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The following is issued on behalf of the Legislative Council Secretariat:
The Legislative Council Secretariat (the Secretariat) today (March 30) released a Research Brief on "The 2015-2016 Budget".
This Research Brief identifies two key issues that have been discussed in this and last year's Budget Speech. These two issues are: the possible occurrence of a structural fiscal deficit within a decade and the need for continuing the one-off relief measures.
Faced with the possible structural fiscal deficit, the Financial Secretary has proposed to establish the Future Fund for seeking higher returns on the fiscal reserves through long-term investment. Indeed, the rate of investment returns was on the decline between 2009 and 2014, notwithstanding the increase in the amount of fiscal reserves the Government has placed with the Exchange Fund for investment income in recent years. In 2014-2015, investment income from the fiscal reserves contributed only $27.5 billion or 5.8 per cent of the total government revenue, compared with a high of $46.4 billion or 14.6 per cent in 2008-2009.
On the one-off relief measures, the Financial Secretary has set aside about 50 per cent or $34 billion of the budget surplus, on tax reductions, rates concession and other relief measures. Yet the impact of these measures is likely to be diluted as it filters through the local economy. Hong Kong is a highly externally-oriented economy and any additional spending by the benefit recipients will soon get spent on imported goods and services.
Meanwhile, Singapore announced its budget in the same week as Hong Kong. The budget features an alternative fiscal strategy of placing a greater weight on building its future through measures such as increase in continued education and training spending, more support for innovation and internationalization activities undertaken by Singaporean companies, and infrastructure investment.
In the case of Hong Kong, public expenditure on infrastructure increased more rapidly than that on the policy area groups of health, education and economic over the last decade. The slow growth of public education expenditure is of particular concern in view of the keen demand for workers with better knowledge with the transformation of Hong Kong into a more knowledge-based economy.
Private spending on health and education services has grown at a faster pace than the corresponding expenditure by the public sector. During 2005-2012, the share of private health expenditure to the total health expenditure increased from 45.6 per cent to 51.7 per cent. As regards education services, for every $100 spent by the Government on education, the additional amount spent by private individuals increased from $34 in 2005 to $43 in 2014. In other words, a higher share of private consumption expenditure on health and education services is observed.
The Financial Secretary delivered his eighth budget speech on February 25 and the Legislative Council will resume the Second Reading debate on the Appropriation Bill 2015 at its meeting of April 15.
This is the fourth issue of the Research Brief for 2014-2015 prepared by the Secretariat's Research Office of the Information Services Division with a view to enhancing information support for Members. It is a concise summary aiming at explaining a subject matter which may be of interest to Members and the general public.
The Research Brief is now available on the Legislative Council Website at www.legco.gov.hk/research-publications/english/1415rb04-the-2015-2016-budget-20150330-e.pdf .
Ends/Monday, March 30, 2015
Issued at HKT 17:16
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