7 things you need to know from Hong Kong leader Carrie Lam’s policy address

In an unusually short maiden policy address, lasting 40 minutes, Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor steered clear of hot political potatoes and gave goodies to companies and middle-class residents. But among her boldest moves was to pledge new initiatives in housing and innovation.

Here are seven key points from her speech.

1. Monthly travel subsidy for commuters

Lam announced a travel subsidy for commuters on all forms of public transport, as long as they use an Octopus card. Once anyone has spent HK$400 for the month, the government will pay 25 per cent of their fares after that. The subsidy will be capped at HK$300 per person per month. The government will pay for the discount using part of the dividends it gets from the MTR Corporation, in which it is the major shareholder. Lam said she expected more than 2 million Hongkongers to benefit from the plan, which she pledged during her chief executive election campaign.

2. Increasing housing supply

On helping first-time buyers, the chief executive will launch a new “Starter Homes” scheme, selling flats to them below the market rate. Single people earning less than HK$34,000 per month and households bringing in less than HK$68,000 monthly will be eligible. The homes will be built on sites owned by private developers, and will come with reselling restrictions. Some 1,000 flats on a Kwun Tong site from the government’s land sale programme will be launched by the end of next year under a pilot scheme.

On public housing, more than 4,000 new public flats will be offered as part of the “Green Form Subsidised Home Ownership Pilot Scheme” by the end of 2018. This is part of Lam’s plan to replace low-rent public flats with subsidised flats.

On transitional housing, the government wants to bring in various short-term community initiatives, such as using idle government premises; letting owners of subsidised housing rent out their flat at below market rate on a pilot basis; exploring the conversion of industrial buildings into transitional housing; and supporting NGOs looking into putting prefabricated modular housing on idle sites.

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3. Profit tax cut

Profits tax on the first HK$2 million a business makes will drop to 8.25 per cent, or half the standard rate. Profits beyond that will still be subject to the standard rate of 16.5 per cent.

To encourage research and development (R&D), Lam proposed that the first HK$2 million eligible R&D expenditure will get a 300 per cent tax deduction, with the rest at 200 per cent.

4. Plan to tear down Wan Chai Sports Ground cancelled

Lam announced she would cancel the controversial plan to turn Wan Chai Sports Ground into a new convention centre, as was proposed by her predecessor Leung Chun-ying. She said the government would instead redevelop government buildings in the area into a new wing of the nearby Hong Kong Convention and Exhibition Centre.

5. Invest to encourage IT development and turn Hong Kong into a ‘smart city’

Lam announced an immediate HK$700 million investment in several projects to develop Hong Kong into a ‘smart city’, including universal broadband coverage. She will also launch a high-level steering committee on IT to examine and guide measures for better use of modern technology.

The city leader also plans to double government spending on R&D within five years, setting aside HK$10 billion for university research funding. The government will seek, Lam said, to promote creative industries, in particular the design sector. She proposed injecting HK$1 billion into the CreateSmart Initiative and providing more resources for the Hong Kong Design Centre.

6. No mention of independence, but a firm “no” to any breach of national security

Lam cited President Xi Jinping’s earlier remarks on how Hong Kong’s destiny has always been bound to China’s, and thanked the country for support over the past two decades, since it was handed from British rule to Chinese. She pledged to uphold Hong Kong’s “one country, two systems” governing formula. Even as she steered clear of uttering the word “independence”, Lam stressed Hong Kong had to say “no” to any attempt to threaten the country’s sovereignty, security and development.

7. Empower young people and enhance training for civil servants

The Education Bureau will set aside HK$3 billion to provide scholarships for local students admitted to University Grants Committee-funded research postgraduate programmes. Lam also pledged to increase the ratio of young people on government committees to 15 per cent within her current term. She will double the number of internships at government departments for students with disabilities from 50 to 100 per year, and review Chinese language requirements to get more ethnic minorities into the government. In the long term, she proposed establishing a new civil service college for better training. The Civil Service Bureau is already planning the college, and looking for a site.