OFFICIAL RECORD of PROCEEDINGS Wednesday, 30 January 2013 the Council Met at Eleven O'clock

LEGISLATIVE COUNCIL ─ 30 January 2013 5455

OFFICIAL RECORD OF PROCEEDINGS

Wednesday, 30 January 2013

The Council met at Eleven o'clock

MEMBERS PRESENT:

THE PRESIDENT THE HONOURABLE JASPER TSANG YOK-SING, G.B.S., J.P.

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE LEE CHEUK-YAN

THE HONOURABLE JAMES TO KUN-SUN

THE HONOURABLE CHAN KAM-LAM, S.B.S., J.P.

THE HONOURABLE LEUNG YIU-CHUNG

DR THE HONOURABLE LAU WONG-FAT, G.B.M., G.B.S., J.P.

THE HONOURABLE EMILY LAU WAI-HING, J.P.

THE HONOURABLE TAM YIU-CHUNG, G.B.S., J.P.

THE HONOURABLE ABRAHAM SHEK LAI-HIM, S.B.S., J.P.

THE HONOURABLE TOMMY CHEUNG YU-YAN, S.B.S., J.P.

THE HONOURABLE VINCENT FANG KANG, S.B.S., J.P.

THE HONOURABLE WONG KWOK-HING, M.H.

DR THE HONOURABLE JOSEPH LEE KOK-LONG, S.B.S., J.P. 5456 LEGISLATIVE COUNCIL ─ 30 January 2013

THE HONOURABLE JEFFREY LAM KIN-FUNG, G.B.S., J.P.

THE HONOURABLE ANDREW LEUNG KWAN-YUEN, G.B.S., J.P.

THE HONOURABLE WONG TING-KWONG, S.B.S., J.P.

THE HONOURABLE RONNY TONG KA-WAH, S.C.

THE HONOURABLE STARRY LEE WAI-KING, J.P.

DR THE HONOURABLE LAM TAI-FAI, S.B.S., J.P.

THE HONOURABLE CHAN HAK-KAN, J.P.

THE HONOURABLE CHAN KIN-POR, B.B.S., J.P.

DR THE HONOURABLE PRISCILLA LEUNG MEI-FUN, J.P.

DR THE HONOURABLE LEUNG KA-LAU

THE HONOURABLE CHEUNG KWOK-CHE

THE HONOURABLE WONG KWOK-KIN, B.B.S.

THE HONOURABLE IP KWOK-HIM, G.B.S., J.P.

THE HONOURABLE MRS REGINA IP LAU SUK-YEE, G.B.S., J.P.

THE HONOURABLE PAUL TSE WAI-CHUN, J.P.

THE HONOURABLE ALAN LEONG KAH-KIT, S.C.

THE HONOURABLE ALBERT CHAN WAI-YIP

THE HONOURABLE WONG YUK-MAN

THE HONOURABLE CLAUDIA MO

THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P. LEGISLATIVE COUNCIL ─ 30 January 2013 5457

THE HONOURABLE JAMES TIEN PEI-CHUN, G.B.S., J.P.

THE HONOURABLE NG LEUNG-SING, S.B.S., J.P.

THE HONOURABLE STEVEN HO CHUN-YIN

THE HONOURABLE FRANKIE YICK CHI-MING

THE HONOURABLE WU CHI-WAI, M.H.

THE HONOURABLE YIU SI-WING

THE HONOURABLE GARY FAN KWOK-WAI

THE HONOURABLE MA FUNG-KWOK, S.B.S., J.P.

THE HONOURABLE CHARLES PETER MOK

THE HONOURABLE CHAN CHI-CHUEN

THE HONOURABLE CHAN HAN-PAN

DR THE HONOURABLE KENNETH CHAN KA-LOK

THE HONOURABLE CHAN YUEN-HAN, S.B.S., J.P.

THE HONOURABLE LEUNG CHE-CHEUNG, B.B.S., M.H., J.P.

THE HONOURABLE KENNETH LEUNG

THE HONOURABLE ALICE MAK MEI-KUEN, J.P.

DR THE HONOURABLE KWOK KA-KI

THE HONOURABLE KWOK WAI-KEUNG

THE HONOURABLE DENNIS KWOK 5458 LEGISLATIVE COUNCIL ─ 30 January 2013

THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, J.P.

DR THE HONOURABLE FERNANDO CHEUNG CHIU-HUNG

THE HONOURABLE SIN CHUNG-KAI, S.B.S., J.P.

THE HONOURABLE IP KIN-YUEN

DR THE HONOURABLE ELIZABETH QUAT, J.P.

THE HONOURABLE MARTIN LIAO CHEUNG-KONG, J.P.

THE HONOURABLE POON SIU-PING, B.B.S., M.H.

THE HONOURABLE TANG KA-PIU

DR THE HONOURABLE CHIANG LAI-WAN, J.P.

IR DR THE HONOURABLE LO WAI-KWOK, B.B.S., M.H., J.P.

THE HONOURABLE CHUNG KWOK-PAN

THE HONOURABLE CHRISTOPHER CHUNG SHU-KUN, B.B.S., M.H., J.P.

THE HONOURABLE TONY TSE WAI-CHUEN

MEMBERS ABSENT:

THE HONOURABLE FREDERICK FUNG KIN-KEE, S.B.S., J.P.

THE HONOURABLE CYD HO SAU-LAN

THE HONOURABLE LEUNG KWOK-HUNG

DR THE HONOURABLE HELENA WONG PIK-WAN

LEGISLATIVE COUNCIL ─ 30 January 2013 5459

PUBLIC OFFICERS ATTENDING:

THE HONOURABLE JOHN TSANG CHUN-WAH, G.B.M., J.P. THE FINANCIAL SECRETARY

PROF THE HONOURABLE ANTHONY CHEUNG BING-LEUNG, G.B.S., J.P. SECRETARY FOR TRANSPORT AND HOUSING

PROF THE HONOURABLE K C CHAN, G.B.S., J.P. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY

THE HONOURABLE GREGORY SO KAM-LEUNG, G.B.S., J.P. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT

THE HONOURABLE RAYMOND TAM CHI-YUEN, G.B.S., J.P. SECRETARY FOR CONSTITUTIONAL AND MAINLAND AFFAIRS

THE HONOURABLE PAUL CHAN MO-PO, M.H., J.P. SECRETARY FOR DEVELOPMENT

MR YAU SHING-MU, J.P. UNDER SECRETARY FOR TRANSPORT AND HOUSING

MR LAU KONG-WAH, J.P. UNDER SECRETARY FOR CONSTITUTIONAL AND MAINLAND AFFAIRS

CLERKS IN ATTENDANCE:

MR KENNETH CHEN WEI-ON, S.B.S., SECRETARY GENERAL

MRS JUSTINA LAM CHENG BO-LING, DEPUTY SECRETARY GENERAL

MISS FLORA TAI YIN-PING, ASSISTANT SECRETARY GENERAL

MISS ODELIA LEUNG HING-YEE, ASSISTANT SECRETARY GENERAL

MRS PERCY MA, ASSISTANT SECRETARY GENERAL

5460 LEGISLATIVE COUNCIL ─ 30 January 2013

TABLING OF PAPERS

The following papers were laid on the table under Rule 21(2) of the Rules of Procedure:

Subsidiary Legislation/Instruments L.N. No.

Import and Export (Fees) (Amendment) Regulation 2013 3/2013

Public Health and Municipal Services Ordinance (Public Pleasure Grounds) (Amendment of Fourth Schedule) Order 2013 ...... 4/2013

Personal Data (Privacy) (Amendment) Ordinance 2012 (Commencement) Notice ...... 5/2013

Other Paper

No. 67 ─ Vocational Training Council Annual Report and Financial Report 2011/2012

WRITTEN ANSWERS TO QUESTIONS

Unemployed People Continuously Receiving Payments Under CSSA Scheme

1. MR TOMMY CHEUNG (in Chinese): President, it has been reported that at present the number of people continuously receiving payments under the Comprehensive Social Security Assistance (CSSA) Scheme due to unemployment in Hong Kong has been persistently high. In this connection, will the Government inform this Council:

(a) of (i) the number of recipients who had continuously received CSSA for the unemployed (CSSA-U) for two years or more (broken down further by education level), (ii) the number of CSSA-U recipients, and (iii) the percentage of the former in the latter, in each year from 2007 to 2012, broken down by age group to which the recipients belonged (set out in the table below);

LEGISLATIVE COUNCIL ─ 30 January 2013 5461

Year: Age group Education level Total 15-19 20-29 30-39 40-49 50-59 (i) Number of recipients having continuously received CSSA-U for two years or more (A): - Tertiary or above - Junior and senior secondary - Primary or below (ii) Number of CSSA-U recipients (B) (iii) A/B(%)

(b) of (i) the average weekly number of service hours performed under the Community Work Programme of the Support for Self-reliance Scheme by each recipient who had continuously received CSSA-U for two years or more (broken down further by education level); and (ii) the average weekly number of service hours performed by each recipient of CSSA-U under the Programme, in each year from 2007 to 2012, broken down by age group to which the recipients belonged (set out in the table below);

Year: Age group Education level Total 15-19 20-29 30-39 40-49 50-59 (i) Average weekly number of service hours performed by each recipient having continuously received CSSA-U for two years or more: - Tertiary or above - Junior and senior secondary - Primary or below - Any education level 5462 LEGISLATIVE COUNCIL ─ 30 January 2013

Age group Education level Total 15-19 20-29 30-39 40-49 50-59 (ii) Average weekly number of service hours performed by each recipient of CSSA-U

(c) of the number of people who had continuously received CSSA-U for two years or more, and no longer needed CSSA-U because of success in securing employment, in each year from 2007 to 2012, broken down by age group to which they belonged (calculated on the date of cessation of their receipt of CSSA-U) and by education level (set out in the table below);

Year: Age group Education level Total 15-19 20-29 30-39 40-49 50-59 Tertiary or above Junior and senior secondary Primary or below Total

(d) of (i) the number of recipients who had continuously received CSSA-U for five years or more (broken down further by education level), (ii) the number of CSSA-U recipients, and (iii) the percentage of the former in the latter, in each year from 2007 to 2012, broken down by age group to which the recipients belonged (set out in the table below);

Year: Age group Education level Total 15-19 20-29 30-39 40-49 50-59 (i) Number of recipients having continuously received CSSA-U for five years or more (A): - Tertiary or above - Junior and senior secondary - Primary or below LEGISLATIVE COUNCIL ─ 30 January 2013 5463

Age group Education level Total 15-19 20-29 30-39 40-49 50-59 (ii) Number of CSSA-U recipients (B) (iii) A/B(%)

(e) of (i) the average weekly number of service hours performed under the Community Work Programme of the Support for Self-reliance Scheme by each recipient who had continuously received CSSA-U for five years or more (broken down further by education level); and (ii) the average weekly number of service hours performed by each recipient of CSSA-U under the Programme, in each year from 2007 to 2012, broken down by age group to which the recipients belonged (set out in the table below); and

Year: Age group Education level Total 15-19 20-29 30-39 40-49 50-59 (i) Average weekly number of service hours performed by each recipient having continuously received CSSA-U for five years or more: - Tertiary or above - Junior and senior secondary - Primary or below - Any education level (ii) Average weekly number of service hours performed by each recipient of CSSA-U

5464 LEGISLATIVE COUNCIL ─ 30 January 2013

(f) of the number of people who had continuously received CSSA-U for five years or more, and no longer needed CSSA-U because of success in securing employment, in each year from 2007 to 2012, broken down by age group to which they belonged (calculated on the date of cessation of their receipt of CSSA-U) and by education level (set out in the table below)?

Year: Age group Education level Total 15-19 20-29 30-39 40-49 50-59 Tertiary or above Junior and senior secondary Primary or below Total

SECRETARY FOR LABOUR AND WELFARE (in Chinese): President, my reply to the question raised by Mr Tommy CHEUNG is as follows:

The Social Welfare Department (SWD) has not kept the number of recipients who have been receiving CSSA continuously owing to unemployment throughout the whole period from 2007 to 2012. The statistics regarding the duration of stay on CSSA under the case nature of unemployment cannot therefore be provided in the following parts of the reply.

(a) and (d)

The numbers of unemployed CSSA recipients aged 15 to 59 from 2007 to 2012, with breakdown by age group and academic qualification, are tabulated as below:

Number of Unemployed CSSA Recipients (By end-December 2007) Education Level Aged Aged Aged Aged Aged Total 15-19 20-29 30-39 40-49 50-59 Tertiary or above 3 33 34 64 92 226 Secondary(Note) 1 047 1 680 2 110 3 251 2 888 10 976 Primary or below 505 289 1 288 6 017 11 936 20 035 Total 1 555 2 002 3 432 9 332 14 916 31 237

LEGISLATIVE COUNCIL ─ 30 January 2013 5465

Number of Unemployed CSSA Recipients (By end-December 2008) Education Level Aged Aged Aged Aged Aged Total 15-19 20-29 30-39 40-49 50-59 Tertiary or above 6 46 33 75 91 251 Secondary(Note) 1 197 1 774 2 296 3 463 3 051 11 781 Primary or below 575 371 1 324 5 467 11 365 19 102 Total 1 778 2 191 3 653 9 005 14 507 31 134

Number of Unemployed CSSA Recipients (By end-December 2009) Education Level Aged Aged Aged Aged Aged Total 15-19 20-29 30-39 40-49 50-59 Tertiary or above 13 107 45 98 120 383 Secondary(Note) 1 394 2 335 2 818 4 251 3 683 14 481 Primary or below 606 452 1 419 5 558 11 701 19 736 Total 2 013 2 894 4 282 9 907 15 504 34 600

Number of Unemployed CSSA Recipients (By end-December 2010) Education Level Aged Aged Aged Aged Aged Total 15-19 20-29 30-39 40-49 50-59 Tertiary or above 11 95 40 102 118 366 Secondary(Note) 1 293 1 991 2 496 4 111 3 818 13 709 Primary or below 567 410 1 156 4 965 10 724 17 822 Total 1 871 2 496 3 692 9 178 14 660 31 897

Number of Unemployed CSSA Recipients (By end-December 2011) Education Level Aged Aged Aged Aged Aged Total 15-19 20-29 30-39 40-49 50-59 Tertiary or above 5 80 28 90 99 302 Secondary(Note) 898 1 606 2 234 3 896 3 806 12 440 Primary or below 361 311 919 4 288 9 530 15 409 Total 1 264 1 997 3 181 8 274 13 435 28 151

Number of Unemployed CSSA Recipients (By end-November 2012) Education Level Aged Aged Aged Aged Aged Total 15-19 20-29 30-39 40-49 50-59 Tertiary or above 5 91 32 85 104 317 Secondary(Note) 831 1 457 2 043 3 703 3 825 11 859 5466 LEGISLATIVE COUNCIL ─ 30 January 2013

Number of Unemployed CSSA Recipients (By end-November 2012) Education Level Aged Aged Aged Aged Aged Total 15-19 20-29 30-39 40-49 50-59 Primary or below 345 310 772 3 607 8 545 13 579 Total 1 181 1 858 2 847 7 395 12 474 25 755

Note:

This includes institutions and commercial schools of the Vocational Training Council.

(b) and (e)

Under the Community Work Programme operated by the SWD, unemployed CSSA recipients are arranged to receive community work services for one day or three days per week. The SWD has not kept record on the number of unemployed CSSA recipients by the number of hours of community work services they have received.

To integrate and improve the employment assistance services under the CSSA Scheme for enhanced effectiveness and synergy, the SWD has launched the "Integrated Employment Assistance Programme for Self-reliance" since 1 January 2013. The Community Work Programme has been enhanced as "Work Exposure (WE) Services" covering more diversified and structured voluntary work and job attachment. The non-governmental organizations will provide WE Services to the unemployed CSSA recipients in need of WE Services for no more than three days per week according to their individual needs.

The SWD has not kept information on the unemployed CSSA recipients who have been receiving CSSA continuously owing to unemployment throughout the whole period and have subsequently left the CSSA Scheme as a result of their securing paid employment. It is noted, however, that a total of 6 085 unemployed CSSA recipients had left the CSSA net owing to securing paid employment during the period between October 2007 and end-September 2012.

LEGISLATIVE COUNCIL ─ 30 January 2013 5467

Applications for Allocation of Public Rental Housing Units

2. MR LEE CHEUK-YAN (in Chinese): President, regarding applications for allocation of public rental housing (PRH) units, will the Government:

(a) set out in tables (of the same format as the one below) a breakdown on the number of applications on the Waiting List (WL) for PRH (including those which are temporarily put on hold) as at the end of 2012 by (i) the year of registration on the WL, (ii) the number of family members and (iii) the choice of PRH district (urban, extended urban, the New Territories, islands and all districts); and

Choice of PRH district: Year of registration on the WL Number of 2005- family 2006 2006- 2007- 2008- 2009- 2010- 2011- 2012- Total members or 2007 2008 2009 2010 2011 2012 2013 before 1 person (Elderly applicant) 1 person (Under the Quota and Points System) 2 persons 3 persons 4 persons 5 persons 6 persons 7 persons or more Total

(b) set out in tables (of the same format as the one below) a breakdown on the number of applications on the WL for PRH the applicants of which were rehoused in PRH units since 1 April 2012 by (i) the year of registration on the WL, (ii) the number of family members and (iii) the district of the PRH unit allocated?

5468 LEGISLATIVE COUNCIL ─ 30 January 2013

District of the PRH unit allocated: Year of registration on the WL Average Number of 2005- waiting family 2006 2006- 2007- 2008- 2009- 2010- 2011- 2012- Total time members or 2007 2008 2009 2010 2011 2012 2013

before 1 person (Elderly applicant) 1 person (Under the QPS) 2 persons 3 persons 4 persons 5 persons 6 persons 7 persons or more Total

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, one of the Hong Kong Housing Authority (HA)'s objectives is to provide PRH to low-income families who cannot afford private rental accommodation. Towards this end, the HA maintains a WL of PRH applicants. The HA's target is to maintain the Average Waiting Time (AWT) at around three years for general applicants (excluding non-elderly one-person applicants under the Quota and Points System (QPS).

Under the established methodology, waiting time refers to the time taken between registration on the WL and the first offer of a flat, excluding any frozen period during the application period (for example, when the applicant has not yet fulfilled the residence requirement; the applicant is imprisoned; the applicant has requested to put his/her application on hold pending arrival of family members for family reunion, and so on). The AWT for general applicants refers to the average of the waiting time of general applicants housed to PRH in the past 12 LEGISLATIVE COUNCIL ─ 30 January 2013 5469 months(1). As at end-September 2012, the AWT for general applicants and elderly one-person applicants were 2.7 years and 1.4 years respectively.

The consolidated reply to the two-part question is as follows:

Detailed analysis on the distribution of waiting time requires a lot of manpower and time for compilation. As such, we are unable to provide the information strictly in accordance with the requirement of the question. However, in view of the increasing number of PRH applicants and the public concern over the waiting time of WL applicants, the HA has previously conducted a special thematic analysis of the housing situation of WL applicants based on the data as at end-June 2012. The relevant work included manually going through individual file records in detail and verifying the information in the file records in order to examine the distribution of waiting time and ascertain the reasons for the long waiting time of individual cases. That task took up a lot of manpower. The gist of the analysis is shown below for Members' reference.

As at end-June 2012, there were about 106 100 general applicants and about 93 500 non-elderly one-person applicants under the QPS on the WL for PRH. Since the AWT target does not apply to the non-elderly one-person applicants under the QPS, they are not included in the HA's analysis above. To examine in detail the distribution of waiting time of the applicants to whom the AWT target applies (that is, the general applicants(2)), the HA has conducted an analysis on the following two different groups of applicants:

(1) It should be noted that some applicants on the WL might have their cases cancelled due to different reasons (for example, failure to meet income eligibility requirements in the detailed vetting stage, failure to attend interviews, and so on). To give flexibility to these applicants whose circumstances might change thereafter, our existing policy is that they may apply for reinstatement of their application if they could fulfil eligibility criteria again within a specific time frame. Strictly speaking, the applicant is ineligible during the period from cancellation to reinstatement of application, and hence the period concerned should be excluded when waiting time is calculated. However, due to limitations in our computer system, the HA has not been able to exclude such periods in the calculation of the AWT.

(2) Including families with two persons or above, and the following one-person applicants:

- Non-elderly one-person applicants originally under the QPS but housed through Express Flat Allocation Scheme;

- Female non-elderly one-person applicants who have been pregnant for 16 weeks or more (the unborn child will be counted as one person); and

- Elderly one-person applicants aged 60 or above. 5470 LEGISLATIVE COUNCIL ─ 30 January 2013

(a) about 15 000 general applicants housed between July 2011 and June 2012 (the general applicants housed); and

(b) about 106 100 general applicants still on the WL as at end-June 2012 (the general applicants on the WL).

General applicants housed

Between July 2011 and June 2012, about 15 000 general applicants accepted offers and were housed. The distribution of their waiting time by district choice is shown in the table below.

Distribution of waiting time of general applicants housed between July 2011 and June 2012

Household size District choice Waiting Time 5-P or Total 1-P 2-P 3-P 4-P above Urban Less than 1 year 320 414 157 126 23 1 040 1 - <2 years 1 115 757 234 299 31 2 436 2 - <3 years 206 1 257 328 210 44 2 045 3 - <4 years 56 1 734 516 123 27 2 456 4 - <5 years 37 301 1 545 176 28 2 087 5 years or above 61 29 88 68 22 268 Subtotal 1 795 4 492 2 868 1 002 175 10 332 Extended Urban Less than 1 year 67 82 22 37 14 222 1 - <2 years 251 234 38 63 31 617 2 - <3 years 24 88 46 76 42 276 3 - <4 years 11 466 70 152 60 759 4 - <5 years 5 212 326 127 38 708 5 years or above 11 13 17 31 10 82 Subtotal 369 1 095 519 486 195 2 664 New Territories Less than 1 year 149 92 30 105 25 401 1 - <2 years 246 134 62 89 25 556 2 - <3 years 69 309 92 113 25 608 3 - <4 years 27 81 63 65 19 255 4 - <5 years 11 11 15 23 8 68 5 years or above 30 2 5 2 0 39 Subtotal 532 629 267 397 102 1 927 LEGISLATIVE COUNCIL ─ 30 January 2013 5471

Household size District choice Waiting Time 5-P or Total 1-P 2-P 3-P 4-P above Islands Less than 1 year 2 2 0 2 0 6 1 - <2 years 3 3 1 3 4 14 2 - <3 years 1 14 2 4 0 21 3 - <4 years 0 0 0 0 1 1 4 - <5 years 0 0 2 0 0 2 5 years or above 1 0 0 0 0 1 Subtotal 7 19 5 9 5 45 Overall Less than 1 year 538 590 209 270 62 1 669 1 - <2 years 1 615 1 128 335 454 91 3 623 2 - <3 years 300 1 668 468 403 111 2 950 3 - <4 years 94 2 281 649 340 107 3 471 4 - <5 years 53 524 1 888 326 74 2 865 5 years or above 103 44 110 101 32 390 Total 2 703 6 235 3 659 1 894 477 14 968

Among about 15 000 general applicants housed, 35% received their first offer within two years and over half (55%) got the first offer within three years. This is consistent with the AWT of 2.7 years for housed general applicants as at end-June 2012. Regarding the general applicants housed with waiting time of five years or above, roughly half (48%) of the cases involve special circumstances of various kinds (some cases involve two or more special circumstances), including cancellation periods (35%; the major reasons were failure to meet income eligibility requirements in the detailed vetting stage, failure to attend an interview, and inadequate documentary proof); QPS cases housed through the Express Flat Allocation Scheme (21%); change of district choice (11%); change of household particulars (10%); and location preference on social/medical grounds (2%).

General applicants on the WL

As at end-June 2012, among about 106 100 general applicants on the WL (including those applications that were frozen at the time, and applications which had previously been frozen), there were about 15% (about 15 700 applicants) with waiting time of three years or above and without any flat offer. As these applicants have yet to receive any flat offer, the waiting time is counted from the 5472 LEGISLATIVE COUNCIL ─ 30 January 2013 date of registration to end-June 2012, excluding frozen period. The distribution of waiting time of these 15 700 applicants is shown in the table below.

Distribution of waiting time of general applicants on the WL as at end-June 2012 with waiting time at or above three years and without any flat offer

Household size District Waiting Time 5-P or Total choice 1-P 2-P 3-P 4-P above Urban 3 - <4 years 16 424 2 791 2 403 789 6 423 4 - <5 years 1 48 292 1 267 429 2 037 5 years or above 1 4 43 878 264 1 190 Subtotal 18 476 3 126 4 548 1 482 9 650 Extended 3 - <4 years 9 1 286 1 507 1 090 231 4 123 Urban 4 - <5 years 0 27 414 622 129 1 192 5 years or above 1 7 31 154 31 224 Subtotal 10 1 320 1 952 1 866 391 5 539 New 3 - <4 years 6 114 181 120 43 464 Territories 4 - <5 years 1 9 21 14 1 46 5 years or above 1 1 7 5 2 16 Subtotal 8 124 209 139 46 526 Islands 3 - <4 years 0 2 3 0 0 5 4 - <5 years 0 0 1 0 0 1 5 years or above 0 0 0 0 0 0 Subtotal 0 2 4 0 0 6 Overall 3 - <4 years 31 1 826 4 482 3 613 1 063 11 015 4 - <5 years 2 84 728 1 903 559 3 276 5 years or above 3 12 81 1 037 297 1 430 Total 36 1 922 5 291 6 553 1 919 15 721

Among about 15 700 general applicants on the WL who had waited for three years or above and without any flat offer, about half of them (about 7 800 cases) have already reached the investigation stage. For applicants reaching the investigation stage, detailed vetting would be arranged soon with allocation of units to follow for those found eligible. As regards the remaining about 7 900 cases which have not reached the investigation stage, they were mainly opting for LEGISLATIVE COUNCIL ─ 30 January 2013 5473 flats in the Urban and Extended Urban Districts. The HA has carried out a special exercise to study those cases on the WL with waiting time of five years or above and without any flat offer. Results show that 40% of these cases involve special circumstances of various kinds, including refusal to accept housing offer(s) before with reasons (27%), change of household particulars (8%), as well as other circumstances such as cancellation periods, location preference on social/medical grounds and applications for Green Form Certificate for purchasing Home Ownership Scheme units (5%).

Pregnant Mainland Women Giving Birth in Hong Kong After Landing in Hong Kong on Grounds of Study

3. MR ANDREW LEUNG (in Chinese): President, it has been reported earlier in the press that some Mainland agents have abetted pregnant Mainland women whose spouses are not Hong Kong permanent residents, commonly known as "doubly non-permanent resident pregnant women" (DNRP women), to apply for permission to land in Hong Kong on the grounds of study at a local university and apply for suspension once they have obtained Hong Kong identity cards, and then stay in Hong Kong to give birth as Hong Kong residents. In this connection, will the Government inform this Council:

(a) whether it knows the number of female Mainland students landing in Hong Kong in the past five years to study in tertiary institutions (with a breakdown by tertiary institution) and among these students, the number of those who had applied for suspension; the criteria adopted by various tertiary institutions for vetting and approving such applications;

(b) whether it knows the number of attendances for public hospital services of Mainland residents holding Hong Kong identity cards in the past five years and the medical expenditure involved; among such attendances, the number of those for obstetric services and the number of attendances of those who were granted permission to land in Hong Kong as students;

(c) of the authorities' measures to deter DNRP women from landing in Hong Kong on the grounds of study and then give birth in Hong Kong; and

5474 LEGISLATIVE COUNCIL ─ 30 January 2013

(d) given that quite a number of countries require foreign students to take out medical insurance before entry in order to cover their medical expenses during the years of their study, whether the Government will consider introducing the relevant measures; if it will not, of the reasons for that?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, it is the Government's policy to ensure that Hong Kong residents are given proper and adequate obstetric services. The Administration is very concerned about the surge of demand for obstetric services in Hong Kong by non-local women (mainly Mainland women) in recent years, which has caused tremendous pressure on the overall obstetric and neonatal care services. To ensure that adequate obstetric services and neonatal care services are available in Hong Kong and local pregnant women are given priority for obstetric services, we have reserved all beds for obstetric services in public hospitals in 2013 for local pregnant women and urgent cases referred by private hospitals and hence no bookings from non-local pregnant women will be accepted. Private hospitals have also indicated that a unanimous consensus has been reached among them to stop accepting bookings for obstetric services in 2013 from Mainland pregnant women whose husbands are non-Hong Kong residents.

My reply to the four parts of the question raised by Mr LEUNG's is as follows:

(a) A breakdown of the number of female Mainland students and the number of those on deferment in local post-secondary institutions from the 2007-2008 to 2011-2012 academic years by institution is at Annex.

In general, post-secondary institutions have well-defined policies on handling deferment of study. Applications for deferment from both local and non-local students are processed according to the same set of standards. Applications for deferment will be approved under exceptional circumstances such as overseas exchange or internship, medical reasons, financial hardship, family emergencies or other special situations acceptable to the institutions. In assessing applications for deferment from individual students, the institutions LEGISLATIVE COUNCIL ─ 30 January 2013 5475

will require the applicants to provide reasons for deferment and relevant information such as medical certificate. Approval will be given with due regard to the justification for each case. Under normal circumstances, the period of deferment approved by most institutions will not exceed one year.

(b) Under the existing policy, holders of Hong Kong Identity Card and children under 11 years of age who are Hong Kong residents are eligible persons entitled to use the heavily subsidized public healthcare services. The Hospital Authority (HA) does not have statistical figures on the types of identity cards held by the eligible persons. Hence, the HA is unable to provide the number of cases involving the use of public hospital services by non-Hong Kong permanent residents and holders of student visa as well as the amount of money involved.

(c) After being admitted by a higher education institution in Hong Kong, Mainland students can apply to the Immigration Department for an entry permit to enter Hong Kong for study according to the existing immigration policies. The applicants must provide accurate, complete and true information in their applications. In making such applications for entering Hong Kong, any person who knowingly and willfully makes a statement or gives information which he/she knows to be false or does not believe to be true commits an offence and is liable on conviction to a maximum fine of $150,000 and to imprisonment for 14 years. Any such visas/entry permits obtained by the applicants through unlawful means shall have no effect and their right of stay in Hong Kong will be revoked according to law. The applicants will also be repatriated to their place of origin.

To complement the implementation of the "zero quota" policy, law-enforcement departments will continue to step up their interception and enforcement actions against non-local pregnant women whose husbands are not Hong Kong residents, so as to combat cases of Mainland pregnant women coming to Hong Kong to give birth through illegal means. In addition, the Government has established a liaison mechanism with the Guangdong authorities to enhance the exchange of intelligence in connection with the problem 5476 LEGISLATIVE COUNCIL ─ 30 January 2013

of Mainland pregnant women giving birth in Hong Kong in an effort to deter Mainland pregnant women without delivery booking from gate-crashing the accident and emergency departments and to enhance enforcement measures against illicit intermediaries assisting Mainland pregnant women to give birth in Hong Kong. The law-enforcement departments will continue to closely monitor the situation and will follow up with any illegal act detected in accordance with the law.

(d) As mentioned above, under the existing policy, holders of Hong Kong Identity Card (including foreign students) and children under 11 years of age who are Hong Kong residents are eligible persons entitled to use the heavily subsidized public healthcare services. At the present moment, the Government has no plan to require foreign students to take out medical insurance before admission to academic institutions in order to cover their medical expenses during the years of their study.

Annex

Number of female Mainland students and the number of those on deferment in local post-secondary institutions from the 2007-2008 to 2011-2012 academic years by institution

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Number of Number of Number of Number of Number of Number of Female Number of Female Number of Female Number of Female Number of Female Female Mainland Female Mainland Female Mainland Female Mainland Female Mainland Institution Mainland Students Mainland Students Mainland Students Mainland Students Mainland Students Students on Students on Students on Students on Students on Deferment Deferment Deferment Deferment Deferment The University of Hong Kong ― HKU 31 1 27 0 35 0 40 0 43 0 SPACE Community College HKU SPACE Po Leung Kuk 0 0 1 0 0 0 0 0 0 0 Community College The Chinese University of 804 87 866 90 938 113 988 113 1 093 158 Hong Kong School of Continuing and Professional 4 0 10 1 18 0 14 0 8 0 Studies, The Chinese University of Hong Kong The Open University of 24 0 43 0 54 0 59 0 52 0 Hong Kong Li Ka Shing Institute of Professional and Continuing 0 0 0 0 0 0 0 0 0 0 Education of The Open University of Hong Kong City University of 411 18 502 18 549 29 594 25 589 32 Hong Kong City University of Hong Kong ― Community 66 1 49 1 23 1 25 3 16 1 College of City University The Hong Kong University of 447 17 490 18 466 23 486 32 507 37 Science and Technology Hong Kong Institute of 4 0 7 0 8 0 6 0 7 0 Technology 5478 LEGISLATIVE COUNCIL ─ 30 January 2013

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Number of Number of Number of Number of Number of Number of Female Number of Female Number of Female Number of Female Number of Female Female Mainland Female Mainland Female Mainland Female Mainland Female Mainland Institution Mainland Students Mainland Students Mainland Students Mainland Students Mainland Students Students on Students on Students on Students on Students on Deferment Deferment Deferment Deferment Deferment Hong Kong Baptist University and its School of Continuing 299 25 356 15 416 14 456 13 511 12 Education and College of International Education Hong Kong College of 1 0 1 0 1 0 1 0 1 1 Technology The Hong Kong Institute 174 3 205 1 234 1 249 3 248 6 of Education The Hong Kong 405 5 516 8 573 6 575 11 555 13 Polytechnic University The Hong Kong Polytechnic University ― 25 0 24 0 26 0 13 0 15 0 Hong Kong Community College Hong Kong Shue Yan 57 0 109 0 130 2 153 2 145 1 University Hong Kong 0 0 0 0 0 0 0 0 0 0 Art School Chu Hai College of 15 0 25 0 27 0 30 0 20 0 Higher Education Sacred Heart Canossian ------0 0 College of Commerce(1) Lingnan 90 1 128 0 153 3 161 2 148 4 University Lingnan University ― The Community College at Lingnan 9 0 11 0 16 0 33 0 63 2 University and Lingnan Institute of Further Education LEGISLATIVE COUNCIL ─ 30 January 2013 5479

Notes：

(1) "-" indicates no post-secondary programme was offered by the institution in the academic year.

(2) Hang Seng Management College was known as Hang Seng School of Commerce before the 2010-2011 academic year.

Waste Recovery

4. MR KWOK WAI-KEUNG (in Chinese): President, according to "Monitoring of Solid Waste in Hong Kong" published by the Environmental Protection Department (EPD), about 3 million tonnes of recyclable materials were recovered in Hong Kong in 2011, achieving a recovery rate of 48%. Among the recovered materials, up to 98.5% were exported for recycling while only 1.5% were recycled locally. Some recyclers have pointed out that the authorities have not provided recyclers with sufficient ancillary facilities, and there is not enough manpower in the industry to handle the large quantities of recovered materials either. In this connection, will the Government inform this Council:

(a) whether it knows the number of people currently engaged in the recycling industry across the territory, and a breakdown on the number of recovery facilities (including those operated by private or non-profit-making organizations) by the type of recovered materials, as well as their site areas and locations;

(b) as quite a number of recyclers have pointed out that the recovery and sorting of waste are obnoxious jobs, and it is therefore difficult to recruit sufficient manpower to handle the recovered materials, whether the authorities have put in place measures to encourage more people to join the recycling industry; if they have, of the measures; if not, the reasons for that;

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(c) as most of the recovered materials are currently bundled up and then exported to other places, and the Chief Executive has indicated in his recently delivered Policy Address that the Government will consider identifying suitable berths so that there will be a stable provision of export facilities to promote vigorously the development of the recycling industry, of the locations and number of the berths that the authorities plan to provide and the timetable for the provision of the berths;

(d) as some recyclers have pointed out that the admission policy of the EcoPark requires tenants to provide one-stop services by producing environment-friendly products from recycled materials, whether the authorities will consider revising that policy so as to enable more recyclers to move into the EcoPark; if they will, of the details; if not, the reasons for that;

(e) given that although recyclers who are not yet admitted into the EcoPark may bid for short-term tenancy (STT) sites, there is no guarantee for renewal upon expiry of the leases, of the criteria based on which the authorities assess the applications for lease renewal for such sites; whether they will consider including as assessment criteria factors such as the existing tenants' investment commitments to their businesses and whether there is a diversification of the types of recovered materials being processed, and so on; if they will, of the details; if not, the reasons for that; and

(f) of the measures put in place and the ancillary facilities provided by the authorities at present, apart from the development of the EcoPark, to encourage more local recyclers to recycle recovered materials in Hong Kong in order to increase the proportion of waste being recycled locally; whether the authorities will consider providing subsidies to the industry, for example, by granting rent concessions for land or tax concessions; if they will, of the details; if not, the reasons for that?

SECRETARY FOR THE ENVIRONMENT (in Chinese): President,

(a) At present about 500 companies and organizations are engaged in the recycling industry in Hong Kong. These include private LEGISLATIVE COUNCIL ─ 30 January 2013 5481

recyclers, recycling centres operated by non-profit-making organizations, and recyclers operating at the EcoPark, and they directly employ about 4 000 workers. In addition, there are itinerant collectors and scavengers of recyclable materials. Owing to the high mobility, it is difficult to make an accurate estimate of the actual number of people engaged in the trade.

Information on the distribution of recyclers in Hong Kong and related issues is available on the Hong Kong Waste Reduction Website managed by the EPD.

(b) The Government has set out a series of policy measures in the Policy Framework for the Management of Municipal Solid Waste (2005-2014) to proactively create a more favourable operating environment for the recycling and green industries with a view to assisting the development of the local recycling and green industries and encouraging more people to join the recycling industry. These measures include the implementation of programmes on source separation of waste, the identification of more suitable sites for leasing to the recycling industry under STT through bidding, the development of the EcoPark, the promotion of the green procurement policy among government departments, the implementation of producer responsibility schemes (PRSs), and the encouragement of the development of recycling technologies through the Innovation and Technology Fund, the Environment and Conservation Fund (ECF) and various funds for small and medium enterprises. We will continue to implement these measures to create a more favourable operating environment for the trade.

(c) Every year, over 3 million tonnes of recyclable materials are recovered in Hong Kong and the majority are exported for recycling. For waste paper, export is primarily via Public Cargo Working Areas (PCWAs). To promote the development of the local recycling industry, the Government will consider identifying suitable PCWA berths for bidding by the recycling industry for their exclusive use to provide local waste recyclers with stable export facilities to support their recycling activities. We will consult the local recycling 5482 LEGISLATIVE COUNCIL ─ 30 January 2013

industry, PCWA operators and other relevant stakeholders on the proposal. The Berth Licence Agreements of existing PCWAs will expire in 2016, and we aim to introduce the proposed measures at the next round of berth bidding.

(d) In order to raise the attractiveness of the EcoPark to potential tenants, we recommended a series of enhanced terms of tenancy in 2010 and have consulted the Legislative Council, the recycling industry and other stakeholders on the recommendations. In addition to extending the length of tenancy of the sites from 10 to 20 years, the new terms of tenancy also include the relaxation of restriction on waste types to be recycled and the increase of the flexibility of the lot size. In the two subsequent tendering exercises in 2011 and 2012, we granted six sites to local recyclers for recycling waste metals, waste batteries, waste construction materials and glass, waste electrical and electronic equipment (WEEE), waste rubber tyres and food waste. At present, most of the sites in the EcoPark have been leased, whereas the remaining sites have been earmarked for the development of WEEE treatment and recycling facilities to support the PRS on WEEE. We believe that the establishment of the EcoPark can encourage the industry to invest in more advanced technologies and value-added processes and help increase the potential of the local recycling industry in the long run.

(e) STT sites are temporary sites for short-term use and the terms of an STT site are normally set for not more than five years. When an STT expires and the site concerned is not yet required for any long-term use, it may be put up for tender again and the original tenant can also submit a tender. There are currently 32 dedicated STT sites for the recovery and recycling industry, with an area of 4.8 hectares. These STT sites will be made available by open tender. Tenderers should be experienced in the recycling industry and approved by the EPD before being granted an STT site. To benefit more recycling companies, the tender documents of individual sites may include special terms and conditions, such as excluding a particular type of recyclable material which is more competitive in the market and has taken up considerable amount of government and private land in certain districts, or specifying that adjacent lots must not be allotted to the same recycling companies. LEGISLATIVE COUNCIL ─ 30 January 2013 5483

The Government will continue to identify more STT sites suitable for use by recyclers and put them up for tender to help supply more land for the development of the recycling industry.

(f) Currently the Government has adopted a waste management strategy with waste reduction as the top priority in tackling our waste problem. Apart from allocating sufficient PCWA berth length for the exclusive use of the recycling industry, the Government is also committed to launching initiatives on various fronts to facilitate the development of the recycling and green industries.

- The Government is preparing legislative proposals to introduce a new PRS on WEEE. Mandatory PRSs will be implemented progressively, with priority accorded to glass beverage bottles. This measure will raise the recovery of WEEE and glass bottles. Complementary measures will also be introduced, which include the use of construction materials containing waste glass in suitable public works, and the setting up of facilities for treating WEEE. Such measures will facilitate the development of the local recycling industry.

- To support the recycling at the community level, the Government plans to set up five pilot community green stations in different districts in Hong Kong. Apart from publicity and education activities, the community green stations will support recycling activities at the community level. This will include reaching out to the community to collect recyclable materials, supporting the community recycling network and launching other source separation initiatives;

- The Government will continue to discuss with stakeholders and the public the implementation details of municipal solid waste charging. The objective of the policy is to promote public participation in recycling and offer a financial incentive to the recycling industry to invest more in the local recycling industry; and

5484 LEGISLATIVE COUNCIL ─ 30 January 2013

- The Government has proposed an injection of $5 billion into the ECF to invest in long-term environmental action as sustainable support to the community. The ECF has funded a series of waste reduction and recycling projects, and it is expected to keep up its efforts in this area in the future.

The Government hopes that through measures on various fronts to engage the whole community to assist with waste reduction and source separation of waste. We hope to bring about a behavioural change through community-wide participation, and more waste will be available for reuse and recycling in Hong Kong.

Application of Building Information Modelling Technology

5. MR TONY TSE (in Chinese): President, with the advancement of innovative technology and development of green architecture, the engineering profession may now employ building information modelling (BIM) technology to consolidate various project designs and working drawings through the three-dimensional information system, thus enhancing project co-ordination and resource utilization, and reducing unnecessary wastages and losses, errors and omissions, as well as the need for remedial works in the projects. BIM technology may be applied to various kinds of infrastructural projects, as well as the construction, management and repair works of buildings. However, some members of the engineering profession have pointed out that while BIM technology has been widely adopted in many advanced countries and regions, the application of such technology in Hong Kong lags behind other places because the Government has not taken an active role in promoting and applying BIM technology. In this connection, will the Government inform this Council:

(a) whether BIM technology is applied in carrying out all the public works projects at present; if so, of the details of the guidelines provided by the authorities to government departments on how to design and apply BIM technology; if not, the reasons for that;

(b) whether it has included terms on the application of BIM technology in outsourced government works contracts; if so, of the number of contracts with such terms included so far, and among these LEGISLATIVE COUNCIL ─ 30 January 2013 5485

contracts, the respective numbers and percentages of consultancy contracts and construction contracts;

(c) whether it will make mandatory in the future the application of BIM technology in carrying out all the public works projects and outsourced government works projects; if so, of the specific requirements; if not, the reasons for that;

(d) whether it has conducted comprehensive assessment on the effectiveness of applying BIM technology in carrying out works projects; if it has, of the assessment result; if not, whether it will conduct such an assessment;

(e) whether the authorities have provided civil servants with training in applying BIM technology in carrying out public works projects; if they have, of the target trainees, the number of staff members trained and the annual expenditure incurred; and

(f) whether the authorities will step up their efforts in promoting the development and application of BIM technology, as well as launching public promotion and education campaigns to enable the community at large to understand BIM technology and the effectiveness of its application in carrying out works projects; if they will, of the details?

SECRETARY FOR DEVELOPMENT (in Chinese): President, with the growing sophistication of the BIM technology, it has been adopted in both public and private works projects in Hong Kong. Many of these projects are building works projects whilst civil engineering projects are relatively less. With regard to public works projects, we will review our initial experience in its application and roll out more pilot projects of different types and scales for assessing its scope of application and cost-effectiveness in such projects in future. We will also consider formulating related guidelines, enhancing training and providing other appropriate complementary measures to facilitate its application in public works projects.

My reply to the six parts of the question is as follows:

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(a) Public works projects cover a very wide range of works that vary in type and complexity. As understood, the benefits of BIM technology are more apparent in delivering relatively complex building works projects. For those relatively simple works such as pipe laying, at-grade road construction and slope upgrading, the merits of adopting BIM technology are relatively less. Besides, BIM technology cannot completely substitute the whole workflow in delivering public works projects. A case in point is quantity taking-off. The existing off-the-shelf BIM application software cannot compute the quantity of various construction materials according to the standards adopted in public works projects. In view of the above, we do not require BIM technology to be adopted in carrying out all public works projects at present.

(b) There are a total of five public works contracts that have incorporated provisions on using BIM technology in the contracts. They include the "Central-Wan Chai Bypass ― Tunnel (Causeway Bay Typhoon Shelter Section)" project. Among the five contracts, construction contracts accounted for three (60% of the total) and consultancy contracts accounted for two (40% of the total).

As noted in part (a), the benefits of BIM technology are more apparent when it is applied to complex projects. Hence, we plan to select some such projects, including those at the design and construction stage, as pilots in order to assess the cost-effectiveness of the technology in public works projects. To facilitate a better understanding of the technology's practical application, some of the projects to be selected would be designed and with the construction contract managed by in-house staff of works departments. The scope of assessment includes the merits of BIM technology in terms of design quality, works safety and co-ordination among project stakeholders (for example, consultants and contractors). In the light of the assessment results and the technology's latest developments, we will further consider the strategies for applying BIM technology in public works projects.

LEGISLATIVE COUNCIL ─ 30 January 2013 5487

(e) In 2012, about 200 civil servants in works departments have received training related to BIM technology. The trained civil servants are mainly professional and technical staff of roughly equal number from each of them. Training in respect of BIM technology cost about $60,000 in 2012. With the increase in the number of pilot projects applying BIM technology, we will provide more civil servants with appropriate training, and help them gain more in-depth understanding of the technology through practical application and training courses.

(f) We plan to share our experience in the pilot projects with industry stakeholders through such means as seminars to promote the public's understanding of BIM technology and its application. The Construction Industry Council (CIC) has set up a working group to mainly discuss the strategies for promoting BIM technology in the industry. We will work with the CIC to promote the application and benefits of BIM technology to the industry.

Government-owned Tolled Tunnels and Lantau Link

6. MR TANG KA-PIU (in Chinese): President, in May 2004, the Government issued the "Toll Revenue Bond" (the Bond) of a value of HK$6 billion and established the Hong Kong Link 2004 Limited (HK Link). After purchasing the Bond, HK Link issued the related Retail Bonds and Notes. The net toll revenues generated by the five tolled tunnels and one bridge (that is, the Aberdeen Tunnel, Cross Harbour Tunnel (CHT), Lion Rock Tunnel, Shing Mun Tunnels, Tseung Kwan O Tunnel and Lantau Link) owned by the Government (tolled tunnels and bridge) are to be used for repayment of the principal and payment of interests on the Bond purchased by HK Link, which in turn makes principal repayments and interest payments on the Retail Bonds and Notes for the tolled tunnels and bridge. Regarding the operation of HK Link and the toll fees of the aforesaid tolled tunnels and bridge, will the Government inform this Council:

(a) of the distribution of the major revenues, the net amounts of such revenues, the net amount of the total revenue, and the year-on-year percentage changes of such revenues of HK Link, in each of the past five financial years;

5488 LEGISLATIVE COUNCIL ─ 30 January 2013

(b) of the year-on-year percentage changes of the toll fees of the aforesaid tolled tunnels and bridge, and the mechanisms for adjustment of such toll fees, in the past five financial years;

(c) of the principal repayments and interest payments for the Bond made by the Government to HK Link in each of the past five financial years; the position of Government's repayment to HK Link on the Bond as at December 2012 (with details of the bond maturity dates, the total amount of principal repaid so far, as well as the total amount of interest paid);

(d) as the authorities have plans to increase the toll fees of CHT and provide subsidies for the operator of the Eastern Harbour Crossing (EHC) so as to lower the toll fees of EHC, with a view to diverting traffic and bringing about overall social and economic benefits, whether the Government has assessed the impact of such measure on the traffic volume and income of CHT; if it has, of the details; and

(e) given that there have been comments that the toll fees of the Lantau Link are too high, resulting in high public transport costs, stifling the economic development of districts and affecting people's livelihood, whether the Government has assessed the impacts of the present toll fees of the aforesaid tolled tunnels and bridge on transport, economic development and people's livelihood; if it has, of the details; if not, whether it will do so and consider lowering the toll fees of the Lantau Link?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President,

(a) In 2004, the Government launched the HK$6 billion securitization of net toll revenues from its tolled tunnels and bridges, and for this purpose established HK Link, which is wholly owned by the Financial Secretary Incorporated, as the issuer. The principal activities of HK Link are to acquire the Bond from the Government and to issue retail bonds and notes to retail investors and institutional investors respectively. HK Link's major source of income is interest, which includes interest of the Bond and bank interest, and so on. In each of the past five financial years, HK Link's net LEGISLATIVE COUNCIL ─ 30 January 2013 5489

interest income, the net amount of the total revenue and the associated year-on-year percentage changes are as follows:

Net Interest Year-on-year Net Amount of Year-on-year Financial Income Changes total revenue Changes Year (HK$ million) (%) (HK$ million) (%) 2007-2008 65 -24 40 -38 2008-2009 44 -32 47 18 2009-2010 8 -82 9 -81 2010-2011 -16 -300 -17 -289 2011-2012 -0.8 95 -1 94

(b) There has not been any adjustment to the tolls of the Aberdeen Tunnel, CHT, Lion Rock Tunnel, Shing Mun Tunnels, Tseung Kwan O Tunnel and Lantau Link in the past five financial years.

As for the toll adjustment mechanism, the tolls of the Government tolled tunnels and roads are determined based on the "user pays" principle, which aims to recover the full cost of providing, operating and maintaining the tunnels and roads. The Government will review their toll levels each year, taking into account the impact of the tolls on the traffic flow and the economy. If adjustment is considered necessary after the review, the Government will consult the Legislative Council Panel on Transport and effect the adjustment by way of amending the tunnel tolls and control area tolls prescribed in the Schedule to the relevant legislation.

(c) In respect of the principal repayments and interest payments for the Bond made by the Government to HK Link, the position in each of the past five financial years is as follows:

Principal Repayment Interest Payment Financial Year (HK$ million) (HK$ million) 2007-2008 1,562 172 2008-2009 705 108 2009-2010 1,932 46 2010-2011 0 0 2011-2012 0 0

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The Government had fully repaid the HK$6 billion worth Bond by February 2010. The total amount of interest paid is HK$819 million.

(d) The Chief Executive announced in his Policy Address on 16 January 2013 that the Administration would conduct public consultation on specific proposals to alleviate congestion at the harbour crossings in the first half of this year. In order to effectively improve the traffic distribution among the three road harbour crossings, it is necessary to increase the relatively low tolls of CHT and at the same time reduce the tolls of the EHC, so as to provide incentive for motorists to switch from using CHT to EHC, to achieve traffic diversion and ease congestion at CHT. The Government will explain to the public during the public consultation exercise the impact of the fee adjustment proposals on the traffic flows of CHT and their revenue.

(e) As mentioned in part (b) of the reply, the tolls of the Government tolled tunnels and roads are determined based on the "user pays" principle, which aims to recover the full cost of providing, operating and maintaining the tunnels and roads. The Government will review their toll levels each year, taking into account the impact of the tolls on the traffic flow and the economy. If adjustment is considered necessary after the review, the Government will consult the Legislative Council Panel on Transport before implementation.

No toll adjustment has been made to the Lantau Link since it came into operation in 1997. The Government will continue to review the tolls of the Lantau Link in accordance with the existing mechanism.

Prices of Domestic LPG

7. MR LEUNG KWOK-HUNG (in Chinese): President, members of the public have relayed to me time and again that the three liquefied petroleum gas (LPG) suppliers adjusted upwards the retail prices of domestic LPG (including cylinder LPG and centralized LPG supplied to housing estates) in November last year, and that the new prices represent shocking rates of increase between 29% and 36% as compared with those in the preceding three months, which far LEGISLATIVE COUNCIL ─ 30 January 2013 5491 exceeded the inflation rate during the same period, aggravating the burden on people's livelihood. At present, Hong Kong's domestic LPG suppliers determine their retail prices mainly on the basis of international contract prices of LPG (that is, the free-on-board contract prices charged at the port of loading made public by the oil companies in Saudi Arabia on the first day of each month). According to the figures provided by the Bureau of Energy, Ministry of Economic Affairs of Taiwan, the average contract price in 2011 was about US$850 per tonne, and that of the first 11 months of 2012 was about US$910, representing a rate of increase of 7%. A comparison between the prices of October and November 2012 (US$995 and US$1,020 per tonne respectively) shows a mere rate of increase of 2.5%, which differs significantly from the price increase of domestic LPG in Hong Kong over the same period of time. Moreover, it has been learnt that LPG prices of Hong Kong are the highest when compared to those of the neighbouring places of similar level of economic development. According to the figures published by CPC Corporation of Taiwan on 2 December, domestic LPG prices per kilogram after taxation were NT$30.06 in Taiwan, NT$41.3 in Korea, NT$48.73 in Japan and NT$54.34 in Hong Kong. In this connection, will the Government inform this Council:

(a) whether it knows the current number of households in Hong Kong using the above two types of domestic LPG;

(b) given that the domestic LPG pricing mechanism adopted since 1999 by one of the major local LPG suppliers has long been accused of being quick in raising and slow in reducing prices, and currently international LPG prices are announced on the first day of each month, whether the Government has considered requesting LPG suppliers to review domestic LPG prices every month for greater price flexibility; if it has, of the details; if not, the reasons for that; and

(c) given that LPG prices in Hong Kong are the highest in the region, and the only yardstick for determining price is market price, whether the Government will consider putting in place price control and adjustment mechanism in the domestic LPG market, as well as adopting alternative criteria other than market price with reference to the practices adopted by the neighbouring countries, so as to minimize the impact of LPG price changes on people's livelihood; given that it has been reported that Taiwan's oil companies, in response to the Taiwan Government's policy of maintaining price 5492 LEGISLATIVE COUNCIL ─ 30 January 2013

stability and caring of people's livelihood, did not raise domestic LPG prices in November last year but waited to recover the shortfall until a future price drop, whether the Government will formulate similar price adjustment mechanism so as to alleviate people's hardship; if it will, of the details; if not, the reasons for that?

SECRETARY FOR THE ENVIRONMENT (in Chinese): President,

(a) In 2012, there were about 250 000 domestic households using cylinder LPG and 230 000 households using piped LPG in Hong Kong.

(b) In accordance with existing mechanism, a local oil company sets the domestic LPG prices for the coming three months by forecasting the import prices for the coming three months in light of the latest international LPG price (that is, contract prices of LPG from Saudi Arabia), and making positive or negative adjustment for any difference between the actual import prices and the forecast import prices in the last review. The review of operating costs is conducted once every year at end January.

In monitoring domestic LPG prices, we make reference to the movement of international LPG prices and local LPG import prices and check whether the oil company's price forecasts are reasonable. We will also follow up with the oil company the positive or negative price adjustments due to actual and forecast price difference in the last review, and assess if the annual adjustment in operating cost is reasonable.

Regarding the suggestion to change the review frequency of domestic LPG prices from once every three months to once every month, we consider that more frequent review may lead to more volatile domestic LPG prices. When the international LPG prices go up, suppliers will raise the price in a time earlier than that under the current practice, which may not be acceptable to the consumers. Instead, the current price adjustment mechanism of quarterly revision can better maintain price stability and provide for positive or negative adjustments.

LEGISLATIVE COUNCIL ─ 30 January 2013 5493

(c) The fuel prices in Hong Kong are determined by individual oil companies with regard to commercial principles and their operating costs. The Government understands and is concerned about the impact of LPG prices on the public, and hence encourages the industry to enhance the transparency of price setting. We are also committed to ensuring a reliable supply of energy. According to existing adjustment mechanism, prices of domestic LPG are adjusted once every quarter, during which the international LPG prices may go up and down, the actual adjustment for the coming quarter will be determined after first offsetting the previous movements. We consider that the related arrangement has served the purpose of stabilizing the gas price.

Unemployment Among Young People

8. DR CHIANG LAI-WAN (in Chinese): President, it has been reported that while the present number of unemployed young people aged 15 to 34 approaches 60 000, there are over 20 000 job vacancies in the retail, hotel and catering industries, and more than 3 000 vacancies in the construction industry. There is a view that should this group of young people fill the vacancies in these four industries, the problem of unemployment among young people will be ameliorated, and the problem of manpower shortage in these industries will also be alleviated. In this connection, will the Government inform this Council:

(a) whether it has studied the causes for the aforesaid phenomenon of manpower mismatch; if it has, of the findings of the studies;

(b) whether it has compiled statistics on the education level and the marital status of the people aged 15 to 34 who are currently unemployed; if it has, of the statistics;

(c) among the people aged 15 to 34 who are currently unemployed, of the number of those who had received payments under the Comprehensive Social Security Assistance (CSSA) Scheme due to unemployment in the past three years; and

5494 LEGISLATIVE COUNCIL ─ 30 January 2013

(d) whether the authorities will formulate new initiatives to encourage young people to seek employment; if they will, of the details; if not, the reasons for that?

SECRETARY FOR LABOUR AND WELFARE (in Chinese): President, my reply to the question raised by Dr CHIANG Lai-wan is as follows:

(a) Generally, in the employment market, there are unemployed persons looking for jobs and, at the same time, there are vacancies to be filled. It may be due to the reason that some unemployed persons are not willing to take up those kinds of jobs not fitting their requirements in terms of job nature or employment conditions. Some unemployed persons may not be capable of filling some vacancies owing to the lack of relevant skills and experience. Also, some job seekers may be unemployed temporarily as they are choosing suitable work or changing jobs.

(b) According to the findings of the General Household Survey in the fourth quarter of 2012, there were 51 200 unemployed persons aged 15 to 34 (provisional figure). The breakdowns by educational attainment and by marital status are set out at Annex.

(c) As at the end of December 2012, there were about 3 800 unemployed CSSA recipients aged 15 to 34. The corresponding figures for 2011 and 2010 were about 4 400 and 5 800 respectively.

(d) The Government adopts a multi-pronged strategy to enhance the employability of young people and promote their employment opportunities through the provision of comprehensive training and employment support.

Focusing on the non-engaged young people aged between 15 and 20 who have yet to acquire recognized qualifications, the Employees Retraining Board (ERB) administers the Youth Training Programme which aims at rekindling their desire to learn and pursue further study, as well as cultivating a positive life attitude and LEGISLATIVE COUNCIL ─ 30 January 2013 5495 self-confidence in them. With a view to assisting the secondary school graduates who have job aspirations but without full-time work experience, ERB administers the "Employment Set Sail for Youth" courses, providing trainees with fundamental vocational training, thereby preparing them to acquire related recognized qualifications and enhancing their competitiveness. Both types of courses include six-month placement follow-up services whereby job-seeking and employment support is rendered to the graduate trainees.

The Vocational Training Council (VTC) has been providing young people who have clearer career aspirations within specific industries with on-the-job and longer-term structured training, including the statutory Apprenticeship Scheme for young people aged 14 or above. The VTC also launched in end-2011 the pilot Traineeship Scheme for young people aged 15 or above. Under these Schemes, the VTC provides free employment services to young people, including referral to employers for interview should a suitable apprentice/trainee vacancy arise. Trainees participating in these Schemes will be able to receive workplace training provided by their employers, while at the same time enrolling in related vocational education courses provided by the VTC.

In order to assist young people to secure employment, the Labour Department (LD) administers the Youth Pre-employment Training Programme and Youth Work Experience and Training Scheme (YPTP&YWETS) to offer "through-train" training and employment support services to young people aged 15 to 24 with educational attainment at sub-degree or below level. To encourage employers to provide more on-the-job training opportunities to young people, the Chief Executive announced in his 2013 Policy Address that the training allowance of YPTP&YWETS will be enhanced. The monthly training allowance payable to an employer, who employs a young person with a monthly salary of $6,000 or above and provides him/her with on-the-job training, will be increased from $2,000 to $3,000. The payment period is from six to 12 months. To encourage participation in the workplace attachment training under YPTP&YWETS, the allowance payable to a young person who 5496 LEGISLATIVE COUNCIL ─ 30 January 2013

completes the one month's workplace attachment training will be increased from $2,000 to $3,000.

Under a special employment project named "Action S5", non-governmental organizations (NGOs) are commissioned by the LD to provide on-the-job training to young people with special employment difficulties owing to low educational attainment, emotional/behavioural problems or learning difficulties for a period of 12 months. The LD also operates two Youth Employment Resource Centres to provide personalized advisory and support services on employment and self-employment to young people aged 15 to 29.

To help unemployed CSSA youths, the Social Welfare Department commissioned NGOs to assist in implementing the Integrated Employment Assistance Programme for Self-reliance (IEAPS) under the CSSA Scheme. By providing employment assistance services, the IEAPS helps unemployed CSSA recipients aged 15 to 59 find jobs and achieve self-reliance. The Special Training and Enhancement Programme under the IEAPS provides employment assistance services to unemployed CSSA youth aged 15 to 29. It includes motivational and disciplinary training, which are designed to enhance the self-image, confidence and sense of responsibility of the participating CSSA youths in order to help them return to work.

Annex

According to the findings of the General Household Survey in the fourth quarter of 2012, there were 51 200 unemployed persons aged 15 to 34 (provisional figure). The breakdowns by educational attainment and by marital status are set out as follows:

By educational attainment

Educational attainment Number(4) Percentage (%) Lower secondary(1) and below 8 600 16.7 Upper secondary(2) 19 800 38.7 LEGISLATIVE COUNCIL ─ 30 January 2013 5497

Educational attainment Number(4) Percentage (%) Post-secondary ― non-degree(3) 8 100 15.9 Post-secondary ― degree 14 700 28.7 Overall 51 200 100.0

Notes:

(1) Persons with educational attainment at lower secondary level refer to those with Secondary One to Secondary Three education or equivalent level.

(2) Persons with educational attainment at upper secondary level refer to those with Secondary Four to Secondary Seven education or equivalent level.

(3) Persons with educational attainment at post-secondary non-degree level refer to those with Certificate, Diploma, Higher Certificate, Higher Diploma, Professional Diploma, Associate Degree, Pre-Associate Degree, Endorsement Certificate, Associateship and other sub-degree education or equivalent level.

(4) Provisional figures

Source: General Household Survey, Census and Statistics Department

By marital status

Marital status Number(2) Percentage (%) Never married 46 500 90.8 Ever married(1) 4 700 9.2 Overall 51 200 100.0

Notes:

(1) Including those currently married, widowed and divorced/separated.

(2) Provisional figures

Source: General Household Survey, Census and Statistics Department

Public Consultation on Draft Bills Conducted by Government

9. MR RONNY TONG (in Chinese): President, this Council enacted the new Companies Ordinance in July last year, with the commencement date to be announced. The Ordinance will impose new restrictions on inspection by the 5498 LEGISLATIVE COUNCIL ─ 30 January 2013 public of information such as the usual residential addresses and full identification numbers of persons such as company directors or company secretaries. According to the conclusions of the first phase consultation on the draft bill concerned, which was conducted by the Government between December 2009 and March 2010, a majority of the respondents supported the imposition of such restrictions. However, some members of the public and the media have recently indicated that they did not know that the Government had conducted the aforesaid consultation exercise, and the Government did not consult the general public as well as media practitioners and organizations on this matter. In this connection, will the Government inform this Council:

(a) of the approach and targets of the aforesaid consultation (with a detailed list of the names of individuals and organizations consulted as well as the means by which the Government had contacted them); apart from uploading the consultation paper onto the designated website, whether the Government had announced and publicized that it was conducting public consultation on the imposition of the aforesaid restrictions on inspection of information; if it had, of the details (including the relevant dates and the types of media through which the announcements were made and publicity was launched); if not, the reasons for that; as some members of the media industry have pointed out that for a number of previous news reports involving significant public interests, they had obtained the leads through inspecting the names and identity card numbers of the directors of certain companies, and that the aforesaid restrictions will affect the work of the media, of the reasons why the Government did not consult the media practitioners and organizations;

(b) of the criteria for deciding the approaches and targets when the Government conducts consultation exercises on draft bills, and how it determines which organizations should undertake the tasks of conducting the consultation exercises and analysing the outcome; the number and details of such type of consultation exercises conducted by the Government in the past five years; whether it had openly reported to the public on the outcome and analyses of such consultation exercises; if it had, of the dates of the announcements and the means for reporting the outcome; if not, the reasons for that; and

LEGISLATIVE COUNCIL ─ 30 January 2013 5499

(c) how the Government ensures that all relevant stakeholders will be consulted and the public are aware that the Government is conducting consultation exercises on draft bills; how the authorities will more effectively publicize the views collected and the relevant details as well as make such information available for public inspection after conducting any public consultation exercise in future; whether the Government will undertake to provide expeditiously all the information on the outcomes, analyses and related data of consultation exercises to the relevant bills committees of this Council for consideration, when it conducts public consultation exercises in future which may impact on the legislative work of the Legislative Council; if it will, of the details; if not, the reasons for that?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President, the question raised by Mr TONG touches on matters under different Policy Bureaux. The Administration's consolidated reply is as follows:

(a) In the course of drafting the Companies Bill (CB), the Financial Services and the Treasury Bureau conducted three topical consultations between March 2007 and September 2008 to gauge views on a number of subjects such as company names, share capital and accounts and audit. Subsequently, we prepared a draft CB for public consultation in two phases between December 2009 and August 2010. All of the five consultations were targeted at the public. For each round of consultation, a consultation paper setting out key issues and questions for consultation was issued and public consultation forums were held. After the end of the consultation period, consultation conclusions containing our analysis of and responses to public views were published. The consultation papers, consultation conclusions and the compendiums of submissions or the public responses received are all available on the Financial Services and the Treasury Bureau's website. On publicity, for each time we published a consultation paper or consultation conclusions, a press release was also issued to inform the public of the same. The Legislative Council Panel on Financial Affairs was consulted or briefed on the progress of work on a number of occasions at different 5500 LEGISLATIVE COUNCIL ─ 30 January 2013

stages of the rewrite exercise. Relevant details of the five public consultations are at the Annex.

We issued the "Consultation Paper on Draft Companies Bill ― First Phase Consultation" on 17 December 2009 for a three-month public consultation. As regards the issue of inspection of the usual residential addresses and full identification numbers of persons such as directors or company secretaries, in light of the concern over privacy protection and the experience of other countries which have amended their relevant laws, and taking into account the view expressed during the drafting of the CB that the public should be consulted on the issue, we dedicated a separate chapter (Chapter 7) in the Consultation Paper to discuss this issue and specifically sought views on whether the residential addresses and full identification numbers of directors and company secretaries should continue to be made available for public inspection. We also asked the public that if their answers to the question were in the negative, whether the approach in the United Kingdom or that in Australia in that regard should be adopted. On the first day of the consultation period, we invited the media to a press briefing on the relevant details and noted that there was media coverage about the issue afterwards. On 4 January 2010, we attended a meeting of the Legislative Council Panel on Financial Affairs to consult its Members. On 4 February 2010, we held a public consultation forum for the first phase consultation on the draft CB. Between January and March 2010, we also attended meetings organized by various professional bodies and stakeholders on the Bill. At the aforesaid public consultation forum, Legislative Council meeting and other meetings, and in all the relevant papers and publications, we had set out the key issues for consultation, including whether the residential addresses and full identification numbers of directors and company secretaries should continue to be made available for public inspection.

On 30 August 2010, we published the consultation conclusions for the above consultation, giving a detailed account of the views received. A press release on the consultation conclusions was issued on the same day. On 1 November 2010, we attended another meeting of the Legislative Council Panel on Financial Affairs to brief Members on the consultation conclusions, including those in LEGISLATIVE COUNCIL ─ 30 January 2013 5501

respect of the proposal of restricting access to the residential addresses and full identification numbers of persons such as directors or company secretaries on the Companies Register.

Thereafter, during the scrutiny of the CB by the Bills Committee formed by the Legislative Council, we presented papers to the Bills Committee on the outcomes of the public consultation and the proposals in the Bill. The issue was discussed at seven meetings held by the Bills Committee between April 2011 and May 2012 and all were open meetings. In the course of discussions, we reached a consensus with the Bills Committee that after enactment of the Bill, the relevant subsidiary legislation will specify, among others, members of the relevant companies, public officers (including law-enforcement agencies and the Labour Department) and liquidators as persons who may apply to the Companies Registry for inspecting the residential addresses and full identification numbers of persons such as directors or company secretaries. There is clear record of the discussions, including the details of the proposals, Members' views and our responses in the report of the Bills Committee which was tabled at the Legislative Council meeting on 27 June 2012.

(b) When conducting public consultation for proposed Bills, the Government will mainly take into account the purpose of consultation, the nature of the subject and resources available in order to determine the means and targets of public consultation, and which organization should be tasked to conduct the consultation and analyse the results. Within the time available for replying this question, we have gathered information from bureaux and departments that in the past five years from 2008 to 2012, the Government has issued 45 public consultation documents for proposed Bills. Bureaux and departments have adopted suitable means for consultation (for example, through public consultation sessions), announced the consultation results (for example, through press conference) and taken into account the relevant analyses in the drafting and legislative process of the Bills.

(c) It is the Government's declared policy to be, as far as possible, open and transparent, and to be accountable to the public. It is also 5502 LEGISLATIVE COUNCIL ─ 30 January 2013

essential for the Administration to take public opinion into account when formulating policies and programmes. Accordingly, when conducting a public consultation exercise, bureaux and departments would set the scope of consultation as wide as possible in order to enable the Government to listen to the views of various sectors of the community. Bureaux and departments would also establish the practice that the public be informed of the results of consultation exercises.

Annex

Details of Public Consultations on the CB

Date of Date of Issuing Date of Issuing the Consultation Consultation Document Consultation Consultation Document Period Forum Conclusions Rewrite of Companies 29 March 2007 3 Months 4 June 2007 26 March 2008 Ordinance ― First Topical Public Consultation on Accounting and Auditing Provisions Rewrite of Companies 2 April 2008 3 Months 28 May 2008 10 December 2008 Ordinance ― Second Topical Public Consultation on Company Names, Directors' Duties, Corporate Directorship and Registration of Charges Rewrite of Companies 26 June 2008 3 Months 9 September 2008 2 February 2009 Ordinance ― Third Topical Public Consultation on Share Capital, the Capital Maintenance Regime and Statutory Amalgamation Procedure Draft CB ― First Phase 17 December 2009 3 Months 4 February 2010 30 August 2010 Consultation Draft CB ― Second Phase 7 May 2010 3 Months 22 June 2010 25 October 2010 Consultation

LEGISLATIVE COUNCIL ─ 30 January 2013 5503

Duties of Phlebotomists

10. DR KWOK KA-KI (in Chinese): President, it has been reported that last month in Queen Elizabeth Hospital, a paediatric phlebotomist administered intravenous drip on a 19-month-old baby girl, but the syringe needle was subsequently dislocated, causing the saline solution to go into the muscle; and as the dislocation was not detected until four hours later, the baby girl's arm had swollen and turned purple. Some healthcare personnel explained to the baby girl's parents afterwards that the failure to detect promptly the dislocation of the syringe needle was related to severe manpower shortage. In this connection, will the Government inform this Council whether it knows:

(a) the number of phlebotomists currently employed in each of the public hospitals;

(b) the scope of the duties of phlebotomists working in public hospitals, and whether duties (such as administration of intravenous drip) apart from blood taking are included; whether the relevant guidelines have specified that phlebotomists may carry out duties apart from blood taking in paediatric wards and geriatric wards; if so, of the criteria for formulating such guidelines; if this is not specified in the guidelines, the reasons for that;

(c) whether the Hospital Authority (HA) had provided any pre-service training for phlebotomists in the past three years; if so, of the number of attendances of phlebotomists in such training and the average hours of training they received; if not, whether it has any plan to provide such training; if it has, of the details; and

(d) the number of medical incidents involving phlebotomists which occurred in public hospitals in each of the past three years, together with a breakdown by the hospitals and departments involved?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, to relieve the heavy workload of front-line doctors in public hospitals, the HA has implemented a number of pilot doctor work reform programmes since 2007. Under the programmes, Patient Care Assistant (PCA) grade staff (including Clinical Assistants) (CA) have been recruited in various acute general hospitals in 5504 LEGISLATIVE COUNCIL ─ 30 January 2013 phases to provide 24-hour blood-taking services and other relevant patient care technical support services. This measure has proved to be effective in alleviating the workload of healthcare staff and improving their working environment and is well received among the staff.

My reply to the various parts of the question is as follows:

(a) As at the end of December 2012, there were 516 CA under the PCA Grade in the HA, mainly working in the acute general hospitals. The number of CA in each hospital cluster is as follows:

Hospital Cluster Number of CA Hong Kong East 50 Hong Kong West 43 Kowloon Central 79 Kowloon East 99 Kowloon West 108 New Territories East 100 New Territories West 37 Total 516

Note:

As the timeline of implementing the pilot doctor work reform programmes varies among hospital clusters, coupled with the difference in the number of acute general hospitals under each hospital cluster, as well as the difference in specialties available in and services provided by the hospitals, the number of CA employed in each hospital cluster differs as well.

(b) and (c)

The duties of CA include blood-taking from adult and paediatric patients; carrying out blood glucose and haemoglobin tests, taking blood with the use of aseptic technique for bacteriological cultures, conducting electrocardiograms for patients, and performing general intravenous cannulation procedures.

All staff performing the duties of CA have to attend a training course organized by the HA. Only those who have passed the assessment and have been awarded a certificate will be formally offered appointments. The CA course lasts for around one year and covers LEGISLATIVE COUNCIL ─ 30 January 2013 5505

training on blood-taking techniques, electrocardiogram examination and intravenous cannulation, and so on, including 35 hours of classroom training and three hours of written assessment, so as to ensure that the CA staff are well acquainted with the knowledge, techniques and procedures of blood-taking, electrocardiogram examination and intravenous cannulation. Besides, CA trainees are required to undergo 315 hours of clinical practice and pass the skills assessments, and to undergo six months of supervised on-the-job training, so as to ensure that upon completion of their training, they are fully capable of performing the work of blood-taking, electrocardiogram examination and intravenous cannualtion in clinical settings, with a view to maintaining the service standard and quality. From 2010 to 2012, about 1 110 staff have completed the training course.

Blood-taking from adult and paediatric patients is one of the CA's routine duties. With the training provided by the HA, they are fully capable of performing their duties in order to relieve the workload of other front-line healthcare personnel (including doctors and nurses).

(d) According to the HA's records, the number of clinical accidents involving the PCA staff (including CA) reported in the past three years are as follows:

Hospital Cluster 2010 2011 2012 Overall Hong Kong East 3 5 5 13 Hong Kong West 14 7 20 41 Kowloon Central 2 2 6 10 Kowloon East 13 3 7 23 Kowloon West 7 10 12 29 New Territories East 4 12 15 31 New Territories West 10 17 19 46 Overall 53 56 84 193

Note:

The above figures cover all cases of accidents involving staff of the PCA grade (including accidents involving the PCA staff who are not CA). These cases are of varying degree of severity and only a minority of them was serious cases.

5506 LEGISLATIVE COUNCIL ─ 30 January 2013

Delays in Traffic Improvement Works

11. MR ALBERT HO (in Chinese): President, it has been learnt that the Highways Department (HyD) has all along grouped small traffic improvement works in the New Territories into three districts (namely New Territories West, New Territories Northeast and New Territories Southeast) for tender purpose. Some members of the public have relayed to me that the progress of such works is slow. In this connection, will the Government inform this Council:

(a) of the average time taken to complete traffic improvement works after issuance of the Works Request Forms by the Transport Department (TD) in the past three years, as well as the respective shortest and longest time taken for such works, with a breakdown by the aforesaid districts;

(b) of the reasons why it has taken one year or even over two years to complete some simple traffic improvement works; the general causes for delays in such works, and whether such causes are related to manpower shortage on the part of the HyD or the contractors;

(d) whether it will consider reducing the areas to be covered in the traffic improvement works contracts and shortening the contract periods so that more contractors can be engaged to expedite the progress of such works; if it will, when it will do so; if not, of the reasons for that?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, the HyD is responsible for the maintenance of public roads and associated road facilities under its jurisdiction. Regular inspections are arranged and timely repair works are conducted. The HyD will also carry out district road improvement works in accordance with the proposals of the TD with a view to enhancing road facilities. As far as the New Territories is concerned, the HyD has engaged one contractor each for the three districts concerned, namely, New Territories Southeast, New Territories Northeast and New Territories West, to implement the maintenance works and minor road improvement works within the respective designated contract areas (DCAs).

LEGISLATIVE COUNCIL ─ 30 January 2013 5507

Our reply to Mr Albert HO's question is as follows:

(a) In the past three years (that is, 2010 to 2012), the TD issued about 3 600 works requests to the HyD for carrying out district road improvement works in New Territories. The completion time for such works in various DCAs subsequent to the issuance of works requests by the TD is detailed in the table below:

New New New Territories Territories Territories Southeast Northeast West Shortest completion time 3 days 16 days 7 days Longest completion time 26 months 25 months 24 months Average completion time 6 months 7 months 4 months

Overall speaking, the distribution of the completion time of works in New Territories is as follows:

Percentage of Completion Time Number of Works Projects Completed within 6 months 68% Completed within 6 to 12 months 22% Completed within 12 to 24 8% months Taking more than 24 months to 2% complete

We must stress that improvement works vary in scope as well as complexity. As such, we cannot directly compare the time required for completing individual works.

(b) As shown by the table above, the road improvement works can generally be completed in about six months' time.

Upon receiving the works requests from the TD, the HyD will send staff to conduct site inspections at the locations concerned, assess the feasibility of improvement works and the necessary procedures as well as draw up a priority list for the works in order to arrange the 5508 LEGISLATIVE COUNCIL ─ 30 January 2013

commencement dates for individual works items. The HyD will arrange prompt implementation of urgent works while following up on the remaining works in a timely manner.

Before commencement of each works project, the HyD has to carry out the relevant advance work, including preparation of temporary traffic arrangements, arrangement for diversion of public utilities, application for tree transplant and consultation with stakeholders. The advance works required by each project differ. Some projects are constrained by the actual conditions and involve a larger amount of changes. They would require a longer process of consultation with stakeholders. For such projects, the HyD also has to closely coordinate the efforts among various departments and public utility companies concerned. Therefore, it will take a longer time to process the advance works and carry out the works.

For works item of local concern, the HyD would report to the Traffic and Transport Committees of the concerned District Councils the works progress.

(c) To ensure timely completion of the works, a completion date is specified in each works order issued to the contractors by the HyD. The works progress has been stringently monitored by the HyD. If the contractors fail to complete the works concerned before the deadline, the HyD will take appropriate actions as stipulated in the contract terms. Such actions include imposition of liquidated damages, issuance of warning letters and reflecting such failures in the contractors' quarterly performance reports, which would be one of the criteria to assess the contractors when they bid for Government projects in the future. Regarding works of a general nature, the contractors are able to finish the works by the completion dates specified in the works orders.

(d) To implement maintenance works of public roads, a contractor must possess sufficient experience and resources, especially the capability of carrying out timely repair works during emergencies, to cater for the actual operational needs. Therefore, contractors with expertise, resources and experience should be attracted to participate in the tender process. An appropriate delineation of DCA guarantees the LEGISLATIVE COUNCIL ─ 30 January 2013 5509

contractors of a stable number of works projects, whereas a contractual period of appropriate length facilitates the proper planning, deployment of sufficient quality equipment and machinery as well as injection of adequate resources by the contractors to tackle the intensive district maintenance works within the duration of the contract.

While considering the DCA delineation and contractual period for road maintenance works contracts in the New Territories as appropriate (currently six years in general), the HyD will keep a close watch over the performance of its contractors and review the situation on a regular basis. In case of unsatisfactory performance of a contractor during the contractual period, the HyD has the right to terminate the contract early.

Short-term Measures to Increase Supply of Residential Sites and Units

12. MR ALAN LEONG (in Chinese): President, according to the figures provided to this Council by the Development Bureau in October 2012, in the unleased or unallocated Government land on the statutory plans of Hong Kong, (i) there are a total of 391.5 hectares of land zoned "Residential" or "Commercial/Residential", among which 18.9 hectares have been included in the Application List for land sale (the Application List), with 372.6 hectares of the land remaining; and (ii) there are 932.9 hectares of land which are zoned "Village Type Development" mainly for the development of New Territories small houses. The Chief Executive has stated in his newly delivered Policy Address that "the top priority of the current-term Government is to tackle the housing problem". Regarding the short-term measures to increase the supply of residential sites and units, will the Government inform this Council:

(a) whether the Government has drawn up a timetable on how the aforesaid 372.6 hectares of land zoned "Residential" and "Commercial/Residential" can be put to good use; if it has, of the details; if not, the reasons for that;

(b) as the Secretary for Development has indicated that "tackling the problem of small houses is still on the work schedule of the Development Bureau", whether the Government has considered 5510 LEGISLATIVE COUNCIL ─ 30 January 2013

allocating immediately a portion of the aforesaid 932.9 hectares of land zoned "Village Type Development" for residential development; if it has, of the details; if not, the reasons for that;

(c) as there are currently 30 residential sites on the Application List, whether the Government will take the initiative to sell some of the sites therein, or even resume regular land sale; if it will, of the details; if not, the reasons for that; and

(d) as it has been reported that the uncompleted residential properties approved by the Government for sale in the past half-year involved a total of 7 885 units, but the number of units offered for sale in the market by developers was much smaller than this, whether the Government has any measures in place to prevent developers from hoarding residential flats approved for sale, so as to increase the supply of private residential flats; if it has, of the details; if not, the reasons for that?

SECRETARY FOR DEVELOPMENT (in Chinese): President, my reply to the question raised by Mr Alan LEONG is as follows:

(a) In reply to a question on "vacant Government land" raised in the Legislative Council on 17 October 2012, the Administration already made it clear that unleased or unallocated Government land is not equivalent to land immediately available for development. The figures of the relevant land areas are obtained simply by subtracting the leased or allocated areas under respective land use zonings from the total areas covered by such zones on the statutory plans, based on statistics as at the end of June 2012.

According to the location maps of unleased or unallocated Government land released by the Development Bureau on its website on 17 October 2012, excluding roads/passageways, man-made slopes, land allocated under the Simplified Temporary Land Allocation procedures and fragmented sites (sites less than 0.05 hectares in area), among the remaining 391.5 hectares of Government land in the "Residential" and "Commercial/Residential" zones, there are still a number of sites with irregular shapes (for LEGISLATIVE COUNCIL ─ 30 January 2013 5511

example, empty space between buildings, back lanes and narrow strips of land alongside existing developments, highways or other amenities), which may not be suitable for housing development.

The suitability of individual sites for development depends on a number of factors, such as their geographical suitability, the adequacy of related infrastructural facilities, compatibility with neighbouring land uses (for example, whether the site is too close to existing or planned buildings or roads), and so on. Some sites may require technical studies to ascertain their development feasibility, and some may have remained undeveloped pending the completion of related infrastructural or site formation works.

For land with potential for development, the Administration will review and assess its development feasibility under the established mechanism. Furthermore, when a plot of land is ready for development, the Administration will, as soon as possible, make appropriate arrangements, such as allocating it for public housing development, including it in the Application List, or allocating it for other uses. This is an ongoing process under which the Administration will allocate a site for suitable development as and when the relevant planning procedures have been duly completed. As such, no timetable has been set.

(b) Under the Small House Policy, a male indigenous villager at least 18 years old who is descended through the male line from a resident in 1898 of a recognized village in the New Territories may apply to the authorities for permission to erect for himself during his lifetime a small house on a suitable site within his own village. The authorities have a policy responsibility to plan for "Village Type Development" sites.

As stated in the reply to a question raised in the Legislative Council on 17 October 2012, land under the "Village Type Development" zoning on statutory plans scatters across the territory and is mainly located in recognized villages in the New Territories. At present, there are in total 642 recognized villages approved by the Lands Department. In general, these sites are not suitable for large-scale 5512 LEGISLATIVE COUNCIL ─ 30 January 2013

development because of their sporadic locations and infrastructural constraints.

Over the nearly four decades since the implementation of the Small House Policy, much has changed in the rural setting as well as in the community at large. Having regard to the present-day land use planning and the principle of optimal use of land resources, the Administration recognizes the need for a review of the Small House Policy. Such a review will inevitably involve complicated issues in various aspects including legal, environment, land use planning and demand on land, and so on, all of which have to be carefully examined. We will continue to engage various sectors of the community in discussion and communication in this regard.

(c) Since 2010, the Administration has fine-tuned the arrangement for the sale of government sites by initiating sale through public auction or tender while retaining the Application List system, and announcing quarterly land sale programme in advance. Announcing annually the List of Sites for Sale by Application and quarterly in advance the programme of government-initiated land sale has been implemented for nearly two years. This provides the market with a transparent and certain programme of land supply and at the same time allows the Government to respond to market demand and adjust the pace of government-initiated land sale, in order to maintain a sustained and steady supply of land to the market.

Regarding housing land supply, the Administration seeks to ensure that there will be adequate land to meet the subsidized housing production targets. At the same time, the Administration also has a responsibility to cater for the public's demand for private residential units by supplying land for private housing development, so as to ensure the healthy development of the property market. At present, the Administration already has an established mechanism for allocating land for construction of subsidized housing as well as private housing. The Administration will provide the Housing Authority with suitable land to build subsidized housing. The Administration also maintains a certain number of sites in the Land Sale Programme in order to provide a steady supply of sites through LEGISLATIVE COUNCIL ─ 30 January 2013 5513

land sale for private residential development in the market. Excluding the sites sold/to be sold and a site allocated for Home Ownership Scheme development, there remain 22 unsold residential sites in the 2012-2013 Land Sale Programme instead of 30.

(d) There were 12 residential developments, involving 7 885 residential units, approved for presale by the Director of Lands from July to December 2012. As at 22 January this year, amongst these units, relevant developers have offered 4 715 units for sale by releasing the price lists. The Agreements for Sale and Purchase in respect of 2 394 of these units have been entered into as at 31 December 2012.

If the Government lease so provides, developers may apply for presale consent for units in residential developments under construction up to 20 months in advance of the anticipated completion date. The decision as to whether or not to apply for such presale consent rests with the developers. If they have applied for presale consent, upon receipt of the Director of Lands' consent, developers will generally put the units up for sale as soon as practicable. In line with the established principle of upholding the market mechanism, we do not impose restriction on the time for private developers to offer their uncompleted residential units for presale. In view of recent public concern over the supply of first-hand private residential properties, the Government will closely monitor the trend of developers offering residential properties for presale. We hope that developers will sell as soon as possible projects that have been granted presale consent in order to meet market demand.

Supply of Centralized Domestic LPG

13. MR GARY FAN (in Chinese): President, in the past one-odd year, the retail prices of centralized domestic liquefied petroleum gas (LPG) have fluctuated greatly ($35.58, $41.3, $32.89 and $42.22 per cubic metre in late 2011, April, July and October 2012 respectively). Many members of the public have relayed to me their dissatisfaction. They are not only furious about the exorbitant LPG prices, but also discontented with the Government condoning profiteering by LPG suppliers without any regulation. At present, there are 15 5514 LEGISLATIVE COUNCIL ─ 30 January 2013 housing estates under the management of the Hong Kong Housing Authority (HA) installed with central LPG supply system, but there are only three central LPG suppliers and only one of them has taken the initiative to adopt a pricing mechanism to review the retail prices of LPG regularly. However, some members of the public have pointed out that the transparency of the mechanism is considerably low, and monitoring is difficult as the general public do not know how the formula for setting the prices works. In this connection, will the Government inform this Council:

(a) whether it will take the initiative to discuss with central LPG suppliers the setting up of a fair and open LPG pricing mechanism; if not, how the authorities assist members of the public in monitoring LPG prices;

(b) whether it knows the reasons for the several central LPG suppliers in Hong Kong often adjusting the prices simultaneously at present; given that various LPG suppliers should have different operating costs as they are of varying scales, whether the Government will investigate if the suppliers have engaged in collusive pricing for profiteering;

(c) given the continuous rise in contract prices of LPG from Saudi Arabia in recent years, leading to the corresponding rise of local retail prices of LPG, whether the Government will consider introducing concessionary measures to subsidize members of the public to shift to use other energy sources (for example, electricity);

(d) given the substantial fluctuations of LPG prices, whether the Government will consider providing fuel subsidies to LPG users when LPG import prices have exceeded a certain level;

(e) given that the measuring units of auto LPG, cylinder LPG and centralized domestic LPG are litre, kilogram and cubic metre respectively, whether it knows why the suppliers use different measuring units; whether the Government has plans to standardize the units concerned to facilitate monitoring by the public;

(f) given that residents of housing estates currently under the management of the HA and installed with only a central piped LEGISLATIVE COUNCIL ─ 30 January 2013 5515

domestic LPG system (such as Kwong Fuk Estate and Tai Yuen Estate in Tai Po and Choi Yuen Estate in Sheung Shui) usually choose to use LPG as fuel, thus having to bear the risk of LPG price fluctuations, whether the Government will provide subsidies to residents in those housing estates or even speed up the redevelopment plans of those estates, so as to alleviate the unfair situation caused by the supply of different centralized fuels to different housing estates; if not, whether the Government will assess if the current practice of residents of public rental housing bearing the risk of LPG price fluctuations is reasonable;

(g) given that the Government has pointed out that, under the existing contract terms with LPG companies, the installation of Towngas distribution network may commence only after the expiry of the existing LPG supply contracts, whether the Government will repeal such terms when entering into new LPG supply contracts, so as to provide an option of supplying Towngas to the housing estates concerned in future; if it will not, of the reasons for that; and

(h) whether it knows the changes in retail prices of centralized domestic LPG from January 2007 to December 2012 (set out the figures of different companies in the table below)?

Company: ______

Year Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2007 2008 2009 2010 2011 2012

SECRETARY FOR THE ENVIRONMENT (in Chinese): President,

(a) In accordance with existing mechanism, a local oil company sets the domestic LPG prices for the coming three months by forecasting the 5516 LEGISLATIVE COUNCIL ─ 30 January 2013

import prices for the coming three months in light of the latest international LPG price (that is, contract prices of LPG from Saudi Arabia), and making positive or negative adjustment for any difference between the actual import prices and the forecast import prices in the last review. The review of operating costs is conducted once every year at end January.

The price increase announced in October 2012 as mentioned in the question was mainly due to the rise in import price forecasts from November 2012 to January 2013, and the positive price adjustment arising from actual and forecast price difference in the last review. In the price review of January this year, with the fall in the oil company's import price forecasts from February to April 2013, the company just announced on 25 January a 5.5% reduction in the price of piped domestic LPG. Under this mechanism, the local price of domestic LPG will be adjusted in tandem with the movement of international LPG prices.

Price adjustment is made once every three months in accordance with the established mechanism. After each price review, the oil company also announces and explains to the public the outcome of the review.

(b) We understand that the adjustments of domestic LPG prices of other oil companies in the market basically follow that of the oil company mentioned in part (a). Therefore, their prices are very close to one another's.

The Competition Ordinance (the Ordinance) was passed by the Legislative Council in June last year. The Ordinance regulates anti-competitive conduct (including price fixing, abuse of market LEGISLATIVE COUNCIL ─ 30 January 2013 5517

power, and so on) in various sectors, with a view to promoting fair and sustainable competition in the market. The Government will implement the Ordinance in phases, with priority in the establishment of the Competition Commission (the Commission) and the Competition Tribunal (the Tribunal). Provisions relating to the Commission have taken effect on 18 January, whereas provisions relating to the Tribunal will commence on 1 August. The Commission has the power under the Ordinance to investigate into competition-related complaints, and to bring public enforcement action before the Tribunal, either on receipt of complaints, on its own initiative, or on referral from the Government or a court.

The fuel prices in Hong Kong are determined by individual oil companies with regard to commercial principles and their operating costs; the general public will also make a choice of fuel with regard to their particular circumstances.

The Government understands and is concerned about the impact of LPG prices on the general public, and hence encourages the industry to enhance the transparency of price setting. We are also committed to ensuring a reliable supply of energy.

The Government currently has no plan to use public money to subsidize domestic LPG users.

(e) As the mode of operation and sales of auto-LPG, cylinder LPG and piped LPG are different, it is necessary to use different measuring units. Standardization of measuring units is not feasible.

Specifically, cylinder LPG is filled in the container in liquid form before it is measured in weight, normally in kilogram. This is similar to the practice in other regions or cities. Piped LPG is supplied to consumers in gas form through pipelines. The volume of gas passing through the gas meter is measured in cubic metre. Auto-LPG, on the other hand, is pumped into vehicles through nozzle in liquid form in petrol filling stations. Same as other auto-fuels, it is measured in litre.

5518 LEGISLATIVE COUNCIL ─ 30 January 2013

(f) As for public housing estates, it is the policy of the HA that Towngas would be provided to public housing tenants wherever possible. Nonetheless, the HA would engage LPG suppliers for public housing estates in remote locations or estates developed years ago when there was no coverage of Towngas at the time of construction of the estates concerned. The LPG supply contracts signed between the HA and the concerned suppliers provide that the LPG price should not be higher than the prevailing private market level, which is also the price paid by other LPG users (including domestic users in private properties or commercial users). Also, under the terms of the LPG supply contracts, other than the central LPG supply, users in public housing estates may choose to use other forms of fuels such as electricity or cylinder LPG.

In fact, the price charged to the users of piped LPG in the public housing estates managed by the HA has been the same as the market price published regularly.

As regards the redevelopment of aged public housing estates, the HA will continue to rely on the result of the "Comprehensive Structural Survey Programme" and consider structural safety, cost-effectiveness of repair options, redevelopment potential and availability of rehousing resources, so as to determine the feasibility and timetable of individual estate's redevelopment programme.

There is competition in the domestic fuel market. The general public may make a choice of fuel with regard to their particular circumstances. LPG prices are determined by individual companies having regard to commercial practices, market conditions and their operating costs. Implementation of any form of price regulatory regime would be inconsistent with the principle of free market. The Government has no plan to use public money to subsidize domestic LPG users.

(g) With regard to converting gas supply from LPG to Towngas in public housing estates, it is difficult to find adequate space for the installation of a Towngas distribution network in a building with its external walls and corridors already occupied by an existing LPG distribution network. The conversion would be technically LEGISLATIVE COUNCIL ─ 30 January 2013 5519

complicated and costly and require the piped gas supply to be suspended during the installation period, thus creating tremendous disturbance to the tenants. Users would need to replace, at their own expenses, all their household gas appliances with Towngas compatible ones. Hence, conversion to Towngas would bring upon the users tremendous disturbance and financial burden. The HA has no plan for such conversion at present.

The HA would continue to consider contract renewal with LPG suppliers on the premise of a safe and stable gas supply and with regard to the suppliers' past service performance and maintenance standard, and so on, and would review and introduce the necessary contractual terms and conditions that serve the best interest of the users in public housing estates.

(h) The retail prices of domestic piped LPG of oil companies from January 2007 to December 2012 are as follows:

Shell

Year Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2007 28.67 30.32 31.27 32.95 2008 32.95 36.90 37.41 37.87 31.58 2009 31.58 27.14 27.65 30.40 32.45 2010 32.45 34.77 34.28 31.79 35.91 2011 35.91 38.32 39.64 36.35 35.38 2012 35.38 40.23 41.30 32.89 42.22

Sinopec

Year Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2010 34.28 31.79 35.91 2011 35.91 38.32 39.64 36.35 35.38 2012 35.38 40.23 41.30 32.89 42.22

Note:

Since Sinopec operates the business of piped domestic LPG for less than three years, only data from May 2010 to October 2012 could be provided.

5520 LEGISLATIVE COUNCIL ─ 30 January 2013

ExxonMobil Hong Kong Limited (EMHK)

As explained by EMHK, it sells piped LPG to the pipeline operators, rather than to the end consumers direct. The actual selling price to the end consumers is in turn determined by the pipeline operators. The piped LPG price is one of the commercial terms with EMHK's operators, and is therefore confidential and proprietary in nature. EMHK is hence unable to make public the requested information.

Residential Units Produced by Projects Undertaken by Private Sector

14. MR ABRAHAM SHEK: President, will the Government inform this Council of the respective numbers of residential units produced from projects undertaken by the private sector in each of the years from 2002 to 2011 on sites involving applications for (i) lease modification, (ii) land exchange and (iii) private treaty grant?

SECRETARY FOR TRANSPORT AND HOUSING: President, in response to Mr Abraham SHEK's question, we have consolidated the required information, as tabulated below, based on the data and statistics provided by the Lands Department, the Buildings Department and the Rating and Valuation Department. As the Government has only started compiling the relevant statistics since 2004, we are not able to provide the same for 2002 and 2003.

Approximate number of residential units developed on the sites concerned(1) Year Lease Private treaty Land exchange Total modification grant 2004 7 700 2 600 3 400 13 700 2005 7 800 200 3 500 11 500 2006 5 700 900 4 800 11 400 2007 3 100 200 3 400 6 800 2008 4 100 500 2 200 6 700 2009 2 700 200 2 400 5 400 LEGISLATIVE COUNCIL ─ 30 January 2013 5521

Approximate number of residential units developed on the sites concerned(1) Year Lease Private treaty Land exchange Total modification grant 2010 3 400 800 4 400 8 700 2011 1 800 300 4 000 6 100

Note :

(1) The figures have been rounded off to the nearest hundred. As such, the total number(s) may not be equal to the sum of the itemized figures.

Problems of Overcrowding at Hung Hum MTR Station's Train Platforms and Footbridges Connecting the Station

15. DR FERNANDO CHEUNG (in Chinese): President, some members of the public have relayed to me that, every day during commuting hours, many passengers wait for trains at Hung Hom MTR Station's train platforms and a large number of passengers use the escalators in the Station to shuttle among various platforms to change trains, making the platforms very congested and chaotic. Moreover, the pedestrian walkways and footbridges connecting the Station's Exits A, B and D are pathways necessary for access to the cross-harbour tunnel bus and minibus stops, The Hong Kong Polytechnic University and the Hong Kong Coliseum, and therefore are also very crowded. In this connection, will the Government inform this Council:

(a) of (i) the respective pedestrian flows at the Hung Hom MTR Station, the bus stops at the Kowloon entrance of the Cross Harbour Tunnel (CHT), as well as the aforesaid pedestrian walkways and footbridges, (ii) the number of accidents caused by overcrowding at such locations, and (iii) the number of complaints received by the relevant authorities from members of the public about overcrowding at these locations, in each of the past five years; the respective measures taken by the relevant government departments, the MTR Corporation Limited (MTRCL) and various franchised bus companies at such locations to maintain order and to facilitate the crowd flows;

5522 LEGISLATIVE COUNCIL ─ 30 January 2013

(b) of the designed hourly loading capacity of the escalators in the Station connecting the various train platforms; (i) the average hourly flow of commuters using the escalators during peak hours, (ii) the number of complaints received by the relevant authorities from members of the public about overcrowding on the escalators in the Station, and (iii) the number of accidents of passengers falling onto the rail tracks in the Station, in the past five years; whether the MTRCL will install additional escalators in the Station to connect the platforms, and when platform screen doors will be retrofitted at the Station; and

(c) given that the Station has been in use for more than three decades and the facilities there are insufficient, whether the authorities will review if the Station is suitable for use as the terminus for the East Rail and the West Rail Lines, and whether they have any plan to use the East Tsim Sha Tsui Station (East TST Station) as the terminus instead?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, my reply to the various parts of the question raised by Dr Fernando CHEUNG is as follows:

(a) Pedestrian flow at MTR Hung Hom Station, walkways of the station, bus stops near the CHT portal and connecting footbridges, as well as figures on incidents due to overcrowding and relevant complaints according to the Transport Department (TD) and the MTRCL are at Annex.

The MTRCL keeps a close watch over the operation of Hung Hom Station. Observation shows that the station is generally in good order with smooth pedestrian flow, providing train services and station facilities that meet commuters' needs as a whole. Meanwhile, crowd control and safety measures are implemented at station platforms, connecting walkways and footbridges. Such measures include (i) deploying platform assistants to maintain order and assist passengers at the platforms; (ii) installing closed-circuit television systems to effectively monitor and manage pedestrian flow; and (iii) displaying various pedestrian signage to guide LEGISLATIVE COUNCIL ─ 30 January 2013 5523

commuters to nearby destinations and waiting areas of other public transport means.

At present, the footbridge linking Hung Hom Station and The Hong Kong Polytechnic University is relatively congested during peak hours, mainly due to passengers queuing up along the footbridge section between station exits and the staircases leading to cross-harbour bus stops for rail-bus interchange.

The TD has been monitoring the pedestrian flow at the aforesaid location. Appropriate improvement measures have been implemented in consultation with other government departments and public transport operators. Such measures include (i) liaising with the Food and Environmental Hygiene Department to curb hawking activities and repositioning litter bins on the footbridges; (ii) liaising with the MTRCL and franchised bus companies to install additional directional signs and line-up markings on walkways, footbridges and bus stops to help maintain order of queuing passengers; and (iii) working with franchised bus companies to improve queuing arrangements to facilitate pedestrian flow. In addition, the franchised bus companies have relocated three bus regulators' kiosks to spare more queuing space for passengers. Special arrangements are also made, such as operating special bus trips during peak hours, allowing passengers to board via both the front door and rear exit to speed up boarding and deploying additional field staff to maintain order at bus stops and connecting footbridges nearby.

According to recent inspections by the TD, queuing at the aforesaid bus stops is generally in good order. The environment of the walkways and footbridges connecting Hung Hom Station has been improved.

(b) Currently, there are altogether 24 escalators at Hung Hom Station linking the concourse and the platforms. The MTRCL does not have on-site statistics of passenger flow on the escalators. Based on an operational speed of 0.6 m per second, each escalator handles a load of 130 commuters per minute. In the past five years, the MTRCL received no complaint about overcrowding on the 5524 LEGISLATIVE COUNCIL ─ 30 January 2013

escalators inside the station but there was one accident(1) in which a passenger fell onto the track in Hung Hom Station. The MTRCL has no plan for the time being to install additional escalators at the platforms of Hung Hom Station but will later on consider such installation during the detailed design of the Shatin to Central Link (SCL) project.

As for the retrofitting of automatic platform gates (APGs), according to the plan of the MTRCL, the retrofitting works at the platforms of the East Rail Line (EAL) stations (including Hung Hom Station) will be implemented in tandem with the SCL project to achieve synergy. It is expected that the APGs of the EAL will be put into service upon commissioning of the North South Corridor of the SCL in 2020. As regards the retrofitting of APGs at the Ma On Shan Line, this will also be implemented in tandem with the SCL project to achieve synergy. It is expected that the APGs will be put into service in 2017, one year ahead of the original plan.

(c) The Government has no plan to develop East TST Station into an interchange station. With the design of only two platforms, it cannot provide sufficient space for train shunting, thus not fit for use as an interchange station. In addition to its existing four platforms, Hung Hom Station is equipped with two platforms for intercity through trains and a freight platform. Compared with East TST Station, Hung Hom Station is adjacent to the CHT and served by well-developed supporting transport facilities, including the Cheong Wan Road public transport interchange and tunnel toll plaza where boarding and alighting facilities for cross-harbour buses are available, making it an ideal site for interchanging between trains and other land transport alternatives.

Upon commissioning of the entire SCL, two strategic railway corridors, namely the East West Corridor and the North South Corridor, will be formed. The East West Corridor connects Ma On Shan Line with West Rail Line, enabling passengers to travel directly from Wu Kai Sha Station to Tuen Mun Station; the North

(1) The accident took place on 26 February 2011 in which a blind passenger slipped at the platform and fell onto the track. LEGISLATIVE COUNCIL ─ 30 January 2013 5525

South Corridor extends the existing EAL from Hung Hom Station across the harbour to Admiralty Station. In future, passengers of both corridors may interchange at Hung Hom Station.

To cater for the operation of the SCL upon completion, major extension and improvement works will be carried out at Hung Hom Station, including the construction of additional platforms to provide greater convenience for passengers interchanging between railway lines.

When the North South Corridor is open, passengers may travel across the harbour directly via the EAL, thus reducing the rail-bus interchange demand at Hung Hom Station. This will help relieve the congestion there.

Annex

Pedestrian Flow, Incident Figures and Number of Complaints

Pedestrian flow at MTR Hung Number of passengers entering and exiting the Hom Station station during the busiest hour from 8 am to 9 am(1): 2008 19 100 2009 24 400(2) 2010 27 700 2011 28 600 2012 31 700 Pedestrian flow at walkways of The MTRCL has no statistics on pedestrian Hung Hom Station flow at connecting footbridges and walkways of Hung Hom Station. Pedestrian flow at CHT bus Pedestrian flow during the busiest hour from stops 8 am to 9 am ranges from about 10 000 to 11 000 per hour: 2008 10 300 2009 10 500 2010 9 800 2011 11 000 2012 10 400 5526 LEGISLATIVE COUNCIL ─ 30 January 2013

Pedestrian flow at connecting The TD does not have the figures for the past footbridges five years. On-site observation shows that pedestrian flow peaks at the busiest hour from 6 pm to 7 pm, ranging from about 13 000 to 14 000 per hour (passenger flow in both directions). Number of incidents due to In the past five years, no report was made to overcrowding the TD on incidents due to overcrowding at the walkways of MTR Hung Hom Station, connecting footbridges or CHT bus stops. Neither did the records of the MTRCL show any accident due to overcrowding in the same period. Number of complaints about In the past five years, the TD received seven overcrowding complaints about overcrowding at the walkways of MTR Hung Hom Station, connecting footbridges or CHT bus stops. Three complaints were received concerning the MTR Hung Hom Station premises.

Notes:

(1) All based on figures in November. There are fewest holidays in November, making it the busiest month of the year.

(2) Commissioning on 16 August 2009, Kowloon Southern Link extends the West Rail Line to Hung Hom Station, thus increasing the patronage of the station.

Writing Off Student Loans

16. MR CHEUNG KWOK-CHE (in Chinese): President, it was reported in the press on 17 October 2012 that the Student Financial Assistance Agency (SFAA) had repeatedly attempted to recover a student loan from a social worker with disabilities. However, the social worker, who worked in a sheltered workshop with a monthly salary of some $500 only, was incapable of repaying her loan of $100,000. Being rejected time and again by the SFAA for waiver of repayment of her loan, she had to bear undue mental stress persistently. Under the prevailing policy, the SFAA will consider writing off student loans only under the following circumstances: the debtor has passed away; efforts to contact the LEGISLATIVE COUNCIL ─ 30 January 2013 5527 debtor and his/her indemnifier(s) have failed; or writing-off action is advised by the Department of Justice (DoJ). Regarding the writing off of student loans, will the Government inform this Council:

(a) whether the authorities will exercise discretion in handling the aforesaid case to waive the borrower from repaying her loan; if they will, of the details; if not, the reasons for that;

(b) of the respective numbers of applications submitted to the SFAA for waiver of repayment of loans in each of the past five years and the justifications for such applications, as well as the numbers of loans written off by the SFAA and the amounts involved, and set out such information in the table below;

Number of written-off cases Reasons for writing off and the amount involved 2012 2011 2010 2009 2008 The debtor had passed away Efforts to contact the debtor and his/her indemnifier(s) had failed Writing-off action had been advised by the DoJ Other reasons (please list the details)

(c) of the respective numbers of borrowers with permanent disabilities and those with disabilities granted waiver of repayment of their loans by the SFAA in each of the past five years and the amounts involved;

(d) of the details of the time limit and the procedure set by the authorities for making efforts to contact a debtor and his/her indemnifier(s) and recover loans until such efforts have failed; how the authorities handle cases in which the debtors and their indemnifiers can eventually be reached after the loans have been written off;

(e) of the justifications based on which the DoJ had advised writing-off actions in the past five years and the procedure involved;

(f) given that the authorities advised in July 2012 that a study on the existing the policy on writing off loans was being conducted to explore ways of handling some special cases, and the task was 5528 LEGISLATIVE COUNCIL ─ 30 January 2013

expected to complete by the end of 2012, of the content of the study and whether it covers a review of granting waiver of repayment of loans for borrowers with disabilities and provision of special assistances to them; if so, of the details; if not, the reasons for that; and the time required for conducting and completing the study as well as the details and results of the public consultation conducted on this subject; and

(g) whether the authorities will make public the results of the study; if they will, when such results will be released?

SECRETARY FOR EDUCATION (in Chinese): President,

(a) In handling loan repayment from student loan borrowers, the SFAA has been making every effort to assist individual loan borrowers who have difficulties in repaying their loans and has put in place an effective mechanism to provide such assistance. If loan borrowers are unable to repay their loans owing to financial hardship, further full-time studies or serious illness, they may apply to the SFAA for deferment of loan repayment. The SFAA will, on the basis of individual merits, consider approving deferment of loan repayment, temporary adjustment of the quarterly repayment amount or extension of repayment period to relieve loan borrowers' financial burden. In the 2011-2012 academic year, the SFAA received a total of 10 034 deferment applications and 86% of them were approved. The aforesaid case reported in the newspaper has already been granted deferment of loan repayment in accordance with the prevailing policy.

Noting that some individual loan borrowers are still unable to repay their loans after repeated deferment of loan repayment due to special circumstances, the SFAA has revised its write-off policy in December last year. Apart from reasons such as decease of loan borrower, if a loan borrower is permanently unfit for work on account of severe disability and can provide sufficient information to establish that he/she meets the definition of "100% disability" of the Social Welfare Department, the SFAA will, on the basis of individual merits, consider approving the application for waiver of loan repayment on compassionate ground. For the aforesaid case, LEGISLATIVE COUNCIL ─ 30 January 2013 5529

the SFAA has contacted the loan borrower to discuss and follow up on her application for waiver of loan repayment.

(b) As student loans are funded by public money, the SFAA has responsibility to make every effort to recover outstanding loans in order to safeguard the proper use of public money and to avoid abuse of the loan schemes. In the past five years, the SFAA handled a total of 268 write-off cases amounting to about $10 million. The major reasons for the writing off loans are decease of loan borrowers or upon the advice of the DoJ. Details are set out in the table below:

Number of write-off cases and the amount involved Academic Year Academic Year Academic Year Academic Year Academic Year 2011-2012 2010-2011 2009-2010 2008-2009 2007-2008 Reason for Number Amount Number Amount Number Amount Number Amount Number Amount writing off of involved of involved of involved of involved of involved write-off ($ million write- off ($ million write- off ($ million write-off ($ million write- off ($ million cases# ) cases# ) cases# ) cases# ) cases# ) The loan borrower had 25 1.04 35 1.57 48 2.02 34 1.41 25 0.95 passed away Efforts to contact the loan borrower 0 0.00 2 0.00 0 0.00 0 0.00 0 0.00 and his/her indemnifier(s) had failed Writing-off actions had 31 0.79 42 1.71 26 0.75 0 0.00 0 0.00 been advised by the DoJ* Other reasons 0 0.00 0 0.00 0 0.00 0 0.0 0 0.00 Total 56 1.83 79 3.28 74 2.77 34 1.41 25 0.95

Notes:

# A write-off case may involve more than one loan repayment account of one or more financial assistance scheme(s) administered by the SFAA.

* The main reason for the writing off loans is bankruptcy of both the loan borrower and the indemnifier(s). Bankruptcy applications were not petitioned by the Government and were initiated by the student loan borrowers for reasons not necessarily related to student loans.

(c) In the past five years, the SFAA received three applications for waiver of repayment of loans from loan borrowers on the ground of permanent disability.

The SFAA has approved, in accordance with the deferment mechanism, the deferment of their loan repayment to help them tide over their difficult times.

5530 LEGISLATIVE COUNCIL ─ 30 January 2013

As mentioned above, the revised write-off policy had been implemented in December last year. The SFAA is now reviewing the above three cases. If it is confirmed that they meet the revised criteria for write-off, the SFAA will write off the loans concerned on a discretionary basis.

(d) The SFAA endeavors to make every effort to recover the outstanding loans from the defaulters and their indemnifiers. Where all efforts to contact the loan borrower and his/her indemnifier(s) have failed, and the loan proves irrecoverable, such as the lapse of time limit for taking recovery actions under the Limitation Ordinance (that is, six-year period for loan borrowers or 12-year period for indemnifiers), the SFAA will consider writing off the loan concerned.

As student loans are funded by public money, in order to safeguard public money, if the loan borrower or his/her indemnifier(s) can be reached after the loan has been written off, the SFAA will initiate a new round of debt recovery actions against them unless the time limit for taking debt recovery actions under the Limitation Ordnance has lapsed or both the loan borrower and his/her indemnifier(s) are bankrupt.

(e) The DoJ will advise the SFAA to consider writing off loans under the following circumstances:

(i) if the debt is unlikely to be recovered despite all appropriate legal actions have been taken against the loan borrower and his/her indemnifier(s) by the DoJ;

(ii) if the loan borrower and his/her indemnifier(s) have been discharged from bankruptcy and no further dividend will be distributed to the SFAA or the distributed dividend is unable to fully settle the outstanding loan; or

(iii) the time limit for taking debt recovery actions against the loan borrower and his/her indemnifier(s) under the Limitation Ordinance has lapsed.

LEGISLATIVE COUNCIL ─ 30 January 2013 5531

In the past five years, the main reason for the DoJ to advise the SFAA to consider writing off the loans is bankruptcy of both the loan borrower and his/her indemnifier(s). The bankruptcy applications were not petitioned by the Government and were initiated by the student loan borrowers for reasons not necessarily related to student loans.

(f) The SFAA conducts regular reviews on the policy on recovering outstanding loans and the related write-off policy with a view to striking a better balance between safeguarding public money and assisting loan borrowers with repayment difficulties. The SFAA has explored ways of handling some special cases, such as loan borrowers suffering from severe illness or disabilities, and has considered, without compromising the integrity of the loan schemes, whether there should be discretionary waiver of loan repayment for these loan borrowers upon application. In the course of the study, the SFAA has taken account of the views on easing the repayment burden of student loan borrowers collected during the public consultation on the Review of the Non-means-tested Loan Schemes conducted earlier. The SFAA has also studied in detail cases involving loan borrowers who suffer from severe illness or disabilities and have applied for waiver of loan repayment or have been granted prolonged deferment of loan repayment. As mentioned above, the SFAA had completed the above study and revised the policy on writing off loans on compassionate ground in December last year.

(g) The SFAA has promulgated the revised write-off policy at its website. As the revised policy has been implemented, the SFAA will examine the applications for deferment of loan repayment on the grounds of serious illness or disability in hand and will contact the loan borrowers concerned to grasp their updated situation. If it is established that the loan borrower meets the revised criteria for write-off, the SFAA will approve his/her application for waiver of loan repayment on compassionate ground.

5532 LEGISLATIVE COUNCIL ─ 30 January 2013

Writing Off Student Loans

17. MR PAUL TSE (in Chinese): President, the travel agent's licence of the GTG International Travel Limited (that is, "Smart Holiday") was revoked by the Travel Agents Registry (the Registry) on 8 January this year. There have been newspaper commentaries pointing out that the facts that (i) the total liabilities of Smart Holiday have reached a high amount of $60 million, (ii) quite a number of travellers have suffered losses, and (iii) there are even cases which are not protected under the Travel Industry Compensation Fund (TICF) mechanism because the original receipts of outbound fares were not duly franked with the levy stamp, and therefore there is no proof that levies have been paid by the travel agent, reflect a big loophole in the regulatory work of the Government. Also, the authorities, albeit knowing well beforehand that Smart Holiday was heavily in debt, not only failed to make timely announcement, but even renewed its licence allowing it to continue to operate, making it possible for Smart Holiday to accept travellers' enrolment for tours during the Lunar New Year period and to obtain services from its suppliers. This is tantamount to giving travel agents which are on the brink of closing down a last chance to reap money and to treat TICF as an automatic teller machine. In this connection, will the Government inform this Council:

(a) during the 12-month period prior to the revocation of the licence of Smart Holiday, how the Registry had monitored the financial situation and operation of the travel agent, and why the Registry had revoked the licence of Smart Holiday only when the liabilities had accumulated to a high amount of $60 million; of the reasons why the Registry had allowed Smart Holiday, which was already in serious financial difficulties, to continue to engage in pre-sale of services to travellers;

(b) of the total liabilities of SIG Holiday Limited (SIG), another travel agent which had ceased operation earlier due to financial difficulties, before the closure of its business;

(c) whether it has assessed the respective amounts of ex-gratia payments that TICF are required to pay to the travellers affected by the closure of Smart Holiday and SIG;

LEGISLATIVE COUNCIL ─ 30 January 2013 5533

(d) of the objective criteria (for example, the percentage of debts in the total assets) based on which the Registry decides to revoke the licences of travel agents in financial difficulties; whether the same criteria are adopted for handling cases involving different travel agents; if not, of the reasons for that; and

(e) whether it has reviewed if the revocation of the licence of Smart Holiday only after its liabilities had accumulated to $60 million reflects a loophole in the Registry's regulation of travel agents; if it has, of the outcome of the review; if it has not, the reasons for that, and whether it will conduct such a review immediately to avoid recurrence of the aforesaid situation?

SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Chinese): President, the Government attaches great importance to the sustainable and healthy development of the travel industry. The Travel Agents Registry (TAR) under the Tourism Commission, is responsible for the licensing of travel agents and related work, including administering the Travel Agents Ordinance (TAO) (Cap. 218) by monitoring the financial situation of travel agents, processing applications for travel agents' licences and their renewal, and scrutinizing the financial reports of over 1 600 travel agents. The TAR maintains close communication with travel agents through its daily operation. It also co-ordinates the efforts of the Travel Industry Council (TIC) and travel agents in case of emergency; and assists the TIC in its communication with other government departments.

My reply to the five questions is set out below:

(a) Upon receipt of report in August 2012 that Smart Holiday did not meet its normal wage payment schedule, the TAR sent officers to the headquarters of Smart Holiday twice and inspected records of the latest balance of the agent's bank accounts, payments of wages to staff and rentals for its branches. As Smart Holiday was unable to give reasonable explanation for its failure to produce breakdowns of current assets and liabilities, the TAR issued a written warning to the company and summoned its shareholders and directors to a meeting at which the company's responsible persons admitted that Smart Holiday's total debts amounted to about $27 million.

5534 LEGISLATIVE COUNCIL ─ 30 January 2013

Taking into account the number of customers at the time (about 11 000 enrolled customers yet to depart, involving about $14 million in tour fees) and the operation and financial situation of the company, the TAR issued a two-month licence to the company in September, so that it could carry out financial and business restructuring. In view of the company's operation and financial situation, the TAR imposed stricter conditions to require auditor's report (ending 31 March 2012), six-monthly management account (ending 30 September 2012) endorsed by its board of directors, weekly reports on the number of customers and tour fees classified by destinations and package type, balance of bank accounts, total bank loans and strategic plan on the company's sales and financial management.

On 8 October 2012, Smart Holiday submitted its auditor's report ending 31 March 2012. Having considered the auditor's report and the company's uncertain financial situation, the Registrar of Travel Agents (RTA) summoned the company's controllers to investigation on 6 November 2012. Before the investigation, Smart Holiday submitted a proposal to improve its business and finance, by selling private assets to realize cash to reduce the company's debts, seeking injection of new capital from new investors, reducing expenditures on advertisement and scaling down the number of branches to reduce operating costs. The controllers of Smart Holiday also pledged injection of new capital of $3 million. Having considered the company's financial situation and the controllers' detailed improvement measures, RTA issued a one-month licence to the company, expiring on 10 December 2012.

Before the expiry of the licence, RTA summoned the company's controllers to investigation on 6 December 2012 and learned that the business and assets of the company had been taken over by a "Joint and Several Receiver and Manager" appointed by its creditor. The Joint and Several Receiver and Manager produced documentary proof of its financial support in the company's daily operation to protect the interest of travellers. The Joint and Several Receiver and Manager planned to restructure the company's organization and finance so as to continue with its travel business. In view of the Joint and Several Receiver and Manager's actual capital injection and concrete plan to restructure the company's organization and finance, LEGISLATIVE COUNCIL ─ 30 January 2013 5535

RTA issued another one-month licence to facilitate the company's organizational and financial restructuring. The tours of Smart Holiday had been departing as scheduled since August 2012, whilst the number of travellers and tour fees dropped to 4 200 and $5.5 million from its peak of 11 000 travellers and $14 million.

On 8 January 2013, RTA summoned Smart Holiday's controllers to investigation at which the Joint and Several Receiver and Manager indicated that it had ceased the injection of new capital and gave up the company restructuring. RTA thus revoked Smart Holiday's licence under section 19(1)(c) of TAO. The number of travellers affected was 1 900, involving $2.8 million in tour fees. The TAR subsequently activated the application mechanism of the TICF to help affected travellers.

(b) Since April 2012, there had been incidents of financial disputes and problems related to SIG's operation and personnel management, in addition to financial disputes with its business counterparts outside Hong Kong. Apart from creditors who approached the TAR on SIG Holiday's defaults, there were also SIG travellers stranded at destinations with difficulties in returning to Hong Kong. In view of this situation, the TAR required in May 2012 that SIG should produce its auditor's report. However, up to the expiry of its licence in December 2012, SIG had not been able to produce such reports. The TAR was therefore unable to make an accurate assessment of the indebtedness of the company.

The management account ending 30 September 2012 indicates that SIG's debts amounted to $2.81 million. SIG's tour receiving counterparts in the Mainland also made claims to the TAR that the company owed them about $5.6 million in tour reception fees. In view of the uncertainties of SIG's financial situation, its failure to meet the licensing conditions of submitting auditor's reports, and the fact that SIG employees also approached Labour Department, the TIC and the TAR on the company's wage defaults, the TAR issued to SIG a one-month licence in November 2012 and closely monitored its business and financial situation as well as the progress of capital injection.

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Under the monitoring of the TAR, SIG injected new capital twice. But the company's business, management and financial situation remained chaotic, leaving the TAR unconvinced that the company could carry on its business in the public interest. RTA summoned the controllers of SIG to investigation on 30 November 2012 before its licence expired. The controllers of SIG however did not show up. The licence of SIG Holiday expired on 4 December 2012.

(c) We estimate that the TICF needs to give out about $2.5 million and less than $10,000 in compensation to customers of Smart Holiday and SIG Holiday respectively. The TICF has previously received 33 applications for compensation at about $239,180 from 176 customers of Smart Holiday. The TICF also received an application for compensation at about $5,000 from two customers of SIG Holiday. The application was subsequently withdrawn.

(d) According to section 14 of the Travel Agents Regulations (Cap. 218A), the licensee shall keep and maintain proper books of account. "Proper books of account" are books of account which explain all transactions entered into by the licensee in the course of the business of travel agent carried on by him and give a true and fair view of the state of that business. The existing financial monitoring mechanism of the TAR requires licensed travel agents to submit balance sheet, annual profit and loss account, and cash flow statement audited by independent auditors.

For travel agents with a high gearing ratio (those with unsatisfactory balance sheets and persistent loss in business), the TAR takes tougher monitoring measures by requiring business restructuring plan, quarterly submission of management account, injection of new capital and/or issuing licences of a shorter duration, so as to closely monitor their financial situation.

Given the wide scope of business, differing modes of operation and business environments, it is not appropriate to impose a single cap in the gearing ratio as a licensing condition. When deciding whether a licence should be renewed, the TAR will generally consider the following factors:

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- whether the state of business of the travel agent meets the requirements of the TIC and whether it holds a valid membership of the TIC;

- whether the financial situation of the travel agent, as evidenced by its balance sheet, cash level, profit and loss status, can sustain its business;

- whether the licensee has violated any licensing conditions or written requirements imposed by the TAR; and

- whether all controllers of the company remain fit and proper to carry on business as a travel agent (whether there have been any new criminal records, bankruptcy records and violation of Code of Conduct).

These aside, the TAR may conduct investigation into a travel agent under section 21 of the TAO to find out whether the licensee has carried on business on contrary to the public interest and thus warrants suspension or revocation of his licence. Where there is no imminent need to suspend or revoke a licence, the TAR may consider issuing a licence of a shorter duration and imposing stricter monitoring measures to compel the travel agent to improve the quality of its operation.

(e) Given the differing business scales, types of business, modes of operation and business environments, it is not appropriate to consider applications for licence renewal solely on account of the indebtedness of the travel agents.

As depicted above, the TAR had been closely monitoring Smart Holiday from August 2012 to January 2013. In the defence of the public interest, the TAR spared no efforts under the TAO in investigating the company's financial situation and compelling it to make improvement. As a matter of fact, subsequent to the imposition of strict licensing conditions and the issue of licences of a shorter duration, the number customers of the company dropped gradually from 11 000 in early September 2012 to 1 900 in early 5538 LEGISLATIVE COUNCIL ─ 30 January 2013

January 2013. The impact on the general public was greatly minimized.

The TAR reviews its financial monitoring mechanism from time to time to ensure effective regulation of travel agents. We will actively listen to the views of the trade and the public to enhance the existing system.

Regulation of Fisheries Industry and Development of Related Industries

18. MR KENNETH LEUNG (in Chinese): President, some green groups have pointed out that the catch of fish in Hong Kong has been decreasing since 1990 and by 2009, it has decreased by nearly 50%. Therefore, the Government should expeditiously implement measures to promote sustainable development and step up regulation of the fisheries industry. In addition, the Government should also ban fishing in the four marine parks and the marine reserve in Hong Kong. On the other hand, some members of the fisheries industry have indicated that the techniques currently used by the aquaculture industry in Hong Kong are still very backward and lack diversified development, and the marine ecotourism industry has yet to be developed. They consider that the Government should assist the development of these fisheries-related industries, so as to help fishermen switching to related industries. Regarding the regulation of the fisheries industry and development of related industries, will the Government inform this Council:

(a) as the Fisheries Protection (Amendment) Ordinance 2012 has come into operation since 15 June 2012, how the Government will implement the management measures for sustainable development of the fisheries industry under the Ordinance, including the implementation date and details of the plan to designate certain areas in Hong Kong waters as Fisheries Protection Areas (FPAs);

(b) given that some green group members have pointed out that the water quality at Port Shelter and Tolo Channel are relatively good, and the waters are also fish spawning and nursing grounds, whether the Government has plans to designate these two areas as FPAs, so as to ban fishing in such waters; if it has, of the details; if not, the reasons for that;

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(c) whether the Government will, by making reference to the practices in overseas countries and the Mainland, introduce the measure of fishing moratorium; if it will, of the implementation time; if not, the reasons for that;

(d) whether the Government has plans to step up education for fishermen on the use of fishing methods conducive to sustainable development and step up efforts to combat the use of illegal fishing methods (such as the use of toxic substances, explosive or electricity, and so on) by fishermen; if it has, of the details; if not, the reasons for that; how the Government will step up efforts to combat illegal fishing activities in Hong Kong waters carried out by Mainland fishing vessels;

(e) whether the Government will adopt the marine conservation policies of foreign countries, including banning the capture of marine lives which are too small in size and carrying out ocean ranching (that is, captive breeding fry before releasing them back into the sea, and capturing them after they have grown up); if it will, of the implementation time; if not, the reasons for that;

(f) as the Government has advised in a paper on environmental protection policy initiatives submitted to this Council in 2013 that "[i]n 2013, in consultation with stakeholders, we will take forward the proposal to ban commercial fishing in marine parks", of the timetable for carrying out the consultation and legislative work as well as the details thereof;

(g) whether the Government will provide more technical support to the aquaculture industry so as to help fishermen engaged in this industry to maintain their livelihood; if it will, of the details; if not, the reasons for that;

(h) given that some members of the industry have pointed out that the water quality of areas east of Hong Kong is excellent and suitable for aquaculture of shellfish and other marine produce, whether the Government will consider assisting the aquaculture industry in farming shellfish and other marine produce in that area, so as to promote diversified development of the aquaculture industry; and

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(i) how the Government will enhance support for the development of the marine ecotourism industry, so as to assist fishermen in switching to other related industries?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, to help restore the fisheries resources in Hong Kong waters and promote the sustainable development of the fisheries industry, we have been pursuing various fisheries management measures as recommended by the Committee on Sustainable Fisheries in its report submitted to the Government in April 2010.

The subsidiary legislation to ban trawling activities in Hong Kong waters was passed by the Legislative Council on 18 May 2011 and came into operation on 31 December 2012. The Fisheries Protection (Amendment) Bill 2011 was passed by the Legislative Council on 9 May 2012 and gazetted on 15 June 2012. The amended Ordinance clears the way for us to introduce a series of fisheries management measures to control the fishing effort in Hong Kong waters and protect important spawning and nursery grounds. We have reviewed the mechanism and terms of the Fisheries Development Loan Fund, with a view to better meeting the requirements of the fisheries sector. We have also reviewed the moratorium on issue of new licences for mariculture operations in fish culture zones (FCZs) with surplus carrying capacity, and are laying the ground work for rolling out a pilot scheme within 2013. We conduct adaptive development studies to enhance productivity and sustainability of the local aquaculture industry.

In collaboration with relevant stakeholders, we have launched a pilot scheme to help fishermen venture into ecotourism. To assist fishermen to upgrade their knowledge and skills, we have been arranging various training courses, workshops and seminars for fishermen. The Chief Executive announced in his 2013 Policy Address the setting up of a Sustainable Fisheries Development Fund of $500 million to provide for financial assistance for projects and researches conducive to the sustainable development of the fisheries industry.

My reply to the various parts of the question is as follows:

(a) and (b)

The Fisheries Protection (Amendment) Ordinance 2012 seeks to:

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(i) introduce a registration system for local fishing vessels, with a view to limiting the entry of new fishing vessels and maintaining an appropriate level of fishing effort in Hong Kong waters;

(ii) restrict fishing activities with the use or aid of non-fishing vessels, and prohibit fishing activities with the use or aid of non-local fishing vessels, with a view to further controlling the fishing effort in Hong Kong waters; and

(iii) designate certain areas in Hong Kong waters as FPAs to protect important spawning and nursery grounds, thereby helping to restore local fisheries resources, and promote their sustainable growth in the long run.

On the registration of local fishing vessels, the Agriculture, Fisheries and Conservation Department (AFCD) has conducted briefing sessions for fishermen in major home ports, including Aberdeen, Shau Kei Wan, Tai Po, Tuen Mun, Sai Kung and Cheung Chau, from April to June 2012. In addition to receiving applications at its Headquarters, the AFCD has also set up temporary outstations at various home ports to facilitate fishermen to submit their applications there. As at 23 January 2013, about 2 700 applications for registration have been received.

Under the Fisheries Protection (Amendment) Ordinance 2012, the Secretary for Food and Health is empowered to designate FPAs, with a view to protecting fish fry, juvenile and spawning fish in important spawning and nursery grounds.

We have taken note of the suggestion to designate waters in Port Shelter and Tolo Channel as FPAs. We plan to consult the trade in 2014 on the designation of FPAs, including the management measures that are to be implemented within the FPAs. Measures that are under consideration include restricting or prohibiting the use of specified methods and gear; restricting the capture of species of certain size; designation of "no-take" zone in FPAs; and implementation of "closed season" to protect spawning fish and fry from fishing during certain periods of a year.

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(c) The statutory ban on trawling activities in the waters of Hong Kong has come into operation since 31 December 2012. This is complemented by other fisheries management measures in the Fisheries Protection (Amendment) Ordinance 2012, which has come into operation since 15 June 2012. We believe that these will help curb further depletion of the marine resources in Hong Kong and enable the marine ecosystem to rehabilitate at a faster rate than would otherwise be possible.

A simulation study conducted by an overseas university has portrayed that fisheries resources and the catch value per unit of fishing effort in Hong Kong waters will rise following implementation of the above measures.

We will closely monitor the effectiveness of the fisheries management measures and consider the need for further measures as and when appropriate.

(d) The AFCD has been providing training courses for fishermen for many years. Since 2010, the AFCD has implemented a tailor-made fishermen training programme to assist fishermen to switch to sustainable fisheries and related operations. The programme includes lectures and practical sessions on recreational fishing and aquaculture, as well as demonstration of non-destructive fishing operations (such as purse seining) with a view to suiting the needs of the fishermen. Over 920 fishermen have joined the various training courses and tour programmes since 2010 and the relevant training courses are rated highly by the participants. For mariculturists at FCZs, the AFCD has also organized workshops and seminars to introduce and promote fish hatchery and nursery techniques, and provide them with advice and technical support, with a view to encouraging them to make use of such techniques. The AFCD will continue to work closely with the trade to provide training for fishermen and mariculturists.

The Fisheries Protection (Amendment) Ordinance 2012 provides for the prohibition of fishing activities by non-local fishing vessels. Since 15 June 2012, any person who contravenes any provision of the Ordinance commits an offence and is liable to a fine of $200,000 LEGISLATIVE COUNCIL ─ 30 January 2013 5543

and imprisonment for six months. The AFCD has been working closely with relevant departments to enforce the Ordinance, including conducting joint enforcement operations from time to time to deter irregularities. The AFCD plans to strengthen patrol through deploying appropriate resources to ensure effective enforcement of the law.

(e) A consultancy study on Fisheries Resources and Fishing Operations in Hong Kong Waters conducted in 1998 recommended, among other things, restocking to enhance local fisheries resources. Restocking involves the release of fish fry or juveniles of other marine animals into the wild to enhance fisheries resources.

To follow up the recommendation, the AFCD has conducted several trials to collect the necessary information for assessing the feasibility of restocking in Hong Kong. Under the trials, the AFCD has released some 57 000 fish fry (including Green Groupers, Russell's Snappers, Star Snappers and High-finned Groupers) and 1 million shrimp seedlings. Experience from the above trials showed that restocking may help enhance fisheries resources. However, its effectiveness would be more pronounced if it is complemented by other fisheries management measures (for example, FPAs). The AFCD plans to conduct larger scale restocking trials to further enhance local fisheries resources.

(f) According to the Environment Bureau, in its previous consultation on the proposal to ban commercial fishing in marine parks, the Legislative Council Members and fishermen groups were generally of the view that the Government should continue to liaise with the fishermen groups with a view to reducing the impact on fishermen's livelihood before taking forward the proposal. In this connection, the AFCD has been working with the fishermen concerned and running specialized training for fishermen and pilot schemes to look into the possibility of assisting fishermen to develop or switch to fisheries-related eco-tourism businesses. In 2012, the Environment Bureau conducted another round of consultation with the majority of the fishing permit holders in marine parks. In 2013, the Environment Bureau would consolidate the discussions with fishermen and further consult stakeholders, including the Legislative 5544 LEGISLATIVE COUNCIL ─ 30 January 2013

Council Panel on Environmental Affairs, on how to take forward the proposal to ban commercial fishing in marine parks, with a view to improving ecosystems in marine parks and offering better protection for marine organisms.

(g) The AFCD conducts adaptive development studies to improve productivity and enhance the sustainability of the local aquaculture industry. To provide a greater variety of species for culture and to enhance the competitiveness of Hong Kong fish farmers, continuous efforts are being made to identify suitable new species with good market potential. The AFCD has introduced Red Drum and Giant Grouper to the local mariculture industry in recent years.

To improve husbandry techniques and enhance the food safety of local aquaculture produce, the AFCD has launched the Accredited Fish Farm Scheme (AFFS), under which some 70 marine fish farms are currently accredited. Accredited farms must follow a set of "Good Aquaculture Practices" which includes aspects on food safety, general hygiene and environmental sustainability. Accredited fish farms can use the AFFS logo and market their products via the AFFS marketing channels. The AFCD also provides support to fish farmers on technical and farm management issues including fish nutrition, water quality monitoring, red tide alerts and fish disease prevention. The AFCD will continue to provide appropriate support needed by the industry.

(h) There has been a general moratorium since 1990 on the issue of new marine fish culture licences, raft area extensions in existing FCZs and the designation of new FCZs because of environmental considerations. Having reviewed the moratorium in 2012, we are laying the ground work for launching a trial scheme within 2013, with a view to issuing limited new marine fish culture licences in FCZs with surplus carrying capacity. We will also explore the feasibility of developing culture methods for shellfish and other seafood in FCZs.

(i) In 2010, the AFCD launched, in collaboration with relevant stakeholders, a pilot scheme in Sai Kung and north-eastern New Territories to help fishermen venture into ecotourism. The scheme LEGISLATIVE COUNCIL ─ 30 January 2013 5545

provides marine-based guided tours which cover the culture and practices of fisherman communities as well as the ecological and geological features of Hong Kong. Over 300 fishermen have received training under the pilot scheme. Drawing on the positive response to the pilot scheme, the AFCD has extended the scheme to Lamma Island in 2011-2012 and to the western waters in 2012-2013.

As advised by the Tourism Commission, marine ecotourism is not one of the popular activities for tourists visiting Hong Kong. Nevertheless, the Hong Kong Tourism Board will continue to promote the coastal beauty of Hong Kong to tourists, such as the Pui O Beach and Cheung Sha Beach on South Lantau, Repulse Bay and Shek O on Hong Kong Islands, and so on.

Youth Hostel Scheme

19. MR CHAN HAK-KAN (in Chinese): President, in a paper submitted to this Council, the Home Affairs Bureau stated that "[t]he Government plans to support non-governmental organizations (NGOs) with the full capital costs of building youth hostels. The concept of Youth Hostel Scheme (the Scheme) is for meeting the aspirations of some working youths in having their own living space and giving these youths an opportunity to accumulate savings to meet their aspirations". The paper has also pointed out that the Government will start with the two more-mature projects on a pilot basis and review the results. Earlier, the Secretary for Home Affairs has indicated that the Scheme aims to supply around 3 000 hostel units and, in order to ensure rotation of use of hostel units, the total tenancy period will be set at not exceeding five years and the upper age limit of applicants at 35. However, some young people have expressed to me their concerns that given the stringent eligibility criteria and complicated formalities of the aforesaid hostels, the Scheme may not be able to relieve their pressure from housing problems. In this connection, will the Government inform this Council:

(a) of the NGOs that have indicated to the authorities their interest in building youth hostels so far; the details of the two more-mature projects mentioned above, including the names of the NGOs, the locations of the sites for building youth hostels and the respective estimated numbers of hostel units that may be provided; the expected 5546 LEGISLATIVE COUNCIL ─ 30 January 2013

date for accepting applications for the first batch of hostel units and the expected date for occupation;

(b) whether, according to the current ideas of the authorities, young people on the Waiting List for public rental housing (PRH) may apply for admission to youth hostels; whether the authorities will consider allowing young people who have moved into youth hostels and are on PRH Waiting List to continue to stay after expiry of the tenancy periods until they have been allocated PRH flats; if they will not, of the reasons for that;

(c) for those people whose tenancy periods for youth hostels have expired or who have exceeded the age limit of 35 but cannot afford to rent or purchase private residential units, what measures the authorities will take to help them, and whether the authorities will consider providing a certain degree of flexibility on the tenancy period;

(d) as the authorities have planned to allow young married couples to apply for admission to youth hostels, of the ratio of hostel units for singletons to those for married couples in their plans, and whether such ratio will be adjusted from time to time in response to the circumstances; of the measures to be taken by the authorities to deal with special circumstances of young married couples getting divorce or having children after moving into the hostels;

(e) whether the authorities will adjust upward the present target of building 3 000 hostel units when the demand for youth hostels exceeds the supply; if they will, of the details; if not, the reasons for that; and

(f) given that the membership of the Long Term Housing Strategy Steering Committee (SC) does not include any representative from the Home Affairs Bureau, how the authorities ensure that SC will give due consideration for the housing needs of youths when discussing housing policies; whether the authorities have considered including the Scheme on the agenda of SC; if they have, of the details; if not, the reasons for that?

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SECRETARY FOR HOME AFFAIRS (in Chinese): President,

(a) Many NGOs have expressed their interest towards the Youth Hostel Scheme (YHS) after it was launched. We plan to start with the two relatively more mature projects on a pilot basis, namely the Tung Wah Group of Hospitals (TWGHs)' project in Sheung Wan and the Hong Kong Federation of Youth Groups (HKFYG)' project in Tai Po. It is initially estimated that TWGHs' project would provide around 200 hostel units. HKFYG's proposed project site is relatively small and we are still studying the potential number of units to be provided. It is estimated that the hostels would be completed in four years at the soonest and the NGOs concerned would begin to accept applications in accordance with the completion progress of the projects.

(b) We are working with relevant departments to study and explore the details of the YHS, and would consult the Housing Authority on those details which touch on the interface with subsidized housing. We will announce such details to the public in due course.

(c) The YHS aims to meet the aspirations of youths aged 18 to 30 by giving them a realistic alternative to having their own living spaces for a period of time and providing them with an opportunity to accumulate savings for future development. However, the youth hostels are not meant to provide a permanent accommodation, and the young tenants would ultimately need to make their own plans and arrangement to solve their long-term housing needs. At the same time, setting various eligibility criteria such as age limit and tenancy period will ensure efficient turnover of units and enable more youths to benefit. As such, we consider that a total tenancy of no more than five years is considered reasonable.

(d) The Government will set out the basic eligibility criteria for tenants under the YHS such as rental, tenancy period, age limit, income and assets limits, operation mode, and so on, to let NGOs operate the hostels in accordance with their objectives and other considerations. NGOs can provide both single and double rooms at the hostels and the Government will not set a strict proportion for the two kinds of 5548 LEGISLATIVE COUNCIL ─ 30 January 2013

rooms to be provided. The NGOs will enter into tenancy agreements with individual tenants, which will specify the identity and number of tenants in the respective units. If the situation changes after the tenants move in such that the lease provisions are no longer complied with, it is expected that the NGO concerned would give the tenants a reasonable period of time to find new accommodation.

(e) The Government would start with the two relatively more mature projects on a pilot basis and review the results. We would also continue to liaise with other NGOs to study their proposals. We will closely monitor the supply and demand for the projects.

(f) The SC will examine the housing needs of specific groups in the community (including young people), consider their relative priorities and recommend measures to meet their housing needs. The Home Affairs Bureau will provide the information of YHS to the inter-departmental Working Group under the Steering Committee for their reference and discussion.

Qualifications of Vessel Operators

20. MR WU CHI-WAI (in Chinese): President, in reply to an enquiry from a member of the public, the Transport Complaints Unit of the Transport Advisory Committee has indicated that according to the laws of Hong Kong, Class I local vessels (including ferries), when underway, must have a person in charge of the vessels who is the holder of a local certificate of competency as a coxswain (person-in-charge), and other persons may also operate such vessels under the supervision of the person-in-charge in the wheelhouse (regulation on the charge of a vessel). That member of the public has pointed out that the Government has not set specific standards on the qualifications of the operators of the ferries of the Hong Kong and Kowloon Ferry Holdings Limited. In this connection, will the Government inform this Council:

(a) under the existing legislation, of the qualifications or certificates that vessel operators must possess, and whether it is illegal for a person without relevant qualifications or certificates to operate a LEGISLATIVE COUNCIL ─ 30 January 2013 5549

vessel under the supervision of the person-in-charge in the wheelhouse; if so, of the legislation contravened; if not, how the authorities ensure that crew members without relevant qualifications or certificates possess adequate professional knowledge to operate a vessel;

(b) whether it knows the respective numbers of people working in the shipping industry or engaged in operating vessels, and so on, in Hong Kong in each of the past three years, with a breakdown by job type; of the training which crew members are required to receive before they are formally appointed, and whether skills of operating a vessel are included; if so, of the details;

(c) of the types of local vessels to which the aforesaid regulation on the charge of a vessel applies, and list the respective standards for different types of vessels; and

(d) of the number of vessel collision accidents in each of the past three years; among them, the number of accidents involving vessels not directly operated by the persons-in-charge at the time of the accidents, with a breakdown by the type of vessels?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, in relation to different parts of the question by Mr WU Chi-wai, our reply is as follows:

(a) and (b)

Under section 47 of the Merchant Shipping (Local Vessels) (Certification and Licensing) Regulation (Cap. 548D) (the Regulation), Class I, II and III local vessels (including vessels such as ferries, cargo vessels and fishing vessels), when underway, shall be in charge of by a coxswain who holds a relevant local certificate of competency. Under the existing practice, the coxswain will ask the crew members to help operate a vessel under his supervision and direction where necessary.

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The Regulation requires that coxswains and engine operators of the abovementioned local vessels must hold a local certificate of competency(1) appropriate for the vessel concerned. To obtain the certificate, the applicant must possess the necessary years of service on board the vessel, complete the prescribed training courses(2) and pass the examination required by the Marine Department (MD). This is to ensure that the holder of a local certificate of competency as a coxswain is adequately proficient in such knowledge as navigation and pilotage skills, vessel control as well as the "International Regulations for Preventing Collisions at Sea". An engine operator must be in possession of engineering knowledge and familiar with the methods and measures on safety and pollution control/prevention.

As for other crew members, they usually work under the supervision of the coxswain. Although the legislation does not regulate their qualifications, the employer will provide on-the-job training according to their job requirements, including emergency response and the proper use of emergency equipment on board.

According to the records of the MD, as at November 2012, the numbers of coxswains and engine operators who are holders of local certificates of competency and under 65 years of age are 15 548 and 10 925 respectively. The MD does not have statistics on the actual number of persons working on vessels.

(c) The aforesaid qualification requirements on coxswains and engine operators are applicable to Class I, II and III local vessels. As regards Class IV pleasure vessels, under section 47 of the Regulation, if a pleasure vessel is more than 3 m in length or is fitted with engines of more than 3 kilowatts total propulsion power, the

(1) The certificates are issued in three grades. A holder of a Coxswain Grade 3 Certificate, Grade 2 Certificate or Grade 1 Certificate may act as the coxswain of a local vessel not exceeding 15 m in length, not exceeding 24 m in length and of gross tonnage not more than 1 600 respectively. A holder of an Engine Operator Grade 3 Certificate, Grade 2 Certificate or Grade 1 Certificate may act as the engine operator of a local vessel having an aggregate power not more than 750 kilowatts, 1 500 kilowatts and 3 000 kilowatts respectively.

(2) Applicable to applications for Coxswain Grade 1 Certificate and Engine Operator Grade 1 Certificate. LEGISLATIVE COUNCIL ─ 30 January 2013 5551

person in charge of the vessel must be the holder of a local certificate of competency as a pleasure vessel operator.

As Class I, II and III local vessels cover various types of vessels(3), the MD requires the respective holders of local certificates of competency to possess broader navigation knowledge and operational skills. As regards the qualification requirements for the holder of a local certificate of competency as a pleasure vessel operator, they are drawn up specifically for the purpose of operating a pleasure vessel. The applicant must pass the required examination, or complete an approved training course and pass the test. This is to ensure that pleasure vessel operators are equipped with adequate knowledge on navigation, seamanship, safety and engines.

(d) According to the statistics of the MD, the numbers of marine incidents involving vessel impact within Hong Kong waters in the past three years are as follows:

2010 2011 2012 Collision (number of cases) 183 204* 147 Contact (number of cases) 35 48 35

Notes:

"Collision" means impact between vessels.

"Contact" means impact between vessels and objects (such as piers and dams).

In a press release issued on 11 October 2012, the MD reported that the number of collision incidents in 2011 was 203. The MD later found that one of the collision incidents originally believed to have happened outside Hong Kong waters should be classified as within Hong Kong waters. Therefore, the number of collision cases for 2011 should be 204.

According to the MD, all vessels were operated by the persons-in-charge at the time of the tabulated incidents.

(3) Including launches, dredgers, dry cargo vessels, and so on. 5552 LEGISLATIVE COUNCIL ─ 30 January 2013

MEMBERS' MOTIONS

PRESIDENT (in Cantonese): Member's motion.

Motion of Thanks. Mr Andrew LEUNG will move this motion. Mr Frederick FUNG, Mr SIN Chung-kai, Ms Cyd HO, Mr CHEUNG Kwok-che, Mr LEE Cheuk-yan and Dr Fernando CHEUNG wish to move amendments to the motion, and Mr WONG Kwok-hing wishes to move an amendment to Mr LEE Cheuk-yan's amendment.

I have accepted the recommendations of the House Committee on the time limits for speeches in the debate, that is, each Member may speak in any of the five debate sessions but he or she may only speak once in each session, subject to the total speaking time limit of 30 minutes.

Mr Andrew LEUNG, as mover of the motion, will have an additional 15-minute speaking time for moving the motion and making reply. In addition, he will have another five minutes to speak on the amendments. Like all other Members, the movers of the motion and of the amendments may speak in any of the five debate sessions. I will invite the Members concerned to move amendments after the five debate sessions have ended.

In each session, I will first call upon those Members who wish to speak to speak. After Members have spoken, if necessary, I will suspend the meeting for 10 minutes for the relevant public officers to prepare their response. Only public officers may speak when the Council resumes. If public officers consider the break not necessary, I will not suspend the meeting. The total speaking time limit for public officers in each session will depend on the number of public officers attending the session. After the public officers have spoken, the debate session will come to a close.

The ending time for today's and tomorrow's debates will be about 10 pm but may be extended for 30 minutes if necessary. The debates for tomorrow and the day after tomorrow will start at 9 am. If the debates for the day after tomorrow cannot be finished by about 10 pm, the meeting will be extended until the debate has finished.

After the five debate sessions have ended, Mr Andrew LEUNG may speak on the amendments. I will then call upon movers of amendments to move LEGISLATIVE COUNCIL ─ 30 January 2013 5553 amendments one after another. After the amendments have been voted upon, Mr Andrew LEUNG may reply. Finally, Members will vote on the original motion or the motion as amended.

I now call upon Mr Andrew LEUNG to speak and move the motion.

MOTION OF THANKS

MR ANDREW LEUNG (in Cantonese): President, in my capacity as Chairman of the House Committee, I move the motion "That this Council thanks the Chief Executive for his address".

This is the first Policy Address of the Chief Executive of the fourth term and also the first "Motion of Thanks" of the fifth Legislative Council. I am happy to have received Members' support, which made it possible for me to become Chairman of the House Committee. I feel very much honoured to move the Motion of Thanks in such a capacity for the first time. First of all, I wish to point out that this motion does not indicate any direction. It only follows the requirements of the Rules of Procedure of the Legislative Council and the traditional practice, so that the Legislative Council can exercise its function "to receive and debate the policy addresses of the Chief Executive" as stipulated in Article 73(4) of the Basic Law. Members can voice their views on the proposals in the Policy Address delivered by the Chief Executive and speak freely in the five debate sessions in these three days.

I believe Members will also agree that in recent years, society has become increasingly divided, thus posing great challenges to the Government's administration. To the new Government, the going is even more difficult. In the face of the social problems that have existed for many years, such as inadequate housing supply, smuggling and parallel goods trading, education for young people and their employment after graduation, and even the various problems arising from the ageing of the population, the public's keen hope for the new-term Government to solve these social problems effectively is understandable. The Chief Executive stressed in his Policy Address that it is necessary to "serve the people with pragmatism". I believe Members' goal is the same as that of the Administration, that is, they hope that the Government's administration would be conducive to economic development and beneficial to people's livelihood.

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President, on the important subject of the relationship between the executive and the legislature, the Chief Executive did not say a single word on it in his Policy Address consisting of as many as 200 paragraphs, so I am a little bit disappointed. However, in the Chief Executive's Question and Answer Session on 17 January this year, the Chief Executive said that he attached great importance to the relationship between the executive and the legislature and also understood that the implementation of the proposals put forward in the Policy Address required the support of the Legislative Council and the public. I wish to point out that the Legislative Council must fulfil its responsibility of monitoring the operation of the Government and voicing views on public policies. However, the relationship between the executive and the legislature is not confrontational. Rather, a good relationship between the executive and the legislature would enable the Government to implement various political, economic and public policies favourable to Hong Kong's development more effectively, as well as helping the Legislative Council perform its monitoring role. As Chairman of the House Committee, I wish to stress that the Legislative Council and the Administration are also in a partnership, so through dialogue and communication with each other, they can work for the welfare of society as a whole more effectively.

In addition, each time after the meetings of the House Committee, I would meet with the Chief Secretary for Administration together with the Vice-Chairman to relay to her Members' concerns and views and strengthen our tie. I am pleased to find that in all these meetings, the Chief Secretary always showed herself to be a ready listener, willing to communicate. After the vessel collision incident off Lamma Island, the Chief Secretary, in conjunction with the relevant officials, made arrangements at the first opportunity to brief Legislative Council Members on the incident and various follow-up measures, so this manifested the spirit of the executive being accountable to the legislature.

One of the very important powers exercised by the Legislative Council is to scrutinize and enact legislation. For many years, the legislative programme has been an issue of concern to Members. When I met with the Chief Secretary for Administration for the first time together with the Vice-Chairman of the House Committee, I already expressed the concern that often, the authorities would table a large number of bills only when the term of the Legislative Council was coming to an end. As a result, Members did not have enough time to scrutinize the provisions of the bills and carry out consultations. According to the legislative programme for this Session submitted by the Administration to the Legislative LEGISLATIVE COUNCIL ─ 30 January 2013 5555

Council, six bills will be introduced in the first half of this Session, including the District Councils (Amendment) Bill drawn up to abolish the appointed seats in District Councils, whereas eight other bills will be introduced only in the second half of this Session. However, so far, the authorities have only introduced two of them, while another one will be tabled before the Legislative Council at the meeting on 6 February. We demand that the Administration introduce the bills into the Legislative Council as soon as possible to avoid affecting the scrutiny by Members. The Chief Secretary has also undertaken to oversee through the Government's internal monitoring mechanism that various Policy Bureaux adhere strictly to the legislative programme in introducing bills.

President, this term of the Legislative Council has commenced operation only for several months. I look forward to the Administration doing more practical work to further improve the relationship between the executive and the legislature.

With these remarks, President, I beg to move.

President, the following are my personal views on the Policy Address.

In the whole Policy Address, the part on economic development consists of more than 30 paragraphs. Given the many ideas proposed therein, it is evident that while the Chief Executive cares about people's livelihood, he also attaches great importance to economic development. As espoused by us in the Business and Professionals Alliance for Hong Kong (the Alliance), the Government must bring improvements to people's living and welfare through economic development. I am pleased to find that the Chief Executive shares our idea. In the following, I will speak on behalf of the Alliance on economic issues.

The Chief Executive proposed the establishment of the Financial Services Development Council (FSDC) and the Economic Development Commission (EDC) and I have also been appointed a member of the latter. On the establishment of the FSDC, I think that it is desirable to pursue a greater scope of development for the sector. However, at present, Members have little understanding of the functions, powers and even the direction of the FSDC, so both Members and the public also have a lot of queries. I hope the authorities can enhance the transparency of their work in the future to enable the public and Members to have a better understanding.

5556 LEGISLATIVE COUNCIL ─ 30 January 2013

At the same time, when the FSDC explores the market development for the financial industry, a balance with the concerns of the sector must be struck and it should guard strictly against over-regulation to avoid stymieing the sector's development. A balance must be struck between the two. I believe that with the efforts made by the sector and the Government, there will surely be a great deal of room for development in such areas as Renminbi (RMB) business, asset management, insurance (in particular, RMB insurance products), captive insurance as well as securities and futures. I believe that so long as the Government can focus on working together with the sector, a leading position in the world can surely be secured, such that Hong Kong's position as an international financial centre can be entrenched even more securely.

As regards the establishment of the EDC, I think this is the first step taken in response to the lobbying by the sector and me all along for the development of a more diversified economy. Last week, I examined the Policy Address with members of the Federation of Hong Kong Industries (FHKI) at a luncheon and quite a number of people pointed out that the Chief Executive had not mentioned any industrial policy or strategy for the development of innovative technology. However, we all hope that the Working Groups on Manufacturing Industries, Innovative Technology and Cultural and Creative Industries under the EDC can commence work as soon as possible to formulate an overall strategic proposal and complementary measures for the development of new industries, as well as identifying and introducing high value-added new industries with potentials to take root in Hong Kong. Meanwhile, regarding the sectors covered by other Working Groups under the EDC, such as transportation, convention and exhibition, tourism industries and professional services, they are all facing keen competition from neighbouring countries and regions. Hence, even if we move a bit too slowly would result in our falling far behind others. For example, the convention and exhibition industry is an important component of the Hong Kong economy that brings many orders to SMEs each year. However, in recent years, in the face of severe challenges from neighbouring regions, the shortage of venues has made the sector miss many opportunities. The sector and I have fairly high expectations for the work of the EDC and hope that it would not simply formulate a long-term overall development blueprint, as Secretary Gregory SO said at a meeting of the Panel on Commerce and Industry last week. But we hope that it would also be pragmatic by putting in place a backup plan, that is, some short-term measures that can immediately support the local manufacturing industry and other emerging industries that have commenced operation.

LEGISLATIVE COUNCIL ─ 30 January 2013 5557

President, I am the representative of the FHKI in the Legislative Council and I also operate factories. Both my sector and I were disappointed by the lack of mention of the industrial sector in the Policy Address. We often say that all advanced developed countries attach great importance to industrial development and regard it as the major pillar of the national economy. The electronics industry can be found in Japan and Korea; such heavy industries as the automobile and heavy machinery industries can be found in Germany; the clock and watch, pharmaceutical and even chocolate industries can be found in Switzerland and Singapore, the size of which is only half of that of Hong Kong, also has the oil-refining and biochemical industries. The industries in Hong Kong have also seen its heyday but with the relocation of the production base to the Mainland, the wrong impression that there are no industries or Hong Kong no longer needs any industries has formed.

In fact, in recent years, the industrial sector in Hong Kong has been moving actively towards high added value and high technology, such as automobile parts, environmentally-friendly recovery and recycling, and so on. The technological industry also wants to develop a fourth-generation data centre in Hong Kong to support the application of cloud computing nowadays. However, often, the expansion plans of companies often fell through due to a lack of land. In the past, some friends who were factory owners also told me that originally, they had planned to return to Hong Kong for development but due to the lack of a long-term industrial policy in Hong Kong and the lack of support for factory owners under the Government's land policy, they could only choose to set up factories and establish their Asia-Pacific headquarters in neighbouring regions like Singapore, thus making Hong Kong miss many excellent development opportunities.

A sound industrial sector can help buffer the economy against the impacts of an economic downturn and sustain economic development, as well as spreading the risk of a high unemployment rate arising from an economic downturn. The Government should look at factories with new thinking because industries have long production chains, and so Hong Kong should focus on the high value-added segment by concentrating on such areas as design, marketing and branding, whereas the downstream segment, for example, such labour-intensive processes as manufacturing and assembly, can be decentralized and carried out in other places. We have to abandon the past policy of active non-intervention for the sector and under the principle of free market economy, Hong Kong should formulate a long-term industrial policy, so as to establish a 5558 LEGISLATIVE COUNCIL ─ 30 January 2013 foundation for its future development and enable the industrial sector to access the greatest support possible.

All along, we have requested the Government to allocate land for the construction of a fourth industrial estate and review the policy on the use of industrial sites in existing industrial estates. However, the Government has now given us the impression that it is mobilizing all members of the public to find land for housing construction. The industrial sector does not wish to see that all industries have to make way for this. In the future, it is still necessary for Hong Kong to develop North East New Territories and Hung Shui Kiu into new towns. We must understand that in order to develop a well-developed new town, apart from paying attention to the need for housing and the relevant complementary community facilities, it is also necessary to have some economic element, so that there can be enough scope for industrial development and sufficient business opportunities provided to create a sufficient number of jobs. In the development of Sha Tin and Tai Po in the past, sufficient land was also reserved for industrial development and the construction of commercial buildings and shopping arcades apart from housing, so that there are opportunities for SMEs to operate and for residents to find jobs. The planning of new towns must be carried out carefully and it is through the land policy and ensuring the existence of circular economy in new areas that we can help the public live in peace and work with contentment. We must not repeat the planning mistakes of Tin Shui Wai. Therefore, when the authorities plan land uses in the future, they must give this area sufficient consideration to ensure the balanced distribution of land resources, since it would not be acceptable to find just residential buildings but not industrial or commercial activities.

President, in the Policy Address, many passages are devoted to (The buzzer sounded) ……

PRESIDENT (in Cantonese): Mr LEUNG, you need not care about the sound of the buzzer. Please go on.

MR ANDREW LEUNG (in Cantonese): President, many passages in the Policy Address are devoted to our economic relationship with the Mainland and it is proposed that the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) be fully implemented, new economic and trade offices be LEGISLATIVE COUNCIL ─ 30 January 2013 5559 set up and the "early and pilot implementation" approach be implemented in Guangdong Province to expand the scope of Hong Kong's professional services and lead Hong Kong enterprises in opening up the Mainland market. I believe the direction is correct. To SMEs, it can be said that the implementation of CEPA has given rise to very mixed feelings. On the one hand, they are happy to be able to strengthen co-operation with the Mainland and promote trade and investment, and on the other, they have to face the problem of "big doors are opened, but small doors are not yet opened". At present, Hong Kong factory owners operate tens of thousands of factories on the Mainland and face the challenges of restructuring and upgrading, as well as expanding in the domestic and overseas markets (The buzzer sounded) ……

PRESIDENT (in Cantonese): Mr LEUNG, please continue.

MR ANDREW LEUNG (in Cantonese): …… but the Government failed to open discussions with the Mainland specifically on the implementation of CEPA in various regions, provinces and municipalities on the Mainland. When Hong Kong businesses encounter the difficulty of "small doors are not yet opened" when entering the Mainland market, often, they would approach the relevant regional governments or departments for discussions on their own.

The FHKI is happy to find that in the Policy Address, the difficulties encountered by Hong Kong companies are addressed squarely and that a willingness is also expressed to support and foster Hong Kong companies in various areas at the government level by setting up a new joint working group under CEPA, enhancing G2G (Government-to-Government) co-operation, as well as communicating with local governments and professional regulatory bodies, so as to assist the sector, in particular, SMEs. I believe this would help Hong Kong companies expand their business on the Mainland and ultimately benefit the Hong Kong economy.

In recent years, various countries around the globe all hope to assist their companies in gaining access to Mainland China and the emerging markets in Asia. The heads of state and premiers of European and American countries have followed one another in leading large business delegations in visiting Asia to explore new business opportunities in the hope of getting a share of the pie. Our sector is also eager and envious. The Alliance and I both hope that the 5560 LEGISLATIVE COUNCIL ─ 30 January 2013

Government can introduce policies to support and tie in with the promotional activities carried out by companies on the Mainland, for example, through the Hong Kong Create brand proposed by us earlier on.

All along, consumers on the Mainland have a good impression of Hong Kong brands. Unfortunately, due to the lack of resources and networks, in developing the Mainland market for domestic sales, SMEs often have to expend a great deal of effort but to little avail. If we can join forces with the provinces and municipalities in the Greater Pearl River Delta (PRD) in developing the national domestic market and enhancing the awareness of Hong Kong's fashionable brands and products, so when we consolidate our position as the frontrunner in fashion, we can also promote Hong Kong's lifestyle, thus assisting Hong Kong brands in establishing effective distribution channels on the Mainland and promoting Hong Kong's service economy to Mainland companies. We can then join hands with municipalities in the Greater PRD Region in carrying out promotions and launching publicity campaigns in the first-, second- and third-tier cities nationwide. In this way, not only can we arouse greater interest among more consumers and enterprises, we can also secure more business opportunities, thus achieving greater cost-effectiveness.

We are very concerned about the reorganization of the Greater Pearl River Delta Business Council into the Consultative Committee on Economic and Trade Co-operation between Hong Kong and the Mainland. We absolutely agree with the objective of establishing the Committee, but the sector hopes all the more that the Committee would not just engage in theoretical discussions, rather, it should also focus on practical tasks. The business sector cares about actual benefits and results, so empty talks about the overall policy would not be helpful to the development of SMEs.

President, apart from developing the Mainland market, we also have to make good use the geographical advantage of our proximity to Southeast Asia by strengthening and promoting co-operation between Hong Kong and the Mainland with the Association of South East Asian Nations (ASEAN). We have to become an active partner of ASEAN by serving as a bridge between ASEAN and the Mainland and helping ASEAN grow bigger and stronger.

Under globalization and with the shift of the global economic focus to the East, we cannot set our eyes on just a single country. We have to adopt the perspective of a regional economy. The trade between China and ASEAN LEGISLATIVE COUNCIL ─ 30 January 2013 5561 countries is growing rapidly and there are 1.9 billion people in this Free Trade Area (FTA), making it the FTA with the largest population in the world. In 2012, the trade value between China and ASEAN countries hit a record high and broke the US$400 billion mark, representing an increase of 10.2%. It is also the third FTA after those in the European Union and North America.

All along, Hong Kong has benefited from the growth in trade between China and ASEAN countries. In 2011, the trade with ASEAN countries accounted for 10.2% of Hong Kong's trade value, surpassing that between Hong Kong and Europe. Hong Kong possesses a unique advantage, that is, it has "one country, two systems" as its foundation. The establishment of "ASEAN+1", together with "one country, two systems", has provided a strong foundation for the Hong Kong economy over the long term.

At present, five ASEAN countries have joined the rank of being the 20 biggest trade partners with Hong Kong and they include Singapore, Thailand, Malaysia, Vietnam and the Philippines. The total value of the re-export trade between China and ASEAN countries via Hong Kong also rose significantly from US$33.6 billion in 2008 to US$44.2 billion in 2011. In addition, the huge Asian market of India can also provide great scope for development. Unfortunately, the Hong Kong Government has hitherto still not established good communication channels with ASEAN and the governments of various countries, so this would only impede Hong Kong's development.

Situated between the Mainland and ASEAN, and coupled with its well-developed commercial and trade networks and transportation infrastructure, Hong Kong enjoys an excellent geographical advantage. On the one hand, Hong Kong provides a springboard that can assist more Chinese enterprises in "going global" more quickly and exploiting the business opportunities in ASEAN countries; and on the other, Hong Kong is also a service platform that can provide professional services to companies in ASEAN countries in gaining access to China, so that they can benefit from the huge market in China. Therefore, Hong Kong has to seize the opportunities by making contribution and proposing strategies actively to help Chinese enterprises go global. This is also the only way for Hong Kong to further consolidate itself as and develop into a world-class financial, commercial and transportation centre and strengthen its position as the hub in the regional economy and regional co-operation. For this reason, I urge the Government to promote Hong Kong's participation in the China-ASEAN FTA at an early date, so as to create more business opportunities.

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It is obvious that the Chief Executive has done little to support companies doing business in the traditional European and American markets, but we cannot neglect the traditional European and American markets either, since "a broken ship still has three catties worth of nails". At present, these markets still account for a large proportion of Hong Kong's trade value, and furthermore, some SMEs are still quite reliant on these traditional markets. Moreover, these markets are showing signs of recovery, so it is necessary for the authorities to continue to monitor market changes and provide appropriate support to companies when necessary.

President, the Chief Executive also mentioned the six pillar industries that we have talked about frequently in the past few years. Hong Kong is a high value-added city where talents converge. It also possesses modern and highly developed facilities for the logistics, exhibition and convention, conferencing, financial and professional services. If Hong Kong can join the Mainland-ASEAN FTA to serve the 1.9 billion people in it, this consumer market with the greatest development potential in the world will surely be favourable to the economic development in Hong Kong and the region, as well as being conducive to raising the living standard of the people in the region. For this reason, I propose that Hong Kong can develop itself into a regional education, healthcare as well as testing and certification centre through the opportunity of accession to ASEAN, so as to serve ASEAN countries and China.

Although education is classified as one of the six industries where we enjoy clear advantages, I still believe that education in Hong Kong should develop into a regional hub to attract overseas students to pursue their studies in Hong Kong. Since Hong Kong is an international city, it is highly advisable to make investments in education and increase the resources for tertiary and professional education, so as to meet its need for talents. Suitable talents should also be trained having regard to Hong Kong's industrial policy, so as to add momentum to the development of China and Hong Kong. Meanwhile, the authorities should encourage the public to pursue continuing education, strengthen tertiary education and vocational training, for example, in hotel management and the nursing profession, as well as offering opportunities and choices of more diversified education, career and further study to young people.

In respect of healthcare, there are excellent healthcare talents in Hong Kong. Although healthcare is not a highly profitable industry in Hong Kong, the Government can develop Hong Kong into a healthcare service hub and the LEGISLATIVE COUNCIL ─ 30 January 2013 5563 first step would be to commit more resources and train more healthcare workers to ease the pressure at the front line. It is also necessary to allow Hong Kong residents who have obtained the relevant professional qualifications overseas to practise without having to take any examination, so as to increase the manpower for healthcare and raise the standard of healthcare in Hong Kong. Not only can doing so provide better services to the public, it can also internationalize healthcare in Hong Kong and turn the territory into a medical centre in the region.

President, some major professional services in Hong Kong, such as finance, real estate, engineering, architecture and related professions, law, accounting, testing and certification, and so on, have all along enjoyed competitive edges in the region. These edges include an international perspective, management experience, specialized knowledge, expertise, and so on, and they have gradually developed into our famous brands. The further development of the international economy will bring new opportunities to Hong Kong in the promotion of its professional service branding on the Mainland. The SAR Government should hold discussions actively with the relevant government departments on the Mainland to expand the co-operation in professional services between the two places.

Hong Kong has the conditions to develop the innovation and technology industry and become a trading centre of intellectual properties but time is of essence. At present, there are already strong competitors in the region, so it is necessary for us to develop into a regional patent registration centre. For this reason, I welcome very much the Government's measure to establish a working group comprising members from the Government, the sector and experts to study the relevant strategies and the necessary government support measures. Both the Alliance and the FHKI will promote the work in this regard very actively. We propose that Hong Kong capitalize on such edges as having a sound legal system and professional services and seize this opportunity to establish a patent office and a local patent system that can directly grant patents locally. And we also propose that that Government make reference to the experience of Singapore and join hands with the State Intellectual Property Office and the State Patent Office of the Mainland in formulating the standards for direct approval and the patent system for Hong Kong. After these offices have assisted in examining the important elements of a patent, Hong Kong can then approve applications and issue standard patent certificates to applicants direct.

5564 LEGISLATIVE COUNCIL ─ 30 January 2013

President, tourism is also an indispensable component of Hong Kong's economic development. Hong Kong enjoys the international reputation of being a cuisine and shopping paradise, but we do not hope to see visitors coming to Hong Kong just for the sake of snatching up large quantities of infant formula, Yakult or other daily items. Rather, it is hoped that Hong Kong can develop into a popular destination for leisure travel, so that visitors can enjoy their holidays in Hong Kong.

According to the figures of the Hong Kong Tourism Board for 2012, although the number of visitors rose by 16% compared with 2011, the increase in the number of Mainland visitors, at 24.2%, was the highest. In contrast, the number of visitors considered by us to be high-end, for example, European, American and Japanese visitors, has seen decreases. Does this mean that Hong Kong is no longer attractive to them? Looking at our neighbouring countries and regions, in recent years, a speedier and more satisfactory job has been done in Macao and Singapore in putting in place the infrastructure and ancillary facilities for tourism compared to Hong Kong. Take Macao as an example, the Macao Government has striven to develop tourism and in the short span of a few years, a large number of world-class hotels were attracted to establish their presence on Taipa Island. Together with the new tourist attractions developed with the Government's encouragement, Macao has become a popular tourist destination in the region. The number of European and American tourists visiting Singapore has increased steadily and the annual rate of increase was over 2%. Sentosa has become synonymous with holiday resorts and in recent years, such large-scale tourism infrastructure as the Tiger Sky Tower, Singapore Flyer and Universal Studios have attracted a large number of tourists from all over the world to Singapore.

In contrast, after 1997, Hong Kong has little to boast by way of tourism infrastructure and often, they took a long time to come on stream. The construction of the Hong Kong Disneyland began in 1999 and it was not until 2005 that it opened. The planning of the cruise terminal began before 2005, but the first berth will be completed only in the middle of this year. The planning for Ngong Ping 360 began in 1998, but the plan was finalized only in June 2006. It was constructed and operated by the Mass Transit Railway Corporation Limited and in the end, it was commissioned only on 30 January 2006. Compared with the two places mentioned by me just now, Hong Kong is obviously not so proactive and aggressive in respect of tourism. Last year, I stayed in Singapore for a few days and noticed that there were many Japanese, LEGISLATIVE COUNCIL ─ 30 January 2013 5565

European and American tourists with great spending power there, and the local Government also made great efforts to attract whole families to visit Singapore. I believe that with the efforts made by the Tourism Board, it is true that in recent years, the number of Mainland visitors coming to Hong Kong has increased drastically but the authorities cannot neglect visitors from other countries either because it is only by maintaining a culture of pluralistic tourism that Hong Kong's charm as an international city can be highlighted.

In respect of tourism, I wish to talk in particular about cuisine and local snacks. In the past, we also learnt from the press that the artisans in some traditional old shops had difficulty finding successors, such that they could not pass on their skills and as a result, their rank is dwindling. In recent years, we would learn from time to time that one long-time small shop after another had to close down due to their inability to cope with exorbitant rents. Earlier on, the Michelin published its star ratings list but one small shop that clinched a star award could not afford the high rent and had to close down even before the public had any time to queue up to taste its menu. If Hong Kong wants to keep its renown of being a gourmet's paradise, it must help eating establishments solve the problem of drastic rises in rent. Otherwise, it would not be long before visitors can only see chain stores during their time in Hong Kong but have difficulty finding even a single cafeteria with special characteristics or well-known wanton noodle shop. In addition, we also have to actively train the younger generation, so that they could join the culinary trade. Not only should they be trained to prepare feasts fit for a king, more of them should be trained to become "chefs for the kaifong".

The Alliance is very concerned about the difficulties faced by SMEs. The Chief Executive also mentioned the situation of SMEs in the Policy Address. We hope that the Government can give us positive responses in the Budget to be announced in the near future, for example, to introduce a lower profits tax rate for SMEs making profits of less than $3 million by setting their tax rate at 10% and encouraging SMEs to make reinvestments, so as to enhance their competitiveness, as well as offering allowances to enterprises with reference to the arrangements adopted for the allowances for personal income tax, so as to ease their burden.

Lastly, I must talk about the SME Financing Guarantee Scheme. At the onset of the financial tsunami, members of the Economic Synergy and I lobbied the Government for the implementation of a special guarantee scheme for 5566 LEGISLATIVE COUNCIL ─ 30 January 2013 financing of SMEs, so as to counter the financial turmoil. As a result, many SMEs and over 300 000 jobs were preserved. Subsequently, the Government took on board our views by regularizing the SME Financing Guarantee Scheme and introducing the Special Concessionary Measures of offering a guarantee of 80% for nine months. The application period will end by late February 2013. At present, the global economy is still weak and the prospects are not promising. We hope that the authorities can extend the repayment period of the guarantee scheme to ease the operational pressure on SMEs, extend the application period of the Special Concessionary Measures by at least one year, as well as reducing the interest rate to a level close to or lower than the prime rate, so as to help SMEs secure credit support and cope with difficulties in cash flow.

President, here, I wish to raise one point. Given the many initiatives proposed in the Policy Address and together with that very thick Policy Agenda which elaborates the areas under the charge of each Policy Bureau in an exhaustive manner, the public has many expectations and hopes that all the proposals could be implemented as soon as possible. However, we also know that there will surely be a great deal of resistance and a lot of problems in implementation, so I hope the Chief Executive and his team can adopt a tolerant attitude and bring various social forces together in implementing the various plans in the Policy Address.

President, I so submit.

Mr Andrew LEUNG moved the following motion: (Translation)

"That this Council thanks the Chief Executive for his address."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr Andrew LEUNG be passed.

PRESIDENT (in Cantonese): This Council will now proceed to a joint debate on the motion and the amendments.

We now proceed to the first debate session. The debate theme is "Economic Development". This session covers the following five policy areas: LEGISLATIVE COUNCIL ─ 30 January 2013 5567 commerce and industry; economic development (other than energy); financial affairs; technology and communications; and aviation and maritime transport.

MRS REGINA IP (in Cantonese): First of all, right from the outset, I have to thank the Chief Executive for accepting the suggestion of the New People's Party of abolishing the levy on foreign domestic helpers. I know that this suggestion has been subject to extensive discussions within the Government as the Government will incur a loss of more than $1 billion in revenue per annum. There is also the worry that some labour groups may think that the abolition of the levy on foreign domestic helpers is tantamount to opening the floodgate for importation of foreign labour. I also thank the Financial Secretary and the Secretary for Labour and Welfare for accepting our views. I believe the abolition of the levy on foreign domestic helpers will greatly alleviate the burden of the middle class and will be welcomed by them. In fact, I do not see how the Government can impose on employers of foreign domestic helpers the levy of $400 upon expiry of the suspension period this summer. In any case, I thank the Government for heeding sound advice.

In this session, I would like to speak on the Government's industrial policy. First of all, I think the order of priorities in the Chief Executive's Policy Address, that is, economic development, housing and land supply, poverty alleviation, care for the elderly and assistance to the frail is appropriate because the Chief Executive has responded to the greatest concerns of the community, that is, economic development, land and housing, care for the elderly and poverty alleviation. As the saying goes, "well fed, well bred". It is most imperative for us to deal with economic development first.

Furthermore, I also agree that the Government's industrial policy is in the right direction generally. Regarding industrial development, the Chief Executive's major targets are the financial services sector, business and professional services and international shipping centre. He also mentioned industries where Hong Kong enjoys clear advantages, highlighting the innovation and technology industries, as well as the testing and certification industry. But the education and medical industries were not mentioned anymore. In my opinion, the Government should give us an explanation and account, including how its industrial policy is formulated and on what criteria such priority industries are chosen. I have some suggestions in this regard.

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In my opinion, when a city or country selects some industries where it enjoy clear advantages, it should, according to traditional economics proved to be viable by experience over the past decades, select industries that enjoy comparative advantages and competitive advantages. I believe knowledgeable government officials must understand that the concept of comparative advantage was raised by the traditional liberal economist David RICARDO during the Age of Enlightenment. It means that a place will enjoy comparative advantage in producing a product if it is most cost-effective to produce it. For instance, among various countries in the world, China has a greater comparative advantage in producing consumer goods such as footwear and apparel compared with the United States because of its abundant labour force. Hence, in comparison, it is most suitable for China to make these products. However, China does not have any advantage in the manufacturing of large aircraft such as Boeing even though it is working very hard to upgrade and transform its industries.

Another advantage is competitive advantage, which is relatively easy to change. For example, Hong Kong is a free port and no tariff is charged. This is a competitive advantage. So, in the sales of expensive consumer goods, such as up-market luxury goods, we enjoy a greater advantage than the Mainland market. However, such competitive advantage is vulnerable to change. If a sales tax or tariff is introduced in Hong Kong, or taxes are cut substantially in the Mainland, our advantage will disappear at any time.

The industries mentioned by the Chief Executive match with these principles. However, I would like to point out that it is appropriate for the SAR Government ceased talking about the education and medical industries. As many scholars have pointed out, including Prof Raymond SO of Hang Seng Management College in an article that I read today, the education industry has always existed in Hong Kong even without promotion by the Government. I worked as a teacher in the New Method College when I was young. Both the New Method College and Wellington College were private schools without any government subsidies or land grants. However, they could meet market needs and provide quality education services. The students' results in the Hong Kong Certificate of Education Examination or Advanced Level Examination were quite impressive. Many high ranking officials and leaders in various sectors also came from the New Method College and Wellington College. As these private schools could meet the needs of the market, they were a kind of industry able to run without any government assistance. Similarly, tutorial schools meeting market needs nowadays do not need any government subsidies at all.

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However, if the Government wishes to change an essential service, be it education or health services, into an industry, it should clearly define the business model. If it is an industry, it should be allowed to maximize its profits at the expense of others. It will be allowed to impose whatever charges on its clients as long as business runs. Certainly, operators in the industry will also be eliminated by competition in the market mercilessly. As we can note from the newspapers in the past couple of days, the century-old Sacred Heart Canossian College of Commerce will close down because it has failed to compete with courses offered by self-financing institutions. In that case, it is contradictory to the concept of education because education is a kind of public good. As the Financial Secretary or Secretary Prof K C CHAN may know, education is a kind of public good. We will only care about the education of our own children instead of the others'. Thus, the Government has to provide education to the people.

As education is a kind of public good, the Government has the responsibility to ensure that all social strata can receive quality education. There will be contradiction if education is turned into a kind of business. If a school can admit as many students as it wishes without regard to the maximum capacity of enrolment, or the quality of education service, or whether the students can find jobs in the future, a lot of problems will be created. Although some institutions such as The Hong Kong Institute of Education will welcome it as they can expand their business, and some professors may be promoted to be deans, or deans may be promoted to be principals, is this compatible with public interest as a whole? The Government should think long and hard about this.

In other words, I would like to point out that if the Government wants to change any essential service into an industry, it must ponder over the business model involved and decide whether the operators can make money without paying regard to the impact on society. Our education cannot be successfully turned into an industry if it is run like the medical industry. Regarding the medical industry, although land has been granted, many restrictions such as the requirements of providing low-fee wards or service for a fixed proportion of Hong Kong people are imposed to prevent hospitals from making too much money. Subsequently, hospitals are not allowed to maximize their profits at will. Therefore, the medical industry is now facing a reality, that is, although sites are earmarked by the Government, no tender is submitted by businessmen who find the business unprofitable after computation. So, I hope that when the Government espouses any proposal on the development of an industry in the 5570 LEGISLATIVE COUNCIL ─ 30 January 2013 future, especially when an essential service or public service that should be provided by a government is to be turned into an industry, the Government should think about the business model involved, the products to be made, the market to be met, the impact on those who need those services, as well as the effects on the long-term development of society as a whole.

Regarding the Government's economic policy, I subscribe to Mr Andrew LEUNG's views and would like to express disappointment with the fact that the Government has not attached sufficient importance to the technology industry. For example, we note that there is scanty mention of innovation and technology by the Government. Certainly, there is no more mention of the establishment of a technology bureau. But the technology sector sincerely hopes that there will be a dedicated innovation and technology bureau.

Let us take a look at the candidates of the Working Group on Manufacturing Industries, Innovative Technology and Cultural and Creative Industries under the Economic Development Commission. We will also focus on the technology sector. The members comprise Mr Charles Nicholas BROOKE, Chairman of the Hong Kong Science and Technology Parks Corporation; Prof Philip CHAN, Deputy President and Provost of The Hong Kong Polytechnic University cum Fellow of the Hong Kong Institution of Engineers; Ir Daniel CHENG, member of the environmental protection industry; Mr MA Huateng of Tencent in the network industry; Mr Andrew LIAO, an intellectual property expert and barrister; as well as Dr Roy CHUNG and Dr Humphrey LEUNG. Although they are leaders in the manufacturing sector, they are all engaged in the manufacture of hardware. Dr Humphrey LEUNG, for instance, is engaged in the manufacturing of semiconductors and belongs to the IC industry. Although Mr MA Huateng has made substantial achievements in the networking industry, it is disappointing that the members do not comprise representative of the local information technology industry (I mean software, not hardware), not to mention one single representative of the Computer Society. Although Mr Charles Nicholas BROOKE is responsible for the Hong Kong Science and Technology Parks Corporation, and I know that he has to travel around the world in order to attract more multinational companies to come to Hong Kong for conducting scientific research, he comes from the real estate sector rather than the information technology sector. This is a well-known fact.

Therefore, I think that there is inadequacy on the part of the Government in seizing the opportunity of the global information technology development and LEGISLATIVE COUNCIL ─ 30 January 2013 5571 making efforts in encouraging the development of information technology. In fact, industries such as information technology and software do not require a lot of land but offer great potential of value enhancement. They are precisely the priority industries badly needed by Hong Kong. I hope that government officials will give responses in due course.

Thank you, President.

MR LEE CHEUK-YAN (in Cantonese): President, first of all, I will response to the Policy Address in general. Of course, organizations outside the Complex have urged that we must vote against the Motion of Thanks, while another organization has thrown eggs outside to suggest that the Policy Address should get zero score. I have thus blended together these two views in my speech, with a stash of batter. Since this is a zero-score Policy Address as a whole, we cannot but oppose the Motion of Thanks. The position of the Labour Party on the Policy Address as a whole is known to all, that is: The Policy Address is to "Attempt Deception, Maintain Stability", for many of the promises made in the manifesto have not been honoured. We have put forth the "Four Profound Regrets", namely, the regrets about standard working hours, universal retirement protection, the volume of public housing construction, and the domain covering universal suffrage, population policy and the rule of law. Apart from the "Four Profound Regrets", we have put forth "Four Profound Amendments". In the following sessions, I will go into the details about the "Four Profound Regrets" put forth by the Labour Party, which I have just mentioned.

However, Members would have noticed that after the delivery of the Policy Address, the net popularity rating of LEUNG Chun-ying dropped to -14%, which meant 48% of the public opposed him to be the Chief Executive and only 34% supported him. According to that opinion poll, he should indeed step down. This is also the position held by us all along. Not only because LEUNG Chun-ying's integrity is problematic, but also because of his zero score in handling people's livelihood issues. As such, he should step down immediately.

I will now come to the theme of this session ― economy. Members may notice the several mindsets in the economics aspect. First, it is still tilted to the development of financial services. Actually, in the present society of Hong Kong, this mindset should be corrected. For if only speculation on real estate 5572 LEGISLATIVE COUNCIL ─ 30 January 2013 and financial products are promoted, the economy of Hong Kong as a whole will be led towards speculation, thereby eliminating other industries. Now, he talks about the development of other industries, but if we continue to boost the development of the real estate industry and the finance industry, the development of other industries will by no means be possible. As Members all know, the rentals are very expensive now, and rentals in Causeway Bay are the highest in the world. Given such circumstances, how can other industries operate? Their operation is simply out of the question. He talks about developing the creative industry, yet how can operators rent a place to run their businesses? Many creative industries have to experience hard times at their start-ups. In addition to the difficulties encountered in their initial operation, they have to cope with the rents. The most deplorable point now is that these operators cannot afford the rents. Against such background, how can we promote the development of the creative industry? Certainly, we strongly support the return of industries, yet how can this be implemented when the rent is so high? The best option the Government can think of is revitalizing industrial buildings. However, once the proposal of revitalizing industrial buildings is mooted, it drives up the rent of industrial buildings significantly. No sooner had the Government proposed the revitalization of industrial buildings than the rent of industrial buildings rocketed immediately. How should this problem be dealt with? Therefore, we strongly oppose the approach of tilting to the financial services sector, for this will eliminate other industries.

Second, it is the great controversy surrounding the establishment of the Financial Services Development Council (FSDC) for no reason. Actually, the Chinese name of the council is strange in itself, which is "金融發展局". In this world, only Policy Bureaux headed by officials under the accountability system or certain statutory organizations are called "局" in Chinese, such as the "旅遊發展局" (Hong Kong Tourism Board) and the "貿易發展局" (Trade Development Council), and so on, which are all statutory organizations. Why is the organization relating to financial services called "金融發展局" (the FSDC)? Today's newspapers reported the underlying reasons. He has appointed "red-hots" from the Mainland, including the son of ZHU Rongji to the FSDC. These Mainland "red-hots" are fame seekers. When they are asked what they do in Hong Kong, they may say that they are members of the FSDC, which sounds more prestigious. If the organization is called the Financial Services Development Advisory Committee, it sounds less important. Rumours have it that the Government has named this organization the FSDC solely to house this group of "red-hots" from the Communist Party of China. If that is the case, why LEGISLATIVE COUNCIL ─ 30 January 2013 5573 not explicitly call this the "Fame-shooting Board" or the "Bragging and Boasting Board" instead of the FSDC?

Besides, what is the problem with the development of the financial services which renders it necessary to establish a council? The more products the authorities launch, the more extensive will speculation become. Therefore, we adamantly oppose the continual tilt to the sector.

As for the other rumour, I think it is belittling Hong Kong to say that it is done for the purpose of coping with our Motherland, for it seems to suggest that everything we do is "shoe-shining" China, and that the development of China will bring a lot of opportunities to Hong Kong. However, we must bear in mind that the most important task is to develop the competitiveness and competitive edge of Hong Kong. Without competitive edges, what does the economic development of the Mainland have to do with us? They will compete with, or even surpass us.

We think that under the leadership of this "shoe-shining" Chief Executive, who adopts a kowtow approach as the overall direction for the economic development of Hong Kong, our competitive edge in development has become problematic. Therefore, many Members have mentioned earlier innovation and technology and the return of industries, and so on, which are areas where we should pursue development. However, he has done nothing except kowtowing.

Another point is about the overall mindset adopted. At the beginning, LEUNG Chun-ying often said that he would seek change while maintaining stability. I have asked him repeatedly what changes he would make. It turns out that not many things will change. There is but one approach in the end ― going on a construction spree ― the one and only one approach. However, has he brought about any genuine change? No. The thinking underlining economic development he mentioned in the last page is after all about the "trickle down effect", a notion mentioned frequently nowadays and most strongly opposed by the Labour Party. What is the content? In the 199th paragraph of the Policy Address, it is said that, "Improving people's livelihood hinges on economic development. We promote economic development for the purpose of improving people's livelihood." It is nonsense. Basically, even when the economy is developed, the people's livelihood can hardly be improved without sound distribution. The first level of distribution is between employees and employers. At present, the minimum wage has only been increased by $2, and 5574 LEGISLATIVE COUNCIL ─ 30 January 2013 the right to collective bargaining is still lacking. In the absence of such distribution and given the failure of the Government to carry out the second level distribution, there will hardly be improvement in people's livelihood. I hope the Chief Executive will read the book The Price of Inequality written by Joseph STIGLITZ. Today, Hong Kong society is a society with serious inequality, and this has restricted the development of society and the economy. Moreover, when people discuss economic development, they are indeed discussing employment.

Actually, Members may look at the case overseas. Their discussion is about jobs, jobs and jobs. It is all about job opportunities. The case of Hong Kong is just the contrary. The authorities are only pursuing economic development instead, to the neglect of job opportunities. Worse still, it now talks about the importation of labour when necessary, right at a time when wages start to see some improvement. We have put up with dramatic wage cuts for a dozen of years. Wages were cut significantly by 30% in the last financial crisis, whereas raises have been made at snail's pace subsequently. Recently, in the face of the newly emerged labour shortage, wages have been adjusted accordingly, and with the effect of minimum wage, people's livelihood has just started to improve. Yet at this very point, he proposes the importation of labour to curb wage increase. What else will Hong Kong pursue? Everything is about economic development, and no genuine concern is accorded to employment and people's livelihood. We do not want this economic development model. We want the economical development model that enables the people to share the fruits of prosperity.

In view of the overall economic philosophy adopted by LEUNG Chun-ying, I think he should get a "zero" score. Thank you, President.

MR IP KWOK-HIM (in Cantonese): President, first of all, I would like to express our overall opinions on the Policy Address on behalf of the Democratic Alliance for Betterment and Progress of Hong Kong (DAB). This is LEUNG Chun-ying's first Policy Address in his tenure as the Chief Executive, in which he has devoted considerable length to elaborating his vision of administration for the coming five years. Compared with the previous policy addresses, this one actually gives the people of Hong Kong an impression that the new Government is more proactive in its attitudes of administration, manifesting, the mentality of seeking change whilst maintaining stability. In regard to economic LEGISLATIVE COUNCIL ─ 30 January 2013 5575 development, for example, the Policy Address emphasizes that the role of the new Government should be appropriately proactive. It also espouses the notion of homeland relationship with a view to strengthening the co-operation and liaison with the Mainland.

With respect to promoting the development of industries, the Policy Address has attached importance to the development of traditional pillar industries as well as small and medium enterprises on the one hand while promoting the concept of co-operation among the Government, industry, academia and research sectors to help develop innovation and technology industries on the other. In the light of the limited social resources, the Policy Address decisively suggests to review the development of healthcare and education industries, prioritizing "respite", "consolidation" and "enhancing" as the principal components of our education policy.

The description in the Policy Address regarding the people's livelihood is also proactive in attitude, especially when it comes to the policy directions of assisting grass-roots families in moving into public housing and the middle-income families in home ownership. The Policy Address is also committed to reforming the Mandatory Provident Fund System, promoting environmental protection and conservation.

Overall, we think the Policy Address manages to grasp the advantages and opportunities of Hong Kong's social development while also pointing out all the problems and difficulties. The DAB basically agrees to the directions of the Policy Address. It should be pointed out that since the inauguration of the Chief Executive and the new Government, many initiatives have been rolled out as soon as they are ready in order to address the major issues relating to people's livelihood, including the disallowance of delivery bookings for expectant Mainland mothers with no ties to Hong Kong, the launch of Old Age Living Allowance and the introduction of the Buyer's Stamp Duty. All these initiatives have answered the aspirations of the people. They should be done right now and there is no excuse for further procrastination.

In the future, the DAB will also urge the Government to act according to the philosophy and directions set out in the Policy Address, that is, to continue to quickly roll out better and more specific initiatives as soon as they are ready.

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President, a politician should always give top priority to the interest of the public. The DAB does not wish to see the Chief Executive hiding any good policy concept or initiative for subsequent announcement in his annual Policy Address. We think that it is totally unnecessary. Again, we think that he should adhere to the direction of rolling out policy initiative as soon as they are ready.

The DAB opines that Hong Kong society has accumulated many problems in respect of the economy and people's livelihood. Any attempt to radically resolve the problems within a short period of time is unrealistic. In fact, there are some problems, especially those deep-rooted ones, which still require public discussions over a period of time in order to consensus to be forged and solutions finalized. It seems that there has yet been any panacea to fix them in one step.

President, the DAB is particularly concerned about the proposal to set up a number of commissions espoused in the Policy Address. We really hope that these commissions can start discussion and consultation expeditiously, thereby making practical and feasible recommendations on relevant policies. We hope they will not fall short of public expectations or become an excuse for procrastination.

The Budget will be released one month later. As the Financial Secretary is present today, the DAB urges him to allocate sufficient resources in the Budget to supporting the implementation of various policy proposals. The DAB also urges him to introduce more relief measures according to the actual circumstances in order to help people from all walks of life in Hong Kong.

President, the DAB considers this Policy Address commendable and will support the Motion of Thanks. Thank you, President.

MR NG LEUNG-SING (in Cantonese): President, first of all, I would like to show my support for the motion moved by Mr Andrew LEUNG, Chairman of the House Committee of this Council, namely "That this Council thanks the Chief Executive for his address". This motion is moved according to the convention of this Council as found in Rule 13 of Part B of the Rules of Procedure. Since this is part of the agenda of a civilized political assembly as a matter of courtesy, I think that Honourable colleagues should respect it and co-operate.

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Now I would like to speak on the first session on the agenda, that is, on the part "Economic Development". As the ancient saying goes: "The line is the key link; once it is grasped, everything falls into place." The Policy Address stressed that sustained economic growth is a prerequisite for us to tackle problems in housing, poverty, an ageing population and the environment. Therefore, it can be said that economic development is the line and if there can be smooth and healthy development of the economy, other things will naturally fall into place. I agree therefore very much with the view that promoting economic development is the primary goal of the Government.

While seeking to develop the economy, the Government should still make a lot of efforts to ameliorate all sorts of problems related to society and the people's livelihood. I would suggest that the Government should set the axis of its administration as focusing its efforts on promoting economic growth, taking concrete actions to improve people's lot, seeking gradual and orderly development of the constitutional system, solving conflicts in a peaceful manner and collaborating with the people in building a bright future. The Policy Address has not discussed at great lengths the financial services industry, and the focus of its discussion is on Hong Kong's development as an offshore Renminbi (RMB) business centre and an international asset management centre, as well as making full use of the National 12th Five-Year Plan to support such development. This is in line with the practical situation and understandable. It is because Hong Kong has grown into a mature international financial centre and it would not be possible to propose many new policies and measures on that front.

With respect to these two roles, Hong Kong does have some latent edges. We know that many places in the world are fighting for a share of the offshore RMB business. These include places as far as London and New York and nearby places like Taipei and Singapore. Therefore, we have to give full play to our edges and as the Policy Address says, "Under 'one country, two systems', Hong Kong is an ideal 'testing ground' for steady market reforms of our country's interest rate and exchange rate regimes, and its gradual realization of the RMB capital account convertibility.". If we can do a good job in such matters, then would have no rivals to fear.

A new issue in the Policy Address is the setting up of the Financial Services Development Council (FSDC), which is also the focus of heated discussions lately. There are queries about its framework and source of funding. I would think that these are only secondary. If we are to judge the FSDC, we should base such judgment on whether the duties it discharges can really promote 5578 LEGISLATIVE COUNCIL ─ 30 January 2013 the development of the financial services industry of Hong Kong. Therefore, the FSDC should come up with a plan with concrete objectives and a timetable on how these objectives are to be achieved. The performance of the FSDC should be measured according to the work done and based on the relevant data obtained.

Now the FSDC has proposed five areas of study, namely, financial policies development, opportunities on the Mainland, new businesses, market promotion and human resources. I must say that the work of many institutions and universities also touches on these five areas. For example, the Institute of Global Economics and Finance at The Chinese University of Hong Kong has undertaken some very in-depth studies on the subject of RMB as an international currency. The FSDC should make good use of its unique advantages, such as experts pooled from different sectors and places and it should draw up some unique directions of work. I would also suggest to the FSDC that apart from undertaking studies on its own, it can make full use of the resources of the sectors and the academia to facilitate such studies.

As to the question of how the FSDC should assess, integrate and balance the research papers from various parties, this would be an issue of a higher level and must be carefully handled. There should be a mechanism in the FSDC to screen the views received and avoid leaving out some valuable ones. Besides, there are also such matters as, after coming up with certain recommendations, what channels the FSDC should take to submit these recommendations to the government departments concerned for implementation, how these recommendations are to be followed up and how the results should be gauged, and so on. All these should be determined clearly, or else the FSDC will become merely a venue for empty talks.

President, individual commentaries have claimed recently that Hong Kong is unduly dominated by the finance industry. I would like to say a few fair words for the finance industry. The finance industry is the second largest pillar in terms of GDP and currently it accounts for 16% of the GDP of Hong Kong. But its contribution is not limited to the economic aspect. It is a link which forges ties between Hong Kong and the world and it makes Hong Kong truly an international city. As an economic commentator has rightly said, we cannot find in history any international city which owes its emergence only to agriculture, the manufacturing industries and culture. If a city is to become an international city with influence felt all over the world, it must first possess the conditions for a cutting-edge international financial centre. Therefore, our financial sector must LEGISLATIVE COUNCIL ─ 30 January 2013 5579 only go forward and it can never go backwards. If it retracts, it will have an extremely negative impact on our socio-economic conditions as well as people's life.

However, on a realistic note, Hong Kong actually faces challenges which can rightly be said to be extremely worrying. If we compare Hong Kong with Singapore, in 2002, Singapore only had 56% of the human resources as compared to Hong Kong in terms of financial and commercial services. But in 2010, Singapore had already caught up and reached 94%. This shows that our competitive edge is diminishing. We should never take this lightly. The FSDC is the mastermind of our future developments in finance and it certainly has got an important role to play.

President, for the last 20 years our financial sector has maintained steady growth in the midst of drastic changes in the global economy. We have weathered the debts crisis in 1994, the Asian financial turmoil in 1997 and 1998, and the subprime mortgage crisis in 2008. We can see that in some developed countries, their financial industry has suffered great crises and managed to survive only with non-stop funding from their governments. In contrast, Hong Kong can be said to be immune, thanks to the stringent gate-keeping efforts made by the regulators and also the prudence and self-discipline of the sector. These two causes are indispensable to our continued success.

Against such a background, I think that the Government should not be excessively harsh in its regulation of the financial industry. A large amount of taxpayers' money is to be spent on the regulation of the sector as well as on the relevant organizations. Currently our regulation of the financial industry is on par with international standards. We are one of the first places in the world which adopts the new Basel capital requirements. It follows that with such conditions, there is no need to impose a harsher yardstick on the sector. When I come into contact with the small and medium-sized financial institutions, they would always raise the point that as international standards are introduced, the authorities must offer more guidance and attention so that excessive regulation can be prevented and the competitiveness of the sector will not be undermined.

As for the development of our economy as a whole, I agree that while the Government should emphasize free market, it should also take an appropriately proactive approach. But the focus should be placed on enhancing our long-term competitiveness and suitably avoiding too many short-term measures, so as to 5580 LEGISLATIVE COUNCIL ─ 30 January 2013 prevent the production of undesirable side-effects. First of all, a long-term policy on the industries should be formulated. The Policy Address proposes that we must deepen and expand our industries. I would think that by deepening our industries, it means to increase the volume of business; and by expanding, it means to explore new industries suitable for Hong Kong.

I would think that there is still an inadequacy and that is, we must have a goal of upgrading our industries. To achieve this goal, the training up of talents and enhanced investment in research and development are essential. Now we have a low R&D input which is only 0.76% of our GDP, as compared to 2.2% in Singapore and 1.6% on the Mainland. We should enhance our efforts on this front. We have no natural resources, so we can only enhance ourselves and improve our competitive edge in order to maintain our position as a world city.

The Policy Address mentions that our universities are an important source of innovative technology. It is right that we should collaborate with the universities to promote the products of scientific and technological research. However, the focus of research in many of our universities is placed on publishing articles in the academic journals in a bid to enhance the international ranking of the universities. But less importance is placed on researches related to our local industries. In view of this, the Government should introduce some suitable initiatives to guide and encourage a shift in the direction of our research efforts.

President, I so submit.

MR RONNY TONG (in Cantonese): President, during the election, LEUNG Chun-ying used his capability as a selling point, yet "the ugly daughter-in-law must take off her veil before the father-in-law in the end". After reading his Policy Address, many people cannot suppress the thought that this "capability" is also a scam.

President, among the 200 paragraphs in the Policy Address, in only 29 paragraphs, that is, six pages, is mention made of economic development. Mr LEE Cheuk-yan said that the policies tilted to the development of the financial services industry or economic development, but we can hardly see that. On the contrary, the 29 paragraphs only reveal LEUNG Chun-ying's limited knowledge of economics and his failure to put forth proposals.

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President, why do I say so? I hope I am not being too unfair to him. Yet if Members read those 29 paragraphs carefully, they will find the content somehow alarming. One third of those paragraphs is about CEPA and the relationship with the Mainland, but nothing is said about external relations or attracting foreign investment apart from the establishment of the two "empty talk committees". President, before I come to the problem of these two "empty talk committees" shortly, I will first talk about CEPA.

President, I am not saying that CEPA has brought no achievement or benefit to the economy of Hong Kong. However, if half of the content in this area in the Policy Address is focused on CEPA and the communication with the Mainland, this will give people the wrong impression that we are reaching out to our Motherland with our back to the world. President, this impression will bring adverse impact to Hong Kong in maintaining its status as a financial centre, for the economy of Hong Kong should be reaching out to the world with backing from our Motherland. Hong Kong should capitalize on the support from our Motherland to establish an essential foothold in the global financial market. Our target should not be becoming an ordinary small town or city in China. Hence, if we are geared in the direction of reaching out to our Motherland with our back to the world, it will convey a false impression to investors around the world. Honestly, if Hong Kong is only regarded as a financial centre on the Mainland, it will be less attractive to other places.

President, I do not wish to draw this comparison. However, during Donald TSANG's era, he had at least considered attracting to Hong Kong certain investment items which we had not been able to secure previously. The Islamic bond item now under our scrutiny is a case in point. Though the item may not bring significant benefits to Hong Kong, this is the correct mindset. President, the attempt to identify certain financial businesses from other parts of the world which we are unable to attract to Hong Kong for the time being is crucial to developing Hong Kong into an international financial centre. For if the focus is only placed on CEPA ― honestly, President, CEPA is no new initiative, for it is not invented by LEUNG Chun-ying, frankly, this approach of focusing merely on CEPA is disappointing.

President, as I said earlier, other than the establishment of the two "empty talk committees", not many measures have been introduced. In terms of economic development alone, LEUNG Chun-ying has proposed the establishment of two brand new "empty talk committees" or advisory frameworks, namely the 5582 LEGISLATIVE COUNCIL ─ 30 January 2013

Financial Services Development Council (FSDC) and the Economic Development Commission. President, there are many committees and advisory frameworks already existing for the financial industries or economic policies, why must two more committees be set up under or above the various departments? It is baffling. President, above all else, the establishment of the committees brings forth two concerns: First, does it mean overlap in terms of the framework, and second, does it mean LEUNG's cronyism in terms of appointments to these committees?

I will first talk about the framework. President, honestly, we may list the various organizations involved in the making and implementation of proposals relating to the economic policy of Hong Kong. The Executive Council, which is definitely the highest policymaking authority, should be excluded. But still, there are the Central Policy Unit, the Commission of Strategic Development, the Hong Kong Trade Development Council, the Hong Kong Tourism Board and the Hong Kong Monetary Authority (HKMA). These organizations are playing established roles in the economic or financial development of Hong Kong, yet two additional committees will be set up on top of these many organizations.

President, I would like to talk about the FSDC in particular. The character "局" (Council) is used in the Chinese name of the FSDC, which gives people the impression that the FSDC is superior to the other advisory committees mentioned earlier. LEUNG Chun-ying has emphasized repeatedly that the FSDC does not have actual power. But if Members care to browse the Internet, they will note that the primary functions of the FSDC involve the promotion of policies. If so, what will the HKMA do? The HKMA is responsible for similar work, is it not? Secretary Prof K C CHAN flies from one place to another every day to promote the economy and financial industry of Hong Kong, is he not? If so, why does the FSDC have to be set up? President, I cannot understand this. It is not only a concern about equivocal authority and unclear accountability, for the FSDC will be operated as a private company by guarantee. Actually, among the 10-odd organizations set out by the Government as reference, only one think tank in the United Kingdom, CTUK, adopts this mode of private company by guarantee. That being the case, why does the Administration not follow the mode adopted by the other nine organizations but choose the mode of private company by guarantee? President, the greatest problem with the mode of private company by guarantee is that the organization will be a private company basically, and it can hardly be regarded as an organization with transparency. Certainly, the authorities may by all means LEGISLATIVE COUNCIL ─ 30 January 2013 5583 enhance the transparency of the FSDC, yet it will be hard for the Legislative Council or members of the public to monitor it. Why has the Government chosen this mode? Why does the Government not follow the established practice in the past or the examples of other countries by adopting the mode of operation of a statutory body? For statutory bodies will at least be subject to regulation by an ordinance, where their objectives, mode of operation, structure and degree of supervision are set out clearly for easy reference. The financial industry is an extremely important pillar to Hong Kong. If the formulation of policies and the promotion of any activities are left to an organization with no transparency, it will give people an impression of inadequate transparency, which will not facilitate the maintenance of Hong Kong's status as a financial centre.

I will talk about the identification of committee members quickly. President, if the FSDC is an advisory body, it should definitely consult the leaders in the trade, but if the Government asks bigwigs in the trade to join the FSDC, there will be conflicts of interests. President, I now read out the objectives of the FSDC published on the Internet, it says, "to identify new opportunities, to access new markets and growth areas". In this connection, will these bigwigs and stakeholders in the market involve any conflicts of interests? When they notice new markets matching the strength of their companies or new markets identified by their companies, will they urge the Government to accept proposals in respect of those markets and promote such markets? If that is the case and if it gives people such an impression, how will the Government remove the impression of unfairness and lack of transparency? As such, President, LEUNG's cronyism in appointing these people to the FSDC will be extremely problematic.

As Mr LEE Cheuk-yan said earlier, or as many people have queried, is the FSDC established for accommodating the "red-hots" from the Mainland"? Why would they account for such a large part of membership of the FSDC? How much impact does it have on the Government? President, these issues are causes for concern. In fact, the most important point is we have to know what should be done to promote Hong Kong economy and to consolidate and develop Hong Kong's position as a financial centre. President, as I said earlier, we should reach out to the world with backing from our Motherland. Moreover, we should find out the major factors attracting foreign investments and then work on them.

President, the primary factor is fair competition, where favouritism or tilt to certain companies, organizations or corporations will not be adopted. Second, it 5584 LEGISLATIVE COUNCIL ─ 30 January 2013 is effective monitoring. To foreign investors, only when the Government can exercise effective monitoring to ensure fair competition will they consider investments in Hong Kong viable. Third, it is credibility, which is extremely important. Though Hong Kong is only a place on the land of China, honestly, our credibility is higher than that of many cities on the Mainland. This is one of our selling points. We should maintain and promote our credibility but not undermining it. Any action bringing damage to our credibility, even if it is done inadvertently, will not facilitate the economic development and growth of the financial industry of Hong Kong. Fourth, it is the rule of law. The rule of law must be upheld so that foreign investors will be confident in making investments in Hong Kong. Fifth ― though I have put this factor in the fifth position, many others consider this the most important factor ― it is the attractiveness of Hong Kong in terms of rental, living standard and price levels. When investors come to Hong Kong to do business, they have to pay rents. If the rents are to be doubled two years later ― President, the rental of my office has doubled recently ― how can investors cope with the high rentals? For those operating shops, the rents will be increased by two to three times anytime. How can they cope? So, this problem must be solved. If this problem is left not resolved, all other things will be mere empty talk. President, education is another concern. Many foreign investors have complained to us that their children in Hong Kong cannot receive the minimum education desired, and some of them do not even have the opportunity to enrol in any school. If so, how can we attract foreign investors or young professionals to Hong Kong?

President, let me sum this up quickly. To promote the economy of Hong Kong, efforts should cover the promotion of local and community economy. The promotion of community economy is extremely important. We cannot have two Hong Kong, one in Central and another in Tuen Mun, and then another one in Tin Shui Wai or Tung Chung. It is impossible. President, recently, I suggested to the Government that we must insist on boosting the local community economy in Tung Chung, hoping that Sky Pier will become an official control point, giving a boost to the economy of North Lantau. I hope that the Government will consider these issues. President, these are realistic concerns. Honestly, after reading the 29 paragraphs, I am extremely disappointed. I dare not say there is nothing good about that, yet these measures will certainly bring more troubles and confusions to Hong Kong.

Thank you, President.

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MR WONG KWOK-HING (in Cantonese): President, the FTU supports the original motion and the amendment proposed by me.

With respect to this Policy Address, I have attended briefings held by the 18 panels of this Council and asked the Government questions on it. In these 18 briefings, I have asked 36 questions in total and 27 of these questions have got a positive response from the authorities. I will speak in the five sessions which follow. Now I would like to speak on the first one, which is about economic issues.

In this Policy Address, there are 30 paragraphs on economic issues. Mr TONG, you were wrong; it is not 29 paragraphs but 30 paragraphs. I think that in these 30 paragraphs on economic development, there are five relationships which the Government should pay attention to and handle. But unfortunately the Government has not done so.

The first relationship is that between economic development and protecting the employment of local employees so that they can be given priority. This relationship is most fundamental. President, when the Chief Executive gave a reply to a question asked by a Member on whether workers should be imported from abroad, he just gave a hint. I would think that the Government should state its position on this issue cleary. The FTU is firmly opposed to mentioning again the importation of labour because of this so-called serving the needs of economic development. It is because in doing so the Government and the business sector are sacrificing the local workers. We notice that the chambers of commerce and the business sector are clamouring for such a proposal lately. We hope that they should not harbour such fantasy. If it is said that a large amount of workers are needed for the construction of more housing, honestly, we would urge you to tackle first the problems of multiple subcontracting and the failure of workers in getting any protection for their livelihood. If these problems are not solved, and if the developers and contractors in the construction industry do not hire long-term workers but only import some cheap labour from abroad, we will firmly object to it. Actually, if there is a genuine need to import these supplementary workers, we have a mechanism for that already and it cannot be said that there is none. So I hope the Government can pay serious attention to the relationship between economic development and giving priority to local workers in employment.

For the second relationship, we hope the Government can attach importance to the relationship between economic development and protecting the 5586 LEGISLATIVE COUNCIL ─ 30 January 2013 financial security of Hong Kong. President, why do I have to mention this point? It is because the Hong Kong Exchanges and Clearing Limited (HKEx) plans to introduce night trading in futures this March. The Securities and Futures Commission (SFC) is now considering this proposal, but it has hinted that approval will be given. A couple of days ago a special meeting was held here and 20 representatives from the sector attended it to present their views on that. Their views are quite contradictory and a great divergence was found. Twelve representatives were for the idea and eight against it. In such circumstances, representatives from the SFC, the HKEx and the government officials were unable to give definite answers to the questions asked by the sector and Members. These questions are on how best to protect security in the financial sector and how best problems in the relationship between the securities companies and their clients can be resolved, and how best serious problems like chain reactions and domino effects and a bank run can be prevented. Questions on these issues were all left unanswered.

A most baffling move is that the HKEx, in a bid to achieve its goals by hook and by crook, has even gone so far as to fabricate public opinion. The HKEx as a listed company and an important institution which controls the trading of stocks in Hong Kong has taken such an outrageous step as to fabricate public opinion before this Council. On that day, this Council received a total of 60 written submissions and of these, 43 submissions were copies of the same standard letter given by the HKEx to institutions and organizations and subsequently submitted to this Council. I have got all the information here. Despite the fact that this issue and the discussion on that day were so important, Secretary Prof K C CHAN left after listening to the first agenda item, and when the meeting proceeded to discussing the item, the relevant Permanent Secretary also left, with only an acting Assistant Secretary staying behind to take the questions. May I ask Secretary Prof K C CHAN if he has really fulfilled his duties as an accountable official? You must face this issue squarely. You must handle this personally. I hope the Financial Secretary can pay attention to my speech and take follow-up actions, because it has a bearing on security in our financial sector. We hope that this decision of trading in futures after the stock market is closed will not be made and implemented so hastily because it is tantamount to laying mines in our finance sector and the economy.

Third, we have to tackle the relationship between economic development and problems in people's livelihood that arise from the interaction between the cultures of Hong Kong and the Mainland. Recently, the incidents with infant LEGISLATIVE COUNCIL ─ 30 January 2013 5587 formulas, "doubly non-permanent resident pregnant women", property speculation, parallel goods and clashes between groups have shown clearly that if the economy of Hong Kong is to develop well, all these relationships must be carefully dealt with so that our economy can grow while the livelihood of the local people can be protected. While the Government seeks to facilitate more civilian exchanges between the two places, it must think of ways to deal with conflicts that have already emerged. Such circumstances and relationships must be improved so that these conflicts can be eased. While we should enhance our edges, we should also make full use of the support shown by the Mainland to us. I hope the Government can pay more attention to such a relationship and I do not think it can be solved by just giving a simple answer as Secretary SO has done earlier.

Fourth, the relationship between Hong Kong's economic development and the assurance of the survival and development of the local traditional trades and SMEs. We can see such problems from the spate of incidents that has occurred. Why is the price of beef rising all the time? Now beef is sold at $100 a catty. Should the Government not think of something to end this monopoly? The Government says that it wants to develop the Chinese medicine trade, but it has imposed some unreasonable requirements such as requiring the wholesale and retail operators in Chinese medicine to run their business on commercial premises or else they will not be given any licence. This requirement will come into effect this year and they will be driven out of business. The result is that the so-called Chinese medicine street in West Point with more than a century's history will soon disappear. I must ask the Government this question. Does it have to develop the economy in this way? About rents, they have been surging recently and actually, this has persisted as a long-standing problem for many years. A shop which sells noodles called Lee Yuen will close in a few days. As rents increase by many times that of the original, the traditional trades and small businesses are all being driven into extinction. Do we want an economy like this?

Fifth, I hope that the Government can attach more importance to the relationship between economic development and the returnees to Hong Kong and deal with it. We should be concerned about their plight. President, according to the Government, 300 000 to 400 000 people have moved to the Mainland to work or start a business. But if they are dismissed or if they fail in their business, they have to live here for seven years on returning to Hong Kong before they can apply to the Housing Department for public housing and CSSA from the 5588 LEGISLATIVE COUNCIL ─ 30 January 2013

Social Welfare Department. President, many of the street sleepers at the Cultural Centre in Tsim Sha Tsui are such returnees. They have lost their status as permanent residents and they have to start all over again to meet the seven-year residency requirement. Should the Government not consider how this relationship can be handled?

The Government should attach more importance to these five major relationships between the development of the economy and other aspects and address the related problems. I hope that when the Financial Secretary and the Directors of Bureax speak later, they can respond to the points raised by me. Thank you, President.

MR SIN CHUNG-KAI (in Cantonese): President, I rise to speak against the Motion of Thanks and in support of the amendments proposed by me, Mr Frederick FUNG and the four Members of the Labour Party respectively.

This is a policy address that has failed to make the grade, so this is disappointing to the public. In fact, after the delivery of the Policy Address, public opinion surveys showed that LEUNG Chun-ying's popularity rating was falling all the time, whereas public discontent with him was mounting. LEUNG Chun-ying did not talk in detail about the promises made by him in his manifesto for the Chief Executive Election, still less has he been able to propose solutions to a number of deep-rooted conflicts in Hong Kong, as he once proposed to.

The conflicts that LEUNG Chun-ying referred to are manifold, including the conflicts between China and Hong Kong, the conflicts in the democratization of the political system, as well as those relating to the relationship between the executive and the legislature, human rights, the rule of law and wealth disparity. However, LEUNG Chun-ying did not give a detailed account of how these conflicts would be dealt with, other than proposing the establishment of over a dozen committees, in an attempt to delay fulfilling his promises. LEUNG Chun-ying often says that policies would be announced in the approach of "rolling out new measures as soon as they are ready", but this also reflects his lack of a holistic vision.

ZHANG Xiaoming, Director of the Liaison Office of the Central People's Government in the Hong Kong Special Administrative Region (LOCPG), who LEGISLATIVE COUNCIL ─ 30 January 2013 5589 has just assumed office, also said that "Western District" would not govern Hong Kong. But in the Policy Address, LEUNG Chun-ying did not talk about "Western District" ruling Hong Kong or the relationship between the executive and the legislature in any way, nor did he explain clearly how the Government and the Chief Executive would defend the Hong Kong core value of "a high degree of autonomy" or improve the relationship between the executive and the legislature, so this shows that LEUNG Chun-ying is totally incapable of preventing the LOCPG from interfering with Hong Kong's internal affairs. Perhaps he is abetting the evildoer because he himself is a product of the intervention by the LOCPG. He has sent a very bad message to the Legislative Council, that is, the Government needs not heed the views of the Legislative Council in its administration because in the eyes of the Government, the Legislative Council is only a rubber stamp.

Concerning the political system, we will discuss it in detail in the fifth session of the debate. For now, I only wish to say in general that the current-term Government has the constitutional responsibility to draw up a roadmap and specific timetable for the implementation of dual universal suffrage. However, there is not a single word on this in the Policy Address and it is only said that consultation will be carried out in due course. When the Chief Executive responded to the question asked by the Chairman of the Democratic Party, Ms Emily LAU, he only said that we still had time.

However, there is actually not much time left because the issues relating to 2016, 2017 and 2020 are extremely complicated. If the Government does not put forward solutions or activate the consultation process at an early date, this would not be conducive to resolving the deep-rooted conflicts in Hong Kong politics or forging a consensus in Hong Kong for the cause of democratization. On the development of democracy, LEUNG Chun-ying is being irresponsible and only adopts a delaying policy.

On economic development, the Government proposed in particular the establishment of two committees to develop the so-called homeland relationship. What actually is homeland relationship? To adopt a saying on the Mainland, this is to walk on the policy tightrope and in fact, doing so would actually reduce Hong Kong's stature. For many years, Hong Kong's role has been to show China the way in going global. LEUNG Chun-ying should not push Hong Kong towards sinicization any further. Hong Kong's role is to serve as the main door 5590 LEGISLATIVE COUNCIL ─ 30 January 2013 for China to move towards the international community, or as a bridge for the international community to enter China.

In this Policy Address, or ever since the LEUNG Chun-ying Administration has taken over, 16 committees have been established in one go and many of them are tasked with conducting studies, reviews and surveys and making recommendations to the Government. We suspect that the Government has only adopted a delaying policy, so as to consume a lot of time.

Mr Ronny TONG, who is sitting next to me, said just now that there were two committees for empty talk. In fact, I believe there are not just two but more than a dozen of them. Can these empty-talk committees take Hong Kong's development forward on all fronts? We know that during the election, LEUNG Chun-ying promised some members of the financial services sector that the Financial Services Development Council (FSDC) would be established. However, this organization that defies all descriptions is not one that holds any solid or statutory power, yet he has refused to rename it as an advisory body instead.

In fact, when the Government proposed the establishment of the Economic Development Commission (EDC), the market did not have any high expectation of the EDC and there were few criticisms of it because it was only an advisory body. However, the case is different with regard to the FSDC. Although it is not a statutory body, it is called a development council, so it is undeserving of such a name. I hope the Government could hear the voices of the market and rename it properly as an advisory body, or call it a research and development council instead. It is only in this way that the mistake can be corrected.

On the development of industries, this Government headed by LEUNG Chun-ying no longer talks about the six priority industries as did the previous administration under Donald TSANG. Of course, we do not know if LEUNG Chun-ying would behave like TUNG Chee-hwa, that is, if something is no longer mentioned, it is no longer considered to be an issue. However, the Government should give a proper account of how it is going to deal with those six priority industries, including the cultural and creative industry, the medical industry, the education industry, the innovation and technology industry, the testing and certification industry and the environmental industry. Under the EDC, there are four Working Groups on Transportation, Convention and Exhibition Industries and Tourism, Manufacturing Industries, Innovative Technology and Cultural and LEGISLATIVE COUNCIL ─ 30 January 2013 5591

Creative Industries, and Professional Services, so it seems that at least three industries, including education services, medical services and environmental industries, are not covered by the EDC, so how is the Government going to deal with them?

There is no problem with the Government making adjustments to its policies but at least, Secretary Gregory SO, who is also responsible for economic development, should give us an account properly, or LEUNG Chun-ying should give us an account properly on what shifts or adjustments in policy would be made. The previous Government proposed the six industries where we enjoy clear advantages in 2009, so should this Government not give us an account properly? In particular, since the Government has granted sites for some industries, if the policy has to be adjusted, should the Government not give a clear account to the market or market players on how the relevant sites would be dealt with?

President, on the fulfilling of the pledges made in the manifesto, the performance of the LEUNG Chun-ying Administration in many areas has left much to be desired. Many policies would be left to the EDC or the FSDC to be established for study. In addition, the Greater Pearl River Delta Business Council will be transformed into the Consultative Committee on Economic and Trade Co-operation between Hong Kong and the Mainland, but the consultation and empty talk would continue.

The only electoral pledge on which he has delivered, or should I say, on which he has delivered more than he promised, is his support for the agriculture and fisheries sector. In his manifesto, he proposed the introduction of a Fisheries Development Loan Fund to offer low-interest loans to support Hong Kong fishermen in establishing offshore fishing fleets, saying that he would allocate $500 million in one go for setting up a sustainable fisheries development fund.

We can see that the LEUNG Chun-ying Administration is very generous in supporting the agriculture and fisheries industry but in other areas, he only allocated $150 million to train arts administrators and in innovative technology, he only injected $300 million to introduce the CreateSmart Initiative. It can be seen that in the eyes of LEUNG Chun-ying, the importance attached by him to the development of arts and innovation cannot compare with that for the agriculture and fisheries industry. There is no knowing if this is the political rewards for the services rendered to LEUNG Chun-ying because back then, the 5592 LEGISLATIVE COUNCIL ─ 30 January 2013 agriculture and fisheries sector gave LEUNG Chun-ying 60 nominations in one go. Therefore, LEUNG Chun-ying has more than fulfilled his election pledge. However, in the great majority of areas, he would only establish committees and research bodies to conduct studies, so the public finds that this is unsatisfactory.

President, the Democratic Party holds little hope that LEUNG Chun-ying would fulfil his election pledges, but we believe that the public should be entitled to good government service and governance. The greatest disappointment this time around is that in economic development, the whole direction is apparently one of bringing Hong Kong under the influence of the Mainland.

In fact, Hong Kong has already been reunified with China, but its function lies not in walking on the policy tightrope of the Mainland but on how to develop the international market and be oriented towards the international community, rather than taking Hong Kong people back to the Mainland to walk on the policy tightrope.

I so submit.

MR CHUNG KWOK-PAN (in Cantonese): President, the first paragraph of the new Policy Address emphasizes economic development and it states right from the outset that to promote economic development, the Government must be appropriately proactive. It is also mentioned that the Economic Development Commission (EDC) will be set up to explore ways from a high-level, cross-departmental and cross-sectoral perspective to work on an overall strategy and policy to enhance our long-term development. We are given an impression that it is something worth lending our support to, but in actual fact, it is disappointing because there is no direction of development and concrete policy.

From the outset, the Chief Executive said that he wanted to diversify the industries. In paragraph 22 of the Policy Address, it is said that the industries must be deepened and expanded. Unfortunately, however, the Policy Address fell short of proposing any concrete policy or measure to develop any particular industry and left everything to the EDC to undertake reviews and studies. As for the six industries where we enjoy clear advantages as proposed by the Government of the previous term, apart from continuing to develop the two industries of innovation technology and the testing and certification, the other industries are simply ignored. In addition, the most specific point is made when LEGISLATIVE COUNCIL ─ 30 January 2013 5593 it is suggested that Hong Kong should develop into an international shipping centre. But no mention is made of the details on how this can be implemented. For questions like which industries should be developed and what can be done to deepen and expand the industries, it seems that there is no specific plan by the Chief Executive for the moment. The SAR Government has always said that it wants to promote diversification of the industries, but no achievement has been made so far and the new Policy Address has not said how an industrial policy can be formulated afresh.

Actually, Financial Secretary John TSANG has said that there is still much room for development in the traditional pillar industries and he even said that support could be given to these industries so that they could upgrade or be restructured. However, we cannot see any concrete support mentioned in the Policy Address for the traditional industries. The Chief Executive only mentioned in paragraph 147 the following: "To protect our marine ecosystem, the Government has prohibited trawling in Hong Kong waters. We will also set up a $500 million sustainable fisheries development fund …… so as to enhance the overall competitiveness of the industry.".

It certainly merits our support when the Chief Executive expends $500 million to develop leisure fishing and hi-tech marine culture industry. We can also see that he is well-intentioned. However, the question is: How much in Hong Kong's GDP does the fishing industry take up? Why does the Policy Address say nothing on giving funding or support to other industries or setting up sustainable development funds for other industries? An example is our textile and garment industry which is a traditional pillar industry in Hong Kong. Even though the economic conditions were not so good last year, it still had a product value of some $200 billion and there is still much room for development and restructuring relatively speaking. But why does the Policy Address not propose to set up a fashion industry sustainable development fund so that there can be restructuring in our industry?

Every year the textile and garment industry brings in hundreds of billion dollars of foreign exchange income and there is a solid foundation in the industry itself. If the Government is willing to introduce measures to help the industry upgrade and restructure into the fashion industry, it can pull the development of other industries as well. For example, if the garment industry manages to develop into the fashion industry, not only will it become a creative industry but it can also lead to the development of Hong Kong as a fashion centre and create 5594 LEGISLATIVE COUNCIL ─ 30 January 2013 new tourist spots, hence promoting the development of the convention and tourist industries. Another example is that old clothes can be recycled, degraded into fibres and turned into carpets, window fabrics and even fabrics for car seats and such like quality products. This will drive the development of manufacturing industries, high-technology industries and environmental protection industry. The Policy Address says that it wants to develop the testing and certification industry into a key industry. As a matter of fact, 25% of the existing clients of the industry come from the textile and garment industry.

All the abovementioned upgrading and restructuring efforts will benefit the four major areas under the EDC, namely transportation; convention and exhibition industries and tourism; innovative technology and cultural and creative industries; and professional services. These areas will in turn lead to further development in other industries and really deepen and expand other industries.

In addition, the Government can also take active steps to help the SMEs open up markets on the Mainland. In recent years, as a result of the rise in wages on the Mainland, many SMEs in the textile industry want to relocate their production lines to Hong Kong. This is especially true in the garment industry. I hope the Government can take active steps to study how best the Hong Kong manufacturers can be assisted in returning to Hong Kong and engaging in high value-added garment manufacturing. This will benefit the employment of local workers.

SMEs are the backbone of the Hong Kong economy. In fact, however, the Policy Address says little on measures regarding the SMEs. In paragraph 48, there is only a short description of not more than 300 words on the development of SMEs. There is nothing new or no specific policy has been proposed other than only a vague statement like this: "will continue to help SMEs tap the Mainland market by various means, …… and supporting Hong Kong business associations in establishing sales and promotion venues in the Mainland for building the Hong Kong brand.".

SMEs in Hong Kong face uncertain economic prospects and have great difficulties in operation. They badly need assistance from the Government. The Liberal Party in its expectations on the Policy Address says that it hopes that the Government can lend its support to the SMEs to ease their pressure. The measures should include reducing profits tax, increasing the deduction for rents for commercial premises, freezing or waiving various licence fees, reintroducing LEGISLATIVE COUNCIL ─ 30 January 2013 5595 the Special Loan Guarantee Scheme for SMEs and helping the SMEs in their financing, and so on. All these are not mentioned in the Policy Address. The Liberal Party hopes that the Government can give serious thoughts to this and mention these in the Budget to be delivered at the end of next month.

As for the proposal made in the Policy Address that the economic and trade relations with the Mainland and overseas countries should be strengthened, it seems that the focus is only placed on co-operation with the Mainland. While only "homeland relationship" is discussed, there is very little mention of the development of economic and trade relations with overseas countries. It is obvious that the problems are not tackled. In the Policy Address, 11 paragraphs are scattered among the sections "Economic Policy", "Economic and Trade Relations with the Mainland and Overseas Countries", and "Business and Professional Services", giving a detailed account of the development of economic and trade links with the Mainland and collaboration with it in finance. As for economic co-operation with foreign countries, however, there are only two paragraphs, that is, paragraphs 31 and 32, devoted to the subject.

I welcome the efforts made by the Chief Executive in the coming five years of his term to foster economic integration with the Mainland. But as Hong Kong is an international trade and sourcing centre, we must never neglect trade and economic exchanges with overseas countries. We must not slow down our pace in this. There is still a need for the Hong Kong Government to have foresight and vision, keep a constant watch on the trends in the international trade and economic scenes and make efforts to open up new business opportunities abroad.

Against the background of rising production costs on the Mainland, Hong Kong businessmen should look for more opportunities of development overseas. There are new opportunities cropping up in some developing countries or places and the key is whether or not we can be fast enough to seize these opportunities before everyone else. An example is Burma, a country which is gradually opening up in both political and economic terms, and foreign businessmen are racing against each other to make investments there. The country offers much room for development of Hong Kong manufacturers. I have recently visited Burma with a deputation of businessmen from Hong Kong and secured a pledge from the government there that a Hong Kong industrial park be set up locally.

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In sum, the Liberal Party urges the Government to finalize a policy on industrial development as soon as possible. For example, it should target the fashion industry to strengthen assistance for SMEs and, while developing the homeland relationship, pay attention also to trade ties with foreign countries.

Thank you, President. I so submit.

DR LAM TAI-FAI (in Cantonese): President, the first policy address by the Chief Executive, LEUNG Chun-ying, is entitled "Seek Change Maintain Stability Serve the People with Pragmatism". When I first saw the title, I was full of expectations. I thought the Policy Address should have some new thinking and the concepts found in it would represent a breakthrough. On top of this, LEUNG Chun-ying always gives people an impression that he is a man of capability, boldness and determination. He is also regarded as an intelligent and resolute person. I therefore hope very much that Mr LEUNG will change the negative character of the Donald TSANG Administration especially in the latter years of the term and draw up a blueprint for our economic development after we have lost our direction for more than a decade. We hope that he can set some clear-cut direction for development and targets so that Hong Kong can go from strength to strength in the next few years.

Unfortunately, President, after reading this Policy Address over and over again, I cannot find any clear-cut blueprint for economic development as such. Over the last decade or so, Hong Kong was not developing in any direction. The economy only inched and made very little progress. The SMEs found the business environment increasingly difficult. After 2003 and as Hong Kong benefits from the economic growth of China and the Individual Visit Scheme, the retail sector has been doing a roaring trade all through these years. We can see places like Tsim Sha Tsui and Causeway Bay literally packed with tourists. But behind all this prosperity, there is an imbalance in our economic structure and our economy has become too dominated by one or two industries. President, at this moment in time, we will definitely need a government which takes an appropriately proactive approach to steer us out of the troubled waters. Many people hope that when LEUNG Chun-ying claims to seek change and maintain stability, he can lead us like Moses leading his people out of the Red Sea. But now we are still drifting in the sea, not finding any direction. It could be for strategic purposes that in this Policy Address, the Chief Executive devotes most of his energy to the problems of housing. He is being hollow in terms of LEGISLATIVE COUNCIL ─ 30 January 2013 5597 economic development. This reinforces people's impression that his weakest point lies in economic and financial issues.

When Donald TSANG was in power, our GDP rose from $150 million in 2006 to $190 million in 2011 and our per capita GDP also rose from $219,000 in 2006 to $274,000 in 2011. LEUNG Chun-ying repeatedly emphasized that he was very much concerned about the problem of poverty and also said that by improving the economy, problems in people's livelihood and poverty would be eased. But what are his targets of economic development during his term of office? He has not mentioned these in his Policy Address at all. He has not even given any basic data. It can be said that there is no clear target and direction. How can we expect the economy to develop in any effective way?

President, there is a close relationship between economic development and the economic structure. And economic structure is not something rigid and cannot be changed. It can change according to the development of the economy and the conditions prevailing at that time. There should not be a long-standing tilt to the financial services and property sectors. Figures for 2011 show that the service industries took up 93.2% of the GDP, and of this import and export trade, retail and wholesale sectors took up 25.5%, finance and insurance sectors took up 16.5%, while real estate and professional services related to properties took up 21.4%, but the manufacturing industries only had a share of 1.6%.

(THE DEPUTY PRESIDENT, Mr Andrew LEUNG took the Chair)

Deputy President, if our economy is to develop in a healthy and sustainable manner, we must achieve diversification. We have to take into account the development of the real economy, that is, the industries. In his Policy Address, LEUNG Chun-ying mentioned the development of such industries as financial services, business and professional services, international shipping centre, innovation and technology, and testing and certification. Since he wants to deepen and expand these industries, I would like to know how he quantifies the deepening and expansion of the industries. How should we understand it?

After reading the Policy Address, I got the impression that it is vague and insubstantial. LEUNG Chun-ying says that he wants to promote the industries where we enjoy clear advantages. But just how much growth in GDP does the 5598 LEGISLATIVE COUNCIL ─ 30 January 2013

Government want to see in these industries? It seems that we can only see slogans in the Policy Address but not targets. Nor are there any specific policies.

With keen competition brought about about by globalization, the commerce and industries in Hong Kong failed to make any breakthrough mainly due to the outdated mentality of the Government which fails to keep abreast of the times. The Government should stop ignoring the development of the industries and it must study the topic of re-industrialization and roll out effective policies and measures to support high value-added manufacturing industries with characters. Unfortunately, Mr LEUNG has inherited the bad practices of the previous two Chief Executives in not saying anything about industrial development.

Deputy President, the focus of the section on economic development in this Policy Address is, in my opinion, only making a fanfare for the setting up of two frameworks, the Financial Services Development Council (FSDC) and the Economic Development Commission. It seems that the Chief Executive wants to tell us that the future development of our economy and our lifeline should depend on the work of these two bodies. Many people are therefore very worried because the success or failure of these two bodies will dictate the rise and fall of Hong Kong. Moreover, there are problems with the FSDC right after its formation and people do not know clearly its functions and institutional framework. This has greatly undermined its credibility as a result. The FSDC is obviously a product of immature thinking, contradicting the Chief Executive's pet claim that a measure will be introduced when ready.

Deputy President, what makes people really feel indignant is that the section in the Policy Address on "Development of Small and Medium Enterprises" only has got 268 words in Chinese and one wonders if this small paragraph would carry so much weight. Ninety-eight per cent of the enterprises in Hong Kong are SMEs and they are an important pillar propping up our economic growth and employment. At this time when world economic conditions remain uncertain, business costs are rising all the time, and the gross profits of the enterprises keep on falling, the Government has only used 268 words to address the situation and talk about the support for SMEs. This really makes the SMEs feel worried and disappointed.

Deputy President, we have been telling the Government persistently that the sectors are in great difficulty and that applies especially to SMEs. But our LEGISLATIVE COUNCIL ─ 30 January 2013 5599 aim is not to get any charity or handout from the Government. We only hope that the Government can remove the obstacles in our way and improve the business environment to help us in our upgrading and restructuring efforts. Such examples include undertaking a review of and amending section 39E of the Inland Revenue Ordinance and beefing up the guarantee for loans and financing. However, the Policy Address has not introduced any new policies in this respect, nor does it contain any words of encouragement to SMEs and the industrial sector. All which are found are no more than existing measures. And yet he dares list the "SME One" set up by the Hong Kong Productivity Council last year as part of his achievements. I think that this is most careless and perfunctory.

Deputy President, the Chief Executive says that Hong Kong cannot afford to waste any more time. I agree very much with this view. But after reading this part of the Policy Address on "Economic Development", I am worried that in the next five years, it is very likely that Hong Kong will be wasting time again. Its economic structure will remain in domination by one or two industries and an imbalance. The industrial sector will remain isolated and helpless.

Deputy President, I would think that this Policy Address emphasizes too much on national policies and aims only at strengthening Hong Kong's trade and economic links with the Mainland. As a matter of fact, we have our unique edges and a solid foundation. We should not ignore our own advantages and refrain from developing them. If Members have watched the news bulletin today, they must have noted that the State has just given a New Year's gift to Taiwan by increasing the RQFII amount to RMB 100 billion yuan. This is meant to be part of a pilot scheme. I hope Members will know that the favours and affection from our Motherland will not only be extended to Hong Kong as in the past.

It follows that we must be clear about our direction and we must bring our own advantages into full play in maintaining our international position and influence.

Deputy President, I so submit.

MR MICHAEL TIEN (in Cantonese): Deputy President, to this first policy address by Chief Executive LEUNG Chun-ying, I would give it a bare pass. While it has got inadequacies, it does not mean that it has no merits at all. I will 5600 LEGISLATIVE COUNCIL ─ 30 January 2013 not criticize it blindly. So I will divide my speech into two parts. I will first speak on what I am satisfied with and then I will talk about the inadequacies. I understand that LEUNG Chun-ying does have limitations and that is because the new government has come into office for only half a year and it is very difficult to grasp all the problems hidden under the carpet all through the years, let alone proposing specific policies to solve all of these problems. Having said that, when the Chief Executive managed to point to a number of new directions, it can be said that he has found the way, but the question remains whether his capabilities can help him find solutions.

Now I would like to talk about the areas with which I am satisfied. On the question of poverty alleviation, the drawing of a poverty line is an initiative that addresses squarely the problem of poverty which has existed for many years. Once a poverty line is drawn, there will be an indicator and we cannot evade the question of whether poverty alleviation policies and measures are effective or not. This is actually inviting all the parties concerned to monitor the Government, a move that shows commitment. For those in power, the drawing of a poverty line is to a certain extent asking for trouble. I can see in this initiative the commitment to the grassroots shown by the Chief Executive and his determination in implementing poverty alleviation measures.

With respect to universal retirement protection, many people have suggested the tripartite contribution proposal and they also said that there is no need to increase taxes and both employers and employees need not make more contributions, and so on. Everyone would then be happy and they can lead a good life when they reach 65 years of age. I think that this will not work at all ……

DEPUTY PRESIDENT (in Cantonese): Mr TIEN, I would like to remind you that the theme of this debate session is "Economic Development" and if you wish to speak on other areas, there will be no officials making a relevant response in this session. Please speak on the theme.

MR MICHAEL TIEN (in Cantonese): Deputy President, that does not matter, for I only wish to express my opinions.

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There is no country in the world which can implement universal retirement protection without increasing both the taxes and government revenue while being able to maintain fiscal stability. Therefore, I agree to the Chief Executive's insistence on building a retirement protection system by using the three pillars. I consider this a reasonable and responsible decision, and we should lend it our support.

Now I would like to talk about the foreign domestic helper levy. All along the New People's Party has been fighting for the abolition of this levy. But since the levy involves recurrent revenue amounting to some $1 billion, so initially I thought the Government would make repeated delays in this matter. When the Government can make up its mind to respond to the aspirations of the middle class and abolish this levy at one go and pledge that the retraining fund will not be slashed, I think this a just approach. The New People's Party appreciates this resolute style of the Chief Executive.

With respect to Old Age Living Allowance, the Government has not yielded to populist demands and in the face of filibustering by Members of this Council and pressure from the public, it has insisted on the means test requirement ― Deputy President, this is related to economic issues ― and not raising the asset ceiling. It is able to expend public money on the neediest group of people. I consider this a just allocation of resources. I am happy to note that the Chief Executive can adhere firmly to the fiscal discipline which emphasizes prudence, make good use of taxpayers' money and protect the interests of the middle class. The Government must never use public money to win popularity.

The civilian organizations have always pointed out that the problem of sub-divided units is very serious. After the occurrence of the incident in Ma Tau Wai and the blaze in Fa Yuen Street, it is obvious that those tenants of sub-divided units are living in deplorable conditions and their life and property are threatened. The Chief Executive has commissioned a consultancy to inspect sub-divided units territory-wide and make analyses of their distribution and numbers, I would think that he is addressing this problem squarely, having taken an important first step.

The streaming of traffic flows at the two cross-harbour tunnels is also a decision that requires political courage. There has been much discussion in society on how to ease the traffic congestion on Hong Kong Island. The previous-term Government commissioned a consultancy to undertake a study but 5602 LEGISLATIVE COUNCIL ─ 30 January 2013 nothing concrete has come out of it. As we all know, once the idea of diversion is raised, it is inevitable that the Cross-Harbour Tunnel in Hung Hom has to increase its tolls. Given the prevailing social circumstances, that the Government can be so bold as to defy the pressure of public opinions and propose an increase in tolls is commendable.

The legislation for standard working hours has far-reaching effects. We all know the details. Deputy President, the sectors which you represent have said that this issue is much more complicated than minimum wage. The Chief Executive has been prudent in handling the issue of standard working hours for he has not formed any preset stand in this matter during the consultation period and listened to different views and engaged in in-depth discussion before deciding whether relevant legislation should be enacted. Last week, I saw a TV host pursuing the question and asking his stand on the matter, but he did not waver, saying all the time that he would study the issue and look at it carefully. I think that this is a most responsible approach. He is worthy of our praise because although he is a leader who does not enjoy a high popularity rating, he has not yielded to such pressure.

After talking about things sweet, now I wish to turn to something bitter. I wish to talk about the serious inadequacies found in the Policy Address or blank spaces which should be filled up. I think that the most fatal inadequacy is the negligence shown for the hidden population in Hong Kong. The Policy Address does not have any population policy which is also related to economic issues. If we do not do something to address this problem of a hidden population, it will become a bomb that will ignite the conflicts between the people of Hong Kong and China. Even if the problem is not mentioned this year, I do not think the current-term Government can turn a blind eye to it. If it does, then the consequences will be disastrous. By hidden population I mean Hong Kong people born of single or doubly non-permanent resident pregnant women and who live on the Mainland. It is estimated that there are hundreds of thousand such people. There were 270 000 of them during the period from 2001 to 2011. We had asked the Government about this, but we were told that it is not known when these people would return to Hong Kong, how many would come or whether they would come at all.

The conflicts between the people of Hong Kong and those on the Mainland are a time bomb. These are seen not just in issues like the scramble for infant LEGISLATIVE COUNCIL ─ 30 January 2013 5603 formulas, itinerant traders or travellers on individual visits, and so on. These are just the beginnings of such conflicts. When it comes to the peak of the arrival of these children born of "doubly non-permanent resident pregnant women", the conflicts will spread from fighting with Hong Kong residents for places in kindergartens and subsidized primary schools to places in secondary schools and universities. The people of Hong Kong attach great importance to education. I do not think the local parents will ever cede any ground in this aspect. At that time, there will be conflicts and disputes of a large scale. How can the people of Hong Kong accept something like a six-year-old child having to go to school in another district? Now people in my constituency have asked me why these children are coming here to snatch away school places from us. The problem is therefore serious. I said to this member of the public, "No, they are also Hong Kong residents and after all, these school children were born in Hong Kong." Why is there such a view that there are two groups of Hong Kong people? It is thus evident that the problem of division in our society is very serious.

Just think about this. If our younger generation grows up in this hostile environment of "we" and "they", and if they have to sit in the same classroom, the conflicts that may arise then would be unthinkable. The Government pays no attention to this problem of the hidden population and there is no plan to increase resources correspondingly. There is not even any estimation made. I am sure we will face a situation in which there are fights for all sorts of resources. Education is only one such area of conflict. Other areas like healthcare, housing and transport will all become such points of explosion. Conflicts of a deeper nature are that all these children of single or doubly non-permanent residents are in fact Hong Kong residents, so if the Government adopts a "zero policy" towards the hidden population, it will only intensify the hostilities in Hong Kong people. They will not accept this group of new arrivals to Hong Kong, and there will be a new identity crisis. Recently, the Central Authorities have shown concern in a high profile about the fact that some young people of Hong Kong see themselves only as Hong Kong people and do not think that they are Chinese. In many of the demonstrations staged, they hoisted the Hong Kong flag belonging to the times of the British colonial rule which carried a lion and a dragon in its emblem. These young people also oppose the subject of moral and national education in schools. The deputy chairman of the National People's Congress (NPC) has written a letter to the NPC Deputies from Hong Kong, urging them to step up the work among the young people. But we are not magicians and if the SAR Government continues to ignore the problem of the hidden population and if it 5604 LEGISLATIVE COUNCIL ─ 30 January 2013 does not formulate any long-term matching policy, I do not think we can do anything no matter how hard we may wish to help.

Hong Kong really needs a long-term population policy and we must never ignore this group of hidden population. We must do something to arrest this growth in the hidden population because it is growing in uncertain numbers and beyond our estimation. Leaving aside the question of whether the right of abode should be granted to foreign domestic helpers, I do not think the people of Hong Kong can afford to deceive themselves anymore. They must face up to the problem squarely. On the question of whether or not we should seek an interpretation of the Basic Law, we can stand on the moral high ground and say that such an interpretation is really playing bad loser and undermining judicial independence. But I would think that the people of Hong Kong must regain this power to control the population in their society. If the outcome of this interpretation is that the right of abode should be given to the children born of doubly non-permanent residents and the same right should be extended to foreign domestic helpers as well, then I will fully agree that we must do something to amend the Basic Law. However, I would like to stress that interpretation of the Basic Law is a right conferred by the Basic Law. And there is a chance that the problem of children born of doubly non-permanent residents can be solved in this way. Why should we not use the most direct method but take the tortuous route of discussing amending the Basic Law? This will only result in more delays. Should the people of Hong Kong not stop deceiving themselves indefinitely?

Lastly, I would like to talk about economic development. We have talked about economic development for a very long time, like the term "diversification of the industries". I am not reading from a speech draft now. What I am speaking from the bottom of my heart. There is no consensus in society on the relevant goals. I know what the goal of economic development is within our Government, which is to increase the GDP. When the GDP is larger, it means that we are richer. And when the reserves grow from $600 billion to $800 billion and keep growing, the Government will become richer and richer. But there is another goal related to economic development and it has never been mentioned by anyone before. It is about raising the income of wage earners in general. This refers to the income they get from the free market, not an income mandated by the minimum wage. If we are to achieve this goal, then the productivity of these people must be raised. Over the past 10 years, the income of the young people aged 18 to 24 has remained at some $8,000 to $9,000 only. There has not been any increase at all. How inconceivable indeed. But how much have the rents increased? And what is the inflation rate? The entire LEGISLATIVE COUNCIL ─ 30 January 2013 5605 view of economic development is only macro in perspective and what is being done is only looking at the public coffers, but what about the money in the pockets of the people? What is the situation now? It is to impose a minimum wage and employers will pay an hourly wage of $30, $35 or $40. When productivity is not enhanced and minimum wage is raised, what will be the result? The result will only be bubbles formed by inflation, and this is a great problem indeed.

On the question of raising the productivity of the young people, who in fact are the people doing this kind of work? In foreign countries, this is done by the small enterprises and the micro enterprises. Mitt ROMNEY in his presidential campaign proposed five points in his election platform. The one which I appreciate most, something which he emphasized all the time, is promoting the development of small enterprises and micro enterprises. By a micro enterprise, it means one that employs five persons or less. It is because these people have creativity and they manage to hire five persons but making more money than other people. How are things done in this aspect in foreign countries? In the United States, there is a small business policy to promote the development of small and micro enterprises. When the American Government is to contract out or procure anything, it requires that a certain percentage each year should be awarded to some companies which are not larger than a certain size or whose staff size is not more than a certain number. I think this is the best method.

I have talked with the bosses of many small businesses and also people who want to become bosses. I asked them what they needed and asked questions on manpower training, high rentals, and so on. I have also asked them whether or not they would need land or that their rents should be waived, and so on. They said that these are not what they want. Someone says that his business is in Kwai Chung and it is in a building for industrial and commercial uses. The monthly rent is $8 per square foot and it is $12,000 for a unit of 1 500 sq f t. Does he have to close his business because he cannot afford the monthly rent of $12,000? Honourable colleagues, this is not a question of rents, but about the market. I have asked these bosses of small businesses the same questions and they all said that there is no market. Will anyone give them a market? Paragraph 48 of the Policy Address talks about markets. What is said therein? It is to continue with the work of tapping the Mainland market, building the Hong Kong brand, organizing large exhibitions, and so on. But these things have been talked about for many years. I would say that the simplest and most direct way to give them a share of the market is enabling them 5606 LEGISLATIVE COUNCIL ─ 30 January 2013 to get a certain percentage of the business when the Government conducts outsourcing or procurement.

Let me give an example. Two years ago I had worked as a street cleaner for two days. A week ago, some cleaning workers were to be granted an award as outstanding staff members. They would like me to attend the ceremony. Then I went there and talked with them. That company employs many people and it can be regarded as a large company. I asked the boss how much the workers were paid for an hour. He said it was $28. I asked why it could not be more than $28. He said that the government policy was that the contract would go to the lowest bidder. He could not pay more than $28 or else he would not get the contract. I asked him how workers did their job. He said that they still used a metal cart and a bamboo broom to sweep the leaves and water. Have Members seen how well-equipped are cleaning workers in the shopping malls? But the outsourced cleaning workers hired by the Government are still using that metal cart? They have been using these carts for 20 years, working in the same way. So how can their productivity be raised?

I have told the Government that tender documents should not just include information on the price but there should also be information on the wages payable, whether or not there will be new equipment, and so on. All of these should be included. But my suggestions all fall on deaf ears. Why? The Food and Environmental Hygiene Department tells me, "Michael TIEN, what has this got to do with us? We are afraid of being criticized as wasting public money. That is why we use the cheapest way to clean the streets."

Now the question is, how can the income of the wage earners be increased? I think this should be an important target of economic development. This is an inter-departmental issue. It is because every government department has outsourcing and procurement work, and they are involved. Recently, the Chief Secretary, Mrs Carrie LAM, leads an inter-departmental group on the infant formula issue. I would think that it is amazing to see that some inter-departmental discussion is held on this issue of infant formulas. She thinks that the proposal from the New People's Party to make infant formula a reserved commodity merits consideration. But if she does not head an inter-departmental group and just gives orders, I do not think anyone will listen to her. So she has to lead an inter-departmental group.

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On the question of raising the income of wage earners, especially those job types with many employees who are aged 18 to 24 years, I would think that it should be the most important task of the SAR Government. The Chief Secretary, Mrs Carrie LAM, should lead an inter-departmental task force herself and study how to go about it. This is not just an issue about economic development and it involves other areas as well, including those found in the portfolios of Policy Bureaux such as those on food and the environment as well as others.

I really hope that when the Chief Executive hears my speech today, he can approach the question of economic development from another perspective. He should not just aim at making the pie larger and increasing public reserves because the monthly income of the people will remain the same. I will stop here for today.

Thank you, Deputy President

DR KWOK KA-KI (in Cantonese): Deputy President, as we discuss this Policy Address, we cannot help but look at how the public judge it. An opinion poll newly published by the University of Hong Kong shows that the popularity rating of the Policy Address has dropped to 48.1 points and Chief Executive LEUNG Chun-ying has a popularity rating of minus 14%. It is found that 48% of the people oppose his staying in the office and only 34% would give him their support. And the public discontent with the Government has risen by 7% compared with last month to 45% and only 26% of the people are satisfied with the performance of the Government. The popularity rating of the Government is minus 10%.

Many Members say that we should follow the British tradition of offering our vote of thanks. I hope these Members will realize how the people look at this Policy Address. For so many years, the development of our economy has invariably not relied on the Government. People always say that commerce is the cornerstone of Hong Kong. If all the businessmen were to rely on the Government for help, I believe they would all have to fold their business. When we discuss how the economy of Hong Kong can be boosted and such things as the innovation industries, it is fortunate that the Secretary for Transport and Housing is there, but unfortunately, the Secretary for Commerce and Economic Development who is in charge of economic development matters is not here. 5608 LEGISLATIVE COUNCIL ─ 30 January 2013

Meanwhile, the Financial Secretary is not able to hear our speeches either. From this Members can see how little importance they attach to economic development.

Property prices and rentals in Hong Kong are among the most expensive in the world. Our rentals of office buildings top the major cities in the world. In such circumstances, it would just be empty talk if Hong Kong is to develop its economy or if more people are allowed or encouraged to start up businesses. Many young people would want to start up a business and they want to play a part in the local economy. But they have to face many policies such as those on housing and planning. These policies are denying them room of survival because they are driven out of the factory buildings in which they are operating.

Now we can just look at what the vision of our Government is. Despite the wave of criticisms it had attracted, the Donald TSANG Administration of the previous term put forward the concept of Nylonkong ― that is, New York, London and Hong Kong. This is something we might as well think about, even though it may not be possible to achieve. Now for this Government and according to LEUNG Chun-ying, the emphasis is placed on the so-called "homeland relationship". It is strengthening ties with the Mainland and turning our economic and financial systems red. Actually, many people in the related trades know very well that CEPA is only empty talk because despite the great number of projects put forward, the number of projects that are really implemented and rendered support is small. It is not that there are no such projects, only the number is far less than the official figures. The claim that there will be benefits to the local economy and opportunities for the young people is simply exaggeration. I would think that the most important thing for us and on which we depend our existence is the challenges we face from the world in the past several decades. Our rivals should not be confined just to those cities on the Mainland, but also other cities in Asia and the world.

However, as we look at our Government and note its narrow field of vision and poor performance, I am sure the degradation of Hong Kong and our economic development will only continue. It is because the more we leverage on our Motherland and the more we depend on offshore Renminbi business and tourists from the Mainland, those special qualities which we used to be proud of are simply vanishing. We always say that the regulation of our financial system should be enhanced, but after the Lehman Brothers incident, we can see clearly that the Government has done nothing to strengthen the protection of investors. LEGISLATIVE COUNCIL ─ 30 January 2013 5609

While we hope to introduce some platforms that can ensure fairness and equality, such as in the competition law and others, so that more businessmen, be they local and foreign, can secure a footing here, what we have now got though is a dismembered competition law. When we want to enhance the stability of our financial system, the Government sets up this Financial Services Development Council (FSDC). At one time it is said that the FSDC is a civilian organization and at another it is said that it is an advisory organ. Sometimes it is said that the FSDC does not have any powers, but we can see that there are many red tycoons in it. So the people's worries are not unfounded.

When Hong Kong ― and that includes its economy and financial industry ― gradually becomes communist, we are sure that Hong Kong will lose its competitive edge. Just think about this. If Hong Kong is to compare with other cities in China at this level, how can we say that we will have any future? We do not have a government which has got vision and we do not have any economic policy that can look into the future, nor do we have any platform which allows people intent on starting a business or running a business here to move forward. We consider that with respect to economic policies, there is nothing to write home about, like the rest of the entire Policy Address.

I so submit. Thank you, Deputy President.

IR DR LO WAI-KWOK (in Cantonese): Deputy President, in the first Policy Address delivered in his tenure, the Chief Executive, Mr LEUNG Chun-ying, has tried to depict his blueprint for ruling Hong Kong in the next five years, stressing that the promotion of economic development would be the primary goal of the Government. I agree to this simply because sustained economic growth in Hong Kong is required to solve at root some of the major social problems faced by us now. These problems include meeting the people's demand for housing, easing the disparity between the rich and the poor, preparing for the advent of the ageing society, and expanding the space for young people to find employment and create their own business.

It is pointed out in the Policy Address that the Government needs to play a role and to be "appropriately proactive" in economic development. I consider this a pragmatic attitude. Looking around the globe, we can see that developed economies including the United States, Europe and Japan have without exception adopted proactive fiscal and monetary policies with a view to revitalizing their 5610 LEGISLATIVE COUNCIL ─ 30 January 2013 local economies and creating jobs. As the saying goes, "Complacency marks the start of regress." Hong Kong has to consolidate its existing strengths in order to promote sustained economic growth. Hence, the SAR Government should be proactive.

However, it is disappointing that although the Policy Address has pointed out the direction and the main theme, it has failed to provide any specific long-term economic development strategy and industrial policy. We still have to wait for the study result of the Economic Development Commission.

As Hong Kong upholds market economy, what should the SAR Government do in order to be "appropriately proactive"? During the consultations on the Policy Address, I have, through various platforms, reflected to the Chief Executive the views and suggestions of professional sectors such as engineering, technology and environmental protection.

First of all, in order to achieve the long-term and sustainable development of Hong Kong economy, the SAR Government should formulate a balanced and visionary industrial policy so as to establish a clear policy vision and targets. After that, consolidated matching measures should be provided in respect of land supply, tax incentives, attraction of funds, talents training, as well as co-operation among the Government, industry, academia and research sectors in order to strengthen the pillar industries, promote competitive industries and revitalize the traditional industries.

This industrial policy, which is tailor-made for Hong Kong, will not only enhance the existing four pillar industries, including financial services, logistics, tourism and professional services, but also accelerate the promotion of Hong Kong's competitive industries, such as the environmental protection, innovation and technology, testing and certification, cultural and creative industries. Furthermore, it should seek to support and revitalize the traditional industries, such as food manufacturing and processing. The overall objective is to ensure that Hong Kong economy will develop in the direction of diversification and high value-addedness in order to create a wide variety of employment and business start-up opportunities for the people.

Secondly, the SAR Government should make the best use of our unique international experience and advantages to expand regional economic co-operation. The fact that the global economic gravity is shifting to the East LEGISLATIVE COUNCIL ─ 30 January 2013 5611 and the implementation of the 12th Five-Year Plan for National Economic and Social Development of the People's Republic of China (hereinafter referred to as "National 12th FYP") have provided good opportunities for the development of industries in Hong Kong. However, to turn opportunities into actual achievements, it calls for the joint efforts of the SAR Government and various sectors of the community. For example, the SAR Government should make pragmatic efforts in "government to government" policies. It has to implement various economic and trade agreements signed with the Mainland on the one hand and improve the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) mechanism on the other. In the meantime, it has to extend the scope of "pilot schemes" from Guangdong to provinces in the Pan-Pearl River Delta (PRD). On the other hand, it should proactively enter into free trade or investment promotion agreements with foreign trading partners, such as fighting for accession to the China-ASEAN Free Trade Area. These measures will help local enterprises expand Mainland and overseas markets, and attract industries and talents to Hong Kong. Hence, they are important measures to achieve economic diversification.

What industries are suitable for Hong Kong in the long term? Many friends of mine in the professional sectors and I believe that innovation and technology is one of the new industries that Hong Kong should make every effort to promote.

Proactive investments in innovation and technology around the world have created a number of high value-added star enterprises, such as Apple and Microsoft in the United States, Samsung in South Korea, and Huawei and Tencent in China. In the National 12th FYP, innovation and technology has been elevated to an important strategic position. This has provided a better external environment for Hong Kong to seize the development opportunities.

Certainly, industrial development hinges more on the availability of favourable internal factors. Under the commendable rule of law in Hong Kong, intellectual property and freedom of information are adequately protected. Furthermore, with the presence of advanced information and communications technology infrastructure, it is most suitable for the development of technology industry and Internet economy. In the meantime, the technology industry can also upgrade the competitiveness of other industries in Hong Kong. For example, the development of data centres will help consolidate the status of Hong Kong as an international financial centre and regional logistics centre. 5612 LEGISLATIVE COUNCIL ─ 30 January 2013

Therefore, the SAR Government should enhance investment in scientific research, promote the commercialization of technological achievements, industrialization of products, and internationalization of industries. The Government should, by means of more flexible policy initiatives, induce the sector to expand its investment in technology infrastructure, improve the mobile Internet and expand the regional data centre.

The Government should also put in place a strategy to promote regional co-operation, boost technological co-operation between Hong Kong and the Mainland, and jointly establish a series of technology industries in Hong Kong and the PRD in order that Hong Kong's advantages in terms of "scientific and technological research and development, technology transfer, technology management and technology financing" can be brought into full play. Otherwise, Hong Kong will lag behind.

In order to promote the development of innovation and technology industries in Hong Kong, friends of mine in the technology sector and I have repeatedly asked the Chief Executive to deliver his campaign promises and set up a Technology and Communications Bureau as soon as possible. The sector was most disappointed by the Chief Executive's remark earlier that the reorganization proposal will not be presented to the Legislative Council in the short term. Despite that, the SAR Government should formulate specific technology policies and strategies to tie in with Hong Kong's development needs in the long, medium and short terms. The initiatives advocated by the sector are as follows:

(a) to improve the technological infrastructure and set up a universal high-speed network;

(b) to increase government and corporate investment in technology, and encourage enterprises to invest in scientific and technological research and development by offering double or triple tax deduction so that such investment as a percentage of GDP can be increased;

(d) the Government's procurement policy should encourage local scientific research. By making reference to the relevant experience of other regions, including members of the World Trade LEGISLATIVE COUNCIL ─ 30 January 2013 5613

Organization, the Government should take the lead in using local research and development products;

(e) to improve the existing funding approval mechanism for research and development so that the industry can get easier access to various types of government subsidies including expanding the scope of application of the R&D Cash Rebate Scheme;

(f) to improve the existing tender mechanism and contractual provisions, suitably divide projects for tender to dovetail with the development needs of big, medium and small enterprises so that local professionals in the engineering and technology sectors as well as the industry itself will be given opportunities to play a more active role in the projects and bring their talents into full play.

Apart from the innovation and technology industries, some business and professional services in Hong Kong such as engineering, law and accounting, also enjoy competitive advantages in the region. The further development of our national economy has brought new opportunities for us to promote the brand names of our professional services in the Mainland. Thus, the SAR Government should be more proactive. Through consultation with the relevant Mainland authorities, the SAR Government should expand the co-operation of professional services of the two places, including speeding up the mutual recognition of professional qualifications of various sectors in the two places. The SAR Government should also enhance the functions of its offices in the Mainland so that they can help our professional service enterprises to set up companies in the Mainland, in addition to providing one-stop advisory and support services.

Deputy President, the 2013 Policy Address has responded to some suggestions of the professional sectors and outlined the blueprints of some policies, although a long-term and comprehensive development strategy is still lacking. We hope that the Economic Development Commission to be set up and its Working Group on Manufacturing Industries, Innovative Technology and Cultural and Creative Industries will make up for the deficiency in this aspect. The relevant Policy Bureaux should formulate corresponding policies and measures as well as an implementation timetable.

In the meantime, we also hope that the Financial Secretary, in the Budget to be announced at the end of February, will clearly explain how relevant 5614 LEGISLATIVE COUNCIL ─ 30 January 2013 resources will be allocated to demonstrate the Government's determination in promoting industrial development and co-operation among the Government, industry, academia and research sectors in order to upgrade Hong Kong's global competitiveness, achieve sustained economic growth and effectively transform the principle of "Seek Change Maintain Stability Serve the People with Pragmatism" into fruits of economic success that can be shared by all social strata.

Deputy President, I so submit.

MS CLAUDIA MO (in Cantonese): Deputy President, although we have a policy debate today, we can speak on freedom of the press only in this session of "economic development" for it at least covers "technology and communications" compared with other debate sessions. The press, information and freedom of expression are not only the cornerstone of a civilized society but also its major pillars. However, no official or Policy Bureau in the Hong Kong Government as a whole has the courage to come forth and tell us that he or the bureau is the authority in charge of issues relating to the press, information and freedom of expression. Regarding issues relating to technology and communications, they basically involve radio, television, and sometimes the Internet. However, freedom of the press, which is a major issue, is not covered.

I have in my hand the annual report entitled "New Leader Raises Fears: Challenges for freedom of expression in Hong Kong" published by the Hong Kong Journalists Association (HKJA) last summer. It precisely reflects that the assumption of office by the new Chief Executive has cast a shadow on the freedom of expression in Hong Kong. The thickness of that annual report is not much thinner than the Policy Address. However, in his Policy Address, LEUNG Chun-ying has only used a few words "and respect for press freedom" to explain his position. The word "and" carries a connotation that the issue is mentioned only in passing. So, I have reasons to believe that the new Chief Executive regards the relationship between the Government and the press as "a contradiction with the enemy". He expects that the press would act in the same way as their counterparts in the Mainland. In other words, he wishes that the press would act as a gatekeeper of the Community Party of China. If things go on like this, freedom of information in Hong Kong will definitely fall into the darkest of times. This is no grandstanding. Nor do I intend to steal the limelight by making comparatively radical remarks.

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During the Chief Executive Election, LEUNG Chun-ying clearly indicated that he would support the formulation of an archives law and a Freedom of Information Act. The archives law would be implemented by means of an administrative measure. In short, in terms of administration, archival records will be destroyed if the Government Records Service Director thinks fit. Regarding a Freedom of Information Act, people tend to think that this would only involve the collection of information by reporters whenever they are talking about requesting an official institution to provide information. But in fact, not only reporters but also the general public, and even all Hong Kong people are involved because their right to know is affected. For instance, when we have found some irregularities after being admitted to a public hospital and would like to obtain the relevant information from the Hospital Authority, what can we do if it refuses by abusing its powers under its administrative code? The answer is to seek help from The Ombudsman. But how many people have the time or the mood or perseverance to pursue the case persistently with the Government?

While an archives law is related to the history of Hong Kong, a Freedom of Information Act is concerned about the news in front of our eyes. The Chief Executive, who made an array of promises when running in the election, gave us a brief account of the major pillars of spiritual civilization including freedom of the press, freedom of information and freedom of expression in just a few words in the Policy Address.

Another point I wish to make is that the authorities have chosen to go against the norm. Somehow the legislation on stalking is to be introduced by the Constitutional and Mainland Affairs Bureau. We have voiced objection to this and will continue to do so because the legislation will apparently impede the news-gathering activities of journalists in following celebrities. This legislation will be introduced on the ground that there is misconduct such as stalking on movie stars and domestic violence. But we must bear in mind that once legislation on stalking is enacted, journalists will not be able to follow LEUNG Chun-ying, thereby revealing that he has visited the Liaison Office of the Central People's Government in the Hong Kong Special Administrative Region to thank them for the votes. I hope the Government will not fool with the press as this is entirely a practice which will deny Hong Kong people of their right to know. Thus, not only reporters will be affected, all those who stage protests and demonstrations cannot avoid the impact. For instance, when some people stage demonstration against real estate hegemony by pinpointing a company or lying in the street, the police officers, upon receiving a complaint from that company, may 5616 LEGISLATIVE COUNCIL ─ 30 January 2013 take all people concerned to a police station to assist in investigation on the ground that they have breached the law if legislation on stalking has been enacted. Even though prosecution may not be initiated, the action of the people may have been nipped in the bud on the scene. So this is unacceptable. However, relevant work has been carried out by the authorities. Hong Kong people must note this problem.

As extensively reported by the media, there is certainly another issue concerning the subsidiary legislation under the Companies Ordinance which prohibits people from conducting company search. To my understanding, it is not a total ban. Government officials, liquidators, lawyers, accountants and even minority shareholders of companies can still do a company search. Moreover, to my current understanding, the Financial Services and the Treasury Bureau is quite willing to grant exemption leniently to such an extent that not only news activities are exempted, reporters with documents issued by a newspaper or certificates issued by the HKJA are also exempted. Furthermore, exemption for freelance Internet writers or authors will also be considered. If such level of exemption can be made, what is the difference between this regulation and last year's "Internet Article 23"? When 90% or even 95% of the public in Hong Kong are to be grant exemption and allowed to conduct search when necessary, I cannot help but ask: How could human rights be divided into different tiers like this? Why are there 10% or 5% of the people who do not have such a right for reasons unknown when the majority enjoy such a right? This is the basic principle of human rights. If such exemption is allowed, why should the Government not consider making a critical decision at this stage just like a brave man cutting off his arm?

In this debate session, we have to talk about "economic development". I would like to emphasize that the provision banning company search under the Companies Ordinance is even opposed by The Hong Kong Association of Banks (HKAB), which has asked the Government to "keep the status quo" because the status quo is quite good. The Government has chosen to implement a measure which is even opposed by HKAB. If the Government is not inviting trouble, what is it?

In a written reply in response to Mr Ronny TONG's question, the Government elaborated on this issue at great lengths. However, it basically is reluctant to admit that neither the HKJA nor representatives of the press have been consulted during the consultation on the Companies Ordinance.

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The truly urgent matter now or the most intolerable thing when Hong Kong people talk about information technology, telecommunications and freedom of the press is the issuance of new free television programme service licences. This issue has been dragged on for three years. Borrowing a famous quote in a television drama series: How many three years are there in a man's life? While the Government has been dragging its feet, Secretary Gregory SO has been acting like a "human tape recorder". This remark is meant not as a personal attack, but the reality. I am not putting the blame on him because apparently he has nothing to say. When Secretary Gregory SO had been repeating the answer until he really had nothing to say and no more procrastination could be made, an application for judicial review was submitted out of expectation. This sudden judicial review without any clue beforehand has become the Government's most powerful shield.

In LEUNG Chun-ying's Question and Answer Session in the Legislative Council, I asked him whether there was any problem of "dominance by one broadcaster". He did not dare to comment on even a matter of common sense. Then I asked him whether he agreed that Hong Kong people deserved and should be entitled to the availability of new free television channels. But he was reluctant to give a direct answer to such a question. He just mentioned it over and over again that he could not make any comment because someone had applied for judicial review. On the contrary, Secretary Gregory SO was at least willing to reiterate that under the Government's policy, Hong Kong people could have an open and free television market.

To the grassroots, please do not say they have a choice on the ground that there are lots of pay television channels in the market. They will certainly not subscribe to pay television programmes when they fail even to cope with daily expenses such as clothing, food, rents and travelling. Although broadcasters of pay television programmes in Hong Kong have been running their business well, the thrust of free television service is the opening up of the airwaves. The sky is basically the asset of all Hong Kong people.

Deputy President, I hope that LEUNG Chun-ying's Administration will put forth a timetable and roadmap for the formulation of an archives law and Freedom of Information Act in a pragmatic manner. Please do not ask The Ombudsman to take the initiative to conduct a study or whatsoever. How can we know whether the matter will drag on for another four and a half years? As for the legislation on stalking and the Companies Ordinance, the Chief Executive 5618 LEGISLATIVE COUNCIL ─ 30 January 2013 should give up the idea of submitting it to the Legislative Council just like a brave man cutting off his arm if he really wants to maintain the stability of Hong Kong.

Furthermore, I hope that the Government will respect the motion passed by the Legislative Council at the end of last year. According to the motion which is binding, the authorities are requested to issue new free television licences before April. The Panel on Information Technology and Broadcasting of this Council has also passed a motion which strongly condemned the Government for its delay in the issuance of domestic free television programme service licences without regard to public interest.

Speaking of the problem of ideology, LEUNG Chun-ying apparently has adopted an evasive attitude and tried to drag his feet. Regarding his election pledge of upholding freedom of the press, he plays the hypocrite and does not elaborate it anymore. While only a few words were used to cover this issue, no specific measure has been proposed in this regard. On the contrary, the people of Hong Kong will be astounded by the mantra in paragraph 22, "Hong Kong has also benefited from this national achievement", which is simply an insult to them. Such wording is sickening, but he may find it interesting.

Deputy President, I absolutely refuse to thank the Chief Executive for this Policy Address. On the fronts of information, the press and freedom of expression alone, I would have voiced strong condemnation instead. Thank you, Deputy President.

DR LAU WONG-FAT (in Cantonese): Deputy President, many people would understand the principle of maintaining vigilance in peace time and keeping a sense of crisis. In fact, those words of wisdom are always on the lips of many senior government officials, thus giving people an impression that the administration is proper, stable and pragmatic. If the Government can really do what it says and fulfil its promises, the possibility of serious policy blunders will be minimized and the people can benefit from good governance instead of enduring sufferings. Hong Kong people, who have weathered many storms over the years, are certainly glad to hear and see such a vision.

In response to a question about whether the current housing policy will fall into the same pitfall of the "85 000" units fiasco, the Chief Executive, Mr LEGISLATIVE COUNCIL ─ 30 January 2013 5619

LEUNG Chun-ying, said in a radio programme a few days ago that the Government would pay heed to the situations of the United States and European markets and the Mainland economic slowdown. Vigilance will be maintained in this aspect. To give the matter its fair deal, the ambitious housing policy of providing 85 000 units per year launched soon after the reunification of Hong Kong aimed at resolving the housing problem of the general public under the soaring property prices. It should be a benevolent policy which, however, was implemented at the wrong time when Hong Kong was badly hit by the Asian financial turmoil. Although the subsequent collapse of the property market should not be unduly attributed to that policy, the Government, as we can see it on the basis of its response back then, had neither planned ahead nor considered how to respond rapidly in case the property market should take a sharp turn for the worse, thereby leading to bursting of the asset bubble. In other words, it had failed to maintain vigilance in peace time and keep a sense of crisis.

Since the Chief Executive has repeatedly emphasized that the housing problem has been accorded top priority in administration, I hope that he will really learn a lesson and formulate comprehensive precautionary measures in promoting his housing strategy. How could the Government remain vigilant in peace time and keep a sense of crisis in a more effective manner? In my opinion, to pay attention and stay alert to major issues including the real estate market is not enough. The authorities should learn from past mistakes and conduct deduction and stress tests in a prudent manner, apart from carrying out regular reviews and formulating a range of contingency plans. In this way, the SAR Government will have greater confidence in dealing with sudden crises, such as financial turmoils or catastrophes triggered by regional conflicts.

The Chief Executive mentioned the problem of land development and land supply, stating in no unclear terms that the Government will engage the public and rise up to challenges. I agree that the Government should exert its utmost to increase the supply of housing units and land when public demand for residential flats is keen. Apart from reclamation, the North East New Territories New Development Areas, Hung Shui Kiu New Development Area, the northern part of the New Territories, and the review of deserted agricultural land in North District and Yuen Long should also be pressed ahead. Nine new towns have been developed in the New Territories since 1973. Such an achievement is impressive and it is most natural for the authorities to continue its efforts in this aspect. Admittedly, as times have changed, the authorities are facing numerous obstacles in administration when the political ecology has seen dramatic changes. 5620 LEGISLATIVE COUNCIL ─ 30 January 2013

A lot of difficulties have to be overcome. But in my opinion, as long as pragmatic government policies are launched for people's well-being, and a compassionate and fair compensation package is offered after extensive consultation and planning, I am sure that the project will finally win the recognition of the community.

Deputy President, if the Government, when introducing a policy, has neither considered its merits and demerits nor adopted any preventive measures after implementation so as to nip problems in the bud, thereby causing the situation to worsen to such an extent that it has gone out of control, I think it will also reflect that there is a lack of awareness to remain vigilant in peace time on the part of the Government. The authorities have precisely made such a serious mistake when promoting the Individual Visit Scheme (IVS) as a tourism measure.

Most people would agree that the launch of the IVS as a tourism measure during the economic downturn of Hong Kong has indeed brought great economic benefits to us. However, the officials in charge are obviously obsessed with the benefits brought by the IVS but slack and indifferent to its side-effects, thus having done nothing. But when each and every delivery room of hospitals is utterly fully packed, property prices are soaring, infant formulas are snatched, railways stations are full of itinerant traders and the public are seething with discontent, the authorities wake up to the reality and face up to the problem squarely, sparing no effort to find remedies. This can be likened to the situation where a doctor has failed to make timely diagnosis and administer treatment to a patient suffering from influenza. The doctor tries to rescue the patient only when the illness has further deteriorated to become pneumonia. Even if the patient is rescued, he would have suffered a lot. This doctor is extremely incompetent if not derelict of duty.

Everything has its merits and demerits. As Hong Kong is a small place, the impact of the IVS on people's livelihood is far-reaching. Hence, restrictions and regulations should be imposed. The Government should not adopt any piecemeal and stopgap measures to cope with the relevant problems. It is really puzzling that there is no specific discussion on how to iron out the problems brought about by the IVS in the Policy Address.

I must point out that if problems brought about by the IVS are not tackled properly, they will become not only the major social and political issues faced by LEGISLATIVE COUNCIL ─ 30 January 2013 5621 the SAR Government, but also intensify the conflicts between the Mainlanders and Hong Kong people. This will not be conducive to the integration and development of the two places. In view of the seriousness of the matter, I suggest that the Government immediately set up a high-level inter-departmental committee dedicated to studying and conducting a comprehensive view of the relevant issues of the IVS, including assessing the capacity of Hong Kong in all aspects and seizing the opportunity to formulate and co-ordinate effective countermeasures in a proper manner.

Deputy President, our ancient sage Laozi had this warning for us: "Happiness! Misery lurks beneath it". He also pointed out that "There is no guilt greater than to sanction ambition; no calamity greater than to be discontented with one's lot; no fault greater than the wish to be getting." 1 Anyone, be he a government official or politician, will be better able to remain vigilant in peace time and stay out of trouble if he can always maintain a high degree of vigilance and engage in introspection.

With these remarks, Deputy President, I support the motion. Thank you.

MR MARTIN LIAO (in Cantonese): Deputy President, a focus of the economic development in the Policy Address is to deepen and expand our industries. I believe no one would raise any objection. The previous administrations proposed a series of ambitious projects to pursue industrial diversification and promoting economic transformation in Hong Kong such as the Chinese medicine port and Cyperport Project proposed by the first-term Government and the six priority industries promoted by Donald TSANG's Government. Those projects, however, have basically ended up miserably. Industrial diversification is just a castle in the air and the economic transformation is nothing but a mirage. Hong Kong continues to rest on its laurel, relying on the financial and real estate industries to prop up the scene. The unitary nature of Hong Kong's industrial structure has long been a problem. Hong Kong's relative comparative edge gradually fades away as the neighbouring countries and cities steadily grow. The endless internal arguments in the past have indeed made Hong Kong miss the opportunities to expand our industrial base. Instead of writing some post-dated cheques that cannot be cashed, the Government should take serious and effective

1 5622 LEGISLATIVE COUNCIL ─ 30 January 2013 measures to honour its promises in the Policy Address. This is the key factor for success in our future governance. The Government should exert its utmost to catch up in order to achieve some results.

I am grateful for Hong Kong that the Chief Executive is aware of the cardinal importance of economic restructuring to Hong Kong's future development. However, the greatest concern to us is whether the specific initiatives are feasible and effective. The proposals in the Policy Address rely on the setting up of commissions to study the feasibility of various initiatives; everything is still unknown and remains in a state of vanity. I share the same view with the citizens that the Policy Address is a solemn commitment of the Chief Executive to Hong Kong society, but such commitment must be honoured. The whole Policy Address is full of visions outlining a development blueprint for Hong Kong's future. Hong Kong society and the people expect highly of the Policy Address. I hope that the Government can master the situation well in hand and work out strategies so that the Chief Executive can fulfil the promises he made in his Policy Address, turning visions into realities with his wisdom and capability.

In the Policy Address, the section on economic development is full of ambitions but there are few specific measures. Commissions are fundamentally set up to formulate specific measures. This is like the curate's egg and thus it is difficult to determine its results at the present stage.

Among the whole range of commissions to be set up, the Financial Services Development Council (FSDC) is comparatively controversial. I agree with the objectives of setting up the FSDC, but its institutional arrangement has indeed aroused general skepticism among outsiders. Firstly, there are different versions of official statements leading to criticisms of confusion of responsibilities, transfer of benefits, lack of supervision and waste of resources. However, I believe the FSCD can facilitate the development and consolidation of Hong Kong's financial services industry. The Hong Kong Monetary Authorities (HKMA), the Securities and Futures Commission as well as the Hong Kong Exchanges and Clearing Limited are currently tasked to promote the development of Hong Kong's financial services industry. Their efforts have been proven. Since the public has weak confidence in the Government, it has the responsibility to explain clearly to the general public the relationship and division of duties among the FSDC, other financial departments and financial bodies, in order to avoid an overlapping of responsibilities, policies coming from multiple LEGISLATIVE COUNCIL ─ 30 January 2013 5623 departments and waste of resources. It is a good arrangement inviting members from China-funded enterprises and foreignly-funded institutions to join the commissions as it can help Hong Kong integrate with the financial markets in the Mainland. Besides enhancing Hong Kong's international network and outlook, it can also strengthen Hong Kong's role in assisting the Mainland enterprises in "going global", thus achieving mutual complementarity and benefits. The Hong Kong stock market and China's economy are actually inseparable. Over 60% of the total capitalization of the Hong Kong stock market is related to Mainland enterprises. The trading volume of the shares of Mainland enterprises accounts for 70% of the total trading volume. Moreover, the macroeconomic indicators and the policies in the Mainland often affect the trend of Hong Kong's stock market. From a practical perspective, the inclusion of well-connected persons well-versed in the Mainland situation in the FSDC is absolutely beneficial to Hong Kong's financial development. The purpose of establishing the FSDC is to reinforce and enhance Hong Kong's status as an international financial centre. Hong Kong's role as a bridge for China to move toward international financial markets will continue to strengthen. As Renminbi is moving toward internationalization, and Mainland China is upgrading its financial industries whilst advocating the development of its financial sector, Hong Kong's status as an international financial hub will hardly be challenged.

However, the establishment of the FSDC in the form of a limited company is beyond comprehension and perplexing. Justifications presented are less than convincing, thus turning good things into bad. Unless the FSDC does not employ any public resources at all, public scrutiny of the FSDC is inevitable. It is said that the FSDC Secretariat will comprise a team of staff seconded from the Financial Services and the Treasury Bureau or the HKMA. If that is the case, it implies that public funds will be used to support the operational expenses of a private company, whereas the company's accounts would not be subject to public scrutiny. How on earth can this Council scrutinize the relevant expenditure in the budget? Moreover, the financial industry involves a lot of sensitive information about supervision and the market, representing huge pecuniary interests. The FSDC's establishment will increase the risk of sensitive data leakage, making it much easier to profit from insider information and sensitive data. Outsiders will never be able to scrutinize the actual operation of the FSDC and look into the possible conflicts of interest. Given the nature of the FSDC being a public body, the Government should carefully study the code of conduct regarding the FSDC and its members for avoidance of apprehensions.

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Deputy President, apart from strengthening the financial industry, another focal point in the Policy Address is to develop the maritime industry. Our close neighbours such as Singapore, Shanghai and Guangdong are fully prepared to lay a solid foundation in the hope of carving out a share of the high value-added maritime services. Although Hong Kong lags behind these countries in this respect, it is better late than never. The Chief Executive is a man of foresight in this aspect. He emphasized in his Policy Address that Hong Kong should develop into an international shipping centre. The Chief Executive asserted that Hong Kong, with a deep pool of well-qualified professionals, has maintained good momentum of development. But is it really so good? As for air services, Hong Kong still maintains its leading status in the international scene, but is confronted by the emerging and competing neighbouring airports. Regarding maritime services, Hong Kong has to face the flow distribution of Mainland ports. In order to maintain its competitive edge, Hong Kong has to provide quality services, strive for perfection and shoot for middle-higher price level for cargo shipment. The Policy Address also mentioned the determination to develop high-end maritime services which cover ocean liner services. They include ship registration, marine insurance, marine finance, ship chartering and maritime legal services. In respect of the high-end maritime industry, Hong Kong lacks talented professionals, which means that we rely heavily on external supply. Local talented professionals are mainly engaged in low-end logistics services. Furthermore, Hong Kong lacks software facilities for the high-end maritime industry. Deputy President, the software facilities I am referring to is not company software, but institution and talented professionals. None of them can be made available overnight. The Government has to take remedial action proactively to make up for the lost golden opportunities, that is, training relevant professionals while offering more incentives to overseas talents to encourage them to work in Hong Kong. We can foresee a scramble for talents, but the current economic downturn of most developed countries has also provided a window for us. If the Government wants to outflank its rivals, it must devise a comprehensive plan.

The development of high-end maritime services will only benefit the large enterprises and perennial supporting services, whereas local small and medium primary logistics services may not be substantially benefited. According to the data from the Chamber of Hong Kong Logistics Industry, there are about 200 000 people working in the logistics industry in Hong Kong. As prime sites for warehouses and storage are reaching capacity, the development of the logistics industry will be affected. The Policy Address did not mention coping with the LEGISLATIVE COUNCIL ─ 30 January 2013 5625 need for provision of sites for development of the logistics industry. It seems that our local logistics industry can only mark time. In fact, supporting infrastructure is a prerequisite for the long-term development of the entire maritime industry.

Hong Kong registered a container throughput of 23.1 million twenty-foot equivalent units (TEU) last year, which outnumbered Shenzhen by 160 000 TEUs, but it still lags behind Shanghai and Singapore by nearly 10 million TEUs. Mr TUNG Chee-chen, the Chairman of the Orient Overseas International Limited, said earlier that even if the local container terminals can be dug deep in the future to accommodate new vessels, the shortage of container berths still exists. The industry also knows that if Hong Kong cannot expand its infrastructure to handle more businesses, the new business will be lost to the neighbouring low-cost regions. Last year, China and Nicaragua signed an agreement to invest US$30 billion in building the Great Canal of Nicaragua. Latin America, Brazil, Chile and Peru are competing to upgrade their ports, possibly indicating a major decline in operational costs. It also indicates that cargo trades between China-funded enterprises and America may rise further. All in all, whether Hong Kong's shipping industry can outperform its neighbouring ports in the Pearl River Delta Region is still an unknown factor.

Deputy President, the Chief Executive's commitment in the Policy Address to improving people's livelihood is commendable. However, on the economic front, resources will be placed only on areas involving Mainland businesses. There is no mention of improvement to the business environment or ancillary services, nor is there any mention of enhancing our global competitiveness or giving support to small and medium enterprises (SMEs). Lacking any long-term planning that targets on Hong Kong's economic development, the Policy Address only centered on the existing and past policies, beating about the bush or simply putting old wine in new bottles. We have earlier discussed in the Legislative Council, for instance, the SME Finance Guarantee Scheme and other policy measures aimed at supporting SMEs. It is now the right moment we reviewed their effectiveness and made them as perfect as possible. Besides, rent accounts for approximately 30% of the operating costs of SMEs. Lei Yuen, a 42-year-old congee and noodle shop in Causeway Bay, has been forced to fold after rent was doubled from $300,000 to $600,000 a month. The exorbitantly high rents have decimated some excellent enterprises and their traditional craft. While the Government is claiming to help the development of the creative industry, high rents have undermined the sustainability of the overall economy, let alone 5626 LEGISLATIVE COUNCIL ─ 30 January 2013 upgrading and restructuring it. The Policy Address is silent on the problem of exorbitant rents. It only mentions supplying more sites and facilities for commercial purposes and revitalizing industrial buildings. Can these initiatives benefit small shop tenants and SMEs? Deputy President, distant water cannot put out a fire nearby. We all clearly know that the problems are not created by the incumbent Government, but Hong Kong cannot sit idle and wait for land supply. We hope that the Government can work harder in this respect to relieve the hardships faced by the people. The middle class and SMEs have all along been willing to bear hardships unconditionally. They embrace social responsibilities. They have been anticipating leadership for so long that they hope the Government would not let them down.

Deputy President, there is still a lot of room for improvement in the Policy Address. But if we compared it with the previous ones, the Policy Address this year is much better in terms of its breadth and focal points. As I said earlier, we consider this Policy Address a solemn promise of the SAR Government to Hong Kong society. The promises therein will become the criteria with which the public appraise administration by the Government. The discerning eyes of Hong Kong people can differentiate actions from gestures. I am afraid the enthusiastic supporters in the community may become frightening criticizers if the Government fails to honour its promise. I wish that the Chief Executive and his team could fulfil their commitment and turn visions into realities.

Deputy President, I so submit.

DR ELIZABETH QUAT (in Cantonese): Deputy President, on behalf of the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), I will speak on economic development and technology policies in this session. First, it is about the problem of itinerant traders and the panic caused by infant formula shortage, which has recently aroused a grave concern among Hong Kong people. I will thus talk about tourism first.

Since the introduction of CEPA and the Individual Visit Scheme in 2003, Mainland tourists have gradually become the major source of tourist income for Hong Kong. In recent years, the number of visitor arrivals from the Mainland has repeatedly scaled new heights. Last year, the number increased to nearly 3.5 million visitor trips, accounting for 72% of the total visitor arrivals. In comparison, visitors from European countries, the United States and Japan, and LEGISLATIVE COUNCIL ─ 30 January 2013 5627 so on, have decreased obviously. Take the year 2011 as an example. The number of visitor arrivals from Japan was only 1.29 million, accounting for only 3% of the total visitor arrivals, whereas as visitor arrivals from the United States and European countries only account for 2.9% and 4.3% respectively.

As indicated by the latest information, the spending pattern of Mainland tourists visiting Hong Kong has shifted from high-end spending to spending on daily goods of the middle-to-low price bracket. Members in the industry pointed out that there has been a structural change in Mainland tourists visiting Hong Kong. Previously, Mainland tourists came from first and second rank cities with strong spending power, but now, Mainland tourists come from second and third rank cities, whose spending power is 65% lower than tourists in the past.

As for the length of stay of overnight visitors, though the overall overnight visitor arrivals had increased in 2012, their percentage in the total arrivals of Hong Kong had dropped from 53% in 2011 to less than 50% in 2012, and the percentage of Mainland overnight visitors had decreased from 48% to 43%. In other words, more Mainland visitors have chosen to take same-day round trips to Hong Kong. According to the information for 2011, the average length of stay of overnight visitors in 2011 was 3.6 nights, which remained at the same level of 2010. In fact, in the past few years, the average length of stay of tourists visiting Hong Kong has remained at the level of three nights or so. I think Hong Kong tourism should not rely solely on Mainland visitors. Hong Kong should put in extra efforts to attract overseas visitors to visit and stay longer in Hong Kong. If the average stay of visitors can be extended by one night, the amount of spending will increase significantly, and this will be conducive to the promotion of economic growth of Hong Kong.

Deputy President, according to the new tourism concept prevailing in the international arena, efforts should be made to attract visitors prepared to spend for special tourism experiences, such as eco-tours and special cultural and life-experiencing tours. These tours will attract quality tourists prepared to spend on fine food and accommodation. Actually, apart from being a shopping and dinning paradise, Hong Kong also has the potentials to develop special tourism on cultural, eco and lifestyle tours. In respect of culture, there are many special temples, villages and regular temple fairs here. As for traditional culture, we have Hakka and Chaoshan cultures, lion dances and unicorn dances, 5628 LEGISLATIVE COUNCIL ─ 30 January 2013 and so on. For ecotourism, Hong Kong's mountainous landscape and seaviews are good for hiking and cycling tours, as well as marine and deep sea excursions.

Deputy President, if the tourism industry of Hong Kong is to pursue sustainable development, it should not rely solely on Disneyland and Ocean Park. The coastal and marine scenery in Sai Kung is comparable to scenic spots in Thailand and other Southeast Asian places. Moreover, we have a geographical park of global standard. Hong Kong has good potentials for developing marine tours, leisure fishery and diving tours, which will create new opportunities of transformation and development for fishermen in Hong Kong.

On the other hand, given the large number of scenic country parks and hiking trails, the Hong Kong Tourism Board (HKTB) should double its effort in promoting the natural scenic areas in country parks in Hong Kong, where temples and traditional villages are found along the trails. These hiking and exploration tours will be very attractive. Apart from Sai Kung and the rural areas, the authorities should also step up its effort in developing Cheung Chau and Lantau Island, speeding up the construction of tourist support facilities, including cultural and eco elements in tourism, developing modern tourism to cope with preferences of high-spending tourists, and attracting business visitors participating in exhibitions and conferences in Hong Kong to extend their stay for a few days after the functions for sight-seeing and shopping.

Deputy President, Sha Tin District is a good place for developing cycling tourism. The Government may improve the existing cycling tracks and connect Shing Mun River with tourist spots in the district, such as Che Kung Temple, Tsang Tai Uk and Hong Kong Heritage Museum, and so on. It may draw reference from the experience of London of Britain or Xi Hu of Hangzhou by setting up self-service bicycle rental schemes. Under the scheme in London, tourists can rent four bicycles with one card, which is convenient for family tourists to enjoy the fun of cycling tours. It may be a very interesting experience to many tourists to cycle along Shing Mun River and other scenic spots along the tracks.

To develop ecotourism and cultural tourism to attract high-spending visitors, there must be supporting facilities, talents and publicity. We will need more piers, safer ships, quality tourism practitioners and adequate supply of boutique hotels. And the HKTB should make extra efforts in promotion.

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On the other hand, the DAB thinks that with the rapid increase in the spending power of Mainland residents, visitor arrivals from the Mainland will definitely rise further. At the same time, the spending pattern of Mainland tourists visiting Hong Kong has shifted to a more diversified pattern, where they will purchase not only luxury goods but also daily necessities. As such, they no longer do shopping merely in districts concentrated with brand stores but also districts throughout Hong Kong Island, Kowloon and the New Territories. Therefore, the retailing sector must adjust its inventory strategy to maintain the diversity and quality of goods on supply. The authorities must seriously assess Hong Kong's capacity in receiving tourists, and it should formulate strategies to strike a balance between taking more business from tourists and keeping the daily life of Hong Kong people unaffected.

As for the problem of "black taxis", I had carried out an undercover check in Tsim Sha Tsui some time ago and found that the problem was quite serious. The police have already taken swift actions. I hope the authorities will continue stepping up its effort in combating such practice, so that the reputation of the tourism industry of Hong Kong will not be tarnished. As for the independent Travel Industry Authority to be set up soon, I hope this will facilitate the development of tourism in Hong Kong.

Deputy President, in respect of economic development, the Policy Address stresses the diversification of industries. The Economic Development Commission is set up to promote the overall strategies and policies for the long-term development of Hong Kong. At the same time, to facilitate the development of Hong Kong into an intellectual property trading hub, an expert task force will be set up to examine the relevant development strategy. In this connection, the DAB agrees with the development direction adopted by the Government and hopes that Hong Kong will further expand the scope of development of established industries and individual new industries, consolidating Hong Kong's status as an international shipping centre and an international financial centre, and enhancing Hong Kong's competitiveness in the market.

On the other hand, the Chief Executive has attached great importance for Hong Kong to capitalize on the development opportunities arising from the National 12th Five-Year Plan and to enhance the economic and trade relationship between Hong Kong and the Mainland, including assisting Hong Kong enterprises and professionals to enter the Mainland market. I consider this 5630 LEGISLATIVE COUNCIL ─ 30 January 2013 direction adopted by the Chief Executive quite correct, and I hope the Chief Executive will not overlook the need for continuous development of overseas market.

Deputy President, in respect of assistance to SMEs, since SMEs have all along been facing difficulties in developing the Mainland market, it is really necessary for the SAR Government to provide more support. Hence, we agree with the Chief Executive's measure of establishing additional offices on the Mainland, and we hope the Government will provide more one-stop support and relevant services to SMEs. Regarding the proposal of supporting Hong Kong business associations in establishing sales and promotion venues in the Mainland for building the Hong Kong brand, the DAB welcomes the proposal and hopes that the Government will implement this as soon as possible.

I would like to reiterate the concern about the Special Concessionary Measures of providing a loan guarantee commitment of HK$100 billion under the SME Financing Guarantee Scheme, which the Government introduced last year to help SMEs to ride over the cashflow problems resulting from the credit crunch. We think that the Government should extend the application period for the Special Concessionary Measures to help SMEs to cope with the risks arising from the continual fluctuation of the external market.

Moreover, it is mentioned in the Policy Address that the Government and the relevant Central People's Government ministries had launched studies with a view to formulating a specific work plan as soon as possible to facilitate businesses and professionals in expanding their presence in the Mainland market via CEPA. The DAB proposes that the Government must step up its effort in promoting mutual recognition of professional certification under CEPA, so as to remove the various hurdles now faced by Hong Kong professionals and various industries and lead their entry into the Mainland market.

Deputy President, in respect of technology policies, the Policy Address this year gives further recognition to the importance of innovative and technology industries and undertakes to promote its development. I agree with this general direction in principle. However, for purposes of implementation, particularly the specific development targets and work plans, it is still an unknown. I must remind the Chief Executive here that more efforts should be made in respect of the setting up of a Technology Bureau and the formulation of technology policies. Since a working group instead of a Technology Bureau will be set up to study the LEGISLATIVE COUNCIL ─ 30 January 2013 5631 development of technologies and, local talents in information technology are not included in the working group, we have to express our disappointment.

The development innovative and technology industries requires clear development targets and comprehensive technology policies have to be formulated in this connection. Despite the views expressed by various sectors in society on this point, nothing has been said or done so far. It is true that the Government will introduce individual technology-related measures from time to time, but those measures are piecemeal, failing to point to a clear direction for overall development. I think the Government should enact the legislation on technology and innovation as soon as possible, requiring the Government to set various quantifiable targets for technological development at regular intervals and accomplish those targets on schedule. It should walk away from the drawing board and take actions.

In the development of innovative technology, scientific research is the most important element. However, in Hong Kong, the percentage of investment in scientific research in a share of the GDP is lower than that of Singapore, the Mainland and Japan, which prompts queries about the importance Hong Kong attaches to research and development (R&D). The Chief Executive promised in his manifesto that the total expenditure to be made by the Government invested in R&D will increase to 0.8% of the GDP in five years. The DAB hopes that it will be increased to 1% to 2% of the GDP in five years, and even if this target cannot be achieved, the Government should at least honour the initial promise in a gradual manner.

In addition to increasing the investment in scientific research, the application of scientific research results is also extremely important. The Government should actively promote the co-operation among the Government, industries and institutes in research. It should ensure that projects undertaken by scientific research institutes cope with the needs of the industries, rationalize the course of commodification of results of scientific research and fully capitalize on these results by transforming them into economic benefits. Apart from engaging Hong Kong in R&D projects, the Government may promote the exchange, or even the trading, of scientific research results. It is mentioned in the Policy Address that a working group will be set up to study the development of Hong Kong into an intellectual property trading hub. The DAB supports this proposal and we hope that the Government will launch the relevant work as soon as 5632 LEGISLATIVE COUNCIL ─ 30 January 2013 possible and formulate a strategy on promoting intellectual property trading promptly.

Technology infrastructure is also an indispensable component for innovative technology. A few days ago, it was reported that a survey had found the speed of the Internet service in Hong Kong the fastest. Certainly, we are happy to learn that. However, on this foundation, the Government should make continued efforts to enhance technology infrastructure and set up universal high-speed network, including the Internet of Things. Moreover, the Government should enhance the pervasiveness of technology services, so that more people can enjoy the convenience brought by technology in improving their quality of life.

Deputy President, innovative technology and environmental protection are complementary. The Government should promote R&D on green technology, introduce incentives for upgrading and transformation, and encourage the use of green technology among enterprises. Now, the Government plans to make focused efforts on developing data centres, yet data centres require intensive electricity consumption which may affect the environment. Hence, the Government has to include green elements in the development of data centres. It may draw reference from the practice of Singapore and other places by setting "green standards for data centres" in collaboration with the industry and offering financial incentives to encourage data centres to save energy and implement environmentally-friendly measures to reduce carbon emission. In fact, the promotion of green technology is in line with the international practice. At present, in the international community, many enterprises have included environmentally-friendly requirements or green standards as a criterion for procurement. A company must meet these standards in order to get the deal. As such, the upgrading of green technology in Hong Kong will enable us to secure more deals with other advanced economies on the one hand, and enhance our cost-effectiveness through energy conservation on the other hand, raising the marginal profit and the competitiveness of local industries. The Government should set an example by taking the lead to use and promote green technology in promoting a green culture.

Providing support to SMEs is an important link in the development of innovative technology, as many ideas of innovative technology originated from SMEs. The procurement of the Government has an extremely important bearing on the development of SMEs, yet many SMEs fail to compete with overseas large LEGISLATIVE COUNCIL ─ 30 January 2013 5633 enterprises in securing these procurement contracts. The Government often advances the excuse that Hong Kong has joined the World Trade Organization (WTO) and should comply with the requirement on free trade, and it should therefore treat SMEs and overseas enterprises equitably. However, other countries and economies which have joined the WTO have also provided facilitation terms and conditions to local enterprises in the procurement process of the government. I think the Government should draw reference from overseas experience. It should examine the provisions under the WTO and identify ways to offer facilitation terms to SMEs in Hong Kong, encourage their participation and increase their room for development.

Moreover, many representatives of SMEs in the trade have complained to me about the complicated procedures and difficulties they encounter in applying for government subsidies like the Innovation and Technology Fund. In my view, if the Government wishes to assist SMEs in the technology industry, it must examine the needs of the industry, identify ways to simplify the complicated application procedures of various assistance schemes, step up its promotion efforts to let the industry know the various assistance schemes offered, and to provide adequate assistance in the course of application.

Deputy President, in the development of all kinds of industries, talents is a prerequisite. The current shortage of talents in the innovation and technology industries in Hong Kong should be faced squarely. The Government must work on this starting from primary education, trying to strengthen fundamental education on technology in primary and secondary education. At the same time, it should show to tertiary students taking technology-related electives the prospects of the industry and offer more scholarships and research subsidies to encourage further studies. Moreover, the Government should pool technology talents from all over the world through the migration scheme. It should adopt a multi-pronged approach to ensure an adequate supply of talents to support the development of the technology industry.

Expensive office rentals and the lack of land for the construction of data centres have hindered the development of the technology industry and various trades. Therefore, in addition to the expedited construction of residential flats, the Government should increase the supply of commercial buildings and land for industrial estates.

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Furthermore, despite the Government's desire to reinvigorate the innovation and technology industries, a designated organization vested with adequate powers should be set up to co-ordinate the deployment of resources and plan the development. At present, various sectors in society have largely formed a consensus on the setting up of a Technology Bureau, so the Chief Executive should act according to the trend by setting up the bureau as soon as possible.

Finally, I would like to talk about Internet crimes. There are pros and cons for everything. Technology brings convenience, but it also gives rise to many risks and crimes. Recently, there are frequent reports about Internet crimes, including theft of information and Internet social traps, where some teenage girls have been deceived on Internet social platforms and become victims of sex crimes. The authorities should beef up the inspection effort in view of such crimes. It should publicize these common traps among the public and urge the public to be vigilant about this, and it should encourage the persons concerned to report such crimes. With efforts made on various fronts, it is hoped that the public will enjoy the benefits brought by technology and be spared of the troubles in the course of promotion of technology development by the Government.

Regarding the proposal on developing the innovation and technology industries as put forth in the Policy Address this year, I hope the Government will not be paying lip service but will formulate specific plans and implementation particulars as soon as possible.

With these remarks, Deputy President, I support the Motion of Thanks on the Policy Address.

MR CHAN KAM-LAM (in Cantonese): Deputy President, this is the maiden Policy Address delivered by Chief Executive LEUNG Chun-ying. The Policy Address has been greeted with both positive and negative comments since its release. In the past two weeks, we have held a number of residents' forums in a row to listen to the views of the public on the Policy Address. In gist, the public considers the Policy Address relatively satisfactory. On the point that no specific figures in solving housing problem have been provided right away in the Policy Address, most people have shown understanding. We all agree that the Policy Address is pragmatic and sincere with clear objectives and directions, which is a display of the determination and vigour of the new Government. Yet, LEGISLATIVE COUNCIL ─ 30 January 2013 5635 we all hope that the Government will implement some measures beneficial to the public as soon as possible.

As we enter the year 2013, Hong Kong still faces numerous challenges. In addition to the perennial problems of high property prices, high inflation rate and heavy economic pressure faced by the grassroots, the downturn of the global economy has brought many challenges and opportunities to the economic development of Hong Kong. Europe is still in the shadow of the debt crisis, the United States is approaching the fiscal cliff and Asia is facing plunging trade exports. All these bring hidden worries to Hong Kong, an externally-oriented economy. The positioning of the future economic development of Hong Kong is particularly important.

As the Chief Executive said, the global economy looks to the East. Various European countries and the United States have nearly exhausted all possible fiscal policies and means, yet the economy has shown no improvement. Perhaps global economy revival may only be propelled by the East. The positive effect to be brought about by the bilateral and multi-lateral co-operation between the Association of South East Asian Nations (ASEAN) and China, and that among China, Japan and Korea, particularly the establishment of freetrade areas, should not be underestimated. The co-operation in the great region in Southeast Asia with the integration of ASEAN countries has provided a positive force that should not be overlooked in promoting free trade, preventing economic crises and realizing joint development. Hence, it is a natural course of action to join the China-ASEAN Free Trade Area, so that our goods, services and investments can access the ASEAN market in more favourable conditions. In view of the shrinking markets in Europe and the United States and the poor export trade, which even recorded negative growth, in Hong Kong, the exploration of the Southeast Asia trade market will complement the exports market in Hong Kong.

The world looks to the East, and the East looks to China. China, being the largest economy in the region, is the most important trade partners to Asian countries. Among the total exports of Hong Kong, Australia, Taiwan, Korea and Japan, China accounts for 52%, 27%, 27%, 24% and 20% respectively, which is higher than the total percentage of exports to the two regions, Europe and the United States. Earlier on, Mr Ronny TONG criticized the economic policies proposed in the Policy Address for reaching out to our Motherland with our back on the world, and he considered that the correct approach should be 5636 LEGISLATIVE COUNCIL ─ 30 January 2013 reaching out to the world while leveraging on our Motherland. We can tell which approach is right and which is wrong clearly if we have a good understanding of the global economic environment today.

In recent years, the economic reform carried out in China has brought numerous business opportunities to Hong Kong. Apart from re-export trade, Hong Kong has taken a share in the upgrading of the Mainland service industries. The service industries account for 43% of the GNP of the Mainland, which is lower than the level of 70% for developed countries. Introduction of external experience is an important move in the development of service industries. Hong Kong, being an economy based on high-end service industries, may make contribution to the relevant reform in the Mainland. In 2015, full liberalization of Hong Kong's trade in services in the Mainland will be achieved, and this is now the golden opportunity for enterprises to make plans and preparations. The financial development zone in Qianhai will bring once-in-a-lifetime opportunities to the financial industries in Hong Kong in their pursuit of deeper and more extensive development.

Amid the weak global economy and rising labour cost resulting from the implementation of minimum wage since May 2011, the performance of the labour market is said to be very impressive. Between March 2011 and September 2012, the employed population increased by 3.5%, that is, 124 700 persons. To other economies, this is an incredible figure. One of the main reasons for the rise is the sustained heavy demand of the Mainland for commercial services in Hong Kong and individual spending. Under the National 12th Five-Year Plan, the State encourages Mainland companies to explore overseas markets, whereas Hong Kong is still playing the bridgehead for Mainland companies in "going global", so this will provide significant impetus to the development of commercial services in Hong Kong.

Hence, I am very glad to note that the Chief Executive has proposed in this Policy Address that the Hong Kong Government will enhance G2G (Government-to-Government) work. On the entry to Mainland market, the industries should not be left to explore on their own, whereas the Hong Kong Government and the Mainland authorities should implement certain policies direct to open small and big doors simultaneously for purposes of fully capitalizing on the Mainland market.

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Given such an economic landscape, it is inconceivable that someone would regard the co-operation and integration between the Mainland and Hong Kong as the Mainland's attempt of turning Hong Kong red, using slogans like "Resisting Communization" and "Recovery Movement" to oppose the integration of the two places and provoke divisions in Hong Kong society. I would like to remind everyone that while Hong Kong is embroiled in all kinds of arguments and disputes, our neighbouring countries are making constant progress. In our discussions on policies or economic indexes, we often like to draw a comparison with Singapore, but soon we can no longer be comparable to Singapore.

Hong Kong is backed by the Mainland market, one seeing the most prosperous economic growth in the world, with the full support of the Central Government and an enormous market with a population of 1.3 billion. Various economies around the world admire this edge of close proximity enjoyed by Hong Kong. In terms of objective environment and conditions, Hong Kong is in a better position than Singapore, so it is only natural and reasonable that Hong Kong's competitiveness should be better, but it turns out to be the opposite. In recent years, Singapore has made focused efforts in promoting development and construction. On the contrary, Hong Kong has been becoming all the more politicized and emotional, where people engage in squabbles and quarrels day and night. Hong Kong has fallen into the quagmire of political squabbling, and it can hardly get out of it.

Actually, after the reunification, Hong Kong can only live on the achievements it made in the earlier days, for there is no sustainable development at all and the future is all doom and gloom. On the one hand, the politicos claim that they are "Resisting Communization" and even demand the shelving of policies like the Individual Visit Scheme (IVS) and CEPA, and so on. As a result, the Mainland authorities cannot but call to a halt the measure of allowing non-local residents of six Mainland cities to visit Hong Kong under the IVS. On the other hand, Mr LEE Hsien-loong, the Prime Minister of Singapore, has just visited Beijing and expressed the hope to expand the depth and width of the co-operation between the two countries. Another important purpose of the visit is to strive for China's consent to allow Singapore to be the off-shore market in the internationalization of RMB. Singapore is obviously keeping an eye open for any opportunity of which it can take advantage, attempting to take over Hong Kong's position. As such, when certain political parties in Hong Kong are 5638 LEGISLATIVE COUNCIL ─ 30 January 2013 advocating the idea of "Resisting Communization", Singapore is seizing the opportunity to strive for a greater share of the China market.

In fact, the Central Authorities always consider Hong Kong as the best testing ground for the development of international RMB business. However, Members should understand that Hong Kong does not enjoy any monopoly in developing RMB business. If we do not do it, others are more than willing to do so. Apart from Singapore, Taiwan has also been catching up rapidly. On 28 January, the central bank of Taiwan granted approval for the Taipei Branch of the Bank of China to act as the clearing bank for RMB in Taiwan region, and with immediate effect from the date of approval, designated foreign exchange banks may sign clearing agreements with the Taipei Branch of the Bank of China. RMB business in Taiwan will start operation before the Chinese New Year the earliest.

Financial experts in the United Kingdom are also determined to build London into an off-shore RMB centre. The RMB business centre scheme supported by both Governments of China and the United Kingdom has been joined by 10 banks. In 2012, the financial city in London had made continued efforts of promotion and marketing, providing user's guide on RMB for enterprises and making known to European enterprises and investors that the use of RMB in China trade would save costs and enhance efficiency. At the same time, they urge for the simplification of procedures in using RMB to enable SMEs to benefit.

Shanghai also hopes to capitalize on the internationalization of RMB by developing its RMB services, so that Shanghai's position as the domestic financial centre will be upgraded to the international level. Qianhai of Shenzhen has also commenced its RMB services. It is evident that in both the trade and financial markets, we are sailing against the stream, and if we do not forge ahead, we will be left behind. If Hong Kong were hoodwinked by certain political parties into believing that the integration between Hong Kong and the Mainland would mean communization that should be resisted, Hong Kong people and the future development of Hong Kong would stand to lose, whereas other regions competing with Hong Kong would stand to benefit. The more intense the disputes in Hong Kong become, the happier our counterparts will be. By then, it will be useless for Hong Kong to regret.

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Nothing on earth should be taken for granted. I hope the people of Hong Kong will understand this truth. We should work together in one heart for the continuous prosperous development of the economy of Hong Kong. Thank you, Deputy President.

MR CHARLES PETER MOK (in Cantonese): Deputy President, it is the duty of this Council to monitor the administration by the Government and impose checks and balances on the executive departments. If the Chief Executive is only paying lip service in promoting unity, whereas he considers Members from the pan-democratic camp his foes in private, it is not something the public would wish to see. In my view, we should do more than just "agreeing to disagree", and we should "disagree without being disagreeable". Priority should be given to bringing about better economic development for Hong Kong and bringing a better life to Hong Kong people and the next generation.

However, after reading the first Policy Address of LEUNG Chun-ying carefully, I can hardly be convinced that the economic and industrial policies put forth by this Government will be truly conducive to the long-term development of Hong Kong. I have two major doubts: First, the Government continues to be tilted to the financial industries but overlook the importance of industrial diversification; and second, it is about the Government's strategy on the development of the innovation and technology industries.

A society should be fair. Not only should resource distribution be fair, development opportunities should also be offered in a fair manner. I often meet with university students and young people on various occasions. They tell me they are worried about their prospects upon graduation. Take postgraduate students engaging in research and development or information technology as an example. They will consider whether there are good prospects of development in Hong Kong. Sometimes, when I met with some entrepreneurs, they would complain about the difficulties they faced, stating the extremely difficult conditions for setting up businesses in Hong Kong and the mismatch in the market and in investment. The Government says that it senses the urgency of the pressing needs of the public, if it is the case, it should not be short-sighted and it should not be tilted to improving the people's livelihood, for economic development is the key to improving quality of living. Regrettably, the Government has offered nothing but empty talk on this front.

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The public's primary aspiration in life is to live in peace and work with contentment. In terms of administration, the Government should not only cope with the immediate needs for housing and overlook the needs arising 10 years later or in the longer term. In the face of the ageing population and the dropping trend of youth population and labour force, we are obliged to create more diversified opportunities of upward movement for the next generation. In view of the present reliance of Hong Kong economy on conventional industries, I think that more diversified and high value-added employment opportunities of quality should be created. As for scientific research and entrepreneurship, they should be encouraged, and new industries should also be promoted, for these are critical to the maintenance of Hong Kong's competitive edge.

The Government has seemingly introduced many measures in improving people's livelihood, yet for certain long-term economic strategies without palpable and immediate effect, the Government turns to slogan-chanting on "deepening and expanding industries", placing heavy reliance on the Mainland market. It is evident that under the leadership of Chief Executive LEUNG Chun-ying, the Government adopts "Red-cronyism" in promoting the integration between the Mainland and Hong Kong ― where Hong Kong is "totally absorbed" by the Mainland. Following this course, I seriously doubt whether LEUNG Chun-ying is trying to turn Hong Kong into a small town focusing merely on livelihood issues and forgetting all economic ideas and prospects. May I ask the Government whether the various development projects planned are implemented to cope with the need of the Mainland or to improve the standard of living of Hong Kong people? On behalf of children at school and the next generation of Hong Kong people, may I ask LEUNG Chun-ying whether he knows that apart from land, housing and infant formula, the most important and essential need for Hong Kong people is good education and an environment with high economic growth conducive to the career development of individuals?

In the Policy Address, the authorities offer "studies", "reviews", "consideration" and "examination" as excuses on the one hand, and outsourcing its responsibility of formulating industrial policies to the Economic Development Council (EDC) on the other. Does the Government have any sense of responsibility to the public? The objective of the EDC established by LEUNG Chun-ying is supposed to be gauging the pulse of the public and prescribing remedies, yet the membership of the EDC is overwhelmed by "red" nobility of China-affiliated organizations and the second generation of government officials, where Hong Kong representatives are scarce. Take the Working Group on LEGISLATIVE COUNCIL ─ 30 January 2013 5641

Manufacturing Industries, Innovative Technology, and Cultural and Creative Industries as an example. No local representative from the information technology sector is included in the Working Group. From what perspective will such red nobility put forth strategies and policies for the economy of Hong Kong? Such practices of the Government are evident that it has staked the future of Hong Kong economy completely on that of the Mainland. It is extremely worrying. Such practices run counter to the principle of diversified and sustainable economic development.

In his manifesto, LEUNG Chun-ying has talked extensively about economic development and promoting new industries. However, after taking the throne of the Chief Executive, he only gives regard to public stability. As for policies on economic development, I would say he has handed in a blank answer sheet. Not only that an industrial policy which the IT sector is concerned about is not provided, the establishment of a Technology and Information Bureau has been shelved. All the measures put forth by LEUNG Chun-ying in his manifesto on the development of scientific research and technology have simply disappeared. He has indeed kicked away the ladder.

Scientific research is the cornerstone for the development of innovative technology. As for innovative services, its development also requires technological support, for instance, in the area of enhancing service flow and experience. Some time ago, the Chief Executive and senior government officials coincidentally stated in public that given the service-based economy of Hong Kong, the demand for scientific research was relatively low and thus the scientific research standard of Hong Kong was on the low side. This concept of theirs is really shockingly backward. I hope the Chief Executive will seek advice from the President of the United States, Barrack OBAMA. Though the United States is a leading nation in the global technology arena, where its expenditure on technology already accounts for 2.6% of its GNP, OBAMA still hopes to increase the percentage to 3% within his term of office. He does so for he understands the importance of scientific research and the training of talents to the long-term development of the American economy. In his inaugural address, OBAMA said he had to lead the United States in building the future, but for LEUNG Chun-ying, he is only looking for land for housing construction, lacking any foresight. LEUNG's incapability is laid bare in comparison. This comparison of the two really embarrasses LEUNG Chun-ying.

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Having consolidated the earlier proposals put forth by me and the views of the industries, I am going to state the following points on the scope covering commerce and industry, and economic development, and I hope the Government will follow up these issues carefully.

First, it should honour the election promise of establishing the Information and Technology Bureau for the formulation of long-term policies on technology industries. Second, it should strive for a new round of liberalization measures under CEPA, relaxing the requirements for Hong Kong-invested enterprises in forming joint-venture companies with Mainland operators, so that Hong Kong-invested enterprises may own over 50% of the shares of such joint-venture companies. Third, in addition to increasing the cash rebate on R&D to 30%, the Government should step up its efforts in encouraging enterprises and the academic sector to reinforce their R&D work, which include the introduction of measures like tax concessions, so as to beef up the continually low percentage of R&D. Fourth, the authorities should provide incentives to SMEs in procuring local technology products, such as providing financial support to SMEs and re-inject funds into the SME Training Fund. Fifth, the Government should adopt a technology procurement policy that would offer encouragement to local technology industries, so as to provide more development opportunities for talents in the IT sector. For instance, it should adjust the requirements of tenders to allow more local enterprises to participate instead of merely seeking the lowest bid that may hinder the development of the industries. The authorities should implement the proposal in LEUNG Chun-ying's manifesto which states that the Government should adopt "a procurement policy that would actively support the use of applied technologies, with environmental protection". Sixth, the Government should commence the "electronic new town development". As for infrastructural planning for new development areas, be it Kai Tak, West Kowloon or the New Territories, innovative technology should be introduced at the planning stage, and technology infrastructure supporting wireless cloud computing technology should be established. Seventh, in communications affairs, domestic free television licenses should be issued as soon as possible, and for telecommunications, particularly on the policy on spectrum, a level playing field should be maintained.

Finally, I would like to cite a view in the article, The Great Innovation Debate, published in The Economist recently, a view which I very much agree. It is said in the article that governments should be prevented from becoming the impediments to innovation. It is said that three things must be done properly. LEGISLATIVE COUNCIL ─ 30 January 2013 5643

First, governments should not impose hurdles for enterprises. Second, the conventional culture of governments and public organizations should be overhauled. Third, it should invest wisely. "Diversification, freedom and openness" are the competitive edges of Hong Kong, and we must protect and uphold these strengths. The Government should not take the lead to undermine Hong Kong's edges by relying solely on the development of the Mainland, which will dwarf Hong Kong's status as an international city and undermine our competitive edges. Hence, I can hardly support this Policy Address which offers no, or less than effective, proposals in technology, R&D and industrial policies.

Deputy President, I so submit.

MR JEFFREY LAM (in Cantonese): Deputy President, regarding the Chief Executive's direction of according priority to the handling of economic development in the Policy Address, the Business and Professionals Alliance for Hong Kong (BPA) expresses our support. As the Chief Executive said repeatedly after announcing the Policy Address, Hong Kong needs to have more rapid and sustainable economic development to muster the power and resources to address social problems. For this reason, he mentioned economic development first in the Policy Address, and he said, "Sustained economic growth is a prerequisite for us to tackle housing, poverty, ageing population, and environmental problems. Promoting economic development is therefore the primary goal of the Government."

This policy agenda on economic construction and people's livelihood improvement reflects that the Chief Executive and the SAR Government are pragmatic, which is similar to the proposal put forth by the BPA so far, that is, "driving economy through commerce and industries and improving people's livelihood by professionals". I urge the Government that it must strike a balance between economic growth and the people's livelihood in administration. For if the economy remains in the doldrums, proposals on extensive construction and solution to the problem of poverty will only be empty promises. Particular attention should be paid to the drastic actions taken by the Government in housing and land supply, for the more such actions are taken, the greater amount of public money will be involved. Though the Government is wealthy now, the money should not be spent arbitrarily. It is impossible for us to meet the enormous expenditure continuously.

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Deputy President, we notice from the Policy Address that the Government has offered neither any arbitrary and empty promises just to win a round of applause, nor any lavish welfare handout at the expense of others, allowing populism to establish its footing in Hong Kong and bringing a long-term financial burden to Hong Kong. Deputy President, if we can first improve the economy, problems relating to people's livelihood and employment will be easier to tackle. Hence, the Hong Kong General Chamber of Commerce (HKGCC) has all along been urging the Government to maintain a business environment with a simple low tax regime, which is conducive to the attraction of more investors to Hong Kong, thereby creating employment opportunities and ensuring a stable living for the public.

To ensure the sustainable development of Hong Kong, the HKGCC has repeatedly called on the Government to be prudent in finance management, adhering to the basic principle of keeping expenditure within the limits of revenues. Hence, we agree with the approach stated by the Chief Executive in the Policy Address, that is, "During my term, I am fully committed to the principle of keeping expenditure within the limits of revenues, and to maintaining a business-friendly environment with a simple and low tax regime.". It is evident that the Chief Executive has accepted the views of the business sector and understood the causal relationship among economic development, creation of employment and alleviation of people's plights.

Moreover, this Policy Address has set out a blueprint for the long-term development of the economy of Hong Kong, thus it is worthy of support. We hope that in the next five years, no matter the economy is in boom, gloom or doom, the SAR Government will strike a good balance between the affordability of the public and the stability of public finance. These will also facilitate the stable development of the economy of Hong Kong and secure a stable life for the public.

Deputy President, as the external economy slows down, the economy of China is still growing at a steady pace. To grasp the opportunity of economic development, Hong Kong must reinforce its economic and trade ties with the Mainland. The Policy Address has put forth economic measures compatible with the actual situation, where more than half of those measures are related to the Mainland. Some of the concerns raised by the HKGCC and the BPA on economic and trade development between the Mainland and Hong Kong have been addressed squarely. Positive responses have been made, which include working on the problem of "big doors opened but not the small ones" under LEGISLATIVE COUNCIL ─ 30 January 2013 5645

CEPA and setting up an additional joint working group. The Hong Kong Government and the Ministry of Commerce will take the lead, whereas the relevant Central People's Government ministries and municipal governments will participate, providing targeted assistance to sectors which have encountered relatively more entry barriers. We believe this will effectively address the problems encountered by Hong Kong businessmen in entering and operating in the Mainland market, fully capitalizing on the opportunities arising from CEPA.

Deputy President, we notice that the SAR Government has attached importance to the views of the business sector, but we look forward to the early introduction of pertinent policies. At the lunch of the HKGCC, which saw the Chief Executive's attendance, members of the HKGCC expressed keen concern about the timetable for the implementation of the relevant measures. On that occasion, I asked the Chief Executive when he would complete the work on G2G. The Chief Executive said that he would work on it as soon as possible, pointing out that the work on G2G would commence in the Mainland before the Chinese New Year, and then he would visit Beijing in March to meet with the relevant departments. As for overseas work, he said that after discussing with the relevant countries the details of the meetings, the information would be released as soon as possible. The business sector will participate actively in activities of opening up business opportunities. With the Chief Executive leading the delegation, entry into the market will be gained more easily. By then, Hong Kong businessmen will genuinely capitalize on CEPA in opening up the Mainland market and enhancing the quality of services and products in the Mainland, thus achieving a win-win situation.

Deputy President, in promoting economic development, no other option can be better than enhancing the business environment and attracting overseas investors to make investments in Hong Kong. However, overseas investors and professionals have strong views about the air quality in Hong Kong. The HKGCC has continuously urged the Chief Executive and the SAR Government to face the problem squarely and identify remedies. In fact, air quality affects not only the health of all members of the public but also the desire for overseas investors to come to Hong Kong. As such, the environmental protection policy is another focus in the Policy Address, and the HKGCC welcomes the relevant proposals. According to the Policy Address, the Government will invest at least $15 billion in the near future to promote environmental protection, and $10 billion of it will be spent on phasing out old diesel commercial vehicles to alleviate air pollution. Hence this policy item involves the greatest amount of provision in this Policy Address.

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Deputy President, since diesel commercial vehicles are a major source of roadside air pollution in Hong Kong, the replacement of old diesel vehicles is one of the most direct solutions in improving air quality. In the past, I had repeatedly proposed to the Government in the Legislative Council that the financial incentive should be increased appropriately in order to bring the effect of the scheme in phasing out diesel vehicles into full play, but the Government then only stated that consideration would be given to my proposal. This time around, the Government has heeded our views in the Policy Address by setting aside a significant sum of $10 billion for the scheme, under which the new mode of subsidy is more flexible than the two previous replacement schemes. I hope that air quality will be improved with the implementation of the scheme, so that more overseas investors and talents will be attracted to station their business in Hong Kong, thereby consolidating Hong Kong's status as an international business centre.

The HKGCC has all along been urging the Government to enhance the competitiveness of Hong Kong. This time, the Chief Executive decided to set up the Economic Development Commission (EDC) and working groups on four major areas, namely, Transportation, Convention and Exhibition Industries and Tourism, Manufacturing Industries, Innovative Technology and Cultural and Creative Industries, and Professional Services, seeking to promote diversified development of industries, encourage entrepreneurship among young people and create opportunities of upward mobility in society.

Deputy President, the problem of land and housing supply in Hong Kong has been dealt with in a focused manner in the Policy Address in response to the aspiration of the public. However, not much has been mentioned of the call for increasing commercial land supply and enhancing support for SMEs. We hope that the Financial Secretary, John TSANG, will respond to our aspiration in the Budget, which includes extending the Special Concessionary Measures under the SME Financing Guarantee Scheme. In our view, the Government should lower the profits tax rate, institute a two-tier system for profits tax, and levy a profits tax of 10% on the first $2 million of taxable profits. We believe these measures will alleviate the tax burden of SMEs while maintaining a simple tax regime for Hong Kong.

(THE PRESIDENT resumed the Chair)

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President, the life of the middle class in Hong Kong is becoming increasingly difficult. The Policy Address has adopted a number of middle-to-long-term measures with a view to assisting the middle class in home purchase, but in the absence of short-term alleviation measures, the middle class feel very gravely concerned. We hope that the aspiration of the middle class will be answered in the Budget of the Financial Secretary, where alleviation measures, including an increase in child allowance and dependant parent allowance, will be provided to them.

As for the Special Committee on Standard Working Hours to be set up by the Government, we hope that the Government will listen to the voice of the business sector seriously, give due regard to the difficulties encountered by the business sector, particularly SMEs, and the difficulties the legislation may bring to them, so that Hong Kong's competitiveness will not be undermined.

President, I so submit.

MR FRANKIE YICK (in Cantonese): President, the Chief Executive said that the Policy Address would not only present the annual work plan of the Government but also set out the long-term blueprint and objectives. Regrettably, the transportation and logistics industries can hardly find any vision in this Policy Address.

In the National 12th Five-Year Plan promulgated last year, the State once again stated unequivocally its support for consolidating and enhancing Hong Kong's status as an international shipping centre, and developing Hong Kong into a centre for storage management and distribution of high value goods. It was indeed a booster to the transportation and logistics industries. Regrettably, a year has lapsed, but the SAR Government has failed to introduce any concrete policies to tie in with this.

It is proposed in the Policy Address that a working group on the transportation industry will be set up under the Economic Development Commission. However, the major task of the working group is to conduct a comprehensive review of the existing policies and organizational structures supporting the development of transportation and port logistics based on the two consultancy reports soon to be completed, namely the Study on the Strategic 5648 LEGISLATIVE COUNCIL ─ 30 January 2013

Development Plan for Hong Kong Port 2030 and the study on Enhancing Hong Kong's Position as an International Maritime Centre. In other words, no policy on promoting the long-term development of the industries will be rolled out in the nearer term, and everything will remain at the stage of study and discussion.

At present, over 700 companies in Hong Kong are running maritime-related businesses and providing diversified international maritime services. As at the end of December 2012, 2 193 ships with a total gross tonnage of 78.9 million were registered in Hong Kong, a 15% increase in gross tonnage in comparison with the same period of the previous year. Hong Kong has now risen to the third position in the global ranking as a place for ship registration. To further enhance Hong Kong's position in the transportation sector, we consider that the authorities should formulate comprehensive and long-term policies as soon as possible to facilitate the sustainable development of the transportation industries. The policies should be proactive and they should include measures to attract talents in the transportation industry from all parts of the world.

I understand that the Chief Executive is determined to upgrade Hong Kong's status from a "shipping centre" focused on existing goods-based maritime services to one providing high value-added maritime services, ship management, ship trading and finance, maritime insurance and maritime arbitration, and so on, in order to further enhance the attractiveness and competitiveness of Hong Kong. However, goods shipment and maritime services are closely related. Among the goods handled at the port and the airport in Hong Kong, 70% are related to the Pearl River Delta Region in the Mainland, which are mainly shipped across the border on land. As such, land transport is an important link in connecting maritime and air transport. If the working group on transportation will focus only on maritime and air transport but fail to give regard to land transport, it will be less than comprehensive.

In actuality, the land transport industry has been declining in recent years due to spiralling operating costs, manpower shortage and the lack of experienced hands. The implementation of minimum wage has further intensified the difficulties they encountered in operation, where less competitive SME logistics companies have been eliminated in succession. Some members of the industries claim that due to the manpower shortage, they cannot but give up certain businesses. If the authorities fail to put forth remedial measures to address the LEGISLATIVE COUNCIL ─ 30 January 2013 5649 problem, the development of the transportation and logistics industries will be impeded in the long run.

As the development of global economy shifts to the East and the economy of the Mainland continues to grow rapidly, China has become the largest imports and exports country in the world. This has brought opportunities to the transportation and logistics industries, but the question remains whether we can capitalize on these opportunities. The proposal of developing Hong Kong into a high value-added good storage management and regional distribution centre is a case in point. Hong Kong possesses the conditions for such development, for we are in a favourable geographical location and we have a sound legal system and advanced financial services. Besides, the infrastructural facilities in Hong Kong are comprehensive, including the Hong Kong International Airport, which ranks the first for international air cargo throughput, and Hong Kong is the third busiest cargo port in the world with freight forwarding agents being rich in global network experience.

However, the greatest problem impeding the development of the industries is land shortage. At present, members in the industries, SMEs in particular, are complaining about the shortage of land for warehouse storage, packing, devanning containers, distribution and other value-added services. Some enterprises have complained to me recently that the supply of factory buildings, which no one was interested in using in the past, has become tighter as the Government adopts the revitalization policy of factory buildings and the rental of factory buildings has increased significantly. Since they cannot afford the expensive rents, they are now facing great trouble in identifying warehouse sites for removal.

In the Policy Address 2009, the SAR Government said that several sites with a total gross floor area of about 29 hectares had been identified in Kwai Tsing district for permanent uses with a view to creating a logistics cluster to support the development of the industry. However, so far, the authorities have only granted two sites of a total area of 4.8 hectares for the construction of modern logistics centres. This year, a third site of 2.1 hectares in Tsing Yi will be granted for logistics use. Nonetheless, the progress of land grant is extremely slow, failing to cope with the rapid development of the logistics industries.

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Since these sites are granted through tender, they will eventually be leased at expensive rent, which cannot alleviate the shortage of warehouse storage faced by SMEs. Hence, the authorities should provide large scale long-term sites as soon as possible. In addition, the authorities should consider building government warehouses, similar to the case of government factory buildings built in the 1960s and 1970s, as a kind of infrastructural facilities, which will be leased to SMEs at reasonable rates with a view to facilitating the development of SMEs in the logistics industries. Our strong competitor, Singapore, has already implemented such a policy to support the development of the local logistics industry. At the same time, the authorities should expeditiously implement the project on constructing logistics parks to enable professional logistics operators providing transportation, warehouse storage and distribution to operate in a highly-concentrated environment and thus saving transportation and operating costs.

Since efficiency is the prerequisite for the development of high value-added goods and high value-added logistics services, where a designated volume of goods should be shipped to designated regions within designated time, it is necessary to further enhance the services and capacity of the air transport of Hong Kong. The third airport runway to be built in Hong Kong is expected to be completed in 2023. However, our neighbouring cities have been expanding their aviation services continuously. It is estimated that by 2020, the Guangzhou Baiyun Airport will add the third to fifth runways, the Shenzhen International Airport will add the second and the third runways, and the Taipei Taoyuan Airport and the Incheon Airport in Seoul will add the third and the fourth runways respectively. Given the enhancement of services by other cities, if the third runway in Hong Kong cannot be completed promptly, Hong Kong's competitiveness in the aviation service industry will be surpassed by our neighbouring cities. We must understand that business opportunities missed can never be regained. Hence, the authorities should commence the construction works of the third airport runway as soon as possible and it should by all means strive for the early completion of the project in order to entrench and enhance Hong Kong's status as an aviation centre.

Finally, President, I would like to point out that the logistics industries are extremely concerned about the intended tightening of the requirements on air cargo security screening by European countries and the United States recently. Many SME manufacturers and freight forwarding agents are incapable of fulfilling the requirement on 100% advance screening procedure of all goods. If LEGISLATIVE COUNCIL ─ 30 January 2013 5651 the Government fails to make proper preparations with the industry in fulfilling the security screening requirements imposed by European countries and the United States, it will deal a serious blow to the logistics industry and the overall economy of Hong Kong. The measure on 100% advance screening of air cargoes to European Union countries is expected to be implemented after the summer holidays next year just less than one and a half year away. I hope the relevant departments will gather members of the industries as soon as possible to examine contingency plans and implement the corresponding measures promptly.

President, I so submit.

MR WONG TING-KWONG (in Cantonese): President, land policy is made the obvious focus of the Policy Address this year as expected, which is an issue of greatest concern. After all, housing is the most pressing problem in Hong Kong at present, which greatly affects the general public. As for the economy, the Chief Executive has presented a visionary blueprint and reviewed the positioning of the six industries where Hong Kong enjoys clear advantages. He has also set up the Economic Development Commission (EDC) to study economic development strategies and identify industries where Hong Kong enjoys clear advantage for focused development. Moreover, the Chief Executive has undertaken to promote the economic and trade co-operation between Hong Kong and the Mainland, for which a designated working group will be set up to address technical problems encountered in implementing the detail arrangements under the CEPA. On the whole, the Policy Address has provided a relatively thorough account on the economic, commercial and industrial fronts, which are worthy of recognition in principle. Though SMEs are not given a prominent place in the Policy Address this year, we are full of hope after noting the grand economic development plan presented by the Chief Executive.

Now, I come to the specific contents. For the part on the development of SMEs in the Policy Address, it is mainly an overview of the support measures available at present and previous achievements accomplished. It is then stated that "the Government will continue to help SMEs tap the Mainland market by various means, including effective use of the Dedicated Fund on Branding, Upgrading and Domestic Sales, and supporting Hong Kong business associations in establishing sales and promotion venues in the Mainland for building the Hong Kong brand." The account in this part instills a sense of stability: there is no 5652 LEGISLATIVE COUNCIL ─ 30 January 2013 problem with it, yet there is no surprise. Regarding the proposal on establishing sales and promotion venues in the Mainland, we will surely support. However, apart from these measures, it seems that no other specific measures focused on supporting SMEs have been offered. In this connection, we certainly hope that more tailor-made measures will be introduced in future.

Over the past year, Hong Kong encountered many economic challenges, including the fluctuated development of the debt crisis in Europe and the United States and the slowing down of the Mainland economy. Against this background, the export demand of Hong Kong was put under pressure. SMEs experienced a drop in orders received, and even if they could secure orders, they might experience defaults on payment when their clients went bankrupt or closed down. If they have already delivered the goods, they may not get the payment, and as a result, they have no money to repay their bank loans. It is comparable to the disaster of burning chained ships, just too deep for tears.

Apart from economic challenges, many new changes had taken place in terms of government policies last year. The Competition Ordinance was enacted, a decision was made to raise the minimum wage level, and the introduction of standard working hours is poised for implementation. I am not criticizing these measures, yet these measures have in actuality increased the burden of SMEs which will have to cope with many more problems in future.

Land and housing is the most popular subject of discussion now. Actually, this problem does not only affect the public in general, SMEs have also suffered much from this. During the period in the past, property prices and rents have surged drastically. It is an apt description to say that the land is worth gold. When SMEs are making strenuous efforts to make just a humble profit on the one hand, property owners impose drastic rent increases on the other. The achievements made by employees sweating blood are offset completely by the increases in rent. The public in general can hardly purchase their own homes. In view of all this, the Government has imposed strong measures and adopted a multi-pronged approach by introducing the "Hong Kong property for Hong Kong people" policy, the Buyer's Stamp Duty (BSD) and the Special Stamp Duty (SSD), and so on. However, in the face of exorbitant rents, small employers are encountering difficulties in operation, and we do not see any highlight policies introduced by the Government for the time being. The measures adopted by the Government to deal with the property market have in fact prompted investments to flood into the commercial property market. I would say that speculators LEGISLATIVE COUNCIL ─ 30 January 2013 5653 losing the opportunities in the property market will soon capitalize on the opportunities in the commercial property market. They will soon go on a speculation spree on commercial properties and rents will continue to surge. This will add to the burden of SMEs, and they will be in deep waters.

There is this interesting fallacy in society, that is, it is prestigious to be bosses. All of us must have seen the images of bosses depicted in advertisements, movies and even cartoons. They are all men with a big belly wearing a bowtie, suspenders and trousers, and smoking cigars. Actually, these are simply fantasies. More often than not, employers of SMEs only look affluent on the outside, and they have indeed gone through rough journeys. In times of economic changes, they have to make every effort to cope with the shoestring budget, just like a cook having to cook with 10 pots but only three or four lids. In the face of the capital chain pressure, drop in turnover, defaulted payment of customers and calls on loans by banks, they are gripped by cold sweats and can hardly eat and sleep. Running a SME appears on the surface to be a good chance to be a boss, yet nine out of ten SMEs' employers are merely working with their employees for banks and property owners, or large consortia or some bigger bosses. They are hard pressed in making a living in the gap between the upper and lower classes.

Certainly, it is the choice of individuals to be an employer or not to be. Those choosing to be employers of SMEs know well in advance that this is a difficult path. Despite that, in the face imminent troubles, they will naturally look for a helping hand, or at these being offered a lifebuoy. Regarding the plights such as economic challenges, changes in government policies, exorbitant rents and difficulties in operation mentioned by me earlier, the Government should not overlook these problems no matter how, and it must identify solutions to maintain adequate room of survival for SMEs.

I understand that many long-term directions have been put forth in the Policy Address. It is by all accounts desirable to have visionary goals. However, for the SMEs, I hope that the Government will provide more specific measures of assistance.

The greatest difficulty in the operation of SMEs is maintaining the cash flow. The Government must enhance the "availability, extensiveness and quality" of financing channels for SMEs. Some time ago, the Government introduced the Special Concessionary Measures under the SME Financing 5654 LEGISLATIVE COUNCIL ─ 30 January 2013

Guarantee Scheme (SFGS). The Government's sincerity and good intention is not to be doubted. However, when it comes into implementation, many problems about the details have to be dealt with. For instance, the interest rate prescribed is high and the application period will only last for nine months. At a debate in December last year, the DAB and other Members of the Legislative Council put forth many proposals to the Government on enhancing the SFGS, lowering the interest rate, extending the application period, relaxing the requirements and drawing up plans for regular reviews according to the needs of the industries. Regarding these proposals, I urge that the Government must consider them carefully, particularly concerning the extension of the application period. Now that SMEs are facing many challenges, the Government should not close the umbrella in rain. As such, the Special Concessionary Measures should not cease on expiry in nine months. The Government should appreciate the needs and aspirations of the industry and continue to provide appropriate and sustainable financing channels to SMEs.

Concerning land supply, given the serious housing problem, as well as the surging rentals of shops, SMEs are facing a most pressing problem of shortage of accommodation. The Government should identify ways to increase the supply of commercial buildings and shops, so as to cool the overheated market and enable property prices and rents, to stabilize so that prices and rents will gradually drop to an affordable level. Apart from reclamation, urban renewal and developing new land, the authorities should think out of the box and try new methods. For instance, given the shortage of space at the ground level, the Government may examine the development of underground space and underground cities. There may be a lot of technical barriers, yet there are more solutions than problems. Examining the possibility of one more solution will bring one more chance of finding a solution to the problem.

At present, most SMEs in Hong Kong look to our Motherland in the North and they attach great importance to the opportunities brought by CEPA. However, when Hong Kong merchants go to the North for development of business, they often encounter difficulties in coping with the difference in legal requirements and trade rules between the two places. The situation is described as "big doors opened but not the small ones". The Chief Executive has promised in the Policy Address the setting up of a joint working group specialized in assisting Hong Kong businessmen in solving problems and clearing barriers encountered in the implementation of CEPA. Moreover, the Chief Executive has said that support will be provided to Hong Kong business associations in LEGISLATIVE COUNCIL ─ 30 January 2013 5655 establishing sales and promotion venues in the Mainland. SMEs have aspired for such measures and arrangements for years, which the DAB has all along been urging the Government to implement. Now that some kind of direction for these two aspirations has been revealed, we earnestly hope that the Government will confirm the details expeditiously, so that the industries will know the details and benefit from it as soon as possible.

Recently, many people are discussing the concerns about parallel imports and Mainlanders coming to Hong Kong to compete for the purchase of infant formula and necessities, and the concerns have intensified the conflicts between residents in the Mainland and Hong Kong. However, in view of the desire of Mainlanders for quality goods from Hong Kong, we should grasp these business opportunities to expand the Mainland market. The Hong Kong Trade Development Council (HKTDC) may take the lead in this cause. It should identify suitable shopping malls or business and trade centres located in Mainland cities which offer good radiation coverage meet the prerequisite of convenient transport and sufficient space for accommodating sales and promotion units of various products. Moreover, ancillary facilities for financial, insurance, logistics and trading services should be available in the vicinity. The HKTDC will rent the place for Hong Kong businesses for the setting up of sales and promotion booths and distribution centres. The arrangement will enable Hong Kong-invested enterprises to attract retailers, wholesalers and agents in the Mainland and open up long-term business opportunities for sales co-operation with Mainland companies via negotiation on the one hand, and allow Hong Kong enterprises to promote their brands and products to Mainland consumers direct and understand the demand, spending power and market situation of the region on the other.

The tenure of lease for each enterprise should be limited, say from several months to half a year, so that new enterprises will have the opportunities to participate after some time. These sales and promotion or distribution centres may be set up at different time slots and in different cities, so that when the lease of a booth in one centre expires, an enterprise may move to another booth in other similar distribution centres. This will enable enterprises to look for business opportunities in different cities and expand their sales network.

Moreover, the Government should continue to promote the economic and trade co-operation between the two places to create more favourable conditions for SMEs to open up market in the North. It should also provide SMEs with 5656 LEGISLATIVE COUNCIL ─ 30 January 2013 information on policies and market of the Mainland to help SMEs to seize development opportunities in the Mainland.

Last year, the Government overcame all the difficulties to enact the Competition Ordinance, seeking to encourage competition and prevent monopolization. In fact, the most effective way to encourage competition and prevent monopolization is to assist SMEs. If SMEs can thrive well, there will be more choices and more competition in the market, and large consortia can no longer achieve monopolization. However, to enable SMEs to thrive well, the authorities must first secure adequate room of survival for SMEs, and then it should promote entrepreneurship by showing the prospects in the market to people interested in setting up their own businesses. At present, large consortia have already established solid dominance in the market, which SMEs can hardly challenge. Furthermore, SMEs can hardly afford the expensive rents arising from the inadequate supply of commercial premises in Hong Kong, and this has widened the gap between large consortia and SMEs. In this commercial race, SMEs have lost out at the starting line. In Hong Kong, we face not only disparity between the rich and the poor, but also ranking disparity between "bigwigs" and small businessmen, a barrier that can hardly be overcome. If the Government does not work hard to assist the SMEs and change this phenomenon, this rule of game on rigid ranking can hardly be removed and SMEs will hardly hold any hope of success.

In the private sector in Hong Kong, half of the employees are employed by SMEs. It is evident that the rise and fall of SMEs will have a great bearing on the job security of wage earners. If the Government wishes to preserve employment and improve the people's lot, it must ensure the sustainable development of SMEs.

The Chief Executive, LEUNG Chun-ying, has come under many criticisms since assuming office. However, in my view, despite the numerous difficulties, the Chief Executive may still handle issues he is capable of handling and achieve success. With the achievements thus made, the confidence of the public may be fostered. By then, he can pave the way for the ambitious plans and strategies for the future. This is the best approach. When we show our support for the Policy Address, we should at the same time give impetus to the Government by pointing out unequivocally the concerns which the Government should address but has indeed overlooked. We should avoid rendering blind support, which LEGISLATIVE COUNCIL ─ 30 January 2013 5657 will result in neglect in governance. By doing so, we are showing true and practical support to the Government.

The Policy Address this year has put forth many long-term targets in promoting economic development. The DAB agrees with these targets in principle, yet we hope that the Government will introduce more specific measures in assisting SMEs, particularly in addressing such problems as financing channels, surging rents and difficulties in operation, and so on. After the announcement of the Policy Address, the Budget will soon be announced by the Financial Secretary. We will wait and see what measures will be rolled out to assist SMEs.

With these remarks, President, I support the Motion of Thanks on the Policy Address.

MR ABRAHAM SHEK: President, I stand to speak for the "Motion of Thanks" moved by the Honourable Andrew LEUNG, but not without constructive criticism.

President, earlier this month, Hong Kong was again named the world's freest economy for the 19th consecutive year. This is evident of our effective and efficient economic and financial policies, enabling Hong Kong to withstand the worldwide economic and financial doldrums with a clean bill of health. While adhering to free market principles has been a key to Hong Kong's economic success, the Chief Executive's maiden policy speech seems to indicate a repositioning of this very cornerstone, in that the Government stated its intention to adopt an "appropriately proactive" approach by taking appropriate action to address economic problems in cases of market failure. In this regard, the Chief Executive highlighted, in paragraph 20 of his Policy Address, the "exploits" of proactive action that his Administration has implemented since he took office, with the introduction of the Buyer's Stamp Duty (BSD) cited as one of those.

It is a dangerous thing when, without a clear and objective delineation, the Government can solely determine what "market failure" is or is not, particularly when the Government is the one that least understands the market. This is a complicated subject to which even economics experts have diverse answers, as seen in the case of the BSD.

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In fact, it is a matter of finding a balance between "doing things right" and "doing the right things". Curbing speculation is right, but the BSD as it stands is wrong. A solution is needed to be found to minimize the ill effects of the BSD that is affecting a free market economy like Hong Kong.

President, the real estate industry supports the Government in checking speculation, but the crux of the problem lies in the inadequate supply of flats over the last five years and the solution to this is to increase supply, to increase supply and to increase supply. The Government deserves to be censured for confusing the concept of genuine housing needs with speculation. In theory, the Government can suppress speculation by increasing speculation costs and hence reducing the rate of return, but it is hardly possible to curb the genuine demand for housing units, as evidenced by the failure of the BSD introduced in November 2010 with a similar aim. The fact is that since the then BSD was introduced in November 2010, prices have risen over 20% to 30% compound. While the Administration is trying to suppress people's demand and hence property prices by the BSD, the recent strong market rebound has slapped the Administration in the face, and made clear that the BSD simply has not yet worked.

Although the Government claimed that it aims to reduce demand of non-Hong Kong permanent residents to purchase properties in both the primary and secondary markets, thus according priority to buyers who are Hong Kong permanent residents through the BSD, this is blatantly untrue, given that local companies run by Hong Kong permanent residents are not given exemptions.

Worse still, redevelopment projects by the private sector are expected to grind to a halt as the Administration tilts the balance intentionally or unintentionally in favour of the Urban Renewal Authority (URA), without paying due regard to the difficulties faced by the developers in redevelopment projects. Is this the business-friendly environment where all firms can compete on a "level playing field" which the Policy Address claims to maintain?

Furthermore, the BSD explicitly discriminates against foreign investors, which clearly has a negative impact on our well-established free market economy. Regrettably, the Government did not assess the possible consequences before taking this risky step, putting Hong Kong's free economy at a disadvantage. Compared to Singapore, though it is not a free economy as Hong Kong, the country is run under guided democracy, ours is different. If anything goes wrong, must the Government not be held accountable for that? The answer is LEGISLATIVE COUNCIL ─ 30 January 2013 5659 very clear. The present BSD measure is at best a short-term solution to a structural housing problem, and at worst, creates a crack for Hong Kong's economic foundation of a free open economy.

President, a peculiar feature of the Policy Address is the setting up of nine commissions, two councils and three task forces to help study issues in various policy areas. The public doubts that these new bodies will be effective and efficient ― prove us wrong. After all, the Special Administrative Region Government has long been criticized for "having endless discussions without making any decisions and making decisions without implementation" or "making the wrong decision", as in the case of the BSD.

The Chief Executive may have high hopes for the soon-to-be-established Economic Development Commission (EDC), which will work on overall strategy and policy to enhance the long-term development of Hong Kong from a high-level cross-departmental and cross-sectoral perspective, under the auspices of which the working groups from various industries will be set up. This is like "putting the old Donald TSANG's wine in a new 'CY' bottle". The public, however, takes it with a pinch of salt. President, as you may recall, former Chief Executive Sir Donald TSANG announced in his 2008-2009 Policy Address the establishment of a Task Force on Economic Challenges, which was chaired by the Chief Executive and composed of elites from the academic and business sectors. The former Chief Executive even asked the Central Policy Unit ― that was a very efficient one then ― to arrange a series of focus group discussions with the participation of trade representatives, academia, researchers, task force members and government officials. Nonetheless, apart from suggesting the development of the six new industries, which still remain at an embryonic stage of development, if not purely academic, no notable achievements from this Task Force ensued. If this is déjà vu all over again, what can the public expect from the EDC except for the commencement of another series of regular "blah-blah-blah" meetings to be followed by a no-one-will-care conclusion report which several years later will be done from scratch all over again?

By the same token, the Financial Services Development Council (the Council) has drawn fire for its indefinite composition and functions. As rumours continue to spread, the capable Mrs Laura CHA tried hard and tried exceedingly hard to alleviate the financial sector's misgivings and the community's suspicion regarding this ill-perceived "white elephant".

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Despite the very well presented argument of Mrs CHA, yet there are still many unanswered questions, President. If this will be just another think-tank organization without genuine power, what was the point of the Chief Executive mentioning it in the Policy Address and giving it a high profile? Why will this body not be formed like other statutory bodies which are subject to the direct scrutiny of the Legislative Council, the public auditor and Ombudsman, but rather in a covert way as if it had some hidden agenda?

Although the Council has set out five areas to study, including the financial services development, I have not seen representatives from the small to medium-sized banks being represented there. Are they not important? They represent the backbone of all the small and medium enterprises. The other study involves the opportunities on the Mainland, new businesses, market promotion and human resources. Will all these overlap with the already well established roles of the Bureau, the effective Monetary Authority (MA), the autocratic Securities and Futures Commission (SFC) and the business-friendly Hong Kong Trade Development Council (TDC)? And how will the work of the Bureau, the MA, the SFC and the TDC be affected as the Council scrambles for their resources and power?

As distrust and misgivings about the Council have prevailed since the very day it was born, it is really difficult for it to grow further. What can people expect it to achieve? At the end of the day, President, it might only be another inflated bubble soon to be burst and vanished without a trace. Finally, with the proposed support of manpower directly from the Bureau, the SFC and the MA, as I said earlier, the Council should be subject to the supervision of The Ombudsman and the Director of Audit.

President, as a renowned metropolis, Hong Kong's economic success lies in its adherence to free-market principles, a business-friendly environment, and a level playing field among other things. The Government must weigh and consider whether it is wise to risk sabotaging this well-established foundation, even if it is out of "good intentions". On the other hand, though consultation and advisory bodies can be helpful to policy planning, the Government must bear in mind that quantity does not mean quality, and that it is even more imperative to get rid of the old habits of the being "indecisive" and "capricious". Hitherto, President, the economic and financial wellbeing of our economy, under the helmsmanship of our capable Financial Secretary and his team, has yet to be soiled by politics. Keep it that way. Do keep it that way, for we are the LEGISLATIVE COUNCIL ─ 30 January 2013 5661 world's number one not without a reason: We are number one because there is no politics involved, and we Hong Kong survive economically and financially.

Thank you, President.

MR CHRISTOPHER CHEUNG (in Cantonese): President, the Chief Executive, Mr LEUNG Chun-ying, delivered the first Policy Address in his term. Although it is not entirely satisfactory in such areas as housing, poverty alleviation and constitutional reform, and there is a lot of room for improvement, I think that in respect of economic development, it is generally acceptable.

President, I am fully aware that the economy and people's livelihood are closely intertwined. Economic development and improving people's livelihood are subjects of great concern to all sectors of society. Even as the Hong Kong economy is thriving, the policy on social welfare should also be further improved. It is incumbent upon us to provide support to the underprivileged in Hong Kong society.

Hong Kong is an international financial centre. In the face of the opening up of the market in China, business opportunities for the financial industry in Hong Kong are unlimited. The Chief Executive also pointed out in the Policy Address that in the future, we will consolidate and expand our offshore Renminbi (RMB) business and consolidate our leading role as the asset management centre in the Asia-Pacific Region. We think that this is a correct goal.

In the Policy Address delivered by the Chief Executive, mention was made of the future development policy for the financial industry in Hong Kong and some of the proposals are already hackneyed ones, just like the reflections of the moon in water and flowers in a mirror in that they are beautiful but unattainable. To the local securities industry, they are tantamount to allaying one's hunger by painted cakes and quenching one's thirst with imaginary plums. The financial services policies proposed in the Policy Address are hollow and remain at the level of chanting the slogan of working in tandem with the internationalization of our country's financial market, so they are short on clear and specific policy objectives and strategic thinking.

The global financial market nowadays is volatile and under the development trend of globalization, Hong Kong is facing ever keener 5662 LEGISLATIVE COUNCIL ─ 30 January 2013 competition. The financial and securities markets on the Mainland are also developing at high speed and the international financial markets in Shanghai and Qianhai in Shenzhen are developing in leaps and bounds. The development of the financial market is like a boat sailing against the current in that we must forge ahead or be swept downstream. Friends in the financial sector hope that the Government can point out to us the direction in which we should strive and take charge of this large ship called Hong Kong in sailing full steam ahead. However, the Government's Policy Address has fallen somewhat short of our expectations. We want to see the Government to putting forward specific and feasible policies rather than an elusive mirage.

Mainland financial institutions, such as banks and securities and futures companies, are entering the Hong Kong market one after another, whereas financial institutions in Hong Kong have difficulty in entering the Mainland market. Despite many years of discussion, the Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA) has yet to yield any result.

At present, the development of Qianhai is progressing at full throttle but the communication between the securities sector and the authorities in Qianhai has still remained at the stage of discussion and observation. We in the sector hope that in the discussions with the relevant authorities on the Mainland, the Hong Kong Government can strengthen communication with the financial sector and take on board its views, so as to promote and expedite bilateral co-operation.

Given the development trend of the opening up of the financial market in China and the internationalization of RMB, the financial industry in Hong Kong will face a completely new environment. All these require our Government to make critical assessment of the situation with ground-breaking new thinking, so as to lead the financial business in Hong Kong in moving forward.

President, I believe the Government also understands wherein the crux of the problem lies. On the acceptance by the Chief Executive, Mr LEUNG Chun-ying, of the proposals put forward by us in the financial sector and the announcement made by him in the Policy Address on establishing a Financial Services Development Council (FSDC), we in the Business and Professionals Alliance for Hong Kong (BPA) supports his initiative. The Chief Executive pointed out in the Policy Address that the newly-established FSDC would provide a professional and effective platform for stakeholders to focus on examining ways to complement the internationalization of our country's financial market, further LEGISLATIVE COUNCIL ─ 30 January 2013 5663 develop Hong Kong's financial industry, including promoting the diversification of Hong Kong's financial services industry and elevating Hong Kong's position as an international financial centre among our neighbouring countries, and put forward views and recommendations to the Government. We consider this desirable. We hope that the FSDC can consider issues more from the angles of market development, product development and the financial sector and complement the existing policies of government departments in charge of financial affairs, so as to promote the development of the financial markets in Hong Kong.

I believe that on the basis of maintaining Hong Kong's position as an international financial centre and Hong Kong's competitiveness, importance should also be attached to the balanced development of the financial market in Hong Kong. The Chief Executive has not shown any concern about the deteriorating business environment of local small and medium securities dealers. Local small and medium securities dealers play a pivotal role in the financial market and also represent a class important to the stability and prosperity of Hong Kong society. However, we find that the development and importance of small securities dealers have been overlooked for a long period of time. Although the financial market in Hong Kong is developing at high speed and the market value of the Hong Kong market has doubled to about $22,000 billion at present, the market for local small and medium securities dealers is contracting all the time. Currently, the some 400 Category C securities dealers account for only about 10% of the market share, whereas the 65 medium and large financial institutions account for close to 90% of the market share.

We hope that the Government can address squarely the problems faced by small and medium securities dealers. Since the reunification, the rents for properties have increased several-fold and wages have also risen substantially. However, the major source of income for securities firms, that is, commission, is equal only to a quarter of that before the reunification. Under the rapidly deteriorating operating environment for local small and medium securities dealers, these securities dealers are winding up one after another. We hope that the Administration can face up to the gravity of the problem. Is it not necessary for the Government to look in earnest into the reasons for the closure of these SMEs? Is it not necessary to review whether or not the present financial policy is inappropriate? Should the policy not be adjusted when necessary to avoid even greater policy mistakes?

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We hope that the direction of development of the financial market and the formulation of policy in the future will enable members of the financial industry in Hong Kong and the market to develop in a balanced manner, so that members of various backgrounds can all play a part in market development fairly and equitably. This will be conducive to the healthy growth of the financial market in Hong Kong. Local small and medium securities dealers do not need any special favours from the Government. We are only asking the Government to provide a level playing field, so that securities dealers, be they large, medium or small ones, can all find room for development.

President, we believe that the officials in charge of financial affairs in the Hong Kong Government have vigour and an international outlook. I also believe that the Chief Executive, Mr LEUNG Chun-ying, has the will and ability to carry out reforms and that he is someone with new thinking. We in the sector have confidence in Hong Kong's prospects and high expectations for the Government.

President, I so submit.

MR JAMES TIEN (in Cantonese): President, I saw the Financial Secretary in the Chamber just now but perhaps he has left. The Financial Secretary and several Secretaries have listened to our speeches with great attention. I believe the Financial Secretary is anxious about whether or not various political parties would support the Motion of Thanks on the Policy Address. President, I will first give them a piece of good news. For many years, the Liberal Party has always supported the Motions of Thanks, which are ceremonial motions. Please put your mind at ease. We will vote in favour of the Motion of Thanks and oppose the other amendments.

However, supporting this motion does not mean that we support the proposals in the Policy Address. President, the first session is on economic development and the Liberal Party thinks that in terms of economic development, the Policy Address this time around has nothing impressive to offer. Most of the subject matters revolve around housing, poverty alleviation, healthcare and environmental protection. All of these are very important subjects but in economic development, the business sector or SMEs only care about two points the most: First, in finance, the Financial Services Development Council (FSDC) will be established. President, initially, I thought that it would be assigned LEGISLATIVE COUNCIL ─ 30 January 2013 5665 actual functions but according to the authorities' explanations now, it seems that it has become an advisory framework. In addition, regarding the Economic Development Commission (EDC), it is evidently an advisory body with four Working Groups under it, one of them being related to tourism. I find this very strange. Currently, there are the Commissioner for Tourism and the Hong Kong Tourism Board (HKTB) and now, the EDC will be established on top of them and a Working Group under it will also concern itself with tourism, so is this not an overlapping and cumbersome structure? What conclusions will be drawn after carrying out consultations in this regard?

If we look at this matter in a positive light, the business sector believes that in respect of economic development, the Government should not interfere too much and should not poke its nose into anything. It can just carry out consultations, with the FSDC carrying out some consultation and the EDC carrying out some others and that will be fine. The longer the time it takes to carry out consultations, the longer there will be no interference. Without interference, we in the business sector can be left to operate on our won. In that event, given the present adverse conditions, we may be able to fare better.

President, many overseas chambers of commerce and banks have told us that the economic outlook this year, particularly that in Europe, is most uncertain. Although the situation in the United States has stabilized somewhat, on the whole, in the financial industry, which is one of our four major economic pillars, the value of IPOs in 2012 fell sharply and the figures of stock transactions also fell very sharply. We also believe that this year, the financial industry will just tend to remain stable and see little growth.

The second area is imports and exports. We can see that the Kwai Chung Container Terminal now ranks the third in the world but some 10 years ago, we were in the first place. Exports figures are falling all the time. Of course, Mr Frankie YICK also gave the reasons for this just now: The shortage of container truck drivers, the shortage of cargo vessels at the container terminal, together with many other reasons, such as soaring costs, have made the performance of the imports and exports through our Kwai Chung Terminal not as outstanding as before.

The third area is of course real estate. Ever since the two policy measures called BSD and SSD were introduced, one can see that property transactions …… in particular, the SSD has caused a sharp drop in transactions in the secondary 5666 LEGISLATIVE COUNCIL ─ 30 January 2013 market and initially, we did not anticipate this, thinking that this stamp duty called SSD would be able to stabilize the property market. However, strangely, we found that after this stamp duty had been implemented for several months or a period of time, the number of transactions fell very sharply but prices did not see any significant drop. In the past, investors may sell their properties for a profit after letting them out for half a year or a year but now, since it is necessary to pay so much in duty, they would forget about this and continue to hold their properties for two or three years. As a result, while the number of units offered in the market has decreased, the number of people seeking to buy properties remains the same. As a result, property prices have risen instead of falling. Some commentaries consider that the Government has done a disservice. From the angle of property buyers, it has done them a disservice. Of course, with regard to the other new measure of BSD, given the special circumstances now, its introduction is necessary and the Liberal Party also supports it. However, we believe that a balance has to be struck with Hong Kong's position as a world-class city and international financial centre. This duty smacks of protectionism, that is, if foreigners come to buy our properties, so long as they are residential properties, this duty is payable. If it is introduced in response to the exigencies of the moment, it is still justified for the time being but if it is implemented for an extended period of time, it may not be desirable. Certainly, the Government may say in response that this kind of tax is also in place in Singapore and Macao. However, we can also query why no comparison is made with New York, London, Paris and Tokyo. The Government may yet again reply that similar measures are also being considered in London. In such cities as Beijing and Shanghai on the Mainland, this measure is implemented and one is only allowed to buy a certain type of properties. The purchase of a second property by non-Beijing residents is practically prohibited. Such measures would impede free economy, so we believe that the Government has to handle them carefully.

President, since Secretary Gregory SO is here, I as Chairman of the HKTB would like to talk about the tourism industry. In the past six years, the number of visitors to Hong Kong has increased from 26 million in 2007 to 48 million last year. This is a very significant increase but at the same time, we also noticed that although the promotions made by us are global in nature, with one third of the resources being used on long-haul visitors from Europe and America; one third of the resources being used on Southeast Asia and only one third of the resources being used on promotion on the Mainland, the result is that the number of Mainland visitors has been rising year on year, with rates of increase ranging LEGISLATIVE COUNCIL ─ 30 January 2013 5667 from some 10% to 20% and now, the rate has even reached 72%. The overall number of visitors to Hong Kong has reached 35 million passenger trips. In the last couple of years, we noticed that there was an economic downturn in Europe, the economy in the United States remained poor and the economy in Southeast Asia was passable. But the performance of the Mainland economy has been the best, so naturally, the number of Mainland visitors has increased significantly. As regards the trend in the next couple of years, we estimate that the economy of the Mainland will continue to see a growth at 8%. This is only a rough figure and if Europe does not experience negative growth, it can already be considered to have done well and this is also the case with the United States. Therefore, in the next couple of years, Mainland visitors will still make up the bulk of the increase in the number of tourists. In this regard, the Government really has to strike a balance. At present, Mainland visitors are bringing economic benefits to Hong Kong. Take 2012 as an example, such economic benefits amounted to $300 billion. These economic benefits have provided employment opportunities to many members of the grassroots. From the catering sector to the retail and transportation sectors, all of them have benefited and this is also one of the major factors contributing to the fall in unemployment rate to 3.3%. However, it is also necessary to strike a balance with the situations seen in the streets, for example, one may not be able to book a place anywhere, such as restaurants and with regard to shopping, goods may all be snatched up by Mainland visitors, thus leading to shortages. In extreme cases ― take the recent situation involving formula milk as an example ― many members of the Hong Kong public are actually feeling very helpless and keenly concerned about this problem.

Can the Government do a better job in respect of the several issues that we care the most? In this regard, I hope the Government can do whatever it can. Of course, we believe that at present, the biggest bottleneck relating to tourists is the shortage of hotel rooms. Since July last year, the Government has auctioned off several sites for the construction of hotels but unfortunately, in the past few years, the supply of hotel sites has been nil. The supply was indeed minimal. We estimate that in the next few years, that is, from 2014 to 2015, the number of rooms can only increase by 2 000 to 3 000 each year, so this is far from adequate to cope with the demand arising from the estimated increase in tourists. In fact, the Government is perhaps powerless to do anything. The proportion of visitors staying overnight may continue to fall, whereas the proportion of visitors not staying overnight, with the exception of itinerant traders, will continue to increase.

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Secretary Gregory SO, on the issue of itinerant traders, I hope the Government can differentiate between tourists and the so-called itinerant traders. If the public's impression is that the Individual Visit Scheme can be equated with the "multiple entry permit scheme" and itinerant traders, it would be very difficult to deal with the present situation relating to the purchase of formula milk. I think the Government should differentiate genuine tourists from itinerant traders and regard the latter as engaging in illegal black market activities, that is, illegal labour, because they are paid to work in Hong Kong. Alternatively, the customs authorities on the Mainland and that in Hong Kong can levy a duty on the formula milk brought back to the Mainland, so that itinerant traders cannot make any financial gain. I believe this can reduce the number of itinerant traders.

Of course, we have also pointed out that the concept of "multiple entry permit scheme" is intended to allow residents living in cities in northern China or those not living in cities in Guangdong to travel to Hong Kong after being granted permits and spare them the need to return to their place of residence, for example, Beijing, to obtain a permit for each and every trip. However, we do not expect them to travel to Hong Kong several times a day or to come here today and return tomorrow, then come again the day after. This problem is found only in Shenzhen. In view of this, in respect of "multiple entry permits", is there any effective way to allow the some 2.4 million Shenzhen residents to travel to Hong Kong only once daily, rather than several times daily? The reply of the Immigration Department is that it would be difficult to do so. However, we think that from the angle of security, since there are records on the number of times a person has passed through the checkpoints, so if the authorities know that someone has come to Hong Kong in the morning, how can they possibly not know that this person has left Hong Kong in the afternoon, then comes back again in the evening? I think it would be absolutely feasible to do so if we want to because the HKTB has looked at the figures and found that for genuine tourists on pleasure day trips to Hong Kong, they do not have to go back in the afternoon after coming here in the morning, then come back again in the evening. Among the people who make use of this measure of "multiple trips daily", over 95% of them are itinerant traders. I think it would be most desirable if this problem could be dealt with.

President, I wish to talk about several matters relating to the economy. Many SMEs are very concerned about the Chief Executive's stated intention to establish a Special Committee on Standard Working Hours to conduct studies. I know that this subject has put the Government in the crossfire because many LEGISLATIVE COUNCIL ─ 30 January 2013 5669 other political parties, in particular, political parties affiliated with the labour sector, think that standard working hours can provide protection in terms of working hours to employees. However, in fact, on this issue of standard working hours, the business sector, in particular, SMEs …… at present, the service industries are the mainstay of Hong Kong, that is, the manufacturing industry are no longer the mainstay, nor is office work. If we really exempt the service industries, take Korea as an example, over 60% of the workers there are exempted, involving some 10 to 20 service industries. The remainder is factory workers. However, there are no large-scale factories in Hong Kong, no Samsung as in Korea, nor do we have any factories manufacturing mobile phones or cars. The number of workers in the service industries in Hong Kong is even larger. If the proportion of workers exempted is exceedingly large, what is the point of enacting such legislation? In the event that it is not possible to enforce the law, this would only result in more disputes between employers and employees. Therefore, we think that if it is necessary to study standard working hours, this should not be implemented after the relevant study. Rather, a neutral attitude should be adopted when conducting the studies and we should look at whether or not standard working hours should be implemented and whether it is feasible given the prevailing economic situation of Hong Kong only after the studies have been completed, then make a final decision.

President, the Chief Executive said in his initial manifesto that "the supply of industrial and commercial premises cannot catch up with the needs of economic restructuring and upgrading, resulting in higher rental and operating costs for SMEs". However, we found that in the Policy Address of this year, all passages were devoted to housing. We found that in the speech lasting 40 minutes, everything was about public rental housing and Home Ownership Scheme units. I wish to remind the Government that of course, it is necessary to care about the living conditions of the people, from such issues as public housing and HOS flats, through "Hong Kong property for Hong Kong people" to the acquisition of properties by Hong Kong people, however, there are also some matters related to the economy, including offices, shopping arcades and hotels. We hope that in the process of finalization, a balance with commercial demand must be struck. One of the reasons for the high rents at present is the shortage of shopping arcades. How can additional shopping arcades be built? Since the construction of shopping arcades often takes several years, if no effort is made now, there will be a shortage of hotels in the future. What I mean is in five to 10 years' time. If the shortage of offices and shopping arcades persists in the future, our society will become imbalanced. Although the public will have solved their 5670 LEGISLATIVE COUNCIL ─ 30 January 2013 housing problems, what would Hong Kong's competitiveness be like in terms of employment? Are Grade A offices or shopping arcades sufficient? When tourists come to Hong Kong, they would find that the room rates of hotels are as fickle as the prices of fresh seafood and now, it is already difficult for them to find a decent hotel room charging a fee of $1,000 or less, so they are forced to stay in Shenzhen. In fact, this is unfavourable to us.

President, since I really want to talk about poverty alleviation and speak in the session on housing, in view of the present arrangement on the debate themes, I will speak again in the next session. Since the Financial Secretary has returned, I want to repeat what I said at the beginning: The Liberal Party will support the Government in respect of the Motion of Thanks. I hope the Financial Secretary will be happy to hear me say so. As regards the other criticisms voiced by us, I hope they will be put on record. Thank you, President.

MR MA FUNG-KWOK (in Cantonese): President, the Chief Executive, Mr LEUNG Chun-ying, has delivered his first Policy Address and according to the Rules of Procedure of the Legislative Council and past conventions, a ceremonial motion is to be moved to express thanks to the Chief Executive and give Members an opportunity to express their views on the Policy Address. For this reason, I now speak in support of the motion and express my views on the Policy Address. I do not agree with the actions taken by some Members to propose amendments to express their aspirations, so I will not support any of the amendments.

President, Mr LEUNG devoted quite a number of passages to discussing economic development as well as housing and land supply. On economic development, I fully agree with the concept of "appropriately proactive governance" proposed by Mr LEUNG. It was due to the Government's embrace of the dogma of active non-intervention that it had neglected the active roles that it could play, thus indirectly leading to the unitary development of the Hong Kong economy and as a result, economic growth cannot radiate out to all members of the public. Therefore, on the establishment of the Economic Development Commission to formulate an all-round industrial policy and promote diversified economic development, generally speaking, such a direction is worthy of our support. It can be said that the cultural and creative industries were not neglected and managed to make their way into the Working Group for LEGISLATIVE COUNCIL ─ 30 January 2013 5671

Manufacturing Industries, Innovative Technology and Cultural and Creative Industries. This is precisely the area on which I intend to focus my discussion.

President, if we wish to develop the cultural and creative industries, the space and resources required cannot be overlooked. For many years, due to the heavy skew of the land policy towards real estate development, various trades and professions within the creative industry have been subjected to a great deal of oppression. This includes the increasing squeeze on and the erosion of the space for the cultural and artistic creative activities resulting from the policy of revitalizing industrial buildings. Cinemas, at the forefront of contact between the film industry and the audience, are also gradually decreasing in number and replaced by boutiques and shopping arcades. In these circumstances, how can we talk about the development of the film industry? At present, the locations of book stores are experiencing a three-dimensional shift. They are either located farther away from the ground floor, or tucked away in inconspicuous corners in shopping arcades, or have even disappeared altogether from busy urban areas. The scale of the so-called "Comix Home Base" to be completed soon is, in contrast to any of the industrial bases of this type on the Mainland, just as a grain is to the ocean and perhaps it would be more fitting to call it by the proper name of "Comix Studio". To change the present situation and avoid attaching importance only to the housing problem, the land policy must be adjusted and it is necessary to formulate appropriate measures targeting various industries, so as to turn the tide. It is only in this way that vitality can be instilled into the cultural and creative industries.

I came from the film industry, so I care a lot about the development of the film industry. One important subject on the agenda is the training of talents and passing the Hong Kong film industry on to its successors. Recently, in the film The Grandmaster, the character of old master GONG Bao-sen made a cogent remark, "So long as I have one last breath, I will light a lamp. With the light, people will come.". In fact, people devoted to the film industry also hold the same conviction. So long as they have one last breath, they will light a lamp, hoping that the film industry in Hong Kong will have successors and continue to shine brightly.

The film industry needs new blood and new blood needs opportunities. In the past decade or so, with the contraction of the film industry in Hong Kong, many members of the industry have gone to the Mainland, where the film industry is developing all the time, to look for development opportunities. 5672 LEGISLATIVE COUNCIL ─ 30 January 2013

However, to rookies, no matter if they work on the screen or behind it, all these opportunities are just so distant as to be unattainable. In the end, these newcomers either left quietly or persevere in the face of difficulties, waiting quietly for opportunities.

Therefore, regarding the proposal in the Policy Address on introducing the "First Feature Film Initiative" under Create Hong Kong to provide opportunities to newcomers, it is a proposal put forward by me six or seven years ago, so such a direction merits our approval. However, the industry generally feels that the vigour of the initiative is not strong enough and that it is necessary for the Government to prescribe an appropriate assessment mechanism in order to attain the goals of the initiative, as well as making the initiative a pilot measure. Then after the accumulation of experience, it will be necessary to dial up the vigour and implement the initiative on an ongoing basis.

Some members of the film industry are working for and advocating the "return of the film industry". They advocate that Hong Kong should be used as the base of the film industry again, so that some films can make a comeback and be produced in Hong Kong, and workers in Hong Kong can be hired and the post-production work can also be done in Hong Kong. The return of the film industry to Hong Kong does not mean that only films about Hong Kong should be produced, rather, it is about the return of the whole industry. In fact, the economic development on the Mainland has resulted in ever rising production costs for the Hong Kong film industry and there are also some restrictions on content. As a result, the Hong Kong film industry has begun to attach increasingly great importance to competitiveness and the return of the film industry to Hong Kong has become possible. Through making efforts, the production of films on various subjects and geared towards various markets can all return to Hong Kong, so as to provide new job opportunities to local talents who work on the screen or behind it. However, without any policy support from the Government, in particular, support in terms of land policy, it would be very difficult to make this wish come true.

In the new film Life of Pi produced by the Taiwanese director, Ang LEE, more than 70% of the filming locations were situated in Taiwan and a large number of local workers were recruited. To achieve this, the vision of the director, Ang LEE, was certainly important but the co-operation of the Tai Chung City Government was also indispensible. Therefore, if we want to facilitate the return of the Hong Kong film industry, the enthusiasm of the film industry is the LEGISLATIVE COUNCIL ─ 30 January 2013 5673 fire and the support of the Government is the oil. Both of them have to play their roles in order to light the lamp.

President, the furore over DBC illustrated the fact that the promotion of digital broadcasting is more difficult than imagined. From the experience of other regions, it can be seen that if digital radio stations want to compete with conventional analog broadcasting, the challenge would be very great. In fact, if we want to change the habits of the audience of radio stations, additional incentives are required. According to the latest information from market surveys, last year, the digital broadcasting radios sets sold in the market numbered only at 100 000 and the coverage of digital radio stations was only 70%. Judging from these figures alone, it can be seen that there is still a great deal of room for improvement in respect of the infrastructure for digital broadcasting. How is the Government going to promote the development of the sector, so as to retain Hong Kong's reputation as the broadcasting hub of the Asia-Pacific Region? Where is the "Digital Audio Broadcasting Steering Committee" which, it was said, should have been established in 2010? The Government should give a clear account of all of these matters to the public.

With regard to the development of the television industry, I support the Government in issuing additional free-to-air television licences to create a fair, reasonable and competitive market environment, so as to promote healthy competition among industry players, provide more job opportunities, give viewers more choices in programmes and provide a new platform for the development of other cultural and creative industries. This has all along been the scene that the industry and the public hope to see, which is also crucial to consolidating Hong Kong's position as the broadcasting hub of the Asia-Pacific Region.

All along, the industry has been debating incessantly whether or not the size of the market could be enlarged after the issue of licences. It is only right for the Government to give explanations to the public after collecting sufficient data, but despite being asked such questions a number of times, the Government's response was only to remain silent. A decision cannot be made despite the passage of three years, so from the angle of either the efficiency of the Government or the capability of the policymaking mechanism, such a situation is far from satisfactory. I believe it is necessary for the Government to make a decision and give an account to the public at an early date.

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President, the publishing industry is one of the industries that is greatly disappointed by the Policy Address. Not only is the Policy Address short of mention of the development of the industry, there are also no specific support measures, still less a response to the demands of the sector. So this has fallen far short of the claim made by the Chief Executive in his manifesto, that he cares about the industry.

In fact, the popularity of tablet computers and the expansion of the e-publishing market are challenges that publishing industries all over the world have to face. In the present market when print books and e-books co-exist, on such issues as how the publishing industry in Hong Kong can keep tabs on changes in the print book market, tap the e-publishing market and seize new opportunities in it so as to meet the demands of readers for various formats in various markets, it is necessary for the industry to upgrade and take corresponding actions in such areas as technology, management and market operation and for the Government to support such efforts.

Meanwhile, the Government has made a great deal of effort in recent years to develop e-learning, so as to enhance the effectiveness in education. To the local e-publishing sector, this is a development opportunity. I hope the Government can communicate more often with the sector, listen to their views more often, roll out policy measures at an early date and avoid inciting conflicts among stakeholders, so as to help take forward the development of the industry and bring about a win-win situation.

President, the music circle in Hong Kong was once highly influential. There was a time when urgent meetings had to be called to launch rescue operations if the sales of a new album was less than 5 000. However, nowadays, if the sales of a new album can reach such a figure, record companies may have to throw a banquet in celebration. There are many reasons for the adversities faced by the music circle, but the principal reason is the advent of new technologies that make copying and downloading very convenient, But this has denied members of the industry reasonable returns, thus impacting on the mechanism for the industry to recoup its investments and affecting the virtuous circle of business operation. There is an urgent need for the Government to update the statutory protection for intellectual property rights in a timely manner. I hope the Government can propose amendments to the Copyright Ordinance again as soon as possible, so as to align it closely with the international trend and protect the ecology for the survival and development of the music industry as well as other LEGISLATIVE COUNCIL ─ 30 January 2013 5675 cultural and creative industries, thereby upholding Hong Kong's reputation in the protection of intellectual property rights.

President, in developing the cultural and creative industries, we must note the fact that the Mainland has gradually become the market with the greatest development potential. The Government must seize the opportunities presented by the strategy of "great prosperity and great development of culture" proposed by the Central Government, assist the industry in opening up the channels of entry into the Mainland market, eliminate the obstacles that still exist, help the industry in seizing such opportunities and at the same time, assist the industry in enhancing its operational and competitive capability, so as to cope with the challenges that will arise in this course.

President, Hong Kong has the characteristic of having the best of both the Chinese and Western cultures and to visitors, it has the appeal of being pluralistic, which is something that we can develop. Last year, the number of visitors to Hong Kong broke the 48 million mark, representing an increase of 16% over the previous year. Those from the Mainland accounted for 71% of the total and quite a number of them were itinerant traders. An increasing number of public views have expressed the concern that the spending power of this new group of visitors under the Individual Visit Scheme is no longer comparable to those who came initially and that the excessive number of visitors has also resulted in instances of overloading in space and the complementary transport facilities in many areas, thus leading to conflicts. Originally, the development of tourism should only bring benefits and no harm to Hong Kong but in the past, the Government adopted the approach of extensive development in tourism, so there was a lack of detailed economic planning, nor has any timely review been conducted. In the future, it must roll out some timely measures to prevent an otherwise good initiative turning sour.

I agree with the measures proposed in the Policy Address to promote cruise tourism and attract high-yield tourist segments. I believe the Government should carry out long-term planning: First, it must study and assess the potential and function of tourism in driving economic growth; second, it must review how the existing hardware and transport facilities can cope with the large number of tourists and third, it must ensure that on the premise of assured sufficient capacity, the measures and strategy on visa issuance are enhanced, the complementary software is upgraded, eco-tourism is developed and more cultural, artistic and sports events are organized and developed. As regards the 5676 LEGISLATIVE COUNCIL ─ 30 January 2013 monitoring mechanism for the tourism industry, which is being reviewed by the Government, I believe we should keep abreast of the times, so this move should be approved. However, we must accord top priority to protecting visitors' rights, and meanwhile, raise the standard and quality of services in the sector.

President, the Policy Address has expressed some reservation about the industrialization of education and healthcare services proposed by the last-term Government. I believe our industries have been too homogeneous rather than diversified in the past. It is necessary to review all industrial policies at an appropriate time. Without making serious assessments or improvements, or sorting out wherein the problems and difficulties lie, one should not talk rashly about changing the policies. Otherwise, this would give an impression of being immature and rash.

With these remarks, I support the motion.

MR DENNIS KWOK (in Cantonese): President, the title of this year's Policy Address is "Seek Change Maintain Stability Serve the People with Pragmatism". On first hearing it, it seemingly echoes the "treading the right path and striving for change while preserving stability" proposed in LEUNG Chun-ying's manifesto. However, as soon as we look at the specific proposals, we will find that the goods do not match the description. The so-called "seek change" is only to recapitulate and repackage the policies of the previous Government. He has failed to honour a number of promises that he made to all members of the public while running in the election, for example, not to give the real estate hegemonists a free rein anymore, to curb the property market, to listen humbly to the views of the public, to expedite the completion of 35 000 public housing units, to enacting legislation on standard working hours, an archive law and even a law on freedom of information, and so on. All these promises have not been honoured in the Policy Address.

Even if we assume that LEUNG Chun-ying had no manifesto and had no need to honour any promises, as the Chief Executive, he is still duty-bound to face up to the demands of the public and respond to them. All members of the public were concerned about what striking measures would be proposed in the Policy Address, but it turned out that the Policy Address delivered by LEUNG Chun-ying is only old wine in a new bottle, so this makes one doubt if he has lost the will and ability to govern Hong Kong. However, if we take a better look, we LEGISLATIVE COUNCIL ─ 30 January 2013 5677 will find that LEUNG Chun-ying has an even more serious problem: Not only has he copied from Donald TSANG, he has even totally misunderstood where the crux of the problem is. LEUNG Chun-ying has said a number of times that the policy on housing has "top priority" in the work of the Government but in the Policy Address, the first policy area mentioned is not housing but economic development.

Why is the "top priority" in the work of LEUNG Chun-ying put in second place instead? In fact, some hints can be found in the introduction to the Policy Address. Paragraph 3 of the Policy Address says, "As long as we keep focused on development, avoid feuds and strive for results, Hong Kong will be able to sustain its economic growth. As long as we have a proactive government and well-planned industrial policies, people from different backgrounds will have the opportunities to realize their potential, and young people will be able to put their learning to good use. With sustained economic growth, we will be able to properly address our housing, poverty, ageing population and environmental problems." Judging from this rationale of the Chief Executive, LEUNG Chun-ying, to him, economic development is the solution to all problems.

To LEUNG Chun-ying, it seems that so long as a good job is done in respect of the economy, other problems, such as those related to housing, poverty, the ageing population, constitutional reform and the environment, can all be solved instantly. But is this really the case? At present, the Hang Seng Index has surged past 23 000 points, property prices have surpassed the peak in 1997 and the unemployment rate is 3.3%, have the public experienced any improvement in their living though? Is it easy for the public to buy their own homes? Has the number of the poor seen any decrease? Has the problem of an ageing population been solved? Has the air quality seen any improvement? SMEs are the economic pillar of Hong Kong and they account for 98% of all business organizations. They are the major stakeholder in driving Hong Kong's economic restructuring, promoting social mobility and rebuilding the social ladder. They play a very important role, but how much support are they given in the Policy Address?

Just like Donald TSANG, in this Policy Address with more than 200 paragraphs, LEUNG Chun-ying only devoted a short paragraph to the policy on supporting SMEs. In the some 200 words therein, the Chief Executive only rehashed some of the support schemes passed down from Donald TSANG, but with regard to the rising prices of raw materials, office, factory and shop rentals 5678 LEGISLATIVE COUNCIL ─ 30 January 2013 and the costs in various areas, as well as the policies that make the operation of SMEs increasingly difficult, not a single word was said of them. As regards enhancement of the training schemes designed to support SMEs, LEUNG Chun-ying even turned a blind eye to them and did not mention them in any way. To SMEs, this Policy Address has delivered nothing.

The problem before us now is that no matter how good the Hong Kong economy is, it seems the public cannot share the fruits of economic growth. What is more, when the economy develops at too fast a pace, the public will even fall victim to it. The main reason for this phenomenon is the monopolization by the consortia and the skew towards the property and financial sectors back then, which has led to the increasing imbalance in economic development. At the same time, employees, small businesses and SMEs cannot share the fruits of economic development. We sincerely advise the LEUNG Chun-ying Administration to really address the people's pressing needs, take practical measures, listen to the aspirations of the public humbly and face each problem squarely, rather than follow in the footsteps of the former Chief Executive by attaching greater importance to those consortia and turning a blind eye to SMEs. Economic growth is certainly important, but it definitely is not a panacea. I hope LEUNG Chun-ying would not be so naïve as to think that leveraging on economic development alone, all problems can be solved.

President, I so submit.

MR YIU SI-WING (in Cantonese): Tourism has all along been one of Hong Kong's important industries, with the number of employees currently engaged in tourism-related trades and industries reaching 210 000, and spending related to in-bound tourism exceeding $300 billion. This proves the effect of tourism on promoting economic development and stimulating employment. As a Member representing the tourism sector, I am, of course, most concerned about how the Chief Executive expounded on the way forward for Hong Kong's tourism industry in the blueprint outlined in the Policy Address for the next five years. However, no account of a long-term plan on tourism can be found in the entire Policy Address, which consists of 200 paragraphs and 11 chapters. Instead, many related issues, such as co-operation between Hong Kong and Guangdong, hotel sites and tourism project development, merely scattered among nine paragraphs and saw brief mention. I am disappointed with the relatively loose content of the Policy Address concerning tourism.

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Among the various policy issues, economic development is given the top priority in the Policy Address with a proposal for the Government to set up the Economic Development Commission to formulate an industrial policy for industries in six areas, including Convention and Exhibition Industries. In this connection, I asked the Government in the Chief Executive's Question and Answer Session on the Policy Address whether overall planning would be undertaken for tourism development. The reply given by the Chief Executive was that he would listen to the views of the Working Group on Convention and Exhibition Industries before making a new decision. In this regard, I hope substantive results can be achieved. The Chief Executive further explained that there is currently no lack of tourists in Hong Kong, and it is more important to consider the capacity of tourism facilities in the future, or in his words, upgrading the quality of inbound tourists. President, I agree that it is worthwhile to study ways to upgrade the quality of inbound tourists, but the tourism industry as a whole might not necessarily be benefited as a result. It is quantity that really matters when it comes to the various tourism-related trades and industries.

In recent years, there have been concerns in society about tourism facilities reaching capacity, and they are, to a large extent, attributed to a lack of comprehensive tourism planning over the years. In the past, overseas promotion, for instance, was most of the time focused on the introduction of only several tourism or shopping destinations. Although such a strategy can highlight well-known bright spots in Hong Kong, tourists tend to be over-concentrated, thus stimulating the rents in the relevant districts to rocket, or even affecting the daily life of the public. It is the aspiration of the industry to motivate the Government to formulate long-term planning for tourism development. In the light of the issues before us, Hong Kong cannot restrict tourists visiting Hong Kong for the sake of controlling their flow. Through effective planning, however, it can take stock of existing tourism resources and allocate them appropriately having regard to their unique characteristics. In this way, not only more selling points in tourism can be created in Hong Kong, the distribution of tourist flow can also be adjusted, thereby fundamentally alleviating the overcrowding of tourists in individual districts.

Among the numerous new projects mentioned in the Policy Address, including the development of Lantau Island, the setting up of a recreational landmark in Kai Tak, and pressing ahead with the harbourfront development, the Kai Tak project may capitalize on its cruise terminal to open up new client sources in overseas places and the Pearl River Delta Region. The opportunities 5680 LEGISLATIVE COUNCIL ─ 30 January 2013 brought forth by the construction of the Hong Kong-Zhuhai-Macao Bridge must be seized for the development of Lantau Island, which can hopefully become a new tourism landmark in Hong Kong, if the existing resources can be consolidated. Furthermore, some colleagues in this Council have also proposed setting up a shopping mall at the boundary. All these proposals can effectively open up new client sources and regulate visitor flow. I hope the Government can expeditiously draw up timetables for the development of these tourism projects.

President, the Policy Address proposes that our industries must be "deepened and expanded". Insofar as the tourism industry is concerned, the long-standing imbalance between the supply and demand of hotel rooms has invariably stifled its sustainable development. According to the statistics released by the Government, the volume of inbound visitors had increased by 153%, from 16.6 million passenger trips in 2002 to nearly 42 million passenger trips in 2011. During the same period, however, the supply of hotel rooms had increased by only 77% from around 35 000 to 62 000. As the rate of growth is lagging far behind the demand, I agree with the remarks made by Mr James TIEN just now. However, the content of the Policy Address concerning supplying more commercial land made no mention of hotel sites. Instead, it merely mentioned the development of a short-term land use project in Tin Shui Wai, and the consideration of rezoning the land for hotel uses was brushed aside lightly. Obviously, the Policy Address has failed to provide a satisfactory answer to address the inadequate supply of hotel rooms. It is imperative for the Government to address the present situation squarely by granting additional hotel sites promptly and reasonably and streamlining the vetting and approval procedure for hotels in order to increase the supply of hotel rooms and ensure stable and reasonable hotel room rates.

The tourism industry is also one of the major areas of collaboration between the Mainland and Hong Kong as promoted by CEPA. Since 2003, more than 20 liberalization measures have been launched under CEPA in the tourism sector, though the number of branches or offices operated by Hong Kong travel agents in the Mainland has increased slowly from four or five a year or so ago to just over 10 now. Under the Supplement IX to CEPA signed last year, the Mainland has been opened up to allow Hong Kong-invested travel agents to operate outbound group tours, which should be tremendously helpful to enabling the local tourism sector to expand business. But at present, consent has been given to allowing only one travel agent to operate such tours on a pilot basis, LEGISLATIVE COUNCIL ─ 30 January 2013 5681 which can definitely not satisfy the demand of the industry. I hope the Government will continue to campaign for allowing more Hong Kong travel agents to operate outbound group tours in the Mainland for the purpose of "expanding" the local tourism industry.

Furthermore, according to the information provided by the Hong Kong Tourism Board, of the 48.6 million visitor arrivals recorded last year, long-haul visitors from the United Kingdom, the United States, Japan and Korea accounted for only 9.8%, lower than the 11.4% recoded in 2011. Furthermore, the shortening of the duration of stay of overnight visitors from an average of 3.6 nights in 2011 to 3.5 nights in 2012 reflects that the existing tourism nodes in Hong Kong are insufficient to maintain its attractiveness to long-haul visitors. In this regard, Hong Kong may step up collaboration with Guangdong Province and Macao for the joint development of multi-destination itinerary in the three places by turning the resources in Guangdong and Macao into an element to enable Hong Kong to develop tourism in a more comprehensive manner. From the development of complementary tourist attractions to enhancing co-operation in overall publicity, the three places can help raise the desire of long-haul visitors to visit Hong Kong, thereby "playing to Hong Kong's strengths to increase business volume", as mentioned in the Policy Address, in order to achieve the objective of pursuing deeper development.

President, an industrial policy requires long-term planning for complementary measures in the market, and enhancing the business environment of industries is indispensible, too. In tandem with the Travel Industry Authority (TIA) to be set up shortly by the Government to replace the existing Travel Industry Council and the Travel Agents Registry to perform their monitoring and licensing functions, the dual regulatory structure that has been operating in the tourism industry for more than a decade will be overhauled, and this will bring a significant change to the local tourism industry. Although the concern about "the industry regulating its own members" can be allayed as members of the TIA to be set up shortly comprise predominately lay persons, there are bound to be advantages as well as disadvantages. As a result of allowing outsiders to regulate insiders, policies formulated in future might be unable to meet the demand of the industry and consumers. In order to strike a balance between reform and ensuring continuity of some proven practices, the function of the industry must be brought into play and the existing organizational structure be optimized to avoid affecting the normal operation of the industry and ensure that the appropriate regulation effected by the TIA can effectively protect the rights 5682 LEGISLATIVE COUNCIL ─ 30 January 2013 and interests of the industry and consumers without affecting the vitality of small and medium travel agents.

President, the utilization of the Travel Industry Compensation Fund has been a long-standing concern to the industry because the cumulative amount of compensation made in connection with closures and accidents involving travel agents was only $9,103,000 over the past five years, but its accumulated balance reached $590 million as at October last year. In his manifesto, the Chief Executive proposed studying ways to capitalize on the balance of the Fund, spend the money belonging to the industry on the industry, and set up a small and medium travel agent credit guarantee scheme dedicated to travel agents, but the Policy Address has failed to give an account of this. I hope the Government can expeditiously launch the relevant study, explore ways to expand the scope of the Fund, enhance protection for consumers, and support the development of the industry.

President, concerning economic development covered in the Policy Address, I so submit.

DR PRISCILLA LEUNG (in Cantonese): President, "to grope one's way across the river" was one of the principles adopted by the colonial Government in governing Hong Kong. Now, 15 years have passed since the reunification, the Government must not "grope its way across the river". Some of the policies outlined in the Policy Address under discussion today are bombs left behind by the Government of the previous terms, including policies concerning housing, education, population, and so on, and many mysteries are still unsolved. It is indeed impossible for these so-called deep-seated social problems to be resolved overnight.

However, we have also begun to see some clues of how some policies accumulated by the Government of the previous term should proceed, including the population policy. In the Legislative Council of the previous term commencing in 2009, I had persistently made an annual appeal to the Government to demonstrate its courage by proposing a longer-term population policy because it affected overall economic planning covering birth, death, illness and old age, clothing, food, housing and transportation, hospital beds, adequacy of university places, columbarium niches, provision of homes, and the number of young people in need of assistance to seek employment or start a business. LEGISLATIVE COUNCIL ─ 30 January 2013 5683

Despite the lengthy discussion, the Government of the previous term did not have any ideas until its final year when it started mentioning in paragraphs 53 to 61 of its policy address that a review of the Hong Kong population revealed that its birth rate might be falling over the past two decades and how the public should be concerned about the issue of foreign population and engage in community-wide discussions. However, I consider the population policy outlined in this year's Policy Address a retrogression.

Second, when it comes to education policy, the Government must not "grope its way across the river", either. In the Legislative Council of the previous term, a consensus was nearly reached among Members on promoting 15-year free education. Although Michael SUEN of the Government of the previous term often called himself an administrative officer, stating that the decision on the policy was not made by him in the end, I think that the first thing the current-term Government may do is to implement 15-year free education, because doing so can gain credits as there is already a consensus in society. Hence, I reiterate here that we should "cross the river".

Concerning the middle class and SMEs, I have recently helped a businessman from the Hong Kong Gemstone Manufacturers' Association, who was involved in some legal disputes in the Mainland and on the verge of being sentenced to imprisonment for more than 10 years. It was with much difficulty that we subsequently managed to help him return to Hong Kong after a year or so. When I congratulated his family members on being able to resume their gemstone business, the businessman told me that the entire gemstone industry might have fallen into decline. Although these people are in their fifties only, the reason for the decline of their trade is that they have already been replaced by their Mainland counterparts. They are among the numerous SME operators, and in particular, the first batch of pioneers in the Mainland. They face many difficulties now indeed, but they are still very young, in their fifties. Hence, I must particularly mention the motion debate held last week, in which I expressed my hope that the Government could seriously consider the fact that not all the middle-class people were employed. Moreover, even SME operators might need to switch to other industries or restructure their operations. Hence, the Government must help them board the express train carrying economic opportunities, as mentioned in numerous paragraphs in the Policy Address.

Furthermore, we often talk about the four concerns of young people: education, employment, home purchases and start-up businesses. Many young 5684 LEGISLATIVE COUNCIL ─ 30 January 2013 people have expressed their earnest hope of completing their studies and asked whether the Government can provide them with a general environment to start up businesses after they have gained some working experience. According to our opinion polls, 64% of the young people in Hong Kong hoped to start up their own businesses because, although they had managed to land a job, it was the job they wanted. I would like to advise young people not to start up businesses recklessly, or they will risk running into a wall, with all their money going down the drains. However, I think that some room should be allowed in the broad environment of economic development for the entrepreneurial spirit of the young people. For instance, some Business Angel Funds are already set up for young people in overseas countries but, of course, they are not targeted at young people only. Besides offering financial support, some large enterprises already groved in will very often assist young people in dealing with their finances, personnel matters and marketing in starting up their businesses, thereby giving them opportunities to really participate in the market and board the economic express train in the initial years.

Regarding the various issues mentioned just now, I think that the Policy Address lacks a broad direction. I hope the Government can really step up its efforts in this regard. Nevertheless, I think that consideration must be made more clearly when it comes to whether or not we should support the Motion of Thanks this time around. Nowadays, arithmetics is in fashion. I would like to invite Members to do some arithmetic exercises of addition, subtraction, multiplication and division to decide whether or not we should render our support to the Motion of Thanks.

On "addition", Members can actually see that the Chief Executive has been working very hard. Not only has he drawn up the poverty line, sought to build additional public rental housing flats and resumed the construction of Home Ownership Scheme flats, he has also made enormous efforts to identify land territory-wide for additional housing construction. There are also, for instance, allowances for the middle-aged persons and the elderly, additional residential care homes, barrier-free society, and renewed proposals on Chinese medicine practitioners and healthcare tax concessions. Evidently, he has heeded the views of many Members, including those of the last-term Legislative Council.

On "subtraction", what deductions have been made? The Fare Adjustment Mechanism that allows fares to go upward and downward, the concessionary fares offered by the MTR Corporation Limited, the multi-pronged LEGISLATIVE COUNCIL ─ 30 January 2013 5685 approach to lower MPF expenses ― Secretary Prof K C CHAN is here. What is most welcomed by the middle class is the abolition rather than reduction of the levy for employment of foreign domestic helpers. Since joining this Council in 2008, I have been aware of the wishes expressed by representatives of the middle-class families every year for the levy for foreign domestic helpers to be waived. Obviously, the Government has heeded the views of the community before putting this proposal into implementation.

What has been done when it comes to "multiplication"? I can see that he has been working very hard in certain areas, including the economic policy mentioned in numerous paragraphs. Of course, I am most interested in the Government's proposal in paragraph 88 of setting up a statutory Harbourfront Authority, which was one of the proposals put forward by us in a motion debate on harbourfront development in the Legislative Council of the last term. The Chief Executive has also particularly mentioned the water-friendly culture in paragraph 148. On the improvement of water quality, here I would like to thank the Government for responding to the appeals made over the years by me and a number of District Council members from district organizations (including those from the Kowloon West New Dynamic) for the Chief Executive to use "multiplication" in harbourfront development, meaning that in addition to harbourfront development, water quality, tourism and waterborne transport should be taken into account as well. For instance, Hong Kong people consider it extremely valuable and worthwhile for the operation of the ferry business to be preserved as part of the Victoria Harbour for the sake of waterborne tourism and transport.

Furthermore, concerning the method of "multiplication", I mentioned the Hong Kong Gemstone Manufacturers' Association just now and many colleagues also mentioned the fact that Hong Kong is leveraging on the Mainland. Nevertheless, can we really bring the strengths of the two places into better play? In particular, the Mainland economy is now taking off at a high speed. I have recently come across several business tycoons who have moved to the Mainland, though they have been doing very well in Hong Kong. Each time when we chatted, they would express a grave concern about Hong Kong, for it seemed that Hong Kong was stalled by many internal conflicts and stuck in a quagmire. How can the Government rise to the challenges ahead and overcome these "inevitable" difficulties, and possibly even more difficulties in the days to come? Whatever the Government does, some people will definitely raise objection. Most importantly, the Government must move forward towards the goals.

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As regards "division", I can see that the "zero delivery quota" rolled out by the Government in 2013 is very popular among the public, but still the conflicts between China and Hong Kong have yet to be resolved. When I mentioned similar incidents during an interview on the radio two years ago, I said that conflicts that occurred on buses might be due to the use of discriminatory language by Hong Kong people, thus provoking conflicts with Mainlanders visiting or even living in Hong Kong. Recently, an incident involving the biting of a finger has even made headlines in the press. Members can see that Hong Kong has actually not done a very good job in the integration between the two places as well as cultural and economic integration. At a meeting of the Panel on Education, I still heard some colleagues ask why local universities should set aside some places for students with Mainland background and allow them to rob Hong Kong people of their university places. I think that such remarks lack understanding and will only aggravate the conflicts. On education, the relevant broad policy has completely neglected how to complement the economic takeoffs of the two places, namely China and Hong Kong. In my opinion, such mindset should really be given up.

For this reason, I agree with the enforcement of the "zero delivery quota". However, when it comes to the population policy, the population problem is still not completely resolved because children born in Hong Kong are entitled to the right of abode (ROA). As a result, many Mainland parents wish to have their babies born here, so that they can acquire the ROA. On clothing, food, housing and transportation, Hong Kong should actually offer a certain degree of assurance in its policy. I think this has nothing to do with "subtraction". In order to fully resolve this problem, "division" must be used instead.

How can we use arithmetics to judge this Policy Address delivered by the Chief Executive? I will look at it this way. As I pointed out right in the beginning, my speech would have a bitter start but a sweet end, and so I began with criticisms. Of course, many colleagues consider the Policy Address inadequate in many aspects, such as, as mentioned by Members just now, universal retirement protection, constitutional development, standard working hours, and so on. However, these issues are still relatively controversial in present-day society. Hence, it is understandable that the Chief Executive chooses not to discuss them at great lengths in the Policy Address for the time being. Although Hong Kong people are very anxious to see immediate results in many issues, I understand that even education and population measures cannot achieve instant results, not to mention economic takeoff.

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I wish to point out that the economy today is at least not worse than that in 2008 when we had to deal with the Lehman Brothers incident right after we had taken office. Hence, from this perspective, the economy is at least not worse off, and so the Government should be able to deliver a better report card. In this regard, I very much hope that, as I heard CHEUNG Chi-kong say this on the radio, we should perhaps give the Government some time as many things cannot be accomplished in one go. If we can deal with a minor issue in three months and another one in six months, then we can deal with a major issue in a year. I will make evaluations in accordance with this timetable. Concerning the many issues left untouched in this Policy Address, many Bureau Directors and Under Secretaries have told me that what is not mentioned this time around does not mean that it will not be mentioned in the next term. Neither does it mean that it will not be dealt with, only that the highlights are included in the Policy Address. I understand that housing is a major highlight. I also hope that the Government can really demonstrate its boldness in practical terms and undertake its tasks with vision.

I will deal with education issues, harbourfront development and environment protection again in the relevant sessions. After doing some arithmetic exercises of addition, subtraction, multiplication and division to calculate the points scored, I still feel that this Policy Address should receive credits for its hard work, if not merits. I have also seen that he has really listened to some of the voices made about some issues in districts, including the 18 District Councils, by devolving some financial powers to us, so that we can make our own decisions to resolve local issues at the District Council level. In this regard, I will give the Policy Address a passing grade, and I will support the Motion of Thanks, too.

As regards the relevant amendments, this is how I have been looking at amendments over the years. In fact, all Members would like to see the policies they wish to implement the most appear in the Policy Address as highlights. If all Members, excluding the President, put their own political platforms in the amendments, we will have 69 amendments. I consider this undesirable. Hence, I disagree that we should put our major platforms in amendments, and so I will not support the amendments.

President, I so submit.

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MR ALBERT CHAN (in Cantonese): President, when "6892" was elected in March, the People Power already pointed out that Hong Kong was formally taken over by the Hong Kong communist regime. Hence, right from the beginning, we did not recognize the representativeness of "689". In spite of this, the People Power has submitted to the Government a 150-page proposal regarding the Policy Address as its recommendations and blueprint. Among them, there are numerous recommendations on economic development, housing and social welfare. In particular, we proposed that the Financial Secretary should give everyone $10,000 for the sake of returning wealth to the people. This Policy Address, however, can be described as utterly deplorable. As this session is about the economy, let me discuss economic issues with you.

When "689" ran in the election, he vowed in his manifesto to "promote industrial development, technology innovation, interaction and a win-win situation". One of his proposals was to "give support to the restructuring of Hong Kong manufacturers …… especially enhancing support to enterprises enjoying traditional strengths, including garment, toys, jewelry, digital clocks and watches, and so on, in relation to branding, design, product research and development, market research, marketing channels, and exhibitions and sales". In this respect, his proposal was surprisingly similar to the one put forward by the People Power regarding this Policy Address as well as those by the Chief Executives of the previous terms on reviving Hong Kong's industries. However, when it comes to the real Policy Address, "689" has completely failed to mention ways to assist industrial development. Instead, he has continued to tell lies after lies and kicked away the ladder. This is why I very much admire Miss CHAN Yuen-han for convening a press conference earlier in which she expressed support for the Policy Address. The Hong Kong Federation of Trade Unions has been betrayed by someone who has gone back on his words. Despite his failure to make any commitment to standard working hours, she has even continued to express support. Hence, I call on the wage earners in Hong Kong to look closely at these Hong Kong communists and labour unions betraying the interest of workers how they could have even justifiably and blatantly rendered continued to support betraying the interest of workers in Hong Kong. Please look closely at these so-called representatives of public opinion, who should be carrying on

2 The Chief Executive was nicknamed "689" for he had obtained only 689 votes in the Chief Executive Election. LEGISLATIVE COUNCIL ─ 30 January 2013 5689 their back the aspirations of the workers. This Chamber is most weird. Dr Priscilla LEUNG, who left just now, had described the policy addresses during the British Hong Kong era as "groping their way across the river". I believe she has never read the Policy Address delivered by MacLEHOSE or listened to the speech of administration delivered by Chris PATTEN. This Chamber should feel ashamed about criticisms of such levels.

President, when it comes to the significance of industries, I think Hong Kong people of this generation miss and cherish very much the past performance of Hong Kong industries. Hong Kong's existing poverty problem and worsening disparity between the rich and the poor are precisely attributed to its economic policy and the gradual shrinkage of Hong Kong industries. Let me cite some figures for Members' reference: Hong Kong's manufacturing industries represented 1.61% of its Gross Domestic Product. Financial Secretary, I am talking about 1.61%. This figure is most shameful and pathetic. It was 4.66% in 2000, 16.88% in 1990 and 22.43% in 1980. In other words, it has fallen from around 22% in 1980 to 1.6% now, Financial Secretary. This is Hong Kong's economic policy. In particular, since the era of TUNG Chee-hwa, the Government has been vigorously advocating financial development and reliance on tourism and real estate hegemony. While the financial industry surged from 6% in 1980 to 16.25% last year, the tourism industry …… the share of the tourism industry is actually not large. Representing 0.91% in 1980, it accounted for only 3.53% in 2011. Nevertheless, the shrinkage of the manufacturing industries is worrying and shameful.

Let us look at our neighbouring countries. In 2011, manufacturing industries accounted for 26.6% in Singapore, but 1.6% in Hong Kong ― 30.4% in Taiwan, 43% in Thailand, or nearly half of the country's economy, and 27.3% in Japan. Hence, if we look at the situation in Hong Kong, we will find that we were born in the 1950s, and many of our family members, who used to be workers in industries, relied on industries to feed their family members and support the development of Hong Kong. Hence, the Hong Kong Government would be hopeless should it continue to believe blindly that the financial, real estate and tourism industries can continue to drive Hong Kong. It will only lead Hong Kong into a dead alley and continue to aggravate the disparity between the rich and the poor in Hong Kong and serve the financial and real estate hegemonists. You will only become a lackey of the financial or real estate 5690 LEGISLATIVE COUNCIL ─ 30 January 2013 hegemonists. Once you become their slave, Hong Kong people will become slaves of these hegemonists, too. Therefore, the People Power will definitely pull out all the stops to continue to voice opposition and fight till the very end.

MR JAMES TO (in Cantonese): President, this session of the debate is on a number of policy areas related to economic development. The first thing I wish to discuss is the Financial Services Development Council (FSDC) formed recently. Many Honourable colleagues have said that when the FSDC was first set up, the people were very confused about its role. They did not know what functions it had. At first it was said that the FSDC was a civilian organization. Then it was said that it was an official agency. Then somebody said that it was a consultative body, but it was set up in the form of a limited company. The fact that the people are confused is mainly due to the background against which the FSDC is set up. Mr LEUNG Chun-ying stressed the role to be played by the FSDC when he was running for the Chief Executive office, saying that it would be an important body to drive development in that domain. On the other hand, Mr LEUNG advocated things like the so-called sovereign funds and investments. This makes people fail to understand what in fact are the functions of the FSDC, not knowing whether it is doing something which we cannot see on the surface.

It is due to all these questions that we consider the most practicable way to dispel such worries of the people is …… I would advise the authorities not to use the form of a limited company to set up the FSDC. This is the most important thing of all. Provided that the authorities will not do it, all the misapprehensions that may arise such as whether the FSDC will hold any assets or do anything which is not related to consultation or work as consultants as it claims will be dispelled.

Therefore, the authorities need to do just one thing, and that is, not to set up the FSDC in the form of a limited company. I think this form is really strange because we cannot find any consultative body that needs to be set up as a limited company. Do the Fight Crime Committee and the hundreds of committees of various sizes have to be formed as limited companies and be consulted? So this is really weird.

We need to form a limited company only when we really want to enter into contracts, hold assets or hire staff in the capacity of a body corporate. And LEGISLATIVE COUNCIL ─ 30 January 2013 5691 when hiring staff, it is not known how many members should be hired to handle an amount of work which is not certain, then there would be a need to set up a limited company. Of course, if a limited company is not set up, there will not be any sponsorship and donations from private parties and so worries of corruption will be further allayed.

The second point I wish to discuss is that recently there is a case of money laundering and the amount of money involved is $13.1 billion. The defendant is convicted. My concern is that according to reports, the crime took place in just a short time as about half a year and it is not known whether or not the bank concerned has taken the initiative to report the crime. I am all the more concerned about the fact that when an ordinary bank comes across such strange matters and when a small computer software company keeps on making one or an average of one transaction amounted to $50 million every day for half a year, will the bank concerned take the initiative to report the case as required by law? If the answer is no, has the Government undertaken any investigation into the matter? If the Government has not done so, does it mean that it connives at the operation of underground banks, hence causing a blot on Hong Kong's clean reputation?

About the banks, have they set up any effective system to report money laundering activities? I came across a case recently and it was reported to me by a member of the public who runs a trading firm. The email account of his company had been hacked and the hacker demanded that the victim's clients to settle the bills by depositing about HK$1 million into the account of a Hong Kong bank as shown in the bogus email. When the victim discovered this, he went to the bank of the account set up by the fraudster at once. He found the manager of that bank and gave him some papers, hoping that he would investigate the case. This bank is one of the largest in Hong Kong and when the victim made this request, to his dismay the manager told him to leave at once, as if he had contracted some infectious disease. The manager said that the victim was not a client of that bank and he just ran into the bank and claimed that a fraudster had opened an account with that bank. So he could only ask him to leave at once. What is more frustrating is that when the victim wanted to leave behind some papers for the bank to undertake some internal investigation or refer the case to the department concerned in charge of investigating money laundering cases, the manager of the bank refused to take them other than asking the victim to leave.

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I cannot help but ask the Government: Has the Hong Kong Monetary Authority (HKMA) ever required the banks and all their front-line staff to be on the alert for such matters? If someone walks into a bank and claims that an account in that bank is being used for money laundering, should the bank staff just ask him to leave? Are banks not very afraid that some of their clients are really engaging in money laundering? I know that the manager whom the victim came into contact with might only be some front-line staff of the marketing department. But we should know that we cannot expect every person who walks into a bank to report money laundering will know to which proper department of the bank should he report the case. The staff member of that bank is a manager, but he did not inform the department for internal investigation and he did not take those papers for investigating into that money laundering case. Does it mean that the bank does not want to investigate the problem of money laundering? President, this is a problem about institutions. It touches on the question of whether the HKMA has taken any effective measures to require all front-line staff of banks to be on the alert for money laundering and whether they hope and welcome people who come to report such things so that the banks will come clean of any money laundering activities. But the reality is just the exact opposite.

We know in these few days that the Hong Kong Exchanges and Clearing Limited (HKEx) wanted to introduce night-time trading in futures. I am most unhappy about the fact that the HKEx has drafted a standard letter and sent copies to the brokerage houses and instructed them to use that standard letter to show that they are in support of the view of the HKEx when they come to this Council when Members hear views from the public. Honestly, this is bogus consultation. Some people will say that this should not be regarded as bogus consultation because copies of the standard letter submitted by the brokerage houses are in support of the view of the HKEx. But we should know that the HKEx has a responsibility to monitor the listed companies and the holding companies of many of these brokerage houses are listed companies, too. In other words, the HKEx letter is addressed to the subsidiaries of those companies monitored by the HKEx itself and asked these companies to show support for the HKEx in promoting the futures business. How can there be such things like this? The HKEx is a statutory body and it must be open, transparent and accountable. But it turns out that it attaches importance only to money and it will resort to using all kinds of ways and means. It can even be said to be promoting and inciting or even coercing the brokers to hand in submissions in LEGISLATIVE COUNCIL ─ 30 January 2013 5693 support of it. Had we not found out the truth when we were asking questions, we would have really thought that all these submissions were voluntary and there were really so many people who held this view. There are non-executive directors in the HKEx from the Government. So I hope that the HKEx can look thoroughly into the matter. Did its chairman CHOW Chung-kong do it? Did the HKEx board of directors know about it? Did the chief executive, Charles LI, know anything about it? Are these people all blinded by the pursuit of money and as they are bent on pushing this measure through, they have just brushed aside all objective consultation mechanisms? The last two occasions on which I saw this kind of acts are: First, during the constitutional reform; and second, in 2003 when legislation was about to be enacted to implement Article 23 of the Basic Law on national security. On these two occasions, some people were making things happen in that way. Of course, we may not be able to find out more of this kind of examples because the Government has been very clever. But I have never dreamt that even the HKEx could do such a thing and by doing so, it has undermined its image of being independent and fair.

President, another issue about economics and financial affairs which is a concern to me is investment product schemes linked, related to or associated with insurance policies. President, we have experienced the Lehman Brothers incident and after that some improvements have been made to the system. But now there is a loophole and that is, those investment product schemes related to insurance policies. In terms of the standards, codes of practice, guidelines and vetting system in the monitoring regime, they belong to a lower level as compared to similar products which people buy from securities brokers or banks. It is less stringent and the manpower ratio involved in this kind of monitoring work is not so high. Some people may say that this is not the case and people just pay a small sum of money every month and it is not known what will happen in future because the schemes will complete 20 years later. But we must remember this: Is this kind of products suitable for the purchasers? After they have made all the contributions, will they get the reward as promised? Or should we not use a similar or more stringent standard to regulate this kind of products? I know that in actual operation, it is the client who is to go personally to a bank and it is seldom the case for a bank to go to a client. But it is not the case with life insurance agents or other insurance agents, as they may provide personalized services such as going to the home of the client or meet him in a cafe or in his workplace. But we must remember this: If we are to lower the relevant standards because of the manner in which these products are marketed or 5694 LEGISLATIVE COUNCIL ─ 30 January 2013 the process of sale, there is a chance that problems, loopholes and disasters may arise.

I am not saying that many of these large insurance companies are doing this, but there are tens of thousand of people working in the insurance business. The worst case I know is that an insurance company does not sell certain investment products and if it does, it will not pass the lucrative business on to other people. When people are selling their own products, there will be less incentive for them to resort to this kind of sales tactic. But the worst thing is that certain insurance companies do not have these investment products and they are only selling the products of other people and they are not selling them on a large scale. And they may just be selling some of these so-called flexible combinations which used to be approved by the Securities and Futures Commission but are no longer approved by it. This could be a more technical question, but these products are most dangerous. I hope the Government can address this problem expeditiously.

The last thing I wish to talk about is the Hong Kong Convention and Exhibition Centre. President, I know that the Hong Kong Trade Development Council or the Hong Kong Convention and Exhibition Centre (Management) Limited has made great efforts in lobbying and many of the Members of this Council share the same view with it and they are stakeholders. They are lobbying the Government to commence the construction of Phase 3 of the Convention and Exhibition Centre in Wan Chai. I must point out that if the existing convention facilities are not yet fully utilized and if Phase 3 of the expansion project were placed in the hands of the same operator and if the same kind of monopolistic mode of operation is used, I would not think this is conducive to the entire industry in Hong Kong. It is because only certain operators, certain related trades and those people with a cobweb of interests will stand to benefit. I therefore hope that the Government can be very careful in considering this issue. For if not, if this highly monopolistic nature of the convention industry is to expand and grow, I am afraid it will run out of the control of the Government some day.

MR CHAN CHI-CHUEN (in Cantonese): President, this Policy Address is a much awaited one and it is actually an assignment handed in three months late. The people of Hong Kong have been very tolerant and very patient, too. There LEGISLATIVE COUNCIL ─ 30 January 2013 5695 are some people who still harbour some expectations for LEUNG Chun-ying and hope that he can be given some time and room to deliver what he calls "results". They want to see what he has got to save Hong Kong and also himself. So in this light, this Policy Address is a report card for LEUNG Chun-ying.

Some people may cherish some extravagant hopes for this Policy Address and think that this is like a dose of Viagra to LEUNG Chun-ying's sagging reputation. But things go against these people's hope. It is because he is incurably sick in his death bed. No dose of any aphrodisiac will save him. LEUNG Chun-ying's popularity rating has sunk to rock bottom. The latest rating for him is 48.1 points and his net support rate is -14%. Hence this Policy Address is also nicknamed "a zero report", "a delay tactic report" and a "post-mortem report" ― the last name means that it is the report of a dead person. It is also a post-mortem report for Hong Kong as well. After reading this report, we should know that all our hopes are put out like a candle and there is nothing to write home about. We might as well call it a day.

Of course, we will vote against the Motion of Thanks. We will not show any gratitude to him. But we can give him a present. I remember back in the Ming Dynasty there was this scholar called JIE (解) Jin3 who had passed the imperial examination and written a couplet to this effect: "The weed on the wall has a heavy top and a light bottom and its roots are shallow; the bamboo shoot in the mountain has a pointed mouth, thick skin and a hollow belly." Chairman MAO Tse-tung once gave his explanation of the couplet and said that it meant that a person is not being practical when he only tries to please the people and is being flamboyant, weak and considers himself always in the right. This is an apt description of LEUNG Chun-ying.

Today we will first debate economic development. On the question of economic development, we must not fall into the fallacy of not seeing the wood for the trees. We must not focus on just one two or three points because although we may wish to deal with these, we may not be able to do so. This is because we fail to see the full picture. The section on economic development is placed as the first one after the introduction and it is given the top priority. Earlier on some Members have argued about the number of paragraphs in this section on economic development. By all appearances it is from paragraph 19 to

3 Mr CHAN Chi-chuen pronounced the character "解" as "jie". 5696 LEGISLATIVE COUNCIL ─ 30 January 2013 paragraph 48 and there are altogether 30 paragraphs. But actually, there are more than 30 paragraphs because some paragraphs have been removed. They are paragraphs 184 to 186 which have been removed and placed under "Cultural and Creative Industries" in Section IX, that is, "Arts and Culture and Sports Development".

Paragraph 42 says that a review should be conducted of the six industries where Hong Kong enjoys clear advantages. Talking about these six industries, the education and healthcare industries have disappeared, and no mention is made any more of the environmental protection industry. And the cultural and creative industries have been moved to another place, no longer placed under the section on Economic Development. First of all, I wish to ask the Government: Is the television broadcasting industry part of the cultural and creative industries? In Hong Kong which always boasts the free market, if the economy is to develop, the first task is to create an environment for healthy competition.

On the question of issuing free-to-air television licences, no mention is made in the Policy Address. When asked about this issue, the Government always says that the matter is now undergoing judicial proceedings and no reply can be given because a judicial review may be filed. This does not make sense at all. For even if you do not wish to talk specifically about one or two new or existing TV stations, at least you should talk about how the SAR Government is to assist the development of television in Hong Kong. Should the Government not make a response to the public at large who wants to watch more diversified and quality TV programmes? This is a row which has been lingering on for three years and there are companies which have suffered in this delay because they have made billions of dollars of investment. These companies want to spur competition in the creative industries, but the Government is hindering the injection of vigour and vitality into the TV industry which is stagnant and lifeless currently.

The Policy Address only engages in hollow talks about the development of industries and fails to show what is meant by the diversification of industries. It does not know anything about the importance of diversification. The TV industry in Hong Kong has not been making any progress for the last 10 to 20 years and we all know that only one TV station dominates the scene. But the Government pretends not to see it. There is no competition of any kind. This is Hong Kong, and this is our government.

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On the question of issuing licences, I do not know if there is any secret or mysterious agenda such that the authorities do not want to grant another licence. Originally, there was no judicial review, but given the delay, it is likely that a judicial review will be filed. What would be the result? It is that those people with the ambition to set up a new TV station will have to consider pulling themselves out. Does the SAR Government want to force these investors to wind up their companies and dismiss their staff? Then will any newcomers dare to invest in the TV industry in Hong Kong anymore? So, true to the mindset of "out of sight, out of mind", this Policy Address has removed the cultural and creative industries and ceased to place it under the section on "Economic Development" because these industries do not have any future and there is no economic benefit of any kind.

The development of the economy, training of talents and creation of a business-friendly environment are interlinked. With respect to the cultural industries, not only has the SAR Government not tried its best, one can even say that it is going in the opposite direction. The three paragraphs in the Policy Address on cultural and creative industries boil down to these words: Create Hong Kong. The SAR Government thinks that by setting up an office called Create Hong Kong, it is like developing the creative industries in Hong Kong. Is this not too naïve or ignorant?

When we read the Policy Address of LEUNG Chun-ying, we have an impression that it is like we are watching channel 13 of ATV which is called a TV Classic. Paragraph 179 of the Policy Address presents an indulgence in past glories and I quote: "Over the past decades, Hong Kong's television drama, music, films, newspapers, magazines and books have gained immense popularity in overseas Chinese communities …… The impact of Hong Kong culture on other cities is testimony to the abundance of our creative talents." Unfortunately, all these are in the past tense. When people get lost reminiscing the past, they should think all the more why the present is so different from the past.

The last sentence in paragraph 179 says and I quote, "Given suitable support, Hong Kong can scale new heights in cultural and arts development.". This refers to his support for these creative industries which he has just mentioned. But sad to say, I cannot find anything in the entire Policy Address which shows such support for the TV industry. So these so-called innovative industries with an advantage have now become industries with a disadvantage and we may as well forget them.

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Last week, the former President of The Hong Kong University of Science and Technology, CHU Ching-wu, had a sharing in a seminar. He said that the young people these days did not have any dreams. He thought that the adults had not set themselves as good examples. He also pointed out that the funding for scientific research in Hong Kong was the smallest in amount in the three places on both sides of the straits. He also explained the doubts which LEUNG Chun-ying had about the education industry. CHU Ching-wu said that he did not find any difference in calling education an industry or otherwise. If by industry it means a matter of importance, then it should be done irrespective of whether it is called an industry or not. This is not a question about terms and names. However, it is obvious that in this Policy Address, nothing much is said about the creative industries.

President, I wish to make a strong recommendation to LEUNG Chun-ying. It is a simple method that can serve to invigorate the Hong Kong economy instantly. Since the promotion of any industry will not result in a vibrant economy, the People Power now suggests that the method which can be instantly effective is to hand out $10,000 to every person. This will stimulate consumption. I know that Carrie LAM has been encouraging LEUNG Chun-ying to make redoubled efforts in learning the ropes. Unfortunately, however, the people of Hong Kong cannot afford to wait another four years in exasperation. I think that the people of Hong Kong are thinking like us and that is, we hope that this will not be the first, but also the only policy address of LEUNG Chun-ying.

I so submit.

PRESIDENT (in Cantonese): The surname of the scholar mentioned in the speech just now should be pronounced as "xie" (懈).

MR TONY TSE (in Cantonese): President, this Policy Address is entitled "Seek Change Maintain Stability Serve the People with Pragmatism". It outlines the blueprint for administration by the Chief Executive in the next five years. It covers such issues like economic development, housing and land supply, people's livelihood and environmental protection and conservation. This Policy Address is relatively balanced and pragmatic, but its shortcoming lies in the lack of specific targets and concrete measures. The Chief Executive is only concerned about demonstrating his convictions in governing Hong Kong and LEGISLATIVE COUNCIL ─ 30 January 2013 5699 there are no specific targets or concrete measures. It depends on the setting up of many different committees to examine various problems. Committees are used to replace concrete measures as a means of administration and it is hoped that leadership can be provided to steer the course for Hong Kong in the next five years. I find this disappointing.

The policy addresses in the past did not dwell too much on the development plans for Hong Kong in the medium and long terms, so this hindered development to a certain extent. Therefore, I support the Chief Executive when he sets out a blueprint for the next five years in his Policy Address. Also, I would think that it is a correct approach for the Chief Executive to propose making the promotion of economic development the primary task. This is because economic matters will top the agenda in the development of any country or place. It is only when there are a sound foundation and favourable conditions for economic development that a government can have enough resources to tackle various problems found in society and offer assistance to people in need.

The Chief Executive stresses that he is committed to the principle of keeping expenditure within the limits of revenues, and to maintaining a business-friendly environment with a simple and low tax regime. Hong Kong upholds free market economy. But in case of market failure and if the market cannot play its role, the Government must take appropriate actions to address the problem. So in this respect, I agree that the Government should be appropriately proactive. Now with the overheated property market and the soaring property prices, ordinary members of the public have found property prices beyond their affordability. The Government's introduction of the Buyer's Stamp Duty (BSD) is a good example of what is meant by being appropriately proactive. However, I wish to remind the Government that this BSD is introduced because of the market failure induced by various reasons. These temporary measures can only be seen as stopgap measures and we cannot think that they can solve the problems in the long term. These appropriately proactive measures should be abolished in due course.

President, the reform and opening up of the Mainland during the past 30 years have led to rapid development of the Mainland economy and brought immense opportunities to Hong Kong. The National 12th Five-Year Plan explicitly supports Hong Kong in reinforcing and enhancing its status as an international financial, trading and shipping centre. As Hong Kong entrenches 5700 LEGISLATIVE COUNCIL ─ 30 January 2013 the development of its existing and conventional industries, it should also aim at capitalizing on the existing advantages and seizing opportunities of development on the Mainland for purposes of diversifying its industries. In such a process, our developments in finance and shipping should tie in closely with the relevant developments on the Mainland and bring our advantage of having a knowledge-based economy into full play, hence making Hong Kong more competitive in the international market.

In aviation service, I would suggest that the Government should study how the management of the airspace in the Pearl River Delta (PRD) Region can be improved. This would mean a rescheduling of the timetable regarding the airspace arrangements in the PRD with a view to increasing north-bound flight paths. Given the differences in systems and standards between Hong Kong and the Mainland in flight management, flight protocols and standards of operation, the Hong Kong Government should aim at the development of a management model that suits the PRD airspace.

In addition, it is also mentioned in the Policy Address that assistance will be given to the development of local business and professional services. Apart from helping these business and professional services to open up the Mainland market by means of CEPA, it is also very important to enhance the branding of these professional services so that they can make inroads into the international market. Previously, a large number of professions in Hong Kong may, because of the effect of name brands, prefer services provided by some well-known foreign companies and hire experts and professionals from abroad. This has affected the development of local professional services. I therefore hope that the Government can adopt a policy of according priority to local professions so that more local companies of professional services and local professionals can have more opportunities of development, thereby upgrading the level of professional services rendered.

President, the Chief Executive pointed out that four factors should be considered in setting out and implementing this blueprint. One such factor is that while the Government is determined to deliver results, we must act with one heart and one vision to tackle various problems. Of course, it would be ideal if we can act with one heart and one vision to tackle all these problems. But it is easier said than done. Often times administration by the Government is affected by other factors and as a result, the pace of delivering results is slowed down and the efficiency in administration may also be affected. We do not wish to see LEGISLATIVE COUNCIL ─ 30 January 2013 5701 such things happen. I hope all the sectors across the community can act with one heart to deliver the results we want. We should narrow our differences and reduce confrontation and together we can build a better and more harmonious Hong Kong.

President, I so submit.

MR ALBERT HO (in Cantonese): President, it was only after half a year since he had assumed office that the Chief Executive delivered this Policy Address. This Policy Address was delivered belatedly and, sorry, I must say that it has not brought us any pleasant surprises and on the other hand, there are many places in it that greatly disappoint us. It is because, with respect to many major political issues, the Chief Executive has not proposed any measures that are concrete enough or due. He has not made any insightful recommendations and everything is left to the newly formed committees which number some 10 to 20 in all for further study. So about this so-called setting out the blueprint of governing Hong Kong for the next five years, I really cannot see anything about it. When we choose someone to be the Chief Executive, we do not just hope that he would listen and consider the suggestions made. This person should have convictions, strategies and commitment. But honestly, we cannot see any of these in him.

When LEUNG Chun-ying was running in the Chief Executive race, he had said repeatedly that he knew that there were deep-rooted conflicts in Hong Kong and he would exert his best to solve them. But can we see how much he has done in the Policy Address to analyse and seek to solve these deep-rooted conflicts that we all know?

First, on the relationship between the Central Authorities and the SAR, now the people of Hong Kong feel the "high degree of autonomy" which they are supposed to enjoy is threatened by interpretations of the Basic Law by the NPC and dark clouds looming over the territory when the Western District wants to exert its control on Hong Kong. Just what has the Chief Executive done to dispel our worries?

Moreover, we can see that there are lots of problems related to people's livelihood caused by the Individual Visit Scheme and the arrangement of multiple entries under one endorsement. The result is that there have been conflicts 5702 LEGISLATIVE COUNCIL ─ 30 January 2013 between groups in the community. These are problems we have to face. But what solutions have the Chief Executive got? For matters of a longer term, he did not even mention anything about a population policy. It is because once any population policy is involved, it will touch on the question of how much say Hong Kong really has. What kind of rights can we get after fighting with the Central Authorities such that we can decide to accept the entry of what kinds of people for travel or settlement? It is more so a problem considering the open policy which the State is enforcing regarding Hong Kong. By this open policy, I mean that the State is opening Hong Kong up to more and more people from the Mainland. So what should we do?

We might as well forget about constitutional reform. We can see that no mention was made at all about the roadmap for dual universal suffrage. There is not even any timetable available for consultation. The relationship between the executive and the legislature is deteriorating and the Government seems to be at its wits' end. About the wealth gap problem which is worsening, the Chief Executive seems to be saying this: "I am working hard to set up a Commission on Poverty and I will draw a poverty line. After these are done, we can see a ray of hope and a solution is at hand.". But I must say that I cannot see such a ray of hope.

First, on the drawing of a poverty line, God knows how much time it will take for this to be done. It seems that there are no strategies devised and commitment shown on how poverty is to be addressed and eliminated. We all know that we have got to be sensible when we approach this problem of poverty and we should emphasize beliefs and convictions. I will speak more on this issue in the second session of the debate.

In general and as we can see from the Policy Address, LEUNG Chun-ying is both lacking in a vision for the future and a breadth of mind. He seems to be evading thorny and sensitive problems. He wants to cause delays and at times he even wants to shirk his responsibility. As a result, we are very worried about the prospects of future development.

Now I would like to return to the topic of policies on economic development. The Policy Address discusses at length the developments in finance, especially the relationship with the Mainland, that is, forging bilateral ties with the Mainland. With respect to this Policy Address, I am sure many people will share the same impression and that is, it seems too much emphasis is LEGISLATIVE COUNCIL ─ 30 January 2013 5703 placed on the development of the financial industry to the neglect of diversifying the industries, devising a policy to assist the industries and caring for them.

Also, it seems that when he attaches such great importance to reinforcing and intensifying Hong Kong's relationship with the Mainland, many people would have the impression that under the National 12th Five-Year Plan, Hong Kong is gradually being planned into serving as a financial centre and regional economic hub for the whole country. People will think that we can no longer see the grand ambitions and lofty ideals in Hong Kong. There is nothing of the sort of things which we heard at the time of Donald TSANG, things like Hong Kong is to become Nylonkong ― that is, to be on the same par as New York and London. This kind of ambition and ideal is gone and there is no more of this kind of striving for excellence in the international community. There is only a single-minded tilt to the Motherland and asking her for support in seeking to make Hong Kong integrate with China's economic development. I will not oppose any development in this aspect. But if the other aspect is not taken into account, that is, to develop Hong Kong into a world city of excellence and an important financial centre, then this will be proven a failure in the long run. It is because speaking of the development of our country, the functions we perform may be beneficial, but this will only have a temporary and short-term advantage.

Many Honourable colleagues have said earlier that the FSDC is a consultative body which does not have a proper name. They hope that this misnomer can be changed, and it is important that this be done. With respect to the future development of the FSDC, many people would have an impression that the FSDC is only paving the way for the development of Qianhai into a special financial zone. We can see that many heavyweights in the Mainland financial sector have joined the FSDC. This makes people wonder whether or not this FSDC is only serving this specific purpose. I think we should be told the answers to these questions.

Rightly as Mr James TO said, however, we do not see the point of forming a company for a consultative body like the FSDC. This deviates from previous practice. Of course, the parties concerned have tried to dispel worries in the public by saying that the FSDC does not have any substantive powers and it will not replace any specific powers of the Hong Kong Monetary Authority (HKMA) or the Securities and Futures Commission. It is also said that the FSDC will not become a body above all these institutions. I hope all these be put down in record. It is claimed that it is not an agency that has got any actual powers. 5704 LEGISLATIVE COUNCIL ─ 30 January 2013

But why is it so strange if it is only a consultative body after all? We also want to know how it will operate in future. In terms of functions, we consider that the FSDC duplicates the work of the HKMA in many respects. Anyway, we would keep a close watch on its developments.

On the securities market, we know that the present trend is that an increasing number of Mainland companies will come to Hong Kong for listing. Now Mainland enterprises take up more than 50% of the market value of all listed companies in Hong Kong. In this Policy Address, there are seven paragraphs on relations with the Mainland. I am sure when such relations are strengthened in future, more private enterprises from the Mainland will be listed in Hong Kong. We are very concerned about the many differences between the two systems. We are also worried about the issue of integrity in the corporate governance of these Mainland enterprises and whether these enterprises have enough integrity.

I am not badmouthing the Mainland. We will have some idea of this when we see that Mainlanders have no confidence at all in their own products, including infant formulas. I am therefore very worried as to how these Mainland enterprises can exercise due diligence. I hope the Secretary can listen to this carefully: There will only be more and more companies which want to be listed, checks on compliance must be enhanced and likewise the work of the Financial Reporting Council. The Government must not consider that this is an achievement when the number of companies listed in Hong Kong increases and when the trading volume in the Stock Exchange of Hong Kong rises. If we cannot do a good job in front-line regulation and if we cannot collaborate well with the Mainland in regulation such that we cannot get any information required for investigations into acts of non-compliance and bring the offenders to justice, then we might as well do less rather than more of this kind of business. I do not think the people of Hong Kong will want to be cheated again like that in the Lehman bonds incident, and they will not want to see another incident like Enron.

Many Honourable colleagues have said that the Government has not done much in promoting the development of industries and their diversification. They are very disappointed. The LEUNG Chun-ying Administration has said that it will promote information and innovative technology and it is even said that a new bureau will be set up. In my opinion, even if a new bureau is not set up, at least the Government should not change its relevant policy. At that time many people thought that Hong Kong should take active steps to develop in this direction. The information and innovative technology is one of our six priority industries. LEGISLATIVE COUNCIL ─ 30 January 2013 5705

Now it is said that two out of these six industries should be reviewed. I agree with the idea. This is especially true regarding the healthcare industry. But regarding information and innovative technology, the Government has not disclosed anything at all in the Policy Address as to what it will do in the next five years. A lot of matching facilities should be put in place first, such as those regarding land, talents, financing, taxation, technology, and so on. Work in these areas should commence. I share the same idea of some other Honourable colleagues and that is, he has not honoured his promises and he has failed to deliver.

At the strategy level, Hong Kong should improve its tourism products. This was mentioned earlier. It will create jobs as well. There is a need for green industries, which is a matter of public interest. We need to reduce emissions and exhausts to make the environment better. For if not, our competitive edge will be seriously undermined. As a matter of strategy, funding should be provided to the environmental protection industry. If there is not enough funding, I do not think many of the tasks can be completed. I am sure many political parties will share the view that a reasonable amount of subsidy should be offered to companies in the industry, and this can create many jobs suitable for the grassroots. By means of the work procedures and recycling efforts at source, the environmental protection industry should be able to create more job opportunities.

In addition, with respect to the production of traditional foodstuffs, the clocks and watches trade, the toys industry or the creative industries as a whole, the Government should devise a clear policy to promote their development. However, there is no mention of these in the Policy Address. I would think that this is a serious shortcoming.

The competition law will come into force soon. We support of the idea that relevant subsidiary legislation should be enacted. The Government should take the lead to review the statutory bodies under it to see which ones should not be granted exemption in order to facilitate our expeditious discussions. For the Government itself, there are many public policies in existence that are unfair or not conducive to competition. Honourable colleagues have mentioned earlier the policy on issuing free-to-air television licences. The Government has said openly before that it wants to liberalize the market. But there has been a delay for many years. Now some people have applied for such licences, but the performance of the government departments in this shows that they are of such a 5706 LEGISLATIVE COUNCIL ─ 30 January 2013 low efficiency. People even have an impression that these departments are most incompetent. As a result, the entire community is very much disappointed. I hope that the results of the licence applications can be made public in the first quarter of this year. And I know many Members have been waiting for these results for a long time.

Members can also see that the incident about a driving school is another good example. The driving school is required to pay some very preferential rents, it can arrange a speedy driving test date for the students and its driving instructors are issued a special licence. But the result is a company which is unscrupulous and suppresses the trade unions. Will the Government allow this to continue? For us, we will certainly follow this issue up.

We support the establishment of the Independent Insurance Authority. Given the developments to date, we are disappointed with the trade in exercising self-discipline. Many of the new products have an element of investment and they are sold in great numbers indiscriminately. There are many complaints from the clients that they have been misled. But I do not find that regulation by the trade itself has been effected properly. I do not find members of the trade are being fair and serious enough in handling the complaints received. The arbitration mechanism concerned does have many shortcomings and loopholes. I therefore approve of the setting up of this agency and I hope that this can be done soon.

Lastly, on the question of public finance, when the Government talks about planning in any five years, it must first consider what the aims of economic development are. Economic development is certainly meant for improving the life of the people. This is important. But economic development does not lead to a reasonable distribution of wealth by itself, and we cannot hope that poverty can be eliminated at once. This cannot be done. If there is no reasonable tax policy to tie in with economic development, the result is that the disparity between the rich and the poor will only worsen. It is therefore important to set up a fair tax regime. The Democratic Party has made proposals on this for many years. We think that some ladders in personal income tax should be added and the standard rate for personal income tax should be abolished. This will make those who have the means to pay more and in suitable amounts. Besides, some specific types of tax should be introduced. One example is the green tax and we are for it. Some tax items should be imposed to combat property speculations or to ensure that Hong Kong people can buy their own homes. We support these tax measures. And we hope that the Government can have a clear idea as to the LEGISLATIVE COUNCIL ─ 30 January 2013 5707 future aims of its taxation policy as a whole and undertake a review of it. The Government must strive to ensure that while there can be economic development, the results of such development can be shared in a reasonable manner. This will enable the vast number of grassroots who are engaged in economic activities and making contribution to get the care and attention they need be reasonably rewarded, too.

MISS CHAN YUEN-HAN (in Cantonese): President, colleagues of the Hong Kong Federation of Trade Unions (FTU) went to different districts to collect opinions after the announcement of the Policy Address. In this process, many people said that they could feel how angry we were when demanding the Government to resolve various problems faced by workers. People were supportive of the FTU.

They have a certain view on people's livelihood. For issues which have been under debate earlier, such as the Old Age Living Allowance, "doubly non-permanent residents" and air quality of Kowloon East, they have a different opinion. With these in mind, the six Legislative Council Members of the FTU should evaluate the situation carefully before determining our stance towards the Motion of Thanks.

Apart from being concerned about long working hours, low wages, poverty and the Mandatory Provident Fund's offsetting arrangement, the FTU also cares about employment. Back in late 1990, or around 1998, the FTU proposed an employment-oriented economic development strategy. LEUNG Chun-ying visited the FTU during the election campaign and explained how he would promote more job opportunities through economic development. We were very concerned as well as happy upon listening to what he said. But the point is whether he will follow the footsteps of the last-term Government, that is, all talk but no action.

While LEUNG Chun-ying was delivering paragraph 143 in the Policy Address about the Government's assistance for the recycling industry, I nearly burst into laughter although I did not as you were presiding over the Council meeting. Do you know what he said? He said, "In my Manifesto, I proposed to promote vigorously the development of the recycling industry. Since most of the recyclable materials are exported through the public cargo working area, the Government will consider identifying suitable berths ……" President, you 5708 LEGISLATIVE COUNCIL ─ 30 January 2013 know that I have been serving Kowloon East for a long time. The Secretary must be familiar with the midstream operation site in Kowloon Bay. Back in the days when Sandra LEE was still in office, the Government wanted to remove the site. However, she agreed to extend the period of use for three years. Dr Sarah LIAO also agreed to our request and granted a further three-year extension. Now, we are talking about demolishing a midstream operation site which exports 70% of our waste paper and 70% of our scrap metals with low handling fees. Maybe the Government caves in to real estate developers, which explains why it does not want to have such beautiful scenery to be seen in Kowloon Bay. The Secretary should be very familiar with the cities in America, where many such berths can be found. These berths exist in highly developed cities to tackle problems in relation to the recycling industry.

In 1995, the FTU took to the streets calling for development of the recycling industry because it could create more job opportunities. But there were suggestions that the industry should operate in the remote Tin Shui Wai. This kind of suggestion, in my opinion, is entirely detached from the fact that the whole industry survives on low operating costs. The suggestion was quickly dismissed. After listening to LEUNG Chun-ying's Policy Address, I could not help laughing. I thought, "What on earth does he want?" The Government always gives us an impression of "this is now and that was then"…… I was referring to the last-term Government. We feel scared if the current-term Government makes any proposal, but we will be very angry if it does not. The point is that his mindset "has changed with the passage of time". As for those six priority industries, there are only four left. Now, he talks about assisting the recycling industry by reintroducing midstream operation sites. What on earth does he want? We are simply baffled.

Recently, a person from the creative industry said, "Miss CHAN, I like this Policy Address very much." ― Please listen up because it was a sarcastic remark ― "In terms of the economy, neither the creative industry nor the revitalization of industrial buildings is mentioned. I feel very much at ease." Secretary, this is what young people have been thinking. They think that whatever is mentioned by the Government will ultimately make things even worse. The notion of "revitalizing industrial buildings" has only ended up in driving the creative industry out of factory buildings. People in the creative industry have no idea where they can move to. On one occasion when Donald TSANG saw me in deep anger, he promised to allocate one or two factory buildings to help the creative industry. Where are those two factory buildings LEGISLATIVE COUNCIL ─ 30 January 2013 5709 now? With regard to "energizing Kowloon East", Mr Raymond LEE, the Head of Energizing Kowloon East Office, said that it had three key features, namely, core business district, cultural space and traditional manufacturing industry. When Raymond came here to brief the Legislative Council of the features, I felt it was not like that. I came to realize that it was nothing but a real estate project in the end. Action Areas 8 and 9 are developed to entirely cater for the needs of property developers in Telford and Kwun Tong. Secretary, I am really frightened. Where is our existing culture and creativity placed? Why did the three music bands who have originally promised the authorities to perform in the above Action Areas ultimately cancel the performance? Because they found out that the authorities merely wanted them to put up a show.

President, Honorable colleagues have reminded me to limit my speech today to only three minutes. I have already exceeded the time limit ― since I have a lot to talk about tomorrow ― I only wish to emphasize one point. The Chief Executive should have a policy to deliver his promise. He cannot go back on his words and place all of us in jeopardy. We do not want to see a completely different policy direction compared to the claim made. As LEUNG Chun-ying has "guaranteed" in his manifesto to resolve the deep-rooted conflicts, I hope that the creation of job opportunities will be his main task. Hopefully, he will not give in to property developers and monopolistic consortiums, or give up assisting the grassroots to find jobs and improve their lot.

Thank you, President.

MR CHAN KIN-POR (in Cantonese): President, the Policy Address of this year has mapped out long-term planning in many areas. It attempts to lay down our future paths in finance, economy, housing and poverty alleviation. In contrast, there are not many measures that can produce instant results. Thus, the Policy Address has attracted criticisms such as "empty" and "unhelpful" to the people.

However, it has always been my view that policy addresses should draw up blueprints for Hong Kong with vision and farsight. This is the primary task. From this perspective, the Policy Address has done its job and also reversed the short-sightedness of the Government in recent years. To give the matter its fair deal, the Policy Address should always be appraised on realization of plans. Ultimately, what really matters is the Government's capability to deliver on promises.

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I would start with the Financial Services Development Council (FSDC). There are lots of controversies soon after the establishment of this new framework, with criticisms like too many members from Chinese enterprises, unclearly defined powers and responsibilities, and so on. These criticisms arise from a lack of confidence in the new body. The Government should hence spend more efforts on explaining it to the public. Unfortunately, the public is paying too much attention to these controversies and misses the crucial issue. Hong Kong really needs such a body to help develop our financial services, remove barriers and develop more business opportunities. While more jobs could be created, government revenue might be increased eventually.

Let us take a look at the Asian economies, including Hong Kong's major rivals. They are actively promoting and planning for economic development. Hong Kong is perhaps the only exception not having a dedicated body to take forward the development of the financial services industry. We have already missed many opportunities. In fact, our economy might have been caught in an impasse if support from the Mainland had not been available. Therefore, it is necessary to establish the FSDC, which will advise the Government on fostering a favourable environment for investment as well as helping the industry break new grounds and overcome imminent problems in a pragmatic manner.

Regarding the criticism of there being too many members from Chinese enterprises, I would like to point out that one would realize that Hong Kong needs their expertise if one looks at the current financial development trend. Hong Kong's priority today is to become the largest offshore Renminbi centre of the world. Hence, we badly need experts on the Chinese financial framework to help build a suitable system for Hong Kong.

Besides, the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) provides for entry to the financial services industry in the Mainland, but there are too many obstacles in the process. Take insurance as an example. Entry has remained at a standstill. Expert advices from the Chinese side are badly needed to help find practical solutions. In fact, Hong Kong's financial services industry has been developing an inseparable relation with its counterparts on the Mainland, and the engagement of Chinese financial experts for further development and consolidation is inevitable. All this is just common sense.

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Regarding the financial services industry, I would like to point out that Hong Kong has been more vigorous in financial supervision than in development in recent years. Again, take insurance that I am familiar with as an example. Since the Lehman Brothers incident, the Government has been dialling up the stringency in its regulation of the industry, rolling out regulatory requirements incessantly. Some measures are so extreme that people have been caused to wonder whether regulators are more concerned about potential responsibility than practicality of the new requirements and measures. As a result, they are not only unhelpful to customer protection but also obstructive to the normal course of business. When regulation and development lose balance, Hong Kong would only be a loser.

When the Government focuses on regulation, business development is often overlooked, thus rendering the development of the financial services industry stagnant in recent years. I hope that the FSDC, apart from helping local underwriters to enter the Mainland, would also look into the development of catastrophe and captive insurance, and Hong Kong as a centre for insurance and reinsurance. These would help promote diversification in the insurance industry. I would suggest the study to cover means of upgrading Hong Kong's competitiveness, such as the development of headquarters economy or offers of tax incentives.

The proposed Independent Insurance Authority is the prime concern of the industry. The Government is making every effort to table a Bill to the Legislative Council for scrutiny during the current Session. Since an independent regulator will have far-reaching implications on the industry, a second round of consultation has been concluded. Both intermediaries and underwriters have made substantial submissions, particularly on industry participation in the new Authority, legal relation between underwriters and intermediaries, as well as tougher penalties for intermediaries. Taking account of these views, the bill may require considerable revisions in drafting. As the new legislation will directly affect the long-term development of the industry as a whole, it is hoped that the Government will address these outstanding concerns before tabling the bill to the Legislative Council.

On the proposed Policyholders' Protection Fund, the Government aims at introducing a bill to the Legislative Council in the next Legislative Session. Although the legislation is being drafted by the Government, the industry still has several concerns in respect of certain parts of the bill. Should SMEs be covered? Should policies underwritten by insurance companies in liquidation 5712 LEGISLATIVE COUNCIL ─ 30 January 2013 still be valid? If these issues are not resolved, the Fund may be drained, leaving the public to foot the deficit.

Turning to the Mandatory Provident Fund (MPF) System, the Government will consider expanding the power of the Mandatory Provident Fund Schemes Authority (MPFA), in addition to having directed it to get ready for full portability arrangement within three years. In fact, the implementation of full portability is a general trend. Studies on a central database and the arrangement of "one member, two accounts" are priorities for the early realization of full portability. Market competition will help bring down the fee level of MPF schemes.

According to the analysis of "Report on a study of administrative costs in the Hong Kong Mandatory Provident Fund System", MPF scheme charges in Hong Kong are higher than places where retirement plans are more mature mainly because of the higher administrative costs in Hong Kong. Other fees are comparable. Thus, simplified and automated administration is the right prescription to bring down charges of MPF schemes. Apart from promoting full portability, the MPFA should also push forward the administrative reform properly. In this way, improvements are forthcoming.

On expanding the power of the MPFA, the Government is studying to include more factors like fund types, charges and returns for scheme members in the checklist for accreditation of schemes and qualified funds. I hope these measures will not lead to over-regulation.

On tariff control, I have repeatedly stressed that fees and charges are complex market matters. Administrative orders alone will not bring down charges. If excessively stringent measures were introduced, service providers might be compelled to reduce investments in compliance for survival. As a result, scheme members would only suffer from poor services and lower returns.

As explained earlier, there is room for downward adjustment of charges. We should start with automated administration and full portability, supplemented by other practicable measures. We should not try to win applause with one-off measures that are not addressing the root causes. If we did, we would be just fooling ourselves.

I so submit.

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MR TANG KA-PIU (in Cantonese): I would like to discuss one of the portfolios of Secretary Prof K C CHAN, that is, the Mandatory Provident Fund (MPF) System as some Secretaries of Departments and Directors of Bureau are present now.

To alleviate the discontents of society, the public and wage earners with the MPF System, the setting up of central database and "one member, two accounts" as proposed at the meeting of the relevant panel is not enough. The FTU certainly supports the proposed "one member, two accounts". In fact, we have proposed to introduce a system similar to that of "bank books", which will allow wage earners to inspect employers' contributions and the profit and loss situation of MPF schemes. We believe such an arrangement is very much desirable.

Concerning the proposed central database, we wonder whether the proposal of setting up a central database for tracking employers' contributions is due to the Government's total refusal to consider abolishing the offsetting mechanism. So, even though the "one member, two accounts" is implemented, employers can still use the accrued MPF benefits to offset severance payments if necessary, and this is detrimental to the interests of wage earners.

I proposed a relevant motion debate some time ago. In my opinion, the MPF scheme has become employers' savings plan which can be used to offset severance payments. According to our estimation, during the past 12 years after the implementation of the MPF System, about 30% or 40% of applications for withdrawal of accrued interests sought to offset severance payments with accrued benefits. How much money will be left for a wage earner upon retirement? Several Honourable colleagues will express further views in the third debate session on the retirement protection system and elderly poverty.

On the issue I mentioned just now, the presence of Secretary Prof K C CHAN is essential. So I have to raise it here. In 2010, a Member asked an oral question about the MPF System. In reply, the Secretary said that the accrued benefits for an employee with a monthly income of $10,000 after making MPF contributions for 15 years would be $550,000 when the employee reaches the retirement age of 65.

I cited the situation of another worker as an example in a recent motion debate on the MPF System. It happens that her salary is $10,000. She has been making contributions since the establishment of the MPF System. After 13 5714 LEGISLATIVE COUNCIL ─ 30 January 2013 years of contributions, she will retire in two years. But her accrued benefits in the MPF are only $200,000-odd. I asked in the motion debate: How can the accrued benefit be increased from $200,000 to $550,000 in three and a half years? Thus, people feel very much worried and cast doubts on the effectiveness of the MPF System. The MPF as a retirement plan is far from adequate.

(THE PRESIDENT'S DEPUTY, MR ANDREW LEUNG, took the Chair)

There are two main reasons why people feel worried and question the effectiveness of the MPF System: First, the authorities have never explained the income replacement rate of MPF after the wage earners have retired and how to ensure its sustainability. There is no explanation at all. Secondly, what protection will be available for those who have not made any MPF contributions? The Comprehensive Social Security Assistance Scheme may have to foot the payments. In view of this, I very much hope that Secretary Prof K C CHAN can make the MPF System an issue for discussion by the task force on social security and retirement protection under the Commission on Poverty. Of course, the Legislative Council has approved the establishment of the Subcommittee on Retirement Protection (the Subcommittee). I hope Secretary Prof K C CHAN will assign his staff to attend the Subcommittee meetings when it starts operation. I think it is necessary for him to do so although the Subcommittee is under the Panel on Welfare Services.

Regarding the views of the FTU on the Policy Address, the FTU will continue to follow up on why election promises relating to labour rights, particularly on the offsetting mechanism, were not mentioned or played down in the Policy Address.

The theme of today's debate is economic development. We believe that economic development cannot be separated from employment and manpower training. The ultimate goal of all economic development strategies should be the creation of employment opportunities ― quality employment opportunities. Among the four industries on which emphasis are placed, I will only mention two of them that I am familiar with because the trade unions concerned have expressed a lot of views to me.

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First, the tourism industry. According to some members of the industry, so far the Travel Industry Council of Hong Kong has not required that tour escorts be assigned by travel agents for outbound tours. There is no regulation in this respect. In other words, a travel agent can tell its clients to go directly to a boundary checkpoint where a tourist guide cum driver assigned by a Mainland travel agent will meet them. Under such circumstances, how can jobs be created and quality be assured? The Commerce and Economic Development Bureau will submit a bill on the establishment of the Travel Industry Authority to solve the problem. I hope that the authorities will not rely on regulating members of the trade by licensing as a measure to improve the quality of the trade while turning a blind eye to their needs for support and employment opportunities.

Besides, during the discussion with the Seamen's Union, we found that their situation is most miserable. The number of maritime students from the two sea schools each year is small, just around 100. Some students who wish to be trainee captains in ocean-going shipping companies in order to take up a maritime career in the next 10-odd years have acquired different licences and become professionals in this industry. But eventually, they found that there is a lack of employment assurance after graduation.

The Government has neither put pressure on the shipping companies nor provided policy incentives to encourage shipping companies to employ them. While trainees of the construction industry are offered a monthly allowance of $5,000, why do the authorities not do the same for the shipping industry? What are the problems as a result? There is a lack of prospect for young people, not to mention that the Marine Department finds it difficult to recruit local maritime staff. These decade-old problems can never be resolved. The industries that we are talking about may only help improve the GDP but not nurture talents.

Mr LEUNG Chun-ying paid numerous visits to the local communities before, during and even after the election, giving us a wrong impression that he attached importance to local community economy. But the development of local community economy is not much mentioned in the Policy Address. There are two definitions of local community economy. Firstly, a district has become another "locomotive" of Hong Kong economy or the "locomotive" of an industry; secondly, it refers to the local community economy of a district. But there is no mention in the Policy Address. Has Mr LEUNG Chun-ying wasted his time in visiting the local communities?

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He visited Tung Chung more than twice and promised to establish a Lantau Economic Development Council after being elected as Chief Executive. But no further news has been heard to date. He is aware of the development potentials of Lantau in terms of land, sea and air, apart from its proximity to the Pearl River Delta. But so far, we have not heard of the proposal anymore. Has it been shelved?

Apart from industrial economy, the FTU would also like to talk about dual economy. There are no marketplaces or hawkers in the fourth-generation new towns such as Tung Chung, Tuen Mun, Yuen Long and Tin Shui Wai. It is difficult for the grassroots to find employment, not to mention starting their own businesses. Some people said that more jobs can be created by holding more large-scale events. But the creation of employment opportunities means more than creation of jobs. It also means opportunities of business venture, which are not available at all.

On economic development, the FTU opines that many things should be preserved and there is room for improvement. We will discuss issues concerning labour and welfare in detail later on.

I so submit. Thank you.

MR VINCENT FANG (in Cantonese): Deputy President, not only the SAR Government is a "hot kitchen", Hong Kong as a whole has become a hot kitchen too. Many hot topics will crop up every day and the heated topic this week is infant formulas. The panic purchase of infant formulas during the Lunar New Year has even led to more heated topics. Should the policy of "Hong Kong infant formulas for Hong Kong people" be implemented? Should infant formulas be classified as a reserved commodity so that the number of cans that can be carried by a person departing from Hong Kong should be limited? Should people carrying a large amount of commodities or goods commonly known as "parallel imports" be allowed to depart from Hong Kong? Should the measure of "multiple entry permits" for Mainlanders be abolished? Should the Individual Visit Scheme be discontinued? This is a social problem as well as an economic issue, which is even related to the Government's administration and whether there is long-term planning and supporting measures in policymaking.

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The panic purchase of infant formulas has undoubtedly re-confirmed that the SAR Government has never conducted any medium- and long-term planning for socio-economic development as a whole. Neither has the Government made any precaution on anticipation of any problems or demands arising from the measures to be introduced. Thus, regarding Mr LEUNG Chun-ying's principle of "roll them out as soon as ready", I feel a bit more worried.

I have almost commented in every policy debate that the Chief Executive is not visionary enough. I think my comment is right. Let me cite a few more examples. The Capital Investment Entrant Scheme was launched when the Mainland was getting rich. But when property prices surged due to the influx of Mainland capital, capital investment was abolished. When property prices continued to soar, the Government launched "Hong Kong property for Hong Kong people" and raised the stamp duty. The situation is the same when it comes to "Hong Kong infant formulas for Hong Kong people". However, the Government has continuously made all efforts to urge the Mainland to implement the Qualified Foreign Institutional Investor (QFII) or Qualified Domestic Institutional Investor (QDII). However, has it predicted the chain reaction in the investment market when a large quantity of Mainland capital is attracted to Hong Kong? In fact, not only real estate, other assets such as taxi licenses have also surged to $7 million due to speculation by Mainland investors.

Another issue that we still have a vivid memory is the "doubly non-permanent residents" problem. As this Council has time and again discussed this issue, I am not going to dwell on it anymore. But the problem still has to be resolved by restricting the use of maternity wards to Hong Kong people only.

What will be the next targets of panic purchase? Places in universities or primary schools? Rice, shampoo or chocolate? If so, should the supply of these commodities be restricted to Hong Kong people again? Given that places like Causeway Bay, North District and Mong Kok are crowded with Mainlanders, should we restrict the use of roads to Hong Kong people? Or should the Individual Visit Scheme (IVS) be abolished in one go?

The wholesale and retail industry and I support the IVS and oppose any measures that seek to restrict the supply of commodities or assets to Hong Kong people. We also oppose any prohibition on parallel imports trading activities. 5718 LEGISLATIVE COUNCIL ─ 30 January 2013

I know that some Honourable colleagues will criticize me for protecting the interest of the industry at the expense of the interest of Hong Kong babies. It is wrong. Suppliers and retailers of infant formulas have recently discussed the matter with the Government continuously, trying to do their best to serve Hong Kong mothers and babies. So, Hong Kong mothers can rest assured. You will certainly be able to buy formulas for your children. Perhaps you should start considering the recommendation of the Department of Health (DH) ― breastfeeding your children until they are three years old. In that case, you need not buy any infant formulas. Therefore ― Secretary Dr KO Wing-man is not present at the moment ― the DH recommendation that communication between suppliers of breastmilk substitutes and mothers be strictly prohibited is not viable. The Government may effect regulation on advertisements, but the incident shows that transparency of information is most important.

I oppose the idea of "Hong Kong infant formulas for Hong Kong people" and measures that prohibit parallel imports trading activities mainly because these are contradictory to the status of Hong Kong as a free port and Hong Kong's effort in maintaining its reputation as a "shopping paradise". Hong Kong has been so popular among international and Mainland consumers because the commodities offered in Hong Kong are fine in quality but cheap in price. Moreover, goods sold in Hong Kong are no fakes, fashionable and in ample supply. People can buy whatever they need conveniently. Due to our advanced logistics industry, goods from all parts of the world can be launched onto the market in a couple of days as long as supply is available.

Therefore, I support the establishment of the Economic Development Commission as proposed in the Policy Address so that studies can be conducted on the convention and exhibition industries and tourism, transportation and logistics industries to facilitate discussion on a long-term development strategy. These are the edges of Hong Kong. Undoubtedly, we should consolidate our existing advantages instead of following what people in other countries are doing. Otherwise, Hong Kong will only become a total loser.

Deputy President, I would like to talk about the IVS again. I believe we all acknowledge that Mainland visitors coming here on the IVS have brought enormous benefits to different sectors of Hong Kong economy, such as tourism, hotels, retail, catering, transportation, and so on. In the past when Mainland visitors could only join group tours to Hong Kong, only a small number of operators could be benefited. In the meantime, many visitors could not enjoy the advantages of Hong Kong as a shopping and gourmet paradise. But after the LEGISLATIVE COUNCIL ─ 30 January 2013 5719 implementation of the IVS, visitors can find accommodation on their own. They can eat whatever they like and move around for shopping. Thus, Hong Kong economy has been rescued from the trough after the SARS. Moreover, various industries and small and medium enterprises have seized the opportunities for development over the past decade. For example, hotels preferred by these visitors and shopping malls full of small commercial tenants have to rely on the IVS for their business.

However, the storm caused by panic purchase of infant formulas has stimulated some people to siege passengers carrying large luggage at train stations. Some Legislative Council Members requested the abolition of "multiple entry permits" and even the IVS. They even urged the Customs in the Mainland to enforce the law strictly and impose tariffs on inbound travellers who are carrying certain commodities. These have encouraged hostility against Mainlanders. However, have those who put forth such suggestions estimated the implications on our economy, employment opportunities and public sentiment? As infant formulas are not iPhones and not limited in production, the problem of supply will be resolved as long as the distribution and sales channels of suppliers and retailers are improved.

The incident has reconfirmed what I said at the outset. When the Government requested the Mainland to implement the IVS, it did not forecast or estimate the resultant demand for clearance service, public transportation, accommodation, shopping facilities, eateries and tourist attractions so that corresponding measures can be implemented. One need only a look at the checkpoints at Shenzhen which are packed with people and the immigration officers who are working as busy as bees, to realize the problem.

Worse still, the supply of hotels cannot catch up with the increasing number of visitors. Mr James TIEN, in his capacity as Chairman of Hong Kong Tourism Board, will call on the Government to increase land for hotel development almost every year. But the increase simply fails to catch up with demand. As a result, many residential buildings have been transformed into hotels or serviced apartments, thus adding fuel to the soaring residential property prices.

Another problem is the lack of ancillary facilities for the development of the commercial and retail sector. After the IVS has been implemented for a decade, the total volume of retail sales in Hong Kong has doubled. Business 5720 LEGISLATIVE COUNCIL ─ 30 January 2013 opportunities will naturally lead to panic purchase of retail properties, while lots of people also want to set up their own business by seizing the opportunity. However, the additional area of retail properties is less than 10%. Under such circumstances, will rents of retail properties not rise?

But over the past decade, Hong Kong has almost done nothing in respect of new town development. No suitable place can be found for the development of a new business district, particularly along the railway lines. Therefore, tourists who come to Hong Kong for shopping are cramped into several districts. Will local people not complain about it? So, I support the proposals in the Policy Address on developing the North East New Territories, Hung Shui Kiu, and Lantau Island as well as areas along the trunk routes in New Territories West. This can increase land supply for residential purpose on the one hand and increase the opportunities for development of business districts on the other.

But these are relatively long-term problems. In the short term, the Government should introduce measures to alleviate the soaring rents of retail properties. Unfortunately, the Chief Executive, who has promised to the wholesale and retail sector that he will respond to this problem in his Policy Address, has failed to deliver. I hope that specific response will be given to the motion proposed by me next week.

I agree to the views of the Chief Executive on economic development strategy that industries in Hong Kong should be expanded instead of maintaining the over reliance on the financial and real estate sectors. But there is a lack of specific measures. I expect further economic policies will be introduced by the Chief Executive on the one hand and look forward more eagerly to seeing chain reaction assessments being conducted on the making of complementary arrangements in rolling out any new ideas, policies or measures by the Chief Executive in future on the other. In doing so, it will be conducive to the sustainable development of our economy.

I so submit. Thank you, Deputy President.

MR WONG KWOK-KIN (in Cantonese): Deputy President, today this session of discussion is economic development in the Policy Address. Personally, I support the philosophy and direction of economic development expounded in the Policy Address, despite some inadequacies in it. Regarding the concept of LEGISLATIVE COUNCIL ─ 30 January 2013 5721 economic development, the Government has proposed "appropriately proactive governance", which is in fact advocated by us for many years. The last-term Government had also mentioned it. In our opinion, government intervention, in some measure, is necessary when the market has failed to bring its functions into full play. Take the current housing policy as an example. Property prices can remain stable because of government intervention.

Insofar as the general direction is concerned, we agree with what the Chief Executive said in paragraph 19: "Sustained economic growth is a prerequisite for us to tackle housing, poverty, ageing population, and environmental problems. Promoting economic development is therefore the primary goal of the Government." However, we consider that there are still some inadequacies. What are they? In my opinion, the first and foremost goal of economic development is to bring benefits to all citizens. Apart from resolving such problems as social development, poverty and housing, another important point is to create more quality job openings for young people and to provide them with more opportunities of moving upwards on the social ladder. To achieve this, a very important prerequisite is to diversify our industries. In the present-day Hong Kong, the real estate and financial services sectors outshine other industries. This phenomenon is certainly far from satisfactory.

According to our understanding and conversations with young people, many young people complain about the lack of a career pathway. Many university graduates are incapable of solving their own housing needs although they have been working for several years. They do not dare getting married since the problem of finding accommodation after marriage is a big headache to them. I remember the former Chief Executive Donald TSANG once said that it is not necessary to buy a flat, and renting a flat is also fine. But how can they rent a flat now? Take a look at the market. It may be still affordable if it is a "sub-divided unit". In the urban areas, the monthly rent of a 400-square-foot flat is more than $10,000. If two university graduates get married, the rent would almost use up the whole salary of one party. How could they afford to rent a flat? A most fundamental issue, which is the problem of finding a marital home, is not resolved.

Furthermore, there are problems such as upward mobility and prospects of development. Young people in Hong Kong are so disgruntled. Why do we often say that young people from the post-80s and post-90s are comparatively more radical, often complaining of the Government and voicing strong views 5722 LEGISLATIVE COUNCIL ─ 30 January 2013 against the Government? This is precisely because their situation is worse than that faced by us. Although we as their predecessors were very poor when we were young, we saw prospects and opportunities of moving up the social ladder. I believe some Honourable colleagues here, including myself, come from the grassroots. Through our own efforts, there were lots of opportunities and channels allowing us to move and climb upwards. Our families as a whole could thus be lifted out of poverty. However, as young people nowadays fail to make ends meet, how could they lift their families out of poverty? This is a big problem, not only in the economic sense, but also in the social sense. Thus, we think the direction of industrial diversification mentioned by the Government and the Chief Executive in his Policy Address is correct.

In the Mainland, the Central Government's 12th Five-Year Plan mentioned that Hong Kong would be supported as a shipping hub. The shipping industry should be in a favourable situation. But after a long period of time, we still do not see any substantive measures and policies introduced by the Hong Kong Government to promote Hong Kong as a shipping hub. We should fully understand that the shipping industry is not merely about aircrafts and ships. It also includes insurance, finance, actuary, claims, testing and others industries which are derived from the shipping business. They serve to provide some quality jobs outside the financial and real estate sectors for young people. We are delighted that the Chief Executive has established a Working Group on Transportation under the Economic Development Commission because the Government has finally started to take action. But I would like to remind the Government that simply setting up a commission or a consultative framework to discuss the issue may not be able to meet the objectives and fulfil its duties. It is because the conclusions and policies come out of discussions have to be implemented. Many friends of mine from the shipping industry have told me that the Hong Kong Maritime Industry Council has discussed many policies, but most of them are sheer empty talk without any subsequent development.

I believe this situation happens not only in the shipping industry. The same problem occurs to many advisory bodies of the Government. Hence, I hope that the current-term Government, which has established so many commissions ― critics said that the current-term Government and our new Chief Executive are fond of establishing commissions to study various issues ― will follow up and implement the policies formulated after discussion by the relevant departments and their counterparts. Empty talk is meaningless.

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Finally, I would like to mention that in respect of industrial diversification, the last-term Government had proposed the development of testing and certification industry. The current-term Government has recapped this. However, the last-term Government, after proposing the idea, has done nothing to promote the industry. I think the industry has very strong potential for development. Why are there so many Mainland residents engaging in panic purchase of infant formulas, cosmetics, and even daily necessities such as shampoo? Because they have little confidence in products made in the Mainland. They have even lost confidence in food safety and drug safety on the Mainland. Hong Kong's strengths and advantages lie in our sound rule of law. People have confidence in the products that are tested in Hong Kong and the brand name Hong Kong. If Mainland goods have gone through testing and certification in Hong Kong, I believe Mainland residents will have confidence in buying them. Thus, they do not have to travel a long and hard journey to Hong Kong in order to scramble for these goods. Therefore, I think the business opportunity before us is enormous and prospect for development is very bright. I hope that the current-term Government and Chief Executive LEUNG Chun-ying will implement the proposals in the Policy Address by rolling out specific measures. It should not engage in sheer empty talk like its predecessor. I hope that the Policy Address of next year will not mention these proposals again. Otherwise, I believe it will be most disappointing. I shall stop here for this debate session.

DR LEUNG KA-LAU (in Cantonese): Deputy President, I rarely spoke on this topic in previous years since I am not well-versed in economic development. But this year, I would like to talk about the healthcare industry. Over the past few years, the last-term Government stated that it would promote the six industries where Hong Kong enjoys clear advantages, including the healthcare industry. The Chief Executive, in paragraph 42 of the Policy Address, pointed out that "In promoting the industries over the past four years, we have identified certain issues that need to be addressed. For example, our medical sector is facing manpower shortage, and the public is divided as to whether education services should be regarded as an industry. The need to meet local demand also clashes with the need to promote the growth of these two industries.". Therefore, in his Policy Address, the Chief Executive has pointed out that a review and study is necessary.

5724 LEGISLATIVE COUNCIL ─ 30 January 2013

After reading the Chief Executive's description, I felt quite worried. First of all, I would like to point out that in the Policy Address, the Chief Executive said, "In promoting the industries over the past four years.". As pointed out by many Honourable colleagues, although the Government proposed to promote the six priority industries, nothing has been done in relation to any of them, not to mention the healthcare industry. What we need most is land. The four plots of land proposed by the last-term Government are still pending tender offers. It is heard that tenders would fall through. As regards the completion date, it is nowhere in sight. Regarding the issue of "doubly non-permanent resident pregnant women" mentioned, it is not intentionally developed by the Government. It is simply because Mainlanders can get Hong Kong identity cards for their children born in Hong Kong. In fact, this should not be regarded as an industry since it is not intended by the Government. Actually, nothing has been done by the previous Government to promote the healthcare industry.

Secondly, I see that the Chief Executive labels non-residents as the target customers of these industries. I consider it a wrong concept. In Hong Kong, even the Disneyland or Ocean Park could run into deficits if they do not receive local guests. You must always have 30% to 40% local guests to sustain the operation. Therefore, the domestic demand is indeed part of an industry. A number of Honourable colleagues just now recommended developing various types of marketplaces in some districts. These also seek to serve the local people.

In the past few years, I have recommended to many officials the healthcare industry. How significant is the contribution of the healthcare industry to our economy? In fact, it is a high value-added sector. For example, if the weekly business turnover of a 300-bed private hospital is $100,000, the annual revenue would be $1.5 billion assuming an 70% occupancy rate in 52 weeks a year. In contrast with a 300-room hotel, how comparison can be made? Assuming that the rent of a hotel room or the relevant income is about $2,000 per night and it is fully occupied for 365 days a year, the revenue is only $440 million. Thus, the medical care industry is a fairly high value-added sector. What we need is just land. The Government has given us four plots of land, which are in fact very remote since they are located in Tai Po, Tseung Kwan O and Tung Chung respectively. If hospitals are constructed on these four plots of land for use by Hong Kong residents, it would be very difficult to break even.

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Why are sites at remote locations allocated for such purpose? Because the last-term Government considered that a fairly large plot of land was needed for building a private hospital. I wonder why the last-term Government did not first conduct a market research or survey before implementation. In fact, amongst the existing 12 private hospitals, the largest single plot of land occupied is no more than 1 hectare with the smallest one being only 0.3 hectare. A hospital must be close to the residential areas for the convenience of patients living nearby.

Recently a private hospital was found to be making a handsome profit and even profiteering despite claiming itself a non-profit-making body. The profits have been transferred to its affiliated or holding company. Thus, some newspapers have called for a halt of development of private hospitals on the ground of their confusing situations. I am very surprised. If development is stopped, would the existing private hospitals not become more arrogant and would it not be more difficult to regulate them due to insufficient beds in hospitals? To be reasonable, the Government should consider this point. Since the healthcare industry can make profits, why should they be forced to be non-profit-making organizations? If they are profit-making, the Government should charge the market premium on the land they operate. The simplest solution is to put the land on the Application List, for instance. By putting eight to 10 plots of land of different sizes on the Application List for tender, the Government could collect revenue when operation by the market has commenced. Of course, the Government should provide sufficient land because insufficient land supply will lead to soaring prices as in the case of the residential market.

Some friend of mine have asked this question. How could the healthcare industry be developed with a shortage of manpower? Let me do some calculations. How much manpower is required in a 300-bed private hospital? Only 70 doctors and 300 nurses are needed. How many doctors and nurses are there in Hong Kong currently? There are more than 12 000 doctors and 40 000 nurses in Hong Kong, in addition to at least 300 medical graduates every year. Why should there be a shortage of manpower? The so-called shortage of manpower is due to the mismanagement by the Hospital Authority (HA) and the problematic personnel management system which has caused the understaffed situation of several departments and clusters. But this is the problem of the HA instead of the shortage of doctors in Hong Kong. The local private healthcare market is sufficiently staffed currently, particularly in obstetric services. Last 5726 LEGISLATIVE COUNCIL ─ 30 January 2013 year, they served 30 000-odd pregnant Mainland women. You can see how much spare capacity they have in this year when such business has gone.

I would like to cite the incident of infant formulas as an example. I saw an irrational way of dealing with the problem, thus turning an apparently good thing into a bad thing. When friends in the Mainland have no confidence in the quality of goods produced in the Mainland and come to Hong Kong to buy infant formulas, it is obviously a profitable business for Hong Kong. Why do we not continue to do the business? I must declare my interest first. I have a one-year-old son on No. 3 infant formula and a one-month-old daughter on No. 1 infant formula. These are non-expensive infant formulas. My wife told me that the prices of No. 3 and No. 2 infant formulas are $160 and $200 per can respectively. Since these infant formulas are cheap, the supply should absolutely not be a problem. No one will scramble for them as they can be purchased easily. When people come to Hong Kong in order to scramble for expensive infant formulas here, we can consume cheaper ones. There is no problem at all. My children grow fat and healthy by consuming these formulas. There is no problem at all.

If the wholesalers do not have any problem in getting supplies, it should not be difficult to meet the demand of local people. I propose that non-governmental organizations (NGOs) buy infant formulas from wholesalers direct. Then in districts where supplies are tight, the Government can co-operate with the NGOs so that the latter will provide a venue for stocking these infant formulas for purchase by Hong Kong people. In fact, I think it is easy to resolve the problem of shortage in supply due to panic purchase in individual pharmacies. I hope the Government will understand that the crucial factor in developing an industry is data. Data play the most important role. Empty talk is useless. It is the right direction if matters are handled in a rational manner.

Deputy President, I so submit.

MR KENNETH LEUNG (in Cantonese): Deputy President, as a graduate of the Queen's College where many well-known medical practitioners were groomed, I very much agree with the remarks made by Dr LEUNG Ka-lau just now.

The debate theme today is the part on the economy, as proposed by the Chief Executive in the Policy Address. In this debate session on "Economic LEGISLATIVE COUNCIL ─ 30 January 2013 5727

Development", I would like to express utter disappointment with the entire Policy Address.

Today, I have some time to read the parts on the economy in the policy addresses of a couple of years ago and found that timetables and roadmaps were proposed in the those policy addresses. In the Policy Address this year, however, only some vague slogans, such as "studies and studies" and "the establishment of advisory committees" are mentioned, as if all problems in Hong Kong can be resolved by the establishment of all these advisory committees.

Let me start with the economic concept of the Chief Executive, LEUNG Chun-ying. In the earlier part of the Policy Address, he said that a simple and low tax regime had to be maintained. This I agree. This regime is also the cornerstone of Hong Kong's success in the past decades or even century. However, what is Mr LEUNG Chun-ying's economic concept? Regarding his proposed slogan "appropriately proactive", what was he referring to when he mentioned the word "appropriately"? What did "proactive" mean? Does the word "proactive" suggest that there is no need for the Government to intervene in the market through enacting legislation or not doing so? When will the Government act in an "appropriately proactive" manner?

A colleague said in his speech just now that the Government would have to intervene when the market mechanism fails. However, if we read between the lines, we will find that Mr LEUNG Chun-ying implied that the Government would intervene in the market not only when it failed. So, what is his idea exactly?

After raising these conceptual issues, I would like to say a few words about two industries. The first one is the financial services industry. Repeated discussions have been conducted among us on the establishment of the Financial Services Development Council (FSDC) proposed in paragraphs 33 to 37. Although I support this proposal, the functions, powers and responsibilities, and titles of the FSDC are still unclear, and they can even be described as "unsystematic". So, how can it come to fruition?

Another more serious problem has also been neglected. Hong Kong's financial services industry is not a single industry, for it covers insurance, banking, asset management, hedge funds, private equity funds, and so on. 5728 LEGISLATIVE COUNCIL ─ 30 January 2013

Leaving a variety of industries to be dealt with by a single organization ― the FSDC ― it is actually hard for its 20-odd staff members to do solid work.

Furthermore, the Policy Address has also proposed developing Hong Kong into a more comprehensive asset management centre in the Asia-Pacific Region. Despite a lot of specific suggestions made by the industry over the past decade, the Government has failed to put them into implementation. As a professional with close ties with the financial sector, I can briefly discuss those suggestions without referring the matter to the FSDC for discussion. For instance, regarding the asset management centre, many countries have already launched the limited partnership regime, though there are unlimited investment companies, too. While such "investment tools" were rolled out in Singapore a long time ago already, the enactment of legislation on these two kinds of "investment tools" in Hong Kong is still nowhere in sight.

Let me cite the tax exemption arrangement for offshore funds as another example. Certainly, an ordinance was already enacted in Hong Kong in 2006, but it is now plagued with problems seven years or so after it has come into operation. For instance, can exemptions be granted when offshore funds engage in lending? When it comes to offshore funds, tax concessions have recently been introduced in Singapore for locally controlled funds. So, should the Government contemplate what should be done?

Another "white elephant" found in the Policy Address is the Economic Development Commission, though I have no intention to go into the details of its composition and structure. I only wish to express my views on these two points ― shipping and aviation centres.

Owing to its prime geographical location, Hong Kong was once a thriving shipping centre. Nevertheless, thanks to the Government's shortsighted policy, Hong Kong's status as a shipping centre is on the decline. Let me cite section 39E of the Inland Revenue Ordinance (IRO), as mentioned repeatedly by Dr LAM Tai-fai, as an example.

A number of port-related economic activities, such as leveraged leasing, were undertaken in Hong Kong when it was a port in the 1980s. However, subsequent to amendments to the IRO in 1992, the leasing business of the aviation industry and leveraged leasing business of the shipping industry were derailed. Section 39E mentioned by Dr LAM Tai-fai is about the provision of LEGISLATIVE COUNCIL ─ 30 January 2013 5729 tax relief on depreciation of machinery not used locally. I hope the Government can review in practical terms whether tax relief can be reintroduced for leveraged leasing. We should neither throw out the baby with the bathwater nor give up greater economic benefits for the sake of plugging loopholes in taxation.

Let me now turn to the aviation industry. Is it necessary for a committee to engage in lengthy discussions before actions can be taken? During a meeting yesterday with the Chief Executive of the Cathay Pacific Airways, I realize in less than 45 minutes into our discussion that the Government could adopt the following two measures to assist the development of the aviation industry: First, to sign more bilateral air service agreements; and second, to rationalize the power of control of the air traffic zones in the Pearl River Delta (PRD). Since there are only five airports in the PRD, airport runways are very often extremely busy. As mentioned by the Chief Executive, this matter must be rationalized by a "G2G" (Government to Government) approach. Nevertheless, did the Government succeed in doing so?

On the economy, I so submit. Thank you, Deputy President.

DR CHIANG LAI-WAN (in Cantonese): Deputy President, right at the beginning of the part on Economic Development in the Policy Address, the Chief Executive mentioned that sustained economic growth is a prerequisite for Hong Kong to tackle housing, poverty, ageing population, and environmental problems.

Regarding the point of setting economic development as the primary goal of the Government, I fully agree with it. Hong Kong's expenditure on people's livelihood and welfare is increasing continuously, yet it is stipulated in Article 107 of the Basic Law that, "The Hong Kong Special Administrative Region shall follow the principle of keeping the expenditure within the limits of revenues in drawing up its budget, and strive to achieve a fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of its gross domestic product.". In other words, if the economy of Hong Kong remains stagnant, the increase in welfare expenditure can hardly be realized, unless the reserve is drawn down when we are out of money as certain Members said earlier. However, if we resort to such practice, Hong Kong will end up in a state similar to countries on the brink of bankruptcy and our economy will never revive. Those people who propose such an arrangement are obviously putting the interest of their political parties before that of the public, for people's 5730 LEGISLATIVE COUNCIL ─ 30 January 2013 livelihood can only be improved when economic development is faring well. In paragraph 20 of the Policy Address, the Chief Executive mentions that to promote economic development, the Government must be appropriately proactive, and the Government should refrain from intervention when the market is functioning efficiently, except to ensure a level playing field; but in case of market failure, the Government must take appropriate action to address the problem. Now, is the market in Hong Kong functioning efficiently? Or is the market failing to perform its functions? We may review the situation in the past. Last decade, in the 1960s and the 1970s, the economy was far less buoyant than today, but the problem of disparity between the rich and the poor was not as serious as today. The credit should go to the diversified economic development. Back then, manufacturing industries were still the mainstream, employees in the sector exceeded 40% of the total employment size and the industries accounted for over 30% of the GDP. Though society was not affluent, there was balanced development of the industries.

By 1990s of the last decade, industries in Hong Kong started to move to the North. Since then, industries in Hong Kong have become hollow. To date, employees in the industries only account for 3.7% of the total employment size, whereas the manufacturing sector only accounts for 1.7% of our GDP. After the reunification in 1997, the Government eventually decided that Hong Kong's economic development direction was to position on four pillar industries, namely, finance, trade, transport and logistics, and later the six industries where Hong Kong enjoy clear advantages. However, we should bear in mind that apart from that for finance and trade, the authorities have not formulated any effective policy to promote other trades and industries. Against this background, the market has failed to perform its functions in regard to these trades and industries, and the policies have been reduced to mere slogans. Hence, it is time for the Government to take appropriate action in formulating policies and setting targets accordingly.

I am glad to learn from paragraph 23 of the Policy Address that the Chief Executive is going to formulate a holistic industrial policy, and that the Economic Development Commission (EDC) will be established to explore ways to make use of Hong Kong's long-standing advantages and the opportunities offered by our country, to work on the overall strategy to enhance our long-term development, and to identify industries which present opportunities for Hong Kong's further economic growth. However, at issue is that before identifying industries which present opportunities for Hong Kong's further economic growth, LEGISLATIVE COUNCIL ─ 30 January 2013 5731 we must have a clear understanding of the strengths and weaknesses of Hong Kong. We all know the weaknesses of Hong Kong. Our land is scarce and we are densely populated. We lack natural resources and tourism monuments, where the Disneyland and Ocean Park are the best we have. Recently, someone said on the Mainland that Hong Kong people have to rely on the Mainland even for the water we drink. Honestly, Hong Kong people do feel uncomfortable at hearing that. But, this is the undeniable reality, and no matter how unwilling we are, we must face it.

How about the strengths of Hong Kong in economic development? I would like to bring out four points. First, Hong Kong is the world's freest financial centre and economy. Second, Hong Kong is a tariff-free free port. Third, Hong Kong has a deep-water harbour. Fourth, Hong Kong has the backing of the factory of the world and the world's largest market. In the Policy Address, the Chief Executive has mentioned the first three points. On the financial and economic front, the Chief Executive says that the Financial Services Development Council will be established to further develop the financial industries in Hong Kong. I support this. For despite the development for over a decade or so, the financial industry only accounts for 16% of the GDP of Hong Kong to date, and the employees in the sector only accounts for 5% of the total employment size. Our neighbouring places, such as Shanghai and Singapore, are eager to take Hong Kong's place to be the world's financial centre, so if the financial industry in Hong Kong remains stagnant, the future of the industry will be imaginable.

As for the second strength mentioned, it depends on how well Hong Kong can make use of its strength of being a tariff-free free port in coping with the overall market trend and reinforcing the support for the consolidated development of the trading, exhibition and tourism industries in Hong Kong. In this connection, I would say that the effort made in the Policy Address is less than adequate. Hence, I will pin my hopes on the Working Group on Convention and Exhibition Industries and Tourism set up under the EDC, which I expect will put forth more insightful proposals and valuable views.

The third point is how Hong Kong can play to its strength of being a deep-water harbour in developing into an international shipping centre. I would highly commend this point. However, we must pay attention to the issue of the supporting manpower required. Since the development of Hong Kong into a shipping centre can be achieved via the development of affiliated trades, such as 5732 LEGISLATIVE COUNCIL ─ 30 January 2013 shipping management, shipping agency, shipping financing, marine insurance and ship registration, and Hong Kong may as well be developed into an international maritime arbitration and meditation centre in Asia. However, Hong Kong lacks these talents, so we must make good preparations in manpower training.

Lastly, I will come to the fourth point. After the reunification, Hong Kong has been focusing on the development of the financial, trading and transportation industries, with little effort made on identifying ways to fully capitalize on our country's position as the factory of the world and the world's largest market, when countries all over the world have set eyes on it. How can we fully capitalize on the positions of our country on these fronts? Certainly, as the Government often says, there is CEPA, and the Government has done much work in this connection. However, we must know that due to protectionism, the "small doors" of certain places have yet to be opened, so only a very limited number of participants in the service industry from Hong Kong can truly benefit from the arrangement. As for the products manufactured by Hong Kong, only a limited number of products are left to struggle for survival, and a very small number of manufacturers can benefit from the arrangement. Hence, I hope the Government will adopt reverse thinking. It should not only focus on ensuring entry of Hong Kong people into the Mainland but also consider inviting certain high value-added manufacturing industries of the Mainland to come to Hong Kong, bringing Hong Kong's strength as a major port of trade into full play in exporting goods to places around the world, and making proactive efforts in developing high value-added and high-technology manufacturing industries in Hong Kong. It is stipulated unequivocally in Article 119 of the Basic Law that, "The Government of the Hong Kong Special Administrative Region shall formulate appropriate policies to promote and co-ordinate the development of various trades such as manufacturing, commerce, tourism ……". In this Article, the manufacturing industry takes precedence over many other industries. Hence, I wonder why the Government could have turned a blind eye to the manufacturing industries in the past. In the policy addresses in the past, the manufacturing industries were seldom mentioned, and not a word about the sector had been said in the policy address of the last-term Government. Is it adequate for Hong Kong to rely merely on the service industries like the financial and tourism industries?

I recall the former Chief Executive once claiming in high profile that Hong Kong could support the living of 7 million people with the financial and real estate industries. In fact, this is wrong. The financial industry in Hong Kong LEGISLATIVE COUNCIL ─ 30 January 2013 5733 cannot support the living of 7 million people, and it has only fattened a handful of rich people and putting over a million of people in poverty. Certainly, the financial and real estate industries are the competitive edges of Hong Kong, yet they are the culprits for the problem of disparity between the rich and poor. Against this background, if the Government lacks the vision to develop the manufacturing industries, these problems will never be solved. Here, I would like to thank Chief Executive LEUNG Chun-ying particularly, for the Government will formulate a holistic industrial policy and Working Groups on Manufacturing Industries and Innovative Technology and Cultural and Creative Industries to carry out focused studies and make specific recommendations to the Government. In the past 15 years, I have been working with a group of industrialists and economics scholars on some studies with the major objective of urging the Government to support and promote the development of manufacturing industries for the economic development of Hong Kong and for the livelihood and welfare of the public. As such, I would like to express some of my views to the Working Groups on Manufacturing Industries and Innovative Technology and Cultural and Creative Industries under the EDC.

First of all, we have to ask ourselves several questions. First, we have to consider in the development of manufacturing industries, what strengths does Hong Kong possess that are indispensable in the economy of this region? Or to put it in another way, can Hong Kong take on the role of an engine for the economy of this region? Second, in the paragraph 21, the Chief Executive says, "There are currently two major trends in economic development. First, the global economic gravity is shifting to the East. Second, the implementation of the National 12th Five-Year Plan will usher in a new wave of development for the Mainland economy." What kind of manufacturing industries can ride on this wave to develop in Hong Kong? Third, Hong Kong used to be one of the major production bases of manufacturing industries of the world. In future, how should Hong Kong capitalize on its strengths to continue to play a key role in manufacturing industries in the global economy? I am delighted to hear the earlier remarks made by a Member representing the textiles industry, that many manufactures wanted to return to Hong Kong for development, and that they wanted to launch operations in Hong Kong to bring our fashion industry to a higher level. Fourth, why have three out of the four Asian dragons, namely, South Korea, Taiwan and Singapore, fostered good development in manufacturing industries? For South Korea, it has gained superiority in the manufacturing of automobiles, household appliances and high-tech products. For Taiwan, it is renowned for its agricultural industries, and high-tech 5734 LEGISLATIVE COUNCIL ─ 30 January 2013 development in IC electronics and computers, and so on. As for Singapore, in addition to financial development and bio-chemistry manufacturing industries, its high-tech products and computer software industries are also strong. Hong Kong is one of the four Asian dragons, yet do we have any signature manufacturing industries? Why are there no manufacturing industries in Hong Kong?

Let me carry the discussion to some farther places. For instance, whenever we talk about perfume, fashion and wine, people will think of Paris in France. When it comes to watches and clocks and chocolates, people will think of Switzerland. In Finland, which has a smaller population, there are mobile phone manufacturing industries of renowned brand names and many software manufacturing industries. As for Denmark, the pork produced there is world famous, accounting for 40% of the European market. For Germany and Japan, they are still dominating the global market in heavy industries like automobile production, and tooling and moulding machinery. Even in Ireland, which is slightly lagging behind in industries, tremendous efforts have been made in recent years in developing the electronic hygiene and health industries. At present, their industry accounts for 46% of their GDP, whereas employees in the industries account for 27% of the total employment size.

Some people consider industrial development in Hong Kong unnecessary, for they think that Hong Kong should target at becoming the "Nylonkong". I can tell Members that among the three cities in "Nylonkong", industries in New York account for 6% of its GDP, and those of London accounts for 11%. How about Hong Kong? The percentage of industries as a share of our GDP has dropped continually from the peak of 30% to 1.7% today. Are we ruining the manufacturing industries, which were once the strongest, ourselves? In the past decade or so, the SAR Government has introduced certain measures to support the manufacturing sector, yet there was no comprehensive industrial policy. As a result, organizations serving the industries have hardly fulfilled their designated functions. However, many of these supporting organizations under the Government still exist today, such as the Trade and Industry Department, Innovation and Technology Commission, Applied Science and Technology Research Institute, Hong Kong Science and Technology Parks Corporation, Hong Kong Productivity Council, Hong Kong Export Credit Insurance Corporation, Hong Kong Trade Development Council, and so on. As for four major business associations, they all have their representatives. They are representatives of the LEGISLATIVE COUNCIL ─ 30 January 2013 5735 manufacturing industries of Hong Kong. Two out of the four major business associations hoist the banner of representatives of industries and manufacturers. Hence, I hope the Government will face the problem squarely by examining ways to consolidate these organizations properly and making redeployment.

The DAB always strives for the development of manufacturing industries in Hong Kong. Hong Kong should have its own products. For instance, we may make use of our original industrial base to establish a round-the-clock export wholesales centre, consolidate our high value-added industries, and capitalize on our existing advantages to develop high-tech industries, say Chinese and Western medicine manufacturing, health food and green industries. All industries that carry out production in Hong Kong should be granted tariff-free or low-tax entry into the Mainland market under CEPA. We should also attract Mainland enterprises to make use of Hong Kong's position as a port of trade by carrying out the final production process in Hong Kong and exporting their goods to places around the world. The DAB considers that the Government should capitalize on the existing resources and advantages to focus on facilitating the development of high value-added and high-tech manufacturing activities in Hong Kong. By doing so, it will alleviate the poverty problem in Hong Kong and create opportunities of upward mobility for young people. It should thus formulate a comprehensive policy for the manufacturing industries in a serious manner.

(THE PRESIDENT resumed the Chair)

I so submit. Thank you, President.

PRESIDENT (in Cantonese): Does any other Member wish to speak on the theme of "Economic Development"?

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): If not, Members have finished, speaking in this session. Since public officers attending this session have indicated that they do not need a suspension of the meeting, I will now invite five public officers to 5736 LEGISLATIVE COUNCIL ─ 30 January 2013 speak. On the basis of 15-minute speaking time for each officer, they may speak for up to a total of 75 minutes.

FINANCIAL SECRETARY (in Cantonese): President, the Chief Executive uses the title "Seek Change Maintain Stability Serve the People with Pragmatism" for the Policy Address this year, and gives a full account of the Government's policy direction in improving people's livelihood and economic development. As the Financial Secretary, I will offer full support to the policy objectives set out by the Chief Executives on the economic and public finance management fronts, dealing with the short-term external fluctuations while proactively promoting sustainable and diversified development of the economy of Hong Kong in the long term. On the one hand, we have to reinforce the conventional industries where Hong Kong enjoys clear advantages, yet we have to explore new industries compatible with the competitive edges of Hong Kong. Our target is to develop Hong Kong into a high value-added, knowledge-based and diversified economy, striving to maintain its strong competitiveness in the world economy and creating more resources for addressing people's livelihood concerns, so that members in all strata of society may share the fruits of economic development.

Next, I will give an account of the economy in the past year. Affected by the unfavourable external environment, economic growth in Hong Kong had slowed down significantly since the middle of 2011 and remained slow throughout last year. The year-on-year growth in real terms in the first three quarters was only 1%, much lower than the trend growth rate of 4.5%.

The weak demand of the external economy was the main reason for the slow economic growth in Hong Kong in the past year or so. The heavy debt and structural problems suffered by advanced economies in Europe, the United States and Japan severely weakened the domestic demand of these economies, and in turn adversely affected the production and trading activities in the Asia, causing an overall drop in Hong Kong exports to various major markets in most of the time last year. Due to the serious Euro debt crisis, economies in the Eurozone had plunged into recession, which rendered Hong Kong exports to the European Union (EU) market to record a prolonged double-digit year-on-year decline.

Despite the unfavourable external environment, the internal economy of Hong Kong had remained stable. The labour market held largely desirable, where the unemployment rate in the fourth quarter last year was at its low of LEGISLATIVE COUNCIL ─ 30 January 2013 5737

3.3%, a state of full employment, and wages and income had in general increase. As such, private consumption expenditure grew steadily in the past year, and a 4.1% year-on-year growth in real terms was recorded for the first three quarters last year. In recent months, retail sales recorded a steady increase. As for investment spending, the overall performance in investment was stimulated by the large-scale infrastructure works going in full swing, as well as the surge in private-sector building and equipment acquisition activities, recording a year-on-year growth in real terms of 8.8% in the first three quarters.

As indicated by recent figures, after the prolonged slow growth in the first three quarters last year, the economy was expected to show relative improvement in the fourth quarter. The export of goods in November and December recorded a more rapid year-on-year growth. The lower base of the fourth quarter of the previous year might be one of the reasons. But more importantly, it was because the Mainland economy regained its growth momentum in the later months of last year, which had exerted positive impact on Hong Kong exports.

However, it may be too early to say whether the economy of Hong Kong will step out of the shadows of slow growth. Given the prevailing complications and uncertainties in the world economy, and advanced economies stricken by structural problems, it is extremely difficult to break away from the slow growth, and a significant rebound in global trading will be highly unlikely. If the downturn of advanced economies prolongs, it may give rise to stronger protectionism sentiments and even spark off currency wars, adding uncertainties to the external trade environment.

At present, the Euro debt crisis is the greatest threat in the world economy. Progress was made by the European authorities in stabilizing the Euro debt crisis in the second half of last year, but to tackle the problem at root, structural reforms have to be launched, competitiveness has to be raised, flexibility of the market has to be enhanced and economic and financial integration has to be consolidated. The process will be long and winding.

This painful process of adjustment has already led the Eurozone economy into another round of recession. The unemployment rate has hit record highs time and again. Economic reforms have met with strong resistance from society. These factors have made the targets of debt cuts and reviving economic growth more challenging. Adding to all this the political uncertainty brought by the elections in Italy and Germany this year, fluctuations in the Euro debt crisis is 5738 LEGISLATIVE COUNCIL ─ 30 January 2013 expected. As such, the world economy will continue to be fraught by the Euro debt crisis for a relatively long period, which may trigger significant fluctuations in the financial market at anytime. Therefore, we must remain highly vigilant.

In the United States, the passage of the resolution early this year had spared it from the crisis of the fiscal cliff. However, the two parties have only postponed the crucial concern on government spending cuts for another two months, and the debt ceiling has only been extended temporarily to the middle of May. We can expect that in the next few months, the two political parties in the United States will be engaged in political wrestlings over these issues. As such, the future fiscal policy of the United States will remain uncertain. It is unknown whether the United States can enhance the sustainability of its financial status in the long run. Given the long-standing high unemployment rate and the continued de-leveraging of households and public sector, whether the United States can keep the momentum of revival should be subject to observation.

Furthermore, we should pay attention to the risks arising from the currency policy and changes in the interest rate cycle of the United States. In the end of 2008, after the outbreak of the global financial tsunami, the Federal Reserve Board (FRB) changed the interest rate policy by lowering the interest rate to a near-zero level, which remains valid to date. By now, three rounds of quantitative easing measures have been introduced. Early this year, the measure was intensified to a monthly bond purchase of US$85 billion without setting a limit on the total volume.

However, Ben BERNAKE, Chairman of the FRB, announced at the end of last year that the decision on interest rate adjustment would be linked with the unemployment and inflation rates, where the target for increasing interest rate would be set at the level when the unemployment rate in the United States falls below 6.5% and inflation projections remain above 2%. The remark implies that if the revival of the United States economy is better than expected or the inflation rate rises faster than projected, the interest rate may be raised at a time earlier than 2015 as anticipated by the market. According to the minutes of the rate-setting meeting of the FRB released recently, some Board members consider that bond purchase should be reduced gradually or stopped by the end of this year or even earlier. When the United States re-enters the rising interest rate cycle, the interest rate in Hong Kong will definitely rise accordingly. By then, the affordability of the public in repaying mortgages will be affected and the property LEGISLATIVE COUNCIL ─ 30 January 2013 5739 market may experience fluctuations. Therefore, investors and home buyers must pay attention to the risk of an earlier rise in interest rate.

Japan also faces structural problems like sustained high debts, ageing population and weakening competitive edges of enterprises and exports, and its economy has slipped into technical recession. The new Government of Japan has beefed up its fiscal measures to support economic growth. It has also stated that bold monetary policies attempting to stimulate the economy via the depreciation of Yen will be implemented, which has intensified the volatility of the global financial market and the exchange market.

Against the weak fundamentals of the three major European economies, the United States and Japan, the International Monetary Fund projects in the World Economic Outlook published recently that the world economy will only grow by a sub-trend rate of 3.5% this year.

The Mainland economy will be the major driving force for the growth of the world economy. Recently, the Mainland economy has gradually recovered and rebounded at its low in the third quarter last year, which should be able to provide impetus to economic activities in the region. Hong Kong exports, benefiting from the sound fundamentals of the Asian Region as a whole, will hopefully remain steady this year, which should be slightly better than last year. However, given the flagging state of advanced economies, a significant rebound will be highly unlikely this year.

As for the internal economy, it will hopefully remain stable this year. On the one hand, the employment and income conditions have turned largely favourable, inbound tourism remains vibrant and rising asset prices has brought forth the wealth effect, which will likely stimulate consumption demand. On the other hand, infrastructure works are being carried out at a high level and private-sector construction activities have increased rapidly, providing impetus for overall investment.

As for prices on the external front, since global food and commodity prices were relatively stable last year, and inflation in import sources have slowed down in general, imported inflation has receded. On the domestic front, as a result of the slow economic growth, pressure on domestic cost has slightly dropped. The underlying consumer price inflation last year was 4.7% on average, lower than 5740 LEGISLATIVE COUNCIL ─ 30 January 2013 the 5.3% of the previous year and tapered to 3.8% in the fourth quarter last year, which was much lower than the 6.4% of the previous year.

In the near term, the inflation pressure will be under control, yet the room for future drop in inflation is very limited. On the one hand, global food prices have shown signs of rebound at its low, and the new round of quantitative easing measures launched by Europe, the United States and Japan in the latter part of last year has given rise to excessive global liquidity, which may push up international commodity prices further and trigger another round of imported inflation. On the other hand, in most of the time last year, rentals for residential premises have risen rapidly, which effect may surface gradually and pose a upside risk on inflation.

When I announce the Budget by the end of February, I will publish the forecast on economic growth and inflation for the whole year.

Next, the Secretary for Commerce and Economic Development will give an account of the work on promoting industrial development. The Secretary for Transport and Housing and the Secretary for Financial Services and the Treasury will respond on the development of the transportation and logistics industries and the financial industry respectively. The Secretary for Constitutional and Mainland Affairs will speak on the economic and trade relationship between Hong Kong and the Mainland.

With these remarks, President, I urge Members to support the Policy Address this year.

SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Cantonese): President, I will respond by presenting some salient points on the work of the Commerce and Economic Development Bureau on various fronts.

In terms of macroscopic policy, the SAR Government has all long endeavoured to provide a favourable business environment for the commercial and industrial sectors. The simple and low tax regime, sound legal system and infrastructure in Hong Kong are all conducive to business development. In view of the limited land and manpower resources in Hong Kong, we must invest our resources in high value-added or high technical content production activities with clear advantages and potential for development.

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The Economic Development Commission (EDC) led by the Chief Executive will, from a high level, explore ways to capitalize on Hong Kong's long-standing advantages and the opportunities brought forth by the State, and to focus on efforts to broaden our economic base, to work on the overall strategy to enhance our long-term development, and identify industries which present opportunities for further economic growth. We look forward to the EDC making recommendations on setting out a holistic industrial policy, with a view to creating jobs and improving the people's livelihood.

Earlier on, a number of Members have mentioned the difficulties faced by small and medium enterprises (SMEs). In this connection, we will continue to provide support to SMEs on various fronts, including assisting enterprises to secure finance, expand markets and enhance their overall competitiveness.

In recent years, financing difficulties have been a cause of concern to the industries. In this connection, we will continue to pay close attention to changes in the global economy and credit market, and implement appropriate and effective measures when necessary to provide support to enterprises.

The Government has always been supportive of Hong Kong businesses operating in the Mainland. We will continue to implement various measures to assist Hong Kong-invested enterprises to capitalize on the tremendous opportunities arising from the Outline of the Twelfth Five-Year Plan for the National Economic and Social Development of the People's Republic of China (National 12th FYP) to identify and develop the Mainland market. Through the Dedicated Fund of a total of $1 billion, we will continue to provide subsidies to Hong Kong enterprises and business associations, which are non-profit-distributing bodies, to assist enterprises to develop their brands, upgrade and transform, and to develop domestic sales market in the Mainland.

In respect of the Mainland and Hong Kong Closer Economic Partnership Arrangement, or Closer Economic Partnership Arrangement (CEPA), the Mainland and Hong Kong have all along relied on standing mechanisms at the Central and municipal levels in discussing issues relating to the implementation of CEPA. As announced in the Policy Address, a joint working group will be set up to handle issues involving the implementation of CEPA in individual provinces and municipalities, and to enhance the existing mechanism for the implementation of CEPA. The Mainland side of the joint working group will be led by the Ministry of Commerce, with the participation of relevant Central 5742 LEGISLATIVE COUNCIL ─ 30 January 2013 ministries and commissions and municipal governments upon invitation. The Hong Kong side will be led by the Trade and Industry Department. The joint working group will provide targeted assistance to sectors which have encountered relatively more entry barriers, as reflected by the sectors concerned, with emphasis on assisting SMEs.

On realizing the further opening up of Mainland market to the Hong Kong services sector, with a view to achieving the liberalization of trade in services between the Mainland and Hong Kong by the end of the 12th FYP period, the Government and the relevant Central ministries and commissions have launched studies for the early formulation of a specific work plan. We have already invited the relevant sectors to express their views on this.

We are now three years away from the end of the National 12th FYP period, and we will seize the time to strive for the further opening up of the Mainland market to Hong Kong service sectors by broadening and deepening the scope of liberalization under CEPA.

Furthermore, in line with the progressive and incremental approach as stipulated in CEPA, the HKSAR Government and the Central People's Government, when exploring liberalization measures under CEPA, will seek to pursue liberalization on a pilot basis in individual provinces so as to set models and provide the basis for seeking country-wide liberalization in future. Taking into account the views of the trade in Hong Kong, we will continue to pursue with the Central People's Government extension of the "early and pilot implementation" to the whole country or other provinces or municipalities, particularly those in the Pan-Pearl River Delta Region, with a view to providing more business opportunities for the trade.

In respect of intellectual property rights, we are now conducting a comprehensive review of the patent system. The Advisory Committee on review of the patent system in Hong Kong has made recommendations to the Government. We will set out the development direction in the near future and report to the Panel on Commerce and Industry in February.

In a knowledge-based economy, intellectual property rights are increasingly commercialized and traded around the world. Hong Kong has the potential to develop into a regional intellectual property trading hub. We plan to set up a working group comprising the Government, the industry and experts LEGISLATIVE COUNCIL ─ 30 January 2013 5743 from various sectors to examine the overall strategies to promote Hong Kong as an intellectual property trading hub and the government support that may be required.

As for international trade, to safeguard Hong Kong's long-term economic interest and maintain its international positioning, Hong Kong will continue to seek to enter into economic and trade arrangements with trading partners to secure more favourable access to overseas markets for Hong Kong goods and services.

With strong support from the Central People's Government, Hong Kong has submitted to the Association of South East Asian Nations (ASEAN) a request to join the Free Trade Area between China and ASEAN. We are now actively lobbying the Member States of ASEAN.

Moreover, we will continue to seek to conclude Investment Promotion and Protection Agreements with other economies to attract foreign investments in Hong Kong and to enhance the protection of Hong Kong investors' investments overseas. In the end of 2012, we commenced the relevant negotiations the Russian Federation, and we plan to initiate negotiations on an investment agreement with Chile later this year.

We will continue to make good use of the platform of the Hong Kong-Taiwan Economic and Cultural Co-operation and Promotion Council and the Taiwan-Hong Kong Economic and Cultural Co-operation Council of Taiwan to further promote and deepen the mutual-beneficial development between Hong Kong and Taiwan. We will make continuous efforts to strengthen the co-operation with Taiwan in such areas as trade promotion, investment promotion, tourism, trade facilitation and creative industries, and so on.

In respect of tourism, the total number of inbound tourist arrivals exceeded 48 million in 2012, a 16% increase in comparison to 2011, among which, around 70% are Mainland visitors.

A number of Members have expressed views earlier on the supporting facilities and capacity of tourism in Hong Kong, and these are important factors to be considered in the short-, medium- and long-term development of the tourism industries.

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For the outlook of 2013, the tourism industry in Hong Kong will face many challenges, including the increasingly intense competition from tourist cities in the region, the uncertain prospects of the global economy and the rising tension in regional politics. Despite that, we are cautiously optimistic about the development of the tourism industry of Hong Kong. We will continue to invest in tourism infrastructure in Hong Kong to enhance its attractiveness and hospitality capacity on the whole, ensuring that the Hong Kong tourism industry will gain healthy and sustainable development.

On the regulation of the tourism industry, upon the completion of the relevant review in 2011, the Government decided to set up an independent statutory body called the Travel Industry Authority (TIA) to take up the overall regulation of travel agents, tourist guides and tour escorts. We have launched the preparatory work for the new regulatory framework, including the drafting of new legislation for the establishment of the TIA. We expect to submit the bill to the Legislative Council around the middle of next year.

Hong Kong is determined to develop into a city of creative industries. To continue to promote the creative industries, the Chief Executive has announced in the Policy Address that $300 million will be injected into the CreateSmart Initiative to fund the industry in organizing more events. We will submit the required funding application to the Finance Committee within this Legislative Session.

Moreover, early this year, we will launch the First Feature Film Initiative under the Film Development Fund, where Create Hong Kong will select through competition trade practitioners without experience in directing commercial films. The winning teams will receive full funding from the Film Development Fund to shoot their first commercial films. We believe this new initiative will help the Hong Kong film industry to nurture and identify new practitioners.

The ani-com and design industries in Hong Kong have good potential for development. The Comix Home Base and PMQ will be completed in the middle and the end of 2013 respectively, and they will become two landmarks and exchange platforms of the creative industries. The Government will facilitate the promotion of Comix Home Base and PMQ to foster the development of creative clusters, so as to spur synergy and interaction, and foster a creative milieu in Hong Kong.

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The innovation and technology industries offer significant impetus in promoting economic and social development. We will make continuous and proactive efforts to promote the provision of software and hardware support, foster co-operation among the Government, industry, academia and research sectors, enable closer collaboration with the Mainland, and inject additional resources when necessary. All these will be conducive to the commercialization of scientific research results, which will in turn give impetus to the development of the industries.

The enormous and fast growing Mainland market has provided opportunities for further development of the testing and certification industries of Hong Kong. Through CEPA, the Mainland will open up its market to the testing and certification industries of Hong Kong in phases. Starting from January 2013, CEPA has expanded, on a pilot basis in Guangdong, the scope of testing services that can be provided by Hong Kong testing organizations to food-related certifications, reflecting the gradual acceptance of Hong Kong's testing results by the Mainland. We are assisting the Hong Kong Council for Testing and Certification to review the progress of implementation of the three-year market-driven industry development plan it proposed in 2010, with a view to formulating new plans to provide further support to the development of the industries.

The Government attaches great importance to the development of information and communications technology. In view of the advancement and rapid development in technology, we must keep abreast of the latest development trend. Hence, we have already launched a comprehensive review of the existing information technology strategy "Digital 21 Strategy", with a view to formulating an updated blueprint for development.

Cloud computing is the latest development trend in information technology, which provides flexibility to users in the deployment and sharing of computer resources, lowers the costs and lead time for introducing new services, and enhances productivity and service quality. We will invest more than $200 million in developing the Government cloud platform in the next five years. The first stage of services will be launched by the end of 2013, and such services include electronic information, synergy and electronic procurement.

Finally, on broadcasting, the Government will continue to promote the development of Digital Terrestrial Television (DTT) and digital audio 5746 LEGISLATIVE COUNCIL ─ 30 January 2013 broadcasting (DAB) in Hong Kong. We will further enhance the take-up rate of DTT and promote DAB services.

On the development of public service broadcasting, Radio Television Hong Kong will make continuous and proactive efforts in implementing various new development initiatives, including the provision of DAB services, implementation of pilot community involvement in broadcasting service, preparation for launching DTT services and co-ordination in respect of the construction of the New Broadcasting House in Tseung Kwan O.

With these remarks, President, I urge Members to support the Policy Address this year.

SECRETARY FOR TRANSPORT AND HOUSING (in Cantonese): President, just now, a number of Members pointed out that not only must the Government deal with homeland relations; it also has to attach importance to external relations by maintaining Hong Kong's position of "having global ties" and being "an international hub". We agree with this point. This is also our general direction in relation to our aviation and maritime transport.

In air services, some Members expressed concern about the development of a third runway at the Hong Kong International Airport (HKIA). The HKIA is the world's busiest cargo airport. It is also one of the world's 10 busiest passenger airports. At present, 61 countries and regions that are partners in civil aviation with Hong Kong have made arrangements on bilateral air services with Hong Kong. A third runway is of paramount importance in ensuring the HKIA's position as an international and regional aviation centre and maintaining Hong Kong's long-term development. After the Government has given its approval in principle to the three-runway proposal, the Airport Authority Hong Kong (AA) embarked on the specific planning for the three-runway proposal in August last year, including launching an Environmental Impact Assessment (EIA). It is expected that the EIA will be completed in about two years. The AA strives to turn the HKIA into a green airport and will explore all options for reducing the potential environmental impact of the project to build a third runway, and the EIA will be carried out in a transparent and highly professional manner. At present, we expect that the third runway will be completed and commissioned in 2023.

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Before the completion of the third runway, the AA will actively upgrade airport facilities as planned. The new air cargo terminal will come on stream in phases starting from next month and once in full operation, this project will increase the airport's cargo handling capacity by 50% to 7.4 million tonnes yearly. In addition, to cope with air traffic demand up to 2020, the AA is implementing a midfield expansion project, including the construction of such facilities as a new midfield passenger concourse, 20 aircraft parking stands, automated people mover, and so on. The works are expected to be completed by mid-2015. In line with the medium-term development plan, the AA will also construct 16 new aircraft parking stands in the western part of the midfield area, to be completed in two phases by the end of 2014. After the completion of these two projects, there will be a total of 182 aircraft parking stands, an increase of 26% over the present figure. In addition, the new Air Traffic Control (ATC) Centre is expected to commence operation by the second quarter of 2014. The new ATC system, which adopts advanced electronics technologies, has greatly enhanced data processing functions that are twice the capability of the present system, so it will be capable of handling growth in the number of flights in the future.

Some Members are concerned about the issue of airspace. In this regard, the Civil Aviation Department, the Civil Aviation Administration of China and the Macao Civil Aviation Authority have established a tripartite working group to hold regular meetings on examining how best to further optimize the usage of the airspace and co-ordinate air traffic management in the Pearl River Delta Region.

A number of Members are concerned about the development prospects of the maritime industry in Hong Kong. Some Members are also concerned about the competition posed by such places as Shanghai and Singapore to Hong Kong. The 12th Five-Year Plan of our country states explicitly that support is to be given to Hong Kong in consolidating and elevating Hong Kong's position as an international maritime centre, and the Chief Executive also proposed in the Policy Address that we will build on the strengths of our existing terminal business to develop our international maritime services, reinforce the maritime service cluster and develop high value-added maritime services. In addition, the Chief Executive has also announced in the Policy Address that an Economic Development Commission (EDC) would be established. The Working Group on Transportation will be set up under the EDC to make strategic recommendations on the development of the maritime industry to the Government.

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Furthermore, having regard to the discussions of the Working Group on Transportation and the findings of the two consultancy studies on port and maritime development now underway (namely, the Study on the Strategic Development Plan for Hong Kong Port 2030 and the Consultancy Study on Enhancing Hong Kong's Position as an International Maritime Centre), we will review comprehensively the policy formulation and institutional arrangements for supporting maritime and port development, with a view to promoting more effectively the long-term development of the relevant sectors and Hong Kong's position as a shipping centre. The relevant tasks will involve adjusting and reinforcing the work of the Transport and Housing Bureau and Marine Department, as well as the functions of the three major related advisory bodies (that is, the Hong Kong Maritime Industry Council, the Hong Kong Port Development Council and the Hong Kong Logistics Development Council). Mr Frankie YICK can rest assured that the Government will not wait until the findings of the reviews are available to take actions. We have already embarked on the work in various areas.

The maritime service industries of Hong Kong have a sophisticated and solid foundation. The aim of the afore-mentioned studies is to analyse the development potential of the related maritime services, including ship management, finance, insurance, law, arbitration, as well as ship broking and ship chartering, and so on. Also, with reference to the policies and measures adopted by other international shipping centres, and having regard to future opportunities and challenges, the studies will make recommendations on the development roadmap of Hong Kong as an international shipping centre. The studies are expected to be completed in the first half of this year. It is true that Hong Kong is facing ever keener competition from other cities in the region. The opportunities are many, but so are the challenges. In order to maintain our competitiveness, Hong Kong must enhance the strength of its maritime cluster and conditions for provision of high value-added services.

In sum, the Government will strengthen its support for the maritime industry through three areas: Infrastructure, marketing and promotion, and manpower training.

With regard to port infrastructure, we plan to dredge the Kwai Tsing container basin and its approach channels to increase the present navigable depth from 15 m to 17 m. This will enable the Kwai Tsing container terminals to meet the draught requirements of new-generation ultra-large container ships at all tides. LEGISLATIVE COUNCIL ─ 30 January 2013 5749

Subject to approval for the funding application, the project is expected to be completed by 2016.

We are also committed to multi-modal development to upgrade our port and airport, as well as land boundary crossings and transport facilities, to enhance the capacity and network of Hong Kong as a regional hub port. The Study on the Strategic Development Plan for Hong Kong Port 2030, which will be completed this year, will also recommend further strategic directions and feasible measures for enhancing complementary port facilities.

On marketing and promotion, we co-organized with the Hong Kong Trade Development Council the Second Asian Logistics and Maritime Conference in November 2012, which attracted the participation of about 1 300 industry experts and service users from over 21 countries or regions and a number of provinces and municipalities in Mainland China. It highlighted Hong Kong's premier status as a regional logistics hub and an international shipping centre. We plan to organize another international conference of similar nature in the second half of this year. It is expected that the response would be even stronger on this occasion.

In addition, the Transport and Housing Bureau also joined hands with the Hong Kong Port Development Council, Hong Kong Maritime Industry Council and Hong Kong Logistics Development Council to regularly organize delegations to visit the Mainland and overseas countries to promote Hong Kong's relevant services and strengths in various areas.

In respect of manpower training, the Government has been working with the industry through the Hong Kong Maritime Industry Council to support maritime-related manpower training. The Government has put in place a number of subsidy schemes. These include scholarship schemes for training professionals in maritime services and incentive schemes for training sea-going officers and ship-repair technicians. So far, over 850 persons have benefited from the various schemes. I agree very much with the view expressed by Mr Martin LIAO just now, that Hong Kong must provide high-end maritime services, groom specialists for maritime services and strengthen the foundation of the system, as well as publicizing the prospects of the maritime services industry. In view of this, we will definitely join hands with the sector to do our utmost in developing manpower training and strengthening the ties and co-operation with tertiary institutions and the Vocational Training Council. We must also attract 5750 LEGISLATIVE COUNCIL ─ 30 January 2013 young people to join the industry in order to boost the manpower supply for the logistics and transportation industries.

A Member pointed out that it is necessary for Hong Kong to elevate its role as the regional logistics hub. We understand that currently, the logistics industry is facing challenges in land and manpower supply. The Government supports the sector in capitalizing on its strengths in developing high value-added services and will gradually make available a number of permanent sites for the development of modern logistics facilities. We have granted two logistics sites in Tsing Yi with a total area of 4.8 hectares one after another. We will grant a third permanent logistics site of about 2.1 hectares in Tsing Yi by open tender early this year. These sites, together with the four sites in Kwai Chung District, will provide a total floor area of over 1.6 million sq m for the development of the logistics industry. Meanwhile, we will continue to identify suitable sites in other districts for the development of the logistics industry.

In the first quarter of this year, the Government will commence the second phase of the public engagement exercise on "Enhancing Land Supply Strategy". The consultation will include the reclamation works on Lantau and the development of logistics is one of the uses that can be considered. We will examine the proposal to develop a logistics park on Lantau having regard to such factors as the results of the consultation, the freight forecasts for the port and airport in Hong Kong and the demand for sites for third-party logistics service.

With these remarks, President, I urge Members to support the Motion of Thanks.

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Cantonese): First of all, President, I have to thank Honourable Members for expressing a lot of valuable views on ways to promote the development of the financial services industry.

The financial services industry is one of the industries in Hong Kong with the greatest global competitiveness. Accounting for approximately one sixth of our Gross Domestic Product (GDP), the industry is a key pillar providing momentum for economic growth. Moreover, it provides more than 220 000 jobs direct, comprising staff awarded higher technical and academic qualifications. Talents from different backgrounds and with various levels of education also LEGISLATIVE COUNCIL ─ 30 January 2013 5751 serve in various positions of the service supply chain. In fact, of the posts created by the industry between 2007 and 2011, the average annual growth rate of non-management and non-professional staff was approximately 4%, which was higher than the 3.3% average annual growth rate of management and professional staff during the same period.

Insofar as the significance of the financial sector to Hong Kong economy is concerned, we should not focus only on its proportion in Hong Kong's GDP, the employment figures, and so on. Playing a strategic role in Hong Kong economy, it not only serves Hong Kong's various trades and industries but also helps promote the development of the real economy. In 2010, the sector expended a total of $44.2 billion on services from business services (such as advertisement, business promotion, accounting, audit and legal services), transportation, travel, postage, communications and property, contributing 2.3% of Hong Kong's GDP at that time.

Although the financial market has remained volatile in the past few years, Hong Kong's financial services industry has demonstrated its resilience, and the operation of our financial institutions has remained stable. As the global financial markets are still volatile, we and the regulators will continue to remain vigilant in monitoring the latest global financial developments and, when required, take appropriate measures to ensure the normal operation of our financial market.

Meanwhile, we must capitalize on the economic performance of the Asian-Pacific Region, which is better compared to that of Europe and the United States, the policy support of our State for Hong Kong's development, and the new opportunities brought about by the Mainland's rapid growth, and reform and liberalization to integrate with Hong Kong's advantages in infrastructure, laws and regulations, regulatory systems, flow of capital, pooling of talent, and so on, to maintain Hong Kong's leading position as an international financial centre, with a view to exploring new points of growth while consolidating our traditional advantages.

We have to further promote the development of the financial services industry, seize various advantageous opportunities, make the best of the situation, and explore business opportunities. The establishment of the Financial Services Development Council (FSDC) can provide a high-level and cross-sectoral platform for relevant stakeholders to explore ways to complement the 5752 LEGISLATIVE COUNCIL ─ 30 January 2013 internationalization of the financial market of our country and facilitate the further development of Hong Kong's financial services industry, including advising the Government on areas related to diversifying the financial services industry and enhancing Hong Kong's position and functions as an international financial centre of our country and in the region.

With its members coming from the financial services industry and other relevant sectors, the FSDC has extensive representativeness. We sincerely hope that the efforts made by the FSDC can complement the Government, regulators and the sector in various aspects, so that contribution can be made to promote the long-term development of Hong Kong's financial services industry and upgrading Hong Kong's position as an international financial centre with global influence.

Now I would like to say a few words on the Renminbi (RMB) business and our financial collaboration with the Mainland. With the support from the Central Government and driven by market force, Hong Kong has seized the business opportunities arising from the wider use of RMB outside the Mainland and developed into the largest and most competitive global hub for offshore RMB business. As at end 2012, the cumulative total value of RMB dim-sum bond issuance amounted to almost RMB 300 billion yuan. In addition, various RMB investment products have been launched, including four RQFII A-share Exchange-traded Funds, RMB currency futures, and shares and derivative warrants traded in both RMB and Hong Kong dollar. In the first 11 months of 2012, the amount of RMB trade settlement handled by banks in Hong Kong exceeded RMB 2,300 billion yuan, representing a year-on-year growth of 41%.

With its offshore RMB business maturing and deepening, Hong Kong is moving towards the further development of its RMB financial intermediation activities. We will endeavour to develop innovative and diversified RMB investment products so as to expand the use and circulation of RMB funds.

In the year ahead, we will actively explore with the Mainland authorities on further measures to strengthen financial co-operation between the two sides, for example, expanding the range of eligible financial institutions under the RQFII Scheme, lowering the requirements for small and medium-sized Mainland enterprises to be listed in Hong Kong, launching the individual RQFII and QDII (that is, Qualified Domestic Individual Investors), and carrying out preparatory work for fund passporting.

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Apart from offshore RMB business, Hong Kong will continue to co-operate closely with the Mainland authorities in various financial areas to promote mutual development. At the national level, the introduction of various liberalization measures under the CEPA framework greatly facilitates the entry of Hong Kong financial institutions into the Mainland market. At the regional level, we have all along maintained close contact with various Mainland provinces and municipalities, and the two sides have worked collaboratively on a number of financial projects conducive to the development of our financial sector.

Next, I would like to say a few words about the latest developments of the capital market. As at end 2012, the Hong Kong stock market, which boasted a market value of approximately HK$2,000 billion, ranked second in Asia and sixth in the world. Although nearly $90 billion was raised in Hong Kong last year through initial public offerings (IPOs), which was obviously less than the amount raised in the previous year, the total amount of funds raised by the Stock Exchange of Hong Kong Limited (SEHK) through IPOs over the past five years has exceeded $1,100 billion, thus making the SEHK the number one stock exchange in the world.

Thanks to market liquidity and its close tie with Mainland China as the world's fastest growing major economy, Hong Kong's securities market has clear competitive edges. We will continue to seize the opportunities arising from, for instance, the support rendered by the Mainland for Mainland enterprises meeting the listing requirements in Hong Kong to be listed here and convert their B shares into H shares while promoting and facilitating the efforts to enable more companies from overseas jurisdictions to come to Hong Kong for listing, as well as enhancing the quality of our fund-raising platform. All these will consolidate the status of our market as one of the world's most attractive markets for initial public listing.

Now, let me turn to asset management business. Hong Kong has already developed into Asia's principal asset management centre. As at end 2011, the total asset of the fund management business in Hong Kong was over $9,000 billion, which showed a 54.5% increase compared to three years ago. On the asset of fund management business, the fact that non-local investors account for two thirds of the fund management business shows that Hong Kong is very popular with overseas fund managers operating fund management business here.

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We have all along striven to enhance Hong Kong's status as an asset management centre and adopted multi-pronged measures, including the conclusion of agreements on avoidance of double taxation (the number of agreements already signed has increased to 27) with more trading and investment partners, developing an Islamic financial platform, perfecting the Trustee Ordinance, and enhancing publicity in the Mainland and abroad.

On the development of an Islamic financial platform, the Inland Revenue and Stamp Duty Legislation (Alternative Bond Schemes) (Amendment) Bill 2012 (the Bill) already went through its First and Second Readings on 9 January in the Legislative Council. The Government will actively complement the scrutiny of the Bill for its expeditious passage to enable Hong Kong to become a platform facilitating the issuance of Islamic bonds and consolidate Hong Kong's status as international financial and asset management centres.

We are currently carrying out a trust law reform and making legislative proposals to expand trustees' default powers, and introduce appropriate checks and balances measures to ensure that new powers are exercised by trustees properly. Not only will the proposed reform facilitate effective administration of trusts by trustees, it will even help bolster the competitiveness of Hong Kong's trust services industry and attract more people to set up trusts here, which will in turn upgrade Hong Kong's status as an international asset management centre. It is hoped that the relevant bill can be introduced into the Legislative Council by the first quarter of 2013.

On the Mandatory Provident Fund (MPF) System, we will continue to work in collaboration with the Mandatory Provident Fund Schemes Authority (MPFA) to improve the MPF System in various areas by, for instance, adopting a host of short-term, medium-term and longer-term measures to facilitate downward adjustments of MPF fees. In this connection, the consultancy findings on trustee costs were announced at the end of last year by the MPFA, which is currently following up at full steam on the consultancy recommendations which can be implemented under the existing framework. Meanwhile, we will examine with the MPFA proposals on enhancing its powers appropriately to achieve our goal of introducing relevant legislative amendment proposals in the 2013-2014 legislative year. The Government and the MPFA will also follow up on some fundamental reform proposals, including rationalizing the types and numbers of funds in the light of the goal of retirement protection, and introducing ceilings on MPF fees and preparing consultation LEGISLATIVE COUNCIL ─ 30 January 2013 5755 packages in case of market failure. We have also requested the MPFA to complete preparations for the introduction of "full portability" in three years.

I would like to say a few words on the efforts to complement international regulatory requirements. According to the international standards in the field of banking supervision issued by the Basel Committee on Banking Supervision, Basel III is being implemented step by step by the Hong Kong Monetary Authority (HKMA) in order to enhance the resilience of Hong Kong's banking system. In this connection, the Banking (Capital) (Amendment) Rules 2012 has already commenced operation since January this year. We will keep a close watch on the implementation of the new capital standards in Hong Kong as well as the development of international standards. The HKMA will introduce subsidiary legislation to the Legislative Council later this year for the implementation of the relevant disclosure requirements of Basel III.

In order to implement the pledge of the Group of Twenty, the Government is currently working in collaboration with the Securities and Futures Commission and the HKMA to devise a system for the supervision of the over-the-counter derivatives market, and the relevant proposal is expected to be tabled before the Legislative Council for scrutiny in the first half of 2013. As the international community has yet to reach a consensus on some of the key components of the market reform, we will closely watch the relevant discussions in the international community, further guidelines provided by organizations responsible for devising international standards, and the details of the implementation of the system for the supervision of the over-the-counter derivatives market, as well as the relevant timetables for purposes of making appropriate complementary efforts.

As pointed out in the Policy Address, the shift of the global economic gravity to the East and the implementation of the National 12th Five-Year Plan will usher in a new wave of development for the Mainland economy and become the two major trends in economic development. In the short span of several years, Hong Kong has already developed into the largest and most liquid offshore Renminbi (RMB) business centre outside the Mainland. Furthermore, the Asia has seen the fastest wealth growth globally, and this helps consolidate Hong Kong's leading role as the asset management centre in the Asia-Pacific Region and develop Hong Kong into a more comprehensive fund and asset management centre.

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In the face of competition from other financial centres, Hong Kong must strive to enhance its own advantages, continue to develop a diversified financial platform, make active contribution to the country in such important financial reform as the internationalization of RMB, and better complement the development need of the real economy, so as to enable the financial services industry to achieve sustainable development and enhance the overall competitiveness of the local economy.

With these remarks, I urge Members to support this year's Policy Address. Thank you.

SECRETARY FOR CONSTITUTIONAL AND MAINLAND AFFAIRS (in Cantonese): President, I would like to emphasize again that, as Members could clearly hear from the speeches delivered just now by the Financial Secretary and several Bureau Directors, the SAR Government attaches as much importance to our economic and trade relations with the Mainland as to those with overseas countries. As for the Mainland, the Policy Address suggested that the Government should enhance Government-to-Government (G2G) co-operation and introduce a series of measures to enhance our economic partnership with provinces and municipalities in the Mainland. I am very pleased this afternoon to have heard many Members express their support for our policy direction. I would like to take this opportunity to specifically elaborate on several priority areas of work.

To date, the SAR Government has set up four offices in the Mainland. They are the Economic and Trade Office (ETO) in Beijing located in the North, the Guangdong ETO in the South, the Shanghai ETO in the East and the Chengdu ETO in the West of the Mainland. In recent years, the Central Government has made significant efforts to develop the central region, given free reign to its geographical advantage in linking the West with the East, and implemented the Rise of Central China Strategy. The Policy Address proposed to set up a fifth office of the SAR Government in Wuhan. We will proactively follow up the work of establishing the Wuhan ETO, with a view to better assisting Hong Kong people and enterprises in capitalizing on the development opportunities in the central region. Among other relevant tasks, we will follow up as soon as possible with the Central Government and relevant provinces and municipalities on the specific arrangements for the establishment of the new office, timely consult the relevant Legislative Council panels about any directorate posts LEGISLATIVE COUNCIL ─ 30 January 2013 5757 possibly involved, and then seek approval from the Establishment Subcommittee and Finance Committee. With our current plan, we hope that the Wuhan ETO will be established and begin to provide services to Hong Kong people and enterprises in Central China in 2014.

In addition, there are currently a total of three liaison offices set up in the Guangdong ETO and Chengdu ETO. We will also look into the feasibility of setting up liaison offices in other Mainland cities. We also welcome views from this Council in this regard.

In addition to increasing the number of offices in the Mainland, we proactively enhance the functions of the offices, so as to better support Hong Kong people and enterprises in the Mainland. We will co-ordinate with various offices in the Mainland, as well as the relevant bureaux and departments, to take forward the work in four areas:

First, we will have dedicated staff in every office to strengthen liaison with Hong Kong people and groups in the Mainland, including Hong Kong business associations, student organizations and retirees living permanently in the Mainland, and provide them with information and assistance as far as possible.

Second, we will set up a new Immigration Division in the Chengdu ETO, in addition to those in our Beijing Office and the Guangdong ETO, to provide more timely support to Hong Kong people in distress in the Mainland.

Third, we will step up our efforts in conducting policy research and gathering data related to Hong Kong people in the Mainland to better gauge their situation and service needs. We will also analyse the opportunities and challenges for Hong Kong people arising from national policies, as well as gather and disseminate information about major development and investment projects in various provinces and municipalities, so as to assist Hong Kong people and enterprises in seizing development opportunities early.

Fourth, we will enhance communication and publicity targeted at all sectors in the Mainland by, among others, organizing a variety of activities, such as exhibitions and radio or television programmes, with a view to promoting Hong Kong's advantages and enhancing mutual understanding and respect between the communities in both places.

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To tie in with the Government's efforts to strengthen economic and trade co-operation with the Mainland, we will reorganize the Greater Pearl River Delta Business Council. It will be renamed the Consultative Committee on Economic and Trade Co-operation between Hong Kong and the Mainland. Its expanded terms of reference will cover economic and trade issues between Hong Kong and all regions in the Mainland. The Committee will, from the perspective of the industries, advise the Chief Executive on the promotion of complementarity between Hong Kong and the Mainland, with a view to achieving a mutually beneficial win-win situation and sustainable economic development.

In his speech, Mr Andrew LEUNG requested the Committee to more actively promote the engagement of various industries in the trade and economic development in the Mainland from a pragmatic point of view. We will include this in the focus of our work.

The Policy Address has also highlighted the need to enhance the economic partnership between Hong Kong and the Mainland, with particular focus on G2G co-operation. In this regard, we will press ahead at the central and regional levels respectively.

At the central level, we will fully implement the National 12th Five-Year Plan (FYP) promulgated in March 2011, making it a key focus of the work of the current SAR Government. In addition, we will tie in with the preliminary work of the National 13th FYP under the principle of "one country, two systems". We will gauge views on this subject from various sectors of society and the Legislative Council in the days ahead.

Mr Albert HO used the wording "being planned" in his mention of the National 12th FYP in his speech. I do not agree with this description. In fact, there is a dedicated chapter on Hong Kong and Macao in the National 12th FYP. This arrangement is consistent with the constitutional arrangements under "one country, two systems", and also reflects the actual situation of increasingly close economic and trade relations between the Mainland and Hong Kong.

At the regional level, the SAR Government will make better use of the existing platform for G2G co-operation with Guangdong Province, the Pan-Pearl River Delta (PPRD), as well as other provinces and municipalities, to intensify regional co-operation with the Mainland.

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The co-operation between Hong Kong and Guangdong, including that with Shenzhen, will be the most intensive work covering the most extensive areas of co-operation on the platform for co-operation between the SAR and various regions. It is arguably the top priority of our work. The SAR Government will strengthen co-operation with Guangdong through different policy measures, including ensuring effective implementation of CEPA and leveraging on the early and pilot measures for Hong Kong service industries to tap the Guangdong market. Secretary Gregory SO has also mentioned this point in his speech just now.

Mr Christopher CHEUNG highlighted his hope that the Government could help Hong Kong's financial industry explore the markets of Qianhai. I wish to point out here that the SAR Government has all along maintained contact with the relevant Mainland authorities regarding the development of Qianhai. The SAR Government will fully reflect the views of Hong Kong industries before formulating specific implementation details of the Qianhai policy with the relevant Mainland authorities, with a view to creating a good investment environment for Hong Kong industries and helping them timely explore the relevant markets in Qianhai.

Moreover, the SAR Government will continue to promote co-operation with the PPRD Region. With a population and GDP accounting for nearly one third of those of the Mainland, the PPRD Region is a hinterland with very great potentials of development. The extensive and strong international ties of Hong Kong enable us to play a role in channelling international capital, talent and technology to assist the PPRD Region in implementing the development strategy of "going global and attracting foreign investment". The Chief Executive led a delegation to the Pan-Pearl River Delta Regional Cooperation and Development Forum last year, and met with the leaders of several provinces to further discuss the various aspects of bilateral economic and trade co-operation in the future.

President, the social, economic and trade relations between Hong Kong and the Mainland are becoming increasingly close. On the one hand, Hong Kong people quite often work, do business, travel and live in the Mainland, but, on the other, an increasing number of Mainland residents prefer to come to Hong Kong for travel, shopping, further studies or other services. In recent years, some situations related to Mainland residents visiting Hong Kong, such as giving birth, buying infant formulas, purchasing private residential properties and parallel 5760 LEGISLATIVE COUNCIL ─ 30 January 2013 goods trading, have raised concern among various sectors of society in Hong Kong.

I would like to reiterate here that the SAR Government attaches great importance to the relations between Hong Kong and the Mainland. In this connection, I believe it is necessary to properly deal with our work in three areas:

The first area of work is related to capacity. The healthcare and social services, goods supply, tourism and other public facilities in Hong Kong are subject to certain capacity constraints. Driven by a substantial increase in demand, there emerged such issues as "children born to doubly non-permanent residents", infant formulas being snatched up, parallel goods trading activities being rampant and tourist hot spots possibly being overloaded. Having regard to the capacity of Hong Kong, the SAR Government has implemented a series of targeted policy initiatives including, with the consent of the Central Government, a halt to the multi-entry endorsement for non-permanent residents of Shenzhen, "zero delivery quota" in 2013 for pregnant Mainland women whose husbands are not Hong Kong residents, concerted efforts among government departments to crack down on parallel goods trading activities, and ongoing close follow-up to ensure adequate supply of infant formula on the local market. The Chief Executive has also stressed that he will adopt the principle of according priority to Hong Kong people in dealing with the allocation of limited social resources.

The second area of work is related to cultural backgrounds. Because of the unique historical and social development backgrounds of Hong Kong and the Mainland, there are many differences between the two places in terms of system, culture and lifestyle. This gives rise to some misunderstanding or even friction between the people on either side in their daily contact. Amid the increasingly frequent interactions between the two places, we need to learn more about the differences between them in terms of system, culture and lifestyle. We hope that various sectors of society will adopt an attitude of mutual respect and tolerance to understand and accommodate such differences.

The third area of work is related to communication. Given the capacity constraints in Hong Kong and the cultural differences between the two places, it is critical to enhance publicity targeted at the Mainland and deepen mutual understanding between the two communities. The Chief Executive stated in the Policy Address that he will enhance the functions of our Mainland offices. Such efforts include enhancing communication and publicity targeted at all sectors in LEGISLATIVE COUNCIL ─ 30 January 2013 5761 the Mainland, so as to promote Hong Kong's advantages and, at the same time, enhance the mutual understanding and respect of the two communities, with a view to eliminating some unnecessary misunderstandings.

The SAR Government will continue to closely monitor the situation and, where necessary, timely introduce measures to ensure that the normal life of Hong Kong residents will not be seriously affected while we continue to develop the relations between Hong Kong and the Mainland.

With these remarks, President, I implore Members to support the motion.

PRESIDENT (in Cantonese): The first debate session ends. We now proceed to the second debate session on the theme of "Housing, Infrastructure, Planning and Development". This session covers three policy areas, namely Housing, Development (planning, lands and works, as well as heritage conservation) and Transport. Members who wish to speak in this session will please press the "Request to speak" button.

MR STEVEN HO (in Cantonese): President, basically, the DAB has expressed its agreement with the overall direction of the Policy Address, so I will not dwell more on this here.

As the representative of the agriculture and fisheries industries, I would like to thank the Chief Executive for his concern about the agriculture and fisheries industries. First, in his manifesto, four items related to the agriculture and fisheries industries were put forth unprecedentedly. Second, though the Policy Address has not discussed any concrete policies, it has mentioned the setting up of the Sustainable Fisheries Development Fund and the establishment of a committee for the Fund to seek sustainable development for the industries. Hence, on behalf of the agriculture and fisheries industries, I express my heartfelt thanks to the Chief Executive.

However, I must tender a reminder to the Government about certain contradictory points in the Policy Address. In the past, when mention was made of the agriculture and fisheries industries in policy addresses, it was usually about the imposition of certain regulatory policies, such as the trawling ban or the ban on commercial fishing in marine parks, and so on. As for the support offered, it 5762 LEGISLATIVE COUNCIL ─ 30 January 2013 would only be technical support, with no practical actions ever having been taken. According to other government papers, it is learnt that the pollution of marine resources is mainly caused by the discharge from our surrounding regions. First, it is the discharge from the Pearl River Delta. Second, it is the dredging and dumping arising from the infrastructure projects carried out by the Government. Third, it is the impact caused by certain trawling activities of the fisheries industry, yet it may not necessarily be caused by the fisheries industry alone.

PRESIDENT (in Cantonese): Mr HO, are you going to speak on the theme of this debate session?

MR STEVEN HO (in Cantonese): Yes, I am talking about development.

It is pointed out in the Policy Address that due to the needs of development, reclamation on an appropriate scale outside the Victoria Harbour has to be carried out. The last-term Government once conducted consultation on Enhancing Land Supply Strategy. Among the six options under the strategy, only the option on reclamation attracted strong views and disagreement from the public. As such, I consider the position stated by the Government contradictory. On the one hand, it says that regulation on the fisheries industry has to be imposed to protect marine resources, but on the other, it continues with the dredging and dumping work or the construction of additional infrastructure. In fact, the construction works of the Hong Kong-Zhuhai-Macao Bridge are still underway. Another baffling point is about the remark on reclamation outside the Victoria Harbour, to which the Government adds the word "actively". Fishermen and some Hong Kong people were agitated at hearing that. Actually, six options have been put forth in the consultation paper introduced by the Government earlier. Has the Government made full use of the other "five major options" proposed previously? Should not reclamation be regarded as the last resort and only be carried out after exhausting all options? I hope the Government will consider this cautiously.

Moreover, I hope that the Government will further study and consider the objectives of reclamation. In the past, the Government would usually draw up the plan or set out the objectives before carrying out reclamation, as in the case of the construction of the airport and theme parks, and the construction of incinerators recently. As for this time, despite the long search, I can only find LEGISLATIVE COUNCIL ─ 30 January 2013 5763 one objective for the reclamation, that is, to increase the land reserve. However, I do not consider this a strong justification. I hope the Government will conduct more in-depth studies and present more figures to convince the public and the industries. President, the agriculture and fisheries industries are merely dissatisfied with this point in the Policy Address.

Thank you, President. I so submit.

DR PRISCILLA LEUNG (in Cantonese): First of all, I wish to respond to a remark made by Mr Albert CHAN just now, that I had once said that the former colonial administration in Hong Kong adopted the approach of "groping one's way across the river" as the philosophy behind its policies. Of course, I was not a Member of the former Legislative Council at the time when Chris PATTEN was the Governor. But in 1985 when I was in the third year of my studies as a student in the Government and Public Administration Department, I had a chance to read an article by the former President of the Legislative Council, Mr Andrew WONG. In that article he likened the public policies of the colonial administration to "groping one's way across the river". I believe this view is agreed and quoted by many people.

After I have become a Member of this Council, I also think that irrespective of whether it is before or after the reunification, or even in this Policy Address, this idea of "groping one's way across the river" is found in the policies. However, as I have pointed out earlier, I hope that the present-term Government must never act like "groping its way but not crossing the river". Instead, it should "grope its way and crosses the river". Now as we are in the second session of the debate, I am convinced that in certain policies, the present-term Government should claim the win and hit the jackpot based on the efforts and hard work accumulated by its predecessors. The case is like the former governor, Murray MacLEHOSE, who left behind the MacLEHOSE Trail which is widely known among many young people now and regarded as one of his achievements.

This morning members of the Business and Professionals Alliance for Hong Kong were each given a QR code. The QR code I got is to brief Members on the water-friendly culture mentioned in paragraph 148. On 2 June last year, the Chief Executive accepted an invitation from us and walked with us all the way from Tai Kok Tsui to Tsim Sha Tsui, Hung Hom and To Kwa Wan. We 5764 LEGISLATIVE COUNCIL ─ 30 January 2013 asked him to sniff the pungent smell of the sea breeze blowing along the harbourfront of the beautiful Victoria Harbour which is considered the best and most valued treasure of the people of Hong Kong. The area used to be a cargo working area and it has been developed into a posh residential area now. Now many tenants living more than 10 floors up can still smell the stink from the seawater. At that time, the Chief Executive promised us that he would exert his best to restore azure sky, white clouds and a deep blue sea to the people of Hong Kong. I hope that he can honour his promise during his term of office and claim the win.

I have raised this issue because water quality is linked with the development of the harbourfront. The harbourfront in Hong Kong used to offer a very beautiful and natural vista. We find the same thing in the harbourfront along Tai Kok Tsui today. The rocks there have not been subject to any manmade decoration and embellishment. Many students would go there jogging. But the water quality and sea breeze there are not healthy. Various political parties and groupings in this Council as well as people of all ages agree that this is the present situation. During my last term in this Council, I had raised the issues of the development of West Kowloon and improving the harbourfront and water quality there in the years 2010, 2011 and 2012. In the last term of this Council, Prof Patrick LAU also raised the issue of perfecting the planning for the harbourfront in 2011. I can say therefore that this Council has forged a consensus on these issues during the last term of the Council. In paragraph 88 of the Policy Address, the Chief Executive has honoured his promise and set up the Harbourfront Authority. This can well be said to be a good beginning.

However, with respect to a water-friendly culture, I am afraid he has only some concepts and no more. I hope he can put into practice all those measures which are fragmentary. All along we have urged the Government to proceed with the easier tasks before coping with the more difficult ones. With respect to certain parts where approval cannot be given to reclamations and for which no reclamation can be carried out, including the harbourfront along To Kwa Wan and Tsim Sha Tsui, the Government should first persuade the developers to borrow the design of floating bridges and viaducts in foreign countries and construct an uninterrupted waterfront. I consider this to be a major task for the Development Bureau.

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I must say that there are unlimited potentials in Hong Kong and harbourfront development which ties in with the improvement of water quality is one. With respect to the QR code assigned to me this morning, I have brought along a photo of the Hoi Sam Park. I hope Members will not only find this to be a heap of rubbish because this is actually a black spot for water quality in Hong Kong. The pollution there is very serious. We have a beautiful harbour, but according to studies done and monthly water quality index readings released by the Kowloon West New Dynamic and the Blue Sea Action, we find that the there is a great disparity in the water quality index readings obtained by civilian organizations and the Government. For places which the Government claims are of good water quality, we find the water quality there poor. We hope that the Government can listen to views from the civilian organizations with an open mind. Our only hope is that the development of the harbourfront can tie in with improvements in water quality and that our next generation can be left with a beautiful harbour with greenery and this will be the best cultural heritage for them.

On the questions of cultural heritage and tying in harbourfront development with improvements in water quality, we cannot leave aside the question of ferry service. The Star Ferry pier was built in 1880 and it can really be regarded as qualified for application to be considered a world heritage. Besides, in 2012, we had fought to preserve the two ferry routes from Hung Hom to Central and from Hung Hom to Wan Chai. These routes began serving members of the public in 1965. Recently, a ferry route which used to served the New Territories was terminated. I think I have to raise this issue for discussion in this session of the debate because discussions then on the development of a ferry policy were stuck in the Transport and Housing Bureau. At that time, we hoped that the Government could start a tender exercise again and give it another chance and study in the least expensive way whether or not some tourist activities or advertisements could be used to attract more tourists and users, in addition to employing the tactic of making these ferry routes accessible to the beautiful waterfront in Hung Hom. But unfortunately, this proposal was rejected because the authorities approached this question only from the perspective of it being a means of transport.

At that time we found that the Environment Bureau, the Development Bureau and the Harbourfront Commission were all very interested in studying how ferry services could be used to match the development of the Victoria Harbour. Therefore, I wish to tell Prof Anthony CHEUNG, Secretary for Transport and Housing, that it is the view of the Environment Bureau that many 5766 LEGISLATIVE COUNCIL ─ 30 January 2013 of the discussions conducted by the so-called "3 S meetings", that is, meetings held by the Secretary for Transport and Housing, the Secretary for Development and the Secretary for the Environment, as well as many tasks which the Environment Bureau would like to carry out, are all stuck in bureaucracy. I hope therefore that the present-term Government can handle the issue by adopting a cross-bureau approach. This will restore ferry services for Hong Kong people because these are teeming with vitality and carry very fond memories of the people. Besides, ferry services can ease the problem of traffic congestion on land caused by many express rail and MTR projects currently in progress.

Moreover, I hope that the authorities will not only consider the issue of money when devising their policies. In this regard, I hope that the Financial Secretary can allocate funds to improving water quality in Hong Kong. I also hope that the waterfront areas in the eastern and western parts of Kowloon can be linked up so that both the local people and tourists can admire the beautiful scenery of the harbourfront and enjoy the refreshing sea breeze. I also hope that the authorities can adopt an inter-departmental and cross-bureau approach to handle matters in this respect. This is because if we want to improve water quality, we cannot expect the work to be done by just one department alone. Various departments such as the Marine Department, Drainage Services Department, Home Affairs Bureau and even the Transport and Housing Bureau are all involved. This is because there are matters related to ferries and ships. Also, the Development Bureau and the soon-to-be-established Harbourfront Authority are also involved. I hope that efforts can be made at a higher policy level, such as by the entire Civil Service led by the Chief Secretary for Administration. This can leave a harbourfront to our next generation which is far better than the MacLEHOSE trail. When the time comes, I do not think we will oppose any cross-harbour swimming races which the Government may suggest organizing.

President, I hope that with respect to the questions of harbourfront development, water quality and ferry service, the present-term Government can be a winner and honours its promise. During the last term of this Council, we made great efforts in forging a consensus. This enables the Government to score many points in this respect now. I only hope that the Government can really realize all these in earnest.

President, I so submit.

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MR NG LEUNG-SING (in Cantonese): President, in his Policy Address for 2013 the Chief Executive talks about housing and land supply in 43 paragraphs out of a total of 200. In two of these paragraphs, there are seven and 10 subparagraphs respectively presenting the plan to increase subsidized housing and land supply for housing in the short and medium terms. Evident in the large number of paragraphs devoted to the subject and the great details in the discussions, housing policy is the most important item this year and even for the next few years.

About the housing policy as elaborated in the Policy Address, it is said that the guiding principle is "assisting grass-roots families in moving into public housing and the middle-income families in buying their own homes". It is stated that a land reserve will be built up and measures for the short, medium and long terms will be rolled out and a multi-pronged approach will be taken to find all the land that is suitable to build houses. Efforts will be made to compress the construction time and speed up the procedures of changing land uses. All kinds of land under formed land, Government, Institution or Community (GIC) sites, green belts, industrial land, rural land, farm land, New Territories Development Areas, brownfield sites, reclaimed sites, rock caverns, and so on, are all searched. Under this kind of all-round search for land, it seems that all land resources which can be developed are all searched. It can be seen that the present-term Government has shown great determination and courage in solving this deep-rooted problem of demand for housing land which has plagued Hong Kong for years. I am sure that this is a right direction and I agree with it. But we should know that housing construction is not magic and we cannot hope to see the problem disappear by the waving of a magic wand. The Policy Address has undertaken planning for the volume of housing construction based on practical circumstances. It is a practical approach. Some political parties and groupings ignore the reality and the fact that time is needed to develop land and build houses and only oppose everything blindly. They attack the Chief Executive in respect of housing supply, even to a malicious extent. I can only feel laughable, and I also feel dismayed and pathetic about society which is so deeply divided.

President, there are three components to housing supply in Hong Kong and they are: public rental housing (PRH) units, Home Ownership Scheme (HOS) flats and private sector housing built on auctioned land. This is a long-standing combination in our housing policy, also a housing ladder on which people can move up. Unfortunately, over the past five years, this ladder has obviously been broken and this housing combination rendered imbalanced. We need to 5768 LEGISLATIVE COUNCIL ─ 30 January 2013 reorganize a more effective combination. The key to this is to speed up the housing construction according to the actual conditions and to re-adjust the ratio of the three components.

I think that the current-term Government should increase reasonably the amount of PRH units and speed up their construction. Of course, the mechanism for turnover of PRH units should be strictly followed. This can hopefully ease the demand for housing of the grassroots.

In addition, when the building of HOS flats is to resume, emphasis should be placed on their ability to meet practical needs instead of being luxurious and to provide some sort of basic and subsidized self-owned homes, thus building a ladder of home ownership. As for these new HOS units, they should belong to the basic type of flats with a saleable area of 400 sq ft to 500 sq ft so that the selling price of these flats can linked with the people's ability to service mortgages. In this way, such flats can meet the needs of ordinary members of the public and help the middle-class people take the first step in property ownership.

As for the sale of land and construction of private residential units, some kind of incentive and restrictions should be imposed on the terms of construction in line with the needs of the special circumstances. The aim is to facilitate the construction of a minimum number of small and medium-sized flats with an appropriate saleable area, and even with completion dates and selling dates specified. These flats can meet public demand for such flats.

Various types of land including those for community, school and hospital should be appropriately related to conditions in the population and people's livelihood. This will prevent causing problems in development in future.

President, the Policy Address presents a vision for housing land supply and I believe when the relevant measures are implemented, this will bring a pleasant living environment to the people of Hong Kong. About the construction of subsidized housing, my concerns are that the turnover of PRH units should be expedited and also, attention should be paid to the basic quality of public housing to be constructed.

On the question of speeding up the turnover of PRH units, a multi-pronged approach must be adopted. The relevant initiatives include HOS and PRH LEGISLATIVE COUNCIL ─ 30 January 2013 5769 construction, undertaking a review of the well-off tenants policy, striving to recover PRH units from tenants income and assets passing the limits, and as the Policy Address says, "The Housing Department will step up its efforts to combat the abuse of PRH resources.". Information shows that the Housing Department (HD) investigates on average about 8 000 cases of suspected abuse of PRH units each year, and 400 of these cases are substantiated. In the year 2011-2012, the online patrol team of the HD discovered 1 700 cases of illegal online leasing of PRH units. This kind of illegal act is abuse of public housing. It wastes public money and is despicable. Therefore, forceful action should be taken to combat such illegal activities.

On the building of HOS flats, these flats should have a suitable size and selling price and they should be practical and not luxurious. Such include the quality of building materials used, decoration, design, and so on. All this should enable tenants to live comfortably and obviate the need to undertake another round of refurbishment before they move in, thus preventing the waste of building materials and the production of sound and air pollution. Therefore, as we seek to expedite the construction of PRH and HOS flats, we should emphasize the quality of being practical rather than luxurious and attention should be paid to meeting environmental protection needs, such that the wasting of resources can be avoided and people enabled to truly live in peace and work with contentment.

President, I so submit.

MR POON SIU-PING (in Cantonese): President, this year's Policy Address has set out a blueprint for the future development of transport in Hong Kong. The trend in the development of any modern city is to have a railway-based network complemented by bus services. Now the railway systems in Hong Kong are under tremendous pressure where the train compartments are very crowded even in non-peak hours and fully packed during the peak hours. Passengers cannot board the trains and the platforms are also crowded. This plan to develop transport with railways as the backbone is our long-term target. But the pressing task before us now could be how best to effectively use different means of transport to divert traffic for the heavily loaded railway systems.

Moreover, the Government plans to introduce some new initiatives applicable to professional drivers. Apart from new proposals to encourage the phasing out of diesel commercial vehicles, laws will be enacted to set a service 5770 LEGISLATIVE COUNCIL ─ 30 January 2013 life limit for diesel vehicles. Many of these measures have a bearing on the living of professional drivers and the problems concerned cannot be tackled simply from an environmental protection perspective. Since housing policy is regarded as the most important policy area in the Policy Address, I would also like to express my views on it in this session of the debate.

The Policy Address states that in our long-term planning for public transport, it will revolve around a railway-based network complemented by bus services. Recently, we can see that the MTRCL has been trumpeting its service improvement measures and increasing the frequency of train service from one train every four minutes to one train every two minutes. Of course, I welcome improvement in the railway service, but even if the trains come at every two minutes, now in the main stations during the peak hours, the trains are fully packed. In the Admiralty Station, for example, passengers will need to wait for a few trains before they can board one. In the major interchange stations such as Kowloon Tong, crowd control measures may even be enforced to restrict passengers from entering the platforms. This shows that crowds of passengers cannot be diverted simply by increasing the frequency of trains.

In the Policy Address, the Chief Executive suggests that while railways are developed, other road transport services should also come under review. He also says that the functions and roles played by different means of public transport will have to be rationalized. This review will start with the role of buses as a complementary means of transport and bus routes will be optimized to enhance the feeder service, improve the interchange arrangements and reduce roadside air pollution.

I do not oppose the idea that bus services should be improved in this direction in the long run. But speaking of the short term, when a review is conducted of bus routes such that when bus routes are reorganized, emphasis is placed on the complementary role of buses and their feeder function, and as more passengers are diverted to using the railways or that they are left with no option but to ride the trains, this will result in a heavier burden being imposed on the railway systems.

In my opinion, when bus routes are to be reorganized, consideration should be given to the traffic diversion concept, that is, diverting passengers from the overloaded railways. This would be more important. Besides, many minibuses and residents' coaches have become the main means of transport for many people LEGISLATIVE COUNCIL ─ 30 January 2013 5771 because of the suitability of their routes, and convenience which passengers find in boarding and alighting. Under this slogan of a railway-based network complemented by bus services, what is the positioning of these means of transport? If the Government is to fully outlaw minibuses and residents' coaches, this would not only be related to considerations in environmental protection but also the right to choice of the people plus the livelihood of close to 10 000 workers in the minibus trade and other professional drivers. Hence the issue must be carefully handled.

Recently, the MTRCL has introduced a considerable number of new carriages and also brought in audio-visual broadcasting as found on the East Rail. The MTRCL argues that this move serves the purpose of making more information available to passengers and providing quiet cars are provided for passengers who do not want such information. This is only an argument devised to cover up the attempt made by the MTRCL to force passengers to receive information in order to increase its income from advertisements. This idea of providing quiet cars is also putting the cart before the horse. Making themselves available to audio-visual broadcasting is not a term which passengers have to accept when they ride a train. A more reasonable practice would be for the MTRCL to provide one or two cars with audio-visual broadcasts for those passengers who prefer such information, instead of the other way round, that is, asking passengers who do not want to be disturbed by sound and images to board the quiet cars.

As a matter of fact, the first and foremost problem which people have to face when they patronize the MTR is whether or not they can board a train, instead of choosing what kind of compartment to board. So the best course of action would be provision of quiet cars for the whole train and dissemination of information by text and mute images.

Now the Government is conducting a review with the MTRCL of the Fare Adjustment Mechanism. The Government has the responsibility to urge the MTRCL to provide quality service instead of asking the people to bear with the loud broadcasts when they ride a train.

In the policy objectives concerning transport in the Policy Address, the Government has at last shown its concern for the relationship between long working hours and safety. The Government says that in view of the recent serious incidents concerning franchised buses, the Transport Department (TD) is 5772 LEGISLATIVE COUNCIL ─ 30 January 2013 consulting employee representatives on work, rest and meal time of bus captains of franchised buses.

I support this move made by the TD. But the question is, those professional drivers other than bus drivers are also involved in traffic accidents resulting from long working hours. The TD cannot just pay attention to the serious traffic accidents caused by long working hours of drivers of franchised buses while ignoring the traffic accidents caused by long working hours of other professional drivers.

President, environmental protection is an important principle that maintains sustainable development in society, but the survival of a minority group of people should not be sacrificed as a price paid for environmental protection. In Hong Kong which has a policy of making railways the backbone of public transport, plus the increasingly high requirements on the use of diesel engines, the professional drivers are finding it more and more difficult to earn a living. The Policy Address suggests that a service life limit of 15 years should be set for newly registered diesel commercial vehicles.

Some users of diesel vehicles have told me that the new Euro V diesel engine saves fuel and emits very little pollutants. They question the need to set such a service life limit. Drivers of school buses and nanny vans have also told me that school buses have a lower wear and tear than other goods vehicles and if these school buses are properly maintained, their service life can be as long as 20 years or more. If school buses and nanny vans are forced to retire after 15 years, this will greatly add to the operation costs and in the end, the operators will have to fold their business or transfer the cost onto the parents. I urge the Government that when consideration is made of environmental protection and diesel vehicles, it must take into account factors like technology developments in diesel engines and the impact on professional drivers. When a relevant policy is to be formulated, a balance must be struck among environmental protection, technology and the trade concerned so that the society as a whole can benefit.

President, housing policy is regarded as the most important item by the Chief Executive. But the housing policy found in the Policy Address is only about long-term development and there is no measure to solve the immediate problems. The Government does not want to give any rent allowance to those on the Waiting List for PRH, nor does it have any effective measure to help those residents of Hong Kong who want to buy a home but whose income is above that LEGISLATIVE COUNCIL ─ 30 January 2013 5773 of the ceiling for application of HOS flats. These people can only pay the expensive rents and high-priced homes. The impression which people get from this housing policy is that it sounds great but delivers very little result. The policy only remains being a vision for the future, and there is no specific action. No wonder those people who live in distress feel disappointed.

President, I so submit.

MR CHAN KIN-POR (in Cantonese): President, property prices in Hong Kong have been surging continually and right after the new-term Government has been inaugurated, it has made the housing problem as the most important area of work and soon introduced the so-called "double curbs" measures. The effect of this is an instant drastic drop in the number of transactions. However, after the announcement of the Policy Address, as there are no other short-term measures, property prices are set to rise again. As a result, many people think that the housing policy of the Government is lame.

As the saying goes, "it takes more than one cold day for the river to freeze three feet deep". The fact that property prices are rising all the time is because there is an imbalance in supply and demand in the market. Over the past five years, the private-sector market could supply only an average of about 9 800 new residential units each year. But according to past experience, there has got to be at least 20 000 new flats before the basic demand is satisfied. When coupled with the fact that Mainland residents like to come to Hong Kong to buy properties, the demand therefore greatly increases. In such circumstances, property prices just rise and never fall.

The fact that the supply of flats in the market is short is because after the financial turmoil of 1997, property prices in Hong Kong plummeted, and in order to restore stability in the market, the Government ceased to sell land by auction at regular intervals in 2002. Then the Application List System was introduced. Land supply from then on has been reduced greatly. The Government's reluctance to resume land sales at regular intervals has caused people in Hong Kong to suffer during the past few years. When I give a recount of history, I am not trying to settle old scores but I just wish to tell Members that the plight we have now is the result of what has happened for the last 10 years. During these 10 years, there has been a short supply of land and the Government's land 5774 LEGISLATIVE COUNCIL ─ 30 January 2013 development effort has almost come to a standstill. If we wish to resolve all these problems overnight, I would say that the only way is to find a wizard.

The Policy Address has set out measures to increase the supply of housing land in the short, medium and long terms. It can be likened to an attempt at seizing each inch of land relentlessly. I have never seen any policy address in which the discussion on land supply is so detailed. But if land is used to build houses, it would take at least four or five years. The Policy Address also talks about supply in the short term. In the next three to four years, there will be a supply of 67 000 new residential units in the private-sector market, that is, at least 16 000 new units will come on stream each year. Compared to previous years in which there were only 9 800 new units each year, the amount of supply proposed has increased. When this is coupled with the so-called "double curbs" measures from the Government, the desire of Mainland residents coming here to buy properties will be dampened. And in a few years from now the new HOS flats will be introduced. I therefore believe that the tight supply will be eased.

The Policy Address proposes many measures of increasing land supply, including converting government sites, deserted green belts and industrial land for residential uses. It is expected that at least 300 hectares of land can be released. And when after a few years flats are built on these tracts of land, market demand can be further eased. I would think that increasing land supply is an initiative that can address the problem at root and also effectively.

Honestly, I am not worried about the Government not finding any land. Rather, I feel concerned that when faced with pressure from the community, the Government will roll out more measures to curb property prices. Now the Government has introduced the so-called "double curbs" measures, that is, the imposition of Buyer's Stamp Duty and Additional Buyer's Stamp Duty. If property prices continue to soar, the Government has made it clear that it may roll out more measures to curb property prices. Recently, there are talks about a tax for vacant properties. The "double curbs" measures may serve a shortlived effect of curbing Mainland residents' demand for property purchase in Hong Kong. But if more curbs are rolled out in order to cool the heated property market, this would make people fear that once there are fluctuations in the external economy, such as when there are armed clashes arising from misunderstandings between China and Japan, the United States raising the interest rate earlier than expected or a sudden deterioration of the Euro debt crisis, LEGISLATIVE COUNCIL ─ 30 January 2013 5775 all these curbs measures will speed up a meltdown of the property market in Hong Kong.

Judging from the prevailing market situation, a bubble has already formed and it may burst at any time. The Government has the responsibility to remind members of the public what the danger will be when the bubble bursts. And they should be told how to cope with the burst. The Government should never pinch the bubble and make it burst. So I do not wish to see the Government roll out these curbs all the time as this will only add to the risk of an ultimate burst. I hope that there can be a soft landing in the property market as land supply is restored to normal.

This Policy Address also presents many suggestions to increase land supply in the long term. These include reclamation, developing Hung Shui Kiu and Lantau Island. All along I have supported reclamation outside the Victoria Harbour. Now the Government has proposed to construct an artificial island between Hong Kong Island and Lantau Island. This idea can bring substantial results while causing little impact on the environment. We should study it in depth. Many countries or cities which are close to the sea in the world would use reclamation as a means to cope with the growth in their economy and population. In Singapore, there are some 13 000 hectares of reclaimed land or 26% of its total area. In Macao, two thirds of its land is reclaimed from the sea. In comparison, Hong Kong has only some 6 800 hectares of reclaimed land and they take up 6% of the total area. This amount cannot be said to be large at all. At present, our development is really hindered by the shortage of land. I therefore hope that Members can give serious thoughts to the reclamation proposal.

Lastly, I wish to talk about public housing. Many studies have pointed out that when the housing problem is addressed, society will become stable and the poverty problem will be eased. Singapore is a success story. Now almost 50% of the Hong Kong people live in public housing or subsidized flats for sale. I suggest that we should raise the proportion of people living in public housing to 60% of the total population or even higher, with public rental housing (PRH) being the mainstay. It is pledged in the Policy Address that the rate of PRH construction will be speeded up and for the five years starting from 2018, the total supply of PRH units would be increased to 100 000. This is a correct step to take. But I hope that all sectors across society can lend their support to offering 5776 LEGISLATIVE COUNCIL ─ 30 January 2013 help to needy people so that they can be allocated a PRH flat. This will ease the housing problem in Hong Kong.

I so submit.

MR WU CHI-WAI (in Cantonese): President, LEUNG Chun-ying has devoted one fifth of the Policy Address to addressing the housing problem. In his opinion, every Hong Kong citizen must support all his housing projects before all the housing problems can be resolved and his flat production target be met. But this can actually not happen in civil society. There is always a possibility for any government project to be revised, or even terminated or changed substantially.

Let us take a moment to review LEUNG Chun-ying's manifesto. Among the proposals therein, the one related to housing policy is substantially "inflated", compared to the measures proposed in this Policy Address which are expected to be implemented as scheduled or in the pipeline. Here I will try to point out how it is "inflated". One of the incidents involving LEUNG Chun-ying's failure to "repay his debt" is his "enormously inflated" flat production target. He has merely brought forward the production of flat supply originally scheduled for a later stage in order to fulfil the pledge in his manifesto, that the annual production of public rental housing (PRH) flats be increased to 35 000. In fact, what he can do is just to maintain the supply of PRH flats for the coming five years at around 75 000.

Although he has mentioned the need to raise the transparency of land supply and sustained ability of implementation, he has merely mentioned in paragraph 90 that the Steering Committee on Housing Land Supply chaired by the Financial Secretary will be reorganized as yet another committee, the Steering Committee on Land Supply. He has also said that additional land will be allocated to building homes for elderly retirees to meet the needs arising from the ageing population, but nothing is mentioned in the Policy Address about how this measure will be implemented.

He has also said that additional manpower will be deployed to conduct a comprehensive inspection of the living conditions of "sub-divided units", "caged homes" and cubicle apartments, for purposes of formulating appropriate safety and hygiene standards, but he has not mentioned any policies related to the LEGISLATIVE COUNCIL ─ 30 January 2013 5777 solving of these problems long term and in a comprehensive manner. In fact, during our discussion of these problems with the Transport and Housing Bureau recently, we found that the Government did not even have a clear idea of the positioning and role of "sub-divided units", "caged homes" and cubicle apartments in its overall housing policy. How can people be convinced?

Actually, in retrospect, we will find that after LEUNG Chun-ying has taken office, the property price index has continued to rise, and it has even surged by 2% after the introduction of the Buyer's Stamp Duty. After the unveiling of the Policy Address, some of the owners in the property market have even refused to offer their property for sale or raised prices again and again. What does all this reflect? It reflects that LEUNG Chun-ying's ability of addressing problems concerning supply and property prices is questionable. Hence, the market is telling the SAR Government that it has no faith in its housing and land policies. Nevertheless, we must understand that it takes time for land supply to be turned into actual flat supply. But the question remains: Given such a large number of policies, the supply of so many plots of land, and the planned production of so many flats, why can the Government not put the hearts of people in need of home ownership at ease? I think the SAR Government needs to give serious thoughts to this issue.

Regarding the SAR Government's housing policy, we are caught in a dilemma. Certainly, the Government should not address the housing needs arising from investment needs. Instead, it must face the local Hong Kong people in need of home ownership and examine how its housing policy can help them acquire a place to build their homes. However, insofar as this measure is concerned, I can see that the Government has often failed to administer the right cure.

In face of the long-term home purchase needs of Hong Kong people, we actually need to address two significant issues. The first one certainly involves how our land supply, flat production and housing supply can cope with the actual needs in society. The second one is that the problems before us must be resolved. Members can see that property prices have continued to rise while we still have no idea of whether the Government's policy is working. Moreover, faced with many external factors, people can hardly decide whether it is good or bad to "purchase their first flat" later. As the market is full of such panic demands, what good solution or approach will the Government offer?

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In face of all these issues, the Government should properly perform its fundamental duty. As a land administrator in Hong Kong, it should be able to tell the people clearly what it will do. We propose that the Government should give priority consideration to the present Application List System, whereby sites are triggered by property developers or, if failed, put up for auction or put on hold. This measure will only tell the market as well as Hong Kong people that the Government will continue to maintain its high land price policy. Given such a policy, how can Hong Kong people be convinced?

If the Government is sincere in changing this situation, the first premise is that, assuming land developers are reluctant to trigger land or pay the prices the Government has in mind, the Government should let them know that if they do not want the land, it will be released for the construction of subsidized housing. In this way, a very clear signal will be sent to the market, that the Government is determined to curb the high land price policy and prepared to resume regular land sales in order to stabilize land supply. Neither will it allow property developers to curb land supply through land hoarded in the hands of the Government, thereby raising property prices.

Second, since we know that there is a time lag between land supply and housing supply of probably five or seven years, what will the Government do to help the general public during this interim to, in addition to hastening to acquire a home, rent a place, not necessarily a cubicle apartment, to live? I can see that the SAR Government is racking its brain to consider converting industrial buildings for residential purposes or changing the use of GIC sites for the construction of the so-called youth hostels. All these solutions are shortsighted and cannot bear fruit easily in the short term. On the other hand, there will be substantive change to land use and the controversy thus arisen can absolutely not be overlooked.

However, given that the Government still has in its hand nearly 300 000 HOS flats without premium paid, can consideration be given to these HOS flats from a new perspective and, if they can be revitalized, what can be done to enable them to play a role in the rental market? During our discussion with the Secretary on the relevant issues a couple of days ago, the Secretary said that it was infeasible to offer HOS flats for lease in the rental market because they are supposed to be sold as homes. Nevertheless, Members may consider this issue along different lines. For instance, even if an HOS flat owner has not paid the premium in full, he should have paid 55% or a certain percentage of the premium LEGISLATIVE COUNCIL ─ 30 January 2013 5779 to the Government. He will ask this question: Why can I not make flexible use of the portion for which premium has already been paid? In other words, the Government may think out of the box and make a new arrangement for rental proceeds in order to tackle the issue. If it refuses to do so, 200 000 to 300 000 sold PRH or HOS flats without premium paid will be wasted for no reason, such that many people in the rental market are compelled to live in "sub-divided units" or cubicle apartments, whereas these truly vacant flats which should have an opportunity to be used in the rental market cannot be put to use. I hope the SAR Government and the Secretary for Transport and Housing can reconsider this issue.

The Government has indicated that the Urban Renewal Authority (URA) will be invited to exert all efforts to take forward demand-led redevelopment plans, and this is also consistent with the existing policy. Nevertheless, it is actually necessary for the URA to pull out all the stops to take forward the development of sites of even larger sizes. For instance, the size of the 13 streets in To Kwa Wan is so large that it is not easy for individual developments to be carried out. Can the URA intervene in such developments? Insofar as the Tai Hang Sai Housing Estate is concerned, the Hong Kong Settlers Housing Corporation Limited is required to manage a very large site. Owing to some policy issues, a complete breakthrough can still not be made. Given that there are currently many civil service quarters and residential flats built by co-operatives, can the URA come up with a practical plan to enable these old …… in fact, if not for ownership and issues related to the payment of premium, these buildings should have already proceeded to the redevelopment stage. So, can the URA make more efforts in this respect to put these sites to effective use?

The redevelopment of a housing ladder is one of the key topics of the Chief Executive's political platform. However, in the course of providing this ladder, the Government is only considering HOS flats now. Given that the income ceiling for HOS flats is set at $40,000, 73% of the families which do not have property and need to acquire homes are covered. Come to think about this. If we can tell Hong Kong people that the housing ladder supported by the Government can cover people similar to former owners of Sandwich Class Housing with a monthly income of $40,000 to $60,000, then more than 80% of the households in Hong Kong which have not yet acquired their own homes will be covered by the Government's subsidized housing schemes should they wish to acquire property, then this will allay their panic acquisition of property and panic sentiments. Moreover, the SAR Government will hence have more time to 5780 LEGISLATIVE COUNCIL ─ 30 January 2013 tackle the relevant issues. So, why does it not do so? Neither is this a brand new policy, for a similar policy was already introduced in the past. During our discussion with the Transport and Housing Bureau on this issue, the Government indicated that given its limited resources, it had to address the most urgent housing need. Nevertheless, the numbers of flats required by different housing ladders are different. The Government should be able to adjust the relevant housing supply timetables to effectively prevent the relevant issues from causing the policy to tilt, which might otherwise affect the overall effect that may be achieved.

Hence, though it is trite to say so, I still wish to call on the Transport and Housing Bureau again in this policy debate to consider whether the sandwich class should be included in the housing ladder. Otherwise, they will be compelled to compete for the properties that Mainlanders are desperate to flock to Hong Kong to buy. Under such circumstances, how can they feel at ease? Another policy launched by the Government after taking all sorts of paints is called "Hong Kong property for Hong Kong people". However, this policy can be implemented in practical terms by building additional Sandwich Class Housing or HOS flats. Hence, the Government should step up its effort to tackle the relevant issues. Only through giving an undertaking to include the relevant home ownership demands in its subsidized housing plan can the Government put people's minds at ease and allay their panic demands.

Next I will talk about transport. Certainly, Members will not dispute the Government's claim that its policy is oriented towards a railway-network complemented by buses. Unfortunately, this policy direction is not used to rationalize the traffic problems confronting Hong Kong society. Let me cite an experience of Seoul, South Korea. More than a decade ago, the situation in Seoul was exactly the same as that in Hong Kong, with various private operators providing public transport services and the roads filled with modes of transport operated by companies A, B and C. Although many of these companies were privately run, some were operated by the public sector. Because they were not subordinate to one another, no result was achieved however hard were the adjustment and co-ordination efforts made by the Government. Despite the mention of a railway-based network complemented by buses by LEUNG Chun-ying nowadays, he has not seized this opportunity to bring up two major underlying issues: a bike-friendly and pedestrian-friendly environment complemented by barrier-free access, which has been mentioned by the Government repeatedly. If these several measures can complement one another, LEGISLATIVE COUNCIL ─ 30 January 2013 5781 the Government can actually rationalize Hong Kong's public transport system to serve the public. Do Members wish to see buses crowded together curbside or the railway system stretched to the limits? In order to improve the situation, various modes of transport actually need to complement one another and consolidate. To achieve this, the SAR Government must demonstrate great courage. Does the Government have such great courage to rationalize the transport system? Despite the MTRCL's 20% or so private stake, the Government is already reluctant to make great efforts, not to mention other private modes of transport that are required to make complementary efforts as well. Hence, regarding the part concerning traffic and transport in the Policy Address, I hope the Government can examine and review the operation of Hong Kong's public transport system in a comprehensive and holistic manner.

The Policy Address has also mentioned realignment of bus routes as one of the solutions. To do so, the Government must demonstrate its determination of allocating land for major bus interchanges, or else Siu Lam will not succeed, and the urban areas will become even more hopeless, for a solution will never be found to the most critical traffic congestion problems there. Hence, one of my proposals to solve the transport problems is to provide an ideal transport interchange in the urban area, especially the Kai Tak Development Area (KTDA). Through reserving land for the development of a major transport change in combination with the present development of the KTDA, the Government can actually tell the public that it is determined to realign bus routes and provide bus interchanges, rather than just making noises.

On the other hand, I certainly hope that the Government can consider some recommendations on improvement of bus services. Members of the public often find it uneasy to wait for buses because annunciators are unavailable. Can annunciators be installed, given that we have the global positioning system and advanced technology? In fact, annunciators can be arranged to complement the Government's interchanges. I hope that such technology can be brought into application.

Lastly, housing estates built on the slopes in the urban areas are particularly densely populated. Hence, the Government should make its best endeavour to implement projects to build major automatic uphill pedestrian links because doing so can complement the inadequacy of the present public transport system and alleviate the pressure on those indispensable modes of road transport.

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President, I so submit. I will use the remaining time to speak on other areas.

Thank you, President.

IR DR LO WAI-KWOK (in Cantonese): President, the Chief Executive's 2013 Policy Address tries to outline the blueprint of urban planning of the future Hong Kong. In the short and medium terms, 10 proposals have been put forward to increase the supply of residential land. As regards the long-term increase in the supply of land, it includes the implementation of the North East New Territories New Development Areas, reclamation on an appropriate scale outside the Victoria Harbour, and rock caverns and underground space development, I basically support all of these. Land shortage has seriously stifled Hong Kong's economic development and housing supply. However, in this blueprint, the lack of corresponding long-term infrastructure planning is rather disappointing. After all, urban planning is not just land development, for more emphasis should be placed on long-term infrastructure planning which includes ancillary facilities such as transportation network and urban facilities. Only through optimizing the long-term infrastructure planning could the Government make suitable resource input and satisfy the corresponding needs for human resources. Thus, the sustainable development of our society will be promoted.

The major infrastructure project before and after Hong Kong's reunification with China was the Rose Garden Project launched during the colonial administration of David WILSON. It involved building a new airport and related core projects. They both involved land supply as well as large-scale infrastructure projects. The Chek Lap Kok International Airport under use, Airport Railway, Lantau Link, West Kowloon Reclamation Project, Western Harbour Crossing and Tung Chung New Town (Phase 1) play a significant role in meeting public aspirations in respect of our economic development, improvement in transport network and increase in housing supply.

The 10 Major Infrastructure Projects were put forth during the tenure of the former Chief Executive, Donald TSANG. These included those well-known projects such as the Shatin to Central Link, Guangzhou-Shenzhen-Hong Kong Express Rail Link, the Hong Kong-Zhuhai-Macau Bridge and the West Kowloon Cultural District. But during this period, in terms of increasing the land reserve, LEGISLATIVE COUNCIL ─ 30 January 2013 5783 it was far from satisfactory, resulting in social problems such as shortage in housing and land supply today.

From past experience in development, we can see where the inadequacies and problems lie. The Government has the responsibility to develop land and the duty to devise long-term policies on comprehensive urban planning, population distribution, economic activities and related infrastructure.

President, visionary and sustainable planning is required for Hong Kong's infrastructure development instead of piecemeal solutions. More importantly, infrastructure construction boosts the local economy. The commencement of these projects will increase local job and business opportunities. After their completion, other economic activities will be promoted such that the overall conditions of living can be improved. On the contrary, the lack of long-term infrastructure planning will seriously affect the development of the related industries. Friends of mine in the engineering and construction sectors have complained to me that during the past 15 years after the reunification, the number of infrastructure projects has been fluctuating. During the peak of infrastructure building, there are $60 to $70 billion worth of projects every year. However, during the trough, only around $20 billion worth of projects are ongoing. In a period of abundant construction works, there is insufficient manpower ranging from engineers to construction workers. But unemployment and underemployment arise when projects have dropped. As a result, members of the industry would be in extreme situations where if they do not have to "work like an ant", they may "starve to death". Such ups and downs are definitely detrimental to the development of the sector and Hong Kong.

President, Hong Kong has to optimize the long-term infrastructure development. This should never be confined to increasing a certain number of infrastructure projects. Instead, focus should be placed on infrastructure required by the development of Hong Kong in the next few decades. It will create both business and employment opportunities as well as more development opportunities for the next generation. In addition, in the formulation of long-term infrastructure planning, green infrastructure should also be included in order to strike a proper balance between development and environmental conservation.

The Chief Executive has promised in his manifesto that he will explore new enforcement mechanisms to co-ordinate urban planning and development 5784 LEGISLATIVE COUNCIL ─ 30 January 2013 projects with a cross-sector professional project management team. But there is no further explanation in the Policy Address. Nor the formulation of long-term and sustainable infrastructure planning has been included in the agenda. I am looking forward to further elaboration and active follow-up on the matter by the Chief Executive and his accountable team.

President, large-scale land development often takes 10 years or more. Comprehensive long-term infrastructure planning will take an even longer time, which should be launched expeditiously. In the mean time, the Government should also review the current mechanism for planning formulation and launch consultation properly. In recent years, there are often social controversies on land use and infrastructure projects. Land development and infrastructure planning often involves many stakeholders. Inevitably, there is divergence of views and even political bickering arising from different sectoral interests, rehousing need and other environmental issues. In response to Hong Kong's ever changing socio-political environment, the SAR Government should review and optimize the existing public consultation mechanism. Moreover, the procedures and enforcement mechanism of town planning should be improved and simplified so as to enable the effective implementation of long-term infrastructure projects in future.

The supply of land and housing is an important part of the overall urban planning. In the Policy Address, it is stressed that solving the housing problem is the primary task of the current-term Government. Although the Chief Executive has presented his land supply strategies which are in the right direction, specific details such as medium- and long-term land use planning and land formation, reclamation plans and timetable, as well as annual land supply are still lacking. As for the new long-term housing strategy, it remains to be studied by the Long Term Housing Strategy Steering Committee before conducting a consultation exercise. The Chief Executive said that the Government will uphold the principle of assisting grass-roots families in moving into public housing and the middle-income families in buying their own homes. However, many friends of mine in the middle class and professional sector have told me that, according to the announced housing supply plan, the SAR Government will focus on increasing the supply of subsidized housing in the short and medium terms. It apparently fails to cater for the aspirations for home ownership of the middle class. Moreover, because of the lack of overall planning, the Government is caught in a quandary in some related projects. For example, due to social controversies arising from the planning of the North East New LEGISLATIVE COUNCIL ─ 30 January 2013 5785

Territories New Development Areas, the Chief Executive indicated that the authorities are actively studying the possibility of appropriately increasing the development density and proportion of public housing. However, it is worrying that if the Government fails to make a balanced distribution of different types of housing, including public housing, HOS flats and private housing, or carefully plan the economic activities within the areas, it would easily give rise to various social problems. These new areas may even become another "city of sadness". The SAR Government should stay vigilant on this issue.

Regarding the complementary transportation network, it is also an important part of urban planning as a whole. The Chief Executive said that the Government will continue to bring into full play the integrated development of mass transportation and residential property. I would like to emphasize that the interaction between Hong Kong and the Mainland is becoming increasingly frequent. In the area of transportation network facilities, apart from considering local situations, it is necessary to take into full account the connection of transport infrastructure between Hong Kong and the Pan-Pearl River Delta Region. I look forward to serious consideration by the authorities in this aspect when formulating transportation network planning for the long term.

Besides, in the process of formulation and implementation of long-term infrastructure planning, including land development, supply of housing and improving the transportation network facilities, the authorities should ensure that there is adequate provision of professional grades officers in the Civil Service and resources that can meet the requirement. In doing so, the Government can honour its promises when everything is soundly planned and implemented according to policies backed up by adequate manpower and resources.

President, I so submit.

MR CHARLES PETER MOK (in Cantonese): President, a large part of the Policy Address is spent on the discussion of identifying land for the construction of resident flats. The authorities have set out many figures and specified the several sites to be used, which include government sites. It is true that the Government has identified many sites for the construction of residential flats. Indeed, many sites other than those listed in the Policy Address are available for housing construction. Yet a casual remark on identifying sites for residential flats or continued housing construction is not the solution to the housing problem. 5786 LEGISLATIVE COUNCIL ─ 30 January 2013

Does the Government remember the two important concerns of property prices and town planning?

Has the Government ever considered the affordability of the public? After the announcement of the Policy Address, property prices rose instead of dropping and shares of real estate companies rocketed, for the Government has not offered any effective measure to curb property prices. The public cannot afford the high property prices. Do we really want everyone to fall into the net of public rental housing (PRH)?

The Government cannot think out of the box of housing construction. Have the authorities ever considered the concerns about screen-like buildings and community support? The development of a community requires a comprehensive complementary plan. Without the community and local economies, residents can hardly live in peace, which will bring other social problems.

President, the Policy Address has evaded the truly important problem, that is, real estate hegemony. It tries to shift the responsibility and resort to procrastination. In fact, many feasible options are available to the Government in achieving the pragmatic objectives of increasing supply and curbing property prices.

Let me cite an example to illustrate my point. The Government should act in accordance with rules and procedures even in great anxiousness, so it should not have jumped to the immediate conclusion of using GIC sites for the construction of PRH. Such practice appears hasty. In fact, many sites are available for use. We in The Professional Commons have identified five suitable sites in the List of Sites for Sale by Application. Moreover, the Kai Tak Development Area can be used for the construction of PRH, HOS flats or even Sandwich Class Housing flats instead of luxury flats. Besides, a lot of brownfield sites are available for the construction of flats in the New Territories. Moreover, sites above the four West Rail stations can also be used for the construction of PRH. It is estimated that about 30 000 public housing flats will be supplied on those sites, and the construction works can be completed within the term of the incumbent Chief Executive. If the Government does not fully utilize existing sites but try to use sites designated for other purposes, such as education, it is violating its own policy pledge. In this way, it will also mess up the overall planning and development of Hong Kong.

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Furthermore, the Hong Kong Government still possesses 391 hectares of idle land, but it has not given the exact location of these sites so far. If the Government is determined to deliver results, it should stop being passive and wait for estate developers to "call the shots". The Government should announce the information on idle land, and make advance announcement on the number of sites to be released in the quarterly land sale for the next few years. With this information, potential home buyers can accurately anticipate the number and timetable of residential flats to be completed in the districts they prefer, whereas estate developers will not be able to manipulate the information and drive up property prices easily. I hope the Government will stop misleading the public into believing that land shortage in Hong Kong is acute and that they have to put up with the high property prices.

Finally, the Government should reinstate the "regular quarter land sale" to stabilize land supply. In view of the prevailing social and economic conditions in Hong Kong, I think the Application List System has fulfilled its historical duty. The Government should take this opportunity to establish an automatic transfer mechanism, under which the Government will transfer sites not sold at regular land sale to the Hong Kong Housing Authority and the Hong Kong Housing Society for the construction of PRH. Such an arrangement will ensure that the supply of completed residential flats will not be affected by market changes or joint boycott initiated by estate developers, thereby protecting the housing needs of the grassroots and middle-class people in the sandwich class.

President, I so submit.

MR GARY FAN (in Cantonese): President, in this speech of mine, I wish to talk about the views of the Neo Democrats on the parts of housing, development and transport in this Policy Address.

The housing policy has been referred to as a top priority by Chief Executive LEUNG Chun-ying, but if we look at the entire Policy Address from a more macroscopic perspective, it is obviously much cry and little wool, and it can be likened to "drawing a picture of a cake to satisfy the hunger". To many people who face problems in housing, the housing policy in the Policy Address just carry plans for the indefinite future, rather than a vision. There are only target numbers but not concrete measures capable of producing instant results or actual effects in a few years. With regard to public housing, in the next five 5788 LEGISLATIVE COUNCIL ─ 30 January 2013 years, the Government will only maintain the production of public housing at the levels undertaken by the Government of the last term, which means that the grassroots will not be allocated public rental housing (PRH) units in the foreseeable future. In respect of private housing, the Government will not increase the total supply of land in the next five years, meaning that it will remain immensely difficult for the middle class to achieve home ownership, not to mention the policy of "Hong Kong property for Hong Kong people" which has been implemented in a slapdash manner as a small quantity of land is set aside for implementation this policy of "Hong Kong property for Hong Kong people". "Hong Kong property for Hong Kong people" has been degenerated into something more of a slogan than an actual policy. Our Chief Executive is not only an exemplary manipulator of "hypocritical rhetoric". In his Policy Address, he even sounded as if he has done something simply by talking about it.

In fact, those who will benefit from the housing policy in the Policy Address will not be members of the general public, but property developers all the same. Taking an evasive attitude on the one hand, the SAR Government is at the same time tilted to the property developers in its policies. In every new development project, property developers can invariably enjoy the advantage of being the "first mover" which enables them to acquire land, to hoard land and abandoned agricultural land, and so on.

Speaking of the hoarding of land and agricultural land, President, I wish to emphasize that, unlike what the Chief Executive has said, there is not a shortage of land supply in Hong Kong, and the problem lies not in the scarcity of resources, but actually in the uneven distribution of resources. The Chief Executive has simplified the housing problem in Hong Kong by saying that it is the result of a shortage of land supply. It is an irresponsible remark.

President, in respect of the private market, it is reported that the five major property developers, including Henderson, Sun Hung Kai, New World Development, Sino Group and Cheung Kong (Holdings) Limited, have accumulated a land reserve totalling as large as 1 279 hectares, which is three times of the 320 hectares of land in the Government's reserve. For Henderson alone, according to its annual report in 2009, it had a land reserve of 9.4 million sq ft plus 32.8 million sq ft of agricultural land, which added up to a total of more than 40 million sq ft or 392 hectares of land. The land reserve of Henderson alone is already larger than that of the SAR Government.

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To increase land supply, Chief Executive LEUNG Chun-ying now plans to rezone Government, Institution or Community (GIC) sites for housing development or change the use of those sites earmarked as GIC sites, as Mr Charles Peter MOK has said earlier on. But this will affect the rights of the public to use community facilities, and if the SAR Government has to adopt this measure to identify land for housing development, it would be like "killing the hen to get the eggs", thus affecting the planning of the entire community. Chief Executive LEUNG Chun-ying has said that the different fields of surveyors are different professions and so, it is impossible for him to tell whether he has unauthorized building works. No wonder Chief Executive LEUNG Chun-ying, being a property surveyor himself, knows only property development but nothing about holistic urban planning.

President, as regards the part on development in the Policy Address, the Chief Executive has proposed to implement large-scale development projects on the ground of a shortage of land supply, insisting on the North East New Territories (NENT) development project and proposing the development of New Territories North. President, I must point out that SAR Government has granted several hundred hectares of land situated across the territory under private recreational leases, and these several hundred hectares of land are only serving an extremely small number of people in the privileged class and tycoons. How can members of the ordinary public afford the millions of dollars-worth membership of golf clubs or cricket clubs? Why does the Government choose the difficult course instead of the easy one and insist on developing land by bulldozing everything and wrecking the livelihood of the people and pulling down homes of the people only to identify land to increase the Government's land reserve? Why does the Government not resume some of the land enjoyed by the privileged class? Why does the Government not ask property developers to stop hoarding a large quantity of brownfields and abandoned agricultural land?

President, the Government has proposed to develop a large number of PRH units through the NENT development project in order to meet the housing needs arising from population growth in the future. However, we can see from the NENT development project that the land designated for PRH development actually accounts for a small part or half of the development area. In Kwu Tung North, as much as two thirds of the area is designated for private development of large shopping arcades and luxurious residential flats. As for the land in Ping Che, which is mostly agricultural land used for organic farming, the Government has proposed to develop private low-density residential housing there, giving a 5790 LEGISLATIVE COUNCIL ─ 30 January 2013 green light to major property developers in Hong Kong to reap huge profits. Coupled with the development in Liantang control point, is the development in NENT truly meant for Hong Kong people? Will Hong Kong people be truly given priority, just as the Chief Executive has said? The Neo Democrats and I wish to clearly reiterate that we oppose such an integrated development plan in NENT which is an act of selling out Hong Kong.

Lastly, President, I wish to talk about the part on transport in the Policy Address. With regard to the proposal of increasing the tolls for the Cross Harbour Tunnel (CHT) and reducing those for the Eastern Harbour Crossing (EHC), the Neo Democrats considers that this proposal would produce only limited effects. Rather, the synergy created by the EHC, CHT and the Western Harbour Crossing (WHC) should be able to produce better results if traffic can be diverted effectively. In this connection, if the net revenue of the WHC is far lower than the Minimum Estimated Net Revenue as set out in the Western Harbour Crossing Ordinance, the WHC operator will still have the right to increase its tolls to make the expected revenue. We, therefore, propose that the Government should seriously and carefully consider buying back various harbour crossings, so that the traffic flows at various harbour crossings can be adjusted through the tolls, thereby achieving effective traffic diversion.

Moreover, President, the Neo Democrats is also very concerned about the review of the Fare Adjustment Mechanism (FAM) that allows MTR fares to go upwards or downwards. Over the years, the Government has subsidized the MTR Corporation Limited (MTRCL) in its business development through the provision of an enormous quantity of land and resources. We call on the MTRCL to include its business benefits and revenue generated from, say, property development in the formula of the FAM. We also call on the MTRCL to factor into the formula its service performance, in order to ensure that the MTRCL will continue to provide services of a high quality and fulfil its social responsibilities while making reasonable profits.

President, I so submit.

MR TANG KA-PIU (in Cantonese): I have just read a news story about the organization of owners of "blue taxis" formally applying for a fare increase. When it comes to an application for fare increase by "blue taxis", members of the public certainly will not be happy hearing it. If their fare increase application is LEGISLATIVE COUNCIL ─ 30 January 2013 5791 approved, it would provide an indicator for other modes of public transport to follow suit and apply for a fare increase, and various public utilities will also increase their fees or charges in tandem. That said, the main justification advanced by the spokesman for applying for a fare increase is worthy of our deep thoughts. He said that the fare increase is meant to make up for the fuel cost, which mainly refers to the increase in the price of auto Liquefied Petroleum Gas (LPG). The public, after hearing the reason, considers that a fare increase indeed gives no cause for criticism. As the electricity tariffs or towngas charges have all increased, it is reasonable for them to ask for a fare increase.

However, drivers have a different view if we ask them what they think. The drivers said that once the flag down fare is increased, taxi owners will immediately increase the taxi rental. First, the drivers will not benefit from the fare increase and second, the number of passengers will drop not in the short term, but in the medium term. This is why the taxi trade union has explicitly proposed the levying of a fuel surcharge. Since the Government has always emphasized the principle of "user pays", and I think we broadly agree that this principle should be adopted for taxi fares, why do we not consider including a fuel surcharge to be adjusted in line with the fuel price movements as a component of the mechanism for determining taxi fares? Taxi owners do wish to see a rise in the taxi licence premium, and if an increase of the flag down fare is approved, taxi owners will increase the taxi rental and after the taxi rental is increased, the taxi licence premium will rise further. The taxi licence premium for a "red taxi" is as high as $7 million now, but there has not been any government regulation.

Therefore, we hope that the Government can consider this proposal, especially as Secretary Prof Anthony CHEUNG said a couple of days ago that he would be willing to consider the levying of a fuel surcharge. I would like to hear a specific response from Secretary Prof Anthony CHEUNG. I hope that the authorities can truly act decisively to shut these taxi owners up.

Indeed, people who are engaged in the transport sector wish to pour out many grievances, and a colleague from the labour sector has already spoken at length on that just now. I wish to share with Members some of my experiences in helping them. At many meetings before, we have discussed the heavy workload and work pressure of bus drivers, and we are all concerned about their health. Bus drivers are in an employment relationship, and in the event of an 5792 LEGISLATIVE COUNCIL ─ 30 January 2013 unfortunate incident, they will have employees' compensation or the protection of labour insurance.

However, half or over half of the drivers in Hong Kong are not in any employment relationship, including drivers of taxis, red minibuses, light goods vans, nanny vans and works vehicles, and these drivers are exposed to very high occupational risks. This is particularly the case recently as we have read from newspapers that at least one fatal case occurred in each of the past few months. In this connection, I would like to find out how many professional drivers have died or sustained serious injuries in the course of work each year, but the Social Welfare Department (SWD) cannot provide such figures. Even though the SWD has a compensation fund which provides assistance regardless of who was at fault, it does not have these figures. The Labour Department does not have these figures; the Transport Department (TD) does not have these figures; nor do the police have these figures. Why is it so?

I trust the occupational risks faced by the 100 000-odd members of this trade are similar to those faced by members of the construction industry. Many members of the construction industry are also self-employed, and many of them work under the contracting system but why can the construction industry do so well whereas professional drivers are nevertheless neglected? I hope that Secretary Prof Anthony CHEUNG will address this problem squarely. Just now I talked about how I tried to obtain those simple figures, and the responses that I was given are all true. Therefore, the trade union has proposed the setting up of an occupational compensation fund for drivers, and the labour sector has long proposed the setting up of a central compensation fund.

In fact, many bus drivers have told me that no matter how skillful or how experienced a bus driver is, sometimes it is really not easy to meet the performance pledge. According to a survey conducted by the Hong Kong Federation of Trade Unions recently, one in every four scheduled bus trips is delayed. Lost trips mean deviation from the scheduled time for a bus to depart from the first bus stop, whereas delayed trips mean that the bus fails to arrive at en route stops at the time as undertaken. Take a bus route with a pledge of running at an interval between seven and 13 minutes per hour as an example. Our survey has found that one in every four bus trips is provided more than 13 minutes after the previous trip. Of course, some may be late for one minute and some may be late for 15 minutes. It all depends on the luck of passengers.

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Why is this the case? We have looked up the information for the past five years and found that the number of buses has not increased and there has not been any substantial increase in the number of professional vehicles as the number has risen by only some 4 000, but the number of private vehicles has increased by 80 000. Has the TD done its part properly in the management of roads? In recent years, the construction works of many major railway lines and major infrastructure projects have been in progress, thus making road closures necessary and yet, the authorities have still allowed private vehicles to increase by 80 000 in five years. Why is it so?

Various political parties and social organizations have often criticized the bus companies for their poor performance. The Kowloon Motor Bus Company (1933) Limited has been given a warning letter, and so has the New World First Bus Services Limited. In this connection, we must, of course, exercise monitoring but sometimes we still have to take into consideration the objective conditions. Why have the authorities allowed private vehicles to increase by 80 000 and done nothing about it? This has dragged all the people of Hong Kong into troubles.

On the other hand, the Admiralty MTR Station is also a problem. If we go there during the rush hours at around 5 pm to 7.30 pm ― I wonder if the Secretary has been there during this period of time before ― we really do not dare to enter the station as it is always very crowded. If we do not wish to take MTR and turn to buses instead, we are worried about delayed bus trips, lost bus trips and congestion on road. As a result, some middle-class people have bought their own private cars, thus creating to a vicious cycle. This is a matter of road planning, and have the authorities done anything to deal with it? But the Policy Address has not mentioned this problem. This is an issue of economic benefits and also a case of environmental protection.

Let me cite another example. Many drivers' organizations have called for the provision of more dedicated LPG filling stations. Obviously, in order to garner support from taxi organizations for a full switch from diesel to natural gas as auto fuel, 12 dedicated filling stations were provided back then in an effort to provide taxis with natural gas at cheaper costs through subsidies in land premium. Back then, it cost only something more than $2 per litre. The price of natural gas has gone up and costs more than double at $5 to $6 per litre now, which is already cheaper than the price at non-dedicated filling stations as they charge $1 to $2 more. It is ridiculous that the Government has continuously granted 5794 LEGISLATIVE COUNCIL ─ 30 January 2013 approval to the provision of non-dedicated filling stations. As a result, non-dedicated filling stations have more filling nozzles than dedicated filling stations. As this, after all, has a bearing on drivers' livelihood, two thirds of the drivers still go to dedicated filling stations for cheaper natural gas. Why is there traffic congestion in Wan Chai? Because drivers will fill up their vehicles at the dedicated filling station in Marsh Road. Can we put the blame on taxi drivers? No. Because they are doing this for living's sake, and it is necessary for them to consider the cost.

All these are interrelated, and we call on the authorities to provide more dedicated filling stations, so that drivers can be diverted to other stations, rather than the sole reliance on certain dedicated filling stations in the downtown area. This proposal can address the problems of congestion on road and environmental protection because there is still exhaust emission from taxis queuing up to top up their tanks. The authorities must address these problems, and it is not easy to tackle them. Turning back to fuel surcharge and dedicated LPG filling stations, while it sounds that these proposals only have to do with individual trades, they are actually affecting transport territory-wide.

Certainly, we have been talking about the rationalization of bus routes recently, and this has actually been discussed for many years. The bus companies or some people have blamed the District Councils (DCs), and as a member of the Island DC, I can say that the Island DC has no disagreement over the bus routes because the area is very large and there is no overlapping of routes. That said, I have seen the approach taken by bus companies in handling changes in the bus routes. Every year, the bus companies will provide a document only seven to 10 days before a meeting is convened by the Transport Advisory Committee, setting out in a fragmentary manner that an additional trip will be provided for a certain route, that changes will be made to two bus stops of a certain route, that there will be one trip less for another route, and so on. There is no way for us to know the so-called three major regional benefits brought by the rationalization of bus routes. First, will the rationalization of a series of bus routes speed up the bus journeys? The second point is about environmental benefits and that is, will the rationalization of bus routes reduce the bus mileage and alleviate congestion and hence reduce the amount of exhaust emission? Third, on the operation front, will the reduction of bus routes ease the pressure of fare increase or reduce the costs? There has not been any explanation on these benefits. With regard to DCs, there are 19 DC members in this Council, and I believe we are up to scratch. Therefore, I hope that the TD and the Transport LEGISLATIVE COUNCIL ─ 30 January 2013 5795 and Housing Bureau will, during their discussion with bus companies, remind them that they must recognize the fact that the DCs and DC members are quality partners and so, they should not put forward fragmented proposals without specifying the benefits to be achieved only five or six days before a meeting will be held.

But in any case, we agree to the urgency of the rationalization of bus routes, especially in respect of interchanges. Miss Alice MAK has conducted a site survey recently. In Tuen Mun, land is already provided, and there is an interchange in Siu Lam but its actual benefits are limited ― she may provide more information on this later ― Although all the bus routes are operated by the Kowloon Motor Bus Company (1933) Limited, passengers cannot enjoy fare concessions for all the routes. I will not go into the details, but this problem must be addressed.

Some people said that this Policy Address has mapped out plans only for the too distant future and that there is no instant surprise to speak of, and some people even said that it has no substance at all. I agree that the Policy Address has not given us any "instant surprise". With regard to "醫 (healthcare)、食 (food), 住 (housing) and 行 (transport)", and when I say "醫", I mean the word "醫" of "醫生" (doctor), it is necessary to recruit manpower and provide training, and we do not blame the Government on this count. With regard to food, or food safety, the authorities must further study the problem concerning beef which is a grave concern to Mr WONG Kwok-hing. As regards housing, it is necessary to identify land for housing development. On transport, in paragraph 120 the authorities mentioned that they are very concerned about the travelling expenses of workers at the grassroots level. But we doubt whether the authorities have empathy towards them. Why is it that the entire Policy Address has not put forward some immediate measures to tackle the problem of transport fares which should be within the control of the authorities? Certainly, the authorities will say that the dual track system of transport subsidies can provide assistance. But firstly, this arrangement cannot provide assistance to all wage earners, and secondly, as applications are subject to vetting, what about those people who do not wish to undergo vetting? Thirdly, the fundamental problem is that expensive transport expenses are taking toll on the competitiveness of the city and the mobility of the people, and this basically has nothing to do with welfare.

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In this connection, our demands are simple. We call on the authorities to expeditiously introduce a $600 territory-wide MTR monthly ticket as a form of transport subsidy, and passengers travelling from Tung Chung to Chai Wan can also buy a monthly ticket at $600. Of course, to people who live in the urban area or in my case, for instance, as I live in Kowloon and I travel from East Kowloon to West Kowloon for work, I will decide by myself whether or not to buy the monthly ticket. This arrangement will at least enable the Government to immediately secure support from residents of new towns in remote districts all over the territory, but the authorities have not done it. I hope that the authorities can raise this issue at the crucial moment of the review of the Fare Adjustment Mechanism. In fact, in our discussion in the Legislative Council, we already passed Mr Michael TIEN's motion as amended by Mr CHAN Kam-lam. Various political parties and groupings have also discussed this issue. Is it possible to introduce such a territory-wide monthly ticket? It does not require much public coffers but it will make everybody happy because for residents who grow up in such districts as Tung Chung, Tuen Mun and Tin Shui Wai, there is already a gap between them and the mainstream Hong Kong.

Let me come to housing now. I have been working in Tung Chung for six or seven years. If you ask the young people in this district about the conservation of Wan Chai, they can only tell you what they have learnt from information on the Internet because they simply do not go out. Have they ever been to that large green lawn in West Kowloon? No. The transport fares are affecting various development opportunities of residents in remote new towns. At a meeting of the Panel on Education, I mentioned that under the new academic structure for senior secondary education, Secondary Five students can choose to take some practical courses and in this connection, I asked a student from Tung Chung what he would wish to learn. He replied that he was interested in culinary art but he did not go for it because he would otherwise need to take up classes in Pokfulam. This will surely happen, because the transport fares are expensive and as the Government has not provided any subsidy, how can he go there? Therefore, this is a major problem. In this connection, I wish to tender a piece of advice to the Development Bureau and the Transport and Housing Bureau. If they are going to launch large-scale construction and reclamation works in the remote parts of the territory in order to develop a new town to accommodate several tens of thousand people, they must address the problem of expensive transport fares and of course, there are also the problems of employment, supporting community facilities, and so on. Although Tung Chung has, after much struggle, gone through these problems and there have been LEGISLATIVE COUNCIL ─ 30 January 2013 5797 improvements in employment and community facilities, the problem of expensive transport fares remains unresolved and stifles the development opportunities of some residents. I hope that the authorities can address this problem squarely.

Lastly, I hope that the authorities can cross out the words "upwards and" as in the "FAM that allows transport fares to go upwards and downwards". Frankly speaking, if a new formula is put forward, I think various community organizations will immediately do some computations, putting the figures of the past few years into this new formula to work out the future arrangement. But even if the result is a fare increase of a mere 0.1%, I believe we will still have very strong views against it because the MTRCL has indeed made too much money. We have fed it much too full indeed.

President, I shall stop here.

DR JOSEPH LEE (in Cantonese): President, colleagues have spoken a lot on the part on housing in this Policy Address of the Chief Executive, and I also wish to briefly talk about it. The Policy Address has dedicated as many as 10 paragraphs to issues relating to housing, which is natural since the Chief Executive has said that housing is a top priority.

With regard to the existing housing problem in Hong Kong, the Secretary may have a different view, but from the angle of an ordinary member of the public, I can see only a few points: Property prices have surged beyond people's affordability; rental has increased; the waiting time for public rental housing (PRH) flats is too long; the living environment is poor; and housing supply is insufficient. These have basically provided a picture of the current situation. According to the Chief Executive, he has drawn up a blueprint in view of these situations, with the objectives of assisting the grassroots to move into public housing, assisting the middle class in buying their own homes and improving the living environment. These are very good intentions. However, I do not see any detail.

I would like to ask the Secretary this question, and maybe he can give a response later. If the Secretary agrees that what I have just said is the causes of the housing problem in Hong Kong, and since the Chief Executive has put forward those three slogans or principles as mentioned, can the Secretary give an explanation to address the point that I have just made about what I cannot see in 5798 LEGISLATIVE COUNCIL ─ 30 January 2013 the Policy Address? In other words, what special measures can the Government implement immediately to assist people with a monthly income of $40,000 or below in buying their own homes? The Government seems to have made a lot of effort, such as identifying land and increasing PRH production a few years later. But in respect of his pledge assist the public to move into public housing, the Chief Executive is still talking about a waiting time of three years. So, has it been expedited in any way?

The Chief Executive has pointed out in the Policy Address that in order to improve the living environment, it is necessary to provide more living space. I was very happy hearing that. But have the authorities set any target to specify by how much the living space should be increased for different classes of people and different income groups? Why do they not deal with the problem of "sub-divided units"? The living space in "sub-divided units" is extremely appalling and unreasonable, so why do the authorities not deal with them?

Besides, rentals have been rising continually. What I am saying is not the closing down of a certain noodle shop as a result of its monthly rental surging to $600,000. I am talking about the rentals of private residential flats in general. Rentals will naturally rise upon the expiry of tenancies, and even before the expiry of the tenancies, the owners can increase the rental after giving a notice. The authorities said that rent control cannot be reinstated because Hong Kong is a free market. But shortly after the SARS outbreak a decade ago, the Government introduced amendments to the legislation on rent control, and this is precisely why tenants are no longer under protection now, whereas owners can keep on increasing the rentals. May I ask the Secretary whether the Chief Executive's Policy Address has any concrete measures to address these problems? I really feel puzzled about this.

The Secretary may reply that there are measures in place, just that we do not see them. Then, I have another question. With regard to the professionals in our healthcare service sector, if two people in this sector who make a similar income get married, their monthly household income will definitely exceed $40,000, and the Secretary has once told me that this category of people account for only about 30%. As far as I understand it, these people have to pay quite a lot of tax, but the entire Policy Address has made it clear that the Government is not going to help them because people with problems in housing are confined to those with a monthly income of $40,000 or below. However, the Government will use the tax money paid by the former to assist the latter in home ownership. LEGISLATIVE COUNCIL ─ 30 January 2013 5799

Is this not creating division in society? It seems that the Government wants to penalize people with a higher income and make use of the tax revenue to redistribute wealth. If this is the political philosophy that will be adopted by Hong Kong, I may not agree to it but since this has become a fact, I have nothing to say because the Chief Executive is not returned by universal suffrage, but this is his approach. However, everything is far from clear.

What about people who make a monthly income of $40,000 or more? They also hope to have a reasonable living environment. What if they are thinking about selling their flat and buying a new one? Forget it. Since they have bought their own homes, why should they take the trouble of selling their flats and buying new ones, bearing in mind the exorbitant property prices now? However, the entire Policy Address does not have any measure and transparent mechanism to provide a platform for property prices to develop in a reasonable, fair and healthy manner. The Chief Executive has not mentioned anything in this regard. Such being the case, for people who make a monthly income of $40,000 or more, they may now have a place to live in, or they are leasing flats at expensive rentals in the private sector, but the authorities cannot provide assistance to them because they can do nothing about rent control, and even if these people wish to buy their own homes, they cannot afford those flats which are indiscriminately called luxurious residential flats. What should they do? These people are also very important to Hong Kong, but why is it that nobody cares to help them address their housing problem and nobody cares to pay attention to them? You cannot say that assistance has been provided to them with the abolition of the levy for hiring foreign domestic helpers, because those several hundred dollars hence saved cannot help them buy their own homes. So, what is the view of the Secretary? I really have great doubts about how the entire Policy Address will address these problems.

If the Government said that the Home Ownership Scheme (HOS) can help a certain group of people achieve home ownership, that is all very fine, but is that true in reality? Will the Secretary explain in detail in his response later when the ratio of White Form applicants to Green Form applicants for HOS flats has changed? Is it that HOS flats have ceased to perform the function of a "revolving door"? If HOS flats no longer serves as a "revolving door", the Government will have to keep on providing PRH units because PRH tenants will not have the opportunity to move upwards through this "revolving door" and instead, the HOS has become a way for middle-class people with a monthly income of $40,000 or below to achieve home ownership. I do not see the details 5800 LEGISLATIVE COUNCIL ─ 30 January 2013 for all these. I wonder if it is because no Policy Agenda is published this time around that I cannot catch up. Hardly can I grasp the details simply from a paper provided by the Secretary.

Another problem is also related to the HOS. President, after the Policy Address was delivered, insofar as the secondary HOS market is concerned, there have either been withdrawals of the offer for sale or revocation of the asking prices, or the prices of HOS flats have simply risen. How can this assist people with a monthly income of $40,000 or below in buying HOS flats and revitalize the HOS market? What we are talking about now is not just those figures, such as receiving as many as 5 000 applications or oversubscription for that housing project named something like green villa or whatever. We must ask: Is this a good thing? This is actually a significant warning. It is proof of a herd mentality among the public. People all become doubting Thomases, thinking that since the Government has introduced short-term measures and they do not see any substantive measure to be rolled out in the medium term, it might be better to buy residential properties first. This has sounded a warning to the entire property market in Hong Kong.

Lastly, I would like to ask the Government if it has actually come to a firm view of using public coffers to assist a particular class of people in Hong Kong to buy their own homes. If so, can it provide specific figures to explain to us how many people will have assistance from the Government in buying their own homes? The Secretary has told me that 70% of people in Hong Kong have a monthly income of less than $40,000. What percentage of these people will have assistance from the Government in buying their own homes? For how long will assistance be provided to them? In general, will the Government make long-term commitments, and how much public money will be used to help how many people buy their own homes? In these respects, the problem cannot be addressed simply by making slogan-like remarks that assistance will be provided to the middle class in buying their own homes, that assistance will be provided for the public to move into public housing as soon as possible, that the living environment will be improved, and so on.

I feel very disappointed with this part of the Policy Address, for it cannot help these middle-class people like us who make an income of over $40,000, nor can it provide immediate solutions to such problems as soaring property prices, long waiting time for public housing, and people with a monthly income of around $40,000 facing difficulties in buying their own homes. In the long term, LEGISLATIVE COUNCIL ─ 30 January 2013 5801 the Government has claimed that housing supply will be increased but it may take five to even 10 years for the Government to provide "disposed sites" and "potential sites" that can be used for housing development. What will be the property prices and the interest rates then? All these problems cannot be resolved. I hope that the Secretary and his team will examine together with the Chief Executive whether it is really necessary for them to do something in this respect, rather than just chanting certain slogans which cause us to have illusions and create expectations. I hope to see some measures that can be truly implemented, so that Hong Kong people can have something to look forward to in respect of housing. Thank you, President.

MISS ALICE MAK (in Cantonese): President, paragraph 77 of the Chief Executive's Policy Address mentioned the project in the Hung Shui Kiu New Development Area (Hung Shui Kiu NDA), saying that the next stage of public engagement would be launched and that a preliminary outline development plan would be formulated as soon as possible. The authorities said that the Hung Shui Kiu NDA to be studied is 790 hectares in area and that over 400 hectares of land can be provided. After full development, it can accommodate a population of 160 000 and also ease the problem of tight supply of land and housing.

Regarding this construction project originally scheduled to be launched in 2019, we hope very much that it can be launched as soon as possible. Two years have passed since the consultation started in 2010, but it seems there is still no outline development plan, nor are there any figures on housing and land supply, and the residents there also have no idea what the future holds for them either. In fact, this area in Hung Shui Kiu enjoys geographical advantages. It is located in-between Tin Shui Wai and Tuen Mun and the exit of the Kong Sham Western Highway is located there, so its development can actually complement the shortage of ancillary community facilities in Tin Shui Wai and can also give momentum to its neighbouring new towns.

Therefore, we hope that the development of Hung Shui Kiu would not be affected as a result of the resistance to the development of North East New Territories (NENT). Moreover, the Government should make reference to the experience in developing NENT to allay the misgivings of the public more proactively. On planning, it should not make the Hung Shui Kiu NDA a repeat of Tin Shui Wai, rather, the opportunity should be taken to make up for the shortage of community facilities in Tin Shui Wai and Tuen Mun.

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In respect of planning, we have expectations for the future planning of the Hung Shui Kiu NDA. We hope that we can explain to the Government our expectations for this new town, or NDA, by making reference to the Tin Shui Wai experience, in the hope that when the Government carries out planning, it can first consider some of the problems and inadequacies at present.

At present, residents in Tin Shui Wai are facing various problems, including that of healthcare. At present, the proportion of private doctors to the population in Tin Shui Wai is 0.1 to 1 000, lower than the 0.4 for Hong Kong as a whole. Why is this so? As we all know, there are no streets in Tin Shui Wai. Basically, the new towns developed by the Government do not have streets. In the past, we would talk about taking a stroll in the streets, but this is no longer the case. Now, we walk on roads, pavements and footbridges, then we take a stroll in shopping arcades but there are no streets for us to take a stroll in. All shopping arcades in Tin Shui Wai are managed, or shall we say monopolized, by The Link. As we all know, the rents charged by The Link are not cheap. In this district, the average personal income or household income is very low. Therefore, given such high rents and high costs but constraints in raising fees and charges, private doctors are unwilling to set up clinics there.

Therefore, in Tin Shui Wai, we do not have any choice even in private medical services, not to mention the shortage of public medical services. Therefore, we hope very much that when the Government carries out planning on Hung Shui Kiu, it has to consider the need for adequate complementary medical facilities in this area and the need for appropriate levels of public and private medical services, so as to attract new doctors in private practice to set up clinics in the Hung Shui Kiu NDA. The Government claims that after development, this area will accommodate 160 000 people, so we hope that adequate medical services can be provided to them.

At the same time, we hope that when the Transport and Housing Bureau undertakes planning for new public housing estates, it will no longer hand them over to The Link for management. The Government should adopt the mode adopted in the past, for example, some private doctors used to practise in the clinics on the ground floor of the buildings in housing estates, and in this way, cheaper medical services could be provided to the public, so that both public and private medical services were available in newly developed areas. We hope that in the future, some land can be reserved in the Hung Shui Kiu NDA for the construction of new public or private hospitals.

LEGISLATIVE COUNCIL ─ 30 January 2013 5803

At present, residents in Tin Shui Wai face an economic problem. Many people live in Tin Shui Wai but the employment problem among residents there cannot be solved. If residents want to work, they have to cross districts. Although a transport subsidy of $600 is provided to residents in Tin Shui Wai now, if they have to work on Hong Kong Island or go to the urban area, the daily transport fare amounts to at least to $40, so the transport subsidy is actually of little help to them.

Therefore, we hope very much that in the future Hung Shui Kiu NDA, employment opportunities can be provided to residents in the area. In particular, some local community economic can be developed. In fact, the development of local community economic does not necessarily mean the development of the retail industry there. Hung Shui Kiu itself is already a historical monument or cultural heritage, so opportunities to develop local cultural tourism can be found there. In fact, in this NDA, there are 11 graded historical monuments and the area is also one of the origins of the clan culture in Hong Kong. Some statutory historical monuments, for example, the Tang Ancestral Hall and the Yeung Hau Temple, can be found there. Nowadays, many members of the Hong Kong public will make day trips to these places during their holidays.

Therefore, we hope that in the future, the existing local culture in this NDA can be preserved and that the opportunity can be taken to develop some local economic activities, so that residents in the NDA can take part in these economic activities, find employment opportunities there and do not have to worry about employment anymore.

Sixteen percent of the land in this area is farmland, so the Government can also take advantage of this early stage to develop community-supported agriculture in this area, for example, community farms that are popular among the public, so that some agricultural development can be carried out in this NDA. In the new town, it is also possible to develop street economic activities, as we have all along stressed. The FTU has all along stressed that in new towns, we have to develop street economic activities as well as a market culture.

In addition, in the Hung Shui Kiu NDA now, about 27% of the land is used for open storage and port back-up land. We hope that in the future NDA, the Government can tap the geographical advantage of having the Western Corridor there to support the development of the logistics industry. In sum, the aim is to enable people in the NDA to benefit from economic activities and enjoy the 5804 LEGISLATIVE COUNCIL ─ 30 January 2013 benefits to people's living, as well as enabling them to have a sense of vigour to carry out development in their communities.

In addition, paragraph 81 of the Policy Address talks about reclamation on an appropriate scale outside the Victoria Harbour, and reclamation at Southwest Tsing Yi is mentioned specifically. I have lived in Tsing Yi ― both when I was going to school and now ― for more than two decades and witnessed the construction of the first Tsing Yi South Bridge. At present, the whole Tsing Yi, with many bridges and tunnels, is like an octopus. We can also see that according to the planning of the Government in the 1980s, Southwest Tsing Yi is to be used for the development of heavy industries, whereas the northeastern part is to be used for the development of residential areas. At present, 40% of the land on Tsing Yi is designated as green belts and the aim is to use them as a natural barrier to separate the southwest and northeast areas, thus separating residents from the heavy industries. In the event that the Government really considers carrying out reclamation at Southwest Tsing Yi, even as it develops the land ― of course, we welcome carrying out more development on Tsing Yi ― the Government must not forget about how to deal with the existing heavy industries in Southeast Tsing Yi, which include oil depots, dockyards and a Chemical Waste Treatment Centre ― and that is the place for the only facility of this kind in Hong Kong. However, how can we ensure that residents would not be affected by these facilities?

We know that the biggest infrastructure development on Tsing Yi is Container Terminal No. 9. Back then, as a result of this development, a hotel was built between this container terminal and an existing private housing estate located in the southwest. Originally, this hotel was intended as a sound barrier to block out the light pollution and noise pollution from the container terminal, so that the residents living in the private housing estates nearby would not be affected. However, in the end, the developer turned this hotel development into a serviced apartment development and subsequently, turned it yet again into a building with divided shares, that is, to virtually sell them as flats.

Therefore, we hope very much that in the future, if reclamation is carried out along the southwest coast of Tsing Yi, sound planning could be carried out first and having regard to the existing planning for Tsing Yi, examination conducted to see if the approach taken in the 1980s should be adopted ― that is, the southwest is to be used for heavy industries whereas the northeast is to be LEGISLATIVE COUNCIL ─ 30 January 2013 5805 used for residential purposes ― and if reclamation is to be carried out, to where will those heavy industries and industrial developments be relocated? Moreover, will there be a repeat of the incident in which residential areas and hotels that were used as sound barriers were subsequently sold as de facto residential properties? Therefore, in this regard, I hope the Government can provide us with more information and in the future, also give consideration to this issue.

In addition, the development of the southwest also provides the district with many job opportunities. Therefore, if the Government wants to carry out reclamation on Tsing Yi, we hope that this can be turned into an opportunity of giving Tsing Yi greater vitality and making it a place that is all the more suitable for inhabitation.

What was mentioned just now were issues in planning, but there are also some issues relating to housing. Today, we have heard many Honourable colleagues asked this question. Since the Government is short of land now, how can it construct buildings and solve the housing problem faced by the public? All it can do is just to look on. Nevertheless, we in the FTU certainly hope that the Government can build more public housing and HOS flats as soon as possible and that consideration can be given to building public housing for the sandwich class. This is just like the kind of public housing built by the Hong Kong Housing Society in the past for application by members of the public whose incomes were slightly higher than the level that would qualify them for application of public housing. However, given that the Government has no land for the provision of housing, how can it help the public solve their problem in the short term?

There are two core measures that can be accomplished very quickly and the Government is also capable of introducing them ― the Financial Secretary is now present ― in fact, if it is willing, it can announce their introduction right away next month, that is, to provide rental subsidies to the 200 000 people on the public housing Waiting List at present. They are people eligible for the allocation of public housing. This is not a new idea and in the past, we also had a Rent Allowance for Elderly Scheme. In fact, it is worthwhile to consider this rental subsidy for people waiting for public housing because it can help the 200 000 waitlisted people now meet their pressing needs. Before they are allocated public housing, they can receive some assistance in renting flats.

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In addition, some Honourable colleagues also mentioned that some members of the middle class are still unable to buy their own homes, having to bear with high rents. In fact, at present, the Government offers tax deduction on mortgage repayment. Of course, some members of the public making mortgage repayments have to bear heavy expenses in relation to their properties but those renting flats also have to shoulder heavy burdens. Therefore, we should consider providing them with an allowance in renting private housing ― of course, they have to meet the requirement of never owning any property before ― so that their burden of housing can be eased and they can be given an allowance to ease their burden.

Moreover, in the Policy Address, the Chief Executive mentioned the tolls for the Cross-Harbour Tunnel and the Eastern Harbour Crossing and the issue of increasing the tolls for one and reducing those for the other through subsidy. However, among the various parts of Hong Kong now, New Territories West is an area with many tollways, including the Lantau Link and the Tai Lam Tunnel, and if residents of New Territories West have to cross the harbour, they have to use the Western Harbour Crossing. All these roads charge tolls that are higher than those of the Cross-Harbour Tunnel and the Eastern Harbour Crossing, so this affects residents of New Territories West in crossing districts for employment and social interactions. Therefore, we hope that in the future, when the Government considers the tolls of these tollways, it can freeze the tolls, in particular, those of the Lantau Link. Since the Government owns it, can it abolish the tolls? In this way, the burden of transport expenses borne by residents of the Tung Chung new town on Lantau can be eased significantly. We know that at present, residents in Tung Chung often complain that life is very hard in there. Although the prices of goods are high in the district, they have no other choice as they cannot go to other areas to make use of the local community facilities, the main reason being the high transport expenses. If the tolls of the Lantau Link can be abolished, this can surely help ease the burden borne by residents.

Meanwhile, Mr TANG Ka-piu also made a passing reference to the bus-bus interchange at Siu Lam, that is, the existing bus-bus interchange (BBI) on Tuen Mun Road. Of course, there are still much room for improvement in respect of this BBI, including whether or not the areas covered by the routes are adequate, if the interchange concession is adequate to attract the public to use this BBI, and so on. However, ultimately, we hope that with regard to future NDAs, including those in Hung Shui Kiu and NENT, some land should be reserved for BBIs in the course of planning, and they should be BBIs that the public would be happy to LEGISLATIVE COUNCIL ─ 30 January 2013 5807 use. The facility located at Siu Lam is relatively new and slightly better than those at Tai Lam Tunnel and Shing Mun Tunnel. But in respect of the facilities and other complementary hardware, the Government can consider how a better job can be done. Only in this way can the public be encouraged to use this BBI.

President, my speech in this session ends here. Thank you.

MR YIU SI-WING (in Cantonese): President, in the Policy Address, a number of new development projects are proposed and they can all help promote the development of the local tourism industry, so they merit our support. The Chief Executive has the insightful observation that such places as the western coast of the Pearl River Delta (PRD), Qianhai, Nansha, Hengqin, and so on, are developing rapidly. Coupled with the opportunities presented by the launch of the Hong Kong-Zhuhai-Macau Bridge (HZMB) project and other infrastructure projects, he was prompted to propose that Northwest Hong Kong be made the focus of future development. In this area, Lantau Island possesses geographical advantages within the PRD area, such that after the commissioning of the HZMB, it will even enjoy the advantages of being a "bridgehead economy" conducive to the full-scale development of such industries as logistics, tourism, and so on.

At present, there are many tourism and convention and exhibition resources on Lantau Island, including the Hong Kong Disneyland Park, Ngong Ping 360, the fishing village at Tai O, hotels, the AsiaWorld-Expo, and so on. In respect of complementary transport facilities, there are the airport, the Airport Railway, the SkyPier, cross-boundary buses, relatively speaking well-developed local transport networks, and so on, so basically, the conditions to forge it into a tourism island are present. It is believed that the potential of this area in the development of tourism is huge, pending the green light from the Government to carry out relevant planning.

Mainland visitors are an important client source of tourism in Hong Kong. According to the statistics of the Hong Kong Tourism Board, last year, the number of visitors to Hong Kong was more than 48 million person trips and Mainland visitors accounted for 72% of the total. The figures of the National Tourism Administration also show that the annual rate of increase in the number of visitors to Hong Kong was on average as high as 16.2%, whereas the annual rate of increase in the number of people visiting the Mainland was on average about 3.8%, so the two-way flow of people between the two places in 2011 was 5808 LEGISLATIVE COUNCIL ─ 30 January 2013 as many as 108 million person trips, thus making them a two-way travel area with the highest figures in the world.

In the past, the coming on stream of the Guangshen Expressway provided impetus to the economy of Guangdong and Hong Kong, and even some areas of the PRD. With the development of the national high-speed rail (HSR) network and the completion of the HZMB in the future, the land transport network between Hong Kong and the PRD, and even the whole country, will be opened up. Take the Guangzhou-Shenzhen-Hong Kong Express Rail Link as an example, it is expected that after its commissioning, it will only take 15 minutes to travel between Hong Kong and Futian in Shenzhen, and it will be possible to reach the majority of cities in the southern part of central China within five hours. It will only take 10 hours to travel to Beijing direct, so the two places will be much closer to each other.

According to government estimates, in the first 50 years of the operation of the Guangzhou-Shenzhen-Hong Kong HSR, if we simply calculate the journey time that visitors will be able to save, the benefits that can be gained will be equivalent to $87 billion. The national HSR network, in extending south to Hong Kong, will also help enhance Hong Kong's competitiveness, apart from meeting the needs of the high volume of visitors travelling between the two places. As a result, it will also serve to directly promote exchanges in the economy, trade, tourism and culture of the two places. Among these areas, tourism and the professional services will be the first sectors to benefit from this, and then the retail and catering industries will also be able to get a share of the new business opportunities.

The Beijing-Guangzhou HSR, as the main connection for the Guangzhou-Shenzhen-Hong Kong Express Rail Link to link up with the whole country, was commissioned at the end of last year and the HSR grid with four North-South and four East-West HSR corridors as planned by the Mainland has also taken shape. The Guangzhou-Shenzhen-Hong Kong Express Rail Link will go into service in 2015 at the earliest. Furthermore, since the controversies over the implementation of the co-location arrangement are still ongoing, this is a cause for concern. In the Policy Address, no mention is made of the cross-boundary infrastructure, so I hope the Government can expedite the construction of the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the HZMB, so that these projects that have been discussed for over a decade can be completed as planned.

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The third runway of the airport is also another major infrastructure requiring close attention. It is beyond dispute that the existing capacity of the airport will not be sufficient, but according to the proposal of the Hong Kong Airport Authority, the third runway will not be commissioned before 2023, so it will take an even longer time than that required for the construction of the whole Chep Lap Kok Airport back then. What is even more ironical is that this new runway taking more than a decade to build will reach full capacity again seven years after commissioning, yet we have not seen the authorities put forward any countermeasures. This matter again underscores the fact that the Government has all along lacked foresight in planning such complementary facilities for tourism as transport facilities, so it is hoped that the incumbent Government can look at this problem with new thinking.

The Kai Tak Cruise Terminal will be completed in the middle of this year and as far as I know, 40 pick-up and drop-off spaces and 30 queuing spaces for use by coaches carrying passengers to and from the Terminal will be put in place. According to the assessment of the project consultant, the parking spaces for coaches would be able to handle about 1 800 passengers simultaneously, so they should be adequate to meet the operational need of the largest cruise liners. However, there is still quite a lot of room for improvement in the matching transport facilities for handling tourists travelling between Hong Kong and the Mainland and the diversion of traffic from the peripheral urban areas.

The problem of insufficient parking spaces for coaches is serious and has been long-standing. According to government figures, in the past three years, the total number of non-franchised buses in Hong Kong, including coaches, stood at about 6 700. Yet, the number of parking spaces designated for non-franchised buses was about 5 300 in the same period, so it is evident that demand has outstripped supply. Among them, the total number of parking spaces designated for coaches in urban areas is only about 2 900 and this is precisely the reason for the deteriorating situation of frequent traffic congestions and the competition between pedestrians and vehicles for space on the roads at tourist attractions and in the shopping areas downtown.

The Policy Address proposes the establishment of the Working Group on Convention and Exhibition Industries and Tourism to discuss and formulate policies for the tourism industry. Here, I hope that the authorities, in the course of examining the policies, will carry out relatively comprehensive planning and formulate specific measures for such issues as transport and infrastructure 5810 LEGISLATIVE COUNCIL ─ 30 January 2013 mentioned above, and change their present approach of taking piecemeal measures to deal with issues.

President, I so submit.

SUSPENSION OF MEETING

PRESIDENT (in Cantonese): I will now suspend the meeting until 9 o'clock tomorrow morning.

Suspended accordingly at six minutes past Ten o'clock.