Lawmaker and Lingnan University's associate vice president Lau Chi-pang on Wednesday said he believed universities could cope with the proposed funding cuts which he described as "mild and acceptable".

In his budget speech, Financial Secretary Paul Chan said he would set aside HK$68.1 billion for government-funded universities over the next three years, which reflect a two percent reduction each year.

The government said the funding cut could save around HK$2.8 billion for the 2025-28 triennium.

Lau told RTHK that universities had been preparing for the reduction and could absorb it without scaling down teaching or administrative staff.

"It is acceptable in a way that we do have reserves for research, development, and other expenses. So this two percent, if it's only a triennium cut, I would say that the university community can absorb that," he said.

However, he noted the city's universities were expanding and competing globally, which requires substantial funding.

Universities will also have to return HK$4 billion from their General and Development Reserve Fund to the government on a one-off basis, the University Grants Committee said in a statement.

Lau said while this is not good news, institutions were developing income sources including self-funded postgraduate programmes to help balance the funding cuts.

"Of course, we don't welcome any cut because universities are expanding our scope and we are competing with other world-class universities in the ranking, and we are helping our country to build up an even stronger higher education community," he said.

On the scrapping of the HK$2,500 student grant from the 2025-26 academic year, Lau believed the impact on low-income pupils would be minimal.

"That HK$2,500 was given to students when most students were having these online classes and they require a lot more assistance, but now we are back to a normal situation. So I don't think this is a kind of financial aid that we need to continue," he said.