Thursday, November 26, 2015   

Maiden policy address

Neil Western

Thursday, October 09, 1997

Full text of Tung Chee-hwa's speech

Madam President,


1. To the Members of this Council, and to all citizens of Hong Kong, I

now deliver the first Policy Address of the Government of the Hong

Kong Special Administrative Region of the People's Republic of China.

2. On 1 July 1997, Hong Kong was reunited with China. We the people of

Hong Kong have begun to write our own history. Each step we take today

will set our course for decades to come. Clearly and constantly

remembering the deep significance of 1 July, we must work to build

Hong Kong for ourselves and for future generations: a Hong Kong that


is civilised, prosperous, stable and democratic, filled with a new


3. Taking stock of the situation around us, for more than a century

conditions have not been better or more promising for our country than

they are today. After nearly twenty years of reform, China's

remarkable achievements are recognised all around the world. The 15th

Party Congress under the leadership of President Jiang Zemin has just

set out the goal of building China into a major power by the middle of

the 21st Century. Our country has bright prospects from which Hong

Kong is sure to benefit. Hong Kong has finally broken free from the

psychological constraints brought about by the colonial era. We should

have the courage to set aside past modes of thought and plan Hong

Kong's long term future with new vision.

4. The world economy is undergoing a tremendous transformation. It has

entered an era of increasingly open, free and borderless competition.

Rapid developments in information technology will change the way

mankind works and lives. Hong Kong now faces the challenge of the

information age. We must look to new concepts with which to assess our

competitiveness and set new courses for development.

5. Hong Kong is indeed fortunate. We have incomparable advantages: a

high degree of autonomy under "One Country, Two Systems"; abundant

financial reserves; social and economic systems that work well; a

sound, comprehensive legal system; we are the southern gateway to

China and an international financial, trade and shipping centre. Our

future economy will also be strongly supported by the rapid

development in China.

6. As China's economy, culture and spirit develop and as the world

continues to progress, Hong Kong can either stand by passively,

content with what we have achieved, or ride the wave of opportunity

and go forward, adding new dimensions and vibrancy to our lives. I

believe that the people of Hong Kong will rise to the challenge of

this brave new era.

One Country, Two Systems and Hong Kong

7. Hong Kong's reunification with China under the "One Country, Two

Systems" concept requires us to appreciate and accept one practical

and profound truth: Hong Kong's prosperity and stability are closely

linked with those of the Mainland. Also, Hong Kong and China share the

same fundamental interests. This is the basis for successfully

implementing "One Country, Two Systems`'. It is also the starting

point for the SAR Government when formulating policies for our

relationship with the Mainland, and strategies for Hong Kong's long

term development.

8. "One Country, Two Systems" is a well thought out political

concept. Understanding the relationship between "One Country" and

"Two Systems", and handling that relationship properly, is

fundamental to the successful implementation of the concept. "Two

Systems`' enshrines Hong Kong's practical and long term interests.

Naturally we will do everything to preserve that. At the same time, we

have to realise that "Two Systems`' has been made possible by the

deliberate choice of the Central Government, arising from its

consideration of the fundamental interests of the whole country,

including those of Hong Kong. Simply put, emphasising the "One

Country" concept and implementing "Two Systems" protects the

interests of China and Hong Kong. When we truly recognise the

significance of "One Country" and "Two Systems" we will be able to

find the way forward and will be well able to handle the relationship

between Hong Kong and the Central Government, and between Hong Kong

and the Mainland.

9. The policy of reform and opening up in the Mainland has given new

energy to Hong Kong's economic development. In our daily lives, we

enjoy the benefits of our country's rapid economic development. In

recent decades, Hong Kong and the Mainland have established broader

and closer relationships in many areas. Whereas previously they had

mainly been confined to the non-governmental level, with reunification

and with government support, the relationship between Hong Kong and

the Mainland should flourish comprehensively in all fields such as the

economy, finance, trade, transport, culture, education, science and

technology, tourism and sports.

10. In terms of the overall economic development of the SAR and the

Mainland, prospects are bright. Strengthening economic co-operation

with nearby provinces and cities is of particular importance to the

future development of Hong Kong. Building on past co-operation, the

SAR Government and the relevant mainland authorities have agreed that

the "Hong Kong and Mainland Major Infrastructure Projects

Co-ordinating Committee" be re-established to handle a number of

cross-boundary infrastructure projects between Hong Kong and

Guangdong. It will conduct in-depth studies on specific projects, such

as the Western Corridor, the Zhuhai Lingdingyang Bridge, the Tonggu

Channel, air traffic control co-ordination between the new airport and

the Pearl River Delta, the Lok Ma Chau and Huanggang boundary

crossings and others. Furthermore, in order to strengthen

comprehensively our regional co-operation with Guangdong Province, the

SAR Government and the Guangdong Provincial Government, in conjunction

with relevant Central Government departments, will establish a high

level framework to study and co-ordinate major issues such as

infrastructure, environmental regulation, supply of non-staple foods,

water supply, social welfare, business investment and the speeding up

of the flow of passengers, traffic and freight across the border,

enabling co-operation between Hong Kong and Guangdong to rise to new


The Basic Law

11. The Basic Law is the constitutional law of the Hong Kong Special

Administrative Region. It gives solemn and inviolable legal protection

for the "One Country, Two Systems" concept. The Basic Law lays down

clearly the rights that the Central People's Government grants to Hong

Kong for the exercise of a high degree of autonomy; stipulates that

Hong Kong shall adopt social, economic and political systems different

from those in the Mainland; safeguards the lifestyle and rights to

which the residents of Hong Kong are accustomed; and defines the

duties of the residents of Hong Kong. We are the freest and most

vibrant economy of our time because Hong Kong has always practised

free enterprise and free trade, insisted on prudent financial

management policies and keeping a low taxation system, upheld the rule

of law, and placed emphasis on an efficient, executive-led government

and a quality oriented civil service. All these factors are

safeguarded in the Basic Law. It is, consequently, very important to

the operation of Hong Kong's society that we understand the Basic Law.

The SAR Government will set up a steering committee under the

chairmanship of the Chief Secretary for Administration to make plans

for education and promotion programmes on the Basic Law, and to

co-ordinate the efforts of government bodies and all sectors of the

community in this work.

Outlook on Development

12. To promote the well being of the people is the most fundamental

task of a responsible government. In the increasingly open and

competitive world market, all governments will have to maintain the

economic vitality of the community as a whole to create rising

prosperity. The law of the market is simple and clear. Whoever

achieves lower costs, higher efficiency and better quality, and

therefore adds higher value to products, will succeed, otherwise they

will be left behind. My Administration therefore has to plan with

specific focus on adding value to our economy, and seriously

considering our ability to compete in the world market.

13. Hong Kong's economic restructuring and the relocation of

industries to the Mainland make us realise that low-wage manufacturing

and services can no longer fit in with Hong Kong's economic

development. Our high standard of living relative to our neighbours

means that we cannot derive competitive advantage from wage costs. It

is impractical to attempt to maintain competitiveness by driving down

incomes. This would not protect our overall interests. The invisible

hand of market forces has already pointed out that the way forward is

to develop high value-added industries and services. Only through

business that adds high value can Hong Kong's people enjoy higher

incomes and better lives. Only by that means can we solve the poverty

problem of the lower income group once and for all.

14. The SAR Government encourages enterprises to develop into higher

value-added activities. Hong Kong's ability to reach this goal depends

mainly on the number of our citizens who have the ability to enter

these fields. We must, therefore, provide every citizen with the

opportunity to receive quality education so that they master the

skills needed to participate in the new economy, to create wealth for

themselves and for Hong Kong. Next we must develop a quality

environment that will help to retain our qualified professionals and

to attract talent from all over the world. This makes the provision of

good and affordable housing and a quality living environment, together

with a variety of cultural and sporting activity, necessary additions

to a sound legal system and free enterprise policies.

15. It will take a long time to train all our citizens to equip them

for careers in high value-added business. For those citizens who have

been displaced in the course of Hong Kong's economic restructuring in

recent years, it is incumbent on the SAR Government to help them. We

also have to consider the question of our population growth, which has

been increasing at 2 per cent annually. We must set the creation of

new jobs as our main goal and continue to develop and provide

employees retraining schemes to help our citizens find employment and

adapt to new jobs.

16. Hong Kong's development strategy will be based on two principles,

a free market economy and a prudent fiscal policy. We are also

committed to maintaining a sound legal system. Together with our

emphasis on adding value, these principles will uphold Hong Kong's

competitiveness, maintain the lifeblood of Hong Kong's economic

development, and protect the interests of every citizen. As this is an

important issue with far reaching consequences, the SAR government

will set up a commission on strategic development. I will be the

chairman, and members of the commission will include government

officials, members from industrial, commercial, financial and grass

roots sectors, and also academics. It will be tasked to conduct

reviews and studies on our economy, human resources, education,

housing, land supply, environmental protection, and relations with the

Mainland, to ensure that our resources are well-used, that we keep up

with world trends in competitive terms, and that we maintain the

vitality of Hong Kong's economic development.

The Programme

A. A Better Business Environment

17. If we are to build better homes, improve transport, improve

education, care for the elderly, or brighten up life in our city, we

must maintain Hong Kong's economic vitality. My Administration will

strive to improve the environment for business in Hong Kong so that

everyone has the opportunity to prosper through their work and so

contribute to the common prosperity. Our efforts will be directed to

increasing our external competitiveness, increasing friendliness to

business within Hong Kong and to promoting a healthy competitive

environment. We will do everything to remove obstacles and constraints

to business development. We will give the private sector freedom to

set its own direction, to explore and to seize opportunities.

18. Hong Kong gains extensive benefit from the experienced and dynamic

international business community that has established itself here. I

welcome their contribution. We will continue to pay close attention to

their requirements and to all the factors that help make Hong Kong an

attractive place for them.

A Business Friendly Environment

19. Hong Kong already has one of the most business friendly tax

regimes in the world. Our intention is to keep the tax regime simple,

predictable and competitive. With these principles in mind, the

Financial Secretary is reviewing the system of profits tax. He will

determine and announce any changes to this, or to other tax

arrangements in the Budget next year.

20. As well as paying attention to the effects of taxes, we will put

under critical scrutiny the costs that Government imposes on business

by the regulatory and licensing framework and the efficiency of its

services. The Business and Services Promotion Unit is working closely

with the private sector to cut red tape, reduce costs of compliance

and improve services. A one stop centre for business licence

information has just been set up. On-line applications for certain

licences through the Internet will be accepted in 1998.

21. To companies operating out of Hong Kong, the negative impact of

rents and inflation on business costs is a concern. Although inflation

is now down to its lowest level for ten years, our competitiveness has

been eroded. Many of the programmes that I am setting out in this

address are drawn up with this in mind. My Administration will do its

best to help reduce business operating costs and maintain Hong Kong's

competitiveness as a business and financial centre.

Small Business

22. 98 per cent of Hong Kong's businesses, employing about two thirds

of the workforce, are small enterprises. We have set up a Small and

Medium Enterprises Committee to address their specific concerns. To

help small enterprises raise capital, we will support the Stock

Exchange's study into establishing a Venture Board. We have set aside

$500 million to establish a pilot Credit Guarantee Scheme to help

small and medium enterprises seek loans from commercial banks to

finance pre-shipment activities. Details of such a scheme are being

worked out and we hope to bring it into operation as soon as possible.

Financial Services

23. The last decade saw extraordinary growth in Hong Kong's financial

services industry. Its contribution to our GDP has increased by over

500 per cent. We are now the world's fifth largest banking centre and

sixth largest securities market. We are one of Asia's leading

insurance and fund management centres. This is an industry that has

very strong prospects for the future, prospects that will be enhanced

by recent decisions taken by the 15th National Congress of the

Communist Party of China on the next stages of financial and economic

reform on the Mainland.

24. We will work to improve Hong Kong's position as a premier

financial centre by maintaining a world class supervisory regime

without over regulation; by providing state-of-the-art financial

infrastructure and a well trained, adaptable workforce; and by

maintaining the rule of law, a low and predictable tax regime, an open

market and a level playing field. We will:

issue guidelines to the banking sector this year to ensure that they

will maintain adequate capital against market risk, so as to comply

with new international standards;

study the impact of electronic banking and its implications for

supervisory policy to ensure that this keeps in step with new


set up a secure intranet linking regulators and regulated institutions

as a first step towards straight through processing across the

financial system;

examine how to link the securities clearing system to the banking

clearing system, and explore the setting up of a single clearing

corporation for both stocks and futures to reduce risks and increase


encourage the Securities and Futures Commission and the two exchanges

to set up an Investor Resources Centre to improve investors' knowledge

of the market; and

support the industry's study into the need for and feasibility of

setting up a Financial Services Institute to co-ordinate training for

this sector.

Travel and Tourism

25. The travel and tourism industry employs 12 per cent of our

workforce, contributes 8 per cent to our GDP and is Hong Kong's major

earner of foreign exchange, bringing us an income of over $104

billion. The recent downturn in tourism has raised concerns about the

future of this industry. Our rising costs are becoming a deterrent and

competition from neighbouring cities is increasing. To maintain Hong

Kong's attractiveness as a travel destination, all sectors of the

industry need to examine their cost structure and business practices.

We will continue to plan and invest in tourism facilities and

attractions. New projects such as the Hong Kong Exposition, a Film

City, a virtual reality theme park and a new cruise terminal are being

studied by the Hong Kong Tourist Association.

26. To help keep Hong Kong in the world traveller's eye, we will make

a loan of $100 million to the Hong Kong Tourist Association to start

up an International Events Fund, designed to bring together private

sector partnerships to stage 50 major international events here over

the next five years. We will work closely with the tourism promotion

authorities in South China to enhance our position as the gateway to

the many attractions in the region. In addition, a task force has been

set up by the Government, the Tourist Association and all sectors of

the industry, to consider ways to enhance our competitiveness and

continue to promote Hong Kong as a tourist destination.

Film, Music and Broadcasting

27. Hong Kong produces over 100 films and 5 000 hours of original TV

programmes every year. In terms of the number of films exported, Hong

Kong is now number two in the world, second only to Hollywood. Our

recording industry is booming and our artists have a huge following.

We have in Hong Kong a first class infrastructure; a sound legal

framework; and an Administration that upholds intellectual property,

freedom of expression, freedom of publication and privacy of

communication. All these serve to protect creative expression and

encourage the growth of these industries.

28. In 1998, we will carry out a comprehensive review of the

television market, to see how we can promote competition to widen

choice and encourage innovation. We will set up a Film Services Office

to help the industry with production and location shooting issues. To

help the development of this industry, a site designated for film

production use has been included in this year's land disposal

programme. In addition, the Secretary for Broadcasting, Culture and

Sport will establish and chair a Film Services Advisory Committee to

promote dialogue between the industry and Government.

Manufacturing Industry

29. In the course of the economic transformation of the past twenty

years, Hong Kong's manufacturing capacity has spread to South China

and is now extending further afield. Hong Kong's role as the base for

activities that add value to that manufacturing has expanded

significantly. These activities, which include fashion, design,

management, marketing, packaging, financing and research, are now at

the core of our economy.

30. However, we still have some significant traditional manufacturing

industries which make an important contribution to our economy. We

will not neglect their requirements. For example, the textile and

clothing industry, where labour intensive processes are kept here

because of the effect of quotas, faces unique challenges and deserves

our support, given its relationship with our important fashion

industry. To ensure that there is sufficient skilled manpower to take

advantage of the quota allocation to Hong Kong for the next few years,

a joint working group of the textile and clothing manufacturers, the

training institutions, labour representatives and Government has been

set up to assess requirements and training needs.

Stimulating New Technology Industries

31. Innovation, adapting to new technologies and developing new

industries will always be important for Hong Kong. Our universities

are producing talented technologists and trained researchers. Our

business networks are extremely sensitive to customer needs and market

opportunities. We have set up the Industry Support Fund and Applied

Research Fund to encourage innovation and give support to the

development of new industries. We are reviewing their operation to

ensure that they work effectively to stimulate advancement in our

industries. We stand ready to inject up to $500 million into the

Applied Research Fund, specifically to support the commercialisation

of research in information technology and other high technology

fields. We will release the money once it is clear that the Fund

continues to be effective in meeting the objective of upgrading our

industry in terms of value and technology.

32. Improving our existing arrangements alone may be insufficient. My

aim is to make Hong Kong an innovation centre not just for ourselves,

but for South China and the region, adding value to our economic

hinterland, from which in turn we draw benefit. We may need to do more

to stimulate the exchange of ideas between our university researchers,

our businessmen and industrialists, and our customers, so as to drive

forward innovation and turn technological development into commercial

products. We also need to tap the talents and the results of

scientific research in the Mainland. I shall be setting up a high

level committee of academics, industrialists, businessmen and

officials to advise me on what steps Hong Kong should take, and what

institutional arrangements are needed to achieve my aim.

Land for Industry and Business

33. Excellent work is being done by our university research centres to

stimulate new industries, work that we support. For Government's part,

we will ensure that our industries and businesses have the land and

support facilities they need:

we will start to develop a science park at Pak Shek Kok. Land will be

available to commence phase I in 1998;

a site for a second industrial technology centre in Kowloon Tong has

been earmarked. Development will take three years;

a site for a fourth industrial estate has been identified in Tuen Mun.

It will be ready by 2004 when the existing land bank of the Industrial

Estates Corporation will be exhausted; and

to meet the changing operational requirements of local and

international companies, we are commissioning a study into setting up

a business park.


34. Our community has been served by a tradition of good relations

between labour and management that has brought mutual benefit. We owe

a great deal to the hundreds and thousands who have built Hong Kong's

prosperity through their labour. Even today, over 300 000 still are

engaged in traditional industries, but as our flexible and efficient

businesses continue to adapt to market opportunities, and as labour

intensive industry moves up north, constant restructuring of

employment takes place. We must ensure that opportunity for training

and retraining is open to every member of the workforce to maintain

their prospects for finding work, as well as to improve the quality

and productivity of businesses.

35. This requires us to be sensitive to the needs of those displaced

and to adapt our training and retraining courses to meet the needs of

tomorrow's working environment. We have critically reviewed the role

and future direction of the Vocational Training Council and Employees

Retraining Board. They will be revising courses and developing new

ones so as to respond robustly to market needs and to improve their

flexibility. We will also pay particular attention to helping new

arrivals of working age get into employment quickly.

36. For the construction industry, we are undertaking a special

exercise to meet the demand expected from our plans to boost housing

supply and build supporting infrastructure. A study on the manpower

needs in the various trades will be completed within this year. A

working group comprising employers, employee representatives, training

institutions and relevant government departments has been set up to

study issues such as manpower demands and training. The working group

is now setting out its plan for the expansion of training and

retraining programmes and discussing measures to encourage employment

of trained local workers by contractors. It will advise Government on

any specific measures to ensure an adequate supply of labour in this

industry over the next decade. We will also encourage initiatives to

increase productivity in this industry.

37. The issue of importation of labour has vexed our community for a

number of years. Let me state now that the unalterable policy of my

Administration is to give priority in employment to our own citizens.

But we must be honest with ourselves. Only if we remain competitive as

an economy will we be able to offer the fullest opportunity of

employment to our citizens. We cannot afford to tie our hands when we

cannot meet demand from within our own resources. Imported labour has

contributed to Hong Kong's success. Foreign domestic helpers in many

households open up career opportunities to tens of thousands of Hong

Kong's women. We may need to import labour to help meet our housing

construction targets or to provide staff for new homes for the

elderly. I will not open the doors to unrestricted import of labour.

If necessary, we will consider the need for importing labour to make

up for shortage in specific trades or posts. While we operate under

the principle of giving priority to local workers, we do need to

improve our Supplementary Labour Scheme, to give our economy the

flexibility that it needs to maintain our competitiveness.

Recommendations for amending the Supplementary Labour Scheme are being

studied. I trust that they will strike the right balance between the

concerns of our workers and the needs of our economy. I have no doubt

that enhancing the skills and job opportunities of our local workers

is fundamental to the success of our economy.

38. We are also reviewing the pilot scheme for entry of mainland

professionals into Hong Kong. Our aim is to come up with effective and

appropriate measures to meet the needs of employers in certain trades

to bring in professional staff from the Mainland who have skills,

knowledge and experience of value to Hong Kong but which is not

readily available here. We aim to complete the review within this


39. Finally on the subject of business, there are a number of measures

that we need to take to protect our interests and uphold Hong Kong's

commitments as a responsible member of the world trading community.

Intellectual Property Rights

40. We must provide a robust regime, in full accordance with

international standards, for the protection of patents, trademarks,

registered designs and copyright. This is necessary to complement our

high technology based development and to ensure that Hong Kong remains

a home for creative and innovative works.

41. We will take more effective enforcement actions against all forms

of infringements against intellectual property rights, especially the

sale of pirated and counterfeit goods. We will continue our raids

against retail black spots. We will tackle illicit trading in

copyright-infringing articles. We will not allow the acts of illegal

businessmen to erode the development of creative business and do harm

to the reputation of the Hong Kong SAR.

Trade Controls

42. Advanced technologies help the rapid development of our commerce

and industries as well as promote academic research. As a responsible

trading partner, the Hong Kong SAR will increase resources for control

on trade in strategic commodities, so that our partners will have

confidence to continue to supply high-tech products to Hong Kong. We

will also strengthen our textile export control system against illegal

transhipment of textile products, to ensure that genuine Hong Kong

products have free access to world markets.

Competition Policy

43. Key to our economic efficiency and international competitiveness

is openness and competitiveness within Hong Kong's economy. I am fully

committed to promoting competition, and I welcome the good work that

has been done by the Consumer Council to address practices in our

internal market. I trust that they will continue to take a vigorous,

proactive stance in this field. My Administration has been positively

considering the Council's recommendations on overall competition

policy. These have wide ranging implications that required thorough

examination, but we will be ready to give a full response shortly.

B. Connecting to the Information Age

44. I would like to turn now to the tool that will shape the 21st

Century - information technology (IT). Already our children are

roaming on the internet; our academics are discussing with their

colleagues and even teaching students over a global communications

network. In Government and in many of our companies, e-mail and

intranets are changing the way we work, changing our horizons. But the

uses to which we are putting information technology today in Hong Kong

are only a foretaste of what will be possible. To make Hong Kong a

leader, not a follower in the information world of tomorrow, we need

to bring together four things:

first, the hardware of high capacity communications systems;

second, a common software interface mounted on established

communications networks, through which individuals, business and

Government can interact easily and securely using their own systems;

third, people who know how to use the new technology; and

fourth, a cultural environment that stimulates creativity and welcomes

advances in the use of this technology.

Information Technology Co-ordination

45. To ensure that Government will facilitate this process,

responsibilities now divided between several bureaux will be

regrouped. One Bureau Secretary will lead and co-ordinate the work of

all those throughout the Government organisation involved in

information technology and the related areas of broadcasting and

telecommunications. This Bureau will also be responsible for

co-ordinating overall information technology development in Hong Kong

and will:

first, formulate policies to facilitate the establishment of an open,

common interface information infrastructure, accessible throughout the


second, lay down an appropriate regulatory framework to remove

obstacles to interconnection between networks, and enhance Hong Kong's

external info-communications links;

third, develop a policy for accelerating the use of IT applications

using the common interface in the public and private sector; and

fourth, commission pilot projects that make innovative use of the

developing infrastructure.

Information Technology in Education

46. We will launch a five-year IT education strategy to promote the

use of IT to enhance teaching and learning. The main tasks are to

equip our teachers with the necessary IT skills; to apply

computer-assisted teaching and learning across the curriculum; and to

place students in an environment where they can use this technology as

part of their daily activities and grow up to use it creatively.

47. Within five years, we are aiming to have teaching in at least 25

per cent of the curriculum supported through IT. Within ten years, we

aim to see IT being applied comprehensively in school life, and all

our teachers and Secondary 5 graduates being able to work competently

with IT tools. To move firmly in that direction, within the next

school year we will:

increase the number of computers in each primary school from 15 to an

average of 40 and in each secondary school from 20 to an average of


procure and develop new software to support teaching, especially for


enhance training to over 30,000 teachers in IT use, and set up an IT

Education Resource Centre to support the management of school IT


introduce pilot schemes in 20 schools to establish best practices for

IT applications in teaching and learning;

connect all schools to the Internet; and

make preparations for an education-specific intranet for

multi-dimensional communication and sharing of information within the

school sector.

The Challenge Ahead

48. My Administration aims to ensure that the private sector has an

open market and a well developed skills base which it can use to build

on our head start in the field of the hardware of information

technology infrastructure. We have opened negotiations to secure

liberalisation of international telecommunications services in Hong

Kong. Looking at the rate of growth in information industries, there

is a huge market out there. The Asian market outside Japan for

info-communications is expected to grow to US$1,000 billion by 2010,

five times the 1995 level. This market, this development, is not

simply a matter of telephones and television; it is about introducing

entirely new ways of doing business and interacting in the community,

from banking and shopping to learning and entertainment. In Hong Kong,

by introducing advanced broadband communications connections over the

next ten years, opportunity would be created to deliver services to

our homes. The scope of those services knows few boundaries other than

the imagination. My Administration will harness the new technology to

improve its efficiency and services. The real challenge is for the

business sector, indeed for the whole community, to experiment, adapt

and develop these new tools to enlarge our vision, conquer new markets

and create new patterns of life for our entire community.

C. Homes for Hong Kong

49. Let me now discuss the question of housing. On 1 July, I set out

my vision for tackling the housing needs of the community. I realise

from the outset that this is a highly complex problem. It involves

some entrenched policies, practices and constraints that have

inhibited the supply of residential land and slowed down flat

production, making the job of meeting public expectations increasingly

hard to reach.

50. Flat supply has been uneven from year to year. This has sent

confusing signals to the market, produced erratic price patterns and

left potential home buyers and developers in the lurch.

51. Having only a one year land sale programme did not enable us to

take a long term view, or have information on long term flat supply.

Furthermore, the rising expectation of the community to be consulted

during the development process, coupled with a statutory procedure for

dealing with objections that is not time-limited, has increased

uncertainty over completion of projects.

52. I set my Administration three main targets:

to build at least 85,000 flats a year in the public and private


to achieve a home ownership rate of 70 per cent in ten years; and

to reduce the average waiting time for public rental housing to three


53. Achieving these targets will be a considerable challenge. It is

not just a matter of producing more flats, but of ensuring an even

annual supply and a high degree of predictability that supply will be

sustained. That is the only way to ensure moderate prices. This

requires a well defined, rolling five year land disposal programme

against a longer ten year planning horizon. It also requires a radical

reform of planning and co-ordination functions within the Government.

54. My Administration has responded vigorously to the challenge. The

Financial Secretary has set up a task force to attack the problem,

known as the Steering Committee on Land Supply for Housing, HOUSCOM

for short. It has translated my three targets into well defined tasks.

It has developed a realistic production programme and has revised the

procedures for land and housing development to ensure that absolute

priority is given to housing. Today I want to set out in detail how we

are going to live up to the commitments that have been made.

Land Supply for Housing

55. We have already announced a five year land sales programme that

will provide 120 hectares of land for private housing up to March

1999, and an additional 260 hectares in the following three financial

years. In addition, there will be about 285 hectares of land for

public sector housing over the same period. Together with developments

initiated by private land owners and those associated with railway

developments and public housing redevelopment, this level of supply

will translate into a production pattern rising from around 70,000

flats in 1998 to more than 85,000 flats a year with effect from 1999.

HOUSCOM is finalising a ten year programme, which includes site

specific information for the first five years, with the aim of

sustaining annual production of at least 85,000 flats. The programme

will be rolled forward annually. To provide more land, we will:

within the next ten years develop strategic growth areas in Tseung

Kwan O, Tung Chung and Tai Ho on Lantau Island, the Northwest New

Territories and Southeast Kowloon;

proceed with the Tsuen Wan Bay and Green Island reclamations; and

rezone suitable agricultural and industrial areas for housing


56. To meet the growing demand from more international professionals

operating in Hong Kong, 117 hectares of land, sufficient for at least

9,000 large flats, will be sold before March 2002 in areas such as the

Peak, Hong Kong Island South, Shatin, Tai Po and South Lantau, in

addition to the 64 hectares already included in the sales programme up

to March 1999. To further increase the supply of this category of

flats, in this financial year we are releasing 260 Government quarters

and three sites now used for civil servants quarters.


57. To ensure that all suitable land can be used for housing, major

improvements to the transport infrastructure will be needed. Our focus

will be on high capacity, environmentally friendly rail systems:

the West Rail passenger system from Tsuen Wan to Yuen Long will be

completed by 2002, and extended to Tuen Mun by 2003;

the Mass Transit Railway (MTR) Tseung Kwan O Extension will be

completed by 2003; and

a decision will be made on a passenger railway between Ma On Shan and

Tai Wai and the Kowloon-Canton Railway extension from Hung Hom to Tsim

Sha Tsui by the end of this year.

We will also develop plans for:

a new MTR North Island Line from Central through Wanchai to Causeway

Bay, with a possible extension to South Hong Kong Island;

a new East Kowloon Line to serve the Kai Tak area;

an extension of the MTR Island Line to Kennedy Town and Green Island;

a second connection from the Ma On Shan railway into Kowloon; and

a fourth cross harbour rail route.

58. Improvements to the road network will also be needed. Over the

next ten years, we will:

widen the Tolo and Fanling Highways;

complete Route 9 between Northwest Tsing Yi and Lai Chi Kok; and

build a link between North Lantau and the Northwest New Territories.

Plans will be developed for:

a new Western Highway to connect the western part of Hong Kong Island

with the Northwest New Territories via Lantau;

a new Eastern Highway from the main urban area through the Eastern New


an east-west route to connect the Eastern and Western Highways in the

New Territories; and

a Central Kowloon route to ease traffic flow between West Kowloon and

Southeast Kowloon.

59. To help speed up private housing development, when appropriate we

will entrust related infrastructure works, such as feeder roads and

drainage systems, to the private sector.

Organisation and Procedures

60. Plans for increased land supply must be complemented by efficient

procedures. HOUSCOM has begun to review the organisation and

procedures for housing production. It will complete its review by the

end of 1997, but has already:

drawn up a package of measures to simplify and streamline various

government planning, land and building approval processes for

residential development; and

completed a review of the planning and development procedures of the

Housing Authority and the Housing Society, resulting in significant

reduction of the development lead time for public housing: in the case

of the Housing Authority, from 62 months to 47 months; and in the case

of the Housing Society, from 52 months to 46 months.

61. HOUSCOM has compiled an inventory of all housing developments in

Hong Kong and will monitor progress site by site. A new accountability

system for completing these developments has been devised, redefining

the responsibilities of departments at district and central levels.

The system covers both approval procedures and mechanisms for dispute

settlement. In addition, we are looking at the organisational

structure among bureaux to ensure the effective management of the land

supply and housing programmes.

Home Ownership

62. Speeding up land supply for housing development will help both

private and public sectors contribute towards our second target of

achieving 70 per cent home ownership by 2007. Further measures will be

taken specifically to help meet this target. In the public sector, we

will maximise opportunities for families to buy their own homes:

over the next ten years, we will provide the opportunity for at least

250,000 families living in public rental housing to buy their flats at

reasonable and affordable prices. These prices will take into account

the age and location of the flats as well as other relevant factors.

Flexible mortgage arrangements will be negotiated with financial

institutions; the condition of flats will be checked and essential

renovation works carried out before sale; a structural guarantee

period will be provided; Owners' Corporations will be set up,

maintenance funds will be established, partly with contribution from

sale proceeds, and reasonable resale conditions will be drawn up. We

expect to receive from the Housing Authority details of such a scheme

in time for the Government to take a decision by the end of this year,

so that the first batch of about 25,000 flats can be sold early in


we will build more subsidised home ownership flats;

we will increase the number of Sandwich Class Housing flats to be

built, raising the total stock to 50,000 units by 2006;

we will give all successful public housing waiting list applicants the

option of buying rather than renting flats;

we will launch a new "Home Starter" loan scheme, over and above the

existing Sandwich Class loan scheme, targeted at first time home

buyers, under which in each of the next five years 6,000 families will

be given a loan of about $600,000 each; and

we will implement a pilot scheme to tender selected sites, subject to

the requirement that the developer will hand over at least 30 per cent

of the flats built to the Government for sale to eligible purchasers

at designated prices.

63. The land disposal programme, the streamlining of procedures, the

rezoning and the infrastructure development that I have outlined will

make it possible for the private sector to produce up to 36,000 flats

a year from the year 2000. We have a mechanism to ensure that flats on

new development land are completed within a fixed period. We will

monitor production in the private sector closely to ensure that

targets are met. I am confident that the private sector will do their

part to help ensure that we meet our housing targets. Land production

in our strategic growth areas will ensure that there is ample supply

of land for stable and sustained private sector development to meet

our target.

64. To promote stability in the market, we have put in place a more

effective system for monitoring the residential property market and

have drawn up a package of measures to introduce at short notice

should signs of excessive speculation emerge at any time. If need

arises, we will use them.

Public Rental Housing for Those in Genuine Need

65. Our targets on flat construction and home ownership may catch the

headlines, but improving the supply of subsidised rental housing to

those in genuine need is no less important a part of our housing

strategy. We will reduce the waiting time for public rental housing

from the present average of six and a half years to under five years

by 2001, to four years by 2003 and to no more than three years on

average by 2005. At present we assign about 14 000 flats a year to

waiting list applicants. To meet our targets, from 2001 we will

provide an average of 20 000 flats each year, and to ensure that they

go to those in genuine need, we will introduce in 1998 a means test of

income and assets for all prospective public housing tenants.

66. We will also take steps to improve housing for those now living in

poor conditions. We will clear all remaining old type temporary

housing areas by 2000 and all remaining cottage areas by 2001. By then

we will also have offered public housing to all those who may be

displaced from bedspace apartments which do not meet the safety

standards for licensing. We have also drawn up a programme to offer

public housing to all squatters affected by development clearance.

Speeding up Urban Redevelopment

67. Added to the challenge of providing enough new housing is the

large stock of old or inadequate housing in the urban area. At current

rates of redevelopment, this stock of housing over 30 years old will

double from 20 per cent to 40 per cent of private housing over the

next ten years. Redevelopment is a complex process but we must address

the challenge more vigorously if we are to ensure that Hong Kong's

inhabitants have good homes in a good environment. This will involve a

number of measures, including the redevelopment of old industrial

areas into housing, a review of plot ratios and set time limits for

handling public objections to residential developments.

68. Ability to resume land for redevelopment is the key. We aim to set

up an Urban Renewal Authority by 1999 to build on the good work that

has been accomplished by the Land Development Corporation. We will

introduce legislation to give the Authority effective powers to carry

out resumption and comprehensive redevelopment. We will also introduce

legislation to assist property owners and developers to assemble land

so as to quicken the process of renewal by the private sector.

A Safer Home

69. A good home is a safe home. We will step up programmes to ensure

the safety of residential buildings. We are working to introduce a

Mandatory Building Safety Inspection Scheme in 1998. We will set up a

$500 million "Urban Rehabilitation Fund" to provide loans to owners

of old buildings in targeted areas for rehabilitation. This will help

maintain the safety and quality of our existing housing stock.

70. Recent tragic accidents have shown the need for much greater

awareness of the danger of fire and for closer co-operation between

Government and the community in the fight against fire. A package of

legislation and administrative measures to improve fire safety will be

introduced by the Secretary for Security.

71. This year's exceptional rains have shown both the benefit of the

work that has been done so far on improving slope safety, and how much

we still have to do to educate private property owners and the

community on maintaining slopes and drainage channels. We will also

extend Government slope maintenance programmes.

72. I have demonstrated to Honourable Members and to the community

that my Administration has a clear programme to tackle the housing

problem comprehensively. The Financial Secretary and his team will

elaborate on this programme in the next few days. There is

determination within my Administration to meet the targets I have set.

We ask for the support of the Legislature and the community at large

in this common enterprise.

D. The Environement

73. To achive all that we hope for our business and industry, we need

to put one thought at the heart of all our planning, the quality of

our environment. Let me put it bluntly, unless Hong Kong provides an

environment that is good to live in, how are we going to attract or

retain the talented and creative people that our businesses and

economy need in order to grow? Improving the quality of the

environment is as vital as economic growth to improving our quality of

life. We will ensure that consideration of how to sustain and enhance

the environment is built into strategic planning and policy making.

The Environmental Impact Assessment Ordinance comes into effect in

1998. We will use it vigorously. We have just commenced a study into

sustainable development. We will seek to involve the whole community

in learning and discussing what that means for us and for the way we

do business. Simply put, waste and environmental degradation represent

inefficiencies that are costly to our health, our businesses and our

community. Sensible planning and action to reduce them is good for our

competitiveness as well as our enjoyment of our city.

74. My Administration will be taking immediate steps to address water

and air quality problems, and to reduce waste.

75. The new Stonecutters Island Sewage Treatment Works is operating

well. Rigorous environmental monitoring is being carried out which

will help with design of future stages of the Strategic Sewage

Disposal Scheme. We will complete phase I of the Strategic Sewage

Disposal Scheme by 2000. Subject to the outcome of further studies, we

aim to complete phases II, III and IV steadily thereafter to extend

the coverage and quality of the treatment system.

76. We will shortly introduce a trial scheme for Liquefied Petroleum

Gas (LPG) powered taxis. Once the technical issues have been settled,

we will implement a plan to replace diesel powered vehicles with LPG

or other cleaner technologies as soon as possible. The effect of

traffic fumes on our air quality and health is obvious to all. We will

not let this problem continue.

77. Keeping Hong Kong clean is everyone's responsibility. It is not

just a matter of keeping our city centre clean. In every corner of the

territory from rural villages and country parks to industrial areas

and our great harbour, we all need to play our part in promoting a

clean and healthy environment, to take pride in making Hong Kong a

clean and beautiful city.

78. In 1998, we will be launching a Waste Reduction Plan. We will

examine all processes to see where we can be more efficient in

handling and reducing waste. I trust that there will be public

participation and political consensus to implement this important


E. Uncovering Hong Kong's Treasure


79. I said on 1 July that education is the key to the future of Hong

Kong. It provides a level playing field for all and the human

resources for further economic development. Our education system must

be firmly rooted in the needs of Hong Kong; it must enable us to

contribute to the development of our country; it must give us an

international outlook. It should be diverse, drawing on the strengths

of East and West. It must inspire commitment to excellence. I will now

set out our plans to achieve that.

80. Primary and secondary education provides the foundation for all

our children and it is here that the commitment to excellence needs to

start. I am glad that the Education Commission has just published its

seventh report, which provides a basis for promoting quality and

innovation; for upgrading the professionalism of teachers and school

administrators; for developing essential indicators for assessing the

performance of schools and for improving the learning environment. My

Administration will begin to implement the recommendations

immediately. We will press forward with mother tongue teaching, so

that students can learn more effectively. We will also continue to

promote excellence in tertiary education and to improve quality at

kindergarten level and in special education.

Quality and Innovation

81. We will allocate $5 billion to establish a Quality Education

Development Fund. This will be used to encourage innovation,

competition and self-motivated reform in primary and secondary

schools. It will be a more flexible and efficient alternative funding

source than the normal Government mechanism.

82. To promote and strengthen school-based management, we will also

require all schools to draw up plans and achievement targets; publish

annual reports; and conduct fair and open appraisal of teachers. We

will give school principals, whose leadership is key to the success of

our education system, more flexibility in the use of funds to meet

their own plans and priorities.

A Committed Teaching Profession

83. For our substantial investments in education to yield good

returns, a teaching profession of high commitment and quality,

respected and supported by the community, is essential. To enhance the

professional status of teachers and to help them do their job more

effectively, we will:

first, within two years set up a General Teaching Council, a

professional body for teachers;

second, relieve teachers of the burden of clerical work. More than 800

clerical posts will be provided to schools in the coming year;

third, advance the date for graduate posts making up 35 per cent of

all primary teaching posts from 2007 to 2001;

fourth, require all new teachers to be trained graduates. The

University Grants Committee will study the timetable and the means

needed to achieve this target. I expect to be able to announce

decisions next year; and

fifth, declare 10 September each year as "Teachers' Day" as a

reminder to all of the enduring importance of the teaching profession.

Language Skills

84. Confidence and competence in the use of Chinese and English are

essential if we are to maintain our competitive edge in the world. The

Education Commission Report No. 6 has already laid down a framework to

achieve our goal for secondary school graduates to be proficient in

writing English and Chinese and able to communicate confidently in

Cantonese, English and Putonghua. Putonghua will become part of the

curriculum in the next school year starting from Primary 1, Secondary

1 and Secondary 4, and a subject in the Hong Kong Certificate of

Education Examinations by the year 2000.

85. Greater use of mother tongue teaching will help raise the standard

of teaching in non-language subjects. It also allows more time to be

given to specialised teaching of English and Chinese so that all

language standards may be raised.

86. To make an immediate impact on improving the English language

standard of our students, we will implement a new Native-speaking

English Teachers Scheme, providing more than 700 additional

native-speaking English teachers for secondary schools from next year.

87. We will also:

set language benchmarks for all teachers in 1998-99;

require all new teachers to meet the benchmarks before they join the

profession in 2000;

provide training for in-service language teachers, so that within five

years of the benchmarks being set, all will be able to reach them; and

provide more teachers to support school library services and the

Chinese and English Extensive Reading Schemes in primary school.

88. In the longer term, we need to develop a centre of excellence in

language teaching, and we will be looking into establishing a "Centre

of Language Teaching" within the Institute of Education for the

training and retraining of our language teachers.

The Learning Environment - Whole-day Primary Schools and others

89. We need to provide an environment conducive to an all-round

education for our children. At primary level, our goal is whole-day

schooling for all. As a first step, we will raise the percentage of

students in whole-day schools from the previous target of 40 per cent

to 60 per cent by the 2002 school year. To meet this new target in the

face of the perennial shortage in land, we will need to increase

slightly the average class size in primary schools to 34.5 students

per class and temporarily withhold reduction of class size at the

secondary level. In view of the benefits that whole-day schooling

brings to the learning environment for our children, we are determined

to reach our target of the full implementation of whole-day schooling

as soon as possible after 2002. The problem is finding sufficient

sites for new schools, particularly in the old urban area. My

Administration is looking imaginatively at provision of sites. I will

set out a timetable for achieving this target in my next Address.

90. At the secondary level, we are on target to abolish floating

classes up to Secondary 5 by the year 2000. We will also revise the

designs of primary and secondary schools to suit new developments,

such as providing multi-media rooms, language rooms and staff rooms.

In parallel, we will continue to enhance existing schools under the

School Improvement Programme.

Schooling for Newly Arrived Children

91. Children born outside Hong Kong but who have right of abode here

are part of our community. We must provide a good education for them

to help them settle into Hong Kong and contribute to our society. To

meet the demand, we are already scheduled to complete 16 school

projects by September 1999. We will build another six primary and ten

secondary schools before the 2001 school year. We will provide

induction programmes, English language programmes, short term

preparatory courses and school-based support services to help newly

arrived children overcome initial academic difficulties and integrate

into the local school system as soon as possible.

Tertiary Education

92. Tertiary education accounts for about one-third of our total

budget on education. The tertiary sector has now entered a period of

consolidation following its rapid expansion over the past decade. I

have asked the University Grants Committee and the tertiary

institutions to build upon existing strengths and invest in

state-of-the-art facilities so as to provide programmes which will be

recognised internationally for their excellence.

93. The tertiary institutions have a role to play in enhancing the

language proficiency of students. Students whose language skills do

not meet the minimum standards should not enter the institutions. We

will ask the universities to consider exit language tests and we will

provide more resources to them for language training.

94. We will build 11 000 additional hostel places, principally for the

three universities that do not have any at present, to ensure that all

students can spend at least one year in a university hostel.

95. Universities should be places for cross cultural learning and

exchange. From the next academic year, we will double the number of

non-local undergraduates and taught postgraduates from 2 per cent to 4

per cent and increase the ratio of non-local research postgraduates

from 20 per cent to one-third. We have asked the institutions to

recruit outstanding students from the Mainland to enrol in

first-degree courses.

96. We will make a $50 million grant to the Open University to develop

adult distance learning courses in both English and Chinese, to serve

Hong Kong and mainland students. Our goal is to turn the Open

University into a centre of excellence in adult and distance learning.

97. We will enhance the efficiency, transparency and fairness of the

Local Student Finance Scheme to ensure that no students will be denied

access to tertiary education due to a lack of means. We will also

introduce a non-means tested loan scheme open to all full-time

tertiary students to complement the existing means-tested scheme. We

expect this to benefit some 50 000 students.

Special Education

98. To ensure that all our children can fulfil their potential, we

must help children with special educational needs. In the coming year,

we will enhance the quality of special education services through

improved support staffing. We will conduct a two-year pilot exercise

in nine schools to map out a long term policy to help students with

special education needs integrate into ordinary schools.


99. Turning to kindergarten education, I propose to maintain the

momentum for improvement in standards by ensuring that 60 per cent of

teachers at this level have formal training by 2000; by upgrading the

standards of training for teachers, and by requiring all new

kindergarten principals to be graduates of the Certificate in

Kindergarten Education Course by 2004. Also, we will be introducing

improvements to the Kindergarten Subsidy Scheme to provide incentives

for kindergartens to employ more trained teachers.


100. The measures that I have proposed above will raise recurrent

expenditure on basic education by 7.6 per cent in the coming year. In

addition, capital expenditure will increase to $22.2 billion over the

next five years.

Review of the Education System

101. Such additional expenditure is essential to provide the quality

of education that Hong Kong deserves. However, I am convinced that we

need to take a very careful look at the whole structure of our

education system. We need to decide how it should develop into the

next century. By the end of this year, we will have reviewed the

existing structure of executive and advisory bodies, with the aim of

streamlining the system. In the coming year, we will:

ask the Education Commission to begin a thorough review of the

structure of pre-primary, primary, secondary and tertiary education,

addressing the age at which students should begin each stage of

education; the duration of the various stages; the curriculum and the

interface between stages. It will also consider the matter of four

years of tertiary education;

review our policy on private schools in order to foster a more vibrant

and diverse private school system that encourages innovation and gives

parents greater choice;

review our examination system to take account of students' performance

at schools so that their achievements will not be determined by a

single examination; and

ask the universities to review their admission criteria for

undergraduates to give recognition to excellence in extra-curricula

areas, such as community service, arts and sports.

The Curriculum

102. In the school curriculum, we need to develop teaching about

Chinese history and culture. These are part of the heritage of our

predominantly Chinese community. We also need to be looking afresh at

our curriculum to ensure that our schools are giving proper attention

to science and mathematical knowledge that is essential in the modern

world, and that we seek to promote the all-round development of

children and encourage all their talents.

103. We are examining best practices in other places, and will draw on

expert advice in all the reviews, to ensure that we look critically

and constructively at all we are doing, so as to build on our

strengths and remedy our weaknesses in educating our community for the

next century. I will look to develop our plans in my next Policy


Our Young People

104. It is important that we educate our young people, so that they

master the knowledge and skills needed to make a living and to

contribute to society. But this is far from being the only aim of

importance. Knowledge and skills can propel economic growth, but our

goal goes beyond this. Our goal is to become a community that is both

rich and warm of heart, both free and united, both sophisticated and

culturally confident. This calls for more than mere knowledge and


105. Schooling is just a part of our young people's lives. The impact

of family upbringing is immeasurable. I call on all parents of Hong

Kong to work with teachers and to spend more time with your children,

to help them grow. They are at their most sensitive and imaginative

age. They need your guidance, patience and love.

106. Working together to educate and bring up our young people

properly is the responsibility of parents and the Government. But

young people also have their share of responsibilities to others, to

their families, and to the community. I believe that the greatest

respect that can be paid to anyone is let them assume responsibility.

107. The Commission on Youth will carry out a study on how our young

people can take up a more active role in building up the SAR, and in

voluntary work, to make Hong Kong a place abundant not just in

material wealth, but a place that is spiritually enriched for the next


The Arts

108. Young and old alike look to our city to be far more than just a

place of study and business. We look for art to stimulate and sustain

us. Hong Kong has long embraced both eastern and western cultures and

in our artistic life we find contemporary diversity with Chinese

characteristics. Over the years we have injected considerable

resources into developing artistic endeavours. We have many venues for

the arts, and a flourishing Academy for Performing Arts. I welcome the

work done by the Arts Development Council, the Provisional Urban

Council and the Provisional Regional Council. We must aim higher. My

Administration will consider how to make better use of the resources

we now invest in this area, and what more we can do to stimulate the

artistic life of Hong Kong.


109. In sports, as in the arts, there is great diversity in Hong Kong,

and my Administration will strive to encourage this. We will continue

to support the Sports Development Board's strategic plan to improve

our sporting environment and to promote the health and spirit of Hong

Kong through sport.

Hong Kong's Culture

110. How education and culture will shape our home, how we can each

play our part in creating a community that all can enjoy and draw

strength from, are matters for everyone. For many years, Hong Kong has

been set apart from the Mainland. We have lived in a society and a

cultural environment very different from the Mainland. As we face the

historic change of being reunited with China, for every individual

there is a gradual process of getting to know Chinese history and

culture, so as to achieve a sense of belonging. My Administration

attaches importance to this process. We will provide resources and

will promote educational, recreational and cultural exchange

programmes to involve the community fully in this process.

111. Ours is a cosmopolitan city. Our ability to embrace the cultures

of east and west is one of the secrets of our success, shaping a

unique social culture of our own. While we deepen our understanding of

Chinese history and culture, we will continue to develop our own

diverse cultural characteristics. China's culture, like every other

culture, is growing and changing as we journey forward into the 21st

Century. Hong Kong stands in a unique position in this process, able

to act as the centre of exchange for China to learn about western

cultures and for the world to learn about Chinese culture.

112. To help nurture the growth of a stronger understanding of our own

community and culture, the Home Affairs Bureau will be launching a

programme to strengthen civic education over the coming year, under

the theme "Hong Kong, Our Home".

F. A Compassionate and Caring Society

113. As we work hard together to build our future, caring for those in

need, supporting the elderly and helping the disadvantaged are

fundamental to the quality of our society. My Administration will work

to improve conditions for the elderly and people with disabilities, to

help our new arrivals integrate into the community and to improve

health care.

Care for the Elderly

114. Caring for the elderly is the responsibility of every family: we

need to provide a sense of security, a sense of belonging and a

feeling of health and worthiness.


115. For the elderly to feel secure, they must first be financially

secure. To prevent future generations from facing the uncertainty of

toddies elderly, we will establish the Mandatory Provident Fund

Schemes in 1998 so that in twenty to thirty years all the workforce

will have provision for their retirement. To address today's needs, we

will increase the monthly payment to elderly Comprehensive Social

Security Assistance (CSSA) recipients. The annual Chinese New Year

Grant and the Social and Recreational Activities Grant will also be

merged into the regular monthly payment. Taken together, in the next

financial year the CSSA monthly payment for the elderly will be

increased by $380 before inflationary adjustment.


116. More important for the elderly than cash is a place to call home

and the effective delivery of good services. We will respond to this

need and steadily increase investment in services. We need a flexible

and wide-ranging approach that helps families that want to care for

their older members, that helps those elderly who have no family but

want to live in their own homes, and that provides sufficient

institutional care for those in need.

117. It is only right that we reciprocate the love of our parents and

take care of them when they are old. To encourage family support, we


first, establish 12 visiting health teams in 1998-99 to provide

services to the elderly living in the community and give support to

their carers;

second, set up 15 additional home help teams in the next financial

year to assist the elderly living with their families in the


third, set up two Carer's Support and Resource Centres in 1998 to help

families looking after the elderly; and

fourth, review public housing allocation arrangements to encourage

eligible family members to live with older members.

118. We really need to know just how great the need for services is,

particularly for residential care, in order to plan properly. I have

asked the Elderly Commission to carry out a comprehensive assessment

on the longer term demand for elderly housing and residential care

services and draw up a strategy for both the private and public

sectors to meet the needs. They will make recommendations next year,

and I will follow up on what more needs to be done in my next Policy


119. In the meantime, we will increase the supply of housing for the

elderly by introducing a "Senior Citizen Residence Scheme", under

which flats will be built in the urban area to lease for life to the

elderly. We will also increase subvented residential care places by

2,400 through the Bought Place Scheme over the next three years. A new

Dementia Supplement will be introduced and the Infirmary Care

Supplement will be maintained to enable subvented care homes to

provide continuity of care to the elderly.

Health and Worthiness

120. To promote the health and sense of worthiness of the elderly, we

will improve medical care, social services and opportunities for the

elderly to join in community life. We will set up 12 elderly health

centres in 1998-99 to provide a new integrated elderly health service

comprising preventive, promotive and curative health services. An

extra psychogeriatric team will be set up to reach another 4 600

patients each year.

121. So that the elderly can lead a more active and purposeful life,

the multi-service centres for the elderly will also introduce an

Elderly Volunteer Programme to encourage senior citizens to continue

to contribute to the community. By 2000, 36 integrated teams to

provide dedicated social networking and outreaching services to the

vulnerable single elderly will be set up.

122. The improvements to services for the elderly that I have

announced will lead to total recurrent expenditure on direct services

rising to $5.1 billion in 1998-99. That is on top of the $9.4 billion

we will spend on financial assistance.

CSSA Review

123. There has been much public debate about what is meant by

providing adequate social security to those who do not have the means

to support themselves. I am aware of the concern that some elderly

persons are not eligible for CSSA payments if they have assets above a

certain level. There is consensus in the community that more must be

done for the elderly, particularly the single elderly. We need to be

compassionate and caring. But, we should not remove incentives to

work. To ensure that neither of these considerations are compromised,

I have asked the Secretary for Health and Welfare to conduct a study

on the scope and the administration of the CSSA scheme in 1998.

Services for People with Disabilities

124. We also must ensure that the needs of people with disabilities

are addressed. Our goals remain to provide suitable rehabilitation

services and support and assistance to this group, so that they can

develop their potential and integrate fully into this community,

sharing the same opportunities as their fellow citizens.

125. Recent efforts have significantly improved services. However, the

Health and Welfare Bureau, in consultation with voluntary and

non-governmental organisations (NGOs), will review the demand for

different types of services and support next year. We will plan ahead

for the next five years in the light of the findings to meet the

special needs of this group.

Newly Arrived Citizens

126. Another group to whom we have to respond are the children of Hong

Kong citizens born in the Mainland. All those eligible under the Basic

Law have a right to come here. Ours is a caring society. Our duty is

to ensure that our new citizens quickly feel part of our community and

can rapidly start to contribute to our society. We need to make sure

that we have the proper facilities to receive these children without

affecting existing programmes and services for the community. I have

noted the steps that we are taking to provide education, training and

housing. We are encouraging a wide variety of social services adapted

to the needs of these new citizens. We are working closely with the

authorities on the Mainland to make the necessary arrangements for the

arrival of these children. The Secretary for Home Affairs is

co-ordinating the delivery of services by government departments and

NGOs, to ensure that all new arrivals know the services that are

available and are helped to find work or support where they need it.

Continued Page 6

Full text of Tung Chee-hwa's speech

From Page 5


127. The women of Hong Kong make a most significant contribution to

the prosperity and progress of our community. My Administration will

always give consideration to the interests of women, and to the

promotion of equality of opportunity in our community.

Continued Improvement in Health Care

128. Health is a valuable asset. In Hong Kong today, we already enjoy

a standard of health care that compares well with any developed

country. We will work continuously to improve our health care system

for the benefit of our community.

129. Starting with preventive medicine, we will increase our

co-operation in worldwide efforts to monitor disease patterns and

enhance our ability to respond effectively to outbreaks. At the same

time, we will strongly promote health education programmes. Many

illnesses common to women or to the elderly can be prevented: we must

ensure that they have the knowledge and the support needed to enjoy

healthier lives. Health facilities will also be improved with the new

Kowloon Bay Primary Health Care Centre and Nursing Home opening next

year, providing new general out-patient and specialist treatment

services as well as a radiography support centre. To extend our

hospital services, we will bring into use 754 additional hospital beds

next year.

Health Care Review

130. Our health care professionals in the public and private sectors

provide a service of high quality to the community, which reflects

well on their commitment and training. I fully understand the concerns

that have recently been raised about our hospital services. These are

important issues for us, and the Hospital Authority is addressing

them. There are also questions about out-patient services that we need

to deal with. Beyond these, our health care system faces a number of

challenges in the longer term. We have a growing and ageing

population. The community has ever rising aspirations for quality

care. As a result, health care expenditure will continue to escalate.

To help us draw up suitable long term policies, the Secretary for

Health and Welfare will carry out a comprehensive review of our

existing health care system during 1998.

131. In the review, we will examine how to achieve a better interface

between primary health care, out-patient and hospital in-patient

services. We will review whether the existing split of workload

between the public and private sectors is reasonable. We will also

study how patients and the community can best share our health care

costs. I will address this subject further in my 1998 Policy Address.

Chinese Medicine

132. For the protection of public health, we aim to introduce a bill

in the next legislative session to establish a statutory framework to

recognise the professional status of traditional Chinese medicine

practitioners; to assess their professional qualifications; to monitor

their standards of practice; and, to regulate the use, manufacture and

sale of Chinese medicine. The establishment of a sound regulatory

system will lay a solid foundation for the future development of

traditional Chinese medicine within our overall medical care system. I

strongly believe that Hong Kong has the potential to develop over time

into an international centre for the manufacture and trading of

Chinese medicine, for research, information and training in the use of

Chinese medicine, and for the promotion of this approach to medical


G. Vietnamese Boat People

133. For over twenty years, Hong Kong has played an outstanding part

in coping with the burden of Vietnamese boat people. 143,000 refugees

have been resettled to third countries, 69,000 migrants and illegal

immigrants have been repatriated to Vietnam. Today only 1,300 refugees

and 800 migrants remain in Hong Kong, to which recently have been

added about 1,000 illegal immigrants. We have done our part as

citizens of the world. It is time to bring this issue to a close one

way or another. We are developing strategies to resolve the remaining

aspects of this problem as soon as possible.

134. The recent arrivals are illegal immigrants and we are pursuing

arrangements with the Vietnamese authorities to secure a faster pace

of repatriation. We are also seeking the Vietnamese Government's

assistance in the return of the 800 non-refugees who arrived while the

Comprehensive Plan of Action was still in effect. We are pressing the

United Nations High Commissioner for Refugees (UNHCR) and the

international community to work harder to arrange for the resettlement

of the remaining 1,300 refugees, and to continue to look after them

while they remain here. We will also continue to press the UNHCR to

repay the debt that is owed to Hong Kong. In pursuit of these

objectives, we have the full support of the Central People's

Government. I will also be urging the United Kingdom Government to

discharge its continuing moral responsibility to assist in reaching a

full solution to this problem.

H. The Administration of Justice

The Judiciary

135. The Basic Law provides for the continuation of the rule of law

and the judicial system beyond 1 July with no fundamental changes. The

common law and all the laws previously in force in Hong Kong, except

for any that contravene the Basic Law, are maintained; the judicial

system continues to operate fairly and independently as before.

136. One major change to the judicial system, a change which is

welcomed by all, is that the power of final adjudication is now vested

in the Court of Final Appeal of the Hong Kong Special Administrative

Region. The Court was set up on 1 July 1997. With the appointment of

judges and formulation of court rules, the Court is now fully

functioning. For the first time in our history, we have a fully

integrated system of courts within Hong Kong.

137. Another milestone in our judicial system has been the

establishment of a bilingual court system in which the Chinese

language can be used along with the English language. We take pride in

having a court system capable of dispensing justice in a language

which the vast majority of Hong Kong people can understand. At the

same time, it is important that the common law is maintained and

developed. There are difficulties that can arise when Chinese is used

in the common law setting, so the Judiciary has been implementing the

use of Chinese in courts prudently, so as not to compromise the

operation of the common law in any way.

138. A credible and independent judicial system underpins Hong Kong's

present success. I am confident that the Judiciary will continue to

uphold the rule of law in Hong Kong by dispensing justice without fear

or favour.

Legal Aid

139. Central to the rule of law is the equality of every person before

the law. Our legal aid system ensures that no one is prevented from

seeking justice because of a lack of means. In the coming year, we

will improve the service provided by the Legal Aid Department,

restructure the Department and streamline its work procedures.

140. We will continue with the Legal Aid Policy Review on further

improvements to our legal aid system. Particular consideration will be

given to reviewing the criteria used to assess the financial

eligibility limits and access to the legal aid system. We aim to begin

public consultation before the end of this year.

I. Upholding the Law

A Police Force of the Highest Quality

141. The Hong Kong Police Force is one of the best equipped and

trained in the world. They have made Hong Kong one of the safest

cities in the world.

142. We are not complacent with what we have achieved. We are

determined to maintain the Police Force as one of the finest, and

further improve its effectiveness. We will:

strengthen Police intelligence and detection capabilities;

deploy additional Police officers for front-line operational duties;

strengthen liaison with overseas law enforcement agencies to tackle

international organised crimes, and enhance co-operation with the

Guangdong authorities to tackle serious trans-boundary crimes between

Hong Kong and the Mainland;

upgrade the anti-smuggling and anti-illegal immigration capabilities

of the Marine Police; and

continue to foster a service culture in the Police Force and emphasise

the importance of integrity and honesty.


143. A generation ago, Hong Kong set its face firmly against

corruption. Thanks to resolute action, the Independent Commission

Against Corruption (ICAC) has succeeded in bringing this problem under

control, a vital ingredient in the common prosperity that the

community has created since then. Let me make it clear that the SAR

will not tolerate any form of corruption. The SAR Government is

committed to the fight against corruption in every area of public and

private life. To show that commitment in practice, additional

resources will be provided to enable the ICAC to strengthen its

investigation and prevention capability.

144. In the coming year, the ICAC will continue to enhance ties with

Mainland and international counterparts. Together with the Guangdong

Provincial People's Procuratorate, it will produce a new legal guide

for investors. It will also establish an International Assistance

Section to develop co-operation with other anti-corruption agencies in

investigating corruption-related crimes which transcend international

boundaries. I am confident that with the concerted effort of the ICAC

and the community at large, we will keep corruption at bay.

J. Public Administration

The Political Structure: Hong Kong People Ruling Hong Kong

145. Finally, I turn to our system of Government. The SAR Government,

in accordance with the Basic Law, is developing a political system

under which Hong Kong people are ruling Hong Kong. My Administration

is devoting attention to preparing for the election of the first SAR

Legislature and to the steady development of Hong Kong's democracy.

The elections will take place on 24 May next year. Legislation for the

conduct of the elections has just been passed by this Council. We have

just established the Electoral Affairs Commission to oversee the

elections, to ensure that they are carried out openly and fairly. A

vigorous, territory wide campaign to register voters and update the

electoral roll will be conducted. I urge every eligible resident to

register and to vote. I welcome every person or party who seeks to

represent the community to put themselves forward for election.

146. Next May's elections are the first step in a ten year timetable

laid down by the Basic Law for the elections of the Chief Executive

and the Legislative Council. Annex I of the Basic Law sets out the

method for electing the Chief Executive, while Annex II lays out the

method for forming the first, second and third terms of the

Legislative Council and its voting procedures. The two annexes also

set out the procedures to be followed should the method for electing

the Chief Executive or the Legislative Council after 2007 need to be

amended. While the broad framework has been settled, there are many

details that need to be worked out. We will be working out these

details in accordance with the principles of democracy and openness

required by the Basic Law and expected by the people of Hong Kong.

Together we will work steadily towards our long term objective of

having a Chief Executive and a Legislature elected by universal


147. We should take a fresh look at the regional organisations, the

Municipal Councils and the District Boards, so as to decide for

ourselves whether the present structure of local representative

government will continue to ensure the efficient and responsive

delivery of services to our evolving community. I have asked the

Secretary for Constitutional Affairs to consider how to take forward

public consultation on this issue.

An Efficient and Accountable Executive

148. The Hong Kong SAR has an executive-led government. To lead, we

must listen carefully and explain clearly what we intend to do. In the

programme that I have outlined today, and through the presentations

that each of the Bureau Secretaries will make over the coming week, we

want to assure the community that your Government remains committed to

listening to community views and responding by setting out clearly how

we plan to meet our long term objectives. We remain committed to

debating publicly issues of importance to the community, so that all

have the opportunity to take part in the process. The authority to

enact legislation, and to approve budgets, taxation and public

expenditure, rests with this Council in accordance with the Basic Law.

The executive arm of Government will continue to serve the community

through the proper exercise of its powers and the faithful discharge

of its responsibilities under the monitoring of the Legislature and

the public.

149. For many years, Hong Kong people have been used to learning about

government policy and actions through the news media. There was some

concern that the freedom of the press would be curtailed on the

establishmentof the SAR. I can assure everyone that this Government

will remain an open government, respecting the freedom of the press

and of the media.

The Civil Service

150. We are privileged to have a dedicated, honest and efficient Civil

Service that has gained the deep respect of the local and

international community alike. In the past three months as Chief

Executive, I have been struck by their professionalism and continuous

quest for improvement. The content of this Address and the Policy

Programmes we are publishing this afternoon demonstrates their


151. A high quality public service requires an effective management

process. I have tasked the Secretary for the Treasury to lead a

special group to develop and implement a target-based management

process to achieve continuous improvement in public services. The

group will focus its early efforts on the areas of housing and care

for the elderly. We must manage for results, by results.

152. To promote the objective of managing for results, we must expand

the leadership and strategic management capacity of the civil service.

To this end, the Secretary for the Civil Service will organise a

tailor-made high level leadership programme for the senior officials

who lead and manage the change process.


153. The programme that I have set out today will lead to an increase

of $7.7 billion in recurrent spending in the next financial year,

rising to $18.6 billion annually for the financial year beginning in

April 2001. Over the same five year period, capital expenditure of $88

billion will be incurred because of the initiatives in this Address.

This represents public money being reinvested in the community to

carry Hong Kong into the new millennium. We can afford to make these

investments because of the strength of our reserves, to which have

been added the Land Fund assets, and because of our careful management

of public finance. Recent events in Southeast Asia have shown the

importance to Hong Kong of maintaining strong reserves and prudent

fiscal management. But, my Administration will not hoard public funds

unreasonably. We will continue to seek ways to return the benefits of

today's prosperity to the community, and to invest wisely to ensure

future prosperity and the strengthening of Hong Kong's

competitiveness. The Financial Secretary is reviewing our financial

situation carefully, and will discuss the role played by our reserves

in the financial management of the SAR Government in his next Budget.


154. I understood, as I drew up this Policy Address, that what I say

today will affect the future development of Hong Kong and the

interests of each and every citizen. I asked myself some searching

questions: is our outlook broad enough? Is our thinking down to earth?

Has our direction reflected the fundamentals of a free market economy

and the principle of prudence in financial management? Has our

thinking reflected the feelings and aspirations of our citizens? Have

we only delivered the good news and not the bad in our assessment of

the current situation? Are we making promises to our citizens we

cannot realistically achieve? Have we ensured the development of

democracy by proceeding in an orderly fashion and in accordance with

the principle of steady progress? Have we allowed our attention to be

distracted by too many things, and lost focus? All these questions

have been in my mind during the entire process of preparing this

Policy Address, and will, I am sure, guide me in my work during the

coming five years.

155. In finalising the HKSAR Government's first Policy Address, my

colleagues and I share a common feeling: through our efforts, all the

tasks set out in this Address can be accomplished. My confidence is

based on Hong Kong's abundant human resources, our strong financial

position, the unique opportunity before us, and the strong support of

our country. In years gone by, the people of Hong Kong, mostly

Chinese, have created the miracle that is Hong Kong. Now, being our

own masters, I have no doubt we will be able to create an even better

future for our city.

156. Hong Kong has a bright future. I sincerely hope that I will have

the support of all Honourable Members, all my Civil Service colleagues

and all the citizens of Hong Kong. I sincerely hope that each and

every one, with the same sense of responsibility and commitment that

we have towards our own families, will join hands to achieve our goals

as we move steadily forward.

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