Sunset clauses: The right thing to do

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Sunset clauses are used abroad to protect nations’ most cherished rights.  Little used here now, it should be a part of all our legislation.

Beautiful sunsets, long walks on the beach and cost-benefit impact assessments – all good for thoughtful policy.

Sunset provisions in legislation, that is.  This little used tool in Hong Kong needs to become a centrepiece of our political culture, much as balanced budgets and thrifty bureaucrats became fixtures under Cowperthwaite, persisting for decades after.

Let the sun go down

Sunset clauses are built into legislation to give them a restricted life span.  At the end of the time limit, the policy, programme or law – and presumably its funding – expires.

These clauses have their origins in Imperial Rome where they applied to legislation concerning taxes, raising troops and emergency laws.  They would normally expire before a new leader took office, deterring tyranny and providing a clean slate for incoming rulers.  They were considered an important principle that should be adhered to in good lawmaking.  They lost favour when Julius Caesar self-anointed himself dictator for life.

Our activist government has, in the latest Policy Address, undertaken to transform the nature of welfare.  It has been doggedly grinding stamp duty measures, applied in practice but not yet law, through LegCo.  It is undertaking a number of new programmes whose impact will be uncertain – a normal condition of new laws.

Sunsets:  A healthy default

The benefits of sunset clauses in good government are manifold.  The disadvantages to special interest groups and legacy builders are what stop them from being widespread.

Sunset provisions need to become a centrepiece of our political culture.

In a sense, all policy is experimental.  Even if successful elsewhere, the vagaries of  time, place, people and other factors make each implementation unique.  We move forward with the best of intentions,  but there  is no shame in recognising that things don’t always work out as planned.   Research, cost-benefit analysis, and comparative studies are tools to improve our best guesses.  They are not guarantees.  Including an automatic review and would give governments a chance to determine if their policies were having their desired impacts and should be continued. If the practices are widely recognised as beneficial, a hearty and speedy legislative renewal can count as an easy win for a government and reaffirm people’s faith in their leaders.  Contentious policies can be examined, debated and weighed against alternatives.   Bad policy can die.

Ensuring temporary really means temporary

Without sunset clauses, there is nothing so permanent as a temporary government measure.  The most notorious in the Western world are income taxes.  Usually raised to fund wars (the United States’ Civil War, Australia and Canada in World War I), politicians always promise ‘temporary’ only to find their addiction to the income stream too good to give up.

In Hong Kong now, stamp duties have been sold as temporary measures.  Without a sunset clause, it is more likely they will  become permanent measures, to be tweaked to appease populists of the day and give the government a lever on the economy in lieu of fiddling interest rates like other jurisdictions.

The ancient Romans knew sunset clauses to be a principled part of good policy.

Cyd Ho, Paul Tse and Vincent Fang suggested last year that the milk powder export limits, billed as a temporary measure, could include sunset provisions.  Lack of quorum at a key meeting and then deadlines saw the amendments’ window of opportunity pass and the law passed as proposed.  No one to this day knows what temporary means in this context and we are treated to the farcical spectacle of Golden Week ‘stress tests’ as if access to top milk powder brands were of equivalent importance to the potential collapse of the European banking system.

Sunsets, Welfare and Dependency

In the Policy Address, a raft of new measures have been announced to help low income families, the elderly and more.  A past staple of Policy Addresses, corporate handouts may appear in the budget.

For those policies intended to deliver a hand up – not a handout – the case for sunsets is powerful.  If they are effective, then that means fewer people will be on welfare and they can be scaled back to protect our fiscal position and avoid wasting money. Programmes can be reviewed and new measures brought in to catch those still falling through the cracks.  If they are not effective, they should be abandoned.  New measures should be devised and experimented with.

Welfare, personal or corporate, can run the risk of becoming a crutch.  While one-off measures under the Tsang-Tsang administration were criticised by some, they didn’t lead to people expecting the government to automatically provide benefits for life.  For programmes that do not have a sunset clause built in, that is what happens.  Politician promises today have no guarantee of being delivered by politicians a generation hence.  Most of Hong Kong’s policies have shorter term impact.  But with measures like universal pension schemes currently being debated in Hong Kong, dependency today leads to future dismay.  Sunset clauses keep recipients of taxpayer largesse on their toes, seeking to reduce their dependence on an uncertain public purse.

For genuine handout cases, like disabled seniors, a lifetime pension guarantee for the rest of their short lives is more compassionate.  But single parents whose children will grow up and leave, and the unemployed and underemployed could benefit from a little goad to speed them on their path to independence.  Companies of all sizes receiving handouts would move like lightning knowing their bridge over troubled waters could be withdrawn next fiscal year.

A bulwark against tyranny

The ancient Romans rightly resisted temporary taxes and military conscription from becoming permanent features. In Germany, six month sunset clauses are a constitutional requirement for emergency legislation.  In Canada, provincial exemptions from the some elements of the Charter of Rights and Freedoms have an effective 5 year limit.

In Hong Kong in 2006, democrats, led by the Democratic Party, walked out as the government gained new powers of surveillance, their application for a sunset clause denied.

In many jurisdictions in the modern era, sunset clauses were invoked to protect civil liberties as support for anti-terrorism laws swept the world post 9-11.  In Hong Kong in 2006, pan-democrats, led by the Democratic Party, walked out as the government gained new powers of surveillance and denied the democrats a sunset clause they were fighting for.  The government promised to review the legislation in 2009.  The regular Annual Report was duly issued that year. No major review materialised.  The law did not turn out to be monster democrats predicted, leaving them with bigger legislative fish to fry.  The political vim to fight the law dissipated.  The expanded government powers of surveillance remain, ready when needed.

Tequila sunsets

Tequila sunsets can lead to nasty hangovers.  There are potential drawbacks to sunset clauses.

Political and other types of decision making could be delayed in the time period before a sunset clause is set to expire.  If Hong Kong enacted a sunset clause on new stamp duties, sales could seize up as sellers and buyers waited to see if duties lapsed or were renewed.  Companies considering new ventures or investing in new staff or capital might wait to see the outcome of policies that work for, or against, their prospects.

A uniquely venal or inept political class in single point in time could lead to good programmes being allowed to lapse.  If the terms are set too short, the political class could waste time and effort fighting the same battles over and over to the same results.  Extension of the ability of Congress in the US to raise the debt ceiling is an extreme case in point with shutdowns threatened every few months.

However, drawbacks are manageable.  The time of a sunset clause can be considered to give programs a fair chance to succeed or fail and be properly evaluated.  Setting clauses to expire after one administration leaves and another arrives would give new political  leaders the ability to let bad programs die, claiming it was their predecessor’s priority and give them time to plan for a new agenda.   In Hong Kong, that would mean 4-5 year sunset clauses.

Good policy, bad politics

What  is good for policy, however, is not always good for politics.  While  politicians may always be looking to the next election, special interest groups can be extremely entrenched with an eye to the long term.  A measure  favourable to their constituency over the interests of the general public can drive them to promise to support or punish politicians.  Sunset clauses do not help them.

Often, their concentrated efforts can enable ‘forever’ change used as a platform for the next step in their broader agenda.  Minimum wage was a legislative goal regardless of the actual impact on society.  It was base camp for tackling standard working hours, blocking imported labour, and eventually central planning of the labour force through immigration.  A sunset clause leading to scrutiny of its impacts would not have served those already planning their next campaign to transform the economy of Hong Kong.

Politicians may also be wary of the enforced discipline of  a sunset clause, especially if it comes due during their term.  Abraham Shek’s attempts at a sunset clause for the special stamp duty to expire in 2012, while the duty was being debated in 2011, was shot down.  Politicians would rather have the flexibility to control the timing of the debate to suit their schedule.  It’s just good politics.

Tequila sunsets can lead to nasty hangovers.

Likewise, those benefitting from automatic injections of cash, increased to match annual  inflation, would be devastated if a review of their actual benefits found them wanting.  Education and training funds for dead industries, an industry unto themselves, spring to mind.  They would no doubt fight the application of sunset clauses.

Legacy building politicians with an eye to their place in history hate the idea of their successors undoing their handiwork.  Regardless of the benefits, for them, their certainty in their infallibility would see them give constitutional like permanence to all their works.  However, it is the future voters that would have to live the effects of their hurbis.  Long term, hubris gets its comeuppance.  In the short term, hubris often wins the vote.

It is the principled thing to do

We all labour under the biggest sunset  clause of all – Article 5 of the Basic Law – which says  the  ‘capitalist system and way of life shall remain unchanged for 50 years.”  No doubt minds will be focused on the 2047 deadline as it approaches.

Germany and Canada, as described above, have sunset clauses as mandatory elements of their most  important legislation protecting rights and preventing tyranny.  The benefits of sunset clauses described above far outweigh the low probability and easily managed potential drawbacks mentioned.  All policy and programmes could benefit from the scrutiny that sunset clauses would bring.

Brave and principled politicians in Hong Kong could take up the cause to make sunset clauses a regular and normal part of our legislative culture – the default setting.  It would see Hong Kong leading the world yet again, this time in political culture and legislative excellence.

Thanks to Secretary General of the LegCo Secretariat, Mr. Kenneth Chen and his team for assistance with details of LegCo meetings past.  Pretio servi populum!