Paul Chan: Huge Budget Deficit May Swell Further

Financial Secretary Paul Chan says predictions of an unprecedented HK$280 billion budget deficit for this financial year are likely to prove to be an underestimate, as the projections fail to fully account for lost tax and land sales revenue.

Chan had predicted in his budget in February that the budget deficit for the 2020/21 financial year would reach its highest ever level at HK$139 billion as the SAR dealt with a recession following months of anti-government protests and Sino-US tensions.

The administration announced a further HK$137 billion in relief measures this week to cope with the coronavirus pandemic, including support for affected industries and help with staff pay for companies that agree not to fire employees.

"Considering that during economic recessions, tax collections and revenue from land sale would inevitably come down, we are of the view that it would be quite possible for the deficit for this year to exceed HK$280 billion," he said.

Chan also said the administration was looking at ways to ensure that businesses could not exploit a wage subsidy scheme announced as part of this week's relief package.

The measure will pay half of workers' salaries, up to a maximum of HK$9,000 per month, for six months. But critics said there was nothing to stop bosses claiming the money and then cutting the pay of staff or ordering them to take unpaid leave.

Chan said Secretary for Labour and Welfare Law Chi-kwong and the government's policy unit were working on how to prevent exploitation.

"In designing the scheme, one of the features is transparency, so which companies have applied for such a subsidy will be published.

"With improved transparency, hopefully there will be more accountability, and also there will be opportunities for the aggrieved employees to raise their concerns."

Chan also said that the logistics of a HK$10,000 handout for all permanent residents was being worked on, with applications likely to open in June and the first recipients getting their money in July.