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Budget Speech by the Financial Secretary (17)

Concluding Remarks

165. Mr President, the first decade of the 21st century is just behind us.  The decade has seen several crises.  We have come to realise the speed at which the global economic landscape is changing.  Some worry that Hong Kong may be marginalised amidst the intense economic competition in the region and lag behind in the process of globalisation.  The successive crises have put many citizens under tremendous pressure.  They argue that the mode of our economic development cannot achieve a fair distribution of wealth, thus causing problems of poverty and social immobility.  Some people also query, from a values perspective, the suitability to Hong Kong of the mode of promoting economic growth through infrastructural development.

166. As Hong Kong is a small and open economy subject to external constraints, it is inappropriate for us to solve the unemployment and poverty problems through large-scale redistribution of wealth.  If we adopt this approach, which focuses on providing high levels of welfare, we will have to overhaul our tax regime and tax rates, weaken wage elasticity and adjustment function of the market, and fundamentally change our well-established mode of economic operation.  I don't believe this will be acceptable to our society at large.  I believe that in the long run, the fundamental solution to the problems of unemployment and poverty is to promote overall economic growth so as to provide opportunities for wealth creation in the community.

167. We uphold the principle of "Big Market, Small Government" because we believe that the market mechanism is the most effective way to raise economic efficiency.  However, the Government will intervene when the market is not functioning properly.  Our investment in education, infrastructure and social welfare aims to enhance overall competitiveness and to upgrade the capabilities of our citizens so they can rise to social and economic changes, which will in turn enhance social mobility.

168. Our long-term strategy for poverty alleviation is to develop the economy and invest in education.  Between 2004 and 2008, when our economy was on an upturn, the number of low-income earners decreased.  Income levels generally improved.  Unemployment and underemployment rates fell.  These show that the grassroots can also benefit from an economic boom.  However, we also notice that in times of economic downturn, they bear the brunt of income reduction.  Therefore, since 2008 we have introduced various short-term relief measures to help them meet their pressing needs.

169. Expenditure on education now takes up the largest share of recurrent government expenditure.  Expenditure in this area has increased substantially over the past decade.  This is because we believe that education and training are fundamental to enhancing social mobility.  Quality human capital is the key to building a knowledge-based economy.  Education plays a crucial role in personal development.  An educator once said: "Education then, beyond all other devices of human origin, is the greatest equaliser of the conditions of men Ал the balance-wheel of the social machinery."  Many success stories in Hong Kong have one common lesson Ал knowledge changes one's fate.  I believe that continuous investment in education will yield continuous and improving returns for the community at large.

170. The context in which our public policies are framed has become complicated in recent years.  Our citizens, with very high expectations of the Government, hope we can solve all problems in the shortest possible time.  But some are concerned about over-expansion of the Government.  I believe that the most important element in the relationship between the Government and the market, and between the economy and the community is to ensure an efficient government.  An efficient government spends public money cost-effectively, uses public resources to promote our economic development and restructuring, promotes social advancement and improves our citizens' quality of life.  Apart from a "big market" and a "small government", we have a dynamic "big community".  We should make good use of our abundant social capital, and join hands to tackle social problems and pursue social justice and values.

171. In my view, a government upholding market principles is by no means a ruthless government.  We promote economic development to benefit the community at large and not just a handful of rich people.  When confronted with the poverty problem, the whole community has the collective responsibility to tackle it.  The Government provides a favourable and vibrant market environment and economic setting for the business sector to play to their strengths.  When some people cannot benefit from this, we expect that the business sector will fulfil their social responsibility to build a caring society together.

172. We have been stressing the importance of economic development because we believe that a prosperous society is in the overall interests of Hong Kong.  In promoting economic development, we are serving the interests of all sectors of the community and not individual classes.  I believe that Hong Kong people love to live in a prosperous society, and in a prosperous and caring society even more.

173. I share people's deep anxiety about layoffs and pay cuts.  Since reunification, the Asian financial crisis and the financial tsunami have brought hardship to our people.  We have in response introduced a number of measures to improve the employment situation, thereby improving people's livelihood.  In addition, we also introduced relief measures to alleviate their burden, even though this might cause a deficit for the time being.  In the long run, we must maintain fiscal discipline to ensure that our children will not be burdened by our spending today.  I believe this is what a responsible government should do.

174. The contributing factors in Hong Kong's poverty problem are many.  They include the outward mobility of Hong Kong people, the socio-economic conditions of the migrant population, and structural changes of the local economy.  There has been considerable discussion in the community on ways to alleviate poverty.  Much remains to be done.  Legislating for a statutory minimum wage, promoting employment and implementing relief measures are our priority tasks.  When the community has reached a consensus on the relevant policies, we will provide the necessary financial resources.

175. We have been taking a pragmatic approach to economic development.  Economic pragmatism has tided us over many difficult times in the past.  In promoting economic growth, we will take into account changes in the external environment as well as the situation of Hong Kong.  We will have regard to the prevailing circumstances, without rigidly adhering to any single ideology or dogma.  These are basic ingredients of Hong Kong's sustainable development.  As such, while we are the freest economy in the world, we are also reputed to be the biggest public housing provider.  I am always prepared to introduce initiatives that are pragmatic, proactive and conducive to the overall development of our city.

176. Recent events in Hong Kong have shown that some citizens attach importance to the values underlying social development.  I appreciate that different people hold different values and that this is perfectly normal in an open and diversified society.  In implementing public policies, the Government listens to the views of people with different values, and takes into account the actual needs of the community.  For example, while showing respect for conservation and local values, we should carefully consider the role that development plays in promoting economic growth and increasing job opportunities.  In balancing different values and handling conflicts in the community, we should tread lightly on the differences by giving due consideration to all views.

177. Mr President, Hong Kong has been through many changes in the past century.  Politically, Hong Kong, formerly a British colony, was reunited with China as a Special Administrative Region with a high degree of autonomy.  Economically, Hong Kong has been transformed from a local city engaged in manufacturing industries into a world city orientated to financial and service industries.  It has also changed from an immigrant city to a civil society.  We all love living here and have a strong sense of identity as Hong Kong people.  It is a delight to see that citizens are attaching great value to their identity.  I believe that as long as we maintain close communication with various sectors of the community and our policies can serve the interests of our people, Hong Kong will be able to sustain its economic and social development.  

178. Hong Kong people have gone through many tough times before.  In confronting crises and difficulties, we have displayed unity and solidarity.  So long as we strive to enhance social cohesion and keep up the Hong Kong spirit, I have full confidence in the future of Hong Kong.

Ends/Wednesday, February 24, 2010
Issued at HKT 12:52


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