Central economic planning?
But could we do more? For example, do we need a new, high-level body, bringing together business representatives, representatives of the work-force and the Government? If the purpose is dialogue, then perhaps this proposal is a good idea. But as I said to this Council last week, I tend to think that we have already in place all the forums for discussion that we need. If the purpose is to attempt to manage the economy, to second-guess markets or to embark on government planning through the back door, then my answer is an emphatic no. That is not what Hong Kong needs.
Tax cuts?
Should we be cutting taxes to stimulate the economy? We just had a full debate on this question. The obvious questions are: Does anyone really believe Hong Kong businesses and individuals are overtaxed? Can anyone claim that our tax regime deters investment? How could reducing tax rates in Hong Kong stimulate demand for our goods and services abroad? How large an impact would lower taxes have on our domestic demand? It is worth noting that the substantial tax reductions introduced in each of the last three Budgets did not seem to provide the sort of economic stimulus that advocates of lower taxes to boost growth rates are hoping for.
Freezing fees and charges?
Should we freeze government fees and charges? I understand the temptation to do so. But would such a freeze really help? It would do nothing useful to stimulate the economy. However, it would do serious and lasting damage to the principle that the users should pay for services provided by the public sector, especially when the users are commercial.
Increasing public expenditure?
Should we attempt to stimulate the economy by increasing public expenditure? The danger here is that higher recurrent and capital expenditure would worsen inflation rather than improve employment and real incomes. We have a relatively small public sector. In very rough terms, we would need to double the growth in public expenditure to produce a one per cent increase in our growth rate.
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