XN000022-1997-03-06 — Page 8

7-

Mr KC Kwong (in English): I think we have to take into account that from April 1, 1996 we introduced a package of improvements to CSSA payments. That package of improvements was made on the basis of a year long household survey done in 1995 and it cost us something like $500 million. So we have to consider in 97-98, when we increase expenditure and social welfare, which would be the priority areas. And if you look at the list of improvements set out in the introduction to the estimates you can in fact see that there is a comprehensive list of improvements covering services for the elderly, for children and for various groups who are at risk.

Reporter (in English): Mr Kwong, I am sure you discussed your Budget with Mr Tung Chee Hwa because your Budget is over 1997 and 1998. So what did Mr Tung Chee Hwa comment on your Budget?

Mr K C Kwong (in English): We have indeed briefed Mr Tung on the preparation of the Budget but I think you would accept that I would not let you have the detailed exchanges that we had with individuals.

Reporter (in English): I would like to ask you about the land premium figures. I note that the revised estimate for the current year has gone up to almost $60 billion. I would like to ask you why there has been such a rapid, by my calculation, 40% increase in land premium figures? Secondly, why there is going to be a similar 43% decrease projected for the coming financial year? And thirdly, given the windfall, if you like, why you could not be more generous on the expenditure side?

Mr K C Kwong (in English): Can you refer specifically to which figure in the published accounts for the funds?

Reporter (in English): I am referring to page 136 in the English language version, revenue analysis of the second half of that particular page: revised estimate for 96-97 of $59.841 billion, revised estimate for 97-98 of $34.477 billion.

Mr KC Kwong (in English): The main reason for the much higher revised estimate in 1996-97 is the buoyancy of the property market. In the last few months of 1996 and in the first couple of months in 1997 we see a certain keenness among property developers in agreeing premium assessments by the Lands Department. And in some of the cases, especially concerning modifications of leases, we have had exceptionally high premiums agreed, and that is the main reason for the rather higher figure of $59.8 billion in 96-97. It is not really realistic to try to compare land revenue between two consecutive years. The main reason is that land revenue is a capital revenue. It depends very much on the size, location, property market situation, etc, and therefore even if you are selling about the same amount of land in a year compared to the year before, you might get very different premia as a result.