(6)
32.
Management of the public finances
At the same time, I can assure Miss Dunn that the
Government is mindful of its responsibilities "in the way it
manages its own affairs and, in particular, in the way it
controls the growth of public expenditure". In this connection,
I can assure her that, however frequently I may be encouraged
on other occasions not to take too seriously the framework
within which our budgetary and fiscal policies are constructed, I intend to stick by it. None of my guideline ratios and absolute guideline figures relating to the relative size of
the public sector or the construction of the annual budget or
the balance of the fiscal system or the steady development of
the public sector's services and facilities or the relative
size of our fiscal reserves, is sacrosanct, but each imposes
discipline and reminds us to think through the consequences
of particular courses of action. For instance, the financing
of the capital account would be placed in jeopardy if we did
not watch very carefully the proportion of recurrent revenue
absorbed by recurrent expenditure and this means accurate
forecasting of the financial implications of policy decisions.
33.
Thus I really cannot accept that our rolling three-
year forecasts are prepared "more for presentational reasons
than to provide us with an effective regulator". I would not
argue that these forecasts are a perfect regulator and, although
our objective is always to foresee and to monitor the
implications for expenditure in the following years of new
policies and projects approved and implemented during a year,
we sometimes fail to do so. It is for this reason that I have
sympathy with Mr. T.S. Lo's suggestion that "the Government might seriously consider spacing out expenditure on the P.W.D. programme", but I think he has overlooked the fact that the very concept of the absolute guideline figures for the two components of the Public Works Programme is designed to ensure
that bunching of expenditure does not occur. That, at any
rate, is the theory even if, in practice, we make a few mistakes.
19
/34.
Nor