scmp.com: Use reserves for housing and health, says Goodstadt

前港英政府中央正策局(CPU)局長，評論今時今日CPU，

Use reserves for housing and health, says Goodstadt

Gary Cheung Updated on May 05, 2011

http://bit.ly/myb2K3 Hong Kong could afford to use its huge fiscal reserves to spend more on tackling long-term problems such as housing and health care, the pre-handover government's top adviser says. Leo Goodstadt, head of the Central Policy Unit from 1989 to 1997, said the reserves were now extraordinarily high and he could not think of any other major economy holding as much as the Hong Kong government does. The administration had estimated that the reserves would reach HK$591.6 billion by March, equivalent to 23 months of government spending. "With this huge fiscal reserve, there is no doubt we could afford resumption of the Home Ownership Scheme," Goodstadt said. "Could we [also] afford to have a social insurance scheme based on monthly contributions, like the Central Provident Fund implemented in Singapore? "We could easily abolish the fees for schools operating under the Direct Subsidy Scheme and abolish the new charges introduced by the Hospital Authority in recent years." Goodstadt said in the 1950s when Hong Kong was very poor and faced a tough external trade environment in the wake of UN sanctions on China, the reserves target set by the colonial administration was 12 months of government spending. "At the time, businessmen in Hong Kong were [telling the government it was] too prudent. Now the question is: are our fiscal reserves so big that we are embarrassed by them?" he asked. The government has come under fire recently for failing to come up with initiatives to address long-term problems. Goodstadt said it should not keep on telling people that the city could not afford such programmes. "The question is whether we think it's an acceptable risk. I guess most people would say so." In an oblique reference to the present Central Policy Unit's heavy reliance on opinion polls, he said he and his colleagues at the unit did not try to follow public opinion. "When I was in the CPU, somebody said to me, `I want to do a survey to find out what the needs of old people are'. I said with a chuckle, `You just resigned. We already know'." The Central Policy Unit was criticised for commissioning a poll in March on whether Financial Secretary John Tsang Chun-wah should resign over his budget U-turn. Goodstadt said there was a difference between the officials the government think tank served before and after the handover. The unit is responsible for giving advice to the chief executive, chief secretary and financial secretary. "The clients I had wanted problems solved. They needed a group of people they could hand the problems over to," he said. He said Hong Kong faced unprecedented challenges in the 1990s such as the change from a manufacturing to a service economy and a growing number of people in need of government services. "When you were facing a new situation, you needed a small group of people who could give you practical suggestions you could implement straight away." Goodstadt said he had no criticism of the present CPU, which plainly did what its clients wanted, adding that the problems facing the city were different from the 1990s. Regarding the present CPU's reliance on opinion polls to canvass public views, he said: "I guess for an unelected government, you keep worrying what your potential voters think." He said officials had picked their priorities which could be seen in the policy address and budget. "For whatever reasons, their priorities didn't include solutions to problems in ways the community had got used to and believe would work now. But government officials are paid to make their choices. What more can you say?" The government has refused to resume the Home Ownership Scheme, a subsidised housing scheme launched in 1978 which helped people squeezed out of the private property market to buy flats. In his policy address in October, Chief Executive Donald Tsang Yam-kuen announced a new rent-and-buy scheme, the My Home Purchase Plan, under which rent paid will count towards the price of buying a home. Goodstadt cited a government-commissioned focus group discussion on subsidised housing last year which showed the majority of respondents, even the wealthy, believed that the scheme was worth having. "We need to face the fact that for most Hong Kong people, housing is the biggest financial burden of their life. You don't need any survey or investigation to get this point," he said.