Q1:	When will the 2000-01 Budget be published?
A1:	On Wednesday, 8 March 2000.
Q2:	What is Draft Estimates of Expenditure? When will the Draft Estimates of Expenditure for the coming year be published?
A2:	The Draft Estimates of Expenditure contains expenditure estimates of bureaux, departments and subvented organisations for the next financial year. It also provides analysis on the cost-effectiveness and the results sought for a number of Heads of Expenditure in the form of Controlling Officers' Reports.
	The Draft Estimates of Expenditure for 2000-01 will be released by the Secretary for the Treasury, Miss Denise Yue, on Friday, 3 March 2000. Details on the relationship between government expenditure, public expenditure and GDP, and analysis on public expenditure by Policy Area Group (e.g. Economic, Education, Environment, Health, Housing, Community, etc) will also be given.
Q3:	What is the HKSAR Government's philosophy of financial management?
A3:	The Government aims to operate under a small scale government with a low taxation system. In this regard, it strives to ensure that, over time, government expenditure grows at a rate no faster than the economy as a whole. In drawing up its budget, it follows the principle of keeping expenditure within the limits of revenues, strives to achieve a fiscal balance and avoids deficits. This is also stipulated in the Basic Law.
Q4:	What is the amount of fiscal reserves currently held by the HKSAR Government?
A4:	About HK$400 billion.
Q5:	What are the purposes of fiscal reserves?
A5:	In simple terms, the fiscal reserves serve three purposes. First, the reserves are used to meet the operating requirement of the Administration in times of cash shortage. Second, they are required to meet contingency requirements. For instance, when the actual revenue in a certain year is substantially lower than originally estimated, we may have to dip into the fiscal reserves. Third, the reserves are needed to underpin the linked exchange rate to ensure the stability of Hong Kong dollars.
Q6:	What are the main sources of government revenue?
A6:	The main sources of government revenue are: (a)profits tax, (b)rates, properties and investments, (c)salaries tax, (d)land revenue, (e)utilities and fees and charges, (f)betting tax, (g)stamp duties (h)duties and (i) other revenue (including Loan Fund, Land Fund etc).
Q7:	What are the main areas of government expenditure?
A7:	The main areas of government expenditure are: (a)education, (b)health, (c)social welfare, (d)support, (e)security, (f)infrastructure, (g)economic, (h)environment, (i)community and external affairs and (j)housing.
Q8:	What is "user-pays" principle? Currently are the costs of all public services recovered according to this principle?
A8:	It is a well-established policy of the Government to adopt the "user-pays" principle for determining the fees for most of its services. The "user-pays" principle requires fee levels to be linked up with cost. This is to ensure that those who use the services pay for them so that the costs of providing the services do not fall on taxpayers alone.
	In practice, the Government will set appropriate subsidy levels for certain services having regard to policy needs. Therefore, the Government have never applied the "user-pays" principle across-the-board to all kinds of services. For example, we will, having regard to public affordability and taking into account the need to avoid abuse, provide subsidy to those services which are vital to the public, such as education and medical services, and those which affect people's livelihood, such as water and sewage charges. Consequently, the amount of fees to be paid by users of these services will be lower, or much lower than their cost.
	Furthermore, the Government will apply suitable flexibility in determining the pace of full or partial cost recovery. Accordingly, to soften the impact on users, we may phase in full or partial cost recovery of an individual service over a period of time, rather than seek to achieve full or partial cost recovery in one go. From the financial perspective, we should follow the "user-pays" principle to enable us to execute the low tax policy specified in the Basic Law and implement the provision of the Basic Law - strive to achieve a fiscal balance in public finance. Appropriate implementation of the policy is essential as fees and charges for government services are important recurrent revenues.
Q9:	Which bill and order are related to the Budget? What is the legislative procedure?
A9:	Under the Public Finance Ordinance, the Financial Secretary will table the relevant Appropriation Bill to the Legislative Council before the commencement of the next financial year. He will on that day present his Budget and announce the expenditure and revenue proposals.
	After the first and second readings of the Appropriation Bill, Members will be invited to raise their questions in writing, to be followed by written replies by the Government, so as to accelerate examination by the Legislative Council. The Finance Committee will also convene a special meeting to consider all items included in the draft estimates of expenditure before the third reading in the Council. The remaining bills and subsidiary legislation will be handled by their nature in accordance with normal procedures.
	Last year, the Administration adopted a new approach of combining various revenue proposals which needed to be effected through legislative amendments in one omnibus Bill for consideration by the Legislative Council. This approach enables the Legislative Council to consider all revenue proposals as one complete package, and facilitates its evaluation of their fiscal effects in overall terms. However, the procedures for considering bills remain unchanged.
	In addition, as a usual practice, the Chief Executive will sign the relevant Public Revenue Protection (Revenue) Order (valid for 4 months) after consulting the Executive Council so that all the clauses of the Revenue Bill will have full legal effect before the Bill is deliberated by the Legislative Council.
Q10:	What are the actual budget surpluses/deficits in the past 10 years?
A10:	Year Actual ($ million) Surplus/(Deficit) 89-90 11,064 90-91 3,967 91-92 22,509 92-93 21,979 93-94 19,164 94-95 10,843 95-96 (3,113) 96-97 25,678 97-98 86,866* 98-99 (23,241) * including the change of $6,006 million in the net worth of the investments of the Land Fund
Q11:	The government recorded a deficit in the 1998-99 budget, and a deficit budget is drawn up for 1999-2000 as well, why?
A11:	In 1998, the financial crisis swept across Asia and the Hong Kong economy experienced a severe downturn. The GDP recorded a negative growth of 5.1%. In order to restore the confidence of the community, the government introduced several measures to mitigate their hardship and improve the business environment. In response to the demands of the community, the government continued to allocate resources to improve and expand various social services. As such, increase in government expenditure is unavoidable. However, government revenue declined as a result of the tax rebate and freeze in government fees and charges. In 1998-99, budget deficit stood at $23.2 billion. In 1999-2000, there will also be a deficit, and the actual figure will be published on 8 March 2000.
Q12:	What strategy will the government adopt in face of the budget deficit?
A12:	The government's budgetary strategy aims at a return to a balanced budget over the medium term. To achieve the target, the government will: strictly control government spending at a rate lower than trend GDP forecast growth. implement the modest revenue raising measures proposed in the 1999 Budget and endorsed by the Legislative Council. privatise a substantial minority share of the Mass Transit Railway Corporation through a public offering.
Q13:	What is 'Enhanced Productivity Programme'? Why undertake this programme? What are its targets? What results has it achieved?
A13:	'Enhanced Productivity Programme' (EPP) is an initiative announced by the Chief Executive in his 1998 Policy Address and driven by the Chief Secretary for Administration to achieve a lasting improvement in public sector productivity. Hong Kong experienced an economic downturn in 1998 and recorded negative growth in GDP for four consecutive quarters. According to our well-established budgetary principles, government expenditure should grow no faster than the economy as a whole. Thus, the resources available are very limited. In view of the growing demands of the community, there would be difficulties in cutting expenditure. It is therefore important to ensure that public funds are used properly to provide the necessary services in a more efficient manner and at a reduced cost. We will reinvest every dollar of productivity gain in the delivery of public service. The target of the short-term phase of EPP is to reduce recurrent baseline expenditure by 5% by 2002-03. Baseline expenditure, which accounts for the majority of government total recurrent expenditure, means the recurrent resources required to fund current activities. Between now and the year 2003, we will undertake EPP in stages. We have quoted $818 million of productivity gains for 1999-2000 and around $1 billion (1% of total operating expenditure) for 2000-01. The remaining 4% productivity savings would be achieved in 2001-02 and 2002-03. In the meantime, we will also address certain fundamental issues to achieve a lasting improvement in public sector productivity. In respect of its progress, EPP is implementing on schedule and we are satisfied with the progress. In this financial year, a total of $818 million of productivity gains have been achieved under EPP, three-quarters of which have been redeployed to fund new services or improved services, and the remaining one-quarter reflects reduced expenditure. For 2000-01, all bureaux, departments and subvented organizations have planned to reduce the recurrent operating expenditure by 1%. The productivity savings of around $1 billion will be used to meet the earmarked growth and new services. We are committed to proceeding with EPP to achieve further productivity gains in 2001-02. We are confident that we can achieve the target of reducing total operating expenditure by 5% in 2002-03. Since the implementation of EPP, there is also an obvious change in the resource management culture in the government. The pubic sector, including subvented organizations, is now more aware of the need to save resources. As the growth of expenditure has reduced, the public sector develops more flexible and innovative initiatives to achieve savings for funding various new services or improved services, e.g. by process re-engineering, using advanced technology and rationalizing existing services etc.
Q14:	Why does the government wish to adjust the fees and charges for services at this moment?
A14:	It is normal practice that, fees and charges, which are determined in accordance with the principle of full cost recovery, are reviewed and adjusted annually to reflect changes in the cost of delivering the services concerned. Similarly, fees and charges for subsidised services are also adjusted annually so as to maintain the real value of the level of subsidy .　 　 In view of the economic downturn in Hong Kong in 1998, the administration freezed most government fees and charges. It was originally planned that the arrangement should last for one year, until 17 February 1999. Consequently, the Financial Secretary has announced in his 1999-2000 Budget Speech that the moratorium would be extended for another six months and that the government would seek the views of Members of the Legislative Council on the level of increase and the priority for adjusting different fees and charges upon the expiry of the moratorium.　 　 Having taken into consideration the concern over the proposed timetable for adjusting fees and charges expressed by various sectors during the consultation, the administration has decided that the adjustment originally scheduled for October last year be suspended until the year-on-year growth rate of GDP has turned firmly positive. Provisional Financial Results for the year 1999-2000