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The following is the speech by the Chief Secretary for Administration, Mrs Anson Chan, on the Budget at the Legislative Council today (April 5):
Madam President,
The 2000-01 Budget of the Government of the Hong Kong Special Administrative Region is pragmatic and is in the overall interests of Hong Kong. It has been warmly welcomed by all sectors of the community. Honourable Members of this Council who spoke in the Debate indicated their support for most of the Budget proposals. Later, five Policy Secretaries will respond to Members' views and the Financial Secretary will conclude.
Madam President, Hong Kong has gradually recovered from the economic downturn caused by the Asian financial crisis in the past year. Both private enterprises and the local workforce demonstrated great resilience in adapting to the changes. Their common objective is to enhance our efficiency and productivity, and to restore Hong Kong's overall competitiveness. In this year's Budget, we have followed the Chief Executive's policy objectives and the HKSAR's development strategies for the 21st Century, and committed more resources to education, environmental protection, innovation and technology and the provision of social services. We will also further strengthen our financial systems, upgrade our financial infrastructure and reorganise the trade and industry-related departments to promote foreign investment. Hong Kong must be well positioned to face the challenges brought about by globalization in the 21st Century and to capitalise on the business opportunities arising from China's accession to the World Trade Organization.
An Up-to-date Civil Service
Despite the lack of natural resources, we have been able to develop Hong Kong into one of the world's most prosperous and successful cities through our long-term investment in education, manpower resources and infrastructure. Hong Kong's success owes much to the hard work and entrepreneurial spirit of our citizens. But an honest, reliable and professional Civil Service is also an important building block of this success.
While the private sector is striving to adjust and upgrade themselves, the Government has, over the past few years, embarked on a number of measures to increase the efficiency and cost-effectiveness of the public sector. These include the "Serving the Community" programme, Performance Pledges, Target-based Management, the recently introduced Enhanced Productivity Programme (EPP) and the Civil Service Reform.
EPP has achieved good results since its implementation last year. All government departments have been able to cut expenditure, to maintain or improve their level of services, or to provide new services. I am pleased to note that all departments have achieved their EPP Target for 2000-01. The more progressive ones have gone one step further in meeting the full 5% target which was originally scheduled for completion in 2002-03. These achievements would not have been possible without the efforts and dedication of our civil servants. Although within this large set-up, there are some civil servants who are not performing or are involved in malpractices, I believe that, on the whole, we have a responsible and customer-oriented Civil Service.
With advances in information technology and higher degree of civic awareness, the community will not be content with the improvements that we have made so far. They want a world-class Administration. The community also wants a more cost-effective public services, a more streamlined establishment and more flexible deployment of resources. These demands are reasonable and normal in a mature, open democratic society.
Progress of the Civil Service Reform
As head of the Civil Service, I am fully aware of the high hopes that are placed on civil servants. And we are pursuing the Civil Service Reform in a proactive and positive manner. The aim of reforms that we initiated last year was to foster a customer-oriented culture through a more flexible and open management mechanism. After months of hard work and consultation with the community, the Staff Sides and departmental management, we have worked out the detailed reform proposals under the principles of "change amidst stability" and "securing the old and reforming the new". Of these, the new starting salary levels and the streamlined disciplinary procedures have been endorsed and will be in place this April. We have also worked out, after thorough consultation with the Staff Sides and departmental management, the new entry system, the civil service appointment terms and the fringe benefits for recruits in order to make the Civil Service appointment system more flexible and more in line with private sector practices.
The Civil Service Bureau has also put forward specific proposals on the Voluntary Retirement Scheme and enhanced performance management for discussion with the Staff Sides. In addition, we commenced the consultancy study on the Civil Service Provident Fund Scheme in January and the Stage 1 report is expected to complete in mid-2000.
The fact that good progress has been made in taking forward the proposals on various aspects of the Civil Service Reform in just a year's time reflects the determination of the Government. Of course, to successfully implement these proposals, we will need support from this Council and the community.
In last week's debate, some Members of this Council held the view that our pace for reform was too slow when compared with that of the private sector. Others, however, were worried that the reforms would affect Civil Service morale. We understand that these are also the concerns of the community.
In the next few months, we will be seeking funds from this Council for introducing a fringe benefits package for new recruits. Specific compensation proposals for voluntary retirement and management-initiated retirement will also be put to this Council for discussion. In formulating these proposals, our aim is to achieve fiscal prudence and a more flexible establishment, as well as to ensure that all those affected will be given reasonable and fair compensation. I hope Members of this Council will support the funding requests so that the reform proposals can be implemented.
Containing the Size of the Civil Service
To show our determination to enhance the productivity of the public sector and to maintain a lean and efficient Civil Service, I have, in conjunction with the Financial Secretary, drawn up the target of reducing the Civil Service establishment by 10 000 posts in three years. Such a reduction does not merely aim to strictly contain the size of the Civil Service. More importantly, we hope to further encourage government departments to take a closer look at service demands and modes of service delivery, to encourage higher efficiency and quality in the provision of public services through greater private sector participation and utilization of information technology, and to uphold the principle of maintaining a "small government". In fact, the percentage of Hong Kong Government's spending to our GDP is relatively low when compared with that of other governments in the Region after their expenses in defence are excluded.
In last week's debate, some Members queried that our target of cutting 10 000 posts was insignificant. I must point out that while we are striving to achieve the target of bringing the number of civil servants in 2003 down to the 1995 level of 188 000, we also need to cope with increasing demands for public services resulting from population growth and implementation of new policy initiatives. As such, a 5% reduction in the Civil Service establishment is indeed a pragmatic target.
A series of measures will be carried out to tie in with the cutting of posts. The head of the two resource bureaux will work closely with Heads of Departments in reviewing their departmental human resource planning, existing establishment, vacancies, future service and manpower demands, etc. The purpose is to streamline the establishment and to contain the growth in the number of staff without compromising service quality. Resources released through the reduction of posts can be used to meet new or additional service demands through alternative modes of service delivery.
I would like to stress that cutting of the number of posts will not be carried out on an "across-the-board" basis, nor will it be targeted at particular grades. Through a Voluntary Retirement Scheme and an enhanced central co-ordination mechanism, the problem of surplus staff in individual grades caused by changes in service demands or modes of service delivery will be alleviated. We do not think that the reduction of posts will lead to lay-offs. More importantly, we have pledged to maintain the level and quality of public services while streamlining the Civil Service establishment.
Civil Service Pay
Madam President, I understand that some Members may think that the present pay levels for civil servants in general are too high and that they should be adjusted downwards in order to control public sector expenditure and enhance our overall competitiveness. I must reiterate that the Government's policy on Civil Service salaries is to attract, retain and motivate civil servants by offering them reasonable, competitive pay and conditions of service which are in line with those in the private sector.
As regards the comprehensive survey on the overall pay level for the Civil Service, the Secretary for the Civil Service has submitted a paper to the Staff Sides and the Legislative Council Panel on Public Service last month, setting out the details and factors for consideration. The Staff Sides are concerned whether it is appropriate to carry out a comprehensive pay level survey in the prevailing economic climate. We will also need to examine how the difference in job nature between the public and private sectors should be reflected in the survey. We will study this issue carefully taking into account the experience of the 1986 Pay Level Survey before discussing with the Staff Sides and this Council.
Meanwhile, we have in place a well-established mechanism for annual salary review which has been widely accepted by the community, the Management and Staff Sides. The 2000 Pay Trend Survey is underway. As a good employer, the Government will adhere to this mechanism. When the findings of the survey are available, we will consider the morale of the Civil Service, the overall budgetary situation and general economic conditions before reaching a decision on this year's pay adjustment.
An efficient, honest and modernised Civil Service has always been the building block of Hong Kong's development. It must be in step with time to meet the ever-increasing and sophisticated demands of the public. The effective operation of the Civil Service system, however, hinges on the discipline and integrity of civil servants. We must, therefore, enhance this culture of integrity in order to protect the system from undesirable influences.
Construction Industry Review Committee
The recent spate of piling problems in public housing estates have indeed caused public concerns over the integrity and capability of the Civil Service as well as individual staff members. These incidents also expose some inherent weaknesses of the construction industry. Substandard construction works have an adverse impact on Hong Kong's reputation and our sustained economic development. In view of the seriousness and urgency of the issue, the Chief Executive has decided to appoint an independent Construction Industry Review Committee to examine the operation of the industry and to make recommendations on measures to improve upon the practices of the trade. The Committee will examine issues like output quantity and quality of the industry, environmental friendliness, site safety, workforce, system of supervision, etc..
The Committee's recommendations will have regard to local circumstances and overseas experience. Its aim is to improve cost-effectiveness, customer satisfaction, nurture a quality workforce, promote a sense of responsibility and integrity among members of the industry, and foster a healthy culture in the construction industry.
The Committee will be chaired by the Honourable Henry TANG, Member of the Executive Council, and comprises reputable and knowledgeable members from the construction industry and related fields, as well as members from other sectors of the community. We expect the Committee to complete the review in about nine months' time and submit a report with recommendations to the Chief Executive by the end of this year.
The Panel on Housing of this Council has passed a motion urging the Chief Executive to appoint a statutory committee to conduct a review on the construction industry. The Government is of the view that, given the extensive scope of work and the review process (which will involve different levels of the trade and many relevant parties), the Committee should be given more flexibility to allow it to complete this complex and important study in a short span of nine months. Besides, a statutory commission of inquiry normally investigates specific incident, and its operations are governed by legislation. Owing to statutory or other procedural requirements, the proceedings of a statutory inquiry will certainly take much longer to complete. In view of its nature of work and the large number of issues involved, we consider it more appropriate and efficient to assign the task to a non-statutory committee.
End/Wednesday, April 5, 2000
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