A lot of speakers from overseas shared their experience on Civil Service Reform. Two points came out very clearly. The first point is reform is a necessity. The civil service must reform in order to meet the ever-increasing expectations of the community, to provide a better and better service which the community expects.

The second point is reform is a long and continuous process. It's almost non-stop. Once you start the reform, you have to carry on.

In our case, we have started the reform. This year, we are tackling quite major issues such as the development of an improved pay-adjustment mechanism, which means that we will want to conduct a pay-level survey by the last quarter this year.

Some civil-service allowances outdated

We will review all civil-service allowances. Some of them, we would have to admit, are probably quite out of date. Some may have to be abolished. Some may have to be changed. But these are some things we have to go through first of all as a consultation exercise with our civil service colleagues.

And we'll also have to address our establishment. Do we still have some room to reduce the size of the civil-service establishment? Where are the surplus grades? How do we deal with these surplus grades? If we do not concentrate on forced redundancy at this stage, what are the voluntary schemes we should bear in mind?

But in the conference itself, I also mentioned that we'll have to start thinking about some of the more fundamental issues at our second stage of our reform, such as "Do we still have a very elaborate and very complicated, unwieldy almost, grading and ranking structure?" We have 400 grades with over 1,000 ranks. This is a 19th century invention. Can we survive with this structure in the 21st century?

Civil-service system overly centralised

Secondly, we have an over-centralised civil-service system. Every salary scale of every grade is linked to another grade. Most of the policies and practices are done centrally by the Civil Service Bureau. Overseas experience suggest that that is not going to be tenable in the long term. We need the flexibility. We perhaps need more devolution, more delegation, more decentralisation.

I mention these major issues, not to suggest that we are going to embark on them. These are not our immediate tasks. Our immediate tasks are already quite complicated, quite daunting. This is really to highlight the fact that the civil service reform has a long long way to go. We have started it. We are tackling the most immediate issues.

There will still be a lot of issues which we'll have to tackle and we will tackle them carefully, in consultation with the civil service but also in full discussion with the Legislative Council and the community at large.