MR CHAN KIN-POR (in Cantonese): President, although this year’s Budget has brought no great surprises, it is still pragmatic and has taken into account the needs of various sides. Meanwhile, it has formulated new strategies pinpointing the declining competitiveness of Hong Kong and injected new momentum into the Hong Kong economy by, among other things, setting the objective of capitalizing on the new opportunities created by “One Belt One Road”, promoting the development of start-ups, developing corporate treasury centres, and so on. Despite the vigour of these measures remaining insufficient, this reflects that the Government can see clearly the hidden worries of the local economy and has seriously taken steps to address the problems.
On the other hand, the Budget has continued to hand out “candies” this year. The Financial Secretary did not forget the needs of the middle class as the latter can benefit quite a lot from the $34 billion to be handed out. Besides, the Budget has provided support measures particularly for industries affected by Occupy Central and also launched a series of publicity and promotional activities to rebuild the confidence of international investors and tourists in Hong Kong. Meanwhile, foreseeing that our external trade performance will be affected by a host of uncertainties this year, the Financial Secretary has put forward a series of pre-emptive measures to provide support for small and medium enterprises (SMEs). Therefore, from the economic angle, the Budget can be said to have “delivered”.
However, as the representative of the insurance industry, I would like to talk about the Voluntary Health Insurance Scheme (VHIS). Before the end of the public consultation period on the VHIS, the Budget announced the uses of the $50 billion originally earmarked to supporting healthcare reform, stating that the Government would only inject funds into the high risk pool under the VHIS and provide tax concession for subscribers, which would cost around $16 billion only. Of the remaining fund, $10 billion would be used to set up a fund, from which the investment returns to be generated would be used for implementing public-private partnership initiatives. In the meantime, $4 billion would be used for offering loans to non-profit-making organizations for private hospital development. The remaining sum of around $20 billion would be returned to the Treasury for general use.
The consultation exercise on the VHIS officially ends today. Over the past few years, the insurance industry has all along taken a positive attitude in negotiating with the Food and Health Bureau and assisting the Bureau in formulating the 12 Minimum Requirements for the VHIS to improve the health insurance products, such as drawing up the Standard Plan and providing more measures to enhance the protection for policyholders and these, I basically support. However, the Bureau did not keep the promise made by the Government of the last term of using the $50 billion to offer discounts to first-time and long-term policyholders. Despite that the high risk pool will be maintained and tax concession will be provided, the scheme cannot attract participation of young and healthy people, and this problem will be fatal to the VHIS.
In fact, the formulation of the 12 Minimum Requirements under the VHIS will considerably increase the protection for policyholders. This will naturally be reflected in the premium which certainly will not be cheap as a result. If the Government is unwilling to provide sufficient financial incentives, including discounts for first-time and long-term policyholders as proposed before, it will be impossible for young and healthy members of the public to join the VHIS because they cannot benefit from the Scheme in any way. The principle of insurance is risk sharing, and consistent participation by healthy and young people is required for the risks of the Scheme to be shared before the Scheme can become sustainable. If there is participation only from high-risk individuals, I think I do not need to do any more explaining, for Members all know that sustainable development would be out of the question and the Scheme would go bust sooner or later.
The insurance industry has dedicated many years of efforts to the VHIS and helped the Government resolve a lot of problems, and we are really just one step to success. I hope that the Bureau can seriously consider our views and make concerted efforts to formulate a sustainable Scheme with premium being pitched at a level acceptable to the public by, among others, offering discounts to first-time and long-term policyholders with the $50 billion that has been set aside, so that young and healthy people will be willing to take out insurance policies, hence achieving the objective of risk sharing and ensuring sustainability of the Scheme.
The Bureau should also abolish the mandatory requirement that insurance companies can only sell products that meet the 12 Minimum Requirements to allow free competition in the market. But in order to protect consumers, it can require insurance companies to fully disclose to consumers the differences between the less expensive products and standard products.
Besides, the industry has proposed another approach under which the industry will use the 12 Minimum Requirements as a blueprint to make improvements to the current VHIS on their own. Apart from one or two requirements which will substantially drive up the premium, hence rendering the Scheme unsustainable in practice, the industry will undertake to meet all the requirements by a specified date and be brought under the regulation of the Independent Insurance Authority. This approach will enable the public to benefit from most of the advantages of the Standard Plan while the premium will not have to be increased substantially.
President, I also wish to talk about corporate treasury centres and the new opportunities brought about by “One Belt One Road”. The Budget announced that in order to attract multinational and Mainland enterprises to establish corporate treasury centres in Hong Kong, the Government would amend the Inland Revenue Ordinance to provide tax concessions for corporate treasury centres. In reply to my written question, the Financial Services and the Treasury Bureau stated that many multinational corporations would consider co-locating their corporate treasury centres with their regional headquarters to increase operational efficiency and this new proposal would, therefore, inject impetus into the development of headquarters economy in Hong Kong.
In this connection, the promotion of the establishment of corporate treasury centres is an important step in the development of headquarters economy in Hong Kong, and it is a good beginning to adopt the strategy of attracting multinational corporations to make investments in Hong Kong. Indeed, as we have clearly experienced recently, investments by Mainland capital in Hong Kong have enabled the local stock market to break the stalemate that has persisted for years and become excessively bullish right away. By the same token, if we can successfully attract large corporations from the Mainland and overseas to set up their headquarters in Hong Kong, especially corporations which are actively pursuing development in the international market, such as technology companies, this can also give impetus to the development of the local economy and the employment market and even redress the imbalance in the industrial development of Hong Kong. If we can capitalize on these developments, this may create new opportunities for Hong Kong.
I think the Government should learn from the practices of Singapore and promote the development of headquarters economy in more direct ways, such as directly providing tax and policy concessions to multinational corporations investing in Hong Kong. Attracting large international corporations to set up regional headquarters or regional offices in Hong Kong can expand the scale of the local economy and upgrade Hong Kong’s competitiveness direct. What is more, this will bring forth an immediate and large supply of quality jobs with international outlook for young people, and this can indeed kill several birds with one stone. We must clearly understand the current situation that the competitiveness of Hong Kong is on the decline and it is now time we opened up a new direction for the next generation. Of course, this is not an easy path to take, especially as Hong Kong people have long grown accustomed to living in a greenhouse. But so long as we can work with one mind, there is always a way to overcome problems no matter what difficulties are lying in front of us, and this may also be the reason for many people revisiting the “Lion Rock spirit” recently.
If we can seize these new opportunities, there will be new room for development in Hong Kong and our competitiveness can return to a rising trend. I believe in these new opportunities and I have consistently advocated the development of headquarters economy in the hope of furthering our development in the international trade and economic arena by capitalizing on the international edge of Hong Kong. While this is still at a very preliminary stage, just take a look at the fact that the international community is fully confident in the Asian Infrastructure Investment Bank and we will know that the “One Belt One Road” initiatives are set to come into operation, so the question lies in whether we can really seize the opportunities. I hope that various sectors of the community can support the economic development of Hong Kong and will not sacrifice our development opportunities for political struggles. If we remain stagnant and continue to cling to our past advantages, our fortune will be exhausted one day. As long as we are willing to work with perseverance and diligence, the legend of Hong Kong will certainly continue.
The worst point now is that Hong Kong has sunk deep into political struggles. Yesterday, the moderate opposition camp and the pro-establishment camp agreed to take steps to prevent filibusters. This is proof that the moderate opposition have come to realize that they will only be meeting their doom and handing over their votes to the radicals in following the radicals as they did in the past. This is why the radicals lashed out strongly at you yesterday. But you must understand that when the opposition camp fiercely criticized what you said or did, it only proved that what you did was right and so, you must keep it up. However, the real solution to filibustering is to make amendments to the Rules of Procedure in order for the Legislative Council to restore its normal function of political deliberations and for Hong Kong to achieve healthy development. I sincerely hope that the moderate opposition can have independent thinking and will not hold back from making the right decision for fear of losing the votes of young people. You must understand that the young people need you to lead them on, not vice versa. Young people have a lot of ideals, but it is you who know what is practically feasible. I hope you can really lead the young people, not that you are led by them. Otherwise, they will certainly blame you in the future and by then, it might be too late to do anything, and they would have been deprived of a Hong Kong with healthy development.
With regard to the relief measures, the Government proposed this year to reduce salaries tax and tax under personal assessment for the year 2014-2015 by 75%, subject to a ceiling of $20,000, which will reduce government revenue by $15.8 billion. This proposal has won the support of the middle class for it can benefit all taxpayers and seems to be fair on the surface. But if we think about it in detail, the provision of a tax rebate has been a measure adopted for years and what is more, this measure has fallen between two stools given that it is subject to the limit of 75% and the ceiling of $20,000. People making a general income do not pay a lot of tax and so, they certainly will not use up the full amount of the $20,000 ceiling, and as the tax reduction is subject to a limit of 75%, they are still required to pay tax at the end of the day. Therefore, the tax reduction of $20,000 is of little practical use to them. On the contrary, for taxpayers with an annual income of over $1 million, even though they may use up the full amount of $20,000, a tax reduction of $20,000 does not actually mean a lot to them in view of their financial means.
I have done some simple calculations. According to the information on the year 2012-2013 that I have with me now, the salaries tax paid by taxpayers with an annual income below $700,000, or a monthly income below $60,000, amounted to only $9.6 billion and accounted for only less than 20% of the salaries tax received for the year. In other words, even if a full tax reduction is provided to taxpayers with an annual income below $700,000, the tax revenue foregone will be less than the $15.8 billion revenue loss estimated by the Government and the remaining sum can even be used for providing a partial tax reduction to people with an annual income over $700,000. Therefore, I think the Government should introduce changes to the mechanism of tax reduction. As a first step, the Government should provide full tax reduction for taxpayers with an annual income below $700,000 and the remaining estimate can be used to provide partial tax reduction for people with an annual income above $700,000. This will result in 85% of the taxpayers in Hong Kong not having to pay any tax without increasing the estimated expenditure in the Budget, and the middle class will benefit most from it. Therefore, the Government must explain clearly to the public that tax reduction is provided only on an ad hoc basis, depending on the actual circumstances every year. Even if the Government does not implement this measure this year, I think it should seriously consider implementing it in the Budget next year in order for resources to be allocated as a priority to helping people most in need.
Moreover, I had put forward some proposals before the release of the Budget and although these proposals were not accepted, I think it is still worthwhile to put them forward for discussion. I proposed that the Government should offer tuition fees remission to university students for one year. We all know that the tuition fees have become a burden to university students and many students are heavily in debt upon graduation. Since the academic structure of university education was changed from three years to four years, students have received one year less of free secondary education but they have to study one more year in universities, meaning that they have to pay one more year of tuition fees at some $40,000. In this connection, I proposed that the Government should pay the tuition fees for the students for one year to alleviate their burden. This will involve an expenditure of about $630 million but it can ease the heavy burden on students and will be fairer to them.
I believe Members must be aware that I have all along supported work-life balance. The first motion that I proposed in the Legislative Council was about promoting work-life balance which was passed in this Council, though the Government’s response was but lukewarm. I think the Government is duty-bound to take a leading role. For example, it can model on the practices of Singapore of setting up a fund to provide funding for applicant companies to promote flexible working hours and allow their employees to take special leave. Recently, there has been a very good opportunity because in a survey conducted by the Labour Department some time ago, it was found that some 970 000 employees could only enjoy 12 days of statutory holidays a year, which is less than the 17 days of public holidays. According to the Government’s estimate, increasing the number of days of statutory holidays from 12 to 17 will incur an additional wage cost of $1.8 billion yearly. If this fund can be set up, subsidies can be provided for workers to take all or part of these five days of holidays. This proposal can avoid adding to the burden of employers and instantly benefit workers in Hong Kong from the angle of work-life balance. Think about this: It takes only $1.8 billion a year and nearly 1 million “wage earners” will be able to spend more time with their families. This is a measure that can produce a significant effect at only minimal costs, bringing huge benefits to Hong Kong people or the Government while requiring only a small amount of funds. I hope the Government can take this into consideration.
President, while these proposals that I have put forward are quite audacious, they can help people in need. Furthermore, with its strong financial strength, the Government should be more creative and target-specific in implementing policies. I hope the Government will seriously take these into consideration. I so submit.