Appropriation Bill 2016（2016/04/14）

President, according to the findings announced by the Public Opinion Programme at the University of Hong Kong, this year's instant survey gives Secretary John TSANG's budget a rating of 60.5 marks, which can be considered the one with the highest satisfaction rate among all his budgets delivered since he assumed office in 2008. This year's Budget will probably be approved by the general public as not much controversy is expected. 

The measures of "handing out candies" proposed in this year's Budget amount to $38.8 billion. The middle-class people will enjoy more benefits from them than they did from those of the previous years. To a certain extent, this Budget has addressed part of the aspirations of the middle class. In the past, the practice of "giving out candies" gave us an impression that such "candies" would benefit the grassroots first and the aspirations of the middle class were ignored, with a view to winning more applause. Last year, the news about "a middle-class three-member family with a monthly income of $70,000 was struggling from pay cheque to pay cheque and only had $1,500 left after deducting all the monthly expenses" became the talk of the town. The news had the sympathy of many middle-class people. In fact, the middle class is shouldering a large part of the Government's income tax and has made a remarkable contribution to the income of the public coffers. Yet, they are not entitled to public housing and most social welfare benefits. Besides, they have to bear the rather hefty expenses on housing and supporting their parents and children. The stress they suffer from everyday life is by no means less than that of the grassroots. In this year's Budget, the allowances for married persons maintaining a dependent parent or grandparent were increased. The deduction ceiling for elderly residential care expenses for taxpayers whose parents or grandparents are admitted to residential care homes was raised. The rates reduction arrangement was streamlined. These measures give us the feeling that the Government shows concern for us by alleviating the financial pressure from our everyday life during times of economic downturns.

President, when viewed from a certain perspective, this year's Budget seems less generous in terms of the giveaways. But if we give it a serious thought, we will see that if the Government utilizes the resources properly and makes use of the recurrent expenses to help the grassroots who are in genuine need, it should have public support. In fact, the total expenses on education, social welfare and medical services over the past decade have increased by more than 80%. Among such expenses, those on education have increased by 70%, those on social welfare have doubled and those on medical and healthcare have increased by 80%. There is nothing wrong for the Government to introduce some one-off relief measures when we are financially sound. But we should understand that recurring welfare expenses can only be materialized with the support of recurrent income. I agree that the Government should maintain prudence in managing its finance. It should never put us into any kind of financial predicament which will place a heavier burden on our next generation simply for the sake of momentary applause.

President, the inbound tourism of Hong Kong is performing very poorly at present. The number of visitors has been declining since March last year. The decline has become more acute in the past six months and we cannot see any sign of recovery in the near future. Although tourism only accounts for 5% of our GDP and 270 000 people are employed in the trade, as shown in Government statistics, it is hard fact that tourism can give impetus to other industries such as retailing, catering, transportation, logistics and so on. According to the World Travel & Tourism Council, Hong Kong's tourism generated a total of $494.3 billion direct and indirect revenues in 2014, which accounted for 22% of the local GDP. Tourism also gave directly and indirectly employment to 745 000 people, which accounted for 19.8% of the overall employment figure. According to Government statistics, retail sales contributed by tourists accounted for as high as 42% of local retail sales.

Exactly because tourism may help boost the local economy extensively, the ripple effect starts to surface following the decline in the number of visitors. Tourism-related businesses, such as retailing, catering, tourist attractions and hotels, have seen an obvious decline in their income. The income of people engaging in commission-based services has dwindled significantly and some people may even lose their jobs. Let us think about the following. As the income of many people and families has decreased, it will definitely affect local consumer confidence, thereby affecting all walks of life. Over the last two years, when uncivilized incidents aiming at visitors took place, I pointed out time and again that we should concern about the ripple effect caused by the decline in the number of visitors. However, those troublemakers just care about nothing but their own political interests and show no regard for the people's livelihood. Regrettably, my prediction has come true.

Against the severe situation faced by the local tourism industry, a highlight of the Budget is the allocation of $380 million extra resources in total for the tourism industry. They include $140 million on waiving the licence fees for travel agents, restaurants, hotels and guesthouses for one year, and a total of $240 million to promote and re-package Hong Kong's tourism image. I wish to thank the Government for allocating extra funding for the tourism industry, and I consider it a pragmatic arrangement. Waving the licence fees for one year may not do much help to the business operators, but it shows the Government's care about the trade. The $10 million matching fund for travel agents to develop information technology system will do something concrete to help small and medium-sized travel agents. I welcome the measure.

President, with regards to revitalizing Hong Kong's tourism industry, I have some recommendations:

First, we need to make an attempt to restore Hong Kong's hospitable image. Hong Kong's tourism industry has been thriving for more than a decade since the introduction of the Individual Visit Scheme in 2003. Undeniably, we have reached the bottleneck at the present time. We have not planned adequately for tourism and therefore we lack new and fascinating tourist attractions. Other countries are opening up the tourist visa for Mainland tourists while the exchange rate of Hong Kong dollar is strengthening. Moreover, the introduction of duty concessions by various neighbouring countries to attract Mainland tourists has posed direct competition against Hong Kong. All these are the reasons for the slowdown in the number of arriving visitors. Nevertheless, why we see a decline in the number of visitors in just one year after enjoying a decade-long boom, or even a decline for several months in a row? We have to face the fact that some politicians have made an issue on the cultural difference between Mainland and Hong Kong by mounting a series of uncivilized attacks on Mainland visitors. This is the direct cause of the decline in the number of visitors. If we look back on the past three years, there was a flood of negative news about actions targeting Mainland visitors. There were twists and turns over that period, and many Members from the opposition camp even proposed the imposition of entry tax to curb the influx of Mainland visitors. At the time when the market had yet recovered, a riot broke out in Mong Kok on the night of the first day of this Chinese New Year. Many Mainlanders mistook the riot as an incident against them. Although the Chinese New Year period was supposed to be a high season for tourism, we saw a drastic decline by 26% in the number of Mainland visitors in February. We can see clearly that the respons of the Mainlanders towards the negative atmosphere in Hong Kong has reached such a level that even a minor incident will get on their nerve.

President, the recently announced 13th Five-Year Plan has mentioned China's pledge to support Hong Kong in consolidating and enhancing its status as a global financial, shipping and trading hub. However, unlike the practice of the previous years, no explicit support for Hong Kong's tourism industry has been mentioned. This signal is worth our reflection. In view of the occurrence of so many undesirable incidents in Hong Kong, the Central Government has to consider the sentiment of our compatriots in the Mainland. Hence it will definitely have hesitation in introducing supportive tourism policies which may benefit Hong Kong. The Financial Secretary pointed out in his Budget speech the heartfelt wishes of tourism practitioners: "a handful of people choosin to express their views and political demands using irrational and uncivilized tactics … these destructive acts … have also severely tarnished Hong Kong's reputation as a hospitality city internationally."

In fact, if we do not reverse this negative image, it will be difficult for the tourism industry to fully recover even if we pour in more resources. I beg politicians from the opposition camp not to make an issue of the Individual Visit Scheme and our Mainland compatriots anymore. Hong Kong's tourism industry cannot withstand more salt to be rubbed into the wound.

Second, the additional allocation should be put to good use. Last year, the Government spent $90 million to support the recovery of the tourism industry. Of this amount, $60 million were spent on overseas publicity and lottery campaigns during the summer holidays, but the effects were rather limited, as evidenced by the decrease of 6.4% in the number of visitors in the third quarter. On the contrary, another $20 million spent on promoting the

"HAPPY@hongkong Super JETSO 2015" tourism campaign between May and June last year provided direct impetus for the hotel, retailing and catering industry. The market atmosphere was not bad. Between May and June, retail sales registered a 4% increase as compared with the same period in the previous year. It seems that more funding does not necessarily mean a better result. The key is whether the resources are put to their right use. 

In this year's Budget, the allocation to the Hong Kong Tourism Board (HKTB) has increased by more than $200 million. I hope the HKTB can put the additional allocation to good use by launching target-oriented promotions. Besides image publicity, incentives should be added on practical level, so that the actual benefit to visitors may fuel their desire to stay and spend in Hong Kong. For instance, it may explore the feasibility of providing free shuttle bus services for passengers transiting at the Hong Kong International Airport, so that they may travel to Tung Chung or Disneyland and do some shopping. It may also provide regular shuttle bus and guided tour services at suitable tourist attractions such as Central, Wan Chai or the Peak, with a view to attracting tourist to stay longer for sight-seeing purposes. These measures do not cost too much, but they will win praises instantly, and they are more practical than image publicity. Last year, a $10 million matching fund was provided for partnership with other tourist attractions, and the measure achieved quite good results. Hopefully more partners from the airline industry, hotels and travel agencies will join the campaign this year for more collaboration with the trade to speed up the pace of recovery. 

Third, medium and long-term tourism plans should be put in place. The current allocation for revitalization of the economy is just an interim measure to meet the pressing need. If we are to ensure the healthy and sustainable development of the tourism industry, we need to plan ahead and devise medium and long-term tourism plans. In this year's Budget, the Financial Secretary proposes to launch short, medium and long-term measures. Strictly speaking, expanding the scale of major events, making new promotional videos and promoting our natural scenery and unique history and culture are specified by the Financial Secretary as medium-term measures. In fact these can only be considered as short-term measures. There are no specific projects as far as the medium-term measures are concerned. As to long-term measures, he mentioned projects such as a hotel in Ocean Park, Disneyland's new themed area based on Marvel's Iron Man franchise and a new hotel, and a project relating to the Hong Kong Convention and Exhibition Centre. All these, however, are just expansion on the scale of existing projects, which cannot be considered as new projects.

Facing the difficult situation of the tourism industry, the Government has to take into consideration the medium and long-term development in its train of thought. It should take a look at the competition around us from a higher perspective and take stock of our tourism resources and competitive edge. Given that we do not have a dedicated Policy Bureau to manage tourism affairs, the Government may establish a cross-departmental body to formulate short, medium and long-term tourism plans. If the relevant policies can be implemented proactively in response to existing issues concerning tourism, we would be in a better position to compete with the competitors around us.

President, Hong Kong is an open economy with a simple tax regime. The source of income for public coffers has a rather narrow base. Hong Kong is susceptible to the impact of external factors. In times of economic downturns and decline in tax revenues, fiscal deficits will emerge. In the wake of an ageing population, a decline in the number of taxpayers and a continuous increase in welfare expenses, structural deficits will pop up at any time. I support the Secretary's principle of financial prudence. In response to the ageing population, the Government announced last year the establishment of the Future Fund. It is mentioned in this year's Budget that the Hong Kong Monetary Authority will allocate $220 billion from the balance of the Land Fund, which is part of the fiscal reserves, as an initial endowment of the Future Fund, and it will inject one third of the fiscal surplus of this year into the Future Fund. This arrangement is really necessary.

As for the future, I hope the Government will give sufficient consideration to the possible risks that we will face and the ability of the entire society to tackle such risks when addressing the aspirations for increase in welfare expenses. We should never get Hong Kong inextricably bogged down in the mire of a welfare state.

With these remarks, President, I support the Budget.