XN000022-1986-02-26 — Page 42

27

WEDNESDAY, FEBRUARY 26, 1986

+1 MUST EMPHASISE THAT WE PRODUCE THIS FORECAST NOT BECAUSE ANYBODY SERIOUSLY BELIEVES THAT FUTURE FINANCIAL PERFORMANCE IN HONG KONG'S CIRCUMSTANCES CAN BE PRECISELY ANTICIPATED, BUT TO ENSURE THAT BEFORE IMPORTANT DECISIONS ARE TAKEN, WE HAVE A FIRM EYE ON THEIR POSSIBLE LONGER-TERM IMPACT,+ SIR JOHN SAID.

SIR JOHN SAID THAT AS PROMISED IN HIS BUDGET SPEECH LAST YEAR, THE FORECAST ALSO EMBODIED A REVIEW OF THE FORMER BUDGETARY GUIDELINES. THESE HAD NOW EFFECTIVELY BEEN REPLACED BY EIGHT KEY ASSUMPTIONS.

+TWO ARE BASIC ECONOMIC ASSUMPTIONS HAVING A SIGNIFICANT

THEY ARE THE AVERAGE ANNUAL EFFECT ON GOVERNMENT FINANCES GROWTH IN GDP AND THE AVERAGE RATE OF INFLATION AS IT AFFECTS

THEY WE HAVE TAKEN 4.5 PER CENT FOR BOTH. PUBLIC SECTOR COSTS. CAN BE CHANGED ON REGULAR UPDATE IF NECESSARY, SIR JOHN SAID.

HE SAID THE REMAINING SIX ASSUMPTIONS WERE SPECIFIC TO GOVERNMENT FINANCES AND WERE THUS ARGUABLY SUBJECT TO DIRECT CONTROL. THEY COVERED TOTAL NET CASH FLOW, TOTAL EXPENDITURE GROWTH, CAPITAL EXPENDITURE GROWTH, TAXATION POLICY, THE RELATIONSHIP BETWEEN RECURRENT REVENUE AND EXPENDITURE, AND THE SIZE OF THE CIVIL SERVICE.

MTRC, KCRC FINANCES STILL SEPARATE *****

THE GOVERNMENT HAD DECIDED NOT TO INCORPORATE THE FINANCES OF THE MASS TRANSIT RAILWAY CORPORATION AND THE KOWLOON-CANTON RAILWAY CORPORATION IN PUBLIC SECTOR EXPENDITURE, THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, SAID.

THE ARGUMENT FOR THE INCLUSION OF MTRC AND KCRC FINANCES IN PUBLIC SECTOR EXPENDITURE WAS A RESPONSIBLE AND REASONED ONE WHICH HAD REQUIRED MUCH THOUGHT, HE SAID.

+THE GOVERNMENT'S VIEW HOWEVER HAS NOT CHANGED THAT, GIVEN FULL PUBLIC KNOWLEDGE OF ALL THE FIGURES, THERE IS GREATER MERIT IN LIMITING THE DEFINITION OF CONSOLIDATED EXPENDITURE TO THAT VOTED FROM PUBLIC FUNDS,+ HE SAID.

THE GOVERNMENT'S MEDIUM-RANGE FORECAST IDENTIFIED ALL EQUITY INJECTIONS INTO THE MTRC, BUT DID NOT INCLUDE THE DAY-TO-DAY OPERATING EXPENDITURE AND REVENUE OF THE MTRC.

+TO INCLUDE THESE WOULD, I SUGGEST, BE MISLEADING, SINCE THE WHOLE CONCEPT OF THE MTRC AS AN AUTONOMOUS CORPORATION SETS IT CLEARLY IN THE PRIVATE SECTOR AS A COMPETING TRANSPORT MODE,+ SIR JOHN SAID.

/+ANYWAY, WE