WHEN Tung Chee-hwa was asked this week whether he envisages challenges to the legitimacy of his leadership in the wake of last month's polls - which saw some legislators elected with a mandate of more than 100,000 votes - his response was unequivocal. 'I was chosen by Hong Kong, by the people of Hong Kong in accordance with our constitution, and I will govern and run Hong Kong in accordance with our constitution, the Basic Law. I do not feel any other way. I am the chosen Chief Executive and this is a strongly executive-led government, and I want to make sure it is going to be kept that way.' Presumably, those participants who applauded at the Far Eastern Economic Review-sponsored conference were impressed by the strong and assertive rhetoric of the Chief Executive. The instant reaction, however, may have reflected a sense of unease within business circles, if not the whole community, over the post-election political landscape. As one highly-placed source in the administration puts it, the 'executive-led' set-up has become an empty slogan. 'Let's face it. The most important issue in the next few years is not about the economy, but the political system . . . The legislators are holding the purse-strings. They have real power,' he said. Under the Basic Law, the political set-up is designed to uphold the so-called 'executive-led' system of governing by checks and balances between the executive and legislature. The Government, headed by the Chief Executive with assistance from the Executive Council, is to formulate and implement policies, and draft and introduce bills to the Legislative Council. It should be accountable to the elected legislature. Despite the fact that the post-handover legislature faces curbs in its legislative powers on matters such as private members' bills, councillors have real power in checking on executive authorities on matters including budgets and other funding. As Liberal Party chief Allen Lee Peng-fei bluntly put it this week, Legco could say 'no' to any government request for funds if the administration chose to ignore their demands. He was referring to the six-point package hammered out by the coalition of seven political parties and groups to salvage the sagging economy. How long Mr Lee and his partners, who hold divergent political views, can stick together remains unclear. The cautious response from representatives of the Democratic Alliance for the Betterment of Hong Kong (DAB) at the end of the coalition's meeting with Financial Secretary Donald Tsang Yam-kuen did not augur well for a lasting united front. It is likely the DAB and the Hong Kong Progressive Alliance (HKPA), which together holds 16 votes in the new Legco, may adopt a more conciliatory attitude at the end of the day. Nevertheless, Mr Lee's warning on the likelihood of legislators blocking funding should not be lightly dismissed. Without the DAB and the HKPA, the Liberal Party and pro-democracy forces will still control nearly half of Legco. They will be fully aware their most powerful weapon in holding the executive branch accountable lies with the power to approve funds. A senior official, however, believes legislators will take a more 'responsible and mature' attitude. 'I don't think you will see any sort of the US Congress blocking the passage of funding to the government in Hong Kong. If that happens here, everybody will suffer. The Government will be paralysed,' he said. The official said he did not consider the coalition of political forces over economic issues as a political challenge to the authority of the administration. 'It's originated from economic issues, not politics,' he said. 'These are all long-time politicians. They won't go too far,' he said. 'I don't think there is now a serious threat against the executive-led system.' There is a deeper sense of crisis, however, in different sectors of the community. Columns and letters to the editor in China-friendly dailies - Wen Wei Po and Ta Kung Pao - have begun to ring alarm bells for the move to turn the executive-led government into legislature-led. Citing the cross-party move, an article in Wen Wei Po asked: 'Is someone taking the opportunity of the economic downturn to change the executive-led system under the Basic Law into a legislature-led system?' By doing so, it said, the Chief Executive would be sidelined. Bracing for the challenge, Mr Tung has vowed to work closely and co-operate with the new legislators. Constitutional Affairs Secretary Michael Suen Ming-yeung has repeatedly talked of the need for their colleagues to keep in constant touch with legislators and to engage them in their policy-making process. Their bottom line is that it is still the executive branch calling the shots. There are growing forces, however, against the supremacy of the executive authorities in policy-making. The six-point initiative from the political aspirants is but one of the challenges against the authority of the executive branch. Fundamentally, it is a challenge to the way the Government handles the economic crisis on issues such as the drawing of a deficit budget. Mr Tung and senior finance officials have argued the need to maintain the long-held tradition of fiscal prudence to remove fears that the Government has compromised its formula of past success in the face of populist demands. The Chief Executive went further to argue a deficit budget could be interpreted as the readiness of the Government to abandon basic policies such as prudent finance and the fixed exchange rate. The power of a 'strong executive-led government', however, lies in more than assertive rhetoric. As long as there is a major discrepancy between the mandate of the Chief Executive and Legco, there will be powerful political pressure from the elected politicians for the Government to follow their policy agenda. This is the price the administration has to pay now that it has no plan to amend the electoral arrangements in the Basic Law. The limited option thus left to the Government is for it to broaden its legitimacy and popularity through results. This has to be demonstrated in consistency in public policies, transparency and democracy in the policy-making process, flexibility in adjusting policies when required due to circumstantial changes, and the effectiveness of civil servants in its implementation. As evidenced in the declining level of satisfaction with government performance in recent polls, the ability of the administration to lead and govern in the past 11 months has been doubtful. Inconsistencies in remarks by officials over the state of the economy, the policy of supplying 85,000 flats a year and the deficit budget are among the oft-cited cases that the community has found confusing. This is the fundamental problem that needs to be addressed by an administration striving for a 'strong executive-led government' - especially in times of crisis.