Response to 2002/03 Budget

20 March 2002

The Right Honourable Antony Leung, GBS, JP
Financial Secretary
Government Secretariat
The Government of the HKSAR
12/F, Central Government Offices
West Wing, Lower Albert Road
Hong Kong

Dear Mr Leung,

We are writing to express our views on your recent Budget speech.

Overall, we are pleased that you did not seek to raise taxes, but held a steady course, notwithstanding the current deficit and the alarmist views of some commentators. You rightly laid stress on the expansion of public spending as a percentage of GDP in recent years, and the need to reverse this trend. The proposed cut of 4.75% in Civil Service salaries is a small but vital step in this direction. And the various reliefs and concessions you offered are no doubt welcome to the sectors of the community that will benefit from them.

Although there was not much detail in your speech, we received the message that you have a serious intention to reduce the size of government, rationalise the activities performed by the government and where possible move activities from the public sector to the private sector. The Foundation has always been a strong supporter of such policy. Far too much activity that in other countries is carried out by the private sector remains in Hong Kong the preserve of Government. Examples include 95% of hospitals, more than 40% of our housing, water supply, the two rail companies, the airport, and last but not least, all the land in Hong Kong.

It is time for these assets to be returned, in an orderly manner over a period of years, to the private sector where they can be put to more productive use. This will restore Hong Kong’s competitiveness, create more employment opportunities in the private sector and at the same time raise substantial revenues for Government. We strongly urge you to consider privatization, contracting out, and private participation in projects wherever possible.

I hope these comments are helpful, and we wish you all success with your work in the coming years.

Yours sincerely,

Alan Lung Ka-lun
Chairman

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