Estimates for 2018-19

188.    The major policy initiatives announced by the Chief Executive in her Policy Address involve an operating expenditure of $40 billion and capital expenditure of $23.5 billion.  I will ensure that adequate resources are provided to fully support the launch of these initiatives.

189.    Total government revenue for 2018-19 is estimated to be $604.5 billion, of which earnings and profits tax is estimated at $218.4 billion.  The revenue from land premium is estimated to be $121 billion, while that from stamp duties is estimated to be $100 billion.  The overall expenditure of the Government for 2018-19 is estimated to be $557.9 billion, an increase of 17.6 per cent compared with the revised estimate for 2017-18.  Operating expenditure for 2018-19 is estimated to be $441.5 billion, a year-on-year increase of 18.4 per cent or $68.6 billion.  Recurrent expenditure, which accounts for over 90 per cent of operating expenditure, will reach $406.5 billion, a year-on-year increase of 11.8 per cent or $42.8 billion.

190.    In 2018-19, the estimated recurrent expenditure on education, social welfare and healthcare accounts for about 60 per cent of government recurrent expenditure, exceeding $230 billion in total.  Recurrent expenditure in these three areas recorded a cumulative increase of 42.8 per cent over the past five years.

191.    The Government will increase manpower to support the implementation of various new policies and initiatives and ease the work pressure on civil servants.  In 2018-19, the civil service establishment is expected to expand by 6 700 posts to 188 451.  This represents a year-on-year increase of about 3.7 per cent, the highest since reunification.

192.    Moreover, I will allocate a one-off provision to policy bureaux in 2018-19, equivalent to three per cent of the recurrent non-personal emoluments portion of their envelopes, to allow greater operational flexibility in coping with price adjustments, implementing new initiatives of a smaller scale or making service improvement.

193.    Taking all these into account, I forecast a surplus of $46.6 billion in the Consolidated Account in the coming year.  Fiscal reserves are estimated to be $1,138.6 billion by the end of March 2019, equivalent to 40.3 per cent of GDP.