XN000022-1990-03-07 — Page 25

WEDNESDAY, MARCH 7, 1990

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"THE PROPORTION OF GDP REPRESE) TED BY CONSOLIDATED PUBLIC SECTOR EXPENDITURE WILL AVERAGE 19 PER CENT COMPARED WITH AN AVERAGE OVER THE LAST FOUR YEARS OF 15.5 PER CENT.

OF

"IN THE LIGHT OF THE SLOW-DOWN IN THE ECONOMY AND THE LEVEL EXPENDITURE ΤΟ WHICH WE ARE NOW COMMITTED, THIS IS REGRETTABLY UNAVOIDABLE," HE SAID, NOTING ALSO THAT THE MEDIUM RANGE FORECAST SHOWED AN AVERAGE ANNUAL GROWTH RATE FOR RECURRENT EXPENDITURE OF SEVEN PER CENT.

THE FINANCIAL SECRETARY SAID THE CIVIL SERVICE ACCOUNTED FOR A HIGH PROPORTION OF RECURRENT EXPENDITURE AND A SPECIAL EXERCISE HAD BEEN CONDUCTED TO REVIEW STAFF ESTABLISHMENTS AND TO CONTROL GROWTH IN THE SIZE OF THE SERVICE.

"BY

REDUCING ESTABLISHMENT LEVELS IN THE CURRENT YEAR WE HAVE ACHIEVED NIL GROWTH. I AM GRATEFUL FOR THE EFFORTS MADE BY BRANCH SECRETARIES AND HEADS OF DEPARTMENTS IN THIS EXERCISE.

"AS MOST OF THE POSTS DELETED WERE UNFILLED, WHAT WE HAVE DONE DOES NOT REDUCE CURRENT LEVELS OF EXPENDITURE, BUT IT DOES REDUCE THE SCOPE FOR FUTURE GROWTH, AND SETS A NEW, LOWER BASE. IT IS FROM THIS NEW, LOWER BASE THAT DEPARTMENTS WILL HAVE TO JUSTIFY ANY ADDITIONAL POSTS.

"IT IS INEVITABLE THAT NEW COMMITMENTS WILL REQUIRE MORE POSTS, BUT IN 1990-91 WE AIM TO LIMIT GROWTH IN ESTABLISHMENT TO 2.5 PER CENT, AND POSTS WILL BE CREATED ONLY IF THERE IS A CLEAR NEED AND A DEFINITE PROSPECT OF FILLING THEM.

"GIVEN THAT WE HAVE ACHIEVED NIL GROWTH IN 1989-90, THIS THAT THE GROWTH IN ESTABLISHMENT OVER THE TWO YEARS IN QUESTION AVERAGE ONLY 1.25 PER CENT. A USEFUL START," HE SAID.

MEANS WILL

TURNING TO REVENUE, IN ESSENCE, AND USING THE MEDIUM RANGE FORECAST, SIR PIERS SAID HIS STRATEGY WAS THAT ENOUGH SHOULD BE RAISED TO MEET GOVERNMENT EXPENDITURE AND TO MAINTAIN ADEQUATE RESERVES.

"AS I HAVE SAID MANY TIMES BEFORE, OUR REVENUE BASE IS TOO NARROW AND TOO VULNERABLE TO ECONOMIC CHANGE: REVENUE FROM DIRECT TAXES, THAT IS SALARIES TAX, PROFITS TAX AND ESTATE DUTY, REPRESENTED 50 PER CENT OF TOTAL REVENUE FROM DIRECT AND INDIRECT TAXES IN 1985- 86.

TO

"IN 1989-90, IT HAD RISEN TO 63 PER CENT AND IT IS EXPECTED BE 65 PER CENT IN 1990-91. WE MUST NOW TAKE STEPS TO REVERSE THIS TREND, HE SAID.

TT

SIR

PIERS SAID THE GOVERNMENT MUST ALSO MAINTAIN THE VALUE OF REVENUE FROM OTHER SOURCES, IN PARTICULAR THE CHARGES MADE FOR SERVICES PROVIDED.

**THE LEVEL OF FEES AND CHARGES IS BASED ON THE PRINCIPLE THEY COVER THE COST OF THE SERVICE BEING PROVIDED UNLESS WE CONSCIOUSLY DECIDED TO RECOVER LESS THAN THE FULL COST, OR UNLESS FEE OR CHARGE IN QUESTION IS TAX-LOADED. THUS, FEES AND CHARGES REVIEWED REGULARLY," HE POINTED OUT.

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