You may recall that immediately after I was sworn in as Chief Executive last June, I took the first opportunity I could to address this Council. I talked about the relationship between the Executive and the Legislature, and pointed out that "together we stand, divided we fall".

I believe we should always put the well being of the community first, be understanding and accommodating, and try to develop a harmonious working relationship to serve the best interests of the public. If there are constant disagreements between the Executive and the Legislature, this will only lead to ineffective governance, and will be detrimental to the overall interests of the community. I still firmly maintain this belief.

The respective roles of the Executive and the Legislature, as well as their relationship, are clearly defined in the Basic Law. Simply put, the Executive is responsible for formulating and implementing policies and bills, while the Legislature is responsible for scrutinising government policies and bills, and for monitoring policy implementation.

In formulating or implementing a policy, the Executive should take full account of public opinion to ensure the policy is moderate, reasonable and consistent with our objectives. On this basis, the Executive endeavours to support the work of the Legislature so that the two can co-operate in a spirit of goodwill to serve the community.

Upon assuming office, Legislative Councillors swear to uphold the Basic Law, which covers the inter-dependent relationship between the Executive and the Legislature. They complement each other and operate with due checks and balances. The spirit of the Basic Law makes it clear that the Executive and the Legislature are not adversaries, and the issue of one suppressing the other does not arise. A powerful glue binds them together: public opinion.

We must not stubbornly cling to our positions and lose sight of our clients - the general public - otherwise all our efforts will be in vain.

After the 2007/08 constitutional development proposals failed to secure the support of a two-thirds majority of all Members of this Council, I said that we would make economic and livelihood issues our first priority. Many thought that meant that political matters would be shelved. This is not the case.

As the Chief Executive, I am responsible for leading political work in Hong Kong. In policy-making, I listen to different views; in launching important policies, I ensure there is extensive discussion and canvassing of public views. All this is part of political work, and is the essence of "strong governance".

Policies should not only be made decisively, but should also respond effectively to public aspirations. When I said economic and livelihood issues would be our top priority, it was in relation to the 2007-08 constitutional review. Now that the review is behind us, there is no need for further discussion. However, the Government will progressively take forward key political issues. I will go into more detail shortly.

Today, I wish to provide an overview of the key economic and livelihood issues to be covered during the remainder of the term of the current SAR Government. These focus areas, most of which have already been detailed in my Policy Address, warrant particular attention.

I must emphasise that all the other initiatives set out in my Policy Address that are not covered today will still be carried out as scheduled. But on this occasion, I want to highlight a few focus areas, having taken into account public sentiment, and having completed a comprehensive review with my Principal Officials. These focus areas will address three major challenges facing the community.

The threat of avian influenza remains. Any outbreak will ruin the achievements of last year's economic recovery. We will remain vigilant to protect against any outbreak of avian influenza or other epidemic diseases. The Government will make full use of the existing mechanism to liaise closely with the health authorities in Beijing and Guangdong Province, and to closely monitor the situation, taking effective precautionary measures as appropriate.

In addition, we will cap the local chicken population at 2 million to reduce the risk of an avian influenza outbreak in local farms. In the longer term, the Government will identify a suitable site for centralised slaughtering in three years' time.

As the Chinese saying goes, "food is people's paramount concern". To provide for an environment where people can lead a happy life, first and foremost, they must have peace of mind when they eat.

In mid-2006, we will work on establishing the Centre for Food Safety under the Food & Environmental Hygiene Department. The funding proposal will soon be submitted to this Council for consideration.

Hong Kong is seeing fewer days of blue sky. One of the many sources of our air pollution stems from power generation for daily use. The Scheme of Control Agreements between the Government and the two power companies will expire in 2008. While it is important to ensure steady and reliable power supply, I wish to reiterate that we will set emission reductions as a precondition for licensing when we formulate the new schemes of control. We will require the power companies to install effective emission-reduction facilities and use clean fuel as far as possible.

On the part of Guangdong Province, a series of measures have been taken. They include stepping up the use of clean fuels, phasing out small and polluting power plants, installing desulphurisation equipment for generation units, and imposing controls on industrial boilers. I believe that through our joint efforts, we can look forward to gradual improvement to our regional air quality.

Our economy is now in the best shape it has been in years. But I am fully aware that some people are still working for relatively low pay. The Labour Advisory Board is currently looking into the complex issue of "minimum wage" and "standard working hours". I hope to see substantial progress in the Board's work and hope that a consensus will emerge. If not, the subject will be transferred to the Commission on Strategic Development for consideration.

Apart from ensuring that employees will share the fruits of success, we are committed to maintaining a level playing field and providing a favourable business environment. The Competition Policy Review Committee is scheduled to complete its review by mid-year.

We will report its findings to this Council and conduct public consultation. Our objective is to develop a competition policy that best suits Hong Kong's economic situation and provides for a favourable environment for enterprises of all scales.

We are on our way to full economic recovery. At this critical juncture, we must seize and create opportunities for further development. This includes boosting our tourism industry.

The Government is now examining six proposals concerning the development of a new cruise terminal. The results of our deliberations will be released as soon as possible. We aim to complete construction by 2011 to benefit our tourism sector and related industries, which in turn will provide more jobs for the community.

Launching major infrastructure projects is yet another important initiative. The Tamar development project is ready to be implemented. It will not only resolve the issue of inadequate accommodation and facilities for the Government Secretariat and this Council, but will also provide more open space for the public in the heart of the city.

Furthermore, it will help ease the unemployment problem of construction workers. I hope that Members will support the funding proposal for early implementation of this project, so that construction workers can earn their living and the public can be provided with recreational space alongside Victoria Harbour.

The Central Government has been very supportive of Hong Kong's ongoing development and has reaffirmed our status as the financial centre of China. In the draft Outline of the 11th Five-Year Plan submitted by the State Council to the National People's Congress for deliberation earlier this month, there were specific references to Hong Kong.

The draft stresses that efforts should be made to strengthen and promote co-operation between the Mainland and Hong Kong in business and trade, science and education, culture and public health; to support Hong Kong's development in finance, logistics, tourism, and information services; and to maintain Hong Kong's status as an international financing, trading, shipping and transportation centre.

The roles and strengths of Hong Kong are clearly set out in the draft. I believe that all sectors will work together to capitalise on our advantages, including the rule of law, the free flow of information and a free and equal society, to boost the economic prosperity of Hong Kong.

During the remaining term of the current SAR Government, we will work on several important political issues to lay a solid foundation for our future constitutional development. Although the constitutional development proposal for the 2007/08 elections failed to gain the required support of this Council, the Government will continue to promote discussion on constitutional development and a roadmap for universal suffrage through the Commission on Strategic Development.

We hope discussion on the possible model for the election of the Chief Executive and the Legislative Council by universal suffrage will conclude early next year, after which we can proceed to the next stage of work.

Separately, in my Policy Address last year, I announced that the role of the District Councils would be expanded, and that they would assume responsibility for the management of some district facilities. A working group under the Home Affairs Bureau and the Constitutional Affairs Bureau is devising a detailed implementation plan. The working group is now in its final phase of work, and a public-consultation exercise on the functions of the District Councils and related matters is expected to commence by mid-year.

To further improve the development of the political appointment system, we will consider creating within our administrative structure a small number of positions dedicated to political duties to support the Principal Officials in their work.

During the process, we will ensure that our fine tradition of a permanent, professional and politically neutral civil service will be preserved. After consultation with senior civil servants, we will put forward proposals for public consultation around mid-year.

We must be fully prepared to face the three major challenges I have just mentioned. By "strong governance", I am not saying that the Government is omnipotent. Instead, it is our faith in a small, but strong and effective government that can rise up to challenges, and to operate with transparency and provide effective response at crucial times.

We cannot expect to draw up the perfect blueprint for strong governance behind closed doors. Policy visions can only be strengthened with the full input of views from our Legislative Councillors and the community as a whole. It is this kind of governance that will have a popular mandate.

The Government's role must change with the times, but when and how the Government should intervene requires social consensus. To reach such a consensus, the Government must be responsive to public views. Strong governance, therefore, is not an end in itself but the means to achieve the goal of "people-based governance".

West Kowloon Cultural District project to move forward

Now I will turn to the West Kowloon Cultural District project. I know many people hope that the project can be taken forward as soon as possible, and this is also our pledge. The Chief Secretary for Administration has provided this Council with a detailed account of our next phase of work. We will work together with the community to develop a high-quality arts and cultural district for Hong Kong.

Many people consider that "re-starting" the WKCD project has been a setback for strong governance. They have only skimmed the surface, and overlooked the crux of the matter.

It is widely known that the WKCD project is one project closest to my heart. To start afresh on this landmark project was a truly difficult choice. However, it is exactly because of the project's far-reaching implications that extra prudence is called for.

We should have the courage to review and rectify our decisions; and this in itself demonstrates our commitment to "people-based government".

"Strong governance" is a culture of governance based on public views and effective execution. The Government will make no empty promises, provoke no meaningless arguments and set no unrealistic goals.

In my 30 years as a civil servant, I have always undertaken my daily duties with prudence. I expect myself to be resolute, courageous, pragmatic, honest and open, setting a good example in promoting this culture of "effective execution".

Chief Executive Donald Tsang gave this address to the Legislative Council ahead of his question-and-answer session.