TNAG-2921-FCO40-4196-Visits-and-proposed-visits-by-Alastair-Goodlad--Minister-of--1993 — Page 17

CONFIDENTIAL

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MDHIAN 8377

'GIVE-AWAY' TERMS ON WHICH GERMANY HAD BEEN PREPARED TO FINANCE DEALS. THE CPG'S NEED FOR UK SUPPORT IN ENTERING THE GATT WAS ALSO

WELL PUBLICISED.

17.

NO LESS IMPORTANT WAS THE OBVIOUS ABILITY OF MAJOR UK ENTERPRISES (NOTABLY, SWIRE GROUP, THE HONG KONG BANK, AND CABLE AND WIRELESS) TO CONTINUE TO BUILD ON THEIR PROFITABLE PRC RELATIONS DESPITE THE APPARENTLY HOSTILE POLITICAL CLIMATE. (THE FAILURE OF THE JARDINE GROUP TO DO LIKEWISE TENDED TO BE IGNORED AS A SPECIAL CASE).

AFFORDABLE PENSIONS.

18. THE MOST CONTENTIOUS ISSUE ON THE LOCAL POLITICAL AGENDA

TODAY IS HKG'S PROPOSAL TO INTRODUCE AN OPS. THIS MEASURE WILL REMOVE ONE OF THE FEW OBDURATE BLEMISHES ON HKG'S RECORD, THE FAILURE TO RESPOND FULLY TO PUBLIC CONCERN ABOUT FINANCIAL SECURITY IN OLD AGE. FOR MANY YEARS, WE HAVE MADE PROPER PROVISION FOR SOCIAL SECURITY AND HOUSING FOR THE ELDERLY IN NEED. HOWEVER, THESE PROGRAMMES HAVE NOT MET THE COMMUNITY'S ASPIRATIONS FOR A BASIC PENSION RATHER THAN A MEANS-TESTED SAFETY NET. IN MY OCTOBER POLICY ADDRESS, I PROMISED TO ANNOUNCE THE WAY FORWARD ON THIS ISSUE BEFORE THE YEAR END. WE HAVE NOW DONE SO.

19. THE POLITICAL PARTIES HAD BEEN LOOKING FOR A SINGAPORE-STYLE

CENTRAL PROVIDENT FUND WHICH WOULD HAVE HAD SEVERE DRAWBACKS. (IT WOULD DO NOTHING FOR TODAY'S ELDERLY OR FOR OLDER WORKERS, AND INDIVIDUALS WOULD TAKE DECADES TO BUILD UP ADEQUATE FUNDS TO PAY A WORTHWHILE PENSION). BY CONTRAST, HKG'S SCHEME WOULD PROVIDE IMMEDIATELY TO EVERYBODY A PENSION EQUIVALENT TO 30 PERCENT OF THE AVERAGE WAGE. IT WOULD BE FUNDED BY A SMALL LEVY (PERHAPS 4 PERCENT, INITIALLY) ON SALARIES, WITH THE COST SHARED BETWEEN EMPLOYER AND EMPLOYEE.

20.

THIS PROPOSAL HAS ENCOUNTERED PREDICTABLE CRITICISM, BUT THE OPPOSITION HAS FAILED TO DO ITS SUMS. HKG'S SCHEME WILL PROVIDE REASONABLE PENSIONS WHILST KEEPING CONTRIBUTIONS LOW, EVEN AS THE POPULATION AGES. THE SCHEME ALSO REPRESENTS A VERY FAVOURABLE DEAL EVEN FOR BETTER-OFF EMPLOYEES IN TERMS OF THE RETURN THEY WILL GET ON THEIR CONTRIBUTIONS. THE GENERAL PUBLIC HAS BEEN QUICKER TO RECOGNISE THESE FACTS THAN THOSE COMMENTATORS WITH VESTED INTERESTS (INCLUDING EMPLOYERS' REPRESENTATIVES). IN A RECENT POLL (21-23 DECEMBER), 58 PERCENT OF RESPONDENTS SAID THEY WERE WILLING TO CONTRIBUTE TO OUR SCHEME.

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