Motion on ” managing the government’s non-financial assets more proactively”
Deputy President, in the face of objective factors such as geopolitical instability, a global economic slowdown and high interest rates, Hong Kong’s economic outlook is fraught of challenges. Additionally, with deficits recorded in four out of the last five financial years, the position of our public finance has aroused widespread concern.
In the past, our concerns were more focused on the estimated revenues and expenditures and the performance of the Government’s financial assets such as the Exchange Fund, we would be concerned about its investment objectives and rates of return, and we would also be eager to know whether the establishment of the Hong Kong Investment Corporation Limited could support the development of innovation and technology and the restructuring of industries in Hong Kong and so on, but we were less concerned about the non-financial assets. I am grateful to Dr Kennedy WONG for proposing this motion, urging the Government to make use of diversified fiscal strategies to help reduce our deficit. I support the motion.
The latest Budget mentions that we will adopt a fiscal consolidation strategy to narrow our fiscal deficit towards achieving a fiscal balance. The contribution of financial assets is also included in the calculation, but financial revenue is more susceptible to market conditions and is more volatile. In fact, the impact of non-financial assets on the Government’s finances should not be overlooked, and the operability of non-financial assets is even greater than that of financial assets. At present, the Government’s non-financial assets mainly include government-owned enterprises, land, property, roads, infrastructure and equipment. If these assets can be managed in a more proactive manner to increase revenue and reduce expenditure, it is believed that it will help the Government to accelerate the improvement of our financial position.
The Government is currently the largest property owner in Hong Kong. Apart from land, the Government basically owns all the properties in public housing rental estates, the annual maintenance and management costs of which are astronomical. However, we seldom discuss the effectiveness of these costs from a value-for-money perspective. The same holds true for government office buildings and other properties owned by the Government.
Furthermore, there are various leisure and cultural facilities across the territory, including sports, cultural and entertainment venues which are frequently booked by the public. However, the Government has not paid any active attention to how to further improve their operation. For instance, during my recent visit to some local community centres to meet with the public in relation to delivering talks for promoting the “two sessions”, I found that the community halls in those districts very dilapidated and the conditions of the venues very poor, which would in turn affect their occupancy rates and their ability to serve the public.
Government business enterprises (“GBEs”) are also an important component of non-financial assets. According to the consolidated financial statements for 2022-2023 published by the Treasury, there are 13 enterprises in which the Government has an investment holding of not less than 20% and of which the Government shares the net earnings. Attention should be given to enhancing the effectiveness of GBEs other than the Hongkong International Theme Parks Limited and the MTR Corporation Limited, which are linked to listed enterprises and can be classified as financial assets.
At present, GBEs have a wide range of businesses, providing products and services to their clients in different areas. For example, the trading fund of the Office of the Communications Authority seeks to “maintain Hong Kong’s position as a pre-eminent communications centre in the region to support economic development”; and the Hong Kong Science and Technology Parks Corporation aims to “create a vibrant innovation and technology ecosystem to deliver social and economic benefits to Hong Kong and the Asia-Pacific region”.
Although GBEs are backed by the Government, business development is the basis for survival of an enterprise. GBEs should all the more fulfil the requirement of providing high-quality products and services for society, and proactively undertake the responsibility of upgrading the overall standards of the industries. I believe if GBEs can perform their responsibilities well and put their “visions” into action, it will not be difficult for them to increase revenue. Certainly, when contemplating ways to enhance the efficiency of its non-financial assets, the Government should bear in mind the original intent of establishing GBEs and consider the unique characteristics of each enterprise to formulate appropriate operating policies accordingly.
Government officials who are stationed in these enterprises or those who also serve in these enterprises should actively participate in the day-to-day operational decision-making, so as to better formulate the assessment criteria of the KPIs (key performance indicators). Besides, in order to enhance the Government’s supervision and management of these enterprises, consideration should be given to changing the traditional practice of appointing the relevant Policy Secretaries, Under Secretaries or Permanent Secretaries to the relevant boards of directors. Although this practice holds symbolic significance, it is worth pondering whether these people, who are already very busy with their own responsibilities, are capable of engaging in detailed discussions regarding the operation of the enterprises at board meetings. Should the Government appoint a group of dedicated professional managers to assume this function on its behalf instead, so that these managers can actively enhance the enterprises’ ability to increase revenue and reduce expenditure? I hope that the Government can give serious thought to these issues.
I so submit. Thank you, Deputy President.