Spending spree to cut surplus

THE Government aims to boost public expenditure for the remaining 21/2 months of the current fiscal year in what is seen as a desperate move to trim back embarrassingly high surpluses for 1992-93.

Departments have been told to approve construction and consultancy tenders without going through the usual course of first seeking Legislative Council backing.

With underspending on public works a key reason for the windfall, officials hope that an accelerated spending drive before the end of March will trim the surplus that the Financial Secretary, Mr Hamish Macleod, will announce in his March 3 budget.

Last year, Mr Macleod announced a record high surplus of $22 billion. That eventually forced him to withdraw a proposed 0.5 per cent increase in rates after legislators criticised the move.

If Mr Macleod comes up with another giant windfall this year, it is almost certain to trigger more demands in Legco for higher public spending and more tax concessions.

The latest official estimate put the 1992-93 surplus at about $13 billion. That includes the $6 billion the Governor, Mr Chris Patten, committed in his policy speech on welfare and environment projects.

But Ernst and Young tax principal Mr Marshall Byres predicted the figure would be nearer an astronomical $30 billion.

The move to speed up spending was initiated last month by the then acting Treasury Secretary, Mr Kwong Ki-chi, in an internal memo to all departments.

''With immediate effect until 31 March 1993, blanket approval is given to works departments to invite tenders in advance of FC (Finance Committee) approval to upgrade the relevant projects to Category A,'' the memo said.

Category A projects are those eligible for immediate funding from Government revenue. Existing practice requires the Secretary for the Treasury to approve the upgrading of a project to Category A, prior to Legislative Council approval.

The memo added that departments should ensure that if the Finance Committee refused the funding request, the Government would not be faced with claims for compensation by bidders.

It also streamlined the procedure for upgrading projects to Category A by authorising departments to get around Legco's public work sub-committee.

''In order to speed up the approval process, consideration will be given to requests by policy secretaries [and works directors] to put projects direct to FC where the normal process of prior submission would delay a start on the project,'' it said.

Normally all works projects have to pass the public work sub-committee before they are allowed to go to the finance committee.

The Government would also try its best to ensure full payments were given to contractors whose works were due to finish before the end of March.

Departments were allowed to estimate ''how much work a contractor has or will have completed by the end of March 1993 and certify a payment invoice on that basis''.