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The Financial Secretary, Mr John C Tsang, has today (February 24), in his annual Budget proposed a series of measures to build on Hong Kong's economic recovery from the global financial crisis.
Mr Tsang also unveiled initiatives to stabilise the property market, develop six priority industries and foster a caring society.
The Financial Secretary highlighted Hong Kong's strong rebound from the financial tsunami. After four straight quarters of negative growth, Mr Tsang said Hong Kong¡¦s gross domestic product (GDP) expanded by 2.6 per cent in the fourth quarter of 2009. He forecast GDP growth of 4 to 5 per cent for 2010.
"While we have come through the most difficult period of the financial tsunami, the external environment is still fraught with uncertainties and the foundations of the recovery are not yet firm," Mr Tsang said.
"I am also concerned that some people have yet to benefit from the economic recovery. Therefore, through this Budget, I will strive to achieve the three objectives of consolidating the recovery, developing our economy and building a caring society."
Mr Tsang announced a nearly $20 billion relief package that includes tax rebates, rates concessions and public housing rental waivers, to provide financial assistance to the community during the economic recovery.
A proposed salaries tax reduction of 75 per cent for 2009-10 capped at $6,000 will cost the Government $4.5 billion and benefit all 1.4 million taxpayers.
The Financial Secretary also proposed a rates waiver for 2010-2011, with a ceiling of $1,500 per quarter that will cost $8.6 billion.
Around 700,000 public housing tenants will have two months¡¦ rent paid for at a cost of around $1.8 billion to the Government while another $1.8 billion has been earmarked to provide an additional one-month allowance for recipients of Comprehensive Social Security Assistance (CSSA), Old Age allowance and Disability Allowance.
The Budget included a series of measures to prevent volatility in the property market, such as raising stamp duty on property sales of above $20 million, and steps to curb excessive expansion of mortgage lending.
On infrastructure development, the Financial Secretary estimated that capital works expenditure would increase to $49.6 billion in 2010-2011.
Major projects expected to start this financial year include the Kai Tak Cruise Terminal Building and ancillary facilities and the Hong Kong-Zhuhai-Macao Bridge boundary crossing facilities.
"With many projects entering their construction peaks, I estimate that the capital works expenditure for each of the next few years will be at an all-time high of over $50 billion," he said.
Mr Tsang earmarked $100 million to support the work of the Construction Industry Council (CIC) to avoid a mismatch of skills in the construction workforce. He said the additional finances would help the CIC attract new blood to the industry and improve the working environment.
The Financial Secretary also announced measures to support the development of six industries identified as priority areas to broaden the city¡¦s economic base in the wake of the financial crisis.
These industries are medical services, education services, environmental industries, testing and certification, innovation and technology and cultural and creative industries.
"The role of the Government is to provide a conducive environment for the development of these industries under the principle of 'Market Leads, Government Facilitates'," Mr Tsang said.
To optimise land resources for these industries, Mr Tsang said the Lands Department would set up a dedicated team to handle applications to redevelop or convert industrial buildings.
He also allocated $41 million in the next two years to support the work of the Hong Kong Council for Testing and Certification and the Hong Kong Accreditation Service.
Mr Tsang said the Government would implement the Hong Kong Science Park Phase 3 development for completion in phases between 2013 and 2016. This would promote innovation and technology and create some 5,000 jobs during construction and 4,000 R&D-related jobs on completion of the project. The Phase 3 development is expected to cost the Government $4.9 billion.
To encourage the transport sector to test out green and low-carbon transport technology, Mr Tsang announced the establishment of a $300 million Pilot Green Transport Fund.
"I hope that this Fund will encourage the industry to introduce more innovative green technologies, such as the use of buses, public light buses, taxis, and ferries that employ green technologies and help nurture the budding of green technology in Hong Kong," he said.
Mr Tsang also set aside $540 million for subsidies to replace Euro II diesel commercial vehicles.
The Financial Secretary proposed injecting $3 billion into the Arts and Sport Development Fund as seed money with the annual investment return being used to provide additional resources for the long-term development of sports, culture and arts.
He also earmarked $3 billion for the Beat Drugs Fund to support the Government's work in combating drug abuse.
An additional $1.24 billion has been set aside for the Hospital Authority (HA) to strengthen services including training of nurses, strengthening services for cataract, renal and cancer patients, and incorporating eight more drugs into the HA Drug Formulary.
To foster regional co-operation, Mr Tsang said the Government would set up a Hong Kong-Taiwan Economic and Cultural Co-operation and Promotion Council to enhance cross-Strait ties.
The Financial Secretary added that the Government would take full advantage of the platform being provided under the National 12th Five-Year Plan to capitalise on the "China advantage".
"While our economy is in its early stage of recovery, the road ahead may not be smooth," Mr Tsang said.
"I will promote sustainable development of our economy by furthering regional co-operation, investing in infrastructure and promoting the development of various industries."
The Financial Secretary forecast a larger than expected surplus of $13.8 billion for 2009-10.
He forecast a deficit of $25.2 billion for 2010-2011, and expected a return to fiscal balance by 2013-14. He forecast mild inflation of 2.3 per cent in 2010.
Ends/Wednesday, February 24, 2010
Issued at HKT 13:10
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