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Following is the English version of a statement made by the Financial Secretary, Mr Donald Tsang, during a stand up media session at Central Government Offices today (November 27):
"Hong Kong's economy is firmly on the road to recovery. We have now had six consecutive quarters of positive GDP growth - the last three recording double digit growth. Our overall economic performance continues to be robust. That's why last Friday we again revised our GDP growth estimate for the year as a whole to 10%.
However, I fully understand that many people are still suffering from the effects of the financial turmoil and the economic adjustments that have taken place over the past two years. This is particularly true for the lower- to middle-income employees who have not yet felt the full benefits of the recovery. Pay cuts or pay freezes which were imposed at the onset of the crisis remain in place for most of these employees.
As from this Friday (December 1), the Mandatory Provident Fund (MPF) Scheme will come into force to provide much-needed long-term financial security for employees. This scheme is the most important social policy we have implemented in recent years, representing the consensus of the community reached over some three decades of discussion. It has far reaching positive implications for the benefit of our workforce and for this reason it needs to begin as scheduled on December 1. We cannot afford any last minute hold-up.
We fully understand that some employees may require some time to adjust to the new arrangements in the introductory stage because of the need to contribute their share to the MPF scheme. We sympathise with these concerns and recognise the need to minimise the impact and, at the same time, ensure the smooth implementation of the scheme.
After considering these issues for some time and with the support of the Chief Executive, I have decided to implement two relief measures:
(a) I will propose no increase in four major categories of livelihood-related fees - namely water tariffs, sewage charges, school fees and medical fees - until an appropriate later date.
(b) I propose to extend the concessionary duty rate of $1.11 per litre on ultra-Low Sulphur Diesel (ULSD) for a further six months from 1 January to 30 June 2001, when it will return to $2.00.
Most of the Government fees and charges have been frozen since February 1998 as part of the relief package introduced to help us ride out the economic storm. I originally intended the freeze to last for one year but further extended it pending economic recovery. As the economy is now back on track and having regard to the need to uphold the 'user pays' principle, we should have revised these fees and charges by now.
However, we do not want to place an additional burden on the general household expenditure of the community, at this time, especially those households which have yet to fully benefit from the economic recovery. For this reason, we decided to continue to freeze the levels of these four categories of government fees, which are most closely related people's livelihood.
We don't have a predetermined timeframe as to when we will resume revision of these fees. However, we will keep this constantly under review having regard to the economic situation of Hong Kong and the community at large. In due course, Bureau Secretaries will consult the relevant Panels in LegCo on the appropriate timing of the revision.
With regard to the remaining fees which we propose to revise in the coming months, they are largely regulatory fees and fees for services that will not cause any undue impact on the livelihood of the general public or the day to day cost of doing business. But, we have a duty to uphold the 'user pays' principle and ensure that the costs of providing these services do not fall unfairly on the taxpayer.
As to the current concessionary duty rate for ULSD, we consider a six-month extension to be appropriate. In arriving at this decision, we have taken into account various factors. These include the assessment made by a number of international experts on the likelihood of a moderation in the price of oil next spring when the weather gets warmer. Also by then the public should have felt the full benefits of the economic recovery. In paying heed to the request of the transport trade, the government must also have regard to the overall interests of the community and the need to strive for a balanced budget. Given this fact and the loss of revenue because of other recent major fiscal concessions for environmental improvement, we cannot afford to keep the extension on ULSD indefinitely.
At the same time, we take competition in the fuel market seriously. This is more important if fuel prices are to be lowered. And we have already made progress on a number of fronts to facilitate new entrants into the market and to enhance competition. We will continue to monitor the oil market and to strive to reduce adverse oligopolistic effects, if any, in the local oil market that prevents oil companies from lowering pump prices to fully reflect reductions in production prices.
I am confident that these two special measures I have just announced - a further freeze on four major livelihood fee categories and the extended ULSD concession - will bring about psychological and economic relief to the general public and the transport trade. Both measures should be beneficial to bringing further economic growth and help lift the mood of the people."
End/Monday, November 27, 2000
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