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CS's Speech


Following is the speech by the Chief Secretary for Administration, Mr Donald Tsang, at the 5th Anniversary Dinner of the Hong Kong Institute of Directors tonight (November 6):

Mr Chairman, distinguished guests, ladies and gentlemen,

You have given me the honour to join you tonight at this 5th anniversary dinner of the Hong Kong Institute of Directors. Over the past five years, the institute has worked hard to promote good corporate governance in Hong Kong. So stand up and take a bow - you deserve it! You have the community's full support to push for the highest standards of corporate governance within Hong Kong. By doing so, you help cement Hong Kong's premier position as the international corporate and financial services hub for the region and for China.

Tonight I also want to talk about governance - the governance of Hong Kong. Over the past five years, this subject has pervaded public debate, because Hong Kong people have taken very seriously the promise of a high degree of autonomy and 'Hong Kong people running Hong Kong' under the 'One Country, Two Systems' formula. But it has come into much sharper focus over these past few months with the advent of the new Accountability System against the backdrop of a sharp economic downturn.

I shall focus on two themes. First, it is our commitment to public sector reform and change in the governance of Hong Kong. Second, I shall discuss the importance of a united effort to ride out our present and future challenges.

Managing change is never easy. The status quo has forever superficial appeal but is often not the best option. The same applies to what we do in government. As our economy quickly restructures itself, change is no longer an option for Government; it is imperative. Indeed, this is nothing new - throughout my 35 years in the Civil Service, and now as a Principal Official under the new Accountability System, managing change has been a part of our raison d'etre.

But we hear more about it nowadays because community expectations run higher than what the civil service can traditionally deliver; and because the pace of change in our economic and social underpinnings is faster than ever before. As a result, we have to respond more quickly to meet not only the demands of the community, but also to maintain our competitiveness in the globalised economy.

Look at the changes we have had to grapple with since Reunification - the establishment of the SAR, implementing 'One Country, Two Systems', the Asian financial crisis, the bursting of an asset price bubble, persistent deflation, high unemployment, a shrinking tax yield, a rising Budget deficit, reforms to our financial markets, education system and the Civil Service, the global economic downturn, the fight against terrorism. The list goes on.

All of this has involved not just managing change, but pro-actively taking measures to bring about change. The Civil Service is no exception.

In these past few years, civil servants have been doing more with less staff and resources. We have reduced the number of Civil Service posts by 10% - from 198,000 in early 2000 to 178,800 by October this year. The actual number of civil servants now stands at 172,000 - about the same as it was in the mid-1980s. This is no mean feat. Particularly when over the same period our population has grown from about 5.5 million to 6.7 million.

In 2000 we introduced the first Voluntary Retirement Scheme and since then more than 9,500 civil servants have left Government of their own choice. The scheme enabled departments to improve services through business re-engineering and outsourcing without resorting to compulsory redundancy. We have maintained service standards by changing the mode of service delivery but, at the same time, have achieved savings through the deletion of posts.

These staff cuts, coupled with an Enhanced Productivity Programme, have helped us save $6 billion of taxpayers' money a year. The recently implemented Civil Service pay cut and cut in salary-related subventions will shave another $3.2 billion a year off the government's expenditure. Bureaux and Departments are now identifying more savings to cut operating costs by about 5 per cent over the next five years as requested by the Financial Secretary in the 2002/03 Budget.

If you look back objectively and separate out the expected opposing and strident statements by the staff unions, you will discover, by and large, that civil servants have handled all these challenges remarkably well. They have quietly but surely demonstrated a genuine desire and commitment to serve the community to the best of their abilities and within the available resources.

Standards of service have not suffered. In many areas they have improved. Immigration officers, for example, cleared 92% of the 23 million arrivals at Hong Kong International Airport within 15 minutes last year. Four years ago, their performance pledge was 30 minutes.

But we will not stop there. The budget deficit affects everyone in the community. No one person or group of people can hide from it in isolation. The public service will not shirk its responsibility. It will do its part to contain and reduce public spending.

For example, under the Accountability System, all Directors of Bureau are now reviewing their own set-up as well as the working relationship between their bureaux and departments. The reviews are driven by three objectives: first, to streamline organisational structure; second, to better integrate policy formulation and policy implementation; and, third, to enhance operational efficiency and economy. The Secretary for Housing, Planning and Lands and the Secretary for Education and Manpower have conducted their organizational reviews and hope to implement a new and streamlined structure by January. At the same time, we are preparing for another round of voluntary retirement early next year.

There has also been considerable debate within the community about the level of Civil Service remuneration. To take this matter forward in a rational and structured way, we have formed a task force to review the pay policy and system of the Civil Service. Their first set of recommendations is now open for public consultation until November 15. Our broad objective is to build a more flexible system to facilitate better matching of jobs, talents and pay, in the light of current relativities in the private sector. In coming to a decision, we will take into account the feedback from civil servants and the public.

But as a matter of priority, the task force has proposed to conduct a Pay Level Survey and review the annual pay adjustment mechanism. The Civil Service pay system should include sufficient but not excessive remuneration to recruit, retain and motivate staff of a suitable calibre to provide the public with an efficient and effective service. The system should be regarded as fair both by civil servants and by the public they serve. It should complement, support and facilitate the effective and efficient operation of the Civil Service. Most of all it should be flexible enough to allow itself to change and evolve over time to match socio-economic movements.

As I just mentioned, change is never easy. And the reforms facing the Civil Service are complicated. In the spirit of good governance, we are committed to smoothing the passage of change by ensuring that it is a transparent and inclusive process. We believe in frank and open dialogue with civil servants on the mode and speed of change. I urge all civil servants, irrespective of rank and station, to respond in a collaborative and spirited fashion in this enterprise. We must find and agree a measured pace of reforms needed to meet public aspirations and to sustain a vibrant service.

While some things must change, some others must not. Adequate and cost-effective public services must continue. A clean, efficient administration must be preserved. The core values of the Civil Service - continuity, professionalism and political neutrality - must not be compromised.

The international business community rates our Civil Service as one of the best in the world. It constitutes a prime factor in choosing Hong Kong as a base for their operations. A corruption-free, professional and well-trained Civil Service marks Hong Kong above many of our competitors vying for foreign investment. It is the best guarantee for a level playing field that is so important for the international business community to prosper.

We have thus set lofty goals for our Civil Service to reach. In return the Administration has a duty to ensure that members of the Civil Service remain motivated to serve. That motivation comes professionally from continual training and skills upgrading and emotionally from the appreciation that the Civil Service is able to secure from the community. We want our civil servants to feel proud when they serve to the best of their ability. Very often, indiscriminate criticisms tend to militate against this desire.

As Chief Secretary for Administration, I meet frontline staff regularly during visits to departments. I am always touched by the prevailing sentiments of those I meet. Those I meet thoroughly understand the need for further belt-tightening, cost-cutting and productivity gains. They understand why there was a pay cut. They are always willing to find ways to apply technological advances in providing better services. They are willing to share the pain of the community of which they form a part. But they are deeply troubled by some misconceptions about the Civil Service within the community.

One example stems from the introduction of the Accountability System. Some commentators has ascribed the birth of this new System to the conception that the civil servants were not up to the task. Nothing was further from the truth than this. The Accountability System was introduced because Hong Kong people had begun to demand what the Civil Service system could not offer. And it was also an important step along our path of constitutional development.

Under the previous system of maintaining a permanent Civil Service it was nonsensical to apportion individual political responsibility for decisions made collectively. The Accountability System reconciles the needs for political accountability with the necessity to maintain the political neutrality of the Civil Service. Like political appointees elsewhere in the world, the Principal Officials will come and go, but the Civil Service must stay as the bedrock of governance and service for Hong Kong.

I say with personal experience and conviction that since the new system was introduced, Principal Officials and the civil servants have quickly learned to live with each other and support each other. The Principal Officials take ultimate responsibility for steering the policy agenda. But supporting them, working with them, advising them, is the Civil Service. It is a teeth and lips partnership.

Being a free and open society, Hong Kong will continue to relish quarrels and disagreements over new policies or new procedures, about what is right, and not so right, to help us through the current economic challenges. But what is overwhelmingly important in our own interests and for our own future is to accept each other now as honest partners in pursuit of a common goal. Let's work towards that common goal of economic prosperity. Let's put our individual agenda aside. Let's engage, discuss rationally and reach compromise.

Principal Officials have a role to play. The Civil Service has a role to play. Business has a role to play. Our Legislature and the wider community have a role to play. In decades past, Hong Kong has overcome enormous challenges and threats to its prosperity. I have great faith in the ability of our community to overcome these current difficulties in our strides.

As partners we will find strength in unity, and a unity of purpose to counter any adversity that comes our way. And by doing so Hong Kong will continue to shine as Asia's world city and to entrench its position as the crown jewel of our country.

Thank you.

End/Wednesday, November 6, 2002


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