Regular financial reviews suggested
With another forecast of a budget deficit set to be proved wrong, a senior accountant has suggested the government carry out more frequent reviews of its financial position.
In last year's budget, Financial Secretary John Tsang Chun-wah predicted a HK$39.9 billion consolidated deficit for the 2009-10 financial year. But thanks to strong growth in income from stamp duty on property and stock transactions, the government may end up with a surplus of more than HK$10 billion for the financial period.
It will not be the first time that the administration has got its sums wrong in estimating its financial position. In 2001, the then financial secretary Donald Tsang Yam-kuen predicted a HK$3 billion deficit for the 2001-02 financial year but the government eventually recorded a HK$63.3 billion deficit.
The best forecast was made by Donald Tsang in 2000 when he predicted a HK$6.2 billion deficit for the 2000-01 financial year. The administration ended up with a deficit of HK$7.8 billion. In 2006, then finance chief Henry Tang Ying-yen predicted a surplus of HK$5.6 billion for the 2006-07 financial year but the administration eventually pocketed a HK$58.6 billion surplus.
Yvonne Law Shing Mo-han, national chief knowledge officer and partner of Deloitte Touche Tohmatsu, said the huge discrepancies arose from the fact that the government consistently adopted a conservative approach in drafting budgets.
'It usually took the low end of estimates of economic growth made by economists, banks and economic agencies when it prepared budgets,' she said. Law suggested the government make quarterly or half-yearly reviews of budget deficit or surplus, instead of only revising the original estimate when a budget was delivered in February. 'A regular review of the government's fiscal position would ensure that the eventual discrepancy between original prediction and actual results would not be too big.'
The original estimate of revenue from land premium and land sales for the current financial year was HK$16.5 billion. The actual income is expected to reach about HK$37.4 billion after the government pocketed HK$3.37 billion from yesterday's auction of a Tseung Kwan O site.
Paul Chan Mo-po, the legislator representing the accountancy sector, estimated the administration would record a surplus of HK$6.76 billion for the current financial year.
He attributed the discrepancy between the government's original estimate of a budget deficit and actual results to the stronger-than- expected economic recovery since last year's budget.
Eighteen pan-democratic lawmakers are demanding fresh relief measures worth HK$10.3 billion from John Tsang in his latest budget. The proposals include the construction of more public housing and Home Ownership Scheme flats, in view of rising property prices.
Democratic Party vice-chairwoman Emily Lau Wai-hing said: 'People are beginning to think they will never be able to own their own home, or even if they did, would have to spend their whole life paying off their mortgage.' Cyd Ho Sau-lan, one of the pan-democratic legislators, said: 'Each year the government underestimates the budget deficit or surplus and then hands out sweeteners later. What we want is an investment into resolving the wealth gap - investment in the future.'