Full text of "The Chief Executive's 2018 Policy Address"

Hong Kong (HKSAR) - Mr President, Honourable Members and fellow citizens,

I.  Foreword: Striving Ahead

1.  Today, I present this Policy Address not only to reiterate my governance philosophy and elaborate on the vision and initiatives of the current-term Government for different policy areas, but also to share with you my experience since I assumed office as the Chief Executive.  What I hope to demonstrate in this Policy Address is my ever growing commitment to Hong Kong, my unwavering confidence and my courage to rise to challenges, which will help Hong Kong brave thewind and billows, seize the opportunities and move towards a brighter future.

2.  In the past year or so, my political team and I have taken a pragmatic approach to “care”, “listen” and “act” while being “innovative”, “interactive” and “collaborative” in implementing our policy initiatives proactively.  From enhancing our position as a financial centre, which includes revision of listing regulations and application of financial technologies (Fintech), to forging ahead the development of innovationand technology (I&T), such as the establishment of I&T clusters on healthcare technologies, artificial intelligence and robotics technologies, the outcomes of our initiatives have been remarkable.  All these are testimonies to my belief when I was running for the Chief Executive: “Hong Kong people are outstanding and our foundations are solid.  As long as we stand united and remain focused, I have no doubt that we will scale new heights!”

3.  My another realisation is that there is no perfect solution in this world and it would be difficult toforge an absolute consensus in the community, yet divergence of views should not become an obstacle to the Government’s leading Hong Kong to make progress and more importantly, it should never bring Hong Kong to a standstill.  We have already spent a lot of efforts on many rounds of public consultation, whether on land supply options or abolition of the “offsetting” arrangement under the Mandatory Provident Fund (MPF) Scheme.  It is high time for us to decide and proceed after discussions; since procrastination will just bring greater sufferings to families living in a poor and overcrowded environment, in particular the children, and to grass-roots workers who need better retirement protection.

4.  My third realisation is that we need companions as we “move forward”; the more inclusive the Government is, the more companions it will have.  I would not harbour an unrealistic wish that all our political parties or Members of this Council share the same political stance, yet so long as the principle of “One Country” is not compromised, there should be plenty of room for collaboration.  A good case in point is the visit by a cross-party delegation to various Mainland cities in the Guangdong-Hong Kong-Macao Greater Bay Area (Greater Bay Area) arranged by the Legislative Council (LegCo) early this year; another example is the approach of “dealing with simple issues before the difficult ones” adopted by the Government in presenting the many funding items to this Council after consultation with legislators of different parties.  This has helped reduce confrontation in this Council and contributed to the smooth passage of initiatives that benefit our economy and people’slivelihood.

5.  My last realisation is that the Government should act swiftly and boldly on matters which clearly serve the public interest.  In this Policy Address, I propose to impose a total ban on electronic cigarettes, strengthen primary healthcare services and providefurther resources for research and development (R&D) – all are big strides towards clear objectives.

6.  These realisations are derived from my experience in serving as the Chief Executive.  While they have added a personal touch to this Policy Address, a majoritypart of this Policy Address also reflects the views  presented to me by LegCo Members and various sectors of the community.  I, of course, have to thank my political team and colleagues of various ranks in the civil service for their exemplary dedication and progressive attitude in seeking and embracing change.  While the road ahead may not be all smooth and easy, I strongly believe that it will lead to a broad runway for Hong Kong to take off again.

II.  Good Governance

My Belief

7.  I solemnly pledged in my first Policy Address that the Hong Kong Special Administrative Region (HKSAR) Government and myself will, with our utmost endeavours, implement the “One Country, Two Systems” principle, uphold the Basic Law and safeguard the rule of law; and good governance is the cornerstone for discharging the aboveconstitutional responsibilities.  The HKSAR, being an inalienable part of the People’s Republic of China, is directly under the Central People’s Government and enjoys a high degree of autonomy.  With the support of the Motherland in the past 21 years and an international vision, Hong Kong has maintained its unique strengths which are protected by the Basic Law, including the rule of law, executive power, legislative power, independent judicial power including that of final adjudication, human rights and freedom, etc.  To ensure the robustness of the “One Country, Two Systems”, the HKSAR must uphold the “One Country” principle and handle the relationship between the Central Government and the HKSAR correctly.

Relationship between the Central Government and the HKSAR

8.  The Chief Executive is responsible to both the HKSAR and the Central Government.  Under this “dual responsibility”, the Chief Executive is required to comprehensively, accurately and firmly implement the “One Country, Two Systems” principle, uphold the Basic Law, defend the rule of law and promote the relationship between the Central Government and the HKSAR.  In face of the complex situations and new conflicts emerged in the Hong Kong society in recent years, the HKSAR Government and I will not tolerate any acts that advocate Hong Kong’s independence and threatens the country’s sovereignty, security and development interests.  We will fearlessly take actions against such acts according to the law in order to safeguard the interests of the country and Hong Kong.  To nip the problem in the bud, we have also reinforced the understanding of all sectors of the Constitution, the Basic Law and national security and fostered an awareness of “One Country” in the community.

9.  Meanwhile, with the Central Government’s staunch support for Hong Kong’s integration into the overall national development, we will make the best useof the advantage of “Two Systems” and actively participate in the Belt and Road (B&R) Initiative and the development of the Greater Bay Area.

10.  The HKSAR Government has signed a number of co-operation agreements with different central ministries and commissions over the past year or so.  These include the Framework Agreement on Deepening Guangdong-Hong Kong-Macao Co-operation in the Development of the Bay Area signed with the National Development and Reform Commission (NDRC), the Guangdong Provincial Government and the Macao Special Administrative Region Government, the Arrangement for Advancing Hong Kong’s Full Participation in and Contribution to the Belt & Road Initiative signed with the NDRC, the Agreement between the Mainland and HKSAR on Enhancing the Arrangement for Closer Cultural Relations signed with the Ministry of Culture and Tourism, as well as the Arrangement on Enhancing Innovation and Technology Co-operation between the Mainland and Hong Kong recently signed with the Ministry of Science and Technology (MOST).  These co-operation agreements have provided Hong Kong with ample opportunities to participatein national development and enhance the opportunities of its industries and professional services.  To put the spirit of these agreements into practice, the bureaux concerned are taking forward specific initiatives that can benefit various sectors.

11.  On 15 August this year, I, as a member, attended the first plenary meeting of the leading group for the development of the Greater Bay Area convened by the Vice Premier of the State Council, Mr HAN Zheng.  The leading group provides top-tier design to advance the development of the Greater Bay Area and enhance co-ordination of its development.  This is the first time that the Chief Executives of Hong Kong and Macao Special Administrative Regions (SARs) have attended a meeting at central leadership level as members, highlighting the importance the Central Government attaches to the role of the two SARs in the Greater Bay Area and its continued support for their integration into the overall national development.

12.  The Central Government’s support for the HKSAR is also fully manifested in a host of policy initiatives rolled out in the past year that would facilitate Hong Kong people’s study, work and living in the Mainland, in particular the introduction of the Regulations for Application of Residence Permit for Hong Kong, Macao and Taiwan Residents in August this year, whereby eligible Hong Kong residents can apply for residence permits (Footnote 1)  andare entitled to enjoy, in accordance with the law, various rights, public services and convenience at the place of residence.

13.  This year marks the 40th anniversary of the reform and opening up of our country.  Hong Kong enterprises have been the major source of externalinvestment in Mainland provinces and municipalities and, in recent years, have assisted Mainland enterprises to expand their business overseas.  Hong Kong continues to serve the important function of being a platform for our country to attract foreign investment and for Mainland companies to go global.  The HKSAR Government will strengthen collaboration with Mainland provinces and municipalities and actively performs its role as a “facilitator” and “promoter”, so as to identify more business and development opportunities for Hong Kong people and enterprises.  In May this year, I led a delegation to Chengdu and co-chaired the First Plenary Session of the Hong Kong-Sichuan Co-operation Conference with the Secretary of the CPC Sichuan Provincial Committee to establish a new high-level co-operation mechanism between Hong Kong and Sichuan.  In August, I co-chaired the Hong Kong/Shanghai Co-operation Conference with the Mayor of Shanghai in Hong Kong and signed co-operation agreements on a number of areas.  I will conduct the Hong Kong/Beijing Co-operation Conference with the Mayor of Beijing later this month while the Chief Secretary forAdministration will co-chair the Hong Kong-Fujian Co-operation Conference with leaders of the Fujian Province in late November.

Executive Authorities

Proactive Government

14.  The new style of governance, new roles for the Government and new fiscal philosophy I have adopted for the current-term Government have received wide support from the community, and specific initiatives are being implemented.  Among these, I have advocated that the Government should play the roles of “facilitator” and “promotor”, and various bureaux and departments have become more proactive in handling economic and livelihood issues.  Part of the efforts have been reflected in the 2018 Policy Address and the over 240 new initiatives in the Policy Agenda.

15.  Some may ask whether the Government’s proactiveness will deviate from the market economy upheld by Hong Kong.  My answer is “no”; but a city’s competitiveness is like a boat sailing against the current and it must forge ahead in order not to be driven back, and hence the Government has every responsibility to provide policy support and explore business opportunities for enterprises locally and overseas, and to engage in more “government-to-government” interactions.

16.  Some may also question whether the Government will, by allocating public resources more robustly to improve people’s livelihood, deviate from the principles of fiscal prudence and keeping expenditure within the limits of revenues, thus embarking on the road to a welfare society.  My answer is “no”.  With our ample fiscal reserves, it is the Government’s responsibility to use the resources derived from the community for the good of the community, invest for the future, relieve people’s burdens and enable people from different walks of life to share the fruits of our economic growth.  In fact, the spirit of self-reliance among Hong Kong people has been impressive.  Currently there are about 12 000 unemployment cases under the Comprehensive Social Security Assistance (CSSA) Scheme, representing only 24% of the peak caseload in September 2003.

17.  In respect of playing the role of a “facilitator” more effectively, a major function of the Policy Innovation and Co-ordination Office (PICO), which was set up on 1 April this year, is to provide “first-stop and one-stop” consultation and co-ordination services for different sectors.  For projects with wider public benefits proposed by civil groups, the PICOwill co-ordinate the requirements and views of the relevant departments while maintaining communication with the proponents to facilitate project implementation.  In addition, the Efficiency Office, which has been transferred to the Innovation and Technology Bureau (ITB), will assist bureaux and departments in implementing business facilitation measures.  Over 70 related measures have been rolled out last year, and more than 130 new measures will be launched this year to reduce the compliance cost and remove red tape for various industries.

Upholding the Principle of Meritocracy

18.  We attach importance to public participation and engagement.  I have called upon all policy bureaux to uphold the principle of meritocracy and cast their net wide in scouting for talent, as well as to increase the proportion of female and young members.  In the past 12 months, a total of over 3 400 members have been appointed by policy bureaux to various public organisations and advisory committees.  At present, female members account for about 33% of all the non-official members appointed by the Government to advisory and statutory bodies, whereas young people account for 9% (Footnote 2).  I believe that these appointees drawn from different sectors of the community will enable us to take into account extensive views in the policy formulation process.

Open and Transparent

19.  Historical archivesnot only record the decision-making process, but also preserve the collective memory of society.  I would reiterate that the current-term Government attaches importance to the integrity of government records and holds a positive view towards the enactment of an archives law.  The Law Reform Commission (LRC) of Hong Kong has completed its study on our existing records management system and the relevant laws of other jurisdictions.  Public consultation is expected to commence by the end of this year.  The Government will follow up on this after receiving the report from LRC.  At the present stage, the Government will continue to enhance its records management work, including formulating a more comprehensive training plan for bureaux and departments, providing more professional training programmes for staff of the Government Records Service, and reviewing the implementation progress of electronic recordkeeping systems, etc.

20.  The Code on Access to Information (the Code) manifests the openness and accountability of the Government as it provides an effective framework for the public to access an extensive range of government information.  Since the implementation of the Code, the percentage of requests where information is provided has consistently exceeded 95%.  LRC formed a sub-committee on access to information earlier to review the current system of public access to government information, with a view to making appropriate recommendations on reforms.  After the LRC has submitted its report, the Government will deliberate on the recommendations and consider how to further improve the system of access to information.

Enhancing the Institution

21.  Institutional safeguard and accountability are key elements of good governance.  When there are major public incidents, the Government must front up and commit itself to solving the problems.  In the past year, to address the extensive public concern over a bus accident that resulted in serious casualties and the problematic construction works at the Hung Hom Station Extension of the MTR Shatin to Central Link Project, I promptly set up independent inquiry committees to carry out in-depth investigations.  I believe that the recommendations of the two committees will help the Government and the relevant oragnisations improve their systems and reinforce public confidence in the services concerned.

Boosting Implementation Capabilities

Augmenting the Civil Service Establishment

22.  To effectively implement the new policies and initiatives proposed by thecurrent-term Government and to tie in with the commissioning of various large-scale cross-boundary infrastructures, we have expanded the civil service establishment substantially by 3.7% in 2018-19, far exceeding the average year-on-year increases in the past ten years.  Looking ahead, the Government will uphold the prudent principle in the management of the civil service establishment to ensure that our civil service will continue to develop in a steady and orderly manner and cater for the needs of social development.

Extending the Service of Civil Servants

23.  To tie in with the goal of expanding the labour force and respond to the aspirations of our civil service colleagues, the Civil Service Bureau (CSB) invited, in July this year, serving civil servants joining the service between 1 June 2000 and 31 May 2015 to choose to retire at 65 (for civilian grades) or 60 (for disciplined services grades).

Establishing a Civil Service College

24.  In my Policy Address last year, I proposed to establish a new civil service college with upgraded training facilities so as to further enhance training for civil servants in the areas of leadership, interactive communication with the public, use of I&T, etc.  Apart from deepening civil servants’ understanding of our country’s development and the relationship between the Central Government and the HKSAR as well as enhancing their awareness of international affairs, the college is also tasked to promote exchanges with civil servants in other places.  We have identified a “Government, Institution or Community” site with an area of about 11 000 square metres in Kwun Tong for redevelopment.  In addition to the civil service college, our preliminary proposal is to provide a District Health Centre (DHC) and other community facilities in this composite development under the themes of “healthy living” and “lifelong learning”, with a view to enhancing the accessibility and city landscape of the district.  We will consult the Kwun Tong District Council on the proposal in due course.

25.  The civil service college is expected to be completed in 2026.  In the meantime, the Civil Service Training and Development Institute currently under the CSB will continue to enhance training for civil servants, including training in innovation and use of technology to tie in with the Government’s Smart City Blueprint for Hong Kong.  We will set up a civil service training advisory board comprising relevant professionals and government officials to give guidance on training programmes for the civil service and its long-term development strategy, and to prepare for the development of the new civil service college.

Enhancing Inter-departmental Collaboration and Efficiency

26.  Set up on 1 April this year, the PICO has, within just half a year, performed rather effectively in, for example, assisting the co-ordination of government measures to facilitate the development of the maritime industry and identifying suitable sites for the new public markets to be provided in Tin Shui Wai and Tung Chung.  The PICO has employed 18 policy and project co-ordination officers on a contract basis whereby young people can be closely involved in assignments reporting directly to the Chief Executive and participate in policy research and project co-ordination.

27.  Besides, we have completed two organisational changes in the Government by transferring the Efficiency Unit to the ITB and the Legal Aid Department to the Chief Secretary for Administration’s Office.  During public consultation on the Policy Address, there was a considerable amount of views suggesting that the Transport and Housing Bureau (THB) was overburdened and should be split into two, with the establishment of a new policy bureau to co-ordinate housing and land policies.  I generally agree that there is such a need and will further consider how to implement the suggestion.

28.  To enhance the integrity of family policies, the Labour and Welfare Bureau (LWB) will lead a study group to explore the feasibility of integrating the family-related policies, including those on children, women, the elderly and family currently put under the respective purviews of the LWB and the Home Affairs Bureau (HAB).

29.  High-level steering with enhanced co-ordination is a practicable alternative to organisational restructuring.  The Chief Secretary for Administration, the Financial Secretary and I provide steer for the relevant policy areas by chairing high-level committees.  For example, I chair the Steering Committee on Innovation and Technology and the Steering Committee for the Development of the Greater Bay Area to be established shortly; the Chief Secretary for Administration chairs the commissions and steering committees in relation to youth development, ethnic minorities and human resources; and the Financial Secretary chairs the Financial Leaders Forum and the high-level tourism co‑ordinating meeting.

30.  I would like to take this opportunity to express my gratitude to the civil service, which has all along been delivering efficient and quality services to the general public with professionalism.  In particular, when the Super Typhoon “Mangkhut” swept through Hong Kong recently, all government departments worked together to protect the lives and properties of the citizens and ensure public safety by discharging their duties fearlessly under the inclement weather.  I would also like to thank thousands of volunteers and people from the local community who have actively participated in handling the aftermath.  They should be commended for fully demonstrating the Hong Kong spirit of mutual care and assistance.

The Judiciary

31.  The rule of law is the most important core value of Hong Kong, and independence of the Judiciary is the key to embodying the rule of law.  The Basic Law lays out the fundamental principles underpinning our independent judicial system.  Notable ones are the independent exercise of judicial power by our courts free from interference, vesting of the power of final adjudication of the HKSAR in our Court of Final Appeal (CFA), and invitation of judges from other common law jurisdictions to sit on our CFA.  We will continue to steadfastly safeguard judicial independence and uphold the rule of law.  Let me reiterate that, any behaviour arising from disappointment with certain court verdicts, including unreasonable attacks on the judicial system and the Judiciary, interference with the independence of judicial power or verbal insults on judges, are totally unacceptable as well as detrimental to the judicial system and the spirit of jurisdiction in Hong Kong.  As the Chief Justice of the CFA, Mr Geoffrey MA Tao-li, pointed out at the Ceremonial Opening of the Legal Year 2018, any criticisms which are levelled against the Judiciary should be on an informed basis.  Courts and judges are concerned only with the law and the legal issues which arise in any disputes to be determined by them.  It is not relevant, nor is it any part of their constitutional duty to adjudicate on political, economic or social issues as such without reference to the law.  It is in everyone’s interest that the rule of law remains strong, respected and visible.

32.  To ensure the effective operation of the Judiciary, the Government has all along been providing sufficient resources and necessary support to the Judiciary.  Concerning court facilities, the Judiciary has set up a central steering committee to oversee the new High Court project adjacent to the Central Government Offices at Tamar and the District Court project at Caroline Hill Road.  The relevant departments will work closely with the Judiciary to press ahead with these two major projects that can address the long-term needs of the courts.  On human resources, the Government has accepted the proposals of the Judiciary and plans to extend the statutory retirement ages for judges and judicial officers to 70 (judges at the level of the Court of First Instance of the High Court and above) and 65 (judicial officers below the High Court level).  This will be conducive to the goal of enhancing judicial manpower, address the recruitment difficulties of the Judiciary, and help retain senior judicial talent with extensive experience.  We will introduce the relevant legislative amendments for scrutiny by the LegCo as soon as possible.

Legislating for Article 23 of the Basic Law

33.  The HKSAR Government has the constitutional responsibility to legislate for Article 23 of the Basic Law in order to safeguard national security.  I have stated publicly for a number of times that the Government will carefully consider all relevant factors, act prudently and continue its efforts to create a favourable social environment for the legislative work.  Yet, it does not suggest that we will turn a blind eye to the acts of violating the Constitution and the Basic Law, attempting to secede from the country and endangering national security; or our existing laws will be put aside and never be applied to deal with certain acts that should be prohibited.  The fact that the Secretary for Security took actions last month by applying the Societies Ordinance bears a strong testimony to the above.  This issue has aroused extensive public concern and intense discussion on the legislation for Article 23.  I will listen to these views earnestly and explore ways to enable the Hong Kong society to respond positively to this constitutional requirement on the HKSAR.

Article 45 of the Basic Law: Selection of the Chief Executive by Universal Suffrage

34.  On the work to effect the selection of the Chief Executive by universal suffrage, my stance remains the same as last year.  I understand the aspirations of the community, in particular our young people, for selecting the Chief Executive through “One Person, One Vote”.  Yet, I cannot ignore the reality and rashly embark on political reform again as this will divert the attention of our society from development.  The HKSAR Government will act prudently in this respect.

Executive-Legislature Relationship

35.  The Basic Law stipulates the respective responsibilities of the executive authorities and the legislature of the HKSAR.  The HKSAR Government respects the functions of the LegCo to exercise checks and balances on the executive authorities.  This does not only manifest good governance, but also forms an integral part of the new style of governance of the current-term Government.  Upon the proposal of the LegCo Committee on Rules of Procedure, I have been attending Chief Executive’s Question Time on a monthly basis to answer Members’ questions in a “short question, short answer” format, in addition to Chief Executive’s Question and Answer (Q&A) Session held four times a year.  In the 2017-18 legislative session, I attended four Chief Executive’s Q&A Sessions and seven Chief Executive’s Question Times, and responded to a total of 139 questions.  The Q&A Sessions strengthen accountability, while interaction with Members allows me to better feel the pulses of society and promptly respond to issues of public concern.  For example, the “Lift Modernisation Subsidy Scheme” proposed in this Policy Address to assist the public with repair of lifts in older buildings is a response to Members’ suggestions.

36.  In the 2017-18 legislative session, despite all the disputes relating to revision of the Rules of Procedures, the LegCo has achieved a lot.  It passed a total of 27 Government Bills, more than double of the 12 bills passed in the 2016-17 legislative session.  The Finance Committee also approved 98 items involving over $250 billion.  The effectiveness of LegCo in carrying out its two major constitutional functions, i.e. law enactment and approval of funding, and in serving the people, to some extent, reflects the enhanced Executive-Legislature relationship.  My political team and I will continue to communicate and interact with LegCo Members in a sincere and pragmatic manner, so that we may discuss, decide and proceed from the perspective of Hong Kong’s overall interests.

District Administration

37.  We attach great importance to taking in views from members of the District Councils (DCs) and local stakeholders, which helps resolve district issues and take forward district administration more effectively.  After taking office, I asked all Secretaries of Department and Directors of Bureau to visit all 18 districts within two years to meet with people in the local communities and understand better the sentiment and needs of the districts.  As at end-September 2018, they made 174 district visits, which translated into one visit every two working days on average.  During the visits, the officials listen earnestly to local feedback and take necessary follow-up actions.

38.  Cityscape and environmental hygiene are among the livelihood issues of greatest concern to the DCs and local communities.  In this connection, the relevant departments have consulted the DCs on hygiene blackspots and action priorities in the second quarter of this year, and are implementing the corresponding action plans.  These include stepping up efforts in cleansing, mosquito prevention, rodent prevention, the strength of enforcement, as well as beautifying and opening up selected vacant sites progressively.

39.  Since its launch in 2013, projects under the Signature Project Scheme spearheaded by the respective DCs have been delivering results.  Among the 25 funded projects, six have been in operation and are in general well received by the local community.  We expect that most of the remaining projects will gradually come into operation next year to benefit local residents.


40.  A corruption-free government and society as well as a deep-rooted probity culture in all walks of life are among Hong Kong’s key competitive edges.  For 45 years, the Independent Commission Against Corruption (ICAC) has been pursuing the corrupt independently and professionally in accordance with the law, without fear or favour.  Its relentless effort has implanted a culture of integrity across the territory.  The ICAC will continue to keep international ranking institutions abreast of Hong Kong’s probity situation, and will also assist foreign countries, particularly the Association of Southeast Asian Nations (ASEAN) countries and other B&R countries, in building up their anti-corruption capacity.  Such work not only fulfils Hong Kong’s international obligations, but also benefits Hong Kong investors seeking development opportunities in these places.

Non-refoulement Claims

41.  The Government commenced a comprehensive review of the strategy of handling non-refoulement claims in 2016.  Initial results are positive, with the number of non-ethnic Chinese illegal immigrants and new non-refoulement claims dropping drastically by 80%.  The number of claims pending screening by the Immigration Department has dropped from the peak of over 11 000 claims to less than 2 000 at present.

42.  Having reviewed the experience in screening non-refoulement claims and taken into account overseas laws and practices, the Security Bureau will introduce a bill to amend the Immigration Ordinance early next year.  The bill aims to improve the screening procedures by preventing people from using various means to delay or impede the screening process, so as to further increase the overall efficiency.

The Chief Executive’s Mission and Leadership

43.  In March 2018, we set up the Chief Executive’s Council of Advisers on Innovation and Strategic Development.  More than 30 members of the council are tendering advices on Hong Kong’s future development and strategies for driving innovation.  Besides, in my Policy Address last year, I proposed to hold Chief Executive Summits on important policy areas.  Since assuming office, I have already chaired three summits respectively on new directions for taxation, poverty alleviation and quality education, during which I listened to the views of the relevant sectors and stakeholders directly.  I will chair a summit on rehabilitation next month.  We will also organise summits on youth development and I&T next year.

44.  On 1 July last year, I accepted the greatest honour in my life with humility and got myself prepared for the greatest challenge in my public service career.  Over the past year or so, I have led my governing team to work with one heart.  We stand united and rise to various challenges.  I have worked in the Government for 38 years and have been upholding the principle of “saying what needs to be said; doing what needs to be done”, and I have never evaded anything.  The mission of my team and myself is to grasp the opportunities, focus on development and improve people’s livelihood by uniting all sectors in the community, so as to enable the HKSAR to leverage its strengths under new circumstances to meet the needs of our country and integrate into its overall development.

45.  The work of the Chief Executive is undoubtedly taxing.  I need to remain composed and resilient under pressure, while taking care of the internal and external environment and unite all sectors of the community.  Nevertheless, people’s aspirations for a happy life and good governance are the driving force to keep me striving forward.

III.  Housing and Land Supply

My Belief

46.  As I stated in the Policy Address last year, the housing policy of the current-term Government comprises four elements.  First, housing is not a simple commodity; while maintaining respect for a free market economy, the Government has an indispensable role to play in this area.  Second, we will focus on home-ownership and strive to build a housing ladder to rekindle the hope of families in different income brackets to become home-owners.  Third, we will focus on supply and, based on the Long Term Housing Strategy (LTHS), increase the supply of housing units.  Fourth, when new supply is not yet available, we will optimise the existing housing resources to help families that have long been on the waiting list for public rental housing (PRH) and residents in poor living conditions.

47.  To implement the aforesaid housing policies and meet the demand for land and housing in the course of our economic development, it is imperative for us to increase land supply.  We must make bold decisions, overcome all difficulties and develop land resources in a resolute and persistent manner.  To prevent the acute problem of land shortage from emerging again, the determination of the Government to identify and produce land and build a land reserve should never waver in face of short-term changes in economic environment or fluctuations in property prices.

48.  Our people will call Hong Kong their home only when there is adequate housing for all to enjoy life in this city, and it is the Government’s responsibility to provide suitable housing for families in different income brackets.  With the persistent imbalance in housing demand and supply, the average waiting time for PRH has lengthened and prices of private housing, which have been rising substantially in recent years, are well beyond the affordability of ordinary families.  During my term of office, I will increase the ratio of public housing, allocate more land to public housing development  (Footnote 3), and undertake that 70% of the housing units on Government’s newly developed land will be for public housing.

Current Situation

49.  Surging property prices and shortage of housing supply are major livelihood concerns of the public.  The overall private residential price in August 2018 was historically high, registering a 16% increase over the same period last year.  The index of home purchase affordability (i.e. the ratio of mortgage payment to median income of households) also continued to deteriorate to 74% in the second quarter this year, and was above the annual average of 67% in 2017.  At present, there are over 150 000 families and elderly singletons waiting for PRH, with an average waiting time of 5.3 years.

Housing Policy

50.  Of the six new housing initiatives I announced in June this year, the most important one is the revision of the pricing mechanism of subsidised sale flats (SSFs) to the effect that the selling prices of these flats will no longer be linked to market prices of private flats.  Instead, it will be determined primarily with reference to the affordability of applicants.  This is well received by the community and the upcoming sale exercises are expected to attract a large number of applications.  Following the new pricing policy, the Hong Kong Housing Authority (HKHA) has reopened applications for Home Ownership Scheme (HOS) 2018.  The sale of the first project under the regularised Green Form Subsidised Home Ownership Scheme (GSH) and the “Starter Homes” (SH) pilot project for Hong Kong residents provided by the Urban Renewal Authority (URA) will also be launched subsequently.  These three projects will provide a total of 7 426 housing units (Footnote 4).

51.  The revised pricing mechanism, together with the arrangement for buyers to obtain mortgage loans of up to 90% or even higher loan-to-value ratio, will render future SSFs affordable to the target households.  The monthly mortgage payment will generally not exceed 40% of the total household income.

The Hong Kong Housing Society

52.  As an important partner to the Government in implementing housing policies, the Hong Kong Housing Society (HKHS) has played an active role in providing PRH units and SSFs for low and middle-income families.  As the new HOS pricing mechanism will affect the selling prices of SSFs developed by the HKHS and may have financial impact on the HKHS, the Government will review the land premium arrangement for the HKHS’ projects.  In addition, the Government is prepared to support the HKHS in redeveloping its aged rental estates with a view to increasing the supply of public housing units.  The Government has decided to allocate one of the sites in Kai Tak, which was re‑allocated for public housing as announced in June this year, to the HKHS for the redevelopment of Chun Seen Mei Chuen in the vicinities.  The remaining new units on the Kai Tak site can also be dedicated to rehousing other eligible non-owner occupier households affected by government development or URA projects.

Buildings Developed under the Civil Servants’ Co-operative Building Society Scheme

53.  Some of the buildings developed under the Civil Servants’ Co-operative Building Society Scheme (CBS) are clustered in high-density development areas in the urban districts.  Aged and of a low density, these buildings did not fully utilise the plot ratios of the sites concerned.  In addition, some of these sites are in the vicinity of existing public housing estates and their ancillary facilities.  By kicking start the redevelopment of these buildings, we can increase housing supply.

54.  In this connection, I will invite the URA to identify one or two clusters of CBS sites suitable for high-density development as pilot sites, and explore the redevelopment of the sites in accordance with the usual project implementation approach adopted by the URA.  If we can fully utilise the plot ratios of the sites through redevelopment, we will request the URA to earmark some of the resumed land for public housing development.  The dedicated rehousing approach of the HKHS mentioned earlier can also help address the accommodation issue arising from the redevelopment of CBS buildings.

Redevelopment of Tai Hang Sai Estate

55.  Tai Hang Sai Estate in Shek Kip Mei is a private rental housing estate catering for low-income families at below market rentals.  It is constructed and managed by the Hong Kong Settlers Housing Corporation Limited (HKSHCL), which is a non-profit-making organisation.  The HKSHCL plans to redevelop the estate in situ in phases, and is now consulting the affected households on rehousing arrangements.  On the premise that the HKSHCL will make proper rehousing arrangements for its tenants, the Government has clearly indicated that we will firmly support the HKSHCL in taking forward the redevelopment project as soon as possible and will provide the necessary assistance, with a view to improving estate facilities and increasing housing supply.

Review of the Long Term Housing Strategy

56.  On the basis of my principles and policies on housing, the public/private split of the future ten-year housing supply target under the LTHS may need to be adjusted.  In fact, there are divergent views as to whether the public/private split of new housing supply in the next ten years should be maintained at 60:40.  The THB will have full regard to the latest developments and views from various sectors when announcing the next ten-year housing supply target.

Efficient Use of Public Housing Resources

57.  To increase short-term housing supply, I suggest that the HKHA and the HKHS consider implementing the following three new initiatives:

(i)  in the light of the operational experience of the HKHS’ pilot scheme, the HKHA to join the scheme and allow owners of HKHA’s SSFs with premium unpaid to sublet their flats to needy families;

(ii)  accept the HKHS’ recommendation of launching a “Flat for Flat Pilot Scheme for Elderly Owners” for its SSFs with premium not yet paid.  Under this scheme, owners aged 60 or above who have owned their flats for at least ten years can sell their original flats and then buy a smaller SSF flat in the secondary market without payment of premium; and

(iii)  The HKHA to launch a new initiative whereby under-occupation households whose family members are all aged 70 or above are allowed to enjoy lifetime full rent exemption upon their transfer to smaller, new or refurbished units.

Increasing the Supply of Transitional Housing

58.  Before new supply becomes available, a task force under the THB will actively facilitate the implementation of various short-term community initiatives to increase the supply of transitional housing.  As of today, the Community Housing Movement operated by the Hong Kong Council of Social Service has introduced a number of projects providing a total of 153 units; the Modular Social Housing Scheme on Nam Cheong Street in Sham Shui Po, with funding support from the Community Care Fund, is expected to provide a total of 90 units.  On the relaunching of measures to revitalise industrial buildings, we will allow wholesale conversion of industrial buildings for transitional housing.  The Government is also actively supporting non-profit-making organisations to explore the feasibility of constructing pre-fabricated modular housing on idle private and government sites.  A number of such projects are underway.

Land Supply

59.  In the past year, the current-term Government has restored the housing ladder and revised the prices of SSFs.  Finding land is the pressing problem that we need to tackle urgently.  In fact, the shortage of land supply not only leads to a shortage of housing supply, but also affects people’s quality of life.  From child care centres to elderly care facilities; from basic education and healthcare services to leisure open space and cultural and recreational facilities; and from maintaining the advantages of traditional trades to promoting new economy industries, land is strictly necessary.  In short, the improvement of livelihood and the development of the economy and transport infrastructure of our society hinge on land resources, without which all strategies or plans will end up in empty talk.

Land Development – a Daunting Task

60.  In November 2011, as the then Secretary for Development, I launched a public engagement exercise entitled “Enhancing Land Supply Strategy”, which proposed six measures including reclamation outside Victoria Harbour, rock cavern development, optimising the use of brownfield sites and agricultural land etc.  I made the following remarks publicly at that time:  “It is utterly difficult to developing land resources, and it is getting increasingly even more difficult.  Nevertheless, we must rise to the challenge for the sake of Hong Kong’s long-term development.”  Now seven years have passed, the larger scale land development projects are still struggling with hurdles along the way.  While the last term Government raced against time to press ahead with rezoning as a major short-to-medium term measure and various new development areas (NDAs) projects in Kwu Tung North/Fanling North, Hung Shui Kiu, Yuen Long South as well as Tung Chung, these efforts are constrained by project complexities and lengthy processes.  Adding to these is the long lead time required to resolve the conflicting interests of land owners, residents and other stakeholders affected by land development, which invariably resulted in delays or scaling back of the projects.

Task Force on Land Supply

61.  The Task Force on Land Supply (Task Force) set up in September last year has shouldered the task of forging collaborative deliberation with the public, in an attempt to build the greatest consensus in society.  The chairman, vice-chairman and members of the Task Force have been fully committed to the five-month long public engagement exercise which was concluded last month.  I would like to express my heartfelt thanks to the Task Force and look forward to receiving the full report of the Task Force by the end of this year.

62.  Half a month ago, upon my request, the Task Force shared with me its preliminary key observations.  While public attention has centred on the observations in respect of individual land supply options, I am attracted to the Task Force’s three general observations that the community broadly agrees that land supply is pressing; that we should be prepared for the rainy days; and that a multi-pronged approach should be adopted.  I now present some plans on land supply in line with such policy objectives.  As regards the further analysis of individual options, I will give detailed consideration to the Task Force’s recommendations in its full report.

Lantau Tomorrow

63.  Lantau, the largest outlying island in Hong Kong, is home to the Hong Kong International Airport and the gateway to the world.  Upon the commissioning of the Hong Kong-Zhuhai-Macao Bridge (HZMB), the transport connectivity between Hong Kong and other cities in the Greater Bay Area will be further improved, making Lantau a “Double Gateway” to the world and other Greater Bay Area cities.

64.  The Government’s vision for the development of Lantau covers the development areas at the artificial islands near Kau Yi Chau and Hei Ling Chau in the Central Waters, North Lantau as well as the coastal areas of Tuen Mun including the River Trade Terminal after re-planning and Lung Kwu Tan, to be supported by a new set of transport networks connecting various development areas.  The vision aims to instil hope among Hong Kong people for economic progress, improve people’s livelihood and meet their housing and career aspirations.  We will realise this vision in the coming 20 to 30 years through the following five policy directions and investment.

(1)  Unleashing land potential, increasing land supply and developing a liveable near carbon-neutral city

To unleash the development potential of existing land on Lantau, we kicked off the statutory planning procedures for the Mass Transit Railway Corporation Limited’s (MTRCL) Siu Ho Wan Depot Site early this year.  It is estimated that its topside development can provide no less than 14 000 residential units in the medium to long term.  We hope to develop the depot site into a Siu Ho Wan community with public and private housing as well as community facilities, with due regard to factors including planning, public-to-private housing mix, transport infrastructure, development timeline and MTRCL’s participation etc.
The Government has decided to commence immediately a study on phased reclamation near Kau Yi Chau and Hei Ling Chau for the construction of artificial islands with a total area of about 1 700 hectares.  The study and design work will begin shortly with the aim of commencing the first phase of reclamation in 2025.  The land reserve to be provided by reclamation could be planned for building 260 000 to 400 000 residential units.  These units, with 70% being public housing, could accommodate a population of 700 000 to 1 100 000.  We anticipate that the first batch of residential units could be available for intake in 2032.  The construction of artificial islands in the Central Waters helps meet the housing, economic and employment needs in the long run, which ties in with the overall population growth and economic development of Hong Kong.  We can make use of the additional land reserve to thin out the dense population in urban areas.  This will facilitate the redevelopment of old districts, improve living environment, and achieve a more balanced spatial development pattern for the territory.

We plan to develop near carbon-neutral pilot zones on the artificial islands at Kau Yi Chau and Hei Ling Chau.  We will explore the wider use of renewable energy, energy efficient design and technologies, green transport, higher greening ratio, more advanced recycling and waste management measures etc.

to progress towards the long-term vision of carbon-neutral community.  On the other hand, we will adopt city concepts that are smart, green and resilient to environment and climate in the Tung Chung New Town Extension for their first trial.

(2)   According priority to transport infrastructure, reinforcing advantages of a “Double Gateway”

One of the key development axles of the Lantau Tomorrow Vision is to accord priority to transport infrastructure development.  We will study the construction of a new major transport corridor to link up the coastal areas of Tuen Mun, North Lantau, the artificial islands in the Central Waters and the traditional business centre in Hong Kong Island North with roads and railways, and take forward works for a highway parallel to the North Lantau Highway and the Lung Mun Road improvement.  This new transport corridor will not only shorten the travelling distance between the Chek Lap Kok airport and Hong Kong Island, thereby strengthening the role of Lantau as a “Double Gateway” and facilitating the formation of the Western Economic Corridor, but also release the development potential of the artificial islands in the Central Waters, reclaimed land at Lung Kwu Tan, as well as coastal areas such as the River Trade Terminal, Tuen Mun East and Tuen Mun West.  Besides, the corridor will help relieve the congestion at the West Rail and Tuen Mun Road during peak hours, and significantly improve the transport system in the North West New Territories as well as enhance the flexibility and resilience of the entire transport network of Hong Kong.

(3)   Developing the Aerotropolis and the third Core Business District to promote economic development

The Government will invite the Airport Authority Hong Kong (AAHK) to submit a proposal for the topside development at Hong Kong Boundary Crossing Facilities Island.  Such development, coupled with the Three-runway System, high value-added logistics centre at the South Cargo Precinct, the SKYCITY project, as well as the AsiaWorld-Expo, of which a private interest was recently acquired by the AAHK, and its Phase Two development, will create at Lantau an Aerotropolis connecting the Greater Bay Area and the world, thereby strengthening and enhancing Hong Kong’s position as an international business centre.

The artificial islands formed by reclamation in the Central Waters will evolve into the third Core Business District (CBD) of Hong Kong following Central and Kowloon East.  Capitalising on the favourable geographical advantages, the artificial islands will link up Central/Sheung Wan area with Lantau via a new transport system.  Complementing traditional CBDs and synergising with the advanced Aerotropolis, the artificial islands will create extensive room for the development of conventional and emerging industries.  Our preliminary estimate is that about 340 000 jobs will be created by developing the artificial islands.

(4)  Enhancing environmental capacity for sustainable development

The fourth key development axle of the Lantau Tomorrow Vision is sustainable development.  Upholding firmly the planning principle of “development for the north, conservation for the south”, we will carry out infrastructure and development projects along the direction of “conservation to precede development”.  A $1 billion Lantau Conservation Fund will be set up to promote and implement conservation of rural Lantau, and to pursue livelihood improvement works in remote villages and communities.
We will also review the legislation concerned and map out more effective means to control landfilling, dumping of wastes and associated development activities causing environmental damage to areas of high ecological values at Lantau, with a view to enhancing protection of the natural beauty of these areas.

(5)  Increasing leisure and entertainment facilities to promote a healthy lifestyle

Lantau has a wealth of green and blue natural resources.  Given proper measures for environmental protection, it has the potential of developing into a leisure and entertainment destination of choice.  We will provide additional pedestrian-friendly walkways and extend the cycle track network as linkage to the Tung Chung New Town, and explore the feasibility of connecting Tung Chung with the airport island, with a view to encouraging green living.  We will also formulate and implement in phases a comprehensive Lantau Trails and Recreation Plan for the development of a hiking trail network connecting as many heritage, ecological and recreational hotspots as possible, provision of diverse leisure experience and promotion of healthy living.
Sunny Bay will be developed into a leisure and entertainment node, where mega-scale activities as well as international or local major competition events will be held to attract visitors.  The development of Sunny Bay will create synergy with the Hong Kong Disneyland Resort expansion project.

65.  The Lantau Tomorrow Vision involves the overall planning of the city and implementation of a number of major infrastructure projects in the coming decades, and requires the efforts of various bureaux, government departments and Non-Governmental Organisations (NGOs), which entails a large amount of meticulous co-ordination work.  As the Lantau Tomorrow Vision is a priority area of the current-term Government, I will set up as soon as possible a dedicated co-ordination office, which is directly accountable to me, to steer the overall direction as well as co-ordinate and monitor the planning and implementation of the programme.  This office will be expanded as needed to ensure that the policy and implementation could be effectively matched.

Development of Brownfield Sites in the New Territories

66.  Brownfield sites in the New Territories are disturbed greenfield or agricultural land.  Using them for housing development is a logical and natural choice.  This seemingly easy option is in fact fraught with difficulties.  I must first point out that developing brownfield sites has always been an important part of our land supply strategy.  NDAs projects under planning and implementation, including those in Kwu Tung North/Fanling North, Hung Shui Kiu, Yuen Long South etc ., will cover about 340 hectares of brownfield sites in total, while another some 200 hectares are within the New Territories North strategic growth area.  From public consultations, rezoning, to land resumption and clearance, as well as compensation and rehousing, implementation of NDA projects invariably requires a decade or so.  For example, the North East New Territories Development (referred to as Kwu Tung North/Fanling North NDAs nowadays) was initiated in 2008 when I was then the Secretary for Development, but land resumption has yet to start formally, not to mention commencement of works.

67.  Nevertheless, I share the community’s aspiration about developing brownfield sites to increase housing supply and improve the current haphazard landscape in some parts of the New Territories.  I have asked the Development Bureau (DEVB) to co-ordinate among relevant departments to advance the study about developing brownfield sites in New Territories North, and initiate a study on the remaining 760 hectares of scattered brownfield sites to identify those with greater development potential.  As many brownfield sites are now used for port back-up, logistics operations, recycling workshops, and storage of construction machinery and building materials, etc ., we need to consider how these existing operations can be handled or relocated in light of the needs of economic development.  We expect to complete within this year two studies on brownfield operations that have commenced earlier on, with a view to formulating relevant policy strategies and implementation measures.

Land Sharing Pilot Scheme

68.  According to some open information and rough guesstimate, private developers hold altogether no less than 1 000 hectares of agricultural land in the New Territories.  In the past five years, the Town Planning Board (TPB) processed some 20 rezoning applications for private housing development in the New Territories involving about 40 hectares of land in total.  Because of inadequate infrastructure support, planning considerations or local objections, only seven applications have been approved by the TPB.  These approved applications cover an area of about 18 hectares with an estimated supply of about 2 800 housing units.  The plot ratio is far lower than that of public housing resulting in an underutilisation of the land concerned.  If private land is covered by Government’s plans for public housing development or provision of infrastructure facilities, we will continue to resume it pursuant to the Lands Resumption Ordinance.  However, if we want to unleash earlier the potential and make better use of privately owned land not covered by Government’s planned development, we believe we can do so through a Land Sharing Pilot Scheme (LSPS) that is based on fairness and high transparency, so as to meet the needs of both public and private housing in the short to medium term.

69.  The Secretary for Development will formulate the feasible arrangements for the LSPS along the following directions and principles:

(i)  the Government will openly invite land sharing applications.  Applicants are required to explain clearly in their proposals how the private land they hold could, in the short to medium term, bring about substantial increase in housing flats through means such as enhancing infrastructure, increasing plot ratio, changing land uses, etc.  The increased floor areas will be shared between the Government and applicants, among which not less than 60% to 70% have to be used for public housing development mainly SSFs.  The types of public housing to be provided will depend on factors like subsidised housing policies, site location and provision of ancillary facilities;

(ii)   applicants should comply with all applicable statutory procedures and land administration regimes, including submitting to the TPB rezoning or planning applications and paying to the Government land premium at full market value in respect of lease modifications for the private housing and ancillary commercial facilities in the development;

(iii)  to take advantage of the efficiency of the private sector and expedite development, applicants will be responsible for building infrastructure facilities that can support the development concerned or even benefit the local community.  Subject to assessment by the Government on cost effectiveness, the relevant cost will be deducted from land premium.  Besides, applicants are required to consolidate private property interests within the development site on their own.  If the infrastructure facilities encroach onto private la

Published on: 2018-10-10

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