The recent budget contains perhaps the worst five-year economic forecast in Hong Kong's history. Yet such is the prudence of Financial Secretary John Tsang Chun-wah that he anticipates that, at the end of this unprecedented period, we will still have fiscal reserves of HK$391.1 billion, representing 19.9 per cent of gross domestic product and 14 months of government expenditure. Hong Kong citizens are entitled to ask: 'why bother generating surpluses at all, if they are not to be spent even in times like these?'
Stung by criticism that he has been too stingy, Mr Tsang now says that he will 'wait and see' before taking further measures, if necessary. Hong Kong is a ship that is about to sail into the worst financial hurricane in living memory. What sort of captain would you prefer on the bridge? Someone who says: 'let's wait and see how bad this gets'? Or one who says: 'we shall now deploy the full resources of this ship to ensure the safety of passengers and crew'?
Prudence is a relative virtue. Mr Tsang paints a convincing picture of how bad things are in our economy; he is equally convincing in warning of worse times ahead. He knows that a very bad storm is coming, but his approach is: 'let's wait and see'. He calls this being prudent and pragmatic, but it is the wrong sort of prudence for the circumstances.
How might the community have reacted if he had said instead: 'Thanks to our policy of fiscal prudence, we have now built up sizeable reserves. We citizens of Hong Kong should wake up every morning and remind ourselves how lucky we are, not to be in the situation faced by many countries who are now in debt at the worst possible time. But these are unprecedented times, and prudence now dictates that I should be more generous rather than less so. I will spend all the reserves in the next five years, if I must.'
I suggest that such a statement would have given the community confidence. And confidence, above all, is what it is necessary in times such as these.
All around the world, countries are playing 'policy catch-up'. Events are moving so fast, governments can't keep up. By reacting to events, rather than anticipating them, policymakers are losing control. The result is that the situation is worse than it could be and the costs are ultimately far higher.