The Professional Commons - Recent Research - Better Use of Fiscal Surplus

Better Use of Fiscal Surplus

In view of the high budgetary surplus of the Hong Kong SAR Government, it has also conducted a research concerning on how the budget surplus could be used inder the principles of forward-looking, faireness, efficiency, inflation neutral and flexibility, the Report entitled Fairness, Forward looking and Development Research Report on the Better Use of Fiscal Surplus, was published in January 2008.

The Report proposed using HK$47.2 billion to provide:

• A HK$5,000 immediate special relief to the "needy", that is, those who are currently receiving the Comprehensive Social Security Assistance, Old Age Allowance, Disability Allowance, and those who are earning less than HK$8,000 a month,
• A 25% direct across-the-board public transport rebate,
• The Government should set up a personal account for every adult citizen of Hong Kong, entitled ‘Citizen’s Account”, which could serve a dual purpose of personal development, as well as serving the needs for retirement.

The key components of the Account are as follows:

• The Government should make a “seed payment” of HK$4,000 to the “Citizen’s Account” of every member of the adult population in Hong Kong, that is, those who hold Hong Kong Permanent Resident Identity Cards;

• There are two components in the Account, serving two different purposes: “Personal Development Purposes” and “Retirement Purposes”, each constitutes HK$2,000;

• The “Personal Development Purpose”: MPF account holders could withdraw the money through the MPFA immediately to serve personal needs, the Mandatory Provident Fund Authority shall be responsible to distribute the amount concerned, while those without MPF Account could apply through the Government;

• As for the arrangements for the “Retirement Purposes”: The MPFA will contact the existing MPF account holders to seek their instructions on whether they should:

• Deposit the amount concerned into their existing MPF Account as voluntary contributions; or

• Request the Mandatory Provident Fund Authority to transfer the amount concerned to the Hong Kong Monetary Authority for their investments and management;

• For those who do not have an MPF Account, their entitlement in the “Citizen’s Account” shall be pooled together for investments and managed under the Hong Kong Monetary Authority, until the account holder transfer their money to set up their own MPF Account, or the money will be available for withdrawal once the account holders reach 65;

• Old Age CSSA and Old Age Allowance recipients will be allowed to withdraw the whole HK$4,000 in the Account immediately;

• The Government shall also send notification concerning the balance to the account holders on a regular basis.

• The establishment of a HK$8 billion "Climate Challenge Fund" to finance local and cross-boundary measures for the tackling on global climate change.

The measures include:

• A HK$500 million “Low-Carbon Professional Aid Scheme”;
• A HK$500 million “Green Homes Subsidy Scheme”;
• A HK$2 billion “Green Community Subsidy Scheme”; and
• A HK$5 billion “Pearl River Delta Climate Change Response Fund”.