Tsang also said the government would consider expanding its immigration schemes to attract more young and single men to offset the increasing number of single women in the territory.

Financial Secretary Henry Tang said the government will consider increasing the tax allowance for children.

Hong Kong's rapidly aging population is a big headache for the government, as it costs more in social welfare costs, medical and health bills.

A low birth rate could compound the government's financial woes by slowing economic growth and crimping government revenues just as public spending pressures rise.

The number of births in the SAR has fallen from 63,300 in 1996 to 47,900 last year, according to the Census and Statistics Department.

These figures have sparked concern that Hong Kong may encounter a shortage of skilled labour in the future.

Tsang said the fertility rate was just 0.9 babies for each woman, one of the lowest in the world.

``We will encourage people to have more children,'' Tsang told RTHK's Talkabout.

``I think each family should have at least have three children. The replacement level requires 2.1 children.''

The number of mainland people arriving in Hong Kong on one-way permits is also decreasing, and fell from 53,000 in 2003 to 38,000 last year.

On average, 104 mainlanders arrived for indefinite stays in Hong Kong every day last year, which was only 70 per cent of the total quota of 150. Most were women and children of Hong Kong men.

At a Legco debate last year, Liberal Party chairman James Tien criticized the decade-old quota which allows 150 mainlanders a day to settle in Hong Kong.

He said it brings in people who have ``low income with a low education level,'' contributing to the widening poverty gap.

Tsang said Hong Kong might not be as attractive as it was in the past for mainlanders because of the rapid economic development in China.

But the government will consider expanding programs to attract skilled or talented people.

The Capital Investment Entrant Scheme had attracted 291 people to the SAR as at December while the Admission Scheme For Mainland Talents and Professionals has attracted 10,241 mainlanders since its start in July 2003.

Tsang was cautious about the imbalance between the male and female population, and said the government must find ways to attract more young, single and talented men to the SAR through these schemes.

The male proportion of the population has declined from 49.9 percent in 1996 to 48.1 percent in 2004, while the proportion of women has increased from 50.1 percent to 51.9 percent in the same period.

The proportion of never-married women aged 45 to 49 also rose from 3.7 percent in 1991 to 8.3 percent in 2001, according to the 2001 Population Census. This is partly because men are marrying mainland wives. Also, Hong Kong women have high expectations of their partners while Hong Kong men find it hard to accept that their wives may be more capable than they are.

``Half of the men in the SAR now go to the mainland for wives,'' Tsang said.

``If this situation remains unchanged, then there will be 70 males to 100 females by the year 2031.

``Let's say if we have 20,000 men going to the mainland for marriage, then there will be 20,000 [Hong Kong] women remaining single.

``These 20,000 men may bring their wives to Hong Kong, thereby increasing the female population.''

However, a caller to the station was not convinced by Tsang's explanation and blamed the SAR government for the declining birthrate.

``The education system is a mess and university students are unemployed after graduation.

``I don't think parents can afford to have more children,'' the caller said.

Tsang responded that the government understood that people were disturbed by the Asian financial crisis and by political disputes since 1997.

He said the government will study how to reduce pressure on families.

But experts said improving the quality of local education is a more urgent task than encouraging women to have more children.

University of Hong Kong senior lecturer Paul Yip said the present economic environment and education system is not conducive to families having more children.

He urged the government to encourage the adoption of flexible working hours and to subsidize couples buying flats.

Yip also suggested the government gives extra help to single males wanting to move to Hong Kong.

Hong Kong Baptist University sociology associate professor Siu Yat-ming urged the government to improve education.

Executive Councillor Leung Chun-ying said it was not necessary to give tax allowances to attract talented people to the SAR.

Instead, the government should streamline immigration application procedures.

Another Executive Councillor, Bernard Chan, said importing skilled people

could eventually increase job opportunities and provide much-needed skilled labor.

teddy.ng@singtaonewscorp.com