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OFFICIAL REPORT of PROCEEDINGS Wednesday, 27 HONG KONG LEGISLATIVE COUNCIL― 27 February 1980 441 OFFICIAL REPORT OF PROCEEDINGS Wednesday, 27 February 1980 The Council met at half past two o’clock PRESENT HIS EXCELLENCY THE GOVERNOR (PRESIDENT) SIR CRAWFORD MURRAY MACLEHOSE, G.B.E., K.C.M.G., K.C.V.O. THE HONOURABLE THE CHIEF SECRETARY SIR JACK CATER, K.B.E., J.P. THE HOUOURABLE THE FINANCIAL SECRETARY SIR CHARLES PHILIP HADDON-CAVE, K.B.E., C.M.G., J.P. THE HONOURABLE THE ATTORNEY GENERAL MR. JOHN CALVERT GRIFFITHS, Q.C. THE HONOURABLE THE SECRETARY FOR HOME AFFAIRS MR. LI FOOK-KOW, C.M.G., J.P. THE HONOURABLE DAVID AKERS-JONES, C.M.G., J.P. SECRETARY FOR THE NEW TERRITORIES THE HONOURABLE LEWIS MERVYN DAVIES, C.M.G., O.B.E., J.P. SECRETARY FOR SECURITY THE HONOURABLE DAVID WYLIE MCDONALD, C.M.G., J.P. DIRECTOR OF PUBLIC WORKS THE HONOURABLE KENNETH WALLIS JOSEPH TOPLEY, C.M.G., J.P. DIRECTOR OF EDUCATION THE HONOURABLE DAVID GREGORY JEAFFRESON, J.P. SECRETARY FOR ECONOMIC SERVICES THE HONOURABLE ALAN JAMES SCOTT, J.P. SECRETARY FOR HOUSING THE HONOURABLE THOMAS LEE CHUN-YON, C.B.E., J.P. DIRECTOR OF SOCIAL WELFARE THE HONOURABLE DEREK JOHN CLAREMONT JONES, C.M.G., J.P. SECRETARY FOR THE ENVIRONMENT DR. THE HONOURABLE THONG KAH-LEONG, J.P. DIRECTOR OF MEDICAL AND HEALTH SERVICES THE HONOURABLE ERIC PETER HO, J.P. SECRETARY FOR SOCIAL SERVICES THE HONOURABLE JOHN CHARLES CREASEY WALDEN, J.P. DIRECTOR OF HOME AFFAIRS THE HONOURABLE JOHN MARTIN ROWLANDS, J.P. SECRETARY FOR THE CIVIL SERVICE 442 HONG KONG LEGISLATIVE COUNCIL―27 February 1980 THE HONOURABLE JAMES NEIL HENDERSON, J.P. COMMISSIONER FOR LABOUR THE HONOURABLE GERALD PAUL NAZARETH, O.B.E. LAW DRAFTSMAN THE HONOURABLE WILLIAM DORWARD, O.B.E., J.P. DIRECTOR OF TRADE, INDUSTRY AND CUSTOMS THE HONOURABLE OSWALD VICTOR CHEUNG, C.B.E., Q.C., J.P. THE HONOURABLE ROGERIO HYNDMAN LOBO, C.B.E., J.P. THE HONOURABLE LI FOOK-WO, C.B.E., J.P. DR. THE HONOURABLE HARRY FANG SIN-YANG, C.B.E., J.P. THE HONOURABLE LO TAK-SHING, O.B.E., J.P. THE HONOURABLE FRANCIS YUAN-HAO TIEN, O.B.E., J.P. THE HONOURABLE ALEX WU SHU-CHIH, O.B.E., J.P. THE REVD. THE HONOURABLE JOYCE MARY BENNETT, O.B.E., J.P. THE HONOURABLE CHEN SHOU-LUM, O.B.E., J.P. THE HONOURABLE LYDIA DUNN, O.B.E., J.P. DR. THE HONOURABLE HENRY HU HUNG-LICK, O.B.E., J.P. THE HONOURABLE LEUNG TAT-SHING, O.B.E., J.P. THE REVD. THE HONOURABLE PATRICK TERENCE MCGOVERN, O.B.E., S.J., J.P. THE HONOURABLE PETER C. WONG, O.B.E., J.P. THE HONOURABLE WONG LAM, O.B.E., J.P. DR. THE HONOURABLE RAYSON LISUNG HUANG, C.B.E., J.P. THE HONOURABLE CHARLES YEUNG SIU-CHO, J.P. DR. THE HONOURABLE HO KAM-FAI THE HONOURABLE DAVID KENNEDY NEWBIGGING, J.P. THE HONOURABLE ANDREW SO KWOK-WING THE HONOURABLE HU FA-KUANG, J.P. THE HONOURABLE WONG PO-YAN, O.B.E. ABSENT THE HONOURABLE JOHN HENRY BREMRIDGE, O.B.E., J.P. THE HONOURABLE ALLEN LEE PENG-FEI IN ATTENDANCE THE CLERK TO THE LEGISLATIVE COUNCIL MRS. LORNA LEUNG TSUI LAI-MAN HONG KONG LEGISLATIVE COUNCIL― 27 February 1980 443 Papers The following papers were laid pursuant to Standing Order No. 14(2):― Sessional papers 1979-80: No. 37― Draft Estimates of Expenditure 1980-81 (published on 27.2.80). No. 38― Draft Revenue Estimates 1980-81 (published on 27.2.80). No. 39― Supporting Financial Statements and Statistical Appendices from the Estimates of Revenue and Draft Estimates of Expenditure 1980-81 (published on 27.2.80). No. 40― Estimates of Revenue and Expenditure for the year ending 31 March 1981－ Report of the Public Works Sub- Committee of Finance Committee 1979 (published on 27.2.80). No. 41― Report of the Establishment Sub-Committee of Finance Committee for 1979-80 (published on 27.2.80). Government business First reading of bill APPROPRIATION BILL 1980 Bill read the first time and ordered to be set down for second reading pursuant to Standing Order 41(3). Second reading of bill APPROPRIATION BILL 1980 THE FINANCIAL SECRETARY moved the second reading of:―‘A bill to apply a sum not exceeding $18,441,723,000 to the service of the financial year ending on 31 March 1981’. Paragraphs MOTION 1 ACKNOWLEDGEMENTS 2 444 HONG KONG LEGISLATIVE COUNCIL―27 February 1980 Paragraphs STRUCTURE OF SPEECH 3 - 4 PART I: THE ECONOMY IN THE 1970s (1) Growth Performance: (a) New series of estimates of expenditure on the G.D.P. 5 - 9 (b) Real output versus real income 10 - 14 (c) Shifts in key relationships 15 (2) Changes in the Economic Environment: (a) General 16 (b) The exchange rate 17 - 21 (c) Protectionism and diversification 22 - 28 (d) Socio-economic influences on the flexibility of the cost/price structure 29 - 35 (e) The China dimension 36 - 37 PART II: THE PUBLIC FINANCES IN THE 1970s (1) Introduction 38 (2) General Revenue Account for 1979-80: (a) Budgetary policy 39 - 40 (b) Revised estimates: 41 (i) Outturn 42 - 43 (ii) Revenue 44 - 46 (iii) Expenditure 47 - 51 (c) Financial position at 31 March 1980 52 - 54 (3) Assessment of Performance in the 1970s: (a) General principles 55 (b) Implications for management in the early 1980s 56 - 61 PART III: THE IMMEDIATE OUTLOOK FOR THE ECONOMY AND THE PUBLIC SECTOR (1) Present State of the Hong Kong Economy: (a) Outlook at the end of 1978 62 - 67 (b) Budgetary policy 68 - 73 (c) Preliminary estimate of G.D.P. in 1979 74 - 84 (d) Assessment of adjustment process 85 - 95 (2) Acceptable Expenditure Limits for 1980-81 96 - 101 (3) Forecast of Expenditure on the G.D.P. in 1980: (a) Introduction 102 (b) Gross domestic product by component: (i) Private consumption expenditure 103 HONG KONG LEGISLATIVE COUNCIL― 27 February 1980 445 Paragraphs (ii) Government consumption expenditure 104 (iii) Gross domestic fixed capital formation 105 - 108 (iv) Exports 109 - 113 (v) Imports 114 (vi) Net exports of services 115 (vii) Stocks 116 (c) Total expenditure on G.D.P. 117 (d) Prices and G.D.P. at current prices 118 - 120 (e) Implications of the forecast for the economy 121 - 129 PART IV: THE BUDGET FOR 1980-81 (1) Introduction 130 (2) Draft Expenditure Estimates: (a) Total expenditure 131 - 133 (b) Recurrent 134 - 140 (c) Capital 141 - 146 (3) Revenue Estimates: (a) Total revenue 147 - 148 (b) Recurrent 149 - 153 (c) Capital 154 - 159 (4) Outturn and Assessment 160 - 164 (5) Pattern of Expenditure on Consolidated Account 165 - 167 (6) Fiscal Policy: (a) General 168 - 170 (b) Reserves of taxable capacity 171 - 174 (c) Revaluation of rateable values 175 - 179 (d) Reassessment of assessable values for property tax 180 - 185 (e) Tax reforms in hand 186 - 187 (f) Tax reform proposed for 1980-81: contrived cessations of business 188 (g) Tax concessions proposed for 1980-81: 189 (i) Personal taxation 190 - 197 (ii) Interest tax liability of credit unions 198 - 199 (iii) Estate duty 200 - 201 (iv) Stamp duty on conveyances of low value properties 202 - 204 (v) Implementation 205 (7) Assessment and Outturn: (a) Balance of fiscal system 206 (b) Outturn and state of reserves 207 - 212 446 HONG KONG LEGISLATIVE COUNCIL―27 February 1980 Paragraphs (8) The Public Sector and the Economy: 213 (a) Growth and relative size of the public sector 214 (b) Balance of the public sector 215 PART V: THE PUBLIC SECTOR AND THE ECONOMY IN THE 1980s (1) Outlook for the General Revenue Account in the Forecast Period, 1981-82 to 1983-84 216 - 219 (2) Likely Developments in the Economy 220 - 229 CONCLUSION 230 Appendices I: Paragraphs 17-44 of the printed version of the Budget Speech 1980 II: Paragraphs 86-121 of the printed version of the Budget Speech 1980 III: Paragraphs 128-134 of the printed version of the Budget Speech 1980 ANNEXES REFERENCE IN SPEECH (1) The Hong Kong Economy 1970-79: Growth rates of selected aggregates and variables f.n. (14) (2) General Revenue Account 1970-71 to 1980-81 f.n. (35), f.n. (125), f.n. (142) (3) Application of Cash Limits 1979-80 f.n. (47) (4) Summary of Consolidated Account expenditure by main functions 1970-71 to 1980-81 f.n. (98) in Appendix II (5) Summary of actual revenue by main sources 1970-71 to 1980-81 f.n. (113) in Appendix II (6) Balance of the fiscal system 1970-71 to 1980-81 f.n. (116) in Appendix II (7) Fiscal changes 1970-71 to 1979-80 (in terms of the requirements of fiscal policy) para. 111 in Appendix II HONG KONG LEGISLATIVE COUNCIL― 27 February 1980 447 Reference in Speech (8) Budgetary guidelines 1970-71 to 1980-81 f.n. (122) in Appendix II (9) Forecast of expenditure on the Gross Domestic Product in 1980 f.n. (98) (10) Financial Information System － (11) Expenditure in the Main Programme Areas para. 133 (12) Summary of actual expenditure by main components 1970-71 to 1980-81 f.n. (127) (13) Examples of salaries tax having regard to proposed in creases in personal, child and dependent parent allowances para. 197 (14) Effect on salaries tax of proposed increases in personal allowances para. 197 (15) Income levels at which salaries tax payers enter the standard rate zone para. 197 He said:－ MOTION Sir, I move that the Appropriation Bill 1980, which was published in an issue of the Gazette Extraordinary at 2 o’clock today, be read the second time.
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