Our annual Finance Minister of the Year study takes into account not only the actions of a minister takes to bolster his or her respective economy, but also aspects of their personal behaviour that detracted from the credibility and prestige of the institutions they represent.
Today's entry is a minister who has fallen short on both counts in a city that badly needs better leadership.
RANKED 10TH: PAUL CHAN, HONG KONG
After four years as Hong Kong's development minister, Paul Chan stepped up to become financial secretary in January last year. And he carried plenty of baggage as he took over from popular incumbent (and failed candidate for chief executive) John Tsang.
“Boosting land supply” had been Chan's catchphrase as development chief under former chief executive CY Leung, but he left a series of targets unmet. His team was 44,000 public flats short of target in 2016 and the average waiting time for public housing hit 4.6 years in March 2016 (two months after his departure), more than 50% above target. That said, he did identify more than enough land for the development of private flats during his time in office.
Shortly after his appointment to the bureau in 2012, reports emerged that his family owned some 18,000 sq ft of farmland in Kwu Tong North, part of an area designated by the government for a new town. It was later revealed that a firm controlled by Chan's wife had operated illegally subdivided flats. Being sued for libel by his children's classmates and billing taxpayers HK$2 million ($250,000) for a refit of his official home also drained Chan's political capital.
All of this makes it harder for Chan – previously a lawmaker representing Hong Kong's accountancy sector – to tackle Hong Kong's challenges. The city's government is awash with money as a booming property market leads to huge government surpluses, yet social inequality is rising while unaffordable housing and limited economic opportunities frustrate the city's young people.
Chan's first budget in February 2017 showed promise of a break from the record of his predecessor Tsang, who spent his almost 10 years as financial chief offering only one-off giveaways, like tax rebates, rather than focusing on long-term investment to share the social wealth.
For a start, Chan identified several key shortcomings in the city’s past use of surpluses – stuffing money for an unspecified time and purpose in a so-called Future Fund, for example. While still handing out one-off sweeteners, Chan promised greater deployment of capital to invest in long-term economic growth and social welfare.
Measures unveiled in the new budget on February 28, including tax deductions for private healthcare insurance and subsidies for electric car ownership, were welcomed by observers. “The government must support individuals saving for their future and taking responsibility for their health, so we are glad they have offered measures towards these goals and look forward to seeing the relevant legislation,” Curtis Ng, convener of Budget Proposals Sub-Committee of the HKICPA, said.
The Hospital Authority will also receive nearly HK$6 billion in additional recurrent funding. However, there were disappointments. Chan plans to inject HK$2.5 billion into funds that help small- and medium-sized enterprises on domestic and export branding – but these are not easily accessed. “The government must reduce the red tape businesses face in obtaining funding,” Ng said.
What's more, much of what Chan announced had a familiar tone. He promised HK$50 billion for technology and innovation, but almost half is going towards the so-called 'Lok Ma Chau Loop' – a patch of toxic sludge by the Shenzhen River that will take years if not decades to clean up, even before it can be converted into a cross-border research hub.
Billions more went to the Science Park and Cyberport, two developments from the early 2000s that have so far shown only the faintest signs of turning Hong Kong into city that fosters innovation. The latter, famously granted to the son of tycoon Li Ka-shing without a competitive tendering process, is getting HK$100 million for the development of an 'e-sports hub'. Meanwhile actual, innovative start-up businesses compete for a handful of spots in incubators or are forced to rent premises at sky-high prices.
And, of course, there were the predictable 'one-off" tax handouts and rebates, HK$1 billion for a 'Youth Commission' (to replace a 'Commission on Youth' that achieved nothing tangible) and, just for old time's sake, some further pledges of new housing.
It's a clear contrast with old rival Singapore, which has boldly pushed through tax reform aimed at catering to its ageing population while also offering straightforward tax rebates for companies that invest in innovation.
Chan is described by his colleagues as hardworking and dedicated. Perhaps his dedication can help generate tangible budgeting reform during his term. But Hong Kong, more than most territories on this list, faces deep political and social divisions that would make it tough even for a popular politician to push through radical change.
For Chan it will be even tougher. It would help if he, or his family, could stay away from property investments.
NEXT: A veteran who has seriously outstayed his welcome.