President, the Policy Address this year has put forward a myriad of practical proposals targeting problems relating to the people’s livelihood, including problems in respect of elderly care, poverty alleviation, youth, and land supply. For example, there are a Low-income Working Family Allowance, regularization of a number of programmes under the Community Care Fund, and so on. These proposals can indeed help a lot of people in need, and I personally very much support them.
Having said that, I feel concerned at the same time because this series of proposals will entail an annual increase of $2 billion in the recurrent expenditure of the Government. Given a substantial annual increase in public expenditure, theoretically the Government should explore all possible ways to increase revenue in order to meet the expenditure, but no proposal on economic development has been put forward in the Policy Address in parallel. Frankly speaking, the competitiveness of Hong Kong has already shown signs of a downturn. If the recurrent expenditure increases substantially with no substantial increase being envisaged for recurrent revenue, this would inevitably arouse concern over the future of Hong Kong.
The Government has always been criticized as a Scrooge, upholding fiscal prudence and the principle of “big market, small government” since the Hong Kong-British era. It was unwilling to increase the recurrent expenditure lightly, worried that once a precedent was set, it would have to meet such expenditure year after year, hence embarking on the road of no return. Even if a surplus was recorded, the Government still preferred to adopt one-off relief measures to “hand out candies”, so to speak. Therefore, all that the Government could do in the past was to keep on “handing out candies” without achieving any actual results in poverty alleviation.
The current-term Government is eventually willing to adopt a proactive attitude by substantially increasing the recurrent expenditure for implementing measures to alleviate poverty, demonstrating the Government’s resolve to improve the people’s livelihood. With regard to the many measures proposed, the Low-income Working Family Allowance and other measures can indeed persistently help the low-income households, whereas the proposals of increasing the value of elderly healthcare vouchers and extending the concessionary fare scheme for the elderly can benefit the elderly. These are measures long championed for by the Legislative Council. I believe they will have the support of the majority in society.
Of course, there are views in the community that the Policy Address has not attached importance to the needs of the middle class and is, therefore, utterly disappointing to many middle-class people. But let us not forget that the Budget will soon be released at the end of the month, and we hope that the Financial Secretary will introduce measures to ease the pressure on the middle class. Speaking of expectations for the Financial Secretary, I hope that the Budget can put forward concrete measures on economic development to dovetail with the expenditure plans in the Policy Address. Since the Government has given up the Scrooge-like fiscal management principles, it should also give up the past principle of non-intervention accordingly and make full commitment to promoting economic development in order to ensure coherence in the policy directions of the SAR.
Over the past year, a number of statistics indicate that the competitiveness of Hong Kong has been receding rather than progressing on various fronts. Society continues to rely heavily on the finance industry, which means that we are actually still relying on our old strengths. But what is most worrying is that even the competitive edges of the finance industry is on the decline. Recently, some academics have projected that based on the current rate of increase in public expenditure, the fiscal reserves of Hong Kong will be exhausted in 2030. This is, of course, just simple mathematical induction that may not necessarily happen in reality. But this is a reminder to us that we would eventually become broke if we keep on relying on our old strengths, not to mention the problem of population ageing to be faced by Hong Kong. In order to help the poor and support the disadvantaged, efforts must be made to vigorously promote the economy at the same time, thereby generating more revenue for Hong Kong society to fund our work.
As regards ways to develop the economy, the last-term Government proposed the development of six priority industries, which I sincerely support. But regrettably, the Government insisted on the non-intervention policy and this explains why all the efforts made for this cause failed to achieve any result. Members must understand that while the six priority industries may not necessarily make a lot of money for Hong Kong, they can create a large number of job opportunities for the youth while redressing the imbalance in the industrial structure and are, therefore, worthy of promotion. I hope that the Government can adopt an aggressive attitude in making proactive efforts to consolidate and promote afresh the development of the six priority industries. On the other hand, I think we should make reference to the experience of Singapore and promote the development of headquarters economy with a new mentality, with a view to attracting investments by more international enterprises. In this respect, I have stated a lot of views before, so I am not going to make any repetition today.
Likewise, the foundation of the finance industry needs to be consolidated, too. The Financial Services Development Council has completed a series of study reports which have made specific recommendations on a number of areas. Most of the recommendations are very helpful to the industry and some have even provided directions for development in the long term. I hope that the Government can expeditiously implement these recommendations.
Moreover, a Free Trade Zone (FTZ) has already been set up in Shanghai while preparations are being made for setting up another FTZ in Guangdong. Many analyses have pointed out that FTZs in the Mainland will compete with Hong Kong direct. Given that competition will be inevitable, we all the more should take an aggressive approach to secure a foothold, with a view to sharing the fruits of development. In this connection, I hope that the Government can take the initiative to explore opportunities of co-operation with the FTZs, thereby enabling the local business sector to participate in the development of the FTZs. All in all, I think this offers an opportunity that enables the Government and the community to obtain a clear picture of the difficulties besetting Hong Kong and then drum up the resolve to make changes.
Furthermore, I also wish to take this opportunity today to talk about the insurance industry. This year’s Policy Address has not specially made new proposals relating to the insurance industry while the Policy Agenda has only mentioned the establishment of an Insurance Authority and the progress of the establishment of a Policyholders’ Protection Fund. However, the insurance industry actually has plenty of problems that warrant our special attention.
At present, fraud remains a serious problem in the insurance industry. In respect of labour insurance alone, the past decade already saw a loss of $2.6 billion and last year alone recorded a loss of $600 million. Fraudulent activities are the major cause of the loss suffered by the industry. A Joint Subcommittee on Issues Relating to Insurance Coverage for the Transport Sector was set up by the Legislative Council in the last term to specifically look into ways to combat activities relating to insurance fraud. The Government and the police reacted positively at the time, and the police even immediately set up channels for reporting fraudulent activities. But much to our regret, while the Joint Committee completed its report in the year before last and put forward a number of useful suggestions to combat, among other things, the problem of insurance fraud by using sick leave certificates, the Government has not given any response and fraudulent activities carry on continuously. The insurance industry has followed up the problem, but the Government has yet to give any positive response. I hope that the Government can seriously address these fraudulent activities.
With regard to the Policyholders’ Protection Fund, the Government is in the course of drafting the relevant legislation. The insurance industry remains concerned about some of the details, including the period of expiry of the policies of an insolvent insurer. As a company in liquidation generally has many problems, its underwriting policies may very likely have problems too. If the Fund is made to assume the legal liabilities of the policies concerned for a long time, huge potential risks may probably be entailed. Therefore, the insurance industry hopes that the Fund will be required to shoulder the relevant liabilities for a short period, say, a month only, so that the insured will have the opportunity to take out insurance with another insurer.
Regarding the levy, as the Government has proposed to adopt a progressive funding model, the Fund will increase the levy rates when necessary, such as when an insurer becomes insolvent. The industry hopes that the legislation will clearly provide for a cap on the levy which is best to be capped at less than 0.5%, in order to remove uncertainties in the industry.
The Government plans to introduce a bill on the establishment of an independent Insurance Authority within this year and has undertaken to appoint more members from the industry to the Board and the relevant committees of the Insurance Authority, in order to enhance their representativeness. The insurance industry will continue to follow up this matter and communicate with the Government on issues relating to the transitional arrangements. Apart from this, the Health Protection Scheme is also a key concern of the insurance industry, and I will discuss it in the third debate session.
Thank you, President.