Start at the top... in order to make local schools more appealing to prospective students we should start by improving the quality of Hong Kong's higher education. Ours should be the top universities in Asia and the world. This will take time, but once it happens demand for places in local schools will increase.
Local schools feed local unis directly, and a direct path to some of the world's best universities will increase the appeal of local secondary schools immensely.
The next step is to implement the IB diploma program at all local schools. This is far and away the most competitive academic diploma available around the world at the moment. It is recognized internationally at universities, and secondary schools. and it will ensure students are learning to the highest international standard (or are at least being tested by it).
Considering English is one of HK's official languages there needs to be more English language through-schools in the public system. This is not to say that all public schools should not be bilingual. The quality has to improve to a standard parents and teachers are proud of.
The next step is to increase taxes on international schools. Enough moaning and groaning out of that lot. Don't like it? Pay up or gtf out of here. Seriously... schooling is free and you're complaining there are not enough spaces available in the expensive schools (then complaining that the prices are too high???)?
I never saw mainlanders coming to hk and complaining that they had to line-up outside of LV... They could shop at cheaper stores if they wanted, like regular consumers, but they elected not to, and they are entitled to that choice.
But if those same mainland shoppers were to start whining about the lines, and the prices, and how there were too many shoppers in luxury stores who weren't from the mainland... too many 'hong kongers' in those stores... well... people might not be so tolerant of that.
International school kids aren't any better than kids at public schools.
We can make HK's public schools more competitive. A good starting place would be to make the ESF public (ie. open to all hk residents regardless of color or accent), and add four or five under enrolled 'local' schools to the ESF overhead.
Start teaching Eng to an international standard in those re-branded 'local' schools and see if they don't fill up with kids whose parents are eager to get them an 'international education' at public school prices.
That's a start. That would solve a lot of the Edu Bureau's woes.