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100. FOR THE PURPOSE OF THIS EXERCISE, I ACCEPT THESE FIGURES AND SO THE ONLY REMAINING QUESTION IS WHAT ELSE CAN BE FITTED IN. TO BEGIN WITH, THERE ARE CERTAIN COMMITMENTS WHICH ARE CONTRACTUAL, NAMELY, CAPITAL WORKS UNDER THE DEFENCE COSTS AGREEMENT AND THE REPROVISIONING OF VICTORIA BARRACKS AND RAF KAI TAK AND PUBLIC DEBT REPAYMENTS. THESE AMOUNT TO DOLLARS 90 MILLION, DOLLARS 68 MILLION AND DOLLARS 310 MILLION IN EACH OF THE THREE YEARS.
101. TOGETHER WITH THE TWO PUBLIC WORKS PROGRAME COMPONENTS OF THE CAPITAL ACCOUNT, THESE COMMITMENTS BRING THE TOTAL OF CAPITAL EXPENDITURE TO DOLLARS 2,390 MILLION IN THE FIRST YEAR, DOLLARS 2,400 MILLION IN THE SECOND YEAR AND DOLLARS 2,633 MILLION IN THE LAST YEAR OF THE FORECAST PERIOD. CAPITAL SUBVENTIONS, U.P.G.C. GRANTS, DEPARTMENTAL SPECIAL EXPENDITURE AND THE HOME OWNERSHIP SCHEME (PHASE 1) WILL REQUIRE, ACCORDING TO THE FORECAST, DOLLARS 662 MILLION IN 1978-79, DOLLARS 390 MILLION IN 1979-80 AND DOLLARS 240 MILLION IN 1980-91.CLEARLY THERE CAN BE NO (NEXT WORD UNDERLINED) CERTAINTY THAT EXPENDITURE OF THIS ORDER CAN BE FINANCED AND THE POSITION WILL HAVE TO BE CONSIDERED YEAR BY YEAR, HOWEVER, I AM PREPARED TO ASSUME THAT THE GUIDELINE THAT AT LEAST 60% OF CAPITAL EXPENDITURE IS FINANCED BY THE SURPLUS ON RECURRENT ACCOUNT CAN BE OBSERVED, AND THAT DEBT CAN BE RAISED ON SATISFACTORY TERMS TO ASSIST CAPITAL REVENUE TO COVER THE RESIDUAL DEFICIT ON CAPITAL ACCOUNT.
102. BUT IN CONSTRUCTING THE BUDGET THERE ARE TWO OTHER GUIDELINES TO BE BORNE IN MIND IF WE ARE TO ENSURE THAT WE MAINTAIN, AT ANY RATE IN THE ABSENCE OF ADVERSE SHIFTS IN THE WORLD TRADING ENVIRONMENT, A STEADY RATE OF PROGRESS,
103. FIRST, WE NEED TO HAVE SOME IDEA OF THE RATE AT WHICH TOTAL EXPENDITURE BY THE PUBLIC SECTOR CAN GROW ANNUALLY IN REAL OR CONSTANT PRICE TERMS AND I HAVE TAKEN THIS TO BE ABOUT 10%. THIS IS NOT SO MUCH A GUIDELINE AS A MATTER OF HISTORICAL EXPERIENCE OF WHAT HAS PROVED POSSIBLE IN THE 70S. QUITE APART FROM THE FACT THAT THERE IS A VARIETY OF CONSTRAINTS ON EXPENDITURE
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