15.          Apart from fostering the development of the emerging industries, we will also reinforce and further enhance our financial services sector, transportation services and logistics industry, tourism, construction and related professional services sectors, legal services, etc.  Through policy steer, allocation of resources and external promotion, we will seize the opportunities arising from the Belt and Road Initiative and the Guangdong‑Hong Kong‑Macao Bay Area development.  Take the financial services sector as an example.  The Financial Leaders Forum chaired by the Financial Secretary will put forward strategic and forward‑looking proposals, which will be followed up by relevant departments.  The Government will allocate more resources to the Financial Services Development Council to enhance its role in promoting market development and nurturing talent.  The Government will also take the lead in arranging the issuance of a green bond in the next financial year and promote the establishment of green bond certification schemes that meet international standards by local entities.

16.          In order to further enhance the competitiveness of Hong Kong, we will demonstrate greater determination in our taxation policies.  The Financial Services and the Treasury Bureau has made proposals on the two tax measures put forward in my Election Manifesto, with a rate of tax reduction even deeper than what I had proposed, and will strive to implement them within 2018.  On the two‑tier profits tax system, the profits tax rate for the first $2 million of profits of enterprises will be lowered to 8.25%, or half of the standard profits tax rate, instead of 10% as proposed in my Election Manifesto.  Profits above that amount will continue to be subject to the standard tax rate of 16.5%.  To ensure that the tax benefits will target small and medium enterprises, we will introduce restrictions such that each group of enterprises may only nominate one enterprise to benefit from the lower tax rate.  To encourage research and R&D investment by enterprises, we propose that the first $2 million eligible R&D expenditure will enjoy a 300% tax deduction with the remainder at 200%.

17.          In recent years, government departments have been shouldering an increasing workload, and might not have been able to fully meet public expectations in policy implementation.  We are determined to improve the situation on several fronts.  First, we will augment the civil service establishment by at least 3% in the next financial year to provide immediate relief to the workload pressure on colleagues and to respond to public aspirations.  We will proceed to ask the Heads of Departments to streamline administration, foster innovation and collaboration, and leverage technology.  We will revamp the Central Policy Unit into the “Policy Innovation and Co‑ordination Unit” and place the Efficiency Unit under the Innovation and Technology Bureau to enhance inter‑departmental collaboration and assist departments in technology application.  In the long term, I propose establishing a new civil service college with upgraded facilities in Hong Kong so as to better equip the civil service for various challenges.  The Civil Service Bureau has already commenced project planning and site search.

18.          Innovative approaches may also be applied to the formulation of concrete measures aimed at benefitting people’s livelihood.  To relieve the burden of long‑distance public transport expenses on commuters, colleagues in the Transport and Housing Bureau, after three months of diligent effort, propose to introduce a non‑means tested Public Transport Fare Subsidy Scheme to provide fare subsidy, to an extent, for commuters if their monthly public transport expenses exceed a specified level.  Our proposal is to set the line at $400 in the monthly expenditure on public transport, with the Government providing a subsidy amounting to 25% of the actual expenses in excess of this level, subject to a cap of $300 a month.  We anticipate that over two million commuters will benefit from the scheme, which will cover the fares of MTR, franchised buses, green minibuses, ferries and trams.  The scheme will be simple and easy to understand, and will not require any application.  The Government aims to launch the scheme within one year after obtaining funding approval from the Finance Committee of the Legislative Council.

19.          For quite a long time, a variety of problems have persisted in the community.  Some of them have been set aside due to incessant arguments.  Some of them have not been taken forward for fear of criticisms.  The current‑term Government sets no easy goals and avoids no difficult tasks.  With this style of governance, we will make every effort to solve these problems for our people.

20.          First, the difficulty in achieving home ownership and the poor living conditions.  My housing policy comprises the following four elements:

     (1)     housing is not a simple commodity.  Our community has a rightful expectation towards the Government to provide adequate housing.  This is also fundamental to social harmony and stability.  Therefore, while maintaining respect of a free market economy, the Government has an indispensable role to play in this area;

     (2)     we will focus on home ownership to enable our people to live happily in Hong Kong and call it their home.  The Government will strive to build a housing ladder to rekindle the hopes of families in different income brackets to become home‑owners;

     (3)     focusing on supply and based on the Long Term Housing Strategy, we will step up our effort in increasing the supply of housing units; and

     (4)     with insufficient land and when new supply is not yet available, we will strive to optimise the existing housing resources to meet the housing needs of families that have long been on the waiting list for public rental housing (PRH) and to help residents in poor living conditions.

21.          PRH is the first rung on the housing ladder.  At present, there are about 756 000 households living in PRH, among which 19% are elderly persons and 16% are receiving Comprehensive Social Security Assistance.  PRH is a long‑established safety net for the grassroots and low‑income families.  The Government will strive to shorten the waiting time for PRH while stepping up our effort to help those relatively better‑off PRH tenants to move up the housing ladder and vacate their units for allocation to the needy.

22.          One approach is to substantially increase the supply of units under the Green Form Subsidised Home Ownership Scheme (GSH), which specifically caters for PRH tenants.  The Hong Kong Housing Authority (HKHA) launched the GSH Pilot Scheme in 2016 and selected a PRH project in San Po Kong to provide 857 units for sale at affordable prices to enable Green Form Applicants to become home‑owners.  The project was nearly 18 times over‑subscribed and all units were sold.  PRH units in different districts are in turn vacated for allocation to those on the waiting list.

23.          From the perspectives of housing policy, utilisation and allocation of the HKHA’s resources, and public aspirations for home ownership, GSH has its merits and no shortcomings.  In fact, apart from assisting PRH tenants to become home‑owners, PRH applicants who have passed the detailed eligibility vetting are also eligible for GSH and can thus more quickly fulfil their aspirations for home ownership.  In view of this, I consider that our future public housing developments should include more GSH units instead of PRH units.  I have requested the HKHA to complete the review on GSH as soon as possible, with a view to regularising the Scheme and offering more GSH flats for sale.  After a preliminary technical assessment, the Housing Department considers that some 4 000 new PRH units in Fo Tan, Sha Tin can be converted into GSH units for sale in late 2018.

24.          Newly‑constructed Home Ownership Scheme (HOS) flats on the housing ladder have all along been providing middle‑income White Form applicants with the opportunities to own subsidised flats.  The Government will continue to increase the supply of HOS flats.  In the past, HOS flats with premium unpaid used to be available for sale on the secondary market only to Green Form applicants.  The HKHA launched two rounds of the Interim Scheme of Extending the HOS Secondary Market to White Form Buyers (Interim Scheme) in 2013 and 2015 respectively on a pilot basis to allow eligible White Form applicants to purchase HOS flats with premium unpaid.  This allows tenants of private premises more opportunities to become home‑owners and at the same time facilitates the turnover of HOS flats.

25.          Taking into account the Tenants Purchase Scheme flats with premium unpaid, there are a total of 380 000 flats available on the secondary market for purchase by White Form buyers.  I propose that the HKHA regularise the Interim Scheme.

26.          In my Election Manifesto, I proposed to introduce, on top of HOS, affordable “Starter Homes” for middle‑class families in Hong Kong, thus re‑igniting the hopes of families with a higher income to own a home in the face of hiking private property prices.  This has generated a lot of attention in the community.  I must reiterate that given the limited land supply for public housing, the Government will provide the proposed “Starter Homes” units only on the premise that the existing supply of public housing will not be affected.  It now appears that the land supply for “Starter Homes” will have to come from sites already owned by private developers or to be bought from the Government.

27.          Our initial thinking is to incorporate provisions into the land lease to require developers to pursue mixed developments, i.e., to design, build and offer for sale a specified number of “Starter Homes” units in addition to private housing units, and to sell these units to target buyers who meet the eligibility criteria set by the Government.  These criteria include, among others, Hong Kong residents who have lived in Hong Kong for seven years or more and have never owned any property here.  Their income will fall between the income limits for HOS applicants and about 30% higher than the HOS limits.  Based on the prevailing HOS income limits, the upper income limit for the new scheme will be set at not exceeding $34,000 a month for singletons and $68,000 for households with two or more members.  The prices and sizes of such units will be determined having regard to the affordability of eligible buyers.  The alienation restrictions may be tighter than those for the HOS.  We need to further consider how to deal with the subsidy given to the buyers at the time of purchase, i.e., the issue of premium payment.

28.          As “Starter Homes” is a new concept and a type of Government‑subsidised flats for sale, the implementation details will intertwine with those of HOS and GSH, which will see a notable increase in supply.  The Government will discuss with the HKHA and relevant sectors and listen carefully to the views of the community.  Details of the scheme will be finalised for announcement in mid‑2018, so as to dovetail with our proposal to launch a pilot scheme by the end of next year using a residential site at Anderson Road, Kwun Tong on the Government’s Land Sale Programme to provide about 1 000 residential units.

29.          Even if our housing policy has broad community support, it takes time to find land for increasing the housing supply.  The current‑term Government will think out of the box to facilitate the implementation of various short‑term community initiatives to increase the supply of transitional housing, with a view to alleviating the hardship faced by families on the PRH waiting list and the inadequately housed.  Specific measures that may be considered include:

     (1)     optimising the use of idle government premises by providing rental housing units like those under the “Light Housing” project launched by Light Be in Sham Tseng;

     (2)     supporting the Community Housing Movement initiated by the Hong Kong Council of Social Service on a pilot basis, including encouraging the Urban Renewal Authority to participate by offering units in old buildings;

     (3)     facilitating the Hong Kong Housing Society in allowing the owners of its subsidised housing to rent out their flats with premium unpaid to needy families at below market rentals on a pilot basis;

     (4)     exploring the wholesale conversion of industrial buildings into transitional housing with waiver of land premium; and

     (5)     supporting non‑profit‑making organisations to explore the feasibility of constructing pre‑fabricated modular housing on idle sites.

30.          Admittedly, these measures on transitional housing are unable to resolve the problem of insufficient supply we face today.  Nevertheless, they will help us pool community efforts and resources and demonstrate our determination in tackling this priority livelihood issue together.

31.          The determination to resolve problems together is precisely the consensus we need in tackling the issue of increasing land supply.  Established in September this year, the Task Force on Land Supply (Task Force) will lead the community to examine the pros and cons of different land supply options in a thorough and macro manner, with a view to achieving the broadest consensus in the community.  With an important mission to achieve within a tight time frame, the Task Force plans to launch a public engagement exercise in the first half of 2018.  I appeal to all sectors of the community to consider the difficult issues of land supply in an inclusive, open and rational manner.  We also look to the Task Force to draw up a comprehensive package of proposals and a visionary land supply strategy.
 
(to be continued)
 

Ends/Wednesday, October 11, 2017
Issued at HKT 11:33

NNNN