LegCo Secretariat releases Research Brief on "The 2018-2019 Budget"
The Legislative Council Secretariat (the Secretariat) today (April 12) released a Research Brief on "The 2018-2019 Budget".
The Financial Secretary delivered the first Budget of the current-term Government on February 28, 2018 and reported a budget surplus of HK$138 billion for 2017-2018. The Government's fiscal reserves surpassed the one-trillion-dollar mark for the first time to reach HK$1.092 trillion as at the end of March 2018.
Armed with a record-breaking budget surplus and guided by the Chief Executive's new fiscal philosophy, the Financial Secretary has unveiled a progressive 2018-2019 Budget with education, social welfare and health remaining the major expenditure items that would together account for 50.9 per cent of total government expenditure. Meanwhile, infrastructure spending continues to take up a large share of total government expenditure at 15.4 per cent in 2018-2019.
Total education expenditure is forecast to increase by 28.4 per cent, or HK$25.2 billion, to HK$113.7 billion in 2018-2019. However, some 82 per cent of such increase will be fuelled by non-current and capital expenditure items. Recurrent education expenditure, which reflects the Government's long-term commitment to education, will remain the largest recurrent expenditure item among all policy areas. However, it will account for a smaller share of total recurrent government expenditure at 20.8 per cent in 2018-2019, down from 22 per cent in 2017-2018, extending the generally declining trend over the past decade. Its year-on-year growth rate in 2018-2019 is the second lowest among all policy areas.
While the share of social welfare expenditure in total government expenditure has risen during the past decade, expenditure on services for the elderly as a share of recurrent social welfare expenditure only increased modestly from 9.7 per cent in 2007-2008 to around 11 per cent in recent years. Such a trend, if it continues, may not be proportionate to the needs of an ageing population in Hong Kong.
The Government's strong fiscal position has allowed the Financial Secretary to allocate more resources on health expenditure. The year-on-year growth rate of recurrent health expenditure, at 13.3 per cent in 2018-2019, is considerably faster than the average annual growth of 7.1 per cent over the past decade. The new policy initiatives include setting aside HK$300 billion to support the second 10-year hospital development plan. While development of new medical facilities can proceed apace, manpower shortage of healthcare professionals may make it difficult for the Government to rectify the overloaded public healthcare system in the near future.
Since the implementation of the Ten Major Infrastructure Projects in 2007, capital works expenditure has more than quadrupled from HK$20.5 billion in 2007-2008 to HK$93.3 billion in 2018-2019. The spiralling costs of some major infrastructure projects have aroused wide concern in recent years. For some mega infrastructure projects, the magnitude of increases in their approved project estimates due to rising construction costs ranged from 22 per cent to 196 per cent.
The recent years have seen increasing use of the hefty budget surplus and fiscal reserves by the Financial Secretary to set aside money for specific purposes and/or establish designated funds to address specific public concerns. A review of the funding earmarked since the 2008-2009 Budget reveals under-utilization of some of the funds. For example, HK$45 billion has been earmarked for the Housing Reserve in the 2016-2017 Budget, nevertheless, the Housing Authority has recently projected that it has sufficient financial resources in the coming five years and would not need any government support from the Housing Reserve. Meanwhile, the Hong Kong Monetary Authority has only invested about half of the Future Fund managed by it.
The Legislative Council will resume the Second Reading debate on the Appropriation Bill 2018 at its meeting of April 25, 2018 and Members will speak on the Bill.
This is the second issue of the Research Brief for 2017-2018 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/1718rb02-the-2018-2019-budget-20180412-e.pdf.
Ends/Thursday, April 12, 2018
Issued at HKT 17:25
Issued at HKT 17:25