Invest Land Fund to create more higher education places for students
According to the budget address, (recurrent) expenditure on education will be HK$67.1 billion.
The revised estimate (on recurrent expenditure) for this year (2013-14) is HK$63.7 billion, according to the government. After adding the inflation rate of 4.6 per cent estimated by the government, the revised estimate in real terms is HK$66.6 billion (HK$63.7 billion x 104.6 per cent). The education expenditure will actually increase by HK$0.5 billion, that is 0.8 per cent. The rate is much lower than the increase in the estimated real GDP of up to 4 per cent. The government will increase the number of senior-year undergraduate places in University Grants Committee institutions by 1,000. It will also subsidise a scheme of 1,000 students to pursue self-financing undergraduate programmes in selected disciplines. According to 2013 Hong Kong Diploma of Secondary Education statistics, the number of candidates who had met the basic university entrance requirement was 28,240. The institutions could only offer 14,476 places. The remaining 13,764 candidates were disappointed and left behind. Though there will be an increase of 2,000 places, it is simply a drop in the ocean.
The financial secretary is considering a "future fund" comprising the Land Fund and a portion of future surpluses. The future fund overlaps with the functions of the government's public reserves. It's difficult to understand this framework.
On March 3, a report from the Working Group on Long-term Fiscal Planning projected that Hong Kong would face a large structural deficit by 2041. This report overstated the increase in government expenditure, but understated the growth in real GDP and the returns on government investment. It is not unusual that the government estimates a budget deficit at the start of the year, but by end of the year, there is a sudden windfall and the budget would record a surplus. How can these experts convince us of their projections in 2041?
You reap what you sow. The HK$220 billion of the Land Fund reserve should be renamed the "Tertiary Education Fund". Supposing the annual investment return is 2.5 per cent, there will be interest of HK$5.5 billion per year.
Based on the estimate in the budget speech, this could create 12,600 places in tertiary institutions. The structural revenue arising from the improvement in the quality of labour can surely cover any structural deficit.
Raymond Tam, principal, G.T. (Ellen Yeung) College