Patten soothes HK firms
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Your support makes all the difference.LOW AND predictable taxes will remain the bedrock of Hong Kong's economic policy, the territory's new governor, Chris Patten, assured the colony's business community yesterday.
Outlining ambitious plans for increased spending on social welfare, education, housing and the environment, Mr Patten also said the exchange rate link between the Hong Kong and US currencies 'must and will remain'.
In a wide-ranging policy speech to the Legislative Council spelling out his aims for the last years of British colonial rule before the handover to China in 1997, Mr Patten emphasised that Hong Kong would retain its prudent approach to government funding. He also announced proposals for the development of a comprehensive competition policy for Hong Kong, the establishment of a Hong Kong Monetary Authority, a drive on government efficiency, and new funds for retraining and research and development.
Mr Patten said his proposals on public assistance payments, retraining, education, housing and a major project on cleaning up Hong Kong's environment would increase annual spending in these areas by more than HKdollars 8bn (pounds 625m) by 1997, a rise of 21 per cent. 'But we will still be holding spending growth to figures that can be sustained by our economic performance and which will allow us to maintain our traditionally prudent level of reserves,' he said.
A 'windfall' - largely from higher stamp duty receipts - had meant that this year's surplus, originally estimated at HKdollars 7.5bn, would now be around HKdollars 13.5bn, he said. 'I think there are reasons for being financially prudent, but being that financially prudent doesn't seem to be very sensible,' Mr Patten said. He said Hong Kong's real annual GDP growth between now and 1997 would average 5 per cent.
The Government would retain prudent reserves, he said. Citing the possible impact of a China-US trade war, he said: 'In Hong Kong we do need to have a lot more padding than might be required in some other communities.'
Mr Patten said he shared concern about the threat of double-digit inflation and would look to improving efficiency.
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