As a financially autonomous public body, the Housing Authority (HA) funds its public housing programmes with its own resources.

Although the HA's expenditure does not form part of the Government's expenditure, it accounts for approximately 5.5% of the public expenditure in 2006 / 07. A summary of the income and expenditure items of the HA's Revised Budget for 2006 / 07 and Proposed Budget for 2007 / 08 is set out below.

	Revised Budget 2006 / 07 ($M)	Proposed Budget 2007 / 08 ($M)
Operating Income [17]	15,034	22,270
Operating Expenditure [17]	15,567	20,562
Capital Expenditure	4,186	6,325

The consolidated operating account for 2007 / 08 shows a surplus of $1,680 million as compared to the consolidated deficit of $598 million in the 2006 / 07 Revised Budget. The forecast operating surplus is mainly due to the sale of surplus Home Ownership Scheme (HOS) flats from 2007 onwards. A summary is set out below.

Summary of Operating Surplus / (Deficit) ($M)
	Rental Housing	Commercial	Home Ownership Assistance	Special Items [18]	Consolidated Operating Surplus / (Deficit)
2006 / 07 Revised Budget	(1,173)	276	325	(26)	(598)
2007 / 08 Proposed Budget	(1,311)	290	2,694	7	1,680

The budgeted cash flow and closing cash balance are summarized below.

Summary of Cash Flow ($M)
	Net Cash Inflow for the Year	Closing Cash Balance
2006 / 07 Revised Budget	1,504	52,060
2007 / 08 Proposed Budget	3,809	55,869

The HA's cash balance is expected to rise from $50.6 billion as at 31 March 2006 to $52.1 billion by end March 2007. This slight increase is mainly attributable to lower spending on construction payments and higher investment return, partly offset by lower rental income as a result of the one-month rent holiday in February 2007. The cash balance is projected to further increase to $55.9 billion by 31 March 2008 as a result of the proceeds from sale of surplus HOS flats and higher investment return.

Capital expenditure is budgeted at $6.3 billion in 2007 / 08. The details are summarized below.

Summary of Capital Expenditure ($M)
	Revised Budget 2006 / 07	Proposed Budget 2007 / 08
Construction Expenditure	2,796	4,775
Improvement Works	110	227
Computer Assets	116	143
Direct Costs and Overheads Charged to Construction, Improvement Works and Computer / Information Technology Projects	1,164	1,180
Total	4,186	6,325

Compared with the 2006 / 07 Revised Budget, the proposed capital expenditure budget for 2007 / 08 increases by $2,139 million (or 51.1%), mainly reflecting a higher level of flats under construction in 2007 / 08.