1. Why is there a sense of crisis about our economy?

There is a sense of economic crisis in Hong Kong for the past decade because the government has made three misleading claims:

• Hong Kong is running short of money;
• Hong Kong is being marginalized by the Mainland's success; and
• Hong Kong workers are not good enough.

The picture the government has painted is untrue and unhelpful. It has sapped the confidence of the people and diverted society's attention away from what Hong Kong must do.

2. What should Hong Kong do about being short of money?

  According to ministers, the government needed to impose a GST because of the threat of recurring budget deficits. Now that public opposition, led by the business community, has forced the withdrawal of the GST, the Financial Secretary suggested Hong Kong might need to consider some other tax option, including a tax on dividends and even a capital gains tax.

3. What is Hong Kong 's true financial position?

The HKSAR Government's consolidated statement of financial position as of 31 March 2006 showed an extremely healthy position that would be the envy of many countries, let alone New York City , London and Tokyo .

The Government has more than HK$910 billion in its reserves.

	* Consolidated Statement of Financial Position as at 31 March 2006 Financial Assets $ Million Investments with the Exchange Fund 324,939 Investments in government business enterprises 204,131 Other investments 21,731 Loans and advances 16,244 Cash and cash equivalents 43,750 Other Assets 20,573   631,368 Liabilities $ Million Provision for pensions (375,693) Bonds and notes issued (24,588) Other liabilities (45,624)   (445,905)   $ Million Net Financial Assets 185,463 Net Assets of the Exchange Fund 453,864 Fixed Assets 271,329 Net Assets 910,656 Represented by: $ Million General Reserve 185,463 Exchange Fund Reserve 453,864 Capital Expenditure Reserv e 271,329   910, 656

The position at the end of March 2007 will be very significantly better in view of the budget surplus for 2006.

My pledge to you is that I will not raise one dollar more in taxation that is needed to meet Hong Kong 's reasonable needs, including prudent additions to our reserves. Any surplus above these requirements should go back to where it belongs – in the pockets of the people.

4. Is Hong Kong being ‘marginalised'?

Donald Tsang and his ministers warn that Hong Kong will be marginalised because the Mainland's economy is advancing rapidly. They have offered a ‘blueprint' to rescue Hong Kong .

The best idea government advisers came up with is to increase ask the Central People's Government to allow more capital to flow through Hong Kong so Hong Kong can take its cut. This is frankly irresponsible. The Mainland needs to exercise care to ensure the stability of the RMB and its financial system.

The truth is that despite two recessions in the last decade, Hong Kong has continued to contribute to national development.

• Hong Kong entrepreneurs and investors have gone on fighting for market share in an increasingly competitive world. They are continuing to play an important role in the Mainland's development, in expanding its export industries, in developing its infrastructure and in expanding the nation's manufacturing bases beyond the major cities and coastal regions.
• Hong Kong-based banks and our financial markets have helped the nation to organise a spectacular series of IPOs. In 2006, our stock market raised almost HK$300 billion for Mainland companies, more than double the 2005 total.
• Between 1978 and 2006, Hong Kong was the Mainland's biggest source of foreign direct investment, providing US$260 billion or 41% of the total.

My pledge to you is to make it my first priority to expand the Hong Kong economy, so that it makes an even more substantial contribution to national development. That goal is best achieved by giving the Hong Kong business community the freedom to do what they do best – attract new investment, create jobs and generate profit.

5. Are Hong Kong workers not good enough?

Government ministers say repeatedly that Hong Kong workers are not up to scratch and can be easily overtaken by Mainland workers.

The truth is Hong Kong workers have taken the strain of recession and deflation, of rising unemployment and falling wages without resentment. They have maintained their adaptability and productivity. They have enhanced their work ethic and improved their personal skills.

I pledge to recognise the indispensable contribution to our prosperity made every day by our work force. I promise to remove the burden of anxiety created by inadequate pay and excessive hours in industries where employees are especially vulnerable.   I pledge to invest in education to raise the average attainments of our students. I pledge to restore the confidence of parents in their children's futures by upgrading the quality of our education, their access to further education and training, and their opportunities for rewarding careers. I will work with employers on work-life balance so that our workers can be even more productive.

6. What is the state of government-business relation?

Government-business relation is poor because the Tung Chee Hwa administration caused public concerns about ‘black box politics' and ‘government-business collusion' through a series of bad decisions. The community abhors cronyism and patronage politics because people know favouritism is wrong, leads to corruption and undermines free, fair and competitive markets.

The Government's past mistakes have never been acknowledged and that has prevented the government and the business community from efficient decision-making and sensible cooperation. We need to move on.

I pledge no more ill-conceived government ventures in partnership with private interests: That are not managed with the same meticulous care as the business world takes for granted; That do not make commercial sense; and That do not make a clear distinction between commercial efficiency – which is best left to business – and social concerns, which are the proper business of government.

7.  What are the real challenges facing Hong Kong ?

The real challenges facing us are not lack of money, the Mainland's success and the quality of our people. The real problem is the lack of good political leadership.

Hong Kong's chief executives and their ministers have weakened institutions that used to be the envy of our neighbours and the pride of Hong Kong .

They have:

• Weakened the rule of law;
• Politicised our civil service;
• Created divisive politics;
• Failed to correct the tax system where land subsidies dominate;
• Pushed favoured but inappropriate business projects;
• Condoned anti-competitive business behaviour;
• Lacked courage in pushing for better corporate governance.
• Cut funding for education;
• Ignored threats to the environment and public health;
• Misinformed the public by claiming our public health system is not sustainable on financial grounds; and
• Impaired Mainland-Hong Kong relations by giving the mistaken impression that Hong Kong people need handouts.

I pledge to focus on Hong Kong 's real challenges. I will: Respect the rule of law; Depoliticise the civil service and return it to a meritocracy; Appoint capable ministers; Cooperate across the political divide; Review how government manages its finances to lessen tax burdens on areas to be encouraged and increase burden on pollution; Assess public projects without fear or favour, and stop ‘white elephants' like Tamar; Introduce a competition law to put an end to rip-offs and price rigging at the consumer's expense [and I propose to start with the real estate sector]; Promote corporate governance and protect minority shareholders; Ensure education is properly funded and our youngster will develop a global outlook; Clean-up air pollution expeditiously - we already know what to do; Practice good urban planning to create a beautiful and convivial city; Focus on good public health management before counting pennies; and Put Mainland-Hong Kong relations back on the right footing.

8. Why has the Government been misleading the people about Hong Kong 's real challenges?

  Our top officials have had to resort to misinformation in order to hide their mistakes and poor judgements. They have had to call for assistance from the Central People's Government thereby creating the impression on the Mainland that Hong Kong people are spoilt and always complaining because of hard economic times.

I pledge to give the facts to the Central Authorities and to re-build Hong Kong 's reputation on the Mainland. Hong Kong remains committed to contribute to the Mainland's modernisation.