Financial Secretary John Tsang says a projection from the Working Group on Long-Term Fiscal Planning in his Budget is a warning, but the Government will take responsibility to avoid a structural deficit in seven years' time.
Speaking on a radio phone-in programme today, Mr Tsang said the dire projection was based on a formula using historical trends in services' enhancement which suggest Government spending would rise 7.5% each year.
He said the Government will explore ways to avoid this, adding forecasts are difficult as many factors, including external economic fluctuations, are hard to predict.
Mr Tsang said adopting a conservative attitude is appropriate in managing funds that belong to Hong Kong people. The Government allocates resources according to needs, and its spending has nearly doubled since he took office as Financial Secretary, he noted.
He also said the Government needs to allocate more resources for seniors, as life expectancy is increasing. The Government is working to enhance seniors' facilities and services, and will carry out studies to reduce long wait times at public hospitals, he added.
Mr Tsang also said the Government has studied a goods sales tax, and listened to discussions in the community. People agreed the Government should broaden its tax base, he noted, but believed a goods sales tax was not suitable for the city.
