Remarks on the Appropriation Bill 2005
at the Legislative Council
on 20 April 2005
Madam President

Former Chief Executive Mr Tung admitted in his 2005 Policy Address the failure of his government to establish the vision of “people-based” governance in the past seven and a half years. The government, in Mr Tung's words, fell short of “thinking what people think and addressing people's pressing needs”. Though Mr Tung is no longer with the government, the Administration should take note of his remarks as a valuable piece of advice.

2005-6 Budget is not “people-based”

Unfortunately, the 2005-06 Budget indicates that the government has failed to draw any lessons from the past. Many people including those in the construction industry are still suffering from unemployment and many professionals facing economic hardship in one way or another including negative equity. But the government did nothing to address their problems although the financial position of the government has obviously improved. Now the Financial Secretary is telling us that the government's cost containment efforts are starting to bear fruit and the budget balance will be achieved in 2007/08, one year earlier than the original target of 2008/09

Not recognising middle class' hardship

Despite the optimism expressed by the Financial Secretary, many sectors of our economy are yet to benefit from the recent economic growth spurred by the surge of in-bound tourists, particularly those from the Mainland. In order to ease the burden of taxpayers, I have urged the government to reduce the salary tax or at least put the second phase of the salary tax increase on hold. But my requests have fallen on deaf ears. Instead, the Financial Secretary proposes to increase allowances for children and dependent parents or grandparents. However, the increase will bring little help to the taxpayers, particularly the middle class.

No measures taken to combat high unemployment in construction sector

Sadly, the construction sector is still hard hit by the reduction in public housing production and the sluggish private sector. Despite the recent improvement in our economy, its unemployment rate still stays at a relatively high 14.7%, almost 2.5 times the overall unemployment of 6.1%. Time and again I have been calling for the urgent attention of Mr Tung and Mr Tang to this serious unemployment problem affecting the industry consisting of over 300,000 people and about one million people if their families are also counted. However, no concrete measure is on the horizon.

The government's determination of drastically cutting public expenditure to resolve budget deficit and to protect the Hong Kong Dollar is understandable but its stubborn attitude of blatantly ignoring the serious situation of the construction industry is most disappointing! Lack of funding will also hinder the maintenance and retrofit of existing infrastructure and building works, let alone start of new projects. How can we maintain our position as a first class international metropolitan city? Although the government has earmarked $830 million for Buildings Department for the removal of unauthorized building works, little impact on our employment situation is expected as it will be undertaken over a span of 5 years. In other words, it involves only a meagre $166 million a year.

No increase in expenditure on infrastructure projects to spur the economy

The Financial Secretary has mentioned in this year's Budget that the government will continue to allocate resources for capital works projects, promote tourism, logistics, environmental, cultural and creative industries, and will facilitate urban renewal and building management and maintenance as mentioned paragraph 65. The paragraph continues, “Apart from encouraging economic development, these projects create more job opportunities”.

And in paragraph 52, it is also mentioned that we will continue to expand our cross-boundary transport network and other infrastructure facilities to meet the needs of our logistics industry. If the government is actually acting on its words, how come the government has only repeated its commitment of investing an average of $29 billion per annum in infrastructure projects?

Indeed, the estimated provision on capital works for 2005-6 is $27.6 billion, much lower than the past average. Surely, the government could always come up with good reasons to justify such variations and reductions. But it will not change the fact that there will be no increase in expenditure in infrastructure development in the coming year or the years to come. Does this mean that the Financial Secretary is only paying lip service to what paragraphs 52 and 62 say?

60% of 169 projects of the two defunct municipal councils still on hold

On the other hand, the government fails to pay much attention to the public need of municipal facilities. 60% of 169 projects for the two disbanded municipal councils remain on hold. According to the information provided by the government on the 169 projects of the two defunct municipal councils, 139 projects are within the remit of the Leisure and Cultural Services Department while 30 are environmental hygiene facilities. (i) Among the 139 projects, 33 projects have been completed or have a completion date. Two are undertaken as Private Sector Finance projects. Eleven were cancelled following consultation with the District Councils. For the remaining 93 projects, 21 are recommended to commence after the review of the Leisure and Cultural Services Department. (ii)With regard to the other 30, funding has been approved for 8 of them. 12 were deemed unnecessary. The remaining 10 projects will be reviewed by the Food and Environmental Hygiene Department in respect of the need of the services and the scope of the projects. Resources permit, they will be carried out according to the priority in need.

I am not satisfied that after chasing the government for over 4 years for the commencement of these 169 projects after the abolition of the Urban Council and the Regional Council. Despite the former Chief Executive Mr C H Tung replied to me at LegCo that he had tasked the Secretary for Home Affairs to look at the projects and to give a report to LegCo within 3 months, there are still no firm decisions on so many projects!

Actions required to address people's pressing needs

Instead of urgently addressing important issues such as unemployment, lack of municipal facilities and strengthening our infrastructure development and building works, the government is still preoccupied with the elimination of budget deficits though its financial position has improved substantially. Is this the way the government lives up to the “people-based” governance? Is this the way the government “think what people think” and “address people's pressing needs”? Or, has the government completely dropped the notion of the “people-based” governance with the departure of Mr Tung?

I have been urging the government to issue bonds to raise funds for more infrastructure development so as to capitalise on private sector's huge resources of some $3,500 billion. Last year, the government did raise $6 billion in its securitization exercise of 5 tunnels and 1 bridge and $20 billion in its bond issue. However, all of this $26 billion is being used to finance part of the $29 billion annual expenditure for infrastructure rather than additional infrastructure projects. In other words, its annual expenditure earmarked for infrastructure projects remains at $29 billion despite the $26 billion bond proceeds. But investing the proceeds in new infrastructure development will help increase the competitiveness of our economy which is the key for future growth. Moreover, initiating more infrastructure projects and building works will create more employment opportunities in the construction industry. In order to create the required impact on our economy and more employment, the government should seriously consider increasing the volume of bond issuance for initiating more public works projects.

On the other hand, the government should also adopt the Private Finance Initiative (PFI) to encourage private companies to initiate more new public projects, which have not been included in the existing facilities or may not be built by the government on its own. I believe that I have talked on the subject many times at this Chamber and am therefore not prepared to repeat the details here again.

Madam President, I am discontent with this year's Budget and have been thinking of voting against it. I sounded out my position in an e-mail distributed to several thousand fellow engineers in early April. Among the responses that I received, almost all of them agreed with my views and gave their overwhelming support to me to vote against the Budget.

If the Financial Secretary wants the public to support his budget, please start thinking what people think and addressing their pressing needs. Madam President, with these remarks, I so submit.