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her Committee. Our executives, i.e. our civil servants, sit on these committees by invitation only, do not have a vote and can be asked to leave our deliberations at any time, and as anyone can see, they do not take part in the official Open Meetings of this Council other than as observers. This system works, and works very well, and there is no reason why it should not be adopted by our Legislative Council very quickly. I am sure it could be instituted within the next six months if the will were there. And it is a system which must be incorporated in the Basic Law if the fully elected Legislative Council is to be anything more than just a rubber stamp.
Also, an essential part of our political process must be the establishment of an Ombudsman system, which so far is not mentioned in the Basic Law at all! I was therefore very happy to see the Draft Bill entitled 'The Commissioner for Administrative Complaints' being published, but was somewhat disappointed with its contents. In my view this Bill is a bad compromise and is based on the UK system which is by far the worst of all the Ombudsman systems in existence around the world, and was in many ways designed to protect the Civil Service rather than to allow honest and wide-ranging investigations. It would have been far better if this Bill had followed the New Zealand or Swedish practice. This can be seen from the results of the systems now in action in the UK where the system really is, unfortunately, a failure, whereas in New Zealand and Sweden it is a very great success. However, rather than make a long speech about this here, especially in view of the public consultation period having ended on the 31 December, I am tabling for members' and the public's information a copy of the letter of comments I wrote to the Deputy Chief Secretary, and hope that both the Hong Kong Government and the Basic Law Committee will take on board what I have said.
Mr. Chairman, we do live in 'interesting times' and I fear 1988 will be more 'interesting' still! So we in this Council must do everything possible to brighten the lives of our fellow sufferers in this City which we will do if we follow the aims we have set ourselves. Which is why I wholeheartedly support the motion.
Appendix A
And while I am on the subject, and I have brought this up in previous meetings of this Council, it is about time Government allowed us to twin with other important cities. Such twinning is good for business, for tourism, and is exercised widely throughout the developed world, and the argument that we 'only' represent the City emphasizes that it is us who should be doing the twinning as we are representing the city, and our colleagues in the Regional Council are representing the country. I have not yet heard one good reason why we should not be allowed to twin, and I know that we have been frequently asked by many cities in the world, and been embarrassed to have to reply that we would very much like to twin but the Central Government won't let us.
The Editor, Hong Kong Standard,
HONG KONG URBAN COUNCIL
10th Floor, Sing Tao Industrial Building, 830 Lai Chi Kok Road, Kowloon.
Dear Sir,
Page 129 of 185
249
Appendix B
11 January 1988
I wonder whether anyone can enlighten me as to the legality of Government forcing local banks to charge negative interest rates on customers deposits. As far as I can see there is nothing in the Banking Ordinance that can make Government enforce their negative interest scheme and it would be interesting to find out just exactly what sort of pressure Government is bringing to bear on the banks to introduce what will be a very unpopular measure.
It wouldn't only be unpopular, it would be an unjust punishment of all Hong Kong residents. To the best of my knowledge it would be the first time that negative interest rates have been introduced anywhere in the world applying to local residents. The Swiss some time ago introduced negative interest rates, but only for foreign deposits. Now that could make some sense also in Hong Kong, but, of course, the Swiss found out that it was not a deterrent, it didn't work. The Swiss Franc appreciated in spite of negative interest rates, and in the end Swiss industry and Swiss tourism not only survived but did very much better than previously, probably because of the revaluation of the Swiss Franc and the accompanying zero inflation.
The Government thinks that negative interest rates will drive everyone out of the HK$ (and why should someone who earns his money in Hong Kong and has HK$ convert to other currencies? Is the Government going to reimburse us for the loss we are going to suffer on the foreign exchange?). Psychologically, and of course this is what happened in Switzerland, the imposition of desperate measures immediately makes the public think that there is something very wrong, which can only be fixed, in this case, by revaluation. The negative interest rates will therefore act in exactly the opposite manner it is intended. Namely, people will think that because this is the last possible step Government can take to prevent a revaluation, when they find out that it doesn't work (and it won't work), they will have to revalue, so let's stay in the HK$ regardless. Furthermore it is quite easy to stay in the HK$: You can take cash and put it in your safe (and has the Government considered that they might run out of cash if everybody takes their money out of the banks and converts into cash??). Then you can get cashiers orders, and I have no doubt there are many other ways of keeping HKS without having to pay negative interest. It seems to me, therefore, that members of OMELCO should look at this matter very closely and try and
Page 129 of 185
248
HONG KONG URBAN COUNCIL
her Committee. Our executives, i.e. our civil servants, sit on these committees by invitation only, do not have a vote and can be asked to leave our deliberations at any time, and as anyone can see, they do not take part in the official Open Meetings of this Council other than as observers. This systems works, and works very well, and there is no reason why it should not be adopted by our Legislative Council very quickly. I am sure it could be instituted within the next six months if the will were there. And it is a system which must be incorporated in the Basic Law if the fully elected Legislative Council is to be anything more than just a rubber stamp.
Also, an essential part of our political process must be the establishment of an Ombudsman system, which so far is not mentioned in the Basic Law at all! I was therefore very happy to see the Draft Bill entitled 'The Commissioner for Administrative Complaints' being published, but was somewhat disappointed with its contents. In my view this Bill is a bad compromise and is based on the UK system which is by far the worst of all the Ombudsman systems in existence around the world, and was in many ways designed to protect the Civil Service rather than to allow honest and wide-ranging investigations. It would have been far better if this Bill had followed the New Zealand or Swedish practice. This can be seen from the results of the systems now in action in the UK where the system really is, unfortunately, a failure, whereas in New Zealand and Sweden it is a very great success. However, rather than make a long speech about this here, especially in view of the public consultation period having ended on the 31 December, I am tabling for members' and the public's information a copy of the letter of comments I wrote to the Deputy Chief Secretary, and hope that both the Hong Kong Government and the Basic Law Committee will take on board what I have said.
Mr. Chairman, we do live in 'interesting times' and I fear 1988 will be more 'interesting' still! So we in this Council must do everything possible to brighten the lives of our fellow sufferers in this City which we will do if we follow the aims we have set ourselves. Which is why I wholeheartedly support the motion.
Appendix A
And while I am on the subject, and I have brought this up in previous meetings of this Council, it is about time Government allowed us to twin with other important cities. Such twinning is good for business, for tourism, and is exercised widely throughout the developed world, and the argument that we 'only' represent the City emphasizes that it is us who should be doing the twinning as we are representing the city, and our colleagues in the Regional Council are representing the country. I have not yet heard one good reason why we should not be allowed to twin, and I know that we have been frequently asked by many cities in the world, and been embarrassed to have to reply that we would very much like to twin but the Central Government won't let us.
The Editor, Hong Kong Standard,
HONG KONG URBAN COUNCIL
10th Floor, Sing Tao Industrial Building, 830 Lai Chi Kok Road, Kowloon.
Dear Sir,
Page 129 of 185
249
Appendix B
11 January 1988
I wonder whether anyone can enlighten me as to the legality of Government forcing local banks to charge negative interest rates on customers deposits. As far as I can see there is nothing in the Banking Ordinance that can make Government enforce their negative interest scheme and it would be interesting to find out just exactly what sort of pressure Government is bringing to bear on the banks to introduce what will be a very unpopular measure.
It wouldn't only be unpopular, it would be an unjust punishment of all Hong Kong residents. To the best of my knowledge it would be the first time that negative interest rates have been introduced anywhere in the world applying to local residents. The Swiss some time ago introduced negative interest rates, but only for foreign deposits. Now that could make some sense also in Hong Kong, but, of course, the Swiss found out that it was not a deterrent, it didn't work. The Swiss Franc appreciated in spite of negative interest rates, and in the end Swiss industry and Swiss tourism not only survived but did very much better than previously, probably because of the revaluation of the Swiss Franc and the accompanying zero inflation.
The Government thinks that negative interest rates will drive everyone out of the HK$ (and why should someone who earns his money in Hong Kong and has HK$ convert to other currencies? Is the Government going to reimburse us for the loss we are going to suffer on the foreign exchange?). Psychologically, and of course this is what happened in Switzerland, the imposition of desperate measures immediately makes the public think that there is something very wrong, which can only be fixed, in this case, by revaluation. The negative interest rates will therefore act in exactly the opposite manner it is intended. Namely, people will think that because this is the last possible step Government can take to prevent a revaluation, when they find out that it doesn't work (and it won't work), they will have to revalue, so let's stay in the HK$ regardless. Furthermore it is quite easy to stay in the HK$: You can take cash and put it in your safe (and has the Government considered that they might run out of cash if everybody takes their money out of the banks and converts into cash??). Then you can get cashiers orders, and I have no doubt there are many other ways of keeping HKS without having to pay negative interest. It seems to me, therefore, that members of OMELCO should look at this matter very closely and try and
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