F.        Conclusion

67.       Madam President, the success of Hong Kong can be found in our pragmatism – we did not engage in ideological debates or utopian social projects. My recent remarks on pragmatic politics and our philosophy of public finance have aroused some public discussion. It was my intention to provide people with a better idea of the Government’s role and values, while trying to gauge their expectations of the Government, in order to reach consensus.

68.       Some mistook our stopping to use the term “positive non-interventionism” as a shift, or a U-turn, in our policy. This is not the case. For the sake of effective governance, I have always believed that we have to keep our feet firmly on the ground, and not be hamstrung by ideology or slogans. During the colonial era in the early 1980s, the then Financial Secretary, Sir Philip Haddon-Cave, in addressing the prevailing needs of social development, broke away from the laissez-faire doctrine and put forward the view that the Government should carefully weigh all relevant factors before deciding to intervene. He redefined the role of the Government with his pragmatic approach. During his term of office, the Government made great strides in expanding the development of education, housing, public health and infrastructure, elevating Hong Kong to new heights. He used the term “positive non-interventionism” to characterise his ideas, which immediately attracted widespread comments and criticism. Since then, all his successors have avoided using the term but the underlying philosophy has remained unchanged for the past 30 years. The Government has endeavoured to maintain public expenditure below 20% of GDP. After the Asian financial turmoil, the SAR Government, through vigorous and continuous efforts, successfully reduced Government expenditure to below 17% of GDP, while total public expenditure has dropped to 18.1% of GDP if we include the spending of all statutory bodies. Both figures are at the lowest level in many years. At present, globalisation and the rise of China are the two major changes affecting Hong Kong. As such, this calls for pragmatic and concrete discussions on the Government’s role in various economic sectors. The Government’s role and level of participation in the economic development of different sectors has varied over time to meet changing circumstances. I welcome the participation of the business community, the Legislative Council and members of the public in discussing when and to what extent the Government should ever intervene in the market, under the rubric of “Big Market, Small Government” and public expenditure not exceeding 20% of GDP. These discussions would be far more profitable than prolonging philosophical debates over abstract slogans or terminology.

69.       For Hong Kong to make further progress, it is important to set bold goals that can foster consensus in the community. As Chief Executive, it is my responsibility to explain clearly to the public our thinking on the way forward. Apart from the need to define the role of the Government in economic development, I think we need to be clear about the challenges Hong Kong is going to face as we move ahead. The Chief Executive of the third SAR Government, whoever that may be, will need to address the three following issues, set clear objectives, formulate appropriate measures, and build a general consensus.

70.       The first challenge is how to sustain economic development. I have recently noticed that some in the community regard economic development and environmental/cultural conservation as mutually exclusive. This is dangerous thinking. In my view, the pursuit of social advancement is a holistic concept that should be people-oriented, comprehensive, well co-ordinated, harmonious and sustainable. In the process, attention should be paid not only to the pace, but also to the promotion of the well-being of the people, society and the environment, as well as the economy. The promotion of humanities is about the conservation of our history and culture. The well-being of society is about sharing the fruits of our success and promoting social harmony. The well-being of the environment is about resource conservation and sustainable development. To attain these progressive goals, however, we must keep up the momentum of economic growth, otherwise this is all empty talk and we shall lack the resources to make things happen. Currently, Hong Kong’s development is hampered by insufficient investment and the slow pace of public investment. I believe that in the days ahead, it will be important for the Government to enhance communication with the business community, the Councils and environmental groups on development goals. Only in this way can we smoothly take forward our public investment programmes.

71.       The second challenge is how to further the development of a democratic political system. The Basic Law requires the active promotion of the democratic development of our political system, which is also the aspiration of the community at large. As Chief Executive, I am fully aware of my constitutional responsibility in this regard. Last year, the SAR Government and I did our utmost and, achieving general consensus in the community after lengthy consultation, put forward a constitutional development package for the election of the Chief Executive in 2007 and the formation of the Legislative Council in 2008. The package would have substantially enhanced the democratic element of the two election systems with the proposed participation of District Councillors. However, it failed to secure the necessary two-thirds majority of this Council. But the SAR Government has continued in its endeavour to move towards universal suffrage. I have been personally leading the Commission on Strategic Development (the Commission) to study our future constitutional development in an open and inclusive manner. For this study, progress has been made on various fronts and our efforts have been positive and constructive as much as they have been effective.

72.       As pointed out time and again by many learned people in our community, the development of Hong Kong’s political system impacts on every aspect of our community. It will have important and far-reaching implications for Hong Kong’s existing institutions and way of life, the governance of the SAR Government, and the immediate interests of every stratum and sector of the community. It also affects the constitutional powers of the Central Authorities. In a pluralistic society such as ours, it is extremely complicated to handle, and difficult to achieve, a wide consensus. What is certain is that both the SAR Government and the Central Government are determined to achieve the ultimate goal of having the Chief Executive and the entire Legislative Council elected by universal suffrage in accordance with the Basic Law, in light of the actual situation in Hong Kong and in a gradual and orderly manner. This stance has never changed. Through the concerted efforts of Hong Kong people from all strata and sectors, and with rational communication in the spirit of seeking common ground while reserving differences, we will be able to deal with the development of Hong Kong’s political system in a proper way.

73.       As the incumbent Chief Executive, I will continue to lead and take forward the work of the Commission in a positive and responsible manner throughout the remainder of my term. The Commission will study more intensively and extensively all relevant issues pertaining to the future development of our political system with a view to summing up the findings in 2007. This will lay a solid foundation for the next SAR Government to follow up on the issue. We have made, and will continue to make, strenuous efforts to draw up a blueprint for the future development of our political system, covering 2012 and beyond. I firmly believe that this is the most practicable way in our quest to realise universal suffrage for the election of the Chief Executive and the Legislative Council.

74.       The elections of the Election Committee and the Chief Executive will be held in December this year and in March next year respectively. The SAR Government will make all the necessary preparations for the two elections in order that they may be carried out smoothly according to the law in an open and equitable manner.

75.       The third challenge is how to build a harmonious society. Globalisation brings new opportunities. People engaged in global, high value-added economic activities, such as financial investment and innovative technology, are able to earn high income. Yet, low skilled workers are facing increasing economic hardship; they may still fail to make ends meet despite all their hard work. In addition, among the baby boomers born in the 1950s with a low to middle education level, a good number of them are faced with the threat of redundancy and pay cuts. At a time when the wealth gap in society keeps widening and social mobility begins to stall, we need to look for ways to resolve conflicts and promote social harmony. These are the thorny issues we need to consider, to tackle, and to solve in the days ahead. An optimist sees every challenge as an opportunity; a pessimist only sees trouble in every opportunity. I am an optimist, and I believe most of us in Hong Kong are, too.

76.       As I said in the Question and Answer Session of this Council in March, “strong governance requires fostering social consensus instead of working behind closed doors. Our administration will be based on public opinion”. Today, Hong Kong is faced with more challenges on the threshold of a new phase of development. We must work together to build a new consensus for our sustainable development, on the basis of which we will easily turn difficulties into opportunities. Hong Kong will certainly have a better tomorrow.