16
of total Government expenditure will be on social and
community services and this represents an expenditure of
something like US$7,000 million at constant (1972)
prices compared with US$2,600 million during the last
decade.
27.
It should not be thought that public expenditure
is so rigidly constrained by the need to protect the
rate of growth of the private sector that the Government
has no room at all for manoeuvre. I have already
pointed out that our mixture of conservative fiscal
policies and liberal economic policies has tended to
produce overall budget surpluses and this has resulted
in the accumulation of substantial reserves. There could
also be recourse to external borrowing, notwithstanding that
loans must ultimately be repaid and that budgetary problems
could arise if borrowing was in respect of projects which
were not directly self-liquidating.
Regardless of
the source of finance, however, expenditure would need to
be carefully phased in order to ensure that the pressure
of aggregate demand for the economy's resources did not
build up to levels which would impede the rate of growth
of exports.
The Future of the Automatic Corrective Mechanism
28. But it has been argued that, when all is said and
done, Hong Kong will simply not be able to maintain both
an internal and an external balance, however delicately
the Government may tread in order to avoid disturbing
the automatic equilibrating mechanism. Hong Kong's
undeniable economic successes, it is sometimes said,
/are....