XN000022-1987-05-13 — Page 16

14

WEDNESDAY, MAY 13, 1987

+THE SETTING UP OF A COMPULSORY PROVIDENT FUND SCHEME, WHETHER CENTRALISED OR DECENTRALIED, IS CERTAINLY ONE APPROACH, BUT IT IS NOT THE ONLY ONE, NOR IS IT NECESSARILY THE BEST,+ MR BRIDGE SAID.

NOTING THAT THE IMPLICATIONS OF ESTABLISHING A CPF WERE SET OUT IN A REVIEW PAPER ISSUED BY THE EDUCATION AND MANPOWER BRANCH IN OCTOBER 1986, MR BRIDGE SAID THE SOCIAL WELFARE ADVISORY COMMITTEE AND THE LABOUR ADVISORY BOARD, AMONG OTHERS, HAD BEEN CONSULTED.

+THIS REVIEW REPRESENTS THE BEST ASSESSMENT OF THE SUBJECT THAT THE INTERESTED BRANCHES AND DEPARTMENTS OF GOVERNMENT HAVE BEEN ABLE TO MAKE, AND, I MUST EMPHASISE, IT WAS CARRIED OUT WITH AN OPEN MIND, AND IS AN HONEST ATTEMPT TO ESTABLISH THE RELEVANT FACTS AND ISSUES, HE SAID.

HE SAID THAT THE BASIC ARGUMENTS FOR AND AGAINST A CPF WERE QUITE EASILY STATED UNDER THREE KEY ISSUES: THE IMPACT ON THE ECONOMY- THE EFFECT ON FUTURE SOCIAL WELFARE NEEDS AND THE QUESTION OF COMPULSION.

ON THE FIRST POINT, MR BRIDGE SAID HE FOUND IT DIFFICULT TO SHARE CERTAIN MEMBERS' OPTIMISM ABOUT THE LIKELY ECONOMIC EFFECTS OF ESTABLISHING SUCH A SCHEME, WHETHER CENTRALISED OR NOT.

HE SAID THAT AS POINTED OUT BY THE FINANCIAL SECRETARY

THE MILLIONS OF INDIVIDUAL CONTRIBUTIONS TO A CENTRAL SCHEME, OR COMPULSORY INDIVIDUAL SCHEMES, WOULD HAVE A COLLECTIVE IMPACT ON THE RATE OF INCREASE IN REAL WAGES.

+THEY WOULD ALSO, IN THE SHORT TERM AT LEAST, TEND TO REDUCE THE COMPETITIVENESS OF HONG KONG PRODUCTS, AND POSSIBLY EVEN CAUSE SOME UNEMPLOYMENT, MR BRIDGE ADDED.

+IT IS NOT CLEAR THAT THOSE INDICATING THEIR WILLINGNESS TO CONTRIBUTE TO SUCH A SCHEME WOULD IN THE LONG TERM CONTINUE TO SUPPORT IT.+

ON THE EFFECT ON FUTURE SOCIAL WELFARE NEEDS, MR BRIDGE SAID PROVIDENT FUNDS PROVIDE THE BEST RETURN TO RETIREES WHO HAD BEEN IN REGULAR EMPLOYMENT FOR A LARGE NUMBER OF YEARS AND WHO HAD EARNED A REASONABLY HIGH WAGE -- IN OTHER WORDS PRECISELY THOSE WHO HAD BEEN IN THE BEST POSITION TO ACCUMULATE SAVINGS EVEN WITHOUT A PROVIDENT FUND.

HE SAID BY CONTRAST TO OTHER PLACES WHICH HAD ESTABLISHED COMPULSORY PROVIDENT FUND SCHEMES, ALMOST ALL OF THEM SMALL DEVELOPING COUNTRIES, HONG KONG WAS A SOPHISTICATED FINANCIAL CENTRE BELIEVED TO HAVE QUITE A HIGH SAVINGS RATE.

/+THERE ARE