CODE 18-77
Mr David (HKGD K245)
Reference......
36
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M. J.Hp.
HONG KONG : SOCIAL WELFARE REVIEW
1.
Our view of the Governor's telegrams of 12 August (Hong Kong telnos 819 and 820) is that the figures supplied help our side and not his; i.e. they show just how relatively small an addition this is to existing public expenditure.
2.
Putting their proposals into context gives the following table:
YEAR
(HK MILLIONS)
1975-76 1976-77 1977-78 1978-79 1979-80 1980-81
Estimated Budget Surplus
*
431
Actual Budget Surplus
-383
431
+950
-738
-650
-200
+280
Estimated Budget Revenue *
6,184
6,721 8,412
9,300 9,890 10,850
Actual Budget Revenue
6,520
6,291
1
Proposed Extension to
О
120
202
255
Social Services
This as % of Estimated
о
1.3%
2.0%
2.4%
Revenue
Total Social Services as %
Public Expenditure
43.7%
38.9%
38.6%
38.2% 39.8%
40.3%
Public Expenditure as % of **
17.6%
16.4%
17.9% 17.9%
16.8% 16.2%
GDP
Notes: *
As estimated in the Budget the year before, or, for '78 onwards, at this (March '77) budget.
** From '77 onwards these figures are, of course, estimates we have made
the simplest possible assumptions about Hong Kong's GDP, measuring it in current prices and assuming an average annual real growth rate of 8.4% pa.
3. The proposed extension to the Social Serves is a relatively insignficant increase in government expenditure at no time does it amount to more than 21% of estimated revenue for that year. Further, given the past tendency to underestimate budget surpluses, the proposed budget deficits of 1977-78787&nd '79-'80 could well in fact turn out to be surpluses, when there would be little chance of Hong Kong's finances being stretched to the limited by these proposals. There would therefore appear to be little justification for describing the scheme as "a considerable addition to expenditure" when looked at in an overall public expenditure context.
24 August 1977
Mark Hull
Mark Hull
Economists Department G 71B/g
4106
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