XN000022-1992-06-24 — Page 3

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WEDNESDAY, JUNE 24, 1992

GOVT ESTIMATES EXPLAINED

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THE SECRETARY FOR WORKS AND THE SECRETARY FOR THE TREASURY LOOKING AT WAYS TO ENABLE EARLY IDENTIFICATION OF POSSIBLE DEVIATIONS FROM THE ESTIMATES OF RECURRENT IMPROVEMENT, THE ACTING FINANCIAL SECRETARY, MR DAVID NENDICK, SAID TODAY (WEDNESDAY).

MR NENDICK SAID THIS WOULD ENABLE THE GOVERNMENT TO DIRECT SUMS LIKELY TO REMAIN UNSPENT IN A FINANCIAL YEAR TO OTHER PROJECTS.

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IN A WRITTEN REPLY TO A QUESTION BY THE HON TAM YIU-CHUNG LEGISLATIVE COUNCIL, HE SAID THE DIRECTORS OF THE WORKS GROUP DEPARTMENTS HAD BEEN ASKED TO REVIEW THEIR DEPARTMENTS' MANPOWER RESOURCES AND AVAILABILITY OF SITES MORE CAREFULLY.

HE SAID THE GOVERNMENT WAS CONSIDERING TO REQUIRE QUARTERLY BREAKDOWNS OF EXPENDITURE FROM THE WORKS GROUP OF DEPARTMENTS SO THAT ACTUAL SPENDING PATTERNS COULD BE MORE CLOSELY MONITORED AND REVIEW GAZETTING PROCEDURES TO IMPROVE THE ACCURACY OF THE ESTIMATED START DATES OF NEW PROJECTS.

HE SAID RECURRENT EXPENDITURE WAS RELATIVELY EASY TO PREDICT, AND THE VARIATION IN 1991-92 BETWEEN THE ACTUAL OPERATING EXPENDITURE AND THE REVISED ESTIMATE WAS LESS THAN 1%.

ESTIMATES OF REVENUE, HOWEVER, INVOLVE JUDGEMENTS ABOUT THE STATE OF THE ECONOMIES OF HONG KONG'S MAJOR TRADING PARTNERS, AS WELL AS BUSINESS CONFIDENCE, INVESTMENT, INTEREST RATE MOVEMENTS AND INFLATION WITHIN THE ECONOMY.

HE SAID APPLYING ECONOMIC FORECASTS ΤΟ REVENUE PROJECTIONS BASED ON PAST TRENDS CLEARLY INVOLVED A SIGNIFICANT DEGREE OF SUBJECTIVE JUDGEMENT.

MR NENDICK SAID AGAINST THIS BACKGROUND, THE GOVERNMENT'S ESTIMATES SYSTEM HAD WORKED WELL IN RECENT YEARS.

SINCE 1988-89, THE AMOUNT OF REVENUE ACTUALLY RECEIVED

IN A PARTICULAR YEAR HAS VARIED BETWEEN 0.5% BELOW THE REVISED ESTIMATE (IN 1990-91) TO ABOUT 2.5% ABOVE IT IN 1991-92).

HE EXPLAINED THAT MOST OF THE VARIATIONS IN RESPECT OF THE LAST FINANCIAL YEAR WAS DUE TO CERTAIN SPECIFIC FACTORS.

A RESURGENCE IN THE STOCK MARKET AND A GREATLY INCREASED LEVEL OF STAMPING OF PROPERTY DOCUMENTS IN MARCH 1991, FOR EXAMPLE, PUSHED STAMP DUTY RECEIPTS UP BY ABOUT $700 MILLION.

"THIS COULD NOT REASONABLY HAVE BEEN ANTICIPATED,

T

HE SAID.

SIMILARLY, THE INCREASE IN REVENUE RECEIVED FROM PROFITS TAX OVER THE REVISED ESTIMATE, THOUGH SMALL IN PERCENTAGE TERMS, AMOUNTED TO SOME $400 MILLION, THE LARGER PART OF WHICH AROSE FROM AN UNANTICIPATED DECREASE IN THE NUMBER OF CLAIMS FOR TAX HOLD-OVER.

/THE VARIATION