Education, healthcare get priority in Hong Kong's new budget

By Eden Estopace | Feb 5, 2012

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Hong Kong's budget for 2012-2013 has given priority to education and healthcare spending, with recurrent expenditure in the two sectors projected to reach nearly $60 billion and  $45 billion, respectively.

Financial Secretary John Tsang said in his fifth budget speech at the Legislative Council last week that education is the policy area, which has always taken up the largest share of recurrent government expenditure, while healthcare is "an area of great public concern."

Tsang estimates government expenditure for 2012-13 re reach $315 billion, or 6 percent higher than the revised estimate for 2011-12. 

"Recurrent expenditure will be $264.3 billion.  Capital expenditure will be $78.7 billion, including an all-time high of $62.3 billion on capital works. Taking into account operating and capital expenditure, I forecast that government expenditure will reach $393.7 billion, an increase of seven per cent compared with the revised estimate for 2011-12.  Public expenditure will be equivalent to 21.4 percent of GDP," he said.

Student assistance up

Hong Kong has consistently increased its recurrent expenditure on primary and secondary education, starting in 2008 when the government extended free education to 12 years. Tsang said on 2009, the government has also progressively introduced small-class teaching in primary schools, incurring additional expenditure for more teaching staff and resources to reach $2.1 billion per year. The government has also started to reduce in phases the number of students in secondary classes from 38 to 34. Additional expenditure involved will reach $1.4 billion a year.

"With regard to post-secondary education, we estimate that by the 2014-15 academic year, over one-third of the relevant age cohort will have the opportunity to pursue degree-level education.  If sub-degree places are also counted, over two-thirds of our young people in the relevant age group will have access to post-secondary education," Tsang said.

"To facilitate the further development of post-secondary education, I have mentioned earlier that we shall provide $1 billion to implement a new Project Yi Jin, $2.5 billion to launch the sixth Matching Grant Scheme and $2 billion to establish more scholarships," he added.

Tsang explained that in Hong Kong, education is seen as the "golden key" to promoting social mobility, with parents viewing educational opportunity as a road to success for their children. To ensure that no student will be denied access to education, the government has introduced the Student Financial Assistance Agency (SFAA) grants and loans in the 2010-2011 academic year.

The grants, he said has benefitted more than 360,000 students or one-third of the total number of full-time students. In the 2011-2012 academic year, the income ceiling for full level assistance were also relaxed, increasing total assistance from over $4.6 billion to $5.4 billion.

Tsang said the government has started conducting public consultations on the review of loan schemes for post-secondary students and the interest rate mechanism to improve measures for the next academic year.

Dr. Moses Cheng, Chairman of the Education Commission, welcomed the government's increase in expenditure for education, saying that more scholarships or award schemes will promote students' all-round development and pursuit of excellence.

"Complemented by these Budget initiatives, I trust our efforts and investments in promoting the internationalization and diversification of the higher education sector will bear fruit, which will reinforce the position of Hong Kong as the regional education hub," he said.

HA gets 40% increase in funding

The Hospital Authority (HA) is set to get $40 billion or nearly 40 percent increase in funding in 2012-2013. Under the scheme, $2.2 billion will be allocated to meet expenditure on hospital projects, and $500 million to acquire and upgrade medical equipment for public hospitals.

"In 2012-13, the Hospital Authority will increase its in-patient service capacity and strengthen its neonatal intensive care service. It will provide haemodialysis and peritoneal dialysis services for an additional 120 renal patients, provide risk factor assessment and management services for 84 000 diabetic and hypertensive patients, and set up eight new teams to take care of an additional 33,600 hypertensive patients," Tsang said. 

"Moreover, the Hospital Authority will extend the coverage of its community-based case management program for patients with severe mental illness to four more districts, and enhance its care for hospitalized mental patients by providing multi-disciplinary treatment," he added.

The additional resources will also ensure the recruitment of more medical staff, which in the past five years has already increased by more than 110 percent.

Tsang added that the government is eyeing healthcare reform through a review of the healthcare manpower strategy and the provision of healthcare services, as well as formulating a review of the regulatory framework that governs the health Protection Scheme (HPS). Some $200 million has been allocated to increase the number of first-year first-degree places in medicine by 100, nursing by 40 and allied health professions by 146.

"We expect to put forward specific proposals in the first half of 2013, and shall finalize the implementation arrangements and proceed with the necessary legislative process as soon as possible.  I have earmarked $50 billion for providing the funding and appropriate financial incentives needed to support the healthcare financing arrangements," he disclosed.

HA Chairman Anthony Wu thanked the government for the continual increase in the recurrent budget allocation to the authority.

Hong Kong's Chief Executive Donald Tsang said compared to the budget five years ago, the government's expenditure has increased by almost 70 percent and recurrent expenditure has increased by one-third. Within the same period, the Gross Domestic Product has grown by 21 percent and by March 2013, it is estimated that fiscal reserves will reach $658.7 billion, equivalent to 20 months of government expenditure. 

"I sincerely thank the Financial Secretary for laying a solid financial foundation for the next term government," he said. "This is a well thought-out and responsible Budget. I hope the Legislative Council and the community will support it."