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(b) Hong Kong's fiscal position. Mr Gray is concerned about the long term effects of continuing real rapid growth in the social service's sector, possible cost increases in the PADS project, and the comparatively low level of fiscal reserves envisaged for 1997. These worries have to be set against the fact that Hong Kong has been improving its social services for a considerable length of time but at the same time managed to maintain the overall share of government expenditure to less than 20% of GDP. As LegCo begins to flex its financial authority more, HKG may well find pressures growing for additional money in this sector. But Hong Kong people have never been those who rely on the State: what they want is a decent education system and a medical service that will look after them in times of need.
As for the government's reserve position, Mr Gray appears to have forgotten or ignored the fact that in 1997 the SAR Government will have available the Land Fund. The balance
in the Fund currently stands at HK$30 billion and is expected to be between HK$60 and 80 billion by 1997. This will leave a reserve position at least as healthy as the current one and a position that would be the envy of almost every government.
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Mill Cre
M V Stone