Budget Speech by the Financial Secretary (7)

Major Revenue and Expenditure Proposals

70. Having regard to the large surplus in 2007-08, we should make good use of it for the greatest well being of the community.  I propose to allocate additional resources in the following four main areas:

(a) Promoting long-term economic and social development as an investment for the next generation;

(b) Supporting disadvantaged groups so as to improve their livelihood;

(c) Leaving wealth with the people to share the fruits of economic development; and

(d) Providing for future challenges.

71. The major revenue and expenditure proposals of this Budget are set out below.

Promoting Long-term Development

72. In the first area of promoting long-term economic and social development, I propose to implement measures for investing in infrastructure; more efficient use of land and resources; reinforcing pillar industries; tapping new markets; developing human capital; community building; and environmental improvement.

Investing in Infrastructure

73. In his Policy Address, the Chief Executive said we will promote economic development through infrastructure projects, which will create more jobs and stimulate wage increases.  Over the next few years, we will vigorously implement various infrastructure projects, including the ten major projects announced by the Chief Executive.  Since the planning of these projects takes time, expenditure on infrastructure is unlikely to increase substantially within a short time.

74. Over the past two years, there has been a significant increase in the number and value of approved infrastructure projects and public works contracts awarded.  We believe that more employment opportunities will be created in the construction industry in the next few years as these projects reach their construction peaks.  Discounting the upfront endowment of $21.6 billion to the West Kowloon Cultural District Authority, the estimated expenditure on infrastructure projects will be $21.8 billion for 2008-09.  It is expected that about 27 000 new construction jobs will be created.

75. I have instructed Controlling Officers and heads of works departments to closely monitor the planning progress of these projects.  The Development Bureau and the Transport and Housing Bureau will play a coordinating role to ensure that these projects will commence as soon as possible.  The major transport infrastructure projects are progressing well.  The MTR Corporation is working on the detailed design of the West Island Line, and has started the preliminary planning and design of the eastern section of the South Island Line.  The review of the project proposals for the Sha Tin to Central Link and the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link are near the final stage.  It is expected that the study on a rail link between Hong Kong International Airport (HKIA) and Shenzhen Airport will be completed by the end of this year.  The governments of Guangzhou, Hong Kong and Macao are pushing ahead with preparations for the Hong Kong-Zhuhai-Macao Bridge.  We believe that the financial arrangements could be finalised shortly.

76. The Hong Kong-Shenzhen Joint Task Force on Boundary District Development has been established.  The Task Force will give priority to two development projects at the new Liantang/Heung Yuen Wai control point and the Lok Ma Chau Loop.  The Kai Tak Development, with its funding approval recently granted by this Council, has entered the construction stage.  As for the projects on opening up new development areas in the Northwest New Territories, we will shortly submit a funding application to this Council to start a comprehensive assessment on the planning and construction of the projects as well as their impact on heritage sites.

Efficient Use of Land Resources

77. With the continued upturn in our economy, demand for residential and commercial properties has increased, exerting upward pressure on both property prices and rent.  The transaction prices of land at auction reflect market demand.  In view of this, we will increase land supply.

Application List System

78. Some property developers have recently urged the Government to change the Application List System and resume scheduled land auctions to increase land supply.  I do not agree.

79. The Application List System enables real estate developers to apply for suitable sites on the Application List for public auction.  The number of sites to be put up for sale and the time for land sale are decided by the market.  This prevents the Government from interfering unnecessarily with the operation of the market.  The system is working well.  We have no intention of changing it.

80. The Development Bureau will announce the Application List for 2008-09 shortly.  The number of sites on the list will increase from last yearˇ¦s 47 to 62.  These sites cover a total area of 60 hectares and allow for a variety of uses.

Flexible Use of Land Resources

81. We will adopt a more proactive and flexible approach in the use of land resources.  For example, to better address the problems faced by the Tin Shui Wai community, it is necessary for us to create more job opportunities in the district.  The Development Bureau is working with the bureaux and departments concerned to study how best to make use of two sites adjacent to the Wetland Park in Tin Shui Wai North, with a total area of about 14 hectares, to give fresh economic impetus to the district and provide the necessary facilities there.  In addition, to respond more positively to the aspirations of local communities, the Lands Department will liaise with District Councils and study ways of putting vacant land not needed in the short term to better use, for example, beautifying it or converting it to other temporary public use.

Relocating Government Buildings outside Central Business Districts

82. Some government office buildings are located in central business districts.  From the perspectives of economic development and use of land resources, we consider that it is not necessary for all government office buildings to be located in these areas.  The Hong Kong 2030 Study completed earlier forecasts that the current supply of sites for Grade A offices in central business districts will be able to meet the demand in the next few years.  However, in order to keep our economy growing, the Government must identify more sites for such offices in central business districts.

83. In order to meet the demand in this respect, we will study the relocation of three government office buildings at the Wan Chai waterfront.  Potential sites for relocation may be found in new districts such as the Kai Tak Development Area and Tseung Kwan O.  This will free some land in the central business districts for developing Grade A offices and give fresh impetus to the new districts, increasing employment opportunities there.

Land Development Parameters

84. The Development Bureau is reviewing the outline zoning plans of several districts to provide citizens with a better living environment.  To ensure that the land supplied by the Government to the market will achieve the same result and that clear market information is provided, we will state the relevant development parameters, for example, building height, permitted floor area, ventilation requirements, for each site on the Application List.  We think it is worthwhile to adopt this measure although it may lead to a reduction in government revenue.

Renewal and Conservation of Old Urban Areas

85. Redevelopment of old urban areas can effectively improve the living conditions of local residents and release land for better use.  However, with the public attaching greater importance in recent years to heritage conservation, community networks and building rehabilitation, the role of redevelopment in the renewal of old urban areas should be reviewed.  In the next few months, the Development Bureau and the Urban Renewal Authority (URA) will conduct a review of the Urban Renewal Strategy.  I hope that various sectors of the community and the general public will participate in the discussion to set a new direction for this important social issue.  Pending revision of the strategy, the URA will push ahead with those redevelopment projects in progress and make effective use of part of the $10 billion we originally injected into the URA to strengthen its work to revitalise old areas and conserve historic buildings.

(To be continued)

Ends/Wednesday, February 27, 2008
Issued at HKT 11:44