Budget Speech by the Financial Secretary (6)

Overcoming Limitations

102. While augmenting further the competitiveness of our pillar industries and fostering diversification of our industries, we must strive to overcome the limitations that hamper economic growth.

Human Resources

103. People are the most important asset for Hong Kong.  The future of our city hinges upon the quality of people.  For generations, Hong Kong people have strived to raise themselves up the social ladder through hard work and self-improvement.  Government has been devoting substantial resources to improving the quality of manpower to further diversify the economy and steer the development towards high value-added activities.

104. With specialisation and division of labour in different sectors in modern society, there is growing demand for talent with specific expertise and skills.  Young people are offered different options to pursue promising careers.  Government has been working closely with different sectors to provide professional training for various trades and industries including construction, retail, clock and watch, printing, health care, and testing and certification.  The active engagement of trades and industries, which effectively enhances their professional image and provides clear career pathways, is crucial in attracting new entrants.

105. Skills mismatch in the labour market is becoming more evident in recent years.  Chronic manpower shortage and recruitment difficulties in individual sectors will hamper the sustainable and diversified economic development.  While according priority to locals in employment, we should seriously consider importing manpower in an appropriate, limited and targeted manner to inject new impetus into the labour market.

Manpower Training

106. In last year's Budget, I announced the allocation of $130 million to support the manpower development of the retail industry.  The series of measures are being rolled out.  The first programme for the Earn and Learn Pilot Scheme for the Retail Industry which is run by the Vocational Training Council in collaboration with the industry commenced last September, with the first cohort of student-trainees started coursework and on-the-job training in tandem.  The Hong Kong Productivity Council has also launched the Retail Technology Adoption Assistance Scheme for Manpower Demand Management to assist the sector in enhancing productivity.  Preparation for the retail industry promotion campaign is under way to enhance the image of the industry with a view to attracting new blood.

107. With our strenuous efforts to promote the professional image and promising career prospects of the construction industry in recent years, more young people are willing to join the industry.  Over the past five years, I have allocated a total of $320 million to the Construction Industry Council (CIC) to train local workers through the provision of training allowances and on-site experience.  This year, I shall provide another $100 million for the CIC to train up more skilled workers to meet the acute manpower demand of the industry.

108. The financial services industry has a keen demand for quality personnel.  Last year, I requested the Financial Services and the Treasury Bureau (FSTB) to consult the industry on manpower training needs.  There was broad consensus that manpower shortage was particularly acute in the insurance and the asset and wealth management sectors.  They also suggested that Government could help promote the industry, enhance the professional competence of practitioners and, in particular, train up more talent for middle and back offices.

109. I shall allocate $100 million to launch a three-year pilot scheme for insurance and asset and wealth management services.  Under the scheme, Government will collaborate with the industry to organise activities and provide internship opportunities to allow the community, in particular students, to have a better understanding of the nature and career prospects of different jobs in the two sectors.  Government and industry will also enhance the contents of continuing professional development programmes, and provide financial support to encourage practitioners to enrol in these programmes.  FSTB is drawing up details of the pilot scheme.

110. From the 2015/16 academic year onwards, Government will subsidise on a pilot basis 1 000 students per cohort to pursue designated self-financing undergraduate programmes for meeting the manpower needs of Hong Kong.  For the first cohort, there will be 13 programmes, covering health care, architecture and engineering, testing and certification, creative industry, logistics, as well as tourism and hospitality.  This scheme will cost $960 million.

111. We shall open up more internship and exchange opportunities for young people to experience the taste of work, broaden their exposure, and be prepared for entering the job market.

112. We plan to increase the short-term internship places provided by government departments for 2015-16 to 3 000, an increase of 30 per cent over the last financial year, so that more young people will have a deeper understanding of different areas of work in Government.  This measure will cost $21 million.

113. Last year, the Hong Kong Economic and Trade Office in Singapore started to arrange internships in ASEAN countries to broaden the international horizons of university students of Hong Kong and enhance their understanding of ASEAN countries.  The inaugural round of the scheme saw 90 students taking up internships.  A total of 250 internship places will be available in 2015-16.

114. I shall also allocate an additional $205 million in the next three years to support more young people to participate in Mainland exchange and internship programmes.

Sustainable Development

115. A liveable environment is vital to improving people's livelihood, pooling talent and sustaining economic development.  Improving the environment is high on our agenda.

116. Government will phase out 82 000 Euro III or earlier diesel commercial vehicles by the end of 2019, involving an ex-gratia payment of $11.4 billion.  So far, 22 000 of these vehicles have been phased out, and we shall continue to assist the transport industry in resolving relevant issues.  The $80 million programme to support replacement of catalytic converters and oxygen sensors of liquefied petroleum gas taxis and light buses was also completed last year.  A total of 18 000 taxis and light buses took part in the programme, accounting for 80 per cent of the eligible vehicles.

117. The port facilities and light dues charged on ocean-going vessels (OGVs) are now reduced by half if these vessels use low sulphur fuel while at berth in Hong Kong.  I propose extending this incentive scheme until the end of March 2018, which will involve revenue foregone of $240 million.  We shall introduce legislation this year to require all OGVs at berth in Hong Kong to use low sulphur diesel.

118. Since its launch in 2008, the Cleaner Production Partnership Programme has funded a total of 2 400 cleaner production projects and promotion activities, helping Hong Kong-owned factories in both Hong Kong and Guangdong reduce emissions, conserve energy, etc.  We shall allocate an additional $150 million to extend the programme for five years.

119. To promote the use of electric vehicles, I announced last year that the First Registration Tax exemption for electric vehicles would be extended up to the end of March 2017.  We installed 100 faster chargers for electric vehicles at 16 government car parks last year, which can shorten the charging time.  The total number of chargers in the territory has increased to 1 100.

120. The Harbour Area Treatment Scheme collects sewage from both sides of Victoria Harbour for treatment at Stonecutters Island to improve the water quality of Victoria Harbour proper.  Stage 2A of the scheme will come into operation this year.  Stage 1 and Stage 2A of the scheme together cost $25.8 billion.  We plan to commission a new consultancy study on enhancing the leisure and recreational value of the coastal areas of Victoria Harbour in the long run.

121. We shall start working on the design of a desalination plant at Tseung Kwan O and the associated infrastructure in phases this year.  It is expected that the desalination plant will commence operation in 2020 and the annual output will account for five to ten per cent of Hong Kong's fresh water consumption.  We shall apply the relevant state-of-the-art technology, including efficient energy recovery system, for greater energy efficiency, increased output and lower cost.

122. To minimise water loss, we shall progressively establish Water Intelligent Network by installing sensors in the water supply networks to monitor their conditions.  We shall also examine other techniques, such as data mining, to predict water main bursts for early identification and handling of defective water mains.

Land Resources

123. Land, apart from manpower, is the other major constraint to the economic and social development in Hong Kong.  To make room for economic, social and personal development, we shall optimise land utilisation and increase land supply through a combination of measures.

Residential Land

124. Government promulgated the new Long Term Housing Strategy at the end of last year, setting the target for public housing supply at 290 000 units for the coming decade.  As the major provider of public housing in Hong Kong, HKHA cannot afford the expenditure to be incurred in the long run.

125. The Housing Reserve I set up last December is to provide financial resources to meet the ten-year public housing supply target.  The initial injection is the investment returns generated in 2014, which amounted to $27.5 billion.  Further injections will be considered at an appropriate juncture.

126. A total of 20 residential sites were put up for sale by Government in 2014-15, capable of providing 6 300 private residential units.  Taking into account the railway property development projects, the Urban Renewal Authority's projects and private redevelopment or development projects, the land supply has a capacity of producing 20 000 units.

127. The 2015-16 Land Sale Programme will include 29 residential sites capable of providing 16 000 units in total.  Out of these sites, 16 are new ones.  Taking into account the housing land supply from different sources, I expect that a total of 19 000 units can be provided.  The Secretary for Development will announce tomorrow the Land Sale Programme for the coming financial year.

128. To promote market circulation of subsidised housing, HKMC will consider launching a new Premium Loan Guarantee Scheme to help owners of subsidised sale flats pay the premium to HKHA or HKHS.  After settling the premium payment, owners will have greater flexibility in disposing of their flats, such as letting out or selling the flats in the open market.

129. The property market has revived since April last year, with both flat prices and transactions showing renewed pick-up.  There has been a double-digit increase in the prices of small and medium-sized flats.  Meanwhile, the external environment is volatile.  The timing and pace of the US interest rate hike as well as the further monetary easing measures of the central banks of Eurozone and Japan could have significant impact on the local property market.  The public should be extra cautious when making decision on purchasing property, and carefully assess the potential risk they need to bear in case of a market downturn.  Government will continue to monitor the market conditions closely, and I will not hesitate to introduce measures when necessary, in order to maintain the healthy and stable development of the property market and safeguard the stability of our macroeconomic and financial systems.

(To be continued.)

Ends/Wednesday, February 25, 2015
Issued at HKT 11:59