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Legislative Council (Legco) sitting on 4th February 2004
Speech by Eric Li Ka-cheung
Debate on the Policy Address 2004 (Vibrant Economy)

Madam President,

A dispensable non-event

This year’s Policy Address can be described by the English term “Non-event”. To translate it literally, it is like a “dispensable” event. In meaning, it is more like “routine business” than previous Policy Addresses.

From the preparation of the whole Policy Address to the moment it was announced, and from the response of the citizens to the coverage by the media, and even today’s debate among our colleagues and the demonstration outside, all these lack ‘passion’. The content of the Address itself lacks issues that are truly worth debating. The Policy Address is like a re-arrangement and a summing up of issues that were already known and financial analyses already made. It is hard to identify new ideas in the Address and it is even more insipid than the more important news in general. But in Hong Kong, a strange political environment in which criticisms are plentiful and praise is rare, this could already be a not-too-bad result!

To look at it from another perspective, perhaps it reflects the fact that people do not have a high expectation of the Policy Address. Nor do they want to face big political changes. Deep down, what they want is only a harmonious, co-ordinated, free but stable society in which they can make their own living and be self-reliant instead of depending on the Government to create their tomorrows.

Economic recovery: Opportune time, advantageous terrain

This preference is very evident today with the economy making progress. The theme of economic restructuring and revival has in fact become, to a certain extent, a consensus in society.

To look at the global economy from a macro perspective, it is almost certain that the trend in 2004 is better than that in 2003. The USA, the driver-engine of the world’s economy, saw decent economic growth in 2003. It is believed that this will continue at least until the presidential election in November this year. The property market in England has performed steadily and has successfully avoided deflation. Economic growth has bounced back. The economies of other major economic systems, such as the European Union and Japan, have also been performing better.

China’s economic performance is particularly outstanding. Not only has it enjoyed steady growth in its manufacturing business, it has played a vital role on the international trading stage. It has, on the one hand, significantly increased imported products and services, and has, on the other, repeatedly absorbed US Government bonds to support America’s purchasing power and strength for economic growth. At the same time, our motherland has substantively provided inexpensive value-for-money products for export to directly stimulate and promote international trade activities.

From an overall commercial point of view, the existing low interest rates, the improved profit-making situation, the overall revival of investment confidence have produced “opportune time, advantageous terrain” for the present theme of “Seizing Opportunities for Development”.

Act more and talk less, less talk and more act

I have in previous Policy Address Debates criticized the Government for its shortcoming of “more words than actions”.

In 1998, I used “strong in macro-economics, weak in action plan” to describe the then Policy Address for “having strategies” but “lacking skills” for implementation.

In 2003, I used “more practical and less theoretical and abstract” to describe the change of style in the Policy Address.

This year’s Policy Address displays the “to the point” element everywhere. Such an approach is closer to the realistic situation and meets the basic call for “small government” and “non-interference” of the majority of citizens on the issues of the local economy and people’s livelihood.

My viewpoint on this was in fact adjusted in the 2000 Policy Address. At that time, I already differentiated “internal” and “external” economic activities. I felt that if Hong Kong people were to venture into the Mainland for business activities in line with market developments, the initiative, active participation and support of the Government would be a must. I even hoped that “the Government officials would stop being bureaucratic and should co-operate with members of society to organize structures to progressively fight for and attain fruitful results.” The CEPA arrangement this year should be considered a significant harvest and victory. More Government officials have started leading professionals from the business sector to go to the Mainland for talks. The “Act more and talk less” style should be applauded. For today’s achievements, credit should go to Chief Executive Tung Chee-hwa and the officials who have made their contributions. Although the Policy Address has not devoted much space to blowing one’s own trumpet regarding the achievements, an impartial legislature would owe due recognition to those who deserve it. The arrangement process for CEPA reflected that in its relationship with overseas as well as with the central government, although Hong Kong has the convenience of “opportune time and advantageous terrain”, if it did not have “harmonious personal relationships” politically, then the CEPA arrangement would not have been attained so easily.

Property and stock markets “blossom”, Hong Kong emerges from fatalism

From the internal economic perspective, the public “gazed with eager expectation” and finally saw the happy situation of “the blossoming of both the property and stock markets”. In the Policy Address in 1997 when the property price was still high, I then said: “What the public wants is a “soft landing” for the property market. I strongly urge our government officials to refrain from making intimidating gestures at this time. Such gestures could ruin the property market and thus further weaken our share market and our whole economy.” These words unfortunately became reality. It took Hong Kong six years to re-emerging from this misfortune. During the past seven years, I frequently criticised the Government’s land and housing policy. Now, I hope that we can finally lay off burden and put a full stop to our disagreements on this important policy. I hope all the more that the Government will truly treasure this expensive experience and know clearly that in a market that adheres to a free economic principles, even if a public policy is to be implemented that might interfere with the free market, it should clear distinguish by the government that “what things should be done while some others should never be attempted.”

Fiscal deficit solution faces too many restraints

Although Hong Kong’s economy is doing better – externally we have CEPA, internally we have the revival of the property market, finance and tourism expenditure – the Policy Address has not touched much on the much-expected issue of the fiscal deficit. I am quite disappointed by this. As in the past, I will patiently await Financial Secretary Harry Tang’s budget speech. However, from the 300-plus words of paragraph 41 of the Policy Address, one can already feel that the mission handed down by the Chief Executive to the Financial Secretary is not an easy one, especially from my point of view: (1) the outcome of the civil service salary negotiation has been unfavourable to the Government; (2) the temporary suspension of tax increases and fare increases stated in the Policy Address means relying on the windfall gains of the foreign exchange fund to increase income. This method can only suffice for one or two years. The Policy Address has laid too many restraints and the structural problems of the fiscal deficit will definitely be difficult to solve, especially in light of the increasingly difficult investment environment next year. The only solution is to increase the extent of service reduction. The education service is presently the first to feel the blow. The social welfare services and medical reform are already facing “the approach of gusty wind and rain”. One can see that it is not easy for the Government. Secretary Henry Tang could lead his family business to attain prosperity. He successfully brought his business out of Hong Kong and did a better job than his seniors. Of course, even if the situation of over-expenditure does happen in the future, it will be unconvincing if Councillors use terms such as “squander or playboy” to describe the Financial Secretary. However, to really solve the brain-wrecking problem of the fiscal deficit for Hong Kong, it seems that some prompt display of creativity is needed.

Another point that is worth mentioning is the concept of international asset management centre described in paragraph 33 of the Policy Address.

In my response to Mr. Tung’s first Policy Address in 1997, I mentioned that the Government should “be decisive and identify a position for the economy.” In 1998 the Government used the Asian world city as a response and cited examples such as “New York and London”. This year, “Switzerland” is added.

I agree with this goal, especially as the Mainland possesses enormous assets. However, it still faces foreign exchange restraints for the time being and the laws are not yet perfect. This explains why the position of Hong Kong still has a lot of potential. I take this opportunity to remind Financial Secretary Henry Tang that it was mentioned in the 2002 Budget Speech that consideration would be given to abolishing estate duty to match the policies of investment immigrants and the asset management centre, or at least consideration should be given to waiving the estate duty of non-domiciled residents. CEPA only has over three years of advantageous position and the proposal has gained quite substantial support. This is an opportunity too good to miss. This, together with CEPA, will make the proposal an extremely favourable publicity tool. I hope that that good news is already on its way.

Legislative Council (Legco) sitting on 6th February 2004
Speech by Eric Li Ka-cheung
Debate on the Policy Address (Effective Governance)

Madam President

Attainment of both prosperity and stability

Since the Policy Address in 1997, I have raised the point that if the political reform plan was not proposed as soon as possible, the Policy Address would be like a dull-coloured blueprint. Today, I still maintain this viewpoint. During this year’s Policy Address consultation period, I met with Chief Executive Tung Chee-hwa together with other independent legislators. We even visited Beijing to tell leaders of the Central Government that Hong Kong needs the two legs of politics and economy to walk, in order to achieve a harmonious status for both politics and the people so that both prosperity and stability can be attained.

This year’s Policy Address lacks progress in the area of political reform. Although personally I am slightly disappointed, I felt that the setting up of the three-person Constitutional Development Task Forces by the HKSAR Government to discuss with the central government while extensively listening to public opinion was understandable in view of the serious and significant link between the political reform and the central government as raised by the Mainland legal professionals.

In spite of this, as a legislative representative of the functional constituency, I will not slow my pace. Before the Government reached full speed on this issue, I had prepared long beforehand and proactively initiated consultations on political reform. Since as early as 1998, I have published many articles and have provided a platform for the industry to raise views for discussions and consultation. In the next two to three months, I will consult the views of the industry and faithfully reflect the views of the accounting sector on political reform. Before I complete the consultation, I will try my best to rule out my personal views on the issue.

To fight for political reform through a peaceful and rational mechanism

I believe that the majority of Hong Kong people are in support of the ideas of freedom and democracy within their hearts. However, I do not believe that all supporters would neglect the consequences, and act without first understanding the position of the central government towards this important issue. It is impossible for the SAR Government to fight blindly for the goal of direct elections, without exchanging views with the central government on this serious matter.

The art of politics includes a foundation of philosophy as an ideal. But at the same time, a politician should take into consideration the realistic political and financial situation as well as people’s livelihood. He should adopt a peaceful and rational mechanism, approach issues with a fair attitude and finally accept a negotiated end result. This is the function of politics. As politicians, we should adopt this goal as our basis to serve our people. We should not use important decisions that involve the future of Hong Kong as issues to muster greater personal political gain.

Spring arrives late, but prologue starts at last

With regard to the amendment to the motion proposed by legislator Yeung Sum, I find it hard to support. Of course I understand that as crusaders for democracy, Yeung Sum and his democratic colleagues would feel frustrated by the lack of progress made in this respect. I also understand the need for the Government to require caution in the handling of this issue. This is why I personally made a public appeal immediately after the Policy Address that while we conduct discussions with the central government on the legal explanations pertaining to the Basic Law, we should also encourage our citizens to express their views. Related consultative work can be conducted at the same time and this will avoid delaying the political reform review. Chief Secretary Donald Tsang’s previous announcements have already confirmed that the Government will also adopt this kind of approach now. I therefore feel that it is not necessary to denounce the Government. Although the work of political reform review is like the late arrival of spring, this year’s Policy Address has finally raised the curtain.

Emphasis on middle class a correct approach

History has shown that what the authorities need to fight for is a solution that can be accepted by the majority, and not necessarily a solution that is sought after by the minority. It can therefore be seen that the opinion of the middle class, which seldom participates in politics or expresses a political opinion, is of paramount importance. In handling the issue of political reform timeframe, paragraph 72 of the Policy Address stated that emphasis is attached to the middle class. This thought at least showed that we have taken the right approach. But I must remind the Government that the inclusion of over 100 middle-class representatives in the consultative structure does not equate to listening to the views of the middle class. The general impression of middle-class people is that they are a core group of community members whose level of knowledge is higher, opinion more professional and independent, and whose political inclination is diverse.

It is however a pity that up to now, the debate on political reform review is still more inclined to the extreme views between the democratic party and the conventional party. Those with a milder and more neutral inclination not only lack a platform but have also been brushed aside by those with more radical thoughts. It is not until today that the milder views are acknowledged by more people.

As a Legislative Councillor, I am very fortunate to be able to have the opportunity to openly raise concrete suggestions. These are the views mentioned in the publication sent to the Hong Kong Society of Accountants in February – that the political reform be conducted in three stages to attain universal suffrage for the Legislative Council and the Chief Executive. The first stage is to increase the number of directly-elected seats under the existing system; the second is to turn the functional constituencies and the selection committee into a nomination committee; and the third is to reach the goal of universal suffrage in the mid term of the 50-year Basic Law structure.

This timeframe can even adopt a mechanism for a comprehensive survey so that when discussions are mature and the opportunity is ripe, the ultimate goal of the Basic Law – universal suffrage – can be attained earlier. My concept regarding the timeframe and the ‘trigger’ mechanism to handle the issue of political reform is not new. As early as 1988 when I took part in the consultative work of the Basic Law, I already raised a similar model. The background for raising this concept then was because the political reform was a massive project that involved complicated issues of entrenched interests. Besides, it was easy for society’s views to go extremes and create diversion, eventually causing Hong Kong to pay dearly for these internal conflicts. It was for this reason that I did not propose to focus on the first two elections but rather to adopt a visionary approach to build the future and to avoid the repetition of raising the same issue, causing society undue regular diversion and aggravating the unstable factors for the community.

In my speech concerning the economy, I commended the Chief Executive and the Government officials for their achievements in fighting for CEPA. In my criticism regarding the discrepancy in the land and housing policy, I accept that the SAR Government has attempted to right the wrong and hope that we can put a full stop to this issue.

In the area of political reform, the SAR Government led by Chief Executive Tung Chee-hwa has given an inconsistent performance that lacks a clear direction and suffered a late start. However, we still have two, three more years. If the Government is as determined as it was in achieving CEPA, and as respectful and modest in facing the public and the different views as it is in its attitude towards the Central Government, I believe that it will not be difficult to accomplish this great historic mission before 2007 and to draw a beautiful full stop for the SAR Government in the after-1997 history.

I earnestly wish that this will be another good deed accomplished by Chief Executive Tung Chee-hwa for the people of Hong Kong before his term ends.

Madam President, I support the motion.


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