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JohnTsang confident Hong Kong finance business

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Budget aims for long-term development: FS

Financial Secretary John Tsang is confident the $80 billion worth of measures proposed in his Budget will stabilise the economy, adding it was formulated with Hong Kongs long-term development in mind.

Speaking to the media after delivering the budget today, Mr Tsang said many citizens and Legislative Council members offered their views during the budget consultation period. Having given careful thought to their views and taking into account the current economic conditions and forecasts, he said he has proposed a basket of measures that will benefit the community.

As you can see from the backdrop, the theme of the budget is Stabilising the Economy, Safeguarding Peoples Livelihood & Investing in the Future. I am certain these measures will help support this overall theme, he said.

In the past five years, government expenditure increased by 70% while our nominal Gross Domestic Product growth was 21%. Our recurrent expenditure has increased by almost 33%. In this budget, expenditure in livelihood related items has increased by a respectable rate. Expenditure in education will grow by 7%, medical and health services by 8%, and social welfare by 9%.




He said the SME Financing Guarantee Scheme and other measures will help reduce the pain faced by small and medium enterprises.

Besides providing support to enterprises and preserving jobs, Mr Tsang said he has kept in focus the needs of the working class.

Although the current unemployment rate is at a full employment level, we should be prepared to readily take measures to counter any upward pressure on the unemployment rate, he said.

There is also a chronic manpower shortage in some sectors, such as the construction industry. In this budget, I have proposed additional funding to support the industry in enhancing manpower training. This can bring new entrants into the industry to ease the problem of an ageing workforce and provide necessary manpower for future infrastructure projects.

He said the Government will not withhold resources even in the face of an economic downturn.

We shall continue to allocate resources to enhance essential community services while stimulating the economy to help those in need. Having said that, every dollar of public money should be well spent and used, where appropriate.

Education, medical and health services, and social welfare are closely related to peoples livelihood, he said, adding the Government devotes the largest share of resources to these policy areas, irrespective of economic circumstances.

Expenditure in these three areas, amounting to 60% of overall expenditure, has increased by 30%-40% compared with the 2007-08 fiscal year.

Although inflation is expected to slow in the coming year, he said he fully understands the pressure on the community brought by price hikes last year.

With this in mind, I have proposed various relief measures and tax concessions in this years budget to ease the burden of people in need. These targeted measures are set to benefit people from every sector of our community, he said.

The budget also identifies ways to nurture the six industries where Hong Kong enjoys competitive advantages.

The output of these six industries accounted for 8.4% of Gross Domestic Product and employed nearly 410,000 people. The budget has proposed various measures to support the development of the six industries, which we hope will become the new economic pillars of Hong Kong and further diversify our economy in future.

The many large-scale infrastructure projects, already under way or soon to be implemented, will not only benefit our labour market, they will, upon completion, enhance our citys competitiveness as well as our quality of life.

He said the Government has maintained the share of public expenditure at around 20% of Gross Domestic Product and the target was set to prevent overspending by the Government and stifling the development of the private sector.

This percentage provides useful guidance but we are not bound by this rule. We can go beyond this target level, if need be. In four of the past 10 years, public expenditure exceeded 20% of GDP. This is also the case for the estimated public expenditure for the budget.

I firmly believe that, when preparing the budget, we should adhere strictly to the guiding principle of fiscal prudence. The needs of all trades, industries and sectors of society should take priority. This way we can maintain Hong Kongs social stability and equip the city for the challenges ahead.

Speaking in a joint television panel discussion tonight, he said most of the recurrent expenditure will involve long-term issues, such as education, welfare and medical services.

In response to calls for a reduction in the rate of profits tax, he said Hong Kong already enjoys a low tax rate.



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