OFFICIAL RECORD OF PROCEEDINGS
Thursday, 8 October 1998
The Council met at Three o'clock

MEMBERS PRESENT:

THE PRESIDENT
THE HONOURABLE MRS RITA FAN, G.B.S., J.P.

THE HONOURABLE KENNETH TING WOO-SHOU, J.P.

THE HONOURABLE JAMES TIEN PEI-CHUN, J.P.

THE HONOURABLE DAVID CHU YU-LIN

THE HONOURABLE HO SAI-CHU, J.P.

THE HONOURABLE CYD HO SAU-LAN

THE HONOURABLE EDWARD HO SING-TIN, J.P.

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE MICHAEL HO MUN-KA

DR THE HONOURABLE RAYMOND HO CHUNG-TAI, J.P.

THE HONOURABLE LEE WING-TAT

THE HONOURABLE LEE CHEUK-YAN

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

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

THE HONOURABLE LEE KAI-MING, J.P.

DR THE HONOURABLE DAVID LI KWOK-PO, J.P.

THE HONOURABLE FRED LI WAH-MING

DR THE HONOURABLE LUI MING-WAH, J.P.

THE HONOURABLE NG LEUNG-SING

PROF THE HONOURABLE NG CHING-FAI

THE HONOURABLE MARGARET NG

THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, J.P.

THE HONOURABLE RONALD ARCULLI, J.P.

THE HONOURABLE MA FUNG-KWOK

THE HONOURABLE JAMES TO KUN-SUN

THE HONOURABLE CHEUNG MAN-KWONG

THE HONOURABLE AMBROSE CHEUNG WING-SUM, J.P.

THE HONOURABLE HUI CHEUNG-CHING

THE HONOURABLE CHRISTINE LOH

THE HONOURABLE CHAN KWOK-KEUNG

THE HONOURABLE CHAN YUEN-HAN

THE HONOURABLE BERNARD CHAN

THE HONOURABLE CHAN WING-CHAN

THE HONOURABLE CHAN KAM-LAM

DR THE HONOURABLE LEONG CHE-HUNG, J.P.

THE HONOURABLE MRS SOPHIE LEUNG LAU YAU-FUN, J.P.

THE HONOURABLE LEUNG YIU-CHUNG

THE HONOURABLE GARY CHENG KAI-NAM

THE HONOURABLE SIN CHUNG-KAI

THE HONOURABLE ANDREW WONG WANG-FAT, J.P.

DR THE HONOURABLE PHILIP WONG YU-HONG

THE HONOURABLE WONG YUNG-KAN

THE HONOURABLE JASPER TSANG YOK-SING, J.P.

THE HONOURABLE HOWARD YOUNG, J.P.

DR THE HONOURABLE YEUNG SUM

THE HONOURABLE YEUNG YIU-CHUNG

THE HONOURABLE LAU CHIN-SHEK, J.P.

THE HONOURABLE LAU KONG-WAH

THE HONOURABLE LAU WONG-FAT, G.B.S., J.P.

THE HONOURABLE MRS MIRIAM LAU KIN-YEE, J.P.

THE HONOURABLE AMBROSE LAU HON-CHUEN, J.P.

THE HONOURABLE EMILY LAU WAI-HING, J.P.

THE HONOURABLE CHOY SO-YUK

THE HONOURABLE ANDREW CHENG KAR-FOO

THE HONOURABLE SZETO WAH

THE HONOURABLE TIMOTHY FOK TSUN-TING, J.P.

THE HONOURABLE LAW CHI-KWONG, J.P.

THE HONOURABLE TAM YIU-CHUNG, J.P.

PUBLIC OFFICERS ATTENDING:

THE HONOURABLE MRS ANSON CHAN, J.P.
THE CHIEF SECRETARY FOR ADMINISTRATION

MR RAFAEL HUI SI-YAN, G.B.S., J.P.
THE FINANCIAL SECRETARY

THE HONOURABLE ELSIE LEUNG OI-SIE, J.P.
THE SECRETARY FOR JUSTICE

MR MICHAEL SUEN MING-YEUNG, J.P.
SECRETARY FOR CONSTITUTIONAL AFFAIRS

MR CHAU TAK-HAY, J.P.
SECRETARY FOR TRADE AND INDUSTRY

MR NICHOLAS NG WING-FUI, J.P.
SECRETARY FOR TRANSPORT

MR DOMINIC WONG SHING-WAH, J.P.
SECRETARY FOR HOUSING

MRS KATHERINE FOK LO SHIU-CHING, J.P.
SECRETARY FOR HEALTH AND WELFARE

MR JOSEPH WONG WING-PING, G.B.S., J.P.
SECRETARY FOR EDUCATION AND MANPOWER

MR BOWEN LEUNG PO-WING, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS

MISS DENISE YUE CHUNG-YEE, J.P.
SECRETARY FOR THE TREASURY

MR LAM WOON-KWONG, J.P.
SECRETARY FOR THE CIVIL SERVICE

MR DAVID LAN HONG-TSUNG, J.P.
SECRETARY FOR HOME AFFAIRS

MRS REGINA IP LAU SUK-YEE, J.P.
SECRETARY FOR SECURITY

MR LEE SHING-SEE, J.P.
SECRETARY FOR WORKS

MR LEO KWAN WING-WAH, J.P.
SECRETARY FOR ECONOMIC SERVICES

MRS RITA LAU NG WAI-LAN, J.P.
SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING

MRS REBECCA LAI KO WING-YEE, J.P.
SECRETARY FOR FINANCIAL SERVICES

CLERK IN ATTENDANCE:

MR RICKY FUNG CHOI-CHEUNG, J.P., SECRETARY GENERAL

PURSUANT TO RULE 8 OF THE RULES OF PROCEDURE, THE CHIEF EXECUTIVE, THE HONOURABLE TUNG CHEE-HWA, ATTENDED TO RECEIVE QUESTIONS.

PRESIDENT (in Cantonese): Will Members please remain standing while the Chief Executive enters this Chamber.

PRESIDENT (in Cantonese): Please be seated.

(Members raised their hands to indicate their wish to ask questions)

PRESIDENT (in Cantonese): Members are quick to respond by raising your hands without waiting for the reminder. Will the Secretary take down the names of Members. Please keep your hands up for a little longer.

PRESIDENT (in Cantonese): Since Members all raised your hands at the same time, you will understand that some may have to wait in line before you can ask your questions.

The Chief Executive is aware that we have a tight schedule today and so he will not address this Council. We will proceed straight to the questions. Mr Eric LI.

MR ERIC LI (in Cantonese): When I listened to Mr TUNG's policy address yesterday, I thought his objectives were quite pragmatic. But then later, I heard him saying, in response to questions on the radio, that there would certainly be no tax increase next year or in the future. I have done a rough calculation and found that the Government would not cut its expenditure on the one hand and its budget deficits would be quite huge on the other. While the public sector will save only $5 billion to $6 billion in three years, I do not see how it can make ends meet. Can Mr TUNG clearly explain to us whether there will be no increase in all forms of taxes or there will be increase in some specific areas?

CHIEF EXECUTIVE (in Cantonese): I originally intended to say a few words. But then I reckon that I talked for two and a half hours yesterday, I really feel embarrassed to say any more today. (Laughter)

Concerning Mr LI's question, first of all, I would like to stress that we have earmarked $235 billion on investment and capital injection for the construction of railways, highways, schools and various kinds of infrastructure within the five years from 1997 to 2001. This is very important to the long-term development of Hong Kong. In view of its importance, we have to look into whether we need to increase in taxes in order to finance this $235-billion colossal investment and whether we can afford it. Given our current financial management policy, I am glad to tell Members that there is no need to increase taxes and we can afford the $235-billion programme.

Concerning other aspects, I have also stressed that we would continue to exercise financial prudence in the future. This guiding principle will not change. In other words, our future recurrent expenditure will commensurate with our medium-term economic growth. This guiding principle will not change. Given this guiding principle, I am sure that we have already got the reserves for the $235-billion programme. For other areas of work, we will also adhere to the prudent financial management policy.

PRESIDENT (in Cantonese): Mr LI, would you like to follow up?

MR ERIC LI (in Cantonese): As there are many other colleagues who want to ask questions, I would like to give them the chance.

PRESIDENT (in Cantonese): According to established practice, a Member can ask a follow-up question after the main question has been answered.

MR MARTIN LEE (in Cantonese): After the delivery of the policy address, Mr TUNG has spent a lot of time on radio ......

CHIEF EXECUTIVE (in Cantonese): Sorry, could you speak up please, I cannot hear you.

MR MARTIN LEE (in Cantonese): My apologies. After the policy address has been delivered, Mr TUNG spent a lot of time explaining it on radio and television. This I appreciate very much. But this Council would like to see you here more often and share your wisdom with us. But we have made a lot of requests before you promised to come here thrice a year. We asked for a two-hour meeting on every occasion but you still seemed reluctant to do so. We know you are very busy every day. For instance, you have to spend many hours on book and painting exhibitions every year. If you are mindful of fostering a better relationship between the executive authorities and the legislature, should you take the first step of indicating to your subordinates that you are willing to come here more often? Is that really so difficult? For instance, can you stay here for two hours on this occasion today?

CHIEF EXECUTIVE (in Cantonese): Mr LEE, first of all, let me assure Members that I do respect this Council greatly. I have promised that I would come to this Council thrice a year. I have also said that should there be a need or emergency, I would come here more often. But in principle, we have set it at three times a year. It is not a matter of respect and I have also explained this to Dr LEONG. In fact, we have had a lot of opportunities to meet and talk in this Chamber. Secondly, my secretary recently has compiled some statistics for me. Under his arrangement, I on average spent two and a half hours meeting people from outside the Government every day during the past three months from July to September. That does not of course include colleagues from the Government. I spent two and a half hour meeting people from outside the Government, about four people in a group. What are these people? They are local people from various sectors and all walks of life, colleagues from the Legislative Council, people from the financial sector, the grassroots, as well as overseas visitors from the financial, economic and political circles. During the three-month period from July to September, I met so many people every month because I really wanted to keep tap on the pulse of the public and the response of the international market. I want to know their views and comments on what we have done. So, firstly, I hope Mr LEE can understand that I will try my best to foster communication with this Council and I know my colleagues have maintained regular communication with Members.

PRESIDENT (in Cantonese): Mr LEE, any follow-up question?

MR MARTIN LEE (in Cantonese): Mr TUNG, in fact, we are not talking about co-operation or respect. I think the most important question at the moment is how to realize Article 64 of the Basic Law, which provides that "The Government of the Hong Kong Special Administrative Region must abide by the law and be accountable to the Legislative Council of the Region." Accountability in this context does not mean chit-chat behind closed doors or even talking about national affairs behind closed doors. We must let the public see that the Government is accountable to the legislature. You cannot just meet political parties in private or chat in private. This does not count. That is why we are so keen that you should come to this Council on formal occasions. It does not matter whether you come to receive questions or talk to us. But it is very important that we have an open forum, otherwise, it is not possible to realize Article 64 of the Basic Law.

CHIEF EXECUTIVE (in Cantonese): Private meetings do not count, no wonder Mr LEE does not want to meet me. (Laughter) Let me put it this way. We respect all the rights vested in the Legislative Council by the Basic Law. Mr LEE can rest assured about this. Just now I said I will come to this Council thrice a year. The first occasion is after the delivery of the policy address, the second will be in the first quarter and the third in the second quarter. For the third quarter, I am not sure whether I will come or not because of the break. At a later stage, I decided that I could come here three times. Let me repeat, if there is any important issue or any emergency, I will be glad to come here again.

PRESIDENT (in Cantonese): Mr Jasper TSANG.

MR JASPER TSANG (in Cantonese): Madam President, the Chief Executive mentioned four important factors in his policy address. He said the most important factor is our own confidence. In my opinion, the public's confidence hinges on the public's perception of the competence of government officials. I also notice that he did not mention the civil servants when he mentioned our enviable advantages. In the dealing with various crises that we saw over the past year, the civil servants' self-evaluation sometimes differs from the evaluation given by the media and the public. Why is that in the policy address, the Chief Executive did not make an in-depth review on issues of public concern over the past year and highlight problems in the Government's operation? Why did you not propose any improvement measures? Do you think the Government could have done better in building the public's confidence in the government officials?

CHIEF EXECUTIVE (in Cantonese): I would like to talk about this issue in greater details. There were indeed a lot of problems surrounding the opening of the airport. Since the Commission of Inquiry is still investigating the case, it would not be proper of me to say too much about it. But in fact, we can all see that the airport is now running smoothly. On the avian flu incident, as I have emphasized recently, this incident has tarnished Hong Kong's reputation and shaken people's confidence. But is it really the case? Let me look at the whole process carefully. We indeed did not do well in the slaughtering of chickens. But we must always look at the result of an incident. The result was that we did not have avian flu at the end. Both the international community and the World Health Organization agreed that we had done a good job. You ask if government officials could have done better? Yes, of course, they could. I know my colleagues will continue to work hard.

Secondly, I should like to say here that having worked with my colleagues in the Government for over a year, and we have had very good co-operation, I feel that all my colleagues have a strong commitment to Hong Kong. They work very hard with strong leadership and are prepared to rise to challenges. In fact, I am sure that Members have recently read an article in the Newsweek published in the United States. It compared our colleagues with their counterparts in Singapore and Taiwan, and highlighted, for example that we do not have as many holders of doctorates or higher qualifications. Now let me say this to you, I know a lot of officials and friends in Singapore and many of my friends in Taiwan are also high-ranking officials. I can tell you that my colleagues are as capable as their counterparts elsewhere. They may be even more efficient and I am very proud of them. Could there not be mistakes committed by individual civil servants among the 180 000-strong Civil Service? Of course, there must be some mistakes. What is the most important thing is that we know how to follow up the mistakes. I am very confident in the present civil service structure of the Hong Kong Government.

MR JASPER TSANG (in Cantonese): Madam President, I would like to ask a follow-up question. Does the Chief Executive consider that over the past year, no government official can be accused of dereliction of duty or no one should be held responsible for the incidents?

CHIEF EXECUTIVE (in Cantonese): Mr TSANG, I think I can put it this way. Concerning the airport incident, for instance, the Commission of Inquiry will submit to us a report which will certainly be made public upon the completion of the inquiry. It will also be available to all Members. Then you can come to your own conclusion about the whole incident and I can also draw mine. As to other incidents like those in connection with the Hospital Authority, investigations are being conducted. As you know, conclusions have already been drawn for some of these incidents. In fact, there will be investigations or follow-up actions for every incident. We will definitely make improvement to areas that call for such.

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): Thank you, Madam President. I would like to ask the Chief Executive a question because members of the public worry very much about many things. But after hearing your policy address yesterday, I feel that you lack a sense of crisis ......

CHIEF EXECUTIVE (in Cantonese): Sorry, I cannot hear you ......

MISS EMILY LAU (in Cantonese): Mr TUNG, would you please put on the earpiece so that you can hear more clearly and we do not have to shout. The Hong Kong people hope that the Government would have a sense of crisis so that it could rise to emergency. Could Mr TUNG inform this Council (because yesterday you did not mention some issues which we really want to know) during the past 10-odd months after the handover of Hong Kong to China, if there has been an increase or a decrease in overseas and local investment in Hong Kong and what is the amount? What is your forecast of our economic development in the next 12 months? How many companies will close down? How many people will become unemployed? It is because we want to know your view on the past and the future in order to see if you have any strategy to deal with these situations.

CHIEF EXECUTIVE (in Cantonese): Miss LAU, as regards your comment that the Government lacks a sense of crisis, or I lack a sense of crisis, I would like to respond in this way: For some emergencies, we really have no control. But for some incidents, such as the whole package of measures we took in the financial markets in August, do you think we lack a sense of crisis? What is our objective? Our objective is to restore order in the financial markets. Are there any effects after our actions? Yes, there are. Is there any result? The answer is also in the affirmative. If we lack a sense of crisis, why did we have so much determination to take this action? This action is generally supported and approved of by the general public of Hong Kong. The international financial circle including London and New York also agreed that the measures were necessary and justified. So, if you say that I or my colleagues, colleagues responsible for financial matters, lack a sense of crisis, I hope you would reconsider your remark.

As regards the future economic development of Hong Kong, as I said yesterday, I do not hold 1999 in great optimism. As to how many companies will run into trouble or whether or not they will run into trouble, there are indeed a lot of factors. For instance, Miss LAU, you can see that two or three weeks ago until now, interest rates have come down significantly. Interbank rates have also dropped substantially with the prime rate remaining unchanged. The fluctuation of interest rates will have much impact on the operation of each and every company. Since there are so many unknown factors, what we can do is ...... I know the Financial Services Bureau is keeping an eye on the situation and anticipating all the problems. The Government is indeed keeping an eye on the situation rather than turning a blind eye to it.

As regards unemployment, I know it is a question very close to your heart, and indeed mine too. The unemployment rate has been going up and I believe it will continue to go up. We have to show our concern for the unemployed. But the fundamental solution to the problem hinges upon a revitalization of our economy because only through revitalizing our economy can more job opportunities be created. In this respect, we have taken some measures. But on the other hand, we have to look further afield.

MISS EMILY LAU (in Cantonese): A brief follow-up. I would like to ask Mr TUNG this question for I am sure the Government must have some figures ¢w please put on your earpiece because this is a large chamber ¢w I think people want to know these figures. For instance, my question concerning local and overseas investments in Hong Kong during the past 12 months, you ought to be able to give us some ideas; if there was absolutely no investment in Hong Kong, we must know it. The government officials should have compiled a lot of figures concerning our future economic growth, economic contraction, economic projection and so on. We have to know these figures. With these figures, we would have a sense of crisis instead of focusing our attention at things 10 or 20 years from now as you said. So, I hope Mr TUNG can understand that Hong Kong people are very worried. Please do not urge people to face challenges like those people battling the floods. We do not want to be so backward.

CHIEF EXECUTIVE (in Cantonese): Miss LAU, I think we are not backward at all. In 1996, there was US$100 billion flowing from Europe and the United States into Asia, excluding mainland China and Japan. In 1997, there was an outflow of capital more than US$100 billion. These figures are provided by the Bank of International Settlement. In fact, during this international financial turmoil, there was an outflow of capital rather than an inflow of capital into Asia and Hong Kong. So, the stability of international financial market is extremely important. This is why we are so keen on seeing that the international financial market and Hong Kong's financial market can restore their stability.

PRESIDENT (in Cantonese): Mr James TIEN.

MR JAMES TIEN (in Cantonese): Thank you, Madam President. Mr TUNG, you think that nothing much can be done to improve our economic situation in the short term, a point which has been mentioned by several Members just now. As regards the new idea of "innovation and technology" and the "$5 billion" proposal you mentioned yesterday, the Liberal Party strongly supports these ideas. We understand that these are long-term plans just like distant water which cannot put out an immediate fire, but we still strongly support the earliest implementation of these plans as they will be very helpful to our next generation.

I would like to ask a specific question: Is there any timetable for the utilization of this $5 billion? While we all support your current economic policies, we are a bit disappointed as far as implementation is concerned. For instance, in your policy address last year, you mentioned that $0.5 billion would be earmarked to help with export credit. But eventually, only several millions of dollars have been spent so far. As you said in yesterday's address, only around $170 million has been spent from the $2.5 billion, representing only 92 loan cases. Furthermore, a review will only be made after six months' time. Although we started a little bit late, we do not want to see that technological development has to wait five to 10 years. Has the Government considered within what timeframe the $5 billion will be exhausted?

My second question is: Will funds be allocated to the industry directly (it is another matter if the industry invites the tertiary institutes to carry out the research for it, which is the practice in Taiwan and Singapore), or, in your contemplation, research will first be carried out by tertiary institutes which will then approach the industry later? Thank you, Madam President.

CHIEF EXECUTIVE (in Cantonese): Mr TIEN, first of all, you commented that my policy address lacks substance in terms of short-term economic policies. But I would like to ask you a question: What can we do in order to help improve the short-term economic situation of Hong Kong? We cannot withhold our work from last year or January this year until October or pending my instructions. It is because these are short-term measures which must be implemented right away at the appropriate time. Therefore, a series of measures have been undertaken since February and they were still in progress in August. We have not folded our arms. Rather, we have been doing our job. As I said yesterday, the revenue lost due to tax reduction, freezing of public housing rentals and fares of the two railways has added up to $20 billion. We have also taken some financial measures in August. In fact, we have been working towards relieving people's hardships and stabilizing the market. The policy address is a summary of our job in the past few months and a forecast of our future.

Concerning the $2.5 billion loan fund for small and medium-sized enterprises, the Government has received mixed comments and will draw a conclusion early next year. But in fact, we have been listening to a lot of views. We received 92 applications in six weeks' time. Response was rather slow during the first two weeks but the pace took up later. The Government will draw a conclusion as soon as possible.

As regards the $5 billion, Prof TIEN Chang-lin will submit his final report before the end of June next year. I hope he and his commission can fully discuss your questions in the months to come and give you a satisfactory answer.

MR JAMES TIEN (in Cantonese): Madam President, is the Government still considering whether direct aid should be given to the industry in order to develop high technology or research be conducted by tertiary institutes until there is a result for the industry?

CHIEF EXECUTIVE (in Cantonese): It is proposed that the Applied Research Institute be formed to carry out scientific research. As to the details, I hope you can wait for a few months and the report will be submitted as soon as possible.

PRESIDENT (in Cantonese): Miss Christine LOH.

MISS CHRISTINE LOH (in Cantonese): Mr Chief Executive, in fact I have a number of questions, but I would like to concentrate on air pollution. In the policy address, you also admitted that air pollution is appalling. But one of the Government's major proposals is to convert the taxi fleet to using liquefied petroleum gas (LPG) fuel. My question is: Since the policy address proposes that all new taxis should operate on LPG fuel from the end of 2000, does the Chief Executive have any idea of how many taxis there would be from now until the end of 2000? There are now more than 2 000 taxis in the whole territory, is the number too small? If the Chief Executive still thinks that the degree of air pollution is already appalling, would you consider to discuss the issue with government officials again to see how the scheme can be expedited? Two years and four months are indeed too long.

CHIEF EXECUTIVE (in Cantonese): Miss LOH, I am also very anxious to see the earliest implementation of the scheme. According to my understanding, one of the major difficulties is to identify sites for installation of the LPG tanks. That is the problem, and safety measures are another factor. Although we have said that the targeted year is 2000, we will try our best to put it in place as soon as possible and it is also our wish to do so.

MISS CHRISTINE LOH (in Cantonese): To follow up, I hope the Chief Executive will keep a close eye on this issue and see if we can speed up the process. I am sure it is possible. I hope the Chief Executive can bring into play your leadership and give us some fresh air. My follow-up question is that our concern is not simply the conversion of the taxi fleet to LPG fuel but the vehicle emissions. All vehicles give out emissions, but only motorcycles are required to comply with certain emission standards. Why are motorcycles alone rather than all vehicles required to comply with these standards?

CHIEF EXECUTIVE (in Cantonese): Miss LOH, I am afraid I cannot answer your question (Laughter). My apologies. But I can tell you that studies are being conducted on another type of diesel oil which can reduce the pollution level by 55%. In this respect, we are very determined to pursue our objective and we will ban the sale of leaded petrol in 1999. Concerning the question you raised just now, I am afraid I cannot answer off hand but I will follow up later.

PRESIDENT (in Cantonese): Mr Ambrose LAU.

MR AMBROSE LAU (in Cantonese): Mr Chief Executive, after the publication of your policy address, some people suggested that you should "govern by doing nothing that goes against nature", while others suggested that you should "govern by doing things that go against nature". Different views abound. However, I believe the public would agree unanimously that this policy address shows your determination of attaching importance to the overall and long-term interests of Hong Kong, and such determination is not at all shaken by the present economic doldrums. Nevertheless, the policy address lacks details on specific proposals for solving the employment problem, especially that of the professionals. Local professionals have proposed to the Government many times if consideration can be given to the setting up of a system to encourage more local contractors to participate in infrastructure projects; or whether overseas contractors can be required to employ or train a certain number of local professionals. In this way, local professionals can be given priority in employment, the situation of unemployment can be improved, and the transfer of technology promoted. What substantive measures does the Government have to achieve these goals?

CHIEF EXECUTIVE (in Cantonese): Mr LAU, the ultimate solution to the unemployment problems of different strata is to revive the economy. When the economy begins to be brisk again, employment opportunities of different strata will increase. Therefore, in this aspect, I hope we will all work hard together to attain the goal. With regard to the employment problem of professionals, since Hong Kong is a very open society with an export-oriented economic system, basically all kinds of people can come to do business and fight for every business opportunity in Hong Kong. For example, we welcome overseas consultancy firms and professionals. Many Honourable Members sitting here, including Dr the Honourable Raymond HO, have talked to me about whether the employment opportunities of local professionals can be enhanced. While Mr Ambrose LAU has mentioned this to me, Mr NG has also brought it up with me. Dr Raymond HO has particularly talked to me about the transfer of technology. Although you raised these questions to me about a month ago, I am still studying them for the moment. So I am sorry that I cannot give you an answer today. Nevertheless, these issues are all matters of concern to us.

PRESIDENT (in Cantonese): Mr LEE Kai-ming.

MR LEE KAI-MING (in Cantonese): Madam President, recently, as the wave of lay-offs and wage cuts is rolling on with full force, employees have all begun to feel a sense of insecurity. At the same time, business organizations continue to add fuel to the fire. What measures have the Government adopted to counter this wave of lay-offs and wage cuts? How is it going to restore the employees' confidence in society?

CHIEF EXECUTIVE (in Cantonese): Just now I attended a luncheon hosted by 10 business federations in which I explained the relevant measures in the policy address. I talked about in particular the unemployment problem brought about by the present economic situation. I told them that the Government cannot and will not set a benchmark for wages. The Government will not do this. However, I said that, at this hardest time, it is imperative to be sympathetic to the employees' livelihood. I hope that they will try their best to communicate with the labour side so as to establish a better relationship of mutual trust. In such a difficult time, I also hope Mr LEE will do the same. Stability is the most important thing when we take the interests of the society as a whole into account ......

(A man stood up and clamoured in the public gallery)

PRESIDENT (in Cantonese): Stop shouting! (The man kept on clamouring and waved a pile of paper.)

PRESIDENT (in Cantonese): Take him out! (Several security guards approached the man and tried to stop him from yelling, but he continued to stand up and clamour.)

PRESIDENT (in Cantonese): Take him out! (The man struggled with the security guards and kept on clamouring.)

PRESIDENT (in Cantonese): Take him out! (When the security guards removed the man from the public gallery, the man continued to clamour. Another man in the public gallery took the papers in his hand and threw them down the Chamber.)

PRESIDENT (in Cantonese): Honourable Members, since the meeting cannot proceed quietly now, I will suspend the meeting for the moment.

3.37 pm

Meeting suspended.

(The two men were taken away from the public gallery)

3.38 pm

Council then resumed.

PRESIDENT (in Cantonese): I am sorry, Mr Chief Executive, just now we were slightly disturbed. Will the Chief Executive continue to answer Members' questions please?

CHIEF EXECUTIVE (in Cantonese): Mr LEE, I would like to raise another issue for Members' reference. Within the three months prior to December last year, the average employed population of Hong Kong amounted to 3 196 000. Within the three months prior to the end of July this year, the employed population was 3 197 000. The number of employees indeed has not decreased, though their wages might have been slashed. Why do I mention this? Because, other than an economic contraction, another problem confronting Hong Kong is the rapid growth of population which is something we will have to face squarely one day. Besides, I would like to say that the Government has actually done a lot of work for employment. In the light of the data released recently by the Employees Retraining Board, 70% of the graduate trainees are able to find employment. The work of the Vocational Training Council has also been quite satisfactory. It is of course easy to say, but I hope that the unemployed will not be dejected and will try to fight for more learning opportunities in their dire straits. Learning enriches a person and strengthen his abilities, so when an opportunity arises, he can grasp it with greater ease. I know what I say now may be taken by many unemployed people as empty talk, and they may think that I cannot come up with any concrete solutions. But I think the most concrete solution is to promote a recovery of the economy as soon as possible, since according to past data, every 1% of economic growth would bring about 30 000 job opportunities. We have to work harder in this direction.

MR LEE KAI-MING (in Cantonese): Madam President, I would like to follow up. In the policy address delivered by the Chief Executive yesterday, one of the four measures to save the economy is boosting confidence. We all know that unemployment is directly related to the economic situation, and that the public, especially the employees, do not have much confidence. So it is very important to restore their confidence. By saying so, I am not promoting confrontation between labour and capital, but in reality, what measures does the Government have to further improve labour relations and encourage dialogue between labour and capital so that people's confidence can be restored as soon as possible?

CHIEF EXECUTIVE (in Cantonese): On the occasion I attended just now which almost 1 000 members from the business community were present, I put particular emphasis on the importance of dialogue between labour and capital. I have also stressed my personal experience: a successful enterprise is one that cares about the interests of the labour side. I hope we will all work harder in this direction, whereas I myself will also put in more efforts.

PRESIDENT (in Cantonese): Mr Ambrose CHEUNG.

MR AMBROSE CHEUNG (in Cantonese): Mr Chief Executive, many people have criticized the way in which the Government has handled the review of district organizations. These criticisms mainly concentrate on three areas: firstly, the Government makes use of the avian flu incident as a pretext to scrap the Municipal Councils; secondly, controversies abound about the analysis of public views; thirdly, as for the structure, in fact it was only yesterday that the Government put forward for the first time any concrete proposals about introducing structural changes to the administrative framework. I have this question for the Chief Executive: Regarding the way of conducting the review, will the Government consider assuming an open and broad-minded attitude in the next three months and make known to the public the counter-proposals about the restructuring of the administrative framework as well as that of the two Municipal Councils, so that the public will have a chance to express their opinions? Furthermore, will it conduct a more independent, systematic and scientific survey in order to establish a better basis upon which the Legislative Council can discuss the whole review in early 1999?

CHIEF EXECUTIVE (in Cantonese): Mr CHEUNG, as far as the issue of the two Municipal Councils and environmental hygiene is concerned, I actually elaborated on it in great details in the policy address yesterday. I know that the Government has indeed spent a lot of time on the study and has consulted the public who in return has given us many different opinions. I know that, in this Council, many Members disagree to the Government's modus operandi this time. I stressed yesterday that I hoped I could convince Members in the coming few months and win your consensus so that you would support the Government's direction. We may also make use of these few months to discuss the relevant matters.

MR AMBROSE CHEUNG (in Cantonese): Madam President, please allow me to follow up. The Chief Executive mentioned the avian flu incident a moment ago, actually it was a blunder on the part of the Government. Can the Chief Executive openly account for the incident today in this Council so that the Urban Council's role will not be mistaken unjustly? In the avian flu incident, basically the Chief Secretary for Administration, the Economic Services Bureau and the Health and Welfare Bureau were responsible for the decision-making and co-ordination, whereas the Urban Council was only responsible for executing the command, which was to collect chicken carcasses in this case. (Laughter) Can the Chief Executive openly clarify the matter and account openly and fairly for the Urban Council that the blunder had nothing to do with the Urban Council?

CHIEF EXECUTIVE (in Cantonese): Mr CHEUNG, as I mentioned yesterday, the avian flu incident has reflected a number of problems: firstly, our own environmental hygiene is problematic; secondly, it is an unsatisfactory situation to have too many government departments handling the same matter while central co-ordination is lacking. Therefore, we are not blaming the Urban Council in any way, we just realize that it is simply not the best arrangement to have so many different sectors and agencies tackling the same problem. All these should better be dealt with by a bureau which provides central co-ordination and we are just working in this direction.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): I believe Mr TUNG is also aware of the seriousness of the unemployment problem. At present, while the number of unemployed exceeds 200 000, many of them have been out of job for a long time and are living in dire straits, probably having depleted their savings. A lot of people hope that the policy address delivered yesterday would put forward effective and proactive measures, but it seems that Mr TUNG has not achieved this. He just handed the problem to the employment summit. Although the Task Force on Employment has proposed a number of measures, many of them are still hanging in the balance. Given that these measures have yet to be implemented or cannot be implemented, how does the Government or Mr TUNG ensure that the proposed measures can really help the unemployed?

Take the Tamar case which I have talked about many times as an example. The labour sector had once proposed that lands should be earmarked for use by the unemployed to make a living. But when the Tamar site was designated for the purpose, an abnormality arose: one has to pay $30,000 to rent a stall. How can the unemployed afford such a rent? So at last the plan fizzled out. Now the Tamar site is given temporarily to the Hong Kong Tourist Association for organizing "City of Vitality" events, and the progress so far has been quite satisfactory. From this example we can see that even though we do propose measures to help the unemployed and boost the economy, these proposals often remain as proposals and policies remain on the drawing board. Up to yesterday, certain government officials still thought that the Jumbo Market belonged to the Urban Council, I said, "No, the original purpose of the site was to help the unemployed." I hope Mr TUNG will understand that the measures put forward by the relevant ad hoc group in the past were not realizable. I hope he will follow up with these issues, make government officials put themselves in the unemployed's shoes and implement the measures laid down in the past. Take retraining as an example, it is not easy to receive retraining nowadays. The "491" course just vanished into thin air, what practice is this? Why should such things happen? I hope Mr TUNG will answer my questions and put an end to the situation where measures laid down by ad hoc groups in the past are "hanging in the balance". The measures should not be drawn up to enhance public relation, but to really boost the economy and improve the employment situation.

CHIEF EXECUTIVE (in Cantonese): Miss CHAN, the Government has already allocated an additional $500 million to the Employees Retraining Board for retraining purposes and the quota has been increased by about 8 000. So the Government has really made an effort. Employees must be retrained to acquire new knowledge, which will help them in finding new opportunities.

As to the question of the Jumbo Market, the Government has followed up with it. In fact, many measures proposed by the Task Force on Employment are being carried out right now, only one or two among them are still pending. We are still following up and I will inform Members of the progress in due course.

PRESIDENT (in Cantonese): Miss CHAN, do you wish to follow up?

MISS CHAN YUEN-HAN (in Cantonese): Madam President, I want to tell Mr TUNG that the relevant measures in the past had flaws. For example, when people signed up for the "491" course I mentioned earlier, which was a retraining programme costing $4,000, lasting nine months with a quota of 1 000, they found the qualification was raised from the initially set Form Three standard to Form Five standard, the reason being that the number of applicants far exceeds the quota. It is actually unrealistic that only one department assumes full responsibility of implementing the policy. Many people have high hopes that the government policy can be put into practice. I have received a number of complaints lately. Members of the public told me that they tried to learn new skills as suggested by the Government, but while some of them were not even qualified for the retraining programmes, others could not find jobs after retraining. Therefore, Mr TUNG, please do not just look at the report. It is not true that 70% of the retrainees were successful in job-hunting, there may be a lot of "bragging" in it. So my only concern is: How can the policy be genuinely implemented?

CHIEF EXECUTIVE (in Cantonese): Talking about the figure of 70%, actually I had read it again five minutes before I came here because I believe Honourable Members will surely ask me this question. (Laughter) As to how accurate this figure is, I will check it up later.

PRESIDENT (in Cantonese): Mrs Selina CHOW.

MRS SELINA CHOW (in Cantonese): In last year's policy address, the Chief Executive stressed that the business environment had to be improved. However, this issue is not mentioned at all in this year's policy address. In the past year, the situation of the wholesale and retail sector which I represent has not improved, rather it has become even more desperate. The "none of my business" attitude adopted by certain government departments has actually added fuel to the fire. Why? As a section of Nathan Road has to be closed for 19 months due to a public works project, hundreds of small and medium retail or catering shops are faced with yet another disaster. This is only one of the examples. The trade effluent surcharge, for another example, is still too high and unfair. Under such circumstances, hardly can the Government maintain that the business environment has been improved. Will the Chief Executive directly introduce relief measures to the service industry, such as reducing government fees and charges, eradicating unnecessary red tape as soon as possible and simplifying the application for or even revoking unnecessary licences, and regulate with enforcement measures instead?

CHIEF EXECUTIVE (in Cantonese): This is a rather meticulous question and indeed I am unable to answer it here. However, we have always regarded the creation of a good business environment as one of our major duties, and we have been studying ways to of improvement. I have talked about sewage charge and other problems such as the reduction of red tape, which I know we are actually making an effort to address. With the introduction of electronic commence in the future, businessmen may be able to save a lot of money. If we come up with better solutions in these areas, we will definitely follow up and improve the situation. I have also noted that Singapore has recently launched a series of measures aiming at these problems.

MRS SELINA CHOW (in Cantonese): Madam President, the Chief Executive said just now that my question seemed meticulous. In fact, I think the examples I cited were quite specific. In terms of general directions, I hope the Chief Executive can tell us whether he will reduce government charges. I have to stress that I am talking about the overall policy. Under the present policy of "user pays", users have to pay a considerable amount of fees because all licences are expensive. This is very important to small and medium enterprises and the Government can directly help them save money. Will the Chief Executive formulate an overall policy specifically targeting at these problems and cutting red tape?

CHIEF EXECUTIVE (in Cantonese): We have always been working at cutting red tape. As for reducing charges and fees, I have talked about the problems faced by small and medium enterprises not long ago and they are: the grasp of market information, human resources, working capital and, lastly, cost. We are studying whether there are ways to help them cut costs, which will of course include the method proposed by Mrs Selina CHOW just now.

PRESIDENT (in Cantonese): Mr LAU Chin-shek.

MR LAU CHIN-SHEK (in Cantonese): Madam President, Mr TUNG has always stressed that Hong Kong is a city with "three highs": high property prices, high inflation and high wages. At present, as everybody knows, property prices and inflation have come down a lot while wages have been slashed sharply even though certain companies are actually making profits. I wonder if Mr TUNG has assessed whether this atmosphere of cutting wages has anything to do with his remarks about high wages. In Mr TUNG's view, does he think today's Hong Kong is a high-wage society? Thank you, Madam President.

CHIEF EXECUTIVE (in Cantonese): Mr LAU, as I said just now, the Government cannot and will not set a benchmark for wages. This is not the responsibility of the Government and wages should be regulated by the market itself. The most important task for the Government is to ensure a good relationship between labour and capital, as well as to protect the labour interests. We will try our best in this regard.

MR LAU CHIN-SHEK (in Cantonese): Madam President, in the present Hong Kong situation, some shopkeepers' hourly pay is as low as $14. So is Hong Kong still a high-wage society?

CHIEF EXECUTIVE (in Cantonese): I think that the Government cannot label whether Hong Kong is a high-wage or low-wage society. We should let the market find the equilibrium. But I can tell you that, for example, in the last two weeks, the Japanese yen has dropped by more than 10% against the US dollar, whereas the Deutsch mark and Southeast Asian currencies have also been on the fall. As a result, Hong Kong's competitiveness may be enhanced. We therefore have to look at the situation from a panoramic perspective. The Government cannot say which level should be the benchmark.

PRESIDENT (in Cantonese): Dr LEONG Che-hung.

DR LEONG CHE-HUNG (in Cantonese): Thank you, Madam President. Today I am asking questions in my own name, and they have absolutely nothing to do with the House Committee. However, I believe these questions will arouse interest and strike a sympathetic chord among the majority of Honourable colleagues.

Mr TUNG, your policy address has a mixed reception after it was delivered. For those who praise it, they think it has vision; as for those who censure it, they think that a slow remedy cannot meet an urgency. You have also said that many things cannot be done right away. However, we think that the Government should make an effort to boost people's confidence as soon as possible. Take the problem of government as an example, you may also be aware that Honourable colleagues of the Legislative Council have always been very concerned about the relationship between the executive authorities and the legislature. In fact, this is not only confined to this Legislative Council, as the issue was also debated in a motion in the Provisional Legislative Council. We all think that we have to work harder in this aspect. Unfortunately, only a small part in the policy address touches on this issue slightly: as long as we have better mutual trust, we will establish a better relationship and things will be better. Does Mr TUNG think that there is no problem at all with the relationship between the executive authorities and the legislature? Or does he think that we need not address this problem? I hope Mr TUNG can give us an explanation.

CHIEF EXECUTIVE (in Cantonese): I think that there is a problem with the present relationship between the executive authorities and the legislature, and that we have to deal with it. For me, the solution lies in enhanced communication. From the standpoint of the Government, we will definitely take one more step, two more steps or even three more steps for the enhancement if necessary. With better communication, the relationship will be improved. The Special Administrative Region Government has only been established for 16 to 18 months, we are still exploring our future direction. In the first few months, especially that we are the first Legislative Council, we must spend some time to know and adapt to each other, trying to find out what ways we should take. Both sides should make an effort. I hope this will be a good start.

PRESIDENT (in Cantonese): Dr LUI Ming-wah.

DR LUI MING-WAH (in Cantonese): Mr TUNG, many people say the policy address is not a perfect one. But is there a perfect one at all for any country? To the industrial sector, we are happy to see the Government understands the shortcomings of an economy that relies solely on the service industry. It can also see that the only way to provide a solid foundation for the Hong Kong economy is to rebuild the manufacturing sector in Hong Kong. But the policy address has given us the impression that while the Government encourages the development of hi-tech and innovative enterprises, it also encourages the development of the service industry including services and manufacturing. It encourages Hong Kong to perform research only and leave packaging to some other places. With a high unemployment rate at the moment, why can the Government not use some preferential terms to attract local or foreign investors to set up plants in Hong Kong to carry out production?

PRESIDENT (in Cantonese): Dr LUI, I am sorry. You can ask only one question.

CHIEF EXECUTIVE (in Cantonese): Dr LUI, I believe labour-intensive industries have been relocated to the Pearl River Delta or other places of the world. Of course if you think Hong Kong can continue to be competitive in that respect, the Government would be happy as it means Hong Kong people will have more job opportunities. I have this idea about the possibility of Hong Kong developing industries with high technology: There is a certain role for Hong Kong in high precision, hi-tech industries. If it is ordinary hi-tech industry involving labour-intensive production, Hong Kong would perhaps find little room for development. Dr LUI is an industrialist and he will know more than I do on this. As far as the Government is concerned, our position is that we hope to make developments in hi-tech, high value-added industries to enhance efficiency in the services or industries of Hong Kong on the one hand, and to carry out manufacturing either in Hong Kong or in China on the other when we can transform the fruits of scientific research into commodities. This is a possibility we would not rule out.

DR LUI MING-WAH (in Cantonese): Mr Chief Executive, cost is all-important when one wants to engage in manufacturing in Hong Kong. Hong Kong is notorious for its high land price policy. Both land and wages cost a fortune in Hong Kong. Of course you did say the Government plays no role in setting wages. But the Government owns land and hence can influence its price. I believe the Government can lay down some policies to attract manufacturers to come to Hong Kong, especially manufacturers in hi-tech industries.

CHIEF EXECUTIVE (in Cantonese): We have an industrial estate in Hong Kong. In fact it can attract industrial investments. I think I am right in saying that the prices of industrial buildings have fallen of late. This can mean an opportunity if you think this is feasible.

PRESIDENT (in Cantonese): Mr Chief Executive, it is now 4 pm. Can I ask you to give us an extra half hour. There are two reasons for this: Firstly, 40 Members have raised their hands to indicate their wish to ask questions, but so far only 14 of them have been able to so. If the session is adjourned now most of them would be disappointed. Secondly, several minutes were lost due to the disturbance at the public gallery. Would the Chief Executive give us an extra half hour?

CHIEF EXECUTIVE (in Cantonese): Certainly.

PRESIDENT (in Cantonese): Thank you. Mr Gary CHENG.

MR GARY CHENG (in Cantonese): Thank you, Madam President. I am glad to hear Mr TUNG express the hope that the communication between the executive authorities and the legislature can be enhanced. However, we have already communicated with the Government many times concerning the Rules of Procedure of the Legislative Council. This Council, including our legal advisers, has repeatedly studied the issue several times. We have also exchanged our views with officers of the Department of Justice a number of times. However, we thought it over and over and still do not understand which parts of the Rules of Procedure violate the Basic Law. Of course, the Government's stance is very clear. So how are we going to untie this knot? And how are we going to deal with this divergence of views now?

CHIEF EXECUTIVE (in Cantonese): Mr CHENG, as far as I understand it, I can agree with and support my colleagues in the Government in saying that parts of the Rules of Procedure are in breach of the Basic Law. I really hope that Honourable Members of this Council will read the Basic Law once again. (Laughter)

PRESIDENT (in Cantonese): Sorry, Mr Andrew WONG, according to the usual practice, Members have to wait for their turn to ask questions. Mr Gary CHENG, you may follow up now.

MR GARY CHENG (in Cantonese): Thank you, Madam President. We have exchanged our views many times, and we have also thought it over many times, listened many times and pondered many times. So is the final solution like what has been reported in the news, that is, the Government will confront this Council before a court of law? Do you think this is the ultimate way that we have to choose?

CHIEF EXECUTIVE (in Cantonese): I hope Honourable colleagues of the Legislative Council will read the Basic Law once again. (Laughter)

PRESIDENT (in Cantonese): Mr WONG, do you want to raise a point of order?

MR ANDREW WONG (in Cantonese): Madam President, I have received a letter issued by the Assistant Secretary General, Mr Ray CHAN, saying a follow-up question raised by a Member about the question raised by that Member would not be treated as an extra question, but a follow-up question raised by a Member about an original question raised by another Member would. In other words, if the President exercises her discretion, she may let other Members raise follow-up questions.

PRESIDENT (in Cantonese): I am not prepared to exercise my discretion because it would be unfair to the 20-odd Members waiting before your turn.

DR YEUNG SUM (in Cantonese): Madam President, the Government wants to scrap the two Municipal Councils on the grounds that food safety and environmental hygiene has to be improved. Then it publicly puts an advisory body into a monitoring role over the work of the new policy bureau. In principle, has this run counter to democratic practices? Mr TUNG, do you regard this as an honourable act?

CHIEF EXECUTIVE: (in Cantonese): Dr YEUNG, I think the act is in a correct direction. It has nothing to do with whether that is a retrogression in democracy. But it has to do with how we can make the present framework work better. In fact, the Legislative Council is already elected, directly or indirectly. The district boards are elected. That is why I asked yesterday: We already have two structures, do we need a third one?

DR YEUNG SUM (in Cantonese): That means Mr TUNG does not consider it a retrogression in democracy to replace an elected council with an appointed structure? I think it is a matter of form. But my follow-up question is: When we ask that the legislature, the Legislative Council be returned by universal suffrage, Mr TUNG says we should progress gradually. However, when the Government scraps the two Municipal Councils everything is done so very quickly. Is the Government contradicting itself?

CHIEF EXECUTIVE (in Cantonese): Dr YEUNG, I think we have heard public opinions loud and clear on how we should improve our work on environmental hygiene and keeping Hong Kong clean. The conclusion was arrived at after consultation.

PRESIDENT (in Cantonese): Mr Howard YOUNG.

MR HOWARD YOUNG (in Cantonese): Madam President, in his policy address, the Chief Executive mentioned that he would appoint a Commissioner for Tourism. Will the Chief Executive inform this Council what the functions of this Commissioner will be and how the administrative structure will look like? At present, the Economic Services Bureau is in charge of tourism. However, many matters relating to tourism do concern different departments. For instance, the issue of visas for residents of Taiwan, the Mainland and Russia involves the Security Bureau. How would this Commissioner enforce the policy for tourism which involves different departments?

CHIEF EXECUTIVE (in Cantonese): Mr YOUNG, our aim is to have a person specially in charge of tourism. He will be under the Economic Services Bureau and will answer to the Secretary for Economic Services. I believe that such a structure will achieve greater efficiency. It can enhance the work we have been doing for tourism, while new areas will be developed at the same time. Also, the Economic Services Bureau will remain in charge.

MR HOWARD YOUNG (in Cantonese): Since the Commissioner will come under the Economic Services Bureau, does this mean that his powers and influence will be limited to within the Economic Services Bureau? Can this really facilitate inter-departmental co-operation? Moreover, how will he co-ordinate with the Hong Kong Tourist Association?

CHIEF EXECUTIVE (in Cantonese): I do not think Mr YOUNG should need to worry about inter-departmental co-ordination, since it should improve after the appointment of the Commissioner.

PRESIDENT (in Cantonese): Mr HUI Cheung-ching.

MR HUI CHEUNG-CHING (in Cantonese): Madam President, the import and export trade has always been one of the underpinnings of Hong Kong's economy. However, since last year, due to the effects of the depreciation of Southeast Asian currencies and the paralyzed operation of the air cargo terminal of the new airport in July, Hong Kong's competitiveness in the international market has already declined. What concrete solutions does the Chief Executive have to address the difficulties faced by the import and export trade at present?

CHIEF EXECUTIVE (in Cantonese): Indeed, the weak Southeast Asian currencies have had a great impact on Hong Kong's import and export trade. However, in terms of export, our exports to Europe and the United States have achieved good results. It is only the exports to Southeast Asia and Japan which have not fared so well as before. I cannot offer any special measures since this is a situation created by the larger environment. However, so far, our exports to Europe and the United States have not been affected. I hope that more efforts can be made in this area.

PRESIDENT (in Cantonese): Follow-up question.

MR HUI CHEUNG-CHING (in Cantonese): Textiles exported by Southeast Asia to Europe enjoy preferential tariffs and no quota restriction. If this trend continues and if we fail to come up with any countermeasures in Hong Kong, our products will become very expensive.

CHIEF EXECUTIVE (in Cantonese): This problem does not affect Hong Kong alone. We have had frequent arguments about the exports and the currency value of Hong Kong and mainland China. As I said just now, during the past two weeks, all the European currencies and the Japanese yen have risen against the US dollar. This will ultimately be helpful to us. We will come up with countermeasures keeping in view the length and depth of the adjustment period.

PRESIDENT (in Cantonese): Mr Bernard CHAN.

MR BERNARD CHAN (in Cantonese): Madam President, the Government pointed out in the policy address that the main work on the guidelines and regulations for the Mandatory Provident Fund (MPF) scheme will be completed this year. However, no date for its implementation was mentioned. We in the insurance sector are very worried that the Government might postpone the implementation of the MPF scheme under various kinds of political and economic pressure. If so, the tens of millions of dollars we spend on the launching of the schemes would go down the drains. Could Mr TUNG make an explicit statement about whether the Government is really determined to implement the MPF scheme? Moreover, will Mr TUNG give the date and timetable of the implementation of the MPF scheme intended by the Government, so that the industry will have confidence to make investments?

CHIEF EXECUTIVE (in Cantonese): The MPF scheme will certainly be implemented. Of course, there are many calls in the community ¢w especially from small and medium-sized enterprises ¢w to postpone the implementation of the MPF scheme in view of the present economic conditions. As far as I know, the Government's target is to implement the scheme in 2000. This target remains unchanged.

PRESIDENT (in Cantonese): Mr CHAN, do you have a follow-up question?

(Mr Bernard CHAN indicated that he had no follow-up question)

PRESIDENT (in Cantonese): Mr MA Fung-kwok.

MR MA FUNG-KWOK (in Cantonese): Madam President, in last year's policy address, the Chief Executive proposed the setting up of almost 10 commissions, including the Commission on Strategic Development, the Elderly Commission and the Film Services Advisory Committee. In this year's policy address, you have proposed to set up more commissions of this kind. How do you see the functions and effectiveness of these commissions? In particular, how could they translate the conclusions they have drawn from their discussions into policies? Could there be cases where discussion is held but no decision is made or decision is made but implementation is impossible?

CHIEF EXECUTIVE (in Cantonese): The Elderly Commission is now doing a lot of work and working quite well with the Social Welfare Department. Yesterday I mentioned in particular the Commission on Strategic Development which is also undertaking a lot of work. I know that the Bureau Secretary will submit a report to this Council. Besides, the Commission on Innovation and Technology chaired by Prof TIEN Chang-lin has also come up with a lot of valuable recommendations. I believe the Government will consider these valuable and innovative ideas in detail and implement them if deemed meritorious. This year I have proposed to set up a rather special council. I have invited more than 10 world-renowned figures from the industrial, commercial and financial sectors to form the International Business Council. This Council will look at the future development of Hong Kong from the international perspective. I believe this would help Hong Kong tremendously. Hence, every time when we set up a commission, we will consider carefully before deciding on that.

PRESIDENT (in Cantonese): Follow-up question.

MR MA FUNG-KWOK (in Cantonese): I would like to ask a follow-up question about the Council just mentioned by the Chief Executive. Is it because the Chief Executive thinks that the current Civil Service lacks an international perspective and you need to set up the Council as a supplement? Or is it because you want to win more support from this Council?

CHIEF EXECUTIVE (in Cantonese): Members of this International Business Council include the President of the General Electric of the United States and Mr Rupert MURDOCH. Is it not a good thing if we could bring all these people together and listen to their views on Hong Kong from the international perspective? In fact, I meet each of them once every year. But if we could gather together to have reviews and talks, I think this would be helpful to me and my colleagues tremendously. We decided to set up this Council with this picture in mind.

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung.

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, yesterday Mr TUNG talked about the schedule for implementing whole-day schooling in primary schools. This is something which I think the whole education sector would support. However, I do not agree that, in order to expedite the pace of implementing whole-day schooling, the Government should implement the measure of increasing the number of students in each Primary One class by two, as well as requiring secondary schools to shelf the plan of cutting the number of students. Will the Government try to think of an arrangement that has the best of both worlds, that is, increasing the number of teachers, at the same time of expediting the implementation of whole-day schooling, so as to improve the teacher-student ratio and to ensure that the quality of education will not suffer?

CHIEF EXECUTIVE (in Cantonese): Mr YEUNG, in fact I personally do not agree to this too. (Laughter) However, sometimes it is really difficult to balance the concerns of all sides. We have indeed put in a lot of efforts to come to this conclusion. In the policy address, I have also said that even though this is the conclusion, we will have to take account of the condition of new arrivals in future. That is another big issue. We will pay attention to all areas and, if possible, we will definitely make changes. This is our common goal.

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung.

MR YEUNG YIU-CHUNG (in Cantonese): If the number of students increases, can the schools hire more teachers in order to maintain the ratio between teacher and student at a reasonable level?

CHIEF EXECUTIVE (in Cantonese): Mr YEUNG, I do not know if merely increasing the number of teachers can solve the problem because it will also involve issues such as classrooms and other matters which have to be resolved all together.

PRESIDENT (in Cantonese): Mr LEE Wing-tat.

MR LEE WING-TAT (in Cantonese): Madam President, Mr TUNG said in a radio programme that he had visited residents of old buildings in Sham Shui Po. He said that he was distressed by their living conditions. But, as a matter of fact, what the people expect is more than just a feeling of distress. People expect him to translate distress into action. Mr TUNG said that as the piling works of many housing projects under the Housing Authority (HA) scheduled to be completed before 2001 had been finished, alteration was impossible. This I agree. However, if Mr TUNG thinks that the real estate market has been stabilized and that the construction cost has been lowered while many architects and surveyors are out of job, why do we not make use of this opportunity to expedite the construction of those public rental housing blocks scheduled to be completed after 2001 so as to shorten the waiting time from five to two or three years? Why do we have to wait for eight years until 2005 before the waiting time for a public rental unit in such a wealthy city as Hong Kong can be reduced to three years? Is it not a great pity? Why do we not expedite the public housing projects so that the waiting time can be shortened to three years by 2002 or 2003?

CHIEF EXECUTIVE (in Cantonese): Mr LEE, first of all, we ought to consider that the original waiting time is seven years which will be reduced to three years by 2005. In fact, the process has been much expedited. I think this is a very important commitment. In 1998 we have been doing quite well. As to whether the rehousing process can further be accelerated in the future ...... Mr LEE, it seems to me that you are a member of the HA, (Laughter) you can advise me of your suggestions. (Laughter)

MR LEE WING-TAT (in Cantonese): Let me put it in a simple way. I understand the constraints you have. Take public rental housing to be completed before 2001 as an example. There is nothing we can do because the piling works have already been carried out. But I think you are very "generous" in doubling the quota under the Home Starter Loan Scheme from 5 000 to 10 000 within a year. On the other hand, cage home lodgers and those in poor living conditions are requesting faster rehousing. Concerning the so-called seven years' waiting time, I hope Mr TUNG would remember that the former Legislative Council had proposed that the waiting list should hopefully be non-existent by 1997. So, we have failed to keep our promise once. I am sure Members of various parties share the same view that those on the waiting list are genuinely in need of housing. If Mr TUNG promises to expedite the construction of public rental housing and shorten the waiting list, I in my position as a member of the HA will lend him all my support. I also believe that my colleagues in the HA will lend theirs as well. That will be a nice thing to do. At least I can find one cause in the policy address which I can heap praises on Mr TUNG.

PRESIDENT (in Cantonese): Mr TUNG has listened to your views, Mr LEE.

CHIEF EXECUTIVE (in Cantonese): I will follow up.

PRESIDENT (in Cantonese): Mr Edward HO.

MR EDWARD HO (in Cantonese): Madam President, I intended to ask Mr TUNG three questions, but one of those has already been asked by Mr Ambrose LAU, and that is about the employment opportunities for local professionals. However, I am quite disappointed with Mr TUNG's reply. I met with Mr TUNG on two occasions and raised this question on both, and I have also submitted a paper to Mr TUNG to state my views. However maybe I was sitting too far at the back, Mr TUNG seemed to have forgotten my question. I consider it a good thing for the Hong Kong Government to carry on with all the infrastructural projects. I am not advocating protectionism, but I hope that the Hong Kong Government would appreciate the current plight of our local professionals, and the fact that our community has invested a lot in these professionals and they do have a long-term commitment to Hong Kong. My specific questions to the Chief Executive are, firstly, as regards the calls for tender and the selection of consultants, will the Government grant more points to local expertise, for if we do so, local professionals will definitely make positive contributions to the projects; and secondly, will the Government consider to promote our professional services overseas on a wider scale?

CHIEF EXECUTIVE (in Cantonese): As regards the second point, we have certainly tried to do so and know that this can be done. Sorry, maybe Mr Edward HO is really sitting too far back, so I cannot see him clearly. (Laughter) Mr Edward HO has written to me about this matter and Mr HO Sai-chu has also discussed this with me.

As I said a moment ago, I fully appreciate the plight of local professionals, but of course, we must also consider our obligations to the World Trade Organization (WTO) in the future. I think we should think of a measure that can strike a balance between the needs of Hong Kong on one hand, and the international environment on the other. I can assure you that we will study and follow up on this matter.

PRESIDENT (in Cantonese): Mr HO, do you wish to follow up?

MR EDWARD HO (in Cantonese): Madam President, I would like to point out that the WTO agreement, that is, the Uruguay Round Agreement does not cover professional service. If we look at the practices of other countries (such as the United States where I am registered as an architect ), in spite of their claims I am not allowed to practise there because it would not give me a work permit. I hope that the Government will refrain from using the agreement as an excuse and we must safeguard the interests of our local professionals. Thank you.

PRESIDENT (in Cantonese): Mr Timothy FOK.

MR TIMOTHY FOK (in Cantonese): Madam President, in his policy address last year, the Chief Executive said only 16 words on the policy for culture and sports. This year, that policy has become one of the major policies. I think members of those sectors have all felt encouraged. They especially request me to ask when the Chief Executive will inaugurate the state-of-the-art stadium, since we have waited for it for many years.

CHIEF EXECUTIVE (in Cantonese): I think it might still take some time. The initial plan seems to be to construct it in the Kai Tak Airport area. Can the Secretary Mr Bowen LEUNG confirm whether it will be built in East Kowloon? (Laughter) That is our plan. There is a lot of work to do. It might not be accomplished before Mr FOK's hair has turned a shade greyer ¢w I hope it will not come to that. (Laughter)

PRESIDENT (in Cantonese): Mr FOK, do you have a follow-up question?

(Mr Timothy FOK indicated that he had no follow-up question)

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): Madam President, I believe the biggest problem confronting Hong Kong now is, as Honourable Members have said just now, the confidence crisis, with the lack of confidence in the Government being part of it. In answering Members' questions earlier, the Chief Executive said although policy blunders had spoken people's confidence, the Civil Service had actually done its best and been extremely efficient. However, I think that such an answer is very superficial and lacks depth in terms of self-review. I wonder if the Chief Executive has asked himself the real causes for the policy blunders in the past year. The problem may not necessarily lie with the Civil Service. Was it because wrong opinions had been propounded to the Chief Executive by Members of the Executive Council? Should they be sacked? Just now the Chief Executive said that, in the past three months, he have spent two and a half hours daily receiving outsiders. Has he been meeting the wrong outsiders? Have those people been offering him the wrong advices? Some people have alleged that there are mysterious persons advancing views to the Chief Executive behind the scene. Have these mysterious persons been giving him the wrong views? Or is it because the Chief Executive had failed to give sufficient or clear explanation to the public when he explained his administration, thus losing the people's confidence? I think this is a very important point which the Chief Executive must address squarely. Therefore, I am very disappointed that the Chief Executive's answer earlier was that the Civil Service had tried their best and they had been extremely efficient, so there should not be any problem. Are things really that superficial? Mr Chief Executive, do you have any other views yourself?

CHIEF EXECUTIVE (in Cantonese): Mr LEE, I do not know who is advancing views to me behind my back. Perhaps you could come to my office and sit there for some dozens of hours to observe how I work, you may then see for yourself if any mysterious persons are offering me opinions behind my back. (Laughter)

Just now I have talked about my views on the Civil Service. With some 180 000 to 190 000 civil servants, mistakes are inevitably made by individuals and we have a mechanism in place to review these mistakes. The most important point, in my view, is that we will improve upon a spotted mistake, and that we know how to do better next time. We absolutely have an integral monitoring mechanism.

As Mr LEE mentioned the Executive Council a moment ago, I can discuss this issue with him a bit. I used to be a Member of the former Executive Council. I can say that, in the present Executive Council, every Member is outspoken. While the hours of our meetings are relatively long, we speak more and the discussions on issues are very thorough. With regard to some people's criticisms of the Executive Council, I would say the same thing: I think the Executive Council Members are good and they all work very well.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): Madam President, if the Executive Council is good, the Civil Service is good, the Chief Executive is good and everybody in the world is good, why are there still so many blunders? I think that one cannot just say everybody in the world is good and get by because, in this way, the public does not understand why the blunders happen. In this regard, I believe that the Government has to give Hong Kong people a clear answer so as to let them know what actually went wrong.

CHIEF EXECUTIVE (in Cantonese): Mr LEE, this has been a historical year in which there are two major changes, one being political, the other economic. With regard to the political change, Hong Kong has transformed from a colony to a highly autonomous region which implements "one country, two systems". This significant change has been recognized as successful both in Hong Kong and in the international community. As for the economic change, while our bubble economy had been existing for a while, we were attacked by the international financial turmoil which inflicted a serious blow on society as a whole and on our economic structure, thus bringing about great changes.

I think that no matter whether Mr LEE, or any other Honourable Member or any member of the public is to assess the work of the Government, he must take into consideration if we have a good grasp of the situation in the course of such changes. One must also assess how we are leading Hong Kong to recover its economy, and if we can foresee variables from a macroscopic perspective. I believe in assessing the success or failure of an institution or government, one must consider what it has done in the course of managing these changes. In fact, in the past year, the Government has done a lot in education, elderly welfare and environmental protection, and such work has gained the approval of society. Can we do better? Of course we can. In the event of unexpected incidents in the future, I believe we will do better. Mr LEE can rest assured that we will definitely review ourselves and keep up the efforts in order to strengthen our structure and bring about improvements. I hope that when people assess the Hong Kong Special Administrative Region Government, they will take into account all aspects from a holistic angle.

PRESIDENT (in Cantonese): Dr Raymond HO.

DR RAYMOND HO (in Cantonese): Madam President, I feel like I have hit Mark Six because at first I thought today I will not have a chance to raise any questions.

The Chief Executive mentioned both yesterday and today that he would spend $235 billion within five years to stimulate the economic growth and to create job opportunities. I am personally somewhat skeptical about whether this could be done, and hope that the Chief Executive can tell us in four and a half years' time. However, in relation to speeding up the projects, I would like to offer the Chief Executive some suggestions. If we rely solely on government resources and do not seek to increase our taxes, then the Government will have less tax revenue. Under such circumstances, will the Government consider to encourage more private sector participation by way of Design and Build or BOT, that is, the Build, Operate and Transfer modes? All these will help to speed up the projects and reduce the time required (yesterday, the Chief Executive said it may take 10 years), and may also save on resources. I hope that the Government can consider these suggestions. Moreover, the choice of projects is also very important, otherwise we may not achieve our goals. The Chief Executive mentioned yesterday that the strategic sewage disposal scheme has already been finalized, and about $10 billion was spent in the first stage of the project. All, or nearly all of the works were contracted out to overseas contractors or expatriate professionals. Is this in any way beneficial to us? I doubt this very much. So, the choice of projects is also very important.

CHIEF EXECUTIVE (in Cantonese): Mr HO has made some very good suggestions such as those about BOT, and we shall study and take that up further.

DR RAYMOND HO (in Cantonese): May I follow up?

PRESIDENT (in Cantonese): Please, Dr HO.

DR RAYMOND HO (in Cantonese): I think that the Chief Executive has given developers and members of the labour sector a lot of opportunities to meet and communicate with him, but it seems that the Chief Executive has seldom met members of the professional sector, and at least, this is true for the engineering sector. I hope that the Chief Executive would meet with them more often in the future.

CHIEF EXECUTIVE (in Cantonese): My doors are always opened and you are most welcome.

PRESIDENT (in Cantonese): Last question. Mr SZETO Wah.

MR SZETO WAH (in Cantonese): Madam President, does Mr TUNG know one constituency of a directly elected Member of this Council is equal to how many constituencies of Municipal Councillors? Under such circumstances, how could directly elected Legislative Members completely replace Municipal Councillors in playing the role of ombudsmen?

CHIEF EXECUTIVE (in Cantonese): Mr SEZTO Wah, the first time when I formally talked to you, you tried to put me through a test , and now you are doing the same thing. (Laughter) I can still remember that.

As regards the issue of abolishing the two Municipal Councils, I said a lot about it yesterday. The position of the Government is very clear, and I believe we have the support of the general public, but I also understand that there are a lot of different views in this Council. I hope that with more communication in the next few months, we can reach a consensus and win the support of Members.

PRESIDENT (in Cantonese): Members, the meeting has so far lasted for an hour and a half. Mr SEZTO Wah, you may follow up.

MR SEZTO WAH (in Cantonese): Mr TUNG, the issue of reviewing district organizations was raised in last year's policy address, and at that time, the then Secretary for Broadcasting, Culture and Sport, Mr CHAU Tak-hay, lamented to the Provisional Legislative Council that he was a general without soldiers. In this year's policy address, the Chief Executive has decided to "scrap the Municipal Councils" and repossess their powers. Is this pre-meditated, or is he trying to follow the footsteps of the first Emperor of the Qian Dynasty in recalling all the soldiers to Xian Yang?

CHIEF EXECUTIVE (in Cantonese): I think Mr SZETO Wah is trying to read too much out of this. (Laughter) I hope that in the next few months, colleagues in the Government will work to arrive at a consensus with Members. Thank you.

NEXT MEETING

PRESIDENT (in Cantonese): Members have asked 27 questions in the past one and a half hours. I would like to thank Mr TUNG for answering all these questions in a succinct manner.

I now adjourn the Council until 2.30 pm on Wednesday, 14 October 1998. The Chief Executive will now leave the Chamber. Will Members please rise.

Adjourned accordingly at twenty-five minutes to Five o'clock.