Hamish's handouts

DESPITE the record budget surplus, and the heavy overall increase in expenditure scheduled for the coming financial year, the Government has nonetheless decided that, on the recurrent expenditure front at least, it has no room for profligacy. Recurrent expenditure is to rise in line with the overall growth in the economy, estimated at five per cent, adjusted for inflation. This administration is nothing if not populist, however, and has not only boosted spending on social welfare, public health, education and the environment well in excess of the average, but made sure this is widely appreciated long before the Financial Secretary's budget speech to the Legislative Council next Wednesday.

Mr Hamish Macleod's address is likely to be taken up with the announcement of other welcome gifts to the public such as increases in personal allowances, and multi-billion dollar one-off allocations for the Governor's favourite projects to use up some ofthe surplus. At least $7.5 billion will be disbursed on top of the money announced in last October's speech to the legislature.

The Government is being coy about what that money is to be spent on, for fear of stealing Mr Macleod's muted brand of thunder next week. However it is likely to include generous sums for sandwich class housing, additional spending on sewerage and capitalworks, not to mention more for popular items like education and health.

In the welter of figures rele It is believed that one area of economy lies in deploying less officers to catch illegal immigrants. If that is so, the Chinese will smell another British plot which would, at a stroke, save money on the police, ease the squeeze in the territory's overcrowded prisons, solve the labour shortage, and leave the problem of a growing number of long-stay illegal residents to the post-1997 administration.

The release of the Government's expenditure estimates for the coming financial year reveals the true depth of the Government's underspending problem, much of it directly or indirectly attributable to the political impasse with China. Not only the airportcore projects have been delayed - ensuring that large sums have now had to be allocated for the coming financial year instead - but similar delays are now being taken into account for other airport work, such as land acquisition and new construction.

Total expenditure on capital works for next year is now estimated at $31.394 billion compared with a revised estimate of $20.613 billion for the current year. Yet at this time last year, 1992/93 expenditure on capital works was put at $28.918 billions. The under-spending is even greater than it appears, since last year's estimate was calculated in 1991 prices, while the revised estimate is calculated in 1992 prices.

There will still be more than enough to do for the Government's soon-to-be-named Director of Public Works, whose enviable task will be to spend as much as he can in as short a time as possible. He will have his work cut out. Merely announcing new spending programmes and public works is not enough. Unless the Government can ensure different spending departments co-ordinate projects more closely, there will be more under-spending again next year.

In government as in business, it is bad practice for the right hand to have no idea what the left hand is doing. The administration is always happy to point out how much the slightest China-induced delay in the airport project is likely to cost the taxpayer. It should make clear to its own under-spending departments how much delays caused by their own inefficiency add to the cost of each project.