OFFICIAL RECORD OF PROCEEDINGS
Thursday, 22 October 1998
The Council met at half-past Two 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

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

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 SZETO WAH

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

THE HONOURABLE TAM YIU-CHUNG, J.P.

THE HONOURABLE FUNG CHI-KIN

MEMBERS ABSENT:

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

THE HONOURABLE LEUNG YIU-CHUNG

THE HONOURABLE ANDREW CHENG KAR-FOO

THE HONOURABLE LAW CHI-KWONG, J.P.

PUBLIC OFFICERS ATTENDING:

THE HONOURABLE DONALD TSANG YAM-KUEN, 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 RAFAEL HUI SI-YAN, G.B.S., J.P.
SECRETARY FOR FINANCIAL SERVICES

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

MR KWONG KI-CHI, G.B.S., J.P.
SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING

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

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

MR STEPHEN IP SHU-KWAN, J.P.
SECRETARY FOR ECONOMIC SERVICES

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

CLERKS IN ATTENDANCE:

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

MR LAW KAM-SANG, J.P.,
DEPUTY SECRETARY GENERAL

MRS JUSTINA LAM CHENG BO-LING,
ASSISTANT SECRETARY GENERAL

MEMBERS' MOTION

MOTION OF THANKS

Continuation of debate on motion which was moved on 21 October 1998

PRESIDENT (in Cantonese): Honourable Members, we shall now continue the debate on the Motion of Thanks moved by Dr LEONG Che-hung.

MR DAVID CHU (in Cantonese): Madam President, the second policy address of the Chief Executive of the Special Administrative Region (SAR) is a forward-looking one. Regrettably coming at a time of Hong Kong's gravest economic troubles in 50 years, it has been unrealistically taken by some in our community as a prescription with immediate market revitalizing effects and thus has been criticized for failing to deliver such. However, we must understand that Mr TUNG, as the Chief Executive, is no magician. Such people overlooked the portions of the policy address that will play an important and enduring part in the long-term development of Hong Kong. In my speech I shall give my views on the policies proposed in the policy address on education and social welfare. Other aspects have already been covered by my colleagues of the Hong Kong Progressive Alliance (HKPA).

Our most valuable asset is our human resources. There have been numerous storms in Hong Kong over the last 100-odd years and we managed to come out of every crisis stronger, thanks to the fighting spirit and perseverance of the Hong Kong people. It is therefore our most important priority to have a set of sound policies to invest in local human capital. I welcome the proposal of the Chief Executive to let education continue to be the biggest single item of recurrent expenditure. I also fully support the several education measures proposed in the policy address, the initiative of learning through information technology (IT) in primary and secondary schools is particularly in keeping with the times. However, I think that the pace of providing IT co-ordinators could be quickened so that each and every school in the territory would get one as soon as possible. The Government must also strengthen teacher training in order to match the initiative of learning through IT.

The major principle of to "enable our students to be bi-literate and tri-lingual" is correct and worth our support. Nevertheless, many parents still have no confidence in mother-tongue learning; and there are teachers not yet accustomed to using teaching materials written in Chinese. Therefore, the Government has to inject resources to intensify the English training of students on the one hand so that their standard of English will not be lowered as a result of mother tongue learning, and on the other hand, Chinese teaching materials should be actively developed to help teachers in using Chinese as the medium of instruction.

In the area of higher education, I consider that quantity and quality should be equally stressed. While academic knowledge is taught, the development of the students' personality should also be taken care of. The proposal of increasing 11 000 hostel places for students has my greatest support, because not only is hostel life the most fascinating part of the university experience for students, it can also promote the students' sense of belonging to the university. What is more important is that it will enable the students to spend more time on campus to participate in extracurricular activities which can help train them in interpersonal communication skills and in leadership.

On social welfare, I fully support the Government's comprehensive review of the system of welfare financing so that our social welfare programmes can help those with genuine needs without wasting public resources. I think that at the same time social welfare is developed, we should specifically stress on promoting the spirit of "self-reliance" so that Hong Kong would not become a territory of "welfarism".

Besides, I also support the voluntary programmes mentioned in the policy address, in particular the one to involve the elderly people because it will fully manifest the Chinese spirit of giving the elderly "a feeling of personal worth" and of "self-help and helping others".

I am nevertheless disappointed that the "funding for social welfare development" was not promised in the policy address. I believe there are still many people in our society who need assistance. It is worth the while to set up a fund to introduce new social services for them.

Lastly, the HKPA would like to express some of its thinking in respect of the Government's decision not to retain the two Municipal Councils. Everybody knows that major engineering projects will be carried out in the New Territories in the coming 10 years, so will the pace of urban renewal be quickened. The demand for municipal services by people in the New Territories and those in the present urban areas of Hong Kong Island and Kowloon will remain keen, and there will also be big differences between such demands of the two areas. Therefore, there is still a point in keeping the two Municipal Councils and there is also a need for the two Councils to perform their respective functions. What is equally significant is that the two Municipal Councils have long been an important channel for democratic participation on the part of the citizens, and the key organizations for municipal services at the district level. The issue of re-structuring should be given more consideration, and should be implemented in a gradual manner so as to avoid sacrificing democratic participation and public interests for the sake of administrative convenience. It is a pity that the Government has refused to extend the consultation period and stood firm on not retaining the two Municipal Councils. To this, the HKPA expresses its regret. We hope that the Government would shelf the decision and instead begin rational and pragmatic discussions with the various sectors with a view to going forward with the restructuring of the district organizations only after the broadest consensus has been reached.

Summing up, I think this far-sighted policy address is worth our support. With these remarks, Madam President, I support the motion of Dr LEONG Che-hung.

PRESIDENT (in Cantonese): Mr Ronald ARCULLI.

MR RONALD ARCULLI: Madam President, debates on policy addresses are generally reflections by Members of this Council of their dissatisfaction with the Government's stingyness when times are good. It, therefore, comes as no surprise that when times are tough, as it is now, Honourable colleagues and indeed the community expect the Government to do away with all our troubles in one stroke. In the absence of an instant cure, someone has to be the fall guy and who is an easier target than our Chief Executive, Mr TUNG Chee-hwa? But is this fair or realistic?

Madam President, I shall divide my comments broadly into three sections. First, I will deal with housing and financial services, then with the cost to the community of the public sector expenditure and conclude with constitutional affairs, the relationship between the executive and the legislature and the three amendments.

Madam President, many of us recognize the importance of economic growth to any community and Hong Kong is no exception. Even our democrats acknowledge this, although democracy seems to remain their top priority. Many of us also recognize the tremendous contribution that the property and construction and the financial sectors have made and will undoubtedly continue to make to our economy. Indeed, the policy address rightly compares Hong Kong to New York and London and sets the attainment of a similar status as our ultimate goal. At the risk of being immodest, I daresay that goal is within our reach, but we will have to pay our dues.

In seeking such a status, we must not be deterred from making changes to ensure that our financial markets are well-regulated, open and fair. We must not be blind to or fear criticisms and must keep abreast of developments in global financial markets. Indeed, when we are convinced we are right, we must not be shy to put forward new ideas as our Financial Secretary did in his latest sales trip to America and Europe. Although it is early days, the signs are encouraging that we will see a new order for regulating global financial markets. Hong Kong is undoubtedly the best equipped financial market in Asia to play a leading role, and I welcome the Financial Secretary's invitation to host G-22 meetings in our search for a solution. Madam President, in seeking that ultimate status, we must not forget that our own people must play an important role. By its very nature, the financial services sector is highly demanding and competitive and it, therefore, expects a highly professional and skilled workforce. It is in this area that the regulators, market participants and the professions can and should seek the support of the Administration, should policy or legislative changes be necessary. Government-led changes are the least desirable courses because they will lead to criticisms of government intervention, but worse still, sometimes governments do get it wrong and our Government is no exception.

Madam President, no international financial centre can sustain its position without a debt market. In this respect, I urge the Administration to use its powers of persuasion and whatever else it takes to accelerate the process. We have spoken about this for sometime, and the establishment of the Hong Kong Mortgage Corporation was a good step in that direction, but I do believe we are moving too slowly. We must give our local and indeed foreign investors as many investment alternatives in our financial markets as possible. Madam President, this goal needs not go through any strategic thinking process. We should just do it.

Madam President, in the past few months, the steep decline of property prices brought about calls from all and sundry for measures to be taken to stabilize the market. The policy address has rightly acted on such calls not ─ I emphasize "not" ─ for the purpose of supporting property prices or property developers, but out of concern that if the decline is unchecked, it will affect the banking sector and that will be in nobody's interest. A stable property market is vital to restoring confidence which is necessary for stimulating domestic spending. A review of our housing policies is also timely.

Madam President, I say that the housing review is timely because we have not kept pace with the times. Those in most need of public housing have to wait six and a half years. The problem is even worse when it comes to our elderly, for the majority of them die before they are housed. On top of this, we have those living in caged bedspaces and rooftops, as well as an ineffective urban renewal strategy plus industrial areas that have long outlived their usefulness.

Madam President, one key issue is subsidized home ownership. The markets have been somewhat puzzled by the variety of schemes to promote home ownership and the role of the Government in housing production. The subsidies are either bricks and mortar or by way of loans. But in view of the many complaints about public sector homes under the Home Ownership Scheme, the Private Sector Participation Scheme or the Sandwich Class Housing Scheme ranging from the time it took to produce to the lack of reasonable quality in the end product, would it not be much better to subsidize home ownership by way of loans rather than by "bricks and mortar"? It would be far more productive to concentrate on this method and work out the details including transitional arrangements.

Madam President, every year, Members of this Council put forward expenditure and revenue proposals. It has been relatively easy in the past, because we have had sustained growth and the problem we had was how to spend money and how to restrain government appetite for revenue. Sadly, this year is different. Perhaps, this is why the Administration's medium range forecast of our trend growth for the next Budget is pitched at a somewhat optimistic 4%. This will give us a tidy $6.8 billion of "new" money for new or improved services. Many Honourable colleagues were pleasantly surprised by the Administration's adherence to this forecast, but why should we be doubting Thomases? I hope this is not a crumb thrown to us to silence our dissatisfaction with the half-hearted and almost pitiful attempt in obtaining a productivity gain of a mere 5% over a three-and-a-half-year period under the Enhanced Productivity Programme (EPP). Nor I hope is this a trade-off, an attempt by the Financial Secretary to increase taxes and revenue in the next Budget.

Madam President, those of us who have been in this Council for more than one term will know the efforts made by this Council in persuading the Administration to cut wastage, cost, red-tape and layer over layer of civil servants or those in the public sector, as well as increase productivity and efficiency. It is high time the whole Civil Service and the subvented sector take quick action in this regard. But we must not stop there. The EPP should also apply to non- government public spending like the Urban Services Department, the Regional Services Department and the Housing Department which together have an operating budget of over $20 billion. It should also apply to trading funds departments which have a total operating expenditure of some $4 billion. Madam President, the list does not stop there either. One example of too much bureaucracy and too many layers is our Education Department, where 3 000 out of 7 000 staff are not involved in direct school duties. Furthermore, each year, some 3 000 to 4 000 civil servants retire and that by itself present an opportunity to save anywhere up to about $1.5 billion per year without taking into account on-costs.

Madam President, the Administration has a golden opportunity to restore public confidence by pleasantly surprising us with a larger than 5% productivity gain and a drastic rethink of the way the public sector operates. Both are long overdue.

Madam President, this brings me to the relationship between the executive and this Council. Cynics might say what relationship? Both historically and under the Basic Law, ours is an executive-led Government, but what does that mean? True, there is a measure of consultation by our Bureau Secretaries regarding new or changes to existing policies or legislative proposals. But even with the best will in the world, there are bound to be disagreements. In a system where Bureau Secretaries have the power and perhaps accountability but with virtually no consequences if a wrong decision is made, while an elected legislature has both accountability and responsibility to the voters and effectively only a veto power, we have a recipe for collision. I remember that when the Liberal Party first called for a ministerial system in 1994, we had few supporters. Today, we count among supporters for a ministerial system some senior civil servants. But will the introduction of a ministerial system make all these problems disappear? Of course not, but it will go a long way in producing a smoother and much better balance of power, accountability and responsibility. But that having been said, I think it is fair to say that the consultative process whilst improving still has some ways to go. On our part, the Liberal Party will continue to strive for improving relations with the executive, but we will not shirk from criticizing the executive when we believe that the executive is wrong. In this respect, I would reiterate our position regarding the two Municipal Councils. As the Administration has only set out its position in the policy address, it does not seem fair that the public support for abolition of the two Municipal Councils is relied upon without telling the public the total plan. It is only when all of us know the whole plan that we can gauge whether that support is still there.

Finally, I would like to say a few words on the amendments put forward by my Honourable colleagues. First of all, we have to understand that a motion of thanks is, by nature, a matter of protocol. The motion itself does not touch on the substance of the address. Therefore, I see no point for any amendment to be made to the motion. If Members wish to make criticisms to the policy address, they can do it through the debate. If there are some Members who find the policy address completely unacceptable, they can choose to vote against the motion which is equivalent to a vote of no confidence. Moving amendments to a motion of protocol is neither necessary nor reasonable. The Liberal Party will, therefore, support the original motion but not any of the amendments.

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

MR LAU CHIN-SHEK (in Cantonese): Madam President,

The threat of unemployment and pay reduction

The latest unemployment figures as announced show that the unemployed population has increased from 174 000 to 181 000. With roughly 1.8 million families in Hong Kong, it means that one in every 10 families has one of its members out of a job. The situation is extremely serious!

At present, shadowed by unemployment and in the face of pay reduction, all working people are worried and fear for themselves, not knowing when the bad luck of layoff or pay reduction will befall them! Our trade unions now have to handle complaints from workers about layoffs, pay, bonus or double pay reduction, and overtime work without compensation, almost on a daily basis. It can be said that unemployment and pay reduction have become the perils threatening the livelihood of the people!

Some have said that the recent rebound in the stock and property markets presages an economic recovery, showing that public confidence has been restored. I do not understand whether a rising stock market represents public confidence and a falling one the lack of it. Then, there have been citizens "forced" to jump off a tall building to end their lives for fear of not being able to pay the mortgage payments of their flats. Does this signify confidence, or a lack of it?

The prompting words of the Chief Executive

During the debate yesterday, some Members brought up the argument of free market, saying that the public believing in free economy should not expect the policy address to prescribe any solution. I trust there is no more need for me to elaborate my understanding of the role of the Administration. However, one thing stands out conspicuously, and that is Mr TUNG Chee-hwa, the Chief Executive, as compared with other government officials, has been the only person who over the past year or so repeatedly alleged that Hong Kong "has high wages". Even though we do not accuse Mr TUNG of being the chief mover and perpetrator behind the recent tide of pay reduction, I would believe, he has to bear a responsibility of making way for the pay reduction wave. It is common knowledge that he alleges that the wages of Hong Kong workers are too high, and thinks that wages should be adjusted downward so as to increase Hong Kong's competitiveness. Even in his speech marking the first anniversary of the reunification in last July, he did not forget to mention once again the issue of high wages.

The high wages always hanging at the corner of the Chief Executive's mouth have become one very good excuse for the various private enterprises to reduce workers' wages recently. In the name of "enhancing productivity and competitiveness", they in reality simply "fish in trouble waters", and to indiscriminately reduce pay across the board in the midst of the economic downturn. At the questions session, the Chief Executive said that the Government should not interfere with the wage level in the private sector, but he did not clearly explain why he maintained in the past that wages in Hong Kong were high!

Though the Chief Executive has not made, or refuses to make, a reply in public, I wish to point out unequivocally that the wages of the general working population in Hong Kong are not on the high side, instead it can be said that they are in fact relatively low. When compared with countries having a level of development similar to that of Hong Kong, the workers in the manufacturing sector in Hong Kong, for example, earn average monthly wages of around US$973, while their counterparts in Singapore, South Korea and Taiwan, the other three of the four Asian dragons, earn about US$1,500, all higher than in Hong Kong. In fact there are reasons for high wages in Hong Kong, the main one being that inflation in Hong Kong has remained consistently high for the past 10 years. If the factor of inflation was discounted, the wages of manufacturing workers in real terms saw a 0.5% negative growth in the past five years. During the same period, however, the manufacturing workers in other Asian economies enjoyed a positive growth, with those in South Korea taking the lead, with a real-term wage increase as high as 7.1%.

On what grounds can the Chief Executive say that wages are high in Hong Kong?

The Government helped the wicked trend

The allegation by the Chief Executive of high wages has sparked off the fire of pay reduction, and now working people are all engulfed. But the Chief Executive simply backed down, saying that "the Government cannot say if Hong Kong is a high-wage or low-wage economy, and should let the market seek its own equilibrium." Has he ever thought about the hardships of the ordinary citizens of today?

Though the unemployment rate is 5%, as I said earlier, there is already one family in 10 with a member without a job. If we take into account underemployment, reduction in pay, bonuses and double pay, a family may be subjected to multiple hardships: the husband is laid off, the wife has her pay reduced, and the son, just graduated, finds himself a member of the unemployed ranks. Middle-income families do not fare any better, with their property becoming a negative asset, interest for mortgage payments remaining high, while all the time worrying about the security of their jobs. They are facing huge pressures, how can the Government just stand there and do nothing?

The Government has refused to introduce legislation to protect the workers, and has only planned to issue guidelines that are not binding. I would like to ask Mr TUNG, if a company reaping huge profits still insists on reducing the pay of its staff, what in the name of God can the Government do? Is it prepared to let workers be exploited? If the workers stand firm against pay reduction, does the Government simply accept that the workers will have no alternative but get the sack?

The Government has only incessantly stressed capital/labour consultation, but has not addressed properly to the reality that in industrial relations, the capital and the labour are never on any equal footing. What is more, it has repealed the law that provided for the right to collective bargaining that the working people originally enjoyed. Therefore, the Government is not even standing there doing nothing, it is effectively aiding and abetting the evil trend!

The Chief Executive could really have "no regrets" over his views about "high wages", "no regrets" about the repeal of the laws. However, if he goes on like this, would the so-called rebuilding of confidence merely achieve the opposite results, with the gap between the Chief Executive and the citizens growing bigger by the day?

The citizens are merely a difficult problem

Madam President, I also would like to talk about a theme of the policy address, that about the so-called "collective planning and concerted efforts".

The Chief Executive stresses that we should work together. But he has never thought of working together with the ordinary citizens, because the latter, to him, are only a "problem", a "difficult problem", or sometimes even his "burden".

Precisely because the Chief Executive takes the ordinary citizens as a "problem", a "difficult problem", or a "burden", instead of partners with whom he can work together to solve problems, to him "democracy" is a great scourge, and "people being masters of their own house" simply a myth. In order to solve the "problems" as he sees them, the partners of the Chief Executive in "collective planning" are the big consortiums, business tycoons and designated professionals, or even foreign entrepreneurs or celebrities. As a result, various big and small special committees are appointed. What is the purpose of them? They are there to satisfy the needs of those who "plan collectively", to satisfy the needs of his partners.

However, come to think about this, those big consortiums, business tycoons, and even the foreign entrepreneurs and celebrities mostly go where money leads them. Once there is no money to be made here, they will leave. Generally, they have no sharply defined commitment to Hong Kong.

In praise of the flood-fighting spirit

When the Chief Executive praises the flood-fighting spirit, the image flashing through my mind is that when the flood waters come, he himself and his partners in "collective planning" stand on the banks, showing from time to time their "sympathy" and "sorrow" over the hardships of the people. But below fighting the floods are the people making "concerted efforts", forming "human sand bags" and trying to stop the deluge with their "Great Wall of flesh and blood"!

Whether the policy address should earn the "thanks" of the people of Hong Kong for the Chief Executive, regardless of the eventual result of the vote of this Council, I believe the people of Hong Kong all know for themselves!

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Eric LI.

MR ERIC LI (in Cantonese): Madam President,

Economic downturn, political stability

The economy of Hong Kong has turned for the worse since the first policy address of the Chief Executive last year: the stock market and the property market plunged, consumer spending has remained low, and unemployment high, directly affecting the livelihood of many citizens. The magnitude of the changes is well beyond what was first anticipated.

However, we may take comfort in that in the past year, Hong Kong enjoyed political stability, the previous way of life with all the freedoms such as public speech, demonstration and procession compared favourably with that before the reunification, and this Council was returned by a record number of voters. On the surface of it all, everything has been going on smoothly, earning us more recognition in the international community over the successful handover of sovereignty, further consolidating our position as an international financial centre.

Giving vent to emotions does not help

However, the second policy address of the Chief Executive has been the subject of an almost overwhelming wave of criticisms by the media since its delivery, which to a certain extent has led the direction of public opinions. It is particularly so because in the midst of the present economic hardships when the citizens, facing a multitude of predicaments, have unduly high expectations of the policy address, and naturally as a result, suffered greater disappointment. The policy address, exposing the limited ability and ingenuity of the Government, immediately opens the floodgate for the people to give vent to their feelings, and gives political parties an opportunity at no cost to them to earn free propaganda through amendments to the present motion, thus adding injuries to insult. One year ago nobody would have guessed that the Chief Executive, who stressed economic issues at the expense of political ones, would have tripped over his management of economic problems.

Though mistakes are glossed over, do not be disheartened by mistakes

The fault of the Government is glossing over its mistakes. However, with public feelings down the abyss of extreme pessimism now, this Council will not be able to help the people of Hong Kong get out of their plight simply by castigating the Government with inflammatory words. In the chapter of A Leisurely Trip, Zhuangzi said, "Do not get elated even in the face of universal praise; nor get disheartened even in the face of universal criticism". As a matter of fact, Hong Kong still has in its possession all the strengths. The people of Hong Kong should examine the reality and the trends, analyse with a cool head the gains and losses. Members of this Council should also show more restraint and pragmatism politically with a view to jointly finding a way to turn crises into opportunities.

Scoring in macroscopic issues, losing for having little punch

As opposed to the magnificent plans in last year's policy address, the main theme of the present lacklustre one can arguably be "to change and adjust and to stabilize public confidence". With respect to the basic content, this main theme does have its merits, particularly because it serves the purpose of sending out the Government's very unambiguous message to the local and foreign business communities in respect of the macroscopic economic environment, that is, the across-the-board revision of the housing policy, stabilizing property prices, rigorous defence of the linked rate of the Hong Kong dollar, fostering an environment where interest rates will go down, a knowledge of the weakening of the Hong Kong dollar in the wake of a softened US dollar; all these, plus active investments in infrastructure, measures to reduce taxes, will provide the most important and most effective conditions for the recovery of medium- and long-term investment confidence.

It is actively promoted in the policy address that co-operation with the Mainland be strengthened and that several most well-placed economic activities be helped with a view to, with time, becoming major economic pillars of Hong Kong outside real estate and financial services, so as to increase the growth potential and stability of the overall economy. Such endeavours, though not without risks and requiring both time and resources, are in the face of the acute international competition nevertheless forward-looking and indispensable administrative policies. This Council should give them a high degree of recognition.

The policy address may have managed to "see opportunities" amid crises in the economic areas. But how are we going to seize such future economic opportunities and meet the challenges they would bring? How the specific actions on the part of the Government can convince people that they are effective and can really grasp the chances? The opportunities might be there, and there are lofty goals, but the actual action plans have been set in too uncertain a way. This inadequacy can but make the citizens feel that the Chief Executive is resorting to the tactic of painting rosy pictures, simply to give them something to hope for. The end result is giving a political "opportunity" for the opposition to create the illusion of the Government having an administrative crisis.

The citizens, while in deep waters with confidence wearing very thin and despite their knowledge of the limited ability of the Government, apart from expecting the emergence of a firm, strong and innovative leader, will also hope against hope that there might, just might, be a chance that a miracle will come about, bringing a gleam of light of recovery, just as was the case in the past. Hong Kong lost its confidence before. On such occasions, the Government would suddenly propose new mega-plans, like the new metropolitan projects and the new airport projects. And while the citizens were still dazed, the Hong Kong Government of that time showed forthwith unbounded determination and started to implement such projects with lightning speed, giving people a much needed shot in the arm, cheering them up like a magician who brings a rabbit out of his hat. Mr Timothy FOK also told me that such strategy in football terms could be called "launching a sudden attack after securing a tight defence". Now with no hope of any miracle projects, the citizens are openly and loudly expressing that they want development opportunities at any price, even such alternative medium-sized projects as a Disneyland theme park. This has totally exposed the unfulfilled desire of the Hong Kong people for "opportunities", whether long-term or short-terms ones.

Be innovative, do not be passive

Besides innovative objectives, the morale and work attitude of the key commanders in our Government whose job is to lead the people of Hong Kong are very important. They must uphold the cardinal principle of the officialdom that when times are good, they should exercise due prudence and should not take any rash actions, and should act only after careful and detailed contemplation; and when the going is rough, they should be positive and active, take the lead and act at the first possible moment with determination to solve all troubles and allay worries. This would show their valuable worth. I would like to quote a few examples for illustration purposes.

(1) Reduce business costs, enhance competitiveness

The Government has a plan to streamline the laws and procedures and to increase out-sourcing of services in respect of the entire operation and metabolism of registered companies, from their inception, to daily operation to eventual liquidation, if they ever come to that, so as to achieve the goals of having higher economic effectiveness and lower overall costs. However, after the last Budget was published eight months ago, a series of related measures are still something we only hear about. The progress of the actual work is slow, and none of the measures can be implemented in time to ameliorate our present predicament.

As we now see, new companies incorporated are rare, while thousands of companies are folding up, among them possibly an unknown number might just have a chance of survival under the new laws. The work of liquidators is piling up, and untold amounts of assets have long been frozen. It makes people think that the officials concerned abide too much by existing rules and do things taking their leisurely time, simply out of touch with the situation in the real world!

(2) Attracting foreign investment

Apart from the snail's pace in providing more competitive conditions, the Government has shown little genuine initiative in implementing the overall strategy of promoting and attracting investment. Other than the routine, such as talks, exhibitions and publicity materials, the officials seem to completely lack the instinct and ability for any active actions.

Just look at other Asian countries. Not only do they have strategies to lock on world-class companies as targets of their promotional efforts, they also dispatch their highest ranking officials, including even their presidents and vice-presidents, to do the lobbying and appeasing. At the negotiation table, they can allow all sorts of flexible arrangements in respect of taxes and grant of land. The governments concerned other than displaying attitudes that "anything can be negotiated", designate special personnel to provide immediate services to help the foreign investors get all trivial procedural matters done. Against such aggressive services, the Hong Kong-style promotional efforts are mighty passive, leaving everything to chance.

(3) Open up the market on the Mainland

Though the policy address talks a lot about development opportunities on the Mainland, the results of actual discussions remain insignificant.

In reality, limited by political factors, the economic development of Hong Kong could only be export-oriented. Our internal market is small, and is in no position on its own to bring about a revival to our economy. Therefore, apart from looking forward to better times in Europe and America, thus waiting passively for our opportunities to come, there used to be no better alternative.

But, after the reunification in 1997, the gradual relaxation and reduction of the various taxes and quotas on Hong Kong goods by the Mainland should be an object of our efforts. While Hong Kong is completely open to mainland products, if we can take the initiative to gain even some of the market share on the Mainland for Hong Kong merchandise and services, our economic recovery would just be around the corner. Will the Government think and rethink this close opportunity with a new way of thinking?

Merely to obey orders, or risk being political?

The policy address tends to avoid many of the most important political issues. With the Chief Executive showing nothing, people are made to worry whether the present superficial stability already might have hidden certain undercurrents, and whether the relationship between the Executive and Legislative Councils and the Civil Service is being subjected to a grave test.

I have been all along proud of the high credibility, high efficiency and the esprit de corps of our Civil Service; I am particularly so in view of the active determination and unequivocalness of the Civil Service Bureau and the Finance Bureau in taking up the mammoth task of asking civil servants to accept the reality as well as the policy direction in the adjustments to pay and fringe benefits, and the streamlining of the government structure. This amply demonstrates the self-discipline and self-strengthening qualities of our Civil Service, and deserves our respect and support.

However, expecting the most from those we love best, we should criticize as well as praise. Whenever I observed a light laxity and complacency in individual officials, or that they were a little off their political neutrality, I would feel that I had to sound the warning, and could only become comfortable after having done so.

Quite a number of Members already mentioned the recent arrogance or arbitrary ways of doing things of certain officials. Such conduct is out of line with their role as remunerated civil servants. Good or bad, learned or otherwise, the Chief Executive and Members of this Council were elected under the provisions of the Basic Law. Poor performance on their part will be subjected to the criticisms or other sanctions of the public and their constituents. Civil servants, on the other hand, do not have an equivalent constitutional mandate. Though some of them may be superbly learned, they are still directly or indirectly in the Government's employ, and should within the establishment be doing what they are paid to do. They may advise the Chief Executive, but once a decision is made, they have to take orders, adhering strictly to their political neutrality, and move forward without looking back in doing their utmost to carry them out. Their duties include briefing this Council as best they can, harmonize and make changes, until they have the support of at least half of the Members of this Council. Now that there are dissenting political views, and different political parties, in the greatest majority of cases, such objectives can be achieved.

Poor management, unclear reward and punishment criteria

According to the concept of the original system, when civil servants disagree with the policy decisions of the Chief Executive, they have only two options: they can either accept the orders or resign. There is no room for them to insist on their own views. Officials naturally are not without initiatives, but such initiatives must be countenanced by the Chief Executive. If officials are allowed to act contrary to what they are ordered to do, this would be a first-level management mistake of the Chief Executive. If officials are allowed to submit faulty policy proposals, or to make a multitude of mistakes in carrying out policies without being duly punished, that will be a second-level management mistake. For such mistakes, the Chief Executive must take his share of the blame, and must bear political responsibility.

Deviating from neutralism, taking over political power

Another possible scenario is that a number of civil servants collectively deviate from political neutrality, and insist on having the power to formulate their own policies. If such a case is again acquiesced by the Chief Executive, it would represent a radical change to the system. It would then justify the ministerial system advocated by many Members that would require the officials concerned to bear the political responsibility for the policies they formulated. If not so, the officials would enjoy power without at the same time any responsibility, and the Chief Executive would eventually become "the boss carrying the can".

At present, what many Members and citizens see are a Civil Service that is perennially "without fault, under no control, incurring neither reward nor punishment". The blame can be put on (a) the Chief Executive who has failed to exercise good management, and has been muddled in handing out rewards or meting out punishments; and (b) individual civil servants who deviate from neutralism, and take political power in their own hands, but leave the political responsibility to the Chief Executive and the entire Civil Service. As a matter of fact, the two are intrinsically different, but only the Chief Executive can tell. If the Chief Executive thinks that it is a case of the former, he should immediately strengthen management, and with the help of the Chief Secretary for Administration, restrain the behaviour of the officials so as to rectify the public image of the Civil Service; if it is the latter, he should consider institutional changes, filling principal policy-making posts by political appointments, so that such appointees would personally take up political responsibility. At the same time power is shared, there must also be a corresponding sharing of responsibility, so as to maintain the stability of the whole administration.

The Chief Executive also expressed concern over the straining relationship between the executive and the legislature. But he does not seem to understand the underlying reasons for that. Part of the cause could naturally be the excessive demanding attitudes of certain Members. However, if the style of the Chief Executive and the subject officials is that they listen extensively to all opinions, but in the end the act only serves to demonstrate that "of all people only they are clear-headed", any suggestions in line with those of the Government are mere coincidence, how can such an executive-led way of administration not smoulder the enthusiasm of those who are willing to "collectively plan and make concerted efforts" with the Government in working out solutions? Political public relations is in fact an easy thing, its practice does not require any high official or genius. I can remember that some master-hands in the government of the past would attribute their own ideas to other people, claiming that they had come up with such ideas after listening to such other people. Giving credit to other people made those who worked with them happy and completely convinced. Such a technique is one hundred per cent effective if applied to politicians relying on the votes of their constituents. Any approach to the contrary would make every step difficult.

The many topics make focusing difficult

The many topics in the policy address makes focusing difficult. Therefore apart from commenting on politics and the economy, I would only respond a little on matters concerning the youth and the Comprehensive Social Security Assistance (CSSA).

Regarding the direction of the development of youth affairs, the various sectors are glad that it has received the serious attention of the Government, the distribution of resources will really be implemented and that a comprehensive and effective plan will be carried out. Certain Members queried the effectiveness of the boards and committees appointed by the Government. If the work of the Youth Commission can be taken as an example, there should no longer be any doubt that boards and committees can achieve good results. Over the past year, the Youth Commission, working together and in co-ordination with other important advisory committees relating to youth affairs, youth organizations and various government departments, has produced results that have won general approval. I also believe that in this respect the Government could boldly enlist as working partners people like Members of this Council or community leaders who have ideas alien to the Government. On the one hand, this can let us understand and appreciate the internal operation of the Government, and on the other produce very good results.

Since the delivery of the policy address, I have attended some youth forums. The young people, though approve of the work of the Government in youth development, are more concerned about their own education and employment problems. There are extremely strong feelings of dissatisfaction among them. I feel that this warrants the attention of the Government which should begin steps to understand and divert such feelings. The Youth Commission is willing to do its best to assist in this respect.

Regarding the review of the CSSA, I only wish to venture a little piece of advice to the Government: "Do not fire aimlessly, and without clear targets, otherwise there will only be a big fuss with little effect." There is bound to be abuse of CSSA, but the number of the really unscrupulous lazy bones is certainly very small, and the amount actually involved in such abuse is also quite limited. If the excuse is used to threaten the 100 000-odd CSSA recipients with reduction in payment in the absence of concrete proposals, it will only create social unease and a feeling that the Government is not caring. The Government should actually do more and talk less, and shutting up altogether would be even better. The community do have quite good understanding of the actual situation. There is room for a review of CSSA, but the effect of pragmatic discussions might be better than pointedly politicizing the matter by the Government.

There should be nothing against collective planning and concerted efforts

"Turning crises into opportunities" is subject to different interpretations when applied to the political and economic fields. The fact that the Chief Executive is bold in creating future economic opportunities has been criticized by this Council as being neglecting the imminent political crisis. While the purposes are different, all are reasonable in their own right.

However, as to "collective planning and concerted efforts", there should not be any dissenting voices. The Government has little power in solving the immediate problems, and has failed to give a pleasant surprise to the citizens who are looking at the circumstances around themselves. If this debate again turns out to be a place for political shows with Members indulging in their individual topics, resulting in nothing being done, how much is the performance of this Council in handling the matter better than that of the Government? "Collective planning and concerted efforts" imply the magnanimity of working for the good of the overall interests of the community. At present the most undesirable thing for Hong Kong is giving vent to frustration or blaming other people. I do hope that Members would raise far-sighted proposals, maintain their self-respect, give up their differences and make no more clever excuses.

With these remarks, I support the original motion of Dr LEONG Che-hung.

PRESIDENT (in Cantonese): Mr Eric LI, your speaking time is up. Dr Raymond HO.

DR RAYMOND HO (in Cantonese): Madam President, our present situation is described in the policy address: "one looks at the situation, Hong Kong is going through a period of change. This had led to unease and difficulty, but it can also be a force for stimulating new ideas and creating new opportunities." But how are the citizens of Hong Kong going to grasp the new opportunities in this difficult situation to create a better future? We also expected to find the answer in the policy address carrying the title "From Adversity to Opportunity". I would attempt to look at the content of the policy address from the following angles.

Industrial development

Quite a number of proactive proposals are made in the policy address, including setting up an Applied Science and Technology Research Institute and a $5 billion Innovation and Technology Fund to promote development in this direction; encouraging co-operation between Hong Kong and the Mainland in strengthening industrial development, with each utilizing their own strong points. In fact, in a seminar on ways to turn science and technological research results on the Mainland and in Hong Kong into commercial products I chaired last April in Beijing, there were in-depth discussions on such co-operation. As there is ample potential of such co-operation, I made proposals to the Chief Executive after the seminar. I believe that our industry, financing, professionals and international experience complement very well the work of the numerous technological professionals and the abundant technological strengths of the Mainland. I welcome the Government's emphasis on such co-operation. On the other hand, I hope that the Government would formulate as soon as possible a set of sound industrial policies, so as to make optimum use of the outstanding talents and equipment of our institutions of higher education to speed up the development of innovations and technology and at the same time enhance our productivity and competitiveness.

Small and medium-sized enterprises (SMEs)

To enhance our competitiveness, we should also do our best to assist the development of SMEs which are the basic building blocks of our economy. Apart from providing a large number of employment opportunities, the SMEs with their simpler structure and smaller scale of operation can respond quickly to market changes. They also employ two thirds of our workforce. When major corporations continue reorganizing and streamlining their manpower while earning profits, many people have failed to see that the development of SMEs on the contrary can create many new jobs. As a matter of fact, western countries that in the past relied on big enterprises as the major job providers have slowly come to understand the potential of SMEs, and consequently have been encouraging their development. In helping the SMEs, the Government of the Special Administrative Region (SAR) has taken some positive actions. Apart from the $5 billion SME Special Finance Scheme launched earlier, measures proposed in the policy address include the setting of SMEs services centres in the Industry Department. Such measures should be applauded. These policies are moving in the right direction. However, I think that support to the SMEs should be further increased because they are sure to play an important role in driving our future economic development and job creation.

Infrastructure

The SAR Government will in the next five years invest $235 billion in the West Rail Phase I, the MTR Tseung Kwan O Extension, the Ma On Shan Railway, the spur line between Sheung Shui and Lok Ma Chau, and a number of major roads in the SAR. I welcome these projects which will ensure on the one hand that the transport network system of Hong Kong is able to meet the need arising from our future economic development and population growth, and will on the other create numerous jobs, serving a positive function in alleviating the present economic hardships. However, the policy address has not come up with an adequate and effective solution for the increasing cross-boundary traffic problems between Hong Kong and the Mainland; even the much discussed cross-boundary projects such as the Shekou-Yuen Long link and the Zhuhai-Tuen Mun road bridge are not mentioned. The land development scheme on North Lantau with huge potential has not been included in the policy address, I wonder whether this is the result of the current economic downturn. Indeed I proposed last year a scheme to develop North Lantau to accommodate 1 million people. My proposal even caught the attention of two British TV stations, each of which invited me more than once to brief their audience in United Kingdom on location on Lantau Island.

The transport projects and the deep tunnels of the strategic sewage system are world-class and expensive infrastructure works after the New Airport Core Projects. The Government should learn a lesson from the blunder in the new airport project and intensify government supervision over their various stages of implementation, in particular project management and tendering procedures. Transparency should be increased and the service of local professionals who are familiar with the local environment and needs should be enlisted. Technology transfer and chances for local engineering personnel to receive relevant training should be ensured. Only with such arrangements can our engineering sector strengthen their international competitiveness, and only thus can the good ideas of exporting our engineering technical expertise and project management be realized. The Government must not again use the signing of the governmental purchase agreement of the World Trade Organization as an excuse, because that agreement does not cover professional services.

To this end, we suggest the Government introduce measures in respect of policies, system and tendering procedures to protect companies with mainly local capital. In personnel training, stipulation should be made in contracts requiring priority employment of local people and local engineering graduates. Further, the Government should carefully draw up the timetable for the various major infrastructure projects, so that the number of such projects in any given period of time can match the availability of local human and other resources. This is to avoid an uneven distribution of works projects and will help achieve steady progress and stable project prices.

In the policy address, the Chief Executive also mentioned that we have adequate means to support our commitment to spending in the road and railway projects. While I do not doubt the resolve of the Government, I am not so sure if the Government can really reach its goals in infrastructure construction in the five years. I think that the Government should do more to encourage private participation, such as using the arrangements of "Design and Build" and "Build, Operate and Transfer". In this way, the financial commitment on the part of the Government can be reduced and the various projects can be expedited to match our economic development and population growth and to provide jobs. However, in doing so, the Government must at the same time take up the responsibility to monitor the quality of the work. As a matter of fact, it is not a surprise that major projects can take 10 to 12 years to completed. I hope that the Government can do some in-depth study regarding the feasibility of using the above-said ways in future projects.

Environmental protection

In the area of environmental protection, the Chief Executive mentioned the quality of our air and coastal waters as well as waste disposal. I agree that the direction is correct. However, in certain areas, there are flaws in strategy and methodology which have in the past produced limited results despite the tremendous resources invested. We have to rethink whether there are still many local factors not yet carefully considered and in great detail. Therefore, we come to an obvious corollary, and that is we must 0enlist the service of local professionals to solve such important local issues.

Information technology (IT)

The 21st century will be an IT era and IT is bound to be an important element in economic development. It is absolutely right for the Government to stress the development in this field. Apart from strengthening IT education in schools and tertiary institutions, the Government should also help the graduates and those already working, such as providing them with advanced courses of study. Further, other fields from trade to town planning should be able to tie in with the development of IT. Studies should be launched to stimulate and apply the technology and concepts concerned, so that Hong Kong can be on par with advanced countries in areas from electronic trading to the development of an intelligent city.

In view of the rapid development of technology which is becoming more specialized by the day, the Government should, when formulating policies and in implementation, entrust more of the task to professionals with professional IT knowledge and experience.

The relationship between the legislature and the executive, the system of appointing policy-making officials

The relationship between the legislature and the executive has not been discussed in any depth by the Chief Executive in the policy address. Nor has he made any new and positive suggestions. He only said in passing that there is a need for mutual trust and communication, to the total neglect of the urgency of the issue. This arouses our concern.

To enhance their accountability to the citizens and the Legislative Council, leading officials heading Policy Bureaus, I think, should not be part of the Civil Service. The Chief Executive should appoint competent people, including serving civil servants, who agree with his idea of administration to such posts. Naturally, such appointees must be made responsible for their own policies. On the other hand, such a system will ensure that people with the relevant professional knowledge hold policy-making posts, so that all policy areas will be under officials specialized in the particular areas instead of promoting officers of the Administrative Service. In the formulation of policies, the officials concerned are needing more and more professional knowledge in their particular fields to handle the social and economic issues that are becoming more complex by the day; otherwise, they will eventually be unable to explain in any detail to the public.

Conclusion

The 1998 policy address sure does chart the course for our future development. However, to the now unemployed, the proposals in the policy address do not have a direct bearing on them. Nor has the policy address talked about how to "turn crises into opportunities". Their only consolation is that the Chief Executive and principal officials have given them this piece of encouragement: "Have confidence in yourselves." But it might not be easy to ask those who have no previous experience of unemployment to accept such an encouragement.

I agree with the Chief Executive categorically that measures to solve economic and unemployment problems cannot and should not be dealt with all at the same time in the policy address. The policy address does list the various measures in the past to ameliorate people's hardships. I hope that the Government would continue its effort in this direction. It is more important to let the citizens currently in straits know that the Government really understands their plight, so that all will work towards "collective planning and concert efforts, and turning crises into opportunities".

With these remarks, Madam President, I support the original motion moved by Dr LEONG Che-hung.

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): Madam President, I speak in support of the amendments proposed by Mr LEE Cheuk-yan, Mr Martin LEE and Miss Christine LOH.

Madam President, the reason we of the Frontier proposed the amendment to express our regret is that we feel that this policy address of the Chief Executive has not really answered the many demands and worries of the community. We also know that this amendment might not be carried; in fact there are reports that all the three amendments are likely to be voted down, and even the original motion of Dr LEONG Che-hung would meet the same fate, resulting in none of the four getting through. This voting mechanism that is "incapable of achieving anything but liable to spoil everything" would once again show its force. Naturally, those who drafted the Basic Law did not anticipate such a scenario which may now appear.

Some people might ask why the Legislative Council is so weird; or would wonder why the split runs that deep. Madam President, I do not want but have to say that the reason is related to the ways Members were elected. I have reasons to believe that had all 60 Members been returned through direct elections, the amendment proposed by Mr LEE Cheuk-yan would have gone through. Madam President, why do I say so? As a matter of fact, the government officials can honestly ask themselves how the citizens are thinking of the performance of the Government. Regardless the situation being the result of external factors, or our own internal mistakes, how are the citizens evaluating the work of the Government? I believe there is no need for us to say here, everybody can read the results of some of the opinion polls. Therefore, it was a big surprise to us that the Chief Executive going to Beijing to report his work was praised by one leader after another who invariably spoke very highly of his performance. Sometimes we may think, do the leaders know what the citizens of Hong Kong think? Or how many who dare to express what they actually think can do so to the leadership in Beijing personally? We really doubt it. We hope that the leadership has the magnanimity to give chances for people with dissenting views to speak their minds. Madam President, we are naturally not inviting Beijing to interfere, but we hope that the leadership in Beijing would get hold of adequate information, understand how the citizens are thinking, before lavishing praises over the executive, the Chief Executive and other government officials. Otherwise, people may wonder why the leadership in Beijing thinks so very differently from the several million Hong Kong people. Have the leaders been misled? Or are there somethings they simply do not wish to touch upon, simply objecting to whatever the people of Hong Kong want? This will do no good to the relationship between the Central and the Special Administrative Region.

Madam President, I am as a matter of course going to talk about democracy, freedoms, human rights and the rule of law. In these two days, some colleagues have said we had better not mention such issues because right now the utmost concern of the citizens is economic problems. I think that is ridiculous. I think that the citizens are concerned about all issues. However, some people, including some in this Chamber, have regarded democracy, human rights, freedoms and the rule of law as poisons, or "book-office poison". If nobody talks about such issues, the citizens will naturally have little chance of hearing views about such issues. But, as popularly elected Members, we have the duty to discuss such issues and, whether some people like it or not, we will talk about them whenever the opportunity arises.

Madam President, on democracy, I have pointed out repeatedly in this Chamber that we very much hope that we have an elected government. When we six Members from four organizations met Mr TUNG Chee-hwa for 40 minutes on the 15th last month, he said that in order not to disappoint us on 7 October, he would give us advance notice that there would not be any concession over the issue of democracy. We feel that as over 1 million citizens cast their votes in the last elections, the demand for democracy is already clearly evident. Could the Chief Executive write us off by simply saying that in order not to disappoint us on 7 October, he would tell us in advance that there would not be any concession? But he really did that. Madam President, we are not going to give up, and as long as I am here, I will keep on expressing my views. It is not that we want to overthrow the Government, to start a revolution, but we will fight with reasons for what we feel is correct. We hope the executive would change its mind, and I refer also to senior government officials because they have tremendous influence. They should not merely focus on matters in their respective portfolios. If they really want a better Hong Kong, and think that Hong Kong should enjoy democracy and the rule of law, I hope that they would raise such matters also at internal meetings.

Further, on human rights, Madam President, many people have said that Hong Kong is doing well, and nobody ever got arrested since Communist China took over Hong Kong. This is true, though sometimes during our demonstrations, the police might have been a bit too rough, which is a problem. But have you ever thought about why it is so? This is because society as a whole is becoming more muted. Recently I talked with some people in the academia, they said that they would now not express their views because there might be trouble if they did. They just did not even care to try to test the waters because they knew that the result would likely be a transfer, demotion or even dismissal. They simply refrained from airing their ideas; this is what is called "smart". We the people of Hong Kong have all these years been very "smart" indeed: we kowtow to whoever have the money, the influence and the power, because this will bring ourselves certain benefits, and in politics, will pave a broad path for advancement. However, if all people in Hong Kong are that "smart", our society will become a pitiable one. I utterly do not believe that any community can be without a dissenting voice. This is just impossible. We hope that when different views are voiced, there will be an orderly way to sort them out. Now how is the present situation like? The great majority of our intellectuals, professionals and businessmen are shutting their mouths. Try look at the results of the various opinion polls, many of them show that the citizens are not too happy, are having a lot in their minds. They would call the phone-in radio programmes to speak their views because in this way nobody knows who they are, only their voice is aired. If they are asked to stand out and speak their minds to the media that will report the same, you can ask the journalists of the media, how many people are willing in that case to express their views. Only frontline fighters like us and the democrats speak out. But what happens after we speak out? On many occasions, the media simply do not bother to report our views. If this is case, why bother to instruct the police to arrest us? Our words just would not stand a chance of being heard. We are just silly people speaking to ourselves. This being the case, I believe our development in the areas of human rights and freedoms is definitely not optimistic.

In this respect, I think that the Government can do something. At present, the Home Affairs Bureau compiles a number of reports every year for the relevant United Nations organization. As such reports involve a number of government departments, I hope that the Bureau, instead of copying paragraphs from old reports, would add to its portfolio a new responsibility, and that is to see if such departments have really abide by the international human rights convention. The Bureau should take up such responsibility instead of being a mere messenger boy. Further, I hope that officials of the Judiciary and law enforcement agencies would receive more training in human rights legislation, have more information regarding the enforcement of the international human rights convention by the courts of other countries, as well as materials regarding their human rights commissions. I know that they did some work and I hope that the government officials concerned in their response would tell us how much they have done, whether they have a big library where a lot of such information and materials are available. In respect of human rights, I opine that the Government can at least do these things.

Madam President, on the rule of law, Miss Margaret NG spoke very eloquently yesterday. I fully agree with her views. Therefore I am not going to repeat them. This Council, I believe, will follow up on the decision of the Government not to prosecute Miss Sally AW Sian and the case of the Xinhua News Agency. Such incidents have emanated a worrying message that not all people are equal in front of the law. The two incidents have not ended because the cases concerned are still with the court. However, a new incident has surfaced before the old ones are gone. I am referring to the appointment of a very senior officer within the Department of Justice, that is the Solicitor General. Madam President, I am not discriminating against anybody on ground of political inclination. However, if Deputies to the National People's Congress (NPC) or Members of the Chinese People's Political Consultative Conference (CPPCC) are appointed high-level officials of our Government one after another, I cannot help but a bit worried. In fact, the leaders in the Central Government are not in favour of Hong Kong's NPC deputies and CPPCC members being too active in the Hong Kong political arena, and therefore the proposal by these two groups of people to set up an office in Hong Kong was not supported. The Central Government in fact very well understands that with their status, they are politicians of China, their job is to represent Hong Kong. But holding senior offices in our executive with such status is another matter. Though there are people who say that it would not matter so long as they are willing to resign their Chinese offices during the period they are in the senior posts, how can we tell our 6 million citizens not to worry and convince them that such senior officials will be very independent and very impartial when they are in their posts? Miss Elsie LEUNG is a former NPC Deputy, and I am uneasy with her appointment. Now we are likely to have a similar case, and also inside the Department of Justice. The most important thing is that this particular department helps the executive handle matters relating to the rule of law, and I am worried when it has such staff.

Naturally, some people will say to me, "Look, Emily LAU, now that Hong Kong is under the administration of China, and it is the Chinese Communist Party that is ruling the whole of Hong Kong." However, we take it that Hong Kong is at present practising the system of "one country, two systems" with "Hong Kong people ruling Hong Kong with a high degree of autonomy". We feel that at the very least, do not let NPC Deputies and CPPCC Members flood into our executive. As a matter of fact, we do not know how many of them are members of the Communist Party. That being the case, how can we be convinced that we are practising "Hong Kong people ruling Hong Kong with a high degree of autonomy"? Indeed a search of all relevant documents will not produce any interpretation to the "high degree of autonomy"; it is merely a slogan. Regarding the appointment of that particular officer, we might have spoken too late because I believe a decision was already made. But still I hope the executive would know the thinking of the citizens, that is, when selecting candidates for the most senior government posts, it is important to select those without very strong mainland Chinese political background.

Madam President, economic issues are perforce another topic of today's debate. Many Members already spoke a lot in this respect. The citizens are very disappointed this time, saying that the Government has not done very much regarding our economy. The Financial Secretary told us several days ago as soon as he got off the aeroplane that he saw light in the tunnel of our economic development. We do hope what he said is true, naturally. However, when the Asian financial crisis first struck, he told us that the troubles would be over by Christmas time, so we do not know if we should still have confidence in his words. Actually, it is not important what forecast the officials made; what is important is that they made such forecast basing on facts. Therefore, we very much hope that Mr Donald TSANG when responding to our comments in early November would tell us what are the facts he based on when telling us that he saw light in the tunnel; whether investment has increased, or statistics show that consumer spending, investment in plants and equipment are on the rise, thus bringing us out of the bottom of the valley. Madam President, we are all in fact very worried. I have asked Mr CHAU Tak-hay if we could do more in our industrial sector so as to strengthen our competitiveness and to reduce unemployment, which is an important problem. We understand that the Government has all along said it would not interfere in a large number of things, would not grant any financial assistance. But if we are to compete with other countries, how are we going to go about it? We hope that the Bureau Secretaries would give the matter some thought. Long-term hi-tech development is of course a good thing, but in the short term or medium term, how are we going to tell the increasing number of unemployed people that they will not be able to get a job even after several months of training? That we are at wit's end as to enhancing competitiveness? That we can do nothing to attract local and foreign investment? Madam President, I hope that government officials can do something in these areas.

Lastly, I wish to talk about the problem of the Civil Service. Madam President, I fully support the Chief Executive's proposal to increase the productivity of the Civil Service by 5%, and I think that the goal is absolutely achievable. I think that there are still sinecures within our Civil Service, and I fully support rigorous actions against such people. I also hope that the Government would not incessantly increase posts. A new bureau will soon be established to take care of health and environmental matters, and it is decided that the head of the bureau will be a D8 officer. The newly created Information Co-ordinator post for the Office of the Chief Executive is also rumoured to be ranked at D8 level. It is more strange that while it is said that Mr LAM Shui-lun is designated for the post when the rank and the functions of the post are not yet decided. I think Mr LAM Woon-kwong would have some explaining to do later why such strange things could happen. I am not against the creation of such a post, because under the previous governor there used to be such a post. However, at that time the post was a D4 one, and there is no reason to upgrade it to D8 now. We hope that the people concerned would explain how it can be so strange as to designate an officer for a post and ask him to decide his own rank and functions. I do not think such a practice is acceptable. Now that the ordinary citizens are retrenching, we hope that civil servants would understand that they also have to ride the hard times with the citizens. Therefore, apart from removing the bloated portions of the Civil Service, there should not be any arbitrary creation of new posts.

I so submit.

PRESIDENT (in Cantonese): Mr CHAN Wing-chan.

MR CHAN WING-CHAN (in Cantonese): Madam President, the second policy address of the Chief Executive of the Hong Kong Special Administrative Region is the result of extensive collection of public opinions over the months, including those from the various political parties, trade unions, community organizations as well as all walks of life. The policy address was delivered on 7 October, but even in late September there were still trade unions making representations to the Chief Executive. I feel that the views of the trade unions have been incorporated in the policy address which, I can say, is the work of the Chief Executive and his team of writers after racking their collective brains and burning the midnight oil.

The Chief Executive recently went to Beijing to report his work. The leaders of the Central Government praised him lavishly and suggested he and his wife make use of the short break to really enjoy some private time, get some rest, so as to become revitalized when he returns to his administrative work back in Hong Kong. I wish them a very enjoyable trip. This will show that Members do have some of the traditional Chinese human touch.

The policy address has been both applauded and criticized by the community, including Members of this Council, exactly 30 of whom expressed their view yesterday. I have also said that this policy "paints a bright future, but fails to address the immediate woes".

The immediate woes we talk about are of course the problem of unemployment and pay reduction that are our concerns, particularly of most of the working people. The Federation of Trade Unions (FTU) announced a few days ago that in the first nine months this year, a total of over 800 complaints were received about pay and benefits reduction, among such complaints, most concerned reduction and deduction of pay, and outstanding wages. Pay reduction and outstanding wages cases alone amounted to 578, representing 60% of the total.

With high unemployment, the masses of working people are in deep waters, and are placed in an unfavourable position. Regarding layoff and pay and benefits reduction, the worst hit ones are the hotel and catering sector, and retail business sector. Trade unions have received numerous such cases. I would like to call on all employers to immediately stop such acts that will harm the interests of the workers. A further deterioration of industrial relations brings no good to both sides. The "Guideline on Labour Rights and Interests" (the Guideline) being drafted by the Labour Department is still not published and we do not know how effective it will be. This Council has discussed this issue before. I would, however, suggest the Government also adopt the "Employer's Undertaking Regarding Pay Reduction" (the Undertaking) recently proposed by the FTU together with the Guideline, so as to let employees agreeing to pay reduction enjoy certain protection, and to enhance mutual trust.

The Undertaking is a simple document, covering only two points: (1) the company undertakes to base all benefits of the workers such as severance pay (or long service payment) on the wages before pay reduction in the event of dismissal of the employees; and (2) the company undertakes to reinstate the original pay and benefits of the staff when business improves in future. The proposed Undertaking is only an expedient measure. The protection of the rights and interests of workers must eventually come with legislation.

(1) Re-employment support scheme

There are certain difficulties if the unemployment problem is to be solved at one go, given the present extremely unfavourable economic and business environment. However, the Government should try to find more ways to help and care for the large number of people who are out of a job, particularly to solve their economic difficulties after losing their jobs.

The FTU has all along advocated active government assistance to the unemployed and for this purpose has suggested to the Government to introduce a "re-employment support scheme" which resembles "unemployment aid payment", meeting exactly the need of the currently unemployed. The details of the scheme are: (1) to provide emergency financial assistance to unemployed people to meet their immediate needs; (2) to provide them retraining so that the unemployed can learn new skills and raise their qualification for a change of trade, preparing them for entering the job market when the economy picks up; (3) to arrange voluntary community work for them after retraining sessions so as to let them maintain their roles in society and boost their self-confidence; (4) expand the "job matching service" to help the unemployed seek jobs.

The "re-employment support scheme" is a separate one from Comprehensive Social Security Assistance. The scheme not only provides support other than financially to the unemployed, but also increases their ability to re-enter the job market, including related support services such as the retraining of skills, psychological counselling and enhancing their role in community involvement. The scheme has certain merits towards helping low-skilled and less educated people.

(2) Welfare for the elderly

There is relatively less support proposed in the policy address as well to the elderly service. Compared with that of last year's, the new policy address uses conspicuously less space in care for the elderly. For example the increase of 15 home help teams as proposed is a long way from the currently estimated shortage of 60 teams; and the increase of subsidized residential care places can in no way meet the actual demand. The Government should step up community support services so that those old people not yet given places in elderly homes can receive the minimum community care. This will go some way to preparing for the future ageing of our population.

(3) Environment

The proposals in the policy address to improve environment to better the citizens' quality of life is welcomed. However, they lack specific measures for improvement to the worsening environment and air quality in Hong Kong. I hope that the Government would pay proper attention to this. The policy address also points out that the Government will spend $12 billion in the next five years to improve the sewage treatment system, including the construction of deep tunnels to collect sewage from Hong Kong Island for treatment at Stonecutters Island.

I think that the centralization of sewage treatment as suggested by the Government is workable. However, from the point of view of longer-term water quality improvement, the Government should implement a two-stage sewage treatment programme and the sewage discharge points must be within Hong Kong waters so as not to affect the water quality of the Mainland.

The report of the environmental assessment in respect of Phase II of the Strategic Sewage Disposal Scheme was published by the Government not long ago. Four options have been proposed for public consultation. Each of the options would involve an investment of over $10 billion and with huge recurrent operating costs. As a result, the Government anticipates that the sewage disposal expenses would increase by many times in the future. If the Government continues rigidly the charge mode of "polluter pays", a very heavy burden would be imposed on the citizens, the catering trade and the business sectors, particularly trades that consume huge quantities of water. Therefore, the Government should lower the sewage charge so as to reduce the burden of the citizens while all people would work jointly with the Government to improve the quality of Hong Kong waters and to improve the environment.

Madam President, I would turn back to the policy address itself. The Asian financial crisis burst the economic bubble of Hong Kong. The raids by the international financial predators have inflicted fundamental damage on Hong Kong's economy. It has been suggested that at a time when business is difficult and unemployment is high, a policy address is hard to write. I agree it is indeed.

Before its delivery, the policy address was compared to a bride inside the bridal sedan chair, guesses were made as to whether the bride was beautiful or ugly. Eventually, the bride coming out of the sedan chair is as expected by the clever speculators ─ she is not stunningly pretty, but she looks decent enough and with inner beauty; there is no telling if she is exceptionally fertile, but that would be something of the future. The guess was so accurate because everybody has mastered one point, and that is: you cannot have the cake and eat it. Madam President, if you can, you are really lucky, or it is predestined that you can.

Madam President, I am not inclined to sing praises of the bride. On the contrary, if the Government tries to dress up a plain-looking bride with layers of make-up, I am afraid that when she eventually shows her actual looks, the bridegroom would feel cheated, and that will produce the opposite result. It is hoped that this bride will have a good mother-in-law with whom she lives a harmonious life, and keep a shipshape household with collective planning and concerted efforts. Well, do we not say "a peaceful family is a prosperous one"?

The general public has pointed out that the policy address on the whole is down to earth, and has not tried to please people with surprises. The Government has faced the reality and admitted that unemployment would further rise. This alone shows that the Government is beginning to have a sense of crisis. Naturally, as far as the community at large is concerned, it is the way the Government handles and resolves the crisis that matters. Allow me to paraphrase the words of the Chief Executive: "We should be able to do better"! (Here the "we" refers to the Government).

Some academics pointed out that the policy address has specifically examined the relative strengths of Hong Kong and made suggestions as to the ways to develop such strengths; they also pointed out that comparing with previous ones, this year's policy address is no doubt more forward-looking and strategic.

The FTU has its own comments on the policy address as follows: The policy address while analysing in an objective manner the causes of our present predicaments, has put forward suggestions to solve the difficulties, and outlined the future of Hong Kong. It is a factual document with definite objectives and directions, reflecting the sense of responsibility to the citizens and the far-sightedness of the Government.

With these remarks, Madam President, I support the Motion of Thanks moved by Dr LEONG Che-hung. Thank you, Madam President.

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

MR LEE WING-TAT (in Cantonese): Madam President, over the past one year, Hong Kong experienced drastic changes, politically and economically. Hong Kong reunited with the motherland, washed away the shame of being a colony, but a fully democratic system is not yet in place, turning "Hong Kong people ruling Hong Kong with a high degree of autonomy" into empty words.

Over the one year, the appointment of Mr TUNG Chee-hwa brought brief hopes to the citizens, but the honeymoon period was short-lived. The strategy and ways of the TUNG administration have been queried by the citizens, not only because Mr TUNG was not returned by a universal election, but also, more importantly, because Mr TUNG, instead of establishing a methodology that can take care of the long-term development strategies and can resolve the short-term crises of society, is ponderous and indecisive in his policy-making, and compared with the governors in colonial times, has shown that he is closed to and detached from the populace, and he has failed to form a transparent government that is highly accountable to the community, not to mention the establishment of government prestige that would help lead the people out of the present plight.

The policy address is extremely disappointing on the issue of democratic development. Apart from harping some old tunes, re-affirming the need for democratic development to follow the snail's pace as laid down in the Basic Law, it simply dodged the popular demand for greater democracy.

To further strangle democratic development and to concentrate all powers in the central, the Government has used the avian flu as the excuse to disband the two Municipal Councils. In the entire public consultation exercise for that purpose, the Government all along juggled statistics and failed to honour its promises to the people. I agree that there is much room for improvement in the work of the two Municipal Councils, financial supervision in particular; but I fail to imagine how a Policy Bureau with concentrated powers without the close oversight of elected representatives can achieve any degree of high transparency and public accountability. The Government has stressed that efficiency would be greatly enhanced after the powers are recovered. While it is doubtful if such a dud cheque could ever be cashed, the short-sightedness of the Government has been revealed in its attempt to kill democratic participation with the pretext of raising efficiency, to the neglect that democratic participation can bring about open and responsible policies. What is more worrying is that the threats of centrally co-ordinated and controlled cultural policies to the freedom of artistic creation. The citizens should not discuss the case of disbanding the Municipal Councils in isolation, because since the new Legislative Council began its operation, the Government has, through a number of incidents such as challenging the Rules of Procedure of the Legislative Council and the Council's deliberation of the Holidays Ordinance, repeatedly showed its inclination of stripping elected representatives of their powers. Disbanding the Municipal Councils will only strangle democratic participation, lower the transparency and public accountability of the policy-making process of the Government. It is intrinsically the same as the stripping of the powers of elected Members of the Legislative Council. In a brief to the Legislative Council recently, the Constitutional Affairs Bureau pointed out that a total of over 150 pieces of principal and subsidiary legislation were involved in the disbanding of the Municipal Councils. And the mammoth work of scrutinizing all the laws will have to complete in less than one year. What is it if not forcing the Legislative Council to act as a rubber stamp? What are the purposes of the Government in adopting the fast-track approach of simultaneously consulting the public, engaging as the consultant of a retired senior government officer and drafting the laws?

Is the Government worried that, with more Members elected through direct elections in the next Legislative Council, such democratically regressive proposals would be difficult to push through? Lately Mr Michael SUEN, the Secretary for Constitutional Affairs, has resorted to using rates reduction to entice the citizens to approve the killing of the Municipal Councils. This is not only a mean tactic, but is also an insult to the intelligence of the public at large and Members of this Council. The position of the Democratic Party is that with or without the two Municipal Councils, rates should be reduced.

I would like to turn to the land and housing policy of the Special Administrative Region Government. "Wavering policies, protection of the interests of major property developers at the expense of the housing needs of middle and lower classes" can best be used to describe the housing policy. Last year, the Chief Executive proposed great increase in land supply and set the target of producing no less than 85 000 housing units annually so as to suppress the soaring property prices and provide the housing units the citizens needed. This year, amidst economic adjustment and the pressure of the property tycoons, a moratorium on land sale was slapped on, measures were taken to prop up the property market to rescue the property developers. This inconsistency of "suppressing property prices with 85 000 housing units at one time, and stop land sale to prop up the market at another" has created significant chaos in the property market.

The moratorium on land sale cannot change the continuing downward trend of property prices resulting from a burst economic bubble. On the contrary, the results of the measure are greatly reduced government revenue, the annual amount of lost revenue estimated to be around $30 billion to $50 billion, increase of unemployment among professionals and workers in the building industry, and a serious short supply of private housing three years from now that will push up once again property prices. Would Mr TUNG then undo what he is now doing and propose another increase of housing supply and measures to halt property speculation? Further, to some small and medium-sized property developers with little land reserve, the fall in land prices should have given them a chance to make investment. The moratorium has created artificial obstacles in the market, preventing its operation under fair competition. For the sake of stabilizing long-term housing supply and government revenue, the Government should begin selling land in the coming April. The Sandwich Class Housing Scheme should only be dropped when ordinary sandwich class have the confidence to buy private property after stable land and housing supplies end volatility in the market.

The Democratic Party cannot agree with the proposal to replace the Home Ownership Scheme (HOS) with a loan scheme. HOS flats are sold as public housing, and have a moderating effect on the prices of private property. Further, White Form applicants have an average family income of around $20,000, though the ceiling is $33,000. With such average income, most of them cannot afford private property generally costing $1.5 million or more. HOS flats are the only hope of those families with monthly income of under and around $20,000 that wish to own property. HOS also brings close to $20 billion of surplus to the Housing Authority (HA) every year, money that can be used for more rental housing development. So, property developers and people of certain political parties should also consider the revenue receivable by the HA when they call for a stop in building HOS flats. It is impractical to cherish the wishful thinking that there could be direct or indirect equity injection into the HA by the Government or the Financial Secretary at this time of financial difficulties.

The most disappointing news in this year's policy address relates to the speeding up of public housing allocation. The present average waiting time is six and a half years, and it will take seven years, that is by 2005, to shorten to three years. Now with the land sale moratorium and suspension of the Sandwich Class Housing Scheme, some of the land so freed could be used for rental housing, and the goal of achieving a three-year waiting time earlier, by 2002, has become possible. If the Government accepts the suggestion of the Democratic Party, I am sure many citizens at the grassroots level would rejoice.

The objective of 70% home ownership within 10 years set down in last year's policy address should be scrapped, because the Government should only play the role of a supplier of land, infrastructure and public housing. Whether the citizens will get their accommodation by buying or renting property, it should be left to their decision having considered their own financial capability and other factors. A 70% home ownership rate only turns the housing policy unreasonably favourable to certain people, resulting in the abnormal situation of the Government subsidizing the purchase of luxury flats instead of cage home lodgers.

On housing needs, the Government must not neglect the housing problem of cage home lodgers. The Legislative Council approved unanimously the motion of Mr LAU Chin-shek urging the Government to totally rehouse cage home lodgers and eliminate such accommodation within a specified period. I hope that the Government would not again evade this common demand of all the political parties and Members of this Council. The old harp would not help resolve this pressing housing problem.

The Bedspace Apartments Ordinance is but a transitional arrangement, the Government should not shamelessly argue that there is such demand in the market and shirk its responsibility. There is a Chinese saying that "he who has hair does not want to go bald", if the Government can provide sufficient number of singleton flats and greatly shorten the waiting time, at the annual UNESCO Conference Hong Kong will no longer be the subject of criticism by Third World countries many times less developed than we are that Hong Kong still retain such inhuman places of dwelling.

Madam President, "collective planning and concerted efforts" cannot merely be a wishful thinking. The Chief Executive should reflect carefully, why he, working "seven to eleven" every day with his "selfless, without regret and grievances" attitudes, is not appreciated by the citizens. I suggest Mr TUNG make more unofficial visits to listen personally to the views of the citizens, to more "opposition" ideas, think as the people think, worry about their worries. Only thus can his administration get a way out.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr SZETO Wah.

MR SZETO WAH (in Cantonese): Madam President, the words "executive-led government" cannot be found in the Sino-British Joint Declaration, nor the Basic Law, nor all laws of Hong Kong. Mr Michael SUEN said ,"Everybody say it, so I follow suit." He admitted that he was just parroting and not knowing what he was talking about. One citizen wrote me, saying, "It is not only high-handed, it is simply highwayman-like". Using the pretext of reviewing the district organizations to disband the Municipal Councils and seize powers is exactly a manifestation of the "high-handed" and "highwayman-like" approach.

Shortly after last year's policy address proposed the review of district organizations, Mr CHOW Tak-hay, then Secretary for Broadcasting, Culture and Sport, lamented at a Provisional Legislative Council meeting that over cultural and art policies, he himself was a "commander without troops". His words revealed that the aim of the so-called review of district organizations was to, like the first emperor of the Qin Dynasty did, "collect the weapons all over the world and keep them in Xian Yang", Xian Yang then being the capital where the central government was. The reason is that culture and art belong to the area of ideology, a most sensitive one. Faced with strong opposition, the Government sought alternative breakthrough, eventually it succeeded in getting the avian flu incident.

Who should actually be held responsible for the avian flu incident? At the beginning of the outbreak, Mr TUNG Chee-hwa, the Chief Executive, alleged that the exaggeration by the mass media scared tourists away from Hong Kong. Was he then being too insensitive and careless? Later, the central formed a inter-departmental liaison group and launched the "kill the chickens without getting the eggs" operation. If there lacked "effective central co-ordination", what then was the purpose of that inter-departmental liaison group? The executive departments under the two Municipal Councils were responsible for picking up the dead chickens because the operation was not under the direct command of the two Councils. "Chickens were killed and eggs were not gotten", but the incident was used as the pretext to disband the two Municipal Councils, to seize the powers of the two Councils.

Paragraph 149 said that the Legislative Council could take over from the two Municipal Councils to play the role of ombudsmen. I have asked the Chief Executive if he knew the number of Municipal Council constituencies that would be equivalent to one Legislative Council direct election geographical constituency. He evaded my question, saying I was giving him a quiz. According to the proportional representation system, one directly elected Legislative Council seat covers close to three Municipal Council constituencies. Take New Territories East and West with five Legislative Council seats for example, they are the equivalent of Regional Council constituencies with 15 members. How can the Legislative Council Members look after such a vast area? How can they replace members of the Municipal Councils as ombudsmen? With the overly limited powers of the district boards, and with Legislative Council Members failing to play such an ombudsman role, killing the Municipal Councils is to narrow the redress avenue, and to weaken supervision by the citizens.

The report on the review of district organizations has been published. The dirty tricks of fabricating and altering public opinions, of pulling all the stops out to get what it wanted, can compare favourably with and even exceed those employed by the former Hong Kong British Government in killing the direct elections for 1988. More able in doing bad things than good one, Mr TUNG has done his most outstanding bad piece since his administration came into being.

Those with any respect for public opinions please read the results published in today's newspapers of the opinion poll conducted by the Asian Pacific Research Institute of the Chinese University. Only 23.4% of the respondents were satisfied with the administration of Mr TUNG, those unsatisfied reached 34%. According to such poll results, we could quote the words of King Suan of the Qi State as seen in the Works of Mencius, "Why not get rid of it? Use a sheep to replace it." How can we get rid of the two Municipal Councils? We should get rid of some other thing in the place of the two Municipal Councils.

Under the existing constitutional system, the two Municipal Councils are democratically constituted. Before the reunification, the great majority of their members were returned through single-seat, single-vote direct elections; the small number of indirectly elected members were also representatives of public opinions. Only after the reunification were their memberships expanded by one fourth by appointed seats. The two Municipal Councils have fiscal and policy-making powers, and are not subject to interference by the central. For example, during the present economic downturn, they can reduce rents and charges to speedily heed public opinions; their actions are more promptly taken than the central government and the Housing Authority with all their feet-dragging or haggling. Has that made Mr TUNG uncomfortable and vow to kill the Councils and seize the powers? Our democratic political system has seen continuous retrogression since the reunification, it would be a big step backward if the endeavour to disband the Councils and seize the powers succeeds! Well, this is exactly "without any way to ameliorate the hardships, no chance of turning around adversity; but with tricks to kill the Councils and bring retrogression". In order to kill the Councils and seize the powers, Mr TUNG has resorted to the trick of buying the support of the district boards. District Board members, please heed these words, "He who lavishes favours upon you can also take the same from you."

This operation of killing the Councils and seizing the powers is pre-meditated, planned, choreographed and organized. There is supposed to be "no change for 50 years", but in the areas of democracy, freedoms, human rights and the rule of law, changes are made as soon as they are proposed. This is regression step by step.

Not long ago, this Council passed a motion for "One Council, One Department"; it was carried by separate votings, approved by the two groups of Members. Public opinions were adequately reflected. The final defence against this "killing of the Councils and seizing of powers" is this Council which has to pass the related amendment laws. If the political parties and Members stand firm on their original position, do not switch sides, there is no way the proposal can go through, the Government would simply be defeated. This is a grave test of the political parties and Members, to see whether they would show their true colour as government loyalists and help get it approved. Please stay alert!

Madam President, the Democratic Party and I oppose the original motion, and support all amendments that reflect public dissatisfaction. It is estimated that the end results of this debate would be that the motion and all the three amendments would all be negatived. Even that happens, I think it is not a bad thing to let this policy address score zero mark. I so submit.

PRESIDENT (in Cantonese): Mr NG Leung-sing.

MR NG LEUNG-SING (in Cantonese): Madam President, tomorrow marks the anniversary of the Asian financial turmoil. Before its onslaught, policy addresses were almost invariably delivered in the midst of sustained economic growth in Hong Kong. As a result, at a time of economic downturn in the shadow of the one-year-old financial crisis, it is extremely difficult for the Chief Executive to outline his priorities for the coming year in his policy address. As a matter of fact, past policy addresses were not all able to satisfy everybody's needs even when our economy was robust. In the past year, Hong Kong has been dragged into the worst recession since the war, resulting in rising unemployment. In the face of such a grave economic situation, the community naturally had various expectations as to the ways the policy address would propose to save the economy and alleviate people's hardships. When it cannot deliver a comprehensive solution to all problems, there would easily be dissatisfaction. However we should also understand the economic reality, the characteristics of the Hong Kong economy, that all long-accumulated structural problems cannot be resolved overnight, and that the Government can do little in the short term to actually influence our economic cycle. What the Government needs is to have the courage to bear pressure, to be responsible, and to use public resources more prudently and properly. A responsible government has to find long-term solutions in the face of immediate hardships. What we need are plans that can really cure Hong Kong of its economic malaise at the root and tackle issues affecting people's livelihood. Dissatisfaction and complaints will not help brush the troubles away. In appraising this policy address, we do not simply see whether it has suggested the use of huge amounts of money, or has made numerous promises; instead we should examine if it has analysed the actual situation, got hold of the crux of the problems and the focal points of administration before making plans to really lead Hong Kong out of our economic plight on to the long-term road of a new phase of development

(1) Enhanced confidence is essential to stabilizing economy

The policy address has reviewed the predicament now facing Hong Kong in a realistic and accurate manner, pointing out the four factors on which our economic recovery depends: an improvement in the external economic environment; a steadying of interest rates; stability in the property market; and the restoration of public confidence. Of the four, I think that the external environment is an objective factor quite beyond our control, whereas the confidence factor is the most crucial. Look at the early '80s when Hong Kong experienced great upheavals in the foreign exchange market with the Hong Kong dollar once falling close to 10 to one US dollar, all because of weakened public confidence in the future of Hong Kong, and without any external impact. Therefore, I am of the opinion that the Government could, through its various policies and measures, positively nurture a restoration of public confidence which is of special importance in the midst of an economic downturn. This is particularly so with our current economic structure built upon our financial and property markets, because public confidence plays a key role in the stability of these two markets, and such stability in turn will bring our whole economy new life, eventually relieving the pressure on people's livelihood. The policy address has basically got the core of this issue accurately; naturally, corresponding measures must be introduced to restore such public confidence so as to produce a positive impact in tackling our current economic woes and livelihood hardships.

(2) Stable property prices: a prerequisite to economic recovery

With the huge adjustment in the property market in the past year that has shrunk the assets of several hundred thousand families that own property, and the need of our banking system to operate prudently, the Government has earlier imposed a moratorium on land sale. The proposals in the policy address further amended the 85 000-flat housing production target suggested last year, scrapped the construction of the Sandwich Class Housing Scheme flats, so that private housing can adjust closely to the market. Further, the policy address also probed the feasibility of replacing the Home Ownership Scheme (HOS) with a loan scheme; this will spur the public to expect a bigger adjustment to the balance in supply and demand in the private market. All the above arrangements represent a painstaking effort to stabilize the property market and to stimulate the dull economy. I urge the Government to exercise due prudence and to do some comprehensive thinking when any change to the long-term housing policy is involved, particularly the balance between the supply of HOS flats and the financial capability of the citizens to buy property. From the various reviews and directions suggested in the policy address, it can be seen that the Government has basically understood where the problems of our economic difficulties lie and has initially selected its focuses in administration. However, the specific measures and force with which such measures are implemented need further and careful deliberation.

(3) Imperative to maintain Hong Kong's position as an international financial centre

As the policy address has pointed out, we have to enhance our existing economic strengths to maintain our position as an international financial centre; this will restore the confidence of investors in the markets. The measures introduced by the Government in early September to perfect the supervision and operation of the financial markets have had positive effects. However, after the repeated battering of our economy during the past year amidst the financial crises, and the use of public funds to take the market actions to fight manipulation, the Government, we hope, would continue to carry out systematic and forward-looking reviews, learn its lesson, and buttress the defence capacity of our financial system against assaults so as to consolidate our position as an international financial centre. It is worth mentioning that we need to give priority to strengthen and perfect the existing market mechanism to ensure fairness and openness and to effectively prevent market manipulation. Only having done so should we consider introducing suitable financial products. We cannot blindly pursue diversification and expansion of the markets. Only thus can we really restore the confidence of the investors. Further, our linked exchange rate is the cornerstone of the Hong Kong economy; so we not only must build confidence in the linked rate on the pledge of the Government, we must also have actual measures to serve as solid shields for the linked rate. The measures introduced to support the currency board system in early September, such as the discount window and the convertibility undertaking of the balance of licensed banks, have stabilized interest rates. But the authorities concerned must not think that all is well afterwards, and must always remain prudent and clear-headed, and listen to the views of experts, academics and the industry. Continued efforts should be made to prepare action plans to effectively defend our linked rate and protect the interests of the citizens.

(4) The Government should still stick to its own role

At this special time when the second policy address comes in the middle of the sudden and unprecedented recession and economic hardships of the people, the Government must have a responsible attitude in bearing the pressure, and must be firm and clear about its own role. In the policy address, the Chief Executive has set the stage for the future development of Hong Kong. However, what is more important is that this document at the same time has affirmed the role of the Special Administrative Region Government. Hong Kong practises free and open market economy, and the Government abides by the principle of prudent financial management, interfering with economic activities only when necessary and for the purpose of providing guidance. The recovery of Hong Kong's economy hinges on the improvement of several factors. This being the case, the Government should further perfect our market operation mechanism and do its best to stabilized market confidence, measures that require the use of too much public resources are not practical.

Therefore, from a pragmatic angle, to relieve pressure, the Government has in fact put forward quite a number of measures, including tax concessions, rates rebate, an SME special finance scheme, setting up an employment ad hoc group, injection of $500 million into the Employee Retraining Board, and speeding up infrastructure programmes. In helping citizens secure jobs, the Government can in fact have few short-term measures. That being the case, the Government may face a fiscal deficit of over $20 billion. As the employment difficulties afflicting our citizens now are the result of the accumulated effect of the structural problems that came with our bubble economy, and are also the direct result of the financial turmoil, so as long as the external factors have not fully turned for the better, we must face the reality, and must not have too high expectations of the actual effectiveness of the short-term measures aimed at stimulating the economy and ameliorating people's hardships. We must attempt to get to the root of these problems and cure them by way of long-term policies for the reshaping and upgrading of our manufacturing industry. In the short term, we have to wait out the storm, for the external factors to improve to power the recovery of the overall economy. In the face of such reality, a responsible government cannot make unrestrained fiscal commitments that have no actual effectiveness. The recent softening of the US dollar and US interest rates have brought about an improvement in the property and stock markets as well as other economic activities in Hong Kong. This serves to demonstrate that external factors, as compared with government policies, have a significant influence on our economy. This is exactly the long-standing characteristic of our economic system.

(5) The long-term need for guiding the upgrading of Hong Kong's economic structure

I think that in respect of the long-term development of Hong Kong, the Government has the task of giving guidance. Therefore, even we have short-term economic difficulties, our long-term objectives in economic development should not waver, the perspective and focus of our policies should stay definite and clear. This second policy address is an extension of the way of thinking of the first one, and has further specified the strategies in respect of technology and innovation, setting as our objectives to turn Hong Kong into an international or regional centre in seven fields. In this respect, the policy address has made definite commitments, such as the creation of the $5 billion Innovation and Technology Fund to promote technological application. Besides, expenditure on education will also be increased, and major infrastructure projects will be implemented as scheduled.

On the whole, in the midst of our present economic difficulties, we should appraise the policy address without any bias. This policy address has been able to stick firmly to the role of the Government, has insisted on prudence and self-discipline in interfering with economic operation, and at the same time has been determined in achieving the long-term administrative objectives, with focus on technology and innovation, and emphasis on buttressing and expanding the economic base of Hong Kong so as to enhance productivity. To be fair, the policy address cannot relieve all citizens of Hong Kong of their worries and doubts. But on the whole, it is far-sighted, and I believe that the implementation of the various specific policies will lay a good foundation for the future development of Hong Kong, preparing for a new phase of growth after Hong Kong pulls through the current economic doldrums. I also believe that so long as the various policies and measures can increase public confidence, when everybody is full of confidence and unite together, Hong Kong people are sure to have the ability to tide over the present hardship together, and build a favourable base for long-term development, to work for a more stable and prosperous future.

With these remarks, Madam President, I support the Motion of Thanks moved by the chairman of the House Committee.

PRESIDENT (in Cantonese): Mr LAU Wong-fat.

MR LAU WONG-FAT (in Cantonese): Madam President, a year ago, shortly after the smooth return of Hong Kong to China and with everything remaining prosperously the same, Mr TUNG Chee-hwa, the Chief Executive, delivered his first policy address with the apt title of "Building Hong Kong for a New Era". Today, one year later, the second policy address of the Chief Executive with the theme of "From Adversity to Opportunity" also reflects the plunge of the Hong Kong economy in the aftermath of the financial turmoil. The sharp changes over the past year are something nobody could have foreseen.

Contraction of the economy, high interest rates and unemployment, sharp depreciation of asset values, all the negative factors surfaced have inflicted tremendous pains on the people of Hong Kong over the past year. What everybody fervently hopes is that the Government can lead Hong Kong out of such doldrums as soon as possible. However, I believe that Hong Kong people, forever the pragmatic ones, do not expect that one policy address could sweep away all the problems. As the pace of our economic recovery hinges largely on external factors, the Chief Executive has made it plain that there can be no panacea for a speedy recovery for Hong Kong. Nevertheless, the policy address has in fact proposed a number of measures aiming at enhancing the vitality of the Hong Kong economy as well as our competitiveness, outlining an exciting and encouraging blueprint.

There are some who criticize that the policy address has not prescribed any effective medicine to cure our current economic malaise, and that all the lofty and far-sighted objectives set out cannot provide immediate relief to our present predicament. To be fair, such allegations are not justified. In the past few months, the Government has made a series of moves to relieve the pressure on the public, to stabilize property prices, to create job opportunities, to defend our linked exchange rate and to maintain order in our financial markets. The effectiveness of such measures is difficult to gauge, but we can say definitely that without such actions, Hong Kong would have been a much worse place than it is now. All such measures involve elements of timing and targets and could not wait until after they were set out in the policy address. If this was taken as the ammunition to attack the policy address as having "nothing substantial", such allegations are obviously prejudiced, and are not impartial and objective.

As the Chief Executive has said, "Our economic difficulties will remain with us for quite some time, and the situation next year gives us now cause for optimism", we have to keep on trying to enhance Hong Kong's vitality, so that we can embark earlier on the road of economic recovery. The Chief Executive has devoted a great part of the policy address to outlining his strategies about fostering economic growth, increasing our strengths in this respect, including promoting development in science and technology, expanding major infrastructure projects, and further strengthening our tourism industry. His decision, inter alia, to appoint a Commissioner for Tourism to specifically promote the development of our tourism industry, is a very good investment and an excellent measure to increase our source of income. In recent years, the lure of Hong Kong as a tourist destination has been eroded by huge challenges from competitors in the region in areas of shopping, tourist attractions and facilities. Tourism being an important part of our economy, the authorities must greatly boost our promotional efforts so as to push our tourism industry to another peak and let it make bigger contribution to our economy.

In this respect, I suggest the Government consider holding a nation-wide convention on foreign trade next year. In the face of economic slowdown and prevailing pessimism, major international economic activities will provide positive stimulus to the various sectors in Hong Kong. Such an activity will attract businessmen and tourists from around the world, and will benefit our tourism industry as well as the overall economy and trade of our country. Further, the trade convention can be packaged as a key celebration activity for the 50th National Day. Now that Hong Kong has reunited with the motherland, relevant activities in Hong Kong would serve to demonstrate the strong support China is giving Hong Kong, and at the same time we could make use of such an international occasion to publicize the policy of "one country, two systems". If the Government is willing, I am sure we can work out perfect arrangements regarding the details of such a trade convention, including the need of co-hosting with the relevant authorities in Guangdong Province.

Madam President, apart from finding new sources of income, the Chief Executive has also announced plans of limiting the expenditure of government departments. The plans are to require heads of departments to raise productivity to lower cost, with the aim of shaving 5% off their operating cost over four years. I fully agree with such plans. In order to maintain the efficiency of the Government, I think that the measures to enhance productivity should not be expedient ones responding just to the financial crisis, and should be established as long-term practices. The civil servants of Hong Kong are renowned for their high quality, and I am convinced that it is absolutely possible for them to do better through continued improvement. Further, I also think that it is now high time to review the system of reward, punishment, appointment and removal in the Civil Service, so as to sharpen the alertness of the civil servants and increase their accountability. This will help improve their image as well as raise their prestige.

Hong Kong is now facing the grave situation of a recession and a huge fiscal deficit. Government departments should naturally try to cut costs, but the authorities should also conduct comprehensive studies to see if there are other areas where expenses can be reduced. I would think that immigration from the Mainland is an issue worth studying.

Major immigrant receiving countries such as Canada and Australia adjust their immigration quotas according to the state of their own economies, the purpose is to protect their national interests as well as those of their nationals. Though Hong Kong is not a country, it has similar problems in accepting new immigrants. Several ten thousand people come to settle down in Hong Kong from mainland China every year. When times were good, this did not bring Hong Kong any problem. Now that we face this economic downturn, with rising unemployment and little hope of a speedy recovery, it is reported that more and more new immigrants fail to secure jobs and have to resort to public assistance.

From another angle, a Hong Kong in economic doldrums will mean more difficulties for the new immigrants, both in their daily life and in their feelings, and make it harder for them to integrate with the community. Under such circumstances, I believe Hong Kong should consult the Central Government to reduce the number of new immigrants into Hong Kong until our economy recovers when the number can be adjusted upward accordingly.

Madam President, the most controversial decision in the policy address relates to the abolition of the two Municipal Councils. As was generally expected, the Government decides to go its way alone to kill the two Councils. I greatly regret and am immensely disappointed by the decision. In the debate of the last policy address and on numerous occasions after that, I repeatedly pointed out that abolition of the two Municipal Councils lacked justification, and the conditions for replacing them did not exist. Like many people, what I have to say has been said, and I am not prepared to waste my breath here again. However, the authorities must prudently consider one question, and that is, if the legislation for abolishing the two Municipal Councils should fail to get through the Legislative Council, what will the Government do then? The Government must not pursue the objective of killing the Councils at the expense of everything else and disregarding all consequences. The Government must put forward a proper scheme that is practicable and acceptable to the citizens.

With these remarks, Madam President, I support the original motion of Dr LEONG Che-hung.

PRESIDENT (in Cantonese): Mrs Sophie LEUNG.

MRS SOPHIE LEUNG (in Cantonese): Madam President, in the second policy address delivered by the Chief Executive of the Hong Kong Special Administrative Region (SAR), Mr TUNG Chee-hwa, since his coming into office, he devoted a large section to outlining the blueprint of Hong Kong's future development and pragmatically set out the long-term goals of the development of Hong Kong.

The Asian financial turmoil which took place last October already has repercussions in other parts of the world. During this turmoil, Hong Kong was hard hit by an economic recession. There has been negative economic growth and our unemployment rate is the highest in 15 years.

In an age of global economic integration, the economic prosperity or recession of individual regions is not just due to isolated factors, but is also the result of external economic factors. Since Hong Kong is an open economy, it is extremely susceptible to the influence of external economic factors. During these dark economic times, it seems impractical to rely on our internal resources to turn the tide.

While everyone suffers from the economic downturn, we cannot sit passively and wait for the recovery of the economy. In the face of adversity, we should find ways to adapt and enhance our own ability, so that we can meet the future changes in society.

Survival in adversity and adding to one's value

As we approach the 21st century, we will face increasingly rapid and complex changes which will pose a greater challenge to our adaptability. We have to prepare ourselves for adapting to changes in society. Enhancing our adaptability means strengthening our ability to anticipate crisis.

The SAR Government should set an example for Hong Kong people in terms of enhancing one's ability of anticipating crisis and adaptability. The SAR Government administers over Hong Kong and its administration has a far-reaching effect on Hong Kong's development. As the largest employer, the SAR Government should make internal adjustments in the face of the rapid changes in society. It should cause the civil servants to change their mentality and enhance their ability to anticipate crisis, so that they would not be at a loss as to how to deal with crises.

While setting an example by enhancing the quality of civil servants, the Government should also encourage employers and employees to change their mentality and update their skills constantly to keep up with the development of society, as well as maintain a high degree of adaptability. Otherwise, we will fall behind others and be unable to meet the challenges of work. Eventually, we will lose our jobs. Having to face the challenges of the 21st century, our young people must also be highly adaptable. In view of this, the first thing we have to do is to introduce education reforms, replacing the old spoon-fed education which is at the same time examination-oriented and lacking in critical thinking and analysis with an education that focuses on independent thinking and enhancing analytical ability, whereby logic is an important subject for the latter.

Hardships and prospects

For a society to sustain its positive development, a suitable environment must be created for the individual to realize his dreams and create wealth.

As the representative of the textile and clothing industry, I wish to take this opportunity to illustrate the importance of the above two factors with the industry as an example. Over 90% of enterprises in the textile and clothing industry are small and medium-sized enterprises (SMEs). Among the owners of SMEs that I know, many of them have started from scratch as workers. By accumulating experience and through their own hard work, they have set up their own businesses. They have realized their dreams and put their words into deeds. They are devoted to their work and have a sense of rare commitment to the industry of Hong Kong. They are willing to carry on in this business.

Today, the textile and clothing industry is the largest manufacturing industry in Hong Kong as well as the manufacturing industry which earns the most foreign exchange. For example, in 1997, the textile and clothing industry accounts for 40% of the total domestic exports, at a value of $84.8 billion. Do Hong Kong people want to maintain this industry?

In his second policy address delivered earlier, Mr TUNG made a clear statement about making Hong Kong "a world class design and fashion centre". I very much agree to this and am quite confident that our industry has a sufficiently solid foundation.

Due to international competition, the textile and clothing industry in Hong Kong can no longer rely on low-cost production as in the '60s and '70s. Instead, it must develop a high-value added element in order to achieve greater and sustainable growth. Our industry has been developing a high-value added element for a long time and not just since today.

To realize the Chief Executive's vow to make Hong Kong an international fashion centre, we need to address two issues now.

First, the ageing of the workforce. Due to the introduction of free primary education in the '70s, which was later extended to junior secondary education, and the rapid expansion of tertiary education in the early '90s, the education level of the people has risen considerably.

From 1971 to 1996, the percentage of employees with primary school education fell from 50% to less than 20%. In contrast, the percentage of employees with secondary school education rose sharply from 28% to 58%, while the percentage of employees with tertiary education increased by four times.

During the past 20 years, Hong Kong strove to develop the financial and services sectors, which absorbed the majority of young people, so that industries with a great capacity for earning foreign exchange such as the textile and clothing industry were in shortage of new blood. The number of employees in the industry shrank continuously. In 1997, some 93 000 were employed in the industry, a drop of 16% from 1996. This has greatly undermined the industry's competitiveness. At present, if the world standard is finishing the sprint in 9.9 seconds, we finish in 29.9 seconds. Thus, it is imperative to make the workforce younger. Otherwise, even if we have such hard-working people devoted to this industry, they can hardly realize their plans, not to mention create wealth.

Second, 80% of the textile and clothing products in Hong Kong are exported to the European, United States and Southeast Asian markets. They are extremely popular and the label "Made in Hong Kong" is a guarantee of high quality. If the production processes are relocated out of Hong Kong, it will certainly affect the competitiveness of Hong Kong's products. I have repeatedly mentioned that France is a very good example. Due to the relocation of the production processes of its clothing industry, it has lost its leading position as a fashion centre and has been replaced by Italy, its neighbour.

Innovation and technology

This year, after the delivery of the policy address, some people severely criticized the Government for failing to provide measures to solve the economic difficulties of Hong Kong. Actually, they have overlooked that the purpose Mr TUNG Chee-hwa in advocating innovation and technology is to achieve the long-term and pragmatic goal of creating a major driving force for economic growth. GOH Chok Tong, the Prime Minister of our competitor Singapore, has reacted quickly to the Chief Executive's policy address, reiterating the development strategies of Singapore for the next century and stressing that competitiveness would mainly be enhanced through high technology and high value-added elements. Singapore newspapers also attached great importance to the Chief Executive's policy address and responded very positively to the development of high technology in Hong Kong and Singapore. Therefore, I very much hope that Hong Kong people will judge and analyse Hong Kong's development with an objective, rational and forward-looking attitude, instead of being short-sighted and obsessed with the present, while forgetting about the future and our next generation.

Now, I would like to express some views on technological talents and capital. One of the important factors in the development of high technology is manpower. Scientific research has always been neglected in Hong Kong. Due to the economic development of Hong Kong in the past 20 years, especially the bubble economy in the last decade, the emphasis was on "making fast money". Due to the atmosphere of speculation, young people lack far-sight and patience and only look for fast results. Such a mentality is a great obstacle to the development of high technology scientific research which requires perseverance and patience.

It would take at least three to five years to train our own scientific research personnel. For the time being, we have to attract mainland and overseas people to come and work in Hong Kong and deal with the work that we want to start now. Perhaps we can borrow from the experience of the Silicon Valley in the United States. At present, over 20% of those who have succeeded in setting up businesses in the Silicon Valley are of Asian descent. Most of them studied in the United States between the '60s and the '80s or have equivalent overseas academic qualifications. As a result, they have easily obtained a work permit to work in the States. Within a short time, if their employers consider them to be outstanding employees, they would support the immigration applications of these professionals, so that they could stay behind, concentrate on their work and create wealth for them. Therefore, when approving the entry applications of technological talents, the Government should grant them work permits and the procedures should be kept simple so as to facilitate easy entry and exit.

As for investment capital, I believe that "that which has fragrance will naturally attract attention". As long as our technological development achieves results which are internationally recognized, investment capital will keep coming in. The Commission on Innovations and Technology has proposed to set up an Innovation and Technology Fund with an injection of $5 billion to provide the initial capital for developing high technology research. This will certainly have a stimulating effect and therefore I fully support it.

I believe that in developing high technology, Hong Kong should start with computer software. As long as there is a matching policy and a correct direction, I am sure that we will achieve something in two to three years.

With an attractive business environment, the various businesses will flourish and the individual can realize his dreams, create wealth and contribute to society and the economy. The Government will also benefit from an increase in revenue, which can in turn be invested in social development and used in improving people's livelihood. This is a situation in which one can win both ways.

Health care and hygiene

Hong Kong is an international metropolis full of challenges. However, people engaged in challenging work also need to have good health. Therefore, the Government should step up primary health care education and emphasize that everyone should pay attention to his own health.

In addition, the Government should offer rent concessions to private general practitioners to encourage them to group together and set up medical centres in public housing estates with longer consultation hours, so as to reduce the use of hospital resources. The Government's polyclinics can also be rented to medical centres set up by private specialists on a contract basis. These centres can provide "one-stop" services, so that patients can be referred to these centres and use their medical services immediately.

The medical and health incidents that occurred over the past year have aroused widespread public concern. In his policy address, Mr TUNG Chee-hwa proposed to set up a Policy Bureau for the environment and food safety. I support this change. However, in defining the functions of the new Policy Bureau, one must consider whether it would duplicate the functions of existing departments, whether there are any grey areas and clarify the co-ordination among departments.

Environmental protection

In his policy address, Mr TUNG Chee-hwa proposed concrete and long-term targets for improving the environment. Undoubtedly, environmental protection is a general trend in society. As a metropolis, Hong Kong also has a duty to environmental protection. Incorporating this concept and value into the culture of Hong Kong is a long-term target. There must be intensive education and the public must be encouraged to participate in the discussion of environmental protection issues before this concept can be implanted in Hong Kong people and translated into action.

As the largest employer, the SAR Government can demonstrate its commitment to environmental protection by setting an example. It should launch an environmental protection movement and lead the way in translating concept into action. Fundamental changes to environmental protection in Hong Kong can only be effected if everyone has an awareness of environmental protection.

Conclusion

The recent floodings in the Mainland have touched me deeply. Despite the shortage of resources, our compatriots did their best and worked together to fight against the disaster courageously. Such a united spirit commands our admiration. Compared to the Mainland, our resources and opportunities are at least 10 times more. We are confident that we can overcome the crisis. As long as we unite, we can create a better tomorrow. I am not asking people to fight the floods. I am merely asking them to learn from that spirit. I believe that people can distinguish the difference.

With these remarks, Madam President, I support the original motion.

PRESIDENT (in Cantonese): Mr Fred LI.

MR FRED LI (in Cantonese): Madam President, I am going to discuss four issues today. The first one is social welfare. The Secretary for the Treasury said at a meeting of the Financial Affairs Panel that there would be a real increase of $2.9 billion for social welfare services next year. This means that if we deduct the $2.2 billion earmarked for meeting the increased expenditure on Comprehensive Social Security Assistance (CSSA) payments, there will just be $700 million left for directly subsidized services. Therefore, with the only exception of residential care services for the elderly, which have received relatively more attention, all other services will face a shortage of resources even though demands are increasing.

We all know that the Chief Executive is a very traditional man who attaches great importance to respect for the elderly and filial piety, and this explains why a good part of the policy address last year was devoted to a description of elderly services. One year has since passed. May I ask the Chief Executive whether there have any substantial improvements for the elderly? Although the Elderly Commission has convened many meetings, and although it has spent a lot of public money on research reports, over 10 000 old people are still waiting for admission to subsidized residential care homes, and those living in private care homes are still denied proper care.

The greatest social welfare commitment in the policy address this year is the provision of 900 new subsidized residential care places. This, together with the 7 100 pledged last year, will mean the provision of about 8 000 new subsidized places in the period between 1998 and 2002. If the Government is to achieve this target on schedule, the only way will be to buy places from private care homes in large numbers. That is why the policy address this year also touches upon improvements to the existing Bought Place Scheme. When compared with the residential care homes constructed by the Government itself, places bought from private care homes will involve less government expenditure, and the Bought Place Scheme is thus indeed an economical and expedient alternative. However, I hope that while the Government takes advantage of this expedient alternative, it will also try to provide protection for the elderly. Since the Residential Care Homes (Elderly Persons) Ordinance came into effect, only 20% of private residential care homes have been issued licences. Although the Government will pay higher prices for bought places, if there is the absence of a strict regulatory mechanism and good quality control, this may only add to the profits of operators without bringing forward the desired improvements in service quality.

What upsets people most is that the Chief Executive hints in the policy address that since CSSA expenditure has risen drastically, and since the Government must manage its finances prudently, there is no alternative but to "axe" CSSA payments. Since we are now faced with an economic recession and the number of unemployed people is rising, this is in fact precisely the time when government assistance is needed most badly. However, instead of offering more assistance, the Government is now planning to make life even more difficult for people. Worse still, although the results of the CSSA review will not be released until the end of this year, the top officials of the Social Welfare Department have already hastened to sound out that "CSSA has nurtured lazy bones". As a government with a sense of responsibility, the Government should really conduct an open and extensive consultation exercise on the issue as soon as possible. And, before the completion of the consultation exercise, no one should make any inappropriate comments which may divide the lower strata of our community, or which may induce the community to discriminate against and misunderstand CSSA recipients. I hope the Government can handle this issue cautiously.

The second issue I wish to discuss is energy resources. The third issue is the rights of consumers, and the fourth is the review on district organizations. On energy resources, on electricity supply, I notice from the policy address that quite a number of reviews and studies relating to power companies are still in progress, some examples being the proposal on constructing additional generators, the study of interconnection in the electricity supply sector and the interim review of the Scheme of Control Agreements with power companies. I hope that in the course of these reviews and studies, the Government will always base its considerations on such factors as market liberalization, promotion of competition and consumer protection. The surplus output of the China Light and Power Company last year has indicated fully that the existing Scheme of Control Agreements is full of problems. For this reason, the Government must make the best use of the interim review to fight for improvements to the Scheme, so as to protect the rights of consumers. It must not think that by simply asking the Secretary for Economic Services, Mr Stephen IP, to call upon the power companies not to increase their charges, it will have done enough to protect the interests of consumers. This is simply not enough.

Another aspect of energy supply which closely affects the general public is fuel. From the perspective of the Government, there must be regulation in this respect. Fuel companies in Hong Kong operate in the form of oligopoly and they seem to have formed a kind of cartel among themselves. Whenever oil prices go up worldwide, they will all increase their prices immediately, but in the opposite case, they are reluctant to follow suit; they will only offer more tissues, more distilled water and more soft drinks as gifts. In the past one year, oil prices worldwide and the prices of oil products from Singapore kept going down, but what the fuel companies in Hong Kong have done in response is just a nominal price reduction for vehicle petrol and diesel between January and March this year. And, even so, the rate of price reduction was still much smaller than the decrease rate of import prices. As for LPG prices, there have been no adjustments whatsoever since June 1997. These fuel companies have indeed acted in complete defiance of consumer interests. That is why I think that the Government must impose regulation on them.

Regarding consumer interests, the Consumer Council received a total of 18 000 complaints in the past one year, an increase of over 100% when compared with the corresponding period last year. Of these complaints, most are about bakeries and video shops. Some video shops have even been found altering the terms of pre-paid vouchers unilaterally, forcing consumers to increase their consumption. This fully reflects the fact that consumers are given no protection at all under the existing system of pre-paid consumption. That is why the Consumer Council has proposed to legislate for the protection of consumers under the pre-paid consumption system. Unfortunately, the Trade and Industry Bureau has made absolutely no mention of pre-paid consumption in its policy commitments for next year, and it even does not bother to use words like "concern" and "studies". I think the Trade and Industry Bureau has failed to discharge its duties in regard to the protection of consumer rights.

Last year, the Government turned down the proposals on enacting a fair competition law and on setting up a fair competition committee. Instead, a Competition Policy Advisory Committee was set up. The point is that this Committee is made up entirely of government officials, and it does not have any definite objectives, not to mention any agenda. As a result, this Committee turns out to be nothing but a window-dressing pet which is even more powerless than a "toothless tiger". However, the Trade and Industry Bureau seems to be of the view that it has already completed a major mission, as evidenced by the fact that the setting up of this Committee is put under the heading of "Action Completed". For this reason, the Bureau does not mention any further work in this regard in its policy pledges. The Democratic Party is therefore very disappointed. The Democratic Party would like to make a proposal on the composition of the Committee: its members should be drawn from different trades and occupations and groups representing different interests. We also think that the Committee should draw up fair competition guidelines for different government departments and industries, and public hearings should be held. Once again, the Democratic Party would like to call upon the Committee to discharge its duties. And, in the long run, the Government should enact a fair competition law, so as to ensure that the business environment in Hong Kong is conducive to fair competition.

Lastly ─ it is a pity that the Secretary for Constitutional Affairs is not here right now, I wish to say that we can notice at least three fallacies in the recent review of district organizations. If the Government has really decided to "kill" the two Municipal Councils on the basis of the outcome of consultation, then I must point out that these three fallacies should suffice to convince the Government that it should reconsider whether such a decision is at all appropriate.

The first fallacy. It is pointed out in two separate paragraphs of the consultation report that most people agree that the handling of matters relating to food safety and environmental hygiene should be centralized and put under the charge of the Government. It is also said that the public views are diverse with respect to the retention or otherwise of the two Municipal Councils. The expression "views are diverse" is quoted directly from the consultation report. In another paragraph, the questionnaire survey is mentioned. There, it is said that the questionnaire was designed by the Constitutional Affairs Bureau, and 15 000 responses were received. On this questionnaire survey, the Government writes as follows in the consultation report: "The majority of the respondents supported the proposal for the Government to assume direct responsibility for food safety and environmental hygiene, while views on the future structure of district organizations are again diverse". But if we read the Compendium of Public Views compiled by the Government itself (I have not brought along it because it is as thick as a telephone directory), we will find to our surprise that most of the 700 or so submissions are in support of retaining and merging the two Municipal Councils, and their abolition is not supported on the whole. And, if we look again at the survey conducted by the Government itself, we will be able to realize even more how absurd the Government is. According to this survey, 62% of the respondents are in support of retaining and merging the two Municipal Councils and only 17% of the respondents would like to have them disbanded. The questionnaire used in this survey was designed by the Home Affairs Bureau itself and distributed to area committees, chairmen of mutual aid committees and owners' corporations. That is why although the respondents are very small in number, their views should still be highly regarded for their quality. If one argues that theirs are not views of a high quality, I would most certainly raise objection because they are in fact district-level leaders trained up by the Home Affairs Department itself. Their views are all together very, very clear. Sixty-two percent of them support the retention and merging of the two Municipal Councils. Their views are certainly not "diverse" as claimed. So to say that their views are "diverse" is the first fallacy, an act of foul play because when their views are so clearly expressed, the consultation report simply should make such a comment.

The second fallacy relates to the views submitted by cultural and arts organizations. Since members of the public did not express too many views in this respect, the views on arts, culture and sports contained in the consultation report are mostly quoted from the two major bodies of these fields, namely, the Hong Kong Arts Development Council and the Hong Kong Sports Development Council. But the Government has completely omitted the views of another type of organizations, the views of which are entirely different from those of the Government. The Government is of the view that since the responsibilities for sports, culture and sports are too fragmented and not well co-ordinated, such responsibilities should be centralized under a new framework. But the other type of organizations which I have just mentioned (such as the Hong Kong Cultural Sector Joint Conference and the Hong Kong Artists' Union which comprise members from the arts and culture fields) are of the view that the current problem is nothing but precisely an over-centralization of these responsibilities, with the two Municipal Councils controlling the use and management of all venues. These organizations maintain that the two Municipal Councils should hand over some venues to private-sector organizations for the staging of activities. The views of these organizations are markedly different from those of the Government, the Sports Development Council and the Arts Development Council. Why has the consultation report not made a single mention of their views? Besides, some other major organizations also submitted their views, but very obviously, the Government has simply accepted what it thinks will suit its purpose, and all those views which the Government does not like are simply discarded. The entire consultation report has been written with such an approach. What is even worse is that even the views submitted by academics are distorted beyond recognition. If Honourable Members read the consultation report, they will see that the views of four academics who sent in their submissions during the consultation period are highlighted. But what the Government has done is simply to interpret some of their opinions out of context, so as to justify its position that the two Municipal Councils are no longer needed and should thus be "killed". These four academics are Mr LAU Siu-kai, Ms LAU Pui-king, Mr Joseph CHENG and Prof Peter CHEUNG. I have read all their submissions in their entirety, and I have them all here. I have photocopied them all, and I have read them carefully one by one. After doing so, I notice something absolutely interesting. I discover that the views of these four academics are in fact different from those of the Government. The only thing is that the Government simply highlights some of their opinions out of context and claims that these are their positions in regard to the issue. For example, Ms LAU Pui-king says, as part of her whole line of thoughts, that "even if the two Municipal Councils are not to be disbanded, they should be merged." But in fact, she does not have any strong views about the dissolution or merging of the two Municipal Councils. She actually thinks that both options are acceptable. But she emphasizes at the same time that she would favour the third option set out in the consultation document, namely, the merging of the two Municipal Councils and the District Boards. In any case, it is not true to say that she really supports the disbanding of the two Municipal Councils. But the Government simply interprets part of her reasoning out of context, so as to support its intended move to disband the two Municipal Councils. The truth is that she favours the third option, namely, the merging of the two Municipal Councils and the District Boards.

Similarly, Mr LAU Siu-kai supports the third option, but the Government has also quoted only part of his reasoning to justify its move to disband the two Municipal Councils. This is nothing but an attempt to achieve the desired purpose by interpreting others' opinions out of context. And, if we look at the views of Mr Joseph CHENG, we will see that the situation is even more absurd. Mr Joseph CHENG supports the dissolution of the two Municipal Councils, but he maintains that the number of District Boards must first be reduced to five, as opposed to 18 as proposed by the Government. Besides, he proposes that the Government should provide assistance to political parties for meeting election expenses, and he also thinks that the role of political parties in the Legislative Council should be enhanced by expanding the electorate. Why has the Government not mentioned all these proposals? The Government has simply quoted his conclusion that the two Municipal Councils should be disbanded without mentioning the pre-conditions and analysis which go before it. Mr Joseph CHENG's views are not presented as a simple statement of support, and his support for the disbanding of the two Municipal Councils is evidently qualified. So the Government simply should not quote his views in such an out-of-context manner. Let me illustrate my point by using one example. I may well say, " I support the freezing of town gas charges, but I support price reduction even more." Can the Government then claim that I support the freezing of town gas charges without mentioning the latter part of my statement? No, it cannot. Prof Peter CHEUNG no doubt supports the disbanding of the two Municipal Councils, but at the same time, he emphasizes that a more desirable option will be to introduce full-scale direct elections for all District Boards. However, the Government does not mention all these analyses and reasoning in its consultation report. Mr Robert CHUNG suggests that following the dissolution of the two Municipal Councils, all their responsibilities and functions should be transferred to District Boards, which should then be reorganized into five organizations resembling a municipal council. His views are different from those of the Government, which proposes the dissolution of the two Municipal Councils but the retention of the 18 District Boards as they are. Well, even if these academics do indeed support the disbanding of the two Municipal Councils as claimed by the Government, what about the 10-odd academics who have subscribed articles to the press to voice their objection to the dissolution of the two Municipal Councils? Why has the Government ignored their views? Why has the Government not quoted their views in the consultation report? Why did the Government not discuss the matter with us? Very obviously, even before the conduct of the consultation exercise, the Government already reached its own conclusion. So it has just quoted the views of the academics out of context to justify its position.

Madam President, I have never before seen such a tricky consultation exercise, such a tricky opinion survey. Some people have tried to describe what a cheat the Chief Executive has been. But I just want to say one thing. This consultation exercise can be compared to the worst soccer game in this century, with the Government displaying the worst of all sportsmanship. The only thing I can do in response is to analyse before Honourable Members the many fallacies found in the consultation report. I hope the Government will pay heed to our views. Do not ever reckon that we will not dare to vote down its proposal and do not try to disband the Municipal Councils by forcing the relevant legislation upon us! I so submit.

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

MR TAM YIU-CHUNG (in Cantonese): Madam President, nowadays, if people in Hong Kong do not know how to swim, it is really worrying. In the past year, Hong Kong was like a newly launched ship struck by the financial turmoil. As a result, there has been a credit crunch and small and medium-sized enterprises have been operating with difficulty. Internal consumption has been weak and the unemployment rate has risen sharply. There has been a wave of layoffs and salary reductions. In addition, a series of major incidents have hit us directly like strong winds. No wonder that the confidence of the passengers on board has been shaken. Some passengers keep scolding the captain while some even ask for his dismissal. The captain has to help passengers overcome all sorts of difficulties and steer the ship away from the storm. What is needed is not just a magic cure for sea-sickness and strengthening the body. Above all, they need a correct course. Thus, the captain proposes a course and various contingency measures. Unfortunately, the captain's efforts cannot change those people who are bent on picking on him.

Before the policy address was delivered, the Government had announced a series of measures to combat unemployment and help people weather the difficult situation. These measures include tax reductions, speeding up infrastructure projects, creating new jobs, freezing the rents of public housing and so on. These immediate measures obviously help to relieve the difficulties we are facing. Apart from strengthening the short-term measures to alleviate hardship, the policy address sets out the long-term strategies for consolidating our economic base and promoting economic development. With the economic growth of Hong Kong over the next 30 years in mind, the Government of the Special Administrative Region (SAR) plans to develop high value-added industries and make use of the advantages of Hong Kong to build a more diversified economy, in order to protect ourselves against the various storms that might strike again. Such forward-looking strategies deserve our praise.

Some critics of the policy address say that it is impractical to conjure up a beautiful new world for the "next life" while the problems of "this life" have not been solved. However, the same people criticized the former British Hong Kong Government for offering "stopgap solutions" and not making long-term planning. Why have they become so short-sighted now?

Some people say that technological development in Hong Kong lags behind other countries and cannot even keep up with Singapore and Taiwan in our neighbourhood. In proposing the development of high technology and high value-added industries now, Hong Kong has overrated itself and is impractical. If these people's views prevail, Hong Kong would continue to rely on low technology and highly mobile foreign capital for economic development. Should another financial turmoil come splashing on us, Hong Kong's economic lifelines will be struck at their roots. If we do not struggle for survival, we will have to pay a heavy price.

Active development of human resources

To promote the healthy development of our economy, apart from investing in innovations and technologies, high value-added industries and infrastructure, manpower training is also an indispensable important factor. The policy address once again puts education at the first place and introduces for the first time the concept of "life-long learning", in the hope that Hong Kong will develop as a learning-based community.

Undeniably, developing education, especially continued education is a key to maintaining the vitality and competitiveness of the labour force in Hong Kong, as well as a key to maintaining our economic success. The policy address pledges to do everything to let people have a chance to upgrade their skills if they are keen at learning. Such a positive attitude is praiseworthy.

The policy address also pledges to give the Employees Retraining Board (ERB) a grant of $500 million and develop a qualifications accreditation framework for retraining programmes offered by the ERB, so that people can upgrade their qualifications constantly through training. From the perspective of "life-long learning", these measures will certainly help enhance the competitiveness of trainees and their abilities to seize the initiative in their own hands.

However, we do not see any vigorous measures to develop continued education under the Government's policies. The Education and Manpower Bureau has not set any parameter for appraising continued education in the coming year. One of the existing flaws is that the adult evening schools directly under the Education Department are still offering remedial education only. With regard to the continued education programmes developed by private institutes, the Government is divorced from reality in terms of supervision, co-ordination and planning. These issues have not been given due consideration.

Though also a part of continued education, employees retraining has always been regarded as an effective solution to unemployment. Such a presumption is impractical and might even make people lose confidence in the retraining system. Only when our whole community attaches importance to continued education and self-improvement will we be more confident in facing various crises. I deeply understand that the unemployed are under great pressure. However, I hope that the unemployed will not lose confidence in the retraining programmes just because they cannot find a job for the time being.

Building a diversified economic system with high value-added and high technology industries means demanding higher technical skills from the workforce. Due to the growth of the adult population in Hong Kong and an increasing number of settlers from the Mainland, Hong Kong's education services urgently require corresponding adjustments. However, we are facing a very serious situation: 40% of the 3.2 million workforce in Hong Kong have received junior secondary education or even less. The Human Development Report recently published by the United Nations also shows that the illiteracy rate in Hong Kong is as high as 8%. Although there are many continued education courses offered by private organizations, the enrolment rate of people having received junior secondary education or less is very low according to these organizations. This shows that for various reasons, less of these people take the initiative to learn. At present, the Government injects considerable resources into primary, secondary and tertiary education to ensure that the next generation will have mastery of language and applied information technology at a certain level. If this is what an advanced community requires of the quality of its people, the Government should also create a better environment for upgrading people having lower qualifications. Therefore, apart from developing traditional school education, it is imperative for the Government to make a comprehensive plan for adult continued education.

To develop life-long learning and build a learning-based community, the Government's education policy has to cover a wider area and the Government must increase its expenditure on education. The experience of Britain, the United States and our neighbours Japan and Taiwan tells us that greater efficiency can be achieved with half the effort if private organizations and enterprises are encouraged to take part. What the Government should do is to formulate a series of basic measures for promoting the development of adult education, including planning the curricula, compiling the teaching materials and establishing an examination and appraisal mechanism, in order to set up a vocational training and qualifications framework which can make self-adjustment to meet society's needs and which can encourage in-service training and self-learning.

Long-term planning of elderly affairs

In terms of elderly affairs, the Government made a more comprehensive pledge to improving elderly welfare last year. It aimed at making the elderly financially more able, and improving their living environment and medical care, as well as providing them with stronger community support. The measures adopted by the Government, such as implementing the sheltered housing scheme for the elderly, establishing visiting health teams and home help teams as well as setting up Elderly Health Centres, have the support and approval of the public and the service organizations. In his policy address, the Chief Executive once again pledges to increase the number of subvented residential care places, provide funding for residential care homes to allow elderly people to continue to live in the same home and introduce a respite service allowing families to place their elderly parents in day care centres. These measures will give certain help to upgrading the existing elderly welfare services.

Nevertheless, the problem of the ageing of our population has intensified. Apart from improving existing elderly services, there is an urgent need to make a comprehensive assessment of the future demand for elderly services and make long-term plans to provide against the future. At present, 10% of our total population are people aged 65 or above. By 2016, this group of people will account for 13.3% of the total population. The dependency rate of the elderly will increase from 141 persons per 1 000 working people in 1996 to 184 persons in 2016. At the current pace of development, the services will not be able to meet society's needs then.

We stress that just as economic development needs long-term planning, a sound elderly care system and the development of elderly welfare services also require the Government's far-sight. Improving the existing services is not enough. It is worthwhile to learn from Japan which consistently improves its elderly welfare policy. In addition to its existing pension system, a 10-year development strategy for elderly health care and welfare services called "Gold Scheme" was introduced in 1989 to safeguard the retired lives of the elderly. In 1994, the Japanese Government introduced a revised "New Gold Scheme" and started looking for new funding for elderly welfare services. Recently, after having reviewed the plan and found that the scheme is short of funds, the Japanese Government has decided to introduce a "long-term elderly care insurance system" with contributions from the elderly in 2000. This shows that the improvement of elderly welfare services cannot be accomplished at one stroke and Hong Kong still has a long way to go.

Madam President, Members have many different views on the policy address of the Chief Executive and there are also many criticisms. This shows that despite economic difficulties, our freedom of discussion and freedom of speech have not been hampered or suppressed. However, yesterday, Members of this Council kept making fun of the Chief Executive's remarks about his "selflessness and feeling no regret or shame". No matter how many negatives these Honourable colleagues mention, they do not compare with a positive. I am sure that none of us will deny that the Chief Executive is a man who sets his mind on doing something positive. However, whether he is capable of accomplishing what he sets out to do depends on whether Honourable colleagues and Hong Kong people are prepared to work with him to turn adversity into opportunity. Rome was not built in one day nor by one man alone.

With these remarks, I support the original motion and oppose all the amendments.

PRESIDENT (in Cantonese): Mr Ambrose CHEUNG.

MR AMBROSE CHEUNG (in Cantonese): Madam President, I have rather conventional expectations of the policy address. I hope that the Government can show through the annual policy address that it is an efficient government with leadership, good performance and credibility. With these conventional expectations, I am rather disappointed about this policy address. I also wish to look at this policy address against some other principles and standards, such as examining the vision of the policy address and how it deals with the present situation from a political and economic perspective.

First of all, I would like to talk about the economic vision. I give the policy address relatively high marks for this area. In my view, the policy address has grasped an important point, which is that our economy, industry and various areas need diversified development. The policy address suggests that we promote high value-added, high technology and multimedia industries, develop innovation and technology, scientific research and information technology, so that Hong Kong will become a world centre in various areas and a leading international city in Asia. I believe this is the right course to take.

Next, I would like to examine the political vision of the policy address. I give it relatively low marks in this area. In the policy address, the Chief Executive says that for the longer term, we are fully committed to developing further our democratic institutions in accordance with the Basic Law. Actually, this amounts to a dismissal of our demand for the acceleration of the pace of democratization, setting forward the timetable for the election of the Legislative Council and the Chief Executive by universal suffrage and even our demand for considering making amendments to the Basic Law to meet with the needs of the community: it stipulates that democracy can only be further developed in Hong Kong in accordance with the Basic Law in its present form.

I would also like to comment on how the policy address deals with the present economic situation. I will give it a "fair" score in this. The Chief Executive understands that during the economic downturn, the most important measure for stimulating the economy is to solve the problem of interest and money supply. If interest rates can stabilize at a reasonable level and banks can relax the money supply, and if small, medium and large enterprises can operate at reasonable costs and have adequate operating capital, there will naturally be fewer cases of shutdown, layoff and salary reduction. The overall investment climate will also improve. This will revive our commercial and industrial operations, rein in our unemployment problem directly and indirectly as well as create more job opportunities.

The Government also has to consider how to handle a new economic situation, a situation of deflation. Hong Kong has relatively little experience in this. Although the Chief Executive said that there would be no tax increase, government officials have been quick to point out that careful consideration would be given to whether there should be a tax increase or not. Land sales has been reduced and the Government's revenue has consistently declined. However, one has to stimulate the economy at the same time. During a time of deflation, where does the Government get its revenue from? Overseas experience teaches us that the Government can consider privatizing its services, such as transport, communication or municipal services. This is a new direction. I hope that we can discuss this with the Government in the future.

I give a very low score to the part of the policy address dealing with the present political situation. Let me explain this with three examples: the first example is the Government's policy accountability, the second one is about the relationship between the executive and the legislature and the third is about the review of the structure of district organizations.

As we can see, the Government had a lot of trouble undertaking accounting for its policies in the past year or so, in terms of medical and health incidents, the airport, the financial turmoil and the economic downturn. The Government did not have the courage to bear accountability for its policies. I am not asking the Government to apologize. I just hope that the Government will step forward and say that some areas in its policies in the past year or so could be reviewed. We can carry out this review together with the Government. However, there is not even one basic review that reflects a readiness to make itself accountable. I am really very disappointed.

The second point is about the relationship between the executive and the legislature. Mr TUNG admits that the relationship between the executive and the legislature needs to be improved and his solution to this is more dialogue. It is fine to have dialogue. However, what I find most disappointing is that when the Chief Executive came to attend a question session at the Legislative Council, he did not even accede to one of our basic requests. We asked whether the Chief Executive could come one or two times more to talk with us, instead of just three times a year. It was a very good opportunity for the Chief Executive to show that he supported dialogue. He could very easily have said that he could come one or two more times. However, he did not even have this basic attitude. The Chief Executive has always stressed dialogue, saying that we have many other channels. However, if the channels are not built into a framework and we can only communicate on informal or social occasions, it does not meet our demand at all. Therefore, I would like to take the opportunity of this debate to ask the Government to take the initiative and make some improvement in the framework, so as to arrange a high-level co-ordination meeting between the Chief Executive, the Executive and the Legislative Councils. With regard to the political appointments of government officials, my stand is quite clear. I am in favour of the Government absorbing all-round talents and specialists gradually through political appointments within and without the Civil Service.

I would like to turn to the Municipal Councils. Actually, there are many discussions about the review of the Municipal Councils and district organizations. I would like to judge this matter with a certain criterion, that is, whether the Government has dealt with this honestly, openly and fairly. After many discussions in the districts, some people asked me whether the Government had reasons other than those cited in the consultation paper, whether there were some political reasons. They assumed that there were some political reasons behind this. Since the two Municipal Councils are financially independent and can formulate and implement policies on their own, they are a great affront to the executive-led concept of the Government. We can also see a trend here. As these democratic structures are constituted through election, if individual or combined political groups manage to get hold of the majority of seats in these structures gradually, they will be an even greater affront to the concept. The Government seems to fear such a situation. Now, it has taken advantage of the provisional status of the two Municipal Councils and the economic downturn, when people are more concerned about economic issues than other issues and therefore might accept political changes more easily.

Besides, due to some incidents in the past two years, the two Municipal Councils' reputation has suffered. On account of certain incidents relating to medical and health, food safety, environmental hygiene, the Government considers this to be the best time to "strike". If it does not "strike" now, there will be no other chance. Thus, the Government is forced to take this course. Just now, many Honourable colleagues talked about this course of action and expressed deep dissatisfaction with the way the Government has handled this. In June and July, in the brief space of two months, without providing the public with concrete and detailed information and without a proposal for the concrete administrative framework, a public consultation exercise was conducted in a manner that was neither independent, scientific nor systematic. When the views collected were not agreeable to the Government, how did it deal with them? It had two ways to deal with them. One way was to take isolated views and analyse them. These views were also interpreted arbitrarily and qualitative data was given more weight than quantitative data. The Government did not tell us that in nearly 10 surveys conducted by the Government and among political parties, academic groups, district boards, district board members and area committee members in the past four months, the majority views were against the abolition of the two Municipal Councils. Instead, they were in favour of retaining the two Municipal Councils or their merging.

The Government pursues this relentlessly and links the abolition of the two Municipal Councils with the subventions to the district boards, the remuneration of district board members and even with the rates. I know that the Government will clear up these issues over time. However, I am quite sure that the disclosure of this information was systematic and premeditated. Whether the two Municipal Councils are abolished or not, the rates will be lowered next year. The triennial assessment is due next year. Due to the drastic fall in property prices, even if the two Municipal Councils are not abolished, the rates will be reduced. Therefore, the abolition of the two Municipal Councils and the rates should not be discussed in the same breath.

Moreover, asking the Legislative Council to pass over 160 pieces of principal and subsidiary legislation within a very short period is neither feasible nor practical within such a tight timeframe. Why is there such a rush? There are political reasons behind this.

I would like to make a few suggestions. The Government still has a chance to put the review of district organizations back on the right track. I hope that the Government will consider these four proposals: first, the Government should carry out a second phase of consultation to make sure that it has public opinion behind it; second, apart from consulting the public, it should hold a public hearing with academics and political figures in the Legislative Council; third, it should introduce legislation to the Legislative Council systematically and in a package, so that the Council can discuss issues thoroughly; fourth, it should discuss an effective timetable for review with the Legislative Council. Lastly, it should inform the public in case it does not have the support of the Legislative Council, how it proposes to arrange the provision of municipal services to the public at the end of 1999.

Finally, I would like to take this opportunity to make an undertaking. During the discussions of the two Municipal Councils, we decided that we should make a concrete undertaking to the public and that is, we undertake that from now until 1999, regardless of the outcome of the matter concerning the abolition of the two Municipal Councils, we will discharge our duties with the utmost effort and review our performance. Our Municipal Services Joint Working Committee will work towards "one Municipal Council, one Municipal Services Department" and demonstrate that this idea is workable. We will also provide the public with full information to enable them to understand the relationship between the two Municipal Councils and the Urban and Regional Services Departments and where the problems lie. Lastly, we will consult the public and let public opinion have the final say on the future of the two Municipal Councils. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr HO Sai-chu.

MR HO SAI-CHU (in Cantonese): Madam President, the policy address stresses helping the elderly enjoy a sense of security, a sense of belonging, good health and a feeling of personal worth. The Liberal Party has always been concerned about the elderly problem and we support this objective of the Government. However, our population keeps ageing. Up till mid-1997, there are almost 940 000 people aged over 60, and it accounts for 14.4% of the total population. As estimated, people aged over 60 will increase to 23% by 2006 while the rate of increase in people aged over 75 will be the most rapid, and it is believed that by 2006, the rate of increase in people aged over 75 will be 4.59%, 2.5 times the rate of increase in people aged over 60 then which will be 1.77%. An increase in elderly population means an increase in the number of people dependent on public resources. The housing problem of the elderly is the first problem that emerges. We wonder if the policies introduced by the Government in the policy address can meet the demand and achieve the aim of helping the elderly enjoy a sense of belonging.

Along with the changes in family structures and values come a change in the local families' concepts of care for the elderly. Many family members have to work and they cannot take care of the old people in their families. Families that find it affordable will send old people to private homes for the elderly but the expensive charges of these homes are not affordable by ordinary families. Therefore, some old people have to rely on public resources and wait for the places of government-subvented institutions. It is a pity that the supply of subsidized institutional care places for the elderly is far less than the demand. As shown by the data given by the Government, by the end of September, a total of 37 430 people were waiting for the places of subsidized institutions for the elderly and the average waiting time was two to three years. For care and attention homes which face the greatest demand, the waiting time was more than two years while that of convalescent homes was three years. There seems to be a very long way to go before the Government's objective of helping the elderly enjoy a sense of belonging can be achieved.

It is stated in the policy address that it is planned to increase around 8 000 subsidized places in the period between 1998 and 2002. As 7 100 were pledged last year, the Government has only increased 900 subsidized places this year with a modest allocation of resources. Information shows that the Government will mainly group these newly added places under the Bought Place Scheme.

The supply of subsidized institutional care places for the elderly will fall short of the demand and the policies stated in the policy address can hardly achieve the objective of helping the elderly enjoy a sense of belonging. We think that the Government should be flexible and put forward practical proposals in keeping with the changes in the social environment. The Liberal Party has made the following suggestions regarding increasing the supply of subsidized institution places for the elderly.

Firstly, relying only on the Government to grant land for building institutions for the elderly is too slow. The Government should seize the good opportunity of a drop in property prices now and buy existing premises for redevelopment as institutions for the elderly in accordance with the needs in individual districts. This can speedily increase the number of institutions for the elderly. Besides, many vacant government quarters are now open for lease and the Government may as well select some quarters at suitable locations and redevelop them as institutions for the elderly. For instance, the Pamela Youde Nethersole Eastern Hospital is co-operating with voluntary agencies to redevelop doctor quarters as institutions for the elderly. As these institutions are adjacent to hospitals, the elderly can get medical services conveniently. In addition, as it is stated in the policy address that the Sandwich Class Housing Scheme will be suspended (as we wish) in the light of the changes in the property market, the Government may consider building institutions for the elderly on land originally allocated for building sandwich class housing.

In addition to increasing institutional care places for the elderly, the Government has to attend to the needs of those old people who do not need to be institutionalized and provide them with suitable accommodation. The Government should constantly review the elderly housing scheme to further shorten the waiting time of old people on the Waiting List. We also support that the Government should give Waiting List applicants living with old people priority in public housing allocation. However, the Government must frequently conduct random checks and visits to prevent people from getting priority allocation by way of false statement.

There will be an increasing demand for elderly services in Hong Kong as our population is ageing. As old people have served the community and made contributions, we have to secure a protected life for them in their later years. The Government should closely monitor the changes in demand and keep reviewing the existing elderly policy to practically solve the elderly problem.

I would like to discuss about the unemployment problem. At present, unemployment persists in Hong Kong and many analyses have projected a further increase in the unemployment rate. Some Members think that the policy address has not discussed at length about solving the unemployment problem or the relevant solutions in detail. In fact, the Government can take few direct actions to tackle the unemployment problem other than principally creating a sound investment environment, attracting new domestic and foreign investments and encouraging existing investors to expand their businesses. When economic activities flourish, there will naturally be more job vacancies and the unemployment problem will be solved.

In fact, the policy address has discussed at certain length about the development of industries, improving the business environment and stabilizing the property market. As Honourable colleagues of the Liberal Party have expressed their views in this respect and explained them in detail, I will not repeat them here. The policy address touches upon indirect solutions to the unemployment problem and some people will think that the aid is too slow in coming to be of any help. Nevertheless, the Government has already taken some immediate measures such as pacing up infrastructure projects to create more vacancies and enhancing retraining courses and it has not put these off until the publication of the policy address.

Our economy is now going through a painful adjustment. Not only employees bear the risks of being rendered unemployed, many bosses are also having financial difficulties and difficulties in running their businesses. We must restore investors' confidence in our prospects so that they will continue to make efforts to climb up from the bottom of the valley. Employees have to face the reality and work out strategies with their employers, help one another as they are in the same boat in an effort to reach a consensus concerning wages so that the bosses can continue to run their businesses while the employees will not lose their jobs, and they can tide over the financial difficulties together.

People have all along disputed over labour importation and there is now a stringent mechanism for monitoring the import of a small number of foreign workers and ensuring that local people will have priority to employment. We do not agree to an across-the-board suspension of the importation of all foreign workers, for as in many cases importing some foreign workers can create vacancies for local people at the same time. I can give a simple example. A Sichuan restaurant which would soon commence business needed to recruit two authentic Sichuan chefs, and after they had failed to find suitable candidates in Hong Kong, they applied for the importation of foreign workers. When the Government granted it approval for importing two foreign workers, the Sichuan restaurant could then successfully open for business, at the same time creating 50 vacancies for local workers. Therefore, labour importation will not necessarily cut vacancies, on the contrary, it can create more job opportunities for local people.

We must understand that unemployment is a problem brought about by economic recession and they go hand in hand. Therefore, we must find the crux of the problem before we can prescribe the right medicine. At present, the most important task is to stabilize our economy and create a sound environment for investment. When our economy revives, job opportunities will naturally increase and the unemployment problem will be solved.

I shall now turn to the issue of Comprehensive Social Security Assistance (CSSA) payments now. At present, a group of Hong Kong people depend on CSSA payments for their living but only at subsistence level. Because of the poor economy, the number of people relying on CSSA payments keeps growing. In addition to those people who do not have working capacity and the old, weak and disabled, there are many unemployed people who have working capacity. Conspicuously, the composition and features of the population applying for and receiving CSSA payments have become different as a result of the changes in the social and economic environment, and the Government must make corresponding changes. Accordingly, the Government must expeditiously review the existing CSSA policy to meet social needs in a more appropriate way.

The Liberal Party always think that the CSSA scheme will not nurture lazy bones. The objective of establishing the CSSA scheme is to assist the old and weak in our community and allow them to live in a dignified manner and meet their most basic living needs. But, can the existing CSSA payments allow them to live in a dignified way? Many families receiving CSSA payments have too many difficulties to cope with and they are living on the verge of poverty. In our view, the existing CSSA policy cannot fully assist them in meeting their daily needs and a review should be made by the Government so that the old and weak who really need assistance can live peacefully.

Many CSSA recipients are unemployed but they have working capacity. Some think that the existing CSSA policy gives too much assistance to families having working capacity especially when wages are decreasing in general, and there is a distance between the amounts received by these families having working capacity and the income of average families in our society. Besides being unfair, the policy will also make people with working capacity less willing to seek employment. The Government must conduct a review in this respect.

We have to understand that no matter how advanced our society is and how prosperous our economy is, there will still be people in need of help and the Government must be realistic and cater for their needs and assist them in improving their living. Only this will show that our society is progressing.

With these remarks, Madam President, I support the original motion and oppose the amendments.

PRESIDENT (in Cantonese): Mr Albert HO.

MR ALBERT HO (in Cantonese): Madam President, first of all, I would like to speak on transport infrastructure on behalf of the Democratic Party.

In the area of expanding transport infrastructure, the most specific commitment the Government has made this year is that four railway projects are going to commence shortly. These railway projects are the West Rail Phase I, the Ma On Shan/Tai Wai rail link and the Kowloon-Canton Railway (KCR) Tsim Sha Tsui extension, the Tseung Kwan O MTR extension, and the extension from Sheung Shui to Lok Ma Chau. Since the publication of the Railway Development Strategy by the Transport Branch in December 1994, the progress of these railways has been among the issues we pursued when the policy address was published each year. For many years, the answer we got was that the railway projects were still under study. Because of repeated studies, the target completion dates of these railways are now changed from 2001 or before to between 2002 and 2004.

We can see from this policy address that many large-scale infrastructures are under study at the moment. Of course, we hope that the Government will not use this as an excuse to delay the making of important decisions. If these projects are really under study, we hope that the Government can speed up the studies to enable the projects to be implemented and commenced expeditiously. In this year's policy address, the Government indicated that it would take measures to streamline the construction projects of transport infrastructure with the objective of shortening the construction time by 15%. We support this measure, but it is unfortunate that the address has failed to specify the details of the measures and when they can be put into practice. We hope the Secretary for Transport can give us a more concrete reply in this respect next week.

I turn now to public transport service. It is to our surprise that the railway companies are in full possession of autonomy to raise the fares of public transport, which the public in general relies on to get to work and go to school. On the other hand, the Transport Advisory Committee, which is lack of operational transparency and representativeness in its membership, is in full control of scrutinizing bus fares. We can see from these fare adjustment mechanisms that the opinions and rights of the public are completely neglected! In order to improve the fare increase mechanisms for railways and buses, the Democratic Party moved a private bill in 1997 with a view to amending ordinances relating to the Mass Transit Railway, Kowloon-Canton Railway and buses. But very unfortunately, the two bills were negatived. It was because in lobbying Members at that time, the then Secretary for Transport, Mr Gordon SIU, undertook that the Government would consider setting up an independent public transport management committee with credibility and transparency as well as appointing respectable and reliable people to scrutinize all matters concerning public transport fare rises. In addition, he stated that the Government would in due course consult the public on the composition, terms of reference and operational mode of the committee. However, we only come to know today that after the bills were vetoed against by Members, the Government has fundamentally failed to conduct any comprehensive reviews, or probably no review at all. Earlier on, the Secretary for Transport indicated that the regulatory framework was operating smoothly. We are strongly dissatisfied with the Government's irresponsible attitude of failing to honour its promise! We would like to urge the Government once again to submit the relevant review reports as soon as possible and honour the undertaking made by the Secretary for Transport made earlier.

This year, the policy address also mentioned that the Government would strengthen the supervision of various railway corporations. In this connection, may I ask the Secretary what concrete measures will be put in place? As far as railway fares are concerned, how will the Government ensure that the public interest is being protected?

As for transport management, the community has recently noted the uneven traffic flow of the Western Harbour Crossing (WHC) and the Cross Harbour Tunnel (CHT). As a matter of fact, the low traffic flow of the WHC has not only failed to ease the congestion of the CHT, but also wasted the resources of the community. I think the reason is very simple and that is the fees charged by the WHC are simply too high.

We think the Government should be held responsible for the situation today. It is all because, right at the beginning, the Government allowed the WHC Corporation to incorporate an automatic fare increase mechanism in its franchise agreement by setting out clearly the company's rate of return, tunnel fees and criteria for raising fares. Not only is the relevant ordinance far from flexible, it has succeeded in unilaterally safeguarding the interests of the operating company as well. Once the relevant legislation is passed, even the Government itself is unable to intervene with the decision of the company, and it therefore fails completely to play its regulatory role. Even if it knows very clearly that the fees charged by the WHC are too high, it is unable to do anything.

At this stage, the Democratic Party is still studying this issue. It has come to our notice that the Government will probably put forward proposals to improve the traffic condition of the three tunnels. We are willing to consider carefully the proposals that the Government may put forward in future. But we must remind the Government again that it must take into account the public interest. Moreover, it must not ask other tunnel users to subsidize the WHC by way of fare increases. In conclusion, we hope that the Government can consider the matter in details before putting forward a proposal. It should not put forward the proposal rashly in order to muddle the matter through.

Madam President, the next issue I would like to discuss concerns financial reform. Over the past year, our financial system has developed numerous problems, including the repeated occurrence of fraudulent cases and closures of securities companies, bank runs, repeated attacks on the Hong Kong currency, the intervention of the Government in August and so on. These incidents have undermined Hong Kong's position as an international financial centre. In the section concerning financial services in the policy address, we cannot see that the Government or the Chief Executive has seriously absorbed past experiences and conducted a comprehensive review of the existing financial system in order to reinforce Hong Kong's position as an international financial centre. The Chief Executive has, in the policy address, put forward two proposals in respect of financial services. Firstly, he asked the Secretary for Financial Services to take a more active role in co-ordinating regulators and market operations, and to review the resources he needs to do this. Secondly, he asked the Administration to follow up the setting up of the Financial Services Institute, as was proposed last year. Among these two proposals, only the first one is a new suggestion; the second one has been mentioned before.

The Democratic Party supports the first proposal as we think this is necessary. The Government's market intervention has reflected the fact that the Securities and Futures Commission, the Hong Kong Futures Exchange, the Stock Exchange of Hong Kong Limited (SEHK) and the Hong Kong Securities Clearing Company have been acting in their own ways and there is a lack of co-ordination among them. As such, it is necessary for the Secretary for Financial Services to strengthen its regulatory role by enhancing the link among various financial institutions in order to plug the operational loopholes of the existing financial markets.

The Democratic Party is disappointed with the fact that the policy address has failed to mention two important reviews. The first review concerns the organization and structure of the SEHK. Because of the occurrence of a series of incidents related to market suspension and the collapse of the futures market in the wake of the stock crash in 1987, Hong Kong's reputation as an international financial centre was badly damaged. It was even nicknamed "a casino without the supervision of an overlord" or "a private club". Ten years down the road, Hong Kong is still unable to get rid of such notoriety. At present, the share rights of the SEHK are held by brokers, who are enjoying a monopolistic position as well. A number of past examples have also illustrated the fact that the SEHK sees the protection of its members' interests as its paramount task, at the neglect of investor interest. In addition, its strong sense of protectionism has delayed the development of the market. The Democratic Party is of the view that we must expeditiously review the monopolistic position held by the SEHK as well as its structure. For instance, the responsibilities borne by the SEHK for its members can be shifted to independent companies set up under the SEHK; or perhaps the SEHK can expand the share rights so that the share rights originally held solely by the brokers can be held by other market participants or members of the public as well.

Secondly, the performance of the Hong Kong Monetary Authority (HKMA) in the issue of the linked exchange rate over the past year has fully exposed the fact that the relationship between its role and the relevant ordinances is ambiguous and vague. As such, the Democratic Party urges the Administration to review the structure of the HKMA, enact relevant legislation to empower the HKMA in a clear-cut manner, as well as defining its role, responsibilities, organizational framework (such as the tenure and appointment of its Chief Executive, the terms of reference and composition of the board of directors of the HKMA, the Exchange Fund Advisory Committee and so on) as well as the financial issues of the HKMA. This will ensure that the HKMA will discharge its supervisory responsibility independently, as well as maintaining its operational transparency and accountability.

Because of the successive closures of a number of securities companies over the past year, investors have incurred serious losses. Of course, the lack of government supervision is the main reason. But these incidents have also reflected the importance of investor education. As such, the Government should make use of information technology to enable investors to fully grasp the required information and understand their own rights so as to make sensible investment decisions. The SEHK should set up databases on relevant rules and regulations, listed companies and their members, statistics and so on. On the other hand, the HKMA should regularly release to the public the basic information of banks, such as loan portfolio, capital adequacy ratio, the amount of capital, as well as putting them onto the Internet.

Lastly, the Government previously promised that it would abolish the fixed-deposit interest rate agreement in 1995. But subsequently it made numerous excuses and only the 24-hour fixed-deposit interest rate agreement was scrapped. In this policy address, the Government has not mentioned a word at all about the abolition of the deposit interest rate agreement. This gives the Hong Kong Association of Banks a grand excuse to continue to safeguard the interests of some large banks through the interest rate agreement, thereby jeopardizing the interests of consumers. The Democratic Party is of the view that the banks' interest rate agreement is in breach of the principle of fair competition. We are also disappointed with the fact that the policy address has failed to fulfil the commitments it has made. The Democratic Party is now intending to draft a private bill to propose abolishing the right of the Hong Kong Association of Banks to cap the rate under the interest rate agreement. In addition, we urge the Government to consider expeditiously to introduce legislation for the setting up a bank deposit insurance mechanism so as to safeguard the interests of bank clients and the stability of the banking system.

Madam President, over the last two days, a lot of criticisms were heard in this Council. In conclusion, I want to make a few sincere remarks. Even if some of my colleagues made very strong or even critical comments, our intention is good rather than bad or hostile. Although the criticisms touch on numerous areas, or even involve the basic principle of government administration, I believe my colleagues have no intention to completely deny the effort and achievements made by various government departments. But on the whole, we still feel regret and disappointed with the policy address. Of course, I have to reiterate that we confronted the Government not because we have given up all our hope. The Democratic Party will continue to work hard and make unceasing efforts to promote democratic reform and fight for improvement of administration of various government policies. We will also seek to, if circumstances permit, co-operate with the Government to improve the livelihood of the people. We all hope that Hong Kong can overcome today's difficulties as soon as possible. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr CHAN Kwok-keung.

MR CHAN KWOK-KEUNG (in Cantonese): Madam President, in his policy address, the Chief Executive revealed clearly his determination to broaden the economic base of Hong Kong by developing high technology. He will strive to make Hong Kong a most cosmopolitan city in Asia. This is a good idea in the long term. In the policy address, much of the writing was about high technology and high value-added industries, giving the impression that Hong Kong is going to become a more modernized community.

To put this in an analogy, it seems Hong Kong people have fallen into a valley from a peak, and as they look ahead they see another peak. Is this not a good thing? But the Government must not just ask people to look ahead without helping them scale the peak before them. Without the "stamina" and the "skills" how can they finish the long march or climb to the peak?

I think as we promote the updating and development of local industries, we need to put this through thorough and comprehensive consideration. We should not lose sight of the need to upgrade low-skilled labour, improve the employment situation, develop the human resources of Hong Kong and create more job opportunities.

Regarding the structure of the human resources in Hong Kong, we will see that we have not been doing good enough in retraining, if we look at some simple data from the past. The number of employees in the manufacturing industry dropped from 950 000 in 1986 to 570 000 in 1996, a 40% strong drop. The share they represent in the total working population dropped from 36% to 18%. During the same period, tertiary industries relating to the services (including wholesale, retail, import/export trade, catering and hotel, transport, storage, communications, finance, insurance, real estate, commercial services, community services, social and personal services) had its workforce increased from 1.45 million to 2.17 million, an increase of about 40%. That is an increase from 55% to 72% of the total workforce. Therefore we can see that workers who were formerly engaged in manufacturing have joined the service industry, especially those non-technical jobs.

In addition, if we look at a previous forecast of the then Education and Manpower Branch for 2001, we will find that it forecast a shortage of 40 000 strong workers each in the group with higher secondary education and that with matriculation education by 2001. But it also forecast a surplus of 20 000 strong workers with university education, and a surplus of 50 000 workers with education at junior secondary level or below. We can see there is an imbalance between manpower supply and demand across different educational levels. A major cause for this situation is a mismatch between manpower planning in terms of education and economic development, causing some people to be trained for jobs they will not do, and consequently a waste of manpower resources.

In fact, before the Hong Kong economy suffers setbacks as it does now there has been problems concerning manpower development in which unskilled labour was not given training to cope with restructuring, not to mention the defective overall manpower planning. With an economic downturn, drastic reductions in job vacancies, and an increasing unemployment rate, the severe imbalance in the economic structure is revealed. An immediate solution is also needed to match manpower resources with the job market. A more important issue, however, is how the Government is going to provide people with the "stamina" and "skills" to tide over this difficult period of adjustment.

Regarding the human resources structure, the policy address has revealed the Chief Executive's intention to merge the existing two Technical Colleges and seven Technical Institutes to form a single academic and training institute, the Hong Kong Institute of Vocational Education. I think it is a good thing for the Government to take the first step to make reforms in training institutes, but I do not want to see the Government stop there. It should bring about deeper reforms in retraining.

We at the Hong Kong Federation of Trade Unions proposed a debate two years ago, requesting the Government to restructure retraining institutions. At that time, we pointed out some obvious problems in the retraining system. On the one hand, there was a lack of co-ordination between the relevant government departments and institutions, resulting in fragmentary efforts and overlapping of resources. On the other hand, the Government lacked a clear direction in its manpower training policy. There was a lack of a system for centralized planning and co-ordination between the two major training institutes, namely, the Vocational Training Council (VTC) and the Employees Retraining Board (ERB). There was an overlapping of their respective roles and even competition for resources.

The present proposal to unify the two Technical Colleges and seven Technical Institutes is only a reform to individual frameworks under the VTC. There is still no distinction of roles between the VTC and the ERB, especially when both institutions are conducting retraining and there is no clear division of labour.

Furthermore, since 1992 when the Government launched the Employees Retraining Scheme to help elementary labour to switch to new jobs, the entire Scheme had no clear direction or long-term development strategy. The course design could not effectively help trainees acquire new skills and lacked convergence with other existing courses. In recent years, the authorities switched the emphasis from "training-oriented" to "placement-oriented", which was a short-sighted move. The focus fell on whether trainees could find jobs soon after retraining rather than the adequacy of the training. Now the Government is injecting an extra $500 million for retraining in the light of rising unemployment, worsening livelihood conditions, a shrinking job market, and less available jobs. If the ERB continues to target on a 70% placement rate and rejects the idea of subsidizing other institutions to start courses on upgrading skills for switching jobs, many of the unemployed will lose the opportunity for training during this time. It would be a disappointing consequence. Fortunately I was told the ERB is heeding good advice and has promised to review and change its course as stated above.

I maintain that policies on human resources should not be left solely to the Policy Bureaux of the Government, otherwise views from other sectors of the community will be overlooked. As Hong Kong is going through this adjustment, the Government should make good use of this opportunity to set up a statutory body consisting of representatives from labour, capital, the Government and the professions to take up the responsibility of unifying all training institutes and fostering co-operation among them. This body can make specific contribution in three aspects. First, it can study the trend in the Hong Kong labour market and developments in different trades so that the training institutes can provide service accordingly and make suitable adjustments in curricula and training; second, it can formulate and promote a direction for overall training to match the long-term economic development of Hong Kong; and third, it can unify and co-ordinate training efforts from all relevant departments to lay down a development plan for training institutes so that they may effectively promote placement.

There are around 1.3 million workers in Hong Kong with an educational level of Form Three or below. Basically, the Government of the Hong Kong Special Administrative Region (SAR) needs to cater to training at three levels: first, retraining for low-skilled labour to enable them to master new skills in their own trades; second, training for skilled labour to enable them to master new skills in their trades and enhance their personal productivity and efficiency; and third, training for professional and management skills, and training for new technology with a view to promoting the technological and management standards of Hong Kong as a whole. If Hong Kong makes light of the training for the one million-odd low-skilled labour, the ensuing social problems will become more difficult to solve.

Now let me speak about the question of "stamina". For people to get out of the difficulty, stamina is a must, that is, our workers must have jobs and food. The Government indicates it does not want the unemployed to rely on relief for long. But do the unemployed mean to rely on Comprehensive Social Security Assistance? So, in addition to providing emergency financial assistance and skills retraining to the unemployed, the SAR must find ways to create a favourable environment for job seekers. In the long run, the Government must set up an appropriate insurance scheme to protect people against unemployment in preparation for any future economic downturn. Previously, I suggested that the Government should consider strengthening interactive co-operation with the Mainland at the same time as it helps the local industries develop. It is imperative that it should explore new horizons for local industries to develop. In particular it should make an effort to obtain from the Central Government certain rights to domestic sales on the Mainland to make Hong Kong more attractive to foreign investors so as to entice them to invest in local industries.

In addition to market consideration which is in itself a major factor, the development of local industries entails consideration of the question of diversification. Thus we need to consider if we can create job openings at different levels for workers with different education and skill levels.

The Chief Executive places emphasis on high technology and high value-added industries as they may create more job opportunities. But he did not say how he would solve the unemployment problem of the large number of low-skilled workers and workers with a low educational level. Nor did he mention how to absorb workers who cannot benefit from retraining to upgrade their skills or adapt to the new environment in the transition to high technology and high value-added industries in future.

As we all know, judging from the present manpower resources situation in Hong Kong, workers who can grasp high technology represent only a small fraction of the total workforce. On the contrary, low-skilled workers abound. It is important that they get jobs, especially for the benefit of social stability and development. Therefore the Government should not just focus on the development of high technology and high value-added industries without paying attention to these low-skilled workers. This is going to cause wastage of manpower resources.

In fact, in some newly developed countries, there are some industries requiring low-skill work. For example, in some western countries there have been planned industries for environmental protection. The governments have in place a series of active measures on environmental protection. These measures give financial support, technical support and preferential tax treatments to industries on environmental protection. They aim to protect the environment and create more job opportunities. In these industries, the production process retains a large number of low-skill operations, thereby creating large numbers of job opportunities. The products can also suit the needs of environmental protection for the world.

Indeed new industries relating to environmental protection are promising industries. They save energy. They reduce pollution to the air, the water and the soil. More importantly, they provide job opportunities to low-skilled labour. They may enhance the diversification of Hong Kong industries. I think these proposals merit consideration by the Government.

Lastly I urge that all employees in Hong Kong should make unremitting efforts to improve themselves and strengthen retraining and enhance their skills to prepare themselves for challenges and competition in future, so as to bring the Hong Kong economy to new heights that everyone can be proud of.

Madam President, I so submit.

PRESIDENT (in Cantonese): Prof NG Ching-fai.

Prof NG Ching-fai (in Cantonese): Madam President, the past year has been an anomalous year of trial and hardship for the people of Hong Kong; as for Mr TUNG Chee-hwa, I believe those 365 days should have weighed heavily on him as well. While Mr TUNG's first policy address was entitled "Building Hong Kong for a new Era" to reflect his buoyant confidence, the annual Budget published in February this year has already added "riding out the storm" into its main theme, thereby indicating clearly the need to handle the grave shocking effect of the regional financial turmoil. As for this second policy address of the Chief Executive, it has been entitled "From Adversity to Opportunity". In a matter of months, we are no longer in the midst of a storm but in the face of adversity.

In regard to this policy address which strives hard to tackle the crisis confronting us and come through the existing adversity, I should like to comment on three aspects.

Developing hi-tech industries

First of all, I should like to speak on the issue of developing hi-tech industries in Hong Kong. As we all know, the need or otherwise of local industries has become a subject of heated discussion since our manufacturing industries started the outward relocation. In my opinion, if Hong Kong is to have local industries, we must concentrate on developing technology-based high value-added industries. Technological development calls for government support. But with its active non-intervention policy, the Government has in the past caused many local industries to vanish. Many within the local community who are concerned with the sustainable development of Hong Kong have realized that the economic structure of Hong Kong will not be complete without industries or technologies, and even the so-called service industry-based economy would then find it hard to maintain the competitive edge in the long run. Since the reunification, the Hong Kong Institute of Science and I, as well as many organizations and individuals in the industrial sector have all been putting forward proposals to Mr TUNG Chee-hwa on the development of hi-tech industries. In this connection, although we might have used different terms and jargons like "high value-added and hi-tech industries", "new technology industries", "technology industries" and so on, our views are essentially the same on a number of fronts. First, we all believe it is not viable for the economic structure to rely solely on the financial services and real estate industries, because that would put the economic base of Hong Kong in a vulnerable position. As such, Hong Kong should also re-establish for itself competitive and high-value added local industries while developing the service industries. Second, the Government should follow the example of advanced countries and regions and make active efforts to facilitate and support the establishment of local technology-based industries. Third, the support provided by the Government to help develop technology-based industries should make good use of the existing conditions and concentrate on "mid-stream" research and development. Fourth, the Government should co-operate with mainland authorities to enhance the mutual-complimentary benefits for both parties on the front of high technology. We are glad to see that over the past year Mr TUNG has seriously studied the issue of hi-tech industries in Hong Kong and made due decisions. In this connection, the Commission on Innovation and Technology set up under the chairmanship of Prof TIEN Chang-lin is an important step. From the second policy address, we can see the Government has realized that "innovation and technology are important drivers of economic growth" and announced very clearly that "we need now to strengthen our support for technological development, build up a critical mass of fine scientists, engineers, skilled technicians and venture capitalists, and encourage the development of a significant cluster of technology-based business". As for the longer term, the target of the Government is to enable "Hong Kong to become an innovation centre for South China and the region".

Madam President, I consider it an important change for the Government to shift from the active non-intervention economic policy practised by its predecessor into a new one which strives to facilitate industrial development and perfection of other trade through innovation and technological advancement; besides, this should also be considered as an important strategy in helping Hong Kong go after sustainable economic development. For this reason, I believe we should appraise the efforts made by the Government positively.

Madam President, I should like to take this opportunity to speak a few words on the commission chaired by Prof TIEN Chang-lin. The full name of the commission in english and Chinese are Chief Executive's Commission on Innovation and Technology and 行政長官特設創新科技委員會 respectively. In this connection, I should like to raise two points. Firstly, it is appropriate for the Chinese name not to include the word "high" before the term "technology"; and secondly, the Chinese name has however missed the important conjunction "and" between the terms " 創新" and "科技". The conjunction "and" is in fact where the crux of the issue lies, as it tells us innovation and technology should be developed in parallel. My interpretation is that we need to encourage innovation because only through innovation could we have high value-added products. As regards the industrial sector, innovation in general cannot do without technology. In other words, apart from helping those industries with high elements of technology to develop, efforts must also be put into helping the existing industries acquire higher technological elements. What we should not do is to develop hi-tech industries for the sake of it. That means we should not advocate investment in enormous amount of money or in fields of those high-risk state-of-the-art technologies like satellite, nanotechnology (or nanochip) and so on; instead, we should concentrate on developing products with a considerable level of technology element and promising market potentials. Let me cite some practical examples. We hope to facilitate the development of products such as liquid crystal, the production of which has grown from basically nothing to billions a day now; we also hope that traditional industries like textile and clothing, machinery production and so on will turn more to new technologies for help in their endeavours to enhance the quality of their products. In addition, I should also like to point out that since the policy address has disclosed such a policy, a positive effect has already been achieved ─ as it has conveyed to the world the message that the Government of the Special Administrative Region (SAR) attaches great importance to innovation and technology, international investors, entrepreneurs and talents of the field will be attracted to Hong Kong to give full play to their capabilities, thereby injecting both nutrition and vitality into our technology industries.

Madam President, as a representative from the tertiary education circle, I should like to talk briefly about the role that the tertiary education circle could play. Over the past 10 years, Hong Kong's tertiary education has experienced substantial growth in terms of both quantity and quality. In regard to the additional resources granted by the Government, despite the tight budget, Hong Kong has succeeded in attaining considerable achievements in research studies without sacrificing the quality of education over the past few years. As indicated by a survey on research studies conducted by the Department of Technology in the United Kingdom last year, Hong Kong is one of the most fast growing regions in the world in terms of the number of peer reviews presented. During the academic years 1996-97 and 97-98, a total of more than 1 400 postgraduate students were studying for their master's and doctoral degrees at the seven tertiary education institutions. In recent years, many colleagues at different institutions have succeeded in attaining remarkable research results with widespread effects in various areas while a number of others have been invited to give thematic talks at major international conferences. besides, many colleagues have also received technology-related awards from China and other countries. Last year, a local chemical scientist was selected by the chinese Academy of Sciences as one of its associates and has since become the youngest associate of the academy. In regard to this young scientist, most of his research studies are conducted in the laboratories here in Hong Kong. All these serve to tell us that our technological research work has ripened into its harvesting stage; as such, we could say with confidence that our tertiary education institutions could provide a substantial support for Hong Kong in its endeavour to develop technology industries. It is regrettable that the public is still unaware of our situation. Nonetheless, the field of technology is too broad for the six institutes with science and technology disciplines to cover it all. Moreover, since most of our graduates specializing in science and technology studies tend to take up jobs in those so-called "high return" trades that require low skills, there is a need for us to import talents of different levels from the Mainland as well as overseas. The Applied Science and Technology Research Institute as proposed in this year's policy address could in fact play an important role in training industrial talents, while its establishment could link together our industrial sector with the universities more closely and in a more effective manner. In the long run, as our technology industries develop, more locally trained graduates will enter the industrial sector, thereby giving rise to a benign cycle in which the speed of development of both the industrial sector and the tertiary education circle will be further enhanced. If viewed from this angle, the importation of talents should not be regarded as an attempt to deprive our graduates of their employment opportunities; instead, it should be considered as an endeavour to open up more job opportunities. As a matter of fact, this is quite a common practice in any technologically advanced regions; for instance, the taking-off of industries in Taiwan would not have been possible without the importation of ethnic Chinese technology-based entrepreneurs from the United States.

Upgrading the quality of human capital

Madam President, one of the major factor contributing to Hong Kong's prosperity is our human resources. To have sustainable development in the coming century, which is known as the age of knowledge-based economy, the continuous upgrading of our human resources through nurturing local talents and absorbing overseas ones is indispensable to Hong Kong. Therefore, we must keep on improving our education and thereby guarantee the continuous upgrading of the quality of our population.

Madam President, it has been proposed in the policy address that more funds should be provided for the development of basic education and quality education. Yet regrettably, the support for tertiary education institutes, which are directly linked with the hi-tech development and quality development of various trades and industries, is far from being enough. The financial support for universities, in particular, suffers cut-backs repeatedly. In this connection, the operating fund for the seven universities will be cut down by 10% a year from 1998 to 2001 on the ground that the development of the universities needs time to consolidate. But I really cannot understand why cutting funds would have anything to do with the consolidation of development. Moreover, the Government has recently imposed a freeze on the tuition fee for a year. While it is the Government's goodwill to freeze the tuition fee to help the people ride out the adversity, the universities would be left with the problem of shortage of funds. Yet in the absence of any additional grants from the Government to help the universities out, I am afraid we might have to draw on those grants originally assigned for the development of disciplines of excellence. However, cutting down the operating fund on one side to support the other would do no good to the overall development of universities. Moreover, the lack of funds would make it impossible for the tertiary institutions to sustain their promising and ever-improving development achieved over recent years.

Madam President, I sincerely hope that the Government would seriously review the financial support policy for universities. If Hong Kong is to revive its economy, if Hong Kong is to keep its edge and become the centre of innovation and technology in South China or even the region, we would need to depend on the healthy development of our tertiary institutions in terms of education quality and technological research to a considerable extent.

Sustainable development

We do appreciate the efforts put in by Mr TUNG to introduce the concept of sustainable development in his policy address. However, he has not pointed out the determination of the Government in practical terms, such as cutting down reclamation projects, promoting the concept of recycling and so on. The fact that he has mentioned sustainability under the topic of "A Better Quality of Life" would cause the public to mistake sustainability for a general strategy in environmental protection, thereby overlooking its importance as a comprehensive policy. Sustainable development is a fundamental development strategy covering areas such as environmental protection, economic development, social policies, regional co-operation, cultural adaptation and so on. In certain western countries, sustainable development is regarded as a fundamental national policy. For example, in Belgium, sustainable development efforts are co-ordinated by the federal government department concerned. For any country which seeks to safeguard its development potentials and ensure a decent living environment for its people, sustainability is the ultimate and decisive contributory factor. Many countries have already included sustainability among their national strength. Hong Kong should not remain in a passive stage in this respect, otherwise our neighbours will overtake us and undermine our competitive edge eventually.

Madam President, sustainable development also comprises the concept of regional co-operation. Now that Hong Kong has reunited with China, the SAR Government should all the more need to establish closer links with neighbouring cities and provinces on one hand, and take the initiative to make more undertakings when required on the other.

Last Wednesday, I moved a motion on the sustainable development of Hong Kong in this Chamber. Honourable Members have attached great importance to the motion and voted in support of it unanimously. Moreover, more than a dozen Members have spoken on the motion and provided the Government with many useful advices regarding the Government's ongoing study on the sustainable development in the 21st century. However, I was disappointed to find that only the poor Mr Bowen LEUNG, Secretary for Planning, Environment and Lands, was there representing the Administration. The Secretary has provided this Council with a good response and let us know clearly that the Bureau's intention should be to make sustainable development an important consideration for policy-making. However, what worried me was the fact that only the Secretary for Planning, Environment and Lands was sent to this Council to response on the motion on sustainability. Would that be an indication of the callousness of the SAR Government in this respect? Many policy-making senior officials still consider sustainability a general issue under the scope of environmental protection. They simply fail to realize that this is an issue which cover various aspects of life. The response of our Government in respect of this world trend has been lagging far behind many advanced countries and regions. For this reason, I must point out the fact here.

Conclusion

Madam President, looking back on the past year or so since the reunification and the establishment of the SAR, Hong Kong has indeed experienced many hardships and challenges. Among such, the most critical one was the regional financial turmoil, then there was the avian flu, the new airport fiasco and so on. While it is true that there were external factors and historical reasons contributing to it, the administrative mistakes or policy blunders of the Government must also be blamed. As such, I am of the opinion that in discussing the second policy address, we should view the performance and policy direction of the SAR Government over the past year against such a major background.

Madam President, I think if Hong Kong is to turn this "Adversity into Opportunity", it needs to gain wit from its past fall in the pit. The decisive factor would be whether Hong Kong would emerge wiser from the regional financial turmoil and be able to understand its counterparts better in a globalized economy.

Madam President, whether we could all pool "collective planning and concerted efforts" would depend very much on the leading circle under Mr TUNG ─ the senior government officials. If they could humble themselves, insist on what is good and change swiftly for the better; if they could swallow their arrogance but face their strong points and weak points in work squarely; if they could take the initiative to establish a partnership with the public; then the general public could really feel that they are welcomed to participate in helping out each other to ride out the storm and be the masters of their own house.

Madam President, with regard to the three amendments proposed by my respectable colleagues, I am afraid I could not agree less. In my opinion, the original motion is but a neutral motion to show courtesy. It is normal for Members to disagree with the content of the policy address, and they have fully reflected their disagreement in the debate. I therefore do not feel any need to amend the original motion. Moreover, I am afraid it will not help to improve the relationship between the executive and the legislature which we have been stressing so much.

I am glad to hear the Honourable Albert HO say that the criticisms were made only out of goodwill. I hope that they could go further and turn goodwill into actions.

With these remarks, Madam President, I support the original motion.

PRESIDENT (in Cantonese): Mr FUNG Chi-kin.

MR FUNG CHI-KIN (in Cantonese): Madam President, the Chief Executive's policy address does not have much to say on financial services. It only reiterates the major objectives and policies of the Government on the financial sector. Although these objectives are correct ones, they are not elaborated. So I would like to discuss more specifically on this topic, and I shall also talk about my own views and suggestions.

The policy address states that Hong Kong is determined to maintain its position as the international financial centre of Asia and the key source of foreign capital for China. Hong Kong will retain its free and open financial services structure. These two major anchoring objectives and the policy which aims at maintaining a free and open financial system must be accompanied by the building of a sound regulatory system. Considerations should also be given to the developments of the market and the products. The principle of gradual and orderly progress must be adhered to. Market development should be in line with the qualifications of those employed in the sector as well as the quality of the investors. The adaptability and sustainability of the economy of Hong Kong must be taken into account. In the case of the launching of derivatives in particular, care must be taken to ensure that a steady move is taken, and control must be exercised in terms of product variety, scale and pace. For past experience has shown that a blind drive for market ranking, a fast launching of new products, and a desire for speedy success will all lead to short-sighted moves without taking long-term interest into account. One can only watch the fierce competition that took place in the markets around us in these past few years to see noble houses fall on a single day and the forced closure of markets by various governments. As history is the mirror of the present, one should therefore be very cautious.

The financial services sector is one of the underpinnings of the Hong Kong economy. I am in full support of the Chief Executive when he said that we should set our eyes on New York and London and strive to become a comparable financial centre. The fact is: though Hong Kong is called an international financial centre, it does not enjoy a very high ranking and superior strength among international markets. The stock market of Hong Kong ranks within the top 10 of the world and was once the sixth last year, but as for total market value and scale, it is still no match for New York, London and Tokyo. It is only equivalent to a very small portion of New York. A few hedge funds, should they have the slightest interest in the Hong Kong stock market, will be able to cause havoc here. The successful counter-offensive made by the Hong Kong Government in August was entirely due to the strength of the Government and the favourable combination of the place and the people. Just imagine if we had less ammunition, the local stock market would be entirely at the mercy of their hands and the market would dive as much as they wanted. Would you call that market forces? Is this a free and open market? We should therefore be more realistic when we go about telling other people that Hong Kong is a financial centre.

I have no objections that the financial market of Hong Kong should remain highly open, but that does not mean that we will keep our doors always open and unguarded. We should maintain maximum freedom in transactions, but that does not mean that we will connive at market manipulation and allow the territory to become a cash dispenser for speculators. All these involve more rigorous monitoring and sounder rules and regulations and the changing of certain rules of the game for certain products. Of course, this must not be done excessively to the extent of stifling the normal market operations and development.

After the market actions made by the Government, our market operators and regulators can sit down and quietly reflect over the whole situation. I would like to bring up a few suggestions:

(1) Review of the regulatory framework

Due to the fact that there had been substantial developments in many parts of the financial markets in Hong Kong, we have gained the reputation of being an international financial centre. But it is apparent that the existing regulatory framework is unable to catch up with the market growth. There is no institution under the Financial Secretary which is responsible for drawing up the strategies and directions for growth, assume full control of all related matters and co-ordinate efforts in monitoring the market. This has led to remarks made by the Securities and Futures Commission (SFC) that as the SFC was only able to watch movements in the stock and futures markets, so it was not aware of any manipulations. It is clear therefore that there should be an overriding supervisory institution to lead and monitor the activities of the SFC, the Office of the Commissioner of Banking and even the bonds market and the Exchange Fund and so on. Only through the work of such an institution that the scenario whereby the Chief Executive has to assume direct control can be avoided. On the other hand, market developments have led to the existence of a number of clearing houses, making it more difficult to detect promptly the direction of capital flow, to the disadvantage of maintaining the linked exchange rate system. I suggest that an intermarket monitoring mechanism be set up over the clearing houses of the exchanges, and ultimately the number of clearing houses should be reduced to just one or two.

(2) Stricter controls on derivatives

While retaining the free and open financial services structure of Hong Kong, there should be a review of the excessively fast growth and proliferation of derivatives in Hong Kong. The number of derivatives in Hong Kong is among the greatest in the world. These vehicles are given a high-sounding name of risk management vehicles. But the public and the ordinary investors are mostly ignorant of such derivatives. It is difficult to say that the SFC and the government officials in charge of monetary and financial affairs have a thorough and in-depth understanding of these derivatives. And so the issuance and operations of these derivatives often go against their original intentions. They are rarely used by investors in arbitrage activities but in making speculative attacks on the financial markets. So it is high time we conducted a review of the derivatives and to enforce more stringent regulation. I have stated on a number of public occasions that a cash transaction mechanism must be introduced to the settlement of the index futures. This is to use cash settlement to counterbalance transactions in the index futures so as to genuinely realize the arbitrage function of the futures market and the cash market. It will help to prevent the futures market from degenerating into a casino. When after I had made this proposal, there were people who instantly queried that where in the world could we find such a market and whether the market in the United States was in any way like that. I doubt very much that these people are either blind worshippers of things foreign or they have no sincerity in exploring that issue at all.

(3) Promote and enhance international co-operation

Hong Kong's single-handed combat against international speculators in August was necessitated by the emergencies of the time. We need to get more understanding and support from our international partners, and in this respect both the Chief Executive and the Financial Secretary have done a lot of persuasion. Recently, the American firm Long-term Capital Investment ran into difficulties, even the Federal Reserve came to its rescue in order to stop the fire from spreading to other places. I know that for many years people from all over the world have been studying the movements of these huge amounts of hot money and the fluctuations in the financial market caused by the complex derivative products. But unfortunately, no consensus has been reached and no measures are taken. This is tantamount to tolerating and condoning such kind of behaviour. As such, Hong Kong must call upon and urge the international community to pay special attention to the fast international or inter-continental flow of huge amounts of capital over a very short period of time. Hopefully, as a result of this, a new financial order can be established in the international community.

(4) Proactive manpower training

Manpower training is something essential and indispensable. Hong Kong is well-equipped in this respect because there are many investment companies of international reputation taking part in the investment activities. They have brought with them modern financial expertise and they have helped to train up a lot of people in this field over the years. We have to be more active and assume greater efforts in training professionals in finance. The Government should also lend its support to raise the professional competency and quality of local financial services workers. Relevant bodies and professional institutions in the field should also work hard to call on the sector and see that it is law-abiding and practising noble professional conduct. In so doing, our image can be enhanced and Hong Kong can truly become an international financial centre.

Madam President, the financial turmoil posed a severe test to the newborn Government of the Special Administrative Region (SAR). The performance of the SAR Government on this occasion should be subject to review. The report on the review of the financial markets released in April is very disappointing. It is rambling and lacking in focus. Though recognizing the manipulation of the market by international speculators, there is no mention of this in the report, nor is there any determination shown to eradicate and curb acts of market manipulation. The report has exposed the problems of the Administration in getting a good grasp of the information available and those related to the communication of information between different markets. This has led to an inconsistency in the attitude and stance adopted by individual regulatory bodies. As information is chaotic and the regulators and operators all hold different positions, the policy-makers at the top echelons of the Government are not able to grasp the crux of the matter and spot the root of the problem. The report makes no attempt to expose the gimmicks of the speculators but on the other hand, it seems to give a magic cloak to these speculators to enable them to become invisible and to get way with it. And so these international speculators have become bold in their attacks and feel that their moves are well-justified. They made a further move of piling up short positions in the futures and cash markets. In July and August the speculators made use of the public opinion machine and claimed that the Hang Seng Index would plunge to 5 000 points, the exchange rate would see $100, property prices would fall a further 40% from the then prevailing level, the renminbi would devaluate and the peg would vapourize. All these showed that the speculators wanted to overturn Hong Kong with a single wave of attack.

The three-dimensional assault on the forex, futures and stocks markets by the international speculators had surprisingly been met with an all-out effort by the SAR Government which acted in much the same kind of determination shown by the army and civilians who battled the floods in the Mainland. While the mainlanders used a wall of flesh and blood to fight against the terrible floods, the Hong Kong financial sector built a wall of blood and sweat. This was the hard-earned money the people of Hong Kong had saved up over the years. When they saw that their money was dwindling, they knew that they had to fight back or else the consequence would be more disastrous. After this battle, people have come to realize that the SAR Government is a responsible government and so adversity has become an opportunity.

The market intervention made by the Government is smart and decisive. The changes in the international markets which followed, especially those in the United States and Europe, were all conducive to a turn for the better. The incident helped to bring about greater solidarity among the people of Hong Kong against common enemies. It boosted our confidence and made our markets continue to operate in a healthy and sound manner. I dare say, those who genuinely come here to invest, no matter they are from the Mainland or overseas, will all praise and support the market actions of our Government. An overwhelming majority of employees in the financial services sector applauded the market actions by the Government right from the first day of the intervention. Only those market manipulators who relied on their colossal capital and who thought that they were the cops of the world financial market and who went about manipulating the markets of other countries, would gnash their teeth to moan and curse. Forgone were the days when they could push the market up and down at their will and draw money from the market as easily as from a cash dispenser.

Ever since the policy address was released on 7 October, the local stock market had closed at record-high levels since the past few months as a result of the short covering activities of international speculators and renewed buying from the funds. The Hang Seng Index is approaching 10 000 points. When somebody and some opinions are grumbling that there is nothing useful and concrete in the policy address, the medium-to-long-term investors are already using hard cash to indicate their confidence in the future. Bear traders and shortsellers have admitted defeat. The property market has stabilized and trading is becoming active again. Both the property market and the stock market are the linchpins of the Hong Kong economy and they are closely tied with the financial services sector. If these two are turning for the better, would this not mean that adversity is becoming a thing of the past, and opportunities are beginning to blossom and unfold before us?

I remember at a cocktail party on 28 August, a flock of reporters asked me how would the Government cash in and get rid of the huge amount of stocks it had bought. In return I asked them why did they not ask me how would those speculators who had sold short would be able to buy back the stocks and at what prices. But unfortunately, the newspapers did not report my second remark the following day. As I said in a seminar, the reason why the Government intervened was to buy time. I think buying time will help to stabilize the market and allay people's worries. Time is never the speculators' favourite. For they will start to cover their short positions out of panic and fear. The more they cover, the higher the prices will be. And when prices are high, the more they will need to cover. As a result of manipulation, the market was unreasonably undervalued. Now it is unreasonably overvalued. If we can buy time and take a good rest to lick our wounds, the various measures aiming at improving the economy will slowly take their effect and we can get out of the abyss of depression sooner. People who expect instant curative effects from these measures are simply being impractical and they are also being too harsh on the policy address itself.

Of course we should never be too happy with ourselves, for our economy is still having a hard time. Our Financial Secretary should not let himself betrayed by a slip of the tongue when he is overjoyed to see his achievements, lest the predators will seize this chance and strike back. For example, why did he have to be so honest and say remarks like "the shares we bought would not be sold for the time being"? In the past, we used to stress market transparency in order to accede to the requests of these powerful speculators who are in fact wolves in sheepskin, but to our horrors we wake up to find that when they have known everything about the cards in our hands, we know nothing about theirs. Would you call this a fair market? I am not against more transparency. But we must make everyone transparent and subject to the same rules of the game. Some people are calling on the Government to disclose the amount of stocks it is holding, but they refuse to make the big market players disclose the positions they hold in the Hang Seng Index futures and the amount of stocks they have sold short. Is this fair at all?

PRESIDENT (in Cantonese): Mr FUNG, your time is up. Mr Andrew WONG.

MR ANDREW WONG (in Cantonese): Madam President, in yesterday's debate, the Honourable LEUNG Yiu-chung said as a teacher, he could not help awarding points to the policy address. I am a teacher too ─ one of political studies, administrative studies and policy studies. I cannot help doing that either. In fact, I often mock at myself as one infected with the occupational disease of a teacher.

Madam President, to be fair, the 1998 policy address entitled "From Adversity to Opportunity" meets the pass mark. The title itself is somewhat illogical, though. Does adversity invariably transcend into opportunity? I cannot get this straight. It is just a kind-hearted, subjective wish. In the conclusion, the association with fighting the terrible floods is drawn. On this, I differ with the opinion of the Honourable FUNG Chi-kin. I think the association is far fetched. Are the people of Hong Kong compared to troops of the People's Liberation Army who rise to orders and build up a wall of flesh and blood ─ in this case a wall of blood and sweat ─ to block the floods? Under the structure of free economy, granting freedom to the people is a must even after the financial crisis. The role of the Government is to take precautions and streamline matters beforehand as well as redeem and rebuild afterwards, not to ask the people to be selfless and vow support for Hong Kong as a limited company. We must bear in mind that a selfless spirit within the community should be self initiated, or the system of free economy will change overnight into one of instructive economy.

Madam President, the title may be illogical, the conclusion far fetched, the content short of urgently needed policies to me and other Honourable Members and the policies devised not endorsed by me or other Honourable Members, it is clear, despite our disapproval of certain policies like the reform of district organizations and others reflected in the motions for amendment, I still think the policy address should get a pass mark. Everything is still under debate and our opinions including those in support of and against the Motion of Thanks are very clear. I award the pass mark mainly because in comparison to the policy address of 1997, the 1998 edition is a big improvement.

Madam President, the 1997 policy address was entitled "Building Hong Kong for a New Era". There was concrete content, but overall, it was "impractical" and bent on blueprint style social engineering. It had the tendency to suggest uniting the people under the leadership of the Government so that with the establishment of committees for various development aspects and allocations to set up funds, Hong Kong would be all prepared to enter a brave new world. The 1998 policy address is a lot more practical and more like policy addresses of the British era. However, I must point out the need to guard against the tendency for "great government". The more practical style this year may have been caused by the low economy and bleak future. Although we are now, as put by Mr FUNG Chi-kin, more or less proceeding steadily on a good trend, under the circumstances, being impractical will not be convincing. In any case, there are still quite a lot of shadows of impracticality. What is the use of the Council of International Advisers referred to in paragraph 65? Is it for Mr TUNG Chee-hwa's international sphere of friends to meet or is it to be a cardiac stimulant made up of saline liquid?

Madam President, among speeches by Honourable colleagues, I appreciate the one by the Honourable Miss Margaret NG yesterday most. Each word is a gem in itself and full of substance too. I suggest Honourable colleagues and members of the public read it carefully. Personally, I endorse all her opinions, remarks and recommendations. I also fully agree with her suggestion that "this Council should not be grudging in thanking the Chief Executive for his policy address". She did not award grades to the policy address, so I do not know whether she would give it a pass mark or not.

However, Madam President ─ I see that Miss Margaret NG is shaking her head ─ I still want to urge everyone not to be grudging in thanking the Chief Executive for his policy address. Madam President, when Margaret returned to Hong Kong many years ago with her PhD degree, she told me that a professor ─ if I am wrong about this, I hope she will correct me ─ awarded grades to student theses in a curious way. As disclosed, the professor allowed students to set their own topics within the scope of the subject and on receipt of the theses summoned the students to ask if they had presented a "problem" in each thesis. If not, the student concerned would be given back the thesis for rewriting. If yes, he would ask about the problem. If, after discussing it, the problem was found to be not a problem at all, the thesis would be returned to the student for rewriting. If the student could clearly present the problem to his satisfaction, he would ask if a "solution" had been included in the thesis. If not, the thesis would be returned to the student for rewriting. If yes, he would begin to read and grade the thesis carefully. Of course, I have over-simplified the entire process and the professor concerned would not disassociate himself from discussing students' theses. If I apply this professor's "problem ─ solution" assessment method on the policy address, Miss Margaret NG might end up giving a fail grade. I think I have made the right guess. Nevertheless, she would not be grudging in thanking the Chief Executive. I therefore call on parties moving amendments not to be grudging, if all three amendments could not be carried, in giving support to the Motion of Thanks.

Madam President, the Chief Executive's first policy address was read out at the Provisional Legislative Council in October last year. As I said, I did not see eye to eye with that address mainly because I opposed to the philosophy of governance by taking part and the political philosophy of an overpowering government. I held different ideas about the policy content. Last year, I only read out an article by the commentator Mr HUNG Ching-tin. I saw eye to eye fully with what he said at that time and I still agree today. I also said that I agreed with the content of the amendment moved by the then Honourable Frederick FUNG although I did not vote in support of the amendment. In the end, I supported the Motion of Thanks.

Madam President, I said at that time, "In my opinion, the motion moved during the annual debate on the policy address to thank the Chief Executive is an act of courtesy that we should observe ......" Those words do not represent my full view. Therefore, I wish to clarify here. The Honourable Ronald ARCULLI said just now that the Motion of Thanks was an act of politeness, and because of that, he could not support the amendments. He also said that Members who are opposed to the policy direction could vote against the Motion of Thanks at the end. Dr the Honourable LEONG Che-hung said yesterday that he could not tolerate ─ the word he used was "condone". Was it to condone, forgive or accept? I would like him to use the word "support" and say that he cannot accept the amendments because they would have given a direction to a non-directional motion. It would be generally similar to describing the motion as neutral as put by Prof the Honourable NG Ching-fai.

Madam President, my view is closer to that of the Honourable Ronald ARCULLI, but not entirely the same. The Motion of Thanks is undoubtedly an expression of politeness, but it does not mean there cannot be an amendment or a voting down. The Rules of Procedure do not allow for amending the official wording of the motion. All we can do is to add words after the official wording in order to amend it. Again, that is a show of politeness. Personally, I think an amendment gives directly or indirectly a direction to a non-directional motion. It is a show of the Council's will and that is unalterable. For this, I cannot accept Dr LEONG Che-hung's viewpoint that it is wrong to put in a direction.

Madam President, I did not vow support for Mr Frederick FUNG's amendment last year because it served only to present indirectly a direction different from that of the policy address. The amendment suggested that it was regrettable that policies A, B, C and D were not achieved. I thought an amendment to show regret did not match the spirit of a Motion of Thanks. Therefore, to convey regret appropriately, we would need to vote down the motion.

Madam President, for the same reason, I cannot support the three amendments by the Honourable LEE Cheuk-yan, the Honourable Miss Christine LOH and the Honourable Martin LEE although I agree with their contents fully. The fact is that I think this policy address is nowhere near perfection although I have awarded it a pass grade. The pass grade does not mean nothing else should be added to it. I just think regret is not an appropriate expression. We should state what we think directly. For example, we can start with "urge" the Chief Executive to "replace the Executive Council" (just a hypothesis) or postpone or even withdraw implementing reform of the district organizations and so on. The correct attitude should be to vote down the motion, not to state a viewpoint by moving an amendment. In the debate, we can give our views freely.

Madam President, there are already people of the official side calling amendments by Democratic Party Members "cooking things up", and playing tricks and saying that they should be restricted from doing so from now on. Some suggest that the wording of the Basic Law could be copied as the official wording of the Motion of Thanks to become "This Council heard the policy address of the Chief Executive". Others suggest to amend the Rules of Procedure so as to prohibit amendments to the Motion of Thanks. Yet others want to have both, namely, to change the wording to "heard" and to prohibit amendments. I think such ideas are totally irrelevant. If the majority of Honourable colleagues are dissatisfied with the policy address, even if the view cannot be expressed by way of motions at the policy debate, it can be expressed at other forums. If that happens, the feeling expressed in motions may not be just dissatisfaction, but regret or even condemnation.

Madam President, is the present tension between the executive and the legislature rooted from the muddled thinking, ultra preventive devices and vetoing measures of the Administration (at least some members of it)? I hope members of the Administration including the Chief Executive will reflect, reflect again and reflect for the third time.

With these remarks, Madam President, I support Dr LEONG Che-hung's motion.

PRESIDENT (in Cantonese): Mr Bernard CHAN.

MR BERNARD CHAN: Madam President, Mr TUNG's address to this Council on 7 October was constructive ─ it has rightly discerned a long and weary path to strike after innovation and technology. He has overhauled our economic plight and has highlighted some of our strengths, on which we can rebuild our critical economy. Everything is on Mr TUNG's agenda but the public seem to have no reason to celebrate ─ perhaps, they have yet to be moved by his lengthy appeal.

Mr TUNG has figured out a number of fundamentals crucial to economic recovery, but he has apparently omitted an important element, that is, popular faith in the Government.

Without instant cure for the economic downfall, the lurking pessimism in society can be defeated only by inspirations and visions ─ that our community is heading for a sounder economy and a more comprehensive development. While Mr TUNG was talking about innovation and technology, we were anxious to know what to produce, where to get the experts, how to motivate investors and how to equip our students. But to my disappointment, the policy address is silent on these important aspects.

The Government's performance in the past year has created serious concerns in the business community about the competence of its leadership. Obviously, the power of the Government's words is waning. The banks, which have seriously been hurt by the volatile interest rates market, continue to cut loans and inhibit new initiatives. Determination of the Government to go to high technology has yet to facilitate credit for untried businesses on technology. This is the same for many small and medium enterprises, which fail to obtain capital from the $2.5 billion loan scheme. As long as confidence in the financial market is fragile and the credit crunch stays on, the business environment can hardly improve in the near future.

It is absolutely clear that faith in a better future is fundamental to further investment. Only if investors trust the Government and its policy analysis, and believe that things will turn out as the Government predicts, will they inject money into the market.

I regret to say that Mr TUNG's Government is now under real tests after a series of policy blunders in the past year. Albeit we have an excellent administrative system, strong fiscal reserve and officials with distinguished integrity, the Government's slow reaction and wrong guesses have resulted in chaos in the opening of the new airport, the virus control and in the financial market.

I understand that our Government has a tradition of being minimal and adopts laissez-faire policy in many areas. But the fact is, laissez-faire policy is not a universal doctrine applicable to all but is now under stern criticism. A smooth implementation of policies hinges on a mastery control of the situation and a sharp monitoring of popular sentiments.

For example, in order to facilitate economic revival and enhance competitiveness, the Government should consider a master plan for an all-round reduction in rents, rates, utility fees, taxes and salary costs. Staff cost in the past years has been surging with the cost of living. A reduction all across the board implies devaluation in the mildest manner, which will help in our race with our regional competitors who have just experienced a painful slash of currency values. A successful implementation of the reduction plan lies with prudent calculations, forceful political lobbying and effective shaping of public opinions.

To my disappointment, the Government has been powerless to deal with people's vigorous grievances. Poultry farmers and traders, fishermen and stockholders received government aid after they took to the streets. I do not mean that the aid is unjustified, but am worried that the Government's failure to pacify public discontent will be conducive to a dependency culture. The competitiveness of our economy will so be damaged. It will create concern that the strength of the Government lies only with its strong money reserve, rather than administrative power.

Instead of responding passively to outcries of discontent in society, the Government should play a more proactive role to change the economic and political scenes. Pre-emptive measures should have been taken to plug loopholes in the existing system and legislation well before the situation loses control, if our officials have been sensitive enough to notice the omen and identify the problems.

I am expecting the Government to take the lead in creating more vibrant social atmosphere and inspire the public with its discerning leadership.

I also expect Mr TUNG to be equally determined as he heralded the concept of sustainable development in the policy address. The concept has yet to be enshrined by legal provisions, nor is coupled with mobilization of community resources, economic incentives or moral inspirations.

Sustainable development is a comprehensive plan affecting the conservation of environment, land use, transport, pollution control, recycling operations, species protection and so on. By implementing the plan, investment opportunities and new jobs can be created.

For example, recycling is now on the low list of the policy agenda. It is taken only as a form of waste collection. Many recycling factories have moved to mainland China so as to cut operating costs. It is extremely cost ineffective to ship local recyclable materials, such as paper, glass, plastics and metals, to cross the border and bring back recycled products afterwards.

By employing the concept of sustainable development, we may consider incorporating recycling with high value-added industries through proper research and massive participation. Social service agencies may help mobilize underprivileged groups to collect and classify recyclable materials with proper reward. Industrial designers may inject creative ideas into recyclable products. Tax and land concessions may be given to owners of recycling businesses.

A genuine support of the policy of sustainable development involves more drastic moves. The Government may take reference of the "accumulative green credits" system of Germany, which gives credits to companies doing green businesses. Companies selling packaged products bear "disposal liabilities" in the form of levy, unless they support recycling firms to collect disposed packages. Companies producing hi-tech green products are also given financial incentives.

The incredibly huge amount of solid wastes generated by our society pose a major threat to the future of Hong Kong. I believe that green awareness can be enhanced only with concerted efforts from both the public and private sectors. The Government must have an integral part to play in making Hong Kong a green culture.

Madam President, I will support the original motion.

PRESIDENT (in Cantonese): Miss Cyd HO.

MISS CYD HO (in Cantonese): Madam President, I am sure all of us know that today's motion debate is to thank the Chief Executive for his policy address. It is the tradition of this Council to do so. All three amendments have in fact kept this tradition of politeness, but the more essential part is discussion. So many of us have sit here for two days. Our job should be to look at the content of the policy address, review the successes and failures of the past year and seriously consider what we did not do well enough last year so that the same mistake could be prevented in future. I believe this is not just the duty of the Chief Executive and this Council, but something for the people of Hong Kong to get together and review. Therefore, I vow support for the amendments and disagree with the original motion which has not mentioned about a review.

First of all, I want to take a look at the progress of democracy. In his policy address of more than two and a half hours, the Chief Executive spent one minute on the progress of democracy. He mentioned it should progress in accordance with the schedule prescribed by the Basic Law and that was that. I wonder if the Chief Executive can see that a democratic rule is pinned to the confidence of the public and that it is something worth more thoughts, efforts and attention in reviewing.

In fact, the policy address and all three amendments mentioned confidence. Public confidence is indeed very important. If the public loses confidence and refrains from participating in anything, Hong Kong will stay put. But then, from where does confidence stem?

In our good days when external factors were favourable and our competitors were weak, it was naturally easy to maintain confidence. We are now in bad times and we may be facing global recession. In such times, our confidence is not based on our assessment of objective circumstances or our wait for external factors to take on an upturn. We have to search ourselves for strength and opportunities to show our strength. However, not everyone in Hong Kong faces a channel to develop his highest energy. The policy address refers to "concerted efforts", but we know that decisions for Hong Kong are made by a small group of people. Even the Chief Executive was elected by 400 people, not the 6.3 million Hong Kong citizens. As the system stands, the executive is not accountable to the public. However, if Hong Kong is to be run well, we must mobilize the strength of our 6.3 million population. If the general public has no say in policy decisions and is only reduced to the role of waiting to be mobilized, what is the difference between the general public and a cattle tied to a plough? Under such circumstances, how can we have confidence in our future? Confidence stems from the right to participate in decision-making and the ability to master our future. As such, direct election is the way to establish public confidence in government and the future. If we have the opportunity to make decisions, we will vow full support.

Whether democracy is a dose of tiger balm depends on the physical strength of the patient and whether tiger balm is a relief for both minor and serious illnesses. However, autocracy is definitely cyanide. It is cyanide that weakens public confidence. No one else apart from those gripping power in hand tightly will consume cyanide. Recent acts by the Government did not quicken the progress of democracy or let the public express civil rights. Rather, the two Municipal Councils will be abolished and powers vested in them will be recalled, thereby blocking the channel for public participation. In respect of handing down power, the Government is not even prepared to carry out a review. In recalling power, it is doing so in lightning speed. The public will not have confidence in such an autocratic government. I therefore urge the Chief Executive to recognize the relationship between a democratic rule and confidence. I urge the Government to step out as soon as possible to review the progress of democracy in Hong Kong, to strike up discussions on the relationship between and the framework of the executive and the legislature, and to get well prepared for full direct elections in Hong Kong. Mr TUNG's term of office ends in 2002. I do not know if he intends to run for succession. Under the current system for election of the Chief Executive, the people of Hong Kong will not be able to decide who is to succeed or who is to be appointed. If Mr TUNG fails to start work on this in the rest of his term, when his term expires, he will be left with the achievement of abolishing the Municipal Councils only. On the progress of democracy, he will have no achievement at all. Perhaps he should get -30. If that happens, when his term expires, he will be unable to say he is free of qualms to the people of Hong Kong.

I now move on to the economy of Hong Kong. In the last fortnight, external factors improved, the United States Federal Reserve Bureau announced interest reductions twice, the Hang Seng Index went on the upturn and the property market seemed more active. Are these signs of an economic revival? (Maybe we should ask the Secretary for the Treasury to see how much income from stamp duty for stock transactions there is.) In fact, our internal basis has not improved and our unemployment rate has stood at 5.2%. When we met Mr TUNG last time, he said it was expected to rise to 7% by the end of the year. For two successive quarters, we experienced negative growth. That was the first time in 13 years. Employees are still living under the shadow of layoff and pay cuts. Companies introducing pay cuts go as far as 10% easily. If we consider the economy is reviving in view of the rising Hang Sang Index and property market, we are over optimistic. We should on the contrary be cautious. Could this so-called early Spring be the last bubble? Is the bubble like that found after a burn on the arm? If that bubble bursts, the pain will be more unbearable. For an economic revival, we cannot wait passively for external factors to improve. We also know that we cannot rely solely on the property market. The fact remains that we must steadfastly rebuild our economic structure.

Hong Kong does not have natural resources and our production sector has moved north and to countries with cheaper prices than China. Ever since the Chief Executive came into office, he has emphasized that Hong Kong should follow a route of high technology and added value. To this, we have no objection. This year, the Chief Executive has planned to allocate $5 billion as investment on scientific research.

To anticipate hi-tech investment as the only path for promoting the economy of Hong Kong is questionable. Let us take a look at the United States. The business of the famous Microsoft Company stood Bill GATES among the wealthy top of the United States. The daily volume of stock transactions of his company is nearly equivalent to the daily total transaction volume of the Hong Kong stock market (except for that day when the Government stepped in), but the staff size of Microsoft is only around 15 000. Like Hong Kong, because of the relocation of automobile, aircraft and other industries to countries in Asia, the unemployment figure of the United States has been rising. The global total of employees of Boeing Aircraft is 230 000, but only half of them work within the United States because many work processes have moved to Third World countries. It may well be that the prices of consumables from simple garments, footwear to electrical appliances and automobiles on the United States market have continued to drop because of cheap labour overseas, but the United States employment opportunities have followed the exodus of industries to continue dropping. As a result, the gap between the rich and poor widens. The income of software developers and financial traders have indeed increased, but the income of blue collars and even middle managerial level white collars have decreased. Prices may be cheap, but the living qualities of the majority have deteriorated.

Are we saying that there are not enough universities in the United States to develop more people for the hi-tech trades? In fact, ever since the seventies when they started using chips in computer technology, computer products have been in great demand. With enough universities to train people, why have so many people entered the production trade and ended up among the unemployed today? The answer is that hi-tech industries do not need too many employees, automated production lines do not need too many workers and the consumer market for willing consumers has almost been saturated because of the rise in productivity. As the market is unable to absorb all kinds of products produced at a high production rate, only a few highly competitive enterprises can survive.

It is not easy to foot the bills for scientific research either. Several reputable computer companies including IBM have agreed to join in developing chips of even larger memory loads in order to cut research costs. If we put in $5 billion today for scientific research, is it not like a clay ox thrown into the ocean?

We in Hong Kong are making our first stride today. If we put in a large stake in an all out effort, we are in fact comparing our shortcoming with the strength of others. Even if we can strike down an opening in the hi-tech market, how many posts can we provide? Let us not forget that the majority of our half a million strong blue collars have not completed elementary education. As Honourable colleagues have mentioned, these workers fall within the age group of 30 to 50. Even if they pursue retraining, they can only switch to simple clerical jobs or the service trade. For these people, there is very limited space in the hi-tech industry. If we do not have a manufacturing industry, our society will not be able to absorb them. I therefore urge the Government to review our existing administrative measures and create a favourable business environment for small and medium-sized enterprises. This will broaden the role of local workers. One of the possibilities is to review our existing quota application system. I hope the Government will seriously review our existing quota system so that more small and medium-sized enterprises can move their production lines back to Hong Kong. If their operating cost in Hong Kong can be cut down, they can employ more workers here.

In fact, our largest resource is people. What we are best equipped to invest in, and a very cost effective investment it is too, is the creativity of people. New creativity can be of a high value-added component. If we look at the toy LEGO, there is little scientific research component in its original concept. The idea is to stack together plastic parts of different sizes and turn the parts into modelling toys that bring endless variations. That concept has evolved into a very important toy enterprise. The Chief Executive has referred to knowledge as the foundation. Developing education is definitely an investment with return. I hope that apart from the passing of scientific knowledge, our education also focuses on the humane spirit of Hong Kong and the need for imagination and creativity. On this front, I hope the Government will strengthen the art curriculum in our primary and secondary schools. We should make setting student imagination free an objective of our education policy. I hope our students will in future make Hong Kong a centre of product design. It will add the components of leisure and appreciation to our traditional manufacturing industry and it will absorb our already skilled workers. It is a direction that must be explored hand in hand with developing high technology.

At the same time, it pinpoints that the Chief Executive has his blind spot. For the nourishment of creativity, we need an open and free environment, the encouragement of independent thinking and tolerance of young people challenging authority. However, the final target of challenge from critical thinking is inevitably the government in power. We can see that Mr TUNG has his reservations on this front. Mr TUNG has his contradictions too. On the one hand, he wants to see our young people being competitive and pursuing value-added trades, on the other, he does not want to see them jumping off the rail to challenge authority. May I ask what Mr TUNG wants from our young people?

In 1997, Mr TUNG said students should master two languages and three dialects as well as computer technology. This year, he is saying that the people of Hong Kong have knowledge as foundation, are strong in adaptability and equipped with various kinds of techniques. I just want to ask if the purpose of education is merely to produce "multi-functional memories" and turn "humans" into production units. Not only does the Chief Executive lack a humanistic angle in his education policy, but also in his other policies, he makes monetary benefit the yardstick. For example on the spirit of the rule of law, the Chief Executive in his policy address says its purpose is to maintain a fair business environment. There is no commitment shown in the address on how the rule of law can protect the community, how individual groups can respect each other and stay side by side peacefully, how the rights and freedoms of individual safety can be protected, what to do in countering racial and age discrimination and so on. Even on the film industry, Mr TUNG is only focusing on development in special effects technology. If drama has no part in motion pictures, had not we better play Nintendo? The above shows again and again that Mr TUNG lacks a humanistic angle in his policy address. If we measure everything from the point of economic effects instead of make everything based on human beings, the value of human beings will get lower and lower. We absolutely do not want to see our society change to such a state.

Everything seems to suggest that the policy address lacks a humanistic angle.

I must go back to social services here. When the labour force feels ashamed and to be blamed for unemployment, in the end violence will be used as a channel of release. If we think about recent cases in the news, we can see that many tragedies might have been avoided through the provision of support, care and counselling. In fact, the Government needs to extend a helping hand to the group of citizens temporarily not given the chance to bring their productivity into play. Of course, we can thank the Chief Executive for creating 29 additional family casework counsellor posts and 23 additional child protection social worker posts. But then, the annual salary of these social workers add up to just a million dollars which is nothing compared to the large amount of money the Government threw into the stock market.

If we look back at how the Government weigh matters and award priorities, it is indeed disappointing. I feel deep regret that the policy address is neither founded on people nor making the people its priority.

PRESIDENT (in Cantonese): Dr YEUNG Sum.

DR YEUNG SUM (in Cantonese): Madam President, the second policy address of the Chief Executive is entitled "From Adversity to Opportunity", but throughout the address, he has only taken care of the interest of large property developers and tried to shore up the market. The sufferings of the people have not been taken care of. There are no measures to relieve the hardships faced by the community so that ordinary citizens may pull through together. This is indeed very disappointing.　

On issues of livelihood, other Members of the Democratic Party have already given their opinions. I just want to focus my discussion on constitutional matters including the abolition of the two Municipal Councils and the relationship between the executive and the legislature.

Abolition of the two Municipal Councils and blocking chances of participation through election

I quote the Chief Executive in his address, "...... in conducting this review of the functions and structure of district organizations ….. to enhance the standard of provision of services and ...... to focus on the need to improve efficiency and cost-effectiveness, to streamline the present organizational framework and to increase ...... public participation in community affairs." His concrete proposals are to abolish the Provisional Urban Council and Provisional Regional Council and pass on their original functions in handling environment and food safety matters to a newly proposed Policy Bureau directly supervised by the central, and to pass on their original functions in providing cultural, recreational and sports services to another executive framework.

This arrangement is clearly not streamlining executive decisions, just to switch all functions of the two Municipal Councils and their related policy-making mechanism to the central executive. As a result, there will be an additional Policy Bureau and another new executive framework.

The real effect of the proposal of the policy address is to expand the powers of the executive. Through "abolishing the Municipal Councils" and overthrowing the three-tier representative system, the only elected councils with executive powers will be removed, hence dealing a blow to democratic participation.

The Democratic Party is not negating the need for a review of the district administration framework. On 3 June 1992, representing the United Democrats of Hong Kong (from which the Democratic Party has evolved), I proposed a motion debate at the Legislative Council for a review of the two Municipal Councils and District Boards. The United Democrats at that time felt that with full abolition of appointed seats of the Legislative Council, the constitutional development of Hong Kong should proceed gradually towards full democratic participation. Therefore, a proposal to do away with the system of appointment to District Boards and streamlining the whole set-up was made.

Under the premise of election by universal suffrage for the Legislative Council and the Chief Executive, the United Democrats suggested consideration be made to reform the three-tier structure into a two-tier framework, namely, to combine the District Boards and the two Municipal Councils into one council responsible for regional affairs.

Experience of overseas countries have pointed to passing on functions at the regional level to local or regional councils so as to relieve over centralization leading to the series of problems of centralization, executive confusion, inappropriate use of resources and so on. Such an arrangement also encourages active public participation in community affairs.

Six years on, the democratic progress of Hong Kong has not gone forward but stepped back instead. The Democratic Party registers deep regrets again here.

Let us look at the political environment today. Since the Chief Executive came into office, our constitutional system has gone backwards. One sixth or 10 seats of the Legislative Council are returned by an appointed electorate. In the two-tier district organizations, about 20 seats are appointed instead of elected. We lack the fundamental conditions for changing our three-tier structure to a two-tier one.

On the other hand, the Basic Law has now formally come into effect after the reunification. It imposes limitations on the rights of council members to move motions, thereby expanding the powers of the executive and undermining the power of the legislature in exercising checks and balances on the powers of the executive. This is simply not the right time for shaping up our three-tier structure to a two-tier one.

If we do away with the Municipal Councils when conditions are not ripe, the public will lose the chance to elect representatives to councils by way of a fair and open election mechanism. As elected representatives will formulate policies on regional affairs with greater acceptability by the community, this move will undoubtedly be seen as a big retrogression in democratic development in Hong Kong.

Moreover, the proposal in the policy address is in fact not to combine the two-tier district structure into one municipal council to be wholly responsible for policies of district administration. Instead, it seeks to do away with the two-tier structure vested with executive powers and recall policy-making powers to the central. It cannot be compared with the idea of the United Democrats proposed six years ago. The Government now plans to assign policy matters concerning culture, art, recreation and sports to the Arts Development Council and Sports Development Council which are not directly elected. It leaves one worried that our future culture and art policies may be influenced by political directions. I would like to respond to the Honourable MA Fung-kwok here that not all members of the cultural circle support doing away with the two Municipal Councils. I would also like to remind friends of the cultural circle not to be happy too early. Cultural policies formulated by the central will go through consultation at councils and openly, but I am afraid cultural policies led by the central government will run against the open, multi-faceted development path pursued by friends of the cultural circle.

District Boards remain on the consultative level and the constitutional development stays put

Another point of concern is that in responding to voices calling for expansion of the executive functions of district administration organs, the Chief Executive has made "delegating specific executive functions of the 18 District Boards would run the risk of fragmenting responsibilities and diminishing efficiency" the pretext and refused to do so. He has simply reconfirmed the role of District Boards in giving advice and reflecting the wishes of the community.

The explanation shows in many aspects that the executive's reluctance to delegate powers to elected councils. From this, we can see that the Chief Executive has not made preparations for combining District Boards into a municipal council. Maybe Mr Michael SUEN can explain this when he responds later on. All in all, it reflects that the Government does not intend to give members of the public greater opportunities of participation in policy-making at the district level by way of implementing reforms in the district organizations.

In fact, the proposal of the Chief Executive further exposes his intention of executive autocracy. He is using the pretext of reorganizing district organizations to close up the space for democratic development, thereby undermining the power of elected representatives in balancing government functions.

Expansion of the executive to undermine the powers vested with the Legislative Council

Madam President, I want to move from the bird cage of democracy as shown in the policy address to the current relationship between the executive and the legislature. In his policy address, the Chief Executive has said he would try to improve the relationship between the executive and the legislature so that the two may develop a relationship of mutual trust and respect. However, that relationship has not improved after the Chief Executive's assumption of office. On the contrary, the executive has been restricting the functions of the legislature in deliberating matters and monitoring the former.

The Government of the Special Administrative Region often questioned the Rules of Procedure of the Legislative Council. Whether abstentions should be counted when Members vote on motions was queried. It was also alleged directly that the President of this Council had no right to decide whether bills moved by Members should be left with the executive because of their charging effect. Those are ridiculous arguments. In order to improve the relationship between the executive and the legislature, I think the Chief Executive should take the first step of removing unreasonable restrictions on the Legislative Council so as not to be drawn too deeply into the addiction of an executive-led government. The Chief Executive should respect the constitutional arrangement of the executive being accountable to the legislature and let the Legislative Council maintain its operation intact, including respect for the powers and duties of the President and respect for the Council when proposing bills. Secondly, the instances of the Chief Executive attending the Legislative Council to answer questions should be increased and in case of major incidents, the Council should be briefed and its opinions should be sought. Thirdly, the relationship between the executive and the legislature would depend on how government use people. The recent case of appointment of a Solicitor General of the Department of Justice has given rise to doubts within society. According to reports, the public has basically detected that the person concerned has pro-China links. Does not it make one feel that the Chief Executive may consider links rather than abilities in making staff appointments? Or would he just use those with links instead of those with abilities?

General election for our three-tier representative system as a balance of the powers of the executive

The existing Chief Executive and his leadership group are not backed by a popular mandate and they are not required to be politically accountable for any policy blunders. The Democratic Party thinks that a continued lack of effective checks and balances will give rise to a further expansion of the powers of the executive. Members need look no further than the Hong Kong Monetary Authority to realize that it is an independent kingdom. The Democratic Party agrees that the Monetary Authority should have powers of discretion, but at the same time it should be accountable and answerable to the Legislative Council. The constitutional rights of Members of the Legislative Council include the responsibility to monitor and exercise checks and balances on the Government. I must say in passing that the Democratic Party will endeavour to improve the monitoring of financial institutions and the Monetary Authority.

Madam President, the Democratic Party feels it is only meaningful to discuss restructuring of district organizations on the basis of full general election for the Legislative Council and Chief Executive. At this stage, the Government should study into how the Basic Law and related ordinances could be amended to bring about election of the legislature, district councils and the Chief Executive by universal suffrage as soon as possible, and conduct public consultation on the same.

Madam President, democratization of the political system and economic development go hand in hand, not one against the other. I would like to respond here to the speech of the Honourable LAU Kong-wah. The Honourable Martin LEE did not say that economic problems were the result of no democracy. He mainly wanted to point out that democracy and economy were basically supportive of each other or influential to each other. Overall, I think the policy address has failed to pave a way for improvement of people's livelihood and gone backwards in democracy. How can we then change from "adversity to opportunity"?

I want to relate here to what happened in Malaysia recently. The demoted Vice-Premier Anwar was seen with two black eyes and the incident has become a great mockery to Asian values. The Premier of Malaysia Mahathir places great importance on Asian values. He thinks much of social security, but he overlooks democracy and human rights. We can see from this that in a country bent on economic development to the neglect of democracy and human rights, social unrest is something bound to occur.

Let me once again describe how I feel about the policy address. The policies are weak and democracy is going backwards. How are we supposed to go from "adversity to opportunity"?

With these remarks, I support all the amendments.

PRESIDENT (in Cantonese): Mr Howard YOUNG.

MR HOWARD YOUNG (in Cantonese): Madam President, unexpectedly, after the release of the policy address, some people have called it empty in content or even condemned it to the extent of not wanting to say "thank you". I think it is unfair. Our present economic downturn is in fact made up of many external factors beyond the control of the Special Administrative Region (SAR) cannot control. In any case, the Chief Executive is not a fairy, one cannot expect to solve problems by the policy address of a single individual. We should take the attitude of everyone being in the same boat and give our assessments or analyses objectively.

The tourist industry

First of all, I shall talk about the tourist industry. In his policy address, the Chief Executive has made special mention of tourism and confirmed its importance to Hong Kong. His decision to appoint a Commissioner for Tourism reflects government concern and commitment on the tourist industry. There is inadequacy in that no substantial proposals on new tourist attractions have been included and there is no clear elaboration on how the new Commissioner can work in a cross-departmental model on the promotion of tourism development and policies.

When the Liberal Party met with the Chief Executive to discuss the development direction for the year ahead, we pointed out that the positive non-intervention policy pursued by the Govenrment was long outdated. We said what Hong Kong needed was for the Government to adopt proactive policies. Such policies should cover economic activities as well as tourism, which is one sector of commerce and industry. When I visited London last month, I learnt from the ex-chairman of the British Tourist Board that London had been selected as the first choice site for the European Disneyland and that a site had been identified near Heathrow Airport. He disclosed that although the British Tourist Board had welcomed the idea, the British Government failed to actively negotiate with the mother company and in the end, the right to operate the European Disneyland was snatched by France. Today, the total number of visitors to Disneyland in France is larger than the number of visitors to the famous French tourist attraction Notre Dame.

In view of the fact that there are only very few world-class brand name theme parks and with the lesson of the British experience, I do not want our Government to sit in remorse over the loss of operating rights to the second Asian Disneyland in future. I therefore urge the Government to take a proactive attitude towards the building of a new Disneyland. This is not to say that we should give away land at a cheap price for others to run projects. In fact, Hong Kong has her own advantages. Only Hong Kong can attract the Southeast Asian market and the China market at the same time. I believe the Government should do three things here. First, we should make commitment in respect of town planning. Secondly, we should commit ourselves to matching developments of infrastructure. Thirdly, we should commit to offering more convenience for tourists from the Mainland. Let us not forget that we are talking of what to happen five years from now. The above three things should show government support and that the Government is taking this project seriously.

I personally and the trade I represent welcome and support the decision of the Chief Executive to appoint a Commissioner for Tourism to take charge of promoting tourism in Hong Kong. We think the Commissioner should be vested with sufficient clout because government departments involved in tourism are plenty ( Security Bureau, Public Works Bureau, Economic Services Bureau and even the Transport Bureau) and they may have their own work targets not necessarily matching the targets of tourism. The Commissioner should act as the channel of the tourist trade within the Government. He should collate, study and analyse opinions of members of the trade, formulate policies that are comprehensive, effective and favourable for development, and more importantly, see that the policies are supported and implemented across the government departments.

In order to bring into play the advantages of Hong Kong's tourism, I think the Government should consider the following aspects.

First of all, to relieve the burdens of operators. I suggest that the Government cuts down on or suspends levies from the tourist industry such as various types of licence fees, hotel sewage charges, airline fees payable to the Airport Authority and so on. This will cut down on the operation costs of operators.

Secondly, to open up borders. The freight traffic through Huanggang checkpoint is now open round the clock with officers of Customs and Immigration on duty, but passenger traffic closes at 10 pm every night. As we have few scenic tourist spots in Hong Kong, before the implementation of any new projects, the tourist trade can make use of spots in Shenzhen to offer more varied programmes for visitors. Extension of checkpoint hours will give more flexibility for tours to visit the Pearl River Delta and thereby promote the local tourist industry.

Thirdly, to relax entry requirements. I hope the Government will streamline procedures as soon as possible, or if possible, exempt entry procedures for tourists from Russia, Middle East and Eastern Europe.

Fourthly, to deal with the entry of passengers from Taiwan. It is expected that more people will come from Taiwan to Hong Kong because the Taiwanese Government has relaxed restrictions on young people of military service age visiting outside places and is soon to implement the five-day week work system. The above moves will increase demands on short trip travelling and as a place near Taiwan, Hong Kong will become a first choice for visitors from Taiwan.

In June this year, the SAR Government granted approval for Taiwan travellers visiting the Mainland on visit permits to stay here on transit for seven days. It came as a very effective measure. The Government can consider extending the approval further to Taiwan travellers bound for any other places like Singapore, Malaysia and Thailand to stay in Hong Kong for seven days without visas.

Relaxation will be advantageous not only to travel agencies and hotels, but also to the air traffic industry. If Hong Kong can be developed into an air traffic hub or transfer centre, the potential of our new airport will be fully utilized. A relaxation of transit requirements will naturally help attract transit passengers to stay in Hong Kong for one or two days.

The fifth aspect has to do with mainland tour groups visiting Hong Kong. The quota for Hong Kong tours has increased, but the additional quota is given to one travel agency only, not open to local travel agencies. If the quota is open to other agencies, prices will fall in order to be competitive and more people of the local trade will benefit. It is obvious that mainland tour groups represent a large market with enormous potentials. I suggest that we implement further relaxations to allow mainlanders and Mainland units to come here and attend large scale activities or exhibitions.

The sixth aspect is the active development of more tourist spots. In addition to the theme park I referred to earlier, I think we should fight for a liners' pier in the Victoria Harbour. It will see Hong Kong developing into a centre and a midway stop for liners in Southeast Asia as well as a great metropole for international liners.

Telecommunications and broadcasting

With rapid developments in digital technology, the Government has proposed to give clearance for telecommunications operators to provide broadcasting services and broadcasting operators to provide telecommunications services. This is in line with trends in the technology field and in the end, the public will stand to benefit. The Liberal Party supports this.

We agree that in the long term, the market must be opened up in order to promote competition. However, the Government must also consider factors like a fair competitive environment and healthy development of the market, and effect regulation when necessary.

The existing problem of the telecommunications market is that there is no fair environment for competition. As such, we cannot promote healthy competition. The Government should provide a legal base for market management so that the Telecommunications Authority will be able to take the initiative to investigate and take actions against anti-competitive activities in the market. The Government should also require new buildings to be completed to provide sufficient space for installation of facilities by fixed network operators.

In fact, the twisted market phenomenon is also found in the television industry. How do we explain one television station taking nearly 80% of advertising income and accounting for over 80% of the viewer ratings? Apart from the station's many years of successful operation and winning the support of an overwhelming majority of the audience, a lot of people think it has made use of its advantage to monopolize across sectors such as manipulating singers, indirectly controlling the phonographic industry and so on. Therefore, the Government should set up a mechanism to investigate improper acts of competition such as achieving targets of promotion with unfair or even "rigging" methods. This sort of bad practice should be rooted out.

On monitoring of broadcasting contents, the Liberal Party suggests that the Television Entertainment and Licensing Authority should implement thorough reforms, increase transparency, clearly set out the methods of collecting, discussing and handling complaints, as well as master the preferences of the audience and social yardstick accurately by means of scientific, objective, systematic and fair methods.

Reforming the Civil Service system

In the last 10 years, government departments have expanded quickly. We now have a Civil Service of nearly 200 000 members (so-called golden rice bowl). If we count in staff of public bodies or the subvented sector (commonly referred to as the iron rice bowl) paid from public funds, I believe the total number is over 300 000 members. Given that the labour force of Hong Kong is 3.3 million, public servants account for 10% or more.

The current daily pay expenditure in Hong Kong is $700 million and the total paid out to the 200 000 civil servants is as high as $160 million or one quarter of the total. At this time of economic recession, over expanding the Civil Service system may result in a serious crisis. Therefore, the Liberal Party thinks that the Government should follow the example set by many large organizations of "skimming fat". There are two ways to do it.

First, to adjust civil service pay and remuneration in keeping with social development and present circumstances. Steps should include:

1. An overall review of the Civil Service pension system. There are over 50 000 retired civil servants as pensioners. With advancement in medical science, the average life expectancy of human being has been extended. We should consider whether the pension system is still suitable. Since the Government is implementing the compulsory provident fund scheme for our people, will it be more feasible to replace pensions with a provident fund?

2. The entry point pay for civil servants should be reviewed. Earlier on, a personnel consultant firm announced its research results and pointed out that purely on monthly salary, the entry point for the majority of civil servants is far better than employees in the private sector and the biggest difference could be nearly 60%.

3. Allow government departments to enjoy more flexibility in staff recruitment. Some members of the community feel that the Government can consider recruiting civil servants on contract terms, employ more short-term staff to answer work needs and be more flexible in pinning pay such as setting an upper limit but no minimum so as to encourage departments to save public funds.

4. The establishment of government departments should be reviewed and restructured when necessary. The establishment of certain government departments sometimes leave us doubtful of its suitability. Another situation is that certain departments formed to provide a particular kind of service may still exist when demands for such service have fallen. The Squatter Control Section is an example. We therefore feel that the Government should implement an overall review of departmental establishment. Such actions should include skimming or reorganizing redundant or bulky departmental structures and abolishing outdated departments with no objective needs.

Secondly, I think we should bring in new mechanisms and culture and improve the effectiveness of utilization of resources. Firstly, since at present there is no mechanism to encourage departments to conserve resources, departments finding themselves with unused resources when the financial year draws to a close cannot keep the resources for use in the following year. It easily makes departments try all they can before the end of each financial year to spend all resources allocated to them. This is wastage. Therefore, the Government should introduce a new mechanism to encourage departments to save resources for the current year so that some parts can be kept for use in the next year. This will be more flexible.

Secondly, promotion is at present the only internal award for outstanding civil servants. The result is that the middle and upper levels may be unnecessarily expanded. The Government should set up other channels to recognize the outstanding performance of civil servants.

Madam President, I support the original motion.

PRESIDENT (in Cantonese): Mr CHAN Kam-lam.

MR CHAN KAM-LAM (in Cantonese): Madam President, one can say that the second policy address of the Chief Executive was formulated on a path overgrown with brambles. The aspirations of Honourable colleagues and the public are quite contradictory too. On one hand, we understand that, as pointed out by the Chief Executive, "The difficult economic situation will continue well into 1999 …… both employers and employees will come under severe economic pressure". At the same time, even if the Government comes up with certain policies and measures, because "implementation takes time and it takes a period of time before effects on economic growth can be seen", we should not expect too much from the policy address. However, we all hope that the Chief Executive can produce some miraculous medicine to answer community call and relieve the public from difficulties.

Madam President, the Government of Hong Kong in the colonial days was often criticized as short-sighted and reluctant to formulate long-term strategies in various aspects. Having read this year's policy address, we can actually see the forward-looking vision of the Chief Executive. The policy address has devoted many pages to discussing how to formulate strategies to promote economic growth, giving a grand orientation for the future of Hong Kong. Measures suggested include developing Hong Kong as the new technology and innovation centre of South China and the region and a leading city in the world for the development and application of information technology. The Chief Executive wants to develop Hong Kong into five other centres too.

The Democratic Alliance for the Betterment of Hong Kong (DAB) agrees that innovation and technology are the major driving force for promotion of economic growth. In the last 10-odd years, we have placed too much importance on the financial services trade and ignored the development of hi-tech industries so that in developing scientific research and technology, we have lagged far behind Singapore and Taiwan nearby. After the appointment of the Commission on Innovation and Technology in the beginning of the year, the Chief Executive has gradually established that we should develop hi-tech industries. The Chief Executive has raised a series of long-term targets in his policy address. We sincerely hope that the Government can realize various projects as soon as possible and lead Hong Kong on to the road for healthy economic development. We need to strive to the peak of prosperity again.

Madam President, since the financial crisis last year, the markets of Southeast Asian countries have shrunk. Interest rate in Hong Kong has stood at a high level and local small and medium-sized enterprises (SMEs) have to face the problem of difficulty in obtaining capital. In his policy address, the Chief Executive has suggested to review the Special Finance Scheme for SMEs, to set up SMEs offices, to help SMEs increase their competitiveness through the Industrial Support Fund and to discuss with mainland authorities on how to improve the environment for businesses operating in the Pearl River Delta and so on. Those are far-sighted measures in support of industrial development. The DAB thinks that those measures do merit our approval as they help to provide a leading factor for strengthening the foundation of industrial development in Hong Kong, increase Gross Domestic Product and enlarge the ratio of industry in the economic structure of Hong Kong. P> However, we must point out that even if the industrial policies set out in the policy address can be widely implemented, industry in Hong Kong will not be improved overnight. Industrial production and competitiveness cannot be increased drastically within a short time. Therefore, the Government of the Special Administrative Region (SAR) should draw up measures for assistance to tide various trades over the economic difficulty they are facing. In the short term, the DAB feels that the SAR Government should help SMEs solve their financing and financial problems.

Ever since the launching of the credit plan for SMEs in August, response has been quite enthusiastic. However, a lot of SMEs that attempted to apply think that the plan cannot meet the practical needs of SMEs and that the approval criteria are very harsh. The Trade and Industry Bureau has revealed that as at the beginning of October, only 100-odd companies have been granted loans amounting to just over $200 million. Although the Bureau plans to conduct a review half a year after the launching of the plan, the DAB thinks that under the present economic downturn, funds for enterprises are badly needed to put out the fire. If the Government does not conduct a review of the credit plan right away to give enterprises more convenience, it would be useless.　

We suggest that the Government should consider changing the existing guarantee ratio of 50% each for government and credit institutions to 70% of risks for the Government. If this is done, banks will be more willing to approve loans.

On the approval criteria, in addition to considering the repayment ability and financial report of clients, consideration can be given to looking at their development prospects, past business records, business experience and management ability.

Madam President, the policy address has said little about manpower policies, for "manpower training" covers five paragraphs only. Measures to help secure employment include strengthening of the Labour Department's Job Matching Programme, improving retraining courses, advancing capital works and promoting tourism development so as to provide more job opportunities. All of them are comparatively general proposals by the employment ad hoc group earlier on.

The DAB hopes the Government will implement proposals of the employment ad hoc group soon as well as review the effects of the proposal regularly. By so doing, the labour market will develop soundly and the unemployed will get help.

Of course, we understand that the policy address has put before us a long-term blueprint for Hong Kong. The Chief Executive hopes to boost our economy and put Hong Kong on the revival track by promoting innovation and technology and developing telecommunications. When commerce and industry are prosperous, employment opportunities rise and the public rebuilds confidence.

The policy address has pointed out that the Government would study the best practice of foreign countries in forecasting manpower needs. A formula to evaluate this for the next 10 years is under way and it is most welcomed. We hope Hong Kong can make full use of the information and data on manpower needs so gathered. Through the setting up of an employment information base, the Government will actively collect information about the labour market. The items include the speed of expansion and contraction of individual trades, pay trends, the number of new graduates from our universities and training institutes, distribution of the unemployed by trade and so on, so as to match efforts to improve the labour market, come up with direct measures to tackle unemployment and formulate training and retraining policies that suit the market environment.

Madam President, Members of the DAB have given their opinions on various aspects of the policy address. I am not repeating their words.

Dr the Honourable YEUNG Sum just now expressed worries that the Chief Executive could only use pro-China people. He also criticized the use of people with links rather than abilities. I am most surprised. Why is a learned and knowledgeable person so ignorant and narrow? Are we saying that there are few capable persons among pro-China personalities? Are we saying that capable persons do not love Hong Kong and China? According to Dr YEUNG Sum, the SAR Government should devise a system of public servant recruitment with political vetting to ensure all public servants do not or need not love Hong Kong and China. What kind of logic is this? What kind of strange thinking is this?

Madam President, when I entered the Chamber today, I was handed a number of opinion papers from various bodies all on the policy address. Allow me to quote some of the opinions here.

The opinion paper of the YMCA of Hong Kong: "The main reason for our financial crisis today is imbalance of the financial structure resulted from the economic policy of the former government. It is inevitable for a bubble economy to burst finally and adjustments are required. Therefore, it is unreasonable to blame the Chief Executive, Mr TUNG Chee-hwa, and the Government of the SAR for our financial crisis today. In fact, we can all see that Mr TUNG has been working on developing the economy of Hong Kong since he came into office. Confronted by the current economic difficulties and unfavourable factors from outside, Mr TUNG, as revealed in his policy address, tries hard to adopt short-term measures to benefit the people and relieve our difficulties as well as outline a grand blueprint for our future ……"

In the opinion paper of the New Territories Association of Societies, it has this point: "After the Chief Executive delivered his policy address, some people have reflected that such addresses can never quench the thirst suffered right now and there are no miraculous cures. Who could give a prescription to cure our illness instantly under the present economic difficulties in Hong Kong? Ice three feet thick could not have been formed in just one cold day. There may be outside factors to cause our economic difficulties, but the local industrial structure is also flawed. How could one expect quick revival after the bursting of the bubble? …… This is the time for the industrial and commercial sector as well as various trades to unite and join hands, to work together with concerted efforts, to build up confidence to get over difficulties and to re-create new horizons."

Finally, let me quote an opinion paper presented by the Hong Kong South District League (literal): "Recently, we were hard hit by the Asian financial crisis and international speculators. The pounding was unprecedented. Although the SAR Government acted bravely and resolutely in adopting a series of protective measures which tarnished the reputation of Hong Kong as a world financial centre, the measures designed to relieve us from difficulties and change from adversity to opportunity were attacked and twisted by some political parties and politicians. They tried their utmost to ridicule Mr TUNG Chee-hwa and twist the policy address. They focused on one side of the matter and misled the public. They spread rumours of the so-called Pull TUNG Down Fund in order to damage public confidence in the SAR Government. Such outrageous intention is ill designed. The public should consider the situation carefully!"

"Hong Kong is our home and let us join to manage her well." At this time of crisis, the people of Hong Kong should face reality and act together. We should suggest more practical measures towards an active attitude. Working hard and striving to improve is better than "going on a hunger strike to pull TUNG down". It is far more effective to make demands and insist on action.

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

PRESIDENT (in Cantonese): Mr James TO.

MR JAMES TO (in Cantonese): Madam President, the speech by the Honourable CHAN Kam-lam was indeed very righteous, but I think I had better go back to my own speech.　

I want to speak about law and order. More than an hour ago, there was another shooting incident in Macau. Some people may ask why Hong Kong is still not bad when social order in Macau has been chaotic for more than a year going on to two years. According to my analysis, it is simple. Hong Kong possesses an outstanding disciplined service which is not corrupt and one that keeps in good discipline. I think law and order here is in general quite good. From the figures, we are in fact in the best years of the past 25 years. What we need to be concerned with is, like many citizens have pointed out, whether law and order will deteriorate with the deterioration of our economy. Even members of our disciplined forces have let out the hint that law and order cannot be this good forever and our crime rate cannot go further and further down. Sometimes the range of the fall will be smaller, but then the opposite may happen as well. I think what we should look at is whether various sorts of small trends will really get worse. Overall, I think we can stay cautiously optimistic. I am trying to say here that I hope the Government will be cautious in reviewing the provision of public assistance to the needy in our community. I say this because it is a very important factor for law and order to be maintained temporarily at a steady scene. If we cut public assistance drastically on a large scale, I am worried that there may be great repercussions.

Let me go back to the Police Force. First of all, I want to say that the Police Force should change from being responsible to the Chief Executive in accordance with the Police Force Ordinance to being structurally responsible to the Secretary for Security. In the past, the governor held all powers including control of the armed forces and the police. It was a very colonial structure that did not hold aliens in trust. The Commissioner of Police should be responsible to the Secretary for Security instead of having to bypass a civil officer. Secondly, I endorse the concept of the Government to enhance efficiency through technology. I also think that is an inevitable direction to pursue. Frankly, I cannot imagine us resorting to the use of magnets in deploying police vehicles and patrol vehicles, nor can I imagine different vehicles calling in to report their positions. When fishing folks go out on fishing trips, even if it is a light boat they go in, there is a full set of global positioning equipment installed. That kind of equipment costs just over $2,000. For our disciplined forces, however, police vehicles, fire engines and even ambulances still call in to report. I think there is really a lot of space for us to enhance efficiency through technology. We can see that when the reputable Federal Bureau of Investigations of the United States investigate major cases, two or three or more agents get into a team and proceed to investigate with the support of technology and research. In fact, their efficiency is very high.

There was a recent editorial saying that after the CHEUNG Chi-keung case, we may be getting into the era of so-called intelligent crimes. In fact, I already ventured to make that proposition three or four years ago. I projected that there would be endless forgery cases of credit cards, property deeds, forged L/Cs, counterfeit notes, anything, or there could be large scale money laundering activities or computer crimes. I was sure such cases would come one after the other because we were entering a world of technology. I hope the police and the Independent Commission Against Corruption (ICAC) can step up training in this respect. Can we have a stronger foundation to handle such problems soon?

The Government is talking of an Enhanced Productivity Programme. I think the police should be doing this very well. Our Police Force's annual expenditure is $10 billion. There is indeed a lot of space for enhanced productivity. Several years ago, I suggested that the creation of a post at the Chief Superintendent rank in each police district to act as commander of several hundreds of policemen would have the effect of enhanced police strength by multiples. It is something worth deep thoughts. We must make leadership and efficiency the criteria. We can then apply the criteria to screen out the really capable ones and incompetent ones, those with leadership and those without, diligent members and lazy ones. Several years ago, we enacted the Organized and Serious Crimes Ordinance, providing a larger law enforcement foundation for the Government. We have waited for three or four years and it seems no obvious effects can yet be seen. Let me say this here once again. I look forward to more proactive work by the Government in hitting out at triads and organized crimes. At the same time, there is a need to increase manpower and resources of the proceeds investigation division. We have also waited for a long time for reforms to the Police Force and Crimes Ordinances. Before the reunification in 1997, I was surprised that the Government had not forgotten this and in fact published a brief document on it. One year on, it seems there is nothing on this in this year's policy address. I do not know if I have to wait till 2000, but I will stay hopeful because it is now many years from 1992 when the Law Reform Commission started studying into the matter. As for the introduction of legislation to make the Independent Police Complaints Council (IPCC) independent, I think there is no reason whatsoever for the Government to put it off any longer. In fact, those who really think can see what would happen if another bill to this effect is introduced. With the mechanism of voting by groups, the Government is fully aware of whether the bill can be passed. I hope the Government stops making other pretexts. The later another bill is introduced, the more suspicious I will be. Is the Government trying to go back on the progress of legalizing independence for the IPCC? I still want the Government to consider making the Internal Investigations Office independent of the police, or at least consider, as proposed by the IPCC, how to enhance its credibility.

Recently, we became aware of the LEE Ming-kwai case. He obviously had infringed upon human rights, but he was still awarded a medal. It is a slap on the face of Hong Kong people. I agree that Mr LEE did well as a police officer and he handled matters concerning the reunification very well. However, we cannot dismiss a case of infringement upon human rights because of one's past good performance as a police officer or the many good deeds of his doing. I think there are objective standards of right and wrong. If not, with what are we supposed to educate our next generation?

Police officers in debt remains a topic of concern. From figures collected recently, the matter seems to be deteriorating. I hope the relevant authorities can handle this with more concern and more resolution. On anti-corruption and integrity work, as the Independent Commission Against Corruption (ICAC) has put it, this is the age for the battle of wits and there are very few people who handle things as stupidly as they did before. When we visited the ICAC this morning, we saw the account book of Godber. Nowadays, people are not as dumb as that. Who would write down sums collected or sums not yet collected? No one would do that. Therefore, we must strengthen our investigation abilities. In view of modern technologies employed to launder money within a matter of seconds between several banking systems so that the money vanishes into thin air, we must strengthen ourselves. There is one other thing that warrants our concern. Very often when the ICAC sought assistance from some mainland companies over incidents or corruption cases in Hong Kong, it had to wait. As a result, the persons concerned got transferred away from Hong Kong within days and were subjected to more severe handling by the mainland government. It gives rise to a side effect. When this is allowed to happen again and again, Hong Kong people would know that for corruption cases, when one is partnering mainland capital, one can get away from the long arm of the law. When there is no longer the complication of evidence cut away, there will be greater problems with corruption.

Recently, a guideline to review overseas assets of civil servants has been issued. I hope the Government does not stop at issuing a guideline. Instead, the Government should be more serious in handling corruption matters. Some persons of our law enforcement bodies, even those in very high levels, are making their investments in the Mainland lawful acceptance of bribes. This is a very dangerous kind of activity.

The Stock Exchange and the Commodities Exchange should be listed as statutory bodies covered by the Prevention of Bribery Ordinance. I believe the Government has to push this through in a strong way, or else the situation will be disappointing and one of despair. The public will watch closely for the next Commissioner of ICAC to be appointed. This is worth great concern because it signals whether our rule by law, justice and anti-corruption system can be maintained.

A new term of members will be appointed to the Report Corrupt Activities Committee. Who will they be? Will they be people accepted by the community and can they give off the effect of a safety valve? The public will keep a close eye on this.

On fire services and ambulance work, the first thing I want to say is that making call to arrival time the service standard of emergency services is the outcome of a long battle. Unfortunately, since 1993-94 to date, although the basis has been changed, efficiency has not improved. We are still speaking of a standard of 10 minutes plus two minutes. If the Honourable Andrew WONG is not failed by his memory, we may be one minute slower because at one time, we were speaking of 10 minutes plus one minute. As fires occurred quite frequently lately, the Fire Services Department and Electrical and Mechanical Services Department should step up inspections in the next few months.

On immigration matters, I hope the Government can actively negotiate more visa exemptions by more countries so that we may enjoy greater travelling convenience. The Government has recently tightened visa exemptions and the period of stay for nationals of certain countries. I feel that since the measures have been based on objective data, so I do support them.

The Honourable HUI Cheung-ching also said yesterday that many countries did not have offices in Hong Kong and that it was inconvenient for businessmen to obtain visas. I agree with that and I hope the SAR Government will fight with the Central Government for such countries to set up offices in Hong Kong.

On the correctional system, the Ma Po Ping case reflects that the existing Justice of Peace (JP) investigation system should be reviewed and improved. First, JPs do not have independent investigation teams to assist them. I have not raised this point this time, but I still hope that the JPs can at least agree or disagree with reports to a certain degree just like the IPCC, or else the system will suggest that JPs seem powerful to enforce justice but cannot actually do anything. The above case serves to reflect the deficiencies of our existing system.

As to replacements for the heads of Customs and Excise and the Correctional Services Department, my view is that they should as far as possible be promoted internally. Only when the ideal person cannot be found internally that should we consider to second someone from the Police Force.

For the outstanding debts resulted from the Vietnamese refugees issue, I suggest that China deduct it from its payment as a member state of the United Nations until the whole sum is set off. This is practical, feasible and fair too.

On human rights, the legal system and the administration of justice, I am glad to see that the Government has not brought in Article 23 of the Basic Law. The Government has handled this cautiously and consulted widely too. I am also glad that China has become a signatory to the International Covenant on Human Rights, but I am somewhat worried about the enforcement and monitoring of the Covenant. If I had attended the meetings of senior officers of the Home Affairs Bureau and heard of how people misunderstood human rights, I would say we should set up an independent committee to handle the matter.

Switching over to the appointment of a senior officer in the Department of Justice of late, I feel that someone with a strong political background or identity is not suitable. He will not be able to win public trust in just administration of justice. Let us see who is to be our next Director of Public Prosecutions. I am very worried that justice may go backwards and I have developed a cold feeling.

Moving on to the recent conflict in area of judicial jurisdiction, I think the Government should handle it with extreme care.

PRESIDENT (in Cantonese): Mr TO, your time is up. Mrs Selina CHOW.

MRS SELINA CHOW (in Cantonese): Madam President, at the 1992 general election, Bill CLINTON put forth his election strategy of "It's the economy, Stupid" which hit the nail on the head. He came out the winner by showing his full mastery of the situation and winning the nation's confidence in his ability to solve problems. We are so fortunate that Hong Kong is oozing with wisdom. Do not we all remember that the platforms of all candidates for the first Legislative Council centred on the economy? However, crying out loudly in face of crisis is only a show of small cleverness when the real test of wisdom is how to overcome difficulties and how to go from crisis to safety.　

No policy address can be perfect. That is why this debate is worthwhile. However, when we criticize and express dissatisfaction, we have to make a fair and objective analysis. Only by doing so can we genuinely exercise our duty as representatives of public opinion. The Liberal Party has always adopted a positive attitude to seek to improve government administration. We also believe the analysis should be substantial and in depth if it is to be of any real use. Every member of the Liberal Party gives his or her opinion along this line. Is it true that, as alleged by some colleagues, the Chief Executive's policy address is utterly bad? Is the general direction of devising policies to promote economic growth wrong? Are we saying that we need not be innovative in developing technology? Are we saying that there is no need for Hong Kong to redefine our position so as to devise new measures that can strengthen our position? Has the Chief Executive gone on to the side track by focusing his concern on innovative industries of tourism, financial services, information technology, broadcasting and telecommunications, film production and so on? Is there a voice that opposes extensive development of infrastructure? No, the comments can in fact be grouped into several categories. One calls it not innovative, the other says water from afar cannot put out the fire nearby, the third kind laments on no measures to relieve the hardships of the working population and the fourth criticizes the absence of immediately effective measures to revive confidence. In fact, all comments are well based to a certain extent, but if we look at the policy address from a positive angle, we should first of all analyse carefully the strategy commonly accepted as desirable. The Chief Executive has affirmed and supported the first report of the Commission on Innovation and Technology. The Liberal Party feels that the Chief Executive's direction for the promotion of high technology is correct, but we must be aware that this pursuit is a long road of high risks. If we want to succeed, we must be prepared to give enough space to people and organizations that participate to open up new horizons. Do not let the habitual conservative thinking of the Government become a hindrance to the development of innovative energy. At the same time, the Chief Executive has stated expressly that development in this direction would create favourable environment for the commercial and industrial sectors as well as build on and strengthen our competitive edge. This target is ultimately for the strengthening of our power to create wealth. Therefore, no academic research should deviate from our ultimate target.

In addition to high technology, the Liberal Party insists that value enhancement is also an important sector. Before enhancing value, we have to recognize where to do so. Indeed, the policy address has listed several trades for this. However, little has been said about traditional trades, in particular, there are no especially good proposals for the manufacturing and service industries which were quite successful in the past.

In fact, there is this very obvious reasoning that every businessman understands but is often covered up by various other problems. I mean to say that in a liberal economic structure, the impetus for economic prosperity or otherwise rests in the hands of investors and operators. The duty of the Government is to create a desirable business environment and set out fair rules of the game. At present, the only thing to do in promoting economic revival is to rebuild the investor confidence. That is the really good remedy to relieve the problem of unemployment.

The wholesale and retail business sector that I represent is almost entirely made up of small and medium-sized enterprises (SMEs). People in the sector have often complained that running their business is getting harder and harder, The main reason is the weak consumption power and thin confidence of citizens. Closer contact between Hong Kong and the Mainland after the reunification has also indirectly undermined their competitiveness. They are also complaining that the Government has not lent any help. Instead, all sorts of difficulties are thrown their way from time to time, particularly in operating costs. They feel all the more burdened. Increased charges and complicated procedures are their headaches. When the economy was good, the Government increased charges relentlessly. Now that the economy is not good, why cannot the Government cut charges? A mismatch in labour supply has meant reduced efficiency for them because of manpower shortage. When there is a labour dispute, they find the Labour Department not fair enough so that employers get dissatisfied. Sewage charges have remained a long unresolved problem confronting food premises. We have heard of special loans for trades with special needs, but we have remained hearing about them. The cases I have involved in all reflect that the Government is not doing anything to help those in urgent need of assistance. Sometimes, gloss work was done in place of anything to achieve substantial results. In some cases, the reality was glossed over, thereby misleading the public and fellow colleagues. The $2.5 billion special loan fund for SMEs is a well known example. If the Government insists on carrying out a review several months later, I am afraid "when the operation becomes a success, the patient is already dead". How ridiculous is this? We may as well skip the operation. Such slow response of the Government makes businessmen disheartened as well as lose confidence in the Government.

One cannot dispute that service efficiency in Hong Kong is high. But can this alone please our customers? Not necessarily. Some days ago, I was one of the adjudicators for the "Outstanding Service Award" of the Retail Management Association. One of the contestants described her service target with 10 Chinese characters. Her target is an object lesson for our entire service industry. The golden line which wins her the award is "Leave smiling today and come back smiling the next time". If the entire service industry can attain that target, we will excel when the Asian economy revives and we will beat our competitors. Has the Government exerted efforts to promote attitudes that boost industrial spirit?

The tourist industry is closely tied to the retail sales trade. In fact, one can say that the Government is favouring this trade because it is an important pillar of our economy. This is something so preliminary that even a child can understand. Recently, we asked a lot of questions on the flea market concept. Although the Jumbo Fair concept was in the end abandoned, it was replaced by a free creative market. I am pleased to be involved in designing this. Only last week, 45 200 people including tourists visited the site. I am aware that some colleagues who are concerned with employment seem to see the target of this activity as the creation of employment opportunities, but I think that for this new concept to succeed, business principles such as the people flow and the business turnover and so on must be the deciding factors. The ultimate target is profit. In other words, if this concept earns money, it can continue to be run and create employment opportunities. If it loses money, there is no need to say any more.

After listening to the policy address on 7 October, the Liberal Party was disappointed because the Chief Executive did not confirm his stand on a Disneyland here. I do not know if other colleagues see eye to eye with the Liberal Party on this, but in any case, everyone started bombarding questions on the Secretary for Economic Services. In fact, the situation on that day could have been prevented. Just say that the Chief Executive clearly stated in his policy address that the Government was actively fighting for that important project, we would have no need to say a lot and everyone would have felt a shot in the arm. If that had happened, officials would have no need to spend time and energy recently trying to "mend" the whole thing. Today, as the person who first proposed this idea many years ago, I feel that as the Government has publicly made clear its attitude and stand, we should not create more chips for the other party at the negotiation table. We should have faith in our officials. In fact, if we think deeply into this, the conditions of Zhuhai are far less favourable than ours and Singapore does not have the advantage of a China market, not to mention the lack of the attraction of a metropole. So there is no need for worries.

For years, I have kept on fighting for concern for the movie industry, but the British Hong Kong government kept to its own track. There is every reason to celebrate because the Chief Executive has made positive response only one year after assuming office. However, whether there will be results depends on whether the Government can put the expertise of the industry to good use and suit the right remedy. If the Government is overcautious, I am afraid there will be despair and disappointment in the end.

On the basis of the above points, although one may say that the policy address has a lot to be desired, one cannot accuse it of "saying nothing". Nevertheless, the Chief Executive should ensure that the direction and targets so set will not be drawn down by unsatisfactory implementation or human errors. I am not being over-worried. It is just that experience tells me many good policies cannot be carried through to achieve desired results because of bad implementation. Examples are the sale of public housing units, mother tongue teaching and strengthening of school information technology curriculum. The Government should learn from the experience and avoid making more mistakes.

All in all, I must say that in the past year, our Civil Service structure has sparked public discontent. Apart from the failures quoted above, the attitude and culture of the Government and officials are equally important.

First of all, "positive non-intervention" is out of date. After the Government's market actions earlier, this motto has become empty and meaningless. Of course, I am not suggesting that the "Government should fight with the people", but for a government that flaunts "executive-led", it has to establish the style of a leader. In reviving the economy, it has to be resolute and adopt constructive ideas. I just hope that the schedule of the Chief Executive to meet outsiders for two and a half hours per day will be infectious on other officials so that they will learn to be humble and considerate. Supercilious, arrogant attitudes of those who consider themselves the cream will not win public respect, just resentment. The Government should be determined in the year to come in changing the rigid, unresponsive, "tunnel vision" type of approach in resolving problems. For matters to be solved across bureaus or across departments, horizontal team work should be the line to take. This will win the people over. In the end, whether the Government is elected or appointed, it will win the confidence of the people. When this is realized, governance will be effective and we will be able to build a better future.

PRESIDENT (in Cantonese): Mr Gary CHENG.

MR GARY CHENG (in Cantonese): Madam President, it seems we do not have a quorum. Do we have to take a head count? We should have a quorum from the beginning to the end.

(The President directed the clerk to make a head count. The Clerk reported there was no quorum.)

PRESIDENT (in Cantonese): As there is no quorum, I direct that the Clerk ring the bell to summon Members to return to the Chamber.

PRESIDENT (in Cantonese): Honourable Members, according to the Rules of Procedure, we need to wait for 15 minutes. As there are still 10 minutes to go, would Members please take a short break?

MR LEE WING-TAT (in Cantonese): Madam President, a point of order. While we are making the head count, is the meeting still in progress?

PRESIDENT (in Cantonese): Yes, it is.

PRESIDENT (in Cantonese): While we are waiting for Members to return, I would like to explain briefly. Even if we need to adjourn the meeting today due to the absence of a quorum, the debate would not be significantly affected because Mr CHENG is the last Member to speak. If there is a quorum, the deputy chairman of the House Committee, Dr YEUNG Sum, will move a motion to adjourn the meeting. At the meeting on 4 November Dr LEONG Che-hung will be speaking about the amendment. If there is still no quorum within these 15 minutes, Mr CHENG will then be the first Member to speak at the meeting on 4 November. (Laughter) Indeed, this means there will be one Member who will then be speaking on the motion on the same day as Dr LEONG before the public officers reply. After that, Members may move their amendments.

NEXT MEETING

PRESIDENT (in Cantonese): Honourable Members, due to the absence of a quorum, I now adjourn the Council.

Adjourned accordingly at thirteen minutes to Nine o'clock.