Press Release



Transcript of Budget press conference


The following is the transcript of the questions and answers (English portion) in the Budget Press Conference given by the Financial Secretary, Mr Donald Tsang, today (March 7):

Question: Mr Tsang, would you say that your Budget is being over-conservative, especially to those who have been complaining about they are not experiencing the economic pick-up?

Mr Tsang: I would not use the same adjective. I would say that I have done a prudent Budget, as I have done in my previous years. There are times to be courageous; there are times to be prudent. In Budget preparation, I think prudence is an overriding consideration. There are times when I was courageous as well, to the point that many people thought that I was reckless. You remember what I did in the stock market in 1998? But it's not the time to do that sort of thing.

I also believe that we have done quite a lot, in the sense that we have allowed expenditure to grow in real terms this year and the increase in spending is reflected in considerable improvement in a variety of services. And today, in my Budget Speech, I have made special provisions for the underprivileged, the disabled and the juvenile delinquents. So I believe we have done what is appropriate in the present state of Hong Kong economy. I do not think we should further stimulate the economy. The economy is recovering exceedingly well. Just witness its performance in the year 2000. I do not think it is the time for us to distort it by further incentives.

Question: Mr Tsang, doubtless, some people will criticise you though, no matter what you do. And some people might say - whether it's gambling and the tax in dealing with that, whether it's a land departure tax, various green taxes that you, yourself, raised the question about widening the tax net - that you have actually chosen to be not only fiscally prudent but perhaps politically prudent in this Budget, leaving these hot-potatoes for your successor to have to deal with. How would you react to that?

Mr Tsang: I am glad that you did not ask - I wonder why you did not ask my predecessor the same questions.

There are certain structure in our tax system which are inherited for the last 30 or 40 years: a narrow tax base concentrating on a few direct tax items, a heavy reliance on land revenue, that was the past feature, which is now changing. I think I have done what is appropriate and what will be acceptable by the population at large. I am acutely conscious of certain problems in our tax structure and we have already started the ball rolling by setting up the committees to look into this. I would have been able to do something about it if a verdict is passed. But a verdict has not been passed by the committee and the task force concerned. It would be inappropriate for me to undertake those radical changes before a verdict is passed on a subject as important as a structural problem in our tax system.

There are things which we can do, things which we cannot do, and I readily accept criticism of my performance in the past. But interestingly enough, most people have criticised me as being over-ambitious, over-reaching, rather than over-conservative, so I wouldn't mind you saying I am being conservative sometimes.

Question: Recently, an Executive Councillor said that he thought that Hong Kong people were becoming a little too lazy and little bit complacent. Is your idea in allowing more Mainland professionals to come and work in Hong Kong to give them more competition and keep them on their toes?

Mr Tsang: The recommendation I made in the Budget Speech was not motivated by any individual's remark. It was in response to a survey which we did recently, which indicated a great shortfall in a number of professionals and particularly university graduates possessing IT skills and financial skills, in the coming years. And we have now made plans to make sure that the access we've provided for all people in the world, other than from China, is being relaxed, so that we are gaining expertise from the Mainland IT professionals and Mainland financial services professionals. Not only will it help reduce the shortfall of people here, it will also help us to understand more the Mainland market which will be a very important market for Hong Kong.

Question: A lot of Hong Kong people have fears of competition from workers in the Mainland. How are you going to give them guarantees that Mainland workers aren't just going to come in and work as professionals for lower salaries?

Mr Tsang: The details of the plan will be released by the Secretary for Security. There will be strict vetting procedures ensuring that the salaries given to these imported workers will be comparable to their counterparts in Hong Kong. In other words, they will not be depriving Hong Kong people of their jobs, nor will they be likely to reduce in any significant way the wage levels prevailing in that particular sector.

What we have seen in the last two years are rapid increases in remuneration for professionals in these two categories, to the extent it is much higher than their counterparts elsewhere. We wonder whether it is artificially manufactured, or rather it is a question of we need to do something about it by making sure that we have an adequate manpower supply.

Question: Since ...... the "Go West" policy in China, the Western Investment Scheme, that's been in place for about a year. Can you think of any examples of how that has helped Hong Kong so far ...?

Mr Tsang: It is still beginning. We haven't had a definitive policy yet, outlining the incentives being offered to investors in the Western region. Only recently, we have some preliminary viewpoints. But it is quite clear this is somewhere we cannot miss the trick - we cannot afford to miss the trick. I believe that with the nation as a whole becoming a member of WTO, with the tariffs being reduced, with trade barriers being removed, it offers a lot of opportunities. A lot of our competitors are coming to the China market and they are concentrating in the coastal region. I think, with our long term trade connections with China, with our established penetration into certain markets which have not been reached by our competitors so far, it pays a lot of dividends, from my point of view, for Hong Kong people to look at the new markets in the Western part of the nation. It will be hard work but it is time to move, particularly with the prospect of China becoming (a member of) the WTO, and particularly with the anxiety of the Western region, anxious - anxious - to attract foreign investment.

Question: You mentioned level playing field and you mentioned WTO, and I think that one of the very few areas where there might be a difference in point of view between WTO and Hong Kong is on the question of having fair competition legislation. Do you see the political will there to bring such legislation and if so when, and if not why not?

Mr Tsang: It is not a question of political will that Hong Kong does not have a comprehensive competition law, it is a firm conviction on our part that a comprehensive competition law would not help competition, necessarily. We have seen various assessments by professional bodies looking at how competitive the Hong Kong economy is in relation to others. They came to, always, one conclusion: Hong Kong is one of the most competitive, if not the most competitive. So we have not suffered, in terms of competitiveness, by the absence of a comprehensive competitive law. The question is whether we need it. I believe that we do not need it yet. It is going to be very costly for all of us. What is important is, whenever we see an impediment in the market, either in the form of an oligopoly or a monopoly, we should tackle this problem as best we can, by administrative measures or by specific legislation. I do not see the need, at this stage, for a comprehensive competition law.

Transcript of Budget press conference (Chinese transcript)

End/Wednesday, March 7, 2001