THE PUBLIC SECTOR IN HONG KONG THE PUBLIC SECTOR IN HONG KONG his book describes and analyses the role of the public sector in the T often-charged political atmosphere of post-1997 Hong Kong. It discusses THE PUBLIC SECTOR critical constitutional, organisational and policy problems and examines their effects on relationships between government and the people. A concluding chapter suggests some possible means of resolving or minimising the difficulties which have been experienced. IN HONG KONG Ian Scott is Emeritus Professor of Government and Politics at Murdoch University in Perth, Australia and Adjunct Professor in the Department of Public and Social Administration at the City University of Hong Kong. He taught at the University of Hong Kong between 1976 and 1995 and was Chair Professor of Politics and Public Administration between 1990 and 1995. Between 1995 and 2002, he was Chair Professor of Government and Politics at Murdoch University. Over the past twenty-five years, he has written extensively on politics and public administration in Hong Kong. G O V E P O L I C Y Professor Ian Scott’s latest book The Public Sector in Hong Kong provides a

systematic analysis of Hong Kong’s state of governance in the post-1997 period Ian Scott R and should be read by government officials, politicians, researchers, students and N general readers who seek a better understanding of the complexities of the city’s M government and politics. E — Professor Anthony B. L. Cheung, President, The Hong Kong Institute of Education; N T Member, Hong Kong SAR Executive Council.

Public Administration / Politics / Hong Kong Studies ISBN 978-962-209-172-6 P E O P L E

9 789622 091726 Printed and bound in Hong Kong, China Ian Scott 00aPrelim(p.i-iv).indd 1 11/18/09 1:00:13 PM For Christopher and Lindsay

00aPrelim(p.i-iv).indd 2 11/18/09 1:00:13 PM 00aPrelim(p.i-iv).indd 3 11/18/09 1:00:14 PM Hong Kong University Press 14/F Hing Wai Centre 7 Tin Wan Praya Road Aberdeen Hong Kong

© Ian Scott 2010

ISBN 978-962-209-172-6

All rights reserved. No portion of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without permission in writing from the publisher.

Secure On-line Ordering http://www.hkupress.org

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library.

Printed and bound by Goodrich International Printing Co., Hong Kong, China

00aPrelim(p.i-iv).indd 4 11/18/09 1:00:14 PM Contents

List of Figures and Tables vii Preface ix Glossary of Abbreviations and Acronyms xiii

1. The Public Sector: An Overview 1

Part I The Constitution and Political Accountability 23 2. The Constitutional Framework 25

3. Accountability and the Political System 49

Part II The Public Sector and Its Problems 67 4. The Civil Service: Structure and Functions 69

5. The Civil Service: Personnel Policies 95

6. The Public Sector Beyond the Civil Service 119

Part III Policy Formulation and Implementation 147 7. Policy and the Budgetary Cycle 149

8. The Policy Process 175

9. Policy Implementation 201

0bContents(p.v-vi).indd 5 11/4/09 4:38:34 PM vi Contents

Part IV The Government and the People 229 10. Efficiency and Responsiveness 231

11. Rights, Complaints and Redress 257

12. The Public Sector and Its Future 289

Notes 307

Selected Bibliography 361

Index 385

0bContents(p.v-vi).indd 6 11/4/09 4:38:34 PM List of Figures and Tables

Figures 1.1 The Public Sector 2 1.2 Government, Market and Society 4 4.1 The Government Secretariat, 2008 72 7.1 Public/Government Expenditure as a Percentage of GDP 155 7.2 Rate of Growth of Gross Domestic Product by Percentage 156 Change in Real Terms 7.3 Revenue Profile, 2007–2008 156 7.4 Expenditure Profile, 2007–2008 159

Tables 2.1 Composition of the Legislative Council, 1991–2008 31 3.1 Principal Officials in the Tsang Administration, July 2008 59–60 4.1 Bureaus and Departments in the Hong Kong Government, 2008 74–75 4.2 Strength of the Twelve Largest Departments, 2008 75 4.3 Ranks and Establishment in the Police Force and in the Administrative 77 Grade, 2008 4.4 Establishment and Strength of the Civil Service, 1997–2008 88 5.1 Strength of the Civil Service by Gender and Terms of Appointment, 2008 100 5.2 Civil Service Pay Scales, 2008 105 6.1 Number of Advisory and Statutory Bodies, June 2005 125 6.2 The Organisation of the Public Sector 128–129 7.1 The Budgetary Cycle 162 7.2 The Medium Range Forecast 163 7.3 Environmental Protection Department: Analysis of Financial Provision 165 7.4 Social Welfare Department: Analysis of Financial Provision 166 7.5 Total Public Expenditure: Year-on-Year Change 2007–2008 and 171 2008–2009 7.6 Total Public Expenditure by Percentage by Policy Area Group 172

0cFigures(p.vii-viii).indd 7 11/4/09 4:39:29 PM viii List of Figures and Tables

8.1 Selected Policy Issues: Problems of Process and Implementation 195 9.1 Typology of Policy Implementation Styles 206 10.1 The Patient’s Charter 10.2 Establishment of Social Services and Disciplinary Services Departments, 245 1997, 2008 11.1 Complaints and Representations to the Legislative Council, 1997–2008 249 11.2 Complaints to the Ombudsman, 1994, 1997–2008 266 11.3 Disposition of Concluded Complaints to the Ombudsman, 2003–2008 274 11.4 Complaints against the Police by Initial Categorisation, 2002–2007 281 11.5 Resolution of Allegations against the Police, 2002–2007 282

0cFigures(p.vii-viii).indd 8 11/4/09 4:39:29 PM Preface

ince the retrocession to China in 1997, the public sector in Hong Kong has experienced major problems and undergone significant changes. External pressures, Sinternal civil service reform measures and a political climate very different from that of colonial times have contributed to uncertainty, a loss of direction, and relatively little achievement in the resolution of perennial policy issues. Externally, the government — previously seemingly immune from budgetary shortfalls — has been beset by periodic economic downturns that have seen it move into deficit with all the difficult political decisions that entails. It has also faced pressure from the sovereign power. Although the degree to which the Chinese government intervenes in Hong Kong affairs varies, often depending on its assessment of the national importance of the issue, it has been most clearly evident in the restrictions which it has placed on the pace of democratic development, in its interpretation of the Basic Law, and in its support for local political parties and groups sympathetic to its position. While this has influenced the political context in which the public sector works, the Chinese government has not overtly intervened in the affairs of the civil service or of most other public sector organisations. Internal reform measures have added to the turbulence. The immediate post-1997 emphases on greater managerial efficiencies and downsizing of the civil service have now been scaled back but they have left a legacy of organisational and personnel problems. The executive’s attempt to assert greater control over the civil service in the name of accountability has yet to be fully worked through and may well cause more disruption if the lines of command of the recent political appointments are not clearly delineated. The extension of the “accountability system” within the government suffers from the fundamental contradiction that the executive itself is appointed by the Chinese government and is not directly accountable to the people of Hong Kong. Despite the buffeting that the civil service has experienced from efforts to introduce more managerial practices and greater political control, the administrative culture of the civil service has proved to be remarkably resilient. It still possesses high administrative capacity in carrying out the routine implementation of policies which have long been accepted by the community. Where it faces difficulties is in formulating and implementing new policies. Its low policy capacity stands in marked contrast to its administrative performance and

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there is a substantial backlog of issues that have been addressed but have subsequently been abandoned or delayed. The principal reason for policy shortcomings has been the rise of civil society and the difficulty which the government has experienced in developing effective channels of communication with grass-roots organisations and in meeting their demands, inter alia, for universal suffrage and a directly elected Chief Executive. Hong Kong’s institutional framework allows for few mediating institutions between the government and the people. Political parties are weak because they cannot win office and are unable, in consequence, to aggregate demands or build credible policy platforms. They can provide no surety that, even if they win control of the legislature, their platforms will be translated into policy. For its part, the government makes policy, but it has no mandate from the people to do so. Its policy agenda cannot be taken as a package which has been supported by the electorate and it is, as a result, required to find elaborate justifications for its proposals. It claims to act in the best public interest; to consult on major new initiatives; and to be as efficient, responsive and responsible as possible. Some of those claims may be partially true. But when faced with a sceptical population, most of whom want a democratically legitimated government, they cut no ice. Each new proposal comes before an often- recalcitrant legislature and a highly critical public who are increasingly versed in the art of ensuring that policies of which they do not approve do not succeed. This book is an attempt to explain how the public sector has fared in this new political and economic environment. It seeks to describe the constitutional, organisational and policy problems that have confronted the public sector, to analyse the ways in which the government has tried to deal with those problems, and to suggest possible means of minimizing or resolving its difficulties. The research on which this book is based stems from a long-standing interest in public administration in Hong Kong. In 2005, some of the research findings were published in a book, Public Administration in Hong Kong: Regime Change and its Impact on the Public Sector (Singapore: Marshall Cavendish), comparing public administration in the colonial period with that after the handover. Two years later, the book was out of print and Marshall Cavendish was no longer engaged in academic publishing. I am grateful to Colin Day, the publisher of Hong Kong University Press, who was interested in the suggestion that the Press might bring out a new and revised book which would draw on the original work but which would focus more on post-1997 problems. I have been fortunate to be able to undertake research in a congenial and stimulating environment. It has been my privilege and pleasure to teach at the graduate level in both the Department of Politics and Public Administration at the University of Hong Kong and the Department of Public and Social Administration at the City University of Hong Kong. I have borrowed liberally from the excellent research on politics and public administration that has been conducted by members of staff in both institutions. I am grateful, too, to the graduate students of both departments, many of whom work in the civil service or other parts of the public sector, whose presentations and dissertations have been a rich source of information. Both departments are blessed with exceptional support staff and they have been unfailingly helpful and resourceful when unexpected problems arose.

0dPreface(p.ix-xi).indd 10 11/4/09 4:40:16 PM Preface xi

Many serving and former civil servants and other public sector employees have helped to update material for this book and to provide me with a perspective on the problems that they face. I am especially grateful to those who agreed to be interviewed, to members of staff in the Civil Service Bureau who answered my written queries and to Alan N Lai who provided detailed comments on the chapter on the budget and the policy process. I would like to thank also Brian Brewer, John Burns, Elaine Chan, Hon Chan, Joseph CW Chan, Janet Cheng, Anthony BL Cheung, Peter TY Cheung, Linda Chow, Tamara Dent and members of the Asia Research Centre at Murdoch University, Mark Hayllar, Karen Kue, Adrienne LaGrange, Peter HL Lai, Danny Lam, Lam Wai- man, Kanas Lau, Eliza Lee, James Lee, Joan Leung, Paul Morris, Margaret Ng, Martin Painter, Jon Quah, Vanessa So, Dorothy Tam, Ian Thynne, Gavin Ure and HK Wong. This book required help from many different people and I am grateful for all the assistance I have received. Finally, I have to thank my wife, Terry Lui, who not only provided critical comments but also proof-read all the chapters. My son, Christopher, helped to solve most of my computer problems and standardised the tables and my daughter, Lindsay, checked the referencing and proved a stern critic of style and consistency. Needless to say, responsibility for all the remaining mistakes is my own.

Ian Scott January 2009

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BLDC Basic Law Drafting Committee CAPO Complaints Against Police Office CEPA Closer Economic Partnership Arrangement CFA Court of Final Appeal CSSA Comprehensive Social Security Assistance DAB Democratic Alliance for the Betterment and Progress of Hong Kong EOC Equal Opportunities Commission EPP Enhanced Productivity Programme GDP Gross Domestic Product GST Goods and Services Tax Hansard Official Proceedings of the Legislative Council of Hong Kong HKIEd Hong Kong Institute of Education HKEx Hong Kong Stock Exchange ICAC Independent Commission Against Corruption IPCC Independent Police Complaints Council KCRC Kowloon-Canton Railway Corporation KRAS Key Results Areas MPS Master Pay Scale MRF Medium Range Forecast MTRC Mass Transit Railway Corporation NPC National People’s Congress OMELCO Office of the Unofficial Members of the Executive and Legislative Councils POAS Principal Officials Accountability System PCO Office of the Privacy Commissioner PLC Provisional Legislative Council PRC People’s Republic of China PSC Public Service Commission SAR (Hong Kong) Special Administrative Region SARS Severe Acute Respiratory Syndrome

0eGlossary(p.xiii-xiv).indd 13 11/4/09 4:41:16 PM xiv Glossary of Abbreviations and Acronyms

SCMP South China Morning Post SFC Securities and Futures Commission UGC University Grants Committee

The Hong Kong dollar is pegged to the US dollar at 7.8 dollars to 1 US$. Unless otherwise stated, all amounts are expressed in Hong Kong dollars.

0eGlossary(p.xiii-xiv).indd 14 11/4/09 4:41:16 PM 1 The Public Sector: An Overview

he public sector may be defined as those government agencies and related organisations that are funded by revenue raised from taxes, fees and charges or fromT the sale of state-owned assets.1 The agencies include bureaus, departments, the judiciary, funded statutory bodies, publicly-owned corporations, and fully or partly- subsidised organisations such as social welfare agencies, schools and universities. They do not include private companies or voluntary associations. In Hong Kong, the government agencies (the civil service) consist of the offices of the Chief Executive, Financial Secretary and Secretary for Justice, twelve policy bureaus and almost 60 departments.2 In September, 2008, they employed 153,477 people, approximately 4% of the labour force.3 A further 1200 people worked for the Independent Commission Against Corruption (ICAC).4 The 70 “related organisations”, which range from small tribunals, to statutory bodies such as the Hospital Authority, to very large public corporations such as the Airport Authority, employ at least as many people as the civil service.5 There were, in addition, eleven tertiary institutions which are partly funded by the taxpayer.

Government and the Public Sector The Issue of Autonomy

In recent decades, the relationship between the government and the public sector has become much more complex. Two factors, in particular, have contributed to this complexity. The first is that many governments have given public sector organisations outside the civil service a greater degree of autonomy. The second is that the delivery of public goods and services has become, to a greater extent, a partnership between government, the private sector and voluntary social organisations. Under the influence of New Public Management doctrines, private sector practices have been widely adopted in government which itself has been increasingly divided into “core government” — comprising important centralised functions such as finance, security and overall policy-making responsibility — and decentralised government agencies or other public sector organisations which are often concerned with the delivery of social policies such as education and healthcare. Underlying decentralisation is the

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notion that, if public sector organisations are given greater autonomy from central control, they may be able to cut through red tape, deliver services in a more efficient and cost-effective manner and better meet the needs of the public they serve. Figure 1.1 shows a possible relationship between core government and the public sector, assuming that power has been divested, in varying degrees, to decentralised public sector organisations. The degree of autonomy of those bodies from core government will depend on their functions, the extent of public funding, public perceptions of their need for independence, and on the political circumstances which led to their creation. In many cases, autonomy is limited to the performance of very specific functions. For example, regulatory agencies, fully funded by government, may be set up to control, say, the stock market or to protect consumers from inferior or dangerous products. These agencies have autonomy in that they can administer existing legislation independently but they do not make the ultimate decisions on what that legislation should be. Similarly, central banks may be given autonomy to determine interest rates but they may need to work closely with government and legislatures to co-ordinate economic policy. Whether the taxpayer funds a service is an important determinant of the organisation’s autonomy. The greater the level of funding, the more likely it is that government will seek to control it. With some agencies, however, such as the Audit Office or the Ombudsman, governments do set up fully funded, independent public bodies. In these cases, the function of the organisation, to act as a check on government, overrides the fact that it is entirely paid for by the taxpayer. Many governments also own public corporations which generate their own revenue and which are intended to make profits. Public corporations usually have greater autonomy than other public sector organisations although there are often provisions for ultimate central government control.

Semi-autonomous public bodies

Closely-controlled public bodies

Core Government

Market Society

Figure 1.1 The Public Sector

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The Hong Kong government’s relationship with the rest of the public sector should be seen in the context of why power has been devolved to the public sector outside the civil service in the first place. In Hong Kong, unlike many developed countries, the reason for devolution of responsibilities often has little to do with the prescriptions of New Public Management.6 It is not always about creating greater efficiency — senior civil servants are sometimes scathing about the way in which statutory bodies perform — but rather about political convenience or commercial practices. Where public sector organisations have been set up, the Hong Kong government has usually sought to retain a final say through membership on the board and in such matters as the appointment of the Chief Executives of statutory bodies. The government is particularly concerned with whether statutory bodies and public corporations are acting consistently with its overall policy; it has argued, for example, that it has the right to intervene in tertiary institutions to ensure that government policy is implemented.7 And, although the public transport corporations, the Mass Transit Railway Corporation (MTRC) and the Kowloon-Canton Railway Corporation (KCRC) operated on commercial principles, the government had no compunction in initiating a merger of the two organisations.8 Where the government has been scrupulous in respecting the autonomy of public sector organisations is where they act a check on government itself. The Independent Commission Against Corruption (ICAC), the Direct of Audit, the Ombudsman and the Privacy Commissioner have all been able to fulfil their functions without overt interference from the government.

The Functions of the Public Sector

The principal function of the public sector is to provide goods and services for the community. These goods and services9 could potentially cover the whole range of human needs and desires, from education, to child care, to medical services, to clean air, to a safe environment. But there are always questions about how these demands should be met. Should the public sector provide most of the desired goods and services? What role should the market and the private sector play? Should voluntary organisations be involved in the provision of more services? Figure 1.2 illustrates a possible relationship between government, market and the society. Public goods and services provided by the government alone fall within the unshaded area marked “government” while the shaded areas represent partnerships between the government and market and government and voluntary organisations to deliver services jointly. Figure 1.2 could be re-drawn to show a much smaller government and a much larger market and/or society. Services could be divested from government to the private sector or to voluntary organisations and government could be reduced to core functions. Alternatively, Figure 1.2 could be re-drawn to show a dominant government which provided most goods and services with a much smaller role for the market and for autonomous societal organisations. In Hong Kong, the philosophy of the government has always been, in the words of the Chief Executive, Donald Tsang, “Big Market, Small Government.”10 In line with this principle, it might be expected that most goods and services would be provided by

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Government

Market Society

Public goods and services Public goods and services Public goods and services delivered bygovernment delivered by government, delivered by government and the market market and society and society

Figure 1.2 Government, Market and Society

the private sector or by voluntary associations. It is true that, in comparison with other developed countries, public expenditure as a percentage of Gross Domestic Product (GDP) is comparatively low; in 2008, it was about 19%11 whereas public expenditure in most other developed countries is two to three times higher.12 That would seem to imply that government in Hong Kong is a residual force, that it does not intervene directly in either the market or society. As a recent Financial Secretary put it, reflecting the views of his predecessors over the previous fifty years, “market leads, government facilitates.”13 While there is some truth in this picture, it does not entirely convey the full role played by the government and the public sector and the scale of the services that they deliver to the public. Although public expenditure as a percentage of GDP is low, it should be remembered that Hong Kong does not have an army or a significant agricultural sector and that, because it is a small place, there are probably economies of scale. Certainly, “small government” does not mean limited government. In fact, the government is omni-present in Hong Kong. It intervenes in the economy in many different ways, not simply to facilitate but also to regulate. It plays a critical role in the delivery of services through the public sector and through social welfare agencies. And it delivers frequent sermons, in the form of announcements of public interest, on how its citizens ought to behave.

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How, then, should we characterise the role of the government in relation to the private sector and to society? It has been suggested that we might see the Hong Kong government as a developmental or capitalist government rather than as one which is essentially a behind-the-scenes facilitator.14 In this sense, the government acts to preserve the longer term interests of capitalism but does not necessarily act in the short-term interests of capitalists.15 It may see the need, for example, to regulate the labour market to some degree rather to permit firms to pay low wages in unsafe working conditions. It may provide social services to satisfy citizens’ needs even if this does mean that the funding comes in part from company taxation. Government in Hong Kong seeks to play a proactive role in the economy. Very often, occasionally in contradiction of its own professed principles and sometimes against the wishes of the business community, it leads rather than facilitates. It does not always succeed in realising its agenda, however. In recent years, particularly following a massive demonstration against the government on 1 July 2003, its ability to introduce new policies has been considerably circumscribed. It has faced effective opposition on the streets, in the courts, and in the media from civil society organisations which do not believe that their interests are being fully recognised in the present political system. In the following pages, we consider in greater detail the ways in which internal and external relationships and the political and economic environment have affected the performance of the Hong Kong public sector. The purpose of the book is two-fold: • to describe and analyse the way in which the public sector works and to examine its relationships with the market and with society; and • to assess the performance of the public sector measured against its claims to be accountable, its capacity to formulate and implement policy, and its ability to deliver goods and services efficiently and in a manner which is responsive to expressed needs.

Initially, we examine the factors and defining events which have shaped the public sector over time and which have contributed to its particular characteristics.

The Colonial Inheritance

Over the period 1841 to 1997, when Hong Kong was a British colony, the government acquired organisational and policy-making characteristics and relationships with the public that were designed to maintain political stability and to perpetuate colonial rule. In 1984, the Sino-British agreement sought to preserve many of these features in the post- handover political system and they were incorporated in the Basic Law which became the constitution of the Hong Kong Special Administrative Region of the People’s Republic of China in 1997.16 The present structure of the government and the public sector consequently owes much to its colonial origins. Although the political and economic environment has changed considerably since 1997, the machinery of government retains the form and functions that were characteristic of colonial administration. In addition, the public sector organisations outside the civil service, many of which were created in the last two decades before the handover, have remained in place.

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Organisational Characteristics

The principal organisational characteristics of colonial administration which were inherited in 1997 were: centralised government; strong, hierarchically-organised, departments; “small” government and fiscal frugality; recruitment by merit; political neutrality; commitment to the rule of law; and “clean” government. Centralised government was a feature of colonial administration from the outset. It was centralised initially to maintain political control, because resources were limited, and because, since it was a small territory, there was no immediate need for decentralisation. There were partial exceptions to the rule with the acquisition of the New Territories in 1899 and with de facto devolution of responsibility to the District Commissioner for the New Territories and his staff and to the Urban and Regional Councils.17 But these bodies had only limited autonomy; their funding came directly from the government and their policies were ultimately subject to its approval. Partly because government was so centralised, the emergence of a public sector beyond the civil service was a relatively late development. Even with the eventual establishment of many statutory bodies outside the civil service — the Housing Authority, the Hospital Authority and the Airport Authority, for example — the government reserved the right to intervene in their operation and often sought to influence their policies and practices. Consistent with centralised government, the departments, which were responsible for policy implementation, were organised on strongly hierarchical lines. The Police Force was established as a para-military body and retained that character until the final years of colonial rule. Other disciplined services — Correctional Services, Customs, Fire Services, and Immigration — were set up in similar fashion. Within the non-disciplined departments, there was also considerable emphasis on hierarchy. The consequence was that departments tended to develop autonomously from each other and to focus on top- down implementation rather than lateral co-ordination. While a strongly hierarchical system was appropriate for maintaining political control, it was not entirely suitable when the government, on the directions of an active Governor, Sir Murray MacLehose (1971–1981), expanded education, housing, health and social welfare provision. In 1973, the McKinsey consultants made recommendations for change which have been the basis for the organisation of government since that time.18 The Secretariat was re-organised into specific policy branches (later bureaus) with responsibility for a cluster of related departments.19 The branches were headed by a senior civil servant, usually a member of the elite administrative grade, which formulated policy that the departments were then expected to implement. Colonial government was expected to be small and to provide only minimal services. Government’s role was to maintain law and order and support the growth of a capitalist economy. There was pressure from both the British government and from local businessmen to ensure that there were no budget deficits and that all public expenditure, and especially recruitment to new positions, was carefully scrutinised. Taxes were to be kept low. These policies ensured that, rather than simply balancing the budget, the government in fact began to accumulate large surpluses. Although “small government”

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remained an important formal objective, political and economic factors meant that government eventually became a very large, complex and differentiated organisation with a major impact on the market and on society. As the economy prospered, government revenue from company tax and from the sale of land grew substantially. Political factors, especially after the 1966–1967 riots and disturbances and during the transition to Chinese rule, meant that expanded social services were necessary and were increasingly delivered by the government or by organisations funded by it. By 1997, the strength of the civil service establishment was 184,000.20 A further 180,000 were estimated to work in other public sector organisations.21 Overall, the public sector employed approximately one in nine of the labour force. Until the Second World War, British expatriates occupied all the senior positions in the colonial administration. The government thereafter adopted a policy of localization whereby non-local officers would only be employed when there was no qualified local candidate to fill the position. Localisation was nonetheless very slow. Even in the 1980s, most of the directorate level positions and senior positions in the police force were still held by expatriates. With the impending transfer of sovereignty, however, there was a rapid acceleration of localisation so that, by 1997, there were only about 1200 expatriates remaining in the civil service. Appointments and promotions in the civil service are monitored by a Public Service Commission, established in 1950, which continued to function after the handover.22 The concept of political neutrality was inherited from Britain where it meant that senior civil servants would give advice to ministers without fear or favour and would implement impartially any course of action which the minister decided to take. In the fused system of Hong Kong, those holding the most senior positions were in effect both ministers, taking the final political decision, and civil servants, advising themselves on the most appropriate measures. The concept was adapted, accordingly, to mean that civil servants would take decisions in the public interest and that, in some sense, they were accountable to the public to act impartially in taking those decisions.23 Political neutrality survived the handover, but it came under pressure from those who believed that civil servants’ loyalty to political office-holders should override any notion of accountability to a wider public. The colonial government placed great emphasis on the rule of law although in practice the tightly-knit relationship between the executive, the Legislative Council, the civil service and the judicial system meant that the courts were not always as independent as the government claimed. After the Tiananmen Square massacre in June 1989, the maintenance of the rule of law became something of a mantra for those who feared that the Chinese government would violate their civil liberties after 1997.24 The government responded by passing a Bill of Rights in 1991 and by setting up statutory bodies that protected individual rights. These included the Equal Opportunities Commission, the Privacy Commissioner, and an ombudsman with strengthened powers, all of which continued to function after the transfer of sovereignty. Corruption was a perennial problem in the colonial administration. By the 1960s, it was particularly prevalent in the police force where syndicates operated to extract bribes

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from drug traffickers, prostitutes, night club owners, taxi drivers and small businesses. In 1970, the government passed a more stringent corruption law, the Prevention of Bribery Ordinance, but there was concern about how effectively it would be enforced since it was still administered by the police.25 After a senior expatriate police officer, Peter Godber, who had been charged with corruption offences, managed to escape from Hong Kong, the government appointed a judge to investigate the circumstances of the escape and the effectiveness of the ordinance.26 Godber was extradited, tried and convicted. The Governor decided to remove the administration of the ordinance from the police and set up the Independent Commission Against Corruption (ICAC) which began work in 1974. The Commission eventually proved to be extremely effective in reducing corruption in the public service to minimal levels and it has remained an important feature of the post-handover system.

Colonial Policy Formulation and Implementation

The significant features of the colonial system of policy formulation and implementation were: minimal basic functions provided by the government; social policy provision by non-government organisations; policy formulation within very restricted circles; and top-down policy implementation with a focus on outcome rather than process. In the late 1970s, the economist Milton Friedman said that he thought the Hong Kong government most closely resembled Adam Smith’s prescription for the functions of government in a capitalist system: that it should only be concerned with law and order, the administration of justice and some public works.27 Friedman added a fourth responsibility: that of protecting those who could not protect themselves.28 The description does not entirely fit Hong Kong since the government, by that stage, was providing some 40% of the population with public housing29 and had also considerably expanded its education, health and social welfare programmes and built three new towns in the New Territories. But it does convey something of the ethos of the Hong Kong government. The belief from the beginning of colonial times, which was supported by the British government and businessmen, was that it was better that the Hong Kong government should stick to the minimal functions that it did best and not become involved in social policy provision which required both a different organisational structure and more direct contact with the people. The traditional government view was that social services should be provided by voluntary organisations. It was prepared to give subsidies of various kinds, land as well as grants, to churches and charitable organisations which provided the bulk of education and health services.30 The structure of the government was not suited to social policy delivery and, when it became directly involved in provision, reforms were necessary to speed up decision-making and recruitment and to introduce more planning.31 While the changes did improve performance, they did not resolve the problem of lateral co- ordination between strong government departments or provide solutions to long-standing policy dilemmas. Housing and education were constant sources of concern. Healthcare financing began to become problematic in the 1980s. And social welfare policy was

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politically contentious, caught between the belief, entrenched in policy, that the able- bodied should work and the views of social workers and unions that the government had the means to fund more comprehensive social security benefits. The colonial government’s policy-making was conducted in-house in the Government Secretariat. Occasionally, powerful Governors would take action after consulting only a few senior civil servants. More often, policies would be devised after what amounted to an extended conversation, conducted by memorandum, between the most senior civil servants in the Secretariat. Some consultation would then take place with committees of prominent figures, usually themselves appointed by the administration. Green papers, usually with a clear indication of the government’s preferred position, were sometimes then distributed to the public for comment. Subsequently, a white paper containing the definitive policy would be issued, the policy would be approved by the Executive Council, and, if necessary, legislation would be passed by the Legislative Council. The government saw policy implementation as a matter of targets which had to be met on time and within budget. It was not particularly concerned with the process of how these targets were achieved. Those opposed to its proposals were regarded as obstacles to implementation. The government was sensitive to matters that might involve traditional Chinese customs and practices but it was also prepared to act quite forcefully when objectives had been set and there were deadlines to be met. In constructing public housing and building the new towns in the New Territories, for example, squatters were moved off the land, sometimes physically, to make way for the new estates. When the estates in the new towns had been completed, it was discovered that insufficient attention had been paid to the provision of social services and that, in their absence, people were reluctant to move from other urban areas.32 This reflects the traditional colonial attitude towards policy implementation. The focus was on the efficient and cost-effective achievement of the objective. There was little consultation with those whom the policy was designed to benefit; they were expected to be grateful recipients of whatever was provided.

The Colonial Government and the Legitimation of Power

A major feature of the colonial government’s relationship with the people was a continuing legitimacy deficit and attempts to reduce it,i nter alia, by claims that rule was based on a “tripod of consents”; by arguing that the government had performed well; by civil service reform; and by asserting that the government was accountable. The government suffered from a legitimacy deficit throughout the period, principally because, as a colonial regime, it had difficulty in generating consent for its rule. In common with British colonies elsewhere, the Hong Kong government would have preferred to rule with the support of traditional elites. On Hong Kong island, however, there were hardly any people, let alone traditional leaders, when the occupation took place. The first Chinese member was nominated to the Legislative Council in 1880.33 Thereafter, the government, through the boards of the District Watch Committee and the Tung Wah and Po Leung Kuk charitable organisations, gradually began to incorporate

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Chinese elites into its decision-making processes. The implicit bargain was that in exchange for direct access to government the elites would maintain social order.34 There was little interaction between the government and the majority of the Chinese population. The system worked well enough until after the Second World War when the population quadrupled within six years and new social problems meant that the District Watch Committee was no longer as influential as it had been. There were riots in 1956, which left 59 people dead, and again in 1966–1967.35 In 1966, the government appointed a Commission to investigate the riots which found that there was a “gap” between the government and the public, resentment towards the police, and the need for labour reform and improvement in social services.36 Much of the next decade was devoted to bridging the gap, to reducing the legitimacy deficit, and to generating more support for the system without introducing elections. A variety of methods were employed. The government’s rationale for exercising authority was that it was based on a “tripod of consents”, — the consent of the local people and of Britain and China.37 This was a convenient myth since the consent of the people could not be expressed through elections or any institutional mechanisms, the consent of Britain was purely that of a colonising power, and the Chinese government had already said that it would take Hong Kong back when the time was appropriate. A more powerful argument was that the government deserved to rule because it had performed well. It claimed credit for Hong Kong’s economic prosperity which saw GDP growth rates, for example, running at 12% per annum between 1976 and 1981.38 It also argued, implicitly, that it deserved to govern because it was able to assess what people wanted and to deliver appropriate goods and services efficiently and cost-effectively. Education, health and housing services had been in short supply. Their rapid expansion in the 1970s satisfied considerable demand and gave some credence to the argument that good performance generated support for the system. But once those basic needs had been met, it became more difficult to use the same means to reduce the legitimacy deficit. In the 1990s, the government was faced with the problem that it could not change the political system to increase the legitimacy of the government. The last Governor, Chris Patten, did expand the franchise for the 1995 election but the political system had been set in stone by the Sino-British agreement and by the Basic Law and could not be changed to accommodate growing democratic sentiment. What the government did instead was to provide the civil service with a more human face. Performance pledges stressed service to the customer, offices were painted, and the police force was reformed.39 The civil service benefited from changed public perceptions. It was seen to be less distant than in the past, to be more efficient, and to be staffed by competent, well-educated officers. In the final years of colonial rule, the government made yet another attempt to present itself as an accountable government. In 1995, it published a booklet entitled “Serving the Community” in which it argued that accountability was “the fundamental principle which drives the public sector.”40 Civil servants were seen to be accountable in three respects. They were answerable to the Legislative Council, the Director of

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Audit, the Commissioner Against Corruption and the Commissioner for Administrative Complaints (later called the Ombudsman); they were required to keep the community informed of government’s decisions and actions; and they were expected to provide, “within reason”, access to information about these decisions and actions.41 This definition of accountable government is perhaps most remarkable for what it excludes rather than what it includes. The Legislative Council had no powers to dismiss the government if it proved to be incompetent and the community was expected to serve only as the passive recipient of information which the government deemed fit to give it. At the time of the transfer of sovereignty in 1997, the government continued to subscribe to the version of accountability presented in the “Serving the Community” document; the legitimacy deficit remained a problem.

The Government and the Public Sector after 1997

The structure and functions of the government and public sector remained largely unchanged after the handover. The most senior civil servants retained their positions as Policy Secretaries (later called Directors of Bureaus) and the civil service was promised conditions of service no less favourable than before 1997.42 Statutory bodies, for the most part, continued to operate as they had done before 1997. There were, however, significant differences in the interaction between the major executive, legislative and bureaucratic institutions. Prior to 1997, the government had been unified and had worked closely with other major institutions; after the handover, it became much more disarticulated with the major institutions acting independently and often in an unco-ordinated manner.43 Even more important were the changes in the economic and political environment. On 2 July 1997, the day after the new Chief Executive, Tung Chee-hwa, assumed office, the Thai government decided to float the baht, an event which in Tung’s opinion and that of many economists triggered the Asian financial crisis.44 As the economy began to slow, property prices plummeted and negative equity and unemployment began to rise. Following the Asian financial crisis, another economic recession further damaged the economy. By 2003, when an outbreak of atypical pneumonia, Severe Acute Respiratory Syndrome (SARS), killed nearly 300 people and seriously affected many businesses, the economy was reeling. Unemployment had reached a record 8.7%, some property prices had dropped by as much as 70%, and bankruptcies had increased from 600 cases in 1997 to 24,922 cases in 2003.45 The huge surpluses of colonial days were gone and the budgetary deficit was seemingly spiralling out of control. The government blamed external factors for the territory’s problems. But many of its critics maintained that a major reason was poor management. The government’s credibility in managing economic affairs had been significantly undermined.46 The political environment was equally volatile. The Chinese government dissolved the Legislative Council immediately after the transfer of power and re-constituted it without the democratic parties. When new elections under a more restricted franchise were held in 1998, there was a substantial increase in turnout and democratic candidates were returned to the Council. In 2003, the government, probably at the behest of the

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Chinese government, decided to introduce legislation to enact Article 23 of the Basic Law which required that the Special Administrative Region should prohibit “any act of treason, secession, sedition, subversion against the Central People’s Government…”47 The proposed legislation sparked concerns about civil liberties, in an atmosphere in which there was already considerable disaffection with Tung’s administration, and eventually resulted in a demonstration against the government of an estimated 500,000 people on 1 July 2003.48 The national security legislation was withdrawn and Tung eventually resigned in March 2005. However, this did little to improve either the government’s capacity to introduce new policies, which was severely constrained after the demonstration, or to resolve the impasse over constitutional reform. The effects of these changes on the organisation of the government and the public sector, on policy formulation and implementation, and on the legitimation of power are summarized below.

Organisational Characteristics

The major organisational characteristics of government and the public sector after 1997 were: continued centralisation of government and firm control of the remainder of the public sector; the disarticulation of the major institutions; some largely unsuccessful efforts at civil service reform; attempts to assert greater political control over the civil service with the introduction of the Principal Officials Accountability System; and various measures aimed at implementing a “big market, small government” policy. The government remained highly centralised after 1997 and took steps to increase its authority by abolishing the Urban and Regional Councils, which had an elected membership, and by bringing the departments which had served those councils, the Urban Services Department and the Regional Services Department, back into the mainstream of government. Its rationale was that Hong Kong had no need for this middle tier of government between the government and the District Councils although the decision may also have been sparked by the failure of the Urban and Regional Services departments to slaughter 1.2 million chickens effectively after an outbreak of avian influenza.49 The government showed, too, that it did not regard the remainder of the public sector outside the civil service as autonomous, intervening in their affairs and seeking to bring them into line if there were any inconsistencies with government policy. The Basic Law provided for a government that was more articulated and less fused than it had been under colonialism. The political office-holders, the Chief Executive and the Principal Officials, were clearly intended to be separated from other senior civil servants who were not appointed by the Central Government but who might be designated by them “to speak on behalf of the government” to the elected members of the Legislative Council.50 Soon after the handover, there was an evident political divide between senior civil servants and the Chief Executive and some of his advisers on the Executive Council and in the Electoral College. Some of Tung’s advisers and some Chinese government officials believed that the civil service, having served a British administration, was not entirely to be trusted.51 The Executive Council, which had

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previously usually approved the measures proposed by senior civil servants without much dissent, now became a potentially hostile forum, sometimes pushing its own uncosted political proposals. The close-knit collaboration between Governor, Executive Council, and the senior civil service that had characterised colonial rule began to dissipate. There were also problems in the relationship between senior civil servants and the Legislative Council with members of all parties in the Legislative Council becoming concerned that the government was using them as a rubber stamp, failing to brief them properly, and expecting legislation to be passed quickly without appropriate review. There were also the problems between the government and the courts over who should have right of abode in Hong Kong and over the interpretation of the Basic Law. The result was a system that was disarticulated and which lacked unity and co-ordination in its decision- making.52 In 1999, the Chief Executive launched a reform programme which was intended to improve efficiency in the civil service and to change some of the fundamental assumptions on which it was based.53 There had been some evidence of inefficiencies, including the botched slaughtering of the chickens, a public housing corruption scandal and the chaotic opening of the new airport, for which the civil service bore some responsibility.54 But there was also the notion that it should become more like the private sector with more civil servants on contracts, performance pay, and enhanced performance management systems. If the reforms had been implemented in their entirety, it would have fundamentally undermined the principle that the civil service should be based on a permanent establishment with fixed salary scales. But the government was only partially able to implement its proposals. Changes to the recruitment and appointment system were introduced, making it more difficult for new recruits to obtain a permanent position. However, resistance from the civil service associations and the difficulty of implementing proposals, such as performance pay, meant that many proposals were either unsuccessfully introduced or were not introduced at all. The reform proposals may have had the underlying objective of increasing political control over the civil service. A more fragmented civil service on contract terms might, as has occurred in other countries, lead to greater direct influence on the way that the civil service operated. Perhaps with this in mind, Tung Chee-hwa devised and introduced the Principal Officials Accountability System in 2002. Up to that point, Principal Officials, with one exception, had all been senior civil servants. They could be moved from one position to another in the civil service or as Principal Officials but they could not be dismissed. Under the new system, some Principal Officials (the three policy secretaries and the heads of the policy bureaus) were to become political appointees on contract and could be dismissed by the Chief Executive. They were, in that sense, more accountable to the Chief Executive. But their accountability to the Legislative Council remained as weak as it had been before the change. Where the government did succeed was in downsizing the civil service. The difficult economic circumstances of the first six years after the handover led to considerable pressure from business groups and from the Legislative Council to reduce the size of the civil service and to cut salaries. The government responded by enacting a freeze on

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recruitment and, in 2002, began a process which eventually resulted in reductions in salaries and conditions of service for all civil servants to June 1997 dollar levels. At the same time, it reduced the size of the civil service, transferring some to other parts of the public sector, but cutting back particularly on artisans and labourers who had formed such a large part of the colonial civil service but whose work was now outsourced to the private sector. In 1997, 12% of the civil service (22,883 people) was on Model Scale 1, the salary scale for artisans and labourers; by 2008, this had been reduced to 6.8% (10,506 people) although some of the shortfall was made up by employing non-civil service staff on contract.55 There were other significant drops in some departments, notably in housing, where estate management had been contracted out. An enhanced productivity scheme and voluntary retirement schemes also contributed to the drop in numbers. Overall, the strength of the civil service declined from 184,639 in 1997 to 153,477 in 2008.56

Policy Formulation and Implementation after 1997

The main features of policy formulation and implementation after 1997 were: policy- making was constrained by economic circumstances; policy co-ordination was adversely affected by the introduction of the Principal Officials Accountability System; the consultative system broke down and the growth of civil society organisations made policy implementation more difficult; and some critical policy problems remained unresolved because of the political climate. The first budget of the Special Administrative Region was expansionary and sought to address the backlog of problems that had built up in the last years of colonial rule. Thereafter, the budgetary deficit and the need for cost-cutting meant that the government could not afford to take many new initiatives. When the economy improved after 2004, the problem was not that the government could not afford to take new initiatives but rather that its low credibility meant that it did not wish to spark confrontations with the many civil society organisations who were opposed to new measures such as the introduction of a goods and services tax, changes to the healthcare financing system and various infrastructural developments. There were also problems with policy co-ordination which were exacerbated by the introduction of the Principal Officials Accountability System. Part of the rationale for the new system was that Directors of Bureaus, who were now drawn in greater numbers from outside the civil service, were expected to take new initiatives and to cut through red tape. Some of these proposals foundered because they were announced without proper consultation or costing. In addition, the Principal Officials Accountability System in effect downgraded the roles of the Chief Secretary for Administration and the Financial Secretary in the hierarchy. Both officials previously had the power to control public expenditure. Under the new arrangements, they were implicitly equal in status with their fellow Principal Officials. The system encouraged Director of Bureaus to act more autonomously and to reduce co-ordination with other bureaus. When Donald Tsang succeeded Tung Chee-hwa as Chief Executive in March 2005, he reverted to previous

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practice, in which the Chief Secretary and the Financial Secretary had exerted stronger financial control over new expenditure, and brought back more former civil servants as Directors of Bureaus.57 The consultative system, which had been an integral part of policy-making under colonialism, quickly broke down after 1997. The major reason was the growth of civil society organisations which worked outside formal political structures and often took their grievances to the streets rather than channelling them through the Legislative Council or bringing their demands directly to the government. This made it difficult for the government to try to deal with them and, on many issues, it did not even try to do so.58 In other cases, pressure groups were created to oppose the policy after it had been announced which resulted in problems with implementation. The groups also employed increasingly sophisticated tactics, using court action and forming coalitions with other groups to try to prevent implementation. The opposition to the national security legislation in 2003 illustrated the way in which the consultative system was failing and, conversely, that the way in which the strength of civil society organisations outside the formal political structure was growing. The initial consultation with the public over the changes that would be made under Article 23 led the government to believe that it enjoyed majority support for its proposed measures. Public opinion polls, to the contrary, showed that a majority were actually opposed to the legislation. As opposition began to build, a coalition, the Civil Human Rights Front, brought together disparate groups who believed that their civil liberties were threatened or who were opposed to the government on other grounds. The eventual mass demonstration resulted in the withdrawal of the legislation but left open the possibility that such mass action might occur again if government policies alienated a sufficient number of people. The consequence was that the government found itself in a serious dilemma over policy. If it were to introduce new policies, it had to be certain that there would not be substantial opposition to their introduction. But the existing consultative mechanisms were clearly an inadequate guide to whether a policy would meet with public approval. The government, accordingly, formulated and implemented policy with extreme caution. The goods and service tax, which economists had long agreed was the best way of broadening Hong Kong’s revenue base,59 was abandoned when there was some evidence of opposition to it. Other policies, such as the reform of healthcare financing and social security benefits, were made so slowly that the problems gradually became worse. By 2008, there were substantial policy backlogs in many areas.

Government and the Legitimation of Power after 1997

Fractious relations between government and the public over policy issues were part of the larger problem of how to reduce the legitimacy deficit and obtain a mandate to govern effectively. The difficulties of legitimating power were related to: problems associated with constitutional reform and the introduction of universal suffrage; the position of the Chinese government; and the unresolved problem of changing the system in a polarised polity.

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Constitutions are intended to reflect some measure of political reality, of how the people wish to see their affairs arranged and the conditions under which they accept that a government has a legitimate right to rule. The Basic Law was never approved by the Hong Kong people. It was imposed after a drafting process, dominated by the Chinese government, which led to the entrenchment of many of the former authoritarian colonial provisions. It did, however, include two possibilities for progress towards more democratic elections. The first was that specific provisions for the election of the Chief Executive in 2007 and the Legislative Council in 2008 were to be reviewed, raising the prospect of introducing universal suffrage or, at least, a faster pace of democratic reform. In 2004, the Chinese and Hong Kong governments closed the door on this avenue for constitutional change. The government’s Task Force laid down nine conditions which had to be met before constitutional change could be considered, including taking the views of the Chinese government into consideration, doing nothing to abrogate the Chinese government’s right to appoint the Chief Executive, ensuring that any amendments to the Basic Law should strengthen the executive-led system, and that “the maturity of political talents and political groups” should be taken into account.60 This was a scarcely-disguised code for the maintenance of the status quo and of the continuing opposition of the Chinese and Hong Kong governments to any immediate increase in democratic numbers in the Legislative Council. When, in December 2005, the Chief Executive offered a sop in the form of a proportionate balanced increase in numbers in the Legislative Council, and of expanding the size of the electoral college for the Chief Executive elections, the democratic members used their votes to prevent the government from obtaining the two-thirds majority it needed to pass the amendment.61 The second possibility for constitutional reform was contained in the provisions in the Basic Law that stipulated that both the Chief Executive and the Legislative Council should ultimately be elected by universal suffrage.62 At each election since 1991, approximately 60% of the electorate have consistently voted for democratic parties who stand for the introduction of universal suffrage as soon as possible.63 There have also been street demonstrations in favour of universal suffrage, some of which have attracted hundreds of thousands of protesters. Opposition to rapid progress towards universal suffrage has come from the Hong Kong government itself, from the business-based Liberal Party, from the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) and, especially, from the Chinese government. Although both governments and all political parties now favour the eventual introduction of universal suffrage, the question of when it should be introduced and the form that it should take has been at the heart of political debate since 1997. Between September and December 2007, a critical by-election campaign was fought on Hong Kong island which focused on the democracy issue. Because it was a by- election, the entire 618,000-strong electorate on the island was entitled to vote for a single candidate, in contrast to the list proportional system, which applies at general elections, where voters select six members for the whole of Hong Kong island. The democrats billed the by-election as a referendum on universal suffrage and chose to support the former Chief Secretary for Administration, Anson Chan, as its candidate.64 The DAB

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threw its support behind Regina Ip Lau Suk-yee, the former Secretary for Security, who had been responsible for the introduction of the national security legislation under Article 23 of the Basic Law. Chan won the election by a convincing margin, receiving 55 % of the vote to Ip’s 43% on a 52 % turnout.65 In the 2008 Legislative Council elections, the democrats won 23 of the 60 seats, sufficient to retain a blocking percentage on constitutional issues. The election saw two prominent members of the Liberal Party lose their seats, weakening the government’s support and giving the legislature a slim majority of left-of-centre members. On most issues, the government continued to rely on the DAB, the remaining Liberals and independents with the democrats providing the opposition. The election did nothing to resolve the constitutional issue.66 Following his election as Chief Executive in 2007, Donald Tsang said that his foremost objectives in office would be to seek a consensus on constitutional reform. A Green Paper was issued in 200767 but gave no clear indication of how universal suffrage might be achieved, although Tsang said he was willing to accept 60% in favour of any proposal as a basis for progress.68 When he reported to the Chinese government on the response to the Green Paper, Tsang said that there was a consensus that universal suffrage should be introduced in 2017 with the Chief Executive elections to be held in advance of those for the Legislative Council, possibly in 2012 but no later than 2017.69 He warned, however, that as far as models for elections to the Legislative Council were concerned “no mainstream view could be formed at this stage.”70 By the end of December, the Standing Committee of the National People’s Congress had announced that the Chief Executive “may” be elected by universal suffrage in 2017 and that the Legislative Council “may” be elected under universal suffrage in 2020.71 The devil continues to lie in the details. The Chief Executive is currently elected by an electoral college of 800 delegates. A candidate requires the signature of one hundred delegates to be nominated. In the 2007 election, the democratic candidate, Alan Leong Kah-kit, did manage to obtain the necessary number of nominations but had no real chance of winning the elections.72 In the schemes that have been suggested by some pro- Beijing figures, the Chinese government, or a nominating committee reflecting its views, would have the final say on which candidates would be permitted to run in the Chief Executive elections. Leaving aside the Basic Law provision that the Chief Executive is appointed by the Chinese government, universal suffrage would then mean a choice between two or more Beijing-approved candidates. Similarly, elections to the Legislative Council might depend on the interpretation of what universal suffrage means. In January 2006, for example, the Constitutional Affairs Bureau produced a paper which in effect argued that universal suffrage did not mean one person, one vote.73 The Chinese government does not always appear to act in a co-ordinated manner on Hong Kong issues. Some of its views may be driven by particular factions within the government in Beijing or in the region; others may come from the Chinese government’s local Hong Kong and Macao Affairs and Ministry of Foreign Affairs Offices. On constitutional issues, however, at least publicly, the Chinese government has spoken with one voice. Its position has always been that progress towards universal suffrage should be slow and orderly. Its suspicion of the democrats dates from their support for students

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and workers during the Tiananmen Square demonstrations in 1989 and their subsequent annual commemorations of the massacre. The Chinese government has clearly indicated that it will not permit the democrats to exercise power in Hong Kong and that it will use its constitutional powers to prevent them from doing so. In early 2004, for example, when the review of the arrangements for the 2007 and 2008 elections was underway, a former mainland Basic Law drafter said that he did not expect to see universal suffrage in Hong Kong until 2030 or 2040.74 Another drafter, and former New China News Agency representative in Hong Kong, Zhou Nan, was quoted as saying that the democrats were “dangerous elements” and puppets of the British government and that only patriotic Hong Kong people should rule Hong Kong.75 The Deputy Secretary-General of the Standing Committee of the National People’s Congress, Qiao Xiaoyang, in explaining why the Committee had not changed the electoral rules, argued that over-representation of business interests was necessary to protect capitalism, that the Basic Law was not yet fully accepted by the Hong Kong people and that there were major disagreements over the implementation of universal suffrage in 2007 and 2008.76 Despite the concession of universal suffrage for the 2017 Chief Executive election and the 2020 Legislative Council elections, the Chinese government’s stance does not appear to have changed greatly since those statements were made. The conditions laid down for universal suffrage in the Chief Executive’s letter on the Green Paper on constitutional development to the Secretary of the National People’s Congress in December 2007 are essentially the Chinese government’s conditions. They include, for example, “the four principles on constitutional development, namely, meeting the interests of different sectors of society, facilitating the development of the capitalist economy, gradual and orderly progress, and being appropriate to the actual situation in Hong Kong.”77 Any one of these conditions might be used to veto future constitutional models even those which had the support of a majority of Hong Kong people. In essence, the Chinese government seeks to ensure that the government of Hong Kong remains in the hands of those whom it thinks will maintain stability and prosperity. For the present that does not include the Democratic Party although there may be room in the future for accommodation with more moderate democrats. Why did the Chief Executive propose that universal suffrage should be granted as early as 2012? Why did Chinese government, despite its misgivings, eventually concede that universal suffrage might be introduced for the 2017 and 2020 elections? When he announced the decision, the Chief Executive claimed that “the Central Government had attached great importance to the wishes of the Hong Kong people.”78 But this begs the question of why the Chinese government chose not to attach the same importance to those same views in 2004 or even earlier. A more likely explanation is contained later in the same announcement when the Chief Executive notes that: Universal suffrage has been a contentious issue ... since [the] 1980s, with diverse views among political parties and within the community. If emotional debate and conflict between political parties drags on over this matter, Hong Kong’s stability and development will be severely hampered.79

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In other words, the policy impasse will continue, there will be more street demonstrations and the electorate will become increasingly disenchanted. In the face of those problems, the promise of universal suffrage, carefully hedged to ensure that ultimate power remains with the Chinese government and its preferred appointees in Hong Kong, is a palliative designed to sooth a fractious polity and to enable policy to be formulated and implemented more easily. The task of devising constitutional arrangements broadly acceptable to the public has been devolved to the Commission on Strategic Development, a body which is as divided as the polity. There must be doubts about whether it can come up with a consensus on progress towards universal suffrage or whether the paralysis over the form of elections is set to continue.

Analysing Systemic Problems in the Public Sector

From this brief account of political system and the public sector, three major problems, spanning the colonial and post-1997 periods, may be identified: • The problem of ensuring that public officials are accountable for their actions (accountability); • The problem of formulating and implementing policies that are in the public interest (appropriate policy-making); • The problem of legitimating the use of power and of ensuring that the process of governing is undertaken with the consent of the people (legitimacy)

Each of these problems puts relationships within the public sector and between the public sector and market and society under strain. When there is a smooth working relationship between the political officeholders and bureaus and departments within the civil service, when needs can be identified and appropriate solutions devised, when policies can be formulated and implemented with the support of elected politicians, business and civil society, then government and the public sector can deliver goods and services efficiently and can respond effectively to future problems. While there were periods during colonial rule when those conditions were met, they have not applied in Hong Kong since the handover, to the detriment of public sector performance. To analyse why this has been so, we need to look at each of these problems in their wider conceptual context.

Accountability

The question of how politicians and civil servants will be held accountable for the way in which they exercise power is a central consideration in any political system. Accountability may be defined to include both the external constitutional measures and internal bureaucratic controls that are required to ensure that power is exercised legally, appropriately, and in the public interest.80 In its constitutional form — that is, the nature of the accountability of the government to the people and the types of political controls over the public sector — we need also to distinguish between answerability, the willingness

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of a government to explain its actions, and political responsibility, where a government accepts the consequences of its mistakes which may mean the resignation of ministers or even of the government itself.81 The type of political system determines the different ways in which these accountability issues are handled. In parliamentary systems, the government is accountable to the legislature and to voters who may remove it from office at the next election. Accountability for the actions of civil servants is formally vested in the minister in charge of a department who answers questions on its performance in the legislature.82 The minister is a member of the legislature and may be held responsible for the inappropriate, illegal or corrupt actions of civil servants in exercising their official functions. Under the American and in some other presidential systems, accountability is vested in cabinet ministers who are appointed by the Congress and who are required to report frequently on the performance of their bureaus and agencies.83 Each presidential and congressional election requires candidates to seek a mandate from the voters. In the Chinese system, the Communist Party is seen to represent the will of the people and thus assumes a direct political responsibility for the way in which the public sector operates. The party’s supremacy derives from its revolutionary importance as the vanguard of the proletariat and the “sole interpreter and guardian of the interests of the people and the nation” and is not dependent on legitimation through elections.84 None of these systems apply in Hong Kong. While civil servants are bureaucratically accountable for their actions through the internal hierarchy and through such external checks as the Audit Commission, the ombudsman and the Public Accounts Committee, the political accountability of the government to the Legislative Council remains weak and ill-defined.85 Principal Officials are not confirmed by the Council and, although they must answer to it, a vote of no confidence in their performance would not necessarily result in their dismissal. The government is similarly unaccountable to the people who do not vote it into office and cannot remove it. The creation of the Principal Officials Accountability System did not resolve these problems and relationships between government and the legislature and between the government and the public consequently represent major hurdles in devising new policies, delivering goods and services, and establishing regulatory processes and institutions.

Appropriate Policy-making

Policy formulation and implementation is a fundamental concern in any system of public administration. Policy choices represent the priorities which government accords to problems and to the opportunities which it wishes to pursue. If those choices are made with only passing reference to the demands of the people, then the government is likely to be accused of insensitivity to their needs and perhaps may also encounter opposition at the implementation stage. Policy choices are always difficult to make. They become even more difficult when financial resources are stretched, when there is vocal opposition to the direction which the government has chosen, and when that opposition is related to governance or legitimacy questions.

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Because all of these issues were relevant in post-1997 Hong Kong, the government suffered from weakened policy capacity, especially after the July 2003 demonstration.86 It was making policy “without a thorough grasp of the circumstances”87 because Principal Officials were encouraged to cut through the Gordian knot of accumulated problems without, sometimes, the prudent costing that had characterised policy-making under its colonial predecessor. If the colonial government had often underestimated its capacity to introduce new policies,88 the Special Administrative Region government, in more difficult circumstances, very often over-estimated its ability to do so. The consequent policy failures undermined its credibility and resulted in a situation in which the government was reluctant to introduce new policies for fear of further failure.89 Policy problems increased in an atmosphere of rising discontent.

Legitimacy

For the exercise of power to be fully legitimate, three conditions are required: conformity to established rules; the justifiability of laws by reference to the shared beliefs of rulers and ruled; and the express consent of subordinates to the particular power relationship in which they are involved.90 It follows that if these conditions are absent, the way in which power is exercised is, to a greater or lesser degree, compromised. Constant and widespread friction between a government and its people may be symptomatic of more intractable difficulties than simple discontent with particular policies. Because people have multiple roles in life, it is quite conceivable that any individual or group may be dissatisfied or disadvantaged by a specific policy decision but may benefit from government action on another issue. In many political systems, these compensatory rewards even up the policy ledger and serve to relieve pressure on the government. If this does not happen, or if the policy issue assumes such significance that compensatory rewards are unimportant, there may be constitutional remedies to rectify the situation. In democratic systems, for example, the government may be removed at the next election. In more authoritarian systems, such as Hong Kong, where the government is not elected, cannot be removed, and has no mandate from the population, discontent with policy may be coupled with, or become representative of, more systemic problems. If citizens do not hold that the system of power relationships under which they live is legally valid and morally justifiable and if they give no indication of their consent to that relationship, then the regime will suffer from a legitimacy deficit. If it does nothing to correct or reduce that deficit, then it could be faced with a crisis of legitimacy in which its authority to rule is called into question. In the absence of elections that could change the government, or any other means of legitimation, the Hong Kong government, both before and after 1997, has been faced with the need to reduce the legitimacy deficit. Tung Chee-hwa was confronted with the problem that many of his options were precluded by the severe economic difficulties which Hong Kong was then experiencing. His problems were compounded by ill-advised policy initiatives and perceived threats to civil liberties which called his authority into question. His successor was fortunate enough to experience an economic recovery in

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his first three years in office. But the legitimacy problem remains. The constitution does not enable the government to demonstrate that it has the consent of the people and an unquestioned mandate to govern. The government has yet to show that it has the capacity to make policy in ways that resolve contentious problems. And the pace of democratic reform continues to divide the polity. Each of these related problem areas –– accountability, policy formulation and implementation and legitimacy –– represents a major challenge for the public sector and helps to explain why the post-1997 system has operated with reduced policy capacity and conflictual relationships between political institutions and with the public. Those problems and attempts to resolve them provide a framework for the remainder of this book. In Part 1 (Chapters 2 and 3), we consider issues relating to the political accountability of public officials: the constitutional and legal framework, the effect of the introduction of the Principal Officials Accountability System, and the political system established under the Basic Law. In Part 2 (Chapters 4–6), we focus on bureaucratic accountability, the values and structure of the civil service, reform initiatives, public sector organisations outside the civil service, and the problems which government and public sector organisations have faced. In Part 3 (Chapters 6–9), we analyse the policy-making system. These chapters focus on the budgetary process and policy formulation, the policy process in its political context and policy implementation. In Part 4 (Chapters 10–12), we focus on the relationship between government and the people and on attempts to reduce the legitimacy deficit by creating a more responsive civil service and establishing organisations designed to protect civil liberties and to redress grievances. The book concludes with an evaluation of the prospects for resolving the current difficulties which the public sector faces and some suggestions for reform.

ch.01(p.1-22).indd 22 11/4/09 3:03:41 PM Part I The Constitution and Political Accountability

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onstitutions are definitive, legally-binding accounts of the rules and principles that govern polities. They describe the powers and functions of the major executive, Clegislative, judicial and administrative institutions and delineate relationships between them. They provide the authority for the decisions of the government and help to legitimate the way in which power is exercised. They often specify how government is to be controlled and the mechanisms through which the executive authorities are to be held accountable by the legislature and by the people. They may reflect the aspirations and values of the people and help to protect their civil liberties from possible encroachments by the state. While Hong Kong’s Basic Law contains most of the features of a constitution, it also has three peculiar characteristics resulting from the resumption of Chinese sovereignty and from the legacy of the colonial political order. First, a constitution normally implies sovereignty, that is, it assumes that the ultimate source of legal authority is vested in the jurisdiction that is being described and that the powers of the political and administrative institutions which compose the state are not constrained by any external body. Since Hong Kong is part of China, however, sovereignty rests with the Chinese state and the ultimate source of formal legal authority is the constitution of the People’s Republic rather than the Basic Law. The Basic Law does specify that the political arrangements that apply in Hong Kong will be distinctly different from the rest of China and that it will enjoy “a high degree of autonomy.” But power is not entirely vested, as it would be in a sovereign state, in the Hong Kong authorities. The government of the People’s Republic of China (PRC) retains responsibility for foreign affairs, defence and, most importantly, the right to interpret and amend the Basic Law which, as Ghai notes, “... is not simply about the meaning of laws but about power relationships...about control not autonomy...”1 There are aspects of the relationship between the central government and the Hong Kong Special Administrative Region (HKSAR) which have yet to be made clear and which are a consequence of the establishment of a supposedly highly autonomous entity within a unitary system. Thus, while the Basic Law may be regarded as an authoritative, formal description of the way in which domestic institutions are expected to work, there are also certain restrictions within it on the evolution of political

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institutions which reflect the interests of the sovereign power and its views on how the polity should be run.2 Second, the Basic Law is fundamentally different, in a formal constitutional sense, from the colonial political order which it replaced. The colonial constitution was largely unwritten. Legal authority stemmed from the Royal Instructions and the Letters Patent, supplemented by unwritten conventions, some of them binding, some of them not. The interpretation of those conventions by the executive authorities in Britain and Hong Kong and by the courts enabled quite significant constitutional changes to be made without major amendments to the written constitutional documents. Conventions generally tend to develop over time in response to changing circumstances. The Basic Law, by contrast, is a written constitution which has only been in force for a short period of time. As a young constitution, with many of its central provisions still to be fully interpreted in the courts or by the Standing Committee of the National People’s Congress, it could still develop in surprising and unexpected directions. In the many constitutional disputes that have occurred since 1997, the different interpretations of the Basic Law reflect deep disagreements over Hong Kong’s political arrangements. While such divisions exist, there is no reason to suppose that many other provisions will be any less controversial when they are subject to interpretation. As Thynne remarks, the Basic Law creates “but a framework within which understandings, relationships, various courses of action, and so on, will have to be forged, justified and maintained through an ongoing process of political debate and manoeuvring.”3 Third, although there were fundamental differences in form between the largely unwritten colonial constitution and the written Basic Law, there was considerable continuity in the way in which the central institutions of government were expected to perform. The drafters of the Basic Law deliberately drew on the central features of colonial rule in constructing the new political order. Xu Jiatun, the Chinese government’s representative in Hong Kong in the 1980s, argued, for example, that “when we are designing the Basic Law…we ought to place emphasis…and utilise the British system of administration.”4 The Basic Law drafters were particularly attracted to the centralisation of power in the hands of the executive authorities; a weak and, until 1985, entirely unelected Legislative Council; and the informal, but nonetheless significant, participation of business and professional elites in the exercise of power. The Chinese government was understandably anxious to promote political stability in Hong Kong after 1997 and colonial practice seemed to offer a successful model. But what the drafters of the Basic Law took from the colonial constitution was its pre-1984 legacy. They largely ignored the political effects of the transition to Chinese sovereignty and the economic effects of increasing affluence on the aspirations of the population, in particular, demands for a more democratic and representative government. The Basic Law centralised power in the office of the Chief Executive; the Legislative Council remained weak; and functional constituencies, disproportionately favouring business and professional elites, became an entrenched feature of the electoral system.5 In this chapter, we are particularly concerned with the degree to which the Basic Law establishes a framework for political accountability — that is, the extent to which

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the government is held accountable for its actions — and whether it provides legitimate authority for the exercise of power. We are also concerned with the question of whether the Basic Law accurately describes the way in which the political and administrative system actually operates. Is the relationship between the various institutions adequately and clearly described? How appropriate are their powers? How well does the Basic Law protect civil liberties? What do the controversies over its interpretation and implementation of the Basic Law tell us about the political system? What problems have occurred in implementing the Basic Law?

The Basic Law

The Basic Law was drafted with the provisions of the Sino-British Joint Declaration of 1984 in mind. The preamble notes that the Chinese government’s basic policies on Hong Kong have been elaborated in the Joint Declaration and that these include the principle of “one country, two systems” and that the socialist system and policies, other than those relating to defence and foreign affairs, will not be practised in the HKSAR where the “previous capitalist system and lifestyle shall remain unchanged for 50 years.”6 In addition, specific provisions concerning the rights of citizens, the legal system, the economy, education, science, culture, sports, religion, labour and social services closely followed the wording of the Joint Declaration. What had not been agreed between the British and Chinese governments — and what was to become a continuing subject of controversy — were the provisions governing the central political institutions and the pace at which, if at all, representative government would be introduced. The Chinese government’s policies on the Chief Executive, the Principal Officials and the election of the Legislative Council are outlined in a single brief paragraph in the Joint Declaration and say little except that only local inhabitants may hold office, that the Chief Executive may be selected or elected and appointed by the Central People’s government, and that the Legislative Council should be constituted by elections.7 The political vacuum created by the absence of firm guiding principles on the composition, powers and functions of the central institutions in the Joint Declaration left open the possibility that the Basic Law might eventually lead to a more democratic Hong Kong. The Chinese government had promised a future in which “Hong Kong people would rule Hong Kong.” There was some expectation that this would necessarily entail the introduction of more democratic processes to allow choice about whom those rulers would be. But the consultation process quickly dashed that hope. The Chinese government set up two committees to help draft the Basic Law. The first, the Basic Law Drafting Committee (BLDC), had primary responsibility for the production of the document. The BLDC was composed largely of mainland drafters and conservative Hong Kong political figures. The 59 members were primarily drawn from the mainland although 23 did come from Hong Kong. Of those, only two, Martin Lee Chu-ming and Szeto Wah, were democrats, but both resigned from the Committee, and then were subsequently expelled by it, after they expressed support for the students and workers in the Tiananmen Square demonstrations in 1989. A second committee, the Consultative

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Committee, was supposed to feed the views of Hong Kong people into the drafting process. But it soon became clear that the Committee had little power, was controlled by the Chinese drafters, was not representative of public opinion, and was intended to serve simply as a means of legitimating and endorsing the decisions of the BLDC.8 The Basic Law was promulgated in 1990 without a referendum or any other form of ratification to determine whether it was acceptable to the Hong Kong people. The Chinese government took the view that Hong Kong people were Chinese, that Hong Kong was Chinese territory, that sufficient consultation had taken place and that the National People’s Congress had the authority to pass the legislation. The British government did not insist on any form of popular endorsement, preferring instead to try to modify Chinese views behind the scenes and to avoid possible further difficulties during the transitional period. The consequence was that the future political arrangements began life with two very serious impediments: they had not received the approval of the Hong Kong people and they were based on practices that, even in 1990, let alone 1997, were outdated and inappropriate for an increasingly participative and highly political society. The polity, like its colonial predecessor, was to be “executive-led” with considerable powers vested in the Chief Executive. Unlike the Governor, however, the Chief Executive could either be elected or selected. The first Chief Executive was in fact elected by a carefully selected electoral college of 800.9 Article 45 notes that the aim is ultimately to select the Chief Executive by universal suffrage “upon nomination by a broadly representative nominating committee in accordance with democratic procedures.” The definition of “democratic” in this context is critical since the committee probably would not put forward candidates unacceptable to the Chinese government. Even if it did, the Chinese government, under Article 45, has the power to appoint the Chief Executive and need not appoint a candidate even if he or she does receive a majority of the votes cast. The election of the Chief Executive became increasingly contentious after 2002 when, despite his widespread unpopularity, Tung Chee-hwa was returned unopposed. In the following year, a Democratic Party Legislative Councillor, Albert Ho Chun-yan, proposed that the Basic Law should be amended to allow the Chief Executive and all members of the Legislative Council to be elected by universal suffrage but the motion was defeated by the functional constituency members.10 The failure to make progress towards electing the Chief Executive by universal suffrage led to the creation of the Article 45 Concern Group, professionals with seats in the Legislative Council, who sought the early implementation of the electoral provision and who eventually became core members of the Civic Party which emerged from the Group.11 Additional pressure to enact the provision had little immediate impact on either the Chinese or Hong Kong governments. In April 2004, the Standing Committee rejected calls for the Chief Executive to be elected by universal suffrage in 2007.12 In December 2005, a Hong Kong government proposal to double the size of the electoral college from 800 to 1600 was rejected by the Legislative Council as inadequate.13 Despite these setbacks in progress towards universal suffrage, the 2007 election for the Chief Executive did result in a contest with both candidates campaigning on policy

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platforms, holding debates and seeking to mobilise support as much, it seemed, among the public as among the 800 members of the electoral college.14 Although the result was never in doubt, and although even a popular election would probably have resulted in the Chinese government’s preferred candidate, Donald Tsang, continuing in office, the public response to the election showed a level of participation and enthusiasm which reflected majority support for the view that the Chief Executive should be elected by universal suffrage as soon as possible. In December 2007, the Chinese government’s eventually conceded that the Chief Executive might be elected by universal suffrage in 201715 although there were still concerns that the nomination process might be used to exclude candidates whom it found to be undesirable. The difficulty has been that the Chinese government does not see the Chief Executive as the representative of the Hong Kong people. Rather, just as the Governor was the representative of the British Crown, the Chinese government regards the Chief Executive as its appointee in charge of Hong Kong affairs. He is consequently armed with most of the autocratic powers previously vested in the Governor. The Chief Executive has the power, under Article 48 of the Basic Law, to decide on government policies and to issue executive orders; to sign bills passed by the Legislative Council; to nominate the Principal Officials for appointment by the Chinese government; to appoint and remove judges of courts at all levels; to appoint or remove the holders of public office in accordance with legal procedures; to implement directives from the Chinese government in matters provided for in the Basic Law; to conduct permitted external affairs on behalf of the HKSAR and as authorized by the central authorities; to approve the introduction of motions regarding revenues and expenditure to the Legislative Council; to decide whether government officials should testify or give evidence to legislative committees in the light of security and the vital public interests of the SAR; to handle petitions and complaints and to grant pardons. The Chief Executive may also return bills to the Legislative Council for further consideration (Article 49) and may dissolve the Legislative Council if he refuses to sign a bill passed a second time by the Legislative Council or if the Legislative Council refuses to pass the budget or other important government legislation (Article 50). These are formidable powers which are not restricted, to any great extent, by the powers granted to the Executive and Legislative Councils and do not, in practice, make the Chief Executive accountable to any body other than the Chinese government. The Executive Council, which is appointed by the Chief Executive, is simply described as “an organ for assisting the Chief Executive in policy-making” (Article 54). The Chief Executive must consult it “before making important policy decisions, introducing bills to the Legislative Council, making subordinate legislation or dissolving the Legislative Council” (Article 56) but is under no obligation to follow its advice. The Chief Executive is accountable to the “Central People’s Government and the Hong Kong Special Administrative Region” (Article 43). But it has never been clear what is meant by the Hong Kong Special Administrative Region in this context. It cannot be the government since the Chief Executive is head of the government. Nor can it be the Legislative Council since it does not have the power to hold the office accountable

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(although the government is supposedly accountable to the Council under Article 64). Nor to the people of Hong Kong since they do not at present have the right to vote for the Chief Executive. Political accountability is about the ways in which a government’s powers, and by implication those of the Chief Executive, can be regulated or checked in the interest of protecting the citizen from the arbitrary exercise of power by the state.16 Constitutional conventions have yet to emerge to modify the formal powers of the Chief Executive. It might be argued, however, that, given the strength of civil society and the Legislative Council’s ability to publicise potential threats to liberties or arbitrary government action, the Chief Executive would be unwise to exercise to their fullest extent the potentially autocratic powers granted by the Basic Law. To remove the Chief Executive from office, without the support of the Chinese government, is virtually impossible. He may only be removed if he is unable to discharge his duties, or, if after the dissolution of the Legislative Council by the Chief Executive, it passes the same bill again with a two-thirds majority or, if after dissolution because it refused to pass the budget, it still refuses to pass the budget (Article 52). The Legislative Council may pass a motion charging the Chief Executive with breach of law or dereliction of duty, charges which are then investigated by an independent committee set up by the Chief Justice. If there is sufficient evidence to support the charge, the Chief Executive may be impeached if there is a two-thirds majority in support of the motion (Article 73). Such situations are highly unlikely to arise and would probably trigger overt or covert action by the Chinese government. The Chinese government has a number of powers which could be interpreted as a right to remove a Chief Executive if it chose to exercise them. The Secretary of Constitutional Affairs has taken the view that, although there was no explicit mention in the Basic Law of the Chinese government’s right to remove a Chief Executive, “it can be reasonably deduced that the Central People’s Government can remove the Chief Executive from office in accordance with certain provisions of the Basic Law.”17 The clause that the Secretary had in mind was Article 73(9) which provides that the removal of a Chief Executive must be reported to the Chinese government “for decision.” Despite the opposition of some members of the Legislative Council, who claimed that the government was amending the Basic Law, the Chief Executive Election Ordinance of 2001 contained a clause which further strengthened the role of the Chinese government by specifying that it may remove the Chief Executive in accordance with the provisions of the Basic Law.18 For all practical intents and purposes, then, the Chinese government is the only body that can remove a Chief Executive. In most constitutions, power is formally lodged in the executive or in the legislature or in some distribution of power between the executive, legislature and other institutions such as the judiciary. Since the Basic Law essentially establishes an “executive-led” system, it follows that the powers of the Legislative Council are relatively weak in relation to the executive. The drafters of the Basic Law sought both to dampen political participation so that popular sovereignty could not easily be expressed through the legislature and to reduce the powers of the Council to prevent its development as a counterpoint to the authority of the executive. Although Article 68 re-iterates the Joint

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Declaration provision that the Legislative Council shall be constituted by election and specifies that “the ultimate aim is the election of all the members of the Legislative Council by universal suffrage”, no timetable is set in the Basic Law for when this might be achieved. The decision in December 2007 that elections by universal suffrage “may” be permitted in 2020 will mean that the Basic Law will have to be amended. It is not yet clear, however, how the words “universal suffrage” will be interpreted which could mean that functional constituency seats could continue to survive. Since 1991, when directly elected seats were introduced, the electoral support for parties in favour of rapid progress towards universal suffrage has been sufficiently strong that they would have won a majority in the Legislative Council if elections had been held on a “first-past-the post” system. As it is, the electoral arrangements in the Basic Law, and as subsequently promulgated by the Provisional Legislative Council, are designed to allow for the election of enough conservative, pro-China members to provide majority support for the government in the Legislative Council. Elections for directly elected seats take place under a proportional, multi-member list system, which increases the chance of a party or individual winning a seat with a low percentage of the vote, while the functional constituency seats have many business and professional members, who tend to support the government and are often returned unopposed by very small electorates (see Table 2.1).19

Table 2.1 Composition of the Legislative Council, 1991–2008 Year Officials Appointed Directly- Functional Election Total elected Constituencies Committee 1991 3 18 18 21 – 60 1995 – – 20 30 10 60 1998 – – 20 30 10 60 2000 – – 24 30 6 60 2004 – – 30 30 – 60 2008 – – 30 30 – 60 Sources: Ian Scott, “Party Politics and Elections in Transitional Hong Kong,” Asian Journal of Political Science 4(1), (1996),133; The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, 1990 (Hong Kong: The Consultative Committee for the Basic Law, April 1990), Annex II. Notes: 1. The Governor was President of the Council (and a fourth official) until 1992. 2. The Legislative Council will not be entirely directly-elected until 2020 at the earliest. The ratio of directly-elected to functional constituencies in the interim and whether or not functional constituencies will be retained in some form even after 2020 has yet to be determined.

The powers of the Legislative Council are also restricted by the Basic Law. Article 64 does specify that the government is accountable to the Legislative Council but it is a very weak form of accountability. The government shall “present regular policy addresses to the Council; it shall answer questions raised by members of the Council; and it shall

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obtain approval from the Council for taxation and public expenditure”. The Council can “examine and approve” the budget (Article 73) but risks dissolution and elections if it is not passed. The intention of the Basic Law is to create a debating chamber which will dutifully endorse the bills brought before it by the government. Bills introduced by the government require a simple majority to pass whereas motions, bills or amendments to government bills introduced by Councillors require a majority of each of two groups of members, those from the geographical constituencies and those from the functional constituencies (Annex II). The provisions concerning the other central institutions, the judiciary and the public service, followed those prescribed in the Joint Declaration. Save for the issue of the Court of Final Appeal, which remained unresolved until 1995, the judicial system was intended to function as it had before 1997 (Article 81). Judges were to be appointed by the Chief Executive on advice from an independent commission (Article 88) and could only be removed by the Chief Executive on advice from a tribunal of not less than three local judges. The civil service, too, was expected to maintain its past powers and functions. In 1995, the Preliminary Working Committee (PWC), which was responsible for overseeing the transition from the Chinese side, released their working paper on the civil service, the only one of 26 such papers that was made public. The paper essentially committed the Chinese government to an unchanged civil service. It noted that: The Chinese government attaches great importance to the stability of the Hong Kong civil service before and after 1997 and considers this to be vital to the smooth handover of sovereignty and the smooth transition. It regards Hong Kong’s 180,000 civil servants as a huge wealth, a source of strength for the realization of “Hong Kong people governing Hong Kong” after 1997.20

The Committee followed the Basic Law on issues of recruitment, management and conditions of service but added the provisions that those who wanted to leave should submit their resignations as soon as possible, that public servants would not in future be held responsible for their decisions under the colonial government and that the principle of political neutrality would continue to be observed.21 The British government also wanted to see stability and to exit Hong Kong in as dignified a manner as possible and the civil service was clearly the key institution that would enable it to do so. Both sides consequently gave public support to the civil service, lauding its efficiency and stressing that it would continue to function as it had in the past. The Basic Law makes specific mention that “public servants … including the police department … may all remain in employment and retain their seniority with pay, allowances, benefits and conditions of service no less favourable than before”(Article 100). There were concerns about a possible exodus of senior police officers, many of whom were expatriates, during the transitional period. Expatriates are prevented from holding the most senior positions in the civil service which are reserved for Chinese nationals with no right of abode in a foreign country. Under Article 103, the management of the civil service, recruitment on grounds of merit, conditions of employment,

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assessment, discipline and pay and conditions of service remain unchanged. Shortly after the handover, the government introduced the Public Service (Administration) Order which gives the Chief Executive authority over appointment procedures, dismissals, suspensions and discipline. The Order drew on the colonial civil service regulations but was subsequently further amended in 2000 to better reflect new public sector reform measures. The Basic Law seeks to centralise power and to establish a government which, in the somewhat contradictory words of Article 12, “shall enjoy a high degree of autonomy and come directly under the Central People’s Government.” The Basic Law does provide some protection for civil liberties, the capitalist economic system and the rule of law but it is also singularly deficient in many constitutional and political respects. In the following section, we examine these deficiencies and the impact that they have had on Hong Kong’s political system.

Deficiencies in the Basic Law

There are three critical respects in which the Basic Law is deficient. The first is that it suffers from a lack of legitimacy because it was largely drafted by mainland Chinese officials and academics and was never subsequently approved by the people of Hong Kong. Second, the way in which political institutions are defined in the Basic Law has contributed, unintentionally, to the creation of a disarticulated and dysfunctional political system. Third, some of the specific provisions of the Basic Law have proved to be problematic and have increased the regime’s legitimacy difficulties. In particular, the interpretation of the clauses relating to right of abode and the attempt to introduce national security legislation under Article 23, have shown that there is widespread opposition to some of its constitutional provisions. We examine the effects of each of these deficiencies in turn.

The Problem of Legitimacy

Because the Basic Law was introduced without the consent of the people and did not entirely reflect their beliefs, it has become a matter of debate and controversy rather than an unchallenged source of authoritative decisions.22 As one senior Chinese government official has noted, “[t]here has not been a single day in which it [the Basic Law] has not been subject to queries, distortions and even vilifications...”23 The “queries, distortions and vilifications” are symptomatic of a legitimacy deficit and reflect deep- seated differences over the way in which power is exercised. The failure to legitimate the political system means that it does not function efficiently. The major institutions do not work in the unified, “executive-led” manner which the Basic Law presumes. As far as policy is concerned, the informal relationship between the government and civil society organisations is often more important than that between the government and the formal institutions. And, since the government’s relationship with civil society is frequently conflictual and sometimes hostile, the government’s ability to make and implement policy is greatly constrained.

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The weakness of the Legislative Council and of political parties is a consequence of the deliberate efforts of the Chinese and Hong Kong governments to reduce their power.24 If, as a result, the political institutions are not regarded as legitimate, it is scarcely surprising that public demands are expressed through informal channels. The rise of civil society may be attributed, in part, to the failure of the Basic Law to provide sufficiently for the articulation and resolution of those demands. The Chinese government’s adamant refusal to amend the Basic Law has meant that political reality has continued to diverge further from the constitutional description of the political order.

A Disarticulated System

The drafters of the Basic Law wanted a system which would enable the political executive to make policy and to ensure that their intentions were implemented. Although the system was intended to be unified and centralised, it quickly became disarticulated, that is, the principal institutions began to function separately, in an uncoordinated fashion, and not always harmoniously. The drafters of the Basic Law had no intention to set up a system of checks and balances; the system was supposed to be “executive-led” and the other institutions were expected to remain subordinate to the executive. Although Tung Chee-hwa sought to address the political, as opposed to the constitutional, weakness in his position as Chief Executive by introducing the Principal Officials Accountability System, there remained a fragmented policy-making environment which frequently resulted in unsatisfactory compromises, changes in direction and retractions, and poor implementation. One important unintentional weakness in the Basic Law is that the relationships between the central institutions are inadequately described and that they can function within their prescribed powers without necessarily interacting in a coherent and unified way. For example, it is not incumbent upon senior civil servants to attend the Legislative Council. They might be required to do so under the Legislative Council Powers and Privileges Ordinance but this would involve a cumbersome procedure. Immediately after 1997, senior civil servants were less diligent in providing members of the Council with information on bills or appearing in person, partly, it seems, because they felt that they were afforded some protection against undue legislative interference in policy-making by the Basic Law. Legislative Councillors of all political persuasions complained that they were insufficiently informed of the government’s legislative programme and that the government seemed not only unaccountable but also unconcerned that the Council’s power to review proposed legislation might be contravened.25 For their part, civil servants were concerned that the Chief Executive and the Executive Council and latterly the Principal Officials often seemed to have different policy agendas from those which had been presented to the legislature or in the policy addresses. Carefully formulated proposals were often nullified by ill-considered alternatives or vetoes. Some of these unintended consequences were caused as much by the way in which post-1997 politics developed as they were by the lack of specific provisions in the Basic Law governing relationships between the central institutions. But the absence of those

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provisions meant that there were uncertain areas in resolving differences between the executive authorities, which gave the public an image of a government at war within itself. Other institutions, such as the Legislative Council, essentially became alternative power bases, whose members often had very different agendas from that of the government. The reality of politics and constitutional practice in post-1997 Hong Kong is consequently light years away from the model on which it was based, an unreformed pre-1984 colonial constitution with centralised and unified power in which an omniscient government beneficially provided for a grateful population. The Basic Law was intentionally designed to discourage the development of political parties.26 In the transitional period, the Chinese government placed particular emphasis on its relationship with Hong Kong’s business and professional elites. It remained hostile to democratic groups and parties, especially after the Tiananmen Square massacre, probably viewing political parties as a focal point for popular discontent. In 1992, however, the Chinese government did sanction the creation of the Democratic Alliance for Betterment of Hong Kong (DAB) which brought together leftist organisations such as the Federation of Trade Unions and which sought to pose a challenge to the electoral dominance of the democrats in the directly elected seats to the legislature. Despite finding favour with Beijing, when Tung Chee-hwa selected his post-1997 Executive Council, only one member of the party was chosen. There is no requirement in the Basic Law that Executive Councillors or Principal Officials should be drawn from political parties and neither Tung nor the Chinese government appeared to want to breathe life into them by creating an avenue of access to the decision-making process. The failure to do so led to serious problems in securing Tung’s position in the Legislative Council.27 Although the electoral system meant that a majority of members generally supported the government, there was no government party in the Council which could ensure that the executive’s legislative programmes would always be approved. The Basic Law does not take into account the possibility that the Legislative Council might be consistently opposed to the Chief Executive’s policies except insofar as it provides the Chief Executive with the power of dissolution. If the Chief Executive resorted to dissolution before the term of the legislature expired, clearly a constitutional crisis would have already resulted and would likely continue.28 Relationships between the government and the Legislative Council have improved since their nadir in 1998 and 1999. In July 2002, when Tung Chee-hwa was re-elected unopposed, leading figures from the Liberal Party and the DAB were appointed to the Executive Council. His successor, Donald Tsang, went further and appointed a prominent former Democratic Party leader, Anthony Cheung Bing-leung, to the Council. The interaction between the executive and the legislature has also become more institutionalised and friction over the government’s poor briefing of Councillors has been reduced. Nonetheless, the system still does not work entirely as the drafters of the Basic Law intended. The Legislative Council has expanded its powers to their fullest, if still limited, extent under the Basic Law while the Chief Executive has never been able to exercise all of his formidable powers. A Chief Executive who was elected under universal suffrage and who was the choice of the people would be in a much stronger

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position in relation to both the Legislative Council and civil society organisations but that cannot happen until 2017 at the earliest. The intention of the Basic Law to reduce the influence of political parties has had major consequences for the way in which demands are expressed. If parties are powerless to bring about change, their utility rapidly diminishes and people will look elsewhere to express their views. This helps to explain the rise of civil society in Hong Kong and the emergence of many different interest groups — often fragmented, sometimes opposed to each other — but also, as the demonstration of 1 July 2003 showed, often able to work together in coalitions outside the formal political institutions. The rapid increase in pressure groups and the inadequacy of parties as a means of articulating demands has institutionalized the street protest as a way of voicing grievances. The restricted role of political parties has helped to contribute to the disarticulation of the system. Parties have been faced with the difficult task of establishing their positions after pressure groups had expressed their opposition to particular government measures. In some instances, such as the movement to stop the government’s reclamation of part of the harbour, parties were even forced to reverse their previous support for the government and side instead with the pressure group.29 When this occurs, pressure groups are serving notice on government that they can, under some circumstances, veto approved government policies. This means that government can never be entirely certain that a group might not emerge from outside the known political universe, gather popular support, organise demonstrations, and eventually force the government to retract or modify its original position. The government has been not able to devise appropriate, accurate or credible consultative mechanisms to assess views and aggregate demands. The consequence has been that policy sometimes appears to be made with little knowledge of the political realities of implementation.

The Interpretation of the Basic Law

The difficulty of working within the formal provisions of the Basic Law, the politics of making laws and regulations under the system, and the problems of legitimacy which have ensued are well illustrated by the controversies that arose over the interpretation of the clauses in the Basic Law relating to right of abode and national security. The attempt to introduce national security legislation, in particular, became a defining moment in Hong Kong’s political development, one which increased political consciousness, generated deep emotions and galvanised enormous support for a cause.30 When a constitution lacks legitimacy, issues which might otherwise be easily resolved take on a wider and deeper political significance with a mobilisation of forces on both sides of the argument. The legitimacy of the constitution itself becomes part of the controversy.

Right of Abode Article 24 (3) of the Basic Law provides that persons of Chinese nationality born outside Hong Kong to a Chinese citizen born in Hong Kong or resident in the territory for not

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less than seven years are entitled to become permanent residents of the SAR. Although the number who might exercise this right was not known, the prospect of a flood of new migrants from the mainland after 1997 was sufficient to raise official concern. Consequently, one of the first acts of the Provisional Legislative Council (PLC) was to pass legislation requiring any eligible offspring to obtain certificates outside Hong Kong entitling them to immigrate to the SAR. By this means, the government thought that it would be able to control the influx administratively and presumably reduce its potentially detrimental impact on government expenditure and social services. The issue initially, then, was focused on the question of whether the right of abode was an absolute right under the Basic Law or whether it might be qualified by administrative decisions on whether a certificate of entitlement should be granted. When the legislation was appealed in the courts, the issue soon acquired much wider constitutional significance. In the Court of First Instance, the judges ruled that any Chinese-born offspring of a Hong Kong person had an automatic right of abode under the Basic Law. This was subsequently modified by the Court of Appeal, which found that the right of abode only existed if the parent was a permanent resident of Hong Kong. In January 1999, however, when the issue reached the Court of Final Appeal (CFA) in the case of Ng Ka-ling v Director of Immigration, the judges unanimously decreed that children in China, who were born to permanent residents, had right of abode. In the course of the judgement, the Court felt obliged to state its views on its own constitutional position, on the right of Chinese political institutions to interpret Hong Kong law, and on the legality of the PLC. The Court saw its role as “acting as a constitutional check on the executive and legislative branches of government to ensure that they act in accordance with the Basic Law.”31 And then it went further: … laws which are inconsistent with the Basic Law are of no effect and are invalid. Under it, the courts of the Region have independent judicial power within the high degree of autonomy conferred upon the Region…. It is for the courts of the Region to determine whether an act of the National People’s Congress or its Standing Committee is inconsistent with the Basic Law, subject of course to the provision of the Basic Law itself.32

Just over a week after the CFA had released its judgement, four mainland legal scholars who had been involved in drafting the Basic Law issued a statement attacking its decision. Since the New China News Agency published their statement, it was taken to represent the official position of the Chinese government. They argued that the starting point of the “one country, two systems” concept was that of “one country” and that it followed that, since the National People’s Congress (NPC) was the institution with the highest authority in the country, its Standing Committee, not the CFA, had the right to interpret whether the laws of Hong Kong were consistent with the Basic Law.33 The Hong Kong government itself then sought a clarification from the Court because, as its counsel argued, there was some concern that the Court was setting itself above the sovereign.34 The Court then retreated from its previous position, claiming that it did not question the authority of the Standing Committee of the NPC under Article 158

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of the Basic Law, a provision that states, quite unequivocally, that the power to interpret the Basic Law rests with the Standing Committee. These developments opened the way for an appeal from the government to the Standing Committee against the Court’s original decision. In April 1999, the government produced figures estimating that the numbers seeking right of abode might be as high as 1.67 million and, in May, the Executive Council announced that it would appeal the decision.35 The Standing Committee then declared that mainland children who were born after their parents became permanent residents of Hong Kong had no right of abode and that certificates of entitlement to emigrate were valid requirements. The right of abode issue festered on with further court cases and sometimes violent demonstrations. In 2002, a majority of the 5,000 right of abode seekers lost their claims.36 How was the outcome interpreted? There were two viewpoints. The Chief Executive maintained that the Standing Committee’s decision was “entirely legal and constitutional” and that the rule of law would never be compromised.37 His future Secretary for Constitutional Affairs, Stephen Lam Sui-lung, argued that the original CFA decision had been respected, that several thousand claimants had been allowed to remain, and that the SAR’s “high degree of autonomy” under the Basic Law had not been placed in jeopardy by the government’s decision to refer the case to the Standing Committee.38 Academics, too, have argued that the constitutional principles enshrining Hong Kong’s autonomy have been upheld.39 On the other side of the argument, the view is that the government seriously compromised Hong Kong’s autonomy and that it subverted the legal system. The Chairman of the Bar Association, for example, argued that the “political will of the government has prevailed over due process” and that “any CFA decision is only final if the government wants it to be.”40 Academics have also queried whether the legal system can withstand the kind of pressures that it has faced, not only from the right of abode issue but from other cases where the government failed to prosecute or otherwise seemed to take a cavalier attitude towards due process.41 The right of abode issue was about much more than the question of whether Chinese- born children of Hong Kong residents should be allowed to stay in the SAR. It brought to a head concerns about the rule of law and sparked debate over the government’s action. It weakened the political and judicial institutions, calling into question the legality of the PLC and the powers of the CFA. And it heightened fears that the high degree of autonomy that Hong Kong was supposed to enjoy after 1997 would be eroded by the two governments. Each of these developments had serious consequences for regime legitimacy. They reduced the credibility of the institutional framework because of the evident conflict between the government and judiciary and they increased the tension between the beliefs of the people about the importance of the rule of law and the independence of the judiciary, on the one hand, and the actions of the government, on the other.

Article 23 of the Basic Law Scarcely had the dust settled on the right of abode issue than the government decided to introduce legislation to deal with subversion, treason, sedition and the theft of state

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secrets under Article 23 of the Basic Law. During the first Tung Chee-hwa administration, the government had received some credit for the fact that it had not moved to implement the provisions of Article 23. But soon after the second administration came to office, it announced that new legislation would be introduced. In September 2002, the Executive Council approved the release of a consultation paper which set out the government’s proposals.42 It was speculated that the timing of the decision to legislate reflected pressure from the Chinese government who were particularly concerned that the Falun Gong, whom it regarded as subversive, was not proscribed in Hong Kong. Predictably, there was strong support for the proposed legislation from senior Chinese government ministers and from united front groups in Hong Kong.43 Equally predictably, civil liberties groups, journalists, democratic parties, legislators, the Bar Association and a variety of other organisations were outraged. Article 23 states that: The Hong Kong Special Administrative Region shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People’s Government, or theft of state secrets, to prohibit foreign political organisations or bodies from conducting political activities in the Region, and to prohibit political organisations or bodies of the Region from establishing ties with foreign political organisations or bodies.

The original article covering these concerns in the draft Basic Law had simply specified that the SAR “shall prohibit by law any act designed to undermine national unity or subvert the Central People’s Government.”44 In January 1989, in a further draft, it became Article 23 and specified that the “Hong Kong SAR shall legislate on its own to prohibit any act of treason, splitting of the state, sedition and the theft of state secrets.”45 After the Tiananmen Square massacre, the article was further strengthened to include the reference to foreign political organisations. In 1996, the colonial government attempted to finesse the issue by introducing a bill which included reasonably liberal definitions of the new crimes of secession and sedition. The Chinese government then objected to the legislation on the grounds that it would infringe upon the authority of the SAR legislature.46 There was also strong opposition from the legal profession and from civil liberties groups and the sections of the bill containing the offences of secession and sedition were eventually dropped.47 As the SAR government, and no doubt the Chinese government saw it, this created the obligation to legislate under Article 23 in the interests of national security. The Hong Kong government moved cautiously in its attempt to implement Article 23. Its fundamental premise was that offences should be defined as specifically as possible so that existing civil liberties would not be threatened. It was well aware that there would be substantial opposition not only from journalists, legislators, religious and civil liberties groups but also from business if it introduced new offences which were vaguely worded and open to different interpretations. Under existing laws, Hong Kong already had provisions to deal with treason and sedition but none to cover secession or subversion. The consultation document provided that these offences would be defined

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more precisely to fit specific circumstances, such as, for example, joining with foreigners to overturn the government of the PRC or inciting others to violence or public disorder.48 Similarly, the offence of theft of state secrets, which particularly alarmed journalists, was to be covered by the existing Official Secrets Ordinance with the addition of a new offence of “unauthorised access to, transmission of or dealing with protected information and…unauthorised disclosure of protected information.”49 On secession and subversion, the government proposed to make it an offence to withdraw a part of the PRC from its sovereignty and “to intimidate” the government of the PRC and to attempt to overthrow it.50 Not everyone was convinced that the government had been able to define the offences unambiguously. The Bar Association, for example, objected strongly to the proposals. It claimed that the offences were not “clearly and tightly defined.” It thought secession was adequately covered under existing legislation and that “subversion was not an offence known to the common law.”51 Bankers and business people, too, expressed concern that the proposed laws might restrict the free flow of information.52 The consultation document provoked strong objections in three other respects. The first was that it was not specified exactly what was to be included in the legislation and that the public did not therefore have an opportunity to comment in advance on whether the laws might violate their civil liberties. The former Chief Secretary, Anson Chan On-sang, the chairman of the Democratic Party, Martin Lee Chu-ming, and the Bar Association called for a white bill, containing the proposed legislation, before the completion of the consultation period.53 The government’s response did not aid its cause. The Secretary for Justice argued that, if the principles of the consultation document were not accepted, there was little point in introducing a white bill while the Secretary for Security, Regina Ip Lau Suk-yee, said that she did not think that “taxi drivers, restaurant waiters and MacDonald’s staff would study the provisions of a white bill in detail.”54 Later, in defending the decision to legislate under Article 23 to university students, she was reported to have said “Don’t believe democracy will be a panacea. Adolf Hitler was returned by universal suffrage and he killed seven million Jews.”55 Critics were at pains to point out that Hitler’s accession to power was scarcely a showcase of democracy.56 But the comment also raised the central question of how committed the government was to the democratic process as a means of protecting civil liberties. The second major concern related to freedom of expression and whether the Chinese government would continue to tolerate groups in Hong Kong who were opposed to it. The Falun Gong and the Hong Kong Alliance in Support of the Patriotic Democratic Movement in China were believed to be particularly vulnerable. In the case of the Falun Gong, the Chief Executive had already labelled it an “evil cult” and had said that the government would eventually legislate under Article 23 in the context of his discussion of the activities of the sect.57 Sixteen Falun Gong members had been charged with obstructing and assaulting a police officer. The government argued that there was no intention to target the Falun Gong and that its members had been prosecuted because they committed an offence, not because they were Falun Gong. The Bar Association thought, to the contrary, that the Falun Gong might well be proscribed if the legislation was passed.58 The Secretary for Security also dismissed the suggestion that the Alliance

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would be banned, saying that a Hong Kong group would have to be funded by a mainland group for a subversive connection to be established and that it would need to advocate the use of force for an offence to be committed.59 Despite the Secretary’s reassurances, there remained suspicions that the aim of the legislation, at the behest of the Chinese government, was to bring in more controls over political groups who were perceived to be threats to national security. A third, and related, concern was the equally strong suspicion that the legislation would have a detrimental effect on the freedom of the press. In 1994, a Chinese court sentenced a Hong Kong journalist, Xi Yang, to twelve years in jail for reporting on the sale of gold reserves by the Bank of China.60 The offence of theft of state secrets could clearly be interpreted very widely. Once again the government attempted to allay the fears of journalists and others.61 The Secretary of Justice revealed that Xi Yang’s offence had been to refuse to disclose his sources. He had obtained unauthorised access to information and unauthorised access constituted theft of state secrets. As the Legislative Councillor Margaret Ng noted, the government was proposing to increase the unauthorised disclosure offence from two to five years. “Is it any comfort” Ng asked, “that in future Hong Kong reporters in Xi Yang’s shoes may be likely to be sentenced to fewer years than he?”62 The consultation period ended on 24 December 2002. By that time, the government had received 97,097 submissions containing 340,513 signatures.63 There had also been very substantial demonstrations, both for and against the proposals, and heated debates in the press, on television and on the radio. The government, which again appeared to be using the consultation process to legitimise what it had already decided, divided the results into four categories: submissions by organisations, submissions of original letters, submissions of pre-printed, standard letters; and signature forms. The organisations came out overwhelmingly in favour of the government’s stance with 925 organisations supporting enactment of the legislation and 65 opposed to its position. Submissions from original letter writers were 56% in favour and 27% against while pre-printed or standard letter writers were 76.3% supportive with 20% opposed. Of the signature letters, however, only 25.5% supported the government while 72.2% were opposed.64 The differences between the various forms of submission reflect the different tactics of the supporting and opposing groups. The united front groups tended, as they had in past consultative exercises, to deliver pre-printed letters to leftist schools, unions and employees of mainland firms. The opposing groups were more likely to seek support for their position in signature campaigns, in street demonstrations and group meetings. Those opposed to the legislation did constitute a majority of the signatures received with some 175,823 signing the forms.65 Given the subsequent events, this would seem to have been more reflective of public opinion than asking organisations for their views or counting cyclostyled forms. The Hong Kong Transitions Project found 54% of its respondents strongly disagreeing or disagreeing with the proposition that “now is the time to legislate on Article 23”; students and educators were the most opposed while those who had retired were most supportive of the government.66 There were numerous complaints about the government’s consultative methods and its analysis of the outcome.67

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The government, which had argued that there was strong support for its actions, did pay some attention to the consultation exercise. It recognised that there was significant opposition to its proposals and it modified them in the legislation that was eventually presented to the Legislative Council.68 The Secretary for Security announced that the government would “definitely not extend Mainland laws or concepts to Hong Kong.”69 She noted significant changes to the major categories to which the legislation applied. Treason was only to apply to Chinese nationals whereas previously permanent residents might have been guilty of the offence; secession was only to involve acts which resulted in engaging in war, using force, or serious criminal means; the “threat of force” was removed as a condition of subversion; for sedition, there was a need to show intent; and the notion of “unauthorised access” as an offence for theft of state secrets was dropped in favour of “illegal access”.70 With those changes, the government was able to present a bill to the Legislative Council, the National Security (Legislative Provisions) Bill, which only amended three existing ordinances.71 The legislation was intended to give the impression that there would not be much change to existing practices; the government provided extravagant guarantees that freedom of expression and other civil liberties would not only be protected but might even be extended by the more precise definition of offences; that it respected public opinion; and that the major concerns of the pressure groups had been met. It clearly hoped that Hong Kong could move on to other problems, subsequently setting a deadline of 9 July 2003 for the passage of the legislation. Opposition to the legislation continued to build. Leading lawyers remained critical of its provisions and fears were aroused by the power given to police to search homes without a court warrant under conditions where national security might be in question.72 Again, the government sought to allay public suspicions. On 3 June, the government introduced further amendments to the legislation, seeking to provide more safeguards for civil liberties and specifying that the power to search homes without a warrant could only be authorized at the Assistant Commissioner of Police level or above.73 On 14 June, a seminar on the legislative provisions was held at the University of Hong Kong and was attended by senior government officials, most of the democratic legislators and leading journalists and critics of the legislation. The Deputy Solicitor-General spoke of the legislation as a “liberalising measure” and argued that it was consistent with the human rights safeguards provided in the Basic Law.74 On the same day, the legislation reached the Bills Committee of the Legislative Council. With only one democratic legislator present, the government, supported by the conservative members of the Council, pushed the Bill through the committee stage and passed, what the editor of the South China Morning Post called, “an unprecedented motion” to prevent further clause-by-clause debate on the legislation.75 This process undermined the government’s claim that it was willing to listen to its critics and sparked increased opposition to the bill. The amendments to the legislation, rather than quelling public anxieties, seemed to increase them. A poll conducted by the University of Hong Kong’s Public Opinion Programme in late June found that 55% of 1,023 respondents were against the enactment of Article 23 with 84% opposed to

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allowing the police to search homes without a warrant.76 Pressure groups — political parties, churches, human rights groups and trade unions — united to organise a demonstration for 1 July, a holiday celebrating Hong Kong’s return to China. The organisers of the demonstration, the Civil Human Rights Front, hoped the protest would attract a crowd of 100,000. In the event, an estimated 500,000 marched through the streets.77 The demonstration reflected not only opposition to the legislation under Article 23 but widespread discontent with government policies and with Tung Chee-hwa, in particular. Tung’s initial response was to make even more concessions to the legislation in the hope of mollifying his critics. He announced that the provisions proscribing a local organisation subordinate to a mainland organisation, which might have been used to ban the Falun Gong, for example, the prohibition on “public interest” as a defence for the unlawful disclosure of information, and police powers to search without a warrant would all be dropped and proposed that the second reading should go ahead as planned on 9 July.78 But this was all too little, too late. The unlikely catalyst for defusing the immediate situation was the Chairman of the Liberal Party and member of the Executive Council, James Tien Pei-chun. Following the demonstration, Tien paid a hurried visit to Beijing. On his return, he announced his resignation from the Executive Council and urged the government to defer the legislation until December. He noted that the Chinese government wanted the legislation passed although it had no clear preferences on its details or on the timetable for its passage79 and he pledged the Liberal Party’s continued support for the Bill. Without the Liberal Party’s more immediate support and in the face of the prospect that some of the independent legislators might join with the democrats to oppose the Bill and that hundreds of thousands of demonstrators would surround the Legislative Council building itself, there was little option but for the Chief Executive to defer the resumption of the second reading.80 As it was, an estimated 30,000 to 50,000 people, calling for Tung’s resignation, demonstrated outside the legislature on 9 July even though the second reading had been postponed. A further 20,000 demonstrated on the following Sunday. The Chief Executive had essentially run out of ammunition and his government was in increasing peril. On 16 July, two Principal Officials, Regina Ip Lau Suk-yee, the Secretary for Security, and Antony Leung Kam-chung, the Financial Secretary, resigned. In both cases, care was taken to distance them from the crisis. The Secretary for Security said that she had submitted her resignation on 25 June although she expressed deep regret that the legislative work to implement Article 23 had not been completed on schedule.81 The Financial Secretary’s resignation was linked to controversy over the purchase of a car prior to an increase in registration fees in the budget although it was no doubt politically convenient for him to serve as a sacrificial lamb. In a final attempt to bolster his fading support, the Chief Executive promised to re-open consultation on Article 23, to hold regular meetings with politically influential groups, to remove the Secretary for Health from the chair of the committee investigating the SARS outbreak, to enhance economic co-operation with China, to direct policy bureaus to be more consultative and to adopt whatever positive measures could be found to improve the sluggish property market.82 He then flew off to Beijing to discuss the crisis with China’s leaders.

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The extent of the opposition to the legislation and Tung Chee-hwa’s continuing tenure as Chief Executive caused problems for the Chinese government. Tung was their man and they were committed to the passage of the legislation. To intervene directly, however, would have raised the issue of the autonomy of the SAR and possibly further strengthened the opposition to the legislation. The Chinese President, Hu Jintao, noting that the central government was “extremely concerned” about events in Hong Kong, simply re-affirmed his support for Tung and said that he expected that the legislation would be passed after “earnest and wide-ranging consultation” had led to better understanding of the legislation by local compatriots.83 Yet, if the legislation was not understood after nearly a year’s consultation, it seemed unlikely that more talking or more concessions would make much difference. The issue of Article 23 had gone beyond the content of the legislation itself to become symbolic of much that was wrong with the system and with government policies. Although the government’s initial response was simply to delay the legislation and hope to see it pass at some indefinite point in the future, the political fallout from the events of July 2003 saw a marked decline in support for the government’s ally, the DAB. With elections to the Legislative Council due in mid-2004, party leaders were convinced that the government’s stance on Article 23 would be a millstone around their electoral necks.84 The Chief Executive was receptive to their view that it should postpone enactment indefinitely. The Chinese government was also persuaded to support the DAB position, possibly by a party delegation in Beijing. On 5 September, Tung announced the withdrawal of the National Security Bill and its indefinite postponement.85 The following day, perhaps in the hope of regaining some lost electoral support for the DAB, the Chinese Vice-President stated publicly that the party was “the largest and most influential political group in Hong Kong.”86 What do the dramatic events of July 2003 tell us about the relationship between government and the people? The process of attempting to bring Article 23 into effect revealed the mistrust that a majority of the people had for their government and its political executive. It highlighted the inadequacy of the existing ways of assessing opinion and obtaining consent. And it was perceived to strike at the heart of the rule of law and the rights and freedoms which had been guaranteed when China resumed sovereignty over Hong Kong. Despite the government’s view that the legislation was a “liberalising measure”, a majority of the population took the view that the measures would restrict their liberties. Legislating Article 23 also damaged the government’s credibility because it was widely believed that the Bill had only been introduced because the Chinese government wanted it, not because it was necessary. If the government was no more than a surrogate acting on Beijing’s behalf and the legislation did not have the support of the people, how could such an unpopular course of action be legitimated? The Chief Executive had been selected rather than elected and appeared to be bent on a course of action from which no institutional or popular checks could deflect him. As a newspaper headline succinctly put it, “Still the mainland’s man, still with legitimacy problems.”87

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The July demonstrations were no doubt prompted by much more than the issue of the legislation. Frustrations over the economy, problems with the SARS epidemic and inept policy implementation unquestionably played their part.88 That Article 23 became symptomatic of these difficulties and served to unite different groups in opposition to the government may have had much to do with the issue itself. It affected everyone in Hong Kong rather than specific groups. And it raised very clearly the issue of legitimacy. The demonstrations indicated that the government had neither the consent nor the legal and moral authority to introduce such legislation and that its mandate did not extend to re-inventing the rules under which the people would in future be required to interact with their government.

Other Constitutional Issues

In many jurisdictions, a written constitution has set the parameters within which the law has subsequently developed. Because the constitution is superior to ordinary legislation, those who draft and pass the laws are careful not to violate its provisions. Similarly, in Hong Kong, the Basic Law prevails in the event of a conflict between its provisions and existing legislation. However, unlike some other jurisdictions, most of the ordinances which the government enforces pre-date the Basic Law. Although those laws have the same validity as before 1997, under Article 160, they must be amended or cease to have force if they are in conflict with the Basic Law. This has opened the door for an increasing number of legal challenges to the government on the grounds that it is acting unconstitutionally. Applications for judicial review rose from 138 in 2002–2003 to 212 in 2006–2007.89 In 2006, of 132 judicial reviews, 128 involved the government.90 The Legal Aid Department and the Court of Final Appeal have subsequently acted to reduce the number of judicial reviews. In 2007, over half the applications for legal aid for judicial review were rejected by the Department and, in November 2007, the Court of Final Appeal ruled that cases have to be “arguable”, not just “potentially arguable”, in order to obtain leave for judicial review.91 Some examples may serve to illustrate the type of issues on which the courts have had to pass judgment. In 1997, the legality and competence of the Provisional Legislative Council was challenged on the grounds that it was not, as the Basic Law provides, established by election. The Court dismissed the case finding that a Committee, set up under Chinese law, had the power to make arrangements for the transition.92 In the same year, the Chief Executive’s right to appoint and dismiss civil servants was also unsuccessfully contested.93 Two years later, an elected Regional Councillor argued that the government’s decision to abolish the Regional Council was unconstitutional since it violated his rights under the International Covenant for Civil and Political Liberties which is enshrined in the Basic Law.94 The appeal was dismissed. Several cases have involved ordinances where the question before the Court has been whether provisions in the Basic Law override the legislation. In the Town Planning Board v Society for the Protection of the Harbour, the Court found that there was nothing in the Basic Law that

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affected the provisions of the Harbour Protection Ordinance and found in favour of the Society.95 In the Catholic Diocese of Hong Kong v Secretary for Justice, the church argued that, by amending the Education Ordinance, the Education Bureau was in effect replacing the previous education system which was guaranteed under the Basic Law. The appeal was dismissed.96 The extent to which civil liberties protected in the Basic Law are undermined by existing legislation has also been an issue. In Leung TC William Roy v Secretary for Justice, a homosexual successfully argued that his fundamental right under the Basic Law not to be discriminated against was undermined by the provisions of the Crimes Ordinance.97 In Leung Kwok Hung and Another v Chief Executive, two political activists successfully argued that the legal basis of the government’s covert surveillance activities under the Telecommunications Ordinance was in breach of Article 30 of the Basic Law.98 In the Secretary for Justice v Ocean Technology and Others, the government sought to close down Citizen’s Radio, a talkback radio programme, on the grounds that it was not properly licensed and that its frequencies might interfere with aeronautical navigation. The defendants argued inter alia that the Telecommunications Ordinance infringed their rights enshrined under the Basic Law to freedom of speech and freedom of communication.99 As these examples suggest, the potential areas in which conflict between existing legislation and the Basic Law might occur are very wide-ranging. In formulating policy, the government has difficulty in anticipating the kind of legal challenge that it might face. Yet, as the harbour protection case has shown, once the case reaches the legal system, there can be costly delays in implementing policy. In a settled political system, challenges to the constitution in the courts might be resolved harmoniously by amendments to legislation or, if the matter was of sufficient importance, to the constitution itself. In the charged political atmosphere of Hong Kong, where the legitimacy of the constitution is in question, where the sovereign power has so far refused to make amendments to it, and where civil society organisations have become increasingly sophisticated in their use of legal avenues to achieve their goals, the Court of Final Appeal has become an arena for the judicial review of many decisions which often revolve around divisive political issues. Although the Basic Law has failed to provide a system in which Hong Kong’s executive authorities are little more than weakly accountable to the legislature and to the public, it has nonetheless become something of a double-edged sword for those who would wish to implement fully the notion of an “executive-led” government. The provisions in the Basic Law to protect civil liberties and to introduce universal suffrage have meant that an alternative conception of the political order continues to persist, supported by street demonstrations and occasionally underwritten by court judgments. It is possible that, as constitutional conventions gradually emerge which establish more precisely what the executive authorities may or may not do and what the relationship between the principal institutions should be, the Basic Law may become more institutionalised and that the combination of its written provisions and constitutional conventions may provide a more widely accepted political framework. For the moment, it is a battleground between entrenched conservative elites who wish to maintain a

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strong centralised system of government and slow progress towards universal suffrage and those who favour a more politically accountable government, a democratically elected Chief Executive and Legislative Council, and the fullest possible protection for civil liberties.

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he test of whether a government is politically accountable is not whether the system is representative or democratic but whether external bodies, be they voters,T legislatures or a superior level of government, have the power to impose sanctions on office-holders in the event of unsatisfactory performance.1 Judged by this criterion, the Hong Kong government is accountable to the government of the People’s Republic of China and Principal Officials are accountable to the Chief Executive. But the Chief Executive and Principal Officials are only very weakly accountable to the Legislative Council and the voting public. Voters cannot remove the government. And the restricted powers of the Legislative Council means that it cannot hold the government fully accountable. Political accountability depends not simply on the provisions of the constitution but also on the way in which power is actually exercised. Even in constitutions that have never been amended, such as the Basic Law, conventions can develop in which a government will gradually concede that it should be held more accountable for its actions. Alternatively, of course, it is possible that a government may act repeatedly in ways that violate the constitution which then tends to become irrelevant. In addition, measures may be taken within the framework of the constitution which significantly alter the way in which power is exercised. During his first term in office, Tung Chee-hwa made two such changes, abolishing the Urban and Regional Councils and introducing the Principal Officials Accountability System (POAS). The Chief Executive’s main objectives seem to have been to centralise power and to exert more political control over the civil service although he argued that the abolition of the Councils would result in greater efficiency and that the POAS would result in more accountable government. In 2008, the system was further extended to include politically appointed Deputy Directors of Bureaus and political assistants. In this chapter, we examine the effects of these measures on the broader issues of representation and accountability in Hong Kong.

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The Abolition of the Urban and Regional Councils

The Urban and Regional Councils (the Municipal Councils) were statutory bodies set up to introduce a measure of local government to Hong Kong. From 1973 onwards, the Urban Council was financially autonomous and could decide on how its resources would be allocated and managed.2 The Councils provided important services through the departments attached to them — the Urban Services Department and the Regional Services Department — in the areas of food safety and environmental hygiene, arts and cultural services, and sports and recreational services.3 Until 1982, when District Board elections were held for the first time, Urban Council elections were the only means by which Hong Kong citizens could express their views through the ballot. Although elections were contested, they did not attract much interest and turnout was low. The Basic Law makes no specific mention of the Municipal Councils. Article 97 does state, however, that district organisations “which are not organs of political power” may be established for consultative purposes or to provide services. In October 1997, Tung Chee-hwa called for a “fresh look at the regional organisations, the Municipal Councils and the District Boards, so as to decide…whether the present structure of local representative government will continue to ensure the efficient and responsive delivery of services.”4 In the following June, the Constitutional Affairs Bureau released a consultation document in which it outlined government concerns over funding arrangements, the fragmentation of responsibilities for food and hygiene, arts and culture and sports and recreation, the issue of whether there was a need for both district and municipal organisations, and the question of whether the role of the District Boards should be expanded.5 The government made quite clear that its preferred option was to dissolve the Municipal Councils and to transfer their responsibilities to other policy bureaus and to the District Boards.6 The debate over the future of the Municipal Councils took place in the context of the decision in December 1997 to slaughter approximately 1.2 million chickens after an outbreak of avian flu. The Urban Services Department and the Regional Services Departments were responsible for the slaughter of the chickens but it was not carried out properly, leading to many complaints. There were some who felt that the government’s preference for abolishing the Municipal Councils was “using the chickens to kill the Councils.”7 The government denied this but claimed strong public support for an enhanced role in food and hygiene matters, probably because of the avian flu crisis.8 Its decision to review the Municipal Councils and the District Boards pre-dated the avian flu crisis and probably reflected longer-standing central government concerns about inefficiencies and financial practices in the Urban Services and Regional Services Departments. The Chinese government’s decision not to recognise the electoral arrangements in place at the retrocession meant that all members of the Municipal Councils and District Boards were appointed after 1997 and that a review of the composition and functions of the councils and boards would probably have proved necessary. An immediate political concern for the government was to deal with claims that the dissolution of the Municipal Councils would have adverse effects on political

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development and representation. According to the government’s report on the consultation exercise, three arguments were advanced in favour of retaining the Councils: that they had decision-making powers and served as a useful training ground for future politicians; that they enabled public participation in the making of local policies through their elected representatives; and that they could effectively supervise the work of the executive departments.9 The government rejected these views citing the authority of unnamed “leading social scientists.”10 It maintained that there was sufficient representation and enough public offices to train future politicians and that future democratic development should focus on elections to the Legislative Council.11 The government was accused of manipulating the results of the consultation exercise, of pre-judging the issue and of unnecessarily shortening the consultation period.12 In the end, its original view prevailed and the Municipal Councils were abolished. At the beginning of 2000, the functions undertaken by the Urban Services and Regional Services Departments were transferred to a new Food and Environmental Hygiene Department and a Leisure and Cultural Services Department directly under the control of the Hong Kong government. The eighteen District Boards were retained but were renamed District Councils. The government decided that it would reserve the right to appoint up to 102 members to the Councils as against 390 who would be elected and 27 ex officio members who would be retained. In the previous election in 1994, with the exception of the ex officio members, all members of the District Boards had been elected. Initially, the abolition of the Municipal Councils could be seen as consistent with the continuing dominance of the senior civil service and the strengthening of the existing system. There had been concern, for example, even before the handover, about possible corruption, over-staffing and poor supervision in the Urban Services and Regional Services Departments. However, the longer-term effect of the abolition of the Municipal Councils and the changed arrangements for the composition of the District Councils was to eliminate centres of potential opposition to the political executive. Urban and Regional Councillors had a history of criticizing the government. In the District Councils, which potentially provided a similar forum, the Chief Executive used his right to appoint over 25% of the members of the Councils to nullify the successes of the democratic parties in the November 2003 elections and to ensure that most of the Councils were pro-government in their orientation.13 Thus, although the changes were sold to the public as means of promoting efficiency, in retrospect, these developments were a step along the road towards greater centralisation of authority in an “executive-led” government.

The Principal Officials Accountability System

In 2000, Tung foreshadowed an even more radical change to the political system which was aimed, supposedly, at establishing “a comprehensive system of public accountability.”14 Public concern over the accountability of the civil service did increase after 1997. Some serious cases where the government or a statutory body failed to implement or explain its decisions properly –– for example, the decision not to prosecute a newspaper owner whose paper had inflated its circulation figures, a multi-million dollar

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scandal surrounding the faulty construction of public housing blocks, the problems with the opening of the new airport and the methods used in dealing with the avian flu crisis –– all called into question the adequacy of the accountability mechanisms.15 The system that was eventually unveiled, however, appeared to have been motivated more by the Chief Executive’s intention to exert more direct political control over the civil service than to enhance accountability. The central idea was a new system of appointing fourteen of the Principal Officials: the three secretaries (the Chief Secretary, the Financial Secretary and the Secretary for Justice) and the eleven Directors of Bureaus, who would serve on contract at the pleasure of the Chief Executive. The conditions of service of the five Principal Officials mentioned in Article 48(5) of the Basic Law who were all civil servants –– the Commissioner of Police, the Director of Audit, the Commissioner against Corruption, the Director of Immigration and the Commissioner of Customs and Excise –– were to remain unchanged.16 The Chief Executive would nominate suitable candidates, either from within or outside the civil service, for the fourteen key Principal Officials’ positions to the Central People’s Government and would also have the authority to recommend their removal. The fourteen Principal Officials would all be members of the Executive Council where they would be joined by five unofficial members, who included the leaders of the Liberal Party and the DAB. The Principal Officials would have the responsibility for formulating and explaining policies and canvassing support for their policies, would be answerable to the Chief Executive for the success or failure of those policies, and would attend meetings of the Legislative Council to answer questions, move bills and take part in motion debates.17 The critical difference from the existing system was that the Principal Officials, who, with two exceptions, had all previously been permanent and pensionable senior civil servants, were now to be replaced by political appointees who were on contract and, in theory, could be more easily dismissed by the Chief Executive. The proposed system was further developed in a government paper presented to the Legislative Council in April 2002.18 The rationale presented was that it would enhance the accountability of the Principal Officials for policy failures and would enable the Chief Executive to dismiss those who were not performing adequately.19 As a “comprehensive system of public accountability”, the proposed system was seriously deficient. The Principal Officials were only accountable to the Chief Executive, not to the Legislative Council or, in any meaningful sense, to the public. When asked whether a Principal Official would be dismissed if the Legislative Council were to pass a motion of no confidence in that official, Tung said that “it would be one of my considerations but not the only consideration influencing my final decision.”20 To have developed a more accountable system would have required amendments to the Basic Law whereas the changes to the appointment system for Principal Officials could be accommodated within the existing provisions of the Basic Law. But to amend the Basic Law to introduce more accountability would clearly have required the support of the Chinese government and was not apparently, in any case, the Chief Executive’s primary objective.

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The new system was also expected: …to ensure that the Government can better respond to the needs of the community; enhance coordination in policy formulation; strengthen the cooperation between the Executive and the Legislature; ensure effective implementation of policies and provide quality services to the public.21

It was not entirely clear how those goals would be achieved. The newly-appointed Directors of Bureaus were given greater flexibility to manage financial resources and were required to produce plans for the re-organisation of their bureaus and departments which were intended to improve policy co-ordination and implementation. Although the new financial management system did result in improvements, there were no immediate benefits in terms of policy co-ordination since each bureau could come up with its own plan. The relationship between the executive and the legislature might have been improved if the ways in which the Principal Officials were accountable to the legislature had been clarified. But most senior civil servants in the bureaus, now to be called permanent secretaries, would continue to have a public role and would attend meetings of Legislative Council panels and deal with the media.22 The civil service was to remain politically neutral but it also had “a bounden duty … to be loyal to the Chief Executive and the principal officials of the day.”23 There were also unresolved questions about the relationship between the Principal Officials and the Executive Council. The Principal Officials were all members of the Executive Council but the Council still had members who were not Principal Officials. It was expected that the Principal Officials would meet separately from the Executive Council, raising questions about duplication and where the final authority for decisions actually lay.24 The fourteen new Principal Officials took office on 1 July 2002. Of those appointed, five came from outside the civil service.25 In addition, the Financial Secretary, Antony Leung Kam-chung, and the Secretary for Justice, Elsie Leung Oi-sie, who had been appointed before the new system was introduced and who retained their positions, had backgrounds in the private sector. Those Principal Officials who had been civil servants retained their former roles with the exception of the Secretary for Constitutional Affairs who went to Housing, Planning and Lands and an official in the Chief Executive’s office who became Secretary for Constitutional Affairs. The Secretary for the Civil Service, unlike the other Principal Officials, was required to be drawn from the ranks of senior civil servants and was permitted to return to the civil service.26 Almost immediately after the new system came into effect, the extent to which Principal Officials were accountable for their actions became an issue. On 25 July 2002, the Hong Kong Stock Exchange (HKEx) released a report establishing the criteria for the de-listing of low-priced stocks, particularly those that traded below 50 cents for 30 consecutive days. On the following day’s trading, the market lost $10.91 billion in market capitalisation.27 The controversial proposals in the consultation paper were rapidly withdrawn. As the subsequent investigation of the incident showed, there were clearly a number of parties, including the Chief of the HKEx and Chairman of the Securities and Future Commission (SFC), who were involved in drafting and submitting the proposal

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and who had some systemic, if not personal, responsibility for the subsequent debacle.28 To the extent that the Principal Officials were involved, the Financial Secretary was absolved because he did not receive a copy of the proposal before it was released and did not read a copy of the executive summary until 28 July.29 Public attention focused instead on Frederick Ma Si-hang, the Secretary for Financial Services and the Treasury, who had received a copy of the proposal but who had not read it.30 The summary table of the proposal arrived in Ma’s office on 17 July but, since he had a dinner engagement and then flew to London, he did not return to his office until 22 July and was then too busy to deal with its contents. He first became aware of the summary table on 26 July.31 On 31 July, the Financial Secretary announced that there would be an independent inquiry into the incident and the Legislative Council convened a special meeting of its Financial Affairs Panel. According to the subsequent report of the investigative panel: The Secretary was bombarded with a series of hostile and severe criticisms to which he was unable to acquit himself with either clarity or distinction. It would have required the skills and experience of a much more seasoned bureaucrat to have come out of that barrage relatively unscathed.32

Legislative Councillors observed that the Secretary might be regarded as having underperformed his official duties by failing to keep himself informed, that ignorance was just as inexcusable as negligence, and that Hong Kong’s reputation as a financial centre might have been jeopardised as a consequence of the proposal.33 In his defence, Ma accepted that “as a principal government official, he was prepared to take a certain degree of responsibility for the whole incident.”34 But clearly he also felt that there were mitigating circumstances. When the investigative panel did not attribute blame directly to any individual, Ma initially took this as vindication of his position. Subsequently, in the face of considerable criticism, he did make a public apology, a development that the government was eventually to claim “demonstrated the force of the accountability system in action.”35 The Penny Stocks incident was the first test of the new system and it aroused considerable interest. As the investigative panel observed: The Penny Stocks Incident quickly developed into a political hot potato. There were criticisms of the role of Government, the SFC and the HKEx [and] the lack of clarity over the division of responsibilities between the FS [Financial Secretary] and the Secretary as well as what the accountability system entailed.36

At stake, too, were the circumstances under which a Principal Official might feel obliged, or be required, to resign. Many legislators felt that Ma’s initial refusal to offer an apology and the Chief Executive’s contention that the incident had nothing to do with accountability made a mockery of claims that the new system was an improvement on past practice.37 Accountability, under the new system, appeared to mean something much less than resignation or even an apology for poor performance: a requirement,

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perhaps, to explain lapses in judgment or inadequate performance but not necessarily to relinquish office. A second test of the system was occasioned by quite different circumstances: the personal conduct of the Financial Secretary. In January 2003, the Financial Secretary, Antony Leung Kam-chung, purchased a new car, four days after a budget strategy group, of which he was a member, had considered raising the first registration tax on cars. On 11 February, the strategy group confirmed that it would raise taxes. On 5 March, at a meeting of the Executive Council at which another Principal Official revealed that he had recently bought a car, the Financial Secretary failed to disclose his own purchase.38 On 10 March, following media reports, the Financial Secretary apparently offered his resignation to the Chief Executive although subsequently it was unclear whether his letter of resignation followed a verbal offer to resign which the Chief Executive had declined. The Chief Executive then wrote to Leung on 15 March, noting that, although Leung’s actions constituted a breach of the Code for Principal Officials, he had concluded that “your mistake warrants a formal criticism from me but not your resignation.”39 A member of the Standing Committee of the National People’s Congress reportedly observed that the matter was “no big deal.”40 Legislative Councillors thought otherwise. On 17 March, Leung was called before the Legislative Council’s Constitutional Affairs Panel and grilled in much the same manner as Ma had been.41 Leung claimed that the purchase of the car had been a practical necessity and that he had no intention to avoid tax but that he had been guilty of inappropriate behaviour and of an oversight.42 Democratic legislators focused particularly on the implications of the conflict of interest for integrity and trust in government while others took the view that it had been an honest mistake. There were also comments about inconsistencies in the account of his offer of resignation, a central issue in the subsequent Legislative Council debate calling for the establishment of a select committee to investigate the matter.43 The motion to establish a select committee was defeated, but the issue further damaged the credibility of the accountability system and the Financial Secretary’s own position. In addition, the ICAC conducted a separate investigation into the case, referring the results to the Department of Justice which eventually decided that there should be no prosecution on the grounds that it could not be proved that Leung deliberately sought to evade tax.44 Leung and the Secretary for Security, Regina Ip Suk-yee, eventually did resign in July 2003 following the demonstrations against the government’s proposed legislation under Article 23. There were two other events which led the new accountability system to be called into question. In July 2003, the Secretary for the Civil Service, Joseph Wong Wing- ping, retired from the civil service at the age of 55 and collected his pension. However, he retained his position as a Principal Official and the office of Secretary for the Civil Service. Wong’s resignation from the civil service was not widely known until October 2003 when the Administrative Services Association, which represented the administrative grade, the Federation of Civil Service Unions and the Senior Non-Expatriates Officers Association, raised the issue of whether this might constitute a violation of the rules under which the accountability system operated.45 Under the rules laid down in April 2002,

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the Secretary for the Civil Service had to be drawn from among senior civil servants.46 Once Wong had resigned, so the civil service staff associations argued, he no longer fulfilled the basic requirement for holding office. The associations saw Wong’s retirement as the end of special representation for the civil service in the ranks of a potentially hostile political executive. While Wong claimed he would continue to represent the civil service, the unions clearly doubted whether he would pursue their interests with the same vigour after his retirement from the civil service.47 In the event, the provision that the Secretary of the Civil Service should be drawn from among serving civil servants and not be required to resign or retire from the civil service before taking up the position was re-affirmed in October 2007. In the context of concerns that the political appointment of Deputy Directors of Bureaus and political assistants would affect the neutrality of the civil service, the Constitutional and Mainland Affairs Bureau recommended that the Civil Service Bureau should not have politically appointed Deputy Directors or political assistants and that the Secretary for the Civil Service should remain a civil servant.48 Another instance in which the credibility of the accountability system was raised was in the handling of the SARS epidemic. After the crisis had abated, two inquiries were launched into whether the outbreak might have been contained more effectively and whether the Hospital Authority might have been better prepared for the difficulties of treating patients and the protection of its own staff, some of whom had succumbed to the disease. The first inquiry was a panel of experts, set up by the Chief Executive in May 2003. The Chief Executive had originally appointed Dr Yeoh Eng-kiong, the Secretary of Health, Welfare and Food, to head the inquiry over objections that there might be a conflict of interest. The appointment was rescinded after the July 2003 demonstrations. The Expert Panel, which reported in October 2003, found that Hong Kong had handled the crisis well. No individual was “deemed to be culpable of negligence, lack of diligence or maladministration”49 and the committee simply made some suggestions for improvements in the event of any future outbreak.50 The second inquiry was set up by the Hospital Authority to investigate any shortcomings in its handling of the situation. The committee found that “…the Government could have acted sooner and with greater clarity to warn the community of the potential risks” and they were critical of the lack of co-ordination between the Hospital Authority, the Department of Health and the Secretary of Health, Welfare and Food. They did not attach specific blame to individuals.51 What the government feared most was the prospect of a select committee set up by the Legislative Council which would investigate the conduct of Principal Officials and which would, if past practice were any guide, attempt to attribute responsibility for shortcomings. Establishing a select committee had been the Democrats’ preferred strategy in the Leung case but that had been defeated by the Liberals and the DAB. In May 2003, however, the DAB voted for a Democratic Party motion on a non-binding resolution to set up a select committee if the government did not itself establish an independent commission of inquiry.52 While the other inquiries were in the process of collecting evidence, the Legislative Council did nothing to set up a select committee. But once the government-appointed Expert Panel and the Hospital Authority Review Panel had reported, there was cross-party concern in the Legislative Council that

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no officials had been censured for their role in handling the epidemic. In October, despite a reported government offer to set up an independent commission of inquiry, legislators voted instead to set up a select committee.53 Legislators saw the SARS expert committee’s report as a whitewash that had failed to address a central issue and they noted public dissatisfaction over its finding that no one was to blame for the handling of the epidemic.54 The terms of the select committee were carefully considered by the Legislative Council’s House Committee. A majority of the members wanted to avoid the impression that the select committee would be a witch-hunt but they were adamant that issues of accountability should be investigated. The terms of reference eventually provided that the select committee should “examine the performance and accountability of the Government and the Hospital Authority and their officers at policy-making and management levels” with regard to their handling of the SARS outbreak.55 When the Committee reported in July 2004, it exonerated the Chief Executive, who had refused to testify on the grounds that it was “constitutionally inappropriate” in an executive- led government, but was scathing in its criticism of the Secretary for Health, Welfare and Food whom the Committee said, did not show “sufficient alertness” in the initial stages of the outbreak, was “confusing and misleading” in his public announcements, did not show the “communication skills expected by the public of a policy secretary” and failed to require the Director of Health to add SARS to the list of notifiable diseases as quickly as he should have done.56 The Secretary apologised to the deceased, family members and healthcare workers but initially declined to resign.57 Three days after the Select Committee report had been released, he changed his mind and submitted his resignation.58 Tung Chee-hwa’s departure in March 2005, ostensibly on grounds of ill health, sparked a constitutional debate which had implications for the POAS. After consulting the Chinese government and mainland law experts, the government proposed that Tung’s successor should serve for two years, the remaining balance of the term. The Secretary for Constitutional Affairs said that, since there was no express provision in the Basic Law for the length of the term of a successor, it was appropriate to follow the practice on the mainland. In any event, he reminded legislators, the Standing Committee of the National People’s Congress had the power to interpret the Basic Law.59 The democrats argued, to the contrary, that Article 46 of the Basic Law provided that the term of office of the Chief Executive should be five years and that legal opinion in Hong Kong was overwhelmingly of the view that this should be applied when a vacancy occurred. The issue was not simply about the length of the term of the new Chief Executive; there were broader political agendas on both sides. The democrats believed that the rule of law would be violated if the Chinese and Hong Kong governments arbitrarily proscribed a two-year term. But they also saw the issue in the context of reforming the system for electing the Chief Executive. Their hopes of changing the provisions for the 2007 election had already been dashed, but a five-year term would have raised the question of reform at an earlier date, if the next election was held in 2010. For precisely the opposite reasons, the Chinese and Hong Kong governments wanted to

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retain the existing “small-circle” election system for as long as possible. A two-year term, followed by an election under the existing rules in 2007, would mean that there could be no changes until at least 2012. In addition, a two-year term offered the Chinese government a degree of flexibility in its choice of Chief Executive. If Tsang could not resolve some of the very considerable problems which he had inherited, there was the possibility of changing the leadership in 2007. There may also have been lingering suspicions about the wisdom of appointing a high ranking former colonial civil servant to become Beijing’s man in Hong Kong. A two-year probationary period would enable the Chinese government to assess his “patriotic” qualities and suitability to hold office for a longer term. The two-year term, which the Chinese and Hong Kong governments mandated, placed important restrictions on Tsang’s freedom of action. If he were to be elected in 2007, he could not afford the confrontations with civil society that had characterised the Tung administration. Under Tung, Principal Officials had been encouraged to be entrepreneurial and to cut through red tape. They did not work so much as a team but rather as high profile individuals with different agendas and often conflictual relationships both inside and outside their bureaus and departments. Under Tsang, they were more disciplined and unified. At the cost of inaction on some critical issues, there were no new major policy initiatives. Tsang appeared to believe that achieving a consensus on constitutional development was a necessary pre-condition to making successful policy in contentious areas.60 Directors of Bureaus were limited to introducing non-controversial measures or refining existing policies. Greater collective responsibility was achieved by two means: re-working the policy hierarchy within government and relying more on senior civil servants to fill the positions of Principal Officials and top administrative aides. One of the reasons why Principal Officials under Tung had been relatively independent spirits was because the system introduced in 2002 in effect downgraded the roles of the Chief Secretary of Administration and the Financial Secretary. Principal Officials reported directly to Tung without the previously mediating and authoritative roles played by those officials. This caused considerable confusion, particularly over the role of the Financial Secretary. Tung partially addressed the issue in June 200361 but did not resolve the wider problem of poor policy co-ordination. In the first substantive statement of his first policy address, Tsang announced that henceforth all heads of bureaus would be required to have their proposals cleared by the Financial Secretary and the Chief Secretary of Administration in the Policy Committee.62 This was a reversion to the pre-2002 system and had the effect of curbing the enthusiasm of Directors of Bureaus for announcing proposals which may have been good ideas but which had not been properly costed or approved. When the Chief Secretary for Administration, Rafael Hui Si-yan, completed his term of office in June 2007, Tsang thanked him particularly for the way in which he had chaired the Policy Committee and the Star Chamber, which vets spending, and said that those committees were “now known for their depth, intellectual rigour and remarkable efficiency.”63 Tsang inherited the Principal Officials who had served under Tung but his public statements suggested that he regarded experience within government as more important

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than entrepreneurial ability in appointments to top positions.64 He brought in Hui, a former career civil servant, to replace himself as Chief Secretary and later strengthened his own office by appointing another former senior civil servant, John Tsang Chun-wah, as Director.65 When the term of the Principal Officials ended in June 2007, he made six changes, resulting in a team which more resembled the pre-2002 situation when all but two Principal Officials had been former civil servants. The POAS had been designed to reduce the power of the senior civil service. In Tsang’s new line-up, however, nine of the twelve heads of policy bureaus and the new Financial Secretary, John Tsang Chun-wah, had been former civil servants and nine of those ten had been members of the elite administrative grade (see Table 3.1).66 The remaining appointments, with one exception, had long experience of government through their service on major committees or as Principal Officials who had been re-appointed. Even the exception, Tsang Tak-sing, a former left-wing journalist with close connections to the DAB, who was appointed Secretary for Home Affairs, had some experience of government through his membership of the Central Policy Unit.

Table 3.1 Principal Officials in the Tsang Administration, July 2008 Position Incumbent Previous Experience Chief Executive Donald Tsang Kam-yuen Former administrative officer. Financial Secretary (1995–2001); Chief Secretary (2001–2005); Chief Executive (2005–). Secretaries of Departments Chief Secretary for Henry Tang Ying-yen Industrialist. Financial Secretary Administration (2003–2007). Financial Secretary John Tsang Chun-wah Former administrative officer. Secretary for Commerce, Industry and Technology (2003–2006); Director, Chief Executive’s Office (2006–2007). Secretary for Justice Wong Yan Lung Lawyer. Secretary for Justice (2005–) Directors of Bureaus Secretary for Michael Suen Ming-yeung Former administrative officer. Education Secretary for Housing, Planning and Lands (2002–2007). Secretary for Rita Lau Former administrative officer. Commerce and Permanent Secretary, Commerce and Economic Economic Development Development

(Table 3.1 continued on p. 60)

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(Table 3.1 continued)

Secretary for Stephen Lam Sui-lung Former administrative officer. Constitutional Secretary for Constitutional Affairs Affairs (2002–) Secretary for Ambrose Lee Siu-kwong Former civil servant. Secretary for Security Security (2003–) Secretary for York Chow Surgeon. Secretary for Health, Food and Health Welfare and Food (2004–) Secretary for the Denise Yue Chung-yee Administrative officer. Secretary for Civil Service the Civil Service (2006–) Secretary for Tsang Tak-sing Journalist. Member of the Central Home Affairs Policy Unit. Secretary for Matthew Cheung Former administrative officer. Labour and Welfare Kin-chung Secretary for K.C. Chan Academic. Former Chairman, Financial Services Consumer Council. and the Treasury Secretary for Carrie Lam Cheng Former administrative officer. Development Yuet-ngor Secretary for the Edward Yau Tang-wah Former administrative officer. Environment Secretary for Eva Cheng Former administrative officer. Transport and Housing Sources: Government of the HKSAR, “New team of Principal Officials appointed,” Press Release, 23 June 2007 and www.gov.hk. Note: In addition to those listed above, the Commissioner of Police, the Commissioner of the ICAC, the Director of Audit, the Director of Immigration and the Commissioner of Customs and Excise are Principal Officials. The Director of the Chief Executive’s Office is on the same terms and conditions of service as a Director of a Bureau and is regarded as a Principal Official (see note 15).

Under the new Chief Executive, the only major controversy over the accountability of Principal Officials concerned events which had taken place mainly under the Tung administration. In January 2007, the Council of the Hong Kong Institute of Education (HKIEd), a tertiary institution which trains teachers, decided not to renew the term of its President, Professor Paul Morris. Shortly afterwards, HKIEd’s Vice-President, Professor Bernard Luk, wrote in an intranet message, subsequently widely reported in the local media, that the reason for the decision not to re-appoint Professor Morris was that he had refused to support a merger between HKIEd and the Chinese University of Hong Kong. The Secretary for Education and Manpower (a Principal Official), Professor Arthur Li,

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had proposed the merger. It was also alleged that Professor Morris had been pressured to dismiss staff critical of government policy. Academic autonomy is enshrined in the Basic Law and there were many who felt that, if proven, the actions of the Secretary constituted a violation of the right of institutions to run their own affairs.67 The government then set up a Commission of Inquiry to investigate three allegations relating to academic autonomy: that the Secretary of Education and Manpower had threatened to cut student numbers at the HKIEd unless the President agreed to a merger with the Chinese University of Hong Kong ; that senior government officials had called on the President of HKIEd to dismiss academics who wrote articles critical of government policy; and that the Secretary for Education and Manpower had requested the Vice-President of HKIEd to issue a statement condemning a teachers’ protest and the Hong Kong Professional Teachers’ Union which had assisted them.68 The Commission was asked on the basis of the facts to ascertain whether there had been any improper interference with academic freedom or institutional autonomy. The Commission held hearings for 39 days with evidence presented formally by teams of lawyers and with witnesses cross-examined by opposing counsel. The Commission evidently felt that it had a difficult line to steer between government interference with academic autonomy and the legitimate pursuit of public policy. On the issue of threats to reduce the student numbers at the Institute, for example, the Commission accepted that the Secretary for Education had probably said that he would “rape” the HKIEd but, while it found the remark to be “offensive”, chose to see it in the context of fulfilling the government’s higher education policy objectives.69 The Commission found that “there was no concerted effort” to force the HKIEd to reduce numbers if it did not agree to the merger.70 On the issue of calling for the dismissal of academics who criticised the government, however, the Commission found that the requests of the Permanent Secretary for Education, Fanny Law Chiu-fun, to Professor Morris to curb the criticisms of government by two academics constituted an improper interference with their academic freedom.71 It also found that Mrs Law had requested a Professor at the HKIEd to sack a staff member who was critical of government policies. On the alleged request from the Secretary to the Vice-President to issue a statement condemning the student protest and the Hong Kong Professional Teachers’ Union, the Commission found that the allegation was not established.72 Tsang’s response to the findings was remarkably similar to the manner in which Tung had dealt with controversies affecting his Principal Officials. He welcomed the findings of the Commission, noting that it had cleared the actions of the officials.73 This was only partially true. The Commission did clear the Permanent Secretary on one count of improper interference with academic freedom but found her guilty on another. Fanny Law Chiu-fun resigned after the Commission of Inquiry reported although she maintained that she had done nothing wrong. Tsang said that he had asked her to stay, promising her full support.74 Professor Li was not re-appointed as a Principal Official but it was thought that he had intended to step down for some time before the controversy became a public issue. Even though it had appointed the Commission, the government was not satisfied with the finding that officials who contacted academics to express

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critical opinions of their views were improperly interfering with academic freedom. The Secretary for Education subsequently asked for a judicial review of the finding.75 The Chief Executive is ultimately responsible for the performance and behaviour of the Principal Officials. Despite the attempts of Legislative Councillors to hold them accountable, they have no constitutional authority to require Principal Officials to resign. It is the responsibility of the Chief Executive alone to decide whether Principal Officials have violated norms contained in the Code for Principal Officials, whether they are culpable of negligence or, worse, of dereliction of duty, or whether their competence in decision-making is in question. The Chief Executive and the Chinese government decide whether they should continue to hold office. Tung Chee-hwa was remarkably lenient in his treatment of his Principal Officials. Apart, possibly, for the Secretary for Health, Welfare and Food, none, apparently, was required to resign. The Secretary for Financial Services and the Treasury escaped with a public apology. The Financial Secretary submitted his resignation but was told that his offence only merited criticism. In the attempt to legislate under Article 23, where the government clearly totally misread public opinion, Tung attempted to persuade the Secretary of Security not to resign.76 In an analogous situation in 2007, when the former Permanent Secretary of Education, by then a Principal Official as Commissioner of the ICAC, submitted her resignation following criticism by a government-appointed commission, Tsang likewise asked her to continue in office.77 In February 2008, he also requested an Executive Councillor, David Li Kwok-po, who had been charged by the United States Securities and Exchange Commission with insider trading and had paid over US$8 million to settle the case, to “reconsider his resignation.”78 This implies either a very weak definition of what constitutes accountability or that the concept of accountability itself had become meaningless.

The Extension of the Principal Officials Accountability System

In October 2005, Tsang proposed to extend the Principal Officials Accountability System by appointing a small number of Deputy Directors of Bureaus and political assistants.79 He promised that the new appointments would not undermine the political neutrality of the civil service. In July 2006, the Constitutional Affairs Bureau produced a consultation document which outlined the role of the Deputy Directors and political assistants in the context of the POAS. The reasons given for the proposal were that the existing political layer of 14 people was “too thin” to engage in public communication and liaison; that additional political appointments would be conducive to maintaining the neutrality of the civil service; and that the new positions would serve as a career path for political talents.80 The Chief Executive’s office and the policy bureaus, with the exception of the Civil Service Bureau, were to have a Deputy Director and a political assistant. The Deputy Directors were to report to the Directors of Bureaus and were to be responsible for political input into policy objectives, coordination with other policy bureaus, attending panel and committee meetings of the Legislative Council, responding to motion debates in the main meetings of the Council, timetabling and securing the

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passage of bills, maintaining close contact with the media, political organisations and business and community groups and deputising for the Directors in their absence.81 The political assistants, who were to report to the Deputy Directors, were to engage in community liaison and prepare political statements and speeches for the Director and the Deputy Director.82 After the public consultation period ended in November 2006, the Constitutional and Mainland Affairs Bureau, as it had become, waited for nearly a year before it produced a report which essentially endorsed the proposals in the consultation document.83 The Bureau claimed that most submissions supported the extension of the system but it also reported the views of some who were opposed to the new appointments. The Democratic Party believed that the development of the political appointments system should come after the introduction of universal suffrage.84 Anson Chan, the former Chief Secretary, wanted a full review of the accountability system before making any changes. She also thought that there was no clear division of functional responsibilities between senior civil servants and Deputy Directors.85 Others argued that the process of recruiting Deputy Directors and political assistants should be open and that the Legislative Council should be able to question prospective appointees. This, the Bureau firmly rejected, arguing that open recruitment was “not suitable for political appointments…since it is one of the fundamental principles for political appointees to subscribe to the C(hief) E(xecutive)’s manifesto…”86 Instead, an Appointments Committee, comprising the Chief Executive, the Director of the Chief Executive’s Office, Secretaries of Departments and Directors of Bureaus, was to make the selection decision. When the eclectic mix of former journalists, academics, DAB members, business people and civil servants who made up the first batch of Deputy Directors and political assistants was announced in May 2008, the government was again criticised for failing to match the appointee’s expertise with the bureau in which they were to serve.87 Anson Chan returned to the attack, arguing that the division of responsibility between the political appointees and the senior civil servants was still not clear, that morale in the civil service might be affected, that administrative officers would now find it difficult to be directly appointed as Principal Officials, and that the impression had been given that only pro-government people need apply.88 There were also complaints that five of the eight Deputy Directors had foreign passports. The Chief Executive had said that one of the qualities that the new appointees should possess was that they should be “patriotic.”89 Under the Basic Law, Principal Officials are not permitted to have right of abode elsewhere. A further cross-party criticism was that the government would not disclose the exact salaries of the political appointees to legislators.90 The Chief Executive initially shrugged off the criticisms, saying that there was no Basic Law requirement that Deputy Directors and political assistants should not hold foreign passports and declined to provide information on individual salaries.91 There was growing public feeling, however, that the political appointees should renounce their foreign passports and there was widening criticism of the government for the way in which it was handling the issue. The DAB also found itself in a particularly difficult position. One of its leading figures, Gregory So Kam-leung, had been appointed as a

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Deputy Director but he held a foreign passport. Although a former Chairman of the DAB and Executive Councillor, Tsang Yok–sing, argued that the Deputy Directors should not be required to give up their passports, other party officials were not convinced. They feared that the issue would cost the party support in the September 2008 Legislative Council elections.92 Eventually, the five appointees with foreign passports undertook to relinquish them, apparently as a result of “individual decisions” rather than government pressure.93 The furore over the appointment of Deputy Directors and political assistants illustrates some of the government’s problems with political accountability. The failure to provide information to legislators on the recruitment process or to permit councillors to interview prospective candidates created a situation in which the democratic parties were likely to seize upon any mistakes that were made. For the government’s part, as it subsequently admitted, the in-house process by which candidates were recruited did not sufficiently stress that foreign passports might be an issue.94 If the exercise had been conducted more openly, it is highly probable that the passport issue would have been raised at an early stage in the Legislative Council and that complaints about the government’s failure to disclose the salaries of appointees could have been resolved. The government’s reason for not consulting the legislature fully –– that candidates had to subscribe to the Chief Executive’s election manifesto –– seems an inadequate justification of its actions. This tendency to make a critical decision at the centre of government without sufficient consultation and then to announce it as a fait accompli has led to problems both of accountability and of policy implementation. Political accountability requires that those who are being held accountable for their actions should be subject to the oversight of an external body which has the ability to impose sanctions upon them.95 The measures that have been introduced since 1997 have been taken with the aim of strengthening the political executive but there has been very little reciprocity in strengthening the mechanisms which hold the political executive accountable. In that respect, the abolition of the Municipal Councils was regressive because Urban and Regional Council members did play a role in ensuring that the heads of the Urban Services and Regional Services Departments were held to account. In effect, the government argued that efficiency was a more important value than accountability, rejecting inter alia the view that elected Urban and Regional Councillors could provide an avenue for political talent to advance to the Legislative Council and higher levels of government. Yet the same argument – that the new positions would be a breeding ground for political talents –– was later used by the government to justify the appointment of Deputy Directors and political assistants who have no electoral legitimacy. In its most recent defence of the POAS, the government has put forward three arguments. First, that … [A]lthough the Chief Executive is yet to be returned by universal suffrage in reality he and his Principal Officials are already expected to perform their duties and to respond to public demands in a manner which meets the standards of Hong Kong as an open and transparent community.96

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In other words, although the political executive is not formally accountable, it acts as though it is. Openness and transparency are important characteristics of good governance but they are only tangentially related to political accountability. Principal Officials have shown that they are prepared to be answerable for their actions which might be taken as an indication of openness and transparency. But, if this answerability simply means that they say what happened followed by an apology or an expression of regret, it is unlikely to mollify Legislative Councillors, and others, who believe that accountability means accepting responsibility for mistakes and who expect Principal Officials to resign for poor decisions, inadequate performance or improper behaviour. When it introduced the POAS, the government argued that it would make it easier for the Chief Executive to remove Principal Officials if they were not tenured civil servants which would then serve to make the executive more accountable. In practice, even before 2002, the Chief Executive was still at liberty to transfer Principal Officials within the government. Under the POAS, the reluctance to require Principal Officials to resign when their actions are in question means that their status, in accountability terms, is not significantly different from when the Principal Officials were all civil servants. Thus, despite the government’s best efforts to put a gloss on the new system,97 the accountability of the executive is no further advanced than it was under the colonial system or in the immediate post- handover period. The second justification for the POAS was that it opened up positions in the political executive “to individuals inside and outside the civil service, thereby enabling Hong Kong to draw from a wider pool of political talent.”98 This, too, is only tenuously related to political accountability. Tung Chee-hwa originally presented the system as more responsive to community needs because the Principal Officials were not civil servants, could be drawn from a wider spectrum of the community and in that sense might be more broadly representative, and would have to pay heed to public opinion if they wished to keep their positions.99 Civil servants, by contrast, were permanent and pensionable and could presumably more readily ignore public demands. This logic only holds if the Chief Executive is willing to act against Principal Officials who are responsible for policy failures. And, as we have seen, that has not been the case under either Tung or Tsang’s administration. Under Tsang, moreover, a majority of the Principal Officials in charge of policy bureaus are former administrative officers who are now directing other current members of the same elite grade (see Table 3.1). The appointees to Deputy Director and political assistants in May 2008 were, however, drawn from a larger pool. A third argument used to justify the system was that it strengthened “the foundation of a professional and politically neutral civil service.”100 This implies a separation of roles between Principal Officials and senior civil servants with civil servants accountable to Principal Officials for their actions. The government has argued that this clarification of roles will allow civil servants to devote themselves to the implementation of policy. But it is clear from the reasons given for the appointment of Deputy Directors and political assistants that civil servants do much of the political work for Principal Officials, as they did in the pre-2002 system. In addition, the argument tends to conflate political and bureaucratic accountability. Civil servants are accountable in various ways for their

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actions. But if Principal Officials are not themselves politically accountable, as legislators have repeatedly pointed out, their authority to demand accountability of civil servants is considerably diminished. The POAS has had far-reaching implications for the location of power within the government and for the structure of the civil service itself. It has also had a significant impact on the way that policy is formulated and implemented. But on the grounds which it was originally sold to the Legislative Council and the public –– that it would make Principal Officials more politically accountable for their work –– it must be judged on the evidence so far to have been a singular failure. It has not solved the problem of the disjunction between a Legislative Council, which is looking to assert its constitutional role of holding the executive accountable but which it is unable to do so fully under the present arrangements, and a political executive whose accountability is principally to the Chief Executive, and through him, to the Chinese government.

ch.03(p.49-66).indd 66 11/4/09 4:05:48 PM Part II The Public Sector and Its Problems

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he Basic Law provides only a general framework for the organisation of the Hong Kong government and has even less to say about the public sector beyond the civil service.T Article 48 does specify that the Chief Executive shall lead the government and may appoint judges and holders of public office and Article 62 empowers the government to conduct administrative affairs. Some departments, such as the Police, Immigration, and Customs and Excise, are mentioned in the Basic Law and it is stipulated that there shall be a Commission against Corruption and an Audit Commission, but there is no description of the organisation or powers of any of these bodies. Instead, the Chief Executive may decide, in consultation with the Directors of Bureaus and Heads of Departments, on the way in which their organisations should be structured which may then be formalised in ordinances or in executive orders, regulations and circulars. If new positions are required, or unnecessary ones are deleted, government proposals will be discussed in the Legislative Council. Most bureaus and departments have been organisationally stable for many years1 but refinements are often made as the government takes on new responsibilities, merges bureaus and departments, or ceases to provide services that are no longer necessary. There are also pressures for re-organisation from elected representatives, political parties and interest groups, who reflect changing political, economic and social conditions, and from the government’s own constant search for improvements in efficiency. The underlying principles on which government should be organised have been surprisingly widely shared by political leaders and the public both before and after 1997. The following propositions attract broad support: • that government should be centralised and hierarchically organised; • that the civil service should be run by a generalist administrative elite, selected from the most able candidates available, and that it should be politically neutral;2 • that government should be “small government” and that it should perform only limited functions3 with a focus on fiscal frugality, efficiency and “value for money”4 • that the recruitment and promotion of civil servants should be made on grounds of merit and that most civil servants should enjoy tenured positions for the duration of their working lives;5 and

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• that the civil service should be as free of corruption as possible and subject to the rule of law.6

These principles are not as easily achieved as might be supposed. There has sometimes been a sizeable difference between the way in which the government is expected to function and the way in which it actually operates. The Hong Kong government has not always been small or limited in function or corruption-free. The tenure of civil servants and the interpretation of political neutrality have been subject to challenge. Changing economic conditions and the political context in which the government finds itself have also been important factors influencing the structure of government. In this chapter, we will examine the formal structure and functions of the Hong Kong government – the way it is supposed to work — and assess the extent to which practice has deviated from the first three principles. In Chapter 5, we consider the remaining principles and the government’s record in meeting those criteria through its personnel policies.

The Structure of Government

The Colonial System

The formal structure of the Hong Kong government has traditionally been highly centralised. Power has always been concentrated in the hands of a relatively few senior figures, partly because of the political circumstances in which the rulers of Hong Kong found themselves but also because decentralised or devolved government in a small territory has only occasionally been necessary. The civil administration of Hong Kong was promulgated by despatch from the Colonial Office in June 1843.7 In September 1843, the offices of Governor and Colonial Secretary were established together with the Judiciary, Finance, Harbour, Public Works and Lands Departments.8 A Police Force and an Audit Commission were created in 1844.9 For the first twenty years or so, Hong Kong’s administration was chaotic and corrupt. In the next twenty years, civil service reforms produced a strongly centralised system of hierarchically organised departments. The first cadets (later called administrative officers) were appointed in 1862 and soon assumed the most senior positions within the civil service.10 Corruption in the police was addressed later in the 1860s by appointing a cadet as head of the Force.11 And, by the beginning of the 1880s, public finances were managed in a more systematic way. At the apex of the system was the Governor, but he was often dependent on the advice of his Colonial Secretary who was the person actually in charge of the civil service. Power was concentrated in the Colonial Secretariat which contained within it the cadets who were responsible for the central functions of finance, policy-making and the regulation of the civil service itself. Responsibility for relations with the public lay with the Secretariat for Chinese Affairs, a separate body, which took on the functions of liaison and consultation with the representatives of elite Chinese opinion.12 When the New Territories was acquired in 1899, there was a greater devolution of autonomous

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decision-making to the level of the district officer who exercised his authority with the advice of local elites.13 On Hong Kong island and in Kowloon, government remained highly centralised and there was very little devolution of power or responsibilities. Over time, the government gradually created a number of departments which at first were concerned with law and order but latterly expanded into social services, notably the provision of public housing in the 1950s. While the Colonial Secretariat was able to make and implement decisions it was fulfilling a largely regulatory function in a small government in which changes were almost always incremental. After the Second World War, there were many additional pressures. Senior officers were over-loaded and the Secretariat was becoming clogged and unable to respond rapidly enough to the problems with which it was faced.14 There were various proposals for reform but it was not until 1972 that the Governor decided that there was a need for a re-vamped administrative structure to deliver social services more efficiently. The McKinsey consultants were employed to make recommendations. They found that departments could not “take many decisions” and that, as a consequence, “large numbers of decisions have to be taken centrally...”15 They devised a new structure in which the policy functions which had been bundled together in the Colonial Secretariat were hived off to six policy branches and two resource branches (finance and the civil service), each of which was headed by a Secretary.16 The policy branches formulated policy which the departments under their control were then expected to implement. As time went on, the problem of overlapping and unclear responsibilities led to the creation of more branches and more departments. Power remained highly centralised, however. The Policy Secretaries were mostly members of the administrative grade, which provided for cohesion and unity of direction, and they reported to the Colonial Secretary (later called the Chief Secretary). In addition, control over expenditure remained firmly in the hands of the Financial Secretary. The newly created Civil Service Branch took over responsibility for the management of the entire civil service, a reform that was intended to provide for better co-ordination with the departments and the Public Service Commission than its predecessor, the Establishment Branch.17 The McKinsey structure, with some modifications arising from the introduction of the Principal Officials Accountability System (POAS), has remained the organisational template for the civil service since 1973.

The Government Secretariat after 1997

Figure 4.1 shows in diagram form the way in which the Government Secretariat is expected to work. The Chief Executive replaces the Governor at the apex of the structure. His powers are derived from The Public Service (Administration) Order and the Public Service (Disciplinary) Regulations which were passed in 1997 and give the Chief Executive similar authority over the civil service to that exercised by the Governor.18 Beneath the Chief Executive, the Chief Secretary for Administration is the head of the civil service and the direct lineal successor of the Colonial Secretary. Slightly beneath him in the hierarchy are the Financial Secretary and the Secretary for Justice who

ch.04(p.69-93).indd 71 11/4/09 4:09:38 PM 72 The Public Sector in Hong Kong Bureau and the Services Treasury Treasury Financial Bureau Development FINANCIAL SECRETARY FINANCIAL and Bureau Economic Commerce Development and Bureau Housing Transport Bureau Security and Labour Bureau Welfare Welfare Home Affairs Affairs Bureau ADMINISTRATION CHIEF EXECUTIVE CHIEF SECRETARY FOR CHIEF SECRETARY The Government Secretariat, 2008 4.1 Figure Health Bureau Food and Bureau Environment Bureau Education and Mainland Constitutional Affairs Bureau Affairs SECRETARY FOR JUSTICE SECRETARY Civil Bureau Service

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replaces the colonial Attorney-General. The Chief Secretary and the Financial Secretary are expected to vet policy proposals and related increases in public expenditure coming from the bureaus (as the branches were called after the handover) and to filter out those which the government cannot afford or does not consider a priority. When the POAS came into effect, this critical function was devalued and the Chief Secretary and the Financial Secretary were in effect downgraded to the level of Policy Secretaries.19 One of Donald Tsang’s first acts when he succeeded Tung Chee-hwa as Chief Executive in 2005 was to re-assert the pre-eminent positions of the Chief Secretary and the Financial Secretary.20 In 2002, the Hong Kong civil service was divided into sixteen bureaus which made policy and nearly 60 departments and agencies which were responsible for administering programmes and dealing with the public. The policy bureaus continued to be largely staffed by the administrative grade whose members were also the heads of some 26 operational departments.21 With the introduction of the POAS in July 2002, the Chief Executive decided to reduce the number of bureaus from sixteen to eleven. As a consequence, there were mergers and re-organisations of bureaus and reviews of the implication of the devolution of power to Directors of Bureaus.22 The Directors were given a greater degree of financial autonomy through the introduction of an “envelop” approach which was to give them “clear parameters on the operating resources available to them” which they were then required to allocate to the departments under their control.23 There was also considerable re-organisation of the departments.24 In June 2007, Tsang undertook further major organisational changes. The number of policy bureaus was increased to twelve and there were reviews of the structure of each of the bureaus.25

Departments

Departments and agencies come below the bureaus in the hierarchy and are subject to their direction (see Table 4.1). Formally, a department is a government body which exercises authority to implement the laws and regulations which fall under its jurisdiction. However, the Hong Kong government also considers some organisations, which are not, strictly speaking, departments, such as the University Grants Committee, to fall under the jurisdiction of bureaus. The confusion over the term reflects the centralising tendency of the government. The bureaus are considered to have oversight over different types of public sector organisations that have responsibilities within the area of the bureau’s remit. These may include commissions, advisory committees and statutory bodies as well as departments. What they are actually called and what distinctive legal characteristics they may possess is less important, from the standpoint of the government, than that they should support and implement centrally-determined objectives.26 Apart from some social services departments, the proportional size of departments within the civil service as a whole has remained relatively unchanged since colonial days. Table 4.2 shows the strength of the twelve largest departments in 2008. Compared with 1988, as a proportion of the civil service, the disciplined services (Police, Fire Services,

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Table 4.1 Bureaus and Departments in the Hong Kong Government, 2008 Office of the Secretaries Departments and Agencies Chief Secretary for Administration Administration Wing; Efficiency Unit Financial Secretary Economic Analysis and Business Facilitation Unit Secretary for Justice Department of Justice

Bureaus Departments and Agencies Civil Service Bureau, Secretariat, Advisory Bodies on Civil Service Commerce and Economic and Judicial Salaries and Conditions of Service Development Bureau Hong Kong Observatory; Innovation and Technology Commission; Intellectual Property Department; Invest Hong Kong; Office of the Chief Information Officer; Office of the Telecommunications Authority; Post Office; Radio Television Hong Kong; Television and Licensing Authority; Trade and Industry Department; Hong Kong Economic and Trade Offices (Overseas) Constitutional and Mainland Registration and Electoral Office; Office of the Affairs Bureau HKSAR Government in Beijing; Hong Kong Economic and Trade Offices (Mainland) Development Bureau Architectural Services Department; Buildings Department; Civil Engineering and Development Department; Drainage Services Department; Electrical and Mechanical Services Department; Lands Department; Lands Registry; Planning Department; Water Supplies Department Education Bureau Secretariat, University Grants Committee; Student Financial Assistance Agency Environment Bureau Environmental Protection Department Financial Services and the Census and Statistics Department; Company Treasury Bureau Registry; Government Logistics Department; Government Property Agency; Inland Revenue Department; Office of the Commissioner of Insurance; Official Receiver’s Office; Rating and Valuation Department; Treasury Food and Health Bureau Agricultural, Fisheries and Conservation Department; Department of Health; Food and Environmental Hygiene Department; Government Laboratory

(Table 4.1 continued on p. 75)

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(Table 4.1 continued)

Bureaus Departments and Agencies Home Affairs Bureau Home Affairs Department; Information Services Department; Legal Aid Department; Leisure and Cultural Services Department Labour and Welfare Bureau Labour Department; Social Welfare Department Security Bureau Auxiliary Medical Service; Civil Aid Service; Correctional Services Department; Customs and Excise Department; Fire Services Department; Government Flying Service; Hong Kong Police Force; Immigration Department Transport and Housing Bureau Civil Aviation Department; Highways Department; Housing Department; Marine Department; Transport Department Source: Adapted from www.gov.hk/en/about/govdirectory/govchart/index.htm (accessed 12 July 2008).

Table 4.2 Strength of the Twelve Largest Departments, 2008 Department Strength 2008 (%) 1988 (%) Hong Kong Police Force 31,882 20.8 17.6 Food and Environmental Hygiene 9,822 6.4 – Fire Services 9,167 6 4 Housing 7,385 4.8 6.5 Leisure and Cultural Services 7,012 4.6 – Correctional Services 6,426 4.2 3.3 Immigration 6,357 4.1 2.8 Customs and Excise 5,391 3.6 1.9 Education Bureau 5,343 3.5 3.5 Post Office 5,236 3.1 2.5 Social Welfare 4,739 3.4 1.9 Health 4,669 3.0 14.5 Others 49,948 32.5 25.4 Total 153,477 100 100 Source: Calculated from Civil Service Branch, Civil Service Personnel Statistics 1988 (Hong Kong: Government Printer, 1988), 10–14; www.csb.gov.hk (accessed 9 July 2008). Note: Civil servants in the Leisure and Cultural Services Department and the Food and Hygiene Department were drawn largely from the former Urban Services and Regional Services Departments which together constituted 13.2% of the civil service in 1988.

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Correctional Services, Immigration and Customs) have increased in percentage terms. Customs was not represented in the twelve largest departments in 1988 but much greater cross-border traffic since 1997 has required the recruitment of additional staff. There have also been significant increases in numbers in the Fire Services Department. Health and Housing have declined in both absolute and percentage terms, reflecting the creation of the Hospital Authority, which employed many civil servants from the former Medical and Health Department, and the privatisation of the management of some housing estates. The Social Welfare Department has risen substantially in percentage terms although the major increase in absolute numbers occurred before 1997. In general, the figures suggest that, while trying to downsize the civil service, the post-1997 government has still tended to support some increases in the disciplined services establishment but has sought to deliver social services by other means, if possible, and to reduce the size of those departments accordingly. Although bureaus are charged with policy formulation, they are often unable to proceed with proposals without the advice and ideas of senior departmental officers. There is, consequently, continual interaction between the bureau and the departments. It might be argued that this is a duplication of resources that could possibly contribute to slower decision-making. The merger of the Education Bureau with the Education Department in 2003, for example, was predicated on the belief that the bureau and department had overlapping responsibilities.27 Proponents of separating bureaus and departments, which include many administrative officers, argue to the contrary that the exchange of ideas and the links with other bureaus and decision-making bodies improves policy co-ordination and the quality of policy-making. This structure sometimes also leads to tension between the bureaus and departments. Departmental officers have complained that the administrative officers have too little experience to make sensible proposals in their areas. They have also occasionally been incensed when administrative officers have been parachuted into senior positions in departments, adversely affecting their promotion opportunities.28

Hierarchy: Grades and Ranks

The civil service is divided into about 380 grades which are then further sub-divided into approximately 1100 ranks.29 New recruits join a grade and are usually assigned to the lowest rank in the grade. In the Police Force, for example, depending on qualifications, new recruits may join at the rank of inspector or at the rank of constable and, subject to performance, will move up the ranks to more senior positions. A host of other grades work in the Police Force. These include both police departmental grades, such as translators, interviewers and traffic wardens, and civilian grades such as administrative officers, executive officers, typists, treasury accountants, clinical psychologists and many others.30 The Police Force is one of eight disciplined services falling under the Security Bureau. In the disciplined services, hierarchy is particularly important in issuing orders and ensuring compliance and, as a result, there tends to be more ranks to supervise and monitor the performance of junior officers. In the Police Force, for example,

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there are fifteen ranks ranging from the Commissioner of Police at the head of the organisation to constable at the bottom (see Table 4.3). In other grades, collegiality and the exchange of ideas may be more important qualities than control within a hierarchy. In the administrative grade, for example, there are seven ranks and, in the Department of Justice, only three. As Table 4.3 shows, the function performed by the grade changes the shape of the hierarchy. In the Police Force, the organisational structure is a sharp pyramid with most police officers in the junior ranks. This structure helps to promote rapid communication of orders down the line of command. In the administrative grade, there is a more even spread of staff within the ranks, reflecting greater collegiality and potential for flexibility in postings across the civil service.

Table 4.3 Ranks and Establishment in the Police Force and in the Administrative Grade, 2008 Police Force Establishment Administrative Grade Establishment (ranks) (ranks) Commissioner of Police 1 Staff Grade A1 (D8) 17 Deputy Commissioner of Police 2 Staff Grade A (D6) 14 Senior Assistant Commissioner of Police 5 Staff Grade B1 (D4) 27 Assistant Commissioner of Police 14 Staff Grade B (D3) 47 Chief Superintendent 45 Staff Grade C (D2) 179 Senior Superintendent 87 Senior Administrative 165 Officer Superintendent 273 Administrative Officer 141 Chief Inspector 524 Probationary Inspector/ Inspector/ 1652 Senior Inspector Station Sergeant 1291 Sergeant 4660 Constable/Senior Constable 19096 Total 27649 590 Sources: www.legco.gov.hk/yr07-08english/fc/f/w-q/sb-e.pdf (accessed July 7, 2008). There was an additional permanent establishment of 4833 civilian posts in the Police Force in 2008; www. csb.gov.hk/English/grade/ao/751.htm (accessed July 6, 2008).

Most grades are departmental grades. Civil servants in those grades will spend their working careers within the department and are not usually transferred to other departments although they may be seconded to deal with particular situations. As they acquire experience, they will normally move up the hierarchy taking on more responsible tasks. The efficient working of the administrative system depends on the knowledge acquired by these civil servants in dealing with the same kinds of problems,

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delivering services or administering laws over long periods of time. The hierarchical structure of the civil service promotes efficiency, ensuring that orders issued at the top are carried out by more junior staff. But there are disadvantages. Most departments do not usually encourage much upward communication of information from lower levels of the organisation with the consequence that problems may exist for some time before senior officers can rectify them. Further, if senior civil servants are content with the status quo, departments can become moribund and unable to deal with new problems or to seize new opportunities. For two grades, transfers between bureaus and departments are a regular part of their working life. Administrative and executive grade officers are usually posted to new positions every two to three years. The formal rationale for this practice is to provide experience in different aspects of administration across the civil service. But the practice is also important in retaining a central presence in the departments and in attempting to ensure that those officers are not captured by the departments to the extent that they resist central instructions. Administrative officers are the conduits through which information on policy passes from the centre to the departments and back from the departments, through the administrative officers, to the centre. Executive officers, similarly, perform important tasks in ensuring that the personnel practices devised by the Civil Service Bureau and the laws, with which the departments must comply, such as the Protection of Data Ordinance, are observed in the departments.31 Without the role played by these generalist grades, the system would not work smoothly. A top- down, centralised, hierarchical system, in an organisation as large as the Hong Kong civil service, needs adequate channels of communication if it is to avoid potentially conflicting policy objectives and implementation and the possibility that administrative practices might develop that are contrary to the intentions of the centre.

The Administrative Grade

The administrative grade plays a key role in another respect. Its members form a significant proportion, some 23%, of the 1205 civil servants who in 2008 made up the directorate level of the civil service.32 The directorate comprises the most senior officers in the civil service and is responsible for the formulation and implementation of policy and for performing high-level personnel and operational functions. A majority of the directorate are senior departmental officers who have risen to the top positions through the ranks. Administrative officers, however, are usually principally involved with policy formulation and until 2002 often made the final decision on whether policy should or should not be adopted. This political role has resulted in conflict with elected politicians in the Legislative Council and some difficulties with political appointees to the positions of Directors of Bureaus, as Policy Secretaries became known after the POAS was introduced. Since Tsang became Chief Executive, however, there has been some restoration of the power and influence of the grade. For much of the colonial period, the administrative grade was an entirely male, expatriate elite usually recruited from among graduates with good degrees from British

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universities.33 No Chinese were recruited to the grade until 1948 and localization was very slow; even by 1968, there were still only fourteen Chinese administrative officers.34 Women were not admitted until the early 1960s and only then after a fierce debate among the senior officials. By 1997, the grade had expanded to around 500 officers of whom nearly 50% were female.35 By that time, local officers made up well over 90% of the grade. Expatriate recruitment had ceased and most of the remaining expatriates were close to retirement.36 New recruits are expected to be intelligent, innovative, concerned with the welfare of the community, and fluent in English and Cantonese and, increasingly, in Putonghua. Salaries are generous and promotion is usually quite rapid. Despite the very considerable changes that had taken place in its composition by 1997, the public esteem in which the administrative grade was held remained remarkably unchanged. Administrative officers continued to be respected for their high levels of integrity — before 1997, none was convicted of a corrupt offence37 — for their meritocratic selection in the face of often fierce competition for admission to the grade and for their ability to resolve problems. When decisions were made by this closed elite and implemented authoritatively by the departments, the grade had great power and influence within the structure of government. By the 1990s, however, the political environment had begun to change. The administrative grade slowly retreated from its position of unquestioned pre-eminence and morale within the grade gradually declined.38 The directly elected members of the Legislative Council were more critical of government policies than their appointed predecessors; the Chinese government was suspicious of an administrative elite which was seen to be working for the British government against its interests; some high profile local Chinese officers, who had been identified with the policies of the last Governor, Chris Patten, left the service for statutory bodies or the private sector; and the promotion prospects of expatriates were adversely affected by the Basic Law.39 By 1997, power still remained in the hands of senior civil servants, many of whom were members of the administrative grade, and the public esteem in which they were held had not seemingly diminished. Their dominance was no longer unquestioned; their political masters sought to exert greater control over how the civil service worked and how policies were formulated and implemented.

The Administrative Grade after 1997

After the handover, the new regime had three choices on how it would exercise power. The first was to seek democratic legitimation and to move rapidly towards the universal suffrage promised in the Basic Law, a course of action to which the Tung administration and the Chinese government were adamantly opposed. A second option was continued rule by the senior civil service. Before the handover, the Chinese government had given assurances that the civil service would function much as it had done in the past40 and the Basic Law provided that conditions of service would remain unchanged. In 1997, the Chief Secretary, the Financial Secretary and the serving Policy Secretaries, who were administrative grade officers, were all re-appointed as Principal Officials; only the newly created position of Secretary for Justice went to an outsider. At that time,

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Anson Chan On-sang, the Chief Secretary and an administrative officer, was probably a more popular choice for Chief Executive than the person whom the Chinese government selected, Tung Chee-hwa. The third option, which gradually emerged as Tung and the Chinese government’s preferred choice, was to exert more political control over the civil service to bring it in line with new policy objectives and Hong Kong’s changed status. Despite the assurances which the Chinese government gave about the continuance of the system of governance after 1997, there was, from the outset, an undercurrent of opposition to the continuing pre-eminence and power of senior members of the administrative grade. Members of the Executive Council, Tung Chee-hwa’s own advisors, pro-China united front groups and some businessmen were amongst those who saw the civil service, at best, as an obstruction to the achievement of policy goals and, at worst, as a relic of colonial rule and privilege. The Chinese government appears to have been equally suspicious of the administrative grade. Anson Chan, for example, was reportedly personally warned by the Chinese leadership to support the Chief Executive.41 In 2002, Qian Qichen, the Vice- Premier, told a newspaper reporter that the Chinese government questioned the loyalty of senior civil servants who had been appointed by the colonial administration.42 At the fifth anniversary of the handover, the Chinese President, Jiang Zemin, in a comment which was also taken to be an attack on the commitment of senior government officials to the policies of the Chief Executive, said: Civil servants at all levels, especially ranking officials, should conscientiously submit to and support the leadership of the chief executive, work with one heart and strive to achieve fresh success.43

All this came with a barrage of hostile criticism for the policy failures of the post- 1997 period. Rather than the rational, far-sighted, competent officials, who were held in high public esteem at the handover, civil servants were now portrayed as overpaid, underachieving spendthrifts who, rather than the Chief Executive, were responsible, through their inefficiency, for the decline of Hong Kong. Indeed, seemingly so intense was the feeling against civil servants that the Chief Executive himself felt compelled to note — remarkably, if self-evidently — that civil servants were not responsible for Hong Kong’s growing fiscal deficit.44 Initially, the centralising measures taken by the post-handover administration — the abolition of the Municipal Councils and some civil service personnel reforms — did not affect the continuing dominance of the administrative grade. When the POAS was implemented in 2002, however, there were significant implications for these officials. The scheme created political support for the Chief Executive at the Director of Bureau level because the new appointees were no longer civil servants and were dependent on him for their continuation in office. But it did not entirely resolve the problem of maintaining or enhancing a centralised administration because in the process bureaus became more autonomous and co-ordination between them was unintentionally reduced.

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Some of the glue which had held the system together and which had enabled a centralised governmental structure to work effectively had been removed. The POAS required those administrative officers at the most senior levels to decide whether their fortunes lay with the regime, whether they preferred instead to play a diminished role within the civil service, or whether they would resign or take early retirement. If they accepted an offer as a Director of Bureau, they would become political appointees on contract and would have to relinquish permanent and pensionable terms of service. They would owe their position directly to the Chief Executive. They would be expected to be transformational leaders. They would be thrust into the political maelstrom and could be dismissed if they failed to deliver on policy. As Tung discovered when he canvassed senior civil servants to take up positions as Director of Bureaus, this was not to everyone’s liking. A second possibility was to remain a civil servant under the new political superstructure, and perhaps under the control of the new Directors of Bureaus from outside the service, who did not always share the values of the administrative grade. There would be no prospects, as there had been in the past, of reaching a position where critical policy decisions were largely within their control; the politically appointed Directors were expected to make those decisions. The administrative officers would simply execute political decisions made elsewhere, a significant diminution of their role. For those administrative officers slightly below the highest level, their promotion prospects were affected by cutbacks in the directorate level establishment of positions held by administrative officers and by further ventilation of the long-standing complaint of senior specialist departmental officers that they should not be expected to serve under generalist administrators.45 Morale in the administrative grade was also detrimentally affected by what appeared to be a re-interpretation of the traditional concept of political neutrality. Political neutrality, drawing on British practice, had been taken to mean the right of senior civil servants “to speak truth to power”, to advise the political decision-makers on appropriate courses of action and then to implement to the best of their ability whatever was decided. In her valedictory address in 2001, the outgoing Chief Secretary, Anson Chan, defended this traditional conception: [Civil servants] know they can tender advice without fear or favour, safe in the knowledge that even the most unwelcome advice would not lead to blighted career prospects or unpleasant postings out of earshot of those who may not like what you have to say… I believe passionately in the notion of a politically neutral civil service…46

Increasingly, however, political neutrality appeared to be supplanted by the expectation that civil servants should, above all, be loyal to the government and unquestioningly obedient to the dictates of political appointees, a situation which might apply in the fused political/administrative system of China but which did not sit well with Hong Kong civil servants. A Chinese State Councillor, for example, implied that political neutrality was an outdated British idea in the context of another Councillor’s remark that civil

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servants should be patriotic and uphold the Basic Law.47 Although the Secretary for the Civil Service re-affirmed on at least three occasions that the government still regarded political neutrality as central to the role that the civil service played, in practice it seemed that the politicians regarded loyalty and obedience more highly than honesty.48 By the time that Tung Chee-hwa relinquished office, the problems of role definition and morale in the senior levels of the civil service were having an impact on policy formulation. The government found it difficult to implement its policies and co-ordination between bureaus appeared to be influenced by the perception that administrative officers had a less positive and self-confident role to play and were to be regarded more as the executors of policy rather than as its initiators. Directors of Bureaus were following their own paths and canvassing their proposals directly with the Chief Executive. Many of these new proposals found their way only slowly, if at all, into the public domain because after the July 2003 demonstrations, the capacity of the government to introduce new policies was very much reduced by the level of opposition in civil society. When Tsang, himself a former administrative officer, succeeded Tung Chee-hwa in 2005, he went some way to restoring the lost prestige and influence of the grade. The Chief Secretary for Administration and the Financial Secretary, both former administrative officers, were immediately given back their former roles as gatekeepers and the structure of government was adapted accordingly. Following his first policy address in October 2005, the government sought to strengthen the bureaus and the directorate. Although there was formally a freeze on recruitment, the government proposed the creation of thirteen new directorate posts, ten of whom would be administrative officers.49 Promotions prospects improved and the grade benefited from an increased establishment which brought its numbers from 588 in 2005 (the same establishment as in 2002) to 613 in 2008.50 There were further changes in May 2007 when the Constitutional Affairs Bureau undertook a detailed review of the organisational structure of the policy bureaus and in July 2007 when former administrative officers were appointed as Directors of Bureaus. By July 2008, nine of the twelve Directors of Bureaus were former administrative officers (see Table 3.1). Eighteen of the nineteen Permanent Secretaries and 29 of the Heads of Departments (compared with 26 in 2002) were administrative officers.51 The Tsang administration also stressed the importance of the political neutrality of civil servants when it proposed to make political appointments at the Deputy Director and Political Assistant levels, arguing that this would relieve civil servants of the need to do “political work”.52 It was not clear, however, whether the emphasis on political neutrality reflected a return to speaking truth to power or whether it was still being defined principally in terms of loyalty and obedience. Nonetheless, by 2008, the civil service rather more resembled its colonial predecessor than the somewhat confused structure that had resulted from the POAS.

Problems with the Post-handover Structure of Government

Aside from the problems of role definition and morale in the administrative grade, there were three other major structural problems that faced the government after 2002:

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the system was over-centralised; lines of authority were not clear; and bureaus and departments were too autonomous. In any public administration system, it is difficult to find the appropriate balance between the degree of centralisation and control and the ability to deal effectively and efficiently with the many issues that require decisions. One of the aims of the POAS was to centralise the government to an even greater extent than under colonialism. But by reducing the number of Director of Bureaus, the Chief Executive created a situation in which they were almost bound to be over-loaded and where matters requiring decision might in practice either still revert to senior civil servants or would not be dealt with expeditiously. One of the defences offered by the Secretary for Financial Services and the Treasury in the Penny Stocks incident, for example, was that the “papers and files in my office were piling up like a mountain and I could not possibly have read every document.”53 Each of the Directors of Bureaus conducted a review to determine whether the sixteen Permanent Secretaries appointed for the eleven bureaus were all necessary and concluded, presumably in view of the workload, that they should remain in post.54 The organisational changes resulting from the POAS also caused some confusion about the lines of command in the newly created bureaus and merged departments. There were problems over the relationship between the Director of the Bureau and the Permanent Secretary and some uncertainty over who was responsible for what. In the Penny Stocks incident, for example, it was not immediately clear whether the Financial Secretary had some responsibility for the affair or whether the Secretary for Financial Services and the Treasury was wholly accountable. The deletion of senior posts in the directorate affected lines of command and the allocation of responsibilities. The initial re-organisation resulted in the deletion of eighteen directorate level posts and 146 non-directorate posts and total saving on staff salaries of over $100 million and there were further cuts in the years after the POAS was introduced.55 At times, the logic of re-organisation seemed to be subsidiary to the aim of cutting civil service costs. In addition, the re-organisation appeared to enhance the autonomy of the departments but without imposing a uniform structure upon them. Subject to Legislative Council approval, Directors of Bureau appeared to be able to re-organise their bureaus and departments in any way that they thought was appropriate without taking into account inter-departmental co-ordination. This raised the issue of whether establishing different bureau and departmental structures within the government might mean that initiatives which required the joint action of two or more departments might not receive sufficient attention. By the end of the Tung administration in March 2005, the Hong Kong government was still carrying out routine functions efficiently. But it had lost much of its capacity to deal with new problems. This was not simply a result of confusion within government about the way in which the POAS should work; the opposition of civil society organisations to important government policies was perhaps a more important factor. But poor policy formulation, co-ordination and implementation did relate in part to the difficulties in which the government found itself. Tung tried to achieve greater centralisation and political control over the civil service while at the same time changing

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its structure at the top and reducing its size. The end product was a government that lacked co-ordination and direction and over-loaded the Chief Executive. Under Tsang, although the POAS was retained and to some extent expanded with the appointment of Deputy Directors and Political Assistants, former administrative officers were in charge of many bureaus and administrative officers held many of the senior positions in the civil service itself. Tsang at first worked with the same eleven policy bureaus that had been created under Tung but, in July 2007, he increased the number of bureaus to twelve. The government also used the argument that Directors of Bureaus were over-loaded to canvass for the political appointment of Deputy Directors and Political Assistants. In a report published in October 2007, the government gave as its first reason for making more political appointments that: Principal Officials need additional support to meet the demand of people- based government. The existing political layer is too thin to deal with the demands of governance and political work.56

As a corollary to lessen the load of the Directors of Bureaus, it might have been supposed that when deputies were appointed, they would have been given specific portfolios within the bureau. But this was not the case and it was left to individual Directors to determine what roles their deputies should play. The broader question is whether the Hong Kong government needs such a centralised system. There have been occasional moves to devolve minor responsibilities to the District Councils. The government has also shown some enthusiasm for outsourcing and a measure of privatisation and it has become a little leaner but most of its functions are still undertaken within a centralised hierarchical structure. Tsang has claimed that his administration will continue to focus on “people-based governance” but this seems to be limited to “identifying what our people need so as to provide them with more efficient and convenient services.”57 It does not extend to de-centralising the government structure or to permitting civil society organisations to play a larger role. Power remains highly centralised; decisions are taken in top-down fashion; and the extent to which the community is involved in decision-making, beyond formal consultation, is still limited.

Small Government

Small government in the Hong Kong context has at least three closely related meanings: limiting the functions of government and ensuring that the government is fiscally frugal and cost-effective; limiting the size and cost of the civil service; and enabling the private sector to deliver services that might otherwise have to be provided by government. We consider each of these in turn.

Limiting the Functions of Government

The original functions of the colonial government — the maintenance of law and order, the administration of justice, public works, port administration and the prevention and

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control of epidemics and relief from the effects of natural disasters — remained the main tasks undertaken by the civil service for well over a century. The prevailing belief was that government should only undertake those functions that were absolutely necessary and that its main role was to regulate the society in ways that would encourage the economy to prosper. So entrenched was the view that Hong Kong government should only have limited functions that, even after it had begun to provide social services on a considerable scale and was no longer a small government in that sense, it was still regarded as a model for capitalist systems. In 1979, for example, Milton Friedman wrote that Hong Kong was an “excellent current example” of limited government and free market societies in action.58 Limiting the functions of government was closely related to the belief in the need for fiscal frugality and a balanced budget. The colonial government could not afford to fund social policies to any great extent and was under pressure not to do so from the British government, which did not want to subsidise its colony, and from the local business community who saw any additional expenditure as a prelude to increased taxation. Most education, health and welfare services were provided by the churches, Chinese traditional organisations, such as the Tung Wah and Po Leung Kuk, and by voluntary agencies.59 The government provided some support through land grants and subventions but did not become actively involved in the provision of social services until after the Second World War. “Value for money” became, and remained, a central plank in the government’s financial practices. As the colony prospered, the government began to accumulate large reserves and the Financial Secretary was usually able to budget for a surplus. In only five of the fifty years before 1997 did the government experience a budgetary deficit.60 The Financial Secretary nonetheless exercised tight control over expenditure and much time was spent in looking for ways to save money. New proposals were vetted very carefully and, until the 1970s, departments required the approval of the Finance Branch for buying even relatively minor items such as a calculator.61 In February 1989, by which time it was clear that the system was too centralised, the Branch produced its own proposals for reform which included a re-definition of its role. It stated its difficulties very clearly: Traditionally, financial control has been highly centralised … To date, the debate concerning resource allocation has revolved mainly around the deployment of new resources. This incremental approach is fundamentally limiting. Attention is focused on new services, and seldom on a re-appraisal of the need for current activities.62

The document envisaged that in future the Finance Branch should be responsible for “global totals and controlling the overall allocation of resources to Policy Secretaries.”63 Although greater devolution was eventually introduced, there was still opposition from those within the Finance Branch who continued to favour centralised control. The functions of the colonial government gradually began to expand in the 1950s when the influx of refugees from China caused the population to increase four-fold in the space of a few years, putting pressure on the housing supply and stretching other

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facilities. A Department of Labour and a Social Welfare Department were created although not with the aim of providing services as of right.64 Rather the intent, which remains the government’s starting point to this day, was to re-integrate welfare recipients into the workforce as quickly as possible. The introduction of the public housing programme, following the disastrous 1953 Christmas Day fire which left thousands of squatters homeless, was based on a similar logic. To provide public housing became a government policy not because the government was moved by the plight of homeless squatters but because it believed that freeing up the land they vacated would be good for the economy.65 Social policies were introduced either because they were felt to serve economic ends or because, as in the case of some very basic labour laws and the provision of government primary schools, there were fears that if nothing was done the Communist Party might exploit the situation. By the 1960s, this approach was insufficient to deal with the social problems of a much larger population. The Commission which investigated the 1966 riots found serious problems with the labour laws, weaknesses in other policy areas, and a “gap” between government and the people.66 The riots and further disturbances in 1967, which were a result of the Cultural Revolution, were not immediately reflected in new social policies aside from reforms to the labour laws. However, in 1972, following MacLehose’s commitment to the much greater provision of housing, education, health and social welfare, which itself represented a sea-change in the philosophy of government and in ways of maintaining social stability, the functions of government and the size of the civil service increased dramatically. Between 1972 and 1982, the establishment grew from 94,816 to 168,298, an increase of over 56%.67 In the transitional period between 1984 and 1997, there were political and structural considerations which made it difficult to reduce the functions of government or the size of the civil service. MacLehose’s commitment to the funding of social policies created expectations that the new services would continue to be provided. There was, moreover, no financial pressure to cut those services or the number of civil servants supplying them; the economy was strong and the budget was in surplus. In addition, the British and Chinese governments were agreed on the need to keep the civil service stable in the potentially volatile years before the handover. Rather than devolving functions or taking measures to reduce the civil service, both of which would have resulted in political opposition, the Hong Kong government instead avoided controversy and focused on maintaining the status quo. It did create more statutory bodies, some of which were concerned with civil liberties and which were intended to alleviate fears about the handover, and it promised new programmes, not all of which were immediately implemented.68 Despite the more relaxed attitude to public expenditure in the 1990s, the government did issue a document “Serving the Community” which presented a rationale for the system of government in Hong Kong. “Living within its means” was identified as one of the key principles.69 It was defined as the way in which government decided on how much it could afford to spend and how to set priorities to meet community needs within that limit. In the narrow sense, this meant that government expenditure should not exceed

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its revenue, a principle which was embodied in the Basic Law, but which was of little concern to a government that continued to enjoy large surpluses. The consequence was that Hong Kong arrived at 1997 with anything but a small government. In 1997, the civil service had an establishment of 189,136 of which 182,675 positions were actually filled.70 There was also a substantial public sector comprised of public corporations, statutory bodies and subvented organisations, many of which drew on the public coffers for their funding. Government pervaded the lives of the citizens of Hong Kong, a far cry from the original colonial ideal of distance from the citizen and the provision of only minimal services. Yet, despite the evidence that the government had grown “like Topsy”, as one Legislative Councillor put it, the value and commitment to small government and to the belief that it was the appropriate form for a capitalist system remained unimpaired. By 1997, the government knew that it should slim down, but was still not perhaps quite ready to do so; recruitment to the civil service again began to rise.

The Size and Cost of the Civil Service

The post-handover government was as expansionary as its colonial predecessor had been. Major initiatives were announced in the Chief Executive’s first policy address including new programmes in education, housing and infrastructure.71 There was no mention of cost-cutting in the civil service; the focus instead was to be target-based management and achieving results.72 Thereafter, the effects of the Asian financial crisis, a further downturn, and the economic consequences of the SARS epidemic resulted in six consecutive years of budgetary deficits on the operating account. As unemployment rose, there was political and public pressure on the civil service to reduce its costs and to return to the principle of small government. The government took three broad measures to attempt to reduce costs: to downsize the civil service; to cut civil service salaries; and to introduce an Enhanced Productivity Programme73 and an Efficiency Savings Exercise scheme to cut expenditure. In his policy address in 2003, the Chief Executive indicated that the government’s objective was to reduce the size of the civil service to 160,000 by 2006-2007 without compulsory redundancies.74 The establishment of the civil service then stood at 174,116, which was already substantially down as a result of a freeze on recruitment and a voluntary retirement scheme which had targeted 59 grades with surplus staff (see Table 4.4). A second voluntary retirement scheme, with less generous conditions but covering 200 grades, was introduced in 2003. At that time, the government did not expect to balance its budget before 2008 and saw the task of cutting the size of the civil service and of the cost of their salaries as an essential element in its efforts. The effect of the voluntary redundancy schemes, coupled with the deletion of posts through other cost-savings schemes, outsourcing and privatisation, reduced the civil service by about 19% from its peak in the 1990s.75 By April 2007, the economy had recovered and the freeze on recruitment was lifted and the civil service establishment was expected to rise to 164,500 by March 2009.76

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Table 4.4 Establishment and Strength of the Civil Service, 1997–2008 Year Establishment Strength 1997 190,503 184,639 1998 192,508 186,062 1999 195,627 189,225 2000 193,606 185,868 2001 185,784 180,968 2002 179,740 173,029 2003 174,116 169,100 2004 168,954 163,039 2005 163,593 157,300 2006 160,827 155,019 2007 159,401 153,805 2008 160,324 153,477 Source: Adapted from Civil Service Bureau, Civil Service Personnel Statistics 2008 (Hong Kong: Civil Service Bureau, 2008), Table 1.1.

Although the government’s efforts in reducing costs and the size of the civil service were well received by its critics, the decline in numbers was not quite as dramatic as the raw figures suggested. In 1999, the government introduced a Non-Civil Service Contract scheme which was designed to enable departments to continue to provide services that would be affected by downsizing. The contracts were usually for three years at salaries no greater than equivalent positions in the civil service and with inferior conditions of service. About one-third of the non-civil service staff were employed in lower level positions in the Post Office, the Leisure and Cultural Services Department, the Education and Manpower Bureau and the Social Welfare Department.77 By 2006, when the scheme was reviewed, non-civil service staff amounted to over 16,000, or about 10% of the established civil service.78 Although it was originally envisaged that non-contract staff would not take on the work of civil servants, the review discovered that over 4000 of them were in fact doing so. The government then acknowledged that the non-contract staff were being inappropriately employed and undertook to phase out the positions or to create new ones in the civil service.79 There were also exemptions to the freeze on recruitment. Even at the height of the freeze in 2003, the Police Force was still permitted to recruit 230 new police officers, followed by a further 950 in the next two years, and, when recruitment was once more permitted, an additional 1250 posts in 2006-2007.80 In most departments, though, exemptions were not granted with the consequence that the staff tended to be over- worked and that morale declined. This was exacerbated by the government’s tendency to save costs by creating acting appointments without making a substantive appointment for some time and by keeping the strength of the civil service at 2 to 3.5% below the establishment.81 The freeze on recruitment has also had an effect on the demographic

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profile of the service with a dearth of new young recruits available to succeed to senior positions. In 2008, only 33% of the civil service were in the 20-39 age group.82 Despite the freeze, the cost of the civil service has continued to rise. This is partly because increments tend to be granted annually, usually without question, and that civil servants, in consequence, tend to proceed unimpeded to the top of their salary scale. For those on permanent and pensionable terms, there are also generous housing benefits and education allowances. An ageing civil service also means that more civil servants are at or near the top of their ranks and are paid accordingly. By March 2008, 67% of all civil servants were in the 40-59 age group whereas only 33% were in that age group in 1984;83 77% of all civil servants were at the maximum pay point of their rank in 2008.84 As civil servants retire, pensions become an increasing burden on the government. The introduction of the Mandatory Provident Fund in 2000, which all new recruits must join and which is less generous than the previous scheme, may eventually reduce those costs. In the interim, pension costs continue to rise and are a necessary expense associated with redundancy schemes. Financial provision for pensions, for example, rose sharply in 2002 and 2003 because of voluntary retirements and the ageing workforce. Thus, despite the significant drop in civil service numbers, the freeze on salaries in 2000/2001, and pay cuts from 2002 onwards, by 2008 there had been only a slight reduction in recurrent costs.85 Cutting civil service salaries was one of the government’s major solutions to the problem of burgeoning operating costs. In 1999, changes to conditions of service lowered the salaries of new recruits although the government did not at first reduce the salaries or benefits of those already employed. As the economy worsened, it came under strong pressure from the business lobby to bring salaries in line with the private sector. In February 2000, the Chairman of the Liberal Party, James Tien Pei-chun, argued that there was a substantial gap between conditions of service in the private and public sectors and called on the government to take action. “Civil servants must choose” he said “between high pay and job security — because taxpayers cannot afford to let them have both.”86 The government responded by freezing civil service salaries and then eventually decided to take more drastic action by cutting salaries. It was concerned that any pay cuts would face challenges in the courts because the letter of appointment and the Memorandum on Conditions of Service under which most civil servants were employed did not explicitly permit the reduction of salaries.87 Another issue was whether the government was in violation of Article 100 of the Basic Law, which assured civil servants that they would not suffer from conditions of service which were worse than at the handover. The government believed that the pay cuts were constitutionally valid because they still left civil servants’ salaries above 1997 levels. Nonetheless, it chose to legislate its proposed reductions through the introduction of a bill, the Public Officers Pay Adjustment Bill, taking the view, which proved to be correct, that the courts would confirm its right to cut civil service salaries in this way. The Ordinance provided that pay would be reduced by 4.42% for the directorate and upper salary band, 1.64% for the middle salary band and 1.58% for the lower salary

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band. The Bill was fiercely debated in the Legislative Council but was eventually narrowly approved in July 2002. The civil service associations immediately organised a demonstration against the decision with an estimated 25,000 civil servants and 113 different staff associations taking to the streets.88 Civil servants were clearly aggrieved that their pay had been cut but they were almost equally annoyed that the traditional ways of deciding civil service pay adjustments through annual research by the Pay Survey and Research Unit had not been followed and that there had been very little consultation on the matter.89 The Hong Kong Confederation of Trade Unions, whose membership included some civil service associations, argued, for example, that: … the government has rejected any need for consultation with civil servants’ unions over increased outsourcing, casualization and privatisation. Moves to now legislate a new round of pay cuts exposes the failure of “consultation” which can never replace collective bargaining rights.90

Other civil servants argued that the decision to reduce pay constituted a dispute under the 1968 agreement with civil service unions and that a Commission of Inquiry should have been set up to investigate the matter. Civil servants took out four court actions over the decision, including a petition for judicial review. When the government sought to reduce civil service pay further in 2003, it adopted a more conciliatory and consultative approach. In February 2003, the Secretary for the Civil Service announced that he had reached a consensus with the staff sides of the four Central Consultative Councils and representatives of the four major unions.91 The government had decided, many months prior to the consultation, to reduce salaries to dollar values at June 1997 levels for all civil servants below the third pay scale point on the directorate pay scale in two adjustments of broadly equal amounts.92 The civil service staff associations were unable to persuade the government to make any major concessions. They did manage to postpone the implementation of the pay cut to January 2004 and January 2005 and to obtain a commitment to improve the pay adjustment mechanism, which was already being studied by a task force, but the force of public opinion was clearly against the unions on the issue of civil service salaries. The government then introduced a further bill, which was passed by the Legislative Council, which gave effect to the pay reductions. There were also cut backs in acting and duty-related allowances and some reductions in education and housing allowances.93 The government estimated that, when the pay cuts were fully implemented, it would save $7 billion annually on salaries and subsidies to subvented organisations, which were required to make similar adjustments.94 But the savings came at a very high political cost. Morale in the civil service was already low when the pay cuts were introduced. Their effect was to alienate a substantial proportion of the civil service still further and to add to the growing list of the discontented. When Tsang became Chief Executive, he was more conciliatory towards the civil service; the economy was already improving and the government could afford to entertain requests for pay rises. By 2008, it was offering the civil service staff associations pay increases of between 5.29% and

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6.30%, the highest for ten years, on the basis of factors that included “the state of civil service morale.”95 The cost of civil service salaries and personnel-related expenses was approximately the same as it had been in 2001 at $69.5 billion but as a percentage of recurrent expenditure it had dropped from about 36% to 27%.96

Divesting Functions to the Private Sector

In theory, a government that follows minimalist principles should be prepared to divest its non-core functions to the private sector or to voluntary agencies. Throughout its history, the Hong Kong government has been willing to permit voluntary agencies to deliver services which it has subsidised. Under colonialism, control over those agencies was usually quite loose unless the government believed that their methods threatened political stability. After 1997, the concern with reducing costs and Tung Chee-hwa’s belief that the government could benefit from more private sector involvement in the provision of services led to an even greater stress on the need to divest some government functions to the private sector or voluntary agencies. The divestment did not mean that the government relinquished control. While it was willing to encourage purchaser/ provider relationships, its controls over the providers were often tightened to the point where there were complaints from agencies that they had too little autonomy.97 The government enhanced its supervision of the delivery of services in ways that were often much more interventionist than its colonial predecessor. Paradoxically, the efficiencies resulting from divestment were often reduced by the administrative costs of supervising the proper delivery of services. After the handover, the government took critical measures to increase its control over social welfare and education provision. The Lump Sum Grant scheme, to which 162 of 173 NGOs had subscribed by 2008, gave the social welfare agencies more autonomy over the way in which they would run their budgets but also meant that they were required to bring their salary scales more in line with government.98 The scheme stipulated that the agencies should include a member from the government on their boards. In education, the introduction of the school management reform also resulted in proposed changes to the school boards which the Catholic Church, in particular, argued violated the traditional partnership between the church and the state and was consequently in conflict with the Basic Law.99 The government succeeded in defending its position but the head of the Catholic Church in Hong Kong, Cardinal Zen, believed that the measures were prompted by the Chinese government’s desire to reduce the influence of the churches and refused to implement them.100 The managerial emphasis on the relationship between the government and the agencies provided the government with more channels to exert control in exchange for greater financial autonomy in the welfare agencies and more participation of teachers, parents and government in school management affairs. The post-1997 government’s emphasis on private sector involvement in the delivery of goods and services has been particularly noticeable in the growth of outsourcing. A 2006 survey revealed that the government had about 4000 outsourcing contracts with

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a value of about $200 billion, over six times the value of contracts in 2002 although the number of contracts awarded had declined.101 A majority of contracts, in terms of value, were in public works although many services have also been outsourced. In most departments, for example, cleaning, horticultural services and gate-guard duties have been contracted out. Outsourcing is attractive to the government for three reasons. First, it helps to meet its proclaimed objective of “big market, small government”102 and the government’s intent to involve the private sector wherever possible. Second, it reduces costs because the private sector may provide some services, such as cleaning, at a lower price than the public sector. Third, outsourcing does not divest the responsibility of providing the function from the government; a contract can be terminated if the service is not satisfactory. As the Efficiency Unit puts it, “Departments should note that they can outsource services but not the ultimate responsibility” because the government is accountable for the standard of service.103 Other forms of private sector involvement have not led to any divestment of functions. There have been successful “build, operate and transfer” projects for tunnels for many years but some of the more recent public-private partnerships, such as the West Kowloon Cultural District,104 have run into difficulties and cost overruns. Since the government has to face legislative scrutiny on its expenditure, failed projects have considerable political implications. In addition to public/private partnerships, there have also been some privatisation measures that have helped to reduce the size of the civil service. The privatisation of the management of some public housing estates, for example, reduced numbers in the Housing Department significantly.105 Although Tung believed that the private sector generally performed more efficiently than the private sector, that view was not shared by senior civil servants schooled in the fiscal frugality and “value for money” tradition. Rather, their inclination, even when services are being delivered by the non-profit organisations or the private sector, has been towards maintaining strict cost controls and not divesting ultimate responsibility for the service to those bodies. The consequence has been that, while the government in 2008 was leaner than it had been at the handover, it had increased the number of functions that it was performing. It was attempting to move to a more managerial role in some areas but maintaining control and centralising the government structure seemed to be a more important consideration than divestment. The structure and functions of the Hong Kong government have been greatly influenced by the core principles of centralisation and hierarchy, the belief in the values of a generalist administrative elite and political neutrality, and in small government, efficiency and fiscal frugality. Although there have been times at which the government has deviated from these principles, the explanation for the deviation usually lies in the specific political and economic circumstances in which it finds itself. In the transitional period, for example, the government could not afford to downsize the civil service because its first priority was to maintain political stability. In post-1997 Hong Kong, the government did come under pressure to reduce the size of the civil service largely because economic circumstances did not permit it to retain such a large establishment. Each time that the government has sought to deviate from its core values, influential

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voices have been raised to re-affirm their importance. In the post-1997 economic climate, business groups were able to make a persuasive case that Hong Kong should return to its previously proclaimed belief in “big market, small government”. When the traditional conception of political neutrality came under threat, senior civil servants were quick to point out that the quality of policy advice would be affected. When lines of command, and consequently effective centralisation, were threatened after the introduction of the POAS, Tsang soon reverted to the time-tested structure of the traditional civil service. There is, in short, something of a default model at work. If the government’s structure and functions deviate too far from core principles, and there is no good reason for doing so, there is usually sufficient political and public pressure to require the government to revert to previous practice. That is not to say that the government has become ossified or that the key principles in themselves are necessarily always consistent. The managerialist reforms and the stress on private sector involvement in the provision of government functions introduced under Tung enhanced centralisation and control and helped to reduce expenditure at least in the short term. The stress on small government, even with a significantly reduced civil service, does not mean that the government has divested itself of many of its functions or responsibilities. Depending on how small government is defined, the Hong Kong government may or may not be a small government. What is certain is that it has a large scope, many functions and a dominating presence within the community. In structure, it remains a traditional bureaucracy with a focus on hierarchy and top-down lines of command. In function, it remains willing to divest, provided it maintains control, and to adapt pragmatically to new challenges and responsibilities.

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ew public management is the name given to the range of public sector reforms that have been adopted around the world with the aim of reducing the size and cost of Nthe public service, encouraging greater interchange of personnel between the public and private sectors, introducing more private sector practices, and divesting government of assets and activities that are no longer considered to be essential or cost-effective. These broad features of the reforms may be interpreted in very different ways, depending on specific political, economic and social circumstances. New public management does not offer a single road map to a particular destination; rather, it is a basket of possibilities from which a reformist government might select, adapt and implement in ways which it regards as most suitable for local conditions. In Hong Kong, it has been cogently argued that attempts to reform the public sector have been more a reaction to the political and economic difficulties which the government has encountered than attempts to converge with what the more enthusiastic advocates of new public management consider to be a world-wide revolution.1 Because the government’s concern has focused principally on reducing the size and cost of the civil service and encouraging greater private sector involvement in the delivery of goods and service, changes have related mainly to the conditions of employment of civil servants, to attempts to improve their efficiency and productivity, and to various ways of using the private sector to perform public functions. In this chapter, we consider how key principles shaping the status and behaviour of civil servants have been affected by attempts to implement public sector reforms. These principles constitute widely-held beliefs that: • the recruitment and promotion of civil servants should be made on grounds of merit and that most civil servants should enjoy tenured positions for the duration of their working lives; and • the civil service should be as free of corruption as possible and subject to the rule of law.

Public sector reforms in Hong Kong have not resulted in radical changes to the structure and functions of government and there has not been significant interchange

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of personnel between the public and private sectors. The introduction of new terms of employment, however, have had an important impact on the civil service, leading to greater fragmentation, a reduction in the power of the staff associations, morale problems, and the creation of an environment in which the assertion of more direct political control is less likely to meet with resistance. We examine the consequences of the reforms in four major areas of human resource management: recruitment, selection and terms of service; pay and fringe benefits; disciplinary procedures; and performance management and training. The second principle has also been affected by changes in ICAC practices. Although a corruption-free civil service subject to the rule of law has very considerable support in Hong Kong, public sector corruption is no longer regarded as a major problem. Declines in traditional forms of corruption, such as accepting bribes, the rigorous enforcement of the Prevention of Bribery Ordinance and the emergence of new issues arising from greater private sector involvement in the affairs of government have led to new approaches. We consider the effects on the civil service of the shift from a policy of corruption prevention to one of promoting integrity.

The Background to Human Resource Management Reform

In January 1999, Tung Chee-hwa, in an appearance before the Legislative Council, announced a major review of the civil service, citing a need to increase efficiency and “to improve the system at the fundamentals.”2 The consultation document, which followed the Chief Executive’s speech, spelled out the need for reform in slightly greater detail: the Asian financial crisis had increased the community’s expectations of government, there had been a number of incidents in which the public was unhappy with the performance of the civil service and there had been criticisms of inefficiencies in some departments.3 Although neither the incidents nor the inefficiencies were specified in the document, it may be presumed that they included the way in which the Department of Health, the Agriculture and Fisheries Department and the Urban and Regional Services Departments had handled the avian flu outbreak in December 1997 and the blame attributed to the civil service for the chaotic opening of the new airport in July 1998.4 The aim of the civil service review was to make recommendations that would ensure that the government of the Special Administrative Region had “a clean, trustworthy, quality and efficient Civil Service.”5 The reforms might have been seen in the context of previous efforts to change human resource management or they might equally be considered to be a prelude to radical changes to the civil service. Placed in its historical context, the civil service could argue that it had looked to bring about changes in its personnel policies for almost the entire decade prior to the 1999 reform document. In 1993, for example, the Civil Service Branch (later the Civil Service Bureau) had argued for a more flexible appointment system and did subsequently introduce some changes in human resource management within the service.6 The localisation of senior levels of the civil service, the issue of expatriates in the police force, and questions of compensation for those

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who were to be displaced or to lose their promotion prospects after the change of sovereignty in 1997 were central concerns. There was also a slate of reform measures, many of them initiated by the Efficiency Unit, which were designed to make the civil service more managerial, more entrepreneurial and more customer-friendly. Other than for overseas officers, none of these measures threatened either the power structure or the permanent and pensionable conditions of service of most civil servants. The assumption was that reform was desirable — for example, many civil servants strongly favoured the changes to their work culture in the 1990s — but that it could be accommodated without disruptions to the status quo.7 The 1999 reform proposals could be interpreted to call that assumption into question. The idea of radical reform of the civil service had wide and vocal support. Since the reform document could be considered to be aimed directly at the recruitment, salaries, conditions of service, and tenure of civil servants, it appeared to offer support for many who saw the civil service as overly privileged in a time of economic hardship. There was a widespread belief that civil service salaries and fringe benefits were too high in comparison with those in the private sector.8 The reduction of the cost of the civil service had been a long-standing concern of business groups, of the Chief Executive and even of some senior civil servants.9 In the Legislative Council, the Liberal Party argued strongly that civil service salaries and fringe benefits should be brought in line with the private sector and that the service was over-staffed.10 The intention of those who favoured radical reform was to create a less permanent, more managerial, more productive civil service which would remove civil servants from the protective cocoon of careers for life and generous salaries and move them along the path towards greater accountability for their personal actions. There was division over what the reform document meant and the pace at which its recommendations would be introduced. The civil service staff associations objected to some of the proposed changes to recruitment, promotion, and disciplinary procedures and were incensed by the subsequent pay cuts. Yet initially the implementation of the reforms was handled very cautiously. A central pledge, for example, was that no civil servant would be made redundant as a result of the reforms. The Secretary for the Civil Service was also constrained by Article 100 of the Basic Law which reads: Public servants serving in all Hong Kong government departments, including the police department, before the establishment of the Hong Special Administrative Region, may remain in employment and retain their seniority with pay, allowances, benefits and conditions of service no less favourable than before.

This was clearly designed to re-assure civil servants during the transition. It was probably not expected to become a matter of political concern because the salaries and conditions of service of civil servants had always previously improved rather than deteriorated. The Secretary for the Civil Service, on legal advice, indicated that he would treat Article 100 as a specific commitment and that pay would not be reduced to levels below those of July 1997.11

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Others also sought to place the reforms in the context of what the 1999 consultation document called a “balance between stability and flexibility.”12 A year after the proposals were released, the Chief Secretary for Administration spoke of the need for “maintaining stability while introducing reforms and protecting existing staff while introducing changes at entry levels”13 which perhaps implied a slower pace of change than some of the proponents of reform wanted. She also reflected on the effects of reform on morale in the civil service and the concerns of the community in this respect. If the reforms had been fully implemented, they would have undermined the Weberian character of the bureaucracy and, in combination with the Principal Officials Accountability System (POAS), would have significantly reduced the power of the civil service. The proposals anticipated major changes.14 The intent was clearly to move towards a performance- oriented system which would more closely mirror private sector practice and which would allow a much greater interchange between the public and private sectors. The expansion of the public sector outside the civil service would encourage greater mobility of civil servants which would be facilitated by the portability of pensions and benefits. The decentralisation of many personnel functions to the departmental level would mean an erosion of service-wide relativities in salaries and conditions of service and would increase the powers of Principal Officials. In the following sections, we look at the specific issues that were raised in the reform proposals and the extent to which they have been implemented.

Recruitment, Selection and Terms of Service

Recruitment to the Hong Kong civil service has traditionally been on grounds of merit or, as the consultation document puts it, “openness, fairness and the best person for the job.”15 Entry requirements usually involve relevant academic or professional qualifications, working experience, language proficiency and any other qualities or attributes that the grade requires.16 Applicants may also have to pass written examinations and to perform well at a selection interview.17 They must also pass medical examinations and integrity checking and must meet certain physical and fitness standards in the disciplined services. All successful applicants are required to be permanent residents of Hong Kong except for foreign nationals who may be employed as advisers at the discretion of the government.18 Since 2008, applicants have also been required, as a test of their “suitability” but not of their eligibility, to demonstrate knowledge of the Basic Law by means of a written test.19 The Public Service Commission, established in 1950 as an independent statutory body, has a brief to ensure that merit principles are observed for recruitment to senior positions in the service. It advises the Chief Executive on appointments to posts with a maximum salary of $33,330 per month or more and had approximately 33,200 posts under its purview at the end of 2007.20 Senior appointments are subject to the provisions of Article 101 of the Basic Law. The positions of Secretaries and Deputy Secretaries of Departments, Directors of Bureaus, the Commissioner against Corruption, the Commissioner of Police, the Commissioner of Customs and Excise, and the Directors of Audit, Immigration and Customs and Excise may only be held by Chinese citizens with no right of abode in a foreign country.

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New recruits usually enter the service at a relatively young age. Prior to June 2000, unless they committed an offence serious enough to warrant dismissal, they would normally expect to be permanently employed in the service until retirement. The 1999 consultation document, while noting the advantages of a stable and permanent civil service, argued that such permanent appointments discouraged able potential applicants who might not want a life-long career in the civil service, stifled the exchange of talents with the private sector and led to some civil servants “being less than fully motivated.”21 These are debatable assumptions but they were at the heart of radical changes to recruitment policy. The most critical measure proposed was that the notion of a permanent career should be re-defined to mean not security of tenure but “the promise of structured career and long-term employment for those who continue to contribute their best.”22 Prior to 2000, successful applicants, depending on their place of origin and the requirements of the position, were usually offered one of four terms of appointment: permanent and pensionable terms (either local or overseas) or agreement (contract) terms (either local or overseas). After the signing of the Sino-British agreement in 1984, the Civil Service Branch’s main concern was the localisation of the service, especially at the most senior levels and in the Police Force. The policy of localisation had been in place since 1946 but progress had been very slow. In 1982, for example, at the start of the Sino-British negotiations, expatriates held 54.3% of directorate level positions (343 of 632 positions), 49.3% of administrative grade positions (159 of 329 positions) and 40.6% of the positions in the Police Force of inspectors or above (877 of 2,160 positions).23 After the Sino-British Agreement, expatriate administrative officers were required to retire at 57, a “golden handshake” scheme was put in place to retire some 70 administrators and 30 policemen in the public interest or as a result of constitutional change, and some professional ranks, such as engineers, were soon entirely localised.24 Newly appointed expatriates, who included some ethnic Chinese, were only employed on agreement terms.25 Expatriate officers became concerned about their futures and challenged the government’s plans to localise more rapidly, using the then newly-introduced Bill of Rights, which prohibits discrimination and gives access to all public services to permanent residents, as the basis of their case.26 Local civil service associations and members of the Legislative Council objected to the prospect that expatriates might continue to occupy senior positions and called on the government to implement its localisation policies more quickly.27 The government sought to avoid further court cases and released a consultation document in 1993 which, it was hoped, would keep both sides happy. The government proposed that all serving local and overseas officers on agreement terms would be offered new permanent and pensionable terms provided they qualified as a local under the Basic Law, were proficient in the Chinese language, met a service need, had a satisfactory conduct and performance record, and were physically fit.28 The provisions were aimed largely at expatriate officers and had little effect on locals. Most civil servants continued to be employed on local permanent and pensionable terms. In 1997, for example, of a civil service strength of 184,639, 155,012 were on local

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permanent and pensionable terms with a further 2,902 on agreement terms. Of those on overseas terms of service, 530 were on permanent and pensionable terms while 715 were on agreement terms.29 The 1993 consultation document assumed that those on agreement terms would leave on the expiry of their contracts and that all new recruits would enter the service on what were designated as “new permanent and pensionable terms.”30 The trend, as the consultation document indicated, was clearly towards an almost exclusively local civil service, fluent in Cantonese and, increasingly, in Putonghua.31 Most expatriates were not immediately disadvantaged by the new conditions because the majority of contracts were renewed. After 1997, however, there was a gradual decline in number of overseas officers. By 2008, there were only 265 remaining civil servants on overseas terms (see Table 5.1).

Table 5.1 Strength of the Civil Service by Gender and Terms of Appointment, 2008 Gender Local Overseas Common New Total Percentage Male 89,259 265 1,183 10,808 101,515 (65.8) Female 47,537 0 243 5024 52,804 (34.2) Total 136,796 265 1,426 15,832 154,319 (100) Percentage (88.6) (0.2) (0.9) (10.3) Source: Adapted from Quarterly-updated Civil Service Personnel Statistics, www.csb.gov.hk (accessed December 26, 2008). Figures are as of September 2008.

The 1993 document did not challenge the fundamental premise on which the civil service had been based. If the employee was on permanent and pensionable terms, apart from failures during the probation period or a gross breach of misconduct, a job was a job for the working life of the employee. An internal document, The Consultation Document on Human Resource Management Review, circulated to senior management in the branches and departments in 1993 did foreshadow some of the issues that were to become important in the future. The central argument presented in the document was that the terms of appointment had “reduced responsiveness to service needs”32 and that there was a need to introduce more flexible contract terms. No changes were made in appointment policy, however, until January 1999 when “common terms” of appointment and conditions of service, that is, those that did not distinguish between overseas and local terms, were finally introduced. These terms only applied until June 2000 when the “new” terms for fresh recruits came into effect. The 1999 proposals recommended that new recruits should be appointed on agreement (contract) terms rather on permanent and pensionable terms as in the past. The first step in the implementation process occurred in June 1999 when the Standing Commission on Civil Service Salaries and Conditions of Service produced a report on starting salaries which, on the basis of a survey of private companies, reduced starting salaries significantly.33 The overall decrease was between 6% and 31% for new civil servants on the Master Pay Scale (MPS), and between 3% and 17% for disciplined services staff. The entry point for professional and related grades was lowered from

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MPS point 27 ($35,285) to MPS point 22 ($28,075) and for degree holders from MPS point 16 ($21,010) to MPS point 11 ($16,095).34 The Commission observed that there had been “far more drastic reduction in pay” in the private sector for degree holders than for technicians35 and noted that this might be a result of an increase in the supply of graduates and of the labour market favouring occupational skills. All entry points on the MPS were reduced from their previous levels. New recruits were further disadvantaged by the extension of their probationary period. Prior to the reforms, the normal probationary period had been two years at which point, subject to satisfactory performance, the appointee would then be offered permanent and pensionable terms. Under the new system, an appointee would serve on an initial probationary contract of three years. If performance was judged to be satisfactory, the civil servant would be offered a further contract of three years and could only then, again subject to continuing satisfactory performance, accede to permanent and pensionable terms. The Civil Service Bureau was very careful to assure the civil service staff associations that the conditions of service would only apply to new recruits and that civil servants already in post would not be affected by the new provisions.36 In addition, the Public Service Commission recommended that the offer of permanent terms after three years should be retained for the disciplinary services.37 The initial impact was limited because there was a freeze on civil service recruitment from April 199938 although some departments were still permitted to recruit “on an exceptional basis.”39 As we saw in Chapter 4, the Hong Kong government has tried various means to reduce the size and cost of the civil service: by encouraging civil servants to retire early through voluntary retirement schemes, by introducing a Provident Fund, in place of pensions, which applied to new recruits, by employing non-civil service contract staff and by outsourcing some government activities. New recruitment policies provided an additional and long-term solution to the problem of the cost of the civil service. But there were also long-term adverse consequences resulting from the new conditions of employment. First, the new system has made it very easy to terminate the contracts of new recruits. For a cash-strapped civil service and a head of department who wants to balance the budget and reduce expenditure, terminating the employment of new recruits after one or two contracts may seem the easiest course of action. There has been some support for undertaking precisely such a course of action. The Public Service Commission has stated that “confirmation to the permanent establishment should not be ‘automatic’ and advocate[s] the need for more realistic assessment of the performance of probationers/officers on trial.”40 It also said that it was “pleased” that some probationers had their contracts terminated and a number of others had their probationary period extended. As yet the numbers on new terms of service are relatively small but they are likely to grow rapidly as the civil service gradually ages and recruitment resumes (see Table 5.1). A rapid turnover of new recruits, whose contracts are not renewed, would not necessarily be in the best interests of the civil service or the public. The institutional memory of the organisation could be adversely affected, innovation and enthusiasm might be diminished, and probationers could well spend a good proportion of the latter part of their contracts looking for alternative employment.

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A second problem is that the system creates a yawning chasm between those on permanent and pensionable terms and those who joined the service after April 2000. Not only is there a significant salary difference between the two groups but other fringe benefits and pensions have also been detrimentally affected. The principle of “equal pay for equal work” is essentially violated when those on inferior conditions of service are required to perform the same tasks as those on permanent and pensionable terms. This could affect morale, as it did with the 4000 non-contract civil service staff who until 2007 were working in positions normally filled by civil servants,41 and could also substantially increase the wastage rates as new recruits look for other better-paying and possibly more secure positions. In the executive grade, for example, the salary entry point was substantially reduced in 2001/2002. As economic conditions improved, turnover increased and the entry point was raised in 2007 to attract more applicants. The effects of this, however, was to disadvantage the remaining 2001/2002 recruits who were now paid at the same salary as new entrants even though they had five or six years more service. Similarly, during the economic downturn, the Police Force was able to recruit constables with degrees. In 2003-2004, 43% of the new recruits held degrees.42 By 2006-2007, this had declined to 17% and, with better opportunities in the private sector and at the officer level in other disciplined services, the Force was having difficulty retaining the degree holders that it had.43 There is also some evidence that new recruits regard their positions more as a job than as a career for life and are consequently less likely to join civil service staff associations.44 A third difficulty with the new recruitment policies is that they change the demographic profile of the civil service without offering an adequate substitute to replace experienced staff and without providing sufficient incentives for able new staff to join the service. This has been exacerbated by the stop-start policies on recruitment which have had a marked effect on succession planning. In the 1980s, as the young recruits from the MacLehose era began to acquire experience, the civil service had a wealth of talent to promote to senior positions. By 2008, with only 33% of civil servants under the age of 40, and many of those in the junior ranks of the disciplined services, the civil service had a major problem with succession planning.45 New public management logic would suggest that the solution is to recruit from the private sector. But this may not be an attractive option either in salary terms or in terms of working style. Those who have so far been parachuted into the senior levels of the government from the private sector have not always found it easy to adapt to a civil service whose ethos, traditions and procedures stand in sharp contrast to those of the private sector. Further, the civil service has traditionally promoted from among internal candidates and, in many cases, does not even advertise vacancies externally. In 2005, for example, 118 of 121 vacant posts at the directorate level were filled by internal promotion.46 With the lifting of the freeze on recruitment in April 2007 and improvements in the economy, the attractiveness of the civil service as a career became a concern for the Civil Service Bureau and the Public Service Commission.47 Recruitment exercises still produced large numbers of applicants but the Public Service Commission felt that this might simply be a backlog resulting from the previous freeze on recruitment. It attempted

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to improve procedures, reducing the length of time required to appoint new employees, and also conducted research with the Civil Service Bureau on the employment market for eight selected grades.48 The increase in starting salaries and the global financial crisis may help to sustain the number of applicants. The difficulties arise in conditions in the workplace once the appointment has been made. The new conditions of employment have fragmented the civil service into those on permanent and pensionable terms who enjoy greater benefits and better salaries than those who come in on the new terms of service. While eventually there will be fewer employees on permanent and pensionable terms, there is likely to be a continuing sense of relative deprivation amongst those who are performing the same tasks for less reward.

Pay and Fringe Benefits

Civil service salaries are based on two principles, which are often quoted, sometimes criticised and much debated. The first is that remuneration should be sufficient to attract, retain and motivate staff and that it “should be regarded as fair both by themselves and the public they serve.”49 The second, much more contentious, principle is that civil service pay should be broadly comparable with pay in the private sector. Both principles date from the 1960s. The “comparability” with the private sector principle was introduced by the 1965 Salaries Commission and the “fairness” principle can be traced to the government’s agreement with the staff associations in 1968.50 The result of the practical application of these principles has been that when times are prosperous the civil service thinks that it is underpaid and when times are bad the private sector thinks that the civil service is overpaid. But both principles raise a host of questions about whether pay levels are or are not attracting the best people and how comparisons can actually be drawn between very different positions in the public and private sectors. Prior to 1979, civil service salaries were determined by periodic salaries commissions. In times of relatively low inflation, it was sufficient for these commissions to be appointed every five or six years. After 1971, it became clear that continuous management of the pay determination process was necessary. The first attempt to try and ensure comparability with the private sector was through the introduction of an occupational class system whereby the government’s Pay Investigation Unit tried to identify similar occupational classes in the public and private sectors and then made appropriate changes to salaries. This approach resulted in industrial unrest since particular grades could be upgraded or downgraded, in salary terms, depending on the often volatile situation in the private sector. This means of establishing comparability was abandoned in 1974 when the government moved to annual pay trend surveys. Nonetheless, its legacy remained and was at least partially responsible for the wave of industrial unrest which affected the civil service during the mid and late 1970s.51 The government responded to its worsening staff relations by creating a Standing Commission on Civil Service Salaries and Conditions of Service in 1979. Subsequently, three further standing committees, one for the six Disciplined Services and the Independent Commission Against Corruption, one for the Directorate and one for

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the Judiciary, were established to make recommendations on pay for civil servants on those scales. They have similar terms of reference to the Standing Commission although their procedures have evolved in different ways.52 The principal roles of the Standing Commission are to review the principles and practices governing the grade, rank and salary structure of the Civil Service, the salaries of individual grades and the methodology used to determine comparability with the private sector and to recommend to the Chief Executive any changes it considers necessary.53 Soon after its inception, the Commission rejected the occupational class method as a means of determining comparability between public and private sector pay and instead adopted a qualification group approach, establishing educational qualification entry benchmarks for new recruits and de-linking the pay scale from direct comparison with groups in the private sector. Civil service associations and even heads of department might still claim that particular grades were underpaid or that they should be paid more to attract necessary new staff but they could no longer claim that they should be paid exactly the same as their private sector counterparts. The educational qualification method enabled the government to engage in “broad-banding” so that grades with similar requirements for appointment were collapsed into qualification groups, of which there are currently twelve, in each of which a common pay structure prevails.54 Broad- banding has been defended on the grounds that it promotes equity and parity but it is also a useful management tool because it forestalls the argument for special treatment for particular grades. The staff associations have frequently made cases for “other factors”, such as obnoxious duties, excessive workloads or unreasonable hours, to be taken into consideration in pay determination for their grades. The Commission has responded by making rules about what remuneration these “other factors” should attract. It has never entirely ruled out using pay as an incentive when recruitment is a problem and some grades have seen their pay increased as a result of a shortage of supply of new recruits. The overall effect of the system has been to enhance stability, possibly at the expense of efficiency.55 The Standing Commission also took on board the wider issue of staff relations. Staff relations had been a focus of government concern since the 1968 agreement with three service-wide staff associations which led to the formation of the Senior Civil Service Council, a body on which the staff associations were represented and which the government undertook to consult in the event of any changes in conditions of service.56 Other central consultative bodies were established later: a Model Scale 1 Council in 1982 constituted on the staff side by members from eight staff associations mainly representing labourers and artisans; a Police Force Council formed in the same year with representation from four police staff associations; and a Disciplined Services Consultative Council created in 1990 with representation from fifteen staff associations in the disciplined services other than the Police Force.57 The problem that faced the Standing Commission in the early 1980s was that although consultative committees did exist at the departmental level they were not well developed. In a wide-ranging report released in 1980, the Commission laid down uniform rules covering such matters as membership,

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frequency of meetings, the use of Cantonese and attendance by Civil Service Branch representatives.58 These measures, coupled with the new method of determining pay, probably helped to prevent pay and conditions of service issues from escalating into territory-wide disputes as they had done in the late 1970s. Departmental consultative committees are now the major institutional mechanism for resolving differences between staff and management in all departments with a staff of over one hundred. Their meetings are attended by representatives of the staff associations and by a member of the Civil Service Bureau who explains government policies. Pay and conditions of service are usually an important topic for discussion although the committees also deal with appointment and promotion criteria, welfare and recreational activities and improvements in productivity.59 Civil servants are paid on one of eleven pay scales but most fall within the six major pay scales with over 60% coming under the Master Pay Scale (see Table 5.2). The other scales are for the directorate level staff, the directorate (legal) officers, the police, other disciplined services which have three pay scales for commanders, officers and rank and file, the Model Scale 1, which is comprised mainly of artisans and labourers, and the training, technician and craft apprentice pay scales.60 Since pay increases (or reductions) are normally issued in three bands for upper, middle and lower ranking civil servants and relativities between the bands are approximately maintained, the pay scales tend to reinforce the hierarchy within the civil service. The ratio between the lowest paid and highest paid civil servant is considerably greater than it would be in most developed countries. But, because the government considers itself to be a good employer, historically the lowest paid civil servants have been better paid than their private sector counterparts. Since 2000, this differential has been reduced to some extent by outsourcing many of the services that the lowest ranking civil servants previously provided.

Table 5.2 Civil Service Pay Scales, 2008

Type Scale Salary Range ($ per month) Strength Directorate Level D1-D10 $103,400–$241,750 1,214 Master Pay Scale MPS 0–49 $8,455–$92,720 91,414 General Disciplined Services GDS 1d-38 $16,500–$97,545 23,976 (Officer) Scale General Disciplined Services GDS 1a-27 $13,105–$29,365 (Rank and File) Scale Police Pay Scale PPS 1a–59 $15,235–$202,000 27,453 Model Scale 1 MOD 0–13 $8,980-$11,700 10,176 Source: Pay Scales, www.csb.gov.hk; Quarterly-updated Civil Service Personnel Statistics, www. csb.gov.hk (accessed 26 December 2008). Figures are as of 28 September 2008. Note: The quarterly civil service personnel statistics do not differentiate between officers and rank and file in the General Disciplined Services.

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Comparability with the private sector is determined by an annual pay trend survey of salaries in private sector companies. The Joint Secretariat, which is attached to the Standing Commission, houses the Pay Survey and Research Unit which carries out the surveys on the basis of a methodology established by an independent Pay Trend Survey Committee.61 Until 2007, the Committee surveyed 91 companies representing the major economic sectors, choosing its sample on the basis that the companies were typical employers in their field and had a staff of more than 100. In 2007, the methodology was changed to give a 25% weighting to smaller companies with between 25 and 99 employees.62 The survey includes all full-time employees of the company, whose basic salaries are the equivalent of three broad salary bands in the non-directorate staff of the civil service, and takes into account salary adjustments made over the year and any additional payments, merit increases and increments. When these have been calculated, they are translated into indicators which represent the weighted average pay adjustment for all surveyed employees within each salary band. The findings are then sent to the Secretary for the Civil Service. Once the findings have been confirmed, the major staff associations make a claim for an adjustment. The government, which is obliged to consult with the staff associations under the terms of the 1968 agreement, considers the submission and then makes a pay offer. The staff side comments on the offer and a proposal is then submitted to the Executive Council which decides on the annual adjustment subject to the provision of funds by the Finance Committee of the Legislative Council. The pay trend surveys assess changes in remuneration within the service but they do not address the more difficult question of establishing whether the annual determination of the trend accurately reflects pay levels in the private sector. Until December 2001, the difficulty of making the comparison, and the opposition of the staff associations, persuaded the government that it should be left unresolved. A pay level survey conducted in 1986 found that, except for those on the Model Scale 1 pay scale, civil servants’ salaries and fringe benefits outstripped private sector compensation by as much as 23% on the lower pay band and by up to 52% on the upper pay band.63 The civil service staff associations raised strident objections to the consultants’ methodology, arguing that it was based on only three factors — know-how, problem-solving and accountability — and that other important factors, such as skill and working conditions, had been ignored.64 Under the 1968 agreement, this constituted a dispute and the government was obliged to appoint a committee to investigate the issue. The Committee duly reported that the “pay level survey does not provide a sufficient basis for making adjustments to civil service pay either now or in the future.”65 There the matter rested. Faced with the political problems of the transitional period, the government had no desire to create more friction by raising the matter of the civil service pay level and the staff associations saw no advantage in doing so. The 1999 civil service reform document, however, foreshadowed potentially major changes to the civil service pay system. It noted, for example, that pay was not linked to performance, that pay and fringe benefits should be more closely linked to private sector practices and performance appraisal and that the pay trend system might have

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to be improved. A less costly civil service was critically important to the government’s reform agenda and the issue of the comparability of pay with the private sector had to be confronted, if it wished to maintain credibility. In December 2001, the Secretary for the Civil Service invited the Standing Commission and its counterpart, the Standing Committees for the Disciplined Services Salaries and the Directorate Salaries, “to conduct a comprehensive review of the pay policy and system for the civil service.”66 The review was charged with examining the fundamental principles underpinning civil service pay policy, especially the principle of broad comparability with private sector pay, the methodology for determining pay levels, the rationalisation of the grading structure of the grades and ranks in the service, the possibility of increasing the motivation of the civil service through an improved and more flexible salary system, the annual pay adjustment mechanism and the preservation of the integrity and stability of the civil service while system changes took place.67 These were extensive terms of reference and clearly envisaged a report that would make recommendations for radical changes to the pay policy system. The civil service staff associations, perhaps predictably, were opposed to the review on the grounds that economic conditions were too volatile to arrive at conclusions that would stand the test of time. The Task Force set up to conduct the review produced its initial interim report in April 2002.68 While it said that it had an open mind on the issues, the matter of reducing the cost of the civil service was clearly on its collective mind, particularly because its members believed that it was “obvious that the community would like to see a thorough re-thinking of the basic principles of the existing pay system.”69 A second report released in September 2002 outlined its long-term vision for the pay system. It reiterated many of the basic principles that had previously governed the system including that the system should be able to attract and retain staff of suitable calibre to provide the public with an efficient and effective service; that it should be fair; and that it should be flexible but stable enough to assure civil servants of their reasonable expectations.70 But it left the door open for the introduction of performance pay, enhanced performance management systems, measures to allow managers to use resources more effectively and regular reviews of the system.71 The Task Force favoured regular and comprehensive pay level surveys but recognised methodological difficulties and deferred the issue of comparability with the private sector pending a study of the subject and the development of a practical framework and methodology for the survey. The Task Force’s other major recommendations were to study ways in which fixed pay scales might be replaced with pay ranges; to consider improvements to the staff appraisal system in support of performance pay and flexible pay ranges; and to study how the practical problems associated with a simplified and decentralised pay administration could be overcome. The Civil Service Bureau proceeded cautiously with the work of reforming the pay system, and with good reason. The government had introduced a first round of civil service pay reductions in 2002 at a time when the Task Force’s reports were being considered, a move which raised political tempers on the pay issue and aroused strong opposition from the staff associations.72 Despite legal action by the associations, who argued that the move was in contravention of the Basic Law, civil servants’

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demonstrations against the cuts, and complaints that the reductions violated the existing pay determination system, the government was determined to bring civil service salaries more in line with what it believed were equivalent levels in the private sector. By April 2003, it had decided to introduce a second round of cuts to reduce “the value of all pay points on all civil service pay scales to the levels as at 30 June 1997...”73 Reductions to salaries were introduced in two phases in January 2004 and January 2005. To make additional radical changes to the pay system at a time when staff associations were incensed by the government’s decision and when the government was already under pressure over its decision to legislate under Article 23 of the Basic Law would have been very difficult. The Task Force’s report might have created a long-running battle with the staff associations. Its strong advocacy of a pay level survey was opposed by the associations and could have caused unrest in the service and the acceptance in principle of performance pay, pay ranges and the decentralisation of the system had potentially far-reaching effects on the structure of the civil service and of practices, such as performance appraisal. Nonetheless, in April 2003, the same month that the government decided to legislate the second round of pay cuts and following the report of the Task Force, the Civil Service Bureau sought to develop concrete proposals for change.74 With the assistance of two committees, one composed of advisers who had been members of the Task Force and some senior civil servants (the Steering Committee on Civil Service Pay Adjustment Mechanism), the other composed of representatives of the staff associations and some senior civil servants (the Consultative Group), the Bureau produced a progress report, published in November 2003, which made it clear that the government had retreated from some of the more radical possibilities raised by the Task Force. The principle of comparability, for example, was to be expressed as broad comparability rather than any attempt to identify appropriate private sector analogues for every position in the public sector.75 In setting pay levels, the Bureau said that the government should continue to follow “the established principle that the government should follow, but not lead the private sector”76 although presumably it did not intend to overturn the principle that the government should also be a model employer. The Bureau was cautious about internal pay relativities, which it thought should not be disturbed, and made no comment on the introduction of performance pay or linkages between performance appraisal and pay. Even in those areas which it endorsed, such as the need for a pay level survey, the Bureau left most matters undecided. It proposed to employ consultants to advise on developing a feasible and detailed methodology for a pay level survey, to review the methodology of the pay trend surveys, and to introduce enabling legislation to allow it to adjust civil service pay in future rather than returning to the Legislative Council, as it had done in 2002 and 2003.77 The Bureau did eventually proceed with the pay level survey and with its efforts to improve the pay trend methodology. But its mood remained conciliatory. There was wide consultation with the staff associations, the Standing Commission and the public78 and there was clearly an attempt to achieve a consensus and incorporate, if possible, proposed suggestions into the methodology. The pay level survey system had important

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features that won support from the Standing Commission and the staff associations.79 It was to use the job family and job level method, drawing on broad categories of positions to make comparisons; to select and match civil service benchmark jobs with those in the private sector; to select “steady and good employers” in the private sector for the surveys; and to collect cash-based pay data.80 The civil service stood to benefit in the application of the collected information from the survey. First, the upper quartile of private sector pay was to be used to arrive at the market pay indicator. Second, the market pay indicator of a defined job level would be compared with the notional mid- point salary of the civil service plus average expenditure on fringe benefits. Finally, the acceptable range of difference between civil service and private sector pay was set at plus or minus 5% with no adjustment made to pay levels if the findings fell within this range.81 When the survey was carried out in 2006, the consultants collected data from 97 companies and matched them against 166 civil service ranks. They then divided the civil service into five job levels, ranging from the lowest to the highest levels. Since each of the levels were within the plus or minus 5% range, the Secretary for the Civil Service was able to announce that there would be no changes to civil service pay scales because of the broad comparability with the private sector that the survey had revealed.82 The government did announce that it intended to hold pay level surveys every six years, starting salary surveys every three years, and to re-introduce pay trend surveys, which had been suspended following the government’s pay cut legislation, with an improved methodology involving more small companies in the survey. There was no mention of any intention to initiate a performance pay system linked to appraisal, or to bring in pay ranges, or to decentralise the pay system, all of which had been mooted in the reform document83 and by the Task Force and which had some political support from the Chief Executive and in the Legislative Council. The government’s retreat from a full scale implementation of the managerialist recommendations of the reform document and the Task Force can probably be best explained by changing political and economic conditions. First, at the time the changes were proposed, the government was faced with a host of other volatile issues and may not have wanted to add further fuel to the fire by pressing for radical change. Second, the Tsang administration was generally more sympathetic to the civil service than Tung Chee-hwa and his supporters. In the first two years of his administration, in particular, Tsang did not seek confrontation with the staff associations and would not have wanted to deal with the threat of industrial action. Stability in the civil service would have been greatly affected by changes in the pay system. Third, as economic conditions improved, the heat was to some extent taken out of the pay issue. Part of the public support for pay reductions had been a feeling of relative deprivation, that the civil service should experience the same economic hardships that the rest of the community was facing. When wages in the private sector began to rise, there was less public focus on the level of civil service pay. Salary increases were granted in both 2007 and 2008 and the system once more reverted largely to its pre-2002 form.

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Performance Management and Training

Performance appraisal has been a perennial concern for the Hong Kong civil service and its deficiencies have long been recognised.84 There has been a persistent “central tendency” where civil servants, who are being assessed annually on their performance, are generally marked in the middle or top end of the scale. Attempts to move away from the annual reporting system to more continuous and qualitative “coaching” seem largely to have failed and the appraisal system has remained a constant source of irritation for critics of the civil service. Their view is that performance should be evaluated in ways which enable management to discern and reward the diligent and the able and penalise the lazy and the incompetent. However desirable this might be, it is not easily achieved. The 1999 consultation document, the Civil Service Bureau and the Task Force on Civil Service Pay Policy all assumed that the creation of a more discriminating performance appraisal system was both possible and necessary. Experience elsewhere, and in Hong Kong after the reform process was started, suggests that this was wishful thinking.85 The reform proposals maintained that reporting officers were too generous in their assessments. For some years after 1999, the Public Service Commission supported this view and called for action to remedy the situation. In 2000, for example, it commended efforts “to tackle the problem of loose and over-generous reporting which undermines the performance management system”86 and suggested that poor performance might result in demotions.87 By 2007, it was taking a more benign attitude towards performance appraisal, noting that departments should avoid quota systems and that assessment panels should avoid downgrading “very effective” ratings to “effective” which, it felt, created “a lot of grievances and complaints from staff.”88 It also supported Civil Service Bureau efforts to introduce a competency-based approach, defined in terms of “knowledge, attributes, attitudes and skills”89 required to do a job effectively. In 2007, the competency-based approach was used to assess 80% of the grades in the civil service and was expected to be extended to the rest of the civil service.90 In the reform proposals, the performance appraisal system was expected to play a key role in three respects. First, it was seen to be a vital element in linking pay to performance and in improving productivity. The consultation document pointed out that increments in the civil service pay scale were not closely linked with performance.91 In June 2000, the Civil Service Bureau established rules which provided that civil servants could only be given an increment if their performance at work, including conduct, diligence and efficiency, was satisfactory.92 The Task Force on Civil Service Pay Policy then explicitly called for changes to the appraisal system, suggesting that it might be applied more rigorously to determine whether annual increments were awarded. Yet there appears to have been little success in using the appraisal process for this purpose. Since 77% of civil servants were on the highest salary point within their ranks in 2008,93 the appraisal system seems to have had, at most, a limited effect in determining the increments of most of the civil service. Increments are occasionally withheld as a disciplinary measure but the appraisal process is not used in the way in which the consultation document anticipated that it might be.

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A second area in which performance appraisal was expected to be useful was in identifying under-performers and, if necessary, dismissing them. In March 2003, the Civil Service Bureau stipulated that an “unsatisfactory” rating over a twelve-month period, provided that counselling on performance had been given, could result in action to retire the offender in the public interest under Section 12 of the Public Service (Administration) Order.94 In October 2005, the period allowed for “unsatisfactory” performance was reduced to six months.95 Yet these measures do not appear to have resulted in more dismissals. In fact, the number of civil servants dismissed under Section 12 declined from 38 in 2002/2003 to 14 in 2006/2007, of whom only seven were dismissed for unsatisfactory performance.96 The third area in which performance appraisal was thought to be significant was in identifying candidates for promotion. Promotion boards do have applicants’ performance records on hand and they do appear to represent an important consideration in the promotion decision. Some staff associations and many civil servants doubt the validity of the assessment process and regard reliance on the performance appraisal report as an unfair way of determining suitability for a position at a higher level. Although the promotion boards also use interviews to help them arrive at a decision, there is a suspicion that an adverse appraisal might be a determining influence on the outcome. Attempts to moderate the results of all reporting officers in the assessment panels do not appear to have been entirely successful and are affected by the Public Service Commission’s objection to the use of quotas which reinforce the central tendency.97 The difficulty with attempts to reform the performance appraisal system so that reports can be linked to performance pay, dismissals and promotions has been that insufficient account has been taken of the informal culture within the organisation. Performance appraisal is a problem because attempts to introduce results-based systems run into resistance from supervisors who often value a harmonious and productive working culture above a more friction-laden, performance-based assessment process which, in any event, is usually much less reliable and fair than its proponents maintain.98 In addition, reporting officers resent the time spent on performance appraisal and the number of civil servants which they are required to assess. Some departments have made efforts to improve their appraisal procedures, and the Civil Service Bureau keeps the issue under review, but the larger problem of producing fair assessments that adequately reflect performance remains unresolved. One of the assumptions behind new public management, which is evident in the reform proposals, is that rewards and sanctions will improve performance and that more training will increase productivity and efficiency.99 From this perspective, training is about acquiring a competency which is then expected to benefit the organisation by cutting its operating costs. Training may be also be used as a means of imparting core values to civil servants. The balance between competency training and imparting values is indicative of the kind of approach that government takes to public management. In the consultation document, for example, there is no mention of values; the stress is on “tailor-made plans” which will enhance “organisational and grade competence.”100 Since 2006, however, there has been some shift of emphasis in imparting core values to civil

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servants which has been reflected in a larger number of China studies programmes, increased training in the Basic Law, an important new integrity management programme run by the Civil Service Bureau and the ICAC, and attempts to draft a civil service code.101 Until 2004, training was provided through a relatively independent Civil Service Training and Development Institute which ran courses in Chinese writing and English, management development, general grades training, information technology, China studies, training in support of the civil service reforms, a Leadership Enhancement and Development programme and overseas visits for senior staff.102 Most training took place in the departments with some, such as the Police Force, having well-established and comprehensive programmes for all ranks. In December 2003, the Civil Service Bureau announced plans for a radical re-structuring of the Institute. In future, it was to concentrate on four areas: senior executive training and development; national studies programmes; consultancy services to departments on human resource management initiatives; and promotion of a continuous learning culture within the civil service. The Institute was also subsumed within the Civil Service Bureau and 47 posts including the post of the Director, 25 Training Officers and 21 other posts were deleted.103 This was consistent with the tenor of the civil service reforms, with cost-cutting initiatives at the time, and with continued stress on departmental training to provide the competencies required of their officers. The subsequent additional emphasis on imparting values to civil servants probably derived from a number of sources. Both before and after 1997, leading Chinese officials and some Hong Kong politicians had pressed for more education of civil servants about Chinese history and economics and about the Basic Law. Programmes have been developed whereby senior civil servants at the directorate level, above point 45 on the Master Pay Scale and senior ranks of the disciplined services can attend dedicated training courses at Beijing universities.104 At levels below point 45 on the Master Pay Scale, civil servants are able to undertake one-week study tours at a Chinese university.105 There is also an exchange programme under which Hong Kong civil servants can be seconded to Chinese government departments and vice versa. Some 45 departments have so far participated in the programme.106 The immediate aim of these programmes is to enhance civil servants’ understanding of the Chinese environment but the wider goal is to try to ensure that they act in the national interest rather than simply in parochial terms. Training in the Basic Law began in the 1990s and courses have gradually expanded since then. The need for this kind of training is more symbolic than real since most civil servants probably already have a very good knowledge of the Basic Law. With the commitment in the Chief Executive’s 2007 policy address to enhance Basic Law training for civil servants and the requirement in the following year that new recruits should demonstrate some knowledge of it, programmes are set to expand at all levels of the civil service.107 The integrity management programmes derive from changing problems relating to the ethical behaviour of civil servants, some of which probably stem from the adoption of new public management practices such as outsourcing. Historically, the ICAC prosecuted

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corrupt civil servants under the Prevention of Bribery Ordinance which involved establishing that the offender had accepted an advantage.108 Over the years, the level of corruption defined in this way declined markedly and the ICAC’s approach changed with it. After 2005, as an alternative to prosecuting under the Prevention of Bribery Ordinance,109 some prosecutions were based on the charge of “misconduct in public office”, a vaguely-worded common law offence which was not restricted to accepting an advantage and could cover other conflicts of interest. The ICAC’s training programmes have traditionally been aimed at corruption prevention but, with declining complaints and corruption prosecutions and the consequent difficulty of convincing departments heads that there is a corruption problem, the focus has increasingly shifted to top-down integrity management programmes. The ICAC and the Civil Service Bureau work with department heads, who appoint a directorate level civil servant in each department as an ethics officer with responsibility for devising an annual integrity management plan. While corruption prevention and the definition of what it means to accept an advantage remain important in ICAC programmes, training increasingly involves other conflicts of interest.110 In addition, once the civil service code is promulgated, it will be necessary for the Civil Service Bureau to explain through training what those values contained in the code mean for civil servants in practice. The vast majority of training programmes in the Hong Kong government are competency-based. But the increase in the number of programmes that relate to the inculcation and transmission of core values suggests that there has been some move away from the notion that all that civil servants need are the skills required to perform a job effectively. Rather than a greater interchange of personnel with the private sector, which is central to new public management, the government is still in practice committed to the idea that most civil servants should have a career for life. If that is so, then the development of public service ethos is an important supplement to the acquisition of particular skills.

Discipline and Conduct

Discipline and conduct encompass many different aspects of the standards and behaviour of civil servants, ranging from positive attempts to motivate personnel and encourage greater productivity to the penalties applied for breach of the civil service regulations and gross misconduct. Discipline in the civil service under the colonial government was covered under the Letters Patent and the Colonial Regulations (as distinct from the Civil Service Regulations) which lapsed at the handover. After 1997, the Basic Law (Article 48(7)) empowered the Chief Executive to take disciplinary action against civil servants and The Public Service (Administration) Order further expanded upon those powers, specifying the procedures to be followed when a civil servant is charged with an offence warranting dismissal, suspension or compulsory retirement.111 Section 10, for example, permits the Chief Executive to summarily dismiss an officer who is absent from duty without leave for more than fourteen days and who cannot be traced or fails to give a reasonable excuse for his or her absence. Further provisions, specifying the

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procedures to be followed in a disciplinary investigation and the punishments for those convicted, are laid down in the Public Service (Disciplinary) Regulation, a regulation made under the authority of the Order. For the period between 2000 and 2007, 1640 civil servants were disciplined under The Public Service (Administration) Order and 346 were dismissed.112 The Civil Service Bureau is central to the disciplinary process because it administers the Civil Service Regulations which are binding on all civil servants. The regulations cover such matters as conditions of service, standards of conduct and behaviour which may compromise the integrity of the service.113 Since 2001, stemming from the proposals for civil service reform, there has been a Secretariat for Civil Service Discipline within the Civil Service Bureau which has a wide-ranging brief including the processing of all disciplinary cases, advising departments on investigations, presenting evidence and witnesses, liaising with departments on procedures, identifying areas which are vulnerable to misconduct and improving staff management systems.114 As a result of the reforms, departments were expected to play an increasing role in resolving cases of minor infractions of the rules. In November 2002, they were given responsibility for all disciplinary cases concerning civil servants on salaries up to the middle ranges of the Master Pay Scale. It has been estimated that some 300 departmental and general grades officers spend at least some of their time on disciplinary matters.115 The phrase “bringing the service into disrepute” occurs repeatedly throughout the Civil Service Regulations which go into some detail about soliciting or accepting advantages, entertainment, and investments which an officer must report within two months of his first appointment and every two years after reaching the directorate rank.116 These provisions are clearly aimed at preventing corruption. They are reinforced by the Prevention of Bribery Ordinance which makes it an offence to have assets disproportionate to one’s income without a satisfactory explanation, a provision which was aimed at securing the conviction of corrupt police officers in the 1970s. The ICAC, consequently, plays an important role in maintaining standards of integrity in the public service and monitoring the level of corruption in the civil service. Reports from the public alleging corruption in the service have been declining gradually over the years and dropped sharply between 2003 and 2007 when the number fell from 1541 to 975, about one-third of which were concerned with the Police Force.117 The number of prosecutions for alleged offences over the same period dropped from 50 to 25, of whom 13 were convicted.118 The ICAC also has the power to refer cases of misconduct to the Secretary of the Civil Service or to bureaus and departments for disciplinary action; in 2007, 123 such cases were referred, a fall from the 234 referred in 2003.119 The Public Service Commission (PSC) also has a role in the disciplinary process, advising on penalties that should apply to virtually all civil servants and on the principles that should guide the process. Its stated aim is to ensure consistency in decision-making, fairness, and a speedy resolution to cases.120 In 2007, 91 cases were referred by the Civil Service Bureau to the PSC for advice, of which 84 concerned officers in the lower ranks.121 In eight cases, the Commission recommended dismissal from the service and a further twelve civil servants were compulsorily retired, all of whom were below point

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33 on the Master Pay Scale.122 Most misconduct cases warranting dismissal relate to unauthorised absence from work while those dismissed for criminal offences have mostly been found guilty of Prevention of Bribery Ordinance offences, attempts to defraud, or theft.123 For more minor misdemeanours, offenders receive reprimands, warnings and fines. The Hong Kong civil service has a high level of integrity and disciplinary cases are comparatively small considering the size of the service. Why, then, are so much resources spent on ensuring compliance with the rules? First, the civil service is still a traditional bureaucracy in which rules are important for the maintenance of the system and the hierarchy. Second, there is the spectre of past corrupt practices and the intent to ensure that they should never be allowed to emerge again. Third, there has been political pressure on the government to improve its monitoring and disciplinary mechanisms. This was particularly important at the time when the reform proposals were being considered after some cases of shirking and poor performance were widely publicised.124 The reforms introduced since then have worked well and have produced a speedier process without compromising the principle of a fair hearing. But there is still a need for more simplified civil service regulations that can easily be understood and which the departments can administer without too much debate with the Bureau over their meaning. Although changes to the disciplinary procedures represent one area where civil service reform has been successful, there are other areas of conduct which remain relatively poorly regulated and lacking in transparency. Several high-profile cases have put pressure on the government to tighten its regulations. In 1996, the Director of Immigration, Leung Ming-yin, was compulsorily retired from the civil service. A Legislative Council Select Committee established that Leung had been investigated by the ICAC but had been cleared and that the formal reasons for his compulsory retirement were that he had violated civil service regulations and that the government had lost confidence in his integrity.125 The government claimed that Leung had breached the terms of the Housing Loan Scheme, had not declared the full details of his investments, and had entered into a business relationship with a Legislative Councillor which might have resulted in a conflict of interest. The substantive charge against Leung was that he had engaged in conduct unbecoming of a senior civil servant and raised the issue of the penalties for non-compliance with civil service regulations. The case also illustrates the range of concerns that the government might have about the integrity of a civil servant for it raised questions about loyalty, assets in excess of income, and the point at which civil service regulations might require dismissals or compulsory retirements. In the post-handover period, two other cases concerned with the post-retirement employment of senior civil servants also caused public concern. Elaine Chung, who had served as Director of Urban Services and Deputy Director of Housing, was given permission to take up a position with the Hong Kong Ferry Company, a company associated with the Henderson Land Development Company. Henderson was bidding for multi-million dollar contracts for the government’s West Kowloon Cultural District project. In September 2004, the Secretary for the Civil Service wrote to Chung asking her to clarify what role she had in Henderson’s bid for the contracts and, two months later,

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specifically prohibited her from participating in any aspect of the bid.126 The Secretary was clearly concerned that Chung was engaging in inappropriate lobbying. When the matter was raised in the Legislative Council, Chung defended her activities vigorously. She contended that there was no conflict of interest, noting that it was five years since she had been involved in cultural activities which more than satisfied the sanitisation period and that there had been no “transfer of benefits” because she had not made any decisions on projects involving either the Hong Kong Ferry Company or Henderson during her time in government.127 In March 2005, the Civil Service Bureau conceded that Chung had not been involved in a conflict of interest but warned her that what she had been doing fell outside the scope of approved work. In August 2008, a former Director of Housing, Leung Chin-man, was alleged to have been involved in a conflict of interest over a property development undertaken by a company which he had subsequently been given permission to join. Although Leung had served the two-year sanitisation period, he had apparently not informed the Civil Service Bureau in his application of the potential conflict. In the face of public pressure, Leung resigned from the property development company and the Chief Executive set up a committee to examine once more the rules on post-retirement employment.128 Policy had already been revised following the Chung case. However, the original strict rules which the Legislative Council had called for were moderated by pressure from some civil service staff associations who saw tighter regulations as a restriction on their future right to work. It is questionable whether tighter regulations can resolve this kind of problem. It is generally agreed that the best means of avoiding potential conflicts of interest is to ensure that civil servants have an appropriate set of values which will enable them to steer clear of situations where their integrity is compromised and where the reputation of the civil service may be damaged. There have been various attempts to enhance the public service ethos in this way. In 1998, the Office of the Ombudsman issued guidelines on ethical behaviour for civil servants which included a range of questions that sought to enhance their sense of responsibility and accountability, to improve their decision- making in the public interest, and to promote their honesty, integrity, professionalism, courtesy, loyalty and dedication, economy and environmental consciousness.129 In the same year, the then Chief Secretary, Anson Chan, laid out six core values for the civil service which, with slight modification, have remained in place. They are: commitment to the rule of law; honesty and integrity above private interests; accountability and openness in decision-making; political neutrality; impartiality in the execution of public functions; and dedication and diligence in serving the community.130 It is fair to say that most civil servants appear to show a high level of commitment to those values. Until the ICAC’s integrity management programmes were introduced in 2006, however, core values tended to be acquired more by osmosis than by training. The political appointment of Deputy Directors and political assistants did raise questions about how they would interact with the civil service. It was determined that they would not have a direct line of command over the Permanent Secretary who would continue to report directly to the Director of Bureau. Nonetheless, concerns about the status of the new appointees

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provided a stimulus for the drafting of a civil service code which may be expected to provide more detail on how the government sees the way in which the core values should affect the behaviour of civil servants.131 Attempts to reform the personnel system have had, at best, mixed success. The original vision of a civil service along new public management lines in which there would be many more appointments on contracts, where pay would be linked to performance, and where appraisals would be conducted rigorously and would enable management to identify and promote the competent and coach or punish under-performers, has not been realised. The reform of the terms of employment was primarily aimed at new recruits and created morale problems when similar jobs were being performed by civil servants on very different conditions of service, violating the principle of “equal pay for equal work.” Salary levels were reduced in 2003 and 2004 but the reform to the pay determination system proved more elusive. Minor adjustments were made to the methodology but the system originally created in 1979 is essentially still in place. There has been more monitoring of the performance appraisal system and more attempts to determine necessary competencies at the departmental level but the fundamental problems of the central tendency and of the relationship between performance and the grading system remain. The principal success of the reform process has been in streamlining the disciplinary process. Even here, however, it might be argued that the reform worked because it was consistent with the existing administrative culture of a traditional bureaucracy, not because a new idea had won acceptance. What explains the failure of the reform process? When it was introduced in 1999, the conditions seemed suitable for change. The Chief Executive was anxious to introduce more private sector practices into the civil service. Civil servants were seen to be over- privileged at a time when the economy was deteriorating and unemployment was rising. There had been some major administrative mistakes and scandals and it seemed an appropriate time for changes to the conditions of service of civil servants and the way in which they were managed within the civil service. The types of reforms that were proposed potentially implied a major re-structuring of the service along new public management lines. In other countries, it has been possible to make that transformation. Why was it not possible in Hong Kong? First, economic conditions improved and the cost and performance of the civil service became less of a public issue. Second, Donald Tsang, schooled in the traditional civil service, was seemingly less committed to the notion of introducing major reforms than his predecessor had been. Reforms may be disruptive and in his first two-year term Tsang was principally interested in maintaining stability after the turbulence of the Tung era. There were still attempts to involve the private sector and the Efficiency Unit continued to draw attention to practices that might be usefully adopted. But the changes were essentially within the framework of a traditional bureaucracy rather than the radical changes that the 1999 proposals had anticipated. Finally, the civil service itself was an obstacle to reform. The staff associations were suspicious of attempts to introduce changes to the terms of service and to the pay determination system, especially because, in their view, due process had been ignored in the reduction of civil service

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salaries. In a wider sense, the civil service is a political organisation with vested interests which any government attempting reform has to ensure is supportive of change. With the staff associations opposed to the reforms and the political leadership in disarray, the reforms foundered, and, by default, personnel policies largely returned to their traditional form.

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lthough public sector reform in Hong Kong has focused principally on reducing the size of the civil service, on the pay determination process and on cutting salaries, Asenior officials have frequently expressed the view that the public sector can benefit from greater entrepreneurialism, more private sector practices in the workplace, and more devolution of government functions to statutory bodies or subvented organisations. These are not new ideas. During the colonial administration, social policy outputs were initially mainly provided by churches and by charitable and subvented organisations. When the government became more involved in social policy, it created large statutory organisations, the Housing Authority, the Hospital Authority and the Airport Authority, to deliver services. The post-1997 administration’s continuing commitment to small government has also been based on the belief that the private sector can undertake many public functions in more efficient ways than the civil service. But the measures that have actually been taken have been relatively modest. There has not been a substantial increase in the number of public enterprises, in the corporatisation of government activities, or the sale of state assets. There are cross-cutting values at work. While the government would like to devolve some of its responsibilities, it has in practice strengthened its grip on public sector organisations because it wants to retain control of service delivery and to ensure that their strategies are consistent with central policy objectives. Many senior civil servants also believe that statutory bodies and subvented bodies are not run as efficiently as they should be. An equally important reason why greater privatisation and corporatisation of government activities has not occurred is because of political opposition. However much Tung Chee-hwa might have wanted to privatise or to devolve more government functions, there were many other fronts on which his administration was battling to win or retain support. To introduce further controversial measures would have aroused the ire of the unions, members of the Legislative Council and perhaps civil servants. For similar reasons, Donald Tsang declined to take on major new initiatives in his first term for fear of creating more political turbulence. Aside from the political context, there have also been specific objections to proposals to privatise or corporatise. The Chinese government tends to favour centralised government and was opposed

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to both the corporatisation of government broadcasting and the privatisation of the Airport Authority.1 Opposition to privatisation and corporatisation has also come from politicians and academic commentators who have questioned whether such measures are in fact more efficient and cost-effective than having services provided directly by the government. There has also been criticism of the lack of accountability of statutory bodies, public outcries over the large salaries paid to their senior executives, fears over job losses in the civil service, and concern over the seemingly inevitable increase in fees for public services that were once free or relatively inexpensive. Many of these concerns were raised in a debate in the Legislative Council in 1999 on the privatisation of government departments. Lee Cheuk-yan, a leading figure in the Hong Kong Confederation of Trade Unions, who introduced a motion urging the government “not to blindly believe in the effectiveness of privatisation,”2 said that he opposed … sacrificing the interests of the whole society for the sake of creating more business opportunities. I oppose the blind belief in privatisation … while ignoring the five big evils accompanying the privatisation of government services, namely a drop in service quality; heavier burden for the people as a result of loss of control on the monitoring of charges; retrogression in democracy due to dwindling accountability; adverse effects on the overall effectiveness in society arising from piecemeal implementation of government policies; and the smashing of the “rice bowls” of staff that might lead to unemployment, social unrest and suppressed wages.3

Against the “five big evils”, the then Financial Secretary, Donald Tsang, posited what perhaps might be considered as the four virtues. Corporatisation, he said, had distinct commercial advantages. The service providers could develop a customer-oriented culture. The cost-effectiveness of services could be more accurately assessed. Corporations would no longer be subject to government rules and could adjust to changing market conditions. Private sector organisations could take part in offering services previously provided by government.4 If changes were to be made, Tsang noted that staff would be consulted, redundancies would be avoided as far as possible, service quality would be enhanced, and the level of charges would be monitored or included in the operating agreement with the newly-created corporatised body.5 Which position does the evidence support? Is Lee Cheuk-yan’s criticism that statutory and privatised bodies are less accountable than the traditional civil service justified? Is quality compromised and are charges raised if services are privatised or delivered by statutory bodies? Are the chief executives and directors of public corporations overpaid? In this chapter, we examine, first, the evolution of the government’s relationship with service providers outside the traditional bureaucracy; second, the legal status and funding of those providers; third, the control and accountability of non-government organisations; and, finally, issues arising from their operations, particularly the payment and recruitment of senior executives.

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The Evolution of Government’s Relationship with Service Providers

The Hong Kong government has a long history of encouraging private organisations to provide public services. Before the Second World War, education, health and welfare were largely in the hands of “not-for-profit” organisations, mainly churches, missionaries and Chinese charitable organisations, such as the Tung Wah and the Po Leung Kuk.6 Government’s involvement in social policy was generally restricted to regulating education and healthcare, making occasional benevolent donations and grants of land to schools and hospitals, and providing very limited support for the destitute and for refugees. There were two major reasons why the colonial government was strongly disinclined to develop extensive, publicly funded, social policy programmes. First, and most important, the prevailing philosophy was that government should be kept small and that its functions should be limited. Business representatives in the Legislative Council believed that any social policy programmes could only be funded by increased taxes which they fiercely opposed. Secondly, there was pressure from the British government to balance the budget and there was consequently little slack for expenditure on social policy. Instead, the government concentrated on monitoring social policy providers to prevent the schools from becoming hot beds of political dissent or health practices from deteriorating to the point where epidemics broke out. After the Second World War, regulatory social policies of this kind could no longer adequately address the colony’s problems. The influx of refugees from China created major housing problems, led to communist activities in schools and labour unions, and aggravated economic difficulties. The government began to re-consider its relationship with service providers. In 1947, it set up a Social Welfare Office and supported the creation of the Hong Kong Council of Social Service, which was incorporated in 1951 and was to serve as a mediator between the government and the welfare providers. Initially, there was little funding support from government; its view of welfare was that recipients should be helped to return to the workforce as soon as possible. In two other areas, the government was more interventionist. The Shek Kip Mei fire in December 1953 led to government resumption of land occupied by squatters and the beginnings of a public housing programme that was eventually to provide accommodation for nearly half the population.7 In education, fear of communist activities in schools led to a greatly expanded public primary education programme.8 By the 1960s, the government had become a much larger provider of social policy, but it did so grudgingly under the pressure of social and political forces that it could not entirely control. After the riots of 1966–1967, there was a sea change in the government’s attitude. Policy outputs — more housing, better education, better health facilities, more social welfare — provided the underpinnings for the administration’s attempt to bolster its legitimacy. Ancillary changes to devolve responsibilities to government-owned public corporations occurred at the same time. In 1973, the government introduced a new Housing Authority Ordinance which established the Housing Authority as a public corporation, with responsibility for the construction and management of public

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housing estates. The government did not see this as a new form of organisation but rather as a consolidation into a single body of the powers and functions of the existing Housing Authority, the Housing Board, the Urban Council and the Commissioner for Resettlement.9 The Housing Department, which was to serve as the executive arm of the Authority, remained part of the civil service. In 1975, the government believed that it was breaking new ground when it established the Mass Transit Railway Corporation (MTRC), as a wholly owned public corporation, to build and then run Hong Kong’s underground railway system.10 The principal reason for setting up the MTRC as a public corporation lay in its commercial possibilities. If running a railway was seen as a commercial activity, it followed that Hong Kong’s other railway, the Kowloon-Canton Railway Corporation (KCRC), which had been a government department since 1910, should also be set up as a public corporation. An ordinance to make this change was passed by the Legislative Council in 1982. Measures were also introduced to provide for government regulation of the electricity companies and the bus companies which operated under schemes of control which capped their charges and required that certain performance standards should be met.11 The government’s policy of increasing social policy outputs, such as housing and education, had considerable political advantages.12 It enabled the government to claim performance legitimacy, the notion that it deserved to rule because it was an efficient and effective government and provided the kinds of collective goods that people wanted. By the 1980s, this justification for colonial rule was becoming less persuasive. The expansion of the education system produced more graduates who sought to influence policy directly. Negotiations on the future of the territory politicised the entire population. Popular demands were now not simply for more housing, education and social welfare but for better quality housing, education and social welfare. Building more housing estates, new towns, hospitals and schools did not in itself satisfy an increasingly critical public.13 The growing demands of an ageing population also meant that healthcare and welfare would both become more expensive. The government’s response was to look more favourably on other means of providing those services. In 1985, the consultants, W.D. Scott and Company, were appointed to investigate more efficient and cost-effective ways of delivering health services. Their recommendation was to create a single authority because they believed that, unless such action was taken, “the current system of medical services delivery will become increasingly…costly to maintain and less able to cope with the demands placed upon it.”14 When the Hospital Authority came into existence in 1990, the model adopted, after some years of contentious debate, was similar in legal form to that of the Housing Authority.15 The Authority was set up with overall responsibility for the management of public hospitals but public health remained within government under departmental control. In 1988, the government also made changes to its original arrangements with the Housing Authority, allowing the Authority greater financial flexibility which was intended to enable it to implement its long-term housing strategy more effectively.16

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There were good political reasons for strengthening the powers of the authorities. The growing number of complaints about the quality of housing, healthcare, transport, education and welfare added to the pressures on government. Demands for more representative political institutions in the territory, fears about the consequences of the transition to Chinese sovereignty, and eventually the Tiananmen Square massacre, all meant declining legitimacy for the government. Anything that could be introduced to deflect complaints about social policy to organisations outside government was clearly politically desirable. In moving operational, but not policy, responsibilities for hospitals and housing more distinctly beyond the government’s orbit, the burden of responding to complaints was removed from what was becoming an overloaded system. In addition, the government also took other measures to reduce criticism of its own operations. The Broadcasting Authority was set up as a statutory body in 1987 and had, among its responsibilities, answering complaints about radio and television. To deal with complaints more broadly, an ombudsman was established in 1989, predictably receiving the largest number of complaints about housing. In the 1990s, the government began to devolve more of its responsibilities to statutory bodies and to charge for more of its services. These measures were driven by both commercial considerations and wider political concerns. One of the fears expressed during the transitional period was that a centralised bureaucracy with the kinds of autocratic powers held by the colonial regime could be used to suppress civil liberties after 1997. There was consequently some support in government for spreading more of the public sector beyond the traditional civil service. The further expansion of the civil service had, in any event, been halted by a freeze on recruitment which began to take effect in the early 1990s. In line with the idea of devolving more power to statutory bodies, the powers of the ombudsman were strengthened, an Equal Opportunities Commission was established and an attempt was made to corporatise Radio Television Hong Kong although this was eventually abandoned in the face of opposition from the Chinese government.17 In similar vein, although without involving the creation of statutory bodies, the government passed legislation to protect the privacy of individual data and to provide access to information. On the commercial side, the government began to experiment with changing the way its departments did business. A Trading Funds Ordinance was passed in 1993 which enabled the Financial Secretary to allow government departments to operate in a commercial manner provided that they were efficient and effective and had “the capacity to meet the expenses incurred in the provision of the government service.”18 Six trading funds were eventually established: the Lands Registry, the Companies Registry, the Office of the Telecommunication Authority, the Post Office, Electrical and Mechanical Services and Sewage Services. In 1998, the Sewage Services Fund was terminated after members of Legislative Council criticised it for raising charges.19 The Funds were not usually given the liberty to set their own prices and were not faced with any private sector competition. In consequence, they continued to operate as monopolies and did not entirely live up to the expectations of those who wanted to see more commercial activity in government.20 Another major commercial venture was the building of the new

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airport at Chep Lap Kok. The government established an Airport Authority, drafting the legislation along similar lines to that of the MTRC.21 This raised concerns that there would be a lack of government control over the new public corporation, a fear that was reiterated after the disastrous opening of the airport in 1998 when the Legislative Council’s investigation laid some of the blame at the door of inadequate monitoring of the authority by senior officials.22 The Tung administration proved even more enthusiastic about privatisation, corporatisation and private sector involvement in public affairs than its colonial predecessor. In 2001, the Financial Secretary told government departments that: Consideration should always be given to involving the private sector in the provision of new services. And opportunities to improve private sector involvement should be examined proactively.23

The Asian financial crisis and the subsequent recession increased the pressure on the government to do more for business and to utilise its services to decrease the costs of civil service expenditure. There were proposals to contract out welfare services and water supplies and to privatise public corporations of which the MTRC was to be the first example. In his 2003 budget, the Financial Secretary announced that the government would sell $112 billion in assets over the following five years.24 In the following year, his successor noted that about $21 billion had been realised through selling housing loans to the Hong Kong Mortgage Corporation and the securitisation of revenues from government toll tunnels and bridges.25 Future candidates for privatisation were thought to include 25–49% of the Airport Authority, car parking spaces and shopping centres owned by the Housing Authority, the remaining shares in the MTRC, the Post Office, the KCRC, the Water Services Department, the Environmental Protection Department and the government’s holding in Disneyland.26 By 2008, the only project that had been fully implemented was the sale of the Housing Authority’s car parking and shopping centres and even that was delayed by a court case brought by activists opposed to the move.27 The KCRC was merged with the MTRC in December 2007 but not without opposition from the democratic parties who voted against the merger bill and from minority shareholders in the MTRC who were critical of the merger conditions which reduced the corporation’s autonomy to decide on fares.28 There were many different reasons for the failure to divest other government assets. The Chinese government was not supportive of the privatisation of the Airport Authority. There would have been considerable political opposition to the privatisation of government departments. And the government’s venture with the Walt Disney Company had yet to make a profit. The government’s attitude to privatisation also changed. It had less need to sell assets once its fiscal situation began to improve and Tsang was less willing than his predecessor to court controversy by doing so. Rather than divesting assets, the government seemed more interested in regulating the commercial sector through the introduction of a competition law and by re-writing the Companies Ordinance.29

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The Legal Status and Funding of Service Providers

The bewildering range of relationships that exist between central government and the non-government public sector organisations is probably a product of the ad hoc way in which those organisations have developed. To understand how this affects wider issues of accountability, there is a need to try to classify these relationships. By non- government public sector organisations, we mean those bodies which perform public service functions but which, either because of their legal status or primary roles as private sector organisations, enjoy varying degrees of independence and autonomy from the central government. In June 2005, the government calculated that there were 509 advisory and statutory bodies (see Table 6.1).30 They range in type from executive agencies to statutory corporations to some private companies. They also include what is sometimes regarded as the only type of non-government organisation, the voluntary welfare organisation involved in community service. They do not include such organisations as political parties or civic pressure groups which are not usually engaged in a direct relationship with government over service provision. Because many advisory and statutory bodies are involved in activities that are matters of continuing public concern, such as transport, housing and healthcare, there is a need to ensure that they are accountable to some institutions within the political system and that their actions are consistent with community goals and other government policies.

Table 6.1 Number of Advisory and Statutory Bodies, June 2005 Type Statutory Non-statutory Total Advisory boards and committees 48 239 287 Non-departmental public bodies 14 1 15 Regulatory boards and bodies 48 0 48 Appeal boards 54 5 59 Advisory and management boards of trusts/funds 44 30 74 Public corporations 5 0 5 Miscellaneous boards and committees 16 5 21 Total 229 280 509 Source: Home Affairs Bureau, Legislative Council Panel on Home Affairs: Review of Advisory and Statutory Bodies: Interim Report No. 14 Review of the Classification System of Advisory and Statutory Bodies in the Public Sector (Hong Kong: The Bureau, 2005), Annex 1.

The government’s classification of the advisory and statutory bodies shown in Table 6.1 is not entirely satisfactory because it includes the category “non-departmental public bodies” which seems to be little more than a catchall for public bodies with financial or organisational problems or with which the government has been in political conflict. The classification which is used in this chapter instead relies on three variables which seem to be particularly important:

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• the extent to which the public sector organisation is funded by government; • the legal framework under which the public sector organisation has been established, that is, whether the public body is established under statute or whether it has a less formal relationship with the government; and • the extent to which specific circumstances influence attempts to ensure accountability.

In this section, non-government public sector organisations are classified accordingly by their legal status and their funding relationships with government; political and accountability issues are considered in the next section of the chapter. The non-government public sector organisations range from quite closely supervised bodies, such as the executive agencies established by government under executive orders or delegated legislation, to bodies such as the Hospital Authority, which have close relations with government departments and policy-making bureaus, to public corporations such as the MTRC which enjoy a much greater degree of independence. Between these extremes, a number of organisations — for example, voluntary welfare organisations, the tertiary level educational institutions, the Trade Development Council, the Productivity Commission and the Independent Commission Against Corruption (ICAC) — receive most, or all, of their funding from the public coffers and are held accountable, to a greater or lesser extent, for the ways in which they use those funds. In addition, some of the companies that operate monopolies or duopolies in areas of public interest, such as the bus companies and the electricity companies, are subject to regulation under schemes of control. Still other arrangements apply to property which the government owns but chooses not to administer directly. For example, the government owns the Cross Harbour Tunnel but has entered into a contract with a private company to manage it.31 Although there has been no coherent pattern to the Hong Kong government’s efforts to oversee these many different kinds of organisation, they do fall into certain categories in terms of their funding arrangements and legal status. Table 6.2 presents a classification based on these variables. The relationship between government and the non-government organisations should nonetheless be conceived of as dynamic and subject to change over comparatively short periods of time. For example, the government can legislate changes in the status of non-government organisations, as it did with the decision to merge the KCRC with the MTRC and with the unsuccessful proposal to amend the Airport Authority Ordinance to allow for partial privatisation.32 There may also be changes of function which might result in more autonomy from government. The Housing Authority, for example, now has a role as a housing facilitator rather than a provider, and has been brought under direct government control.33 Any organisation’s position within the classification, therefore, is fluid and depends on the prevailing circumstances and government’s response to them. A further difficulty in classifying non-government organisations is that the legal status of non-government organisations is not wholly exclusive. Thus, a statutory body (that is, one established under an ordinance) can also be a charitable trust for income tax purposes and a public corporation. The classification, consequently, is based on a combination of the organisation’s funding relationship with government as well as its legal status.

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With these caveats in mind, we can examine specific types of non-government organisations and the reasons why government has established a particular kind of relationship with them.

Core Government Functions

Core government functions are provided by the bureaus and departments which are staffed by civil servants. The legal authority to establish such bureaus and departments was derived from the Letters Patent and the Royal Instructions under colonial rule and under the Basic Law after 1997. The authority to organise administrative affairs is delegated to the Hong Kong government under Article 16 of the Basic Law which states that the HKSAR shall be vested with executive power and that it may, on its own, conduct the administrative affairs of the Region. Article 60 further provides that a “Department of Administration, a Department of Finance, a Department of Justice and various bureaus, divisions and commissions shall be established in the Government of the Hong Kong Special Administrative Region.” Structural changes in government, such as the introduction of the Principal Officials Accountability System, may involve the presentation of the proposals to the Legislative Council and may require the approval of the Council if new positions are introduced. But the authority to make changes to the structure of government rests with the executive. The funding of bureaus and departments usually comes from revenue raised by the government. Some departments may have income from their activities — which then may trigger a debate about whether they should be operating commercially as trading funds — but most are reliant on the funding granted by the Legislative Council when it approves the budget estimates. This enables the Council, through its Finance Committee and the Panel on Public Service and other more specialised panels, to keep under review the ways in which the government spends its money and, particularly, whether requests for new positions are justified.

Quasi-Government Organisations

Quasi-government organisations may be created in a number of different ways: by executive decree; under an ordinance passed by the Legislative Council; or by their own private constitution under which they may provide functions which are seen to be in the public interest and for which they may receive government funding. We consider examples of each of these types of quasi-government organisations.

1. Executive body In purely legal terms, the simplest way to create a relatively autonomous organisation to perform specific functions is by government decree. This may be done either through an executive order or under delegated legislation. The Hong Kong Monetary Authority, for example, which serves as the equivalent of a Central Bank and administers the Banking Ordinance and the government’s investments in the stock market, was, prior to 1993, the Monetary Affairs Branch of the Hong Kong government. It was not established under its

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Table 6.2 The Organisation of the Public Sector Type Legal Foundation Funding Examples A. Core Government Organisations 1. Policy Bureau Recognised under Fully funded by Health and Welfare; the Basic Law but Government Environmental established by an Hygiene and Food; executive order or Constitutional Affairs decision 2. Government Recognised under Mostly fully-funded Education Department; Department the Basic Law but by government. Social Welfare established by an Some departments Department. The Post executive order or providing commercial Office operates as a decision services may operate Trading Fund as Trading Funds B. Quasi-government Organisations 3. Executive body Established by Usually fully funded Hong Kong Monetary executive order or by government Authority; directive University Grants Committee; Women’s Commission 4. “Not-for- Established by Fully or nearly fully Independent profit” subvented ordinance subvented by Commission against statutory body government Corruption; Hong Kong Trade Development Council 5. “Not-for- May or may not be Organization charges Hong Kong Council profit” non- established by fees and is self- of Academic subvented body ordinance financing Accreditation 6. Partially Established by an May charge fees or Hospital Authority; commercial entity ordinance as an rents or sell property Airport Authority underwritten by incorporated but may be dependent government statutory body on government backing for capital expenditure 7. Commercially Established by an Wholly self-financing Kowloon-Canton viable entity ordinance as an but government may Railway Corporation. incorporated forego dividends to (After its merger with statutory body support further capital the MTRC in 2007, expenditure the KCRC remained a statutory corporation but with very few staff)

(Table 6.2 continued on p. 129)

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(Table 6.2 continued)

8. Company Established by its Wholly self-financing Mass Transit Railway in which own constitution, but government may Corporation government holds pursuant to the waive or defer all or a majority Companies dividends in the of shares Ordinance and interest of further sometimes also capital expenditure subject to a special ordinance C. Private Organizations with Public Functions 9. “Not-for- Established by its Regularly or partially Hong Kong Aids profit” private own constitution or subvented by Foundation; Hong (voluntary) deed of trust government grants Kong Council on welfare pursuant to an with supplementation Smoking and Health; organization ordinance such as from organizations Community Advisory the Societies such as the Drug Council; Po Ordinance and Community Chest Leung Kuk sometimes and the Jockey Club incorporated under an ordinance 10. Publicly- Established by its Company contracts Bus companies; tunnel listed company own constitution, with government to companies; or private pursuant to the manage a public outsourcing company with Companies function at a profit to information public functions Ordinance, the company but with technology operating under a controls over prices contract, franchise, and standards. build-own-operate Government may also agreement, or the legislate or issue like with directives in regard government to franchise or build-own-operate arrangements Sources: Adapted from Ian Scott, “Organisations in the Public Sector in Hong Kong: Core Government, Quasi-Government and Private Bodies with Public Functions,” Public Organisation Review 3(3), (2003), 250–251. This table is based on the legislation and annual reports of the government departments and organisations mentioned in this chapter. I am grateful to Ian Thynne for his help in clarifying many of these relationships and for his suggestions on the wording of the categories.

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own ordinance but its functions are clearly laid down in the Banking Ordinance.34 The relationship between the Authority and the government is very close.35 The government funds the authority, the Financial Secretary retains the chair of its major committees, and many of its senior officials are former civil servants. Fully funding an executive agency is quite common in Hong Kong but there is no reason why such agencies should not be set up as self-financing bodies. This will depend on their ability to generate revenue and the government may decide that it needs to ensure the viability of the organisation by providing for its entire budget. Despite this relationship of dependency and the ease with these executive agencies can be created, there is no guarantee that friction with the government will be avoided. Specific funding and political issues may arise and the relationship between the responsible official in the government and the head of the agency can be a source of conflict if powers and duties are not carefully defined. In addition, the government, in setting up such agencies, does not always provide much legislative oversight into their work. If relationships between the statutory body and the Legislative Council do develop, it may be because both sides see value in communication and expand their contact informally to the point where they become conventions. The Monetary Authority, for example, has worked hard to keep legislative committees apprised of what it is doing; the Authority’s Chief Executive meets with the Legislative Council Panel on Financial Affairs three times a year and other members of the Authority appear before the Panel if required.36

2. “Not-for-profit” subvented statutory body The difference between an executive agency and a subvented statutory body is that the latter is established under ordinance. The public body has been given powers and duties which may be the subject of scrutiny by the Legislative Council. In addition, for the government to propose such an arrangement there must be some function that it believes can be performed better by an independent or autonomous agency. The ICAC is a classic example of this type of organisation. Its principal purpose is to prevent corruption and pursue and prosecute those who are corrupt which cannot easily be undertaken by the government; if it were, there would be no certainty that cases would be dealt with independently and fairly. The nature of its function means that the ICAC could scarcely be expected to raise money to fund its own activities. It is, therefore, necessarily a fully subvented statutory body whose officers are employed on contract, often on secondment from the civil service itself.

3. “Not-for-profit” non-subvented body Unlike the ICAC, there are some organisations, which may or may not be established under ordinance, that perform public functions but which are permitted to charge for their services. Since the function is in the public interest, the organisation is not allowed to charge fees with the intention of making a profit although it will seek to cover its costs. The Hong Kong Council of Academic Accreditation which validates degrees and also assesses non-Hong Kong degrees for government recruitment purposes is an example of this type of organisation. The government pays the Council for its services.

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4. Partially-commercial entity underwritten by government Some organisations have been set up outside the central government to better implement policy without the constraints of normal bureaucratic practice. The Housing Authority (until 2002), the Hospital Authority and the Airport Authority have several significant features which they share in common. First, they were established as public corporations under ordinances passed by the Legislative Council. This means that in some respects they may act in a similar manner to private companies; they may sue and be sued, for example. They may have other legal entitlements that private companies do not have; they may be charitable trusts, for example, which would give them favourable income tax benefits. Second, they have large capital expenditures which may be provided or underwritten by government or may be financed from their own activities. By 2001, for example, the Housing Authority had evolved to the point where it was financially autonomous and had $20.8 billion available for investment.37 With the review of public housing in 2002, however, and the decision to bring the Housing Authority back directly under government control, its role was radically changed from “bricks and mortar” provision of public housing to advising government on a housing strategy which would encourage more private sector provision.38 Third, the Authorities have the capacity to make money themselves through charging rent and selling flats, in the case of the Housing Authority, and through charging fees in the case of the Hospital and Airport Authorities. Fourth, they are each involved in the difficult task of establishing a proper balance between the public need for the service and the economic cost of providing it. For the Housing Authority, this is complicated further by the fact that there are private developers who may view the Authority as unfair competition if it provided too many flats at too low a rent or sold too many flats at what the developers regard as uneconomic prices. The difficulty for the Authorities is that they are not purely commercial operations; they provide services subsidised by government. While they have the ability to charge economic prices, if they were to do so, the political cost to the government would be unacceptable.

5. Commercially-viable public entity Until 2007, when it was merged with the MTRC, the government did wholly own one public enterprise which could charge the full economic price for its service and make a profit. The Kowloon-Canton Railway Corporation (KCRC), which was then a public corporation, made consistent profits although in some years the corporation claimed a loss for tax purposes.39 The government as its only shareholder was entitled to dividends from these profits but often waived the dividend to assist further capital expenditure.

6. Company in which government holds all or a majority of shares Prior to 1999, the Mass Transit Railway Corporation (MTRC) was a public corporation and had the same legal status as other public corporations such as the Housing, Hospital and Airport Authorities and the KCRC. Since 1999, the MTRC has been a public company, quoted on the Hong Kong Stock Exchange, in which the government has a

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majority (77%) stake. The decision to create a public company began a new phase in the development of public sector bodies. The changed status of the MTRC raised issues about the relationship between commercial practice and the public interest which had previously been treated as an internal negotiating matter between the government and the corporation. When the MTRC was created in 1975, the government stressed that the corporation could only operate “having regard to the reasonable requirements of the public transport system of Hong Kong” and that it was “highly important” that it took into account the government’s transport policies.40 The MTRC was permitted to determine fare levels, the number of trains purchased, and the frequency of operations but required government approval for its routes.41 The merger with the KCRC raised a number of issues, not the least of which was the politically sensitive question of control over fares. The government, which initiated the merger, expected that the synergies that it would produce would actually reduce fares.42 To ensure that the merged company did not use its dominant market position to raise fares unjustifiably, the government wanted to ensure that there was an “objective and transparent” fare adjustment mechanism and that the company would not engage in cut-throat competition with other transport providers.43 The government was clearly acting in the public interest. As a public company, however, MTRC directors also have to consider minority shareholders’ interests as well as their responsibility to explain company policies to the market.

Private Organisations with Public Functions

The government has permitted voluntary welfare organisations and the private sector to provide necessary public functions, such as community care, electricity supplies and bus services, while retaining some control over pricing and standards through funding and licensing arrangements. The division between those functions that are directly provided by the government and those that are supplied by welfare organisations or a private company are often determined by historical circumstances. In the case of welfare, the government has traditionally preferred services to be provided by non-government organisations. In cases involving private companies taking on public functions, the government has tended to be sympathetic if it believed that the service could be provided more efficiently by the private sector. Occasionally, however, political considerations have meant that the government has had to provide services which it would have probably preferred to see delivered by the private companies. For example, for many years, water was a political issue because much of the supply came from China and was subject to negotiations over price and quantity. In 1994, Sewage Services were established as a trading fund but concerns over increased charges eventually led the government to close it down and return responsibility for water to departmental control.44 In other areas, such as the supply of electricity and gas and in some aspects of transport provision, the government has been less interested in playing a direct role. Where there are multiple providers of services, the appropriate mix between government, subvented bodies and the private sector is often an issue. There is a danger of duplication, of varying quality for the same service, and of pricing differentials. The

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government’s answer to these problems has been to try to introduce more uniformity in standards through such management methods as schemes of control over the power and bus companies, the school management system, and the Lump Sum Grant scheme for welfare agencies or to permit an element of “user-pays”, as in the hospital system, where private providers are entitled to charge higher fees than the Hospital Authority. In some areas, such as school management and the Lump Sum Grant scheme, the government’s methods have caused considerable friction with providers. Achieving the balance between different providers and between cost-effectiveness and an equitable provision of services is difficult and requires constant adjustment and review to ensure that the system works well.

1. Voluntary welfare organisations Legally, voluntary welfare organisations are private bodies although most receive a high percentage of their revenue from the government, the Community Chest or the Jockey Club, or from more than one of these sources. In 2008, the Social Welfare Department paid out $7.342 billion to 173 subvented agencies of which 162 came under the Lump Sum Grant subvention mode.45 The Community Chest disbursed a further $138 million to 125 of its 143 member agencies and the Jockey Club made grants totalling almost $354 million to 54 community services groups.46 Most voluntary welfare agencies are members of the peak organisation, the Hong Kong Council of Social Service, which negotiates with government on their behalf, conducts research, and serves as a planning body for the provision of services.47 In 2005, the government set up a Commission on Poverty, chaired by the Financial Secretary, which proposed policies for poverty alleviation but which was criticised for a lack of direction, for recommending policies that were already in place, and for inefficacy in a time of rising income inequalities.48 The considerable extent to which voluntary agencies are subvented means that they are highly dependent on government; one observer has described them as “camouflaged quasi-government agencies.”49 Government directs their policies and attempts to ensure that there is no overlap in the services provided. The introduction of a Lump Sum Grant scheme in 1999 was designed to give them some discretion in spending their subvention. Whether that outcome was achieved is questionable; government control was probably strengthened by greater scrutiny of the funds provided for salaries (rather than a replication of government salary scales) and by the inclusion of a representative of the Social Welfare Department on the boards of the subvented voluntary agencies. By 2008, there were signs that the government was prepared to relax some of these control measures by establishing an independent review committee to advise on the way in which the Lump Sum Grant scheme was working and how it might be improved.50 Subvented organisations may be incorporated under an ordinance. In some cases, the government has chosen to recognise private welfare organisations by passing legislation governing their operations through the Legislative Council. The reasons for recognition may vary. In the case of the two charitable organisations, the Tung Wah and the Po Leung Kuk, the original reasons for incorporating them under ordinance reflected government’s desire for greater control over their activities. In general, incorporation does imply a

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stronger relationship between the private organisations and government, but other than a purely commercial relationship between government and a private company, it still represents the loosest form of contact; the incorporated body is responsible for its own funding although it may also hope to receive some government largesse.

2. Publicly-listed company or private company with public functions The bus companies, the tunnel companies and certain utilities in Hong Kong are in some respects controlled by the government. In their day-to-day operations, they function as any other private company would. However, under their schemes of control, they are required to submit increases in charges and fares to government and are also required to meet performance standards laid down by the government.51 Since the companies cannot operate without government approval, they are in effect dependent upon it. Until 1993, there were only two franchised bus companies. Although it would appear that the companies would be able to negotiate from a strong position since they held monopolies over their routes, this did not prove to be the case. In 1998, the government put out tenders for a new bus franchise with the result that the New World First Bus Company was awarded much of the China Motor Bus Company’s network which then ceased to be a franchised operator.52 There are now five franchised bus companies. The construction and operation of Hong Kong’s tunnels involve equally complex relationships between government and private companies. Five of the tunnels have been constructed under “build, operate and transfer” provisions. The government owns a further seven tunnels that are managed and operated under contract by private companies.53 There have been problems of congestion in some cases and under-utilisation in others. Other difficulties have arisen from the tolls charged. If tolls are too high, as some consumers believe, the government may be called upon to put pressure on the company to reduce them. The relationship of the government to the bus companies and the tunnel operators may be appropriately described as a public/private partnership in which government regulates and coordinates and the private company provides the service. Greater private sector involvement in the work of government has also taken other forms. In October 2000, the Housing Department contracted out estate management and maintenance in the public housing estates and 7,100 staff were offered buy-outs and voluntary departures despite strikes supported by the Hong Kong Chinese Civil Servants Association.54 There was a greater emphasis on outsourcing and a requirement that government departments should consider it as an alternative to providing services themselves (see Chapter 4).55 In addition, the government supported multi-million dollar construction projects such as Cyberport, which was expected to attract foreign investment in information technology, Disneyland, and the West Kowloon Cultural District project, an arts and cultural venue. In each of these cases, public money was spent on the project and, in each case, the project proved to be politically controversial. The Cyberport contract was awarded, seemingly without a proper tendering process, to a son of the business tycoon, Li Ka- shing.56 Disneyland required the government to make an initial contribution to a joint

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company of $3.25 billion dollars in equity together with a loan of $5.6 billion.57 There were also various planning and infrastructure costs but nothing to date by way of positive financial returns.58 The long-running saga of the West Kowloon Cultural District project, which the government hoped to fund on the “build-operate-transfer” model, became bogged down in tendering problems, court cases, capital costs spiralling to $21.6 billion, and allegations that the project had more to do with property development than with the arts.59 If these experiences with the difficulties of partnering the private sector were not enough, one of the government agencies, Invest Hong Kong, contracted out a rock concert, meant to celebrate the revitalisation of Hong Kong after SARS, to a private company which had little experience in the field. The government lost its sponsorship money of $100 million and the subsequent investigation revealed inter alia shortcomings in financial controls and in the briefing of the Legislative Council.60 In the light of that track record, the Tsang administration has been rather more wary of grandiose projects. It has continued to support outsourcing initiatives although they tend to be mainly limited to capital works which accounted for 73% of annual expenditure in 2006. Eight departments accounted for almost all of the money spent.61 The government continues to stress that it is in favour of private sector involvement but its taste for taking up public/private sector partnerships may have been tempered by the political controversies of the past. The decision to build a cruise terminal, for example, was originally conceived of as a public/private partnership but was abandoned when private sector bids were deemed unsuitable. Eventually, the government decided to finance the project itself.62 In its dealings with public bodies, the government possesses very considerable powers over the funding and legal status of public sector organisations. It may decide, for example, to increase or reduce subventions or capital expenditure. It may slow or speed up the pace with which housing estates or railway lines come into operation. It may even affect the fortunes of private companies by awarding or failing to award franchises and contracts. In addition to the control of the purse, the government also has the ability to change the legal status of non-government organisations through its executive powers or through the introduction in the Legislative Council of new ordinances or amendments to existing ordinances. A non-government organisation could have its powers shorn, or its autonomy expanded, depending on whether the government believes that its aims would be better achieved by a change in legal status. Yet, despite these formidable powers, it would be wrong to assume that the government always gets its own way and that non-government organisations do not exercise some control and direction over their own affairs. Points of friction do emerge between the government and the non-government organisations over funding and legal authority. It is also true that many political issues arise because of disputes over whether the non-government organisation has fulfilled its side of the bargain to deliver services or infrastructure in the manner which was originally agreed. Many of these concerns are not with funding or legal status but with the commercial operations, project implementation or service provision of the public bodies. Since public money is likely to be involved in one way or another, this becomes an accountability issue: how are these organisations to

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be held accountable when they were intended to be semi- or nearly wholly autonomous? In the following section, we examine this issue in greater detail.

Accountability and Public Bodies

When the government and public are satisfied with the performance of non-government organisations, they are left largely to their own devices. But once major issues or scandals emerge the government often serves as a proxy for the wrath of the public or their representatives. It may be accused of failing to ensure that there was sufficient legislative oversight over the organisation or it may be held to be negligent in fulfilling its duties on the boards of public corporations or it may even be judged to have made a mistake in removing the agency from the government in the first place. Whatever the charge, accountability relationships between the government and these organisations, not only in Hong Kong but also in many other parts of the world, have generally been very weak. In the Hong Kong case, three major scandals concerning public bodies raised very serious questions about the extent to which the organisations were accountable either to government or the legislature. The first concerned the opening of the new international airport at Chep Lap Kok in July 1998. The airport’s computer, cargo-handling and baggage systems failed to work properly causing considerable inconvenience to passengers and had a significant detrimental effect on the economy as many perishable goods rotted.63 The second instance, a year later, involved inadequate construction of two housing blocks which had to be demolished, resulting in a loss of $258 million.64 The third case involved the decision of the KCRC to overpay contractors some $321.8 million as a result of initial planning mistakes.65 Since then, there have been many other, relatively minor, instances where public sector organisations have failed to live up to the expectations of the government or the public.66 Would these problems have arisen if tighter accountability systems had been in place? To try to answer that question, we have to look at the accountability system that is presently in place to see whether the weaknesses can be remedied. There are four major institutional checks on the work of public bodies. The first is through the powers of direction vested in the Chief Executive or in the Principal Officials. The second is through the power of the Chief Executive to appoint representatives who sit on the boards of the statutory bodies and public corporations. The third is legislative scrutiny, usually through committees or tabled reports or testimony from the executives of public bodies in the Legislative Council. The final method is through the audit process which serves to identify shortcomings in the financial or other dealings of the public bodies.

Powers of Direction

The Chief Executive has the power to direct the work of statutory bodies both generally through the Interpretation and General Clauses Ordinance and, more specifically, through the individual ordinances governing the work of the statutory bodies. He may

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appoint the members of statutory bodies and may also dismiss the board and re-constitute it as he sees fit.67 There are also powers that may be exercised under the ordinances that govern the boards of the statutory bodies. The Urban Renewal Authority Ordinance, for example, provides that: The Chief Executive may, if he considers the public interest so requires, give directions in writing to the Authority in relation to the exercise of its powers or the performance of its duties and the authority shall comply with those directions.68

These are very broad powers, sufficient to ensure that the government could, if it so wished, shape the statutory bodies in any way it wanted. In 2001, the then Chief Secretary said that “although statutory bodies are entrusted with certain executive powers, policy responsibility remains firmly with the relevant Policy Bureaux.”69 In 2007, the government sought through judicial review to re-affirm its right to make policy over other considerations, such as academic autonomy, in the Hong Kong Institute of Education case.70 Normally, though, its powers to overrule the boards on policy grounds (as distinct from appointments to boards or perceived administrative incompetence) appear to have been used quite sparingly. Only when major strategic issues are involved, such as the future of rail transport, has the government unequivocally asserted its policy-making authority over the statutory bodies. On day-to-day issues, the statutory bodies are largely left to their own devices.

Boards and Government Representation

The most important means by which the government ensures that the public body is accountable is through the power, usually exercised by the Chief Executive, to appoint members of the board. These often include the relevant senior government officials. The actual role that these representatives may play is dependent on the type of organisation. In simple voluntary organisations, for example, the board may only play an advisory role. In more commercial organisations, by contrast, the board may, as a body corporate, have the power to sue and be sued and it may assume a collective responsibility for the actions and direction of the organisation. In the most commercial operations of all, the government may have no representation on the board at all. The different types of board mean that membership tends to reflect what government perceives their function to be. The representational board is an attempt to replicate community concerns. In 2007, the Housing Authority and Hospital Authority, for example, had memberships of 30 and 24 respectively drawn from government officials, politicians, academics and professionals.71 The Hong Kong Tourism Board is a similar, more curious, form of the representational board. Its ordinance requires that the board consist of twenty members of whom two shall be passenger carriers, two hotel operators, one licensed travel agent, one tour operator, one retailer and one restaurant operator.72 This functional representation is probably not the best way to ensure unity of action from a board; members are likely to have different views on the way forward for the industry.

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In general, the larger boards would appear more to resemble class reunions rather than groups focused on clear policy objectives. It is difficult to see how they would be able to hold executives accountable for administrative or policy failures. The technical board is usually much smaller and draws on the specific expertise of its members. The MTRC, for example, has thirteen members on its board, including three senior civil servants, and draws on a wealth of governmental, financial and engineering expertise.73 The concerns of the technical boards are much more focused on the business of making money and of meeting governmental objectives rather than on the demands of their customers which, given their composition, might be more of a concern for the representational boards. The MTRC board does, however, include the chairman of the Hong Kong Council of Social Service as one of its members. The holding company of the Kowloon Motor Bus Company, by contrast, has no government representatives on its board although it does include two former senior civil servants.74 Its relationships with government are dependent on informal contacts with the Transport Department, the terms of its franchise and its critical role in implementing future transport strategy. How exactly does the ex officio board member express government’s interests? The senior civil servants who sit on the boards are in a delicate position. The public sector organisation has generally been created to allow it to exercise a degree of autonomy from government and to compete in the marketplace. If the government representatives assert the official position to the exclusion of commercial considerations, they fall into the danger of rescinding the powers they gave to the public sector organisation in the first place.75 The government appears to believe that it can use membership on the boards as a way both of liaising with the key players in service provision and as a means of exercising some control. In introducing the Lump Sum Grant scheme for subvented welfare organisations, for example, the Social Welfare Department proposed that a government official should sit on each of the boards of the subvented bodies, which had not previously been the case, and which, in combination with other new monitoring and control mechanisms over social welfare expenditure, could be taken to mean that the government wanted to ensure that its money was being spent properly.76 Since the government has not specified exactly what role its officials should play on the boards of public sector bodies, it can probably be safely assumed that those roles vary, from passive receipt of information to active participation, depending on the personalities, circumstances and the degree of government funding. That does not mean that the presence of senior public servants on the boards can prevent public sector organisations from making mistakes or ensuring that those who make mistakes are accountable for them. In the case of the defective public housing blocks, it is unlikely that the members of the Housing Authority, without appropriate technical advice, would have been able to detect what was in fact corrupt practice. The Chairman of the Housing Authority, who was not a civil servant, did resign following the incident, but the extent to which she could be held accountable given the complex lines of decision-making within the Authority is questionable. The Director of Housing, who was the subject of a no confidence vote in the legislature, did not resign. In the case of the opening of the airport, Legislative Councillors argued that the then Chief Secretary, Anson Chan,

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who chaired a key committee, should have delayed the opening of the airport and was therefore accountable for the mistake. The difficulty in ensuring accountability in cases such as this is, first, establishing the difference between decisions taken as a matter of judgement in good faith, with as much relevant information as possible, repeated poor judgements where the calibre of the official may be in question, and reckless, irresponsible decisions made without due process. Second, disentangling the “many hands” involved in these decisions to ensure that responsibility is located in the right place is a difficult process. Boards are given the authority to act and must certainly bear responsibility for the way public bodies function. Yet, until the government spells out in more precise detail what it expects of the senior civil servants on these boards, it is not likely that their presence alone will ensure more accountable public bodies.

Legislative Scrutiny

Legislative Councillors have repeatedly asserted their wish to monitor public corporations rather better but have also graphically described their difficulties in doing so. One member described their role as “rats trying to pull a tortoise, not knowing where to start”; another spoke of the Legislative Council as a “man dressed in black trying to catch a crow on a dark night.”77 As a legislature which has relatively weak powers, the Council is distant from the work and activities of public bodies and suffers from the disadvantage that most of the problems that come before it have occurred in the relatively distant past. The Legislative Council, through its Public Accounts Committee, does have a role in determining responsibility for poor practice and misspent public funds but its recommendations usually come so long after the actual events that remedies (or justifications) are already in place. The Council has powers under some ordinances to call the chairmen and executive directors of statutory bodies to account. Under the Urban Renewal Authority Ordinance, for example, The committees and subcommittees of the Legislative Council may request the Chairman and the executive directors to attend its meetings and they shall comply.78

The Legislative Council’s main powers in reviewing the work of public bodies lies in questioning their activities in the chamber, discussing the Director of Audit’s findings on their performance, reviewing their annual reports and, rarely, in investigating their activities and in censuring their executives for inappropriate behaviour. Although all these activities have the advantage that they bring greater transparency and publicity to the work of public bodies, they suffer from the limitations that the Legislative Council is over-worked and under-staffed and does not have sufficient powers. Questions in the chamber raise issues temporarily, debates in the Public Accounts Committee dissect past events, annual reports often gather dust, and high-level investigations and votes of no confidence make transitory headlines. Public bodies do not always see themselves as accountable to the legislature and they seldom appear to concern themselves with its powers of review and sanctions.

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To illustrate the process by which potential malpractice in public bodies reaches the attention of the Legislative Council, we may consider two cases in which the Audit Commission conducted investigations of statutory bodies. In mid-2000, the Commission audited the Hong Kong Sports Development Board and found room for improvement in many of its practices. Over 80% of the Board’s revenue came from a government subvention with the balance largely provided by the Jockey Club. Contrary to government guidelines, remuneration at some levels exceeded comparable civil service levels, sports facilities were not fully utilised, grants were not properly handled and there were weaknesses in the inspection of facilities, in administration and in contracting out.79 The Audit Commission released its report in March 2001 by which stage the Secretary for Home Affairs and the Chief Executive of the Board had both agreed to all its findings and to remedy the defects that had been identified. Two points are of interest. First, the Audit Commission recommended that the Secretary for Home Affairs, as the controlling officer for the government’s subvention, should pay more attention to the way in which the Board had spent its money. Since the Secretary was also a member of the Board which was responsible for the mistakes, the possibility of a conflict of interest in that he was also the officer to whom it was accountable is clearly evident. Second, the matter did not reach the Legislative Council’s Public Accounts Committee until the Audit Commission had secured agreement to its recommendations from the Secretary of Home Affairs and Chief Executive. The Committee did interview the relevant officials but did not release its transcript until February 2002 and did not make its recommendations until more than two years after the initial investigation.80 With the best will in the world, the Committee had been frozen out of the process before it had a chance to participate. In 2007, the Audit Commission investigated the affairs of the Tourism Board (HKTB), 94% of whose income of $725 million was subvented by the government.81 The Commission found irregularities in corporate governance and questioned the absence of long-term planning, spending priorities, marketing strategies, and some financial irregularities.82 In this case, the Public Accounts Committee was able to respond almost immediately. It found inter alia that: The top management of the HKTB should be held directly responsible for the deficiencies in corporate governance. It had failed to ensure that the HKTB adopted high standards of corporate governance, effective operations, compliance and administration systems … In particular, the Committee condemns the former E(xecutive) D(irector) who has failed in her duties…83

Although the Committee responded promptly, the resignation of the Chair and the Executive Director effectively took the steam out of its recommendations. As the former Chair explained, many of the recommendations had already been implemented and the rest were in train.84 It was the Audit Commission — not the Legislative Council — that held the Tourism Board accountable.

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The Legislative Council has shown some interest in developing a more direct relationship with statutory bodies but there are no set rules on how the accountability mechanisms should work. In practice, relationships appear to have evolved and have not represented a deliberate effort to put checks in place. When the Urban Renewal Authority was established, a legislator asked whether the government and the Authority would report on progress to the Council. The Secretary for Planning and Lands, in reply, although noting that members of the Authority had met with the Legislative Council’s Planning, Lands and Works Panel, left open the possibility that future meetings would take place between the Authority and the administration who would then keep the Council informed of the work of the Authority.85 If the Legislative Council is to play a more effective monitoring role in future it will need to ensure that the rules are spelled out more clearly.

Auditing Public Bodies

Under the Audit Ordinance, the Director of Audit has the power to investigate more than 60 statutory and non-statutory funds.86 For the Audit Commission to audit a public body other than a government department was until recently a relatively rare event. Its focus has been primarily on the government accounts, “value-for-money” studies and improving the execution of particular programmes. These are critical functions and ones which legislators would expect to be performed without fear or favour. Its reviews of the finances and practices of government departments and bureaus, and its subsequent reports to the Public Accounts Committee, constitute an important element in the accountability process. Legislators have steadfastly supported the independence of the Audit Commission, questioning, for example, the appointment of a senior administrative officer as Director of Audit in November 2003, on the grounds that there might be a conflict of interest.87 Although the Audit Commission has taken a more proactive role in auditing statutory bodies in recent years, the auditors of public corporations and companies also have important responsibilities. Instead of reporting to shareholders and the market as they would in the case of private companies, their responsibilities extend to a much larger audience: taxpayers, government and the Legislative Council. This implies an independent approach and transparency and publicity for their findings. In the case of the overpayments by the KCRC to contractors, the problem was uncovered in a report from the independent auditors.88 This kind of monitoring role is as necessary for public corporations and companies as it is for government and the private sector. If resource constrictions prevent the Audit Commission from extending its remit to audit public bodies on a regular basis, government or the Legislative Council may wish to exercise the right not only to appoint such auditors but also to provide specific instructions on what it is that they want to find out about what is, after all, public property. Many of these concerns about accountability and statutory organisations came together in a motion which was passed by the Legislative Council in December 2001. The motion was principally concerned with pay and fringe benefits of senior

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executives in the largest of the public bodies89 but it also drew attention to the accountability issues that have been raised previously in this chapter. Specifically, it urged the government to: … review the effectiveness of appointing policy secretaries to the managing boards of these bodies to play a monitoring role; to put these bodies under the scrutiny of the Director of Audit so as to enhance their accountability in their operation; and to require the senior management of these bodies to regularly report to the Legislative Council.90

Although there are clearly major accountability problems in the relationship between government and the public bodies in each of these respects, it was the high salaries of senior officials, lack of transparency and political appointments to boards that caught the attention of both legislators and the public. Those issues are considered separately in the following section.

Public Sector Appointments and Salaries

Appointments to senior positions in public bodies and the salaries that such executives can command are also accountability issues. If opaque committees within the organisation determine these matters, then there is likely to be a loss of public confidence in the recruitment and wage determination process. By December 2001, the feeling that senior executives in statutory bodies were indeed overpaying themselves was running high. Government data showed that 91 senior executives of five major public corporations were being paid three to five times as much as senior civil servants with comparable levels of responsibility.91 The government came under attack in the Legislative Council and eventually agreed to appoint the Hay Management consultants to investigate the comparability of the salaries of the top 100 executives in nine statutory bodies with equivalents in the private sector. There were conditions attached to the review. The civil service was explicitly excluded for purposes of comparison; the consultant was to make some recommendations for salary packages but not existing contracts; there should be reasonable guidelines for boards to determine salaries; and there should be an effective adjustment mechanism to “enable the community to monitor the long-term comparability between remuneration packages … and their private sector counterparts.”92 Perhaps predictably, when the consultants reported, they found that 70% of the Chief Executive positions had their current remunerations within a range of 15% of the market medians. They did recommend a net downward adjustment of 10% “for prestige identified with two chief executive positions” and suggested that committees be established which would disclose to the public the full remuneration packages for chief executives and the aggregate or average remuneration for second and third tier executives.93 The constraints on the consultants meant that the report did not address the fundamental issues raised by Legislative Councillors who argued that executives in statutory bodies were public employees and that they should be paid accordingly. To use the private sector benchmark as the standard for remuneration meant instead that

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government accepted that there should be a substantial difference between salaries for senior civil servants and those paid to executives in other public sector organisations. Even though some senior executives voluntarily accepted salary reductions, their remuneration remained high in comparison to the civil service. Legislative Council members and the media continue to raise the issue periodically94 and the government has sought to regularise its position by introducing an annual review and reporting mechanism between the statutory bodies and the relevant bureaus. The government’s relatively benign view of the salaries of senior public sector executives is sometimes linked to criticism of the recruitment system and the seemingly disproportionate number of senior civil servants appointed to high office in the statutory bodies.95 In some instances, it is not surprising that former senior civil servants have been employed in the statutory bodies. Where those bodies take on functions previously performed by government, such as, for example, the Monetary Authority and Urban Renewal Authority, the need for continuity suggests that it would be desirable to employ former civil servants who had worked in that area. In the case of the Urban Renewal Authority, the appointment of the managing director, who happened to be a former senior public servant, was undertaken by a selection panel composed of the Chief Secretary, the Financial Secretary, the Secretary for Planning and Lands, the Chairman of the Urban Renewal Authority Board and an Executive Council member.96 Although candidates from both the public and private sectors were considered for the position, the heavy representation of senior civil servants gives pause for thought. In particular, the absence of Legislative Councillors from the panel is striking. In public corporations where the activities of the organisation are largely commercial, it is more difficult to see why so many senior public servants have been appointed to executive positions. There is a danger that a patronage system could develop and that senior civil servants could begin to make decisions with one eye to lucrative future positions in either the public bodies or the private sector. There has been considerable concern within government about conflict of interest when senior civil servants join the private sector and there is a prospect of unfair lobbying or the use of sensitive information to obtain an unfair advantage. This concern does not seem to extend to statutory bodies and the rest of the public sector which the government often seems to regard as an extended version of its own operations. The assumption is that the qualities of generalist administrators will be equally prized in statutory bodies whatever their complexion. Yet one of the assumptions on which the more commercial organisations have been established and separated from government is that they will benefit from the application of private sector rather than public sector skills. There has also been continuing concern that the government has used its power of appointment to boards to reward its political supporters and to exclude opponents of the regime.97 From 1996 onwards, Legislative Councillors repeatedly sought a review of the role and functions of the advisory and statutory bodies in an effort to improve their transparency and appointment procedures. In April 2002, perhaps as a sop to Council members when the government was introducing the Principal Officials Accountability System, the Secretary for Constitutional Affairs finally announced that a review would

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take place.98 The Home Affairs Bureau, which took charge of the process, decided on a two-stage approach. During the first stage, the aim was to determine the guiding principles; the second stage was to conduct in-depth reviews of particular problems or individual advisory or statutory bodies. A consultation paper, released in April 2003, laid out the government’s view of what the guiding principles should be. Principal Officials should be “ultimately accountable for the advisory and statutory bodies under their purview” and those organisations were to do nothing to detract from that.99 They should be structured to ensure that there was no duplication in their work; appointment criteria should be set out before the appointment process was under way; appointments should be on merit; the service of non-official members should be unpaid; there should be equal opportunities for individuals from all sectors of the community to participate in their affairs; steps should be taken to promote the participation of women; members should declare their interests; their work should be open and transparent; and members should not serve for more than six years or on more than six boards (the “6 plus 6” rule).100 When the Home Affairs Bureau began to release its individual reports, it soon became clear that, despite the government’s powers of appointment, it had no intention of enforcing its own rules. Its 2005 report on the “6 plus 6” rule showed that the numbers of those who had been on boards for more than ten years had actually increased.101 In his first election manifesto, Donald Tsang claimed that he would strictly enforce the rule but, by January 2008, there were still 137 statutory board members who had served for more than six years.102 There still appeared to be little monitoring of the performance of board members. The Audit Commission’s investigation of the Tourism Board in 2007 revealed that one member had missed fifteen consecutive meetings and had still been re- appointed twice to the board.103 Others had failed to sign declaration of interest forms.104 There was very little progress either on the transparency of board meetings or on the extent to which board members had to declare their interests. The number of women did increase but Legislative Councillors suspected that they were disproportionately appointed to the less important advisory and statutory bodies.105 What the government was interested in pursuing through the review was its dealings with those organisations with which it had problems. In its classification of all advisory and statutory bodies in June 2005 (see Table 6.1), the Home Affairs Bureau lumped into the category “non-departmental public bodies” all public sector organisations with which the government had financial, organisational or political problems.106 These included the Hong Kong Applied Science and Technology Company, the Hong Kong Examinations and Assessment Authority, the Prince Philip Dental Hospital, the Sports Development Board, which was re-structured and later removed from the list, the Vocational Council, the Hospital Authority, and the Equal Opportunities Commission which had won a ruling from the courts that the government’s secondary school allocation system was discriminatory and had subsequently been embroiled in a political scandal over the government-appointed chair.107 In each case, the government asserted greater control over the operations and organisation of the non-departmental public bodies. Little was done to address the concerns of legislators about transparency and political appointments to boards.

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In contrast to its laissez-faire approach to recruitment and the salaries of senior executives in the statutory bodies, the government has shown considerable interest in trying to reduce the wage bill at middle and lower levels of subvented organisations. The Finance Branch’s guidelines on comparability with the civil service date from 1987 and have been re-affirmed from time to time. They state that salaries in subvented bodies should not exceed equivalent salaries in the civil service. In practice, salaries in subvented organisations have tended to be benchmarked against their civil service counterparts although there has been some upward creep in some statutory bodies such as the Tourism Board. The government has been intent on ensuring that this does not happen, moving towards de-linking salaries in the subvented bodies from those in government. For those with top-heavy organisations, the temptation might be to pay less and dissolve the parity link with civil service salaries. The recruitment and appointment of executives and board members, salary structures and the accountability of public bodies have all been highly contentious matters and have been exacerbated by the suspicion that the post-1997 government would have liked to devolve even more government business to the private sector or to statutory bodies. To date, not many efficiency benefits, other than outsourcing, appear to have been derived from devolution to the private sector or public organisations beyond the civil service. The private sector is not necessarily always more efficient than the traditional civil service. If salary structures outside the civil service are higher than the previous cost of delivering services, the only case that can be made for greater private sector efficiency is that some productivity benefits will be generated by the skills of the managers or the freedoms offered by a less rule-bound environment. Yet that itself is in doubt and has been a source of tension with the press, the public and legislators who have all questioned both the extent of the benefits of devolution to these bodies and the weak accountability mechanisms that are presently in place. That the worst fears of unionists, such as Lee Cheuk-yan, of job losses through privatisation, of price rises, and of drops in service quality and accountability have not been fully realised may relate partly to the strength of the political opposition to greater devolution, the failure of some public/private partnerships, and contradictions in the government’s own position. The government’s historical tendency to centralise functions has been evident when it has been faced with political criticism of the way in which the statutory bodies are operating. Thus, the Housing Authority was brought under closer government control and the review of statutory bodies became an exercise in identifying problem cases and tightening the regulatory mechanisms. Policy changes, such as the introduction of the Lump Sum Grant mode and the school management system, have also meant some reduction in the autonomy of subvented organisations. Since Tsang came to office, however, there has been some retreat from the desirability of devolving public functions to the private sector and statutory bodies and rather more emphasis on improving the performance of existing functions within the civil service.

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ne criterion that can be used to evaluate the performance of governments is their ability to formulate and implement sound policies which will deliver collective Obenefits as efficiently, effectively and economically as possible. Our definition of public policy as: A set of inter-related decisions taken by a political actor or group of actors concerning the selection of goals and the means of achieving them within a specified situation when these should, in principle, be within the power of these actors to achieve1

suggests that it is possible to meet that criterion. But it is also quite possible that the government will fall far short of its goals or that those elusive objectives — efficiency, effectiveness and economy — will prove to be contradictory or that one will be maximised at the expense of the others. Our definition of policy is perhaps a little optimistic. It assumes a logical and rational sequence of events from formulation of goals, through consideration of the most beneficial means of achieving those ends, to actual strategies of implementation. It is considerably easier for policy-makers when this does occur or when they can structure their decisions so that stages follow logically, one from another. But circumstances may not always allow a careful assessment of the problem and its optimal solution. The need for action may be so immediate that policy-makers do not have time to reflect on the most rational strategy or politics may influence outcomes to the extent that the resulting policy is neither efficient nor effective nor economic. In the following three chapters, the overarching argument is that two policy-making systems co-exist uneasily in Hong Kong. Until the last two decades, the policy-making system was closed and well insulated from political pressures. It was based on a budgetary system which so effectively controlled resources that the government was able to build up large fiscal reserves. On the back of a buoyant economy, it had ample means to fund its policies. Under such circumstances, it is relatively easy to fend off political pressures and, in Ambrose King’s phrase, to co-opt potentially dissident elites by the “administrative absorption of politics.”2 Civil servants, not politicians, decided

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what the policy problems were and how they should be addressed. Once the problem was identified and under active consideration, advice could be sought from advisory committees or from the community and could be accepted or rejected as senior civil servants saw fit. Policy could be formulated in what appeared to be a rational and logical way. Options could be considered, the relative benefits of different public investments discussed, and final policies put before a public, which was often prepared well in advance for the measures that the government intended to introduce. There were, of course, crises which the government could not foresee and events which did not always allow slow and considered progress towards a particular conclusion. The system itself was modified by the rise of pressure groups and political parties and the realisation that successful policy formulation did not always lead to successful implementation. When such circumstances arose, the government usually chose to act first and then engaged in subsequent remedial action if it proved to be necessary. After 1997, another system, very different from the traditional way in which policy had been made, gradually began to make an appearance. Here, as Kingdon observes, policy-making processes do not always proceed chronologically but may unfold independently and simultaneously rather than in neat, logical stages.3 After the retrocession, three important changes affected the way in which policy was formulated and implemented, and created the conditions which encouraged the development of a different policy-making style. First, the political executive wanted to put its imprint on policy. Colonial government policy-making, with the exception of the MacLehose period, had tended to be reactive rather than proactive. The Chief Executive, the Executive Council and, after 2002, the Principal Officials attempted to initiate changes which would both reduce the backlog of policy problems left over from the transitional period and establish the government’s credentials, as its predecessor had done, on the basis of performance legitimacy. The political executive expected its ideas to be translated into action quickly through the civil service. The consequence was that some of the new initiatives were not always as carefully assessed as they had been in the past and were less subject to the moderating influence of the budgetary system. The policy agenda, within a system which was becoming more disarticulated and which was characterised by friction between the legislature, executive, judiciary and bureaucracy, was increasingly less under the control of senior civil servants. A second factor that changed after 1997 was that political parties, pressure groups and civil society organisations gradually became more able to obstruct the implementation of policy. They had relatively little influence on policy formulation within the formal political institutions but they had enough support in the community to make policy implementation difficult. Although the government was still able to implement most of its policies, in an increasing number of cases it was forced to retreat or to revise its proposals, especially after the July 2003 demonstrations confirmed the extent of popular discontent with the existing state of affairs. The fragmented nature of the political system, which hindered communication and consultation, did not assist

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effective policy implementation and led to many instances of community opposition to policies that the political executive and sometimes the legislature had approved. The third factor that changed the nature of policy-making was a persistent structural budgetary deficit. When the economy provided the government with sufficient revenue to obviate the need to make hard choices, policy-making was a relatively relaxed exercise. When real tensions arose over which services would be funded and which would not, and when politicians needed to make authoritative decisions about the allocation of resources, there was less time for economic rationality. More explicitly political agendas had to be met. After Tsang assumed office, both budgetary pressures and proactive policy-making diminished. Tsang did not seek to take major new initiatives in his first term and improvements in the economy meant that existing policy commitments could easily be funded. Yet it remained difficult to introduce new policies. Civil society organisations continued to act as a brake on what could be successfully formulated and implemented, the pan-democrats in the legislature still had the numbers to block constitutional changes, and the memory of the July 2003 demonstrations was sufficient to persuade the government that it should proceed cautiously. These increasing political and societal pressures mean that the post-1997 system is more porous than its colonial predecessor with the consequence that policy formulation and implementation is less easily controlled and outcomes are more difficult to predict. That said, policy in some areas, particularly well-established policies which require fine-tuning rather than radical change and those which are of little immediate political interest, remain rationally driven from within the civil service rather than by the political executive. The attempt to exert political control over the civil service is uneven; old ways of doing things persist and the imperative that the costs and benefits of public policies should be properly assessed continues to be important. We will explore this argument over the next three chapters. In this chapter, we describe and analyse the system used to allocate resources which has been the bedrock of the traditional policy-making system. We look at the principles underlying the budget, constraints on budget-making, the budgetary cycle and what we can learn from the budget about patterns of expenditure and policy priorities. Although the budgetary system remained based on the same principles as it had been before 1997, some of the principal actors were transformed from civil servants into politicians and a new way of allocating resources to bureaus was introduced. In Chapter 8, we consider the political factors influencing policy more directly, the ways in which issues reach the agenda, the extent to which the system itself is open or closed to demands from the community, and the results of the two different policy-making styles. In Chapter 9, we will analyse the means of achieving policy objectives and how these have changed over time, the role played by pressure groups and parties in the implementation process, and the contrasting features of civil-service driven policy from that of policy driven by the political executive.

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Budgetary Principles

The budgetary process has been described as “a mechanism for making choices among competing claims for resources under conditions of scarcity.”4 The scarcity arises because there are never enough resources to meet demands; an authoritative decision — which the budget represents — is needed on which policy areas will be funded and how revenue will be raised to meet that expenditure. What principles guide the government in determining how much money it will make available to meet demands? Is the government willing to go into deficit, if necessary, to fund critical policy areas? How does the budgetary process assist in establishing what should be funded and what should not? To answer these questions requires an examination of the evolution of budgetary principles. The budget is based on principles which date to the origins of Hong Kong as a colony. The British government wanted to keep the cost of running its empire as low as possible and regarded a balanced budget as a highly desirable feature of colonial administration. Since the Hong Kong government benefited from greater autonomy from London when the budget was balanced, and because it was constantly being criticised by local businessmen for spending too much, and perhaps also because senior officials were themselves believers in fiscal frugality, Financial Secretaries put a great deal of effort into ensuring that the government remained small and that it did not spend beyond its means. This was particularly true after the Second World War when the colony was devastated and had to rely on financial support from the British government to re-establish itself. A condition of its subsequent financial autonomy, or so it was perceived, was that the colonial government should establish a budgetary surplus. A series of long-serving Financial Secretaries made “value for money” and the balanced budget the central tenets of their fiscal credo.5 This implied certain assumptions about revenue and expenditure: that revenue would be sufficient for the needs of a small government if the colony continued to prosper economically and that expenditure was to be kept to a minimum by stringent financial controls. The result was that the government accumulated large fiscal reserves and had virtually no debt. These principles came under pressure in the 1970s when MacLehose vastly expanded social policy outputs, putting the budget under strain even though the economy was prospering. In the end, however, fiscal discipline was maintained. MacLehose’s ambitious public housing targets could not be entirely met because the Finance Branch was adamant that there were no funds available. By the end of the 1970s, Financial Secretaries had refined their budgetary principles to the point where rules were prescribed to guide best practice.6 In 1982, the Financial Secretary laid down four principles which were to serve as the basis of the budgetary system: • the growth rate of public expenditure should have regard for the growth rate of the economy; • the pattern of public sector expenditure should reflect the government’s conscious view of its priorities;

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• there should be a balance between direct and indirect taxation, and between taxation and other recurrent revenue, and the taxation system should be simple to administer, equitable and generate enough revenue for policy priorities to be met; • guidelines should be borne in mind in preparing the annual estimates of revenue and expenditure so that recurrent expenditure did not consume such a proportion of the budget that capital expenditure suffered.7

In 1995, a Finance Branch publication put these principles in the context of the continuing importance of the historical constraints of business interests and small government: … in Hong Kong, it is the private sector, not the public sector which largely generates the wealth on which all else depends. Disproportionately large public sectors not only reduce the real resources available to the private sector but may also impose a burden on the community through higher taxation.8

The Basic Law essentially endorsed all the stringent fiscal practices that the colonial administration had adopted. During the drafting process, there were those who wanted to include the mandatory requirement of a balanced budget in the constitutional arrangements on the assumption that revenue would usually be sufficient to meet expenditure. In the event, a slightly milder form of that principle was adopted. Article 107 provides that: The Hong Kong Special Administrative Region shall follow the principle of keeping expenditure within the limits of revenue 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.

If these conditions cannot be met, for how long can the government be in breach of the Basic Law and what happens to its existing programmes if “keeping expenditure within the limits of revenue in drawing up its budget” cannot be maintained? The phrase “strive to achieve a fiscal balance” has been interpreted to mean that it would be possible to have a deficit in any particular year, or perhaps for a few years, but that a balanced budget would soon be re-established. It was not anticipated that a deficit might be structural and that a balanced budget might become a difficult goal to achieve. By 2004, there had been six consecutive years of budgetary deficits on the operating account, which comprises only recurrent revenue and expenditure, and deficits on five out of six years on the consolidated account, which includes both recurrent and capital revenue and expenditure.9 In his 2003 budget address, the Financial Secretary, Antony Leung, noted that the causes lay in the “consolidation” of the property market and the bursting of the “bubble economy”, economic re-structuring with the majority of Hong Kong’s industrial production processes moving to China, an ageing population, and increases in recurrent expenditure as a result of a rigid pay adjustment mechanism for civil servants and subvented organisations.10 Other than reducing civil servants’ pay, there was little that could be done immediately to resolve Hong Kong’s other economic

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difficulties. Leung’s plans for balancing the budget assumed that it could not be achieved until 2007 and, although his successor, Henry Tang Ying-yen, was rather more optimistic about the improving state of the economy and the positive effects of Closer Economic Partnership Arrangement (CEPA), he revised the date for achieving a balanced budget to 2008.11 In fact, it proved possible to balance the budget by the 2005–2006 financial year, an achievement which the Financial Secretary attributed to the government’s sound policies but which might equally be taken to illustrate the difficulties of fiscal management and forecasting in an open economy.12 In 2004, the government published its first accrual-based accounts (although it still retained a cash-based financial management system) which it believed would better reflect its position by showing public funds in statutory bodies and business enterprises such as the MTRC.13 Although the accrual-based accounts did show a lower budgetary deficit, they did not resolve the fundamental structural problem. The government also re-affirmed the traditional principle that public expenditure should remain below 20% of Gross Domestic Product (GDP).14 Total public expenditure in 2004 as a percentage of GDP had been well above the 20% target (see Figure 7.1) but thereafter it fell rapidly. This probably had more to do with improvements in the economy than with the government’s cost-cutting measures. Similarly, its estimates of its fiscal reserves proved to be inaccurate because it could not predict the impact of the economic recovery on its revenues. By 2004, fiscal reserves had declined to $266.4 billion and the longer term forecast was for still further falls to the point where in 2007 they would decline to $158.4 million and there would be support for between seven and ten months of government expenditure.15 In fact, by 2007, fiscal reserves had climbed to $369.3 million, well over double what the government had forecast, representing 25 months of expenditure.16 The budgetary principles are important because they embody the government’s fiscal strategy and because, as such, they constitute the macro-economic background against which policy is constructed. The formulation of the budget, however, is also constrained by more immediate and pressing factors to which we now turn.

Constraints on Fiscal Policy

An important constraint that Financial Secretaries face when drafting the budget is the imprecision of the economic growth figures from which are derived estimated revenue and expenditure figures for the next financial year. Figure 7.2 shows Gross Domestic Product (GDP) in real terms between 1988 and 2007. GDP has fluctuated wildly since 1997. It was initially adversely affected by the Asian financial crisis, the subsequent economic malaise and the SARS epidemic, but grew strongly between 2004 and 2008 when the global financial crisis caused it to plunge once more. GDP is the starting point for the calculation of the Medium Range Forecast (MRF) which determines the size of the expenditure for the following year. There is a slight bias towards an optimistic forecast because the Financial Secretary has to cover existing expenditure commitments. If the forecast of the rate of growth is too pessimistic, expenditure will exceed revenue, even at the formulation stage, and the budget will then be in breach of the provisions of Article

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% 24

22

20

18

16

14

12

0 96-97 98-99 00-01 02-03 04-05 06-07 08-09 10-11 12-13

Forecast

Figure 7.1 Public Government Expenditure as a Percentage of GDP Source: Financial Secretary, The 2008–09 Budget (Hong Kong: Government Logistics Department, March 2008), Appendix B. Note: The government draws a distinction between public and government expenditure. Public expenditure includes both government expenditure and expenditure on public bodies outside government. Government expenditure is expenditure directly attributable to government departments.

107 of the Basic Law. The projections of growth have as a result sometimes been more optimistic than the actual rate of growth. For example, GDP actually declined in 1998, 1999 and 2001 despite positive prognoses from the government. If growth forecasts are not met, however, the Financial Secretary will eventually be required to explain why the deficit is so great and why the fiscal reserves are being consumed at such a rapid pace or, conversely, why the government has accumulated such a large surplus. The inability to predict economic growth figures accurately has a direct impact on the determination of revenue and expenditure levels. The government is never entirely sure how much revenue it will collect and therefore how much it will have to spend. In prosperous times, the government will usually receive more than it expects; in difficult economic conditions, it will need to rely on its fiscal reserves to meet its commitments. Many factors result in volatile, short-term changes to the government’s revenue base. In particular, the land premium, stamp duties, and profit tax vary considerably depending on the state of the economy. As Figure 7.3 shows, approximately 39% of revenue in 2007/2008 was derived from profits and salaries tax. The companies are obviously dependent on economic circumstances for their profits which determine the amount of tax that they pay. Tax is low at 16.5% in 2008.17 For individuals, the maximum standard

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20

18

16

14

12

10

8

6

4

2

0

-2

-4

-6

-8

-10 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Figure 7.2 Rate of Growth of Gross Domestic Product by Percentage Change in Real Terms Source: Adapted from Financial Secretary, The 2008–09 Budget (Hong Kong: Government Logistics Department, 2008), 2.

Profits and Salaries Taxes (39.2%) $107.5 billion

Other Non-tax Revenue (11.3%) $31.1 billion

Investment Income (9.5%) $26 billion

Stamp Duties (8.3%) $22.6 billion

Land Premium (14.1%) $38.5 billion Other Tax Revenue (17.6%) Tax revenue $48.1 billion (65.1%) $178.2 billion

Non-tax revenue Government Revenue (34.9%) $95.6 billion Total: $273.8 billion

Figure 7.3 Revenue Profile, 2007–2008 Source: Adapted from Financial Secretary, The 2008–2009 Budget: Information Pack for the Financial Secretary’s Consultations, www.legco.gov.hk, CB (1)145/07–08(03) (November 2007).

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rate of salaries tax is 15% with an initial threshold of $216,000 in 2008 for married people. There are substantial deductions for children, education allowances and home loans. The tax base for both companies and individuals is consequently very narrow. In 2007/2008, 800 companies contributed over 64% of profits tax.18 Of an estimated working population of 3.5 million, some 2.2 million did not pay tax at all.19 The government has long been conscious of the need to broaden the tax base. In March 2000, the Financial Secretary appointed a Task Force to review public finances and to determine whether the operating deficits were a short-term, cyclical problem or whether there was a longer term structural problem. An Advisory Committee was also established to make recommendations on new broad-based taxes. When the reports were delivered in early 2002, it was clear that members believed that there was an urgent need for public financial reforms. The Task Force concluded that there were … unequivocal signs that even when the economy returns to “normal” growth, the budget deficits will remain and indeed worsen. To continue the current fiscal “lifestyle” is therefore not an option.20

It recommended that government should give priority to controlling the growth of public expenditure and that it should consider means of making the tax base more broad-based.21 The Advisory Committee, after a wide review of the available options, recommended that, rather than raising salaries taxes, a consumption tax should be considered instead.22 The government was supportive of the need for reform and believed that in principle a goods and services tax (GST) was the best way to broaden the tax base. But it was politically difficult and economically undesirable to bring in a new tax at a time when unemployment was running at over 7%. The government froze most fees and charges in 1998 when it sought to alleviate the financial burden on the poor in a time of economic hardship and it has had difficulty recovering ground since then. Only about 60% of the proposed measures to increase taxes in 2001, for example, were eventually approved by the Legislative Council.23 In 2003, legislators persuaded the government to withdraw a proposal to levy a Boundaries Facilities Improvement tax which it was estimated would raise $1 billion and which was to be charged to departing passengers to improve services.24 The GST was a much more significant measure and attracted widespread opposition both from within the legislature and from retailers and service businesses who, in 2004, formed a Coalition Against Sales Tax chaired by a Liberal Party Legislative Councillor.25 The government introduced its proposals for a GST in the form of a consultation document in July 2006. By that stage, the budget was in surplus and unemployment had dropped. The government’s rationale for the tax was simply to broaden the revenue base to even out the wide fluctuations of the previous decade and to provide additional funding support for an ageing population.26 The Financial Secretary gave assurances that there would be no threat to Hong Kong’s low tax regime, that the GST would be low at about 5% and would be expected to generate $30 billion annually, and that there would be a high threshold for registration which would exclude many small and medium-sized

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businesses.27 Opposition to the GST continued to mount. In October 2006, a Democratic Party Legislative Councillor, Yeung Sum, lodged a motion opposing its introduction, claiming that 70% of the public were against it.28 During the debate, there was cross-party support for the motion with many legislators questioning the government’s assumption that the tax base was too narrow and raising concerns about its impact on the poor and on Hong Kong’s economic competitiveness. The motion passed with 40 legislators voting for it, four voting against, and five abstaining.29 Without support in the Legislative Council, the government had no chance of realising its proposals. In December 2006, the Financial Services and Treasury Bureau conceded that “it is clear that the public is strongly against GST… nor are the conditions right for the introduction of GST.”30 Despite its defeat on the GST, the government has continued to study options for creating a more stable revenue base. One way in which it might raise revenue and reduce costs is to charge for services that it now offers at highly subsidised rates. The difficulty in doing so has been public objections to user charges although it remains government policy to try to introduce more realistic fees even in the face of likely opposition from legislators. The problem, as the former Financial Secretary, Henry Tang, has pointed out, is that: While many people agree with the “User Pays” principle, strong objections have arisen when the Government has put forward specific proposals for fee revisions based thereon. As a result, taxpayers have increasingly had to subsidise individual users … We are duty-bound to reduce the amount of subsidies given for various fees and charges …31

A critical area in which the government’s resolve will be tested is healthcare financing. Hong Kong people currently enjoy a healthcare system which is heavily subsidised by government and is becoming increasingly expensive.32 The government’s proposals for reforming the system all entail larger personal contributions to healthcare financing33 and are being challenged by political parties and civil society groups. Other than raising charges for government services, the government’s options for raising revenue appear to be limited. It does not want to raise salaries or companies tax because it fears that this might affect foreign investment and Hong Kong’s competitiveness. It could sell government-owned assets but there would be political opposition and, in any event, it does not want to cover recurrent expenditure by this means. Similarly, while it could issue government bonds, it does not believe that this would resolve the fundamental structural problems of the public financial system; it continues to support the principle that operating expenditure should be covered by operating revenue rather than by borrowing. Expenditure patterns are less liable to rapid fluctuation than revenue. As in many governments, a large proportion of services continue to be funded from year to year. The expansion of social policy programmes means that a large percentage of the budget — some 57% in 2007/ 2008 — is spent on education, health and social welfare (see Figure 7.4). When revenue is higher than expected, as it was in 2008, this does not create any problems; the surplus simply goes into the fiscal reserves and legislators

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Housing (0.1%) $0.2 billion Education (24.4%) Community and External $50.1 billion Affairs (3.5%) $7.3 billion

Economic (3.9%) $8 billion Social Welfare - Social Security Assistance (12.5%) $25.7 billion Environment and Food (4.3%) $8.7 billion

Social Welfare - Other Infrastructure (5.5%) Welfare Expenditure (5%) $11.4 billion $10.3 billion

Support (14.3%) Health (14.8%) $29.4 billion $30.5 billion

Security (11.7%) $24 billion Recurrent government expenditure Total: $205.6 billion

Figure 7.4 Expenditure Profile, 2007–08 Source: Adapted from Financial Secretary, The 2008–2009 Budget: Information Pack for the Financial Secretary’s Consultations, www.legco.gov.hk, CB (1)145/07–08(03) (November 2007).

complain that more services should have been funded. It is when revenue is below expectation and the government still needs to fund existing services that it may need to tap the fiscal reserves to meet its commitments. In 2002, for example, funding existing services amounted to over 94% of expenditure and left the Financial Secretary with relatively little leeway.34 In 2003, he listed some of the programmes which could not easily be reduced or abolished. The government, he said, was providing nine years of free education, subsidies to 86% of senior secondary students, free maternal and healthcare services, subsidies of 82% to 97% for various medical services, and 680,000 low-cost housing units.35 Another way of considering the rigidity of government expenditure is to calculate the proportion of the budget which goes towards personnel or social security- related expenditure items. In October 2003, the Financial Secretary noted that 78% of government’s operating expenditure and 66% of total expenditure went on these items, a fact which partly explains the government’s aggressive role in cutting civil service salaries and those of staff in subvented organisations.36 The Financial Secretary has few options other than to continue to budget for most of the vast range of services that the government presently funds. The sunk political and economic costs of existing programmes mean that room for manoeuvre in any particular budget may be quite limited. The best chance of changing the direction of

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fiscal policy is to make gradual reductions and to look for savings in delivering services. In the 2003 budget, for example, the Financial Secretary set a target of a 9% reduction in expenditure by 2007 even while expenditure in the 2003/2004 budget was projected to rise.37 In 2008, although revenues were buoyant, the Financial Secretary, John Tsang Chun-wah, drew attention to expenditure on the health and social welfare systems which, if they were to remain unchanged, were expected to lead to increases of 400% and 140% respectively in real terms by 2033.38 He argued that a central principle of public financial management should be sustainability and that the government should avoid measures either to raise revenue or increase expenditure that “the community will find hard to bear in the long run.”39 The political environment has become a more important constraint on the Financial Secretary than it was during much of the colonial period. The budget is now an overtly political exercise in which the Legislative Council, political parties, civil society organisations and the public play an active role. This is especially true in election years when unpopular tax increases might have an impact at the polls on parties supporting the government in the Council. There are also cleavages between business groups and the more populist parties which annually fuel the debate on how money will be raised and spent. The Democratic Party, for example, has challenged the basic principle that the budget should be balanced, maintaining that expenditure on welfare, education, housing and healthcare is “indispensable” and should be accorded higher priority than mechanical attempts to balance the books.40 In times of surplus, the pan-democrats, the DAB and unionists argue that not enough is being spent on social policy and condemn the government for hoarding funds which could be put to better use. Business groups have different agendas.41 They have consistently argued that the cost of the civil service is too high, that taxes should be lowered and that the government is not showing sufficient concern about Hong Kong’s regional economic competitiveness.42 Despite their reservations about policy on particular issues, business groups generally support the government which, for its part, has remained committed to their aims. This is important because the Legislative Council’s most potent powers over the executive lie in the approval, modification or rejection of the government’s budgetary plans which in recent years the Council has been inclined to use to a much greater extent than in the past. It is a traditional function of legislatures to hold governments accountable by voting for supply and it is conceivable, although unlikely, that the government’s budget proposals could be defeated in the legislature. After the 2008 elections, the demise of the pro-business Liberal Party in the directly-elected seats gave groups in favour of greater social policy expenditure a small majority in the Legislative Council. To defeat the government would require an alliance of the pan-democrats and the pro-government DAB. While the parties have taken similar positions on particular issues such as the government’s decision to cut social security assistance, it is improbable that they would find common ground to vote down the entire budget. Nonetheless, a Financial Secretary without a mandate or sufficient support from parties or individuals who seek to restrain social policy expenditure needs to tread carefully.

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The Budgetary Cycle

The Financial Secretary may have greater room for manoeuvre in the committees that determine whether proposals will be funded and whether existing programmes continue to be funded at the same level. Senior policy-makers take these decisions formally in such bodies as the Executive Council, the Policy Committee and the Star Chamber, to establish how the following year’s expenditure will be allocated to bureaus. Many different values come to the fore in this process; pressure groups, political parties, legislators, the individual departments themselves, all have an interest in seeing that their proposals are funded and that existing programmes do not have their budgets cut. Since resources are scarce, some will inevitably be disappointed and other will have to make do with less than they wanted. The Financial Secretary and the Secretary for Financial Services and the Treasury are central to the process of deciding who gets what. If the decisions are not to be contradictory or wasteful, they must have a clear understanding of how those decisions relate to broader questions of policy: what those policies are, in what directions revenue and expenditure plans will take the government, and how fiscal policy is to be co-ordinated with the policy objectives of the Chief Executive and his senior policy-making colleagues. The process of deciding on the new budget begins soon after the last one has been agreed (see Table 7.1). In June, the Financial Services and Treasury Bureau updates the Medium Range Forecast (MRF) which is the backdrop to the budget. The MRF is based on assumptions about the future macro-economic picture — particularly, the GDP and the rate of inflation — and of government fiscal intentions over the period. It is designed to provide a perspective on the direction of government revenue and expenditure beyond that of the annual resource allocation exercise. Table 7.2 shows the changing nature of the government’s future expectations of expenditure and revenue under the MRF. The MRF is unreliable because, as we have seen, revenue is difficult to predict and the level of fiscal reserves can change quite rapidly. Despite this, it represents a critical stage in the budgetary cycle because it provides the basis for establishing the amount that bureaus and departments will be able to spend in the coming financial year. In addition, it is a quantification of fiscal strategy, the target which the government aspires to meet. Budgeting in a time of surplus is obviously much easier than in a time of deficit for, even if expenditure overruns, the impact on the government’s finances can be comfortably absorbed. When the government is running a deficit, the MRF becomes both a forecast of future growth and an indication of the ways in which the government expects to overcome it. After the MRF is determined, the next step in the budgetary process is for the Financial Services and Treasury Bureau to provide a sum, in an “envelop”, for each of the Directors of Bureaus. Prior to 2002 and the introduction of the POAS, the Financial Secretary dealt directly with departments and any changes to the estimates had to be approved by him. The Director of Bureau was not permitted to move money from one department to another even if the departments all came under the same bureau. Since 2002, the Financial Secretary has dealt only with Directors of Bureaus who then decide

ch.07(p.149-173).indd 161 11/4/09 4:18:39 PM Table 7.1 The Budgetary Cycle Date Activity 1 April Financial year begins. June/July The Financial Services and the Treasury Bureau (FSTB) updates the Medium Range Forecast and advises the Financial Secretary on the amount of “new money” for which bureaus and departments may bid. The Financial Secretary issues “envelops” of funding to Directors of Bureaus advising each of them of the amount of funding that will be available in the coming year. Allocations for the following four years are also given for indicative, planning purposes. Each Director of Bureau is required to confirm acceptance of the figures and to advise FSTB on the allocation of resources to his/her bureau and departments. July/September The Resource Allocation Exercise (RAE) begins. All Controlling Officers are invited to bid for resources for new initiatives in the coming year. All bids have to be submitted through the Director of Bureau who has to support the proposal and rank the bids in order of priority. In a parallel exercise, Directors of Bureaus submit new initiatives for inclusion in the Policy Address. Those initiatives which have financial implications are only included in the Policy Address if they secure RAE funding. The Star Chamber meets to consider all bids and advises Directors of Bureaus of the results. Controlling Officers proceed to finalise their heads of expenditure for inclusion in the estimates. October/December The Chief Executive delivers his Policy Address in October. The Financial Secretary discusses with Legislative Councillors and invites public submissions on the shape of the future budget and the constraints which the government faces. He produces an “information pack” which is intended to set the parameters for those discussions. February/March The Financial Secretary delivers his budget speech to the Legislative Council. At the same time, he introduces the draft estimates of expenditure and the Appropriation Bill to raise the revenue to meet expenditure. He moves that the Appropriations Bill be read a second time. The debate is then adjourned to allow the Finance Committee, which is a committee of the whole Legislative Council, to examine the draft estimates of expenditure. The Chair of the Finance Committee reports to the Legislative Council. March Debate in the Legislative Council on the budget. The Financial Secretary sums up the budget debate. The Appropriations Bill is amended, if required, and passed by the Legislative Council. 31 March Financial year ends. Sources: I am grateful to Alan N. Lai, former Permanent Secretary for the Financial Services and Treasury Bureau, for his comments and wording of some of the sections of this table. See also Financial Secretary, The 2007–08 Budget (Hong Kong: Government Logistics Department, 2008).

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Table 7.2 The Medium Range Forecast 2007–08 2008–09 2009–10 2010–11 2011–12 2012–2013 $m $m $m $m $m $m Operating revenue 248,296 212,269 254,140 272,196 289,200 306,575 Operating expenditure 206,243 255,700 237,300 251,500 267,800 286,500 Operating surplus 63,715 (6,340) 55,672 57,729 61,236 67,255 after investment income Fiscal reserves 369,264 484,939 477,396 526,603 581,525 648,280 Fiscal reserves as 25 18 21 22 24 25 number of months of government expenditure Source: Adapted from Financial Secretary, The 2008–09 Budget Supplement and Appendices (Hong Kong: Government Logistics Department), Appendix A, 7.

on the allocation to departments under their control and inform the Financial Secretary of their decision. The new system gives Directors of Bureau much greater flexibility and is consistent with the intention to allow them to take greater responsibility for their decisions.43 Budgets are normally incremental documents and the Directors of Bureaus will usually have a general idea of the amount they might expect to receive from the previous year’s exercise because the “envelop” comes with projections for expenditure for the following four years. The process nonetheless does involve two important political decisions. The first is the determination of the government’s agenda and whether the “envelop” will reflect relatively greater or less emphasis on the activities of the bureau and its departments. Since the “envelop” is to fund existing activities, it may be assumed that it reflects funding for everything that has already been approved. In times of economic difficulty, however, a bureau or some of its departments might well be expected to do more with less; the issue of where the Financial Services and Treasury Bureau thinks it can save money and where it reduces or does not proportionately increase the funding relative to other bureaus is a sensitive matter which is nonetheless cushioned by the parameters recognised for the bureau’s future expected expenditure. A second political decision rests in the Director of Bureau’s allocation of funding to the departments. The departments themselves may accept the Director’s decision and make appropriate adjustments to their own budgets but the allocation may also have to be defended publicly in the Legislative Council and, possibly, in the press. Here again the pressure is towards an incremental solution. Departments will be relatively happier with an allocation which is similar to the previous year with any appropriate increases for new projects or inflation. They, and their clients, are less likely to be happy with radical changes to their budgets. In considering their proposals, departments will have

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regard for long term as well as shorter run considerations. Policies may not fit neatly into the annual budgetary time-frame and the department may be required to devise programmes that run over several years. Departments will also be asked by their bureaus to account for their progress on existing programmes and to explain any shortcomings. If they are proposing new policy initiatives, they will be subject to particular scrutiny on the recurrent expenditure side. Additional recurrent expenditure means new posts which will need to be justified to the Star Chamber and the Legislative Council’s Finance Committee. By July, the Financial Services and Treasury Bureau knows how much “new money” will be available for expenditure on new programmes. The Directors of Bureaus are then asked to rank bids from their departments for “new money” in order of priority. The bids are then considered by the Star Chamber which is a body composed of high-ranking Principal Officials: the Chief Secretary for Administration, the Financial Secretary, the Secretary for Financial Services and the Treasury and the Secretary for the Civil Service. It is the gate-keeper for what will proceed as a funded proposal and what will be rejected or deferred for future consideration. The Star Chamber interviews Directors of Bureaus on their spending plans. It may also interview the heads of departments although it does not normally do so. When it reaches a final decision on what will be funded, the new proposals are included in the Chief Executive’s Policy Address. Since most expenditure is already committed in the form of civil service salaries, there is relatively little leeway when the budget is under pressure. For the 2002 budget, for example, only $4.3 billion “new money”, which could be used to fund new or improved services, was available.44 For the 2003 budget, the process of determining how “new money” would be spent was not even necessary because the Financial Secretary decreed that expenditure would be frozen at its 2002 levels less a levy of 1.8% on each department. In consequence, the Star Chamber met only to consider appeals from departments and bureaus for critical expenditure which could not be delayed. In 2008, with a healthy budget surplus, the government was more inclined to loosen the purse- strings with planned new expenditure on airport runways and a container port, various community-building projects, more small class teaching, investments in new markets and environmental improvements.45 Despite its more limited role in deficit years, the Star Chamber does have the power to make significant changes in resource allocation by deciding on policy priorities and of how government funds should be spent. Table 7.3 and 7.4 illustrate the final outcome of expenditure proposals for the Environmental Protection Department and the Social Welfare Department in 2007. We do not know what proposals the department may have put up which were rejected either by its bureau or by the Star Chamber but the tables do illustrate which programme areas were funded, how the allocation between programme areas was decided and where the bureau and the department were looking to place their emphasis in the future. Each policy programme falls within a general policy objective that provides the basis for the more specific components contained in the policy programme. For the Environmental Protection Department, for example, the waste facilities policy aim is “to develop and implement a sustainable waste management strategy for Hong Kong to reduce waste and

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to safeguard the health and welfare of the community from any adverse environmental effects associated with the improper handling and disposal of waste.”46 Similarly, the aim of the Social Welfare Department’s social security policy is “to provide a non- contributory social security system to meet the basic and essential needs of the financially vulnerable and the special needs of the severely disabled and elders.”47 Expressed in this way, the policy represents a continuous commitment rather than a programme that can be completed within a specific time frame. If we look further into the estimates of expenditure, we can discover the reasons why particular programmes exist and why the allocation has been made in a particular way. In the Environmental Protection Department, two programmes, waste management and air quality, consume over 85% of expenditure.48 The emphasis on the provision of waste facilities, relative to expenditure on other programmes, reflects a chronic shortage of such facilities in Hong Kong and the near-exhaustion of landfill sites. The increase in expenditure on air quality is a consequence of the decision to install emission reduction devices on heavy-duty diesel vehicles, the maintenance of monitoring networks, and the investigation of possible sources of indoor and toxic air pollution.49 On the one hand, the department will be looking to meet public demand for environmental improvements by undertaking new initiatives. On the other hand, under pressure from its bureau, and indirectly from the Financial Services and Treasury Bureau, to reduce expenditure, it will be seeking to complete programmes and to re-deploy staff. This constant re-evaluation of policy programmes is a necessary step in maintaining efficient resource allocation.

Table 7.3 Environmental Protection Department: Analysis of Financial Provision Programme Area 2006–07 (Revised) 2007–08 (Estimate) ($m) ($m) Waste Facilities 1381.4 1398.9 Air 241.9 966.0 Noise 89.8 93.0 Water 207.6 217.5 Environmental Assessment and Planning 74.9 76.8 Nature Conservation 7.0 5.7 Total 2002.6 2,757.9 (+37.7%) Source: Adapted from Government of the HKSAR, Estimates for the Year ending 31 March 2008 Volume 1a-General Revenue Account (Hong Kong: Printing Department, 2007), 217.

In measuring its needs for personnel for particular programmes, departments will have to take into account not only new policy initiatives but also public demand for existing services and speedier decision-making. To assess these factors, the departments look at indicators (to determine demand) and targets (to attempt to improve the speed with which the service is delivered). Thus, the Environmental Protection Department considers, inter alia, as indicators, under its waste management programme, the number of marine dumping permits issued, the number of prosecutions for various offences,

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the amount of livestock waste produced, and the number of complaints handled.50 Its key performance measures (targets) are how quickly it can process clinical and marine dumping disposal permits and how long it takes to respond to complaints.51 In the Social Welfare Department, indicators for its major programme, social security, relate particularly to the increase in the number of cases requesting social security support and the numbers eligible for benefits under the Comprehensive Social Security Scheme (CSSA). Cases served by the department under CSSA were expected to increase slightly in 2008 to 356,200 while cases served under the Social Security Allowance Scheme for the elderly were also estimated to rise by some 18,500 cases to 649,400.52 As Table 7.4 shows, actual financial provision did increase to meet the number of new cases. However, there is a continuing problem with funding social security partly because of an ageing population but also because many new migrants from China are dependent on social security. Perhaps significantly, the department does not list key performance measures or targets for this programme.

Table 7.4 Social Welfare Department: Analysis of Financial Provision Programme Area 2006–07 (Revised) 2007–08 (Estimate) $m $m Family and Child Welfare 1301.6 1431.6 Social Security 24,158.1 24,904.7 Services for Elders 3,087.2 3,267.4 Rehabilitation and Medical Social Services 2,607.6 2,797.4 Services for Offenders 280.9 268.1 Community Development 133.5 132.6 Young People 1269.2 1,287.3 Total 32,838.1 34,089.4 (+3.8%) Source: Adapted from Government of the HKSAR, Estimates for the Year ending 31 March 2008 Volume 1b-General Revenue Account (Hong Kong: Printing Department, 2007), 339.

Although the leeway for the development of new initiatives may be limited in times of budgetary austerity, new policies provide important recognition that the government is responding to community need. There is keen competition for “new money” within government and from many groups outside government who would like to see expenditure on their favoured projects. The acceptance or rejection of a proposal will have much to do with the politics of the issue. Yet while it will depend on political factors, acceptance or rejection will also be affected by the contribution that the proposal makes to the government’s general policy direction, the perception that it addresses an important problem, pressure in the community for its adoption, and the vigour with which the Director of Bureau makes the case for funding. If it is accepted as part of the policy address or is contained as a newly-funded initiative in the Principal Official’s post-policy address briefing, it has receivedde facto recognition as part of the institutional agenda, a sign that its implementation is to be taken seriously.

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The Chief Executive’s policy address is produced by the Central Policy Unit (CPU) which collates the approved new proposals. Despite its name, the CPU does not have any say in deciding which policies will proceed. Before 1997, it did produce papers on policy problems for the information and attention of senior policy-makers, some of which were acted upon. After 1997, apart from its role in preparing the policy address, it appears to have focused mainly on research into policy issues which appear to have only a marginal influence on the formulation process.53 Until 2002, the Governor or the Chief Executive traditionally delivered the policy address to the Legislative Council in the first week of October. In 2002, the Chief Executive moved the date of the policy address to January 2003 in order to allow the new Principal Officials more time to prepare their plans and establish their priorities but, under Tsang, the date has again been moved back to October. The policy address contains both a review of current progress and an indication of future directions. In his 2008 address, for example, the Chief Executive began with an account of the problems resulting from the global financial crisis. He went on to outline measures that would be taken to address those problems and policy initiatives that would be taken to improve the environment and to introduce increased social security benefits, competition laws and healthcare reform. There was mention of further constitutional development and regulatory measures to ensure food safety and protection for flat buyers.54 Accompanying the policy address is a booklet entitled Policy Agenda which, in 2008, reported progress on previous and continuing initiatives on the infrastructure, the quality of life, advances towards achieving a more caring society, attracting new talent to the city and developing democracy and enhancing governance.55 The government’s initiatives are expressed very broadly and contain no details about the problems encountered in implementation or about their funding. It appears to be aimed primarily at describing in a favourable light what the government is actually doing. The debate following the policy address gives members of the Legislative Council the chance to praise the government for its foresight and to castigate it for its shortcomings. Since members may not propose additional expenditure in the budget itself, the debate on the address is a convenient opportunity to bring alternative views on policy to the government’s attention. The government cannot entirely ignore legislators’ views because it needs the Council’s support to pass the budget when it is presented in March of the following year. Consequently, it consults with legislators and drafts proposals which are likely to gain the support of a majority of the Council. The debate on the address is a formal occasion. In addition, the Financial Secretary meets with political parties and groups of legislators less formally to ascertain their views.56 In 1992, the then Financial Secretary, Sir Hamish MacLeod, was forced to withdraw a measure to increase rates in the face of opposition from Legislative Councillors. As a result of this experience, the Financial Secretary now seems to be bound by convention to consult with legislators in advance of the budget in order that they can make their contributions “in good time.” 57 More recently, the process has become even more institutionalised with the Financial Secretary putting out an “information pack” which contains information on the state of the economy, present expenditure and revenue patterns and the direction that the government thinks that policy should take. He then

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invites comments from legislators as well as the public on the forthcoming budget.58 In 2006, for example, the Financial Secretary met with groups in favour of, and opposed to, the goods and services tax, and with organisations, such as the Hong Kong Council for Social Service, Oxfam and the Society for Community Organisations, who were seeking to increase expenditure on welfare.59 There is some scepticism whether the government’s apparent receptivity to new ideas is any more than good public relations. As one commentator remarked, “it is mostly a cosmetic exercise, with the government seeking and listening to the views of the community and then going off and doing exactly what it wanted to do before the start of the so-called ‘consultation’.”60 The Financial Services and Treasury Bureau does, however, write to all those who made unsuccessful submissions to explain why their proposals were not accepted. By the time the Financial Secretary meets legislators, the main features of the following year’s budget are in place although small concessions with little financial impact may still be made. The Financial Secretary presents the budget to the Legislative Council at the end of February or in the first or second week of March. The first reading of the Appropriations Bill, which is the budget, is a purely formal exercise to table the bill. On the same day that it is read, the estimates of expenditure are tabled. The budget speech itself is actually the Financial Secretary’s speech in support of a motion to read the Appropriations Bill for a second time. In his speech, the Financial Secretary will normally range widely over the state of the economy and the government’s financial position, explaining how the budget takes account of these factors. In 2008, for example, the Financial Secretary spoke of the problems of an ageing population, the need for new financing arrangements for healthcare services, and the funding for new infrastructural projects which had been foreshadowed in the Chief Executive’s policy address.61 There are rarely major economic changes announced in the budget. Taxes may be adjusted slightly upwards or downwards, special provisions may be announced for particular groups, such as the elderly or charities, and mention will be made of the projects which will be funded by new money. But, for the most part, the changes are likely to be incremental and relatively innocuous reflecting the kinds of constraints under which the budget is made. The President of the Council then refers the estimates to the Finance Committee. The Finance Committee is a committee composed of all members of the Council with the exception of the President. The Committee has a continuous role in the budgetary process. It is required to approve any supplementary expenditure during the course of the year and its two sub-committees, on establishment and public works, meet frequently to consider new posts and capital expenditure respectively. The most important task of the Finance Committee is to ensure that the estimates of expenditure requested in the budget are “no more than necessary for the execution of the approved policies.”62 The members may raise questions in writing about the plans of bureaus and departments with the Principal Officials and may ask supplementary questions at the special meetings of the Committee which are held in public three weeks after the budget speech has been read. The Directors of Bureaus are given 45 minutes each to explain their proposals and to answer written and supplementary questions. After these special meetings have concluded, the Chair presents a report on the proceedings to the full Council.

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After the resumption of the debate on the second reading of the Appropriations Bill, members of the Legislative Council are free to express their views on the general direction of the budget, on what it will achieve and the areas in which it has failed to bring about improvements. This is an opportunity for Legislative Council members to voice their particular concerns. Each member is given fifteen minutes to elaborate on what they feel are the pressing issues facing Hong Kong. The debate always ranges widely. In the 2007 debate, for example, members raised the problems of traffic congestion, youth unemployment, the need for environmental improvements, domestic violence, the underspending of some government departments, and problems with waste and sewage treatment as well as many other issues.63 Members of the Council speak for and to their constituents in the budget debate so that it is not surprising that they cover many different subjects and sometimes recommend completely contrary courses of action to that proposed by the Financial Secretary. The Financial Secretary, closing the discussion on the second reading, dwells again on the general direction to which the budget is pointing, notes the points raised by members, and seeks to move away from the specifics to the larger picture. In recent years, members have been calling for a division at this stage although the government has always had a comfortable majority in the ensuing vote. Once the second reading is concluded, the Legislative Council moves into committee to consider specific heads of expenditure, most of which are passed without opposition. Members are permitted to move amendments provided that they reduce rather than increase expenditure. In 2003, two amendments were proposed which, had they passed, would have had the effect of abolishing the Complaints Against the Police Office and the Constitutional Affairs Bureau on the grounds, members argued, that they were not properly fulfilling their functions.64 The Secretary for Security and the Secretary for Constitutional Affairs responded to the amendments which were defeated and the budget then moved on to its third reading. The final stage is the consent of the Chief Executive which is a formality provided that the budget has not been so substantially amended that it no longer reflects government’s original intentions.

Policy and the Budget

Our definition of public policy starts with the notion that it is comprised of “a set of inter-related decisions”. Ideally, the budget should reflect a series of coherent decisions that eventually come together as integrated policy. They are expected to be coherent in at least two different senses. First, the decisions themselves should not be contradictory. With the many thousands of individual decisions that make up a budget, it is quite conceivable that individual departments or policy bureaus will formulate or implement policies that either cancel each other out or make the desired outcome more difficult to achieve. In the 1980s, for example, an area that had been designated as a marine park by one department was being used as a landfill site by another. In such cases, the swift intervention of senior officials can probably resolve the problem quite quickly. In other cases, it may be the values on which the policies themselves are based that may be in

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total or partial conflict. The policy to provide public housing for those below a certain income level, for example, will be more difficult to achieve since the government has also committed itself to refrain from building more home ownership flats, and thus generating revenue, in the interests of raising property prices.65 Values, such as equity, often break down in the face of the political reality that policies sometimes benefit some groups at the expense of others. Traditionally, the structure of government has not been designed to minimise such problems which require both extensive lateral co-ordination between departments and strong leadership to resolve value differences reflected in policy. The best that can perhaps be hoped for is that the government is aware of the possibility of such conflicts and attempts to resolve them before policies are actually introduced and implemented. The second, related sense in which government’s policies should be coherent is that, as the 1982 budget guidelines maintain, they should represent conscious policy choices.66 The extent to which there is a match between stated policy objectives and the way in which the government spends money provides one indication of how well the many decisions involved in the budget process come together in broad policy streams. In assessing how successful the government has been in this respect, we need to consider the total public expenditure because, in the social policy field, in particular, implementation is often undertaken by subvented bodies. We may analyse the relationship between aggregated expenditure decisions and intended policy objectives from a short- term perspective, examining year-on-year changes in budget allocation, and a longer term perspective to determine how allocation has been made to different sectors over the last decade. If the budget is consciously used by policy-makers, as it should be, to facilitate the achievement of goals, this should provide an important indication of the issues that have priority on the policy agenda. Table 7.5 shows the budget allocation by sector in 2007 and 2008. In such a short time span, the budget should usually reflect incremental policies because a large proportion of expenditure is already committed to existing programmes which are regarded as essential. Crises and one-off programmes may sometimes disrupt the short-term incremental pattern of resource allocation. In 2003, for example, the SARS outbreak meant that actual expenditure on health was $1 billion over budget in the revised estimates. In 2008, expenditure on education, community and external affairs and economic sectors showed large percentage increases which reflected specific new projects such as the establishment of an $18 billion research endowment fund and funding for the West Kowloon Cultural District project and a new cruise terminal (see Table 7.6). Such increases are exceptional and deviate from the underlying trend of most policy sectors which show only marginal changes to funding in the short term. If there is to be increased expenditure as a result of a new policy initiative, there should be a match between the statement of priorities in the policy address and increased expenditure in that area in the budget. This has generally been true of education, for example, which was identified as a priority in a number of policy addresses and where there has been considerable increases in government expenditure both in absolute terms and as a percentage of the share of the total budget (see Tables 7.5 and 7.6). Once policy

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Table 7.5 Total Public Expenditure: Year-on-Year Change 2007–2008 and 2008–2009 Sector 2007–08 2008–09 Increase/decrease Revised Estimate ($m) Estimate ($m) in real terms (%) Education 55,066 77,275 30.5 Social Welfare 34,896 39,448 2.2 Health 33,533 35,828 5.3 Community and External Affairs 8,304 32,582 290.5 Security 28,120 28,368 -5.7 Economic 14,020 26,552 73.6 Infrastructure 22,905 24,974 2.5 Housing 15,604 16,968 3.7 Environment and Food 12,115 12,440 0.3 Support 31,885 37,647 1.9 Total 255,858 332,082 20.7 Source: Adapted from Financial Secretary, The 2008–09 Budget (Hong Kong: Government Logistics Department, 2008), Appendix B, 22. Notes: 1. Economic covers air and sea communication, commerce and industry, employment, financial services, information technology and broadcasting, posts, power, competition policy and consumer protection, public safety and travel and tourism. 2. Support covers the central management of the civil service, complaints against maladministration, constitutional affairs, intra-governmental services, revenue collection and financial control and support for members of the Legislative Council.

priorities are established, it may be more difficult to turn off the funding tap, mainly because programmes may need some years to complete and because adverse reactions to budget cuts may result in political difficulties. If there is no likelihood of additional funding for new programmes and bureaus and departments have to make do with what they have or with less than they presently have, expenditure debates will probably revolve around the programmes which are regarded as essential. Bureaucratic battles for new resources are more likely to be fought within departments and bureaus rather than in competition with other parts of the civil service. Table 7.6 shows the allocation of resources within policy sectors over a lengthier period of time. The figures for the 1992/1993 budget have been included to show that there has been comparatively little difference over time between the sectoral budget allocations before and after 1997. Spending on education and social welfare programmes are notable exceptions and have increased considerably. Increased expenditure on education reflects one of the policy priorities of the administration but the growth of social welfare spending is a function of an ageing population and uncertain economic conditions; the post-1997 government is no more sympathetic to the idea of comprehensive social security than its colonial predecessor. There have been some changes in housing over the period indicating the policy shift in the Tung administration which began its term in office with promises of increased public housing supply. There

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Table 7.6 Total Public Expenditure by Percentage by Policy Area Group Policy Area Groups 1992–93 2004–05 2005–06 2006–07 2007–08 2008–09 (revised (estimate) estimate) Education 18.7 21.2 22.2 21.5 21.5 23.3 Support 11.6 12.5 11.7 12.3 12.5 11.3 Health 11.8 12.5 12.9 13.3 13.1 10.8 Social Welfare 10.2 12.9 13.6 13.9 13.6 11.9 Housing 17.0 7.0 6.3 6.1 5.9 5.1 Security 9.6 9.9 10.1 10.4 11.0 8.5 Infrastructure 8.5 12.0 11.0 9.7 9.0 7.5 Economic 4.6 4.9 5.1 5.3 5.5 8.0 Environment and Food 4.6 4.0 3.9 4.7 4.7 3.8 Community and 3.4 3.1 3.2 3.2 3.2 9.8 External Affairs Total Public 123,490 257,137 244,982 241,744 255,858 332,082 Expenditure ($million) Sources: Adapted from Financial Secretary, The 2008–09 Budget (Hong Kong; Government Logistics Department, 2008), Appendix B, 29; Financial Secretary, The 1997–1998 Budget (Hong Kong: Government Printer, 1997), Appendix B. Note: For an explanation of the categories of ‘Support’ and ‘Economic’, see Table 7.5, notes 1 and 2.

is a relative decrease in spending on infrastructure but that can be explained by the capital expenditure on the new airport in the 1990s. Other than education and social welfare, there has been some movement in a few sectoral categories, which would help to explain the remaining differences between the 1992 budget and the 2008/2009 budget. Expenditure on the environment has risen but may be explained partly by the abolition of the Urban and Regional Councils and the inclusion of environmental hygiene as expenditure on environment and food rather than on community and external affairs. Generally, the ways in which the Hong Kong government has allocated funding to the various sectors over the last decade has been relatively consistent. Social policies continue to consume the bulk of expenditure and present the major challenge for any Financial Secretary seeking to obtain “value for money” from the budget. We began this chapter by suggesting that the policy-making system in Hong Kong was undergoing significant change, from a decision-making process that was largely closed and controlled by the bureaucracy to one that was more open, fractious and subject to direction from the political executive. The budgetary process provides some illustration of how this change is occurring. Although policy outputs are largely similar in terms of the proportion of the budget devoted to each sector, the means of reaching

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agreement on the allocation of resources has gradually evolved into a more public exercise than was previously the case. Financial Secretaries now consult with legislators, political parties and pressure groups on the shape of the budget; the political executive, rather than the senior civil service alone, is charged with the responsibility for coming up with new ideas and projects; and there is a continuous public debate on whether government proposals are appropriate. This does not mean that decisions are necessarily taken in a more rational or logical way. Conflicting pressures may result in decisions that are less than optimal, particularly when resources are scarce. The constraints on the decision-makers have increased and their room for manoeuvre has correspondingly declined because the political environment has changed. In the following chapter on the policy process and the political system, we examine some of the wider ramifications of the superimposition of one policy-making system on another.

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efinitions of policy are often recognised to be inadequate to cover the range of practical and analytical difficulties that the term encompasses.1 Policy may involve debatesD over values, establishing an agenda to determine priorities, consultation with the public, negotiations between politicians and stakeholders, and deciding authoritatively on which course of action should be followed. It will also involve the use of state power, interactions between institutions and organisations, both inside and outside the governmental structure, strategies to ensure successful implementation, assessments of the impact of the policy on citizens and much more besides. It is difficult to find a definition which will cover this complex interaction between values, agendas, institutions, groups, and the impact that policy has on people. Some analysts seek to avoid the complexity by defining policy simply as the output or decisions of any public sector organisation. The difficulty with this approach is that it may miss the substantively important political issues in the process of arriving at decisions. It also fails to distinguish between different types of policies: a decision to raise the fines for illegal parking, for example, would fall into the same category as government policy on education. Our definition of public policy takes it to be a broad course of action, a set of related decisions rather than random choices, involving “the selection of goals and the means of achieving them within a specified situation when these should, in principle, be within the power of these actors to achieve.”2 Even with this definition we have some conceptual problems. Not all elements of the process can easily be incorporated within the dynamics of policy-making and there are, moreover, important debates among scholars about the degree of rationality in policy formulation and the extent to which goals can be realised by employing rational means. It would be helpful if we could escape from some of these conceptual difficulties by analysing policy-making as a sequence. We might begin with the observation that policy is, first, a debate about values. There has been a continuing debate over values in Hong Kong, for example, between the government and schools and education pressure groups over the extent to which the medium of instruction should be Cantonese or English. Government officials, pressure groups, political parties and anyone else who chooses to join the public debate are all policy actors in this process although clearly not everyone

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has the same degree of influence on the final decision.3 The debate may be about whether the value is of such importance that it should reach the policy agenda or, if it is agreed that action should be taken, about the means to be used to ensure that it is achieved. The government itself will also have goals which may require some discussion to ascertain whether they have sufficient public support. Relatively few values reach the institutional agenda which is composed of those items up for active and serious consideration by the policy-makers.4 Policy-makers usually come from inside the political and administrative system. In Hong Kong, they would consist of the Chief Executive, the Chief Secretary for Administration, the Financial Secretary, Directors of Bureaus, senior civil servants and members of the Executive Council. Legislative Councillors and advisory committees may also be involved. The next stage is for policy to be implemented, a process fraught with problems and unrealised expectations. In seeking to realise their values — to translate words into action — policy implementers use public institutions, principally government departments and quasi-governmental agencies, but also groups, voluntary organisations and people outside the government framework, to achieve their goals. If these stages are completed successfully, we should be able to arrive at some judgment on the type of output, the policy content. Finally, the success or failure of the action must be evaluated to see whether its objectives have been realised and whether public funds have been properly spent. The idea that policy might begin as a debate over values, proceed through agenda- setting to formulation, and emerge as a tangible policy, which is then implemented and evaluated, provides a convenient analytical map from which we can follow the stream of policy from its formulative stages to its final conclusion. Unfortunately, it may also be an idealised, unrealistic and misleading view of policy. As Kingdon remarks, while “there are indeed different processes, they do not necessarily follow one another through time in any regular pattern.”5 This is a matter of degree, however. Under some circumstances, policy might move forward in steps or stages provided that the decision-making system is insulated from politics and that it enjoys relative autonomy from business and other influential elites. Such conditions applied in Hong Kong, for example, under the colonial system where the government controlled the policy process, where there were no political parties or pressure groups and where the policy-making process, for the most part, took place behind closed doors. The political system is a key variable determining the dominant mode of policy-making. It is unlikely that all policy will be made in exactly the same way. Within any system, policy will be formulated in different ways depending on the political circumstances, particularly whether the issue is controversial. Kingdon’s model of three streams of action — problems, politics and policy — is perhaps better suited to an explanation of the policy-making system that emerged in the later transitional period and in post-colonial Hong Kong where the factors that often make success unpredictable, such as parties, pressure groups and public opinion, had greater influence over the process.6 In this model, values are debated up to, and sometimes after, implementation. Policies may be re-formulated at the point of delivery and may have to be re-visited to take account of spectacular failures or unexpected problems. Resources may dry up; governments may change their minds; success may

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owe more to accidental fortune than to planned, rational calculation. Policy-making, in this conception, is a messy, political business whose outcomes may be fortuitous or disastrous, and often unintended. For Kingdon, the chances of achieving policy goals are greater when there is a window of opportunity in which the three streams of action come together to enable policy to be made authoritatively. Yet while this resolves the debate over values, it does not in itself guarantee successful implementation. In the Hong Kong context, bearing in mind the caveat that policy-making might not always occur as a logical sequence of events, it may still be helpful to try to clarify the policy process by distinguishing the different processes involved in policy-making — the role of values and policy actors, the role of public institutions, the location of power within the system, and so on. We should note that the dominant mode of policy- making in the colonial period has persisted beyond 1997. However, the government now operates in a more turbulent political environment, especially in its relationship with civil society organisations, and seeks to deal with policy issues in rather different ways from its predecessor. In consequence, there are at least two styles of policy-making. One mode, which we characterise as rational, has its origins in the policy formulation style of colonial times. The other, which is much closer to the situation which Kingdon describes, reflects the politics of policy-making in the post-1997 period. The four stages outlined below cannot always be assumed to follow each other sequentially but, in whatever context or order they occur, they are central to the nature of the policy process and are used as a framework for this chapter: • the predominant values represented in the policy formulation process (values and the policy agenda); • the location of power within the system and the role of institutions in formulating specific policies (power and the institutional framework); • the nature of consultation and participation, that is, the extent to which the policy- making system is open or closed (consultation and participation); and • the types of policies that are actually produced (content and outputs).

For much of the colonial period, policy-making gives the impression of a rational sequence in the order listed above. The administration was insulated from popular pressures and debates over values and the policy agenda were decided with minimal public consultation. Policy decisions were reached after careful consideration within the government and were usually incremental adjustments to long-established practices which eventually proved insufficient to meet the demands of the community. In the 1970s, the MacLehose administration introduced more distributive policies and more attention was given to the provision of collective goods, such as education and housing. After the Sino-British Agreement in 1984, the character of policy-making changed again. Values were often agreed but implementation sometimes faltered in the face of opposition from political and social groups; policy initiatives were often largely symbolic. In the post-1997 era, lack of institutional co-ordination in a disarticulated system contributed to the emergence of disjointed policies which were sometimes poorly implemented. Policy became much more contentious and seemingly less rational and

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ordered and the process became more fragmented and less authoritative. Yet there is historical continuity in policy-making so that values, institutions and processes may all be incorporated in the new mix. Some policies, even in post-1997 Hong Kong, continue to be made in largely the same way as before the retrocession. The most significant new factor affecting policy-making in post-1997 Hong Kong has been the rise of civil society. Under the Tung administration, the inclination initially was to try to implement policy whether or not this brought the government into conflict with civil society organisations. While policy could still be formulated by an “executive- led” government, its implementation gradually became more difficult. Civil society groups grew in strength7 and, even more problematic for the government, sometimes emerged following formal legislative approval of a policy. After the watershed July 2003 demonstrations against the introduction of national security laws, the ability of the government to introduce new policies was severely constrained by the fear that they would provoke similar reactions from the public. Under Tsang, although there was some improvement in policy co-ordination and consultation with the public, the government’s policy capacity remained in doubt.8 Unpopular policies, such as the goods and services tax, were abandoned at the process stage when it became clear that there would be substantial organised opposition to their implementation. In the remainder of this chapter, we analyse why these changes have taken place, why some features of the system remain and others do not, why policy capacity and the ability to introduce new policies is low, and what consequences have resulted from problems with formulation and implementation.

Policy-Making under Colonial Rule

In the following section, we consider the political underpinnings of the colonial style of policy-making and how it related to rationality.

Values and the Policy Agenda

Values impinge on the policy process in many different ways. At the most general level, they are implicit in regime values, which are an underlying component of the political system and which may have a determining influence on the way in which concrete policies are devised.9 Regime values provide a polity with its legitimacy. They provide the justification for the use of coercive action and the persuasive reference point when a government needs popular support. They may relate closely to more specific policy values, in the sense that there is congruence between what a regime stands for and what its specific policies represent, or there may be a vast distance between the ideals on which the polity is founded and the concrete policies that the government is actually formulating and implementing. What were those regime values in colonial Hong Kong? How did they translate into specific policies? The dominant form of policy-making is determined largely by political factors. Under colonialism, the regime was concerned with maintaining its rule and with the

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associated problems of political stability and legitimacy. It wanted to encourage economic growth and believed that this could be achieved by keeping government small and by allowing business to have free rein, unrestricted by regulation. The fundamental concerns with political stability inevitably placed some constraints on government. Policy-making tended to be incremental because the functions of government were limited and did not change much and because they had usually been devised with the intent of maintaining stability or encouraging enterprise through free trade and a free port. To get new policies on the agenda was difficult. The government could not raise tax revenue for social policies without encountering fierce opposition. A low tax regime was a fundamental premise on which Hong Kong’s fiscal policies were based. Although this was essentially a system of colonial control, it was also one that was governed by well-respected conventions. The colonial administration would not tolerate threats to its rule. It did not normally intervene in the market and was often accused by business people of doing little to help them. But it also did little to regulate business and benign neglect served the interests of commerce well. The government’s relationship with the people was distant. It legitimised its rule by arguing that the colonial administration provided good government and order and security which, implicitly, were not to be found across the border in China. After the 1966-1967 riots, the government sought to address mounting social problems and to establish a better relationship with society. This meant that the values underlying policy also had to change. In contrast to the distance that had characterised relationships between government and people prior to the riots, the government now tried to bridge the gap and to move towards meeting more of their needs. The difference in the values underlying the policy-making system can be identified from a keynote speech by MacLehose to the Legislative Council in October 1972. Speaking of the need to improve housing conditions, he said: … the inadequacy and scarcity of housing and all this implies … is one of the major and most constant sources of friction and unhappiness between the Government and the population. It offends alike our humanity, our civic pride and our political good sense.10

Governors, prior to MacLehose, would have been reluctant to make speeches which so clearly acknowledged government’s moral responsibility to improve the social conditions of the population. MacLehose’s initiatives resulted in vastly increased, publicly-funded, social policy outputs. More housing units were built, new towns were constructed in the New Territories, social welfare and healthcare provision was increased and education was eventually extended to three years of compulsory secondary school. The government quickly learned that distributing social policy outputs in greater quantity could positively lift its political support. But there were costs, both to the long-standing value of “small government” and to the regime’s traditional distant relationship with society. To provide more collective goods required a more interventionist approach. Of necessity, the civil service began to grow rapidly and the Hong Kong government began to take on the

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characteristics of a major service provider, a role that it had previously tried to avoid. At the outset of MacLehose’s decade-long tenure, the administration probably believed that it could control the process of building a more prosperous, better-housed, healthier and better-educated population. But social policy outputs have their own dynamics. The society that had emerged by the end of MacLehose’s tenure in 1982 was markedly different from the immediate post-1967 period. Its members, particularly its educated members, wanted much more active participation in the affairs of the colony (now known as a territory). Pressure groups had become more critical of deficiencies in social policy and labour was more belligerent, particularly within the civil service where the staff associations had grown in number and strength. The professionals who provided the new services — teachers and social workers, for example — had their own views about how those services should be provided and what they should be paid for providing them. New values began to infiltrate the policy process. Consultation with the people became the leitmotif of the administration although government still claimed the right to make the final decision. While the economy prospered and government had the ability to deliver desired collective goods, the values on which policy was based continued to receive widespread support. The government’s control over the policy process, however, gradually declined. The decision to return the territory to China politicised the population, creating uncertainty and reducing confidence in the established order. The government came under siege from those who wanted to see a more democratic system in place before 1997, from an increasingly influential Chinese government, and from a variety of pressure groups seeking guarantees that their own positions would be safeguarded after the resumption of sovereignty. The government stuck to its previous commitments to distributive social policies but it was not able to implement them as forcefully as before and it had to develop policies with an eye to maintaining confidence in the system. In consequence, policy-making often had symbolic aims in which the articulation of the value sometimes seemed more important than its actual implementation. By 1997, a much more dynamic, and sometimes contradictory, mix of values was influencing policy-making. There was pressure for a more active government that would address enduring social problems and which would set in place policies which could not be subverted by the Chinese government. For its part, the Chinese government seemed to want to inherit a system unchanged from unreformed colonial days; they sought to exclude the democratic parties from power. The British government’s principal aim was to leave the territory with the minimal possible disruption and with its dignity intact. Until Patten became Governor in 1992, it tried to do as little as possible to offend the Chinese government. Policy became a hostage to these forces. In some cases, the government did take active measures to address concerns, to improve social conditions and to protect civil liberties. In others, policy remained largely symbolic because the government preferred to let sleeping dogs lie rather than risk more confrontational politics.11

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Power and the Institutional Framework

Where does power reside in a system? Who has the authoritative right to decide which policies should be pursued and implemented and which should not? The location of power in a policy-making system is important because it is a critical factor influencing the way in which policy is made. If power is centralised, civil society relatively weak, and decisions can be effectively implemented, then the chances of following a sequential, planned policy process from formulation to implementation are greater. If power is diffuse, scattered among various institutions and groups within society, then policy- making becomes more difficult as different influential institutions or groups affect both policy formulation and implementation. Power in classical colonial systems was invariably centralised and exercised through a hierarchically organised civil service. No institution challenged the authority of the Governor and the Secretariat. The government spoke with one voice and whatever disagreements existed between civil servants over policy were kept behind closed doors. The only occasional constraint on the local administration’s ability to make policy autonomously was pressure from the British government to ensure that social and labour conditions in Hong Kong met basic standards.12 Apart from these sporadic concerns, the colonial administration was usually left to its own devices. The Colonial Secretariat was the principal source of policy advice for the Governor and policy ideas were either generated within the Secretariat or from departmental proposals. The functions of government were very limited. Once policies were established, the changes that were required were largely incremental, mainly changing or tightening a regulation here or there. The Secretariat was not particularly responsive to attempts by government departments to change policies and vetted new proposals carefully. It saw itself as holding a monopoly over decision-making. To arrive at the point where policy was to be changed or initiated required the approval of the senior officials, the Governor, the Chief Secretary and the Financial Secretary. Without their support, nothing could be achieved; even with their support, a period of bargaining over resources usually followed.13 When policy papers were finally agreed internally, they went to the Executive Council and the Finance Committee of the Legislative Council for further discussion and approval. The changes introduced in the 1970s from a basically incremental to a more distributive system had important repercussions for the way in which policy was made. In 1973, the McKinsey consultants recommended the establishment of policy branches, staffed almost entirely by administrative officers, who would make policy, and departments which would implement it.14 The division was never quite so clear- cut because the separation between politics and administration implicit in the concept is not how policy-making is usually made. The departments had long experience of implementing policies and often firm ideas on what would or would not work. Administrative officers in the branches were liable to transfer every three years or so and had little specialist knowledge of the matters on which they were expected to make policy. There were other important shortcomings in the reforms. The consultants called for more programme and resource plans.15 But there was some opposition within the

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civil service, especially from the Finance Branch and from the administrative grade. The Finance Branch was concerned that it might lose some control over resources. The administrative grade preferred the generalist policy-making system of the past and was reluctant to concede power to specialists.16 Power was more diffused after the reforms than under the old colonial system. The Secretariat still remained the central policy-making body and the administrative grade was still the dominant force in the formulation of policy. However, after 1984, the British and Chinese governments were informally able to exercise vetos on policy proposals in some areas. As the government itself became larger, the control exercised by the Secretariat over departments was slightly diminished simply because the thin layer of senior administrators was no longer able to supervise every aspect of government. Power remained centralised but there were many more actors in the policy-making process both within the civil service and outside it. The institutional framework could not incorporate the emerging civil society groups. Business people and professionals continued to be over-represented on the Legislative Council; they dominated the advisory committees; and they were already playing a significant role on the Executive Council. New pressure groups were under- represented and it was difficult to include them because many were focused on the political arrangements for the future, which were beyond the control of the Hong Kong government. Policy-making, by default, remained in the hands of the civil servants although they had difficulty, as 1997 approached, in persuading the Legislative Council that their policies were the best solutions to the territory’s problems.

Consultation and Participation

During the colonial era, consultation and participation in policy-making were restricted and controlled in various ways. Until the 1970s, the location of power in an administration supported by the most powerful figures in the business world and in Chinese society meant that other elements of society were starved of access to the policy-making process. There were no political parties and pressure groups were slow to develop. When pressure groups did emerge, they tended to lobby departments, which did not have final decision-making power. The Legislative Council was also largely excluded from the policy-making process. Its members were sometimes influential behind the scenes in advisory committees but their role was essentially to validate policy rather than to formulate or criticise it. The Council was also entirely appointed by the Governor and was consequently composed of supporters of the government rather than its critics. Because expectations were limited, popular protests were not concentrated on the government’s policy shortcomings. Until the 1966 riots, demonstrations were seen as aberrations from the normal condition of social stability and were dealt with by tighter regulations. After MacLehose introduced his social policy reforms, political participation increased considerably. This was encouraged by the government to the extent that it sought to build its policies around “consultation and consent”. New policy initiatives were often presented as green papers which were put to the public for comment. After

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a period of consultation, the government would issue a white paper which, it would argue, reflected the views of the community. The system fell into some disrepute as it gradually became clear that the government tended to ignore those views that did not correspond with its own. The most significant case in which this happened was over the issue of increasing the number of elected representatives in the Legislative Council in 1987, but it was also true of other areas of policy-making, such as education and the system for redressing grievances.17 The government did make more effort to consult with groups affected by policy, but there were still institutional gaps in the ways in which policy-making was conducted. The government also had relatively little control over the new pressure groups that began to emerge in the 1970s. Policy towards groups was based on regulation under the Societies Ordinance and attempts to fragment the labour movement. One consequence was the emergence of many small and fragmented groups and unions. There were exceptions, such as the Professional Teachers Union, which was able to build a more comprehensive organisation on the back of confrontations with the government over the status of certified teachers and the closure of the Precious Blood Jubilee School.18 Although the government might have wished to include groups in the policy process in a more meaningful way, it was increasingly constrained by the politics of the transition. Neither the British nor the Chinese governments favoured more democracy for Hong Kong in the 1980s. The Governors of the period, Youde and Wilson, tended to rely upon traditional elites and the emerging democratic groups were excluded from the process. During the Patten years, consultation took rather different forms. Patten came to office with a commitment to more open government and spent much more time in discussions with legislators. As a result of the introduction of direct elections for some seats in 1991, there was also much more bargaining between government and Legislative Councillors. Yet political constraints on greater consultation and participation still remained. The government wanted to include pressure groups in the policy process but it could not afford protracted conflict with them at a time when relations with China were tense and when public confidence in the future of the system was low. Its strategy was to try to establish a value consensus — for example, that the education system needed to be reformed or that the quality of public housing needed to be improved — and formulated policies to meet those ends. But at points where it might be involved in conflict with pressure groups, it tended not to force the issue. Policy-making in that sense was symbolic; it could only be implemented provided that there were no groups likely to engage in political or industrial action.

Policy Content

By content, we mean the nature of the policy outputs that are representative of the period. Thus, following Lowi, we might describe the policies of the old colonial period as mainly regulatory, those of the later colonial period as largely distributive and symbolic, and those of the post-colonial period as largely unfocused but with elements of some of the

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policy-making concerns of the preceding systems.19 It should not be assumed that these descriptions of policy-making encompass all policies made within a particular historical period. There has been nonetheless a dominant form of policy-making in each period which was determined by the factors that we have already considered, namely values, the location of power and the institutional framework, and the nature of consultation and participation. Under colonialism, regulatory policy was seen to be the appropriate way to maintain the stability of the regime. The Societies Ordinance , the Education Ordinance and various labour regulations were used to control organisations, intervene in the school system, and fragment trade unions.20 After the Second World War, regulatory policy was no longer sufficient and the administration began to make grudging accommodations in health, welfare, housing and education.21 The MacLehose reforms brought collective goods in larger quantities: more school places, more hospital beds, increased social welfare, and a greater likelihood of securing a public housing flat. This expansion of social policy was a means of re-legitimating a regime that had singularly failed to provide adequately in these respects in the 1950s and 1960s. It had the effect of heightening expectations for even more, qualitatively better, collective goods. After the 1984 agreement, policy remained largely distributive in terms of its overall emphasis but also took on more symbolic aspects. Regulation changed from a concern with control in the interests of maintaining stability to an attempt to ensure that standards were met in the provision of services. A more sophisticated economy required different types of regulation and important reforms were made, for example, in the banking sector. The government also sought to build confidence in the future by other means: by providing for a Bill of Rights and various forms of safeguards for civil liberties, by creating new universities and by constructing a new airport. Policy was used symbolically to persuade the people that post-1997 Hong Kong would be at least as prosperous and pleasant as in the past. In addition, the government tried to avoid becoming embroiled in contentious policy issues. In areas where it could not avoid making policy, the process of implementation was designed to minimise conflict and to allow the government to retreat if its proposed measures proved to be too controversial.22

The Rational Policy-Maker

The political pre-conditions which aid rational policy-making include: government monopoly of the policy agenda; restrictions on the influence of the population on the way that decisions are made and the insulation of decision-makers from the political process; centralising the decision-making system to control resources and to attempt to avoid the development of potentially conflicting policies; acting authoritatively to reinforce the image of a government in command; and trying to match policy outputs to the prevailing political circumstances. How did these political pre-conditions translate into rational policy-making? Did the policy-makers hold a set of beliefs about the best way to make policy? If so, what were those beliefs?

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In the course of the research for this book, interviews were conducted with 32 senior officials from seven different policy bureaus and sixteen different departments and statutory bodies.23 All had held high office in the final years of the colonial administration and continued in senior positions after 1997. Seventeen of the 32 were administrative officers and had been transferred between bureaus, departments and statutory bodies in the course of their careers. What follows is a distillation of their beliefs about how policy should and should not be made. A critical feature of successful policy-making, although few of the interviewees used the word, was that it should be rational, that is, that the government’s response to a problem should be appropriate to provide a solution to present or future difficulties. The respondents drew attention to the need to ensure that there were adequate financial resources, that alternatives had been considered, that the problem had been properly discussed with all the relevant stakeholders, and that proper “homework” had been undertaken to stave off criticism and to defend the policy proposal against charges that there were better ways to proceed. The means to achieve these conditions for successful policy-making varied according to the nature of the problem. In some cases, the policy- makers sought expert advice; in others, they surveyed public opinion; in still others, they undertook pilot schemes or conducted experiments. In each case, however, the aim was to construct a case for change as watertight as possible or, alternatively, to put the issue before the public in such a way that the problem was canvassed and the options presented, usually with the government making its preferred position clear. A second element that was heavily stressed was the need for flexibility. One respondent quoted with approval the words of a long-standing Executive Councillor who advised policy secretaries that they should always give themselves room to “wriggle”. In fact, in the last years of the colonial administration and after the handover, policy secretaries found it difficult to take unequivocal positions because the nature of the political process meant that criticism of their role was more intense than it had ever been before. The view of some respondents was that there should initially be a preferred government stance but that fall-back positions and contingency plans for changing circumstances were a necessary part of the process. A third element was that the policy-maker should keep his or her distance from the politics of the policy process. “Don’t eat with your chin” said one highly experienced official, meaning that the policy-maker should avoid becoming part of the public debate until an authoritative decision was required. This was, of course, part of the colonial culture of maintaining distance from the population. No government likes to back down on policy but there was always the suspicion that, if a colonial government did so, the legitimacy of its rule might be called into question. Decisions were generally not negotiable once the government had put its prestige on the line. The notion of distance from politics was also related to decision-making within the government. Most respondents believed that they should be politically neutral in the sense that they should give the “best” policy advice that they could. But there were concerns that this was being undermined in the post-1997 period. Many noted that “politics” were determining decision-making to a greater degree than in the past and that, implicitly, the “best”

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decision was not always reached because of considerations of political expediency. The ideal administrator was one who could distance himself or herself from the process and arrive at rational decisions after appropriate consultation with other policy actors. In the following case study, we consider the application of rational decision-making to a volatile political issue. The methods used to deal with the problem are largely derived from long-standing beliefs in the value of rationality, flexibility and distance in dealing with policy problems.

Rational Policy-Making: Reducing Social Security Assistance Scheme

The Comprehensive Social Security Assistance Scheme (CSSA) was introduced in 1993, replacing a public assistance scheme which had provided only the most basic of social security benefits. The new scheme was rather more generous although it was constructed on a philosophy that was very similar to the one which had preceded it. Social security would be given to those who were needy in order to raise their incomes to meet essential requirements. The benefits were means-tested and all able unemployed people between 15 and 59 years of age were required to register with the Labour Department for job placement. The scheme provided for a range of standard rates for different categories of applicants, for rent and to meet special needs. At the end of 1993, there were 92,000 CSSA cases compared with 79,700 public assistance cases in the previous year and expenditure on the scheme was $2,073.8 million, an increase of 54.9 % over the previous year.24 CSSA cases rose from 92,000 in 1993 to 195,645 in 1997.25 The most significant increase in the number of new cases was in the unemployed whose numbers rose from 3,876 in 1993–1994 to 14,964 in 1996–97.26 The increase came at a time of almost full employment in Hong Kong and suggested that those who were claiming unemployment benefits might be doing so because the payments were more attractive than working.27 In Tung’s first policy address, he announced that there would be a review of the CSSA system and stressed that “we should not remove the incentive to work.”28 From the outset, the agenda for change was controlled by the civil service. The Steering Group which conducted the review was chaired by the Director of Social Welfare and its membership, with the exception of one member from the Employees Retraining Board, a statutory body, was composed entirely of civil servants.29 There was no outside representation from those who might be affected by its decisions or from organisations, such as the Hong Kong Council of Social Service, which might have been expected to speak on behalf of the disadvantaged. Controlling the agenda meant that the Steering Group could define the problem. There was, it said, … growing public concern about the rapid growth in the CSSA caseload and its expenditure, the high level of CSSA benefit for larger families as compared with market wages, and sharp increases in the number of people of working age turning to CSSA. There is also an increasing perception that some people are abusing the system and as a result of this, increasing calls … for the Government to take more measures to prevent such abuses.30

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The identification of the problem was accompanied by supporting statistics: the number of CSSA cases had increased by 146% between September 1993 and September 1998; expenditure had grown three-fold and was certain to rise still further; benefits were becoming more attractive because of the slow growth in wages; and CSSA payments for a family of four or more were considerably higher than low-end wages.31 The definition of the problem in this way rested on some assumptions about the motives of the recipients and pointed to possible solutions. The Group felt that there was “a tendency for some employable adults to consider reliance on welfare assistance as a preferred option even when there is employment available.”32 Clearly, this conflicted with the long-standing value that welfare would be provided only for so long as it took to return the able-bodied to the workforce. The solutions offered by the Steering Group, therefore, took aim at the unemployed and at benefits enjoyed by families which exceeded the wages of low-end workers. The proposals included slashing benefits, new programmes under which the unemployed CSSA beneficiaries would engage in unpaid community work, re-assessment of the asset limits for the unemployed, provisions to terminate CSSA benefits if the recipient refused reasonable employment, and strengthening existing arrangements to prevent fraud.33 Even these measures, the Steering Group warned, would not prevent the growth in CSSA expenditure from increasing to the point where it was unsustainable.34 Their predictions proved to be correct. With the subsequent economic downturn, more poor migrants from China and growing number of elderly recipients of CSSA, the number of applicants and government expenditure rose dramatically. The number of cases increased from 195,645 in 1997 to 288,648 in October 2003.35 The budget increased from $2.4 billion in 1993 to $9.4 billion in 1998 to $16 billion in 2002.36 In the years immediately following the implementation of the Steering Group’s recommendations, it appeared that the measures had some effect in discouraging new applicants for unemployment benefits. The number of new cases rose to 31,942 in 1998–99 but stabilised thereafter and even dropped in 2000.37 But the number of low-earnings cases, whose incomes were supplemented by CSSA, continued to rise, suggesting that the slowing growth in wages and the benefits provided under CSSA were beginning to come closer than the government wished. As economic conditions worsened, the number of unemployed CSSA cases rose sharply. By September 2003, there were 51,372 unemployed cases, nearly double the number in March 2000.38 The government faced a potentially explosive situation. Any move to cut benefits further might have resulted in an even greater loss of political support and the growth of protest movements. On the other hand, expenditure on the CSSA was clearly spiralling out of control. In October 2002, the Director of Social Welfare, Carrie Lam, put the government’s case in an article in the South China Morning Post.39 The tone was coolly rational. The problem was presented as one which was not simply a matter for the government but for the society, a concern with how welfare provision should best reflect the values of the community. “The community,” wrote Lam, “is compassionate towards the vulnerable when the economy is good and public finances permit … [but] expects vigilance by the administration in guarding CSSA from becoming a preferred

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alternative to work.”40 She then presented figures which showed that, as a result of negative growth in the economy the actual purchasing power of the CSSA was 12.4 % higher than at the time it was set in 1996. She concluded: The issue now is whether CSSA rates should be reduced to restore purchasing power to the intended level, freeing up existing resources to help an anticipated increase in applicants. On a broader front, with the growing number of elderly, and an increasing number of low-income families, what should be done to ensure CSSA will continue to provide a strong financial safety net for the most vulnerable? These are questions on which we welcome public views.41

In fact, of course, the government had firm views on the direction in which it should proceed; it had framed the agenda and established what it perceived to be the principal problem that required attention; it wanted to reduce CSSA benefits by 11.1%. The invitation to the public to comment was not because the government was uncertain of its preferred policy direction but rather because it had to gauge whether the political effects of the reduction might potentially spill beyond the confines of the particular issue to a wholesale indictment of an unpopular regime. Over the next few weeks, the debate intensified. On 11 November, the Director of Social Welfare met with the Legislative Council Panel on Welfare Services, some invited individuals and representatives of ten pressure groups and the Hong Kong Council of Social Service to discuss the CSSA issue.42 She stressed that the administration had not yet come to a view on whether the CSSA should be adjusted downwards by 11.1% although she explained how that figure had been calculated. The pressure groups and many legislators were, as might be expected, mainly opposed to any reduction. In her concluding remarks, the Director sought to address some of their concerns. She emphasised that the effects of deflation on wages and the CSSA benefits had been calculated in a methodical manner, that the government had always drawn a distinction between the able-bodied who could work and those who could not, and that the reduction was not about the budget deficit and saving money but about distributing benefits more equitably.43 A few days after the meeting, Christine Fang, the Director of the Hong Kong Council of Social Service, a government-funded statutory body that acts on behalf of subvented welfare organisations, challenged many of the government’s central assumptions.44 She noted that almost 80% of CSSA recipients were elderly, disabled or infirm or single parent families, few of whom had chances of finding work, and that the unemployed had been unfairly maligned. People who lost their jobs did not immediately turn to the Social Welfare Department; only 14.3% of the unemployed received CSSA benefits.45 She also cast doubt on the central plank of the government’s argument that CSSA benefits were too high, claiming instead that wages were too low and would be pushed lower if the CSSA was cut. In place of reduced benefits, Fang suggested that there was a need for a comprehensive review of the CSSA system and that reductions in benefits should not be treated simply as a budget deficit issue.

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The Democratic Party and the major unions, who regarded CSSA recipients as their constituents, were also highly critical of the proposed course of action. The government, however, remained steadfast. The changes, which reduced the standard rate allowances for the able-bodied by 11.1% from June 2003 and the benefits for the elderly, disabled, and infirm by the same amount in two phases, starting in October 2003, were approved by the Executive Council in February 2003.46 The day following the announcement, a motion without legislative effect was introduced into the Legislative Council opposing the “cutbacks in welfare benefits for the elderly, the vulnerable and the disabled.”47 There were some differences between the parties on the proposed measures. The Democratic Party argued that it was wrong in principle to cut benefits again when they had already been cut following the 1998 review.48 The DAB, while supporting the adjustment downwards, argued that it should not apply to the elderly and the disabled.49 The Liberal Party, which supported the provision of CSSA benefits for the elderly and the disabled although not for the unemployed, favoured the course of action proposed by the government.50 Frontier was opposed to the cuts on the moral ground that they would detrimentally affect the quality of lives of the recipients.51 The government remained unmoved. The Secretary for Health, Welfare and Food noted that the measures should not be regarded as welfare cuts but rather an effort “to return rates to their original intended buying power so as to ensure the financial sustainability of our social security system.”52 The motion condemning the cutbacks was passed without dissent and 90 pressure groups later demonstrated against the government’s action.53 But the planned reductions went ahead and were given legislative effect with the passage of the budget in April 2003. The reduction in CSSA rates stands as an example of successful policy formulation and implementation in difficult times. Why did the government succeed in this instance when it failed in so many others? Each of the characteristics of rational policy-making, identified earlier in interviews with senior officials, was present in the process. First, the government controlled the agenda and focused its energies on a specific change. The Director of Social Welfare did not allow herself to be deflected into other conceptions of the problem or even to enter the political fray to debate them. She defended the proposal with an array of statistics and with such vigour that she became known, to her annoyance, as the “figures lady.” “Figures,” she said, ‘have helped me to convince others when implementing some policies. We could not solve problems with emotions alone.”54 The proposal was carefully explained, placed in the context of the government’s overall welfare policy, and always defended in terms of the greater equity that would ensue from a re-distribution of benefits to new, deserving applicants. It was not only presented as a logical and rational course of action; it was presented as the only logical and rational course of action. A second characteristic of rational policy-making identified in the interviews with senior officials was flexibility. The government made its views known on its preferred proposal from a very early stage. It did not, however, finally commit itself to a course of action until the final inclusion of the reductions in the budget. Even in the motion debate in February 2003, the Secretary for Health, Welfare and Food still spoke of the

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reductions as a proposal. Flexibility also meant listening to the proposals from interested individuals and pressure groups although the government made few concessions. It delayed the cuts to non-able-bodied recipients to October 2003 and October 2004, a similar strategy to that employed over civil service pay reductions. But there were no other substantive concessions to any particular group of CSSA recipients. Finally, the Director of Social Welfare was careful to keep her distance from the political process. She did meet with pressure groups and representatives of the political parties but she did not bargain with them. Rather, she saw her role as listening to their proposals and arguments, perhaps with a view to developing contingency plans should they have proven necessary. In the event, the reductions to the CSSA came when the government was considering implementing Article 23 and when SARS was becoming a serious problem and these developments soon took centre stage. The success of the government’s proposals was also aided by the division within the parties and pressure groups. In comparison with the range of other options available, the government’s proposal had the advantage of clarity, political appeal to the values of hard work and to the development of programmes returning recipients to gainful employment, sensitivity to equity and future requirements of the welfare system, and a continuing emphasis on the traditional virtue of fiscal frugality.

Politics and Policy-Making after 1997

Although rational policy-making has persisted in the post-handover system, particularly in areas less controversial than reductions to welfare benefits, it is better suited to systems where policy-makers can remain aloof from the politics of the process and retain control of the agenda. In the post-handover system, with the difficulties inherent in the institutional framework and the increased politicisation of the policy process, a new mode of making policy, rather closer to the conditions underlying Kingdon’s “three streams” approach, began to emerge. In the following sections, we examine the characteristics of the approach and compare it, using the example of the government’s attempt to merge universities, with the rational approach.

The Post-1997 Policy Agenda

What values does the post-1997 government seek to realise through policy? And how do these differ from those that it inherited? In his first policy address in October 1997, the Chief Executive stressed many of the values that we have already identified: government was to be even more proactive in meeting the needs of the business community; the new political system would promote political stability; government would look after the interests of the population by making policy in many different areas; law and order would be maintained; and the administration would continue to deliver policy outputs efficiently, effectively and economically.55 Aside from stressing that Hong Kong was now part of China, the 1997 policy address might have been delivered by a British Governor.

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Within a few years, the tone had changed. In his re-election speech, Tung claimed that the government had successfully taken a different direction since the handover although he conceded that some of the policy initiatives might have been handled differently.56 There was more stress on the need for economic re-structuring, of enhancing relations with China and of re-vamping the structure of government.57 The problem was that the administration faced an economic crisis virtually from the moment it assumed office and this placed many of the traditional regime values to which the political executive subscribed under threat. Thus, for example, the Chief Executive, most members of the Executive Council and many members of the Legislative Council were in favour of more de-regulation and small government. But the economic crises led to calls for more government intervention and help in times of hardship. There were signs that the government itself was not adverse to intervention under some circumstances.58 But this left the basis on which policy was to be made somewhat ad hoc and without the more consistent regime value parameters that had characterised the colonial government. Similar problems arose with establishing values authoritatively on the agenda. Because the government was under challenge from many different quarters and lacked support from the public, it found the process of introducing policy changes much more difficult than it had anticipated. Alternative policies were being canvassed in the legislature and often enjoyed the support of the voting public. One former legislator, Christine Loh, for example, through the think tank, Civic Exchange, produced an annual alternative policy address which picked up many of the issues that democrats wanted to see on the agenda.59 The disarticulated political system of post-1997 Hong Kong enabled such values not only to be expressed but also to gain support and to act as an impediment to the realisation of the government’s own goals.60 The government was not entirely in control of its own agenda.

The Institutional Framework

The institutional framework inherited by the new political executive after 1997 was deficient in a number of important respects. The Basic Law did not specify sufficiently how institutions would co-ordinate policy. Rather, it was assumed that they would co-operate. In the event, there was considerable friction between them. Under Tung, the executive was not unified and there were major differences in approach and values between the business and professional appointees on the Executive Council and senior civil servants. The businessmen wanted change within the civil service which would improve efficiencies and reduce costs and they saw the civil service as an obstruction to rapid change. They wanted new policies that would aid business, including government initiatives with the private sector, and more cost-effective delivery of social policy outputs. Senior civil servants may not have been directly opposed to those aims but they wanted policy to continue to be driven by the civil service with careful attention to rationality, costs and strategies for implementation. This resulted in a struggle on some issues between Executive Council members and senior civil servants over policy- making style with the Councillors favouring new, sometimes uncosted, ideas, and the civil servants preferring to rely on well-established procedures.

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One of the consequences of a disarticulated system is that power is diffused rather than centralised. As Kingdon remarks, under such circumstances, policy ideas may come from anywhere but may still have some prospect of reaching the agenda.61 Whereas under colonialism, the senior civil service held a monopoly over which proposals would succeed and which would fail, in post-1997 Hong Kong, ideas could be picked up from any one of a number of sources: pressure groups, political parties, the Legislative Council, the political executive or the Chinese government. The prospects for their formulation into tangible policies could be increased by endorsement from either the civil service or the political executive where they might then follow either one of two routes. The first would see the proposal move through the civil service and eventually be presented for public discussion with the agreement of the political executive. Alternatively, policy might be generated from the top down by the political executive. The latter route appeared to become more prevalent after the introduction of the Principal Officials Accountability System in July 2002. The problem was that top-down policy announcements tended to unravel in the process of turning them into a concrete set of proposals for implementation. The disarticulated system meant that institutions were poorly co-ordinated and did not work together to formulate coherent policy. After Donald Tsang became Chief Executive, there was some attempt to improve policy co-ordination by defining lines of command and lateral communication more precisely. But while the government began to act more as a team than it had done under Tung, its policy capacity did not greatly increase. The problem lay at the interface between government and civil society. The government’s proposals were generally better thought through under Tsang, and it remained highly competent and efficient in administering existing policies, but gaining public acceptance for new policies remained as difficult as ever.62

Consultation and Participation after 1997

The post-1997 government did not initially believe that it faced the same constraints as the transitional colonial administration and it soon sought to address some of the policy issues that had been swept under the carpet. Its problem, as gradually became apparent, was that it did not have a mandate. In a disarticulated system, groups could claim that their policies were more sensible than, and just as authoritative as, those of the government. In education, for example, the government was faced with a shifting coalition of opposition, depending on the issues at stake. On benchmarking the curriculum, the school-based management system and mother tongue teaching, the Professional Teachers Union, individual teachers, churches, parents and even students were in conflict with some aspects of government policy.63 Moreover, because the government’s policy intentions were less ambivalently stated than during the transitional period, there was an opportunity for pressure groups to make their case to the general public rather than agree to a government-engineered consensus. The situation was further exacerbated by the tension between the government and the Legislative Council, particularly immediately after the handover when Councillors felt that they were not

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being adequately informed by the government. The Council became a sounding board for those who had policy positions opposed to the government. Other pressure groups took to the streets to articulate their demands. The government did not attempt to ram its policies through without consultation. The formal aspects of the consultation process remained in place. The green papers of colonial days were replaced by consultation documents on many different aspects of government policy. These included, for example, the decision to abolish the Urban and Regional Councils, the decision to introduce anti-subversion and anti-secession legislation under Article 23, matters relating to executive and advisory bodies in education, the development of traditional Chinese medicine, the goods and services tax and healthcare financing.64 Despite its commitment to the formal consultative process, the Tung administration was also prone to making announcements from the top which arrived on the agenda without prior consultation or notice. In the decision to provide 85,000 flats a year, which was later abandoned, in its educational policies, in the decision to create a cyberport and to provide government funding for the construction of a Disneyland, in the bid for the Asian games, and in the announcement of proposals to merge the Chinese University, the Hong Kong University of Science and Technology and the Hong Kong Institute of Education, the government simply laid out its proposals and ultimately bore the wrath of a highly critical public.65 In a remarkable mea culpa in 2005, Tung admitted the shortcomings of this approach. He said: In formulating policies, we fell short of “thinking what the people think” and “addressing people’s needs”...we were not sufficiently mindful of the impact of some policies on the community... and the potentially controversial nature of those policies. We introduced too many reform measures too hastily... We also lacked a sense of crisis, political sensitivity as well the necessary experience and capability to cope with political and economic changes. We were indecisive when dealing with emergencies. These shortcomings and inadequacies have undermined the credibility of our policy-making capability and our ability to govern.66

After Tsang assumed office, there were efforts to establish more consultative institutions at the centre, in particular, the Commission on Strategic Development, which had existed under Tung but was now expanded and charged with “making policy formulation more scientific and transparent,” and the Commission on Poverty which was “to make policy recommendations to prevent and alleviate poverty and promote self-reliance.”67 Neither body achieved the aim of producing solutions to problems that could be implemented as policy.68 Rather, they tended to reflect the conflicting values of representatives selected from different parts of the political spectrum. What perhaps offers more hope of resolving the impasse in making policy is civic engagement with those directly affected by new proposals. To date, the government does not appear to have a consistent approach on civic engagement. On some issues, it consults widely and interacts with stakeholders; on others, there appears to be very little consultation. Research suggests, however, that the more the government talks to relevant groups, the more likely it is to arrive at a satisfactory conclusion.69 Civic engagement seems to

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work to the extent that it brings public attention to the issues and involves some actors in the process although there are still problems of trust and government domination of the agenda.70 The difficulties in bringing new policies into effect are shown in Table 8.1. In all but one of the cases listed, opposition to government policy has either delayed or prevented the introduction of the policy. The exceptional case of the implementation of soccer betting suggests that policy acceptance is sometimes more a matter of fortuna than of rational calculation. Had the DAB not split on the issue, the Legislative Council would have rejected the government’s proposal. Another example, which also illustrates Kingdon’s theories, is the introduction of legislation to ban smoking in public places. In 2001, in difficult economic conditions and opposition from the catering industry, the government did not proceed with the legislation. Four years later, in a time of greater prosperity, virtually the same proposal was approved by the Legislative Council.71 In Kingdon’s terms, there had been no coupling of the problem, politics and policy streams in 2001; by 2005, there was a window of opportunity through which the policy could be introduced. In the case of small class teaching, the government initially approached the issue in a rational manner and employed a consultant to examine the effects of small class teaching in a pilot study. He found that small class teaching had little relationship to improved learning except for the mentally disabled.72 The government, under pressure from legislators and teachers, decided nonetheless that it would proceed with the proposal. In two other cases — the Independent Police Complaints Council Ordinance and the Race Discrimination Ordinance – there was fierce criticism of the government’s proposals and the bills were probably only passed because legislators felt they would make some improvements to the existing situation, even if fundamental issues had been ignored. In each of these instances, policy was being made in a highly politicised context which created the conditions in which no government proposal is authoritative and may subsequently be abandoned, delayed or implemented with considerable modifications.

Policy Failures and Policy Fiascos

A policy failure refers to “performance defects of any size or seriousness which may or may not be politicised” whereas a policy fiasco refers to situations where there is “subjectively significant social damage” and that are “highly politicized.”73 Governments usually seek to minimise the damage from policy failures so that they do not turn into policy fiascos. This has been difficult in Hong Kong since 1997, partly because the political system is not able to contain demands or to reduce adverse criticism in the ways that were used by its colonial predecessor. How do we explain these failures which turned into fiascos? As we have seen, a critical factor has been the rise of civil society organisations and their importance in ensuring the success, or otherwise, of a policy proposal. There are always alternative policies waiting in the wings or, to put it another way, government policy proposals are not regarded as authoritative. Why they are not regarded as authoritative may relate in part to the style in which they are presented although it may also be a function of a

ch.08(p.175-200).indd 194 11/4/09 4:19:56 PM Table 8.1 Selected Policy Issues: Problems of Process and Implementation Start Date Issue Process Implementation 1980s Healthcare financing Many commissions, Not yet proposals, no resolution implemented 1990 Constitutional reform Continuing political Not yet debate implemented 1992 Small class teaching Experimentation, Not yet fully political promises implemented 1996 Independent Police Legislation was Implemented but Complaints Council eventually passed some critics remain in July 2008 dissatisfied 1999 West Kowloon Cultural Long delays, complaints Still pending District project over lack of public consultation, tender procedures and design 2002 General Goods and The government Not implemented Services tax withdrew its proposal after consultation showed strong opposition 2002 Harbour reclamation Passed the Legislative Only partially Council but court cases implemented and continuing opposition from environmental groups 2003 Legislating Article 23 Massive opposition. Not implemented of the Basic Law Street demonstration of 500,000 people 2003 Soccer betting 118 groups opposed Implemented but only because DAB split on the issue 2004 Amendments to Bogged down in Approved but domestic violence Legislative Council continuing debate legislation committees but over how it should amendments to the be implemented. Domestic Violence Ordinance were eventually enacted in June 2008 2004 Race discrimination Legislation passed Implemented but seemingly exempting many critics remain government from its dissatisfied provisions 2005 Competition policy Business opposition Still pending Sources: This table has been constructed from a wide range of primary sources, many of which may be found at www.legco.gov.hk/database/english/full.htm.

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disarticulated system where it is quite likely that legislators or political parties or civil society organisations will have alternative agendas. This can be contrasted with the style of policy-making under colonialism where the process was closed and controlled and where policy statements, once made, were regarded as definitive. This older style of policy-making persists when issues are not controversial. Where the political executive is not directly involved or where it chooses to follow a less public course of action and where public suspicions have not been aroused, it is still possible to make policies that proceed in more orderly fashion through the stages that we have identified. The problem for the government is that almost all issues are at least potentially controversial. The dynamics of the post-handover period have made the process much less rational, much more difficult to bring new policies on line, much more determined by immediate political considerations, and much more likely to fail at the implementation stage. In the following case study, we examine some of the weaknesses of policy-making under conditions where a rational, controlled approach was not followed, where policy directives were issued from the top, where there were entrenched stakeholders who were not consulted, and where the characteristics of rational policy-making — precise identification of the problem, flexibility in seeking a solution, and distance from the political process — were either not observed or not possible.

Policy-Making in a Disarticulated System

In the interviews with senior officials, the point was frequently made that the policy process had become more “political”. Most of the examples provided were either of uncosted policy proposals emanating from the Executive Council or from its decision to treat a problem in an entirely different way from that intended by the civil service. The Legislative Council was also seen as a body which had considerable influence over policy although usually, from the standpoint of the respondents, in a negative way. Pressure groups were regarded as important to the success of the implementation process and in some, but not all, bureaus and departments they were part of a regular, institutionalised consultative forum. With the introduction of the Principal Officials Accountability System in July 2002, top-down pressures on the civil service intensified. One of the intentions of the new system was to increase co-ordination in policy formulation and to make implementation more effective.74 This was a response to the policy failures of the previous period and may have been taken as an implicit criticism of the way that the civil service was making policy. Directors of Bureaus were supposed to be transformational innovators who would resolve the problems that were afflicting their policy areas. This type of top-down policy might be characterised as “ideational” in the sense that it seeks to bring about change rapidly without too much concern for the details of implementation or for the possibility of alternative courses of action; it is based on what seems to be “a good idea” at the time. In Chapter 9, we consider several examples of “good ideas” that failed at the implementation stage. In the following case study, we consider a “good idea” that did not survive the policy formulation stage and examine the reasons for its failure.

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Merging the Universities

In 2002, Hong Kong had eight government-funded degree-granting tertiary institutions. When the budgetary deficit became an issue, there were those who believed that eight institutions was a luxury for a population of 6.8 million and that substantial savings could be achieved by rationalisation. By that stage, the universities were jealous protectors of their own autonomy. They were, moreover, somewhat insulated from sudden changes in government policies by the University Grants Committee (UGC), a statutory body which funded universities on a triennial basis, delaying the impact of financial cutbacks. In October 2002, the Secretary of Education and Manpower, Professor Arthur Li, who had previously been Vice-Chancellor of the Chinese University of Hong Kong (CUHK), announced that CUHK, the Hong Kong University of Science and Technology (HKUST) and the Hong Kong Institute of Education would merge.75 There was some confusion about the announcement. It came during a press conference in which the Secretary appeared to be testing the water for some new ideas in higher education. But the announcement was not followed by a regular press release. There was no official statement on the merger and there were few details available on how the Secretary intended the merger to proceed. It was also unclear to what extent senior civil servants in the Education and Manpower Bureau and the UGC had been consulted. What was clear was that the Secretary was not basing his ideas for a merger on the savings to be derived from economic rationalisation. He promised that there would be no redundancies after the merger and based his case for amalgamation on the more nebulous goal of creating a “world-class” university.76 The undefined goal of a “world-class” university raised questions about the status of specific institutions and about the future of other universities in the SAR. There had been only limited prior consultation with the Vice-Chancellors about the proposal and none at all with the President of the Institute of Education or with the staff or students of the two universities. Li described himself as only a “matchmaker” but he was also reported to have said that if “universities refuse the merger and ignore the entire well being of Hong Kong, the government would take action …” and that the government would force the merger through even if staff and students were opposed to it.77 Apart from the political consequences of the decision, the Secretary’s action appeared to encroach upon the role of the UGC which had responsibility for tertiary institutions and which subsequently set up its own working party to examine the question of institutional integration. There had been some discussion of the need for Hong Kong’s universities to aspire to international excellence in a report commissioned by the University Grants Committee (UGC), the Sutherland Report, where the notion of a “world-class university” was described as “an elusive and…resource intensive flower.”78 The issue of whether Hong Kong should have a world-class university — and indeed what a world-class university was — soon became intertwined with the radical changes to Hong Kong higher education proposed in the Sutherland Report which was adopted, with some additions, by the UGC and the government. These changes included, inter alia, role and mission

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differentiation, a review of sub-degree programmes and de-linking university salaries from civil service salaries, apparently because this was seen as a hindrance to recruiting staff with world-class reputations from overseas.79 On 28 October, when the Legislative Council Panel on Education wanted to question the Secretary on his merger proposal, he was abroad and the discussion was postponed. The Panel soon turned its attention to the very substantive issues raised by the UGC proposals.80 In its brief to the Legislative Council on its proposals, the UGC did not support a merger although it did note that the proposed changes to the higher education system might aid such a development and that the Chinese University and the University of Science and Technology had set up committees to investigate the possibility.81 In the interim, opposition to the merger had grown. Reaction to the Secretary’s comments in the universities was predictable. Staff and students at both universities organised against the proposal and received wide support. A few days after the announcement, a campaign at HKUST had already collected 250 signatures from staff; of 649 students polled in all tertiary institutions, 65% were opposed to the merger.82 In November, 1,707 of 2,000 HKUST students voted against the change.83 In December, the Chairman of the HKUST Council announced that the university would not pursue talks on the merger unless the government clarified a number of key issues.84 In the following year, although there were signs that there was some support for the proposal at the Chinese University, both staff and students at the HKUST and at the Institute of Education continued to oppose it. In December 2003, in what looked to be another policy reversal, Tung said that he did not think that eight tertiary institutions were too many.85 In January 2004, the UGC produced another policy paper on higher education which carried forward its notion of role differentiation. Each of the degree-granting institutions was to have a defined role to which they were expected to remain “faithful” and Hong Kong was to play a role as an “educational regional hub.”86 There was no mention of “world-class universities” but the UGC’s Working Party on Institutional Integration put the final nail in the proposal when it found that “while a merger between CUHK and HKUST might become viable at some point in the future, it should not be further explored for the present.”87 In retrospect, it is not difficult to understand why the proposal failed. What is more interesting, perhaps, is to compare the way in which it was handled with the way in which the Director of Social Welfare presented her case for the reduction in CSSA benefits. With the merger proposal, the problem which the amalgamation of the universities and the Institute was seeking to address was never very well identified. Even if a merger had created a world-class university, it was not clear what particular benefits would ensue for Hong Kong. There was also an alternative agenda. The UGC, backed by the authority of the Sutherland Report, had proposals which would define the role of the tertiary institutions more precisely and which would save the government money. Its proposals were much closer to the government’s thinking and did not involve the potentially expensive re-structuring which would have resulted from the merger. And although the UGC’s proposals might equally cause unrest in the universities, they did not come with the immediate political costs which the Secretary’s proposal had already

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provoked. With the CSSA reductions, although there were real political costs in terms of support for the government, there were also savings from reducing benefits which could be used to provide for the expected increasing number of future CSSA applicants. The proposals to merge the universities, by contrast, had the potential for many different kinds of unintended consequences. In terms of flexibility, although the Social Welfare Department’s position on the CSSA reductions was well known, the government’s final commitment to that position was delayed until the last possible minute. On the merger proposal, the Secretary made a strong commitment to amalgamation and then appeared to put the entire weight of government behind his proposal. He was perceived to be threatening to implement the proposal in the face of considerable opposition rather than listening to opponents and presenting cogent reasons for his stance. The consequence was that there was little room for manoeuvre. The merger proposal was reduced to a zero sum game; either implementation went ahead or it did not. No other options for merged departments or cost-sharing without full amalgamation were explored. As the South China Morning Post editorialised, “however strong the case for merging some institutions may be, Professor Li’s top-down approach is not conducive to a rational discussion of its pros and cons.”88 In the case of the CSSA reductions, the Director of Social Welfare maintained her distance from the politics of the process. She listened to the views of political parties and pressure groups but declined to bargain with them. Unmoved to make major concessions, she was thus able to retain authority to make the final decision while claiming to have been consultative and open to persuasion. The Secretary of Education and Manpower, too, maintained his distance from the politics of the process. But, unlike the Director of Social Welfare, who made sure that the government’s position was well argued in the press and before the relevant committees, the Secretary did not have strong institutional support for his proposal. He was unable to argue his case before the Legislative Council Panel on Education and no papers on the merger appear to have gone to the Executive Council. He did not present his own case in the media but rather relied on it to report his views which it did extensively but not always, apparently, with accuracy.89 Distance from the political process is important to preserve the authority of the decision. However, for the decision to have authority, institutional support for the policy stance needs to be in place. Despite the Secretary’s strong position on amalgamation, there was never clear institutional support from other parts of government or from the Legislative Council or other policy actors. The UGC eventually emerged with an alternative agenda. The authoritative nature of a decision depends in part on the surety that it will be implemented. Much of the difficulties of policy implementation in the post-handover period derive from the lack of authority behind the decision. In the case of the CSSA reductions, the authority existed because the principal actors knew that the government could attain its ends by simple budgetary provisions; in the case of the merger, those responsible for implementing the proposal were beyond the reach of government and, in many cases, were opposed to the proposal.

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It is perhaps helpful to think of the policy process in Hong Kong as a continuum. In its initial form, the state dominated the formulation and implementation of policy with little reference to the society or those affected by its actions; policy itself was action taken in support of maintaining stability and colonial rule and it was made rationally with those interests in mind. In the reformed colonial system, the state continued to control the policy agenda although some attempt was made to incorporate community interests. Policy continued to be made rationally but the focus shifted from regulatory policies to distributive policies and, in the latter years of colonial rule, was sometimes more symbolic than substantive. “Stability and prosperity” remained the government’s mantra although other values had become more important. In the mixed policy-making system of the immediate post-1997 period, rational policy-making co-existed with ex cathedra pronouncements on policy from the political executive, a government with low policy capacity, a volatile political environment, and a disarticulated system which had the effect of compressing issues of values, formulation and implementation into a single event rather than a series of distinct stages. The government became less confrontational in its approach under Tsang but many of the fundamental political problems remained. Rational policy-making is based on the assumption that the political process can be controlled and that appropriate, cost-effective solutions can be developed to resolve problems. It is predicated on the insulation of policy-makers from partisan values which may deflect them from arriving at economically rational decisions. The post-1997 system does not insulate policy-makers from political pressures. It is much more diverse and pluralistic. While power is formally centralised, it is in reality diffuse. Successful policy-making consequently depends on a window of opportunity, a fortunate political conjunction of perceived problems with appropriate solutions. The prospect for failure in such circumstances is much greater than in a controlled political system not only at the formulation stage but also when policies have to be implemented in what is frequently a hostile environment.

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n the previous two chapters, our attention was primarily focused on problems associated with budgeting and with policy formulation. Traditional policy-making modelsI tend to assume that, if financial resources are available, if policy is properly formulated, and if appropriate organisations are in place to achieve the intended objectives, the actual process of implementation should be unproblematic.1 In practice, this assumption is clearly not tenable. Many problems may prevent the realisation of policy objectives: communication between the policy-makers and implementers may be inadequate, objectives may be imprecisely stated, the means chosen to implement the policy may be inappropriate or those affected by the policy may respond in ways which had not been anticipated by its initiators. Indeed, because there are so many different variables involved, some believe that perfect implementation is practically impossible.2 Policy-makers, in consequence, cannot afford to assume that their work is finished immediately after their proposals receive official endorsement. If they wish to see their policy objectives actually achieved, they have to manage the process to its desired conclusion. In this chapter, we look more closely at policy implementation: what means the government uses to achieve its ends, to what degree it consults or coerces to ensure that its goals are realised and how the results are evaluated both by the government and those affected by its actions. A critical variable affecting policy implementation in Hong Kong has been the changing political context. Although there are still significant continuities in the means of implementing and evaluating policies, the style of policy implementation has changed considerably over time, often in response to political pressures. Prior to 1984, the assumption on which government based much of its policy-making was that of the traditional policy model: if the policy was properly formulated and properly costed, and if it took into account real concerns and problems, then authoritative direction from the government and efficient implementation by the civil service would ensure that goals were achieved. In the decade or so before 1997, policy was implemented more cautiously because the regime could not afford major policy confrontations with the public when it was already embroiled in political and constitutional controversies over the future of the territory. In the post-1997 period, implementation has become very

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problematic, partly because the government under Tung was initially more aggressive in its efforts to implement policies, partly because the constitutional arrangements did not allow for an adequate aggregation of demands or feedback on proposed government actions, and partly because many of the “good ideas” did not come with a strategy of implementation and were sometimes uncosted and not clearly related to other policies. In addition, there has been concerted opposition to some policy measures not only from established pressure groups but also from previously unknown organisations that emerge in response to an issue. The government cannot always easily anticipate the force or nature of the objections with which it will have to deal. In this chapter, we consider three aspects of the process of policy implementation: • policy instruments, defined here as the methods and techniques which governments use to achieve their policy objectives; • strategies of implementation, which examines the major approaches of the colonial, transitional and post-1997 regimes to implementation; and • evaluation, the way in which the Hong Kong government and the public assess its policy performance.

Policy Instruments

Policy instruments may be classified in many different and complex ways which reflect the wide range of methods that governments use to achieve their objectives.3 The macro- level typology adopted here is a simple model derived from Etzioni’s division of power into coercive, remunerative and normative types. Coercive power involves the use or threat of force. Remunerative power implies the ability to control and distribute material resources and rewards. And normative power, which might also be called persuasive or manipulative or suggestive power, “rests on the allocation and manipulation of symbolic rewards.”4 Following Vedung, we may develop this further into a three-fold classification of policy instruments as regulations, economic means and information which correspond to the kinds of power identified by Etzioni. Vedung goes on to note that these might be called the stick, the carrot and the sermon, that is, the government may either force us, pay us or have us pay, or persuade us.5 To illustrate these categories in the Hong Kong context, we can take some specific examples, each of which has a prescriptive (positive) element and a proscriptive (negative) element. Regulations (or the stick) may be used to encourage particular kinds of behaviour; in this sense, they are prescriptive. Codes of conduct for civil servants, for example, are designed to encourage appropriate behaviour but they do not usually have an explicit sanction attached to them. Regulations may also be used to prohibit certain kinds of behaviour with penalties, such as fines or jail sentences, for those committing the offence; in that sense, they are proscriptive. It is an offence, for example, under the Prevention of Bribery Ordinance to offer a bribe to a public official in Hong Kong. Even where regulations are used in a punitive way, there is very often a moral component to the intended outcome. Littering, for example, is an offence punishable by a fine. The

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policy objective is clearly to change public behaviour in the interests of achieving a cleaner and more pleasant Hong Kong. The economic policy instruments likewise may have positive and negative aspects. The positive aspects (the carrot) often relate to programmes which the government wishes to see introduced or expanded but which it does not have the capability to provide. Examples are subsidising higher education places or the provision of specific programmes in technology or in professional fields where there is a shortage of trained manpower. The negative aspect of economic policy instruments is that the government has to collect taxes to fund its programmes. This involves an element of coercion since it is a crime not to pay taxes but it may also implicitly sanction certain types of behaviour. For example, taxes on cigarettes and on companies that pollute the environment are clearly designed to send the message that both are hazardous to health. The final type of policy instrument, the provision of information or the sermon, is the effort that all governments make to persuade their people to act in certain ways, objectives which may also be achieved through the use of regulation or economic policy instruments. With the sermon, the public information campaign is the government’s principal means of achieving its objective. The paternalism of the Hong Kong colonial government in the 1970s, when it was engaged in extensive community-building, laid the basis for the sermon to become a regular part of public life. Periodic publicity campaigns covering many different subjects usually contain sermons which include positive (encouragement) elements and negative (warning) aspects. The Leisure and Cultural Services Department and the Department of Health, for example, run an annual “Healthy Exercise for All Campaign” which encourages people to exercise regularly and provides facilities for them to do so. The campaign stresses the health benefits of regular exercise and warns implicitly of health problems if you do not do so.6 Warnings are sometimes more explicit. The government has also launched annual campaigns against dengue fever, a disease transmitted by mosquitoes. It advises people that they should ensure that there is no stagnant water in their surroundings but it also prosecutes individuals and companies when stagnant water is found on their premises.7 There are three messages that the government is attempting to convey: we have a problem about which we are concerned; if you do not take heed of our instructions, you could well contract the disease; and, if you do not take heed of our instructions, we may prosecute you. Macro-level policy instruments are often used in combination to address a particular problem. In November 2002, the Hong Kong government announced that it intended to legalise soccer betting.8 The problem, as the government saw it, was that illegal and unregulated betting on soccer matches was already prevalent. It wanted to control the problem by granting a licence to the Jockey Club to administer a system of legal betting on matches. Penalties would continue to apply to anyone betting outside this government-created monopoly (regulation). The tax on betting also had benefits for the Treasury’s depleted coffers which, it was expected, would stand to gain approximately $1 billion per year in revenue from the tax (economic policy instrument). Finally, the government sought to assuage the fears of the pressure groups that had come together as

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The Greater Coalition to Oppose Legalisation of Soccer Betting. A fund was launched to help problem gamblers and new initiatives were to be introduced to provide more public education and to warn teenagers of the dangers of gambling (information and a sermon).9 The three types of policy instruments often come together because the government is trying to address a number of separate issues and to reach a compromise that will satisfy the public. It may need to regulate both present undesirable or illegal activities and to provide possible alternatives and some guidance on future behaviour. There are also likely to be fiscal implications at some stage of policy implementation and this, too, must be considered in the form of additional and specific taxes or as subsidies to promote what the government believes to be desirable outcomes. The choice of policy instruments is based on the way that the government uses power to achieve its objectives. But we may wish to go beyond this to ask questions about the specific instruments employed to implement policy. When does the government rely on its own resources and personnel to achieve its goals? When does it rely on partnerships with subvented bodies or the private sector to deliver goods and services? When would it rely on the private sector alone to do the work for it? The answers to these questions are important because, if governments make mistakes and choose the wrong instrument for achieving policy objectives or delivering goods and services, the results can be costly failures. Considering these questions in turn, we might say that the government has traditionally chosen to rely on its own resources in limited areas that might be identified with core government: management of the economy, law and order, constitutional affairs, justice, water supplies and domestic regulation (maintenance of standards of hygiene, hawker control, the issue of licences and registration of births, death, marriages and companies). Increasingly, however, government has found itself drawn into the social policy fields of health, housing, education and social welfare, not only as a purchaser of services, as it would probably have preferred, but also as provider of those services. Housing, education and social welfare, for example, are all public/private partnerships but with varying degrees of involvement of the government. In housing, the government has itself provided public housing although there has been a friction-laden relationship with private developers over the amount of housing that should be supplied. In social welfare, government has relied on subvented bodies which, although notionally independent, can nonetheless be controlled through funding and other arrangements. In education, the government has become involved in provision although it also subsidises private schools. In health, the government has a major commitment, with the Hospital Authority, to provide healthcare for a majority of the population. These relationships point to a public/private or a public/subvented partnership that vary in the different social policy fields and can change in character quite rapidly, as the 2002 decision to bring housing policy more directly under the control of the government’s Housing Bureau showed. Finally, we might look at the government’s relationship with private companies. The major private companies presently involved in the provision of services are the transport companies but utilities, such as gas and electricity, also provide services under schemes of control.

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There are many structural forms available to the government when it brings into effect a new policy or seeks to implement a major decision. The critical question is whether it wants to implement the policy itself or find another provider, a statutory body or a private company. Most decisions of this kind are made on precedent, that is, whether there is a successful analogous relationship, either within government or with the rest of the public sector or with the private sector. One criterion that became important under Tung is the government’s claim that it should consider whether the private sector could be involved in implementation. The government sees itself as “business-friendly” and officially maintains that the private sector has an important role to play in implementation.10 This has had the effect of expanding relationships with the private sector although recent adverse experiences may have dampened its enthusiasm for those kinds of public/private partnerships.

Implementation Strategies

Once the government has chosen its policy instrument, there is the question of the degree to which it will become involved in managing the programme to completion. If the project is taken over by a statutory body or a private company the decision is taken out of its hands and evaluation will tend to take place only after results have been achieved. Within government, the ways in which departments might proceed to implement the same programme could differ greatly in terms of the administrative values which the strategy seeks to maximise, the level of attention paid to implementation once the policy has been formulated, the extent to which instructions are clearly communicated, the level of co-ordination between different government departments, the degree of communication and consultation with affected parties, and the extent to which outcomes are regarded as sufficiently important to use the coercive powers of the state to ensure that implementation is as close as possible to the intentions of the policy-makers. With each of these variables, there is the possibility that failure to attend to the issues involved could lead to faulty implementation. In any political system, policy is implemented in a variety of different ways. There is no one single formula that applies across the board although there is often a dominant style of policy implementation, usually determined by the nature of the political system or by the objectives that the regime seeks to achieve. The variety of styles of policy implementation is the result of two factors. First, appropriate methods must be adopted to ensure success. Implementing a social policy, for example, requires rather different structures and political skills than implementing infrastructural or security policies. Second, departments build up historical knowledge about the best ways to deal with policy problems. Even if the dominant style of policy implementation calls for policy to be implemented in a new way, traditional reliance on structures and methods that have produced results in the past is an important consideration. Routine policies that have been established over many years usually continue to be implemented incrementally. Any attempts to change them will normally require evidence that they are not working and a readiness to make considerable political and administrative investment to change the system.

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We can identify five systems of policy implementation that are currently in place (see Table 9.1). Each system has been dominant, or partially dominant, at various times in the past and has survived even though the prevalent style of policy implementation has changed. We consider each of these in turn.

Table 9.1 Typology of Policy Implementation Styles

1. Top-down. Hierarchical and centralised structures with focused but limited policy-making capabilities. Orders are transmitted vertically from the top of the organisational pyramid and are expected to be implemented without question by those at the base of the pyramid. There is often only limited communication or consultation with those affected by the decision or policy. 2. Rational. Policy is formulated within a civil service structure, which maintains its autonomy and distance from politics by co-opting elites. More attention is given to planning, co-ordination and cost-benefit analysis than in a dominant top-down system but organisational difficulties remain. Communication and consultation are limited to elites at both central and local levels. Implementation takes place by stages with progress evaluated on completion of each stage. Some top-down systems remain in place. Routine policies, which the government believes to be satisfactory, continue to be implemented with only incremental changes. 3. Symbolic. Policy implementation procedures are similar to the rational mode but less use is made of the coercive power of the state to ensure implementation. More extensive consultation is carried out with concerned groups although much of it does not substantively affect outcomes. The government is less concerned with meeting objectives than with avoiding friction with pressure groups and parties. Rational procedures remain in place, as do some top-down systems. Routine policies, which the government believes to be satisfactory, continue to be implemented with only incremental changes. 4. Disarticulated. The civil service attempts to implement policies rationally with attention to planning, co-ordination, estimations of costs and the value of public investment. However, unchannelled and disparate political demands increase as the policy-making system itself becomes more porous. Demands from the political executive, pressure groups, political parties and the Legislative Council require bargaining both to get policies accepted and to try to implement them. Implementation becomes more difficult because of post facto resistance from grass-roots pressure groups. Policy failures attributed to the civil service reduce its authority and autonomy although top-down systems continue to function and routine policies continue to be implemented with only incremental changes. 5. Ideational. The political executive is strengthened in an attempt to resolve existing policy difficulties with radical new ideas. The civil service is circumvented as the political executive looks to providers outside the system to implement its ideas. No strategy of implementation is developed but there is an expectation that those affected will work together in good faith to implement the new proposals. In many other areas, however, policy implementation is still carried out by government departments following more traditional modes of operation. Under Tsang, more control is exerted over Principal Officials who have less scope to act autonomously.

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Top-down

Law and order has always been a primary concern of the Hong Kong government. The Police Force, the largest department, originally had a quasi-military structure and has continued to be organised as a well-defined hierarchy. Other departments, too, developed strong line capabilities and tended to implement policies without much regard for co- ordination with other departments.11 Co-ordination rested with the senior officials in the Secretariat. They did exercise that power on occasions, particularly when financial issues were involved, but the autonomy of the larger departments also meant some duplication of functions. Both the Police and the Customs Departments, for example, were given responsibility for implementing the anti-drug policy.12 Both had powers of arrest but they tended to act so autonomously that, as anecdote has it, they sometimes arrested the officers of their fellow department. Top-down implementation often results in a sub-optimised perspective. It maximises one value — the strength of the focused, vertical organisation — at the expense of another value, co-ordination between parts of the civil service in pursuit of common goals. Top-down implementation need not be associated with incrementalism but when a government has limited functions, as it did for most of the colonial period, successful policies tend to become entrenched and are subject to only minor modifications. The two major exceptions to the rule — the development of a public housing programme and the expansion of the government provision of primary education — serve as indications of what it took to break the top- down incremental mode. In the case of the public housing programme, a major event, the Shek Kip Mei fire of December 1953, presented the government with a reason to act although the issue had been simmering for some time.13 Both the government and business elites wanted the squatters off the land so that it could be re-developed for commercial purposes. This conjunction of events, coupled with fires and health dangers in squatter areas, created a policy window for the public housing programme. The policy represented a radical departure from existing practice but, once established, the virtues of top-down implementation again became apparent. Public housing blocks were very quickly erected and land clearance was achieved with comparatively little resistance. In the case of the expansion of the government provision of primary education from 1955 onwards, the change of policy, from private to greater public provision, was sold as a campaign against communism.14 Implementation of the policy was not quite as successful as the public housing programme and initially fell short of its targets. The probable reason was that the implementation of a social policy of this kind was difficult for a government which did not place great value on either co-ordination or the role of professionals in delivering services in public organisations. Although the original character of the Hong Kong government has now been very considerably modified, it should not be assumed that top-down implementation has entirely disappeared. The six disciplinary services retain hierarchical structures in which orders are expected to be obeyed and whose functions mean that a top-down strategy may still be the most appropriate. Programme management in the Police Force, for

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example, has been described as “a top-down approach because the strategic directions are set at the force level by the Commissioner of Police and his two deputies.”15 The culture of the force, despite efforts to move away from the paramilitary nature of the colonial force towards more community policing and a more “bottom-up” approach, remains attuned to top-down implementation.16 Other disciplined services would appear to have experienced similar difficulties in moving to less authoritarian structures. In the Customs and Excise Department, for example, human resource management reforms were implemented in top-down fashion whereas the theory of the changes implied wide organisational consultation.17 Top-down implementation has been modified in most departments by the sharing of responsibility for policy commitments with other departments and organisations in related fields. Policy objectives frequently involve more than one bureau or department and implementation must necessarily involve inter-departmental co-ordination and consultation. The advantages of co-ordination and consultation are that they bring different strengths to resolving problems and to achieving objectives. The disadvantages are that they are more time-consuming because different values are represented in the process which tends to slow down implementation. It is, of course, possible that top- down implementation could occur even with co-ordination and consultation between departments. However, it is less likely to occur if hierarchical lines of authority are disrupted by the need for lateral interaction with other departments which may have different implementation styles. Within the Hong Kong civil service, there is still a residual culture that sees top-down implementation by the department alone as the appropriate way to achieve policy goals. This was reinforced by the introduction of the Principal Officials Accountability System which initially resulted in more autonomous, less co-ordinated departments. Subsequently, however, a greater emphasis on co- ordination and civic engagement appears to have slowed down both the process of policy formulation and of implementation.

Rational

Under colonialism, because of the nature of the political system, there was time and space for policy-makers to consider whether or not to take action and to debate appropriate solutions to problems. The approach was rational and policy-making was undertaken in stages. In the classical traditions of rational policy formulation, this tended to lead to the assumption that, since policy had been so well considered, implementation would follow automatically. This was reinforced by the epistemocratic nature of authority, which attributed superior knowledge and vision to policy-makers, and by autonomous departments with strong hierarchies accustomed to achieving their goals. The government was also usually disinclined to admit that its policies might be misconceived and civil society was as yet insufficiently developed to call it to account. The expansion of social policy programmes in the 1970s clearly implied changes in government structure. It was not possible to implement those programmes successfully with the traditional colonial structure because they required more co-ordination, more

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planning and some feedback from those who were the beneficiaries of the new policies. The McKinsey reforms were aimed at putting such a framework in place. Yet, although the consultants stressed the need for greater co-ordination and planning, they did not make any major recommendations in those areas. Consultative mechanisms, too, remained more a matter of form than of substance. McKinsey’s principal recommendation, to separate the policy-making functions in the branches (later bureaus) from implementation by the departments, still permitted departments to continue to achieve their policy goals using the old, top-down methods. In the New Territories, for example, the building of the new towns was accomplished on schedule in classical top-down style in the face of the very considerable difficulties of clearing land and re-locating squatters. There was a co-ordinating committee under the District Officer, which facilitated the process of physical construction, but little attention was paid to the social needs of the new inhabitants.18 The result was that at first there were far fewer tenants to take up the new housing blocks than had been expected. As the official in charge of the New Territories observed, it had been “too readily assumed that once the buildings were up the job was done … management — not only of the housing estates but of the whole town — is of as great importance in improving the quality of life.”19 There were warning signs in other areas that a top-down strategy of implementation could not be maintained indefinitely. Within the government, the labour disputes with the civil service associations and with teachers in the mid and late 1970s showed that groups were becoming more organised and more militant. In 1978, the Education Department’s decision to close the Precious Blood Secondary School, in the wake of a financial scandal and demonstrations by students, showed some public support for the more progressive syllabus that the school had been offering.20 The quantity of social policy outputs was becoming less important than the quality of those outputs. Although gradually more progress was made towards achieving greater co-ordination and planning within government, the difficulty remained that too little attention continued to be paid to the strategy of implementation. Two incidents in the implementation of transport policy illustrate the deficiencies in the process. In January 1984, the Secretary for Transport announced a 15% increase in first registration tax for taxis and an increase in annual licence fees from $4,600 to $13,400. Taxi fares would also be increased as some compensation for the new charges. Taxi drivers throughout the territory almost immediately organised a go-slow protest which had the effect of bringing all traffic to a standstill. In Mongkok, crowds began to assemble and eventually began looting shops. Thirty people were injured, 25 buses were damaged and 130 people, mostly under the age of 21, were arrested.21 When the Legislative Council re-convened, the bill to increase first registration tax and licence fees was thrown out with the official members of the Council abstaining.22 The taxi issue can be seen as a problem of lack of consultation with those directly affected by the policy. The government, however, defended its implementation strategy. The Secretary for Transport claimed that the Transport Department had held discussions with the taxi operators23 and that he had no discretion to consult with taxi drivers’ associations because Public Revenue Protection Orders, which was the form in which

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the first registration tax and the licence fees were introduced, had to be made before the bill was presented to the legislature.24 Even so, the swingeing increases in charges suggest a serious political miscalculation that might have been avoided if there had been better communication with the taxi operators. The assumption, on which much of the rational policy-making was based — that the government had the means to implement policy and that it would not be opposed by affected groups — was now clearly shown to be incorrect. A second incident involving the implementation of transport policy showed conclusively that the government could no longer expect that its rationally formulated policies would necessarily receive public support. Electronic road pricing was seen as a means to reduce traffic congestion in busy areas. The aim was to record the licence plates of vehicles entering the designated zones at peak hours and to present their owners with a monthly bill.25 Unlike the proposed increase in registration and licence fees for taxis, there was much wider consultation on the plan to introduce electronic road pricing. The Department put its case in the media and explained the scheme to the District Boards. This produced four major objections: that the technology had not been tested anywhere else in the world; that the billing system was an infringement of privacy; that the government was simply trying to raise money rather than improving the traffic situation; and that the cost of the project was too expensive. The government backed down in the face of the criticism. The issue of electronic road pricing showed that not only groups directly affected by a decision but that groups from across society could be mobilised against a policy proposal and could effectively prevent its implementation. The government learned its lessons from the failure to implement the two transport policy proposals. It learned, particularly, that it was dangerous to be committed too soon to policy goals and that it needed to give itself more flexibility and options to reach its objectives. Policy implementation became more of a winding road and rather less of a direct linear progression from the determination of a policy objective to its attainment. The government needed to cover its back if opposition to a proposal emerged and then to determine what cost it was willing to pay to achieve its aim. That is not to say that the government was unable to use the power of the state if it thought the goals were worth realising; rather, it sought to reserve its strengths for other issues: constitutional battles, crises of confidence that periodically afflicted the territory and the difficult issues arising from the transition to Chinese sovereignty. Policy could continue to be formulated rationally but there was less stress in many areas, particularly on social policy matters, on the importance of actually implementing it. The rhetoric of policy, the affirmation of values arrived at consensually, often became more significant than whether or not a new measure was actually being implemented properly.

Symbolic

In its post-1984 manifestation, symbolic policy implementation can be seen in three forms: in the avoidance of conflict over new social policy initiatives; in the slower pace of

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implementation of controversial policies; and in the creation of new organisations which had the purpose of allaying the fears of the population about the future. Social policy initiatives became more problematic, not only because of the changing political situation, but also because, by the 1980s, the government had so successfully expanded the housing supply, the number of school places, and healthcare and social welfare provision that demands were increasingly for qualitative rather than quantitative improvements or for the maintenance of existing benefits under threat. Public housing tenants resisted rent increases;26 there were concerns that the government might move from near-universal provision of medical services to “user pays”;27 and there was dissatisfaction among professionals, pressure groups and some parents about the state of the education system.28 In terms of its administrative capacity, the government was less able to respond to these social policy concerns than it was to meeting its traditional commitment to build infrastructure, housing estates, and schools and hospitals efficiently and economically. Its approach became more cautious and it tried to establish, through more extensive consultation, that its values were indeed widely shared and that they would not generate conflicts that could potentially jeopardise political stability. The first form of symbolic implementation — that of avoiding conflict — is particularly evident in attempts to implement new education policies. In the charged political atmosphere following the signing of the Sino-British Agreement, the government clearly felt that it could not afford more confrontations of the kind that had arisen with the Professional Teachers Union and with the closure of the Precious Blood Jubilee School. Its new strategy was to lay down a policy, often bolstered by the recommendations of an external consultant or experience in other countries, and affirm values that corresponded with demands for more quality education or more efficient school administration. In the 1980s and 1990s, many of these new initiatives — civic education, the target-oriented curriculum, the school-based management system, small class teaching, and the bridging programme to enable children to move from Chinese to English language instruction, for example — were intended to show that government was committed to improving the quality of education.29 Undoubtedly, the government would have liked to implement these measures as quickly and as fully as possible. Unfortunately, from its perspective, the stakeholders were a kaleidoscope of shifting coalitions, changing with the content of the issues put before them. So it was quite possible that an issue that won the support of parents, school principals and education interest groups would be less enthusiastically endorsed by teachers and the union, or vice-versa, or that some other coalition would emerge to counter the new initiative. At the critical point of implementation, the government often did not insist that its policy should be fully enacted because it feared some form of disruption that might prove politically embarrassing. New measures were half-implemented or not implemented at all.30 The consequence was that teachers, in particular, became somewhat cynical about reforms that “kept everybody busy but amount[ed] to little real change.”31 Despite the frustration of some senior Education Department administrators who sincerely wanted to see improvements, the result was that the government was buying short-term political support at the longer-term expense of an improved education system.

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A second form of implementation concerned policies which the government wanted to see introduced but which took much longer to bring into effect than initially had been assumed. Three examples may illustrate the process under such circumstances. In the first case, civil service reform, the government’s approach was essentially symbolic. The other two cases, the establishment of the Hospital Authority and the construction of a new airport, are counter-illustrations of what happened when the government really wanted to see its policies implemented. In both cases, delay and bargaining with affected groups characterised the process. In each of these examples, the nexus of the issue was the extent to which government was willing to continue with the implementation of the policy even as political opposition increased. In the 1990s, the government fully implemented some civil service reform proposals which were unlikely to be opposed, such as performance pledges and improving customer service, and which it hoped would win plaudits from the public. In other areas of personnel reform, such as new conditions of service for government employees, the changes could conceivably have affected the stability of the civil service and made the transition even more difficult than it already was. In consequence, the government contented itself with affirming the need for reform but undertaking little by way of bringing relevant measures into effect. The new conditions of service proposed in 1993, other than those affecting overseas officers on contract, were not finally implemented until 1999. In the case of the Hospital Authority, four years elapsed between the recommendation of the consultants to establish the Authority and the actual creation of the organisation. There was no doubt that the government wanted to see the Authority established both as a means of cutting costs and as a way of deflecting complaints about healthcare. But there were voices opposed to the manner in which the government wanted to set up the new body. At stake were the conditions under which civil servants would transfer from the government to the Hospital Authority, the organisational form it would assume and its accountability to the public. Eventually, the government conceded generously on most of the points raised by its critics.32 The extent of political dissent meant that the government could no longer simply decree that new organisational forms or policies would take shape in exactly the way that had been assumed at the policy formulation stage. In the third case, the construction of the airport at Chep Lap Kok, the government very much wanted to see implementation of the project on time and according to plan. The new airport seems to have been originally conceived of as an infrastructural development of the type that the government had so successfully undertaken in creating the housing and transit systems. After the Tiananmen Square massacre, the government also attempted to sell it to the public as a symbol of confidence in the future. But it had underestimated the Chinese government’s concern that the costs of the project would fall on the future Special Administrative Region and, for some time, there was significant disagreement over whether or not the airport would be built. The Hong Kong government was adamant that the airport would go ahead and went so far as deciding to construct the Tsing Ma bridge, a vital part of the project, without the approval of the

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Chinese government. Eventually, differences between the governments were resolved and a memorandum of understanding between the Chinese and British governments was signed in June 1991.33 These three cases illustrate different aspects of the difficulties the Hong Kong government faced over implementation in the transitional period. In the case of civil service reform, the government could afford to act in the manner that it had adopted in its failed efforts to implement the new education initiatives. The matter was not pressing, values could be stated as indications of future directions, and implementation could be postponed. In the other two cases, the government could not act symbolically because it had a real need to see the Hospital Authority in place and the airport built. In these cases, concessions were made to those opposing its goals so that the policy could be implemented. During the transitional period, the government was in effect faced with a choice between symbolic implementation and bargaining with affected groups to achieve its most important objectives.

Disarticulated

With the difficulties of the transitional period behind it and ringing endorsement from the British and Chinese government for its performance, it might have been supposed that the post-1997 civil service would have reverted to previous practices of rational decision- making where critical decisions were taken in-house after some formal consultation. Senior civil servants wanted to reduce the level of bargaining over policies that had characterised the last years of the colonial government and hoped for a return to a proper “executive-led government” under the provisions of the Basic Law. Legislative Councillors soon complained that they were not being consulted sufficiently on new bills, that the executive was intent on pushing policies through without adequate time for reflection, and that it was acting in a high-handed manner.34 The intention may have been to make policy rationally but politics could no longer always be contained or absorbed within the administrative machine. The post-1997 political order was disarticulated. It became difficult to aggregate demands and to gauge possible public responses to policy initiatives. Pressure groups were often able to create major problems in implementation. The consequence was a sense of frustration on the part of senior government officials and the growing feeling among the population that the government was out of touch. The new government certainly placed greater emphasis on the realisation of its goals than its predecessor. It was anxious to establish its credibility and to show that it had the capacity to deal with the backlog of policy problems. But it proved no more able to implement policy than the transitional government; in some respects, it was far less successful. Moreover, when it failed to deliver, there was a more noticeable gap between what it promised and what it achieved. The colonial government had generally re-affirmed its commitments to policies during the transitional period even if they had not always been implemented. The post-1997 government was rather quicker to discard unsuccessful policies and rather more ready to assign blame for failures. There was a view among some senior political figures that the civil service was largely liable for the

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policy failures or, at the very least, that it could be held culpable for not implementing policy more efficiently. This created considerable tension within the government, partly because the claims were not entirely justified and partly because many senior civil servants took the view that the constitutional role of the political executive was to accept ultimate responsibility for policy. There are significant differences between policy implementation in the transitional period and after 1997 but there are also areas in which it continued much as in the past. There are three policy environments in which similarities and differences in implementation can be observed. These are: implementation under conditions of crisis; the implementation of established policies; and attempts to implement new initiatives or to turn symbolic policies into substantive ones. We consider each of these areas in turn.

a. Policy implementation under conditions of crisis The Hong Kong government has a mixed record in dealing with crises. The structure of the government was originally designed to deal with threats to political stability and crises were essentially defined in those terms. Many instances suggest that the government had some difficulty in dealing with events which did not fit neatly into an incremental mould and that there was a lack of contingency planning and policy-making capacity when unexpected events required innovative or rapid responses. In 2005, Tung Chee-hwa, criticising the performance of his own administration, said that “we were indecisive in dealing with emergencies.”35 In April 1997, a three-year old boy died of what was initially diagnosed as a powerful strain of an influenza virus.36 The government immediately set up a task force to investigate the disease. Three further cases of the disease were diagnosed in November and two of the patients subsequently died. It was also discovered patients could infect medical staff. By December, there was considerable public anxiety over the possible spread of the disease. When more victims were identified, public pressure on the government to take action became acute. The disease had proved to be fatal and there was no known cure. The government’s solution was radical. It announced that the entire 1.2 million live chicken population would be slaughtered in less than 36 hours. The task proved far beyond its capabilities; only 260,000 chickens were killed on the first day.37 A fundamental problem was that the chickens were to be gassed but the operators were not experienced in the procedures. Chickens “rose from the dead” and the exercise took much longer than had been anticipated. When the chickens were finally killed, there were further problems with the disposal of the carcasses, some of which were found rotting in the New Territories. The government was widely criticised for not responding more quickly to the crisis. Legislators and medical practitioners claimed that not enough had been done to diagnose the disease and the media was scathing in its criticism of the government’s handling of the matter. Yet, in fairness, the disease was a new one. The government did set up a working party to study the problem but was less certain of its role when public anxiety began to rise. The chicken slaughter also assumed a capacity that the government did

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not have. The organisational cause of the failure probably lay in poor co-ordination between departments, a legacy of strong top-down structures which looked after their own jurisdictions competently but did not always co-operate well with others. More widely, the issue illustrated the continuing weakness of the government in handling crises. The Hong Kong government’s strength lies in implementing routine matters where policies have long been decided. When crises arise which have essentially new features, such as the avian flu issue, the government did not appear to have the ability to adapt quickly to the new situation. Many of the same kinds of criticism were levelled at the government for its handling of the SARS crisis. The three investigations on whether the SARS outbreak could have been better handled — by an Expert Panel, by the Hospital Authority Review Panel and by the Select Committee of the Legislative Council — raised issues that called the government’s performance into question.38 Although the focus of the three reports was slightly different, each of them dealt with matters which affected the government’s ability to transmit and process information, its contingency planning and the co-ordination and delineation of responsibilities between the relevant bureaus, departments and statutory bodies. Each of these elements is critical to successful policy implementation. When a crisis has to be dealt with immediately, they become even more important because there is usually insufficient time to develop better communications, contingency plans and improved co-ordination. Processing and transmitting relevant information is an essential part of the identification and resolution of policy problems. Nothing was known about SARS until it was discovered in Guangdong at the end of 2002. The Chinese authorities investigated the situation and produced a report on the disease in January 2003 but the findings were not made known to the Hong Kong government and it was not apparently until 11 February 2003 that China notified the World Health Organisation of the outbreak.39 The slow reaction of the authorities to the crisis was noted in the investigative reports, which all called for improved communication between the Chinese and Hong Kong governments on health matters. It was recognised, however, that the absence of information on the disease was a mitigating factor. As the Expert Panel put it: Overall the epidemic in Hong Kong was handled well although there were clearly shortcomings of system performance during the early days of the epidemic when little was known about the disease or its cause.40

On 12 March, the WHO issued a global alert.41 There was some criticism in the reports of the failure of the Director of Health to add SARS to the list of notifiable diseases until 27 March and of the Secretary for Health, Welfare and Food for failing to instruct her to do so.42 The Select Committee of the Legislative Council thought that the Director’s performance was “not satisfactory” and criticised the Secretary for being insufficiently alert and for failing to communicate clearly with the public.43 Once the extent of the problem was known, however, the transmission of information to the public was generally good although there were suggestions that the government might have appointed a single person to liaise with the media rather than to speak with several, and occasionally conflicting, voices.44

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All the reports focused on the inadequacy of contingency planning. The Expert Panel called for an outbreak control plan in which individual responsibilities would be clearly identified and both the Hospital Authority Review Panel and the Select Committee were critical of the absence of an adequate plan. The Select Committee took the view that the Chairman of the Hospital Authority had been partially to blame because he had failed to call a board meeting in the period between 27 March and 26 April at the height of the outbreak and had not used the opportunity to increase community support and to canvass ideas on how to combat the epidemic.45 The Hospital Authority reacted to the recommendations of the Review Panel by claiming that it had put many contingency planning measures in place after the epidemic had abated. But there was little disguising the fact that the Hospital Authority’s response to the crisis was not well focused and involved considerable organisational confusion. The related issue of co-ordination between the government and the Hospital Authority received a good deal of critical attention in all three reports. The Hospital Authority Review Panel went so far as to describe the situation as one in which there was an “absence of a clear chain of command” and “no central decision-making body”, remarks which attracted the ire of the Secretary for Health, Welfare and Food.46 There were problems in the relationship between the Bureau, the Department of Health and the Hospital Authority. The Bureau’s initial response was to allow the Hospital Authority to solve the problem. As the crisis worsened, the Secretary, and eventually the Chief Executive, began to play more active roles but there remained “a lack of common understanding” and inadequate communication between the Department of Health and the Authority.47 These problems may be endemic to the relationship between the government and the statutory bodies but they intensified during the crisis and impeded a co-ordinated response. The picture that the reports present on the handling of the SARS epidemic is one of organisational confusion caused partly by the absence of information on the disease, the lack of a contingency plan and poor communication and co-ordination. Eventually, the magnitude of the problem and the effect which it had on the community and the economy was such that the government was able to mobilise sufficient resources to deal with the crisis effectively. But the time which it took to do so raises the question of why those difficulties occurred in the first place. There is something of the colonial legacy in the absence of a contingency plan: the colonial government was never very enthusiastic about planning, preferring an ad hoc approach. In addition, as Michael DeGolyer has suggested, the problem may also have been the administrative system itself with over-worked officials, lines of authority and responsibility that had become blurred, and decision-making that had become more personalised.48

b. Implementation of established policies

In many policy areas, there was continuity in implementation in the post-1997 period. Where policies had been routinely implemented successfully over time, there was no particular need or pressure to introduce new ways of achieving policy goals; only in

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sensitive areas where symbolic policies had been the norm in the transitional period was there seen to be a need for change. With established policies, the nature of the implementation process is illustrated most clearly when the policy fails. We consider here two examples. The first, a public housing construction scandal, was a failure of implementation in what had long been an area of successful achievement. The second, the opening of the new airport, was a fresh venture, but one which drew on the considerable experience of the public sector in building infrastructure. In mid-1999, the Housing Department discovered problems with the piling on some public housing construction sites. Further monitoring showed that two partly completed blocks in Shatin had piles that were so short, and represented such a danger to safety, that the blocks had to be demolished, causing a loss of $258 million.49 The Housing Authority then appointed an independent investigation panel to establish the facts of the case, identify areas of responsibility and negligence, and to recommend whether disciplinary action should be taken.50 Before the panel could report, the ICAC had charged eight people, including three civil servants, with corruption and the contractor had been banned from tendering for future public housing projects. The investigation panel reported in May 2000 and made a number of specific recommendations for future improvements in the management of contracts and identified problems in the culture of the Housing Department. Significantly, it attributed blame largely to middle level officials in the Housing Department rather than to senior management. The Chair of the Housing Authority did resign shortly before the Legislative Council debate but the Director of Housing did not, even after the Council passed a vote of no confidence.51 The investigation panel’s report on the housing construction scandal also discovered conventional problems in the implementation process that had little to do with post- 1997 political circumstances. It found a culture within the Housing Department that could explain the poor supervision of contracts and the opportunity for corruption. Five weaknesses were identified: formalism and routine performance were treated as more important than substantive achievement, staff focused on their own responsibilities and missed the wider picture, the staff who were responsible for construction quality spent too much time at their desks, promotion was based on long service rather than good performance and the usual reaction to a problem was to add a new instruction.52 These shortcomings had clearly been part of the organisational culture of the Housing Department for some time. They do not represent significant differences in the style of implementation from the colonial period. The opening of the airport was somewhat different because there was more at stake than in the housing scandal. When the airport opened in July 1998, the failure of the cargo-handling and baggage systems and the flight information display system resulted in delays and other inconveniences for passengers, considerable economic damage, especially of perishable goods, and a significant loss of “face” for the government, which had seen the new airport as a prestige project.53 Strictly speaking, it was a statutory body, the Airport Authority, which was accountable for the problems. But the Chief Secretary, Anson Chan, accepted that a measure of blame lay with the government. She herself had headed the Airport Development Steering Committee which oversaw the implementation

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of the project. No less than three investigations, one appointed by the government, one by the ombudsman, and one by a select committee of the Legislative Council, were launched to discover the source of the problems.54 Each of the reports found that the airport had been opened before all systems had been properly tested. They did not give credence to the view that the airport had been opened prematurely because of a visit from the Chinese leader, Jiang Zemin. The Legislative Council’s report criticised the Chief Secretary for her judgement in allowing the airport to be opened too early and for neglecting or ignoring advice not to do so.55 But the Commission of Inquiry appointed by the government appeared to clear her of responsibility for the problems that had arisen and attributed blame instead to officials within the Airport Authority.56 In the end, the Chief Executive found that there was no evidence of misconduct and issued an apology on behalf of the government for the chaotic opening and the problems that it had caused. In terms of implementation, the difficulties lay in the organisational relationships between the government and the statutory bodies within a framework in which there were unresolved problems of control and accountability. There were new dimensions to the relationship resulting from a greater emphasis on private sector practices in the post-1997 period. But the difficulties could well have been experienced elsewhere or in earlier times and were not unique to the post-colonial period. They appear instead to have been the basic problems associated with many kinds of failed policy implementation: inadequate supervision, insufficient monitoring and testing and poor communication between the Airport Authority and the government. If these examples simply illustrate conventional problems, there are probably many other policy areas in which implementation proceeds much as it has done in the past. If the policy is not controversial, and has been well established and supported over time, the routine, incremental resolution of problems should resolve most implementation difficulties. Only where dramatic failures occur, such as in public housing and airport scandals, should critical attention be drawn to the shortcomings in the process. The difficulty for the Hong Kong government is that increasing numbers of previously uncontroversial policies and decisions have become issues of friction between government and the public.

c. New initiatives and the implementation of symbolic policies

The post-1997 government was committed to policies which were designed to win support and provide performance legitimacy much along the lines of the MacLehose administration in the 1970s. In substance, the policies were not greatly different from those which the colonial regime had used to bolster its position: more housing, better education, and more health and welfare services. But they proved more difficult to implement not only because of economic problems but also because civil society organisations were not always convinced that the government’s approach was correct and did not co-operate fully in seeing its goals realised. During the Tung administration, new initiatives were usually endorsed by a majority of the legislature or issued as a

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government decree and then encountered difficulties in implementation. During the Tsang administration, the government was more inclined to withdraw its proposals in the formulation stage rather than to risk confrontation over implementation. The Tung administration’ confrontational style was particularly evident in education where it eventually ended up not only in conflict with the stakeholders — school principals, teachers, and parents — but also with one of the major providers, the Catholic Church. The process, which was also applicable in other policy areas, has been characterised as involving a process that started with the identification of a “problem”, proceeded with the government attempting to gather public support with strong criticism of some practice, became officially endorsed in a policy statement (for example, an Education Commission Report) which identified the broad intentions of the government, and was finally translated into specific action.57 With the symbolic policy-making of the transitional period, the final stage was sometimes not fully implemented because it was evident that it would result in friction that the government was seeking to avoid. In the post-1997 period, attempts to implement government proposals frequently produced such intense conflict with affected groups that policies had to be substantially modified or abandoned to take objections into account. The government’s post-1997 education policy consisted of measures which were likely to provoke friction with parents, principals, teachers and unions. These included: curriculum reform, benchmarking the qualifications of teachers, reforming the primary one admission system, reforming the secondary schools allocation mechanism, reforming the university admission system, re-designating schools as “mother language” teaching schools and improving public examinations.58 Conflict between the government and teachers arose over the government’s decision to assess their language proficiency, over attempts to merge the subjects of History and Chinese History and over redundancies of lecturers resulting from upgrading teacher education.59 The decision to reduce the number of English language schools provoked widespread criticism from teachers, parents and pupils and eventually led to the government modifying its original proposal and reducing the number of schools that were required to change to Chinese language teaching.60 The result in some cases was that policy had to be remade after it was supposed to have been implemented, a waste of both time and resources. This suggests that there was something wrong with the nature of the consultation process or the way the political system worked or that the government had insufficient support to implement policy authoritatively. The difficulty that the government faced was that objections to its proposals often arose after the formal period of consultation had taken place. The reclamation of Yung Shue Harbour illustrates the kinds of problems faced by the Tung administration. In 2001, the Planning Department held two public meetings with local residents to discuss the proposal. The officials were apparently sufficiently satisfied with the results of the meetings that they went ahead with more detailed planning. When the schedule for completion was officially announced, however, opposition to the project quickly coalesced. A group called “Save Lamma” was formed which organised surveys, petitions and letters to government departments and successfully attracted media attention to

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the issue.61 Faced with organised and articulate opposition to its plans, the government suspended reclamation and eventually produced another plan which with funding and other delays would take five years to implement.62 There are a number of interesting aspects to the “Save Lamma” campaign. First, if, as the group subsequently showed, it was in tune with the political process and was well able to express its views, why was the government not aware of those views at an earlier stage? It is possible that government’s consultation in this case was largely token. As a study of public housing policy at the time suggests, “the consultation process … appears to operate primarily to provide a degree of legitimacy for the Hong Kong government’s policy decisions [and] its impact on policy itself is very limited.”63 The government did revise its consultative methods and subsequently met with a number of interested groups, including “Save Lamma”, to discuss planning policy for shorelines throughout Hong Kong.64 Second, the “Save Lamma” campaign suggests that political parties were unable to play a mediating role between government and the society. Because the political system was designed to keep political parties weak, they could not aggregate demands or present views to government which represented an authoritative position. Rather, they often tended to be reactive, seeking to ascertain what public opinion was and then reflecting it in their policies and actions. The “Save Lamma” campaign did receive party support but it was the pressure group itself that made the running and which brought the views of Lamma residents directly to the attention of government. There are other instances of pressure group behaviour which suggest that the medium of language instruction issue, other contentious educational issues, and the Lamma reclamation dispute are not isolated cases. In October 2002, for example, the government announced plans to introduce more facilities for tourists near the Po Lin monastery on Lantao Island. The monks took exception to the proposals and threatened to close the monastery. The government was again forced to back down and re-negotiate a settlement after a policy decision had been publicly declared.65 Another example suggests a similar sort of disarticulation in policy implementation. Towards the end of 2002, the government took the seemingly innocuous decision to protect some statutes and trees from New Year revellers by covering them in plastic. The decision was attacked by a group called Education Convergence which argued that the government should address itself to the moral education of youth rather than spending money on plastic protection for trees and statutes. Others weighed in with complaints about the litter left after the celebrations, sparking a debate on anti-litter policy. The problem for the government has been that relatively minor issues can spill over into more major confrontations because institutional channels are unable to contain and resolve those issues at their source. In 2003, in a reprise of the “Save Lamma” issue on a larger scale, plans to reclaim parts of the harbour for a bypass project were challenged by an environmental pressure group, the Society for the Protection of the Harbour, which took the government to court.66 In September 2003, the group, which had opposed plans to reclaim the harbour for many years, was granted leave to apply for judicial review. It used the opportunity to rally support for its cause, holding protests which attracted several thousand demonstrators and launching a signature campaign against the reclamation.67 Legislative

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Councillors who had earlier supported the government’s plans began to re-consider their positions. The government itself suspended reclamation operations shortly before the judicial hearing but claimed that if the action was successful it would cost taxpayers $600 million and 1,500 job losses.68 The interim judgement went in favour of the government but it decided only to resume limited operations on the reclamation pending a final decision.69 In March 2004, the High Court found that the Chief Executive in Council was exercising his powers under the Town Planning Ordinance lawfully and reasonably and that the reclamation could therefore proceed.70 The government took note of the strength of public feeling and announced that, aside from two projects which were deemed to be of “overriding public need”, there would be no more harbour reclamations.71 Tsang could not initially afford to adopt the confrontational strategy with civil society organisations which, until 2003, had characterised the government’s approach. When he was re-elected in 2007, the strategy continued to be based on accommodation rather than on the enforcement of its proposals. In 2008, for example, in his policy address, Tsang announced that the old age pension would be raised to $1000 per month but that it would be means-tested.72 This resulted in many protests from legislators and pressure groups and a 60% negative response rate to a government survey.73 Within ten days the means test was dropped. The government’s cautious approach to its dealings with civil society was also evident in its stance on the collapse of Lehman Brothers which left an estimated 43,700 investors with losses of $15.7 billion.74 The victims, with the help of political parties and professional advice, were soon very well organised. Their claim was that the banks had sold high risk financial products as safe investments. They wanted the government to ensure that the banks complied with their demands for compensation for their losses. The government was very reluctant to become involved, largely because of the precedent that might be set, but also because it was conscious that it would be unlikely to come up with any kind of solution that would satisfy angry investors, the banks, or its own formal commitment to non-intervention in the economy. Such are the problems of policy-making under circumstances where the government finds it difficult to act authoritatively and where it may often be involved in gridlock. If the Hong Kong government was less centralised, it is possible that some issues, such as the Lamma island reclamation, might be dealt with by local councils with appropriate powers. But for most policy issues there is no such filter. Issues come straight to the government which then loses credibility because it cannot find appropriate solutions. It is hamstrung by many different factors. First, civil society organisations are themselves divided on the sorts of policy responses that they wish to see from the government. Second, the government’s consultative mechanisms do not always seem reliable enough to provide an indication of the strength of opposition. And since potential groups opposed to a policy cannot be determined in advance, it becomes very difficult to work out an appropriate strategy of consultation. Third, although civil society organisations are usually well-organised and well-informed and have the ear of the media, they are often reactive to official proposals rather than proactive in presenting their own suggestions to government. Some organisations see themselves as part of a permanent opposition.

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In Hong Kong, as in most countries, pressure groups bring their policy demands to the government. Some of those groups, such as business and professional groups, have traditionally been well-entrenched in the formulation process and other social groups have gradually become increasingly involved. These new groups have the power to disrupt implementation but they are not fully incorporated into the policy process. Consequently, realising policy goals is often dependent on bargaining at the point when the policy is about to be implemented, which is costly and results in delays or even the abandonment of the policy or decision.

Ideational

By ideational, we mean the notion that good ideas can produce innovative policies which may be implemented using policy instruments other than, or in addition to, traditional government departments. This was particularly characteristic of policy-making under Tung Chee-hwa. Ideational policies and decisions had specific features: they were generally top-down, that is, formulated and promulgated by the Chief Executive or a Director of Bureau or head of an agency with relatively little input from the senior civil service; often, in consequence, they were only superficially assessed in terms of their economic potential and costs; they were usually a prestige project, designed to reap political benefits; and they were implemented by means of a public/private sector partnership or by parties outside the civil service. This could never be the sole mode of policy formulation and implementation because it implied circumventing a civil service which was still responsible for implementing the vast majority of public policies. Under Tung, however, the beleaguered political executive found ideational policy-making attractive because projects and proposals made in this way promised to cut through the impasse in implementation, because they could be seen to support the private sector and because they could potentially have won support for the regime. Such a strategy, if it can be called that, rested on some heroic assumptions. First, it assumed that innovative ideas were the preserve of the political executive and the private sector and that the impasse in implementation was largely the fault of the civil service rather than a product of government’s relationship with civil society. The appointment of Directors of Bureaus from outside the civil service was justified on the grounds that they would be transformational in ways that the senior civil servants could not. But the problem with policy implementation could not be laid solely at the door of the civil service. A reductionist explanation conveniently ignored the growing strength and dissatisfaction of civil society with the policy direction of the government. It ignored, too, the serious constraints on implementation which resulted from the executive-led constitutional arrangements of the Basic Law which made it difficult for the concerns of civil society to be aggregated into policy demands. To favour one source of policy advice at the expense of the experienced ideas coming through the civil service system or from well-informed pressure groups was to invite scepticism from those excluded from the process. Good ideas are clearly a necessary but insufficient condition for successful implementation; to achieve the goal, the process has to be managed politically to ensure that critically important stakeholders will support the policy.

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A second difficulty with ideational policy-making was that it assumed that implementation would be unproblematic and would be undertaken either through a public/private partnership or by the private sector. Examples include: the building of a high technology Cyberport, the construction of a Disneyland, the unsuccessful bid for the Asian games, the launching of Harbour Fest, a series of concerts designed to raise spirits after the SARS outbreak, and the announcement of plans to hasten economic integration with the Pearl River Delta region. Each of these projects involved government providing or substantially funding an infrastructural development with private operators running the projects after their completion. In the Harbour Fest project, the government underwrote the concerts to the tune of $100 million and eventually had to set up a panel of inquiry to find out why the project had failed so badly.75 The Director of Audit’s report on Harbour Fest not only severely criticised the manner in which the project had been implemented but also provided a series of guidelines which the government should have followed. These included: conducting a feasibility study, conducting options analysis, drawing up a formal business plan, greater transparency and accountability in the use of public money, taking effective action to monitor the project, assessing whether it can be completed in time and ensuring that performance targets of private sector partners are reliable.76 Similar fears that some of the rational features of the policy process may be missing have been expressed about some of the Pearl River Delta infrastructural projects. In each of these projects, the uncertainties of the venture demanded a more careful assessment of costs and benefits. Policy implementation may be unsuccessful for many reasons: unclear objectives, inadequate planning and costing, failure to resolve conflicting values, poor communication, and inadequate implementation structures. Implementation on the basis of “good ideas” alone is likely to suffer from most of those problems. In consequence, they have tended to be presented as “win-win” situations, highly desirable innovations which will have benefits for everyone. Opposition then builds as the inadequacies of the planning and costing are gradually revealed. Where there are “good ideas” which have immediate political costs, such as the university merger proposal, opposition may be mobilised more quickly. Whichever path is followed, the disarticulated political system makes the implementation of any new policy devised in this way very difficult. Under Tsang, and a much more civil service-friendly administration, ideational policy-making was largely abandoned. There were suspicions that it might re-emerge with the plans to build a bridge to Macau and Zhuhai and with the proposal to build a cruise terminal. But the Tsang administration has tightened up the process by attempting to ensure that that there is more likely to be a detailed assessment of costs when new projects are proposed. It also looks for consensus before it moves forward to implement specific policies, a political condition that is often very difficult or impossible to achieve. We have discussed strategies of policy implementation in terms of five major styles or modes: top-down, rational, symbolic, disarticulated and ideational. Examples of each of these modes can be found in post-1997 Hong Kong. The twin factors of the nature of the political system and the determination of the political executive to bring in new policies were the most significant features of policy implementation under Tung.

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They meant that implementation became something of a battleground between the government and civil society. Under Tsang, new policies were difficult to formulate and implement because there were implicit vetoes which were widely distributed throughout a polyarchic, disarticulated system. In addition, because the government does not have a popular mandate, gaining acceptance for top-down, authoritative decision-making is not easy. “Executive-led government” permits only weak mediating structures between the government and the civil society. Disputes cannot easily be resolved through political bargaining or the aggregation of policy demands which are usually undertaken in other countries by political parties. The consequence is that policy implementation is very often an exercise in frustration for both the government and those affected by its policies.

Evaluation

If policy is carried out according to the intentions of the policy-makers, is it necessarily a success? To compare results with goals is usually an important dimension of evaluation.77 It is not, however, the only dimension. A policy may be implemented successfully from the standpoint of the government but may still fail to meet the needs of those who are affected by it. To evaluate policy, then, we need to look at it from different perspectives. In this section, we consider three views on policy implementation in the SAR: that of the government; that of the Audit Commission, the independent body which monitors the government’s accounts and conducts “value for money” studies; and the views of the population expressed through surveys.

Government’s Assessment of its Policy Successes

An important feature of formal evaluation is reporting actual performance against the targets that have been set. The post-handover government committed itself to managing by results and subscribed to the hoary (but inaccurate) old cliché that “what gets measured gets done”. In 2002, it produced a Progress Report on Policy Objectives in which it gave itself a 96 % success rating on the 1,368 policy commitments that it had made. Of these, 631 commitments had already been implemented, a further 578 were on schedule, 100 needed adjustment and a further 59 were behind schedule.78 Many of its successful achievements, however, were of a relatively minor nature. For example, the Civil Service Bureau had committed itself to organise a “customer service excellence award”; the Water Supplies Department undertook to improve quality assurance in its attendance to bursts and leaks; and the Education and Manpower Bureau was to conduct a survey on age discrimination.79 All these initiatives were duly achieved, but they were clearly of limited significance compared with some of the policies that were not achieved, or which were under review, or where the policy objectives of the government were changed. The government is not unbiased when it undertakes assessments of its own performance. The major reporting mechanism on the extent to which the government has achieved its policy goals is the report by the Controlling Officer of the Bureau

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or Department in the annual estimates which accompany the budget. There are guidelines issued by the Financial Services and Treasury Bureau that prescribe what a Controlling Officer may or may not include in the report. They include the extent to which programmes have met their targets and operational objectives have been achieved; the effectiveness of operations; and the determination of key performance measures which best indicate the quality, economy, efficiency and effectiveness of programmes.80 In 2005, the Audit Commission undertook a comprehensive study of bureaus and departments to see whether these guidelines had been met.81 It found that only 30% of performance measures concentrated on targets while 70% were indicators which were not quantifiable.82 Further, only 11% were concerned with effectiveness with the remainder dealing with workload, service quality or efficiency.83 The Commission recommended that in future bureaus and departments should focus more on setting targets and improving performance measures.84 That is easier said than done. There are three major problems. First, in evaluating whether policy has been successfully implemented, the ultimate test is whether the intended outcome has been achieved. Thus, for example, the Commission was critical of the Education Department for failing to provide performance measures on its intended outcome which was to improve student learning and performance. But, as the Director of Education pointed out, there were major problems in doing so.85 The difficulty, common to many policies, was to develop quantitative measures for a goal which was essentially qualitative. Second, the Commission raised problems about the reliability of information on which performance measures were based. In many departments, there was no means of verifying whether the figures were accurate.86 What was being measured, contrary to managerial expectations, was not necessarily being done. Finally, simple quantification of whether a policy goal has been achieved or not tells us very little about the impact of policy on people, the importance of the policy in terms of government’s priorities, whether the goals were fully realised or whether government was simply formally reporting completion, what problems were encountered, and the extent to which residual or contingent problems needed future attention. Policy implementation is a complex business in which many of the outcomes are often unintended.

The Audit Commission

The Audit Commission has two functions. It reports each year to the Legislative Council on the accounts of the Hong Kong government (“regularity” audits) and it also conducts “value for money” studies to determine whether the government is spending money wisely and to best effect. Strictly speaking, the Direct of Audit is not entitled to “comment on policy decisions of the Executive and Legislative Councils except their effect on the public purse.”87 However, the wide range of other responsibilities that the Commission has under the Audit Ordinance and under rules agreed with the Legislative Council in February 1998 means that the distinction between when the Direct of Audit is or is not commenting on policy is very finely drawn. For example, under the rules, the Director of Audit is entitled to consider the authority upon which

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the policy objectives have been determined, whether there are satisfactory arrangements for considering alternative options in the implementation of policy, whether established policy aims have been implemented, whether there is any conflict between policy aims and objectives or between the means chosen to implement them, and whether policy aims and objectives have been translated into operational targets and measures of performance.88 In exercising these functions, the Director of Audit has little option but to provide at least implicit commentary on the success or failure of government policies and to suggest improvements in implementation. Two examples may suffice to illustrate this point. In 2002, the Audit Commission undertook an investigation of the small house grants policy in the New Territories. Since 1972, an indigenous male villager, who is over 18 years of age and descended from a resident of a recognised village in 1898, is entitled to a concessionary grant to build a small house.89 The aim of the policy was to improve social cohesion in the New Territories and to improve housing and sanitary standards. The Audit Commission produced evidence to suggest that, at least as far as efforts to improve social cohesion were concerned, the policy was not working. In 53 cases, the Commission found that villagers had sold their entitlements under the policy within five months of the removal of the restriction on alienation. The Commission also drew the attention of the Lands Department to delays in processing applications, to the absence of a list of indigenous villagers entitled to the grant and to inadequacies in the register of those who had been awarded grants.90 There was no direct criticism of the policy decision in the Commission’s report, but it did provide powerful evidence for abandoning the policy. In 2007, the Audit Commission also conducted a study on truancy in public schools, surveying head teachers and seeking to analyse the causes of truancy.91 On the basis of the survey, the Commission made recommendations for improving the existing system which included, for example, recommendations on procedures for detecting absences, follow-up procedures, identifying schools which were not complying with procedures and strengthening the Non-attendance Cases Team.92 The Secretary for Education and Manpower simply said that he generally agreed with the recommendations which in effect involved changes in policy.93 Government departments almost invariably accept the Commission’s recommendations. It is consequently a significant policy actor in programmes on which it reports. The Audit Commission also plays an invaluable role in identifying problems of inefficiency and unnecessary expenditure in public policies. In 2002, for example, one Legislative Councillor calculated that the Commission had discovered ten cases of waste in government which involved losses of $10 billion.94 In its Harbour Fest investigation in 2004, the Commission was intent on ensuring that future public/private partnerships should follow clear guidelines to ensure that public money would not be wasted.95 Yet the terms under which the Commission operates are such that it can only draw attention to problems after they have occurred or, rarely, to future inaccurate predictions. It is also restricted to comments on particular cases rather than to wider recommendations on the way that policy is formulated and implemented. It may be a thorn in the side of the administration, drawing attention to its inadequacies. But it can do nothing about the

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constraining political circumstances under which the government attempts to implement policy and which are often at the root of the problem.

Surveys

The reaction of people to the impact that government policies have upon them is a critical factor in evaluating the success of policies. The government, through the Home Affairs Bureau, previously conducted periodic surveys on the public response to policies and its levels of satisfaction with the performance of the government. In August 2003, for example, a Home Affairs Bureau opinion survey of 1,473 people found that 59% were dissatisfied or very dissatisfied with the performance of the government.96 Despite the government’s claim that it wanted to be more in touch with public opinion, no Home Affairs Bureau surveys of this kind appear to have been held since August 2003. In February 2004, however, the government did indicate that it would seek “to keep abreast of public opinion through polls, social networking, focus group discussions, analyses of views in the press and public views and attitudes revealed through opinion surveys …”97 These means may serve it better than the surveys used in the past which did not identify the sources of dissatisfaction very precisely. A private polling organisation, the Public Opinion Programme, using telephone polls of about 1000 respondents, has also found varying levels of dissatisfaction with the performance of the government over the post-handover period. At its lowest level in July 2003, 68.3% were dissatisfied with the performance of the government while only 11.4% viewed its performance as satisfactory.98 In October 2008, 22.5% thought that the government was performing well with 49% neutral and 27.9% believing that it was performing poorly.99 Dissatisfaction may clearly vary according to particular issues and may also need to be distinguished from unsatisfactory economic, political and social conditions. It is sometimes difficult, for example, to separate discontent with poor economic conditions from specific measures that the government has or has not taken to deal with those conditions. The polls taken in the second half of 2002 and in the first half of 2003 may, for example, reflect unhappiness with the government’s decision to introduce anti-subversion legislation under Article 23.100 There is some evidence to suggest that Hong Kong people are reasonably satisfied with the government’s delivery of existing services101 which would suggest that most dissatisfaction comes from what the government is not doing or what it is unable to do. There have been substantial changes in policy implementation in Hong Kong over the past two decades. In the choice of policy instruments, there has been a greater reliance on the public sector organisations outside the civil service, outsourcing, and public/ private partnerships to deliver goods and services. The prevailing orthodoxy, to which the Hong Kong government subscribes, is that providing goods and services in this way is more efficient and cost-effective. This assumption needs to be examined carefully on a case-by-case basis. It is not always true that the public sector is less efficient than the private sector; the calculation of costs and savings is often problematic and sometimes ignores the efficiencies that have been developed over time by government departments but which are not available to the private sector or to subvented organisations.

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The rapidly changing political environment has significantly influenced the strategies that have been adopted to implement policy. Under the colonial system, the government had little need to concern itself about opposition to its policies at the point of implementation. If it did engage in consultation, the answers that it received were usually those it wanted to hear. Some of these attitudes have been carried over into a political system where they are no longer appropriate and where a disarticulated political system and the rise of civil society have meant that the implementation of new policies has become very difficult. Those who try to implement policy are never entirely certain that those affected by the proposed measures will accept them; pressure groups may emerge, almost anomically, in response to policies and frustrate attempts to achieve goals. At the same time, despite many formal consultative mechanisms, there seems to be little attempt to ameliorate the tension between government and society. The ombudsman, for example, has suggested three questions that civil servants might ask themselves about consultation with the public on policy implementation: “Is there adequate consultation with affected individuals and groups all the way before programme initiatives are planned, developed, modified where necessary, and implemented? Is this consultation done in a meaningful and timely way? Is the way in which the final decision will be made clear from the outset to the affected persons?”102 It is unlikely that such questions are often actually asked. And, although they might help to improve the situation, they do not address the fundamental causes of the problem: constitutional arrangements that inhibit the aggregation of demands and political tensions between the government and civil society. The evaluation of policies in this context reflects the different perspectives of government and society. We should also note that evaluation of policy itself has changed in character over the past two decades. Most governments have shifted their focus from policy inputs to attempts to assess outputs and outcomes. The Hong Kong government is more interested in evaluating its performance than it once was and spends some effort in assessing whether it is meeting its policy objectives. As we have seen, this assessment tends to be quantitative and does not necessarily reflect either the Director of Audit’s judgements about the efficiency and cost-effectiveness of government programmes or the more qualitative views of SAR citizens. The gap between formal quantitative evaluations and those that involve the opinions of the stakeholders is illustrative of the general malaise affecting policy implementation. The government may say that it has achieved its objectives and that it deserves the support of the public because of its efforts. But, if opinion polls show that there are high levels of dissatisfaction with its performance, then formal success in achieving policy objectives is of little relevance. The gridlock in policy implementation in post-1997 Hong Kong is a reflection of the friction between the government and the society.

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hat do people expect of their government? How does the government seek to meet those expectations? For any government that is not solely based on the coerciveW power of the state, these are important questions. In Hong Kong, where the government cannot be removed by elections and where there are few other justifications for its continuing rule, the ability to respond to the people’s needs and expectations is critical. Both the colonial and the post-handover regimes have rested their claims to rule on performance legitimacy, the belief that if the government meets expectations and delivers the public goods and services that people want then it has ipso facto political support and a rationale for exercising its authority. There is a critical assumption underlying this claim: that the government has the capacity to provide the people with what they want. That may be true if expectations are relatively low but, if they are complex, expensive or conflicting, then the government’s ability to deliver may be in question. As we saw in Chapters 8 and 9, the post-handover government has low policy capacity and has difficulty in introducing new policies even when there have been clear public demands for them. Somewhat paradoxically, low policy capacity has co-existed with high administrative efficiency; the government has generally been able to deliver its established programmes cost-effectively and to the satisfaction of the population. Many public sector reforms have been aimed at increasing efficiency not only because this accords with some of the fundamental values to which the regime subscribes, such as “value for money” and fiscal frugality, but also because an efficient government, at least in its own eyes, is a legitimate government. Although the government has always believed that efficiency is central to meeting people’s expectations, it has not been the only value that it has sought to promote. A non-democratic government might still win popular support and reduce its legitimacy deficit if it acted responsibly and responsively. If relations between the government and the public could be conducted courteously, quickly and with attention to specific needs and if the government was able to assess public demands for policy changes and then formulate and implement those changes, then it might reap the benefit of political support. Efficiency and responsiveness, in this ideal world, might then be regarded as compatible values. If, for example, a department is able to serve its clients quickly, it may

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be acting both efficiently in terms of its delivery of services and responsively in meeting their needs. But it is also possible that the values of efficiency and responsiveness may be incompatible. A department that spends too much time looking after very diverse needs of citizens might be responsive without being efficient. Conversely, a department might deliver services efficiently but without any regard to the views of its clients. The balance between efficiency and responsiveness is difficult to achieve. For the most part, the Hong Kong government has tended to regard efficiency as the overriding legitimating value. The debate over whether the government should be cost-effective (and win political support for its prudent fiscal management and speedy delivery of services) has usually won the argument over whether it should listen to what people want and then deliver services appropriately, if less cost-effectively. However, responsiveness has been seen at various times as an alternative means of legitimation. Under Patten, it was central to the aim of changing the culture of the civil service and “re-legitimating” the bureaucratic polity.1 After 1997, this approach fell out of favour because Tung laid the stress on the importance of managerialism, efficiency and “executive-led” government. After 2003, the 1 July demonstration persuaded the government that it should be more concerned with “people-based governance”2 and more responsive to their policy demands. But this was essentially a formal commitment and did not lead to many new ways of encouraging greater participation in the policy-making process. The impasse in policy-making reflected the fact that, although civil servants were often both responsive and efficient, there were no institutions which could easily determine public expectations and demands and convert them into policy outputs. In this chapter, we examine the public sector reforms that have aimed to enhance efficiency and to develop responsiveness and analyse the extent to which those goals have been achieved.

Efficiency and Performance Legitimacy

Efficiency is a key value for any government. But in the Hong Kong context it has important political as well as administrative significance. As Lui puts it, Failure to attain efficiency would not only be administratively undesirable but also might threaten the political authority of the unaccountable bureaucrats.3

Efficiency covers at least three related aspects of administrative performance. First, it means that costs should be under control and that new expenditure should meet the criterion of greatest output for least resources expended. Under colonialism, the administration had long experience of keeping tight control over the budget although it was faced with new challenges from the 1970s onwards when MacLehose’s social programmes required vastly increased expenditure. Second, efficiency means rapid decision-making, a quality that was markedly absent during the earlier colonial period. The McKinsey re-organisation of the structure of government in 1973 helped considerably by disaggregating the Colonial Secretariat into discrete policy branches and decentralising some functions to the departments, which allowed more decisions to be taken at a relatively lower level.4 Third, efficiency involves delivering services

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through an appropriate structure and with qualified personnel. There were long delays in recruiting professionals to the civil service under colonialism with the consequence that experienced staff were over-loaded.5 However, as the McKinsey consultants observed, as the size of the operations began to grow, economies of scale allowed more differentiation of the roles of professionals, a development that took place gradually as the civil service expanded in the late 1970s and early 1980s. The planned expansion of social services in the 1970s did not materialise to the extent that the government had hoped. The ten-year plan to build homes for 1.5 million people was too ambitious; a growing population meant that healthcare and educational facilities were still under pressure; and social welfare provision remained minimal.6 But there were significant achievements. Although the housing programme fell short, the government was still able to build 35,000 new homes per year. The number of government hospital beds increased from 6,534 in 1972 to 10,300 in 1982.7 The number of government doctors rose for 670 to 1234 in the same period.8 School enrolment increased from 669,000 to 776,000 and the government committed itself to nine years’ compulsory education.9 Behind all of this was a buoyant economy, for which the government claimed credit, in which per capita Gross Domestic Product increased from $11,695 in 1976 to $26, 654 in 1981.10 Under such favourable circumstances, it is perhaps not surprising that the government’s efforts met and probably exceeded public expectations and that greater legitimacy resulted from its efforts. The political support which the government received may also have sprung from its moral agenda and the vigorous efforts of the Independent Commission Against Corruption to combat corruption in the police force and other departments which were in frequent contact with the public. The government was able to argue that it was acting in the best interests of the people and that it had in place plans for the provision of future social programmes, that it could deliver existing services efficiently, and that it was committed to clean government. Until new political factors changed the environment, the government was able to maintain performance legitimacy as the basis of its support. However, the Sino- British negotiations and the realisation that the British and Chinese governments would determine the fate of Hong Kong reduced the authority of the colonial administration. The retrocession to China also sparked demands for the protection of civil liberties and the rule of law after 1997, which neither the British government nor the colonial administration could guarantee. There were increasing demands for representative government and pressure groups began to ask not simply for efficient administration but for qualitatively better social policy outputs. Although these political developments reduced the authority and scope of the colonial administration, the British government made it clear that Hong Kong would continue to be vigorously administered and that the colonial administration had a responsibility to ensure that the public interest was properly pursued until the handover. The search for greater efficiency remained a central value which led the government in various directions. It attempted to improve healthcare delivery by creating a Hospital Authority with some autonomy from the government and gave more powers to the Housing Authority, devising a long-term housing plan.11 To answer demands for

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qualitatively better social policy outputs, it set up an Education Commission, which produced recommendations on teaching practices and learning, and established new universities to cater for increased demand at the tertiary level. It also set up a department to deal with environmental issues and began to try to improve the social welfare system and to resolve transport problems.12 The government also tried to build on the McKinsey reforms. In 1989, the Finance Branch produced a document, Public Sector Reform, which was aimed at increasing efficiency and the expansion of services by improving value for money.13 The Branch supported the creation of six trading funds from existing government departments which were to have greater financial flexibility. They were expected to recover costs although their staff remained part of the civil service. The Public Sector Reform document also called for greater private participation and co-operation with government and the establishment of more public corporations. Although the trading funds, with one exception, were successful, the government remained cautious in developing public- private relationships further in the latter years of the transitional period. In 1992, it did, however, establish an Efficiency Unit, reporting directly to the Chief Secretary, which was intended to carry on the work outlined in the Public Sector Reform document, and which was given a brief to transform the management and delivery of public services so that community needs were met in the most effective and efficient manner.14 The notion that the government could acquire legitimacy through effective and efficient delivery of services is a thread that runs through Hong Kong’s history, but there are significant differences between its earlier and later forms. In the 1970s, the right to rule rested on political support resulting from the efficient delivery of desired public goods and services, such as housing, education and healthcare, and the credit that the government claimed for the territory’s economic prosperity. The success of the government’s programmes encouraged the belief, later held particularly by business and pro-China groups, that Hong Kong people would be satisfied with any government that provided such goods and services, regardless of the way in which it was selected. The legitimacy of the regime, from such a perspective, simply became subsumed under a general managerialist assumption that outcomes and ends, not means or process, mattered in securing political support. If this were so, then the only problem with which a government need concern itself was whether it was able to deliver what the people wanted. There might be a managerial crisis if the government could not deliver on its material promises, but its right to rule was not otherwise in question. Tacit support would obviate the need for expressed consent. The evidence from Hong Kong in both the transitional and post-1997 periods suggests that such an approach over-simplifies the nature of the legitimacy problem and underestimates the complex support that is required to maintain consent and the legal and moral authority to rule in a non-democratic regime. It is important in this context to distinguish between consent and democratic legitimation. Democratic legitimation is probably the most practical means of obtaining consent. But it is not the only means. In the 1970s, the colonial regime manufactured consent by building a community which was intended to reflect and reinforce the values

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of the ruling elite. There is no reason to suppose that consent was not willingly given to a regime which promised, and delivered, many of the material priorities of the population. The nature of performance legitimacy, however, is that efforts to buy political support have limited shelf life. Basic needs may be satisfied, but they spark continuing demands for more specialised goods and services and for better quality in service delivery which may not be realised as easily as the earlier basic provision and which will eventually come up against the constraint of finite financial resources. After the 1970s, the better educated, more prosperous community that resulted from the expanded provision of public goods and services and from an increasingly prosperous economy was inclined to look for justifications to rule in features of the regime that required a more lasting resolution of the problem of consent and the protection of civil liberties and the rule of law. Performance legitimacy, defined in terms of efficiency, became a hygiene factor, a necessary condition for acceptable government but insufficient in itself to legitimise government either before or after 1997.

Responsiveness

In July 1992, when Chris Patten assumed office as the last Governor of Hong Kong, the possibility of legitimating the post-handover polity by democratic means had already disappeared. It was clear that, even though directly elected members had been introduced to the legislature for the first time in 1991, the Basic Law precluded the possibility of an elected government for the foreseeable future. The Chinese government also made it clear that it would overturn electoral reforms as soon as it gained control of Hong Kong. Patten, accordingly, sought to bolster his administration by other means. Aided by some reform-minded senior public servants and legislators, he began to put in place operational and legal changes to the relationships between the civil service and the public.15 These changes were specifically designed to transform the public service from a colonial bureaucracy to an organisation which was more responsive, accountable and open and which enhanced citizens’ rights to information, data protection, freedom from discrimination, and legal aid. They were grounded in the need to reduce the regime’s legitimacy deficit,16 to strengthen the civil service as a bastion of institutional stability during the transition, and to provide some assurance for a future in which the government, if not fully democratic, might at least respond positively to citizens’ needs and demands. Responsiveness, defined to include a “culture of service” to the public, was a key value. The idea of a “culture of service” took some of its intellectual substance from British practice and from the Organisation for Economic Co-operation and Development which had given some thought to identifying the features of a responsive administration. These included the notion that the public should be able to readily understand how government worked; that it should encourage citizens to participate in policy-making; that it should satisfy their needs and that it should be accessible.17 At the heart of the idea was the concept of accountability since, if a government met those criteria, it would be recognising its responsibilities to its citizens in important respects. In Hong Kong,

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of course, there had been many other values, such as efficiency, which, historically, had been far more important than the notion of responsive administration and to which the government remained committed.18 In his policy address in October 1992, Patten made clear that the principal aim of the public sector reforms was not only improved efficiency but also more open, transparent and responsive government. Performance defined in terms of satisfactory public policies or efficiency was not in itself sufficient to meet public expectations: Good government is about much more than simply finding the wherewithal to upgrade our programmes, to improve our social services or enhance our infrastructure. An increasingly prosperous and sophisticated community quite rightly demands greater openness and accountability from the public sector which it pays for — and an official attitude of mind that regards the public as clients not supplicants.19

The initial focus of the reforms was simply to improve communication between civil servants and the public. Civil servants were required, for the first time, to identify themselves by name; interim replies to correspondence were to be received within ten days; government forms were to be simplified and abolished if they were found to be unnecessary; and civil servants were to receive training to achieve new standards of courtesy and helpfulness.20 These were seen as basic and preliminary measures. The broader aim was to introduce performance pledges which would be adopted in all government departments providing services to the public.

Performance Pledges

The idea of performance pledges was drawn from the Citizen’s Charter in Britain which set out the standards which the public had a right to expect from government departments. In Hong Kong, they were first introduced in the departments which had the most contact with the public: the Hospital Authority, the Department of Health, the police, fire and ambulance emergency services, immigration control points, the Inland Revenue Department and for Transport Department officials who dealt with vehicle and driving licences.21 In addition, departments were encouraged to set up customer liaison groups to meet quarterly or bi-annually to provide feedback on services and to reflect consumer preferences. The pledges were at first greeted with some suspicion in the civil service. The Finance Branch thought that there might be increases in operating expenses, which there were, and the departments thought that the standards set might be unattainable, which proved not to be the case. By October 1993, 30 of the 50 government departments had produced performance pledges, 20 had created user or customer liaison groups, over 4,400 government forms had been reviewed and 800 had been abolished, and over 30,000 civil servants had attended training courses to improve their skills in dealing with members of the public.22 By the following year, all departments and many statutory bodies and public corporations, such as the Hospital Authority, the Mass Transit Railway

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and the Kowloon-Canton Railway, had produced performance pledges. Commitments to the public were prominently displayed in government offices throughout the territory; “service to the community” became the new public sector credo. There were considerable differences in the types of pledges the departments made to their clients. This was partly a reflection of the diverse functions that they performed but it was also a result of the potentially conflicting values that the government sought to emphasise. Performance pledges were to serve the functions of improving relationships with customers, imparting a customer focus to staff, acting as a management tool in daily operations, providing performance standards for staff, and providing a mechanism for reporting performance to customers and the community at large.23 This wide brief enabled departments to put their own construction on what should be included in the pledges. At least three separate elements could justifiably be included in a performance pledge. The first of those elements was a commitment to certain values that the department would respect in its dealings with the public. The Social Welfare Department, for example, pledged that its civil servants would be courteous, fair, respect confidentiality, respect privacy, process requests promptly and have regard for personal circumstances.24 A second element of performance pledges, which focused on the performance standards and efficiency, eventually received greater emphasis in the pledges than the expression of the core values governing the relationship between civil service and the public. Some departments defined their functions in terms of their efficiency in delivering services, not in how courteously or fairly they dealt with clients. The Fire Services Department, for example, assessed its performance on how quickly it responded to fire alarms, how rapidly it put out fires and how swiftly the injured were transported to hospital.25 The situations in which it was usually required to deal with the public evidently did not leave much room for social niceties. Even departments which had considerable contact with the public in less difficult circumstances, such as the Housing Department, the Water Supplies Department and the Trade Department, chose to focus their performance pledges on targets rather than values.26 Targets were an integral element of the performance pledge27 and those responsible for providing guidance on their implementation within the government reinforced the notion that performance rather than responsiveness was the aim of the exercise. The Efficiency Unit, for example, saw the importance of performance pledges as “focusing the attention of senior managers on the outcomes they produce”28 which might or might not be at the expense of other reform objectives. There was thus potentially some tension between the values of responsiveness and those of efficiency. The Social Welfare Department, quite appropriately, stressed responsiveness, which might not always be efficient, while the Fire Services Department and many other departments, equally appropriately, underlined their commitment to efficiency which might not always be responsive. This tension was increasingly resolved after 1997 in favour of an emphasis on the efficiency criterion with values expressed in mission and vision statements. A third way in which some departments, such as the Education Department and the Labour Department, expressed their performance pledges was to set “soft targets” and

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simply re-state their existing policies.29 One of the most important functions of the Labour Department, for example, was to provide an employment service to assist employers to recruit staff and to help job-seekers find employment.30 The Department promised that a job-seeker in the busy summer months “would be served within 30 minutes of his or her appointment time.”31 The provision sought to balance departmental resource constraints with the need to make some form of public commitment. By describing its policies and practices in its performance pledge and failing to provide evidence of improved service, the Department left itself open to complaints about the substance of its policies and practices. The Federation of Trade Unions, for example, criticised the department’s performance pledge on the grounds that it did nothing to improve the convenience of the job-seeker and suggested changes to existing practices. Yet there was much going on in the Labour Department which was not reflected in the official performance pledge but which was intended to meet the “culture of service” requirements that were central to the government’s reform programme. The Department issued internal guidelines on standards of service which were designed to make the staff more responsive. They included instructions to be patient, courteous and flexible, to wear a pleasant smile and to identify themselves with name badges if they were dealing with the public. There were also explicit directions about the maintenance of the office, ensuring that queuing systems were efficient and fair, that the complaint procedure was prominently displayed and that staff should be deployed effectively to meet changes in demands for services.32 The Labour Department did take the reforms seriously and made some effort to try to ensure a more pleasant and efficient atmosphere in its dealings with the public. Most civil servants seemed to believe that performance pledges did make a difference to their work. In a survey of 414 executive officers conducted in 1999, 75% either disagreed or strongly disagreed with the statement “performance pledges have not made much difference to the work of the department: we still do things the old way.”33 Most of the executive officers who were surveyed had implemented the pledges since their inception. But there were differences between those whose departments had direct dealings with the public and those whose departments were mainly responsible for servicing other government departments and who did not see much change as a result of the reforms. There was also some scepticism about the way in which targets were set or the way in which the government allegedly massaged figures for best effect. Although only 11% of the respondents agreed with the statement that “the performance targets set by my department are too easily achieved,” 34 those who were critical pointed to the vagueness of the targets and “playing with figures.” As one respondent from the Police Force remarked: “(t)he performance pledges are carefully designed so that they will be met even (if) we do things the old way.” Another respondent noted: “(t)he performance pledges of this department are qualitative rather than quantitative. As a result, people (that is, civil servants) do not have much change.” Whether they expressed their views in terms of the limited impact of values or in terms of the imprecision of targets, critics of the performance pledges clearly believed that they had done little to change the underlying culture of the civil service.

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At the interface between the public and the civil servant, there were nonetheless signs that performance pledges had some effect both on the civil servants and on their clients. This might be explained partly by the attitude of civil servants themselves towards the public. By the 1990s, the civil service might still be colonial in its basic structure and culture, but over 99% of its employees were local Chinese. Although senior civil servants often privately remained paternalistic towards the public, they also believed that the Hong Kong political system was not democratic enough and that people should be permitted to participate more in their own affairs.35 In the 1999 survey of executive officers, there was strong support (68% approval) for the liberalising reforms of the Patten era but a much more negative reaction to human resource management reforms and other later managerialist reforms.36 There is some suggestion, then, that civil servants may have been favourably pre-disposed towards performance pledges focusing on responsiveness rather than efficiency. Civil servants may also have seen the pledges in a positive light because they were accompanied by improvements to their work conditions. Offices were painted, counters were re-designed to make information more easily available and to facilitate interaction with clients, and some departments introduced awards for best customer service offices. The tension at the outset between the Finance Branch and the departments over costs was gradually governed by some informal rules. The department made the pledge, seeking more funding to make their operations more efficient and customer-friendly; the Finance Branch sought to hold them to their promises and would not grant additional funding if the pledges were not met. Most departments introduced projects to motivate their staff to provide better service. These included a competition for the friendliest clinic in the Department of Health, a competition for the best counter service in the Immigration Department and a staff quiz on the work of the Trade Department.37 In the Labour Department, all ten local employment service offices were involved in a contest for the best customer service. While the criteria tended to be focus on quantitatively determined efficiency measures rather than the quality of the service, there was also some recognition that customer reactions to the service they received were an important element of the pledges. It is difficult to assess the effects of the performance pledges on the regime’s political support and legitimacy in the last years of the transitional period.38 In the wider context of its legitimacy problems with consent and legal and moral authority, performance pledges probably did little more than marginally reduce the legitimacy deficit. Yet they were important in enhancing responsiveness, improving the public image of the civil service, raising the morale of civil servants and meeting public expectations of better service. At a time when senior Hong Kong Chinese civil servants were increasingly seen as major political figures, when their interaction with members of the legislature was constantly in the news, and when the Chief Secretary herself was seen as a leading candidate for the future Chief Executive position, performance pledges contributed to the high public regard for the civil service. Both the British and Chinese governments helped to reinforce these positive public attitudes of the civil service. The performance pledges were attempts to improve responsiveness throughout the civil service. But citizens tend

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to focus on those departments and statutory bodies which directly affected their well- being such as the Police Force, the Housing Authority and the Hospital Authority. In the following sections, we examine the extent to which responsiveness as a value was reflected in the changed practices of those organisations both before and after 1997.

Responsiveness in Key Government Departments

Responsiveness in the Police Force

In the context of the Patten reforms, there was some pressure on the Police Force to be more community-centred and to introduce practices which would identify its future role as the police of the people rather than as the most visible representatives of colonial rule. This was not an entirely new role. In the 1970s, the Force had run community- based programmes, such as neighbourhood policing units and Junior Police Call, with considerable success.39 These schemes remained in operation in the 1990s but there was more emphasis on enhancing communication with local organisations and community leaders, developing a more explicit “culture of service”, establishing mutual trust with the public and improving the image of the Force. There were considerable internal changes within the Force itself in the period immediately before the retrocession. The reduced number of expatriates in senior positions, the appointment of a local Commissioner of Police, and the prospect of recruiting well-educated officers into the senior ranks also helped to create the underlying conditions for a shift from its former para-military role to more community policing. By 1994, there had been a review of the Force’s command structure which recommended some possible reforms and organisational changes at senior levels.40 Although there was scepticism among senior officers about the value of the review, the proposal to establish a Service Quality Wing (SQW) was eventually accepted and set up under an Assistant Commissioner of Police in May 1994.41 In March 1995, the SQW produced a policy document on Force Strategy on Quality of Service which was based on the private sector notion of Total Quality Management and on the practices of the British police forces.42 The Force Strategy aimed at developing … a culture which will involve all officers at all levels in continually striving for improvement to ensure that services provided by the Force are effective, efficient and economical and that, whenever practicable, meet the expectations, in regard to quality of all our customers, both internal and external.43

There was also a commitment to conduct periodic opinion polls and customer satisfaction surveys which signalled its intention to pay more attention to relations with the public. The first customer satisfaction survey, undertaken by an independent consultant, was conducted in December 1995.44 It found satisfaction levels with Force performance at 78%; only 3% of respondents regarded the performance of the police as poor although

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19% gave unsolicited adverse comments on the service manners of police officers.45 The survey, together with the results of a consultation process within the Force and with the public, was used to produce a Vision and Statement of Common Purpose and Values which was intended to define the role of the Police and to commit it to some core values such as fairness, impartiality and compassion, acceptance of responsibility and accountability, professionalism, dedication to quality service, responsiveness to change and effective communication inside and outside the Force.46 The Force made increasing efforts to identify particular problems in its relations with the public. In March 1997, an independent survey of 804 randomly selected people, who had been involved in cases of non-violent crime, nuisance, dispute, minor assaults and traffic accidents, was carried out.47 The findings were again generally positive with only 5% considering the police performance to be poor or quite poor. A majority (69%) of respondents thought that the police were courteous and rated this as the best aspect of their performance while their speed and efficiency received the lowest rating.48 Another survey conducted in 1999 found that, while respondents thought that the Force was professional and efficient, they did not think that it was either accountable or transparent. Some reservations were expressed about the police role in community relations and the manner in which the police conducted their business. Only 35.4% were satisfied with the police community relations effort and only half of the respondents were satisfied with the manner in which the police conducted their business.49 Subsequent surveys, however, have tended to support the view that the police are now much better regarded by the public than under colonial rule. In 2006, the Census and Statistics Department undertook a survey of crime victimization, finding that only 19% of crimes were reported to the police and that the reporting of violent crimes was even lower.50 Some 89% of those who did report crimes, however, said that the manner in which the police treated the case was “good” or “very good.”51 In their study of policing in Hong Kong, Lo and Cheuk identify some positive outcomes from the community programmes for the relationship between the police and the public.52 They note that there have been significant improvements in communications between the police and the public, particularly because the Police Community Relations Officers have paid close attention to community liaison. They observe, too, that police-public relations and the image of the Force have both improved markedly. On other issues, success has been less noticeable. Lo and Cheuk note constraints on the programmes relating to community policing. The most important of these, they believe, is a lack of institutional commitment within the Force to community relations. The law enforcement function takes clear overriding precedence over all other roles performed by the Force. This, in turn, has consequences for the resources available for officers engaged in community work, for their promotion opportunities, and for the organisational capacity of the units for which they work.53 There are other constraints which may undermine much of the greater responsiveness that has characterised the Force since the introduction of the reforms. The increasing number of protests has created difficult conditions for the Force, especially when protesters break the law by organising demonstrations that have not received police

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approval. The police coped well with the hundreds of thousands on the streets during the July 2003 demonstrations and no arrests were deemed necessary. But in other demonstrations the police have been accused of being high-handed and using unnecessary force both with local democratic activists and with Korean demonstrators at a World Trade Organisation meeting held in Hong Kong in December 2005.54 The emphasis on reform in the mid-1990s appropriately reflected a changing political climate and enabled the Force to deal rather better with the difficulties of the post-1997 order than it would have done with its previous structure. It seems probable that its community policing role will grow as government programmes expand. The amendments to the Domestic Violence Ordinance, for example, give the police a greater role in handling domestic affairs than they have had in the past.55 Similarly, the solutions offered by legislators and social workers to the potential growth of slums in areas such as Tin Shui Wai suggest that the police should play a more interventionist community role.56 The Force is not yet as far along the road to taking up that role as some of its critics might wish but it has made significant ground over the last decade towards becoming more responsive.

Responsiveness in the Housing Authority

The government is, by far, Hong Kong’s largest landlord. In December 2007, 30% of the population lived in public rental housing with a further 18% in subsidised home ownership flats.57 The extent of the government’s involvement in the provision of public housing means that its policies have an impact, directly or indirectly, on virtually everyone in Hong Kong. The conditions governing eligibility for public housing, the quality of the flats and policies on rent and home ownership directly affect tenants. Since the termination of the Home Ownership Scheme in November 2002, when the government decided that it would suspend indefinitely the production and sale of subsidised public flats to tenants in the interests of stimulating the property market, housing policy has also affected their aspirations for future home ownership.58 Equally important, government decisions on housing have an impact on those on the waiting list for public housing — some 110,000 households in December 2007 — and on the supply and demand and price of housing in the private sector.59 For a government attempting to be responsive to the needs of its citizens, public housing poses two sets of problems. Some problems are those normally associated with landlord-tenant relationships: difficulties with rent increases and maintenance. Public housing was first introduced in 1954 because the government wanted to get the squatters off the land and move them into re-settlement blocks. Its relationship with its future tenants was based on persuasion but it was prepared to move them forcibly to achieve its ends. The colonial government recognised that there was a need for community- building in the re-settlement estates. The rules were not determined by mutual agreement, however. The government prescribed how its tenants would behave. The relationship evolved gradually in tune with the development of local level institutions but with a continuing dominant government role. In the 1970s, tenants were

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encouraged to form mutual aid committees which were expected to provide the estate management with suggestions for improvements. The emergence of pressure groups, such as the Association for Democracy and People’s Livelihood and the Hong Kong People’s Council on Public Housing Policy, the increasingly political role played by professional groups such as social workers, the creation of District Boards and the emergence of political parties in the late 1980s may have helped to improve the position of the tenant slightly. But, aside from the social workers, the efforts of many activists were usually focused on those without public housing who often had to spend many years on the waiting list. The case for the tenants was not helped by better-off occupants, who despite being charged double rent, still chose to remain in public housing. The perception was that the government was not charging enough rent to persuade the wealthier tenants to leave and, in the process, was behaving inequitably towards those on the waiting list.60 When there was a demonstration at the Housing Authority headquarters against an increase in rents, there was little public sympathy for the protesters.61 One consequence of the fragmented opposition to government’s housing policy was that the Housing Department remained the driver of the relationship with its tenants in the estates. Patten’s reforms did not produce a major change in the responsiveness of the estate management. The existing relationship was simply incorporated into a statement of rights and responsibilities and promises that certain targets would be met.62 Tenants were granted the right to express their views to the Housing Department directly through mutual aid committees or the Estate Management Advisory Committee and to appeal if their tenancy was terminated. They were entitled to apply for rent reduction of 50% for a year under certain conditions and to have repairs carried out by the Housing Department or the relevant management organisation. However, one of their most important rights — to apply for the purchase of a flat under the Home Ownership scheme and to purchase the flat in which they were living — was lost in November 2002 when the government abandoned the Home Ownership Scheme. In addition, after the Housing Department began to contract out estate management towards the end of 2000, there was no guarantee that the new managers would observe the same tenants’ rights, minimal though they were. Nor do the established channels of communication between management and residents seem to provide much opportunity for residents to express their views. One study suggests that the Estate Management Advisory Committees reflects a dominant management culture rather than serving as a participatory forum.63 The other set of problems that a responsive government had to address what was to be done about increasing housing supply and whether public housing should be commercialised and sold off and, if so, at what price. After 1997, this issue, for a time, had high priority because Tung saw housing as an area in which his administration could have an immediate impact. He set a target of 85,000 new flats a year in the public and private sectors, a home ownership rate of 70 %, which would be partially achieved by public rental flats, and announced his intention to reduce the waiting time for public housing to three years.64 These proposals were reflected in a consultative exercise which concluded in February 1998 with the release of a white paper.65 Tung’s identification of housing policy as a key area of government activity stressed the responsiveness of

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government in a rather different way from that of Patten: meeting needs through policy rather than attempting to address problems at the interface between civil servants and the public. In the event, the times were against the policy and Tung eventually abandoned the production targets, admitting that the target of 85,000 flats per year was not achievable. In November 2002, the policy underwent further radical revision when the sale of Home Ownership flats was suspended indefinitely and replaced with a Home Assistance Loan scheme which provided interest-free loans to enable low income families to purchase in the market.66 Despite the failure of its overall policy, the government nonetheless did achieve some success in reducing the waiting list for public housing, partly, it seems, by applying eligibility criteria more strictly. By 2007, time on the waiting list had been reduced to 1.9 years.67 We may conclude that neither Patten’s emphasis on the greater responsiveness of civil servants to the public nor Tung’s proposed measures to meet citizens’ needs had much impact on the formulation or implementation of housing policy. The politics of housing revolved around long-standing intractable problems and it was difficult to make inroads into entrenched practices, particularly during the Patten era. Tung’s promises of an expanded housing supply followed a political strategy that had boosted support for the government since at least the time of MacLehose. It had little to do with responsiveness other than that increased public housing supply would be popular with those on the waiting list. When major changes to housing policy were introduced in 2002, they were a result of economic problems and business pressure, not a consequence of deliberate changes to the government’s views of how its citizens should be treated. The new thinking was that government should be less involved in housing provision but look rather towards making the process of obtaining public housing speedier, more equitable and less rigid. Under Tsang, advances were made in linking rents to affordability and to improving the environment in the housing estates.68 The Housing Authority claimed that this was being done in association with the tenants but it appeared to be largely another top-down initiative.69

Responsiveness in the Health Department and Hospital Authority

In terms of responsiveness, the Health Department and the Hospital Authority offered a different kind of challenge from that of the Police Force and the Housing Authority. There was greater latitude for change within the system than in the housing field, especially once the Hospital Authority had been created, but there was also resistance to allowing patients and pressure groups a stronger voice in the way that services would be delivered. Three issues were critical to a long-running debate: the question of patients’ rights; the degree to which organisational and financial concerns had an impact on the ability to provide services and to respond to patients’ needs; and the extent to which doctors should continue to monopolise decision-making within the system. In the 1980s, the healthcare system was the subject of considerable criticism. There were complaints about inefficient administration, poor record-keeping, long waiting times, inadequate hospital facilities and poor doctor-patient relationships.70 With the

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establishment of the Hospital Authority, major reforms in healthcare were expected. Backed by the government and the Hong Kong Medical Association, it chose to focus on the concept of “patient-centred” healthcare and sought to involve the community as its “partner in health”. A logical outcome of this approach was the introduction of a patient’s charter in 1999 (see Table 10.1).71 But because the drafting of the charter did not involve groups representing patients’ interests and because it was not legally enforceable, it was simply seen as a codification of the principles which the Medical Association and the government thought should form the basis of doctor-patient relations.

Table 10.1 The Patient’s Charter

Right to Medical Treatment The right to receive medical advice and treatment which fully meets the currently accepted standards of care and quality. Right to Information The right to information about what healthcare standards are available, and what charges are involved. The right to be given a clear description of your medical condition, with diagnosis, prognosis … and of the treatment proposed including common risks and appropriate alternatives. The right to know the names of any medications to be prescribed, and its normal actions and potential side effects given your condition. The right of access to medical information which relates to your condition and treatment. Right to Choices The right to accept or refuse any medication, investigation or treatment, and to be informed of the likely consequence of doing so. The right to a second medical opinion. The right to choose whether or not to take part in medical research programmes. Right to Privacy The right to have your privacy, dignity and religious and cultural beliefs respected. The right to have information relating to your medical condition kept confidential. Right to Complaint The right to make a complaint through channels provided by the Hospital Authority, and to have any complaint dealt with promptly and fairly

Source: The Patient’s Charter, www.ha.org.hk (accessed 4 December 2008).

The Department of Health, which is responsible for various outpatient services and for public health information, has also tried to become more responsive to patients’ needs. It produced its first performance pledge in 1995 which focused principally on

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reducing waiting times and providing services within specified time frames, problems which were the source of many complaints.72 The pledge has subsequently been related to each of the many services which the department provides with targets on waiting times and treatment normally being fully met.73 The Department has also been conscious of the need to improve its responsiveness in other areas. It has conducted surveys on staff attitudes and has also run annual consumer satisfaction surveys, reporting an ever-increasing level of satisfaction with its work.74 While the results have to be treated with some caution, there are other supporting surveys which suggest that patients are generally satisfied with the healthcare system and with the dedication of doctors and nurses, although not with the way in which the Hospital Authority handled the SARS outbreak.75 A second controversial question is whether the healthcare system is well organised and appropriately financed to meet citizens’ needs. In 1999, the Harvard Team, government-appointed consultants, argued, inter alia, that the quality of healthcare was highly variable, that doctors were inadequately regulated, that the system was too compartmentalised and that it did not serve the patient as well as it might.76 The consultants also thought that the government was unlikely to be able to continue to afford a level of healthcare service which had seen public health expenditure grow rapidly.77 The Hospital Authority rejected the consultants’ findings, which included increasing charges, in favour of more incremental improvements to the system, changes which were more politically palatable.78 The issue of funding did not go away. In 2008, a government consultative document put forward various options for reforming healthcare financing, all of which involved higher contributions from citizens.79 The government argued that, with an ageing population and increasing demand, healthcare financing would grow faster than the economy and would not be sustainable. It appeared to favour a Personal Healthcare Reserve Scheme which would require workers to save a proportion of their salaries to buy medical insurance.80 But there was considerable opposition to the proposals from politicians and pressure groups who believed that the scheme amounted to double taxation of the middle class.81 A third problem that has affected responsiveness has been the location of power within the Hospital Authority and the Department of Health. Doctors have dominated the system to the virtual exclusion of any other interested parties. Not only have they been in charge of the hospitals, they have also held most of the senior positions in the Department of Health. The argument against this domination has been that in order to be responsive the system has to reflect the wider views of the community. The government has supported this line of reasoning although it has not always been sympathetic to the pressure groups which take up the patients’ cause. As pressure groups have become more active, it has made some concessions to their demands for representation on key committees and boards.82 The Hospital Authority has community representatives on its board and on the governing committees of its hospitals.83 The Health and Medical Development Advisory Committee, a source of policy advice, has some members who are politicians although the majority are doctors.84

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Despite greater community representation, the major healthcare pressure groups still feel that it is the doctors who make the critical decisions and that non-medical representation on the Hospital Authority board or on the governing committees of the hospitals is a form of window-dressing.85 Yuen and Lieu found that both chief executives and members felt that the boards were not performing important tasks such as decision- making and planning.86 The committees are often seen as largely advisory bodies and major decisions are taken elsewhere in the system. It may be that the board and the committees nonetheless serve as useful arenas for raising community and patients’ concerns. It is evident from these case studies of key departments that responsiveness can be interpreted in different ways in different policy areas. One factor that appears to have been important in determining whether the reforms were successful is the extent to which they were taken seriously by senior management. In the Police Force, senior police officers were committed to a reform agenda which was to some extent imposed upon them by changing circumstances within the Force, by the need to adopt more community policing and because regime change required a new perspective on relations with the public. The Hospital Authority was focused from the outset on providing a “community- centred” system. Its problems still lie in translating those ideas into an organisational format which reflects community views and leads to more responsive programmes. In housing policies and practices, despite government claims to the contrary, the system does not appear to place as much value on the views and expectations of the estate tenants as it might. If these three examples are representative, then we might conclude that attempts to make the Hong Kong government more responsive have been successful but that there is still clearly considerable room for improvement.

Efficiency, Responsiveness and the Post-1997 Administration

In post-1997 Hong Kong, although Patten’s reforms remained in place, the values of efficiency and responsiveness were re-interpreted, sometimes conflated and confused, sometimes defined in very different ways. During the first Tung Chee-hwa administration, efficiency was the principal goal; responsiveness was desirable but subject to the dictates of “executive-led” government. After the 2003 demonstrations, this position was no longer tenable and the government tried to increase its responsiveness, defined more in terms of its abilities to make policies that people wanted than in terms of its direct interaction with citizens. In this section, we assess what has happened since 1997 to the values underlying the original reforms.

Improved Technology and Better Performance Management

Despite the relative lack of success of the major public sector reform programme introduced in 1999 (see Chapters 4 and 5), the government continued to press for greater efficiencies in other areas, notably in performance management and technological improvements. The substitution of efficiency for responsiveness immediately after the

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retrocession had an impact on the way in which performance pledges were drafted and implemented. Many pledges were no longer concerned with outlining the values that might govern their relationship with the public. Instead, departments used them to quantify their targets and to record the extent to which services were provided within time limits. Thus, for example, the Highways Department has a target of repairing damaged traffic signs within 24 hours, a new standard that was introduced in 2006 and was achieved in 70% of cases in that year.87 In general, the performance standard reached is used to improve upon delivery times although there is considerable scepticism about the ways in which achieving the goal are met both among civil servants and the Audit Commission which has queried whether performance pledges do in fact result in improved efficiency.88 While it is possible to argue that greater efficiency was always part of the rationale for introducing performance pledges and that faster completion times and targets are a means of being responsive to the citizens’ interests, there are at least two ways in which the values of responsiveness and efficiency could conceivably conflict. The first is that downsizing the civil service might leave too few civil servants to deal with customer enquiries, complaints and demands for services. The government has argued that this has not happened because its productivity and efficiency programmes have been based on delivering the same services with fewer resources. However, while in the initial phase of an efficiency programme, it may be relatively easy to find savings through re- organisation without reducing services, as time goes on, such savings become more and more difficult to identify without eliminating substantive programmes. The temptation for a government with a serious budget deficit is to reduce its front-line staff in social services or to contract out services. There is some evidence that this is the strategy that has been adopted by the Hong Kong government. It has been observed that the government’s social policy expenditure is “budget driven and deeply related to its philosophy of financial management, which ties the level of...spending to the financial situation of the government.”89 Table 10.2 gives one indicator of the effects of this approach. In the often difficult economic circumstances that Hong Kong faced after 1997, cuts to the civil service establishment have been focused particularly on social services departments. New appointments have also tended to be made to disciplinary services departments rather than to those concerned with delivering social policy outputs. This does not mean, of course, that the government is not concerned with providing social services but it would clearly like to see voluntary organisations or the private sector play a larger role. Part of the explanation for the fall in the establishment of the social services departments lies in decisions to divest the government of some of its responsibilities. In terms of the interaction between providers and clients, this passes the obligation to be responsive to an agency outside the government. But it does not entirely relieve the government of its responsibility for ensuring services are delivered in an appropriate manner, particularly those which it funds directly. As the Efficiency Unit notes, services can be outsourced but not the ultimate responsibility for their delivery.90 The danger is that the need to deliver services efficiently and cost-effectively overrides the need to deliver them responsively.

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Table 10.2 Establishment of Social Services and Disciplinary Services Departments, 1997, 2008 Department 1997 2008 Percentage New +/– appointments since 2000 Social Services Education 6585 5846 –11.22 468 Health 6689 4912 –26.57 133 Housing 14776 7624 –47.33 7 Social Welfare 4996 5032 +0.72 428 Disciplinary Services Customs and Excise 4273 5606 +31.20 913 Correctional Services 7576 6650 –12.32 595 Fire Services 8296 9296 +12.05 1364 Immigration 5273 6460 +22.51 1374 Police 33871 32357 –4.47 4712 Source: Civil Service Bureau, Civil Service Personnel Statistics 1997 (Hong Kong: The Bureau, 1997), 17–24; Civil Service Bureau, Civil Service Personnel Statistics 2008 (Hong Kong: The Bureau, 2008), 23–29.

A second way in which responsiveness might conflict with efficiency is in the use of technology to increase productivity. The development of e-government is a key plank in information technology policy where the government seeks to be a leader in the field. The 2008 Digital 21 policy statement says that its aim is to achieve “a deepened e-government programme, with increasing interface with citizens and business, thereby encouraging migration to the electronic channel.”91 The policy statement also claims that the government seeks a “citizen-centric mode of public service delivery with strong emphasis on continuous engagement.”92 An earlier version of Digital 21 stated that the strategy exemplified “a government that places citizens at the centre of everything it does, and which makes citizens its very purpose” and maintained that it provided citizens with a choice about how and when they communicated with government.93 While this is impressive rhetoric, it may carry with it political expectations about responsiveness which technology by itself cannot deliver. E-government is primarily a means of improving efficiency and reducing costs, not necessarily a way of enhancing harmonious government-public relations. It enables citizens to use internet facilities, for exam ple, to register as a voter, access the weather report, tender for government contracts, pay government bills, lodge tax returns, search for and obtain copies of birth, death and marriage certificates, apply for a senior citizen card or provide notification of a change of address.94 In 2008, the government’s portal, www.gov.hk, provided 1200 such electronic services.95 While it is a relatively simple matter to put electronic forms on websites, it is quite another to get people to use them. As the then E-government Co-ordinator admitted:

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Our efforts at getting people to do transactions on the net—to change their habits and stop using counter services or traditional channels—has been much more mixed.96

The Co-ordinator attributed the difficulties of persuading people to transact on-line to the problem of providing a service more customer-friendly than the original.97 The principal problems, in his view, lay in civil service resistance to the introduction of e- government and in competing jurisdictions which hampered the process of change. The ombudsman’s report on the Integrated Call Centre (see below) provides some evidence of such resistance but it is, of course, also possible that the major resistance comes from citizens who continue to prefer to use traditional means of contacting the government. The government has tried to use technology to improve its public enquiry and complaints system. In July 2001, it introduced an Integrated Call Centre (ICC) for twelve (later twenty) government departments which was designed to provide “a one-stop round- the-clock service to handle a range of enquiries and complaints...”98 The ICC uses an interactive voice recording system to transmit calls to operators on the basis of their language or speciality. Operators then use a computerised system to provide “an immediate response to callers or to send messages to the appropriate departments for follow-up action.”99 In November 2001, in addition to the ICC, the Efficiency Unit set up the 1823 Citizen’s Easy Link, a single-number hot line which was intended eventually to serve as the only port of call for all complaints and enquiries. The system was expected to be both responsive and convenient and to provide increased productivity and efficiency gains. However, there were soon numerous complaints and, in October 2002, the ombudsman decided to launch a direct investigation of the ICC.100 The resulting report acknowledged that the ICC had brought improvements to the public enquiry service. But the investigation also discovered shortcomings: delays and lack of response, problems with transmission of complaints and outdated information, and problems with maintaining personal data privacy. Most significantly, the ombudsman found that the ICC’s organisational culture was “more task than people-oriented” and that there were tensions between the ICC and the participating departments.101 Despite her recommendations for change, the Ombudsman continued to receive complaints about the ICC and, in June 2007, launched a further investigation of the service.102 Most complaints and enquiries were still lodged through departmental hot lines rather than through Easy Link although the single number hot line was proving increasingly popular. Overall, the use of ICC services had climbed from 1.8 million in 2004 to 3.1 million in 2007.103 But there were still major problems with the system. The Ombudsman found inter alia that the service was limited and patchy; that there were difficulties when issues crossed departmental boundaries; that some departments were considering dropping out of the system; and that coverage was, in any case, limited to only twenty departments, “far from its ultimate goal of an integrated call centre.”104 The Efficiency Unit, which runs the ICC, has promised to make changes105 but it will be difficult to overcome a culture where departmental boundaries are fiercely guarded, where efficiency rather than responsiveness appears to be the primary goal, and where the ICC takes the blame for delays that are often departmental responsibilities.

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Despite these efforts to improve the public enquiry and complaints system, and the government’s impressive attempts to increase the services available on-line, it is not clear that a significant percentage of the population can be persuaded to abandon their long-standing practice of appearing in person when they have a problem or are required to complete a form. Many government services, in any event, still do require a personal appearance. The difficulty with technology of this sort is that it can create divisions between those who know how to use computers and are willing to do so and those who do not. Although by 2007 some 69.3% of the population over ten years of age knew how to use a computer, only 37.6% of them had used their knowledge to access online government services.106 As might be expected, the highest use of government online services was among the young and the better educated.107 Conversely, the elderly and the less well-educated, who may well have greater need of government services, were much less likely to use computers. Only 37.8% of persons between 55 and 64 and only 9.7% of those over the age of 65 knew how to use a computer.108 Although there has been increasing use of government online services and of the free Wi-Fi wireless broadband internet services which are installed at over 5000 hot-spots around the territory,109 fundamental problems remain. E-government is an impersonal activity which may be convenient and appreciated by those who use it but which can also raise the hackles of those frustrated by poorly-informed operators or recalcitrant electronic forms. E-government may well make government more productive and efficient but it will not in itself make the government more popular or more legitimate in the eyes of the public. Efficiency is a hygiene factor — people expect their government to be efficient — not a motivator of support for the system. Responsiveness as a value is more about enhancing trust than enabling citizens to deal with government efficiently. If the Hong Kong government still believes it can engender trust by being more efficient, it may have misidentified its principal problem.

Re-defining Responsiveness

After 1997, responsiveness was re-defined in two ways. First, in his 2001 policy address, Tung Chee-hwa said: Every person employed by the Government is there to serve the community aim to make the civil service more accountable and to enhance service culture.110

Efforts had been made to put this into practice through the Efficiency Unit which, under its “Serving the Community” programme, sought to transform “the service culture in the public sector to being more open, accountable and customer-friendly.”111 Between 1998 and 2001, some $10 million was spent on educating staff on customer-focused attitudes and most of the pre-1997 innovations such as customer liaison groups, service awards and office improvement projects remained in place.112 Subsequently, however, post-1997 public sector reform focused more on attempting “to meet increases in expectations without adding to the limited resources available or making excessive

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demands of existing resources.”113 In short, the reason for changing existing practices was to improve efficiency, using the same or less resources to achieve greater output. The Efficiency Unit’s future projects, consequently, focused largely on productivity, performance measurement and other means of increasing efficiency. By 2008, its “citizen centric services programmes” were mainly concerned with attempting to use private sector techniques in a customer management and assessment programme and rectifying the continuing problems of the Integrated Call Centre.114 The Unit’s major pre-occupation, as its name suggests, is with efficiency. The government recognises the need to be responsive but it seems to feel that enough has already been done to improve relationships with the public and that what is now needed is simply fine-tuning. A second sense in which responsiveness was re-defined was to suggest that it related as much to making policy that met public expectations as to the interface between civil servants and citizens. Tung talked about this as early as 2001 when he said: [W]e need to have a more acute sense of the pulse of the community in formulating our policies. We need to do our consultation work well to ensure that all public views are fully reflected … we need to understand our community’s inclinations and strive to gain their understanding and support.115

This is one view of responsiveness, but it is a top-down rather than an interactive view and it was intended to be taken in the context of the continuing pre-dominance of executive-led government over public opinion.116 The government saw its role as formulating policy, consulting on the acceptability of its proposals and then making such modifications as it considered necessary. It was the government, not the citizen, which made the first and final decision on what would become policy. Citizens’ views in themselves, however strongly held, were not a sufficient reason to deflect the government from what it wanted to do. They had no legitimate part to play in the process once the government had determined its course of action, other than to support the implementation of the policy. By 2003, this position was clearly no longer tenable. The manner in which the government consulted the population over the national security legislation, the disregard for public opinion in drafting the legislation, and the subsequent massive demonstrations all indicated that little account had been taken of the community’s wishes. In the 2004 policy address, the first after the demonstrations, which was sub-titled “promoting people-based governance”, Tung suggested in rather vague terms that the government would attempt to improve its relationship with experts and opinion leaders, the middle class and the legislature within what appeared to be the unchanging framework of the existing system.117 This theme was pursued in his 2005 policy address when he frankly admitted the shortcomings of the way that his administration had sought to make policy.118 He promised a more transparent and responsive administration although still without providing much detail. Tsang, similarly, has pursued “people-based governance” using central consultative mechanisms as venues for the community to express their views on policy issues119 and setting up an e-forum to draw on expert opinion on policy.

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He has also promised that he would ask civil servants to monitor public views expressed on the internet.120 If the goal of legitimation through responsive policy-making is ever to be realised, then information, transparency and trust and new channels of communication with the public are essential pre-requisites. It is difficult to fault the Hong Kong government on the quantity of information it provides to its citizens or on the accessibility to the media of senior figures in the government. The government website is a mine of information about what the government is doing about anything and everything. Government is perpetually concerned with the mood of public opinion, providing consultation documents on proposed new policies and monitoring the views of the public through surveys and through the hundreds of advisory boards that have been set up to keep government bureaus and departments in touch with changing political, social, legal and technological developments. The problem is that there is often suspicion that the information provided is less than the full story, that sensitive information has been withheld or manipulated or that it has been presented in such a way that it is difficult to form a judgement. Under such circumstances, civil society will create its own versions of reality, conspiracy theories will flourish, and the broad community consensus on values that the government wants will be difficult to achieve. Rather than rational dialogue with an attentive public, the government under both Tung and Tsang has found itself under siege from militant and suspicious civil society organisations. An indication of the beleaguered nature of the executive was that the then government training arm, the Civil Service Training and Development Institute, flew in academics from Harvard to teach directorate-level civil servants about “how the public can be persuaded of the value of government programmes in an adversarial political environment where the press and opposition politicians are constantly attacking public officials, policies, programmes and actions.”121 This suggests, quite accurately, that rather than calm discussion leading to consensus, political debate is instead highly charged with the protagonists often taking fixed and intransigent positions. It also suggests that on major issues there is usually a pro-government coalition pitted against a loose, somewhat anomic, opposition of political parties, pressure groups and critical media commentators. Civic participation that the government seeks to support has not been the kind of civic participation that many believe is likely to lead to their preferred outcomes. Debates on policy, in consequence, are often abrasive, polarised and damaging to the government’s image. These developments are symptomatic of problems with the constituted political order and are unlikely to be resolved by simply increasing the flow of information to the public. If the political institutions are not viewed as appropriate or credible channels through which rational dialogue might take place and if whatever the government tells the people is viewed with mistrust, it is not surprising that those with grievances take to the streets to express their views. Between 2002 and 2006, there were 11,100 public protests or processions in Hong Kong.122 Although many of these were no doubt by the same groups and many were probably small and insignificant and not all were against the government, they were so numerous, and police action in one instance was so

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controversial, that the demonstrations themselves became a political issue.123 The Security Bureau put the government’s view on how public opinion should be expressed: People should discuss matters in a rational and objective manner instead of emotionalising and politicising the matters. In particular, the LegCo Councillors who have sworn to uphold the Basic Law and abide by the law, should not take the lead in breaching the law and “challenge” front-line officers to arrest them, as these actions might provoke others to cause a breach of the public peace.124

These comments reflected the government’s continued commitment to the existing institutions, its pleas for rational dialogue, and its fears that the demonstrations might soon lead to violence, but they did not offer any positive ways of closing the gulf between itself and the public. Although the government has vastly increased the amount of information available to the public about its activities, its actions often seemed to contradict its formal commitment to transparency and its ability to win public trust. Under Tung, in particular, the government was often secretive, disinclined to release any information that might be politically sensitive or that could be used as a rod for its own back. There were a number of incidents — the awarding of the contract for the high-technology Cyberport without the usual process of open tenders, the decision not to prosecute a newspaper owner for false circulation figures, and the veiled threats to Falun Gong, for example — where critics accused the government of being less than transparent.125 The case of Robert Chung Ting-yiu, a researcher at the University of Hong Kong, also raised questions about government attempts to control information and about its views on academic freedom. Chung was conducting polling research on political and social issues, the results of which received some prominence in the local press. Among the regular telephone polls he supervised and subsequently publicly reported were surveys of satisfaction with the government’s performance and the popularity of the Chief Executive. The polls repeatedly showed low levels of popularity and high levels of dissatisfaction with government performance.126 In July 2000, Chung alleged in the press that he had been given a clear message from Tung Chee-hwa that his polling activities were unwelcome and that this message had been transmitted to him by the Vice-Chancellor of the University of Hong Kong.127 The University’s Council then set up an independent panel to investigate the allegations. The panel found that one of Tung Chee-hwa’s senior aides had approached the Vice-Chancellor on the polling issue and that a Pro Vice-Chancellor, acting at the behest of the Vice-Chancellor, had passed on messages “to push Dr. Chung into discontinuing his polling work.”128 The Vice-Chancellor and the Pro Vice-Chancellor resigned as a result of the findings. The most serious of all disjunctions between the government’s actions and its formal commitment to free exchange of information and rational debate was the final stage before the demonstrations against the legislation to enact Article 23 of the Basic Law. The government seemed divided within itself on whether it wished to pursue rational debate. On the one hand, its legal officers engaged in prolonged discussion with the government’s

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critics in many different arenas. On the other hand, when the opportunity came to push the Bill through the committee stage of the Legislative Council, in the absence of the democrats who were listening to the government’s legal officers expounding on Article 23, the government and its supporters not only seized the day but passed an additional resolution preventing further debate on the specific clauses of the Bill.129 The Secretary for Constitutional Affairs was later to argue that it was the views expressed by the community and Legislative Council members that persuaded the government to postpone the second reading of the Bill.130 In reality, it was not rational debate that brought about the change of heart but the 500,000 demonstrators who streamed through the streets of Hong Kong on 1 July. Article 23 put the question of the government’s commitment to free debate and expression of opinion to the test with serious adverse consequences, not so much for its willingness to consult but for the extent to which it was prepared to make substantive changes after consultation had taken place. In addition to increasing responsiveness through providing information, improving transparency and building trust, new channels of communication with civil society are necessary to reach accommodation on policy differences. Some progress towards better civic engagement has been made under the Tsang administration.131 On many issues, however, there is no consensus and creating new central consultative institutions, such as the re-vamped Commission on Strategic Development, simply reflects the differences over policy that exist in the society. They are unlikely to resolve problems, such as constitutional issues, on which there are strong feelings and polarised groups, especially if such institutions are created as top-down, centralised bodies whose members may not be entirely representative of, or able to exercise political discipline over, the groups to which they belong. If new channels of communication are to be created, they need to tap grass-roots public sentiment to a much greater degree than the government does at present. Responsiveness at the interface between the civil service and the public has improved markedly since the 1990s but it remains a value which is subsidiary to the long-standing aim of achieving maximum efficiency in government. In its first term, the Tung administration was concerned with managerial values: with enhancing e- government to provide more rapid and cost-effective services and with developing performance measures. Responsiveness, and the larger consideration of the accountability of the government to the citizen, became after-thoughts, ex post facto rationalisations for policies and decisions which the government intended to take. Subsequent events forced the government to re-think its position and to attempt to produce policies which met with greater public approval. But the government still remains “executive-led” and top-down. The institutional framework does not match its continued formal commitment to responsiveness. Responsiveness assumes particular significance in the context of a political system suffering from a legitimacy deficit. If a government can build trust through the innumerable interactions between the public and the civil service, it may go some way towards improving its public support and may also ameliorate some of the problems of consent and the absence of legal and moral authority which afflict the system. That was

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the political calculation that Patten made when he took office as Governor in 1992. The post-1997 government assumed that a more efficient government would necessarily be both more responsive and more legitimate. But the evidence does not support the view that greater efficiency alone will resolve the problem of legitimating a non-democratic regime. Despite the claims of its many critics, the Hong Kong government, at least since the McKinsey reforms, has never been particularly inefficient. Even if its efficiency is raised to higher levels, the problems that the government faces in its relationships with the public will not disappear. The difficulty is not with efficiency and performance; it is with a political system that does not permit adequate participation and consultation on critical issues and with a government that has passed up the opportunity to ameliorate the situation by increasing responsiveness.

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regime with a legitimacy deficit may ease its problems by conceding rights to citizens to protect them against illegal action by the government, by dealing with complaintsA against the unacceptable or corrupt behaviour of its public officials, and by providing channels for the redress of individual grievances about unfair or arbitrary administrative decisions. If recognition of citizens’ rights and complaint-handling and redress systems become institutionalised as part of the political system, they may compensate to some extent for the absence of democratic legitimation. It is sometimes said that Hong Kong people have freedom but that they do not have democracy. If they have individual freedom, that may mean that they are readier to tolerate, if not necessarily to approve, the more arbitrary and high-handed actions of the government in other matters which only indirectly affect their liberty. Their freedom depends, however, on the surety that rights will be protected and that the complaints and the individual grievances of citizens will be properly, fairly and impartially handled. If rights are ignored and the complaints and redress systems are not credible, grievances may fester and contribute to further mistrust of the government. In this chapter, we examine how the debate over rights developed and the extent to which the post-1997 government has protected them; the evolution of complaint- handling bodies for systemic problems such as corruption and the work of the ICAC; and the growth of the redress system and the problems that it has encountered. We draw a distinction between: • rights which we use in the sense of civil liberties, belonging to individuals rather than groups, which are protected by the legal system and possibly by other specific institutions;1 • complaints which we define as objections raised by citizens about inappropriate behaviour on the part of public officials, particularly corruption, where the complaint relates to the way in which the system is operating or where policy is significantly lacking or deficient; and • redress which is the remedy sought by individuals against arbitrary or unfair administrative action and which may be pursued through such institutions as the ombudsman which have been established for the purpose of deciding whether the grievance is justified.

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These distinctions are not self-contained. For example, a person seeking redress through the ombudsman is making a complaint and, in so doing, is exercising a civil liberty. The distinction does, nonetheless, enable us to analyse the various institutions which have been created to meet these different objectives and the extent to which they have fulfilled their purposes.

Rights

Until 1984, the protection of civil liberties rested almost entirely on the rule of law and the legal system and on conventions about how the government would or would not use its power. Under such a system, civil liberties were residual and were not embodied in domestic legislation; as one observer describes them, they were what was left over after the law had taken away.2 With the negotiations on the change of sovereignty, there was evident public concern that the civil liberties that were in place would be disregarded by the incoming regime. The Joint Declaration on the future of the territory addresses that concern and promises that the post-1997 government will honour the rights and freedom as provided for by the laws previously in force in Hong Kong, including freedom of the person, of speech, of the press, of assembly, of association, to form and join trade unions, of correspondence, of travel, of movement, of strike, of demonstration, of choice of occupation, of academic research, of belief, inviolability of the home, the freedom to marry and the right to raise a family freely.3

In addition, every person “shall have the right to challenge the actions of the executive in the courts”, religious freedom is guaranteed, and the provisions of the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights, as they then applied to Hong Kong, were to remain in force.4 The covenants themselves contain many specific rights and freedoms, some of which repeat those outlined in the Joint Declaration and some of which offer further rights of self-determination under which a people may “freely determine their political status and freely pursue their economic, social and cultural development.”5 The Basic Law incorporates the civil liberties outlined in the Joint Declaration and specifies, in Article 39, that the International Covenants shall apply in Hong Kong.6 The promulgation of the Basic Law took place shortly after the Tiananmen Square massacre. In its attempts to calm anxieties, the Hong Kong government promised to introduce a Bill of Rights which would have the effect of implementing the covenants. Until 1991, when the Bill of Rights was introduced, the British government’s position had been that, since the covenants applied to Britain, they also had force in Hong Kong. The Chinese government was unhappy at the introduction of the Bill of Rights which, it claimed, detracted from the pre-eminence of the Basic Law and which might conflict with some of its provisions.7 The debate rumbled on through the 1990s with various threats to make the Bill of Rights inoperative after 1997. It was amended so that it did not apply to the private sector,8 but the Chinese government was still unhappy. In February 1997, the

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Standing Committee of the National People’s Congress announced that three sections of the Bill of Rights Ordinance would not be adopted as laws of the SAR after the handover, measures to which the outgoing Hong Kong government objected.9 In the 1990s, a number of legislative measures were passed that were designed to increase civil liberties. In 1992, the Societies Ordinance, which had been used by successive colonial governments to control politically unacceptable organisations, was amended to provide better protection for societies from arbitrary government action and to bring it in line with the Basic Law’s prohibition on ties between political organisations or bodies in the SAR and foreign political organisations. In 1994, Patten, under some pressure from the Legislative Council, announced proposals which were intended “to strengthen the rights of the individual and to eliminate discrimination.”10 These included the implementation of United Nations conventions on the rights of the child and the elimination of all forms of discrimination against women, the establishment of an Equal Opportunities Commission and new legislation to prevent discrimination, the introduction of a Code of Access to Information, legislation to protect personal privacy, and improved legal aid.11 In 1995, the Public Order Ordinance was amended to replace the Commissioner of Police’s power to license demonstrations and protests by a system of notification which required the Commissioner, in banning a demonstration, to comply with Article 21 of the International Covenant on Civil and Political Rights. In February 1997, the Standing Committee of the National People’s Congress made it clear that the major amendments to the Societies Ordinance and the Public Order Ordinance would not be adopted as laws of the SAR after the handover. The future Chief Executive’s Office then produced a consultation document aimed at avoiding a legal vacuum. The document also provided amendments which were acceptable to the Chinese government but to which the departing colonial government continued to object.12 While the measures introduced before 1997 were aimed particularly at assuring the public that their rights would be protected after the retrocession, they were also an important part of the Serving the Community programme, which was designed to enhance the accountability of government and to make it more responsive to the public. One dimension of that accountability was to keep the public informed of government policies and services. This was to be achieved through the existing means of the policy address, now to be accompanied by more explicit policy commitments, departmental reports, departmental handbooks, performance pledges, briefings, press releases and interviews.13 A more informed public, it was expected, would lead to an increase in “public support, greater understanding of the Government’s policies and a greater awareness of public service issues.”14 To what extent have these attempts to strengthen civil liberties and to increase openness, transparency and accountability survived the transition? In the following sections, we consider three areas in which reforms were introduced and the extent to which they have been supported by government since the retrocession: the Code on Access to Information; the role of the Privacy Commissioner; and the Equal Opportunities Commission.

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The Code on Access to Information

The Code on Access to Information was introduced in March 1995. The post-1997 government continues to recognise the value of public access to information in promoting “understanding of policies and decisions, accountability for decisions and actions, awareness of public services, participation in public service issues, and in engendering confidence in the administration.”15 As part of the Code, it promises that departments will publish details of their organisation, information on the services they provide, their performance pledges and the extent to which they have been met, a list of their records and a list of information either published or otherwise made available.16 Responses to requests for information are to be given as quickly as possible, ideally within ten days. However, the government has reserved many areas in which it is not required to disclose information. These include: defence and security, external affairs, nationality, immigration and consular matters, the management of the public service, internal discussion and advice, public employment, information which could lead to improper gain, incomplete research, analysis or statistics, third party information (unless the third party’s consent has been obtained) and the privacy of the individual.17 In addition, the Code is not legally enforceable. The Code on Access to Information was intended to make government more open by providing citizens with greater and more specific information on administrative issues. In 1999, the Journalists Association put the Code to the test. It requested 81 documents from various departments, most of which were not thought to be particularly sensitive. Of the 81 documents, 35% were available in full, 9% were withheld in part, 25% were withheld in full, citing reasons under the code, and 32% were not available for other reasons. The Association considered some of the documents withheld to have been non-controversial. A survey of 90 of its members reported that 69% thought that the government was less open than before the handover. The Association subsequently launched a campaign for more open government.18 In 2007/2008, there were fifteen complaints to the Ombudsman about the way in which the Code operated. She has been highly critical of the government’s attitude towards the provision of information, noting that in several cases departments had refused requests for information either without reason or for reasons not specified in the Code. She also said that Access to Information officers at the departmental level were sometimes not aware of the provisions of the Code.19 The government claims that the vast majority of requests are met. Between March 1995 and June 2008, it received 25,068 requests for information of which 21,939 were met in full, 503 were met in part, 514 were refused and 1,911 were withdrawn.20 Bureaus and departments said that they did not hold information on 869 requests and 52 were still being processed.21 Many requests for information probably are routine and can be divulged without transgressing the categories of reserved information. Nonetheless, there is still a belief among many journalists and academics that the government’s attitude towards releasing information is to withhold it rather than to make it available.

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The Privacy Commissioner

The Personal Data (Privacy) Ordinance was introduced in December 1996 to protect the rights of individuals providing data to government. The legislation, which created the office of Privacy Commissioner to enforce its provisions, was based on six principles: establishing the purpose and manner of collection of personal data; ensuring that personal data kept by the government should be accurate, up-to-date and kept no longer than necessary; that personal data should be used for the purposes for which it was collected; that it should be kept securely; that information held should be available to the data subjects; and that data subjects should have the right to correct the personal data held on them.22 In common with the Code on Access to Information, there were exemptions within the legislation which protected the government’s right to limit the application of the Ordinance where it might prejudice security, defence and international relations, the prevention, detection, assessment or collection of any tax or duty, news activities, and health.23 The government clearly provided itself with sufficient loopholes to override the rights of individuals to privacy of personal data if it felt the need to do so. The legislation was primarily symbolic designed to allay fears that sensitive information on individuals might be passed on to the Chinese government. Complaints about violations of the privacy of data have risen from 52 in 1996/1997 to 1067 in 2006/2007, of which 125 were complaints against government and other public sector organisations.24 In 2008, there was a series of leaks of government information from the police, immigration, health authorities and the Civil Service Bureau, mainly stemming from the loss of USB storage devices or from inadvertent loading of the material on to the internet. It was revealed that the records of 46,000 people had been leaked by government and other public sector bodies over the previous three years but that only a few of the 30 incidents had been reported to the Privacy Commissioner.25 The revelations damaged the public image of the government and it has since taken measures to ensure that USBs are encrypted and that there are appropriate monitoring systems for the use of portable storage devices.26 But it has yet to enact proposals from the Privacy Commissioner to amend the Ordinance which he has suggested is outdated and needs to include penalties against those who “obtain or disseminate private data for personal gain.”27

The Equal Opportunities Commission (EOC)

In May 1996, the government established an Equal Opportunities Commission to administer two ordinances, the Sex Discrimination Ordinance and the Disability Discrimination Ordinance. The Ordinances make it unlawful to discriminate on the grounds of sex, marital status, pregnancy and disability, to harass or vilify anyone because of their sex or disability, and to help promote equality between men and women and between persons with disabilities and without disabilities. The Commission also administers the Family Status Discrimination Ordinance, which was passed into law in November 1997 and which makes it illegal to discriminate against anyone who has

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responsibility for the care of an immediate family member, and the Race Discrimination Ordinance which was passed in 2008. Much of the work of the Commission has been concerned with complaints of alleged violations of the Codes of Practice on Employment issued under the Ordinances. If settlement cannot be reached, a complainant has the right to apply for legal assistance and to bring proceedings before the District Court. In 2001, the EOC received numerous complaints about the Secondary School Places Allocation System (SSPA) and sought a judicial review of the government’s practices.28 In June 2001, the court ruled that the system was sex discriminatory and unlawful.29 The Commission’s work on the SSPA30 and in other court cases where the government actively resisted the Commission’s attempts to enforce the laws gave the EOC a positive public image.31 However, in 2003, the government did not renew the term of its chair, Anna Wu, who had been instrumental in ensuring that the Commission fought hard to make all organisations, including the government, comply with the laws against discrimination.32 The new chair, a former judge, Michael Wong Kin-chow, had previously been head of the Administrative Appeals Board. One of his first administrative acts was to rescind the appointment of a senior official, Patrick Yu Chung-yin, who had received an offer of employment while Anna Wu held the chair but who had not yet taken up his position.33 Wong’s decision, which was apparently triggered by an interview which Yu gave to the South China Morning Post, caused a storm of protest. A coalition of thirteen pressure groups called on the ombudsman to investigate his action and the Chair of the Society for Community Organisation called for his dismissal.34 The matter was further complicated when it was alleged that Wong had received gifts of airline tickets from a property developer while still a member of the judiciary, that he was living in a house that the developer was alleged to have given to his daughter, and that he had received special permission from the Chief Executive to receive his pension as a judge and his salary as chair while he held the position.35 The Legislative Council’s Panel on Home Affairs decided that it wanted to interview Wong over the dismissal of Yu. On the day before the meeting, however, Wong resigned. The government, under pressure from the Legislative Council, set up an Independent Panel of Inquiry into the incidents surrounding the termination of Yu’s appointment, Wong’s resignation, and Anna Wu’s allegations that she had been subject to a smear campaign by the government and several members of the EOC.36 The Panel subsequently concluded that Yu had been properly appointed and terminated (but with some technical lapses) and that there was no truth in the allegation published in a local magazine that government officials and EOC members had been involved in drafting an allegedly defamatory statement against Anna Wu at a private meeting the night before Wong resigned.37 The Secretary for Home Affairs, who was at that meeting although not apparently for its entirety, claimed that no one was smeared.38 After 2003, the EOC became rather less active and fewer cases went to court. Wong had been quoted as saying that he intended “to downsize the EOC”39 and, had he stayed in office, it seems likely that there would have been much less of the crusading spirit that Anna Wu had displayed. As it was, public confidence in the EOC seemed to drop after

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the controversies. Complaints fell from 1032 in 2003 to 595 in 2004, gradually rising again to over 800 in 2008.40 The government appeared to want a quieter life. The Home Affairs Bureau picked up on a recommendation of the Panel of Inquiry to separate the position of Chair from that of the Chief Executive Officer.41 Although the action was rationalised as being in line with other non-departmental public bodies, it could also have been interpreted as checking the power of the head of the EOC. The passage of the Race Discrimination Ordinance in 2008 also suggested that the government had no wish to find itself in future in court pitted against one of its own statutory bodies. The government is bound by the Ordinance but only in terms of its general application. Any officer carrying out a statutory duty under another ordinance is not obliged to abide by its provisions. In addition, immigration law and policy, which is an important area in which racial discrimination might occur, are also excluded.42 The EOC’s role is in effect restricted to ensuring that the private sector adheres to the employment provisions in the Ordinance. The Code on Access to Information, the Office of the Privacy Commissioner and the EOC have evolved in rather different ways. The Code has become part of civil service practice but its provisions are not strong enough to require the government to release information which it does not wish to release. The protection of data is required by law but its provisions are not sufficiently punitive, in the view of the Commissioner, to deal with changing circumstances. The EOC experience raises quite separate issues, calling into question the extent to which the government is committed to the protection of civil liberties. In the protests against the national security legislation in 2003, the government was painted into a corner where it was seen to be attacking civil liberties. The perception that it is at best a lukewarm supporter of civil liberties has not been aided by its apparent efforts to reduce the impact of the EOC or by the views of some of the government’s more influential supporters that the Bill of Rights is a colonial device and that the Chinese government never intended the international covenants to apply to domestic law.43 The passage of the Race Discrimination Ordinance did nothing to help the government’s image. The Chair of the Legislative Council’s Bills Committee, among many critics, said she was “deeply ashamed” of a government that had blatantly failed to meet its basic United Nations obligations in the Ordinance.44 In the final analysis, the government’s own pre-dispositions, and those of the Chinese government, may prevent it from adopting a proactive position on civil liberties. Yet, if does not do so, there will always be questions about its commitment to the protection of citizens’ rights. Civil liberties remain a key area of public concern in post-1997 Hong Kong and any attempt to tamper with them arouses fierce opposition.

Complaints

In the introduction to this chapter, we drew a distinction between complaints, which have a broad effect in policy or systemic terms, and individual grievances for which redress might be sought. In this section, we analyse the work of two institutions whose role in handling individual complaints is less significant than their contributions to the correction

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of policy problems and to the maintenance of systemic values. The Legislative Council, like most legislatures, has taken on the role of redressing individual grievances. But that role has become increasingly less important as other complaint-handling institutions have been created and as legislators themselves have sought to identify critical policy issues which could arise from individual complaints but which are probably more likely to be expressed in the form of group representations. The ICAC, similarly, has a systemic role. If citizens have the assurance that corruption can be controlled and if core values are seen to be supported, then the legitimacy deficit can be reduced.

The Legislative Council Redress System

In 1970, the colonial administration rejected the idea of an ombudsman in favour of strengthening the representative function of Legislative Councillors.45 The changes were minimal and Legislative Councillors continued to play only a limited role in redressing grievances. In 1980, for example, it was estimated that some 90% of representations from the public could be handled by civil servants without troubling the Councillors which meant that most complaints could be neatly contained within the bureaucratic system. Under the Office of Members of the Executive and Legislative Council (OMELCO) system, Legislative Councillors (but, in practice, the civil servants manning the OMELCO office) had three rights: the right to information, including government files and correspondence, policies procedures and instructions; the right of access to senior government officials; and the right to challenge the actions of public agencies.46 The OMELCO office did not exercise these rights very frequently. Most matters were resolved informally between the complaints officer in OMELCO, the department concerned and the complainant. OMELCO was eventually organised into a complaints division and a members division, which handled interest group representation.47 This downgraded the importance of complaints, partly because unelected members, who had no need to canvass for votes, were more concerned with pressure groups than with individual complaints and partly because more senior civil servants were seconded to the members division. OMELCO became increasingly less relevant to the complaint-handling process in the 1990s when there were many other avenues through which complainants could air their grievances. A Consumer Council had been established in 1974 and regularly received more complaints than the Legislative Council complaints division.48 The ICAC, which also came into operation in 1974, was soon well respected for its role in combating corruption and received many complaints that had nothing to do with graft. The Urban Council and the District Boards, when they were set up in 1981, provided other channels for redress for aggrieved members of the public. Finally, in 1989, after many years of consideration and consultation, the government did set up a weak ombudsman system, the Commissioner for Administrative Complaints. The OMELCO system, originally the only outlet for complaints against the government, had simply become one among a number of different channels for redress.

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With the introduction of directly elected members to the Legislative Council in 1991, some re-organisation of the system was required. A Legislative Council Secretariat was created in 1994 which retained a complaint-handling function. In the same year, however, the government introduced amendments to the Commissioner for Administrative Complaints Ordinance which enabled complainants to take their grievances directly to the Commissioner, instead of having the complaint referred by a member of the Legislative Council. The amendment increased by seven-fold the number of complaints received by the Commissioner and correspondingly reduced the importance of complaint-handling within the Council Secretariat. In addition, the emphasis on responsiveness after Patten became Governor meant that a good deal of thought went into handling issues likely to cause grievances. The focus on service to the public, performance pledges and training programmes to improve levels of courtesy and efficiency may have helped to reduce the number of complaints. The development of departmental complaint-handling mechanisms also meant that many grievances could be resolved without recourse to the Legislative Council. The reforms to the ombudsman system, in particular, caused Councillors to re-think their collective role. Their view was that “the primary target of the redress system should be towards representations that raise wide policy issues and matters of public concern …”49 However, the Legislative Council could not entirely escape its complaint-handling role because it was required, under Section 73(8) of the Basic Law, to “receive and handle complaints from Hong Kong residents.” In July 1998, it extended its jurisdiction to include non-government bodies and established referral procedures which, with the consent of the client, meant that some complaints were passed on to other complaint- handling institutions.50 Table 11.1 shows the number of representations and individual complaints handled by the Legislative Council over the period 1993–2008. Individual complaints have been gradually declining; the public is well aware that there are other avenues for redress. In a comprehensive survey conducted by the Census and Statistics Department in 2008, the Legislative Council did not even feature as a preferred channel of complaint. Most respondents preferred to take their complaints directly to the department or public body concerned (35.5%), to the District Council (30.5%), to the Ombudsman (15.5%) or to the media (13.9%).51 There is little incentive for Legislative Councillors to devote time to individual complaints for the system does not reward them with the votes of grateful constituents. Members work in groups of six and take turns to be on duty each week although the same group of members usually handle complaints on the same issue.52 If members do have a representative function on behalf of their constituents, it is performed through their own offices rather than through the Legislative Council redress system. A further constraint on the Legislative Council system is that its method of classifying and reporting complaints does not directly address the problem of maladministration. Since 2003, the disposition of complaints has been included with group representations so that it is not possible to determine what decisions have been taken on individual complaints. Complaints, whether from groups or individuals, are

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Table 11.1 Complaints and Representations to the Legislative Council, 1997–2007 Year Group representations Individual complaints 1997–1998 163 798 1998–1999 315 1,264 1999–2000 170 963 2000–2001 194 942 2001–2002 169 626 2002–2003 176 993 2003–2004 175 861 2004–2005 171 841 2005–2006 175 712 2006–2007 194 752 Source: Legislative Council, Annual Reports 1997–2007 (Hong Kong: various publishers 1997–2007, www.legco.gov.hk); Provisional Legislative Council, Provisional Legislative Council Annual Report 1997–1998 (Hong Kong: Horizon Creative Ltd, 1998). Note: The reporting period for 1997–1998 was from 1 July 1997 to 30 June 1998. The reporting period for 1998–1999 was from 1 July 1998 to 30 September 1999.

described as “resolved”, rather than substantiated or unsubstantiated, which means that they may represent a bureaucratic mistake or that the department is simply explaining to the complainant why they took the decision. No further breakdown of the cases is provided. “Resolved” cases and the large numbers of referrals and of “information given” cases suggest that the Legislative Councillors are not primarily focused on ensuring that complaints are rectified and prevented from re-occurring but rather that they seek an appropriate solution for the specific cases brought before them. Some publicity is given to important cases with policy implications but the ombudsman’s aim of improving the quality of the public service through the complaint-handling process does not appear to be a major objective of the Legislative Council system. Complaints, whether brought by individuals or deputations, do provide a barometer of the issues troubling the public. Housing, and particularly the management of the public housing estates, has been a perennial source of complaints, deputations and requests for assistance. Health and social welfare complaints also feature regularly. In any given year, specific government measures may result in a spate of complaints. In 2002/2003, for example, immigration and right of abode matters generated by far the largest number of complaints.53 In 2006–2007, in the light of food poisoning scares, the Health, Welfare and Food Bureau was the subject of the most complaints and also of the most proposals for change by group representatives.54 Legislative Councillors have been able to make some improvements to policy through the redress system. In one case, for example, members received a deputation over the poor construction of housing estates and misrepresentation of facts in the sales

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brochure and were able both to ask the Hong Kong Housing Society to rectify the defects and to persuade the government to introduce legislation on the regulation of the content of sales brochures.55 In another instance, after complaints from residents that the Urban Renewal Authority had taken ten years to re-develop their street, members of the Council met with the Authority to discuss how the work could be completed more expeditiously while retaining the vibrancy of the street.56 Immigration cases have also occupied much of Councillors’ time. As a consequence of the Court of Final Appeal’s decision on the right of abode, the government issued an edict denying school places to affected children. Their families and various pressure groups protested and the Catholic Church, one of the largest providers of private education, refused to implement the measure. Legislative Councillors indicated their own disquiet with the government’s stance. They pointed out that schooling and right of abode were different issues and questioned the legal basis of the decision. The government undertook to review each of the 187 cases and some of the children were subsequently admitted to schools.57 The role of the Legislative Council in handling these issues relates more to policy demands from the society than it does to redressing individual grievances. In a political system where pressure groups often express their reactions to government policy on the streets, the Legislative Council plays a valuable role as a mediator between the society and the government. It may not always be able to persuade the government to take action or to change its position but it does provide a forum for the expression of views and some publicity for those who bring their cases to the Council. Despite these strengths, it is not the most appropriate channel for relatively minor complaints against government decisions. For that reason, Councillors view their complaint-handling role as supplementary to the ombudsman, the Complaints Against the Police Office (CAPO) and other departmental complaint-handling units rather than as the focal point for grievances concerned with maladministration.

The Independent Commission Against Corruption (ICAC)

Corruption is a form of maladministration that may adversely affect the performance of a public service. In the 1960s and early 1970s, syndicated police corruption and corrupt practices in other departments seriously tarnished the reputation of the government and contributed to the legitimacy deficit. When the ICAC was created in 1974, it assumed the mantle of a crusader for clean government and public sector morality. Despite some setbacks in its efforts to win public confidence, especially immediately after November 1977 when there was a short-lived amnesty for police officers suspected of corruption offences, it has been able to retain this image. The measure of its success has been the widely-held belief that its work is essential to sustain integrity in government and that if corruption is discovered it will be fully investigated and the wrongdoers punished. The ICAC has been able to maintain qualities which serve to enhance the support for all institutions concerned with civil liberties, complaints and redress: integrity, independence from government and the willingness and ability to investigate complaints without fear or favour.

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Although it has always prosecuted more offenders in the private sector than in the public sector, the ICAC’s focus has been fixed on detecting and eliminating corruption in government. In 2007, of the 3600 reports it received alleging corruption (excluding election and non-corruption reports), 975 concerned the public service of which 318 were about alleged police corruption.58 A further 249 complaints related to other public bodies. Complaints about corruption in the public service and the number of those prosecuted for corruption have been falling for some years; in 2007, 25 public servants were prosecuted, half the number prosecuted in 2003 and less than a quarter of those prosecuted in the late 1970s and early 1980s.59 In 2007, the Commission also referred 123 civil servants to the Civil Service Bureau for consideration for disciplinary action.60 Complaints about non-government public organisations rose as more of those bodies were created, but have begun to drop again recently. Not all reports are sufficiently specific to be investigated but the ICAC is obliged to make preliminary enquiries even into complaints that are lodged anonymously. The Operations Department, which had 856 staff in 2007,61 is by far the largest of the ICAC departments and is responsible for investigating corruption complaints. It has the power of arrest without warrant and may also enter and search premises with the permission of the court. An increasingly important function of the ICAC is to ensure that elections are corruption-free. Candidates are briefed on the legal restrictions on campaign activities and elections are closely monitored. In 2007, the Commission received 913 election complaints of which 171 were allegations of bribery while the remainder related to other corrupt or illegal activities such as providing gifts for voters or publishing false information about candidates.62 The ICAC’s work in ensuring fair elections gives some indication of its importance to the system as a guardian of moral values. This role extends far beyond investigating corruption cases and prosecuting those suspected of offences. The ICAC’s Corruption Prevention Department, for example, which in 2007 had 55 staff, is responsible for advising on how procedures within government can be improved to reduce opportunities for corruption.63 In 2007, it carried out 92 studies in the public sector in areas which ranged widely from food safety, to land control, medical outside practice at the University of Hong Kong, the management and investigation of bankruptcy cases and procedures for the development of the new cruise terminal.64 The aim is to correct potential faults in the system and, with new legislation, policies and procedures, to build in corruption safeguards as early as possible.65 The work of the third arm of the ICAC, the Community Relations Department, further extends its systemic role to include public education about the detrimental effects of corruption. The ICAC conducts extensive publicity campaigns on television and on the mobile broadcast network of the franchised buses and seeks to get its message across in a variety of different formats from short stories and interviews to a website for teenagers. The Community Relations Department had a staff of 169 in 2007 and was divided into two divisions (one for liaison with mainland counterparts, the other for local publicity) and seven regional offices which served the function both of receiving complaints and of meeting with local groups and schools.66 Youth receive particular

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attention with some 80,000 secondary and tertiary students attending talks or taking part in activities in 2007.67 At the community-wide level, the Community Relations Department also makes attempts to contact business people and civil servants and has set up the Hong Kong Ethics Development Centre to work with the major chambers of commerce. The results of these efforts appear to have been very positive.68 Because of its status in the community, the ICAC also receives a considerable number of non-corruption complaints. In 2007, for example, the ICAC referred 646 reports of a non-corruption nature (approximately 18% of all reports) to other government departments.69 Of these, 28 were non-corruption complaints about police officers and were referred to the Complaints Against Police Office (CAPO).70 The ICAC monitors the progress made in investigating those complaints but does not play any further part in the process. Surveys have revealed that many complainants are perfectly well aware that the ICAC is only responsible for investigating corruption complaints and that it does not have a role in handling other complaints. But there is a widely-held perception that the ICAC is an unofficial court of appeal and that its officers have high integrity.71 This sets the ICAC apart from other complaint-handling bodies; it has become institutionalised while others are still striving to attain the public image of probity and impartiality which the ICAC has enjoyed for some years. The ICAC undertakes an annual random survey of 1500 people which assesses its performance in the eyes of the public. The surveys show high levels of public confidence in its work. In 2007, 98.5% of respondents believed that the ICAC deserved their support,72 over 70% were willing to report corruption, and 90% said they believed that their reports would be kept confidential.73 Some 77% claimed that they had seen ICAC publicity, mainly on television.74 There were very different perceptions of the extent of corruption in the public sector compared with the private sector. Some 76% thought that corruption was uncommon in government departments but 47% thought that it was common in business.75 Some respondents expressed doubts about the accountability of the ICAC and 27% felt that external supervision over it should be increased.76 The surveys suggest nonetheless that the community accepts the ICAC’s extensive powers of arrest and detention as the price it has to pay for clean government.77 Since 1997, both the Legislative Council and the ICAC have continued to make important contributions to the smooth running of the system. Yet although Legislative Council members have influenced decisions on policy through the redress system, there is very little its members can do if the government decides that it will not take action on a particular issue. Even bringing the matter to the attention of the Legislative Council as a whole may be quite difficult since the government has its own agenda and there may be many other matters that members may wish to raise. Pressure groups, in any event, are unlikely to let their concerns rest with Legislative Councillors alone; they normally take other forms of action which means that the issues cannot be contained within the political system. The role of the Legislative Council redress system is to serve as an ameliorating, mediating body. It may help on some issues but it is unlikely to be able to resolve fundamental differences between the community and the government. By contrast, the ICAC, as a defender of public morality and the core value of clean

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government, is critical to the maintenance of the system. Without it, faith in government would decline further and there would be fear of rampant corruption in the public service.

Redress

An effective redress system which deals impartially with individual complaints about unfair, arbitrary or illegal government decisions and recommends remedies and improvements in procedures can be a useful means of reducing a legitimacy deficit. Redress institutions can provide avenues for appeal and for obtaining explanations of official action, which, in non-democratic systems, may be one of the few ways in which citizens can object to unacceptable behaviour by public officials. In Hong Kong, the redress institutions — the ombudsman, the Complaints Against Police Office (CAPO) and the Independent Police Complaints Tribunal, the departmental complaint-handling bodies, administrative tribunals and the Administrative Appeals Board — have developed from colonial administrative practices where considerable attention was paid to presenting the government in a good light and to controlling the redress system accordingly. Political pressure has led to the development of some redress systems which have gradually won more respect from the public for their impartiality. But there remain areas, particularly the handling of complaints against the police and the procedures of some administrative tribunals, which are controversial and where there are divergent views about the best way forward. There are also perennial issues about how redress institutions will be staffed and the degree to which their financial dependence on government affects their autonomy and their willingness to press for justice. Prior to the riots of 1996 and 1967, there was very little by way of a redress system. The colonial administration took the view that the rule of law and an impartial court system should be sufficient to resolve any disputes that citizens might have with their government. This conveniently ignored the practicalities of cost and the fact that courts consider the legality of a decision rather than whether it is fair or reasonable. Applications for the judicial review of administrative decisions suffer from other problems. Unlike normal court proceedings, judicial review focuses on the fairness of the process, “whether a decision-making authority has exceeded its powers, committed an error of law, committed a breach of the rules of natural justice, reached a decision which no reasonable tribunal could have reached or abused its powers.”78 The courts do not decide on the merits of the decision and they may not accept applications for judicial review if there is another avenue of appeal available. The nature of the complaints that people have against their government, important as they are to the individual, are often not matters of sufficient significance for the courts and may be better resolved through other institutions which have procedures for conciliation or investigation into the causes of the grievance.

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The Ombudsman

The rule of law and the Legislative Council redress system were never going to be sufficient to satisfy the mounting political pressure for independent channels of redress.79 The colonial government was anxious to reduce friction between the administration and the public in what were expected to be tension-filled years in the transition to Chinese sovereignty. And so, in the mid-1980s, the proposal to create an Ombudsman, which the Governor and the Colonial Secretary had killed fifteen years earlier, was re-visited. The government was still ambivalent about creating an institution which had the potential to uncover inequities and embarrass its senior officials. The consultative document on the redress of grievances, released in August 1986, reflected its caution.80 After a self- congratulatory review of the work of the existing complaint-handling institutions and the possibility that no changes were required, the government suggested that an ombudsman system or a Commissioner for Administration might be considered. The Commission for Administrative Complaints was established on 1 March 1989. From the outset, it suffered from the problems that had afflicted the British Parliamentary Commissioner system, on which it was based, that complaints had to be referred to the Commissioner by a member of the Legislative Council. Relatively few complaints were actually referred: only 71 in 1989, 167 in 1990, 197 in 1991 and 150 in 1992.81 Even those complaints which were substantiated tended to be concerned with small administrative mistakes although there were exceptions. In 1991/1992, seven of 16 complaints about the Hospital Services Department were found to be substantiated. At least one set of complaints were potentially life-threatening, involving a group of kidney patients who alleged unfair treatment in the selection of patients for renal transplant operations.82 But such cases were rare and received little publicity. The Commissioner, a former judge, usually kept a low profile although, in 1992, when the Legislative Council reviewed the system, he did make recommendations for change.83 Not all of the Commissioner’s recommendations were adopted,84 but the Governor soon announced that the powers of the office would be enhanced.85 The reforms resulted in a much more effective system. Complaints could now be made directly to the Commissioner; publicity for individual cases was permitted; statutory bodies, such as the MTRC and the Kowloon-Canton Railway Corporation, were included in the Commissioner’s jurisdiction; and the Commissioner was given the power, despite strong and public opposition from the Chief Secretary, the head of the civil service, to initiate direct investigations of complaints that had wide public significance.86 The powers of the Commissioner now more closely resembled those of an ombudsman than the British Parliamentary Commissioner and, in December 1996, it was renamed the Office of the Ombudsman. Although the ombudsman has the legal authority to take cases directly, to publicise findings and to launch independent investigations, these are necessary, but not sufficient, conditions for effective performance. Much depends on how the role of the office is interpreted and how its performance is judged by the public and the departments against which complaints are lodged. How does the ombudsman see that role? In her 2007/2008

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annual report, the Ombudsman said that her office investigates “actions by Government departments and public bodies for administrative deficiencies and recommends remedial measures [and] fosters good public administration that is fair, open, accountable and responsive.”87 A previous Ombudsman described the functions of the office as including: redressing individual grievances against maladministration in the public sector; making bureaucracy more human; lessening the gap between the government and the public; preventing abuses by acting as a bureaucratic watchdog; righting individual wrongs; indicating the facts when public servants are unjustly accused; and facilitating administrative reforms in the public sector.88 Two years later, protecting human rights was added to this list.89 To fulfil these functions, the office must be seen to possess certain qualities which place its integrity beyond doubt. At stake are: whether the ombudsman is thorough in the investigation of the complaint and reaches decisions that are fair to all the parties concerned; evidence that the public sees the office as an appropriate place to take complaints and that the office itself provides for suitable and procedurally sound avenues for redress; attention to the public interest and values, such as administrative fairness, to which the office might contribute; and the autonomy of the office itself from government interference, either directly or indirectly, in the way which the ombudsman carries out her work.90 We consider each of the features in turn. Impartiality is an essential quality for effective performance. Without it, the public will quickly come to realise that there is little point in seeking redress through the institution and will look elsewhere to resolve their grievances. For that reason, selecting an ombudsman who has had a career in a profession that demands probity has usually been regarded as an important way of re-assuring the public that the office will be fair and above board. The power to appoint the ombudsman lies with the Chief Executive91 and the responsibility for ensuring that the impartiality of the office is beyond question begins with the government. It has been argued, somewhat curiously, that the executive’s appointment of the ombudsman in Hong Kong removes it from partisan politics, as though the executive itself could not possibly be partisan or political in such matters.92 A government is often a judge in its own cause and it is complaints against arbitrary executive action that the ombudsman is investigating. Legislative Councillors have in fact been the strongest proponents of the independence and impartiality of the office. In May 2003, for example, Cyd Ho introduced a motion in the Council calling for the independence of statutory bodies with complaint-handling duties and expressing concern about the government’s appointment policy.93 There is a good case for the Legislative Council to be involved at some stage in nominations for the office or in approving the executive’s nomination. The first Commissioner for Administrative Complaints, Arthur Garcia, was a former judge while the second, Andrew So, had been a school-teacher. In neither case was there any question about their impartiality. The appointment of the third ombudsman, Alice Tai, in April 1999, did arouse controversy.94 She had been a senior civil servant for many years and there was speculation that her appointment had been a consequence of the administration’s belief that the previous ombudsman, whose term was not renewed, had

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been too outspoken and critical. There is no reason to suppose a former civil servant may not act independently and impartially as an ombudsman but there is the possibility that the public might see such an appointment as a “civil servant investigating other civil servants.” Legislative Councillors had pointed to the undesirability of appointing former civil servants to the Commissioner of Administrative Complaints Office as early as the debate on the creation of the office.95 Jurisdiction and autonomy from government are also critical features in assessing the performance of the office. The ombudsman’s jurisdiction presently covers 80 organisations including government departments and statutory bodies and all the registries and administrative offices of courts and tribunals for which the Judiciary Administrator has responsibility.96 Exclusions from the jurisdiction include the police, matters affecting security, defence and international relations, court proceedings, civil service personnel matters, any action taken personally by the Chief Executive, honours and awards, contracts (excluding procedures affecting tenders), investigation of crimes, any action taken in relation to the code on takeovers and mergers and decisions concerning “the imposition or variation of any condition of granting, extending or renewing any interest in Government land.”97 The government has made a public commitment to maintain the independence of the office.98 It has supported amendments to the Ordinance which allowed the Office to conduct its own financial and administrative matters and enabled the ombudsman to determine the conditions of service of office staff separately from those of the civil service. In 2007/2008, the Office had 98 regular staff on salaries slightly below equivalent ranks in the civil service.99 What the government did not support was an amendment to the Ordinance which would have restricted “the reappointment of the Ombudsman to one further period of five years.”100 Although a majority of Legislative Councillors voted for the amendment, it needed the support of a majority of both functional constituency and directly elected members and that condition was not met. The term of the ombudsman remains indefinite at the pleasure of the government. The extent of the ombudsman’s autonomy from government and a more extensive jurisdiction would mean very little if they were not accompanied by significant powers to investigate complaints. Under the Ombudsman Ordinance, the ombudsman may investigate a complaint if it is made by the aggrieved individual provided that the complaint is lodged within 24 months of the event and that it is not possible to appeal or to seek a remedy through the Chief Executive, the Chief Executive in Council, tribunals or the court system.101 There is an obligation to keep information relating to the complainant confidential, which means that a case cannot be shared with another complaint-handling institution unless the complainant agrees to have it transferred.102 In conducting an investigation, the ombudsman is required to inform the head of the organisation against which a complaint has been lodged and “may seek his comments.”103 If the investigation proceeds further, the organisation may be required to provide any information or documents the ombudsman needs and officials involved in the case may be interviewed. These are substantial powers but they may only be required occasionally. Many of the complaints are relatively minor and can be resolved quite easily.

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Table 11.2 shows the number of enquiries and complaints received and the number of direct investigations undertaken by the ombudsman. Enquiries provide some indication of public knowledge of the institution and have shown a steady rise. Ombudsman offices often serve as a port of first call for citizens seeking guidance through the maze of government departments and activities and it would appear that the Hong Kong ombudsman is increasingly serving that function. Once the Legislative Council filter was removed in 1994 and the number of complaints increased, there were also more cases likely to be outside the ombudsman’s jurisdiction. Even so, the number of complaints fully investigated has dropped substantially in recent years. This is attributable in part to ultra vires cases, to the introduction in 1996 of a referral system (the INCH programme) whereby a complainant can be referred to another complaint-handling institution with his or her approval, and to cases which could not be investigated because of restrictions on the investigation or because the complaint was withdrawn (see Table 11.3).

Table 11.2 Complaints to the Ombudsman, 1994, 1997–2008 Year Enquiries Complaints Percentage of Direct complaints concluded investigations1 1993/1994 1,054 173 74 – 1997/1998 7,578 3,073 84 7 1998/1999 10,192 4,125 81 7 1999/2000 9,323 3,101 85 3 2000/2001 11,821 3,709 81 5 2001/2002 12,900 3,736 83 4 2002/2003 14,298 4,382 85 1 2003/2004 12,552 3,859 80 5 2004/2005 11,742 3,802 88 6 2005/2006 14,633 3,828 86 6 2006/2007 16,626 5,606 85 5 2007/2008 12,169 4,987 78.3 4 Source: Adapted from Commissioner for Administrative Complaints, Annual Report of the Commissioner for Administrative Complaints 1993/1994 (Hong Kong: Government Printer, 1994); Office of the Ombudsman, Annual Report of the Ombudsman, Hong Kong 1997/1998–2007/2008 (Hong Kong: Printing Department, 1997–2002, www.ombudsman.gov.hk). Note: The ombudsman did not have the power to conduct direct investigations until 1994.

The most important reason for the decrease, however, is the way in which the ombudsman treats complaints. Most complaints are of a relatively trivial nature: a letter seemingly insulting a deceased relative, a kindergarten teacher falsely accused of being an illegal hawker, a complaint that the KCRC had incorrectly claimed that a ticket was invalid and so on. In 2007, over 71% of complaints fell into four categories: disparity in treatment, unfairness and selective enforcement; error or wrong decision or advice; failure to follow procedures or delay; and negligence or omission.104 Most of these

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complaints were dealt with under the category of “rendering assistance or clarification” (see Table 11.3). The department may make changes or apologise to the complainant or the preliminary investigation may find that the department acted correctly. Some cases, however, do involve issues of “principle, serious maladministration, gross injustice, systemic flaws or procedural deficiencies.”105 With such complaints, the ombudsman may order a full investigation in which witnesses may be called or site visits may take place. Implicitly, the ombudsman is drawing a distinction between those cases which can be resolved by “assistance or clarification” and those which are of wider significance. This distinction has important implications for the number of fully investigated cases, which have dropped substantially (see Table 11.3), and for the number of substantiated complaints which have also declined.

Table 11.3 Disposition of Concluded Complaints to the Ombudsman, 2003–2008 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 Preliminary 1,834 1,873 1,758 1,643 1938 Investigations INCH 203 209 185 143 81 RAC 1,631 1,664 1,573 1,500 1,857 Full Investigation 284 125 55 71 38 Mediation 7 6 12 2 1 Not Pursued 328 1,071 1,371 1,239 1,421 Ultra Vires 1,892 1,948 1,113 2,385 1,246 Total 4,345 5,023 4,309 5,340 4,644 Source: Adapted from Office of the Ombudsman,Annual Reports 2003–2008, www ombudsman. gov.hk, Figure 3.4, Table 1. Notes: 1. INCH is a referral programme to other complaint-handling institutions. 2. RAC is “rendered assistance and clarification”. 3. Not pursued includes cases that are withdrawn or discontinued. 4. Ultra vires includes cases that are beyond the ombudsman’s jurisdiction or where restrictions are placed on the investigation.

Under the second ombudsman, Andrew So, many complaints were found to be substantiated; in 1995/1996, for example, 39% of all complaints investigated were substantiated. Since his departure, there have been far fewer substantiated complaints. In itself, this may be no more than a matter of classification. Many of the cases in which the office of the ombudsman rendered assistance or clarification were no doubt substantiated or partially substantiated; the ombudsman reported that government departments and statutory bodies were required to take remedial action in 34.5% of cases.106 Of the 38 cases in which a full investigation was conducted, nine were found to be substantiated and a further thirteen were partially substantiated.107 “Substantiated” complaints are not a measure of the effectiveness of the office. But they do have symbolic importance. They show the public that the ombudsman is willing to take on the bureaucracy on behalf of

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the citizen and point the finger, if necessary, to cases where civil servants or public sector employees have been guilty of maladministration. “Substantiated” complaints, moreover, send a message to civil servants that they will not be able to escape censure if they behave in a manner which violates the legal, fair and proper treatment of citizens. When the ombudsman finds a complaint substantiated or partially substantiated, the government is expected to rectify the situation to ensure that it does not recur. Its responses to the ombudsman’s findings are brought together annually as a government minute and tabled in the Legislative Council. Almost invariably, cases of justified complaints are met with an apology, a correction of the error, and a promise to tighten the regulations. The ombudsman can also recommend that compensation be paid in cases where the complainant has been adversely affected by administrative negligence or wrongful advice. In one case, for example, financial compensation was paid to a prospective tenant who was not informed of the pending demolition of a housing block in which she had entered into a tenancy agreement for a shop.108 Thus, although many cases are relatively minor, they have the wider importance of improving government procedures and of ensuring that similar problems do not arise again. The present ombudsman has placed some emphasis on alternative dispute resolution, that is, in referring a complaint to another, more appropriate complaint-handling body, in rendering assistance or clarification without the need for a full investigation, or in mediation where the parties to the dispute voluntarily come together and to seek to resolve the problem.109 The number of complaints resolved by rendering assistance or clarification has been steadily rising (see Table 11.3) but referrals, under the INCH programme, have been dropping and mediation is never likely to involve more than a few cases. In all cases, where a matter is resolved without a full investigation, the ombudsman has to be satisfied that there is no evidence of maladministration and that the complaint has been triggered by a public servant’s minor error or by the complainant’s failure to understand government regulations or the reason for a decision. The ombudsman’s attempts to conciliate in such cases have become an increasingly significant part of the institution’s role. Of the departments and public bodies about which the ombudsman receives the largest numbers of complaints, the Housing Department normally ranks highest, some 24.7% of all complaints in 2007/2008.110 Other departments that attract a large number of complaints are the Lands Department, the Food and Environmental Hygiene Department — some of whose activities, such as hawker control and inspection of commercial premises to check on hygiene standards, have the potential to provoke friction — the Buildings Department, and the Immigration, Social Welfare and Transport Departments. Complaints about departments or public bodies may be distorted by group complaints or public annoyance about a specific matter. Prisoners, for example, at one time preferred to resort to the ombudsman to complain about their treatment rather than use the complaint-handling unit of the Correctional Services Department.111 In 2007, the Television and Entertainment Licensing Authority ranked third on the “most complained about” list, largely as a result of a single issue.112 In general, complaints received by the ombudsman reflect areas in which there is greatest interaction between the government and the public.

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The ombudsman has the power to initiate direct investigations into matters of public concern in which there is alleged maladministration. There need not be a specific complaint about the issue. The ombudsman may choose to examine administrative practices where there is a suspicion that there may be “systemic or widespread deficiencies” in the “implementation of new or revised Government procedures or repeated complaints about particular matters.”113 The issue should be “of sufficient dimension and complexity, representing the general interest, desire or expectation of the community”, not an individual grievance, not normally subject to the jurisdiction of a court or tribunal, and a matter of grave and immediate concern to the ombudsman.114 In 2007/2008, there were eight direct investigations completed or in progress into such matters as improving mechanisms for handling conflicts of interest in organisations subvented by the Leisure and Cultural Services Department, alleged overcharging of water bills, and the effectiveness of the Integrated Call Centre in handling complaints.115 Because direct investigations focus on much larger issues than those normally raised by individual grievances, the possibility of conflict with government over the decision to conduct an investigation or over the ombudsman’s recommendations is greater. The government was originally unhappy about conceding the power of direct investigation to the ombudsman and there have been occasional cases where it has felt that an investigation was unnecessary. The Chief Secretary for Administration, for example, thought that there was no need for the ombudsman’s investigation into the problems surrounding the opening of the airport, especially since there were two other investigations under way. The ombudsman pointed out that the announcement of the direct investigation preceded those of the Legislative Council and the administration itself and that the investigation was focused on the question of whether there had been maladministration.116 The results of direct investigations are reported at a media conference which puts some pressure on the government to address the problem and accept the recommendations. The ombudsman has a mission to bring about improvement in the quality and standard of public administration and to promote fairness in the way which government departments treat citizens.117 The office has produced “administrative ethics” and “administrative fairness” checklists which put questions to public servants about their work practices, their sense of responsibility and accountability, their honesty and integrity, their economy and environmental consciousness, and how they make decisions and handle grievances.118 The administrative ethics checklist also included a code of conduct.119 Efforts to regulate the ethical behaviour of civil servants are largely the province of the ICAC and the Civil Service Bureau which is producing its own code of behaviour but the ombudsman has a role to play because individual cases and direct investigations can serve as examples of appropriate and inappropriate behaviour. Because the principle remains in place that complaints should be resolved at the lowest level possible and because the ombudsman refers complaints under the INCH programme to departments, the office has an interest in how well departmental complaint- handling units perform. In 1998, the office produced a guide to effective complaint- handling which was probably intended for statutory bodies and the private sector as well

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as the government.120 It asserts that the effectiveness of complaint-handling institutions depends on whether they help “to resolve dissatisfaction of customers about the services they have received or believe they should have received.”121 A good complaint-handling system should be easily accessible and conspicuous to customers; simple to invoke and operate; efficient, offering speedy action and resolution within pre-determined time limits; objective and free from undue influence or interference; and confidential so as to protect the complainant’s privacy.122 How well does the ombudsman office itself live up to these principles? The Census and Statistics Department has conducted four comprehensive thematic household surveys which seek to assess public awareness of the work of the ombudsman. In 1997, in a survey of almost 10,000 households, the Department asked whether people had heard of the office. Just over half of those surveyed knew about the office and its functions. An even more comprehensive survey, which was published in late 2000, found that nearly 65% of respondents had seen television advertising for the office and that 22% were aware that the ombudsman could conduct direct investigations on matters of public concern.123 The 2003 and 2007 surveys showed similar results.124 There has been some shift in public attitudes towards complaint-handling bodies over the decade. In 2000, District Council members were the preferred channel for lodging complaints. By 2007, departmental complaint-handling channels had become a more popular choice.125 Older people were still more inclined to go to District Council members but the younger and more educated tended to favour departmental complaint-handling bodies or the ombudsman.126 The popularity of the ombudsman as a preferred channel for making a complaint has been rising. In 2003, 9.8% said they would take a complaint to the ombudsman as their first port of call; by 2007, this had risen to 15.5%.127 The work of the office is well appreciated with 75.2% of those who were aware of direct investigations rating them very effective or effective and 69.1% believing that the ombudsman was effective or very effective in exposing deficiencies in administration, a considerable increase over the 2003 figures.128 Direct investigations have raised the public profile of the office. Its recommendations have led to significant improvements in government practices and it has also served as a model for other complaint-handling bodies in government departments and statutory bodies. While these are positive achievements, if the office places its primary emphasis on resolving the grievances of complainants without investigation rather than actively seeking out maladministration, individuals may be satisfied with its efforts but something of the wider value of the office will be lost. To some extent, this is compensated for by the direct investigations and the depth of the “fully investigated” complaints which contribute to improvements in public administration. At present, the office is functioning well and has helped to raise confidence in an impartial and effective redress process.

Complaints against the Police

The Complaints Against Police Office (CAPO) was established in 1974 as part of the Police Force. Over the ensuing years, there have been two perennial criticisms of its

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operations. The first is that the organisations which have monitored CAPO’s work have had inadequate powers and have been too dependent upon it for information. The second criticism is that investigations lean too heavily towards giving policemen the benefit of the doubt. Fundamental to both criticisms is the fact that CAPO’s investigators are police officers seconded from other parts of the Force and that, as a consequence, it has been difficult to win public confidence. The first attempt to monitor CAPO was in 1977 when it fell under the jurisdiction of a panel of Legislative Council members (the OMELCO Police Group). In 1986, as a result of a rise in the number of complaints and a working party report, the monitoring organisation became known as the Police Complaints Committee and ceased to be a Legislative Council panel. In 1993, the Legislative Councillor, James To Kun-sun, proposed that the government should set up an independent body to investigate complaints against the police. Following the debate in the Legislative Council, the government decided to introduce changes to the Police Complaints Committee. In 1994, it was renamed the Independent Police Complaints Council (IPCC). Plans were then made to turn the IPCC into a statutory body, to empower it to refer a case back to the Commissioner of Police for re-investigation, to monitor CAPO’s investigative actions and to require it to submit annual reports which would be tabled in the Legislative Council.129 The legislation to bring these measures into effect reached the Legislative Council in July 1996 and was then referred to the Bills Committee for further consideration. The Committee met with the administration thirteen times in what turned out to be a controversial debate over the powers of the IPCC. James To sought to increase its remit by enabling it to investigate any complaint where it was not satisfied with the results of a CAPO investigation and to determine the acceptability of the findings and results of the investigation of all complaints.130 Both amendments were carried in the Bills Committee but the proposed clause to empower the IPCC to investigate cases in its own right seems finally to have led the administration to decide that the bill should not proceed.131 When the bill was withdrawn in June 1997, the Chairman of the Bills Committee called for its re-introduction as expeditiously as possible.132 The administration subsequently made some changes to the functions of the IPCC including setting up a special panel to monitor serious cases, preventing “tipping-off” an officer whose behaviour was about to be investigated, undertaking more surveys of attitudes towards the police complaints system, setting time limits on handling complaints and opening part of IPCC meetings to the public.133 It also undertook to monitor every case that CAPO investigated. But criticism continued. In September 1999, when the Legislative Council was considering Hong Kong’s report on the International Covenant on Civil and Political Rights, some deputations noted that it did not address “the concern that investigation of complaints against the Police remained in the charge of the Police.”134 The United Nations Human Rights Committee, commenting on the Hong Kong report, voiced similar concerns, stating that the IPCC

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… has not the power to ensure proper and effective investigation of complaints against the police. The Committee remains concerned that investigations of police misconduct are still in the hands of police themselves, which undermines the credibility of these investigations.135

Another United Nations committee, the Committee against Torture, also favoured strengthening the independence of the IPCC and recommended continued efforts to ensure that it became a statutory body with “increased competence.”136 In the April 2000 budget debate, To moved that the item covering CAPO should be deleted, the effect of which would have been to abolish the office which at the time had an annual expenditure of $60 million and employed 180 staff.137 To argued that CAPO was ineffective in handling complaints. He pointed to the death of a young man in custody where the coroner had found the investigation into the reasons for the death questionable but where no action could be taken. He also criticised the administration’s approach, noting the lengthy period which had expired without legislative reforms since his first motion in 1993.138 In her response, the Secretary for Security pointed to improvements that the administration had made to the system and quoted the chairman of the IPCC to the effect that he doubted whether a fully independent body was really necessary to monitor the work of CAPO.139 In March 2002, the Security Bureau produced a consultation paper which incorporated some of the amendments passed at the committee stage in 1996 but continued to reject the proposal that the IPCC should have the right to determine whether the findings and results of the police were acceptable and to conduct its own investigation if they were not.140 This, the Security Bureau said, “might create two sets of findings and results in respect of a complaint, and cause confusion.”141 The Bureau also thought that it would change the practice of seeking a consensus between the CAPO findings and the IPCC determination. The proposed bill did widen the powers of the IPCC although it also omitted some of the amendments passed at the committee stage in 1996, notably the provision that two Legislative Councillors should be appointed to the IPCC and that the Council should be empowered to refer cases to the (then) Attorney-General and the ICAC.142 Neither the government nor its critics significantly changed their positions. The government wanted to retain CAPO as an organisation staffed by police officers because, it said, they were familiar with the work of the police.143 Critics called for an independent CAPO and an IPCC with much stronger powers. The government made some concessions to give the IPCC more authority, independence and resources and appointed two Legislative Councillors as vice-chairmen of the Council but it did not significantly strengthen the monitoring powers of the IPCC. The legislation was not re-introduced until June 2007 when the draft bill provoked critical submissions from human rights groups and from the Bar Association.144 The legislation was eventually passed in July 2008 by 29 votes to 13 with democratic members voting against it.145 The IPCC became a statutory body with slightly increased powers.

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The second issue which has caused concern is the process of investigating complaints. There have been repeated charges that the process is biased in favour of police explanations of incidents. The long-held police view is that every officer is entitled to be presumed innocent of crime or misconduct until the contrary is proven beyond reasonable doubt. It follows that complaints are not necessarily without foundation but that, in one-on-one situations when versions of events are irreconcilable, it is not always possible to reach a definite conclusion.146 This concern with procedural justice continues to pervade the entire investigative and classification process. The process of dealing with complaints against the police has four stages: initial categorisation; investigation; monitoring; and disposal and classification of complaints.147 When the complaint or report is received, it is classified according to the most serious allegation made in the complaint. Table 11.4 shows this initial categorisation. Since many complaints contain more than one allegation, the initial classifications are subsequently re-considered by the IPCC and endorsed as allegations. In 2007, for example, there were 2,569 complaints and 4,341 allegations.148 Table 11.5 shows the final categorisation by allegation. There has been a marked improvement in relations between the police and the public over the last decade but it is perhaps surprising that complaints are not higher given the number of demonstrations since 1997. The Legislative Council Panel on Security considered separately, however, police action during the World Trade Organisation demonstrations in 2005, the detention of fifteen protesters in 2007, and police attitudes towards offences under the Public Order Ordinance.149

Table 11.4 Complaints against the Police by Initial Categorisation, 2002–2007 Categorisation 2002 2003 2004 2005 2006 2007 Assault 602 594 682 522 541 467 Misconduct 1080 922 971 828 688 717 Neglect of duty 1586 1443 1130 976 930 1063 Unnecessary use of authority 230 172 164 144 89 103 Fabrication of evidence 167 168 134 124 120 97 Threat 127 65 123 85 134 119 Other offences 13 9 9 5 4 0 Police procedures 17 10 9 7 5 3 Reports received 3822 2906 3222 2691 2511 2569 Source: Independent Police Complaints Council, Report of the Independent Police Complaints Council 2002–2007 (Hong Kong: Printing Department, 1997–2003), Appendix VI.

Between 1997 and 2007, the number of assault cases, the most serious of complaints, declined from 967 complaints (33% of all complaints) to 467 complaints (18% of all complaints) and from 976 allegations (33.2% of all allegations) to 587 allegations (13.5% of all allegations).150 This may be a result of improvements in police practices

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but it could also be a consequence of changes in the interpretation of what constitutes assault. It is CAPO, not the complainant, which makes the initial determination of the category into which the complaint should fall. The nature of the alleged offence may prove difficult to categorise and different standards may apply at different times. In one case, a complainant was categorised as alleging “unnecessary use of authority” when he was being restrained by two officers and sprayed with pepper spray by a third.151 From the complainant’s perspective, this might well be regarded as assault. An alleged punch during the same incident, which appears to have done very little damage, was categorised as an assault complaint. There is a widespread view that the police are sometimes violent, especially to those in custody.152 Attempts have been made to make medical evidence in assault cases more specific and to adopt suggestions for improvements arising from individual cases. But none really overcomes the fundamental concern that policeman are undertaking investigations of other policemen. The initial categorisation is important largely because it determines the resources devoted to the investigative process. Assault cases are treated most seriously and a team is set up to investigate the complaint. Many cases cannot be pursued because the complainant cannot be identified, because they are withdrawn, or because there are no witnesses or insufficient evidence. Critics claim that many complaints are withdrawn because complainants have no faith in the integrity of the process.153 As Table 11.5 shows, a large number of complaints fall into the withdrawn, curtailed or not pursuable category. In cases other than assault, such as misconduct, which may involve overbearing behaviour, abusive language or improper manner, or unnecessary use of authority, which may cover a multitude of sins from minor infringements to quite serious incidents, CAPO puts the emphasis on conciliation. In 2007, 21.3% of all complaints and allegations were resolved in this way (see Table 11.5).154

Table 11.5 Resolution of Allegations against the Police, 2002–2007 Categorisation 2002 2003 2004 2005 2006 2007 Substantiated/substantiated other than reported 246 265 253 145 100 100 Not fully substantiated 19 21 14 8 4 5 Unsubstantiated 986 1040 1070 854 610 769 False 354 255 296 244 187 160 No fault 397 395 410 271 152 148 Curtailed 16 12 5 25 7 1 Withdrawn/not pursuable 2526 2735 2570 2246 1719 2232 Informal resolution 1669 1539 1219 902 739 926 Total no. of allegations 6213 6262 5837 4695 3518 4341 Source: Independent Police Complaints Council, Report of the Independent Police Complaints Council 2002–2007 (Hong Kong: Printing Department, 2003–2008), Appendix IX.

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CAPO may decide to conduct a full investigation of a complaint on its own initiative or because the complainant demands that it do so.155 In 2007, CAPO fully investigated 1182 allegations of which 36 (8.9%) were found to be substantiated, 64 substantiated other than reported and five were not fully substantiated (see Table 11.5).156 As the IPCC points out, there is a much higher percentage of substantiated cases in fully investigated cases than of the total number of allegations where the substantiated rate is only 2.3% (see Table 11.5). Once CAPO has completed its investigation, the results are passed to the IPCC for consideration. In 2007, the IPCC had only 22 full-time staff and the extent to which all cases can be examined in detail must be in question. It has the power to call witnesses but this is only rarely used. The examples provided in the annual report suggest that the Council gives most attention to cases where it believes that there may be major discrepancies between its own views and those of CAPO and where there are serious cases that warrant attention. The Council has a Serious Complaints Committee which monitored five cases in 2007.157 After its consideration of CAPO’s findings, the IPCC may ask for explanations on the thoroughness of the investigation, the classification, or compliance with police procedures.158 It may also make suggestions for improvements. In 2007, a total of 1700 queries/suggestions were raised of which 1205 were accepted by CAPO and satisfactory explanations were given for the remainder.159 The final stage of the investigation is the disposition of cases and their classification. The classification does have an important bearing on the disciplinary action that will be taken. In 2007, 90 officers were disciplined of whom 78 were given advice, ten were cautioned or reprimanded and two were warned.160 One officer was prosecuted and given a custodial sentence. After the classification has been decided, the IPCC ratifies the decision and the process comes to an end.161 Two conclusions may be drawn from CAPO’s experience. The first is that whether or not CAPO conducts investigations fairly — in most cases, it would appear to do so — the public perception of what it does is more important than the actual practice. And that perception is that CAPO is not impartial. The police argue that only they have the knowledge to investigate cases properly. But this was the original argument against independent investigations of corruption and it has not held up. A related argument that an independent body would affect police morale has also been largely discredited by the ICAC experience which probably has helped to improve the image of the Police Force and increased public confidence in the investigation of complaints against corruption. A second conclusion is that it should be possible for the police to take a less procedural and more substantive view of justice. The presumption of innocence for police officers who are accused of some form of misconduct does accord with normal legal practice under the common law. But CAPO is not a court and many of those who are aggrieved — the young men and blue collar workers who constitute a majority of complainants — may have little experience of what constitutes evidence or of how to present a case. To apply strict procedural guidelines under such circumstances may be inappropriate. In a court of law, ideally, both procedural and substantive justice should be seen to be done. In an institution concerned with redress, the balance should perhaps be tilted rather more towards substantive justice. The playing field, as it presently stands, is not entirely level.

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Departmental Complaint-handling Units

In line with the principle, which has been in applied since 1979, that complaints should be handled at the lowest level possible, almost all departments in the Hong Kong government have some form of complaint-handling mechanism. Those departments which have the most direct dealings with the public have developed the most sophisticated systems for dealing with them. The Transport Complaints Unit, for example, is well established. In 2007, it received 20,190 complaints of which 15,402 were about public transport issues, many related to taxis, 1184 were about traffic conditions, 318 were about road maintenance, 2968 were about enforcement and 318 were on miscellaneous matters.162 Over the decade 1997–2007, there has been a steady increase in complaints about public transport and the enforcement of the traffic regulations and a decline in complaints about traffic conditions and road maintenance. The Unit has a number of features characteristic of successful complaint-handling bodies. First, it is independent. It is monitored by a sub-committee of the Transport Advisory Committee, which is composed of non-civil servants and does not come under the Transport Department. Second, it is very easy to make a complaint; most complaints are made through the Unit’s telephone hot-line with the remainder coming through e-mail, fax or mail. Third, complainants can expect action on their complaints. A majority of complaints — some 66% in 2007 — were found to be substantiated.163 The relevant departments or organisations were contacted and complainants were informed of the outcome. Fourth, the Transport Complaints Unit relays its statistics to the Transport Department to help solve persistent problems and refers reports of serious infractions to the police. Finally, the Unit is inexpensive and the number of officers involved is small, considering the number of complaints involved. There have been occasional criticisms that investigations are superficial and that the complainants are often only fleetingly concerned about the issue. But that may also mean that the complaint can be rectified or explained quickly and that there is no need for a more extensive investigation. Similar simple types of complaint-handling mechanisms have also been established in the Inland Revenue and Water Supplies Department, both of which also receive a large number of complaints. Other types of complaints may pose more difficult problems. Medical complaints, for example, may range from relatively minor problems to potentially life-threatening situations. One case, in particular, aroused public interest: a patient complained that her doctor had answered a mobile phone call while conducting an operation. The case led to a debate in the Legislative Council over the need to reform the medical complaints system. Complaints against doctors are handled by the Medical Council of Hong Kong, a body with responsibility for regulating the conduct of doctors mainly composed of 24 doctors but with four lay members who take part in “most” stages of the complaints procedure.164 The Council has a Preliminary Investigation Committee to which complaints are initially referred but it seems that this includes any potential problems that the Council faces with doctors (such as, for example, advertising or a court conviction for careless driving). Complaints from patients constitute only part of

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the work of the Committee. Of the 472 complaints that the Council received in 2007, 320 were concerned with doctors’ professional responsibility towards patients.165 Most complaints were dismissed as frivolous or groundless and only 99 complaints of all kinds were considered by the Committee which then referred 34 of them to the Council. Twelve complaints concerned with professional responsibilities to patients were found to be substantiated and a further eight relating to the issuance of false or misleading certificates were found to be justified.166 The “mobile phone” case added to concerns about the complaints procedures employed by the Medical Council. The Legislative Council discussed the issue in May 2001 with members calling for the creation of an independent body.167 The Secretary for Health and Welfare’s view was that a Complaints Office, dealing with patient care, should be set up within the Department of Health. The motion to establish an independent medical complaints body was defeated.168 A Legislative Councillor returned to the issue in 2008, eliciting a response from the Secretary of Food and Health which suggested that the procedures employed were not transparent and that, while it was easy for patients to lodge complaints, the Medical Council provided them with no assistance in ensuring that they had the appropriate documentation.169 The “mobile phone” doctor case also raised the issue of how other professional bodies handle complaints against their members. The dominant position of professional elites in Hong Kong has made it difficult to reform bodies which traditionally have been self-regulating. But a more critical public, and several scandals, have led some professional bodies, such as the legal and surveying professions, to examine their practices more closely. At the same time, the closer relationship between complaint- handling institutions has led to attempts to standardise practices and to ensure that referred complaints are handled with appropriate thoroughness.170 These efforts and the well-publicised criticisms of CAPO and the Medical Council of Hong Kong are likely to lead to greater scrutiny of the practices of the departmental complaint-handling units.

Administrative Tribunals and the Administrative Appeals Board

Administrative tribunals may be established to serve a variety of different purposes. They may resolve disputes, hear appeals against government decisions, act as commissions of inquiry, or to make policy decisions on behalf of the government. These functions are not necessarily performed exclusively by bodies primarily designated as administrative tribunals. In some respects, for example, the Executive Council may be regarded as an administrative tribunal because some ordinances permit appeals to be made to it. The Administrative Appeals Board also hears appeals under the provisions of 46 ordinances and may reverse the original administrative decision. With the range of laws and institutions involved, it is scarcely surprising that the practices of administrative tribunals have sometimes been criticised. Do complainants have the right of appeal against the findings of the tribunal? Are the powers of the tribunal sufficiently publicised? Should procedures meet standards and rules of evidence that might apply in a court of law or should they be more informal? Should tribunals provide reasons for their decisions?

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Do those who hear the cases have appropriate qualifications? We consider these issues below. One criticism of the work of tribunals is that they allow no appeal against their decisions except for the general remedy of judicial review. Many tribunals have been created to hear appeals from individuals against a government action which has detrimentally affected them. A complaint which falls into this category might not even be considered by other complaint-handling institutions. The ombudsman, for example, may not take a complaint if the complainant has “a right of appeal or an objection to the Chief Executive, the Chief Executive in Council, any tribunal constituted by or under any ordinance, or any board or other authority so constituted.”171 In practice, the complainant may have no choice as to where the case is heard and there may be no appeal against its decision. Yet many of the matters that come before tribunals are extremely important. The Immigration Tribunal, for example, hears appeals against deportation from Hong Kong. As a leading lawyer has pointed out, those affected by the decision of the Director of Immigration to deport them may not even know that they have the right of appeal to the tribunal.172 Even if they were to appeal against the Director’s decision, the Immigration Tribunal’s finding would be final. Similarly, the Registration of Persons Tribunal, the Mental Health Review Tribunal and the Addiction Treatment Centre Board make decisions from which there is no appeal. Where the provisions of an ordinance require cases to be heard by a tribunal, when its decisions are final and no reasons need be given for its decision, and where there may be questions about its procedures, there is cause for concern that this form of redress does not meet the criteria of fairness and natural justice for the complainant. There have been attempts to improve the practices of tribunals. Some tribunals do give reasons for their decisions and there has been more concern over procedure. There are nonetheless evident weaknesses that still have to be addressed. The Director of Immigration has wide discretionary powers and rarely gives reasons for his decisions, which makes it difficult to take a case to court on the grounds of unreasonableness. Dykes has argued that the powers are so wide that there is a case for immigration guidelines which would explain the use of discretionary powers to be presented to, and approved by, the Legislative Council.173 The tribunal is chaired by a retired High Court judge and some of the adjudicators are legal professionals, at least one of whom must sit on each case.174 But it is not clear how the other adjudicators are selected, what qualifications they have, and what procedures must be followed. A related tribunal, the Registration of Persons Tribunal, which hears appeals against the decision of a registration officer to refuse to issue an applicant with a permanent identity card, does provide guidelines for its adjudicators whose role is restricted by the ordinance to the factual determination of whether or not a person is entitled to right of abode in Hong Kong.175 Again, it is unclear how the adjudicators are selected. The Labour Tribunal has suffered from procedural problems. The Tribunal was set up in 1973 “to provide a quick, informal and inexpensive means to settle monetary disputes between employees and employers”, precepts to which it still subscribes.176 It

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does not permit legal representation although, apparently, some companies simply sent along their lawyer to represent them, a practice which placed the worker at a considerable disadvantage.177 There were also complaints from employers, many of whom found the practices of the Tribunal to be cumbersome and time-consuming.178 In 2004, a review made recommendations which extended its jurisdiction, improved its processes for conciliation and settlement and tightened other procedures.179 Since the review, there has been a marked improvement in waiting times for cases to be heard and settled.180 The Labour Tribunal, together with the Lands Tribunal, the Obscene Articles Tribunal and the Small Claims Tribunal, falls under the Judiciary. There are considerable variations in practice between these tribunals because each fulfils a specialist purpose. But there is still room for considering whether those who are party to a dispute or are appealing an administrative decision are being best served by those who are appointed to the tribunals and by those who oversee their procedures. The Administrative Appeals Board meets the criterion that practices should, as far as possible, be standardised in the interests of fair play. It was established in 1994 by the Administrative Appeals Board Ordinance and allows the right of appeal against some administrative decisions under 66 ordinances. The Board does draw on legal experts, its sessions are public, the appellant has the right to attend and to be represented and the Board is required to state its reasons in writing. Despite these positive elements, the Board seems little known as an avenue for redress and there is almost no government publicity for its activities. Each of the types of institutions which we have been considering — those that protect civil liberties, those that can make systemic improvements, and those that redress individual grievances — can all play a significant role in reducing the legitimacy deficit. The government starts with the disadvantage in dealing with these organisations that it is likely to be seen as the principal cause of inadequate protection of civil liberties, the source of policy weaknesses or the reason for insufficient corruption controls, or the perpetrator of arbitrary, unfair or illegal administrative decisions. Hong Kong has a civil society, which is deeply and continually concerned about the preservation of civil liberties, and a relatively free press, which brings violations of human rights or dubious practices in the institutions which are supposed to protect them to public attention. Under such circumstances, the government gains no political benefit from ensuring that the institutions which protect civil liberties or make contributions to the resolutions of complaints or grievances function well. If these institutions do perform well, they receive credit from the public; if they do not, the government’s numerous critics will soon identify their shortcomings. Institutions which protect civil liberties or resolve complaints or grievances are not, in short, likely to increase the government’s support or legitimacy. What they may do over time, if they function successfully, is to reduce the legitimacy deficit under which the political system labours by providing support for values which ensure that citizens have recourse to justice in the face of arbitrary, illegal or corrupt action by public officials. Our question, then, is not whether the government can benefit in terms of support from the effective performance of these organisations but rather whether the actions

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which it has taken protect citizens from the arbitrary exercise of power and, in so doing, reduce the legitimacy deficit. The answer to that question, on the evidence presented in this chapter, is somewhat mixed. The post-1997 government has been moderately supportive of these institutions. It has formally endorsed the principal values of the redress system: impartiality, fairness and thoroughness of the investigative process. Some organisations have become so much part of the fabric of the system and have so much public support that it would be difficult for the government to undermine what have become institutionalised procedures. The Legislative Council, the ICAC and the ombudsman all act in ways which are well known and well respected. The government has implicitly recognised their role and there has been no suggestion that their investigative procedures or independence should be compromised. For other organisations, the government appears to have taken the view that it would prefer not to see issues become matters of public controversy and that, if they become so, it will seek to change the direction of the organisation. The failure to re-appoint Anna Wu as Chair of the EOC was widely interpreted to have been a consequence of her confrontation with the government in the courts on issues relating to the implementation of its own legislation. There remain, too, problems with other redress institutions which the government has yet to resolve satisfactorily. Critics of the handling of police complaints would argue for stronger powers for the Independent Police Complaints Tribunal; there is a case for a medical complaint-handling body independent of the Medical Council; some administrative tribunals have been reformed but many others could benefit from review; and the Administrative Appeals Board could function more effectively as a redress institution. The government has been intent on maintaining the quiet, if sometimes unsatisfactory, routine operation of these institutions. It seems to have missed the potential to use them to reduce tensions within an “executive-led” system in which there is no prospect of changing the government and where democratic checks and balances have not been fully developed.

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t is not easy to govern Hong Kong. Aside from the overarching problem of the relationship between the government and its people, there are many specific constitutional,I organisational and policy issues which affect the way in which the public sector works. The Basic Law does not function in accordance with its central precept: the executive cannot “lead” and provide “strong governance” because it is constrained by a civil society which is often less than convinced that the government is acting in its best interests. Relationships between the executive and the legislature have still not been sufficiently delineated. There is no majority government party and no certainty that government proposals will be accepted. The civil service maintains its high administrative capacity but it suffers from some structural and human resource management weaknesses and low policy capacity. The public sector beyond the civil service is not properly accountable and does not always work in harmony with the government. There are major problems in formulating and implementing new policies because of frequent trenchant opposition from civil society groups and the legislature. And above all this the polity is polarised between those who support the existing order and those who want to see a rapid transition to a more democratic system. Under such circumstances, to provide responsible government is a daunting task, especially if external challenges, over which the government has little control, require urgent action. In this concluding chapter, we revisit those issues, seeking to understand how the present problems arose and looking to the future to see how they might be resolved.

The Problems of the Transition

An important feature of colonial administration was that the principal institutions — the Governor, the Executive Council, the Legislative Council, the Judiciary and the Civil Service — were very closely integrated. The fusion of administrative and political functions, the absence of direct control from London, and public acceptance of the bureaucratic order resulted in a centralised, autonomous system that restricted political participation but still managed to maintain stability and promote economic growth. It was a system that held some attraction for the Chinese government. By the

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time negotiations were completed on the future of the territory, it seemed possible that, although there might be a change of sovereignty, the system would remain intact. On the Chinese side, the concept of “one country, two systems” gave recognition not only to the importance of capitalism but also to the political, administrative and legal supports that made it possible. On the British side, there was a clear intention to leave a legacy of freedom without democracy, executive government without the embarrassment of too many legislative controls, and the continuing dominance of an efficient civil service. The Chinese government proved quite willing to write such provisions in very general terms into the Basic Law. The existing political and administrative arrangements had the backing of the business community and pro-China groups and, with the exception of some vague concessions to future democratic development, the political framework strongly resembled the pre-1997 colonial constitution. There were three problems. The first was that the population became increasingly politicised as a result of the Sino-British agreement and the Tiananmen Square massacre, and began to demand more representative government and more protection of their civil liberties. Just before the retrocession in 1997, Patten observed that whenever there was a fair test of public opinion “approaching two-thirds of the electorate support a democratic agenda.”1 It may be, as some scholars have argued, that there was uncertainty about the kind of system that might be introduced, the niceties of different types of democratic political order, or the degree to which constitutional development should take priority over the pressing problems of the economy, unemployment and housing.2 But that was perhaps less important than the fact that every poll showed that a majority were not happy with the existing political system and that they had declining levels of trust in their government.3 The changes to protect civil liberties and expand the franchise introduced by the colonial administration towards the end of the transitional period were responses to that dissatisfaction. And, although the electoral reforms did not survive the handover, and the measures designed to protect civil liberties were seen to be fragile, they created expectations of progress towards a system that was more representative. When the incoming government dissolved the Legislative Council on 1 July 1997 and subsequently introduced an electoral system which the democratic parties felt discriminated against them, support for the new political framework, which appeared to be more autocratic than the departing colonial administration, was eroded from the outset. A second problem was that the position of Chief Executive did not equate as easily with the old position of Governor as might have been supposed. In colonial Hong Kong, the Governor tended to meld with the civil service rather to stand apart from it. There were governors, such as MacLehose, who sought to transform the colony, but they tended to be the exception rather than the rule. When Tung Chee-hwa became Chief Executive, there was little doubt that he wanted to bring about major changes. Some problems were inherited from the transitional period where difficult decisions were postponed to avoid political unrest, but most of the impetus for change probably came from Tung’s desire to stamp his own imprint on the administration, from behind-the-scenes advice from his political supporters, and from the Chinese government. Whatever the cause, there was an increasing tension between Tung and his senior civil servants, especially when

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policies could not be successfully implemented. Pollitt and Bouckaert have described a similar process in other countries as “distancing and blaming” where a Chief Executive seeks political distance from the government by blaming it for failure to perform to expectations.4 This may set the political stage, as it did in Hong Kong, for public sector reform. The existing civil service system was no longer seen as appropriate for the kind of public service which Tung wished to create. A third problem was that the values that underpinned the bureaucratic polity, critical as they were, were not formalised into the constitutional arrangements. Neither the Joint Declaration nor the Basic Law captures the intricate relationship between the values which the civil service held dear and the construction of its dominant position within the polity. There is no mention in the Basic Law of such values as meritocracy and political neutrality. But a bureaucratic polity requires, as any political system does, a justification for the particular arrangements that entitle its office-holders to exercise power. Legitimacy requires consent and moral and legal authority. The colonial administration had a continuing deficit on each of these counts although it did claim to have the consent of the people. What evidence supported that claim? How could consent be justified in a system which provided no means of democratic legitimation? The colonial administration offered a number of elaborate answers to those questions, including its performance, its efficiency and its support for such values as meritocracy and political neutrality, all of which were used to justify its moral claims to rule. Perhaps the most important of those claims was that senior civil servants had epistemocratic authority, that is, that they were entitled to rule because they were the wisest and most able people available and because they were imbued with a public service ethos which meant that the decisions that they took, as far as they were able to ensure, were in the best interests of the people of Hong Kong. If one reads the memoirs and speeches of senior civil servants in Hong Kong, the importance of the public service ethos is a recurring theme. In her valedictory speech, Anson Chan, the outgoing head of the civil service, said that as a young administrative officer she had been told that: … you have joined a very special service which has an excellent reputation built up by the people who have gone before you. Your obligations as an administrative officer are simple. You must serve the people well and you must serve them with honour.5

It was, she said, advice that she passed on to her younger colleagues. When her successor, Donald Tsang, was asked about the differences between himself and Anson Chan, he stressed instead their common commitment to the people.6 Many other senior civil servants have testified to the importance of the public service ethos as a value which created expectations about the role that civil servants would play in the community.7 In the Civil Service Training Centre, as it then was, fresh graduates on the first day of their induction course were asked why bright young men and women such as themselves were prepared to serve a colonial regime. In the embarrassed silence that usually followed, the instructor provided the answer: they were not there to serve a colonial regime; they were there to serve the people of Hong Kong.

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To be overly-cynical or overly-nostalgic about such professions of the importance of the public service ethos misses a critical point. In any Weberian system of public administration, public service as a vocation, meritocratic recruitment and political neutrality are central values. But in most Weberian systems, such values did not by themselves legitimate the exercise of power because there was also normally a political order, often democratically legitimated, which gave elected representatives a mandate to decide on what was in the best interests of the people. In the bureaucratic polity of Hong Kong, if civil servants were to exercise power, they needed legitimating principles to justify what they were doing. Public service as a vocation provided one such justification. Because the commitment of senior civil servants to the public interest was a value that was rarely called into question and because civil servants were supposedly drawn from the most able members of the community, the bureaucratic polity derived political authority and legitimacy from the notion that it not only provided for rule by the wise but that those officials were committed to the public good. Nor should we be surprised that this justification proved so successful. Although it is sometimes argued that Hong Kong’s pre-1997 political system was unique, the ideas on which it was based had a long pedigree. Confucius and Plato would both have approved of a system in which able new recruits to the civil service were socialised and trained in a commitment to public service and where popular influence on government was restricted. Despite the importance of these bureaucratic supports for the system, they were not sufficient to prevent the colonial administration from suffering from occasional crises of legitimacy and from an enduring legitimacy deficit. There remained major problems of consent and of legal and moral authority which the colonial administration could attempt to reduce but could never entirely resolve. The absence of alternative forms of legitimation became even more evident when it became clear that Hong Kong’s democratic development was about to be curtailed. The authority of the post-1997 system was undermined by the dissolution of the Legislative Council and it was to be further compromised by the blame that the government received for its handling of the economy and for its policy failures. The question was which values, if any, might replace those of the colonial order.

The Values of the Post-1997 Government

The answer to that question was not immediately obvious. If Tung Chee-hwa had assumed the mantle of a colonial governor and defended his civil service against the criticisms of his own supporters in the business world, and if the Chinese government had refrained from interfering in Hong Kong, as it initially seemed inclined to do, then it is possible that the existing system might have continued for some time. But the life of the bureaucratic polity was essentially limited by the political pressures from Tung, his supporters, and the Chinese government, on the one hand, and from the democrats, on the other. There was declining public support for a system based on rule by civil servants. The Tung administration wanted a new order which asserted political control over the civil service. It sought to bring to government what it regarded as the virtues of private

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sector practices. The relative autonomy which the civil service had previously exercised in relation to decisions affecting the business community was eroded. The democrats, for their part, were looking for a more accountable system, especially following the tensions between the Legislative Council and senior civil servants in the immediate aftermath of the retrocession.8 To fill the void, the government proposed two solutions. The first was the introduction of managerial reforms which either re-interpreted the meaning of old values, such as efficiency or responsiveness, or sought to establish new values within the civil service which undermined the traditional norm of public service as a vocation. With more managerialism in government, the emphasis was on the ability to accomplish politically-determined ends rather than the notion of the public service ethos. Managerialist values tend to emphasise the achievements of the individual rather than collective efforts. The reform programme, introduced in 1999, put some of these values in the forefront of future civil service practice. It supported the introduction of more contractual conditions of employment, under which renewal would be determined by performance, the use of performance pay as a motivator, and harsher sanctions for failure to meet minimal standards. As the experience of other countries has shown, to pursue such an agenda is difficult enough under normal conditions. In Hong Kong, the government introduced its public sector reforms at a time when it was suffering from a significant budget deficit. This was attributed in part to the high operating costs of a civil service which the government and the business community believed was too large and too well paid. It is possible to introduce reform programmes, as the Hong Kong government itself showed in the mid- 1990s, which enjoy the support of civil servants. But the public sector reform initiatives soon became synonymous with downsizing and salary cuts. The notion of employment in the civil service as a life-time career was replaced with programmes which brought in new recruits on short-term contracts and offered voluntary retirement to longer- serving officials. As salaries were cut, new organisational changes were introduced, and public criticism grew, morale in the civil service declined alarmingly.9 Core values seemed increasingly under threat. And there was nothing to replace them except for the government’s hope that increased productivity and efficiency would result from a leaner civil service. The second measure taken to replace the bureaucratic polity was to shift political control from senior civil servants to a new hand-picked political executive under the Principal Officials Accountability System. Tung’s diagnosis of the problem was probably correct. There were demands for greater accountability after a series of scandals relating to the handling of the avian flu issue, the opening of the airport, and the faulty construction of housing projects. But the Principal Officials Accountability System did not resolve the problem. Its fundamental weakness was that the Principal Officials were only accountable to the Chief Executive because only he and the Standing Committee of the National People’s Congress in China could appoint and remove them. To legitimise the system would have required a role for the Legislative Council in the appointment process but that was not possible under the Basic Law and would probably not have been approved by the Chinese government even if it had been feasible.

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A second weakness was that the Principal Officials Accountability System was interpreted as an attempt to undermine the concept of political neutrality. In its re- iteration of the importance of political neutrality, the government shifted ground from the emphasis that Anson Chan had placed on “speaking truth unto power”10 to the notion that a civil service should be loyal to the government in power. The difficulty was that the government did not have express consent to exercise power; the source of its authority was the Basic Law which had never been approved by the people of Hong Kong. A third weakness was that Principal Officials soon had their own policy and personal scandals with which to contend. Tung contributed to the problem by failing to ask for the resignation of policy secretaries who had made serious mistakes which gave the impression that the system was no more accountable than its predecessor. The new system also meant that some senior civil servants had to make a choice between becoming Principal Officials or remaining as civil servants. This fragmented the senior civil service between those who were willing to make a political commitment and those who continued to see themselves as career civil servants albeit with reduced powers. Neither the managerialist reforms nor the Principal Officials Accountability System answered the problem of providing new values and institutions to replace the bureaucratic polity. Rather, they contributed to the further disarticulation of the political system. The Basic Law does not specify sufficiently how co-ordination between the principal institutions will occur; the emphasis is on the powers and duties of the institutions, not their relationships with one another. It may be surmised that the drafters thought that co-ordination would probably occur much as it had done in the past: that an “executive- led” government would ensure that other institutions were brought into line and that policy formulation and implementation would consequently be unproblematic. That was a reasonable assumption at the time that the Basic Law was drafted. But it became less plausible in the last years of the transition as the Legislative Council became more critical of government action, as parties and pressure groups began to emerge, and as senior civil servants found that they had to play politics to get their policies accepted. After the handover, some senior civil servants attempted to return to less political roles by appearing less frequently before the legislature which they were entitled to do under the provisions of the Basic Law. Relations between the government and the Legislative Council deteriorated as a consequence and, on the part of the democrats, became increasingly hostile. The right of abode issue and its impact on the relationship between the government and the judiciary and the attempt to legislate under Article 23, which resulted in very large street demonstrations, further exacerbated the distance between the government, other major institutions and the people. The democrats began to call for Tung’s resignation. This was already a volatile mix. When the government added to that mix a public sector reform programme, which was seen to focus on downsizing and salary cuts, and attempted to increase political control over the civil service, bureaucratic dominance came to an end. The cost of those highly political decisions was a more fragmented polity and greater disarticulation among its principal institutions.

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When Tsang became Chief Executive, he was faced with the task of re-vitalising a demoralised civil service. Reversions to past practices helped to resolve some problems. The Chief Secretary for Administration and the Financial Secretary were re-instated as the principal gatekeepers through which new policy proposals must pass; the central role of the administrative grade as the glue that held the structure together was re-affirmed; and an end to downsizing, salary increases, and some modest increases in recruitment helped improve morale. But there were other aspects of Tung’s legacy that were not so easily resolved. The attempts to exert greater political control over the civil service through the Principal Officials Accountability System could not be reversed and, amid considerable controversy, was extended to include Deputy Directors of Bureaus and political assistants. The effects of reducing salaries at entry points and then raising them when the standard of new recruits dropped had a detrimental impact on the morale of those recruited at the lower level. Formulating and implementing new policies remained as intractable a problem for Tsang as it had been for Tung.

Policy and the Disarticulated System

A disarticulated system has detrimental effects at different stages of the policy process. If the central institutions are not co-ordinated, there may be problems initially at the formulation stage, especially if the policy requires that different departments, and possibly non-government agencies, are to be involved in its implementation. The Principal Officials Accountability System enhanced the autonomy of bureaus and maximised vertical policy formulation and implementation at the expense of lateral co- ordination. Since Tsang came to office, there have been some improvements in policy co-ordination although nothing appears to have been done to speed up the often laborious processes of consultation over policy between bureaus and between departments. Other dangers for successful policy formulation and implementation emerge once the policies become public. Although the Legislative Council is hampered by the relatively weak powers allocated to it under the Basic Law, it has utilised its powers to good effect. The government faces a number of different problems in its attempts to persuade the legislature to adopt its proposals. First, and perhaps most serious, it does not have a majority government party in the Legislative Council to ensure that its policies are endorsed. Tung Chee-hwa made it clear that he had little time for political parties, a view that echoed the position of the Chinese government. Although the government’s policies under Tung and in the first Tsang administration were generally supported by the Liberal Party and the DAB, the political climate has gradually become more fluid as parties have become more sensitive to the electoral implications of policy measures. After the September 2008 elections, the election of a small majority of left-of-centre legislators, and the decline of the Liberal Party, meant that the government faced even greater difficulties in obtaining policy approval. For that reason alone, its attitude towards constitutional reform, which could involve a reduction of its support from the present functional constituency members, may well be ambivalent. Second, there are now many experienced legislators who use their knowledge of Council procedures to grill Principal

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Officials and senior civil servants on their proposals and attempt to ensure that they are accountable once policy is implemented. Unlike the colonial legislature, where the appointment system, until the last few years of the transitional period, ensured that the government always had a majority, the Legislative Council has now emerged as an alternative source of constituted authority. Even if a policy proposal passes the scrutiny of the Legislative Council, there is no guarantee that it will be successfully implemented. Opposition to a government policy on a massive scale such as greeted the proposal to legislate under Article 23 is rare. But there are many smaller pressure groups that can join in coalition to frustrate government intentions. These are often new political actors. They are not the “usual suspects” but well-educated citizens who may be campaigning at “a higher, smarter level” on such issues as taking the government to court over the harbour reclamation issue or organising investors who claim banking malpractices on the sale of Lehman Brothers minibonds and equity-linked notes.11 These groups are difficult to deal with because they are sometimes created in response to a policy announcement or an event, and consequently cannot be consulted prior to the decision, or they may be fragmented into many smaller groups. Their methods include thorough research of policy issues, development of possible alternative courses of action, and knowledge of “how to campaign and get media attention.”12 The government cannot easily mollify these loose coalitions of pressure groups; the opposition is hydra-headed and concessions to one group may not necessarily satisfy another. Policy, in this sense, creates its own politics. Rather than controlling the timing, presentation and politics of the process, as the colonial administration did, policy ideas in the disarticulated, polyarchic system of post-1997 Hong Kong can come from anywhere. If the policy comes with the backing of the government, it will often provoke opposition from civil society which may be strong enough to veto the proposal. There are areas, even controversial areas, where the government can still formulate and implement policies successfully and where senior civil servants make policy much as they did in the past. But the long string of policy failures under Tung and the delays and retreats under Tsang suggests that more attention needs to be paid not only to the consultative framework but to the politics of the policy-making process. Successful policy-making is critical to a regime which seeks to pin its colours to the banner of performance legitimacy. If the government believes that it can gain support, or reflected glory, from a more prosperous Hong Kong, then its policies must contribute to that prosperity. There are evidently considerable doubts about whether that has occurred during the chequered economic experience of Hong Kong since 1997.

The Legitimacy Problem

In the course of this book we have explored in passing the consequences of legitimacy problems for the way in which power can be exercised. A crisis of legitimacy occurs when the political arrangements do not have the consent of the people and where there are serious doubts about whether the government has the legal and moral authority

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to exercise power. Short of a crisis, there are ways in which legitimacy deficits may be reduced. However, they require addressing systemic problems, not simply efforts to increase support for the government. Governments may generate support in many different ways — by cutting taxes, for example, or by providing desired collective goods. But those short-term political gains should not be confused with resolving fundamental issues of consent and legal and moral authority. Nor should legitimacy be confused with political stability. A regime may preside over long periods of stability and still suffer from a legitimacy deficit; colonial Hong Kong is a case in point. It follows that there are three analytically distinct courses of action that a government may take to resolve the problems of lack of consent and of insufficient legal and moral authority. It may seek, first, to increase its own support in the short-term. This will not resolve its legitimacy problems but it may temporarily dampen opposition and promote greater political stability. Second, it may attempt to improve governance mechanisms by investing resources, for example, in the way that it makes policy and delivers public goods, in enhancing its consultative arrangements, or in strengthening its complaint- handling and redress institutions. Again, this does not resolve the fundamental legitimacy problem but it does reduce friction and may help to avoid financially and politically costly policy failures. Third, addressing the legitimacy problem requires answers to the question of how power is to be exercised, what supports and values are central to the system, and how authority may be constructed so that it is seen to be both legal and moral. What is the post-1997 government’s record in these respects?

Generating Support

Tung Chee-hwa believed that, if people were economically satisfied, any problems with the political system would be greatly reduced and might even disappear.13 His successor, while initially recognising that the political order constituted the fundamental problem for his administration, subsequently looked to address economic issues as a priority during the global financial crisis.14 Governments do rely on economic performance for their political support but it is often a short-term electoral consideration rather than a matter which affects the legitimacy of the system. In Hong Kong, however, the performance legitimacy which the government derives from economic success has been viewed rather differently. The sustained period of growth under colonialism was attributed not simply to the sound policies of the government but to the values and practices which underlay the political system. The administration claimed legitimacy from its vigilance in defending such core values as a low tax regime, small government and free trade; prosperity was a function of the system, not only of specific policies. The post-1997 government, similarly, placed its record in managing the economy as the benchmark by which it should be judged. By implication, governments which could not attain that end were not deserving of support and did not deserve to rule. The economic difficulties which Hong Kong has faced over the last decade or so have been well beyond the reach of the administration. Global economic conditions and uncontrollable epidemics have provided the government with an escape clause. But

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they have also highlighted the limits to its jurisdiction. It has been unable to deliver on its promises and the economic vitality of the community has only been sporadically maintained. Tung presided over a period of economic under-performance and budget deficits; Tang reaped the benefits of a recovery only then to experience the consequences of the global financial crisis. When the government cannot deliver, even if the causes of its failure are beyond its control, the connection between economic well-being and the political system is lost. It is not possible to claim that prosperity is the result of a particular system of government if there is no prosperity. Performance legitimacy consequently has a much more restricted ambit than it had under colonialism. Economic policies may still be used to garner short-term support but their contribution to the maintenance of the system is likely to be minimal.

Investing in Political Infrastructure

One way in which a regime can avoid a legitimacy crisis is to invest in its own political infrastructure. The colonial administration not only absorbed economic and social elites into the decision-making system but also offered a career structure for the most able local graduates. This reduced potential dissent from outside the administrative system because it meant that there were paths to power through the bureaucratic polity for those who otherwise might have provided a formidable opposition to colonial rule. Civil servants who reached the highest positions in the government were well-rewarded financially and in terms of their status in the community. In exchange, they provided loyal service and support for the system. The colonial administration also invested in its consultative networks. Although this was often little more than window-dressing, it did provide the government with some sense of public opinion even if its political antennae were not always sensitive to changing views. What the government did manage to avoid was a groundswell of opinion against colonial rule. The consultative process, however meaningless it was in changing official policy, had the symbolic value of showing that the government wanted to include, rather than to exclude, citizens from decision-making. In practical political terms, this also meant that concessions could be made to groups if they were thought to be necessary; opposition could be fragmented. With the exception of the establishment of the Principal Officials Accountability System, the Tung administration did not made any significant investments in political infrastructure. Its circumstances were very different from those of the colonial administration. The intention to exert more political control over the civil service, coupled with salary reductions and downsizing, had the effect of disinvestment in what was the central governing institution. It reduced the attractiveness of the civil service as a career path for able young people but provided no other alternative channels for those who wanted a stable career in government or who wished to accede to power. It was no accident that the Tung administration was profoundly unpopular among the young and the educated. Even the efforts that were made to invest in the political infrastructure had little success; the consequence was that the political authority appeared to be

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distant from the people it purported to serve. The public service ethos was diminished, if not destroyed, and the connecting links between government and the people were not replaced and fell into disrepair. The Tsang administration has shown more inclination to invest in the political infrastructure, justifying, for example, more political appointees on the grounds that this would create a career path in government for young people.15 Attempts have also been made to strengthen the central consultative committees although not with the positive results for which the government might have hoped. The opposition to the administration is such that it is very difficult to institutionalise a consultative framework. Pressure groups emerge, coalesce over certain issues, and then disappear. The more permanent groups operate from entrenched positions and consensus is difficult to achieve. The government, unlike its colonial predecessor, cannot use the consultative process to divide and rule. There is a disjunction between the government and the society which requires investment in new political infrastructure and support for those organisations, such as those protecting civil liberties and providing redress, which help to reduce legitimacy deficits.

Changing the Constitutional Framework

Constitutions are codified versions of power relationships between governments and their people which may or may not reflect the realities of that relationship. The Basic Law is based on colonial power relationships which prevailed before 1984. The degree to which it is out of step with present realities has been a subject of continuing debate and controversy, with the Chinese government and the administration stressing the need to maintain existing provisions intact, and democrats, unionists, and some professional and business groups arguing the need for change. The Basic Law does provide for some progress towards democratic legitimation. Article 45 states that the ultimate aim is for the Chief Executive to be selected by universal suffrage albeit after nomination by a “broadly representative” nominating committee. Article 68, similarly, holds out the prospect that eventually all the members of the Legislative Council will be elected by universal suffrage. In April 2004, however, the Chinese government, formally acting on the advice of the Chief Executive, but in fact stating its own clearly preferred position, announced that there would be no universal suffrage for the selection of the Chief Executive in 2007 or the Legislative Council elections of 2008.16 In 2007, it announced a tentative date for the possible direct election of the Chief Executive in 2017 and of the Legislative Council in 2020 but without providing any details on how the elections would be structured and under what conditions. It is unclear whether functional constituencies would be phased out to make way for universal suffrage or what provisions would govern elections to the Legislative Council in 2012.17 The Chinese government has specified how it believes that the Hong Kong political system should operate. It holds that certain principles should be in place before the introduction of universal suffrage and greater democratisation. These include:

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• “One country, two systems” which means the supremacy of the Chinese constitution: without one country, there would not be a second system; • “Hong Kong people running Hong Kong” which means that patriots, defined as those who would not harm their country, must run the SAR; • “a high degree of autonomy” but only exercised under authorisation by the Central Government; • “executive-led” government: constitutional development in Hong Kong should not deviate from this principle; • “balanced participation” which means regard for the interests of all sectors of the society; and • “gradual and orderly” progress and the “actual situation” which should be reflected in constitutional development.18

In short, Hong Kong’s political executive would be composed only of those who had the confidence of the Chinese government and would be supported by “balanced participation”, a euphemism for the disproportionate representation of business interests and pro-Beijing political parties in the Legislative Council and other influential bodies. The Chinese government would monitor developments and would intervene if necessary even if this meant that the guarantees of Hong Kong’s “high degree of autonomy” in the Joint Declaration and Basic Law were nullified. It is difficult to see how universal suffrage, and the assumption that this might lead to democratic legitimation and to Hong Kong people choosing their own government, could be introduced if these conditions are strictly observed. Constitutional issues do not simply go away because governments want them to. Hong Kong people have been debating questions relating to the political order and civil liberties for over 25 years, largely because the provisions in place do not match their aspirations or are under threat from the actions of their government. Even Chinese government officials concede that, if Hong Kong people were asked whether they wanted a more democratic government or preferred the existing arrangements, a substantial majority would opt for the former.19 If no regard is paid to those views and if the present political system remains unreformed, the problems of poor governance and unsuccessful policy-making which have plagued the post-1997 regime will continue. Even business, traditionally government’s strongest ally, ultimately cannot afford a situation in which the administration is unable to deal authoritatively with pressing issues. Many different political agendas are being pursued in the constitutional reform debate. In an interview in late 2008, Tsang frankly admitted that he was not optimistic about achieving a consensus. He said: ... the active politicians are miles apart on what they want. Some want a pure one-man, one-vote single chamber which I have not seen anywhere else in the world. Some others want the retention of all the functional constituencies, re-constituted to meet the universal suffrage criteria.20

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Eventually, based on public consultation, Tsang will have to put a proposal to the Legislative Council where it would need a two-thirds majority for approval. Since the pan-democrats have over one-third of the seats, it is unlikely that any proposition which does not show real progress towards universal suffrage would meet with their support. The ingredients in this constitutional mix — an intransigent Chinese government, a weak Hong Kong government, a volatile civil society, and a global financial crisis — suggest that there will be increased, rather than reduced, polarisation within the polity. For public sector organisations, the resolution of these constitutional and legitimacy issues is critical for more efficient and successful performance. That they have not performed to expectations since 1997 is not the result of a sudden decline in the ability of their personnel or their commitment to the public interest but rather a result of the disarticulated political system in which they have been required to operate.

A Reform Agenda

We began this book by identifying four areas in which the public sector had experienced major difficulties: accountability and constitutional issues; organisational and personnel difficulties; deficiencies in policy formulation and implementation; and relationships between the government and the people. In this concluding section, we suggest in broad outline reforms which might be undertaken to improve administrative and policy capacity in those areas.

Accountability and Constitutional Issues

Although the resolution of the universal suffrage and democratic legitimation issues remain highly problematic, there are reforms which could be undertaken to reduce the level of disarticulation within the system and to improve governance. These reforms could be introduced without amendments to the Basic Law and without involving bitter party and factional disputes. They rest on the interpretation of conventions of the constitution and the willingness of the executive to enhance its relationship with the legislature. They assume that the Legislative Council has a fundamental role to play in ensuring accountability. First, there is a need to ensure that Article 64 of the Basic Law which stipulates that the government should be accountable to the legislature is properly implemented. The Directors of Bureaus are answerable to the legislature in the sense that they respond to members’ questions and participate in debates and panels. But they are not accountable to the Legislative Council in the important respect that they do not bear ultimate responsibility for their actions. No matter what mistakes they make, their political futures are not dependent on the Legislative Council. The legislature has no say in the appointment or removal of the Directors of Bureaus who are not elected and whose only source of legitimacy is their appointment by a Chief Executive elected by a small electoral college. The accountability of the government would be strengthened considerably if all political appointees (Directors and Deputy Directors of Bureaus and

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political assistants) were required to resign if a vote of no confidence in their performance was passed in the Legislative Council. A second area in which the legislature could enhance accountability is by adopting a more proactive role in monitoring public sector organisations beyond the civil service. A public sector organisation that is fully funded by taxpayers’ money should be required to report annually to the legislature and to answer questions on its performance. Most public sector organisations do provide annual reports but they are rarely examined in detail by the legislature. The Director of Audit has begun to take a greater interest in the affairs of non-departmental public bodies in recent years and has been responsible for uncovering problems in such organisations as the Sports Development Board and the Tourism Board but there is a need to supplement that role with legislative oversight. The Public Accounts Committee can only respond some time after the problem has occurred. There is a need for a permanent Legislative Council panel dealing with public sector organisations outside the civil service. Related areas which require attention include the composition of advisory and statutory bodies. The Home Affairs Bureau review of those bodies has successfully increased the government’s control over them but it has not improved their wider accountability, representativeness or transparency. The composition of statutory and advisory bodies still favours long-serving supporters of the government. They still do not meet the government’s own rule, and Donald Tsang’s electoral promise, that no member should serve on more than six boards or for longer than six years. The Legislative Council has an important role to ensure that they move in a direction which requires them to account more fully for the public money which they spend. To hold the executive and public sector organisations more accountable, the number of members of the Legislative Council should be increased in 2012. The present 60 members are over-loaded and cannot devote the time necessary to provide more than cursory monitoring of executive action. They also need more members to speed up the passage of new legislation. The Bills Committee is at present restricted in the amount of new legislation that it can consider and further delays may occur if issues prove to be controversial. Members are also heavily involved in work on advisory committees, in hearing complaints from groups, liaising with district councils and attending community events. There is a need to spread the load to ensure that the Legislative Council has the capacity to hold the executive accountable.

Organisational and Personnel Problems

Despite its turbulent post-1997 experience with reform, salary reductions and downsizing, the Hong Kong civil service has retained its ability to administer existing policies efficiently and effectively. The organisation of the civil service is appropriate for its goals, staff are well qualified and trained in specific skills, and bureaucratic accountability is realised through the hierarchy, through the reports of the Director of Audit and in explanations of policies and procedures to Legislative Council panels. Nonetheless, the civil service does have problems with formulating and implementing new policies, which

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we consider in the next section, with the erosion of the public service ethos, and with the legacy of past attempts to reform, downsize and cut the costs of administration. The attempts to introduce managerialist public sector reforms after 1999 have had three important consequences. First, they have eroded the public service ethos by emphasising managerial efficiency over responsiveness and by changing the interpretation of such values as political neutrality. Now that the new public management reforms appear to have been largely abandoned, there is a need to re-assert the public service ethos, which could be done inter alia through the new Civil Service Code and through the ICAC’s integrity management programmes. Second, the public sector reforms affected recruitment and morale as a result of the reduction of salary scale entry points to the civil service. The civil service became another competitor for labour in the job market. In times of economic hardship, the number of applicants for positions remained high but, as the economy improved, some departments and grades, such as the Police Force, the Fire Services Department and the executive grade, had difficulty retaining staff who had joined the service at the reduced entry point. Third, the staff who did remain found that the entry points were raised when the government found it difficult to recruit. This resulted in a morale problem both for staff recruited at reduced entry points who were often required to undertake the same work as those on much higher salaries and, once entry points were raised, for those who saw their years of service count for nothing in salary terms. There have also been problems with the recruitment of non-civil service staff who have taken on the same work as civil servants at lower pay. The logic of the reforms would make sense if the Hong Kong civil service were to encourage substantial interchange of public and private service personnel. But this has not happened. Once the government retreated from its reform programme, the existing traditional bureaucracy was left without uniform terms of service which has resulted in feelings of relative deprivation. Downsizing and reducing salaries have also resulted in a loss of morale. Staff have taken on heavier loads and, partly because of early retirements, the number of acting positions has risen. Because of cost considerations, there has been a tendency to extend acting appointments rather than make substantive appointments. The salary reductions in 2003 and 2004 also caused a loss of morale. It is questionable whether the savings in costs of lowering entry points, downsizing, and reducing salaries have been justified in their effects on staff and the damage to the government’s reputation as an employer which leads rather than follows the private sector in good employment practices. There is a need for the Standing Commission on Civil Service and Conditions of Service to conduct a comprehensive review of the present situation and to make recommendations to resolve the dysfunctions that result from it.

Policy Formulation and Implementation

The inability of the government to formulate and implement policies to deal with long- standing issues in constitutional reform, health, housing, education and welfare has

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less to do with the structure and competence of its personnel than it has to do with its relationship with civil society. The Tung administration was determined to implement its policy agenda but eventually often found itself confronting hostile civil society organisations which in effect exercised a veto over policy. When Tsang succeeded Tung in 2005, he was necessarily cautious about introducing new policies both because his first term was only for two years and because there had been no significant change in the views of many groups on policy issues. Even after he was re-elected in 2007, the government was far less executive-led than it had been in the first few years of the Tung administration. The government has been more equivocal about what it regards as satisfactory solutions to community problems. In this respect, the Tsang administration has made some progress. There have been some improvements in civic engagement on individual policies.21 The difficulty is that there is no single recipe that is likely to work in all cases. The annual policy address was once seen as an authoritative document outlining policies which the government would formulate and implement. Increasingly, it has become a starting point for negotiations with civil society where the politics of each separate issue has to be taken into account if success is to be achieved. So there is a need for the government to build in specific implementation strategies which take account of the positions of the major stakeholders. On narrowly-focused policies, civic engagement may well produce a modus vivendi for successful implementation. On more complex issues, such as healthcare financing, the outcome affects the entire community, many of whom are opposed to the government’s proposals. In those cases, civic engagement may help to clarify points of difference but it is unlikely to facilitate agreement on the way forward. Civic engagement is a supplement to political representation and not a substitute for it.22 If the system does not allow for the aggregation of demands into policies that can be formulated and implemented, then civic engagement may help to alleviate that problem but it will not entirely resolve it. Civic engagement as a strategy also suffers from two other problems. First, the government’s willingness to engage with civic groups is not standard practice; it engages on some issues but not on others. There needs to be a more formal requirement that policy-makers pay attention to stakeholders as a matter of course. Second, civic engagement may, in some instances, simply result in delaying a decision on what could conceivably be a pressing issue. Deadlines need to be set to ensure that decisions are reached within a reasonable time-frame.

Government and the People

The government seeks to improve its relationship with the people through civic engagement, the development of a more responsive civil service and an effective redress system. These institutions, procedures and mechanisms are especially important because of the deficiencies in the constitutional arrangements and the extent of the legitimacy deficit. The major institutions do not provide adequately for the representation of individual interests through Legislative Councillors or for collective interests expressed in the form of the policy platforms of political parties. Because Legislative Councillors

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do not represent their constituents directly but rather are one among many Councillors representing a district, it is often easier and more effective for those with grievances to use the redress institutions. Because political parties cannot win office, their policy platforms lack credibility and elections often centre on personalities rather than issues. In this context, the role played by civil society and by the redress institutions in ensuring that voice is given to public opinion and that instances of arbitrary administrative action are addressed is important in reducing the legitimacy deficit. Informal channels for the expression of the views of civil society organisations consequently need to be protected and strengthened. The media provides one avenue through which those views may be conveyed but there is also a need to ensure that government hears their message, a point which Tsang stressed in his 2008 policy address.23 Although the organisations dealing with rights, complaints and redress have generally functioned well, there are weaknesses that need to be addressed, such as the development of a proper complaint- handling system for medical patients, a review of the work of administrative tribunals to ensure that their practices conform with natural justice, and a greater willingness on the part of government to be proactive in the protection of the rights of citizens. In a non-democratic system, the way in which the executive and legislature deal with public opinion is critical for the formulation of policy responses and for taking administrative action to remedy grievances. Both the government and the legislature collect a good deal of information through responses to consultation documents, meetings with concerned groups and from submissions by individuals and groups on current policy issues. On some matters, the executive and the legislature co-operate in arriving at solutions but, on others, the government seems to rely solely on its own view of the state of public opinion. Establishing accountability to the people in a non-democratic system is not the easiest of tasks. But if it is ever to be achieved, it does require taking public opinion into account. Legislative Councillors, with an ear to the views of their constituents, are perhaps best placed to provide government with that information. Whether there are enough formal and informal channels between executive and legislature to convey those views and whether the government pays sufficient attention to them is a moot point. What is certain is that “executive-led” government, unqualified by serious attention to public opinion, carries with it the danger of inappropriate policy- making, sometimes with disastrous results. In summary, the following reforms would help improve the accountability of the Hong Kong government and increase its administrative and policy-making capacities: • as a convention of the constitution, Directors of Bureaus and all other political appointees should resign if the Legislative Council passes a motion of no confidence in their performance; • the Legislative Council should increase its oversight of fully-funded public sector organisations beyond the civil service; • the number of Legislative Councillors should be increased for the 2012 elections; • there should be a re-assertion of the public service ethos through the Civil Service Code and the ICAC’s integrity management programmes;

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• the Standing Commission on Civil Service Salaries and Conditions of Service should ensure that raising grade entry point levels does not financially or in any other way disadvantage currently-employed civil servants and compensation should be provided for those who have been disadvantaged in this way in the past; • the Standing Commission on Civil Service Salaries and Conditions of Service and the Public Service Commission should ensure that the principle of equal work for equal pay is more uniformly observed; • civic engagement should be institutionalised as part of the policy process; • the channels through which the views of civil society organisations are conveyed to government should be examined with the aim of formalising those channels, where feasible, and of ensuring that coverage of public opinion is as comprehensive as possible; • the procedures of administrative tribunals should be reviewed to ensure that they are in accord with the principle of natural justice.

These measures would help to improve governance and reduce the legitimacy deficit. But they would not entirely resolve the legitimacy problem. The constitutional arrangements and the way in which they affect institutional relationships remain the single greatest barrier to better policy-making and administrative performance. Until the political relationship between the people and its government is addressed through constitutional reform and until there is evidence that the problems of consent and of legal and moral authority have been accommodated within a political framework in which executive authority is properly accountable, the government will continue to be constrained in its ability to deal quickly and effectively with pressing policy issues.

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Chapter 1 1. This definition is a conventional one which lays stress on the funding of public sector organisations through taxation. In Hong Kong, the sale of Crown land, all of which is owned by the government, has been an important source of revenue and the definition has been amended accordingly. On definitions of the public sector, see Kai Wegrich, “Public Sector” in Encyclopedia of Governance, ed. Mark Bevir, Vol II (California: Sage 2007), 776–777 and the discussion in Jan-Erik Lane, The Public Sector: Concepts and Approaches (London: Sage, 2000). 2. The government web-site, www.gov.hk, lists 60 departments and agencies but includes the Audit Commission, the Independent Commission Against Corruption, The Office of the Ombudsman and the University Grants Committee and some advisory committees, which, strictly speaking, are not departments but what the government calls “related organisations”. If a department is defined as an agency which has executive powers, the number of departments is smaller. See also Chapter 4. 3. Civil Service Bureau, Civil Service Personnel Statistics 2008 (Hong Kong: Civil Service Bureau, 2008), Table 1.1. The figures are for the number of people actually in position (the “strength”) rather for the establishment which is slightly higher. 4. Calculated from Independent Commission Against Corruption, Annual Report 2007, www.icac.org.hk, Appendix 1. 5. It is difficult to estimate the exact numbers employed in the public sector outside the civil service. If the criterion that defines the public sector organisation is the subsidy that it receives from government, then it would be necessary to determine for each organisation how much of the subsidy is spent on staff and how much comes from fees and charges levied by the organisation itself. 6. A.B.L. Cheung, “Public Sector Reform and the Re-legitimation of Public Bureaucratic Power: The Case of Hong Kong,” International Journal of Public Sector Management 9(5–6) (1996), 37–50; Ian Scott, “Organisations in the Public Sector in Hong Kong: Core Government, Quasi-Government and Private Bodies with Public Functions,” Public Organisation Review 3(3) (September 2003), 247–267. 7. The Commission appointed to investigate the claim that the government infringed academic autonomy at the Hong Kong Institute of Education found that the government had the right to “encourage, steer or direct” tertiary institutions but that it should use proper channels. The government then asked for a judicial review of the finding. See

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Yeung Chun Kuen and Lee Jark Pui, Report of the Commission of Inquiry on Allegations relating to the Hong Kong Institute of Education (Hong Kong: Government Logistics Department, June 2007), 101. See also Chapter 3. 8. See Rikkie Yeung, Moving Millions: The Commercial Successes and Political Controversies of Hong Kong’s Railways (Hong Kong: Hong Kong University Press, 2008), Chapter 11, Epilogue. 9. Public goods and services are commonly defined as those goods and services which are provided by governments because the market cannot allocate them efficiently. They have the important characteristics that they are non-rivalrous, in the sense that “more than one person can derive benefits from [their] consumption when its supply does not change”, and non-excludable, in the sense that consumption does not preclude further use by another person. See Karthik Srinivasan, “Public Goods” in Encyclopedia of Governance, ed. Mark Bevir, Vol. II, op. cit., 765–766. 10. Donald Tsang, Strong Governance for the People, www.policyaddress.gov.hk (2005), para 71; Donald Tsang, “‘Big market, small government’ key,” www.3.news.gov.hk, September 19, 2006. 11. Financial Secretary, The 2008–09 Budget (Hong Kong: Government Logistics Department, 2008), Appendix B. 12. For a comparison of Hong Kong’s public expenditure as a percentage of Gross Domestic Product with that of other developed countries, see Wilson Wong and Sabrina Luk, “Economic Policy” in Contemporary Hong Kong Politics: Governance in the Post- 1997 Era, eds. Lam Wai-man, Percy Luen-tim Lui, Wilson Wong and Ian Holliday (Hong Kong: Hong Kong University Press, 2007), 187. 13. Quoted in Tsang, “‘Big market, small government’ key,” op. cit. 14. See Eliza W.Y. Lee, “The Political Economy of Public Sector Reform in Hong Kong: The Case of a Colonial-Developmental State,” International Review of Administrative Sciences 64(4) (1998), 625–641; Ian Scott, “Administration in a Small Capitalist State,” Public Administration and Development 9(2) (April–May, 1989), 185–199. 15. To quote Miliband, it acts “on behalf of capitalists but not necessarily at their behest.” Ralph Miliband, Marxism and Politics (Oxford: Oxford University Press, 1977), 74. 16. Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China on the Question of Hong Kong (Hong Kong: Government Printer, 1984); The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (Hong Kong: The Consultative Committee for the Basic Law, April 1990). 17. See Peter Wesley-Smith, Unequal Treaty: China, Great Britain and Hong Kong’s New Territories (Hong Kong: Oxford University Press, 1980), Chapter 5; Urban Council, Annual Report 1978–79 (Hong Kong: Michael Stevenson, 1979), 5–6. 18. McKinsey and Company, The Machinery of Government: A New Framework for Expanding Services (Hong Kong: mimeo, May 1973). 19. Ibid., 14–17. 20. Civil Service Branch, Civil Service Personnel Statistics 1997 (Hong Kong: Civil Service Branch, 1997), 12. 21. This was the rule-of-thumb adopted by government at the time. The precise numbers were not known. 22. Public Service Commission, Annual Report 2000 (Hong Kong: Printing Department, 2001), 1–2.

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23. See Ian Scott, “Civil Service Neutrality in Hong Kong” in Democratization and Bureaucratic Neutrality, eds. Haile K. Asmeron and Elisa P. Reis (Basingstoke: Macmillan, 1996), 277–293. 24. Carol Jones, “Politics Postponed: Law as a Substitute for Politics in Hong Kong and China” in Law, Capitalism and Power in Asia: The Rule of Law and Legal Institutions, ed. K. Jayasuriya (London: Routledge, 1999), Chapter 3; Leo F. Goodstadt, “Prospects for the Rule of Law: The Political Dimensions” in Judicial Independence and the Rule of Law in Hong Kong, ed. Steve Tsang (Basingstoke: Palgrave, 2001), Chapter 8. 25. Ian McWalters, Bribery and Corruption Law in Hong Kong (Singapore: LexisNexis Butterworths, 2003), 16–19. 26. On the events preceding the establishment of the Independent Commission Against Corruption, see H.J. Lethbridge, Hard Graft in Hong Kong: Scandal, Corruption and the ICAC (Hong Kong: Oxford University Press, Hong Kong, 1985); Ian Scott, Political Change and the Crisis of Legitimacy in Hong Kong (London: Hurst, 1989), 146–152; T. Wing Lo, Corruption and Politics in Hong Kong and China (Buckingham: Open University Press, 1993), 88–108; Jon S.T. Quah, Curbing Corruption in Asia: A Comparative Study of Six Countries (Singapore: Eastern Universities Press, 2003), 133–143; Melanie Manion, Corruption by Design: Building Clean Government in Mainland China and Hong Kong (Cambridge : Harvard University Press, 2004), 27– 83. 27. Milton Friedman, Free to Choose (Harmondsworth: Penguin, 1980), 47–49, 54–55. 28. Ibid., 53. 29. Hong Kong Government, Hong Kong 1980 (Hong Kong: Government Printer, 1981), 91. 30. See, for example, Elizabeth Sinn, Power and Charity: The Early History of the Tung Wah Hospital, Hong Kong (Hong Kong: Oxford University Press, 1989), 13. 31. See McKinsey and Company, op. cit. 32. District Commissioner, New Territories to Hon. Colonial Secretary, Ref (23) in NT4811C, April 19, 1973. 33. G.B. Endacott, Government and People in Hong Kong 1841–1962 (Hong Kong: Hong Kong University Press, 1964), 93. 34. H.J. Lethbridge, Hong Kong: Stability and Change (Hong Kong: Oxford University Press, 1978), 117. 35. Hong Kong Government, Report on the Riots in Kowloon and Tsuen Wan October 10th to 12th 1956 with Covering Despatch dated 23rd December 1956 from the Governor of Hong Kong to the Secretary of State for the Colonies (mimeo, 1956), ii. 36. Commission of Inquiry, Kowloon Disturbances 1966: Report of the Commission of Inquiry (Hong Kong: Government Printer, 1967). 37. See Norman Miners, The Government and Politics of Hong Kong, 1st Edition (Hong Kong: Oxford University Press, 1975), viii. 38. Hong Kong Government, Hong Kong 1981 (Hong Kong: Government Printer, 1982), 35. 39. Anthony B.L. Cheung, “Performance Pledges — Power to the Consumer or a Quagmire in Public Service Legitimation,” International Journal of Public Administration 19(2) (1996), 233–260. 40. Hong Kong Government, Serving the Community (Hong Kong: Government Printer, 1995), 21. 41. Ibid., 21–22.

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42. The Basic Law, op. cit., Article 100; Joint Declaration op. cit., Section IV. 43. Ian Scott, “The Disarticulation of Hong Kong’s Post-Handover Political System,” The China Journal No. 43 (January 2000), 29–53. 44. Government of the HKSAR, “CE’s speech given at the Hong Kong Association,” Press Release, November 12, 2003; Y.C. Jao, The Asian Financial Crisis and the Ordeal of Hong Kong (Westport, Conn.: Quorum Books, 2001), 4. 45. Government of the HKSAR, Hong Kong 2003 (Hong Kong: Printing Department, 2004), 99. 46. See Agnes S. Ku, “The ‘Public’ up against the State: Narrative Cracks and Credibility Crisis in Postcolonial Hong Kong,” Theory, Culture and Society 18 (1) (2001), 121– 144. 47. The Basic Law, op. cit., Article 23. 48. Jimmy Lee and Claudia Mo, “500,000 march through the streets,” SCMP, July 2, 2003; see also Joseph Y.S. Cheng, ed., The July 1 Protest Rally: Interpreting a Historic Event (Hong Kong: City University of Hong Kong Press, 2005), Chapters 1, 2. 49. Constitutional Affairs Bureau, Review of District Organisations: Consultation Document (Hong Kong: Printing Department, June 1998), vi–vii. 50. The Basic Law, op. cit., Article 62. 51. See, for example, Jimmy Cheung, “Civil service neutrality is a British thing: state leader,” SCMP, October 17, 2003. 52. Ian Scott, “The Disarticulation of Hong Kong’s Post-Handover Political System,” op. cit. 53. Civil Service Bureau, Civil Service Reform: Consultation Document: Civil Service into the 21st Century (Hong Kong: Printing Department, March 1999). 54. See John P. Burns, Government Capacity and the Hong Kong Civil Service (Hong Kong: Oxford University Press, 2004), 163, 166–167. 55. Civil Service Branch (1997), op. cit., 16; Civil Service Bureau (2008), op. cit., 36. 56. Civil Service Branch (1997), op. cit., 12; Civil Service Bureau (2008), op. cit., Table 1.1. 57. Tsang, Strong Governance for the People, op. cit., para 5. 58. Ma Ngok, Political Development in Hong Kong (Hong Kong: Hong Kong University Press, 2007), Appendix 5. 59. Advisory Committee on New Broad-Based Taxes, Final Report to the Financial Secretary (Hong Kong: Printing Department, February, 2002), 27. 60. Constitutional Development Task Force, The Second Report of the Constitutional Development Task Force: Issues of Principle in the Basic Law Relating to Constitutional Development (April 2004), www.info.gov.hk/cab (April 2004), 37–39; Chief Executive, Report by the Chief Executive of the Hong Kong Special Administrative Region to the Standing Committee of the National People’s Congress on Whether there is a Need to Amend the Methods of Selecting the Chief Executive of the Hong Kong Special Administrative Region in 2007 and for Forming the Legislative Council of the Hong Kong Special Administrative Region in 2008, www.info.gov.hk/ce/cdreport (April 2004). 61. Hansard, December 21, 2005, 3313–3559. 62. The Basic Law, op. cit., Articles 45, 68. 63. See Suzanne Pepper, Keeping Democracy at Bay: Hong Kong and the Challenge of Chinese Political Reform (Lanham, MD: Rowan and Littlefield, 2008), 379–380. Pepper cautions that voters may not necessarily opt for democratic parties because they are seeking to accelerate democratic development. See also Joseph Chan and Elaine

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Chan, “Perceptions of Universal Suffrage and Functional Representation in Hong Kong: A Confused Public?” Asian Survey XLVI (2) (March/April 2006), 257–274. 64. Chris Yeung, “Anson Chan admits to risks in election debut,” SCMP, October 2, 2007. 65. See www. elections.gov.hk/legco2007by (accessed December 15, 2007). 66. See www.elections.gov.hk (accessed October 15, 2008). 67. Government of the HKSAR, Green Paper on Constitutional Development (Hong Kong: Government Logistics Department, July 2007). 68. Jimmy Cheung, “Tsang targets 60pc for suffrage plan,” SCMP, March 22, 2007. 69. Chief Executive, Report on Consultation on Green Paper on Constitutional Development (Hong Kong: Government Logistics Department, December 2007), 62. 70. Chief Executive, Report by the Chief Executive of the Hong Kong Special Administrative Region to the Standing Committee of the National People’s Congress on the Public Consultation on Constitutional Development and on Whether there is a Need to Amend the Methods for Selecting the Chief Executive of the Hong Kong Special Administrative Region and for Forming the Legislative Council of the Hong Kong Special Administrative Region in 2012 (Hong Kong: Government Logistics Department, December 2007), 6. 71. Chief Executive, “CE’s statement on the decision by the Standing Committee of the National People’s Congress,” Press Release, December 29, 2007. 72. Electoral Commission, Chief Executive Election, www.eac.gov.hk, 70. See also Sonny Shiu-Hing Lo, The Dynamics of Beijing–Hong Kong Relations: A Model for Taiwan? (Hong Kong: Hong Kong University Press, 2008), Chapter 8. 73. Constitutional Affairs Bureau, “Adoption of the Principles of ‘Universal Suffrage’ and ‘Balanced Participation’ in Some Democratic Countries,” CSD/GC/W/1/2006. See also Jimmy Cheung, “Albert Ho warns over suffrage,” SCMP, February 4, 2008. 74. Gary Cheung, “Jurists leave no doubt: 2007 is out,” SCMP, January 20, 2004. 75. Dagong Bao, “Zhou Nan on the political review,” January 30, 2004. 76. Qiao Xiaoyang, “Striving in a pragmatic spirit to find the right path to political development,” SCMP, April 29, 2004. On the reasons given by the Chinese government for refusing to extend the suffrage, see also Ming Pao, “NPC rules out direct elections for 2007,” April 27, 2004. 77. Government of the HKSAR, Green Paper on Constitutional Development (Hong Kong: Government Logistics Department, July 2007). 78. Chief Executive, “CE’s statement on the decision by the Standing Committee of the National People’s Congress,” op. cit. 79. Ibid. 80. Ian Thynne and John Goldring, Accountability and Control: Government Officials and the Exercise of Power (Sydney: Law Book Company, 1987), 11. 81. Ibid., 7–9; Mark Bovens, The Quest for Responsibility: Accountability and Citizenship in Complex Organisations (Cambridge: Cambridge University Press, 1998), 26–28. 82. Thynne and Goldring, op. cit., 6. 83. Kenneth F. Warren, Administrative Law in the Political System, 3rd edition (New Jersey: Prentice Hall, 1996), 155–157. 84. Albert H.Y. Chen, An Introduction to the Legal System of the People’s Republic of China (Hong Kong: Butterworth, 1992), 40. 85. For discussions of accountability in the Hong Kong context, see Burns, op. cit., Chapter 5; Kit Poon, The Political Future of Hong Kong: Democracy within Communist China (London: Routledge, 2008), Chapter 6.

ch.13 Notes(p.307-359).indd 311 11/4/09 4:32:34 PM 312 Notes to pages 21–28

86. Anthony Cheung, “Policy Capacity in Post-1997 Hong Kong: Constrained Institutions Facing a Crowded and Differentiated Polity,” The Asia Pacific Journal of Public Administration 29(1) (June 2007), 51–75. 87. Stephen Brown et al., The Budget and Public Finance in Hong Kong (Hong Kong: Civic Exchange, 2003), 16. 88. See Gavin Ure, The Origins of the Hong Kong Government’s Autonomy 1918 to 1955 (Unpublished Ph.D. dissertation, Perth: Murdoch University, 2007), 332–333. 89. Ian Scott, “Legitimacy, Governance and Public Policy in Post-Handover Hong Kong,” The Asia Pacific Journal of Public Administration 29(1) (June 2007), 29–49. 90. David Beetham, The Legitimation of Power (Basingstoke: Macmillan, 1991), 15–19. See also Ian Scott, “Legitimacy and Its Discontents: Hong Kong and the Reversion to Chinese Sovereignty,” Asian Journal of Political Science 1(1) (June 1993), 55–75; Muthiah Alagappa, ed., Political Legitimacy in Southeast Asia: The Quest for Moral Authority (Stanford: Stanford University Press, 1995), 14–24.

Chapter 2 1. Yash Ghai, “The Legal Foundations of Hong Kong’s Autonomy: Building on Sand,” The Asia Pacific Journal of Public Administration29(1) (June 2007), 11. 2. For a further exploration of the unique features of the “one country two systems” model on which the Basic Law is based, see Peter T.Y. Cheung, “Towards Federalism in China? The Experience of the Hong Kong Special Administrative Region” in Federalism in Asia, eds. Baogang He, Brian Galligan and Takashi Inoguchi (Cheltenham: Edward Elgar, 2007). 3. Ian Thynne, “Autonomy and Integration” in Institutional Change and the Political Transition in Hong Kong, ed. Ian Scott (Basingstoke: Macmillan, 1998), 238. 4. Xu Jiatun, Xu Jiatun Xianggang Hu Yi Lu [The Hong Kong Memoirs of Xu Jiatun] Vol. 2 (Hong Kong: United Daily News, 1993), 183. 5. On functional constituencies, see Christine Loh and Civic Exchange, eds., Functional Constituencies: A Unique Feature of the Hong Kong Legislative Council (Hong Kong: Hong Kong University Press, 2006). 6. Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China on the Question of Hong Kong (Hong Kong: Government Printer, 1984). 7. Ibid., Annex V, 1. 8. See Ming K. Chan and David J. Clark, The Hong Kong Basic Law: Blueprint for ‘Stability and Prosperity’ under Chinese Sovereignty? (Hong Kong: Hong Kong University Press, 1991), 7–8; Emily Lau, “The Early History of the Drafting Process” in The Basic Law and the Hong Kong’s Future, eds. Peter Wesley-Smith and Albert Chen (Hong Kong: Butterworth, 1988), 101–104; Karen Tang Shuk Ta, An Analysis of the Basic Law Drafting and Consultative Process (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1990), 89–91. 9. The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (Hong Kong: The Consultative Committee for the Basic Law, April 1990), Annex 1. 10. Hansard, May 21, 2003, 6699–6762. 11. The Article 45 Concern group was formed in November 2006 and was dissolved on the creation of the Civic Party in March 2006.

ch.13 Notes(p.307-359).indd 312 11/4/09 4:32:34 PM Notes to pages 28–37 313

12. The text of the Standing Committee’s decision is reproduced in the SCMP, “Full text of the Standing Committee’s decision,” April 27, 2004. For an explanation of the Chinese government’s position on progress towards universal suffrage, see Wang Zhemin, “The Significance of China’s Decision on Universal Suffrage,” The Hong Kong Journal No. 10, www.hkjournal.org (April 2008). 13. Hansard, December 21, 2005, 3313–3559. 14. See Sonny Shiu-Hing Lo, The Dynamics of Beijing–Hong Kong Relations: A Model for Taiwan? (Hong Kong: Hong Kong University Press, 2008), Chapter 8. 15. Chief Executive, “CE’s statement on the decision by the Standing Committee of the National People’s Congress,” Press Release, December 29, 2007. 16. Benny Y.T. Tai, “The Development of Constitutionalism in Hong Kong” in The New Legal Order in Hong Kong, ed. Raymond Wacks (Hong Kong: Hong Kong University Press, 1999), 39. 17. Hansard, July 11, 2001, 7535. 18. Chief Executive Election Ordinance, Cap 569, Clause 4c. 19. On the electoral system, see Ma Ngok, “Political Parties and Elections” in Contemporary Hong Kong Politics: Governance in the Post-1997 Era, eds. Lam Wai-man, Percy Luen-tim Lui, Wilson Wong and Ian Holliday (Hong Kong: Hong Kong University Press, 2007). 20. Preliminary Working Committee, Some Views of the Preliminary Working Committee of the HKSAR Preparatory Committee on Maintaining the Stability of the Hong Kong Civil Service and Its System (Hong Kong: mimeo, December 8, 1995). 21. Ibid. 22. On the conditions for the legitimate exercise of power, see David Beetham, The Legitimation of Power (Basingstoke: Macmillan, 1991), 15–19. 23. Qiao Xiaoyang, “Striving in a pragmatic spirit to find the right path to political development,” SCMP, April 29, 2004. 24. See Ma Ngok, The Political Development of Hong Kong (Hong Kong: Hong Kong University Press, 2007), Chapters 5, 6. 25. Ian Scott, “The Disarticulation of Hong Kong’s Post-Handover Political System,” The China Journal No. 43 (January 2000), 29–53. 26. Lau Siu-kai and Kuan Hsin-chi, “Hong Kong’s Stunted Party System,” The China Quarterly No. 172 (December 2002), 1020–1028; see also Lau Siu-kai and Kuan Hsin- chi, “Partial Democratization, ‘Foundation Moment’ and Political Parties in Hong Kong,” The China Quarterly No. 163 (September 2000), 705–720. 27. See Constitutional Development Task Force, The Second Report of the Constitutional Development Task Force: Issues of the Legislative Process in the Basic Law (April 2004), www.info.gov.hk/cab, 20. 28. Yash Ghai, Hong Kong’s New Constitutional Order: The Resumption of Chinese Sovereignty and the Basic Law, 2nd edition (Hong Kong: Hong Kong University Press, 1999), 293–295. 29. Chloe Lai, Carrie Chan and Ambrose Leung, “Legislators change of heart on the harbour,” SCMP, October 8, 2003. 30. M. Alagappa, Political Legitimacy in Southeast Asia: The Quest for Moral Authority (Stanford: Stanford University Press, 1995), 46. 31. Court of Final Appeal, Final Appeal No 14 of 1998 (Civil) (Ng Ka Ling v Director of Immigration) 1 HKC 291 (January 29, 1999). 32. Ibid.

ch.13 Notes(p.307-359).indd 313 11/4/09 4:32:34 PM 314 Notes to pages 37–40

33. Xiao Weiyun and others, “Why the Court of Final Appeal Was Wrong: Comments of the Mainland Scholars on the Judgment of the Court of Final Appeal” in Hong Kong’s Constitutional Debate: Conflict over Interpretation, eds. Johannes M.M. Chan, H.L. Fu and Yash Ghai (Hong Kong: Hong Kong University Press, 2000), 64–68. 34. SCMP, “Judges say they never intended to question NPC,” Internet edition, February 26, 1999. 35. Government of the HKSAR, “Speech by Secretary for Security,” Press Release, May 19, 1999; No Kwai-yan, “Basic Law amendment ‘not answer on abode’,” SCMP, May 1, 1999. 36. The last abode seekers lost their appeal in March 2008. See Nick Gentle, “Last 14 abode seekers left in limbo by Beijing lose appeals,” SCMP, March 19, 2008. 37. Chris Yeung, “NPC lays down the law,” Sunday Morning Post, June 27, 1999. 38. Stephen Lam, “Abode rulings prove autonomy is safe and sound,” SCMP, January 16, 2002. 39. Albert H.Y. Chen, “The Constitution and the Rule of Law” in The First Tung Chee-hwa Administration, ed. Lau Siu-kai (Hong Kong: Chinese University Press, 2002), 84–85. 40. Alan Leong, “Does the system protect our rights as before? Not as much,” SCMP, January 14, 2003; Sunday Morning Post, “Much more than an interpretation is at stake,” editorial, June 27, 1999. 41. See, for example, documents on the public debate over the right of abode in Chan, Fu and Ghai (2000), op. cit., Part II; Byron Weng, “Judicial Independence under the Basic Law” in Judicial Independence and the Rule of Law in Hong Kong, ed. Steve Tsang (Basingstoke: Palgrave, 2001). 42. Security Bureau, Proposals to Implement Article 23 of the Basic Law: Consultation Document (Hong Kong: Printing Department, 2002). 43. Chris Yeung, “Anti-sedition laws finally unveiled,” SCMP, September 25, 2002. 44. Draft Committee for the Basic Law, The Draft Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (For Solicitation of Opinions) (Hong Kong: The Committee, April 1988), Article 22. 45. Secretariat of the BLDC of the Hong Kong SAR of the PRC, The Draft Basic Law of the Hong Kong SAR of the PRC (Hong Kong: mimeo, January 18, 1989). 46. H. Fu, “The National Security Factor: Putting Article 23 of the Basic Law in Perspective” in Tsang, op. cit., 78. 47. Ibid., 79. 48. Security Bureau, op. cit., 10. 49. Ibid., 37. 50. Ibid., 30. 51. Hong Kong Bar Association, Response to the Consultation Document on the Proposals to Implement Article 23 of the Basic Law, www.hkba.org (2002). 52. Philip Segal, “Business: The Biggest Victim,” Far Eastern Economic Review, December 19, 2002, 30–34. 53. Hong Kong Bar Association, op. cit.; Anson Chan, “Hong Kong needs a new consensus,” SCMP, October 3, 2002; Martin Lee, “Officials must reveal true colour of Article 23,” SCMP, October 1, 2002. 54. Ibid.; Angela Li and Ambrose Leung, “Article 23 White Bill considered pointless,” SCMP, October 6, 2002. 55. May Sin-mi Hon and Angela Li, “Most back security law, says Regina Ip,” SCMP, October 29, 2002.

ch.13 Notes(p.307-359).indd 314 11/4/09 4:32:35 PM Notes to pages 40–44 315

56. Christine Loh, “Hitler comments undermine democracy,” SCMP, November 1, 2002. 57. Government of the HKSAR, “Chief Executive’s statement about Falun Gong,” Press Release, February 8, 2001. 58. Hong Kong Bar Association, op. cit. 59. May Sin-mi Hon, “Will it or won’t it breach the rules?” SCMP, September 25, 2002. 60. See Richard Cullen, “Freedom of the Press and the Rule of Law in Hong Kong” in Tsang, op. cit., 159, 175 note 10; Margaret Ng, “Government sharpens its knives against the media,” SCMP, October 23, 2002. 61. Bob Allcock, “No change in freedom of speech,” SCMP, September 30, 2002. 62. Margaret Ng, op. cit. See also Ma Ngok, “State-Press Relationship in Post-1997 Hong Kong: Constant Negotiation amidst Self-Restraint,” The China Quarterly No. 192 (December 2007), 949–970. 63. See www.basiclaw23.gov.hk (accessed May 20, 2003). 64. Ibid. 65. Ibid. 66. Hong Kong Transition Project, Accountability & Article 23: Freedom, Fairness and Accountability in Hong Kong (Hong Kong: The Project, December 2002), 57. 67. Ravina Shamdasani and Quinton Chan, “Fears over analysis of security law views,” SCMP, January 13, 2003. 68. Legislative Council, Legislative Council Brief: National Security (Legislative Provisions) Bill (Hong Kong: mimeo, February 13, 2003). 69. Government of the HKSAR, “Secretary of Security speaks in Legco,” Press Release, February 12, 2003. 70. Ibid. 71. Legislative Council (2003), op. cit. 72. Article 23 Concern Group, Why the Blue Bill on National Security (Legislative Provisions) is not Good Enough (Hong Kong: The Group, April 2003); Klaudia Lee, “Most people oppose security bill,” SCMP, June 28, 2003. 73. Government of the HKSAR, “Government announces draft amendments to the National Security (Legislative Provisions) Bill,” Press Release, June 3, 2003. 74. Government of the HKSAR, “Speech by Deputy Solicitor General (Constitutional),” Press Release, June 14, 2003. 75. SCMP, “Scrutiny of Bill makes a mockery of the system,” editorial, June 16, 2003. 76. Klaudia Lee (2003), op. cit. 77. Jimmy Cheung and Klaudia Lee, “500000 march through the streets,” SCMP, July 2, 2003. 78. Government of the HKSAR, “Chief Executive’s transcript on the Basic Law Article 23,” Press Release, July 5, 2003. 79. Jimmy Cheung, “James Tien quits over Article 23,” SCMP, July 2, 2003. 80. Government of the HKSAR, “Statement by CE,” Press Release, July 7, 2003. 81. Government of the HKSAR, “Statement by Secretary of Security,” Press Release, July 16, 2003. 82. Jimmy Cheung, “Tung opens door to change,” SCMP, July 18, 2003. 83. Catherine Armitage, “Beijing puts Hong Kong on notice,” The Australian, July 21, 2003. 84. Matt Pottinger, “How Pro-Beijing Politician Made Hong Kong Retreat,” The Asian Wall Street Journal, September 8, 2003. 85. Jimmy Cheung, Klaudia Lee and J. Ma, “Tung shelves Article 23 legislation,” SCMP, September 6, 2003.

ch.13 Notes(p.307-359).indd 315 11/4/09 4:32:35 PM 316 Notes to pages 44–51

86. J. Ma, “DAB wins praise from Vice-President,” Sunday Morning Post, September 7, 2003. 87. Lau Nai-keung, “Still the mainland’s man, still with legitimacy problem,” SCMP, July 21, 2003. 88. See Joseph Y.S. Cheng, “Introduction: Causes and Implications of the July 1 Protest Rally in Hong Kong” in The July 1 Protest Rally: Interpreting a Historic Event, ed. Joseph Y.S. Cheng (Hong Kong: City University of Hong Kong Press, 2005). 89. Polly Hui, “Judicial review legal aid bids on the rise,” SCMP, March 3, 2008. 90. Ibid. 91. Peter Po Fun Chan v Winnie C.W. Cheung and Another, FACV10/2007, www.legalref. judiciary.gov.hk. 92. HKSAR v Ma Wai Kwan and Others, CAQL1/1997, www.legalref.judiciary.gov.hk. 93. The Association of Expatriate Civil Servants v The Chief Executive of HKSAR, HCAL 90/1997, www.legalref.judiciary.gov.hk. 94. Chan Shu Ying v The Chief Executive of the Hong Kong Special Administrative Region, HCAL151/1999, www.legalref.judiciary.gov.hk. 95. Town Planning Board v Society for the Protection of the Harbour, FACV14/2003, www.legalref.judiciary.gov.hk. 96. Catholic Diocese of Hong Kong v Secretary for Justice, HCAL157/2005, www.legalref. judiciary.gov.hk. 97. Leung TC William Roy v Secretary for Justice, HCAL160/2004, www.legalref.judiciary. gov.hk 98. Leung Kwok Hung and Another v Chief Executive of the HKSAR, CACV73/2006, www. legalref.judiciary.gov.hk. 99. Secretary for Justice v Ocean Technology Limited and Others, HCA 70/2008, www. legalref.judiciary.gov.hk.

Chapter 3 1. John P. Burns, Government Capacity and the Hong Kong Civil Service (Hong Kong: Oxford University Press, 2004), 157–158. 2. Norman Miners, The Government and Politics of Hong Kong, 5th edition (Hong Kong: Kong: Oxford University Press, 1991), 160–163. 3. Constitutional Affairs Bureau, Review of District Organisations: Consultation Document. (Hong Kong: Printing Department, June 1998), 11–12. 4. Tung Chee-hwa, Building Hong Kong for a New Era (Hong Kong: Printing Department, 1997), 49–50. 5. Constitutional Affairs Bureau (1998), op. cit., vi–vii. 6. Ibid., 33–37. 7. Hansard, July 29, 1998, 1199. 8. Constitutional Affairs Bureau, Review of District Organisations: Consultation Report (Hong Kong: Printing Department, October 1998), v, 43. 9. Ibid., 23. 10. Ibid. 11. Ibid. 12. Hansard, July 29, 1998, 1204. 13. Jimmy Cheung, “Democrats in battle to head councils,” SCMP, December 10, 2003. 14. Tung Chee-hwa, Serving the Community, Sharing Common Goals (Hong Kong: Printing Department, 2000), 38.

ch.13 Notes(p.307-359).indd 316 11/4/09 4:32:35 PM Notes to pages 52–55 317

15. Burns, op. cit., 161–167. See also Christine Loh, Accountability without Democracy? The Principal Officials Accountability System in Hong Kong (Hong Kong: Civic Exchange, 2002); Cheung Chor-yung, “The Quest for Good Governance: Hong Kong’s Principal Officials Accountability System,” China: An International Journal 1(2) (2003), 249–272. 16. Constitutional Affairs Bureau, Legislative Council Paper: Accountability System for Principal Officials (Hong Kong: The Bureau, April 17, 2002), 6. In 2002, the Director of the Chief Executive’s Office also became a Principal Official. The Director’s conditions of service were aligned with those of Directors of Bureaus in July 2007. See Constitutional and Mainland Affairs Bureau, Report on the Further Development of the Political Appointment System, www.cmab.gov.hk (October 2007), 43. The position is not mentioned in the Basic Law but the government presumably would argue that it can create new Principal Official positions under the category “Directors of Bureaux” in Article 48(5) without the need to amend the law. 17. Tung Chee-hwa, Building on Our Strengths, Investing in our Future (Hong Kong: Printing Department, 2001), 35–36. 18. Constitutional Affairs Bureau (2002), op. cit. 19. Ibid., 5. 20. Hansard, April 17, 2002, 5499. The Legislative Council has occasionally passed a motion condemning the actions of a Principal Official and has also sometimes defeated the government on critical policy issues. But this has not prompted resignations. See Hansard, February 2, 2005, 4392–4466. 21. Constitutional Affairs Bureau (2002), op. cit., 6. 22. Ibid., 11. 23. Secretary for the Civil Service, “SCS writes to colleagues on Accountability System,” Press Release, April 18, 2002. 24. Emily Lau, “So, just what is the point of Exco?” SCMP, September 10, 2003. 25. Government of the HKSAR, “New team of Principal Officials appointed,” Press Release, June 24, 2002. 26. Secretary for the Civil Service (2002), op. cit. 27. Robert G. Kotewall and Gordon C.K. Kwong, Report of the Panel of Inquiry on the Penny Stocks Incident (Hong Kong: Printing Department, 2002), 100. 28. Ibid., 158–161. 29. Ibid., 153. 30. Ibid., 158–159. 31. Legislative Council, Panel on Financial Affairs, Minutes of a Special Meeting held on 31st July 2002 (Hong Kong: mimeo, 2002). 32. Kotewall and Kwong, op. cit., 110. 33. Legislative Council, Panel on Financial Affairs, op. cit., 8, 14, 17. 34. Ibid., 8. 35. Secretary for Constitutional Affairs, Twelve Month Report on Implementation of the Accountability System for Principal Officials (Hong Kong: mimeo, 2003), 18. 36. Kotewall and Kwong, op. cit., 169. 37. Angela Li and Ambrose Leung, “‘Whitewash’ attacked by all sides,” SCMP, September 11, 2002. 38. Ambrose Leung and Jimmy Cheung, “Reports on car purchase made public,” SCMP, March 22, 2003. 39. Tung Chee-hwa, “Letter to Antony Leung Kam-chung,” www.info.gov.hk/ce, March 25, 2003.

ch.13 Notes(p.307-359).indd 317 11/4/09 4:32:35 PM 318 Notes to pages 55–59

40. Jimmy Cheung and Gary Cheung, “Tung admonishes his finance chief,” SCMP, March 11, 2003. 41. Legislative Council, Panel on Constitutional Affairs, Minutes of a Meeting held on 17th March (Hong Kong: mimeo, 2003) (translated from Chinese). 42. Ibid., 1. 43. Ibid., 34–5; Hansard, April 9, 2003, 5529–5593. 44. Government of the HKSAR, “DPP decides not to prosecute Antony Leung,” Press Release, December 15, 2003. 45. Ambrose Leung and Quinton Chan, “Civil Service chief asked to explain retirement,” SCMP, November 1, 2003. 46. Constitutional Affairs Bureau (2002), op. cit., 10. 47. Leung and Chan, op. cit. 48. Constitutional and Mainland Affairs Bureau (October 2007), op. cit., 40. 49. SARS Expert Committee, SARS in Hong Kong: From Experience to Action: Report of the SARS Expert Committee (Hong Kong: Information Services Department, 2003), 159. 50. Ibid. 51. Hospital Authority Review Panel, Report of the Hospital Authority Review Panel on the SARS Outbreak (Hong Kong: The Authority, September 2003), 20, 147, 158. 52. Legislative Council, House Committee, Minutes of a Meeting held on 10th October 2003 (Hong Kong: mimeo, 2003), 10; Chris Yeung, “A question of accountability,” SCMP, June 27, 2003. 53. Jimmy Cheung and Mary Ann Benitez, “Legislators unanimous on holding SARS probe,” SCMP, October 11, 2003. See also Mark Richard Hayllar, “Governance and Community Engagement in Managing SARS in Hong Kong,” Asian Journal of Political Science 15 (1) (April 2007), 39–47. 54. Legislative Council, House Committee (October 10, 2003), op. cit., 10. 55. Legislative Council, House Committee, Minutes of a Meeting held on 17th October 2003 (Hong Kong: mimeo, 2003), 11. 56. Legislative Council, Report of the Select Committee into the Handling of the Severe Acute Respiratory Syndrome Outbreak by the Government and the Hospital Authority, www.legco.gov.hk (July 2004), 251–252. 57. Mary Ann Benitez et al., “Officials accept responsibility over SARS but won’t step down,” SCMP, July 6, 2004. 58. Mary Ann Benitez and Klaudia Lee, “‘Dedicated’ Yeoh quits over SARS,” SCMP, July 8, 2004. 59. Hansard, March 16, 2005, 5621. 60. Chief Executive, “CE’s statement on the decision by the Standing Committee of the National People’s Congress,” Press Release, December 29, 2007. 61. Chief Executive, Responsibilities of the Financial Secretary and the Secretary for Financial Services and the Treasury, www.info.gov.hk/fstb/fsb/prr/report (June 2003). 62. Donald Tsang, Strong Governance for the People (Hong Kong: Logistics Department, 2005), para 8–9. 63. “CE thanks outgoing principal officials,” www.news.gov.hk, June 28, 2007. 64. “Three officials named to new posts,” www.news.gov.hk, January 24, 2006. 65. Ibid.; Government of the HKSAR, “CE’s remarks on the appointment of Principal Officials of the Third Term of the HKSAR Government,” Press Release, June 23, 2007.

ch.13 Notes(p.307-359).indd 318 11/4/09 4:32:35 PM Notes to pages 59–64 319

66. Ibid. 67. Yeung Chun Kuen and Lee Jark Pui, Report of the Commission of Inquiry on Allegations relating to The Hong Kong Institute of Education, www.gov.hk, 112. 68. Ibid., 113. 69. Ibid., 86, 99. 70. Ibid., 1. 71. Ibid. 72. Ibid. 73. Chief Executive, “CE speaks on the report submitted by the Commission of Inquiry on Allegations relating to The Hong Kong Institute of Education,” Press Release, July 20, 2007. 74. Ibid. 75. Education Bureau, “Education Bureau launches judicial review,” Press Release, September 17, 2007. 76. Government of the HKSAR, “CE issues statement,” Press Release, June 16, 2003. 77. Chief Executive (July 20, 2007), op. cit. 78. Stephen Vines, “Accountability is not just for the little people,” SCMP, February 22, 2008. 79. Donald Tsang, Strong Governance for the People, www.policyaddress.gov.hk, (October 2005), para 25. 80. Constitutional Affairs Bureau, Consultation Document on Further Development of the Political Appointments System, www.cmab.gov.hk (July 2006), 15–16. 81. Ibid., 28–29. The rank title is Deputy Director of Bureau. The position title is Under Secretary. 82. Ibid., 30. 83. Constitutional and Mainland Affairs Bureau (October 2007), op. cit. 84. Ibid., 14. 85. Ibid., 14, 15. 86. Ibid., 46. 87. Ambrose Leung and Fanny W.Y. Fung, “Tsang names eight deputy ministers,” SCMP, May 21, 2008. 88. Eva Wu and Ambrose Leung, “Anson Chan attacks new appointments,” SCMP, May 22, 2008; Chris Yeung, “Running the show,” SCMP, May 30, 2008. 89. Constitutional and Mainland Affairs Bureau (October 2007), op. cit., 44; Chris Yeung, “Fresh faces get a harsh dose of political reality,” SCMP, May 30, 2008. 90. Eva Wu and Fanny W.Y. Fung, “Come clean on aides’ pay, say parties,” SCMP, May 31, 2008. 91. Government of the HKSAR, “Under secretaries’ recruitment lawful: CE,” www.news. gov.hk, May 31, 2008. 92. Mary Ma, “Storms in a tea-cup,” The Standard, June 6, 2008. 93. Ambrose Leung, Albert Wong and Eva Wu, “New team nationality row ‘underestimated’,” SCMP, June 6, 2008. 94. Ibid. 95. Burns, op. cit., 157–158; Governance Reform Group, How to Take Accountability Reform Forward? Accountability to Whom and How? (Hong Kong: Synergynet, 2002), 8. 96. Constitutional Affairs Bureau (July 2006), 3–4.

ch.13 Notes(p.307-359).indd 319 11/4/09 4:32:36 PM 320 Notes to pages 65–70

97. Secretary for Constitutional Affairs (2003), op. cit.; Constitutional Affairs Bureau (July 2006), op. cit., Chapter 1; Constitutional and Mainland Affairs Bureau (October 2007), op. cit., Chapter 2. 98. Ibid., 6. 99. Hansard, April 17, 2002, 5493–5494. 100. Constitutional and Mainland Affairs Bureau (October 2007), op. cit., 6.

Chapter 4 1. See Ho Pui-yin, The Administrative History of the Hong Kong Government Agencies 1841–2002 (Hong Hong: Hong Kong University Press, 2004). 2. John P. Burns, “Civil Service Reform in the HKSAR” in The First Tung Chee-hwa Administration, ed. Lau Siu-kai (Hong Kong: Chinese University Press, 2002), 278– 280; John P. Burns, Government Capacity and the Hong Kong Civil Service (Hong Kong: Oxford University Press, 2004), 105–108. 3. Sir Philip Haddon-Cave, “The Making of Some Aspects of Public Policy in Hong Kong” in The Business Environment in Hong Kong, 2nd edition, ed. David Lethbridge (Hong Kong: Oxford University Press, 1984); Chief Secretary, The Hong Kong Government Serving the Community, Briefing to Legislative Council Members (Hong Kong: Government Printer, February 10, 1995), 3; Finance Branch, Practitioner’s Guide: Management of Public Finances (Hong Kong: Government Printer, 1995), 31; Donald Tsang, Strong Governance for the People (Hong Kong: Government Logistics Department 2005), para 72. 4. Hong Kong Government, Serving the Community (Hong Kong: Government Printer, 1995), 29; Chief Secretary, op. cit., 3. 5. Terry Lui Ting, “Changing Civil Servants’ Values” in The Hong Kong Civil Service and Its Future, eds. Ian Scott and John P. Burns (Hong Kong: Oxford University Press, 1988), 139–140; Chris Patten, Hong Kong: Transition (Hong Kong: Government Printer, 1996), 29; Ahmed Shafiqul Huque, Grace O.M. Lee and Anthony B.L. Cheung, The Civil Service in Hong Kong: Continuity and Change (Hong Kong: Hong Kong University Press, 1998), 25; Anson Chan, “Speech by the Chief Secretary of Administration at an Asia Society luncheon,” Press Release, April 19, 2001. 6. Independent Commission Against Corruption, Support Clean Government: Handbook for Managers (Hong Kong: Government Printer, 1996), passim; Chan, op. cit. 7. G.B. Endacott, An Eastern Entrepot: A Collection of Documents Illustrating the History of Hong Kong (London: HMSO, 1964), 255–259. See also Ho Pui-yin, op. cit. 8. Sir Charles Collins, Public Administration in Hong Kong (London: Royal Institute of International Affairs, 1952), 51. 9. Norman Miners, “The Localization of the Hong Kong Police Force, 1841–1947,” Journal of Imperial and Commonwealth History 18(3) (1990), 298–315. 10. Steve Tsang, Governing Hong Kong: Administrative Officers from the Nineteenth Century to the Handover to China, 1862–1997 (London: IB Taurus, 2007), 19–20. 11. Steve Tsang, A Modern History of Hong Kong (Hong Kong: Hong Kong University Press, 2004), 31. 12. James Hayes, Friends and Teachers: Hong Kong and Its People 1953–1987 (Hong Kong: Hong Kong University Press, 1996), Chapter 8; Patrick Hase, “The District Office” in Hong Kong, British Crown Colony, Revisited, ed. Elizabeth Sinn (Hong Kong: Centre of Asian Studies, University of Hong Kong, 2001).

ch.13 Notes(p.307-359).indd 320 11/4/09 4:32:36 PM Notes to pages 71–78 321

13. Hayes, op. cit., 85–107. 14. Colonial Secretariat, Report on the Organisation, Methods and Staff Survey (Hong Kong: Legislative Council Sessional Paper, 1949), 73–78. 15. McKinsey and Company, The Machinery of Government: A New Framework for Expanding Services (Hong Kong: mimeo, May 1973), 7. 16. Ibid., 16–17. 17. Ibid., 12. 18. The Public Service (Administration) Order gave the Chief Executive the same powers over the civil service as those previously enjoyed by the Governor. The Association of Expatriate Civil Servants argued unsuccessfully in court that the Basic Law required that procedures for appointing and dismissing civil servants should be established by legislative authority. 19. Secretary for Constitutional Affairs, Twelve Month Report on Implementation of the Accountability System for Principal Officials(Hong Kong: mimeo, 2003). 20. Tsang (2005) op. cit., para 8–9. 21. Secretary for the Civil Service, “Establishment of the AO and EO Grades,” Press Release, February 27, 2002. 22. Secretary for Constitutional Affairs (2003), op. cit. 23. Ibid. 24. In July 2003, a new Government Logistics Department was created by the merger of the Government Land Transport Agency, the Government Supplies Department and the Printing Department, a move that cut 60 posts, and the Labour Branch was merged with the Labour Department. In 2004, the Civil Engineering Department was merged with the Territory Development Department and there was a further review of the Education and Manpower Bureau; the Housing Department, which had already seen swingeing cuts in its establishment, was again re-organised. 25. Civil Service Bureau, Reorganisation of Policy Bureaus in the Government Secretariat: Changes in Civil Service Organisation Structure, EC (2007–08), www.legco.gov.hk, (May 2007). 26. The Hong Kong Institute of Education saga is a case in point. The government sought judicial review over the finding of a Commission of Enquiry that the actions of the Permanent Secretary for Education had violated academic autonomy, claiming that it was necessary for officials to contact university administrators to implement its policies. 27. Education and Manpower Bureau, Legislative Council Brief on the Merger of the Education and Manpower Bureau with the Education Department and Education Commission with the Board of Education, EMBCR 6/2/3321/90 Pt.3 (Hong Kong: mimeo, November 18, 2002), 2. 28. Ian Scott, “Generalists and Specialists” in The Hong Kong Civil Service and Its Future, eds. Ian Scott and John P. Burns (Hong Kong: Oxford University Press, 1988). 29. Personal communication, Civil Service Bureau, July 17, 2008. 30. Legislative Council, Bills Committee on Independent Police Complaints Council Bill, LC Paper No. CB (2) 184/07/08(1), April 18, 2008. 31. See Ian Scott, “Public Sector Reform and Middle Managers in Hong Kong,” Asian Journal of Public Administration 22(2) (December 2000), 107–134. 32. Personal communication, Civil Service Bureau, July 17, 2008. Administrative officers have usually made up about 19% of the directorate level. See Burns (2004), op. cit., 110.

ch.13 Notes(p.307-359).indd 321 11/4/09 4:32:36 PM 322 Notes to pages 79–82

33. For a detailed analysis of the composition of the grade, see Burns (2004), op. cit. For a history of the grade, see Steve Tsang (2007), op. cit. For autobiographical accounts of the experiences of administrative officers, see, for example, Austin Coates, Myself a Mandarin (Hong Kong: Heinemann Educational Books, 1975); Hayes, op. cit.; Denis Bray, Hong Kong Metamorphosis (Hong Kong: Hong Kong University Press, 2001). Eric Peter Ho, Times of Change: A Memoir of Hong Kong’s Governance 1950–1991 (Hong Kong: Hong Kong University Press, 2005). 34. N.J. Miners, The Government and Politics of Hong Kong, 2nd edition (Hong Kong: Oxford University Press, 1977), 90. 35. Burns (2004), op. cit., 110. 36. By 2008, only 282 officers of a strength of 153, 195 were non-local officers. See Civil Service Bureau, Civil Service Personnel Statistics 2008 (Hong Kong: Civil Service Bureau, 2008), Table 3.1. 37. Steve Tsang (2007), op. cit., 110. 38. Hase, op. cit., 144. 39. The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (Hong Kong: The Consultative Committee for the Basic Law, April 1990), Articles 61, 101. 40. Preliminary Working Committee, Some Views of the Preliminary Working Committee of the HKSAR Preparatory Committee on Maintaining the Stability of the Hong Kong Civil Service and Its System (Hong Kong: mimeo, December 8, 1995). 41. May Sin-mi Hon, “Support Tung, Qian tells Anson,” SCMP, September 27, 2000; SCMP, “Anson’s reprimand,” editorial, September 27, 2000. 42. David Lague, “Standing Up to the Boss,” Far Eastern Economic Review, July 25, 2002, 22–23. 43. Ibid., 23. 44. Tung Chee-hwa, Capitalising on Our Advantages, Revitalising Our Economy (Hong Kong: Printing Department, 2003), 22. 45. In November 2003, this view was very strongly expressed by the Chairman of the Hong Kong Senior Government Officers Association, Peter Chan Pak-fong, an engineer, who reportedly said that the generalist approach inherited from the colonial era no longer suited the needs of a knowledge-based society and that laymen should not be allowed to lead experts. See Jimmy Cheung, “‘Colonial’ civil service system attacked,” SCMP, November 3, 2003. 46. Chan (2001), op. cit. See also Anson Chan, “Beware of blurring the dividing line,” Financial Times, July 1, 2002. 47. Jimmy Cheung, “Civil service neutrality is a British thing: state leader,” SCMP, October 17, 2003. 48. Secretary for the Civil Service, “Principal Officials Accountability System,” Press Release, April 17, 2002; Civil Service Bureau, Circular setting out the Working Relationship between Civil Servants and Principal Officials under the Accountability System, LC Paper CB (2) 2467/01–02 (01) (June 28, 2002); Government of the HKSAR, “SCS’s transcript on the political neutrality of the civil service,” Press Release, October 14, 2003. 49. Civil Service Bureau, Note for Establishment Sub-Committee of the Finance Committee, ECI (2005–2006) 6 (November 2005), www.legco.gov.hk. 50. Personal communication, Civil Service Bureau, July 17, 2008. 51. Ibid.

ch.13 Notes(p.307-359).indd 322 11/4/09 4:32:36 PM Notes to pages 82–87 323

52. Constitutional Affairs Bureau, Consultation Document on Further Development of the Political Appointments System, www.cmab.gov.hk (July 2006), 5–7. 53. Quoted in Robert G. Kotewall and Gordon C.K. Kwong, Report of the Panel of Inquiry on the Penny Stocks Incident (Hong Kong: Printing Department, 2002), 109. 54. Secretary for Constitutional Affairs (2003), op. cit. 55. Ibid., 28. 56. Constitutional and Mainland Affairs Bureau, Report on the Further Development of the Political Appointment System, www.cmab.gov.hk (October 2007), 7. 57. Donald Tsang, A New Direction for Hong Kong, www.ceo.gov.hk (October 2007), para 110. 58. Milton Friedman and Rose Friedman, Free to Choose (Harmondsworth: Penguin, 1979), 55; See also Alvin Rabushka, Hong Kong: A Study in Economic Freedom (Chicago: University of Chicago Press, 1979), 7, 31. 59. See, for example, H.J. Lethbridge, Hong Kong: Stability and Change (Hong Kong: Oxford University Press, 1978); Elizabeth Sinn, Power and Charity: The Early History of the Tung Wah Hospital, Hong Kong (Hong Kong: Oxford University Press, 1989). 60. Y.C. Jao, The Asian Financial Crisis and the Ordeal of Hong Kong (Westport, Conn.: Quorum Books, 2001). 61. McKinsey, op. cit. 62. Finance Branch, Public Sector Reform (Hong Kong: The Branch, 1989), 3. 63. Ibid. 64. Hong Kong Government, Report of the Hong Kong Salaries Commission 1947 (Hong Kong: Government Printer, 1949), 33. 65. Hong Kong Government, Annual Report by the Commissioner for Resettlement for the Financial Year 1954–55 (Hong Kong: Government Printer, 1955), 44–45. 66. Commission of Inquiry, Kowloon Disturbance 1966: Report of the Commission of Inquiry (Hong Kong: Government Printer, 1967), 127. 67. Civil Service Branch, Civil Service Personnel Statistics (Hong Kong: The Branch, 1982), 1. 68. To take two examples: small class teaching was proposed in 1992 but not implemented and civil service personnel reforms were mooted in 1993 but not pursued to any great extent. 69. Hong Kong Government, Serving the Community (Hong Kong: Government Printer, 1995), 29. 70. Civil Service Bureau, Civil Service Personnel Statistics 1997 (Hong Kong: The Bureau, 1997), 12. 71. Tung Chee-hwa, Building Hong Kong for a New Era (Hong Kong: Printing Department, 1997), 16–23. 72. Ibid., 51. 73. For more detail on the programme, see Ian Scott, Public Administration in Hong Kong: Regime Change and Its Impact on the Public Sector (Singapore: Marshall Cavendish, 2005), 95–97. 74. Tung (2003), op. cit., 22. 75. Legislative Council, Panel on Public Service, General Overview of the Civil Service Strength, Retirement and Resignation, LC Paper CB (1)1817/07–08(01) (Hong Kong: mimeo, June 16, 2008) . 76. Government of the HKSAR, “Civil service establishment to rise by 1%,” Administration and Civic Affairs, March 31, 2008.

ch.13 Notes(p.307-359).indd 323 11/4/09 4:32:36 PM 324 Notes to pages 88–91

77. Legislative Council, Panel on Public Service, Review of Employment Situation of Non- Civil Service Contract Staff, LC Paper No. CB (1)471/06–07(03) (December 2006), 3–4. 78. Ibid., 2; see also Ada Chan Ka Wing, A Review of the Non-Civil Service Contract Scheme of the Hong Kong Government (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 2008). 79. Legislative Council, Panel on Public Service (December 2006), op. cit., 7; Legislative Council Panel on Public Service, Employment of Non-Contract Staff, LC Paper No. CB(1)377/07–08(03) (December 2007), 3. 80. Chang Lai-yin, An Analysis of the Impact of Civil Service Reform on Recruitment and Retention in the Hong Kong Police Force (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 2008), 24. 81. Public Service Commission, 2007 Annual Report (May 2008), www.psc.gov.hk, 42–45; see also Jimmy Cheung, “Watchdog criticizes civil service management,” SCMP, May 6, 2008; Civil Service Bureau, Civil Service Personnel Statistics 2008 (Hong Kong: The Bureau, 2008), Table 1.1. 82. Ibid., Figure 1.4a. 83. Civil Service Bureau (2008), op. cit., Figure 1.4a. 84. Personal communication, Civil Service Bureau, July 29, 2008. 85. Civil Service Bureau, Civil Service Personnel Statistics 2003 (Hong Kong: Printing Department, 1997–2003), Table 1.6. 86. James Tien, “Stop indulging the civil service,” SCMP, February 29, 2000. 87. Secretary for the Civil Service, “SCS’s speech on Public Officers Pay Adjustment Bill,” Press Release, June 5, 2002. 88. Klaudia Lee and Sarah Bradford, “Case has not ended legal battle for redress,” SCMP, June 11, 2003. 89. Legislative Council, Panel on Public Service, Minutes of a Meeting held on 23rd May, LC Paper No. CB (1)2628/01–02 (Hong Kong: mimeo, May 23, 2002). 90. Hong Kong Confederation of Trade Unions, “No pay cuts. Collective bargaining rights now!” www.hkctu.org.hk (2002). 91. Secretary for the Civil Service, “SCS’s transcript on the pay cut consensus reached with the staff sides,” Press Release, February 21, 2003. 92. Secretary for the Civil Service (2002), op. cit. 93. Secretary for the Civil Service, “SCS writes to all colleagues,” Press Release, April 14, 2004. 94. Financial Secretary, The Budget 2003–04 (Hong Kong: Printing Department, 2003), 17. 95. Civil Service Bureau, “2008–09 civil service pay adjustment,” Information and News, www.csb.gov.hk, June 3, 2008, 96. Government of the HKSAR (2008), op. cit. 97. Joan Y.H. Leung and Ho-mun Chan, “The School Management Reform in Hong Kong: Administrative Control in a New Cloak of Managerialism” in Public Sector Reform in Hong Kong: Into the 21st Century, eds. Anthony B.L Cheung and Jane C.Y. Lee (Hong Kong: The Chinese University Press, 2001); Joan Y.H. Leung, “The Politics of Decentralization: A Case Study of School Management Reform in Hong Kong,” Education and Society 19(3) (2001), 17–36; Joe C.B. Leung, “The Advent of Managerialism in Social Welfare: The Case of Hong Kong,” The Hong Kong Journal of Social Work 36 (1/2) (2002), 61–81.

ch.13 Notes(p.307-359).indd 324 11/4/09 4:32:37 PM Notes to pages 91–96 325

98. Joe C.B. Leung, op. cit.; See also “NGO corner,” www.swd.gov.hk (accessed July 22, 2008). 99. Leung and Chan, op. cit. 100. Brian Brewer and Mark Hayllar, “Building Public Trust through Public-Private Partnerships,” International Review of Administrative Sciences 71(3) (2005), 475– 492. 101. Efficiency Unit, Serving the Community by Using the Private Sector: A General Guide to Outsourcing, 3rd edition, www.eu.gov.hk (March 2008), 7. See also Mark Richard Hayllar, “Outsourcing: Enhancing Private Sector Involvement in Public Sector Provision in Hong Kong” in Public Service Reform in East Asia, ed. Anthony B.L. Cheung (Hong Kong: The Chinese University Press, 2005). 102. Donald Tsang, “‘Big market, small government’ key,” www3.news.gov.hk, September 19, 2006. 103. Efficiency Unit (March 2008), op. cit., 11. 104. Brewer and Hayllar, op. cit. 105. The establishment of the Housing Department declined from 14,098 in 2000 to 7, 624 in 2008. Civil Service Bureau, Civil Service Personnel Statistics (Hong Kong: Printing Department, 2000), 27; Civil Service Bureau (2008), op. cit., 27. On privatisation in Hong Kong, see Miron Mushkat and Roda Mushkat, “The Transfer of Property Rights from the Public to the Private Sector in Hong Kong: A Critical Assessment,” Global Economic Review 35 (4) (December 2006), 445–461.

Chapter 5 1. Anthony B.L. Cheung, “Public Sector Reform and the Re-legitimation of Public Bureaucratic Power: The Case of Hong Kong,” International Journal of Public Sector Management 9 (5/6)(1996), 37–50; Richard Common, “Are Hong Kong’s Public Sector Reforms Converging with International Trends?” in Public Sector Reform in Hong Kong: Into the 21st Century, eds. Anthony B.L. Cheung and Jane C.Y. Lee (Hong Kong: The Chinese University Press, 2001); see also Martin Painter, “Against the Trend: Public Management Reforms in Hong Kong” in Public Reform, Policy Change and New Public Management: From the Asia and Pacific Perspective, ed. Akira Nakamura (Tokyo: EROPA Local Government Center, 2004), 31–49. 2. Hansard, January 14, 1999, 4652. 3. Civil Service Bureau, Civil Service Reform: Consultation Document: Civil Service into the 21st Century (Hong Kong: Printing Department, March 1999), 5. 4. Even in the Provisional Legislative Council (1997–1998), from which all but one of the democrats were excluded, there was considerable criticism of government policies and their implementation. See Hansard, April 8, 1998, 312–395 and Legislative Council, Report of the Select Committee to Inquire into the Circumstances Surrounding the Commencement of the Operation of the New Hong Kong International Airport at Chep Lap Kok since 6 July 1998 and Related Issues Vol. 1 (Hong Kong: Printing Department, January 1999). 5. Civil Service Bureau (1999), op. cit., 5. 6. Civil Service Branch, Civil Service Consultation Document on Civil Service Terms of Appointment and Conditions of Service (Hong Kong: Government Printer, 1993), 23; Civil Service Branch, Human Resource Management (Hong Kong: Government Printer, December 1995), 54.

ch.13 Notes(p.307-359).indd 325 11/4/09 4:32:37 PM 326 Notes to pages 97–101

7. Ian Scott, “Public Sector Reform and Middle Managers in Hong Kong,” Asian Journal of Public Administration 22(2) (December 2000), 107–134. 8. Hansard, April 5, 2000, 5662; Hansard, December 21, 2001, 2364. 9. Christopher Cheng, “Public service must change with the times,” SCMP, January 8, 2003. 10. Hansard, March 29, 2000, 5383–5383. 11. Cherry Cheung, Civil Service Pay Adjustments and Pay Trend Surveys (Hong Kong: Research and Library Services Division, Legislative Council Secretariat, 2002), 1. 12. Civil Service Bureau (1999), op. cit., 9. 13. Hansard, April 5, 2000, 5660. 14. Civil Service Bureau (1999), op. cit., 9. 15. Ibid., 9. 16. Legislative Council, Panel on Public Service, Background Brief on Civil Service Recruitment Policy, LC Paper No. CB (1)974/07–08 (Hong Kong: mimeo, March 11, 2008), 1 17. Ibid., 2. 18. Article 101 also provides that British and foreign nationals may continue to work for the Hong Kong government after 1997 although they may not hold the most senior positions. 19. Civil Service Bureau, “Recruitment,” www.csb.gov.hk. 20. Public Service Commission, 2007 Annual Report, www.psc.gov.hk (May 2008), 4. 21. Civil Service Bureau, op. cit., 9–10. 22. Ibid. 23. Civil Service Branch, Civil Service Personnel Statistics (Hong Kong: The Branch, 1982), 19–20. 24. Sa Ni Harte, “Redundancy boost for expatriates,” Sunday Morning Post, August 30, 1987. 25. Civil Service Branch (1993), op. cit., 3. 26. Tai Ming Cheung, “Patriots, Expatriates,” Far Eastern Economic Review, September 23, 1993. 27. Hansard, October 13, 1993, 136–139; November 24, 1993, 1093–137; December 15, 1993, 1635–1656; Brian Butt Yiu-ming, Local Terms of Employment for Expatriate Civil Servants (Unpublished MBA dissertation, Hong Kong: University of Hong Kong, 1995), 16–17. 28. Civil Service Branch (1993), op. cit., 19. 29. Civil Service Bureau, Civil Service Personnel Statistics (Hong Kong: Government Printer, 1997), 14–15. 30. Civil Service Branch (1993), op. cit., Annex E. 31. Ibid., 8. 32. Kue Mei Wah, Karen, Civil Service Reform in Hong Kong: New Appointment Policy (Unpublished MPA dissertation, University of Hong Kong, 2001), 74. 33. Standing Commission on Civil Service Salaries and Conditions of Service, Civil Service Salaries Starting Salaries 1999 (Report No. 36) (Hong Kong: Printing Department, June 1999), 18–19. 34. Ibid. 35. Ibid., 19. 36. Government of the HKSAR, “New civil service entry system and fringe benefits package,” Press Release, April 7, 2000.

ch.13 Notes(p.307-359).indd 326 11/4/09 4:32:37 PM Notes to pages 101–104 327

37. Public Service Commission, Annual Report, 2000 (Hong Kong: Printing Department, 2001), 14. 38. Kue, op. cit., 76. 39. John P. Burns, “Civil Service Reform in the HKSAR” in The First Tung Chee-hwa Administration, ed. Lau Siu-kai (Hong Kong: Chinese University Press, 2002), 278. 40. Public Service Commission, Annual Report, 2001 (Hong Kong: Printing Department, 2001), 8. 41. Ada Chan Ka Wing, A Review of the Non-Civil Service Contract Scheme of the Hong Kong Government (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 2008), passim. 42. Civil Service Bureau, Civil Service Newsletter, No. 69 (June 2007), 13. 43. Ibid.; see also Chang Lai-yin, An Analysis of the Impact of Civil Service Reform on Recruitment and Retention in the Hong Kong Police Force (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 2008). 44. See Tsang Wa-chung, A Review of Staff Relations in Relation to Public Sector Reform in Hong Kong (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 2007). 45. Legislative Council, Panel on Public Service, General Overview of the Civil Service Strength, Retirement and Resignation, LC Paper CB (1)1817/07–08(01) (Hong Kong: mimeo, June 16, 2008), 2. 46. Public Service Commission, 2006 Annual Report, www.psc.gov.hk, Appendix V. 47. Public Service Commission (2007), op. cit., 22. 48. Ibid., 13–14. 49. Standing Commission on Civil Service Salaries and Conditions of Service, The First Report of the Pay Level Survey (Report No. 16) (Hong Kong: Government Printer, 1986), 1; Civil Service Bureau, Progress Report on the Development of an Improved Pay Adjustment Mechanism for the Civil Service, www.csb.gov.hk/hkgcsb/doclib (November 2003), 5. 50. Ibid., Annex A. 51. Jack Arn, “Public Sector Unions” in The Hong Kong Civil Service: Personnel Policies and Practices, eds. Ian Scott and John P. Burns (Hong Kong: Oxford University Press, 1984). 52. Standing Commission on Civil Service Salaries and Conditions of Service, Report No 1: First Report on Principles and Practice Governing Civil Service Pay (Hong Kong: Government Printer, 1979), 1. 53. Standing Commission on Civil Service Salaries and Conditions of Service, Report No. 42 (January 2008), www.jsscs.gov.hk, Appendix A. 54. Standing Commission on Civil Service Salaries and Conditions of Service, Report No. 23 (Hong Kong: Government Printer, 1990). 55. Anthony B.L. Cheung, “The Civil Service Pay System in Hong Kong: Implications for Efficiency and Equity” in Asian Civil Service Systems: Improving Productivity and Efficiency, ed. John P. Burns (Singapore: Times Academic Press, 1994); Ahmed Shafiqul Huque, Grace O.M. Lee and Anthony B.L. Cheung, The Civil Service in Hong Kong: Continuity and Change (Hong Kong: Hong Kong University Press, 1998), 100; Grace O.M. Lee, “Hong Kong: Institutional Inheritance from Colony to Special Administrative Region” in Reward for High Public Office: Asia and Pacific Rim States, eds. Christopher Hood and B. Guy Peters (London: Routledge, 2003).

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56. For the text of the 1968 agreement, see John P. Burns, Government Capacity and the Hong Kong Civil Service (Hong Kong: Oxford University Press, 2004), Appendix D. 57. Legislative Council, Panel on Public Service, Staff Consultation Mechanism in the Civil Service, LC Paper No. CB (1) 1769/04–05 (Hong Kong: mimeo, June 2005), 1–3. 58. Standing Commission on Civil Service Salaries and Conditions of Service, Report No. 4 (Hong Kong: Government Printer.1980). 59. Legislative Council, Panel on Public Service (2005), op. cit., 3–4. 60. Task Force on the Review of Civil Service Pay Policy and System, Interim Report: Phase 1 Study (Hong Kong: Printing Department, April 2002), Appendix IX. 61. Standing Commission (2008), op. cit., 5. 62. Ibid., 4–5. 63. Committee of Inquiry into the 1988 Civil Service Pay Adjustment and Related Matters, Report (Hong Kong: Government Printer, 1989), 21. 64. Ibid. 65. Ibid., 105. 66. Task Force on the Review of Civil Service Pay Policy and System, Phase One Final Report, www.csb.gov.hk/hkgcsb/doclib (September 2002), Appendix 1. 67. Ibid. 68. Task Force, Interim Report (2002), op. cit. 69. Ibid., 22. 70. Task Force, Final Report (2002), op. cit., 12–13. 71. Ibid. 72. Hansard, June 5, 2002, 7010–7015; Klaudia Lee and Sarah Bradford, “Case has not ended legal battle for redress,” SCMP, June 11, 2003. 73. Civil Service Bureau, Brief for the Legislative Council Public Officers Pay Adjustments (2004/2005) Bill, CSB CR PG 4–085–001/33 (May 13, 2003), 6. 74. Civil Service Bureau, Progress Report on the Development of an Improved Pay Adjustment Mechanism for the Civil Service, www.csb.gov.hk/hkcsgcsb/doclib (November 2003). 75. Ibid., 7–8. 76. Ibid., 9. 77. Ibid., 11–14. 78. Legislative Council, Panel on Public Service, Progress Update on the Pay Level Survey and the Development of an Improved Pay Adjustment Mechanism for the Civil Service, LC Paper No. CB (1)248/06–07(04) (November 2006). 79. HKSAR, “Improved civil service pay adjustment mechanism announced,” Press Release, April 24, 2007. 80. Ibid. 81. Ibid. 82. Ibid. 83. Civil Service Bureau (1999), op. cit., 15–17. 84. T.T. Lui, “Performance Appraisal” in Ian Scott and John P. Burns, op. cit.; Brian Brewer and Mark R. Hayllar, An Exploratory Study of the G.F.1 Performance Appraisal System in the Hong Kong Civil Service (Hong Kong: Department of Public and Social Administration, City Polytechnic of Hong Kong, September 1991). 85. Tom Coens and Mary Jenkins, Abolishing Performance Appraisals: Why They Backfire and What to Do Instead (San Francisco: Berrett-Koehler, 2000). 86. Public Service Commission (2000), op. cit., 15.

ch.13 Notes(p.307-359).indd 328 11/4/09 4:32:37 PM Notes to pages 110–114 329

87. Ibid., 23. 88. Public Service Commission (2007), op. cit., 50. 89. Civil Service Bureau, Performance Management Guide (1999), www.csb.gov.hk, 6. 90. Public Service Commission (2007), op. cit., 52. 91. Civil Service Bureau (1999), op. cit., 15. 92. Legislative Council, Panel on Public Service, Performance Management in the Public Service, LC Paper No. CB (1) 1459/02–03(04) (Hong Kong: mimeo, April 2003), 1. 93. Personal communication, Civil Service Bureau, July 29, 2008. 94. Legislative Council (2003), op. cit., 3. 95. Legislative Council, Panel on Public Service, Updated Overview of Civil Service Conduct and Discipline, LC Paper No. CB (1) 1915/06–07(02) (Hong Kong: mimeo, June 2007), 5. 96. Ibid., Appendix B; see also Public Service Commission (2007), op. cit., Appendix 6. 97. Ibid., 50. 98. Coens and Jenkins, op. cit., 20–24. 99. Civil Service Bureau (1999), op. cit., 23–24. 100. Ibid. 101. Legislative Council, Panel on Public Service, Integrity Enhancement Initiatives for Civil Servants, LC Paper No. CB (1)764/07–08(05) (Hong Kong: mimeo, February 2008); Legislative Council, Panel on Public Service, Update on National Studies and Basic Law Training for Civil Servants, LC Paper No. CB (1) 764/07–08(04) (Hong Kong: mimeo, February 2008); Civil Service Bureau, “LCQ 6: Civil Service Code,” July 9, 2008, www.csb.gov.hk. 102. Government of the HKSAR, Hong Kong 2001 (Hong Kong: Printing Department, 2002), 23. 103. Legislative Council, Panel on Public Service, Reorganisation of the Civil Service Training and Development Institute, LC Paper No. CB (1) 551/03–04 (03) (Hong Kong: mimeo, December 2003). 104. Legislative Council, Update on National Studies and Basic Law Training (February 2008), op. cit., 1–3. 105. Ibid. 106. Ibid., 3. 107. Ibid., 5–7; Donald Tsang, A New Direction for Hong Kong (October 2007), www.ceo. gov.hk, para. 115. 108. See Ian McWalters, Bribery and Corruption Law in Hong Kong (Singapore: LexisNexis Butterworths, Singapore, 2003), 17. 109. Legislative Council, Panel on Public Service, Integrity Enhancement Initiatives (February 2008), op. cit., 5. 110. Independent Commission against Corruption and Civil Service Bureau, Ethical Leadership in Action: Handbook for Senior Managers in the Civil Service (Hong Kong: ICAC and CSB, 2008), 19–23. 111. John P. Burns, “The Hong Kong Civil Service in Transition,” Journal of Contemporary China 8(20) (1999), 80. 112. Legislative Council, Panel on Public Service (June 2007), op. cit., 3. 113. Civil Service Branch, Summary Guide on Civil Service Regulations (Hong Kong: The Branch, 1997). 114. Civil Service Bureau, “Disciplinary Mechanism,” www.csb.gov.hk/hkgcsb (2001). 115. Burns (2002), op. cit., 279.

ch.13 Notes(p.307-359).indd 329 11/4/09 4:32:38 PM 330 Notes to pages 114–121

116. Civil Service Branch (1997), op. cit., 12.10–12.36. 117. Legislative Council, Panel on Public Service, Supplementary Information on Corruption- related Statistics, LC Paper No. (1) 989/07–08(03) (March 2008), Annex A. 118. Ibid., Annex B. 119. Ibid., Annex C. 120. Public Service Commission, Annual Report 2003 (Hong Kong: Printing Department, 2003), 26–27. 121. Public Service Commission (2007), op. cit., Appendix 8. 122. Ibid. A civil servant who is dismissed loses pension benefits while one who is compulsorily retired is entitled to keep those benefits. 123. Legislative Council, Panel on Public Service (June 2007), op. cit., Annex A. 124. Burns (2004), op. cit., 254–257; Brian Brewer, “Human Resource Management Reforms in the Hong Kong Government” in Cheung and Lee (2001), op. cit., 274. 125. Legislative Council, Report of the Select Committee to Inquire into the Circumstances Surrounding the Departure of Mr Leung Ming-yin from the Government and Related Issues Vol. 1 Report and Minutes of Proceedings (Hong Kong: Government Printer, June 1997), 31–32. 126. Legislative Council, Panel on Public Service, Post-retirement Employment of Ms Elaine Chung, Former Deputy Director of Housing/Deputy Secretary for Housing, LC Paper No. CB (1)1095/04–05(01) (Hong Kong: mimeo, March, 2005), 5. 127. Elaine Chung, Letter to Secretary-General, Legislative Council, LC Paper No. CB (1)548/04–05(01), November 25, 2004; Elaine Chung, Letter to Clerk of the Panel on Public Service, LC Paper No. CB (1)545/04–05(01), December 18, 2004. 128. Fanny W.Y. Fung and E. Wu, “Arculli heads committee to review jobs policy for ex- civil servants,” SCMP, October 1, 2008; Chief Executive, “Statement of the Chief Executive’s Office,” Press Release, August 15, 2008. 129. Office of the Ombudsman, Administrative Ethics Checklist (Hong Kong: Printing Department, 1998), 1–4; Civil Service Bureau, Civil Servants’ Guide to Good Practices, www.csb.gov.hk (2005). 130. Independent Commission against Corruption and Civil Service Bureau (2008), op. cit., 4. 131. Civil Service Bureau, “LCQ6: Civil Service Code,” www.csb.gov.hk.

Chapter 6 1. Anthony B.L. Cheung, “Reform in Search of Politics: The Case of Hong Kong’s Aborted Attempt to Corporatise Public Broadcasting,” The Asian Journal of Public Administration 19(2) (December 1997), 276–302; Anthony B.L. Cheung, “How Autonomous are Public Corporations in Hong Kong? The Case of the Airport Authority,” Public Organisation Review 6(3) (September 2006), 221–236. 2. Hansard, June 16, 1999, 8791. 3. Hansard, June 16, 1999, 8787–8788. 4. Hansard, June 16, 1999, 8855–8856. 5. Hansard, June 16, 1999, 8858. 6. Elizabeth Y.Y. Sinn, Power and Charity: The Early History of the Tung Wah Hospital (Hong Kong: Oxford University Press, 1989); H.J. Lethbridge, Hong Kong: Stability and Change (Hong Kong: Oxford University Press, 1978), 71–103. 7. See Alan Smart, The Shek Kip Mei Myth: Squatters, Fires and Colonial Rule in Hong Kong, 1950–1963 (Hong Kong: Hong Kong University Press, 2006), Chapter 6.

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8. Anthony Sweeting, A Phoenix Transformed: The Reconstruction of Education in Post- War Hong Kong (Hong Kong: Oxford University Press, 1993), 218–219. 9. Hansard, February 14, 1973, 440. 10. Hansard, April 2, 1975, 658. 11. Lam Pun-lee, The Scheme of Control on Electricity Companies (Hong Kong: City University of Hong Kong Press, 1996), 17–29. 12. Ian Scott, Political Change and the Crisis of Legitimacy in Hong Kong (London: Hurst, 1989), 152–165; James Lee, Housing, Home Ownership and Social Change in Hong Kong (Aldershot: Ashgate, 1999), 13. 13. Paul Morris and Ian Scott, “Educational Reform and Policy Implementation in Hong Kong,” Journal of Education Policy 18(1) (2003), 71–84. 14. W.D. Scott and Company, Report on the Delivery of Medical Services (Hong Kong: The Company, 1985), 2–3. 15. Robin Gauld and Derek Gould, The Hong Kong Health Sector: Development and Change (Hong Kong: The Chinese University Press, 2002), 51–73. 16. Hansard, March 9, 1988, 899. 17. Cheung (December 1997), op. cit., 276–302. 18. Trading Funds Ordinance, Cap 430, S. 3(2). 19. Anthony B.L Cheung, “The ‘Trading Fund’ Reform in Hong Kong” in Public Sector Reform in Hong Kong: Into the 21st Century, eds. Anthony B.L. Cheung and Jane C.Y. Lee (Hong Kong: The Chinese University Press, 2001), 204; Lam Pun-lee and Yue- cheong Chan, Privatising Water and Sewage Services (Hong Kong: City University of Hong Kong Press, 1997), 3. 20. Cheung (2001), op. cit., 218–20; Ahmed Shafiqul Huque et al., Public Sector Reform in Hong Kong: The Performance of Trading Funds, Occasional Papers Series (Hong Kong: Department of Public and Social Administration, City University of Hong Kong, 1999), 1. 21. Cheung (2006), op. cit. 22. Hansard, April 24, 1994, 3267. 23. Financial Secretary, The 2001–2002 Budget: Honing Our Strengths, Striving to Excel (Hong Kong: Printing Department, March 2001), 18. 24. Financial Secretary, The Budget 2003–04 (Hong Kong: Printing Department, 2003), 25. 25. Financial Secretary, The 2004–05 Budget (Hong Kong: Government Logistics Department, March 2004), 25; Enoch Yiu, “Tolls back Ma’s drive to sell $6b in bonds,” SCMP, April 20, 2004. 26. Joel Baglole, “Hong Kong’s Big Sell-Off,” Far Eastern Economic Review, October 23, 2003; Florence Chong, “Bonkers over property float,” The Australian, February 5, 2004. 27. Lo Siu Lan v Hong Kong Housing Authority, FACV 10/2005, www.legalrefjudiciary. hk. 28. Rikkie Yeung, Moving Millions: The Commercial Successes and Political Controversies of Hong Kong’s Railways (Hong Kong: Hong Kong University Press, 2007), 264–265. 29. Jimmy Cheung, “Exco endorses formation of an anti-trust agency,” SCMP, April 30, 2008; Financial Secretary, The 2008–09 Budget (Hong Kong: Government Logistics Department, 2008), 30. 30. Home Affairs Bureau, Legislative Council Panel on Home Affairs: Review of Advisory and Statutory Bodies: Interim Report No. 14 Review of the Classification System of

ch.13 Notes(p.307-359).indd 331 11/4/09 4:32:38 PM 332 Notes to pages 126–133

Advisory and Statutory Bodies in the Public Sector (Hong Kong: The Bureau, 2005), Annex 1. In December 2007, the government reported that there were about 400 advisory and statutory bodies rather than the 509 that it had recorded in June 2005. It seems unlikely that the number would had been reduced by 20% in such a short time and the 2005 figure would seem to be more accurate. See Hong Kong Government, Hong Kong 2007 (Hong Kong: Government Logistics Department, 2008), 16. 31. Government of the HKSAR, “Management contract for the Cross Harbour Tunnel awarded,” Press Release, May 30, 2002. 32. See Yeung (2007), op. cit.; Cheung (2006), op. cit.; Legislative Council, Background Brief on Airport Authority (Amendment) Bill 2004, LC Paper No. CB (1) 1693/03–04 (May 2004); Economic Development and Labour Bureau, Consultation Document on Partial Privatization of the Airport Authority (Hong Kong: Government Logistics Department, November 2004). 33. Government of the HKSAR, “Statement by CS on the review of the institutional framework for housing,” Press Release, June 20, 2002. 34. Banking Ordinance, Cap 155, S.7. 35. Jackie Wu and Michael Yu, The Governance of the Hong Kong Monetary Authority and Comparable Authorities in Hong Kong and Overseas Jurisdictions (Hong Kong: Research and Library Services Division, Legislative Council Secretariat, 2003), 10, 25. 36. Hong Kong Monetary Authority, Annual Report 2007, www.hkma.gov.hk (accessed August 26, 2008). 37. Hong Kong Housing Authority, Annual Report 2000/2001 (Hong Kong: The Authority, 2001), 98. 38. Ibid., 99. 39. Kowloon-Canton Railway Corporation, Annual Report 2000 (Hong Kong: The Corporation, 2001), 109. 40. Hansard, April 2, 1975, 659–660. 41. Timothy V. Runnacles, Nigel G. Wilson and Edward C.T. So, “Constraints and Opportunities of Planning the Mass Transit Railway” in Land-Use/Transport Planning in Hong Kong: The End of an Era, eds. Harry T. Dimitrou and Alison H.S. Cook (Aldershot: Ashgate, 1998), 120. 42. Environment, Transport and Works Bureau, “2 railway corporations invited to start talks on possible merger,” Press Release, February 24, 2004; Environment, Transport and Works Bureau, Legislative Council Brief on Rail Merger Bill, ETWB(T) CR1/986/00 (June 2006); Yeung (2007), op. cit. 43. Ibid., Annex B. 44. Cheung (2001), op. cit., 215–217; Lam and Chan, op. cit., 3. 45. Social Welfare Department, Social Welfare Services in Figures (2007 edition), www. swd.gov.hk (accessed August 26, 2008); Legislative Council, Panel on Welfare Services, Lump Sum Grant Subvention System, LC Paper No. CB (2) 1875/07–08(03) (May 2008), 1. 46. Community Chest, Annual Report 2007/ 2008, www.commchest.org.hk, 14–18; Hong Kong Jockey Club, “Community Services,” ww.hkj.com.hk (accessed August 28, 2008). 47. Hong Kong Council of Social Service, “Membership List,” www.hkcss.org.hk (accessed August 28, 2008).

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48. Raymond Ngan and Mark Kin-yin Li, “Responding to Poverty, Income Inequality and Social Welfare: The Neo-Liberalist Government versus a Social Investment State” in The Hong Kong Special Administrative Region in its First Decade, ed. Joseph Y.S Cheng (Hong Kong: City University of Hong Kong Press, 2007); Joseph C.W. Chan et al., From Consultation to Civic Engagement: The Road to Better Policy-making and Governance in Hong Kong (Hong Kong: Centre for Civil Society and Governance, University of Hong Kong, March 2007), Chapter 7. 49. Nelson Chow, “The Past and Future Development of Social Welfare in Hong Kong” in Hong Kong in Transition, ed. Joseph Y.S. Cheng (Hong Kong: Oxford University Press, 1986), 409. 50. Legislative Council, Panel on Welfare Services (May 2008), op. cit., 3–4. 51. Environment, Transport and Works Bureau, Background Brief on Fare Increase Applications by Franchised Bus Companies, LC Paper No. CB (1) 829/07–08 (April 25, 2008). 52. Dorothy Chan, “Modern Transport Services in Hong Kong” in Modern Transport in Hong Kong for the 21st Century, eds. Anthony G.O. Yeh, Peter R. Hills and Simon W.K. Ng (Hong Kong: Centre of Urban Planning and Environmental Management, University of Hong Kong, 2001), 106. 53. Hong Kong Government (2007), op. cit., 234–235. 54. Hong Kong Housing Authority (2001), op. cit., 13–14. 55. Efficiency Unit, Serving the Community by Using the Private Sector: A General Guide to Outsourcing, 3rd edition (March 2008), www.eu.gov.hk, 7. 56. Legislative Council, Panels on Information Technology and Broadcasting and Planning, Lands and Works, Minutes of a Joint Meeting, LC Paper No. CB (1)1817/98–99 (April 29, 1999); Leo F. Goodstadt, Uneasy Partners: The Conflict between Public Interest and Private Profit in Hong Kong (Hong Kong: Hong Kong University Press, 2005), 134–135. 57. Tourism Commission, Economic Services Bureau, Briefing Paper Hong Kong Disneyland (Hong Kong: mimeo, November 1999). 58. Tourism Commission, Commerce and Economic Development Bureau, Progress Update on Hong Kong Disneyland, LC Paper No. CB (1) 457/07–08(05) (December 2007); SCMP, “Swift action needed to revive Disneyland,” editorial, April 16, 2008. 59. Brian Brewer and Mark Hayllar, “Building Public Trust through Public-Private partnerships,” International Review of Administrative Sciences 71(3)(2005), 475–491; Home Affairs Bureau, Assessment of the Financial Implications of the WKCD Project, WKCD–511 (January 2008), 13. 60. Moses Mo-chi Cheng and Brian Stevenson, Report of the Independent Inquiry on the Harbour Fest (Hong Kong: mimeo, May 2004), iii, 124. 61. Efficiency Unit (2008), op. cit., 7. 62. Donald Tsang, Embracing New Challenges, www.policyaddress.gov.hk/08–09/index. html, para 4. 63. Eliza W.Y. Lee, “The New Hong Kong International Airport Fiasco,” International Review of Administrative Sciences 66(1) (2000), 57–72. 64. Hong Kong Housing Authority, The Report of the Investigation Panel on Accountability: Piling Contract 166/1997 of Shatin Area 14B Phase 2 (Hong Kong: The Authority, 2000); Lo Shiu-hing, Governing Hong Kong: Legitimacy, Communication and Political Decay (New York: Nova Science Publishers, 2001), 114.

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65. Quinton Chan, “KCRC to pay extra $132.6 million after West Rail miscalculation,” SCMP, June 7, 2004. 66. These include, for example, the Hong Kong Applied Science and Technology Institute, the Sports Development Board and the Tourism Board. 67. Interpretation and General Clauses Ordinance, Cap 1, S.42. 68. Urban Renewal Authority Ordinance, Cap 563, S.33. 69. Hansard, December 12, 2001, 2519. 70. Education Bureau, “Education Bureau launches judicial review,” Press Release, September 17, 2007. 71. Housing Authority, “About us,” www.housingauthority.gov.hk (accessed August 31, 2008); Hong Kong Hospital Authority, Annual Report 2006–2007 (Hong Kong: The Authority, 2007), 10. See also Janice Caulfield and Agnes Liu, “Shifting Concepts of Autonomy in the Hong Kong Hospital Authority,” Public Organisation Review 6(3) (2006), 203–219. 72. Hong Kong Tourism Board Ordinance, Cap 302, S.9. 73. MTR Corporation, Annual Report 2007, www.mtr.com.hk, 102–105. 74. Transport International Holdings Limited, Annual Report 2007, www. irasia.com. 75. The government has long recognised that there are potential conflicts of interest in the role that senior civil servants play on the boards of statutory bodies. See Finance Branch, Public Sector Reform (Hong Kong: The Branch, 1989), 17. In 1990, two civil servants were in effect dismissed from the board of the KCRC, apparently for criticising the award of “golden handshakes” to senior members of staff. See Ian Thynne, “Hong Kong’s Kowloon-Canton Railway Corporation and its ‘Golden Handshake’ Affair,” Asian Journal of Public Administration 19(1) (1997), 142–156. 76. Kenneth L. Chau and Chack-kie Wong, “The Social Welfare Reform: A Way to Reduce Public Burden” in The First Tung Chee-hwa Administration, ed. Lau Siu-kai (Hong Kong: Chinese University Press, 2002), 221. 77. Hansard, December 12, 2001, 2458, 2496. 78. Urban Renewal Authority Ordinance, Cap 563, S.9. 79. Audit Commission, Review of the Hong Kong Sports Development Board: Report No. 36 (Hong Kong: Printing Department, 2001). 80. Public Accounts Committee, Report of the Public Accounts Committee on the Accounts of the Government of the Special Administrative Region: Report No. 37 (Hong Kong: Printing Department, February 2002). 81. Audit Commission, Report No. 49, www.audit.gov.hk (October 2007), Chapter 5. 82. Ibid., 14, 26, 37–38. 83. Public Accounts Committee, Report No. 49A, www.legco.gov.hk (April 2008), Part 4, 92. 84. Ibid., 10. 85. Government of the HKSAR, “Work progress of Urban Renewal Authority,” Press Release, January 9, 2002. 86. Audit Ordinance, Cap 122, S.14. 87. Government of the HKSAR, “Government response on appointment of Director of Audit,” Press Release, November 28, 2003; Hansard, December 17, 2003, 2318–2326; Government of the HKSAR, “Independence of Audit Commission,” Press Release, December 17, 2003. 88. Chan (2004), op. cit. 89. Hansard, December 12, 2001, 2448–2475.

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90. Ibid., 2453. 91. Ibid., 2510. 92. Government of the HKSAR, “CS’ statement on remuneration of senior executives of statutory and other bodies,” Press Release, June 26, 2002. 93. Ibid. 94. See, for example, Hansard, May 9, 2007, 6766; Maria Chan, “HKMA chief’s pay packet gets 7.9pc fatter at HK$10.3 million,” SCMP, April 19, 2008. 95. Philip Bowring, “Suspicions of sleaze thrive on secrecy,” SCMP, June 3, 2002. 96. Government of the HKSAR, “Managing Director of the Urban Renewal Authority appointed,” Press Release, October 12, 2001. 97. Hansard, December 3, 2003, 1812–1822; Legislative Council, Panel on Home Affairs, Minutes of a Meeting held on 13th February 2004 (Hong Kong: mimeo, 2004). See also Anthony B.L. Cheung and Paul C.W. Wong, “Who Advised the Hong Kong Government? The Politics of Absorption before and after 1997,” Asian Survey 44(6) (November–December, 2004), 874–894. 98. Constitutional Affairs Bureau, Accountability System for Principal Officials (Hong Kong: mimeo, 2002), 18. 99. Home Affairs Bureau, Review of the Role and Functions of Public Sector Advisory and Statutory Bodies: Consultation Paper (Hong Kong: The Bureau, 2003), 6. 100. Ibid., 6–8. See also Ian Scott, “The Government and Statutory Bodies in Hong Kong: Centralization and Autonomy,” Public Organisation Review 6(3) (September 2006), 185–202; Ian Thynne, “Statutory Bodies as Instruments of Government in Hong Kong: Review Beginnings and Analytical Challenges Ahead,” Public Administration and Development 26(1) (2006), 45–53. 101. Home Affairs Bureau, Progress Report on the Review of Advisory and Statutory Bodies (Hong Kong: The Bureau, May 3, 2005). 102. Hansard, January 30, 2008, 75–76. 103. Audit Commission, Report No. 49, op. cit., Chapter 5. 104. Ibid. 105. Legislative Council, Panel on Home Affairs, Minutes of a Meeting held on 16th April 2004 (Hong Kong: mimeo, 2004), 14; Legislative Council, Panel on Home Affairs, Minutes of a Meeting held on 17th June 2005 (Hong Kong: mimeo, 2005), 13. 106. See Scott (2006), op. cit. 107. To date, the Equal Opportunities Commission has been the only statutory body subject to an individual report under the review. The Home Affairs Bureau used the opportunity to abolish the Equal Opportunities Commission post of executive chairman on the grounds that no other “non-departmental public bodies” had such positions. See Home Affairs Bureau, Interim Report No.15 – Review of the Corporate Governance of the Equal Opportunities Commission, LC Paper No. CB (2) 786/05–06 (Hong Kong: mimeo, January 2006). The report lists the other organisations that the government regards as “non-departmental public bodies”.

Chapter 7 1. Quoted in W.I. Jenkins, Policy Analysis (London: Martin Robertson, 1978), 15. 2. Ambrose Y.C. King, “Administrative Absorption of Politics in Hong Kong: Emphasis on the Grass Roots Level” in Social Life and Development in Hong Kong, eds. Ambrose Y.C. King and Rance P.L. Lee (Hong Kong: The Chinese University Press, 1981), 130.

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3. John W. Kingdon, Agendas, Alternatives and Public Policies, 2nd edition (New York: Harper Collins, 1995), 78. 4. Jerry McCaffery, “Features of the Budgetary Process” in Handbook of Government Budgeting, ed. Roy T. Meyers (San Francisco: Jossey-Bass, 1999), 27. 5. Alvin Rabushka, Value for Money: The Hong Kong Budgetary Process (Stanford: Hoover Institution Press, 1976); Newman M.K. Lam, “The Changing Face of Hong Kong Budgeting,” Public Administration and Policy 9 (2) (2000), 1–25; Newman M.K. Lam, “Government Intervention in the Economy: A Comparative Analysis of Singapore and Hong Kong,” Public Administration and Development 20(5) (2000), 397–421. See also Stephen Brown et al., The Budget and Public Finance in Hong Kong (Hong Kong: Civic Exchange, 2003). 6. Alvin Rabushka, Hong Kong: A Study in Economic Freedom (Chicago: University of Chicago Press, 1979), 31–32. 7. Financial Secretary, The 1982–83 Budget (Hong Kong: Government Printer, 1982), Appendix A. 8. Finance Branch, Practitioner’s Guide: Management of Public Finances (Hong Kong: Government Printer, 1995), 33. 9. Financial Secretary, The 2004–05 Budget (Hong Kong: Government Logistics Department, March 2004), 17; Financial Secretary, The 2003–04 Budget (Hong Kong: Printing Department, March 2003), 3. 10. Ibid., 5. 11. Financial Secretary, “FS’ speech on Hong Kong’s economy and management of public finances,” Press Release, October 23, 2003. 12. Financial Secretary, The 2007–08 Budget (Hong Kong: Government Logistics Department, 2007), 3–4. 13. Government of the HKSAR, “Government releases accrual-based accounts for 2002– 2003,” Press Release, January 5, 2004. 14. Financial Secretary, The 2003–04 Budget (2003), op. cit., 15. 15. Financial Secretary (2004), op. cit., 17. 16. Financial Secretary, The 2008–09 Budget (Hong Kong: Government Logistics Department, March 2004), Supplement and Appendices, 7. 17. Ibid., 53. 18. Financial Secretary, The 2008–2009 Budget: Information Pack for the Financial Secretary’s Consultations, LC CB (1)145/07–08(03), www.legco.gov.hk (November 2007), 42. 19. Ibid., 40. 20. Task Force on Review of Public Finances, Final Report to the Financial Secretary (Hong Kong: Printing Department, February 2002), 43. 21. Ibid. 22. Advisory Committee on New Broad-Based Taxes, Final Report to the Financial Secretary (Hong Kong: Printing Department, February 2002), 27. 23. Financial Secretary, The 2004–05 Budget: Information Pack for the Financial Secretary’s Consultations, www.budget.gov.hk/2004, 23. 24. Ibid. 25. See Lawrence Ma, “GST Eliminate (sic) Business Advantages,” www.chamber.org.hk (2006); Andrea Pawlyna, “Taxing Time,” www.hkicpa.org.hk (September 2006). 26. Financial Secretary, Broadening the Tax Base: Ensuring Our Future Prosperity: What’s the Best Option for Hong Kong, www.taxreform.gov.hk (July 2006).

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27. Ibid. 28. Hansard, October 19, 2006, 479–480. 29. Ibid., 580. 30. Financial Services and Treasury Bureau, Public Consultation on Tax Reform: Interim Report, Fin (CR)/11/2306/06 (December 5, 2006). 31. Financial Secretary, The 2004/2005 Budget, op. cit., 24. 32. See Gabriel M. Leung and John Bacon-Shone, eds., Hong Kong’s Health System: Reflections, Perceptions and Visions (Hong Kong: Hong Kong University Press, 2006), Part IV. 33. Food and Health Bureau, Your Health, Your Life: Healthcare Reform Consultation Document (Hong Kong: Government Logistics Department, March 2008). 34. Calculated from Financial Secretary, The 2002–03 Budget: Background Information for the Financial Secretary’s Consultations with LegCo Members on the Expenditure Part of the Budget (Hong Kong: Finance Bureau, 2001), Chart 10. 35. Hansard, April 9, 2003, 5428. 36. Financial Secretary, The 2004–05 Budget: Information Pack for the Financial Secretary’s Consultations, op. cit., Chart 9. 37. Financial Secretary (2003), op. cit., 18 38. Financial Secretary, The 2008–2009 Budget, op. cit., 13–14. 39. Ibid., 17. 40. Hansard, April 10, 2002, 5241. 41. Hansard, March 28, 2007, 5325, 5376. 42. Ibid., 5381–5383. 43. I am grateful to Alan N. Lai for information on the post-2002 process of resource allocation. 44. Financial Secretary, The 2001–02 Budget: Honing Our Strengths: Striving to Excel (Hong Kong: Government Printer, 2001), 5, Chart 10. 45. Donald Tsang, Embracing New Challenges (Hong Kong: Government Logistics Department, 2008). 46. Government of the HKSAR, Estimates for the Year ending 31 March 2008 Volume 1a- General Revenue Account (Hong Kong: Printing Department, 2007), 209. 47. Government of the HKSAR, Estimates for the Year ending 31 March 2008 Volume 1b- General Revenue Account (Hong Kong: Printing Department, 2007), 325. 48. Government of the HKSAR, Estimates for the Year ending 31 March 2008 Volume 1a- General Revenue Account, op. cit., 218. 49. Ibid., 212. 50. Ibid., 210. 51. Ibid. 52. Government of the HKSAR, Estimates for the Year ending 31 March 2008 Volume 1b- General Revenue Account, op. cit., 326. 53. Ma Siu-hung, A Study of the Policy Advice Mechanisms of the Hong Kong Government (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1998), 124– 148. 54. Chief Executive (2008), op. cit. 55. Government of the HKSAR, Policy Agenda (Hong Kong: Government Logistics Department, 2008). 56. Financial Secretary (2001), op. cit. 57. Hansard, April 1, 1992, 2488–2497.

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58. Financial Secretary, The 2004–05 Budget: Information Pack (2003), op. cit. 59. Civicus, The HKSAR: A Vibrant but Loosely Organised Civil Society (Hong Kong: Hong Kong Council of Social Service, 2006), Appendix 4 (with additional mimeo material not included in the main report). 60. Ian K. Perkin, “Tang: is he going to have it both ways?” Hong Kong Business (December 2003), 18–20. 61. Financial Secretary, The 2008–09 Budget, op. cit., 13, 23–24. 62. Finance Committee, Procedure, www.legco.gov.hk (2002), S.49. 63. See, for example, Hansard, March 29, 2007, 5513–5603. 64. Hansard, April 9, 2003, 5435, 5470. 65. Secretary for Housing, Planning and Lands, “Speech to the Lions Club International on the analysis of the property market data,” Press Release, July 31, 2003. 66. Financial Secretary (1982), op. cit., Appendix A.

Chapter 8 1. Mark Considine, Public Policy: A Critical Approach (South Melbourne: Macmillan, 1994), 3–4; Michael Howlett and M. Ramesh, Studying Public Policy: Policy Cycles and Policy Systems, 2nd edition (Don Mills, Ontario: Oxford University Press, 2003), 5–8. 2. Quoted in W.I. Jenkins, Policy Analysis (London: Martin Robertson, 1978), 15. 3. Considine, op. cit., 5–6. 4. R.W. Cobb and C.D. Elder, Participation in American Politics, 2nd edition (Baltimore: John Hopkins, 1983), 86. 5. John W. Kingdon, Agendas, Alternatives and Public Policies, 2nd edition (New York: Harper and Collins, 1995), 78. 6. Ibid., 145; see also John P. Burns, “The Policy Process in the HKSAR” in Public Reform, Policy Change and New Public Management: From the Asia and Pacific Perspective, ed. Akira Nakamura (Tokyo: EROPA Local Government Center, 2004), 53–78. 7. See Ma Ngok, Political Development in Hong Kong: State, Political Society, and Civil Society (Hong Kong: Hong Kong University Press, 2007), Part C; Elaine Chan and Joseph Chan, “The First Ten Years of the HKSAR: Civil Society Comes of Age,” The Asia Pacific Journal of Public Administration 29(1) (June 2007), 77–99. 8. Ian Scott, “Legitimacy, Governance and Public Policy in Post-handover Hong Kong,” The Asia Pacific Journal of Public Administration 29(1) (June 2007), 29–49; Anthony Cheung, “Policy Capacity in Hong Kong: Constrained Institutions Facing a Crowded and Differentiated Polity,” The Asia Pacific Journal of Public Administration 29(1) (June 2007), 51–75. 9. John A. Rohr, Ethics for Bureaucrats: An Essay in Law and Values, 2nd edition (New York: Marcel Dekker, 1989), 68. 10. Hansard, October 18, 1972, 4. 11. Paul Morris and Ian Scott, “Educational Reform and Policy Implementation in Hong Kong,” Journal of Education Policy 18(1) (2003), 71–84. 12. Norman Miners, Hong Kong under Imperial Rule 1912–1941 (Hong Kong: Oxford University Press, 1987), 153–69, 280–282. 13. C.J.G. Lowe, “How the Government in Hong Kong Makes Policy,” Hong Kong Journal of Public Administration 2(2), 63–70.

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14. McKinsey and Company, The Machinery of Government: A New Framework for Expanding Services in Hong Kong (Hong Kong: mimeo, May 1973), 16. 15. Ibid., 9–11. 16. Ian Scott, “Generalists and Specialists” in The Hong Kong Civil Service and Its Future, eds. Ian Scott and John P. Burns (Hong Kong: Oxford University Press, 1988). 17. Hong Kong Government, Consultation Document: Redress of Grievances (Hong Kong: Government Printer, August 1986); Hong Kong Government, Green Paper: The 1987 Review of Developments in Representative Government (Hong Kong: Government Printer, 1987). 18. Joan Y.H. Leung, State and Society: The Emergence and Marginalization of Political Parties in Hong Kong (Unpublished Ph.D. thesis, Hong Kong: University of Hong Kong, 1999), 149–154. 19. T.A. Lowi, “Four Systems of Policy, Politics and Choice,” Public Administration Review 32(4) (1972), 298–310. 20. Anthony Sweeting, “Hong Kong Education within Historical Processes” in Education and Society in Hong Kong: Toward One Country and Two Systems, ed. Gerard A. Postiglione (Hong Kong: Hong Kong University Press, 1992), 45. 21. Hong Kong Government, Annual Report by the Commissioner for Resettlement for the Financial Year 1954–55 (Hong Kong: Government Printer, 1955); Anthony Sweeting, A Phoenix Transformed: The Reconstruction of Education in Post-War Hong Kong (Hong Kong: Oxford University Press, 1993); Victor C.W. Wong, The Political Economy of Health Care Development and Reforms in Hong Kong (Aldershot: Ashgate, 1999), Chapter 4. 22. Morris and Scott, op. cit. 23. Twenty-five of the interviews were conducted between 1998 and 2002. A further seven were conducted in 2006 and 2007. 24. Hong Kong Government, Hong Kong 1994 (Hong Kong: Government Printer, 1994), 175–176. 25. Census and Statistics Department, Hong Kong Annual Digest of Statistics (Hong Kong: Printing Department, 2003), 315. 26. Tsoi Keon-wah, “Poverty Eradication and Social Security in Hong Kong” in Advances in Social Welfare in Hong Kong, eds. Daniel T.L. Shek et al. (Hong Kong: The Chinese University Press, 2002), 124. 27. Liu Pak Wai, “Financing the CSSA Scheme,” www.tdctrade.com/econforum (2000). 28. Tung Chee-hwa, Building Hong Kong for a New Era (Hong Kong: Printing Department, 1997), 40. 29. Social Welfare Department, Review of the Comprehensive Social Security Assistance (CSSA) Scheme, www.hwfb.gov.hk/hw (1998), Annex 1. 30. Ibid., 3. 31. Ibid., 3–5. 32. Ibid., 5. 33. Ibid., 35–36, passim; Kenneth L. Chau and Chack-kie Wong, “The Social Welfare Reform: A Way to Reduce Public Burden?” in The First Tung Chee-hwa Administration, ed. Lau Siu-kai (Hong Kong: The Chinese University Press, 2002), 209–213. 34. Social Welfare Department (1998), op. cit., 4 35. Census and Statistics Department (2003), op. cit.; Social Welfare Department, “CSSA recipients encouraged to move towards greater self-reliance,” Press Release, October 9, 2003.

ch.13 Notes(p.307-359).indd 339 11/4/09 4:32:40 PM 340 Notes to pages 187–193

36. Social Welfare Department (1998), op. cit., 4; Tsoi, op. cit., 125; Hong Kong Standard, “Lam warns of ‘drastic steps’ if benefits not cut,” Hong Kong Standard, November 12, 2002. 37. Census and Statistics Department (2003), op. cit. 38. Ibid.; Social Welfare Department (2003), op. cit. 39. Carrie Lam, “Will we have to cope with less?” SCMP, October 24, 2002. 40. Ibid. 41. Ibid. 42. Legislative Council, Panel on Welfare Services, Minutes of the Meeting held on Monday 11th November 2002 (Hong Kong: mimeo, 2002), 1–4. 43. Ibid., 13–14. 44. Christine Fang, “Why we should not cut social welfare,” SCMP, November 15, 2002. 45. Ibid. 46. Government of the HKSAR, “ExCo endorses rate adjustment of CSSA and SSA,” Press Release, February 25, 2003. 47. Hansard, February 26, 2003, 4148. 48. Ibid., 4144. 49. Ibid., 4161. 50. Ibid., 4149–4151. 51. Ibid., 4165–4168. 52. Ibid., 4178. 53. Chris Yeung, “Rising heat,” SCMP, February 26, 2003; Legislative Council, Panel on Welfare Services, Minutes of the 16th meeting (Hong Kong: mimeo, June 27, 2003). 54. Ella Lee, “I hate being known as the figures lady,” SCMP, October 30, 2003. 55. Tung (1997), op. cit., passim. 56. Tung Chee-hwa, “I will bring solutions to our problems,” SCMP, December 14, 2001. 57. Tung Chee-hwa, Building on Our Strengths, Investing in Our Future (Hong Kong: Printing Department, 2001): 35–39; Tung Chee-hwa, Capitalising on Our Advantages, Revitalising Our Economy (Hong Kong: Government Printer, 2003), 14–18; Tung Chee- hwa, Seizing Opportunities for Development, Promoting People-based Governance (Hong Kong: Government Logistics Department, 2004), 2–15. 58. Anthony B.L. Cheung, “New Interventionism in the Making: Interpreting State Interventions in Hong Kong after the Change of Sovereignty,” Journal of Contemporary China 9(24) (2000), 291–308. 59. See, for example, Christine Loh, “An Alternative Policy Address: 2007–2008,” www. civic-exchange.org (2007). 60. Ian Scott, “The Disarticulation of the Hong Kong’s Post-Handover Political System,” The China Journal, No. 43 (January 2000), 29–53. 61. Kingdon, op. cit., 71. 62. Scott (2007) op. cit.; Cheung (2007), op. cit. 63. Elaine Chan, “Beyond Pedagogy: Language and Identity in Post-colonial Hong Kong,” British Journal of Sociology of Education 23(2) (2002), 271–285; Morris and Scott, op. cit. 64. Education and Manpower Bureau, Consultation Document on the Review of Education Executive and Advisory Bodies (Hong Kong: Printing Department, 1998); Health and Welfare Bureau, Consultation Document on the Development of Traditional Chinese Medicine in the Hong Kong Special Administrative Region (Hong Kong: Printing Department, 1997).

ch.13 Notes(p.307-359).indd 340 11/4/09 4:32:40 PM Notes to pages 193–198 341

65. Tung (1997), op. cit., 19; Leo Goodstadt, Uneasy Partners: The Conflict between Public Interest and Private Profit in Hong Kong (Hong Kong: Hong Kong University Press, 2005), 134–135; Joan Y.H. Leung and Ho-mun Chan, “The School Management Reform in Hong Kong: Administrative Control in a New Cloak of Managerialism” in Public Sector Reform in Hong Kong: Into the 21st Century, eds. Anthony B.L. Cheung and Jane C.Y. Lee (Hong Kong: The Chinese University Press, 2001). 66. Tung Chee-hwa, Working Together for Economic Development and Social Harmony (Hong Kong: Government Logistics Department, 2005), 8–9. 67. Donald Tsang, Strong Governance for the People (Hong Kong: Government Logistics Department, 2005), para 17; www.cop.gov.hk (accessed November 5, 2008). The Commission on Poverty’s term ended in June 2007. 68. Raymond Ngan and Mark Kin-yin Li, “Responding to Poverty, Income Inequality and Social Welfare: The Neo-Liberalist Government versus a Social Investment State” in The Hong Kong Special Administrative Region in Its First Decade, ed. Joseph Y.S. Cheng (Hong Kong: The City University Press, 2007), 554–559. 69. Ma Ngok, op. cit., Appendix V. 70. Joseph C.W. Chan et al., From Consultation to Civic Engagement: The Road to Better Policy-making and Governance in Hong Kong (Hong Kong: Bauhinia Foundation Research Centre, March, 2007). 71. Legislative Council Brief, Smoking (Public Health) (Amendment) Bill 2005, HWF CR52/581/89 Pt 56 (Hong Kong: mimeo, 2005). 72. Legislative Council, Panel on Education, Progress of the Study on Small Class Teaching, LC Paper No. CB (2)1041/06–07(01) (Hong Kong: mimeo, February 2007). 73. Mark Bovens and Paul’t Hart, Understanding Policy Fiascoes (New Brunswick: Transaction Publishers, 1996), 15. 74. Constitutional Affairs Bureau, Legislative Council Paper: Accountability System for Principal Officials (Hong Kong: The Bureau, April 17, 2002), 6. 75. Gary Cheung, “Landmark merger of universities agreed,” SCMP, October 5, 2002. 76. Ibid. 77. Hong Kong Economic Times, “Should someone refuse, the government would take action,” October 5, 2002; SCMP, “Merger confusion,” editorial, October 8, 2002. 78. Stewart R. Sutherland, Report of the University Grants Committee (Commissioned by the Secretary for Manpower and Education) (Hong Kong: Printing Department, March 2002), 5. 79. Education and Manpower Bureau, Legislative Council Brief: Higher Education Review and Rolling Over the 2001/02 to 2003/04 Triennium to the 2004/05 Academic Year, EMB CB3/1/2041/89 (Hong Kong: mimeo, November 2002); Sutherland, op. cit., viii– ix. 80. Education and Manpower Bureau (2002), op. cit., 5. 81. Yeung (October 5, 2002), op. cit. 82. Polly Hui, “Students strongly opposed to link,” SCMP, October 9, 2002; Polly Hui and Linda Yeung, “Opponents launch signature campaign,” SCMP, October 8, 2002. 83. Sunday Morning Post, “Students oppose merger,” November 17, 2002. 84. Gary Cheung, “University merger plans put on hold,” SCMP, December 9, 2002. 85. Government of the HKSAR, “CE’s speech at Chinese University of Hong Kong 40th anniversary banquet,” Press Release, December 6, 2003. 86. University Grants Committee, Hong Kong Higher Education: To Make A Difference: To Move With The Times (Hong Kong: The Committee, January 2004), 5, 8.

ch.13 Notes(p.307-359).indd 341 11/4/09 4:32:40 PM 342 Notes to pages 198–209

87. Ibid., Appendix B. 88. SCMP (October 8, 2002), op. cit. 89. Government of the HKSAR, “Inaccurate news report dismissed,” Press Release, October 4, 2002.

Chapter 9 1. Brian W. Hogwood and Lewis A. Gunn, Policy Implementation for the Real World (Oxford: Oxford University Press, 1984), 196–218. 2. Ibid. 3. Christopher Hood, The Tools of Government (London: Macmillan, 1983); B. Guy Peters and Frans K.M. Van Nispen, eds., Public Policy Instruments (Cheltenham: Edward Elgar, 1998); Marie Louise Bemelmans-Videc, Ray C. Rist and Evert Vedung, eds., Carrots, Sticks and Sermons: Policy Instruments & Their Evaluation (New Brunswick, N.J.: Transaction, 1998). 4. Amatai Etzioni, A Comparative Analysis of Complex Organisations (New York: Free Press. 1961), 5; Evert Vedung, “Policy Instruments: Typologies and Theories” in Bemelmans-Videc et al., op. cit., 28. 5. Ibid., 29–30. 6. See www.lscd.gov.hk/healthy/en/index.php (accessed November 9, 2008). 7. Hansard, October 24, 2007, 379–381. 8. Jimmy Cheung, “Jockey Club wins soccer betting rights,” SCMP, November 27, 2002. 9. Legislative Council, Panel on Home Affairs, Minutes of the Meeting of 12th December 2003, LC Paper No. CB (2) 913/03/03 (Hong Kong: mimeo, 2003), 7–13. 10. See, inter alia, Government of the HKSAR, “Speech by CE at joint chambers luncheon,” Press Release, January 10, 2003. 11. Ian Scott, “Policy Implementation in Hong Kong,” Southeast Asian Journal of Social Science 15(2) (1987), 17. 12. Ian Scott, “Efficiency and Effectiveness in the Enforcement of the Drug Laws in Hong Kong” in Asian Civil Service Systems: Improving Efficiency and Productivity, ed. John P. Burns (Singapore: Times Academic Press, 1994), 241–249. 13. See Alan Smart, The Shek Kip Mei Myth: Squatters, Fires and Colonial Rule in Hong Kong, 1950–1963 (Hong Kong: Hong Kong University Press, 2006). 14. Executive Council, Seven-Year Primary Expansion Programme, Memorandum XCC 57 (Hong Kong: mimeo, August 2, 1954). 15. So Kam Tong, Bernie, The Hong Kong Police as a New Paradigm of Policing in a Post Colonial City: An Analysis of Reform Achievement (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1999), 62. 16. Ibid., 73–75. See also Carlos W.H. Lo and Albert C.Y. Cheuk, “Community Policing in Hong Kong: Development, Performance and Constraints,” Policing: An International Journal of Police Strategy and Management 27(1) (2004), 97–127. 17. Jim Kwok Kai-chiu, The Performance Management System of the Customs and Excise Department (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1997). 18. Ian Scott, “Administering the New Towns of Hong Kong,” Asian Survey 22(2) (July1982), 659–675.

ch.13 Notes(p.307-359).indd 342 11/4/09 4:32:40 PM Notes to pages 209–214 343

19. District Commissioner, “Memorandum to the Colonial Secretary” in NT 4811: C, April 19, 1973. 20. Joan Y.H. Leung, State and Society: The Emergence and Marginalization of Political Parties in Hong Kong (Unpublished PhD thesis, Hong Kong: University of Hong Kong, 1999), 154. 21. Chan Yuen Tak-fai, Dorothy, A Study of Transport Policy Formulation in Hong Kong (Unpublished PhD thesis, Hong Kong: University of Hong Kong, 1989), 271–272. 22. Ibid., 276–277. 23. Hansard, January 18, 1984, 478. 24. Hansard, January 18, 1984, 464. 25. S.F. Borins, “Electronic Road Pricing: An Idea Whose Time May Never Come,” Transport Research 22A(1) (1988), 37–44; Chan, op. cit., 329. 26. Denny Kwok Leung Ho, “The Rise and Fall of Community Mobilization: The Housing Movement in Hong Kong” in The Dynamics of Social Movement in Hong Kong, eds. Stephen Wing Kai Chiu and Tai Lok Lui (Hong Kong: Hong Kong University Press, 2000), 201. 27. Victor C.W. Wong, The Political Economy of Health Care Development and Reforms (Aldershot: Ashgate, 1999), 154. 28. Paul Morris, “The Management of Participation in the Policy-making Process: The Case of the Education Commission in Hong Kong,” Journal of Education Policy 11(3) (1996), 319–336. 29. Joan Y.H. Leung and Ho-mun Chan, “The School Management Reform in Hong Kong: Administrative Control in a New Cloak of Managerialism” in Public Sector Reform in Hong Kong: Into the 21st Century, eds. Anthony B.L. Cheung and Jane C.Y. Lee (Hong Kong: The Chinese University Press, 2001); Elaine Chan, “Beyond Pedagogy: Language and Identity in Post-colonial Hong Kong,” British Journal of Sociology of Education 23(2) (2002), 271–285; Paul Morris, “Promoting Curriculum Reform in the Context of the Political Transition: An Analysis of Hong Kong’s Experience,” Journal of Education Policy 17(1) (2002), 13–28; Paul Morris and Ian Scott, “Education Reform and Policy Implementation in Hong Kong,” Journal of Education Policy 18 (1) (2003), 71–84. 30. Flora Kan and Edward Vickers, “One Hong Kong, Two Histories: ‘History’ and ‘Chinese History’ in the Hong Kong School Curriculum,” Comparative Education 38 (1) (2002), 73–89; Morris and Scott, op. cit. 31. Grace C.L. Mak, “Primary and Secondary Education” in The Other Hong Kong Report, eds. Nyaw Mee-kau and Li Si-ming (Hong Kong: The Chinese University Press, 1996); Polly Hui, “Please, please, no more EC reports or school reforms,” SCMP, December 20, 2003. 32. Robin Gauld and Derek Gould, The Hong Kong Health Sector: Development and Change (Hong Kong: The Chinese University Press, 2002), 73. 33. Memorandum of Understanding Concerning the Construction of the New Airport in Hong Kong and Related Questions (Hong Kong: mimeo, July 4, 1991). 34. Ian Scott, “The Disarticulation of the Hong Kong’s Post-Handover Political System,” The China Journal, No. 43 (January 2000), 29–53; Hansard, February 11, 1998, 143– 180. 35. Tung Chee-hwa, Working Together for Economic Development and Social Harmony (Hong Kong: Government Logistics Department, 2005), 9.

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36. Chiu Yu-chow, An Analysis of Policy Agenda-Setting in Hong Kong: The Avian Flu Case (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1999), 23. 37. Ibid., 37. See also Ahmed Shafiqul Huque and Grace O.M. Lee, Managing Public Services: Crises and Lessons from Hong Kong (Aldershot: Ashgate, 2002), 48–64. 38. SARS Expert Committee, SARS in Hong Kong: From Experience to Action: Report of the SARS Expert Committee (Hong Kong: Information Services Department); Hospital Authority Review Panel, Report of the Hospital Authority Review Panel on the SARS Outbreak (Hong Kong: The Authority, September 2003); Legislative Council, Report of the Select Committee into the Handling of the Severe Acute Respiratory Syndrome Outbreak by the Government and the Hospital Authority, www.legco.gov.hk (July 2004). 39. Christine Loh, “The Politics of SARS: The WHO, Hong Kong and Mainland China” in At the Epicentre: Hong Kong and the SARS Outbreak, eds. Christine Loh and Civic Exchange (Hong Kong: Hong Kong University Press, 2004), 143. 40. SARS Expert Panel, op. cit., 67. 41. Loh, op. cit. 42. Legislative Council, Report of the Select Committee (2004), op. cit., 251–252. 43. Ibid., 253. 44. Loh., op. cit., 160. 45. Legislative Council, Report of the Select Committee (2004), op. cit., 247. 46. Government of the HKSAR, “HWFB’s statement on HA’s SARS Report,” Press Release, October 16, 2003. 47. SARS Expert Panel, op. cit., 72. 48. Michael E. DeGolyer, “How the Stunning Outbreak of Disease Led to a Stunning Outbreak of Dissent” in At the Epicentre: Hong Kong and the SARS Outbreak, eds. Christine Loh and Civic Exchange (Hong Kong: Hong Kong University Press, 2004), 130–133. 49. Hong Kong Housing Authority, Report of the Investigation Panel on Accountability Piling Contract 166/1997 of Shatin Area 14B Phase 2 (Hong Kong: The Authority, May 25, 2000), 1–2; Government of the HKSAR, “Defective piling blocks to be demolished,” Press Release, March 16, 2000. 50. Ibid. 51. Hansard, June 28, 2000, 9325. 52. Hong Kong Housing Authority, op. cit., 8. 53. Eliza W.Y. Lee, “The New Hong Kong International Airport Fiasco: Accountability Failure and the Limits of New Managerialism,” International Review of Administrative Sciences 6(1) (2000), 57–72; John P. Burns, Government Capacity and the Hong Kong Civil Service (Hong Kong: Oxford University Press, 2004), 163–164. 54. Government of the HKSAR, Report of the Commission of Inquiry on the New Airport (Hong Kong: Printing Department, 1999); Office of the Ombudsman, Executive Summary of the Report of the Investigation into the Commissioning and Operation of the New Airport at Chep Lap Kok (Hong Kong: Printing Department, January 1999); Legislative Council, Report of the Select Committee to Inquire into the Circumstances Surrounding the Opening of the New Hong Kong International Airport at Chep Lap Kok since 6 July 1998 and related issues, Vol. 1 (Hong Kong: Printing Department, January 1999). 55. Ibid., 49, 187.

ch.13 Notes(p.307-359).indd 344 11/4/09 4:32:41 PM Notes to pages 218–225 345

56. Government of the HKSAR (1999), op. cit., 637. 57. Morris and Scott, op. cit. 58. Tung (1997), op. cit., 29–35; Tung Chee-hwa, Quality People, Quality Home: Positioning People for the 21st Century (Hong Kong: Printing Department, 1999), 19–26; Tung Chee-hwa, Serving the Community, Sharing Common Goals (Hong Kong: Printing Department, 2000), 17–25; Education Commission, Learning for Life, Learning through Life: Reform Proposals for the Education System in Hong Kong (Hong Kong: Printing Department, September 2000), passim. See also Lok Sang Ho et al., eds., Education Reform and the Quest for Excellence: The Hong Kong Story (Hong Kong University Press, 2005). 59. Morris and Scott, op. cit.; Kan and Vickers, op. cit.; Edward Vickers, In Search of an Identity: The Politics of History as a School Subject in Hong Kong 1960s–2002 (New York: Routledge, 2003); Kwok-chan Lai, Kwok-wai Ko and Elizabeth Lai-man Cheung, “Implementation of Graduate Teacher Policy in Hong Kong Primary Schools: Promises and Disillusionment” in Lok Sang Ho, op. cit. 60. Chan, op. cit., 276–279. 61. See www.lamma.com.hk, My Lamma Monthly E-zine, 21 (April 28, 2003). 62. See www.saveourshorelines.bizland.com/project02.html (accessed October 10, 2008). 63. Brian Brewer and Adrienne La Grange, Whose Views Matter? Reforming Public Housing Policy in Hong Kong, Public and Social Administration Working Paper Series (Hong Kong: City University of Hong Kong, 2001), 32. 64. See www.saveourshorelines.bizland.com/project02.html (accessed October 10, 2008). 65. A. So, “Deal reached in Big Buddha row,” SCMP, October 25, 2002. 66. Winston Chu, “A shrinking asset,” SCMP, September 20, 2003. 67. Ravina Shamdasami, “Harbour activists take to the streets,” SCMP, September 23, 2003. 68. Sara Bradford, “Reclamation court fight opens,” SCMP, October 4, 2003. 69. Michael Suen, “Balancing public interests,” SCMP, October 15, 2003. 70. Government of the HKSAR, “Government welcomes High Court judgment on Central Reclamation Phase III,” Press Release, March 9, 2004. 71. Ibid. 72. Donald Tsang, Embracing New Challenges, www.policyaddress.gov.hk/08–09/index. html, para 71. 73. Government of the HKSAR, “CE’s remarks on the Old Age Allowance,” Press Release, October 24, 2008. 74. Government of the HKSAR, “Speech by the SFST at the 9th Hong Kong Forum,” Press Release, October 31, 2008; Peggy Leung, “Financial services chief to be first to face panel on minibonds fiasco,” SCMP, January 22, 2009. 75. Hansard, November 5, 2003, 907. 76. Director of Audit, Report No. 42 (Hong Kong: Government Logistics Department, March 2004), 60–65. 77. James W. Fesler and Donald F. Kettl, The Politics of the Administrative Process, 2nd edition (Chatham, N.J.: Chatham House, 1996), 285. 78. Government of the HKSAR, Progress Report on Policy Objectives (2001) (Hong Kong: Printing Department, December 2002), i–ii. 79. Ibid., 4(6), 20(2), 13(2). 80. Director of Audit, Report No. 45 (Hong Kong: Government Logistics Department, October 2005), Chapter 6, p. 8.

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81. Ibid. 82. Ibid., 10. 83. Ibid., 16. 84. Ibid., 36. 85. Ibid., 20–22. 86. Ibid., Part 3. 87. See www.info.gov.hk/aud. 88. Ibid.; Director of Audit, Report No. 39 (Hong Kong: Printing Department, October, 2002), 8–9. 89. Ibid., Chapter 8, v. 90. Hansard, February 23, 2000, 4126; Director of Audit (2002), op. cit., Chapter 8, v–vi. 91. Director of Audit, Report No. 48 (Hong Kong: Government Logistics Department, 2007), Chapter 7. 92. Ibid., passim. 93. Ibid., 42. 94. Hansard, April 11, 2002, 5386. 95. Director of Audit (2004), op. cit. 96. Home Affairs Bureau, Report of the HAB Telephone Survey-August 2003, www.info. gov.hk/hab (August 2003), 14. 97. Government of the HKSAR, “LCQ1: public opinion survey,” Press Release, February 18, 2004. 98. Public Opinion Programme, People’s Satisfaction with the Hong Kong Government, www.hkupop.hku.hk (October 2008). 99. Ibid. 100. Hong Kong Transition Project, Accountability & Article 23: Freedom, Fairness and Accountability in Hong Kong (Hong Kong: The Project, December 2002), 72. 101. World Bank, Governance Matters IV: Governance Indicators for 1996–2004 (Washington, DC: World Bank, 2005). 102. Office of the Ombudsman, Administrative Fairness Checklist, 3rd edition (Hong Kong: Printing Department, 2001), 5, my italics.

Chapter 10 1. Anthony B.L. Cheung, “Public Sector Reform and the Re-legitimation of Public Bureaucratic Power: the Case of Hong Kong,” International Journal of Public Sector Management 9 (5/6) (1996), 37–50. 2. See Tung Chee-hwa, Seizing Opportunities for Development, Promoting People-based Governance (Hong Kong: Government Logistics Department, 2004), 22–24; Tung Chee-hwa, Working Together for Economic Development and Social Harmony (Hong Kong: Government Logistics Department, 2005), 9–10. 3. T.T. Lui, “Efficiency as a Political Concept in the Hong Kong Government: Issues and Problems” in Asian Civil Service Systems: Improving Efficiency and Productivity, ed. John P. Burns (Singapore: Times Academic Press, 1994), 18. 4. McKinsey and Company, The Machinery of Government: A New Framework for Expanding Services (Hong Kong: mimeo, May 1973), 5. 5. Ibid., 8. 6. Hong Kong Government, Hong Kong 1983 (Hong Kong: Government Printer, 1984), 103.

ch.13 Notes(p.307-359).indd 346 11/4/09 4:32:41 PM Notes to pages 233–237 347

7. Hong Kong Government, Hong Kong 1974 (Hong Kong: Government Printer, 1975), Appendix 25; Hong Kong Government, Hong Kong 1983, op. cit., Appendix 26. 8. Hong Kong Government, Hong Kong 1974, op. cit., Appendix 26; Hong Kong Government, Hong Kong 1983, op. cit., Appendix 27. 9. Hong Kong Government, Hong Kong 1974, op. cit., Appendix 19; Hong Kong Government, Hong Kong 1983, op. cit., Appendix 20. 10. Hong Kong Government, Hong Kong 1980 (Hong Kong: Government Printer, 1981), Appendix 6; Hong Kong Government, Hong Kong 1983, op. cit., Appendix 6. 11. See Robin Hutcheon, Bedside Manner: Hospital and Health Care in Hong Kong (Hong Kong: The Chinese University of Hong Kong Press, 1999), Chapters 3, 4; Adrienne La Grange, “Housing (1997–2007)” in The Hong Kong Special Administrative Region in Its First Decade, ed. Joseph Y.S. Cheng (Hong Kong: The City University of Hong Kong Press, 2007), 701. 12. See, for example, Terri Mottershead, “Sustainable Development in Hong Kong: A Road Yet to be Travelled” in Sustainable Development in Hong Kong, ed. Terri Mottershead (Hong Kong: Hong Kong University Press, 2004), 93; Transport Branch, Transport in Hong Kong: A Review of 1989 (Hong Kong: Transport Branch, 1989); Working Party on Social Welfare Policies and Services, Social Welfare into the 1990s and Beyond (Hong Kong: Government Printer, 1990). 13. Finance Branch, Public Sector Reform (Hong Kong: The Branch, 1989), 1. 14. Efficiency Unit, “Overview of Reform,” www.eu.egov.hk (accessed November 28, 2008). 15. Chris Patten, Our Next Five Years: The Agenda for Hong Kong (Hong Kong: Government Printer, 1992), 26; Chris Patten, East and West (London: Macmillan, 1998), 46; Hong Kong Government, Serving the Community (Hong Kong: Government Printer, 1995). 16. Cheung, op. cit., 38. 17. Organisation for Economic Co-operation and Development, Administration as Service: The Public as Client (Paris: OECD, 1987), 131. 18. Hong Kong Government (1995), op. cit., 7; Hong Kong Government, The Hong Kong Government Serving the Community, Briefing to the Legislative Council by the Chief Secretary (Hong Kong: Government Printer, February10, 1995), 4. 19. Patten (1992), op. cit., 26. 20. Ibid., 26–27. 21. Patten (1992), op. cit., 27. 22. Chris Patten, Hong Kong: Today’s Successes, Tomorrow’s Challenges (Hong Kong: Government Printer, 1993), 29. 23. Efficiency Unit, The Service Imperative (Hong Kong: Government Printer, 1996); Efficiency Unit, Performance Pledges, www.info.gov.hk/eu (2001). 24. Social Welfare Department, Performance Pledge (Hong Kong: Government Printer, n.d.), 2. 25. Fire Services Department, Performance Pledge, 1994 (Hong Kong: Government Printer, 1994), 1–4. 26. Housing Department, Performance Pledge 1994 (Hong Kong: The Department, 1994); Trade Department, Performance Pledge 1994 (Hong Kong: The Department, 1994); Water Supplies Department, Serving the Community: Performance Pledge (Hong Kong: The Department, 1994). 27. Patten (1992), op. cit., 26. 28. Efficiency Unit (1996), op. cit., 9.

ch.13 Notes(p.307-359).indd 347 11/4/09 4:32:41 PM 348 Notes to pages 238–241

29. Education Department, Performance Pledges (Hong Kong: The Department, n.d.), 1, 3. 30. Labour Department, Performance Pledge (Hong Kong: Government Printer, n.d). 31. Ibid., 2. 32. Nora Ting Lai King, “An Efficient and Courteous Service in a Clean and Friendly Environment: A Case Study on the Performance Pledge of the Labour Department,” (Hong Kong: mimeo, 1994), 8–10. 33. Ian Scott, “Public Sector Reform and Middle Managers in Hong Kong,” Asian Journal of Public Administration 22(2) (December 2000), 124. 34. Ibid., 122. 35. Terry T. Lui and Terry L. Cooper, “Bureaucracy, Democracy and Administrative Ethics: A Study of Public Service Values in Hong Kong,” International Review of Administrative Sciences 62(2) (1996), 187. 36. Scott (2000), op. cit. 37. Hong Kong Government, The Hong Kong Government Serving the Community (1995), op. cit., 7. 38. Cheung, Public Sector Reform (1996), op. cit. 39. Royal Hong Kong Police, Directive: Neighbourhood Policing (Hong Kong: mimeo, 1975); Carlos Wing-Hung Lo and Albert Chun-Yin Cheuk, “Police-Public Projects in Hong Kong: An Evaluation,” The Asian Journal of Public Administration 25(2) (December 2003), 296–299; Carlos Wing-Hung Lo and Albert Chun-Yin Cheuk, “Community Policing in Hong Kong: Development, Performance and Constraints,” Policing : An International Journal of Police Strategies and Management 27(1) (2004), 97–127 40. So Kam Tong, Bernie, The Hong Kong Police as a New Paradigm of Policing in a Post Colonial City: An Analysis of Reform Achievement (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1999), 49. 41. Ibid. 42. Ibid.; Commissioner of Police, Royal Hong Kong Police Review (Hong Kong: Government Printer, 1996). 43. So, op. cit., 51. 44. MDR Technology Ltd., Opinion Survey on the Quality of Police Services: A Report (Hong Kong: The Company, 1998). 45. Ibid., 8. 46. Hong Kong Police Force, Vision and Statement of Common Purpose and Values (Hong Kong: mimeo, 1996). 47. Provisional Legislative Council, Panel on Security, Customer Satisfaction Survey of the Police Force, www.legco.gov.hk/yr 97–98 (July 25, 1997), 1–2. 48. Ibid., 2. 49. Social Science Research Centre, Public Opinion Programme, Public Opinion Survey on the Public Image of the Hong Kong Police Force: Survey Report (Hong Kong: The Centre, 1999), 18, 22. 50. Census and Statistics Department, Crime and Its Victims in Hong Kong in 2005, Thematic Household Survey Report — Report No. 31 (May 2007), www.censtatd.gov. hk, 23. 51. Ibid., 24. 52. Lo and Cheuk (2003), op. cit., 291–292.

ch.13 Notes(p.307-359).indd 348 11/4/09 4:32:42 PM Notes to pages 241–243 349

53. Ibid., 305. See also Michael Chiu Kai-ting, “The Significance of a Value-driven Competency-based Performance Management System: Key Issues with Reference to Developments in the Hong Kong Police Force,” The Asian Journal of Public Administration 24 (2) (2002), 235–253, who describes the vision statement as causing confusion and an excessive amount of administrative work. See also Allan Jiao, The Police in Hong Kong: A Contemporary View (Lanham, Md: United Press of America, 2007), passim. 54. Government of the HKSAR, “Response to frequently asked questions on the Public Order Ordinance,” Press Release, October 25, 2000. See also Sonny Lo Shiu-hing, “The Politics of Policing the Anti-WTO Protests in Hong Kong,” Asian Journal of Political Science 14 (2) (December 2006), 140–162. 55. See, for example, Legislative Council, Panel on Welfare Services, Minutes of the 19th Meeting, www.legco.gov.hk, January 22, 2008. 56. See, for example, Chester Yung and Jeannette Ng, “Tin Shui Wai’s growing underclass,” The Standard, July 25, 2005. 57. Hong Kong Government, Hong Kong 2007 (Hong Kong: Government Logistics Department, 2008), 204. 58. Government of the HKSAR, “Statement by Secretary for Housing, Planning and Lands,” Press Release, November 13, 2002. On the Home Ownership Scheme, see Adrienne La Grange and Yip Ngai Ming, “Social Belonging, Social Capital and the Promotion of Home Ownership,” Housing Studies 16(3) (2001), 291–310. 59. Hong Kong Government (2007), op. cit., 205; Secretary for Housing, Planning and Lands, “Speech at the Asia-Pacific Network for Housing Research Conference,” Press Release, February 5, 2004. 60. Yip Ngai-ming and Lau Kwok-yu, “Housing” in Social Policy in Hong Kong, eds. Paul Wilding, Ahmed Shafiqul Huque and Julia Tao Lai Po-wah (Cheltenham: Edward Elgar, 1997), 42–43. 61. Denny Kwok Leung Ho, “The Rise and Fall of Community Mobilization: The Housing Movement in Hong Kong” in The Dynamics of Social Movement in Hong Kong, eds. Stephen Wing Kai Chiu and Tai Lok Lui (Hong Kong: Hong Kong University Press, 2000), 201. 62. Hong Kong Housing Authority, “Know your rights and responsibilities,” www.housing authority.gov.hk (2003). 63. James Lee, “Constructing Consumer Identity and Responsible Citizens: Public Housing Governance in Post-Colonial Hong Kong,” Paper presented to a workshop “How Governments Become Responsible,” City University of Hong Kong, March 1–2, 2007. See also Kwong Tsz Man and Johnnie C.K. Chan, “Community Development and Resident’s Participation in Housing Management” in Professional Housing Practices in Hong Kong, ed. Rebecca Lai-har Chiu (Hong Kong: Hong Kong University Press, 2006), 176. 64. Tung Chee-hwa, Building Hong Kong for a New Era (Hong Kong: Printing Department, 1997), 18. 65. Housing Bureau, Homes for Hong Kong People into the 21st Century, A White Paper on Long Term Housing Strategy in Hong Kong (Hong Kong: Printing Department, 1998); Brian Brewer and Adrienne La Grange, Whose Views Matter? Reforming Public Housing Policy in Hong Kong, Public and Social Administration Working Paper Series (Hong Kong: Department of Public and Social Administration, City University of Hong Kong, 2001), 17–18.

ch.13 Notes(p.307-359).indd 349 11/4/09 4:32:42 PM 350 Notes to pages 244–248

66. Government of the HKSAR (2002), op. cit. 67. Hong Kong Government (2007), op. cit., 205. 68. Hong Kong Housing Authority, Annual Report 2007/2008, www.housingauthority.gov. hk, 17. 69. Ibid., 42. 70. Raymond Ng Kwok-ming, Administrative Reform: The Case of the Hospital Authority (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1992), 46. 71. See Iris Chan and Mary Ann Benitez, “Changing Patient Expectations” in Hong Kong’s Health System: Reflections, Perspectives and Visions, eds. Gabriel M. Leung and John Bacon-Shone (Hong Kong: Hong Kong University Press, 2006), 84–85. 72. Susanna Ko Yuk-ying, An Analysis of Performance Pledges and Customer Service in the Hospital Authority (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1995), 75. 73. See www.dh.gov.hk/aboutus. 74. Efficiency Unit (1996), op. cit., 21; “Monitoring of Customer Feedback,” www.info. gov.hk/dh (2004). 75. Ian Holliday and Tam Wai-keung, “Fragmentation and the Hong Kong Health Care System: Myth and Reality,” The Asian Journal of Public Administration 22(2) (December 2000), 170–172. 76. The Harvard Team, Improving Hong Kong’s Health Care System: Why and for Whom? (Hong Kong: Printing Department, 1999), 4–6. 77. Ibid., 5. 78. Holliday and Tam, op. cit., 178–179. 79. Food and Health Bureau, Your Health, Your Life (Hong Kong: Government Logistics Bureau, 2008). 80. Ibid., 93. 81. Colleen Lee and Peggy Yeung, “Public forced to make up for funding cuts, says rights group,” SCMP, March 13, 2008; Ella Lee, “Health-care reform must go ahead, says Chow,” SCMP, March 21, 2008 82. See Chan and Benitez, op. cit. 83. Mark R. Hayllar, “Reforms to Enhance Accountability and Citizen Involvement: A Case Study of the Hong Kong Hospital Authority,” International Journal of Public Administration 22(3/4) (1999), 461–498. 84. Health and Medical Development Advisory Committee, Building a Healthy To-morrow; Discussion Paper on Future Service Delivery for our Health Care System, www.fhb. gov.hk (2005). 85. Peter P. Yuen and Geoffrey S.Y. Lieu, “Hospital Governance: An Assessment by Governing Committee Members and Chief Executives of Hong Kong’s Public Hospitals,” Public Administration and Policy 12(1) (March 2003), 79. 86. Ibid. 87. Highways Department, Performance Pledge 2006 (Hong Kong: Government Logistics Department, 2006), 5. 88. See Director of Audit, Report No. 45 (Hong Kong: Government Logistics Department, October 2005), Chapter 6, Part 3. 89. Eliza W.Y. Lee and M. Shamsul Haque, “The New Public Management Reform and Governance in Asian NICS: A Comparison of Hong Kong and Singapore,” Governance 19(4) (October 2006), 619. 90. Efficiency Unit, Serving the Community by Using the Private Sector: A General Guide to Outsourcing, 3rd edition (March 2008), www.eu.gov.hk, 7.

ch.13 Notes(p.307-359).indd 350 11/4/09 4:32:42 PM Notes to pages 249–253 351

91. Commerce and Economic Development Bureau, 2008 Digital 21 Strategy, www. digital21.gov.hk (December 2007), 21. 92. Ibid., 53. 93. Information Technology and Broadcasting Bureau, E-government Benefits Us All (Hong Kong: The Bureau, 2002), 9. 94. Ibid., 14–21. 95. Commerce and Economic Development Bureau (2008), op. cit., 54. 96. Michael V. Stone, “What practical value has Hong Kong obtained from implementing a Digital Administration?” Speech to the Danish E-government Forum: Digitaliserising 2003, www.info.gov.hk/digital21/e-gov (May 20, 2003), 1. 97. Ibid. 98. See Efficiency Unit, “Public Sector Reform,” www.eu.gov.hk (accessed December 9, 2008). 99. Office of the Ombudsman, Ombuds News No. 2 (Hong Kong: The Office of the Ombudsman, July 2, 2003), Appendix D. 100. Ibid. 101. Ibid. 102. Office of the Ombudsman, Direct Investigation on Effectiveness of the Integrated Call Centre in Handling Complaints, www.ombudsman.gov.hk/direct_investigation2.html (June 2008). 103. Ibid., 5. 104. Ibid., 8. 105. HKSAR Government, “Integrated Call Centre to improve handling of complaints,” Press Release, June 26, 2008. 106. Census and Statistics Department, Thematic Household Survey Report — Report No. 32, www.censtatd.gov.hk (December 2007), 37, 145. 107. Ibid., 38. 108. Ibid., 37 109. Hong Kong Government (2007), op. cit., 349–350. 110. Tung Chee-hwa, Building on our Strengths, Investing in Our Future (Hong Kong: Printing Department, 2001), 37. 111. Efficiency Unit, www.info.gov.hk/eu (accessed 2003). 112. Civil Service Bureau, Customer Service Excellence in the Civil Service (Hong Kong: The Bureau, 2000); Secretary for the Civil Service, “Government pledge to provide quality customer service,” Civil Service Bureau, November 2, 2001. 113. Efficiency Unit, www.info.gov.hk/eu, op. cit. 114. Efficiency Unit, “Citizen Centric Services Programmes,” www.eu.gov.hk. 115. Tung Chee-hwa (2001), op. cit., 38. 116. Tung Chee-hwa (2001), op. cit., 40. 117. Tung Chee-hwa, Seizing Opportunities for Development, Promoting People-based Governance (Hong Kong: Government Logistics Department, 2004), 24. 118. Tung Chee-hwa, Working Together for Economic Development and Social Harmony (Hong Kong: Government Logistics Department, 2005), 8–9. 119. See Central Policy Unit, “Commission on Strategic Development,” www.cpu.gov.hk; Administrative and Civic Affairs, “Commission on Poverty Members Named,” www. news.gov.hk, January 27, 2005. 120. Donald Tsang, Embracing New Challenges, www.policyaddress.gov.hk/08–09/index. html, para 122.

ch.13 Notes(p.307-359).indd 351 11/4/09 4:32:42 PM 352 Notes to pages 253–259

121. www.info.gov.hk.cstdi (accessed November 2002). The Civil Service Training and Development Institute was incorporated into the Civil Service Bureau on April 1, 2004. 122. Hansard, April 25, 2007, 5797. See also Elaine Chan and Joseph Chan, “The First Ten Years of the HKSAR: Civil Society Comes of Age,” The Asia Pacific Journal of Public Administration 29(1) (2007), 80. 123. Government of the HKSAR (2000), op. cit. 124. Ibid. 125. Hansard, March 25, 1999, passim; Ahmed Shafiqul Huque and Grace O.M. Lee, Managing Public Services: Crises and Lessons from Hong Kong (Aldershot: Ashgate, 2002), 66–77. 126. See “Popularity of the Chief Executive” and “Satisfaction with the HKSAR Government,” www.hkupop.hku.hk. 127. Independent Investigation Panel, Report to the Council of the University of Hong Kong, www.hku.hk/reportip (2000), 5. 128. Ibid., 30. See also Jan Currie, Carole J. Petersen and Ka Ho Mok, Academic Freedom in Hong Kong (Lanham, MD: Lexington Books, 2006), Chapter 3. 129. SCMP, “Scrutiny of Bill makes a mockery of the system,” editorial, June 16, 2003. 130. Secretary for Constitutional Affairs, “Government to work with community,” Press Release, July 10, 2003. 131. See, for example, Joseph C.W. Chan et al., From Consultation to Civic Engagement: The Road to Better Policy-making and Governance in Hong Kong (Hong Kong: Bauhinia Foundation Research Centre, March 2007).

Chapter 11 1. Peter Wesley-Smith, “The Method of Protecting Civil Liberties in Hong Kong” in Civil Liberties in Hong Kong, ed. Raymond Wacks (Hong Kong: Oxford University Press, 1988), 11. 2. Malcolm Merry, “Freedom of Expression: Defamation and Contempt,” in ibid., 88. 3. Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China on the Question of Hong Kong (Hong Kong: Government Printer, 1984), S. XIII. 4. Ibid. 5. Yash Ghai, Hong Kong’s New Constitutional Order: The Resumption of Chinese Sovereignty and the Basic Law, 2nd edition (Hong Kong: Hong Kong University Press, 1999), 406. 6. The Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (Hong Kong: The Consultative Committee for the Basic Law, April 1990), Chapter III. 7. Chris Yeung, “Alarm at fate of laws under Bill of Rights,” SCMP, May 22, 1990. 8. Christine Loh, “Human Rights — In a Time Warp” in The Other Hong Kong Report, eds. Ngaw Mee-kau and Li Si-ming (Hong Kong: The Chinese University Press, 1996), 99–100. 9. Chief Executive’s Office, Civil Liberties and Social Order: Consultation Document (Hong Kong: The Office, April 1997), 2; Hong Kong Government, “Commentary on Civil Liberties and Social Order Consultation Document” (Hong Kong: mimeo, April 1997), 3.

ch.13 Notes(p.307-359).indd 352 11/4/09 4:32:42 PM Notes to pages 259–262 353

10. Chris Patten, Hong Kong: A Thousand Days and Beyond (Hong Kong: Government Printer, 1994), 20. 11. City and New Territories Administration, Green Paper on Equal Opportunities for Women and Men (Hong Kong: Government Printer, 1993); Patten, op. cit., 21. 12. Chief Executive’s Office, op. cit., 10–17; Hong Kong Government (1997), op. cit., 4–7. 13. Hong Kong Government, Serving the Community (Hong Kong: Government Printer, 1995), 25. 14. Ibid. 15. Constitutional and Mainland Affairs Bureau, “Access to Government Information,” www.access.gov.hk. 16. Ibid. 17. Ibid. 18. Hong Kong Journalists Association, HKJA Launches Campaign for Open Government (Hong Kong: The Association, 1999). 19. Office of the Ombudsman, Annual Report 2007/2008, www.ombudsman.gov.hk, 5; See also Doreen Weisenhaus and Jill Cottrell, Hong Kong Media Law: A Guide for Journalists and Media Professionals (Hong Kong: Hong Kong University Press, 2007), 93. 20. Government of the HKSAR, “Statistics on the Code on Access to Information,” Press Release, October 6, 2008. It is not clear how the government arrived at the figure for the total number of requests. The various categories add up to more than 25,068. 21. Ibid. 22. Privacy Commissioner, “The Privacy Commissioner for Personal Data,” www.pcpd. org.hk. 23. Personal (Privacy) Data Ordinance Cap 486, Part VIII. 24. Privacy Commissioner, Annual Report 2006/2007, www.pcpd.org.hk. 25. Joshua Butt, “Data of 46,000 leaked over three years,” SCMP, May 29, 2008. 26. Legislative Council, Panel on Information Technology and Broadcasting, Information Security, LC Paper No. CB (1)326/09–09(04) (December 2008). 27. Joshua Butt and Martin Wong, “Privacy chief gets tough on data leaks,” Sunday Morning Post, May 11, 2008. 28. Equal Opportunities Commission, Annual Report 2002/2003, www.eoc.org.hk, 4. 29. Ibid., 9; Carole J. Petersen, “The Right to Equality in the Public Sector: An Assessment of Post-Colonial Hong Kong,” Hong Kong Law Journal 32(1) (2001), 117–131. 30. Equal Opportunities Commission, op. cit., 9. 31. Petersen, op. cit. 32. Hansard, July 2, 2003, 7960–7961. 33. Ravina Shamdasani, “New rights official is sacked before he starts work,” SCMP, October 23, 2003. 34. Ravina Shamdasani, “Watchdog faces pressure to resign,” SCMP, October 24, 2003. 35. Ravina Shamdasani and Stella Lee, “EOC chief faces ‘gifts’ enquiry,” SCMP, October 31, 2003; Hansard, November 26, 2003, 1737. 36. Independent Panel of Inquiry, Report of the Independent Panel of Inquiry on the Incidents Relating to the Equal Opportunities Commission, www.legco.gov.hk (February 2005); Legislative Council, Panel on Home Affairs, Termination of the Employment of the Director (Operations) Designate by the Equal Opportunities Commission and other Related Incidents, LC Paper No. CB (2)1003/04–05(01) (March 8, 2005).

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37. Independent Panel of Inquiry, op. cit., II, III; Legislative Council, Panel on Home Affairs (2005), op. cit., 10. 38. Hansard, November 26, 2003, 1791. 39. Legislative Council, Panel on Home Affairs (2005), op. cit., 8. 40. Equal Opportunities Commission, “Cases and Statistics,” www.eoc.org.hk. 41. Home Affairs Bureau, Interim Report No. 15 — Review of the Corporate Governance of the Equal Opportunities Commission (Hong Kong: mimeo, 2006). 42. Race Discrimination Ordinance, S.3, 55, 56. 43. Siu Sin-por, “‘Judicial Activism’ creates court chaos,” SCMP, February 20, 2000; Johannes Chan, “Civil Liberties, Rule of Law and Human Rights: The Hong Kong Special Administrative Region in its First Four Years” in The First Tung Chee-hwa Administration, ed. Lau Siu-kai (Hong Kong: The Chinese University Press, 2002), 92–94. 44. Hansard, July 8, 2008, 94. 45. Hansard, October 1, 1969, 11; October 8, 1969, 95. 46. OMELCO, Annual Report (Hong Kong: Government Printer, 1990), 29–30. 47. OMELCO, Annual Report (Hong Kong: Government Printer, 1989), Appendix 13. 48. Hong Kong Government, Hong Kong 1989 (Hong Kong: Government Printer, 1989), 91. 49. Legislative Council, Legislative Council Annual Report 1993–1994 (Hong Kong: Government Printer, 1994). 50. Legislative Council, Legislative Council Redress System and Related Matters: Reference Manual for Legislative Council Members (Hong Kong: mimeo, November 2001), 178. 51. Census and Statistics Department, Thematic Household Survey Report No. 33, www. censtatd.gov.hk (August 2008), 27–28. 52. Legislative Council (2001), op. cit., 180. 53. Legislative Council, Legislative Council Annual Report 2002–2003, www.legco.gov.hk (2003), 59. 54. Legislative Council, Legislative Council Annual Report 2006–2007, www.legco.gov. hk, 60. 55. Legislative Council, Legislative Council Annual Report 1998–1999 (Hong Kong: The Council, 1999), 66. 56. Legislative Council (2006–2007), op. cit., 64. 57. Legislative Council (2002), op. cit., 74. 58. ICAC, Annual Report, www.icac.org.hk (2007), 38. 59. Ibid., 41; ICAC, Annual Report (Hong Kong: Government Printer, 1985), Appendices 17, 18. 60. ICAC (2007), op. cit., 42. 61. Ibid., 37. 62. Ibid., 39–40. 63. Ibid., 49. 64. Ibid., 49–60, Annex C. 65. Ibid., 50. 66. Ibid., 65. 67. Ibid., Appendix 16. 68. ICAC, “ICAC Annual Survey 2007,” www.icac.org.hk, viii. 69. Ibid., 59.

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70. Ibid., 64. 71. See Ma Man, Su-lan Paula, A Study of the ICAC’s Role in Handling Non-corruption Complaints (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 1988), 49; MDR Technology Ltd, ICAC Annual Survey (Hong Kong: MDR Ltd, 2002), xi ; ICAC, Annual Survey (2007), op. cit. 72. ICAC, Annual Survey (2007), op. cit. 73. Ibid. 74. Ibid. 75. Ibid. 76. Ibid. 77. Ibid. 78. K.S. Law and S.Y.Yue, The Channels for Redressing Grievances in Hong Kong and in Overseas Countries (Hong Kong: Research and Library Services Division, Legislative Council Secretariat, 1998), 4. 79. Hong Kong Government, Consultative Document: Redress of Grievances (Hong Kong: Government Printer, August 1986), 5. 80. Ibid., 7. 81. Commissioner for Administrative Complaints, Annual Reports of the Commissioner for Administrative Complaints 1989–1992 (Hong Kong: Government Printer, 1989–1992), Appendix E (1989); Appendix D (1990–1992). 82. Commissioner for Administrative Complaints, Annual Report of the Commissioner for Administrative Complaints (Hong Kong: Government Printer, 1992), 55. 83. Ian Scott, “Reforming the Ombudsman: the Evolution of the Commissioner of Administrative Complaints Office in Hong Kong,” Public Law (Spring 1994), 27–38. 84. Hong Kong Government, Review of the Office of the Commissioner for Administrative Complaints (Hong Kong: Government Secretariat, June 1992), 4. 85. Chris Patten, Our Next Five Years: The Agenda for Hong Kong (Hong Kong: Government Printer, 1992), 29. 86. Scott (1994), op. cit., 35. 87. Office of the Ombudsman, Annual Report 2007/2008, op. cit., 10. 88. Commissioner for Administrative Complaints, Annual Report of the Commissioner for Administrative Complaints 1996 (Hong Kong: Government Printer, 1996), 5. 89. Office of the Ombudsman, An Ombudsman System with Hong Kong Characteristics (Hong Kong: The Office, 1998), 2. 90. Jonathon Boston et al., Public Management: The New Zealand Model (Auckland: Oxford University Press, 1996), 339; Brenda Danet, “Towards a Method to Evaluate the Ombudsman,” Administration and Society 10 (2) (November 1978), 335–370. 91. Ombudsman Ordinance, Cap 397, S.3 (3). 92. David Gwynn Morgan, “The Value of an Ombudsman in Hong Kong — A Comparative Perspective” in The Basic Law of the HKSAR: From Theory to Practice, eds. Priscilla M.F. Leung and Zhu Guobin (Singapore: Butterworths, 1998), 366–367. 93. Hansard, May 21, 2003, 6763–6774. 94. Carlos Wing-hung Lo and Robert J. Wickens, “Towards an Accountable and Quality Public Administration in Hong Kong: Redressing Administrative Grievances through the Ombudsman,” International Journal of Public Administration 25(6) (2002), 763. 95. Hansard, July 20, 1988, 1954–1958. 96. Ombudsman Ordinance, Cap 397, Schedule 1.

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97. Ibid., Schedule 2. 98. Government of the HKSAR, Administrative Redress, Legal Aid and Sustainable Development: Policy Objective for the Administrative Wing of the Chief Secretary for Administration’s Office (Hong Kong: Printing Department, 2001), 3. 99. Office of the Ombudsman, Annual Report 2007/2008, op. cit., 35. 100. Hansard, November 28, 2001, 1977. 101. Ombudsman Ordinance, S.10 102. Ibid., S.15(1). 103. Ibid., S.12(1). 104. Office of the Ombudsman, Annual Report 2007/2008, op. cit., 18. 105. Ibid., 13 106. Ibid., 21. 107. Ibid. 108. Office of the Ombudsman, Annual Report of the Ombudsman, Hong Kong (Hong Kong: Printing Department, 1998), 20. 109. Office of the Ombudsman, Annual Report 2007/2008, op. cit., Chapter 2. 110. Ibid., 17, 19–20. 111. Office of the Ombudsman (1998), op. cit., 12–13. 112. Office of the Ombudsman, Annual Report 2007/2008, op. cit., 16, 19. 113. Ibid., 14. 114. Office of the Ombudsman, Annual Report of the Ombudsman, Hong Kong (Hong Kong: Printing Department, 2003), Annex 5. 115. Office of the Ombudsman, Annual Report 2007/2008, op. cit., 22. 116. Office of the Ombudsman, Executive Summary of the Report of the Investigation into the Commissioning and Operation of the New Airport at Chep Lap Kok (Hong Kong: Printing Department, January 1999), 4–5. 117. Office of the Ombudsman, “Mission,” www.ombudsman.gov.hk. 118. Office of the Ombudsman, Administrative Ethics Checklist (Hong Kong: Government Printer, 1997); Office of the Ombudsman, Administrative Fairness Checklist, 3rd edition, (Hong Kong: Printing Department, 2001). 119. Office of the Ombudsman, Administrative Ethics Checklist, op. cit., i–vi. 120. Office of the Ombudsman, Effective Complaint Handling: A Tool for Better Serving the Community (Hong Kong: Printing Department, 1998). 121. Ibid., 16. 122. Ibid., Annex 13. 123. Census and Statistics Department, Thematic Household Report No. 4, Public Awareness of the Office of the Ombudsman (Hong Kong: Printing Department, December 2000), 52, 69. 124. Census and Statistics Department, Thematic Household Report No. 17 (Hong Kong: Printing Department, April 2004), 41, 43; Census and Statistics Department (2008), op. cit., 29–31, 42. 125. Ibid., 33. 126. Ibid., 35. 127. Census and Statistics Department (2004), op. cit., 47; Census and Statistics Department (2008), op. cit., 35. 128. Census and Statistics Department (2004), op. cit., 56; Census and Statistics Department (2008), op. cit., 41.

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129. Legislative Council, Panel on Security, Background Paper prepared by the Legislative Council Secretariat: Independent Police Complaints Council (Hong Kong: The Council, 2002), 2. 130. Ibid., 3–4. 131. Ibid., 6–7. 132. Hansard, June 27, 1997, 986. 133. Legislative Council (2002), op. cit., 7; Security Bureau, Independent Police Complaints Council (IPCC) Bill: Public Consultation Paper (Hong Kong: Printing Department, March 2002), 17. 134. Legislative Council (2002), op. cit., 8. 135. Quoted in ibid. 136. Ibid., 9. 137. Hansard, April 5, 2000, 5702. 138. Ibid., 5703. 139. Ibid., 5719–5720. 140. Security Bureau (2002), op. cit. 141. Ibid., 21. 142. Ibid., 11. 143. Legislative Council, Bills Committee, Independent Police Complaints Council Bill, LC Paper No. CB (2)97/07–08(03), October 27, 2007. 144. See, for example, Submission on Independent Police Complaints Bill from the Hong Kong Human Rights Monitor (December 6, 2007); Submission on Independent Police Complaints Bill from the Hong Kong Bar Association (January 15 and 22, 2008), www. legco.gov.hk. 145. Legislative Council Minutes, July 9–13, 2008, Appendix 17. 146. See, for example, Royal Hong Kong Police Force, Complaints Against Police Annual Report 1989 (Hong Kong: Police Headquarters, 1990), 26. 147. Cicada Wong Lai Sim, The Responsiveness and Accountability of the Hong Kong Police Force: A Study of the Police Complaints System and Mechanisms of Control (Unpublished MPA dissertation, Hong Kong: University of Hong Kong, 2002), 36–42; see also Independent Police Complaints Council, Report of the Independent Police Complaints Council 2007, www.ippc.gov.hk (2008), Appendix II. 148. Ibid., Appendix VI, VIII. 149. See, for example, Legislative Council, Panel on Security, Report of the Panel on Security for Submission to the Legislative Council, LC Paper No. CB(2) 2589/05–06 (June 28 2008), 2; Legislative Council, “Administration’s Reply to a Question raised by the Hon Leung Kwok-hung on Public Meetings and Processions,” CB(2) 1736/06–07 (13) (May 8 and June 5, 2007), www.legco.gov.hk; Legislative Council, Panel on Security, Report of the Subcommittee on Police’s Handling of Search of Detainees, LC Paper No. CB (2) 2692/07–08 (July 25, 2008). 150. Independent Police Complaints Council, Report of the Independent Police Complaints Council 1997 (Hong Kong: Government Printer, 1998), Appendix VI; Independent Police Complaints Council (2007), op. cit., Appendix VI. 151. Independent Police Complaints Council, Report of the Independent Police Complaints Council 2001 (Hong Kong: Government Printer, 2002), 110–114. 152. Hansard, April 5, 2000, 5722–5727. 153. Ibid., 5173. 154. Independent Police Complaints Council (2007), op. cit., Appendix IX.

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155. Complaints Against Police Office (CAPO), A Guide for Complainants (Hong Kong: mimeo, c2007). 156. Independent Police Complaints Council (2007), op. cit., 21. 157. Ibid., 2. 158. Ibid., 26–27. 159. Ibid., 21. 160. Ibid., Appendix XII. 161. Independent Police Complaints Council (IPCC), Minutes of the 105th meeting of the IPCC with the Complaints and Internal Investigations Branch, www.info.gov.hk/ipcc (2003). 162. Calculated from Transport Complaints Unit, Quarterly Reports January–December 2007, www.info.gov.hk/tcu. 163. Ibid. 164. Medical Council of Hong Kong, “Complaints,” www.mchk.org.hk. 165. Medical Council of Hong Kong, Annual Report 2007, www.mchk.org.hk. 166. Ibid., Table 1. 167. Hansard, May 9, 2001, 5198. 168. Ibid., 5250, 5257–5258. 169. Hansard, July 9, 2008. 170. Office of the Ombudsman, Effective Complaint-Handling (1998), op. cit. 171. Ombudsman Ordinance, Cap 397, S.10. 172. Philip Dykes, “Discretion and Immigration Control,” Paper delivered at a conference on Immigration Law and Policies, Faculty of Law, University of Hong Kong, 2001. 173. Ibid. 174. T.K. Lai, “Discretionary Law and Discretionary Powers,” Paper delivered at a conference on Immigration Law and Policies, Faculty of Law, University of Hong Kong, 2001. 175. Registration of Persons Ordinance, Cap 177, S.3D; Registration of Persons Tribunal, Guidance Notes for Adjudicators (Hong Kong: mimeo, n.d.). 176. See Hong Kong Judiciary, Labour Tribunal, www.judiciary.gov.hk (2008). 177. Jane Moir, “Combatants want to sort out redress mess,” SCMP, September 13, 2003. 178. Ibid. 179. Hong Kong Judiciary, Report of the Working Party on the Review of the Labour Tribunal, wwwjudiciary.gov.hk (2004). 180. Hong Kong Judiciary, Annual Report 2007, www.judiciary.gov.hk (2008).

Chapter 12 1. Chris Patten, Hong Kong: Transition (Hong Kong: Government Printer, 1996), 19. 2. Kuan Hsin-Chi and Lau Siu-kai, “Between Liberal Autocracy and Democracy: Democratic Legitimacy in Hong Kong,” Democratization 9(4) (2002), 58–76; Ming Sing, Hong Kong’s Tortuous Democratization (London: RoutledgeCurzon, 2004), 183– 190. 3. Ibid., 182. 4. Christopher Pollitt and Geert Bouckaert, Public Management Reform: A Comparative Analysis (Oxford: Oxford University Press, 2000), 174–175. 5. Anson Chan, “Speech by the Chief Secretary of Administration at an Asia Society luncheon,” Press Release, April 19, 2001.

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6. Government of the HKSAR, “Transcript of Chief Secretary for Administration’s media session (Part 2),” Press Release, May 3, 2001. 7. James Hayes, Friends and Teachers: Hong Kong and Its People 1953–1987 (Hong Kong: Hong Kong University Press, 1996), 13–14, Chapters 8, 11; Elizabeth Sinn, ed., Hong Kong, British Crown Colony, Revisited (Hong Kong: Centre of Asian Studies, The University of Hong Kong, 2001), 7, 126–127. 8. Lo Shiu-hing, “The Changing Dimensions of Executive-Legislative Relations: The Case of Hong Kong,” Public Administration and Policy 7(2) (September 1998), 79–103; Ian Scott, “The Disarticulation of the Hong Kong’s Post-Handover Political System,” The China Journal, No. 43 (January 2000), 29–53. 9. Joseph Cheng, “Team spirit lacking in demoralized civil service,” SCMP, October 26, 2002; Jimmy Cheung, “Civil servants’ morale in dramatic fall since handover,” SCMP, June 30, 2003; Chris Yeung, “Observer,” SCMP, December 16, 2002. 10. Chan (2001), op. cit. 11. Christine Loh, “Christine Loh’s newsletter,” www.civic-exchange.org, September 25, 2003; Peter So, “Complaints over financial services surge on back of minibonds gripes,” SCMP, January 20, 2009. 12. Loh, op. cit. 13. Government of the HKSAR, “CE’s speech given at the Hong Kong Association,” Press Release, November 12, 2003. 14. Ambrose Leung, “Tsang delays consultation on poll reform,” SCMP, January 16, 2009. 15. Donald Tsang, Strong Governance for the People (Hong Kong: Government Logistics Department, 2005), para 25. 16. Standing Committee of the National People’s Congress, “Full text of the Standing Committee decision,” SCMP, April 27, 2004. 17. Chief Executive, “CE’s statement on the decision by the Standing Committee of the National People’s Congress,” Press Release, December 29, 2007. 18. Tung Chee-hwa, “CE addresses Basic Law seminar,” Press Release, March 15, 2004. 19. Qiao Xiaoyang, “Striving in a pragmatic spirit to find the right path to political development,” SCMP, April 29, 2004. 20. Donald Tsang, “An Interview with Hong Kong’s Chief Executive, Donald Tsang Kam- yuen,” Hong Kong Journal, www.hkjournal.org, No. 12 (October 2008). 21. Joseph C.W. Chan et al., From Consultation to Civic Engagement: The Road to Better Policy-making and Governance in Hong Kong (Hong Kong: Bauhinia Foundation Research Centre, March 2007). 22. Rachel Laforest and Susan Philips, “Citizen Engagement: Rewiring the Policy Process” in Critical Policy Studies, eds. Michael Orsini and Miriam Smith (Vancouver: UBC Press, 2007). 23. Donald Tsang, Embracing New Challenges (Hong Kong: Government Logistics Department, 2008), para 122.

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7. Policy Addresses; Speeches and Statements by the Governor/Chief Executive Chief Executive, “Chief Executive’s statement about Falun Gong,” Press Release, February 8, 2001. –––– “Chief Executive’s transcript on the Basic Law Article 23,” Press Release, July 5, 2003. –––– “Statement by CE,” Press Release, July 7, 2003. Government of the HKSAR, “CE’s speech at Swearing-in Ceremony,” Press Release, July 1, 2002. –––– “CE’s speech given at the Hong Kong Association,” Press Release, November 12, 2003. –––– The 2003 Policy Address: Policy Agenda (Hong Kong: Printing Department, 2003). Patten, Chris, Our Next Five Years: The Agenda for Hong Kong (Hong Kong: Government Printer, 1992). –––– Hong Kong: Today’s Successes, Tomorrow’s Challenges (Hong Kong: Government Printer, 1993). –––– Hong Kong: A Thousand Days and Beyond (Hong Kong: Government Printer, 1994). –––– Hong Kong: Transition (Hong Kong: Government Printer, 1996). Tsang Kam-yuen, Donald, Strong Governance for the People (Hong Kong: Logistics Department, 2005). –––– A New Direction for Hong Kong, www.ceo.gov.hk, October 2007. –––– Embracing New Challenges, www.policyaddress.gov.hk/08–09/index.html, October 2008. Tung Chee Hwa, Building Hong Kong for a New Era (Hong Kong: Printing Department, 1997) –––– Quality People, Quality Home: Positioning People for the 21st Century (Hong Kong: Printing Department, 1999). –––– Serving the Community, Sharing Common Goals (Hong Kong: Printing Department, 2000). –––– Building on Our Strengths, Investing in Our Future (Hong Kong: Printing Department, 2001). –––– Capitalising on Our Advantages, Revitalising Our Economy (Hong Kong: Government Printer, 2003). –––– Seizing Opportunities for Development, Promoting People-based Governance (Hong Kong: Government Logistics Department, 2004).

8. Other Government Reports, Documents and Speeches Audit Commission, Reports Nos. 36, 39, 42, 45, 48, 49, www.audit.gov.hk (2001, 2002, 2004, 2005, 2007). Civil Service Branch, Who’s Who in the Administrative Service of the Hong Kong Government (Hong Kong: The Branch, 1991). –––– Human Resource Management (Hong Kong: Government Printer, December 1995). –––– Summary Guide on Civil Service Regulations (Hong Kong: The Branch, 1997). Civil Service Bureau, Civil Service Newsletter No. 39 (September 1997). –––– Progress Report on the Development of an Improved Pay Adjustment Mechanism for the Civil Service, www.csb.gov.hk, 2003. Commerce and Economic Development Bureau, 2008 Digital 21 Strategy, www.digital21. gov.hk (December 2007). Efficiency Unit,The Service Imperative (Hong Kong: Government Printer, 1996).

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Secretary of Housing, Planning and Lands, “Speech to the Lions Club International on the analysis of the property market data,” Press Release, July 31, 2003. Standing Commission on Civil Service Salaries and Conditions of Service, Report No. 1: First Report on Principles and Practice governing Civil Service Pay (Hong Kong: Government Printer, 1979). –––– Report No. 4 (Hong Kong: Government Printer, 1980). –––– The First Report of the Pay Level Survey (Report No. 16) (Hong Kong: Government Printer, 1986). –––– The Pay Trend Survey System (Hong Kong: Government Printer, 1988). –––– Civil Service Salaries Starting Salaries 1999 (Report No. 36) (Hong Kong: Printing Department, June 1999). –––– Report No. 42, www.jccs.gov.hk, January 2008. Standing Commission on Disciplined Services Salaries and Conditions of Service, Third Report of the Standing Committee on Disciplined Services Salaries and Conditions of Service (Hong Kong: Printing Department, 1998).

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Unpublished Dissertations Catron, Gary W., China and Hong Kong 1945–1967 (Unpublished Ph.D. thesis, Boston: Harvard University, 1971). Chan Ka Wing, Ada, A Review of the Non-Civil Service Contract Scheme of the Hong Kong Government (Unpublished MPA diss., Hong Kong: University of Hong Kong, 2008). Chan Yuen Tak-fai, Dorothy, A Study of Transport Policy Formulation in Hong Kong (Unpublished Ph.D. thesis, Hong Kong: University of Hong Kong, 1989). Chan Yin-ling, Linda, A Study of the Discipline Policy in the Hong Kong Civil Service (Unpublished MPA diss., Hong Kong: University of Hong Kong, 2000). Chang Lai-yin, An Analysis of the Impact of Civil Service Reform on Recruitment and Retention in the Hong Kong Police Force (Unpublished MPA diss., Hong Kong: University of Hong Kong, 2008). Chiu Yu-chow, An Analysis of Policy Agenda-Setting in Hong Kong: The Avian Flu Case (Unpublished MPA diss., Hong Kong: University of Hong Kong, 1999). Ko Yuk-ying, Susanna, An Analysis of Performance Pledges and Customer Service in the Hospital Authority (Unpublished MPA diss., Hong Kong: University of Hong Kong, 1995).

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Kue Mei Wah, Karen, Civil Service Reform in Hong Kong: New Appointment Policy (Unpublished MPA diss., Hong Kong: University of Hong Kong, 2001). Kwan Wood-kai, Edward, Public Attitudes towards the Royal Hong Kong Police Force (Unpublished MPA diss., Hong Kong: University of Hong Kong, 1993). Kwok Kai-chiu, Jim, The Performance Management System of the Customs and Excise Department (Unpublished MPA diss., Hong Kong: University of Hong Kong, 1997). Lau Chi-wai, Edwina, The Outsourcing of Police Functions: Options, Prospects and Concerns (Unpublished MPA diss., Hong Kong: University of Hong Kong, 2001). Leung Yin Hung, Joan, State and Society: The Emergence and Marginalization of Political Parties in Hong Kong (Unpublished Ph.D. thesis, Hong Kong: University of Hong Kong, 1999). Ma Siu-hung, A Study of the Policy Advice Mechanisms of the Hong Kong Government (Unpublished MPA diss., Hong Kong: University of Hong Kong, 1998). Ng Siu-ling, Giselle, Accountability in Public Administration: The Case of Hong Kong (Unpublished M.Phil. thesis, Hong Kong: University of Hong Kong, 1996). Ng Suk Han, Christina, The Health Policy Network and Policy Community in Hong Kong: From Concertation to Pressure Pluralism (Unpublished M.Phil. thesis, Hong Kong: University of Hong Kong, 1998). Pang Yiu Nam, Terry, An Analysis of the Legitimization of Police Powers in Hong Kong (Unpublished MPA diss., Hong Kong: University of Hong Kong, 1999). So Kam Tong, Bernie, The Hong Kong Police as a New Paradigm of Policing in a Post Colonial City: An Analysis of Reform Achievement (Unpublished MPA diss., Hong Kong: University of Hong Kong, 1999). Tang Shuk Tak, Karen, An Analysis of the Basic Law Drafting and Consultative Process (Unpublished MPA diss., Hong Kong: University of Hong Kong, 1990). Tsang Wa-chung, A Review of Staff Relations in Relation to Public Sector Reform in Hong Kong (Unpublished MPA diss., Hong Kong: University of Hong Kong, 2007). Ure, Gavin, The Origins of the Hong Kong Government’s Autonomy 1918 to 1955 (Unpublished PhD diss., Perth: Murdoch University, 2007). Wong Lai Sim, Cicada, The Responsiveness and Accountability of the Hong Kong Police Force: A Study of the Police Complaints System and Mechanisms of Control (Unpublished MPA diss., Hong Kong: University of Hong Kong, 2002).

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Academic autonomy, 61, 137, 254, 307, Advisory bodies, 125, 193, 247, 253, 302 321n see also Commission on Poverty, Accountability, 7, 10–11, 13–14, 19–20, Commission on Strategic 22, 26, 30–1, 49, 51–7, 60, 62–66, Development 97, 106, 120, 125–6, 135–6, 139, Agriculture, Fisheries and Conservation 141–2, 145, 212, 218, 223, 235– Department, 74, 96 6, 241, 255, 259–60, 269, 277, Airport Authority, 1, 6, 119–20, 124, 126, 293, 301–2, 305 see also Principal 28, 131, 217–8 see also Privatisation Officials Accountability System; opening of the airport, 217–8 Legislative Council, Statutory Airport Development Steering Committee, bodies: accountability of 217 bureaucratic 7, 10, 19–20, 22, 51, 65–6, Appropriations Bill see Budget 97, 116, 232, 235–6, 241, 251, 255, Architectural Services Department, 74 259, 272, 277, 296, 302 Article 23 of the Basic Law, 12, 15, 17, 33, of the Chief Executive 29–30, 49 38–45, 55, 62, 108, 190, 193, 195, political 9–10, 13, 19–20, 25–27, 29–31, 227, 252, 254–5, 263, 294, 296 47, 49, 52, 54, 56–7, 62, 64–6, 120, Chinese government’s position, 11–2, 235, 293, 301, 305 39 Addiction Treatment Centre Board, 286 critics of the proposed legislation, 40–3 Administrative Appeals Board, 262, 270, demonstrations over proposed 285, 287–8 legislation, 12, 41, 43, 45, 55–6, 82, Administrative Appeals Board Ordinance, 108, 150–1, 178, 242, 247, 252, 294 287 Hong Kong government’s position, 12, Administrative tribunals, 270, 285, 288, 15, 38–40, 43–44, 62, 255 305–6 responses to the consultative document, Administrative grade, 6, 55, 59, 63, 65, 71, 15, 41–2, 62 73, 76–82, 84, 99, 181–2, 185, 295, Article 45 Concern Group see Civic Party 321n, 322n Asian financial crisis 11, 87, 96, 124, 154 educational qualifications, 78–9 Asian games 193, 223 fears of the future, 79 Association for Democracy and People’s political role, 78, 80–82 Livelihood, 243 promotion, 82 Attorney-General 73, 280 Administrative Wing, 74 Audit Commission, 140–1, 144, 224–6, 248, 307n

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Director of Audit, 52, 60, 139, 141–2, expenditure, 158–72, 186–7, 226, 232, 223, 225–6, 228, 302 246, 248, 280 Audit Ordinance, 141, 225 Medium Range Forecast (MRF), 154, Autonomy, 206, 233, 270, 272–3, 293, 300 161–3 of the Hong Kong government, 300 operating account, 87, 153 of the Hong Kong government from principles, 152–4 business, 293 resource allocation exercise, 161–2, of the Hong Kong government from 165–7, 170–1, 179, 203, 209 society, 206 revenue, 156–163 of statutory bodies, 233 Star Chamber, 58, 161–2, 164 of redress institutions, 270, 272–3 Task Force on Review of Public Avian flu 50, 52, 96, 215, 293 Finances, 157 Buildings Department, 74, 276 Bank of China, 41 Banking Ordinance, 127, 130 Capitalism, 5, 8, 18, 85, 290, 308n Bankruptcies, 11 and the Hong Kong government, 5, 8 Banks, 2, 41, 221 “big market, small government”, 3, 12, Bar Association, see Hong Kong Bar 92–3 Association Catholic Church, 91, 219, 267 Basic Law, 5, 10, 12–3, 16–8, 22, 25–39, Catholic Diocese of Hong Kong v Secretary 42, 45–6, 49–50, 52, 57, 61, 63, 69, for Justice, 46 79, 82, 87, 89, 91, 97–9, 107–8, 112– Census and Statistics Department, 74, 241, 3, 127–8, 153, 155, 191, 195, 213, 265, 278 222, 235, 254, 258–9, 265, 289, Central Policy Unit, 59, 167 290–1, 293–95, 299–301 see also Chan, Anson On-sang, 16, 40, 63, 80–1, Article 23; Chief Executive; 116, 138, 217, 291, 294 see also Legislative Council, Judicial review Chief Secretary for Administration amendments to, 10, 16, 52, 301 Chan, K.C., 60 and executive-led government, 46, 213 Chan Pak-fong, Peter, 322n see also ‘Executive-led government’ Cheng, Eva, 60 interpretation of, 13, 36–8, 45–6 Cheung, Anthony B. L., 35 promulgation, 258 Cheung Kin-chung, Mathew, 60 Basic Law Drafting Committee, 27 Chinese government, 7, 10–12, 15–9, 26– Basic Law Consultative Committee, 27–8 30, 32–5, 37, 39–41, 43, 50, 52, 57– Bill of Rights Ordinance, 259 8, 62, 66, 79–80, 86, 91, 112, 119, British government, 6, 8, 18, 28, 38, 79, 85, 123–4, 180, 182–3, 192, 212–3, 233. 121, 152, 180–1, 213, 233, 258 see 235, 239, 258–9, 261, 263, 289–90, also Sino-British Agreement 292–3, 295, 299, 300–1, 311n see Budget, 6, 9, 11, 14, 22, 29–30, 32, 43, 55, also Article 23; Chief Executive; 85, 87, 91, 101, 121, 124, 127, 130, Sino-British Agreement 149–173, 187–9, 197, 199, 201, 225, and the Basic Law, 12, 16, 26–30, 33–4, 232, 248, 280, 293, 298 37, 39, 52, 57–8, 290, 293 accrual-based accounting, 154 attitudes towards constitutional reform, Appropriations Bill, 162, 168–9 16–9, 29, 183, 299–301, 311n consolidated account, 153 Chinese University of Hong Kong, 60–1, deficit, 6, 11, 14, 85, 157, 188, 248, 293, 197 298 Chief Executive, 1, 3, 11–4, 16–8, “envelop” system, 73, 161–162 26–30, 32–5, 38, 40, 43–7, 49, 52,

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54–66, 69, 71–3, 78, 80–4, 87, 90, pay and conditions of service; 96–8, 104, 109, 112–3, 116–7, 136–7, Executive grade; 140, 150, 161–2, 164, 167–9, 176, age structure, 89 190–2, 216, 218, 221–3, 239, 254, core values, 92, 111, 113, 116–7, 237, 262, 272–3, 286, 290–1, 295, 299 241, 264, 293 see also Principal Officials; discipline and conduct, 113–117, 283 Principal Officials Accountability Enhanced Productivity Scheme, 14 System; Tsang Kam-yuen, Donald; expatriates in, 7, 32, 55, 79, 96, 99–100, Tung Chee-hwa 240 accountability, 29–30, 49, 54, 66 grades, 76–82, 87, 100, 103–4, 107, election, 17–18, 27–9, 35, 64, 80, 299, 110, 112, 114, 303 301 neutrality, see Political neutrality electoral college, 12, 16–17, 28–9, 301 Non-Civil Service Contract Scheme, policy address, 31, 34, 58, 82, 87, 112, 88, 101 162, 164, 166–8, 170, 186, 190–1, pensions, 89, 98, 101–2 221, 236, 251–3, 259 performance appraisal, 106, 108, 110–1, powers, 32–5, 52, 62, 69, 136–7, 272 117 relations with the civil service, 49, performance measurement, 252 52–3 permanent secretaries, 53, 82–3 relations with the judiciary, 38 promotions in, 69, 76, 79, 81–2, 95, 97, removal, 30 102, 105, 111, 217, 241 Chief Executive Election Ordinance, 30 ranks in, 53, 76–7, 89, 99, 102, 107, Chief Justice, 30 109–10, 112, 114, 240, 273 Chief Secretary for Administration, 14–6, recruitment, 6, 8, 13–4, 32, 69, 76, 79, 40, 52, 58–9, 63, 71–4, 79, 80–2, 116, 82, 87–8, 95–9, 101–2, 104, 123, 137–8, 143, 181, 217–8, 234, 239, 130, 292, 295, 303 271 reform, 9, 12, 22, 33, 70, 95, 106, 112, China Motor Bus Company, 134 114–5, 119, 212–3, 231–2, 234, 236, Chinese medicine, 193 247, 251, 291, 293–4, 303 Chow, York, 60 size, 13–4, 86–8, 92, 119 Chung, Robert Ting-yiu, 254 staff associations, 56, 90, 96–7, 101–9, Citizen’s Charter, 236 111, 116–8, 180 see also Federation Civic engagement, 193, 208, 255, 304, 306 of Civil Service Unions; Hong Kong Civic Exchange, 191 Confederation of Trade Unions; Civic Party, 28, 312n Trade unions Civil Engineering Department, 321n training, 111–3, 116, 227, 236, 253, Civil Human Rights Front, 15, 43 265, 291 Civil Servants Provident Fund, 101 voluntary retirement scheme, 14, 87, Civil Service, 1, 3, 5–7, 9–14, 19, 22, 101 32–3, 49, 51, 53, 55–6, 62–3, 65–6, women in, 79 69, 71–125, 127, 129–31, 135, 137, Civil Service Branch, 71, 75, 96, 99, 105 139–43, 145, 150–1, 159–60, 164, Civil Service Bureau, 110–114, 116, 224, 171, 173, 179–182, 186, 190, 192, 261, 268, 277, 294, 307n 196, 198, 201, 206–9, 212–3, 222–4, Civil Service Code, 112–3, 117, 303, 305 227, 232–5, 237–9, 248–51, 253, Civil Service Regulations, 33, 113–5 261, 263, 268, 271, 273, 277, 289– Civil Service pay and conditions of 95, 298, 302–6, 307n see also service, 11, 13–4, 32–3, 42, 52, 60, Administrative grade, Civil Service 79, 88–90, 96–8, 100–12, 114–5, 117,

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119, 153, 190, 212, 273, 293, 303, Consumer Council, 60, 264 306 Constitutional and Mainland Affairs Master Pay Scale, 100, 105, 112, 114–5 Bureau, 17, 50, 56, 62–3, 72, 82, 169 Model Scale 1, 14, 104–6 Correctional Services Department, 6, 75, Pay Investigation Unit, 103 276 performance pay, 13, 107–9, 111, 293 Corruption, 7–8, 13, 51, 70, 96, 113–4, pay scales, 105, 107–9 130, 217, 257, 264, 267–70, 283, 287 qualification groups, 104 see also ICAC; Police: corruption Salaries Commission, 103 Court of Final Appeal (CFA), 32, 37, 45–6, Standing Commission on Civil Service 267 Salaries and Conditions of Service, Cross Harbour Tunnel, 126 100, 103–4, 106–9, 303, 306 Cruise terminal, 135, 170, 223, 268 Task Force on the Review of Civil Cultural Revolution, 86 Service Pay Policy and System, 90, Customs and Excise Department, 6, 52, 60, 107–10 69, 75, 98, 208, 249 Civil Service Training and Development Cyberport, 134, 193, 233, 254 Institute, 112, 253 Closer Economic Partnership Arrangement DeGolyer, Michael, 216 (CEPA), 154 Democratic Alliance for the Betterment Coalition Against the Sales Tax, 157 and Progress of Hong Kong (DAB), Code on Access to Information, 259–61 16–7, 26, 29, 35, 44, 52, 56, 59, Colonial Secretariat, 70–1, 181, 232 63–4, 135, 160, 189, 194–5, 244, Commission on Poverty, 133, 193, 341n 295, 298 Commission on Strategic Development, 19, Democratic Party 18, 28, 35, 40, 56, 63, 193, 255 158, 160, 189 Commissioner for Administrative Dengue fever, 203 Complaints, see Ombudsman Department of Health, 56, 74, 96, 203, 216, Commissioner for Administrative 236, 239, 245–6, 285 Complaints Ordinance, 265 Director of Health, 57, 215 Commissioner for Resettlement, 122 Development Bureau, 72, 74 Communist Party, 20, 86 Directors of Bureaus, 11, 14–5, 52–3, Community Chest, 129, 133 58–9, 62–3, 69, 73, 78, 81–4, 98, Companies Registry, 123 161–4, 68, 176, 196, 222, 295, 301, Complaints Against Police Office (CAPO), 305, 307n see also Principal 169, 267, 269–70, 278–83, 285 Officials; Principal Officials cases, 281–3 Accountability System investigative procedures, 279–81 Disability Discrimination Ordinance, 261 powers, 281–3 District Boards, 50–1, 210, 243, 264 Comprehensive Social Security Assistance District Councils, 12, 51, 84, 302 (CSSA), 9, 166, 171, 186–90, 198–9 District Watch Committee, 9–10 Consultation, 9, 14–5, 27–8, 39–44, 50–1, Disneyland, 124, 134, 193, 223 53, 62–4, 70, 84, 90, 96, 98–100, Domestic Violence Ordinance, 185, 242 108, 110–1, 144, 150, 157, 168, 175, Dykes, Philip, 286 177–8, 182–4, 186, 192–5, 206, 208–13, 219–21, 228, 241, 252–6, E-government, 249, 251 264, 280, 295, 301 Economic Analysis and Business documents, 39–42, 50–1, 53, 62–3, 96, Facilitation Unit, 74 98–100, 110–1, 144, 157, 253, 259, Education and Manpower Bureau, 88, 197, 280, 305 224

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Education Commission, 219, 234 167–9, 171–2, 176, 181, 295 see also Education Convergence, 220 Leung Kam-chung, Antony; Education Department, 76, 128, 209, 211, Tang Ying-yen, Henry; 225, 237 Tsang Chun-wah, John Director of Education, 225 Fire Services Department, 6, 73, 75–6, 237, Secondary School Place Allocation 249, 303 (SSPA), 262 Food and Environmental Hygiene Education policy, 61, 219 Department, 51, 74–5, 276 Efficiency, 78, 80, 87, 92, 95–7, 104, 110– Food safety, 50, 167, 268 1, 117, 145, 149, 225–6, 228, 231–7, Friedman, Milton, 8, 85 239, 241, 243, 245, 247–53, 255–6, Frontier, 189 265, 291, 293, 303 Efficiency Savings Exercise, 87 Garcia, Arthur, 272 see also Ombudsman Efficiency Unit, 74, 92, 97, 117, 234, 237, Ghai, Yash, 25 248, 250–2 Godber, Peter, 8 Elections, 10–1, 16–21, 27, 31–2, 44, 49, Goods and Services Tax (GST), 14, 157, 50–1, 64, 160, 183, 231, 268, 295, 168, 178, 193 299, 305, 310n Government Land Transport Agency, 321n Electrical and Mechanical Services Global financial crisis, 103, 154, 167, Department, 74, 123 297–8, 301 Employees Retraining Board, 186 Government Logistics Department, 74 Enhanced Productivity Scheme, see Civil Green Papers, 9, 182, 193 service Gross Domestic Product (GDP), 4, 10, Environmental Protection Department, 74, 153–6, 161, 233, 308n 124, 164–5 Guangdong, 215 Equal Opportunities Commission (EOC), 7, 123, 144, 259, 261, 335n Harbour Fest, 223, 226 Establishment Branch, 71 Harbour reclamation, 195, 221, 296 Executive Council, 29, 34–5, 38–9, 43, Hay Management Consultants, 142 52–3, 55, 62, 64, 80, 106, 143, 150, Health policy, 2, 158–60, 179, 211, 233, 161, 176, 181–2, 185, 189, 191 244, 246 Executive grade, 78, 102, 303 Healthcare reform, 8, 14–5, 122, 158–60, ‘Executive-led’ government, 46, 51, 213, 193, 195, 245–6, 304 224, 232, 247, 252, 300, 305 Highways Department, 75, 248 Ho, Albert Chun-yan, 28 Falun Gong, 39–40, 43, 254 Ho, Cyd, 272 Family Status Discrimination Ordinance, Home Affairs Bureau, 72, 75, 144, 227, 261 263, 302 Fang, Christine, 188 Hong Kong Alliance in support of the Federation of Civil Service Unions, 55 Patriotic Democratic Movement in Federation of Trade Unions, 35, 238 China, 40 Finance Branch, 85, 145, 152–3, 182, 234, Hong Kong and Macao Affairs Office, 17 236, 239 Hong Kong Bar Association, 38–40, 280 Financial Services and the Treasury Hong Kong Chinese Civil Servants Bureau, 158, 161–5, 168, 225 Association, 134 Financial Secretary, 1, 4, 14–5, 43, 52–5, Hong Kong Confederation of Trade 58–9, 62, 71–4, 79, 82, 85, 120, Unions, 90, 120, 130 123–4, 130, 133, 143, 152–64,

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Hong Kong Council of Academic 133, 233, 257, 264, 267–70, 277, Accreditation, 130 280, 283, 288, 303, 305, 307n Hong Kong Council of Social Service, 121, cases, 114, 217, 268 133, 138, 186, 188 complaint-handling, 264, 269 Hong Kong Housing Society, 267 community relations, 268–9 Hong Kong Institute of Education (HKIEd), corruption prevention, 268 60–1, 137, 193, 197, 307n Hong Kong Ethics Development Hong Kong Medical Association, 245 Centre, 269 Hong Kong Monetary Authority, 127, 130, integrity management programmes, 143 112–3, 116, 303, 305 Hong Kong Observatory, 74 operations department, 268 Hong Kong People’s Council on Public organisation, 267–9 Housing Policy, 243 powers, 113, 269 Hong Kong Senior Government Officers Independent Police Complaints Council, Association, 322n 194, 279–81, 283 Hong Kong Sports Development Board, Information Services Department, 75 140, 144, 302, 344n Information Technology policy, 134, 249 Hong Kong University of Science and Innovation and Technology Commission, Technology, 193, 197–8, 344n 74 Hong Kong Tourism Board, 137, 140, Integrated Call Centre, 250, 252, 277 144–5, 302 International Covenant of Civil and Hong Kong Transition Project, 41 Political Rights, 45, 258, 263, 279 Hospital Authority, 1, 6, 56–7, 76, 119, Inland Revenue Department, 74, 236, 284 122, 126, 128, 131, 133, 137, 144, Intellectual Property Department, 74 204, 212–3, 215–6, 233, 236, 240, Interpretation and General Clauses 244–7 Ordinance, 136 Hospital Authority Review Panel, 56, Invest Hong Kong, 74, 135 215–6 Ip Suk-yee, Regina, 17, 40, 43, 55 see also Housing Authority, 6, 119, 121–2, 124, 126, Secretary for Security 131, 137–8, 145, 217, 237, 243, 276, 321n Jiang Zemin, 80, 218 complaints, 245, 276 Jockey Club, 129, 133, 140, 203 tenants, 209, 211, 242–4, 249 Joint Declaration on the future of Hong waiting lists, 242–4 Kong see Sino-British Agreement Housing Department, 75, 92, 122, 134, 217, Journalists Association, 260 237, 243, 249, 276, 321n, 325n Judicial review, 45–6, 62, 90, 137, 220, re-organisation, 92, 134, 321n, 325n 262, 270, 286, 307n Housing Bureau, 72, 75, 204 Judiciary, 1, 30, 32, 38, 70, 104, 150, 262, Housing policy, 204, 220, 242–5 273, 287, 289, 294 Home Ownership Scheme, 242–3 independence of, 38 pressure groups, 243 Hu Jintao, 44 King, Ambrose, 149 Kingdon, J. W., 150, 176–7, 190, 192, 194 Immigration Department, 75, 239, 276 Kowloon Canton Railway Corporation Immigration Tribunal, 286 Ordinance, 122 Independent Commission Against Kowloon Canton Railway Corporation Corruption (ICAC), 1, 3, 8, 11, 55, (KCRC), 3, 122, 128, 131, 237, 271 60, 62, 96, 103, 112–6, 126, 130, Kowloon Riots, 1956, 10

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Labour Department, 75, 186, 237–9, 321n crisis of, 21, 292 Labour Tribunal, 286–7 deficit, 21–2, 231, 235, 239, 255, 257, Lam Cheng Yuet-ngor, Carrie, 60, 287–90 264, 267, 270, 287–8, 292, 299, 304 Lam Sui-lung, Stephen, 38, 60 see also defined, 235, 291 Secretary for Constitutional Affairs performance legitimacy, 122, 150, 218, Lands Department, 70, 74, 226, 276 231–2, 235, 296 Lands Registry, 74, 123 Lehman Brothers, 221, 296 Lands Tribunal, 287 Leisure and Cultural Services Department, Lau, Rita, 59 51, 75, 88, 203, 277 Law Chiu-fun, Fanny, 61–2 Leong, Alan, 17 Lee Cheuk-yan, 120, 145 Leung, Chin-man, 116 Lee Chu-ming, Martin, 27, 40 Leung Kam-chung, Antony, 43, 53, 55, 153 Lee Siu-kwong, Ambrose, 60 Leung Kwok Hung and Another v Chief Legal Aid Department, 45, 75 Executive, 46 Legal aid, 45, 235, 259 Leung Ming-yin, 115 Legislative Council, 7, 9–13, 15–8, 20, Leung TC William Roy v Secretary for 26–31, 34–7, 41–5, 47, 49, 51–7, Justice, 46 62–6, 69, 78–9, 83, 87, 90, 96–7, Letters Patent, 26, 113, 127 99, 106, 108, 115–6, 119–25, 127, Li Kwok-cheung, Arthur, 68, 197 130–1, 133, 135–6, 138–44, 157–8, Li Kwok-po, David, 62 160, 162–4, 167–9, 171, 176, 179, Liberal Party, 16–7, 35, 43, 52, 89, 97, 157, 181–3, 188–9, 191–2, 194–6, 198–9, 160, 189, 295 206, 209, 213, 215, 217–8, 225–6, Loh, Christine, 191 255, 259, 262–7, 269, 271–3, 276–7, Lump Sum Grant scheme, 91, 133, 138, 279–81, 284–6, 288–90, 292–6, 299– 145 302, 305 see also Accountability; Luk, Bernard, 60 Principal Officials Accountability System Ma Si-hang, Frederick, 54 composition, 13, 16–7, 31 Macau, 223 elections, 16–8, 27–8, 31, 44, 51, 299 MacLehose, Sir Murray, 6, 86, 102, 150, functional constituencies, 26, 31–2, 152, 177, 179–80, 182, 184, 218, 299–300 232, 244, 290 Finance Committee, 106, 127, 162, MacLeod, Sir Hamish, 167 164, 168, 181 Mandatory Provident Fund, 89 House Committee, 57 Marine Department, 75 panel on Constitutional Affairs, 55 Mass Transit Railway Corporation panel on Home Affairs, 262 (MTRC), 3, 122, 124, 126, 128–9, panel on Financial Affairs, 130 131–2, 138, 158, 236, 271 panel on Public Service, 127 McKinsey reforms, 6, 71, 181, 209, 232–4, powers, 20, 26, 30–1, 39 256 Public Accounts Committee, 20, 139–41, Medical Council of Hong Kong, 284–5, 302 288 Secretariat, 265 Mental Health Review Tribunal, 286 Select Committees, 55–7, 115, 215–6, Morris, Paul, 60–1 218 redress system, 264–7 National People’s Congress (NPC) Legitimacy, 21–2, 33, 36, 38, 44–6, 64, (Standing Committee), 17–8, 26, 28, 121–3, 178–9, 185, 218, 220, 235, 37, 55, 57, 259, 293 239, 255, 257, 296–301, 304–6

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National Security (Legislative Provisions) 247, 249, 253–4, 259, 267–8, 273, Bill, 42 see also Article 23 281, 303 see also Public Order Neighbourhood Watch, see Police Ordinance, Article 23, Complaints New China News Agency, 18, 376 Against the Police New Public Management, 1, 3, 95, 102, Commissioner, 52, 60, 77, 98, 208, 111–3, 117, 303 240, 259 New World First Bus Company, 134 complaints see Complaints Against New Territories, 6, 8–9, 70, 179, 209, 214, Police Office; Independent Police 226 Complaints Council; Police Ng Ka-ling v Director of Immigration, 37 Complaints Committee Ng, Margaret, 41 corruption, 7–8, 70, 114, 233, 267–8, 283 Obscene Articles Tribunal, 287 expatriates in, 7, 32, 96, 240 Office of the Telecommunication Authority, Junior Police Call, 240 74, 123 neighbourhood policing, 240 Official Receiver’s Office, 74 OMELCO police group, 279 Ombudsman, 2–3, 7, 11, 20, 116, 123, 218, organisation, 77 228, 250, 257–8, 250, 257–8, 260, pay scale, 105 262, 264–7, 270–8, 286, 288 performance pledge, 238 complaints to, 274–6 ranks in, 77, 112, 240 direct investigations, 271, 274, 277–8 recruitment, 88 INCH system, 274–7 responsiveness, 240–2 jurisdiction, 270–3 size, 75 Ombudsman Ordinance, 273 Service Quality Wing, 240 OMELCO (Office of Members of the vision statement, 241, 349n Executive and Legislative Council) Police Complaints Committee, 279 see Legislative Council; Police Police Force Council, 104 “One country, two systems”, 27, 37, 290, Policy, 1–3, 5–9, 12–5, 19–22, 28–9, 31, 300 33–4, 36, 45–6, 50, 52–3, 57–62, Outsourcing, 84, 87, 90–2, 101, 105, 112, 64–66, 71, 73, 76, 78–87, 93, 99, 129, 134–5, 145, 227 116, 119, 121–3, 128, 131, 137–8, 142, 145, 147–228, 231–5, 240, Patient’s Charter, 245 242–4, 246–9, 251–3, 255, 259, Patten, Chris, 10, 79, 180, 183, 232, 235–6, 263–7, 269, 272, 285, 287, 289, 292, 239–40, 243–4, 247, 256, 259, 265, 294–8, 300–1, 303–6 see also Chief 290 Executive: policy address; Civil Pearl River Delta, 223 Service: Policy Bureaus; Education Penny stocks incident, 54, 83 see also Ma policy; Health policy; Housing Si-hang, Frederick policy; Transport policy; Welfare Performance appraisal, see Civil Service policy Performance pledges, 10, 212, 236–9, 248, formulation, 8, 12, 14, 20, 22, 53, 76, 259–60, 265 78, 82–3, 147, 150–1, 175, 177, 181, Personal Data (Privacy) Ordinance, 261 189, 193, 196, 201, 208, 212, 222, Planning Department, 74, 219 294–5, 301, 303–4 Po Leung Kuk, 9, 85, 121, 133 ideational, 196, 206, 222–3 Police, 6–8, 10, 32, 40, 42–3, 52, 60, 70, implementation, 6, 8–9, 14, 22, 45, 64, 75–7, 88, 96–9, 102, 104–5, 112, 150–1, 199, 201–28 114, 169, 207–8, 233, 236, 240–2, incremental, 71, 85, 163, 170, 177, 179, 181, 205–7, 218

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rational, 149–51, 173, 175, 177–8, Printing Department, 321n 184–7, 189–91, 194, 196, 199–200, Privacy Commissioner, 3, 7, 259, 261–3 206, 208–10, 213, 223 Privatisation, 76, 84, 87, 90, 119–20, 124, symbolic, 177, 180, 183–4, 200, 206, 126, 145 210–4, 217–9 Productivity Commission, 126 Policy instruments, 202–5 Professional Teachers Union, 61 Political appointments, 62–3, 82, 84, 142, Property prices, 11, 170 144 see also Principal Officials; Protection of Data Ordinance, 78 Deputy Directors of Bureaus, 49, 56, Provisional Legislative Council (PLC), 31, 62, 295, 301 37, 45, 266, 325n Political Assistants, 49, 56, 62–5, 84, Public Accounts Committee see Legislative 116, 295, 302 Council Political neutrality, 6–7, 32, 62, 70, 81–2, Public Officers Pay Adjustment Bill, 89 92–3, 116, 291–2, 294, 303 Public Opinion Programme, 42, 227 Political parties, 16, 18, 34–6, 43, 69, 125, Public Order Ordinance, 259, 281 150, 158, 160, 167, 173, 175–6, 182, Public/private partnerships, 92, 145, 204–5, 190, 192, 196, 199, 206, 220–1, 224, 226–7 243, 253, 295, 300, 304–5 see also Public Service (Administration) Order, Civic Party; DAB, Democratic Party; 259, 281 Frontier, Liberal Party Public Service (Disciplinary) Regulations, Post Office, 74–5, 88, 123–4 71, 114 Precious Blood Jubilee School, 183, 209, Public Service Commission (PSC), 7, 71, 211 98, 101–2, 110–1, 114, 306 Preliminary Working Committee, 32 Press, 41, 145, 163, 199, 253–4, 287 Qian Qichen, 80 see also Journalists Association Qiao Xiaoyang, 18 freedom of, 41, 258–9 opposition to Article 23, 41 Race Discrimination Ordinance, 194–5, Pressure groups, 15, 36, 42–3, 125, 150–1, 262–3 161, 173, 175–6, 180, 182–3, 188– Radio Television Hong Kong, 74, 123 90, 192–3, 196, 199, 202–3, 206, 211, Rating and Valuation Department, 74 213, 221–2, 228, 233, 243–4, 246–7, Regional Services Department, 12, 50–1, 253, 262, 267, 269, 294, 296, 299 64, 75n, 96 Prevention of Bribery Ordinance, 8, 96, Registration and Electoral Office, 74 113–5, 202 Registration of Persons Tribunal, 286 Principal Officials, 12–4, 20–1, 27, 29, Regularity audits, 225 34–5, 43, 49, 52–6, 58–66, 79, 84, Representative government, 26–7, 50, 233, 136, 144, 150, 164, 168, 206, 294 290 accountability of, 49, 53, 58, 60, 65–6, Right of Abode, 144, 168, 293, 301, 305 mainlanders born of Hong Kong appointment, 58–60 parents, 13, 33, 36–8, 266–7, 286, Code of Practice, 62 294 removal of, 53–7, 61–2 political appointments, 63–4 Principal Officials Accountability System, Principal Officials, 63 12–4, 20, 22, 34, 49, 51–2, 57, 59, senior civil servants, 32, 98 64–6, 71, 73, 78, 80–4, 93, 98, 127, see also Court of Final Appeal 143, 161, 192, 196, 208, 293–5, 298 Riots, 7, 10, 86, 121, 179, 182, 270 criticisms of, 53–7, 64–6 see also, Kowloon Riots, 1956; introduction of, 52 Star Ferry Riots, 1966

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Royal Instructions, 26, 127 Social Welfare Department, 75–6, 86, 88, Rule of Law, 6–7, 33, 38, 44, 57, 70, 95–6, 133, 138, 164–6, 188, 199, 237 116, 233, 235, 258, 270–1 Societies Ordinance, 183–4 Society for Community Organisation, 168, “Save Lamma”, 219–20 262 Scott, WD and Co., 122 Society for the Protection of the Harbour, Secretariat on Civil Service Discipline, 114 45, 220 see also Civil Service: discipline Staff Associations, see Civil Service: Secretary for the Civil Service, 53, 55–6, unions 82, 90, 97, 106–7, 109, 115, 164 Standing Commission on Civil Service Secretary for Constitutional Affairs, 38, 53, Salaries and Conditions of Service 57, 60, 143, 169, 255 see Civil Service Pay and Conditions Secretary for Education and Manpower, of Service 60–1, 226 Star Chamber see Budget Secretary for Health, Welfare and Food 43, Star Ferry riots, 1966, 7, 10, 86, 121, 179, 57, 60, 62, 189, 215–6, 285 182 Secretary for Home Affairs, 59, 140, 262 Statutory bodies, 1, 3, 6–7, 11, 50, 73, Secretary for Justice, 1, 40, 46, 52–3, 59, 79, 86–7, 119–20, 123, 125, 136–45, 71–2, 74, 79 154, 185, 215–6, 218, 236, 240, Secretary for Justice v Ocean Technology 246–7, 263, 271–2, 275, 277–8, 302, and Others, 46 accountability of, 120, 136–9 Secretary for Planning and Lands, 141, 143 boards, 91, 125, 133, 136–9, 144, Secretary for Security, 17, 40, 42–3, 55, 60, 246–7, 253, 302, 334n 169, 280 Suen Ming-yeung, Michael, 60 Secretary for Transport, 209 Sutherland Report, 197–8 Security Bureau, 72, 75–6, 254, 280 Szeto Wah, 27 Senior Non-Expatriate Officers’ Association, 55 see also Hong Kong Tai, Alice, 272 see also Ombudsman Senior Government Officers Tang Ying-yen, Henry, 59, 154 Association Target-based management, 87 “Serving the Community”, 10–1, 86, 116, Tax, 1, 5–7, 14–5, 32, 55, 85, 121, 126, 251, 259 131, 153, 155–8, 160, 168, 178–9, Severe Acute Respiratory Syndrome 193, 195, 203–4, 209–10, 221, 246, (SARS), 11, 43, 45, 56–7, 87, 135, 249, 297, 307n see also Budget; 154, 170, 190, 215–6, 223, 246 Goods and Services Tax panel of experts, 56–7 profits, 157 Select Committee on SARS, 55–7, 115, salaries, 155–7 215–6, 218 Taxi drivers, 8, 40, 209 Sewage Services, 123, 132 Television and Licensing Authority, 74 Sex Discrimination Ordinance, 261 Territory Development Department, 321n Sino-British Agreement (1984), 5, 10, 27, Thynne, Ian, 26, 129 32, 99, 177, 211, 258, 290–1, 300 Tien Pei-chun, James, 43, 89 Small Claims Tribunal, 287 To Kun-sun, James, 279–80 “Small house” policy, 226 Town Planning Board v Society for the So, Andrew, 272, 275 see also Ombudsman Protection of the Harbour, 45 Soccer betting, 194–5, 203–4 Trade and Industry Department, 74 So Kam-leung, Gregory, 63 Trade Development Council, 126, 128

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Trade unions, 9, 35, 41, 43, 56, 90, 119–20, Water Supplies Department, 74, 224, 237, 183–4, 189, 219, 238, 258 284 Trading Funds Ordinance, 123 Welfare policy, 8, 86, 121–2, 132, 158–9, Transport Complaints Unit, 284 171, 179, 187, 189–90 Transport Department, 75, 138, 209, 236, West Kowloon Cultural District, 92, 115, 276, 284 134–5, 170 Transport policy, 209–10 White papers, 9, 193, 243 Tsang Chun-wah, John, 59, 160 Wilson, Sir David, 183 Tsang Tak-sing, 59–60 Women’s Commission, 128 Tsang Yam-kuen, Donald, 3, 14, 17, Wong Kin-chow, Michael, 262 29, 35, 58–9, 61–2, 65, 73, 78, 82, Wong Wing-ping, Joseph, 55–6 see also 84, 90, 93, 109, 117, 119–20, 124, Secretary for the Civil Service 135, 144–5, 151, 167, 178, 200, Wong Yan Lung, 59 see also Secretary for 206, 219, 221, 223–4, 252–3, 255, Justice 291, 295–6, 299–302, 304–5 World Health Organisation, 215 see also Chief Executive World Trade Organisation, 242, 281 Tsang Yok-sing, Jasper, 64 Wu, Anna, 262, 288 Tung Chee-hwa, 28, 34–5, 43–4, 49–50, 57, 62, 65, 73, 80, 82, 91, 96, 109, 119, Xi Yang, 41 214, 222, 247, 251, 254, 290, 292, Xu Jiatun, 26 295, 297 see also Chief Executive election, 28, 35 Yau Tang-wah, Patrick, 60 popularity, 28, 254 Yeoh Eng-kiong, 56 relations with political parties, 35, 295 Yeung Sum, 158 resignation, 57 Youde, Sir Edward, 183 Tung Wah group, 9, 85, 121, 133 Yu Chung-yin, Patrick, 262 Yue Chung-yee, Denise, 60 Unemployment, 11, 87, 117, 120, 157, 169, 186–9, 290 Zen, Cardinal, 91 University Grants Committee (UGC), 73–4, Zhou Nan, 18 128, 197–9, 307n Zhuhai, 223 Urban Council, 6, 12, 49–51, 64, 96, 122, 172, 193, 264 Urban Services Department, 12, 50 United Nations, 259, 263, 279–80 University of Hong Kong, 42, 254, 268 Urban Renewal Authority, 137, 139, 141, 143, 267 Urban Renewal Authority Ordinance, 137, 139

‘Value for money’ audits, 4, 85, 92, 141, 152, 172, 224–5, 231, 234 Vedung, Evert, 202 Voluntary retirement scheme, see Civil Service Voluntary welfare organisations, 126, 132–3

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