Every five years or so, it seems, some supposedly high-powered government committee comes out with a blood-curdling prediction about our financial future. Those of us who have been around for a while have heard this song so many times we can join in: aging population globalization competition welfarism unpredictable government income gloom, doom or new taxes.

Having heard it so many times those of us who have been around for several decades have also seen the earlier versions of the prediction turn out to be a load of rubbish. Indeed this is not surprising. Scientists have determined that predictions produced by experts in politics and economics are uniformly worthless. This is not the experts' fault. They are dealing with very complex systems. Predicting the future of human societies is like predicting the weather. The difference is that weathermen have the sense not to offer predictions of the local weather in 20 years time.

The new thing in the latest burst of fallible prophecy is the suggestion that the government would find it easier to follow the committee's advice if it told lies about its income. This is the real meaning of the suggestion that income from land sales, premiums etc. should not be regarded as income. It should be treated as a special kind of non-income which does not show up in the accounts. This would allow the government to plead spurious poverty and so resist pressures to spend money on desirable social goods like poverty alleviation.

Now let us get this sorted out. Income from land is not a "windfall". A windfall is an unexpected one-off dollop of money which could not have been predicted and cannot be expected to occur again. For example, an ancient legend has it that a large trove of government gold was buried somewhere in the grounds of Government House just before the Japanese invasion. By the time the war was over all the people who knew where the treasure had been hidden were dead or disappeared. So it has never been found. Now if the Government House gardening team turns it up tomorrow that will be a windfall: a pleasant surprise, but no sensible Financial Secretary will expect it to happen again next year.

Income from the government's land monopoly is not a windfall. It is just an income stream with large fluctuations. This is inconvenient, but not uncommon. If you are in the film business you find that most films do not make money. In fact most large-scale films do not even cover their production costs. A film company makes 10 films, of which maybe eight lose money, one breaks even and one makes huge amounts, covering the losses on the others and providing a profit. This does not mean that if you make 10 films a year you can rely on a regular stream of profits. It means that in some years there will be no big hit and the company will lose money. In others there will be two or three and you will be rolling in it. If a couple of years go by without a hit it is common for the shareholders to panic and fire the CEO. This is commonly followed by a burst of hits, all of which were planned and approved while the last leader was still in charge.

Clearly income which varies a great deal is still income. Moreover, income derived from a major monopoly is not going to disappear altogether. It may fluctuate but it will not sink. Quite a lot of the government's income fluctuates, actually. The important thing, clearly, is to have large enough reserves to be able to continue with essential expenditure at times when the fluctuations are not helpful. As our government has more reserves than it knows what to do with that condition is clearly met, so the sensible thing to do about variable income is to stop worrying about it.

Instead, we are told, this income which is not income should be put in a separate fund to be spent only on infrastructure projects presumably on the basis that spending on infrastructure projects is not really spending. Well fans of infrastructure spending will say that it isn't spending: It's investment. This is a label commonly sought by people who wish to encourage a particular kind of government spending, and indeed almost any government expenditure can be dressed up as an investment if you try hard enough. You can also, without trying too hard, label a lot of infrastructure "investment" as a thorough waste of money undertaken as a sort of poverty relief for the construction industry.

This suggests that whatever we think about the financial prospects in 20 years, it would be a good idea to keep the language of discussion simple. Money coming in is income. Money going out is spent. Other formulations are not helpful.

The author's work in journalism has won him honors in the Hong Kong News Awards and the International Radio Festival of New York. He is well known as a columnist, reviewer and broadcaster.

(HK Edition 01/27/2014 page1)