ENG-1999 — Page 94

THE ECONOMY

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The draft estimates of expenditure on the General Revenue Account are presented by the Financial Secretary to the legislature when he delivers his annual budget speech. In the Appropriation Bill introduced to the legislature at the same time, the administration seeks appropriation of the total estimated expenditure on the General Revenue Account. The estimates of expenditure contain details of the estimated recurrent and capital expenditure of all government departments, including estimates of payments to be made to subvented organisations and estimates of transfers to be made to the statutory funds.

The Government's consolidated account recorded a deficit of $23.2 billion in 1998–99. The accumulated balances at the end of 1998-99 stood at $434.3 billion. These balances form the Government's fiscal reserves and are available to meet any calls on its contingent liabilities and enable it to cope with any short-term fluctuations in expenditure relative to revenue.

The two provisional municipal councils, which operated through the Urban Services Department and Regional Services Department, were financially autonomous. They drew up their own budgets and expenditure priorities. The expenditures of the two councils were financed mainly from a fixed percentage of the rates from property in their respective areas. Additional income was derived from fees and charges for the services the councils provided.

The Housing Authority, operating through the Housing Department, is also financially autonomous. The Government provides the authority with capital and land on concessionary terms to build public housing for rent and for sale. Part of the authority's recurrent expenditure, for clearances and squatter control, is financed from the General Revenue Account.

A trading fund is a department or part of one providing services on a commercial or quasi-commercial basis through the operation of a separate accounting system. Unlike a vote-funded department, trading funds are allowed to retain revenue generated to meet expenditure in providing the services and to finance future expansion.

Government Supplies Department

Purchases of goods and related services required by government departments are undertaken centrally by the Government Supplies Department, which provides similar services to certain non-government organisations, such as the Hospital Authority and the Vocational Training Council. These goods and related services are normally obtained by competitive tendering, without giving preference to any particular source of supply, to ensure that users' needs are met at the best possible price, having regard to life-time cost and reliability of supply. Helping users to derive the best value in their purchases, the department formulates a specific strategy for each type of purchase based on market conditions, focusing on meeting requirements for high-value and critical items by cost-effective and reliable means.

Public tender procedures are widely used for general and common items. As a means to save administrative costs, invitations to tender or quote for low value purchases are normally confined to registered suppliers. Restricted or single tender procedures are used where open competitive tendering would not be an effective means such as in cases involving compatibility with existing equipment, or patented/proprietary items, or unforeseen urgency. For complex and critical