THE ECONOMY
The Budget presented by the Financial Secretary to the Legislative Council each year is developed against the background of the Medium Range Forecast to ensure that full regard is given to these principles and to longer-term trends in the economy.
In recent years, the administration has embarked on a programme of internal financial management reforms which are intended to help departments, and the government as a whole, to obtain progressively better value for money. The main emphasis of this programme is on ensuring that expenditure priorities are set at key points in the planning process, on focusing line managers' attention more directly on the results they intend to achieve with public funds and on clearly delegating the responsibility for value for money to line managers in departments, who are best placed to seek improvements.
Public Sector Expenditure
Consolidated public sector expenditure in 1988-9 was $64.8 billion. The government itself accounted for $53.4 billion, excluding contributions to other public sector bodies. The growth rate of consolidated public sector expenditure over the preceding year was 21 per cent in money terms, or 7.7 per cent in real terms.
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The growth rate of consolidated public sector expenditure is compared with the rate of economic growth at Appendix 9. Consolidated public sector expenditure has been around 15 to 16 per cent of the gross domestic product since 1984-5.
Total government revenue in 1988-9 was $72.6 billion. The consolidated surplus of $18.8 billion, comprising $16.8 billion on the General Revenue Account and $2 billion in the other funds. The surplus reflected higher than anticipated yields from profits tax and stamp duty. Details of revenue by source and of expenditure by component for 1988-9 and the original estimates for 1989-90 are at Appendix 8. An analysis of expenditure by function is at Appendix 10.
Some $18.5 billion (28 per cent) of consolidated public sector expenditure in 1988-9 was of a capital nature. There was no additional borrowing in 1988-9. The balance of the government's outstanding borrowings at the end of the year was $1 billion. This was repaid in full in 1989–90.
The draft Estimates of Expenditure on the General Revenue Account are presented by the Financial Secretary to the Legislative Council when he delivers his annual Budget Speech. In the Appropriation Bill, introduced into the Legislative Council at the same time, the administration seeks appropriation of the total estimated expenditure on the General Revenue Account.
The Estimates of Expenditure contain details of the estimated recurrent and capital expenditures of all government departments, including estimates of payments to be made to subvented organisations and estimates of transfers to be made to the statutory funds. They also provide for the repayment of public debt.
With the exception of only four years (1974-5, 1982-3, 1983-4 and 1984-5) in the past twenty years, the General Revenue Account has shown a surplus income over expenditure at the end of each year. The accumulated net surpluses on the General Revenue Account form the government's fiscal reserves. These secure the government's contingent liabilities and ensure that it is able to cope with any short-term fluctuations in expenditure relative to
revenue.
The Urban Council and Regional Council, which operate through the Urban Services Department and Regional Services Department respectively, are financially autonomous. They draw up their own budgets and expenditure priorities. The expenditures of the two councils are financed mainly from a fixed percentage of the rates from property in the
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