Fund 'needs careful thought'

GOVERNOR Mr Chris Patten yesterday said the issue of a central provident fund (CPF) for the territory was something that needed very careful consideration.

During yesterday's one-hour question time, he said the provision of retirement benefits had very profound social and economic consequences and it would be ludicrous to make any rapid decision on the matter.

''I think that the issues raised are so important that it would be unwise for this council or for the executive to address them before we had made every possible effort to build common ground across the community, including between groups representing employees and groups representing employers,'' he said.

''The idea of the Government controlling huge funds on behalf of potential retirees would not be in keeping with the usual economic philosophy pursued in this community and would run the risk of politicising benefits and investment in an undesirable way.'' Legco members voted in February for a CPF instead of the administration-proposed compulsory retirement scheme.

Under the Government's proposals, the administration would only be responsible for monitoring and not financially guaranteeing the schemes.

A three-month consultation on the proposal, which ended in early February, was conducted by the Government.

The Governor said the administration was at present looking at all the comments it had received on the proposals.

Mr Patten said he thought there would be private sector solutions on this issue which could limit the risks to retirees.

Legislator Mr Stephen Cheong Kam-chuen said, as a representative of a major employers' association, the Federation of Hongkong Industries, there were a few sister organisations that supported nothing less than a CPF.

On Legco members' call to combat inflation, the Governor said the territory's runaway inflation was a structural consequence of high levels of economic growth and was also caused by the shortage of land and labour supply.

He said the most important thing for the public sector to do was to increase the efficiency with which it used public resources and to keep the growth of public expenditure below that of economic growth.

''What we can't do is to hold any increase in fees down so low that the taxpayer has to make up the difference.

''That isn't a very sensible way of trying to counter inflation,'' he said.