The way forward: After so many years of difficult adjustment, Hong Kong has finally shaken off the economic doldrums and is now on the road to healthy development, the Chief Executive said in his Policy Address. He announced new initiatives to help the needy and poor, including the establishment of a commission to alleviate poverty.

Chief Executive Tung Chee Hwa has outlined plans to consolidate and build on the economic revival, help the needy and poor,  promote social harmony and stability and more firmly entrench 'people-based' governance.

Mr Tung today presented his Policy Address, "Working Together for Economic Development and Social Harmony", the third of his second term, and his eighth since becoming Chief Executive in July 1997.

The Government's clear direction and positioning and the hard work of Hong Kong people had heralded the first stage of a sustained recovery, with Hong Kong's economy "now at its best since the Asian financial crisis," he said.

Seven years of painful economic restructuring had lowered costs and increased Hong Kong's competitiveness, while GDP had grown by 7.5% in 2004, he said.

A broad-based and sustainable recovery had reduced or eliminated some of Hong Kong's problems, such as unemployment, deflation, negative equity among property owners, and the fiscal deficit.

"All this points to the fact that after so many years of difficult adjustment, Hong Kong has finally shaken off the economic doldrums and is now on the road to healthy development," he said.

Community's 'undaunted spirit' helped meet challenges

Mr Tung paid tribute to the "undaunted spirit" of the community in meeting the challenges of restructuring.

"This economic restructuring has been protracted and difficult to manage. Hong Kong people, particularly the middle and working classes, have endured immense hardship and suffered many shocks," he said.

"But we have witnessed people once again displaying the spirit of Hong Kong - striving to improve their lives and displaying agility, flexibility and resilience."

The staunch support of the Central Government in responding positively to suggestions for, among others, the Closer Economic Partnership Arrangement (CEPA), allowing more Mainlanders to visit Hong Kong under the Individual Visit Scheme, allowing local banks to conduct personal renminbi business, and streamlining procedures for Mainland enterprises to set up business in Hong Kong, had all worked to boost the economy, Mr Tung noted.

Economy poised for consolidation, growth

Hong Kong's economy would reach a stage of post-recovery consolidation and growth in 2005, driven by continuing expansion of the global economy and the stable, rapid and sustainable growth of the Mainland economy. 

Hong Kong would continue to consolidate development of the four core industries of financial services, producer services, logistics and tourism. 

Mr Tung  identified  new economic growth areas in cultural and creative industries, urban renewal and revitalisation, and attracting talented people from the Mainland and overseas to develop their careers in Hong Kong. 

In keeping close to the community and following consultations for this year's Policy Address, the Government had pinpointed 11 areas of greatest public concern. These were:

* increasing employment;

* helping the poor and needy;

* environmental protection;

* developing education;

* municipal projects;

* business environment;

* fair competition;

* goods and services tax;

* healthcare financing;

* population policy; and

* the West Kowloon Cultural District.       

'People-based' governance vision to be upheld

Mr Tung outlined ways in which governance would be improved by continuing to uphold the vision of "people-based" governance and enhancing the operation of the Accountability System.

Over the next three years, the Government will spend  $60 million on public policy research, while there would be enhanced support for District Councils and more help for District Officers to better play their role to resolve local problems.

On constitutional development, Mr Tung said the Government was moving forward in accordance wit the Basic Law and the interpretation and decision made by the Standing Committee of the National People's Congress in April 2004.

"We firmly believe that as long as we can maintain prosperity, stability and social harmony, our democratic constitutional system can develop at a faster pace," he said.

"The ultimate aim of universal suffrage as set out in the Basic Law can be achieved at an early date." 

Maintaining social harmony key goal

The Government had identified five major areas to maintain social harmony:

* fairness in governance, resolutely against collusion between business and government;

* implementing "people-based" governance and practical measures to mitigate antagonism between different strata;

* maintaining the stability of the middle class;

* enhancing Hong Kong people's understanding of the Mainland; and

* promoting inclusiveness, unity and respect for different viewpoints.

He announced new initiatives to help the needy and poor, including, among others, the establishment of a commission to alleviate poverty and additional resources to provide district-based health, educational and counselling services for families in need.

Extra resources will be deployed to provide long-term care places for the frail elderly and to enhance support for people with severe disabilities.

Environmental industry to get concessions

The eligibility criteria for the Portable Comprehensive Social Security Assistance Scheme would be extended to cover Fujian Province as well as Guangdong, while the permitted absence period from Hong Kong under the Social Security Allowance Scheme would be extended to 240 days from 180.

On environmental protection, the Chief Executive announced that the Government would formulate a policy to provide concessions to assist the development of the environmental industry.

To control air pollution, the Government will impose caps on the total emissions of the power companies.

"We will also make it a policy to require them to maximise the use of natural gas in power generation and develop renewable energy," he said.

"At the regional level, we will further strengthen co-operation with Guangdong Province to implement various emission reduction schemes and pollution control measures."

Other initiatives will include implementing a Total Water Management Policy, greening master plans for all districts, and the decking of 16 sections of nullahs in urban areas.

Education reforms produce early results

Mr Tung noted that education reforms had started to produce results. He paid tribute to the education sector for its efforts and the exceptional results attained by Hong Kong students in international rankings.

He said that in Hong Kong's transition to a knowledge-based economy, substantial investment was needed in education. From 2005 to 2007, second- and third-year places in local universities would be increased to provide further learning opportunities for those who complete associate degree programmes.

"We will continue to promote life-long learning to upgrade the competitiveness of our workforce. We will also encourage more students from overseas and the Mainland to come to Hong Kong to study, thereby adding a greater international dimension to our tertiary education."

The "3+3+4" academic structure reform would be taken forward, teachers would be given additional resources to continue learning and participate in professional development, and small-class teaching would be promoted on the basis of trial results and research.

"Hong Kong has undergone a painful process of adjustment, exploration and adaptation," Mr Tung said.

"Now that the broad direction for developing our economy, constitution and governance is clear, we need to unite to safeguard stability and harmony.

"Let us join hands to build a better future for Hong Kong and to contribute to the bright future of our country."