XN000022-1997-03-06 — Page 7

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The next chart is the cumulative growth in government expenditure compared with cumulative growth in GDP since 1986-87. It is a comparison to indicate that in controlling our expenditure, we are able to comply with the principle that the growth rate in government expenditure is similar to that of GDP. We use 86-87 as the starting point because we started our mid-range forecast in 86-87.

The next chart is the analysis of the current public expenditure by policy area group. You will notice that education has the greatest share at 21.2%. Other large sectors include health and social welfare.

The next chart is a similar analysis but it is the analysis of total public expenditure. So apart from recurrent expenditure, capital expenditure is also included. Education still occupies the largest share. Health and social welfare also have a substantial share.

Chart 7 is the recurrent expenditure growth in three policy areas in education, health and social welfare in the year 97-98. Expenditure for education will increase by $3.7 billion, health by $3.1 billion and social welfare by $2.8 billion. Percentage- wise, education will increase by 3.4% in real terms, health by 6.5%, and social welfare by 9.4%.

The final chart shows the recurrent expenditure growth in the same three key policy areas in real terms over the last five years. So you notice that social welfare will grow by 86%, health 49%, and education 30%. So that is my briefing for the time being. I welcome your questions.

Reporter (in Chinese): A question for Mr Kwong. Mr Kwong, at LegCo just now, you mentioned 19 rounds of talks with the Chinese and the expenditure side does not need to be changed. But the Chinese side, Mr Chen Zou'er said that expenditure on social welfare increased too rapidly. Now you say that the expenditure side does not have to be changed. Is it true that the Chinese side has changed their mind after 19 rounds or is it true that the Hong Kong Government itself has adjusted the expenditure?

Mr K C Kwong (in Chinese): Let's look at it this way. In terms of expenditure for social welfare, our objective all along is to allocate money to satisfy the service demand to people in need. In our discussions with the Chinese side at the Expert Group, the Chinese side also appreciated this objective. So when we discussed expenditure for social welfare, we could reach a consensus to support this growth.

Reporter (in English): The 96-97 growth rate was like 13.7%. Now it's like 9.4%. And in your pages 8-9 of the booklet it seems to me that CSSA (inaudible) will be included in the 97-98 but only for those elderly recipients who go to the Mainland. Does it mean that there won't be any (inaudible) (inaudible) growth in 97-98?