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Following is the transcript (English part) of the press conference given by the Secretary for the Treasury, Miss Denise Yue, on the Draft Estimates of Expenditure for 2000-01 today (Friday):

Reporter: I'm with TVB. Just two points please. Spending outstripped GDP growth, what sort of concern does that raise, and how much longer will that continue? And the second question is that: when it comes to welfare spending, what exactly is the money being spent on it? It seems that a lot of money is being spent on positions and salaries, I mean, is there any value for money? What is it that people are getting?

Secretary for the Treasury: We are now estimating that total public expenditure for year 2000-01 will roughly equal to 21.9 per cent of estimated GDP. This is slightly lower than the revised expenditure for 1999-2000 as a percentage of GDP, because in the 1999-2000 revised expenditure, if we express it as a percentage of GDP, it is about 22.6 per cent. So for the coming year, public expenditure expressed as percentage of GDP will decrease slightly. But even at 21.9 per cent, it is still higher than what we experienced in the early 90s. We do not have a specific numerical target as to what percentage government expenditure should be of GDP, but obviously we would wish to try to keep it within a range of around 20-21 per cent of GDP.

With regard to Social Welfare expenditure, for the coming fiscal year, 2000-01, we expect, on the recurrent side, to spend around $30 billion for social welfare. CSSA expenditure alone accounts for $15.5 billion out of total social welfare expenditure of $30 billion. There is another around $7-8 billion for other forms of cash assistance, like old ages allowance, like allowance given to the disabled. It terms of actual delivery of services in the social welfare area for the coming fiscal year, it is around $6.4 billion, by the subvented sector. We are talking about the delivery of social welfare services by the non-government organisations. Examples include provision of bed spaces for the elderly, provision of services for the youth, provision of workshops for the disabled, etc. So services to be provided by the subvented organisations: $6.5 billion. Expenditures on CSSA: around $15.5 billion, and then around a few billion dollars for other forms of cash assistance, such as the allowance for the disabled.

Reporter: In the district and community relations, there is an increase of 7.3 per cent which you have explained already, but at the same time, there is a decrease of 7.9 per cent in recreation, culture and amenities. Does that mean, on balance, there is actually less spending on the things that used to be under the ambit of the municipal councils, and also on environmental protection, there is an increase in percentage terms, but the absolute figure is still quite small considering the amount of pledges the Chief Executive made in the policy address about environmental protection.

Secretary for the Treasury: First of all, on municipal council services, yes, there will be a reduction on expenditure in the coming fiscal year, but that is not because the government has reduced the provision of municipal services, nor is it because the quality of service will suffer a deterioration. The reduction in expenditure is largely because we no longer need to pay the provisional municipal councils' two secretariats. So, as a result, some posts have been saved and therefore, correspondingly, expenditure has been reduced. In addition, as a result of amalgamating the provision of municipal services in the urban area and the New Territories, we have also been able to achieve some economy of scale without affecting either the quantity or the quality of service provided. In fact, these are the two main reasons for the reduction of expenditure in municipal services.

In so far as the environment is concerned, the Chief Executive in the 1999 policy address pledged that we would at least spend $1.4 billion to improve air quality in Hong Kong through various measures, including encouraging taxis to convert to LPG, encouraging light buses to convert to LPG, installation of catalytic converters in heavy lorries and so on. Some of these measures are still being worked out in implementation terms. An example is the conversion of light buses to LPG. The industry has only recently started a pilot scheme on a handful of light buses. So for this reason, from a cash expenditure point of view, we do not expect to be able to spend the total of $1.4 billion pledged by the Chief Executive all in fiscal year 2000-01, but that does not mean any cut back of expenditure. We will honour the pledge of $1.4 billion expenditure to improve air quality, but this $1.4 billion will probably be spread out in two to three years in terms of cash flow expenditure.

In terms of environment, over the last five years, the cumulative increase in environment has been pretty substantial. For the last five years, we have increased total environment expenditure by 37 per cent. Cumulative increase in expenditure in environmental protection area in five years was 37 per cent, and for the coming fiscal year, it will increase by another 7.6 per cent, which is much higher than the average growth of government expenditure as a whole. In fact, you can say, other than the increase in expenditure for social welfare, the next highest growth area in expenditure terms is environment.

Transcript of press conference on Draft Estimates (Chinese Part)

End/Friday, March 3, 2000

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