This Policy Address is particularly significant for me and for my administration. This is my first address since re-election in March. And this is the first Address of the third-term HKSAR Government.

This is also the first opportunity I have had to explain in detail how I will make good on my election promises, how to balance the various needs of our society, and how to lay a solid foundation for future prosperity. It was also an opportunity to show that we have listened to the public's concerns about various issues - for example, heritage preservation - and responded positively to those concerns.

In other words, I'm setting the scene for what we want to achieve over the next year, as well as the next five years of this administration. And, I'm also trying to create the atmosphere and momentum for Hong Kong to make the most of its many advantages during our next decade as a Special Administrative Region of China, and at a time when our country itself is making enormous social and economic progress.

Pragmatic approach

My defining approach to work is pragmatism. Even though some people criticised it, I stand squarely behind my election campaign slogan to "get the job done". Over the next year, and the next five years, I want to see results.

I will be pushing my Principal Officials and Administration to achieve results. My team is a good team, an enthusiastic team, and a dedicated team. And it's a team that will be working wholeheartedly in the long-term interests of Hong Kong.

Looking ahead one, five, 10 years down the track is not an easy task - our first decade as an SAR certainly proved that point. We can certainly expect the unexpected to test our mettle in the future.

If past experience is anything to go by we will tackle those future, unexpected crises with our trademark determination, resilience and unity. And, if we have a vision, and a plan to realise that vision, then getting back on track after such setbacks will be all that much easier.

In reviewing our progress over the past decade, and looking ahead, it is clear that Hong Kong has two complementary roles to play. On the one hand we are a major city in China, a special city in China, that has contributed greatly to our country's development and will continue to do so.

Indeed, it is our duty to do so. On the other hand, we are a world city, a co-ordinator of global and regional economic activity, a services hub, an outward-looking, open, free, pluralistic and cosmopolitan city. "One country, two systems." One city, two roles.

This was the context in which we hammered out the details of the Policy Address. We know what we are. We know where we're going. So, let's make sure that our policies are achievable, and can help us consolidate our role as a major city in China, and as a world city in Asia.

Dual roles

These dual roles cannot be delinked, or viewed in isolation. It's a symbiotic relationship. Many of our policy threads bind these two roles even closer together.

For example, the Closer Economic Partnership Arrangement provides enhanced access for our goods and services into the Mainland. This boosts our attraction as an international platform for companies wishing to enter the Mainland market, and for Mainland companies wishing to tap into Hong Kong's international networks.

But it also allows our country to experiment with reforms and initiatives that go beyond its WTO commitments. And, in particular, it also helps the Mainland to upgrade its services quickly and in an orderly, evolutionary fashion.

This brings me to the two specific areas I'd also like to talk about today - education and the living environment.

I'll start with the living environment because I know it is of particular concern to many in Hong Kong. In a wider context, it is also an important national issue. So, once again, we can see how our local, national and international interests are all closely aligned.

Making Hong Kong a cleaner, greener city will be a priority of my administration. Hong Kong's high-density and high-pressure living means that we have to give our residents room to relax. That's why we will push ahead with greening plans for Hong Kong Island and Kowloon.

Greening plans

A greener streetscape can take the harsh edge off the city. More trees and shrubs around the city will also help us combat global warming by absorbing carbon-dioxide emissions. We have designated another country park on Lantau Island not only to protect our green lungs but also to provide more recreation options for residents.

We will lower development densities in some areas to improve air flow and avoid the "wall effect" that has caused concern in some districts.

We will propose legislation to require ultra low sulphur diesel to be used for all commercial and industrial processes. And when we negotiate new agreements with the power companies we will link their rates of return to reductions in emissions.

I will also inject $1 billion into the Environmental  & Conservation Fund, and review funding guidelines, so we can make better use of the money to raise awareness about environmental protection and conservation activities.

We will also be doing more to encourage residents to live a green lifestyle and to urge businesses to adopt building energy codes.

We all know that our air-quality problem is not just confined to Hong Kong. Manufacturing operations in the Pearl River Delta are big contributors to air pollution that affects not just Hong Kong, but also Guangzhou and important cities such as Dongguan, Foshan, Zhongshan and Shenzhen.

Clean the air

Our national government has outlined measures to address this problem at source. Basically, high-polluting operations will be required to clean up their processes, or shut down.

There are some 60,000 Hong Kong linked operations in the PRD likely to be affected. Many of them, like manufacturing, will require new additional measures. So, restructuring, upgrading and relocation need to be seriously considered.

We will help these industries adopt clean production technologies and processes. This inevitably reduces emissions - and by extension the air pollution affecting the PRD - as well as improve competitiveness and corporate image.

Improving the living environment and the air quality in the Pearl River Delta will also help us maintain Hong Kong's attractiveness as an international city. Poor air quality threatens our long-term competitiveness. That is why I will be working hard to see good progress over the next five years.

If Hong Kong and the PRD are to continue to move up the value chain and prosper, then we need to ensure that we can attract global talent to live and work here.

This brings me to human capital. If we are to develop and prosper as a global financial centre and as a regional services hub then we need to do two things.

First of all, we need to give our own population every opportunity to learn, to grow and to mature. Secondly, we need to supplement our own home-grown and excellent human capital with the best and the brightest from the Mainland and abroad. This year, I have announced a few initiatives to help do just that.

Education investment

We will invest more in education by extending the scope of free schooling from nine, to 12 years. We will also fund vocational training courses for those who leave school after Form 3 so there is equal treatment for those taking the academic stream and those who prefer to further their education with more hands-on and practical education.

This will help ensure that all of our young people have the opportunity to learn if they want to. We will start to implement small-class teaching where appropriate so we can enrich the learning experience for our children.

For some time now, the international chambers have been saying to me: "Donald, we don't have enough school places for the kids of expat business people. If they can't put their kids in a school they won't come here." So, we will provide more support to the international school sector. We will provide more land so new schools can be built, or current schools expanded. And we will also help provide interest-free capital-works assistance loans. This is another example of a practical response to a market concern.

Our universities are among the best in Asia, so we will do more to attract students from the Mainland and abroad to come and study here. At the same time, we'll relax our immigration policies so those students will be able to work while they're studying. And, when they finish their studies we'll make sure our immigration policies allow these young, bright and talented people to accept a job and contribute to Hong Kong's development.

We will also modify the Quality Migrant Admission Scheme by relaxing age limits and other requirements. And we'll do more to promote the scheme in the Mainland and overseas to attract more talented people from a wider range of sectors.

Quality city

Taken together, our work in these two policy areas is designed to underpin Hong Kong's long-term viability as an economy and as a quality city.

Here, I must also say that it's not up to the government alone to achieve these objectives. On the environment, in particular, individuals and business all need to play a role. It can be something as simple as using low energy lightbulbs and appliances in your home or office.

You can tell your driver not to keep the car running while he's waiting to pick you up. You can keep the windows open and use a fan at home instead of an air conditioner. If everybody does a little bit, we can achieve a lot.

Over the weekend we marked the 300-day countdown to next year's Olympics. We are indeed fortunate to be playing a role for our country in this historic undertaking. The equestrian test events in August were a great success, with excellent feedback from competitors and officials.

The events in Hong Kong next year will provide us with an excellent opportunity to showcase our attraction as a sophisticated, free and open international city. I am sure that we will extend a typically warm and enthusiastic welcome to all those who visit us for the Olympic and Paralympic events. I encourage everyone to get behind our efforts to promote the Olympic spirit in Hong Kong over the next year.

The Olympic Spirit is about friendship, fair play and solidarity. I believe these values are already deeply ingrained in all of us. And I know that we'll all be working together to make these equestrian events the best ever. But then again, what else would we expect from Hong Kong.

Chief Executive Donald Tsang made this speech at the joint business community luncheon.