Timid Leaders Lack Vision

SCMP Novermber 3, 2013

 

When will Hong Kong's government and civil service leaders grow up? It seems they are incapable even of thinking beyond the baby steps they propose to meet Hong Kong's most obvious problems. They have a lot to learn from Beijing on the eve of the Communist Party plenum, where high-level advisory bodies and think tanks have been proposing bold ways for China to move ahead.

They include such items as freeing up interest rates, a road map to full currency convertibility, abolition of the hukou system, ending of preferences for state enterprises, and creating a market in land-use rights.

Of course we know that a lot of this will not happen. Interest groups within the closed political system will likely frustrate reform. But at least China has people near the top with vision. Where are their equivalents in Hong Kong? For sure, Hong Kong's political system can be an obstacle to change, but ultimately its more open system should be better capable of bringing about change for the common good than a one-party state. But timid men in well-paid, secure jobs are failing the community.

Take the issue of the ageing population. There is a suggestion of setting aside HK$60 billion for a fund to support the ageing poor. This is a derisory sum; it compares with the HK$24 billion which sits in the Civil Service Pension Reserve Fund for that spoiled class in the unlikely event that the government itself could not pay their pensions out of recurrent revenue.

What current and future pensioners - those reaching 65 to 70 over the next 15 to 20 years - deserve is a share of the vast surpluses built up by their toil over the previous four decades. These are currently HK$1.3 trillion - some HK$674 billion in fiscal reserves plus the HK$637 billion accumulated surplus of the Hong Kong Monetary Authority.

It is often forgotten that much of the surplus has arisen as a direct result of devaluation of the Hong Kong dollar, whether in the period immediately before the peg or as a result of subsequent US dollar weakness, against some currencies in which assets are held. The Exchange Fund has benefited at the expense of savings eroded by inflation.

Lower income groups mostly save through bank accounts. But decades of mostly negative real interest rates have eroded their savings to the advantage of the banks, the developers and those already sufficiently well-off to be able to borrow and enjoy many years when assets prices have outstripped rises in earnings. While the small savers earned nothing, the HKMA was able to reap the higher returns available in bond markets. It is of course entirely coincidental that the non-official members of the fund's advisory board are bankers and property developers.

It is time for the government to give back to the people - the older ones in particular - the HKMA's gains which accrued at the cost of the people, not as a result of clever management. These reserves are not required for currency stabilisation, for which the HKMA has more than enough other assets and tools.

Hence the sum the government should be thinking about is not HK$60 billion but HK$600 billion. It can still be managed by the HKMA as part of the Exchange Fund but its income and some of its capital must be earmarked for a pension system which does not leave frugal hard-working people in abject post- retirement poverty.

On the question of advancing the retirement age, the civil service (and quasi-government bodies like the universities) set the worst possible example. Retirement at 60, or even earlier, mainly benefits the upper echelons who then get cushy jobs in the private sector peddling their connections to the bureaucracy. Lower ranks can find difficulty in finding new jobs.

Health is the only reason for retiring before 65. Those in services requiring a higher level of physical fitness should have the option of redeployment in other parts of the civil service. Ultimately the general retirement age probably needs moving to 70.

A previous column addressed the meaningless baby steps being touted to raise the fertility rate. One of those baby steps - tax breaks - is being proposed for health insurance. Yet again this is a device aimed not at dealing with an issue at its root but adding to the income and wealth divide by favouring one class of citizen - mostly the high-income one - over the rest.

The iniquities of the high-land- price policy, and the lock of the Heung Yee Kuk, are well enough known. But fellow Post columnists have recently drawn attention to the abuse of public housing as a result of government unwillingness to enforce rules meant to keep it for those who need it. Likewise, feeble administration allows tens of thousands of flats to remain vacant.

There is no need to repeat here details of the deliberate failure to address pollution issues, have a rational pricing system for tunnel and highway use, or even begin to think about modernising the tax structure. Bold policies on all these issues are within easy reach and maybe some Beijing think tanks could spell them out for our do-nothing leaders.

Only then will we know if the legislature is the obstacle to change that officials suggest, rather than timid men taking refuge in "seeking consensus".

Philip Bowring is a Hong Kong-based journalist and commentator

This article appeared in the South China Morning Post print edition as Vision lacking in timid leaders

Share

0
in Share 16 Comments Print Email

After reading this article, people also read

1. Fluency in Chinglish doesn't count as World City yardstick Dec 19, 2013
2. Hong Kong people must not settle for anything less than universal suffrage Dec 19, 2013
3. Are Chinese students smarter or is testing system rigged in their favour? Dec 19, 2013
4. Why HK-style property tax may not cure Vancouver's China syndrome Dec 19, 2013
5. A ‘crush' on Tony Blair - can Wendi Deng be serious? Dec 19, 2013

• All comments
• Most recommended

16

This article is now closed to comments

Giwaffe Nov 4th 2013
8:08pm At best, the people in the present government are 95% "administrators" that you have to put up (much like anal HR people) and 5% "leaders" that you would want to follow and lead you. ****** Nov 4th 2013
12:08pm Well said, Mr Bowring. Why aren't people more angry about this, no petitions, no pressure on government?? Like you said, this is getting to be worse than the mainland China style of governance. Apparently, this bunch is not even worried about social unrest, hence zero motivation to work for the vast majority. What a pickle our underprivileged are in... no voice at all. No one cares. ****** Nov 4th 2013
12:10pm I'm beginning to gain a lot of respect for China's new leadership - despite all their obstacles, they at least have a visionary plan, bar none in the world. From an investment perspective, this to me screams BUY China, SELL Hong Kong. kctony Nov 4th 2013
1:38am A "patriot" came over to my boss during the changeover evening and claimed HK's prosperity will exceed that of the colonial days. He said the British had always left many colonies ruined when they left, but not HK with China backing it up.
My boss gave him a polite smile, "The Brits left us 4 words.....The Hong Kong Government"
radose18 Nov 3rd 2013
11:13pm my friend's sister-in-law makes $82 hourly on the internet. She has been laid off for eight months but last month her payment was $15922 just working on the internet for a few hours. his comment is here ****www.jobs64.com caractacus Nov 3rd 2013
10:13pm There is little imagination in our Executive Council and even less talent and Legco is not far behind. This has spilled over into what was once an honest and efficient civil service now paralysed by indecision and the incompetence of leaders who have been promoted above their abilities because of the same crony culture. What do you expect when a Chief Executive only appoints "yes men" who have to have been vetted as politically correct by the CCP?
If Hong Kong were a business it would have gone into liquidation 10 years ago and the Directors would be in gaol. caractacus Nov 3rd 2013
10:07pm All true and fair comment. At the heart of the weakness and inaction of the administration is the Crony Appointments System which has been accompanied by lack of transparency and accountability, arrogant abuse of power and corruption at the very top.
I suspect the last thing Hong Kong may need is China "think tanks" - will that only make the corruption worse? shouken Nov 3rd 2013
6:00pm While largely agreeing with the author's call for the government to take bolder actions regarding the ageing poor in HK, I want to point out that the so-called "open" political systems are better poised to fight interest groups than China (called a "closed" system by author), is an illusion. I do not see Obama and his administration is faring much better in fighting against vested interests on the other side of the Pacific Ocean. Dao-Phooy Nov 3rd 2013
4:43pm Agree with the observations. These 3rd rate people in the civil service have been promoted well above their very limited abilities. Those reaching retirement age are then given plum postings in Quangos and so double dip - receive their pensions plus a salary all on taxpayer's expense. They system is rotten and in serious need of reform. johnyuan Nov 3rd 2013
2:31pm The civil ‘servants' in Hong Kong is divided into two groups that comprise with many levels of different responsibility, compensation and etc. The seniors, in the colonial days were mostly British. The rest were Chinese. Since the hangover, the localization requirement rushed the Chinese juniors into senior positions. It is batch of civil servants who are formally as a group seeking extension of retirement age. I am all for anyone to remain in servicing the public if they are physically fit and have a good performance record. The chances of the latter clearly are absent. For those in the very senior positions, despite dismal performance, the government has been treating these retirees on a musical chair of employment. They just retired to stay on other positions paid by tax. The colonial senior members before the hangover just mostly packed and retired somewhere (not in Hong Kong). Sure there are now those having a good time in the private sectors nowadays making themselves for their new employers by keeping in touch with their former subordinates in the government.
.
A blood change of the senior civil servants is not an unreasonable move in attracting the more civic minded people who would hold their job to serve the public instead would hold an iron bowl as a job. And not the least, stop the music and remove those chairs for those retirees.

 

ends