Speak on the 2014-15 Budget (Translation)

For many years, the Financial Secretary's Budget has been criticized most for the Government's incorrect estimation of revenues, mostly underestimation of revenues, resulted in the accumulation of fiscal reserves, the usage of which is uncertain. Sometimes the Government will adopt a one-off measure of "handing out candies", which have the transient impacts like firecracker burning. How should the Government estimate its revenues? The Financial Secretary set up the Working Group on Long-Term Fiscal Planning (Working Group) before the delivery of his Budget this year, which made estimates of future revenues on the basis of historical data in the past three decades.

Making estimates on the basis of historical data is actually a reasonable approach as factors such as the changes in various tax regimes, the growth of social services, various disputes, and so on can be taken into consideration. Originally, it was reasonable to make estimates on the basis of historical data, but if we take a closer look, we will find that, as stated in paragraph 131 of the Budget, historical data showed that over the past three decades, the annual real GDP growth averaged 4.6%. As the growth rate was 4.6% in the past three decades, similar estimates of the growth rate in the next three decades should be made. However, the Working Group projected that real GDP with only grow at a rate of 2.8% in the next two to three decades. I am not sure why the projected growth rate is lower and it seems that there are artificial factors. Making future estimates on the basis of historical data is highly reasonable but the Government has lowered the growth rate after the estimates have been made. What is the extent of the adjustment? It appears that only Gods know if the Government's estimates are correct.

I do not intend to argue about such a professional issue and I will try to consider the issue from another perspective. What will happen if the Government's estimates are correct? What will happen if the estimates are wrong? As the estimates will either be correct or wrong, we have to discuss what should be done in future. For the moment, let me assume that the Government's estimates are correct, what suggestions has the Financial Secretary made? He suggested adopting the old practices of controlling expenditures, securing revenues and saving for a rainy day. In this connection, I would specifically discuss the area of healthcare.

If the Government's estimates are correct, how can the Financial Secretary control expenditures in the way as stated in paragraph 139 of the Budget: "Government departments and the public sector should conduct expenditure reviews and introduce efficiency measures with a view to doing more with less. In response to community needs, Government will continue to increase recurrent spending". Nevertheless, there are still certain problems. First, the actions mentioned in paragraph 139 should be taken regardless of the financial situation. Such actions will be taken when the Government does not have money, and money should not be spent wilfully even if the Government has money. Second, how should actions mentioned in paragraph 139 be taken, especially in the area of healthcare?

The Government asked the Hospital Authority (HA) to introduce efficiency measures with a view to doing more with less, but the current funding approach is different. At present, the Government gives the HA a "big envelope" each year; and the funding is increased by 3% each year after taking into consideration factors such as the annual population growth, price adjustments and inflation. The HA will make its own arrangements to provide various services with the increased provision. Assuming the Government's estimates are correct seven years later, the funding allocated to the HA will not increase, and the HA may, for reason of reduced funding, extend patients' waiting time and provide inferior services. In fact, at present we have unanimously demanded for additional funding for the HA, how is the Financial Secretary going to respond? I would like to stress one point, in cutting expenses or when expenses cannot be increased, the biggest obstacle often comes from the staff. So, how can the authorities make hay while the sun shines?

In my view, if the Financial Secretary continues to allocate funds to organizations such as the HA in the form of a "big envelope", it will not work because the Government will not be able to withstand public pressure. How can the Government exercise control when the services of the HA become increasingly poor? The Government will be under tremendous social pressure. Therefore, in addition to providing funding to various public bodies and government departments, I suggest that the Financial Secretary should sometimes be directly involved in some important macroeconomic policies, especially healthcare policies.

For example, if the Financial Secretary believes that its estimates are correct, there may be a structural deficit seven years later and most medical graduates will not be able to find work. There must be an adequate supply of doctors before actions can be started; medical graduates will not be able to find work if the Government reduces funding. Thus, the Government should first start reducing the number of medical students in 2015.

Second, as I have mentioned time and again, the HA provided unsatisfactory services because of the uneven distribution of resources internally and the waiting time is not long in all hospital clusters. My views about this issue were finally taken on board by the News Magazine which produced a special programme two weeks ago on hospital resources. It was revealed in the programme that despite an increase in funding, some clusters have all along been allocated fewer resources, resulting in the very long waiting time. There are also press reports that the occupancy rate of rehabilitation beds in Island West is less than 60% while the occupancy rate in other clusters such as New Territories West is higher than 90%. If additional funding for the HA is not put in the services that the public are most dissatisfied with, such services cannot be improved no matter how much additional funding is provided. Hence, I request the Government to be directly involved in the formulation of macroscopic healthcare policies while the formulation of microscopic healthcare policies can be shelved for the time being. In any case, this approach can actually improve services without increasing resources.

The Government also needs to establish an independent audit mechanism to see whether the services provided by the HA include outdated and redundant items as in stated in paragraph 139 of the Financial Secretary's Budget. If the Government does not take such actions, given that our doctors are so shrewd, it is not possible to reduce the services provided.

What should we do if the Working Group makes wrong estimates again and it turns out that our economic growth in the next three decades is as strong as in the last three decades? While Hong Kong has accumulated a huge surplus and the Government has the capacity to continue to increase funding, if the number of medical students is reduced as I have proposed, there will be a lot of funding and vacancies. What should we do when people start rebuking? Can we introduce a newer concept?

In many cases, the Financial Secretary has been criticized as being miserly, refusing to spend any money. Under the practical situation and tax regime of Hong Kong, many revenues are one-off in nature. For example, when the economy is booming, more land will be sold, and owing to various other reasons, the Government will have one-off revenues. Nonetheless, the Financial Secretary intends to contain recurrent expenditures. Once the Government does not have one-off revenues, it has no money to meet the recurrent expenditures. Can a new concept be flexibly introduced? Can there be semi-recurrent expenditures besides recurrent expenditures? In other words, with a social consensus, certain expenditure items can be implemented when the Government is rich and such items will be cut if the Government has no money.

Can such flexible arrangements and adjustments be made in respect of healthcare? If the Government allocates all the funding to the HA, such kind of flexibility will not be made possible. So long as the Government allocates funding to the HA, it cannot take control of many things. For example, the HA's target is to employ permanent staff and the Government can hardly reduce the relevant expenditures. A more flexible approach is that the Government can actually directly purchase certain services at the HA cost. The Government must have listened to the suggestion of the HA or Secretary Dr KO Wing-man; therefore, it is proposed in this year's Budget that the Government will allocate an additional funding of over $420 million for the implementation of a pilot programme to subsidize colorectal cancer screening. I can use this example to illustrate this point further.

How is colorectal cancer screening carried out? According to the standard practice in overseas countries, all people aged over 50 can have a fecel occult blood test in hospital, and people with positive test result will receive colonoscopy. Generally speaking, around 2% of people will have a positive test result and a colonoscopy is costly. The cost of a fecel occult blood test is about a few hundred dollars but the cost of a colonoscopy at the HA ranges from $10,000 to over $23,000; and the waiting time is six months. Since the Government is willing to spend more than $400 million to implement a pilot programme, and given the high cost of the tests conducted by the HA and the long waiting time, a simple approach is to hand over the work to the private sector.

How is the situation in the private sector? First, patients do not need to wait or they only need to wait a week at most to undergo the test, which is better than waiting six months, and I guess the cost of a standard colonoscopy in the private sector is about $10,000, which is cheaper than the relevant service provided by the HA. I am not sure about the future development because a team under the Department of Health is still examining the details. If we have a choice, will we choose to undergo the test in the HA or the private sector? If patients choose to receive the service in the private sector, they do not have to wait and if they cannot stand the pain, they can pay $1,000 to $2,000 more for anaesthesia. They can also make us of the opportunity to undergo gastric examinations as well; flexible arrangement can be made.

The most important point is that the service can be a semi-recurrent expenditure item, as I have said earlier. What are the reasons? For example, if the Government suspends this service seven years later due to the lack of financial resources, I believe this will not provoke a backlash because people receiving colonoscopy are just ordinary people. Based on overseas experience, even if the Government provides funding for people to undergo examinations, many people will not use such service. Generally, only about 60% of people will undergo examinations. Therefore, the Financial Secretary can introduce the concept of semi-recurrent expenditure items in various areas, or explore with Secretary Matthew CHEUNG the possibility of introducing this concept in the area of social welfare. Agreements can be drawn up, under which the Government will implement some service programmes when it has money for a period of time, say five years; and the service programmes will be suspended if the Government has no money. In that case, the Government will have greater flexibility in future, and can make flexible arrangements based on the short-term increase or decrease in government revenues.

Just now, I assume that the authorities' estimates are correct and I propose reducing the number of medical students. Some people might think that I am crazy to make such proposal when there is at present a serious lack of manpower for healthcare services. I would like to spend the remaining speaking time on presenting some simple ideas again. It is generally believed that manpower shortage leads to unsatisfactory public healthcare services, but as I have already explained, unsatisfactory public healthcare services are most probably attributed to unequal distribution of resources. Some people, including the Chief Secretary for Administration, have pointed out that there is a shortage of healthcare personnel. As the HA currently lacks 300 doctors, the situation is unsatisfactory. However, people who have more administrative experience will note that the lack of 300 healthcare personnel only accounts for about 5% of the 5 500 doctors under the HA. Will the shortage of one personnel in a department of 20 people have significant impacts on the provision of services? To say that the impact is significant is telling lies. On the contrary, will the availability of 300 additional healthcare personnel mean that the services of the HA can immediately be improved to the satisfaction of the public? Certainly not. Many people blame the Hong Kong Medical Association (HKMA) for they believe that the HKMA opposes the recruitment of overseas doctors, which has affected the HA services. I would like to tell them, though the HKMA opposes the recruitment of overseas doctors, its opposition has no effect. It is because the HA placed advertisements and screened the applicants, and applicants who meet the requirements can then file applications for entry into Hong Kong. Almost all such applications have been approved, with the exception of one applicant. Therefore, the approach of recruiting overseas doctors is actually not very effective. Some people hope to relax the requirement for overseas doctors to practise medicine in Hong Kong, and the dispute lies in whether such doctors need to take examinations. Nonetheless, if candidates are not required to take examinations, there will be more doctors in private practice; but if they need to take examinations, the quota is full as I have just mentioned. Lastly, if the legendary Formula One driver, Ayrton SENNA, regains conscious and intends to drive in Hong Kong, does he need to obtain a Hong Kong driving licence?

Deputy President, I so submit.