THE ECONOMY
Proximity to the Mainland is a key advantage that should be well capitalised on. This is to be done through earnestly increasing the cross-flows between Hong Kong and the Mainland. On flow of people and goods, key measures include improving existing boundary crossings and building new ones, shortening customs processing time, and enabling more Mainland visitors to come to Hong Kong. On flow of capital, Hong Kong is currently the Mainland's largest source of foreign direct investment as well as major funding centre, and this role is expected to be enhanced even further. Moreover, CEPA will help accentuate all these flows even more.
On upgrading the quality of the workforce, the Government is committed to education reform, and will continue to invest substantially in education, training and retraining for advancing knowledge and skills. These measures are aimed at facilitating Hong Kong's economic restructuring and enhancing individuals' capability to gear in with the requirements for a knowledge-based and skill-intensive economy. Apart from nurturing local talent, the Government also strives to attract talent from all over the world to live and work in Hong Kong. The population policy has eased restrictions on the entry of Mainland talents and professionals. With more professionals coming to Hong Kong, the vitality of the economy will be engendered further, and this in turn will create more job opportunities for the local workforce.
A high priority is attached to tackling the fiscal deficit. The Government has set out to do this through containing public expenditure, through introducing practical revenue measures, and through revitalising the economy to yield better revenue growth. The Government is determined to reduce its operating expenditure to $200 billion, to restore fiscal balance, and to keep public expenditure to 20 per cent of GDP or below by 2008-09.
Public Finance
Structure of Government Accounts
The Government controls its finances through a series of fund accounts. The General Revenue Account is the main account for day-to-day departmental expenditure and revenue collection. There are eight other funds established by resolutions of the Legislative Council for specific purposes such as to finance capital works expenditure or government loans and investments. They are the Capital Works Reserve Fund, Capital Investment Fund, Civil Service Pension Reserve Fund, Disaster Relief Fund, Innovation and Technology Fund, Land Fund, Loan Fund and Lotteries Fund.
The Capital Works Reserve Fund finances the public works programme, land acquisitions, capital
capital subventions, major systems and equipment items, computerisation and the payment of redemption money in respect of land exchange entitlements. Its income is derived mainly from land premia and appropriation from the General Revenue Account.
The Capital Investment Fund finances the Government's capital investments, such as equity injections in the Airport Authority, the Kowloon-Canton Railway Corporation and the MTR Corporation Limited, and capital investments in the Hong Kong Housing Authority and the Urban Renewal Authority. Its income is derived mainly from appropriation from the General Revenue Account and dividends.
The Civil Service Pension Reserve Fund acts as a reserve to meet payment of civil service pensions in the unlikely event that the Government cannot meet such liabilities
67