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Transcript of Secretary for Treasury's press conference

Following is the transcript of the press conference on Draft Estimates 1997-98 held by the Secretary for the Treasury, Mr K C Kwong, today (Thursday):

Thank you very much for attending this press conference. May I introduce to you the speakers of the press conference. Mr K C Kwong, Secretary for the Treasury and his two deputies, Mr Kevin Ho and Mrs Carrie Lam, and also the Principal Assistant Secretary for the Treasury, Mr Cookson. After the photo-taking session I will ask Mr Kwong to speak to you.

Mr Kwong: I am happy to introduce to you our 1997-98 Draft Estimates of Expenditure. Today, we will publish the sets of Draft Estimates of Expenditure. Tomorrow, the Appropriation Bill will be gazetted. On next Wednesday, March 12, the Financial Secretary, Mr Donald Tsang, will introduce his Budget to the LegCo, including the income side of the Budget.

This is a unique Budget. It covers the whole year of 1997-98 and covers the transition on July 1, 1997. Through the Expert Group of the JLG, we have had consultations for a long time on the Budget. After 19 rounds of meetings we came to a consensus. The Draft Estimates of Expenditure, we are publishing, therefore, cover a total of 12 months from April 1, 1997 to March 30, 1998. The Draft Estimates of Expenditure are for the provision of continuation of existing services as well as improvements to services and new services. I will highlight the important points on the expenditure side by way of the charts and then I will answer your questions.

Chart 2 is the overview, as I said. The Draft Estimates provide funds for continuation of existing services and for improvements to services. In considering improvements to services we have widely consulted the general public, including members of LegCo. Another consideration is the need to observe the budgetary principle that the government expenditure, over a period of time, should not exceed the trend growth rate of our economy. The trend growth rate is estimated to be 5% per

annum.

Chart 3 indicates the relationship between government and public expenditure. Government expenditure is on the left-hand side of the chart. For the year 97-98, government expenditure has exceeded $200 billion for the first time. There are also expenditures in the realm of public expenditure, including trading funds, Lotteries Fund, Housing Authority and two Municipal Councils. Public expenditure will reach $248 billion, or about 18.3% of GDP. That is roughly the same as in previous few

years.