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Speech by CS at Rotary Club of Kowloon Golden Mile, Kowloon West and Hong Kong Financial Centre Luncheon Meeting (English only)(with photo/video)

     Following is the speech by the Chief Secretary for Administration, Mr Stephen Lam, at the Rotary Club of Kowloon Golden Mile, Kowloon West and Hong Kong Financial Centre Luncheon Meeting today (May 30):

David (Harilela), Thomas (Mo), William (Yung), Samuel (Ma), H W, Rotarians, friends, ladies and gentlemen,

     It is very kind of H W to give me such a glowing introduction, but in my heart of hearts I remain a humble public servant, as H W was. And this is really very apt that you have chosen to ask H W to make this introduction today, because the topic I have chosen to speak to the Rotary Club today is about population policy of Hong Kong. And here we have the former Commissioner for Census and Statistics to kick off. And, David, I've chosen to come to the Rotary Club to speak about this very important topic because the Rotary Club represents Hong Kong society in many ways.

     Your members are not just managers and professionals. You are people who care a lot about Hong Kong, and Rotary Club does a great deal of community service. In past decades, you have supported many charitable projects. You are mentors to schoolchildren, and you liaise with other NGOs in Hong Kong to make sure that we keep growing as a service-oriented community. And that is why, having decided to issue the Steering Committee on Population Policy Progress Report for 2012, I have chosen to come to you guys to make this announcement to Hong Kong society.

     Attention on the subject of population policy started way back in September 2002 when the Task Force on Population Policy was convened. That Task Force published a report in 2003 and it set the objective for Hong Kong population policy to be to secure and to nurture a population which sustains our development as a knowledge-based economy, and a range of policy measures were proposed then - they were subsequently implemented over the years. In 2007 the Chief Executive decided once again to set up a Steering Committee on Population Policy, to be chaired by the Chief Secretary, and the task of the Steering Committee was to keep under review, to examine, to analyse the latest demographic data and trends.

     Now, around the world many advanced economies have a phenomenon of an ageing population. Hong Kong is no different. We need to address the challenges brought about by an ageing population, and sustain the growth of our economy and the vibrancy of Hong Kong society. In setting these broad directions for Hong Kong to face up to this challenge, we can have reference to overseas experience, but at the same time we must examine the circumstances which are unique to Hong Kong society. For example, the close ties between Hong Kong and the Mainland create unique challenges. Among them, all of us know quite well, are the phenomena of Mainland women coming to Hong Kong to give birth to their babies and also Hong Kong elderly people choosing to reside in the Mainland for retirement. And therefore, as directed by the Chief Executive in 2010, the Steering Committee for about 18 months had focused on addressing these two topics, and certain long-term policy measures were proposed in the 2011-12 Policy Address like the Guangdong Scheme which we have adopted to ensure that Hong Kong people - the elderly who choose to move to Guangdong - can benefit from some of our social security payments.

     In the last while, there has been grave, serious community concern about Mainland women coming to give birth in Hong Kong, and this has had some important, significant impact on how our obstetric services for local pregnant women are being handled. These babies born to Mainland mothers have long-term implications for our education, our health and our social services. The Government recognises the importance of addressing this issue.

     Also, at the same time in the Population Policy Steering Committee we recognise that we must address the challenges which will be brought about by an ageing population on schooling, on employment, on post-retirement arrangements, and therefore today I'd like to highlight to you three main themes which this progress report has set out. We've actually outlined 10 recommendations, but let me set out to you three main themes.

     Firstly, about Mainland women coming to give birth in Hong Kong. The SAR Government's original intention was to progressively narrow the scope for Mainland mothers coming to give birth to their babies in Hong Kong. And therefore, in 2012, we set an overall quota of 35,000 births. And we have wanted to examine the possibility of bringing this quota even further down to below 30,000, perhaps closer to 20,000 for 2013. This would then have achieved, over time, a soft landing for the problem. The Chief Executive-elect made known his position recently that the booking of delivery places in hospitals by non-local women whose spouses are not Hong Kong permanent residents should be suspended for 2013, subject to further consideration of the matter by the next-term Government, on the long-term implications for education, social services and other related issues. We, this current-term Government, take the view that if a zero quota could be adopted for 2013 onwards for Mainland mothers coming to give birth in Hong Kong, this would actually address, very effectively, the concern raised by Hong Kong community in this regard, and it would provide a very effective solution to the issue. That is why the relevant bureaux and departments of the Hong Kong Government are actually examining the means for achieving a zero quota, and the issue can be taken further forward from July 1 onwards, when the fourth-term HKSAR Government is sworn in.

     In the meantime, in order that we can continue to tackle this problem effectively, we continue to implement administrative measures which we have adopted, which we have put together, in the past months. For example, there is now a tightened surveillance system of mothers who cross the boundary next to Shenzhen, and we screen these pregnant visitors. Every week we return quite a sizeable number to the Mainland. Within the urban areas of Hong Kong we also crack down on illegal activities: people who let their homes, people who run illegal hostels, we crack down on these, and there have been three successful cases of prosecution. I think the measures which we have adopted so far have already had a deterrent effect. Also, we are raising the fees for obstetric services at public hospitals for mothers who come without bookings to give birth, particularly at the accident and emergency centres. The fees for giving birth will be increased from $48,000 per birth to $90,000 per birth. It has been adopted with effect from May 12.

     Now, these children who are born to Mainland mothers, they will need to come back to Hong Kong for certain services. For example, the parents can choose for these children to be educated in Hong Kong, and in order to ensure that these children who live, say, in Shenzhen, can cross the boundary every day safely to come back here to study in an orderly fashion, we are setting certain limits at our border control points. For 2013, we set a capacity limit of 13,000 - daily capacity for these children to cross the boundary to come back to Hong Kong to study. Most of these children will study in the northern part of the New Territories, so our Education Bureau is expanding the capacity for six schools in Yuen Long, in North District. At the same time, we are going to encourage the school bus operators in Shenzhen to transport these children from point to point, from home in Shenzhen to school in Hong Kong. This is to ensure that these children will be well looked after, and that they will not have any risk factors facing them when they cross the border every day.

     However, it is actually not our policy to encourage these parents to bring their children to Hong Kong for schooling purposes on a daily basis. This is actually very cumbersome, and it is not necessarily safe for the children to do this every day. So the capacity limit of 13,000 crossings per day and the limited number of school places in the northern part of the New Territories will constitute, jointly, a natural cap on the number of children who can come back to Hong Kong to study. Now, in addition to this, of course the parents can choose to place these children with their friends and relatives in, say, the urban areas of Hong Kong, but I reckon that not many of these parents will have the ability to do so, the contacts which they can trust for looking after their children. We will monitor this trend very closely to see whether there is a continuing rise in the number of cross-boundary students in Hong Kong.

     Now, aside from schooling, these parents actually place their children with different service centres in Hong Kong. For example, the maternity and child health centres. I visited one in Fanling a few months ago. We just expanded the Fanling maternity and child health centre, but the local parents complained to me that the services were very crowded and the local population were finding it very difficult to gain access to these centres. But the Mainland parents have a great deal of confidence in the maternity and child health services in Hong Kong. The injections would be of a high standard, and they would give their children good care.

     However, our first priority as the Government is to look after the local population, whether it is schooling or maternity and child care. So we have a plan to expand these centres in Hong Kong.

     So much for the first theme. Basically I think, if we can implement zero quota for Mainland women births in Hong Kong from next year onwards we would have broken the back of this problem.

     Secondly, I wish to dwell on fertility and labour market. For many years, Hong Kong as a modern society, modern economy, has seen a downward trend in fertility rates. Currently it is standing at about 1.1 per couple. It is well below the natural replacement rate of 2.1 per couple, and therefore in the long run Hong Kong will have fewer young people, our population will no longer grow as much and this will have an impact on Hong Kong's productivity as an economy. Over the decades Hong Kong has thrived on being a centre for attracting new arrivals and talents from different parts of the world. The gathering here today is actually a fine example of that statement which I just made. And we have been able to provide an environment in which people of all ethnic origins can succeed and contribute to Hong Kong society. We must ensure that we continue to do so.

     Now, new arrivals through the one-way permit system from the Mainland constitute a major source of Hong Kong's population growth. The Steering Committee recommends that the Government should continue to strengthen services and support for new arrivals through the use of district partnership and media partnerships. We have to expand our labour force. We should make fuller use of youth, female and elderly population. With regard to youth, currently our young people suffer from a relatively high unemployment rate. For the age group of 15 to 19, the unemployment rate is 11.2 per cent. That for 20 to 24 is 7.4 per cent. This is higher than the overall unemployment rate of 3-point-something for Hong Kong as a whole. But the scale of this problem is limited. Among those two age groups, we have about 25,000 young people who are unemployed. The situation in Hong Kong for youth unemployment is not as dire as those in other OECD economies. As a community, we still have the resources to look after our young people, and we should do so. We should try to create more employment opportunities, and to create a better future for them.

     Now, the report recommends that the Government should work together with NGOs and social enterprises to see if we can create more employment opportunities for our young people. We can consider providing more funding to those NGOs which have plans, projects, which look after young people and put them into employment situations. I recall that during the days of the Asian financial crisis we created around 10,000 jobs for our young people, and we made them tourism ambassadors, service personnel in community centres, etc. Now if we have a new plan which can create several thousand jobs for these young people, this will have an appreciable, significant impact among the 25,000 who are not employed currently.

     So much for the youth. Female employment. It is actually very important that we should continue to encourage a higher rate of female participation in our workforce. Among the Government and the NGOs we have been taking quite a few initiatives. For example, every year we train quite a few thousand females to become domestic helpers, part-time or full-time. And there is now a new trend in Hong Kong of employing neonatal care workers. So these are things which the Government and related organisations can promote. We also have a policy. We adopted a Work Incentive Transport Subsidy Scheme so that successful applicants, subject to means testing, can have a supplement of several hundred dollars every month to help meet their transport fares. So with these training programmes, and with these transport subsidy scheme initiatives, I think we will end up encouraging more of our female citizens to join the labour force.

     Finally, for the elderly we recommend as a steering committee that the Government should consider the merits and implications of encouraging the adoption of a higher retirement age. Now, of course in Hong Kong we do not have a statutory retirement age which applies to all sectors, and we're not recommending that we should adopt that now. But as a government, since we face an ageing population, we should consider means, schemes, which can encourage Hong Kong society to allow people to remain in employment till they reach an even more advanced age. But in so doing I emphasise that Hong Kong people should continue to be able to draw their retirement benefits at the prescribed age. For example, Mandatory Provident Fund: you should be able to draw your benefits from the age of 65 onwards - don't change that, even if we encourage people to work longer.

     So we have practical measures and broad policy directions set out in this report to enable us to release more of our local population, among the youth, the women and the aged, into the workforce in order to head off some of the challenges of an ageing population. We don't stop there. In Hong Kong the Chief Executive on different occasions has mentioned that we have four pillar industries and six priority industries. As an Administration we have examined the supply and demand manpower balance between these various industries, and on the whole we are doing reasonably well. Within the next decade or so we should be able to produce enough local graduates and to attract enough talents from around the world and from Mainland China to fill the manpower needs of Hong Kong.

     That said, we should not rest on our laurels. Hong Kong, as an international city, we are facing intense competition along with other major cities and centres around the world to attract talents. We have to examine the push and pull factors which enable people to come to Hong Kong, and we are doing very practical stuff. For example, we have in the pipeline an expansion plan for the expansion of our international schools in Hong Kong. We have 5,000 additional school places coming on stream in four years, and in order to ensure that we can continue to attract the right calibre of people to be management professionals and other service providers in Hong Kong, I've asked the Education Bureau to identify several vacant school premises and put them to tender among international schools so that the international school operators can all express an interest in laying their hands on these vacant school premises and expanding their international schools. This is good. This will ensure that Hong Kong has the best of talents available to us.

     Last but not least, my third message. We all advance in age, David, and we gain better experience. We all want to celebrate our elderly birthdays in good health and in relative abundance. Now on health care, the Steering Committee recommends that Hong Kong should develop the public and private health-care sectors in parallel and diversify sources of funding in meeting the rising medical and health-care costs. The Government should also continue its efforts in developing specific plans and measures to address the health-care needs of elderly people. For Dr York Chow and his colleagues, they have a fund of about $50 billion set aside by the Chief Executive to promote health-financing schemes, and all these plans are being laid.

     But aside from looking after the health-care needs of elderly people, they also have financial needs. As we all advance in age we have to look after ourselves, our spouses. Our children end up looking after themselves, we hope. But in Hong Kong we only started to have a Mandatory Provident Fund a few years ago, and so far we have been focusing on what the Government calls a three-pillar retirement protection system, namely Mandatory Provident Fund, personal savings and social security. Now, on Mandatory Provident Fund we do not have any current plans to change that scheme. On personal savings, I reckon that if the Hong Kong economy continues to grow, we should be able to convince Hong Kong people to continue to save, and that will help, to some extent, looking after Hong Kong people by themselves in their old age. But there is one sector among the Hong Kong population that I think we need to look after, and this is the sector of the elderly who are less privileged.

     We have a range of services available to the elderly who are relatively disadvantaged, in public housing, in medical services and in social security. We have disability allowance, we have some comprehensive social security allowance for them. But we need to do better, and that is why recently we have adopted a scheme of $2 per public transport trip. This is the Public Transport Concessions Scheme, and we hope to be able to introduce this at some point during the summer. This will encourage active ageing. A few years down the road I can apply for that scheme too. But aside from looking after their transport needs, we note that the Chief Executive-elect has stated in his policy manifesto that among other things there is a proposal to double the Old Age Allowance for the elderly, subject to means testing. This will mean that the current Old Age Allowance of about $1,000 could be increased to around $2,000 per person in the next-term Government. Now, this is a step in the right direction. This will also go some way towards meeting the livelihood demands and needs for people in this particular grass-roots sector, because those of you who are seated in this dining hall, you probably, you and your family, have means to look after yourselves as you advance in age, but in Hong Kong there will always be this sector who will need to look to the Government and the community for help and for support. And I think as we face an ageing society, this is the pocket, the sector of people, which we should focus on in dealing with post-retirement requirements.

     So, ladies and gentlemen, this is a report which is to our minds pretty comprehensive. I wish to emphasise a few points in closing. Firstly, if we succeed in adopting a zero quota from 2013 onwards for Mainland mothers giving birth in Hong Kong, then we would have addressed a major issue which has been weighing on the minds and hearts of Hong Kong people. I am reasonably confident that we will find some means of doing that. Secondly, it is a fact that Hong Kong society is ageing. By about 2020, the economic dependency ratio will rise to about 1,042 per 1,000 active population. This means that those who are active in the workforce will have to win bread to feed more than himself or herself, in the wider community, among their families, because the ratio would have exceeded 1 to 1. Now this is a trend which we should not accept just like that. We must examine every possible means, we must make every endeavour, to stop the rising of this economic dependency ratio and we can do this by releasing the talents and the workforce in Hong Kong society among the young, the female and the elderly. We should also make sure that our schemes for attracting quality migrants remain really attractive. And thirdly, as I have elaborated on just now, we must look after the health-care needs and post-retirement needs of the elderly.

     Population policy is an ever-evolving portfolio. Advanced economies all face ageing populations and the challenge of maintaining economic productivity. Hong Kong is not alone, but Hong Kong has more means than any other society to deal with this. For a start, our economy is still growing. Also, the Government has substantial reserves. We need not face this challenge naked and without means. We should make all possible use of the means we have as a community to face this challenge head-on.

     Thank you very much.

Ends/Wednesday, May 30, 2012
Issued at HKT 20:15


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