2018 Budget Address: Live Blog

Financial Secretary Paul Chan has concluded his Budget Speech by saying that the financial blueprint is no panacea for all of Hong Kong's problems.

However, he said with China's economic development entering a new phase, Hong Kong now has a "very favourable external environment", and "the wind beneath our wings will bear Hong Kong far and high" if the city can capitalise on the opportunities it has.

Chan added that the government is ready to think out of the box to open up new horizons for Hong Kong, and that the administration is "resolute" in devoting resources to improve people's livelihood.

13:06

Financial Secretary Paul Chan says he expects Hong Kong’s economy to grow by an average of three percent per year for the next three years, with inflation expected to be at 2.5 percent.

However, he says this relatively sanguine outlook assumes no severe external shocks, and Hong Kong must remain vigilant to the volatile political and economic environment across the globe.

He also expects more surpluses for the coming five financial years, with the fiscal reserves expected to balloon to HK$1,222.6 billion by the end of March 2023.

12:55

Taxpayers will have as much as HK$30,000 deducted from their tax bills this year.

The Financial Secretary, Paul Chan announced in his budget speech that salaries and profits tax will be reduced by 75 percent, with the cap at HK$30,000.

Almost two million taxpayers will benefit, at a cost of HK$25.5 billion in lost revenue for the government.

Property rates will be waived for all quarters of 2018-19, capped at HK$2,500 per rateable property. Some 3.25 million properties will be covered, and the government will lose HK$17.8 billion revenue.

People who are on subsidy programmes like the Comprehensive Social Security Assistance scheme, Old Age Allowance, Old Age Living Allowance and Disability Allowances will be given an extra two months’ worth of payments – at a cost of HK$7 billion.

Recipients will of the Low-income Working Family Allowance and Work Incentive Transport Subsidy will also get another two months’-worth of payments.

Chan says he’s invited the Community Care Fund to consider short-term relief to poor families who aren’t on welfare or living in public housing.

The Financial Secretary also proposed reforming tax bands, in a move expected to benefit 1.34 million taxpayers.

Tax bands will be widened from HK$45,000 to HK$50,000, and a new tax band will be introduced. The changes are designed to reduce taxes, and is expected to cost the government HK$4.09 billion in lost revenue.

Basic and child allowances will be increased from HK$100,000 to HK$120,000 – helping 335,000 taxpayers and reducing tax revenue by HK$1.31 billion per year.

Allowances for dependent parents or grandparents will also be increased, and a personal disability allowance for eligible taxpayers will be introduced.

12:46

Financial Secretary Paul Chan has announced a HK$500 million initiative to provide social work services for about 150,000 children and their families in all aided child care centres, kindergartens and kindergarten-cum-child care centres.

However, Chan says the government won't be immediately allocating one social worker per primary school quite yet. He said while that remains the goal, for now he has just promised more resources for public primary schools to encourage them to strengthen and enhance their social work and counselling services.

There have been growing public calls for enhanced services at schools and kindergartens in the wake of several high-profile child abuse cases.

12:41

Drivers who want to buy electric vehicles will be able to get up to HK$250,000 taken off the first registration tax for the purchase, if the scrap an eligible car they already own. Financial Secretary Paul Chan says details of this "one-for-one replacement scheme" will be announced later, but the concession will be offered until March 2021.

For drivers who don't have a car to scrap, the government will continue with a maximum tax concession of up to HK$97,500 for purchases of eligible electric vehicles.

And first registration taxes will continue to be waived in full for electric commercial vehicles, electric motor cycles and electric motor tricycles until March 2021.

12:34

Financial Secretary Paul Chan says the Food and Health Bureau will soon announce details of a much-anticipated Voluntary Health Insurance Scheme shortly. However, Chan gave no details about the actual proposal, beyond saying that people who purchase insurance under this scheme should be given tax deductions of up to HK$8,000 per insured person.

Chan says the government will also pump an additional HK$6 billion to the Hospital Authority in recurrent funding to help increase the number of hospital beds.

The authority will also be considering scrapping a pay freeze on new recruits for their first two years to boost morale and help retain staff. Chan said he’ll make sure there are adequate resources available.

The Financial chief also says he’s directed the HA to start a new 10-year plan on hospital services – including proposals to redevelop Princess Margaret Hospital and Tuen Mun Hospital; and build a new hospital to replace Queen Elizabeth Hospital, which may create up to 4,000 more hospital beds. HK$300 billion will be set aside for the plan, as well as to improve Health Department clinics, and upgrade and increase healthcare teaching facilities.

The government is also considering providing more training places for doctors, dentists, nurses and other health professionals. In the interim, Chan said he will ensure that the Hospital Authority has adequate resources to employ all medical students who are expected to graduate in the coming five years.

Health care vouchers for the elderly will be given an additional HK$1,000 worth in the coming year on a one-off basis, costing the government HK$796 million. Each user will be allowed to accumulate HK$5,000 worth of these vouchers, up from HK$4,000 for greater flexibility. The vouchers can be used on services provided by private-sector doctors, dentists and Chinese medicine practitioners.

12:21

The government says up to 25,500 private residential flats could be built for the year. Financial Secretary Paul Chan says 27 residential sites -- including 15 rolled over from the previous financial year -- can provide around 15,200 units, with the rest to come from railway property development projects, the Urban Renewal Authority's projects and private development/redevelopment projects.

Chan said in the short to medium term, about 380 000 residential flats will be built by in total by rezoning sites, increasing development density, and taking forward projects at the Kai Tak Development Area and Anderson Road Quarry, railway property development projects and urban renewal projects.

For the longer term, new development area, like an extension to the Tung Chung New Town, will be pursued. The Tung Chung project alone is expected to add almost 50,000 flats from 2023-24 in phases.

12:12

Financial Secretary Paul Chan has proposed increasing recurrent education spending by another HK$2 billion per year -- on top of the HK$5 billion already pledged by the Carrie Lam administration.

Delivering his budget speech, Chan said the money will be used to enhance the professional development of teachers and strengthen support for kindergartens, among other initiatives.

Public schools will be give HK$2 billion to install lifts to help make their campuses barrier-free.

HK$170 million will be spent on regularising a pilot scheme on promoting exchanges between schools in Hong Kong and the mainland, and more nurses will be provided for schools for children with disabilities.

The government will also inject an addition HK$8.5 billion into the Continuing Education Fund, to double the subsidies for successful applicants from HK$10,000 to HK$20,000. The age limits for applicants will also be raised to 70, and the authorities will make it easier for people to apply.

Chan says around 610,000 recipients will benefit from the enhancements.

12:06

The Financial Secretary, Paul Chan is allocating billions of dollars to help Hong Kong's 330 000 small and medium enterprises (SMEs). He said HK$1.5 billion will be pumped into the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund), and another HK$1 billion will be injected into the SME Export Marketing and Development Funds.

Over the next five years, HK$250 million in additional funding will be given to the Hong Kong Trade Development Council (HKTDC) to help local businesses seize opportunities arising from the Belt and Road Initiative and the Bay Area development, promoting the development of e-commerce, and enhancing Hong Kong's role as a premier international convention, exhibition and sourcing centre.

12:03

Ocean Park is to hand out 10,000 free tickets to primary and secondary school students this year, as part of a government initiative to help the park develop education and tourism projects. Financial Secretary Paul Chan said the government will give the park HK$310 million for this purpose over the next few years.

Chan says altogether HK$396 million will be pumped into the tourism industry.

11:59

Financial Secretary Paul Chan says the Hong Kong Mortgage Corporation Limited (HKMC) is considering increasing the issuance size of a new HK$10 billion Life Annuity Scheme, in view of a positive reaction from the community -- and to offer tax concessions.

Chan said the HKMC will launch the scheme -- which allows people to pay a lump sum up front in exchange for monthly payments for the rest of their lives -- in the middle of the year.

The Financial Secretary also said people who make voluntary contributions to their Mandatory Provident Fund accounts will also be tax-deductible -- provided that the funds are transferred to the mandatory contribution accounts, which have withdrawal restrictions.

11:51

The government is proposing to launch a new pilot scheme to attract Mainland and overseas enterprises to issue bonds in Hong Kong. Eligible applicants can get up to HK$2.5 million from the government to cover as much as half of the issue expenses. The pilot programme will run for three years, and cover enterprises issuing bonds in Hong Kong for the first time.

Financial Secretary Paul Chan also proposed a green bond issuance programme, with a borrowing ceiling of HK$100 billion. The money will be pumped into the Capital Works Reserve Fund to fund the government's 'green' public works projects.

11:44

Paul Chan has announced a HK$50 billion spending spree to support innovation and technology in Hong Kong, saying the sector is "undoubtedly an economic driver in the new era."

Chan said the city must optimise its resources to develop its strengths in biotechnology, artificial intelligence, and smart city and financial technologies.

The Financial Secretary said HK$20 billion will be spent on the first phase of the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop. HK$10 billion will be pumped into the Innovation and Technology Fund (ITF) to support research and development work.

Another HK$10 billion will be used to support research on healthcare technologies, and on artificial intelligence and robotics technologies. The aim is to attract the world's top scientific research institutions and technology enterprises to Hong Kong for conducting more research and development projects together with local universities and scientific research institutions.

The last HK$10 billion will be allocated to the Hong Kong Science and Technology Parks Corporation (HKSTPC), to build new research related facilities, and enhance support for its existing tenants.

In addition, HK$100 million will be allocated to turn Cyberport into a a competition venue for e-sports. Chan said the Cyberport Arcade will become a local e-sports and digital entertainment node.

11:37

The government's recording-setting HK$138 billion surplus for this financial year is thanks largely to much higher than expected revenue from land premium and stamp duties. Land premium was 62 percent higher than the original estimate at HK$163.6 billion, while heated trading in both the property and stock markets saw stamp duty revenue rise by 75 percent higher than estimated at HK$92.7 billion.

Financial Secretary Paul Chan said government expenditure was actually 3.5 percent, or HK$17 billion lower than expected, mainly because certain subsidy initiatives such as the Old Age Living Allowance (OALA) and the Low-income Working Family Allowance (LIFA), cost less than expected.

With the massive surplus, Chan said Hong Kong's fiscal reserves are set to breach the one-trillion-dollar mark, to reach an estimated HK$1,092 billion by 31 March 2018.

11:30

The Financial Secretary, Paul Chan, says the government is expecting a record-breaking fiscal surplus of HK$138 billion this financial year. He says he will share with the community about 40 percent of this surplus, while using the rest to improve services and investing in the future.

11:29

Paul Chan says the private sector is expected to produce about 20,800 residential units per year over the next five years, and the tight supply of flats will ease. However, he says expected rises in US interest rates will mean an end to the ultra-low interest rate environment here, and the property market will be under pressure.

11:26

Paul Chan says he is "cautiously optimistic" about the future outlook Hong Kong's economy, saying while the city must remain alert to changes in the global monetary environment, the external environment is "promising."

The Financial Secretary said he expects economic growth of between three to four percent this year, with confidence high and domestic consumption expected to increase.

He's expecting inflation to remain moderate, with the inflation rate expected to be 2.2 percent for 2018.

11:21

Hong Kong's economy grew by 3.8 percent in 2017, Financial Secretary Paul Chan has reported in his budget speech. The city's exports of goods grew 5.9 percent, while exports of services was up 3.5 percent. Chan said domestic demand was particularly resilient -- with private consumption expenditure growing at the fastest rate since 2011 at 5.4 percent.

Inflation grew by 1.5 percent, as inflationary pressure remained moderate.

11:15

Paul Chan is talking up the "strategic significance" of the Bay Area development comprising Hong Kong, Macau and Guangdong. He says it is an enormous market for Hong Kong's financial and high-end services industries, and together, the three sides can create an international innovation and technology hub.

11:03

Financial Secretary Paul Chan is promising to explain in a 'systematic way', the Government's priorities in using public resources, along with its vision for the future.

He says there are three main objectives in his budget: diversify Hong Kong's economy, invest for the future, and creating a more sharing and caring society. However, Chan cautioned that "no abundance of resources would ever enable the Government to satisfy the needs of all."

11:00

The Financial Secretary, Paul Chan, has entered the main chamber of the Legislative Council to deliver the 2018-19 Budget Speech.

10:45

Good morning and welcome to RTHK's live coverage of the 2018-19 Budget Speech.

The Financial Secretary, Paul Chan, is set to deliver the first budget of the Carrie Lam administration at the Legislative Council. With expectations of a record-setting surplus of perhaps HK$150 billion or more, the pressure is on for Chan to figure out how to pump at least part of the windfall back to society.

However, Chan has all but rejected calls for direct cash handouts to all – saying he prefers a more targetted approach. Still, many expect substantial tax rebates, and extra payments for people on various government subsidy schemes.

There are also expectations for a big announcement on a long-debated voluntary health management scheme – which is billed to exclude people with chronic illness as originally planned, and measures to boost elderly care.