Eric Sautedé
I am no economist, and yet I have enough interest in political economy to figure out when something is right or not. Such is the case with the dramatically loaded use of the word “austerity” by the government. Is it right – in both its rational and moral senses – to use the word “austerity”? And if it’s not, why use the word despite its dreadful adverse effects?
One can always blame translation. Should we translate 緊縮 (jinsuo) as “tightening” rather than “austerity”, which is better rendered by 撙節 (zunjie), that better conveys the notion of frugality? But then, jinsuo is also clearly used to express a “drastic” reduction, such as “credit crunch”, so it does not seem to be an overstretch to translate
緊縮計劃 as “austerity plan”, and Macau Daily News indeed refers to 緊縮政策 when it describes “austerity policies” put in place in debt-ridden European countries.
When did we start talking about “austerity” for Macao? Back in June 2014 at the very start of the dwindling of the gaming industry? In December 2014 when the Budget Law for 2015 was passed? Nope.
Only in April 2015, precisely when the budget of the government was being re-examined and revised. At the time, a vaguely worried Chan Chak Mo, the president of the second permanent committee of the Legislative Assembly in charge of supervising public accounts, raised a pale orange flag to say that if monthly gross gaming revenues (GGR) fell below MOP17 billion then Macao could face a budget deficit by year-end. By his sophisticated calculation, MOP20 billion in GGR per month would total MOP240 billion for the year, and given the tax on gambling of 35%, that would in turn translate into MOP84 billion in government’s revenues… almost exactly the amount envisioned by the revision of the Budget Law in May!
Why the MOP17 billion threshold? Because then, we might really have a deficit – a “crisis” in Chan’s vocabulary – but no explanation (other revenues? actual execution of the budget?) was given regarding the MOP3 billion discrepancy. In the new Budget Law, prospective revenues were revised downward, from MOP154.7 to about MOP120 billion, but then expenses went up slightly (!), from MOP83.72 to MOP83.76 billion…
Ultimately, if need be, Chan revealed that expenditures could “easily” be cut across the board by 5%, without affecting social welfare-related spending or heavy investments. This is, albeit slightly pumped up regarding minor investments (-10%), what was announced on September 1st and Chief Executive Chui Sai On has confirmed that these cost-cutting measures were here to stay.
By any account, the seemingly resolute acts taken in the wake of the bad results of the first eight months of 2015 – we are now below the not-so-thin red line of MOP20 billion per month – do not equate to austerity, which is defined as a set of policies aiming at, by way of spending cuts or tax increases or a mix of both, the reduction of government budget deficits. In the case of Macao, this is an (inflated) “anticipated” deficit: we ran a surplus in 2014 and then we have more than MOP350 billion accumulated in fiscal reserve – not even impacted, so we are told, by the ongoing financial turmoil now affecting Shanghai and Shenzhen. Moreover, the government expects these cuts to save MOP1.4 billion, a mere 1.7% of the budgeted expenditures – so much for the rigor of the measures!
Finally, the Execution of the Budget is only 60% – if we rely on the 2013 figures as the most recent ones have yet to be examined by the Assembly – meaning the government spends, in any case, less than 2/3 of the money it said it would!
Taking a stand and publicly explaining what these spending cuts actually mean – the shy first steps in eliminating waste within public administration and restoring trust of the citizenry in its public service – can only benefit Lionel Leong. Resolutely and personally taking the lead in pushing through the ongoing revision of the new Budget Law, thus positioning himself as a manifest proponent of greater transparency and efficiency regarding public finances, might not hurt either.
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