XN000022-1979-04-12 — Page 18

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THURSDAY, APRIL 12, 1979

EXPLAINING THE DECISION-MAKING PROCESS FOR BUDGETARY POLICY, MR. HADDON-CAVE SAID THERE WAS THE REALITY OF ALL THE CROSS- PRESSURES TO WHICH CIVIL SERVANTS ARE SUBJECT, AND THERE WAS THE VIRTUAL ABSENCE OF THAT MECHANISTIC INSTRUMENT OF DISCIPLINE - THE PROFIT AND LOSS ACCOUNT -- WHICH MADE THE DECISION-MAKING PROCESS

IN THE PRIVATE SECTOR MUCH SIMPLER.

+THUS OUR THINKING HAS TO BE SUBJECTED TO THE DISCIPLINE OF CERTAIN GUIDELINES. BUT THE APPLICATION OF THESE GUIDELINES HAS TO BE PRAGMATIC WHICH IS NOT THE SAME THING AS MR. LO'S 'LIP SERVICE, SO THE DECISION-MAKING PROCESS, BEING AN ARGUMENTATIVE PROCESS, OFTEN LEADS TO RESULTS WHICH DO NOT CONFORM EXACTLY WITH OUR GUIDELINES,+ MR. HADDON-CAVE POINTED OUT.

HE ADDED THAT THE RECORD DOCUMENTED IN HIS RECENT BUDGET SPEECH INDICATED THAT THE DEGREE OF NON-CONFORMITY HAD BEEN, USUALLY, ONLY MARGINAL.

THE FINANCIAL SECRETARY ALSO REPLIED TO CRITICISMS OF HIS BUDGETARY POLICY BY THE SENIOR UNOFFICIAL MEMBER, THE HON. OSWALD CHEUNG.

MR. HADDON-CAVE SAID MR. CHEUNG HAD IGNORED THE DISTINCTION BETWEEN PROGRAMME PLANS AND POLICY TARGETS, ON THE ONE HAND, AND ANNUAL RATES OF IMPLEMENTATION WHICH MUST HAVE REGARD TO PREVAILING FINANCIAL AND/OR ECONOMIC CIRCUMSTANCES, ON THE OTHER.

MR. CHEUNG HAD REFUSED TO SUPPORT THE BUDGET BECAUSE OF ITS INCONSISTENCY WITH THE GOVERNMENT'S POLICY OF COMMITMENT TO PUBLIC PROJECTS.

MR. HADDON-CAVE POINTED OUT THAT THE FACT IS, OURS IS AN OVER-EMPLOYED ECONOMY AND, IF WE ARE TO AVOID REALLY PAINFUL ADJUSTMENTS LATER ON TO RESTORE INTERNAL AND EXTERNAL EQUILIBRIUM, WE MUST CHANGE DOWN INTO A LOWER GEAR, THAT IS TO SAY, SLOW DOWN THE GROWTH RATE OF TOTAL FINAL DEMAND.+

HE EMPHASISED: +THE GROWTH RATE OF PUBLIC EXPENDITURE MUST

BE ADJUSTED DOWNWARDS AS A CONTRIBUTION TO THIS END.+

+MR. CHEUNG REFERS TO 'SAVAGE CUTS' AND MY 'ARID' APPROACH IN 'KNIFING THE PUBLIC WORKS PROGRAMME? WITH THE OBJECT, PRESUME, OF DISCREDITING THE EMPHASIS OF BUDGETARY POLICY THIS YEAR. WERE THE GOVERNMENT TO SIT BACK AND DISREGARD CHANGING ECONOMIC CIRCUMSTANCES, DESPITE THE VIEWS OF HIS COLLEAGUES, THE PAINFUL ADJUSTMENTS TO BE SUBSEQUENTLY ENDURED WOULD GIVE HIM EVEN GREATER SCOPE FOR DISPLAYING HIS CONSIDERABLE POWERS OF DESTRUCTIVE RHETORIC,+ MR. HADDON-CAVE SAID.

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