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Turning now to the meat of the debate this afternoon, I should like to set the scene by reminding Members of some home truths about public finances. The state of Hong Kong's public finances are the envy of the world. We have no outstanding public debt. We have substantial fiscal reserves to provide a cushion for unforeseen circumstances. Year after year we produce budgets that keep taxes low and spending under control. Visiting delegations from the International Monetary Fund, the World Bank and the major credit rating agencies come to check up on us, then go away satisfied with our sound and prudent fiscal stance. There is, of course, room for improvement but by and large we are an example to the world in how responsible governments should manage their financial affairs.
Yet this admirable state did not arise by accident. We did not get where we are today by chance. Our present success springs directly from the fact that we have identified certain key fiscal principles, and applied them steadfastly, not allowing ourselves to be blown off course. We in the Administration take great pride in our part in the process: but the Members of this Council also deserve a generous measure of praise for the full support they have given. For example, in the Public Accounts Committee, Members have expended great energies in keeping us up to the mark. Together we have generally eschewed short term political advantage for the sake of the community's long term interest.
What a tragedy it would be, Mr President, what a tragedy, if we were to now throw away the benefits of several decades of hard work for the sake of a few days' headlines. A few moments of pleasure bought at the expense of a lifetime's reputation. We would rue that day not just for ourselves, but for generations to come.
How do these principles apply to the debate today? Very simply. One of our guidelines - by no means the most important, but one element in the overall package is that when setting the fee or charge for a particular service, we should aim to recover the full cost. There are a few exceptions: a small number of fees are tax-loaded to raise revenue; a small number (such as for education or medical services) are heavily subsidised on social grounds. But for the vast majority, the rule is "user-pays". This simple maxim is an excellent aid to fiscal prudence.
It is perhaps ironical that in defending the increases in Urban Council licence fees, the Honourable Fred Li has in effect expressed support for this "user-pays" principle. Just think what would happen if we divorced the price from the service. Once the link were broken, it would be difficult to justify any increase in the price - ever. There would be no rational basis for doing so. On the other hand, demands to improve the service would proliferate because there would be no penalty for the user. So the user-pays principle is useful because it forces both the Government and the customer to have regard to both sides of the equation.