Mutual trust between Hong Kong and the mainland would be undermined if the government proposal for electoral reform in 2012 is vetoed by the legislature, the government's top adviser warned yesterday. The remarks by Lau Siu-kai, the head of the Central Policy Unit, came as former chief secretary Anson Chan Fang On-sang called for the proposal to be withdrawn, or risk it being vetoed by pan-democrats. Speaking after a meeting of the Commission on Strategic Development, Lau said the central government would be more at ease to allow Hong Kong a bigger role in the nation's economic development, particularly in the financial services sector, if mutual trust was strengthened. 'Another rejection of the electoral reform package would not help strengthen mutual trust but it would not severely hamper cross-border co-operation,' he said. The government's package for the 2007-08 elections was vetoed by Legco in December 2005. Lau said Beijing attached great importance to ensuring financial security in the process of financial reforms. He said some commission members were worried that the lack of mutual trust would adversely affect economic integration. While the Democratic Party and the Alliance for Universal Suffrage wish to continue dialogue with the government to seek possible concession, Chan, who heads the Citizen's Commission on Constitutional Development, urged the government to withdraw the proposal. 'The proposal is unacceptable,' she said. She said if the government could not guarantee the abolition of trade-based seats in the legislature and provide a clear roadmap on how universal suffrage will be introduced, pan-democrats should unite and veto the proposal when it is tabled. In a statement, Chan's commission said the government's proposal, which will see the creation of five new functional constituency seats for district councillors in 2012, 'insults the intelligence of Hong Kong people with a shallow pretence of moving forward towards achievement of genuine universal suffrage'. If the proposal is passed, there is a danger of Beijing interpreting the Basic Law to say that functional constituencies are compatible with the principles of equal and universal suffrage thus keeping them forever, Chan said. She urged people to vote in the May 16 by-elections as a 'last chance' to express their democratic desire. In a Legco constitutional affairs panel meeting, Secretary for Constitutional Affairs Stephen Lam Sui-lung sidestepped questions on whether the by-elections will be postponed if an amendment to be moved by government allies to scrap the HK$159 million election funding is passed in this week's Appropriation Bill.