Chief executive’s policy address 2017

In maiden Hong Kong policy address, Carrie Lam focuses on middle class to bring housing market out of crisis

Chief executive also talks tough on national security and pledges tax help

PUBLISHED : Wednesday, 11 October, 2017, 10:45am
UPDATED : Wednesday, 11 October, 2017, 4:20pm

Chief Executive Carrie Lam Cheng Yuet-ngor faced a fresh opportunity to win over Hongkongers, and possibly flip the script on her critics, in presenting her maiden policy address at the Legislative Council today.

12.20pm – Regina Ip gives address a ‘D’

New People’s Party chairwoman Regina Ip Lau Suk-yee, who dropped out of the chief executive race in March, notes that Lam stopped short of saying that she will push forward any political reform.

Those who are hoping for more democracy in Hong Kong would be disappointed
Regina Ip, New People’s Party chairwoman

“Those who are hoping for more democracy in Hong Kong would be disappointed,” she says.

Ip also says Lam should disclose more details about the “starter home” project to help first-time homebuyers, such as the level of discount of the housing units and how many people she expects to benefit from it.

“I would give this address 60 marks out of 100. Marks can be added if officials explain more in the coming days.”

12.05pm – Bernard Chan says Hong Kong has to play ‘catch up’ and focus on development

Executive Council convener Bernard Chan, who is an adviser to Carrie Lam, said that previous governments had “wasted too much time on quarrels”. Hong Kong now has to “play catch-up” and focus on development.

“It’s not that we don’t have solutions to most of our problems but the concern is whether we can reach a consensus,” said Chan, adding that the “pragmatic and efficient” style of Lam’s administration could help with achieving agreement in a divided society.

He said that it was a pity that previous governments failed to realise universal suffrage in Hong Kong. “Hopefully this administration can carry the work [of political reform] forward under the principle framework laid out by the Standing Committee of National People’s Congress on August 31, 2014, when the time is suitable.”

12pm – Financial Secretary on ‘totally affordable’ initiatives

Financial Secretary Paul Chan Mo-po said the 151 initiatives rolled out in Lam’s policy blueprint were “totally affordable”, but the public would have to wait until the annual budget to learn the exact numbers.

“Proper spending can boost the economy and increase incomes as we have seen in the positive relationship between government income and economic growth in the past few decades,” Chan said after the chief executive’s address.

11.44am – No 2 official comments

Hong Kong’s No 2 official, Chief Secretary Matthew Cheung Kin-chung, lauds his boss’s speech for being a “visionary” address that “injects vitality, dynamism and hope” into the city.

“The address covers a full spectrum of clear and concrete plans that reflect that [we are] a people-based government,” Cheung says.

11.40am – ‘Best is yet to come’

Lam ends her policy address by saying: “The best is yet to come for Hong Kong”. Pan-dem lawmaker Raymond Chan Chi-chuen responds by shouting, “Only short of democracy”, while other pan-dem legislators shout “Free political prisoners now” as Lam leaves the chamber.

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In total, the chief executive spent about 40 minutes reading out a 42-paragraph speech of about 8,600 words. She told reporters yesterday the full text of her speech had around 49,000 words and would take her four hours to deliver in full.

11.38am – Empowering youth

Lam pledges to increase the overall ratio of youth members on government committees to 15 per cent within the current government term.

11.37am – Internships for disabled students to double

Lam pledges to double the number of internship places in government departments for students with disabilities from 50 to 100 a year, and review Chinese requirements to attract more minorities to participate in government work.

11.36am – ‘People-oriented’ initiatives

Here’s a list of social initiatives announced by Lam:

1. Air conditioning subsidy for public schools;

2. Boost assistance for patients with uncommon disorders;

3. Enhance the Low-income Working Family Allowance Scheme;

4. Set up a Special Needs Trust for parents in need;

5. Increase the statutory paternity leave from three days to five days and extend the current 10-week statutory maternity leave;

6. Double the number of internship places in government departments for disabled students from 50 to 100 a year;

7. Review entry requirements for Chinese proficiency in the civil service to cater to ethnic minorities;

8. Resume construction of public markets, and improve facilities of existing ones;

9. Establish Countryside Conservation Office to promote eco-tourism;

10. Encourage telecom companies to install high-speed broadband service at remote villages, with 170,000 villagers in 380 villages expected to benefit.

11.32am – More air con for schools

Lam announces several people-oriented initiatives likely aimed at shoring up support for her government. These include an air-conditioning grant for public schools to provide a more “comfortable teaching and learning environment” in hot weather, more help for patients with uncommon disorders and subsidies for specific drug treatments.

11.31am – MPF proposal looming

Lam says the government will soon put forth a proposal on the Mandatory Provident Fund (MPF) to address the concerns of both employers and employees. At present, over HK$3 billion of accrued benefits from employers’ MPF contributions is used each year to offset severance or long service payments. This reduces the total amount of employees’ MPF benefits upon their retirement.

The government has said that the “offsetting” arrangement should be abolished.

11.30am – Restarting an interim property ownership scheme without paying land premium

Lam proposes making permanent an interim scheme allowing families with income limits capped at HK$52,000 to buy Home Ownership Scheme flats with unpaid premium on the secondary market. It was previously launched in 2013 and 2015 on a pilot basis. There are a total of 380,000 flats available on the secondary market for purchase. Buyers will have to assume the liability to pay the premium if they sell the flats to the open market.

“This allows tenants of private premises more opportunities to become homeowners and at the same time facilitates the turnover of HOS flats,” Lam says.

The government’s Home Ownership Scheme allows low-end middle-income families to buy a flat at a 30 per cent discount. But they are only allowed to let or resell the flat to the open market if they pay back a land premium, determined by multiplying current market prices by the discounted percentage.

11.30am – ‘Starter Homes’ plan detailed

As part of initiatives to help rebuild the property ladder, the chief executive will launch a new scheme to help the middle class buy a home in a city that has one of the world’s most expensive property markets.

The “Starter Homes” scheme is targeted at young families who earn too much to qualify for the Home Ownership Scheme, but do not earn enough to afford a flat in the private market. Income limits will be set at HK$34,000 for singles and HK$68,000 for households for eligible buyers.

The homes will be built on sites already owned by private developers or bought from the government. It will set land lease conditions to require developers to build a portion of affordable homes in addition to private housing units.

The reselling restrictions may be tighter than those of the Home Ownership Scheme, and the issue of premium payment will be dealt with further.

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 in the pilot scheme.

11.29am – Health care strained

Despite the government devoting substantial resources to public hospitals, Lam says it is still hard for the health care system to cope with the ageing population. The primary health care system in the city should be enhanced to allow for better community care for the elderly. A new pilot centre will be set up in Kwai Tsing to provide community care.

“The Secretary for Food and Health is the expert in this area, and I will give her full support to implement policies in this area.”

11.26am – Scrapping CY’s convention centre plan

The government will give up a previous plan, proposed by Lam’s predecessor Leung Chun-ying, to turn Wan Chai Sports Ground into a new convention centre, opting instead to redevelop government buildings in the area into a new wing.

11.25am – Five ways to fix housing crisis

The chief executive lays out five ways to solve the housing crisis:

(1) optimise the use of idle government properties by providing rental housing;

(2) support the Community Housing Movement on a pilot basis, including encouraging the Urban Renewal Authority to participate by offering units in old buildings;

(3) allow the owners of its subsidised housing to rent out their flats to needy families at below-market rentals on a pilot basis;

(4) explore the wholesale conversion of industrial buildings into transitional housing with waiver of land premium; and

(5) support NGOs to explore the feasibility of constructing pre-fabricated modular housing on idle sites.

“The current‑term government will think out of the box to facilitate the implementation of various short‑term community initiatives to increase the supply of transitional housing”, Lam said.

11.20am – More public housing next year

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

11.18am – Profit tax cut in half

As reported by the Post, Lam announces her plan to lower profit tax rate for first HK$2 million in profit lowered to 8.25 per cent from 16.5 per cent. Lam has said the cut is aimed at helping start-ups and small-to-medium enterprises thrive in the city.

The tax rate for profits beyond the first HK$2 million will remain unchanged.

There will be rules to limit big corporations so only one of their subsidiaries could benefit from the new measure.

11.16am – More civil servants and better training for them

Lam says the civil service will grow by at least 3 per cent to “meet public expectations in policy implementation”. She will also set up a Civil Service College to provide better training for civil servants.

11.13am – University research

No less than HK$10 billion will be set aside for university research funding. There’ll also be an enhanced tax deduction for research and development expenditure incurred by businesses.

11.11am – More money for students

The Education Bureau will earmark HK$3 billion to provide studentships for local students admitted to University Grants Committee-funded research postgraduate programmes.

11.10am – Spending pledge on R&D

Lam pledges to double spending on research and development to 1.5 per cent of GDP, up from the current 0.73 per cent.

11.09am – Sound economy

Lam describes Hong Kong’s economy as “sound”. Economic growth this year could be better than the expected 3.5 per cent.

11.08 ­– ‘No magic wand’ to solve housing crisis

Lam addresses the city’s housing crisis early in her speech, saying “although we do not have a magic wand [to produce more land], officials have showed exceptional thinking and new direction to meet the housing demands and expectations of Hong Kong people”.

11.07am – Financial prudence

Lam says she will make better use of the over HK$1 trillion in fiscal reserves to invest in the future.

11.00 – Pan-democrats shout as Lam enters chamber

Pan-democratic legislators, referencing their colleagues who were disqualified from their seats for improper oath-taking, shout “shame on the disqualification of lawmakers”, and “give universal pension back to us” as Lam enters the chamber. The legislators placed signs that read “no authoritarianism” in front of their seats that face Lam as she takes the podium.

11am – 49,000 words

Lam says her policy address contains some 49,000 words. No matter how long the address is, it cannot cover and address all issues, she says. “My team and I will continue to listen to views”. She

repeated President Xi Jinping’s remarks made during his visit in July that “one country two systems” policy was workable and the best path for Hong Kong.

“We have the responsibility to say no to any act or behaviour that could harm national security.”

10.50am – “First husband” in the chamber

Carrie Lam’s husband, Lam Siu-por, takes a seat in the middle of the public gallery above the Legco chamber, waiting for the first policy address by his wife.

10.39am – Chief executive arrives

Lam arrives at Legco.

10.33am – Groups gather for Carrie Lam

Members of groups like People Power, Alliance for Universal Pension, Federation of Trade Unions, League of Social Democrats and the Democratic Party wait for Carrie Lam’s arrival outside the Legco.

10.28am ­– Democrats call for political reform

Members of the Democratic Party are in the protest zone, calling for Lam to reform the city’s political system and make long-term planning to improve people’s lives and housing supply.

10.10am – Scuffle outside Legco

Outside the Legco building, a scuffle breaks out between members of pro-establishment Federation of Trade Unions and pan-democratic League of Social Democrats, as they accuse each other of being “shameless” and occasionally push each other. Groups from across the political spectrum have arrived to urge Lam to resolve social problems such as retirement protection for the elderly and the city’s dire housing shortage.

Banking on her theme of “hope and happiness”, Lam sketched out in greater detail her vision for the city for the coming year as well as the rest of her five-year term, which began 111 days ago.

In line with her fiscal philosophy of spending more to invest in people, the goodies in her address that have been revealed by sources suggested there would be several eye-catching items.

Among them are a halving of the tax rate on the first HK$2 million in profits to 8.25 per cent and a helping hand to commuters, with the government planning to subsidise Octopus card users who spend at least HK$400 a month on public transport, up to a cap of HK$300 with no means-testing.

She was also expected to deliver a policy breakthrough on the housing front for young couples, but whether this will go down well with Hongkongers struggling to find affordable homes remains to be seen.

Independence issue presents challenge for Carrie Lam in maiden policy address

As part of her election pledge of ushering in “a new style of governance”, Lam pledged that her policy address would depart from precedent.

She said she would summarise her main points to enable more time for lawmakers to engage her, claiming it could take as long as four hours if she were to read out the full text. The entire policy address was made publicly available after she finished at Legco.