XN000022-1992-10-09 — Page 4

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FRIDAY, OCIOBER 9,

1992

THE FIRST IS THAT NOTHING I ANNOUNCED ON WEDNESDAY WILL REDUCE THE FORECAST LEVEL OF RESERVES FOR 1997 THAT WE'VE ANNOUNCED. I INTEND, AS I SAID TO THE LEGISLATIVE COUNCIL YESTERDAY, TO TO RUN HONG KONG'S FINANCES ON THE BASIS OF A PRUDENT AND

CONTINUE SUBSTANTIAL LEVEL OF RESERVES. THAT, I BELIEVE, IS VERY IMPORTANT IN HONG KONG'S CIRCUMSTANCES AND I'M NOT GOING TO LET ANYBODY PERSUADE ME TO

ON THAT

OUR ELBOW-ROOM

FRONT.

WHY WAS I

REDUCE

SAY,

ABLE TO ANNOUNCE BIG INCREASES SPENDING PROGRAMMES?

IN SOME FIRST OF ALL BECAUSE OF HONG KONG'S GROWTH RATE, THOUGH WHAT I HAVE MADE CLEAR ONCE AGAIN IS THAT ANY PUBLIC

INCREASE IN SPENDING MUST STAY BEHIND RATHER THAN OUTPACE THE GROWTH IN OUR ECONOMIC PERFORMANCE.

RATE OF WE'RE NOT GOING TO MAKE THE MISTAKE

SAME THAT OTHER COMMUNITIES HAVE MADE AND SPEND MONEY THAT WE HAVEN'T EARNED. BUT THIS YEAR WE FIND OURSELVES IN AN EXTREMELY ADVANTAGEOUS POSITION, WE FIND OURSELVES, I'M PLEASED TO REVENUES WHICH ARE MORE BOUYANT THAN WERE EXPECTED AT THE BEGINNING OF THE YEAR. WE WERE PREDICTING EARLIER THIS YEAR THAT WE WOULD SURPLUS AT THE END OF THE YEAR OF SEVEN-AND-A-HALF BILLION. BROUGHT FIGURES SHORTLY AFTER I BECAME GOVERNOR, WHICH SHOWED THANKS TO THE BUOYANCY OF OUR REVENUES ABOVE ALL, WE WERE LIKELY SEE NOT A SURPLUS AT THE END OF THE YEAR OF SEVEN-AND-A-HALF BUT A SURPLUS AT THE END OF THE YEAR OF THIRTEEN-AND-A-HALF AND RISING.

WITH

HAVE A

I

WAS

THAT

TO

BILLION,

BILLION

NOW PRUDENT AS I AM, IT DIDN'T SEEM TO ME THAT WE NEEDED A SURPLUS OF THAT SIZE WHEN THERE WERE SO MANY THINGS WHICH THE COMMUNITY WANTED TO DO. WHAT WOULD HAVE BEEN EXTRAVAGANT, JUDGMENT,

IN MY WOULD HAVE BEEN TO FRITTER THAT ADDITIONAL 6 WINDFALL

BILLION AWAY IN ADDITIONAL SPENDING THIS YEAR, AND WHAT WE HAVE CHOSEN TO DO IS IN EFFECT TO CAPITALISE THAT WINDFALL, USING 3 BILLION TO GIVE A KICK-START TO OUR SEWAGE STRATEGY COME TO THINK OF IT, THINK ONE COULD FIND BETTER WORDS; I FOUND MYSELF THE OTHER TALKING ABOUT "GETTING SEWAGE OF THE GROUND" MEAN.

חד

I

-

DAY ANYWAY, YOU KNOW WHAT I

IN

SECONDLY, TO PUT 2.3 BILLION THROUGH THE LOTTERIES FUND ΤΟ MEET SOME OF OUR SOCIAL WELFARE OBLIGATIONS AND TARGETS, ADDITION, AS I THINK YOU KNOW, WE'VE SPENT 300 MILLION ON RE-TRAINING, WHICH I BELIEVE IS CRUCIAL TO HONG KONG'S FUTURE SUCCESS AND CRUCIAL TO SOME OF OUR LABOUR MARKET PROBLEMS. SO THE SECOND POINT I WANTED TO MAKE IS, WE REMAIN COMMITTED TO PRUDENT CONTROL OF PUBLIC FUNDS.

THIRDLY, INFLATION. WE ALL KNOW THAT BECAUSE OF THE NECESSARY, CONTINUING, NOT TO BE CHANGED IN ANY CIRCUMSTANCES BETWEEN

-

LINK

I JUST WANT ΤΟ GET

-

THAT

BECAUSE MONETARY

THE HONG KONG DOLLAR AND THE US DOLLAR THAT ON THE RECORD IN CASE THERE ARE ANY BROKERS HERE OF THAT THERE ARE LIMITS TO THE EXTENT TO WHICH WE CAN USE POLICY. THOUGH LET'S REMEMBER WHAT USING MONETARY POLICY TO CONTROL INFLATION ACTUALLY MEANS. IT DOES HAVE SOME CONSEQUENCES, YOU'LL ALL RECALL, FOR LEVELS OF ECONOMIC GROWTH AND LEVELS OF EMPLOYMENT. BUT THERE ARE CONSTRAINTS ON US, SO WE FIND OURSELVES COPING WITH INFLATION WHICH IS LARGELY A STRUCTURAL CONSEQUENCE

OF AN ECONOMY WHICH IS EXPANDING VERY RAPIDLY, WITH LABOUR CONSTRAINTS AND LAND CONSTRAINTS. IT PUTS THE ONUS ON US TO WORK EVEN HARDER, IN GOVERNMENT AND OUTSIDE GOVERNMENT, TO USE OUR RESOURCES AS EFFICIENTLY AS POSSIBLE.

/THANK HEAVENS