XN000022-1979-04-12 — Page 13

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THURSDAY, APRIL 12, 1979

+THESE SHOW THE GROWTH RATES OF EXPENDITURE IN REAL TERMS ON CONSOLIDATED ACCOUNT, AND ON CONSOLIDATED ACCOUNT PLUS THE MTR PROJECT TAKEN TOGETHER.

+1 DO NOT THINK IT CAN BE FAIRLY CONCLUDED FROM THESE STATISTICS THAT EXPENDITURE ON THE MTR PROJECT SINCE 1975-76 HAS BEEN SUCH THAT BUDGETARY POLICY HAS BEEN, OR IS BEING, FRUSTRATED, HE SAID.

THE GROWTH RATE OF EXPENDITURE ON CONSOLIDATED ACCOUNT AND THE MTR PROJECT TAKEN TOGETHER IN 1978-79 AT 25 PER CENT WAS ROUGHLY THE SAME AS THE GROWTH RATE OF EXPENDITURE ON CONSOLIDATED ACCOUNT ALONE AND, IN 1979-80, THE RATE WILL BE ACTUALLY LOWER SIX PER CENT WITH THE MTR PROJECT INCLUDED COMPARED WITH 7-1/2 PER CENT WITH THE MTR PROJECT EXCLUDED,

+ IT IS TRUE THAT, IN THE THREE PREVIOUS YEARS, 1975-76 TO 1977-78, THE EFFECT OF INCLUDING EXPENDITURE ON THE MTR PROJECT IS TO INCREASE THE GROWTH RATE QUITE SUBSTANTIALLY BUT, IN THESE YEARS, THE ECONOMY WAS NOT OPERATING AS CLOSE TO FULL CAPACITY AS IT WAS IN 1978-79 AND IS FORECAST TO BE IN 1979-80,

+CONSEQUENTLY, INFLATIONARY PRESSURES AS REFLECTED IN, FOR EXAMPLE, THE RATES OF INCREASE OF PRICES WERE MUCH LESS,+ HE EXPLAINED.

+SO I THINK I CAN FAIRLY CLAIM THAT, MY DEFINITION OF THE PUBLIC SECTOR NOTWITHSTANDING, BUDGETARY POLICY HAS HAD REGARD TO THE LIKELY DEMANDS OF THE PRIVATE SECTOR, INCLUDING THE MTR PROJECT, ON THE RESOURCES AVAILABLE TO THE ECONOMY,+ MR. HADDON- CAVE STRESSED.

ON THE DEFINITION OF PUBLIC SECTOR, MR. HADDON-CAVE SAID EARLIER HE CONFINED IT THIS YEAR, AS HERETOFORE, TO EXPENDITURE SHOWN IN THE CONSOLIDATED ACCOUNT.

OBVIOUSLY, HE EXPLAINED, THE RELATIVE SIZE OF THE PUBLIC SECTOR WILL BE DIFFERENT ACCORDING TO THE PARTICULAR DEFINITION OF PUBLIC SECTOR EXPENDITURE SELECTED.

*FOR THE PURPOSE OF FORMULATING ANNUAL BUDGETARY POLICIES, WE NEED TO ADOPT A PRACTICAL DEFINITION OF PUBLIC SECTOR EXPENDITURE (AND TO APPLY THAT DEFINITION CONSISTENTLY OVER TIME). THUS

Í HAVE DEFINED THE PUBLIC SECTOR FOR THIS PURPOSE IN TERMS OF THE DEPLOYMENT OF FUNDS UNDER THE GOVERNMENT'S CONTROL, HE ADDED.

THE FINANCIAL SECRETARY ALSO SAID BOTH MISS DUNN AND MR. LO, LIKE MANY OTHER COMMENTATORS, MIGHT HAVE OVER-EMPHASISED THE INFLUENCE OF THE CONSTRUCTION PHASE OF THE MTR ON THE COURSE OF THE ECONOMY IN RECENT YEARS.

IN 1978 FOR EXAMPLE, HE SAID, THE MTR EMPLOYED UNDER 11 PER CENT OF THE NUMBER OF MANUAL WORKERS ON BUILDING AND CONSTRUCTION SITES AND LESS THAN 0.5 PER CENT OF THE ECONOMY'S LABOUR FORCE.

тп

/+IT CANNOT