8. As our economy put in a
strong performance last year, revenue from various
sources was higher than expected.
Consolidated Account, I estimate that a surplus of $12
billion will be achieved in 2004?5, equivalent to 0.9
per cent of Gross Domestic Product (GDP).
This is the first time since 1999?000 that the
Consolidated Account has recorded a surplus, and is
mainly due to lower-than-expected expenditure and
higher-than-expected revenue this year, capital revenue
in particular. For
example, land premiums amount to $31.3 billion, more
than two and a half times the original estimate.
Operating revenues such as salaries tax, profits
tax and stamp duty are also higher than expected, with
increases in these items ranging from 9 to 40 per cent.
I must, however, stress
that the main reason for the surplus is that revenue
from land premiums is far greater than expected.
As such revenue is volatile and is affected by a
number of factors, we cannot rely too heavily on it to
fund operating expenditure.
Moreover, the sums raised by issuing bonds in
2004?5 will have to be repaid.
Discounting the proceeds from bond issuances, the
Consolidated Account will still record a deficit of
As far as the Operating
Account is concerned, I am pleased to announce that
operating expenditure for 2004?5 will be lower than
that for 2003?4.
Barring two special accounting arrangements with
the former municipal councils, this is the first time in
over 50 years that operating expenditure has fallen.
This demonstrates that the
various control measures taken by the Government are
gradually producing results. These
include reduction in the civil service establishment,
adjustments to civil service pay, reprioritisation of
service provision, structural reorganisation and
streamlining of procedures.
I am grateful for the joint efforts of Directors
of Bureaux and my colleagues in the civil service.
This also shows that our civil service has the
flexibility to try new approaches and has striven to
reduce operating expenditure while maintaining a quality
operating deficit for 2004?5 is forecast to be $14.1
lower than the $46.6 billion originally estimated.
Despite the fact that
people's incomes decreased and deflation persisted in
the wake of the Asian financial crisis, the
Government's operating expenditure continued to soar.
I know that members of the public are unhappy
about this. Last
year, I pledged that the Government would first cut down
on spending in order to demonstrate our readiness for
year later, we have succeeded in checking the trend of
our operating expenditure, which had been on the rise
for over 50 years. This
clearly demonstrates that we have the determination and
capability to contain our spending.