WEDNESDAY, MARCH 28, 1979
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WHEN PUBLIC EXPENDITURE IS TRIMMED TO FIT IN WITH THE STATE OF THE ECONOMY, IT IS IMPORTANT TO FEED A STEADY FLOW OF PUBLIC WORKS PROJECTS INTO THE CONTRACT STAGE, AS AND WHEN CIRCUMSTANCES PERMIT, SO AS TO AVOID AN INVOLUNTARY +STOP GO+ HE EXPLAINED.
MR. WU SAID THE OPTIONS OPEN TO THE FINANCIAL SECRETARY TO COMBAT INFLATION ARE RATHER SEVERELY LIMITED, PROVIDED THAT HE STICKS TO HIS PRINCIPLES+. THE MOST IMPORTANT OF THESE ARE:
* MAINTAINING PRESENT SERVICES AND EXPANDING THEM TO MEET
DEMAND AT PRESENT STANDARDS, AND
*
INTRODUCING DESIRABLE NEW SERVICES WHEN WE CAN AFFORD THEM, WITHOUT DISTURBING OUR LOW TAX ENVIRONMENT AND WITHOUT INTRODUCING DIRECT CONTROLS WHICH WOULD BE A DANGEROUS DEPARTURE FROM OUR FUNDAMENTAL POLICY.
BESIDES THE OPTION OF CONTROL ON PUBLIC EXPENDITURE IS THE OPTION OF LIMITATION ON THE WAYS IN WHICH THE HK DOLLAR BALANCES CAN BE USED.
THERE
+ IF IT DOES NOT DO THE TRICK, THERE IS THE LIQUIDITY RATIO, AND IF THAT IS NOT ENOUGH, A RELUCTANT FINANCIAL SECRETARY IS SURE THAT HE CAN DEVISE SOME OTHER FORMS OF DIRECT CONSTRAINT
IN THE GROWTH OF THE MONEY SUPPLY, HE SAID.
HE HOPED THAT WITH THE SUPPORT OF THE BUSINESS COMMUNITY, THE EXCHANGE FUND DEPOSITS WILL OPERATE AS THE FINANCIAL SECRETARY EXPECTS.
HE FURTHER REITERATED THAT HE SHARES THE FINANCIAL SECRETARY'S DEVOTION TO THE PRINCIPLES OF LOW TAXATION AND MINIMUM DIRECT GOVERNMENT INTERFERENCE IN THE MECHANISM OF THE ECONOMY.
HE SAID HE HAS SOME JUSTIFIABLE DOUBTS ABOUT THE EFFICACY OF INTERFERENCE. THE ESSENTIAL ECONOMIC FACT ABOUT HONG KONG IS THAT IT RESPONDS TO INCENTIVE. IN MANY OTHER PLACES THE RESULT OF MIXING CONTROLS AND INCENTIVES HAS BEEN THAT THE INCENTIVES NO LONGER OPERATE. IN HONG KONG OUR TAXATION PATTERN AND THE RELATIVE ABSENCE OF DIRECT GOVERNMENT INTERFERENCE RELEASE ECONOMIC ENERGY AND STIMULATE ENTERPRISE TO THE BENEFIT OF THE WHOLE COMMUNITY, HE SAID.
HE THOUGHT THE TIME WILL SOON COME WHEN THE FINANCIAL SECRETARY WILL NOT BE ABLE TO CONDUCT A TRULY COMPREHENSIVE REVIEW OF OUR ECONOMY AND TREAT IT LIKE A THEORETICAL MODEL.
IF IT IS STILL POSSIBLE TO DO SO NOW IT IS BECAUSE OUR ECONOMY IS STILL NARROW ENOUGH, COMPACT ENOUGHT AND VISIBLE ENOUGH BUT EVEN NOW THE FINANCIAL SECRETARY RECOGNISES A MAJOR UNCERTAINTY APART FROM TRENDS IN WORLD TRADE - THE IMPACT OF CHINA'S NEW DIRECTIONS IN INDUSTRIAL DEVELOPMENT, HE SAID.
HE SAID HE SUPPORTS THE PRESENT BUDGET IN THE SPIRIT OF
A COMMON CHINESE SAYING: +EXPLORE RESOURCES AND RESTRAIN SPEND ING+.
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