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Chris Yeung

Jimmy Cheung

Recurrent government expenditure is to rise by four per cent, or $6.8 billion, in the next financial year, it was revealed last night.

 Social welfare spending will increase by 12.5 per cent, health by 3.19 per cent and education by 2.05 per cent.

 Financial Secretary Donald Tsang Yam-kuen said in Washington that the Government's preliminary medium-range forecast, which determines spending, was four per cent.

 'But I hope I will be able to come up with a firmer figure in December when I begin to draft the next Budget,' he said.

 The figure is the average rate of gross domestic product over a period of five years.

 Estimated recurrent expenditure for the 1998-99 year is $172 billion, according to statistics provided by the Finance Bureau.

 'We are planning to increase recurrent government expenditure by four per cent in real terms in the 1999-2000 financial year,' a bureau spokesman said.

 'This means an additional $6.8 billion [at 1998-99 prices] for improved or new services.

 'Within this overall growth of four per cent in real terms, we continue to accord priority to the areas of education, health and social welfare.'  Independent legislator and accountant Eric Li Ka-cheung said the increase 'sounds shocking', but was not surprising because of the way the medium-range forecast was calculated.

 Because the figure took a 'moving average' of the growth rate in the present year, the previous two years and the next two years, 'I can't say four per cent growth is not possible', Mr Li said. 'It's slightly optimistic, though.'  Democratic Party economic spokesman Sin Chung-kai said the estimate was unrealistic.

  'Whether we can achieve this growth rate depends on how fast our economy can recover.

 'Nonetheless it's not bad news because any lower estimate would curb government spending, which would result in the economy contracting more,' he said.

 Unionist Lee Cheuk-yan said the figure was puzzling.

 'I hope it will be proved to be true and will not be revised downward. That will be very bad.

 'It's still much better than expected because of the negative growth forecast of four per cent for this year.'  Mr Lee said Secretary for Treasury Denise Yue Chung-yee had told him that Tung Chee-hwa would release the figure. 'I don't know why it didn't come from Tung,' he said.

 The Democratic Alliance for the Betterment of Hong Kong said the estimate was over-optimistic.

  Economic spokesman Chan Kam-lam asked whether Mr Tsang was under pressure to make a rosy forecast in order to justify more spending in the coming year.

PLANNED INCREASES FOR 1999/2000 Social Welfare $2.95 billion +12.5pc Health $880 million +3.19pc Education $880 million +2.05pc 



Boost for welfare as spending rises $6.8b