Submission of Hon KP Chan on the Policy Address 2011/12 and Budget 2012/13 (Synopsis)
Finance and Insurance
1. Grasp the start of 12th 5-Year Plan. Strengthen cooperation of insurance industry with Mainland. The Government is urged to hold discussions with the State early on details of cooperation of the insurance industry between the Mainland and Hong Kong, allowing Hong Kong insurance institutions to participate in the Mainland market, as well as entry through shareholding with a view to reinforcing mutual product research and development.
2. Strengthen Qianhai Cooperation Zone. Better preparation for finance and insursance sectors The Government should put forward a package of policy initiatives in its remaining term of office and to prepare the commerce sector for related problems arising from further convergence of finance and insurance with the Mainland.
3. Tax concession for insurance premium. The Government is advised to introduce tax concession for insurance premium, including medical, accident and life insurances with a view to encouraging the public particularly the middle class to manage their own risk profiles. Thus, they would not have to fall back to public resources in case of mishaps. The Government should consider providing such tax concession on launching the Health Protection Scheme.
4. Better transition to independent Insurance Authority. The Government has undertaken to consult the industry again on details of the new framework. Its utmost task is to facilitate participation of the industry in designing the new regulatory system and a smooth transition.
5. Review the $50 billion undertaking for a sustainable Health Protection Scheme The Government should review adequacy of the $50 billion undertaking reserved for the Health Protection Scheme on its launch in 2015 in light of inflation, aging population and increasing medical expenses. The Government should also consider its longer term commitment so that the Scheme would survive after expiry of the government undertaking of 25 years.
6. Devise timetable for six major industries. Follow up with dedicated bureaus and officials. The Government should develop the “six major industries” with designated bureaus, officials and projects. Alternatively, the Government might appoint a new bureau for industrial development to coordinate medicine, education, testing and certification, innovation and technology, creative culture, and environment. It should formulate policy for each industry in detail, analyze and provide for the required land, manpower, skills, capital, laws and policy. It should also lay down milestones and targets for their advancement and transformation.
7. Look into exchange rate reform. On the one hand, the Government should look into reforming the exchanging rate, including the direction and timing. For instance, should the Hong Kong dollar be floated? Should it be pegged to a currency basket or the Chinese renminbi instead depending on circumstances? On the other hand, it should also deal with imminent problems derived from the linked exchange rate with US dollar, including currency depreciation, excessive liquidity, inflation and probably question of stagflation.
1. Tackle inflation crisis. Relieve livelihood pressure.
a. Provide relief on rates for one year
b. Raise subsidy for electricity bills
c. Provide salaries tax relief and rebate
d. Raise tax allowance for children
2. Take lead in energy saving campaign. Promoting energy conservation and exploring renewable energy are parallel paths ahead in world energy development. The Government should seriously examine total development in power generation. It should establish a high level consultation structure and invite experts to look into policies on energy conservation and renewable energy development with Mainland China. Meanwhile, the Government should take the lead in energy saving. It should join hands with businesses and schools to hold campaigns on energy saving and emission reduction with a view of extending them to the whole territory and promoting energy savings habit in society.
3. Explore provision of comprehensive monthly student subsidy.
1. Make retirement benefits better. MPF is a good scheme for retirement but its protection is inadequate for some members, including low income-earner, retiring workers and the unemployed. The Government should consider additional protections outside the existing scheme to supplement as an improvement. The Government should also introduce measures to encourage people to support their parents financially.
2. Introduce measure to encourage voluntary added contributions to MPF. The Government may encourage those affordable to save more for retirement by way of additional tax allowance of $30,000 for voluntary added contributions to MPF. These tax exempted voluntary contributions might only be withdrawn after retirement or prolonged period.
3. Improve application procedure for parent support allowance. The FS is recommended to increase the basic allowance to $60,000 and to provide for all children to share the allowance.
Housing the Population
1. Formulate long term housing and land policy that would withstand short term market volatility.
2. Substantially increase public rental housing and revive homeownership scheme to supplement. The Government should reform current public housing policy. It should substantially increase public rental housing supply and progressively relax its eligibility to accommodate more people. Meanwhile, it should revive the homeownership scheme with controlled supply to supplement.
3. Extend the eligible period of tax concession for home mortgage interest payment.
1. Substantially increase total expenditure on health care. The Government plans to increase total spending on health care from 15% of recurrent expenditure to 17%. However, the amount is still very low in terms of GDP and the basic problem is not addressed. For many years, local expenditure health care only amounted to some 5% of GDP, which is much less than developed economies like Japan, Australia and New Zealand. In the US, the share is as high as 18.1%. As society progresses, people are demanding for better health care. As the population is aging and demand for public medicine is increasing, there is pressing need for a higher share of GDP in health care. The Government should ask relative departments to deploy resources more effectively, to keep operations transparent and to deliver world class medical services to the public.
2. Further expand the list of designated drugs.
3. Promote the importance of Health Protection Scheme to the public.
4. Control rising medical expenses effectively.
5. Ensure medical needs of local residents are met early.
6. Actively strengthen psychiatric health service and policy on suicide prevention.
7. Encourage public support to organ donation through innovative thinking.