Hong Kong Government Press Release
8th February 2023 – (Hong Kong) There are views pointing out that stepping into 2023, Hong Kong was greeted by a new wind of price increase, and yet there has been no significant increase in the income of members of the public. The quality of life of members of the public has declined amid the escalating inflation and livelihood pressure. However, the State President has indicated that “it is important to put people first, help them overcome difficulties, especially address prominent economic and livelihood issues that people are concerned with, and truly increase their sense of contentment and happiness.
In response, Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan said in the Legislative Council today that with a complicated and volatile external environment and a bumpy road to global economic recovery lying ahead, Hong Kong’s economy will still be fraught with challenges. Making good use of public money to support the grassroots and people’s livelihood and hence maintain social stability is a top priority for the Special Administrative Region (SAR) Government.
According to the advance estimates provided by the Census and Statistics Department, the Hong Kong economy contracted by 3.5 per cent in 2022. The consumer price inflation remained moderate in overall terms last year, with the headline and underlying inflation rates averaging 1.9 per cent and 1.7 per cent respectively. With the full resumption of normal travel between Hong Kong and the Mainland starting this Monday, it is anticipated that official events as well as business, tourism and other economic activities will resume more quickly, and cross-boundary people and goods movements will increase steadily. This is expected to boost Hong Kong’s exports, transportation and logistics, tourism, retail and catering sectors, and contribute to a more optimistic sentiment and outlook for Hong Kong’s economy as a whole. Looking ahead, while Hong Kong’s economy will certainly perform better in 2023 as compared with last year, the external environment is still full of challenges and uncertainties. Economic recovery is, after all, a process. Only by creating a stable and favourable environment for economic development, and by adopting business-friendly policies and measures, can Hong Kong achieve the greatest extent of economic recovery. While we are striving to consolidate and promote Hong Kong’s economic recovery, we should also, in the process of reopening and rejoicing at the recovery, dedicate our efforts in improving the living conditions and quality of life of the public. By adopting a governance model that better integrates a proactive and capable government and an efficient market, the current-term Government aims to promote the faster and better development of Hong Kong through measures in the short, medium and long term.
The consultation exercise on the 2023-24 Budget is now in full swing. The government is listening to and studying the views expressed by different sectors of society. As the community is gradually resuming normal and our economy has begun to stabilise, members of the public are still expecting certain relieves as part of the counter-cyclical measures taken by the Government. But on the road to economic recovery, there is also a pressing need to ride on the recovery momentum and allocate additional resources to promote economic development, thus allowing Hong Kong to enjoy speedy, robust and steady social and economic development in future. While appreciating that members of the public have different expectations with regard to the Government’s relief measures, we should adhere to the principles of exercising fiscal prudence, keeping expenditure within the limits of revenue and committing resources as and when justified and needed in public finance management when allocating resources for taking forward necessary initiatives so as to maintain fiscal robustness and sustainability, given a fiscal deficit, an unfavourable economic environment and limited financial resources. In deciding what specific relief measures to be taken, the Government will consider a host of factors, such as prevailing economic situation, its financial position and public needs, in a holistic manner.
Burden of electricity charges on the public
Serving the overall interests of the community tops the agenda of Government’s administration, and the government fully understands the concerns and worries of society about the large increase in tariffs. Under the current economic atmosphere, the Government believes that the power companies should shoulder their social responsibilities and use the best endeavours in riding out the difficulties together with the public. Therefore, in multiple rounds of negotiations on the 2023 tariff adjustments, the Government expressly requested the power companies to mitigate the increase in tariffs in their best endeavours, with a view to lowering the current tariff increase which is principally due to the rise in international fuel prices.
Whilst continuing request the two power companies to shoulder their social responsibilities, we will keep on examining critically the power companies’ capital expenditures in accordance with the Scheme of Control Agreements (SCAs). By exercising stringent control, we can ensure that the power companies’ investments are only made according to the actual needs of Hong Kong. Through controlling their deployment of capital, the level of tariffs can be suppressed to the maximum extent possible. Besides, under the SCAs, the fuel cost is charged on an actual basis such that the power companies cannot make any profits therefrom, while maintaining a stable electricity supply in Hong Kong. The Government has also been monitoring the fuel prices and procurement mechanism of the power companies.
Looking forward, the government will continue to explore various measures to stabilise electricity tariffs, including developing a diversified fuel mix, as well as strengthening collaboration with neighbouring regions to increase the import of zero-carbon energy (for example, wind, solar and nuclear energy). It will also explore and examine feasible options under the SCAs, including the introduction of competition in the long term, in order to suppress the level of tariffs.
Consumption Voucher Scheme
The Government has implemented two rounds of Consumption Voucher Scheme (CVS) in the past two years, disbursing electronic consumption vouchers of HK$5,000 and HK$10,000 to eligible persons respectively, benefiting more than 6 million people each year and injecting a total of over HK$95 billion of purchasing power into the local consumption market. The overall response of the community towards the schemes has been very positive. People consider that the Scheme has helped boost consumer sentiment and promote the wider adoption of local electronic payment. However, the CVS incurs a relatively large amount of public fund, in deciding whether to launch similar initiatives again, the SAR Government must make prudent and holistic considerations, including the social livelihood and economic conditions, the current financial situation, etc., to ensure that the measures are in the overall interest of Hong Kong.