Education and welfare the only areas to escape funding cuts For the first time in more than half a century, the government has recorded a drop in operating expenditure. It spent $201 billion during the last financial year - $2 billion less than in 2003-04. Government spending in the coming financial year will be $208 billion, $4 billion less than this year's original estimate. And spending is projected to fall to just $202 billion in 2009-10. Total public expenditure - government spending plus expenditure on non-governmental organisations - will be $268.6 billion in the coming year, representing 20.2 per cent of Hong Kong's gross domestic product. It will drop to $264 billion in the financial year 2009-10, and will account for just 16 per cent of GDP. In 2005-06, education, social welfare, health and security will remain the main spending areas, receiving 68.1 per cent of the government's recurrent expenditure. Education and social welfare are the only two areas to have been spared cuts. Education will receive $48.7 billion - an increase of 0.3 per cent in real terms on the previous year - and will account for 24.5 per cent of recurrent expenditure. From the education budget, $250 million will be used to reduce teacher-to-class-size ratios in special needs primary schools. Another $75 million will be spent on support services for disadvantaged students, and about $350 million will be used to hire more native English-speakers as teachers. Social welfare spending will rise 2.8 per cent to reach $34.3 billion, 17.2 per cent of recurrent expenditure. Government officials estimate that the number of welfare cases in Hong Kong will increase by about four per cent - or 14,500 - to 377,800. Another $1.1 billion has been earmarked to meet the additional demand. Health care spending will be cut by 1.1 per cent, to $29.4 billion, but will still account for 14.8 per cent of recurrent expenditure. Money is to be spent on new projects to improve protection against infectious disease, and the number of Chinese medicine clinics run by the Hospital Authority will rise from three to at least six. Security expenditure will be reduced by 1.7 per cent to $23.2 billion, although the disciplined forces will receive $30.8 million to strengthen cross-boundary clearance services at Lok Ma Chau control point, Tuen Mun ferry terminal and the China ferry terminal. The Immigration Department will receive $15.5 million so it can issue HKSAR passports integrated with biometric identifiers. Meanwhile, capital expenditure in 2005-06 will be $39.8 billion. Financial Secretary Henry Tang Ying-yen said infrastructure spending will remain at $29 billion, the average of the past few years. Projects starting in the new financial year include Tseung Kwan O Sports Ground, the Dr Sun Yat-sen Museum in Central, and enhanced facilities for tourists at The Peak.