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Shirley Zhao

Hong Kong will receive an estimated HK$45 billion of investment income this year - enough to cover 10 per cent of total government expenditure and the most since a record high in 2008, Financial Secretary John Tsang Chun-wah revealed yesterday.
Speaking on RTHK's Letter to Hong Kong show, Tsang said the figure proved that it was important to "save sensibly" and not fritter away the city's reserves.
"Our fiscal reserve, about HK$820 billion now, is not just a piggy bank for rainy days," he said. "It generates a sizeable investment income year after year for public spending on sunny days as well.
"Without the investment income, it will be even more challenging for us to make ends meet in a few years' time," Tsang said.
If Tsang's prediction is accurate, this year's investment income will be the most since the record high of 2008, when it was HK$46.4 billion. The second highest figure since the handover was HK$45.9 billion in 1999.
Responding to criticism that the setting up of a "future fund" is a way to lock up a portion of public resources in order to deprive the community of necessary services, Tsang said the fund was set up as an investment strategy so that the city would be better prepared to deal with "a period of difficulty in the future".
The fund, to be set up later this year, will consist of the HK$220 billion land fund and a quarter to one-third of future government budget surpluses.
The period of difficulty would come, he suggested, in 25 years, when he predicted the city's population of over-65s would have risen from one million today to an estimated 2.6 million people.
"Equally remarkable, and perhaps worrying for some, 960,000 of us - yes, count me in, thank you, if I were so lucky - will be at least 80," he added.
By then, there would be just two working people for each person over 65, compared to the current ratio of five to one, he said.
"Give some sympathy to the people who will be financial secretary 25 years from now," Tsang said. "The financial secretary will need to be budgeting for medical services, social welfare services, transport services and more."
Tsang said the future government would need to generate enough revenue to cover increased expenditure, and that his recent budget was designed to plan for the future.
"Yes, our workforce will begin to shrink in about four years, and so will our tax income," he said. "It will continue to fall steadily until the early 2030s, constraining our long-term growth prospects and limiting our revenue growth potential."
He did not respond to recent suggestions that the problem could be solved simply by raising the retirement age.


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Investment income will cover 10pc of government's expenditure this year: finance secretary

The construction site near Hong Kong Convention and Exhibition Centre in Wan Chai. Hong Kong will receive an estimated HK$45 billion of investment income this year. Photo: David Wong

John Tsang: expect difficulty in 25 years. Photo: Edward Wong

'Our fiscal reserve, about HK$820 billion now, is not just a piggy-bank for rainy days', says John Tsang. Photo: Edward Wong

John Tsang: expect difficulty in 25 years. Photo: Sam Tsang

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Hong Kong

Financial chief says figure proves it's important to 'save sensibly' as he warns of future hardship


Hong Kong will receive an estimated HK$45 billion of investment income this year - enough to cover 10 per cent of total government expenditure and the most since a record high in 2008, Financial Secretary John Tsang revealed.


Investment income will cover 10pc of government's expenditure this year: finance secretary

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Financial chief says figure proves it's important to 'save sensibly' as he warns of future hardship

Financial chief says figure proves it's important to 'save sensibly' as he warns of future hardship