Spending cap at 17pc of GDP by 2009: Tang

Financial Secretary Henry Tang Ying-yen yesterday set a new target of capping public expenditure at 17 per cent of gross domestic product by 2009, the year when the government is expected to reduce spending to $200 billion and wipe out the budget deficit.

And in a speech given before delivering his maiden budget next month, Mr Tang said he would control government spending before considering raising taxes.

When addressing the Legislative Council in October to outline his financial blueprint, Mr Tang announced a delay to the previous target of balancing the books by 2008-09, while capping public expenditure at 20 per cent of GDP.

But he said yesterday that, subject to reviews in the coming years, the government would be able to spend less.

'I set a target of 20 per cent. By [2008-9], when we reached $200 billion of public recurrent expenditure, the total recurrent public expenditure will be about just over 17 per cent and that is back to the levels of the 1970s.'

Mr Tang said he had received more than 600 submissions during the consultation on his budget and all agreed these actions were necessary.

'Everybody has reached the consensus that we have to deal with the budget deficit, we have to achieve fiscal balance with everybody prepared to work together and share the pain to reach this common goal,' Mr Tang said.

'We should basically get our own house in order before we try to dip into other people's pockets.

'Unless the government has the will and the way to control public expenditure, we should not go to the people for more revenue. And this is going to be my guiding principle in my first budget, that we want to demonstrate that we have the will and we have ways to control public expenditure.'