The Government's recurrent spending for 2005-06 is $199.1 billion, a $4.4 billion - or 2.1% - drop against the 2004-05 original estimate of $203.5 billion. Discounting price adjustments, this represents a 1.1% real decrease.

While making strenuous efforts to cut costs, all bureaux and departments are striving to do more with less, improve their services and meet rising demands - essentially "spending where necessary".

The four major spending areas remain:

* education (24.5%);

* social welfare (17.2%);

* health (14.8%); and

* security (11.6%).

Together, they make up 68.1% of the total government recurrent expenditure.

Recurrent spending on education amounts to $48.7 billion, about 24.5% of the Government's recurrent expenditure. Some of the key growth areas are:

* Provisions for new initiatives such as the introduction of school-based after-school learning and other support services for needy students ($75 million) and improvement of teacher-to-class ratio in public sector primary schools to implement specialised teaching ($250 million);

* Increased provisions for measures to support education reform and improve the quality of education, such as additional native-English-speaking teachers, upgrading teaching posts to lead English teaching and additional teachers to serve as curriculum development leaders ($350 million);

* Provisions for an increase in the number of school places, mainly secondary, including those in Direct Subsidy Scheme schools ($190 million);

* Increased payouts under student financial assistance schemes, reflecting an increase in caseload and an increase in the average levels of assistance ($140 million); and

* Salary increments and additional provisions for contributions to Provident Funds for 20,000 aided school teachers ($480 million).

Recurrent spending on Social Welfare amounts to $34.3 billion, taking up 17.2% of the Government's recurrent expenditure. Some of the key improvements are:

* an additional provision of $1.1 billion for the Comprehensive Social Security Assistance Scheme and the Social Security Allowance Scheme;

* an additional 141 contract home places, 20 day care centre places and one district elderly community centre are under planning;

* an additional 736 residential places, 190 day activity centre places, 78 integrated programme places in childcare centres and 340 vocational rehabilitation services places are under planning;

* an additional 75 foster care places, 19 residential places and 18 family and child protection workers are under planning; and

* an additional integrated children and youth services centre and one school social worker for each of the six new secondary schools is under planning.

Recurrent spending on Health amounts to $29.4 billion, representing 14.8% of Government's recurrent expenditure. Some of the key improvements are:

* enhancing infectious disease emergency response systems and building up surge capacity in dealing with infectious diseases;

* increasing the number of Chinese medicine clinics run by the Hospital Authority from three to no fewer than six; and

* reviewing strategies on healthcare services development and healthcare financing options.

Recurrent spending on Security amounts to $23.2 billion, about 11.6% of the Government's recurrent expenditure. Some of the key improvements are:

* $30.8 million for the Immigration Department, Customs & Excise Department and Hong Kong Police Force to strengthen cross-boundary clearance services at Lok Ma Chau Control Point, Tuen Mun Ferry Terminal and China Ferry Terminal, including extending operating hours;

* $15.5 million for the Immigration Department to plan for the issue of Hong Kong passports integrated with a biometric identifier;

* 50 additional posts for manning a new fire station and ambulance depot; and

* 37 additional posts for strengthening the Police Force's front-line operational capability at new infrastructure and traffic enforcement.

The Government remains committed to taking forward justified projects necessary for Hong Kong's future economic development, and will do its best to speed up the project delivery process.

It is delivering on its 2004 pledgeto make provisions for an average annual allocation of about $29 billion for capital projects to 2008-09.

The Capital Works Programme spent $28.3 billion in 2002-03 and $31.4 billion in 2003-04. For 2004-05, the total estimated expenditure is about $32 billion. Taken together with the forecast spending in 2005-06, the average expenditure for the five-year period ending in March 2006 will be $29.2 billion.