THE SURPLUS 'I must stress that the main reason for the surplus is that revenue from land premiums is far greater than expected. As such revenue is volatile and is affected by a number of factors, we cannot rely too heavily on it to fund operating expenditure. Moreover, the sums raised by issuing bonds in 2004-05 will have to be repaid. Discounting the proceeds from bond issuances, the consolidated account will still record a deficit of $13.4 billion.' COST-CUTTING 'The various control measures taken by the government are gradually producing results. These include reduction in the civil service establishment, adjustments to civil service pay, reprioritisation of service provision, structural reorganisation and streamlining of procedures.' EXPENDITURE 'Despite the fact that people's incomes decreased and deflation persisted in the wake of the Asian financial crisis, the government's operating expenditure continued to soar. I know that members of the public are unhappy about this. Last year, I pledged that the government would first cut down on spending in order to demonstrate our readiness for action. One year later, we have succeeded in checking the trend of our operating expenditure, which had been on the rise for over 50 years. This clearly demonstrates that we have the determination and capability to contain our spending.'