HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4135 OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 30 June 1993
The Council met at half-past Two o'clock
PRESENT
THE PRESIDENT
THE HONOURABLE JOHN JOSEPH SWAINE, C.B.E., LL.D., Q.C., J.P.
THE CHIEF SECRETARY
THE HONOURABLE SIR DAVID ROBERT FORD, K.B.E., L.V.O., J.P.
THE FINANCIAL SECRETARY
THE HONOURABLE NATHANIEL WILLIAM HAMISH MACLEOD, C.B.E., 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 MRS SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE MARTIN LEE CHU-MING, Q.C., J.P.
THE HONOURABLE DAVID LI KWOK-PO, O.B.E., J.P.
THE HONOURABLE PANG CHUN-HOI, M.B.E.
THE HONOURABLE SZETO WAH
THE HONOURABLE TAM YIU-CHUNG
THE HONOURABLE ANDREW WONG WANG-FAT, O.B.E., J.P.
THE HONOURABLE EDWARD HO SING-TIN, O.B.E., J.P.
THE HONOURABLE RONALD JOSEPH ARCULLI, O.B.E., J.P.
THE HONOURABLE MARTIN GILBERT BARROW, O.B.E., J.P.
THE HONOURABLE MRS PEGGY LAM, O.B.E., J.P.
THE HONOURABLE MRS MIRIAM LAU KIN-YEE, O.B.E., J.P.
THE HONOURABLE LAU WAH-SUM, O.B.E., J.P.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4136 DR THE HONOURABLE LEONG CHE-HUNG, O.B.E., J.P. THE HONOURABLE JAMES DAVID McGREGOR, O.B.E., I.S.O., J.P. THE HONOURABLE MRS ELSIE TU, C.B.E.
THE HONOURABLE PETER WONG HONG-YUEN, O.B.E., J.P. THE HONOURABLE ALBERT CHAN WAI-YIP
THE HONOURABLE VINCENT CHENG HOI-CHUEN, J.P. THE HONOURABLE MOSES CHENG MO-CHI
THE HONOURABLE CHEUNG MAN-KWONG
THE HONOURABLE CHIM PUI-CHUNG
REV THE HONOURABLE FUNG CHI-WOOD
THE HONOURABLE FREDERICK FUNG KIN-KEE THE HONOURABLE TIMOTHY HA WING-HO, M.B.E., J.P. THE HONOURABLE MICHAEL HO MUN-KA
DR THE HONOURABLE HUANG CHEN-YA
THE HONOURABLE SIMON IP SIK-ON, O.B.E., J.P. DR THE HONOURABLE LAM KUI-CHUN
DR THE HONOURABLE CONRAD LAM KUI-SHING, J.P. THE HONOURABLE LAU CHIN-SHEK
THE HONOURABLE EMILY LAU WAI-HING
THE HONOURABLE LEE WING-TAT
THE HONOURABLE ERIC LI KA-CHEUNG, J.P.
THE HONOURABLE FRED LI WAH-MING
THE HONOURABLE MAN SAI-CHEONG
THE HONOURABLE STEVEN POON KWOK-LIM
THE HONOURABLE HENRY TANG YING-YEN, J.P.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4137 THE HONOURABLE TIK CHI-YUEN
THE HONOURABLE JAMES TO KUN-SUN
DR THE HONOURABLE SAMUEL WONG PING-WAI, M.B.E., J.P. DR THE HONOURABLE PHILIP WONG YU-HONG
DR THE HONOURABLE YEUNG SUM
THE HONOURABLE HOWARD YOUNG, J.P.
THE HONOURABLE ZACHARY WONG WAI-YIN
DR THE HONOURABLE TANG SIU-TONG, J.P.
THE HONOURABLE CHRISTINE LOH KUNG-WAI
THE HONOURABLE ROGER LUK KOON-HOO
THE HONOURABLE JAMES TIEN PEI-CHUN, O.B.E., J.P.
ABSENT
THE HONOURABLE HUI YIN-FAT, O.B.E., J.P.
THE HONOURABLE NGAI SHIU-KIT, O.B.E., J.P.
THE HONOURABLE LAU WONG-FAT, O.B.E., J.P.
THE HONOURABLE MARVIN CHEUNG KIN-TUNG, J.P.
THE HONOURABLE ANNA WU HUNG-YUK
IN ATTENDANCE
MR MICHAEL LEUNG MAN-KIN, C.B.E., J.P.
SECRETARY FOR EDUCATION AND MANPOWER
MR YEUNG KAI-KIN, C.B.E., J.P.
SECRETARY FOR TRANSPORT
MR MICHAEL SUEN MING-YEUNG, J.P.
SECRETARY FOR HOME AFFAIRS
MRS ELIZABETH WONG CHIEN CHI-LIEN, I.S.O., J.P.
SECRETARY FOR HEALTH AND WELFARE
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4138
MR CHAU TAK-HAY, J.P.
SECRETARY FOR TRADE AND INDUSTRY
MR GORDON SIU KWING-CHUE, J.P.
SECRETARY FOR ECONOMIC SERVICES
MR DONALD TSANG YAM-KUEN, O.B.E., J.P.
SECRETARY FOR THE TREASURY
MR MICHAEL DAVID CARTLAND, J.P.
SECRETARY FOR FINANCIAL SERVICES
MR PETER LAI HING-LING, J.P.
SECRETARY FOR CONSTITUTIONAL AFFAIRS
MR CANICE MAK CHUN-FONG, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
MR KENNETH JOSEPH WOODHOUSE, J.P.
SECRETARY FOR SECURITY
THE CLERK TO THE LEGISLATIVE COUNCIL
MR CLETUS LAU KWOK-HONG
THE DEPUTY CLERK TO THE LEGISLATIVE COUNCIL MR PATRICK CHAN NIM-TAK
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4139 Papers
The following papers were laid on the table pursuant to Standing Order 14(2): Subject
Subsidiary Legislation L.N. No.
Prevention of Bribery Ordinance (Amendment
of Schedule) Order 1993................................................................. 215/93
Federation of Hong Kong Industries (Variation
and Addition of Scheduled Groups)
Notice 1993 .................................................................................... 218/93
Federation of Hong Kong Industries Ordinance
(Amendment of Fees) Resolutions ................................................. 219/93 Specification of Public Office .................................................................... 220/93
Forests and Countryside (Amendment)
Ordinance 1993 (14 of 1993)
(Commencement) (No. 2) Notice 1993........................................... 221/93
Judicial Proceedings (Adjournment during Gale
Warnings) (Amendment) Ordinance 1993
(41 of 1993) (Commencement) Notice 1993 .................................. 222/93 Telephone Regulation................................................................................. 223/93
Public Health and Municipal Services (Public
Markets) (Designation and Amendment of
Tenth Schedule) (No. 3) Order 1993............................................... 224/93
Shipping and Port Control (Typhoon Shelters)
Regulations (Amendment of Schedule)
Order 1993...................................................................................... 225/93
Abattoirs (Urban Council) (Amendment)
Bylaw 1993 .................................................................................... 226/93
Slaughterhouses (Urban Council) (Amendment)
Bylaw 1993 .................................................................................... 227/93
Declaration of Markets in the Urban Council
Area (Amendment) (No. 2) Declaration
1993................................................................................................ 228/93
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4140
Factories and Industrial Undertakings (Noise
at Work) Regulation (L.N. 239 of 1992)
(Commencement) Notice 1993....................................................... 229/93
Companies (Forms) (Amendment) Regulation
1993................................................................................................ 230/93
Companies (Amendment of Eighth Schedule)
Order 1993...................................................................................... 231/93
Money Lenders (Amendment) (No. 2)
Regulation 1993 ............................................................................. 232/93
Television (Royalty and Licence Fees)
Regulation ...................................................................................... 233/93
Foreign Judgments (Reciprocal Enforcement)
(Amendment) Order 1993............................................................... 234/93
Limited Partnerships (Amendment of Schedule)
Order 1993...................................................................................... 235/93
Maintenance Orders (Reciprocal Enforcement)
(Designation of Reciprocating
Countries) (Amendment) Order 1993............................................. 236/93
Smoking (Public Health) (Notices)
(Amendment) (No. 2) Order 1992
(Amendment) Order 1993............................................................... 237/93
Employees Retraining Ordinance (Amendment
of Schedule 2) (No. 4) Notice 1993................................................ 238/93
Marine Fish (Marketing) (Rate of Commission)
Notice ............................................................................................. 239/93
Toys and Children's Products Safety Ordinance
(Cap. 424) (Commencement) Notice
1993................................................................................................ 240/93 Sessional Paper 1992-93
No. 84 — Report of changes to the approved Estimates of Expenditure approved during the final quarter of 1992-93 Public Finance Ordinance: Section 8
Affirmation
Mr James TIEN Pei-chun made the Legislative Council Affirmation.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4141 Address
Report of changes to the approved Estimates of Expenditure approved during the final quarter of 1992-93
Public Finance Ordinance: Section 8
SECRETARY FOR THE TREASURY: Mr President, in accordance with section 8(8)(b) of the Public Finance Ordinance, I table for Members' information a summary of all changes made to the approved Estimates of Expenditure for the final quarter of the financial year 1992-93.
Supplementary provision of $6,647 million was approved. This included $5,442 million for the implementation of the 1992 pay adjustment and $580 million to meet increased expenditure on public assistance and special needs allowances. The supplementary provision was fully offset, either by savings under the same or other Heads of Expenditure, or by the deletion of funds under the Additional Commitments subheads.
During the period, non-recurrent commitments were increased by $3.4 million and new non-recurrent commitments of $594.8 million were approved.
In the same period, a net decrease of 1 025 posts was approved. This was mainly attributable to the deletion of posts as a result of civil servants having opted for service with the Hospital Authority.
Items in the summary have been approved either by Finance Committee or under delegated authority. Those approved under delegated authority have been reported to the Finance Committee in accordance with section 8(8)(a) of the Public Finance Ordinance.
Oral answers to questions
Corrupt and illegal practices connected with public election
1. MISS EMILY LAU asked (in Cantonese): In view of the evidence given in the High Court in the recent election corruption case, will the Government inform this Council whether the Independent Commission Against Corruption (ICAC) has identified specific problems associated with the Legislative Council election held in the Regional Council Functional Constituency in 1991, and if so, what recommendations, if any, the ICAC has made to prevent their re-occurrence in future?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, evidence given in the High Court in the recent trial of Mr Gilbert LEUNG identified problems of vote buying and unlawful expenditure.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4142
In consultation with me, the Commissioner Against Corruption has agreed that the Commission's Corruption Prevention Department should examine these matters. That examination is underway. The Corruption Prevention Department will also closely observe the Regional Council Functional Constituency by-election and will review Functional Constituency election procedures generally. Based on the findings of this examination, the Commissioner will make recommendations to the Government as soon as possible.
MISS EMILY LAU (in Cantonese): Mr President, as the by-election for the Regional Council Functional Constituency will be held on the 28th next month, has the Administration considered asking the ICAC to submit the report as soon as possible before the by-election so that we may see how corruption can be prevented in such circumstances? Also, has the Administration considered debarring tainted witnesses from voting?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, on the question of examination by the ICAC Commissioner, surely one of the main observations that he will have to make will relate to the actual conduct of elections in the functional constituency and that will be a matter which he will need to look into before he can make recommendations. As regards the question of the voting rights of the so-called tainted witnesses, I can only say that a person's voting rights are specified in the law. Anybody who under the law has a right to vote can vote.
MR ALBERT CHAN (in Cantonese): Mr President, will the Administration's review also cover whether tainted witnesses should be allowed to continue to serve as members of district board or Regional Council? Does the Administration consider that allowing tainted witnesses to continue in office with the Regional Council will affect the Council's reputation?
PRESIDENT: Are you able to answer that, Secretary?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Yes, Mr President. There is currently no legal basis for any action to be taken against tainted witnesses as regards their qualification for membership of councils and boards. It is a very sensitive matter to disqualify a person who has not been subject to a proper trial by the court and found guilty of having committed an offence which warrants disqualification. I think we should not be tempted to make hasty changes to our electoral legislation relating to a subject where obviously the community should be given more time to express their views.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4143
MR CHIM PUI-CHUNG (in Cantonese): Mr President, in 1991, there were 60 members in the Legislative Council of whom three were ex-officio members, 18 including you, Mr President, were appointed by the Governor, 18 were elected by district-based election and 21 were elected by functional constituencies. Referring to the review of the 1991 election, may I know the ratio in respect of corruption between directly elected members and those elected by functional constituencies? Has the Administration taken any steps to prevent similar incidents from happening again?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President .....
PRESIDENT: I am sorry, I have not called on you yet, Secretary. I think that question strays way beyond the main question and answer, Mr CHIM.
MR LEE WING-TAT (in Cantonese): Mr President, in reply to Mr Albert CHAN's question a while ago, the Secretary said it would be unfair to tainted witnesses if they were debarred from continuing in public office without a proper trial by the court. In other parliaments, political parties very often would demand the resignation of tainted witnesses who have openly confessed their crimes though the court has not made any judgement against them. However, such is not the case in Hong Kong. As the two practices are entirely different, may I ask if the Administration will have a full review and public consultation on whether these tainted witnesses are still fit to hold public office?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, no doubt there are different rules and different regulations for different elected bodies in different countries. Our rules here are clear. There are no rules to prevent tainted witnesses from continuing in office with councils and boards to which they belong. We would of course be open minded and continue to listen to people's views on this matter.
MR HENRY TANG: Mr President, if a Legislative Councillor were convicted of any crime that draws a custodial sentence of over three months, he would lose his seat on the Legislative Council immediately and, on appeal, if he were acquitted of the charge and found to be innocent, he could not regain his seat despite his innocence. How is the Administration prepared to address that problem?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, allowing a Legislative Council Member serving a sentence of imprisonment to retain his seat pending the outcome of his appeal would create considerable uncertainties which would not be in the interest of his constituents and the public. The
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4144
disqualification provisions in our electoral law ensure that such uncertainties will not arise and that does not mean a prejudgement of any future appeal.
REV FUNG CHI-WOOD (in Cantonese): Mr President, the Secretary said he had asked the ICAC to conduct a review on functional constituency elections. But we know that corruption exists not only in functional constituency elections but also in other elections. Would the Secretary also ask the ICAC to review other forms of elections with a view to preventing corruption?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, the examination by the ICAC Commissioner, which I referred to in my main reply, was conducted as a direct consequence of the trial in the High Court that was the subject of Miss Emily LAU's question. As regards the question of prevention of corruption in elections generally in whatever constituency, that is of course a matter covered by existing provisions of the Corrupt and Illegal Practices Ordinance and it is an Ordinance which we are in the process of reviewing.
MR CHEUNG MAN-KWONG (in Cantonese): Mr President, I would like to ask a question on tainted witnesses from a different perspective. Can the Administration inform this Council whether it would consider requiring after a trial the resignation of tainted witnesses who are members of boards and councils as a condition of not bringing charges against them for the sake of the integrity of the boards and councils as well as public confidence?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I believe that is a question relating to prosecution policy which I am not, I am afraid, qualified to comment on. I wonder whether my colleague, the Attorney General, would wish to make any comments on it.
ATTORNEY GENERAL: Mr President, I think it would be quite improper to link immunity given in a criminal trial with a condition relating to taking part in elections or holding public office.
MR JIMMY McGREGOR: Mr President, will the Secretary indicate whether he believes it is morally wrong for a tainted witness to continue to serve in an elective office where honesty and integrity are expected of the incumbent?
PRESIDENT: You are being asked to give an opinion, Secretary, but is there a policy?
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4145
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I think government decisions and actions have to be based on government policy. Whatever my own moral views, they are not, I believe, of particular interest to this Council.
Memorandum of Understanding on new airport
2. MR CHIM PUI-CHUNG asked (in Cantonese): According to the provision of Clause G of the "Memorandum of Understanding Concerning the Construction of the New Airport in Hong Kong and Related Questions" which was signed in June 1991, the Chinese Minister of Foreign Affairs and the British Foreign Secretary will meet twice a year, while the Director of the Hong Kong and Macau Affairs Office of the State Council of China and the Governor of Hong Kong will also hold regular meetings. In this regard, will the Government inform this Council:
(a) of the specific actions taken by the Chinese and British Governments over the past two years to implement the provision; and
(b) whether the Administration is aware of any arrangements made in accordance with the spirit of the Memorandum of meetings to be held in future between the Chinese Minister of Foreign Affairs and the British Foreign Secretary, and between the Director of the Hong Kong and Macau Affairs Office and the Governor of Hong Kong; if so, what the details are; if no such arrangements were made what actions the Administration will take, and whether assessment will be made as to the impact of such non-fulfilment of the Memorandum on the general public?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President,
(a) In accordance with Clause G of the Memorandum of Understanding signed on 3 September 1991, the British Foreign Secretary met the Chinese Minister of Foreign Affairs in September 1991, March 1992, and September 1992, and the Governor met the Director of the Hong Kong and Macau Affairs Office under the State Council in September 1991, January 1992, June 1992 and October 1992.
(b) The British and the Chinese Governments have made plain that they remain committed to the Memorandum of Understanding. Arrangements for any such meetings in future will, as in the past, be made known to Hong Kong.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4146
MR CHIM PUI-CHUNG (in Cantonese): Mr President, we learnt from the acting Secretary's reply that the British Foreign Secretary and the Chinese Minister of Foreign Affairs had not met each other for more than 10 months and our Governor and Director LU Ping of the Hong Kong and Macau Affairs Office of the State Council had not had meetings for nine months. Does this imply that the implementation of the Memorandum of Understanding is not strictly adhered to? Given the apparent reluctance of the two sovereign states to implement the agreement and the Memorandum of Understanding they reached, how can Hong Kong people be expected to honour the Memorandum though it has a binding effect on us?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I should first like to repeat part of my main answer which is that the British and Chinese Governments have made plain that they remain committed to the Memorandum of Understanding. When the Foreign Secretary would meet his Chinese counterpart, when the Governor might meet Director LU Ping of the Hong Kong and Macau Affairs Office of the State Council are clearly matters which have to be decided mutually. Over the last few months I believe neither side considered that the timing was particularly right for a productive meeting.
Piracy in South China Sea
3. MR RONALD ARCULLI asked: In respect of the last minute withdrawal of the Marine Department's position paper on growing incidents of piracy in the South China Sea intended for tabling at the United Nations International Maritime Organization meeting held in London in May 1993, will the Government inform this Council:
(a) of the legal, political or other reasons for the withdrawal;
(b) whether the decision to withdraw the paper came from the British or the Hong Kong Government;
(c) whether the Administration has other plans to present the paper or any other updated reports on the same subject to the international community in the near future; and
(d) how the Administration will deal with the problem of increasing use of firearms against merchant ships in the South China Sea which may involve Hong Kong ships and crew members?
SECRETARY FOR ECONOMIC SERVICES: Mr President, the International Maritime Organization (IMO) is the specialist agency of the United Nations which has, as one of its principal objects, the improvement of safety at sea. One
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4147
of its committees, the Maritime Safety Committee, formulates safety standards for ships. In view of worldwide concerns the Committee has been tasked by the IMO to consider the matter of piracy. Accordingly "piracy and armed robbery against ships" was included on the agenda for the meeting of the Committee on 26 May.
In Hong Kong, the Marine Department's Maritime Rescue Co-ordination Centre collates reports of alleged acts of piracy for the IMO. In a paper entitled Piracy and Armed Robbery against Ships which was issued on 29 March to the Secretariat of the Maritime Safety Committee, the Marine Department included the date, time, and location of 27 incidents reported to the Centre during the period September 1992 to 21 March 1993. These incidents occurred across a wide area of the sea between Singapore and Japan.
Unfortunately, the paper contained some information which could be regarded as misleading. Piracy, as defined in international law, is committed by persons from on board a private vessel for private ends. Eight of the incidents listed in the paper involved the exercise of jurisdiction by official vessels. Also, between March 1993 and the date of the meeting of the Maritime Safety Committee in May, a further eight more incidents had been reported. The Hong Kong Government therefore decided on its own initiative to withdraw the paper and instead presented an oral, correct and updated report at the meeting of the Committee. The Hong Kong delegate fully briefed the Committee on the number and nature of incidents involved. He also expressed concern about the incidents of piracy, the degree of force used in some cases and the dangers involved in attempting to use firearms.
Mr President, international shipping services remain one of Hong Kong's economic life lines, the safety of ships and their crews is of great importance — to us and to many of our trading partners in the Asia Pacific Region. We shall therefore continue to take all available measures in consultation with the international community to safeguard the seaways, by reporting incidents, continuing liaison, through proper channels with our neighbours and by providing information and guidance to the shipping community.
MR RONALD ARCULLI: Mr President, I wonder whether the Secretary for Economic Services would elaborate on the eight incidents that he has referred to as being an exercise of jurisdiction by official vessels; whether any of those incidents involved Hong Kong vessels and Chinese vessels, and if so, whether the Administration has sought clarification from the Chinese Government as to whether they were in fact official interceptions by official Chinese vessels and whether the Administration is satisfied with the replies that were given?
SECRETARY FOR ECONOMIC SERVICES: Mr President, on the generality of the eight incidents, seven of them involved vessels from China and one involved an official vessel from Vietnam. May I, Mr President, refer this
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4148
question to my colleague, the Secretary for Security, who actually dealt with those incidents?
SECRETARY FOR SECURITY: Mr President, in all cases involving Hong Kong ships or Hong Kong personnel on ships, we make representations regarding these interceptions to the relevant authorities. We also, as my colleague has pointed out in his main reply, report such incidents to the International Maritime Organization.
MR JAMES TO (in Cantonese): Mr President, I have had a meeting with the Deputy Secretary for Security to discuss this issue. According to the understanding that I have got from the Deputy Secretary, piracy must involve non-official vessels intercepting other vessels for private ends; without meeting this condition piracy cannot be established. So any conduct cannot be considered piracy if it involves official vessels. My question is: If the government of any particular country, say the Chinese Government or the Vietnamese Government, cannot ascertain whether particular incidents are or are not official interceptions, then how will our Administration classify these incidents? Will it treat them as piracy and report them to the International Maritime Organization, or will it settle the matter by leaving it unsettled?
SECRETARY FOR SECURITY: Mr President, the incidents described by Mr TO are classified as interceptions. We understand that, in the case of the Chinese interceptions to which my colleague referred in his main answer, the Chinese authorities suspect the vessels involved of smuggling into China, but our definition of them is interceptions.
MR JAMES TO (in Cantonese): Mr President, the Secretary may not have understood my question, so perhaps I will repeat once again. According to international law, interceptions involving official vessels cannot be piracy, but as regards some incidents which no government has ever confirmed to our Administration as official interceptions, will we treat them as piracy and report them accordingly to the International Maritime Organization, or will we settle them by leaving them unsettled without any reports made?
PRESIDENT: Secretary, do you wish to have the question clarified?
SECRETARY FOR SECURITY: No, I think I have understood the question, Mr President. I shall try to answer it. Incidents involving official vessels operating in their own territorial waters are defined as interceptions. Incidents involving private vessels operating in international or other waters are defined as piracy. Both categories of incidents are reported, as my colleague has
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4149
pointed out, to the Marine Department who, in turn, report them to the International Maritime Organization. The paper referred to in the main question contained a report on both categories of incidents. And in the case of interceptions, as I replied to Mr ARCULLI, any interceptions involving Hong Kong personnel or Hong Kong vessels are taken up by the Hong Kong authorities with the Chinese authorities.
DR TANG SIU-TONG (in Cantonese): Mr President, will the Administration inform this Council whether we have any actual plans to combat piracy in conjunction with neighbouring countries; and if so, what the role of our Administration is?
SECRETARY FOR SECURITY: Mr President, plans to combat piracy are, as I have described already, a matter for the International Maritime Organization because, as I have said, by definition they take place outside territorial waters. However, the more general point, I think, which is of relevance in Hong Kong is that we have taken considerable steps in conjunction with the Chinese authorities to try and curb a problem of pressing concern to both sides, namely, that of smuggling. And I am pleased to report that the good co operation with our neighbours has resulted in a reduction in the amount of smuggling taking place to and from Hong Kong.
MR ALBERT CHAN (in Cantonese): Mr President, the Hong Kong Government's sudden withdrawal of a paper at an international meeting recently reveals that there are problems in the treatment of information concerning piracy by our government officials, particularly when the matter concerns whether the incidents involved vessels from the Chinese security authorities or pirates' vessels. Will the Administration inform this Council whether such confusion reveals that there are problems in the communication between the border security authorities of Hong Kong and that of China? If so, how will the Administration make improvements in order to avoid such situation from arising again?
SECRETARY FOR SECURITY: Mr President, the problem is one of definition, as I have explained in my answer to Mr TO, that is to say, the different definitions of piracy and of interception. The reason for the withdrawal of the paper from the IMO, as my colleague has pointed out, was that it contained inaccuracies in the interpretation of those definitions. As regards the second part of Mr CHAN's question, I do not think there is any communication problem or difficulty between ourselves and the Chinese authorities. This was simply an internal definition problem.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4150
MISS EMILY LAU (in Cantonese): Mr President, as our Administration could present an oral and correct report at the IMO meeting last month, then why could it not submit a written report at the same time? Although we accept that the report made earlier in March may have been outdated and that part of its content is inaccurate, yet why could a written report not be made available as an oral report was possible? Mr President, may I ask whether it is because many of these incidents involved China and therefore were regarded as very sensitive by the Administration and so the paper had to be withdrawn?
SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Mr President, I have already explained in my reply the reasons for withdrawing the paper. The main reason is that the incidents listed in the paper do not fit the theme topic of the meeting.
Moreover, the Hong Kong delegate had upon arrival discussed with other delegates of the meeting before deciding to withdraw the paper and present instead an oral report at the meeting. Such a decision was not made because of the influence of or pressure from any other parties.
MR JIMMY McGREGOR: Mr President, in view of the need to maintain international confidence in the safety of the port of Hong Kong, will the Government indicate whether there is any evidence at all that any of the ships detained by Chinese vessels and taken into Chinese waters were actually engaged in smuggling, and would the Secretary also tell us whether a copy of the verbatim report to the IMO can be released to this Council?
PRESIDENT: Secretary for Security, I think for the first part of that question.
SECRETARY FOR SECURITY: Mr President, as regards the first part of the question, it is our understanding that the vessels involved in these interceptions in Chinese waters were involved in smuggling activities. But because they took place outside our jurisdiction we do not have any concrete information as to whether the ships were engaged in smuggling, and any action to prove it is obviously to be taken by the authorities that took the steps to make the interception. But it is certainly our understanding that the Chinese authorities had grounds for believing that the vessels were involved in smuggling.
SECRETARY FOR ECONOMIC SERVICES: Mr President, on the question of the actual verbatim report, I shall go back and talk to the Director of Marine. And if he confirms that the release of the document will not break the rules of the Committee concerned, I shall be happy to circulate it to Members.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4151
MR RONALD ARCULLI: Mr President, I think neither the Secretary for Security nor the Secretary for Economic Services have actually answered my question as to whether the Administration was satisfied with the replies from the Chinese Government regarding the incidents involving either Hong Kong crew members or Hong Kong vessels.
SECRETARY FOR SECURITY: Mr President, I apologize if I have not answered the question. On the number of incidents that I referred to, we have made representations. It so happens that none of these interceptions involved Hong Kong crew members whatsoever. There have been other incidents known as incursions which have involved Hong Kong crew members and we have once again made representations to the Chinese authorities. As a result, the number of such incursions has decreased and, even more important, the degree of violence used has decreased significantly. So I think to that extent we are satisfied with our representations.
Divergence of views between Exco and Legco
4. MR LEE WING-TAT asked (in Cantonese): In view of the divergence of views between the Executive Council and the Legislative Council in decisions taken in relation to issues such as policy on well-off tenants in public housing estates, central provident fund, increase in tunnel tariffs and the application scheme for British National (Overseas) passports, will the Government inform this Council:
(a) whether it is aware of a lack of co-ordination and hence a communication gap between the Executive Council and the Legislative Council, and if so, how the communication channel could be strengthened; and
(b) whether the Executive Council would, before taking a decision, fully consult the Legislative Council which represents public opinion and consider its views?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, as long as the Executive Council and the Legislative Council are two separate bodies and play different roles, it is not surprising that there would be occasions on which there are differences of views between them. It is wrong to infer from this that there is a lack of co-ordination between them or that a communication gap exists.
Members of the Executive Council have not lost touch with their colleagues in the Legislative Council. Indeed, as it is always the case, the opinions of the Legislative Council are widely known and well expressed through the media. Members of the two Councils also maintain contacts
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4152
through various informal channels and in informal meetings organized between Members individually or collectively.
There is now also the Governor's question time, which undoubtedly has brought even greater accountability and openness of the work of the Executive Council and the executive to the Legislative Council and the community.
In his policy address, the Governor proposed the setting up of a Government-LegCo Committee to provide a forum of communication between the executive and the Legislative Council. We would be happy to pursue the proposal further should Members feel that it would serve as an additional, useful channel of communication.
We would also be happy to consider any constructive proposals from Members of the Legislative Council.
MR LEE WING-TAT (in Cantonese): Mr President, in the second paragraph of his reply, the Secretary says that Members of the Executive Council will know the views of their colleagues in the Legislative Council through the media and various informal channels. Although the media in Hong Kong are very well-developed, I believe there will never be enough coverage that can make known all the views of the Legislative Council Members. Moreover, "informal channels" are not proper channels. Under the existing system of the Legislative Council, there are motion debates and House committee and panel meetings where decisions are made; may I ask whether the Executive Council will take into account these views of the legislature fully when formulating its own policies? If yes, why did the Administration not mention that in its reply?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I have indeed said that Members of the Executive Council would be aware of the opinions and views of Members of this Council through a variety of means. These include, of course, not just the media but also meetings and contacts of many kinds. As to whether the views of Members of this Council will be carefully considered in reaching decisions on government policies and proposals, I can of course confirm a very definite answer: Yes, they are very seriously listened to.
MR VINCENT CHENG: Mr President, referring also to the second paragraph of the reply, can the Secretary inform this Council what the various informal channels are and the frequency of such informal meetings? Would he include, say, occasional chats at cocktail parties as informal channels or bumping into one another at horse race meetings?
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4153
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, informal channels occur in a variety of ways. I am sure that Members of this Council have numerous chances to meet Members of the Executive Council. Such may occur in informal meetings between individual Members, or in informal meetings between groups of Members, or in the form of contacts on social and other occasions. I would have hoped, however, that should Members of this Council have any constructive suggestions as to how further communication or further improvement in communication can be made, they would seriously put them forward.
DR YEUNG SUM (in Cantonese): Mr President, under the existing constitutional arrangements, the Executive Council is to assist the Governor in making decisions on matters of policy while the Legislative Council is to play a monitoring role. However, in some cases recently, for example, the Western Harbour Crossing, it has the endorsement of the Executive Council on how it is going to be operated; and in this connection, does the Administration think that the monitoring or examination of similar measures by the Legislative Council will create a lot of administrative problems for the Government or will even cause worries amongst investors? Will the Administration inform this Council with all frankness whether the Executive Council deliberately circumvents the check and balance between the executive and the legislature, that is, reducing the role of the Legislative Council in monitoring the Government?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, without commenting on the specific issue that was raised by the Honourable Member, that is, the question of the Western Harbour Crossing, I would simply say that, constitutionally speaking, our system is such that it falls to the executive to make proposals — legislative proposals, funding proposals, and all other kinds of proposals — to this Council; it is the responsibility of this Council to examine those proposals and it is the responsibility of this Council to question the executive on those proposals. I do not think that anyone, certainly none on the official bench here, would wish to see that system being circumvented.
MR FREDERICK FUNG (in Cantonese): Mr President, in the fourth paragraph of his reply, the Secretary says and I quote, "In his policy address, the Governor proposed the setting up of a Government-Legco Committee to provide a forum of communication between the Executive Council and the Legislative Council". We clearly remember that this Committee was referred to in a letter from the Chief Secretary to Mrs Elsie TU, Chairman of the House Committee half a year ago in which it says: First, the Committee will be a channel of communication between the Legislative Council and the Government (not the Executive Council); second, its function is confined to discussing the items of business of the Legislative Council meetings. May I ask whether there is any inconsistency between the answer given by the Chief Secretary then and that the by Secretary now. Moreover, some Members of this Council asked at that time whether all
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4154
the Members of the Legislative Council could meet the Administration or Members of the Executive Council regularly to discuss policy matters. Had this proposal been considered? If yes, when will it be implemented? If no, why?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, the Chief Secretary's letter that was referred to by the Honourable Member will of course go on record. I do not believe that anything I have said in my main reply contradicts what the Chief Secretary has said. Our position on the proposed Government-Legco Committee remains the same, that is to say, from our point of view it is a constructive proposal and we are certainly prepared to pursue that proposal further if Members so desire. As to the question of other formal means of meeting between the executive or the Government or the Administration — call it what you will — and Members of the Legislative Council, certainly there are already many occasions where there are direct meetings between them. I do believe Members of the Executive Council also have meetings with Members of this Council. Whether it is formal or informal meeting is a matter to be further considered.
MR HOWARD YOUNG: Mr President, since the disbandment of OMELCO and the separation of the Executive Council and the Legislative Council, it is certainly my distinct impression that the only time a legislator sees the face of an Executive Councillor and vice versa is when one or the other shows up on the television screen to say something. But this is not two-way communication until we have interactive cable TV. So can the Government, before we have interactive cable TV, commit itself to studying ways and means of formalizing meetings between the two Councils so that Members of the two Councils can sit down seriously to discuss business of common interest rather than rubbing shoulders at cocktail parties?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, the Government would obviously be prepared to listen to and consider seriously any constructive proposals.
CHIEF SECRETARY: Mr President, could I beg your indulgence to add one more point to the answer from my honourable colleague. Could I just remind Members of this Council that there was a very strong view in this Council that the institution of the OMELCO should be abolished, pursued particularly strongly by one political party? It was in response to that that we in the Administration set up an independent Legislative Council and that is one of the reasons why the channels of communication are that much more difficult. Clearly, if Members would wish to resurrect some of the original meetings of the OMELCO which used to take place and which used to provide that channel of communication, I am sure Members of the Executive Council and the Administration would look kindly upon such a proposal.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4155 DR LEONG CHE-HUNG: A point of clarification, Mr President?
PRESIDENT: Mr ARCULLI first, I think, Dr LEONG.
MR RONALD ARCULLI: Mr President, I am glad I am the last but one to ask a supplementary to this question. From the answers given by the Secretary for Constitutional Affairs, am I right in thinking that the Government — or the Administration, I should say — is actually satisfied with the current level of communication or the lack of it between the Executive Council and Members of this Council?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, in many things in life we are never satisfied with the achievements we have made. I am sure that in all things there is much room for manoeuvre.
PRESIDENT: Dr LEONG, exceptionally as a supplementary if you want ..... DR LEONG CHE-HUNG: No, it is just a point of clarification, Mr President. PRESIDENT: You can clarify something then.
DR LEONG CHE-HUNG: Thank you, Mr President. If I could take up a point the Chief Secretary has just made, the move by some Members of this Council to separate the Legislative and Executive Councils — to separate the roles of these two bodies — is in no way a means to separate the Members or a severing of communication between the two groups.
PRESIDENT: You do not have a question, Dr LEONG?
DR LEONG CHE-HUNG: No, it was just a point of clarification, Mr President.
Foreign domestic helpers
5. MRS ELSIE TU asked: Overseas domestic workers who are abused or have their contracts unreasonably terminated may take legal action against their employers. As legal action may take time to conclude and during such period workers are not permitted to take up employment, will the Government inform
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4156
this Council whether accommodation and financial assistance is given to those with genuine hardship?
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, it is our experience that foreign domestic helpers usually have ways of finding temporary accommodation through the consulates, church and worker organizations. Some would prefer to stay with friends. The family services centres of Social Welfare Department can arrange accommodation in one of the two shelters for battered women for female foreign domestic helpers who are genuinely ill-treated.
If a foreign domestic helper does not want to wait in Hong Kong, he or she can return to the home country in the interim and in many cases such workers can actually apply for a new contract with a new employer and come back to Hong Kong later on. In serious cases involving allegations of criminal offence, the Government will consider paying for passages to bring them back to facilitate court proceedings.
We understand that some consulates have a special labour section to look after employment matters of their nationals in Hong Kong. For instance, the Philippine Consulate operates a Centre which provides food and accommodation free of charge to Filipino workers.
MRS ELSIE TU: Mr President, the Secretary's reply makes vague statements on assistance for foreign workers. For example in the first paragraph he says, "they usually have ways of finding temporary accommodation through the consulates, church and worker organizations, ..... (or) ..... in ..... shelters for battered women." And in the third paragraph he says he "understand(s) that some consulates have a special labour section." This is all very vague. I actually know that frequently none of these ways are available to foreign domestic workers. So I would like to ask the Secretary if in the absence of any concrete assistance for these workers he will consider applying Article 6 of the International Covenant on Economic, Social and Cultural Rights which, and I quote, "recognizes the right to work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts"?
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, in answer to the first part of Mrs TU's question with regard to the first paragraph of my answer, the total number of places available in the two shelters is 80; with regard to the third paragraph of my answer, there are four centres operating in Hong Kong with over 100 places available. In addition, the service centres of the Social Welfare Department have not in the last three years received any requests for help from such workers. So the evidence seems to point to the fact that they can make their own arrangements to facilitate their stay in Hong Kong. On the second part of Mrs TU's question, the relevant Hong Kong law, that is,
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4157
the Employment Ordinance, applies equally to such workers as to local workers and they are entitled to full protection under our existing laws. In addition, the contract in respect of these workers provides additional protection and facilities to enable them to work and live in Hong Kong and to be returned to their country of origin after they have finished their contract, within two years.
MRS ELSIE TU: Mr President, I do not think my question has been answered. I asked if they would be allowed to work since the International Covenant says that every person has a right to work.
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the contract entered into by both parties makes it absolutely clear that the foreign domestic worker must return to his or her country of origin within two weeks after termination of the contract. This has been made clear when the parties enter into the contract. In addition, guidance notes have been given to all workers before they come to Hong Kong. There is no question of Hong Kong contravening any existing local laws or international covenants which allow them to work in Hong Kong under such circumstances.
Maternity service for non-HK permanent resident mothers
6. MR MICHAEL HO asked (in Cantonese): Will the Government inform this Council:
(a) of the number of women who had babies in public hospitals, especially in Tuen Mun Hospital and Prince of Wales Hospital, in 1992 and the first five months of 1993; of these, how many were Chinese women who had entered Hong Kong either on Chinese two-way exit permits or illegally;
(b) what effect did the provision of maternity service to this category of people have on the resources and standard of service of public hospitals; and
(c) what the current policy on the provision of maternity service to non-Hong Kong residents is and whether it will be reviewed in the light of the above situation?
SECRETARY FOR HEALTH AND WELFARE: Mr President,
(a) The number of babies delivered in public hospitals during the whole year of 1992 and the first four months of 1993 were 46 247 and 15 062 respectively. Of those born in 1992, a total of 5 454 were delivered in Tuen Mun Hospital and 7 939 babies in Prince of Wales
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4158
Hospital. Corresponding available figures for the first four months of 1993 were 1 740 and 2 428.
According to records kept by the Hospital Authority, 529 or 9.7% of the babies delivered in Tuen Mun Hospital and 1 206 or 15.2% of those delivered in Prince of Wales Hospital in 1992 were born of women who had entered Hong Kong either on Chinese two-way exit permits or illegally. For the first four months of 1993, these figures were 254 or 14.6% and 459 or 18.9% respectively.
(b) Provision of the services mentioned above has been made from existing resources through efficient deployment of manpower and productivity without affecting the quality of care for other patients.
(c) Patients who do not hold a Hong Kong Identity Card or a British Passport are classified as Non-entitled Persons and charged the full costs of their medical treatment. However, two-way permit holders whose spouses are holders of Hong Kong Identity Cards and who can produce a marriage certificate issued by a competent authority are treated as Entitled Persons, while illegal immigrants under police custody are not required to pay any charges.
MR MICHAEL HO (in Cantonese): Mr President, it is mentioned in paragraph (b) of the main reply that they have no effect on either our resources or the quality of care for patients. By adding the number of patients who came here with two-way permits and those by illegal means, they represent 17.1% of the patients in each of the two hospitals mentioned in the reply. Moreover, since these two categories of people do not have prenatal care, babies born to them usually have a high incidence of complications. How can the Administration convince this Council that the 17% additional demand for services would have no effect at all on our resources? Also there is no doubt that the number of people coming in on two way permits will continue to increase. In the light of this trend, how is the Administration going to assess the additional resources required in the next few years, and with this rate of increase, is there any intention to raise the level of funds allocated for this purpose?
SECRETARY FOR HEALTH AND WELFARE: Mr President, our health and welfare services are available to those in Hong Kong who are in need of services irrespective of race, religion or ethnic backgrounds. Such is the virtue of our system and I am sure it is not the intention of this Council to alter the virtuous nature of our policy. As regards the birth rate of babies born of women who have come here either by illegal means or with two-way permits, I have looked at the statistics which indicate that not all of these babies born in Hong Kong were born in public hospitals. It is true to say that babies born in the public hospitals and the mothers who require care do eat into the resources of our
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4159
public hospitals. But as I said in my main reply, because of the efficiency and productivity of our staff such service provided would not affect the quality of care to other patients.
MR MICHAEL HO (in Cantonese): Mr President, I would like to follow up the reply of the Secretary. She mentioned that the 17% additional demand for services had been met through efficiency and productivity of staff. Is there really so much residual manpower in public hospitals to take care of such a large proportion of patients?
SECRETARY FOR HEALTH AND WELFARE: Mr President, the fact is we have coped and we will cope.
MR WONG WAI-YIN (in Cantonese): Mr President, I had raised a written question in this Council some time ago on pregnant women coming in on two-way permits to give birth to babies. The statistics then indicated that the number increased by 1 000 every year. The reply given by the Secretary for Security then was that he would take the matter up with China and urge them not to allow certain categories of pregnant women to come to Hong Kong. However, I understand that the relevant figure for the first four months this year did not come down but showed an upward trend. Does this mean that the discussion between the Hong Kong Government and the Chinese Government was of no avail?
PRESIDENT: Was that a question, Mr WONG?
MR WONG WAI-YIN (in Cantonese): Yes, Mr President. In answer to a question I raised in this Council last year, the Secretary for Security said he would discuss with China about the question of limiting the number of pregnant women coming in on two-way permits. But the figure for the first four months this year showed a continuous upward trend when compared with that of last year. Does this mean that the discussion between the Secretary and the Chinese authorities about limiting the number of pregnant women coming in on two-way permits was of no avail?
PRESIDENT: Are you able to answer that, Secretary?
SECRETARY FOR SECURITY: Mr President, I shall try and answer that. I think there are two answers to that question. The first point is that those coming in under two-way permits are not controlled by us. As Members will be aware, they are controlled by the Chinese authorities. As regards the entry
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4160
of ladies who are obviously pregnant, Hong Kong, like many other jurisdictions, makes no discrimination regarding the entry of such people. However, as the Honourable Member has pointed out, we are concerned about the impact these ladies coming in will have on our own resources, and accordingly, as was pointed out by the Honourable Member, we have made representations to the Chinese authorities to seek to persuade them to take some action to reduce the number of such people coming in. As the figures indicate, the numbers are still increasing, but I am hopeful that we can continue to persuade the Chinese authorities to take this more vigorously into consideration.
DR CONRAD LAM (in Cantonese): Mr President, in the maternity wards in Hong Kong, the number of patients admitted is dependent on the number of beds and the number of medical and nursing staff available, that is to say, they have a limit as to the number of patients they can cater for. With the existing maternity facilities of the Tuen Mun Hospital and the Prince of Wales Hospital and the present strength of medical and nursing staff there, may I know the maximum number of pregnant women they can handle each month? If the Secretary does not have the figure in hand, could she provide it to us later?
PRESIDENT: Can you relate that question to the main answer, Dr LAM, please?
DR CONRAD LAM (in Cantonese): Mr President, the ratio in fact has great relevance insofar as the quality of care and the pressure on staff are concerned. If, for example, a maternity ward is intended for 100 pregnant women each month but now has to serve 120 pregnant women, this will have a great impact on the quality of care to patients and will have great pressure on staff too.
SECRETARY FOR HEALTH AND WELFARE: Mr President, I do not have the figures available. I will certainly refer the question to the Hospital Authority for an appropriate reply.
MR JAMES TO (in Cantonese): Mr President, referring to the reply of the Secretary for Security a while ago, I do not understand why he said Hong Kong did not show any discrimination against pregnant women coming in and that once they were here, we would not stop providing them such service. The Secretary also said just now however that they would discuss with China in the hope that they would take the initiative in limiting the number of certain categories of pregnant women coming in on two-way permits. May I ask whether asking the Chinese government not to approve so many pregnant women coming in or to try their best in discouraging them from coming is a form of discrimination? Will this be contradictory to the principle mentioned
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4161
in the first place by the Secretary just now, that is, discrimination does exist, but the only difference is that it should come from China, not from us?
PRESIDENT: I think that becomes too convoluted and hypothetical, Mr TO. We are running short of time.
MR JIMMY McGREGOR: Mr President, a matter of clarification. Could the Secretary say whether these children mentioned in paragraph (a) of her main reply — those children born in these two hospitals — would have a right to become Hong Kong citizens, that is to say, would they have the right to stay here?
PRESIDENT: Secretary, straying a bit, do you have the answer?
SECRETARY FOR SECURITY: I have the answer. I am just trying to find it and I beg your pardon, Mr President. The answer is: yes, those children who are born here have the right to be Hong Kong permanent residents.
DR LEONG CHE-HUNG: Mr President, the Secretary has just said very eloquently "we have coped and we will cope". By that I presume she means the Hospital Authority. For this of course we have to thank the staff. But without increasing resource provisions, are we not actually overstretching our frontline staff and tapping their up-to-now good nature?
SECRETARY FOR HEALTH AND WELFARE: Mr President, in the true tradition of our hospital services in Hong Kong, we provide services of very high standard to those in need irrespective of religion, race and ethnic origin. This is a credit to our hospital staff and I hope that, in considering funding to the Hospital Authority, we will bear this in mind. May I also take today's opportunity to reiterate that immigration is a matter of immigration policy; the health policy is not impacted in any way by the babies born here. It is also believed that illegal immigrants do not normally tend to seek medical treatment in Hong Kong since this might give rise to their repatriation. But, as was raised earlier on by the Honourable Jimmy McGREGOR, babies born here are accepted as Hong Kong permanent residents through birth. Members may already be aware that there is an international trend against automatic grant of full citizenship through birth to illegal immigrants. Such a right has already been abrogated in the United Kingdom and Australia and is about to go in France. And I think I would like to refer this matter for the deliberation of the Secretary for Security in due course.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4162 Written answers to questions
Funding for education on environmental protection
7. MR ERIC LI asked (in Chinese): As it will, in the long run, be far more cost effective to educate the public on environmental protection than to restore a polluted environment, will the Government inform this Council:
(a) of the respective costs provided for public education on environmental protection in 1993-94 and 1994-95;
(b) whether the above costs include government funding for non-government environmental groups to promote concepts and knowledge of environmental protection in the community; and
(c) if not, what measures the Government will adopt to support these non government environmental groups in running community educational activities on environmental protection?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President,
(a) The Government has allocated $1.7 million for environmental publicity campaigns and $0.5 million for the energy efficiency publicity campaign in 1993-94. The funding allocations for 1994-95 have not yet been decided, but we expect the existing scale of both these publicity campaigns to be maintained. In addition, $3.37 million has been allocated in 1993-94 for the first Environmental Resource Centre at the old Wan Chai Post Office. This centre is expected to open towards the end of 1993 and will be an important focus for public education on environmental issues.
The Education Department (ED) provided $752,500 for 350 school visits to the Mai Po Nature Reserve in 1993-94. A similar sum is earmarked for 1994-95. The department, through the Sai Kung Field Studies Centre, also organizes residential and non-residential courses on ecology, pollution and conservation for Sixth Form students and secondary school teachers. $1.7 million is being provided by ED in 1993-94 to meet the recurrent costs of this centre, with a similar allocation expected in 1994-95. Other costs relating to environmental education for students cannot be separately quantified because of the cross-curricular approach adopted by ED, whereby environmental education is integrated into a wide range of subjects.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4163
Apart from government funding, various non-government organizations support environmental education activities. A typical example is the Environmental Campaign Committee, which raises funds from private donations and the Jockey Club. The Committee hopes to raise $2 million in 1993-94 and $2.2 million in 1994-95.
(b) The Government has made no specific provision for the direct funding of non-government environmental groups although the establishment of the Environmental Campaign Committee provides a new focus for funding environmental activities in the community. Environmental projects by community and environmental organizations also receive a degree of government funding through the district boards' community involvement activities funding scheme, though the precise sum devoted to these activities cannot be quantified.
(c) We realize that we can always do more in the field of environmental education and that a relatively reliable source of funding support is necessary for non-government organizations involved in environmental education activities, in particular the activities of the Environmental Campaign Committee. We are now reviewing the existing funding arrangements to establish a better basis of funding support for various kinds of environmental education activities initiated both by the Government and non-government bodies.
Labour importation scheme
8. MR LAU CHIN-SHEK asked (in Chinese): With regard to the Labour Importation Scheme, will the Government inform this Council of the following:
(a) the numbers of foreign workers allowed to be imported, classified by trade and position, since the implementation of the scheme;
(b) the number of foreign workers who left their jobs (including dismissals and voluntary resignations) before the expiry of contracts in each of the past three years; and
(c) the number of labour dispute cases handled by the Labour Department in the past year involving foreign workers, classified by the causes of dispute; and the respective numbers of cases in which warnings were issued to or prosecutions taken against employers for breach of rules, as well as cases in which foreign workers who were subjected to unfair treatment were successfully placed in other jobs by the department?
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4164 SECRETARY FOR EDUCATION AND MANPOWER: Mr President,
(a) The numbers of foreign workers classified by industries/services who have been issued with visas since the implementation of the general importation of labour scheme are shown in the table at Annex A. It is however not possible to provide a breakdown by positions because of the large numbers of job titles involved.
(b) In 1991 and 1992, 1 180 and 1 771 foreign workers left their jobs respectively before the expiry of their contracts. Between January and May 1993, the relevant figure is 1 365.
(c) In 1992, the Labour Department handled 55 labour disputes and claims involving 176 foreign workers under the general labour importation scheme. These claims involved arrears of wages, wages in lieu of notice and statutory holiday pay.
During the year, a total of 103 summonses were taken out against employers of imported workers, and 406 verbal or written warnings were issued in respect of offences under the law. While there is no breakdown on the warnings, 70 summonses were heard with 51 convictions. Detailed breakdown of convicted summonses is at Annex B. Six imported workers were granted approval to change employer and all, except one, were successfully placed in employment. The remaining worker left Hong Kong without giving reasons.
Annex A
No. of workers allowed to be imported
under the Labour Importation Schemes
(As at 31.5.1993)
Airport scheme 1993 scheme 1992 scheme 1990 scheme 1989 scheme
Industry
No. of
visas
approved
No. of
Visas
approved
No. of
visas
approved
No. of
visas
approved
No. of
visas
approved
Automobile Repairing
Banking and Finance
0 11 156 123 148 0 12 0 1 0
Catering 0 392 1 763
Hotel 0 34 228 2 650 249 Tourism 0 0 47
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4165 Airport scheme 1993 scheme 1992 scheme 1990 scheme 1989 scheme
Industry
No. of
visas
approved
No. of
Visas
approved
No. of
visas
approved
No. of
visas
approved
No. of
visas
approved
Clothing 0 233 1 176 2 517 53 Handbag 0 1 0
Construction work sites
1 418 50 369 2 074 796
Electrical 0 5 147 587 187 Electronics 0 21 329
Footwear 0 0 0 13 0 Furniture 0 0 80 84 15 Insurance 0 0 0 0 0 Jewellery 0 1 63 48 6 Machine shop 0 188 717 699 304 Plastics 0 1 143 285 32 Printing 0 9 288 177 47
Shipbuilding and Repairing
0 8 94 161 3
Textile 0 26 299 454 11 Transport 0 58 142 255 21
Wholesale, Retail and I/E Trades
Others
(Manufacturing)
Others (Non
manufacturing)
0 233 2 912 1 297 24 0 94 2 481 1 422 28 0 146
Total 1 418 1 523 (Note 1)
11 434 (Note 2)
12 847 (Note 2)
1 924
Notes: (1) In the 1993 Scheme, 14 132 quotas were allocated. More visas will be issued when the visa applications are received.
(2) The numbers include visas issued to replacement workers.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4166 Annex B
Breakdown of Summonses Convicted in 1992
Nature of offences No. of summonses convicted Deduction of wages 18
Failure to grant
statutory holidays
Payment in lieu of
granting statutory holiday
Failure to take out
insurance policy
17 10
6
---
Total number of summonses convicted 51==
First aid training
9. DR LAM KUI-CHUN asked: In view of some recent deaths caused by simple traumatic arterial bleeding, for example, the incident relating to the death of a border patrol policeman, will the Administration inform this Council whether training in haemostasis is included in the training programme of the Police Force and the curriculum of schools; if so, what the contents of such training are and whether the Administration will review its effectiveness; if not, whether the Administration will plan to impart such knowledge to policemen and school children?
SECRETARY FOR SECURITY: Mr President, police officers are given training in basic haemostasis when they join the Force. Refresher in-service training courses are also provided to officers once every three years during their career. Police officers are trained not only in haemostasis, but in the wider aspects of first-aid and emergency treatment. They are also trained in specific skills, such as wound dressing and bandaging, cardiopulmonary resuscitation and the treatment of bone fractures and heat stroke.
In the formal curriculum in schools, haemostasis is covered under first-aid in several subjects, such as Health Education at the primary level and Physical Education, Human Biology and Social Studies at the secondary level. As part of the informal curriculum, students are also encouraged to take part in extra-curricular activities provided by the Boy Scouts, the Girl Guides, the St John's Ambulance Brigade and the Hong Kong Red Cross Society where they will have the opportunity to receive practical first-aid training.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4167
We are considering the effectiveness of our first-aid and haemostasis training for police officers in the light of the recommendations made by Mr Justice BOKHARY in his Final Report on the Lan Kwai Fong Incident on 1 January. The police are reviewing their first-aid training for serving police officers in conjunction with the Auxiliary Medical Services.
The main objective of including first-aid topics in the formal curriculum for school children is to promote a general awareness of first-aid among students; the intention is not to provide specialized training. The Education Department considers the content of the school curriculum on first-aid to be effective. The Curriculum Development Council reviews these matters on an on-going basis and will revise the relevant syllabuses if and when necessary.
Territory-wide medical scheme for the elderly
10. MR WONG WAI-YIN asked (in Chinese): At present, various concessionary medical schemes for the elderly are operated by different organizations and bodies in various districts. Will the Government inform this Council whether a co-ordinating body similar to that of the School Medical Service Scheme will be set up to implement a territory-wide medical scheme for the elderly; if so, what the specific plans are; if not, what the reasons are?
SECRETARY FOR HEALTH AND WELFARE: Mr President, services for the elderly at public hospitals and clinics are highly subsidized. In addition, various concessionary medical schemes have been initiated at the grassroots level by different charitable organizations to meet local needs, often with the input of district boards. So far such schemes have operated very smoothly.
The main objective of the Student Medical Service Scheme has been to provide economical medical care to students through the participation of private medical practitioners. Following abuse of the scheme and on the recommendations of the Working Party on Primary Health Care, the School Medical Service Scheme will soon be abolished and be replaced by the Student Health Service.
The present system of healthcare services for the elderly provides flexibility to meet local conditions and allows patients a wide variety of choice and works well. There is, therefore, little justification to replace the existing system by a body similar to the School Medical Service which, in any case, is being dismantled.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4168 Electronically conducted financial transactions
11. DR HUANG CHEN-YA asked (in Chinese): In view of the increasing popularity of using electronic devices to conduct financial transactions, will the Government inform this Council what plans are in place to enhance the legal protection for users of such devices?
SECRETARY FOR FINANCIAL SERVICES: Mr President, the increasing use of electronic devices to conduct financial transactions is an inevitable development as efficiency and cost-effectiveness are necessary for the further development of the different areas of the financial services sector in the modern world.
In general, customers of financial institutions who use electronic devices are subject to the protection afforded by the law of contract as are those who use paper systems. Also, given the diversity of financial activities and the pace with which technology develops, it is difficult to generalize on the specific measures that would be required for protecting individual groups of users.
An example of moves in this direction is the recently introduced Computer Crimes Ordinance which makes new criminal offences in respect of unauthorized access to computers. On the question of privacy, a sub-committee of the Law Reform Commission is currently examining existing laws in Hong Kong in the area. One of the matters to be considered in this exercise is the remedies that should be made available in respect of undue interference with the privacy of the individual, including intrusion (by electronic or other means) into private premises and the interception of communications, whether oral or recorded.
The Government is prepared to examine whether specific measures might be required to deal with any clearly identified problems, and would draw on experience in other countries where appropriate.
Safety of passenger lifts
12. MRS MIRIAM LAU asked: Will the Government inform this Council:
(a) how many passenger lifts in Hong Kong are not equipped with over-loading warning devices;
(b) how many accidents have occurred over the past three years involving such lifts and what the casualties in such accidents were; and
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4169
(c) whether the Administration intends to make it compulsory for all passenger lifts in Hong Kong to be installed with over-loading warning devices, if not, the reasons therefor?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, there are about 35 700 passenger lifts in the territory. In a recent survey by the Electrical and Mechanical Services Department, 1 578 lifts, or about 5.4%, were found not equipped with overloading warning devices. All these lifts were installed before May 1969 when the requirement for the provision of overloading warning devices were included in the relevant legislation.
Over the past three years, there have been four fatal and 22 non-fatal accidents involving passenger lifts. Two of these accidents involved lifts without overloading warning devices and two people were injured. However, neither of these two cases was caused by overloading.
At present, the Administration has no intention to make it compulsory for all lifts installed before May 1969 to be equipped with overloading warning devices. All passenger lifts are required to be constructed in accordance with the latest standards applicable at the time of installation. An overloading warning device is only a precautionary warning system. Although these lifts do not have an overloading warning system, they usually have other safety devices such as fail-safe braking system, overspeed governor, arrester gear and buffers. It is therefore considered more appropriate to allow the phasing out of such lifts by natural wastage. The Administration will of course continue to advise registered lift contractors to encourage owners of pre-1969 buildings to install overloading warning devices in lifts whenever possible.
The Administration will continue to be vigilant over the safe operation of lifts. For instance, amendments to the Lifts and Escalators (Safety) Ordinance were passed by this Council three weeks ago to strengthen control over lift and escalator works. Under the new provisions, inspection and checking of lifts is required to be carried out by competent persons, and the sub-contracting or assignment of lift works to non-registered contractors is also regulated.
Hazardous summer jobs
13. MR CHEUNG MAN-KWONG asked (in Chinese): Will the Government inform this Council:
(a) of the number of work-related deaths and injuries involving local secondary students who engaged in summer jobs over the past five years;
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4170
(b) of the channels through which the Administration urges students not to take part in hazardous industries when looking for summer jobs; and
(c) whether the Administration would step up its efforts to impart knowledge of industrial safety to secondary students; if so, what the details are?
SECRETARY FOR EDUCATION AND MANPOWER: Mr President,
(a) The numbers of local secondary school students who were injured while engaging in summer jobs over the past five years are as follows:
1988 1989 1990 1991 1992
35 29 18 7 11
The majority of these cases involved only minor injuries. No fatal cases have been recorded.
(b) The following measures have been taken by the Labour Department and the Education Department every year to promote the awareness of safety at work among secondary school students:
(i) leaflets are distributed to all schools advising students not to take up hazardous summer jobs, such as working at construction sites, operating heavy machinery and lifting appliances, working at height, using chemicals or doing work involving heat treatment or use of fire. The leaflet also advises students to be careful with the use of food making machines, stoves, knives and chemical cleaning agents, and so on, if they work in the catering industry;
(ii) a design competition on safety at work is held to reinforce the safety awareness of students. This year, a poster design competition was held in March and the two winning posters carrying safety messages for students have been distributed to all secondary schools;
(iii) talks and video shows on industrial safety are being given to secondary students at their schools by Factory Inspectors of the Labour Department since May;
(iv) press releases are issued before the commencement of summer vacation to remind students to stay away from dangerous jobs;
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4171
(v) the Local Employment Service of the Labour Department gives regular guidance to students seeking summer jobs and advises them in particular not to accept hazardous jobs if offered.
(c) To further remind secondary school students not to take up hazardous jobs during the summer vacation, the Education Department has recently issued a circular to all secondary schools reminding school heads and teachers, especially careers teachers, to impress on their students the safety messages. A radio/TV announcement of public interest bearing similar messages to secondary school students has been broadcast. More press interviews and releases will be arranged. The Education Department will also organize annual seminars on safety at work for career teachers, starting from the next school year.
Small public housing flats
14. MR TIK CHI-YUEN asked (in Chinese): Will the Government inform this Council:
(a) of the projected demand and supply of small public housing flats in each district in the coming five years;
(b) whether single persons or two-person families living in Temporary Housing Areas will either have their rehousing dates deferred, or be rehoused in remote areas or "shared public housing flats", due to inadequate supply of small public housing flats; and
(c) what plans are in place to shorten the waiting time for single persons or two person families to move into public housing flats?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President,
(a) The demand and supply of small public housing flats for single persons are assessed annually. After allocation for redevelopment and clearance, the balance of flats is allocated to applicants on the Waiting List. The projection based on this year's assessment for each district for the next five years (1993- 94 — 1997-98) is set out at the Annex.
(b) A clearance operation normally involves the rehousing of all eligible households in the area to be cleared. No clearance has been deferred after formal notification due to inadequate flat supply.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4172
Recently, an accelerated clearance programme of temporary housing areas (THA) has been drawn up with a view to clearing over 80% of the existing population by 1996-97. This means their rehousing dates have been brought forward rather than deferred.
As regards the location of reception estates, eligible THA clearees living on the Hong Kong Island are normally rehoused on the Hong Kong side. Those in Kowloon are offered new flats in the extended urban area or the New Territories, but can be rehoused in urban Kowloon if they are prepared to accept casual vacancies.
It is very unlikely that one-person households affected by a THA clearance will be asked to share non-self-contained units in future.
(c) The only way to shorten waiting time is to increase the supply of small flats. While flat supply for two-person households is expected to be adequate, the shortfall of one-person flats remains a concern. The Housing Authority has in response identified a number of possible options to increase supply, including the construction of additional annex blocks and hostel-type accommodation, provision of more sheltered housing units for the elderly, creation of planned vacancies through transfer exercises, a different flat mix, relaxation of allocation standard as well as programme adjustments. An extra 6 300 one-person units can be generated through these options over the next five years, of which about 750 to 1 000 can be allocated each year to the Waiting List.
Annex
Estimated Demand and Supply of Small Public Housing flats
District Estimated demand* Estimated supply Estimated balance (No. of flats)
Hong Kong North 2 010 2 240 230 Hong Kong South 1 240 1 840 600 Kowloon East 11 420 11 610 190 Kowloon West 1 430 1 510 80 Tsuen Wan 4 890 5 440 550 Shatin 3 130 2 240 -890 Tseung Kwan O 510 3 170 2 660 Tai Po 120 530 410 Fanling 1 060 1 110 50 Tuen Mun 620 780 160 Yuen Long 940 1 620 680 -------- -------- ------- Total: 27 370 32 090 4 720 ===== ===== ====
* for redevelopment of rental estates, clearance of THA and squatter areas.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4173 Water supply to squatter areas
15. MR ALBERT CHAN asked (in Chinese): In view of complaints lodged recently by residents of squatter areas of the lack of water supply, will the Government inform this Council:
(a) of the number of squatter areas which are still without water supply and the size of their population; and
(b) whether there are plans to supply water to these squatter areas?
SECRETARY FOR WORKS: Mr President,
(a) There are 17 squatter areas with a total population of 958 in the urban areas and 726 squatter areas with a population of 2 717 persons in the rural areas which are without mains water supply or metered water supply.
(b) The Government's policy is to provide metered water supply to squatter areas when applications are received if it is technically feasible and when there is no imminent plan of clearance by the Housing Department.
As it is envisaged that all urban squatters on government land will be cleared by 1996, there is thus no plan to supply water to urban squatter areas which are currently without water supply.
Regarding squatters in rural areas, in 1980, based on information from the Heung Yee Kuk, CNTA and WSD, a list of some 750 villages in the New Territories (including squatter villages) was drawn up for the purpose of implementation of a stage-by-stage project for the provision of metered water supply. In 1987, after the initial phases of works, over 500 villages were provided with metered water supply and for the remaining 175 villages which are located far away from the water distribution networks, it was considered that 114 villages could be provided with metered water supply at a reasonable cost.
A PWP item "Water Supply to Remote Villages in the New Territories" was created to implement the works for 85 of these 114 villages. The works are well under way and supply for the final village is expected to complete before the end of 1995. Water supply to the remaining 29 villages has been provided by extension of the existing or newly completed water supply networks under recurrent provision.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4174
The actual number of villages being considered for metered water supply varies from time to time, as some new villages are added to the list while some others are deleted due to clearance in the past years. Up till now, a total of 624 villages have been provided with metered water supply.
There are still 63 villages with a total population of around 4 000 for which the works are not on the Public Works Programme, but their need for mains water supply is kept under constant review. Although the provision of water supply to these villages will not be as cost effective as other villages, the Government is still considering supplying water to 15 of these villages which are having higher priority and with a total population of about 1 500. Provided the required financial resources can be made available, works for these 15 villages is expected to start in 1995 and completed in 1997. As for the remaining 48 villages with a total population of 2 500, a programme of work will be determined later this year, after consultations with the Heung Yee Kuk.
Overseas/expatriate teachers
16. MR TIMOTHY HA asked (in Chinese): It is understood that every secondary school in Hong Kong is allowed to recruit no more than three "overseas" teachers under the Code of Aid while some specially approved schools are each entitled to employ no more than two "expatriate" teachers under the Expatriate English Language Teacher Scheme.
Will the Government inform this Council of:
(a) the total number of secondary schools which have either employed "overseas" teachers under the relevant Code of Aid or "expatriate" teachers under the Expatriate English Language Teacher Scheme over the past three years; the percentage that these schools represent in relation to the total number of secondary schools in Hong Kong; the respective number of these two categories of teachers; the respective percentage each of these two categories of teachers represents in relation to the total number of English Language teachers in all secondary schools in Hong Kong;
(b) any measures which may help improve the constantly small number of "overseas" and "expatriate" teachers in schools at this time when Hong Kong is in need of English subject teachers and better means of improving the students' standard of English; and
(c) the Government's evaluation of these two ways of employing "overseas" and "expatriate" teachers?
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4175
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, under the provisions of the Code of Aid, aided secondary schools of 12-23 classes may employ two teachers of English Language on "overseas" terms and schools of 24 or more classes may employ three such teachers. Under the Expatriate English Language Teacher (EELT) Scheme, some schools have been approved to employ no more than two teachers on "expatriate" terms within a quota which is annually adjusted to match the availability of funds.
The answers to Mr HA's questions are as follows:
(a) The figures requested are provided in the table below:
1990-91 1991-92 1992-93
Total number of secondary
schools which have either
employed "overseas" teachers 27 36 40 under the Code of Aid or
"expatriate" teachers under (6.0%) (8.2%) (8.8%) the EELT Scheme (as a
percentage of the total number
of secondary schools in Hong
Kong)
Total number of "overseas"
teachers employed under the 11 13 15 Code of Aid (as a percentage of
the total number of (0.27%) (0.32%) (0.37%) English Language teachers in
all secondary schools in Hong
Kong)
Total number of "expatriate"
teachers employed under 33 41 44 EELT Scheme (as a percentage
of the total (0.81%) (1.01%) (1.08%) number of English Language
teachers in all secondary
schools in Hong Kong)
Total number of teachers under
the two categories (as a 44 54 59 percentage of the total number
of English Language teachers (1.08%) (1.33%) (1.44%) in all secondary schools in
Hong Kong)
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4176
(b) In the light of the low utilization of the quota for "overseas" teachers, and of suggestions for improvements from schools in the EELT Scheme, the Education Department is reviewing the administrative and recruitment procedures for employing both overseas teachers under the Code of Aid, and expatriate teachers under the EELT Scheme, with a view to streamlining the procedures and making it easier for schools to employ such teachers. A circular will be issued in the coming school year to announce revised arrangements and encourage schools to recruit native-speaker teachers of English.
(c) The Board of Education recently confirmed its support for the EELT Scheme, noting that it is making a positive contribution to raising students' standard of English. Feedback from heads of schools employing "overseas" teachers under the Code of Aid is likewise positive.
Noise nuisance
17. DR CONRAD LAM asked (in Chinese): With regard to noise control after 11.00 pm, will the Government inform this Council:
(a) how many complaint cases of this kind were received by the police in the past three years;
(b) how long it would generally take the police to arrive at the scene upon receipt of such a complaint; and
(c) what effective measures are being taken to control nuisance caused by false alarms from vehicles and shops in the late hours of night?
SECRETARY FOR SECURITY: Mr President, the police do not keep statistics on the number of complaints of noise nuisance by time of day. However, the Environmental Protection Department have received only two complaint cases of noise nuisance caused after 11.00 pm in the past three years.
It is not possible to find out the average time required for the police to arrive at the scene of complaint of noise nuisance; their response time will obviously depend on factors such as the location of the nuisance, the time of day the nuisance is caused, and the availability of police resources in the vicinity. The police respond to all complaints expeditiously.
Section 14A of the Summary Offences Ordinance (Cap 228) is effective in tackling false alarms from shops. It provides that any person who has control of an intruder alarm system in any premises should provide an efficient automatic device to cause all audible alarm signals to cease sounding within
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4177
15 minutes of its activation. Any person who contravenes this section will be liable to a fine of $5,000 and imprisonment for three months. Alarm owners are generally co-operative and willing to fit such automatic devices. Since the enactment of this provision in the Summary Offences Ordinance, there has been a general decrease in the number of complaints about nuisance from alarm systems in shops.
We do not have specific legislative controls against false vehicle alarms. This is not a widespread problem in Hong Kong. Police experience suggests that, in residential areas, car owners usually arrive at the scene quickly to turn off the alarm. It has been suggested that a time limit, similar to that for alarms in shops, should be imposed on vehicle alarms. However, the police do not consider it appropriate to impose any restriction on the use of audible vehicle alarms because they represent one of the effective means of preventing car thefts, which remains a cause for concern.
Cash payments with Renminbi
18. DR TANG SIU-TONG asked (in Chinese): Will the Government inform this Council:
(a) whether it is lawful in Hong Kong to carry out money exchange transactions in Renminbi in places other than banks, moneychangers' counters and hotels; and
(b) whether shops in Hong Kong can accept payment in Renminbi; if so, whether it will have any effect on the monetary system of Hong Kong?
SECRETARY FOR FINANCIAL SERVICES: Mr President,
(a) Hong Kong does not have foreign exchange control of any form, and there is no statute which seeks to regulate the exchange of foreign currency.
(b) There is no prohibition on the use of foreign currencies in cash payments in Hong Kong. Shops in Hong Kong can accept payments in Renminbi, or any other foreign currencies, if they wish to and are happy with the exchange risks that are incurred. We do not believe that the acceptance of cash payments in Renminbi by some shops would become widespread enough to have any significant effect on the monetary system of Hong Kong.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4178 Land sale
19. MR LAU WONG-FAT asked (in Chinese): Will the Government inform this Council of the total volume of land sold and the revenue received in each of the past 10 years and, of the land sold, how much had been resumed in the New Territories, the payment for these resumptions, and the revenue received from the subsequent land sales?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, the total amount of land sold by auction or tender and the revenue received in each of the years 1983 to 1992 is set out at the Annex.
Land is resumed for a public purpose which may include a number of uses such as roads, sewage treatment plants, public housing, public hospitals, schools and so on. Land formation and servicing is necessary in most cases before it can be used for the intended purpose. A site resumed may be amalgamated with other resumed sites or government land before being allocated or disposed of. Alternatively it may be carved up with different parts being used for different purposes. It would therefore be almost impossible and definitely very resource-intensive and time-consuming to identify that part of the land resumed which has subsequently been sold and the price at which that particular part has been sold.
Annex
Year (Calendar) Total amount of land sold (Auction/Tender) (Ha)
Total premium ($m)
1983 59.1 678.7
1984 18.0 901.9
1985 24.8 3,236.9
1986 28.8 3,527.5
1987 24.8 4,338.1
1988 54.4 7,941.9
1989 33.5 12,852.0
1990 19.6 3,480.6
1991 32.2 10,577.3
1992 24.8 10,122.6
Debt owed by UNHCR
20. MR HENRY TANG asked: In view of the large amount of money owed by the United Nations High Commission for Refugees (UNHCR) to the Hong Kong Government for the care and maintenance of Vietnamese migrants, will the Government inform this Council what further action will be taken to
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4179
press the British Government, on behalf of Hong Kong, to demand the UNHCR to repay this sum, and whether the relevant correspondence exchanged between the UNHCR and the British Government in the past year can be released to this Council?
SECRETARY FOR SECURITY: Mr President, both Her Majesty's Government and the Hong Kong Government constantly remind the UNHCR of its outstanding debt to the territory. This is done largely through the regular contacts which take place between officials of the two governments and the office of the UNHCR. However, the ability of the UNHCR to repay the monies owed is dependant on donor countries.
Earlier this year, following a discussion of this matter in the Public Accounts Committee of this Council, Her Majesty's Government were instrumental in having the debt highlighted in the UNHCR 1993 Comprehensive Plan of Action (CPA) Appeal. British diplomatic missions in major donor capitals were also instructed to ask their host governments whether they would consider augmenting their 1993 contributions to the CPA to enable the UNHCR to discharge its debt to Hong Kong. The final outcome of this demarche is now awaited.
Her Majesty's Government and the Hong Kong Government will continue to remind the UNHCR and the international community of the burden imposed on the territory by the failure of the UNHCR to meet the cost of the care and maintenance of the Vietnamese migrants in the territory and to press for repayment of the outstanding debt.
It would not be appropriate for the Hong Kong Government, as a third party, to release copies of correspondence between Her Majesty's Government and the UNHCR.
Motions
OFFICIAL LANGUAGES ORDINANCE
THE ATTORNEY GENERAL moved the following motion:
"That the draft Official Languages (Authentic Chinese Text) (Wills Ordinance) Order, proposed to be made by the Governor in Council, be approved."
He said: Mr President, I move the first motion standing in my name on the Order Paper.
The authentic Chinese texts of the Wills Ordinance, the Employees Compensation Insurance Levy (Rate of Levy) Order, and the Employment of
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4180
Young Persons and Children at Sea Ordinance Order have been carefully examined by the Bilingual Laws Advisory Committee and the Legislative Council Subcommittee on the Authentic Chinese Texts and have their support. In accordance with subsection (4) of section 4B of the Official Languages Ordinance, draft authentication orders in respect of these texts have been prepared and are being put before this Council for approval this afternoon prior to being submitted to the Governor in Council for authentication. I now move that the first of these orders, that is, the draft Official Languages (Authentic Chinese Text) (Wills Ordinance) Order, proposed to be made by the Governor in Council, be approved.
Question on the motion proposed, put and agreed to.
OFFICIAL LANGUAGES ORDINANCE
THE ATTORNEY GENERAL moved the following motion:
"That the draft Official Languages (Authentic Chinese Text) (Employees' Compensation Insurance Levy (Rate of Levy) Order) Order, proposed to be made by the Governor in Council, be approved."
He said: Mr President, I move the second motion standing in my name on the Order Paper. This seeks approval of the draft Official Languages (Authentic Chinese Text) (Employees' Compensation Insurance Levy (Rate of Levy) Order) Order, proposed to be made by the Governor in Council.
Question on the motion proposed, put and agreed to.
OFFICIAL LANGUAGES ORDINANCE
THE ATTORNEY GENERAL moved the following motion:
"That the draft Official Languages (Authentic Chinese Text) (Employment of Young Persons and Children at Sea Ordinance) Order, proposed to be made by the Governor in Council, be approved."
He said: I move the third motion standing in my name on the Order Paper. This seeks approval of the draft Official Languages (Authentic Chinese Text) (Employment of Young Persons and Children at Sea Ordinance) Order proposed to be made by the Governor in Council.
Question on the motion proposed, put and agreed to.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4181 DRUG TRAFFICKING (RECOVERY OF PROCEEDS) ORDINANCE THE SECRETARY FOR SECURITY moved the following motion:
"That the Drug Trafficking (Recovery of Proceeds) (Designated Countries and Territories) (Amendment) Order 1993, made by the Governor in Council on 8 June 1993, be approved."
He said: Mr President, I move the resolution standing in my name on the Order Paper.
The Drug Trafficking (Recovery of Proceeds) Ordinance has strengthened our ability to combat domestic and international drug trafficking, by providing us with the means to trace, restrain and confiscate the proceeds of drug trafficking.
The 1991 Order, made under section 28 of the Ordinance, applies the provisions of this Ordinance, with certain modifications, to enable courts in Hong Kong to confiscate the proceeds of drug trafficking pursuant to external confiscation orders.
In the course of implementing the provisions of the 1991 Order, some ambiguities have come to light. We propose to amend the 1991 Order by clarifying the definitions of "defendant" and "realizable properties", and removing other ambiguities.
This resolution seeks this Council's approval of the Drug Trafficking (Recovery of Proceeds) (Designated Countries and Territories) (Amendment) Order 1993, made by the Governor in Council on 8 June 1993. The Amendment Order introduces technical amendments to facilitate the proper operation of the Ordinance in so far as external confiscation orders are concerned.
Mr President, I beg to move.
Question on the motion proposed, put and agreed to.
TRADING FUNDS ORDINANCE
THE SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS moved the following motion:
"That with effect from 1 August 1993 —
(a) on the recommendation of the Financial Secretary, the Land Registry Trading Fund ("the trading fund") shall be established to
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4182
manage and account for the operation of the government service of the Land Registry;
(b) the services to be provided under the trading fund shall be those specified in Schedule 1;
(c) the assets set out in column 2 of Schedule 2 shall, subject to any term specified opposite an asset in column 3 of that Schedule, be appropriated to the trading fund;
(d) the net value of the assets of $354.90 m. appropriated to the trading fund shall be shown in the Capital Investment Fund -
(i) as to $236.60 m., as a loan;
(ii) as to the balance, as a contribution of trading fund capital;
(e) the loan referred to in paragraph (d)(i) -
(i) shall be repayable in 10 equal annual instalments of $23.66 m. each, the first such instalment to become due on 1 August 1994;
(ii) shall, as to any balance unpaid, bear interest at a rate equal to the average of the best lending rate quoted by the continuing members of the Committee of The Hong Kong Association of Banks, such interest to be payable annually in arrear.
SCHEDULE 1 [para. (b)]
SERVICES TO BE PROVIDED BY THE TRADING FUND
1. Giving advice on matters relating to registration under the Land Registration Ordinance (Cap. 128).
2. Registration of documents -
(a) affecting land and capable of being registered under the Land Registration Ordinance (Cap. 128);
(b) required under any Ordinance to be registered at the Land Registry.
3. Maintaining any book, register, index or other record of the Land Registry, whether in manual, microfilmed or computerized format.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4183
4. Making available for inspection, or providing copies of, the records of the Land Registry.
5. Conducting on behalf of the Government and public bodies searches of Land Registry records, and compiling reports of such searches.
6. Preparing certified copies of records held by the Land Registry.
7. Providing safe custody for documents delivered to the Land Registry for that purpose.
8. Preparing and verifying memorial forms to accompany documents to be registered in the Land Registry.
9. Acting as a depository for plans deposited in the Land Registry pursuant to any Ordinance.
10. Giving advice on matters relating to registration of owners as a corporation under the Building Management Ordinance (Cap. 344).
11. Processing applications by owners of buildings for registration as a corporation under the Building Management Ordinance (Cap. 344).
12. Issuing certificates of registration of owners of buildings as a corporation under the Building Management Ordinance (Cap. 344).
13. Maintaining a register of corporations of owners of buildings under the Building Management Ordinance (Cap. 344).
14. Making available for inspection, and providing copies of, records of corporations of owners of buildings registered under the Building Management Ordinance (Cap. 344).
15. Preparing certified copies or extracts of records of corporations of owners of buildings registered under the Building Management Ordinance (Cap. 344).
16. Compiling and publishing for sale current indexes of streets, house numbers and lots in Hong Kong.
17. Providing training, giving seminars and publishing materials in respect of registration matters under the Land Registration Ordinance (Cap. 128) and the Building Management Ordinance (Cap. 344).
18. Collating and producing statistics, analyses, information and materials from Land Registry records.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4184
19. Advising on and assisting in the introduction of an alternative system of land registration in Hong Kong.
20. Appearances by the Land Registrar or his representative as witness or amicus curiae in court proceedings.
21. Producing Land Registry records for use in court proceedings.
22. Cancelling memorials of re-entry and vesting notices and serving such memorials and notices on owners under the Crown Rights (Re-entry and Vesting Remedies) Ordinance (Cap. 126).
23. Any service that the Land Registrar may be authorized to provide under or by virtue of any Ordinance.
24. Any service incidental to or conducive to the provision of any of the services specified in this Schedule.
SCHEDULE 2 [para. (c)]
ASSETS
Item Description Terms
1. Parts of the building known as Queensway Government Offices,
namely –
(a) the 18th, 19th and 28th floors; and
(b) those parts of the 17th and 20th
floors,
as shown in the document marked
"Accommodation Plan of Land Registry" dated 3 June 1993 and kept by the Land Registrar.
2. All furniture and equipment under the control of the Land Registrar on 1 August 1993, as set out in the document marked "Inventory of Furniture and Equipment of the Land Registry" kept by the Land
Registrar.
Not to be disposed of unless the approval of the Financial Secretary has first been obtained.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4185
Item Description Terms 3. Office car registered number AM 163.
4. Capitalized setting-up costs.
He said: Mr President, I move the motion standing in my name on the Order Paper. Section 3(1) of the Trading Funds Ordinance provides that, the Legislative Council may, on the recommendation of the Financial Secretary, by resolution establish a trading fund. This motion seeks to establish the Land Registry Trading Fund.
As part of the reorganization of the previous Registrar General's Department, the Land Registry has become a separate department since 1 May 1993. The Financial Secretary is of the opinion that the Registry is capable of providing an efficient and effective operation that meets an appropriate standard of service and has the capacity of meeting expenses and finance liabilities out of the income generated from the fees and charges levied in accordance with the Land Registration Ordinance.
The Financial Secretary accordingly recommended on 9 June 1993 that the Land Registry Trading Fund be established to manage and account for the operation of the Land Registry under the Trading Funds Ordinance with effect from 1 August 1993.
The resolution seeks to set out the services to be provided under the Land Registry Trading Fund and appropriate to the Trading Fund the assets and liabilities on the terms specified.
The objective of establishing the Trading Fund is to improve the quality of the services provided to the customers of the Land Registry. Under the trading fund operation, payments received from customers will be credited to the Trading Fund rather than to the general revenue. The Registry will be required to meet expenditure from the Trading Fund. This arrangement will enable the Registry which provides services on a cost-recovery basis to respond to the changing needs of its fee-paying clients more promptly. Such a prompt reaction to changes in demand is inhibited by the existing systems of resource allocation under which funds are allocated at the beginning of each financial year.
Under the trading fund arrangements, the Land Registry remains as a government organization and its staff remain civil servants. At the same time, there is greater flexibility for deploying resources to meet operational needs.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4186
The Land Registry will continue to be under the policy responsibility of the Planning, Environment and Lands Branch. Performance targets and financial targets will be set out in the annual Business Plan. The performance of the Trading Fund will be monitored closely.
Thank you, Mr President.
Question on the motion proposed.
MR PETER WONG: Mr President, I was the Convenor of the Bills Committee that scrutinized the Trading Funds Bill which received its Third Reading on 10 March 1993. My remarks apply to both the resolutions to form the Land Registry Trading Fund and the Companies Registry Trading Fund.
The Committee was supportive of the proposals to start off these two trading funds since the existing arrangements were far too rigid and incapable of responding to fluctuations in market demand for their services. They caused great inconvenience to the professionals, the accountants and lawyers amongst others; and slowed down the rate of doing business, thus adding to the costs. Indeed, Hong Kong was being compared very unfavourably in terms of service efficiency against our competitors.
I can fairly say that all professionals who have to deal with the Land and Companies Registries are looking forward to the setting up of these trading funds so that we can obtain the services expected of an international financial centre. Together with the new freedom that a trading fund will give him, the manager will also have the responsibility to be accountable. He will have to produce the most cost-effective product for the market which is convenient to use. He will need to put in modern management information systems to enable him to manage his activities and respond to and anticipate demand. He should possess accurate and timely accounting information in order to demonstrate that fees are fairly set. Right now, such management tools are non-existent.
We are being asked elsewhere to approve legislation that will increase some charges relating to companies by 30%, based on the results of a survey indicating that we are prepared to pay more. However, the trading fund managers should not delude themselves that we are always willing to pay continuingly higher fees. Here, I can assure the Secretary for Planning, Environment and Lands and the departmental managers that their performance will be closely monitored by the Public Accounts Committee and other Legislative Council Panels on an ongoing basis.
Mr President, trading funds are a new phenomenon in Hong Kong. We in this legislature have yet to find the way we are to monitor and hold the fund managers to account. My concern is how each of the trading funds will remain accountable to the Government and in turn to this legislature. I would suggest something along the lines of the Securities and Futures Commission whereby
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4187
after the tabling of the funds' audited accounts and annual reports, the relevant Panel will receive a copy of the upcoming Business Plan, Budget together with Performance Pledges. Questions can then be asked and if necessary changes made. Once set on its proper course, the fund manager should then be able to get on with his job.
I have gone over the draft Corporate and Business Plans together with Framework Agreements for both trading funds. The one area that I wish to spend some time on is the financial targets for the two Registries. 10% is the prescribed return, before payment of interest and dividends, with average net fixed assets (ANFA) employed. I appreciate that the Ordinance asks for "achieving a reasonable return, as determined by the Financial Secretary, on the fixed assets employed". But the Administration has taken the target return too rigidly, using ANFA as the only yardstick.
I urge the Administration to view ANFA as but one of the yardsticks which may not be the most appropriate one for that particular service. In both funds, the office building housing the activities form the bulk of the assets and it is not a fair measure whether the real business assets, the computers, the filing and retrieval systems, are being adequately maintained and replaced by new technology. There is always the question of whether the charge to the expenditure for depreciation of land and building reflects fairly on the commercial worth of those premises, and that is vital when it comes to gauging the reality of the fees charged. Further, we have to take into consideration the capital gain when it comes to relocate the registry and dispose of the premises. I would suggest that each trading fund reworks its figures based on a market rental charge and see how that works out in terms of ANFA.
Lastly, I wish to state that I fully support the concept of incentive related payments, but this has to be fully explored in the civil service context.
Mr President, I support both motions.
MR FRED LI (in Cantonese): Mr President, since the Trading Funds Bill was passed by this Council on 10 March, trading funds have been established in the Land Registry and the Companies Registry, and my speech will cover these two funds.
Meeting Point thinks that the Administration should clarify the following points:
Firstly, in allowing the two registries to set up their trading funds, the Administration, besides having to consider whether the two registries are able to assume sole responsibility for their profits and losses, must also provide relevant data to convince the public and this Council to pass the present resolutions. What is noteworthy is that the Administration has to approve loans. Besides allocating an amount of funds to the two registries, the Administration
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4188
has also to give them some assets, which include government buildings and vehicles. However, if the two registries want to sell these assets, they only have to obtain the approval of the Financial Secretary and need not notify this Council. As to how it can be ensured that these two registries can assume sole responsibility for profits and losses, the Administration should give supporting reasons and information.
Secondly, the Finance Branch has indicated that it will sign such agreements with the two registries that will have a binding effect on them and ensure that they hold themselves accountable to the Financial Secretary. Meeting Point thinks that the Administration should disclose the content of the agreements for the reason of transparency. Besides, what is the Administration's point in setting a 10-year repayment period? What is the basis for formulating the relevant rates of return? These we do not know, nor have these been clearly indicated in the documents given to us by the authority concerned. I think that these areas need clarification.
Thirdly, in establishing a trading fund, attention should be paid to the feelings of the government staff concerned about the change of system. Meeting Point has conducted a number of surveys in some government departments, for example, the Electrical and Mechanical Services Department, which have set up Operational Services Accounts that are in effect trading funds on trial run. We have talked with the staff about this matter, and have found that they are suspicious and even resistant to this system. They are worried that problems might arise in respect of their fringe benefits and salaries after changing to the trading fund system. As a matter of fact, their worries are unnecessary, because they are still civil servants after the change of system. I think the staff do not understand what a trading fund is about and the Administration has not initiated any communication with them. So if the working efficiency of the staff decreases because of their suspicion of the trading fund system, that will be totally against the original intention of the Administration of enhancing the efficiency of government departments.
Fourthly, the Administration has also to consider the division of work and co ordination between the department heads and the general managers, especially the fact that department heads tend to emphasize policies while cost-effectiveness is what general managers are after. Then how to resolve the conflict between these different orientations? Meeting Point thinks that the implementation of a trading fund system is beneficial to those government departments which can be run on a commercial basis and can assume sole responsibility for profits and losses, especially those that enjoy a monopoly like the Post Office. Under such kind of circumstances where profits are guaranteed, it is generally acceptable for the Companies Registry and the Land Registry to implement the trading fund system. This is the first time that a government department set up its trading fund and by way of a resolution passed by this Council. However, the papers provided by the authority concerned are piecemeal and not systematic. I hope that more information can be provided in the papers in future, such that this Council can monitor and
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4189
examine the situation. Meeting Point is supportive of this resolution, but we have to reiterate our demand that the Administration must provide more cogent information to us next time when it requests this Council to approve the setting up of a trading fund in a government department.
Mr President, I so make my submission.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, may I first reply to the points raised by the Honourable Peter WONG on the trading fund concept. I am grateful for his support of the motion and for his saying that all professionals are looking forward to the setting up of the trading fund. Mr WONG mentioned that the performance of the Land Registry will be closely monitored by the Public Accounts Committee and the Legislative Council panels on an ongoing basis. I will only say that we welcome this ongoing monitoring and we will give our utmost co-operation in this regard.
With respect to the other points raised by Mr WONG, I only wish to state here that we will consider carefully the comments he made, and in the future revision of the Annual Business Plan and Corporate Plan we will certainly take his points into consideration.
With regard to the points raised by the Honourable Fred LI, before answering his points, I would like to stress that we have in fact no intention of withholding any information on the operation and setting up of the trading fund. We have in fact offered to brief the Legislative Council Lands and Works Panel on all the various details connected with the trading fund. I only can repeat here that with regard to the details which Mr LI has asked for, I will be happy — and I am sure the general manager who is sitting behind me will be happy — to have a session with him if he so wishes to go through the details.
One important point Mr LI mentioned is the assets of the trading fund. Of course this is the first time that we are setting up the Land Registry and the asset is mainly the office which the Land Registry now occupies. It is very important, in our view, that its operation should not be affected by the rising and fluctuating rents in the commercial market. We have therefore considered it appropriate to sort of set aside the office as being appropriated to the Land Registry.
On Mr LI's second point about the Framework of Agreement between the Secretary and the head of department or the general manager of the trading fund, we will of course review carefully every year in formulating the Framework of Agreement the various operation targets set by the fund and the demand for public services.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4190
As to Mr LI's point about civil servants staying with the Land Registry, of course, as I said in my earlier speech, they will remain civil servants. So they should have no worry about their terms and conditions of service. I am sure the general manager will be happy to do his utmost to explain the change of status to the civil servants working with the Land Registry.
Mr President, that is all I wish to say in answer to the points made.
Question on the motion put and agreed to.
TRADING FUNDS ORDINANCE
THE SECRETARY FOR FINANCIAL SERVICES moved the following motion: "That with effect from 1 August 1993 —
(a) on the recommendation of the Financial Secretary, the Companies Registry Trading Fund ("the trading fund") shall be established to manage and account for the operation of the government service of the Companies Registry;
(b) the services to be provided under the trading fund shall be those specified in Schedule 1;
(c) the assets set out in column 2 of Schedule 2 shall, subject to any term specified opposite an asset in column 3 of that Schedule, be appropriated to the trading fund;
(d) the net value of the assets of $415.16 m. appropriated to the trading fund shall be shown in the Capital Investment Fund -
(i) as to $276.70 m., as a loan;
(ii) as to the balance, as a contribution of trading fund capital;
(e) the loan referred to in paragraph (d)(i) -
(i) shall be repayable in 10 equal annual instalments of $27.67 m. each, the first such instalment to become due on 1 August 1994;
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4191
(ii) shall, as to any balance unpaid, bear interest at a rate equal to the average of the best lending rate quoted by the continuing members of the Committee of The Hong Kong Association of Banks, such interest to be payable annually in arrear.
SCHEDULE 1 [para. (b)]
SERVICES TO BE PROVIDED BY THE TRADING FUND
1. Administering and enforcing the provisions of the Companies Ordinance (Cap. 32), including facilitating the incorporation of new companies and maintaining registers of companies and charges.
2. Administering and enforcing the provisions of the Limited Partnerships Ordinance (Cap. 37), including maintaining the register of limited partnerships.
3. Administering and enforcing the provisions of Part VIII of the Trustee Ordinance (Cap. 29), including maintaining the Register of Trust Companies.
4. Administering and enforcing the provisions of the Registered Trustees Incorporation Ordinance (Cap. 306), including maintaining the register of incorporated trustees.
5. Making available, where the Registrar of Companies is so required or permitted by law, information registered or filed with the Registrar.
6. Monitoring the adequacy of the regulatory framework embodied in any Ordinance referred to in this Schedule and in other Ordinances where the Registrar of Companies has been specified, and advising the Government on any need for change.
7. Any service that the Registrar of Companies may be authorized to provide under or by virtue of any other Ordinance.
8. Providing advice or information on any matter that lies within the expertise of the Registrar of Companies.
9. Any service incidental to or conducive to the provision of any of the services specified in this Schedule.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4192
SCHEDULE 2 [para. (c)]
ASSETS
Item Description Terms
1. Parts of the building known as Queensway Government Offices,
namely –
(a) the whole of the 13th, 14th and 15th floors;
(b) those parts of the 1st floor of the
Low Block and the 12th, 17th and
30th floors of the High Block as
shown on the document marked
"Accommodation Plan of
Companies Registry" dated 4 June
1993 and kept by the Registrar of
Companies.
2. All furniture and equipment under the control of the Registrar of Companies on 1 August 1993, as set out in the document marked "Inventory of Furniture and Equipment of the Companies Registry" kept by the Registrar of Companies.
3. Office car registered number AM 123. 4. Capitalized setting-up costs.
Not to be disposed of unless the approval of the Financial Secretary has first been obtained.
He said: Mr President, I move the motion stadning in my name on the Order Paper. Its purpose is to establish the Companies Registry Trading Fund and to provide for the appropriation to the Fund of the assets listed in the Second Schedule to the resolution, in accordance with the provisions of the Trading Funds Ordinance.
The establishment of certain government services as trading funds is an important element in the Public Sector Reform initiative. The objective is to enable those services to respond more effectively to the needs of their users by
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4193 giving management the financial flexibility to run the services in a more commercial way.
The passing of the Trading Funds Ordinance in March of this year represented a significant step forward in providing for the Council to approve the establishment of individual trading funds upon the recommendation of the Financial Secretary.
The Companies and Land Registries became independent departments on 1 May 1993, representing the final stage of the reorganization of the Registrar General's Department. The potential for these services to be operated as trading funds was recognized in a consultancy study on the reorganization of the RGD in 1990. Since that time we have been working towards this end and I am pleased to be able to say that the preparatory work is now complete.
In recommending the establishment of the Companies Registry Trading Fund, the Financial Secretary has taken into account the services to be provided by the Registry and its ability to finance those services, its future capital expenditure and other liabilities from the revenue it receives, and has concluded that it would be viable and desirable for a trading fund to be set up.
The main services supplied by the registry relate to the provision of arrangements for the incorporation of new companies and for the registration of overseas companies, and the provision of corporate information. These and other services supplied by the registry are charged for on a cost-recovery basis. Surveys have indicated that the users of the registry's facilities, including firms of solicitors and accountants, banks and other businesses, as well as the wider public, seek quick and ready access to up-to-date information, and services that are responsive to their requirements, and they are prepared to pay for improvements to the existing standards.
Over the years, with rapid economic growth in Hong Kong, the demand for the registry's services has increased dramatically. While some productivity improvements and streamlining of procedures have taken place to try to cope with this surge in demand, the revenue generated by the registry has had to be returned to the central pool of the General Revenue Account, and the Companies Registry has had to compete with other pressing priorities for its share of those resources. The result has been a decline in both the scope and quality of services.
Under the proposed arrangements, the registry will be able to retain the revenue it generates. The management will have the flexibility to vary resource inputs to meet fluctuations in demand and will be able, for example, to invest in longer-term capital projects and productivity improvements secure in the knowledge that the availability of resources is, to a much greater extent, within their own control. Although the staff of the registry will remain as civil servants, the management will also have greater freedom to employ temporary
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4194 staff to ensure that variations in demand can be handled more expeditiously and effectively.
A necessary concomitant of this flexibility is greater accountability. In this context, a Framework Agreement setting out the relationship between the registry and the Financial Services Branch will be signed by the two parties. This will define the respective responsibilities and accountability, including a requirement for the registry to produce annual business plans, containing amongst other things, financial and service level targets. In order to ensure that these targets are met, the performance of the registry will need to be closely monitored by both the senior staff of the registry and by the Financial Services Branch, which will retain overall policy responsibility. Under section 8 of the Trading Funds Ordinance a signed annual report on the operation of the fund and the report of the Director of Audit must be tabled in this Council, ordinarily no later than 31 October each year.
As regards the initial investment in the Trading Fund, the net value of the assets vested in it, as listed in Schedule 2, will be financed by an investment from the Capital Investment Fund, one third being trading fund capital and two thirds being a loan. The Registry will be expected to repay the loan over 10 years and to pay interest at commercial rates on the outstanding balances. A divident will be payable, in principle, on the trading fund capital. The Trading Fund will also be expected to achieve a reasonable return on average net fixed assets.
Mr President, I beg to move.
Question on the motion proposed, put and agreed to.
First Reading of Bills
SUPPLEMENTARY APPROPRIATION (1992-93) BILL 1993
WESTERN HARBOUR CROSSING BILL
HONG KONG PRODUCTIVITY COUNCIL (AMENDMENT) BILL 1993 SHIPPING AND PORT CONTROL (AMENDMENT) BILL 1993 INSURANCE COMPANIES (AMENDMENT) (NO. 2) BILL 1993 PROTECTION OF INVESTORS (AMENDMENT) BILL 1993
Bills read the First time and ordered to be set down for Second Reading pursuant to Standing Order 41(3).
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4195 Second Reading of Bills
SUPPLEMENTARY APPROPRIATION (1992-93) BILL 1993
THE FINANCIAL SECRETARY moved the Second Reading of: "A Bill to approve a supplementary appropriation to the service of the financial year which ended on 31 March 1993."
He said: Mr President, I move that the Supplementary Appropriation (1992-93) Bill 1993 be read the Second time.
Section 9 of the Public Finance Ordinance states that "If at the close of account for any financial year it is found that expenditure charged to any head is in excess of the sum appropriated for that head by an Appropriation Ordinance, the excess shall be included in a Supplementary Appropriation Bill which shall be introduced into the Legislative Council as soon as practicable after the close of the financial year to which the excess expenditure relates".
The accounts for the financial year 1992-93 have been finalized by the Director of Accounting Services. The expenditure charged to 66 heads out of a total of 78 heads is in excess of the sum appropriated for those heads by the Appropriation Ordinance 1992. This is because sufficient offsetting savings could not be found within the heads concerned. In accordance with section 9 of the Public Finance Ordinance, this excess has been included in the Supplementary Appropriation (1992-93) Bill 1993 now before Members. The Bill seeks to give final legislative authority for the amount of supplementary provision approved in respect of particular heads of expenditure by the Finance Committee or under powers delegated by it.
The total net supplementary appropriation required in respect of the 66 heads of expenditure is $7,493.1 million. This excess is largely attributable to the implementation of the 1992 pay adjustment in respect of the Civil Service and government subvented organizations ($5,377.4 million). Other major contributing factors include additional expenditure on pension payment ($1,219.3 million) and the increased expenditure on public assistance and special needs allowances ($566.5 million).
The cost of the 1992 pay adjustment and pension increase had been anticipated in the 1992-93 estimates under the "Additional Commitments" subhead. Savings were also made in other subheads through continued tight control over public expenditure, and I would like to thank the Controlling Officers and others who have contributed to restraint. Because of these savings and the provision made for additional commitments, total expenditure for the year is within the sum appropriated in the Appropriation Ordinance 1992.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4196 WESTERN HARBOUR CROSSING BILL
THE SECRETARY FOR TRANSPORT moved the Second Reading of: "A Bill to grant a franchise for the construction and operation of a crossing between West Kowloon Reclamation and Sai Ying Pun; to provide for the maintenance of the works within the tunnel area, the payment of tolls to the franchise holder for the use of the tunnel by motor vehicles and the regulation of vehicular traffic in relation to such use; and for matters ancillary to and connected with those purposes."
He said: Mr President, I move that the Western Harbour Crossing Bill be read the Second time.
Purpose of the Bill
The Bill now before Honourable Members provides for the award of a franchise to the Western Harbour Tunnel Company Limited to build and operate the Western Harbour Crossing. This will be a vital link between Hong Kong Island, West Kowloon, the new airport at Chek Lap Kok and the northwest New Territories when Route 3 is finally completed. It will also provide much needed relief for the two existing cross harbour tunnels, and will help meet long-term traffic demands.
Background
The Western Harbour Crossing will comprise a dual three lane tunnel connecting Sai Ying Pun and the West Kowloon Reclamation, a toll plaza, an administration building and approach roads. Although only one bid for the franchise was received, as a result of tough negotiations lasting over seven months we have succeeded in securing terms that are at least comparable and in some ways better than those in earlier tunnel franchises. This is a significant achievement, since these other franchises were awarded after highly competitive tendering. In the negotiations we have also taken full account of the wishes and views expressed by those Members of this Council and the Airport Consultative Committee who had shown an interest in the project.
The tunnel will cost $7.5 billion to build, including financing costs. Before making such a formidable investment, the proposed franchisee and his bankers require certainty that the tunnel will produce sufficient revenue to repay debts and to provide a reasonable return on investment. This is an essential prerequisite. Without such certainty there can be no franchise. In the negotiations, we agreed that the proposed franchisee be given the degree of certainty he needs but at the same time we have secured all the necessary public interest objectives. I believe we have struck an excellent deal.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4197 Key issues
Public discussion on the proposed franchise has so far focussed on three key issues: the initial toll levels, the toll adjustment formula and the level of return required by the prospective franchisee. I will deal with each of these in turn.
Initial toll levels
The initial tolls set out in the first schedule of the Bill are expressed in 1997, and not current, dollars. The tolls are set at the levels needed to service debt in the early years of tunnel operation. In that period most of the revenue will be used by the franchisee to repay loans. If the tolls were set lower, then quite simply the franchisee could be in danger of becoming insolvent.
The tolls of $30 for a private car and $55 for a double-decker bus are expressed in 1997 dollars. They may appear expensive and require some explanation.
By way of crude comparison, the construction cost of the Eastern Harbour Crossing was $2 billion in money of the day and the tunnel had an opening private car toll of $10. The Western Harbour Crossing will cost three times as much to build and the tolls must be proportionately higher if debts are to be serviced. The effect of a $55 toll for double-decker buses will be to add about 40 cents to the passenger fare, compared with about 20 cents added for routes currently using the existing cross harbour tunnels.
When all is said and done, we must remember that there will be no compulsion to use the Western Harbour Crossing. If a motorist chooses to use the more expensive Western Harbour Crossing, it will be only because that crossing provides a more efficient passage, and not because he is compelled to use it. In future motorists will have the options of using either the Eastern Harbour Crossing or the Cross Harbour Tunnel, the tolls for which are likely to remain lower. Contrary to media speculation, a $30 toll at the Western Harbour Crossing will not of itself trigger toll increases for the other two tunnels. This is because toll increases at those tunnels have to be justified under the terms of their respective franchises, and may be granted only if the operators are not receiving a reasonable return on their investments. Of course, the alternative to a toll increase in raising the cost of using these tunnels is to impose or increase a passage tax, but this option will be applied only for sound traffic management reasons and I am not prepared to speculate at present whether the Government would introduce such measures into this Council.
Toll adjustment formula
The toll adjustment formula is explained in Part X of the Bill. Whether toll increases occur will depend on whether net revenues reach certain prescribed levels. The formula is based on a floor and ceiling concept, with the
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4198
aim of providing the franchisee with an average return of 16.5% on shareholders' funds over the 30 year life of the franchise. Under this concept, the franchisee will receive a toll increase if net revenues are insufficient to provide a return of 15% on shareholders' capital. If the return is between 15% and 18%, the franchisee will be entitled to a toll increase every four years. If the return exceeds 18%, there will be no toll increase. The Western Harbour Crossing is expected to be a popular facility and it is by no means certain there will be a need for toll increases every four years. In addition, when net revenues reach a level which would yield a return of between 18% and 19%, the excess over 18% will be shared evenly between the Government and the franchisee. When the return exceeds 19%, the whole of the excess will accrue to the Government. All such excess revenue will be placed in a Toll Stability Fund which will be used to defer future toll increases.
Mr President, I would put it to Members that this is a new and imaginative arrangement, and a major improvement on previous tunnel franchises. For the first time, we have defined what is a reasonable return for the franchisee and have capped his profits, with the excess being used to stabilize tolls for the benefit of tunnel users. It replaces the somewhat vague formula in the existing franchises which give us no specific guidance as to what constitutes a reasonable rate of return, and no assurance to the franchisee as to his future earnings and dividends.
Let me make it clear that the proposed toll adjustment formula does not take away the powers of this Council in respect of toll adjustments. In approving the franchise, Honourable Members will be agreeing a precise formula that will govern toll adjustments throughout the franchise period.
Rate of return
Again, contrary to speculative reports, the proposed toll regime does not guarantee a rate of return to the franchisee. It merely provides him with the opportunity over the life of the franchise to earn revenues which would give him an annual average return of 16.5% on his investment. But an opportunity is no more than an opportunity. It does not guarantee the franchisee against any of the risks involved in running a business. For example, there are the penalties of delayed project completion, construction cost overruns, and possible increases in corporate profits tax, the costs of all of which will have to be absorbed by the franchisee and will not be recovered through tolls. There are also the penalties of the tolls being priced too high, because the franchisee will be operating in competition with two other harbour crossings.
The question has been asked whether 16.5% is an excessive rate of return. It is not. After taking extensive soundings, our financial advisers informed us before we invited bids for the franchise that we could expect tenderers to seek a return of between 17% and 20%. The successful tenderer for the Tate's Cairn Tunnel and Eastern Harbour Crossing franchises were looking for returns of between 14% and 16%, although their franchises were awarded after highly
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4199
competitive tendering, and at a time when investors did not feel the need for the degree of certainty they now require. For similar franchises elsewhere in the Asia Pacific region, the rates of return currently being sought to build and operate this kind of infrastructure are between 20% and 25%. The rate of return sought for the Western Harbour Crossing may appear high, but this is what the market requires, given the risks involved.
The Bill
I turn now, Mr President, to the provisions of the Bill itself.
It is modelled on the Tate's Cairn Tunnel Ordinance and the Eastern Harbour Crossing Ordinance with which Honourable Members will be familiar. The main differences are as follows:
(a) first, the 30-year franchise period can be extended if there is proven loss of time due to government delay in handing over work sites or if the Government directs changes in construction requirements;
(b) secondly, provisions have been added to give effect to the new toll adjustment mechanism;
(c) thirdly, there is provision for the establishment of the Toll Stability Fund.
The object of the Bill is to grant a 30-year franchise for the construction and operation of the crossing and to provide for the rights and obligations of the franchisee. I will now describe the key provisions.
Parts I and II of the Bill contain the definitions necessary for the interpretation of the Ordinance, and enable variation in the plan of the tunnel area. They also provide for the grant of the franchisee to design, construct and operate the Western Harbour Crossing, and the use of the tunnel by the public on payment of tolls.
Part III prohibits the alienation or encumbrance of rights granted under the Bill except with the consent of the Governor in Council, or in certain defined circumstances.
Part IV specifies requirements relating to the directors of the company, including the appointment of two government directors, the powers of the Financial Secretary and the tax provisions.
Part V provides for the start of construction works and for their completion within 48 months. Part VI sets out the obligations of the company for tunnel repair and maintenance and empowers the Governor in Council to make regulations in relation to the provision of tunnel facilities, their safety and maintenance, as well as employment of personnel.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4200
Part VII provides for determination of the tunnel opening date, rights of the public to use the tunnel on payment of tolls, control and safety of traffic, and the operation of the tunnel by the Government in an emergency. This part also gives powers to the Commissioner for Transport in determining the adequacy of tunnel facilities.
Part VIII relates to the tolls that may be charged. Part IX establishes the Toll Stability Fund and the committee to administer it. Part X requires the company to submit statements of net revenue annually and sets out the toll adjustment formula.
Part XI makes provision for the prosecution of traffic offenders. Part XII specifies the circumstances in which the tunnel company will be regarded as in default of its franchise obligations, and the remedies available to the Government. It enables the Governor in Council to revoke the franchise and affords the company the opportunity to show why the franchise should not be so revoked. Part XIII finally enables the company to appeal against a public officer's decision and to resolve disputes by mutually binding arbitrator. It also protects the Government and public officers from liability in relation to tunnel works, operation or maintenance.
Conclusion
Mr President, it is regrettable that more time could not have been allowed for Honourable Members to examine this Bill. But there are very good reasons why the Bill should be enacted in the current Session. Hong Kong needs this additional harbour crossing as soon as possible. If the franchise is not awarded until the next Session, there will be a delay of several months in its completion. Moreover, the validity of the tender will expire on 31 August, and if the franchise is not awarded by then construction costs will increase. In the circumstances, I would be very grateful if Honourable Members would exercise their best endeavours to complete their examination of the Bill as soon as possible. My Transport Branch colleagues and I stand ready to discuss with the Bills Committee at any time.
By way of conclusion, I believe we have negotiated a franchise agreement that is good for Hong Kong and fair to all parties. From the tunnel users' viewpoint, the tunnel operator's returns will be capped, and surplus revenues will be put back into the project to defer toll increases, thus ensuring toll stability. The Bill provides the franchisee with the degree of certainty he, his bankers, and his shareholders need for backing such a massive investment. The franchisee will provide $6 billion worth of essential transport infrastructure at no cost to the public purse, thereby allowing public funds to be spent instead on other vital works.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4201 Mr President, with these remarks I commend the Bill to Honourable Members. Bill referred to the House Committee pursuant to Standing Order 42(3A).
HONG KONG PRODUCTIVITY COUNCIL (AMENDMENT) BILL 1993
THE SECRETARY FOR TRADE AND INDUSTRY moved the Second Reading of: "A Bill to amend the Hong Kong Productivity Council Ordinance."
He said: Mr President, I move that the Hong Kong Productivity Council (Amendment) Bill 1993 be read the Second time.
The Bill seeks to remove the requirement to establish an Executive Committee and to give the Productivity Council more flexibility in deciding its committee structure.
The Bill also seeks to increase the maximum number of members representing management, labour and professional or academic interests on the Council from 16 to 17. At the same time, the maximum number of public officials on the Council will be reduced from six to five. These changes will enable us without reducing the existing number of non official members to appoint to the Council the Executive Director of the Vocational Training Council, who is not a public official, in place of the Director of Technical Education and Industrial Training, who as a public official was formerly a member of the Council and whose functions have largely been taken over by the Executive Director of the VTC.
Finally, the Bill seeks to incorporate a clause governing conflict of interest so that the public interest may be better safeguarded.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
SHIPPING AND PORT CONTROL (AMENDMENT) BILL 1993
THE SECRETARY FOR ECONOMIC SERVICES moved the Second Reading of: "A Bill to amend the Shipping and Port Control Ordinance."
He said: Mr President, I move that the Shipping and Port Control (Amendment) Bill 1993 be read a Second time.
The Bill amends the Shipping and Port Control Ordinance to provide for better regulation and control of vessels entering or remaining in Hong Kong waters.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4202
At present, ocean-going ships arriving in Hong Kong are not required by law to give prior notice except in the case of damaged vessels. By tradition, most ships give us 24 hours' notice. Against the background of an ever increasing number of vessels navigating in Hong Kong waters and the possibility that a vessel carrying potentially dangerous cargo may turn up, unannounced, in our waters, we intend to make advance notification a legal requirement. The Bill provides for this.
To complement the requirement to notify, the Bill provides that the Director of Marine may refuse entry of vessels and, in respect of vessels already within Hong Kong waters, require their removal. The Director of Marine is also given powers to direct ships to leave our waters if he considers that the presence of the vessel in the harbour might prevent or seriously prejudice the use of the harbour by other vessels.
The proposed amendments in this Bill have been formulated following consultation with the shipping industry and port users, and with their agreement.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
INSURANCE COMPANIES (AMENDMENT) (NO. 2) BILL 1993
THE SECRETARY FOR FINANCIAL SERVICES moved the Second Reading of: "A Bill to amend the Insurance Companies Ordinance."
He said: Mr President, I move the Second Reading of the Insurance Companies (Amendment) (No. 2) Bill 1993.
This Bill seeks to give greater security to holders of insurance policies. An insurer authorized to carry on business in Hong Kong is not currently required to maintain assets in Hong Kong to match his Hong Kong liabilities. Although the Insurance Authority is empowered to impose such a requirement, he can only do so when the insurer's financial position is sufficiently precarious as to warrant intervention.
Once an ailing insurer's assets have been removed overseas, it is often difficult or impossible to recover them. The Authority may not become aware of problems affecting an overseas insurer's worldwide operations until it is too late to take effective action. In consequence, there is great risk that local policy holders' claims might not be met in the event of an insurer's insolvency.
This is clearly unsatisfactory. In order to provide local policy holders with greater certainty that their legitimate claims would be met in the event of an insurer's insolvency, the Bill proposes that a general insurer be required to maintain in Hong Kong, in addition to the statutory solvency margin, assets equal to no less than 80% of the liabilities arising from his Hong Kong business.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4203
This is the same proportion as that adopted in the United Kingdom. In fact, similar requirements are a common feature of other jurisdictions.
Assets which would qualify as assets in Hong Kong are listed in the proposed Schedule Eight to the Ordinance. To facilitate compliance with the requirement and to enable the Authority to respond flexibly to changing circumstances, clause 2 of the Bill proposes that the Authority be empowered, in a particular case, to admit as Hong Kong assets, items not specified in the list. He will also be empowered to exempt an insurer, in whole or part, from the requirement where he is satisfied that circumstances render compliance impractical.
As in the United Kingdom, reinsurers will be exempted from the requirement. This is because a reinsurance contract normally extends over more than one jurisdiction; so a reinsurer would be unable to attribute particular liabilities to a particular jurisdiction.
The proposed requirement would initially apply only to general insurers. However, the Administration will be considering in due course whether and, if so, how to extend the requirement to long-term insurers.
We propose that insurers be granted a grace period of about six months from the enactment of the Bill to allow them adequate time to comply with the proposed requirement.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
PROTECTION OF INVESTORS (AMENDMENT) BILL 1993
THE SECRETARY FOR FINANCIAL SERVICES moved the Second Reading of: "A Bill to amend the Protection of Investors Ordinance."
He said: Mr President, I move the Second Reading of the Protection of Investors (Amendment) Bill 1993.
This Bill updates and clarifies certain provisions of the Protection of Investors Ordinance. The amendments, which are technical in nature, are aimed at facilitating the further development of capital markets in Hong Kong while safeguarding the protection of investors.
A major review of the Ordinance was last conducted in 1989. That exercise resulted, among other things, in the introduction of exemptions and control on the issue of advertisements relating to debt market instruments. The system has now been in place for a few years and market practitioners have proposed further improvements to the arrangements. Several other issues which were left over from the last review have also been taken up in the current exercise.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4204
The main revisions proposed are related to section 4(2) of the Ordinance which provides exemptions from prohibitions on the issue of advertisements, invitations or documents in respect of debt market instruments, such as certificates of deposit and commercial papers, under certain circumstances.
It is proposed that such exemptions be extended to debt market instruments issued by corporations which comply with a net asset requirement of $100 million, if such instruments are guaranteed by an authorized institution under the Banking Ordinance, a multilateral agency or by specific exempted bodies. Exemptions will also be extended to those instruments issued by a wholly owned subsidiary of a listed corporation and guaranteed by the parent company concerned, if the latter meets a net asset requirement of $100 million. These measures, if implemented, should facilitate the advertisement of debt market instruments in these circumstances which would in turn encourage market development.
In extending the net of exemptions concerning debt market instruments, it is important not to lose sight of the need to ensure sufficient protection to investors. I have already mentioned the "net asset" requirement. At present, the Ordinance adopts "paid up share capital" to measure the financial strength of corporations issuing debt market instruments. The "net asset" requirement is proposed as a replacement which should be a more accurate and useful measure of such corporations' net worth. The level of asset requirement will at the same time be raised from $75 million to $100 million so that only the more substantial corporate issuers will be eligible for the exemption.
As regards advertisements on debt market instruments not qualified for the exemption, the Ordinance allows an application to be made to the Securities and Futures Commission for authorization. The existing scope of this provision needs to be clarified and revised so that the Commission can more effectively protect the interests of investors.
Measures proposed include allowing the Commission to take into account the features of an instrument to be advertised in approving an application for authorization. This would enable the Commission to request the issuer making the application to make changes to the instrument before granting any authorization. In other words, the Commission will be empowered to refuse an application if it is satisfied that it would not be in the interests of the investing public to approve it.
Another important revision proposed relates to listed securities. At present, the issue of advertisements, invitations and documents in relation to securities, including debt securities and warrants, which are listed on the Stock Exchange of Hong Kong Limited is subject to the restrictions of the Protection of Investors Ordinance. However, such issues would already have complied with the Listing Rules of the Stock Exchange and hence should be exempted from being doubly vetted under the Ordinance. Accordingly, it is proposed to add a new category of exemption in the Ordinance for these listed instruments.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4205
The Bill also encompasses some updating of the scope of the Ordinance such as the inclusion of the European Bank for Reconstruction and Development as a multilateral agency under the Ordinance. The Bank has indicated an interest to tap Hong Kong's debt market. Granting it multilateral agency status will enable it to issue debt instruments in the local market.
Apart from these more significant changes, a number of relatively minor revisions to the Ordinance are proposed. They mainly serve to spell out the scope of the Ordinance more precisely.
Some of the amendments taken up in the Bill were suggested by the Law Society and the Hong Kong Capital Markets Association. These bodies have also been consulted on the Bill as a whole and have generally supported its contents. Through such co-operation with market practitioners, the Administration hopes to improve the framework for the further development of capital markets in Hong Kong.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
JUDICIAL OFFICERS (TENURE OF OFFICE) BILL
Resumption of debate on Second Reading which was moved on 28 April 1993 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 TUNNELS (GOVERNMENT) (AMENDMENT) BILL 1993 Resumption of debate on Second Reading which was moved on 26 May 1993 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 LEGISLATIVE COUNCIL — 30 June 1993 4206 CROSS-HARBOUR TUNNEL (PASSAGE TAX) (AMENDMENT) (NO. 2) BILL 1993 Resumption of debate on Second Reading which was moved on 26 May 1993 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).
CROSS-HARBOUR TUNNEL (AMENDMENT) BILL 1993
Resumption of debate on Second Reading which was moved on 26 May 1993 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).
EASTERN HARBOUR CROSSING (AMENDMENT) BILL 1993 Resumption of debate on Second Reading which was moved on 26 May 1993 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).
TATE'S CAIRN TUNNEL (AMENDMENT) BILL 1993
Resumption of debate on Second Reading which was moved on 26 May 1993 Question on the Second Reading of the Bill proposed, put and agreed to.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4207 Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
LANDLORD AND TENANT (CONSOLIDATION) (AMENDMENT) BILL 1992 Resumption of debate on Second Reading which was moved on 3 June 1992 Question on Second Reading proposed.
MR JAMES TO (in Cantonese): Mr President, the Landlord and Tenant (Consolidation) (Amendment) Bill 1992 proposed two major amendments, namely, the phasing out of all rent controls by the end of 1994 and the enhancement of the level of statutory compensation payable to tenants dispossessed by landlords who intend to rebuild their premises.
The Bill was first introduced to this Council on 3 June 1992. Subsequently an ad hoc group was set up to study the Bill. The ad hoc group has since held 17 meetings and received and considered 22 submissions from concerned groups and individuals. In addition, it has paid a visit to a building at Tai Kok Tsui and interviewed the tenants who would be affected if the Bill was passed.
The views of the public on the Bill were divided. Members of the ad hoc group, too, have failed to arrive at a consensus. As the ad hoc group's convener, I will now render an account of the principal issues that the group considered, as well as the mainstream opinions of its members on these issues. In addition, I will be moving at the Committee stage amendments that reflect the ad hoc group's majority opinions. However, I believe that individual members will be speaking later to offer comments on matters of concern to him/her.
To begin with, I would like to talk about the proposed new statutory rate of compensation. The existing Ordinance provides that the statutory rate of compensation shall equal twice the 1983 ratable value plus removal fees and compensation for fittings. This is an out-dated and impractical way of setting the rate of compensation. In the opinions of all sectors of the community, it should long have been adjusted. The Bill seeks to revise the rate of compensation to 1.3 times of the current ratable value. Members of the ad hoc group opined that using the "current ratable value" as the basis for calculating the rate of compensation would be simple and easy to grasp, and it would serve to reflect the latest market value of the properties. With regard to the proposal of discontinuing the payment of removal expenses and compensation for fittings, the Administration's justification for this was that it was often difficult for the landlord or the Land Tribunal to determine what the amount of such
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4208
compensation should be in individual case. The ad hoc group found the proposed amendment acceptable.
There was disagreement, however, over what multiplier was reasonable. Basically, most of the members had reservations about the "1.3 times" multiplier as provided for in the Bill. They thought that a rate of compensation based on such a multiplier would be neither sufficient nor reasonable to dispossessed tenants who have to find new accommodations in a hurry. Some concern groups demanded that the multiplier should be raised to "two times" (of the current rateable value). Some thought that it should be raised to three times plus removal expenses and compensation for fittings. Some even suggested that the compensation should equal the cost of construction. The Administration subsequently raised the multiplier from 1.3 times to 1.7 times, which would better reflect how the average amount of actual compensation had gone up since the Bill was first drafted. The Administration thinks that the proposed new rate of compensation at least doubles the existing rate and will give an affected tenant enough money to pay at least eight months' rentals for a comparable accommodation. Although some members still think that it should be higher, the majority consider the proposed new rate of compensation acceptable. Their argument is that a reasonable statutory rate of compensation should be such as will, in most cases, be practically helpful to the tenants and at the same time acceptable to the landlords. After all, the statutory rate is the minimum rate. In a specific case, the landlord and his tenant can, after negotiation, arrive at an actual rate of compensation that is higher. Meanwhile, enunciating a related policy, the Administration says that the ratable value will be revised once every three years. In addition, the Bill provides that the multiplier in question would be further revised if necessary. In this connection, I urge the Administration to pay close attention to the level of compensation and to be ready to revise it at any time to safeguard the interests of the tenants. This is necessary because, between the two parties involved, the tenant is basically the party that does not have the initiative but is in need of help.
The proposed new rate of compensation reminds us again of the issues raised by the redevelopment of privately owned buildings, including the resettlement of the affected tenants and a better procedure for the repossession of properties by developers. Mr President, as you are aware, the subject of "the redevelopment of privately owned buildings" was debated in this Council on 24 June and 1 July last year. In the wake of that debate, the Administration said that it has set up an interdepartmental working group to study the question of urban renewal. I would like to ask the Administration to expedite this study and to give serious consideration to the comments from all quarters concerning the present Bill.
I now turn to the proposed removal of rent controls.
The Bill seeks to phase out rent controls in respect of the premises controlled by Parts I and II of the Ordinance by the end of 1994. Subsequently, the Administration proposed a more moderate and slower pace and would
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4209
extend the deadline to the end of 1996. Members of the community have entirely different views about the proposed removal of rent controls. Landlords complain that rent controls are unfair to them. They say that they are not getting reasonable returns on their investments and that they cannot afford the cost of repairs and maintenance of their properties. Some people think that rent controls should be removed because the only reasonable thing to do is to give free play to market forces. On the other hand, tenants and social organizations express concern that the decontrol of rents will cause rents to skyrocket across the board and will add further burden to tenants who already experience different degrees of financial difficulties.
During the deliberations of the proposed removal of rent controls, the ad hoc group considered the following questions with great care:
(1) How will the proposed removal of rent controls affect the tenants? How many people will be affected? What are their financial resources and their abilities to bear the burden?
(2) Are the rent controls, which prevent some landlords from charging rents according to market value, fair to them? Are their rates of return on investments much less than those non-controlled properties? Also, if rent controls are to be relaxed, is there no alternative to letting tenants bear the full burden? For example, will the Government consider paying rental allowances to eligible tenants to enable them to afford the higher rents as a result of removal of rent controls?
(3) If rent controls are further relaxed, will Hong Kong's social security net be adequate to ease the increased difficulties that the poor tenants will have to face as a result?
(4) In view of the fact that redevelopment, repossession and re-letting are already causing a steady year-to-year decrease in the number of controlled premises, can the Administration let such premises phase out naturally and not speed up the process by relaxing rent controls?
(5) What is the point of setting forth in the Bill a draft timetable for the proposed removal of rent controls? Will this not produce the effect of preparing tenants for the eventual removal of rent controls, so that they will be ready for the day when rent controls are removed?
Members of the ad hoc group have different views about, and attach different degrees of importance to, the above questions. This precisely mirrors the community's differences of views on the proposed removal of rent controls.
The basic concern of the ad hoc group is to what extent the tenants, especially the elderly, the singletons, the sick and the public assistance recipients, would be affected. At the request of the ad hoc group, the
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4210
Government conducted a comprehensive survey on Part II controlled premises. I must thank the Administration for this. The Government used a very efficient method to complete the survey. I hope that the Administration will not put the survey's findings aside. I believe that these findings are helpful to the Administration in understanding the needs of the tenants of private residential premises and in devising a policy beneficial to them.
Based on the Government survey, the Administration points out that the average income of a family (occupying one flat) is $11,000 or so. Only 1.4% of the families earn less than $2,000 and the ratio of rental payment to income, on average, is in the range of between 7.3% and 23.3%. The Administration thinks that the Bill's provision limiting any increase in the minimum permitted rental to 5%, which should be affordable to the majority of the tenants, is reasonable. I believe that the Secretary for Home Affairs will cite more statistics in support of his argument when he delivers his speech.
Two concern groups have also conducted surveys of a similar kind separately. Their findings are vastly different from the Administration's findings. The ad hoc group thinks that the three surveys arrived at different findings because their objectives, points of emphasis and aims were all different. However, the ad hoc group believes that the government survey, being conducted on a larger scale, may be flawed by over generalization. Therefore, before we consider the Administration's case, I would like to draw Members' attention to the following statistics:
(1) According to the 1991 census, Hong Kong's median family income was about $10,000. However, the latest government survey found that 56% of the families were earning less than this figure.
(2) 21% of the families are made up solely of elderly members who are 60 or older. 47% of these families have a monthly income of below $4,000. One can be sure that their earning power will decline further as their members grow older.
(3) There are 13 000 singleton families. 35% of them have a monthly income of below $4,000.
(4) Take a public housing tenant family as an example, if its rental payment to income ratio exceeds 25%, we call it a "needy household" and it is eligible to apply for rental assistance. Yet, based on the government survey in question, 54% of the families occupying whole flats meet the same criterion. They can be called "needy households living in private sector housing".
Mr President, what I am trying to say is that the tenants' financial situation is not as good as the Administration has made it out to be. Definitely, many tenants are experiencing different degrees of financial difficulties. A further relaxation of rent controls will add further burden to them. Let us not
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4211
forget that, even if rent controls are not relaxed further or relaxed at a faster pace, the existing Ordinance already permits significant rental increases. For example, Part II of the Ordinance permits a 30% rental increase every two years. Therefore, there is no justification for a further raise in the minimum permitted rents, which will add to the burden of affected tenants. Let me give an example, which, I hope, will illustrate my point. Suppose that a tenant now lives in a rent-controlled flat with a market value of $6,000 and that he is paying only 50% of the market value, that is $3,000. The Administration's case concludes that there will be a 10% annual increase in rentals. Then, two years later, the flat's market value will be $7,200. The landlord can then use this $7,200 figure as his basis for setting a higher rent. The new rent will be 75% of the market rental value, that is $5,400. This means that the rent wil increase in one single step from $3,000 to $5,400, which will be an 80% increase and not as small an increase as we imagine. The Administration is right to say that the Government has the duty to give assistance to needy tenants. Yet what assistance is the Government giving them?
The Administration said some time ago that between 500 and 1 000 public housing units would be made available in each of the next five years to singletons now living in private sector housing, and they might apply for such units. This number of public housing units will simply not be enough to satisfy the needs of the singleton families, of which there are at least 13 000, even though some of them may not be eligible to apply. The finding of a small-scale survey conducted by the Government some time ago was that one-third of all families now living in rent-controlled premises had applied for public housing. Yet the supply of public housing units is limited, so how much longer must these applicants wait? As things now stand, the waiting period for a singleton is more than 10 years. Nor is rental allowance, a part of public assistance, of much help. For the maximum rental allowance of $743 is simply not enough for paying the monthly rental for one room, which is $874 at the controlled rate or $1,200 at the market rate.
The majority of the members of the ad hoc group think that existing social security is inadequate. The Administration should make more public housing units available, particularly units for singleton and two-person families; broaden the scope of public assistance; increase the amount of allowance; and, in some cases, pay rental allowances directly to tenants in financial difficulty. Unitl Hong Kong provides better social security and gives assistance to needy tenants, rent controls should not be relaxed. On behalf of the ad hoc group, I will be moving amendments at the Committee stage so as to stop any action intended to relax rent controls further or to speed up the relaxation of the control.
Mr President, I would like to make it clear to the Administration that, under the present circumstances of inadequate social protection, we cannot relax rent controls in disregard of the interests of the low-income groups or act in single-minded pursuit of a so called "policy objective". We should understand the background of rent controls. They were first introduced at a time when the
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4212
public housing scheme was not yet ripe. The Government introduced them lest the landlords should raise rentals sharply, making people homeless and undermining social stability. If the Administration wishes to remove rent controls, it must double its effort in the provision of public housing in order to cope with the needs of various social strata.
Lastly, the ad hoc group notices two procedural problems:
(1) It has indeed taken the Administration too long to revise the Bill. The Bill was first introduced to this Council in June last year. The ad hoc group then held many meetings with the Administration. By December last year, we had arrived at a clear position. We then asked the Administration for a response. The Administration waited until 4 May this year before making clear what its exact position was. Meanwhile, many members of the community were giving various expressions to their anxiety. In particular, as a result of the delay, some tenants failed to receive higher compensation for the properties that were demolished in the meantime.
(2) The ad hoc group agreed with many concern groups in thinking that, as the Bill consists of two distinct parts which affect the landlords and the tenants respectively, more time should be allowed for the discussion of the proposed removal of rent controls. Accordingly, the ad hoc group suggested to the Administration to deal with these two parts separately and to deal first with the issue of statutory compensation, which must be quickly revised. However, the Administration insists that the two parts form an integral whole and should be dealt with together. The ad hoc group is puzzled by this. The ad hoc group hopes that the Administration will not withdraw the entire Bill if it is partially rejected by Members.
Lastly, I would like to take this opportunity to say thanks to members of the ad hoc group for their participation over the past year and to the Secretariat for its full support.
MRS MIRIAM LAU (in Cantonese): Mr President, rent controls have been in force in Hong Kong for many years, during which the relevant law (namely, the Landlord and Tenant (Consolidation) Ordinance) was amended time and again. After the many amendments, the text of the Ordinance has become intricate and complex. In many cases, the landlords and the tenants themselves feel very perplexed. They cannot tell which parts of the Ordinance apply to them. Similar buildings may be subject to different parts of the Ordinance. It is even possible for one building to be subject to rent controls while a similar one is not. One flat in the same building, or even one room or bed space in the same flat, may be subject to rent controls while another is not. The situation is
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4213
confusing. Worse still, some principal tenants, who are protected by rent controls, take advantage of the loopholes of this policy by subletting all or parts of their flats at the prevailing market rent, thus making a profit.
This above situation is quite common and it is really unfair to the landlords. Many landlords affected by rent controls think that the Government is depriving them of their right to earn a reasonable return and they are subsidizing their tenants indefinitely. Such thoughts directly diminish landlords' interests in the repair and maintenance of their properties. The properties become dilapidated because of prolonged disrepair. The tenants then become even more resistant to rental increases. Thus, friction grows between the landlords and the tenants. Disputes are frequent.
In fact, when rent controls first came into effect in 1973, the Government already declared it was an interim measure to stop rents from rising sharply at a time when there were severe shortages of housing. During the early 1980s, the Government amended the Ordinance to narrow the gap between the controlled rents and the market rents. The Government hoped that rent controls would eventually be removed. The maximum rents for Part I controlled premises were raised from 20 times of standard rents in 1984 to 48 times in 1990. For Part II controlled premises, the ratio of minimum rents to standard rents rose by an average of five percentage points a year from 45% in 1984 to 70% in 1990.
On 17 July 1991, the Government moved a motion in this Council to extend rent controls until the end of 1994. The Secretary for Home Affairs said at that time that the Government had reviewed the control and proposals were being formulated to adjust the relevant control mechanism so as to allow the rents of Part II premises to rise to within 90% of the prevailing market rents by the end of 1994. At that time, nobody in the Legislative Council raised objections. The present Bill is merely giving form to an established policy of the Government. In fact, if the Government were to continue its pre-1990 policy of narrowing the gap by five percentage points a year, then the rents of Part II premises would equal market rents by the end of 1996. This would have the same effect as the removal of rent controls.
People who object to removal of rent controls say that the Government should not do that because some of the affected tenants are elderly people or people without the ability to work. Though their numbers are not large, they will be severely affected if rent controls are removed. I agree that the community has an obligation to protect these people, who are unable to take care of themselves. Therefore, I think that the Government should take all feasible steps to help these people by moving them into public housing as early as possible or by paying them adequate rental allowances. This will save them from distress and dismay in the wake of the removal of rent controls. It is the only solution for the problem.
HONG KONG LEGISLATIVE COUNCIL — 30 June 1993 4214 ||20190C.doc
Some think that the removal of rent controls will cause the quality of life to decline for tenants. Undeniably, the tenants will be affected to a certain extent as a result of removal of rent controls. However, the removal of rent controls process will be dragged out over a number of years and the size of each year's adjustment will be moderate. Therefore, I believe that, on the whole, the impact on the tenants will not be too great. Besides, we should give thought to whether it is right to permit the happiness of the tenants to be based permanently on the hardships of small property owners. According to a government survey, 68% of the Part II controlled premises were purchased before 1973, the year when rent controls came into effect. These landlords have had to live with rent controls for 20 years. These premises should be given a chance to return to the free market.
Housing is a headache for the people of Hong Kong. Of course, the most comprehensive solution is for the Government to provide sufficient public housing to those in need. The Government has an inescapable responsibility in this respect. However, I do not think that public housing and rent controls should be mixed up to become one issue. According to a study, some tenants are ineligible for public housing because their income exceeds the upper limit, while others do not like to live in public housing. Besides, it is unfair and unreasonable to ask the landlords to bear the consequences of the under-supply of public housing and to continue letting rent controls deprive them of their right. In fact, the Government should not continue indefinitely to be generous at the landlords' expense. For tenants affected by redevelopment, the Government originally proposed a rate of compensation of 1.3 times current ratable value. Subsequently, however, it agreed to raise the rate of compensation to 1.7 times. Some people think that even 1.7 times is too low and that it should be two times or even three times. According to government figures, during the past three years, where settlements were reached out of court, the average rate of compensation for tenants affected by redevelopment was 0.97 times, 1.34 times and 1.51 times of ratable value respectively. This already far exceeded the court's award. Hence, I think that setting the statutory rate of compensation at 1.7 times of current ratable value, which is higher than the multipliers that I have just mentioned, will be fair enough. Besides, the statutory rate of compensation is after all only a base figure. When a landlord and his tenant opts for out-of-court settlement, the amount of compensation obtainable by the tenant usually exceeds this base figure.
The Bill is a proposal to balance the interests of the landlords and the tenants. By phasing out rent controls, the interests of the landlords will be looked after. On the other hand, the extension of the removal of rent controls process will be in the interest of the tenants, on whom the impact will be kept to the minimum. At the same time, the statutory rate of compensation available to the tenants affected by redevelopment will be raised to a reasonable level. The Liberal Party thinks that the proposal is fair and just to all parties concerned and therefore deserves support.