Submission of the Hon K P Chan on Policy Address and Budget of 2015

On Insurance
1. Drive total development of insurance. The insurance industry is facing major changes in coming years, including establishment of independent Insurance Authority, establishment of policyholders’ protection fund, adoption of risk-based capital framework, etc. These changes, particularly new regulatory regime, would substantially increase compliance costs of capital and operations and also mean tightening supervision. Thus, the Government is bound to support the industry in exploring new business and making Hong Kong a global insurance and re-insurance centre, especially in marine risks and captive insurance, etc. Over-regulation would suffocate industrial development. The Government should study how rival countries and territories in the vicinity support their insurance to grow, and devise corresponding measures to reassure competitiveness of the industry in Hong Kong.

2. Fight insurance scams promptly and extensively. Insurance scams are increasingly serious, structured and organized. In recently solved cases, suspected criminals include adjustors, claim agents, garages, owners and probably even lawyers. The span of gang network is really astonishing. Moreover, their collaboration reflects serious and visible flaws in public bodies like Legal Aid, Hospital Authority and Traffic Accident Victims Assistance Scheme, etc. Obviously, crooks are taking advantage of these flaws. Yet, it is most ridiculous that scams are recurrent but the insurance industry is left helpless. In consequence, insurance, transport, construction, environmental protection, etc as well as small and medium businesses and consumers are all victims suffering considerable collateral damages directly and indirectly. I suggest the Government to set up cross-departmental task force and fight insurance scam extensively with concerted efforts. Loopholes in the system should be plugged.

3. Reconsider healthcare insurance to assure practicality. Food and Health Bureau will publish details of the Health Protection Scheme for public consultation shortly. The insurance industry is concerned that the basis of its proposal is against the principle of free market. Thus, it would be unsustainable in the long run and might even fall through for insufficient enrolment. Firstly, the industry is required to offer policies meeting minimum requirements only. Lower priced “sub-standard” policies would disappear. Consequently, healthcare insurance would be increasingly expensive under such constraint even without medical inflation. In turn, more people are compelled to revert to public medicine. Secondly, the FHB intends to scale down the $50 billion to $5 billion. In effect, most of the original incentives would be removed, and the scheme would become unattractive to the healthy and the young. Whenever claims are high, the scheme as proposed would have no choice but to raise premium making healthcare insurance less affordable. I ask FHB to endorse views of the insurance industry that the government undertaking of $50 billion must be fulfilled to offer incentives like discounts for first-timers and retirees. It is crucial to a viable scheme for the benefit of the public.

On Social, Livelihood and Economy
1. Fully review major policies and identify inadequacy. The Occupy Central Movement is more than disputes over constitutional reform. It exposes underlying controversies of the community, especially issues like lacking social mobility for young people, Mainland and Hong Kong conflicts and education policy. The Government used to look into each and every incident of social disturbance. Root causes were indentified and policy mismatches, if any, were studied to defuse potential crisis. In my view, the Government should take this opportunity to commission researches to find out those underlying controversies and adjust social policies with a view to defusing potential problems embedded in society.

2. Adjust policies to address changes of times. Following Occupy Central, radical social protest would become norm. The opposition would continue disrupting the Government with filibuster in the Legislature. The Government is facing tough times and should not merely pursue efficiency of administration. Better late than never. More attention should be paid on policy details to achieve more robust governance. It should find out what the public really needs and communicate more effectively with policy briefing at district level to win support. As long as policies are supported overwhelmingly, the opposition would dare not defying public opinion.

3. Establish comprehensive youth policy. The Occupy Central Movement has exposed once again frustration of the young people for lacking social mobility. The Government must do a much better job in youth work to prevent further social conflicts. These would include incentives for improving personal skills and pursuing spiritual contentment outside work. I propose to:
(a) Promote generalist training to equip young people with better language skill, communications skill, management skill and accountability so that they may contribute positively in different roles in society. Education development should focus on improving cross-industry abilities.
(b) Convert classic blue-collar jobs into specialist skills as alternative career path for young people who are falling behind in school curriculum. Many classic blue-collar jobs like construction, maintenance and decoration are suffering from prolonged labor shortage for being considered as offensive work. According to foreign experience, they would attract new blood after conversion to specialist skills to improve public image and social standing. More specific measures may include: proper accreditation, professional and tidy look, specialist tools, safe and clean worksites, development and promotion ladder, professional image promotion, etc. In a nutshell, they might be repackaged as modern, specialized technicians. Aircraft maintenance is a good illustration. Admittedly, these proposals call for substantial resources in support but they would pay in the long run. Apart from offering alternative career path to young people, they would also inject new impetus to these classic industries.
(c) To actively help young entrepreneurs taking off. In this era of internet shopping, entrepreneurship is more reachable to young people. eBusiness, as it is called, is also demands less start-up capital but more skills in information technology. It is appealing to the next generation.
(d) To help young people seek spiritual contentment outside work. As social mobility is rather restrictive nowadays, less people might succeed in career. Young people should realize that life is more than hard work and there are many other goals to pursue. They should learn to search for spiritual contentment in daily life including pleasure of family life, hobbies, art and culture, sports and volunteer work, etc.

4. Design contingency plan for economic volatility early. The long term impact of Occupy Central Movement on the economy is probably limited but short term adversity is inevitable and dependent on its duration. It is reported that adverse impacts on retail and tourism are becoming apparent. Both industries are expecting serious setback. Impacts on other businesses are yet to be felt. In particular, the last quarter of the year is crucial time of business planning and budgeting. The prevailing situation would impact significantly on their plans. Thus, the economy in the coming year would be volatile. The Government should be prepared and well-planned for any adversity, particularly the shock to small and medium enterprises (SME), employment, etc. It should pay attention to latest market changes with a view to introducing measures in response like market stimulation and SME support. Meanwhile, short term relief measures should also be allowed when preparing the Budget. If the economy did turn sour, they could be launched timely.

5. Improve consolidated competitiveness of Hong Kong urgently. I have repeatedly point out at the Legislative Council for the past two years that Hong Kong is facing serious challenges in upholding competitiveness. Moreover, the economy has been over-reliant on finance and property sectors, and the situation is very worrying. It is piteous that Hong Kong has been entrapped in political disputes and struggles in recent years. As salient livelihood issues are held up, economic innovation and reform are still not receiving deserved attention. I am convinced that falling competitiveness is already critical and the Government should introduce comprehensive changes including but not limited to my proposals on different occasions.
(a) Develop headquarters economy and attract foreign enterprises to base their regional hubs in Hong Kong. They would bring in international capital and talent, inject agility to the economy and create more quality jobs for the young people.
(b) Step up partnership with the Mainland to sustain growth of the financial sector.
(c) Support emerging industries to rebalance economic structure and offer more development paths for the young people.

6. Relax seating of Green Line Public Light Bus (PLB) for 5 wins. The Government is building a railway-centric transport system. With expanding railway capacity, feeder transport capacity is also increasing, including acquisition of larger buses by franchised carriers. Green Line PLB is also a popular feeder and passenger queues are getting longer during rush hours as demand rises. If higher demand were met by higher frequency, traffic jam would only get worse. So would roadside pollution. Moreover, drivers are not well paid and recruitment is not effortless. Therefore, higher frequency is not necessarily the best solution. In fact, the approved vehicle type is designed for 24 seats but remodeled with only 16 seats to compile with local law. Thus, its designed capacity is not fully deployed. I propose to relax seating of Green Line PLB to 24 for five-sided benefits to Hong Kong.
(a) The people would benefit: An increase of 50 percent in passenger capacity would help reduce queue time during rush hours and relieve pressure on fare hike.
(b) The Government would benefit: An increase of 50 percent of PLB payload to help resolve traffic demand in rush hours in the most environmental friendly way and without costing the public purse a dime.
(c) Bus drivers would benefit: PLB operators would afford better pay, welfare and training to drivers. Service quality would improve and new blood would be attracted.
(d) The industry would benefit: It would help relieve operators under financial stress, avoiding termination of routes in deficit as well as pressure of fare hike.
(e) The environment would benefit: Payload would be increased by 50 percent in the most environmental friendly way as there is no increase in bus fleet.

7. Launch universal medical check-up. In the previous term of Legislative Council, I tabled a Motion on territory-wide medical check-up but the proposal was not accepted by the last Administration. Actually, it is increasing evident that people in Hong Kong are unhealthy in daily life and diet. “Three-highs” are not uncommon. I ask the Government to launch universal medical check-up progressively by age group with subsidy to the middle-aged and above in basic routines like simple blood and urine tests (i.e blood sugar, blood fat and blood pressure, etc). The plan would not only help discover symptoms of disease early but also help remind people to pay attention to personal health and diet. The logic is simple. Vital figures are the best driver to live healthy. It would also encourage people, particularly those who are at the verge of “three-highs”, to undertake regular check-up and watch personal health. In the long run, public medicine would benefit from a healthier population.

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