Sat, Nov 24, 2012 - Page 1 News List

Hau warns debt ceiling cut will slow development

By Mo Yan-chih and Shih Hsiu-chuan  /  Staff reporters

Taipei Mayor Hau Lung-bin (郝龍斌) yesterday lashed out at the Executive Yuan over its proposal to lower the debt ceiling for the city government, and said the large subsidy slash would delay major infrastructure projects and hinder the city’s development.

Accompanied by eight Chinese Nationalist Party (KMT) legislators, Hau told a press conference that the central government had lowered the city’s debt ceiling by NT$225 billion (US$7.7 billion) without discussing the issue first with the city government, describing the move as an “ambush.”

“The lowering of the debt ceiling will cause a serious financial crisis for Taipei. The city government has made great efforts to boost the local economy and create more jobs. However, the central government ... has made it difficult for the city to continue its development,” he said at the legislature in Taipei.

The city government has managed to remain financially healthy and has boosted the local economy by encouraging private investments, although the central government has cut the city’s subsidy every year, Hau said.

However, because of the city’s stable financial situation, the central government has decided to lower the city’s debt ceiling, he said.

“This is like punishing a model student. It’s totally unacceptable,” he said.

If the Executive Yuan insisted on the measure, major infrastructures, including MRT extensions, could be delayed or suspended, he added.

The eight KMT legislators who attended the press conference voiced their support for Hau and the city government, saying they would not vote for the amendment when it comes up for review in the legislature.

“Taipei has been taking care of many people from other cities and counties for study and work. By presenting the proposal, the Executive Yuan is declaring war on Taipei and hurting the development of the nation’s capital. We will not support the amendment,” KMT Legislator Lai Shyh-bao (賴士葆) said.

Hau’s complaint comes in the wake of a Cabinet proposal on Thursday that the debt ceilings of local governments be adjusted to allow New Taipei City (新北市), Greater Taichung, Greater Tainan and Greater Kaohsiung to take out more loans to meet their growing financial needs after they were either upgraded or merged into special municipalities about two years ago.

If the adjustments are passed, Taipei would be able to borrow a maximum of NT$85.5 billion, New Taipei City NT$66.6 billion, Greater Taichung NT$59.2 billion, Greater Tainan NT$46.8 billion and Greater Kaohsiung NT$59.1 billion.

Meanwhile, Kaohsiung Mayor Chen Chu (陳菊) of the Democratic Progressive Party was also dissatisfied with the Executive Yuan’s proposal.

She said the proposal failed to promote the principles of “fiscal justice” and “equal regional development.”

The Ministry of Finance has estimated that, under the proposed amendment, Greater Kaohsiung would have a maximum loan capacity of NT$59.1 billion, which Chen Chu said would not be sufficient to allow the government to implement its policies.

Greater Taichung Mayor Jason Hu (胡志強) urged the Executive Yuan to set up a debt ceiling for each municipality based on their respective situations.

Greater Taichung is capable of paying its debts, Hu said.

“For a company that is able to stay solvent, allowing it to take out more loans can generate more revenue. The central government has failed to take this view into account,” he said.

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