*************************************************
The following is issued on behalf of the Housing Authority :
Although its financial situation is "healthy and sustainable" in the coming five years, the Housing Authority (HA) has to exercise prudence in handling its surplus to maintain the average waiting time (AWT) for public rental housing (PRH) at the three year level.
The Chairman of the Authority's Finance Committee (FC), Mr Chung Shui-ming, said this at a press conference today (January 9).
"In the next five years, the average construction expenditure is $5.7 billion annually in producing adequate PRH flats (average annual production at 16,000 flats) to maintain the AWT at three year.
"The HA has to maintain a sufficient level of working capital to meet its recurrent and capital expenditure in fulfilling its policy pledge," Mr Chung said.
The Finance Committee today endorsed the 2005/06 revised budgets and 2006/07 proposed budgets and noted the financial forecasts for 2007/08 to 2009/10.
"With the listing of the Link Real Estate Investment Trust (Link REIT) and the conclusion of the public rental housing judicial review case, the Authority's finance had become more healthy and sustainable in the short to medium term," Mr Chung said.
"However, external factors such as inflation rate and investment return could also have impact on the HA's long term finance condition," Mr Chung said.
Although the cash balance was anticipated to be $50.2 billion by end of March 2006 and $58.8 billion at the end of March 2010, Mr Chung stressed that proceeds from the divestment was one-off only and the surplus Home Ownership Scheme (HOS) flats would also be sold out ultimately.
Explaining details of the budget, Mr Chung said that no domestic rent adjustment was assumed for the purpose of this budget as the rent review was not yet completed and there was no basis for making any adjustment at this stage.
The 2005/06 revised budget shows a consolidated operating surplus of $16.3 billion, higher than the approved budget of $15.0 billion, mainly due to higher divestment surplus and alienation premium partly offset by lower Commercial operating surplus upon divestment in November 2005 (earlier than March 2006 as assumed in the 2005/06 approved budget).
The consolidated operating surplus drops to $0.97 billion in 2006/07 mainly due to full recognition of divestment income in 2005/06 and decrease in operating surplus from the Commercial business.
Before a decision on the actual disposal programme is made, for budget purpose, we assume sale of 2,000 surplus HOS flats in each year from 2007/08 onwards. The operating surpluses of more than $1 billion each year are envisaged throughout the 3-year forecast period up to 2009/10.
"The spending of public funds should be well justified and focused on those who are in genuine need for public housing. The Authority will continue to review how to utilize its available resources to maintain the sustainability of the public housing programmes in the longer term," he said.
The budgets will be tabled to the Housing Authority on January 20 for approval.
Ends/Monday, January 9, 2006
Issued at HKT 18:57
NNNN
