMP Tuesday, October 9, 2001
Has he got what it takes?
As the Chief Executive puts the final touches to this Wednesday's Policy Address, he faces more than the tough challenge of how to create more jobs and revive the economy. At a time when a confidence crisis is looming, the leadership calibre of Tung Chee-hwa will be put to the test as he presents his annual "state of the territory" speech - the last during his present five-year term.
Public feelings towards the blueprint have been mixed. Over the past few weeks, expectations have been raised as Mr Tung and his top aides have sought to assure the public that the Government would do something. But on the other hand, many are too realistic to expect the Chief Executive to produce any magic cure in his Policy Address.
Amid grave uncertainty about their future, the public are keen to see the emergence of real leaders who are able to set out a vision for the future that will lead the SAR out of its present doom and gloom. This public aspiration for leadership has soared as a result of the September 11 terrorist attacks. The way the United States Government and its citizens rallied to rise from the ashes of the World Trade Centre has impressed even US bashers in the community. And it has contrasted sharply with the currently negative mood in Hong Kong that is caused by a lack of political leadership and an erosion of competitiveness in economic strength and human capital.
Shocked by the sharp deterioration in the external economic environment, the Tung leadership has already begun to instil a sense of crisis and adopt a "can do" approach. Officials readily concede that the September 11 attacks will have a negative impact on Hong Kong's economy. Financial Secretary Antony Leung Kam-chung has indicated the Government will further lower its forecast of one per cent overall economic growth this year. He also told a recent special Legislative Council panel meeting that there were serious doubts as to whether the Government's target of $78 billion in revenue this year could be achieved.
Some analysts now predict a budget deficit of $30 to $50 billion, far higher than the $3 billion originally forecast in the March Budget and difficult to reconcile with the Basic Law's requirement for a balanced budget. Worse still, finance officials face the likely scenario of this sharp fall in revenue lasting for a longer period of time, and a corresponding bigger deficit. Given the fact that neither raising taxes nor drastically cutting public expenditure are politically viable, the first task of the Tung administration will be to try to minimise the deficit.
That will severely constrain the Tung team in the short, medium and long term and is likely to make policymakers even more resistant to economic relief measures that amount to handouts.
It therefore seems unlikely that the Government will back such ideas as a second mortgage for flat owners suffering from negative equity, whose properties are worth less than the outstanding value of their mortgages. According to some estimates, this could cost a staggering $300 billion. In any case, the idea of handouts to the public has not received widespread support as it goes against the traditional culture and character of a free-market economy.
The dilemma for the Government, however, is that doing nothing is simply not an option. Despite the risk of huge deficits, officials have no choice but to draw on a reasonable amount of money from reserves during the present stormy environment.
A modest spending programme to create temporary jobs in such areas as environmental hygiene - along the lines of the $3 billion package proposed by the Federation of Trade Unions - would help relieve pressure on the Government to tackle the jobless problem. Even if such a job-creation initiative does not win widespread support, it would at least show that the Government is trying to do something to help.
Keen to show it is active and responsive, the Tung team has also been quick to try and convince the community that it is capable of reacting swiftly when the international crisis threatens directly to affect Hong Kong. Mr Leung cited as a case in point the Government's quick decision to guarantee third-party indemnities for airlines after they appeared in danger of being grounded by demands for higher premiums last month.
Speaking after Legco approved the guarantee for the local aviation industry on September 24, Mr Leung said the case also showed the Government and legislators could work together to overcome the present crisis. It also fits in with the theme of unity that Mr Tung and his aides - as well as Beijing leaders including Premier Zhu Rongji and Vice-Premier Qian Qichen - have stressed over the past two months.
Inspired by the solidarity shown by the American people in the aftermath of the September 11 attacks, Chief Secretary Donald Tsang Yam-kuen has said that Hong Kong has a lot to learn from how the US turned the tragedy into a force for positive change.
That is not to say the SAR would react to such attacks in the same way. "Hong Kong people might say senior officials should resign if it happened in Hong Kong," complained one senior SAR leader. That observation may hold some truth. A litany of policy blunders and confusion since the 1997 handover has deepened public distrust of the Government and created a psyche within society of "looking for someone to blame" for mishaps.
But just as the September 11 attacks are set to bring about tremendous changes in the US, its aftershocks in Hong Kong could also prove to be a catalyst in the long run.
Cynics might dismiss as a mere political gesture Mr Leung's "meet the people" sessions which have seen him consult economists, legislators, business leaders, students, workers and those suffering from negative equity in recent weeks. The swift approval given by legislators to the insurance package for airlines might also turn out to be more of the exception than the rule. Suggestions that the executive and legislative branches could work more closely together might be wishful thinking. Yet all these moves raise fresh hope that there is a stronger sense of awareness that the Government, politicians, businessmen and ordinary people need to talk to each other to overcome the worst economic crisis for decades.
One sign of that is the Democratic Party's calls for an "economic summit" among leaders from all sectors to discuss ways to revive the economy. Another is that the party has taken a more moderate position in the substance and tone of its economic-rescue proposals.
Thanks to huge reserves, Mr Tung and his top aides will have ample resources for the creation of a sizeable number of temporary jobs and a number of small-scale infrastructure projects. The far more difficult task for Mr Tung is to inspire confidence and rebuild the old Hong Kong spirit through setting out a clear vision, development strategy, partnership in governance and policy priorities for the medium- and long-term future.
Chris Yeung (
) is the Post's Political Editor.