Chow, also an Executive Council member, was speaking at the lunch gathering held annually for the chief executive to explain his policy address to the city's business community.

The address increased recurrent spending by about HK$10 billion. Among the initiatives was a HK$3 billion annual subsidy for low-income families.

Another chamber representative asked Leung: "You say we have a healthy budget … but the financial secretary says the funds will run out. … Where will the funding come from?"

Leung said a "dynamic" view had to be taken in evaluating both sides of the government's balance sheet.

"Taking a straight line of prediction on both the expenditure and the income does not represent the real picture," he said, pointing to a reduction in spending on Comprehensive Social Security Assistance.

The 122-table audience, comprising five leading local chambers and a list of international chambers, also pressed Leung on whether he planned to abolish the Mandatory Provident Fund's "offsetting" mechanism.

A member of the Federation of Hong Kong Industries said: "The long-service and severance payments … are supposed to be for retirement purposes. … Any cancelling of the offsetting mechanism would add a serious burden [for employers]."

Leung said the issue was open for discussion, with the aim of "getting employers and employees on the same side".

"My election pledge is to gradually cancel the mechanism. But how gradual is something for discussion," he said.

Separately, MPF Schemes Authority executive director Cheng Yan-chee said the watchdog had not received any instruction to study the possibility of scrapping the mechanism, which allows bosses to take workers' severance payments from employer contributions to retirement accounts.

Such a move was not technically difficult from the authority's point of view, but it was the government's responsibility to look into any impact it might have on small and medium enterprises, he said.