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'A big surplus won't occur every year'

The financial secretary said he adhered to three principles - commitment, economic sustainability and pragmatism - in drawing up his budget speech.

John Tsang Chun-wah said the budget should demonstrate the government's commitment to society and contain sustainable financial policies, while the administration should also be pragmatic in its decision making.

A government official said the most difficult aspect of formulating this year's budget proposals was meeting public expectations and balancing different groups' aspirations, which had been set high partly because of this year's election and partly because of an expected high surplus.

The official said the government was under a lot of pressure to show it was strongly committed to society - especially the underprivileged - and to share the fruits of economic growth.

'I believe that, through proper revenue and expenditure proposals, this budget can help improve their lives,' Mr Tsang said of the underprivileged.

At least HK$15.68 billion will be spent to help low-income and disadvantaged groups. For example, people who earn less than HK$10,000 a month will be granted a one-off injection of HK$6,000 for their MPF accounts, while recipients of the old-age allowance will receive a one-off grant of HK$3,000.

Despite the largesse, Mr Tsang said the second principle of his budget was the sustainability of the government's financial policies.

'Revenues from stamp duty and land premium income, in particular, are far higher than expected,' Mr Tsang said. However, 'we must realise that a substantial surplus will not occur every year'.

Mr Tsang said temporary improvements in the city's fiscal position were, therefore, not sufficient for significant tax cuts or increases in recurrent expenditure. That might explain why the budget mainly included one-off measures.

'Public resources are limited, but social aspirations are unlimited,' Mr Tsang said. As a result, he said as financial chief, he insisted that public money be well spent, with measures to benefit those most in need and that uphold the principle of 'big market, small government'.

Mr Tsang also said the government had to adopt a pragmatic approach to the problem of the narrow tax base, which it would look into broadening.

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