Thursday, 6 May 1999
The Council met at half-past Two o'clock





















































































PRESIDENT (in Cantonese): Will Members please remain standing for the Chief Executive.

PRESIDENT (in Cantonese): Honourable Members, the Chief Executive will address this Council. As I believe Members want to raise a lot of questions to the Chief Executive, I would like to remind Members that, apart from raising your hands, you should also press the "Request-to-Speak" buttons in front of you to register your requests in the computer.

I now invite the Chief Executive to address this Council.

CHIEF EXECUTIVE (in Cantonese): Madam President and Members, first of all, I would like to talk about a question of considerable concern to all of you. Last Wednesday, the Secretary for Security reported on the results of a survey conducted by the Census and Statistics Department and revealed the increase in the number of people who are eligible for right of abode in Hong Kong according to the ruling of the Court of Final Appeal (CFA). This morning, the Acting Chief Secretary for Administration and Secretaries of the relevant Policy Bureaux detailed the impact on the overall social services and economy should all these people come to Hong Kong. For many years, population has long been a fundamental problem for Hong Kong. In the interests of the long-term development of our society, we must not allow population growth to get out of control because we must ensure the continued growth of our economy in order to create more wealth for the people of Hong Kong. We must ensure that the quality living and various services to which the people of Hong Kong are entitled will continue to improve. More importantly, we must be concerned about the composition of society.

Hong Kong will become a knowledge-based society in the 21st century. Apart from ensuring a high quality education, it is more important for us to attract talents from the Mainland as well as the rest of the world to boost the development of our economy. Since early this year and before the CFA delivered its ruling, relevant government departments have been embarking on a study of a long-term population policy. But this is another subject which may be dealt with separately in the future. As to the right of abode issue, judging by the results of the survey which we presented to this Council today, it is obviously very difficult for Hong Kong to cope with the population pressure brought about by the CFA ruling. For many years, the quality of living in Hong Kong has been gradually improved through the efforts of the people of Hong Kong and we must not allow these achievements to dissipate. We must not allow Hong Kong to go downhill in the new millennium. Of course, we attach importance to family reunion and humanity, but allowing 1.67 million people to settle in Hong Kong within 10 years will have unimaginable consequences.

Every day, 150 persons are allowed to settle in Hong Kong under the one-way permit system through which we accept children born of Hong Kong parents. We take in these children in accordance with the Preparatory Committee's interpretation of Article 24 of the Basic Law. At the same time, we also accept Hong Kong people's spouses on the Mainland on the ground of family reunion and out of humanity consideration. Recently, various parties in the community have been debating on how to solve the daunting population problem as a result of the CFA ruling. As this problem arose in the Special Administrative Region (SAR), it would be best if we could handle it on our own. We must try our best in this respect. But I am afraid that there is little possibility that we can work out a solution on our own. The remaining options include asking the National People's Congress (NPC) to amend the Basic Law or asking the Standing Committee of the NPC for an interpretation of the relevant Articles. Legal advisers for the Government are studying these options. Although the SAR Government has yet to make the final decision, but I can assure the people of Hong Kong as well as Members of this Council that the SAR Government will solve this problem in a resolute, thorough and expeditious manner in accordance with the Basic Law and for the long-term interest of Hong Kong. As the Central Government has always been doing its best to ensure the prosperity and stability of Hong Kong, I am fully confident that the right of abode issue will be solved and the concept of "one country, two systems" will, as always, be fully implemented.

Apart from this issue, I would also like to talk about environmental protection which is also of considerable concern to many people as far as I know. The recent deterioration in air quality has aroused widespread dissatisfaction and criticism from across the community. Sewage treatment and waste disposal have also aroused many comments and concern. I do feel that the Government still has a lot to do in this respect, and these must be done. I can assure Members that the Government is determined to improve the environmental protection work which, together with the long-term objective for sustainable development, will be the main tasks for the Government in 1999 and the years ahead. The improvement in environmental protection cannot be achieved overnight, but we can identify those jobs which can be done earlier under the overall co-ordination plan and will carry them out quickly. I hope that I will have some more details to say on this issue when I deliver my policy address by October. Miss Christine LOH, I talked about the environmental protection issue for you just now and you missed it. Thank you, Honourable Members.

PRESIDENT (in Cantonese): The Chief Executive will take questions from Members. A Member may ask one concise follow-up question in addition to the main question if necessary, only for the purpose of seeking the Chief Executive's further explanation on his reply.

First question, Mrs Sophie LEUNG.

MRS SOPHIE LEUNG (in Cantonese): Thank you, Madam President. Mr TUNG, I believe that many colleagues will ask questions about environmental protection or the influx of mainlanders later on, but I would like to ask a question about China's accession to the World Trade Organization (WTO). This is also a major event for the international community. We all know that a task force on commercial institutions under the Financial Secretary is studying the impact of China's accession to the WTO on Hong Kong, particularly its implications on our economy in the short, medium and long terms. I hope that Mr TUNG will tell us how the Government of the Special Administrative Region (SAR) and the people of Hong Kong, especially the industrial and commercial sector, should prepare themselves in order to seize the opportunity to boost our economy.

CHIEF EXECUTIVE (in Cantonese): Thank you, Mrs Sophie LEUNG. Regarding your question, I would like to talk about something else first and then go back to your question. Recent trips abroad by several leaders of our country have been highly successful and fruitful. As a matter of fact, the last 50 years have seen our country undergoing tremendous transformation. Today, our country has become more open and advanced. Moreover, efforts are being made to promote the rule of law and the idea of revitalizing the country with technology and education. We can see that our country is becoming stronger which is reflected in a firmer economic foundation, an improvement in people's quality of living and an increasingly important role in the international community. All of these are gratifying. I often say that Hong Kong will get better if our country does well. Hong Kong does benefit a lot from the continued economic growth on the Mainland.

In fact, the China economy now ranks sixth in the world, after the United States, Japan, Germany, France and Britain. I believe that, with such a vigorous and dynamic economy, China will probably rank third or fourth within 10 years and second or third in 20 years. The people of Hong Kong will certainly benefit from it. I also believe that the chances of China entering the WTO by the end of the year are good. This morning, I received a report dispatched from Washington, saying that while negotiations were going on and progress made, the chances of reaching an agreement on China's accession to the WTO were very good. In view of this, it is all the more important for Hong Kong to make good preparations as it has played different roles in our country's development during the two periods, namely, the period before 1979 and the period after that (when China started to implement the open-door policy in 1978). Hong Kong will definitely play a different role in the 21st century after China's accession to the WTO. How we will spare no effort in participating in the development of such a dynamic economy does pose a challenge to the people of Hong Kong.

The Financial Secretary, Mr Donald TSANG has formed an interdepartmental group to study various aspects to see how we can become fully involved in areas such as financial services, retail, wholesale, telecommunications and other service industries, so as to maximize the benefits. This is certainly a very important occasion. We will also keep in close touch with the business sector in the course. However, it is now still too early to talk about details in this respect. Why? It is because we have not learned the details of the final outcome of discussions with the WTO, and what is more, China still needs to hold discussions with the United States, the European Union and Japan. I believe our work will accelerate once more information is available. More importantly, from the Government's point of view, we must maintain close contact with the industrial and commercial sector so as to keep it informed of the latest development. As to whether the Government should guide the industrial and commercial sector in exploring business opportunities, I do not think there is such a need at all because people in this sector are very smart.

MRS SOPHIE LEUNG (in Cantonese): Madam President, I have a follow-up, if Mr TUNG does not mind. With regard to the advice that the industrial and commercial sector should seize the opportunities, I believe people in this sector certainly will not let such opportunities slip away. As Mr TUNG has said, people in the industrial and commercial sector should know how to do it. However, I would like to know Mr TUNG's views on the quality of the people of Hong Kong and their other aspects. Why did I say so? Because nowadays running a business requires more than leadership on the part of the leader or the management, all staff should have a higher level of mentality and disposition. In other words, we should have a higher level of mindset. I want to know whether Mr TUNG agrees that we should also get prepared in this respect. For example, the information technology is so advanced that our mindset should enter a tunnel of the so-called global connection instead of always thinking from a single dimension. Nowadays, students and young people on the Mainland are lying on canvas beds when working. Instead of taking an afternoon nap on canvas beds, they sleep in their workplaces at night. They are working so enthusiastically, how can we compete with them? The people of Hong Kong may lose their current advantageous position in the future. How can we compete with the rest of the world?

CHIEF EXECUTIVE (in Cantonese): I think Hong Kong has its unique edge in that we have an excellent financial centre with great capability to raise funds, and our people are more adaptable and creative. But we do have our weaknesses. With the changes to be resulted from China's accession to the WTO and a growing trend towards a more open world, I am very confident that, having experienced the financial turmoil, the people of Hong Kong will transform themselves and improve upon their weaknesses. I believe that we will be successful in overcoming these difficulties in the 21st century. Of course, the Government will do its best and take the lead in playing our part.

MR ALBERT HO (in Cantonese):Thank you, Madam President. Mr TUNG, I believe Hong Kong people highly support the development of a Cyberport in Hong Kong but the Government has not called for tender fairly and openly as usual but privately offered this Cyberport and the ancillary large property development project to the Pacific Century Group (Pacific Century). This project may bring huge earnings. We can see from the fact that the prices of the shares of the Tricom Holdings Limited, with capital injections by Pacific Century, has risen by more than 20 times that people have high expectations of this project. At present, the business sector and people in other sectors have started worrying if Hong Kong has entered an era that emphasizes "monetary power" and petticoat influence. Some even worry if people doing large business have to depend on personal ties.

I have this straight question for Mr TUNG and I hope that he would not mind or become angry. Mr TUNG, your family business, the Oriental Overseas Group, has countless business ties with the Cheungkong and Hutchison Whampoa Group of Mr LI Ka-shing, and they have co-operated closely in the construction of projects like the Felixstowe Container Terminal in England and the Oriental Plaza in Beijing. My question is: How would you dispel the queries of the public and make people believe that the Government under your leadership is not benefiting friends or relatives or exchanging gifts in giving Pacific Century, Mr LI's Group, special treatment?

CHIEF EXECUTIVE (in Cantonese):Mr HO, thank you for asking me this question and giving me a chance to give an explanation. I definitely do not mind that you have asked this question.

First, I would like to stress that Hong Kong is successful today because we do not have money politics and we will definitely not condone money politics in Hong Kong. You can rest assured for I have guaranteed this. Second, the Hong Kong Government is actually highly transparent, with an administrative structure in which the Chief Executive does not actually take part in its operation. I hope that you will also rest assured. Third, with the Legislative Council and the press being responsible for keeping watch on the Government, all Secretaries and the Chief Executive, I hope that you will feel relieved.

I used to be a businessman and I had indeed business contacts with many people but I have separated myself from business affairs now and I do not have such involvement. In other words, I am no longer involved in such affairs. I do not know the current situation but there were business contacts with some companies before I left. As to the relations between the Oriental Overseas Group and Mr LI today, I do not know the particulars as it is not my responsibility. But I hope that Honourable Members will rest assured for there is a very good monitoring framework.

MR ALBERT HO (in Cantonese):Mr TUNG, some people have disclosed to me an incident and I hope that you will confirm if it is true. Before the Cyberport proposal was submitted to the Government, Mr Richard LI of Pacific Century had met you in private for many times and lobbied you on this project. We all know that it is not easy for businessmen to meet Mr TUNG in private. If this incident is true, outsiders will really wonder why Mr LI has the right to do so while other people interested in developing the project are not informed, let alone invited to take part in the tender. The biggest problem lies in whether the rules of the game have changed after this incident. If not, what rules does the Cyberport follow? Putting it in simple terms, can individuals lobby you on great projects in future and will you consider attaching property projects to the projects to be developed? Do businessmen have to lobby you one by one?

CHIEF EXECUTIVE (in Cantonese):Mr HO, this is not a question of lobbying. I have met Mr LI and I can tell you that I have also met three Hong Kong businessmen interested in Chinese medical practice and Chinese medicine recently. They explained to me how we could give play to Chinese medical practice and medicine in Hong Kong. This is what I should know as the Chief Executive. I should know how we can help the development of Chinese medicine practitioners and Chinese medicine. In the field of technology, I have met Mr LI and I have met Bill GATES of Microsoft when he came to Hong Kong. I have met more than one or two persons, because as the Chief Executive, I should know what is happening in the community and in every sector. This is my responsibility. Have the rules of the game changed? Definitely not. Honourable Members should look at this project this way, it is not a property project but a technology project. We will promote technological development with the greatest effort and in the shortest time possible. In fact, 10 multinational companies will come to Hong Kong and take part in this project, and they have told me that they can come to Hong Kong to develop their information technology businesses at once. I am really gratified and I believe more companies will come to Hong Kong in future. I hope that Mr HO will adopt a positive attitude towards this matter and that he will not be so suspicious.

DR PHILIP WONG (in Cantonese):Madam President, I would like to state that this question is definitely not aiming at my Honourable colleague, Mr Martin LEE, but I note that it is reported on the front page of Ming Pao today that a Senior Counsel earns $100,000 a day in addition to the fees charged for preparatory work; and preparatory work that takes four to five days will fetch some $400,000. Such expensive charges will make it impossible for the middle and lower classes to obtain legal services. I would like to ask the Chief Executive, what are your views on this? Do you know how this problem can be solved to allow small and medium enterprises and the middle and lower classes to enjoy fair judicial services? Thank you.

CHIEF EXECUTIVE (in Cantonese):Dr WONG, many people have already reflected to me the problem mentioned by you. They said that the business costs in Hong Kong were very high, crippling our competitiveness. Some also said that the legal sector was charging exorbitant fees for their services. In fact, if this continues, it will not be beneficial to Hong Kong in the long run. Therefore, the Government should look into the problem and I also hope that the legal sector will also conduct a study to find out the true situation. The Government will examine the problem.

DR PHILIP WONG (in Cantonese):I would like to follow up. I know that even the fees charged by barristers in Britain are only about half of those charged by barristers in Hong Kong, I wonder why the fees charged in Hong Kong can be so high. Probably, a barrister charges $100,000 for a day's work which is equal to the annual income of other people so that he may have a lot of spare time for handling matters not within the scope of his profession. (Laughter)

CHIEF EXECUTIVE (in Cantonese):Dr WONG, many people including mainland businessmen investing in Hong Kong have reflected to me this situation and that there are problems with the legal charges in Hong Kong. The community, the Government and the legal sector really need to look squarely at the situation.

MR TAM YIU-CHUNG (in Cantonese):Madam President, I would like to ask Mr TUNG who actively promotes high and new technology in Hong Kong for advice. As recently reported, our neighbour, Shenzhen, has formulated 22 preferential policies for attracting and developing high and new technology. It appears to me that the Government still thinks that to attract high and new technology, the road ahead will be extremely rough and it is still highly suspicious of its worth. What advice can Mr TUNG give us? Can he boost our confidence in high and new technology development?

CHIEF EXECUTIVE (in Cantonese):Mr TAM, on the prospects of high and new technology development, I have become more confident after a year's effort. The Committee led by Dr TIEN Chang-lin will publish a report by June and everything will be clarified then. However, the fever brought by the Cyberport proves that Hong Kong and the rest of the world think that Hong Kong has good prospects in information technology development and this makes us excited. I have met local people and those from the Mainland and foreign countries, and they agree that Hong Kong has good prospects in information technology development. As for our hope that Hong Kong will become a centre for Chinese medicine, many people have actually made valuable suggestions which make me very hopeful. In regard to other innovative technology, the arts and performing arts, there are a lot of original ideas. I have also met businessmen in these sectors and discuss with them how development should be made. At the same time, the Government is actively examining how development can be made in these aspects.

A characteristic of Hong Kong is that the Government creates an environment conducive to businessmen giving play to their strengths, and I believe that this direction is correct. We are also creating such environment as the Cyberport and the Science Park. On the one hand, we will create an environment for attracting outstanding talent, on the other hand, overseas talent can come to Hong Kong to create another environment. Moreover, enhancing environmental protection is also essential to the creation of such an environment. We will try our best in these areas and I deeply believe that many private enterprises in Hong Kong can give full play to their strengths under these circumstances.

MR TAM YIU-CHUNG (in Cantonese):Madam President, I would like to ask a supplementary question concerning local talent. Does Mr TUNG think that there is adequate local talent in this area? Or, does he think that we still have to rely on foreign talent in Hong Kong?

CHIEF EXECUTIVE (in Cantonese):Mr TAM, roughly speaking, local talent is inadequate. Take those taking high technology, scientific engineering and postgraduate courses as an example, there are almost 1 500 graduates each year but the number is inadequate. Therefore, at the preliminary stage, we must rely on foreign talent or mainland talent. The Government has set up a team to study this issue and it will submit a report in a few months' time on suggestions about how the immigration policy can be relaxed to attract an inflow of talent into Hong Kong.

MR ANDREW WONG (in Cantonese):Madam President, I wish to ask the Chief Executive a question through you. It is going to be a very simple question, I hope. Mr TUNG, the question concerns a working group you appointed for renaming the former Government House. The question is really simple. Will you stop taking the trouble and revoke your command? If you move into the house and live there, matters will be pretty simple as the house will become the official residence or mansion of the Chief Executive of the Special Administrative Region. Now that you have not removed to it, it should be called the former Government House as it was the Government House, and it does not need to be given another name. I wonder if you will revoke your command but I think that the renaming exercise has become a farce because many funny names, even "despotic landlords gobble public money house", have been suggested. (Laughter)

CHIEF EXECUTIVE (in Cantonese):Mr WONG, I have shared with some government colleagues a joke. I have seven grandchildren including grandsons and granddaughters but I am not involved in naming them. (Laughter) It is because different people have different ideas and I would rather let their parents decide on their names themselves. You know, some grandfathers will bother about everything but I do not want to do so. This question has indeed caused some debates in society. Mr LEUNG Chun-ying said yesterday, or maybe the day before, that the committee had come to a conclusion, having carefully considered more than 1 000 names. I accepted its recommendation but I know that Mr LEUNG has recently said that we will listen to more suggestions and consider the better names suggested, and I agree fully with him. I have to express my view on whether the house should be renamed, and I hope that you will agree with me. Some people say that TUNG Chee-hwa would like to rewrite history. I do not intend to rewrite history, for example, the Victoria House in which Mrs CHAN resides remains the Victoria House and nobody is going to rename it. The former Government House is not a name but a term for describing the place before and today. What was the place? The former Government House. We need to give it a name. It is surely very difficult to find a more suitable name but I have no intention of rewriting history. They are two completely different matters. In line with what Mr LEUNG Chun-ying said yesterday, I also hope that Honourable Members will express their views and suggest better names.

MR ANDREW WONG (in Cantonese):Let me make a suggestion. As the place was called the Government House, if you use it now, it is perfectly justified to rename it as the official residence of the Chief Executive. Now that you are not using it, it is simply the former Government House, why is it necessary to rename it? Otherwise, Queen's Road Central has to be renamed as well and that will have far-reaching effects. Although Grandfather TUNG is not involved in naming his grandchildren, he cannot say that Mr LEUNG Chun-ying is our father. (Laughter)

CHIEF EXECUTIVE (in Cantonese):What a witty remark! You got me there.

MR MICHAEL HO (in Cantonese):Madam President, I would like to ask the Chief Executive a question through you. The Chief Executive just said that we would face a very serious immigration problem which could not be solved. The Chief Executive has suggested two methods, namely, amending the Basic Law and requesting the NPC to interpret the Basic Law. I would like to ask the Chief Executive, what criteria do you use when you decide to amend the Basic Law? What criteria do you adopt when you judge that you should decide to invite the Central Government to intervene in Hong Kong affairs and request the NPC to interpret the Basic Law at the risk of striking a blow at our judicial independence?

CHIEF EXECUTIVE (in Cantonese):Mr HO, I just said that it would be best if Hong Kong could find a solution itself and we would continue to make efforts. However, I am not optimistic. The choice we have to make is whether we are willing to put up with the pressure and the blow 1.67 million people will strike at our community. Can we accept that? If not, what options do we have? I want to invite the Central Government and the NPC to give us help as provided for in and permitted by the Basic Law. I did not say that I did not respect judicial independence but we have to approach this matter from this perspective.

MR MICHAEL HO (in Cantonese):Madam President, I would like to follow up one point. Why do we not strive for trust on the part of the Central Government in the SAR and allow us to solve this problem ourselves? The Chief Secretary for Administration will return to Hong Kong from Beijing very soon. I am not sure about the agreements she has reached with Beijing. These few days, a few Secretaries and the Chief Executive are discussing the problem of the influx of 1.67 million people into Hong Kong. Their remarks shocked Hong Kong people, so much so that they may be willing to accept whatever measures that would be put forward. Later, Hong Kong people may not oppose it too strongly when the Chief Executive asks the NPC to interpret the Basic Law. Is the Chief Executive adopting this strategy?

CHIEF EXECUTIVE (in Cantonese):This is not a strategy but a fact. We have to face this challenge and I am willing to listen to suggestions as to how this can be solved. If you can think of a better method, please let us know.

MRS SELINA CHOW (in Cantonese): Mr TUNG, I would like to change the topic for a while. I would like to talk about something which my Honourable colleagues and I are very much concerned, that is, the airport. In the inquiry report, reference has been made to the Board of Directors. We have also suggested the kind of qualities which a board of directors appointed by the Government should possess. As we all know, the term of office of the Board members will expire soon. And there are lots of speculations and rumours on that. I would like to ask Mr TUNG whether he would make reference to the factors and criteria which we have listed in the report before he makes the decision to breathe new life into the Board. The airport is facing some very tough challenges and we hope that it can meet the needs of commercial operation since competition is keen given the economic downturn. May I ask what Mr TUNG is prepared to do after reading our report?

CHIEF EXECUTIVE (in Cantonese): First of all, I would like to point out that the airport is running really very smoothly. The people of Hong Kong and the foreigners I meet all say that this is a first class airport and one we should all be proud of. I would say that we have to offer our apologies for the chaotic opening of the airport, but we should also give credit to all those who work in the airport, especially the Board of Directors and the management whose hard work really deserves our appreciation.

About the airport, I recall in the three reports which you have compiled, reference is made to the fact that the operation of the Government and the airport is affected by overlapping and duplication in organization. There is room for improvement in crisis management and accountability. In these regards the Government has learned a good lesson. We will certainly do better. At the end of May, the term of office of all members of the Board will expire. Now we are considering the appointment of board members. We shall take into account the points you have mentioned. I believe when the list of members is finalized and made public, you will surely have every confidence in the Board.

MRS SELINA CHOW (in Cantonese): Madam President, I am very grateful for Mr TUNG's reassuring remarks. I think we should not be digging up old grievances, but we should look forward. Despite being a magnificent structure, the airport is infested with a host of problems. They include the retail business there which is finding it very difficult to do business. The airlines are making a lot of complaints and many people are saying that they do not want to come here any more. These are big challenges our airport has to face. Could Mr TUNG tell us whether in selecting the members of the Board, considerations will be given to the expertise, capabilities and commitment of these appointees to the running and business operations of the airport so that the airport can be really managed to our satisfaction?

CHIEF EXECUTIVE (in Cantonese): I wish to tell you that I have really made these considerations. I have indeed considered the points that you have raised. These are what we want to take into account. About the fees and charges of the airport and the difficulty to do retail business there, I think these can be explained by the relatively higher prices here and the fall in the number of visitors after the Asian financial turmoil. Fortunately, the number of in-bound visitors has risen in this couple of months and that is good news. But that does not preclude our improvement efforts. We will try hard to enhance efficiency and safety, find ways to increase our income and cut expenses. These are what we shall consider. Thank you for bringing this up to our attention.

MR LEE WING-TAT (in Cantonese): Madam President and Mr TUNG, from history, we can see that Hong Kong has twice experienced a drastic increase in population. The first time was after the Second World War, when over 1 million people returned to Hong Kong from the Mainland in a matter of just several years, boosting the population at that time by nearly 50%. The second time was in the mid-1970s, when several hundred thousand people flocked to Hong Kong a few years before the implementation of the touch-base policy. During these periods, colonial governors and their governments were in charge of running Hong Kong, but unlike our Government now, they never tried to scare the people of Hong Kong in the 1950s, 1960s and even the 1970s by saying that the Hong Kong boat would sink. Actually, Mr TUNG, I want to ask you a very simple question. All these people are our fellow countrymen, but from last week till now, I have never heard the Government say anything on the good which these fellow countrymen of ours may do to Hong Kong. It looks as if these people are somewhat regarded as savage people, barbarians.

PRESIDENT (in Cantonese): Mr LEE, please speak up. The Chief Executive cannot quite hear you.

MR LEE WING-TAT (in Cantonese): I am already speaking into my microphone. But since I do want to give people the impression that I am very agitated, I have tried to keep the volume of my voice at this level. (Laughter) The question I want to ask, Mr TUNG, actually concerns the fact that from last Wednesday up to now, I have never come across even one single sentence in the press about the benefits brought about by all those fellow countrymen of ours who came here during the past 10 years ─ not just one year but 10 years. These people are simply depicted like barbarians living in southern China, people who are even worse than the untouchables of India. So, I really cannot help asking, "Has our society been split into rival factions?" So, Mr TUNG, when we handle this issue, can we adopt a more sensible approach by, for example, amending the Basic Law? A moment ago, Mr TUNG asked Mr Michael HO if he had any solutions in mind. Well, I think amending the Basic Law is already one solution. The Democratic Party thinks that the Basic Law should be amended, and in the meantime, we think that the first batch of people ruled eligible to enter Hong Kong by the CFA ruling should be allowed to do so. As for the second batch, we think we may as well hold up their arrival for the time being. Are we really unable to cope with an extra 670 000 people or 700 000 people? Have we not seen from history that our population once virtually shot up by 50% in a matter of just a few years. When this occurred, did the colonial governor at that time ever say that Hong Kong would thus collapse? Why does our own Government instead think that all these people are entirely useless? Thank you, Madam President.

CHIEF EXECUTIVE (in Cantonese): Mr LEE, it is a pity that such terms have been used to describe our fellow countrymen. All these people are our fellow countrymen, and we are naturally concerned about them. But we are also worried that after they have come here, they may have to lead a life which is worse in quality than their life in the Mainland, because after their arrival, Hong Kong may not be able to cope in terms of social and other kinds of services. Now, let me turn to the population increases you referred to a moment ago. Back in the 1960s, because of cheap labour, the industries and manufacturing industries in Hong Kong were booming, and, for this reason, we could easily accommodate newcomers and turn them into reinforcements necessary for triggering off our new developments. But over the past decade or two, the economy of Hong Kong has undergone structural adjustments, moving first towards the services industries and more recently towards the development of high technologies. That is why under the current circumstances, if all these people rush to Hong Kong, their employment alone will give us a very big challenge. We are now in a different era, and we should have different considerations when the times change. It is simply not true that we the people of Hong Kong, or our colleagues in Government, or even I myself am unsympathetic. We are of course sympathetic. How can we be unsympathetic anyway? The point is that when we deal with this reality, we must consider the overall interests of the 6.5 million people now living in Hong Kong. This is the basis of all our considerations. As for what should be regarded as the best solution, I think it is most important for us to remove the anxieties of the community as quickly as possible. And, we must also act quickly and decisively. The solution we come up with must be able to yield quick results, for we can ill-afford any delay.

MR LEE WING-TAT (in Cantonese): I suppose Mr TUNG should also have heard some academics say that population increases can work as an effective means to ease the pressure of wage rises. Actually, Mr TUNG himself has repeatedly said that Hong Kong should enhance its competitiveness. Well, population increases are precisely one of the possible means to achieve this very end. Besides, population increases can also slow down the ageing of our population. So, from the macro point of view, population increases will in fact do good to the community of Hong Kong. But I have never heard the Government say anything to this effect. May I therefore ask Mr TUNG to answer the following question: The question of speed aside, what is so bad about amending the Basic Law after all? Of course, it will be most time-saving if the Central Government can come to a decision, present an interpretation of the Basic Law, and then bar all these people from coming to Hong Kong. But this will sacrifice the rule of law and the independence of the Judiciary. It will take us just one year to have the Basic Law amended. Why do we not go ahead then? What is so bad about this after all. Thank you, Madam President.

CHIEF EXECUTIVE (in Cantonese): Mr LEE, let me stress that the legal experts of the Government are right now exploring the most practicable way forward. Once there is a conclusion, we will make an announcement. And, we are now also listening to the many different views of the community, and I will certainly pay heed to all these views. It is a pity that I have to go on a trip out of Hong Kong next week, because I shall otherwise be able to listen to more views from different people. Anyway, no matter which method we opt ─ interpretation or amendment ─ we must always adhere to the Basic Law. We must always stick to this very basis. We are a society upholding the rule of law, and, so, we will not take any improper actions.

MR MA FUNG-KWOK (in Cantonese): Sorry, Mr TUNG, I am going to talk about copyright piracy again. Recently, some foreign governments have again started to criticize Hong Kong for failing to protect intellectual property rights well enough. And, as a matter of fact, even we ourselves can also see that the problem is still very serious. Yesterday, I raised a question at the Legislative Council meeting, asking if the police could also play a role in combating piracy. The Trade and Industry Bureau replied that there were only four operations with police involvement in the past 12 months, and the operations were all carried out at the request of the Customs and Excise Department. The situation during this period of time was, however, rather serious. For example, at that time, Hong Kong was able to manufacture as many as 16 million laser discs a day, but under normal circumstances, the consumption was even less than one fiftieth of its output. From this, we can see that the problem is very serious. May I therefore ask Mr TUNG whether it is possible for the police to take a more active part in all these operations against piracy?

CHIEF EXECUTIVE (in Cantonese): Mr MA, in our attempts to establish a knowledge-based society, we will certainly fail if we cannot tackle problems such as piracy. This problem is faced not only by the film industry, but also by the record disc industry. The point is that when we develop along the path of high technologies, they will both face this very same problem. And, this is also a problem which the Government must tackle. As Mr MA also knows, the Trade and Industry Bureau has recently completed a consultation exercise on how new legislation should be enacted to combat this problem. This is a most significant step. Following this, I think we should find out how the Customs and Excise Department and the police can possibly enhance their co-operation for the purpose of combating piracy. We will certainly work hard in this direction.

Regarding education on anti-piracy, I think we should adopt a three-pronged approach. And, I hope that we can start to see the results six to 12 months later. Of course, following my recent meetings with people working in the film industry, I do understand that six to 12 months of waiting is indeed much too long for them. We know that piracy affects the film industry most seriously, and we will certainly do our best.

MR MA FUNG-KWOK (in Cantonese): Madam President, I want to ask a follow-up question on police involvement. I know that the police now have one worry, because signs are that some criminal syndicates have already shifted the focus of criminal activities to piracy, which can give them huge illegal monetary returns. But at the meeting yesterday, the Trade and Industry Bureau simply denied the existence of such signs, claiming that there was no supporting evidence at all. The Bureau further said that the involvement of such criminal syndicates were only isolated cases. The reply of the Bureau really worries us a great deal. In the very first place, why have the police come to the observation I have just mentioned? Well, the actual situation is really not quite the same as described by the Bureau, because the piracy acts committed by the criminal syndicates concerned actually involved billions of dollars. May I ask how the police look at the situation?

CHIEF EXECUTIVE (in Cantonese): Mr MA, since I do not know how to answer your question now, can you allow me to do some follow-up work first? But I can assure you that I am aware of the gravity of the problem.

MR YEUNG YIU-CHUNG (in Cantonese): Mr TUNG, I am very concerned about the detention of some Hong Kong residents by certain organizations in the Mainland. Will the SAR Government inform this Council whether it has any policies to deal with the detention of Hong Kong residents in the Mainland; and whether the Government will play some roles with respect to this issue; and if so, what the roles are?

CHIEF EXECUTIVE (in Cantonese): Mr YEUNG, the SAR Government is concerned about the detention of some Hong Kong residents in the Mainland. It should also be obliged to follow up and handle such issues. Of course, in the course of handling the issues, we must be sensitive to the concept of "one country, two systems" and be well aware that the matters must be dealt with within the precincts of "one country, two systems". Since 1 July 1997, approximately 27 such cases have been recorded. In fact, the Security Bureau has been liaising with the Central Government with respect to these cases and will continue with its follow-up work too. If I remember it correctly, of these 27 cases, approximately 18 people have been allowed to return to Hong Kong. The remaining are either serving their sentences or undergoing some legal procedures. I hope and I also believe we can do even better in future. On the other hand, we have set up an office in Beijing. At the moment, the office has already started to give play to its role in this area. I hope we can, through the concerted efforts of various government departments, set up a better mechanism to follow up these issues.

MISS CYD HO (in Cantonese): Madam President, just now I heard Mr TUNG mention that there were two ways to solve the problem pertaining to children born in the Mainland to Hong Kong residents. The first way is to amend the Basic Law; the second way is to request the NPC Standing Committee to interpret the Basic Law. But I hope Mr TUNG can tell this Council and the public in an unequivocal manner and with resolution in this Council as to whether the SAR Government will implement the ruling made by the CFA on 29 January faithfully by accepting the children born in the Mainland to people now enjoying right of abode in Hong Kong?

CHIEF EXECUTIVE (in Cantonese): Miss HO, of course we have to respect the CFA ruling. But in making preparations for solving the problem, we see that the matter is serious. Under such circumstances, I think the Government is obliged to explain to the public as well as Honourable Members and that is: Now we have this issue and are faced with these problems, how are we going to deal with it? I also hope that we can expeditiously reach a conclusion acceptable to both the public and Honourable Members. Hopefully, we can see the result very soon.

MISS CYD HO (in Cantonese): Madam President, if we say that the SAR Government might not be able to implement the CFA ruling, will Mr TUNG deny it?

CHIEF EXECUTIVE (in Cantonese): I think it is premature for us to talk about this issue at the moment. I want to give my comment when the matter becomes clearer.

DR RAYMOND HO (in Cantonese): Madam President, I wish to ask Mr TUNG a question on population. In 1996, the Government announced that according to its projections, the population of the territory would reach 7.5 million to 8.1 million by 2011. On the day of the Mid-Autumn Festival in 1997, I raised some related questions in Mr TUNG's office. I said that the population of Hong Kong would reach 10 million very soon. In the Budget debate held more than a month ago, I also raised the issue of how to deal with a 10-million population. At that time, the problem of 1.67 million persons eligible to come here for settlement had yet to surface. And this morning, we listened to many Policy Secretaries who gave us information on that issue, saying that there was an urgent need to increase facilities in health care, education and so on to cope with this sudden surge in population. No matter how we are going to tackle this problem, may I know if Mr TUNG would consider setting up a committee at the very top of the Government to co-ordinate all related matters? We must set aside resources to cope with this influx of population in such a short period of 10 years, that is in the year 2011, no matter the actual number will be 700 000 or 1.67 million. If we are to add 1.67 million to the projected figures, it will come to 9.5 million, then how much resources are we going to set aside by then to solve these problems? Should we set up an ad hoc committee to oversee such matters and have we thought of ways to get more resources?

CHIEF EXECUTIVE (in Cantonese): Dr HO, I can recall that last time when we had a chat we touched on this problem. I said at that time that in a place like Hong Kong we had no power to decide who might enter the territory. We need first to think whether there is a need to have a population policy. We need to think what is the most proper population policy for Hong Kong, one that will ensure the future well-being of the 6 million plus population and increase their wealth. We are studying the formulation of a population policy and we hope that after a while, we can be more certain of the direction of our long-term development. Of course, we shall discuss and think about these matters together. After we have reached some conclusions, we shall think about how to handle the problems which Dr HO has mentioned. This number of 1.67 million people is out of our expectations and it is something which crops up suddenly. So it is by nature something different.

DR RAYMOND HO (in Cantonese): Madam President, I wish to follow up my last question. In many places, cities and countries, planning can be made on a long-term population policy, but it is a different case for Hong Kong because a lot of factors are simply out of our control. It is precisely because of this that our population figure will have a direct bearing on every aspect of our planning and social services. We are in this sense passive. How are we going to cope with the 700 000 people, or the 1.67 million in some future time, together with the previously projected population growth? How are resources going to be allocated and how much do we need? We cannot afford to wait until a related policy has been formulated before we can solve the above problem. In this sense, our policy is also passive. Should we try to allocate our resources now?

CHIEF EXECUTIVE (in Cantonese): I hope after giving more careful thoughts to the problem, we can be more proactive in formulating our population policy. If we can be more proactive, we can look at the matter in much greater detail and come up with a comprehensive strategy for development. A passive approach will bring in heavy burdens for the community. In any case, I do not think it will take us too long to undertake the research needed to formulate a population policy.

MR JAMES TIEN (in Cantonese):Mr TUNG, there are going to be two material changes in Hong Kong very soon. First, the CFA ruling may increase our population from over 600 000 to over 1.6 million. Second, there is a good chance for China to join the WTO before the end of this year.

Mr TUNG just said that the Financial Secretary would evaluate the positive effects that would be brought about by China's accession to the WTO. If China can join the WTO, it will open up further in areas of insurance, banking, trading and industry. As China has not reached the world standard in these areas now, there is a good chance for Hong Kong to play a part. I heard that the new arrivals to Hong Kong would bring about more negative than positive effects. But there may be more positive effects if China joins the WTO. Will Mr TUNG make a comprehensive study of the two evaluation reports? For example, new arrivals from the Mainland may be more familiar with how things are done in the Mainland and if they can return to the Mainland for work after they have met the manpower demand of the Hong Kong Government and the industrial and business sectors, will this have greater overall effects in the long run?

CHIEF EXECUTIVE (in Cantonese):Mr TIEN, Hong Kong is really facing many different challenges and we have risen up to many challenges in the past 22 months. The reunification of Hong Kong with our motherland and the implementation of "one country, two systems" are challenges. The blow struck by the financial turmoil is another rigorous challenge. With the implementation of "one country, two systems", everything has been under control and the Central Government continues to support us. In the face of the blow struck by the financial turmoil, financial officials in Hong Kong have acted in the wisest way and given full play to their talent in solving the financial problems. Next came the challenge of the CFA ruling and then the new challenge brought by China's accession to the WTO. We will continue to meet many challenges but I think that they will bring us new opportunities. We should carefully study and handle each of these. Moreover, challenges enable the Government, Honourable Members and the community to think deeply and consider how we can meet the challenges in a better way.

China's accession to the WTO will give Hong Kong chances of participation in monetary, telecommunications and retailing fields. The Government can create an environment but we actually have to rely on all sectors to make efforts to give full play to their strengths before results will be yielded. If the SAR Government can reflect to the Central Government how the industrial and business sectors in Hong Kong can play a part and adopt suitable policies to enable the industrial and business sectors in Hong Kong to participate smoothly to generate more wealth for the benefit of Hong Kong, we will certainly do so. As to whether the effect of China's accession to the WTO can be linked up with the 1.67 million population, I have not got a clear idea yet but I will consider this.

MR JAMES TIEN (in Cantonese):Madam President, I would like to follow up this issue briefly. If China can join the WTO, the industrial and business sectors in Hong Kong can certainly play a more important role and benefit Hong Kong as a whole. But we also hope that the Government can publish its evaluation results soon. If it is found after the evaluation that the insurance and banking sectors have more chances of participation, I believe the local insurance and banking sectors will try their best to train up more people of talent and the Employees' Retraining Board of the Government will also train up the required manpower. This way, when China really joins the WTO, we do not need to waste a few years' time or lag behind foreign countries at the very start.

CHIEF EXECUTIVE (in Cantonese):We will actively carry out the relevant evaluation. What is the difficult problem now? The terms for China's joining the WTO are still under negotiation. Before a final decision is made, we do not know the situation perfectly well. Therefore, we will keep abreast of the progress of the negotiation and make an evaluation as soon as possible.

MR FRED LI (in Cantonese): Madam President, I have listened very carefully to the opening remarks of Mr TUNG. Mr TUNG said that Hong Kong could not possibly withstand the pressure exerted by the influx of 1.67 million people and that the Government would not allow our achievements over the years to be destroyed, because the consequences would be very, very serious. This is only the one-sided version of Mr TUNG, and I have listened to him very attentively. This morning, our bureau Secretaries also talked a lot about the matter, for example, that as much as 6 000 hectares of land might be required and that some 20 000 housing units per year would have to be constructed. These are all very frightening statistics. But has it ever occurred to Mr TUNG that once all these figures and what he said a moment ago were made known to the public, people might well ask the Government to bar any mainlanders from coming to Hong Kong. They might think that even the arrival of one single person from the Mainland should not be allowed, or else problems would result. If people are really induced to think that way, and if they really support the Chief Executive, Mr TUNG, urging him not to allow these people to come, how would Mr TUNG handle their request? In other words, if public opinions really ask Mr TUNG not to allow them in, would Mr TUNG consider their request and try each and every possible means to bar their entry into Hong Kong?

CHIEF EXECUTIVE (in Cantonese): Mr LI, when you look at all these figures, and having listened to my explanation, how would you handle the problem if you were in my position? I will listen to the opinions of all as much as possible, so as to identify the best solution. But I must still say that we must take account of the interests of Hong Kong as a whole.

MR FRED LI (in Cantonese): Mr TUNG, I would handle these 1.67 million people in two batches, that is, the first and second generations, and I would also spend several years on handling those 600 000 or so people. Besides, Mr TUNG, as you and I know, not all of those 1.67 million people would come; there must be a discount of some kind. And, we also wish to try every possible means to amend the Basic Law. This is how I would respond to Mr TUNG's question. But Mr TUNG would certainly regard this as a very special kind of opinion, one which he would never accept.

CHIEF EXECUTIVE (in Cantonese): Mr LI, we will listen to the opinions of all as much as possible before making a final decision.

MISS CHOY SO-YUK (in Cantonese): Madam President, I wish to ask a question on the civil service reform. Recently, nine civil service organizations, including the trade unions of the disciplined forces, have expressed their opposition to some proposed civil service reforms such as employment on contract terms and linking of pay increases to performance. May I ask Mr TUNG how the Government can maintain the morale and stability of the Civil Service while introducing improvements to the existing civil service employment policy?

CHIEF EXECUTIVE (in Cantonese): With respect to the civil service reform, there are indeed many different opinions in the community. But there is also a general consensus, and that is, that our Civil Service has to be reformed. The existing team of civil servants in Hong Kong is honest, reliable and clean, and we should all be proud of our them. But we must also remember that the world is now about to enter a new century, in which there will be many changes. And, as I told Mr James TIEN a moment ago, Hong Kong will face many changes too. Given all these changes, our civil servants must keep abreast of the times and work hard to adapt themselves to the new environment. I am sure that our civil servants will be able to perform well even in the 21st century, and the proposed reforms are simply meant to achieve this very objective. One guiding principle of all reforms is that progress should be made on the basis of stability. We can ill-afford any confusion, and we must seek to make progress on a gradual basis, or else chaos will result and Hong Kong will suffer. I understand that the Government has made a lot efforts in this respect, and before it makes any further step, it will review the situation with the relevant departments and trade unions. As the Secretary for the Civil Service has once said, as many as 80 meetings have been held with the relevant trade unions. I hope that at the end of the day, we can work out a civil service system with bigger accountability and stronger adaptability. Let me also take this opportunity to mention the Audit Commission's recent report. I have read this report and notice its many criticisms about several government departments. I find this very unfortunate, but I believe the problems are exclusive to just a handful of civil servants. We will certainly follow up these criticisms, and we will certainly seek to do better, in a much more efficient manner.

MISS CHOY SO-YUK (in Cantonese): Mr TUNG, are you really very confident that the proposed civil service reform can be implemented smoothly?

CHIEF EXECUTIVE (in Cantonese): I am very confident, and so is the Secretary for the Civil Service, right?

MR CHAN KAM-LAM (in Cantonese): Madam President, I am sure that in these couple of days, the issue of 1.67 million prospective arrivals has certainly become a big headache for the Government. But the voice we have heard most often seems to suggest that the Government should adopt an evasive approach, behaving as if it simply did not see the problem at all. Some people seem to think that the Government should remain silent even if it sees that the problem is so serious, because once the Government says anything, people will be scared. And, actually, this is not the only problem that we face. Only yesterday, several hundred Housing Department staff staged a sit-in outside the Housing Authority (HA). Well, in this connection, I wish to ask Mr TUNG this question: How are we going to look after the interests of these staff members who have been working in the Housing Department for several decades?

CHIEF EXECUTIVE (in Cantonese): I think there are really two questions, and I should answer them one by one. For the first question, the one on the 1.67 million prospective arrivals, I must say that the Government will always try to adopt the most open approach and enable the public to know where the problem lies. And, the Government will certainly consider the matter very carefully and prudently before making any final decision. As I said a moment ago, we will come up with a decisive and ultimate solution as quickly as possible. As for the question on the Housing Department, I know that after its meeting this morning, the HA has made it clear that it will go ahead with the announced scheme. I am sure that the HA must have considered the matter very thoroughly before making its decision, because it has to balance the interests of Hong Kong taxpayers against those of the employees themselves. I think reforms are really necessary, but I am sure that the HA and the Housing Department will certainly discuss with the affected colleagues and work out some better arrangements for them.

MR CHAN KAM-LAM (in Cantonese): Madam President, what happened yesterday seems to indicate that people do not think that there is adequate communication between the Housing Department and its staff. In view of this, will Mr TUNG ask the HA and the Housing Department to re-open further discussions with the staff side in an open manner, so as to work out a more satisfactory solution?

CHIEF EXECUTIVE (in Cantonese): I think both the HA and the Housing Department has always had this objective in mind. Both of them do very much hope to sit down at the negotiating table with the employees and work out a good solution. What is most important now is that all parties concerned must remain calm and sit down again for negotiations, so as to identify the best way out.

MISS EMILY LAU (in Cantonese): Madam President, the question I want to ask the Chief Executive is about the right of abode in Hong Kong enjoyed by some mainlanders. Madam President, but before I ask this question, I wish to express the hope that Members of this Council can have access to Mr TUNG as easily as some property developers. Madam President, when Mr TUNG replied to Members' questions just now, he said that he did not rule out the possibility that the Government might choose not to implement the CFA ruling. And, this morning, the Acting Chief Secretary for Administration, Mr Michael SUEN, also used the expression "in case" when he referred to the implementation of the CFA ruling. This actually implies that there is a possibility of non-implementation. If the ruling were really not implemented, we would certainly think that the CFA ruling is no longer final as its name suggests. I do not know whether Mr TUNG has ever considered this point. Mr TUNG has so directly refused to rule out the possibility of non-implementation. That being the case, should we really be worried that once such a decision is made, the people of Hong Kong and the international community will think that the CFA has been deprived of the powers it is supposed to have?

CHIEF EXECUTIVE (in Cantonese): First, I must clarify that I always try to meet with as many people as possible every day. Not long ago, for example, Mr Martin LEE sent a letter to me, asking to see me immediately. At that time, I was about to have an overseas tour, but I still told Mr LEE that I would see him immediately after my return. If Members ring me up for the same purpose, I will certainly treat them in the same way. (Laughter) Hence, please do not think that I am willing to talk with property developers only. Mr MA Fung-kwok should know what I mean, because I have held many discussions with film workers on ways of revitalizing the film industry. I have always hoped, very sincerely, that I can listen to the voices from the different sectors of the community direct.

Back to the question asked by Miss LAU, I must say that it indeed involves some very significant implications which warrant thorough consideration. And, we are right now examining the matter step by step, and in great detail, because the dignity of the CFA is very important to Hong Kong and we must seek to safeguard it as much as we can. But then, when we consider the grave implications, we really have to ask ourselves how we should deal with them. In any case, I am confident that we will be able to work out a good solution in accordance with the Basic Law.

MISS EMILY LAU (in Cantonese): Madam President, the Chief Executive said that he will proceed in accordance with the Basic Law. But according to Article 158 of the Basic Law, the NPC Standing Committee shall allow the lawcourts of Hong Kong to interpret the Basic Law for matters falling within the autonomy of the SAR. Since the Chief Executive does not rule out the possibility of inviting the NPC Standing Committee to interpret Article 24 of the Basic Law, can we therefore conclude that he may violate the Basic Law and destroy our high degree of autonomy?

CHIEF EXECUTIVE (in Cantonese): I think we all treasure our high degree of autonomy very much. Whatever we may do, we will always bear in mind the interests of Hong Kong as a whole. Right now, our legal experts are studying all the relevant issues, and we will only make an appropriate decision after that. Before the outcome of the studies are available, I do not think that it is proper for me to discuss the issues with Miss LAU any further, because there are indeed many legalistic elements.

MR DAVID CHU (in Cantonese): Madam President, I have tried very, very hard to practising asking two questions in Cantonese. Unfortunately, other Members have asked these questions before me. (Laughter) So, I immediately hastened to practise asking a third one. But, very unfortunately again, Mr CHAN Kam-lam has asked it before me. So, the question I am now going to ask is very much impromptu in nature. Please therefore bear with me if my Cantonese is not that good. (Laughter)

Recently, there has been a spate of student gun-shootings in some school campuses of the United States. And, in Hong Kong, juvenile gang violence also occurs occasionally in schools. How does Mr TUNG look at the violent behaviour of students in general?

CHIEF EXECUTIVE (in Cantonese): Mr CHU, this problem has also aroused my concern too. It will be very bad, if we allow the problem of juvenile gangs to grow. All government departments, including the police, the Security Bureau and so on, actually attach very great importance to this problem, in the hope that it can be handled satisfactorily.

Since Mr CHU has raised a question relating to students, I may as well talk about my visit to the Sha Tin Government Secondary School yesterday. I am delighted that I could have a chance to visit this school, because all the students there were so very energetic and resourceful. The Sha Tin Government Secondary School is one of the 10 local schools selected for the pilot scheme on IT education. There are some 150 computers in the school, and the whole school is now equipped with Internet facilities. The Intranet and Internet facilities in the school are both functioning very well. The principal and the teachers have all mastered the techniques of computer operations, Internet and IT very satisfactorily. The reason why I mention this visit is that our people usually do not have confidence in themselves, always thinking there are many problems with Hong Kong. This is evident from the newspapers we read every day. Actually, we should also notice the many positive aspects in our society. For example, all the students in the school I visited are working hard to get a place in university. I am very delighted after meeting with them.

DR YEUNG SUM (in Cantonese): Thank you, Madam President. I do not understand why, but just now when Mr TUNG was speaking on the issue of new arrivals I had a feeling that Mr TUNG was in fact inclined to resolve the issue in a decisive manner instead of procrastinating. In regard to the two methods before us, amending the Basic Law and requesting the NPC to interpret the Basic Law, may I ask Mr TUNG whether he considers it faster and better to ask the NPC to interpret the Basic Law, since the issue could then be resolved expeditiously? I am saying this with the time element in mind, for I can see that the Chief Executive has laid much emphasis on decisiveness and efficiency, he does not wish to procrastinate. May I ask the Chief Executive whether he has any inclination regarding this two methods? Would he mind disclosing to this Council his opinion? (Laughter) We are very cool-headed today, we still keep our cool despite the heat that fills our hearts.

CHIEF EXECUTIVE (in Cantonese): The truth is, Dr YEUNG, I think what we need is a thorough and expeditious solution to the problem. Indeed, this is the hope of all members of the public (and also that of this Council I believe), since procrastination would do nobody any good. As a matter of fact, from the Government's perspective, it will not be able to draft any budget for the coming two years if the matter remains unresolved; besides, I will also have problem drafting my policy address, albeit my drafting the policy address is but a trifle. On the whole, the most important point is how our community as a whole could envisage the future development of Hong Kong in a forward-looking manner. In this connection, I believe it should be a faster solution to interpret the Basic Law, compared to the option of amendment which would take more time. Naturally we have a great many other considerations the detailed study of which has yet to be completed by our legal experts. We will make further announcement in this regard in due course. Nevertheless, as I said before, and I am going to say it again now, it would be best if we could find a better way to resolve the matter ourselves.

DR YEUNG SUM (in Cantonese): Mr TUNG, what you said just now was probably the most explicit reply you have ever given about this question, so was your observation. I must thank you for that. However, I trust that being the leader of the SAR as a whole, you need to always remain calm in the face of adversity. Indeed, it was in this way that your favourite soccer team, Liverpool, managed to draw against Manchester United yesterday. (Laughter) The other day I told the kids a story, the fable of the tortoise and the hare; it was about the race between the hare which could run very fast and the tortoise which moved very slowly. Coming back to the present situation, if you should choose to request the NPC to interpret the Basic Law and thereby reverse the ruling of the CFA, the dignity of the CFA will naturally be injured; what is more, I am afraid foreign investors will leave Hong Kong all at once. For this reason, I hope that you will draw on the fable of the tortoise and the hare and realize that a quick fix may not necessarily be the best solution. If you should adopt the faster method to resolve the matter, Hong Kong will probably have to pay for it with the independence of the CFA.

CHIEF EXECUTIVE (in Cantonese): Dr YEUNG, we will certainly give careful thoughts to each and every aspect concerned. Nevertheless, regarding the foreign investors, I can assure you that I have plenty of information about their plans. (Laughter) This is because I will meet with almost each and every foreign investor when they come to Hong Kong.

DR YEUNG SUM (in Cantonese): But if the rule of law is no longer upheld in Hong Kong, I do not think they would still be here.

PRESIDENT (in Cantonese): I am sorry, Dr YEUNG, but we should now proceed to the next question.

CHIEF EXECUTIVE (in Cantonese): I will keep tap on that.

MR LEE CHEUK-YAN (in Cantonese): Madam President, in speaking on the right of abode issue just now, Mr TUNG kept saying that the impact of the issue on the quality of life of the people of Hong Kong would be grave. However, I do not believe the Government has ever concerned itself very much with the quality of life of the local residents, not in the past when there was no right of abode issue, nor at present. Let me cite some examples. As an employer, the Government has taken steps to ruin the means of living of its 9 000 employees working under the Housing Department; the Post Office has imposed a 20% pay cut on its existing staff; all public housing estates are going to have a rent increase in September; and worse still, the Government has turned down the request for setting a minimum wage. So, how is the Government going to care about the quality of life of the 6 million-odd population in Hong Kong? I can see no effort made by the Government in this respect. Is the Government being hypocritical in saying that it really cares?

CHIEF EXECUTIVE (in Cantonese): There is some truth in Mr LEE's question. The Government indeed cares very much about the quality of life of the 6 million-odd population in Hong Kong, their job opportunities, as well as their existing employment situation. What we have been undergoing is, shall I say, a necessary process. Looking back, we can actually see that the economy of Hong Kong has already developed into a "bubble economy" by 1996 and 1997. While the "bubble" economy is a situation that calls for adjustment, the regional financial turmoil has accelerated the process of adjustment. As a part of the process, our assets price has already been reduced significantly, yet similar adjustments must also be made to other costs; otherwise, the rate of unemployment would have risen at an even higher speed. I am still optimistic about the future of the our economy, albeit the unemployment rate may remain on the rise as Hong Kong is still undergoing adjustment.

Mr LEE asked if the Government would really care. Of course we care. How could we not concern ourselves with the public? The United States has also undergone a painful adjustment in the late '80s. The people there have also experienced such problems as falling assets price, wage reduction and rising unemployment rate. Yes, these are very unpleasant experiences, but one must face up to the fact. Notwithstanding that, the Americans have managed to make prompt adjustments, thereby contributing to their country's flourishing development today. On the other hand, let us take a look at the situation in Japan. It has been nine years but Japan has all along failed to adjust successfully; indeed, the country is still in the process of making slow adjustments. As for the scene back home, since Hong Kong is now in the midst of an economic adjustment, we shall expect to experience an agonizing period of changes. However, the faster the pace of adjustment, the better are the chances of our economy revives its vitality to the full. As such, we hope very much to complete the adjustments expeditiously, and thereby attain economic revival as early as possible.

Bearing in mind that every 1% growth in our economy would entail job opportunities for 30 000 people, the major role of the Government in this entire process of adjustment should be to make every effort to stimulate the economy, with a view to enabling it to bounce back from the present downturn. This is a very important responsibility of ours, we shall put in our best effort to discharge it.

MR LEE CHEUK-YAN (in Cantonese): What Mr TUNG has said just now are the macro-economic issues; however, my concerns are the livelihood problems that members of the public are now facing. In all the examples I have cited just now, the Government is just hitting the people when they are down. To members of the public, it will be a cause for rejoice if the Government should refrain from hitting them. Could Mr TUNG give us some specific examples, say will the proposed public housing rent increase in September be shelved?

CHIEF EXECUTIVE (in Cantonese): For the period between 1999 and 2000, investments made by the Government will create 122 000 additional jobs. This is something that the Government can do. If we can do more in fields like tourism, high technology and so on, we should be able to create more job opportunities. The Government is now working in this direction, in the hope that we could help the economy to revive in real terms.

MR HUI CHEUNG-CHING (in Cantonese): Madam President, Mr TUNG, while Hong Kong's container throughput has increased by a mere 1.4% over the past year, that of Ports Yantian and Shekou in the Mainland has risen by as much as 60% to 70%. As such, strengthening our competitiveness in this respect should be one urgent task before us. May I ask the Chief Executive whether the Government has in place any measures to enhance the appeal of the container terminals in Hong Kong, thereby helping the re-export trade as well as other relevant industries?

CHIEF EXECUTIVE (in Cantonese): This question reflects the fact that the success of the reforms and open door policy of the Mainland will pose a challenge to Hong Kong. This is because the more efficient operation of the terminals and ports in the Mainland has served to enable many vessels to bypass Hong Kong. In the past, exports from Shanghai to Europe had to stop over en route Hong Kong, so did the exports from Shanghai to the United States. However, as the ports and terminals in Shanghai have become more efficient, exports could now be transported non-stop to their destinations. Likewise, exports from Qingdao and Tianjin could also be transported non-stop to their destinations. In addition, while goods from Fujian must be re-exported from Hong Kong to Taiwan in the past, exports could now be transported directly from Xiamen. As a matter of fact, the rapid changes going on have served to pose enormous challenges to us. In this connection, the companies responsible for the management of the container terminals are naturally aware of the keen competition before them. I believe they will adjust the fees and charges accordingly.

On the other hand, the most expensive cost of transportation is that of trucks; by that I am referring to the container trucks running between Hong Kong and the Mainland. Transportation by container trucks is low in efficiency but high in cost due to some border and custom matters. As such, one of the many challenges before the Hong Kong Government is to negotiate with the Guangdong Province to find out ways to cut back the costs. I very much hope that the effort put in by the Government would yield good results.

MR HUI CHEUNG-CHING (in Cantonese): I should like to ask a follow-up. Would mutual assistance between Hong Kong and the Mainland be possible on this front?

CHIEF EXECUTIVE (in Cantonese): I believe there must be some competition on certain fronts. The more open the Mainland has become, the greater are the chances that we have to compete with the Mainland. On the other hand, however, more opportunities would be available to us as the Mainland becomes more open. For this reason, the interdepartmental working group under the leadership of the Financial Secretary, as I have referred to earlier, is now conducting studies in this regard, with a view to identifying new opportunities for Hong Kong. In this connection, there should be plenty of new opportunities available to us in those fields which I have mentioned before, such as financial services, retailing and so on. As for other sectors, we should make adjustments and prepare ourselves to brave any competition.

PRESIDENT (in Cantonese): Mr Chief Executive, although it is now 4.00 pm, seven Members are still waiting for their turn to ask questions. Could you spare us 10 more minutes?

CHIEF EXECUTIVE (in Cantonese): Fine.

PRESIDENT (in Cantonese): Thank you, Mr Chief Executive.

MR KENNETH TING (in Cantonese): Madam President, I am the first one to benefit.

Mr TUNG, in regard to the recent issue of new arrivals, some scholars have pointed out that the best and most efficient way to prevent more than a million new arrivals from coming here within a short time is to tighten the Comprehensive Social Security Assistance (CSSA) Scheme, so that those people intending to move to Hong Kong would have to first consider whether they have the ability to earn a living in Hong Kong before they come here. May I know whether Mr TUNG considers this a feasible suggestion?

CHIEF EXECUTIVE (in Cantonese): Mr Eric LI is sitting right in front of me and I can see him shaking his head. I believe Mr TING should also be aware that the Government has published in this morning quite a number of figures regarding the additional amount of CSSA payments required if this number of people should come to Hong Kong, and that the amount required would certainly be an enormous one. If some 1.6 million people should really come to Hong Kong, we will have to assess the situation as a whole instead of concentrating only on CSSA payments. Indeed, there are a great many aspects that we need to consider, and that is why we have to earnestly study the situation as a whole.

I should like to make a further response in this regard. As I have referred to just now, the practice of approving each day 150 applicants from the Mainland to settle in Hong Kong will remain unchanged. Let me repeat, the practice will not be revoked.

MISS CHRISTINE LOH (in Cantonese): I should like to first apologize to Madam President and Mr Chief Executive for being late. Just now some unexpected hindrances have prevented me from listening to the Chief Executive's remarks on the environmental problems.

I should like to raise a question on the issue of environmental protection. I believe the forthcoming 1.67 million new arrivals should be the most important matter in front of us now. If the population of Hong Kong should expand in such a manner, the environment would certainly be affected. At present, many members of the public have concerned themselves with the co-ordination between Hong Kong and the Mainland. This is because many activities, such as sewage disposal, control over air pollution, as well as many other infrastructural development are all related closely to the issue of environmental protection. In this connection, could Mr TUNG inform this Council how he will co-ordinate with the mainland authorities, in particular the highest level government officials of the Guangdong Province, with a view to collaborating on some high-profile actions on the front of cross-border environmental protection? I understand that Hong Kong and the Mainland are now collaborating in conducting some cultural as well as other activities, but they are still at their initial stage only. Could Mr TUNG inform us of his forward-looking view in this connection?

CHIEF EXECUTIVE (in Cantonese): As I said before, I and my colleagues in the Administration understand very well that members of the public have expressed their dissatisfaction with the existing problem of air pollution in Hong Kong, and we have also found the current situation wanting. Sewage disposal and the disposal of waste material will continue to be one of our major tasks in 1999 and the coming few years, for environmental protection is one the Government's major responsibilities. I expect to give a comprehensive account of our environmental protection efforts when, if not before, I deliver my policy address. I believe our collaboration with our neighbour, the Guangdong Province, will also be included. Actually, we must co-operate with each other on this front. In this connection, both parties have made some initial contacts and confirmed that our ways of thinking are in line with that of one another. As such, the only question should be how we are going to promote and implement the relevant measures in the future. I hope that we could expeditiously implement the measures concerned once the comprehensive plan is finalized. Besides, we will also consult the Council as far as possible in formulating the comprehensive plan.

MISS CHRISTINE LOH (in Cantonese): What I would like to hear most is the views of the Chief Executive himself, since it should be all the more effective for you to develop such kinds of work in your capacity as Chief Executive than any one of us here. By the same token, I believe the environmental protection effort made by the Mainland should also be supported by the highest level government officials there. May I ask Mr TUNG if he would develop the environmental protection work in his capacity as Chief Executive?

CHIEF EXECUTIVE (in Cantonese): I believe Miss LOH is also aware that a Hong Kong-Guangdong Co-operation Joint Conference is currently looking into issues in this regard. I can assure Miss LOH that since sustainable development is of utmost importance to the future of Hong Kong, I will certainly express to both the Central Authorities and the Guangdong Province my particular concern in this respect.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, just now Mr TUNG has answered the questions on the Civil Service raised by several of my Honourable colleagues. The Civil Service is also an issue which I frequently come across in these days. Several weeks after they had staged their demonstration, staff members of the Housing Department again held a sit-in last night. Nevertheless, it seems that the Housing Authority has already endorsed the privatization and corporatization proposals today. Naturally, the staff members' agitation will be aggravated by such a development. May I ask Mr TUNG how he finds the way this issue is being handled? It is obvious that instead of taking into consideration the views of staff members, the Housing Department has simply submitted the proposal and consultant recommendations to the Housing Authority for approval. Once the proposal has been endorsed, the staff cannot but accept it. This is very much similar to practice of some stubborn employers who insist on cutting back on the wages and benefits without taking into consideration the feelings of their staff. I consider the practice of the Housing Department in this case a very bad example, bearing in mind the many forthcoming similar cases to be handled by other government departments such as the Post Office, the Water Supplies Department and so on. In regard to the civil service reform, I believe all government departments would all be affected by such a bad example. May I ask Mr TUNG about his views on this case? Does Mr TUNG find any problem with this practice?

CHIEF EXECUTIVE (in Cantonese): Miss CHAN, I believe there are bound to be problems in any process of reform. The success of any reform relies on, among others, good communication. Apart from a mutual understanding of where the crux of the problem lies, a mutually shared goal to make the reform a success is equally important. I am sure both the Housing Authority and the Housing Department will take into account the feelings and views of its staff in a very careful and sensitive manner in dealing with the current issue. I hereby urge all parties involved to keep their cool and seek to resolve the matter through negotiation.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, Mr TUNG, the current situation is apparently a very bad example. At present, government departments have all concerned themselves very much with issues like this one, for they feel that they share the same lot with each other in this connection. In my opinion, the way the Housing Department approached the matter has served to arouse the conflict between staff and management, since not only those working under the Housing Department but all civil servants are actually feeling uneasy now. Could Mr TUNG inform this Council whether he has in place any plans to deal with this situation, bearing in mind that many civil servants consider the present direction of reform differs a lot with what they have expected and lend their support to earlier on?

CHIEF EXECUTIVE (in Cantonese): I understand that Secretary LAM Woon-kwong has all along been maintaining contact with the various trade unions, and that they have so far conducted 80 meetings. Should 80 meetings be consider insufficient, they are ready to conduct 80 more meetings to ensure good communication. I hope that they could reach a consensus through the proper communication channels and procedures. As I said before, we expect this to be a forward-looking reform which seeks to attain progress under the premise of stability. I am confident that both the management and the staff could exercise a high degree of mutual accommodation to make this reform a success.

PRESIDENT (in Cantonese): Last question.

DR LUI MING-WAH (in Cantonese): Madam President, I should like to tell Mr TUNG that the competitiveness of Hong Kong on various fronts has been on the decline since mainland China implemented its open-door policy, and I am sure Mr TUNG will share my view. This situation has been fully reflected in certain trades, but for others, the effect has yet to take place. In any case, history tells us that the competitiveness of Hong Kong as a whole has all along been dwindling, compared to that of the Mainland. What is more, the dwindling will just go on. We believe there is a need for us to advance a lot faster than the Mainland in all aspects if we are to maintain a competitive edge for Hong Kong. As a matter of fact, however, mainland China is developing at a pace much faster than ours. As we all know, the success of the Mainland is largely attributable to the fact that the mainland authorities have taken the lead to push as well as help the various trades and industries to develop. In this connection, may I ask the Chief Executive whether the Government has in place any grand blueprint for development to lead our businesses, industries, tourism sector, education, financial markets as well as other sectors to advance into the 21st Century? While we can see that a number of development items are now underway, effort to co-ordinate these projects has yet to be made.

CHIEF EXECUTIVE (in Cantonese): Yes, Dr LUI, we have a blueprint. We plan to develop Hong Kong into the most successful metropolis of Asia, as well as one of the most important cities of our country. In my policy address, I have referred to, as part of the development process, our plans to strengthen the four brilliant pillars of our economy, namely, the financial services sector, the tourism industry, the status of Hong Kong as a shipping centre, as well as the role of Hong Kong as an industrial support centre. As such, we are now reforming the financial markets, with a view to further strengthening the position of Hong Kong as a financial centre.

Apart from that, I should also like to put emphasis on the need for us to take part in the economic development of our country from now on. Ours is the most inspiring economic development of the 21st century, I am sure we will be benefited tremendously if we should participate in it. Besides, I have also referred to the advantage we could enjoy if more international or multinational companies are to establish their Asian headquarters or offices in Hong Kong, and that we will strive to maintain our position as such a commercial hub. We have been putting in our best efforts to press forward our development in this direction; indeed, all our work and efforts are made in relation to this objective.

In addition, we also plan to promote innovation and technological development in both of our industrial and information technology sectors. It is our hope that the effort we have made in this respect would yield good harvest in the future. As regards Chinese medicine, our Policy Bureaux are now busy drafting the relevant action plans. So, these are the fields which the Government has planned to vigorously develop.

Certainly, the first and foremost task should be to improve our education system. In this connection, the Education Commission is currently conducting a consultation exercise. I am sure Dr LUI is aware that we need to improve the quality of education. Apart from that, we also need to tackle the environmental protection issues in a positive manner, for Hong Kong will never be recognized as a metropolis if our environment condition is wanting. In a nutshell, we need to further enhance the quality of life of the people of Hong Kong.

I do understand that certain matters and issues to which Dr LUI referred just now have yet to be resolved. Nevertheless, I can assure him that we have taken a long view in setting our objectives and have all along been developing towards them. I am sure we could achieve them all in the future, albeit we are in the midst of a rather painful period at the moment. If Dr LUI should give us some time, I or my colleagues will be happy to discuss with him in detail the work we have planned.

DR LUI MING-WAH (in Cantonese): Thank you, Mr TUNG. As time is running short, I do not wish to further discuss with you now. Nevertheless, I hope that I can exchange views with you in the future. Thank you.

PRESIDENT (in Cantonese): I thank the Chief Executive for answering the questions raised by 25 Members in the past one hour and 43 minutes.


PRESIDENT In Cantonese): I now adjourn the Council until 2.30 pm on Wednesday, 12 May 1999. Will Members please remain standing when the Chief Executive leaves the Chamber.

Adjourned accordingly at fourteen minutes past Four o'clock.