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The main features of the 2001-02 budget include: -
HONG KONG ECONOMY
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* GDP grew by 10.5% in real terms in 2000
* The decline in consumer prices gradually abating from -5.3% in January 2000 to -1.8% in December 2000
* GDP expected to grow by 4% in real terms in 2001
* Following a gradual rise in consumer prices in 2001, zero inflation expected for 2001
* Trend GDP growth of 4% a year in real terms for 2001-04. GDP deflator of 2.5% a year expected for the same period
FINANCIAL POSITION
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* Outturn for 2000-01 shows an increase in estimated deficit from $6.2 billion to $11.4 billion
* Overall deficit of $3 billion forecast for 2001-02
* Overall balanced budgets for 2001-05
* 2000-01 outturn shows an operating deficit of $19.2 billion; 2001-02 Estimates forecast an operating deficit of $16.6 billion
* Successive operating deficits from 1998-99 to 2004-05 remain a concern
* Fiscal reserves expected to stand at $432.9 billion at the end of 2000-01, falling to $429.9 billion at the end of 2001-02
* Fiscal revenues forecast to drop to $427.5 billion at the end of the medium term, very close to the lower end of guidelines
BUDGET STRATEGY
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* Maintain steady economic growth and ensure improvement in people's livelihood
* Devote more resources to address the needs of the community
* Enhance public sector productivity
* Strive to achieve fiscal balance
NEW EXPENDITURE INITIATIVES
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* Government expenditure will amount to $252.7 billion in 2001-02, an increase of $26.6 billion over that in 2000-01
* Expenditure items cover all initiatives announced by the Chief Executive in his Policy Addresses, including: improving education; strengthening training; easing unemployment; helping the disadvantaged; increasing building safety; and upgrading the environment
* On top of these, the Financial Secretary announced the following additional expenditure initiatives -
Support for the Disabled
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* 1000 additional residential places
* 1380 extra places for day services and supported employment
* 360 more places for pre-school services
* $30 million more a year for community support services
* 350 places a year on a three-year pilot on-the-job training programme
* $50 million for non-government organisations to create jobs for the disabled
* $50 million to assist disabled athletes
Care for Youth at Risk
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* Screening in 200 secondary schools to identify youths at risk, to be extended to primary schools as soon as possible
* $70 million for additional integrated social service teams aimed at providing timely counselling to youths at risk
* $10 million more a year for stepping up police liaison with schools
* 30 additional outreach social workers and strengthened Community Support Services Schemes
Training for Those with Low Educational Attainment
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* $72 million for practical adult education focusing on generic workplace skills, targeting the needs of those, including new arrivals, who have not received formal education
Support for Employers' Staff Training
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* $300 million to establish a training fund to support SMEs' training initiatives
Strengthening the Role of District Councils
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* $100 million more a year to strengthen the work of District Councils
REVENUE PROPOSALS
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The Budget proposes measures that strengthen our human capital and our securities market -
* Maximum amount of deduction for self-education expenses under salaries tax increases from $30,000 to $40,000
* Stamp duty on stock transactions drops from 0.225% to 0.2%
In order to improve our fiscal position, the Budget proposes measures that do not impact on economic growth or people's livelihood -
* Tobacco duty increases by 5%
* Duty on alcoholic beverages, except wines and strong spirits, increases from 30% to 40%
* Driving licence fees and vehicle licence fees for private cars, motor cycles and motor tricycles increase by 10%; licence fees for commercial vehicles remain unchanged
* On-street parking meter charges increase from a maximum of $2 to $3 for every 15 minutes
* Air Passenger Departure Tax increases from $50 to $80 and extends to helicopter passengers
ENHANCING PUBLIC SECTOR PRODUCTIVITY
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* Public sector has successfully introduced reforms, controlled growth in Civil Service posts and increased productivity
* Size of the Civil Service will continue to shrink, with number of posts by the end of 2002-03 well below 1994-95 level
* Enhanced Productivity Programme will continue apace, delivering 5% savings to fund new and improved services by 2002-03
* Management of government assets will improve, with privatisation of government tunnels as our next target
* Accrual accounting will begin in 2002-03, increasing transparency of government accounts and tightening management of public finances
STRATEGIES FOR DEVELOPMENT
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* Capture opportunities from China's coming accession to the WTO; step up co-operation with Guangdong, especially with the Pearl River Delta, to capitalise on regional competitive advantage
* Upgrade our human capital to meet demands of a knowledge-based economy and to help improve the standards of living of the disadvantaged; implement an Admission of Mainland Professionals scheme to address a shortage of professionals in order to sustain economic vitality
* Hone our strengths as a centre for international finance and high-value-added services and strive to excel as Asia's World City
End/Wednesday, March 7, 2001
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