Governmental leadership and the Democrats' economic policy

Mr Martin Lee, Legislative Councillor and Chairman of Democratic Party, was the Foundation's guest speaker on 15 December 1998. This is a summary of his remarks.

Noting that he had been charged with addressing Governmental leadership and economic policy, Martin Lee presumed that he was to speak about the Democrats' economic policy; the Government did not have one. At any rate, he would address the topic of Governmental leadership first.

Mr Tung

Martin Lee wished that he could act like Mr Tung. Whenever there was a crisis, Tung would hide himself away for five days, and reemerge when the worst was past. Was this the recommendation of his fung shui adviser? When the airport crisis blew up, Mr Tung waited two weeks before visiting the beleaguered facility, and even then he went by helicopter rather than by train. Perhaps he could not be guaranteed a train.

Such behaviour was the core of the Government's failure of leadership. The Government was not to blame for the crises themselves. Patten was right to say that he had been lucky in events during his rule. But leadership consisted precisely in showing that you were on top of the crisis. The leader should be seen to be in charge, handling the crisis directly, acknowledging it and dealing with it. But Mr Tung treated the crisis as if it did not exist; he felt that handling public perception was only "show".

Martin Lee said that he admired Mr Clinton. This was not so much for his deeds, but for the way that whatever happened he would always step forward to clear his name and put forward his point of view. Clinton understood that if one lost time, even a few hours, people would fear that the Government was not on top of the matter. The leader must show his face.

Civil Service

Turning to the Civil Service, Martin Lee had noticed a change in attitude following the handover, even though the faces were more or less the same. The senior civil servants complained that their advice was no longer sought. Patten would revert to his civil servants if he was forming a different view, and so give them a chance to agree or to put forward a fresh view. And if Patten then did not agree, he would at least tell the civil servant before going public. Mr Tung still went to consult the civil service. But after the consultation, the civil servant would next hear about it in the evening news - and then be expected to defend the policy too.

No one knew whom Mr Tung trusted. He talked to everyone, although not Martin Lee himself - he had had only two meetings with Tung that year. In a way Tung was to be pitied because there was no one on Exco who would disagree with him. Patten had understood the value of dissent. Including Tung he had had two dissenters on his Exco: two old fashioned gentlemen who would be bound to disagree with his policies. Was Patten stupid? Only a stupid leader would not expose himself to contrary views.

Martin Lee recalled his experience on the Basic Law Drafting Committee. In one of the subgroups, it was always 17 against 1: whether he said anything, he would always see two hands go up to oppose him. Yet Martin Lee was not putting forward merely his personal view. He had a team of lawyers supporting him, and the views he put forward represented the consensus; yet he was always opposed. Notably, a mainland representative told him once that he had seen that Hong Kong's own representatives opposed him, and assured Martin Lee that if he could convince the mainland side they would support him.

Martin Lee had received no such encouragement from Tung. Perhaps Tung was poorly advised. For example, when the political parties agreed on the six measures to rescue the economy, they brought them to Donald Tsang. The measures were not very radical, but Tsang did not agree with them. Then Tsang came up with nine measures of his own, which were quite similar. If he had been Tung, Martin Lee would have handled the matter quite differently. He would have summoned the parties to his office, received them with Tsang and Anson Chan there, and congratulated them on their work. He would have accepted three of their proposals right away, whereas others he would have said required further study. Then he would have talked to the public, giving credit to the parties. This would have had substantially the same outcome as the actual course of events, but the public would have liked it because it would have showed how Tung could accept different views - almost as if Tung himself were democratically elected. Unfortunately, Tung had not done this, and dismissed all such actions as show.

If the Chief Executive had been democratically elected, he would have received an intensive training in how to handle public expectation. As it was, he had waited seven days before reacting to the chicken crisis. If it had been Patten, he would have been down in the market on the first day, killing the chickens himself.

Economy

Turning to the economy, Martin Lee felt that economics could not be severed from politics. The Democratic Party had held a free market line up until now - although Martin Lee acknowledged that he had some talking to do with some of his younger members. The party frowned on the recent Government intervention in the stock market.

If the Chief Executive had been democratically elected, he would have received an intensive training in how to handle public expectation.

The Government was perceived to be under the influence of the property tycoons. On the night of 14th August, following the first day of the intervention, Martin Lee questioned a senior official. "We had to do it," the official replied. "Foreign manipulators have been attacking all our markets together. They must be punished." Martin Lee pointed out that the Financial Secretary had the power to defend the currency, but not to punish. The supposed manipulators were only taking from one another anyway. However, the official insisted that the foreigners were out to push the stock market down. If they did that, he said, the property market would go down, and then the banks would go down too. But does that mean, Martin Lee asked, that our monitoring system is so bad, and our financial system so unstable, that we cannot tolerate the risk of one or two banks going down? It seemed that Hong Kong was becoming like Japan, with no bank allowed to fail.

And look at the 70% mortgage ratio rule. How firm the officials had been on that, and yet soon afterwards the Government had used public money to guarantee a further 15% of lending. Who benefitted from all this? The property tycoons. The fact that the Government had pursed policies that drove up the price of land was not the tycoons' fault but they had a very large influence on policy. It had been the same when Patten's anti-speculation measures had been introduced in 1994. The tycoons had complained; the restrictions had been lifted and prices had shot up again.

Martin Lee was not confident in the present revival in stock and property prices. The real economy had not recovered yet, and the spurt in prices had the appearance of a bubble. Policy was being shaped by the property tycoons, by one of them especially.

The Democrats were cautiously supportive of the Government's HK$5 billion for innovation and technology. However, they felt that the Government should not try to pick winners.

On competition, Martin Lee expressed the party's dislike ot cartels. Banks were one, and the pace of liberalisation of that sector had been very slow over years. Supermarket were another cartel; it was very difficult to start a third supermarket chain in Hong Kong. The Hong Kong Government always helped big business. When Chairman of the Consumer Council, up to 1991, Martin Lee had fought for these issues. Now the Consumer Council had more power than before, but it was still not enough. The interests of the consumer should be paramount. There should be a level playing field for business, free choice for the consumer. The Democrats were the consumer's party.

However, these things could not be achieved without a more open and accountable Government. Under the Basic Law, no private members' bill could be presented without the Chief Executive's consent, and none at all that affected Government structure or expenditure. So if one wanted people to have a say in economic life, they would have to have a political say too. The two went hand in hand.

Turning to the region, Martin Lee was pleased to note that democracy had advanced in several countries because of the recession. The Asian "miracle" had indeed been a miracle because in many cases there had been high growth alongside corruption, despotic rule, and lack of human rights. Now it was seen that there was no miracle at all: growth was not sustainable in the long run in the absence of these things.

Economic growth needed the rule of law, free flow of information, a level playing field - and none of these things could be guaranteed unless people elected their own government. Kim Dae Chung had said that democracy and the free market economy went together. And the Democratic Foundation was also of the view that without democracy economic growth would weaken in the long run.

Martin Lee had been to Taiwan to view the recent elections. He saw Hong Kong, China and Taiwan as a triangle; the progress of any one of the three would affect the others. Taiwan was clearly leading on democracy; Hong Kong on the rule of law. He hoped that Taiwan would have clean elections. Hong Kong needed to move forward on democracy. But what was Tung doing? Because the economy was bad he was deferring democratic development. Recent statements by business sector representatives suggested that even the long term timetable for general elections would be deferred. And even if general elections were introduced, nomination would remain controlled by a small elite. So he, Martin Lee, could not stand for election to Chief Executive.

The above does not necessarily represent the views of the Foundation.