This year's Hong Kong Government Budget proposes a series of measures to consolidate its economic recovery from the global financial crisis, and develop its economy.

In his Budget, the Financial Secretary, John Tsang, highlighted Hong Kong's strong rebound from the financial tsunami.

After four straight quarters of negative growth, Mr Tsang said Hong Kong's gross domestic product (GDP) expanded by 2.6 per cent in the fourth quarter of 2009. He forecast GDP growth of 4 to 5 per cent for 2010.

"While we have come through the most difficult period of the financial tsunami, the external environment is still fraught with uncertainties and the foundations of the recovery are not yet firm," Mr Tsang said.

"I am also concerned that some people have yet to benefit from the economic recovery. Therefore, through this Budget, I will strive to achieve the three objectives of consolidating the recovery, developing our economy and building a caring society."

Tsang announced a nearly HK$20 billion relief package that includes tax rebates, rates concessions and public housing rental waivers, to provide financial assistance to the community during the economic recovery.

With the implementation of these relief proposals, Mr Tsang said the Government’s total spending to counter the financial tsunami since 2008 would increase from HK$87.6 billion to HK$110 billion. However, Mr Tsang cautioned that these exceptional means employed at exceptional times could not continue for long. In the long run, the Hong Kong Government must maintain fiscal discipline.

The Budget also includes a series of measures to prevent volatility in the property market, such as raising stamp duty on property sales of above HK$20 million, and steps to curb excessive expansion of mortgage lending.

The Financial Secretary estimated that capital works expenditure would increase to HK$49.6 billion in 2010-2011. Major projects expected to start this financial year include the Kai Tak Cruise Terminal Building and ancillary facilities and the Hong Kong-Zhuhai-Macao Bridge Hong Kong boundary crossing facilities. With many projects entering their construction peaks, the capital works expenditure for each of the next few years is estimated to reach an all-time high of over HK$50 billion.

Six industries identified as priority areas to broaden the city's economic base in the wake of the financial crisis will get more support to help them develop further. These include medical services, education services, environmental industries, testing and certification, innovation and technology and cultural and creative industries.

"The role of the Government is to provide a conducive environment for the development of these industries under the principle of 'Market Leads, Government Facilitates'," Mr Tsang said.

The HK$4.9 billion Hong Kong Science Park Phase 3 development will be completed by 2016, creating 5,000 jobs during construction and 4,000 Research & Development jobs on completion.

To encourage the transport sector to test out green and low-carbon transport technology, Mr Tsang announced the establishment of a HK$300 million Pilot Green Transport Fund.

"I hope that this Fund will encourage the industry to introduce more innovative green technologies, such as the use of buses, public light buses, taxis, and ferries that employ green technologies and help nurture the budding of green technology in Hong Kong," he said.

Mr Tsang also set aside HK$540 million for subsidies to replace Euro II diesel commercial vehicles.

The Financial Secretary added that the Government would take full advantage of the platform being provided under the National 12th Five-Year Plan to capitalise on the "China advantage".

"I will promote sustainable development of our economy by furthering regional co-operation, investing in infrastructure and promoting the development of various industries." To foster regional co-operation, Mr Tsang said the Government would set up a Hong Kong-Taiwan Economic and Cultural Co-operation and Promotion Council to enhance cross-strait ties.

The Financial Secretary forecast a larger than expected surplus of HK$13.8 billion for 2009-10. He forecast a deficit of HK$25.2 billion for 2010-2011, and expected a return to fiscal balance by 2013-14. He forecast mild inflation of 2.3 per cent in 2010.