Policy Address and Budget Consultation - Background Information

Background Information - Economy

Government expenditure for 2011-12 is estimated to reach $378.2 billion, representing an increase of $76.8 billion, or 25.5%, over the actual expenditure for 2010-11. It is 61% higher when compared with 2007-08. This increase far exceeds the estimated 15.8% nominal GDP growth over the same period.

Recurrent Expenditure

Recurrent expenditure for 2011-12 is estimated to reach $242.1 billion, representing an increase of $19 billion, or 8.5%, over the actual expenditure for 2010-11. It is more than 20% higher when compared with 2007-08. The increase in recurrent expenditure reflects the Government’s long term commitment to improving people’s livelihood.

In the 2011-12 Budget, recurrent expenditure on education, social welfare and health account for 56.4% of recurrent government expenditure. Compared with actual expenditure for 2010-11, expenditure on these three policy area groups will increase by over $11 billion.

Education: The estimated recurrent expenditure for 2011-12 is $54.5 billion, representing an increase of $3.5 billion, or 7%, over the actual expenditure for 2010-11. Apart from providing additional funding to continue implementing the new senior secondary academic structure and small-class teaching, the Budget has also increased financial support to students from low-income families.
Social Welfare: The estimated recurrent expenditure for 2011-12 is $42.2 billion, representing an increase of $4.6 billion, or 12%, over the actual expenditure for 2010-11. The Budget has allocated additional funding for meeting the needs of elders for residential care places, community care services, nursing care and treatment, and to increase subsidies and assistance for the elderly, people with disabilities and people in ill-health.
Health: The estimated recurrent expenditure for 2011-12 is $39.9 billion, representing an increase of $3.1 billion, or 8%, over the actual expenditure for 2010-11. The Budget has allocated additional recurrent funding of $2.74 billion to Hospital Authority for meeting new and increasing demands, such as strengthening mental health services, expanding the services for persons with psychosis and children with autism or hyperactivity disorder, expanding the Hospital Authority Drug Formulary, enhancing support for chronic patients, and reinforcing services such as cataract operations, joint replacement, computerised tomography scanning and magnetic resonance imaging. We are also enhancing the regulation of pharmaceutical products.

Capital Works Expenditure

The 2011-12 estimated expenditure on capital works under the Capital Works Reserve Fund will reach $58.3 billion (including $8.4 billion allocation for minor works), representing an increase of 17% over the actual expenditure for 2010-11 or more than 180% over the actual expenditure for 2007-08.

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