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The following is issued on behalf of the Housing Authority:
The Housing Authority (HA) must exercise prudence in financial management in order to maintain its public housing development programme, although its finance has become more sustainable in the short and medium term.
The Chairman of the HA's Finance Committee (FC), Mr Chung Shui-ming, said this today (January 9) after the meeting endorsing the 2007/08 proposed budgets.
"In the five years between 2006/07 and 2010/11, the HA will incur an average construction expenditure of $6 billion per year to produce adequate public rental housing flats to maintain the average waiting time at about three years. This means an annual production of more than 15,000 flats in average," he added.
The FC today endorsed the 2006/07 revised budgets and 2007/08 proposed budgets and noted the financial forecasts for 2008/09 to 2010/11.
The forecast cash balance is $52.1 billion by end of March 2007 and $69.9 billion at the end of March 2011, mainly due to investment return and sale of the surplus Home Ownership Scheme (HOS) flats.
With the proceeds from divestment of its properties and sale of HOS flats from 2007 onwards, the HA's finance has become more sustainable in the short and medium term.
However, Mr. Chung stressed that the surplus HOS flats would be sold out by 2010/11. Investment return and external factors such as inflation could have significant impact on the HA's financial conditions.
"The HA has to maintain a sufficient level of working capital in a prudent manner to meet its recurrent and capital expenditure in fulfilling its policy pledge," he said.
Explaining details of the budget, Mr Chung said that the consolidated operating result in the 2006/07 Revised Budget shows a deficit of $0.6 billion as compared to the consolidated operating surplus of $1.0 billion in the 2006/07 Approved Budget, mainly due to lower rental income as a result of the one-month rent holiday to be granted to tenants of public rental housing (PRH) units in February 2007.
The consolidated operating result in 2007/08 shows a surplus of $1.7 billion, mainly due to the sale of surplus HOS flats from this year onwards.
It is forecast that the consolidated operating result will show a surplus of $2.0 billion in 2008/09 before it turns to a deficit of $0.4 billion and $1.2 billion in 2009/10 and 2010/11 respectively, mainly due to the gradual sold out of surplus HOS flats and the effect of the proposed across-the-board rent reduction of 11.6% for PRH units.
"The spending of public funds should be well justified and focused on those who are in genuine need for public housing. The HA will continue to review how to utilize its available resources to maintain the sustainability of the public housing programmes in the longer term," said Mr Chung.
The budget will be submitted to the HA Regular Open Meeting on January 23 for approval.
Ends/Tuesday, January 9, 2007
Issued at HKT 14:35
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