The Financial Secretary warned last night that Hong Kong should learn a lesson from the economic crisis unfolding in Argentina and take decisive measures to reverse the trend of chronic budget deficits. Antony Leung Kam-chung said the alarm bells had already started ringing with the SAR's predicted $60 billion shortfall for this financial year. 'We must realise public financial resources are not unlimited. We cannot ignore the problem, thus resulting in a situation that is irreparable,' he said. Mr Leung highlighted the problem of shrinking revenue and 'rigidity' in the reduction of government expenditure in areas such as civil service pay and welfare subsidies. He said drawing from the financial reserves was not a long-term solution. Neither would the issuing of bonds generate genuine revenue. Speaking at a dinner hosted by the Chinese Manufacturers Association, he said Hong Kong must not keep everything unchanged and maintain its past lifestyle. Its financial situation would nose dive if decisive measures were not taken to reverse the long-term trend of spending exceeding revenue. 'We have nothing to defend ourselves with if our reserves are depleted. Hong Kong must bear in mind the economic crisis in Argentina, which was a result of over-borrowing and spending in excess of revenue over a long period of time.' Concluding his pre-Budget consultations with legislators, Mr Leung said members had reservations about introducing new taxes next year. He said lawmakers had suggested the Government should study ways to improve productivity, cost-effectiveness and streamline staffing by improving the structure of the administration and work processes. Stressing that the Government's priority was to first look at ways to cut spending, Mr Leung called on the community to propose which items of expenditure should first be reduced and which revenue-raising measures first adopted. 'Which option is politically most viable? How can we balance economic interest and political reality?' he asked. 'In the face of economic uncertainty in the short term, economic restructuring in the medium term and the budget deficit, what measures should we adopt to relieve public pain? To what extent should we do it? When should we strive to seek a balanced budget?'