In the realm of public relations, whether for businesses, NGOs, or governments, the impulse to showcase a positive image is almost universal. For commercial enterprises, a rosy portrayal can attract customers and investors; charities can benefit from increased donations; and governments can enhance their credibility, facilitating smoother governance.
However, overly optimistic portrayals can backfire. An overly positive image might lead to unrealistic expectations, creating potential issues. For instance, a highly profitable company might face pressure to lower prices or increase taxes; a charity that attracts excessive funding might risk losing donor interest; and a government setting sky-high expectations could suffer a credibility blow when realities fall short.
A recent case in point involves the Transport and Logistics Bureau’s proposal to legalize ride-hailing services like Uber. Initial reactions were positive, but further scrutiny revealed a more cautious approach. While other regions, including mainland China and Southeast Asia, have long resolved the issue, Hong Kong plans to spend another year studying the situation, with a draft bill expected by the end of next year. This suggests that significant changes may not occur until 2026 or beyond, potentially disappointing those eager for immediate progress.
The same concerns may apply to Hong Kong’s economic growth forecasts and their impact on public finances. While the city’s economic forecast of 2.5-3.5% GDP growth seems promising, it needs to be contextualized against a backdrop of recent economic volatility. Hong Kong’s economy experienced a sharp decline of 6.1% in 2020, rebounded by 6.4% the following year, and then shrank again by 3.7% in 2022. By the end of 2023, GDP was still below 2018 levels.
Lingnan University’s Professor Ho Lok-sang highlighted these fluctuations during a recent radio discussion about civil service pay rises. Although a private survey suggested potential increases of up to 5.47%, the Executive Council approved a 3% rise, reflecting the cautious approach required in the current economic climate.
Despite assurances from the government that Hong Kong’s public finances remain sound, there are concerns about the deficits. The reported deficits for the last two fiscal years were HK$122.3 billion and HK$101.6 billion, but these figures include bond sales, which are debt rather than income. Excluding bonds, the actual deficits were HK$188 billion and HK$173 billion. The forecast for the current year is a budget deficit of HK$48.1 billion, including bonds, or HK$143.8 billion without.
The cumulative effect of these deficits will see the city depleting its accumulated savings by more than HK$500 billion, though bond sales have bolstered cash reserves by around HK$258 billion. The government has pledged to restore fiscal balance within three years, which will likely mean reduced scope for new spending initiatives and higher fees for public services.
In January, Health Secretary Lo Chung-mau mentioned potential increases in accident and emergency fees, which have not been updated since 2017. Chief Secretary Eric Chan Kwok-ki recently announced a 17.6% increase in university tuition fees over three years, and the Water Supplies Department is considering water charge hikes after 30 years. Public housing rents will also rise by 10% from October, with a three-month grace period.
The post office, which has reported losses in seven of the last ten years, could also see fee revisions. The Audit Commission’s findings suggest that adjustments are necessary, and there may be other fees overdue for revision.
Hongkongers understand the necessity of balancing the books and acknowledge that there is no “magic money tree.” However, they would prefer gradual, modest increases rather than substantial hikes after long periods of neglect. Transparency about deficits and the full financial picture would also improve public acceptance and trust.