On February 26, 2025, Hong Kong's Financial Secretary Paul Chan unveiled the 2025 Budget Proposal, aiming to tackle the city’s significant fiscal deficits. This year's budget focuses on measures including salary freezes for civil servants and reductions to the workforce, adjustments to public transportation fees, and plans to increase certain taxes.
Chan emphasized during his address, "The government has to tighten its belt and implement these measures to restore fiscal balance." With issues such as high public spending and revenue deficits, he pointed out the necessity for strict financial management and proposed what he termed the "reinforced fiscal consolidation plan," targeted at reducing recurrent expenses by 7% over four financial years.
Among the notable elements of the plan is the freeze on civil servant salaries for all administrative, legislative, and judicial officers, including the Chief Executive and political appointees. This freeze has come under scrutiny, particularly from civil service unions. "Freezing salaries will negatively impact morale within the civil service," remarked Leung Chau-ting, head of the Civil Service Union, indicating concern over potential reductions to motivation and quality of public service.
Alongside the salary freeze, the proposal includes cuts to the civil service workforce, with plans to eliminate around 10,000 positions over the next two years, highlighting the existing surplus of over 21,000 vacancies within the department. The government aims to streamline operations and improve efficiency but faces criticism for potentially decreasing service quality and affecting current staff workloads.
Public transportation has not escaped the budget axe. Changes to fares for the widely used public transport systems are also set to take effect. A popular "two-dollar ride" program has been slightly altered to maintain affordability but will introduce stricter limits on benefits. Chan explained the adjustments as necessary to align expenses with current economic conditions.
Financially, the new proposal also includes plans to increase airport departure taxes from HKD 120 to HKD 200 per passenger, estimated to generate approximately HKD 1.6 billion annually. This increase is justified by the government as reflective of rising operational costs and appropriate for ensuring users contribute fairly to the public services they utilize.
To address the anticipated backlash, the government has proposed some financial relief measures, including tax deductions and support for those receiving social welfare. Individuals eligible for social support will see additional payments representing half of the standard aid, which Chan believes will help mitigate the overall impacts especially on those most vulnerable.
While the budget demonstrates a commitment to fiscal responsibility, it raises questions and concerns within various segments of society. Many citizens are expressing their worry about the adequacy of public services amid cuts, with some residents feeling squeezed but still hoping the government would introduce more direct financial assistance measures, commonly referred to as "sugar drops"—the local slang for government handouts aimed at softening the economic blows.
Overall, the reactions to the budget proposal reveal deep divisions. While some support the need for stringent fiscal measures to prevent long-term economic instability, others vehemently oppose what they regard as detrimental cuts to services and the broader social safety net. The Hong Kong community continues to engage with the finer points of the budget, seeking to understand how each decision will resonate personally and collectively.
The reactions to Chan’s proposed budget encapsulate the broader societal struggles within Hong Kong, especially as it navigates the complex interplay between enduring fiscal constraints and the imperative for growth and stability.