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Following is a speech by the Chief Secretary for Administration, Mrs Anson Chan, in the debate on the "Motion of Thanks" in the Legislative Council today (Wednesday):

Madame President, Honourable Members,

Thank you for members' views on the Chief Executive's Policy Address.

It has been noted often in the past that this debate is always a special occasion in Hong Kong's political calendar.

We should remind ourselves of the fundamentals of the process in which we are engaged. Basically, this debate provides Honourable Members with the opportunity not only to respond to the Chief Executive's annual policy address, but also serves as a forum to air their views on the general situation in the SAR and to express their hopes - and put forward their ideas - for the future. It is my responsibility to reply on behalf of the Administration, to expand on what the Chief Executive has set out in his address and, more formally, to thank Members for their support - or, as has become more common nowadays, to urge Members to give us their support.

But let's start at the beginning: the Chief Executive's annual policy address. This follows a long Hong Kong tradition and is one of those events which marks the continuity of our system of government following the transition. It is a key event in the legislative programme because it is the platform from which our head of government reports on progress over the past year, sets out plans and proposals for the coming year and, importantly, ensures that the community is kept fully informed of the government's long term goals and ambitions. By definition, the annual policy address must reflect the situation of the day. It must address that situation in a realistic manner.

This year's address has conscientiously met those requirements. And while it did not meet the expectations of all Members and indeed certain members of the community, the crux of much of the criticism is the complaint that the Chief Executive has not come up with instant solutions to the problems which are facing Hong Kong and, indeed, the rest of Asia and many other parts of the world since July last year when the collapse of the Thai Baht produced a domino effect all over the region and beyond.

Madame President, the fact is that all else flows from there. So, just as last year's policy address set a visionary and positive tone for our future in the wake of an extremely successful transition, this year's address was soberly precise in its analysis of the current situation, pragmatic in its approach to tackling our problems, yet forward-looking and responsible in taking some of the concrete steps we need to find a new niche for ourselves in an ever-changing global economy. The longer term initiatives strengthen our fundamentals to better equip Hong Kong for a rebound when the economy starts picking up again. There were no surprises, no gimmicks, no political sleight of hand. The community would have quite rightly censured us had there been any attempt to pull mythical rabbits out of the hat.

Given the seismic economic shifts that we have witnessed over the last year, their global implications, and the cuts and bruises that have been inflicted on Hong Kong in the process, I believe the community wants to see a coming together of its leadership so that we can tackle the issues we face in a united and coherent way. That is not to exclude differences, or lively and robust debate. That is the Hong Kong way. But I am sure the community does not want to see a "them" and "us" divide. They would prefer partnership to polarisation; constructive criticism, not castigation; solutions, not sound bites.

The Chief Executive was careful to take into account many views, including those of Members, in putting together his

policy address. But I think the community is well aware that there is no simple solution to our current woes. If there was, your Administration would have warmly embraced it by now. I am hence most grateful to those Members of this Council and members of the community who appreciate that there is no quick fix for some of the problems confronting Hong Kong. I appreciate their understanding of our pragmatic approach in seeking to ease the adverse effects in the short term with the view to strengthening our system so that we are more resilient and better equipped in the future. Nevertheless, this is not to say we are bereft of ideas or concern. Far from it.

My colleague, the Financial Secretary spoke earlier in this debate. It is clear from all he has said and what we have done that we have creatively and sensitively tested the limits of our prudent fiscal and economic policies in both his annual Budget and the additional packages of relief measures which were introduced in May and June this year. Further, surely

nobody can now be in any doubt about our determination to defend the currency link which, in our view, is at the core of the economic well-being of this community.

I was pleased to see the response to the Financial Secretary's Budget consultations. Specific ideas are coming forward; I am sure the Financial Secretary will pay them close attention, just as he has always done in framing his Budgets and, indeed, the other measures which have been taken.

Madame President, we shall continue to be a responsive and listening government. In view of the concerns expressed by Members, we shall try to improve and strengthen our relationship with LegCo, although I think some of these concerns owe more to perception than reality. Nonetheless, we will do what we can to enhance the existing channels of communication. Our goal remains to establish a constructive

partnership with LegCo on the basis of mutual understanding and co-operation. The alternative is stand-off and legislative gridlock. That is not what we are here for. That is not the way to serve our community.

This seems like an appropriate reminder to put this matter in perspective, and ask ourselves whether our relationship is quite as difficult and as tense as some have suggested. For my part, I feel only the constructive tension which is an inherent part of the relationship, and I view that positively. I and my colleagues understand and respect our constitutional obligation to be accountable to this legislature. Furthermore, we understand that in being accountable, by joining with you in debating, defending and explaining our proposals, policies and decisions which affect the public interest, we stand a far greater chance of having them understood, accepted and supported by the community at large.

The fact of the matter is that, we work closely with LegCo on a day to day basis. Twenty-seven financial proposals, 12 Bills and over 100 subsidiary legislations have been put forward for scrutiny and approval since the start of the current term. We have answered more than 500 oral, supplementary or written questions raised by Members at Council meetings. We have attended more than 70 panel meetings at the invitation of Members. That is not to say that we are concerned only with quantity of work. In fact we place utmost importance on the quality of our proposals and implementation plans. At the end of the day, securing the support of this legislature and through it, the support of the community is what matters. Nonetheless, the figures I have cited should help to put things in perspective as they are indicative of the time we put in responding to Members' concerns and how we engage Members in the governance of Hong Kong.

We are keenly aware that the legislature can, and does, use its powers to keep the executive under scrutiny and keep it in check through questions, inquiry and debates. We are fully aware, occasionally painfully aware, that we cannot take Members' support for granted. Members who have been on the receiving end of our lobbying efforts can testify to that.

Madame President, there are differences of opinion between the Administration and the legislature as to how the Basic Law should apply in the operation of legislature insofar as the Legislative Council Rules of Procedure are concerned. This search for the intended purpose of the Basic Law in outlining the division of labour between the Executive and the Legislature is an inevitable process, particularly when a new constitution framework is at work under the Basic Law for the first time in our history. We shall continue to engage Members in a constructive dialogue on this issue. Indeed, we are in a new era, with a new constitutional document which we are bound to observe. Whatever views some Members may hold about various aspects of that constitutional document, there is no argument that it is the basis on which we function. In a society which lives by the rule of law, it can be the only basis. And while I fully understand that we must always aspire to a more ideal world, experience tells us that in the meantime we must live in the real world, and make the best of what we have.

As far as the relationship between the Executive and Legislature is concerned, I do not intend to go into chapter and verse of the Basic Law. I am sure Members know Articles 64 and 73 backwards. In essence, while different roles, functions and positions are set down for the Executive and Legislature, the Basic Law also envisages a close and interlocking relationship between the two.

It is hardly surprising that with different mandates for the same portfolios that the Executive and Legislature may not see eye-to-eye on each and every issue : a phenomenon not uncommon in many democracies. That should not override our

common purpose in doing our best for the people of Hong Kong. This Administration is big enough to take criticism - we claim no monopoly on wisdom - but, as one of the local papers noted in commenting on this debate, criticism is always that much more convincing when it is offered along with viable alternatives.

I would like to deal with the suggestion raised by a few Members that a ministerial system is the best way to improve the relationship between the Executive and the Legislature. I am not convinced that this is the panacea they have in mind. This is an issue which requires careful and thorough consideration within our constitutional framework. The Basic Law has set out the blueprint for the political development of Hong Kong in the next ten years. This includes, inter alia, the system for appointing principal officials. We should work according to this blueprint and give it a fair wind before considering whether to introduce changes.

Madame President, I would also like to speak about the civil service. We have taken our fair share of criticism over the last 12 months, and I would like to respond to that. The Asian financial turmoil and a number of other crises such as the avian flu and problems at the new airport have presented serious challenges to the civil service in the past year. In most instances, we managed to bring the situation under control in a timely and effective way. Most recently, the civil service came under close scrutiny again during the intervention in the financial markets when we managed to avert financial disaster by fighting off market manipulators. I believe there was community support for that decisive action, just as there is a much greater understanding and support now in the international markets.

But there are things that we could have done better. For example, we over-estimated our capacity to eliminate the entire chicken population, although it is not everyday governments are asked to kill 1.5 million chickens. And we under-estimated the severity and scale of the economic impact of the Asian financial turmoil during its early stages. We are determined to learn from these experiences.

Despite such problems, the civil service as a whole remains dedicated to serving the community with professionalism and loyalty. There is no question of not giving the best to win the support of the community nor not listening to the concerns of the community. Hong Kong continues to be one of the safest and least corrupt cities in the world - due in no small part to the integrity and determination of the civil service at all levels.

In the current economic situation, the community expects to get maximum value from available resources. It also expects the Administration to increase the provision of public services in response to the growing demand from those in need.

The public sector needs to respond quickly and decisively in the best interests of the public. We shall strive to maintain the level and quality of the existing services which are in demand. At the same time, we must find ways to preserve our ability to fund new initiatives and to cope with increased demands in the years ahead with Government expenditure expected to grow more slowly in the short to medium term.

The launching of an Enhanced Productivity Programme underlines our commitment to stimulate a culture for productivity improvements in the civil service. Instead of relying solely on additional resources to implement new or improved services, Heads of Departments are required to deliver productivity gains amounting to 5% of their operating expenditure by the year 2002.

In return the Heads of Department will be given the flexibility and authority required to embark on cost-effective deployment of resources taking account of overall Government priorities and policies. Staffing flexibility will also be introduced to enable Departments to use short term or contract staff on terms and conditions of employment tailored to suit different operational environments and to engage outside expertise in a timely and appropriate manner.

The success of this Programme depends on the sustained efforts of managers and staff at all levels. It also requires a clear and shared vision in the civil service to continue to be accountable and responsive to the changing needs of the community.

I have personally briefed all senior colleagues on the underlying philosophy which will drive the productivity enhancement movement. The two resource bureaux have drawn up programmes to reach out to all Heads of Departments and have met with the Central Staff Consultative Councils with a view to developing innovative measures to further enhance the productivity of the civil service. With these concerted efforts, I am confident that the civil service will rise above all the challenges and contribute to building a better future for the community they serve.

Madame President, I would like to end by reporting to this chamber how on my just-completed official visit to Europe I encountered so much support, understanding and goodwill for Hong Kong. Everywhere I went - London, Rome and Milan - people at the highest levels of government and business displayed great interest in our progress since the transition, and were keenly aware of the way in which we are managing the issues arising out of the fallout from the Asian financial turmoil.

There was a genuine confidence in our ability to handle these problems and a firm belief that Hong Kong will continue as a strong community and a valued law enforcement and business partner. There was a recognition of our strengths as a free society with an open economy underpinned by the rule of law.

I have to say I was much encouraged by the confidence others have demonstrated in Hong Kong and in the ability of our community to overcome the challenges we now face. I share that confidence. I believe that so long as we unite as a community, as we have done so often in the past, and draw upon our strengths of creativity, determination and resilience, we will return to our winning ways sooner rather than later.

Madame President, thank you very much.

End/Wednesday, November 4, 1998

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