XN000022-1995-10-19 — Page 15

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It is essential, essential that we keep a firm grip on these facts when we confront our economic problems. The plain truth is that the economy has not faltered. It is not in need of a kick start, and the last thing it needs is a deliberate dose of reflation. Attempting to stimulate an economy which is already growing at 5% in real terms each year would create the very real dangers of giving a kick start to inflation, eroding our competitiveness, and, ultimately, leading to higher unemployment. We spent the last three decades avoiding some of the problems partly created by bad macro-economic management in Europe and North America. Why throw all that wisdom away now?

This brings me to my second difficulty with the kick start school of economic policy. These impressive statistics of Hong Kong's economic success have not been achieved by government management of the economy. We have of course played our part.

* We are now spending over $30 billion each year on Hong Kong's physical

infrastructure.

* We are now spending $34 billion each year on our skills infrastructure

through the educational system, vocational training and research.

* We spend hundreds of millions of taxpayers' dollars each year supporting business through organisations such as the Productivity Centre and the Industrial Estates Corporation, and encouraging new investments and ideas through research grants and investment promotion.

This, I believe, is the right role for Government, providing practical long-term support for business but recognising that this help must stop well short of attempting to direct or manage the economy at a macro level or attempting to second guess markets and entrepreneurs at the micro level.

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To go beyond this restricted role would be to enter very dangerous territory indeed. Long-term support for business, yes certainly, and we already provide it. But the Government cannot and should not attempt to cushion businesses from the hard realities of the market place. It is this hard reality that ensures that Hong Kong's businesses remain competitive and successful. If we ever attempt to create a sort of welfare state for inefficient businesses, we shall be putting in jeopardy the enterprise and the flexibility which are the very essence of our economic success.