Macleod in pledge over 1997 budget

PUBLISHED : Thursday, 01 April, 1993, 12:00am
UPDATED : Thursday, 01 April, 1993, 12:00am

THE Financial Secretary, Mr Hamish Macleod, yesterday assured legislators that Hongkong would return to a surplus budget by 1997 with new sources of income to the tune of $15 billion set to be channelled to public funds.


Winding up the debate on the Appropriations Bill 1993, Mr Macleod also pledged the Government was committed to tackling inflation, a subject which drew heavy criticisms from councillors during last week's two-day annual budget debate.


A team of 11 policy secretaries, including Mr Macleod and the Chief Secretary, Sir David Ford, spoke at yesterday's winding up debate on the bill which was passed by 33 to one vote.


Mr Frederick Fung Kin-kee was the lone legislator who voted against the bill on Mr Macleod's 1993-94 budget while the 13 United Democrat legislators abstained.


In his speech, Mr Macleod said: ''I would like to reassure those who are concerned that we may have difficulty in getting back to surplus budgets after 1997.


''Not only should the main spending on the Airport Core Programme have ceased by then, but a number of other positive changes will take place at that time,'' he said.


In particular, he said the Special Administrative Region (SAR) Government would have the interest earned on the Land Fund, together with the full proceeds of land sales, instead of only half as at present.


There was also the rentals arising from the extension of land leases beyond 1997, he said.


Under Annex 3 of the Joint Declaration, it is stipulated that an annual rent equivalent to three per cent of the rateable value of the property shall be charged for extending land leases beyond the 1997 change-over.


''The combined effect of these changes alone is likely to be additional revenue of around $15 billion in 1997-98,'' Mr Macleod said.


He also said in mid-1997, there would be a considerable increase in the reserves when the balance in the SAR Land Fund was transferred to the SAR Government, adding that a senior Chinese official had forecast the Land Fund to be to the tune of $70 billion to $80 billion.


Although a few members' believed that a deficit budget was undesirable, Mr Macleod maintained that the community would prefer to share the fruits of Hongkong's economic success rather than ever higher reserves which went beyond ''prudence to ridiculous parsimony''.


Addressing members criticisms of the lack of long term planning for budgets, Mr Macleod said the Government did not take 1997 as a cut-off point when drawing up his financial blueprint.


Mr Macleod pledged that the forecast next year would be rolled forward for a year to cover 1997-98.


On inflation, Mr Macleod reiterated the Government's stance for not changing the linked-rate system, saying that Hongkong's rising cost of living was not caused by the link to the US dollars.


United Democrats legislator Dr Huang Chen-ya said they decided to abstain in view of the improvement this budget had demonstrated.


''But we have to say that we still didn't find it 100 per cent satisfactory,'' he said.


Despite reservations on certain parts of the budget, Meeting Point voted for it yesterday in view of the improvements compared to the budget last year.