Higher Public Spending Rate To Stay For 5 Years

The Financial Secretary, Paul Chan, says the higher government spending cap will continue for the duration of the present administration.

Previously spending had been capped at 20 percent of GDP, but in Wednesday's budget Chan announced this would be raised to 21 percent. Speaking on RTHK on Friday, he said the current economic climate and the city's needs meant it is prudent to spend more.

He said "In the past, different financial secretaries have stated that public expenditure should not exceed 20 percent of GDP. But... we are facing substantial needs to improve our various areas of service – for example, health care. We also need to be proactive and invest for the future, like innovation and technology, like education."

Chan said Hong Kong has consistently been racking up surpluses because total government revenue has averaged around 21 percent of GDP, while expenditure was lower.

"So going forward, knowing that we need to spend more for the future, to improve service, and to catch up on the undercapacity... the economic outlook for the next five years is prudently optimistic", Chan said.

When he announced the budget on Wednesday, Chan revealed a record HK$138 billion surplus and pledged to share nearly 40 per cent of it with the public, while investing the rest on the future and on improving public services.