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Northern Metropolis project, which was highlighted in this year’s budget speech, is designed to transform the northern New Territories into a hub for housing and innovation, and to promote integration with the rest of the
Greater Bay Area. The project addresses critical issues like housing shortages and economic diversification while positioning Hong Kong as a key player in regional integration.
However, such physical infrastructure projects are inherently long-term endeavours. They require substantial upfront capital investment and take years to generate returns. The financial secretary has decided to finance this project through
debt issuance – a move that alleviates immediate fiscal strain but introduces future interest payment obligations.
Moreover, the success of such projects is contingent on uncertain factors like land and property sales and tax revenues from anticipated economic activities. Given Hong Kong’s current economic uncertainties and the volatile geopolitical environment, it is difficult to be confident that future gains will outweigh present costs.
This critique is not meant to oppose proactive long-term planning but to propose an additional strategy: addressing Hong Kong’s
ageing population and retirement challenges by investing in social infrastructure, specifically a universal pension system.
The World Bank’s five-pillar model for retirement systems provides a useful framework for ageing societies. While Hong Kong has implemented four of these pillars, including the Mandatory Provident Fund and voluntary savings, it lacks the critical first pillar: a universal pension. Years ago, there were calls to establish such a system based on a tripartite contribution model involving the government, employers and employees.
