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LCQ4: Health Expenditure

    Following is a question by the Hon Kwok Ka-ki and a reply by the Secretary for Food and Health, Dr York Chow, in the Legislative Council today (June 11):


    The proportion of expenditure on health to the total recurrent public expenditure (proportion of health expenditure) has been dropping since 2000-2001. The proportion for this financial year is estimated to be 14.3%, which is lower than the actual proportion of 15.3% 10 years ago. On the other hand, the Hospital Authority (HA) is facing various problems such as shortage of manpower and resources, unequal pay for the same work and patients not being prescribed appropriate medications. In this connection, will the Government inform this Council:

(a) of the reasons for the proportion of health expenditure to have fallen to a 10-year low in this financial year, and whether it has assessed if this situation contradicts its repeated claims that it will continue to increase its commitment for healthcare services;

(b) given that the proportion of health expenditure is lower than that of 10 years ago, whether it has assessed how HA can solve the problems it is facing at present; and

(c) of the additional resources required to raise the proportion of health expenditure to the level of eight years ago (i.e. 15.4%), and whether it has assessed if the provision of additional resources can help HA improve its existing services?


Madam President,

(a) In drawing up the overall budget, the Government determines the allocation of funding to various policy area groups primarily based on the demand for public services under the respective policy area groups. The funding needs of various policy area groups are subject to variation each year to cater for specific circumstances and the implementation of new policy initiatives. There exist a host of various factors that can cause the proportion of expenditure of various policy area groups to the overall expenditure to vary with respect to each other. It is thus not very meaningful to make a year-by-year comparison of the proportion of a certain expenditure group alone.

    When Hong Kong was experiencing an economic downturn in the past few years with falling prices, weakening consumption, deflation and a tight government budget, the civil service pay as well as the remuneration of the staff of subvented organisations (including Hospital Authority) had to be adjusted downward and the Government also needed to adopt a number of austerity measures such as the Enhanced Productivity Programme and the Efficiency Savings Programme. The expenditure of health policy area group fell as a result. Meanwhile, other government expenditures such as that on the Comprehensive Social Security Assistance Scheme had to be increased because of the economic downturn, resulting in a drop in the proportion of health expenditure to the overall government expenditure.

    The Chief Executive has made a significant commitment to healthcare by pledging to increase the share of expenditure on healthcare in the government's recurrent expenditure from 15% at present to 17% by 2011-12. Besides, the Financial Secretary has also pledged to draw $50 billion from the fiscal reserves to assist the implementation of healthcare reform after the finalisation of supplementary healthcare financing arrangements for implementation after consultation. These significant pledges for funding reflect the Government's commitment to improving and enhancing our healthcare services. These measures require an increase in service capacity and manpower in the overall healthcare system, and strike a balance in meeting the demand for public services under various policy area groups.

(b) Just now I have explained why there has been a drop in the proportion of expenditure on healthcare. I have also mentioned that under the Enhanced Productivity Programme and the Efficiency Savings Programme, the Hospital Authority (HA) has implemented measures to enhance its efficiency by providing more services with the same amount of resources.

    Meanwhile, the Government takes into account a host of factors in determining the amount of subvention to be granted to the HA each year.  These factors include population growth and changes in population profile, changes in service mode and utilisation, advancement in medical technology, expenditure on staff cost and training as well as equipment replacement and purchase of drugs. The Government would also, having regard to service needs, consider the grant of new additional recurrent or one-off funding to the HA each year for launching new services to the public. Such additional recurrent or one-off funding is to be used for service enhancement or improvement.

(c) The Chief Executive has pledged to increase government expenditure on healthcare to 17% of recurrent government expenditure by 2011-12. According to the current medium range forecast made for the government budget, it is anticipated that our annual recurrent expenditure will increase by about $10 billion. We believe that these additional resources would be able to cope with the growth in service needs in the coming few years, as well as to conduct preparatory works for healthcare service reforms, so as to improve existing services within possible scope before we put in place any financing arrangements. We have not made a separate assessment on the amount of money involved if government expenditure on healthcare is to be increased to 15.3% of recurrent public expenditure.

Ends/Wednesday, June 11, 2008
Issued at HKT 13:36


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