Budget Speech

Mr President,

         I move that the Appropriation Bill 2010 be read a second time.

Introduction

2.      This is my third Budget. In the past year, Hong Kong has gone through many ups and downs because of the adverse impact of the financial tsunami. The shocks to the global economy, in terms of their severity and scale, were more profound than those experienced during the Asian financial turmoil in 1997 and 1998.

3.      During the Asian financial turmoil, Asian currencies fluctuated wildly. Both the stock and property markets went down sharply. Nonetheless, the global economy still grew by 2.6 per cent and global trade expanded by 4.5 per cent in 1998. By contrast, the financial tsunami triggered by the US sub-prime mortgage problem has swept across the entire world. The global economy shrunk by one per cent and world trade plunged by 12 per cent. This recession is the most severe since World War II.

4.      In the face of this severe financial crisis, the Government implemented the strategy of “stabilising the financial system, supporting enterprises and preserving employment” in the shortest possible time. The measures we took included providing liquidity to banks, a full deposit guarantee for depositors, loan guarantee schemes with a guarantee commitment of $100 billion for small and medium enterprises, and fiscal stimulus, job creation and relief measures amounting to $87.6 billion. These measures provided impetus to our economy and restored people’s confidence.

5.      In the fourth quarter of 2009, our economy resumed positive growth after four consecutive quarters of year-on-year contraction – one quarter fewer than that during the Asian financial turmoil. At the worst part of this contraction, job losses were 43 000 – but that was only one-third of those experienced during the Asian financial turmoil. The unemployment rate during this economic contraction was also lower than that during the previous crisis, and started to fall as early as in the third quarter of last year.

6.      Although the current crisis is much more severe than the Asian financial turmoil, our economy has recovered more quickly this time. Both the job market and the overall economic performance indicate that our economic fundamentals are stronger than before and have shown greater resilience to withstand external shocks. The Government's timely strategy has yielded positive effects. More importantly, Hong Kong people have demonstrated once again their tenacity, confidence and ability to rise to challenges.

7.      While we have come through the most difficult period of the financial tsunami, the external environment is still fraught with uncertainties and the foundations of the recovery are not yet firm. I am also concerned that some people have yet to benefit from the economic recovery. Therefore, through this Budget, I will strive to achieve the three objectives of consolidating the recovery, developing our economy and building a caring society.

8.      In his Policy Address, the Chief Executive outlined the future socio-economic challenges and development directions for Hong Kong. I will seek to implement the development blueprint set out in the Policy Address through the proper allocation of resources. The expenditure and revenue proposals of Government departments and related organisations are detailed in the Estimates. I will elaborate on items about which the community are more concerned.

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