The opening three months of 2003 will be a testing time for the second Tung Administration, its new team of principal (and accountable) officials and the members of the revamped Executive Council. At stake could well be the whole standing of the administration through to 2007.

Two tests stand out. First up, is the content of the Chief Executive, Tung Chee-hwa's own delayed Policy Address to the Legislative Council, now scheduled for January 8. It is vital that it is impressive both in content and delivery if Mr Tung is to be able to carry the public with him on his second-term agenda.

Second in line, and just as important given the present adverse economic and fiscal situation is the Financial Secretary, Antony Leung's second Budget -- and first in the new administration -- scheduled for early March. It will need to show there is a coherent plan for tackling the hard economic and fiscal imbalances.

But these are not just matters for Mr Tung and Mr Leung. Both documents will have to show that the whole administrative team have used the past six months wisely in coming to grips with their respective portfolios, and that they are prepared to be innovative and take decisive action in the policy areas they have taken on.

Unfortunately, the economic and political outlook -- and therefore, the environment in which the new team has to work -- looks far from propitious.

Internationally, the future is clouded with the global economic slowdown looking far from over, the campaign against terrorism ongoing and prospect of some action against Iraq, whether its turns out to be full scale war or not.

Domestically, economic weakness continues and Mr Tung's new team of responsible "ministers" and other close advisers -- and admittedly it is early days yet -- have not actually hit the ground running, with little sign of cohesive new policies emerging, as yet, in most areas.

Yet by establishing the six-month timetable -- from July to December this year -- for new policy initiatives and delaying his Policy Address from October 2002 to January 2003, Mr Tung has himself clearly laid down the timetable for his team to show that they can perform in the policy arena.

The events of the first quarter of the new year will be a measure of how much they have succeeded.

Fortunately, the Financial Secretary, Antony Leung, who produced a fairly ordinary first Budget this year -- without much substantive action to cut spending or raise revenues -- appears to have now set down an agenda of what he believes the administration needs to achieve if it is to turn things around.

In an extraordinarily lengthy answer to a question from Legislative Councillor, Kenneth Ting, on October 9, the Financial Secretary appeared to lay out the agenda for government in the period immediately ahead. But as with everything, it will not be the good intentions, but the delivery that matters.

Recognising the problems posed by economic restructuring, high unemployment, protracted deflation and related issues, he said the government had to:

• Consider what Hong Kong's strengths are;

• Have a clear vision of the direction of economic development, and actively institute measures to create an environment conducive to market development, so as to facilitate the successful transformation and continuous upgrading of the Hong Kong economy.

To achieve these objectives, he then outlined eight key areas where the government needed to concentrate its efforts. These key aims, he said, are to:

• Maintain Hong Kong's institutional strengths

• Reduce the size and involvement of government

• Promote closer economic ties with Mainland China

• Upgrade human resources

• Investment in infrastructure

• Promote developments in high-value-added sectors

• Develop relevant sectors to provide broad-based employment

• Stabilise the property market

Amongst the "institutional strengths' he said needed to be maintained, promoted and strengthened, were the rule of law, the level playing field, clean government, the free flow of information, the simple and low tax regime, and efficient and effective market regulation.

On reducing the size and involvement of government he said "small government" was the objective, with public spending less than 20 per cent of GDP. This involved reviewing work processed, setting project priorities, structural and procedural re-organisation, outsourcing services, corporatisation and privatisation, and raising efficiency.

In promoting "Mainland ties," he said the government wanted to advance the "five flows" -- people, goods, capital, information and services -- and grasp the opportunities from the Mainland's robust growth, especially in the PRD. He said the government recognised the Mainland hinterland was the key to economic development.

To upgrade "human resources," the government needed to invest heavily in education and training, promote education reform and life-long learning, enhance proficiency in English and Putonghua, review its population policy and facilitate economic restructuring and the enhancement of individuals' capabilities.

Mr Leung added that the SAR needed high quality "infrastructure" to match economic development, the construction of new links and improve existing links with Mainland and improve the environment.

As far as promoting "high value added sectors" is concerned, he highlighted the priority areas of advancing the SAR as an international financial centre, building on its logistics' strengths, promoting producer and professional services, and encouraging research and development -- and the use of technology -- in the industrial sector.

As to the development of sectors for "broad-based employment," he highlighted tourism and the development of the local community economy, including cultural, recreational, sports, social and personal service activities.

Finally, he said the government would seek stability and healthy development in "the property market" to the benefit of the community, the corporate sector and the overall economy.