XN000022-1991-11-06 — Page 21

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WEDNESDAY, NOVEMBER 6, 1991

IN THE SECOND HALF OF THE 1980'S, THE AVERAGE ANNUAL GROWTH RATE OF GDP WAS 7.8 PER CENT. THIS SLOWED DOWN TO 2.7 PER CENT IN 1989 AND 2.8 PER CENT LAST YEAR.

IN CONTRAST, MR MACLEOD SAID, THE SHARE OF PUBLIC SECTOR SPENDING IN GDP INCREASED RATHER RAPIDLY, FROM 14.5 PER CENT IN 1987- 88 TO 17.4 PER CENT IN 1990-91.

FOR THIS FINANCIAL YEAR, THE SHARE WAS LIKELY TO RISE EVEN FURTHER, TO 19 PER CENT.

"PLAINLY GOVERNMENT SPENDING HAS TO BE BROUGHT INTO LINE LOWER GDP GROWTH PROSPECTS, HE SAID.

**

IN CURRENT CIRCUMSTANCES, THE FINANCIAL SECRETARY PARTICULARLY WITH HIGH INFLATION, IT WAS ALL THE MORE IMPORTANT THE GOVERNMENT 'REIN IN PUBLIC EXPENDITURE.

WITH

SAID,

THAT

BUT HE SAID REPORTS ABOUT "CUTBACKS" IN RECURRENT EXPENDITURE MIGHT HAVE CAUSED UNNECESSARY ALARM.

"IN OVERALL TERMS, WE ARE ACTUALLY PLANNING FOR A SIGNIFICANT REAL INCREASE IN EXPENDITURE. WHY THE CONFUSION?" HE ASKED.

HE SAID THE MISUNDERSTANDING MIGHT ARISE FROM THE WHILE SPENDING MORE EVERY YEAR, THE GOVERNMENT STILL GREATER EFFICIENCY IN GOVERNMENT SPENDING.

FACT THAT, LOOKED FOR

"WE MUST BRING PRESSURE TO BEAR ON DEPARTMENTS TO USE THEIR FUNDING MORE EFFICIENTLY, TO FIND WAYS TO CUT COSTS," HE SAID.

SOME OF THESE SAVINGS WERE THEN PLOUGHED BACK INTO THE EXISTING PROGRAMMES; INTO THE EXPANSION OF SERVICES TO WHICH THE GOVERNMENT HAD NEW CONTINUING COMMITMENT BECAUSE OF PAST POLICY DECISIONS; AND TO SERVICES.

THESE ECONOMIES, TOGETHER WITH THE REAL INCREASE IN RECURRENT SPENDING THAT THE GOVERNMENT WAS PLANNING FOR, FUNDED A CONSIDERABLE PACKAGE OF MEASURES TO MEET THE COMMUNITY'S RISING ASPIRATIONS. INCLUDED:

NEW FIRSTLY,

THESE

POLICY INITIATIVES THAT THE GOVERNMENT HAD ANNOUNCED IN RECENT YEARS. THESE INCLUDED THE EXPANSION OF TERTIARY

BETTER STANDARDS OF SCHOOLING GENERALLY, EDUCATION,

THE AND

PHASED IMPLEMENTATION OF THE ENVIRONMENTAL WHITE PAPER AND THE WHITE PAPER ON

SOCIAL WELFARE.

SECONDLY, EXCEPTIONALLY LARGE SPENDING COMMITMENTS REPRESENTED BY THE HOSPITAL AUTHORITY'S TAKEOVER OF GOVERNMENT AND SUBVENTED HOSPITALS.

THIRDLY,

ADDITIONAL AND UNAVOIDABLE SPENDING COMMITMENTS SUCH

AS INCREASED PURCHASES OF WATER FROM CHINA.

FOURTHLY, THE START UP OF NEW SCHOOLS, CLINICS AND HOSPITALS.

MR MACLEOD SAID THE LIKELY IMPACT OF BUDGETARY RESTRAINT ON THE SOCIAL SERVICES HAD ALSO BEEN THE SUBJECT OF SOME CONFUSION.

/HE SAID