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The Secretary for the Treasury, Miss Denise Yue, reiterated the Government's aims to maintain sound and stable public finances and foster a fiscal environment conducive to continued economic growth and success.

Speaking at the LegCo's Financial Affairs Panel on the Chief Executive's 1999 Policy Address today (Monday), Miss Yue said that despite the impact of the Asian financial crises on public finance, the spending plans had been maintained in the overall interests of the economy.

This has resulted in Budget deficits for the years 1998-99 and 1999-2000. "Although our reserves still stood at a healthy level of $434 billion at March 31, 1999, we cannot continue to draw on our reserves indefinitely. The Basic Law requires us to strive for fiscal balance and ensure that Government expenditure grows no faster than the economy over time," she said.

"The growth rate of Government expenditure has exceeded that for the economy. We need to close this gap by exercising strict control over government spending in the coming years," she added.

However, this does not mean spending less. She said Government expenditure would be increased by 3% in real terms in 2000-01 (or $5.4 billion in additional spending) This amount, together with the EPP savings of $1 billion, means an extra $6.4 billion for the delivery of all pledges on new or improved services made in the prevailing and two previous Policy Addresses.

Indeed, the Government will continue to invest heavily in infrastructure. In the five-year period up to 2003-04, about $170 billion will be earmarked on capital works projects while over $80 billion under the Capital Investment Fund and the Loan Fund will be made available for railway projects, urban renewal, etc.

Miss Yue also updated Members on the progress scored by EPP. Through improved productivity, bureaux, departments and subvented organisations achieved productivity gains of $818 million this year.

Three-quarters of these are redeployed to provide new or improved services in the year while the remaining one-quarter reflects reduced expenditure. "For 2000-01, we are on target to deliver 1% real savings, releasing some $1 billion from existing baseline operating expenditure for meeting earmarked growth and funding new commitments," she said.

"We will continue to press ahead with EPP and achieve further productivity gains in 2001-02. We are confident that the target of 5% savings by 2002-03 will be achieved," she added.

On the further implementation of EPP, which has been going smoothly, Miss Yue pointed out the need to address the issue of redeployment of surplus staff to new or growth areas. It is because the delivery of public service is labour-intensive and any productivity enhancement will inevitably involve staff redeployment.

A clearing house will be established at central level to match surplus staff with new service requirements. Necessary training will also be provided for existing staff to meet new job requirements. "The objective is that while we will press ahead with EPP, we will ensure that we are putting valuable human resources to good use and better serve the community," she remarked.

These measures are part of the human resources redeployment strategy which was jointly promulgated by the Finance Bureau and the Civil Service Bureau in anticipation of surplus staff as efficiency plans are implemented. The strategy aims to minimise staff redundancy, meet the pledged EPP targets and make full use of the human resources available.

End/Monday, October 11, 1999

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