Members present the president the honourable andrew wong wang-fat, O. B. E., J. P
PRESIDENT: Council shall proceed to a division. PRESIDENT
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- DR LAW CHEUNG-KWOK to move the following motion
- DR LAW CHEUNG-KWOK
- PRESIDENT
- MR JAMES TIEN
- HONG KONGS ECONOMY MR ALLEN LEE to move the following motion
- MR ALLEN LEE
- DR HUANG CHEN-YA
PRESIDENT: Council shall proceed to a division. PRESIDENT: Will Members please register their presence by pressing the top button in the voting units on their respective desks and then cast their votes by pressing one of the three buttons below? PRESIDENT: Before I declare the result, Members may wish to check their votes. Are there any queries? The result will now be displayed. Mr Frederick FUNG, Mr LEE Cheuk-yan, Mr CHAN Kam-lam, Mr CHAN Wing-chan, Miss CHAN Yuen-han, Mr CHENG Yiu-tong, Mr CHEUNG Hon-chung, Mr CHOY Kan-pui, Mr IP Kwok-him, Mr LAU Chin-shek, Dr LAW Cheung-kwok, Mr LEE Kai-ming, Mr LEUNG Yiu-chung, Mr Bruce LIU, Mr MOK Ying-fan and Mr YUM Sin-ling voted for the amendment. Mr Allen LEE, Mrs Selina CHOW, Mr Martin LEE, Mr SZETO Wah, Mr Edward HO, Mr Ronald ARCULLI, Mrs Miriam LAU, Mr Albert CHAN, Mr CHEUNG Man-kwong, Mr CHIM Pui-chung, Mr Michael HO, Dr HUANG Chen-ya, Miss Emily LAU, Mr LEE Wing-tat, Mr Eric LI, Mr Fred LI, Mr Henry TANG, Mr James TO, Dr Samuel WONG, Dr Philip WONG, Dr YEUNG Sum, Mr Howard YOUNG, Mr WONG Wai-yin, Mr James TIEN, Mr Andrew CHENG, Mr Anthony CHEUNG, Mr Albert HO, Mr LAW Chi-kwong, Mr TSANG Kin-shing and Dr John TSE voted against the amendment. THE PRESIDENT announced that there were 16 votes in favour of the amendment and 30 votes against it. He therefore declared that the amendment was negatived. PRESIDENT: Dr LAW Cheung-kwok has also given notice to move an amendment to Mr James TIEN's motion. His amendment has also been printed on the Order Paper and circularized to Members. Now that Mr CHAN's amendment has been negatived, Dr LAW may move his amendment now. DR LAW CHEUNG-KWOK to move the following motion: "To delete "lowering the corporate profits tax and salaries tax immediately in order to" and substitute with "distributing immediately part of the accumulated fiscal surplus to the residents of Hong Kong on an equitable basis, so as to encourage consumption,"." DR LAW CHEUNG-KWOK (in Cantonese): Mr President, I move that the Honourable James TIEN's motion be amended as set out under my name in the Order Paper. Question on Dr LAW Cheung Kwok's amendment proposed. PRESIDENT: Mr James TIEN, do you wish to speak on Dr LAW's amendment? You have a mere balance of 15 seconds. MR JAMES TIEN: No, Mr President. Question on Dr LAW Cheung-kwok's amendment put. Voice vote taken. THE PRESIDENT said he thought the "Noes" had it. Mr Frederick FUNG claimed a division.
Mr Frederick FUNG, Dr LAW Cheung-kwok, Mr Bruce LIU, Mr MOK Ying-fan and Mr YUM Sin-ling voted for the amendment. Mr Allen LEE, Mrs Selina CHOW, Mr Martin LEE, Mr SZETO Wah, Mr Edward HO, Mr Ronald ARCULLI, Mrs Miriam LAU, Mr Albert CHAN, Mr CHEUNG Man-kwong, Mr CHIM Pui-chung, Mr Michael HO, Dr HUANG Chen-ya, Miss Emily LAU, Mr LEE Wing-tat, Mr Eric LI, Mr Fred LI, Mr Henry TANG, Mr James TO, Dr Samuel WONG, Dr Philip WONG, Dr YEUNG Sum, Mr Howard YOUNG, Mr WONG Wai-yin, Mr James TIEN, Mr LEE Cheuk-yan, Mr CHAN Kam-lam, Mr CHAN Wing-chan, Miss CHAN Yuen-han, Mr Andrew CHENG, Mr CHENG Yiu-tong, Mr Anthony CHEUNG, Mr CHEUNG Hon-chung, Mr CHOY Kan-pui, Mr Albert HO, Mr IP Kwok-him, Mr LAU Chin-shek, Mr LAW Chi-kwong, Mr LEUNG Yiu-chung, Mr SIN Chung-kai, Mr TSANG Kin-shing and Dr John TSE voted against the amendment. Mr LEE Kai-ming abstained. THE PRESIDENT announced that there were five votes in favour of the amendment and 41 votes against it. He therefore declared that the amendment was negatived.
Mr President, I am not asking the Government to spend all the $150 billion. What I am suggesting is to use the income generated from the $150 billion to cover part of the recurrent expenditure this year to make up the $180 billion revenue originally budgeted to come solely from corporate profits tax, salaries tax, land auctions and charges. Am I asking the Government to cut government expenditure as my motion will cost the Treasury billions of dollars? No, I am not asking the Government to cut its expenditure. I do not have any comments on housing or medical expenditures. I am only asking whether we can, from an accounting point of view, make use of the income generated from the $150 billion so that this amount of reserves will not continue to snowball. Growth in reserves is certainly a good thing. But in view of our unfavourable economic situation, what we need to do is to make use of the money for one or two years down the road until 1997 in the hope that we can have a smooth transition. If so, investors will restore their confidence in Hong Kong which will see an increase in investment. Our economy will then be revived and the unemployment rate will be reduced. By that time, should the Government intend to raise the tax rates again, we would not oppose it. Mr President, I so submit. Question on Mr James TIEN's original motion put. Voice vote taken. THE PRESIDENT said he thought the "Ayes" had it. Mr James TIEN and Dr Philip WONG claimed a division.
Mr Allen LEE, Mrs Selina CHOW, Mr Martin LEE, Mr SZETO Wah, Mr Edward HO, Mr Ronald ARCULLI, Mrs Miriam LAU, Mr Albert CHAN, Mr CHEUNG Man-kwong, Mr Michael HO, Mr HUANG Chen-ya, Miss Emily LAU, Mr LEE Wing-tat, Mr Eric LI, Mr Fred LI, Mr Henry TANG, Mr James TO, Dr Samuel WONG, Dr YEUNG Sum, Mr Howard YOUNG, Mr WONG Wai-yin, Mr James TIEN, Mr Andrew CHENG, Mr Anthony CHEUNG, Mr Albert HO, Mr LAW Chi-kwong, Mr SIN Chung-kai, Mr TSANG Kin-shing and Dr John TSE voted for the motion. Mr CHIM Pui-chung, Mr Frederick FUNG, Dr Philip WONG, Mr LEE Cheuk-yan, Mr CHAN Kam-lam, Mr CHAN Wing-chan, Miss CHAN Yuen-han, Mr CHENG Yiu-tong, Mr CHEUNG Hon-chung, Mr CHOY Kan-pui, Mr IP Kwok-him, Mr LAU Chin-shek, Dr LAW Cheung-kwok, Mr LEE Kai-ming, Mr LEUNG Yiu-chung, Mr Bruce LIU, Mr MOK Ying-fan and Mr YUM Sin-ling voted against the motion. THE PRESIDENT announced that there were 29 votes in favour of the motion and 18 votes against it. He therefore declared that the motion was carried. HONG KONG'S ECONOMY MR ALLEN LEE to move the following motion: "That, as Hong Kong's economy and market conditions show a trend of slowing down and local unemployment figures are on the increase, this Council urges the Government to tackle the root of these problems and expeditiously formulate and implement effective measures, including short-term, medium-term and long-term programmes, to stimulate economic development and encourage local and foreign investments in Hong Kong in order to increase employment opportunities for local workers." MR ALLEN LEE (in Cantonese): Mr President, in the motion debate on the policy address at the end of last month, many colleagues in this Council made it the focus of their speeches the economic situation and problems of Hong Kong. One can infer from that the seriousness of the matter is not something which we can turn a blind eye to. In spite of the fact that the Government is still humming and hawing and refusing to tell Members the prospect of today's Hong Kong economy, the situation is no longer as uneventful as one had thought. This Monday the Government announced that the economic growth for the second quarter was 4.8%. This figure has already given a clear warning that we must act to revitalize the economy of Hong Kong. Must we launch a "rescue campaign" only when the economy registers negative growth? Would it not be too late if we waited tile then? As elected Members of the Legislative Council, we have the bounded duty to urge the Government to tackle the problem of its root by formulating and implementing effective measures to stimulate economic development and enhance investment desire, so as to increase the job opportunities for local workers. What is Hong Kong's economy like now? According to various data, study reports as well as the experience I have gathered in community work, we all can see that the overall economic growth is continuing its downhill slide, the growth in consumer spending has hit an all-time low for the past six years and there is a rise in the number of unemployed or underemployed people. It is unfortunate that both the Governor and senior government officials have told us that, relative to other countries, these figures are "not too bad". And what is more, they quote selectively from overseas study reports that Hong Kong is still doing well and that there is little to fear when the economy has slowed down a bit. I hope that when the Governor goes on a tour of inspection next time, he will ask just any member of the public or any taxidriver and he will see clearly that the present Hong Kong economy and the livelihood of the public are not as optimistic as he had put it. We can be aware of the many bad signs of the economy just by looking at various social phenomena. If we give it more thorough thought, there are really quite a number of hidden crises. For example, in Hong Kong where the labour risk is not high, if some sizeable enterprises lay off employees within a year or so as a result of recession, it can be foreseen that as unemployment gets worse serious strikes by works may occur. When labour problems worsen and the conditions for running businesses have not improved, this naturally will directly affect investors' decisions, and Hong Kong companies would even go and find some better places elsewhere to run their businesses. This is no Munchausenism. Companies which have been operating in Hong Kong for many years are moving to places like Singapore, and such is no news to us in recent years. Another reality is that the economy of Hong Kong has slowed down. And it is not, as some senior government officials have claimed, "a cyclical slowdown of the economy" which would reverse itself and pick up speed again after natural adjustments. In fact, the slowdown of the economy of Hong Kong is structural in nature. In short, it is because the Government has failed to recognize the impact on population quality as a result of population movements, and has at the same time paid no attention to the specific difficulties of local employers and employees caused by the industrial transformation. When all these problems add together, we can hardly believe that, just by relying on the strategy of "natural adjustments", we can get the people of Hong Kong out of the predicament of an economic downhill slide. Mr President, people always look forward, and people who make Hong Kong their homes must look forward even more positively. Therefore, we must take up the mission and put forward phased proposals which will stimulate the economy. Members can hold exhaustive discussions on the proposals and urge the Government to implement them vigorously. For this reason the Liberal Party is actively making recommendations to the Governor for the purpose of stimulating the economy. First of all, I would like to speak on some short-term measures. The Liberal Party firmly believes that freezing various government fees and charges for one year can help reduce inflation, and such move can also play a leading role in this respect. In its financial management, the Government should seek to "use for the benefit of the people what is obtained from them and return wealth to the people". This represents a cycle in public finance determined mainly by the overall economy of Hong Kong as well as the Government's financial situation and fiscal reserve. The Government is duty-bound, where it is financially capable, to take the lead in reducing the expenditure pressure on members of the public and the business sector. The Government has a reserve of $150 billion at present; in comparison, the $2 billion in relation to the freezing of government charges represents a mere 1.33% of the reserve. To a government which serves the people, such an amount is absolutely well within its affordability. Moreover, the Government had initiated and implemented fees freezing measures in 1991 to combat inflation. The Government is not a profit-making organization and does not have to try its best to "make" profits. But even if the Government actually sees itself as a business venture, it is high time that "shareholders shared their dividends". The Financial Secretary has remarked that it would be an exceptional move for the Government to freeze charges. In our view, such an argument is in no way valid. I have just said that it would be no exception, it was something we had done before. That the Government is prudent in financial management does not mean that it should stick to conventions. The Government should make suitable and flexible adjustments according to need. Moreover, the Government's budgets over the years sought to make adjustments to the economy, did they not? Rates, tax rates, labour policies and even property price dampening policies are all measures that have impacts on the economy and the operation of the market. It is not for the Government to say that these are all measures made coincidentally. The Hong Kong economy is not independent from the world economy. Just like most countries or regions in the world, the economic operation of Hong Kong is directly or indirectly influenced by the Government. Therefore, if what the Financial Secretary said last week to the effect that "the role of the Government should be one of maintaining the stability of the overall economy and creating a favourable environment for commercial development" was true, then the Government should agree to this short-term measure. Furthermore, the Liberal Party is of the view that before any public utility company raises its charges, consideration should be given to the present economic situation as well as the possible impact on the economy the increase will have. The Liberal Party's recommendations also include relaxing the restrictions on the mortgage of private property. In this connection, we feel very disappointed that the Secretary for Economic Services has rejected the recommendation, and that is something we must follow up on. This is because an active property market has a positive impact on both the economy and employment. A lot of related businesses such as construction, interior decoration and property dealings are affected by the restrictions on the private property mortgage. If we insist on imposing strict control of it, it will help neither the labour market nor the spending power of members of the public, still less the potential first-time home buyers. Apart from creating job opportunities, the Government, in our view, plays an indispensable role in helping the market by cracking down on illegal workers and checking whether non-domestic jobs are being taken up by overseas domestic helpers. As to the views and recommendations in relation to tax reduction put forward by the Liberal Party earlier on, what the Honourable James TIEN said and explained in detail represents the position taken by the Liberal Party. What has disappointed me is that the Secretary for the Treasury is actually so obstinate that he sticks to the wrong view that the tax reduction proposal is made for political reasons. I now make a solemn declaration and I ask senior government officials to listen to this: we do so for economic reasons, not political ones. Mr President, as for medium-term measures, we believe matters should be dealt with in three aspects which are: industrial development, labour and the competitiveness of Hong Kong. As we can see, the Government has not been making any effort in the planning of economic and industrial development. This has resulted in local workers being unable to receive suitable training at the time of industrial transformation which had been anticipated. This has brought about great difficulties in job matching as can be seen now. In addition, about 500 000 Hong Kong people who have received higher education have emigrated to overseas countries in the past 12 years, and most of the first-generation immigrants from China are holding jobs of relatively low level. Such kind of population shift and change in quality has eventually led to the imbalance in the supply of and demand for lower level jobs as well as a rise in the structural unemployment rate. For this reason, it is not for the Government to say rashly that the efforts to assist small and medium scale enterprises of Hong Kong should be given up. Instead, it should find out as soon as possible how to match Hong Kong's industrial development with neighbouring regions so that the enterprises concerned would not close down when they are unable to carry on with their businesses. In the debate last week, the Financial Secretary said that it would not be feasible to set up an Economic Development Board, and he doubted whether such a body should be vested with powers and assigned functions. Our view is that the Financial Secretary deliberately shifted the focus to minutiae. We believe the matter hinges on the premise that the Government must admit there is the need to set up this body and have it entrusted with the specific responsibilities for the tasks mentioned above. These tasks are: to find out whether or not the competitive edge we have been enjoying would last, to find out why companies are moving out of Hong Kong one after another in recent years, to take the initiative in working together with the business sector to formulate countermeasures and to find out why Hong Kong cannot be as attractive as Singapore to investors. Of course, these tasks are more demanding than "natural adjustments", but it is our belief that government officials motivated by a sense of mission who make Hong Kong their home will have the courage and sincerity to take up the challenge of these tasks. As for measures the Government will have to implement in the long run, the emphasis should be on how Hong Kong can be made more attractive and how more job opportunities can be created. Hong Kong's infrastructure projects and development of the tourist industry have caught the attention of local businessmen as well as overseas investors. If the Government is determined to take up its responsibilities, not only has it to speed up the construction of public housing, but it has also to sell public housing units at low prices so as to ensure cash flow and to make it faster for the target of home ownership to be achieved. At the same time, the Government must speed up the infrastructural projects as this will also help improve the transport of Hong Kong. In order that the competitive edge we have been enjoying can be maintained and Hong Kong is made attractive to investors, we must not sit tight and wait for miracles to happen. Instead, we should strive more positively to develop our superior position in areas where Hong Kong has been possessing an edge. Hong Kong's capabilities in financial business, transport, telecommunication and even advanced technology are areas where long-term development should be strengthened. In front of the world, we must not deceive ourselves as well as others in thinking that Hong Kong will be sure to play the leading role in the region's economic development. Time will not stop and wait for the Government because of its lack of foresight. We must plan and act quickly, otherwise Hong Kong's status as "the Pearl of the Orient" will surely become untenable. Mr President, with these remarks, I move the motion. Question on the motion proposed. DR HUANG CHEN-YA (in Cantonese): I already spoke on the short-term financial policy during the last debate. I would now focus on the medium and long-term measures that would be conducive to promoting the development of the industrial and commercial sector and to boosting employment opportunities, so that the "wage earners" would have jobs to do. Asian Business published this moth the result of their Confidence Survey. It was shown that the Hong Kong Confidence Index among the business community was lower than the Confidence Indexes for other regions in Asia. They believed that the investment risk is derived mainly from political volatility, unfavourable rate of economic growth, inflation and high wages. In 1994, the Hong Kong Government conducted a survey on 1 846 regional headquarters of foreign-owned companies and 433 foreign-owned manufacturers. It was found that the worsening political situation, rent, wages and inadequate labour skills are the major problems. Therefore, we feel that the Government must address these problems and formulate policies to improve the economy of Hong Kong. Let us look at several macro-economic problems first. The uncertain political prospects have not only curbed the desire to invest, but have also placed Hong Kong in a situation where it has to stick to the linked exchange rate. We therefore cannot control the inflation rate through the implementation of policies on the interest rate. However, let him who tied the bell on the tiger take it off. To enhance people's desire to invest, the Chinese Government must give up its ultra-leftist policy that it has always been subscribing to and stop damaging the post-1997 confidence of the people of Hong Kong in such aspects as human rights, freedom and democracy. If such is the case, I am sure that the Hang Seng Index will go beyond 15 000 tomorrow and may even breach 20 000. The economy of Hong Kong will surely grow substantially within a short time. I hope that the Democratic Alliance for Betterment of Hong Kong (DAB), the Hong Kong Association for Democracy and People's Livelihood (ADPL) and the Liberal Party (LP) will support this suggestion. The rise in wages is another problem faced by the industrial and commercial sector. As a matter of fact, during the 10 years between 1982 and 1992, wages grew only by 15% in real terms. It is therefore evident that the "wage earners" did not benefit from the annual GDP growth rate of above 5 to 6% in the past years. In the past two years, real wages dropped in many industries and sectors. Therefore, high wage is in fact driven by high inflation. In other words, only the nominal wage is high. Therefore, to solve the problem of wages, we must control inflation. In view of this, we believe that the Government must, in the long run bring in competition and increase productivity. We can see that since the bringing in of competition to the telecommunications industry, the charges for long distance calls in Hong Kong are now far below those in Singapore. That would be an attraction for many foreign-owned companies. It is therefore evident that competition is of paramount importance. In addition, we should also restrict the public utilities and the three railway companies from raising their fares. Government charges and public housing rental should also be frozen in the short term, so that inflationary pressure can be lessened. The Government should also formulate a stable and far-sighted land supply policy, so as to curb soaring property prices and rent which would then fuel inflation. I will focus on how the Government can promote the development of industries and the service sector. We have just proposed that the profits tax be cut to enhance industrial development, thereby easing the unemployment problem among the manufacturing workers. We are all aware that a profits tax cut and assistance to industries through subsidies are very similar tactics in terms of financial management. The DAB has just fiercely attacked our viewpoint. I hope that they are not of the view that only state-owned enterprises are worth supporting while private-owned enterprises are not. I hope that they can elucidate this point later. So far, the industrial products of Hong Kong are mainly contracted out to Hong Kong factories for manufacture by foreign clients who provide the parts in their primary and unprocessed form. Therefore, the industry of Hong Kong remains dominated by small and labour-intesive factories. The mere manufacturing of such products yields only very low marginal profits and demands only a low level of skill. Therefore, in face of competition from other regions, the industries of Hong Kong will of course withdraw from Hong Kong and move to the mainland and other regions where the wages are much lower. That would of course drive Hong Kong workers into the plight of having to either switch jobs or suffer from unemployment. In view of this, to ensure that the manufacturing industry can continue to survive in Hong Kong so that the workers in the industry can continue to have employment, manufacturers must switch to the manufacturing of self-designed products which would yield higher profits. This up-market change would demand higher productivity and labour with higher skills. In this way, the manufacturers would not so readily move away and would bring to Hong Kong job opportunities. However, in the past 10-odd years, experience shows that only rare examples of success can be found in which Hong Kong manufacturers can by their own efforts raise their technological level. In view of this, the Government must lend a helping hand to the manufacturing industry so as to bring to it up-market changes. In fact, there are lots of things that we can do to promote up-market changes in our industry. (1) the Government should step up the training of technologically qualified people. The annual funding required for the operation of the industrial technology institute of Taiwan is $1.5 billion and 50% to 60% of the funding is subsidized by the Taiwan Government. Behind the robust development of Taiwan's electronics industry is the many qualified personnel made available through the provision of training by the industrial technology institute over the years. (2) The Science Park in Hsinchu of Taiwan has a production value of over $50 billion and the annual growth rate is 50%. Now in Taiwan, it has been decided that another Science Park will be set up in Tainan. In fact, Hong Kong should also develop a Science Park as soon as possible so that new technology can be introduced and developed, thereby ensuring a really bright future for Hong Kong's manufacturing industry. However, the recently published consultancy study report on the Science Park shows that the proposed Science Park is just similar to an industrial estate, occupying only a very tiny area. Not a single word is mentioned in terms of offering tax concessions and capital subsidies which are of crucial importance if enterprises are to be attracted to invest in the Science Park. The Government should as soon as possible look into these problems; otherwise, it would just be the same old wine in a new bottle, having no effect at all. The Honourable SIN Chung-kai will speak on other problems relating to the provision of logistical support to industries. What I have said already illustrates that the Government in fact is capable of promoting the development of the industrial and commercial sector, and there is no reason for the Government to sit with its arms folded and do nothing at all. We do not agree with the Government putting all eggs in one basket by identifying champion industries and staking everything on it. However, a far-sighted scheme that aims at offering capital assistance in such aspects as infrastructure, manpower and technology would enable Hong Kong' economy to turn the corner. Mr SIN Chung-kai and Mr Andrew CHEUNG will later further elaborate on the manufacturing industry and the service industry. With these remarks, I support the motion. Download 0.94 Mb. Share with your friends:
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