The counter-inflation measures proposed in the Budget will help reduce the overall inflation rate, Financial Secretary John Tsang says, adding the proposed "iBond" will offer people an alternative investment option to tackle inflationary pressure.
Speaking on a joint radio forum this morning, Mr Tsang said inflation will be serious in the coming year, so the Government will not introduce measures which will aggravate the situation.
He said the Budget will cater for the needs of people from all sectors because overall government services will be enhanced, and the proposed relief measures will benefit those most in need.
Reiterating the fiscal blueprint will also benefit the middle class, he said the proposed increase in the child and dependant parent allowances, Mandatory Provident Fund account injections, and the proposed iBond will benefit them.
The MPF account injection will benefit people with accounts under an MPF scheme or an occupational retirement scheme. That means the total number of beneficiaries will outnumber the actual working population because the injection will also cover retired people with such accounts.
When asked why he introduced a tax rebate in previous budgets but not in this one, he said in previous years, a tax rebate was necessary to stimulate the economy because Hong Kong was facing deflation. Now that the city is facing inflation, a rebate could trigger inflationary pressure.
Property market
Mr Tsang said the measures introduced earlier to curb speculation activities in the property market are working. This budget mainly focuses on increasing flat supply.
In the coming decade, about 200,000 flats will be made available for sale, he said, adding the move will help change market expectations. The instant market response to proposed measures is not accurate because it takes time to assess the initiatives' effectiveness.
When asked why the government will not resume regular land auctions, he said they are not the best way to solve the problem as it lacks flexibility. He added the My Home Purchase Plan proposed in the Policy Address is better than resuming Home Ownership Scheme flat construction.
Government spending
The Financial Secretary also said the Government will control its spending, and a rise in future government expenditure will not exceed Hong Kong's GDP growth.
However, he reiterated that he will boost health spending to 17% of recurrent government expenditure because the city is facing the problem of an ageing population.
Noting it is not possible to impose a total tobacco ban at this stage, Mr Tsang said the proposed increase in tobacco duty will help smokers change their habit and improve their health.
