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Expenditure on Social Welfare
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65. Social welfare is another item of public expenditure that has been growing very quickly. It now accounts for 15.5% of operating expenditure, with 10.6% for social security payments. The Government will continue to provide vulnerable members of the community and others in need with a basic "safety net", so that nobody will become homeless, suffer from hunger, or be deprived of schooling and medical treatment because of financial difficulties. However, in light of structural changes in the population, the increasing growth of social security payments demands our attention. The Secretary for Health, Welfare and Food announced detailed proposals on adjustment to social security payments last week. The proposed adjustments are based on the movements of the Social Security Assistance Index of Prices, and are meant to restore social security payments to their original intended buying power. The adjustments to social security payments for elderly and disabled persons will be implemented in two phases over the next two years. The proposed adjustments are reflected in the Estimates for 2003-04 presented to this Council today.
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66. We estimate that, after full implementation of the proposed social security payment adjustments, annual expenditure in this area will be reduced by about
$1.71 billion. Despite this adjustment, we anticipate that expenditure on social security payments will continue to grow substantially in the next few years. We will keep the social security schemes under regular review to establish an effective and financially-sustainable basic safety net that provides assistance to individuals and families in financial difficulties.
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Doing More With Less
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67. The resources we are using come from the public. We must use them cost-effectively. The Chief Secretary for Administration has designated the Director of Administration, together with the Head of the Efficiency Unit, to co-ordinate the efforts of departments in using resources more cost-effectively and in avoiding waste. The Civil Service Bureau has recently issued a circular to all Heads of Departments, encouraging colleagues to participate actively in the Staff Suggestions Scheme by putting forward cost-saving measures. I also call upon the public to give us their suggestions to help the Government optimise the use of its resources.
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| Flexible Financial Management |
68. Last year, I put forward some guiding principles to be adopted by the Government in the management of its finances. One of these was the planning of expenditure in nominal or money terms, in order to avoid the tendency for the rise in the price level of government expenditure to exceed the rise in the general price level of the economy. We have already brought this new arrangement into effect.
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69. Starting from this year, with the implementation of the accountability system, each policy bureau has been given an expenditure ceiling, i.e. the operating expenditure envelope. Directors of Bureaux now have greater flexibility to deploy resources within their operating expenditure envelope, and may retain for future use part of the savings achieved, thus providing incentives to save.
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