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WEDNESDAY, FEBRUARY 25, 1976
BALANCED BUDGET FOR 1978-79 ******
THE FINANCIAL SECRETARY, THE HON, PHILIP HADDON-CAVE TOLD LEGISLATIVE COUNCIL THAT HE HAD EVERY INTENTION OF ENSURING THAT THE BUDGET WOULD BE AGAIN AT LEAST IN OVERALL BALANCE BY 1978-79, THE SECOND YEAR OF THE FORECAST PERIOD.
HE ASSURED THE COUNCIL OF THIS IN CASE SOME HONOURABLE MEMBERS WERE WONDERING WHETHER THE GOVERNMENT HAD EMBARKED ON A COURSE OF +FINANCIAL IRRESPONSIBILITY+ IN ITS METHOD OF FINANCING THE DEFICIT IN THE COMING FINANCIAL YEAR.
THE $355 MILLION BUDGET DEFICIT, ARISING FROM ESTIMATED EXPENDITURE OF $7,212 MILLION OVER ESTIMATED REVENUE OF $6,857 MILLION, MR. HADDON-CAVE SAID, WOULD BE FINANCED BY DRAWING UPON THE UNUSED PORTION OF ABOUT $214 MILLION OF THE PROCEEDS OF THE 6-1/2 PER CENT HONG KONG DOLLAR BOND ISSUE 1980 AND BY DRAWING DOWN THE US$60 MILLION FACILITY TO WHATEVER EXTENT IS NECESSARY.
HE SAID HE CONSIDERED IT PERFECTLY LEGITIMATE TO FINANCE THE RESIDUAL DEFICIT IN THIS WAY AS WE ARE WELL WITHIN MY GUIDELINE FOR THE USE OF LOAN FINANCE, NAMELY, THAT DEBT SERVICING CHARGES INTEREST AND AMORTISATION SHOULD NOT EXCEED INTEREST EARNINGS ON OUR FISCAL RESERVES+,
MR. HADDON-CAVE REMINDED THE COUNCIL THAT THE USE OF DEBT WAS LIMITED BY THE STRINGENT (ALBEIT, PERHAPS NOT VERY SCIENTIFIC) GUIDELINE.
REFERRING TO A POSSIBLE SALARIES REVISION FOR THE CIVIL SERVICE WHICH, HE SAID, WAS RELEVANT TO HIS FINANCING STRATEGY IN THE COMING YEAR, THE FINANCIAL SECRETARY SAID A CASE BASED ON MOVEMENTS IN THE RELEVANT INDICES OF CONSUMER PRICES DURING 1974-75 AND 1975-76 AND HAVING REGARD TO PAY TRENDS IN THE PRIVATE SECTOR COULD LEAD THE GOVERNMENT TO CONCLUDE THAT A SALARIES REVISION, WITH EFFECT FROM APRIL 1, 1976 WAS JUSTIFIED.
+ IF SO, THE QUESTION I MUST CONSIDER IS WHETHER THE ECONOMY WILL GROW AT A RATE AT WHICH SUCH A REVISION CAN BE AFFORDED, SO THAT IT CAN BE FINANCED AT EXISTING TAX RATES AND FITTED INTO, AS IT WERE, THE EXPENDITURE SIDE OF THE BUDGET.+
A SALARIES REVISION OF A CERTAIN ORDER COULD BE CATERED FOR, HE SAID, AS HE BELIEVED +WE HAVE BUDGETTED FOR A VOLUME OF EXPENDITURE SOMEWHAT IN EXCESS OF WHAT WILL PROVE TO BE POSSIBLE IN PRACTICE AND THERE IS A POSSIBILITY THAT, ONCE AGAIN, ON THE UPTURN REVENUE YIELDS WILL BE MORE THAN ANTICIPATED IN THE REVENUE ESTIMATES.+
THERE ARE .............