XN000022-1995-07-05 — Page 24

Following the Governor's Summit on the Labour Situation on 6 June, the Administration has announced a comprehensive plan of short, medium and long term measures to tackle unemployment, ranging from retraining, job placement, cracking down on illegal employment, a household survey to obtain more detailed information on the profile of the unemployed and job vacancies, to review of the General Labour Importation Scheme, etc. The Secretary for Education and Manpower has also explained, while responding to Hon Fred Li's motion on 7 June, what would be done to solve the livelihood problems of workers during periods of unemployment. These measures are direct, focused and, we hope, effective.

Inflation

I turn next to inflation. At about 9% this is thankfully below the peak in recent years of 12% reached in 1991, but still uncomfortably high. In order to address the problem correctly, we must first identify the causes. After all, as the Chinese saying goes 對症下藥

ET". We cannot hope to make the right prescription unless we have diagnosed the illness accurately.

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There is a significant structural component to our present inflation caused by the ongoing transformation of our economy. The Government's best contribution to easing the pains of this process is to ensure that our infrastructure - both human and physical is adapted as quickly as possible to meeting the new demands and challenges as they emerge. The substantial investments that we have made and are making in education, vocational training and re-training are bearing fruit. The equally substantial investments in physical infrastructure - most notably the new airport continue to target the economic bottlenecks and eliminate them. We have introduced measures to stabilise the property market and curb speculative pressures on property prices with some degree of success: property prices and rentals have moderated from their peak levels last year. Our on-going measures to increase land supply and expedite flat production to match the continuing demand for flats will help to restrain the rise in flat prices and rentals in the longer term. We shall of course maintain our prudent budgetary policies and ensure that public spending does not increase faster than the growth of our economy, although this has drawn criticism from some Honourable Members for being too conservative. All this is a slow process, with lead times that can be frustrating. But we must persevere with these measures, not snatch at short term palliatives. We are convinced that, in the long term, enhancement of productivity, both in terms of labour and capital, is the most effective means of promoting growth and containing inflation.