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Governor: I think the World Bank Report which the Honourable gentleman referred to was extremely important and it did remind us all of the part which, what the economists call 'social equity investment', plays in successful and efficient economies. I don't happen to think, as some cruder critics appear to, that spending more money on education, on welfare, on health, somehow damages the economy. Actually, if you are sensible and prudent about it, it helps the economy and helps, I think, to add legitimacy as well as credibility to the system of market economics. I feel that extremely strongly.
The World Bank, of course, also counselled against the sort of extravagant welfarism which has had such dangerous consequences in some OECD countries, not just in Western Europe but in North America as well. And I think it would be curious if on the one hand we were to commend the World Bank's approach and allegedly counsel against that same famous Euro socialism, while on the other hand we were allowing public expenditure to rise faster than the economy was growing. I don't think one can have it both ways.
The Honourable Member is also right to say that we should encourage more saving than that implied in any given retirement protection scheme and that in particular, those who want to save over and above what is proposed in the basic scheme should be encouraged. I accept that, though I have some reservations myself about hanging on our tax structure lots of encouragements and incentives and inducements to this or that sort of economic or social behaviour. I think the best way you encourage people and the best way you incentivise people is by concentrating on basic rates of tax, whether profits tax or salaries tax, rather than opening up all sorts of new inducements and incentives.
Mr Peter Wong: I am not talking about incentives. I think one should really remove the disincentives. I, myself, being a professional practitioner, there is nothing that I can do tax-wise in order to save for my old age, whereas someone working for a company has all the tax incentives in the world.
Governor: I know the Honourable Member is an experienced professional in these matters, which I am not. In my personal life it is a pleasure to employ people like the Honourable gentleman and I will certainly follow what he said and discuss it with the Financial Secretary.
Dr Tang Siu-tong: Mr Governor, I would like to follow up on the point made by Mr David Li on Vietnamese migrants. The Government is saying that the Vietnamese economy is becoming better and the migrants may wish to return to Vietnam. Now, Mr Governor, is it true that by 1997 all the migrants will be returned to Vietnam? And for the thousand odd Vietnamese migrants who have criminal records, they will not be easily resettled, if they cannot be returned to Vietnam will they stay in Hong Kong
after 1997?
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