Speech on Budget 2014 (2013/04/17)

President, a widely accepted Budget should cater the needs in various aspects. Apart from short-term handout measures to solve the pressing problems, the Budget should also contain long-term solutions to solve problems such as the disparity between the rich and the poor, healthcare and an ageing population. In the Budget debate of last year, a number of Members queried if the Government's relief measures could look after the "N-have-nots" and the elderly. After listening to the views of various sectors, the Government has made efforts in the area of social welfare. This year, the Budget has injected $15 billion into the Community Care Fund and has earmarked $8.3 billion for the Old Age Living Allowance. The social welfare expenditures has increase by 33%, and 60% of the recurrent expenditures are used in areas such as education, welfare and healthcare. The Government's timely introduction of various short and long-term relief measures is commendable. 

The many difficulties now facing our society must be solved in a progressive and orderly manner. However, the factors that are gradually pushing us towards the edge of the cliff are a decreasing number of the working population and an increasing number of elderly people. According to the Government's projections, the fertility rate in Hong Kong is 1.2, and the rate is lowered to 1.06 after excluding doubly non-permanent resident babies and babies born to singly non-permanent resident pregnant women. This rate is lower than the average replacement level of 2.1. According to various statistics, Hong Kong has the lowest fertility rate among more than 200 countries and regions, and this rate has remained persistently low for years. A low birth rate means problem of ageing population will aggravate, and the median age in Hong Kong has gone up from 36 to 41. It is estimated that the labour force will start declining in 2018 and the number of elderly people will gradually exceed the number of young people. If the Government does not devise ways to improve the demographic structure, it cannot avoid facing the dilemma of struggling to make ends meet. 

Since the Government has a huge fiscal surplus in hand, it can inject large amounts of resources in the areas of education, healthcare and public facilities, so as to make appropriate preparations to cope with people's long-term life planning. It should also consider providing incentives to encourage childbirth, as well as encourage young people to get married and have children. Many countries and regions in the world have implemented policies to encourage childbirth. For instance, from 2011 onwards, the Taipei Government awards TWD20,000 for each newborn baby, and a monthly nursery allowance of TWD2,500 for each child aged under five. In Singapore, the Government awards S$6,000 for the first and second children, and S$8,000 for the third and fourth children. In Japan, there is a monthly subsidy of ¥15,000 for each child aged under three, while children aged over three receive different levels of monthly subsidies until they have completed junior secondary education. 

The Government should make reference to the above schemes and consider adopting incentive measures, such as giving one-off childbirth award and providing allowances (such as formula power) to infants, so as to relieve the pressure faced by young couples in raising infants. Information from the Census and Statistics Department indicates that a total of 91 600 babies were born in Hong Kong last year, and the number of local newborn babies was approximately 65 000 after deducting some 26 000 doubly non-permanent resident babies. I believe we do not need to spend too much on providing appropriate allowances to
tens of thousands of newborn babies each year, but this is very important to the healthy development of our population in the future. I hope the Government would seriously consider these proposals. 

President, as our pillar industry, the tourism industry accounted for 4.5% of the Gross Domestic Product (GDP) last year, and the relevant consumption had reached $300 billion while 230 000 people are directly employed in the industry. Despite an uncertain global economic outlook, there was still a 16.5% increase in the total spending in connection with inbound travelers. When compared to our overall economic growth of 1.5% per annum, the growth in tourism revenue was very impressive, which could certainly promote economic development and benefit many industries. But there are two sides of the same coin. Since the implementation of the Individual Visit Scheme, there has been a rapid increase in the number of Mainland visitors, which has exerted pressure on our complementary facilities, and products sold in shops in tourist centres have become more and more unitary. The surge in rents in certain areas has pushed up commodity prices, affecting the livelihood of people in certain communities. While I do not wish to see this situation, I absolutely oppose abolishing multiple-entry permits or restricting the number of individual visitors on these grounds. 

According to the information published on the website of the World Tourism Organization, spending by outbound Mainland tourists ranks first in the world. Various places in the world have taken various measures to welcome visitors from China. We must understand that not all people travelling on multiple-entry permits are parallel traders, many of them travel to Hong Kong for sightseeing, business or visit relatives. In the midst of economic uncertainty, we still need to rely on the consumption of tourists from all places in the world, especially Mainland tourists, to promote economic development. If we resort to across-the-board screening of tourists when problems have emerged, and reject the entry of those Mainland tourists whom we do not welcome, the Mainland market will have a very bad impression of us, thinking that we are ungrateful. Adverse impacts will be resulted. In my view, the Government should proactively face up to the problems and immediately make comprehensive plans on the development of tourism, such as studying the directions of future development of Lantau Island and Northeast New Territories, providing additional complementary tourism facilities to alleviate the pressures exerted by tourists in shopping and sightseeing, so that our overall receiving capacity can be enhanced. 

President, in this year's Budget, the part on tourism is more comprehensive when that contained in the Policy Address, but no new ideas have been raised when compared with last year's budget. In the past few years, the Government has mainly injected funds into tourism spots such as the Ocean Park, the Disneyland and the cruise terminal. The Ocean Park and the Disneyland are very well-developed tourist attraction sports, which directly help to promote the development of the tourism industry. To maintain market competitiveness, I support the proposal of continuous fund injections and expansion. The development of the cruise terminal is still at the early stage and its profit-making mode is substantially different from that of theme parks. While the major incomes of theme parks come from ticket sales throughout the year, the cruise terminal is subject to seasonal impacts. During the annual typhoon season, the ship calls will be affected. The terminal will be officially commissioned on 12 June and the Mariner of the Seas will be docked there for a few days. As the next cruise will only arrive in Hong Kong in October, there is a gap of four months. The Government has spent an enormous amount of over $8 billion on the construction of the cruise terminal, and the annual recurrent expenditures will be $220 million. Nevertheless, only a total of $13 million will be collected from the operators as fixed rents for 10 years. Even if the government revenue will increase by profit sharing, that will only be a drop in the bucket. I agree that the cruise terminal should not target at profit-making at the initial stage, and the key objective should be promoting the development of related industries. Nonetheless, the Government should still be accountable to the public and each year, it should set various indicators on the basis of the actual situation. For example, the number of inbound tourists using the terminal, how much revenues can be generated and how many jobs can be provided, and so on, and the Government should urge the relevant Policy Bureaux to accomplish the tasks as planned. In order to increase the utilization rate of the cruise terminal, the Government should encourage or subsidize the hosting of various activities at the terminal. When no cruise docks at the terminal, the terminal can be used as a site for exhibitions, retail shopping and leisure activities. Hence, the value of the cruise terminal can be revealed after its operation for some time. 

President, the problem that hotel rooms are in short supply has plagued the industry for a long time. As estimated in the Budget, 10 000 hotel rooms will be provided in the next two years. The supply of hotel rooms will increase at a rate of 7% each year, which is in line with the 6.5% growth in overnight visitors to Hong Kong. I hope the Government would ensure that there will be additional hotel rooms each year in order to relieve the pressure from the increase in visitors.

The issue of inadequate hotel rooms has created a new problem, that is unlicensed guesthouses have mushroomed in recent years. According to the information uncovered by the media, at least eight Mainland websites have helped to lease illegally around 3 000 residential flats in Hong Kong. As a result, the Government and the departments concerned have received an increasing numbers of complaints involving unlicensed guesthouses and more prosecutions have been initiated. There were a total of 1 418 cases in 2012, more than double the relevant number in 2011. The situation cannot be ignored. Overseas tourists do not know that short-term leasing of residential flats in Hong Kong is illegal, and should the conditions of such flats are unexpectedly undesirable, they cannot hardly be protected. If the unlicensed guesthouses have not registered the information of lodgers as required, in the event of an accident or a security problem, it may not be possible to trace the lodgers involved, directly causing losses to other tourists and nearby residents. As the problem of unlicensed guesthouses has aroused concern in various aspects, the Government should try its best to put an end to their operation. 

President, I agree with the proposals in the Budget for increasing expenditures and manpower to solve the problem at control points. At present, short-haul same-day Mainland visitors account for 50% of tourist arrivals. The control points can be jammed for hours during festivals, holidays and weekends. Tourists at least have to wait for more than an hour during the peak period while some tourists have to wait painfully for more than three hours. This situation is extremely unfavourable to the development of tourism, especially to overseas tourism market. Although the Immigration Department has introduced e-Channels for Mainland residents crossing the border since January 2012, which helps reduce the pressure of at control points to a certain extent, the problem of a long queuing time for immigration clearance has still not be completely solved. Though overseas visitors currently accounts for less than 30% of the total number of visitors, if they have to wait a long time for immigration clearance, this will affect their impression of Hong Kong, which is unfavourable to the expansion of overseas markets. After the Government has put in more resources, I hope it would seriously explore effective improvement measures, such as setting up special immigration clearance counters for overseas tourists and business travellers. 

President, the industry welcomes the Government's support of the development of tourism through the Mega Events Fund. Nonetheless, from the statistics provided by the Government, we find a lot of problems related to the actual operation of the Mega Events Fund. After the allocation of $250 million to the Mega Events Fund approved by the Finance Committee of the Legislative Council in 2009, eight rounds of applications had been received, and a total of 21 mega events had received funding, with the total allocation amounted to $84.7 million. Among these events, two events, namely the Hong Kong Open and the Hong Kong Tennis Classic had taken up 40% of the total allocation. In 2011, around 38 000 visitors came for the UBS Hong Kong Open and their spending was approximately $8 million. In 2012, visitors for the same event only increased by 1 900 but their spending increased by $7 million. In 2011,about 12 802 visitors came to Hong Kong for the Hong Kong Tennis Classic and their spending was $5 million, $4 million less than the previous year. Yet, visitors of the Hong Kong Dragon Boat Carnival held in the same year reached 215 000 and their spending also reached $4 million. Yet, there was a big difference in the number of tourists. President, the objective of establishing the Fund is to examine whether the assessment criteria are objective and reasonable, and whether the sponsorship arrangements are accurate and effective, with a view to benefiting the general public and the industry. It is baffling that there were great differences between the sponsorship amount and actual number of people who had participated in the above two events. It is acceptable to spend more if the events are held in a larger scale; however the problem is that the sponsorship amount had increased significantly even though the actual number of participants in some events had not increased considerably. The Government should address the issue squarely and examine whether something have gone wrong with regard to the assessment criteria or procedures, so that timely adjustments can be made. 

President, this year's Budget has not brought the public too many pleasant surprises and the planning on tourism is insufficient, but all in all, it can solve the existing problems of Hong Kong. 

With these remarks, I support the Budget.