Transcript of remarks by CE at question-and-answer session of Joint Business Community Luncheon 2014 (English only)

     Following is the transcript of remarks by the Chief Executive, Mr C Y Leung, at the question-and-answer session of the Joint Business Community Luncheon 2014 held at the Hong Kong Convention and Exhibition Centre today (January 23):

Moderator (Mr David Fong, Vice Chairman of the Chinese General Chamber of Commerce): Thank you, Chief Executive C Y, for the enlightening speech. We now have a few minutes for the floor to ask questions. If you have questions, please raise your hand, identify yourself and please make your questions short and simple. Thank you. A question from table 29.

Attendee: Chief Executive, the Chinese General Chamber of Commerce is always committed to promoting the economy, co-operation between Hong Kong and the Mainland, in particular with Qianhai, Nansha, Hengqin and the Guangdong province. We are glad to hear that the Government will play an active role to the development of the Pearl River Delta and support the establishment of the free trade zone in Guangdong. I strongly agree that it is good direction to enhance the economy, development of Hong Kong and the whole Pearl River Delta region in the future. Could you tell us more about your expectation in enhancing the co-operation between Hong Kong and Pearl River Delta, and whether the Government has any specific progress in facilitating such co-operation? Thank you.

Chief Executive: Thank you very much for the question. It is the single most important subject as far as the Government is concerned, and I would suppose the same would apply to many sectors in our economy. Going forward, the Pearl River Delta region, particularly the west bank of the Pearl River Delta, which has very rich land resources, will be a very, very important factor in the ongoing development of Hong Kong, not just economically, but also socially. The infrastructural projects which I mentioned in my speech linking Hong Kong to this part of the country and the projects within Guangdong itself all make things that much easier between Hong Kong and Guangdong by way of joint development. I made, and my colleagues similarly, very frequent and fruitful trips to Guangdong, and there is one in the pipeline not very far away, and I've seen the very fast developments in Guangdong, particularly the Pearl River Delta area, and therefore the opportunities for us to realise the synergy value, working together, and that is Hong Kong and Guangdong. And I strongly recommend this to friends in the audience: do take a trip driving up and down the Pearl River Delta. I have not done it myself, but I've been told that driving from here to the new terminal, and this is Terminal 3 of the Shenzhen airport, for example, using the new Yanjiang Gaosu (Guangzhou-Shenzhen Highway along the river), which is a coastal highway, takes only an hour and a bit. So it's that kind of impact on the potential of us working together. Our transport secretary was there looking at the new terminal, trying to explore ways of us co-operating, just a few days ago, so we do have very frequent contacts. Insofar as an overall strategy is concerned, it's work in progress, and as soon as we have a plan to consult the business community with, we'll make it available.

Moderator: Questions from table 28.

Attendee: Thank you. I'm Daniel Cheng with Federation of Hong Kong Industries. First of all, I want to welcome CE on the Innovation and Technology Bureau establishment. My question is on the MPF. David Webb has recently written an excellent article setting out the historical background on the long service and severance payments. Long service and severance payments were established at the earliest form of retirement protection. It was clearly stated in records on the drafting of the relevant laws in 1992 that, in order to ensure that employers would not pay double benefits, long service and severance payments could be offset by retirement scheme payments. Hence any talk about cancellation of the offsetting arrangement is clearly against the original legislation intention, which date back even before the inception of MPF. I'm sure CE is aware of this history, and please give a serious consideration on this huge burden on SMEs if the offsetting is abolished. Thank you.

Chief Executive: I do realise that it is a very important subject, not just to the business community but also to the labour sector, and therefore Government has been in a listening mode. As you say, we need to give this matter serious consideration before we come up with any recommendation or decision. There are three parts to this equation, and so in terms of offsetting there are various ways of doing it. And then my pledge in the Manifesto, my election Manifesto, was to gradually offset. So how gradual is gradual is something that we can discuss as well. There are a number of ways by which we could achieve the goal, and we very much like to get the business sector and the labour sector on side to look at the possibilities, and also the consequential impacts of varying degrees on either or both sectors.

Moderator: OK, we've got a question from table 50.

Attendee: Chief Executive, I'm Leland Sun from the Hong Kong General Chamber of Commerce. Your Policy Address lays out a broad array of initiatives that support the needy, the aged and the youth in our community, which I believe we all support and welcome. Now, for these plans to be effective and sustainable will require significant long-term financial commitment. Now, we are fortunate that we currently enjoy a healthy budget surplus as well as have vast reserves, fiscal reserves, accumulated surplus. But, as the Financial Secretary recently wrote in his blog, this surplus will eventually run out. Chief Executive, for these initiatives to be sustainable, where do you see the funding coming from in the long term? Thank you.

Chief Executive: The Financial Secretary has been fully involved in the drafting of the Policy Address and he's fully supportive of all the initiatives that have funding implications that are announced in the Policy Address. Going forward, we need to take a dynamic view of an evolving situation. Straight line projection on either revenue or spending will probably not be very meaningful. Let me just give you a couple of examples. Increases in welfare spending is a concern, but if you look back at the past few years, you see that, interestingly, as a result of a number of things - I will suggest statutory minimum wage being one, very strong economy and therefore a high employment rate being another - the overall CSSA cases has been going down. Let me just read you a couple of statistics. The overall CSSA caseload showed a continuous decrease of 33 consecutive months. And then unemployment cases and low-earning cases registered - and these are also CSSA cases, CSSA payouts as a result of unemployment and low earnings - these cases registered a continuous decrease of 52 and 58 consecutive months respectively.

     So going forward obviously we have an ageing population in sight. In 2018, if other things don't change, other things being equal, as a result of ageing the size of the workforce will go down. But this assumes that everyone retires at the same age. And then going forward, as far as welfare payment and health payments are concerned, this assumes that the next generation, retirees, are as exposed as this generation of retirees. The other view, looking at an ageing society, or Hong Kong as an ageing society, would say that the next generation of retirees are better protected because they are better educated, they have high incomes and therefore high savings to look after themselves. And the payouts to retirees under the MPF scheme in, say, 15, 20 years' time would be more handsome than the payout to retirees who had retired today. Similarly, more people will have taken out medical insurance policies or retirement policies and so on, so forth. So it is a very important subject to look at, whether or not we could afford spending more than what we are spending in this year's Policy Address because of ageing society, the diminishing in the workforce and so on, but we should take a dynamic view of the situation and not a static view.

Moderator: We have time to take one last question. There is a question at the back, to my left.

Attendee: Good afternoon. Cameron Honarvar with Pacific Baby, a company here, and I'm curious, is there any real opposition to Hong Kong joining ASEAN? And, if not, when could we realistically expect Hong Kong to become a member? Thank you.

Chief Executive: I think this year we see the best opportunity than any previous year in getting all members of the ASEAN bloc to say yes to Hong Kong, but there is a lot of work to be done. Generally we feel optimistic.

Ends/Thursday, January 23, 2014
Issued at HKT 17:38