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Sir,

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DRAFT SPEECH BY HON LYDIA DUNN, CBE, LLD, JP LEGISLATIVE COUNCIL 27.3.85

Budget Debate 1985

We must all applaud the Government's efforts to rein in the growth of public sector expenditure, which some of us thought was practically out of control in the early 1980s. Nevertheless, though we are past the worst of the recession the growth of the economy in 1985 is forecast by the Financial Secretary to be less than in 1984 and we have not yet achieved

our aim that the growth of public sector expenditure should not

over the years exceed that of GDP. Despite all the creditable

efforts that have been made, the relative size of the public

sector has declined by less than three percentage points since

the peak reached in 1982-83 and it is still higher than it was

before the bulge of 1981-82 to 1983-84 and is forecast to

decline only minimally in the coming year to 16 per cent.

may be compared with the average ratio for the four years

ending 1981-82 of 14.3 per cent.

This

When public sector

These are not just arid figures. growth is too high this means that we are drawing too high a proportion of our resources away from the profitable economic activity on which our economic prosperity and hence our public

revenues depend. We are not back on course yet and it is at

least arguable whether any growth in public sector expenditure

is wise for the time being.

I have been using the "adjusted" figures for

consolidated account expenditure that the Financial Secretary

has provided in the tables appended to the Budget Speech, yet in the 1982 Budget Speech he said that "the definition of

Consolidated Account Expenditure results arguably in too loose

a leash on expenditure by the MTR now and the KCR soon".

would go further than that. The definition produces a

positively misleading figure for public sector expenditure.

I

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