1 HONG KONG LEGISLATIVE COUNCIL -- 19 July 1989 HONG KONG LEGISLATIVE COUNCIL -- 19 July 1989 1
OFFICIAL REPORT OF PROCEEDINGS
Wednesday, 19 July 1989
The Council met at half-past Two o'clock
PRESENT
HIS EXCELLENCY THE GOVERNOR (PRESIDENT)
SIR DAVID CLIVE WILSON, K.C.M.G.
THE CHIEF SECRETARY
THE HONOURABLE SIR DAVID ROBERT FORD, K.B.E., L.V.O., J.P.
THE FINANCIAL SECRETARY
THE HONOURABLE DAVID ALAN CHALLONER NENDICK, J.P.
THE ATTORNEY GENERAL
THE HONOURABLE JEREMY FELL MATHEWS, C.M.G., J.P. THE HONOURABLE ALLEN LEE PENG-FEI, C.B.E., J.P.
THE HONOURABLE DONALD LIAO POON-HUAI, C.B.E., J.P. SECRETARY FOR DISTRICT ADMINISTRATION
THE HONOURABLE STEPHEN CHEONG KAM-CHUEN, C.B.E., J.P. THE HONOURABLE CHEUNG YAN-LUNG, O.B.E., J.P.
THE HONOURABLE MRS. SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE MARIA TAM WAI-CHU, C.B.E., J.P. THE HONOURABLE CHAN YING-LUN, O.B.E., J.P.
THE HONOURABLE MRS. RITA FAN HSU LAI-TAI, O.B.E., J.P. THE HONOURABLE PETER POON WING-CHEUNG, O.B.E., J.P. THE HONOURABLE CHUNG PUI-LAM, J.P.
THE HONOURABLE HO SAI-CHU, M.B.E., J.P.
THE HONOURABLE HUI YIN-FAT, O.B.E., J.P.
THE HONOURABLE MARTIN LEE CHU-MING, Q.C., J.P. THE HONOURABLE DAVID LI KWOK-PO, J.P.
THE HONOURABLE NGAI SHIU-KIT, O.B.E., J.P.
THE HONOURABLE PANG CHUN-HOI, M.B.E.
THE HONOURABLE POON CHI-FAI, J.P.
PROF. THE HONOURABLE POON CHUNG-KWONG, J.P.
THE HONOURABLE SZETO WAH
THE HONOURABLE TAI CHIN-WAH, J.P.
THE HONOURABLE MRS. ROSANNA TAM WONG YICK-MING, J.P. THE HONOURABLE TAM YIU-CHUNG
DR. THE HONOURABLE DANIEL TSE, O.B.E., J.P.
THE HONOURABLE ANDREW WONG WANG-FAT, J.P.
THE HONOURABLE GRAHAM BARNES, C.B.E., J.P.
SECRETARY FOR LANDS AND WORKS
THE HONOURABLE MICHAEL LEUNG MAN-KIN, J.P.
SECRETARY FOR TRANSPORT
THE HONOURABLE EDWARD HO SING-TIN, J.P.
THE HONOURABLE GEOFFREY THOMAS BARNES, C.B.E., J.P. SECRETARY FOR SECURITY
THE HONOURABLE PETER TSAO KWANG-YUNG, C.B.E., C.P.M., J.P. SECRETARY FOR ADMINISTRATIVE SERVICES AND INFORMATION
THE HONOURABLE MARTIN GILBERT BARROW, O.B.E. THE HONOURABLE PAUL CHENG MING-FUN
THE HONOURABLE MICHAEL CHENG TAK-KIN, J.P.
THE HONOURABLE DAVID CHEUNG CHI-KONG, J.P.
THE HONOURABLE RONALD CHOW MEI-TAK
THE HONOURABLE MRS. NELLIE FONG WONG KUT-MAN, J.P. THE HONOURABLE MRS. PEGGY LAM, M.B.E., J.P.
THE HONOURABLE DANIEL LAM WAI-KEUNG, J.P.
THE HONOURABLE MRS. MIRIAM LAU KIN-YEE
THE HONOURABLE LAU WAH-SUM, J.P.
DR. THE HONOURABLE LEONG CHE-HUNG
THE HONOURABLE LEUNG WAI-TUNG, J.P.
THE HONOURABLE KINGSLEY SIT HO-YIN
THE HONOURABLE MRS. SO CHAU YIM-PING, J.P.
THE HONOURABLE JAMES TIEN PEI-CHUN, J.P.
THE HONOURABLE MRS. ELSIE TU, C.B.E.
THE HONOURABLE PETER WONG HONG-YUEN, J.P.
THE HONOURABLE YEUNG KAI-YIN, J.P.
SECRETARY FOR EDUCATION AND MANPOWER
THE HONOURABLE NIGEL CHRISTOPHER LESLIE SHIPMAN, J.P. SECRETARY FOR HEALTH AND WELFARE
ABSENT
DR. THE HONOURABLE HENRIETTA IP MAN-HING, O.B.E., J.P. THE HONOURABLE CHENG HON-KWAN, J.P.
THE HONOURABLE LAU WONG-FAT, M.B.E., J.P.
THE HONOURABLE RONALD JOSEPH ARCULLI, J.P.
THE HONOURABLE JAMES DAVID McGREGOR, O.B.E., I.S.O., J.P.
IN ATTENDANCE
THE CLERK TO THE LEGISLATIVE COUNCIL
MR. LAW KAM-SANG
Papers
The following papers were laid on the table pursuant to Standing Order 14(2): Subject
Subsidiary Legislation L.N. No.
Trade Marks Ordinance
Trade Marks (Amendment) Rules 1989........................... 234/89
Immigration Ordinance
Immigration (Places of Detention)
(Amendment) (No. 9) Order 1989.................................. 238/89
Telecommunication (Hong Kong Telephone Company)
(Exemption from Licensing) Order
Telecommunication (Hong Kong Telephone Company)
(Exemption from Licensing)(Fees) Order 1989............... 239/89
Immigration (Places of Detention)
(Amendment) (No. 8) Order 1989
Corrigendum.............................................................. 240/89
Hong Kong Royal Instructions 1917 to 1988
Standing Orders of the Legislative Council
of Hong Kong
Ending of 1988/89 Session............................................ 241/89
Sessional papers 1988-89
No. 81 -- Report of the Public Accounts Committee on Report No. 13 of the Director of Audit on the Results of Value for Money Audits.
June 1989
PAC Report No. 13
No. 82 -- J.E. Joseph Trust Fund Report for the Period 1st April 1988 to 31st March 1989.
No. 83 -- Kadoorie Agricultural Aid Loan Fund Report for the Period 1st April 1988 to 31st March 1989.
No. 84 -- Report on the Administration of the Immigration Service Welfare Fund prepared by the Director of Immigration from 1 April 1988 to 31 March 1989.
No. 85 -- Report by the Commissioner of Correctional Services on the Administration of the Prisoners' Welfare Fund for the Year ended 31st March 1988.
No. 86 -- Revisions of the 1988/89 Estimates approved by the Urban Council during the fourth quarter of the 1988/89 financial year.
No. 87 -- Customs and Excise Service Welfare Fund Income and Expenditure Account with Balance Sheet and Certificate of the Director of Audit for the year ended 31 March 1989.
No. 88 -- Sir Robert Black Trust Fund Annual Report for the year 1st April 1988 to 31 March 1989.
No. 89 -- Sir David Trench Fund for Recreation Trustee's Report 1988-89.
No. 90 -- The First Annual Report of the Commissioner for Administrative Complaints Hong Kong.
No. 91 -- Report by the Trustee of the
Police Children's Education Trust
Police Education and Welfare Trust
for the period 1st April 1987 - 31st March 1988.
Address by Member
Report of the Public Accounts Committee on Report No. 13 of the Director of Audit on the Results of Value for Money Audits
June 1989
PAC Report No. 13
MR. PETER POON: Sir, laid on the table today is the 13th Report of the Public Accounts Committee. This covers the conclusions reached by the committee in considering the Director of Audit's report on the results of value for money studies carried out between October 1988 and February 1989.
Sir, the committee has been greatly encouraged by the progress made over the years in improving the management of public funds. This is not to suggest complacency: there are still areas which can and should be improved, our report highlights some. But I think it fair to say that there is now a greater awareness within Government, at all levels, of the need for economy and cost-effectiveness. Given this spirit, we are confident that the recommendations we have made here will contribute towards further improvements, and that these will be implemented with alacrity and vigour.
Oral answers to questions
Review of future system of government
1. MR. CHOW asked (in Cantonese): In view of the desire manifested by the public at large for expediting democractic development in Hong Kong, will Government inform this Council whether, in reviewing the future system of government in Hong Kong for 1991 and after, consideration will be given to the views expressed by various
organizations as regards the composition of the future Legislative Council; and whether there will be formal public consultation in the review?
CHIEF SECRETARY: Sir, in considering the pace of constitutional development towards greater democracy in 1991, the most careful consideration will be given to the full
spectrum of public views expressed. I stressed in this Council on 5 July how important it was to obtain the clear support of the community before any proposals for change should be put into effect. In this respect, I remain confident that Members of this Council will continue to take the lead in building on the consensus that has emerged and will provide the Government with a clear direction on which to base its decisions.
At this stage, it is too early to say whether there will be a formal public consultation similar in procedure to the review which preceded the publication of the 1988 White Paper. A clear consensus on the way forward would make such a time-consuming exercise unnecessary. So, I therefore urge that our community comes out strongly to express their views on this very important matter.
MR. CHOW: Sir, in last Thursday's House of Commons debate the British Government also stressed that the future Hong Kong political system would depend on the consensus of the Hong Kong people. Would the Administration tell this Council what the definition of "consensus" is and how such consensus could be arrived at? Would it mean just the views of the OMELCO, or of certain groups like the Basic Law drafters, or of all the people of Hong Kong?
CHIEF SECRETARY: Sir, I think the views of the Hong Kong people will be expressed in a number of ways, not only through Members of this Council but also through our other representative bodies: the Urban and Regional Councils, the district boards, and indeed, all the many interested community groups that are continuing to take an interest in political development in Hong Kong. And we would wish to take account of all those views, Sir.
MR. CHOW: Sir, in order to get the majority view of the Hong Kong people, would the Administration consider holding a referendum?
CHIEF SECRETARY: Sir, I think to undertake a referendum would involve very careful consideration. There are, of course, well-known difficulties inherent in the holding of a referendum. Firstly, it is very difficult to formulate precise and simple questions which form the basis of any referendum. This difficulty may become
insurmountable if the questions relate to complex constitutional matters. That said, Sir, I think we should add that we have not ruled out any particular method of sounding public opinion on this issue.
Tsing Yi hazard study and reassessment
2. MRS. LAU asked: In connection with the Tsing Yi Island Risk Reassessment Report published in April 1989 and the 1982 Tsing Yi Hazard Potential Study, will the Administration inform this Council:
(1) whether the recommendations of the 1982 study have been implemented and if not, what measures will be taken to implement these recommendations;
(2) the measures proposed to be taken to implement the recommendations made in the 1989 report and to ensure that the implementation will be effectual; and
(3) the progress in regard to the plan to relocate oil depots on the island?
SECRETARY FOR LANDS AND WORKS: Sir, before replying to this question, I wish to apologize for the length of the reply. This is a subject of concern to the Tsing Yi residents and I cannot properly answer Mrs. LAU's questions without going into a certain amount of detail.
Regarding the 1982 report, the main recommendations of the 1982 Tsing Yi Hazard Potential Study were that the risks to the residential population nearest to Mobil's oil installation on east Tsing Yi should be reduced; the infrastructure of Tsing Yi should be improved; and the land use planning and development constraints on Tsing Yi should be re-considered.
A number of measures have been taken by Government to implement these recommendations. These include:
(a) Development of phase three of Mayfair Gardens did not proceed; (b) The risk from Mobil was reduced by the following actions:
(i) Mobil adopted a package of design and operational measures to reduce the risk level;
(ii) improvements were made in the pumping system of the LPG spheres to provide better fire protection;
(iii) Mobil decommissioned one 300 tonnes sphere; and
(iv) workers at Mobil were given extensive training on the safe operation of the terminal.
(c) A number of measures were taken to improve the infrastructure of Tsing Yi:
(i) the ring road system was completed in 1984 with the construction of Tsing Yi Road West (Road TY1) for easy circulation of emergency vehicles. The road networks were further improved with the completion of Liu To Bridge, Road TY5 and Fung Shue Wo Road in 1987, and Road TY4 in 1988;
(ii) the construction of Tsing Yi North Bridge was completed in November 1987, with approach roads linking Tsing Yi to the mainland, thereby taking a larger part of the passenger load off Tsing Yi South Bridge, which is the bridge nearest to most of the petroleum installations; and
(iii) the construction of the Tsing Yi South fresh water service reservoir in Area 19 was completed in 1985; this serves to reinforce the piped water supply to industrial installations beyond the power station and improve the pressure in the mains in the area to a more satisfactory level.
(d) On land use planning, consultation zones have been defined for each hazardous installation within which other new developments are constrained. Government has also decided that in future commercial/residential development in Tsing Yi will be confined to the north and eastern part of the island, which is protected from the potentially hazardous installations (PHIs) on the south and the west shores of the island by the mountain ridge. Plans are also in hand to relocate two oil depots, that is, Mobil and China Resources Company (CRC) Nga Ying Chau away from the north and east shores.
The 1982 report also contained certain recommendations which Government did not
accept. They were that PHIs should be dealt with in a specific statutory framework; that a statutory Hazardous Installations Committee should be established and that PHIs in Tsing Yi should be removed to north Lantau.
And now, regarding the 1989 report, the recommendations of the 1989 report concern mainly three subjects -- improvements in land use planning, adoption of technical measures to improve the safety of the installations on Tsing Yi and adoption of various technical and traffic management measures to reduce transport risks.
On land use planning, the consultants confirmed the Government's decision that there should be no PHI development east of the Tsing Yi main ridgeline and that the ridgeline should be vigorously maintained to preserve the natural barrier between PHIs and most other development. The Administration has accordingly taken steps to ensure that the ridgeline stays. There are also plans in hand to move the three oil depots, namely, Hong Kong Oil, Mobil and CRC Nga Ying Chau in north and east Tsing Yi away from their present locations and I will mention this later in reply to Mrs. LAU's third point. The Tsing Yi Outline Development Plan is being revised and the revision will be taken further in the light of the 1989 report, the Port and Airport Development Study, studies on Route 3, Container Terminal 8 and other relevant
studies.
Fire Services Department together with the Gas Standards Office of the Engineering and Mechanical Services Department and the Environmental Protection Department are now discussing with the operators of installations to persuade them to adopt the technical safety measures, such as installation of gas leakage detection systems, and improvements to management systems, as recommended by the consultants. Where appropriate, these can be imposed upon the operators as licensing conditions under the Dangerous Goods Ordinance and Government is confident that all the recommended measures are in fact enforceable.
To reduce transport risks, Government is examining in detail the practicability of the consultants' recommendations. As a start, LPG vehicles will be given special approval to follow a shorter route off the island away from the local residents as far as possible.
To ensure that the recommendations of the 1989 report will be implemented effectively, an ad hoc inter-departmental steering group has been set up under the Lands and Works Branch to monitor progress of the follow up actions.
Finally, as for the relocation of depots, the Government intends to move the Mobil, Hong Kong Oil and Nga Ying Chau oil depots away from their present locations to better ones. Negotiations with Mobil to move to the southwest of Tsing Yi are going well, and I expect the conclusion will be announced very soon. Discussions with Hong Kong Oil on their future plans have also started, but I cannot now forecast the outcome. Discussions with CRC on their Nga Ying Chau depot will be resumed when the outcome of the study on Route 3 is available.
MRS. LAU: Sir, the 1989 report criticizes the Hong Kong Oil of having poor safety management and recommends in unequivocal terms that the Hong Kong Oil site should be closed since it is incompatible with nearby residential land use. Can the Secretary inform this Council why, despite such recommendation which carries with it a sense of urgency, the Administration still sees fit merely to discuss the matter with Hong Kong Oil instead of taking any concrete action?
SECRETARY FOR LANDS AND WORKS: Sir, it is because the consultants' recommendation, although strong, has no legal standing and the legal position is such that as preliminary to any removal exercise of Hong Kong Oil, adequate discussions must be held.
MR. TIEN: Sir, would Government inform this Council whether consideration has been given to actually purchasing back all blocks of Mayfair Gardens at market price from the residents, rather than paying the three oil companies an astronomical sum to have them relocated, the former being a less expensive option?
SECRETARY FOR LANDS AND WORKS: Sir, the overall economics of removing the oil depots to another site and regaining the very valuable land which they occupy may well be considerably better than the economics of trying to remove residents from Mayfair Gardens. Besides, it would involve an element of compulsion in the removal of
residents, for which there are no obvious statutory powers.
MR. PETER WONG: Sir, can the Secretary inform this Council why Government has not accepted the 1982 recommendation to form the Statutory Hazardous Installation Committee, and also, what channel of communication the Government has established
to enable the residents of Tsing Yi to express their fears and concern for their safety? We really feel that there has been a break down of communication between the government departments and the residents who are simply not told of developments.
SECRETARY FOR LANDS AND WORKS: Sir, the proposals to establish a statutory committee were obviously going to be complicated ones to legislate for. The Administration recognized the seriousness of the situation and the need for action rather than for lengthy consideration of putting a legal framework in place. For that reason, it was decided that the most effective action was not to accept that recommendation but to go for administrative measures.
Regarding the second part of the question, the Administration would respectfully disagree with Mr. WONG that the Tsing Yi residents are not kept in the picture. There has been continuous information on the state of the consultancy, the substance of the consultancy, and the things done about the various consultancies, which have been passed through the district board and residents' organizations to the residents. I would think there is little reason for the strong allegation made.
MR. CHEONG: Sir, in relation to the possible economic gains to Government through the recovery of possession of the land now being occupied by the oil depots, has the Secretary considered the fact that a new gas and oil depot is likely to be installed along the southern tip of the island, although separated by a mountain ridge? In that case, the land thus recovered would be so near to a new depot that the economic value might dissipate.
SECRETARY FOR LANDS AND WORKS: Sir, those issues have been fully considered.
MRS. LAU: Sir, in view of the previous concern which I mentioned, can the Secretary inform this Council whether it is at all possible to let us know when the discussions with the various parties will be concluded, so that we can see some action on the part of Government?
SECRETARY FOR LANDS AND WORKS: Sir, I am not, at present, in a position to give a
difinite answer.
MR. ANDREW WONG: Sir, could the Secretary inform us of the amount of money expected to be paid to Mobil, CRC and Hong Kong Oil in compensation, and the amount he expects to raise from the reuse of the land so recovered?
SECRETARY FOR LANDS AND WORKS: Sir, in spite of there having been an article on the subject in this morning's paper, in which I noticed my name being mentioned, the matter is at present the subject of a confidential paper being put to the Finance Committee and Mr. WONG will have an adequate opportunity to ask his question in that forum.
Follow-up action on death from wrong gas
3. DR. LEONG asked: In the light of the verdict in a coroner's inquest that the death of a patient in a hospital on 14 January 1989 was due to wrong supply of gas to that hospital, and of the recommendations made by the jury of that inquest, will the Administration inform this Council what action it intends to take :
(a) specifically in relation to the supplier of the wrong gas; and
(b) generally to ensure that the recommendations by the jury are implemented to prevent similar fatalities in future?
SECRETARY FOR SECURITY: Sir, legal action is being taken against the gas supplier under sections 10(a) and 14 of the Dangerous Goods Ordinance. The hearing has been set for 24 August in the Magistrate's Court.
The recommendations by the inquest jury can be broadly categorized as follows : (a) the establishment of an Academy of Medicine;
(b) the introduction of monitoring devices in hospitals;
(c) the establishment of a working party to conduct an overall review of the safety
systems and procedures of the gas supplier;
(d) the introduction of colour coding for containers; and
(e) other improvements relating to the organization, management and procedures of the gas supplier.
The Secretary for Health and Welfare has advised that careful consideration is being given to the establishment of an Academy of Medicine which would be responsible for the further training of doctors. The Administration's intentions will be announced in the near future.
As regards monitoring devices, shortly after the tragic incident, the then Director of Medical and Health Services, on 21 January 1989, issued a circular to all government, subvented and private hospitals, providing detailed guidelines on the supply and use of oxygen in hospitals and clinics. The Director of Hospital Services issued a further circular on 21 June 1989 to all hospital managements, drawing their attention to the recommendation of the inquest jury on the installation and use of monitoring devices for every operation involving general anaesthesia.
The Director of Fire Services is now liaising with relevant government departments and the gas supplier to set up a working party to conduct an overall review of the safety systems and procedures. The first meeting will be in early August. This working party will also be asked to examine other recommendations which should be implemented by the gas supplier and to consider appropriate monitoring arrangements by the Administration.
The recommendation to introduce legislation on colour coding for containers will be addressed by the separate working group which is already conducting a review of the Dangerous Goods Ordinance.
DR. LEONG: Sir, in his reply the Secretary indicated that the Director of Fire Services is now liaising with relevant government departments and the gas supplier to set up a working party. As the issue concerns safety measures in the use of medical gases, could the Secretary advise which departments will be involved in this working party and whether the membership will be made known to the public?
SECRETARY FOR SECURITY: Sir, the representative of the Director of Fire Services, who is the licensing authority for compressed gases under the Dangerous Goods Ordinance, will chair the working party. This is now being convened in liaison with the Attorney General's Chambers, the Lands and Works, Health and Welfare, and Economic Services Branches, the Environmental Protection Department, the Gas Standards Office of the Electrical and Mechanical Services Department, and the Pressure Equipment Division of the Labour Department, all of whom will nominate representatives. The Hong Kong Oxygen Company will also be represented and it is possible that their parent companies, L'Air Liquide and British Oxygen, will be involved in the internal review. The first meeting will take place, as I have said, Sir, in early August. DR. LEONG: Sir, will the Administration inform this Council how they would go about implementing the recommendations of the inquest, especially in relation to the principles concerning the gas supplier? And in this regard, I would like to stress that the company concerned is the sole supplier of such gases in Hong Kong.
SECRETARY FOR SECURITY: Sir, the Administration will go about this by means of the working party which will examine each of the riders attached to the verdict of the jury. The Director of Fire Services is the relevant authority for these matters under the Dangerous Goods Ordinance, other than for the Academy of Medicine, which is one of the first parts of the jury's recommendations, and the establishment of the colour coding for containers. It will be for the Director of Fire Services to receive the report of the working party, and any other matters arising from the deliberations of the working party will be referred to the appropriate government department or policy branch concerned. Copies of the minutes and the conclusions and
recommendations of the working party will, in any case, also be sent to the Secretary for Health and Welfare, the Attorney General and myself.
MR. PETER WONG: Sir, can the Secretary please confirm that all hospitals in Hong Kong, whether they be public, or subvented, or private, have these oxygen monitoring devices in operation in the operating theatres?
SECRETARY FOR SECURITY: Sir, I would like to ask my honourable friend, the Secretary for Health and Welfare, to answer that question.
SECRETARY FOR HEALTH AND WELFARE: Sir, my understanding from the Director of Hospital Services is that all hospitals which administer general anaesthesia are now equipped with oxygen monitoring devices, though not all are yet able to meet the recommended standards of provision in full. However, I understand that many hospitals are now placing orders for more machines.
Written answers to questions
Fiscal reserves
4. MRS. LAU asked: Will the Administration inform this Council of the total amount of the fiscal reserve maintained in Hong Kong as at the end of June 1989, how it is being invested and whether the Administration intends to periodically report to the general public on the state of the fiscal reserve or publish the accounts relating to the same?
FINANCIAL SECRETARY: Sir, because of the time necessary to close the monthly accounts, the latest figures available are as at 31 May 1989. The accumulated fiscal reserve at the end of May 1989 was $63.9 billion. Some of this is placed on deposit with banks in Hong Kong to cater for the more immediate cash requirements of government expenditure, but the bulk, $52.7 billion, has been transferred to the Exchange Fund in return for debt certificates. These debt certificates are interest bearing and the interest rate payable by the Exchange Fund to the General Revenue reflects the level of interest rates in the wholesale money market.
The Exchange Fund confines its investments to low risk marketable financial instruments and bank deposits denominated in the major international currencies. It also has a modest portfolio of Hong Kong dollar denominated debt including shareholdings in Hong Kong Telecommunications, the Cross Harbour Tunnel and HACTL. Any foreign exchange or interest rate risks involved are borne by the Exchange Fund and not the General Revenue. If the investments of the Exchange Fund attract a higher or lower rate of return than the interest rate paid to the General Revenue, the profit or loss is for the account of the Exchange Fund.
This arrangement, which has been in place for a number of years, ensures a stable
rate of return on the fiscal reserve for the benefit of the General Revenue and relieves it of any foreign exchange and other investment risks that might otherwise be incurred. In effect, the bulk of the fiscal reserve is placed "on deposit" with the Exchange Fund, earning a market rate of interest. At the same time, this puts additional resources at the disposal of the Exchange Fund to better enable it to carry out its function, as necessary, of maintaining the stability of the Hong Kong dollar.
The amount transferred to the Exchange Fund is published. The monthly accounts of the General Revenue Account and the major funds are published in the Government Gazette and the final accounts of Hong Kong are presented in the Director of Accounting Services report which is laid before this Council in the autumn of each year. This report shows details of the General Revenue Account and the various funds as well as a consolidated account. It also explains the accounting policies adopted in the accounts, significant items and the application of balances, including the fiscal reserve.
In this connection, since neither the General Revenue nor the Exchange Fund is a separate legal entity, it has been determined that the transfer of money from one to the other does not constitute a borrowing. The transfer, therefore, is not subject to the provisions in the Exchange Fund Ordinance restricting the powers of the
Financial Secretary when he borrows for the account of the Exchange Fund, such as the borrowing limit of $50 billion in section 3(4) of the Ordinance.
Members may recall that the borrowing limit was last raised by resolution in this Council on 11 March 1987 with the approval of the Secretary of State. It was agreed then that the limit had to be raised to accommodate further transfers from the General Revenue as the fiscal reserve grew. Subsequent extensive research on the legal
position carried out in connection with the proposal to issue Exchange Fund Bills has indicated that such transfers fall outside this limit. This subject is addressed in greater detail in the Appendix.
Appendix
Section 3(3) of the Exchange Fund Ordinance specifies that the Financial Secretary "..... may borrow for the account of the Fund either in Hong Kong or elsewhere on the security of any asset held by the Fund or on the General Revenue". The policy behind this provision, read in conjunction with the borrowing limit in
section 3(4), is to limit the power of the Financial Secretary to charge the assets of the fund or of the General Revenue as security for borrowing for the account of the Exchange Fund. The word "on" towards the end of section 3(3) (underlined above), however, had caused confusion and led to the argument that the borrowing limit in section 3(4) applied when the Financial Secretary "borrowed" from the General Revenue for the account of the Exchange Fund.
This argument has now been refuted because it has been determined that when money is transferred from the General Revenue Account to the account of the Exchange Fund, Government is merely transferring its assets from one of its accounts to another on the basis that the Financial Secretary will arrange for those assets to be returned to the General Revenue when required, and will account to the General Revenue for the interest payable whilst the assets are credited to the Exchange Fund.
Government as one legal entity cannot lend to itself. Since neither the Exchange Fund nor General Revenue has separate legal persona, it is not correct legally to consider a transfer from the General Revenue Account to the account of the Exchange Fund in terms of a lending/borrowing transaction. This view was further confirmed when research revealed that the word "on" was likely to have been a typographical error that crept in when the Ordinance was revised in 1951, and that the correct word should be "of". Section 3(3), therefore, should have read "may borrow ..... on the security ........ of the general revenue". In any case, even with the use of the word "on", the legal advice we have received is that it should be interpreted as "of" in the context of section 3(3) of the Exchange Fund Ordinance.
Since a change to the borrowing limit can only be introduced with the approval of the Secretary of State, the matter has been brought to his attention. Formal acceptance of the correct interpretation surrounding the borrowing limit has already been obtained from the Secretary of State.
Lawyers' proficiency in both official languages
5. MR. PETER WONG asked: In view of the present requirement to enact all new legislation in bilingual form, will the Government inform this Council what steps are being taken to ensure Hong Kong lawyers' proficiency in both languages?
ATTORNEY GENERAL: Sir, from 7 April 1989 and in accordance with the requirements of the Official Languages Ordinance, all new principal Ordinances, that is to say, Ordinances which stand on their own and which are not amendments to existing legislation are to be drafted in both English and Chinese. Work is also well underway within my Chambers upon the translation of existing legislation into Chinese.
Of themselves neither of these developments will make it necessary for the vast majority of lawyers to be proficient in both languages. In accordance with section 10B of the Interpretation and General Clauses Ordinance the English language text and the Chinese language text of a bilingual Ordinance are declared to be equally authentic. Accordingly, provided a lawyer can understand either the Chinese or the English version of an Ordinance he will be able to treat that version as accurate and legally valid.
Nevertheless, while most lawyers will not require proficiency in both languages it will be necessary for a relatively small number of lawyers, being legislative draftsmen, to acquire proficiency in both languages for the necessary work of translation and for original drafting of Bills in Chinese.
In recognition of that need a bilingual law team was established in the Law Drafting Division of my Chambers in 1986. Presently this team consists of seven draftsmen and 19 law translators. To achieve the Government's objective of having all of Hong Kong's legislation available in both English and Chinese by 1997 it will be necessary to expand this team. My Chambers are seeking competent bilingual law draftsmen and translators and every effort is being made to recruit appropriately qualified, bilingual lawyers and translators to join the Law Drafting Division.
Fire prevention for restaurants
6. MR. TIEN asked: With reference to the Secretary for Security's reply to a question I raised in this Council on 24 May 1989 and in view of the recent fire at a restaurant on Ma Tau Wai Road, which is already the second of its kind in the last two months and which led to six dead and 14 injured, will Government inform this Council :
(a) whether steps will be taken to tighten up existing controls, legislative or otherwise, on closed type external wall decoration as well as the minimum fire installation requirements for restaurants and other public premises and, if so, when;
and
(b) whether it is aware of the fact that many restaurants are operating without going through proper licensing procedures and hence adequate fire prevention installations, and how it intends to ensure the safety of customers of these restaurants in case of a fire?
SECRETARY FOR SECURITY: Sir, this Council was informed on 24 May that window openings were not essential means of access and escape in the case of multi-storey buildings and that staircases provided the main means of escape for occupants of multi-storey buildings and the main means of access for firemen in the event of a fire. Windows which have been boarded over externally for wall decoration or sign purposes in
restaurants should not be a problem if exit doors and means of escape are not obstructed and are maintained to serve their designed purpose.
This type of external boarding, however, can affect the movement of smoke and aggravate the spread of fire within the premises to make fire fighting more difficult. The Director of Fire Services has therefore been considering ways and means of abating this hazard and is now finalizing a series of measures which, among others, will require:
(a) the installation of an automatic sprinkler system for premises exceeding a specified area and where the average quantity of combustible substances exceeds a specified quantity; and
(b) the installation of a smoke extraction system or a stipulation that a certain percentage of the openable windows on the external wall of the buildings should not be obstructed by decoration.
When details are finalized, the industries will be consulted before the requirements are implemented. It is expected that the new requirements will take effect by the end of this year.
The operation of a restaurant without a licence is an offence under the Public Health and Municipal Services Ordinance and the operator is liable to prosecution. The licensing authorities are aware of the fact that some restaurants are operating without licences and will take legal action against them. Where the situation
constitutes a fire hazard, the Director of Fire Services will take action under section 9 of the Fire Services Ordinance. Following the amendment of the Public Health and Municipal Services Ordinance in October 1988, the licensing authorities are empowered to apply to court for closure orders to close the unlicensed premises. A phased programme has been drawn up by the enforcement departments to deal with the unlicensed premises. Until now, five closure orders have been executed.
Tsing Yi bridges
7. MR. LAM asked: In view of the present traffic congestion on Tsing Yi North Bridge as a result of the partial closure of Tsing Yi South Bridge for maintenance, will Government inform this Council whether consideration will be given to:
(i) opening fully the South Bridge between 7:00 a.m. to 9:00 a.m. to facilitate the speedy return of public vehicles to Tsing Yi; or
(ii) introducing effective measures to ease the congestion problem during the said period?
SECRETARY FOR TRANSPORT: Sir, to facilitate the bridge improvement works, the Tsing Yi bound lane of the Tsing Yi South Bridge is now closed 24 hours a day while the Kowloon bound lane remains open. The improvement work is in full swing. The surfacing of the South Bridge is being broken up, and about 3 000 holes are being drilled in the bridge deck for installing bolts to support the new anchorages for the prestressing cables. Access to the spine of the bridge is also frequently required for transporting steel platforms and other materials. The proposal to reopen the bridge during morning peak hours, that is, 7:00 - 9:00 a.m., is therefore not advisable on road safety grounds. Moreover, the improvement work can only be carried out during the single lane closure period. To reopen the lane will mean at least two extra months for carrying out the necessary works at an additional cost of $0.5 million plus possible claims for compensation from the contractor.
The bridge improvement works are expected to be completed in early 1990. In the meantime, an extensive traffic diversion scheme to maintain traffic flow and reduce congestion during the bridge works is in effect.
In addition, the following measures to further improve traffic have been decided after a special meeting between Kwai Tsing District Board members and representatives from relevant departments on 11 July --
(a) examining the provision of a bus lane on Tsing Yi Heung Sze Wui Road to improve the speed and reliability of bus services which have been affected by the current traffic diversion scheme;
(b) adding a 7:00 a.m. - 7:00 p.m. stopping prohibition zone along Cheung Fai Road (Tsing Yi seafront) to prevent goods vehicles queuing back to Tsing Yi Heung Sze Wui Road;
(c) adjusting the traffic light on the Kwai Tsing Road/Kwai Fuk Road junction to allow more vehicles to leave the Kwai Tsing Road roundabout;
(d) opening the access road leading to Riviera Garden to reduce the use of the Texaco Road roundabout for access; and
(e) on the section of Tsuen Wan Road between Tsing Yi Bridge and Tsing Tsuen Bridge, adding continuous white lines to separate the Kwai Chung bound traffic and Kowloon bound traffic to give a smooth flow to the Kowloon bound vehicles.
Traffic conditions in the area are being closely monitored. Efforts will continue to be made to contain traffic congestion until the completion of the bridge improvement works.
Castle Peak Hospital
8. MRS. LAM asked: Will Government inform this Council whether the Castle Peak Hospital is experiencing an acute shortage of medical and nursing staff and in the supply of clothing, linens and toilet papers for patients, and what active measures are being taken to rectify the position?
SECRETARY FOR HEALTH AND WELFARE: Sir, there is no acute shortage of doctors or nurses in Castle Peak Hospital at present. On 1 July 1989 there were 27 doctors working in Castle Peak Hospital against an establishment of 28 and 578 nurses against an establishment of 453. The workload of staff is however heavy because the number of patients now accommodated in Castle Peak Hospital is higher than the designed
capacity and the establishment of both doctors and nurses is currently being revised in line with actual requirements.
The supply of toilet paper to Castle Peak Hospital is adequate. Additional supplies can be made available if required.
It is recognized that the supply of clothing and linen items is sometimes inadequate in Castle Peak Hospital and other government hospitals. In order to improve the availability of supplies, the Hospital Services Department set up a working party in February this year to review the linen services and to recommend improvement measures.
Oversized advertisement signboards
9. MR. McGREGOR asked: In view of the potential threat to public safety caused by the proliferation of oversized advertisement signboards and the problems thus caused to district boards, will Government inform this Council whether it will consider introducing statutory control over the erection and maintenance of such signboards through a licensing system to be operated on a cost-recovery basis by district
officers in conjunction with the district boards under guidelines drawn up by relevant government departments?
SECRETARY FOR LANDS AND WORKS: Sir, the Government's policy as regards advertisement signboards (whatever their size) is to ensure that those signboards which might pose a threat to public safety are removed either by the owners themselves or, where necessary, by the Buildings Ordinance Office. There are sufficient legal powers to enable the Government to do so. Indeed, during the two years from 1 April 1987, the Dangerous Signs Unit of the Buildings Ordinance Office has caused the removal of over 4 000 dangerous signs. An elaborate licensing system would involve more money and more staff, and would not necessarily produce any better results. It is therefore not the intention to introduce such a system.
Illegal fund-raising activities
10. MR. HUI asked: In view of the recent increase in the number of cases of illegal
solicitation of donations and fund-raising activities conducted by bogus organizations, will the Government inform this Council:
(a) what channels are available for people to lodge their complaints about these activities;
(b) what actions can be taken to control these illegal activities; and
(c) what concerted efforts can government departments make to protect the public from being deceived by these bogus organizations?
SECRETARY FOR SECURITY: Sir, the simplest and most effective channel of complaint is to the nearest policeman or police station, pointing out the offender or giving sufficient evidence to enable the police to make a prosecution. Under section 4(17) of the Summary Offences Ordinance, Cap. 228, any person who:
"organizes, provides equipment for, or participates in any collection of money or sale of badges in a public place save under and in accordance with a permit in writing issued by the Director of Social Welfare"
commits an offence and is liable to a fine of $500 or three-month imprisonment. If the police come across such persons in the course of their duties, or if a complaint is laid by the public, then under this section they can and do make prosecutions.
Apart from mounting prosecutions the police also issue warnings to the public whenever cases of illegal solicitation are reported.
Motions
INTERPRETATION AND GENERAL CLAUSES ORDINANCE
THE CHIEF SECRETARY moved the following motion:
"That with effect from 1 September 1989 --
(a) the functions exercisable by the Secretary for Administrative Services and Information by virtue of the enactments specified in the second column of Schedule
1 be transferred --
(i) in the cases specified in Part I of that Schedule, to the Secretary for Recreation and Culture; and
(ii) in the cases specified in Part II of that Schedule, to the Chief Secretary;
(b) the enactments specified in the second column of Schedule 1 be amended in the manner specified opposite thereto in the third column of that Schedule;
(c) the functions exercisable by the Secretary for Municipal Services by virtue of the enactments specified in the second column of Schedule 2 be transferred to the Secretary for Recreation and Culture;
(d) the enactments specified in the second column of Schedule 2 be amended in the manner specified opposite thereto in the third column of that Schedule;
(e) the functions stated to be exercisable by the former Secretary for Home Affairs by virtue of sections 3(1)(i) and 11(2) of the Miscellaneous Licences Ordinance (Cap. 114) be transferred to the new Secretary for Home Affairs;
(f) the functions stated to be exercisable by the former Secretary for Home Affairs by virtue of section 11(1) of the Miscellaneous Licences Ordinance (Cap. 114) be transferred to the Secretary for Recreation and Culture; and
(g) section 11(1) of the Miscellaneous Licences Ordinance (Cap. 114) be amended by repealing "Home Affairs" and substituting "Recreation and Culture".
SCHEDULE 1
FUNCTIONS OF THE SECRETARY FOR ADMINISTRATIVE
SERVICES AND INFORMATION
PART I
ENACTMENTS IN RESPECT OF WHICH FUNCTIONS OF
THE SECRETARY FOR ADMINISTRATIVE SERVICES
AND INFORMATION ARE TRANSFERRED TO THE
SECRETARY FOR RECREATION AND CULTURE
Item Enactment Amendment
1. Television Ordinance In section 17E(6)(b)(ii), repeal (Cap. 52) "Administrative Services and
Information" and substitute
"Recreation and Culture".
2. Places of Public In section 7(1)(g), repeal Entertainment Ordinance "Administrative Services and
(Cap. 172) Information" and substitute
"Recreation and Culture".
3. Film Censorship In section 2(1), in the definition of Ordinance 1988 "Secretary", repeal "Administrative (25 of 1988) Services and Information" and
substitute "Recreation and Culture".
PART II
ENACTMENTS IN RESPECT OF WHICH FUNCTIONS OF
THE SECRETARY FOR ADMINISTRATIVE SERVICES
AND INFORMATION ARE TRANSFERRED TO THE
CHIEF SECRETARY
Item Enactment Amendment
1. Companies Ordinance In section 71A(3)(a), repeal (Cap. 32) "Secretary for Administrative
Services and Information" and
substitute "Chief Secretary".
2. Transfer of Businesses In section 5(3)(ii), repeal "Secretary (Protection of Creditors) for Administrative Services and Ordinance (Cap. 49) Information" and substitute " Chief Secretary".
3. Multi-storey Buildings In section 5(3), repeal "Secretary for
(Owners Incorporation) Administrative Services and
Ordinance (Cap. 344) Information" and substitute "Chief Secretary".
SCHEDULE 2
ENACTMENTS IN RESPECT OF WHICH FUNCTIONS OF
THE SECRETARY FOR MUNICIPAL SERVICES ARE
TRANSFERRED TO THE SECRETARY FOR
RECREATION AND CULTURE
Item Enactment Amendment
1. Antiquities and Monuments In section 2, in the definition of Ordinance (Cap. 53) "Authority", repeal "Municipal
Services" and substitute "Recreation
and Culture".
2. Books Registration In section 2, in the definition of Ordinance (Cap. 142) "Secretary", repeal "Municipal Services" and substitute "Recreation
and Culture".
3. Dangerous Goods (a) In regulation 184, repeal (General) Regulations "Municipal Services" and
(Cap. 295, sub. leg.) substitute "Recreation and Culture"; and
(b) in the Second Schedule, repeal
"Municipal Services" where it
occurs in relation to regulation 59 and substitute "Recreation and Culture"."
CHIEF SECRETARY: Sir, I rise to move the motion standing in my name on the Order Paper. This motion arises from the proposal to create a Recreation and Culture Branch to improve co-ordination of the activities of the various organizations involved in the field of sports, recreation and culture. The new branch will take over some of
the existing responsibilities of the Municipal Services Branch, such as culture and recreation, sports, antiquities and country parks management, and some of the existing responsibilities of the Administrative Services and Information Branch, such as broadcasting, entertainment and censorship policy. The remainder of these two branches' responsibilities will be transferred to other branches and units. The Administrative Services and Information Branch will cease to exist on 1 September 1989.
To enable the new Secretary for Recreation and Culture to assume his role with effect from 1 September 1989, certain statutory functions need to be transferred to him. These statutory functions are set out in the motion and the attached schedules.
Sir, I beg to move.
Question on the motion proposed, put and agreed to.
TELEPHONE ORDINANCE
THE FINANCIAL SECRETARY moved the following motion:
"That the Schedule to the Telephone Ordinance be amended --
(a) by adding after item 11 of Part VII --
"12. For an emergency alert telephone (inclusive of one radio trigger unit and one confirmation unit) --
(a) rental $1,692.00 per annum.
(b) each additional radio
trigger unit $324.00 per annum.
(c) each additional
confirmation unit $204.00 per annum.
(d) connexion $200.00. (see Notes 5 and 6.)
(e) connexion of extension
wiring from the main
socket $275.00.
(f) removal within the same
building for which
rewiring is required $275.00.
(g) removal within the same
building for which no
rewiring is required $140.00.
(h) removal to a different
building $200.00 (see Note 6.)";
(b) by adding after Note 4 --
"5. In item 12 a fee of $140 will be charged for the connexion of each additional radio trigger unit or confirmation unit.
6. In item 12 no connexion or removal fee will be charged for the system installed or removed at the same time as the related exchange line or related internal extension if no extension wiring for the main socket is required."."
FINANCIAL SECRETARY: Sir, I move the motion standing in my name on the Order Paper.
The Hong Kong Telephone Company proposes to supply a new item of equipment, known as an Emergency Alert Telephone, for elderly and handicapped customers. In the event of an emergency, the telephone has the facility to dial an alert message to up to four telephone numbers on receipt of an alarm signal from a portable radio trigger unit carried on the person of the subscriber. Once one of the telephone numbers has received the alert message, a confirmation unit sounds a reassurance tone. This new piece of equipment will be provided on a non-profit making basis.
Under section 26(2) of the Telephone Ordinance, all amendments to the schedule of charges of the Telephone Ordinance require a resolution of this Council. My motion before the Council seeks to add to the schedule charges for the Emergency Alert Telephone. The Administration has examined the proposed charges as set out in the
resolution accompanying this motion and can confirm that the instrument will be provided on a non-profit making basis.
Sir, I beg to move.
At this point Mr. David LI declared his interest as deputy chairman of the Hong Kong Telecommunications Ltd.
Question on the motion proposed, put and agreed to.
INTERPRETATION AND GENERAL CLAUSES ORDINANCE
THE SECRETARY FOR LANDS AND WORKS moved the following motion: "That with effect from 1 September 1989 --
(a) the functions exercisable by the Secretary for Lands and Works by virtue of the enactments specified in column 2 of Schedule 1 be transferred to the Secretary for Planning, Environment and Lands;
(b) the enactments specified in column 2 of Schedule 1 be amended by repealing "Secretary for Lands and Works" wherever it occurs and substituting "Secretary for Planning, Environment and Lands";
(c) the functions exercisable by the Secretary for Lands and Works by virtue of the enactments specified in column 2 of Schedule 2 be transferred to the Secretary for Works;
(d) the enactments specified in column 2 of Schedule 2 be amended by repealing "Secretary for Lands and Works" wherever it occurs and substituting "Secretary for Works";
(e) the functions exercisable by the Secretary for Health and Welfare by virtue of the enactments specified in column 2 of Schedule 3 be transferred to the Secretary for Planning, Environment and Lands;
(f) the enactments specified in column 2 of Schedule 3 be amended by repealing "Secretary for Health and Welfare" wherever it occurs and substituting "Secretary for Planning, Environment and Lands";
(g) Form 5 of the Second Schedule and the Fifth Schedule to the Air Pollution Control (Specified Processes) Regulations (Cap. 311 sub. leg.) be amended by repealing " " in the Chinese version and substituting " ";
(h) the First Schedule to the Water Pollution Control (General) Regulations (Cap. 358 sub. leg.) be amended --
(i) by repealing "Pollution Control (Liquid and Solid Wastes) Division, 9 Floor, Yau Ma Tei Car Park Building, 250 Shanghai Street, Kowloon," and substituting "Liquid Waste Control Group, 25th Floor, Southorn Centre, 130 Hennessy Road, Wanchai,"; (ii) in the Chinese version, by repealing " ", " " and "" and substituting respectively " ", " " and " ".
SCHEDULE 1
ENACTMENTS IN RESPECT OF WHICH FUNCTIONS OF THE SECRETARY
FOR LANDS AND WORKS ARE TRANSFERRED TO
THE SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
Item Enactment
1. Land Development Corporation Ordinance (Cap. 15), section 2. 2. Lifts and Escalators (Safety) Ordinance (Cap. 327), section 8A and 11F.
3. Electricity Networks (Statutory Easements) Ordinance (Cap. 357), section 2, 3, 7 and 9.
4. Electricity Networks (Statutory Easements) (Rectification of Approved Scheme) (Consolidation) Order (Cap. 357 sub. leg.), paragraph 2.
SCHEDULE 2
ENACTMENTS IN RESPECT OF WHICH FUNCTIONS OF THE SECRETARY
FOR LANDS AND WORKS ARE TRANSFERRED
TO THE SECRETARY FOR WORKS
Item Enactment
1. Air Armament Practice Ordinance (Cap. 194) Second Schedule. 2. Defences (Firing Areas) Ordinance (Cap. 196), Second Schedule.
SCHEDULE 3
ENACTMENTS IN RESPECT OF WHICH FUNCTIONS OF THE
SECRETARY FOR HEALTH AND WELFARE ARE
TRANSFERRED TO THE SECRETARY FOR PLANNING,
ENVIRONMENT AND LANDS
Item Enactment
1. Air Pollution Control Ordinance (Cap. 311), section 2.
Item Enactment
2. Air Pollution Control (Specified Processes) Regulations (Cap. 311 sub. leg.), Form 5 of the Second Schedule, Fourth Schedule and Fifth Schedule.
3. Waste Disposal Ordinance (Cap. 354), sections 2, 3, 4, 5, 6, 7 and 35. 4. Water Pollution Control Ordinance (Cap. 358), section 2.
5. Water Pollution Control (General) Regulations (Cap. 358 sub. leg.), First Schedule.
6. Noise Control Ordinance 1988 (75 of 1988), section 2.
SECRETARY FOR LANDS AND WORKS: Sir, I rise to move the motion standing in my name
on the Order Paper. This motion arises from the proposed reorganization of the Lands and Works Branch of the Government Secretariat into two branches -- the Planning, Environment and Lands Branch and the Works Branch -- as a result of which the Lands and Works Branch will cease to exist.
To enable the new Secretary for Planning, Environment and Lands and the new Secretary for Works each to assume his respective role with effect from 1 September 1989, certain statutory functions need to be transferred to each of them. These statutory functions include those presently exercisable by the Secretary for Health and Welfare in respect of pollution matters, responsibility for which has rested with the Secretary for Lands and Works since 1 November 1988. The functions are set out in the motion and the attached schedules.
The staff resources to establish the two new branches which have been recommended by the Establishment Sub-committee will be considered later today by the Finance Committee of this Council.
Sir, I beg to move.
Question on the motion proposed, put and agreed to.
First Reading of Bills
BANKING (AMENDMENT) (NO. 2) BILL 1989
ARCHITECTS REGISTRATION BILL 1989
ENGINEERS REGISTRATION BILL 1989
ROAD TRAFFIC (AMENDMENT) (NO. 3) BILL 1989
Bills read the First time and ordered to be set down for Second Reading pursuant to Standing Order 41(3).
Second Reading of Bills
BANKING (AMENDMENT) (NO. 2) BILL 1989
THE FINANCIAL SECRETARY moved the Second Reading of: "A Bill to amend the Banking Ordinance."
He said: Sir, I move that the Banking (Amendment) (No. 2) Bill 1989 be read the Second time.
Following a comprehensive review of the three-tier system of deposit-taking institutions, which included extensive consultation with the banking sector, the Government announced, in March this year, certain proposed changes to that system. The main purpose of this Bill is to amend the Banking Ordinance to give effect to those changes. The opportunity is also taken to incorporate other amendments to overcome problems and remove uncertainties identified in the working of the Ordinance.
Amendments to the three-tier system
Use of banking names
One of the principal features of our banking legislation is the tight control exercised over the use of banking names and descriptions. At present only those in the first tier, licensed banks, are allowed the privilege of describing themselves as banks. Those in the other two tiers, licensed and registered deposit-taking companies, cannot do so and this has inhibited those who wish to develop their business overseas. Such institutions, which may wish to operate internationally, find the term "deposit-taking company" either not understood or pejorative, and have
experienced difficulty in getting recognized and treated as credit-worthy, well supervised institutions.
To overcome these difficulties, the Bill replaces the existing categories of licensed deposit-taking company and registered deposit-taking company in the Ordinance with the categories of restricted licence bank and deposit-taking company. Clause 39 amends section 97 to provide that restricted licence banks may use the word "bank" or its derivatives in describing their business, provided that this is qualified by such adjectives as "restricted licence", "merchant", "investment", "wholesale", or a term specified by the Commissioner of Banking by notice in the Gazette. Overseas incorporated banks authorized as restricted licence banks, and operating in branch form, would be allowed to use their corporate names which include the word "bank", provided these are qualified in equal prominence by the words
"restricted licence bank" next to them.
Minimum capital requirements
To ensure that only well capitalized institutions are entrusted with public deposits, the minimum capital requirement for the registration of new deposit-taking companies has already been increased from $10 million to $25 million as from 10 March 1989. To reflect the additional status and privileges of the restricted licence banks, and taking acccount of inflation over the past few years, clause 12 requires these institutions to have a paid-up capital of $100 million as against the present requirement of $75 million for licensed deposit-taking companies. Existing licensed deposit-taking companies will have a grace period of two years from 10 March 1989 to comply with the new requirement. Consequent upon this increase, clause 7 amends section 18 to raise the minimum capital level for licensed banks from $100 million to $150 million to reflect the higher capital requirement appropriate to licensed banks.
Power to obtain information
Section 63 of the Banking Ordinance empowers the Commissioner of Banking to require information from authorized institutions if such information is "necessary for the proper understanding of the financial position of the institution". This is considered to be too restrictive. To enable the commissioner to discharge his statutory responsibilities effectively, he needs to have relatively unfettered power to obtain information from authorized institutions and their related companies. Clause 26(a) therefore amends section 63(2) to empower the commissioner to require any authorized institution or its subsidiaries to submit to him information that may reasonably be required for the exercise of his functions under the Ordinance.
Maximum exposure of an authorized institution
Section 81(1)(b)(i) of the Banking Ordinance provides that the financial exposure of an authorized institution to two or more companies which are subsidiaries of the same holding company shall not exceed an amount equivalent to 25% of the paid-up capital and reserves of the institution. Since the term "the same holding company" in the section includes authorized institutions, the limitation on financial exposure contained in the section therefore applies to exposure of authorized institutions to their own subsidiaries. It follows from this that a bank cannot lend more than
25% of its own capital to its own subsidiaries, even though these are subject to the commissioner's consolidated supervision. To remove this anomaly, clause 33 amends section 81 to provide that an authorized institution may be exempted from section 81 (1)(b)(i) where the institution is itself the controller of the subsidiaries
concerned, but that such an exemption shall be subject to the prior approval of the commissioner and to such conditions as he may think proper to attach thereto. This discretion is intended to be used sparingly, and where the commissioner is satisfied that no credit risk on a group basis will exceed the 25% limit.
Appeals
Following a breach of either the specified capital adequacy ratio or the specified liquidity ratio, the commissioner may, after discussing the matter with the institution, require it to take such remedial action as he considers necessary. Failure to comply with the commissioner's direction is a criminal offence. At present, the institution can appeal only to the Financial Secretary against the commissioner's direction. Elsewhere in the Ordinance, appeals against the commissioner's use of his powers, where non-compliance is a criminal offence, lie to the Governor in Council. For the sake of consistency, clauses 41 and 43 amend sections 100 and 104 respectively to replace the Financial Secretary with the Governor in Council as the appeal body.
Official secrecy
The requirement to preserve and aid in preserving secrecy as provided under section 120(1)(a) applies only to those specified persons presently exercising functions under the Ordinance. It is considered important to ensure that all those who have exercised such functions in the past but do not presently do so are similarly restricted. This category includes retired public officers, professionals and others whose contracts have expired. Clause 46(b) therefore extends the secrecy obligation to all those who have at any time obtained relevant information in the course of exercising any function under the Ordinance.
Other amendments
Sir, the Bill also proposes a miscellany of technical amendments to clarify meanings and ensure consistency between various sections of the Ordinance.
The principal proposals in the Bill have been discussed with and are supported by the Banking Advisory Committee and the Deposit-taking Companies Advisory Committee.
Sir, I move that the debate on this motion be adjourned.
Question on the adjournment proposed, put and agreed to.
ARCHITECTS REGISTRATION BILL 1989
THE SECRETARY FOR LANDS AND WORKS moved the Second Reading of: "A Bill to provide for the registration of architects and disciplinary control of the professional activities of registered architects, and for related matters."
He said: Sir, I rise to move the Second Reading of the Architects Registration Bill 1989 and will at the same time speak to the Engineers Registration Bill 1989, the Second Reading of which I will be moving later.
The need for professional registration has been raised in this Council on several previous occasions. In supporting registration of professional architects and engineers, the administration has recognized, with the professions, a certain confusion in the public mind as to the difference between the various engineering disciplines, and the difference between qualified architects and those who call themselves architects but who may not necessarily be professionally qualified. The first objective of the Architects Registration Bill 1989 and the Engineers Registration Bill 1989 is therefore to assure the public that those who profess to be professionally qualified architects and engineers have indeed received the appropriate training and are competent to practise in Hong Kong. The Administration and the professions involved also believe that this legislation will serve to enhance and maintain professional standards.
Registration of those qualified will not be compulsory, but there will be obvious benefits accruing from the use of the title "registered architect" or "registered professional engineer". The Engineers Registration Bill requires that a registered professional engineer should specify the discipline in which he or she is qualified, so that there is no doubt as to the actual field of expertise of the individual
concerned. Nevertheless, professionals who are not registered will still be
permitted to practise in Hong Kong providing that they do not imply that they are registered. The main requirements for registration are that the person is ordinarily resident and has at least one year's professional experience in Hong Kong, in addition to meeting the relevant academic and professional training standards. Registration initially will not be linked to the right to carry out statutory functions under the Buildings Ordinance, although the Administration can see potential benefits in this application and this will be something to be considered once the registration system has become well established.
The introduction of registration does not mean there will be a "closed shop" or that the professional institutes will be able to operate restrictive practices. The Bills provide for registration to be administered by Registration Boards which are appointed by the councils of the institutes but are independent of the professional institutes in our operation. The functions and powers of the boards are set out in clauses 8, 9 and 10 of the Architects Registration Bill and 7, 8 and 9 of the Engineers Registration Bill. Provision is made for a government appointee to each board. The Administration is confident that the composition of the boards will provide the right balance and the necessary degree of self regulation.
If a registered professional loses for whatever reason his qualification for registration, his name may be removed from the register. In the event that a registered professional commits a disciplinary offence the Bill provides for investigation by an enquiry committee which may result in removal of the professional's name from the register, either permanently or for a specified period. Alternatively the committee may order some form of reprimand. As a safeguard, provision is made for appeal to the Court of Appeal against disciplinary orders.
The Hong Kong Institution of Engineers has already been incorporated under the Hong Kong Institution of Engineers Ordinance 1975. It was intended that a private Bill to incorporate the Hong Kong Institute of Architects would be presented to the Council in this Session, but in the event this has not been possible. In presenting the Architects Registration Bill 1989 I should therefore emphasize that its enactment will depend on the enactment of the private Bill. I understand that the private Bill will be presented early in the next Session.
Sir, I move that the debate be now adjourned.
Question on the adjournment proposed, put and agreed to.
ENGINEERS REGISTRATION BILL 1989
THE SECRETARY FOR LANDS AND WORKS moved the Second Reading of: "A Bill to provide for the registration of professional engineers, the recognition of disciplines within the profession and disciplinary control of the professional activities of registered professional engineers, and for related matters."
He said: Sir, I rise to move the Second Reading of the Engineers Registration Bill 1989. When speaking on the Architects Registration Bill a moment ago I also covered the main points in this Bill.
Sir, I move that the debate be now adjourned.
Question on the adjournment proposed, put and agreed to.
ROAD TRAFFIC (AMENDMENT) (NO. 3) BILL 1989
THE SECRETARY FOR TRANSPORT moved the Second Reading of: "A Bill to amend the Road Traffic Ordinance."
He said: Sir, I move the Second Reading of the Road Traffic (Amendment) (No. 3) Bill 1989.
This Bill provides that regulations made under section 7 of the Road Traffic Ordinance may empower the Commissioner for Transport to specify the design, construction, size, colour, form and positioning of any destination indicators, notices or signs displayed in public service vehicles and insignia worn by the operators of such vehicles.
The main purpose is to empower the commissioner to specify the display and positioning of fare tables inside taxis. At present, fare tables are normally displayed at the front panel inside taxis where it is difficult for back seat passengers to read. This has sometimes led to disputes between passengers and drivers and complaints of overcharging. The proposed regulation will ensure that passengers are better and more clearly informed of the approved taxi fare scales,
thus reducing likely disputes with taxi drivers. The opportunity is also taken to specify the display of destination indicators, notices and signs in public service vehicles such as public light bus to ensure uniformity of practice by the trade and for better public information.
The Transport Advisory Committee has been consulted and supports these proposals.
Upon passage of the Bill, the Road Traffic (Public Service Vehicles) Regulations will be amended accordingly. The Transport Department will consult the public service vehicles trade on the specifications, allowing sufficient time for the operators to comply with the specifications before the new requirements are enforced.
Sir, I move that the debate on this motion be now adjourned.
Question on the adjournment proposed, put and agreed to.
LEGAL AID (AMENDMENT) BILL 1989
Resumption of debate on Second Reading which was moved on 28 June 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
COMPANIES (AMENDMENT) BILL 1989
Resumption of debate on Second Reading which was moved on 5 July 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
HONG KONG INDUSTRIAL ESTATES CORPORATION (AMENDMENT) BILL 1989 Resumption of debate on Second Reading which was moved on 5 July 1989
At this point Mr. Stephen CHEONG declared his interest as chairman of the Hong Kong Industrial Estates Corporation.
Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
INLAND REVENUE (AMENDMENT) (NO. 3) BILL 1989
Resumption of debate on Second Reading which was moved on 24 May 1989 Question on Second Reading proposed.
MR. PETER POON: Sir, I welcome the Inland Revenue (Amendment) (No. 3) Bill 1989. Our existing salaries tax system treats a married woman's income as that belonging to her husband for the purpose of calculating tax liability. This antiquated system is based on a principle that dates back to the earliest days of income tax in 1805 in the United Kingdom and it produces results which are no longer acceptable today: there has been considerable public pressure in the past few years for a change to the system. The source of complaint about the system is two-fold. First, married couples both earning salaries have to shoulder a heavier tax burden than two single taxpayers earning the same level of aggregate income. Such additional burden totals hundreds of million of dollars a year and has been referred to grudgingly by some as the "marriage tax" for many years. Secondly, it is considered that the system does not give proper recognition to the privacy and independence in the tax affairs of married women.
The Administration had been under considerable pressure both from the public and from OMELCO in the last few years for introducing a new system which would allow income of married couples to be charged to tax separately. The Financial Secretary, in his speech concluding the 1988-89 Budget speech, finally agreed to introduce separate
taxation for working wives as soon as practicable. As an interim measure to enable technical procedures to be worked out, he introduced the working wife allowance. The present Bill gives effect to the Financial Secretary's undertaking.
The Legislative Council ad hoc group set up to study the Bill received six representations which contained many helpful suggestions. We had several meetings with the Administration. A number of issues have been raised for discussion and have been amicably resolved. Consequently, we have agreed to a number of Committee stage amendments which, in our view, are improvements to the Bill. Despite the complexity of the matter, the Bill is generally considered to be well drafted.
I would now like to speak briefly on two points which have been raised during the deliberations of the ad hoc group. I am sure other speakers will refer to them in greater detail.
The first concerns the criticism regarding the unnecessary complication of our tax system. OMELCO have considered the issue at great length for some years and decided that such complexity is unavoidable to address the changing circumstances of our society, especially when more and more working women feel that their status as an independent taxpayer should be respected and many of them object strongly to the unfair tax burden under the present system.
The second point concerns the working wife allowance. We have received a submission from the Hong Kong Federation of Trade Unions requesting the retention of the allowance on the grounds that certain two-income families, especially those in the lower income group, would be subject to a heavier tax burden. Whilst we fully
sympathize with this group of taxpayers, we have fully considered and generally accepted the arguments of the Administration that as the allowance was introduced only as an interim measure, comparison of the tax burden should therefore be made with that before the allowance was introduced, and the continuation of the allowance would work against the principle of equity since two-income families would then be enjoying more tax benefits than single income families with similar levels of income. Perhaps, the answer to the problem facing the lower income group should be addressed by more generous adjustments to the basic personal allowance aiming at alleviating the tax burden on the lower income group in general.
In examining the Bill, we have been very conscious of the fact that although no system of tax can work to the advantage of every taxpayer, it should be as equitable
as possible. We have therefore tried to ensure that no married couple would be worse off under the new system compared to the situation before the introduction of the working wife allowance. Suitable amendments to the Bill will be made to this effect. The Administration has really done a great deal of work and research and has been reasonable in its approach in granting relief in appropriate circumstances. They should be congratulated for having performed such a difficult task.
Finally, I wish to state that apart from certain transitional provisions, the new system of separate assessment will apply to final Salaries Tax Assessment for the year of assessment 1989-90, that is, to salaries earned for the year commencing 1 April 1989. I understand that relevant practice notes will be issued by the
Commissioner of Inland Revenue as soon as possible.
Sir, with these remarks, I support the Bill.
MRS. FAN: Sir, the debate on whether married women should have their salaries assessed separately from their spouses has gone on in this Council for a decade. Numerous Councillors have called for separate taxation so that the privacy and independence of the married women's income can be preserved, and that couples would not be required to pay more tax, as a family unit than would two single individuals with the same income. At the beginning, the Administration was not sympathetic to this view at all. When pressed, in 1983, the then Financial Secretary made some peripheral
adjustments to the tax liability which allowed the married women to be responsible for the portion of tax levied on her income, but the joint assessment system on the aggregated salaries of the couple remained. The debate continued. As time goes by, more and more tax administrations adopted separate assessment for married couples. By 1987, there was virtually unanimous support among OMELCO Members for separate taxation. In his 1988-89 Budget speech, the Financial Secretary introduced a working wife allowance of up to $15,000 and indicated that he would consider further how separate taxation for working wives might best be introduced. While the working wife allowance was welcomed as an interim measure, many Members, including myself, were looking for a firm commitment on the implementation of separate taxation, because while the benefit is important, the principle of equitable treatment for the married women is equally important. We were therefore very pleased when the Financial
Secretary in his reply gave a firm commitment with 1990 as the target date for implementation. The long drawn out debate of a decade finally comes to an end.
Sir, the Inland Revenue (Amendment) (No. 3) Bill 1989 is a complicated piece of legislation, as the Financial Secretary rightly predicted in 1988. However, I would rather pay the price of a slightly more complex tax system in order to remove the historical vestige that a wife is not a legal person separated from the husband and to uphold the principle of equity, privacy and independence for the working wife. I do not believe that a working wife allowance is sufficient to enable married women to exercise independent control of their taxation affairs, if they so wish; nor is it fair for their spouse to be landed with their tax bill.
While I appreciate that the Hong Kong Government will lose significant revenue if this Bill is passed into law, one should remind oneself who the beneficiaries of this legislation will be. They belong to the middle income group whose joint annual earning ranges from $170,000 to $330,000. These people are mainly young
professionals and middle management. They are the sandwich class, who are often overlooked in our social and tax policies. It is only fair that they should also benefit occasionally. Furthermore, separate taxation will also serve to encourage married women to join our work force, and in turn, help to alleviate the labour
shortage problem.
When separate taxation for working wives come into effect, the working wife allowance will cease. The Hong Kong Federation of Trade Unions has pointed out that for a certain group of married couples, of comparatively lower income, this means a larger tax bill ranging from a few hundred to over two thousand dollars. The federation therefore requested the retention of the working wife allowance. While I am sympathetic to these couples, I have doubts as to whether it is appropriate to retain the allowance, which is an interim measure for separate taxation. An interim measure must cease to operate when the complete package comes into being. Rather, I would suggest, as my honourable friend Mr. Peter POON has suggested, that the Administration should consider the possibility of an appropriate increase in the level of basic personal allowances in the next Budget, in order to give some relief to this particular group.
Sir, I would like to take this opportunity to congratulate the Financial Secretary and the Commissioner of Inland Revenue for their sterling effort in introducing this Bill into this Council on schedule. Sir, I have pleasure to support the motion.
MR. TAM (in Cantonese): Sir, in response to public demand the Government proposes
amendments to the existing Inland Revenue Ordinance to allow members of the public to file combined or separate tax returns. Such a move is undoubtedly worthy of our support. However, I must point out some injustice in this Bill which overlooks the vertical aspect of equity in the allocation of resources in the society. I consider it necessary to take the equity factor into full account at the time of formulating taxation policy, because social justice is a very important goal in social development.
However, on careful scrutiny of the Bill I have found that the Bill is not bringing any benefit to the lower income group. In comparison with the existing Inland Revenue Ordinance, the Bill will even cause economic loss to them.
The reason is that while this amendment Bill allows married couples to exercise the right of opting for separate assessment, it removes the working wife tax allowance which they enjoyed in the past one year. Under these circumstances taxpayers of the lower income group will have to pay more tax to the Government and thus their financial burden will become heavier. I would like to take this opportunity to point out two very important features of the separate taxation system for husband and wife in this Bill:
Firstly, a moderate progressive taxation system has been adopted for salaries tax in Hong Kong, that is, the higher the personal income, the higher the tax rate. The greater the difference between the income levels of the husband and wife, the greater will be the proportion of the total family income accounted for by the spouse earning a higher salary, who consequently will have to face a relatively higher tax rate. As a result the actual tax burden of this family will be heavier than the other family with similar aggregated income but in which the husband and wife are having approximately the same salaries. In other words, separate tax assessments will
benefit those families with husbands and wives earning approximately the same level of income.
Secondly, in the case of two families with husband and wife earning equal share of income but the total family incomes being different, the tax burden of the family with a lower total income is significantly eased under the existing taxation system because the working wife tax allowance enjoyed by this family represents a significant percentage of its aggregated income. On the contrary, under the new system this family will not benefit very much from separate taxation because its total family income is already rather low. On balance, a comparison between the new system and the existing one reveals that the lower income families will somewhat lose out because of the new system. Without any substantive data, it is impossible to gauge accurately
the effects of the new system on taxpayers, but basing upon the aforesaid two features and other data available, we can assess the impact of the new system upon the taxpayers. The computation of salaries tax liability under the proposed and existing systems reveals that where the husband and wife, with no children or dependant parents, earn the same level of income and their annual total income is below $140,000, they will have to pay more tax under the new system. In other words, should each spouse of the family earn less than $5,800 a month, they are liable to pay more tax. The median income of employees in Hong Kong in the first quarter of 1989 is only $4,4591,
indicating that over half of our employees are earning less than $5,800 a month. Thus many families may have to pay more tax as a result of their low income. This is indeed a perfect irony. The above comparison is only based on the presumption that husband and wife are earning the same level of income. Under the new tax regime, the greater the difference of income between husband and wife, the more unfavourable the new system will be. Thus, I believe my estimates on the unfavourable effects of the new system are already very conservative. It is evident that the working wife allowance is of paramount importance to low income families.
To safeguard the interests of the affected families, I am of the opinion that in the implementation of separate taxation, taxpayers should be allowed to opt for separate or combined assessments, and those families who elect joint assessment should also be entitled to the working wife allowance. Apart from preventing the decline of living standard of the low income groups and the aggravation of uneven distribution of wealth in our society, the working wife allowance also serves to offset to some extent the additional expenses of a working mother. It is a kind of incentive to encourage married women to join the labour force, through which their social values may be enhanced.
In view of the above mentioned justifications for the retention of the working wife allowance, a total of 11 industrial and educational organizations, which includes the Hong Kong Federation of Trade Unions, have incessantly pressed for the retention of such allowance during the last two years. During the last two Budget debates, I urged the Government to allow the husbands and wives to have the right to opt for separate or combined assessments in the implementation of separate taxation and to retain the working wife allowance for those couples who elect joint assessment. Regrettably, the Government still turns a blind eye to the significance of the retention of the working wife allowance. I am sorry to see that this Bill, which seeks to give effect to separate taxation, proposes the revocation of the working wife allowance. Though the purpose of this Bill seeks to provide for separate
taxation for married couples, which has all along been the objective pursued by the labour sectors, I still have reservations about this Bill.
Sir, with these remarks, I abstain from voting on this motion.
MRS. FONG: Sir, the Bill before us is really not a Bill to reduce the impact of taxation on married women, or married couples, as is popularly believed. Rather, it is a Bill to distinguish some relatively insignificant individual rights of married women from the collective rights of the family unit. This is because the supposed inequities in taxation which were used to justify the change, no longer exist. They were already addressed a year ago.
The costs that this Bill will add to the operating costs of the Inland Revenue Department are substantial. The costs could probably be justified if the Bill was necessary to bring about a more equitable distribution of the tax burden, but this is not the case. This was done in 1988 with the introduction of the working wife allowance. The costs could also be justified if there was a public demand from the local population for wives to have the right to maintain confidentiality about their income and taxation matters from their husbands by having the right to prepare their own tax returns. However, I have not seen the social need for this, nor have I heard the public call for it.
In these circumstances, I cannot see the justification of the Bill.
The real tax impact of the changes proposed has not been fully explained. Also, the financial impact of the Bill is not well understood in terms of added costs. In summary:
-- the tax burden of higher income families (those paying the standard rate) will remain the same as at present;
-- the tax burden of middle income families will be reduced, as the new benefits to them will exceed the ones they lose;
-- however, the tax burden on the lower income families (those earning less than approximately $150,000 per year) will be heavier, as a result of the new benefits falling short of those that will be lost by the cancellation of the working wife
allowance;
-- the net tax revenue to Hong Kong will be reduced significantly by the added costs to the Inland Revenue Department because of the need to handle a massive increase in the number of salaries tax returns to be processed (an increase of roughly 200 000 or 25% in the number of returns).
Would people really support the introduction of this Bill if they realized that its effect would be to increase the tax burden on the majority of families, especially on those with lower incomes?
Would people really support it if they realized that its effect is just to provide a means for adjusting one very minor aspect of the financial rights of wives in relation to the family unit? Even if they wanted to, for social purposes .....and I do not think they do....., would people want it if they knew its introduction would significantly increase the cost of the tax administration?
Would the 200 000 married women who are the supposed beneficiaries want it, if they knew that they would have to prepare their own tax returns to get the supposed benefit? Would they want it if they knew that in the process, the majority of family units would end up paying more taxes than they pay today?
Should we support this Bill? I personally cannot justify it. I consider it to be an attempt to solve a tax problem that no longer exists. It is an attempt to establish separate and generally immaterial rights for married women, that are not being sought by these women.
Let us focus for a moment on the costs this Bill will generate. It will:
-- increase the cost of the Inland Revenue Department's personnel complement by a reported amount -- which I believe to be ultra conservative -- of $11 million per year, each year, from now on.
-- involve a one-time capital cost that is said to be at least $28 million for upgrading the Inland Revenue Department's computer capacity to process the 200 000 additional returns.
-- increase the space needs of the Inland Revenue Department and thus
generate permanent added space costs.
In my view, this Bill is an example, a sad example of how political forces can generate momentum and get themselves into a position where they end up supporting something that is unnecessary and not sought by the very people who are supposed to benefit from it.
I can only sympathize with our Administration. They know that this piece of legislation will complicate the tax law; they know that this will create much more work for them and that the legislation is completely non-cost effective. They have had to comply with the instructions given, and come up with the best possible
legislation to handle the issue that was given to them by our political leadership.
I regret to say that by now there may be too much momentum behind this Bill for it to be cancelled, or for there to be any significant modifications. However, I cannot be a party to the introduction of complicated tax legislation to Hong Kong when there is no real or apparent need for it.
I am a tax professional. I have worked with many tax systems in many countries. I have always been extremely proud of Hong Kong's tax system. It has been very simple to administer, very fair to all taxpayers, and a system with one of the lowest collection costs in the world.
I am also a married woman and I find the measure entirely unnecessary and totally irrelevant for the establishment of equity in the majority of family units, in the context of presentday Hong Kong.
Sir, I therefore stand to object to the Bill.
MRS. LAM (in Cantonese): Sir, the Inland Revenue (Amendment) (No. 3) Bill 1989 enables working wives to have the liberty to opt for joint or separate assessment of tax. The Government, being open-minded and responsive to public sentiment, has attained a satisfactory result in the long-disputed system of tax assessment. Here, I must say the efforts of the Financial Secretary and staff members of the Finance Branch are indeed worthy of praise. Nevertheless, the concurrent abolition of the working wife allowance mars this otherwise perfect achievement. In this regard, I register my deep regret with the following observations:
(1) It is hoped that separate taxation for married couples would not only further realize the object of equality between the two sexes, but also help relieve the tax burden of low-income families. However, with the abolition of the working wife allowance, those within the low-income brackets with an annual income of $160,000 or below will on the contrary have to pay more taxes ranging from $165 to $2,154 under the new legislation. For a family with an annual income of $160,000 or below, the monthly income is about $13,000, that is, the husband and the wife each earns about $6,600 per month on average. Given the fact that the median income of local employees is only around $4,400 (according to a survey in the first quarter of 1989 by the Census and Statistics Department), the introduction of the new legislation may mean pecuniary loss to many people in Hong Kong. Moreover, under the new legislation, if either the husband or the wife earns an income considerably lower than that of the spouse, it is very likely that the couple will have to pay more tax regardless of the income level of his or her spouse. Hence, from the view-point of upholding social justice and protecting the interests of the relatively low-income group, the abolition of the working wife allowance will have negative effects on the community.
(2) The abolition of the working wife allowance will discourage married women from staying in the workforce. As compared with single women, married women taking up employments will incur greater additional expenses, such as those on sending children to nurseries, employing the service of part-time or full-time domestic helpers to take care of the housework, and so on. The abolition of the working wife allowance will therefore deal a blow to the working wives, discouraging them from continuing to work. Hence, they will assess the impact of taking up employments on the financial position of their families and the need to look after domestic chores. Some may even choose to stay at home again on that score. Such a decision will have adverse effects on the current labour shortage situation.
(3) The working wife allowance and the option for separate or joint assessment of tax should not be treated as one issue, nor should either one of them substitute the other. The working wife allowance is viewed as a means to encourage married women to continue taking up employments. It also serves as a recognition of the additional expenditure invariably incurred, hence the need to exempt part of the expenditure from tax, as in the case of granting allowances to dependent parents and children. Accordingly, the working wife allowance should be treated likewise, and should be adjusted annually in line with the inflation rate. In view of the above, the working wife allowance should not be abolished. In case its abolition is inevitable, it is
hoped that an alternative measure would be introduced to reduce loss working wives with low income earnings would suffer. This would encourage them to stay in the workforce.
Sir, with these remarks, I support the motion.
MRS. LAU: Sir, the concept of separate taxation for married couples may be criticized by some people as unnecessarily complicating Hong Kong's simple tax system. It is also undoubtedly quite expensive to implement because revenue loss alone is likely to run into hundreds of millions of dollars every year not to mention the capital expenditure required to upgrade the computer process and the increase in
administrative costs to carry the scheme into effect. But the end justifies the means. For years, many Members of this Council have strongly advocated the cause of separate taxation for valid reasons. The fairly inequity of making married couples pay more tax than they would otherwise have to if they were unmarried is, in my view, sufficient justification for introducing measures at all costs to remove that inequity. The
other reasons advanced are equally valid. As a woman, I naturally support the arguments for equality between the sexes and the desirability of allowing wives to maintain independence and privacy in tax matters. Our tax system must be simple but, more importantly, it must be just, fair and equitable. It is not right to compromise our principles just because there may be technical difficulties, or just because it may be somewhat expensive to do so.
Some may argue that actually the inequity which I referred to earlier on has already been adequately addressed or redressed by the working wife allowance introduced a year ago. But it must not be forgotten that the working wife allowance was introduced as, and has always been intended to be, an interim measure only pending implementation of separate taxation. It was never intended to be a substitute for separate taxation. As to whether the working wife allowance sufficiently addresses or redresses the problem, the revenue figures speak for themselves. Under the scheme of working wife allowance, the full year cost to the revenue is in the region of $355 million. If separate taxation were implemented, the full year cost to the revenue would be in a region of $585 million. This means that without separate taxation, married couples in Hong Kong are actually paying $230 million in excess of what they would otherwise have to pay.
Some people believe that the removal of the working wife allowance upon
implementation of the separate taxation system would result in a heavier tax burden on some families in the lower income bracket. This in my opinion is a misconception. Under separate taxation, these families would not be worse off than before the introduction of the working wife allowance. In fact they would still be better off. The working wife allowance is not intended to provide relief to lower income families and should not be treated as such. I support the granting of relief to lower income families but I feel that they should more appropriately be sought from increasing the level of personal allowances, as some of my honourable colleagues have suggested, or introduction of some other allowances. The working wife allowance is intended, on an interim basis, to ameliorate an existing inequitable state of affairs. Once that inequity is removed, the allowance cannot justify its existence.
Sir, I welcome the Inland Revenue (Amendment) (No. 3) Bill 1989 which introduces the long-called-for system of separate taxation.
The Bill is short, succinct and to the point. One would have thought that complex issues require complex legislation but this Bill aptly demonstrates that complex laws need not necessarily be complex. In this regard, may I take this opportunity of congratulating the draftsman for his skill and fine work.
It has been argued that taxpayers should be granted the option of choosing whether to be taxed separately or jointly. Whilst theoretically this may be right, I agree that to allow such an option would probably make the system administratively unmanageable. No computer can possibly handle such uncertainty. The Bill as drafted gives no general right of election, but to prevent taxpayers from becoming worse off under separate taxation, the Bill provides that if one spouse shall have an unabsorbed allowance, an election for joint assessment may be made. One small inequity however remains. The sum total of the two basic allowances falls short of the married person's allowance by $2,000. There may be cases of married couples having to pay more tax under separate taxation than they would if under joint assessment. The ad hoc group considers that this inequity should be removed. The proposed section 10 under clause 3 of the Bill will therefore be amended during the Committee stage to allow couples to make the election for joint assessment where their aggregate salaries tax under separate taxation would be greater than the amount payable by them if they had made the election for joint assessment.
The proposed section 11 under clause 3 of the Bill provides that an election for joint assessment should be made within the year of assessment or the year following.
Although there is provision for granting of such further time as the commissioner may allow, the ad hoc group feels that the time limit should be expressly extended to after the assessment for the year of assessment becomes final and conclusive. Before an assessment becomes final, it may be difficult to decide whether or not an election for joint assessment would be advantageous or disadvantageous. I am pleased that appropriate amendment to this provision will be made during the Committee stage.
In relation to the proposed Part V under clause 9 of the Bill, the ad hoc group expressed concern over the use of the word "may" in relation to the granting of allowances. The word "may" seems to connote a discretion as to whether or not the allowances would be granted. The intent of the legislation is clearly that the allowance will be granted provided the relevant conditions are satisfied. For the avoidance of doubt, the ad hoc group has suggested to substitute the word "shall" for "may", to which the Administration has agreed.
Sir, the introduction of separate taxation removes the unfair tax burden which married couples have suffered for a long time. It goes a long way towards encouraging more women to join our labour force, which is most desirable at this time when our labour market is still tight.
Sir, with these remarks, I support the motion.
MR. PETER WONG: Sir, the Inland Revenue (Amendment) (No.3) Bill 1989 is a very technical piece of legislation enacted with the avowed aim of bringing tax equality to married couples, giving them the luxury of paying no more tax than they would if they were unmarried.
In the words of the Hong Kong Society of Accountants submission to OMELCO "..... we do not regard the concept of separate taxation as being one which can benefit Hong Kong's economy or society; it will merely deflect the attention and resources of the Inland Revenue Department from more worthy and rewarding objectives". I fully
endorse that line of thinking as it reflects the considered opinion of Hong Kong's tax professionals.
This Bill must be considered as a political act of faith on the part of this Council and I must compliment our long suffering and much maligned Commissioner of Inland Revenue in producing a very workmanlike Bill to give effect to the surrender by our
Financial Secretary to the power of the feminist lobby.
The commissioner has bent over backwards to be sympathetic and helpful. I have even accused him (but only half jokingly) that he has designed his computer programmes to assist the taxpayer to minimize the tax payable so that our salaries tax professionals will soon be out of a job. This may not be a bad thing. After all they can be engaged in more productive activities. The commissioner has time and again assured us that his computer programmes will point out whether the taxpayers have made the best choice based on their particular circumstances and he has instructed the assessors to make the most advantageous option known to the taxpayers even if they have made the wrong choice initially in their returns. I would like the Administration to officially confirm that this will be the policy.
The Hong Kong Society of Accountants' submission goes on to say that this is "estimated to cost annually some $600 million in revenue foregone and over $10 million to administer, plus a once-off capital cost of nearly $30 million to implement". This is a very high price to pay. Even now, there will still be some couples who are worse off under the new system than before.
Sir, there is no such thing as equity in taxation and this attempt to treat fairly married couples as though they are two singles is flawed in that it makes our salaries tax system no longer simple. Sir, I will therefore abstain from voting.
MR. ANDREW WONG (in Cantonese): Sir, in the past few Budget debates I already stated the case against separate taxation for married couples. My stand against separate taxation and the reasons I hold have not changed since. I therefore agree entirely to the arguments the Honourable Mrs. Nellie FONG advanced in her speech. Here I should like to point out two common misconceptions relating to the present taxation system (a system about to be changed, though). Firstly, the present system is based on the family unit as the object of tax assessment. The head of a family could be a man or it could well be a woman. Secondly, separate taxation for married couples will not necessarily be the only way to redress the alleged inequity arising out of married and single persons all being taxed as a family entity. An alternative way would be to grant a "working spouse allowance" as distinguished from an allowance enjoyable only by a working wife. The question before us today is in fact one of an expedient devised to deal with complications in the taxation system from the impact of women's rights. I cannot therefore support the motion before Council.
MRS. CHOW: Sir, over the years I have been among those who have supported the principle of separate taxation and therefore I am only too happy to support the Bill before Council.
Listening to the debate, it has struck me that it is not easy to be the Administration these days. After giving in to years of request by the public, it is now being taken to task for having given in. Perhaps the problem was that the Administration tried too hard to ease the unhappiness in the community by introducing the working wife allowance which seems to have been responsible for the short-lived anomaly which is now the present cause of complaint.
I am therefore in support of more generous adjustments to the basic personal allowances as soon as possible to remove the anomaly.
Sir, I support the motion.
FINANCIAL SECRETARY: Sir, I wish to thank Mr. Peter POON and members of the ad hoc group set up to study the Bill for their detailed consideration of its provisions during the consultation period. I am also most grateful to Mr. POON, Mrs. Selina CHOW, Mrs. Rita FAN and Mrs. Miriam LAU for their support. I shall be moving certain
amendments at the Committee stage.
Let me begin by addressing the arguments of Mr. TAM Yiu-chung and Mrs. Peggy LAM for retaining the working wife allowance. The major flaw of the working wife allowance is that it discriminates in favour of a married couple where both the husband and wife work. In particular, it provides them with a greater entitlement to allowances than is available to a single-income family or to two unmarried persons with the same income. Furthermore, as a matter of principle, an allowance should not be based on the concept of its being compensation for any additional family expenses incurred as a consequence of the wife taking up employment. Save its use as an interim relief measure pending implementation of separate taxation, there are no grounds for providing working married couples with an additional allowance that is not available to taxpayers in general.
Sir, concern has been expressed by both Mr. TAM and Mrs. LAM that some married couples will pay more tax under separate taxation than they would have paid on the
same income had the aggregation system been retained. This concern is based, however, upon a comparison of the tax paid by a married couple under the interim working wife allowance provisions with that which will be payable under separate taxation. One of the reasons why a flat rate working wife allowance could not be adopted as a
permanent solution to the so-called "marriage tax" is its inability to deal with the problem equitably at all levels of income. In particular, working wife allowance fails to provide some taxpayers with sufficient relief to negate the full effects of their "marriage tax" while it gives others a tax benefit exceeding their "tax". It is conceptually incorrect to compare the tax payable under the interim relief provisions with the tax payable under separate taxation to evaluate the effect of separate taxation on various classes of taxpayers. The more appropriate yardstick is to compare the tax payable under the legislation prior to the introduction of the interim relief measure with the tax payable under separate taxation. Using this comparison the majority of two-income married couples will, overall, pay less tax. For those adversely affected the joint assessment provisions are available to allow them to continue to be assessed jointly. Thus, while not all married couples will pay less tax under separate taxation none will pay more.
As Mr. Peter POON and Mrs. Miriam LAU have already pointed out, when the re introduction of the working wife allowance was proposed in the 1988-89 Budget, it was made clear that this was an interim measure designed to provide an immediate benefit to taxpayers while further consideration was given as to how separate taxation could best be introduced. There was never any intention that the allowance would become permanent. With the passing of this Bill all working wives will have separate taxation which, among other things, removes the "marriage tax" and the interim relief measure is no longer required or appropriate.
The proposition put forward by Mr. TAM to allow husbands and wives to opt in and out of separate taxation at random runs counter to the principles of independence and privacy in tax matters. In addition such a system would not be tenable in a low tax regime like Hong Kong because it would create unnecessary complexity in file maintenance, introduce uncertainty in the tax-payer base and place an onerous
advisory role on the Inland Revenue Department. However, in recognition that some husbands and wives may not be able fully to absorb their allowances and that others may derive a greater benefit from a married person's allowance than from two single persons' allowances, joint assessment election is being made available to them. To this extent, the option of combined assessment is provided.
Mr. Peter WONG has dismissed the need to extend separate taxation to married women because he considers that this will unduly complicate the salaries tax legislation. Instead, he has endorsed the Hong Kong Society of Accountants stance on the issue. The society has proposed that the "marriage tax" be redressed by increasing the
existing working wife allowance. I have already explained why working wife allowance is not an acceptable solution on equity grounds. In addition, it should not be overlooked that the advocates of separate taxation have also based their representations on the need to provide women with independent recognition and privacy in their personal taxation affairs. Mrs. Rita FAN has alluded to the importance of this. Working wife allowance fails to redress these issues.
I can however give the assurance sought by Mr. WONG that the Commissioner of Inland Revenue will identify and issue the appropriate notification in every case where it will be to the advantage of the married couple to elect to be jointly assessed so that no married couple will become worse off under separate taxation.
Mrs. Nellie FONG and Mr. Andrew WONG have spoken against the Bill mainly on the grounds that the working wife allowance or, as Mr. Andrew WONG described it, the working partner allowance is a satisfactory solution to the "marriage tax" problem and that separate taxation of married women is not justified, given the additional administrative costs, the additional tax burden on the majority of families, and the lack of clamour from married women for the right to maintain confidentiality about their income and taxation matters from their husbands. For the reasons I have already identified, a flat rate working wife allowance does not equitably resolve all
taxpayers' "marriage taxes" and therefore the underlying inequity still remains. Working wife allowance has not benefitted either married couples where only one spouse works or husbands and wives individually chargeable at standard rates. Nor will separate taxation provide these two groups with any financial benefit. But the
majority of all other married couples with both spouses working will receive a benefit from separate taxation. For those who do not, there was no "marriage tax" in the first instance and any benefit derived from the interim working wife allowance can only be regarded as a windfall gain -- their tax burden has not been made heavier because of separate taxation.
Mrs. FONG is quite right to point out that additional costs will need to be incurred to provide for separate taxation. For a number of years the Administration declined requests from Members to grant separate taxation partly on the ground of the revenue that would be forgone and the additional administration costs. At the
time the decision to implement separate taxation was taken, the extent of public debate on the issue clearly indicated that, not only did it have the unanimous support of Members, but also there was substantial demand for it within the community not least because of privacy and individuality considerations.
Finally, I should point out that the decision to introduce separate taxation in Hong Kong is consistent with the trend in this direction in other tax administrations.
Sir, with these remarks, I beg to move.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
PROTECTION OF INVESTORS (AMENDMENT) BILL 1989
Resumption of debate on Second Reading which was moved on 5 July 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1). SUPPLEMENTARY APPROPRIATION (1988-89) BILL 1989
Resumption of debate on Second Reading which was moved on 5 July 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
LEGAL PRACTITIONERS (AMENDMENT) BILL 1989
Resumption of debate on Second Reading which was moved on 15 February 1989 Question on Second Reading proposed.
MR. EDWARD HO: Sir, an ad hoc group was set up under this Council to scrutinize the Legal Practitioners (Amendment) Bill 1989 and the Legal Officers (Amendment) Bill 1989. As convener of the ad hoc group, I wish to express my appreciation to members of the ad hoc group for their support, as well as to pay a special tribute to the Administration and members of the Law Society and the Bar Association for some very constructive and conscientious discussions and consultations resulting in
substantial agreement on a number of points. This has enabled the ad hoc group to conclude its task very efficiently and belied the belief that lawyers seldom agree.
The Legal Practitioners (Amendment) Bill 1989, which gives effect to most of the recommendations of the UMELCO Standing Panel on Security and the Chief Justice's committee on the admission and practising criteria for barristers and solicitors in Hong Kong and on the admission of certain Commonwealth qualified legal officers into private practice, is an important piece of legislation. The ad hoc group formed under this Council to study the Bill sees its mission both as a guardian of the interest of the experienced legal officers concerned in providing them with a fair chance to practise privately, and a guardian of the public interest in ensuring that the
community continue to obtain the very high standard of legal service they now enjoy.
Another area addressed by the Bill, which is the imposition of certain restrictions on the present unfettered right of the United Kingdom barristers and solicitors to enter into practice in Hong Kong, is strongly supported. This involved, in the case of solicitors, a three months' residential requirement before the person can apply for admission and a 12 months' residence in Hong Kong before deemed eligible to apply for an unconditional practising certificate. As regards United Kingdom barristers, the person must have at least three years' practice in the United Kingdom and have resided in Hong Kong for at least seven years.
In the past, legal officers working in the Judiciary and government legal services are not entitled to be admitted as Hong Kong solicitors unless they obtain a Post-graduate Certificate of Law from the University of Hong Kong. However, it is reckoned that some of these lawyers have substantial experience and practice of Hong Kong law. The Chief Justice's committee thus recommended that such lawyers be exempted from pursuing the Post-graduate Certificate of Law and be allowed to be
admitted under certain specified conditions.
The Chief Justice's committee has recommended that only service in the Legal Department should be recognized for eligibility to apply for admission. The Administration's view, however, was that there was no basis for discriminating lawyers from the other government departments if they are able to meet the necessary criteria. Both the Law Society and the Bar Association held a strong view, and the Administration conceded that judicial officers should not be eligible.
The Law Society was receptive to the Administration's proposal to include the Registrar General's Department and the Legal Aid Department (for solicitors' work) whilst the Bar Association considered that, as regards barristers, only those from the Attorney General's Chambers should be eligible. After some lengthy discussions among the various parties, it was decided that meanwhile only legal officers from the Legal Department should be eligible, but should discovery be made of meritorious and eligible candidates from the other departments being prejudiced by the present scheme, the situation would be subject to further review.
Sir, the intention of the Chief Justice's committee was that lawyers from Commonwealth countries applying the common law as a substantial part of their legal system should be allowed to admission, subject to the other qualifying conditions in the Bill. Since reference to the Commonwealth would no longer be appropriate after 1997, schedule 1 of the Bill lists the specific jurisdictions from which lawyers in government service had been recruited in the past. The Bar Association considered that the list should not be confined to places from which lawyers have been recruited by Government in the past. It should include other jurisdictions, for example, Singapore which has a system of legal education and training comparable to Hong Kong. The two professional bodies are investigating the legal system in Malaysia, with a view to its inclusion in future, if found appropriate.
The ad hoc group agreed with the Bar Association's view but maintain that the list should only be able to be amended by resolution of the Legislative Council. I shall be moving an amendment during the Committee stage to this effect.
To ensure that the applicants possessed the requisite experience demanded of a barrister, the UMELCO panel has recommended that for admission to the Bar, the applicant must have at least three years of active practice in the High Court of Hong Kong. The Chief Justice's committee considered that a rigid and narrow
interpretation on "active practice in the High Court" was likely to create difficulties. The Chief Justice's committee suggested that the requirement be flexibly interpreted to include High Court related work. The Bar Association accepted the views of the Chief Justice's committee but suggested that these three years should be the last three years of service and that such service be that usually undertaken by a barrister of ten years seniority in Hong Kong. The ad hoc group was concerned that a rigid requirement over High Court experience might give rise to injustice arising from a break of service which could be beyond the officer's control. The ad hoc group suggested, and it was now agreed that the three years' High Court experience should either take place immediately or recently before the date of application for admission.
Besides, to make sure that solicitors admitted under the present scheme are familiar with all the facets of solicitors' work in Hong Kong, the Bill would be amended to empower the Chief Justice to require the passing of an examination on solicitors' accounts as one of the admission criteria.
Sir, the above points are but some of the more important points agreed after a process of consultation that I have already referred to in the beginning of my speech. Without going into details, I would just like to mention that the other equally significant provisions of the Bill, relating to the strengthening of the advisory committee on legal education, updating of the fine levels and the disqualification of a solicitor under a receiving order and so on, are supported by all parties.
With these remarks, Sir, I support the Bill.
ATTORNEY GENERAL: Sir, may I record my gratitude to Mr. Edward HO and his colleagues on the ad hoc group for their significant contributions and help on this short but complex Bill. I would also like to join with Mr. HO in thanking the representatives of the Bar Association and the Law Society for their thoughtful and constructive comments.
As Members, during the Committee stage, Mr. HO and I shall be moving a number of amendments reflecting the consensus of all parties over the Bill. I shall not go into the details of those amendments at this stage, but would like to make a number of more general points.
I turn first to the list of countries set out in the schedule to the Bill. Those countries are the ones (other than the United Kingdom) from which, for many years, expatriate lawyers have come to Hong Kong to work in government legal service. Those countries, to which I shall be proposing, during the Committee stage, adding Singapore,
have, like Hong Kong, high standards of legal education, high standards of professional conduct and a reputation for producing lawyers of high quality. They are countries with a strong common law tradition or, certainly, influence. The list is comprehensive and I would not readily see the need for it to be extended. But we are currently examining the case of Malaysia. Were we to propose such an extension, it would only be to include such countries that have the attributes I have just mentioned.
During the consultation with the legal professions over the Bill, some anxiety was expressed over the absence of any express provision requiring the court to take into account the public interest when admitting a former lawyer in government legal service, as a barrister or as a solicitor under the scheme in the Bill. Sir, the Bill did not contain such an express provision, because it is not necessary. The court has a discretion under the Bill as to such admissions. In exercising that, as with any other judicial discretion, considerations of the public interest are always to be taken into account.
I turn now to the question of examinations. One of the amendments I shall be moving in the Committee stage will be to require those seeking admission as solicitors to undertake an examination in solicitors' accounts unless otherwise exempted. This amendment accepts a proposal from the Law Society, which recognizes that solicitors, who handle clients' money, must be able to demonstrate that they have had sufficient training and obtained qualification in solicitors' accounts.
The Bill makes no provision for those former government lawyers admitted as barristers to undertake examinations. But all who are admitted will be required by the Barristers (Qualification) Rules to undergo a period of pupillage with a practising barrister. This requirement will ensure that those who intend practising at the Bar by this route will have had a period of transition during which they will have the opportunity to acquire a knowledge of practice at the private Bar.
The amendments that Mr. Edward HO and I propose to move at the Committee stage in no way detract from the philosophy behind this Bill. That philosophy has two main aspects. The first seeks to strengthen the legal profession in Hong Kong by imposing some restrictions on the present unfettered right of entry of United Kingdom lawyers
to practise here. The second is to permit a small number of lawyers in government legal service who are not presently entitled to become Hong Kong barristers and solicitors to join the legal professions here. Those that are eligible to be admitted under the scheme will have considerable experience in government legal service. Those who are admitted under this scheme, while a loss to Government, will be an asset to whichever branch of the profession they join.
Sir, in making these remarks, I am mindful of the need for a general review of admission to practise law in Hong Kong for lawyers coming from the United Kingdom and the Commonwealth. I touched on this topic in relation to United Kingdom lawyers in this Council on 23 November last year. That general review will naturally be undertaken in consultation with the Bar Association and the Law Society.
Sir, it would be a failure on my part not to re-affirm my appreciation of the contribution of the various parties concerned with this Bill. That includes the ad hoc group, the Bar Committee, and the Council of the Law Society. Their hard work, careful thought and concern for the public interest have contributed to the production of this Bill.
Sir, I beg to move.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1). LEGAL OFFICERS (AMENDMENT) BILL 1989
Resumption of debate on Second Reading which was moved on 15 February 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
CHARITABLE TRUST FUNDS (MISCELLANEOUS AMENDMENTS) BILL 1989
Resumption of debate on Second Reading which was moved on 5 July 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
LI PO CHUN CHARITABLE TRUST FUND (AMENDMENT) BILL 1989
Resumption of debate on Second Reading which was moved on 5 July 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
ROAD TRAFFIC (AMENDMENT) (NO. 2) BILL 1989
Resumption of debate on Second Reading which was moved on 21 June 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1). TELECOMMUNICATION (AMENDMENT) BILL 1989
Resumption of debate on Second Reading which was moved on 28 June 1989 Question on Second Reading proposed.
MISS LEUNG: Sir, the Telecommunication (Amendment) Bill 1989 and the Broadcasting
Authority (Amendment) Bill 1989 are inter-related and so the remarks that follow apply to both of the Bills.
Before commenting on the Bills, I would like firstly to declare an interest as a member of the Broadcasting Authority.
My Honourable colleague Mr. Peter TSAO, Secretary for Administrative Services and Information, already explained clearly the background leading up to the two Bills three weeks ago. I shall not repeat those points again. Suffice it to say that the Administration has justifiably sought to bring more into line the controls on the different modes of broadcasting.
Sir, the question might be asked: why, when the trend in certain other parts of the world appears to be towards deregulation, the Broadcasting Authority will under the Broadcasting Authority (Amendment) Bill be extending its jurisdiction to cover sound broadcasting.
The answer lies in the rapid developments that are now taking place in broadcasting in Hong Kong. When the decision was taken last year to call for interested parties to make proposals on cable television and the decision was taken just a few months ago to grant a second licence for commercial radio broadcasting in 1990, new vistas opened up in the field of television and radio broadcasting. I applaud these moves and the positive attitude of the Administration. These steps should help to ensure that the Hong Kong public will benefit from the latest developments in broadcasting. With greater competition, the opportunities for more choice and better quality programmes for the public are enormous, but these opportunities can only be realized if the developments take place in an orderly fashion, with foresight and planning. I believe that the Broadcasting Authority, working closely with the Administration, has an important role to play in this process.
In the case of radio broadcasting, the Broadcasting Authority has not had any formal responsibility for the regulation of this important medium so far. Now with the impending grant of one new licence in August and another one in early 1990 it is time for the Broadcasting Authority to be given formal responsibilities with
respect to commercial radio broadcasting. A licence grants the use of the air-waves, a valuable community property, and it is right that the licensee's use of this should be subject to proper regulation. The Hong Kong public, while it has not always been
satisfied with the quality of broadcasting in Hong Kong, has sometimes been reluctant to make a fuss. In the case of television there is now a formal complaints procedure and the public are encouraged to contact the Broadcasting Authority to register any complaints they may have. It is right that for radio too the public should have an independent body to which complaints can be referred and which will examine those complaints and be in a position to take action on them if necessary. However,
responding to complaints is only one part of the picture. As a member of the Broadcasting Authority, I look forward to good working relations with radio licensees in future so that we can encourage and, where appropriate, assist in achieving standards of broadcasting in Hong Kong that can match those any where in the world.
Returning to the Bills before us, the Legislative Council ad hoc group under the able convenership of my honourable colleague, Mr. Ronald ARCULLI, has scrutinized the Bills in detail and considered a number of proposals made by the existing commercial radio licensee, the Hong Kong Commercial Broadcasting Company Limited. After further discussion with the Administration and careful deliberation, we have found that some of the proposals made by the Hong Kong Commercial Broadcasting Company are already covered because of provisions in other legislation or in different parts of the Bills themselves. In other cases we did not feel that the proposed legislation should be amended. Nevertheless, we have proposed two Committee stage amendments. They are mostly technical in nature and I will explain them in greater detail when the Council is in Committee.
With these remarks, Sir, I support the motion.
SECRETARY FOR ADMINISTRATIVE SERVICES AND INFORMATION: Sir, I should like to thank the Honourable LEUNG Wai-tung for her support and to thank the members of the OMELCO ad hoc group chaired by the Honourable Ronald ARCULLI for scrutinizing with such efficiency the Telecommunication (Amendment) Bill and the Broadcasting (Amendment) Bill at a time when OMELCO has been particularly busy.
I wholeheartedly agree with Miss LEUNG's remarks about the need for the Broadcasting Authority to expand its role in future given the development in sound broadcasting. Sir, it is also intended that the authority's formal responsibilities should further be expanded at an appropriate time to cover cable television.
Sir, Miss LEUNG's proposed amendments at the Committee stage to both Bills are
indeed of a technical nature and they are designed to further clarify the meaning of these clauses. I have no objection to these proposals.
Sir, with these remarks, I move that the Bill be read the Second time. Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1). BROADCASTING AUTHORITY (AMENDMENT) BILL 1989
Resumption of debate on Second Reading which was moved on 28 June 1989 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
4.29 pm
HIS EXCELLENCY THE PRESIDENT: Members might like to take a break at this point. 4.59 pm
HIS EXCELLENCY THE PRESIDENT: Council resumes.
Committee stage of Bills
Council went into Committee.
LEGAL AID (AMENDMENT) BILL 1989
Clauses 1 to 10 were agreed to.
COMPANIES (AMENDMENT) BILL 1989
Clauses 1 to 6 were agreed to.
HONG KONG INDUSTRIAL ESTATES CORPORATION (AMENDMENT) BILL 1989 Clauses 1 to 4 were agreed to.
INLAND REVENUE (AMENDMENT) (NO. 3) BILL 1989
Clauses 1, 2, 4, 5, 7, 10 to 13, 15 to 17, 19, 22 and 24 to 29 were agreed to. Clauses 3, 6, 8, 9, 14, 18, 20, 21 and 23
FINANCIAL SECRETARY: Sir, I move that the clauses 3, 6, 8, 9, 14, 18, 20, 21 and 23 be amended as set out in the paper circulated to Members.
Following consultations with members of the ad hoc group and members of the accounting and legal professions, I am proposing amendments to extend the scope of the joint election provisions to make them available to a small group of married taxpayers who would otherwise pay more tax under separate taxation. Initially it was intended that these taxpayers should obtain relief through personal assessment, but, after considering representations from members, it has now been agreed that they will obtain direct relief in salaries tax by electing to be jointly assessed.
The other amendments are minor and consequential in nature. In addition to a small number of drafting points, they include the provision of a right to elect joint assessment for a period of one month after an assessment becomes final and conclusive, and the fine tuning of the allowance provisions where it was suggested that possible ambiguities may have existed.
Sir, I beg to move.
Proposed amendments
Clause 3
That clause 3 be amended --
(a) in proposed new section 10 by deleting subsections (2) and (3) and substituting --
"(2) Where in any year of assessment a husband and wife, not being a wife living apart from her husband, both have assessable income and --
(a) either the husband or wife is entitled to allowances under Part V which are in excess of his or her net assessable income as reduced by approved charitable donations under 12B(1)(a); or
(b) both also have a net chargeable income and the aggregate of the salaries tax which would be payable by them if subsection (1) applies exceeds the salaries tax which would be payable if an election is made under this subsection,
an election may be made by them, subject to section 11, to be assessed to salaries tax in the manner specified in subsection (3).
(3) Where an election is made by a husband and wife under subsection (2) salaries tax shall be payable on their aggregated net chargeable income as ascertained under section 12B(2) and in the case of an election --
(a) under subsection (2)(a), the spouse who would have been chargeable to salaries tax in the absence of such an election;
(b) under subsection (2)(b), the spouse who is nominated by them,
shall be chargeable to salaries tax in respect of such aggregated net chargeable income.";
(b) in proposed new section 11 --
(i) by deleting subsection (2) and substituting --
"(2) An election shall relate to the year of assessment specified in such form and it, and any withdrawal thereof under this section, may be made at any time - -
(a) within that year of assessment or the following year of assessment; or
(b) before the expiration of a period of one month following the time when the assessment for the year of assessment becomes final and conclusive under section 70,
whichever is the later, or within such further time, if any, as the Commissioner may allow as being reasonable in the circumstances.";
(ii) in subsection (5) by adding after "10(2)" --
"and, where a nomination under section 10(3)(b) is required, includes such nomination".
Clause 6
That clause 6 be amended, in proposed new section 12B(2) by deleting "10(3)(b)" and substituting "10(3)".
Clause 8
That clause 8 be amended, in proposed new section 13(2)(b) by deleting "solely chargeable to salaries tax under section 10(3)(b)" and substituting "chargeable to salaries tax under section 10(3)".
Clause 9
That clause 9 be amended --
(a) in proposed new sections 27(1), 28(1), 29(1), 30(1), 31(1) and 32(1) by deleting "may" wherever it appears and substituting "shall";
(b) in proposed new section 27(3) by deleting "in relation to a child" in the definition of "adopted";
(c) in proposed new section 29(2) and 29(3)(b)(i) by deleting "10(3)(b)" and
substituting "10(3)";
(d) in proposed new section 30 --
(i) in subsection (1)(a) by deleting "a permanent resident of" and substituting "ordinarily resident in";
(ii) in subsection (4)(a)(i) by deleting "the individual" and substituting "that person and his or her spouse";
(e) in proposed new section 33(2) by deleting "31(3)" and substituting "31(2) and (3)".
Clause 14
That clause 14 be amended --
(a) in paragraph (b) by deleting "subsections (2) and (2A)" and substituting "subsection (2)";
(b) in paragraph (d) by deleting subparagraph (i) and substituting -- "(i) by repealing "subsections (2) and (2B)" and substituting "subsection (2)"; and".
Clause 18
That clause 18 be amended, by deleting clause 18 and substituting -- "Assessor to make assessments
18. Section 59 is amended -
(a) in subsections (1B) and (1C) by repealing "his wife, not being a wife living apart from her husband" wherever it appears and substituting "his or her spouse, not being a spouse living apart from that individual";
(b) in subsection (1C)(c) by repealing "section 42B" and substituting "Part V".".
Clause 20
That clause 20 be amended, by adding after paragraph (b) --
"(c) in subsection (6A) by repealing "section 42B" and substituting "Part V".". Clause 21
That clause 21 be amended, by deleting clause 21 and substituting -- "Holding over of payment of provisional salaries tax
21. Section 63E is amended --
(a) in subsection (1) by repealing ", subject to subsection (5),";
(b) in subsection (2)(a) by repealing "paragraph (b), (c) or (d) of section 42B(1)" and substituting "Part V";
(c) by repealing subsection (5).".
Clause 23
That clause 23 be amended, in proposed new section 64(9) by deleting "10(3)" and substituting "10(3)(a)".
Question on the amendments proposed, put and agreed to.
Question on clauses 3, 6, 8, 9, 14, 18, 20, 21 and 23, as amended, proposed, put and agreed to.
New clause 8A Treatment of losses after 1 April 1975
Clause read the First time and ordered to be set down for Second Reading pursuant to Standing Order 46(6).
FINANCIAL SECRETARY: Sir, I move that new clause 8A as set out in the paper circulated to Members be read the Second time.
The clause aims to ensure that the loss provisions in the profits tax legislation will apply to married women on the same basis as they apply to all other taxpayers.
Sir, I beg to move.
Question proposed, put and agreed to.
Clause read the Second time.
FINANCIAL SECRETARY: Sir, I move that new clause 8A be added to the Bill. Proposed addition
New clause 8A
That the Bill be amended, by adding after clause 8 --
"Treatment of losses after 1 April 1975
8A. Section 19C is amended --
(a) in subsections (1)(b) and (2)(b) --
(i) by adding "or wife" prior to "does not elect";
(ii) by repealing "or is not deemed to have elected to be personally assessed"; (b) by repealing subsection (3)(b) and substituting --
"(b) in the case of a husband and wife, not being a wife living apart from her husband, the husband or wife is personally assessed under Part VII,".".
Question on the addition of the new clause proposed, put and agreed to. PROTECTION OF INVESTORS (AMENDMENT) BILL 1989
Clauses 1 and 3 were agreed to.
Clauses 2, 4 and 5
FINANCIAL SECRETARY: Sir, I move that clauses 2, 4 and 5 be amended as set out under my name in the paper circulated to Members.
The main purpose of the Bill is to exempt advertisements relating to certificate of deposit and commercial paper issues from the need to obtain express authorization by the Securities and Futures Commission. Clause 4 inserts a new section 7A to impose a reporting requirement in respect of advertisements relating to such issues. It requires an issuer of such a capital market instrument or in the case of an overseas issuer, his authorized representative in Hong Kong, to submit to the Securities and Futures Commission, within 10 days of the issue of an advertisement in respect of that instrument, such information as the commission may require.
The purpose of this post-facto reporting requirement is to enable the commission to monitor the development of the capital market, for the better protection of investors. While the underlying purpose has not been brought into question, concern has been expressed about the effect and intended operation of this provision. In particular, it has been suggested that section 7A as drafted is insufficiently precise and will also catch advertisements which are already exempt by virtue of other provisions of the Ordinance.
In the light of these concerns, certain amendments are to be made to section 7A to clarify its operation and to remove an unintentional effect. First, sub-section (1) is amended to make it clear that the information to be submitted will relate to the advertisement and will be specified by the commission by notice in the Gazette. We do not intend that this obligation should be either unclear or onerous. Thus the information required will be known at the time of issue of the advertisement. We envisage that this information will only relate to the basic terms of the capital market issue as reflected in the advertisement and we will be arranging with the commission for early publication of the necessary Gazette notice.
Secondly, a new sub-section (5) is added to provide a revised definition of "authorized representative", presently in clause 2, to make it clear that it means any person in Hong Kong authorized by an overseas issuer in relation to the
advertisement in question. We do not intend that the reporting obligation should fall upon a general agent or professional adviser who may not be authorized or able to supply the information required.
Thirdly, a new sub-section (4) is added to make it clear that section 7A does not apply to any advertisements which are already exempt by virtue of section 4(3) and (5). It is not our intention to affect existing exemptions enjoyed by professionals or supervised persons under these provisions.
Clause 5 inserts a new section 9 which grants an immunity to public officers and the commission and its employees in the bona fide performance of their functions under the Ordinance. In view of the similar immunity in section 56(1) of the Securities and Futures Commission Ordinance which covers any person acting in the bona fide performance of his functions under that Ordinance and other "relevant Ordinances" including the Protection of Investors Ordinance, this provision is unnecessary and is deleted.
Clause 5 also contains a new schedule to the Ordinance. Item 5 of Part III is amended to correct a typographical error.
Sir, I beg to move.
Proposed amendments
Clause 2
That clause 2(a) be amended, by deleting the definition of "authorized representative".
Clause 4
That clause 4 be amended --
(a) in new section 7A (1) --
(i) by deleting "subsection (2)" and substituting "subsections (2) and (4)"; and (ii) by deleting everything after paragraph (d) and substituting --
"shall submit to the Commission within 10 working days after the issue by any person of any advertisement, invitation or document referred to in section 4(2) (fa), (fb) or (fc) such information with respect to that advertisement, invitation or document, and in such form, as the Commission may specify by notice in the Gazette.".
(b) By adding after new section 7A(3) --
"(4) This section does not apply to the issue of any advertisement, invitation or document to which section 4(3) or (5) applies.
(5) For the purposes of subsection (1) "authorized representative", in relation to the issue of any advertisement, invitation or document, means any person resident in Hong Kong who is authorized by a multilateral agency or overseas bank, as the case may be, to act for an on hehalf of that agency or bank with respect to that issue.".
Clause 5
That clause 5 be amended --
(a) by deleting new section 9.
(b) in item 5 of Part III of the Schedule, by deleting "of" and substituting "for".
At this point Mr. Peter WONG declared his interest as a non-executive director of the Securities and Futures Commission.
Question on the amendments proposed, put and agreed to.
Question on clauses 2, 4 and 5, as amended, proposed, put and agreed to.
LEGAL PRACTITIONERS (AMENDMENT) BILL 1989
Clauses 1, 5, 7, 8, 12 to 15, 17 and 18 were agreed to.
Clauses 2, 3, 4, 6, 9, 10, 11 and 19
ATTORNEY GENERAL: Sir, I move that clause 2, 3, 4, 6, 9, 10, 11, and 19 be amended as set out in the paper circulated to Members. The effect of the deletion of clause 2 together with other proposed amendments is that judicial officers will, as explained by Mr. Edward HO in the Second Reading debate, not be eligible to become admitted as either barristers or solicitors under the scheme proposed under the Bill.
The proposed amendments to clause 3 deal with the conditions for admission as a solicitor. Proposed new sub-section (1AA) governs residence requirements for United Kingdom solicitors seeking admission in Hong Kong and now provides three alternative bases on which such a solicitor may be residentially qualified: three-month residence immediately before admission, or being a Hong Kong permanent resident as defined in the Immigration Ordinance or being ordinarily resident in Hong Kong for at least seven years.
Proposed new sub-section (1AB) deals with the admission as a solicitor of a lawyer with seven years in Government legal service. It now requires the applicant to be admitted as a solicitor or legal practitioner in one of the countries listed in the schedule to the Bill. The applicant must show that, for the three years immediately or recently before the application for admission, he or she was engaged on work similar to that usually undertaken by a solicitor. The applicant must also intend, if
admitted, to commence practice as a solicitor and must pass an examination in solicitors' accounts, unless exempted by the Chief Justice under new sub-section (1AC). Proposed new sub-section (1AD) clarifies the criteria for the admission as solicitors of certain law lecturers.
New sub-section (1AE) imposes a limit on admissions as solicitors of ten persons for each 12 months in relation to those who were in Government legal service and new sub-section (1AF) adds a definition of "legal officer".
As originally drafted, clause 4 of the Bill in effect imposed a quota on the number of practising certificates that the Law Society could issue in a year to former Government lawyers admitted as solicitors under clause 3 and it required the Chief Justice's approval before such practising certificates could be issued. The Law Society objected to these provisions, because they were inconsistent with the current arrangements concerning the issue of practising certificates. That objection has been accepted. The amendments to clause 3(1AB) which I have just described will now impose the quota on the number of admissions in a year. New clause 4 omits the provisions dealing with issue of practising certificates. Paragraph (b) of the new clause
corrects a drafting error in the original Bill.
The amendment of clause 6 set out in paragraph (a) of the paper circulated to Members is a consequential change. Paragraph (b) of the amendment provides that where a former Government lawyer is admitted as a solicitor under clause 3 but does not commence practice within 12 months after his admission, his name can be removed from the roll of solicitors.
The amendment to clause 9 deletes the reference to "natural place of domicile" in the list of possible alternative residential qualifications in section 27 of the Ordinance. After careful consideration, it is accepted that the spirit of this phrase is adequately covered by the remaining criteria in section 27.
I turn now to the replacement of clause 10. As originally drafted, clause 10 would have permitted long serving lawyers within the Judiciary or Government legal service who are qualified in one of the scheduled countries to be admitted as barristers. New clause 10 now restricts this admission route to lawyers from the Legal Department of the Government, in keeping with the recommendations of the UMELCO standing panel and the committee under the chairmanship of the former Chief Justice. The new clause will also require applicants to have had advocacy experience and during the three years immediately or recently, before applying for admission, to have been engaged in work usually undertaken by a barrister of 10 years seniority. Other amendments are identical in effect with those made in clause 3 in respect of solicitors. Finally, there will be an annual quota of four on those admitted as barristers under this clause.
The effect of the new clause 11 is twofold. First, as I mentioned in relation to clause 10, the quota for barristers will apply to admissions and not to the issue of practising certificates. Secondly, section 32 of the Ordinance is to be amended so that if a barrister who is admitted under this scheme does not commence practice within 12 months of admission, this will be cause to remove him or her from the roll of barristers.
The main amendment to clause 19 is to add Singapore in the list of countries in the schedule of the Bill.
Sir, I beg to move.
Proposed amendments
Clause 2
That clause 2 be amended, by deleting clause 2.
Clause 3
That clause 3 be amended, by deleting new subsections (1AA), (1AB) and (1AC) and substituting --
"(1AA) The Court shall not admit a person under section 4(1)(a)(iii) unless --
(a) he has resided in Hong Kong for at least 3 months immediately before his admission;
(b) he is a Hong Kong permanent resident as defined in the Immigration Ordinance (Cap. 115); or
(c) he has been ordinarily resident in Hong Kong for at least 7 years.
(1AB) In addition to the powers conferred on it by subsection (1) and notwithstanding section 4(1), but subject to subsection (1AE), the Court may, after the Chief Justice has consulted the Attorney General and the Council, admit a person as a solicitor of the Supreme Court of Hong Kong, in such manner as may be prescribed by the Chief Justice, if --
(a) the Court is satisfied that he --
(i) has been admitted as a solicitor in a jurisdiction listed in Schedule 1 or if there is no admission of solicitors in such jurisdiction, as a legal practitioner in that jurisdiction;
(ii) has been employed for at least 7 years in the public service of the Government as a legal officer;
(iii) has been so employed --