Total government revenue for 2017-18 is estimated to be $507.7 billion, of which earnings and profits tax is estimated at $208.9 billion.
Delivering his 2017-18 Budget at the Legislative Council today, Financial Secretary Paul Chan said the major new policy initiatives announced in the Policy Address involve an operating expenditure of $25 billion and capital expenditure of $61 billion.
"I will ensure that financial resources are adequate to fully support the launch of these initiatives."
Land revenue is estimated to be $101 billion, which is at a relatively high level, since the Government plans to release several valuable commercial sites in the urban area next year.
Overall expenditure of the Government for 2017-18 is estimated to be $491.4 billion, representing an increase of 5.3% compared with the revised estimate for 2016-17.
Operating expenditure for 2017-18 is estimated to be $384.2 billion, representing a year-on-year increase of 8.5% or $30.1 billion.
Recurrent expenditure, which accounts for over 90% of operating expenditure, will reach $371 billion, reflecting a year-on-year increase of 7.4% or $25.6 billion.
In 2017-18 the estimated recurrent expenditure on education, social welfare and healthcare accounts for about 60% of government recurrent expenditure, exceeding $210 billion in total.
Recurrent expenditure in these three areas recorded a cumulative increase reaching 43% in the last five years.
In 2017-18, recurrent expenditure on education is estimated to be $78.6 billion, representing an increase of $3.1 billion by year and accounting for 21% of government recurrent expenditure.
Recurrent expenditure on social welfare is estimated to be $73.3 billion, representing an increase of $9.5 billion by year and accounting for 20% of government recurrent expenditure.
Recurrent expenditure on healthcare is estimated to be $61.9 billion, representing an increase of $3.2 billion by year and accounting for 17% of government recurrent expenditure.
Capital expenditure is forecast to be $107.2 billion for 2017-18, including $86.8 billion for capital works.
"The Government will continue to allocate substantial resources to implement public works projects that are closely related to people’s livelihood."
To enhance healthcare facilities and services in the face of an ageing population, the Government announced the 10-year hospital development plan of $200 billion, under which a new major acute general hospital will be built in the Kai Tak Development Area to provide 2,400 beds and the first neuroscience centre in Hong Kong. The plan also covers the redevelopment or expansion of over 10 hospitals.
In 2017-18, the civil service establishment is expected to expand by 3,378 posts to 181,705, representing a year-on-year increase of 1.9%. The increase will allow government departments to implement new policies and improve existing services.
"Taking all these into account, I forecast a surplus of $16.3 billion in the Consolidated Account in the coming year. Fiscal reserves are estimated to be $952 billion by the end of March 2018, representing 37% of GDP.
"I forecast an annual surplus in the Operating Account for the coming five financial years but an annual deficit would surface in the Capital Account as from 2018-19. There will be a small deficit in the Consolidated Account in 2020-21 and 2021-22. Fiscal reserves are estimated at $942.9 billion by end-March 2022, representing 30% of GDP or equivalent to 18 months of government expenditure.
"The fiscal position will be broadly-balanced in the next five years. However, pressure on government expenditure is considerably high in the face of an ageing population, a shrinking workforce, economic volatility and the Government’s long-term commitments. We ought to be prudent and vigilant about the long-term sustainability of public finances."
