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situation we had to borrow abroad on an unprecedented scale during 1974, and are
still having to borrow. The need to service and repay the foreign debt is
going to be a burden on our economy and balance of payments for several years
ahead.
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3.
At the same time as we have to put right the balance of payments it is imperative
that we should also tackle our long-standing problem of low growth. For many years
our annual average growth rate has lagged far behind that of our major European
Allies for example, it was only half that of France or the Federal Republic
of Germany. The roots of economic growth - and this needs no explanation in Hong
Kong are industrial investment and high productivity. Our level of investment
has been and remains low and we have to push it up.
4.
We have then no choice but to put our balance of payments in order and we must
increase the level and efficiency of our investment.
But the resources for these
two priority sectors can only be found at the expense of private consumption and
public expenditure. As I have already said, our wages policy by itself is likely
to mean a fall in the living standards of the private citizen next year, and little
room for improvement for several years ahead. And we will have to be just as
been
stringent on Governemnt spending as on private spending. The public sector has
recently/and is now being financed by deficit borrowing on a scale which is simply
not compatible with the long-term health of our economy. With your own traditions
of prudent and careful financing you will understand that this cannot continue.
The Government has already announced therefore that planned public expenditure ne: i
year will be lower than it is this year, and that it will be seeking further
substantial economies in the following two years after that. All our public
expenditure programmes are therefore under the greatest pressure and are even
now being subjected to the closest scrutiny, particularly when the expenditure
is overseas. When we come to publish the next Public Expenditure White Paper,
all sorts of services will have to be cut back and many desirable projects
sacrificed.
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