The Public Sector in Hong Kong

7. Policy and the Budgetary Cycle

7 Policy and the Budgetary Cycle One criterion that can be used to evaluate the performance of governments is their ability to formulate and implement sound policies which will deliver collective benefits as efficiently, effectively and economically as possible. Our definition of public policy as: A set of inter-related decisions taken by a political actor or group of actors concerning the selection of goals and the means of achieving them within a specified situation when these should, in principle, be within the power of these actors to achieve1 suggests that it is possible to meet that criterion. But it is also quite possible that the government will fall far short of its goals or that those elusive objectives — efficiency, effectiveness and economy — will prove to be contradictory or that one will be maximised at the expense of the others. Our definition of policy is perhaps a little optimistic. It assumes a logical and rational sequence of events from formulation of goals, through consideration of the most beneficial means of achieving those ends, to actual strategies of implementation. It is considerably easier for policy-makers when this does occur or when they can structure their decisions so that stages follow logically, one from another. But circumstances may not always allow a careful assessment of the problem and its optimal solution. The need for action may be so immediate that policy-makers do not have time to reflect on the most rational strategy or politics may influence outcomes to the extent that the resulting policy is neither efficient nor effective nor economic. In the following three chapters, the overarching argument is that two policy-making systems co-exist uneasily in Hong Kong. Until the last two decades, the policy-making system was closed and well insulated from political pressures. It was based on a budgetary system which so effectively controlled resources that the government was able to build up large fiscal reserves. On the back of a buoyant economy, it had ample means to fund its policies. Under such circumstances, it is relatively easy to fend off political pressures and, in Ambrose King’s phrase, to co-opt potentially dissident elites by the “administrative absorption of politics.”2 Civil servants, not politicians, decided 150 The Public Sector in Hong Kong what the policy problems were and how they should be addressed. Once the problem was identified and under active consideration, advice could be sought from advisory committees or from the community and could be accepted or rejected as senior civil servants saw fit. Policy could be formulated in what appeared to be a rational and logical way. Options could be considered, the relative benefits of different public investments discussed, and final policies put before a public, which was often prepared well in advance for the measures that the government intended to introduce. There were, of course, crises which the government could not foresee and events which did not always allow slow and considered progress towards a particular conclusion. The system itself was modified by the rise of pressure groups and political parties and the realisation that successful policy formulation did not always lead to successful implementation. When such circumstances arose, the government usually chose to act first and then engaged in subsequent remedial action if it proved to be necessary. After 1997, another system, very different from the traditional way in which policy had been made, gradually began to make an appearance. Here, as Kingdon observes, policy-making processes do not always proceed chronologically but may unfold independently and simultaneously rather than in neat, logical stages.3 After the retrocession, three important changes affected the way in which policy was formulated and implemented, and created the conditions which encouraged the development of a different policy-making style. First, the political executive wanted to put its imprint on policy. Colonial government policy-making, with the exception of the MacLehose period, had tended to be reactive rather than proactive. The Chief Executive, the Executive Council and, after 2002, the Principal Officials attempted to initiate changes which would both reduce the backlog of policy problems left over from the transitional period and establish the government’s credentials, as its predecessor had done, on the basis of performance legitimacy. The political executive expected its ideas to be translated into action quickly through the civil service. The consequence was that some of the new initiatives were not always as carefully assessed as they had been in the past and were less subject to the moderating influence...