Analysis of Public Expenditure by Policy Area Group

Commentary on the Changes in Total Public Expenditure in 2000-01

Total public expenditure is forecast to grow in 2000-01 by 2.9% in real terms over the revised estimate for 1999-2000. Within this, total government expenditure will grow by 5.8% in real terms comprising growth in recurrent expenditure of 5.7% and of 6.3% in capital expenditure. This year-on-year growth in capital expenditure is partly attributable to underspending in 1999-2000. Expenditure from the Capital Works Reserve Fund which makes up the majority of capital expenditure is forecast to grow by 3.2% in real terms.

The significant changes in capital expenditure contributing to the growth in total public expenditure are:

Community and External Affairs (-5.2%)

The reduction reflects the exceptionally high level of capital expenditure in 1999-2000 on recreation, culture and amenities projects.

Economic (+10.9%)

Capital spending in this Policy Area Group will rise by 41.8% in real terms reflecting additional spending in support of innovation and technology, including expenditure on Phase I of the Science Park at Pak Shek Kok and sums earmarked for projects to be undertaken by the future Applied Science and Technology Research Institute under the newly established Innovation and Technology Fund.

Education (+4.0%)

The increase reflects provision for additional loans to students pursuing tertiary education, the continuing programme of school-building and improvement works and increased capital payments to subvented primary and secondary schools for maintenance, repairs and minor improvement works.

Environment and Food (-5.2%)

The scope of this Policy Area Group has been redefined as described on Commentary on the Changes in Recurrent Public Expenditure in 2000-01. Expenditure on environmental protection and conservation is forecast to rise reflecting increased expenditure on the restoration of landfills. This is more than offset by reducing expenditure in other areas largely as a result of the effective completion in 1999-2000 of the Sheung Shui Slaughterhouse.

Health (+4.2%)

Payment of medical subventions under the Capital Works Reserve Fund is expected to increase by $283 million (20.5%) in 2000-01 over the revised estimate for 1999-2000. This reflects additional spending on the redevelopment of Kowloon and Castle Peak Hospitals and the relocation of Tuen Mun Polyclinic. In addition capital spending on the provision of government-operated health facilities will increase by $206 million as expenditure on the construction of the Public Health Laboratory Centre in Shek Kip Mei accelerates.

Housing (-8.3%)

The reduction mainly reflects the forecast expenditure of the Housing Authority in 2000-01

Infrastructure (+7.4%)

Capital spending on the infrastructure is expected to rise by 10.3% in real terms. This arises mainly from increased land acquisition for projects in the Public Works Programme, provision for urban renewal and expenditure on site formation and associated infrastructure works for Hong Kong Disneyland.

Security (+6.1%)

Capital spending on Security is forecast to rise by 27.5% in real terms. This reflects the planned expenditure on Phase 3 of the redevelopment of Police Headquarters, the provision of a tactical training complex at the Police Training School and improvements to police stations and operational facilities as well as the construction of disciplined services departmental quarters.

Social Welfare (+9.6%)

The increase reflects additional spending from the Lotteries Fund and on the implementation of the Social Welfare Department's computerised social security system.


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