The Government has been cutting expenditure through substantive measures and there will be more to come to achieve the "small government" target, Chief Secretary for Administration Donald Tsang told legislators today.

To put government expenditure under control, departments will be encouraged to contract out services so the private sector can take part in providing public services.

Mr Tsang said he hoped the move could help create more jobs and allow people to set up businesses.

Outsourcing of services will also open up opportunities for civil servants, improve service efficiency and cost-effectiveness.

He assured legislators that public service reform and better use of resources were a high priority.

The Government will continue to explore the proposed privatisation of public organisations to enhance productivity and efficiency.