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劉廼強 | 21st Jan 2011 | SCMP | (25 Reads)

Chief Executive Donald Tsang Yam-kuen highlighted his concerns about unusual inflationary pressure and its effects during his question-and-answer session in the Legislative Council last week.

In addition to the well-known cause of quantitative easing on the part of the US Treasury, recent serious flooding in Australia, Brazil and Sri Lanka aroused fears of a global food shortage and boosted the price rise.

Ask anyone in the supermarket, and you will have the unanimous answer that prices have been rising everywhere for some time.

As usual, people can expect very little from our government, except for small amounts of money that are dished out so that it could be seen to be doing something to ease the pain. If we cut through all the mumbo jumbo in Tsang's speech, this was in essence what he told Legco.

Now that the public coffers are inundated with money, the government is well equipped to pursue this course. Even so, Tsang took pains to remind us that, according to the Basic Law, he was expected to balance his budget. That means: don't expect too much.

In fact, without a fundamental change in governance philosophy, there is very little else the government can do, and we cannot reasonably ask a lame-duck government to lead a paradigm shift.

During periods of inflation, it is the underdogs who will suffer the most. Minimum wage legislation will only protect those who still have a job. Even they, however, will find that the gap between the general price level and their meagre income is constantly widening, and it is more difficult to make ends meet.

On top of that, the introduction of a minimum wage will invariably cause job losses, and a fixed welfare payment is not much of a consolation for the growing number of unemployed.

Inflation is tough; and stagflation, which we will probably face, is even tougher.

The central government has promised to maintain adequate supplies for our daily necessities, but with general price rises in agricultural products all over the mainland, there is no way it can guarantee us price stability. Do not demand the impossible from our caring Grandpa Wen Jiabao ; he is not Superman.

Most people can live with hardship, at least for a while, but the distribution of hardship is a different matter. Radicalism is not only rising but also becoming more prevalent here. When people see large companies making huge profits without sharing some of it with their employees, they will get extremely upset. When utilities companies raise their charges, everybody will scream.

In an election year, our politicians will not forgo opportunities to stir up anti-business sentiment just to gain more votes. The property market is a time bomb which the government so far has not succeeded in defusing.

Hong Kong citizens today will no longer tolerate a non-performing government. With current price levels so high, people are already unhappy, and when housing prices start to rise further, people will get really angry.

In short, hard times are here and, basically, we are our own - with the possibility of a tiny bit of help from the government. Our lame-duck leaders, apart from playing the good guys and appeasing protesters, have very little up their sleeves. There is one thing it can definitely do, and that is: don't raise charges and levies. And, perhaps as the MTR Corporation's largest shareholder, help to limit MTR fare rises.

This year is destined to be a troublesome one. Things could very easily get out of hand and begin spiralling downwards.