FREEZING charges for public services might lead to reduced efficiency and drastic increases in future, acting Secretary for the Treasury Alan Lai Nin has warned. About $2 billion in revenue would be lost through such a move, he said. 'The suggestion of freezing charges violates our principle of cost-recovery and the user-pays principle,' Mr Lai said. 'It would not be fair if some users benefited from a freeze on charges while the rest of the community, which was not using the service, had to subsidise the expense,' he said. Mr Lai told legislators during a policy address briefing that the Government would have to reduce the number of staff providing services if charges were capped and failed to reflect increasing costs. He said there might be a drastic increase in fees after any freeze which could elicit even greater public outcry. Mr Lai stressed the Government was not threatening legislators. But it was only warning of the probable undesirable consequences. The acting Secretary asked them 'to consider very carefully before putting forward any proposal to freeze the charges'. Legislators indicated on Tuesday they were going to try to freeze at least 11 government service charges including licences for dumping waste and fees for vehicle emission tests. The Democratic Party and the Liberal Party had already made a joint call for the Government to freeze its service charges. Legislators continued yesterday to grill the Government on its conservative fiscal policy which they believed had failed to meet public needs. Association for Democracy and People's Livelihood spokesman Dr Law Cheung-kwok said the Government should introduce measures to give back some of its reserves to the public. Democratic Party legislator Fred Li Wah-ming criticised the policy of tying public expenditure growth to economic growth. 'If the Government managed to achieve a handsome surplus in the Budget but the economic growth was at zero per cent, does it mean that we would have no practical increase in public expenditure?' Mr Li asked. But Mr Lai said the Government should 'prepare for the worst' as no one could guarantee a steady and healthy economic growth rate. He urged caution in the use of fiscal reserves. 'To formulate the fiscal budget for a stable and healthy government, we have to be well prepared for uncertainties that cannot be predicted,' he said. On discussions with the Chinese side, the Deputy Secretary for the Treasury, Kevin Ho Chi-ming, said the formulation of the Budget was an internal matter for the Hong Kong Government. He said consultation with Beijing should not be seen as an inviting mainland interference.