ENG-1995-03-23 — Page 1

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2765 OFFICIAL RECORD OF PROCEEDINGS

Thursday, 23 March 1995

The Council met at half-past Two o'clock

PRESENT

THE PRESIDENT

THE HONOURABLE SIR JOHN SWAINE, C.B.E., LL.D., Q.C., J.P.

THE CHIEF SECRETARY

THE HONOURABLE MRS ANSON CHAN, C.B.E., J.P.

THE FINANCIAL SECRETARY

THE HONOURABLE SIR NATHANIEL WILLIAM HAMISH MACLEOD, K.B.E., J.P.

THE ATTORNEY GENERAL

THE HONOURABLE JEREMY FELL MATHEWS, C.M.G., J.P.

THE HONOURABLE ALLEN LEE PENG-FEI, C.B.E., J.P.

THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE HUI YIN-FAT, O.B.E., J.P.

THE HONOURABLE MARTIN LEE CHU-MING, Q.C., J.P.

DR THE HONOURABLE DAVID LI KWOK-PO, O.B.E., LL.D., J.P. THE HONOURABLE NGAI SHIU-KIT, O.B.E., J.P.

THE HONOURABLE PANG CHUN-HOI, M.B.E.

THE HONOURABLE SZETO WAH

THE HONOURABLE TAM YIU-CHUNG

THE HONOURABLE ANDREW WONG WANG-FAT, O.B.E., J.P.

THE HONOURABLE EDWARD HO SING-TIN, O.B.E., J.P.

THE HONOURABLE RONALD JOSEPH ARCULLI, O.B.E., J.P.

THE HONOURABLE MARTIN GILBERT BARROW, O.B.E., J.P.

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2766 THE HONOURABLE MRS PEGGY LAM, O.B.E., J.P. THE HONOURABLE MRS MIRIAM LAU KIN-YEE, O.B.E., J.P. THE HONOURABLE LAU WAH-SUM, O.B.E., J.P.

DR THE HONOURABLE LEONG CHE-HUNG, O.B.E., J.P. THE HONOURABLE JAMES DAVID McGREGOR, O.B.E., I.S.O., J.P. THE HONOURABLE MRS ELSIE TU, C.B.E.

THE HONOURABLE PETER WONG HONG-YUEN, O.B.E., J.P. THE HONOURABLE ALBERT CHAN WAI-YIP

THE HONOURABLE VINCENT CHENG HOI-CHUEN, O.B.E., J.P. THE HONOURABLE MOSES CHENG MO-CHI

THE HONOURABLE MARVIN CHEUNG KIN-TUNG, O.B.E., J.P. THE HONOURABLE CHEUNG MAN-KWONG

THE HONOURABLE CHIM PUI-CHUNG

REV THE HONOURABLE FUNG CHI-WOOD

THE HONOURABLE FREDERICK FUNG KIN-KEE THE HONOURABLE TIMOTHY HA WING-HO, M.B.E., J.P. THE HONOURABLE MICHAEL HO MUN-KA

DR THE HONOURABLE LAM KUI-CHUN

DR THE HONOURABLE CONRAD LAM KUI-SHING, J.P. THE HONOURABLE EMILY LAU WAI-HING

THE HONOURABLE LEE WING-TAT

THE HONOURABLE ERIC LI KA-CHEUNG, J.P.

THE HONOURABLE FRED LI WAH-MING

THE HONOURABLE MAN SAI-CHEONG

THE HONOURABLE HENRY TANG YING-YEN, J.P.

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2767 THE HONOURABLE TIK CHI-YUEN

THE HONOURABLE JAMES TO KUN-SUN

DR THE HONOURABLE SAMUEL WONG PING-WAI, M.B.E., J.P. DR THE HONOURABLE PHILIP WONG YU-HONG

DR THE HONOURABLE YEUNG SUM

THE HONOURABLE HOWARD YOUNG, J.P.

THE HONOURABLE ZACHARY WONG WAI-YIN

DR THE HONOURABLE TANG SIU-TONG, J.P.

THE HONOURABLE CHRISTINE LOH KUNG-WAI

THE HONOURABLE ROGER LUK KOON-HOO

THE HONOURABLE ANNA WU HUNG-YUK

THE HONOURABLE JAMES TIEN PEI-CHUN, O.B.E., J.P.

THE HONOURABLE ALFRED TSO SHIU-WAI

THE HONOURABLE LEE CHEUK-YAN

ABSENT

THE HONOURABLE LAU WONG-FAT, O.B.E., J.P.

DR THE HONOURABLE HUANG CHEN-YA

THE HONOURABLE SIMON IP SIK-ON, O.B.E., J.P.

THE HONOURABLE STEVEN POON KWOK-LIM

IN ATTENDANCE

THE CLERK TO THE LEGISLATIVE COUNCIL

MR RICKY FUNG CHOI-CHEUNG

THE DEPUTY SECRETARY GENERAL

MR LAW KAM-SANG

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2768 APPROPRIATION BILL 1995

Resumption of debate on Second Reading which was moved on 1 March 1995

PRESIDENT: Council will now resume and continue with the debate on the Appropriation Bill 1995.

MR SZETO WAH (in Cantonese): Mr President, life is a continuous learning process and we should keep on learning throughout our life. While a good start is already halfway to success, pre-school education marks the beginning of this life-long learning process. The first impression is usually indelible. The first stroke on a piece of blank drawing paper is the most important stroke. All these tell us the significance of pre-school education.

In the incident which took place in 1973 concerning certificate masters, the Hong Kong Professional Teachers' Union (HKPTU) which was then still in its preparatory stage of establishment and 12 other educational bodies put forward four requests for the reform of the education system. One of these requests was better remuneration for private school teachers, including kindergarten teachers. 22 years have passed and the HKPTU has been fighting hard all along for the provision of subsidized kindergarten education and better remuneration for kindergarten educators as well as improvement of the quality of kindergarten education. Resolutions concerning these issues were adopted at almost every annual general meeting of the HKPTU. After all these years of great efforts, the Administration finally realizes that "teachers must be adequately paid if they are to have sufficient incentive to improve their qualifications", and that there should be "more direct help to enable kindergartens to employ trained teachers." Therefore, in the 1995-96 Budget, $80 million is appropriated for these purposes.

As compared to the whole Budget and the funds allocated for education, $80 million is only a very small amount. This amount is disproportionately small compared with the funding allocated for tertiary, secondary and primary education. Nevertheless, we still welcome this appropriation of $80 million since it represents the beginning of a change in government policy.

For many years, almost every child would have received kindergarten education before entering primary school. However, the Administration still holds that kindergarten education is not a must and refuses to finance same. In saying this, the Administration has in fact defamed kindergartens which have contributed a lot to society through the provision of pre-school education services. Although $80 million is only an insignificant amount, I hope it marks a tacit admission on the part of the Administration of the faulty policy it stuck to in the past, and signifies the beginning of a new policy. I hope the

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2769 Administration will further the policy of financing kindergarten education from now on.

It is said that the Secretary for Education and Manpower and the Secretary for Health and Welfare are formulating a relevant plan to be submitted to the Executive Council at the beginning of next month and then a decision will be made. I hope the Administration will listen carefully to and incorporate into its plan the views of the Councillors concerning this topic expressed in this debate.

As regards the relevant plans being formulated, my opinions are as follows:

(1) The most crucial element of the entire plan is better remuneration for kindergarten educators. The plan should bring about a significant and actual increase in their salary.

(2) Besides trained teachers, the plan should also focus on teachers who are receiving training and teachers who have not been trained. Only in doing this can the wastage rate of teachers be contained and minimized, and competent people be attracted to join and stay in the profession.

(3) To date, there is still no pre-service training for kindergarten educators. This problem should indeed be treated with urgency. I hope the plan can bring about favourable conditions for solving the problem.

(4) The plan should be published as soon as possible and implemented in September this year to allow ample time for kindergartens to make preparation and adapt themselves to the new policy, to revise the fees they charge, to renew contracts with their teachers and to recruit new teachers.

Mr President, these are my remarks.

MR NGAI SHIU-KIT (in Cantonese): Mr President, I would compare the last Budget introduced by Sir Hamish MACLEOD during his term as Financial Secretary to a "three piece" suit. "Prosperity through consensus" is a jacket, the novel "consensus capitalism" is a pair of trendy trousers and Xunzi's "On enriching the state" is a waistcoat. The suit looks very smart but if we take a closer look, we will find that no matter how skilfully it is packaged, the gorgeous jacket has failed to cover up the ordinary contents of the Budget. Not only has the Financial Secretary failed to set a specific target for the long-term social and economic development of the territory, but he has also sown seeds of latent worries.

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Sir Hamish has been complacent about the concept "consensus capitalism" created by him and he has proudly presented it as the formula for creating the prosperity Hong Kong is enjoying now. If the Hong Kong Government genuinely takes the consensus of all citizens in the territory as the basis of administration and financial management, this is indeed worthy of our applause and Sir Hamish has every reason to feel proud. But, what "consensus" really means is that people from various sectors should exchange their views and hold mutual discussions so as to seek common ground while reserving differences, with the ultimate goal of laying stress on the interests of society as a whole. The Financial Secretary conceives "consensus" as something totally different. He has refrained from following the right path. Instead, he manipulates his public relations skills with a view to giving himself an excuse for politicizing the Budget.

First of all, in the outset, the Financial Secretary talked with fervour and assurance about the merits of his "consensus capitalism", emphasizing the need to encourage free enterprise and competition while promoting equity and assistance for those who need it and to seek consensus through consultation with Members in the course of preparation of the Budget. It would indeed be a blessing if the Financial Secretary is really able to cater for the needs of people from various sectors in the Budget without impairing the executive-led mode of administration. Regrettably, however, the essence of the Budget has been fundamentally changed. The Budget no longer outlines the blueprint of government expenditure and revenue in the coming year on the basis of the actual needs of the community at the time. Instead, it has been degraded to a tool by which the Government pleases political parties through dishing out welfare and it has become a very politicized financial scheme.

Mr President, I must point out that what Hong Kong needs is a public financial policy which is stable, down-to-earth and impartial, instead of a fragmented and politicized mixture meant to appease the different demands of political parties. Being the person who takes the helm of financial affairs, the Financial Secretary has the most important task of effectively distributing and appropriately using social resources, to bring the greatest benefits to society.

I believe that it is the common expectation of the people of Hong Kong that the Government will keep expenditures within the limits of income and make good use of public money. The Financial Secretary also agreed to this in the Budget. But the section on expenditure in the Budget gives a different picture. The total public expenditure in the year 1995-96 will amount to $203 billion, a drastic increase of 19% as compared with that this year. Even when the inflationary factor is taken into account, the expenditure has still increased by 9.3%, far more than the 5.5% projected growth in GDP. In response to public criticizm, the Government argued that public spending would not exceed the real growth in GDP over a certain period. But the Financial Secretary, who has always claimed himself to be prudent, should understand that when public expenditure increases to a great extent in a short period of time and when this persists for years, this will have long-term adverse effects and, as a result,

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government spending may remain large. I am afraid that it will be too late when the Government eventually realizes the seriousness of this crisis having regard to the pressure that a government is invariably under to increase rather than decrease expenditure.

The continuously increasing government expenditure may even produce an illusion of prosperity with illusory economic growth. The Financial Secretary has repeatedly emphasized that he is confident of the continued economic growth of Hong Kong, claiming that it is already conservative to estimate the annual rate of growth to be 5%. As a citizen of Hong Kong, I am certainly happy to see the realization of this projection. But, if the growth in our economy is merely a bubble blown out of the incessant increases in public expenditure, such economic prosperity is unhealthy and unfounded. All it will bring to our community is short-lived happiness followed by perpetual anxieties. This is not the right approach to financial management and is not conducive to the well-being of the people of Hong Kong.

Mr President, the prosperity and stability that Hong Kong really needs is something which is based upon balanced economic development. The economic consensus shared by members of the public is one which hopes for the prosperous development of all sectors to allow full employment of people who have special knowledge in different fields so that members of the public can give full play to their skills and create wealth for society. Regrettably, the Financial Secretary has not given due regard to the genuine "economic consensus" of the people of Hong Kong. He has not proposed any concrete strategies which will help Hong Kong to continue to prosper.

About the issue of economic restructuring, the economic system of the territory has gradually transited from reliance on industries in the past to dependence on the service sector. But, please do not forget that the manufacturing industry is now directly supporting 450 000 workers, which is not a small number. So long as our industries are able to develop steadily and proceed gradually in a direction which applies new technology for the purpose of high value added production, the employment of workers will be fully safeguarded and the quality of living of the workers will also be improved. In the long run, the economic foundation of our society will only be further consolidated if industries are restructured in this direction.

Regrettably, the Budget gives no more than scanty support to industries. It is doubtlessly a piece of good news that $50 million will be appropriated in the new fiscal year for the establishment of the Applied Research Council and the implementation of the research grant scheme. I hope this is the first step by the Government to enhance the competitiveness of local industries. But, most importantly, the Government should detach itself from its wrong conception in the past which regards supporting the development of industries as equal to interfering with the operation of the free market. Instead, the Government should take more positive measures, to enable the development of industrial technology in Hong Kong to progress with the times. However, in this year's

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Budget, the Financial Secretary has only given a brief account of the role played by the Government in supporting technological development. As compared with the graphic and vivid description of the Government's commitments towards the financial and service sectors, this indeed makes people query whether the Government has given up its determination to support the development of industries.

Mr President, my colleagues have already talked about the reclamation works at Victoria Harbour. I would also like to take this opportunity to express my views. It is right to make available additional land to cope with the development of society. However, the Financial Secretary said, on the one hand that the reclamation project in Central is undertaken to provide additional land, to cope with public demand for residential and commercial properties in order to alleviate the pressure on property prices, but on the other hand, he told us, that out of 1 109 hectares of reclaimed land, only 27% will actually be used for the development of commercial and residential properties, the remaining 72% will be used for leisure purposes. What he has said is indeed contradictory. Old folks of Hong Kong like us know that Victoria Harbour is a heavenly endowed deep-water harbour and the source of economic development of the territory. This harbour has enabled us to leap to become an economic metropolis which is the envy of the world and play the important role as the gateway to China. The uniquely favourable geographical conditions and the natural fine harbour are the valuable assets of our decendants in the many generations to come. If the Government takes no notice of the various adverse consequences stemming from reclamation and devastates our fine and beautiful harbour which is full of vitality economically merely for the purpose of reclaiming 72% of the land in Central for leisure purposes, I find this really short-sighted and hopelessly foolish.

All in all, the prosperity Hong Kong enjoys today depends upon many consistently effective factors, including political stability and a stable legal system, social harmony and the adoption of the free trade policy. If Hong Kong is to continue to attract overseas investors, we must, first of all, reinforce the various existing advantages and strengthen our competitiveness on such basis. This is the only way in which we can be assured of continued prosperity in the future.

Finally, on the political front, the greatest hope of the people of Hong Kong at this time is, I believe, that the Chinese and British governments can co-operate in regard to the transition of Hong Kong from now to 1997. This is tremendously helpful in sustaining the economic development and social stability of the territory. I hope that the Hong Kong Government can sincerely consult the Chinese Government in respect of all important issues which straddle 1997, including the formulation of the 1997-98 Budget, instead of making decisions unilaterally and informing the Chinese afterwards. Only this can be regarded as genuinely sincere co-operation.

Mr President, with these remarks, I support the Appropriation Bill.

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MR ALBERT CHAN (in Cantonese): Mr President, in releasing his final Budget the Financial Secretary coined an interesting term "consensus capitalism" - a term even hollower than "positive non-interventionism" used in the past. It reflects that in managing Hong Kong's economy and in handling the government's finances, the '90s has brought little remarkable progress nor advance over the '70s or the '80s either in the Administration's way of thinking or in their specific policies. Therefore generalization is possible only with the use of an empty slogan.

Judging from his speech, it seems that the Financial Secretary wanted to use the term "consensus capitalism" to reflect his achievement in adhering to his principle throughout his entire term of service, and the fact that he has preserved a "traditional consensus" in an ever-changing political environment. By principle he refers to what he called "commitment to the free market economy, to compeition, and to providing community services from our increasing prosperity". But I beg to differ from the Financial Secretary's description.

In the realm of economic management, we certainly cannot ignore the efforts made by the Hong Kong Government over the past few years in bringing reform to the financial system and in monitoring financial institutions. However, nothing positive has been devised to support small entrepreneurs and workers, who are hardest hit by the transforming economy. Worse yet, more and more foreign workers are being imported to provide cheap labour. The profits of big entrepreneurs are protected, but skilled workers who are in their prime are deprived of their employment opportunities. The depressed labour market has generated discrimination on grounds of age and sex. Female workers over 30 of age are unable to find suitable jobs. That is really an elegy mourning today's Hong Kong's society. By the same token, infrastructure has been developing at the expense of the citizens of small means to whom no protection whatsoever is available. A case in point relates to fishermen who make a living by catching and breeding fish. These fishermen suffer not only economic losses from pollution generated from public works and public projects, some of them even have to give up their trade, only to be meagrely compensated. In similar predicaments are old tenant farmers whose farmland has been re-entered. To put it in a nutshell, in managing Hong Kong's economy, the Government not only failed to ensure "all can rise as far as their talent can take them" - as depicted by the Financial Secretary, but also the enterprising spirit of the citizens at grass-roots level has also suffered a heavy blow.

As far as social responsibilities are concerned, I cannot figure out how the Financial Secretary could have proclaimed "our social services ensure that those at risk are protected" at the same time when the Administration had rejected widespread public demand for increasing the Comprehensive Social Security Scheme (CSSA) payment to $2,300. If the Financial Secretary has paid but cursory attention to media reports, I believe there is no reason he could have been unaware of the hardships CSSA recipients were facing, unless he was

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fooled by the billions of dollars of reserves and had lost his ability to observe what was going on in society. If that had been the case, then in the concluding remark the Financial Secretary should have said: "the way to make a country prosperous is to be generous to the rich, and to ignore those at risk". As a matter of fact, there are so many people at risk that the Financial Secretary has failed to behold them. Among them there are more than 200 000 residents living in shabby squatter huts, more than 4 000 cage dwellers, and hundreds of thousands of residents living in cramped housing in run-down areas. Which official can find reason to be complacent, upon seeing these people at risk?

I would also take issue with the "traditional consensus" as described by the Financial Secretary. Consulting Members of this Council during the Budget process is certainly an improvement introduced by the Financial Secretary during his term of office. But it does not necessarily follow that Members of this Council are in favour of the "traditional consensus" in economic policy and in determining priorities. As far as priority is concerned, a very simple example is at hand. The Democratic Party had asked the Financial Secretary as early as three years ago that more manpower and more resources should be allocated to slope investigation and slope maintenance. But the Government had been dragging its feet, and it was not until the Kwun Lung Lau tragedy that more resources in this area were proposed in the 1995-96 Budget. This kind of divergence hardly constitutes a consensus, does it? On the other hand, it is obvious that many Members of this Council have different opinions as to how Hong Kong's public finance should be managed. The Financial Secretary has not forgotten the call for reform of the taxation system and the call for downward adjustment of rates, has he?

To put it in a nutshell, my response to the term "consensus capitalism" is that it expresses no more than the indulgence by colonial officials in the past glories of the "positive non-interventionism" era and their apathy to all those social phenomena that are inconsistent with the interests of the citizens. This is a term which can be used as a tool, so to speak, to rationalize the collusion between the Government and businessmen which is so prevalent in Hong Kong.

Public works have been matters of my concern. I expect that, by citing the example of the slope issue, government officials will be more far-sighted in appropriating funds for construction works and will not wait until after tragic accidents have occurred before responding. As far as specific projects are concerned, the Administration has yet to fully commit themselves to the road widening project for the Castle Peak Road. I find this rather disappointing, for as a result traffic congestion in the New Territories will continue to worsen.

Another point worth mentioning concerns the airport project and the airport railway project. The Financial Committee of the Legislative Council has approved nearly all capital injections concerning the Provisional Airport Authority and the Mass Transit Railway Corporation. But monitoring these two institutions remains a worrying issue. The Administration has to make sure that these two institutions will fully implement the localization policy, and to make

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sure that their staff's remunerations are commensurate with the posts they hold. Effective use of resources has to be ensured, too. But since the Government has been delaying the introduction of the Airport Authority Ordinance to this Council, institutions undertaking the airport project and its management are up till now not subject to this Council's monitoring. I am afraid this issue has to drag on for quite some time.

In addition to this, Mr President, I would also like to discuss issues concerning our broadcasting policy - another important policy aspect I want to focus my comments on. An overview of the past four years will find that the Recreation and Culture Branch has been curbing expenditure on broadcasting by keeping it at a level of about $12 million. Looking at our broadcasting expenditure in retrospect may give the public a little revelation: expenditure on broadcasting for the year 1995-96 stands at $12.7 million, 10.6% lower than the previous year. To compare it with the expenditure of $12.3 million for the year 1992-93, this year witnesses a mere $0.4 million increase over that of the year 1992-93!

Such a state of expenditure reveals clearly two problems. First, expenditure on broadcasting lacks steady growth; and second, the central government pays little regard to broadcasting, as exemplified by the inadequate funding every year.

Had the broadcasting environment remained unchanged ever since the year 1990, the $12 million average funding might get by. But consider this, Hong Kong's broadcasting industry is undergoing a radical change as the consortium operating satellite television, investors intending to invest in cable television and institutions devoted to developing multi-media services are busy developing the local market as well as the Asian-Pacific market. To adapt to this new environment, the Administration must pour in more resources. Broadcasting industry can develop into an important industry for Hong Kong, if more resources are devoted to planning, conducting market research, perfecting current broadcasting regulations and training broadcasting expertise.

But, regrettably, in actuality, the Recreation and Culture Branch's performance in many aspects is far from satisfactory. In last year's Budget, it was said that the Recreation and Culture Branch would study the possibility of deregulating pay television, and that it would draft a comprehensive broadcasting ordinance. But the same tune is heard again this year. With so many work slippages, one could not help querying what with all the expenditure on broadcasting voted to them the Recreation and Culture Branch has achieved.

Disappointing again is the absence of any provision for "public channel" or "public access channel" within the broadcasting expenditure. Demand for making good use of the three free channels provided by Wharf Cable was raised as early as the beginning of year 1993. But up to now the Recreation and Culture Branch does not have the resolution to commit themselves on the matter. The Radio Television Hong Kong has only a 4.7% increase in

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expenditure this year, which cannot even catch up with the inflation rate, let alone perfecting and developing its services.

With the lack of broadcasting expertise and sufficient resources on the one hand and the early retirement of Mr James SO on the other, the public becomes all the more concerned about the future direction of the Branch and the possible successor of Mr SO. This is worrying indeed. It is my hope that ample resources will be allocated for this purpose and that the Financial Secretary, the Recreation and Culture Branch and all officials concerned will act with greater resolution and more far-sightedness and commit themselves to the planning of the broadcasting policy.

Mr President, these are my remarks.

MR RONALD ARCULLI: Mr President, throughtout the past four Budgets, two main themes were repeated each year: first, maintaining adequate reserves and second, reducing inflation. What is "adequate" or "strong" reserves? This question has been asked many times and neither the Financial Secretary nor the Secretary for the Treasury has yet given a convincing answer. Perhaps, sir Hamish's reluctance is because he did not want to commit his successor. Whatever the reason, when the Financial Secretary gave his maiden Budget speech four years ago, he forecast that reserves will stand at $71.6 billion by the end of March 1997. In his words, Sir Hamish said that it would be "a reasonable cushion against the contingencies of the next five years". Four years later, his forecast for reserves as at 31 March 1997 will more than double and stand at $151.26 billion. The Financial Secretary has aptly described our forecast reserves of $151.26 billion as impressive and a very reassuring cushion. When added to our Land Fund, the SAR government reserves will be some $360 billion as at 31 March 1999. Even without the Land Fund, there is no getting away that $152 billion in reserves is more than adequate. Indeed for this reason the Government ought to practise what it preaches, that is, to leave in the pockets of taxpayers the money that they earn since any government should only raise by taxes what is necessary to meet its expenditures.

Against this background, it is understandable that the Liberal Party is disappointed that the Financial Secretary did not accept our proposal to reduce the salaries and profits tax from 15% to 14% and from 16.5% to 15.5% respectively. Our estimate, if our proposal was accepted, based on the 1995-96 Estimates will cost about $3.5 billion. However, before assuming any loss in revenue, let us look at the past year when profits tax was reduced by 1%. Despite this reduction which was right, revenue from profits tax actually increased by some $8 billion. Furthermore, with Hong Kong earning the dubious distinction of being one of the most expensive cities in the world, the reduction in salaries and profits tax would go some way towards making Hong Kong attractive to international and local investors.

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The Liberal Party's second disappointment was that our proposal for a housing allowance of up to $20,000 to reduce the burden on our home providers for mortgage payments and rents was ignored. The Financial Secretary has stated that keeping the tax system simple is of prime consideration, but that could hardly be the reason for refusing to introduce a housing allowance while introducing a new allowance for the disabled.

Moving on, reducing inflation has been one of the main themes of the Financial Secretary. However, throughout the past four years, inflation remains high and has only been reduced by 1%, from 9.5% to 8.5%. The reasons for inflation have not changed. The Hong Kong and US dollar peg demonstrates that we are at the mercy of a weak US dollar. If the Administration is wedded to the dollar peg perhaps the only real alternative is to tackle our tight labour market. Without doubt this has driven up wages and hence increased inflation which then creates another demand for wage increase, thus creating a vicious circle. The Government has to produce a fair, reasonable, and sensible policy to ensure that labour demands in our market are met whilst protecting the interest of our local workforce. The Liberal Party has never advocated indiscriminate and unrestricted importation of labour. Our position has always been to ease bottlenecks in sectors with inadequate workforce.

On matters of concern to my constituents, the introduction of measures recommended by the Task Force on Land Supply and Property Prices into our free market economy was intended to be short-term. Much has been said of the 14% or more drop in property prices since these measures were introduced. I have said on many occasions that the measures were too much too late. What we must not overlook is that there are over 850 000 homes owned in the private sector. For these owners, it is a vote of confidence in Hong Kong. What we must avoid is to shatter that confidence. I therefore welcome the Administration's position that it is time for market forces to correct itself. Indeed the Administration could assist in this process by removing these short-term measures. One example is to allow banks to decide their own mortgage lending limit. Another is removing the restriction on the pre-sale of flats and the time for pre-sale as well as the resale of flats prior to assignment. Short-term measures, Mr President, by definition should stay short term.

The Financial Secretary was quick to stress that many of the Governor's policy objectives will be met in this Budget. Could this urge to accomplish the policy objectives promised by the Governor lead to some hasty proposals without ensuring that these proposals are feasible? Safety at work has received much attention during the past year. While I entirely agree that the safety of workers is of paramount importance, it is not an effective policy to just increase the responsibility of contractors as employers without expecting employees' participation. Whilst the Administration has increased the employers' responsibility, for example, to provide safety equipment, to employ more safety officers and so on, it has paid virtually no attention to the role that employees should play to ensure their own safety. Safety at work is a two-way street, the

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sooner the Administration is able to ensure employee participation, the better safety for all at work.

Mr President, on the lighter side, I believe that Sir Hamish's last Budget will be remembered as one that encourages taxpayers to drink plonk as he has not reduced the duty on fine wines. Perhaps this was considered necessary to justify the introduction to Hong Kong of Breathalyzer laws. On the other hand, could it be in the Financial Secretary's mind that if one drinks enough one may also have many children and thus benefit from the additional allowance for the third to ninth child?

Mr President, in conclusion, I join my colleagues in wishing Sir Hamish a happy retirement, and I would also like to extend my good wishes to Lady MacLEOD. Although at times it may seem not to be so, I wish to assure Sir Hamish that we do appreciate his tremendous contribution to Hong Kong all these years, and not just as the Financial Secretary. We will particularly remember the Financial Secretary for opening up the Administration's budgetary process through consultations with this Council. We look forward to working with his successor, Mr Donald TSANG. We are sure that Mr TSANG will continue the consultative process initiated by Sir Hamish.

Thank you, Mr President.

DR LEONG CHE-HUNG: Mr President, I rise to congratulate the Financial Secretary on behalf of the Medical Functional Constituency for presenting a comprehensive, pragmatic and balanced Budget, in particular the healthy reserve he has managed to achieve over his projection.

For the last two days, we have heard political parties and Members commenting and giving their views on the Budget. Many are of course well thought of ones and worth the Administration's serious consideration.

I will be concentrating on funding on health care. Instead of requesting the Government to spend more money in this direction, which I am sure many of my colleagues would, I am seeking the Government's reassurance that she will look into the policy of health care funding instead. A policy which could bridge into the next decade. I am calling the Government to come out with a plan that will curb the exponential increase of health care cost. By doing so, I am in no way allowing the Government to shirk its responsibility to health care which must be taken as an essential welfare service that no population can do without. I am calling on the Government to upkeep its health care responsibility and yet come out with ways and means to efficiently curb the unsatiable medical cost.

I would venture to suggest that the Government should take three active directions without delay.

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Firstly, to set up Health Targets aiming to reduce incidences of certain diseases which are common and which may be preventable through health education and strengthening of primary health care.

Secondly, to look for a substantial additional funding sources for public health services.

So, I am again renewing my call for a compulsory, contributory, territory-wide health care insurance. Such a scheme will, given time, be a big booster to public health care funding. Such a scheme will ensure a trans-generation funding pool in which the youngsters of today will contribute to the care of the elderly today, and in turn they will be cared for by the young when they grow old. I have been suggesting that this be tagged onto a central provident fund. Although such is now a dream, there is no reason why this health care insurance of funding could not be tagged on the Mandatory Provident Fund that the Government is set to implement.

Thirdly, to ensure a more cost effective Hospital Authority.

I am sure the Administration will say that the Hospital Authority is an independent body properly monitored by the Government through resources allocation, business plans and corporate plans and that a public scrutiny are made through public involvement in the Hospital Authority Board, Regional Advisory Committees and different Hospital Governing Committees of various hospitals.

Yet of late there are two areas which have raised concern. Queries have been raised on the need for so many Hospital Authority head office staff. The Hospital Authority can do no worst than by opening up its meetings so that the public is not only being told of the staffing needs but actually seen the functioning of these staff members.

Secondly, with the improvement of environment and service attitude of public hospitals, more and more patients are being attracted by them. This is of course a measure of the Hospital Authority's success. Yet, is this most cost effective in that there will be a continuous increase in demand for public health care resources in place of resources that could have been spent in the private sector? The Hospital Authority can only prevent itself from becoming the victim of its own success by coming out with a solution of better co operation between the private and public so that the private medical resources could also be tapped.

Primary health care

But regrettably, Mr President, the budget allocation to primary health care does little to strengthen any confidence of the sincerity of the Government towards the drive to improve, let alone revamp primary health care. With the chicken feed increase in budget for the Department of Health, I challenge the relevant departments to complete the recommendations of the Report of the

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Working Party on Primary Health Care; I challenge the efficient implementation of the health pledges of the Governor's policy address.

Let us be very clear that the effective dealing with diabetes, effective dealing with heart diseases and so on, requires much more than setting up four clinics for diabetes and special funding to treat just 200 extra patients a year with heart problems. It calls for an in depth setting up of Health Targets and goals. Such would require extensive and comprehensive planning to ensure that a territory-wide and sustained health education be delivered to the healthy young of today so as to protect them from falling victim to those disabling diseases in the future - those disabling diseases that consumes a big slice of our health budget. Yes, $80 million is allotted to the Health Care and Promotion Fund. But this is hardly enough even to start, let alone to maintain, a sustained programme for continuous Health Targets.

Mr President, when the Report of the Working Party on Primary Health Care was endorsed by the Governor in Council, the Department of Health quickly answered to the call and established a District Health System. This was then considered as a pride and joy - the model of linking up public, private and various community elements to keep people healthy, and an example that should extend throughout Hong Kong. Since then, unfortunately, the whole idea has been forgotten, and after the initial "bang" of setting up one such system, the whole idea appears to have disappeared into oblivion. The Government has in this aspect a lot to explain to this Council and the public.

Dental care

So, whilst it is obvious that the Government has repeatedly resist the provision of dental treatment services to the public against the wishes of the people, the Governor has pledged to serve at least selected groups with special needs. But how much and how far is this progressing? And with all the promises of improving care for the elderlies, will there be funding to look after the oral problems of those in their twilight years?

On the other end of the age scale, statistics have shown that proper dental care in pre-school days goes a long way for future healthy teeth. A pre-school dental programme has been set up, funded by the Royal Hong Kong Jockey Club. This has shown positive results. With the three-year funding approaching the end, I call on the Government to continue with this essential project and seek necessary financial provisions without delay.

Occupational health

Mr President, the workforce is the pillar of Hong Kong's economy. There is a lot of sense to keep our workforce healthy, away from occupational hazards and industrial injuries. Yet, despite the expansion of our workforce, the Occupational Health Division is relatively shrinking. Only one Occupational Health Clinic has so far materialized and the Administration has put it on record

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that there is no plan to set up any more. It appears that we have already faced the end of a blind tunnel.

Up till now there is no sign of the Government's sincerity to formulate regulations to push for compulsory industrial safety officers, nor occupational medical experts for factories and industries of certain staff size. All these have shown the Government's feet dragging in improving occupational health and prevention of industrial hazard.

Co-ordination between 'hospital' and 'health' sectors

Mr President, yesterday, my honourable colleague and classmate, Dr Conrad LAM, spoke at length of the co-operation or the lack of it between the Department of Health and the Hospital Authority. He has cited examples where there are duplication of efforts if not a competition for service. Dr LAM also called for the need of setting up a super authority to co-ordinate the hospital and health services.

I support his call insofar as a better co-ordination of "health" and "hospital" sectors has to be ensured and that somebody has to do the job. Members will remember that both the Scott's Report on which the Provisional Hospital Authority was built and the Report of the Working Party on Primary Health Care did suggest the need of a possible super Health Authority to link hospital and health services up. It may be timely to have a look into this. At the end of the day, it calls for better co-ordination which could well be done by a newly created authority under the Health and Welfare Branch, or a revamped Health and Welfare Branch itself, or perhaps even a Health Branch by splitting the current branch into two portfolios. I say this, Mr President, with no disrespect to the Secretary concerned, nor with any doubt on the effectiveness of her staff and the Branch. Yet, the health and welfare policy areas have grown to such an extensive size that it may be more than for one particular branch to follow.

Health care strategies overriding 1997

Mr President, a lot has been mentioned these two days about the involvement of China in the forthcoming budget determination. I have no wish to enter into this arena, suffice it to say that it is high time, given the fact that we only have around 800 days left before the transfer of sovereignty, that thoughts should be given to health and health funding strategies after 1997. Three areas need deliberation:

Firstly, how much cross-border movement for treatment is expected to take place, basing on which will be our direction for the needs of health care services, be it manpower or hospital beds.

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Secondly, statistics have shown that some 300 children born of Hong Kong Chinese are now in China. They will be full-fledged Hong Kong citizens with a right of abode in Hong Kong after 1997 as stipulated by the Basic Law. What provisions are there to provide for their health care both in facilities and health care budget?

Thirdly, let us not forget that whilst Hong Kong currently subsidizes over 97% of public treatment, hospitals on the other side of the border receive at best some 10% subsidy. Admittedly the Joint Declaration promises one country, two systems. But unless this concept is not swayed by any degree of mounting pressure from the north where there is still a deficiency in health care, many people will be travelling south to seek medical treatment and again our health care system will fall prey to its own success.

Tax evasion

Let me now turn to say a few words on the sensitive topic of tax evasion for which the medical profession is directly or indirectly under fire. As a start, nobody tolerates tax evasion. Yet when it comes to production of records for assessment, the Inland Revenue Department (IRD) is extremely difficult to satisfy and it is at this level that members of my constituency are guilty or otherwise being harassed. We therefore welcome the establishment of law to denote the minimum number and types of records that all business must keep, for by then we will know exactly what to produce when the IRD men knock at our door instead of at a loss of how to satisfy the insatiable needs of that department who always return for more.

It is timely too that the Government should look into the rules and regulations governing the formation of body corporate (or incorporated company) by the medical profession. A doctor can only practise as a solo practitioner for financial gain. Once a few doctors form a body corporate, they come under the Medical Clinic Ordinance which prohibits profit taking. Unfortunately, when a doctor practise on a solo basis, he faces discrimination on any form of tax concession, for there is no way that he could claim concessions for overseas medical meetings, or even medical books or medical journals although these are for improvement of his professional skills to care for the patients and at the same time to promote his practice. On the other hand, members of other professions through a body corporate could have their holidays tax deducted so long as they can prove that the trips are somehow business related.

Spending surplus wisely

Finally, Mr President, whilst praising the Financial Secretary for adding on to our reserve, money is worthless unless it is well spent. Last year, I call on the Government to utilize the reserves on one-off projects. In this year of still plenty, I would be renewing my similar call. In the area of health care, the

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Government cannot be too far wrong than by investing the surplus in the building of new general and specialist out-patient clinics, or at least upgrading and updating them so that they can be catering for the rising needs and aspiration of the current public. Money obtained from the public should be spent as much as possible on the public themselves. This is the golden rule that we should never mislook.

With these remarks, I support the motion.

MR VINCENT CHENG: Mr President, like many of my colleagues, I would like to pay tribute to Sir Hamish MacLEOD for his dedication and contribution to Hong Kong over his 30 years of service. Hong Kong is indeed lucky to have someone like Sir Hamish in the Civil Service, which is an important pillar of Hong Kong's success. In the last four years, I have the good fortune of watching Sir Hamish at work at a close distance. He held steadfastly to the well tested fiscal principles that have made Hong Kong a well admired model in public finance management. At the same time, he listened patiently and accepted many of the advices from this Council on how resources should be redistributed to the various sectors of the community.

Mr President, like many of my colleagues, I am pleased with the 1995-96 Budget. It has been criticized as too prudent, as unimaginative, and uncaring by some Members of this Council. But, I must say I do not agree with these criticisms. No single budget can ever satisfy all aspirations of any community. Over the last four years, Sir Hamish has introduced quite a lot of initiatives to the fiscal policy. There were some major concessions on salaries tax. We have seen more spending by the Government in every sector of the economy including welfare and some massive infrastructure projects. Unless we reject the principle that we should not spend beyond our means, we have to accept that there is a limit on spending. Nor should we expect major changes every year. A good tax system is a stable, predictable system. The community should be weary of annual changes in either tax rates or tax structure. Furthermore, the initiatives made in the last several years need to be completed before further major initiatives are introduced.

The Budget this year introduced only limited changes. Most of those changes were really to adjust for inflation. This is not a bad thing. We are already in the final phase of the transition and prudence should be the key in our budgetary policy, not just for this fiscal year, but also for the next three years. Political reality precludes any major initiative these days. Every major proposal by the Hong Kong Government generates doubt and skepticism in China. Should we make any major change in fiscal policy, there would be a real chance that we would get mired in new arguments and heated debates and time is too precious now to be wasted in such a way.

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We must therefore in the next two years keep changes to the minimum and maintain the long cherished principles which have put Hong Kong in a position of envy for the rest of the world.

We must maintain a balanced budget.

We must keep our tax system simple and tax rates low.

We must maintain a reasonable level of reserves and the Government must listen to this Council for priority areas in terms of spending.

Tampering with these principles could undermine the long-term financial and social stability of Hong Kong.

I would like to concentrate only on two areas: the economy and the vulnerable groups in society.

I share with this Council's view that inflation remains a concern. Although it is not getting worse, it is getting no better either. The real cause is the supply-side bottlenecks in the economy. I am not sure we can find any quick fix for it. Since I do not have the thankless task of fighting inflation, I should like to take the easy way out and join the chorus and ask the Government to come up with some imaginative solutions to this problem. I do not have any.

Linking the salary of the Financial Secretary to the inverse of inflation is no solution. I know New Zealand did it and inflation came down but I think, coincidentally. But I do not think that there is any causality between the two. We can surely bring inflation down through demand management. But at what price? Short-term pain is always unavoidable if we want to bring inflation down through curtailing demand sharply. If we decide to cut demand, the cost would be a recession for Hong Kong, high unemployment, sharp drop in profits and business failures. Do we really want to see that during the transition?

The absence of a quick-fix solution does not mean that the Government should be complacent. I think we should look extremely carefully at every request for increase in prices or fees by public bodies and make sure that they do not add inflationary pressure.

Despite inflation, we should note that the real income of Hong Kong has been increasing. Some commentators mentioned that income distribution is getting more uneven as indicated by the Gini coefficient. However the Gini coefficient is not a good measure of the real picture. It does not take into consideration the effect of tax allowances which have been quite generously increased by Sir Hamish over the last three years. Nor has it taken into consideration the amount of subsidy that the lower income groups receive through, for example, the massive housing programme, nine-year free education, and other forms of subsidies. If these factors are included in the

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2785 calculation, the real income distribution picture of Hong Kong could be very different.

The other concern I have is the cost of doing business in Hong Kong. I am not just talking about high rental and labour cost. I am more concerned about the hidden cost of meeting the endless demand for information by government bodies and regulatory bodies. There are more and more reporting requirements by the regulators. Most of the time, I wonder whether regulators would really read those reports by financial institutions or would they be just field anyway. Or are these really efforts by regulators to justify their existence and expand their empire. I fully agree with my honourable friend, Mr Martin BARROW, to set up a deregulation unit to look at all these government rules and regulations and reporting requirements. We must cut down the size of the bureaucracy which is getting worse and worse. And firms will need teams of people just to meet all these requirements.

A Member of this Council mentioned the linked exchange rate. Like any socio political/monetary system, I am sure it will go one day. But the fact that one has to die some day does not mean that one should die now or should have died already. The link, like any exchange rate system, has its merits and problems. There is no such thing as a perfect exchange rate system. The most important thing is that it has worked for Hong Kong. Since the introduction of the link in 1983, economic growth has been about 7% per annum, with very low unemployment, excellent fiscal position, and very stable balance of payments. It has also made Hong Kong into a US dollar area, thus eliminating the exchange risk of US dollar based investors, allowing Hong Kong to tap into a much wider source of capital.

Now, will the link stay forever? Of course not, therefore those who propose to change the link now will be able to say one day that I am correct and claim credit for having the vision and make a name for themselves. But I am glad that the Chinese Government is more sensible than this and have agreed that the link is an important part of our financial system during the transition and should stay beyond 1997.

I would also challenge those who said that the link should be abandoned to come up with their own systems and see how they would compare with the link system. We cannot just say abandon the link without replacing it.

Mr President, I would now like to turn to a subject of great concern to me. Despite the prosperity we have achieved and the progress we have made, there are certain groups of people who have not been able to share the increased wealth and indeed are worse off. They are the old people. Because of negative real interest rates in the last several years, and the drop in asset prices this year, many old people have seen their lives worse off. We must do something about it.

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I have heard cases of old people having to spend their entire savings on medical expenses when they had operations in government hospitals. This must be a horrible experience to happen to someone at that sort of age. And we must do all we can to avoid such tragedy.

The other issue I want our Government to look at closely is perhaps rates relief for retired people who live in their own homes because rates are based on market rental. As rental goes up, so does rates payment. But if they only live in their own flats and do not get any benefit from higher rent, they still have to pay more in rates because the assessed value has gone up. This would constitute a real financial burden to retired people who rely on their savings in an environment of negative real interest rates. I hope the Government can come up with some sort of relief for these old people.

Mr President, I have only concentrated on a few areas because I think that a short shopping list is actually more effective. There are other issues which are on my list but I will pursue them later when the opportunity arises. Before closing, I would like to wish Sir Hamish all the best and a very happy retirement. I also wish his worthy successor, Mr Donald TSANG, all the best in his term as the next Financial Secretary. But I hope he can look into the distribution of tax burden. At present, the middle class actually bear the bulk of the tax burden, while the rich could avoid tax and the less well-off get allowances.

Mr President, I support the motion.

MR CHEUNG MAN-KWONG (in Cantonese): Mr President, as Sir Hamish MacLEOD, the Financial Secretary, is about to leave his job soon after delivering the 1995-96 Budget, I feel a little sad at his departure. I have to admit that, in preparing the Budgets during the present term of this Council, Sir Hamish has adopted an increasingly open approach in the production process and he did consider some of the opinions expressed by Members of this Council and the public. Although many of our views have not been accepted, I must give my heartfelt thanks to Sir Hamish for his dedication and patience. In addition, I am delighted at the appointment of Mr Donald TSANG as the next Financial Secretary. I hope we will be able to develop a co-operative relationship. However, before Mr TSANG will assume office, I wish to lodge a mild protest against his presenting a gift of flowers only to female reporters whereas their male colleagues received nothing from him, not even a weed. No wonder he was assigned only a minibus for transport during his recent trip to China, and to a back seat, too.

Mr President, in this year's Budget, the Financial Secretary has introduced a new term to summarize his philosophy in financial management, which is the "Consensus Capitalism" everybody has been talking about these days. He has promised to establish a free and fair market and an adequate welfare safety net. In terms of general direction, there is nothing wrong with

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the concept of "Consensus Capitalism", but when it comes to the implementation of specific policies, it seems that the concept is biased in favour of the interests of capitalists and business consortia. The vast working class which constitutes a major component of this capitalist society and those on the lowest social stratum who need help most have not received sufficient care and support. This so-called "Consensus Capitalism" which allows financial groups and property developers to accumulate huge wealth while rendering ordinary people's life more and more difficult will only sow destabilizing seeds in Hong Kong in the run up to 1997.

Our economy has shown signs of recession this year with a contracting manufacturing industry, a stagnant service industry and a significant increase in the number of both unemployed and underemployed workers. The current state of ordinary people's life is best demonstrated by the widespread under-provision of work in factories, long queues of taxis waiting for passengers and the increasing number of empty tables in restaurants, which indicate the community's rapidly declining consumer purchasing power. According to the latest figures released by the Government, the unemployment and underemployment rates in the last quarter stand at 2.5% and 1.5% respectively, the highest since 1989. Even based on the Government's extremely conservative rates, we have an unemployed army as large as 75 000 while underemployed workers number 45 000, as a result of which 120 000 households involving a few hundred thousand people are being affected. The social discontent and conflict that may arise are sufficient to serve as a red light warning to the Financial Secretary on his much-vaunted "Consensus Capitalism".

However, the Government not only disregarded the red light sign but also jumped it, letting loose the Through Train that carries imported workers. The local labour market is now inundated by 25 000 foreign workers, another 27 000 workers to be brought in for the new airport projects, plus tens of thousands of illegal workers as well as an upsurging number of returnees from overseas. The 100 000 foreign workers and 100 000 unemployed local workers, looking like two armies pitted against each other, form a ridiculous situation which can be summed up as "local people are out of job whereas foreign workers are coming over the mountain to make a living here". Despite the fact that local workers are deprived of their jobs by foreign labour, the Government, instead of putting a stop to it, is taking pleasure in its own inaction by saying that the importation of foreign labour can curb inflation. Mr Financial Secretary, the "Consensus Capitalism" championed by you is in essence nothing but capitalism in which tycoons can enjoy more extra benefits at the expense of local workers' interests and their reasonable demand for better pay. Therefore, on the issue of imported labour, there is no consensus but conflict between the majority of local workers and the Financial Secretary.

Mr President, local workers have also contributed to the economic prosperity of Hong Kong. Hong Kong's GDP per capita has reached $170,000, the 15th highest in the world. However, over the past several years, workers at the grass-roots level have been unable to share the fruits of our 5.5% annual

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economic growth and their wages have failed to catch up with inflation. The plight of those who have been unemployed, underemployed and given low wages in the past few years can be summed up as "sweat of one's brow in exchange for eyefuls of tears". There is blood in addition to sweat and tears. Hong Kong's industrial accident rate remained at a high level in 1994 with up to 44 000 people injured. For every 100 people on average, there were 28 injured. The death toll topped 67, of which 51 were related to construction industry, accounting for three fourths of the total. Behind the prosperity and between the skyscrapers lie many shocking and sad stories stained with blood and tears.

This figure is absolutely unacceptable. Even the Government has to admit that the accident rate in construction sites is "too high to be acceptable". What has the Government done in view of such high injury and death rates? Inspection of construction site is only conducted once every three months; an average fine of only $13,000 is imposed on employers where construction site safety regulation is breached; only 1 055 prosecutions were initiated out of the 16 000 construction site accidents; the eight additional Factory Inspectors to be provided in the next financial year are for the Airport Core Projects and no extra manpower will be given to the existing sites. Mr President, does it mean that we have to put up with the high injury rate and high death rate among our workers under the "Consensus Capitalism" as championed by the Financial Secretary? If we remain indifferent to the lives wasted by accident and let the situation deteriorate, this will only reflect the cold-bloodedness of capitalism. And it is the part of capitalism we must discard.

Mr President, the consensus capitalism of the Financial Secretary includes an adequate welfare safety net. Since his assumption of office, Governor PATTEN has emphasized many times that we should "provide for the elderly". However, the Old Age Pension Scheme has turned out to be stillborn and this has turned a gorgeous pledge into a blighted hope. When people have lost hope in retirement protection, their attention is again focused on raising the Comprehensive Social Security Assistance (CSSA) payment for the elderly. The reason is simple: even if adequate retirement protection is put off indefinitely, we cannot neglect those old people who live in extreme proverty and resort to CSSA. The Legislative Council do have consensus on this issue, which is to increase the CSSA payment for the elderly in accordance with the inflation rate to a humanitarian level of $2,500.

When encountered with this agreed request, the Government's first tactic was "to threaten", saying that this would bring about an additional expenditure of $8 billion to $23 billion and the tax rate would therefore have to rise by 3%. Its second tactic, "to deceive", was then adopted. It claimed that with the introduction of the Old Age Pension Scheme, the elderly people receiving CSSA would be benefited immediately. Its last tactic was "to delay". We now have to wait for about a year for the study and review to complete. This "threaten-deceive-delay" series has wiped out the public's confidence in the Government. In fact, the Government has the capacity to increase the CSSA payment for the

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elderly. Last year's surplus was $7.7 billion and the total fiscal reserves in 1997 will reach $361 billion, which is a record figure in the history of Hong Kong. More importantly, the Financial Secretary has failed to keep social expenditure in line with the average economic growth these years, which is 5.5% p.a, making it impossible to raise the CSSA payment to a humanitarian level of $2,500. Concerning the issue of CSSA, the Financial Secretary, who advocates consensus, has discarded the consensus of this Council and the community, and discarded the sound welfare safety net he promoted. This is self-contradicting. It is immoral to keep old people waiting to no avail. If the wheel of time could be turned back, Xunzi who advocated "to be prudent in public spending, to improve the well-being of the people and to maintain good reserves", would bawl the Financial Secretary out for ignoring the well-being of the elderly and call him a miser who misinterprets the ancient books.

Mr President, on many occasions the Government stresses the importance of investment in education. It is the consensus of the whole community that the quality of education should be improved. I have to point out that while the Government is putting all its effort in expanding tertiary education, its investment in basic education has always been on the low side. Expenditure on basic education vis-a-vis the overall expenditure on education dropped from 70% of last year to 60% this year. When compared to this years' increase, the increase for tertiary education is three times as much as that for primary education and four times as much as that for secondary education. The investment in basic education is low and its reforming pace is very slow, too. Kindergarten education is most unfortunate among all as it, only represents one per cent of the overall expenditure on education. Even though funding for direct subvention to kindergartens has been increased by $80 million, it is only a drop in the bucket. The percentage only increases from 1% to 1.3%. The serious imbalance in growth between tertiary education and basic education is the biggest flaw found in the education section of the past three year's Budgets.

Nonetheless, the Government is now willing to subsidize kindergarten. This is a welcome measure and the fruit for which the education sector and the community have been striving over a long time. Unfortunately, this $80 million subvention proposal has not yet been announced, let alone implemented. These uncertainties have given rise to even more doubts and insecurity to the kindergarten sector. More delays, more danger. Therefore, I solemnly warn the Government that it should not break its promise on this welcome measure and turn the hopes of the people to disappointment, for that disappointment will grow into anger.

Mr President, I support the Government's all-out-effort to develop higher education and to allocate $27 billion in the next three years for this purpose. Such a move reflects that the Government attaches great importance to training professionals at tertiary level. However, the rapid expansion in tertiary education also exposes a lot of problems in the process, such as the sharp rise in university tuition fees, the general decline in students' quality, the increasing number of disputes related to the terms of appointment, promotion and

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dismissal of staff, and the possible overprovision of funds to the universities and for the related supervision work. All these problems attract the concern of this Council and the public over the "labour pains" in the course of university expansion. While respecting the academic freedom enjoyed by tertiary institutions, the Government should also ensure and supervise the proper use of public money so as to optimize the interests of the academia and the public.

Mr President, Sir Hamish put forward the ideal of "big market, small government" in a community of consensus capitalism. The Government of Hong Kong is indeed a small but efficient government. However, this small government has to face an extremely great challenge - to turn from a colonial government to the SAR government in the course of the territory's reversion to China - during the transition. Such a transition is unprecedented in the world. We should act prudently to preserve the morale of the civil service and persuade civil servants to continue serving the people of Hong Kong in the new political environment so that the administrative system, which is the core of the Hong Kong Government, can straddle 1997 in a stable manner.

Inevitably, the process to decolonize the Government of Hong Kong will start. Mr President, here I would like to commend the Civil Service Branch in public. In merely a year, the Branch has succeeded in localizing senior officials, recognizing with an open mind the academic degrees conferred in Mainland China and Taiwan and standardizing the terms of employment for both local and expatriate civil servants. These three tasks of decolonization are crucial and arduous. It is by no means easy to have them launched so extensively.

Nevertheless, Mr President, the last difficult task on the way towards decolonization is to overhaul the colonial government's language policy, in which English is regarded as superior to Chinese, and to give effect to the principle of according equal status to both Chinese and English, as stipulated in the Basic Law. It should be noted that 98% of the population in Hong Kong is Chinese. It is absolutely impossible for the Government to discriminate against the Chinese language and use it merely for window dressing. In this regard, the use of Chinese as the principal medium of communication in the civil service should be expedited so that Chinese can be widely used in government departments without difficulty. I am aware that this task is even more arduous, yet it has to be accomplished. The Government should take the lead in giving both Chinese and English equal status by making arrangements for departments which have close contacts with the public, such as the Home Affairs Department, the Housing Department, and the Education Department, to launch the pilot scheme of using Chinese in their official documents. The experience thus gained will provide a sound foundation for the general use of Chinese in all government departments. The language policy of attaching more importance to English than to Chinese, as adopted by the colonial government, will surely come to the end of the chapter with the advent of 1997.

Mr President, these are my remarks.

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MR PETER WONG: Mr President, the Financial Secretary's farewell Budget this year struck a sonorous note of prudence which he said accords with the fiscal policies of eastern and western economists. Scottish prudence governs his budget strategies, filters through his revenue proposals and controls his expenditure estimates. While few people will seriously dispute his cautious approach to public finance as Hong Kong moves closer to 1997, I for one would query his ultra-conservatism bordering on inaction. Apart from the very modest changes proposed, there are few new initiatives for increasing Hong Kong's competitiveness and stimulating growth in what can be described as a caretaker's budget.

The Financial Secretary talked about Hong Kong's "steady, sustainable growth being a pattern for the 1990s". However, prosperity of Hong Kong's volatile economy cannot be taken for granted. For Hong Kong to generate wealth and for its competitiveness to flourish require more from the Government than just providing a framwork of social and economic infrastructure. We need more than a "small government" mentality to brace up to unpredictable forays of world economic depression. We need more than prudence to deal with slow economic growth now looming over the horizon.

Economic downtrun

Despite the affirmative, reassuring forecasts made by the Financial Secretary, the economic outlook for 1995 is clouded by somewhat gloomy sentiments. An on-going opinion survey conducted by Ming Pao since 1985 shows that Hong Kong people's confidence in our economy early this year has dropped by 10% from 1994, although their confidence in the political development has picked up. There are several contributing factors to the prevailing gloomy economic scene.

(A) External factors

Frequent increases in United States interest rates last year have shown their marked impact on our bearish stock market and real estates has recorded a 30% drop in property prices. Their adverse effect on Hong Kong would be to further depress the sluggish consumer spending, especially those of home buyers paying mortgages. Growth in our import of goods is forecast to outpace export growth, so that a deficit in our trade balance will persist. With GDP expected to increase by 5.8% and real expenditure growth estimated to be 9% this year, the writing is on the wall.

Hong Kong's prosperity is dependent on China's continued economic health, external trade and demand for capital and skills. Mr President, members of the Accountancy Functional Constituency have reported increasing cases of slow payments, bad debts and trading beyond capacity among their client companies. Hong Kong companies doing business in China have begun to feel the pinch of China's economic slowdown. Our economic prospect for 1995 very much hinges on China's soft landing in implementing dampening measures

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to cool down its overheated economy. The effects of China's measures to tackle runaway inflation, officially pitched at 21.4% last year, will feed through to Hong Kong which is also experiencing high inflation estimated to be 8.5% this year. The cost of food from China, which has major bearing on our economic price index, is also expected to rise.

(B) Internal factors

Rising world commodity prices due to faster-than-expected pace of growth and international competition are likely to exert inflationary pressures on Hong Kong, leading to a reduction in ultimate domestic demand. At the same time, they will add to the ever present surge in the cost of doing business, transportation and services, and a sustained rise in business and domestic rentals. Meanwhile, Hong Kong's structural changes - from a manufacturing and trade based economy to a service based economy, has encountered supply constraints. Our labour shortage is attributable not only to the movement of jobs out of Hong Kong, but also to the slow rate of training up people to supply new skills. This has resulted in the stalling of expansion by some employers until they can be certain that labour is available to undertake their development plans. Hence the reported increase of 3.5% of the workforce (100 000 workers) is far too low to meet our labour needs and to curb inflation. Inadequate retraining and in-service training have also burdened the tight labour market - it is estimated that there will be a shortfall of 73 200 workers with secondary education (6.7% of workforce) by 1996.

It is noted that a strong underpinning to economic growth comes from the Government's infrastructure spending, with the New Airport project remaining the major impetus for growth. However, the escalation in infrastructure building could also fuel inflation and construction costs. Meanwhile, we have to take into account the decrease in land sales premium and the demand for social spending expected to increase with the political changes due to take place in 1995. The $2.6 billion deficit estimated for 1995-96 is a signal that inflation is likely to persist.

Suggested solution

(A) Public spending

In face of the external and internal pressures, the Government must zealously tackle the problem of consumer price inflation which eats into the ordinary people's savings and threatens their retirement protection. To get to the root of the property price problem, the Government should, in addition to providing more land through reclamation, streamline its urban redevelopment scheme and speed up the re-zoning programme to maximize land use. It should try to resolve high office rents by offering new office space needed to accommodate corporations wishing either to establish a presence here or expand existing operations. Such measures will go a long way towards reducing the cost of doing business which is hampering our growth. My recent trips to Japan

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since the Kobe earthquake indicate that a number of Japanese concerns are worried about their safety and are thinking of relocating their headquarters to another place in Southeast Asia. Hong Kong would have been ideal except for the very high costs. More effort should also be made to increase investments by the private sector in cross-border facilities in view of the inadequate transport infrastructure now hampering trade growth.

To tackle high labour cost, the Government should alleviate labour shortage by liberalizing the immigration policy to allow the movement of skilled workers from China and elsewhere in the world. Greater flexibility is needed in the importation of qualified professionals from other countries including the People's Republic of China (PRC). To resolve the mismatch of skills in the service sector, retraining and on-the-job training should be actively expanded. More non-degree programmes, graduate and executive development programmes should be organized with PRC and overseas universities to teach those skills that Hong Kong will demand in the 21st century. Above all, ways should be explored to overcome the relative decline in service productivity.

Mr President, housing, infrastructure, education and manpower resources hold the keys to maintaining Hong Kong's ability to compete successfully in the Asia Pacific Region. It behoves the Administration to address these problem areas vigorously, with imagination and vision.

(B) Revenue proposals

The 1995-96 Budget has not addressed the fundamental imbalance between revenue collection and spending. In this regard, tax professionals are finding it incredible that only 2% of our labour force are paying tax at the standard rate. We also acknowledge a smaller surplus this year due to less revenue from stamp duty from property transactions.

Mr President, the high cost of doing business has already placed Hong Kong in a disadvantageous position in our competition with our neighbours. The additional tax incentives recently announced by Singapore indicates where the competition lies. A reduction in profits tax of at least 0.5% has been strongly recommended by the Hong Kong Society of Accountants along with other business groups. The Society's innovative suggestion to abolish property tax by bringing property tax payers into the profits tax net is well worth the Administration's consideration. This will effectively maximize the efficiency of the limited Inland Revenue Department manpower. Other measures suggested by the society include group relief for corporate losses to encourage local investment; profits tax exemption for income earned by retirement funds; setting up a task force to study the rising cost of doing business in Hong Kong; and a feasibility study of a self-assessment tax system.

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2794 (C) Primary education

I shall now turn to one public expenditure area that has been causing public concern for some time. The gradual decline in the quality of education, in particular the language standard of primary, secondary and tertiary students, has promoted the Education Commission to look into ways of improving the situation in its Report No. 5. However, among the Commission's achievements listed in Chapter 10 of the Report, the bulk of education reforms were directed at secondary and tertiary education. Of the $34 billion total public expenditure allocated for education in 1995-96, only $6 billion or 17.7% have been earmarked for primary education. Further, a large portion of the capital expenditure will be spent on building the Hong Kong Institute of Education campus. Primary education still remains the Cinderella of our education system.

Following the introduction of nine-year universal schooling in the 1970s, our attention has been shifted to the development of higher education. With disproportionate resources being siphoned off to the development of university education, the time will come when the inverted pyramid system will topple. Our invaluable resources could be wasted on students lacking the right calibre to benefit from expanded college education. For Hong Kong to promote dynamism of free enterprise and competition, a skilled and competitive workforce is essential. We need more than improved class size, increased student-teacher ratio and slow expansion of the whole-day primary schools to upgrade our primary education, and of course we need more equitable budget allocation. Let me paraphrase the Financial Secretary's new terminology "consensus capitalism" - to maintain Hong Kong's "competitiveness", we must promote "equity and assistance" for our primary education.

(D) Environmental conservation

I shall round off by commenting on the environment. Although expenditure for environmental protection for 1995-96 will increase by 24.2%, it only represents a meagre 3% of the total public spending. This amount, however, is absorbed mainly by the Strategic Sewage Disposal Scheme and other waste treatment facilities. Again, Environmental Protection Department's (EPD) and Agriculture and Fisheries Department's budget proposals are lacking in new initiatives such as the introduction of new technology in environmental protection, conservation projects and the building of artificial reefs. No budgetary provision has been made for the collection of comprehensive data on Hong Kong's natural resources, and for running programmes to acquaint EPD personnel of the latest development in environmental technology around the world. More importrantly, EPD is still dragging its feet in promoting the separation of waste at source. Nor has the Department given adequate financial support to the green groups to conduct environmental education - the allocation criteria of the $50 million Environmental and Conservation Fund remain largely unknown to the public.

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Before ending, I would reiterate the point I made during the special Finance Committee meetings that it is too easy for a government department trading fund to slip pass the present financial control system. It is not realistic to expect the policy panels to do a full, systematic scrutiny of the trading fund accounts. There should be some mechanism to ensure that the financial health of all the trading funds be examined in future by this Council as part of this budgetary process.

To sum up, this year's Budget has done little more than tinkering with routine public revenue and expenditure in the name of prudence. But these questions must be asked. How long can we count on Hong Kong's continued economic growth? Is a breakthrough in our conservative fiscal policy long overdue? Should we not start spending to build a better tomorrow?

Mr President, with these words, I support the motion.

MR FREDERICK FUNG (in Cantonese): Mr President, as this is the last financial report presented by the Financial Secretary in his term, the Secretary may not want to introduce too many innovative changes in the Budget. As a result, many sensitive issues, including those concerning the fight against inflation, rates and licence fees for vehicles, have all been left out. The Secretary may wish to leave them all to the next Financial Secretary when he takes over. As for the Secretary himself, he does not want to get involved. Therefore, many aggressive financial policies have either been left out, or shelved or are dealt with in a conservative manner in this Budget. I strongly disagree with the Secretary's consideration in this respect. I feel that the Government has been applying a certain economic philosophy to the Budgets. Although we expect the Government to make changes in this respect, up till now we can still find no trace of such changes and I am very disappointed. On the whole, I feel that this year's Budget has neglected the welfare of the broad masses of grass-root people.

The so-called "Consensus Capitalism" is the standpoint taken by the Government in determining Hong Kong's economic development. It is also the term the Financial Secretary uses to conclude his Budget speech. I doubt if the Government has indeed reached a consensus with the middle and lower classes. From the Budget, I find that when considering making various policies, the Government often considers the interests of big enterprises and people with vested interests first. Hence, the disparity between the rich and the poor has not been reduced this year and I am worried that the situation will even get worse. The Gini Coefficient which shows the disparity between the rich and the poor rose from 0.43 in 1976 to 0.48 in 1991. Obviously, the disparity is widening. A responsible government should narrow and adjust the gap between the rich and the poor through public expenditure policies. Perhaps the Government is relieved to see that the disputes and conflicts between the rich and the poor have not yet developed into an extreme scenario, so it continues to allow such

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inequity to go on. If this is true, I shall call on the Government to get prepared beforehand and understand the merits of making such preparation.

The present working population in Hong Kong is 2.9 million. 990 000 of them are in the so-called service industries, including retail, import and export, restaurant and hotel industries. Between 1991 and 1994, the average wage growth rate in these industries was 9.5%. There were 440 000 people working in the garment manufacture industry and the average wage growth rate was 9.9% during the same period. Allowing for inflation, their real wage growth rate was only about 1%. Most ironically, the Financial Secretary says in his Budget that after allowing for the inflation rate, the growth in Hong Kong's GNP was 5.5%. Workers in general had a real wage growth rate of about 1% while Hong Kong's GNP grew by 5.5%. This shows that a large part of the fruit of the economic success went to the pockets of the entrepreneurs and capitalists. How much of this fruit of economic growth was shared by local workers?

Given the above situation, the Government should consider the interests of the middle and lower classes first in the Budget. In paragraph five of the Budget, it is stated that, when preparing the Budget, the principle for consideration by the Government is to "leave money where it can do most good, in the pockets of the taxpayers". Needless to say, most likely the Government is referring here to the big entrepreneurs and capitalists. The Government has always used such wording to cover up the real situation. The so-called "low tax rate" or "simple standard rate" is indeed unfair to the middle and lower classes, the sandwich class, and the medium and small scale enterprises. The Government can neither see nor hear this situation. The Honourable Sir Hamish MacLEOD, it has been four years now. Every time you asked me for my opinion, I raised the same questions but I have yet to hear of any improvement plans and answers from you. I feel that the long-term solution is to abolish the standard tax rate and introduce a progressive tax rate regime.

Another proof of the Government's partiality to big enterprises is the maintenance of the corporate profits tax at 16.5%. We have to understand this: whether or not capital is attracted to Hong Kong for the purpose of setting up companies or businesses, the deciding factors include the attractiveness of the market itself, the availability of infrastructure, the soundness of the legal system, the availability of labour and the stability of society. Therefore, there was no need for the Government to cut 1% from last year's profits tax rate to make it become this year's 16.5% which the Government is refusing to restore to 17.5%. I think that the Government should raise the profits tax rate back to 17.5%. The increased revenue may be spent on other social welfare services to benefit the general public. I still feel that the Government only wants to protect the interests of big enterprises of the industrial and commercial sector and neglects the welfare of the general public. That is truly disappointing. What I have said just now is to prove that the Government is partial to big entrepreneurs but neglects the interests of the middle and lower classes when making public financial policies.

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Next, I wish to point out the inadequacy of the care the Government extends to the middle and lower classes. The Government is raising the personal tax allowance from $82,000 to $89,000 based on an inflation rate of 10%. This does not mean much to the public. As growth and decline cancel each other out, what the public gets is only the status quo in real terms. Last year, the Government proposed to raise the tax allowance for single parents by 25%, that is, from $32,000 to $40,000. It is a more substantial increase and I welcome it. However, the Government must keep in mind that there are many kinds of difficulties faced by single parents and servies provided by the Government in one area need to be matched by services provided in other areas. According to the Social Welfare Department's statistics, there were 35 000 single-parent families in 1993 already. With the increasing divorce rate, I believe the number of single-parent families is also on the rise. Therefore, the Government's policy towards single-parent family must not be limited to tax concession only. The Government must, at the same time, allocate resources to assist the single-parent families according to their needs in terms of housing, employment and education.

Expansion of the workforce is helpful in the fight against inflation. But the Budget indicates that the workforce increased by 2.9% and 3.5% in 1993 and 1994 respectively. Among those joining the workforce are returned emigrants. The Government expects the workforce to increase further and the number of returned emigrants to be on the rise as well. This may have some impact on Hong Kong's economic development, especially on the present labour importation policy. I feel that the Government must be extra careful in dealing with this. The latest statistics released by the Census and Statistics Department show that Hong Kong's unemployment rate from December last year to February this year was 2.5%, the highest for the same period in the last eight years. Apparently, the extension by the Government of the scope of the labour importation policy has led to the rise in the unemployment rate of local workers. To local workers, this policy is extremely undersirable. Given the growing working population and the substantial increase in the number of imported workers, I am worried that the rising unemployment rate in Hong Kong will continue. Local workers, especially the blue-collar workers who are less educated, have even less security in their employment.

I strongly disagree with the Financial Secretary's view as expressed in the Budget that labour shortage is the major and the only cause of inflation in Hong Kong. He has always used this as an excuse to carry out the inappropriate policy of massive importation of workers. I find that this is putting the cart before the horse. The policy not only creates more unemployment and under-employment among the workers in the manufacturing sector but also hinders the effective development of the retraining programme. I still hope that the Financial Secretary will consider taking another approach to curb inflation, including the use of financial measures relating to the interest rate and the Hong Kong-US dollar peg. Of course, I agree that it may not be the right time to delink the Hong Kong dollar from the US dollar. But in the long run, if the

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Administration does not consider it today, when the right opportunity arises, we will let it slip through our fingers again. The last opportunity arose in 1988.

The Government had a surplus of $7.7 billion last year. According to the estimate of the Financial Secretary, taking into account the credit balance of the Land Fund, the Government of Hong Kong will have a reserve as high as $370 billion by 1999. Despite possessing such a huge reserve, I feel that the Government appears to be overly conservative concerning public expenditure.

Earlier on, this Council has called on the Government to improve the services of kindergartens and child care centres. However, the Financial Secretary only sets aside $80 million for the improvement of kindergarten services but mentions nothing about child care centre services. He only responds by saying that the Secretary for Education and Manpower and the Secretary for Health and Welfare will put forward proposals concerning the issue. Thus, the Government is letting the problem drag on indefinitely. Recently, certain groups have suggested that the Government put its promise of directly subsidizing kindergartens into practice and also improve the services of child care centres, including the entry qualifications of the staff and their salaries, starting September this year. I very much endorse this suggestion. Moreover, I urge the Secretary for Education and Manpower to co ordinate with the Secretary for Health and Welfare and inform the public of the latest progress with regard to the proposal on the subsidization scheme and the unification of pre primary service as soon as possible in order not to let the problem drag on indefinitely.

Undoubtedly, during his term of office the Financial Secretary has put aside a huge reserve for the people of Hong Kong. His achievement in this respect is there for all to see. However, the fly in the ointment is that the middle and lower classes, more often than not, are being sacrificed to achieve Hong Kong's prosperity and they are excluded from sharing the fruit of a prosperous economy. Therefore, I feel that the middle and lower classes have not shared in a reasonable way the fruit of Hong Kong's economic success during the past few years. As for this Budget, I would still describe it the way I did last year, that it is a miserly one. I shall be disinclined to vote for it. I will therefore abstain from voting. In fact, the reason why I will not vote against it is that I wish to present it as a gift to Sir Hamish on his retirement.

I so submit.

MR MOSES CHENG (in Cantonese): Mr President, in relation to the "Consensus Capitalism" first introduced by the Honourable Sir Hamish MacLEOD, the Financial Secretary, in his last Budget during his term of office, I have the following impressions: first, I am very pleased that Sir Hamish really fully understands how Hong Kong achieves its success. Actually, his economic philosophy coincides with the objective that has all along been proposed by the Liberal Party - "dedicated to the betterment of people's livelihood made

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possible by economic growth." We deeply believe that Hong Kong has to maintain economic growth and create wealth in society in order to provide a comprehensive welfare net for the public, thus enabling all of us to enjoy prosperity and stability.

Secondly, I find that the Secretary has been a bit too idealistic and his proposal is divorced from reality. With the political developments in recent years, our spirit of standing united in times of difficulty has already disappeared into thin air. To build up a consensus today will be so much easier said than done. Democratic development is undoubtedly good, but instead of creating contradiction and division, we should aim at taking care of the interests of various strata of society, seeking similarities while accomodating dissimilarities. I sincerely hope that the Hong Kong people can treasure the advice given by Sir Hamish before he parts - "prosperity through consensus". And this is also my advice to Members.

I have made a calculation and found that since Sir Hamish assumed the post of Financial Secretary four years ago, he has brought to the Hong Kong Government's pool of fiscal reserves an income of $46 billion, so that our total reserves have been increased to almost $150 billion. It is naturally a nice thing to learn that the Government is fiscally sound and has sufficient resources for social development. However, not many people will ask whether every cent has been spent in the area which has the greatest need; whether the spending of money is beneficial to the entire society; or whether a large proportion of the money has been spent on the administrative costs for additional posts created or even wasted for nothing.

My paramount task in this Council over the past years was to monitor the Government to ensure that it managed its finance in a prudent manner. When I first spoke in respect of the Budget in 1992, I already stated in unequivocal terms that management of public funds in a prudent manner was the most important responsibility of the Administration. I also proposed that the concept of modern administrative management be introduced to enhance the efficiency of government departments and other public bodies, thereby reducing any unnecessary expenditure.

The economic success Hong Kong enjoys today is attributed to the comprehensive and healthy legal system we have which is widely trusted by international investors. Indeed, a highly efficient legal system is particularly important in present-day society.

I can still remember that, when I first joined the Legislative Council, the Judiciary was like a backward, closed and independent kingdom, harbouring numerous internal diseases, with piles of cases awaiting to be heard in court. It was perhaps due to the incorrect conception that judicial efficiency could not be assesed in terms of money that very few people dared to touch that sensitive area. At that time, I first suggested that in order to modernize the Judiciary, the right medicine must be administered by carrying out management reform and

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2800 efficiency enhancement in order to meet the drastic changes in present-day society.

Today, I am so pleased to see that the Judiciary has, after undergoing a "silent revolution", cast off its old self and changed from a lethargic elderly person into a spirited youngster. With the improvement in management efficiency, the waiting time for cases to be heard has been greatly shortened. The Judiciary has now the courage to stand up and answer the enquiries from Members of this Council and members of the public in an open manner and indicate with confidence that it would do its utmost to attain the new target related to the waiting time of pending cases. From this year onwards, bilingual hearing is to be conducted in district courts. All these were inconceivable in the past but have now turned into reality.

Of course, the successful reformation of the Judiciary is only the very first step on the long road towards management reform in respect of our legal system. But this first step is also a very important step, proving that the introduction of modern management techniques I proposed is precisely the best tool for boosting the efficiency of government departments. We are now heading in the right direction.

According to the Budget for the next financial year, the Judiciary will be given additional funding to employ more judges. In this summer, the court recording and transcription system will be extended to all courts. Nevertheless, to maximize the cost effectiveness of the newly installed equipment, the Administration must provide the courts with more properly-trained supporting personnel. Otherwise, the equipment provided will become useless. Apart from these, the questions as to how to solve the chronic shortage of judges and how to implement the localization policy will present the greatest challenges to the Judiciary in the future.

Mr President, though both the Judiciary and the Legal Department function as legal bodies, the Judiciary has attained considerable success in its management reform while the Legal Department's performance is lagging far behind. During last year's Budget debate, I pointed out that the Legal Department had many shortcomings as far as management was concerned. I also specially reminded the Administration to examine if the huge sums of money spent by the Department on the briefing-out of cases to private lawyers and on related professional services had been well spent. It is a pity that the Administration has turned a deaf ear to what I said.

Now we eventually find out what a great price the taxpayers have to pay for this. In the recently disclosed Bumiputra Malaysia Finance case in which junior Counsel Graham GRANT was involved, the Legal Department has paid out $17 million within two and a half years. In a riot case relating to Shek Kong boat people, $4.1 million was spent. In another incident involving the murder of Shek Kong boat people, again $3.6 million was spent. I believe these

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2801 cases only represent the tip of the iceberg. The lesson learnt is indeed too expensive.

The Legal Department will reorganize the ranking of Crown Prosecutors in the next financial year by creating 23 additional posts to reduce the number of cases briefed out to private lawyers. However, the funds allocated for briefing-out in the next financial year are still as high as $210 million, representing one third of the entire department's expenditure. As a matter of fact, I have to point out that I am not against the practice of briefing-out. And cutting down the number of briefing-out cases is only a negative and drastic measure in dealing with the problem. In view of the rapid increase of cases in recent years and the fact that private lawyers possess the expertise and experience in various fields, I understand that it is necessary for the Legal Department to engage private lawyers to handle some of the cases. Therefore, the right way of dealing with the matter is to devise a fee charging scale in relation to the taking over of Crown cases by private lawyers. Nowadays, many private organizations and even universities or public bodies award their legal service contracts by means of proper tendering to obtain the most efficient and reasonably charged service through fair competition. It is really puzzling why the Legal Department cannot follow suit. Through this method, not only can the Department effectively control its expenditure, but also reduce instances of bargaining with private lawyers on every individual case.

Another aspect which the Legal Department needs to improve is to set up as soon as possible an internal appraisal system for the staff of professional grades, so that the performance of the staff can be assessed through objective criteria and systems. I believe this will help boost the morale of the entire department, thereby greatly enhancing the efficiency of the staff.

Nonetheless, the Legal Department does have something that merits our commendation. To implement the localization policy, I suggested last year that the Legal Department increase the quota for the "Legal Trainees Scheme" to attract the young and talented law graduates of the territory to join the civil service and train up more qualified personnel to carry on the work of the Legal Department in the future. I would like to extend my profound gratitude to the Administration for accepting my proposal again by increasing the quota for the scheme from the present 10 trainees per year to 15 in the next financial year.

Mr President, I would now like to turn to the aspect of social welfare. I am glad to see that the Budget for the next financial year displays the Government's care and concern for the people. The Financial Secretary has increased the single parent tax allowance by 25% and the additional dependent parent and grandparent allowances by 100%. Apart from that, a disabled dependant allowance is also introduced. Although the actual amount of money involved as a result of the tax concessions is not substantial, yet the concessions will go some way towards alleviating the burden of the people concerned in relation to tax payment. And what is more important is that the Administration has conveyed a message to us - our society encourages the young people to

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look after their parents. In addition, our society has not forgotten those unfortunate people who are in need. We care about their predicaments and are willing to share with them the pressure to which they are subject. This loving spirit of mutual care is invaluable indeed.

In the next financial year, expenditure on social welfare will amount to $14.9 billion, an increase that appears to be extremely large. But leaving aside these figures, what I am concerned most is how much money will be actually and directly spent on the people in need instead of being wasted during the course of some unnecessary administrative procedures. If the principle of prudent financial management can be thoroughly applied to social welfare, expenditure on social welfare will be able to help more needy people.

The problem of monitoring whether government funding to subvented organizations is used properly has been another area of concern to me for a long time. In recent years, the funding obtained by subvented organizations has seen a drastic increase, reaching as high as $2.6 billion in the next financial year. However, the existing subvention mechanism has a lot of loopholes. The Hong Kong Government has all along lacked a clear guideline for monitoring the cost-effectiveness of the services provided by subvented organizations. Neither has it any mechanism for assessing the merits and dismerits of the services provided. Somebody remarked that once the subvented organizations got hold of the funding, they could do anything they wish, almost like there is no form of supervision at all. This statement may be a bit exaggerated, but is enough to reflect the seriousness of the problem. On the contrary, some staff members from subvented organizations complained to me that the method of calculating the required funding on the basis of the service cost adopted by the Social Welfare Department was inflexible, thus failing to meet actual needs.

Over the past two years, I have, in delivering my speech, urged the Administration to review the subvention mechanism, to introduce the value-for-money concept, and to change the focus of monitoring from the norm of "investment" to the norm of "provision of services" in order to assess the performance of subvented organizations. The objective of doing so is to enhance the overall standard of services through healthy competition. I am glad that my request has finally been accepted by the Administration and a consultancy has been commissioned from this month onwards to conduct a review on the administrative support for social welfare.

I hope that through this review the subvented organizations can be urged to make better use of the resources since their funding comes from the taxpayers. After comparing the standard of services provided by various subvented organizations, the Administration should encourage those good performers to extend the level and scope of their services. For the less satisfactory performers, the Administration should provide them with the necessary support to help improve their management and set a clear objective in relation to provision of services.

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Allow me to say this to my colleagues. As a Legislative Member who has been working for the Council over the past years, I deeply appreciate that monitoring the Administration's prudent management of public funds is more meaningful than merely asking the Administration for more funding in respect of well-nigh everything as some people are doing. Moreover, this is more in line with Hong Kong's interests as a whole. As far as the foreseeable future is concerned, I believe this is the last time I speak in this Council in respect of the Budget. I sincerely hope that each and every Member of this Council will carry on with the work to attain the goal I have been striving for.

Mr President, with these remarks, I support the Appropriation Bill.

REV FUNG CHI-WOOD (in Cantonese): Mr President, according to the 1995-96 Budget, public expenditure on the environment will amount to $6.8 billion, representing an increase of 24% in real terms and the biggest increase among various policy groupings. While the Democratic Party welcomes this proposal, the Budget has, in fact, failed to attach adequate importance to many existing environmental problems in Hong Kong which need to be addressed urgently. In the meantime, there is no significant progress in the development of a comprehensive and long-term environmental protection strategy. Therefore, the Budget is on the whole disappointing.

Air Pollution

First of all, I have to point out that air pollution is still getting worse and worse. In 1993, a total of 5 606 people died of respiratory diseases and people who contracted lung cancer numbered as many as 2 834 (although not all of these cases were caused by air pollution, the figures can serve as reference). These figures have actually reflected that air pollution in Hong Kong has become so serious that it has reached a dangerous level. Besides, more than 80% of the air pollutants are derived from vehicle emissions. Although the Budget does emphasize the need to solve pollution problems caused by emission from vehicles, the situation is not optimistic.

To begin with, as far as pollution caused by vehicular emission is concerned, the problem caused by diesel vehicles is the most serious. But the policies formulated by the Hong Kong Government are basically inadequate to solve the problem. For instance, the Government intends to impose a more stringent emission standard on newly imported vehicles. Nevertheless, more than 100 000 vehicles which fail to satisfy the new standard are still running on the roads. The Budget, however, has not mentioned whether manpower and resources will be increased to monitor the existing vehicles. Neither has it proposed any improvement packages. The whole incident reflects that the Government is still not determined in this area.

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On the other hand, in a meeting between government officials and members of the Legislative Council Panel on Environmental Affairs at the end of 1991, the government officials steadfastly refused to require diesel vehicles to switch to petrol in view of severe inflation at that time. It was only after repeated pressure from Members and environmentalists that the Government finally agreed to study the proposal which makes it mandatory for diesel vehicles to switch to petrol for the purpose of reducing pollution. The progress of the measures is, however, slow. Three years have elapsed and no concrete proposal has yet come up, demonstrating a lack of enthusiasm on the part of the Government. On the other hand, some academics and professionals have expressed doubt as to whether this measure can ameliorate the pollution problem. So far, the Environmental Protection Department has not come up with an authoritative study for clarification. It is imperative for the Department to speed up its work and undertake a serious study.

At present, most of the air quality monitoring stations are located on rooftops of buildings. The statistics obtained have failed to reflect the extent of pollution on the bustling roads. But, in fact, it is precisely the pollutants on the road surface which directly affect people. For this reason, I have enquired of the Environmental Protection Department about setting up surface monitoring stations but the response received is indeed disappointing. The Administration has not only failed to explain why surface monitoring stations are not set up, but also refused to pledge additional resources for doing this. It makes one doubt if it is really true that the Hong Kong Government does not want to know the actual extent of air pollution to avoid embarrassment and shirk responsibilities. For this reason, I strongly urge the Environmental Protection Department to conduct a review in this regard and allocate additional resources.

Waste Disposal

The Hong Kong Government intends to inject substantial resources into the area of waste disposal. However, there are a number of points that merit attention:

In the past, landfills were seriously abused, with construction waste in particular being the most common type of dumped material. As a result, the life span of landfills was drastically shortened. Since the cost of operating landfills is extremely high, the abuses will constitute a direct wastage of public money. As a matter of fact, in 1992, the Government did plan to prohibit refuse collection vehicles loaded with more than 20% of inert waste from entering landfills. But this proposal has never been put into practice due to the lack of determination on the part of the Government. Although it was said at that time that a fee charging system would be adopted, it was still necessary to ensure the provision of sufficient manpower for monitoring and carrying out regular reviews. If excessive inert waste continued to be dumped into the landfills and the situation remained unsatisfactory, the Government should increase the charges or take other punitive measures to prevent our valuable landfills from being abused again. But one point worth mentioning is that the

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Government has recently made preparations to provide additional resources for disposal of marine refuse. I hope the relevant measure can be implemented in a practical manner to produce a substantive result.

There are at present a number of pollution black spots in the New Territories. For instance, there is plenty of land being converted as illegal open air car parks and container yards. In this connection, the Hong Kong Government last year made provision for recruiting additional manpower to clear the black spots. But, so far, the result remains fair and the progress of the clearing work is very slow. It is necessary for the Government to review the relevant measures and their effectiveness to ensure public money is not being wasted.

Water Pollution

At present, 2 million cubic metres of sewage flow into the harbour each day, but the Government has time and again stalled the establishment of a water control zone in the entire Victoria Harbour and the whole plan will be completed only in 1997. The progress is so slow that it is distressing indeed.

The Hong Kong Government indicated lately that the implementation of part of the plan can be advanced one to three months. While this cannot be taken as a significant progress, at least it will make people regain a bit of confidence in the sincerity of the Government. In the meantime, the Government should learn a lesson and refrain from adopting a perfunctory attitude towards the pollution problem. Recently, red tide has appeared in large quantity in Tolo Harbour, killing a substantial number of fish. What is more, the odour of the rotten fish has affected one third of the Tai Po District. We learn from this incident that if we tolerate pollution until the problem is exacerbated, we will have to put in far more resources and efforts to solve it. Most regrettably, it will be impossible to restore the environment once it is polluted.

Meanwhile, the Strategic Sewage Disposal Scheme is making an extremely slow progress and hundreds of problems have arisen. For instance, the Government has so far spent more than $300 million on consultancy and soil tests for civil engineering projects. But up to the present moment, the specific arrangements of the plan still need to be re studied because of the inherent problems. The Government is suspected of wasting public money indeed. I therefore urge the Hong Kong Government to decide on the specific arrangements for the Strategic Sewage Disposal Scheme as soon as possible to tackle the worsening pollution problem. On the other hand, it has been the public's understanding that the sewage charges are to be spent on the newly introduced Strategic Sewage Disposal Scheme, but not on the existing sewage disposal service. But now, the Government demands that the public has to pay for the expenses incurred by the existing sewage system under the Drainage Services Department. Let me reiterate that the Government is duty bound to provide the basic sewage treatment services to its people. It must not change the

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meaning of the "polluter pays" principle into the "user pays" principle so as to make the public bear all the expenses.

Mai Po Wetland

As early as June 1993, the Hong Kong Government indicated its intention to declare Mai Po and its neighbourhood wetlands as wetlands of international importance under the RAMSAR Convention. However, the demarcation will be formally completed only in mid 1995. Because of the Government's indecisiveness and unwillingness to conduct a detailed study on the preservation value of the wetlands recently, developers have been able to appeal against the Government's decision successfully and turn Nam Sang Wai into a golf course and residential area. Now the Government has decided to protect wetland, but the resources the Government pledged to put into the wetlands are on the low side. Besides, allocation will not be made until the year 1996-97 for the purpose of clearing the land and setting up a visitor centre together with educational facilities. Not a single word has been mentioned with regard to measures and allocation pertaining to the conservation and development of the wetlands. The sincerity of the Government in protecting the wetlands is thus put into doubt. More surprisingly, the entire proposal has essentially made no guiding recommendation from the planning point of view. This will still eventually enable the developers to take advantage of the circumstances and nibble our valuable wetlands away progressively.

As I said at the beginning, the growth in public expenditure on the environment is substantial superficially. Yet, most of the resources will be spent on facilities for disposal of waste. On the one hand, these facilities are nothing new as they are established items. On the other hand, these items are in fact remedial measures which focus on clearing pollution. The result such measures produce will lag far behind that of conservation in terms of environmental effectiveness.

What deserves praise, in relative terms, is the study conducted by the Government on the reduction of waste as well as the drafted legislation to require the submission of environmental impact assessment reports is respect of large-scale development projects. This can be regarded as steps in the right direction. However the right amount of resolve is still lacking. For example, packaged waste constitutes more than 20% of urban waste. Yet the Government, for the time being, has only succeeded in promoting with 1500 business concerns its compaign of using fewer plastic bags. Efforts in this regard still need to continue. Unfortunately, the Budget has given me no indication as to what the Government is proposing to do in this respect.

On the other hand, allocation from the Government for environmental impact assessment and planning has only been increased by 3.2%, reflecting that the Government does not attach importance to long-term environmental planning. In fact, a far-sighted and comprehensive perspective is extremely important to Hong Kong as a rapidly developing city. Imagine the whole

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society carries out development blindly without thinking of the consequences and without a set of guiding policy on environmental conservation. The outcome will be disastrous indeed. Now the Government only pays attention to combatting pollution but once the environment is damaged, the effort required for restoring the environment will be several times greater. Consequently, the Government will be weighed down with work and, more often than not, the result produced will be far from satisfactory. I, therefore urge the Government to review the matter seriously with a view to developing a set of comprehensive policies for environmental conservation instead of simply taking short-sighted remedial measures.

Policy on Women

Mr President, I would now like to turn to expenditure related to women affairs as proposed in the Budget. Before commenting on the various specific arrangements, let me start by putting forward a point of view. In budgeting for expenditure on women affairs and formulating policy for promoting equality between both sexes, the Government should cater for the various needs of women in society. The policy should be comprehensive and the services provided by various government departments for women should be well co ordinated and consistent. If the Government attaches importance to women affairs, it should not adopt a "fragmented" policy to deal with them.

This year's Budget appears to have increased expenditure on women affairs. First of all, the Government will provide $5 million for setting up the Equal Opportunities Commission. Besides, about $1 million will be spent on activities for promoting equality between men and women. In addition, about $1.3 million will be spent on the setting up of a well-woman clinic. The third refuge for women will also be completed in 1995-96. As far as social services are concerned, subsidies granted to agencies providing family and child care services will be raised by 19% and part of the expenditure will be used for providing 1 400 additional places in day creches and 250 additional places in nurseries.

I personally welcome the estimated expenditures proposed by various policy branches as the first step to support women in striving for independence and equality in society. But judging from the provision of comprehensive care for women, these fragmentary expenditure items are grossly inadequate.

Let me start with the Equal Opportunities Commission. Although the Commission can only be officially set up after the passage of the Sex Discrimination Bill, the Government estimates that $36 million will be provided to the Commission each year. According to the existing proposal, the Commission will only deal with discrimination or sexual harassment cases arising from a person's sex or marital status. But the difficulties faced by women nowadays have stretched beyond these areas.

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With regard to employment, the situation where women are being discriminated against on the ground of age is getting worse and worse. Besides, single parents are also being discriminated against both in terms of employment and housing. Yet the existing legislation has obviously failed to provide any protection for these people. If we are to provide women with a legal and social justice protective screen, the Equal Opportunities Commission and the Sexual Discrimination Bill would have only completed half of the work! Therefore, I am of the view that the Government has to provide more resources within the legal framework so as to enable women to gain comprehensive legal protection at various levels.

It will not be possible to completely attain the goal of promoting equality between men and women by relying on legal measures alone. In addition, it is necessary to make consistent and comprehensive arrangements in terms of education, medical services and social services. The spending of $1 million by the Government on activities organized for promoting equality between both sexes is only a short-sighted way of spending the money. If the Government does not wish to develop a long-term strategy and plan for promoting equality between both sexes in terms of educational policy and resources, the $1 million may only be spent for screening one or two additional commercials on television. This will not produce any long-term effect on educating the public.

If we examine expenditure on medical and social services again, it will not be difficult to find that the supporting services for women are inadequate both in breadth and depth. Statistics show that the two well-woman clinics serve 5 000 women annually. Having regard to the fact that there are over 2.9 million women in Hong Kong, the function of the clinics is far from impressive. Besides, the clients are confined to women aged 45 or above, thus further limiting the number of people who can benefit from this service.

The serious shortfall in creche services has further directly prevented women from developing their potentials in society. In addition, the plan of increasing creche places by 1 400 annually is completely unsatisfactory. In terms of the resources injected at present, only 5 000 creche places will be provided every year. We would like the Government to review how far the provision has fallen short of the actual need.

If the Government considers women affairs from a comprehensive point of view, it should recognize that the promotion of equality between men and women involves a diversity of policies.

The co-ordination work undertaken by the Government at present is far from satisfactory. I still hope that the Government will give active consideration to the setting up of a Women Affairs Commission and examine, through this co-ordinating organ, the present situation of women, fully assess

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the needs of women at different levels and co-ordinate the work of various government departments and other service institutions with a view to promoting equality between both sexes.

Mr President, these are my remarks.

MR TIMOTHY HA (in Cantonese): Mr President, this is the last Budget released by the Financial Secretary in his term of office. The Budget has proven itself to be pragmatic and conservative in its way of financial management. As far as revenue is concerned, major tax rates have remained unchanged and taxpayers' mind are put at ease. This is particularly desirable and deserves our support. However, an "accountable government" does more than just keeping its citizens affluent and maintaining good reserves; it has to "make good use of" reserves, so that the public's varied needs will be well catered for. The Administration may have been too conservative in having accumulated so stupendous a surplus - which will reach an estimated $360 billion in 1999. Surplus arising from the community shall, where appropriate, go back to the community. But judging from the various expenditures for the current financial year, there are still certain areas where funding is insufficient, particularly that of the recurrent expenditure for education.

The increase in real terms in recurrent expenditure on education has been a mere 4.9% this year, that is, 1.6% lower than that of the previous year. This represents a mere 3.3% of the Gross National Product, far below the economic growth rate. According to officials responsible for education affairs, expenditure on education is rather generous, which accounts for one-fifth of the total expenditure. However, Hong Kong is an international metropolis which is heavily dependent on human resources. As the Financial Secretary has put it, "our people are Hong Kong's greatest resource". To maintain Hong Kong's international competitiveness, an "accountable government" must increase appropriations for education and affirm the role education plays in nurturing human resources.

The Governor pledged to improve the quality of education in his 1994-95 policy address. But if one takes a closer look at the breakdown of education expenditure as contained in the Budget, one will find that there are still areas where funding is insufficient.

The general public has long aspired to an improvement in the quality of kindergarten education. The commitment to pre-school education as stated in this year's policy address is only a first step forward, and it is still only focused on kindergarten teacher education. Enhancing teacher education will certainly improve education quality, but without reasonable remuneration talents can hardly be attracted to join the kindergarten teacher profession. For this reason, giving subvention to kindergarten education to improve the remuneration of kindergarten teachers is also very important.

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This year's Budget stated that the Administration was ready to pour in $30 million to operate training courses for kindergarten teachers, with an additional $80 million set aside for a kindergarten subsidy scheme. It is most welcome that the Administration should undertake to face the problem squarely with specific actions. But I find it disagreeable that the $80 million being designated for the subsidy scheme should come from cutting down expenses in other education areas, which will necessarily hamper the implementation of other education policies, and ultimately it is the education quality that will be at stake. As regards how kindergarten should be subsidized, my view has always been consistent: the Administration may appropriate funds to set up a pre-school education trust at times when it is financially well-off, like these past few years; and after that the returns generated from this trust may be used, as circumstances arise, to increase subvention to kindergarten education, so that the budget for giving subsidies to kindergarten will come under full control. Another possible way of doing it is to give every kindergarten teacher a certain amount of subsidy every month, the exact amount is to be determined by the Administration according to its financial strength.

Lastly, I hope the Administration can increase the transparency of its policy and spell out as soon as possible the details and the format of the kindergarten teacher training courses as well as those of the subsidy scheme for public discussion.

As regards primary education, setting up graduate posts at primary schools as suggested by the Education Commission Report No. 5 is the most remarkable policy in recent years aimed at enhancing the education quality of primary schools. According to government policy, it is envisaged that by the year 2007, 35% of primary teaching posts will be filled by graduates. Current statistics show that by the 2007, the total number of posts for primary teacher will stand at about 18 000, so 35% of it will make 6 300 graduate posts. This year's Budget stated that $5 million will be spent on upgrading 180 primary teaching posts to graduate posts. This should be positive in enhancing the quality of primary education, but 180 is really too scanty a number of posts to be upgraded. It is the quality of education that will be adversely affected in the long run.

According to statistics, in 1993, there were already 825 primary school teachers who were professionally trained and held a Bachelor Degree or a higher qualification; that accounted for more than 7% of the total number of primary school teachers. By 1998, there will be as much as 2 500 local Bachelor of Education graduates, but we have presently only 860 teaching posts for graduates at primary schools. From this we can see that underestimation will have resulted in too many graduate competing for too few graduate positions in primary schools. With keen competition, teachers yet to be upgraded will have to put up with unreasonable remuneration, or graduates will not be able to find suitable employment. Whichever is the case, teachers' morale will be greatly affected.

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Therefore, the discrepancy between the number of primary school teaching posts available to graduates and the actual number of graduates is a problem not to be taken lightly. The Administration should be quick in conducting a review to increase the number of primary school teaching posts. I further suggest that the resources of 180 primary school teaching posts for graduates saved for the year 1994-95 because of delay in approval should be ploughed back to increase graduate teaching posts in primary schools, so that the above mentioned acute shortage can be slightly alleviated.

Secondary Education

With the introduction of graduate teaching posts in primary schools, the inevitable trend is to have graduates fill all teaching posts in secondary schools. For secondary schools, the staffing ratio of graduate and non-graduate teachers has always been 7:3. But statistics show that the actual number of graduate teachers over the past few years fell slightly short of 70%. In 1993 it was 65%, in 1992 it was 64%, and in 1991 it was 62%. To further enhance the quality of teachers, it is necessary that the grounds upon which the ratio of graduate and non-graduate teacher was based be reviewed with adjustment made where necessary. But unfortunately this issue was never picked up by the Administration in the Budget or in the Governor's policy address. The Administration should be quick in making plans for upgrading the professional status of those 30% non-graduate teachers. The next step is to increase resources so as to realize the policy target.

Teachers' Benefits

As a matter of fact, improving education quality is closely linked to upgrading the professional status of teachers. This is because the quality of teachers is the single most important factor among various conditions for improving education quality. To attract and retain talented teachers, and to encourage them to devote themselves to the teaching profession and take it as their life-long career depends very much on the strengthening of training and professional development as well as on the remuneration and benefits available to teachers. As regards remuneration and benefits for teachers, I have always held the following views:

The remuneration and fringe benefits of subsidized schools teachers should be put "on a par with" those of the government schools teachers as soon as possible. The following are my suggestions:

As far as provident fund is concerned, the discrepancy in employer's contribution to provident fund between primary and, secondary schools on one side and tertiary institutions and technical institutes on the other should be progressively narrowed. At present, teachers of tertiary institutions and technical institutes enjoy 15% employer's contribution regardless of their years of service, which is much better than the 5% enjoyed by school teachers. As an

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initial step, the percentage of employer's contribution for the first five years can be raised from 5% to 10%, and thereafter to 15%.

In terms of housing benefits, the discrepancy in housing allowances between subsidized school and government school should also be narrowed. The "Mortgage Interest Subsidy Scheme" currently available to subsidized schools teachers is only "better than none". I suggest that the Government should pay allowances to meet down payment for the purchase of residential units in addition to increasing monthly allowances in the Mortgage Interest Subsidy Scheme.

As far as medical care is concerned, teachers of subsidized schools enjoy no benefits whatsoever. The Government should refer to the medical care plans of some tertiary institutions and technical institutes and require employers to buy medical insurance plan for their employees.

Education quality cannot be improved nor teachers' professional status raised without long-term commitment in education planning on the part of an "accountable government". The education profession has long been pressing the Administration to sort out the unresolved problems in basic education, such as enhancing remuneration and benefits for teachers, canceling the floating class system in secondary schools, and implementing the full-day system at primary schools and so on. But the Administration has been dragging their feet on these issues on the excuse that basic education at all levels needed to be enhanced. Even when full-fledged development of primary, secondary as well as tertiary education is now under way, the request for increased education expenditure is still being turned down. The Government gives an excuse that the birth rate has declined recently, and the number of primary and secondary school students has dropped. But education expenditure should be regarded more as a long-term investment in society's human resources than a burden to social services. Being mean today will result in future inadequacy. Some people are saying that we could not expect too much from a "sunset government" in long-term planning, and that we should "take things easy". But I definitely am not contented. On the other hand, I am of the view that an "expiring" government should grasp its last chance to perfect education so as to make itself accountable to history. Therefore, I am really disappointed that the Administration has failed to commit itself fully to long-term education planning.

May I take this opportunity to wish Sir Hamish and Lady MacLEOD many happy days after Sir Hamish's retirement.

Thank you, Mr President.

MR MICHAEL HO (in Cantonese): Mr President, the ordinary workers find themselves in a community which upholds "coercive" capitalism instead of "consensus" capitalism. The so-called "consensus" as professed by the

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Government is, at most, a consensus which tallies with the interests of the industrial and commercial sector.

In the face of economic transformation and competition from foreign labour, the occupational mobility of workers has been decreasing. Some skilled workers will switch to take up lower positions in the service industry, such as cleaning workers and watchmen. Moreover, the old and unskilled workers generally have to be subject to the pressure of displacement from the labour market.

Throughout the course of economic transformation, the Government has allocated a great deal of financial resources to infrastructure to speed up the development of the service industry. Under the pressure of high inflation, the Government has adopted the importation of labour as an approach to control the wage increase of local workers. Hence, local workers are not only unable to benefit from economic growth and the commencement of large-scale infrastructural development, but they also have to encounter direct competition from foreign workers when they change jobs.

The Government would certainly argue that all these have been done for the sake of the prosperity of Hong Kong and that the sound development of Hong Kong's economy would be beneficial to everybody. However, has the Government considered who would benefit most in the course of economic development and who would be exploited?

In respect of the protection of workers' welfare, last year, the Government had sided with the industrial and commercial sector and protected their interests. For example, the Government had opposed revisions to the long service payment scheme and hindered the legislature from exercising proper supervision over the importation of labour; and the Government had even rejected the Old Age Pension Scheme. Although the Government has recently decided to implement a privately managed provident fund scheme, it has ignored the need of low-income workers for retirement protection.

Perhaps, the Financial Secretary thinks that the rights and welfare of workers come under the jurisdiction of the Labour Department and have no bearing on the transformation and development of the overall economy. It should be understood that unlike workers in overseas countries who are provided with protection in regard to their labour rights and welfare, such as minimum wages and unemployment protection, workers in Hong Kong are not provided with any protection at all when they encounter difficulties. The adoption of such a short-sighted approach to workers' welfare by the Government directly sacrifices the interests of workers who do not have collective bargaining power.

During the latter part of the transition period, the Government obviously wants to persuade the entrepreneurs to stay and tries hard to provide them with a favourable investment environment. However, this approach would only

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exacerbate the disparity between the rich and the poor, undermine the public's confidence in the Government and give rise to instability.

If the Government really wants society to uphold "consensus capitalism", it should pay attention to the needs of the working class, instead of using the euphemistic word "consensus" while there is essentially only blatant consensus between government officials and businessmen and the working class has been disregarded. As Financial Secretary, Sir Hamish has begun to form a good partnership with the Legislative Council. Sir Hamish really discusses with the Legislative Council and with Members in regard to their expectations concerning the Budget. We appreciate this practice of his very much. However, having an overview of the four Budgets submitted by the Financial Secretary in the past, there is still little which deserves commendation, at least in respect of the protection of workers' welfare. In his last three Budgets, the Financial Secretary had mentioned that as the unemployment rate was rather low and there was full employment, the Government could import labour in order to combat inflation. In his Budget last year, the Financial Secretary proposed a scheme to import people with special expertise from China. This meant that a manpower policy was being turned into a supplementary tool for economic development. The Government aimed for a higher rate of economic growth and an increase in the total fiscal reserve. However, it had looked on with folded arms in the face of the declining wages of workers and the inflation-eroded living standard of low-income workers. I earnestly hope that the next Budget will show an obvious change in the Government's policy on the importation of labour.

On the question of retirement protection for the elderly, the merits of the Old Age Pension Scheme were emphasized in last year's Budget but these merits were not mentioned at all in this year's Budget. We find it very disappointing that the Government had been holding back resources which should have been used on retirement protection and that, in order to flaunt it before the Chinese Government, our Government had boosted the fiscal reserve by diverting resources from the retirement protection.

In regard to issues concerning medical and health, I am very pleased to note that after efforts had been made by various health service groups over the years to urge the Government to make improvements in this respect, the Financial Secretary has particulary allocated resources to offer first-year degree courses in nursing so as to improve the quality of health care services. In fact, there have been problems regarding the shortage of nurses and related services all these years. These problems have all along been disregarded by the Government, but this year, the Government has responded to the demands made earlier on by various health service groups and has really allocated resources to offer nursing degree courses. I hope that this is the first step on the part on the Government to express concern about the relevant problems and I hope that our next Financial Secretary can do better in this regard. I believe my constituents would like to see not only a "suit" as mentioned by some Members, but also a nice "bow tie" to go with it.

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Medical services are highly labour-intensive services. Hence, manpower planning is essential when formulating the budget for hospital services. However, at present, the Administration does not have a comprehensive set of guiding principles for planning the human resources of health care workers. Before the Hospital Authority (HA) was set up, there used to be a clearly defined staff establishment in respect of medical and health care workers, just like the way it is with various government departments now. The defined establishment was the basis on which the Government calculated the costs for the provision of the relevant services and planned the development of such services. Since medical and health services are labour-intensive services, any expansion in human resources would necessarily affect the direction of development of hospital services. However, since the HA has taken charge of the services provided by public hospitals in Hong Kong, it has not worked out such kind of staff establishment, but it has the figures relating to staff of different grades. Let us look at the relevant figures concerning staff increases these two years. We can find from the Budget that the growth rate of medical officers was 8.2% in the year 1994-95 and 10.5% in the year 1995-96. As to the profession of health care workers who are available in such insufficient numbers as to constitute a perpetual staff shortage, the growth rate was 2.98% in the year 1994-95 and 2.87% in the year 1995-96. It can be observed on the basis of the figures for these two consecutive years that there has been a tendency for an imbalance in human resources development. I very much hope that the Secretary for Health and Welfare, as the official responsible for the Hospital Authority, can monitor this better.

As the defined staff establishment on which manpower planning and budgeting can be based is not available now, we cannot tell whether the above growth rates are appropriate and representive of a balanced development. Certainly, neither can we tell what the criteria were based on which the Government or the authorities concerned planned the manpower for the two different grades mentioned above. However, now that development has been possible without a defined establishment, the HA would certainly continue to assert that there is no shortage of nurses, which is actually not true. Certainly, we understand that over-regulation would lead to inflexibility and would cause the flexible HA to revert to the old ways of government departments. Yet, a defined staff establishment will have an effect on budgetting and the development of services. If the existing situation of hospitals is to continue and individual hospitals are allowed to develop on their own, there will not be any reliable criteria nor effective checks and balances. Hospital services will suffer the direct cumulative effects in the next few years.

At present, there is insufficient information or data for the Legislative Council and the public to monitor the HA. The $17 billion allocated to the HA accounts for about 10% of our total expenditure. We request the health and Welfare Branch to strengthen its monitoring as well as the mechanism of checks and balances. I cannot think of any other institution besides the Government which can effectively monitor such a large authority which uses 10% of the Government's expenditure. Over the last three years, the HA has implemented

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major reforms. However, there is no corresponding adjustment in the systems of the HA to cope with the devolution of powers so as to ensure the effective development and exercise of monitoring as well as checks and balances. As the Secretary for Health and Welfare is the government official responsible, I hope his/her policy branch can take up this responsibility of monitoring and provide the Legislative Council and the public with sufficient data such that they can know clearly how the appropriated 10% expenditure has been allocated, and whether it has been allocated fairly and efficiently.

In addition, I hereby urge the Government to note whether the expansion of the HA's services would affect the allocation of other resources. Over the last few years, we have observed that the market share taken up by the HA has risen from the initial 85% to 92%. In other words, the market share of public hospital services has been continuously increasing. I am sure this is not what was originally intended when we planned for the setting up of the HA. How should the overall planning and policies be developed? I hope that the Health and Welfare Branch can put in more efforts in this respect so that the continuous development of the HA would not eventually affect the entire market for hospital services.

Mr President, these are my remarks.

MISS EMILY LAU (in Cantonese): Mr President, I speak in support of the last Budget of Sir Hamish MacLEOD. Many Members have already discussed quite a number of aspects concerning the Budget, and I would like to talk briefly about two very important issues to which the Government should pay more attention.

First, I want to talk about the hundreds and thousands of people who live on the public payroll, and the first group I want to touch on is of course our 190 000 civil servants. Mr President, all of us will agree that the people of Hong Kong have treated their civil servants extremely well. Their salaries and fringe benefits are probably among the most favourable in the world. If we look at Britain, we will see that the salaries of the Governor of Hong Kong and all Policy Secretaries are much higher than those of the British Prime Minister and Cabinet Ministers. This has largely been the result of the "incessant pay rises" for civil servants over the past years. Maybe, in its reply, the Government should tell us why the salaries and fringe benefits of our civil servants are among the most favourable in the world. Provided that ours is a professional and efficient civil service, free of serious corruption and excessive bureaucratic red-tape, the public, I believe, will regard it good value-for-money to offer more to the civil servants. However, even the Government has recently admitted that some civil servants are enjoying the emoluments of office without doing their work well as required. I strongly support the Government in getting rid of civil servants whose performance have remained persistently unsatisfactory. We all want dedicated civil servants who will do their best after receiving the taxpayers' money. Hence, the Government should take prompt

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actions to weed out inefficient civil servants. In addition, I welcome the Government's announcement on simplifying the disciplinary procedures to deal with civil servants who have committed errors in their work. I hope the Government can assure taxpayers that civil servants will no longer be given "iron rice bowls" and that only the efficient ones can retain their jobs, which offer such good benefits.

Indeed, Mr President, what kinds of benefits do civil servants enjoy? Concerning this, even taxpayers themselves may not have a clear picture. In brief, such benefits include basic salaries, a non-contributory pension scheme, annual leave, medical and dental care, and housing assistance schemes. Legislative Members certainly do not have the power to query such benefits, which are not enjoyed by many employees in the private sector. However, I still want to urge the Government to introduce some changes to one or two benefits enjoyed by civil servants. The first one is the overseas education allowance for civil servants' children. Mr President, the Government has proposed to allocate $3 billion in 1995-96 for sending civil servants' children to study overseas. I presume that what has already been promised as a term of service cannot be changed now. Having said that, I still maintain that such over-generous benefits should be abolished. I have already requested the Government to standardize the terms of service for expatriate and local civil servants. Even without the support of the Chinese Government, the Government should consider the idea of immediately stopping to offer this over-generous benefit to its new recruits, for the simple reason that taxpayers' money should not be spent in such an indiscriminate manner. The Government has also proposed to allocate $100 million next year for the provision of passage to expatriate and Directorate officers and their families. Is it worthwhile to spend this money? We certainly have to provide good benefits to our civil servants lest people may criticize us for damaging civil service morale. I expect that many civil servants will be leaving next year and a similar situation will occur in the private sector, presumably due to 1997. This is a wastage problem which the Chinese Government has to face and the Hong Kong people must prepare themselves for. In spite of this problem, I do not believe that a slight adjustment to the terms of service for civil servants will damage their morale. That is why I hope that the Government can reconsider its stand and cut unnecessary expenditure as far as possible because taxpayers' money is really hard-earned. In fact, some civil servants have told me that whether they will stay after 1997 or whether they will retire early in the next one or two years will depend largely on the choice regarding the Chief Executive. For this reason, the Chinese Government should really consider the matter seriously. In any case, I fully support that our "corpulent" civil servants should be slimmed, by curtailing the many allowances that they now enjoy.

Mr President, apart from civil servants, another group of people also merit our attention. Yesterday, I submitted to this Council a question related to the staff of the Hospital Authority. Their terms of service and benefits may even dwarf those enjoyed by civil servants because on top of their basic salaries, each of them is entitled to a cash allowance amounting to 60% of their basic

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salaries. This is intended to compensate them for the benefits they would otherwise enjoy should they choose to remain in the civil service. Since they are no longer entitled to such benefits after joining the Hospital Authority, they are compensated in cash. However, the expenditure involved is really astronomical. According to the Government's reply yesterday, this is an unique exercise intended to encourage the staff of government and subvented hospitals to join the Hospital Authority. Well, on the one hand, it is claimed that this an unique exercise, but, on the other, some civil servants say this is actually a mistake which should be corrected immediately. I have recently heard to my delight that the Hospital Authority is going to cut its manpower by as much as 20% over the next three years. This should be done as quickly as possible, and all sinecures, if any, must be removed without any delay. According to the Government, what has already been fixed, such as terms of service, cannot be changed. Is that really so? The Government should really consider very seriously whether it should continue to offer such exceedingly generous terms to its new recruits. I believe taxpayers do not want the Government to be too generous.

Mr President, the third group of people are the cream of our society, the well-paid intellectuals who live in the ivory tower. I am referring to the academic and administrative staff of the six universities and Lingnan College funded by the University Grants Committee. The salaries of these people, the academic staff in particular, have also risen tremendously over the past 10 years or so. A simple reason is that their salaries are pegged to those of civil servants. In other words, if the salaries of civil servants rise tremendously, so will theirs. I hope the Government can confirm in its reply whether the salaries and allowances enjoyed by our university academic staff are among the most favourable in the world. Surprisingly, the academic standard of our universities does not rank among the highest in the world. As a result, one can say that our university teachers' performance are not commensurate with their pay. Taxpayers do not find this at all satisfactory. After we have paid so much, why do our universities still lag far behind Harvard and Oxford in terms of academic standards? I hope the Government can pay more attention to this issue.

Mr President, you may also be aware that the provident fund schemes of some of our universities have recently run into financial troubles. In response to this, the Government has laid the blame on the councils of these universities, and some Members of the Legislative council may be involved because they are the council members of different universities. Last week, some government officials even pointed out in a meeting of the Finance Committee that the Vice-Chancellors or council members of the universities concerned may have to go to jail or pay a fine because of the provident fund incident. When our students are fighting for their right to join university councils, they may never realize that they may have to go to jail. They should realize that now. I hope all of you can "tighten your belts", and think up some possible solutions. Having said that, Mr President, I must point out that my stand over this issue is absolutely unambiguous, and so is the unanimous stance of the Public Accounts Committee. As the Government has already known, it should never expect the Finance

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Committee of the Legislative Council to allocate even a single cent to save the provident fund schemes of the universities. I hope that the Government can work out a solution with the universities themselves. This incident reflects the inadequate supervision of our universities. However, the Government's immediate response to this criticizm is usually that since the universities enjoy a high degree of autonomy, the Government is not supposed to interfere with their management. Actually, I agree with this point. Now, Mr President, if the Government is not supposed to do so, who should be responsible for supervising the universities? The responsibility will naturally fall on the council of the universities. If the Government appoints people who want only to angle for reputation, to whom should we turn when these people simply do nothing to supervise the universities? Therefore, people who accept the Government's appointment as university council members should really keep in mind the obligations that go with their appointment. If not, the administration of the our universities will be left entirely to a handful of people, causing serious problems. In any case, I must reiterate that taxpayers should not and need not assume this responsibility.

Mr President, another problem I want to talk about is the housing problem - the arch-enemy of Hong Kong. In the past few years, when the Financial Secretary consulted us, I told him repeatedly that housing was the major concern of the public. I am very sorry that the Financial Secretary has not done much to tackle this problem, as evidenced by this year's Budget and those of past years. One third of the public complaints my office receives is related to housing. I believe that the same situation can be found in other Members' offices which also handle public complaints. To begin with, I have reiterated many times that private property prices are still very high and beyond the means of the general public. Last week, the Secretary for Housing said in this Council that although current property prices have dropped by 14% since the peak time in April last year, they are still 37% higher than the prices in January 1993. Therefore, the Government should really understand that property prices are still unacceptably high.

In addition, I believe that the most important problem is about public housing. As we all know, there are still 160 000 applicants on the General Waiting List. According to the Government's promise last year, these people have to wait seven years on average before rehousing, and by 2001, the waiting period may be shortened to five years. Mr President, can the Financial Secretary accept the fact that these Hong Kong people who are now living in such poor conditions still have to wait five or seven years before rehousing? Also, government officials have repeatedly stressed the need to look after elderly people. But, a single elderly person still has to wait four years before he or she can be allocated a public housing unit. I wonder if they find this at all acceptable. Next time, when Mr Chris PATTEN goes on one of those district tours, please let him have a look at where these 100 000-odd applicants are living. Can the Governor live in such conditions for just five or seven days, let alone five or seven years?

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Mr President, to conclude, I would like to talk about the Home Ownership Scheme (HOS). I agree with the concept of this Scheme, and I believe that many Hong Kong people do not have a sense of belonging because, among other things, they do not own any property here. Indeed, I am in full support of the Sale of Flats to Sitting Tenants Scheme, which has, however, fallen through for various reasons. Circumstances permitting, the Government should implement the Scheme as far as possible. If it is really impossible to implement the Scheme, the Government should expand the HOS and lower the sale prices to benefit more people. This can certainly encourage more public housing tenants to give up their units and buy HOS flats. In any case, apart from increasing people's sense of belonging to Hong Kong, the Sale of Flats to Sitting Tenants Scheme can also induce people to better protect the environment of their own housing estates out of a concern for their own properties. At a time when the incumbent Financial Secretary is about to retire, this duty will naturally fall on the next Financial Secretary, Mr Donald TSANG. I just wonder if we still have to wait five, seven, 10 or even 15 years before the problem can be solved.

Mr President, like my colleagues, I would like to thank the Financial Secretary for his work. In particular, I must compliment him for consulting us over the past few years. I am sure that after he has retired to his homeland in Scotland, occasional recollections of Hong Kong's economic miracle will fill him with a sense of pride, although he should not forget that Hong Kong has treated him and his family very well. I will miss him because he is such a reputable civil servant. I greatly appreciate that he has decided not to join the local commercial sector after his retirement because I have always believed that conflict of interests may result if senior civil servants join the commercial sector. What is more, the public may even think that there is collaboration between the Government and the businesses. Of course, some people may not have the means to leave Hong Kong and have to stay here to work. Whatever the case may be, I advise self-respect to retired government officials. Mr President, the remaining 800 days of the transition period will not be stable at all. I would like to wish Sir Hamish a very happy retirement, and I also wish the new Financial Secretary, Mr Donald TSANG, and the Hong Kong people good luck.

With these remarks, I support the motion.

DR LAM KUI-CHUN (in Cantonese): Mr President, this year's Budget is generally regarded as steady and sound, and it also gives us a strong sense of political reality. The Budget is obviously designed to facilitate its smooth passage through the Legislative Council. Concerning tax concessions and the expenditure relating to people's livelihood, the Budget has obviously doled out pieces of "biscuits" among various political parties. In regard to the overall financial situation, as some of Hong Kong's major lifelines are undergoing changes, special assessment and guidance should be given in the Budget. Those lifelines I referred to include the following:

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(1) The decline and relocation of industries and the loss of interest in industrial land auctions have led to a reduction in the wealth generated by the industrial sector. However, as it is very difficult for workers aged over 40 who have been engaged in industries requiring traditional workmanship to find other jobs, there are more people unemployed, which will definitely affect expenditure on welfare.

(2) Hong Kong is experiencing an economic transformation and there are insufficient local workers suitable to render service. There are also difficulties in the importation of labour, and businessmen are finding it hard to further develop their businesses.

(3) No date has been given for the construction of Container Terminal Nine to commence; and the re-export trade is facing competition from the cheaper container yard in the adjacent Yantin port which will start operation next year.

(4) High interests are being charged for bank loans; banks are faced with intensified competition after the revocation of the interest agreement.

(5) Lastly, the stock market has nosedived, and unfamiliar financial instruments have been introduced into Hong Kong.

All the above factors will greatly affect the economic trend and the financial development of Hong Kong in the next few years. The Government should provide us with specific figures when it gives its response next week to enable us to assess the prospect of our economy.

The demands of various political parties concerning their share of "the biscuits" are met and it seems that the biscuits have been shared rather appropriately, as reflected by the responses of the parties concerned. Basically, the Government has used the income generated by economic growth to boost the expenditure on the people's livelihood which is most needed. I believe the public will agree to this approach. Therefore, I will support this Budget.

My speech will mainly be focused on several less obvious but very important aspects. I hope that the Government can pay attention to the following:

Firstly, the drug problem. The Governor has already admitted that the strategies adopted in the past have not been effective, and this Budget should re-deploy resources to tackle the problem. In fact, the usual practice of detecting and wiping out drug abuse is only a temporary solution. We should rely on education to get at the root of the problem. However, we can only spend about $2 million a year on education, which is equal to 2%- 2.5% of the amount spent on the stopgap measures. As to the drug traffickers, they obtain at least $400

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million a year from selling heroin which helps to promote their drug trafficking business. At present, the funding for the voluntary agencies responsible for getting at the root of the problem is being scrutinized by the Social Welfare Department, but the Security Branch is fighting for the funding on its behalf. The Security Branch has all along denied that drugs constitute a major problem in Hong Kong. Therefore, when it fights for resources to prohibit drugs on behalf of the Social Welfare Department, it has not been very active. The subsidy obtained this year is only one-tenth of what is originally requested. Some agencies are being run on what remaining money the Social Welfare Department may have had. This year, the funding for the Hong Kong Council of Social Service in this area is not even enough for employing an officer, let alone employing other assistants and clerks. It is not certain whether they can obtain the funding next year. Those staff who were willing to stay last year are going to resign this year. The Government should adopt an approach similar to that for preventing AIDS in this year's Budget and set up an anti-drug abuse fund. The Government can follow the other countries' practice where the funding comes from the confiscated wealth of the drug traffickers. It is estimated that a fund of $300 to $400 million will be enough. The term of the deposited amount will automatically be renewed every year and the interests or added value can be used to promote anti-drug education. It is projected that there will be a fund of several million dollars available each year, and this is the only long-term solution to the resource problem.

My work in the St. James' Settlement proves that, in reality, the prevention of diseases is an effective means to promote health and save medical expenditure (this is also agreed to by the Government). In the past couple of years, I have repeatedly pointed out that the pace of implementing health care for the elderly has been too slow. People who apply for joining the health care programme run by St. James' Settlement have to wait for more than 10 months, and this trend of demand exceeding supply has already been in existence for a long time. Although the fees charged by the Government's elderly clinic in Nam Shan Estate are one-third of that charged by our organization, only 690 people have visited the clinic within eight months from last April to the end of last year while the target of the clinic is to serve 3 800 people a year. The St. James' Settlement has to cope with a great demand while the clinic in the Nam Shan Estate does not have enough patients. The heart of the matter lies in the fact that a mismatch exists between resources and the form of services in clinics operated by the Government. This can be proved by specific figures: the public only pays $29 for a visit to the government clinics, and only around $120 if they visit private practitioners, for both consultation and medicine. However, when elderly people who are not sick go to the Nam Shan clinic for screening, the mode of service provided is the same as that when they fall sick and visit the doctor, and blood screening which is necessary for disease prevention is not provided, but they still have to pay $220. It is hard for the consumers to appreciate the value of such services. Although these clinics also provide supportive service such as courses in Tai Chi, it is far cheaper and more interesting for people to take part in these activities in the park helped by their friends. The Government should re-match the resources and services from the

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users' point of view, otherwise, even when these elderly health centres are set up, they will only be reduced to places where the staff gather and knit!

As regards medical resources, the Government should have a complete service philosophy and it should clearly define the target resources and orientation of general medical treatment and medical treatment for rare diseases. There is a new item in this year's Budget - "Health Care and Promotion Fund" which amounts to $80 million. Last year, I pointed out that, generally speaking, medical funding is appropriated for the purpose of curing as many people as possible at a minimum cost. Adequate protection should be given in this regard and funding should be increased every year having regard to medical inflation and the needs of the public so that the majority of patients will be given the care they need. However, some patients who have contracted rare diseases need advanced technology for treatment, and this is a case of curing the minority at great costs. Proper arrangements should, in principle, be made, but the small costs for curing the majority of patients should not be eroded. Therefore, I had requested that a separate budget be prepared in respect of advanced technology medical treatment, where the total expenditure each year should be fixed according to the economic situation and the priority of treatment be set according to the seriousness of individual diseases. The "Health Care and Promotion Fund" mentioned in this year's Budget is a correct start. As to which diseases should be treated by locally trained practitioners and which by practitioners overseas, this should be considered on the basis of individual diseases, in order to achieve greater cost effectiveness. The amount of $80 million should be adjusted according to the economic situation of Hong Kong and geared to the fund-raising programme of individual hospitals. This, coupled with the payment for expensive medical accessories such as artificial joints needed by individual patients, should solve the existing thorny issue of "itemized charges".

Concerning the expenditure of the Hospital Authority, the expenditure on medicine and equipment takes up a relatively lower percentage. The speedy rise in the prices of new equipment and medicine has caused the medical inflation rate to grow fast. This year, expenditure of the Hospital Authority on medicine and medical treatment only accounts for 17% of its total expenditure, which reflects that the rate of expenditure growth in respect of the salaries of medical and nursing staff is similar to the inflation rate of medicine and new equipment. After the establishment of the Hospital Authority, the front-line workers have been hard pressed in their work. Among the 1 800 people to be recruited by the Hospital Authority next year, 40% are not front-line workers and cannot help to relieve the work of those directly giving medical treatment. Last year, I urged the Hospital Authority to streamline its manpower structure and suggested that it had to re-organize the departments which had already contracted out their work, for example, the laundry staff. The Hospital Authority has a new chairman this year who intends to further improve the authority's efficiency by modelling the authority upon private organizations. This is a good opportunity for it to consider streamlining the administrative staff. This also is a feasible approach for the Government to control the medical inflation rate so that more

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resources will be reserved for use in improving medicine and purchasing new equipment to benefit the patients directly.

There is an item in this year's Budget which I consider to be unreasonable. Last year, the Government claimed, without any scientific ground, that all the incinerators, both old and new, in hospitals were not up to standard. The Government even refused to issue licence to the newly completed medical incinerator in the Pamela Youde Nethersole Eastern Hospital which was the largest one in Hong Kong. This wasted several million dollars of taxpayers' money. However, the Government wanted to replace the said incinerator with a central medical incinerator. When several American scientific studies proved that domestic waste was as contagious as clinical waste, the Government determined that a special transportation company had to be paid to collect clinical waste. This will surely cause the medical costs to increase, and there is the risk of increased bacterial infection in the course of transporting the clinical waste to Tuen Mun for centralized treatment. The American studies have sufficiently demonstrated that the more complex and expensive the method of disposal of medical waste, the more it will discourage the patients from properly disposing of medical waste, which will lead to the adverse result of more and more illegal disposal. The Hospital Authority has calculated the future volume of medical waste according to the Government's instructions. It is discovered that the total volume of medical waste produced is less than one-third of that as projected by the consultants. This shows that the incinerator cannot achieve a balanced budget on the basis of the prices estimated by the consultancy. However, the Government still designs the incinerator on the basis of the original figures and prepares to sign the construction contract in respect of the incinerator this year. The design of this incinerator lacks any scientific basis, but it is designed so as to match the building capacity of the consultancy company which is going to build the incinerator. It is not known whether the incinerator will fall into disuse very soon. It seems that this expensive incinerator which is only built for the sake of the consultancy will have the same fate as that of the waste gasification plant of the desalination plant. It will only increase the medical costs and increase the burden of the public and the patients. This is the worst point raised in the Budget.

In order to have a balanced budget, I agree that the Government should stand firm on its bottom line regarding financial management even under pressure exerted by various parties. It should ensure that the increase in spending does not exceed the rate of economic growth. Concerning this bottom line, I also agree that the Government should not use up all the surpluses, but should leave such surpluses in the pockets of the taxpayers as is stressed in paragraph five of the Budget. The Financial Secretary should carefully consider the Liberal Party's suggestion of widening the tax band. I do not agree to the Honourable Frederick FUNG's suggestion of increasing the profits tax because the experience of foreign countries has demonstrated that the higher the rate of profits tax, the less would be the total tax revenue in the long run. It is because investment will be shifted to other places and this will intensify the problem of tax evasion and tax avoidance in Hong Kong. Therefore, the

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worldwide trend is to lower the rate of profits tax and to strive for an increase in the total tax revenue.

Mr President, the Liberal Party proposes that we should attach importance to our economy and pay attention to the livelihood of the people. I am most concerned with the proper use of public resources. The Honourable Allen LEE pointed out yesterday that the prosperous development of industry and trade will benefit Hong Kong people and economic development will generate more resources for use to better people's livelihood. This is the key to improving people's livelihood.

The "biscuits sharing" game actually involves the art of co-ordination; no one will be fully satisfied. However, if we can cut back on unnecessary expenditure and even pick up the biscuit crumbs to further share them among people, I believe all parties will have a greater sense of satisfaction.

Mr President, with these remarks, I support the Bill.

THE PRESIDENT'S DEPUTY, MRS ELSIE TU, took the Chair.

MR MAN SAI-CHEONG (in Cantonese): Madam Deputy, first of all, I would like to talk about culture, art and the preservation of cultural relics. In the policy speech delivered by the Governor in October last year, the Government had stated in black and white its commitments regarding the development of art and culture and that it was determined to preserve and conserve Hong Kong's archaeological and historical heritage. Regrettably, however, we only need to take a look at the Budget this year, and we can see clearly that the Government's actions are not in keeping with its words. Now that the Recreation and Culture Branch has taken up the important mission of promoting the development of cultural activities and that the Government has made commitment in the Governor's policy speech that it will invest considerable resources in this area, I wonder why the Government has to reduce funding for recreational and cultural affairs with the result that there are fewer staff at the Branch thus adversely affecting the launch and the progress of various programmes.

Moreover, whilst the Recreation and Culture Branch emphasizes that providing more support to visual art and literary art organizations is going to be one of its major tasks in the coming year, funding for this purpose has only increased by $6 million. One can hardly imagine how this sum of $6 million which even fails to catch up with inflation can be regarded as an actual increase. The Secretary for Recreation and Culture has said in public that films are not purely a form of art but a synthesis of various forms of art and that, as making film is an industry, it has to take care of itself. Therefore, we can see that the Government only provides funding for film censorship work or the amendment of the Film Censorship Ordinance every year. The Secretary also defined cinematographic art as something of a commercial nature and films as

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commodities, not art. This only reflects the ignorance of the Recreation and Culture Branch and the Government on art. If film making is regarded as an industry because films generate income from sale of tickets, can writing literary articles be regarded as publication industry because books sold generate income? Whilst the Government provides financial support for alternative literature, why can it not subsidize films having artistic value? An ironical fact is that when the Chief Secretary promoted the image of Hong Kong in overseas countries and engaged in international diplomacy, she sought the limelight by referring to local movie stars. However, the Government has been turning a blind eye to local film workers who have been working seriously and conscientiously and who only need substantive support from the Government. The plan for setting up a film commission which has been proposed by the film industry for many years is believed to have been shelved because of a lack of consensus between high ranking government officials and their subordinates. We fully understand that the Government has limited resources, but the allocation of its resources should be focussed, with a bottom line set. It is also impossible for the Government to subsidize every area. However, the Government must advance convincing arguments to justify its choice. The Government has committed itself to the promotion of arts. It should not show its indifference to some important areas of the field nor should it look on without doing anything.

Next, I would like to talk about the preservation of relics and historical sites. A 4% increase in the funding for this area is mentioned in the Budget which apparently shows that the Government does not intend to further develop the work being done in respect of relics and historical sites. The fact is, however, that expediting the identification and preservation work in respect of historical sites is now a task which brooks no delay. In the course of economic development, old buildings of significant historical value, whether Government or privately owned, have gradually been demolished, making Hong Kong a place with neither memory nor a historical touch.

Materially, the living standard of Hong Kong people is up to international standard, but spiritually, in particular, as regards the conception of history, the public lacks such conception. It is because the colonial government has not adequately preserved and repaired historical sites in the past, and this has gradually caused mutilation to the historical features of Hong Kong. Whether the Hung Lau in Castle Peak related to the National Father, Dr SUN Yat-sen, can be designated as a statutory historical site will depend largely upon whether the Government is sincere enough. We shall wait and see.

If we have to summarize the provisions in the Budget concerning funding for art and culture, we can say that even a token increase with the rate of inflation taken into account has not been made. If the Government still continues to hold such a short-sighted view, it will make people worry more about the prospects of art and culture in Hong Kong in the long run. There will be even less room for development, let alone room for a breakthrough or upsurge.

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The Government has inadequately preserved relics and historical sites and this has further alerted us to the fact that the Government has achieved little in respect of preservation and natural conservation. It is because we all know that the natural environment and natural resources are important assets of the community. For the sake of developing large-scale projects in tandem with the fast growth of our economy, we have actually sacrificed our beautiful natural environment. Many people have become aware that we have destroyed nature for the sake of economic development, and we may have to pay a higher price if we want to make up for what we have lost. Sustained economic growth should be kept in harmony with "sustained development", and "environmental conservation". It is a pity that up to now we still do not have a complete set of environmental conservation guidelines. So-called conservation is carried out in an unsystematic and piecemeal manner. The various government departments have not set consistent objectives for their conservation policies. There is no systematic and specific conservation policy being adhered to by various departments. Conservation policy is not about idle theorizing. It is a policy which requires the Government's full support and promotion before it can have desirable effects. The Government should not think that after the Environment and Conservation Fund has been established, it can shift the burden to non-governmental groups and organizations for them to promote the relevant work. I urge the Government to provide necessary resources for the future budgets and for the financial allocation of the coming year in order to fully implement the conservation policy of Hong Kong.

I would like to take country parks as an example to illustrate this point. The existence and management of country parks are indeed a very important aspect of our conservation policy. According to the Territorial Development Strategy of 1993, 14 potential sites have been identified as suitable for designation as country parks or special zones. However, the Government said that as it has insufficient financial resources, it is impossible for these 14 potential sites to be designated as new country parks in the new fiscal year. If we care to examine the available information we will know that, if these sites are designated as country parks for management, only 218 staff members will be required, at a cost of around $26 million. The capital expenditure and the recurrent expenditure within five years will be $80 million and $2.5 million respectively. Taking five years as the basis for calculation, to our Government which has a sizeable surplus now, the total costs involved are indeed minimal. But as far as the public is concerned, these country parks are very important assets and very important resources for leisure and outdoor activities. I hope the Government can look squarely at this issue and substantively increase the funding for the development of country parks in the coming year. In particular, in respect of the country park on Lung Fu Shan in Hong Kong West and the country park in Lantau North the designation of which has long been desired by the public, the public earnestly hopes that the Government can allocate funds as soon as possible, so that there are resources for developing these two sites as country parks for the public.

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The Financial Secretary, Sir Hamish MacLEOD, has used a very interesting term when he generalizes the Government's philosophy of fiscal management this year, which is "Consensus Capitalism". On the first page of the Budget, the Financial Secretary writes that it is "a consensus about the need to encourage free enterprise and competition, while promoting equity and assistance for those who need it". It seems that the Financial Secretary regards Hong Kong as a model of the classical school of economics which believes that economic prosperity is achieved through free competition. This way of thinking and "positive non-interventionism" can indeed be traced to the same origin. But it can be said that it is more advanced than positive non-interventionism, that is to say, in an imperfect market environment, the Government hopes that it can "promote equity and assistance for those who need it" through certain measures. However, the Hong Kong Government plays a conservative role in economic development. It only wants to maintain an environment for fair competition and it has overlooked the fact that, at this stage of our economic development, the Government should not simply ensure that there are fair rules for the game, but it should also exert influence on the outcome of the game. Let us consider that the small and medium-sized enterprises in Hong Kong are facing strong competition in the international market. Besides providing relatively low tax rates, it seems that the Government has not done anything to increase the competitiveness of these enterprises. In respect of basic research, Hong Kong is lagging far behind other places, in particular, its neighbouring countries. The Government has all along given a very low priority to scientific research for the promotion of economic development. As to the service sector, such as the film making and tourist industries, the Government does not have any long-term policy for the further development of these industries. When these industries encounter difficulties, the Government cannot say what assistance it can offer.

As regards the social policy of the Government, "assistance for those who need it" is still a slogan which lacks substance. In fact, many elderly people who have lost their competitiveness are in desperate need of government assistance. However, the Government gives scant response to their demand. As to workers who have lost competitiveness as a result of economic transformation, the Government also does not offer them much assistance. On the contrary, the labour importation policy of the Government makes them worry about losing their jobs. I really hope that, under the slogan of "Prosperity Through Consensus", the Financial Secretary, Sir Hamish MacLEOD, and his successor, Mr Donald TSANG, would offer more assistance to people at the grass-roots level and to those who lack competitiveness. "Consensus" should not only be reached by the Government and the business sector, the fruits of "prosperity" should also be enjoyed by the general public.

HONG KONG LEGISLATIVE COUNCIL - 23 March 1995 2829 MR ERIC LI (in Cantonese): Madam Deputy,

Who should be thanking who, and who should be thanked?

On this occasion every year, the Legislative Council thanks the Financial Secretary. Despite the "compliments" he receives, however, the Financial Secretary should neither allow himself to get complacent nor expect that Members would be lenient with him and concentrate only on his good work. Even though the Financial Secretary has done his job, Members would still be very critical, as if they are marking his work instead of thanking him on behalf of the public. What is so exceptional is that the Financial Secretary can still remain broad-minded. Having portrayed such an unsound political phenomenon as a sign of "progress", he even thanks Members right at the beginning of the Budget, in the hope of currying favour with them. I have no idea how other Members have felt about the Secretary's thanks over the past four years. On my part, I feel a bit "embarrassed".

Neither the Government nor Members of this Council have created the wealth Hong Kong has. It is the hardworking people, especially those in the industrial and commercial sector, who have created the wealth of the community and the huge reserves of the Government. Financial Secretaries in the past did not forget to thank these people for their contributions. In contrast, Sir Hamish MacLEOD only remembers to thank the Members who have criticized him, and the first thing the Financial Secretary-designate did soon after the announcement of his appointment was to send flowers to lady reporters. This is mere political tactics. Five marks should be deducted because they have overlooked the people and the industrial and commercial sectors who should be thanked most for their real contributions.

The accuracy of the Budget this year is in marked contrast to the serious inaccuracy of the Medium Range Forecasts over the past four years. Inaccurate forecasts, nevertheless, may not be really that bad, especially when the errors are on the side of underestimating the volume of our future reserves. The business sector is often compared to a goose which can lay golden eggs. Now, this goose has laid three dozens of golden eggs instead of two dozens as originally expected. How can we still blame it for such a commendable achievement?

However, when this Council realizes that it cannot find any fault in the Budgets, it turns to scold the goose for consuming too much (profit); it also criticizes that the eggs laid (government expenditure) are not big enough. Even the Financial Secretary, who is responsible for taking care of the goose, is not excused. Last year, perhaps due to similar criticizms, the Financial Secretary appeared rather modest before Members. However, at the same time, he turned his attack on taxpayers, which form the minority of the people of Hong Kong. Apart from narrowing the tax base to increase the tax burden of the sandwich class and the high income group, he also tried to squeeze more money from them on the pretext of combating tax avoidance. This he did by introducing a

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new piece of legislation directed at service companies, a common lawful means used by this group of people for the purpose. Although the Government is less aggressive this year, five more marks should still be deducted for this policy of "bullying the weak and fearing the strong".

Advice complied with and bull's-eye hit

Having said the above, I must point out that the Financial Secretary has been almost "in full compliance with" all the advice I put forward during the consultation exercise. The forecast of our reserves is so accurate that it "hits the bull's eye". He should have scored 100 marks if not because of the 10 marks already deducted. Let me explain why he can score as high as 90 marks.

When the Financial Secretary conducted the consultation exercise, I strongly advised that in terms of financial strategy we should adhere to the basic principle of "preserving our strength and avoiding drastic moves." I tendered the advice because of these consideration: our huge reserves; uncertain prospects of Sino-Hong Kong politics over the short-run; slowing down of China's economy under its macroeconomic adjustment and control policy; and the Sino-American tension caused by their trade negotiations.

In regard to government expenditure, I made the following proposals: teacher training for pre-school education should be strengthened; the growth rate for welfare service grants in real terms should not be less than 10%; Comprehensive Social Security Assistance (CSSA) payments for children should be increased and subsidy for hostel service should be maintained at a reasonable level. All these suggestions have been put into practice by the Government.

As a reasonable Legislative Council Member, I, of course, will not withhold my thanks if my requests are duly entertained. I thank the Financial Secretary for his positive response to the reasonable requests I made on behalf of the community. However, the demands of the community are ever-increasing and members of the public will not stop voicing their demands. Since the close of the consultation exercise in mid-November 1994, like other Members, I have put forward more demands regarding government expenditure. To be fair, I will not criticize the adequacy or otherwise of the Budget on the basic of these demands. A more reasonable approach is for Members to single out the requests they put forward after the close of the consultation exercise and specify them in this debate as priority expenditure items in the 1996 Budget. For me, I have the following requests:

(1) to inject a capital of no less than $10 billion, an amount originally proposed under the Old Age Pension Scheme, into the mutual insurance fund of the Mandatory Provident Fund Scheme, and the CSSA Scheme for improving payments in the next three years;

(2) to expedite the fulfilment of the objectives of family services as set out in the White Paper on Social Welfare by increasing the number

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of caseworkers in order to meet increasing demand and to reduce the number of cases they have to handle to below 65;

(3) to provide, as soon as practicable, one social worker per school to help youngsters deal with worsening problems like drug abuse, triad societies and emotional problems;

(4) to provide an additional teacher in each school whose sole responsibility is to plan and organize extracurricular activities; and

(5) to upgrade the training and salaries of child care workers to a level currently enjoyed by qualified kindergarten teachers.

Shifting to Low Gear for Smooth Transition

While quite a number of Members have described the Budget as unimaginative, it has in fact given some pleasant surprises to the public. For instance, $2.5 billion has been allocated for the purchase of welfare premises to speed up the provision of welfare services. This deserves my thanks on behalf of the public. What is more, the Medium Range Forecast projects that there will be a reserve of $151 billion by 31 March 1997, $31 billion more than what was projected last year. This reflects our strong economic growth in real terms in recent years and also our bright economic prospects in the three years to come. If this Council still describes such encouraging projections as unimaginative, it should really ask itself whether it has become so politically myopic that it cannot see the wood for the trees.

On the very same day when the Budget was released, I referred metaphorically to "a shift to low gear to facilitate the alighting of the Hong Kong Government and the boarding of the Chinese side". The Financial Secretary's enterprise and foresight are reflected in the Budget, which contains a meticulously compiled Medium Range Forecast and a full account of our sophisticated fiscal strategy. At a time when our huge financial strength has led to more confidence, he also puts forward a detailed and opportune proposal to consult the Chinese Government on the 1997-98 Budget. This has already received positive responses from the Chinese Government. All these far-sighted proposals, put forward by Sir Hamish as a Financial Secretary who is forced to retire early because of civil service localization, are a show of his exceptional broad-mindedness. He has remained dedicated to the well-being of Hong Kong people although he is going to retire. For that reason, he should be commended as a paragon of civil servants.

Holding fast to fiscal strategy with a pragmatic display of real art

This year's Budget contains some pleasant surprises and some proposals which are both progressive and far-sighted. However, all this cannot compare with Sir Hamish's deliberately plain approach and it is this approach that can best illustrate the "real art" of his holding fast to the fiscal strategy concerned.

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The Financial Secretary has painstakingly described the entire budget process in great detail, reiterated and reaffirmed his budget strategy and even referred emphatically to this strategy as a kind of "clear and consistent" "consensus capitalism" which has stood the test of time. Then, in an almost "deliberate" attempt to "conform", he has drawn up this year's Budget simply by "copying" last year's. Is this really unimaginative? Or, has he deliberately shifted to low gear to let others see the secret of his success more clearly, in the hope that Members, thus "impressed", can refrain from taking "rash actions"?

The Hong Kong people, who attach great importance to stability, certainly would not want the Chinese authorities to introduce any rash changes before they have fully grasped the working mechanisms of our market economy. Conformity and strong reserves are the best insurance for smooth transition to 1997. Colleagues knowledgeable about business administration will surely understand this. In regard to those Members who believe that reforms are the answers to everything, I think the Financial Secretary will share my view that they should really think carefully before they act in the coming two years. They must not act in such a way that we do not even have to wait until 1997 before our well-tried and well-integrated fiscal strategy, drawn up so painstakingly by professional civil servants over the years, is dismembered.

Joint Efforts in Forecast to Enhance Confidence

Any applications of forecast techniques to portray economic prospects are bound to be prone to errors, as rightly evidenced by the glaring inaccuracies of the Medium Range Forecasts over the past four years. Such glaring inaccuracies have been caused, among other things, by the delayed implementation of infrastructure projects, the strong growth of our GDP initiated by the economic development of China, and fluctuations of property prices. But, if we realize that in a market economy, economic forecasts are just a tool enabling us to look at and evaluate our prospects so that prompt contingency measures can be taken to cope with uncertainties, we will then agree that what is more important should be the macro indications we can get during the forecasting process. Accuracy or otherwise at the end of the day does not really count that much.

On the above understanding I suggest that the Government should, as soon as possible, reveal to the Chinese authorities all the information related to the Medium Range Forecast drawn up this year and invite their participation in drawning up the Medium Range Forecast for the 1996-97 Budget. This can give China an early opportunity to have an overall picture of Hong Kong's economy, and an understanding of the specific differences between a market economy and a planned economy. In addition, when it comes to Sino British negotiations on the land sale programme and Airport Rail link financing, China will be better able to grasp the possible blows to Hong Kong's overall financial situation in the long-and medium-run should any delay occur. Of course, the Hong Kong people as well as overseas investors also hope that China and Hong Kong can eventually agree to adopt a more uniform approach to the Medium

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Range Forecast. This can enable them to see the indication of Hong Kong's prospects as clearly as China does, thus giving them more confidence when planning their investments. Sino-British co-operation in this respect can certainly help ensure stable economic developments during the transition period.

Here, I think two more points are worth mentioning. They are closely related to economic forecasts and I mentioned them as early as the 1992 Budget debate.

(1) Gross National Product (GNP): Owing to the immense offshore wealth of the Hong Kong people, in foreign countries and in the Pearl River Delta, using the GDP as a yardstick to measure the real growth in the wealth of the Hong Kong people and their ability to pay tax may result in a trend of persistent underestimation. In 1993, the Government agreed to examine the possibility of formulating the GNP as an alternative indicator. It is expected that an initial finding will be available by the end of 1995 and this proposal can be put into practice in the 1996 Budget.

(2) Airport Core Programme (ACP) as a separate account. In principle, the Government has accepted my proposal that with the exception of government funded items all ACP revenue and expenditure should be excluded from the Budget, and recorded in a separate account administered by the Provisional Airport Authority. However, except the submission of a relatively comprehensive Business Plan Summary (BPS) to this Council in June 1992, no further briefing has been given because the British Government and Chinese Government have been unable to reach any agreement on financing. Now, after all the developments that have taken place, I am afraid that the BPS is already altered beyond recognition. With regard to this very significant programme which is not covered in the Budget, I urge the Financial Secretary to submit, as soon as possible, the revised BPS to this Council because I believe that the various issues related to the ACP, such as possible capital injection delay, significant land grant along the rail link and other commercial proceeds, will all produce significant economic implications that can affect the Medium Range Forecast.

Sincerity is the essence of politics

In my budget debate speech last year, I said that the Financial Secretary had billions of dollars to realize the people's dream. In fact, this is a difficult but thankless task.

The hardworking taxpayers and the professional people in the business sector are the goose which lays golden eggs. Actually, they do not really want to be thanked. As long as they can remain "well-fed", they can lay more golden eggs to share with others. Although the Financial Secretary's job is to look

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after the goose only, his efforts of taking good care of the goose and carrying out his duties methodically over the past four years are well appreciated. It is therefore only reasonable that we should all thank him on behalf of the community. I hope each and every Member of this Council can be more sincere and less political, and give Sir Hamish's last Budget a vote of total confidence before his retirement. I also take the opportunity to wish Sir Hamish and Lady MacLEOD every happiness and good health wherever they alight from the political train.

With these remarks, Madam Deputy, I support the motion.

MR LEE WING-TAT (in Cantonese): Madam Deputy, on behalf of the Democratic Party, I will talk about issues concerning housing in the Budget.

Regarding the section devoted to housing in the Budget, I wonder if all these proposals can meet the needs of applicant on the Waiting List, tenants suffering from high private rentals and residents in the Temporary Housing Areas, squatter areas and rooftop flats.

With the establishment of the Housing Branch, it is generally hoped that land supply and housing construction will be expedited so that the families on the Waiting List will be allocated public housing soon. It is also hoped that operation of the property market will be monitored so that property prices will fall back to a level that the average family can afford. These are what we look forward to.

Firstly, we think that the Housing Branch should be responsible for monitoring the supply of flats by both the public and the private sectors. Actions should be taken as soon as a supply shortfall is observed. Besides, the Branch should also monitor the property market and step in if necessary. In 1994, 34 170 new flats were built but 40 413 were left vacant. We can see that there are more vacant flats than new ones. When encountered with such situations, the Government often resorts to its pretext of "non-intervention in market operation" for not adopting measures to tackle the problem of flats being left vacant. Since no punitive or intervening measures are taken against vacant flats, developers who are laden with capital are virtually not affected, even if rates are levied on all properties.

It is very easy for developers to free themselves from the regulations laid down by the Government and hold their flats until the property market booms again. For instance, the developers may extend the construction period so that the time to put up their flats for sale will be under their control. Once the Government has devised some measures to combat the soaring property prices and speculation in properties, developers will think of even more tricks to counter these nominal measures. Should the Government still fail to find a way to plug these loopholes, efforts to curb the soaring property prices will be

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futile, even if the supply of private housing is further increased, and the problems will stand as they are.

Moreover, the Housing Branch estimates that 26 000 and 27 000 flats will be produced in the private sector in 1995 and 1996, respectively. These numbers are a far cry from the average annual production target of 35 000 private flats as set by the Government. Insufficient supply of private flats caused by insufficient production has all along been the reason for soaring property prices. We hope that the newly-established "Inter-departmental Housing Project Action Team" will expedite the development of housing projects so that the annual production target of 35 000 private flats can be met. I hope that in their reply next week, the Financial Secretary and the Secretary for Housing will explain to us if this target can really be met in the future. It is advised that the team will expedite the examination and approval of 19 works projects involving 32 700 flats. However, the number of private flats to be built in the next two years will remain small. They will still be in short supply, even if the team strives hard to meet the target. Hence we suggest that in addition to a significant increase in land supply and early release of land for auction, the Government should also adopt the following four measures: (1) to impose a time limit on redevelopment works in the urban area; (2) to ensure that building contractors will carry out and complete construction works on schedule; (3) to monitor the internal pre-sale of flats closely; and (4) to take more intervening and punitive measures against vacant flats so as to increase the cost of holding vacant flats. I hope that the Government will respond to these issues and proposals.

The Financial Secretary stated in his speech that the prices of existing residential properties had fallen by 14% from their peak in 1994. Yet he admitted that the prices of residential properties were clearly beyond the reach of the average family. Property prices still remain high but the Government takes no special measures to cope with the situation. In this regard, instead of putting forward more substantial measures to cope with this situation, the Government announced clearly that no further intervention was planned. We cannot agree to the view of the Financial Secretary. Firstly, the package of measures introduced by the Government in June last year only brought about a little increase in the cost of the speculators. At that time I already criticized these proposed measures as too weak. We cannot say that these measures have "squeezed out" speculators. Besides, the Financial Secretary himself admitted that though property prices had fallen by 14% from their peak last year, they were still high and were beyond the reach of the average family.

Prices in January this year were still some 37% higher than they were in January 1993. It is a shame that the Financial Secretary, instead of reiterating the importance of combatting the soaring property prices, announced that measures to curb property prices would be frozen, as if they "would be buried for good", without consulting this Council and the public. Obviously, the property market goes buoyant again under the encouragement of the Financial Secretary. The Financial Secretary can see that many people have started lining

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up again to buy properties as they all believe that property prices have bottomed out. We cannot say that such mentality of following the herd has nothing to do with the Government's weak stand to curb property prices as shown in the Budget. Can the Government simply do nothing about this? In fact, the Government should take some remedial measures by allocating more land for the use of high-density residential properties in the Land Sales Programme for 1995-96. As the Government believes that increasing land supply is an economic measure to regulate property prices in the long term, the Government must honour this commitment. I hope that the Government will give a forecast of land grants for the coming year in its reply.

The Financial Secretary stated clearly in the Budget that soaring property prices was one of the major factors contributing to high inflation. Yet he announced that measures to curb the property prices would be halted. It seems that he has "lifted a stone to crash his own foot". I would like to ask the Financial Secretary whether he wants property prices and inflation to remain high or to come down, or whether he still has not made up his mind as to which stand to take, just like what he is doing now?

Madam Deputy, many people from the Chinese side, members of the Preliminary Work Committee and property developers recently raised strong queries about the reclamation projects in the urban area. Apparently, they said they were worried about the safety and environment of the harbour. However, the real reason behind it, I think, is that they want to suppress the increase in local land supply so that the value of their own land reserve will shoot up. They object to the reclamation projects in order to protect their own interests. I have a doubt here. As the planning of these reclamation projects was started many years ago and some of the projects have already been completed, why do these people wait until now and say that China should be consulted on this matter on the ground that these reclamation projects straddle 1997?

Obviously, they are now unscrupulously aggrandizing the principle of "China should have a say on Hong Kong affairs". Through this and political intervention by China, their goal to exploit the middle and lower classes to boost only the interests of the property developers and the capitalists will be achieved. I hope that the Government will stick to the principle of supplying land on a long-term basis and never yield to the pressure of China and the Preliminary Working Committee.

That the supply of public housing and Home Ownership Scheme flats falls far short of demand has been the subject of debate in this Council numerous times. Unfortunately, when this Council last time held a motion debate on land supply for public rental housing, the Government indicated that it would need to carry out an assessment before a decision on further allocation of land could be made. We must understand that, to realize the target of home ownership by the year 2001 under the Long Term Housing Strategy (LTHS), the Government has yet to make available 38 hectares of land for housing construction. If the Housing Authority is not granted such land, not only will it be impossible to

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attain the LTHS's home ownership target for the year 2001, the supply of public rental housing will also be affected.

The completion by 2001 of 141 000 additional public rental housing units will only cater to the housing need of no more than three quarters of the families on the Waiting List in 1997. That is to say, at least 19 000 families will not have been rehoused by 1997. Let us not forget that no fewer than 10 000 families will be added to the Waiting List each year. It is estimated that by the year 2000 100 000 families may still be awaiting their turn to be rehoused in public housing units. Granted that the LTHS can be implemented as scheduled, families on the Waiting List generally will have to wait for five to 10 years before they can be rehoused. It can thus be seen that the LTHS is unable to cater to the present housing needs.

The Housing Authority will, at the end of this year, formulate the post-2001 long term housing strategy. If the Government yet again evades reality and misinterprets demand, the issue of lower income people's long wait for public housing and high property prices will forever be a subject of persistent debate. To solve this problem, the Government must formulate a long term housing strategy with the focus on public sector housing development.

We hope that the Government will make a more accurate calculation of demand and will not deliberately keep the upper income limit low in order to curb demand; nor should it deliberately suppress the come-forward rate. If the come-forward rate is suppressed time and again, we shall have a state of affairs where housing demand is calculated at a considerable discount, not only once, but twice and even three times. This way we will of course fail to arrive at a correct figure that truly reflects housing demand. I hope the Financial Secretary and Members will consider this. It has been 23 years since Lord MACLEHOSE (then Sir Murray MACLEHOSE) first launched the 10-year scheme in 1972 to build public housing. If by the year 2000 we are still unable to solve the basic housing problem of the Waiting List applicants, for how many years more shall we need to discuss this problem before it is eventually solved? I suggest that the Housing Branch should draw up performance pledges to say how many years more it will take to satisfy the varied housing needs of the Waiting List applicants. Furthermore, the post-2001 long term housing strategy will have a far-reaching impact on the well-being of the general public. I suggest that the Housing Branch should carry out extensive consultation before it draws up the strategy to avoid going it alone without regard to outside input. Here I would request the authorities not to ignore the housing needs of the low income people because such neglect will result in Hong Kong people continuing to live in crowded, environmentally unacceptable or financially unaffordable accommodation.

Madam Deputy, on behalf of the residents of the Tsing Yi Constituency, I have to thank the Financial Secretary, the Secretary for Transport, the Secretary for the Treasury, the Secretary for Economic Services, the Secretary for Works and the Secretary for Planning, Environment and Lands. I thank them first

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even before I begin to say what for. It is because they have been very attentive to the requests made by myself, the Honourable Albert CHAN and Tsing Yi residents with regard to the traffic problem of Tsing Yi. The Financial Secretary has now given a firm go-ahead to the Tsing Yi Duplicate South Bridge whose construction is to start as soon as possible. I attach great importance to this construction project and would like to thank the Government for implementing it which will alleviate to a certain extent the traffic congestion on Tsing Yi's external road links. Here I would like to express the hope that the Government will do its best to monitor the progress of Route 3 (Urban Section) and the Airport Railway so as to ensure their expedite completion; at the same time nuisance to residents caused by these works projects when they are under way should be reduced to a minimum.

Madam Deputy, lastly, I would like to reflect the praise that Members from the Democratic Party have for the Financial Secretary. I attended every budget consultation meeting called by the Financial Secretary. Although the Financial Secretary talked little and did not quip or joke, he listened intensively to the diverse views and suggestions given by the Members and considered them with an open mind. Even though some thorny issues under discussion then might have caused him to knit his brow, the hairline on his forehead does not seem to have receded appreciably. His hair is still thick. I hope the Financial Secretary will look young and light-hearted when he retires to Scotland.

Here, I would like to a congratulate the Financial Secretary-designate Mr Donald TSANG and to say I very much appreciate his liberal and positive attitude. The only thing which worries me is that Mr TSANG's financial management philosophy is yet more conservative and he regularly keeps a tight hand on the public purse. I hope Mr TSANG can relax his grip somewhat and do more to satisfy the actual welfare needs of the humble citizens.

Madam Deputy, I so submit.

MR HENRY TANG (in Cantonese): Madam Deputy, some people say that Sir Hamish has been extremely lucky because he has been able to serve as the Financial Secretary during an uneventful period with no stock crash, but strong economic growth coupled with huge surpluses and rapidly growing reserves. However, I do not think that the Financial Secretary's term of office has been an easy one at all because he has been torn between two demands: one for rich reserves, and the other for welfare spending as a matter of top priority. For example, last year, when the Financial Secretary introduced tax reduction measures, he was attacked by a barrage of severe criticisms. This year, Hong Kong's economy showed signs of potential problems right at the beginning, but the Financial Secretary's rather prudent Budget is still criticized for being over-cautious. Thus, the kind of difficulty the Financial Secretary needs to face lies not in the lack of funds to work with, but in having to please everyone, which is rather impossible.

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We must be clear that we should not take our good fortune for granted. In the past couple of years, while countries in the West were badly hit by economic recession, Hong Kong managed to stay prosperous. The main reason is that the rapid economic growth in China in recent years has given impetus to Hong Kong's commercial, financial and trading sectors as well as other service industries. Nevertheless, China has started to slow down its economic growth to curb inflation, and Hong Kong's re-export trade has been the first to receive the blow. If we take a careful look at the volume of re-export trade between Hong Kong and mainland China, we will notice that although mainland China is still our largest re-export trade partner, the growth in our re-export trade is not as rapid as that in the previous year. It will, of course, be good for Hong Kong, if in the long run, China can cool down its over-heated economy and curb inflation without triggering off a drastic economic recession. At the moment, however, we just cannot afford to take everything for granted and squander what we have saved over the years.

Indeed, the Financial Secretary has managed to find a proper way out in this year's Budget - while keeping wealth in the pockets of the people, he has managed to maintain adequate reserves for future contingencies, as summed up in the subtitle on the cover of his Budget speech: "The way to make a country prosperous is to be prudent in public spending, to improve the well-being of the people and to maintain good reserves." This advocation of Xunzi strikes a good balance between the two extremes of "maintaining adequate reserves" and "welfare spending as a matter of top priority." Xunzi, a Confucian scholar, also advocated a naturalistic view of "utilizing the dictates of Heaven to the benefit of the people". In modern perspectives, this can be construed as a bold spirit of putting trust in the ability of human determination to overcome nature. This view, held by the Financial Secretary, is what I am glad to hear. We must note that the prospects for 1995 are such that things "began on a more pessimistic note" and we need to face a situation in which "inflation will remain relatively high at 8.5%". Moreover, after enjoying many years of prosperity, Hong Kong's economy has entered an adjustment stage. Our economic growth is closely affected in every respect by China's macro-economic control measures, interest rate fluctuations, developments in the stock and property markets, and the uncertainties that exist in the transition period. Therefore, although the Financial Secretary believes that "our business opportunities for 1995 appear to be promising", he has refused to over-spend. Obviously, this is a pragmatic approach which is no doubt prudent, but without being over pessimistic. This approach also fully illustrates the Financial Secretary's fiscal strategy whereby allowances are made for the rainy days by not letting government expenditure grow faster than the economy as whole. I fully understand and support this strategy. For human determination to be able to overcome destiny, naturally we must save for the rainy days. This view can perhaps do some justice to the Financial Secretary amidst accusations such as "shifting to low gear to facilitate the Hong Kong Government's alighting", or "being over-cautious".

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I would describe this year's Budget as "unexciting yet not without any show of concern", particularly in the area of health care services, for which the Financial Secretary proposes to inject $80 million to promote awareness of health issues and provide financial assistance to the small number of patients who suffer from rare diseases. The Budget also proposes to introduce a new allowance for disabled dependants. Although the Government has been criticized for "boasting too much and spending too little", those measures can still provide some form of timely help. Hong Kong is not a welfare state, but we need to give a helping hand to the vulnerable members of our community. The Government simply should not evade its responsibility in this respect.

Another responsibility that the Government has ignored is this Council's call for an increase in Comprehensive Social Security Assistance (CSSA) payments to $2,500. I regret that the Government has rejected the call on the grounds of "insufficient time", "lacking rational discussion" and "oversimplified reasoning".

The Financial Secretary has stressed that many suggestions made by Members have been included in the Budget, and he has also expressed the hope that we can resist the temptation of focusing only on the excluded requests. Despite this, I still want to pass some criticisms on the Budget because such criticisms are related to the requests made by the community and Councillors over the years. Besides CSSA payments, pre-school education is also an issue that has been discussed for a long time without any concrete results. Although the Government has announced that $80 million will be reserved in September this year to subsidize pre-school education, this $80 million, as we all know, in fact comes from the savings within the Education Department. What about the funding for workers in child care centres under the Social Welfare Department? We have heard government officials repeatedly saying that the standardization of pre-school education is a very difficult task. However, what progress has they made? Is it so difficult that no progress is possible? Each year, pre-school education workers renew their contracts with their employers in April or May. So, it is clear to everyone that time is running short. Prolonged delay will only add to the anxiety of kindergarten teachers and child care workers. Some people in the profession have already started to suspect that the Government is delaying the announcement of details, so that it can defer the allocation of funds on technical grounds. I hope that the Government can allay such anxieties by taking concrete actions before the end of April.

Besides, the Budget has left future industrial developments out in the cold. This is a great disappointment to me. Of the $260 million allocated for the purpose of supporting industrial development, $50 million will be used for implementing research projects jointly undertaken with relevant experts from China, and $83 million will be used to fund projects which were approved but not committed last year. The remaining $127 million will have to finance altogether 30 to 40 new projects. This amount is just a drop in the ocean.

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In fact, the structural development of Hong Kong's economy is now in a critical state. Faced with the strong competitive edge of Taiwan, Korea, and Singapore, Hong Kong has fallen to the bottom of the list from the leading position it used to occupy, primarily because of our lack of a far-sighted and focused strategy to assist our industries during the period of economic restructuring. At a time when other countries have fervently embarked on hi-tech intensive economic plans, I hope that our government can discard its present attitude of nonchalance or incompetence, and, instead formulate as quickly as possible a set of long-term industrial policy to strengthen the competitive edge of Hong Kong in the Asian Pacific region.

I am very grateful to the Financial Secretary for setting the precedent of collecting the views of Members belonging to various political parties before drawing up the Budget. I hope that the new Financial Secretary can continue this practice and strive to strike a right balance between upholding the market economy and free competition on the one hand and promoting social services and welfare security on the other, so that Hong Kong may continue to enjoy the prosperity it has been enjoying so far.

Finally, I must express my heartfelt thanks to Sir Hamish MacLEOD, in particular for his prudent and pragmatic attitude towards work during his term of office. I sincerely wish Sir Hamish a happy and relaxing retired life after leaving office. But then, Sir Hamish, when you are enjoying fine red wines at low cost in Scotland, please think of your old-time colleagues in the Legislative Council who need to pay more for the same enjoyment!

Madam Deputy, with these remarks, I support the motion.

THE PRESIDENT resumed the Chair.

MR TIK CHI-YUEN (in Cantonese): Mr President, I respond to the call by the Honourable LEE Wing-tat and, like other Members, I thank the Financial Secretary Sir Hamish MacLEOD for his contribution to Hong Kong, in spite of my opinion that this last Budget presented by Sir Hamish is nothing but commonplace. However, as he has been willing to listen to the views of Members of the Legislative Council as well as people from various sectors over the past few years when the Budget was being worked out, the gap between the wishes and demands of the people and the work of the Government has been narrowed. Take the community facilities of New Territories North as an example. The Financial Secretary has listened to our views and allocated funds, so that some important facilities can be realized. These include the construction of the North District Hospital, the Shenzhen River training project and the speeding up of the construction of secondary schools in Tai Po and North District. Such an open-minded approach really deserves our praise.

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I now turn to this year's Budget. The Financial Secretary hopes to achieve the goal: "to be prudent in public spending and to improve the well-being of the people". I can say that the Budget will be able to "be prudent in public spending" but unable to "improve the well-being of the people". Of course, the fiscal management philosophy of the Chinese attaches great weight to getting prepared for rainy days, and we do not want the Government to be wilfully spendthrift. But we should not be cheeseparing as regards what is worth spending on. One has the impression of this year's Budget that it is "too prudent in public spending", and it is even a little "cheeseparing" in that funding is not appropriated to some important social facilities and services. If, with its sound financial position, the Government had further improved the livelihood of the people, the unhealthy gap between the rich and the poor could have been reduced. Unfortunately, the Budget has not done enough to improve the livelihood of the lower class people. Now, what we see is that things the Budget proposes to do differ from what the people expect. These include the raising of the Comprehensive Social Security Assistance rates for the elderly, the introduction of an old age protection scheme, the setting up of a central provident fund and improvements on medical services and public housing, and so on. But the Government adopts a delaying tactic in dealing with these expectations, which is really disappointing. Clearly, the Government has failed to show sympathy to lower class people who are suffering, and failed to return wealth to the people.

On improving the livelihood of the people, I would like to air my views in relation the education services and the developments in new towns.

Mr President, this year's recurrent expenditure appropriation for education is over $30 billion, the highest among all policy area groups. However, its growth in real terms is only 4.9%, which still lags behind local economic growth in real terms.

Also, this year's Budget proposals offer scant improvement to education. It mainly follows up the recommendations made in the Education Commission Report No. 5. But I must say that the recommendations in the Education Commission Report relate to only part of the areas the education profession has called for improvement to be made. Apart from this, we also want to see improvements in other areas. Therefore, the education profession is indeed disappointed to find that the Budget has proposed no improvement relating to important issues like the under-provision of school places, floating classes, the use of mother tongue as a medium of instruction, the one school - one social worker system and curriculum reform.

Among this year's Budget appropriations, one thing that pleases us somewhat is the Financial Secretary's commitment to provide for the subsidization of kindergarten education so as to enable kindergartens to employ qualified teachers as well as to encourage teachers to receive training. However, the Government has yet to announce the details of the subsidy scheme to date, and we find it worrying whether the subsidy scheme can be

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implemented in the coming school year beginning next September. We think that if the subsidy scheme for kindergartens is to be implemented this year, given that time is running out, the details of the package concerned have to be announced by early April this year so as to enable parents, teachers and schools to make arrangements in time.

Another thing is that we regret that the Government has long neglected the need to effect improvements to creches. Over the years, creche workers have been calling for improvements as regards the entry requirements and remuneration. But unfortunately, the Government is unmoved by these reasonable suggestions and a lot of time has been wasted. Now that improvement is about to be made to kindergartens, the Government is of the view that, with the subsidy to kindergartens, there will be an impact on creches. In saying this, the Government has erected a barrier for the implementation of the kindergarten subsidy scheme. We find the Government's dilatory style very unsatisfactory. We strongly demand of the Government to implement the kindergarten subsidy scheme as soon as possible and, at the same time, to improve the entry requirements and remuneration of creche workers so that all these improvements can be carried out simultaneously this September.

Mr President, the Democratic Party is very concerned about the work to provide support services to schools with Band Five students. In 1992, the Government set up the Working Group on Support Services for Schools with Band Five Students, and the report, together with its recommendations, was published subsequently. Unfortunately, the recommendations of the report have not been properly carried out over the past few years. In our opinion, the main reason for this is that the Education Department does not have a systematic supporting team and there are not sufficient resources to go with it.

We note that the Education Department is now experimenting with the School-based Curriculum Tailoring Pilot Scheme in 10 secondary schools, and the result of this scheme is encouraging and a certain degree of success is achieved. Therefore, the scheme will be extended to include 70 other secondary schools. For this reason, we urge the Government to employ additional staff to support the scheme and change the current practice of having teachers seconded from other secondary schools to one of employing them on contract terms, so that this pilot scheme can be carried out more smoothly and be given the fullest play. Furthermore, we also demand that the Government should allocate a reasonable amount of resources for the implementation of other recommendations put forward by the Working Group on Support Services for Schools with Band Five Students. This will help students whose standard of academic attainment is less than satisfactory to develop more effectively.

Mr President, because of the Government's inadequacies in planning, there has been a serious under-provision of school places in new towns over the years. In order that students living in new towns do not have to travel a long way to go to schools in other districts, some schools do provide additional

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classes and increase the size of each class as requested by the Education Department, so that more places can be provided for students from the district.

For example, in Tai Po and North District, most of the secondary schools there have provided an extra number of Form One classes; in addition to this, 10 secondary schools in North District and nine in Tai Po will admit students in excess of the permitted student intake in the coming school year in 1995. We are of the view that the Government cannot shift the blame on others for the under-provision of school places in these districts. In view of the necessity for secondary schools of new towns to provide extra classes and increase the size of each class, it is the responsibility of the Government to do something and provide additional financial assistance to these schools so as to reduce teachers' burden of teaching and administrative work.

As for special education, it is an area that has been neglected by the Government over the years. At present, the Education Commission has set up a working group on special education to specifically study the approaches to improve special education, and the report of the working group will be completed shortly. Therefore, we urge the Government to make funding provisions so that we will have the necessary resources to go with the recommendations submitted by the working group and for their expedite implementation.

Mr President, I am an elected Member from New Territories North, and I would like to raise a few points concerning the new towns in North District, hoping that the Government can address these problems and make improvements:

Strengthening of family services in new towns

Since community facilities in new towns are not sufficient, many family problems have thus arisen. Examples are matrimonial discord, family disintegration and juvenile problems. In order to address these problems, apart from remedial measures, it is more important to prevent problems from occurring. In this respect, the developmental and preventive family services provided by the Government are not sufficient. In the Budget of last year, it was proposed that family activity and resource centres were to be set up in all the 19 districts, and the existing manpower and resources of these community centres were to be reinforced for the diversified family activities to be expanded. We think this is a good start, and we also hope that the Government can assess the work of the family activity and resource centres over the past year, and that the Government should further expand them if the result is found to be outstanding. Moreover, the Government should allocate funds for voluntary organizations to provide similar service, and we call for such kind of family services to be provided to every housing estate eventually.