The road to better government: wider representation

SCMP July 14, 2003

Hong Kong has launched itself on a journey of constitutional development as well as more immediate political change. It is no less real for having been provoked by the stubborn stupidity of Chief Executive Tung Chee-hwa and the infuriating arrogance of the likes of Regina Ip Lau Suk-yee than having been the outcome of a thought-out agenda. But now that it is clear that the people want more than a neo-Confucian business paternalism in place of colonial rule, it is also time to think about what kind of policies and practices the public wants.

For many, more representative government is an end in itself. It is both a matter of dignity, of fulfilling the promise of 'Hong Kong people ruling Hong Kong' and of giving newly influential classes and hitherto disenfranchised groups a part in the power structure. Professionals in particular seem to feel bypassed by the existing structure.

But for others, particularly in lower income groups concerned with day-to-day money and employment issues, it is not the process that matters, but the result. More democratic government is not an end in itself but a means to an end.

What needs to change is government policies themselves, as well as the way in which they are arrived at. Before being carried away by the euphoria of July 1, we need to think of how policies could be different under another set-up.

Unemployment, falling property prices, Sars and the budget deficit have been major contributors to the discontent that brought 500,000 people onto the streets. But do the leaders of the protest, and in particular the Democratic Party, have coherent policies on these issues? Like most opposition parties, they fudge the issues either because they lack the intellectual capacity to devise alternatives, or because to do so would lose some of their coalition of interests.

In fact, there are many issues in which there is a clear link between bad policies and unrepresentative government.

The first is the unnecessarily high cost of many goods and services in Hong Kong, which distort the economy, inhibit job creation, reward oligopoly over entrepreneurship and encourage the export of capital rather than the reinvestment of profits. The lack of a competition law or meaningful competition policy is a major cause of this. Even the mainland is now ahead of Hong Kong in giving legal backing to competition policy. Meanwhile, the government sits pat on its ridiculous claim that to do so would be interfering with business freedom. Its lack of a policy is entirely due to the hand-in-glove relationship between the bureaucracy and the big business interests which are so overly represented in the executive and legislative councils.

Influential businesses - some from across the border - long ago acquired, through fair means and foul, an effective veto over the decisions of large areas of bureaucratic decision-making. It is noteworthy that the only monopoly to have been broken up - the old HK Telecom - was controlled in London, not Hong Kong. Change can only come from the top, which means a chief executive who understands that Hong Kong thrives on competitive business but is being sucked dry by the high profits of protected ones.

The second issue is the small circle of people who are placed on government advisory panels and boards of government-owned or dominated enterprises.

This group, including many sons of entrepreneurs, has solidified the business-government links in a way that underpins oligopoly and inhibits change. Public transport enterprises and boards, in particular, need a blood transfusion to make them answerable to the consumer.

Third, improved policy is closely associated with transparency. This column has noted before the secrecy of departments connected with lands and planning. Last week's judgment against the Town Planning Board's harbour reclamation plans was a welcome setback for this unaccountable and secretive body of trustees. But that was an exceptional case due to the existence of the Protection of the Harbour Ordinance, which the bureaucrats and the rubber stamp Town Planning Board arrogantly ignored. Most planning and land issues remain solely in the hands of unaccountable bodies and individuals.

The fourth issue is the protection of investors. Although this society looks up to investment and asset ownership, rip-offs of small shareholders by family-controlled companies are rampant and go largely unchecked by a government which still treats such companies as exemplars of Hong Kong business. The contrast between Hong Kong and South Korea, where chaebol have been broken up and leading businessmen sent to jail, could not be more stark.

As for the huge structural fiscal deficit, this is best tackled if the public has faith in the integrity of the relevant ministers. The public does not respect top bureaucrats and ministers who expect to be paid far more than their colleagues overseas just to do their job. If that is the price of their honesty, get rid of them. The public will surely accept a broader income tax base, higher hospital, public housing rental and utility charges and lower spending on roads and housing if it believes the burden is being fairly distributed. Spending cuts and higher taxes are both going to be needed.

But the quid pro quo must be a more steeply progressive income tax, a stop to white elephant public investments driven by bureaucratic or business interests and give-aways to influential private groups. Credible efforts are required to increase public sector productivity so that funds remain available to care for the needy and the growing number of old people.

People can be more easily encouraged to save for their old age rather than rely on the state - but only if the state takes their side against stock market rip-offs and high-cost bank intermediation which erodes real returns, and currency policy driven by sectional or political interests.

In short, a representative government would have a much better chance of taking on Hong Kong's huge fiscal and other policy challenges than today's government, which is driven by entrenched and selfish interests.

Meanwhile, if the mainland is unwilling to allow more representation, it owes it to itself to install individuals who are committed to Hong Kong. Out with those who slavishly followed Mao's cultural revolution mayhem but now support any sleazy mainland fat cat. Out with the rich men's sons who have joined the patriotic cause to protect their interests. In with new, home-grown, self-made talent.

ends

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