OFFICIAL RECORD OF PROCEEDINGS

Thursday, 12 October 1995
The Council met at half past Two o'clock

MEMBERS PRESENT

MEMBERS ABSENT

CLERKS IN ATTENDANCE

PURSUANT TO STANDING ORDER 4AA, HIS EXCELLENCY THE GOVERNOR, THE RIGHT HONOURABLE CHRISTOPHER FRANCIS PATTEN, ATTENDED TO ADDRESS THE COUNCIL AND TO RECEIVE QUESTIONS.

PRESIDENT: Council will now resume. Would Members please remain standing for the Governor?

CLERK: His Excellency the Governor.

PRESIDENT: Question time this afternoon will be devoted to matters arising from the Governor's policy address. Members may now put questions to the Governor. A Member who has asked a question may for the purpose of elucidation only ask a short follow up question. A show of hands please. Mrs Selina CHOW.

MRS SELINA CHOW (in Cantonese): Mr Governor, the boat people protested again recently. There have been many such incidents these days but you have mentioned nothing whatsoever about this problem in the policy address. Even on the television programme last night, you failed to give an unequivocal answer. We learn from the Progress Report that you have already admitted the failure to achieve this target but you have not told the people of Hong Kong directly what you intend to do eventually. Can you tell us now what remedy plan the Hong Kong Government has in mind concerning this problem? In the event that the Government fails to repatriate all boat people by 1997, what is it going to do? And do you intend to call upon the British Government to take all these boat people stranded in Hong Kong into the United Kingdom? This will be much more practical than fighting for the right of abode in Britain for the 3 million people in Hong Kong.

GOVERNOR: First of all, on the television programme which the honourable lady stayed up to watch last night, I did have one question on the issue which the honourable lady raises and I gave what I thought, which everybody else seemed to think, was an honest answer. Our policy on Vietnamese migrants is exactly the same as it was when the honourable lady was a Member of the Executive Council and we are attempting to implement that policy as effectively as possible. The honourable lady may recall that we were having some success in repatriating Vietnamese migrants voluntarily; we have managed to move about 45 000 since 1989. In 1992 and 1993 Vietnamese migrants were returning voluntarily and of course there was the Orderly Repatriation Programme but they were returning voluntarily at about 1 000 a month. Unfortunately, a number of circumstances, including a vote in the United States Congress, have dried up the flow of voluntary repatriation, so we are trying to move forward with the Orderly Repatriation Programme, but we undoubtedly need to encourage voluntary repatriation as well. We will continue to do everything we can to get the Vietnamese migrants back to Vietnam, and as for what happens if we do not succeed, I prefer to concentrate on succeeding.

The honourable lady knows, I think, perfectly well, that it is hardly helpful to hold out wholly unrealistic prospects of what might happen to Vietnamese migrants if they have not gone back by 1997. They are not going to find a home in the United Kingdom, they are not going to find a home in Australia, they are not going to find a home in the United States, and nobody should give them that impression. It is not helpful to give them that impression because it encourages them not to volunteer.

MRS SELINA CHOW (in Cantonese): Mr Governor, first of all, you talked about the past policies of the Executive Council or the Hong Kong Government. I would like to correct one point. The Hong Kong Government has kept saying that all Vietnamese boat people will be repatriated by 1995. That is a policy. And now it has failed to achieve the objective of this policy. Mr Governor, you have repeatedly evaded this question and have also said that if Vietnamese boat people are still stranded in Hong Kong by 1997, it will only mislead them if we tell them that they will be allowed to go to Britain. Why will it be misleading? Why can you not urge the British Government to accept these Vietnamese boat people into Britain on behalf of us? Everyone in Hong Kong wants to see this happen.

GOVERNOR: For the same reasons that applied when the Executive Council, which had a number of distinguished Members, discussed the issue in 1988: the United Kingdom Government, after 1997, would not have, legally or on any other grounds, any responsibility for taking them. That is why I want to get them back before 1997 and we will continue in the Administration to work as hard as we can on the issue.

I do not think the honourable lady should be disingenuous in pursuing this argument. The parameters of the problem have not changed since she was a distinguished Member of the Executive Council. We are working extremely hard, not least our Correctional Services Department and our police officers from time to time, to deal with the problem, and we will continue to do so. We will do everything we can to deal with the problem as quickly as possible and I hope that we get more support rather than less support internationally. As I have said before and as I explained to Representative SMITH, a United States Congressman who has been much involved in this issue, I do not think that recent decisions by the United States Congress have helped but I am glad that the United States Administration has been trying to be of assistance on this matter.

PRESIDENT: DR LEONG Che-Hung.

DR LEONG CHE-HUNG: Mr Governor, in your policy address yesterday you gave some words of praise to the Hospital Authority and its performance pledges and for that we have to be thankful. In the same address you also mentioned that there will be an increase in public medical services, like increasing some 800 hospital beds which is obviously laudable, but you also feel that there will be more people patronizing the public medical services. In other words, it appears that there will be an unlimited public medical service itself. Now could I ask whether it is the commitment of your Government to infinitely fund these unlimited services? If not, what are your plans either to curb the service or are there any means in your mind to fund the service itself; and what plans do you have to balance the provision of health care services between the private and the public?

GOVERNOR: These are problems which we started to debate, thanks to the honourable lady there, a couple of years ago, but I am not sure how much appetite or enthusiasm for the debate there was in the Council or in the community on the issue at that time. The matter which the Honourable Member touches on is not one which is unique to Hong Kong. It is a problem in every developed community. I think that here in Hong Kong we provide better services at less cost and with less worry for patients or potential patients than in many other communities. But the basic problem, the honourable gentleman knows better than I do. The costs of medical care continue to increase, both for demographic reasons and because of the advances of science and technology. Everybody, understandably, wants the best service they can get and expects, for instance, any new treatment to be available to them. We also face the additional costs of an ageing population. As the health service keeps people alive for longer, so the costs of their health care increase and it is always the case that a very large proportion of a health budget is devoted to the health care of the elderly. So we will find ourselves in the same position as other communities, trying to balance unlimited demand against an inevitably limited supply of resources, and I hope that we can resume the debate which had begun a couple of years ago so the community can try to focus on what we believe the priorities should be. The Honourable Member has very sensibly underlined the importance of community health care and taken a more holistic approach to these issues and I think that has to be something that we all do.

I can just add one point. We do at present have a vigorous private sector and we have sensible bridges between the private and the public sector in health care. I hope that we do not inadvertently burn those bridges down because I think that would lead inexorably to more costly health care for everyone and it would lead inexorably to even more concern about different standards of health care according to the personal means of the patient and I think we want to avoid that if at all humanly possible. But I welcome the Honourable Member's suggestion that this is a subject which this Council will need to debate and to focus on.

PRESIDENT: Dr David LI.

DR DAVID LI: Mr Governor, would you inform this Council which sector or industry has the majority of illegal employment and what are the causes?

GOVERNOR: I would need more notice for that question but I think it will be apparent to the whole Council that there have been some sectors in the past, like the construction industry, like the restaurant business, where there have been particular problems with the number of illegal workers. Between about June and August there were, I think, over 600 actions carried out against illegal employment and well over 900 arrests were made. That is, I hope, an indication of our determination to stamp out illegal employment wherever we can. It is unfair to the whole community but it is also, we must remember, unfair to those who are being employed illegally. Invariably they are being employed on worse terms. Invariably they are being employed in deplorable conditions in which things like safety and health have even less priority than they do in other parts of the workforce. So it is in the interest of the illegal employees, as well as everybody else, that we take action on these matters.

DR DAVID LI: Mr Governor, has there been any improvement since that action that you had taken?

GOVERNOR: I think that we are all aware of the scale of the problem. To have made over 900 arrests in a period of three months is, in one sense, an indication of success but perhaps should give us all concern about the scale and dimensions of the overall problem which argues for continuing efforts on our part, and we will have to look at the penalties that are imposed in due course to see whether we think they are discouraging people from what is an entirely damaging activity.

PRESIDENT: Mrs Miriam LAU.

MRS MIRIAM LAU (in Cantonese): Mr Governor, you have mentioned in the policy address that in order to improve air quality on the streets, the Government published last month some proposals to encourage taxis and light buses to shift from diesel- to petrol-fuelled vehicles and consulted the public on this. Mr Governor, have the opinions of the public you consulted included those of people in the trade who have been affected; and will the relevant proposal be implemented only when there will be broad support from the public and general acceptance from people in the trade? Lastly, why has the Government included in the 1995/96 Legislative Programme the proposal to require diesel vehicles under four tonnes to switch to petrol while the matter is still under consultation and the result has yet to be published? Has the Government in fact already decided that it will certainly act this way? If so, would the consultation paper be more appropriately renamed as "notification paper" instead?

GOVERNOR: Well, we do want to proceed with as broad a measure of support as we possibly can and I think we would be acting curiously were that not so. But it does seem to me that we start from a position in which the overall view of the community is not that we were doing too much to improve air quality, but that perhaps we should have acted even more vigorously even sooner. That is certainly the pressure of my correspondence and it is the sort of pressure that I get when I am questioned going around the community. We must improve air quality in Hong Kong. I do not think that anybody really believes that we will have a chance of doing that unless we reduce diesel numbers in urban areas. As the honourable lady knows, we want, within five years, to halve the total diesel numbers and switch most intensive road users to unleaded petrol. If we do that when we do that we will be moving in the same sort of direction as other developed communities, and there is clearly a cost to us in terms of health care, as well as overall environmental quality, if we do not manage that.

Now, we have started this process of consultation, not least regarding the financial incentives, to encourage a switch. I hope during the course of the consultation we will manage to encourage the trades involved, passengers, as well as pedestrians and the general public, of the good sense of what we are proposing, but there is not an easy way of achieving the objective that we want. I think that it is in everyone's interest, and not least the transport industry, to have cleaner transport in Hong Kong and I hope we can manage that.

Even if the honourable lady may take exception to some of the things that we are attempting to do in switching from diesel to petrol, I hope that she will totally agree with us that where there is no petrol alternative, it is important with larger diesel vehicles to have annual smoke inspections, to have tighter emission controls and to increase penalties. I think that should be an issue on which everybody could agree.

MRS MIRIAM LAU (in Cantonese): First, I wholeheartedly support environmental protection as much as Mr Governor does. The question is: can the current proposal really meet the needs relating to environmental protection in a fair and equitable manner? I have just deliberately asked Mr Governor a question, which is: will the relevant proposal be implemented only when there is broad support from the public and acceptance from people in the trade? I hope Mr Governor can give an unequivocal reply to this question. Or, that the proposal will be implemented once it gains broad support from the community, regardless of whether or not it is acceptable to people in the trade?

GOVERNOR: Of course we have to take account of the trade, but we have to weigh in the balance the overall community view and the overall community interest. And I do not think anyone not even somebody representing a particular functional constituency would argue that the whole of the community interests should be put on one side if that particular functional constituency is not totally in support of the measure. I actually think that a number of sensible and public spirited transport undertakers would actually accept the arguments for cleaner transport and I am sure their point of view will be eloquently put forward by the honourable lady. At the end of the day or at the end of the debate, representing the community as it does, if we bring forward legislation, this Council will take a view and I hope that when it does so the honourable lady's eloquence will be one of the decisive factors in securing improved air quality for us in Hong Kong without sacrificing the legitimate needs of our transport industry.

PRESIDENT: Dr Anthony CHEUNG.

MR ANTHONY CHEUNG (in Cantonese): Mr Governor, you have reiterated in the policy address the commitment you made last year, that is, the Government will assist the Preparatory Committee of the Special Administrative Region in its work. Can you inform us of the specific scope of work in which the Government has intended to assist the Special Administrative Region Preparatory Committee? It has been pointed out time and again by the Preliminary Working Committee of the Special Administrative Region Preparatory Committee as well as by Chinese officials that one of the important tasks of the Preparatory Committee is the formation of the provisional legislature. In this connection, can the Government inform us whether or not the assistance to be offered by the Government to the Special Administration Region Preparatory Committee will include the formation of the provisional legislature?

GOVERNOR: Let me deal with the second point first. I have been asked questions about it from time to time in the past and just in case I have not made myself as clear as I would like to have done, let me say, once again, that there can be no question under any conceivable circumstances of the Hong Kong Government, or for that matter the Government of the present sovereign, doing anything to undermine the authority of this legitimately constituted Legislative Council. There can, therefore, be no question of us assisting in the production I am not quite sure what word to use of some alternative whose genesis in relation to the Joint Declaration and the Basic Law is, to me, decidedly unclear. So as far as I am concerned, there is one Legislative Council and it is meeting here, and there is every reason why it should go on meeting here until 1999, and I think that is the overwhelming view of the international community as well as the community here in Hong Kong, that is even more to the point.

As to the co-operation elsewhere with the Preparatory Committee, we have made clear that the Preparatory Committee emerges from the sacred texts, emerges from the Joint Declaration and the Basic Law. The Preparatory Committee has an important job to do in paving the way for the Chief Executive designate and his or her team. We have suggested the establishment of a Liaison Office to work with the Preparatory Committee to provide it with information. As to the exact way in which we operate, the exact mode of working, we will obviously want to discuss with the Secretariat of the Preparatory Committee when it is established, and with the Preparatory Committee itself. But I think that this Council and the whole community would expect us to be as helpful and co-operative as possible.

Let me just add one other thing. I do not wish to pre-empt the decision that others make, but I imagine it is conceivable that there may well be Members of this Council on the Preparatory Committee and Members of this Council will therefore be receiving information that we give to the Preparatory Committee and will, I am sure, not expect us to give information to the Preparatory Committee which this Council does not know about.

MR ANTHONY CHEUNG (in Cantonese): Just now, the Governor has said that the Government would mainly assist the Preparatory Committee by providing it with information. Can you inform us that apart from the provision of information, would it be complemented by other specific matters?

GOVERNOR: Well, there may well be other ways in which they want to be assisted. They may want some of them who do not know Hong Kong as well as one would like to learn more about Hong Kong, to be shown parts of Hong Kong's life which they may not be familiar with. There are all sorts of practical ways in which they may need help and I think the community would expect us to provide that help. But I know perfectly well that this Legislative Council will press us on exactly what help we are giving and since, as I said, there are likely to be Members of this Council on the Preparatory Committee, it would be foolish of us to contemplate even if we wished to do so, which we do not to hide from the Council what in general we were doing to help the Preparatory Committee.

PRESIDENT: Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Mr Governor, the question I want to put to you is: Why did you not mention anything about the application of the United Nations Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) in your policy address delivered yesterday? Does it imply that the Government is not going to do that?

GOVERNOR: No. It is still our intention to work for the application of CEDAW to Hong Kong and though I do not have all the Policy Commitments in hand, I think were I to do so I would be able to find a specific reference to that in the Policy Commitments of my distinguished colleague, the Secretary for Home Affairs.

PRESIDENT: Do you have a follow-up, Miss CHAN?

MISS CHAN YUEN-HAN (in Cantonese): However, there is no specific reference in the Policy Commitments as to when it will be implemented. There is only a passing reference that the Government has such intention. This issue has been raised in this Council many times and I very much hope that the Government will work out a specific timetable.

GOVERNOR: I think that perhaps the lack of specificity about the timetable is because we are discussing the exact timing both with the present and the future sovereigns. But I can assure the Honourable Member that we have no intention to do other than apply CEDAW, with those appropriate reservations which have been discussed in the Council, as rapidly as possible. It would be strange were it otherwise because both the present and the future sovereigns, as I recall, apply CEDAW.

PRESIDENT: Miss Emily LAU.

MISS EMILY LAU: Thank you Mr President. I want to follow up on the question of the provisional legislature raised by Mr CHEUNG Bing-leung. The Governor referred to the unclear genesis in the Basic Law and the Joint Declaration of the provisional legislature which I agree of course, but I wonder whether he would go even further to say that the setting-up of the provisional legislature would be a breach of the Sino-British Joint Declaration? And also, Mr President, I want to ask the Governor whether in co-operating with the Preparatory Committee next year and in 1997, he is also prepared to co-operate in a sense of allowing the Chinese Government to second cadres to work in the Hong Kong Government, just like right now the British Government is seconding people to work in the Hong Kong Government and would that be also seen as a breach of the Joint Declaration?

GOVERNOR: Well, I am always reluctant in life, before anybody breaks my windows, to rush around blaming them for having done so, and before anything is done which may be in contravention of the Joint Declaration, I am reluctant to point an accusatory finger. But speaking as an interested observer of these things, I do find it difficult to imagine how the establishment of a provisional legislative council, which of course is unnecessary, undesirable and unwelcome, could be within the terms of the Joint Declaration. But, I repeat that I do not want to wag my finger in a minatory way about something that may never happen.

As for the secondment of the People's Republic of China(PRC) of civil servants to the Hong Kong Government, that has not, I do not think, been yet suggested, either for the period before 1997 or the period after 1997. I am not sure whether, were it to be suggested, it would actually be in breach of the Joint Declaration, but I am prepared to take counsel on that point. I do think, if I may say so, that there are two important considerations which none of us should lose sight of. The first is that civil servants in Hong Kong are going to want to work in an understanding and co-operative way with civil servants in the PRC and that may well mean that just as civil servants in Hong Kong want to know more about the way PRC ministries and bureaucracies work, so the reverse could reasonably be regarded as true as well. Secondly, I would have thought that one of the contributions which Hong Kong, without an excess of institutional vanity, could offer after 1997, was its expertise in running public administration from emergency services to budget planning, right across the board and that too might argue the case for secondments from time to time. I do not see how that process would necessarily infringe the guarantees in the Joint Declaration and the Basic Law, about Hong Kong's high degree of autonomy or about the continuity of the civil service in Hong Kong. So I am less certain about that issue than I am about the other, not that I think the other should ever need to occur.

MISS EMILY LAU: Mr President, just a short follow-up. I think being the British Government's representative in Hong Kong, it is important for the Governor himself to know what is, or what is not, in breach of the Joint Declaration and especially when the Chinese Government has repeatedly said that they are going to dismantle this Council and replace it with a provisional legislature. So I just do not think it is good enough for you to sit here today and say you are not going to anticipate that. If you clearly think that it is in breach of the Joint Declaration, you should say so in no uncertain terms to the British Government, to the Chinese Government and to the Hong Kong people. And also, can you confirm for us whether the Chinese Government has said that they intend to second cadres to work in the Hong Kong Government, both before and after 1997?

GOVERNOR: On the second point, we have had no indication, as far as I am aware, of the posting of cadres to the Hong Kong Administration, though if I am not correct about that I will certainly let the honourable lady know.

On the first point, I was attempting diplomatically to avoid accusing anyone of breaching the law before any breach of an agreement had either been committed or conceivably contemplated. But were the situation to occur the honourable lady should rest content that I will make my views abundantly plain. What I have said and will continue to say, is that I think there is no reason whatsoever why this Council should not continue from 1995 to 1999. There is every reason why it should continue and every reason for supposing and arguing vehemently that to disrupt the life of this Council in 1997 would be bad for Hong Kong and would be bad for a smooth transition.

PRESIDENT: Dr LAW Cheung-kwok.

DR LAW CHEUNG-KWOK (in Cantonese): Mr Governor, I agree with you that it is imperative for Hong Kong to raise its productivity if our economy is to be enhanced. In paragraph 35 of the policy address, you mention that the productivity of our workforce has been growing at an annual average of 4.5% since 1985. I believe that the vast majority of economists in Hong Kong share my view that the figures you quoted fail to truly reflect the changes in the productivity of Hong Kong's labour force. I will be very worried if the Government formulates its economic policy on the basis of these figures and always feels complacent about the economy of Hong Kong. I would like to put forward two recommendations here: that the Government should immediately undertake a detailed study of the changes in the productivity of our labour force and of the reasons for such changes, and that it should continue making its best endeavour to formulate specific proposals with a view to enhancing the productivity in various trades and sectors.

GOVERNOR: Thank you. I am not sure on what basis the Honourable Member tells me that our official statistics on productivity are wrong. I have to say that until it is proved otherwise, I will continue to believe the figures that are given me by our official statisticians and by the Government Economist. Where I accept the honourable gentleman's argument is that there is no reason for being complacent about our economic performance, no reason for being complacent about our continuing ability to compete successfully by continuing to raise our productivity levels. Now the most effective way we can raise our productivity is by ensuring that we have an increasingly skilled and highly trained workforce and that we continue to invest in the machinery that workforce uses and invest substantially in the production of wealth. In the last three years, our net capital investment has, I think, increased by 31% which suggests that we are still investing pretty substantially and there are, I think, this year, 155 000 men and women in Hong Kong who were in some sort of part-time education trying to increase their vocational skills or their professional qualifications. So I do not think anybody in Hong Kong, least of all the Governor, is complacent about this issue. Increasing productivity will continue to be the way in which Hong Kong earns its living in the world.

DR LAW CHEUNG-KWOK (in Cantonese): Mr Governor, if you are not too sure as to the correct way to measure productivity, and yet you always stress how important productivity is to Hong Kong, I would feel that you are a bit irresponsible. I bet that you can hardly find five private sector economists in Hong Kong who would agree that your way of calculation is accurate.

GOVERNOR: On the contrary, looking at the figures on our economy produced by private sector economists and comparing them with the figures produced by Government Economists, I think we normally find that we are about in the middle of the pack. But if the Honourable Member has a real substantial intellectual case to make against our measurement of productivity, then we will be delighted to take delivery of it. Unlike the Honourable Member, I think I am right in saying this, I do not have the great advantage of belonging to what I think is called "The Gloomy Profession". I am not an economist. I also accept what I think was implicit in the honourable gentleman's view that if you have 10 economists in a room you have 10 different views, but I will be interested in the outcome of the Honourable Member's dialogue with my economist colleagues in the Administration.

PRESIDENT: Mr CHENG Yiu-tong.

MR CHENG YIU-TONG (in Cantonese): Thank you, Mr President. Mr Governor, you said you would continue making efforts to invite Mr LU Ping to come to Hong Kong as your guest. If Mr LU really comes to Hong Kong, would it be an indication that full contact between the Chinese and British Governments over the issue of Hong Kong has resumed? If he does not come to Hong Kong, would it mean that there are still obstacles?

GOVERNOR: First of all, can I say that I hope Director LU Ping is wholly fit to travel and to take up his full responsibilities as soon as possible. He has not been well recently; we all understand that he is making a good recovery and in all sincerity, I wish him the best recovery as soon as possible.

Let me not, necessarily, personalize the issue, though I repeat again that I would be delighted to meet Director LU pretty well anywhere anytime, and I think that that would be widely welcomed here in Hong Kong. Why? Well, for a simple reason: people in Hong Kong look at what is happening around the world and they see officials from every community, from every country whatever the disagreements there may have been, talking to one another, and they scratch their heads and they puzzle about why it is that certain senior Chinese cadres find it so difficult to do what officials everywhere else in the world do. It is, I think, a matter of some confusion to the public, not only in Hong Kong but well beyond. I do not think that anybody should be worried about losing face by meeting the Governor of Hong Kong. Those Chinese officials know perfectly well where decisions are still generated about Hong Kong's Administration and Hong Kong's Government, so I really think that we should behave rather more sensibly. I think to go on behaving as some people have been behaving is, frankly, rather demeaning.

MR CHENG YIU-TONG (in Cantonese): Could you attract him here with your charisma?

GOVERNOR: The Honourable Member is much too flattering. (Laughter) I sometimes think that it would be, perhaps, easier and more convenient for many of us in politics if we had, at an earlier stage in our careers, a charisma bypass. (Laughter) I would use any wiles or eloquence to persuade Director LU and other senior Chinese officials to come to Hong Kong. I think that it is a matter of some concern that some senior Chinese officials who are involved in policy making about Hong Kong do not actually know this community very well, have not been to this community at all in some cases, and I think that is something that we should all want to correct.

I had two days of vigorous debate and discussions with Director LU. I belong to a tradition in which even if you have a vigorous discussion with somebody, it does not mean that you lose respect for that person, and I certainly have not lost my respect for Director LU's commitment to a successful transition here in Hong Kong. He is a professional, he is a distinguished public servant; and I look forward to future discussions with him, lively though they may be, and I trust they are not too charismatic.

PRESIDENT: Mr LAU Chin-shek.

MR LAU CHIN-SHEK (in Cantonese): Mr Governor, workers would certainly consider you charismatic if they heard you said yesterday that the labour importation scheme would be brought to an end. We, the labour sector, know perfectly well that workers are in dire straits as a result of the labour importation scheme. Therefore, when I heard you mention the termination of the scheme, I naturally thought that I could breathe a sigh of relief. However, I had hardly let out my breath then I immediately heard you propose the Supplementary Labour Scheme. If we follow your scheme and import the 5 000 workers at the beginning of 1996, then the number of imported workers will be higher than the number of workers imported in September under the present scheme. Secondly, the General Labour Importation Scheme is, by nature, a short term plan. However, the Supplementary Labour Scheme that you are proposing will be a recurrent labour importation scheme. I asked an official from the relevant Policy Branch about the issue this morning. He replied that the Supplementary Labour Scheme was a proposal, not a policy. Then I asked him whether I could vote it down. He said "You are a Member of the Legislative Council, you should know what to do." May I ask you, Mr Governor, whether in saying so the official meant that this proposal would be tabled before the Legislative Council and let the Council decide? Or did he mean I can oppose the proposal by means of a Member's Bill? However, you mentioned yesterday that you would veto any Member's Bill that we passed if it was detrimental to Hong Kong. What should I do then? If the proposal is to be tabled before this Council, can I vote it down? Or should I oppose this proposal by moving a Member's Bill? But if you are not going to give assent to the Bill, could you tell me where is the mechanism with which we can evaluate what is in the best interests of Hong Kong?

GOVERNOR: Well, I hope that we will be able to proceed on a basis of consensus on an issue about which the community feels so strongly. Perhaps I can say, before giving a reasonably comprehensive answer to the Honourable Member's question, that I do not think anybody seriously believes that the decisions we take on the importation of labour are going to be the most fundamental and important decisions that we take on job creation and dealing with unemployment in Hong Kong. I do not think that is the Honourable Member's view. I do not think the Honourable Member thinks that if we did whatever he wants on labour importation, we would suddenly find ourselves, hey presto, creating more jobs than increasing the number of people coming into the workforce. There are all sorts of other things that we need to do to keep Hong Kong creative in jobs, to ensure that, as has happened over the last three years, we create 10% more jobs perhaps in the next three.

The second thing I would say, something which seems to me to be important if we are going to have the sort of co-operation which the Honourable Member referred to and which I certainly hope for, is that it is important for people not to rush into the headlines or not to denounce things before they know exactly what they are. And what we are very much hoping is that Honourable Members will now find themselves in a dialogue with the Administration, in particular with our excellent Secretary for Education and Manpower. We are hoping that we can focus that debate and that dialogue on the summit that I will be calling next month. We very much hope that at the end of the discussion, we will have proposals which command the consent of employers, employees and the Legislative Council in as large a measure as possible.

Just let me say a couple of other things about the proposal. The first, again, is about the background of the proposal. What is the background? Is anybody seriously arguing that the whole of the reason for the increase in unemployment that we have seen in Hong Kong is the General Importation of Labour Scheme? In the last three years, in Hong Kong, we have increased the number of jobs by 10% by 270 000. The workforce has increased by 11% by just over 300 000 for a variety of reasons: because some people who previously emigrated to Canada and Australia and elsewhere have come back; because the number of immigrants coming in from China has been high; the daily quota of 150 now means over 50 000 people coming in from China. Understandably, we are trying to avoid a big problem in 1997. But that is the fact.

Now, against those sort of figures, plus demographic factors, with more people coming into the workforce than there are retiring, the actual numbers represented by the importation of labour are relatively slight. I am not saying they are completely unimportant or completely irrelevant if I thought that, I would not have sanctioned the proposals that we put to the Legislative Council yesterday but they are only part of the issue, part of the problem. And what we must not do is to take any decision which makes Hong Kong less competitive and which encourages employers to move their capacity, move their manufacturing plant or whatever, elsewhere.

The second thing: the important feature of the proposals that we have put forward, which I hope the Honourable Member will discuss in as open-minded a way as possible, is not only that the ceiling is so much lower than under the present Scheme, but that the way the Scheme is to be administered is completely different. You are talking about each job rather than sectors of industry. You are requiring an employer, in effect, to demonstrate that he cannot fill the job in Hong Kong either through job-matching or by contacting our Employees Retraining Scheme, or in other ways. So, I hope that the Honourable Member will look both at the details of the Scheme as well as at the total numbers, though the total numbers are much smaller than are allowed in under the present Scheme.

It is important that we get this right, and it is important, I think, that if we possibly can, we avoid having a great argument about something which matters of course, but is not ultimately, in the long term, going to be the central factor in determining whether we go on producing jobs that are well-paid and decent for the people of this community.

PRESIDENT: Mr LAU.

MR LAU CHIN-SHEK (in Cantonese): Thank you, Mr President. I think if we look at that figure, it is, in fact, very simple and clear. If 5 000 workers were to be imported under the Supplementary Labour Scheme, the actual number of imported workers in 1996 will exceed that at present. I believe that I am not just looking at the figure, but also at its underlying implications on workers. You seemed to be suggesting just now that this is a proposal to be decided by the Summit. I would very much like to know if no decision were made, will you allow the Legislative Council to make a decision? Or wait for Members to move Member's Bills to decide whether or not this proposal is to be adopted?

GOVERNOR: It is our obligation to give a lead and to try to carry this Council and the community with us, and that is what we will be trying to do. That is what executive-led government is all about. But this Council has a mandate and a broader mandate than it has ever had before, to hold us to account, so I very much hope that we can convince this Council.

Can I just say something about the figure and the Honourable Member is not an unfair man, so I want to put this point very directly to him. It is not reasonable to take the limit for the new scheme that we are proposing, to add it to those who have come under the present scheme, and then to claim that next year there must therefore be more people brought into Hong Kong to work than there are at present. First of all, the number brought in under the present scheme will be gradually running down over the next year or so. Secondly, the figure of 5 000 is a top limit. We are not saying that there must be 5 000 people brought into Hong Kong next year. Indeed, we are saying that every job that is brought in will have to be justified, and justified, ultimately, to the Labour Advisory Board. But we will have to be able to demonstrate to this Legislative Council every three months that the scheme is being run in a sensible way and is not threatening to undermine people's jobs.

But I hope that we can straighten out all these issues over the next few weeks in a way which satisfies people like the honourable gentleman, who I hope will recognize that what we are trying to do is to respond to the legitimate anxieties which people like the honourable gentleman have raised for the last couple of years, without, on the other hand, going so far as to hurt Hong Kong's competitiveness and prevent us being able to introduce people with particular skills that we do not have into our workforce. I think we have pitched the balance about right, but we will be happy to talk about whether we have got things right with Honourable Members and others over the coming weeks.

PRESIDENT: Mr IP Kwok-him.

MR IP KWOK-HIM (in Cantonese): In the policy address, the Governor mentioned the termination of the labour importation policy. A moment ago, Mr LAU Chin-shek also mentioned this point. Apart from the 5 000 workers just quoted, Mr Governor, are you aware that many more people who hold British Passports are currently working in Hong Kong without being required to obtain any employment visa? Mr Governor, will a review be conducted in regard to this category of people coming to work in Hong Kong, so that the priority in employment enjoyed by local workers can be safeguarded?

GOVERNOR: I am sure the honourable gentleman would understand that those people are in a wide variety of occupations. One of them is the Governor (Laughter). It is a post only available to one person at a time and some may say, alas....., I am not keeping a local out of the position, though in due course a local will take over the job and I will have to look for employment elsewhere. Most of the rest are overwhelmingly working in administrative and professional areas which are not covered by the Labour Importation Scheme. Now the other day I heard somebody talking about large numbers being employed on the airport. There are a matter of a few dozens employed on the airport. I keep on looking at the representative of the Legal Functional Constituency and find myself about to say "with respect", but with respect as barristers say, I really do not think that you could say that there is very much relationship between that issue, which is a result of history and Britain's responsibilities for Hong Kong, and the levels of unemployment in Hong Kong.

MR IP KWOK-HIM (in Cantonese): Provided that the Hong Kong people have the capability, then according to the principle of offering priority in employment to local people and in view of the present economic situation in Hong Kong, I think the same should apply to the above-mentioned category of people. Provided that the Hong Kong people have the capability, why not give them employment priority? With respect to the point just mentioned by the Governor, I think that the same should still apply to those people, be they executives or even the Governor.

GOVERNOR: I would not say it is something I am looking forward to, because people will misunderstand me, but in due course, Hong Kong people running Hong Kong will exclude the Governor, who may not even have the opportunity of running Britain! (Laughter)

To be serious, I totally understand the proposition that we should try to ensure that our own people get preference in the market place, provided of course they have got the skills which our economy needs. If, in some cases, they do not have the skills then it hurts all of us and hurts our economy if we do not bring in people with those skills. I am sure, given the fact that so many people from Hong Kong have found employment in other communities, we would not want to start sounding as though we advocated not allowing people from other communities to work here in Hong Kong, because were we to do that people in other communities might start to think that the same should apply to us.

We have taken a very open-minded view about employment, about the requirement to move around to get jobs, to move around internationally. When unemployment is increasing in Hong Kong, plainly we want to give preference locally but we do not want to behave as though we think that every worker who comes to Hong Kong from anywhere else is somehow a pariah. That is quite opposite to the contribution which many people from other communities made in what is an open, international city.

PRESIDENT: Mr Ambrose LAU.

MR AMBROSE LAU (in Cantonese): Mr Governor, when you talked about the economy in paragraph 33 of your policy address, you said that the role of the Government must be to promote the efficiency, flexibility and competitiveness of our economy. We must, as you said, compete our way back to full employment and stable prices. In order to enhance the competitiveness of our economy, would you consider setting up a statutory organization, which may be known as the "Economic Development Council", which would be similar in structure to that of the Trade Development Council? The main functions of such a Council would be to advise the Government on important economic issues, to attract foreign investment by setting up overseas offices, and to undertake tasks conducive to the promotion of economic development of Hong Kong. If this were successfully done, you, Mr Governor, will certainly not have to spend so much time today explaining the policy for the importation of labour to Mr IP Kwok-him and Mr LAU Chin-shek.

GOVERNOR: I have to say that I am not attracted to that, which sounds to me a bit like central planning. Hong Kong has managed its economy astonishingly well by any international standards over the last decades, and it has done so by and large by standing back from business and from industry, letting entrepreneurs get on with the things they do best, providing a framework, an infrastructure, providing decent investment in education and training, providing decent investment in roads and tunnels and bridges, and providing as open a market as possible. I am not attracted by the idea of sitting down and trying, even with the assistance of other businessmen and trade unionists, to plan the economy or run the economy. I do not think that has been the Hong Kong way. I do not think it offers any improvement over our position today, which is one in which there are reputable international bodies which think we were one of the most competitive economies in the world, one of the most business friendly, and certainly, the most free. And I do not think they would take that view if we were to go in for old fashioned central planning or indicative planning.

So I quite understand that the proposal made by the Honourable Member is extremely well-intentioned, but I do not think it would be helpful. We should not forget the fact that we are an economy which is growing at 5% a year. I read somewhere in the paper today, someone suggesting that we should be trying to "kick-start the economy". Kick-start an economy which is growing at 5% a year anybody in Europe or North America would think we had taken leave of our senses. Try to kick-start an engine when it is going and you get into terrible trouble. We have grown at 18% over the last three years. We have seen a 43% increase in our exports in manufactured goods and a 31% increase in our services. We have cut taxes. We have increased the reserves by 57%. Do I want now to completely change our economic policies? No, I do not.

MR AMBROSE LAU: Mr Governor, it seems to me that it has been the regular practice adopted by Hong Kong to have the Trade Development Council assisting promotion of Hong Kong trade.

GOVERNOR: Yes, I agree with that. The Trade Development Council does an outstanding job. It has helped to promote our exports in manufacture and it may well be appropriate for it to help the development of our export in services as well. I think that is rather different to what I took to be the Honourable Member's proposal. Maybe I misunderstood him, but I have seen one or two reflections of that elsewhere. Of course we have some economic problems. On the whole they are problems associated with success rather than failure and I do not want to do anything which inhibits that success.

If you keep on winning at Happy Valley, if you keep on coming away on a Wednesday evening with money in your pocket, which is not something that has ever happened to me, I should add, you do not, I think, conclude that you should stop taking advice from the person who has been giving you tips. We have done very well in Hong Kong, no thanks to this Governor particularly, you have done very well in Hong Kong following classical market economics for the last 40 years and I would be amazed if anybody seriously thought we should overthrow that now.

ADJOURNMENT AND NEXT SITTING

PRESIDENT: In accordance with Standing Orders I now adjourn the Council until 2.30 pm on Wednesday 18 October 1995.

Adjourned accordingly at twenty-seven minutes to Four o'clock.

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OFFICIAL RECORD OF PROCEEDINGS

Thursday, 12 October 1995 The Council met at half past Two o'clock

ADJOURNMENT AND NEXT SITTING

Thursday, 12 October 1995
The Council met at half past Two o'clock