First Tsang government

The Executive Council was expanded with adding 8 new non-official members to the Executive Council, which balanced the ratio of composition to 14 official members (3 secretaries of the department and 11 secretaries of the bureaux) and 15 non-official members.

After 80% of fish from mainland China was found to contain malachite green, forcing many fish stalls to close, fishermen and businessmen criticised the Tsang administration for acting too slowly. Subsequently, the approval rating of Tsang and his administration fell in polls.

Fearing H5N1 bird flu would come back to Hong Kong one day, Tsang announced that free fresh chicken sale would be replaced by a system of central slaughtering starting from 2009. A slaughter house will be built in Sheung Shui.[4]

On 30 August 2005, Tsang announced that the Guangdong Provincial Government invited all 60 members from the Legislative Council to visit Guangdong between 25 September to 26 September 2005. This was the first chance for most of the pro-democrats such as Martin Lee to visit the mainland China since 1989.

Tsang has talked of discriminatory treatment of political parties and politicians, describing their relationships with him as either intimate or distant. This is what is known as the policy of friend-or-foe dichotomy (親疏有別). In June 2008, through praising Frederick Ma, the former Secretary for Commerce and Economic Development, for his even-handedness with all political parties, pan-democratic politicians landed an indirect attack at Tsang's style.[5] Tsang explained that he had been quoted out of context. He explained in the Legislative Council that what he meant was he would "stay close" to what was representative of mainstream public opinions, and "stay away" from what was against mainstream public opinions.

On 30 November, he televised appeal for support on the electoral reform package. Opposing the package publicly, thousands of Hong Kong people demanding immediate universal suffrage (63,000 as reported by the police, 81,000 - 98,000 by HKU-POP research team, at least 250,000 by the organisers) demonstrated against the reform package four days later. It was clear that Tsang would not change the reform package which was supported by about 60% of the population.

On 21 December, the Legislative vetoed his reform proposal as the government failed to get support from more than two-thirds of the councillors. Some lawyers in Beijing said that if the problem can't be solved, Donald Tsang has the power to dissolve the Legco under the Basic Law. He angered democrats, who voted down his proposals, when he referred to them as "horrid animals".[6]

Henry Tang introduced the Goods and Services Tax (GST) to the public in early 2006. Despite public opposition and opposition from all pro-Beijing and pan-democracy parties, Tsang publicly supported the GST in September 2006. The plan for the tax was shelved unexpectedly on 5 December 2006, prior to the end of the planned consultation period.[7]

Besides, Tsang announced that the Government no longer adopted the positive non-intervention policy in September 2006, further harming the relations between the Liberal Party and the government. He said the term had never reflected the policies of the government accurately. He is of the view that "Big Market, Small Government" is a more accurate description of the way Hong Kong operates.

Tsang has been criticised for not doing enough to improve Hong Kong's environment. In recent years high air pollution levels have been an increasing concern for people in Hong Kong, with pollutants from factories and power stations in China's industrial hinterland mixing with the fumes of the region's growing fleet of vehicles and wafting into the city on prevailing winds. The city has fallen in the rankings in several quality of life indices and there are worries that foreign firms will relocate to cleaner cities such as Singapore and Kuala Lumpur. Concerns over the pollution's effect on public health and the tourism industry are also rising. In mid-2006 Tsang launched the "Action Blue Sky Campaign" and outlined a comprehensive plan to tackle air pollution in Hong Kong and in collaboration with the neighbouring Guangdong province. Scepticism however remained among the expatriate and local population of Hong Kong and, in late November 2006, they ridiculed Tsang for citing the long life expectancy of Hong Kong residents as evidence of Hong Kong's high quality of life relative to other major cities in the East Asian region.[8]