HK’s Unpopular Chief Exec May Face Competition from Bureaucrats

Hong Kong’s top two bureaucrats are limbering up to present themselves as challengers to the deeply unpopular incumbent Chief Executive C.Y. Leung, 62, whose term ends next year. The two are Chief Secretary for Administration, Carrie Lam, 59, and long-serving Financial Secretary John Tsang, 64. Both are life-long civil servants. However, it is not clear where they are serious challengers to Leung or are simply going through the required motions to make the selection process look a genuine contest.

In practice, given that Beijing has refused to allow universal suffrage for 2017, the choice falls to a panel of 1,200 people, the majority of whom will go with the preference indicated by Beijing through its united front operations.

Lam in particular has recently been adopting a very high profile both in Hong Kong and overseas. Her latest foray has been to declare three populist issues she aims to resolve over the next year. They are fare rises on the Mass Transit Railway, pension offsets in the Mandatory Provident Fund scheme, and a row over rent increases for shopkeepers on public housing estates where shops are owned by the privatized and quoted Link REIT (Real Estate Investment Fund). It is the largest real estate investment trust in Asia.

It may be bizarre to hear Lam singling out these issues over the ones her administration has singularly failed to tackle during its period in office. There is a long list that includes air pollution, land supply and enforcement of land use laws, overcrowding of public hospitals, waste of public funds on costly and ill-managed infrastructure spending. But Lam clearly thinks that if she can claim victory on the three minor issues, that will somehow make her appear the effective, can-do problem solver and innovator that she has singularly failed to be over the past four years.

The Link rental issue cannot be resolved by government without impinging on the company’s property rights. It was the government that sold the properties in the first place in 2005 to raise cash. It has itself compounded the problems of small traders by closing wet and open markets to please the interests of the big chains (two in particular) which dominate retailing of basic consumer goods. That process has been going on for years, including when Lam was Secretary for Development.

Lam is indeed a classic bureaucrat, saying all the rights things about what needs to be done but then failing to do much because she lacks either the guts or the interest to take on vested interests.

That is apparent in the issue of the MPF. The ability of employers to offset long service payments against their obligations to the employees’ MPF contributions has long been an issue. The government has persistently declined to take on the opposition in the business sector to what is clearly a massive loophole in contributions to the scheme and hence its use as a pension system.

Lam is also notorious for protecting the featherbedded senior bureaucracy from suffering for its major mistakes. Most recently an inquiry into lead contamination in water supplies in public housing estate found several departments partly to blame but the head of the Water Supplies Department in particular. Yet Lam insisted the system, not individuals, was at fault.

More seriously, while the coxswain of a vessel involved in a ferry sinking in which 36 people were drowned received a long prison term, the bureaucrats who failed to enforce regulations on vessel seaworthiness and provision of lifejackets – the reason why so many died from what should not have been a major collision – got off with little or nothing.

Lam has indeed used her position to strengthen the suffocating grip that that early retiring senior civil servants have through their appointment to the vast number of quasi-government institutions which own or control vast swathes of the domestic economy.

At the same time, rampant abuse of the law by the rich and influential, ranging from obstructive parking in the Central district to a breach of land use regulations and kow-towing to the feudal mafia known as the Heung Yee Kuk in the New Territories, goes unchecked. Indeed she is partly to blame for Leung’s inability to carry through the promises he made at the time of his selection. Other rackets, such as the freeze on taxi licences to benefit the license-owning cartel at the expense of drivers and the public is another classic the grip that vested interests have on Lam and her ilk.

In the public perceptions, Lam has her merits. She is always visible, doesn’t appear arrogant or threatening and, at least compared with Leung, is less a creature of the united front. But forget any notion that she would bring change and better government to a Hong Kong whose natural spirit is being stifled by entrenched interests, of which the principle is the bureaucracy itself.

As for John Tsang, his moustachioed and somewhat dishevelled appearance gives him a relaxed and friendly look. He has gone further than any of his colleagues in offering a little sympathy to towards a younger generation anxious to maintain the territory’s identity against the mainland onslaught. Possibly he would try harder than Leung or Lam to protect Hong Kong’s separate interests. Yet Tsang is also the very antithesis of an innovator. In nine years as Financial Secretary he has produced not a single major new idea to resolve long-standing problems of excessive government reliance on land and stock market revenues. Indeed, various supposedly populist tax changes have further distorted the tax structure and mainly benefited the top 25 percent of income earners.

While resisting social spending he has given free rein to HK$150 billion infrastructure spending driven by politics and local interests, not economics. Annual budgets have been designed to make a few concessions to middle-income earners and gestures to the poor while continuing to accumulate vast surpluses invested in low-yielding assets managed by another group of over-paid bureaucrats, the Monetary Authority.

Prior to becoming Financial Secretary, Tsang was Development Secretary responsible for the deliberate squeeze on land supply to favor the government and big developers with land banks. That in turn was a major cause of the subsequent property price bubble, which may now finally be unwinding.

It remains doubtful whether either Lam or Tsang could be regarded as serious candidates. Beijing clearly distrusts these holdovers from the British era, however obedient they may now be. A male-dominated politburo is also unlikely to favor a female of any sort – and that includes British-groomed but now pro-Beijing veterans Regina Ip and Rita Fan.

Beijing has not been happy with Leung’s performance and lack of popularity. But it has yet to indicate that it wants him replaced. So Lam and Tsang, and maybe more, can put themselves forward safe in the knowledge that they stand a chance only if some major mishap befalls Leung late in the day as it did the then front runner, Henry Tang, in 2012.