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Budget Speech

Striving to Maintain Healthy Public Finances

178. To address social aspirations and strive for service enhancement, the current‑term Government has significantly increased the recurrent expenditure on social welfare, healthcare and education.  Based on the Revised Estimates for the current financial year, the overall cumulative increase in the recurrent expenditure in these three areas will exceed 40 per cent, or close to $85 billion in dollar terms.  In view of the very substantial increase in the recurrent expenditure from $361.8 billion in 2017‑18 to over $510 billion in the Original Estimates for this year, I emphasised last year that government expenditure should enter a consolidation period.  I also announced an expenditure reduction programme, under which government departments were required to cut recurrent expenditure by one per cent without affecting livelihood‑related spending.  Given the lasting effect of the recurrent expenditure reduction, we will not roll out any further expenditure reduction programme this year, otherwise the cumulative impact may disrupt departmental operations and in turn affect the delivery of public services.  We will, however, continue to examine carefully any new initiatives that will incur recurrent expenditure and strictly control the growth of the civil service, so as to ensure that our long‑term financial commitments are commensurate with the increase in our revenue.

179. The current‑term Government actively promotes the Government Green Bond Programme.  Given that green bonds are issued to finance certified green projects and our commitment not to use the proceeds for meeting operating expenditure, they are widely accepted by investors.  The issuance of green bonds will not undermine our fiscal discipline, but can relieve the Government's fiscal pressure arising from the need to meet capital expenditure with existing resources, and hence further reinforce the confidence in our public finances.



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