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Following is the "Letter to Hong Kong" on Budget 2012-13 by the Financial Secretary, Mr John C Tsang, broadcast on Radio Television Hong Kong this morning (February 12):
Fellow citizens,
On the first of February, I delivered the final Budget of the current-term Government.
So far, this year's Budget seems to be quite well received by the community generally. But, as ever, you can't please all of the people all of the time.
Some people have suggested, among other things, that this year's Budget is not visionary or daring enough, or that it lacks new and exciting initiatives.
As far as that is concerned, all I can really say is: Guilty as charged. As with my previous four Budgets, the underlying principles for the 2012-13 Budget have been balance, prudence and sustainability. I know that such an approach is hardly likely to set the world on fire - but that's the solemn duty of the Financial Secretary.
I have sought to achieve three main objectives in this year's Budget:
First, to ensure that we have the necessary resources to fund new and existing policy initiatives, and, in particular, those set out in the Chief Executive's annual Policy Address.
Second, to set aside adequate resources to support those in the community who are less well off.
Third, to ensure that the Government is in a strong position to cope with any unforeseen shocks. This has been a crucial element of my budgetary deliberations this year, given the volatility of the global economic environment.
Maintaining a balanced budget is not just a sensible and responsible approach, it is also for us a constitutional requirement. Unlike other places, our Basic Law requires us to keep spending within limits of revenue, to strive for a balanced Budget and to avoid deficits.
We cannot, and should not, ignore these tried and trusted tenets. And while they may constrain the nature of budget-making, they also have their rewards.
In recent years, in fact, since my first Budget in 2008, we have seen in various countries the consequences of long-term deficits and the danger of racking up too much debt.
Although such behaviour did not trigger the financial tsunami in 2008, a lack of fiscal discipline has bound the hands of many governments in dealing with the crisis effectively, prolonging the global recession and, in some cases, resulting in political and social upheaval.
Instead of following other major economies into the financial mire, Hong Kong has been able to forge ahead in a positive direction - even though the ill winds of the financial turmoil are still swirling around us.
I see a difficult year ahead for the global economy, and hence a difficult year for Hong Kong too. We expect our economy to grow by 1 to 3 per cent in 2012, which is less than the 5 per cent growth in 2011. We may even see negative growth in the first quarter of this year if exports fail to pick up.
But thanks to our city's long history of prudent fiscal management, we do have the necessary resources to cope - to support our business sector and preserve jobs during a downturn, to continue funding major social and infrastructural projects, and to draw on our reserves for a rainy day should something go badly wrong.
An important focus of this year's Budget is to support small and medium-sized enterprises, particularly our exporters and associated sectors, in the event of another economic downturn. This year's Budget includes tax concessions and extending or expanding initiatives such as the loan guarantees that were so important in helping our SMEs weather the recent global financial tsunami.
We also understand that we have to help different sectors of the community. That is why spending on health care, social welfare and education remain our top priorities. I have increased total recurrent spending in these three areas to some $150 billion for 2012-13.
Indeed, total recurrent expenditure on education, health care and social welfare has increased by between 30 and 40 per cent over the past five years. I mention this because it is important to look at the overall picture, rather than at the few one-off measures that make up a small portion of our total expenditure.
In recent years, we have introduced 12-year free education, launched a voucher scheme for kindergartens, and provided various grants for schools and universities, including the $18 billion Research Endowment Fund. There is an additional $10.5 billion worth of education initiatives in this year's Budget.
In my first Budget in 2008, I set aside $50 billion from our reserves for health-care reform so that Hong Kong will be able to cope with the challenges of an ageing population. This year, among other things, I allocated $10 billion to the Samaritan Fund. This will help ensure that patients can get the medication they need at prices they can afford for years to come.
Recurrent expenditure on social welfare is expected to increase to $44 billion in the next financial year, providing additional support for those less well off in our community.
All these areas are crucial to improving people's livelihood, as well as providing our young people with opportunities to study and, eventually, to find jobs.
It is also our approach that, when extra resources are available, we return wealth to the people. That is what I have done.
Taxpayers and CSSA (Comprehensive Social Security Assistance) recipients, the elderly and the disabled, families and carers will all feel the benefit of our city's fiscal strength through this year's Budget.
Budget-setting in Hong Kong has its own idiosyncrasies, but time and again a prudent, balanced and measured approach has proved to be the right strategy.
Our healthy reserves provide an essential buffer that will keep our economy ticking during difficult times, and propel our recovery and sustainable development.
Importantly, when the next term of Government takes office in July, it will have the necessary resources to continue valuable medium- and long-term programmes and, depending on their policy agenda and priorities, launch new initiatives for the benefit of the whole community.
Thank you, and have a great day.
John Tsang
Ends/Sunday, February 12, 2012
Issued at HKT 10:47
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