Financial Secretary John Tsang has outlined numerous initiatives to allow the Government to plan major financial commitments to meet future social development and livelihood needs.
Delivering his 2016-17 Budget today, Mr Tsang said he has been particularly mindful of Hong Kong's long-term needs.
"I have set up the Housing Reserve in support of public housing development, set aside $200 billion for the 10-year hospital development plan and established the Future Fund as part of our long-term investment strategy."
Future Fund
He said: "To tackle the problems that come with an anticipated structural deficit, I have established the Future Fund to set aside part of our fiscal reserves for long-term investments when we can still afford to do so."
He has asked the Monetary Authority to allocate $220 billion from the balance of the Land Fund, which is part of the fiscal reserves, as an initial endowment of the Future Fund, and to inject a third of the actual surplus in 2015-16 into the Future Fund.
The authority will deploy half of the Future Fund for incremental placement with the Exchange Fund’s Long-Term Growth Portfolio to achieve greater returns.
Hospitals and housing
The Government has set aside a dedicated provision of $200 billion for a 10-year hospital development plan to enable the Hospital Authority to expand and upgrade healthcare facilities in a more flexible and long-term manner.
It will also top up the Housing Reserve to support long-term public housing development.
"The Hong Kong Housing Authority (HKHA) requires substantial resources to implement the 10-year public housing construction programme. It is estimated that HKHA’s cash and investment balance will drop to $16 billion by the end of March 2020. I have set aside the investment returns of $45 billion in 2015 as an injection into the Housing Reserve. Taking this injection together with the 2014 allocation and accumulated investment returns, the balance of the Housing Reserve now stands at $74 billion.
"When Government and HKHA have reached consensus on the necessary government financial support arrangements, we shall seek approval from the [Legislative Council] Finance Committee for funding to be drawn from the Housing Reserve to support the long-term public housing development."
Retirement protection
The Government has earmarked $50 billion to improve retirement protection for the elderly. The Commission on Poverty is conducting a public engagement exercise on how retirement protection can be improved.
"Our society is ageing. This has far-reaching implications for our future public finances. Any retirement protection scheme must be financially sustainable to avoid shifting the significant retirement protection expenses to future generations. I hope that all sectors of the community will keep an open mind and work together to explore sustainable proposals that meet the needs of Hong Kong."
The Government will also allocate $10 billion to the Hospital Authority to set up an endowment fund to generate investment returns for enhancing public-private partnership programmes.
