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Carrie Lam's policy address 2018

For Carrie Lam, winning friends in Hong Kong is not as important as getting things done, no matter what the cost

Chief executive not shy about tackling difficult issues in her second policy address, as land supply, businesses and smokers all fall into her cross hairs

PUBLISHED : Thursday, 11 October, 2018, 7:02am
UPDATED : Thursday, 11 October, 2018, 7:02am

Carrie Lam Cheng Yuet-ngor may well be the first chief executive since Hong Kong’s handover to China to juggle the largest number of contentious issues in a single policy address.

On Wednesday, she scrapped the controversial Mandatory Provident Fund’s “offset mechanism” despite widespread opposition from employers, announced the huge “Lantau Tomorrow Vision” land reclamation and housing project which could cost up to HK$500 billion and, for good measure, tossed in a complete ban on e-cigarettes and other new tobacco products.

And there was considerably more in her second policy address outlining her government’s new plans for Hong Kong.

At her press conference on Wednesday afternoon, a reporter referred to the Lantau plan and asked Lam whether she was worried Hongkongers might end up blaming her for launching such an “ultra-expensive” project.

Lam’s response reflected a determination to press on with difficult or controversial plans, regardless of the prospect of criticism.

She said the government did not have a figure yet for the cost of reclaiming 1,700 hectares for housing to the east of Lantau Island, but acknowledged that it would be expensive.

“It’s really, in my view, quite narrow-minded to try to avoid doing things because it is expensive,” she said. “We need to ask ourselves whether that would provide the long-term supply of housing and meet the long-term social and development needs of the people of Hong Kong.

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“So, with that in mind, I really don’t think people could blame me. I could go for the populist route and not do these sorts of controversial things, but that’s not good for the people.”

The project is expected to provide 260,000 to 400,000 homes, 70 per cent of which will be public housing, and have a population of 700,000 to 1.1 million over the next 20 to 30 years.

A government source put the price tag at between HK$400 billion (US$51.2 billion) and HK$500 billion, nearly half of the government’s fiscal reserve of HK$1.03 trillion.

By going ahead with it, Lam also defied opposition from environmentalists who have warned that the massive reclamation work could pose a threat to the ecology of the area.

Lam’s willingness to tackle tough issues head-on was also evident in her decision to scrap the MPF’s controversial “offset mechanism” that allows employers to use their share of contributions to the pension scheme to offset long-service or severance payments for employees.

Carrie Lam’s policy address 2018: five key takeaways

In the run-up to her policy address, several figures from the business sector – particularly small and medium-sized enterprises – made their opposition to this change clear.

But, Lam said in her 40-minute address to the Legislative Council on Wednesday: “There is no perfect solution in this world, and it would be difficult to forge an absolute consensus in the community. Yet, a divergence of views should never bring Hong Kong to a standstill.

“We have already made a lot of effort on many rounds of public consultations. It is high time for us to decide and proceed after these discussions.”

Her style was in stark contrast to that of her predecessor Leung Chun-ying’s handling of the issue.

Although he pledged in his manifesto for the 2012 chief executive election to tackle the MPF “offset mechanism” issue, Leung went on to emphasise the need for consensus among the labour and business sectors, and warned against making a rash decision.

Four years later, delivering his 2016 policy address, Leung did not mention a word about reviewing or scrapping the mechanism.

In his final policy address before leaving office last year, Leung proposed that the government could bear part of the cost to employers in the 10 years after the mechanism was abolished. That was estimated to cost the government HK$6 billion.

A week before his term ended in June, Leung offered a revised package earmarking HK$7.9 billion to ease the financial burden on employers over a 10-year period.

Neither unionists nor businesses were impressed by his plan, and the hot potato landed in Lam’s lap.

Changes to pension scheme would mean half a million workers paying more

On Wednesday, the chief executive said her improved proposal for HK$29.3 billion in subsidies over 25 years to help companies cope with changes to the MPF scheme was final, and her government was determined to press ahead.

She also made no apologies for leaving the city’s smokers unhappy.

Announcing a complete ban on e-cigarettes and new tobacco products, Lam stressed that the government “should act swiftly and boldly on matters which clearly serve the public interest”.

Sitting on a trillion-dollar mountain of fiscal reserve, Lam has the room of manoeuvre to tackle long-standing and thorny issues. But what next?

Will the chief executive, who says she couldn’t care less about vested interests, and groups chanting high-sounding ideals, alienate more of groups whose support is vital to her government?