Resumption of Second Reading Debate on Government Bill
MR CHAN CHUN-YING (in Cantonese): President, in delivering the new Budget, Financial Secretary Paul CHAN said that the brown cover symbolized nutrient-rich soil. Although the fifth wave of the epidemic has now subsided considerably, the general public and all sectors of the economy have already been hard hit. The Budget not only aims to immediately allocate resources to members of the public and businesses as nutrients for them to weather the imminent difficulties, but also aims to irrigate and fertilize the core, emerging and potential industries. Through fiscal spending, Hong Kong can expeditiously integrate into the overall national development, consolidate its financial strengths, nurture emerging industries, build a new quality living area and make plans for the future economy. In my opinion, the Budget has struck a good balance in two areas and I would like to discuss three aspects in particular.
The first aspect is relieving people’s hardship in order to benefit members of the public and businesses. Fighting the epidemic is now the overriding priority of Hong Kong. In the Budget, nearly $67.5 billion has been earmarked directly for the fight against the epidemic, including the procurement of rapid antigen test kits, more vaccines, anti-epidemic supplies, enhancing environmental hygiene services and constructing various anti-epidemic facilities. Another $20 billion is also set aside for other related needs. However, the fight against the epidemic cannot be won simply by making available sufficient funds. The Government must make the best use of the support provided by the Central Government and work in concert with all sectors of the community. By putting the safety of the public as the top priority, it should take all decisive and feasible measures to achieve the goal of “dynamic zero infection”.
The continuous outbreak of the epidemic has led to constant calls for the Government to hand out “sweeteners”. The most direct initiative in the Budget which is also advocated by various parties, I believe, is the disbursement of $10,000 worth of electronic consumption vouchers. Apart from the higher amount, the first batch valued at $5,000 has already been issued early this month. The remaining vouchers will be disbursed together with those of the new eligible persons in the middle of the year. Even though people’s desire to dine out and go shopping may be slightly affected by the epidemic, the vouchers can still be used to meet people’s basic transport and food expenses. This will have a positive effect on alleviating people’s hardship.
President, since the outbreak of the epidemic, small and medium enterprises (“SMEs”) have been in dire straits and urgent need of financial support. The Budget has announced the extension of two schemes, namely HKMA’s SME Financing Guarantee Scheme and the Pre-approved Principal Payment Holiday Scheme. The application period for the former will be extended, and enterprises can also obtain a higher loan amount and an extended repayment period under the Special 100% Loan Guarantee. The latter will be extended for six months to the end of October this year.
It can be said that the above initiatives are proposed after taking heed of good advice and have fully responded to the aspirations of the relevant industries and myself. It is also believed that they can alleviate the pressure on SMEs’ operation and safeguard jobs.
The Budget proposes to introduce legislation to prohibit landlords from taking rental enforcement actions against 39 specified sectors for a period of three months. The Government considers that rental payment constitutes a substantial part of operating expenses and imposing a legislative moratorium is a well-intentioned move. According to most tenants, this initiative can give them a breathing space, so that they will not be forced out of business.
Nevertheless, there are also views in the community that it should be left for market’s self-adjustment, or that the Government should use administrative measures to push major landlords to reduce rents. Some landlords even said that legislating against rental enforcement actions would undermine the sanctity of contracts. Having considered the views of various sectors, the Financial Secretary has proposed a number of amendments including bringing in exemptions, providing loans to landlords and allowing deferred payment of rates. Well, it is better late than never. The banking sector, however, is puzzled by the Government’s move to prohibit by legislative means the exercise of the right to take security enforcement actions. The industry has all along been fully supportive of the industrial and commercial sectors, and I strongly believe that banks will actively cooperate with the Government to deal flexibly with the situation where a landlord’s repayment ability is affected by a reduction in rental income. This legislative exercise has shaken the legal basis of secured loan. I hope that this is only an exceptional measure under specific circumstances and will never be adopted again.
Separately, I endorse the groundbreaking reform of the rating system proposed in the Budget, which has not undergone any major adjustments since 1995. In the future, only individual owners will be allowed to apply for rates concessions for their domestic properties, and a three-tier progressive system will be introduced for domestic properties under which high-value properties will be subject to rates higher than before.
The new proposal will help prevent owners with multiple domestic properties from receiving multiple benefits under the current rates concession system, alleviate the Government’s burden and embody the principle of fairness in wealth redistribution that has been called for by this Council for many years.
As the rateable values are based on assessment, the implementation of a three-tier progressive rating system may lead to a significant rise in objections and appeals from property owners in the future, thereby substantially increasing the required administrative resources and costs. The Government should be well prepared in this regard to facilitate the smooth implementation of the policy.
Secondly, I would like to talk about enhancing financial strength and supporting the development of industries. The Budget and the Chief Executive’s Policy Address last year have unanimously affirmed the important role of the financial services industry in the local economy, and responded to many of my expectations by introducing a series of measures on the development of the financial services industry to consolidate and enhance Hong Kong’s status as an international financial centre, including proposals to promote the wider application of financial technology, deepen the interconnection mechanism, expand the issuance quota of iBond, silver bond and green bond, expand offshore Renminbi products and their cross-border use, promote asset and wealth management, and so on. It is believed that the proposals will help attract more quality enterprises and investors to Hong Kong.
The denomination of the southbound trading stocks under Hong Kong Stock Connect, which is at the pre-launch stage, in RMB will not only enrich the product range of the Hong Kong capital market, but will also attract more issuers, institutional and retail investors. This will be conducive to expanding the scope of the use of RMB. More importantly, the Budget has expressed concern about the issue of attracting and retaining talents, as well as strengthening talent training programmes, such as training courses and related subsidies on green and sustainable finance and financial technology.
In line with the idea of expeditiously integrating into the development of the Greater Bay Area (“GBA”), the funding allocated to the Hong Kong Growth Portfolio under the Future Fund will be increased by $10 billion, of which $5 billion will be used to set up a GBA Investment Fund. GBA will be a key driver of regional economic development in the future. By investing in the various competitive industries in the region, we will not only add momentum to the development of the region, but will also bring economic and social benefits to Hong Kong in turn.
The financial sector has remained resilient in the midst of the epidemic. However, Hong Kong’s long-standing closed-door policy towards the Mainland and other countries, which has impeded the movement of people, could undermine its status as an international financial centre. This issue has not been directly addressed in the Budget. The Government needs to assess the situation and make wise choices in its overall strategy to combat the epidemic, so as to strike a balance between dealing with the urgent task on hand and meeting long-term needs.
The third aspect is to speed up infrastructure development to resolve the land and housing plight. Accelerating housing construction and the development of new areas with enhanced efforts are also a key focus of the Budget. The Budget echoes the concept of the Northern Metropolis first proposed by the Chief Executive in last year’s Policy Address. One hundred billion dollars will be set aside from the return of the Future Fund for the project, with a dedicated fund to be set up under the Capital Works Reserve Fund in order to expedite the implementation of infrastructure works relating to land, housing and transportation within the Northern Metropolis. Meanwhile, the Budget also mentions that preliminary proposals for Lantau Tomorrow will be announced in the fourth quarter of this year. The Government has pledged to streamline administrative procedures and to consider engaging the community through bond issuances and public-private partnership. The ultimate goal is to advance the timetable by commencing reclamation before the original date of 2027 with the population intake before 2034. It is necessary to adopt a multi-pronged approach to resolve Hong Kong’s land and housing problems. The accelerated implementation of both the Northern Metropolis and Lantau Tomorrow projects is worthy of support.
Deputy President, the economic outlook for Hong Kong this year is full of uncertainties due to the impact of the fifth wave of the epidemic. The Budget forecasts a real economic growth rate of 2.0% to 3.5%, which is obviously lower than last year’s level of 6.4%.
Fortunately, according to the Financial Secretary’s latest information, a fiscal surplus of $29 billion was recorded last year. This is a significant improvement over the original estimate of a deficit of $101.6 billion. If the proceeds from bond issuance, the Housing Reserve and the investment return of the Future Fund are not taken into account, it will still end up in a deficit. Nevertheless, with the support of the abundant fiscal reserves of over $900 billion, the Government is able to introduce timely and targeted measures to help the economy recover as soon as the epidemic is under control.
On the whole, this year’s Budget meets the need to undertake the core tasks of the day and the long-term objective of integrating into the overall national development. Against the backdrop of the complex and volatile international political environment and the public health crisis, Hong Kong’s economic policy should indeed put stability first, focus on enhancing the core competitiveness of sectors which we enjoy clear advantages, such as the financial services sector, and spare no effort to develop the innovation and technology industry to achieve industrial restructuring. I look forward to the implementation of the Budget, which will help Hong Kong emerge from the shadow of the current epidemic and regain the growth momentum as soon as possible.
With these remarks, I support the Budget. Thank you, Deputy President.