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The Financial Secretary, Mr John C Tsang, said today (December 18) that the Government has established a Housing Reserve to meet the 10-year public housing supply target.
Mr Tsang said, "In accordance with the Long Term Housing Strategy, the public housing supply target is to deliver 290 000 units in the next 10 years. This is an important step to improve people's living environment. The Housing Authority (HA) is the major supplier of public housing. The Government will ensure that the HA has adequate funding to meet the target. Given the huge financial commitment, we have to make advance planning. We will make provision by instalments to reduce fiscal volatility.
"It is prudent for us to earmark a sum for establishing the Housing Reserve when we are in a steady financial position. This could help alleviate the increasing fiscal pressure due to the public housing production target."
The Financial Secretary has instructed the Chief Executive of the Hong Kong Monetary Authority (HKMA) to set aside the investment return on the Government's fiscal reserves (about $27 billion) for the Housing Reserve. The HKMA is also responsible for the investment of the Housing Reserve. The Housing Reserve and the cumulative investment return will be used to support the public housing development programme and related infrastructure.
The Government and the HA will continue discussions on the long-term financial planning of the HA. The HA has to assess its medium to long-term financial requirements based on its five-year rolling budgeting process and adopt every possible measure to ensure the cost effectiveness of the public housing development programme. When the two sides have reached agreement on quantum and timetable of funding injection from the Government, the Government will seek the approval of the Finance Committee of the Legislative Council for funding to be drawn from the Housing Reserve to support public housing development.
The Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, announced on December 16 the new Long Term Housing Strategy, under which, the public housing supply target would be 290 000 units, comprising 200 000 public rental housing units and 90 000 subsidised sale flats. According to the preliminary estimate, the HA will face a huge deficit and a substantial injection from the Government is required.
The Working Group on Long-Term Fiscal Planning in its report in March 2014 projected that due to population ageing and a mature economy, Hong Kong's economic growth would be trending down. The Government will face enormous fiscal pressure in the medium and long terms. Should government spending persistently grow faster than government revenue, there may be structural deficit within a decade or so. The Government should take measures to promote economic growth, contain government expenditure growth, preserve and broaden the revenue base and save for the future.
Ends/Thursday, December 18, 2014
Issued at HKT 12:35
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