OFFICIAL RECORD OF PROCEEDINGS
Thursday, 14 January 1999
The Council met at Three o'clock

 

MEMBERS PRESENT:

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

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

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

THE HONOURABLE DAVID CHU YU-LIN

THE HONOURABLE HO SAI-CHU, J.P.

THE HONOURABLE CYD HO SAU-LAN

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

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE MICHAEL HO MUN-KA

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

THE HONOURABLE LEE WING-TAT

THE HONOURABLE LEE CHEUK-YAN

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

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

THE HONOURABLE LEE KAI-MING, J.P.

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

THE HONOURABLE FRED LI WAH-MING

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

THE HONOURABLE NG LEUNG-SING

PROF THE HONOURABLE NG CHING-FAI

THE HONOURABLE MARGARET NG

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

THE HONOURABLE RONALD ARCULLI, J.P.

THE HONOURABLE MA FUNG-KWOK

THE HONOURABLE JAMES TO KUN-SUN

THE HONOURABLE CHEUNG MAN-KWONG

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

THE HONOURABLE HUI CHEUNG-CHING

THE HONOURABLE CHRISTINE LOH

THE HONOURABLE CHAN KWOK-KEUNG

THE HONOURABLE CHAN YUEN-HAN

THE HONOURABLE BERNARD CHAN

THE HONOURABLE CHAN WING-CHAN

THE HONOURABLE CHAN KAM-LAM

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

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

THE HONOURABLE LEUNG YIU-CHUNG

THE HONOURABLE GARY CHENG KAI-NAM

THE HONOURABLE SIN CHUNG-KAI

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

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 MRS MIRIAM LAU KIN-YEE, J.P.

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

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

THE HONOURABLE CHOY SO-YUK

THE HONOURABLE ANDREW CHENG KAR-FOO

THE HONOURABLE SZETO WAH

THE HONOURABLE LAW CHI-KWONG, J.P.

THE HONOURABLE TAM YIU-CHUNG, J.P.

THE HONOURABLE FUNG CHI-KIN

DR THE HONOURABLE TANG SIU-TONG, J.P.

MEMBERS ABSENT:

DR THE HONOURABLE PHILIP WONG YU-HONG

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

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

PUBLIC OFFICERS ATTENDING:

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

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 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 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 BENEDICT KWONG HON-SANG, J.P.
SECRETARY FOR WORKS

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

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

MR KEVIN HO CHI-MING, J.P.
SECRETARY FOR TRANSPORT

MR PATRICK LAU LAI-CHIU, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS

CLERK IN ATTENDANCE:

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

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

PRESIDENT (in Cantonese): Will Members please remain standing for the Chief Executive?

PRESIDENT (in Cantonese): Honourable Members, I will invite the Chief Executive to address this Council first.

CHIEF EXECUTIVE (in Cantonese): Honourable Members, we are now at the start of 1999. First of all, let me wish everyone a prosperous new year and good health. Before I take questions, I would like to go through several issues of concern to the general public and Members.

To begin with, I would like to talk about the efficiency and performance of the Civil Service. In the past months, the public and this Council have expressed a number of views about the efficiency and performance of the Civil Service. I must point out that the 180 000-strong Civil Service as a whole consists of the best people. We have a highly institutionalized Civil Service the members of which are fully dedicated, honest, capable and highly acclaimed here and overseas. In fact many government departments have been providing quality and efficient services to the public. This can be seen by all. At the historical moment of the reunification, the Civil Service continued to display its high efficiency and make tremendous contribution to the reunification, and the implementation of the principle of "one country, two systems" and "Hong Kong people ruling Hong Kong".

Over the last 18 months, Hong Kong has faced a lot of unexpected events such as the Asian financial crisis. Despite all the adversities, the Civil Service overcame all sorts of difficulties, maintained the stability of Hong Kong and the smooth running of the Government with professionalism.

There are comments now among the community that individual departments still need to work harder, from the point of view of value for money. I share this view. The Government would look closely at any positive criticism. Indeed, we have been taking criticisms, including those by the Director of Audit in his various reports, in a positive manner. We have urged the relevant departments to follow up and make improvements in the service they provide to the public and enhance their efficiency.

Last October, I pointed out in the policy address that we needed an Enhanced Productivity Programme to raise our productivity. As the Programme unfolds gradually, all departments are planning proactively to achieve our targets and implement the work required. A good Civil Service system should move with the times. The Government is duty-bound to set new targets and take Hong Kong out of the woods at a time when it is facing the most trying economic difficulties. It should lay a firm foundation for the Hong Kong Special Administrative Region (SAR). One important step to take is to enhance the efficiency of the Civil Service, for the benefit of even greater excellence. To ensure that target is met, we must change the system at the fundamentals. I would request the Civil Service Bureau to expedite their work, to grasp the opportunity to conduct a full review of long-term and effective reforms in the management and system of the Civil Service.

Roughly, the reviews and reforms consists of four parts:

(1) We will review the permanent and pensionable terms of appointment for the Civil Service to ascertain if this could meet the needs of Hong Kong in the 21st century. We must ensure the recruitment policy of civil servants is more in keeping with the times, sufficiently flexible and cost-effective.

(2) We will conduct a comprehensive review of the pay and fringe benefits for the Civil Service to ensure that they are not out of tune with the private sector or the market. The survey on entry point conducted by the Standing Commission on Civil Service Salaries and Conditions of Service is an important step. On basis of the results of the survey, we will find out whether or not we need to conduct a comprehensive survey on the pay and welfare for the Civil Service. Insofar as long-term targets are concerned, we will consider further the possibility of linking salary increment to performance, which is the usual practice in the private sector.

(3) We will simplify further the procedures for disciplinary action to make the system even more streamlined. In particular, we want the management to place more emphasis on applying strictly the rules for disciplinary action to ensure employees are suitably rewarded or punished so that the image of hard-working employees will not be tarnished by a handful of black sheep.

(4) We will cultivate a management culture basing on effectiveness and spirit of service. We will review the present appraisal system for improvements and any professional training and personal development required for the entire service. We hope that through this we may inject vitality and openness into the service to enable it to continue its service-oriented tradition.

These reviews and reforms are very important. They are especially good for the SAR. I have issued a directive to the Secretary for the Civil Service in this connection. I demand that the work be done in a serious and detailed manner to make sure targets are achieved, with a good measures of continued fairness and openness. I also instructed my Administration to consult the staff side so that there is better communication between staff and management. I will monitor closely the progress of the reform, and I will be supervising this important task together with the Chief Secretary for Administration and the Financial Secretary.

I would like to talk about the ministerial system as well. Some views among the community have it that we must practise the ministerial system in order to solve the various problems confronting us now, including the efficiency of the Civil Service and improvements in the relationship between the executive authorities and the legislature. As I pointed out earlier, it is not the right time yet to consider this suggestion. We have an executive framework with high efficiency and transparency. We have a Civil Service that is honest, law-abiding and highly effective. I think what is most important now is to consolidate our executive framework, listen more to views of the public and respond positively to the views expressed by Members and the public. The ministerial system may mean different things to different people. If one takes it to mean the appointment of non-civil servants to work for the Government, the existing system has already provided a channel for that. If one takes it to mean otherwise, I do not think it is the right time yet. The ministerial system is not the only way to improve the relationship between the executive authorities and the legislature. Nor is it a panacea for all problems. The implementation of the ministerial system involves a change in the constitutional structure and therefore must be carefully studied. The Basic Law has laid down a blueprint for the future political system of the SAR and we should follow that blueprint. Any material change should be considered only after the system has been in operation for some time.

Finally, I would like to talk about the economy. Indeed, it is the economy and the problem of unemployment that the people are most concerned about. In this connection, I have received a piece of bad news as well as a piece of good news today. The good news is that labour and management of the Cathay Pacific Airways have reached an agreement for wages and work arrangement after some hard work, despite the difficult business environment. The bad news is that the Brazilian financial problems are still around, casting uncertainties in the external environment.

I wish to point out that in the past several decades, the opening up of the international market did bring a lot of benefits to Hong Kong. It created huge wealth for the people here. However, the present position is that the open economy of Hong Kong has brought new challenges. We must understand that enterprises in Hong Kong will find competitors not just in other local enterprises. Enterprises all over the world are all our competitiors. We will lose if our costs are too high. The United States faced similar problems in the late eighties and early nineties. After some adjustment, the United States is now very competitive. Our competitors comprise enterprises in the United States, Europe, and other Asian countries, so we must make adjustments in our economy, in our costs. The faster the adjustment is, the quicker the recovery.

The Hong Kong economy was overly heated and there must be an adjustment. The adjustment has taken place and it is an enormous one. We have seen greatly diminished property prices and a rise in the unemployment rate. Wages have dropped too. It is a rather painful process. We cannot but face the reality in the worldwide economy. The Government of the SAR will continue to work hard for the recovery, both long-term and short-term. In the short term, we have increased spending in the fiscal year of 1998. Taxes have been cut to stimulate the economy. In the long term, we have laid down long-term targets and strategies by investing in large-scale infrastructure projects, increasing expenditure on education, encouraging innovation and technology and enhancing our productivity and competitiveness. All these are meant to bring Hong Kong out of the woods the soonest possible. All these are meant to maintain Hong Kong's competitive edge in the long term.

In my policy address, I mentioned four factors affecting the Hong Kong economy: first, the lowering of the interest rate; second, the stability for property prices; third, a stable external environment; and fourth, confidence in ourselves. Now the interest rate has dropped and property prices stabilized. But external factors are after all beyond our control. Recent developments appear to have improved a little bit but what took place in Brazil yesterday reminds us how unpredictable external factors can be.

On the whole, the Hong Kong economy has seen its worst. I expect it will remain at an all-time low for some time because adjustment is taking place. While we are tiding over the difficulty, it is important that we keep renewing our strengths, keep helping each other as we are in the same boat. Fate is in our hands. The future is our making. We must be self-confident. I trust with faith we can achieve our goals. After this difficult period, our economy will revive and we will fare better than ever. Thank you.

PRESIDENT (in Cantonese): Thank you, Mr Chief Executive.

Mr Chief Executive, Honourable Members, the last time the Chief Executive came to this Council to take questions, 27 Members asked questions. Today, while the Chief Executive was still delivering his speech, 18 Members who had not asked questions on the last occasion indicated they would be asking questions and 11 Members who had asked questions the last time indicated their wish to ask questions. I will let Members ask questions in order and I will let those who did not ask questions the last time ask questions first this time. I would request that each Member ask a main question and may ask one follow-up question after the Chief Executive has answered. But the Member who asks a supplementary question must raise his/her hand because I cannot possibly know such intention from the computer. The follow-up question must be about subjects within the ambit of the main question. No new topics shall be introduced. Questions now.

PROF NG CHING-FAI (in Cantonese): Mr TUNG, the Government has announced that it has set up an ad hoc group for the Applied Science and Technology Research Institute. Which is its terms of reference: (1) to put forward some plans for the Commission on Innovation and Technology so that the Commission can make final proposals for the setting up of the Institute, (2) to make proposals to the Government direct for decision, or (3) to make itself a preparatory body for the Institute?

CHIEF EXECUTIVE (in Cantonese): I can tell you with certainty the group is not a preparatory body. It is still about six months before the Commission on Innovation and Technology finishes its work. When it finishes its work we will see how we can move forward. In fact we are anxious to start work on this area. We would like to find out with our colleagues how we may do better with the resources we have invested in innovation and technology. We will be working on this. We will be waiting for the report from the Commission led by Prof TIEN. We will also be working on the matter at the same time. We do not want to lose any more time.

PROF NG CHING-FAI (in Cantonese): Will the Government inform this Council whether the ad hoc group will be working closely with the Commission?

CHIEF EXECUTIVE (in Cantonese): Which ad hoc group are you referring to?

PROF NG CHING-FAI (in Cantonese): The ad hoc group for the Applied Science and Technology Research Institute.

CHIEF EXECUTIVE (in Cantonese): Yes, it will.

MR FUNG CHI-KIN (in Cantonese): In the policy address last year, Mr TUNG said that Hong Kong had to develop its financial industry and become the Manhattan of Asia. When the Chief Executive addressed this Council just now, he pointed out that Hong Kong would still have to go through a long period of tough time because some external factors are beyond our control. Under such circumstances, should we just sit here and wait, or are there any more substantive ideas which can give impetus to reforms and developments in the market?

CHIEF EXECUTIVE (in Cantonese): I think that we must absolutely not just sit here and wait. The development of the financial markets is very important to the future economic development of Hong Kong. When Mr GREENSPAN, the Chairman of the Federal Reserve Board of the United States, visited Hong Kong this time, he said to me that he was sure Hong Kong would play a more and more important role in the international financial scene in the 21st century. While this is a foreigner's view, this is also ours as well. Therefore, in order to ensure that Hong Kong will become one of the most distinguished and outstanding international financial centres in Asia in the 21st century, our colleagues in the Government have been working on many things that should be done, such as how to improve our competitive edge, how to respond to and prepare for Singapore's recent series of actions and challenges to us, how to further improve our rules and regulations in various areas, as well as how to really launch a bonds market in Hong Kong.

MR FUNG CHI-KIN (in Cantonese): I would like to follow up the issue of the development of a bonds market as mentioned by Mr TUNG. Is Mr TUNG referring to the Hong Kong dollar or the US dollar market?

CHIEF EXECUTIVE (in Cantonese): We have always had a Hong Kong dollar bonds market which has been in operation for quite some time. I think that we can exercise a little fit more flexibility and give consideration to both since a US dollar bonds market may not necessarily be impractical.

MISS CYD HO (in Cantonese): It is indeed a most appropriate time for Mr TUNG to come to the Legislative Council today because the Finance Committee is going to discuss tomorrow the post of Information Co-ordinator who is also the spokesman for the Chief Executive's Office. I really want to ask Mr TUNG: Why do you think only an officer of D8 rank can help you do a good job in making press releases? In the past, there was just a D4 officer doing this job and the person who is very likely to take up this new post is only D6 at present. Why do we have to spend so much money to have this job done well?

CHIEF EXECUTIVE (in Cantonese): Miss HO, I think that the principal objectives of establishing the post of Information Co-ordinator is to improve the communication between the Government and the mass media as well as the public, to strengthen the liaison between the Government and Legislative Council Members, as well as people of influence, and, most important of all, to co-ordinate the strategies concerning government information and public relations. In fact, by doing so, I believe both the work of the Government and mine will become more transparent and open. After making reference to many other regions and countries, I find that they also place information co-ordination at a very high position. This idea has been scrutinized thoroughly inside the Government since it was first mooted. We think that this is the right action to take and only by doing so can our goals be achieved.

MISS CYD HO (in Cantonese): We of course agree that the Chief Executive's Office should be more open. But can that degree of openness really be attained by merely filling up the gap between the remunerations attached to points D4 and D8 in the directorate scale?

CHIEF EXECUTIVE (in Cantonese): If this post is taken up by a colleague of higher ranking, I believe it can serve better to give full play to the many functions expected of the post. This was one of the factors we took into consideration.

MR HO SAI-CHU (in Cantonese): Some time ago the Government revised the medium range forecast for economic growth to 4%. Will Mr TUNG tell us what plans he has in mind to realize this 4% economic growth? Our economic growth in the next few years is likely to be minimal, so under such circumstances, 4% will be a very high growth rate. What plans does the Chief Executive have to bring about such high growth?

CHIEF EXECUTIVE (in Cantonese): Mr HO, when we revised the growth rate to 4%, the economic situation of Hong Kong was slightly different from that of today. As to how much economic growth can be achieved in the medium range, the Financial Secretary still needs to make a reassessment together with his colleagues to see if the 4% mark can be attained. We of course hope that it can be done, but we also understand that the economy has not yet recovered at the moment and we indeed have to tide over a certain period of difficulty. However, we will try our best to see if the 4% medium range economic growth can be achieved. I expect that the Financial Secretary will explain in greater detail when he announces the Budget.

MR HO SAI-CHU (in Cantonese): Mr TUNG, it was not a long time ago when we heard that the forecast for economic growth was 4%. Does it mean that, within such a short span of time, the Government may have revised the 4% forecast again? Does the Government not have the confidence to achieve the 4% medium range economic growth and so it has to revise the forecast in such a short time?

CHIEF EXECUTIVE (in Cantonese): I believe we had better leave the details to the Financial Secretary when he delivers the Budget. Fine?

MR SIN CHUNG-KAI (in Cantonese): Madam President, I would like to ask the Chief Executive a question about telecommunications. On 3 September, the Government published the review reports on television and telecommunications at the same time. It was decided that the television market would be opened up in December so that international mass media can enter the Hong Kong market and participate in our competition. However, with regard to the opening up of the local fixed network market, the Government is still fairly hesitant. While the provisional licensing scheme ended last June, the Executive Council still cannot make a decision up to now. Will the Chief Executive inform us if it is the case that a television market without Mr LI Ka-shing's investment can be opened up, whereas a fixed network market with Mr LI Ka-shing's investment cannot be opened up? Do you feel that certain businessmen in Hong Kong are privileged and certain people can even influence government policies?

PRESIDENT (in Cantonese): Honourable Members, Mr SIN, in our rules regarding questions, no matter whether it is a public officer or the Chief Executive that is answering, he should not answer a question on a particular person or a particular event. Therefore, I hope the Chief Executive will answer on principle.

MR JAMES TO (in Cantonese): Madam President, which rule of the Rules of Procedure says so?

PRESIDENT (in Cantonese): Paragraph (a) of Rule 25 of the Rules of Procedure which is about the contents of questions stipulates that "a question shall not include the names of persons, or statements which are not strictly necessary to make the question intelligible". I allowed Mr SIN to make a statement because I believed he was citing an example to illustate the crux of his question.

MR JAMES TO (in Cantonese): Madam President, the crux is that several corporations are involved in the opening up of the telecommunications market. Does your ruling mean that it is completely unnecessary to include any person's name? As far as I understand it, the Rules of Procedure states that if it is necessary to mention names, names must be mentioned. Now the issue does involve a particular corporation.

PRESIDENT (in Cantonese): Mr James TO, I said just now that I had allowed Mr SIN Chung-kai to mention names because I believed he was citing that name to illustrate the crux of his question. However, when the Chief Executive answers this question, he needs not answer the question with relation to that name. He needs to answer only on matters of principle.

MR JAMES TO (in Cantonese): Madam President, this is the freedom of the Chief Executive and there is no need for guidance.

PRESIDENT (in Cantonese): During question time, when I give a ruling regarding the Rules of Procedure, I will always handle in the same manner irrespective of whether the person answering the question is the Chief Executive or a public officer.

MR CHEUNG MAN-KWONG (in Cantonese): Madam President, I would like to consult you on a question. Rule 25 of the Rules of Procedure only outlines the rules for asking questions, but it does not spell out the rules for answering questions. In other words, when a question is raised, if it will make the question more intelligible and if the President permits, the names of persons can be included. As to how the Chief Executive answers the question, it will of course be his own freedom because our Rules of Procedure cannot control how a person answers questions. What the Rules of Procedure does stipulate are the contents of questions but not the contents of answers, right?

PRESIDENT (in Cantonese): Mr CHEUNG Man-kwong, Honourable Members, in this Chamber, when the Legislative Council meeting is in progress, the President's ruling is final. I have been very patient in answering Mr SIN Chung-kai's and Mr James TO's questions. As Question Time is very precious, I have already tried my best to answer you. If Members are still interested in discussing the matter with me, I invite and welcome you to discuss with me after the meeting. However, I do not think that we should use Members' and the Chief Executive's valuable time during Question Time to discuss such details.

CHIEF EXECUTIVE (in Cantonese): With regard to the issue of fixed networks, Mr SIN, it is a very complicated problem. The Government is still studying the issue and hopes to make a decision as soon as possible. But I can tell you that when the Government makes any decision, it will not consider the interest of individual corporations. Rather, it will consider the overall interests of Hong Kong definitely.

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

MR SIN CHUNG-KAI (in Cantonese): Yes.

PRESIDENT (in Cantonese): Please indicate your wish by raising your hand.

MR SIN CHUNG-KAI (in Cantonese): Madam President, I wish to elucidate that ......

PRESIDENT (in Cantonese): Please indicate your wish by raising your hand before asking a follow-up question.

MR SIN CHUNG-KAI (in Cantonese): Madam President, I would like to ask the Chief Executive through you whether the Government will consider the intent of other corporations when it considers if local fixed network licences will continue to be issued, because some companies have already indicated their interest in investing in Hong Kong.

CHIEF EXECUTIVE (in Cantonese): I believe that all factors, including the one mentioned just now by Mr SIN, will be taken into consideration.

MR LAU KONG-WAH (in Cantonese): Madam President, recently, a lot of people go to Shenzhen for consumption. I wonder if the Chief Executive and Mrs TUNG have done so?

CHIEF EXECUTIVE (in Cantonese): Go to Shenzhen for what?

MR LAU KONG-WAH (in Cantonese): Go to Shenzhen for consumption, that is, for leisure. This is not only a transient fervour, this is actually a trend. Just now Mr TUNG said that Singapore is our competitor in business and finance. In fact, our neighbour Shenzhen is likely to become our competitor in other areas such as retail and consumption. I do not know if Mr TUNG has noticed this. Mr TUNG has also mentioned the problem of excessively high costs, and that is indeed a very important factor. I wonder if Mr TUNG has paid attention to that and what solution he would have. In the face of so many competitors, what are Mr TUNG's tactics?

CHIEF EXECUTIVE (in Cantonese): Mr LAU, both I and my colleagues in the Government are deeply concerned about this matter. In fact, I have invited some local economists to my office to discuss the matter with me, as well as to study what would be the most appropriate attitude we should adopt. The conclusion of our study is that such a trend is inevitable. This is point number one.

Point number two is: In the short run, this trend may be a blow to the retail, catering and many other trades in Hong Kong; but in the long run, it may not necessarily be a bad thing to the territory. As consumption in the Mainland is inexpensive, the spending power of Hong Kong people is enhanced and the money they save can then be spent on doing other things in Hong Kong. In brief, this may not be a bad thing. In reality, we cannot close the border and prohibit Hong Kong people from shopping across the border. The most important thing is that, in view of the good economic development in the Mainland today, we have to look and think how we can further benefit from the economic system of the Mainland. While this is the right way forward, we should not be overly defensive and should look further instead, trying to find out how we can gain more advantages when the economy in the Mainland is doing so well.

MR LAU KONG-WAH (in Cantonese): Madam President, while I mentioned earlier that Shenzhen may become our competitor, I know that the Chief Executive has visited some high value-added industries in Shenzhen. In which aspects can the two cities of Hong Kong and Shenzhen form a partnership, especially under the present circumstances of economic restructuring?

CHIEF EXECUTIVE (in Cantonese): In fact, many Honourable Members have also visited Shenzhen which has been developing very fast and well. I believe that we do have room for co-operation in many aspects. While we have 6 million people in Hong Kong, the population of Shenzhen almost reaches 4 million and the whole Pearl River Delta has a population of 20 million. This economic structure is indeed not a small one in which Hong Kong may really play a leading the role. Therefore, I feel that it would be more appropriate if we look at the situation positively.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, I think it is very tragic that a number of old people have died as a result of the cold spell in the past few days. However, in fact, even before this cold spell, many of us, that is, the "employees" of Hong Kong have already felt "coldness" at heart, and since a lot of corporations which are still "making huge profits" have resorted to measures like pay freezes, benefit cuts and layoffs. Everybody are feeling the pinch. Just recently, even a public corporation wholly owned by the Government ─ the Mass Transit Railway Corporation (MTRC) ─ has announced plans to lay off its staff. I wonder if Mr TUNG is aware of this. Has the corporation ever discussed its plan with the Administration? And, does the Administration know whether similar public corporations have followed the guidelines issued by the Administration on pay reduction and layoffs when they take such actions? How does the Administration view the layoffs and benefit cuts introduced by some public corporations? I ask this because they are doing so in spite of the fact that they do not have great financial difficulties. Has the Administration ever helped them to solve their problems so that they do not have to resort to such measures? The Chinese New Year is approaching, so if public corporations do so before the Chinese New Year, they will deal a severe blow to their employees. I would like to know whether the Administration has any plans to help these workers, so that these public corporations will not have to lay off their staff.

CHIEF EXECUTIVE (in Cantonese): Mr LEUNG, I would try to answer the question on two fronts. First, I think we all sympathize with those who are unemployed. In fact, I am sure that no one and no employer would like to lay off their employees and render them jobless. Those who have lost their jobs will have to face the problems of finding enough money for food and clothing, and for the school fees of their children and housing. I fully share their concerns and sympathize with them. On the other hand, many Hong Kong corporations are confronted by with severe challenges and competition internationally, and they actually have great difficulties in continuing their operations. Some corporations are on the verge bankruptcy, and others have to be downsized. These are all the major problems which they are facing at this time of economic adjustment and these are the problems which we cannot evade. We certainly have to try our utmost to help those who are unemployed, and we hope that the Comprehensive Social Security Assistance (CSSA) Scheme can provide a safety net and offer assistance to these people. As to the question on the recent operation of the MTRC, I think we should look at it this way: the MTRC is a corporation, so it should be financially autonomous. It has to raise loans from overseas for the construction of the Tseung Kwan O extension, and it has to be accountable to you and me as to whether it will raise its fares this year and what it plans to do next year. As a corporation, the MTRC should increase its efficiency as much as possible and streamline its structure, so I suppose what they have done is understandable. We deeply sympathize with those who are unemployed. But from the standpoint of the MTRC, there is nothing else it can do, but to take this course of action.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, I think that if the business of public corporations is not good, maybe they can try to find some other ways like lowering their fares to attract more patronage, and other public corporations can also adopt similar measures; in fact, there are a lot of criticisms that, in addition to losing passengers because of high fares, the financial difficulties of the MTRC have also been caused by the operations of the Airport Railway. I think it is most unfair to pass the consequences of these problems onto the employees. I am also worried that this would also set another bad precedent, because some time ago there was the bad precedent of a corporation which laid-off and cut the pay of their staff in spite of the fact that it had made huge profits. If the public corporations are still doing that, then I am afraid that a very bad trend will be created, and under this trend, the ranks of the unemployed will expand. In fact, since the MTRC is wholly owned by the Government, will the Government give more advice in this respect?

CHIEF EXECUTIVE (in Cantonese): I think the Board of Directors of the MTRC has to do what it has to do. I understand that of the staff laid off by the MTRC, 30 of them are senior staff. In other words, both senior and junior staff are affected.

DR DAVID LI: Madam President, in line with the trend of cost reduction, will the Chief Executive advise this Council whether the Government has any plan to lower the charges in regard to government services? I have particularly in mind charges such as rates, water charges, licence fees and air passenger departure tax.

CHIEF EXECUTIVE: I think this is the wish of everybody. In these very difficult times, we must do all we can, but we also need to consider the budget itself. As you can see, we already have a hugh deficit for 1998-1999. Thus, it is a difficult issue. But fortunately, it is an issue that I do not have to answer today, as I shall leave it to the Financial Secretary to answer in due course. (Laughter)

MR DAVID CHU (in Cantonese): As far as economic co-operation between Hong Kong and China is concerned, will the Chief Executive inform this Council whether there is any mechanism for discussing and studying that kind of co-operation between the Special Administrative Region and the Central Government? For example, would the Central Government as a matter of policy encourage private mainland enterprises to come to Hong Kong to invest? We have spent some money as salary and I think we should gain some return. (Laughter)

In Hong Kong, can we make it a policy to facilitate mainland entrepreneurs to come to Hong Kong? In a nutshell, how can we strengthen co-operation to help Hong Kong revive its economy and its future economic development? Thank you, Mr TUNG.

CHIEF EXECUTIVE (in Cantonese): Excuse me, I could not hear the first part clearly. (Laughter)

I thought I was losing my Cantonese. (Laughter)

There are three points to my answer. First, Premier ZHU repeatedly said he would do what he could to help Hong Kong if it needed help. Second, I do think the economic development in China is very good. In the next 10 or 20 years there will be promising developments in China on the economic front. We must find a way to solve the several problems you mentioned. We must find a way to complement each other, to grow together with China economically. So, it is an issue we all want to take up seriously. We will give the matter some careful thoughts, come up with a long-term plan and then make it known to the Central Government for further discussion. As you may have known, in the meantime, a high level meeting between Guangdong and Hong Kong will be held in March for the third time. We will be discussing a number of issues with the Guangdong Provincial Government and our discussions will continue in this direction.

MR DAVID CHU (in Cantonese): I hope Mr TUNG would provide some input in terms of economic co-operation at the Central Government level. Thank you, Mr TUNG.

CHIEF EXECUTIVE (in Cantonese): Yes, certainly.

MR CHAN KWOK-KEUNG (in Cantonese): Madam President, I have to seek the advice of Mr TUNG on one matter. Mr TUNG's family business owns a lot of ships and vessels, right? I believe that Mr TUNG also knows that the shipping industry uses "bosun chairs" to facilitate its painting and maintenance works while the construction industry uses scaffoldings to facilitate the job. Recently, some officials have introduced legislation to phase out this trade. According to the records given to me by the Labour Department, to date there has been no casualty record involving this industry over the past decade. However, the officials have tried to phase out this industry on safety and scientific grounds, and as a result, a few hundred people in this industry will be rendered jobless immediately.

Mr TUNG has introduced a lot of measures to create jobs, right? However, as a result of the introduction of this legislation, unemployment will be created. I wonder what does Mr TUNG think about this?

CHIEF EXECUTIVE (in Cantonese): Mr CHAN, I believe that the Administration has introduced the legislation with improvement to construction site safety in mind; and I believe you are also aware that there is a very high accident rate at construction sites in Hong Kong. I think that the legislation you have just mentioned is part of the efforts we made in improving safety at construction sites.

I cannot see why you are saying that the introduction of this legislation will drive people out of jobs? Why is that these people cannot take up other jobs? Are these professional people?

MR CHAN KWOK-KEUNG (in Cantonese): No, but they told me that they cannot join another trade, therefore, their livelihood will be at stake. At the same time, I have also consulted the Housing Department, several institutions which are concerned about safety and those of the shipping industry, and they all told me that this is a very safe and flexible practice. It is a pity that this high-value added industry will have to be phased out just because someone said that it is unscientific and unsafe. I think that the Government should think of other ways and measures by introducing other rules and regulations to enhance the operational safety of this industry, so that the workers could continue to work in this industry.

CHIEF EXECUTIVE (in Cantonese): Fine, I will follow up this matter.

MR CHAN KWOK-KEUNG (in Cantonese): Thank you.

MR KENNETH TING (in Cantonese): Mr TUNG, the Liberal Party is deeply concerned about the legal and tax problems encountered by Hong Kong manufacturers and enterprises in their mainland operations, and very often these people will feel isolated and caught in dire straits. The Liberal Party and the Federation of Hong Kong Industries are both of the opinion that the existing arrangement of collecting and distributing information on mainland laws and taxation through the Trade Department and the Hong Kong Trade Development Council is too passive and inadequate. At a Provisional Legislative Council meeting last year, one of our colleagues asked about the progress of the discussions between the Hong Kong Government and the Guangdong People's Provincial Government on improving the business environment for Hong Kong businessmen on the Mainland, but to no avail. Could Mr TUNG inform this Council, whether we have achieved any progress in the deliberations in this area since the matter has been under discussion for a few months? Will the Government try to adopt a more proactive attitude and play a more active role in finding ways to help our businessmen?

CHIEF EXECUTIVE (in Cantonese): Mr TING, the Government has always been actively concerned about the issue you raised, but perhaps since we have been reunited with the Mainland for only a short time, operationally we still have to explore ways and means to try to do a better job. I hope we can achieve some progress in this area.

As to the difficulties encountered by Hong Kong businessmen in their investments in the Pearl River Delta, the issue has been raised at the last high level meeting between Guangdong and Hong Kong, to seek ways to improve the business environment for Hong Kong businessmen in the Pearl River Delta. I believe that the topic, including discussions on setting up a one-stop service centre will be brought up again at the meeting in March. I hope that we could have some more concrete news for you after the meeting in March.

MR CHEUNG MAN-KWONG (in Cantonese): Mr TUNG, you have been in the post of Chief Executive for 18 months, but your popularity ratings have always been on the low side. One of the criticisms against you is that, politically you are very conservative. Apart from eliminating the two Municipal Councils, you are now introducing an appointment system into our district councils; in fact, the appointment system was abolished in 1994 during the colonial era. Mr TUNG, do you consider the appointment system for district councils is a retrogression in democracy? Do you think that after the reunification, the election system which you have proposed for the district councils will have a lesser degree of democracy as compared to the election system for the district boards during the last stage of the colonial era?

CHIEF EXECUTIVE (in Cantonese): Mr CHEUNG, it is undeniable that I tend to be rather conservative in my way of doing things. As to the second point which you have just mentioned, that is, on the appointment of members to district councils, the Administration has considered different factors and listened to different voices from various quarters of the community before we make this proposal. In fact, a lot of these voices are supportive of the appointment system. The appointment system really has its advantages for once it is in force, people with professional backgrounds and who would like to work in district councils, and those who are experienced in district work but would not like to go through direct elections, may have a chance to participate in the work of the district councils. In addition to the existing advisory duties, the district councils will have a more important role to play in the future in respect of environmental hygiene and food safety issues. Therefore, I think that it is a good thing to have appointed members on the district councils.

MR CHEUNG MAN-KWONG (in Cantonese): Mr TUNG, if you think that the appointment system is so good, then can you tell me for countries like Britain, United States and other democratic countries, which of them have appointed seats on their district councils? Since you have always said that Hong Kong is an international city, and since your have also admitted that the education level in Hong Kong is not lower than that of Britain and United States, and in view of the fact that we have a long history of elections, why is it that we cannot have fully elected district councils? Why is that some people can join the district councils without going through direct elections? Does Mr TUNG think that Hong Kong people do not have the ability to elect our own district councils and manage our own affairs at the district level?

CHIEF EXECUTIVE (in Cantonese): Mr CHEUNG, all members of the House of Lords in Britain are appointed.

MR CHEUNG MAN-KWONG (in Cantonese): Mr TUNG, I am talking about district councils.

CHIEF EXECUTIVE (in Cantonese): Every country and place will have their own political needs and considerations. As regards the appointment system for district councils, I think that our present way of thinking is correct. I am sorry that I do not share the views of Mr CHEUNG.

MR CHEUNG MAN-KWONG (in Cantonese): Madam President, it seems that Mr TUNG has not answered my question on why is that some people can join the district councils without going through elections, and why is that Hong Kong people cannot have a fully elected district council. Is it because we do not have the ability to do so? I think Mr TUNG has not answered this question. But, of course, it is up to Mr TUNG to answer or not.

PRESIDENT (in Cantonese): If that is the case, I think I will call upon another Member to ask his/her question. I hope that Mr CHEUNG would understand that we are hard pressed for time.

MR CHAN KAM-LAM (in Cantonese): Mr TUNG, you had appealed to the shops in Lei Yue Mun to contribute to the tourist industry in Hong Kong when you officiated at the opening ceremony of Hong Kong Tourist Association sponsored food festival in Lei Yue Mun in 1997. However, recently the Territory Development Department has launched a plan to open up a western coastal road at Tseung Kwan O straddling Lei Yue Mun. This project will last for four years and will completely destroy Lei Yue Mun. I cannot understand why while we are saying that we should develop Hong Kong's tourist industry, some government departments are launching projects which run counter to our intention. I would like to ask Mr TUNG that whether he thinks that we should sacrifice some main tourist spots when we develop our infrastructures?

CHIEF EXECUTIVE (in Cantonese): Mr CHAN, I would look into the issue which you have just mentioned. Very often, the Government does not have a lot of choices for we have to consider our infrastructural needs on the one hand, and protect our heritage and preserve our tourist spots on the other. I think you are right in saying that Lei Yue Mun is a very important tourist spot, so we will look into this issue again.

MR CHAN KAM-LAM (in Cantonese): I hope that after looking into this matter, the government departments will try to think of ways to develop and improve our tourist spots, instead of doing something to destroy them. I hope Mr TUNG would understand this.

CHIEF EXECUTIVE (in Cantonese): Mr CHAN, I do not think that the Administration will deliberately do something to destroy our tourist spots. I am sure that it must be due to other considerations. I will follow up this matter.

MR NG LEUNG-SING (in Cantonese): Madam President, I would like to ask Mr TUNG the following question. Over the years, the Government had spared no effort to combat inflation. However, the recent months have seen a deflation which has made a lot of people worry. May I ask how the Government intends to explain the merits and demerits brought about by deflation to the people; whether it has foreseen the onslaught of the deflation and whether it will adopt measures to deal with it if it persists for a long period of time?

CHIEF EXECUTIVE (in Cantonese): In the short term, prices will drop considerably due to the deflation. This will be beneficial to our present economic readjustment. However, if the deflation persists over a long period of time, it will be detrimental to Hong Kong. As for how we can shake off the deflation gradually, it depends on how the Government stimulates the economy and how consumption can be increased again. If we manage to stimulate the economy or if interest rates drop further, consumption will start to increase and the deflation will be ameliorated. Therefore, we need to work on these areas. In the short term, we should not be overly anxious about it, since it is a good thing for Hong Kong at present and a necessary stage in the process of readjustment.

MR NG LEUNG-SING (in Cantonese): I would like to ask a short follow-up. If that is the case, is the deflation expected to last very long? If so, has the Government considered and forecast what the lowest point of deflation would be?

CHIEF EXECUTIVE (in Cantonese): Mr NG, I really cannot tell you how long it will last. But I hope it will not be too long.

MR FRED LI (in Cantonese): I would like to ask Mr TUNG a question about fair competition and monopolization. Not too long ago, the Secretary for Economic Services and even the "Old" Venerable Mr TUNG clearly stated that fuel prices must go down. It was quite effective. Petrol filling stations immediately slashed their prices by 12% to 15%. However, the price of liquefied petroleum gas has not budged.

I would like to ask Mr TUNG the following. We are very concerned about the internal competition in Hong Kong and we hope that the commercial sector will have an environment for fair competition. At present, many businesses such as the container, energy and even petrol are monopolized by a few cartels. May I ask whether Mr TUNG will support the Legislative Council in enacting legislation on fair competition in order to enhance the international competitiveness of Hong Kong and attract investments from overseas?

CHIEF EXECUTIVE (in Cantonese): Mr LI, just now Mr CHEUNG referred to me as a conservative person. I did not mind at all. Now, I do mind a little your calling me the "Old" Venerable Mr TUNG. (Laughter) Is that supposed to be a respectful address?

PRESIDENT (in Cantonese): Chief Executive, you need not mind at all. They also call me "the 'Old' Venerable". (Laughter)

CHIEF EXECUTIVE (in Cantonese): Let me put it this way: we all share the conviction that it is a good thing to liberalize and introduce competition into the market. However, is there a need to bring in legislation to achieve this end, or do we have other ways to achieve it? Legislation tends to provide an over-generalized approach. In my view, our existing methods are proven and effective. We will examine every trade to decide whether there is a need to introduce competition into it, how to introduce and enhance competition, as well as how to liberalize the market further. In my view, this is a proven and effective method. It is also a better one.

MR FRED LI (in Cantonese): My follow-up question is this: Since Mr TUNG has visited many countries, he must be aware of the experience of a lot of overseas countries. The economic environment and structure of Hong Kong are almost no different from that of overseas, that is, advanced Western countries. Most of these countries have enacted fair competition laws, that is, the over-generalizing or anti-trust laws as Mr TUNG has put it. Why is it that Hong Kong with a system so similar to theirs should not introduce such legislation?

CHIEF EXECUTIVE (in Cantonese): Each country has a different background and there are big and small economic systems. Therefore, we should consider it very thoroughly. The few biggest nations in the world are still talking about liberalizing the telecommunications market but their markets still remain very much closed. Therefore, we must look at the problem very carefully and consider what course to take. However, we have to uphold the overriding principle, which is to introduce competition into and liberalize the market. We must adhere to this overriding principle.

PRESIDENT (in Cantonese): Mr Chief Executive, it is now 4 pm. Originally, you have scheduled one hour for the question session. However, 20 Members are still waiting for their turn to ask questions and seven of them have never had the opportunity of asking questions in previous question sessions. Could you spare us a little extra time?

CHIEF EXECUTIVE (in Cantonese): Yes.

PRESIDENT (in Cantonese): We hope to finish today's question session by 4.20 pm.

MR CHAN WING-CHAN (in Cantonese): Madam President, I would like to seek Mr TUNG's advice on an issue which has greatly bothered me. The unemployment rate stands now at 5.5% with 190 000 people rendered jobless, and more than 400 restaurant and eating establishments were closed down last year, and the 12 000 people who have thus been rendered jobless are now having a very difficult time. With the Chinese New Year approaching, more restaurants and eating establishments may probably close down. Some academics have predicted that such enterprises will close down before or during the Chinese New Year, and the unemployment rate is going to soar. May I ask Mr TUNG what specific measures the Administration will put forward to allay the worries of the public, and whether he has got any good news for me, such as whether there are any effective measures to keep the restaurants and eating establishments afloat so as to lower the unemployment rate among workers in this sector, so that I could pacify the workers who have lodged complaints? Thank you.

CHIEF EXECUTIVE (in Cantonese): Mr CHAN, I am very sorry that I do not have any specific solution for this problem. It is an unfortunate fact that the unemployment rate stands at 5.5% and it is possible that it will go up further. The only thing we can do now is to encourage communication between the employers and employees, so that they could understand each other's problems better. On the part of the Government, we have done several things. From now until the end of 1999, the investments we are going to make in the infrastructure will create about 100 000 jobs, and the Labour Department can offer job placements for around 4 000 people every month; as regards the retraining programme, we will strive to do better in this aspect. However, what we can offer are mostly short-term measures. In the long run, it will all depend on when the economy revives. As I have said, we are still at the bottom of the pit, and we will probably stay there for a while before we can get out of it.

MR CHAN WING-CHAN (in Cantonese): Mr TUNG suggests that we should have better and more frequent communication with our employers, but as soon as we talk to the employers, they will try to persuade us to accept pay cuts or propose a level of pay cuts, so the situation of workers is rather tragic. I also do sympathize with the restaurants and eating establishments which are trying to attract more customers with cut-throat prices. As we can see that the prices of everything are coming down, but the fees charged by the Government on restaurants and eating establishments are going up instead of coming down. I wonder whether the Government will consider to lower the rates of sewage charges and the trade effluent surcharge, so as to improve the business environment and to reduce the burden on restaurants and eating establishments. In this way, perhaps fewer eating establishments will close down. I hope Mr TUNG could consider these suggestions.

CHIEF EXECUTIVE (in Cantonese): Mr CHAN, on the issue of improving the business environment, we have actually introduced a series of measures since February when the Budget of the Financial Secretary was published up to June when various measures on saving the economy were introduced. However, we will certainly look into the suggestions which you have just put forward.

MISS CHOY SO-YUK (in Cantonese): I have the following question for Mr TUNG. It is reported that the number of Form 1 students transferring from Chinese medium secondary schools to English medium secondary schools has greatly increased since the implementation of mother tongue teaching in this term. This indicates that mother tongue teaching has met with difficulties. I know that Mr TUNG has always kept the question of mother tongue teaching to his heart. May I ask what Mr TUNG's view is on this and what concrete measures he has to improve the situation?

CHIEF EXECUTIVE (in Cantonese): Miss CHOY, the purpose of mother tongue teaching is to ensure that all Hong Kong people are biliterate and trilingual. This is a big goal. We do not mean to cause a deterioration of English standard by promoting mother tongue teaching. We hope that Hong Kong people will be proficient in two written languages and be able to speak three languages. While what you said is true, the overall situation is not too bad, judging from the over 300 schools. We are still at the beginning and it seems to work quite well generally speaking. With regard to the implementation of mother tongue teaching, did we not say that a review would be conducted three years after its implementation? I am sure that in the review, we will see in which areas we have done well and which areas need to be followed up and improved.

MISS CHOY SO-YUK (in Cantonese): Mr TUNG, the current figures clearly show that the implementation of mother tongue teaching has met with certain difficulties. May I ask whether the Government will pull forward the timetable for review taking into account the problems that have arisen in the implementation of the scheme?

CHIEF EXECUTIVE (in Cantonese): Actually, I know that the Education Department has been following this closely. If there is a need, we will certainly do it.

MRS MIRIAM LAU (in Cantonese): I would like to ask a question on fuel prices again. If we say that fuel prices in Hong Kong are the highest in the world, I am sure that many people would agree. Since Mr TUNG (I will not call him the Old Venerable Mr TUNG) has publicly stated his concern about fuel prices, oil companies have responded. However, their response is by no means comprehensive and oil companies also said that they could not maintain the price cuts in the long term. Oil companies also pointed out that the reason why fuel prices were so high was because of the extremely high fuel duty in Hong Kong and the high land premium paid by local petrol stations. These two factors have led to high fuel prices in Hong Kong. May I ask Mr TUNG whether the Government would consider reducing the fuel duty and changing its land price policy, so that all fuel prices could be reduced in the long term?

CHIEF EXECUTIVE (in Cantonese): Undeniably, the land price and duty rate are two factors which have contributed to the high fuel prices. Of course, we are aware of the other factors too. It is a good thing that fuel prices have been lowered recently. As for duty or land price, under the present economic difficulties, we are bound to have strong views about individual tax items, thinking that such and such should be done. However, in my view, we have to look at the overall revenue and expenditure position, how much deficit we will have in our budget next year and how much deficit can be considered a prudent budget deficit. We also have to consider the measures and tax regime that will make the economy more effective. These are factors that we must consider. At present, I do not think I can answer your question. We have to make an overall consideration. We must remember that during difficult times, we will examine each and every tax item. I am sure you will agree that we have to consider expenditure and the budget from the overall perspective.

MRS MIRIAM LAU (in Cantonese): I would like to follow up. I believe Mr TUNG understands that diesel prices have a great bearing on the operation of many transport businesses and are directly linked to their operating costs. Just now, Mr TUNG said that in considering tax items, economic factors would be taken into account. If the Government takes the operating environment of these businesses into account, even if it will not reduce other taxes, will it consider reducing the duty on diesel oil in order to alleviate the operating difficulties of the transport industry?

CHIEF EXECUTIVE (in Cantonese): I know that the transport industry is also in a recession right now. However, can the problem be solved through taxation alone or are there any other factors? Actually, other factors are also involved. I am well aware of this. I think we will study this problem from the overall perspective.

MR JAMES TO (in Cantonese): Madam President, I feel uneasy after hearing Mr TUNG's answer to the Honourable LEUNG Yiu-chung's question on the entrenchment exercise of the Mass Transit Railway Corporation (MTRC). I seldom speak on labour issues. Instead, I speak more often on security matters. But the fact is that the current unemployment rate is very high and the public is filled with grievances. I hope Mr TUNG would understand that it is most imperative that the Government or public organizations should stabilize the situation. I do not know whether Mr TUNG considers that it is purely a decision made by the MTRC itself. However, a retrenchment launched at a time when the unemployment rate is so high will give people an impression that the Government "strikes a person when he is down" and deals him a further blow. At the same time, such an impression will be projected onto the Government. If that is the case, I am worried that it is dangerous and it will impact adversely on social stability.

As regards the Comprehensive Social Security Assistance (CSSA), the review we now have focuses on the saving of only a few hundreds of millions of dollars. If we do not expect that the economic situation is so bad that it will take more than a decade to recover, the Government's attempt to save that sum of money may give rise to factors which may seriously affect social stability. Does Mr TUNG think that it worths the while?

PRESIDENT (in Cantonese): Mr Chief Executive, I think the first part of Mr James TO's question is a remark urging your attention to his view while the second part is a question. It would be unfair to other Members if Mr TO has put two questions.

MR JAMES TO (in Cantonese): Madam President, my question is: Would Mr TUNG particularly pay attention to social stability in considering these social policies instead of just saying that the MTRC is governed by the relevant legislation under which it can make independent decisions, or that the entrenchment itself is "understandable" and so on? Should we give regard to the current critical situation when we are looking into a problem?

CHIEF EXECUTIVE (in Cantonese): As far as the MTRC is concerned, the Government will absolutely not strike a person when he is down, as Mr TO said. We will not do that, nor do we have such an idea in our mind. This is purely an independent judgement and decision made from the corporation's own perspective.

Regarding the issue of CSSA, Mr TO, I believe all of you here are sympathetic to the CSSA recipients. They are on the dole aptly because they are unemployed. And we fully sympathize with them. I do not believe that they deliberately fall into the safety net of CSSA. Nevertheless, we all see the spiralling expenditure on CSSA year on year. It will continue to rise rapidly in the future. The question now remains is how resources should be allocated to those who are genuinely in need. The success of Hong Kong has always been attributed to our unceasing efforts to improve ourselves. We do not rely on the Government but on ourselves to strive to survive in adversity. This is the true Hong Kong spirit. In such a hard time, I think we should take care of these people on the one hand and bring this spirit into play on the other.

MR JAMES TO (in Cantonese): Madam President, it is reported that in a recent letter to some public organizations and statutory organizations which are staffed, the Financial Secretary reminded them to take heed of salary adjustments. If these public organizations, in particular those which are wholly funded by the Government, begin to act on his advice, the public will hardly presume that they are making independent decisions without being pushed or the tacit approval of the Government behind the scene in a subtle way. I hope Mr TUNG would understand the importance of stabilizing the situation at such a time. If even the MTRC has to lay off its staff, it will be full of symbolic significance. Does Mr TUNG feel that the retrenchment exercise of the MTRC conducted at such a time has more symbolic significance than that of other private companies?

CHIEF EXECUTIVE (in Cantonese): Mr TO, I think the MTRC must have its own factors to consider when deciding to lay off its staff. It will do so only when it thinks that it ought to. As I said earlier, the MTRC has undertaken to build the Tseung Kwung O Extension; on the other hand, it has to bear a lot of pressure. For instance, it cannot increase fares the next year or this. Furthermore, it has to present a healthy financial statement to others in order to raise finance abroad. Hence, as a corporation, it has a lot of factors to consider. As to whether its decision to lay off its staff will give people a certain kind of impression as mentioned by Mr TO, I think there is a possibility. And that is why the Government has to explain the issue on more occasions. But I believe that Mr TO would also appreciate that it is difficult to give a clear explanation on the matter. But the fact is that the MTRC has arrived at the decision in view of its long-term interests.

MR WONG YUNG-KAN (in Cantonese): Madam President, Mr TUNG, the motion I moved on promoting the development of the agriculture and fisheries industries was carried by this Council on 2 December 1998. In the motion, I urged the Government to establish a research institute on agriculture and fisheries, so that the industries can follow closely the world trend of developing technologically-advanced and high value-added modes of production, and to formulate a long-term agriculture and fisheries development strategy. What has the Government done in these various aspects and what is the progress so far?

CHIEF EXECUTIVE (in Cantonese): Mr WONG, as far as I know, a detailed review has been conducted by the Agriculture and Fisheries Department (AFD) together with the Legislative Council in December. The AFD is now looking into the question you have just raised. I hope that the Government can give you a formal reply after a reasonable period of time and discuss and study further the matter with you by that time.

DR TANG SIU-TONG (in Cantonese): Mr TUNG, apart from providing the public with services in respect of food safety, environmental hygiene and cultural, recreational and sports activities, the two Municipal Councils have provided a training ground for those interested in participation in politics. If the Government dissolves the two Municipal Councils hastily, the relevant services might be affected. Furthermore, the new administrative structure of the Government might not be more effective than the two Municipal Councils in improving municipal services. May I ask Mr TUNG whether the Government will shelve the decision for scrapping the two Municipal Councils and consult members of the public on the new administrative structure, before reviewing again the transfer of the functions of the Municipal Councils and the relevant arrangements?

CHIEF EXECUTIVE (in Cantonese): Dr TANG, in order to enhance food safety and environmental hygiene, as well as improving the cultural and sports services, the conclusion reached after consultation is that another structure should be set up to deal with them. Under these circumstances, the existence of the two Municipal Councils is cast into doubt. The Government has made this decision after consultation. In my view, this is a right approach. Therefore, I do not think that the Government will consider withdrawing its decision.

DR TANG SIU-TONG (in Cantonese): My follow-up question is whether the Government will consult members of the public on the new administrative structure.

CHIEF EXECUTIVE (in Cantonese): We made the proposal for the new administrative structure only after a consultation done by consultants. Therefore, I do not think that there is a need to conduct further consultation.

PRESIDENT (in Cantonese): Last question.

MR ANDREW CHENG (in Cantonese): Mr TUNG, ever since you assumed office, your popularity has steadily declined. Have you ever reviewed your policies? While you may appear benevolent, my impression is that you act in an extremely arbitrary way. You introduce drastic changes in the democratic system, first by "dissolving the Municipal Councils" and then by proposing the appointment of district council members. In dealing with people's livelihood, however, you seem to me to be weak and hesitant. Just now, in answering the question about retrenchments by the Mass Transit Railway Corporation (MTRC), you made light of the matter by saying that it was "understandable". The MTRC is a public utility company wholly owned by the Government. It reduces its staff while making a profit and you explain it away with words like that. To me, that is a sign of your helplessness. With such perverse policies, you yet ask people to regain confidence all the time. Do you not feel that you have lost touch with the public? Do you not feel that there is an increasingly wide gap between you and the public?

CHIEF EXECUTIVE (in Cantonese): Mr CHENG, I do not feel that I have lost touch with the public. Actually, I have many chances to be in touch with the public and I talk a lot with members of different strata and different sectors. I am also well aware of public sentiments. Popularity is no doubt important. However, the most important thing is to have one's own convictions. After listening to the views, one acts according to one's convictions and for the long term interest of Hong Kong. While some actions may be acceptable to everyone, others may not be acceptable to all. However, on the whole, no matter what one does, the important thing is that one acts for the long term interest of Hong Kong people. I do my job with this aim in mind. While my popularity might be a bit low, it is quite natural under the present circumstances. Since the economic environment is so bad, the people are naturally a bit unhappy. I can understand that.

MR ANDREW CHENG (in Cantonese): Mr TUNG, the weather is very cold recently. Do you know how many old people in Hong Kong have died from the cold? Do you know how many people have burnt charcoal to commit suicide recently due to inability to cope? In the past, the Hong Kong Government took the suicide of schoolchildren very seriously. Now, I do not see that Mr TUNG has any concrete measure to prevent these cases. In talking about unemployment, you said you could do nothing about it and that no one was to blame. We are faced with a wave of suicides. Does Mr TUNG know that burning charcoal to commit suicide might have become a trend? These are all very serious social problems. What measures do you have to solve them?

CHIEF EXECUTIVE (in Cantonese): The weather has been very cold recently. Actually, the Government takes this problem very seriously and does a lot of work everyday to take care of the homeless and old people living alone. The Government has really done a lot of work. I find that Mr CHENG might have been too extreme in some of his criticisms. I am sure that the public will agree that the Government has done a lot of work.

PRESIDENT (in Cantonese): I thank the Chief Executive for answering 20 questions.

In presiding over the meeting today, I might not have done too good a job and might have held up Members in asking questions. I hope that I can allow more Members to ask questions next time. However, I have to tell Members that those who had not asked any questions in the last meeting and who raised their hands to ask questions today had a chance to do so, while those who had asked questions last time did not have a chance to do so in this meeting.

NEXT MEETING

PRESIDENT (in Cantonese): I now adjourn the Council until 2.30 pm on Wednesday, 20 January 1999. Will Members please remain standing when the Chief Executive leaves the Chamber.

Adjourned accordingly at twenty-three minutes past Four o'clock.