Letters | Hong Kong’s bloated civil service could do with more than a spending trim

The issue was ignored during the fat surplus years but with deficits looming amid an economic downturn, it’s time to take a good hard look at public expenditure

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Civil servants at an oath-taking ceremony last December at the Hong Kong government headquarters. Photo: Information Services Department

Published: 6:30am, 8 Mar 2021Updated: 6:30am, 8 Mar 2021

According to Hong Kong’s latest budget for 2021-2022, the government will require all policy bureaus and departments to cut their spending. The aim is to trim recurrent expenditure by 1 per cent in 2022-23 without affecting livelihood-related spending, to achieve an estimated saving of HK$3.9 billion (US$503 million).

Solving the structural deficit is a priority for a government that wants to maintain fiscal balance for the long-term needs of Hong Kong’s public finances. Other than promoting the local economy and increasing government revenue, controlling government expenditures is key. The short-term, 1 per cent departmental spending cut is not enough if the government wants to tackle the issue fundamentally.

With reference to the report prepared by the Working Group on Long-Term Fiscal Planning in 2014, there are several recommended principles that the government should consider again for future budgets, including:

1) that the operating expenditure should not exceed 90 per cent of the operating revenue. Surpluses in the operating account may help meet shortfalls in the capital account or may be retained as a reserve, rather than being spent right away;

2) that the capital account (primarily funding capital works expenditure) should be segregated from the operating account and should strive to stay within the limits of capital revenue (primary revenue from land disposals); and

3) that the government should contain overall government expenditure growth within the forecast nominal gross domestic product growth rates and keep the public expenditure at or around 20 per cent of GDP.