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HONG KONG URBAN COUNCIL

during a sensitive period, we must first of all create a stable society in which everyone is provided with the necessities of life in keeping with the economic level. Only when this is achieved will people have confidence in and a sense of belonging to Hong Kong.

Internal disaccord is very often the factor besides foreign intervention which causes disturbances in a society. I wish to put forward today some solutions to the problems of internal disaccord—a proposal to reform public policies.

Public policies

Hong Kong's public policies (on education, medical service, housing, social welfare and labour) first took their shape in the sixties. Between 1964 and 1966, the government published, one after another, White Papers on education, resettlement and social welfare, but they all tackled relevant problems in a conservative way and failed to come up with long-term plans necessary for Hong Kong. Then the territory was shaken and its stability disrupted by the two riots in 1966 and 1967 which resulted in losses of working days and aroused fears among investors. Afterwards it took three to four years for Hong Kong to return to normal. The subsequent report on the riots published by the government in 1968 stated that most of the rioters were young people who had no political background or thinking, did not have a sense of belonging to the society, had no interest in their work, hated the government and had no trust for the civil servants. Most of them lived in crowded communities and their schools, families and communities did not provide enough facilities or activities to ensure that they felt contented. As a result, they were easily instigated to mass violence. The violence in Central on Christmas Eve and New Year Eve in 1981 and the violence in 1984 resulting from an increase in licence fees for taxis revealed once and again the internal disaccord and uneasiness in Hong Kong. The government took immediate action to deal with these problems. The Secretariat for Chinese Affairs was changed to Home Affairs Department in 1968 and various youth activities were provided. It was worthy of note that several White Papers on public policies were published at one go by the government in the early seventies.

(1) In his annual Address to the Legislative Council in 1972, the then Governor put forward a ten-year housing programme, planning to rebuild old Type I and II housing estates to provide 'separate, permanent, self-contained' standard units for one million people. But the programme was curtailed because of economic recession.

(2) The White Paper on Social Welfare published in 1973 outlined a welfare programme for the five years following, called on the public and voluntary agencies to participate in welfare services and set standards for welfare facilities. But again it was slowed down by the economic recession in 1975 and 1976.

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(3) The government declared in the White Paper on education published in 1974 that it aimed to provide nine-year subsidized education for all children. But later, in October 1975, it announced that in view of the economic recession, it would postpone implementation of the White Paper for one year.

Expenditure on public services in Hong Kong is not high. It is on the low side when compared with some Asian countries. The Financial Secretary has, however, stated many times in his budget speeches that he wishes to keep public expenditure below 20 per cent of gross domestic product. Likewise, the Governor has emphasized once and again that the government has to be selective in the development of social services and that the implementation of public policies must not hinder economic development. This being the principle behind the formulation of public policies, public expenditure has increased very little from 15 per cent of gross domestic product in the early seventies (1972–73) to 20 per cent in the early eighties.

It is true government spending in relation to the gross domestic product has increased, but when we look at the ten years between 1974 and 1984, we shall find that while the change in recurrent expenditure for the implementation of public policies in relation to total recurrent expenditure was kept within 1 per cent, the change in capital expenditure was very great indeed. The government very often postpones capital works in times of economic recession; in the years 1974-1977, capital expenditure on medical facilities dropped from 2.3 per cent to 0.9 per cent, that on social welfare dropped from 0.9 per cent to 0.7 per cent and to 0.6 per cent while that on housing remained at 16 per cent. As the economy recovered in the six years following 1977, capital expenditure increased drastically; that on education increased from 3.9 per cent to 5 per cent, that on medical facilities increased from 1.1 per cent to 3.2 per cent, that on housing doubled to 34.7 per cent and then remained at around 28 per cent, that on social welfare increased from 0.4 per cent to 1 per cent while that on labour remained unchanged. Then in view of over-consumption in the economy, the government decided in 1980-81 to reduce the budgeted figures by 0.5 per cent to 6.8 per cent (capital expenditure on social welfare dropped from 0.9 per cent to 0.4 per cent while that on housing dropped from 29.6 per cent to 22.8 per cent). Thus we can see that public policies in Hong Kong are subject to economic considerations. Even if development programmes in accord with social needs are formulated, there is no guarantee that they will be duly introduced. In a society which is becoming more and more open, this way of implementing public policies will lead to two major problems:

(1) On the economic side:

Let us look at our past performance:

In the face of the economic recession in 1974–75, the government tightened public spending in order to keep up the pace of economic development. It then resulted in the following:

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