XN000022-1979-02-28 — Page 11

WEDNESDAY, FEBRUARY 28, 1979

$1,600 MILLION SURPLUS PREDICTED FOR 1978-79

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THE FINANCIAL SECRETARY PREDICTED A SURPLUS OF $1,600 MILLION IN THE CURRENT FINANCIAL YEAR 1978-79, +THE HIGHEST ON RECORD.+

IN HIS BUDGET SPEECH, HE SAID THE REVISED ESTIMATES OF REVENUE AND EXPENDITURE FOR 1978-79 WERE $12,374 MILLION AND $11,162 MILLION RESPECTIVELY, THUS RESULTING IN A SURPLUS OF $1,212 MILLION.

+THIS FIGURE,+ MR. HADDON-CAVE SAID, +IS LOWER THAN THE ESTIMATE OF THE SURPLUS DERIVED FROM THE TREASURY'S CASH BOOK AT FEBRUARY 20 LAST OF $1,750 MILLION, BUT I HAVE A FEELING THAT THE TRUTH LIES SOMEWHERE BETWEEN THESE TWO FIGURES AND SO I SHALL USE A FIGURE OF $1,600 MILLION AS MY PREDICTION OF THE SURPLUS WHEN CONSIDERING OUR CUMULATIVE FINANCIAL POSITION AT APRIL 1 NEXT.+

THE FINANCIAL SECRETARY RECALLED THAT LAST YEAR EFFECTIVELY HE BUDGETTED FOR A BALANCE FOR THE SECOND YEAR RUNNING. AFTER TAKING ACCOUNT OF HIS REVENUE PROPOSALS, THE DIFFERENCE BETWEEN ESTIMATED EXPENDITURE OF $10,266 MILLION AND ESTIMATED REVENUE OF $10,246 MILLION WAS ONLY $20 MILLION.

HE SAID +A SURPLUS OF $1,212 MILLION DESERVES AN EXPLANATION, PARTICULARLY AS, IF IT TURNS OUT TO BE $1,600 MILLION, IT WILL BE THE HIGHEST ON RECORD.+

FOR THE SECOND YEAR RUNNING, THE SURPLUS WAS DUE TO A FLUSH OF REVENUE RATHER THAN A FAILURE OF EXPENDITURE, THE FINANCIAL SECRETARY SAID. BY CONTRAST, IN 1976-77 THE TURN-AROUND FROM A BUDGETTED DEFICIT OF $355 MILLION TO AN ACTUAL SURPLUS OF $902 MILLION WAS ALMOST EQUALLY SHARED BETWEEN EXCESS REVENUE AND UNDER-SPENDING.

MR. HADDON-CAVE SAID THE REVISED ESTIMATE OF REVENUE EXCEEDED THE ORIGINAL ESTIMATE BY 21 PER CENT.

RECURRENT REVENUE IS UP BY A NET $922 MILLION, OR BY 10 PER CENT ON THE ORIGINAL ESTIMATE.

CAPITAL REVENUE IS UP BY $1,206 MILLION OR BY 98 PER CENT ON THE ORIGINAL ESTIMATE. +PREMIA FROM LAND TRANSACTIONS,+ MR. HADDON- CAVE EXPLAINED, HAVE YIELDED $1,166 MILLION MORE THAN I EXPECTED DUE TO 249 ACRES OF LAND BEING SOLD INSTEAD OF THE EXPECTED 88 ACRES- AND TO LAND PRICES BEING HIGHER THAN EXPECTED AND TO PRONOUNCED TENDENCY TO PAY PREMIA IN A LUMP SUM RATHER THAN BY INSTALMENTS.+

REFERRING TO THE REVISED ESTIMATE OF EXPENDITURE, THE FINANCIAL SECRETARY SAID IT WAS NEARLY NINE PER CENT UP ON THE APPROVED ESTIMATE. THIS, HE SAID, IS IN SHARP CONTRAST TO EXPERIENCE IN RECENT YEARS WHEN ACTUAL EXPENDITURE HAS BEEN BELOW THE APPROVED ESTIMATES.+

ON RECURRENT ACCOUNT, THE FINANCIAL SECRETARY NOTED THAT THERE WAS NET OVER-SPENDING OF $121 MILLION LARGELY DUE TO THE 1978 SALARIES REVISION WHICH COST $340 MILLION.

ON CAPITAL ACCOUNT, THERE WAS NET OVER-SPENDING OF $775 MILLION, WHICH WAS MORE THAN ACCOUNTED FOR BY OVER-SPENDING OF $837 MILLION ON THE TWO PUBLIC WORKS PROGRAMME COMPONENTS OF THE CAPITAL ACCOUNT.