Surpluses: again, again and again

Financial Secretary John Tsang will estimate how much money the government will make next year, as well as how much it needs to spend. He’s been wrong for the past few years.

Surpluses and deficits throughout the years: the original estimate, the revised figure and the actual figure of the entire budget (in HK$ billion)

Name of the financial secretary under fiscal year
Order of bars: original, revised, actual figures
At every budget speech, the financial secretary announces estimates for the fiscal year to come, starting on March 31. This estimate gets revised in the following budget, about a month before the end of the fiscal year. Actual figures are known a few months after the end of a fiscal year and compiled into budget documents in the following year. This year, we learned at the budget speech that there is an expected HK$73.54 billion in surpluses, almost HK$55 billion in excess of the original estimate made last year. This is not unlike levels of miscalculation seen throughout John Tsang’s tenure as financial secretary. These figures include money from the general revenue account and the eight funds described in our 2014 graphic.

In 2011, an unnamed government official pointed out a big problem with bad estimates: when the public sees a big surplus and not a lot of long term spending, they want some of that money back. That was the year when the government just gave out HK$6,000 to all of Hong Kong’s six million adult permanent residents. Francis Lui Ting-ming, professor of economics at the University of Science and Technology, said many people would now expect continuing handouts.

Budget surplus beats expectations - again
Financial secretary John Tsang misjudges budget surplus again
HK government's deficit forecast again in doubt
Government out by HK$50b on budget sums, say accountants
Newspaper headlines from the South China Morning Post about the budget (2008-15)

Which government departments are hiring?

You can use the budget to get an idea of which government agencies are hiring more people. Think of it as the government’s shopping list for the coming year. The government releases a list of establishment numbers, which lists how many posts the various departments have, as well as an estimate of how many the departments will have at this time next year.

Historical numbers in the ten largest establishments per head of expenditure

The establishment is the number of posts in the government. By contrast, the number of serving civil servants is called the strength. This graphic only tracks government paid staff, leaving out staff of sizeable public bodies such as Hongkong Post and the Housing Authority. The number used in this graphic is the estimated number of posts for March 31 of the year, announced in the budget generally submitted in the end of February. The 2016 figure is estimate made in the current budget for March 31, 2016.

Where the Hong Kong government gets most of its money from

Most of the government’s revenue comes from profits tax. Basically, if you do any kind of trade, profession or business that makes a profit in Hong Kong, you have to pay taxes. It doesn’t matter if you live here or not. The rate for businesses is 16.5 per cent.

This year, the government cut profits tax by 75 per cent, and people who pay profits tax can save up to HK$20,000.

The not so fine art of estimating revenues

Figures are in HK$ billion
Original estimates (paler orange) and actual figures for revenues in the general revenue account. For 2014-15, we used the revised estimates made public on Wednesday. The windfall in stamp duty contributed in the government’s vast surplus for 2014-15.

Hong Kong has to compete against mainland cities like Shanghai and Beijing for business, as well as regional rivals like Singapore. The mainland cities get a lot more revenue from profits tax than Hong Kong does, but accounting firm Deloitte says the government should think about setting up a two-tier tax system by taxing the first HK$2 million in profits at a lower rate of 12 per cent – the kind of system Singapore has.

Who gets more money, Li Ka-shing’s company, or the Hong Kong Government?

This is just kind of cool. The budget tells you much money the Hong Kong Government collected for the past year. Let’s see how it compares to Hutchison Whampoa, the multinational company chaired by Li Ka-shing, Asia’s richest man.

Comparison of total revenues between the Hong Kong government and Hutchison Whampoa (in HK$ billion)

Hong Kong Government
Hutchison Whampoa
We plotted actual revenues from the Hong Kong budget with revenues found in annual reports of Hutchison Whampoa.

2009 was a tough year. At that year’s budget announcement, financial secretary John Tsang pointed out that Hong Kong, like the rest of the world, will see its economy go down. The 2010 budget announcement notes that “Amidst the severe plunge in global trade, Hong Kong’s goods exports fell by 12.6 per cent in real terms in 2009, the biggest annual drop on record.” Hutchison Whampoa also suffered that year because of significantly lower oil and gas prices, less trade and unfavourable exchange rates.