-42surplus or deficit were the level of operating revenue106 and the results of
investments made by the Exchange Fund.107 Operating expenses108 in general
and spending on social security in particular were relatively stable and rose at a
comparatively modest rate in the eight-year period after the deficit was incurred.
Healthy surpluses accrued in the five years following the deficit year as
operating revenues increased and the Exchange Fund performed positively.
There then accrued a substantial deficit in 2008-2009, very largely due to poor
Exchange Fund results, but that was reversed by a greater net surplus in the
following year, followed by another hefty surplus in the subsequent year. The
fiscal deficit in 2002-03 is therefore indeed no more than a background feature
in the discussion. It makes no contribution to any justification of the seven-year
rule.
L.
Prior warning, charities and the Director’s discretion
115.
Finally, I should mention three arguments that the Director has
advanced in aid of the submission that the seven-year residence requirement is a
reasonable measure.
As I understand them, they are put forward at the
proportionality stage of the argument. In other words, the Director’s main
proposition is that the seven-year requirement is justified as a rational measure
aimed at ensuring the financial sustainability of Hong Kong’s social security
system and that it is a reasonable policy because any hardship flowing from the
restriction is catered for, or at least significantly mitigated, by the three matters
to which I now turn.
106
Comprising taxes, rates and duties; rental income; fees and charges; utilities; royalties
and concessions; and other operating revenue.
107
The Exchange Fund’s results formed part of the category of non-operating
revenue/expenses which also included capital expenses; land premia; net revenue from
Home Ownership Scheme; interest and investment income; actuarial loss and curtailment
loss on pensions; share of profits and losses of government business enterprises.
108
Comprising salaries, allowances and other employee benefits; recurrent subventions;
social security payments; depreciation and other operating expenses.
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