XN000022-1977-03-02 — Page 21

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WEDNESDAY, HARCE 2, 1977

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THE QUESTION NOW IS: HOW CAN WE VIEW THE NEXT FOUR YEARS? I THINK WE MAY SAFELY ASSUME THAT THE FLUCTUATIONS OF THE PAST FOUR YEARS ARE SAFELY BEHIND US. WE CANNOT EXPECT SUCH A RAPID RATE OF GROWTH IN 1977 AS IN 1976, BUT THE OUTPUT OF GOODS AND SERVICES AS MEASURED BY THE GROSS DOMESTIC PRODUCT SHOULD

INCREASE BY ABOUT 7 PER CENT AND THIS I WOULD REGARD AS MOST SATISFACTORY. CONSUMER PRICES WILL INCREASE A LITTLE FASTER THIS YEAR - PERHAPS BY AS MUCH AS 6 PER CENT COMPARED WITH THE INCREASE OF 3-1/2 PER CENT DURING 1976. BY WORLD STANDARDS THE INCREASE IN PRICES IN 1976 WAS A COMMENDABLE PERFORMANCE AND REFLECTED IN PART THE EXTERNAL STRENGTH OF THE HONG KONG DOLLAR. AFTER 1977 THE LIKELY COURSE OF THE WORLD ECONOMY ON WHICH WE ARE SO DEPENDENT IS NOT CLEAR, BUT UNDUE WORRY IS NOT CALLED FOR AT THIS STAGE. I SUGGEST ALSO THAT WE ARE A LITTLE LESS VULNERABLE TO EXTERNAL FORCES THAN WE USED TO BE SINCE THE PATTERN OF OUR EXPORTS IS BECOMING MORE DIVERSIFIED AND THERE ARE THE BENEFITS ACCRUING FROM THE EMERGING FINANCIAL SECTOR OF OUR ECONOMY.

IT WAS AGAINST THIS BACKGROUND OF SATISFACTORY RESERVES, FAST RECOVERY IN 1976 AND A FORECAST OF CONTINUING GROWTH

INTO 1977 THAT I PREPARED THE 1977-78 BUDGET. AFTER CONSIDERING OUR REVENUE PROSPECTS, I DECIDED THAT WE COULD INCREASE PUBLIC EXPENDITURE BY ABOUT 15 PER CENT IN TERMS OF GOODS AND SERVICES, OR BY 20 PER CENT IN PURELY MONEY TERMS. IF WE ACTUALLY MANAGE TO DO THIS WE SHALL HAVE MADE UP FOR THE DELIBERATE SLOW DOWN IN 1975-76 AND THE SOMEWHAT DISAPPOINTING PERFORMANCE IN 1976-77. CERTAINLY, I BELIEVE WE CAN AFFORD THE EXPENDITURE I HAVE BUDGETTED FOR OF $8,245 MILLION BECAUSE REVENUE IS ESTIMATED AT $8,412 MILLION. AND, INDEED, I FELT ABLE TO CONSIDER CERTAIN TAX CONCESSIONS WHICH I BELIEVE TO BE DESIRABLE IN THEIR OWN RIGHT FOR SOCIAL AND ADMINISTRATIVE REASONS.

BUT TO LOOK AT THE EXPENDITURE SIDE OF THE BUDGET FIRST: NEARLY 40 PER CENT OR OVER $3,200 MILLION WILL BE SPENT ON OUR SOCIAL SERVICES INCLUDING HOUSING, EDUCATION, MEDICAL SERVICES AND SOCIAL WELFARE. THIS IS 20 PER CENT MORE THAN WE SHALL SPEND THIS YEAR AND WILL ENABLE US, FOR EXAMPLE, TO COMPLETE NEW PUBLIC HOUSING ACCOMMODATION IN 1977-78 FOR NEARLY 109.000 PEOPLE AND OTHER ESTATES WILL BE IN THE COURSE OF CONSTRUCTION FOR COMPLETION IN LATER YEARS. A START WILL ALSO BE MADE ON THE BUILDING OF 7,200 FLATS FOR SALE UNDER THE GOVERNMENT'S HOME OWNERSHIP SCHEME. MORE THAN 12,000 PRIMARY PLACES WILL BE PROVIDED IN NEW SCHOOLS, MAINLY IN THE NEW TOWNS, AND A FURTHER 3,700 PLACES WILL BE PROVIDED IN SPECIAL SCHOOLS AND SPECIAL CLASSES. THE BUILDING OF 15 NEW SECONDARY SCHOOLS WILL BE STARTED AND 32 NEW SECONDARY SCHOOLS WILL BE COMPLETED- AND, OF COURSE, OUR INTENTION TO PROVIDE EVERY PRIMARY SIX LEAVER WITH A PLACE IN A SECONDARY SCHOOL IN THE PUBLIC SECTOR #ILL BE ACHIEVED ON TIME, THAT IS TO SAY, BY SEPTEMBER 1978. AND IN THE FIELD OF SOCIAL WELFARE, PUBLIC ASSISTANCE WILL BE EXTENDED TO ALL ABLE-BODIED UNEMPLOYED ADULTS SUBJECT TO CERTAIN CONDITIONS.

11.... 20 PER CENT