WEDNESDAY, FEBRUARY 26, 1986
SIR JOHN SAID THERE WAS LAST A SURPLUS, A VERY CONSIDERABLE ONE, ON THE GENERAL REVENUE ACCOUNT IN 1981-82, AND COMMENTED: +1 DO NOT WISH TO DWELL ON HISTORY BECAUSE HONG KONG LOOKS FORWARD NOT BACK. PUNDITS ARE SOUNDER ON PAST THAN FUTURE EVENTS, BUT IT IS ARGUABLE NOW WITH HINDSIGHT THAT FOR VARIOUS GOOD REASONS WE ARRIVED IN A POSITION WHERE EXUBERANT RECURRENT EXPENDITURE WAS OVER DEPENDENT ON BURGEONING CAPITAL INCOME FROM LAND SALES. THAT IS TO SAY ON EXTRAORDINARY PROFITS. THIS WAS CERTAINLY TRUE OF MY FIRST BUDGET FOR 1982-83. WE LIVE AND LEARN.+
NO IMPORTANT PROGRAMMES HAD HAD 'STOP AND GO' PROCEDURES INFLICTED ON THEM, HE SAID, BUT WE HAVE NEVERTHELESS SINCE 1982 SUCCEEDED IN CONTAINING EXPENDITURE AND INCREASING REVENUE SO THAT THE PUBLIC FINANCES ARE NOW BACK IN EQUILIBRIUM.·
THIS WAS A MAJOR ACHIEVEMENT.
LAND SALES PROCEEDS, WELCOME IN THEMSELVES, NO LONGER FUELLED RECURRENT EXPENDITURE. TOUGH THOUGH NOT INDISCRIMINATE MEASURES HAD BEEN NECESSARY, TO WHICH HONG KONG RESPONDED WELL.
+1 SEE NO REASON WHY WE SHOULD NOT BE ABLE OVER A PERIOD OF YEARS TO MAINTAIN THIS BALANCE WITHOUT INCREASING THE OVERALL BURDEN OF TAXATION PROVIDED THAT WE ENSURE BROADLY THAT PUBLIC SECTOR EXPENDITURE GROWTH INCLUDING ALL NEW PROGRAMMES AND INITIATIVES OVER A PERIOD OF YEARS DOES NOT EXCEED GROWTH IN GDP.
+OF COURSE, THIS IS EASY TO SAY BUT MORE DIFFICULT TO PUT INTO PRACTICE IN THE FACE OF RISING ASPIRATIONS. MOREOVER, AS TAX REVENUE LAGS ECONOMIC PERFORMANCE, WHICH IS ITSELF CYCLICAL, IT WOULD BE EXTREMELY FOOLISH TO MAKE SNAP DECISIONS BASED ON JUST ONE YEAR'S OUTCOME.
+ IT IS THUS ABSOLUTELY ESSENTIAL THAT WE OBSERVE CAREFULLY THE OVERALL TRENDS, SAY OVER TWO OR THREE YEARS, AND DO NOT ALLOW OURSELVES TO BE BLOWN OFF A SMOOTHED COURSE INTO EITHER OPTIMISM OR PESSIMISM BY THE RESULTS OF ONE YEAR. THIS WILL REQUIRE RESPONSIBLE JUDGEMENT FROM BOTH THE ADMINISTRATION AND THIS COUNCIL.+
SIR JOHN AT THIS POINT COMMENTED ON THE DEPRESSED GROWTH OF THE GDP IN 1985, FOR SEVERAL REASONS THE LOWEST RATE OF GROWTH FOR MANY YEARS. BUT HE NOTED THAT OVER THE FIVE YEARS 1981-85 EXPORTS INCLUDING RE-EXPORTS HAD INCREASED IN REAL TERMS BY AN AVERAGE OF 10.4 PER CENT PER YEAR AND GDP BY 5.7 PER CENT, FOR 1986, GDP WAS AT PRESENT ESTIMATED TO BE ABOUT 4.5 PER CENT.
+ IT IS THE TREND THAT MATTERS AND WE MUST NOT BE OVER SENSITIVE TO ONE DISAPPOINTING YEAR, HE SAID.
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