|The notion 'Hong Kong people ruling Hong Kong' is not
restricted to the policy-making power of the people of
Hong Kong in the political sphere. It also encompasses
public knowledge of, and participation in, the monitoring
of the huge assets which are controlled by the government
but belong to you and me.
We know little about these assets, even as professional
accountants. The government has much to do to enhance
transparency so that the people of Hong Kong are better
informed about the management of public finances and
to ensure that the government's decisions on fiscal
policy do not become the bargaining chips of a handful
of political groups.
In these last days before the transition, the Chinese
and British Governments should work closely in preparing
the 1997/98 Budget. Before the first SAR Government
is set up, the Administration should provide the Chinese
Government with plans relating to all post-97 long-term
investments, infrastructure projects, and major policy
changes in our public institutions.
The transfer of government assets should be treated
as an important part of Hong Kong's change in sovereignty.
This could take the form of an internationally recognised
agreement, under which the transfer procedures and the
financial obligations of each government are clearly
stated. For example, the British side could endorse
the list of public assets prepared by the government
and assist in recalling external loans, while the Chinese
side could take responsibility for acknowledging the
future SAR's liabilities. Both governments must seek
international recognition of the agreement and present
regular progress reports to the public.
Following the change of sovereignty, the Chinese Government
should put into practice the principle of 'Hong Kong
people ruling Hong Kong' and not interfere in Hong Kong's
internal affairs. Among the many pressing matters the
people of Hong Kong will face, there are a number relating
to the management of public finances.
Large amounts of capital will be released, including
the Land Fund and the minimum fiscal reserve of HK$25
billion as agreed by the Chinese and British Government.
Long-term plans are needed to fully utilise such an
enormous sum. The government's investments should not
just serve the interests of individual government departments
or corporations in the public sector. Rather, they should
serve the long-term overall economic interest of Hong
Kong, ie improving the local investment environment.
Large-scale infrastructure or investment projects should
proceed steadily to avoid overheating the economy and
causing short-term inflation.
A Venture Capital Fund and a Mandatory Provident Fund
(MPF) should be established. The cost of running a business
today are so high that it is virtually impossible for
young people and salary earners to start their own businesses.
The long-term purpose of establishing a Venture Capital
Fund is to preserve the dynamic entrepreneurial spirit
and the economic vigour that characterises Hong Kong.
The MPF aims to bring about a stable society and provide
security for our aging population. Managing such an
enormous amount of retirement funds will be a great
challenge for the future SAR Government. The people
of Hong Kong must make an effort to understand how this
money is managed and the associated risks involved.
The Exchange Fund is another colossal asset that belongs
to the people of Hong Kong. A healthy foreign exchange
reserve will ensure that the strength of the Hong Kong
dollar remains stable. Yet, at present, the people of
Hong Kong only have a superficial knowledge of the Exchange
Fund and its operation. A positive step forward would
be to disclose more information about the Exchange Fund's
investment accounts and provide the public with more
opportunities to participate in its monitoring.
Effective ways to strengthen the monitoring of public
bodies and trading funds must be found. At present,
public bodies are still not fully aware of the need
for internal monitoring. It is a matter of urgency,
therefore, that sound corporate governance be introduced
to ensure that these bodies become fully accountable
to the public. Measures which should be introduced include:
audit committees; the appointment of independent directors;
the stipulation of qualifications of chief financial
officers; and a clear definition of the residual powers
of the Director of Audit. Public consultations should
be held to help the public better understand the operation
of public bodies.
In addition, the management of these bodies should
promote transparency and display a high degree of integrity
in their corporate dealings. More thought should be
given to ways to disclose information to the public.
Consideration should be given to defining parameters
for the type of information disclosed and to following
the example of listed companies by announcing major
plans, transactions, tenders for contracts, consultation
studies and projects.
Trading Funds are subject to several operational constraints:
the stance of trade unions; civil servants' conditions
of service; and the limited marketability of the services
provided. In an open market, these services may be at
a disadvantage when competing with those provided by
the private sector. Until the cost-effectiveness of
these services is improved, the setting up of any new
funds should be postponed while those already approved
should proceed with caution.
The management of public finances is monitored via
three main channels: LegCo and its committees; pressure
groups; and the media.
From the legislature to the polulace, from the independent
watchdogs set up by the government to individuals and
community organisations, all must work together to ensure
that the management of public finances is carefully
monitored so that the resources of our society are properly
The effects of an executive-led government is much
more evident in the shaping of fiscal policy than of
any other public policy. The management of public finances
is now almost exclusively in the hands of the government.
Let us use the opportunity provided by the transfer
of sovereignty to set up an effective monitoring system
and learn more about public finance.
Accountancy Functional Constituency