HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2643 OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 22 March 1995
The Council met at half-past Two o'clock
PRESENT
THE PRESIDENT
THE HONOURABLE SIR JOHN SWAINE, C.B.E., LL.D., Q.C., J.P.
THE CHIEF SECRETARY
THE HONOURABLE MRS ANSON CHAN, C.B.E., J.P.
THE FINANCIAL SECRETARY
THE HONOURABLE SIR NATHANIEL WILLIAM HAMISH MACLEOD, K.B.E., J.P.
THE ATTORNEY GENERAL
THE HONOURABLE JEREMY FELL MATHEWS, C.M.G., J.P.
THE HONOURABLE ALLEN LEE PENG-FEI, C.B.E., J.P.
THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE HUI YIN-FAT, O.B.E., J.P.
THE HONOURABLE MARTIN LEE CHU-MING, Q.C., J.P.
DR THE HONOURABLE DAVID LI KWOK-PO, O.B.E., LL.D., J.P. THE HONOURABLE NGAI SHIU-KIT, O.B.E., J.P.
THE HONOURABLE PANG CHUN-HOI, M.B.E.
THE HONOURABLE SZETO WAH
THE HONOURABLE TAM YIU-CHUNG
THE HONOURABLE ANDREW WONG WANG-FAT, O.B.E., J.P.
THE HONOURABLE LAU WONG-FAT, O.B.E., J.P.
THE HONOURABLE EDWARD HO SING-TIN, O.B.E., J.P.
THE HONOURABLE RONALD JOSEPH ARCULLI, O.B.E., J.P.
2644 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 THE HONOURABLE MARTIN GILBERT BARROW, O.B.E., J.P. THE HONOURABLE MRS PEGGY LAM, O.B.E., J.P. THE HONOURABLE MRS MIRIAM LAU KIN-YEE, O.B.E., J.P. THE HONOURABLE LAU WAH-SUM, O.B.E., J.P.
DR THE HONOURABLE LEONG CHE-HUNG, O.B.E., J.P. THE HONOURABLE JAMES DAVID McGREGOR, O.B.E., I.S.O., J.P. THE HONOURABLE MRS ELSIE TU, C.B.E.
THE HONOURABLE PETER WONG HONG-YUEN, O.B.E., J.P. THE HONOURABLE ALBERT CHAN WAI-YIP
THE HONOURABLE VINCENT CHENG HOI-CHUEN, O.B.E., J.P. THE HONOURABLE MOSES CHENG MO-CHI
THE HONOURABLE MARVIN CHEUNG KIN-TUNG, O.B.E., J.P. THE HONOURABLE CHEUNG MAN-KWONG
THE HONOURABLE CHIM PUI-CHUNG
REV THE HONOURABLE FUNG CHI-WOOD
THE HONOURABLE TIMOTHY HA WING-HO, M.B.E., J.P. THE HONOURABLE MICHAEL HO MUN-KA
DR THE HONOURABLE HUANG CHEN-YA
DR THE HONOURABLE LAM KUI-CHUN
DR THE HONOURABLE CONRAD LAM KUI-SHING, J.P. THE HONOURABLE EMILY LAU WAI-HING
THE HONOURABLE LEE WING-TAT
THE HONOURABLE ERIC LI KA-CHEUNG, J.P.
THE HONOURABLE FRED LI WAH-MING
THE HONOURABLE MAN SAI-CHEONG
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2645 THE HONOURABLE STEVEN POON KWOK-LIM
THE HONOURABLE HENRY TANG YING-YEN, J.P.
THE HONOURABLE TIK CHI-YUEN
THE HONOURABLE JAMES TO KUN-SUN
DR THE HONOURABLE SAMUEL WONG PING-WAI, M.B.E., J.P. DR THE HONOURABLE PHILIP WONG YU-HONG
DR THE HONOURABLE YEUNG SUM
THE HONOURABLE HOWARD YOUNG, J.P.
THE HONOURABLE ZACHARY WONG WAI-YIN
DR THE HONOURABLE TANG SIU-TONG, J.P.
THE HONOURABLE CHRISTINE LOH KUNG-WAI
THE HONOURABLE ROGER LUK KOON-HOO
THE HONOURABLE ANNA WU HUNG-YUK
THE HONOURABLE JAMES TIEN PEI-CHUN, O.B.E., J.P.
THE HONOURABLE LEE CHEUK-YAN
ABSENT
THE HONOURABLE FREDERICK FUNG KIN-KEE
THE HONOURABLE SIMON IP SIK-ON, O.B.E., J.P.
THE HONOURABLE ALFRED TSO SHIU-WAI
IN ATTENDANCE
THE CLERK TO THE LEGISLATIVE COUNCIL
MR RICKY FUNG CHOI-CHEUNG
THE DEPUTY SECRETARY GENERAL
MR LAW KAM-SANG
2646 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 PAPERS
The following papers were laid on the table pursuant to Standing Order 14(2): Subject
Subsidiary Legislation L.N. No.
Port Control (Public Cargo Working Area)
Order 1995 ............................................................................... 83/95
Port Control (Public Cargo Working Area) (No. 2)
Order 1995 ............................................................................... 84/95
Food Business (Regional Council) (Amendment)
Bylaw 1995 .............................................................................. 85/95
Frozen Confections (Regional Council) (Amendment)
Bylaw 1995 .............................................................................. 86/95
Funeral Parlour (Regional Council) (Amendment)
Bylaw 1995 .............................................................................. 87/95 Milk (Regional Council) (Amendment) Bylaw 1995........................... 88/95
Offensive Trades (Regional Council) (Amendment)
Bylaw 1995 .............................................................................. 89/95
Places of Amusement (Regional Council) (Amendment)
Bylaw 1995 .............................................................................. 90/95
Places of Amusement (Regional Council)
(Amendment) (No. 2) Bylaw 1995........................................... 91/95
Swimming Pools (Regional Council) (Amendment)
Bylaw 1995 .............................................................................. 92/95
Undertakers of Burials (Regional Council) (Amendment)
Bylaw 1995 .............................................................................. 93/95
Places of Public Entertainment (Licences)
(Specification of Fees) (Regional Council Area)
(Repeal) Notice 1995 ............................................................... 94/95
Residential Care Homes (Elderly Persons)
Ordinance (90 of 1994) (Commencement)
Notice 1995.............................................................................. 95/95
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2647
Timber Stores Regulation .................................................................... 96/95
Timber Stores Ordinance (11 of 1995)
(Commencement) Notice 1995................................................. 97/95 Foreign Lawyers Practice (Amendment) Rules 1995........................... 98/95 Solicitors' Practice (Amendment) Rules 1995...................................... 99/95 Trainee Solicitors (Amendment) Rules 1995 ....................................... 100/95
Statutes of the Chinese University of Hong Kong
(Amendment) Statutes 1995..................................................... 101/95 Specification of Public Office.............................................................. 102/95
Electricity Ordinance (Cap. 406) (Commencement)
Notice 1995.............................................................................. 103/95
Official Languages (Authentic Chinese Text)
(Public Finance Ordinance) Order............................................ (C)18/95
Official Languages (Authentic Chinese Text)
(Trade Unions Ordinance) Order.............................................. (C)19/95
Official Languages (Authentic Chinese Text)
(Inland Revenue Ordinance) Order .......................................... (C)20/95
Miscellaneous
White Paper on the Annual Report on Hong Kong 1994 to Parliament
WRITTEN ANSWERS TO QUESTIONS
Proper Procedures for Legislative Council Election
1. DR DAVID LI asked: According to the Independent Commission Against Corruption, 289 complaints on election graft were reported in 1994. In view of the upcoming Legislative Council election this year, will the Government inform this Council what further steps will be taken to ensure that proper procedures will be followed during the election?
2648 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, it is important that elections conducted in Hong Kong should not be tainted by graft and other irregularities. The Corrupt and Illegal Practices Ordinance sets out the legal framework against such practices.
Everything possible will be done by the Administration and the Boundary and Election Commission (BEC) to ensure that the Legislative Council elections in September will be as honest and clean as possible.
To this end, the Independent Commission Against Corruption (ICAC) would ensure that candidates and their agents are fully aware of the relevant requirements and procedures to conduct a clean campaign. Their officers would visit all candidates to explain the dos and don'ts under the Corrupt and Illegal Practices Ordinance. An information package would be given to each candidate to provide an introduction to the law, illustrative cases and answers to common problems. Publicity literature for candidates' agents and campaign helpers would also be produced. ICAC officers would also take part in briefings for candidates organized by the BEC.
As for the general electorate, the ICAC would publicize, during the election period, the "Support Clean Elections" message through the mass media, posters and press advertisements. Advisory leaflets would be mailed to all registered electors. A hotline would be set up to enable the public to make enquiries and to report any suspected irregularities. A dedicated team of 30 ICAC officers would investigate complaints from candidates and members of the public.
In addition to the efforts of the ICAC, the BEC would further refine, with experience gained from the March municipal councils elections, its comprehensive set of guidelines on election-related activities for the coming Legislative Council elections. The complaint procedures instituted by the Commission would encourage mutual policing and help ensure that the electoral legislation and guidelines are complied with, and that the Legislative Council elections would be open, clean and honest.
Right of Abode for British Dependent Territories Citizens Passport Holders
2. DR LEONG CHE-HUNG asked: In its response to the Legislative Council's motion debate on full British citizenship for all British Dependent Territories Citizens (BDTC)/British National (Overseas) (BNO) passport holders in Hong Kong, the British Government stated that the Joint Declaration enabled all Hong Kong BDTCs to retain the right of abode in Hong Kong. In this connection, will the Administration seek elucidation to ascertain:
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2649
(a) whether BDTC passport holders who also possess Canadian or Australian passports can retain the right of abode in the territory after 1997, taking into consideration that Britain, Canada and Australia allow dual nationality but China does not; and
(b) if the answer to (a) is in the negative, whether there are or will be two categories of BDTC/BNO passport holders, one with the right of abode in Hong Kong and the other without?
SECRETARY FOR SECURITY: Mr President, section XIV of Annex I to the Joint Declaration and Article 24 of the Basic Law provide that persons not of Chinese nationality shall subject to certain conditions be granted the right of abode. The answers to Dr the Honourable LEONG Che-hung's sequential questions therefore depend crucially on the precise way in which these provisions are to be implemented. We are seeking clarification from the Chinese side, in the context of our wider discussion in the Joint Liaison Group on the "right of abode" issue.
Off-shore Transhipment Centre in Kaohsiung
3. MR HENRY TANG asked (in Chinese): It is learnt that Taiwan plans to set up an off-shore transhipment centre at Kaohsiung before 1997. In this regard, will the Government inform this Council whether it will evaluate the effect of such a plan on the air services, shipping trade and tourism of the territory; if so, how the evaluation will be conducted?
SECRETARY FOR ECONOMIC SERVICES: Mr President, the Kaohsiung centre is apparently designed to cater for shipping, rather than air, links with the mainland; hence the impact on air services should be minimal. We see little potential impact on Hong Kong's tourism industry.
In regard to shipping, the Port Development Board Secretariat has carried out a preliminary evaluation of the possible effect on Hong Kong. The result of this evaluation is that we expect the centre to have a relatively small impact on overall port throughput. Specifically we estimate a 1.1% reduction in the growth of port traffic in the period 1994- 96, and 0.7% in the period 1996-2001. On the other hand, there is also potential for an overall expansion in trade between Taiwan and the mainland as a result of the centre's establishment; some of this trade for reasons of price, service quality or convenience is likely to flow through Hong Kong and would tend to offset any reduction in port traffic.
Our estimates of the effect of the transhipment centre on Hong Kong will be kept under review as more information on its development becomes available.
2650 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 Vietnamese Migrants and Refugees
4. MR MICHAEL HO asked (in Chinese): Regarding Vietnamese migrants and refugees stranded in Hong Kong, will the Government inform this Council of:
(a) the respective numbers of Vietnamese migrants and refugees now staying in the various centres managed by the Correctional Services Department;
(b) the respective numbers of Correctional Services Department personnel presently working in those centres as well as the staffing establishment by rank; and
(c) the personal emoluments and other operating costs in each of those centres in the 1994-95 financial year together with a detailed itemized breakdown?
SECRETARY FOR SECURITY: Mr President,
(a) The Correctional Services Department does not manage any centres for refugees. The total number of Vietnamese migrants in Vietnamese migrant detention centres managed by the Correctional Services Department is about 15 300.
(b) The staffing establishment and the corresponding strength by rank in the Vietnamese Division of the Correctional Services Department is at Annex.
(c) The personal emoluments and other operating costs in each of the Vietnamese migrant detention centres in the 1994-95 financial year are as follows:
Personal emoluments ($ million)
Other
operating costs* ($ million)
Total
($million)
Whitehead
Detention Centre
High Island
Dentention Centre
Chimawan
Detention Centre
182.78 17.68 200.46 55.55 7.99 63.54 25.21 2.38 27.59
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2651
Personal emoluments ($ million)
Other
operating costs* ($ million)
Total
($million)
Green Island
Reception Centre
11.76 0.55 12.31
Total 275.30 28.60 303.90
* Other operating costs include temporary staff, transport and travelling, maintenance charges, stores and general administration expenses.
Annex
Establishment and Strength of Vietnamese Centres
(as at 6 march 1995)
Rank Vietnamese Division
HQ CDC(U)* CDC(L) GIRC HIDC WHDC TOTAL
Custodial Staff
Assistant +1(s) 1 Commissioner 0
Chief 0 Superintendent 1 1
Senior 1 1 2 Superintendent 1 1 2
Superintendent 1 4 5 2 2
Chief Officer 2 1 2 13 18 1 1 1 10 13
Principal Officer 1 3 1 5 41 51 1 3 2 6 35 47
Officer 8 4 11 22 45 5 6 10 31 52
Assistant 40 19 50 247 356 Officer I 4 18 11 66 201 300
Assistant 1 143 8 152 Officer II 1 31 7 107 150 296
Sub-total 2+1(s) 0 54 25 212 336 630+1(s) 3 5 58 27 190 430 713
2652 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 Rank Vietnamese Division
HQ CDC(U)* CDC(L) GIRC HIDC WHDC TOTAL
Vietnamese Migrants Staff
Officer (VM) 34 34 4 2 23 29
Assistant 22 266 288 Officer II(VM) 25 14 221 260
Sub-total 0 0 22 0 0 300 322 0 0 29 16 0 244 289
Total 2+1(s) 0 76 25 212 636 952+1(s) 3 5 87 43 190 674 1 002
Other Departmental Grades Staff
Technical 6
Instructor (CS)
(Catering) 5 5
Instructor (CS) 2 12 14 (Catering) 2 1 11 14
Instructor (CS) 0 0
Workman II 2 4 15 21 1 4 8 13
Total 6 0 2 2 4 27 41 0 0 2 1 5 24 67
General Grades Staff
Senior 1 1 Administrative Officer 0
Administrative 0 Officer 1 1
Senior Clerical 1 1 Officer 1 1
Clerical 1 1 3 5 Officer I 1 3 4
Clerical 1 1 3 16 21 Officer II 1 1 5 13 20
Clerical 1 3 4 Assistant 1 3 4
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2653
Rank Vietnamese Division
HQ CDC(U)* CDC(L) GIRC HIDC WHDC TOTAL
Office 1 4 5 Assistant 1 4 5
Personal 1 1 Secretary II 1 1
Typist 1 3 4 13 4
Supplies 1 1 2 Supervisor I 1 1 2
Supplies 1 1 3 5 Supervisor II 1 1 3 5
Supplies 1 2 1 4 Assistant 1 2 3
Total 4 0 0 2 10 37 53 5 0 0 2 11 32 102
GRAND TOTAL 12+1(s) 0 78 29 226 700 1 045+1(s) 8 5 89 46 206 730 1 084
Legend: Establishment + Supernumerary Posts
Strength
* Chimawan Dentention Centre (Upper) ceased to be a Vietnamese migrant detention centre with effect from 1 December 1994
HQ - Headquarters
CDC(L) - Chimawan Detention Centre (Lower)
GIRC - Green Island Reception Centre
HIDC - High Island Detention Centre
WHDC - Whitehead Detention Centre
Usage of Private Carpark Spaces
5. MR STEVEN POON asked (in Chinese): It is learnt that operators of certain privately-run carparks in the territory have used some of the parking spaces as the venues for car shows or selling second-hand cars, thus substantially reducing the number of parking spaces available for public use. In this connection, will the Government inform this Council:
2654 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995
(a) whether there is any requirement stipulated by the Government that all parking spaces in a carpark are to be exclusively used for parking when granting approval of the building plan of the carpark; and
(b) whether the conversion of part of a privately-run carpark to other commercial usage (such as car shows or selling second-hand cars) is in breach of any regulations; if so, what measures will be taken by the Government to ensure that the relevant regulations are complied with by the carpark operators?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President,
(a) Carparks operated on private lots are subject to the lease conditions governing the particular lot and these can vary considerably from one case to another.
(b) The use of carparking spaces on private lots for other commercial uses, such as car sales or shows, does not necessarily breach the lease conditions therefore. Lease enforcement action can be taken against breaches of lease conditions if these do occur however.
Banks' Derivative Products
6. DR HUANG CHEN-YA asked (in Chinese): Following the progressive abolition of the Interest Rate Agreement, some banks have, one after another, offered various kinds of derivatives in order to secure more retail customers. In this connection, will the Government inform this Council:
(a) whether government approval has to be sought before the banks offer such derivatives to their clients; if so, which department is responsible and what the procedures are for granting the approval;
(b) whether the advertisements put out by the banks for such derivatives are subject to the regulation of the Securities and Futures Commission or the Monetary Authority; if so, what the regulating procedures are; and
(c) what legislation is in place to safeguard the customers' investment in these derivatives?
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2655
SECRETARY FOR FINANCIAL SERVICES: Mr President, we do not see a direct link between the deregulation of the interest rate cap on time deposits governed by the Interest Rate Rules and the introduction of derivative products by banks. Such products are more likely the result of product innovation by banks aided by the development, and more common use, of derivatives.
Regarding (a), the Monetary Authority, as the regulator of banks, expects that all the activities of banks should be conducted in a responsible, honest and business-like manner. Banks are therefore required to be financially sound, to be prudently managed by fit and proper persons and to have adequate systems of internal control for the various aspects of their business, including derivatives-related business. Within this overall framework, it is not generally the practice of the Monetary Authority to require banks to obtain its prior approval for each and every new business product. However, where certain products raise risk-related issues (such as deposit-linked derivatives), banks are expected to consult with the Monetary Authority in advance. In such cases, the primary focus is to ensure that banks fully understand the nature of the risks involved and have systems and controls to manage those risks.
As regards (b), advertisements by banks on their products do not need to be pre approved. Nevertheless, the Monetary Authority recognizes the credit, legal and reputational risks to the banks should they engage in derivatives transactions with customers who do not fully understand the risks involved. In issuing a guideline on risk management of derivatives in December 1994, the Monetary Authority therefore reminded banks that for their own protection, they should have policies and procedures reasonably to ensure that their customers have the capability to understand the nature and risks of derivatives transactions into which they enter. They should also provide the customers with sufficient information to help them understand the risks. The Monetary Authority has followed this up in particular cases by means of on-site examinations.
On (c), provisions in the Banking Ordinance ensure that banks manage their risks properly so as to safeguard the stability of the banking system and protect the interests of depositors. However, banking supervision is not generally designed to protect bank customers in respect of specific products. Furthermore, guidance of the kind described in the previous paragraph will help to achieve the objective of protecting not only the banks but also their customers against imprudent marketing of derivative products. In general, to safeguard their own interest, investors would have to be aware of the risks associated with any of their investment activities and to seek professional advice if necessary.
2656 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 Mandatory Sentences for Serious Crimes
7. DR DAVID LI asked: According to a recent survey commissioned by a local English newspaper, more than half of the people of Hong Kong think the territory's judges are too lenient with criminals. Will the Government inform this Council whether it is considering or will consider introducing legislation to require the courts to impose specific sentences fixed by law for serious crimes such as murder, manslaughter and rape?
ATTORNEY GENERAL: Mr President, there is a specific sentence for murder. Since the enactment of the Crimes (Amendment) Ordinance 1993, any person convicted of murder receives a mandatory sentence of imprisonment for life.
Other serious crimes do not carry mandatory sentences, but are subject to a maximum sentence. The circumstances in which a particular type of offence may be committed are infinitely varied. There may be strong mitigating circumstances in respect of even serious offences. A fixed or minimum sentence would not allow the judge to take into account all the relevant circumstances when imposing an appropriate sentence.
In addition, one possible effect of having offences which carry a fixed or minimum sentence might be an undesirable reluctance on the part of judges and juries to convict.
The Administration is not considering introducing legislation of the type referred to in the question.
Public Displays on Progress of Airport Core Programme
8. MR JIMMY McGREGOR asked: It is learnt that the Provisional Airport Authority has arranged public displays on the progress of the Chek Lap Kok airport project and its associated transport systems in order to provide the public with information on the airport project. Will the Government inform this Council whether it will arrange for a number of public displays of descriptive and pictorial illustrations of such progress, with an indication of the percentage completion of each of the principal core projects, at appropriate venues much frequented by the public; and if so, whether such displays will be updated each month until the completion of the airport project?
SECRETARY FOR WORKS: Mr President, the New Airport Projects Coordination Office (NAPCO) has organized 10 exhibitions between August 1994 and March 1995 in different districts throughout Hong Kong. The aim of these district exhibitions is to keep the public informed of the 10 projects in the Airport Core Programme (ACP), including the new airport at Chek Lap Kok
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2657
and its associated transport systems, and the steady progress that has been made on the works. The exhibitions feature descriptive texts on the ACP projects and their progress, photographic displays of the project sites, models and video films. An indication of the percentage completion of each of the 10 projects is included in the text and these figures are updated from time to time.
The exhibitions have been held about monthly in prominent and convenient venues which attract high pedestrian flow. These include Lok Fu Centre, Pacific Place, Tsuen Wan Plaza, City Plaza, Tuen Mun Plaza, Times Square, Shatin New Town Plaza, Telford Garden, Landmark and Ocean Terminal. The 10 exhibitions held so far have attracted a total estimate of 163 000 visitors. The final exhibition of this series will be held at the Shun Tak Centre from 24 to 26 March 1995.
There is no immediate plan to repeat this series of district exhibitions for the time being. Instead, we are planning to establish an ACP viewing and exhibition centre for the public this year. Other formats of local exhibitions are also being considered.
Apart from exhibitions, NAPCO uses a number of other channels to disseminate information on the ACP to the public. These include the bi-monthly publication of a newsletter and progress fact sheet to keep the public abreast of key developments and progress on the ACP. A total of 45 000 copies are published and distributed to about 2 500 individuals and companies both locally and overseas by direct mailing and to the public through district offices and the municipal councils and so on. In addition, NAPCO regularly issues press releases and photographs to highlight achievements of major milestones on the ACP and these are widely covered in the press.
Briefings and site visits on the ACP are also organized for different members of the local and overseas communities, including community leaders, academics, professional and business groups. For school students in particular, we have also produced teaching kits on the ACP and organized briefings and exhibitions to cater for their interests specifically.
As the ACP projects are building towards peak production, we are aware of the growing importance to keep the people of Hong Kong updated on the ACP progress. We will continue to use the above channels to disseminate the relevant information to the public.
Relocation of Existing Ferry Terminals in Central
9. MR WONG WAI-YIN asked (in Chinese): Some of the existing ferry terminals in the Central District will be relocated to new ferry terminals in the reclamation area as a result of the Phase 1 Central and Wan Chai Reclamation works. In this connection, will the Government inform this Council:
2658 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 (a) of the ferry routes to be affected;
(b) of the distance between the new terminals and the existing terminals to be relocated; and
(c) what measures will be taken to minimize inconvenience to passengers, such as the provision of feeder buses and the construction of a covered pedestrian walkway?
SECRETARY FOR TRANSPORT: Mr President, the relocation of ferry piers under Phase 1 of the Central and Wan Chai Reclamation project is scheduled to take place in stages between March 1995 and early 1997. Upon completion of the project in 1997, public ferry services will be accommodated in five new permanent piers on Central Reclamation — four for the ferry services of Hong Kong and Yaumati Ferry (HYF) and one for the licensed ferry service between Central and Discovery Bay.
HYF's Central to Jordan Road passenger service has been relocated to a temporary pier on the eastern edge of the reclamation with effect from 17 March 1995. Ferry routes serving Tuen Mun, Tsuen Wan and Tsing Yi and the outlying islands will be relocated to new permanent piers on the northern edge of the reclamation in May 1995.
The walking distance between the existing piers and the new piers on the reclamation is estimated to be about 900 m. However, the actual walking distance for ferry passengers will vary depending on their origin and destination. Also, passengers arriving by land transport such as buses and taxis should not be adversely affected because there are interchange facilities adjacent to the new piers. These facilities include a bus terminus and waiting areas for taxis and private cars. One bus route has already been relocated to the new bus terminus and another six bus routes will be relocated by May 1995. A well it covered walkway leading to the ferry piers and adequate directional signs have been provided and more facilities are being constructed to provide easy and convenient access for ferry passengers. Publicity will be arranged through notices at piers, pamphlets and press releases to advise passengers of the changes.
Young Drug Abusers in Yuen Long
10. MR WONG WAI-YIN asked (in Chinese): The problem of drug abuse by young people has become increasingly serious in Yuen Long. It is learnt that the Government is planning to set up a drug addiction treatment centre in Yuen Long to provide services to first-time young drug abusers. In this connection, will the Government inform this Council:
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2659
(a) of the estimated number of young people abusing drugs in Yuen Long; of this number, how many are students and what is the age of the youngest drug abuser;
(b) of the objectives of the proposed drug addiction treatment centre and the details of its specific plan; and
(c) what are the factors that will be taken into consideration in determining the location of the treatment centre; and whether the public will be consulted before any decision is taken; if so, how the public consultation will be carried out; if not, why not?
SECRETARY FOR SECURITY: Mr President,
(a) The number of young drug abusers (below the age of 21) in Yuen Long District reported to the Central Registry of Drug Abuse was 316 in 1994. Statistics on the number of students among these young drug abusers are not available. The age of the youngest drug offender reported in Yuen Long is 10.
(b) The objective of the proposed drug addiction treatment centre, to be operated by the Society for the Aid and Rehabilitation of Drug Abusers (SARDA), is to develop an alternative facility wholly and exclusively for the treatment of young male drug abusers. A new facility is required because existing treatment facilities on the remote island of Shek Kwu Chau do not segregate young abusers from addicts with a long history of abuse and, accordingly, the environment there is not entirely conducive to the restoration of young abusers to a drug-free life.
The project has been endorsed by the Action Committee Against Narcotics and approved for funding by the Community Chest. The proposed centre will provide an in-patient treatment facility for young male drug abusers under the age of 25, with an initial capacity of 20 beds, to be progressively increased to 30 over a period of three years. Once admitted, a patient will undergo a programme of detoxification and counselling by a team of medical, nursing and social work staff. The residential treatment and rehabilitation programme takes eight weeks, during which time the family of a patient will be involved. On completion of the residential programme, the patient will be discharged from the centre and transferred to an aftercare programme in one of SARDA's three regional centres.
2660 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995
(c) Since the participation and support of the families of young drug abusers is considered important in helping to encourage them turn over a new leaf, it is essential that the proposed centre should not be located in areas too remote from the community. On the other hand, care will be taken not to set up the centre in a densely populated area. As regards the requirements of the centre, apart from adequate space to provide the necessary facilities and accommodation, some open space within the centre is needed to enable activities to be organized for the young patients during their stay there.
No firm decision has been taken on precisely where the centre should be located, although a number of sites, including the vacant premises of a disused school in Yuen Long, have been examined. The relevant district board will be consulted in due course.
Water Seepage in Public Housing and HOS Flats
11. MISS EMILY LAU asked (in Chinese): Regarding the frequent complaints by residents of public housing estates about water seepage problems in their flats, will the Government inform this Council:
(a) of the total number of complaints received by the Housing Authority about water seepage problems in public housing and Home Ownership Scheme (HOS) flats under its management which have been occupied for less than three years, together with a breakdown of the causes of water seepage; and how many of such complaints have resulted in repair work being carried out;
(b) of the 10 public housing/HOS estates occupied for less than three years having the largest number of complaints about water seepage problems, together with the names of the respective contractors;
(c) whether the Housing Authority has put in place any regulating mechanism to ensure that water seepage problems will not occur in public housing and HOS flats as a result of the negligence of the contractors or defects in building design; if so, what such mechanism is, and why water seepage problems still occur frequently; and
(d) what measures the Housing Authority has taken to improve the quality of public housing/HOS flats in order to prevent the occurrence of water seepage problems after the flats are occupied?
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2661
SECRETARY FOR HOUSING: Mr President, water seepage problems in newly completed public housing estates involve ceilings, windows, external walls and expansion joints. Common causes are the varying standards of workmanship on surface drainage and tenants' unauthorized modifications which damage waterproof materials and surface drainage in the toilet, kitchen and balcony areas. Given the short notice, it is not possible to include in this reply details of complaints about water seepage in all public housing rental estates which are less than three years old. This information will be provided separately as soon as possible. (Annex) As Home Ownership Scheme flat owners themselves are responsible for maintenance works, the Housing Department does not keep a record of such complaints.
Upon receipt of complaints about water seepage in public housing rental estates, estate management staff will refer them to the District Maintenance Office of the Housing Department for follow-up action. However, if the defects are found within the Defects Liability Period (that is within one year of flat completion), repair work will be undertaken by the main contractor.
The quality of housing construction is maintained through a contractor's performance monitoring system. The detailed requirements are set out in the contract specifications and contract drawings. The contractor is bound by the Conditions of Contract to construct the flats and to deliver the end product to the Housing Department in accordance with the requirements specified.
Apart from providing site staff to inspect regularly the work of each construction project, the Housing Department also requires its own project staff, for example, architects and engineers, to visit the site periodically to check that the flats are completed to the required standard. Both site and project staff are guided by procedures set out in the Housing Department's Quality Management Manuals. This mechanism enables each item of work to be checked at every stage of a public housing construction project so that in case of defects, corrective action is taken before the flats are occupied. As indicated above, the contractor is still held responsible for rectifying any defects within one year of handover of the flats.
Campaign Advertisements through Electronic Media
12. MR HENRY TANG asked (in Chinese): As candidates for the Legislative Council election are not allowed to advertise in the electronic media to promote their candidature, will the Government inform this Council:
(a) of the reasons for banning election advertising through the electronic media by candidates;
(b) whether the relevant provisions in the Bill of Rights Ordinance governing freedom of expression have been taken into account in this connection; and
2662 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995
(c) whether it will consider relaxing the control so that candidates for the new functional constituencies may choose any form of media which they consider to be effective for launching their election campaign?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, TV and radio are extremely influential mass media. They reach into virtually every household in Hong Kong. It is therefore important to ensure that they are not being used to give any particular groups or individuals undue influence or prominence. Given the very high cost for TV and radio advertising, allowing election candidates to place advertisements on TV and radio to promote their campaigns would give rich candidates significant advantage, and would place candidates with limited financial means at a disadvantageous position.
In the interest of open and fair elections, we believe a more equitable option is for the Government to make use of some of the air-time available to it on TV and radio for candidates to introduce their platforms. We are now looking into how this might best be arranged for the Legislative Council elections in September this year, including the elections of the nine new functional constituencies. In devising the arrangements, a central consideration will be to give candidates fair and equal access.
Although candidates for the Legislative Council elections will not be allowed to place advertisements on TV and radio, they will have access to the electronic media through air-time provided by the Government. The relevant provisions of the Bill of Rights Ordinance governing the right to freedom of expression has been taken into account in this connection.
Unlicensed Cinemas
13. DR TANG SIU-TONG asked (in Chinese): It is learnt that a number of cinemas in the territory have started operating before licences are granted by the Urban Council and the Regional Council. In connection with this, will the Government inform this Council:
(a) what is the total number of cinemas now operating without licence in the territory; why this situation has arisen; where should the victims go for filing compensation claims in the event of an outbreak of fire in these cinemas; and
(b) what is the normal time required for the Government to process cinema licence applications; and whether there is a need to review and improve the procedures for processing such applications?
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SECRETARY FOR RECREATION AND CULTURE: Mr President, there are at present five unlicensed cinemas all operating within the Urban Council (UC) areas. The UC have taken prosecution action against the owners of all these cinemas. All these cinema owners have been convicted and fined, ranging from $6,000 to $10,000, plus a daily fine of several hundred dollars. This situation has arisen mainly because the cinema owners are unable to satisfy all the licensing requirements imposed by the licensing authority, which is the UC in the urban area and the Regional Council in the New Territories, prior to opening their doors for business.
In the event of an accident such as a fire, victims could claim legal remedies against the person causing the fire, including the owner of the unlicensed cinemas who would be culpable for operating a place of public entertainment without a valid licence.
Under current licensing procedures, the licensing authority working in conjunction with other departments concerned, including the Buildings Department and the Fire Services Department, would normally complete the initial vetting of an application for a cinema licence and issue to the applicant the licensing requirements within one to two months. The time taken for a licence to be issued would depend very much on the time the applicant successfully complied with all the requirements. Past experience has shown that it would normally take an applicant around nine to 14 months to fully satisfy all the licensing requirements.
The licensing authority keeps the licensing procedures under constant review to ensure that applications are dealt with efficiently without compromising any safety or hygiene requirements. The licensing authority will continue to monitor the operation of the licensing procedures and introduce improvements as and when necessary.
Care of AIDS Patients
14. DR CONRAD LAM asked (in Chinese): In view of the refusal of home helpers in some government-subvented organizations to attend to AIDS patients, will the Government inform this Council:
(a) what short-term measures are in place to cope with the situation;
(b) whether there is any concrete plan to enhance the home helpers' understanding of AIDS: if so, what the details are and what is the timetable for its implementation; and
(c) whether the Government has reviewed the appropriateness and adequacy of the present educational work in promoting the understanding of AIDS; if so, what the result of the review is; if not, when such a review will be conducted?
2664 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 SECRETARY FOR HEALTH AND WELFARE: Mr President,
(a) Home help services are provided by government-subvented organizations. It is known that some home helpers have expressed a reluctance to deal with AIDS patients. Efforts are, therefore, being stepped up to enhance home helpers' understanding of AIDS through briefings and seminars with a view to preparing them for providing services to needy AIDS patients.
(b) In conjunction with the Hong Kong Council of Social Service, the Social Welfare Department will implement the following measures to reinforce training and support for home help staff:
- Pamphlets on AIDS resource centres will be issued to home help staff next month so that they know where to seek advice and information on AIDS directly.
- Six seminars, 40 training workshops and 30 orientation visits will be organized in 1995-96 for all home help staff to enhance their understanding of AIDS.
- The component of AIDS education in all basic and refresher training courses for home help staff will be strengthened.
- Operational guidelines on handling AIDS patients are under preparation and will be issued to home help staff within this year.
(c) The Advisory Council on AIDS and its Committee on Education and Publicity on AIDS have all along built in evaluation as a component of the educational programmes conducted. In general, the results have indicated that the programmes are appropriate and effective for the target groups served. In order to determine the overall effectiveness and appropriateness of current publicity and educational programmes on AIDS, two research programmes are being undertaken to assess the knowledge, attitude and behaviour of the public towards AIDS and AIDS-related issues. Preliminary findings of the researches are expected to be available in mid-1996. The publicity and educational programmes on AIDS may be appropriately modified in the light of these findings.
Cash Allowance for Hospital Authority Staff
15. MISS EMILY LAU asked (in Chinese): As part of their remuneration package, staff of the Hospital Authority (HA) receive a basic salary as well as a monthly cash allowance at a rate up to 60% of their basic salary. This has resulted in high spending by the Government on medical care, but the patients
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2665
have not been able to benefit from it directly. In this connection, will the Government inform this Council:
(a) whether the policy of adjusting the cash allowance in line with salary increases is consistent with the Government's prevailing policy on fringe benefits;
(b) whether, in view of the ever-increasing amount of the cash allowance, the existing discrepancy in the remuneration package between the medical staff of the HA and those of private hospitals will be widened further;
(c) whether the cash allowance, which is intended to substitute some of the fringe benefits, includes an element of housing benefits; how many employees of the HA are now receiving both the cash allowance and benefits under the home loan interests subsidy scheme separately provided by the HA; and whether the provision of such housing benefits runs counter to the Government's established policy of not allowing the receipt of "double benefits"; and
(d) whether a review will be conducted on the HA's remuneration package with a view to urging the HA to adopt another set of employment terms, which is similar to that offered to officers at comparable ranks in the Civil Services, in the recruitment of new staff?
SECRETARY FOR HEALTH AND WELFARE: Mr President, the remuneration package for employees of the Hospital Authority was drawn up by an independent firm of consultants. This remuneration package was designed on the basis that it would be comparable to the civil service package in terms of the overall cost to the employer. It comprises a basic salary and cash allowance, a non-contributory provident fund scheme, annual vacation, medical and dental treatment, life and disability insurance as well as a housing loan interest subsidy scheme. The level of cash allowance was determined on the basis of the partial encashment of certain civil service fringe benefits including retirement benefits, leave and housing benefits. It currently ranges from 8% to 60% of an employee's basic salary.
While the Housing Loan Interest Subsidy Scheme is an element of housing benefit within the Hospital Authority remuneration package, the cash allowance is non-accountable and not regarded as a housing benefit. Employees of the Authority who receive both an interest subsidy under the Scheme and the cash allowance do not, therefore, contravene the "no double housing benefits" rule. There are 3 627 employees currently receiving interest subsidy under the Scheme.
2666 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995
The Hospital Authority remuneration package is a unique package designed to encourage the staff working in former government and subvented hospitals to opt for transfer to the Authority. It was endorsed by the Executive Council and approved by the Finance Committee of the Legislative Council.
Since the majority of medical staff working in private hospitals are not salaried employees whose income is determined largely on an individual basis by virtue of their professional qualification, specialized expertise and profile of clients, it would not be appropriate to compare directly their salary package with that of Hospital Authority employees.
The Administration is conscious of the need to contain cost escalation in the provision of medical services. The comparability of employment terms between Hospital Authority staff and their counterparts in the civil service will be a subject of discussion between the Government and the Authority. However, any consequential adjustment to the remuneration package offered to new employees must be made having due regard to the impact on staff morale as well as the need to recruit and retain qualified professionals.
Impact of Port Expansion
16. MISS CHRISTINE LOH asked: As stated in the Port Development Strategy Review, the Port Development Board is pursuing a level of port expansion which will increase the volume of freight cargo moved by road through the territory from 20 million tonnes in 1996 to 70 million tonnes in 2011, an increase of 250%. Will the Administration inform this Council of:
(a) the estimated air quality impact of this increase, both in terms of predicted vehicle emission levels of major pollutants and in relation to the Air Quality Objectives;
(b) the infrastructure support required to meet the increase in cargo volume moved by road together with the estimated capital cost of such infrastructure support; and
(c) the estimated area of land required for efficient container back-up movements and container storage?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, the answers to the three parts of this question are as follows:
(a) The acceptability of port development proposals in environmental terms were addressed in the original Port and Airport Development Strategy (PADS) studies. Although the Port Development Strategy Review did not itself examine the detailed environmental implications of the projected increase in port throughput, this will
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2667
be the subject of a separate study by the Environmental Protection and Planning Departments of the environmental implications of the projected increase in port and airport throughput. The aim will be to assess all the key issues associated with further economic development in Hong Kong and evaluate their cumulative environmental impacts. This will assist the formulation of plans to achieve a sustainable development pattern for Hong Kong. Full public consultation will be part of this process.
(b) The projected increase in freight traffic will require the provision of new transport infrastructure. A number of projects are planned for this purpose which will not only serve the port, but the whole of Hong Kong. A list of these projects in annexed.
(c) Based on the findings of the "Study on Port Back-up Land and Open Storage Requirements" published by the Planning Department in 1994, we estimate that a total of about 500 hectares of port back-up land will be required by 2011.
Annex
Major Transport Projects
Project Estimated capital cost
(a) Western Corridor Railway from the border to the container port, including a spur line to the container port (port rail line)
The port rail line will cost $8 billion.
(b) Route 3 (Country Park Section) $7 billion (to be financed entirely by a private sector consortium)
(c) Ting Kau Bridge $2 billion
(d) Route 16 (Sha Tin to Cheung Sha Wan) $2.7 billion (probably to be built by a private sector consortium)
(e) Duplicate Tsing Yi South Bridge $1.034 billion
(f) Improvements to Lok Ma Chau border crossing
(g) New Road from Man Kam To Crossing to New Territories Circular Road
$200 million $2.4 million
2668 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 Juvenile Delinquency in Tai Po
17. REV FUNG CHI-WOOD asked (in Chinese): Regarding the problem of juvenile delinquency in the Tai Po District, will the Government inform this Council whether:
(a) there is an upward trend in the number of crimes committed by juveniles in the Tai Po District recently; if so, what are the factors leading to such a situation;
(b) the relevant government department have any specific short term plans to improve the situation; and
(c) consideration will be given to strengthening the police manpower in the District as well as deploying another outreaching social work team to serve the District in addition to the one provided in June 1993?
SECRETARY FOR SECURITY: Mr President,
(a) There has been an upward trend in the number of young persons (under 21 years of age) arrested for crime in Tai Po. The figures are as follows — in 1991, 873 were arrested; in 1992, the number was 1 006; in 1993, it was 1 179; and in 1994 it was 1 583. The increase is mainly attributable to the increase in the arrests of young persons for shop theft and dangerous drugs offences.
(b) The problem of young offenders is a matter of considerable concern to the Government and a number of departments are involved in tackling it. Specifically, in Tai Po, the Police Force has stepped up covert operations against drug traffickers. The Force is currently conducting special weekly operations to check on amusement game centres, which are frequented by young persons. The Force also plans to promote the Junior Police Call, in order to foster a police-youth partnership in the fight against crime; in addition, its community relations officers will increase visits to schools. The Force will also intensify both uniform and plain clothes patrols in school areas and areas frequented by young persons.
The Social Welfare Department, together with subvented Children and Youth Services in the district, will in the coming few months set up 40 guidance groups to provide support to youth at risk; organize three anti-drug campaigns to educate young persons against drugs; and formulate eight volunteer training programmes to help prevent drug abuse and enhance positive peer influence among young people.
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2669
From the prevention angle, the Education Department will continue to encourage dialogue among teachers and school social workers, promote home-school co-operation, produce leaflets on good parenting, organize annual seminars for schools on unruly and delinquent behaviour, promote a "whole school approach to guidance" in order to cultivate a positive and caring environment in schools, help schools promote moral education, and run training programmes for teachers on moral education.
(c) The police manpower in the Tai Po District is considered adequate; there will be an additional 17 disciplined posts created for the Task Force and Patrol Sub-unit of Tai Po Division in 1995-96.
The Social Welfare Department, in conjunction with the Hong Kong Council of Social Service, has just completed a review of its outreaching social work. The review has recommended further expansion of the service from 1996-97 onwards and identified Tai Po District as one of the 13 priority areas for the provision of more outreaching teams. The review report is being considered by the Administration.
Appointment of Recorders and Deputy Judges
18. MR ERIC LI asked: Regarding the appointment of recorders and deputy judges of the High Court to hear cases, will the Government inform this Council:
(a) of the number of occasions during the past five years on which barristers from private practice have been appointed to sit as deputy judges under section 10 of the Supreme Court Ordinance;
(b) since the enactment in July 1994 of section 6A of the Supreme Court Ordinance how many barristers have indicated their willingness to be appointed as recorders, and how many have actually been appointed;
(c) whether the recorder system has resulted in any recorders sitting to hear cases; if not, when the system will be implemented and what is the likely number of cases to be heard by recorders during the next year;
(d) how much notice of sitting dates is given to recorders and deputy judges from private practice; and
(e) whether there is any system in place whereby recorders or deputy judges can be made available at short notice to hear a case if the assigned judge is unavailable; if so, how often has it been used and
2670 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995
on how many occasions has a recorder or deputy judge from private practice declined to sit?
CHIEF SECRETARY: Mr President,
(a) During the past five years, there were 32 occasions when barristers in private practice were appointed to sit as deputy judges of the High Court under section 10 of the Supreme Court Ordinance (Cap. 4).
(b) A total of 40 barristers have indicated interest in becoming recorders of the High Court. The Judicial Service Commission has made a preliminary assessment of the suitability of these barristers and is drawing up a shortlist of suitable candidates. Appointments will be made by the Governor upon receipt of the Judicial Service Commission's advice.
(c) Pending receipt of the advice of the Judicial Service Commission, it is not possible to estimate the number of recorders to be appointed during the next year and the likely number of cases to be heard by them. Once appointed, a recorder is expected to sit in the High Court for at least four weeks each year. It is estimated that approximately 10 recorders will share the workload of one full-time judge.
(d) Sitting dates for deputy judges (and recorders in the future) are normally arranged a few months in advance.
(e) Since July 1994, the Judiciary has kept a list of barristers in private practice who are prepared to sit as deputy judges of the High Court at short notice. So far, two barristers from the list have been invited to take up cases just a few days in advance and both accepted these urgent appointments.
Wage Ceiling for Employment and Compensation Payments
19. MR LEE CHEUK-YAN asked (in Chinese): Will the Government inform this Council whether it will review and raise the wage ceiling of $15,000 for the purpose of determining the severance payment, long service payment and compensation for injuries at work as stipulated in the Employment Ordinance and the Employees' Compensation Ordinance; if so, whether it will propose amendments to these two Ordinances within the current legislative session; if not, why not?
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2671
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the wage ceiling for the calculation of severance payment and long service payment under the Employment Ordinance is now being reviewed. Subject to the advice of the Labour Advisory Board (LAB) on the issue, we plan to introduce the relevant amendments to the Employment Ordinance into the Legislative Council as soon as practicable.
As regards the calculation of compensation payments under the Employees' Compensation Ordinance, the levels of payments for different compensation items are governed by different factors, and wage movements is just one of them. The wage level should therefore be considered in the context of the regular annual review on the levels of all the various compensation items for injuries at work under the Employees' Compensation Ordinance. The LAB will be consulted later in the year and subject to its advice, we hope to effect appropriate changes through a Legislative Council resolution by the end of the year so that the new levels of compensation can come into effect in early 1996.
BILL
Second Reading of Bill
APPROPRIATION BILL 1995
Resumption of debate on Second Reading which was moved on 1 March 1995
PRESIDENT: In accordance with Standing Order 54(2) we will now resume the debate on the Appropriation Bill 1995. The motion before Council is that the Bill be read the Second time. Under Standing Order 27, Members have 15 minutes for their speeches.
MR ALLEN LEE (in Cantonese): Mr President, with regard to the last Budget delivered by Sir Hamish MacLEOD in his tenure as Financial Secretary early this month, I would describe it as "overly prudent but short on creativity".
The Liberal Party has clearly indicated in last year's Budget debate that, given a huge reserve on its hand, we hoped the Government could act with the breadth of vision to promote further investment to build for the future, in order that the people of Hong Kong could continue to create wealth and enjoy the fruits of economic development.
However, in this Budget, only routine adjustments in line with past practices are made; and neither a strong determination to build for the future, nor substantial improvements on livelihood is evident. Having said that, the Liberal Party is not too disappointed because we have not expected much at the
2672 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995
outset. How can we expect a budget which involves medium range forecast extending beyond the present Government's effective period of rule over Hong Kong and made under the premise of avoiding strong criticisms and without consultation with China to have any breakthrough in terms of improvement?
I would like to comment on the following three areas:
(I) Inflation
The Financial Secretary said the Government has identified three factors which may help us in future in the battle against inflation. These factors are, first, falling property prices; second, a modest expansion of the workforce; and third, a significant rise in interest rates.
In fact, of these three factors, apart from the one relating to the property market which the Government is able to interfere in to a certain extent, the other two are only objective circumstances beyond the control of the Government. We can only rejoice in the occurrence of these two events and that is all there is to it.
But the problem is that, according to the Government's projection, the inflation rate for 1995 will still stay at 8.5%, while the cost of imports in 1994 have risen by about 5%. That is to say, inflationary pressure in Hong Kong is generated by domestic demand and only property prices can be controlled by the Government. After the Financial Secretary had made it clear that no further steps would be taken to interfere with the property market, we can see that property prices have begun to stabilize and even rise a little. It just serves to illustrate that the Government has no other effective means to combat inflation. Thus, the people of Hong Kong could only keep their fingers crossed.
In fact, one of the sources of domestic inflationary pressure is the increase in public expenditure. Public expenditure for the coming year is expected to increase by about 19.4% over that of this year and involves the creation of new posts in many government departments. Would such a pace of expansion be too fast? Are there any expenditure items that do not warrant the rush for implementation in the next financial year? If they can be spread over for completion within the next two, to three years, the inflationary pressure we are subject to may be alleviated.
If the inflationary pressure is not mitigated, the Government should consider further curbing the growth of public expenditure. However, in so doing, it must be guaranteed that, where reserves are abundant, expenditure involving the improvement of livelihood must not be slashed.
(II) Livelihood and taxation
In this year's Budget, the Government has proposed to introduce a disabled dependant allowance, double the dependent parent and grandparent
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2673
allowances and increase the single-parent allowance. These can be seen as gestures to seek the approval of the people of Hong Kong. I use the word "gesture" here because, to most of the people who will benefit from these concessions, such relief can only slightly ease their tax burden.
If the Government really wants the people to be the master of their own wealth, it should refer to the proposals of the Liberal Party and further expand the tax band. If the Government is willing to do so and, coupled with the implementation of its tax concession proposals, most people of the middle and lower classes as well as the sandwich class would benefit more. Unfortunately, the Financial Secretary made no mention at all of tax band expansion in his budget proposals. The Liberal Party will keep on pressing the Government to consider our proposals in order that the people may enjoy more substantive tax concessions.
Still on the matter of taxation, the existing arrangement is that taxpayers must pay provisional tax. The Government may say that this requirement proves effective. But I would like to ask: why does the Government not compensate the taxpayers the interests for provisional tax payments while interest is payable even for Tax Reserve Certificate? If the Government wishes to avoid pressure from the public demanding the deduction of interests from tax payments, would it not be most thorough to scrap provisional tax altogether? The Liberal Party would like to hear the Government's reply on this issue.
As far as the elderly are concerned, the Liberal Party is very dissatisfied with the Government for refusing to promptly relax the eligibility criteria of the elderly for the Comprehensive Social Security Assistance (CSSA) scheme and increase the basic rate of CSSA payment to $2,500. No matter how generous the Government appears to be on tax concessions, only the working population can benefit. No direct benefits are enjoyed by the elderly at all.
The Liberal Party proposes that the eligibility criteria for CSSA be relaxed and the basic rate of CSSA payment be increased. That is by far the most direct and quickest way of applying our social resources to the care of those elderly people in need. If the eligibility criteria for CSSA are relaxed in line with the proposals of the Liberal Party, the number of eligible elderly people will increase from the existing 72 400 to 125 000, while the additional costs incurred to our society will only be $1 billion or so. According to the estimate on reserves and surpluses forecast by the Financial Secretary for the ensuing years, such a commitment is within the means of our society, and one that the people are willing to make. I wonder why the Government is putting forward excuses and procrastinating changes to CSSA for the elderly. I hope the Financial Secretary can give a positive response in this regard.
The Liberal Party will continue its fight to secure the Government's early implementation of our proposal to increase the CSSA rate of payment and relax the eligibility criteria. In addition, this should go hand in hand with the privately-run retirement protection scheme which has to be implemented as
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soon as possible, to ensure that "wage earners" will have no need to worry about their living after retirement.
In last year's Budget debate, the Liberal Party had urged the Government to speed up the construction of Route 3 and to improve training for teachers of kindergartens, primary as well as secondary schools. We are pleased to see that a certain amount of work has been done by the Government over the last year. It is hoped that the Government would go on with their work in these matters which are of close concern to the people.
(III) Consultation with China on future budgets
According to the Financial Secretary, he had recommended that a designated team of experts be set up under the Sino-British Joint Liaison Group, and the Hong Kong Government would invite them to observe the planning and preparation of the 1996-97 Budget. Also, starting from April 1996, the Chinese Government would be consulted over the 1997-98 Budget.
Let me quote the Financial Secretary as saying that he hoped the Chinese Government would find it a constructive approach with respect to co-operation between the two governments. I would, however, consider that whether such co-operation will in effect be constructive hinges primarily on whether the Chinese and the British Governments could re-establish their mutual trust. If they could not, any co-operation shrouded with suspicion will prove to be fruitless.
I would suggest that, in order to give effect to the right of financial autonomy conferred upon the Hong Kong Special Administrative Region (SAR) by the Basic Law and the spirit of the Chinese Government's non-interference in the domestic affairs of the SAR, this team of experts should mostly make up of Hong Kong people. And, to allay the Chinese Government's suspicion of the British Government, the team should also comprise a handful of economists from China and the British authorities in Hong Kong should recognize the representativeness of the team and provide them with as much assistance and information as possible.
Since the Chief Executive designate of the SAR will have been appointed by the time the 1997-98 Budget is being prepared, I suggest that apart from consulting the Chinese Government over each stage of the preparation process for the Budget, the Chief Executive shall also be involved in the actual preparation work. The team of experts may act as a think-tank to assist the Chief Executive designate to complete all relevant work. As the tenure of the Chief Executive designate has yet to commence, he/she will not be accountable to the Chinese Government. Instead the Chief Executive designate is accountable to the people of Hong Kong to whom he/she owes explanations whenever questions arise.
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2675
The proposed arrangements I have outlined above should be able to fully manifest the administration right of the British Government over Hong Kong before 1 July 1997, with due consideration being given to the concern expressed by the Chinese Government over a smooth transition, and to establish the stature of the SAR Chief Executive in the minds of the people of Hong Kong. I hope the Government would consider the said proposals.
Mr President, other Members of the Liberal Party will shortly deliver the comments of the Liberal Party on this Budget in respect of the areas for which they are responsible.
Finally, on behalf of the Liberal Party, I would like to welcome the appointment of Mr Donald TSANG. Mr TSANG is the first ethnic Chinese to become Financial Secretary in the history of Hong Kong who, in the final two years of transition, will have to shoulder heavy responsibilities and will therefore need strong support from society. I have known Mr TSANG for many years and believe that he would adopt an open attitude in soliciting advice. However, I must remind him that Hong Kong is a diverse society whose people will benefit only when the industrial and commercial sectors develop and flourish. Although we now have a huge reserve, it would be quickly exhausted during an economic downturn. "To act prudently and to curb inflation" will be his motto in maintaining the success of Hong Kong. I believe and hope that he would prove equal to his task. And on behalf of the Liberal Party, may I take this opportunity to wish Sir Hamish all the best in his retirement years. I trust that he must be proud of and pleased to see the achievements of Hong Kong today.
Mr President, with these remarks, I support the motion.
MR MARTIN LEE (in Cantonese): Mr President, this is Sir Hamish MacLEOD's last Budget in his term as Financial Secretary. Let me first take this opportunity to congratulate Sir Hamish on behalf of the Democratic Party.
Since the introduction of directly elected seats to the Legislative Council, the Council has stopped playing the role as rubber-stamp. Members are given a mandate by the public to monitor the Government. The executive needs to be answerable to the Legislative Council. On the one hand, the Government claims to establish a partnership with the Legislative Council. But on the other hand, it is sticking to the principle of an autocratic executive-led government, barring the representatives of public opinion from participating in decision-making. Just as they did in the past, some of the administrative bureaucrats groomed by the colonial government still think they are on the high horse and they pay no attention to Members' reasonable requests. The resignation of Mr LAU Chin-shek over the Employment (Amendment) Bill speaks for itself. In past debates, some Secretaries have said repeatedly that they would only accept "constructive" views. Whether certain views are constructive or not is, of course, up to them
2676 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995
to decide. This has also reflected deep-rooted bureaucratic authoritarianism in the mentality of some officials.
Among the large number of government officials, Sir Hamish is a leading example in establishing a partnership with Members. We can look at the evolution of the Budget preparation process. After Sir Hamish had assumed office, he gradually started a systematic set of consultation procedures. When he started preparing a Budget, he accepted Members' suggestions. This no doubt signalled the first step in developing a co-operative relationship between the executive and the legislature.
The Democratic Party now has the largest number of directly elected Members in the Legislative Council. We are responsible for conveying public views on the distribution of public resources. The Government must also consider our requests seriously.
I think that only a minority of officials still regard directly elected Members as those who keep on making exorbitant demands, handing out free lunches, running with the herd, doing everything just for more votes and contributing nothing to society. But you will not go along with this view if you look at what the Democratic Party, former United Democrats of Hong Kong and former Meeting Point were doing on the Budgets in the past four years. If the Government is ready to take Members' views seriously, then Members will have to be held politically answerable for policies and they will examine concrete issues in detail before airing their views. Otherwise, in the whole bargaining process, Members will only become quick to criticize and will fail to change government policies and improve the distribution of public resources.
Mr President, in the preparation of the Budget, we could see that both government officials and Members of the Democratic Party were learning together in working out a proper relationship between the executive and the legislature. I think that those officials who are senior to Sir Hamish have yet to note the advantages of such a co-operative partnership. I hope that they can learn from Sir Hamish in the future.
In preparing the Budget, apart from consulting Members, another important task is how to consult the Chinese side.
The Democratic Party agrees that as the 1997-98 Budget which straddles 1997 will affect the Special Administrative Region (SAR) Government, special arrangements must be made regarding its preparation process. We think that it is desirable to set up an expert group to explain the preparation work and procedures to the Chinese side. This should also fall within the ambit of the Sino-British Joint Liaison Group. Such consultation will not involve policy-making and the power of veto because real power should come from the Hong Kong Government and its elected legislature in order to abide by the spirit of "one country, two systems and a high degree of autonomy".
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Thus, the actual preparation of the 1997-98 Budget must strictly abide by the Joint Declaration. As this is a matter between the future SAR Government and the present Hong Kong Government, Chinese officials cannot interfere directly. In the past, the Chinese Government had long been thinking that before setting up the SAR, only the Chinese Government could represent the interests of the SAR and interfere with the internal affairs of the future SAR. This would actually be a breach of the Joint Declaration. People of the SAR and the present Hong Kong people are in fact the same people. If there is a smooth transition of the executive, the judiciary and the legislature, there will not be any big difference or any difference before and after 1997. Under these circumstances, the issue of the Chinese Government representing the SAR will not arise. The Democratic party thinks this basic and important principle should never be breached. We think that the preparation work of the Budget should be undertaken by the Chief Executive designate to be announced in 1996 and the Financial Secretary of the Hong Kong Government. If there is a smooth transition of the executive and the Financial Secretary designate, Mr Donald TSANG, and the Financial Secretary designate of the SAR are one and the same person, then the problem can be solved more easily.
Mr President, the Democratic Party is firmly against the idea that under the pretext of sovereignty, all the internal affairs of the SAR should pass through the hands of the Chinese officials, as this would seriously violate the principles of a high degree of autonomy and Hong Kong people ruling Hong Kong. The SAR Government would be bypassed and the autonomy of the future SAR would be undermined.
Speaking on this year's Budget, I would like to look first at the difficulties faced by the Hong Kong society in the 1990s from a macroscopic perspective. Then I will introduce what Members of the Democratic Party will speak on various policies.
Mr President, the key to Hong Kong's success is free competition. Equalitarianism has never gained grounds in the territory. What the public cares most is a fair chance of competition. If only there is work, there will be a chance. They do not blindly follow the footpath of foreign welfare states.
Mr President, the problem is that such motivation for success and enterprise is being dealt a severe blow. Some short-sighted people in the business sector press for the reduction of the cost of production and importing a large number of workers from China. Due to the lack of effective enforcement by the Government, a lot of illegal workers from Southeast Asia are seen working in the service and retailing sectors. Hong Kong people have witnessed how foreign workers have pushed local workers out of the labour market. The original goal of importing workers to make up the shortfall of the labour force has totally changed in nature. If we tune in to radio programmes like "Talkabout", we will be aware of the voice of the grassroots.
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Due to economic restructuring and under the policy of labour importation, problems such as unemployment, under-employment, difficulties in switching jobs and age discrimination, have appeared on the scene one after another. I think that if we allow the situation to deteriorate, the dissenting voice will eventually turn into an acute social conflict. When the public loses the chance to compete and make a living, they will naturally call on the Government to expand its responsibility to society in providing more welfare benefits. In the end, pressure on the Government to increase its expenditure on social welfare will rise accordingly.
What the Democratic Party presses for is a more humane and reasonable capitalist society. Thus, we very much go for free competition. To sustain the drive for success, the Government needs to review the policy of labour importation and close the loopholes in its implementation.
Moreover, after a few generations of hard work, Hong Kong people are living in an increasingly affluent society. They should be able to enjoy a better quality of life. In view of society's increased affordability and rising public expectations towards life, active improvements to the public's standard of living are in line with the realistic and pragmatic goal in policy implementation.
Mr President, on behalf of the Democratic Party, I would like to briefly introduce the speeches to be made by fellow Members of the Democratic Party.
Today the following Members will speak:
Dr HUANG Chen-ya will criticize the Government's financial orientation on the macro side. He will also criticize the lack of policy support for the industrial and service sectors, as well as the absence of an employment policy.
Mr Fred LI will mainly discuss the Government's budgetary strategy including the medium range forecast and upper limit of expenditure growth. He will also review the expenditure on this year's social welfare items.
Mr James TO will concentrate on the expenditure items on security, particularly those relating to the Police Force, corruption, illegal immigration and overstaying.
Mr WONG Wai-yin will focus his speech on traffic planning for new towns and cross-border transport infrastructure projects.
And the following Members will speak tomorrow:
Mr CHEUNG Man-kwong will discuss labour importation and the civil service. Together with Mr TIK Chi-yuen and Mr SZETO Wah, Mr CHEUNG will provide in-depth comments on the planning of basic education and the enhancement of the quality of education.
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Rev FUNG Chi-wood will analyse the inadequacy of government efforts on the environment with the focus on the expenditure items on environmental protection.
Mr LEE Wing-tat will speak on housing supply, particularly the effort to check rising private property prices.
Mr Albert CHAN will come up with an analysis on those parts of the Budget concerning public works, infrastructure and broadcasting.
Mr Michael HO will speak on the expenditure on medical and nursing services and labour, with particular reference to the training and requirements of nurses.
Dr Conrad LAM will give his views on the expenditure on the public medical services.
Lastly, Dr YEUNG Sum will sum up the Democratic Party's views on the Budget. He will put forward the party's views and angles on the concept of "consensus capitalism" proposed by the Financial Secretary. He will also analyse politics and value relating to the Budget.
Mr President, the Democratic Party hopes that the Government can accept the suggestions and criticisms made by Members in the debate in these two days. In next week's sitting, we will hear response from the Administration, which will further realize the spirit of democratization in the preparation of the Budget. In this way, our commendation and appreciation of the outgoing Financial Secretary would not have been made in vain.
I so submit.
MR HUI YIN-FAT (in Cantonese): Mr President, I would like to describe the Financial Secretary's fourth and last Budget during his tenure as "playing safe and pleasing every party." I do not mean to be fault-finding, and I am not used to criticizing unreasonably, yet I am obliged to give some advice on this plain and prosaic Budget. As the saying goes, "Be the first to show concern and the last to enjoy comfort". A positive approach to managing financial affairs is to prepare in advance for the future economic development and the future needs of the community.
It is widely known that the the Financial Secretary has, over the years, become more and more skillful in packaging and highlighting certain distinctive theme to make the Budget more acceptable to the public. Take the Budget of the next financial year for example, to cover up its uninspiring and short-sighted contents, the Financial Secretary, in addition to quoting Xunzi's philosophy of running the state and putting forward the idea of "concensus capitalism" for the first time, played up successfully the theme that the
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Government's expenditure on social welfare would increase substantially. As the representative of the Social Services Functional Constituency in this Council, while I am gratified with the Government's commitment, it is also my duty to let my colleagues in this Council and the public know the truth behind the significant increase in social welfare expenditure.
The recurrent expenditure on social welfare, amounting to some $12 billion for the next financial year, represents a growth of 13.2% in real terms, and taking into account other items of capital expenditure, the percentage of total spending on social welfare in the overall public expenditure (the so-called "big pie") would break through, undoubtedly, the 7% mark for the first time in history. Although this figure is still way behind those in western countries, its phenomenal size of growth has silenced a good deal of criticisms upon the Government. As a matter of fact, many people from the welfare sector, including myself, cannot but express appreciation of the Financial Secretary's kind-hearted concern.
However, from a long-term and realistic point of view, we may conclude that the current level of spending is still far away from the ideal one (that is, the actual demand). As the Government's expenditure on social welfare has been lagging behind the actual demand, very often, the aggregate shortfalls are so great that many people cannot get the timely services needed, thereby worsening their problems, and the result may be irremediable. Owing to a lack of funds, the preventive service on which the social services sector has laid stress cannot achieve any effects either.
The growth in expenditure on social welfare next year, for example, focuses on services for the elderly, the disabled and family related problems, which are already plans proposed in the White Paper: Social Welfare into the 1990s and Beyond and the Green Paper on Rehabilitation Policies and Services published in 1991 and 1992 respectively. The Government has made no additional or extra commitment. It is just to make good its promises made in the two papers. Thus, neither should one feel surprised, nor take it as generosity on social welfare.
On the contrary, the administration has not taken seriously or responded promptly to problems arising from rapid changes in the community. For example, due to a longstanding shortage of family social workers, cases are piling up and the quality of services is affected. The Government should fulfil the promise it has made for years and the caseload ratio of each family social worker should be reduced to 1 to 60. Though the Financial Secretary has promised to allocate more funds in the next financial year to create some 90 additional family social worker posts, with the increasing complexity of family problems such as child abuse, child neglect and extramarital affairs and the increasing number of such cases in recent years, the posts created cannot relieve the workload of these social workers. So, any talk about improving the quality of services is nothing but "talk".
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The problems of young people misbehaving, committing suicide, abusing drug and being made the scapegoat for triad members in criminal activities have become increasingly complicated and serious. The social services sector asked the Government some 10 years ago to achieve the goal of providing one social worker to every school, so as to strengthen the preventive services and prevent more young people from being led astray. To our disappointment, the Government has ignored the request by both the social services and the education sectors. It did not increase the number of school social workers until the problems were getting out of hand. Even with the provision of 22 additional school social workers in the next year, the goal of one social worker for every school can only be achieved in part. Only those schools with exceptional demand for counselling services are provided with school social worker at such ratio.
I am very glad to see that the Government has allocated a lot of resources in recent years to tackle problems arising from an ageing population. Efforts have been made in satisfying the elderly's needs through the provision of institutional care, primary health care, medical service, housing and other public facilities. However, there is nothing better than enhancing the elderly's skill in taking care of themselves, which is extremely important in helping them to lead a retired life in a positive way, or even contribute to the community in their twilight yet productive years. The Government's performance in this respect has been very disappointing. Earlier this year, it abandoned the Old Age Pension Scheme, a scheme proposed by itself, blighting the hopes of hundreds of thousands of elderly people. These people are not begging for handout from the Government. They just hope that their hard work in the past decades and the dignity with which they made contributions can be recognized and repaid by both the Government and members of the public. Since the Government has decided to implement a Mandatory Provident Fund Scheme, I can say nothing more. I just hope that the amount of the Comprehensive Social Security Assistance payment for the elderly can be increased to $2,500 per month within this year, and the means test exercise, which is too stringent, should be reviewed so that more elderly people in need can be benefited.
However, the ensuing problem of financial commitment is causing more worries. As the ageing problem of our population is speeding up and demand for youth and family services as well as rehabilitation services for the disabled is on the rise, it seems inevitable that the future expenditure on social welfare will keep on rising as a result of increasing demand. The problem is that the Government has yet to make any specific and long-term financial commitments in this respect. Starting from 1993, in a departure from its past practice, the Government set aside part of the Lotteries Fund, which has been used solely for capital expenditure, to finance the recurrent expenditure of certain welfare services. In the next financial year, the total spending on this alone will amount to $640 million, representing 42% of the total spending of the Lotteries Fund and outstripping its spending on capital expenditure items. This growing trend arouses a number of worries. Although the Financial Secretary made an one-off injection of $2.3 billion into the Lotteries Fund in 1993 and the sharing of
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proceeds of the Mark Six lottery transferred to the Lotteries Fund was raised significantly by 15% in 1994, creating an impression that the income of the Lotteries Fund would increase substantially, yet this situation can only last up to 1997. As for the financial arrangement thereafter, it is believed that many people are kept in the dark. The Financial Secretary and other government officials concerned just gave us verbal assurance that the Government's financial position is sound and, as a result, recurrent expenditure currently financed by the Lotteries Fund can be included in the General Revenue Account. I am not suggesting that the Government is not trustworthy. After all, wishful thinking is not always borne out by the naked truth. Judging by past experience, expenditure on social welfare is always the first to bear the brunt in an adverse economic circumstance. The Government has been dragging its feet in living up to its promise. In fact, why has the Financial Secretary been reluctant to use the Government's recurrent revenue to finance recurrent expenditure on social welfare when the economic situation is pretty good? What are his problems? I hereby urge the Financial Secretary and his successors to make promptly a long-term and practicable financial arrangement, so as to remove anxieties of non governmental organizations and the public in this respect.
Mr President, I hope I have made it clear to my colleagues and members of the public that the welfare sector is not insatiable. On the tax burden aspect, in addition to a significant increase in the single-parent family allowance, the Financial Secretary introduced for the first time a new allowance of $11,000 for a disabled dependant, defined as someone who is eligible to claim an allowance under the Government's Disability Allowance Scheme. To this, I, of course, have no objection. However, due to the limited income level of this kind of families, it is for sure that not many of them can be benefited, and the tax concession will be insignificant. Hence, the term "concession" is only used euphemistically; those people concerned can do nothing but to respond with a wry smile. Since the Financial Secretary realizes the extra financial burden of these unfortunate families, he should instead increase the amount of allowance and assistance, and extend the coverage to benefit people whose dependants are the elderly, chronic patients and the mentally disabled in need of care at home. A more positive approach, which has been a long-term policy supported by the Government, is to render assistance to the disabled and the mentally disabled, so that they can earn their own living and integrate into the community. One of the practical and feasible ways is to provide by way of encouragement tax concession to employers who take in this kind of employees. In the long run, the one to be benefited most is always the Government, since its financial burden in this regard can at least be relieved.
I also welcome the Financial Secretary's proposal of granting the Social Welfare Department about $2.5 billion to purchase premises as welfare facilities in order to fulfil its performance pledge. As a matter of fact, in recent years, the authority concerned has encountered quite a lot of difficulties and hindrances in finding locations to operate certain kinds of welfare facilities. Nevertheless, sufficient resources should be provided at the same time to address the acute labour shortage problem and to improve the poor service
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quality at present so as to cater for the need to develop additional welfare facilities. The Government should learn from past experience that if consideration is only given to the quantity of service with the quality overlooked, it will only get half the results with twice the efforts.
On the other hand, the Social Welfare Department has recently spent some $6 million to commission a consultant company to review the existing subvention system of non-governmental organizations. By linking the performance of the organization concerned to its funding level, the consultant will also take a look at services provided by various kinds of organizations and simplify the present funding procedures. I, myself, and the Hong Kong Council of Social Service to which I belong should have nothing to object to on this issue, since it has been our goal to strive for improvements in services and flexibility in resources utilization. However, the reviewing procedures and approaches should be open and fair. Though the Director of the Social Welfare Department stressed that the review did not aim at cutting the amount of subvention, it seemed rather suspicious when the authority concerned had excluded the involvement of its long-term partners, the non-governmental organizations, in the process of selecting consultants from the start. Besides, apart from the staffing problem they have been facing, basic facilities and locations of these non governmental organizations are incomparable to those operated by the Municipal Councils and the Royal Hong Kong Jockey Club. Thus, it will be rather difficult to implement the recommendations of the review if resources are not given to improve the facilities and services of these non-governmental organizations. On the aspect of staffing, I think the Government should follow the example of the Hospital Authority, that is, a monthly cash allowance of up to 16.5% of monthly salary should be provided to staff in general to narrow fringe benefit gap between them and civil servants, so that experienced staff can be retained as a result. In fact, the non-governmental organizations have been losing experienced staff since the setting up of the Hospital Authority. Even in the recruitment of staff required by both sectors, such as nurses and occupational therapists, non-governmental organizations have been reduced to the applicants' second choice. In my opinion, even if the Government is unable to make an overall financial undertaking, there should at least be a plan for schedule implementation by stages.
My President, in conclusion, I think it is most appropriate to summarize the Financial Secretary's work in the past four years by quoting Xunzi's financial philosophy, as the Financial Secretary has done in presenting the Budget, "the way to make a country prosperous is to be prudent in public spending, to improve the well-being of the people and to maintain good reserves." I agree, though, that the way to make a country prosperous is to cut unnecessary expenditure and to reduce the people's tax burden, yet I have reservation on the maintaining of good reserves. We need to look constantly to the future and make long term investment unceasingly for the needs of future development. Only in this way can the Government show its genuine commitment to the future well-being of the community and set a good example to members of the public. If one can only maintain good reserves, from the
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Bible's point of view at least, one is not a good housekeeper. I want to emphasize this: a reasonable and appropriate investment in welfare services is undoubtedly an important factor in maintaining stability of our future community in the long run.
Mr President, with these remarks, I support the motion.
DR DAVID LI: Mr President, at the outset, let me say that while I may have policy differences with the Financial Secretary, he is to be congratulated for his dedication to Hong Kong. During his long years of service, Sir Hamish has demonstrated intelligence and integrity. I wish him every success.
Mr President, today's Budget debate is the tenth I have heard as a Legislative Councillor. I will say this — Financial Secretaries have come and gone, but inflation goes on and on.
In 1985, when the late Sir John BREMRIDGE served as Financial Secretary, HK$100 worth this much. Five years later, under Sir Piers JACOBS, it was worth this much. Today, it is worth half.
Inflation is eroding the purchasing power of hard working people. But the Governor, the Chief Secretary and the Financial Secretary have not suffered so much. Their compensation has increased by 35% more than the average earnings of the people of Hong Kong — people who have to pay their own rent, people who do not have expense accounts, people who even have to pay to maintain their own holiday cottages.
I repeat the call I made two year ago — that the next Financial Secretary's salary be tied to inflation. If the rate of inflation were lowered, the Financial Secretary would receive a raise for a job well done. If the inflation increases, or stays the same, his salary would be left unchanged, to be eaten away by the inflation he has not managed to tame.
Then the Financial Secretary would begin to feel another alarming trend — since 1971, lower income groups have received a decreasing share of disposable income. The Financial Secretary spoke proudly of Hong Kong's wealth. But the "statistics of success" say more about the illusion of averages than the well-being of the people of Hong Kong. US$21,800 GDP per head? Most of our citizens are not so affluent.
In 1971, lower income groups shared 11.3% of the total disposable income. By 1991, 40% of the households that earned less than HK$10,000 per month had seen their share drop by a quarter, to 8.3%. But the top 10% had taken an increasing share. By 1991, they were receiving 37.3% of the disposable income. From 1971 to 1991, the Gini coefficient, which measures the relative inequality of income, rose by 13%.
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Year by year, the social contract implicit in our free market economy is being eroded. Hong Kong has been a city of opportunity. People believed that those who worked hard could succeed. Is this still true? Is the Government just budgets away from being asked to support these people? If the general population is impoverished by inflation, wealthy individuals and business would face higher taxes as a result of rising demand for state welfare. Hong Kong's attractiveness as a business centre would be seriously damaged if domestic pressures force the territory to weaken its tax advantages.
Our future economic success depends on the working men and women of Hong Kong receiving their fair share of prosperity today, and their belief in the potential of tomorrow. Only our competitiveness as an international centre can deliver that promise.
But does this Budget makes Hong Kong more competitive?
We often celebrate Hong Kong's economic achievements. But think — for the past 10 years, Hong Kong has recorded higher inflation than Singapore, Taiwan and South Korea. And consider this — from 1985 to 1994, Hong Kong's Gross Domestic Product grew more slowly than Singapore's, Taiwan's, and South Korea's.
The Administration pointed to a downward trend in the rate of inflation last year. Congratulations! But in January, Hong Kong's inflation rate was back in double digits. But yet again, this Budget provides no strategy to safeguard our prosperity.
Prosperity through consensus? We are conceding defeat at the hands of inflation. But the Administration does not think so. As one pundit observed: "This Government loves inflation. That's what's given it all those surpluses." While the Financial Secretary was busy enriching the state, was the well-being of the people of Hong Kong improved? Was the framework of future prosperity strengthened? Or was the tool that created the illusion of fiscal prudence undermining the supports of success?
We know why the Administration cannot do anything about inflation. It is the same reason why they cannot do anything about the worrisome decline in the value of the Hong Kong dollar. It is the linked rate. Unfortunately, opportunities to escape the policy straitjacket the link imposes were missed. I can only hope another comes before the economic contradictions inherent in the link overwhelm our prosperity.
As it is, Hong Kong is pricing itself out of the international marketplace. Everyday, the sharp edge of inflation's knife presses harder against Hong Kong's throat. People from around the world will not complain for too long about the high cost of doing business in Hong Kong. They can simply relocate to an economy that offers greater value for money.
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The loss of our position as an international business centre would have dire implications. We rely on less than 40% of the workforce to pay salaries tax. Just 2% pay the "standard rate". As our competitiveness withers, should we not wonder where the tax revenue will come from if international business — which also pays profits tax — leaves Hong Kong? Already, some employers are transferring part of their operation to lower-cost centres. If business flees to cheaper pastures, what will become of the surpluses the Administration holds so dear?
Surpluses can become an end in themselves, a savings trophy that allows an administration to appear fiscally prudent. But how much of our Gross Domestic Product should languish unproductively in government coffers? The Basic Law states Hong Kong shall "strive to achieve a fiscal balance". Is over-taxing and under-spending compatible with "fiscal balance"? Is it prudent?
Is it not time to ask: What tax policy should Hong Kong pursue? Should we tax less, or spend more? Why do we consistently fail to meet our spending commitments? What does this negligence cost? Where is the evidence of fiscal discipline being nurtured as an administrative culture?
Surpluses can undermine discipline, engendering a cosy satisfaction, a crippling complacency. They can weaken fiscal restraint. The basic disciplines of budgeting are not being followed. Effective government needs careful, accurate budgeting.
Admittedly, spending forecasts have improved. In 1993 the Administration only under-spend by 2%. In each of the three previous Budget years its record was five times worse. Perhaps the Financial Secretary should also be congratulated on his department's new-found accuracy in predicting surplus. I can only hope that this sets a trend. Last year's forecast was off by 671%. Two years earlier, it was out by a staggering 1 567%. What if it had gone the other way, and Hong Kong had found itself plunged into a deficit position?
A good budget must answer three questions: What can be done; what should be done; and what will be done? Has this Budget asked these questions? Did the Financial Secretary provide any answers? A good budget should paint a vision of fiscal future. But what have we been told? To borrow from Benjamin FRANKLIN: "A little neglect may breed a big mischief". For want of vision, our competitiveness may be lost.
The business community has consistently wanted two things — a wider, fairer tax scheme and lower inflation. My constituency itself has made few requests. But once again, the Finance Functional Constituency is being ignored. Banks would like "Sir Prudent" to stop penalizing prudence. They would like Hong Kong's tax treatment of banks' general provisions for bad and doubtful debts to be brought in line with our regional competitors. Again, the
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Government's inaction is victimizing Hong Kong's business, making the territory less able to compete.
My constituency also recommended that Hong Kong introduce a form of group relief. The tax losses of one company in a business group could then be offset against the taxable profits of another.
I hope that the Financial Secretary will correct another distortion of the tax regime. Why does the Administration tax Hong Kong dollar debt securities? Foreign currency debt securities are not subjected to profits tax. Why are investors discouraged from holding debt securities in Hong Kong dollar? Is the Hong Kong dollar not worth anything? Does the Administration want to reduce market liquidity? Does it want to discourage the issue of Hong Kong dollar paper? Or has it simply made yet another taxation oversight?
For once again, there is no reduction in profits tax or stamp duty, and no abolition of estate duty. Again, we heard nothing about privatization. Could Hong Kong not use the capital gains earned on such past investment as the Kowloon-Canton Railway, the Mass Transit Railway Corporation, the Post Office to finance the construction of the infrastructure of competitveness? Would privatization of some of these public assets not balance the "deficit" this Budget anticipates?
Consensus capitalism? Whose consensus? We all agree that the Government should do what it can to create a fertile environment for capitalism. But capitalism means competition — at home and abroad. Does this Government's new "consensus capitalism" suggest that it believes that Hong Kong is less able to compete? Or is it simply too late for this Administration to do anything?
Consensus should involve the community. It should be based on its past, and its future. Consensus cannot simply be reached behind the Financial Secretary's door, or within this Chamber. It must be forged between employers and employees, between the private and public sectors, between the present and future administrations.
But this "consensus" fails to safeguard our future. The future is China. Yet the Administration is waiting till its last Budget to invite experts from the Chinese Government to observe the planning and the preparation of a budget. Can this Administration assure the people of Hong Kong that it has made every effort to enable the Chinese Government to fully understand the territory's public finances? I think not. I fear not.
I have asked a lot of questions today because this Budget contains so few answers. I ask again: Does this Budget improve the long-term livelihood of the people of Hong Kong? Is it strengthening prosperity? Is it building stability?
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Because I cannot answer that it does, I withhold my decision on whether to support the motion pending a response.
MR PANG CHUN-HOI (in Cantonese): Mr President, the Budget this year is the last one prepared by Sir Hamish MacLEOD in his capacity as Financial Secretary. In view of the fact that he has been known for being prudent and he has granted relatively substantial tax concessions last year, I have long been expecting that there will be no relatively large tax concessions this year.
As Hong Kong continues to have brilliant achievements in economic growth, this year's total expenditure is estimated to reach $169.7 billion, an increase of $23.6 billion over the previous year. Although the expenditure on social welfare has been given a comparatively large increase, yet the Old Age Pension Scheme (OPS) has been vetoed by the Government all of a sudden, and the payments under the Comprehensive Social Security Assistance (CSSA) Scheme have been symbolically increased in line with inflation by a mere 8.5%. More to that, the Government has shown reluctance to raise old people's CSSA payments sbstantially. This has aroused profound resentments among Members of this Council and members of the public.
The Financial Secretary estimates that inflation will remain high at 8.5% for the year 1995, but effective measures are yet to be provided. In the past, the Administration blamed inflation on labour shortage. As a result, Sir Hamish expanded the labour importation scheme last year to curb wage rises. The labour sector has all along strongly objected to the way the Government handles the matter. Intereference in the labour market by the Administration has made it impossible for the workers to enjoy the fruit of our economic growth. At present, our workers are obviously facing problems in job-seeking or job-switching. This may strain the employer-employee relations and definitely will do no good to the stability of Hong Kong society. I am deeply disappointed that the Administration remains unwilling to change the labour importation policy.
As regards tax concessions, a new allowance of $11,000 for a disabled dependent is introduced this year. This allowance may be of some help to those relatively better-off families with disabled dependents but it will do absolutely no good to those families which are really in need (that is to say, those families which have no income and in need of CSSA). I believe the original intention of the Financial Secretary was to lessen the burden of those families with disabled dependents but he has to get the priority right and to distinguish which families are the most needy and merit our assistance.
The Financial Secretary plans to spend $2.5 billion over the next two years on the purchase of premises to accommodate welfare services so as to speed up the implementation of the commitments made in the Governor's policy address. While I welcome this measure, I have to remind the Administration to avoid causing volatility to the property market and pushing up property prices.
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Sir Hamish is going to retire very soon. As the Honourable Martin LEE just said, Sir Hamish has, in his capacity as Financial Secretary over the past four years, widely consulted the public and established close ties with Members of this Council to enable the public to reflect their opinions. His attitude in conducting business should be espoused with by Members of this Council. Even though not all our opinions were accepted, at least the Administration no longer "works behind closed door with scant regard to reality". This should be encouraged.
Mr President, these are my remarks.
MR TAM YIU-CHUNG (in Cantonese): Mr President, since Financial Secretary Sir Hamish MacLEOD, who is going to retire, announced his Budget entitled "Prosperity through Consensus" on 1 March, there have been few responses from the community. However, I do not think this means that the public is very satisfied with the Budget. On the contrary, it could means that the public is totally disappointed with the Financial Secretary or they do not have expectations anymore. Moreover, since the Financial Secretary has indicated that he is leaving, people may think it is useless to express their ideas.
Although the Financial Secretary has quoted the phrase "to be prudent in public spending, to improve the well-being of the people" from Xunzi to describe this year's Budget, the Democratic Alliance for the Betterment of Hong Kong (DAB) thinks that the Budget is prudent in public spending but cannot really improve the livelihood of the public.
The Financial Secretary forecasts that the fiscal reserves of the Administration at 31 July 1997 will stand at an impressive $151 billion, which exceeds last year's forecast of $120 billion by 25%. This shows that Hong Kong is in a sound financial position. Under such circumstances, the Administration should offer better tax concessions to those in the lower income group and allocate more resources for social welfare.
First, as regards the tax arrangement pertaining to individuals, the DAB is not satisfied that the Financial Secretary only increases the basic tax allowance to $79,000 nominally according to the inflation rate. The DAB holds that the basic allowance for 1995- 96 should be increased to $86,000. At the same time, employees aged 60 or above should enjoy an extra allowance of $20,000 so that they may save up more for their old age. In addition, expenses incurred by employees in taking government approved courses after work should be tax-deductible to a certain extent so as to encourage employees to improve their skills and their knowledge through further studies. In addition, employees' contributions towards any government-approved provident fund schemes should be tax deductible in order to facilitate the implementation of such schemes.
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As to rates, the opinion of the DAB is that the increase to be introduced in the coming year should not exceed the inflation rate. Moreover, as promised last year, the Administration may further lower the upper limit of rates increase of 20% in 1995-96 so as to alleviate the financial burden of the public.
As regards the new tax allowance of $11,000 for a disabled dependant eligible to claim an allowance under the Government's Disability Allowance Scheme proposed in the Budget, the DAB hopes that this new arrangement may be extended to cover the family members of the chronically ill.
Now, let us turn to social welfare. With such a large amount of surplus, the Financial Secretary only proposes a nominal increase of $200 each month to the allowance for single parent families under the Comprehensive Social Security Assistance (CSSA) Scheme and a nominal increase of $205 each month to the CSSA payments for children. These increases have already been promised in the Governor's policy address made last year. However, in the Budget, not a word has been said by the Financial Secretary with regard to the community-wide request for increasing the standard rate of assistance for the elderly which been repeatedly put forward in motions passed by this Council. During the debate on retirement protection held earlier, the Administration stated that it would respect the decision of this Council. Yet, its present move seems to belie what it has said. The Administration should be ashamed of being so mean.
Apart from the above, the DAB calls on the Government to review and raise the Normal Old Age Allowance and the Higher Old Age Allowance to $800 each month immediately. The existing unreasonable restriction which provides that recipients of these allowances cannot leave Hong Kong for more than 180 days should also be lifted. These arrangements are meant to reward the elderly for their past contributions to the development of Hong Kong.
To enable the quality of life of those families and individuals in need of assistance to improve at the same pace with the development of the community, the DAB thinks that the Administration should conduct a comprehensive review of the standard rate of various kinds of allowances under the CSSA Scheme and increase the amount of payment to the elderly and healthy children to one-third of the median wage. That means the amount should be raised to $2,500 in the year 1995-96. The Administration should also relax the eligibility criteria for CSSA applicants so that more needy people can be covered by the Scheme.
At the same time, the Administration should increase the amount of special allowances under the CSSA Scheme, including nursery allowance, meal allowance for school children, and mobility allowance for students travelling to and from their schools. Comprehensive health and social services centre for the elderly should also be set up in every district so that the elderly can join social activities and receive health care and psychological counselling services within the same building.
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The DAB also suggests that the Administration should increase the number of home help teams to assist single-parent families, single disabled persons and elderly persons who live alone in taking care of their daily household work. In view of the increasing number of single-parent families the Administration should also provide more emergency nursery services and lower the charges so as to cater for their needs. These arrangements are meant to avoid the recurrence of children falling from their homes while left unattended. There have been several such cases recently.
As for wage-earners, they have to live under great pressure. Those engaged in the manufacturing sector have to cope with the problem posed by industries relocating to China as well as industrial restructuring and to face difficulties in changing jobs. Those in the construction industry are threatened by imported labour and have to face the problem of underemployment. And for those in the service industry, their income and employment opportunity are affected as a result of declining spending power. In addition to all these, the fares and charges of public utilities are also on the rise. All these have combined to exert pressure which is greater than what wage-earners can bear. The gap between the rich and the poor has become wider and wider.
Mr President, on the day when the Budget was announced, the DAB had expressed its worry over the possibility that the Budget would be a prelude to further moves. Events in recent days have proved that our worry does make sense. In order to make it easier for the Budget to be endorsed by this Council, the Financial Secretary has intentionally left out items involving fare increases. However, after the Budget has been published, the Secretary for Transport immediately indicated that the First Registration Tax and licence fees for vehicles would soon be reviewed. A few days ago, the Administration announced that postage rates would be raised too. The DAB is very dissatisfied with the way the Administration has acted.
In conclusion, although this year's Budget is a mild one, we are worried lest it should be a prelude to further moves. Moreover the Administration fails to make proper use of the large amount of surplus. As a result, not much has been done to improve the livelihood of the people, to narrow the gap between the rich and the poor, and to provide more social welfare services.
Mr President, these are my remarks.
MRS SELINA CHOW (in Cantonese): Mr President, in preparing a widely-acclaimed budget, the most important thing is to be able to allocate and make use of resources in an appropriate manner. Otherwise, chronic inequality in allocation will eventually give rise to public grievances and increase the burden on the part of the Administration and the taxpayers Today, I would like to make some remarks on the allocation of resources by various law enforcement departments which are responsible for security matters.
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Over the years, I have been emphasizing the importance of crime prevention. Although the efficacy of prevention may not be apparent or provable by figures, the maintenance of social stability has, indeed, an extremely far-reaching impact on Hong Kong.
Last week, I raised the question of police patrol with the Secretary for Security and the Commissioner of Police in this Council. Those officials who are well aware of the aspirations of the people should know clearly the people's point of view. And I believe that both the shop operators and the residents in the urban areas as well as the New Territories will unanimously ask for more policemen to make their presence visible in the streets. It is because the public believe that the display of armed police presence can effectively deter various kinds of criminal activities, especially in crime black spots. For instance, popular tourist shopping areas like Tsim Sha Tsui, Mongkok and Causeway Bay have become the hunting grounds of the pickpockets; the fact that most of the householders in the housing estates need to go out to work during daytime has attracted the burglars and; the vacated public housing units pending redevelopment have become hiding places where drug addicts can inhale or inject dangerous drugs. All these phenomena call for armed patrolling officers to serve as deterrent and to make it easier or more convenient for the public to seek help.
Every time we voice out the public's aspirations and demands in this respect, the Administration will invariably give us the same high-sounding answers. The excuses may only be: the police are highly professional; the deployment of manpower is in line with the need; the log books are being gradually replaced by beat radios; the Neighbourhood Police Units (NPU) have no practical functions and even the abolition of NPUs can facilitate flexible deployment of manpower and so on. I consider these statements have totally disregarded the opinions and psychological fear of the public. This is also my most severe criticism in respect of the report on police review which still has not been completed after three years. When the Secretary for Security submits this report to the Security Panel next month, I will not mind taking all the trouble to asking the Administration how it is going to review, address and accept the public's views and suggestions. I hope the Administration can give me a clear answer.
Anyway, it is an indisputable fact that the police are experiencing a shortage of patrolling manpower. It is regrettable that the officials were unable to answer my question raised during the briefing session in respect of the Budget last week. As a matter of fact, the answer is very simple. Excluding the marine police manpower, a frontline force of 3210 armed officers are required to satisfy the identified needs or the so-called need for "beat patrol" of various districts, including the manpower for carrying out patrolling and manning report rooms. However, the actual manpower for the year 1995-96 will only be 2 168 officers, which represents a shortfall of 31.9%. One should note that these literal figures are in fact only average figures. If we look at these figures again, we will notice that in New Territories South, New Territories North,
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Kowloon West and Hong Kong Island Region, the manpower shortage of certain shifts can even reach 96.9%. It is well known that Kowloon West is being flooded by vice establishments and the residents there are constantly subjected to unnecessary nuisances. In New Territories North and South, there are drastic increases in the number of both private and public housing estates. However, even after a police station has been completed, it is still unable to operate in full-scale. These give rise to a number of problems, with those occuring in Tai Hing, Ma On Shan, Tin Shui Wai and Tseung Kwan O being particularly familiar to us. It is, indeed, imperative for the police to solve these problems promptly. As certain posts in the police station, such as the report room and detention cell, cannot afford to have reduction in manpower, the manpower for patrolling duties has to be cut accordingly. The officials have once remarked that the anxiliary police can make up for the deficiency. But the anxiliary policement have their own full-time jobs and there will certainly be restrictions on the schedule of deployment. It may also be the main reason for the serious shortage of manpower in certain shifts. All these problems call for immediate solution from the Administration.
Furthermore, the so-called "drink-spikers" and "head-thumpers" have recently been on the prowl who actually threaten the lives and property of the public in broad daylight. I dare not say this kind of phenomenon is attributed to the fact that there are fewer policemen who make their presence "visible" in the streets. However, I believe that many people will agree that if there are enough policemen patrolling the streets, our law and order will definitely be improved and the public will also certainly be more relieved. In fact, the numerous calls have been made by members of the community for restoring the NPUs but were rejected by the police for various reasons. For instance, it was insisted that it was impossible to strictly require the policemen to station at the NPUs for the sake of flexible deployment. Although I understand the reasoning of the police, I absolutely cannot recognize or accept this rationale because it has totally neglected the public's needs as well as the fact that the NPUs can really act as a deterrent.
I would like to propose a compromise solution here which I hope will be seriously considered by the police. I remember that whenever any special events like holidays, carnivals or major festivals take place in London, some mobile NPUs will be set up at the spots where the sightseers gather. The NPUs will be responsible for deploying teams, receiving reports, as well as providing supporting services such as conducting front-line investigation, tracking and making arrests. If in dealing with the crime black spots in Hong Kong the police can take a leaf out of London's book, I am sure this will be proved effective and welcomed by the public.
It is undeniable that since Mr HUI Ki-on assumed the office of Commissioner of Police, the image of the Police Force has been improved and the morale boosted. Besides, the distance between the police and the public is being continuously shortened. But in my opinion, apart from establishing a positive image in the community, the police force should also make proactive
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use of the existing mechanism to assist and stimulate the force to play its part properly. Both the District Fight Crime Committees (DFCCs) and the Junior Police Call (JPC) are conceptually meaningful organizations. However, the former really need more resources and manpower support from the Government to be more capable of fully discharging their functions. Of course, the most vital thing is that the Administration must value the views and suggestions put forward by the DFCCs so that the Committees would not become window dressing devices. Obviously, the allocation of only $10,000 per year as the operating fund is far from adequate. As regards the JPC, it was full of vigour when it was first established. But in recent years, its performance has been losing lustre. In fact, the problems of drug taking by youngsters, drug trafficking, recruitment of students into the triad society and the employment of underage girls in vice establishments and so on have become matters of concern to us nowadays. All these problems can be tackled and prevented through the JPC in a more positive manner.
Mr President, I would like to turn to another topic. We can see Filipino maids engaging in various kinds of non-domestic work everywhere in the streets. Recently we can hear some women airing their grievances in the radio programmes, saying that Filipino maids engaging in hawking, retailing and even the service industry will undoubtedly take away the jobs from local workers and make it increasingly difficult for them to earn a living. The women even expressed their willingness to report what they witnessed. Since the situation is worsening, the Liberal Party suggests that the Administration should make a positive effort to tackle the problem at its root and implement effective measures. We hold that the Administration should provide training to those middle-aged women who have been displaced in the course of economic transformation and refer them to work in the vicinity of their homes. On the other hand, the Immigration Department should deploy more manpower to prosecute the Filipino maids who break the law and repatriate them to their country of domicile immediately. At the same time, those employers who deliberately break the law also have to take responsibility. They should be restricted from applying again for overseas helpers to be hired and brought to Hong Kong. Nevertheless, the above measures should only be implemented after extensive publicity.
Another policy which necessitates change is the one relating to the prosecution and imprisonment of illegal workers. The prisons in Hong Kong have been holding an exceedingly large number of prisoners for a long time, putting unreasonable pressure on the Correctional Services Department as well as imposing an unfair burden on the taxpayers. The Liberal Party suggests that all illegal workers should be repatriated upon arrest. Besides, the Administration should negotiate with the governments of these workers' countries of domicile with a view to cracking down on the "snake-head" activities. Of course, if these workers take part in criminal activities, they should be, like other criminals, liable to criminal sanction and punishment.
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In regard to the Hong Kong Government's financial allocation, I have the following opinions:
(1) Last year, a total of 9 276 illegal immigrants and visitors from China gave birth in Hong Kong. According to the Administration's calculating method, it is conservatively estimated that nearly $100 million in public funds has been spent on these people. Had the Hong Kong Government taken the appropriate administrative measures, this sum of money could have been used for recruiting more than 700 police officers. In so doing, it would not only raise the power of the police force to the required level, but also reopen the NPUs.
(2) The Administration should put in more effort to press for the recovery of the $1 billion the Office of the United Nations High Commissioner for Refugees owes the Hong Kong Government so as to make up for the deficit.
(3) Although the Hong Kong Government indicated that all the Vietnamese boat people stranded in Hong Kong would be repatriated within next year, it does not mean that Hong Kong no longer need to address this problem. It is, therefore, imperative for the Administration to inform the public of the financial burden Hong Kong will still have to shoulder in respect of this problem and how much longer it will take to have the problem solved thoroughly.
Mr President, due to time constraint, I can only leave the other important issues relating to the allocation of resources for discussion by the Security Panel. Such iussues include the resignation and retention of senior police and law enforcement officers, particularly the officers in the Operations Department of the Independent Commission Against Corruption, how to encourage the public to report crime and to co-operate with the police in various aspects, how to co-ordinate various departments in the prevention of domestic violence, the protection of the innocent women and children who have been subjected to abuse and so on.
With these remarks, I support the motion.
MRS PEGGY LAM (in Cantonese): Mr President, the last Budget presented by Sir Hamish MacLEOD as Financial Secretary is a financial management plan characterized by a mixture of prudence, initiatives and attempts at catering for the needs of all. The Budget gives the people of Hong Kong a delightful forecast of the fiscal reserves, but steers clear of the controversial issue of tax adjustments. It also advocates "consensus capitalism" as our principle of public financial management in the modern context. All this shows that, in addition to being prudent, the Financial Secretary is also prepared to take new initiatives.
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Having said that, I still have to point out one deficiency of the Budget, namely, the sidestepping of the problems with regard to inflation and the drastic increase in public spending.
I shall compare the Budget to a glass of fruit punch which has been carefully prepared to suit the taste of the customer, set off by richly coloured assorted fruits. It is not only delightfully sweet, but is also very visually appealing. The most obvious visual appeal of the Budget is its promise that huge reserves up to $151.2 billion will be left to the Special Administration Region (SAR) Government on 31 March 1997. In the initial period after the SAR Government has taken over the helm, this amount of reserves can help clear the uncertainties of the time, thereby enabling it to create an even more prosperous future. Not only this, this amount of reserves will serve as the strongest proof to the world that Hong Kong is confident of its own future.
With what must be described as a nice display of courage and wisdom, the Financial Secretary widely consulted Members of this Council and community groups and explained his purpose in the course of preparing the Budget. At a time when the legislature is already evolving along the path of increasing democratization, the Government should really reach out for public opinions instead of preparing a budget behind closed doors at the risks of running counter to public opinions and thus of being bombarded by Members later on. This can serve a positive purpose, both in terms of better financial management and of reducing political pressure. Of course, in trying to find out how he can still remain in control under political pressure, the Financial Secretary must have political wisdom apart from an eye for figures. Perhaps this is what Sir Hamish MacLEOD has referred to as "consensus capitalism".
The concept put forward by Sir Hamish has given us a clear and delightful message that gone are the days when the Government let the free market operate entirely on its own and simply turned a deaf ear to the people's needs. Nevertheless, this also brings home to us a dilemma faced by the Government in the process of formulating public policies. How is the Government going to play a more active role in the provision of social services without doing any damage to Hong Kong's dynamic market mechanism? And, just how should a consensus be reached?
Another point to note about the Budget is the Financial Secretary's remark that the Governor's annual policy address will make all major policy proposals, and the Budget will only provide the funding necessary for the implementation of the policy commitments set out in the annual policy address. I believe that if such a working arrangement functions well, the public will be better enabled to understand government operation, and can thus express their views at the right time. However, I have to emphasize once again that in the course of preparing the policy address, the Financial Secretary must be fully involved to ensure that each and every policy proposal in the policy address is within the means of Hong Kong and the Government. In other words, we have to hold fast to the principle of living-within-our means and avoid a situation
HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 2697 under which the Financial Secretary has to follow the Governor to clean things up.
Although the Financial Secretary has devoted a substantial portion of the Budget to the Government's budget strategy, he has left out the most important point about the primary function of the Budget as a means of regulating the pace of economic growth. The Financial Secretary has not set out how the Budget will shape Hong Kong's economic development in the coming year. Is this just oversight or is it because he simply does not want to tell the truth?
The Financial Secretary has emphasized that the Government's recurrent expenditure in the coming year will increase by only 6%, which is just a fraction more than the 5.5% growth in the GDP. His purpose is to convince the people that the Government is not a "spendthrift". But this is only a one-sided account. If we look closely, we will see that the growth in Hong Kong's total public expenditure in the year 1995-1996 will be as high as 9.3% in real terms, and the growth in the Government's recurrent and non-recurrent expenditure will be 7.2% in real terms, while the real growth in public sector expenditure will even reach 21%. We can see that the growth in public spending in the coming year will in fact be very considerable.
An enormous public expenditure will not only stimulate economic growth but will also aggravate inflation. As far as measures against inflation are concerned, this year's Budget has proposed nothing worth mentioning. The only things mentioned by the Financial Secretary which can help reduce inflation are the fall in property prices and a slight expansion of the workforce. These factors cannot really solve the problem once and for all and, strictly speaking, they are not government measures as such. What is even more worrying is that the Government announced shortly after the release of the Budget that it had no intention of introducing any further measures to curb property prices. Actually, every year, I bring up the point that the Government should introduce a mortgage tax allowance for first-time home buyers. But, I am very disappointed that the Government has all along been unwilling to make any commitment to help the sandwich class, and it is even more surprising that the Financial Secretary is not going to make this commitment before he retires. An enormous public expenditure, coupled with the Government's inaction to bring down inflation and property prices, will only make us worry that in the year to come, before we can see the bright side of economic growth, we will have to taste the bitter fruit of inflation.
I do not support some of the tax concessions proposed in the Budget. The significant increase in the child allowance for the third to ninth child is particularly unacceptable. According to Sir Hamish, this is meant to improve the treatment received by the third to ninth child, and will not really encourage people to give birth to more children. I find it hard to agree with him. The family planning principle of "Two is Enough" is a popular trend in the world today. Rather than getting out-of-date, it has become more and more important. As modern society becomes increasingly complex, parents and society as a
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whole have to devote more attention and resources to children than ever before. More births may result in inadequate parental care. Not only this, society as a whole will also be heavily burdened. How can the Financial Secretary turn the clock back by offering a bigger tax concession in this respect? Perhaps the Government will argue that such people are only in the minority. But if the Government really thinks so, why has it bothered itself with such mock generosity? I personally think that the Government should totally abolish the tax concession for the third to ninth child, and increase the allowance for the first and second child substantially to $30,000. Only this can be of real help to the families in Hong Kong.
Moreover, I suggest that the Financial Secretary should raise the allowances for dependent parents and grand-parents to $30,000 so as to encourage people to look after their parents. On the one hand, the Government and the community are racking their brains, trying to find a solution to the old age retirement problem. But, on the other hand, the Government is doing nothing positive to encourage people to look after their parents. A tax concession is no doubt a feasible solution.
As for the $11,000 tax allowance provided to families who need to support disabled members, I can describe it as "neither fish nor fowl" only. A disabled person needs more care from his family and yet the allowance for a dependent disabled person is lower than that for a normal child. Why? Furthermore, what families with disabled members need most may not be such a meagre tax concession. The Government should really make use of the resources available to provide more training opportunities and accommodation places for the disabled. Only this can relieve the burden of families with dependent disabled members.
As for estate duty, the existing practice is that the whole of a deceased person's estate becomes taxable if its value exceeds the level below which no duty is payable. This is not fair. Under the present system, an estate of $5.5 million is tax-free, but a slightly bigger estate of $6 million is fully taxable. What is the rationale behind that? I think that the Government should consider inflation and follow the example of salaries tax when determing the duty payable. I propose to set $6.5 million as the level below which no duty is payable. For all estates worth over $6.5 million, only the portion in excess of $6.5 million should be taxed. Take an estate of $7 million as an example (do not think that $7 million is a very big sum because just a modest flat will already cost $7 million). For such an estate, only $500,000 will be taxable. In other words, $6.5 million is tax-free and only the amount in excess of $6.5 million is taxable.
The Budget proposes to spend about $2.5 billion on the purchase of welfare premises from the private sector. This may as well be a feasible means to resolve the problem of inadequate community facilities in old districts. I hope that when apportioning resources, the Government can pay special attention to old districts by, for example, strengthening community facilities for
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the elderly and devoting resources to some controversial services such as rehabilitation facilities for the mentally ill, the mentally handicapped and drug addicts. For the secondary property market, $2.5 billion is quite a substantial injection. The Government must therefore avoid pushing up property prices. It must seek to balance local interests through consultation, and proceed with the whole thing with utmost confidentiality, lest market rumours may upset property prices in the districts concerned.
Another delightful point about the Budget is that after repeated calls for subsidized kindergarten education, the Financial Secretary has finally agreed to go along with the wish of the people by earmarking resources to provide direct help to kindergartens. I hope that the Government can announce the details of subsidization and funds allocation as soon as possible so that this commitment can be put into practice when the new school term commences in September.
On the whole, the Budget is heavily characterized by a tendency to "avoid the difficult and deal with the easy". It does not give any strong guidance on Hong Kong's future economic development. It is rather like a glass of fruit punch: sweet and delicious as it is, it does no good to our health.
I hope that the first Budget prepared by the Financial Secretary designate, Mr Donald TSANG, can put forward concrete guidelines on economic issues with which the people of Hong Kong are most concerned, including inflation, public assistance payments, employment opportunities for middle-aged women and labour.
Lastly, I hope that the Government can negotiate with the Chinese side through the Sino-British Joint Liaison Group concerning the arrangements for a Budget that can straddle 1997. As far as the preparation of such a Budget is concerned, the Government should, in principle, work in conjunction with the future SAR Government, instead of simply consulting it.
Mr President, with these remarks, I support the Appropriation Bill. I also wish Sir Hamish MacLEOD a happy life after his retirement.
MR MARTIN BARROW: Mr President, I wish, firstly, to congratulate the Financial Secretary on this, his last Budget, and to thank him for his overall contribution to Hong Kong. During the past four years, he has kept a steady hand on our financial tiller and he can leave Hong Kong satisfied that our economy and financial strength are in good shape.
An overall philosophy
Years ago, Hong Kong was described as a centre of "laissez faire"; in the early 1980s this description was rebranded as "positive non-interventionism". More recently, it was described as "maximum support, minimum interference" and now we have the Financial Secretary's "consensus capitalism"! I
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congratulate him on the introduction of yet another brand name to describe Hong Kong's overall philosophy!
Despite the overall strength which is well illustrated in the Financial Secretary's Budget presentation, I do have some concern that this new brand name could lead to complacency in certain areas. Are we quite certain that all our plans are based on real needs and not on political appeasement of certain sectors?
The Financial Secretary quoted from Xunzi's "On Enriching the State". May I suggest that we should also remember Laozi's Dao De Jing: "When the Government is too intrusive, people lose their spirit; act for the people's benefit; trust them. Leave them alone"!
Mr President, the Joint Declaration reaffirms that the Hong Kong Special Administrative Region will remain a capitalistic economy with a low taxation policy. We should do everything to reinforce this, our greatest strength. This is the philosophy of popular capitalism. Whether or not it is always "consensus capitalism", it is unashamedly for the individual, and stands for the values which have made Hong Kong great.
The regulatory envrionment
The Financial Secretary will recall my recent question regarding the cost to the private sector of regulatory compliance. That particular question was carefully answered by the Secretary for Financial Services, although of course the thrust of my point related to policy across the board, and not just to those areas directly within his domain. The question would have been answered by the Financial Secretary or the Chief Secretary. In the light of the recent collapse of a bank, it might seem a little unfashionable to express concern about "regulatory overkill", but the points I made need to be considered from the view point of the community as a whole and with regard for the overall well-being of our economy, as the issue of a fair balance in regulation is relevant to all areas of Hong Kong's policy, not just financial services. Hong Kong can be proud of the promotion of free markets and capitalism which have brought so many benefits to the people of Hong Kong. We can be proud, too, of Fortune Magazine's recent description of Hong Kong as the best place in the world to do business. Nevertheless we must be careful to avoid complacency. We must ensure that we continue to look into every nook and cranny to seek out and eliminate any areas of inefficiency and regulatory excess.
One example of my concern was in the Secretary for Financial Services's answer to my question when he referred to the current review of the Companies Ordinance. He implied that this was an example of deregulation. On the contrary, there are indications that this review is likely to be carried out with particular regulatory zeal — even to the extent of attempting to apply Hong Kong company law to those companies incorporated elsewhere. This is not a
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principle which has been adopted in other financial centres and would be a serious retrograde step.
Once again, I would like to refer to the good work of the Efficiency Unit, which has made much progress in achieving a more efficient and responsive government. The introduction of performance pledges and greater transparency have been effective steps in the right direction. I would also like to pay an overall tribute to our dedicated and hardworking Civil Service and, in particular, to those senior officials who have recently been promoted or will be soon.
Proposal for a deregulation unit
Let me repeat my specific suggestion that the Government should set up a "Deregulation Unit" under the Efficiency Unit. Like the Financial Secretary, I may be guilty of creating another brand name, as I know some work aspects of the Efficiency Unit are already in that area. I am, however, concerned that the existing unit is being diverted into focusing on the code of access for information, which seems to be outside their original brief.
The Government rightly talks about "customers". This is emphasized in the recent paper entitled "Serving the Community" which provides an excellent summary of the underlying thinking and the specific initiatives of the Government overall and the Efficiency Unit in particular. Although it refers to the partnership of the public and private sectors, there is, in fact, little mention of what is being done to maintain and increase Hong Kong's reputation as being "business friendly", apart from the introduction of trading funds which cover the land and company registries. I hope, incidentally, that as mentioned by Dr the Honourable David LI a moment ago, we are not losing sight of privatization and corporatization initiatives and that the Government will update us on the status of their plans in the area. There is a danger that in focusing on "customers", we are neglecting the business customers who, at the end of the day, provide the engine room for our economic growth.
Why is there the need for specific focus on deregulation? Good regulations serve a vital purpose — they protect our rights, our safety and our environment. They serve to raise our commercial standards. However, unnecessary or over-complicated regulations inhibit growth in both creativity and enterprise, and often result in a waste of time and money. The objective of deregulation is to remove clumsy or outdated regulations, as well as streamlining, simplifying and improving current regulations to ensure that they are working as effectively and efficiently as possible.
Deregulation should help cut costs, and enable businesses to operate more efficiently, to explore new markets and to trade more competitively, particularly now when we are suffering from inflation rates much higher than those of competitors. But let me emphasize that deregulation does not mean the removal or reduction of necessary protection.
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Although I am not implying that the issue is of the same complexity as in the United Kingdom or Europe, I recommend that the Government should perhaps review the role of the Deregulation Unit attached to the Department of Trade and Industry in London. I visited that unit two weeks ago and was impressed by their determined approach to encourage deregulation and to develop creative communication with the private sector. What Hong Kong seems to lack is an established communication channel between the private sector and the Efficiency Unit. I was interested to learn that in the United Kingdom no government department can introduce a new form without its minister's approval!
In the United Kingdom, a series of deregulation task forces were set up in various areas of the private sector, under the overall chairmanship of the Right Honourable Francis MAUDE, the former minister responsible for Hong Kong. These task forces came up with no fewer than 800 suggestions for simplifying the regulatory environment! I am not suggesting for one moment that we would come up with such a long list here in Hong Kong, but I am sure that if the Efficiency Unit could establish a dialogue with our many chambers of commerce as well as with other trade bodies, there would be specific suggestions which could be brought forward. Let me give just one example where effective communication is already working in Hong Kong. For the past two years, there has been a quarterly meeting between the hotels and restaurants industry, the Efficiency Unit and several government departments involved in the licensing arrangements for restaurants and hotels. There has been noticeable progress, which should now eradicate what has been, by any description, regulatory overkill and a bureaucratic steeplechase.
To name a section within the Efficiency Unit as a deregulation unit would convey the right focus on the issue within the public and private sector. It would encourage creativity and initiative ensuring that specific ideas, designed to enable Hong Kong to roll back any areas of unnecessary regulatory activity which have taken place over recent years. Sadly, the evidence elsewhere is that regulatory regimes designed to increase safety, protection of the environment and in the other areas often do not achieve in practical terms the level of benefit which would justify their direct and indirect cost. The mighty regulatory engine which has appeared, in some very profound way, in the European Union has completely gone off the rails!
The urge to nanny often seems irresistible and there has been plenty of encouragement from this Council and others to head in that direction. The Financial Secretary has referred, for example, to new legislation in health promotion. I appreciate the sentiment behind those initiatives, but I fear further anti-smoking legislation could lead to another round of nannying.
I sincerely hope the Government will consider my proposal and give the Efficiency Unit the power it needs to remove the hurdles of the bureaucratic steeplechase. The Government may argue that there are plenty of channels for a private sector dialogue with the Government through the various advisory
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bodies. However, there is no substitute to pursuing these initiatives with single-minded determination through one body which will focus the attention of everyone concerned. I would emphasize that I am not suggesting any significant increase in resources and I would hope a small deregulation unit could be staffed by one or two people reallocated from other responsibilities.
Inflation
The Financial Secretary has rightly expressed concern about the continued high level. There is now early evidence this year that inflation is on the increase, exacerbated by the recent external movement of exchange rates.
Mr President, this is the seventh Budget debate in which I have raised the issue of Hong Kong's labour shortage. Despite the increase in the size of the workforce referred to by the Financial Secretary, the shortage has remained with us year after year. The Government has continually failed to grasp the nettle and explain to the community why a flexible policy, in line with the policies of our regional competitors, is needed.
The recent attempt to put forward a Private Members' Bill to control imported labour was, however, defeated and would have been so by an even greater margin if all Members had been present. Nevertheless, the Government will have to be ready to strengthen its arguments in the autumn, as clearly there will be continued pressure on the issue. It is important not only to convey the message that the inflationary spiral hurts the very people who benefit in the short term from wage increases, but in addition that Hong Kong must maintain its service standards if it is to retain its status as a great international city for business and tourism. I remain convinced, Mr President, that a more flexible policy on labour supply is in the overall interest of the community.
A limited scheme for imported labour alone is not, of course, the only solution. There must be continued initiatives towards productivity gains as well as towards increasing labour participation. The latter appears to have improved slightly, but is below what could be achieved.
The tourism industry
I am encouraged by the Financial Secretary's reference to the importance of the tourism industry to our economy, and the commitment to solve the issue of future hotel supply. It is the unanimous view of the tourism industry that the Government must take action if Hong Kong is to enjoy continued tourism growth into the next century. What, Mr President, is the point of building a splendid new airport, a magnificent extension to the convention centre and expanding other facilities, if there is no place for our visitors to stay? I hope the Government will take early decisive action to ensure the implementation of the proposals put forward by the Hong Kong Tourist Association and its consultants. With the improving tourism facilities in China and the continued growth of outbound travel from China, together with the pent-up demand for
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travel in East Asia, the long-term growth of that industry is assured — if we nurture it properly. Tourism and travel is the world's largest industry and Hong Kong must maintain its share of the long-term growth. We must do everything we possibly can locally to encourage and develop that growth.
There are a few members of the community apparently concerned about the possible negative effects of tourism, as if visitors could somehow overcrowd us. But let us remember that even if the number of visitors to Hong Kong increased from the current 9 million to, say, 20 million of some point in the next century, it will add less than 2% to the total permanent and travelling population in Hong Kong at any one time. With a spread of new Hong Kong hotels and facilities across the territory, such a level of visitors can be sustained and can only bring long-term benefit. In addition, it is important for the Members of this Council to bear in mind that those affected by night flying out of Kai Tak represent only 1/28th of the population of Hong Kong.
Conclusion
In conclusion, Mr President, let me repeat my congratulations to the Financial Secretary. He will leave Hong Kong with our economy in good shape, with reserves projected to reach $360 billion by the end of the century. I have, however, argued that we should not be complacent and that it is important for the Government to ensure that, under whatever "brand name" as created by his successor, the basic strength and the basic direction which has made Hong Kong successful is not changed. But it would be wrong not to give our support to the Financial Secretary and his colleagues. I wish him every success, as I do to his would-be successor, Mr Donald TSANG.
With these words, I support the motion.
MR LAU WONG-FAT (in Cantonese): Mr President, first of all, let me express my heartfelt congratulations to Sir Hamish MacLEOD, who is about to round off his successful civil service career and make a new start in his life. Sir Hamish's long service in Hong Kong has been marked by many contributions to the territory. I do not intend to repeat the many commendations that Sir Hamish rightly deserves. Yet, I must say that I have been most impressed by one attribute of his. He has remained a modest and approachable gentleman over the years, from the early days when he worked as Tsuen Wan Town Manager to the present time when he works as the Financial Secretary. In apt reflection of his personality, his past three Budgets were, on the whole, quite moderate, marked by the near absence of any drastic measures. And the Budgets were also able to take account of public opinions.
This year's Budget is no exception, though a bit surprisingly, the Financial Secretary has used a quotation from Xunzi's "On Enriching the State", an ancient Chinese classic, to highlight the economic policy upheld by the Hong Kong Government. "To be prudent in public spending, to improve the well-
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being of the people and to maintain good reserves" is obviously a sound principle of financial management. The question is whether this can really be achieved. In this respect, the Budget still leaves much to be desired.
Let us first look at the notion of "improving the well-being of the people". Can the people of Hong Kong really become better off? On the subject of tax concessions, the summary of the 1995-1996 Budget prepared by the Information Services Department says somewhat proudly, "The main tax concessions will put $1.2 billion back into the pockets of taxpayers in 1995-96 and $7.7 billion up to 1998-99". I believe that taxpayers' feelings about this remark must be mixed because the money thus saved will not go into their pockets or, if it does, it will simply vanish soon afterward. One of the reasons is that the Government has been unable to do anything about the high inflation rate over the years. The Government has projected that the inflation rate for 1995 will be 8.5%. However, since the prices of imported goods have shot up following a slump in the US Dollar and many large-scale infrastructure works are in full swing, Hong Kong will inevitably face a much higher inflation rate. Soaring inflation will force members of the public to spend more on their daily necessities, and will thus eat into their savings and purchasing power. As a result, the $1.2 billion saved from tax concessions will actually be offset by inflation.
In addition, there is the biggest headache of housing. Property prices have gone down to a certain extent following the anti-speculation measures introduced by the Administration last June. But, this has not benefited the large numbers of people who have to repay mortgage loans because their monthly commitment for this purpose has remained as high as before. And, in recent months, mortgagees are further strained by the repeated upward adjustments of the interest rate. The money saved from tax concession does not go into their pockets.
Mr President, before inflation is effectively curbed and as long as the Administration remains unsympathetic towards the people's heavy burden of mortgage repayment, many people will have to live frugally. The difficult situation faced by the people is best evidenced by the general sluggishness in the retail, catering and taxi trades. That being the case, how possibly can the people become better off? If the Government really wants to improve the well-being of the people, it must strive to combat inflation and help alleviate the people's burden of mortgage repayment. There is, in my view, a workable measure which can improve the well-being of the people — that is, to make mortgage loan interests tax deductible. I first made this suggestion several years ago in the Budget debate and now I still remain convinced that we have to implement this suggestion.
Next comes the principle of prudent public spending. While Hong Kong has a comparatively big reserve, we have to abide by the principle of prudent public spending, particularly at a time when the hand-over is fast approaching and many destabilising factors may affect Hong Kong. As the saying goes: "In
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fair weather prepare for foul". I think the Hong Kong Government should be more prudent and moderate in public expenditure over the next few years.
Although the Hong Kong Government has underscored time and again its determination to uphold the living-within-our-means rule of financial management, the way this principle is being applied is obviously too flexible. The Financial Secretary stated, "This most vital of all our principles ensures that over time government spending grows no faster than the economy as a whole." But what does "over time" mean? Two to three years or five to six years? The Financial Secretary has not made this clear.
The growth in public spending has, for three consecutive years, outrun economic growth. And, public spending in the new financial year will exceed $200 billion for the first time. I hope that the Administration can stop being too open and flexible regarding the definition of "over time". I also hope that in the future the Administration can refrain from continuing to allow public expenditure to increase faster than the economy while claiming that it still adheres to the living-within-our-means principle. Otherwise, the living-within our-means rule will become a mere misnomer.
Mr President, equally worrying is the Financial Secretary's proposal of significantly increasing the expenditure on social welfare. According to the Budget, this expenditure in the new financial year will be increased drastically by 24% when compared with the figure in the preceding year. No one will oppose or challenge the need for continuously improving our social welfare services. However, since people's attitude toward social welfare is one of "the more the better", and it is thus difficult to take back what has already been provided, a responsible government should really exercise restraint and seek to improve its social welfare services in a gradual manner. A "great leap forward" approach should not be adopted. If the Government does otherwise, our community will have to bear the heavy burden of public expenditure and will face the possible danger of being plunged into the predicaments that welfare states are facing. Should this really happen, what then will be the use for us to keep talking about prudent public spending?
The Financial Secretary has devoted a substantial part of his Budget address to refute the criticisms levelled at the Government's extensive reclamation project. The Financial Secretary, of course, has every right to defend the Government's policy. Yet, since so many academics specializing in the field have expressed considerable reservations and concern about the reclamation project's navigational and environmental impacts, should the Administration dismiss all those dissenting voices simply on the ground of land formation? I think the Government should do more research. It should also review again the feasibility as well as the pros and cons of the whole reclamation project. The findings should then be released. This will surely be more convincing than just standing out to rebut charges hastily.
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Mr President, lastly, I would like to talk about the Government's intention of consulting the Chinese Government on the formulation of the 1997-98 Budget. The Budget will span the transfer of sovereignty and Hong Kong will be under Chinese sovereignty during most of the financial year covered by the Budget, which is around nine months. Therefore, the Budget is an extremely important matter which will have a bearing on our smooth transition. It is required that the 1997-98 Budget has to be scrutinized by the Sino British Joint Liaison Group and found to be in order before it can carry through beyond the year 1997. Of course, the people of Hong Kong will also need to participate in the formulation of the Budget in one way or another.
Mr President, with these remarks, I support the motion.
MR JIMMY McGREGOR: Mr President, I do not intend to examine or comment specifically upon the many important points made in the Financial Secretary's Budget address. I will concentrate on what seems to me to be a most important area of concern and on the circumstances surrounding it. My colleagues will certainly cover the Budget and its salient features many times over. But for the record, let me say at the outset that our economy is strong, resilient and capable of absorbing temporary setbacks without difficulty. It is also true that the nature and shape of our economy is changing also that the creation and distribution of our wealth is expanding and changing and properly so in an economy of such strength. The Financial Secretary has produced a solid, safe Budget which can be supported in all its basic proposals.
The Hong Kong General Chamber of Commerce has welcomed this Budget and the consistent and prudent approach exhibited by the Financial Secretary. The Hong Kong Democratic Foundation broadly agrees but joins me in drawing attention to one glaring and incomprehensible omission about which I will have something to say later in this address.
I congratulate Sir Hamish on a Budget which continues his confident commitment to economic growth and social development so obvious in recent years. This Budget and its proposals maintain the sensible, experienced and careful husbanding of our fiscal resources and a most cautious approach towards changes in policies which have proved so very successful down through the years. The Financial Secretary quotes Xunzi in the third century B. C. as having made a most sensible observation about making a country prosperous.
There have been times however when the attitudes of the Hong Kong Government have been closely identified with the third century B. C. and some of us have wondered from time to time when the Government will progress to the second century B. C., especially in regard to some elements of its policy towards social justice and the development thereof. I will just remind Sir Hamish that Xunzi included in his advice the need to "improve the well-being of the people". Indeed, it seems to me that the basic aim of every government and every system of the Government must be to improve the well-being of the
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people. Otherwise what is the purpose in having a Government at all. It does not matter how a Government has been formed or how it is administered but its primary duty is to look after and seek to improve the lives and well-being of the people it governs.
I take it also that Xunzi meant all the people, not some of the people. He must surely have meant those who had nothing as well as those who had a lot. I will come back to this theme shortly.
Because this territory has had the great fortune to have been in the right place at the right time with an economic philosophy and system of the right kind we have prospered mightily over the years. It is customary to applaud the sagacity and ingenuity of our businessmen for the creation of riches and the development of one of the most successful business systems in the history of the world. Such an accolade is of course deserved and our businessmen have shown the world what can be done when skill and hard work are linked to opportunity and the kind of economic system which has not regarded profit as a dirty word.
But it was not businessmen who created the system of the Government which has provided the philosophy, the policies, the procedures, the essential quality, dedication and continuity that created and maintained the institutional and physical infrastructure within which business happily operates. No, it was not business which was the creator of our economic system, but the Hong Kong Government. It was and it is, the Government which has the enormous responsibility for keeping Hong Kong on an even keel at all times, for maintaining both local and international confidence in our economic viability and future, to the extent that companies and people will come here to do business and use our facilities without doubts and qualms of any kind.
Consider the problems which have faced Hong Kong during the last 50 years, the crises almost always caused by external factors, wars, revolutions, upheavals of every kind, the continual changes around Asia transforming colonial territories and countries governed by various forms of dictatorship to more democratic modern and liberal regimes. We have lived through five decades of Asian trubulence and change and through it all, the Hong Kong Government, in my view, has never shifted its ground. It has steadfastly maintained its fundamental policies whilst accepting the need for change and improvement in virtually every facet of government endeavour. It has been by any standard a remarkable performance. Its track record cannot be assailed. The last half century is littered with astonishing achievements sometimes against very great odds. The Government has had to hold the ring in considering the often acrimonious differences between management and labour, between right and left, between those who have and those who have not. Those of us who have had the privilege of serving the people of Hong Kong in this Council and elsewhere must be fully aware of the high comparative quality of this Government and its officers, of their dedication to duty and of their trials and tribulations in seeking accommodation with us, whilst at the same time trying to carry out their duties as they see them.
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The point I am labouring is that the Government has the final responsibility for making decisions which will "improve the well-being of the people". In the introduction to his Budget speech, the Financial Secretary spoke about the need to encourage free enterprise and competition whilst promoting equity and assistance for those who need it. He describes equity as a fair deal for everyone and especially for those less able to compete. He also refers to an adequate welfare safety net.
He says nothing however about social security although he expresses concern for the elderly, the disadvantaged, the disabled and the sick. Social security, I assume, is taken care of for those in work through the proposed Mandatory Provident Fund (MPF) scheme.
This scheme will provide something for our workers when they retire in 30 years' time. It will do nothing for those who are old now and who will retire within the next few years. They will continue to be given the tiny old age allowances of $485 and $550 per month. These do not reflect social security of any kind and over 400 000 elderly people in Hong Kong receive them. These allowances are a form of welfare, a form of charity from what I have regarded a tight-fisted community. The elderly people who have set aside their pride and applied for these allowances have been given nothing in this Budget that I can see, except disappointment over the failure of the Old Age Pension Scheme (OPS) promised them by the Government and taken from them abruptly and without, in my view, adequate explanation or reason.
This is the glaring omission in the Budget I referred to earlier. The Financial Secretary has produced a first-class Budget, strongly supported by the business sector and by most other sectors, with good reason. But in failing to proceed with the OPS and instead proposing to proceed with the MPF, the Financial Secretary has dashed the hopes and legitimate aspirations of half a million elderly people in Hong Kong. Not a word of explanation or regret to them. Not some carefully worded reference to an alternative support system which would raise their pittance to something more in line with the real cost of living for elderlies and which could be afforded by this very rich and prosperous economy. How can we continue to prosper as an economy and reward some of our citizens with riches beyond their wildest dreams when we also disregard hundreds of thousands of people whose labour helped to make much of the wealth enjoyed by others? I have listened to some of the wealthy sounding off about no free lunches and the need to allow Chinese elderly people to starve in cultural rectitude, and also the rubbish about keeping the very rich out of the social welfare system. These are weak excuses for failure to recognize social liability and the need for social justice.
I therefore want to ask the Financial Secretary and other appropriate senior officers in the Government to begin the process of examining the situation of the elderly people receiving the old age allowances, to determine whether these allowances should be substantially increased with a means test for all such allowances to remove any possibility that the rich will benefit. Such a
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study has nothing to do with the Comprehensive Social Security Assistance (CSSA) review which is a different issue altogether.
This may be the last time I have an opportunity to speak directly to the Financial Secretary in this Council on his Budget proposals. He has established a fine record of service and he has done so in a caring and responsible way, conscious of the continually changing balance between economic and social development. In his four years as Financial Secretary, the Government has taken many important steps to improve the life of the people. I submit however that one of the great omissions is the well-being of the half million elderly people who would have been the first recipients of the OPS so strongly promoted by the Government and now apparently abandoned. The Financial Secretary cannot leave things as they stand. The CSSA has nothing to do with those people. Improvement in CSSA allowances later this year or next will not help the half million old age allowance recipients. Yet we are a rich community with huge reserves and much more to come. I urge the Financial Secretary to join with his senior colleagues and his successor to begin the detailed examination I seek. Do it now and Hong Kong people will thank you for it.
I ask my colleagues in this Council also to support my request. The people of Hong Kong will thank them too.
I apologize for speaking so extensively on what is in fact a Budget omission rather than a Budget proposal. But the issue is of tremendous importance to all of us in a community which promotes and believes in equity and justice. I want to thank Sir Hamish finally for his policies of seeking the views of Councillors before making up his mind on his budget proposal. It is a very good example of government by consensus. My best wishes to him in his future activities.
With these hopes and consent, I support the Budget.
DR SAMUEL WONG: Mr President, I endorse this sensible and prudent Budget, particularly at this unique time in our history. Though I have a few comments on the expenditure on works, health, and transport, I would not want those comments to detract in any way from my support of the Budget as a whole.
First of all, works. The Budget speech made several reference to underspending on capital works projects due to delays in reaching agreement with China, resulting in unforeseen surpluses. However, the expenditure must eventually be made. My concern is that a delayed project usually costs more in real terms. I hope there is a firm policy to inform this Council in due course what the actual extra expenditure turns out to be in real terms, so that we know what these delays have cost.
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I fully support the provision of extra facilities for inspecting and improving the safety of slopes and retaining walls and for the monitoring of safety on construction sites. Hong Kong is probably unique in its commitment to building on hostile land due to the shortage of space. We therefore require a unique approach to guarding against the risks this entails.
Hong Kong has a unique attachment to money. I would therefore urge the Government, in addition to regulation, to seek to implement "safety with Hong Kong characteristics". For example, sufficient reward for completion of an accident free project might well be cost effective compared with the salaries and upkeep of monitoring teams. Let us use the market as well as regulation to encourage safety.
Next, health. I was pleased to hear of the many improvements in health care, particularly for sufferers of heart disease. I would, however, remind the health administration of the information I gave recently that costs of rehabilitation after some cardiovascular crises have been shown to be as much as 30 times higher on average using traditional western techniques than using certain oriental therapies. I hope that some of the extra funds allocated to the training of nurses will be devoted to reviving such therapies in Hong Kong. Indeed that the whole aspect of cost saving through use of the optimum diagnosis and therapy, particularly through traditional Chinese medicine, will be fully investigated and implemented by the Government.
I am encouraged that the increase in the Health Care and Promotion Fund will lead to more preventive care which is so much more cost effective.
I was, however, disappointed to see no reference to the introduction of quality assurance in the health and hospital service, including as it does by definition, patient satisfaction. Inherent in this is the minimization of those aspects of the service with which no patient could be satisfied, such as hospital induced disease. The introduction of true quality assurance might in the first instance require funds, though in the long term there is no question it would be cost effective, possibly massively so.
Finally, transport. This received little mention in the Budget speech, though I support getting on with projects such as the Duplicate Tsing Yi South Bridge and not allowing political disagreements to jeopardize the future well-being of Hong Kong.
In a previous Budget, the Secretary showed progressiveness, foresight and friendship with the environment by waiving the registration tax on electric vehicles. Since then trials have been performed on a standard taxi converted to electric operation. The results were encouraging, both in performance and cost effectiveness. There is, indeed, now strong evidence that the conversion of diesel vehicle fleets, such as minibuses, taxis or heavily used light transport, using up to 50 battery swapping depots distributed throughout the territory, could give us, by 1998, a cost effective replacement for what is recognized as
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the most serious single source of air pollution in Hong Kong. The alternative replacement, petrol vehicles, would be more expensive to run, cause taxi and minibus fares to rise and would still cause massive air pollution, albeit on a reduced scale. I believe the electrification of light diesel vehicles should have received enhanced budget support his year. It is not too late to give it policy support.
Of course, I am aware that the Hong Kong Government is dead scared of being the first to do anything, as can be seen in their failure to introduce telephone voting to improve the miserable voter turnout here. However, the case for the electrification of light diesel vehicles is so compelling that I believe all Members of this Council should do their utmost to persuade the Government to make an exception and actually do something what would be the first in the world and be to the enormous advantage of the Hong Kong people, in both health and cost of living.
Mr President, with these remarks, I support the motion.
MRS ELSIE TU: Mr President, there has been no great outcry against this year's Budget, so I take it that most people are satisfied. Today, I do not wish to criticize much that is in the Budget, but will confine my criticism to what failed to appear in the Budget, and which I consider merited mention.
My remarks fall into three main categories, and they concern issues that have been worrying me, because they worry the community.
(a) Imported labour
The first is the impact of imported labour on our local workers. The issue of unemployment in Hong Kong was barely mentioned in the Budget speech, yet it is a matter of great concern to a large proportion of the population here. In paragraph 9 of the Budget speech, we were given the same old figures that the Labour Department has been churning our year after year, figures that no one believes. Unemployment was put at 2.1% and underemployed at 1.4%, against the workers' estimates that unemployment is four or five times that figure, while the extent of underemployment is not known, but is believed to be extensive.
For the past 30 years and more, I have interviewed scores of people in my office, and I can say that there have not been so many cases of unemployment and underemployment brought to my notice for at least 20 years. And what I see now in my office is only the tip of the iceberg.
The fact that the Government itself recently introduced retraining of redundant workers for the first time in our history is a clear admission that it is not ignorant of the problem. But what the Government does seem to be ignorant of is the fact that many of those retrained workers cannot be employed,
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because some employers prefer imported or illegal immigrant labour. These imported or illegal immigrant workers are cheaper, and they can be denied the benefits which protect local workers by law.
Since the Government repeatedly denies what most of us know to be the truth about the unemployment situation, and since the Government seems unconcerned that workers only in their late thirties and early forties are being denied the right to work, I would like today to ask the Government to set up an investigating team. I have already mentioned this to the Financial Secretary personally and he said he would consider it. I have written to the Secretary for Education and Manpower, but have so far not had the courtesy of a reply. The idea came from some workers who quite fairly suggested that such a team should be set up to find out the true facts as to how and why capable and healthy workers who have not yet reached middle age are already being rejected as too old. The Government itself turns down these workers on the grounds of age. Many of them have been retrained and would be capable of working as cleaners in schools and government hospitals, as waitresses or room attendants in hotels and a host of other jobs now occupied by imported workers. Some would be capable of working on the airport and other manual labour. Some employers looking for cheap labour, however, offer them low wages knowing that the workers cannot accept them, and the employers are then able to report to the Government that they advertised the jobs and local workers did not want them. They can then enter the quota for cheap imported labour.
If the Government would set up an investigating team, both workers and employers could be represented, so that by contact with each other they may understand one another's difficulties. Without mutual understanding there can be no solution to the problem. The title of this Budget, "Prosperity through Consensus", could well be applied in bringing workers and employers together to seek prosperity for both sides. In a future debate already tabled by a colleague, I shall have more to say on this subject. But for the time being I want merely to ask the Government to gather the facts, learn the true situation, and seek a consensus whereby both workers and employers may enjoy the fruits of Hong Kong's prosperity. What the Government cannot afford to do is to close its eyes and pretend the problem does not exist just because the Labour Department statistics do not expose the full picture.
(b) Housing
The second issue I would like to raise today concerns housing. This is a subject I raise perennially after the budget speech and the Governor's policy address. The problem is that it never gets settled, so I have to go on repeating it in the hope that eventually it will sink into the minds of those who have the power to get on with the job.
No community can be happy and harmonious when nearly half of its members are living in conditions that in advanced countries would be considered unsuitable for animals to live in. Huge numbers of people live in
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tiny rooms in tenements where 50 sq ft serves as home for a family of four at a cost of $2,000 a month. thousands live in caged bunks worse than prison camps. Tens of thousands live in old public housing estates or government temporary housing areas in conditions that have to be seen to be believed.
I have noticed in the past few years a vast increase in the number of people that suffer from psychiatric disorders. We read daily of serious cases of wife-beating and unimaginable child abuse. We shudder to hear to some appalling, horrifying cases of sexual assault, rape and incest. In Britain, it is against the law to allow male and female children to live in the same room: they have to have separate bedrooms — or at least that was the case when I lived there and no doubt that is still the case. But in Hong Kong whole families live in one room, men and women and children of both sexes. They live in such close and tightly-packed proximity that it would be a miracle if insanity, violence and sexual assault did not occur. In fact, the miracle is that it does not occur more often, and that says much of the decency of the local people in general.
Our housing programmes for low-paid workers are an absolute disgrace, particularly so because we dare to claim that Hong Kong is an economic miracle. The miracle does not include decent housing at affordable rents for the workers who have not yet been reached on the housing waiting list. Young couples cannot afford to get married because they can find no place to live. When is the Government going to realize that the need for low-rent housing is the same critical need as we experienced in the 1950s when the public housing programme commenced? I despair of ever hearing an answer to that question.
(c) The elderly
The third point I wish to raise today is that of the elderly, already mentioned by my colleague, Mr Jimmy McGREGOR. This is also a perennial question that I ask after every budget speech and policy address.
In this Budget speech, the Financial Secretary excused the lack of action to give more assistance to the elderly, on the grounds that "expenditure decisions are taken well in advance of the Budget speech" and that "we cannot at the last minute find large recurrent sums". No one has requested that such decisions should be made at the last minute. The Old Age Pension Scheme (OPS) was rejected months ago, and the Government was well aware that it would be rejected even before that. There was plenty of time to deal with the problem of more assistance for the elderly in need, not to mention the very long standing problem of providing singleton housing for those elderly persons who prefer to live alone but at present are pressured to share with others. The Government intended to inject a large sum of money into the OPS, so how is it that money is not available now? A real increase in cash for food for the elderly (above the measly amount now promised) would have cost only a fraction of the amount promised for the OPS. I find no case for delay in paying a higher rate to the elderly who need it. I had hoped that this could be done on 1 April this year,
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but delaying tactics have prevented this relief to the elderly. Time after time, their hopes have been dashed with false promises, and still they have to wait.
So, Mr President, while I can support the motion, and will accept the Budget, it falls far short in these matters that are omitted, and I find that regrettable. I now ask for urgent consideration on the three matters I have just pinpointed.
MR EDWARD HO (in Cantonese): Mr President, the title of the Financial Secretary's Budget for 1995-96, his last, is "Prosperity Through Consensus". He also coined the term "consensus capitalism". Just what consensus capitalism is all about will certainly form the subject of many academic debates, and the term may also become the title of his memoirs in the future. But, "Prosperity Through Consensus" may very well be his most important farewell words of wisdom for the people of Hong Kong. It is certainly a message that Members of this Council should take to heart when they think of the interest of the people of Hong Kong.
Let me quote an anonymous Chinese saying: "Harmony is precious". This is not as famous as Xunzi's, but is just as important in these troubled times. Whereas prosperity may be created through consensus, prosperity in itself may not necessarily bring about consensus or harmony. Of necessity, a community has to accommodate diverse interests. These diverse interests bring life and dynamism to a community. But, a community can only make best use of its energy and dynamism when it enjoys harmony. Hence, harmony is the most precious value in any community.
Hong Kong has witnessed over three decades of uninterrupted growth. This has been due to the industry and resourcefulness of its people, to the open-door economic policy of China and to its strategic location in South China. All these factors have been discussed in my previous Budget debate speeches and by economists around the world. What has often been overlooked as a key factor of Hong Kong's success is the harmonious relationship among the various sectors of our community in the past. This is why I do believe that the Financial Secretary's message has come from his heart, through years of experience and his understanding of what has made Hong Kong successful.
Through my contact with many people in our community, both inside and outside of my functional constituency, one impression has come across most strongly: people generally feel that Members of this Council do not have much to do except arguing incessantly and viciously with each other, and with government officials. The saddening scenes in other countries can now be seen in Hong Kong too: personal attacks with rude words and histrionics for effect. And, in some countries, legislators even resort to fisticuffs. All this is intended to attract media attention and increase individual popularity.
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Mr President, a community thrives on its diversities, but grave danger may result if these diverse interests were made use of: polarizing and dividing our otherwise harmonious community for political gains. That will do irreparable damage to our community.
Mr President and fellow Members, in the present political climate, it may be naive for me, and the Financial Secretary, to think that consensus politics can still work. But, at least there are two idealists in this Council. We should at least recognize the Financial Secretary's initiative of consulting Members of this Council in the preparation of this annual Budget.
The colour of his printed speech indicates the Financial Secretary's rosy picture of Hong Kong's economic growth in the coming years: an enviable annual GDP growth of 5.5% next year and huge fiscal reserves of $151 billion at the transfer of sovereignty, to be increased to $361 billion by 31 March 1999. On the other hand, he has also reminded us of the challenges that lie ahead in the next few years: the ups and downs of China's economy and the world economy will continue to influence Hong Kong immensely. For this reason, we can ill afford complacency. For the same reason, I cannot object to the Financial Secretary's strategy of maintaining a healthy reserve.
While the Financial Secretary's prudent financial management has won the acclaim of many, others have queried whether the Financial Secretary has struck a proper balance between prudent financial management and adequate funding for addressing social problems. We know very well that we still face many social problems. In particular, we have to look after the elderly, and we also have to invest in our infrastructure so that housing can be provided to the homeless, overcrowded households and the residents of caged homes, rooftop structures and hillside squatter huts. In terms of GNP per capita, Hong Kong does better than many other countries. However, in terms of quality of living, Hong Kong compares far less favourably, even with relatively poorer countries.
Our task is to strike a proper balance so that we can solve our acute social problems without changing our society into a welfare society, which stifles hard work and in turn contributions to society. If democracy is an ideal, then that balance is the ideal of democracy.
Physical infrastructure
As usual, I will comment on infrastructure. Investment in the physical infrastructure is vital for the sustained growth of our economy. Although we are told that spending on the infrastructure will not diminish in the coming years, there is nevertheless still a nagging concern. If the poor relationship between the British Government and the Chinese Government persists, there is a real risk that some of the more ambitious but vital projects may be delayed during the transition period, and Container Terminal 9 is one example. Up to now, the financing for the Provisional Airport Authority and Mass Transit Railway has still not been agreed by the two governments. Three rail links
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including the important New Territories Northwest Railway are planned to be completed by 2001. But these will remain plans on the drawing board unless the two governments can agree on their works commencement dates.
On various occasions in this Council, I commented on the reclamation projects around Victoria Harbour. Recently, other people in the community have also made comments on the subject, and some even ask the Government to stop any further reclamation to preserve Victoria Harbour. An interesting question, not related to those considerations, is whether our harbour will still be named after Queen Victoria after 1997. Victoria Harbour or not, one thing is certain: the main working harbour has already moved west.
Another point is that we should ensure that the future development of the harbour can continue to enhance the cityscape of Hong Kong. Historically, harbour reclamation in Hong Kong has offered the cheapest and quickest solution to cater for the expansion of our city. The planned reclamation will provide the land much needed for social and economic growth. Another intention of the planned reclamation is to provide more open spaces and community facilities to ease the over-crowding in the Metroplan area. Hence, when planning those reclamations, we must ensure that we will not devote too much land to at grade or elevated roadways and traffic interchanges, as in the case of the West Kowloon reclamation project. In terms of construction costs, underground roads and interchanges will no doubt be more expensive than their at-grade counterparts. However, the resultant long-term environmental benefits will more than offset the additional cost involved. Moreover, if we sell the noise buffer zones designated along the at-grade roads, the future government will also receive considerable revenue. If the above factors are taken into account when planning the reclamations, the reclamation area will shrink considerably in size.
Industry
The shift of many of our production lines to the Pearl River Delta has led many to discuss its implications for the scale of Hong Kong industries in the future. It is however beyond doubt that given its expertise in product design and marketing, as well as its potentials to become a centre for high-tech, high value-added industries, Hong Kong can and should remain as a centre of industrial activities in the South China region. This would need the right kind of infrastructure support from the Government: in education, in funding research and development, and in making available reasonably priced industrial land for special industries. Tseung Kwan O Industrial Estate Phase I, developed by Hong Kong Industrial Estate Corporation, has already been open. The continued encouraging performance of the Corporation indicates that it is now time to plan for the fourth industrial estate. The Government must also develop a land zoning strategy to allocate low density industrial land for purpose-built factories in the form of industrial parks.
2718 HONG KONG LEGISLATIVE COUNCIL — 22 March 1995 Promotion of service sector
I am glad that following Hong Kong's transformation into an important service centre in the region, the Government has finally recognized the contribution made by the service sector to the economy. Hong Kong's service sector is able to compete with its rivals from other countries because of the quality of service it can offer. But this is increasingly threatened by the rising costs of operation in Hong Kong, due to the acute manpower shortage and unrelenting inflation experienced in the last six years or so.
I welcome the Government's plan to research into how best Hong Kong's service industry can be promoted overseas. Hong Kong has not only set an example to the rest of the world on how to provide a suitable business environment for open and fair competition, but it has also offered many opportunities to consultants around the world to participate in its many infrastructure projects and consultancy studies. Consultants from the United Kingdom and United States have been able to benefit from the intelligence network provided by their respective countries' trade offices and consulates. In marked contrast, the Hong Kong Government has never put in any efforts for the service sector.
In a study conducted in 1993 entitled "Hong Kong 21", the Business and Professionals Federation recommended that the Hong Kong Trade Development Council should extend its services to include the promotion of the service sector. I hope that its proposal can be considered by the Government.
Mr President, this is the farewell budget of Sir Hamish. His term as Financial Secretary has not always been smooth sailing. Since 1991, we have had a much more political and at times stormy Council. That the Financial Secretary has not only managed to keep things going, but has also left us with huge reserves is something which certainly deserves our special recognition. We wish him well on his onward journey, and may he and Lady MacLEOD sail any seas safely, profitably, with complete consensual harmony.
With these remarks, Mr President, I support the motion.
DR HUANG CHEN-YA (in Cantonese): Mr President, this is the last Budget presented by Sir Hamish MacLEOD as Financial Secretary, and this is also the last budget debate of this Legislative Council during its current term of office. Therefore, it is a suitable time for an overall assessment.
The Financial Secretary has used the term "consensus capitalism" to describe what we are practising in Hong Kong. When using this term, what he actually has in mind is the emergence in even greater numbers of public appeals in regard to government policies ever since the introduction of directly elected membership into this Council in the year 1991. Since then, because of the addition of democratic input, consensus has become a matter which is no longer
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strictly restricted between the Government and the privileged. More democracy has not plunged Hong Kong into chaos and disorder. Quite the contrary, it has prompted the Government to formulate policies that can better look after the well-being of the whole community, rather than just the interests of a small minority.
The self-evident economic achievements of Hong Kong over the past few years have clearly shown that Hong Kong is capable of having more democracy, and more democracy will only serve to reduce social conflicts and narrow the gap between the Government and the people, thus making Hong Kong even more successful. Therefore, the Chinese Government should really agree to amend the Basic Law to allow full-scale direct elections in Hong Kong after 1997 so that the Special Administrative Region Government's financial philosophy can be brought more in line with the consensus of the community.
In fact, I believe that, in the community of Hong Kong, a consensus view about what capitalism should be has long been in existence. This is a consensus that sees capitalism as essentially a system under which the fruits of economic prosperity can be shared by all members of the community. We respect the free market economy, fair competition and success of individuals. However, we do not want a primitive kind of capitalism under which the law of the jungle applies. We do not want to see large numbers of old people and disabled persons languishing in great misery under the bright neon lights of a prosperous Hong Kong, nor do we want to see economic restructuring reducing the incomes of families or even driving them into unemployment.
Under a capitalist system based on sharing, the Government should not behave as if it were a detached bystander. It must provide the support necessary for further improving our economy so that the "cake" to be shared can become bigger to the benefit of all. At the same time, the Government must remedy the shortcomings of the market through positive intervention to reduce the gap between the rich and the poor. It must also ensure that everyone can be given fair and equal access to success, and that even the unfortunate members of our community can share the happiness enjoyed by the rest of the community.
There is still a long way to go before we can achieve this ideal form of capitalism, but we will continue our efforts until our goal is attained.
Mr President, in the following part of my remarks, I will comment on this year's Budget in terms of economic development, and employment and social policies.
(1) Economic development
First of all, let me comment on economic development. The economic policy of the Democratic Party is well-defined and positive. We are against monopoly, and it is our view that all enterprises should be given more opportunities for development; we agree that the Government should improve
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its regulatory role to promote the long-term development of Hong Kong's economy. We urge the Government to give assistance to the trades in order that Hong Kong can advance towards the goal of high value added activities.
We are of the view that apart from serving to narrow the gap between the rich and the poor, taxation policies should also serve the purpose of promoting the long-term economic development of Hong Kong. We regret that the Financial Secretary has proposed against altering the profits tax. The Democratic Party maintains that a progressive profits tax regime should be adopted. Under such a tax regime, the existing profits tax should be adjusted slightly downward by 0.5% for small and medium-sized enterprises as a kind of encouragement, while the tax rate for highly profitable corporations should be raised by 0.5%.
On economic development, since 1992, the then United Democrats of Hong Kong and I have been urging the Government to formulate a development strategy for the service sector so as to increase productivity, promote higher value added activities and enhance the export of our services. This year, apart from devoting a relatively substantial portion of the Budget to financial services, the Financial Secretary has finally mentioned the need to promote the service sector.
The Democratic Party welcomes the Government's move to promote the service sector. However, we think that the Government's assistance to the service sector as a whole should not be limited to promotion activities. Instead, the Government should draw up a long-term development strategy based on far-sighted research in order to enhance Hong Kong's position as a world class service centre. With the closer ties between China and Hong Kong, we must consider very seriously indeed whether it is possible to maintain or enhance Hong Kong's traditional functions in terms of sales and marketing, port facilities and financing. In the past, the Hong Kong Government adopted a non-intervention attitude with regard to industrial restructuring. Only in recent years did it start to make a last-minute attempt to step up technological development. I do not want the Government to repeat the same mistake with regard to the service sector, and I must therefore caution it against an end-of-pipe approach.
An issue that calls for particular attention is that the existing government machinery is so structured that it caters for industries only. Development of the service sector is not catered for. If we are to further the development of Hong Kong's service sector, we must promptly review the existing government machinery in order to ascertain which government departments are to be responsible for the service sector. Alternatively, a new body may be set up for the purpose.
In regard to support for the industrial sector, the Government's policy of minimum intervention has rendered Hong Kong lagging far behind the other three "Little Dragons" of Asia in terms of industrial development. It was not
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until recent years that the Government began to allocate a small amount of money for technological development and research. This year's Budget has proposed to allocate a meagre sum of $210 million for technological development. This is indeed negligible. We are convinced that if Hong Kong is to maintain its position as a leading manufacturing centre in the region, apart from increasing funds for technological development, the Government should also ensure that the technology so developed can be applied to commerce and industry.
(2) Employment policy
Mr President, concerning employment matters, a government that has an employment policy would ask itself: what should be done to help the people overcome the problem of unemployment caused by economic restructuring and the northward shift of our industries? A government that has an employment policy would ask itself: what should be done to ensure that more well-paid jobs are available to the people over the next few years? A government that has an employment policy would ask itself: what should be done to ensure that old people and disabled persons can find suitable jobs? A government that has an employment policy would ask itself very seriously: why are the labour force participation rate and the employment rate so low? Having done so, it would try to do something to improve the employment opportunities for women, middle-aged people and old people. Unfortunately, the Government is concerned only about the labour importation policy, not a local employment policy.
Everyday on the radio, we can hear complaints about difficulties in finding jobs, and falling wages. However, the Government has remained unmoved and continues to content itself with the 2% unemployment rate. The Democratic Party has put forward a number of recommendations on taxation to promote employment opportunities. Unfortunately, the Government has refused to accept them, nor has it put forward any other employment proposals. We strongly urge the Government to formulate a comprehensive employment policy as soon as possible.
(3) Social policy
As for social policies, I am going to comment mainly on our tax policy and medical expenditure from the angle of assisting the vulnerable, in order to find out whether members of the public can really have a share of Hong Kong's prosperity.
We have always maintained that Hong Kong as a relatively affluent community should take continuous actions to improve the people's quality of living, and to provide assistance to the needy in order to reduce the inequality in wealth. Therefore, the Democratic Party has recommended to add to the 1995-96 Budget an "additional allowance for working disabled persons" and an "allowance for disabled dependents"; at the same time, we have also
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recommended that the single-parent allowance should be raised to the same level as the basic allowance for single persons. This is because we are of the view that the Government has the obligation to make use of tax concessions to encourage more disabled persons to work and to relieve the heavy burden of single-parent families.
This year, the Financial Secretary has made it clear from the very beginning that the Government has special social responsibilities, in particular, towards the disadvantaged, the disabled and the vulnerable. Unfortunately, this principle has not been strictly adhered to because the Financial Secretary has accepted only one of our recommendations, namely, the provision of an additional allowance of $11,000 for each disabled dependent. However, this amount is smaller than what we have recommended, and thus cannot really relieve the financial burden of the people who have to look after disabled or chronically ill family members.
I would like to reiterate our stand on the issue of rates. The Democratic Party is utterly disappointed that the Financial Secretary has repeatedly ignored the people's wish and refused to lower rates from 5.5% to 5%. According to the Government's estimation, the financial reserves of Hong Kong in the next few years will still be very large. That being the case, why has it refused to make any concession on rates, thereby subjecting the people to the suffering caused by high rentals and exorbitant rates? This is really inconceivable.
Also, with respect to health care services, this year's Budget continues to go in the wrong direction and is unable to come up with any new ideas. Time and again we have stressed that given the continuous ageing of our population, if we are to slow down the rapid increase in medical care expenses, we will have no alternative but to establish a good network of primary health care services that can work well in the prevention and early detection of diseases.
On the early detection of diseases, we have been stressing that the number of health centres for the elderly should be increased to 19 for the reason that the number of elderly people over 60 in Hong Kong will increase substantially in the next 10 years. Only by increasing the number of health centres to 19 and by establishing district-based health care networks can we cater for the health care needs of elderly people. Unfortunately, the Government has so far committed itself to the construction of only two new health centres for the elderly, which means that even when we take into account the one already commissioned as well as the other four promised by the Governor, there will only be seven such centres in total. This is far from enough to meet the needs of elderly people. Furthermore, the Government has promised to build only one new "well-women" clinic, which is far less than what is needed.
To prevent diseases, we must also correct our lifestyles and seek to reduce various pathogenic factors. For a long time already, health education has remained a minor item in our health care system. It has been given scant attention and very limited resources. In the Budget this year, the growth in