XN000022-1978-03-01 — Page 8

WEDNESDAY, MARCH 1, 1978

- 7 -

AS FOR RECURRENT EXPENDITURE FOR THE YEAR 1978-79, THE FINANCIAL SECRETARY SAID THE TOTAL OF DEPARTMENTS MAIN ESTIMATES, BASED ON THE PROVISIONAL ACCEPTABLE LEVELS OF EXPENDITURE PREVIOUSLY GIVEN TO THEM, AND THEIR SUPSIDIARY ESTIMATES FOR HEL SERVICES GIVEN HIGH PRIORITY BY THE GOVERNMENT, FINALLY CAME TO 7.323 MILLION. ON THE FINANCING CF NEW SERVICES, MR. HADDON-CAVE MADE THE FOLLOWING POINTS:

+NEVERTHELESS, HAVING REGARD TO THE LIKELY OUTTURN FOR 1977-78, THE LIKELY SIZE OF THE CAPITAL ACCOUNT IN 1978-79, AND SEVERAL POLICY DECISIONS IN THE SOCIAL WELFARE AND SECONDARY EDUCATION FIELDS TAKEN AFTER THE FORECAST RETURNS HAD BEEN SUBMITTED (WHICH MERE ESTIMATED TO COST $160 MILLION IN THE FIRST YEAR} I TOOK THE VIEW THAT SOME 220 MILLION COULD BE AFFORDED FOR NEW PROPOSALS CONTAINED IN THE FORECAST SUBMISSIONS IN 1978-79,+ HE SAID.

TURNING TO CAPITAL EXPENDITURE, IR. HADDON-CAVE SAID THE FINANCE BRANCH TOOK AS THEIR STARTING POINT FOR THE PREPARATION OF THE ESTIMATES THE GUIDELINE FIGURE OF 13,050 MILLION WHICH HE SUGGESTED LAST YEAR WOULD BE ACCEPTABLE, CUT, HE ADDED, +HAVING REGARD TO THE SPENDING CAPABILITY OF THE PUBLIC „ÖRKS DEPARTMENT AND THE HOUSING AUTHORITY, A FIGURE OF #2,306 MILLION WAS EVENTUALLY INSERTED IN THE DRAFT ESTIMATES. A FIGURE OF #935 MILLION WAS INSERTED FOR ALL OTHER CAPITAL EXPENDITURE MAKING A TOTAL OF 2,943 MILLION, HE SAID.

MR. HADDON-CAVE POINED OUT THAT IN CONSTRUCTING THE BUDGET, HE HAD BORNE IN MIND SIX CONSIDERATIONS.

IN

+FIRST, THE LIKELY LEVEL OF THE GROSS DOMESTIC PRODUCT 1978- SECONDLY, THE IMPORTANCE OF ACHIEVING A GROWTH RATE OF PUELIC EXPENDITURE IN REAL TERMS NEXT YEAR HIGH ENOUGH TO BRING THE AVERAGE GROWTH RATE OVER THE FIVE YEAR PERIOD 1974-75 TO 1975-79 UP TO THE 10 PER CENT GUIDELINE DEFINING STEADY PROGRESSION= THIRDLY, THE STATE OF OUR FISCAL RESERVES FOURTHLY, THE DIFFERENT MONETARY CONSEQUENCES OF A PUBLIC SECTOR (CONSOLIDATED ACCOUNT) WHICH IS IN BALANCE, DEFICIT OR SURPLUS FIFTHLY, THE GUIDELINES WHICH DEFINE THE DESIRABLE RELATIONSHIP BETWEEN RECURRENT AND CAPITAL EXPENDITURE AND THE ROLE WHICH RECURRENT REVENUE SHOULD PLAY IN THE FINANCING OF THE CAPITAL ACCOUNT= AND FINALLY, THE AESOLUTE LEVELS AT WHICH THE VAR TOUS COMPONENTS OF THE CAPITAL ACCOUNT SHOULD BE FIXED, + HE SAID.

/ON THE