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Budget Speech by the Financial Secretary (7)
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Maintaining Strict Fiscal Discipline, Realising Sustainable Development

54. The health of our public finances has a major bearing on the stability of our monetary and financial systems, investor confidence, and the sustainable development of our economy as a whole.  One of the most important factors behind the recovery of our financial health has been our maintenance of strict fiscal discipline.  I will continue to observe the principles of prudent management of public finances, keeping expenditure within revenue limits, and ensuring the efficient use, where needed, of resources.  My fiscal policy aims to strike a balance between promoting economic development, improving people's livelihood and supporting the long-term development of Hong Kong.

Estimates of Expenditure

55. Total government expenditure for 2007íV08 is estimated to be $248.4 billion.  Expenditure on Education, Social Welfare, Health and Security will account for over 60 per cent of this.  The total provision for government operating expenditure for 2007íV08 will be $214.2 billion, an increase of $5.2 billion over 2006íV07.  The operating expenditure allocations to various bureaux for the coming year will also be increased accordingly.

Infrastructure Projects

56. Developing our infrastructure can promote economic development, increase employment opportunities and improve our living environment.  As I have previously pledged, we will continue to earmark $29 billion a year on average for infrastructure projects over the next few years.

57. During the Budget consultation period, I heard many suggestions for the Government to expedite the implementation of various infrastructure projects in order to create more employment opportunities for the local construction industry.  We fully recognise the aspirations of the community and have been making great endeavours to this end.  The relevant bureaux and works departments will expedite the implementation of major infrastructure projects.  In the next financial year, a number of major projects will commence construction, including the Tamar development project, the improvement and upgrading works for the 2009 East Asian Games sports facilities, Stage 2 of the Replacement and Rehabilitation Programme for Water Mains, and drainage works in various districts.  It is expected that these will create about 23 000 jobs for the construction industry.

58. In addition, we are now planning some major projects, including the Central-Wan Chai Bypass and Wan Chai Development Phase II, Central Kowloon Route and Kai Tak Development, which will involve expenditure of $25.2 billion, $12.5 billion and $9.8 billion respectively.  We expect that their implementation will provide about 14 000 new jobs for the construction industry.  However, these projects have yet to commence as they require more time for preparatory work, including public consultation.  We very much hope, therefore, that the various sectors of the community can reach a consensus on these projects as soon as possible, so that an early start can be made on them.

59. We have also revised the Concept Plan for Lantau.  In accordance with the overall planning concept of balanced development and conservation, we will accord priority to those projects that can stimulate the local economy and improve people's livelihood.  For other projects with implications for the long-term economic development of Hong Kong, we will deliberate on the best implementation model and timetable according to actual circumstances.  The feasibility study for the Logistics Park, for example, will shortly be completed.  Thereafter, the Government will consult the public on details of the implementation plan.

Civil Service Establishment

60. Since we must strictly control the size of the civil service, we will consider filling existing vacancies or creating new posts only after critically reviewing our manpower situation and exploring the feasibility of other options for service delivery.  In order to implement various policy initiatives and meet the community's increasing demand for public services, the civil service establishment will have slightly expanded to around 162 900 by the end of March 2008, an increase of less than 1 per cent.

61. To complement the creation of new posts and to pre-empt possible succession problems arising in the civil service, we will resume open recruitment of civil servants from April 1, 2007.  However, the recruitment freeze will continue to apply to those grades covered by the Second Voluntary Retirement Scheme, unless otherwise approved.

62. It has long been our policy for civil service pay to offer adequate remuneration to attract, retain and motivate staff of suitable calibre who can provide the public with quality services.  By adhering to the principle of broad comparability between civil service and private sector pay, we ensure that civil service remuneration is considered fair by both civil servants and the public.  The Secretary for the Civil Service is now discussing with staff representatives how best to apply to the civil service the findings of the recently-completed Pay Level Survey and develop an improved civil service annual pay adjustment mechanism.  Should a decision be made on a civil service pay adjustment, it is estimated that the 2007íV08 Budget could meet this need.

(To be continued)

Ends/Wednesday, February 28, 2007
Issued at HKT 11:44

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