2019 Budget Address: Live Blog

The Financial Secretary, Paul Chan, has concluded his budget speech with a warning that the economic environment this year will be “fraught with uncertainties and challenges”, and that Hong Kong people “must get ourselves well prepared.”

However, he put a positive spin on things, noting that the “hard-working and flexible” people of Hong Kong “have weathered tough times and grown tougher. With confidence, hope and concerted efforts, we will definitely be able to see the sunshine through the clouds!”

12:58

The Financial Secretary, Paul Chan, says Hong Kong should have a surplus of HK$16.8 billion in the coming year, with revenue from land premium expected to rise to offset a 15.4 percent increase in operating expenditure.

However, Chan says revenue from stamp duties is expected to drop by five percent compared with the 2018-19 figure.

Chan also notes that recurrent expenditure on education, social welfare and healthcare will account for about 60 percent of government recurrent expenditure, exceeding HK$250 billion. He says recurrent expenditure in these three areas recorded a cumulative increase of 45 per cent over the past five years.

12:51

The government will use HK$20 billion to purchase around 60 properties to house welfare facilities such as day child care centres, neighbourhood elderly centres, and on-site pre-school rehabilitation services.

In his budget speech, Financial Secretary Paul Chan said a shortage of welfare facilities is particularly acute in densely-populated areas, where the need is the greatest. He said the new facilities are expected to benefit around 86 000 people.

He also says the Government expects to provide more than 500 additional residential care places and 300 subsidised day care places for the elderly in the next two years.

12:48

As expected, Paul Chan has announced a HK$600 million plan to give 240 public toilets across the territory a facelift over the next five years. He said the Food and Environmental Hygiene Department will refurbish public toilets in phases to improve ventilation, and enhance cleanliness and hygiene.

12:46

The Financial Secretary Paul Chan says stakeholders will be consulted on a possible Electronic Road Pricing Pilot Scheme in Central and surrounding areas in the first half of the year.

In his budget speech, Chan said the Transport Department has been conducting a feasibility study of the scheme, but stressed that the proposal – if adopted – is not aimed at increasing government revenue.

Chan said the government may use the money generated from the pilot scheme to fund measures to improve public transport services and to encourage more people to use them.

12:43

The Financial Secretary Paul Chan has announced a HK$6 billion injection to develop new harbourfront promenades and improve existing facilities.

In his latest budget speech, Chan said the government plans to extend the length of existing waterfront promenades from 20-odd km to 34 km over the next decade, and provide 35 hectares of open space on both sides of Victoria Harbour.

12:40

Paul Chan says the government will install over 1,000 more public chargers for electric vehicles by 2022, bringing the total number of chargers to 1,700. The Financial Secretary has allocated HK$120 million to extend the public electric vehicle charging networks at government car parks.

Chan also said officials will identify suitable on-street parking spaces to install EV chargers on a trial basis, and see if they can set up pilot quick charging stations as well.

12:31

The Financial Secretary Paul Chan says he will allocate HK$700 million more per year to the Hospital Authority to help relieve the heavy workload of frontline staff.

Allowances for officers on call, and those who work overtime will be increased; as will salaries for support staff. The HA will also look to increase the number of experienced nurses on evening shifts, and more money will be allocated to lure back retired medical staff.

With most public hospitals overwhelmed by the number of patients during the peak winter flu season, many frontline staff have been complaining that they're overworked, with many facilities severely understaffed.

12:24

The Financial Secretary Paul Chan says seven new sites will be added to the government’s land sale programme this year, on top of eight existing ones. Details will be announced on Thursday.

Chan said the expected 8,800 flats that these sites can provide, together with railway property development projects, developments from the Urban Renewal Authority, and the private sector, around 15,500 homes should be made available in the coming year.

While this will be down from the 21,000 private flats completed in 2018, Chan says the supply of new private flats should remain high in the next three to four years. He said the government’s preliminary estimate is that the private sector will complete about 18,800 flats per year from 2019 to 2023 – an increase of around 20 percent over the previous five-year period.

Chan also reiterated that now is not the time to scale back the government's property-cooling measures, even though private property transactions and prices fell in the latter half of last year. He said current flat prices are still largely unaffordable, and "the Government has no intention to withdraw any demand-side management measures at this stage."

He also warned prospective home-buyers to carefully assess the economic risks and their own financial position before taking the plunge.

12:18

The Financial Paul Chan, has announced billions of dollars’ worth of support for local businesses, who may face rough seas ahead with uncertainties in the global economy.

Registration fees will be waived for around 1.4 million business operators this year, costing the government around HK$2.9 billion.

A pilot programme subsiding small and medium enterprises to adopt new tech to upgrade their services and operations will be adopted permanently. Funding for businesses under the Technology Voucher Programme will be doubled to HK$400,000.

12:11

Besides the tax relief, property owners will also benefit from rates waivers, with the reduction capped at HK$1,500 per quarter for all four quarters of 2019-20.

This will apply to around 3.3 million properties and reduce government revenue by HK$15 billion.

Welfare recipients will receive an extra month of payments, while those eligible for the Old Age Allowance, Old Age Living Allowance and Disability Allowance will also receive an extra month’s payment, at a cost of HK$3.84 billion to the government.

Those who get the Working Family Allowance and Work Incentive Transport Subsidy will also get an extra payment.

Elderly people who are on the Elderly Health Care Voucher Scheme will get an extra HK$1,000 worth of vouchers, and each user will be allowed to accumulate up to HK$8,000 dollars’ worth of vouchers, up from the existing limit of HK5,000.

Needy students will be given a one-off grant of HK$2,500 to support learning, while fees will be waived for high schoolers sitting for the 2020 Hong Kong Diploma of Secondary Education Examination.

12:03

The Financial Secretary, Paul Chan, has announced a one-off salaries tax reduction of 75 percent for 2018-19, capped at HK$20,000. This is down a third from the maximum HK$30,000 he handed out last year.

Chan said this will benefit 1.91 million taxpayers and reduce government revenue by HK$17 billion.

Profits tax will be reduced by the same amount – 75 percent – also capped at HK$20,000. This will benefit 145 000 taxpayers and reduce government revenue by HK$1.9 billion.

11:53

If the government has a concrete plan to leverage on the new Greater Bay Area development plan, it’s not in Paul Chan’s budget.

The Financial Secretary only dedicated two paragraphs in his latest blueprint to the Xi Jinping-led initiative, describing the plan as “an important part of the national strategy to promote co-ordinated regional development.”

While Chan talks up the golden opportunities this plan gives Hong Kong, no concrete initiatives were announced.

Chan stuck to generalities, noting that “Hong Kong, positioned as international financial, transportation and trade centres as well as an international aviation hub in the Greater Bay Area, will strengthen its roles as a global offshore Renminbi business hub and an international asset and risk management centre; and will devote great efforts to develop I&T industries as well as international legal and dispute resolution services.”

11:47

To boost talent for Hong Kong’s IT industry, Financial Secretary Paul Chan has announced an increase in the monthly allowance for local graduates who join the industry.

Chan said monthly allowances for researchers with a Bachelor’s degree will rise from HK$16,000 to HK$18,000; while those with a Master’s degree will get HK$21,000, up from HK$19,000

HK$500 million will be allocated for an “IT Innovation Lab” programme. Participating secondary schools will get HK$1 million each to purchase equipment and services, to organise more activities to deepen students' knowledge of cutting-edge IT, such as artificial intelligence, blockchain, cloud computing and big data.

Funding for an existing Technology Start-up Support Scheme for Universities will be doubled from HK$4 million to HK$8 million starting from 2019-20 to better nurture university start-ups.

11:43

Financial Secretary Paul Chan has allocated billions of dollars to help Hong Kong develop its IT industry.

HK$16bn will go to local universities to enhance or refurbish facilities such as laboratories that are essential for research and development.

HK$5.5bn will be set aside for the development to expand Cyberport. Chan says the Cyberport 5 project will attract more tech companies and start-ups, providing 66,000 more square metres of floor area.

He says they hope to begin construction in 2021 for completion in 2024 at the earliest.

11:17

Paul Chan is warning that the uncertain global economic outlook will “restrain” Hong Kong's economic performance. He says with the one-off measures and other plans to be unveiled in his budget this morning, Hong Kong’s economy will grow by between two and three percent in 2019.

However, Chan tempered his estimate, saying if the US-China trade conflict escalates, Hong Kong’s export and asset markets, along with local investments and private consumption, will all be hit.

Chan also anticipated inflation to be 2.5 percent for 2019.

11:13

Financial Secretary Paul Chan has estimated a fiscal surplus of $58.7 billion for 2018-19, with the revenue of $596.4 billion 1.3 percent lower than initially forecast due to lower-than-expected revenues from land premium and stamp duties.

However, the taxman collected HK$16.1 billion more in profits and salaries tax than expected.

Chan explained that land premium revenue fell mainly due to the unsuccessful tendering of two sites in the year. Smaller-than-expected trading volumes were blamed on the weak property and stock markets.

Expenditure was 5.6 percent less than expected, at HK$537.7 billion, 5.6 per cent or $31.9 billion lower than the original estimate. Chan said this is mainly because the expenditures on certain policy initiatives and public works projects were lower than the original estimates.

11:09

Chan reported that Hong Kong’s GDP slowed from 4.1 percent in the first half to 2.1 percent in the second half of the year, with the economy growing 3 percent for the whole year. Growth in the fourth quarter was at a tepid 1.3 percent – which is the lowest since the first quarter of 2016.

Unemployment remained low at 2.8 percent, while inflation was 2.6 percent – counting out the effects of the government’s one-off relief measures last year.

exports of goods declined by 0.2 percent in the fourth quarter of 2018, while exports of services also moderated in the latter half of the year. Consumption also slowed, and business sentiment has weakened in recent months.

11:04

Paul Chan has started his budget speech with a warning that the blueprint was prepared “against the backdrop of profound changes in the global political and economic landscape, a complicated and volatile external environment and heightened uncertainties.”

He said Hong Kong has been susceptible to economic headwinds, which has hit its GDP growth, but he also sounded a note of confidence, noting that every cloud has a silver lining.

His budget will be geared towards "supporting enterprises, safeguarding jobs, stabilising the economy, strengthening livelihoods".

10:50

Good morning and welcome to RTHK’s live blog of the Financial Secretary Paul Chan’s 2019-2020 budget speech. Chan is expected to tighten the purse strings for this year’s fiscal blueprint as Hong Kong’s slowing economy shrinks the city’s surplus from last year’s record HK$138 billion to around a third of that.

The Financial Secretary has been managing expectations of what ‘sweeteners’ he will be dishing out, warning repeatedly that he will not be as generous as in past years. Some one-off relief measures such as salaries tax reductions and rates waivers are still likely, but they will probably be scaled back.

Besides an expected HK$5bn extension and revitalisation project for the waterfront on both sides of Victoria Harbour, Chan is expected to give out another HK$5bn to help hospitals buy equipment. We’ll be looking for any initiatives that tie in with the newly unveiled Greater Bay Development plan that aims to turn the region into a global IT powerhouse.