XN000022-1985-02-27 — Page 3

WEDNESDAY, FEBRUARY 27, 1985

1

SIR JOHN AIMS FOR BALANCED BUDGET

****

THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE, TOLD THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY) THAT HE HOPED TO PRESENT A BALANCED BUDGET IN FEBRUARY NEXT YEAR (1986-87).

+IN 1982-83 THE DEFICIT WAS $3.5 BILLION (AND WE WERE FORTUNATE THAT IT WAS NOT GREATER). IN 1983-84 IT WAS $3 BILLION,+ SAID SIR JOHN.

+FOR THIS FINANCIAL YEAR 1984-85 IT WILL BE ABOUT

$1.8 BILLION - CONSERVATIVELY EXCLUDING THE SUCCESSFUL $1 BILLION BOND ISSUE. IF MY VARIOUS PROPOSALS ARE ACCEPTED BY THIS COUNCIL, THE PLANNED DEFICIT FOR 1985-86 SHOULD BE ABOUT $1 BILLION. IT COULD BE LESS.

+ONLY A FOOL WOULD MAKE PROMISES, BUT I HOPE TO PRESENT TO THIS COUNCIL IN FEBRUARY 1986 A BALANCED BUDGET FOR 1986-87. THIS IS MY PRESENT INTENTION,→

SIR JOHN FORECAST INFLATION OF ABOUT 5.5 PER CENT FOR 1985 AS COMPARED WITH 8.1 PER CENT FOR 1984, REAL GDP GROWTH IN 1984 WAS A REMARKABLE 9.6 PER CENT WHILE THERE HAD BEEN EFFECTIVE FULL EMPLOYMENT. HE FORECAST A GROWTH IN GDP OF ABOUT SEVEN PER CENT IN 1985. HIS BUDGET PROPOSALS WHICH DO NOT INCLUDE INCREASES IN DIRECT TAXATION WOULD RAISE REVENUE BY $1.35 BILLION BUT CUTS IN PERSONAL TAXES FOR THE MORE DESERVING WILL COST $150 MILLION NEXT YEAR AND $210 MILLION IN A FULL YEAR.

+THE NET ADDITIONAL REVENUE TO BE RAISED WILL THUS BE $1.2 BILLION. THE COMPARABLE FIGURE LAST YEAR IN MONEY TERMS WAS $1.5 BILLION. IN THE PREVIOUS YEAR IT WAS $3 BILLION. THE TREND IS CLEAR, SAID SIR JOHN.

REVIEWING RECENT EXPERIENCE, HE SAID THAT THE LAST YEAR WITH A BUDGET SURPLUS WAS 1981-82. IN THAT YEAR LAND SALES REVENUE WAS $8.9 BILLION ITSELF $1.8 BILLION LESS THAN IN THE PREVIOUS YEAR. ONLY FOUR YEARS LATER IN 1985-86 LAND SALES REVENUE IS UNLIKELY TO EXCEED $1.7 BILLION, WHICH MAY ESTABLISH A TREND FOR FUTURE YEARS.

WORLD RECESSION AND THE UNCERTAINTY OVER HONG KONG'S FUTURE MEANT THAT IT WAS NOT SURPRISING THAT SINCE 1981-82 MAJOR BUDGETARY ADJUSTMENT HAS BEEN NECESSARY. THE GOVERNMENT HAS REMAINED STEADILY AND VISIBLY ON COURSE TOWARDS A RETURN TO BALANCED BUDGETS WITHOUT RESORT TO STOP AND GO TACTICS. WE HAVE ALSO MAINTAINED AND EVEN STRENGTHENED MAJOR PROGRAMMES,

HE SAID.

THE LINKING OF THE HONG KONG DOLLAR TO THE US DOLLAR HAS RESULTED IN A STABLE CURRENCY WITH BUILT-IN CONTROL OF THE MONEY SUPPLY. THERE HAS BEEN A RAPID DROP FROM 12.4 PER CENT TO 4.6 PER CENT IN CONSUMER PRICE INFLATION,

/+THIS IS