The Housing Authority's 2005-06 revised budget shows a consolidated operating surplus of $16.3 billion, higher than the approved budget of $15 billion.

The authority said the surplus was mainly due to the higher one-off divestment proceeds and alienation premium, but partly offset by the lower commercial operating surplus upon divestment in November, earlier than March as assumed in the approved budget.

The authority today endorsed the revised budget plus the proposed budget for 2006-07.

The consolidated operating surplus fell to $970 million in 2006-07 mainly due to full recognition of divestment proceeds in 2005-06 and a fall in operating surplus from the commercial business.

In the next five years, the average construction expenditure is $5.7 billion per year in producing16,000 flats annually to maintain the average waiting time at three years.

The cash balance is estimated to be $50.2 billion by the end of March, and will reach $58.8 billion by March, 2010, if there is the sale of 2,000 surplus home ownership scheme flats per year from 2007-08 onwards. A decision on the actual disposal programme is pending.

As proceeds from divestment is one-off and the surplus home ownership scheme flats will eventually be sold out, external factors such as inflation and investment return could impact the authority's long-term finance condition.

The authority will exercise prudence in handling its cash balance to maintain a sufficient level of working capital to meet its recurrent and capital expenditure as well as fulfil its commitments to meet its policy pledge.