ENG-1993-07-07

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4313

OFFICIAL RECORD OF PROCEEDINGS

Wednesday, 7 July 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 HUI YIN-FAT, 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 NGAI SHIU-KIT, 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 LAU WONG-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.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4314 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.

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 MARVIN CHEUNG KIN-TUNG, J.P. 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.

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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.

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 ANNA WU HUNG-YUK

THE HONOURABLE JAMES TIEN PEI-CHUN, O.B.E., J.P.

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 ALISTAIR PETER ASPREY, O.B.E., A.E., J.P.

SECRETARY FOR SECURITY

THE HONOURABLE MICHAEL SZE CHO-CHEUNG, I.S.O., J.P.

SECRETARY FOR CONSTITUTIONAL AFFAIRS

MR ANTHONY GORDON EASON, J.P.

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS

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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

THE CLERK TO THE LEGISLATIVE COUNCIL

MR CLETUS LAU KWOK-HONG

THE DEPUTY CLERK TO THE LEGISLATIVE COUNCIL MR PATRICK CHAN NIM-TAK

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Papers

The following papers were laid on the table pursuant to Standing Order 14(2): Subject

Subsidiary Legislation L.N. No.

Legal Aid (Assessment of Resources and

Contributions) (Amendment) Regulation 1993 ............................. 241/93

Commissioner for Administrative Complaints

Ordinance (Amendment of Schedule 1) (No. 2)

Order 1993..................................................................................... 242/93 Financial Resources Rules......................................................................... 250/93

Sessional Papers 1992-93

No. 85 — 1992 Annual Report by the Commissioner of the Independent Commission Against Corruption

No. 86 — Clothing Industry Training Authority Annual Report 1992 No. 87 — Construction Industry Training Authority Annual Report 1992

Address

1992 Annual Report by the Commissioner of the Independent Commission Against Corruption

MR RONALD ARCULLI: Mr President, as a member of the Advisory Committee on Corruption, I have pleasure in introducing the 1992 Annual Report by the Commissioner of the Independent Commission Against Corruption, which is tabled today in this Council.

But my pleasure is tinged with sadness. The sudden and untimely death of Peter ALLAN on 28 November 1992, at the age of 47, shocked and saddened us all. To quote from the obituary in this report:

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"During his one year's service as Commissioner, Peter effectively brought many of his talents and high professional standards to bear on his demanding and diverse role. He was down-to-earth, sensible and practical with a warm, engaging personality. Hong Kong has lost an outstanding public servant."

In his review at the end of 1992 the Acting Commissioner, Mr J E BUCKLE, observed that it had been an unremarkable year as regards statistics on corruption reports but that statistics alone could not be relied upon to reveal the extent of corruption in any society. He remarked that ICAC intelligence sources tended to show that much more corrupt activity was taking place than had been reported, particularly in the government sector and that the Commission would be giving very close attention to the perceived problem areas during 1993.

During the year it became increasingly evident that the Commission faced significant new challenges resulting from the increasing pace of change to the democratic process and the effects of the Bill of Rights on investigation and court procedures. The acting Commissioner concluded that the effects so far had been beneficial in encouraging self-examination and demanding greater professionalism from ICAC officers.

As always in 1992, the Commission's efforts to control corruption depend on the integrated activities of the three departments. The Operations Department dealt with 2 276 reports of corruption and the breakdown showed that 52% concerned the private sector, 20% the police, 25% all other government departments and 3% other public bodies. The percentage of people prepared to identify themselves when making reports was 68%, which was virtually the same percentage recorded in 1991. During the year 337 persons were prosecuted and 167 were formally cautioned.

With professional and imaginative approaches to their work, the Corruption Prevention Department continued in its task of identifying corruption opportunities and proposing improvements in procedures to limit or eliminate them, while the Community Relations Department concentrated on educating members of the public to understand what corruption is and to identify and report it.

The acting Commissioner concluded his year-end review by thanking the public for their support, the members of the ICAC's advisory committees for their valuable assistance during the year and, of course, the staff of the Commission for their dedication and hard work. Mr President, on behalf of the members of this community who assist the ICAC in so many ways I wish to join in this tribute.

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Oral answers to questions

Retirement protection scheme

1. MR HUI YIN-FAT asked (in Cantonese): With regard to the motion passed by this Council on 3 February 1993 urging the Government to expeditiously formulate measures so that the people of Hong Kong can be provided with a properly designed retirement protection system, will the Government inform this Council of the progress of work done as well as when the details of the system and its implementation timetable will be announced?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, at the motion debate in this Council on 3 February this year, a number of major issues were raised on the future of a retirement protection system. These, together with the 176 public submissions made in response to the Consultation Document, are now being analysed and studied carefully within the Administration. There are several major issues.

These include the relationship between a compulsory retirement protection system and our system of social security benefits, and whether there should be a government guarantee against financial risks arising from private management of decentralized schemes.

The subjects before us are highly complex, involving a series of difficult judgements which will have profound consequences on our long-term social, economic, financial and monetary policies. It is not therefore an issue that we can afford to rush to a conclusion.

I can however assure this Council that we are already handling the subject as quickly as we can. We aim to reach a more definite conclusion on the best way forward by the end of this year.

MR HUI YIN-FAT (in Cantonese): Mr President, the study on the introduction of a retirement protection system in Hong Kong has dragged on for a long time. Could the Administration inform this Council what other issues it has to consider at this stage and whether there are different considerations under different political circumstances and economic situations? The most important thing is: does the Administration have the sincerity to provide a properly designed retirement protection system for Hong Kong?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, there is no question of the Government not being sincere about this. This in fact was the very reason why we issued a document for public discussion and consultation last year. But as I said in my main reply, the subjects are very complex and they do require very detailed assessment and analysis of financial, social,

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economic and other factors involved. These analyses do take time but we are moving as fast as we can. I do not believe that we are affected in any way by the political circumstances that face Hong Kong. I think all factors are taken into account but it is a very complex subject matter and we must take all factors fully into account when analysing these various conclusions.

MR LAU CHIN-SHEK (in Cantonese): Mr President, in the motion debate referred to earlier, Members of this Council expressed unequivocally their support for a central provident fund. Could the Administration inform this Council to what extent the result of that motion debate will be considered and in the light of the consultation exercise, how much importance the Administration attaches to a central provident fund as opposed to other options?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, we have of course taken full and careful note of the very helpful and useful comments made by Members in the debate in February. These, as I have said, are being analysed most carefully together with the 176 submissions from the public which make varying suggestions as to the types of system that we should develop. The Government's mind is open on this and we have to work very carefully to assess all the consequences of this preferred system, including, of course, views of this Council arising from the debate. This includes the point made by Mr LAU on whether the scheme should be centralized or decentralized. Again these are matters we have to pursue in relation to the long-term social, financial and monetary policies that we have to consider.

MR HENRY TANG: Mr President, the Government has accepted that a central provident fund is one of its possible options. Will it then introduce this matter to be discussed by the Joint Liaison Group as it will straddle 1997?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, I do not think I have said that we have included the central provident fund as an option at this stage. It is premature to speculate what type of option or options will be developing in the months ahead. We are certainly looking at all the arguments advanced so far on a centralized or decentralized system. On the question of government guarantees and longer-term social security benefits, these are all matters we have to take fully into account before we arrive at any conclusions.

MR TIK CHI-YUEN (in Cantonese): Mr President, it is mentioned in the consultation paper that the Executive Council is not in favour of a central provident fund system. But now it seems that the Administration is to re-examine all the options. Is the central provident fund one of its options? If yes, does this imply that the Executive Council has a change of heart in its decision?

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SECRETARY FOR EDUCATION AND MANPOWER: Mr President, I do not think I can prejudge or pre-empt what the Executive Council will decide or not decide. What I have said just now is that we are considering all suggestions made by this Council and the public on the future form of a retirement protection system including the centralized system suggested by some Members. These are all suggestions being looked into very actively and very carefully.

DR TANG SIU-TONG (in Cantonese): Mr President, the system in question will straddle 1997. Could the Administration inform us whether it will consult the Chinese side on this? How will the Administration deal with it if the Chinese side disagrees with the setting up of a central provident fund?

PRESIDENT: I think that last part is hypothetical. The first part, Secretary.

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, as and when we have issues affecting the future SAR Government, clearly it is essential for us to consult and inform the Chinese side. But we have not reached that stage yet.

MR MICHAEL HO (in Cantonese): Mr President, in its reply just now, the Administration has mentioned that they do require detailed analysis and observation of the long-term economic impact. In fact what analysis has the Administration made so far and which part of it can be made public at this stage? Referring to the fourth paragraph of the reply, it says they could reach "a more definite conclusion" by the end of this year. Will the Administration inform this Council how definite the conclusion is by the end of this year?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, as regards the first part of Mr HO's question, clearly analysis involving social, economic, financial and monetary policies will require very careful handling. The complexity of the issues will require expert advice from various fields. The analysis is going on but I cannot at this stage predict what the outcome is going to be. All I can say is that we are actively looking into the issues involved. As regards the second part of the question about a more definite conclusion emerging towards the end of this year, all I can say is that we would like to see a more definite conclusion on the way forward by the end of this year. Again I cannot prejudge what that conclusion will be or how we will be taking the matter forward. Not until then will we know better.

MR MARTIN BARROW: Mr President, in view of the complexities referred to by the Secretary, does the Government plan a further round of formal or informal consultation with all sectors of the community, and if not, why not?

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SECRETARY FOR EDUCATION AND MANPOWER: Mr President, in analysing the various complex issues involved, I think we might have to involve particular target groups with regard to issues which might be of particular concern to them. So I do not rule out the possibility of some consultation, but it will, perhaps, not be as extensive as the exercise we did before.

Conservation of rural landscape

2. MR JIMMY McGREGOR asked: In the light of increasing demand for conservation of natural resources, will the Government inform this Council whether priority will be given to the conservation of our rural landscape when formulating the rural statutory plans and, if so, whether the land currently used for open storage of containers and scrap metal would be required to revert to its original state so as to improve the environment?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, one of the main components in the current review of the Territorial Development Strategy and the various Sub-Regional Planning Strategies beneath it is a strategy for the conservation of the country parks and rural landscape. The broad concept is that rural land other than areas required for development to sustain anticipated population and economic growth should be designated for conservation, agricultural and recreational purposes. About half of the rural area is indeed already covered by the country park designation. Other proposals emerging from the planning strategies will be taken into account when the rural Outline Zoning Plans which will replace the current generation of Development Permission Area Plans are prepared.

With regard to the second part of the question, whether land currently used for open storage of containers and scrap metal can be required to revert to its original state depends on a number of factors. The Town Planning Ordinance does not empower the Government to take enforcement or reinstatement action against land uses which existed before the publication of the relevant Development Permission Area Plan. Uses established without permission after the publication of a DPA plan which contravene the land use zoning can be dealt with by enforcement and reinstatement action under the Ordinance however. Even so, the extent to which sites can be restored to their original state in practical terms is something which has yet to be clearly established. In the longer term, new arrangements to tackle the problem of "existing uses" will be required and consideration is being given to this in the context of the review of the Ordinance.

MR JIMMY McGREGOR: Mr President, I understand that about 40 million to 50 million sq ft of land in the western New Territories alone may be involved and rentals are being paid up to $100 million per month to the landowners concerned. Since the Government and only the Government has the power to

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take action to improve and restore these large areas of the New Territories to their original condition, will the Secretary say what action he can take when considering the problem of "existing uses"? Can the existing law be modified to remove this serious blight from the western New Territories and what may be the timetable he will consider? I ask the Secretary not to hide behind good intentions.

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I shall try not to hide behind anything. The area which is used at the moment for open storage uses in the rural New Territories amounts to 700 hectares and I think we need to bear in mind why this is the case, and it is of course not simply because rural landowners wish to make a dollar on their land. It is because there are 700 hectares worth of uses which are mainly a reflection of economic pressures on the territory requiring land for a variety of economic uses. Now what are we doing? I have already mentioned the revision of the Town Planning Ordinance which is the mechanism to deal with "existing uses" or will be the mechanism to deal with "existing uses" when we have further amended it. And what we are doing now is drafting a White Bill which would set out the revisions to the Ordinance which we would propose and I expect to be able to publish that White Bill by the end of this year or early in 1994. However, in the light of what I have said about economic uses, it is clear that whether we remove "existing uses" or not, and restore the land on which they sit, we will nevertheless require quite large areas of land for the sort of uses we are talking about and we are committed to converting the first 30 Development Permission Area Plans, which were published about two years ago, by the middle of next year. And it is in the course of converting those plans into Outline Zoning Plans that we will seek to provide the land necessary for all these uses.

MR SIMON IP: Mr President, I am rather disappointed with the Secretary's bureaucratic response — there are Ordinances, there are plans, there are Bills, there are White Papers. I think all we want to know basically is when the Government will stop the rural areas of Hong Kong being used as a scrap yard.

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I shall try neither to hide nor to be further bureaucratic. I think the essential point to bear in mind is that we can have good intentions and we can wish to improve the situation but we can only do this lawfully. We are not able to proceed by way of arbitrary and summary execution. When we see a use which either we do not like or is untidy or unsightly, we have to proceed, as I am sure the Honourable Member himself would accept, in a lawful way. As far as what is happening now is concerned, the processes which we have available under the law at present have resulted in 1 000 warning letters being issued in respect of suspected unauthorized development cases within the Development Permission Areas. Beyond warning letters, 367 enforcement

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notices have been issued — these are in respect of 61 unauthorized cases — and 17 stop notices involving four cases have been issued. So far we have not got as far as issuing reinstatement notices, but no doubt we will. Three cases have been prosecuted, three offenders have pleaded guilty. I should clarify that the three cases involve six offenders; three offenders have pleaded guilty and three are awaiting the court decision. Now as far as enforcement is concerned, under the Ordinance, which I think Members may forget, it was only extended throughout the New Territories as recently as two years ago. So we are early days as far as enforcement action is concerned. But I think, on the basis of the statistics I have given, it can be seen that we are moving down the track of enforcement and we will eventually get to reinstatement.

REV FUNG CHI-WOOD (in Cantonese): Mr President, the misuse of rural land is really very serious and has caused hindrance to future developments. We must rectify the situation. I am happy to know that the Administration will publish a White Bill, but when will the Administration amend the relevant laws such that the authority concerned can start with the relevant work?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, the Honourable Member will, I think, understand that the issues that we are referring to here have been and will long continue to be very controversial, posing, if you like, a question for landowners and the community. The Honourable Member referred to abuse. I have tried to put this in context and indicate that we may be in some areas talking about abuse; but we are also talking about economic use. The White Bill, as I have said earlier, we expect to publish by the end of 1993 or early in 1994. How long it takes to convert that White Bill into the subsequent Blue Bill and how long it takes to convert that Blue Bill into legislation and a basis for enforcement, I think, will depend very largely on the proceedings in the panels and committees of this Council.

MR HOWARD YOUNG: Mr President, with reference to the Secretary's reply that the rural areas under discussion should be designated for recreational purposes, will the Government tell this Council whether facilities such as picnic sites, hiking trails, golf courses, camp sites — all of which are not buildings — plus buildings such as country park management centres come within the ambit of recreational purpose?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, experience suggests that responding to questions of this kind can produce a good deal of subjective response. It seems as though for every proposition there may well be an opposition. However, applying a commonsense judgement to the uses which the Honourable Member has listed, I would be reasonably confident in agreeing that they may be regarded as recreational uses.

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MR JAMES TIEN: Mr President, due to the ever expanding industrial activities across the border, I feel that the open storage and container problem will continue. Will the Secretary please inform us whether it is considered that land could be provided for real estate developers to construct multi-storey container storage buildings, so that these containers could be moved indoor instead of staying outdoor?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I would not necessarily favour real estate developers in considering such a proposition. But I would certainly, in the context of looking at the conversion of Development Permission Area Plans into Outline Zoning Plans, consider whether some of the requirements could be met by sites on which multi-storey parking buildings could be built.

Gas supply to newly-built public sector housing

3. MR FRED LI asked (in Cantonese): In view of the policy adopted by the Housing Authority to use bulk Towngas supply in the newly-built Home Ownership Scheme estates and public rental housing estates, will the Government inform this Council of the following:

(a) the factors considered when formulating such policy;

(b) as the Government has no monitoring at all over the gas company at present in respect of both its profits and charges, how the interests of residents as consumers can be protected; and

(c) since the gas company is allowed by the Housing Authority to monopolize the gas supply in newly-built public housing estates, whether the Government will consider implementing a certain mechanism for monitoring the company?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President,

(a) The task of the Housing Authority in choosing a source of gas supply for its estates is not much different from that of any developer. It is generally not practicable to permit the installation of two parallel sets of gas supply pipework to every flat so that the residents can choose whether they want to use Towngas or liquefied petroleum gas. The Authority has to make a choice to enable a fuel supply to be integrated into its developments at the design stage. The main difference between the Authority and a private developer in this respect is the existence of a transparent policy.

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The policy of the Authority is that Towngas will be adopted for new estates where available. Only where Towngas is not likely to become available will a piped liquefied petroleum gas supply be adopted. This policy was formulated after very thorough consideration and has been reviewed from time to time, most recently in 1990. Factors considered by the Authority include planning flexibility, cost, safety, security of supply, the need or otherwise for on-site gas storage and possible adaptability to natural gas in future.

(b) Public housing residents as consumers of Towngas are no different from other Towngas consumers and are not subject to a different tariff structure. Their interests are therefore just as well protected as other consumers'. Over the past 10 years, the difference in charges for Towngas and liquefied petroleum gas has been marginal. Sometimes Towngas has been slightly cheaper on an equivalent energy basis and sometimes liquefied petroleum gas has been slightly cheaper.

(c) Although individual consumers may not be in a position to choose which form of piped gas supply is available to them, the charges they pay are determined by competitive market forces. In the specific case of the supply of energy for domestic cooking and water heating, the Hong Kong and China Gas Company competes for market share not only with suppliers of liquefied petroleum gas but also with the electricity companies. Under these circumstances, the Government sees no case for intervening to regulate the gas supply market at the present time. The policy of the Housing Authority on its own does not appear to warrant the introduction of a special mechanism for monitoring the Company. Nonetheless, the Secretary for Economic Services will continue to monitor the situation.

MR FRED LI (in Cantonese): Mr President, in paragraph (a) of its reply, the Administration says that the task of the Housing Authority in choosing a source of gas supply for its estates is not much different from that of any developer. This is untrue because when a housing estate is still at the design stage, its developer can choose either bulk liquefied petroleum gas (LPG) or Towngas as its gas supply. They will make a choice in the best interests of the consumers. The Housing Authority however only chooses Towngas and this has boosted and will boost the market share of Towngas. May I ask the Secretary for Economic Services whether such a situation has been monitored and whether any proposal for improvement has been made so as to encourage a fair competition in the fuel market?

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SECRETARY FOR ECONOMIC SERVICES: Mr President, the Government's overall objective as regards utility services is to ensure that the customer receives an efficient and reliable service at a reasonable cost and one that is responsive to increasing demand. We believe that the best way to provide that type of service is to encourage competition in the delivery of the service and experience tells us that when market forces are permitted to determine the quality and price, they normally work best for the consumer. In respect of consumers using Towngas as compared to LPG, the situation is that, in terms of numbers, the clients are more or less equal. About 900 000 customers now use Towngas, as compared to 950 000 using LPG bulk or LPG cylinder. So the market actually at the moment is equally shared by the two types of suppliers. As regards schemes of control and franchise operation, as the market is now well shared by different suppliers of gas to households we do not believe that there is a case for either considering the grant of a franchise or a scheme of control.

DR SAMUEL WONG: Mr President, for the Housing Authority to select between Towngas and LPG, the Secretary for Planning, Environment and Lands cited safety as one of the several factors to be considered. Does he mean one gas supply is safer than the other?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, the question of safety is partly real but it is also a question of perception. In order to supply LPG in an estate there either has to be a local depot or installation in which the bulk LPG supply is available or it has to be supplied through individual LPG cylinders and the point here is that in order to make that possible there has to be land available reasonably close to an estate within which to establish that sort of facility. This very much involves safety considerations and also there have to be supply lines from such a facility into the estate. The situation is therefore that the source of supply in bulk is closer to the estate than in the case of Towngas; so there is a degree of preference for Towngas in that respect. The other point, I think, I mentioned is the question of perception. The presence of LPG storage in close proximity to estates is clearly not particularly welcome to the residents of those estates, possibly for reasons of unfounded fear, but nevertheless there is a degree of nervousness about living close to such facilities.

MR ALBERT CHAN (in Cantonese): Mr President, in his reply just now, the Secretary for Economic Services indicated that consumers using Towngas as compared to LPG, in terms of numbers, were more or less equal and so monopoly did not exist. But if the Housing Authority continues with its present policy and gives priority to Towngas in the supply of gas to housing estates, it is believed that Towngas will before long control the market. Has the Administration considered this trend and how will it ensure that there is equitable and fair competition in the supply of gas, so that gas suppliers can

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compete on an equal basis rather than being led by the Housing Authority's selection policy which may give rise to market control or monopoly because there is only one supplier?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Mr President, as far as cooking and water heating are concerned, a consumer in fact has a number of options. In the first place, he can use Towngas or bulk LPG. And as far as water heating is concerned, electricity can also be used. Hence, there are various options for households and competition does exist. Moreover, for other consumers they may have a choice of fuel supplies, and they may choose for example LPG cylinders if they like. Therefore, at present, there is no monopoly.

MR TIK CHI-YUEN (in Cantonese): Mr President, according to section 17(4) of the Gas Safety (Gas Supply) Regulations, "No person shall install a gas main for the conveyance of liquefied petroleum gas along or across a road." The effect of such a provision will give Towngas the privilege of excavation and main repairs. Does the Administration think that such a provision will give rise to unfair competition?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I am not entirely clear as to the import of the question.

PRESIDENT: Would you like to clarify, Mr TIK?

MR TIK CHI-YUEN (in Cantonese): Mr President, section 17(4) of the Gas Safety (Gas Supply) Regulations provides that "No person shall install a gas main for the conveyance of liquefied petroleum gas along or across a road." If that provision poses restrictions on the LPG Company in the installation of supply lines, will that give Towngas the privilege of excavation and main repairs? Moreover, will that lead to unfair competition between LPG and Towngas?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Mr President, perhaps I will try to answer this question. LPG in bulk is heavier than air while Towngas is lighter than air. Therefore, if a Towngas main leaks, the gas will rise above ground and disperse. However, for LPG, it is heavier than air, and so if leakage occurs, it will sink underground and will be trapped in waterpipes or electric cables which may lead to explosion or other hazards. This is the original intention of the regulation which is to prevent the installation of main to convey this kind of gas along a road. As Mr EASON has pointed out, it would be absolutely safe if it is stored away from the estate and not on a road.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4329

Reports on Hong Kong by the British Government

4. MISS CHRISTINE LOH asked: Will the Government inform this Council:

(a) of the international treaties and agreements under which the British Government is required to report periodically on Hong Kong's status;

(b) of the due dates for making the next reports on Hong Kong under the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political Rights; and

SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, the answers to Miss LOH's multi-barrelled questions are as follows:

(a) The international treaties under which the British Government is required to report periodically on the state of the treaties' implementation in Hong Kong are:

(i) the International Convention on the Elimination of All Forms of Racial Discrimination;

(ii) the International Covenant on Civil and Political Rights;

(iii) the International Covenant on Economic, Social and Cultural Rights; and

(iv) the Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment.

(b) The due dates for the next reports under the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political Rights both fall in June 1994.

(c) The Hong Kong Government contributes to the preparation of the relevant reports by preparing and submitting to the United Kingdom Government draft reports in respect of Hong Kong.

MISS CHRISTINE LOH: Mr President, I would like to ask two questions, one is for clarification. Can the Secretary confirm that the other two covenants, namely (i) and (iv), are also due in 1994 and that these are expected to be the

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4330 last times that Britain will make submissions on Hong Kong to the United Nations?

My second question is: how will the Hong Kong Government ensure that this Council and interested parties will have some input?

SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, in answer to the first question, I can confirm that reports in respect of both the International Convention on the Elimination of All Forms of Racial Discrimination and the Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment are due in 1994.

Turning to the second question as to whether or not we will involve other parties in our reporting procedure, I can only say that reporting on such matters is an executive function and a responsibility of the British Government. In the preparation of the draft reports, the Hong Kong Government does not formally consult non-government organizations since this is but a process of putting together factual information on the state of implementation of the treaties. Frankly, it is at the stage of formulation of the relevant policies that non-government bodies' views and those of other representative groups are sought and taken into account, for example, those of various advisory boards and committees.

MISS CHRISTINE LOH: Mr President, my question has not been answered. May I ask that question again?

PRESIDENT: Yes, I think as there were two questions, that is understandable. But go ahead.

MISS CHRISTINE LOH: Can the Secretary please confirm that these are expected to be the last submissions made by the British Government to the United Nations?

SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I would like to check those treaties again before I give an answer. So I will supply an answer in writing. (Annex I)

MRS ELSIE TU: Mr President, as far as I remember, the British Government has made its reports without reference whatsoever to the Hong Kong people. This question has been mentioned but I would like to ask it again. Will the Government on the next occasion make sure that there is some input from the Hong Kong people?

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4331

SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, as I have said in my reply to the previous question, the reports are factual reports on the state of implementation of the treaties as applied to Hong Kong. The important point here is that the consultation should be conducted in the course of formulation of the policies concerned rather than for the purpose of compiling a factual report on the implementation. And as the Honourable Member is well aware, in this Government we have lots of advisory boards and committees. And it is in those committees that the consultation takes place.

MR SIMON IP: Mr President, would the Hong Kong Government find it useful to have the views of this Council — which, I think, is not a non-government organization — in the preparation of its report to the United Kingdom Government?

SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, the materials prepared by the Hong Kong Government form part of the United Kingdom Government's report. It would therefore be inappropriate, during the process of that preparation, to consult the Legislative Council before the materials are presented to Her Majesty's Government and their views taken into account. In any case, these reports are made public after they have been formally submitted to the United Nations by the United Kingdom Government.

MR SIMON IP: Mr President, a point of clarification. I did not ask the Secretary whether he would consult this Council, I asked him whether he would find it helpful to have the views of this Council.

SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, this Council's views are always helpful.

MS ANNA WU: Mr President, as the public and the Government often differ on what is fact and what is fiction, may I ask if the Administration will consider holding public hearings to invite representations on the pace of human rights development in Hong Kong and will the Government ensure that the reports as finalized, but before filing with the relevant international body, will be made public here in Hong Kong?

SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, this is a sort of "apple pie and motherhood" question — difficult to say no, but to say yes would commit us to the sort of undertaking whose ramifications I am not so sure of. So, if I may, I will give a bureaucratic answer.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4332 MS ANNA WU: Mr President, may I ask what that answer is? I am quite lost.

SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I think, frankly, that the draft reports we provide to the United Kingdom, as I said, are factual reports and fact is fact and one cannot turn it into fiction. In any case those reports will see the light of day and that is why I do not wish to commit myself, without looking at the constitutional relationship between ourselves and the United Kingdom Government, to giving a more positive answer than I have just given.

MR LAU CHIN-SHEK (in Cantonese): Mr President, having heard the Secretary's reply, I still cannot get at it. May I ask whether the Administration has sought confirmation from the Chinese side through the Sino-British Joint Liaison Group if it would submit reports to the United Nations after 1997 in respect of the state of implementation of the international treaties in Hong Kong? If not, why not? If yes, how did China respond to this?

PRESIDENT: I do not think that arises from the main question or answer, Mr LAU.

MR MAN SAI-CHEONG (in Cantonese): Mr President, may I ask the Secretary for Planning, Environment and Lands if the Hong Kong Government has any important undertaking in respect of the implementation of the international covenants and agreements on environment protection? At the Brazil Summit on environmental protection last year, did the United Kingdom undertake anything on behalf of Hong Kong which committed the territory to certain obligations in future?

PRESIDENT: I think you are way outside the main question and answer, Mr MAN.

MR MAN SAI-CHEONG: Mr President, the question is on international covenants and agreements and Hong Kong's obligations and I think it falls within the question.

PRESIDENT: I have to overrule that question, I fear, because it does not arise from the main question or answer.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4333

Immigration clearance at Kai Tak

5. MR HOWARD YOUNG asked: In view of the large number of passengers queueing for immigration clearance at Kai Tak Airport during peak periods, will the Government inform this Council:

(a) of the number of complaints received in the past two years about the time taken for immigration clearance, and how these complaints were resolved;

(b) how the existing Immigration Department's target of clearing such passengers within 30 minutes of arrival compares with the international standard, that is that of the International Civil Aviation Organization (ICAO); and

(c) what measures are being taken or contemplated to alleviate the problem, bearing in mind that passenger volume will continue to grow and a replacement airport will not be ready for a few more years?

SECRETARY FOR SECURITY: Mr President, seven complaints were received by the Immigration Department in 1991, nine in 1992 and five in the first half of this year. Of these 21 complaints, 16 involved passengers who had apparently been cleared in less than the 30-minute target time. The remaining five cases all occurred during mid-day peak periods. The Immigration Department has now revised its manning pattern to give maximum coverage during these periods.

There is an ICAO recommended standard of 45 minutes for airport clearance overall, but not for immigration clearance alone. In general, our immigration clearance time compares quite favourably with other airports, given the high usage and the physical limitations of Kai Tak.

We are aware, however, that passenger volume at Kai Tak must be expected to increase before a replacement airport comes into operation. We hope to be able to provide next year some more resources for the Immigration Department following the completion of the screening of Vietnamese asylum seekers. The Immigration Department itself has made a number of improvements in productivity and clearance times over the last few years to cope with the increased pressure.

A recent improvement has been the implementation of the Travel Record and Immigration Control and Enforcement System known as "TRAICES". This has achieved a significant shortening of the processing time for residents on arrival, from a minute-and-a half to a minute, and on departure from a minute to half a minute. The final stage of this improvement was achieved only last month.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4334

One further important measure is in sight: to replace in 1995 the existing computer terminals by optical readers which will reduce further the time needed to clear Hong Kong identity card and machine readable passport holders.

MR HOWARD YOUNG: Mr President, can the Secretary throw some light on the number of immigration officers on the ground working at Kai Tak, in particular how many additional staff have been employed since, say 1989, so that we can see whether it is in line with the growth of passenger throughput at the airport?

SECRETARY FOR SECURITY: Mr President, I do not have any figures on the total number of immigration officers deployed at the airport. It does of course vary from time to time — it varies during each hour of the day — but I will try to give an overall figure in writing. (Annex II) So far as passenger traffic is concerned, it has had its ups and downs since 1989 but, overall, the increase in the five years since mid-1988 has been about 30%. There has been no increase in staff since that time.

DR PHILIP WONG: Mr President, would the Government consider employing more staff to be stationed at the airport immigration counters, or better rostering, as a way to alleviate congestion?

SECRETARY FOR SECURITY: Mr President, despite a very considerable increase in the volume of passenger traffic, the percentage of passengers who are cleared within the target time has been generally maintained — for arriving passengers approximately 94% and for departing passengers over 99%. The problem, I think, tends to occur at peak periods just prior to holidays; at peak periods during normal days the target time is still achieved. The possibility of employing more staff is one that we do keep under regular review and will continue to do so. We will also seek to achieve further increases in productivity. I believe the steps that have been taken in recent years to increase productivity and improve clearance times have been very considerable achievements.

MR JAMES TIEN: Mr President, currently there are several counters designated for clearing Hong Kong residents returning to Hong Kong at Kai Tak Airport. However, unlike most other countries, these counters here are implemented loosely and many tourists are allowed to go through. Will the Government please inform us whether these counters will be strictly enforced to expedite returning Hong Kong residents only?

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4335

SECRETARY FOR SECURITY: Mr President, no, it is not intended to have rigid enforcement of this. Generally, arrival counters are segregated for residents and visitors approximately in the ratio of 3:7. But these are adjusted from time to time during the day to accord with passenger mix at particular times.

MR HENRY TANG: Mr President, will the new optical readers to be in place in 1995, or due in 1995, be able to read an existing ID card without modification?

SECRETARY FOR SECURITY: Mr President, yes, I believe so.

MR CHIM PUI-CHUNG (in Cantonese): Mr President, in his answer the Secretary said that they had achieved a shortening of the processing times from the previous levels to half a minute now for passengers on departure and a minute for those on arrival. Did he refer to the Hong Kong Identity Card or passport holders? Has the Administration compared it with the current practice of Singapore so that we can do better in this respect?

SECRETARY FOR SECURITY: Mr President, yes, the times I gave referred to residents using ID cards. The TRAICES system cannot cope with other forms of travel documents; it does not have the database, for example, to deal with visitors who are non-Hong Kong residents. But very considerable improvements have been made and, as I said in my main answer, I expect the times to be reduced further by 1995 when we introduce optical readers.

MRS SELINA CHOW: Mr President, I find it quite amazing that the Secretary was not able to answer what additional staff have been employed, say, in the last three years or five years. How does he actually keep track of the increase in staff as proportional to the growth in tourists coming to Hong Kong in the last, say, three years, and how does he actually ensure that the speed with which visitors and passengers are processed is kept at an acceptable level by manning the counters with adequate staff to cope with the increase in traffic?

SECRETARY FOR SECURITY: Mr President, I think the questions are based on a misunderstanding of what I said. I said quite clearly that there had been no additional staff at the airport in the last five years.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4336 Coroner's recommendations in respect of passenger hoists

6. MR HENRY TANG asked: The coroner's inquest on the fatal accident involving a passenger hoist that occurred 13 years ago during the construction of Telford Garden made 17 recommendations, six of which related directly to labour matters. Will the Government inform this Council whether all these six recommendations have been accepted for implementation in full and if not, what the reasons are?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, those recommendations that were directly related to the safe use of passenger hoists following the Telford Garden coroner's inquest were accepted. The construction industry discontinued the use of all passenger hoists of the same model as the one in Telford Garden upon establishing that the accident was attributed to the defective design of the model.

On recommendations related to legislative control, all relevant requirements were studied to ensure that there were adequate provisions in industrial safety laws. For example, Regulations 17 and 18 of the Factories and Industrial Undertakings Regulations require the reporting of accidents and dangerous occurrences. This was consistent with the coroner's recommendation regarding mandatory reporting of incidents. As regards the proposed introduction of legislation to improve safety and control of passenger hoists, the provisions under the Construction Sites (Safety) Regulations under the Factories and Industrial Undertakings Ordinance regulating the safety of passenger hoists were reviewed and generally found to be adequate.

Those recommendations which generally fell outside the ambit of government control, having regard to practices overseas, were not implemented. For example, it was not considered appropriate to require the Labour Department to certify the structural safety of all hoist types since such responsibility should rest with the manufacturer and owner of a hoist, similar to the practice in the United Kingdom and many other countries. Likewise, recommendations proposing that any manufacturers' modification should be approved by the Labour Department were not adopted.

MR HENRY TANG: Mr President, today there is a better than one-in-four chance of being injured on a construction site. What will the Government do to promote and to ensure better safety for construction workers, such as setting up a safety committee to review safety standards in the construction industry?

PRESIDENT: Does this arise from passenger hoists, Mr TANG, or generally? MR HENRY TANG: Particularly on construction sites.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4337

PRESIDENT: Do you have a ready answer, Secretary?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, I can only relate this to the passenger hoists arising out of the main question. We certainly have been promoting the publicity campaigns on industrial safety in all our construction sites over the years and there has been a particular emphasis this year on industrial safety concerning construction sites and use of heavy machinery. On the question of safety committees, at the present time 80% of construction companies are now adopting this practice on our construction sites and we have found this to be sufficiently encouraging in promoting the safe use of sites by workers and employers alike. On the question of other safety measures, we are, as Members are aware, proposing legislation soon to increase the penalty for offences by four times to heighten the deterrent effect. And finally on passenger hoists in particular, we have now in the Works Branch a working group which has started on a review of the safety practices of passenger hoists and we will produce recommendations in six months time.

MR LAU CHIN-SHEK (in Cantonese): Mr President, before I put my question, may I ask the Secretary to clarify his answer to the previous supplementary, which I find it amazing, as he says 80% of construction sites have safety committees. May I know what exactly these safety committees are? And now turning to my question which arises from the third paragraph of the main answer where it says "any manufacturers' modification should".....

PRESIDENT: Can we take that one first, Mr LAU?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, by 80%, I was referring to the major companies who employ between them 80% of the total number of employees on construction sites in Hong Kong.

PRESIDENT: Now your own question, Mr LAU.

MR LAU CHIN-SHEK (in Cantonese): Mr President, according to the third paragraph of the main answer, "recommendations proposing that any manufacturers' modification should be approved by the Labour Department were not adopted". I understand that the height of a passenger hoist on a construction site has to be adjusted as the work progresses, that is to say, its height will increase correspondingly as more and more floors are built. As such modification does not require the approval of the Labour Department, may I ask what measures the Administration has to monitor it so as to ensure the safety of users?

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4338

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the question of the changing needs of construction sites is clearly a matter which the existing working group is to look into; the rapidly changing requirements for safety do make it necessary for us to look into this particular aspect more carefully. I do not wish to pre-empt the findings of the working group but we are looking at the possibility of stricter monitoring of these passenger hoists and possible licensing in the future.

MR TAM YIU-CHUNG (in Cantonese): Mr President, the third paragraph of the Secretary's main answer is far from satisfactory. Can the Administration reconsider approving and publicizing only those types of passenger hoist which meet the specifications, as well as specifying their useful life, so as to discourage contractors from using substandard hoists to minimize cost?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, as I said earlier on, the current practice in Hong Kong and in many overseas countries is to place the burden of ensuring safety on the construction contractor. But arising from the latest accident in Java Road, we are prepared to have the working group reconsider the control of passenger hoists in Hong Kong, as I have mentioned earlier. And one of the recommendations is likely to be for increased government control over the safety of such hoists and how best this is to be implemented.

MR FRED LI (in Cantonese): Mr President, in the third paragraph of his main answer, the Secretary said that it was not considered appropriate to require the Labour Department to certify the structural safety of all hoist types. But in general lifts in Hong Kong are inspected annually by the Electrical and Mechanical Services Department and a signed and dated certificate will be posted in lifts to certify their safety. Why should there be double standards when the Electrical and Mechanical Services Department has to inspect all lifts in buildings while the Labour Department considers it unnecessary to inspect passenger hoists on construction sites in respect of their structural safety?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, I think I have said already that the practice in Hong Kong as regards passenger hoists follows the practice elsewhere where the responsibility lies with the contractor, not with a government department. But in this case, the working group will consider the possible transfer of the responsibility of control from the contractor to a government department which is better equipped to assume such control.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4339

MR MICHAEL HO (in Cantonese): Mr President, the Secretary mentioned in his reply earlier that the working group was looking into ways to improve the safety and control of these hoists. But in the second paragraph of his main answer, he said that statutory provisions in regard to the safety of hoists were generally found to be adequate. So does the Administration consider the control of hoists so far is adequate or not?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the second paragraph of my reply refers to the recommendations of the coroner's court made at the time of the Telford Garden accident and that part of the reply was in relation to that particular recommendation. As I said just now in reply to supplementaries, we are now re examining the safety requirements of passenger hoists following the latest accident at Java Road construction site and this question of safety is being re-examined by the working group.

MR CHEUNG MAN-KWONG (in Cantonese): Mr President, in relation to the passenger hoist accident several days ago which left 12 workers dead, the Secretary said that the relevant legislation would be reviewed with a view to monitoring the safety of hoists like what it had been doing for lifts. Does this change of policy point to the fact that the Administration erred in its decision in not accepting the coroner's recommendation 13 years ago to require the Labour Department to certify the safety of passenger hoists, thus giving rise to many safety problems of hoists thereafter?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, I do not think one can draw such a conclusion. It is not appropriate because we have now moved forward many years since the last accident 13 years ago. We, of course, have reviewed the present arrangements and the working group is to look at how passenger hoists are to be further controlled in the light of the latest accident, which incidentally did not involve the same model as that involved in the 1978 accident. So the comparison is quite inappropriate.

DR LEONG CHE-HUNG: Mr President, the Secretary just mentioned that some 80% of major construction companies have safety committees and they are found to be both effective and useful. Will the Administration therefore consider extending this to all major construction sites and companies, even to the extent of introducing legislation?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the Government certainly intends that all construction sites be encouraged to have safety committees involving both employers and employees to ensure work safety. But we feel that we should not legislate. We would prefer it to be

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4340

voluntary because in most cases the voluntary efforts by both parties are far more effective and useful than compulsion.

Written answers to questions

Fire accidents on public buses

7. MR WONG WAI-YIN asked (in Chinese): Will the Government inform this Council:

(a) of the number of cases in the past three years of public buses catching fire while carrying passengers and of the causes of such incidents; and

(b) what measures have the authorities concerned taken to prevent similar incidents from recurring, in order to protect passengers?

SECRETARY FOR TRANSPORT: Mr President,

(a) In the past three years 1990 to 1992, there were 36 cases of public buses catching fire while carrying passengers. According to the Fire Services Department, these fires are believed to have resulted from a variety of causes including combustible materials coming into contact with the external walls of the hot engine and/or exhaust pipe, electrical short-circuiting and discarded lighted smoking materials.

(b) Buses are designed and constructed in such a way as to minimize the risk of a fire. Thus, bus chassis are normally designed and fitted with fire prevention features, such as shields to prevent grease being thrown onto hot exhaust pipes, insulation of electric wiring systems and so on. These fittings and equipment as well as all other parts of a bus are subjected to vigorous annual inspections by the vehicle examiners of the Transport Department before their licences are renewed under the Road Traffic Ordinance and its subsidiary legislation. In addition, spot checks are carried out by the Department to ensure that the buses are in a satisfactory safe operating condition.

As a precautionary measure, the Ordinance also requires the carriage of fire extinguishers on each and every bus. These extinguishers are regularly inspected to ensure that they remain in an efficient working condition.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4341

The Smoking (Public Health) (Amendment) Ordinance 1992, among other things, extended the prohibition on smoking from the lower deck of a public bus to all parts of it. The new provisions became effective on 1 August 1992 and should reduce the incidence of discarded cigarettes found on buses, and hence the bus fires so caused.

Escalator linking Central and the Mid-Levels

8. MRS MIRIAM LAU asked (in Chinese): Will the Government inform this Council:

(a) when the escalator linking Central and the Mid-Levels will be completed and put into use;

(b) what measures the Administration will take to ensure the safety of users of this escalator and to prevent vandalism of the escalator; and

SECRETARY FOR TRANSPORT: Mr President,

(a) The Central to Mid-Levels escalator system is expected to be ready for use in late September this year.

(b) To ensure the safety of users and to prevent vandalism, the escalator system will be patrolled by four attendants during operating hours, which will extend from 6 am to 10 pm each day. In addition, the officer in charge of the system will be accommodated in a control room located in Caine Road. There he will be able to monitor the whole system by means of closed circuit television and he will also be able to direct users and issue safety instructions through a public address system. Both the closed circuit television system and the public address system will be connected to the Police Regional Command and Control Centre, Hong Kong Island. Outside operating hours, watchmen will be deployed to prevent vandalism.

(c) A publicity campaign is being organized to educate the public in the use of the new system. This will include the distribution of a users' guide to the system, leaflets, posters and press releases. Notices will also be prominently displayed at entrances to the system advising the public on its safe usage.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4342 Shark attacks

9. MR CHIM PUI-CHUNG asked (in Chinese): Will the Government inform this Council whether it has any information on suspected shark attacks in Hong Kong waters; if so,

(a) how many such cases have taken place in Hong Kong waters over the past three years;

(b) what measures the Administration has taken to prevent such incidents and why are there still attacks on swimmers; and

SECRETARY FOR RECREATION AND CULTURE: Mr President, I set out the answers to the queries raised in the Honourable CHIM Pui-chung's question in the order as they appear:

(a) Three cases of suspected shark attacks have occurred in Hong Kong waters over the past three years. The first such case took place on 8 June 1991 and the remaining two in June 1993. Details are as follows:

(i) On 8 June 1991 at 6.35 am, a 65-year-old woman died because of a suspected shark attack while swimming about 500 m off Silverstrand Beach in Sai Kung.

(ii) On 1 June 1993 at 8.00 am, a 42-year-old man was fatally wounded, suspected to have been attacked by a shark, whilst swimming about 150 m off Seung Sz Wan in Sai Kung.

(iii) On 11 June 1993 at about 7.30 am, a 61-year-old man died, again suspected to have been fatally attacked by a shark, whilst swimming about 3 m off Silverstrand Beach in Sai Kung.

(b) Following on the occurrence of these incidents, the Marine Police, the Marine Department and the Government Flying Service all joined hands in strengthening surveillance over Hong Kong waters. The two municipal councils, who are the managers of public beaches, also took immediate action which include:

(i) the hoisting of shark warning signals and red flags on affected and nearby beaches;

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4343

(ii) verbal warnings given through the public address system every 15 minutes to warn swimmers against entering the water;

(iii) lifeguards keeping a close watch on nearby waters with the assistance of binoculars; and

(iv) constant patrol in the vicinity of the swimming area by lifeguards in motorized rescue crafts.

Despite consistent warnings, some swimmers still take the risk of swimming in nearby waters.

(c) On 18 June 1993, an interdepartmental working group chaired by Deputy Secretary (Recreation and Culture), Recreation and Culture Branch and comprising representatives of Agriculture and Fisheries Department, Regional Services Department, Urban Services Department, Royal Hong Kong Police Force, Marine Department, and City and New Territories Administration, met to co-ordinate measures to tackle the problem. The meeting decided that the following precautionary measures should be adopted:

(i) existing measures set out in (b) above currently undertaken by the municipal councils and the various government departments would continue;

(ii) more lifeguards would be deployed in affected areas as well as some of the more popular beaches, and additional motorized boats have been purchased to step up surveillance;

(iii) some public swimming pools would be opened earlier to cater for early morning swimmers; and

(iv) pamphlets and posters on measures to avoid shark attacks, including dispelling specifically the general misunderstanding that swimmers are safe from shark attacks in shallow water, would be more widely distributed.

In addition, the Regional Council has recently endorsed, at its meeting on 29 June 1993, the proposal to lay shark prevention nets on an experimental basis at selected popular beaches. The Regional Services Department is now taking action on this measure.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4344 Traffic accidents caused by drivers using mobile phones

10. DR TANG SIU-TONG asked (in Chinese): Will the Government inform this Council of:

(a) the number of traffic accidents, in each of the past two years, caused by drivers using mobile phones while driving; and

(b) its policy on the use of mobile phones by drivers while driving?

SECRETARY FOR TRANSPORT: Mr President,

(a) There were two traffic accidents recorded in 1991 and three in 1992 in which the use of mobile telephones while driving was considered a contributory factor.

(b) Using a mobile telephone while driving can cause traffic accidents and the practice is discouraged. In the Road Users' Code, motorists are advised to stop their cars in a safe place if they wish to use their mobile telephones. While there is no legislation specifically prohibiting the practice, motorists may be prosecuted for careless driving if the use of a mobile telephone can be shown to have caused a traffic accident.

Traffic accidents inside or within the exit areas of vehicular tunnels

11. DR HUANG CHEN-YA asked (in Chinese): Will the Government inform this Council of the number of traffic accidents which involved fatal or serious injuries occurring inside vehicular tunnels or within the approach/exit areas of the tunnels in the past three years; how many of these accidents occurred when the tunnels were partly closed or when single tubes were opened for two-way traffic; and what measures will be taken to improve driving safety inside and around vehicular tunnels?

SECRETARY FOR TRANSPORT: Mr President, in the past three years, six fatal traffic accidents and 66 causing serious injury have occurred within road tunnels and their approach/exit areas. Three of the fatal accidents and 36 causing serious injury occurred while one tube of a tunnel was closed, and the other tube was being used for two-way traffic. In the same period, the overall accident rate in tunnels was 0.58 accidents per million vehicle km, which compares favourably with the rate of 1.72 per million vehicle km on all roads.

With a view to further improving tunnel safety when one tube is closed, consideration is being given to implementing additional traffic management measures, erecting larger directional signs, imposing a 50 km per hour speed

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4345

limit, and arranging for more frequent radio broadcasts of safety messages within the tunnels.

Supreme Court Registrar's failure to fix a date for hearing of an appeal

12. MISS EMILY LAU asked: On 27 May 1993, the Registrar of the Supreme Court was ordered by a High Court judge to pay costs for failing in his statutory duty to fix a date for an appeal. Will the Government inform this Council:

(a) of the circumstances leading to the court ruling;

(b) whether it involved dereliction of duty on the part of officials responsible; and

CHIEF SECRETARY: Mr President, the case in question was concerned with an appeal against a decision of the Obscene Articles Tribunal. Section 30 of the Control of Obscene and Indecent Articles Ordinance (Cap 390) provides that any party to any proceedings before the Obscene Articles Tribunal may appeal to the High Court against a decision of that Tribunal on a point of law by giving notice of appeal to the Registrar, Supreme Court. Where such notice is given, the Registrar is required to fix a date for the hearing of the appeal within a period of up to 56 days. The date is fixed normally by the Clerk of Court on behalf of the Registrar when the relevant documents are received from the Tribunal.

In this particular case, the documents from the Tribunal arrived later than usual. By the time the Clerk of Court saw the parties to fix a date for the hearing, the time limit for fixing the date had already expired. For this reason, the Crown objected to the appeal being listed. The Clerk of Court therefore decided to decline to fix a date for the hearing. The appeal party then issued formal proceedings in the High Court for an order requiring the Registrar to fix a date and the judge ruled in favour of the appeal party. Also an order for cost was made against the Registrar.

Immediately following the court ruling, the Registrar ordered an investigation into the case. It transpired that the Clerk of Court had, in his own better judgement, taken the decision to refuse to fix the date for hearing the appeal. The case could have been referred to the Practice Master in the Registry for guidance. The Practice Master was able to give any directions which might be required on questions of practice and procedure, including directing the Clerk of Court to set the appeal down. Having examined the circumstances of the case, the Registrar concluded that the decision of the Clerk

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4346

of Court was an error of judgement. It did not involve dereliction of duty on the part of any officials.

In the course of the investigation, the Judiciary has taken the opportunity to review completely its procedures on appeals against decisions made by the Obscene Articles Tribunal and has already made the necessary improvements.

Bridging course for students of grammar schools

13. MR TIK CHI-YUEN asked (in Chinese): Will the Government inform this Council:

(a) of the number of students who attended and completed the pilot "Bridging course for students of grammar schools seeking transfer to Secondary II of pre-vocational schools" last year, and the number of those who subsequently transferred to pre-vocational schools;

(b) of the expenditure of that bridging course, with a breakdown of the main elements; and

(c) whether it will consider providing bridging courses for students of pre vocational schools who wish to transfer to secondary grammar schools; if not, what the reasons are?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President,

(a) Forty-five students attended and completed the pilot "Bridging course for students of grammar schools seeking transfer to Secondary II of pre vocational schools" in summer 1992 and subsequently 35 students were transferred to pre-vocational schools.

(b) The total expenditure on the courses was $249,000. The breakdown of the main elements was as follows:

A. Salary Amount ($)

(i) Technical Teachers 97,200

(ii) Workshop Instructors 64,800

(iii) Administrative staff 36,000

B. Miscellaneous

Consumables, materials and stationery 51,000

--------------

Grand total 249,000

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(c) Students are admitted to pre-vocational schools on the basis of a clear and positive preference by themselves and their parents for this type of education. Before admission, these students also take an aptitude test which shows that they have a genuine interest and inclination in studying technical and commercial subjects. Hence, there has not been any demand so far from pre vocational school students wishing to transfer to grammar schools, and the need to consider providing bridging courses for this purpose has not arisen.

Passenger hoist inspection

14. DR SAMUEL WONG asked: Recent inspections conducted by the Administration revealed that 86 construction sites have been using hoists, of which 27 are of a design similar to the one involved in the passenger hoist accident at Java Road. Six of these hoists were found to have irregularities relating to the gates. Will the Government inform this Council:

(a) what specific aspects of the passenger hoists were examined in the recent inspections;

(b) whether the safety device on stopping system of the 86 hoists in question which helps to stop an over-speeding hoist from plummeting was examined or tested;

(d) whether the irregularities constituted offences under the Construction Sites (Safety) Regulations (Cap. 59 sub. leg.);

(e) how many cases of prosecution have been instituted over these irregularities; and

(f) how future inspections will be organized and conducted in order to prevent similar accidents?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President,

(a) We have carried out one round of inspection immediately after the accident and another round is in progress. The first round covering all passenger hoists mainly focused on whether contractors had complied with safety requirements of the law, including the provision of an effective and efficient fall arrester, interlocking devices for the gates, the notice for the safe working load and the maximum number of persons allowed to be carried, the relevant

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4348

certificates and reports of test, examinations and inspections under the requirements of the Construction Sites (Safety) Regulations.

In the second round of joint inspections by Labour Department and Electrical and Mechanical Services Department, namely the special random check exercise, inspections on the hoist cage, landings, hoistway, electrical installations and a full-load test will be covered.

(b) For the passenger hoists which will be covered in the second round of inspections, the safety device which is used to stop the hoist from rapid descent during an accident will be tested.

(c) In the first round of inspections covering 86 hoists, no other irregularities were found apart from those relating to the gates. The second inspection is still on-going.

(d) The irregularities constituted offences under the Construction Sites (Safety) Regulations.

(e) Six summonses relating to the irregularities mentioned in (d) above have been taken out.

(f) More inspections of sites with hoists will be carried out and prosecution action taken if there are breaches of the relevant safety regulations. Besides, a code of practice on passenger hoists will be prepared with a view to rationalizing the standards in construction, maintenance, testing and examination of passenger hoists. The need for special inspection arrangement for passenger hoists in the longer term will be a subject for consideration by the Working Group set up under the Works Branch to look into further means of enhancing the safe use of heavy machineries and lifting appliances in construction sites, including passenger hoists.

Employment of overseas officers over the age of 60

15. MR CHEUNG MAN-KWONG asked (in Chinese): As overseas officers over the age of 60 are still appointed on agreement terms in various government departments, will the Government inform this Council:

(a) of the total number of such officers and their respective departments and ranks;

(b) of the criteria and procedures under which the Administration endorsed the continued employment of these overseas officers instead of promoting local officers to fill their posts; and

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SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, at present, there are 20 overseas agreement officers over the age of 60 who are employed in the Civil Service. They are serving in nine departments and 16 ranks (details are at Annex).

In general, the further employment of an agreement officer beyond the age of 60 is considered only in very exceptional circumstances. The officer has to be of good conduct and performance and also physically fit. He may be further employed beyond the age of 60 if there is a strong need for his service to be retained based on an assessment against the following criteria:

(a) there are recruitment, retention and succession problems;

(b) there are specialist and/or operational grounds for retaining the officer;

(d) the further employment will not cause a promotion blockage (depending on the circumstances of each case, an officer may be further employed in the same rank or in a lower rank).

Departmental recommendations on such further employment must be put to the Public Service Commission for advice before approval.

These criteria and procedures apply to both overseas and local officers. In the case of an overseas agreement officer, in addition to the criteria outlined above further employment beyond the age of 60 is considered only where no suitable local replacement is available.

Annex

Appointment of Overseas Agreement Officers

beyond the age of 60

(Position as at 5.7.93)

Department Rank No. of officers

Architectural Services Department

Buildings and Lands Department

Maintenance Surveyor 1

Senior Maintenance Surveyor 1 Building Surveyor 3

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4350

Department Rank No. of officers Civil Aviation Department Operations Officer 1 Senior Operations Officer 2

Assistant Director of Civil Aviation 1

Department of Health Medical and Health Officer 1 Education Department Assistant Education Officer 1 Government Secretariat Assistant Commissioner of Insurance 1 Industrial Promotion Project Officer 1

Housing Department Deputy Director of Housing 1 Legal Department Law Officer 1 Senior Crown Counsel 2

Deputy Principal Crown Counsel 1

Royal Hong Kong Police Force

Interviewer 1 Superintendent of Police 1 Total: 20

Complaints against estate surveyors

16. MR ALBERT CHAN asked (in Chinese): In view of the complaints lodged recently by residents of Discovery Bay about the lack of channels to make complaints in respect of the professional ethics of estate surveyors, will the Government inform this Council:

(a) of the existing channels through which members of the public may complain against the professional ethics of estate surveyors;

(b) whether these channels are adequate and effective; and

(c) of the measures for monitoring the operations of estate surveyors and whether consideration will be given to strengthening them?

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SECRETARY FOR WORKS: Mr President,

(a) The Surveyors Registration Ordinance was enacted in 1991. Under this Ordinance, no person can use the title "Registered Surveyor" unless he is registered under the Ordinance. Members of the public can lodge complaints against the ethical standard of Registered Surveyors to the Surveyors Registration Board, which has the power to remove Registered Surveyors committing serious disciplinary offences from the Register.

(b) Members of the public by engaging Registered Surveyors have direct access for any complaints on the professional ethics of an individual estate surveyor. Any such complaint to the Surveyor Registration Board must be addressed by that Board, in accordance with its procedures. The government member of the Board will be involved, particularly to monitor the effectiveness of such procedures.

Members can rest assured that the procedures are kept under review for improvement if found necessary.

(c) Similar to other professions, we consider it more appropriate for the relevant professional registration board to monitor the operations of its members. Views of the Administration are reflected to the Surveyors Registration Board through the Board Member appointed by the Governor. There is no plan to change this system at this stage.

Crime Information Form Scheme

17. MR LEE WING-TAT asked (in Chinese): As regards the Crime Information Form Scheme, will the Government inform this Council:

(a) how many Crime Information Forms were received by the Government in each of the past five years;

(b) how many criminal cases had been solved by the police on the strength of the information provided in those forms; and

(c) whether it would consider extending the distribution network of the Crime Information Forms to cover mutual aid committees and owners' corporations of multi-storey buildings, supermarkets, restaurants and fast food shops?

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SECRETARY FOR SECURITY: Mr President, the number of Crime Information Forms received in each of the past five years has been increasing steadily as shown in the table below:

Year Number of Crime Information Forms

received

Number of arrests attributable to

information in CIFs

1988 916 388

1989 1 042 567

1990 1 196 716

1991 1 723 496

1992 2 111 475

1993 1 061 149

(up to 31.5.93)

-------- --------

Total 8 049 2 791

We do not keep separate statistics for the number of cases detected on the strength of information provided in the Crime Information Forms. However, the arrests shown in the table above have been made in the light of information supplied by members of the public through these Crime Information Forms.

The police use the information received on Crime Information Forms as intelligence to assist their investigations. On average, one arrest results from every three Crime Information Forms received. This channel of passing crime information to the police is of considerable help to criminal investigations.

Crime Information Forms are available at all Post Offices, District Offices, Management Offices of public housing estates, hotels and banks; a total of more than 700 locations throughout the territory. The forms are also available at certain supermarkets, chain convenience stores, dispensaries and a number of mutual aid committees and owners' corporations in multi-storey buildings. The Police Public Relations Bureau has made a considerable effort, since the inception of the Crime Information Form Scheme in 1980, to expand the distribution network. The Bureau has had reasonable success in encouraging the involvement of the community, especially by seeking the consent and co-operation of commercial enterprises to allow the distribution of the Crime Information Forms at their premises.

Resettlement of Vietnamese refugees

18. MRS ELSIE TU asked: Will the Administration inform this Council:

(a) of the target date for resettling all Vietnamese refugees staying in Hong Kong;

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(b) of the reasons, if any, for holding up their resettlement; and

SECRETARY FOR SECURITY: Mr President, our aim is to resettle all Vietnamese refugees as soon as possible. Some 800 have been resettled so far this year, and 13 000 since January 1989.

On 1 July, there was a total of 2 231 Vietnamese refugees in Hong Kong. Of these, 1 146 have already been accepted for resettlement and should be departing over the next few months. The remaining caseload is under re-examination by the Office of the United Nations High Commissioner for Refugees or being considered for resettlement. While it is evident that there will be difficulties in resettling some of the refugees in this category, principally because of their criminal records, it would be premature to seek to define the exact number who may never be resettled.

We keep in close contact with the Office of the United Nations High Commissioner for Refugees and the consulates of the resettlement countries, and will continue to monitor the situation to ensure that every effort is made to speed up the resettlement of those who have not yet been accepted for resettlement.

Automatic photographing system for detection of drivers disobeying traffic signals

19. DR LAM KUI-CHUN asked: An automatic photographing system was introduced in January 1993 to monitor drivers' observance of traffic signals. Will the Administration inform this Council of the progress in the implementation of the scheme, including the numbers of cameras installed and drivers detected to be disobeying traffic signals by the system and prosecuted, and of the effectiveness of the system in deterring and detecting such offences?

SECRETARY FOR TRANSPORT: Mr President, under a pilot scheme started in January 1993, an automatic camera has been placed at certain road junctions with the aim of identifying vehicles that ignore red traffic lights, and to act as a deterrent against this offence. One camera is being used and it is presently being alternated between two road junctions.

In the period up to 31 May 1993, 605 red light violations have been identified using the camera. As a result 207 fixed penalty tickets and two summonses have so far been issued, and the remaining 396 cases are being processed.

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The scheme has been a success. An analysis of enforcement data has revealed a 47% reduction in red light violations at junctions where the camera is in use. Plans are now being made to purchase additional cameras.

Motions

PUBLIC BUS SERVICES ORDINANCE

THE SECRETARY FOR TRANSPORT moved the following motion:

"That the franchise conferring the right on Citybus Limited to operate a public bus service on the routes specified in the Schedule of Routes (Citybus Limited) Order 1992 (L.N. 331 of 1992) shall not be subject to sections 26, 27, 28, 29 and 31 in Part V of the Public Bus Services Ordinance."

He said: Mr President, I move the resolution standing in my name on the Order Paper.

To promote healthy competition in bus services, the Governor in Council has granted Citybus Limited a three-year franchise to operate 26 bus routes. These 26 bus routes were subsequently gazetted as Legal Notice 331 of 1992. The new services provided by Citybus will come into operation in September 1993.

The Citybus franchise will not contain a profit control scheme. In the circumstances, it is proposed in the case of Citybus to disapply those sections of the Public Bus Services Ordinance governing the permitted return under the profit control scheme, but to retain those sections which enable the Government to specify depreciation rates in respect of franchise related assets and require the company to produce accounts and other information needed for our monitoring of their performance. The resolution before Honourable Members will give effect to these policy intentions.

Mr President, I beg to move.

Question on the motion proposed.

MR LEE WING-TAT (in Cantonese): Mr President, the two motions, which aim at excluding the application of some provisions of the profit control scheme to the new franchises granted to China Motor Bus and the Citybus Limited, have been examined by a subcommittee of this Council. Members of the subcommittee supported the basic principle of these two motions, but were concerned about the effect of the non-application of the profit control scheme on assessment of bus fare increase applications and the standard of bus service in general.

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The Administration advised Members that with the non-application of the profit control scheme as proposed in the motions, the permitted return of 15% on the average net fixed assets of the company will no longer be used as a criterion for considering bus fare increase. Other factors taken into account in assessing the applications for bus fare increases will continue to be applied; they include the date of the last fare revision, changes in operating costs and inflation rates, efforts made to reduce costs and increase income, the quantity and quality of service, the service development programme, as well as public affordability and acceptability. While account will be taken of the need for a reasonable profit for the company as a commercial organization, there will not be any permitted target rate of return. What is regarded as reasonable profit will be dependent on the various factors considered in the assessment process and the operating conditions of the companies concerned.

Mr President, in the course of discussion with the Administration, Members expressed the concern that information provided by the company in support of its application for fare increase should be made available as far as possible. Members consider it important that the rationale for fare increases be explained. As a matter of procedure, a briefing on bus fare increase application should be arranged for Members before the application is considered by the Transport Advisory Committee. In response, the Administration has agreed to brief the Transport Panel on any future fare increase application from a franchised bus company before submitting it to the Transport Advisory Committee for advice, and to urge the company concerned to join such briefing.

The subcommittee had also discussed with the Administration the measures to reduce resources wastage of the bus companies and the implications of the new bus franchises in question on the standards of service. The Administration advised that the introduction of competition in the supply of bus service on Hong Kong Island should make the bus companies more accountable to their customers. The companies will be forced to rectify inadequacies and improve operational efficiency. Besides, the new franchises provide for Passenger Liaison Groups to be set up by the companies. To facilitate close monitoring of the companies' performance, operational information of these companies will be provided through the computer network linked to the Transport Department. Members have also been advised that a Bill will be presented to this Council in the coming Session proposing amendments to the Public Bus Services Ordinance to strengthen the cash penalty provisions.

Members had inquired the Administration of the different procedures adopted for fare revisions of public transport companies, but noted that any proposed changes to the existing arrangements will ahve to be dealt with as a separate legislative exercise. Under such circumstances, the subcommittee has no objection for the two motions to be put to this Council.

With these remarks, Mr President, I support the motions.

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MRS MIRIAM LAU (in Cantonese): Mr President, the motion moved by the Secretary for Transport just now is in relation to Citybus. Later on he will move a similar motion on China Motor Bus (CMB). I would now comment on both motions in one go.

Mr President, the scheme of profit control — a subject of criticisms for many years — will no longer apply to the new franchise granted to CMB for the operation of 90 routes on Hong Kong Island, nor to Citybus for the operation of 26 other routes. I believe the public will be glad to see this. Although the profit control scheme is abolished, we cannot help worrying about another matter. How will the Government set the fare levels of these companies and what criteria will it use in considering their fare rise applications? For public utilities without a scheme of profit control, the Government has all along stressed that in examining their applications for charge increase, it will take into account their operation costs, reasonable returns, inflationary factors, quality of service, development programme and acceptability of any increase to the public.

Escalating operation costs is very often quoted as the major factor contributing to bus companies' quest for fare rise. Therefore, the pressure for fare rise will naturally recede if we can control costs effectively. With the new franchise coming into effect, CMB will phase out 200 old buses and reduce the number of drivers. Although operation costs will be cut this way, the company still has to cut management costs should lower overall operation costs be pursued. CMB's less than desirable management and conservative business practice in the past have been the major causes for the loss of 26 of its routes. CMB should have learnt from this experience and should positively embark on management reform and operation policy reform by improving management efficiency, developing new sources of income and cutting expenditures as much as possible, and reducing costs. In the meantime, the Government should encourage the company in this respect while stepping up its monitoring of the company's operations.

Waste of resources is one of many headaches for bus companies. Some routes suffer heavy losses because of the meagre number of passengers and need to be cross-subsidized by income from other routes, thus indirectly generating pressure for fare rise. The two bus companies must conduct positive studies on how waste of resources can be effectively controlled and how improvement can be made, for example, by using smaller buses to serve routes of sparse patronage, or by restructuring some of the routes to make their service more cost effective. The Government should render assistance as much as possible in this respect.

We are faced with a vicious cycle where operation costs are pushed up by inflation, thus prompting the operator to increase charges. But any charge rise will in turn spur inflation whereby operation costs will rise again, leading to another charge increase. I think that in considering any application for charge increase by public utilities, the Government will have to take into account, other than inflationary factors, the effect of a charge increase on people's livelihood

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4357

and on inflation in the future, with a view to keeping the increase below the rate of inflation. The best way to combat inflation is, in fact, to control costs effectively rather than letting the charges race against inflation.

It is understandable that a company will want to have reasonable returns, for doing business naturally means "making money". But a uniform criterion for reasonable returns is at present absent. I think that in determining whether or not the returns achieved by utilities are reasonable, we need to consider the quality of their services, whether such services are satisfactory, in addition to considering whether or not they have undertaken their fair share of social obligations and responsibilities. I am however disappointed in this respect for CMB has yet to provide a comprehensive concessionary fare scheme for the elderly. I believe the objective of a public transport company's provision of a concessionary fare scheme for the elderly is to encourage their social participation. Hence every convenience should be given to the elderly people as far as possible. But obviously the preferential scheme offered by CMB has failed to meet this requirement. I hope the Government will exercise whatever leverage it possesses to prevail upon CMB to adopt for the elderly a preferential scheme similar to those offered by the other bus services.

As far as development programme is concerned, the operation of CMB and Citybus on Hong Kong Island is subject to objective geographical limitations which make it very difficult to develop new routes. However, I believe still CMB needs to keep on improving its fleet and add an appropriate number of air-conditioned buses to give the public a variety of choices. And this will enhance its competitiveness.

Finally, acceptability of any fare rise to the public is of utmost importance. And information about this question can be collected through the following three channels:

(1) The Passenger Liaison Groups set up by the two bus companies should from time to time conduct surveys to gauge passengers' opinion about bus fare;

(2) The Transport Department may carry out an independent survey to canvass public response to fare rise; and

(3) On receiving an application for fare rise, the Transport Department should explain to the Legislative Council Transport Panel and consult Members' opinion on the matter, rather than briefing the Council only after the application is approved by the Transport Advisory Committee. I believe accuracy of the findings of surveys conducted through varied channels will be much better than that of the present.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4358

Mr President, the transfer of 26 franchised routes from CMB to Citybus, while allowing the former to continue its operation of 90 routes, is to give effect to the Government's policy of encouraging healthy competition. I hope that by way of healthy competition, these two bus companies will be encouraged to provide a satisfactory service to the public on the routes under their respective operation. And the Government's exemption of the two companies from the scheme of profit control will help putting them to vigorous endeavours to provide a better service and strive for a bigger market share.

With these remarks, Mr President, I support the Secretary's present motion and the one next following on the Order Paper to be moved by him.

MR LAU CHIN-SHEK (in Cantonese): Mr President, I shall speak in one go on the two motions moved by the Secretary for Transport on Citybus Limited as well as on China Motor Bus Company. First of all, I must once again welcome the decision to withdraw the original profit control scheme of the China Motor Bus Company under which the permitted return of the Company is to be calculated according to its average net fixed assets. I hope that in examining and approving the application of bus companies for fare increases in future, the Government will take into full consideration such factors as inflation as well as affordability to the general public, so as to avoid affecting the livelihood of the people.

Today, I would like to focus on the procedures for processing bus fare increases. The ad hoc group assigned to study this resolution has demanded a reply as to the rationale behind the requirement for the ferry company to lay its application for fare increases before the Legislative Council for examination in the form of subsidiary legislation whereas no such requirement is imposed on the bus companies in their applications for fare increases. In its reply to the Legislative Council ad hoc group dated 11 June, the Government only pointed out that in enacting the Public Bus Services Ordinance in 1975, the Legislative Council did not put forward the requirement in the above connection. The Government has evaded answering directly the query on the marked difference in procedure between processing bus and ferry fare increases. I feel extremely disappointed!

Actually, as I understand it, the main reason for the absence of a mechanism to enable the Legislative Council to examine fare increase is that a profit control scheme has been set up under the relevant Ordinance, under which a level of "permitted return" is fixed for the bus companies each year, (the present profit control scheme arrangement with both KMB and CMB only came into effect in September 1975 after the said Ordinance was implemented.) It can thus be deduced that the rate of fare increase is adjusted according to the profit return requirement, leaving very little room for modification, and therefore there is not much necessity for examination by the Legislative Council. Mr President, it is obvious that after today's resolutions are passed, there will no longer be any profit control scheme, which in effect will mean no

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4359

"guaranteed profit" for CMB as well as for Citybus which is going to operate 26 bus routes on Hong Kong Island. Therefore the procedures for bus fare increase should in future be the same as those for the franchised ferry company which similarly has no profit control scheme. That is to say, fare increases should be approved by the Executive Council and be laid before the Legislative Council for examination in the form of subsidiary legislation.

I believe Members are aware that today's Legislative Council is no longer a "rubber stamp". As a body which represents public opinion, I think it is absolutely imperative on the part of the Legislative Council to examine the issue of fare increase by the bus companies, which has a great impact on the livelihood of the people. That the application for fare increase at a rate approved by the Executive Council should also be laid before the Legislative Council for examination in the form of subsidiary legislation is, I believe, the mildest of proposals.

I hope that later the Secretary for Transport can respond to my question and introduce to this Council, as soon as possible, a Bill based on my proposal to amend the Ordinance in question so as to enable the public and this Council to monitor effectively the level of bus fares.

Mr President, I so submit. Thank you.

SECRETARY FOR TRANSPORT: Mr President, I have taken careful note of the points and helpful suggestions made by those Honourable Members who have spoken on this motion and I am very grateful to them for their support. If I may, I will respond very briefly to the points they made.

The criteria governing the approval of bus fare increases in future will be exactly the same as those at present except that the average net fixed asset (ANFA) base of the operating companies will no longer feature in the basket of factors requiring consideration. I am confident that the competition resulting from the transfer of 26 of its routes to Citybus in September 1993 will provide much needed impetus for CMB to cut costs and improve services. I would like to assure Honourable Members that the performance of both bus companies will be closely monitored.

I have taken careful note of the remarks made by the Honourable LAU Chin-shek. I will be happy to consider his proposal and I will respond in due course.

Question on the motion put and agreed to.

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4360 PUBLIC BUS SERVICES ORDINANCE

THE SECRETARY FOR TRANSPORT moved the following motion:

"That the franchise conferring the right on China Motor Bus Company to operate a public bus service on the routes specified in the Schedule of Routes (China Motor Bus Company) Order 1992 (L.N. 365 of 1992) shall not be subject to sections 26, 27(1), 28, 29 and 31 of the Public Bus Services Ordinance other than for the purpose of defining "Development Fund"."

He said: Mr President, I move the resolution standing in my name on the Order Paper.

In October 1992, the Governor in Council granted a new franchise to China Motor Bus Company (CMB). The franchise gives CMB the right to operate a bus service on 90 routes for two years from September 1993 to August 1995.

CMB's new franchise will no longer have a profit control scheme. In the circumstances, it is proposed in the case of CMB to disapply those sections of the Public Bus Services Ordinance governing the permitted return under the profit control scheme. It will, however, be necessary to retain those sections to enable the Government to prescribe arrangements for the disposal of any balance that may remain in CMB's Development Fund account on 31 August 1993, to specify depreciation rates for franchise related assets and to require the company to produce accounts and information needed for our monitoring of their performance. The resolution before Honourable Members will give effect to these policy intentions.

Mr President, I beg to move.

Question on the motion proposed, put and agreed to.

First Reading of Bills

LAND DRAINAGE BILL

EXCHANGES (SPECIAL LEVY) (AMENDMENT) BILL 1993

BANKING (AMENDMENT) BILL 1993

COMPANIES (AMENDMENT) (NO. 4) BILL 1993

SECURITIES AND FUTURES COMMISSION (AMENDMENT) BILL 1993

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STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1993

Bills read the First time and ordered to be set down for Second Reading pursuant to Standing Order 41(3).

Second Reading of Bills

LAND DRAINAGE BILL

THE SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS moved the Second Reading of: "A Bill to make provision for the constitution of Drainage Authority Areas and the carrying out of drainage works within such areas and for connected matters."

He said: Mr President, I move the Second Reading of the Land Drainage Bill. The Bill seeks to improve the Government's ability to undertake drainage maintenance work which will help prevent flooding.

The flooding which has caused concern in recent years has been a result of a number of factors. First, rapid development in the New Territories coupled with land use changes have had a significant effect on drainage patterns in low-lying areas. Natural watercourses have also become silted up or obstructed, while flood storage capacities of drainage basins have been reduced and flood levels raised. Second, with the steady decline of agriculture, owners of land have ignored the maintenance of watercourses running through or alongside their land. Third, we also had particularly heavy rainstorms and torrential rainfall in the past two years.

To reduce flooding, we need to maintain natural watercourses and ensure that they are free from obstruction. The Government has, however, encountered considerable difficulty in gaining access to these watercourses to carry out drainage works since many of them are located on or surrounded by private land.

To overcome these problems, we need new legislation to empower the Government to gain access to private land to carry out necessary drainage work. The system provided for in the Bill has five main aspects. The first is the establishment of a new Drainage Authority, who will be the Director of Drainage Services, and a Drainage Appeal Board. The Authority may prepare draft drainage plans for the designation of main watercourses on which drainage work may be carried out. The Drainage Appeal Board will comprise non government Members appointed by the Governor. Its main functions will be to review the Authority's decisions on objections to draft plans and to hear appeals under the proposed Bill.

Second, the Bill provides for detailed drainage plan making procedures. It is intended that a total of five drainage plans for the designation of the main

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watercourses will be prepared over the next few years. These plans will cover almost all the flood-prone regions of the north and northwestern New Territories. The public will have the right to object to the draft drainage plans, and to apply to the Drainage Appeal Board for a review of the Authority's decision on their objections. The finalized draft drainage plan and a schedule of objections will be submitted to the Governor in Council for decision.

Third, to facilitate the carrying out of drainage work, the Authority will have the power to gain access to designated main watercourses, through private land if necessary, and to require the removal of obstructions or structures from them. Further, in order to prevent the blocking of such watercourses, the Authority will require anyone who wishes to carry out engineering work in them to obtain his prior consent.

Fourth, appeal procedures will be provided in the proposed Bill. Anyone aggrieved by a decision of the Authority to execute drainage works, to require removal of obstructions or structures, or to refuse consent for engineering work to be carried out will be entitled to appeal to the Drainage Appeal Board. The decision of the Board will be final.

Finally, drainage work to be carried out by the Authority on private land may be a concern to the land owners affected and their tenants. Provision has therefore been made for payment of compensation if damage is caused by the Authority when executing the works. Claims may be referred to the Lands Tribunal for a decision if a settlement cannot be reached. Where land is rendered incapable of reasonably beneficial use as a result of work carried out by the Authority — a situation which is expected to arise only occasionally — the Bill provides that the owner may apply to the Governor in Council for an order to resume the land affected.

Mr President, in view of flooding problems in the New Territories, the proposals in the proposed Bill have been drawn up after public consultation and have the general support of the Heung Yee Kuk and the District Boards concerned. The Bill is essential for the proper maintenance of the main watercourses. I commend it to Members for their favourable consideration.

Thank you, Mr President.

Bill referred to the House Committee pursuant to Standing Order 42(3A).

EXCHANGES (SPECIAL LEVY) (AMENDMENT) BILL 1993

THE SECRETARY FOR FINANCIAL SERVICES moved the Second Reading of: "A Bill to amend the Exchanges (Special Levy) Ordinance."

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He said: Mr President, I move that the Exchanges (Special Levy) (Amendment) Bill 1993 be read a Second time. The Bill aims at amending the law for an orderly winding down of the Special Levy.

After the 1987 market crash, a Lifeboat Loan was raised to enable the Hong Kong Futures Guarantee Corporation to meet its obligations. The Loan is repaid by revenue from two sources. First, the Exchanges (Special Levy) Ordinance imposes a Special Levy on securities transactions as well as stock index futures and options contracts for repaying part of the Loan. Another source of repayment is recoveries from defaulters.

The Lifeboat Loan originally amounted to $1.93 billion, of which $1 billion was raised from the Government and the remaining from seven shareholders of the Hong Kong Futures Guarantee Corporation and 15 broker lenders. The government portion of the Loan had been fully repaid by the end of September 1992. By the end of June 1993, the outstanding amount owed to the other lenders was approximately $256 million.

Market practitioners have been concerned that the Special Levy is a heavy burden on investors and could adversely affect the competitiveness of the transaction costs in the Hong Kong market vis-a-vis other major international markets. Last December, this Council also urged the Administration to take steps to scrap the Levy as soon as possible. At that time, the outstanding loan still amounted to $610 million, and the Administration did not consider it appropriate then to suspend the Levy. However, the Administration undertook to take steps to put an end to the Levy once it had outlived its purpose. It was estimated at that time, on the basis of prevailing figures of market turnover, that levy could be phased out by April 1994.

Since the beginning of this year, the Hong Kong stock market has done exceptionally well, with a robust average turnover of $3.945 billion daily. As a result, the Special Levy has been generating revenue much faster than originally anticipated. With the high turnover continuing, it is estimated that the portion of the Lifeboat Loan to be recovered from the Special Levy could be fully repaid by as early as August this year, after provisions have been made to meet interest and other costs. Now is therefore the appropriate time to proceed to suspend the Special Levy, otherwise a big surplus in the order of $100 million to $200 million could be created in the Special Levy fund by the end of the year. Once adequate arrangements exist to repay the loan, the continuation of the Special Levy would be quite unnecessary and the generation of such a large surplus would represent an undue burden on investors.

As, however, there is no provision in the existing legislation for the suspension of the Special Levy, it is necessary to amend the Exchanges (Special Levy) Ordinance to enable the Government to suspend the Levy when the remaining balance of the Lifeboat Loan approximates the remaining obligation of the defaulters. Upon final repayment of the Loan by defaulters, which is expected to be effected by 1996, the Special Levy will be formally abolished.

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However, in the meantime, the Governor in Council may re-introduce the Special Levy after its suspension should circumstances demand it.

The present Ordinance is silent on the way to handle any credit balance in the Special Levy fund. The Bill therefore seeks to empower the Secretary for Financial Services to direct the transfer of any such surplus into the compensation funds established under the Securities Ordinance or the Commodities Trading Ordinance, or for other purposes in the interests of the investing public. Improvement to investor protection is considered to be the most proper use of any such balance.

Some minor amendments to the subsidiary legislation are also proposed to facilitate the performance of the duties of the trustee of the Special Levy fund upon full repayment of the Lifeboat Loan.

The suspension of the Special Levy will draw to a close the final chapter of the 1987 stock market crisis. Since that unfortunate episode in the history of our markets, a comprehensive review of the operation of the securities industry and its regulatory framework has been conducted, culminating in the introduction of a number of reform measures to guarantee the well-being of the local securities and futures markets. Notable among these was the setting up of the Securities and Futures Commission in 1989 which is now soundly established and providing a strong and independent regulatory framework for the securities and futures industries. The stock and futures exchanges have also undergone major restructuring. The futures exchange clearing system was restructured in 1989 and the Central Clearing and Settlement System was fully implemented in late 1992 to absorb systemic risk and to improve the efficiency of the securities market operation.

These reform measures have proven their worth in subsequent fluctuations of the stock and futures markets when trading has been orderly despite exceptional market volatility. Investors' confidence in our regulatory framework has returned, as can be demonstrated by the steady growth of the securities and futures markets over the past two years.

The Special Levy is coming to the end of its useful life and I trust that we should never need to resort to anything like it again in Hong Kong. The introduction of this Bill in effect represents the final step towards clearing up the last outstanding issue left over from the 1987 crash, an event which I am sure we would all wish to regard as a matter of history.

Bill referred to the House Committee pursuant to Standing Order 42(3A). PRESIDENT: As you have got four more Bills, you might like to go straight on, Secretary.

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SECRETARY FOR FINANCIAL SERVICES: Thank you, Mr President.

BANKING (AMENDMENT) BILL 1993

THE SECRETARY FOR FINANCIAL SERVICES moved the Second Reading of: "A Bill to amend the Banking Ordinance."

He said: Mr President, I move that the Banking (Amendment) Bill 1993 be read a Second time.

The main objectives of the Bill are to further enhance supervisory standards in Hong Kong and to clarify certain provisions of the Banking Ordinance. In addition, to further the objective of facilitating the development of Hong Kong's capital markets, the Bill introduces legislative amendments which will enable the Hong Kong Monetary Authority to establish a central custody system for debt instruments in paperless form.

Hong Kong's framework of consolidated supervision largely conforms with the minimum standards of the Basle Committee for the supervision of international banking groups and their cross border establishments. These standards were established by the Basle Committee of banking supervisors in July 1991 following the collapse of the BCCI group worldwide. The objective of the new standards is to seek worldwide supervisory co operation to ensure that no bank can operate internationally without being subject to effective consolidated supervision. The requirements in the Ordinance governing prior approval for the establishment of overseas banking entities by locally incorporated authorized institutions, however, fall short of the standards.

Although section 49 of the Ordinance requires authorized institutions to seek the prior approval of the Monetary Authority before the establishment of an overseas branch or an overseas representative office, there is no provision governing the establishment of an overseas banking subsidiary. A new section 51A is therefore proposed under clause 13 so that a locally incorporated institution, or its locally incorporated holding company, will be required to seek the Monetary Authority's prior approval before establishing a banking subsidiary overseas.

As regards the plan by the Monetary Authority for establishing a central custody system, the intention is to establish a system to perform the functions of a central custodian and clearing agent for debt instruments. Under the proposed system, a private sector issuer of debt instruments such as certificates of deposits, commercial papers or floating rate notes will issue one global instrument which will be held as bearer by the Monetary Authority. The Monetary Authority will, on behalf of acceptable dealers, record on a computer system interests in those global instruments and facilitate the transfer of such interests.

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With the growth in the markets and the increasing size of transactions, efficiency and effectiveness in the settlement process are becoming more and more important for the further development of the markets. Without the need for any physical delivery of instruments, the settlement process will be quicker and settlement risk will be reduced. This will also enhance the Hong Kong market's attraction to international institutional investors.

Clauses 27 and 29 introduce a new section 137B and a new Sixth Schedule respectively on prescribed instruments. Clauses 30 to 41 propose necessary consequential legislative amendments to a number of Ordinances. Together, these provisions will give recognition to the rights and interests in specified debt instruments in paperless form.

The Bill also introduces a number of miscellaneous amendments to the Banking Ordinance. I shall briefly describe the main provisions.

Clause 9 amends section 46 to enable a company incorporated overseas that lawfully takes deposits from the general public, whether or not on current account, to establish a local representative office in Hong Kong. At present, such a company that does not offer current accounts cannot be regarded as a bank for the purposes of section 46. The amendment will enable such companies which are clearly regarded as banks in their home country and are supervised as such, but do not offer current accounts, to open a representative office in Hong Kong.

Clause 16 introduces a requirement that locally incorporated institutions publish their audited financial statements in newspapers within four months of their financial year end; the present requirement is six months. It is considered that a shorter timeframe will give more timely information to depositors, the general public and the regulators. Furthermore, it will help the auditors to co-ordinate their audit work on authorized institutions with the reports which they submit to the Monetary Authority under section 63(3A) of the Ordinance.

Under section 73(1) of the Ordinance, a person who has been bankrupt, convicted of fraud or dishonesty, or been a director or otherwise concerned in the management of an institution that has been wound up or the authorization of which has been revoked, has to seek the consent of the Monetary Authority before taking up employment with an institution. The problem with the present legislation is that someone may commit an offence without knowing if an institution with which he was previously employed with has been wound up or has had its authorization revoked. The amendment proposed at clause 19(a) removes this problem.

Clause 19(b) introduces a new section 73(1A), which is similar to section 73(1) except that it applies to a person on or after becoming an employee of an institution. At present, if a person becomes bankrupt or is convicted of fraud or dishonesty whilst already in employment with an

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institution, there is no requirement for him to seek the Monetary Authority's consent to continue to work for the institution. Such consent is now required.

Bill referred to the House Committee pursuant to Standing Order 42(3A).

COMPANIES (AMENDMENT) (NO. 4) BILL 1993

THE SECRETARY FOR FINANCIAL SERVICES moved the Second Reading of: "A Bill to amend the Companies Ordinance."

He said: Mr President, I move that the Companies (Amendment) (No.4) Bill 1993 be read a Second time.

This Bill primarily aims at facilitating the invocation of the Financial Secretary's power under the Companies Ordinance to conduct preliminary investigations on companies. It also makes several ancillary amendments to the Ordinance to clarify and rationalize the scope of certain provisions.

At present, if the Financial Secretary's attention is drawn to a situation suggesting fraud, misfeasance or other misconduct in the management of the affairs of a company, he may invoke section 152A of the Companies Ordinance to authorize a public officer to require the company concerned to produce its books or papers and to ask questions about them. An alternative or subsequent measure would be to initiate a full scale investigation under section 143 of the Ordinance.

Preliminary inspection represents a discreet and less costly way to assess whether a full scale investigation is warranted. Such enquiries can avoid the potential disruption to a company that might be caused by a full scale investigation.

Despite these advantages, section 152A has never been invoked. One of the problems with the existing provision is that the Ordinance requires a public officer to be authorized for this purpose, while the Government does not have staff with either the time or the relevant skill for this type of work.

Moreover, the Financial Secretary can only authorize a preliminary inspection if he reaches the same state of mind as would be required to initiate a full scale investigation, that is, if it appears to him that fraud, misfeasance, misconduct or insufficient disclosure of information to shareholders has occurred. As a result, the provision for preliminary inspections has in effect been rendered redundant.

The Bill therefore seeks to lower the threshold for invoking the power to authorize preliminary inspections and to remove the requirement that only a public officer can be appointed as an inspector. This should not only have the effect of making this useful provision operational but it will also bring

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Hong Kong practice generally into line with the provisions of similar legislation elsewhere, such as for example the United Kingdom Companies Act.

Apart from revisions concerning preliminary inspections, the Bill also takes forward several ancillary issues.

The first one is to allow greater flexibility for an inspector appointed for a full scale investigation to delegate his power. This should help to speed up the progress of investigations and to contain costs.

The second issue concerns the power of the Court to appoint receivers or managers. At present, aggrieved shareholders of a company can apply for a court order to protect their interests. It is proposed to state expressly that the Court can, upon such an application, appoint a receiver or manager of property for the company. This may be the most effective means of protecting the interests of shareholders in some circumstances. Some minor textual amendments are also proposed to clarify the scope of the relevant provision.

The last issue is to rationalize provisions in the Companies Ordinance regarding the exclusion of questions put by an inspector and answers given thereto as evidence against a person giving those answers, if that person has specifically stated that his answer might tend to incriminate him. The amendments proposed are for the sake of consistency.

Bill referred to the House Committee pursuant to Standing Order 42(3A).

SECURITIES AND FUTURES COMMISSION (AMENDMENT) BILL 1993

THE SECRETARY FOR FINANCIAL SERVICES moved the Second Reading of: "A Bill to amend the Securities and Futures Commission Ordinance."

He said: Mr President, I move that the Securities and Futures Commission (Amendment) Bill 1993 be read a Second time.

The Bill provides the Securities and Futures Commission with the power to conduct preliminary inspections on records and documents of listed companies. The power is similar to that of the Financial Secretary under section 152A of the Companies Ordinance which is the subject matter of the Companies (Amendment) (No.4) Bill 1993 just introduced.

Being a regulator of listed companies, the Securities and Futures Commission encounters from time to time circumstances suggesting fraud, misfeasance or misconduct in the management of the affairs of these companies as well as failure by them to disclose information to their shareholders. At present, the Commission does not have the statutory authority to investigate such

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cases. This is considered undesirable since the Commission is denied the opportunity to take prompt investigatory actions at the earliest opportunity.

To facilitate the effective regulation of listed companies, it is proposed that the Commission be provided with the power to initiate preliminary inspections on records and documents of listed companies. This power would be similar to that available to the Financial Secretary under the Companies Ordinance and could be invoked whenever it might appear to the Commission that fraud, misfeasance, misconduct in the management of affairs of companies, or failure to disclose information to shareholders has occurred.

It is at the same time proposed that the Commission be allowed to apply to the Courts for orders to protect the interests of shareholders of listed companies. Similar provisions already exist in the Companies Ordinance under which aggrieved shareholders can apply for court orders to protect their interests. Consultation with the Financial Secretary would be required before the Commission could resort to the use of its power in this regard.

In extending the preliminary investigatory power to the Commission, the Administration is mindful of the fact that the Banking Ordinance already provides extensive power for the Monetary Authority to regulate authorized institutions. Circumstances suggesting fraud, misfeasance or other misconduct committed by listed authorized institutions should continue to be investigated by the Monetary Authority. On the other hand, cases involving disclosure of information to shareholders by listed authorized institutions are not directly related to depositors' interests. Such cases would therefore be handled by the Securities and Futures Commission.

In any event, the Commission must consult the Monetary Authority before any authorized institutions or their related companies could be required to produce records and documents for inspection. Furthermore, the power to apply for court orders would not apply to authorized institutions.

As regards authorized insurers under the Insurance Companies Ordinance, no exemption will be given but the Commission will need to consult the Insurance Authority before requiring such companies to produce their records and documents.

These proposals, if implemented, would supplement the investigatory power of the Securities and Futures Commission while minimizing possible overlap of responsibilities of different regulators. They are designed better to equip the Commission to fulfil its role as the lead regulator on listed companies.

Bill referred to the House Committee pursuant to Standing Order 42(3A).

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4370 STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1993

THE SECRETARY FOR FINANCIAL SERVICES moved the Second Reading of: "A Bill to amend the Stock Exchanges Unification Ordinance."

He said: Mr President, I move that the Stock Exchanges Unification (Amendment) Bill 1993 be read a Second time.

The Bill seeks to clarify the power of the Stock Exchange of Hong Kong Limited to make listing rules and to ensure that it enjoys statutory immunity in carrying out its listing functions.

The role of regulating the listing of securities, and thereafter the conduct of listed companies, is shared between the Exchange and the Securities and Futures Commission. In December 1991, the Securities and Futures Commission devolved the primary responsibility for listing matters to the Exchange and these functions are performed on the basis of listing rules made by the Exchange under the Stock Exchanges Unification Ordinance.

The existing scope of the relevant provision in the Ordinance is narrow. As a result, it is unclear whether the Exchange has the statutory power to promulgate certain provisions which must be included in the Listing Rules. One example is the imposition of sanctions to ensure that companies would continue to comply with their obligations following the listing of securities.

Another issue with the existing provision is the uncertainty as to the immunity enjoyed by the Exchange in carrying out listing functions. In performing part of the listing functions before the devolution in December 1991, the Securities and Futures Commission enjoyed a broad immunity conferred by the Securities and Futures Commission Ordinance. On the other hand, whether the Exchange enjoys the same degree of, or indeed any, statutory immunity after the devolution of functions is open to debate.

In order to remove any doubt on these questions, it has become necessary to clarify the power for the Exchange to make effective listing rules and to provide a clear statutory immunity to the Exchange with regard to listing matters.

On the question of immunity, it is essential that the Exchange should be able to act firmly and without the fear of liability in relation to listing matters. Any uncertainty in this regard will hinder its ability effectively to perform these functions. It is understood that threats of legal action against the Exchange and its Listing Committee have been used in attempts to manipulate the listing process. The seriousness of the matter is reflected by instances of companies threatening to sue the Exchange if trading of their shares were to be suspended.

The amendments proposed in the Bill, while fairly simple and straight forward, are important steps in ensuring the effective regulation of listing

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matters by the Exchange. This is crucial to maintaining the confidence of investors in the stock market and thus to the reputation of Hong Kong as an international financial centre.

Bill referred to the House Committee pursuant to Standing Order 42(3A).

PNEUMOCONIOSIS (COMPENSATION) (AMENDMENT) BILL 1993 Resumption of debate on Second Reading which was moved on 5 May 1993 Question on Second Reading proposed.

DR LEONG CHE-HUNG: Mr President, may I start by expressing, as the convenor of the Bills Committee on this Bill, my gratitude to members of the Administration, the Secretariat and members of the Bills Committee for their determination and ingenuity going through this otherwise very complicated Bill. The Bills Committee has received a number of submissions from different concern groups. The message in common is clear — that the Bill should be passed as soon as possible. This objective is shared by the Bills Committee, as members are anxious that the pneumoconiotics be given as much assistance as soon as possible. Similarly, it is the unanimous inclination of members that maximum flexibility be given to the victims, with a view to offering them the highest degree of sympathy, as the disease they have contracted is a long drawn out one which continuously erodes into their quality of life unimpeded until their final death. We look to the Administration too in the hope that they will be more generous in their compensation and ex-gratia package.

The Bill proposes amendments to the Pneumoconiosis (Compensation) Ordinance, which provides for a collective liability compensation scheme for persons diagnosed after 1 January 1981 to be suffering from pneumoconiosis. As the health of pneumoconiotics tends to deteriorate progressively, this Bill provides for continual relief to these sufferers by introducing a system of monthly payments payable during their lifetime. The pneumoconiotic can also ask to be re-examined every two years, and the monthly payment will be increased if the person is found to have suffered additional incapacity.

Improvement is also made in the assessment of incapacity. At present, a pneumoconiotic is only compensated for his loss of earning capacity based on assessment of his physical ability to work. Under the Bill, the assessment of incapacity will take into account the pneumoconiotic's physical incapacity, the likely reduction of his employability, as well as the loss of quality of life. As an illustration, for example, a person with 50% forced vital capacity will be deemed, for the purpose of calculating compensation payments, to have suffered 80% incapacity. The Administration has confirmed that whether the

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pneumoconiotic has taken up any employment will not be a factor for consideration in assessing the degree of incapacity under the proposed scheme.

On the use of an overall average wage of construction workers as the "average monthly earnings" for calculating compensation of which some members show concern, the Administration explained that the same method has been adopted under the existing scheme for determining the amount of compensation in most cases. The adoption of an average wage, with an assumption that the person has worked for 26 days a month, is neither inappropriate nor unfavourable to the workers, given the variety of occupations and the wide range of wages in the construction industry. Consideration had also been given to the suggestion that the monthly earnings be determined according to jobs known to carry a high risk of contracting pneumoconiosis, such as caisson operation. The Administration pointed out, however, that based on availability of statistics, only some 35% of the pneumoconiotics had been deployed on caisson operation or related type of work; the majority of them were employed in work in dust-borne environment. Members also note that singling out any particular jobs for calculation of compensation would be inconsistent with the existing arrangement for charging a flat rate of levy on the industries concerned based on the principle of collective responsibility.

Another area of concern is on the funeral expenses. Members urged the Administration to relax the conditions under which the funeral expenses are payable, so as to cover for cases where the causes of death are not directly related to pneumoconiosis. Some members are of the view that the funeral expenses should be paid irrespective of the cause of death of the pneumoconiotic. They consider that the system of payment should be simple and easy to administer, thereby reducing uncertainty regarding eligibility. Members have been informed by the Administration that the Pneumoconiosis Medical Board has always adopted a sympathetic and flexible approach in these cases, and that there has not been any complaint about the arrangement so far. It is hoped that members' concerns would be reflected to the Board and be taken into account in future assessments for eligibility.

Members have also invited the Administration to consider a number of suggestions from concern groups to further improve the compensation package. The Administration advised that the package proposed in the Bill was drawn up after consultation with various organizations, including trade unions and employers associations, as well as the Legal Aid Department. The general response was that the new scheme represents an improvement over the existing one. Nevertheless, the Administration has agreed to the suggestion that reimbursement for approved medical applicances should cover any types of wheelchairs recommended by medical practitioners, and not just mechanical wheelchairs. The Administration has also undertaken to refer to the Pneumoconiosis Compensation Fund Board the suggestions that the coverage of the Fund should be extended to rehabilitation and social care services, and that at least one pneumoconiotic be included as member of the Board.

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This Bill provides that the proposed scheme will not be applicable to those who, six months after the enactment of the Bill, are actively continuing proceedings in a court for damages at common law for pneumoconiosis, or an appeal against an assessment for compensation under the existing Ordinance. Members were concerned, firstly, whether these pneumoconiotics would be informed of their respective position under the existing and proposed schemes, and secondly, how their rights to common law damages would be affected if they join the proposed scheme. Confirmation was subsequently received from the Administration that there is nothing in the existing Ordinance nor the Bill that would take away a pneumoconiotic's right to continue an action for damages at common law after joining the proposed scheme or, subject to the usual court procedures and the provisions of the Limitation Ordinance (Cap. 346), to issue fresh proceedings if the earlier proceedings had been withdrawn. Assurance has also been given by the Administration that the pneumoconiotics under the assistance of Legal Aid Department will be clearly advised of their rights and options.

Some concern groups had suggested that the effective date of the compensation scheme should be backdated. The Administration responded that, as a matter of principle, changes in the law should not normally take effect retrospectively. This is essential to ensure that anyone affected by the law could order his affairs in accordance with the law as it stands. Members therefore agree that a more practical solution is to have the Bill enacted at the earliest possible date. In this connection, the Administration will move an amendment at the Committee stage to allow the Bill to take immediate effect upon enactment.

To implement the proposals in the Bill, the rate of levy charged on the building and construction and quarrying industries will be raised from 0.02% to 0.3%. The Administration has accepted the suggestion by the Hong Kong Construction Association that the new rate should apply to contracts with tenders submitted on or after the commencement date of the necessary resolution.

With the enactment of this Bill, an ex gratia scheme for pre-1981 pneumoconiotics will have to be considered by the Finance Committee. These pre-1981 pneumoconiotics are not covered by the Pneumoconiosis (Compensation) Ordinance nor the proposed compensation scheme in this Bill. The Administration has explained that when the Ordinance was enacted in 1980, the scope of the compensation scheme was so defined that it would limit the liabilities of construction and quarrying industries to pneumoconiotics diagnosed after 1 January 1981. In recognition of the continual deterioration in the health of the pre-1981 pneumoconiotics and that they deserve the support of the community, further ex gratia payments are proposed by the Administration. This includes a monthly rate of $2,200, to be inflation-adjusted and paid in advance on a quarterly basis until death, and medical examination is not required for establishing eligibility for payment. Members consider that this monthly rate of $2,200 to be too low and invited the Administration to consider

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raising it to $3,000. The Financial Secretary has undertaken a review and a quick response. It is hoped that a favourable reply can be given before the Finance Committee meeting in this Legislation Council Session.

Some concern groups were worried whether the monthly payments under the proposed compensation scheme and the ex gratia scheme will affect the Public Assistance received by the pneumoconiotics. The Administration has informed members that these monthly payments will not count as income for Public Assistance assessment. I hope this point can be reconfirmed by the Administration in its response this afternoon.

Mr President, on a personal basis and on behalf of the medical profession who is actively behind this Bill I have to raise a few areas of disappointment and do hope the Administration would address them in due course of time. First, the medical profession feels that the statutory pre-employment health check-up and regular check-up should be instituted, especially in relation to hazardous occupations to detect occupational disease earlier and to avoid deterioration of functions and reduce disability. In the case of pneumoconiosis, such check-up could bar those of known chronic lung disease from involving in certain occupations as chronic chest conditions are essentially catalyst to pneumoconiosis development. Secondly, the medical profession feels that there is still an inadequacy in the provision of properly co-ordinated rehabilitation programmes for workers with occupational diseases. It would only stand to reason therefore for the Administration to arrange positively the Pneumoconiosis Compensation Fund Board to extend its coverage to such rehabilitation and social care service. Thirdly, the medical profession feels that it is questionable in using only forced vital capacity (FVC) to determine physical incapacity. We urge the Administration to review the situation in the near future and in the light of advanced diagnostic techniques to introduce and set a more comprehensive lung function test as determination criteria so as to offer the fairest compensation to the victims. Finally, Mr President, whilst we do hope that health hazard should be maximally prevented industrial and job related diseases and injuries are inevitable. Proper compensation for all the victims is essential. With the passage of this Bill, I therefore call upon Members of this Council to support the passage of the Employees' Compensation (Amendment) Bill and the Administration to introduce without delay a draft Bill on noise induced deafness compensation scheme.

Mr President, with these remarks, and subject to the amendments to be moved by the Administration at the Committee stage, I support the Bill.

MR PANG CHUN-HOI (in Cantonese): Mr President, life is precious. However, for a group of people, they are so unfortunate that they contracted an incurable occupational disease in their workplace. In their prime of life, they are reduced to watching their life gradually heading towards the end. It is so cruel and tragic.

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Workers who have contracted pneumoconiosis are among such unfortunate people. Once they have contracted this kind of occupational disease, their lung function will deteriorate progressively. Despite today's advanced science and medical science, this disease remains incurable and the patient's condition will only get worse instead of getting better.

The amendments put forth in the Bill require employers of the construction and quarrying industries to pay levy to the Government at an increased rate of 0.3% of the value of the construction works contract or quarry products (the existing rate is 0.02%). Yet the revised rate is not a result of a sudden increase. As early as 1981, the government levy rate was already 0.2%. Subsequently, owing to under-spending of the levy, the levy rate was reduced several times in recent years. The rate was reduced from 0.2% to 0.15% on 5 January 1986. It was further lowered to 0.05% on 8 February 1987. On 26 June 1988, it was set at the present low level of 0.02%. Therefore, the upward adjustment this time only reflects the actual needs. In fact, who will wish to receive this so-called ex gratia payment? Everyone would wish to live by the sweat of one's brow. However, if he is unfortunate enough to have contracted this incurable occupational disease, his employer and indeed society have the responsibility of looking after his livelihood, so that he can be assured as far as possible a decent living in his remaining years.

To provide sufficient care to pneumoconiotics diagnosed before 1981, the Bills Committee proposes that the monthly ex gratia payment be increased from $2,200 to $3,000. Committee members met the Financial Secretary on 2 July to seek a further allocation of $30 million from the Government. The Financial Secretary agreed to consider the proposal. Meanwhile, the Government was so generous as to be prepared to spend $2 billion as subsidy to meet the housing needs of the sandwich class. However, as many Members of this Council objected to the way such subsidy was made, the Government changed its plan and instead granted a $0.5 million low-interest loan to each sandwich class household which successfully applies for the loan to purchase a flat. By the same token, I earnestly hope that given the existing huge surplus, the Government should be more generous to those unfortunate people in society.

The amendment provides the pneumoconiotics with better compensation. There is still, nevertheless, some room for improvement. Since this disease would lead to the accelerated deterioration of lung function and the reduction of the sufferers' ability to move about, in some worse cases, the sufferers cannot even take public transport and have to go to and from the clinic for check-ups by private cars or taxis. Up till now, the Government has not provided the patients with travelling allowance.

Recently, Governor Chris PATTEN commented, in response to an industrial accident, that Hong Kong should not be built on the death and industrial accidents of Hong Kong people. I sincerely hope that the Government would be determined to put more efforts on industrial safety education so as to prevent occupational diseases and industrial accidents. As a result, there will be

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4376 no more victims through no fault of their own while Hong Kong's economy is booming. Mr President, with these remarks, I support the motion

MR TAM YIU-CHUNG (in Cantonese): Mr President, I have mixed feelings when the Pneumoconiosis (Compensation) (Amendment) Bill 1993 is going to be read the Second and the Third time today. On the one hand, I am happy to see that the Bill which the labour sector and the pneumoconiotics have been fighting for long is finally put to this Council for endorsement. But on the other, I am still dissatisfied with the new compensation package, though admittedly better than the previous one, because the new package falls far short of the pneumoconiotics' and my expectations.

The Pneumoconiosis (Compensation) (Amendment) Bill 1993 intends to rectify the existing inadequacies regarding compensation for pneumoconiotics. However, the new compensation package has certain shortcomings which significantly reduce the amount of compensation payable to the pneumoconiotics and their dependents. The compensation received by the pneumoconiotics at the moment is measly and is hardly enough to keep body and soul together. Despite their health, they have to take up employment in order to make a living. Their life is really miserable. What they are asking for is loud and clear. They hope that the new compensation package may help to tide them over. They hope that they could live their lives decently and have good rest and recuperation. However, the Bill falls short of their expectations. They can only expect to receive meagre compensation according to the package which is based on harsh computation.

The most baffling part of the Bill is the arrangement between death compensation and incapacity compensation. As a matter of fact, that the pneumoconiotics suffer from the disease is unfortunate enough and some even die as a result of the disease. The pain they suffer is indeed two-fold. But under the new package, the death compensation payable to the deceased's dependents will be a lump sum payment less the monthly payments of incapacity compensation and the compensation for loss of quality of life received by the pneumoconiotic during his lifetime. This arrangement runs counter to the idea of compensation for loss of quality of life, does it not? It is regrettable that under such an arrangement, the death compensation due to the deceased's dependents is used to offset the various compensation payments made to the pneumoconiotic before he met his death.

I do not think that we should only focus our attention on the compensation for this particular occupational disease during the debate of the Pneumoconiosis (Compensation) (Amendment) Bill 1993. Compensation is after all a negative and passive approach. We should take every possible measure to forestall such kind of disease. There is much to be done. And I would like to point out one area today, that is, problems relating to hand dug caissons. It is an indisputable

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fact that there is an intolerably high density of silica dust inside a caisson and the incidence of pneumoconiosis among workers toiling in such caissons is also intolerably high. According to the Hong Kong Construction Industry Employees General Union, 150 of their members are silicosis patients. All of them are or were engaged in caisson work. It is evident that hand dug caissons have profound bearing on workers' health. In view of this, it is high time that hand dug caisson operation was banned. On that score, an initial consensus has been reached among the Government, relevant professional groups and the labour sector. From the standpoint of the trade unions, we hope that the operation of hand dug caissons will be banned but at the same time, the affected workers should be provided with proper re-training, occupational counselling and even financial assistance. A total ban on hand dug caissons may be introduced in phases but it should not be dragged on for a long time. I consider a period of not more than three years to be the most appropriate. During the transition period, employers should take adequate dust control measures to prevent workers from inhaling silica dust as far as possible. Silicosis control can be carried out in many ways and at different levels. Resources of the Pneumoconiosis Compensation Fund Board should not be confined to making compensation to the pneumoconiotics. It should play a more positive role and inject more resources into preventive work.

The Pneumoconiosis (Compensation) (Amendment) Bill 1993 is going to be passed later this afternoon. In view of the plight of the pneumoconiotics and the predicament their dependents are in, we are obliged to further improve this Ordinance in the immediate future so that the pneumoconiotics and their dependents may enjoy the attention and care they deserve.

Mr President, I support the motion.

MR RONALD ARCULLI: Mr President, the Bill before us seeks to cure the existing inadequacies regarding compensation for pneumoconiotics. While I agree that there is a need for improving the existing arrangements, two issues were not properly addressed in the original Bill and are of concern to my constituency, particularly members of the Hong Kong Construction Association. However, I am glad that they have now been addressed by the Administration and have been resolved. The first concerns the retrospective effect of the new levy. The Bill proposed to raise the levy charged on building and construction and quarrying industries from 0.02% to 0.3% so as to provide sufficient funds to introduce the proposed new compensation package. The Hong Kong Construction Association supports the increase, which illustrates their concern and their sense of responsibility, but they have raised their concern about the unfairness imposed on contractors who have already submitted tenders prior to the introduction of the Bill, which would not have taken into account the new levy when calculating their tenders.

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Following a meeting with the Administration in February, and a subsequent submission to the Bills Committee scrutinizing this Bill, the Administration has finally agreed to introduce an amendment to the Bill, to be moved by the Secretary for Education and Manpower, to the effect that the new rate of levy should not apply to any construction works the tender for which was submitted before the effective date of any amendment.

The second issue concerns the dual claim of pneumoconiosis and deafness which has not been addressed by the original Bill. Indeed since 1991, when the Bill was still in the form of a consultative paper, the Hong Kong Construction Association has raised their concern with the Administration which, put simply, is that the Pneumoconiosis Compensation Fund Board can only take up claims in court proceedings which are strictly related to pneumoconiosis and cannot take up the pneumoconiosis aspect of a claim which also relates to other causes such as deafness. Notwithstanding their written submission to the Administration at an early stage, the Association's view was not taken into account in the Bill when it was introduced earlier this year.

I am glad that subsequent to the Association's meeting with the Administration in March, the issue has now been resolved with the Director of Legal Aid and the Board agreeing that for any plaintiff, who chooses not to opt for the new compensation scheme under the Employees' Compensation Ordinance, his claim for damages for pneumoconiosis will be separated from his other claims. Thus the Board will be able to take up and deal with the pneumoconiosis claim.

Mr President, this Bill, with the proposed amendment, is a good example of how co operation and a little give and take between employers and employees, with the timely intervention by the Administration, can bring about a fair solution to mutual problems. And I wish to take this opportunity to thank the Commissioner for Labour and her colleagues for their efforts.

MR LAU CHIN-SHEK (in Cantonese): Mr President, just now Dr LEONG Che-hung has very clearly presented, on behalf of the Bills Committee, the various views raised in the course of scrutiny of the Bill. I therefore do not intend to repeat them here. Today, I should like to talk briefly on what positive efforts the Administration should continue to make after the passage of this Bill.

Firstly, the compensation scheme should be improved further. I believe the Administration should again give positive consideration to revising the formula from the current one of using the "average wage" of workers to one of using the average wage of workers most vulnerable to pneumoconiosis, such as jobs involving the use of pneumatic drills and caisson operation. Moreover, the present assessment of incapacity using the lung function test as the sole criterion should be replaced with a comprehensive assessment which includes an assessment of working capacity and an oxidation test.

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Secondly, there is the question of the compensation for pre-1981 pneumoconiotics. I have to stress once again that the Administration should be impartial and adhere to "one lung, one scheme". It should raise the compensation for pre-1981 pneumoconiotics and put it on par with the compensation scheme for pneumoconiotics diagnosed from 1981 onwards as proposed under the current Bill. In the short term, the Administration should at least raise the monthly ex gratia payment for pre-1981 pneumoconiotics to $3,000.

The health of a pneumoconiotic deteriorates by the day. According to a government forecast, none of the 600-odd pre-1981 pneumoconiotics will live longer than 14 years. I was shocked beyond bounds by this piece of information. What can we do for them? What can the Administration do? Maybe we can only increase a little bit the monthly ex gratia payment to alleviate some of their difficulties. But in the end, even $100 million may still be not enough. However, I believe that if only the Administration will commit itself to the well-being of these 600 pre-1981 pneumoconiotics who have contributed to Hong Kong with their blood, sweat or even life, it will have shown that we are doing something for these poor sufferers.

Thirdly, there is the question of preventive work. While we are discussing the "appropriate amount" of compensation for pneumoconiotics, we seem to have forgotten the root of the problem. However perfect the compensation scheme, the pay-out will only be "compensation for want of a better deal" to the workers concerned if the Administration continues to neglect asserting effective control to ensure a safe and healthy working environment for workers! In fact, there has been no significant drop in the annual number of confirmed new pneumoconiotics over the last 10 years (more than 100 a year). But pneumoconiosis is the most common among the various occupational diseases. Here I urge the Administration to introduce legislation as quickly as possible to prohibit manual digging of caissons. At the same time, it should also establish as soon as possible safety standards for respiratory equipment and step up publicity on the risks of and prevention against pneumoconiosis.

Finally, I think that the industrial safety situation in Hong Kong and the employee's compensation scheme warrant a comprehensive review, in order to accord effective protection for the safety of all employees in Hong Kong, in addition to giving the unfortunate workers and their families truly reasonable compensation. I hope the Administration will be more positive in taking action in this regard.

I should like to call on all my colleagues in this Council to support this Bill. And I also hope that they will continue to be interested in industrial safety and employee's compensation in the future.

With these remarks, Mr President, I support the motion.

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MR TIK CHI-YUEN (in Cantonese): It is well-known that pneumoconiosis is an incurable occupational disease. The first case of silicosis diagnosed in Hong Kong was in 1956 and since then, 4 000-odd cases have been reported up to the present. The Compensation Ordinance has undergone several amendments but there is still much room for improvement.

However, it is regrettable that in view of the plight of the patients (some of them are already on the brink of death), we cannot allow the drafting and amending of the Bill to go on indefinitely. Members from Meeting Point, therefore, are going to support the Bill in its present form.

We support the immediate implementation of this piece of legislation even though we still consider the Bill inadequate and inequitable. There are two major reasons for it:

(1) There are serious drawbacks in the existing legislation:

Recently, there was an appeal case concerning pneumoconiosis compensation heard by the District Court. The appellant was a pneumoconiotic. He was unsatisfied with the amount of compensation he was granted under the existing legislation and lodged an appeal. The appellant won the case and was awarded a compensation more than double that of the original amount. The case exemplifies the grossly inadequate compensation to these sufferers. The low level of compensation is totally inequitable and unreasonable to patients with such occupational disease.

(2) The desperate needs of the patients:

According to statistics compiled by the Construction Industry Employees General Union, 143 of its members who contracted the disease have died since 1981. As for the surviving patients, life is rough on them in terms of health, finance, employment, social life and psychology. Some even have the feeling that they are on the brink of death and the earlier the Bill be passed, the sooner they may benefit from it.

Having said that, we hasten to add that the Government should address and review the deficiencies of this piece of legislation expeditiously, including the following areas:

(1) Same treatment to all pneumoconiotics:

The Amendment Bill does not cover the pneumoconiotics (approximately 600-odd persons) diagnosed before 1981. Given that they are mostly aged and seriously ill, the Government should not discriminate against these people who have made certain contributions to Hong Kong. We hold that pneumoconiotics diagnosed before or after 1981 should receive equal treatment.

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(2) Areas to be improved: to provide full-scale occupational rehabilitation services:

The cause of pneumoconiosis is very much to do with unhygienic working environment and insufficient precautionary measures. The employer should be largely held responsible on that score.

Since pneumoconiosis is an occupational disease, we are of the view that taxpayers need not bear the financial commitment by way of the compensation payment. Instead, we think that the Pneumoconiosis Compensation Fund Board established more than 10 years ago should play an active role in this respect.

Should we leave it to the Board to provide rehabilitation and social care services, demand on social resources would not be overloaded at the expense of services to other patients with chronic lung diseases. Furthermore, this will give us a true picture of the financial commitment made to the handling of problems arising from pneumoconiosis. In response, employers may have more incentive, and find it hard to resist the pressure, to implement precautionary measures against pneumoconiosis.

At the moment, Japan has set up compensation fund for rehabilitation purposes whereas in mainland China, there are sanatoriums for pneumoconiotics. We can learn from their experience.

From my personal contacts with some pneumoconiotics, I firmly believe that to promote rehabilitation and social care services for such sufferers will enhance their self caring capability. Unfortunately, the rehabilitation service catering for tuberculosis and chest patients by the medical profession are gravely inadequate. Therefore, I and the other three Members from Meeting Point strongly urge the Government to broaden its scope of financing to include the promotion of rehabilitation and social care services to the pneumoconiotics.

(3) To rationalize the computation of qualifying period for death compensation:

Apparently, the Bill has many improvements and the compensation amount seems to have increased substantially. But I compare it with the recently proposed amendments to the Employees' Compensation (Amendment) Bill and found that the maximum compensation amount made available to the affected persons in both Bills is the same, that is, $1.26 million. This shows that the new compensation package for pneumoconiosis does not have any substantial increase.

According to statistics of the Pneumoconiosis Compensation Fund Board's Annual Report 1990, pneumoconiotics are on average diagnosed at the age of 53. The compensation payable to the aged group under the Government's death compensation package is even worse that the old package. Therefore, the

HONG KONG LEGISLATIVE COUNCIL — 7 July 1993 4382 computation of death compensation under this Bill is not as good as the existing one.

Mr President, Meeting Point feels that although the Bill has made some headway, there are areas still not considered to be adequate and equitable enough. Members from Meeting Point will go on fighting for further amendments to this piece of legislation so that all silicosis patients may receive their reasonable compensation. Thank you.

MR MICHAEL HO (in Cantonese): Mr President, the United Democrats of Hong Kong support the Bill which we have strived for over the years but seen only a little progress. There are still a good deal of deficiencies in the Bill. Yet I do not intend to repeat those drawbacks here. We would like to specifically point out that the Bill offers extremely insufficient protection for pneumoconiotics diagnosed before 1981. In this connection, we feel a bit disappointed.

According to the Government's calculation, with the injection of $100 million and the existing fund of more than $30 million, these patients can receive an ex gratia allowance of $2,200 each month. Our position is that more should be done for these unfortunate people. However, we realize that what we can do for them is very limited. In fact, we can only provide them with some additional financial assistance so as to enable them to live a better life in their remaining years. For this reason, we fully support the increase of the monthly ex gratia allowances from $2,200 as presently proposed by the Government to $3,000.

We would like to point out that compensation, after all, is something made following the occurrence of mishaps. Compensation to the pneumoconiotics is only some financial assistance, which cannot change the fact that they are suffering from pneumoconiosis. Once a worker contracted pneumoconiosis, everything is too late because the function of their lungs will be permanently damaged. The so-called compensation means no more than some money. It cannot relieve their pain or cure their disease. For this reason, we hope that the Government could put more efforts in its promotion of industrial safety and promptly make more amendments to the existing laws governing industrial safety. We also hope that, through greater efforts on more effective industrial safety publicity campaigns, the great number of workers who know little about industrial safety can see the danger of work associated with silica dust. We would not like to see any more cases whereby workers contract disease through contact with silica dust at work. We call upon the Administration to expeditiously legislate on the ban of hand dug caisson. We also hope that the Government could, through its influence especially on some large organizations such as the Housing Authority, take the lead in abandoning the hand dug caisson operation in construction works.

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Mr President, the United Democrats of Hong Kong support the Bill. These are my remarks.

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, I am most grateful to Dr LEONG Che-hung and his colleagues on the Bills Committee for their valuable advice and for support of the Bill. As a result, we have agreed to move a number of Committee stage amendments.

Some members suggested that the amendment Bill should come into immediate effect once it is enacted by this Council. We agree to this proposal and corresponding amendment to the Bill will be made by deletion of subclause (2) in clause 1. We also delete "mechanical wheelchair" and replace it by "wheelchair" in clause 42(d) to give more flexibility to the Pneumoconiosis Medical Board in determining the type of wheelchair that suits the user.

We also note the concern of the construction industry that the new rate of levy, which we propose to be increased from 0.02% to 0.3% later this year, should not apply to those construction works the tender for which has been submitted before the effective date of the new rate. I shall move to amend section 36(3) of the Pneumoconiosis Compensation Ordinance to this effect.

Members of the Bills Committee have expressed particular concern on two issues relating to the right of a pneumoconiotic to claim damages at common law and his eligibility to receive financial assistance under the social security system.

I have consulted the Attorney General's Chambers and can assure members that, subject to the normal court procedures and the provisions of the Limitation Ordinance, nothing in the existing Pneumoconiosis (Compensation) Ordinance or the Amendment Bill would take away a pneumoconiotic's right to claim damages at common law.

I have also been advised by the Director of Social Welfare that pneumoconiotics who are either receiving compensation under the Ordinance or ex gratia payment under the Ex Gratia Scheme will continue to receive Disability Allowances under the Social Security Allowance Scheme if they are so entitled. Also, their eligibility to receive Comprehensive Social Security Assistance shall not be affected if, as under the existing condition, their savings do not exceed the permissible level.

Members have suggested that funeral expenses should be given to pneumoconiotics irrespective of the reason of death. I am afraid we cannot accept this proposal as it is against our principle of providing compensation to workers who die or injured as a result of an incident or an occupational disease relating to their employment. This principle is applied under the existing Pneumoconiosis Compensation Ordinance as well as the Employees' Compensation Ordinance. However, the Pneumoconiosis Compensation Medical

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Board has a track record of maintaining a sympathetic and flexible approach and there has been no complaint so far on funeral expenses in these cases.

Finally I have noted Bills Committee Members' strong wish to see improvements made to the Ex Gratia Scheme in respect of the pre-1981 pneumoconiotics. We have listened to the case with sympathy and it is under consideration by the Administration.

Thank you, Mr President.

Question on the Second Reading of the Bill put and agreed to.

Bill read the Second time.

Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).

MERCHANT SHIPPING (LIMITATION OF SHIPOWNERS LIABILITY) BILL Resumption of debate on Second Reading which was moved on 24 February 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).

INLAND REVENUE (AMENDMENT) (NO. 5) BILL 1992

Resumption of debate on Second Reading which was moved on 25 November 1992 Question on Second Reading proposed.

MR MOSES CHENG: Mr President, the Inland Revenue (Amendment) (No. 5) Bill 1992 is mainly concerned with departure prohibition directions, commonly known as "stop orders". At present, section 77 of the Inland Revenue Ordinance (Cap. 112) allows the Commissioner of Inland Revenue to issue a certificate to a District Judge in respect of a person who he believes is about or is likely to leave Hong Kong without paying all the tax assessed upon him. On receipt of the certificate, the District Judge must issue a stop order to the Commissioner of Police to take such measures as may be necessary to prevent the person from leaving Hong Kong without either paying the tax or furnishing

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security to the satisfaction of the Commissioner of Inland Revenue. There is no provision for the affected person to be heard by the Commissioner of Inland Revenue or the District Judge at any stage, nor is there any right of appeal.

With the enactment of the Bill of Rights Ordinance (BOR) in June 1991, the above provision was, in effect, neutralized by the District Court when it expressed doubt as to whether section 77 was consistent with Article 8 of the BOR on liberty of movement.

Clause 30 of the Inland Revenue (Amendment) (No. 5) Bill 1992 seeks to replace the existing section 77 with a new procedure, which is intended to maintain the effectiveness of stop orders, whilst at the same time providing adequate safeguards and remedies to ensure consistency with the BOR.

The Bill was introduced into this Council on 25 November 1992. A Bills Committee of 13 members was formed and commenced scrutiny of the Bill on 3 February 1993. Altogether, we held four meetings, including two with the Administration. We met representatives from the legal and accounting professions and considered submissions from four interested organizations. As chairman of the Committee, I would like to take this opportunity to thank my colleagues in the Committee for the time and effort they put in the discussion, the Administration for their co-operation and the interested organizations for submitting their views and taking part in our deliberations.

Mr President, I now come to the main points discussed by the Committee.

According to the new procedure as contained in clause 30 of the Bill, where the Commissioner of Inland Revenue believes on reasonable grounds that it is in the public interest to prohibit a taxpayer from leaving Hong Kong without either paying the tax assessed upon him or furnishing security, he may issue a stop order to the Director of Immigration and the Commissioner of Police directing them to prevent the person from leaving Hong Kong. The affected taxpayer may either apply to the Commissioner of Inland Revenue for a revocation of the stop order or appeal to the High Court to have it set aside. The Administration believes that this will ensure that basic rights are protected, whilst at the same time, the Commissioner of Inland Revenue will still have an effective means of encouraging compliance with the Inland Revenue Ordinance.

The Committee and some organizations are concerned that the District Judge will be wholly left out in the proposed procedure. This will become a purely executive function. A right of appeal to the High Court is not adequate as the action may be too costly and time consuming for the general public. We therefore consider that the issue of the stop order should be made a judicial function in order to protect the individual's right of freedom of movement and to guard against possible abuse.

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After detailed discussion, the Administration agrees to adopt a revised procedure as follows. Firstly, the decision to issue a stop order will be exercised by a District Judge. Secondly, application for the stop order will be made on an ex parte basis, by statement made on oath by the Commissioner of Inland Revenue or an authorized officer. Thirdly, the stop order will be issued where the District Judge is satisfied that the person has not paid all the tax assessed upon him; that there are reasonable grounds for believing that the person intends to leave or has left Hong Kong to reside elsewhere; and that it is in the public interest to ensure that the person does not leave Hong Kong without first paying the tax or furnishing security. Finally, appeal against the stop order will be made to the High Court.

The Administration considers that the revised approach will satisfy the BOR without seriously impairing an essential revenue protection mechanism. The Committee is satisfied that its concern has been properly addressed. The Secretary for the Treasury will move the necessary amendments at the Committee stage.

Other than clause 30, the Bill contains some minor amendments which are technical in nature. The Committee has found them to be in order.

With these remarks, I support the Bill.

SECRETARY FOR THE TREASURY: Mr President, the purpose of the Bill before Members is to ensure that "stop orders" issued under the Inland Revenue Ordinance conform fully with the Bill of Rights. The opportunity has also been taken to make minor amendments, largely to repeal redundant provisions.

Following the introduction of the Bill into this Council the Administration has received valuable advice and specific suggestions from the Bills Committee chaired by Mr Moses CHENG. As a result of our discussions with the Committee, we have agreed that the discretion to issue stop orders should lie with a District Judge rather than the Commissioner of Inland Revenue. To give effect to this agreement, the originally proposed section 77 has been substantially redrafted, and I shall be moving the necessary Committee stage amendments later this afternoon.

During our discussions, the Administration was also able to clarify how the new provisions would operate in practice. I would like to place on record my sincere appreciation for the hard work done by the Committee and its chairman.

Mr President, our main objective in drafting this Bill has been to balance the need to protect the rights of the individual, in accordance with both the letter and the spirit of the Bill of Rights, with the need to have in place a reliable and efficient system for preventing tax defaulters from absconding from Hong Kong. I am confident that the Bill, as refined with the assistance of

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the Bills Committee, achieves this objective. I accordingly commend this Bill to the Council, subject to the amendments which I shall move shortly.

Question on the Second Reading of the Bill put and agreed to.

Bill read the Second time.

Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).

BANK NOTES ISSUE (AMENDMENT) BILL 1993

Resumption of debate on Second Reading which was moved on 2 June 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).

EXCHANGE FUND (AMENDMENT) BILL 1993

Resumption of debate on Second Reading which was moved on 2 June 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).

INSURANCE COMPANIES (AMENDMENT) (NO. 3) BILL 1992 Resumption of debate on Second Reading which was moved on 15 July 1992 Question on Second Reading proposed.

MR MARVIN CHEUNG: Mr President, the Bill before us has two main purposes. It seeks to amend the Insurance Companies Ordinance to facilitate the reporting of suspected fraud by auditors, accountants and actuaries. It also

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seeks to designate the retirement schemes management business undertaken by insurers as a new class of long-term insurance business.

Members of the Legislative Council Subcommittee set up to study the Bill fully supported the proposal relating to the first objective.

As we know, auditors, accountants and actuaries are bound by their duty of confidentiality to their clients. The proposed legislation will enable these "prescribed persons" to report to the Insurance Authority irregularities relating to authorized insurers which came to their notice in the course of their work. This will strengthen the healthy supervision of the industry and enhance the protection of the interests of policy holders, and should therefore be welcomed. As a matter of fact, provisions are already in place under the Banking Ordinance and the Securities and Futures Commission Ordinance to permit such reporting to the relevant authorities by auditors.

For similar reasons, the Subcommittee supported the proposal to require the Insurance Authority to be notified of any change or prospective change of an auditor or actuary, as such changes may signify possible irregularities in the operation of an insurer's affairs.

The Administration originally intended to exclude overseas insurers from this notification requirement owing to enforcement difficulties. But in view of the concern expressed by the insurance industry about unlevel playing fields, the relevant provisions will now be amended such that the duty imposed upon the auditor and the actuary may be placed, in the case of an overseas insurer, upon the insurer.

A greater part of the Subcommittee's 16 meetings was, however, devoted to discussions on the second objective. Here, various matters of principle had required careful consideration. Some issues entailed research and/or consultation with the interested parties. Some also involved close cross-referencing with the Occupational Retirement Schemes Ordinance. In the course of study, the Subcommittee invited the Administration to undertake a comprehensive review on the correlations between the two pieces of legislation. As a result, a number of consequential amendments to the Occupational Retirement Schemes Ordinance were found necessary. These will be reflected in the amendments to be moved at Committee stage.

I shall report briefly the major areas considered by the Subcommittee in relation to this part of the Bill.

The first point which we took up with the Administration was why the Bill should seek to regulate investment management activities undertaken by insurers, while non insurance institutions were not subject to such regulation. In their representations to the Subcommittee, the insurance industry queried the rationale of the proposal.

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The Administration explained that the objective of designating the management of retirement scheme assets as a new class of long-term business was to ensure that such assets were kept separate from those of other insurance business. Investments management providing for a guaranteed capital or return could carry material risks. Failure of this function could affect the solvency of the insurance company as a whole, thereby jeopardizing the interests of the policy holders. The Administration did not agree with the industry's view that the proposed statutory requirements would put authorized insurers at a competitive disadvantage. On the contrary, there could be incentives for a prudent employer, who wishes to establish a retirement scheme, to enter into contract with an insurer regulated under the Insurance Companies Ordinance rather than an unregulated fund manager.

In the light of the above explanations from the Administration and having studied the practices in other jurisdictions, the Subcommittee accepted that there was a case for regulating classes G and H business under the Insurance Companies Ordinance.

We noted that the mode of operation of classes G and H was different from those schemes undertaken by other fund investment managers in that monies were passed from the policy holder to the insurer to become the assets of the insurer. In other situations, the monies were only held on trust by the investment managers for the scheme members. In any event, the practical effect of the proposed legislation on insurers should be minimal.

The Subcommittee was glad to note that the Hong Kong Federation of Insurers had subsequently come to accept the Administration's position. Nevertheless, the Subcommittee was persuaded that the larger question of regulating fund management business undertaken by other authorized institutions was worth looking into, and the Administration was asked to do so separately.

The next point we dealt with was the nature of business covered by the Bill. After discussions with the Subcommittee, the Administration has agreed to amend the definitions of the new classes of long-term business to make it clear that the only types of business covered are those where the ownership of the assets under management passes onto the insurer.

The Subcommittee noted that the nature of class I business, of which an endowment policy would appear to be an example, combined class G or H with a long-term insurance contract, and was thus in conflict with the provision of clause 15 (para. 3A) of the Bill. We questioned why the insurance element and the retirement element of such policies could not be split to ensure compliance and were advised that it was not the practice of the insurance industry to do so. Having regard to the insignificant and diminishing share of such business, the Subcommittee considered it supportable to allow class I contracts to continue subject to exception allowed by subsidiary legislation.

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As regards the impositions on the authorized insurer in respect of each new class of business, members of the Subcommittee shared the reservation of the insurance industry about the requirement for an insurer to maintain a solvency margin of not less than $2 million for classes G and H business. Particularly class H which offered no guaranteed return. In response, the Administration agreed to do away with the proposed solvency margin for classes G and H, on the understanding that the guarantees element specific to class G business would be addressed in a separate review to be conducted in due course.

Still on the subject of statutory requirements in respect of the various new classes of insurance business, the Subcommittee questioned the need for actuarial input in classes G and H business. We also questioned the appropriateness of the requirements for actuarial certification as stipulated under paragraph 5, Part I, Third Schedule of the Insurance Companies Ordinance. The justification put forward by the Administration was that the profitability or otherwise of classes G and H would have an impact on other areas of the insurer's business. The Hong Kong Federation of Insurers which we consulted also favoured actuarial involvements in these classes of business. Given the view on both sides, we accepted the case to appoint an actuary for classes G, H and I, subject to the role of the actuary being clearly spelt out in subsidiary legislation to be enacted at a later stage.

One last area I wish to cover is the deliberations by the Subcommittee on the interpretation of "assets" of a retirement scheme effected under an insurance arrangement.

According to the Administration, the original intention when drafting the Occupational Retirement Schemes Ordinance was that "assets" should mean the underlying assets of the insurer. The provisions for asset separation (section 21) and restriction of self investment (section 27) had been drafted to reflect this intention. Members, on the other hand, considered that "assets" of a scheme should be taken as the claim under the insurance policy. We were concerned that practical difficulties would be caused to the insurance industry and the accounting profession if the interpretation intended by the Administration were to be applied. Having taken further legal advice, the Administration finally accepted our recommendation.

The Subcommittee reckoned that this might affect certain provisions in the Occupational Retirement Schemes Ordinance. Section 21(1) of the Ordinance requires that scheme assets shall be kept separate from and shall not form part of the assets of the relevant employer of the scheme. As the assets of a scheme under an insurance arrangement is the claim under the insurance policy, the employer, being the policy holder as well as owner of the claim, would be in breach of this asset separation principle. To overcome this problem, a consequential amendment to the Occupational Retirement Schemes Ordinance will be moved at Committee stage to enable retirement schemes

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regulated by insurance arrangements (with the employer as the policy holder) to operate without having to interpose a trust intermediary.

The Subcommittee was very much concerned about the protection for scheme members and considered it important that this should be properly safeguarded. In this connection, we resolved to amend the Occupational Retirement Schemes Ordinance to specify that, in the event of the insolvency of the employer, the assets of the employer available for distribution should exclude those assets representing the retirement entitlements of scheme members under the insurance policy. The Secretary for Financial Services, I am sure, will deal with this in greater detail when he moves the relevant amendments.

The Subcommittee also agreed that the Registrar should be empowered to make rules to impose investment restrictions upon an insurer's funds under an insurance arrangement to parallel those in section 27 of the Occupational Retirement Schemes Ordinance. With the asset of a scheme under an insurance arrangement now taken to be the claim under the policy, section 27 will no longer apply. Rules may be required to be made by the Registrar to ensure that the principles of section 27 of the Occupational Retirement Schemes Ordinance are observed for funds held by insurance companies against such policies.

As can be seen from the above, the Subcommittee has tried to ensure that the provisions in the Bill are reasonable and workable, and at the same time, are compatible and consistent with those in the Occupational Retirement Schemes Ordinance. I hope our efforts have proved useful.

In closing, I would like to thank the Hong Kong Federation of Insurers, the Hong Kong Society of Accountants, the Law Society of Hong Kong and Carlingford Swire Assurance Limited for giving their valuable views to the Subcommittee. They have greatly facilitated our deliberations.

Mr President, with these remarks and subject to the amendments at Committee stage, I support the Bill.

SECRETARY FOR FINANCIAL SERVICES: Mr President, as Mr Marvin CHEUNG has said, the purpose of this Bill is two-fold: it seeks to regulate retirement schemes managed by insurance companies and to facilitate the reporting of fraud by auditors, accountants and actuaries.

I am particularly grateful to Mr Marvin CHEUNG and members of the Subcommittee for their careful consideration of the Bill as well as the members of the insurance industry and the accounting and actuarial professions for their expert advice. The amendments I shall propose and those to be moved by Mr CHEUNG later on have been agreed between the Administration and the Subcommittee after very detailed discussions which Mr CHEUNG has described and which should make for a much improved Bill.

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The proposal to designate retirement schemes management business as a new class of long-term business would supplement the Occupational Retirement Schemes Ordinance by requiring insurers to set aside adequate assets to meet the long-term liabilities arising from that business. As a result of our examination of the inter-relationship between the two Ordinances, we have identified a need for several consequential amendments to the Occupational Retirement Schemes Ordinance. These are to be included in the Bill.

The Subcommittee has recently expressed concern, as Mr CHEUNG has indicated, that the legitimate claims of employees under a scheme regulated by an insurance arrangement may not be met if the employer becomes insolvent, because a liquidator may seize upon a claim under the employer's staff retirement benefit insurance policy as an asset of the employer. In the brief time available, it has not been possible formally to consult the Standing Committee on Company Law Reform. However, with the advice and support of the Official Receiver, it is proposed to amend the Occupational Retirement Schemes Ordinance to ensure that, if an employer becomes insolvent, the assets available for distribution shall not include such a claim. Subsidiary rules, consistent with current legislative requirements providing for the orderly winding up of companies, will give effect to the detailed arrangements.

As mentioned by Mr CHEUNG in the resumption of Second Reading of the Occupational Retirement Schemes Ordinance last December, that Ordinance is a "reasonable and practicable first step" in the regulation of retirement schemes in Hong Kong. The Administration recognizes that, as the future Registrar gains practical experience in monitoring existing schemes and promoting new ones, further amendments may become necessary.

The proposal to facilitate the reporting of fraud by auditors, accountants and actuaries, collectively referred to in the Bill as "prescribed persons", will enable the Insurance Authority to become aware of any irregularities that may affect an authorized insurer's financial health. Regular communication between an insurer and the Insurance Authority helps ensure that the interest of policy holders are protected and the integrity of the insurance industry is preserved.

I shall deal in more detail with other points raised by Mr CHEUNG when I move the Committee stage amendments.

With these remarks, Mr President, I recommend the Insurance Companies (Amendment)(No. 3) Bill 1992 to this Council.

Question on the Second Reading of the Bill put and agreed to.

Bill read the Second time.

Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).

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