HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4451 OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 22 June 1994
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 MRS ANSON CHAN, C.B.E., J.P.
THE FINANCIAL SECRETARY
THE HONOURABLE SIR NATHANIEL WILLIAM HAMISH MACLEOD, K.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.
DR THE HONOURABLE DAVID LI KWOK-PO, O.B.E., LL.D., 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.
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THE HONOURABLE MARTIN GILBERT BARROW, O.B.E., J.P. THE HONOURABLE MRS PEGGY LAM, O.B.E., J.P. THE HONOURABLE MRS MIRIAM LAU KIN-YEE, O.B.E., J.P. THE HONOURABLE LAU WAH-SUM, O.B.E., J.P.
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, O.B.E., J.P. THE HONOURABLE MOSES CHENG MO-CHI
THE HONOURABLE MARVIN CHEUNG KIN-TUNG, O.B.E., 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.
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4453
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.
THE HONOURABLE ALFRED TSO SHIU-WAI
IN ATTENDANCE
MR MICHAEL SUEN MING-YEUNG, C.B.E., J.P.
SECRETARY FOR HOME AFFAIRS
MR ALISTAIR PETER ASPREY, C.B.E., A.E., J.P.
SECRETARY FOR SECURITY
MR ANTHONY GORDON EASON, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
MR HAIDER HATIM TYEBJEE BARMA, I.S.O., J.P.
SECRETARY FOR TRANSPORT
4454 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
MR DONALD TSANG YAM-KUEN, O.B.E., J.P.
SECRETARY FOR THE TREASURY
MR MICHAEL DAVID CARTLAND, J.P.
SECRETARY FOR FINANCIAL SERVICES
MR NICHOLAS NG WING-FUI, J.P.
SECRETARY FOR CONSTITUTIONAL AFFAIRS
MRS RACHEL MARY BEDFORD CARTLAND, J.P.
SECRETARY FOR RECREATION AND CULTURE
THE CLERK TO THE LEGISLATIVE COUNCIL
MR RICKY FUNG CHOI-CHEUNG
THE DEPUTY SECRETARY GENERAL
MR LAW KAM-SANG
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4455
Papers
The following papers were laid on the table pursuant to Standing Order 14(2): Subject
Subsidiary Legislation L.N. No.
Marine Fish Culture (Amendment) Regulation 1994 .................................... 361/94
Boundary and Election Commission (Registration
of Electors) (Geographical Constituencies)
(Amendment) Regulation 1994 ............................................................. 365/94
Building (Administration) (Amendment) (No. 2)
Regulation 1994 .................................................................................... 366/94
Sessional Papers 1993-94
No. 89 ― Report of Changes to the Approved Estimates of Expenditure Approved during the Final Quarter of 1993-94 Public Finance
Ordinance : Section 8
No. 90 ― Hong Kong Provisional Airport Authority Annual Report 1993-94
Address
Hong Kong Provisional Airport Authority Annual Report 1993-94
FINANCIAL SECRETARY: Mr President, in accordance with section 10 of the Provisional Airport Authority Ordinance, the Annual Report and audited accounts of the Provisional Airport Authority for the year ended 31 March 1994 are tabled today. The annual report also contains a detailed review of the Authority’s activities covering events up to early this month.
The report tells a story of solid progress and achievement in the development of our new airport against a challenging and, at times, difficult background. I would like to highlight some of these key developments.
On the construction front, work on the largest reclamation ever undertaken in Hong Kong, to form the 1 248-hectare airport platform, has been continuing round the clock, seven days a week. So far over 700 hectares have been formed ― which amounts to more than 60% completion. Detailed design on the terminal building, the largest building in Hong Kong, is virtually
4456 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
complete. Detailed design is also well advanced on all other aspects of the airfield, such as runway, taxiways, aprons and key airport utilities.
On the non-physical front, work has continued on commercial, operational and financial planning. In particular, the Authority has developed, with the prospective franchisees, business plan specifications and draft franchise terms for the key services of cargo handling, aircraft maintenance, catering and aviation fuel supply. Negotiations are planned to commence on the air cargo franchises in the near future, and others will follow.
Progress on all these fronts could not have been made without the vigorous efforts of the board and the management team, and I would like to take this opportunity to thank the management and staff of the Authority for their dedication to the project.
I am also pleased to say that the report makes it clear that tight control of costs continues to be exercised and that all costs and commitments so far incurred by the Authority have been contained within the Authority’s own budgets, and of course within the funding approved by the Finance Committee of this Council.
Looking ahead, following the achievements made during the past year, the Authority is now ready to intensify its activities in commercial, operational and financial planning. It is also ready to undertake the next major step in construction of this project, comprising the terminal building, the first runway and other essential airport infrastructure facilities. For that we are requesting a further $15 billion in advance funding and I very much hope that the Finance Committee will approve this on 1 July. This crucial next step must be taken without further delay if we are to maintain project momentum. We are meanwhile continuing our talks with the Chinese side and I am sure we all hope that good progress will be made at the next meeting of the Airport Committee to be held this Friday.
Finally, this report (and I hope I am really saying this for the last time) should be the last one issued by this provisional body. We aim to introduce the Airport Corporation Bill as soon as we can to this Council after our current consultations with the Chinese side have been completed.
Mr President, only three years remain in the context of the Government’s commitment under the Memorandum of Understanding to complete the airport to the maximum extent possible by 30 June 1997. The Authority’s task is thus a formidable one and it is essential that we give it the necessary tools to carry it out. These tools are: further funding; agreement with the Chinese side on financing arrangements; enactment of the Airport Corporation Bill; and progress on airport franchises.
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4457 Oral Answers to Questions
Use of Hong Kong as a base for subversion
1. MR CHEUNG MAN-KWONG asked (in Cantonese): Regarding the recent remarks made publicly by the Chief Secretary that the Hong Kong Government would not allow individual pro-democracy activists to try to use Hong Kong as a “base for subversion”, will the Government inform this Council:
(a) the definition of a “base for subversion”;
(b) the activities that would be regarded as “subversive”, and whether comments expressed freely by individuals are included; and
(c) the number of Chinese citizens, scholars or people in exile overseas for supporting the Chinese Democratic Movement in 1989 who have been refused entry into Hong Kong by the authorities concerned in the past five years, the reasons for the refusal, the number of people in this group who have been refused entry for political reasons or for trying to use Hong Kong as a “base for subversion”, and the names of those who have been refused entry and the relevant dates?
SECRETARY FOR SECURITY: Mr President, we are committed to maintaining Hong Kong as a free and open society, and to upholding the rights and freedoms of Hong Kong people.
In making her comments, the Chief Secretary was referring to our long-established policy, which we believe is understood and supported by the community at large, not to allow Hong Kong to be used as a base for political activity by visitors campaigning to undermine any of our neighbours.
There is no offence of subversion in Hong Kong law and therefore no legal definition of “subversive” activities. The word in its normally accepted sense refers to activities which threaten the safety or well-being of a state and which are intended to undermine or overthrow a state by political or violent means. This does not include the peaceful and lawful expression of views by Hong Kong people on any issue, including events in China.
We do not comment on individual cases. Each case is considered on its merits. Hong Kong has very liberal immigration and visa policies. This is a key ingredient of our economic success and we are committed to maintaining it. However, our overriding responsibility is to safeguard the interests, freedoms, rights and privileges of Hong Kong people, and this is our prime concern in considering and deciding individual cases.
4458 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
MR CHEUNG MAN-KWONG (in Cantonese): Mr President, the remark that no visitor would be allowed to use Hong Kong as a “base for subversion” was made by the Chief Secretary. If she does not mind, I hope she could clarify in public what legal principles did she refer to when accusing a person who has not yet arrived in Hong Kong of using Hong Kong as a “base for subversion”, since the offence of subversion does not exist in the law of Hong Kong, nor does the legal definition for “subversion”. Are such remarks, together with the refusal of leave to land directed towards individual pro-democracy activists as well as the unreasonable attitude towards the peaceful memorial activities for the June 4 Incident, some of the means the Government adopted to achieve its aim of ingratiating with China by repressing and sacrificing the freedom of speech, freedom of assembly and freedom of petition enjoyed in Hong Kong, so as to trade in for Chinese Government’s improved attitude towards the Hong Kong Government and China’s co-operation in other affairs in the coming three years?
SECRETARY FOR SECURITY: Mr President, I do not think that the Chief Secretary’s statement, nor the Hong Kong Government, has accused anybody of subversion and I think that in my main answer, I have explained what we mean by the policy we have.
MR SZETO WAH (in Cantonese): Mr President, could Mrs Anson CHAN, the Chief Secretary, inform this Council whether I, as Chairman of the Hong Kong Alliance in Support of Patriotic Democracy Movements of China (HKASPDMC), would be considered as a subversive; and as one who engages in political activities which try to undermine our neighbouring countries. In addition, would I be refused entry into Hong Kong if I travelled abroad?
SECRETARY FOR SECURITY: Mr President, I am tempted to say that we do not comment on individual cases. But perhaps I would rather refer to my main answer which makes it very clear that we do not include in the definition of subversion or subversive activities, the peaceful and lawful expression of views by Hong Kong people on any issue, including events in China.
MR LEE WING-TAT (in Cantonese): Mr President, the Secretary said in the third paragraph of his main reply, “This (subversive activity) does not include the peaceful and lawful expression of views by Hong Kong people on any issue, including events in China.” I wish to know if the Government has discussed with China the legal definition of the term. In other words, is the term “subversion” provided by China, with regard to its long standing allegation that the HKASPDMC is engaging in subversive activities, entirely identical with the legal definition of such term provided by the Government?
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4459 SECRETARY FOR SECURITY: Mr President, no.
MR LEE WING-TAT (in Cantonese): Mr President, could the Secretary explain the meaning of “No”?
SECRETARY FOR SECURITY: Mr President, we have not discussed the definition of “subversion” with China.
MR JAMES TO (in Cantonese): Mr President, the second paragraph of the Government’s main answer says “..... our long-established policy, ..... not to allow Hong Kong to be used as a base for political activity by visitors campaigning to undermine any of our neighbours.” Recently, some pro-democracy activists or scholars have been refused entry into Hong Kong. In this connection, I wish to ask whether some neighbouring countries have informed the Administration that these people would undermine their interests and urged it to render assistance by implementing such long-established policy so as to safeguard their interests; or is it the Government’s own wishful thinking that Sino-British relations would be improved by such “friendly gestures”?
SECRETARY FOR SECURITY: Mr President, we take these decisions ourselves. They are sometimes difficult decisions and we take them on an individual basis depending upon the merits of each case. I do not think I can say any more than that.
PRESIDENT: I am sorry, Mr TO. Not answered?
MR JAMES TO (in Cantonese): Mr President, as the words “undermine any of our neighbours” appeared in the main reply, I wish to know if it is the Secretary himself who define what “the interests of our neighbouring countries” are; or he has been informed by the countries concerned that some categories of people might undermine their interests?
SECRETARY FOR SECURITY: Mr President, neither. These decisions are taken by the Director of Immigration. He may seek advice ― he may seek advice from me; he may seek advice from the Political Adviser ― but these decisions are taken by the Hong Kong Government.
MR LAU CHIN-SHEK (in Cantonese): Mr President, will the Government inform this Council what objective criteria it will use to determine whether the activities of certain categories of people are indeed undermining our
4460 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
neighbours? I wish to stress the words “objective criteria”. Is there any channel for the aggrieved person who is not satisfied with the restrictions imposed on him by the Hong Kong Government to file an appeal?
SECRETARY FOR SECURITY: Mr President, I think I have explained in my answers what we are seeking to prevent and those are the criteria we use. These decisions are taken by the Director of Immigration and anybody has a right to appeal against the decision of the Director in these cases.
PRESIDENT: Not answered, Mr LAU?
MR LAU CHIN-SHEK (in Cantonese): Mr President, could the Secretary explain what the appeal channels are?
SECRETARY FOR SECURITY: Mr President, there is provision for appeal to the Governor against the decisions of the Director of Immigration.
MR FRED LI (in Cantonese): Mr President, will the Secretary inform this Council the number of people who had been refused entry into Hong Kong on the ground that they would engage in political activities undermining our neighbours with the exception of China?
SECRETARY FOR SECURITY: Mr President, as I have said, we do not comment on individual cases and we do not keep statistics in that way. We have statistics on the number of people who are refused entry into Hong Kong but we certainly do not keep them in those terms. The number of people who were refused entry by the Director of Immigration at entry points is very large. The number who we would refuse entry to, because of their possible political activities in Hong Kong, is probably very small.
MRS ELSIE TU: Mr President, I recall that an American lady was prevented from coming to Hong Kong because of something that she might have done in the Philippines. So, would the Secretary confirm that this is not a recent policy but that it has continued for decades?
SECRETARY FOR SECURITY: Mr President, yes, as I think I indicated in my main answer, this is a long standing policy. It is not a new policy.
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4461
MR JIMMY McGREGOR: Mr President, although there is no offence of subversion in Hong Kong, it is known that China has designated certain people in Hong Kong as counter-revolutionary and subversive. Since China will be the sovereign power in Hong Kong after June 1997, what is the attitude of the Hong Kong Government to the continued strong and vocal opposition by these Hong Kong citizens to the nature, style and characteristics of the Chinese Government?
PRESIDENT: I am sorry, I did not quite catch the last part of the question, Mr McGREGOR.
MR JIMMY McGREGOR: What is the attitude of the Hong Kong Government to the continued strong and vocal opposition by these Hong Kong citizens to the nature, style and characteristics of the Chinese Government?
PRESIDENT: Are you able to answer that, Secretary?
SECRETARY FOR SECURITY: Mr President, I would like to refer back to my main answer which indicates that we are very fully committed to upholding the rights and freedoms of Hong Kong people, including the freedom of expression. Clear evidence of that, of course, is our introduction of the Bill of Rights Ordinance into this Council. We do not include in any definition of subversion ― again as I said in my main answer ― the peaceful and lawful expression of views by Hong Kong people.
DR CONRAD LAM (in Cantonese): Mr President, I would like to use a real example to help the Secretary explain the term “interests of our neighbouring countries” more clearly. Some countries have claimed recently that sanctions might be imposed against North Korea; if so, North Korea’s interest will surely be undermined. Would the Secretary say that anyone calling for sanctions against North Korea would be regarded as “persona non grata”?
SECRETARY FOR SECURITY: Mr President, the question is of course hypothetical but I would say, no.
Consumer price index
2. MR ROGER LUK asked: Will the Administration inform the Council what responses have been made to the unfavourable criticisms of the ability of the consumer price index to reflect the current inflation trends?
4462 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
SECRETARY FOR FINANCIAL SERVICES: Mr President, in responding to criticisms made by various commentators, the Administration has reiterated its conviction that the consumer price index (CPI) is a valid means of reflecting the current inflation trends.
I will highlight the major issues to which criticisms are often directed and the common misconceptions about them.
First, it is not uncommon for people to have the impression that the increase in the CPI does not adequately reflect specific price increases which they happen to have encountered. This misconception is not surprising since people tend to remember items which have had drastic, frequent price increases but to overlook or forget those where the increases have been negligible. Not only do they tend to ignore the offsetting effect of the lower increases, but they also overlook the fact that many of the lower increases occur in items which actually represent quite a significant share of household expenditure.
Criticism that the CPI is not based on adequate price data is unfounded as a continuous pricing survey is undertaken by the Census and Statistics Department. A total of some 40 000 price quotations are collected each month from 3 500 different outlets and service providers.
Second, some people fail to distinguish a genuine price increase from an increase in expenditure due to an increase in the quantity they consume or improvement in the quality of their consumption. The household expenditure bill may rise because the household has bought more appliances or there has been more travelling by the household members. These changes should not be attributed to price changes and hence “inflation”. The CPI is intended to measure the effects of price changes on the total expenditure as defined by a given basket of goods and services.
Third, some people may find that the expenditure pattern used in compiling the CPI does not tally precisely with their own expenditure patterns. This, however, should not be unexpected because the expenditure pattern adopted by the CPI represents the collective expenditure patterns of households. While individual experiences may vary, the CPI reflects collectively the inflation situation faced by all households.
Fourth, most recently there has been a criticism that the expenditure ranges to which the three series of CPI relate do not reflect the actual expenditure of households. This comment is misplaced simply because the commentator has confused expenditure levels at 1989-90 prices with current expenditure levels.
Fifth, as the expenditure patterns of households change over time, some people suspect that the inflation situation reflected by the CPI will soon be outdated. This is not true because expenditure patterns of households only
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4463
change gradually and the impact on the CPI is usually minimal. Past research on actual figures well illustrates this.
Nevertheless, updating is part of the system. It is an established practice that the Government will carry out a Household Expenditure Survey once every five years to ensure that changes in expenditure patterns over time are taken into account in the compilation of the CPI. The next survey will start in October this year. In this, as in all other respects, the CPI is compiled by scientific methodology that fully accords with international standards and practices.
MR ROGER LUK: With the increasing trend of home ownership over the years and the soaring property prices, will the Secretary explain whether the housing component of the CPI reflects the actual experience of the owner-occupier houscholds?
SECRETARY FOR FINANCIAL SERVICES: Mr President, there are in fact three separate indices which cover different groups of households within the community groups and the relative level of private and public housing is different in each one. The CPI(A) which is the most commonly used affects 50% of households in Hong Kong and has the largest public housing component in it. The CPI(B) which covers the next 30% in terms of expenditure above that group has a much smaller public housing element. And the Hang Seng CPI which covers the next 10% above that has in fact no public housing element in it at all. It is possible, therefore, to get a comparison of the effect by looking at the three indices and looking at the three breakouts for housing which normally give a breakup between private and public.
I should point out that even on the CPI(A) which is the one we most commonly use and the one with the largest proportion of public dwellings, even there the weighting for public housing in the overall weightings is only 4.47% as opposed to 14.76% for private dwellings, out of a total housing component of 20.56%.
DR HUANG CHEN-YA (in Cantonese): Mr President, as we all know, in addition to the Government-published CPI (A) and CPI (B), the Hang Seng CPI and the GDP deflator are also means of reflecting inflation trends. The compilation methodologies of and the facts reflected by these indices are different and the difference in figures measures up to 20%. The Government has been combating inflation for years but success is yet to come. In view of that, will the Government tell us whether it has chosen the inaccurate indices and therefore become less aware of the inflation trends; and whether it is using the inaccurate indices knowingly to project a more appealing picture in order to save face?
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SECRETARY FOR FINANCIAL SERVICES: Mr President, this question is not about the Government’s tackling of inflation. The question is about whether the CPI adequately reflects inflation. Indeed, there has been some criticism against a comparison between the GDP figures which have been quoted by Dr HUANG and the Private Consumption Expenditure which is derived from the GDP. There has been a comparison of that with the total household expenditure from the CPI. This is criticized as an invalid comparison because when the comparison was made, it not only took a different period for the figures ― the total household expenditure figures are based on the 1989-90 Household Expenditure Survey whereas the private consumption expenditure figures were taken from current figures ― but there is a different coverage for these two elements because the household expenditure is only seeking to reflect what is common household expenditure and not other forms of public expenditure which are reflected in the GDP.
MR CHIM PUI-CHUNG (in Cantonese): Mr President, the public is always sceptical about the CPIs, especially that variation in the price of vegetables affects the indices considerably. Will the Government prepare a detailed list of the percentage taken up by every kind of item in the CPI when it conducts the review in October this year, so as to enable the public to compile a CPI in the light of the current market prices?
SECRETARY FOR FINANCIAL SERVICES: First of all the pricing, as I have mentioned in my main answer, is looked at on a monthly basis in a very comprehensive survey, covering, as I mentioned, 40 000 price quotations. So the pricing is up-to-date. The weighting, which is looked at every five years, only changes gradually. It is available in published form from various outlets and it does not change because the patterns in fact, as I mentioned in my main answer, are only subject to very gradual change over time. This is not only the Hong Kong experience but also the international experience. We update the weightings every five years. It is also the practice in Australia and in Singapore. In the United States where they have an annual household survey, they still only re-base the CPI once every 10 years. The United Kingdom also follows our practice of re-basing every five years. So we are following international practice there and the reason is the same, which is that the patterns change only gradually.
To illustrate the gradual effect, a comparison was done in 1992 on the basis of 1992 figures using the Household Expenditure Survey of 1989-90 and the earlier one of 1984-85, and comparing what the effect would be if each of those was applied to the 1992 price data. The difference was actually minimal; in no one month for 1992 was the difference greater than 0.5%. So I think that very clearly illustrates that the change is gradual and the effect on the price figures is minimal.
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4465
MR FRED LI (in Cantonese): Mr President, will the Government inform this Council why the Government chooses to use CPI (A) as our inflation indicator, instead of using the average of the Composite Index (covering both CPI (A) and CPI (B)) and Hang Seng CPI figures to reflect the real picture of Hong Kong’s inflation situation?
SECRETARY FOR FINANCIAL SERVICES: Mr President, the CPI(A) has the highest coverage of the three indices which I have mentioned, that is to say the “A”, the “B” and the Hang Seng; it covers 50% of the households in Hong Kong. It also covers the 50% in the lower income bracket; and it is generally assumed that the lower income ― or rather the lower expenditure bracket in this case ― are in fact the ones who are likely to be most impacted by inflation because they have the least affordability cushion against it. However, it is true that the Composite Index, which is also published monthly and is derived from all three of these indices, gives a broader picture covering 90% of the households in Hong Kong and consideration is being given to using it for general economic analysis purposes instead of the CPI(A).
MR PETER WONG: Mr President, since we are trying to attract international companies to stay in or come to Hong Kong, will the Government compile an index other than the CPI (A) or (B) or Hang Seng indices, which is relevant to this sector of the market? And if not, is the Government too frightened of what the result may be?
SECRETARY FOR FINANCIAL SERVICES: No, Mr President, the Government is not frightened of that. The fact of the matter is that the coverage of the indices we have at the moment does cover 90% of the households. The bulk of the 10% who are not covered are not missed out because they are at the top. They are out because they are at the bottom and covered by a separate index which is not often mentioned ― the Public Assistance CPI which is compiled on the basis of the CPI(A) less some of the elements which are provided at cost under the Public Assistance System.
Certainly, it is observable that analysts and others from the upper expenditure brackets do express a preference for the Hang Seng CPI, simply, I suppose, because it reflects more closely their own situation. Certainly, the Government does not have any objection to constructing a higher index. We simply do not have a plan to do so at the moment, but our mind is not closed against it.
PRESIDENT: Not answered, Mr WONG?
4466 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
MR PETER WONG: He has not answered it, Mr President, because I am really asking about the cost to the investor which will include rents, travelling, and so on, for their employees.
SECRETARY FOR FINANCIAL SERVICES: Well, Mr President, the indices that exist at the moment measure the actual situation for the groups that they cover. So if another index were to be constructed to cover another group that is not already covered, then it would have to reflect the expenditure patterns of those groups. But this is a hypothetical question because we have no plans to do that at this time.
Kau Sai Chau Public Golf Course
3. REV FUNG CHI-WOOD asked (in Cantonese): Regarding the construction of the Kau Sai Chau Public Golf Course, will the Government inform this Council of the following:
(a) what are the approval procedures for its construction;
(b) whether the public have been consulted prior to such approval;
(c) whether the planning, construction and management and so on of the course have been entrusted to an organization with public representation, such as the Regional Council, if not, what the reasons are;
(d) whether the Environmental Impact Assessment carried out on the project, which lasted for four months, will provide an adequate understanding of any environmental problems that may arise from its construction;
(e) in regard to the seven environmental problems which are known to remain unsettled, whether the Administration will take measures to resolve them before granting official approval to the related construction works;
(f) whether any construction work has been carried out at the site; and if so, what is the progress of such construction work; and
(g) how can it be ensured that the charges of the course will be set at a level acceptable to the general public?
SECRETARY FOR RECREATION AND CULTURE: Mr President, I shall respond to the seven issues raised in Rev FUNG’s question in the order in which he has raised them.
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4467
The development of this Public Golf Centre is within the responsibility of my branch, the Recreation and Culture Branch, but the Royal Hong Kong Jockey Club will meet all the costs. Therefore, the project did not need to be processed through the Public Works Programme. The project was submitted to Executive Council for approval in principle. On 5 October 1993, the Council advised and the Governor ordered, that:
(a) part of Kau Sai Chau island should be made available for a public golf centre;
(b) the Recreation and Culture Branch should hold discussions with the Royal Hong Kong Jockey Club (the Jockey Club) with a view to entering into an agreement to enable the Jockey Club:
(i) to fully finance and be responsible for the planning, design, construction and project management of the public golf centre at Kau Sai Chau including the conduct of environmental, traffic impact and other studies and the provision of any infrastructure and ancillary facilities arising from the golf centre development; and
(ii) initially, to manage the golf centre on behalf of the Government, but at the Jockey Club’s expense, until it is running smoothly when it may be handed over to an alternative management body.
The public have been consulted at different appropriate stages of the project. The Golf Association of Hong Kong, which is the governing body for the sport in Hong Kong, was consulted at the conceptual stage. The association strongly supports the proposed project and considers the proposal a constructive means of promoting golf in Hong Kong, especially to the young. The development of this project will allow members of the public to enjoy this pastime which in Hong Kong has mostly up to now been restricted to members of exclusive private clubs and their guests. Experience worldwide has been that when people can get access to the facilities for golf the game becomes widely popular. Other bodies likely to be particularly interested in the development have also been consulted over the past few months. These have included the Sai Kung District Board, the Advisory Council on the Environment (ACE) and through their representation on the ACE those commonly known as the “green” groups, that is, with a particular interest in the environment. The district board is generally supportive of the proposed development, and the ACE endorsed the (EIA) Environment Impact Assessment at its meeting on 16 May 1994. People in the district are mainly interested in the provision of additional parking spaces and satisfactory compensation arrangements for any losses caused by the project.
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The third question raised is about the organization to which the planning, construction and management of the golf centre have been entrusted. As I have mentioned earlier, the Royal Hong Kong Jockey Club will fully finance the proposed project. The concomitant agreement is that the Club will be responsible for the planning, construction and initial management of the golf centre as well. The Royal Hong Kong Jockey Club has formed a project board to oversee the progress of the project. The board is chaired by a steward, and the Secretary for Recreation and Culture is a member. The agreement is that the Royal Hong Kong Jockey Club will manage the completed centre using revenue generated by the centre, on behalf of, but at no expense to, the Government. When the centre is running successfully and at a surplus, its management may then be transferred to a separate, statutory, non-profitmaking body specifically constituted for the purpose. We have adopted a similar arrangement for the Ocean Park with success.
The EIA undertaken for the project started in July 1993 and was completed in March 1994. We are confident that the study, which totalled nine months rather than the four mentioned in the question, does provide an adequate understanding of any environmental problems that may arise from its construction. I am glad to be able to remind Members that our confidence was underpinned by the endorsement of the EIA by the ACE on 16 May 1994.
The fifth item in the question mentions seven environmental problems which are yet unsettled. I take this to refer to the six, not seven, conditions laid down by the ACE when it endorsed the EIA report. Broadly we accept all these conditions and we believe that we can meet each of them at the appropriate time. If Members would bear with me (and I promise to be brief), I would like to elaborate on them one by one. The six conditions laid down by the ACE were:
(a) To implement all the measures recommended in the EIA study;
(b) To carry out a quick ecological survey that would include a bird survey and a fresh water habitat survey;
(c) To report back to the ACE’s EIA Subcommittee in due course on the ecological survey, the implementation of the turf management plan, the progress of the mangrove transplantation and the restoration of habitat;
(d) While the golf course is being constructed, to consider repairing the bomb damaged landscape outside the golf course;
(e) To consider the use of zero-emission vehicles on the island; and
(f) That any further developments on the island outside the boundaries of the public golf centre be subject to separate EIAs.
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Turning now to the first of the six conditions, implementation of measures recommended in the EIA study, the position is that the measures recommended in the EIA will be fully incorporated into the design, and an Environment Monitoring and Audit Manual to be used by the contractors and the future management body of the golf centre.
As regards the ecological survey that was requested, the position is that the field work has been completed and a report will be submitted to the ACE’s EIA Subcommittee within the next couple of months.
Monthly progress reports on the implementation of the turf management plan, the transplantation of the mangroves and the restoration of habitat will be drawn up and submitted to the subcommittee. The ACE’s requests for consideration of repairs to the landscape and use of zero- emission vehicles will be given early attention. I intend to use my position on the project board to get these matters raised immediately and discussed thoroughly.
The final condition imposed by the ACE is that any further developments on the island outside the boundaries of the public golf course should be subject to further EIAs. We are happy to accept this condition although I should make it clear that we currently have no plans for other developments and would only ever consider other development that was fully compatible with the golf centre.
Rev FUNG has asked whether any construction work has been carried out on site and, if so, what progress has been made. The present situation is that detailed site investigation and survey work is now underway. We expect actual construction to begin next month all being well and to be completed in December 1995.
The Memorandum of Understanding which will be signed with the Royal Hong Kong Jockey Club includes a provision to the effect that to encourage maximum usage by the general public of the centre and to facilitate the development of golf in Hong Kong, the green fees and other fees at the centre should be set at an economically viable level and as low as reasonably possible in comparison with operating costs and fees prevailing in other golf clubs in Hong Kong, and that any increase in fees will have to be made in consultation with the Government. I will use my position on the project board to begin discussions now about the detail of the level at which fees should be set.
REV FUNG CHI-WOOD (in Cantonese): Mr President, the golf course project was approved by the Executive Council in October 1993, an Environmental Impact Assessment (EIA) was then carried out on the project. This EIA was completed in April and accepted by the Advisory Council on the Environment in May this year. However, while the golf course project has long been launched, two environmental surveys, namely the bird survey and the fresh water habitat survey, are yet to be conducted. Does this actually reflect the importance of the EIA to the Government? Would it not be more proper to
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have the EIA fully completed and then examined and endorsed by the government departments concerned before any approval be granted to the golf course project? Besides, when will the Government sign with the Royal Hong Kong Jockey Club a contract covering such matters as project operation and construction works?
SECRETARY FOR RECREATION AND CULTURE: Mr President, as I made clear in my answer, what is crucial is that the ACE was very satisfied with the EIA and with the timing on it. The ecological survey that they asked for on the bird population and fresh water habitat was required only to be a brief survey to allow for the fact that previous work had been carried out in the dry season. They wished to have comparative figures and assessment based on what was taking place during the rainy season. That field work has now been done and is ready to be presented to the Advisory Council on the Environment who I have no doubt will be satisfied with this progress since it is what they requested.
The work that is actually being done on site now is survey work only. It is up to the Jockey Club to decide when construction may actually begin.
PRESIDENT: The date of the contract or the Memorandum of Understanding?
SECRETARY FOR RECREATION AND CULTURE: Sorry, Mr President, we expect to sign the Memorandum of Understanding shortly with the Jockey Club, as soon as both parties are happy with the details of the wording.
MR MARVIN CHEUNG: Mr President, may I ask the Secretary to clarify whether it is the intention of the Government that the golf course will be run on a self-financing basis with no subsidies from public funds, so that green fees and other fees will have to be set at a level sufficient to pay for operating costs?
SECRETARY FOR RECREATION AND CULTURE: Mr President, it is indeed the intention that there will be no subsidies at all from the Government to the operation of the golf centre in any way and therefore that the green fees and so on will be set on a basis that will allow the centre to be self-financing, but also at a level that will be affordable to the general public.
MR PETER WONG: Mr President, my understanding was that discussion with ACE was very strictly limited to the EIA and certainly not exhaustive, and to call it “endorsing” is really stretching the meaning of the word “endorse”. Will the Secretary inform this Council what is the natural outcome of this apparent policy to promote golf as a popular pastime in Hong Kong? How can we possibly have enough public courses for the 50 000 happy golfers whom the
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Secretary of Recreation and Culture said we will have, or will they, all full of expectation, be totally frustrated or perpetually disappointed without a course to play on?
SECRETARY FOR RECREATION AND CULTURE: Mr President, I have here the relevant minutes of the ACE which say very clearly that:
The Chairman concluded that the Advisory Council on the Environment endorsed the EIA report.
As to the question of unfulfilled demand for golf, we take the view that it is better to satisfy some of the demands than none at all ― in the words of the proverb: Half a loaf is surely better than none.
REV FUNG CHI-WOOD (in Cantonese): Mr President, the Secretary has not answered part (c) of the question, in which I asked if any organization with public representation (such as the Regional Council) had been entrusted with or at least consulted about the planning, construction and management works of the golf course? It is because the Regional Council is now constructing in Tuen Mun a Jockey Club funded golf course, which, in fact, is a driving range instead of a standard golf course?
SECRETARY FOR RECREATION AND CULTURE: Mr President, the Regional Council has indeed been involved at various stages in briefings and discussions on the project at Kau Sai Chau, and as the Rev FUNG rightly points out, they are also operating an excellent centre at Tuen Mun which is also funded by the Royal Hong Kong Jockey Club. It has eventually proved to focus more on facilities for horse-riding ― another activity which is under-provided for the public in Hong Kong ― but also includes a very comprehensive and special driving-range for use by the public and which will eventually form an ancillary or back-up facility to Kau Sai Chau.
Supply of residential and non-residential accommodation
4. MR RONALD ARCULLI asked: Regarding the Administration’s intention to increase supply of residential and non-residential accommodation, will the Administration inform this Council of:
(a) the total land area currently occupied or designated as and for the use of the Administration; the total gross floor areas of the buildings or structures erected thereon or the land area if not built upon; and the type of usage, for example, residential, office/commercial or otherwise; and
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(b) how the private sector can assist in the development/redevelopment of such land to ensure additional supply of residential and/or non-residential accommodation to both the private and public sectors?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President,
(a) I regret that there are no readily available statistics on the total land area of government sites, that is, land occupied or earmarked for government offices or quarters, but excluding community facilities.
Government-owned properties on government sites provide a total net floor area of about 4 million sq m. This consists of some 0.72 million sq m of office space, 1.22 million sq m for residential use and 2 million sq m of special accommodation, including schools, hospitals, police and fire stations and so on.
(b) A Committee on Redevelopment of Under-developed Government Sites, shortly known as CRUG, was set up in August 1991 to determine the appropriate land uses and redevelopment potential of under-utilized government sites. The major obstacles to the redevelopment of these sites are the need to reprovision existing facilities and public objections to the rezoning proposals which may be necessary.
Since 1990, 12 government sites have been sold for private sector development. To facilitate redevelopment of other government sites, we are considering the possibility of involving the private sector in reprovisioning the government facilities on some of them. But each case has to be considered on its merits and suitable funding arrangements worked out.
MR RONALD ARCULLI: Mr President, I am disappointed that the Government cannot supply us with land area statistics regarding use by the Government for residential and office premises. But be that as it may, could the Secretary inform this Council the extent to which there is under-utilization in square metre terms, as regards the 720 000 sq m of office accommodation and the 1.22 million sq m of residential accommodation, bearing in mind that reprovisioning for either or both of these could be provided by the Government on its own development or indeed by the private sector in some sort of a joint venture?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I think the Honourable Member is asking for a statistical impossibility because obviously in each case, each site would need to be examined in the local
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planning context and its potential could range very widely according to local conditions and what the use of the site, alternative to the government use, might be. I would be willing to venture to attempt an answer at that question in writing, but I think it could be an answer which would be perhaps not much more helpful than the question. (Annex I)
MR ALBERT CHAN (in Cantonese): Mr President, in the last paragraph of his main reply, the Secretary stated that the Administration was considering the possibility of involving the private sector in reprovisioning the government facilities on some of the government sites. What factors or criteria would the Administration take into account when considering the possibility of involving the private sector? How is it going to ensure that, when the private sector is involved in such projects, the land prices would be reasonable and the sites would not be offered on favourable terms through illicit transfer arrangements between the Administration and the establishments concerned?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, in response to that question, I should say that our experience with what might be described as joint venture projects in the 1980s was not particularly satisfactory. Not because of any of the implied difficulties in that question, but because with the passage of time during negotiations, situations in the market change and so consequently there is a tendency for negotiations to be extended and therefore progress to be slowed down. This is why we prefer the rather more simple approach of normally arranging the reprovisioning of any current uses which need to be retained, vacating the site and drawing up conditions for its alternative uses and putting those out for sale in the normal way, as we have already done; and I referred to this, for 12 sites in recent years. If however we were to find a case in which an arrangement for reprovisioning and the redevelopment of the site for private use could be put together in a reasonably short time, this would be done on the basis of competition and given the special requirements for reprovisioning I suspect that it would be done by competitive tender.
MR MAN SAI-CHEONG (in Cantonese): Mr President, will the Administration inform this Council whether it would, while in increasing the supply of land in the urban areas, agree to the request made by some property developers and include the green belt in the auctions so as to increase land supply? Would the lungs of our city and the sitting-out areas for the public be thus sacrificed?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I am not aware without reference of any proposal that we should sacrifice green belt for sale sites. I personally would be very much against such a move.
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DR SAMUEL WONG: Mr President, could this Council be informed whether there are some pockets of land or blocks of old buildings within the setting known as the Financial Secretary Incorporated, and if so, would the Government entrust non-profit making bodies such as the Housing Society with the work of developing these resources to meet the urgent need?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I doubt whether I could slip that one to my incorporated colleague but I will try and answer it. I think that over the years because of previous pressures of the same sort that we are under today, we have looked very carefully at the Financial Secretary Incorporated’s properties to see whether there is scope for their redevelopment. I believe that I could establish this by reference to records and in writing, but I believe that we have covered most of those opportunities already and that where they remain, they remain in the form of isolated individual flats or groups of flats in developments owned by other people.
MR EDWARD HO: Mr President, I would first like to express my utter amazement that the Government does not have statistics on the total land area of government sites. It is like the Government not knowing how much reserves it has in its coffers. If the Government has not such statistics how can the CRUGS carry out its work? What does it do? What is the crux of CRUGS?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I do not think it would be proper for me to trade amazement this afternoon, but of course the simple answer is that CRUGS looks at sites as individual sites. It considers their under-utilization in the context of the local situation, which I mentioned earlier on, and the quantification of under-utilization or opportunities for redevelopment is very much a case for case issue and therefore this is why CRUGS examines each site carefully on its merits and does not, I think, generally seek to indulge in unnecessary quantification of massive figures of total under-utilization.
MR HENRY TANG: Mr President, the Secretary has stated that there are 1.22 million sq m of government-owned residential property. Since the Task Force on Land Supply and Property Prices has considered the redevelopment of under-utilized government land as a potential source of residential land supply, and the Government is looking for ways to provide the private sector with more opportunities to supplement supply, does the Government believe that private sector assistance would be the quickest route to increase the supply of residential and non-residential accommodation?
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SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I think I have tried to cover that in previous answers. Where a site is occupied by an existing government use, and in some cases it may be occupied by quarters but on an under-utilized basis, then we would in some cases seek to relocate the quarters so that the fuller residential potential could be realized. Our preference is for the simple approach where we reprovision the existing uses, obtain a cleared site and then put it in the hands of the private sector for full redevelopment. But it may be that in certain cases the reprovisioning work and the development of the then available site can be carried out by the same developer. As I pointed out, this is more complicated and sometimes much more time consuming than the straightforward approach. So we need to consider very carefully the options in each case.
MRS SELINA CHOW: Given the task force’s identification of the urgent need for the construction of additional units, and bearing in mind that a lot of the government sites do occupy very prime locations all over Hong Kong, would the Secretary please inform this Council whether the task force intends to take upon itself the task for removing those major obstacles mentioned in paragraph (b) of the reply and set a timetable for itself to achieve certain objectives in terms of increasing units by facilitating the co-operation between the Government and the private sector in developing these prime sites?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, I can confirm that the task force is looking at some of the so-called under-utilized sites which have, on a preliminary assessment, the potential for relatively quick removal of current uses and redevelopment for more intensive residential use. The task force is doing this and it is trying to do it with as much expedition as possible.
MR RONALD ARCULLI: I hope this question is not going to be as useless as the first one I asked. But be that as it may, I look forward to the reply from the Secretary and perhaps I will be the judge as to whether it is useful or not. On that basis, Mr President, I wonder whether the Administration is prepared to make available a copy of the report or the study of CRUG to this Council, so that we can then judge for ourselves the extent to which the Committee actually went into the details of everything?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, it is just possible that Members have it already, but I will check and, if not, I will try to make a copy available.
4476 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 Restrictions on the procession to commemorate ‘June 4’
5. MR SZETO WAH asked (in Cantonese): During the procession organized by the All Hong Kong Alliance in Support of the Patriotic Pro-democracy Movement in China to commemorate the fifth anniversary of the June 4 Incident on 29 May this year, the police allowed only one representative of the procession to proceed to the entrance of the New China News Agency (NCNA) to hand in a letter and did not permit the laying of wreaths and banners in front of the entrance. Will the Government inform this Council of the legal basis, and the reasons, for the police imposing such restrictions on the activities of the participants of the procession?
SECRETARY FOR SECURITY: Mr President, police action taken during the procession organized by the Alliance on 29 May was in accordance with section 10 of the Police Force Ordinance. This imposes a duty on the police to maintain public order.
The decision on the positioning of the banner and the wreath, as well as the limitation on the number of participants who could approach the entrance of the NCNA building, was made having regard to the prevailing circumstances, including the mood and size of the crowd. As with other incidents involving crowd control, the senior police officer on the ground takes appropriate action to strike the right balance between the freedom of the individual to express his views and the need to maintain peace and order.
MR SZETO WAH (in Cantonese): Mr President, in view of the fact that the police found it necessary to take unprecedented action during the procession, will the Administration inform this Council of the differences between the mood and size of the crowd on that day and those on previous occasions?
SECRETARY FOR SECURITY: Mr President, I do not think the action was in any way unprecedented. As regards the presentation of the petition, the limitation whereby one person only was allowed to proceed to present the petition was exactly the same as on previous occasions. As regards the other crowd control measures, there was an innovation which the police made on this occasion which was to erect an inner cordon of mill barriers immediately outside the entrance of the NCNA. The purpose of this was to allow pedestrians to be able to walk along the pavement instead of being forced on to the street.
MR LEE WING-TAT (in Cantonese): Mr President, the Secretary said in his reply that the measures adopted this time was the same as on previous occasions, I do not think this is correct. I have participated in many demonstrations and petition presentations, perhaps well over a score of times, before I participated in the one mentioned today. Each time the police officers on duty would allow
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several representatives of the All Hong Kong Alliance in support of the Patriotic Pro democracy Movement in China to proceed to the entrance to hand in a letter and to lay wreaths. The Secretary claimed that the arrangements on this occasion was exactly the same as on previous ones, is this a conclusion drawn by the Secretary himself or is it something relayed to him by the senior police officers concerned? Has the Secretary verified all the facts?
SECRETARY FOR SECURITY: Mr President, I do not think I said that it was exactly the same but what I did say and what I was advised by the police, who presumably know about this since they are the ones who impose the crowd control measures, is that it has been their normal practice on previous occasions when large crowds have gathered outside the NCNA to allow only one person from a group to go and present the petition.
As regards other measures, I have explained that the way the police organize the mill barriers for crowd control purposes was different on this occasion and there was a very good reason for that, it was to allow the free movement of pedestrian traffic.
PRESIDENT: Not answered, Mr LEE?
MR LEE WING-TAT (in Cantonese): Mr President, if the Secretary thinks that the arrangement of allowing only one person to present the petition is the same as those adopted in the past, will he verify what he said and go through all the video-tapes that had been filmed over the years? In the past, each time some 20 persons were allowed to present the petition together, but this time only one person was allowed. Will the Secretary go through all the video-tapes filmed over the past six years to see how the past arrangement for petition presentation differs from this year’s and then answer this Council in writing?
SECRETARY FOR SECURITY: Mr President, I will certainly check again this point and give a written reply. (Annex II)
REV FUNG CHI-WOOD (in Cantonese): Mr President, I was also present on that day. On that occasion, the police erected a cordon of mills barriers 3 feet outside the entrance of the NCNA, behind the barriers were ten odd policemen standing in combat readiness to keep the people off. Why should the police be so cautious? Is it because they feared that someone would dash into the NCNA or damage the main entrance, or are there some other reasons?
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SECRETARY FOR SECURITY: Mr President, I am told that the wreath and the banner were very large and it was the police assessment, given the circumstances at the time, that they would have created an obstruction if they had been placed at the entrance of the NCNA. Therefore, the police took the action they did to prevent obstruction.
MR WONG WAI-YIN (in Cantonese): Mr President, over the past few years, similar incidents usually took place on 4 June. For this year’s arrangement, the Secretary explained that the mood and size of the crowd had been taken into consideration. My question is: Will he confirm that in this year (or on 29 May), it was necessary for the police to take special action because the size and mood of the crowd was bigger and more heated than that in previous years. If not for this reason, why did the police adopt this measure; and is this action taken on the police’s initiative or at the request of the NCNA?
SECRETARY FOR SECURITY: Mr President, no, I cannot confirm either of the suggestions made in the question. I do not know whether the crowd was bigger or smaller and whether its mood was more or less heated. That is not the point. The point is that the police took the actions they did because it was in their judgement necessary to maintain order on the ground.
PRESIDENT: Not answered, Mr WONG?
MR WONG WAI-YIN (in Cantonese): Mr President, the second part of my question is: Was the action taken on the police’s initiative or at the request of the NCNA?
SECRETARY FOR SECURITY: Mr President, the action was taken on the initiative of the police themselves. It is their responsibility.
MR CHEUNG MAN-KWONG (in Cantonese): Mr President, the presentation of petitions at the entrance of the Government House and that of the NCNA were dealt with in exactly the same manner by the police in the past, 20 representives would be allowed to proceed together to the entrance of the Government House or the NCNA, and one of them would then present the petition. This year, the security arrangement outside the NCNA was obviously more stringent than that for the Government House, as only one person was allowed to proceed to the entrance of the NCNA to present the petition while others were kept outside the mills barriers. I wish to ask the Administration to explain why different measures are adopted at the back door of the Government House and at the entrance of the NCNA; is it because the security at the entrance of the NCNA is more important than that at the Government House that the number of persons
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presenting the petition should be controlled? Moreover, on what legal basis that the police designated the entrance of the NCNA as a restricted area and cordoned off the petitioners (even if they have obtained the licence and will petition in a peaceful manner)?
PRESIDENT: Secretary, two questions.
SECRETARY FOR SECURITY: Mr President, I think the first part of the question has already been asked and I answered it. I do not think it is the case that normally 20 people are allowed to present petitions. However, I have undertaken to check that in respect of previous occasions and I will do so and give a written reply.
As regards the second part of the question, the area outside the NCNA is not a closed area and nobody has ever claimed that it is, but the police have taken the action they did, as I said in my main answer, in accordance with the Police Force Ordinance which requires them to maintain public order.
MR MARTIN LEE (in Cantonese): Mr President, has the Administration noticed that from 4 June 1989 till now, nothing would ever happen if no mills barriers were erected at the entrance of the NCNA, but whenever something went amiss, it so happened that mills barriers were also erected on the spot. Will the Administration consider reviewing these measures?
SECRETARY FOR SECURITY: Mr President, no I had not noticed that and I do not believe it is the case.
MR ALBERT CHAN (in Cantonese): Mr President, the plans and measures prepared by the police for this year’s “June 4” activities at the entrance of the NCNA were obviously more stringent than those taken in the past. Will the Administration inform this Council of the ways by which it could ensure that such new measures were solely implemented to cater for actual needs? Would there be any possibility that some individuals (including police officers) were using such kind of decision to demonstrate their loyalty to China or simply to please China? How is the Administration going to identify the real motive?
SECRETARY FOR SECURITY: Mr President, I can only say that I completely refute the implication in this question. The police measures that are taken ― I do not think there is any point in categorizing them as either stringent or non-stringent ― are appropriate to the circumstances. The police have very great experience of handling crowds and always do so, in my view, tactfully and sensibly.
4480 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 Children convicted of criminal offences
6. MR MARTIN LEE asked: In view of the fact that Hong Kong is among only a handful of territories in the whole world where children as young as seven years of age may be found guilty of a criminal offence, will the Government inform this Council of:
(a) the number of children aged between seven to 16 years against whom criminal proceedings were initiated in the last three years;
(b) the number of these children who were convicted of criminal offences in the same period;
(c) the number of children who were prosecuted or convicted in the same period because of their involvement in drug-related offences; and
(d) the number of children committed to custody in a place of detention for the same period?
SECRETARY FOR SECURITY: Mr President, the number of children aged between seven and 16 years who were charged with criminal offences in 1991 was 2 376; in 1992, it was 2 322; and in 1993, it was 2 233.
The number of children who were convicted of criminal offences in 1991 was 1 372; in 1992, it was 1 345; and in 1993, it was 1 305.
The number of children who were charged with drug-related offences in 1991 was 30, of whom 13 were convicted; in 1992, it was 22, of whom nine were convicted; and in 1993, it was 29 of whom 21 were convicted.
The number of children who received a custodial sentence in 1991 was 161; in 1992, it was 177; and in 1993, it was 166.
MR MARTIN LEE: Mr President, will the Government consider raising the age of criminal responsibility from seven to at least 10 years which is the age for criminal responsibility applicable to the United Kingdom? And if not, why not?
SECRETARY FOR SECURITY: Mr President, this is a question which we have considered from time to time in the past and we have asked for advice on this in the past from the Standing Committee on Young Offenders and from the Fight Crime Committee. The last major review was conducted in 1988 and the advice which we accepted was that the age should not be changed from seven. I appreciate that it is 10 in the United Kingdom but it is not necessarily more than seven in many other countries. There are arguments both for and against
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raising the age. On balance we take the view that the arguments are in favour of retaining the age at seven years.
MR MARTIN LEE: I asked if not, why not? And all the Secretary said was “on balance” we thought we should keep it like that; but what are the reasons?
SECRETARY FOR SECURITY: Mr President, I will go into the reasons a bit more. First of all, there is evidence, even now, that criminal organizations do use children and young persons in the commission of crimes and we believe that raising the age might cause criminals to further exploit young people in the commission of crimes.
There is also the argument that the development of children, in both the physical and mental sense, is certainly as rapid or more rapid now than it has been in the past, and many children of seven years and above do know the difference between right and wrong and should be responsible for their actions.
But there is also the very important point that we do have provision in our law to protect children and section 15 of the Juvenile Offenders Ordinance in particular does enable children in these circumstances to be given care and protection. There could be, in some respects, a gap in the law if criminal responsibility was simply not available between the ages of seven and 10 for example, or 12.
MR ALFRED TSO (in Cantonese): Mr President, I have recently come across a case in Tuen Mun in which a young person was robbed of a packet of cigarettes and property which was worth $25. Four young persons were prosecuted by the police for joint robbery. Will the Administration inform this Council whether there is any real need for it to institute criminal prosecutions so frequently? Has criminal prosecution been abused? Does the Administration have any better alternative to prosecution, such as counselling or other forms of assistance?
SECRETARY FOR SECURITY: Mr President, perhaps what I should explain is that in fact the great majority of juvenile offenders below 10 years of age are not prosecuted. The great majority are actually dealt with under the Police Superintendent’s Discretion Scheme, typically some 70% in the last three years. So it would only be in the rather extreme cases that a prosecution would be taken of someone under 10 years of age. That would depend upon the circumstances of the case. I do not think that it is an option that should necessarily be ruled out where it is considered to be the appropriate way to proceed. Robbery is a serious offence and must be treated as such.
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MS ANNA WU: Does the Secretary have the statistics for (a) through (d) for the age group 7 to 10 and whether he would be able to enlighten us on the nature of the offences involved and the sentences imposed in each case?
SECRETARY FOR SECURITY: Mr President, I probably do have it but I cannot find it. I will give an answer in writing to that. (Annex III)
MR HENRY TANG: Mr President, the Secretary said that there is evidence that criminals are using children for criminal activities and based on his answer it seems that less than 15% of the convicted children actually get a custodial sentence. So there is probably an even greater incentive for criminal elements to use children for criminal activity. Does the Government have any plans to cut down on the number of criminals using children for criminal activities simply because there is less chance that they will be convicted and even when they are convicted, they probably will not receive a custodial sentence?
SECRETARY FOR SECURITY: Mr President, I think really one has to tackle the problem of children being exploited by normal action against criminals and particularly action against organized crime, and we have got a number of initiatives to take more effective action against organized crime, including the Organized and Serious Crimes Bill which I hope we shall see enacted this Session.
MR JIMMY McGREGOR: Mr President, I think many Councillors will in fact feel rather sad that children of seven can be brought up on criminal charges and given custodial sentences, no matter what the background. Does Hong Kong’s treatment of such children equate with that provided in advanced democratic countries which are guided by the rule of law and if so, which countries form the basis for this consideration?
SECRETARY FOR SECURITY: Mr President, could I ask for clarification. Is the question asking whether our facilities for dealing with young offenders for trying to rehabilitate them equate with other western countries?
MR JIMMY McGREGOR: Mr President, not for rehabilitation, for prosecution and detention. In other words the charges taken against children of seven years of age, for example, do these equate to legal charges which can be taken in developed countries which are guided by the rule of law, such as Britain and other countries, such as no doubt the United States, Canada and so on? How do we compare, Mr President, in the league in regard to the prosecution of young children?
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SECRETARY FOR SECURITY: Mr President, as I think I said in answer to a previous supplementary, from the information that we have available the minimum age for prosecution does vary from country to country. In Britain it is 10, in some other European countries it is eight or seven or 10 or sometimes 12. In Australia it varies from state to state. In some places it is 10 years old, in some places it is eight, in some places it is seven. There is a variation but certainly seven is not particularly unusual.
MR JIMMY McGREGOR: Mr President, could I have clarification in writing please in regard to the list of developed countries that I am speaking about and those which have been mentioned here. What is the actual age at which children can be prosecuted in a criminal court?
SECRETARY FOR SECURITY: Mr President, I will certainly try and provide some more information in writing if Mr McGREGOR will let me know what countries he is interested in. The ages I mentioned were precisely the minimum age for a criminal prosecution. (Annex IV)
MR JIMMY McGREGOR: I would be happy to do that, Mr President.
MR JAMES TO (in Cantonese): Mr President, I wish to follow up Mr Henry TANG’s question. We are concerned about children being exploited in the commission of crimes, but no particular distinction could be found among the sentences in relation to abetting adults, adolescents or children in the commission of crimes. Could Hong Kong’s attitude towards various types of crimes be reflected in the precedents set by the judges?
PRESIDENT: Have you understood the question, Secretary?
SECRETARY FOR SECURITY: Mr President, I think so. I assume that all the factors would be brought to the attention of the judge by the prosecution and would be taken into account by the judge. But I do not know what case Mr To is referring to. I think he is asking a hypothetical question here.
PRESIDENT: Clarify, Mr TO?
MR JAMES TO (in Cantonese): Mr President, my question is whether the Secretary could provide a written reply concerning the front-line prosecutors’ view towards the sentences imposed by the courts in cases of abetting adolescents and adults in the commission of various crimes (for example,
4484 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
serious crimes like robbery and trafficking in dangerous drugs). Do the prosecutors believe that those sentences could reflect a standard which is generally accepted?
SECRETARY FOR SECURITY: Mr President, I think I probably would like to ask the Attorney General whether he would come to my rescue here. Prosecution and bringing things to the attention of the court is really his responsibility rather than mine.
PRESIDENT: Attorney General, can you help?
ATTORNEY GENERAL: Mr President, I will be very happy to consider further Mr TO’s question, but I would be very grateful if he would not mind reducing it to writing and direct us specifically to which areas of concern he has in mind. I would also remind him to, and I do not know if it is relevant, consider the provisions of the Administration of Justice Bill currently before this Council which deals with the treatment in some courts of young offenders who are jointly charged with adults.
Written Answers to Questions
Oxygen prices
7. DR HUANG CHEN-YA asked (in Chinese): In view of the apparent higher prices of oxygen in Hong Kong as compared with those in the neighbouring territories, will the Government inform this Council:
(a) of the annual expenditure of the Hospital Authority on the purchase of oxygen in the past two years;
(b) why the prices of oxygen in Hong Kong are higher than those in the neighbouring territories; and
(c) what measures are available to control the prices of oxygen so as to alleviate the community’s burden in this respect?
SECRETARY FOR THE TREASURY: Mr President, the answers to the three questions are as follows.
(a) The Hospital Authority spent $15.3 million in 1992-93 and $18.5 million in 1993- 94 on the purchase of oxygen.
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(b) We do not know whether the price of oxygen is higher in Hong Kong than in neighbouring territories. We have no information on how much the suppliers of oxygen in those territories charge their local buyers. In any event, price comparisons are not meaningful without due regard to the terms of the contract and local conditions.
(c) We are confident that by careful product sourcing and evaluation, use of fair and open tendering procedures and skilful negotiations, we shall be able to obtain supplies of oxygen at reasonable prices that represent good value for money.
Smoking in airport arrivals hall
8. MR STEVEN POON asked (in Chinese): While there are notices and broadcasts advising members of the public not to smoke in the Arrival Hall of Kai Tak Airport, the hall itself is not a statutory non-smoking area. Will the Government inform this Council:
(a) which department is responsible for advising members of the public not to smoke in the hall and how effective such advice has been; and
(b) whether there is any plans to designate the hall as a statutory non-smoking area?
SECRETARY FOR ECONOMIC SERVICES: Mr President, the Civil Aviation Department (CAD) is responsible for the promotion of a smoke-free environment in public areas at Kai Tak Airport. Although areas within the passenger terminal building at Kai Tak are not currently designated as statutory non-smoking areas, the department has implemented administrative measures to discourage smoking in the terminal. These measures include the putting up of “No Smoking” notices and periodic announcements made on the public address system. CAD staff have observed that the voluntary response of the public has been encouraging and only a small minority appear to ignore the notices and announcements.
The Administration accepts the desirability of increasing the number of smoke-free areas in enclosed public places. The Director of Civil Aviation is therefore examining the feasibility of designating the Arrivals Hall and other public areas within the airport as statutory non-smoking areas under the Smoking (Public Health) Ordinance to enable the non-smoking majority of the public to enjoy a fresher indoor environment at Kai Tak.
4486 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
Air time on RTHK programme ‘Access’
9. MR STEVEN POON asked (in Chinese): Will the Government inform this Council of the following:
(a) apart from allowing officials of various government departments to explain government policies and measures on the Radio Television Hong Kong Programme “Access”, how many times representatives of the Kowloon-Canton Railway Corporation, the Mass Transit Railway Corporation, the Land Development Corporation and other non-government organizations were invited respectively to appear on this programme to give presentations or explanations in the past two years; and
(b) what are the criteria for allocating air time to non-government organizations to appear on this programme?
SECRETARY FOR RECREATION AND CULTURE: Mr President, in the past two years, Radio Television Hong Kong (RTHK) has produced 208 “Access” programmes. On 76 of these occasions, representatives of non-government organizations were invited to give presentations or explanations on matters that fell within their purview. A breakdown of the organizations appearing in the programme in the past two years is as follows:
Organization Number of occasions appearing on “Access”
1. Anti-cancer Society 1 2. China Light and Power 1 3. Hong Kong College of Cardiology 1 4. Hong Kong Council of Social Services 1 5. Hong Kong Medical Association 24
6. Hong Kong Society of Accountants 1 7. Kowloon-Canton Railway 9 8. Kowloon Motor Bus 5 9. Land Development Corporation 1 10. Law Society of Hong Kong 2 11. Light Rail 9 12. Liver Foundation 1 13. Mass Transit Railway 8 14. Motor Insurers’ Bureau 1 15. Oi Kwan Social Services 1 16. Open Learning Institute 1 17. Red Cross 1 18. The Chinese University of Hong Kong 1 19. Town Gas 1 20. Vocational Training Council 6
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There are no set criteria for allocating air time to any organization. The main aim of the programme is to provide a forum on television to explain matters of general concern to the public and to answer public queries. Enquiries and complaints sent in by members of the public are answered by representatives of the organizations concerned. The frequency with which an organization appears on the programme largely depends on the frequency and number of queries received concerning that organization’s area of responsibility. For example, personal health and related matters have for some time been a popular topic in the programme. Given the large number of enquiries in this area, the representatives of the Hong Kong Medical Association have appeared most often on the “Access” programme.
On a few occasions, the programme would also allow for a presentation to be made by an organization to explain its work and service to the public. On such exceptional occasions, which account for about 10% of the programme’s total air time, the content must be of sufficient public interest and concern to be aired.
Unauthorized alteration of layout plans in Kowloon Bay
10. MR FRED LI asked (in Chinese): A number of owners of industrial buildings located in Kowloon Bay have altered the original layout plans without permission and have converted parking spaces for container trucks to private car parking spaces for hire or to storage space. In this connection, will the Government inform this Council of the following:
(a) when did the District Lands Office find out such unauthorized alteration of layout plans in Kowloon Bay;
(b) how many inspections were carried out in that district by the staff of the District Lands Office over the past three years; and how often did they conduct such inspection on average;
(c) whether the District Lands Office has prosecuted any owners of industrial buildings for unauthorized alteration of layout plans; if so, how many prosecutions have been brought against such owners up to now; if not, what the reasons are; and
(d) whether the District Lands Office has any plans to recruit more staff in order to step up inspections and prosecutions in this area of work; and whether the Government has any long-term and short-term solutions to this problem?
4488 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President,
(a) The parking layout plans approved and lodged with the Government in the cases referred to have not been altered but either the owners or occupants of the buildings have carried out unauthorized alterations which are in conflict with the approved plans. The District Lands Officer for Kowloon East has received a number of complaints regarding such conversions, particularly in respect of car and lorry parking spaces.
(b) Separate statistics for the number of inspections of industrial parking areas within industrial buildings in the Kowloon Bay area are not available, but District Lands Office staff have carried out 1 120 inspections of industrial buildings within the Kowloon Bay and Kwun Tong industrial areas in the three-year period up to the end of May 1994. These inspections were initiated either as a result of complaints or as part of the continuing programme of enforcement against the misuse of parking spaces within industrial buildings agreed by the Kwun Tong District Board.
(c) Building owners cannot be prosecuted for breaches of lease conditions. Where a breach is discovered, a warning letter can be issued requiring a lot owner to correct the breach. If the breach is not corrected, the lot may be re-entered under the Crown Rights (Re-entry and Vesting Remedies) Ordinance. In the three-year period up to the end of May 1994, 132 warning letters related to breaches of lease conditions in industrial buildings in the Kowloon Bay and Kwun Tong area were issued. Of these, 36 related to parking spaces. In all these cases, the breaches have been corrected.
(d) The possible need to increase staff deployed on lease enforcement duties is kept under regular review having regard to other priorities. For the moment, the misuse of parking areas within industrial buildings in the Kowloon Bay area is being given sufficient priority under the enforcement programme agreed by the Kwun Tong District Board.
Population projections
11. MR ROGER LUK asked: In the light of the trend of migration in recent years, particularly that of returning emigrants, will the Administration advise this Council whether the population projections made after the 1991 Census require revision, and whether there are plans to compile and publish formal migration statistics?
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SECRETARY FOR FINANCIAL SERVICES: Mr President, there has indeed been relatively significant volatility in the migration situation over the last two to three years. Because of this, the Census and Statistics Department has decided to revise the previously published population projections, issued in mid-1992, by the end of this year.
In the Hong Kong situation it is sometimes difficult to identify a particular person as a migrant. Under the present system, Hong Kong permanent residents can travel in and out of Hong Kong on their identity cards and officials at immigration control points do not ask them about intended duration of absence from Hong Kong when they depart, or length of stay when they return. In fact, the purpose of trips need not be revealed at all. Hence, it is not possible to establish which traveller is actually an emigrant or a returning emigrant. Thus, the trend of net emigration of Hong Kong residents can only be estimated by the balance of departures against arrivals. Such statistics are published.
Regarding immigrants from China, there are statistics about arrivals. Should any of them subsequently leave Hong Kong, or travel in and out before they become permanent residents, the arrival-departure system would produce net figures.
Regarding foreign nationals, again only arrival-departure balances are available. For certain specific categories of people, for example, foreign domestic helpers and imported workers, separate sources also provide information on how many of them are in Hong Kong at specific points in time.
To assist the analysis of migration of Hong Kong residents, estimates are also made of the number of people who emigrate within different periods in time, based on statistics on visa applicants and applications for Certificates of No Criminal Conviction.
Given the above situation, it is not possible to quote some simple figures to state exactly how many migrants have come in and how many have gone out during a period of time. The analysis of the migration trend is complicated and various sets of statistics have to be studied concurrently.
Supplementary English Examination
12. MR TIK CHI-YUEN asked (in Chinese): Will the Government inform this Council whether it is aware of the reasons for providing students of Chinese middle schools with a Supplementary English Examination at the Hong Kong Advanced Level Examination; whether such an arrangement will be implemented on a long-term basis; and whether the results attained at the Supplementary Examination are recognized by local tertiary institutions?
4490 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the Intensive English Programme has been introduced by the Government since 1993 to provide special assistance to Form VI Chinese-medium students to meet the English Language entrance requirements of local tertiary institutions. It is one of the positive measures to encourage teaching and learning in secondary schools through the mother tongue.
The programme comprises a four-week post-Secondary VI course, and a six-week post-Secondary VII course leading to the Supplementary English Examination. The first post-secondary VI course was held in the summer of 1993. The first post-secondary VII course is now being held, followed by the Supplementary English Examination to be held in July this year. Local tertiary institutions have agreed that a pass in the Supplementary English Examination will be deemed as fulfilling the English Language requirement for admission to courses for which Grade E in the Use of English is normally required.
The Government intends to conduct an annual review of the programme and the Supplementary English Examination to assess whether there is a need for them to continue to be provided.
Frontier closed area
13. MR LAU WONG-FAT asked (in Chinese): Will the Government inform this Council of the following:
(a) whether it has reviewed the policy of designating border areas as the Frontier Closed Area and imposing curfew restriction in the Frontier Closed Area; if so, when the latest review was conducted;
(b) whether the scope of the review covered the question of whether such a policy is compatible with human rights and the international covenants on human rights; and
(c) what the outcome of the review was and, if its outcome was to maintain this policy, what the reasons were?
SECRETARY FOR SECURITY: Mr President, a review has recently been completed, and its recommendations are now being considered. The Government will be announcing the results shortly. The review has taken into account the need to balance individual rights and the need to combat illegal immigration.
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Traffic congestion at Island Eastern Corridor
14. MR MARTIN LEE asked (in Chinese): In view of the serious traffic congestion during peak hours at the Island Eastern Corridor near the passage to the Eastern Harbour Crossing, will the Government inform this Council what measures are being taken to improve the traffic network in the area?
SECRETARY FOR TRANSPORT: Mr President, the average daily throughput at the Eastern Harbour Crossing is now 87 200 vehicles, compared with 77 700 vehicles a year ago. During the morning and evening peak hours, the average hourly throughput is 6 270 vehicles.
The congestion problem is mainly due to the design capacity (6 000 vehicles per hour) of the Eastern Harbour Crossing (EHC) being reached during the peak hours. When this happens, traffic queues inevitably build up from the tunnel portal and extend onto the carriageway of the Island Eastern Corridor (IEC). Traffic from North Point, via Man Hong Street slip road, has to merge with the tunnel bound traffic queue on the IEC, thus disrupting eastbound through traffic along the IEC. To relieve congestion at this point, the feasibility of only allowing buses from Man Hong Street slip road to weave into the middle lane of the IEC to head for the EHC is being explored. Other motorists will have to use a more circuitous route for access to the EHC, that is, via Lei King Wan and the IEC westbound approach or via the local road network. The longer-term plans are to provide an additional slip road along the IEC directly connecting the Man Hong Street slip road with the EHC.
In the meantime, the Transport Department has implemented traffic management measures to reduce the delay to Chai Wan bound traffic. In January 1994, the double white line marking on the IEC near the EHC tunnel approach was extended together with improvements to the directional signage. This has helped to segregate tunnel-bound traffic from through traffic. The Transport Department is considering whether the double white line marking should be further extended westwards, but this may lead to congestion in certain parts of the Causeway Bay area.
The ultimate solution has to await the completion of the Western Harbour Crossing to provide additional capacity for cross-harbour traffic as a whole.
Trade in prison labour goods
15. DR CONRAD LAM asked (in Chinese): Will the Government inform this Council of:
(a) whether any activities in connection with the trading, re-exporting and sale promotion of products manufactured by prisoners or
4492 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 labour camp inmates of other countries have been found in the local market; (b) whether such activities are illegal;
(c) whether special investigation has been made into products suspected of belonging to this category; and
(d) what effective measures are in force to stop the flow of such products into Hong Kong for sale or re-export?
SECRETARY FOR TRADE AND INDUSTRY: Mr President, Hong Kong’s general policy on the export, re-export and import of goods is that, provided that there is no infringement of any Hong Kong law or any of our international obligations, goods can be traded freely. There is no Hong Kong law or international obligation which would prohibit the import or export of goods processed or manufactured in Hong Kong or elsewhere by prison labour.
The Honourable Member may wish to know that few countries maintain restrictions against trade in prison labour goods. In the case of the United States of America, only imports of such goods are prohibited and there is no prohibition against the exportation of such goods.
The Hong Kong Government does not keep track of trade in prison labour goods. There is therefore no information on whether such products have been found in the local market. Since trade in such goods is not prohibited in Hong Kong, the Government has not conducted any special investigations into such trade and does not maintain any measures to stop the flow of such products into Hong Kong for sale or re-export.
However, we do have a general policy of keeping our importers and exporters informed of the trade policies and regulations of our trading partners. In respect of prison labour goods, the Government has repeatedly informed our trading community that it understands that the United States laws prohibit the import of prison labour goods and that it is China’s policy to prohibit the export of such goods.
Directorate equivalent posts in Hospital Authority
16. MR MICHAEL HO asked (in Chinese): Will the Government inform this Council of the following:
(a) the existing total number of posts in the Hospital Authority that are equivalent to directorate posts of the Civil Service, and what is the increase in comparison with the number of such posts when the Hospital Authority took over the control of the hospitals in 1991;
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(b) the details of the number of such posts created in the various hospitals during the same period; and
(c) the means by which the creation of such posts is monitored by the Government?
SECRETARY FOR HEALTH AND WELFARE: Mr President, the existing total number of posts in the Hospital Authority that are equivalent to directorate posts of the Civil Service is 359, compared to 278 on 1 December 1991. The increase is the net effect of a reduction of two posts at the Head Office level and an addition of 83 posts at the hospital level.
The Hospital Authority was set up by statute to manage and develop the public hospital system, to advise the Government of the needs of the public for hospital services, and to enhance public participation and accountability. It is substantially funded from public revenue. Under the Hospital Authority Ordinance, the Director of Audit may conduct examinations on the economy and efficiency with which the Authority has expended resources in discharging its statutory functions. The Authority also publishes an annual Business Plan which sets out the proposed programmes and targets by which the public can monitor its performance. These safeguards aim to ensure that value for money is achieved by the Authority in conducting its activities.
The Hospital Authority Board is empowered to determine the remuneration and conditions of service of all employees working in the Authority, with the exception of the post of Chief Executive.
Development of beaches
17. MISS EMILY LAU asked (in Chinese): Owing to the serious pollution of waters along the coast from Ting Kau to Castle Peak, many citizens are reluctant, and indeed should not, swim at the beaches there. Will the Government inform this Council whether there are plans to develop bathing beaches at other areas in the New Territories or outlying islands so as to provide the public with healthy and inexpensive recreational outlets during the hot summer?
SECRETARY FOR RECREATION AND CULTURE: Mr President, at present, 30 gazetted beaches in the New Territories are managed by the Regional Council (RC). The Environmental Protection Department (EPD) monitors regularly the water quality at these 30 gazetted beaches.
4494 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
Based on the findings of the EPD, the RC has resolved to open 27 of these 30 beaches in the current swimming season.
Thirteen of these 30 gazetted beaches are in Tsuen Wan and Tuen Mun. Ten of these are open for swimming in the current swimming season. The remaining three, viz Anglers’ Beach, Old Cafeteria Beach and Castle Peak Beach, are closed because of the unsatisfactory water quality there.
Golden Beach, which is a new beach being developed in Tuen Mun, is scheduled for opening to the public in August this year. The RC always seeks to develop potential beaches in its area. A decision in this regard depends on a number of factors, such as accessibility, water quality, beach profile, water current, the size of the hinterland and the availability of infrastructure support.
Supervision over private specialized schools
18. MR CHEUNG MAN-KWONG asked (in Chinese): An unregistered private specialized school which is alleged to be offering specialized courses without permission has continued to operate illegally even after the Consumer Council has censured it by name. Will the Government inform this Council:
(a) whether the Education Department has submitted any relevant information and evidence to the legal Department for the purpose of considering the feasibility of taking legal proceedings against that school; if so, what the results are;
(b) if it has been decided not to institute prosecution in this case, what the reasons are;
(c) how many complaints about that school have been received and how the authorities concerned will handle these complaints; and
(d) what positive measures the authorities concerned will adopt to ensure effective supervision over the operation of private specialized schools?
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, (a) and (b)
The private school in question is a registered school. In January this year, in the course of investigating complaints, staff of the Education Department discovered a number of irregularities in the school including the running of courses for which the approval of the Director of Education had not been obtained. A warning letter was issued and the school was given seven days to rectify the
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irregularities. Simultaneously, legal advice was sought from the Attorney General’s Chambers on whether prosecution might be instituted. The irregularities were duly rectified. No legal proceedings were instituted.
(c) A total of six complaints, including verbal complaints, had been received. These were fully investigated and followed up as described above.
(d) All private schools are required to comply with the provisions of the Education Ordinance and Regulations. This includes the registration of the schools, their managers and teachers with the Director of Education, as well as obtaining his prior approval before courses can be offered. Compliance is monitored through regular inspections by the Education Department school inspectors and investigations into complaints received. Any irregularity detected will continue to be dealt with promptly.
Hospital fund-raising activities
19. MR MICHAEL HO asked (in Chinese): There has been an increase in the number of fund-raising and publicity activities organized by hospitals since the Hospital Authority took over the management of public hospitals, and some former government hospitals, such as Tuen Mun Hospital, Prince of Wales Hospital and so on. have successively organized activities like fund-raising film shows and concerts, exhibitions and open days. In this connection, will the Government inform this Council of the following:
(a) the number of working hours spent by medical officers and nurses in organizing the following activities (please provide the details in respect of the two grades separately):
(i) Tuen Mun Hospital’s fund-raising film show;
(ii) Prince of Wales Hospital’s fund-raising concert;
(iii) Queen Elizabeth Hospital’s Open Day;
(iv) Queen Mary Hospital’s Open Day;
(v) Caritas Medical Centre’s annual bazaar;
(vi) fund-raising activities of Tung Wah Group of Hospitals, Yan Chai Hospital and Pok Oi Hospital; and
(b) the types of work performed by the above-mentioned staff during the time spent in organizing such activities?
4496 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
SECRETARY FOR HEALTH AND WELFARE: Mr President, fund-raising and publicity activities are important tools to foster a close partnership with the local community, and to impose a clear public image of the hospitals concerned. These activities are also part of the tradition established by many ex-subvented hospitals and represent joint efforts of the Hospital Governing Committees, Boards of Directors, local community groups and volunteers.
The specific fund-raising activities in question were organized by the hospital management staff with minimal involvement of frontline medical and nursing staff. As regards the Queen Elizabeth Hospital Open Day, the participation of medical and nursing staff was entirely voluntary. No similar activity was organized by Queen Mary Hospital except for the recent publicity exercise related to its nursing school. In both cases, the work involved consisted mainly of preparation of demonstration material on signboards.
PRESIDENT: I have given permission to Mr Andrew WONG, under Standing Order 17(4), to ask a question without full notice on the ground that it is of an urgent character and relates to a matter of public importance.
Oral Answer to Question
Validity of the Legislative Council proceedings
20. MR ANDREW WONG asked (in Cantonese): As the current President of the Legislative Council was elected before the Great Seal had been affixed to the relevant Letters Patent or the issue of the associated Royal Instructions under the Queen’s Sign Manual and Signet, doubts have been expressed regarding the validity of the election, the sittings called and presided over by the President so elected, and the legislation and resolutions passed by the Legislative Council since then. Although the Administration has intimated that procedural irregularity would not affect the validity of the President’s election or any bills subsequently passed by the Legislative Council, some local legal experts have considered otherwise. In the circumstances, will the Government inform this Council if it intends to request Her Majesty’s Government to legislate to put the validity of the proceedings of the Legislative Council since 19 February 1993 beyond doubt?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, we have reaffirmed with Her Majesty’s Government (HMG) that although the two sets of amendments to the Letters Patent and the Royal Instructions were published in the Hong Kong Gazette before the residual formalities relating to them were completed, this would not have any effect on the validity of anything done in Hong Kong prior to the completion of the formalities.
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At its meeting on 20 June, the Constitutional Development Panel of this Council suggested that there should be some form of retrospective legislation to put beyond all possible doubt the validity of the amendments. At the panel’s request, the Administration have conveyed the suggestion to HMG and have asked for an urgent response. We will inform this Council of the outcome as early as we can.
MR ANDREW WONG (in Cantonese): Mr President, at the Constitutional Development Panels’s meeting held on this Monday, the Government said that it had repeatedly requested Her Majesty’s Government (HMG) to confirm that the not yet completed formalities would not affect the validity of anything done in Hong Kong. I trust that the Government must have sought local legal advice before seeking clarifications from HMG.
Will the Secretary inform this Council what sort of local legal advice did it get and was it different from that given by HMG; if so, in what ways are they different from each other?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, we have in the course of this exercise sought the advice of our Attorney General’s Chambers and nothing in that advice, nor in the advice we received from HMG, gave us any cause for concern as to the validity of the amendments nor anything done under those amendments.
DR YEUNG SUM (in Cantonese): Mr President, as the two sets of amendments to the Letters Patent and the Royal Instructions had been published in the Gazette before the residual formalities relating to them were completed, it might cast doubt on the validity of the 125 ordinances passed by Hong Kong’s legislature after 19 February 1993. The Hong Kong Government and Her Majesty’s Government have assured us time and again that there would not be any problem and told us not to worry, but I still would like to ask the Government: Why did it happen and who should be held responsible? Does the Government think that this incident would significantly affect the credibility of this Council as a legislature? I wish to express my infinite regret over this issue.
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I think at the Constitutional Development Panel meeting, my deputy has explained to the panel that the mistake was made at the London end, but nothing in that technical problem with the exercise would lead us to have any cause for concern about the validity of any acts performed as a result of those amendments. At the request of the panel we have duly conveyed Members’ suggestion to put beyond doubt any questions about the validity of those acts and we now await a response from HMG.
4498 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 PRESIDENT: Dr YEUNG Sum, not answered?
DR YEUNG SUM (in Cantonese): Mr President, the Administration just repeated its reply. My question is: Why did it happen and who should be held responsible?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I thought I said in my answer which I repeated what was actually conveyed to the Constitutional Development Panel that this mistake as confirmed was at HMG’s end.
MR MARTIN LEE: Mr President, does the Government accept that no reassurance either from the Hong Kong Government or from Her Majesty’s Government can bind our court and it is only our courts which can decide whether those laws are valid or not? And if so, how can the Government feel so secure before the courts have decided?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, obviously it is for the court to determine on any point of law which a member of the public or any party chooses to put before the court for determination. But on the basis of the advice that we received at Hong Kong’s end as well as from HMG’s lawyers, there is nothing that would lead us to have cause for concern about the validity of those amendments.
MISS EMILY LAU (in Cantonese): Mr President, will the Government inform this Council whether it is true that the officials of the Constitutional Affairs Branch and the Attorney General’s Chamber believed that HMG should take some remedial measures after the incident; and that they had no alternative but to accept HMG’s instruction after being told by the latter not to worry about anything? Will the Secretary confirm that this was the case at that time?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I do not agree with that allegation. When the problem was pointed out, we obviously sought clarification from HMG and were assured that notwithstanding the technical hitch about the date of the instrument, there was no cause for concern and as a result this problem obviously was not taken further.
PRESIDENT: Yes, Miss LAU.
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4499
MISS EMILY LAU (in Cantonese): Mr President, in order to prove that officials of the two departments concerned held different views and that I am not accusing Mr Nicholas NG of being a liar, could the Government table the relevant documents for Members’ examination? We might then see why the officials requested twice to write to London for clarification, for if there be no cause for concern, I believe that they would not have requested twice to write to London for clarification. As such, will the Government make public the correspondence at the time for Members’ examination so as to reveal the complete picture of the incident?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I am sure the Honourable Member is not suggesting that when a problem is discovered we should not take steps to clarify it ― whether there is a problem and whether there is any follow-up action that needs to be taken. It is on that basis that we corresponded with HMG as to actually whether there was any problem and the answer given to us was that there was no problem. Now as regards the advice, the legal advice we received from the Attorney General’s Chambers is obviously the advice to the Government and legal advice, as the Honourable Member well knows, is privileged.
MR RONALD ARCULLI: Mr President, will the Secretary inform this Council whether the Government accepts the position that whatever assurances that come from Her Majesty’s Government regarding the effectiveness of the amendments, that it would be better to reassure the people of Hong Kong, and indeed this Council, either to consider having some retrospective legislation or indeed the Government initiating proceedings in Hong Kong in court to test the validity of the Government’s position, so as not to get ourselves into a panic should a private citizen in Hong Kong take the point before one of our courts and then one of our courts rules that it is in fact ineffective?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, it is indeed in that spirit that we conveyed the Constitutional Development Panel’s suggestion to HMG. This is not to say that we ourselves have doubts on the advice that we have received all along. Mr President, I do not think we should pre-judge the views or the answer that we would get from HMG at this stage. We have impressed upon them for a speedy answer and I am sure it is forthcoming. I am also certain that whatever answer we get would certainly reassure Members and the general public and will put Members’ hearts at ease.
MR CHIM PUI-CHUNG (in Cantonese): Mr President, will the Secretary inform this Council whether this is the second mistake that the British Government or the Hong Kong Government has made? The first one concerned the appointment of the Executive Council. At that time, while the Commander-in-chief was still an ex officio Member of the Executive Council, the
4500 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
Administration abolished his seat with immediate effect. This was the first mistake committed. Will the Secretary confirm that?
PRESIDENT: I think you are going beyond the scope of the question and answer, Mr CHIM. Do you want to rephrase your question?
MR CHIM PUI-CHUNG: No. (Laughter)
MR JAMES TO (in Cantonese): Mr President, I would like to follow up Mr Andrew WONG’s question. Just now the Government did not reply the part as to whether the legal advice obtained locally is different from that given by HMG? The Government said in its reply just now that nothing in the advice received from HMG gave us any cause for concern. I would like to repeat Mr WONG’s question, was there any difference between the two? Since the legal advice claimed that the conclusion might not necessarily cause one to win or lose the court case, I wish to know the exact wording used in the advice; did it say “a good chance of winning”, “very unlikely that anything would happen”, or “nothing is going to happen”? What sort of affirmative sentences were used in fact?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I really can only say that the advice we have got from our Attorney General’s Chambers, and reinforced by the advice from London, does not give us any cause for concern as to whether the validity of the amendments would be called into question, nor the validity of any acts done as a result of those amendments. As the Honourable Member pointed out, maybe different lawyers would have different interpretations or different inferences as to how a particular situation should be looked upon, but overall the advice we got, reinforced by the advice we received from London, did not give us any cause for concern.
MS ANNA WU: I assume that the validity of the President’s position is now beyond doubt. Has the Secretary considered the possibility of having all laws under question reconfirmed by this Legislative Council?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, I am afraid I do not quite catch the implication of the Honourable Member’s question, but I think in my answer I did say that there was no cause for concern on the validity of any acts performed as a result of those amendments. So obviously that would include, if Members would like to include them, all the legislative amendments that this Council has enacted since that date.
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4501
MS ANNA WU: Mr President, I asked if the Secretary has considered the possibility of having a fresh bill put before the Legislative Council to confirm the validity of the past laws under question. That is one way of putting the matter beyond doubt. Could the Secretary answer whether he has so considered or not?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, the answer is no.
MR ANDREW WONG (in Cantonese): Mr President, common sense tells us that an imperial edict without the royal seal and the signature is indeed a forged one. I believe that the pronouncement of a forged imperial edict has no validity. Is it true that the officials of the Constitutional Affairs Branch, out of their common sense, believed that the amendments were invalid and therefore sought clarification from HMG repeatedly?
SECRETARY FOR CONSTITUTIONAL AFFAIRS: Mr President, if Her Majesty were to give assent and if her Majesty were to approve the Royal Instructions and Letters Patent at the meeting of the Privy Council, I just fail to see how that could be a false order or decision of Her Majesty.
First Reading of Bills
ROAD TRAFFIC (AMENDMENT) (NO. 2) BILL 1994
SUPPLEMENTARY APPROPRIATION (1993-94) BILL 1994
COINAGE BILL
Bills read the First time and ordered to be set down for Second Reading pursuant to Standing Order 41(3).
Second Reading of Bills
ROAD TRAFFIC (AMENDMENT) (NO. 2) BILL 1994
THE SECRETARY FOR TRANSPORT moved the Second Reading of: “A Bill to amend the Road Traffic Ordinance.”
He said: Mr President, I move the Second Reading of the Road Traffic (Amendment) (No. 2) Bill 1994.
4502 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
The Transport Advisory Committee (TAC) completed a review on various aspects of taxi policy in March this year. One particular problem area identified was the exceedingly high premiums paid for taxi licences. Taxi licences have been issued through public tender since 1964. Under existing legislation, all taxi licences are freely transferable. Holders have a perpetual operating right. These factors, coupled with the limited issue of new taxi licences, have contributed to the sharp rise and speculation in taxi licences in recent years.
To tackle this particular problem the TAC has recommended, inter alia, that there should be a 12-month restriction on the transferability of new taxi licences and a requirement that both the transferor and transferee of the licence must register the transaction in person. We propose to implement these proposals.
Clause 2 of the Bill seeks to empower the Commissioner for Transport to prohibit the transfer of the ownership of a newly licensed taxi for an initial period. To provide for flexibility, the exact period has not been specified in the Bill since, in future, it may be necessary to vary this period to enable the Commissioner to respond quickly to the market situation.
To ensure that the trade and all interested parties are made aware of this restriction, the Commissioner for Transport will specify the “period” in the tender documents inviting applications for new taxi licences. Such a restriction will also be endorsed in the Vehicle Registration Document for taxi so licensed.
Mr President, the Transport Panel of this Council has been consulted on the findings of the Taxi Policy Review. I must express my gratitude to Members for their support in principle of the measures that need to be taken, including the proposal now contained in the Bill before Council.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
SUPPLEMENTARY APPROPRIATION (1993-94) BILL 1994
THE SECRETARY FOR THE TREASURY moved the Second Reading of: “A Bill to approve a supplementary appropriation to the service of the financial year which ended on 31 March 1994.”
He said: Mr President, I move that the Supplementary Appropriation (1993-94) Bill be read the Second time.
Section 9 of the Public Finance Ordinance states that “If at the close of account of any financial year it is found that expenditure charged to any head is in excess of the sum appropriated for that head by an Appropriation Ordinance, the excess shall be included in a Supplementary Appropriation Bill which shall
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4503
be introduced into the Legislative Council as soon as practicable after the close of the financial year to which the excess expenditure relates”.
The accounts for the financial year 1993-94 have been finalized by the Director of Accounting Services. The expenditure charged to 67 heads out of a total of 83 heads is in excess of the sum appropriated for those heads by the Appropriation Ordinance 1993. This is because sufficient offsetting savings could not be found within the heads concerned. In accordance with section 9 of the Public Finance Ordinance, this excess has been included in the Supplementary Appropriation (1993-94) Bill 1994 now before Members. The Bill seeks to give final legislative authority for the amount of supplementary provision approved in respect of particular heads of expenditure by the Finance Committee or under powers delegated by it.
The total net supplementary appropriation required in respect of the 67 heads of expenditure is $8,050.1 million. This excess is largely attributable to the implementation of the 1993 pay adjustment in respect of the Civil Service and government-subvented organizations. Other major contributing factors include the increased expenditure under the Comprehensive Social Security Assistance and Social Security Allowance Schemes and additional expenditure on pension payment.
The cost of the 1993 pay adjustment and pension increase had been anticipated in the 1993-94 estimates under the “Additional Commitments” subhead. Savings were also made in other subheads through continued tight control over public expenditure, and I would like to thank the controlling officers and others who have contributed to restraint. Because of these savings and the provision made for additional commitments, total expenditure for the year is within the sum appropriated in the Appropriation Ordinance 1993.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
COINAGE BILL
THE SECRETARY FOR FINANCIAL SERVICES moved the Second Reading of: “A Bill to make provision for the issue of legal tender coins, to provide for matters relating to the demonetization of the one cent currency note and to provide for other related matters.”
He said: Mr President, I move that the Coinage Bill be read a Second time.
The principal object of the Bill is to make provisions for the issue of legal tender coins in Hong Kong and to vest the authority for the issue of such coins in the Hong Kong Government. This is necessary because the relevant provisions are now stipulated in a United Kingdom Order in Council, which will cease to have effect on 1 July 1997. Opportunity is also taken to make provisions in connection with the demonetization of the one cent currency note.
4504 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
In the United Kingdom, the issue of coins is regulated by the Coinage Act 1971. While the Act does not extend to Hong Kong, it regulates coins issued by the Royal Mint, including those in circulation in Hong Kong. The Hong Kong (Coinage) Orders 1936-1978 contain provisions governing matters such as the issue, demonetization and specification of legal tender coins.
Both the Joint Declaration and the Basic Law have specific provisions to vest the authority to issue Hong Kong currency in the Hong Kong Special Administrative Region Government. The enactment of a local Coinage Ordinance before 1997 to vest authority for issuing coins in the Hong Kong Government will therefore contribute to a smooth transition.
The Bill also seeks to make provisions in connection with the demonetization of the one cent currency note. Arrangements for demonetization are already set out in the Dollar and Subsidiary Currency Notes Ordinance, where the Director of Accounting Services shall pay from the General Revenue to persons who surrender the demonetized currency note an amount equal to their face value.
This raises a technical problem insofar as the demonetization of the one cent note is concerned because following its demonetization, the 10 cent coin would become the lowest denomination legal tender and hence it is not possible for the Government to pay to those who surrender one cent notes in multiples of less than 10. It is therefore proposed that where a holder surrenders only one to nine notes, the surrender value of those notes will be nil.
Clause 2 empowers the Governor in Council to authorize the issue of legal tender coins with such specifications and design as he thinks fit. It also specifies the amount for which specified coins are to be legal tender. The amounts are the same as those stated in the Hong Kong (Coinage) Orders 1936-1978. The clause also empowers the Governor in Council to make regulations for the treatment of any coin which has been dealt with in a manner prohibited by law.
Clause 6 provides for matters relating to the demonetization of the one cent note. The holder of one cent currency notes shall, on surrendering them to the Director of Accounting Services, be paid from the General Revenue an amount in legal tender equal to their face value, but only in respect of amounts in multiples of 10.
Mr President, the Bill is a straightforward piece of legislation to address an important issue. The enactment of the Bill will contribute to a smooth transition to 1997.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4505 DUTIABLE COMMODITIES (AMENDMENT) BILL 1994
Resumption of debate on Second Reading which was moved on 27 April 1994 Question on Second Reading proposed.
MR PETER WONG: Mr President, the Bill before us deals with the remaining two items of the revenue measures proposed by the Financial Secretary in his 1994-95 Budget speech that needs to be implemented by legislative means. It seeks to increase the duty on hydrocarbon oils in line with inflation, and to replace the existing duties on alcoholic beverages with a completely ad valorem system of duties, to be calculated on a new basis, that is, on the price of the product at the point of delivery by the seller instead of the previous CIF price.
The Bill was introduced into this Council on 27 April. As it is also the subject of a Public Revenue Protection Order issued on and came into effect from 2 March this year, a decision on the Bill is therefore required before the expiry of the Order, that is, before 2 July 1994. It gives only two months for Members of this Council to examine the Bill after it was introduced into this Council on 27 April.
A Bills Committee was formed on 29 April to study the Bill. It has held five meetings and met representatives of the two local breweries and two interested organizations to receive their representations on the proposals in the Bill.
On the proposed increase of the duty rates of hydrocarbon oils, the Bills Committee accepts the Administration’s explanation that the adjustment, which is in line with inflation, is necessary in order to maintain the real value of the fuel duty. The Bills Committee supports the proposed revision.
However, on the other proposal of the Bill, that is the new ad valorem duty system on alcoholic beverages, the views of Members of the Bills Committee are divided. No consensus, one way or the other, has been reached. In the circumstances, the Bills Committee has not come to a conclusion on this proposal. It, nevertheless, has reported in detail its deliberations and the different views and opinions expressed by the Administration, the representations and Members of the Bills Committee to the House Committee to facilitate the proposal to be fully debated at the Sitting today. I trust a number of my honourable colleagues will speak further on their views of this subject later on. The Honourable Simon IP has also given notice to move amendments to the Bill at the Committee Stage to restore the pre-existing duty system prior to 2 March 1994. Therefore, as the Chairman of the Bills Committee, I will now give an account of the principal issues that the Bills Committee has considered and leave the arguments, for and against the new system, to Members themselves.
4506 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
As explained by the Administration, the main objectives of the new duty system are ― simplification, equity, affordability and GATT compatibility. The main concerns of the Bills Committee are also closely related to these objectives.
They are:
(a) Whether the new system would put local manufacturers of alcoholic products in a disadvantageous position?
The two local breweries have put forward to the Bills Committee their strong objection to the new tax system. Their main argument is that their products would be subject to a different dutiable base with imported beer under the new system. It would create a disparity in duty which would result in a significant market advantage for imported beer because they would be paying duty based on a lesser amount of dutiable costs. This would not ensure a level playing field between importers and exporters as suggested by the Financial Secretary. The method of duty assessment is also complex and cumbersome in operation, and will entail extra accounting and administrative costs to local breweries.
The Administration however does not envisage a significant difference in the taxable values of imported and local beer because the system is based on the same definition of “normal price” for dutiable products in the Bill. The Administration has experience in operating a similar system for other products before and do not think it has difficulty to enforce the new system. The Administration considered that the problems encountered by the local breweries are only transitional and is confident that, once the valuation method is worked out, future exercises will be a straight-forward task.
Some Members of the Bills Committee however felt that the problems encountered by the local breweries will arise every time where there is a new item of expenditure incurred. A specific duty system is on the contrary more straight forward.
(b) Whether the system is simple?
Some Members of the Bills Committee doubt the Administration’s proposition that the new system is simpler than the former. It is because the taxable value of a product will be subject to a few complex definitions in the Bill and not simply the FOB value of the imported product. The Administration has also indicated that it may incur an additional amount of $1.2 million per annum for additional staff to enforce the new system.
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The Administration argues that the broad framework of an ad valorem duty system has been in the Ordinance for a long time. Despite additional expenditure is anticipated in the enforcement front, mainly for verification of the declared price of the products, some savings are expected from certain supporting services, such as testing of alcoholic content, under the new system.
(c) Whether the new system would achieve equity and uphold the principle of affordability?
Some Members of the Bills Committee support the new system because it aims to remove the undue cross-subsidy of the more expensive products by the less expensive ones in terms of duty contribution and is in line with the consensus among the public gathered from informal surveys conducted by the Administration that the duty system should follow the principle that those who can afford to pay more should pay more. As a result, many items of the lower price range would attract duty lesser than before.
However, other Members are doubtful over the possibility of the new system in achieving these objectives because there is no intention for the Administration to regulate the price in the retail market. Therefore, there is no guarantee that the benefits of any duty reduction under the new system will be passed onto consumers.
(d) Whether the new system will provide impetus for smuggling?
Some Members of the Bills Committee share the view of the Liquor and Provision Importers Association that the new system, under which more expensive items, whilst attracting specially high duty, would provide impetus for smuggling. The Administration however does not consider that the new system has greatly changed the potential of the smuggling business. The law enforcement agencies will, nonetheless, keep the situation under close surveillance.
(e) Whether Hong Kong should adopt an ad valorem system when specific duty is indeed the system widely used in other countries?
Some Members of the Bills Committee are concerned that as specific duty is widely adopted by other countries and places like Singapore and Taiwan have in fact abandoned their ad valorem system not long ago, why Hong Kong should go against the norm.
The Administration however is of the view that different countries have different profiles of liquor consumption and production, and it is inappropriate to adopt another country’s system regardless of Hong Kong. Furthermore, in most of the places, where specific duty
4508 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994
system is adopted, there is alongside a value-added tax or sales tax which itself is ad valorem.
(f) Whether the new system is compatible with the GATT principle?
Some Members of the Bills Committee are not in agreement with the view of the Administration that the new duty system is entirely consistent and compatible with Hong Kong’s obligation under the GATT. They considered that the GATT concern is not only on identical products but also on like or substitutable products. While the new system removes the previous anomalies between the duty rates for European-type liquors and Chinese-type spirits, it creates another distinction between grape wine and other types of wine with similar alcoholic content, for example, rice wine, and the latter is given a duty advantage over the former.
Despite five meetings and having considered much information provided by the Administration, some Members of the Bills Committee have yet to be convinced that the proposed new duty system on alcoholic beverages should be supported. They hold the view that the proposal, which is so contentious, needs careful examination and should not have been introduced in the context of a budgetary proposal. Since the proposal is revenue neutral and there is a deadline for a decision, the best way forward is to revert to the old system first and during the interim, the Administration should review the proposal. Conversely, some Members consider the proposal worthy of support. It has its own merits of simplicity and equity, and conforms to the view of the public that those who can afford to pay more should pay more.
I hope I have provided Members with an appropriate summary of the concerns considered by the Bills Committee on this issue and I urge my honourable colleagues and the Financial Secretary to throw more light on the above concerns in their subsequent speeches, so that a suitable conclusion could be reached by this Council after the debate.
Mr President, with these remarks, I support the resumption of the Second Reading of the Bill.
MR SIMON IP: Mr President, the new tax structure on alcoholic beverages was stated by the Financial Secretary to be revenue-neutral. I shall be moving an amendment during Committee stage. If that amendment succeeds, it will not have any revenue implications. This must be made plain from the outset.
The new tax structure on alcohol seemed at first glance as simple and equitable as the Financial Secretary made it out to be. But since the changes came into effect in March, almost no one whom I have spoken to, either on the Bills Committee or on the street, has anything positive to say about the new
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4509
system. Yet the Government continues to call the system “progressive”, claiming that it reduces the tax burden on lower and middle-income households.
But just how progressive is it? To answer this question, we must determine the benefits to lower and middle-income consumers under the new system. Despite levy reductions on some popular beverages, there has been only a very marginal impact on retail prices, while the new taxes have caused prices on higher quality drinks to go through the roof.
The Consumer Council’s most recent survey, conducted in May, shows that the extent of the benefits of the new system has been limited to an average reduction of 12 cents on popular rice wines. Beer has actually gone up in price, while higher-quality cognacs have seen very substantial price increases.
The Government can try to be progressive, but it cannot ― and has rightly said that it will not ― try to control the market. Its failure to achieve even modest progressive goals here is already evident. That is because reduction of duty is simply not the same as reduction of retail price. Consumers of low price products have not benefitted as was imagined by the Administration. Meanwhile, members of the sandwich class, many of whom have developed a taste for the finer things in life, as is their right, will have found that these little luxuries have been priced out of reach. The first rule of public finance is that the costs of any policy should not outweigh its benefits. That rule has been breached in this instance. Simply put, the new taxes hurt more than they help. This alone is reason enough to scrap the new system.
The confusing cocktail
The Financial Secretary called the old, mixed system of specific and ad valorem levies “a confusing cocktail.” Thus, the stated aim of the new ad valorem taxation scheme was “simplicity and equity.” But a majority of Members on the Bills Committee believe that neither simplicity nor equity have been achieved. Rather, the cocktail has become more confusing than ever before.
The fact is that all major trading nations levy specific taxes on alcohol. Specific taxes are based on content alone. They require a longer table of rates, but in practice they are fairly simple to administer. Determine the content, calculate the duty. There is no need to haggle over the value of product back in the country of export.
The Administration counters this point by arguing that in some countries, in addition to a specific excise duty, a general sales tax (GST) or value-added tax (VAT) is charged on an ad valorem basis. With 30%, 90% and 100% ad valorem taxes, one might wonder whether the Government is using the new taxes to the same end as other countries use their GSTs or VATs. But has Hong Kong not already rejected both a GST and a VAT? So this mention of GSTs and VATs is utterly irrelevant to the debate unless the Financial Secretary
4510 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 wishes to acknowledge that he is seeking to introduce a GST through the back door.
What makes an ad valorem system more complicated is the need for precise calculations of the value of the commodity in question. Specific rates, though they require complex tables of tariffs, are actually simpler to administer because they involve flat rates based on alcohol content or volume. So, beer, for example, would be taxed by the hectolitre (100 litres) simply by adding a surcharge, not by calculating its value.
This problem of calculating value has generated tremendous opposition from local brewers San Miguel and Carlsberg. They feel that the new system discriminates against them in favour of overseas breweries. Under the new system, imported beverages are taxed at the ex-factory price, not on the CIF price. This means that importers can value their products without including shipping, insurance and other charges. Local brewers, however, include administrative, distribution, sales and promotion costs in determining the value of their products. These must be deducted in order to arrive at the taxable value of their products. After five meetings with the Government over the last three months, no agreement has been reached on these calculations. Complexity and confusion, not simplicity and clarity, have ruled the day.
Punitive, not progressive
It seems to me the new system is punitive, not progressive. Though the Government says it is not in the business of social engineering, it has not once substantiated the need for such astronomically high rates of taxation on consumer goods. Besides, an argument that drinking wine is a vice that should be punitively sanctioned through taxation would not stand up to scrutiny. That is because scientific evidence shows that a glass of wine each day has a salutary effect on one’s health.
If it is to be pursued at all, social engineering through taxation should focus on the hidden costs of certain activities. In Hong Kong, there are really no visible hidden costs in alcohol consumption. We do not have a problem of widespread alcoholism, nor one of drunk driving.
Problems with the GATT
The Government continues to deny that the new system may entangle Hong Kong in a GATT dispute. I think they are ignoring the evidence. In 1987 the French won a similar GATT complaint against Japan. The GATT Panel’s decision in that case, “did not exclude that there could be a ‘directly competitive or substitutable’ relationship between sake ..... and liquors imported from the EEC into Japan.” The fact is that rice wines and grape wines compete directly for market share in Hong Kong. They should, therefore, be taxed similarly.
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4511
When we sit down to eat in a Chinese restaurant, we usually have a choice of traditional or Western beverages to enjoy with our meal. Sometimes we drink both and treat them as like or substitutable products. The properties of these products and their pattern of consumption are similar. Why, then, should one be taxed at 30% and the other at 90%? Would not, therefore, producers of grape wine have a justifiable cause for complaint and would not a GATT challenge have good prospects of success? It seems to me the answer to these questions is a resounding “yes.”
Greater incentive for smugglers
The Government’s thinking on smuggling seems to me to be entirely muddled. Yes, the effective duty on some products under the old system was 400%. But potential profits from smuggling Shaoxing rice wine hardly compare with the illicit gains to be had from XO, which now sells for about $600 less per bottle in China than it does in Hong Kong. Under the old system, the only serious price differences between Hong Kong and the mainland were on lower-end beverages. To make a significant profit before March, a smuggler would have had to fill a freighter with rice wine. Now, all he has to do is fill a dai fei with cognac. The returns are probably higher than those from stolen luxury cars.
Let me illustrate. A dai fei can hold one S-class Mercedes Benz, which occupies precisely 14.4 cubic meters of space. About 310 cases of Hennessy XO cognac fit in the same space. But while a stolen Mercedes might fetch several hundred thousand dollars on the mainland, a smuggler stands to make about $2.5 million on a single consignment of XO on a dai fei trip across Mirs Bay. To deny that this will create a temptation for smuggling, as the Administration has done, is to defy common sense.
In his lobbying prior to today’s debate, the Secretary for the Treasury said he aimed to clear up some misinformation about smuggling and other related issues. Some Members were given figures about the price differentials on alcoholic beverages between Hong Kong and China. The Secretary, it seems, inadvertently engaged in misinformation himself, when he tried to show that price differences were not so significant as to give greater incentive to smugglers. The Secretary quoted prevailing retail prices in China, prices which include PRC duties on alcohol. But the industry has told me, the reality is that 95% of stocks in China are smuggled, and do not, therefore, pay PRC duties. Thus, the comparison of official retail prices is meaningless. Shenzhen might very well be likened to one big duty free shop when it comes to alcohol. The fact remains that price differentials are much greater than they were before. So big, in fact, a trade spokesperson told me, that a smuggler can stand to make about $1,400 profit per case of Remy VSOP, $8,000 on a case of Hennessy XO, and a whopping $61,500 on a case of Remy Martin Louis XIII.
4512 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 Not meddling in the Budget
I reiterate that I am not advocating meddling in the budgetary process. The fact that this measure was introduced during the budget process, along with other revenue bills, should not lead Members to believe that this is a true revenue measure. The timing of its introduction is a tribute to the Government’s mastery of the politics of confusion. In reality it is not a revenue measure, but simply a change in the structure of duties on alcohol. Whether the original Bill or my amendment carries, the overall effect on the revenue collected is nil.
Some Members will be persuaded to vote against my amendment or to abstain, believing that the budget process should remain firmly in the hands of the Government. I agree with the reasons but I reject the conclusion. The Dutiable Commodities (Amendment) Bill 1994 should not be confused with the budget process. It is entirely separate and should have been introduced separately.
MR HOWARD YOUNG: As representative of the tourism industry I, along with many other Members of this Chamber including the Honourable Martin BARROW, have received many representations from our constituents, particularly from the hotel industry. They, like myself, are genuinely concerned that this revenue-neutral measure will have an adverse impact on tourism into Hong Kong.
I tend to believe that tourists go to a destination for a variety of reasons and they do tend to compare the advantages and disadvantages of each destination product. It is widely known and said that tourists really come, or go anywhere, for the sake of four S’s. One is the sun, the second is the sea and the third is the sand and the fourth S is shopping.
Now Hong Kong is regarded by many tourists to have sun which is too hot, sand beaches which are too crowded and of course our sea. We all talk about what state the water is in. But when it comes to shopping, that is 55% of Hong Kong tourism expenditure. When a tourist comes to Hong Kong, he, like many of us when we go abroad, compare attractiveness of shopping by looking at a small number of products. One is perfumes, the other is the taxi fare and the third is well-known brands of watches and the fourth is expensive drinks. Tourists do not compare the price of rice wine or cheap grape wines between different countries. They do compare many of the very well-known brands, which the Honourable Simon IP has mentioned. Now if a tourist comes from Singapore, where he has just ordered a brandy or fine wine, and he comes to a Hong Kong hotel and he finds that the price is very much higher, he automatically comes to the conclusion that everything else in Hong Kong is twice as expensive.
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I have listened to the arguments in committee by the Government for ad valorem. I do believe that there is a lot of merit in ad valorem but when we look at the structure of what is being proposed, I believe it is not purely a matter of ad valorem versus specific because the actual percentage in each category of ad valorem is different. If it were the same percentage no matter what type of wine then I would be more easily convinced.
I also believe that there must be something wrong if on the one hand the Government says, “This whole thing is revenue-neutral” but then we have the wine dealers up in arms about it and we even have the hotel breweries, who are supposed to have duty reduced, up in arms about it.
So I would suggest that perhaps this year we can go along with the Honourable Simon IP’s amendment and give the Government more time to rethink and see whether there is any better way of doing it and come back again next year with something that could, hopefully, since it is revenue-neutral, make everyone happy.
Now, as a person who today is with an airline and previously in travel but started a career in shipping, I do very much sympathize and understand the point Mr IP has just said about cargoes of Mercedes going up north and cognac coming down. A shipping company’s nightmare is one-way traffic and a shipping company’s paradise is return cargo. I do fear that if we have a system which gives great incentive for people to move cargo illegally in both directions and earn enormous profits, then that really does cause a problem.
Therefore, I am inclined to, at least for this year, go along with the Honourable Simon IP’s amendment.
MR VINCENT CHENG: Mr President, I sympathize with my good friend, Mr Simon IP. I agree with what he said and I do not want to repeat the arguments.
There is no reason at all for the Government to make a bottle of good wine so expensive and impose such a punitive rate. Quite clearly the increase in price of good wine has gone beyond the principle of affordability. Indeed, what the Government has done is forcing people to shift to low quality liquor. Instead of drinking a bottle of XO in a traditional Chinese wedding or birthday banquet we are suggested to drink”九江雙蒸”.
Perhaps government officials should set an example to show their genuine support for this new duty. Instead of serving wine during official banquets and lunches they should serve ”廣東米酒”to their guests because tax on it has declined by 75%. I am sure the Government would love to do this to Members of this Council, not as a gesture of hospitality but rather to get even and settle some old debts.
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Unfortunately for Mr IP I cannot give him my vote because the Bill is part of the Budget. I have always believed that a Budget should not be unstitched by the Legislative Council. We should accept it or reject it as one single package.
Mr President, I support Mr IP in spirit.
MR JAMES TIEN: Mr President, the Administration had wanted to propose an ad valorem duty scheme that would be simple, fair and affordable. The Government claims that the proposed scheme is simple because it treats all alcohol the same, that is, to assess various percentage of duty based on respective normal prices. It is fair because it applies the same scheme to all alcohol products. It is affordable because a lower value product would be levied a lower duty.
I do not question the Administration’s motive but I do question whether the proposed scheme will actually achieve what it sets out to do and whether this is the best way to do it.
Specifically I would like to ask, is it really simple whether or not it creates unfair competition between local breweries and importers? And, is it the appropriate means to ensure affordability in the complex reality of the marketplace?
Mr President, is the proposed scheme simple? After three months of negotiation with local brewers, that is San Miguel and Carlsberg, only an approximate range of duty rate has been reached. The final figures have yet to be worked out. I believe the problem here is what constitutes a normal price on which duty is levied. In an effort to use a uniform system to simplify the present tax system, the Government has created an administrative nightmare, too complex and vague for implementation.
Is the proposed scheme fair? Though the Government has claimed the new system is fair because it is applicable to all products. Yet it has, however, created unfair competition between local brewers and importers. The duty between the two are assessed differently because some of the major cost components are dutiable for local products but not so for the imports. For instance, the assessable value of locally produced beer includes a range of costs related to freight and insurance for imported raw materials and packaging materials, which are excluded from imported beer. The inclusion of certain locally incurred marketing and sales expenses are still being negotiated, while these are all excluded from imported duty basis.
Is the proposed scheme the appropriate means to measure affordability? Duty reduction on lower price products does not necessarily benefit the man in the street. Neither producers nor wholesalers determine the market prices. Retailers do. For instance, producers have no influence on prices charged at
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restaurants or bars, nor do they have much influence on supermarket prices. The Government says prices of certain liquors have already dropped. Yet, of the $41.51 duty reduction for a bottle of Bacardi rum, how much has the retail price dropped? I could tell Members that it will drop by an average of $4.50.
I believe the Government’s ad valorem duty scheme proposal is complex, unfairly discriminates against local producers, and will have dubious benefits for the ultimate consumers.
Mr President, a responsive government is one that retracts a problematic proposal, even if temporarily, for further consultation before implementation. I hope the Hong Kong Government is responsive and will support the Honourable Simon IP’s amendment thus enabling further consultation before implementation. Alternatives such as specific rates based on alcohol content should be considered. The smuggling issue from China and compatibility with GATT rules also has to be carefully discussed.
Mr President, with these remarks, the Liberal Party supports the amendment as proposed by the Honourable Simon IP.
DR HUANG CHEN-YA (in Cantonese): Mr President, the United Democrats of Hong Kong (UDHK) has considered the duties on alcoholic beverages from three aspects: Firstly, their influence on the public; secondly, their compatibility or otherwise with the GATT principle; and thirdly, their influence on local breweries.
Mr President, we know that the wines consumed by 89% of the public are in fact cheap wines. While the old duty system is retrogressive whereby those who drink cheaper wines have to pay more duty, the new system is progressive in that it requires those who can afford expensive wines to pay more. This is a very fair system. From the consumers’ angle, as the duty on most of the alcoholic beverages will be reduced, this implies in fact that they will be paying less for such products. However, as Mr IP and Mr TIEN have pointed out, prices have risen instead of fallen, or fallen by just a very small margin. The problem stems not from the new system. It only reflects that some unscrupulous alcohol traders have regarded the tax reduction as an unexpected fortune and pocketed the duty balance instead of benefiting the consumers. The adoption of the new duty system can serve to reveal to the public the true faces of these unscrupulous traders, whereas a restoration of the old system will only help these traders disguise themselves and continue to erode consumers’ interests. Moreover, the old system has constituted an import hindrance to wineries producing cheap wines because they have to pay the same duties as the expensive wines. Now under the new duty system, consumers can avail themselves of these cheaper but perhaps equally good wines. Some people have said that the new system will punish the connoiseurs. I think that such a proposition is a muddling of logic, equating expensive wines with high quality wines. In fact, we have found that some wines are expensive not because their
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import prices are high; they are expensive because alcohol traders, exploiting consumers’ worship of expensive goods, have set particularly high prices in order to reap profits several times of the costs. If Mr Simon IP really cares about the consumers and hopes that the prices of expensive wines will not increase too sharply, he should endeavour to make these traders show more sympathy for consumers and not to set the prices at such a high level. If the alcohol traders of Hong Kong do not want to see an influx of bootleg wines, all they have to do is to lower their profit margins so that the public will not have to pay so much for the wines. The wines available in Hong Kong should then not be so much more expensive than those in China. So what has it got to do with the old or new duty system?
From the consumers’ point of view, the new system will be more beneficial to the majority of the public. We have no reason to disregard the fact that the majority will benefit and oppose the new system simply because a small number of people who like to drink expensive wines will have to pay more.
Secondly, on the GATT concern. The old duty system distinguishes between European-type liquors and Chinese-type spirits, which is clearly inconsistent with the GATT principle. The new system does not have such a problem. Some people have said that many other countries have adopted specific tax rather than ad valorem tax. However, if we look into the situation in more details, we will find that in addition to specific tax, those countries also levy value added tax, not solely a specific tax. Value added tax is also a kind of duty levied on an ad valorem basis. So when Mr IP said in his letter to us that other countries had adopted specific tax, he was in fact tactfully and conveniently holding back some of the facts and using the part to stand for the whole. The people of Hong Kong have for years opposed the introduction of a value added tax on an extensive basis. I wonder whether Mr IP wants us to retain specific tax for the rich and those who have a taste for expensive wines, and then introduce value added tax “via the back door”.
Thirdly, on the two local breweries. They have complained that the new ad valorem duty will put their competitors at an advantageous position as far as competition is concerned because they will be paying an even lower duty. We surely understand that the ad valorem duties of imported and local beers are calculated at different points of the price chain. Such a difference has given rise to considerable controversies as local breweries worry that although the duty that they eventually have to pay may be reduced, the reduction will not be as much as that enjoyed by imported beer. But from the figures provided to us by the Administration, we find no evidence in support of such a worry, and these breweries have been unable to provide further information to substantiate their worry. Even if there are any technical defects in the existing method for the calculation of ad valorem duties, they can be rectified and should not constitute a reason for not adopting the ad valorem system. Despite the worry of the two local breweries that their competitiveness may be undermined by their generally higher costs compared with imported beer, these breweries, as we all know, have recently increased the prices of their products. The increase reveals that
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they have in fact not worried about the possible usurpation of their market shares by cheap imported beer. The Administration has reduced the duties payable by alcohol traders by nearly 40%, but not only have they not passed the benefit arising from this reduction on to the consumers, they have instead increased the prices of their products, while pocketing entirely the benefit of the reduction. So if the old system is restored, they will have an even more plausible excuse to raise their prices further because the duties have increased! In these circumstances, I think that their arguments are in fact not convincing at all.
We certainly have to keep an interest in and care about our local breweries because not only have they invested in Hong Kong and provided job opportunities, but more importantly they have implemented a scheme for recycling beer bottles and cans, something which imported beers do not have, thereby protecting our environment. However, given our pursuit of free market economy, we simply cannot implement a duty system which particularly protects local enterprises and discriminate against imports, because it runs counter to the principle of a free market which we have always upheld in Hong Kong. As the new ad valorem system will give the public more opportunities and a wider choice of products, it will therefore benefit the consumers, enhance market competition and be favourable to the economy as a whole.
I can also see that the two local breweries have been given support in the form of grants of low-priced land by the Hong Kong Industrial Estates Corporation, and this has enabled San Miguel to earn a large profit recently by liquidating its fixed assets. So the UDHK does not think that we should shelve the proposal of ad valorem duty on alcoholic beverages because of the reasons put forward by the two local breweries.
However, we have to state our stance clearly:
First, as the local breweries have such a worry, we should categorically ask the Administration to find a reasonable and proper solution so that the calculation of the ad valorem duty payable by local breweries should be juggled technically, such that they will not be required to pay more than they are due. Likewise, the breweries of imported beers should not pay less than they are due. Even if the proposal is passed today, we will still follow up this matter.
Second, the Administration should expeditiously legislate to require all alcohol traders to operate a scheme for recycling bottles and cans. Currently, only the two local breweries have done so while the imported bottles and cans have been polluting our environment, and what is unacceptable is that the costs of disposing such garbage has been transferred onto the public. Hong Kong should therefore follow the practice of European countries in requiring all alcohol traders by way of legislation to take up the responsibility of environmental protection.
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For the reasons given above, the UDHK will support this Bill and oppose the amendment by Mr Simon IP.
MR MARTIN LEE: Mr President, when a lawyer speaks on a subject close to his heart, or even closer perhaps to his palate like a bottle of Petrus ― I got the brand name from the Honourable Andrew WONG ― he could be passionately effective. But unlike my successor in the Legal Functional Constituency I do not go for what he calls the finer things of life and so I can speak, perhaps, a little more dispassionately.
If our lawyers could no longer afford expensive wines during meals because of the passage of this Bill, let me recommend to them an even better drink, which is clearly even more conducive to health ― hot water with a twist of lemon. This drink is guaranteed non-taxable so long as Mr Donald TSANG remains Secretary for the Treasury because I understand this is his favourite drink.
Mr President, the United Democrats of Hong Kong and the Meeting Point will oppose Mr IP’s amendment.
MR ANDREW WONG (in Cantonese): Mr President, the duties on alcoholic beverages have always been charged under a mixed system of ad valorem rate and specific rate. In his Budget speech made in March this year, the Financial Secretary, Sir Hamish MACLEOD, announced his reform of streamlining the duty system by placing it solely on an ad valorem basis. Despite the fact that the new ad valorem duty system has been the subject of a Public Revenue Protection Order issued at that time and has come into immediate effect for the time being, the reform of duty system has to be effected by amending the Dutiable Commodities Ordinance. Therefore, the relevant amendment Bill has to be deliberated and passed by this Council today. If the Bill cannot be passed within four months from the date the Order was issued, that is, if the Bill is not passed before July, the new system will have to be suspended from operation and the extra tax thus levied will have to be reimbursed.
The Financial Secretary claims that the new system is both simpler and more equitable than the old system. On the point of making the system simpler, the Financial Secretary has been absolutely correct. But it does not mean that there is no other even simpler systems with ever fewer shortcomings. On the point of equity, we have to look at what “equity” really means. The ad valorem duty system is of course simpler than the existing mixed system since, at least, one less component is involved. However, this has also illustrated that the specific duty system may also serve the same function of making the system simpler. In fact, specific duty is even simpler than ad valorem duty.
Firstly, to charge duties on an ad valorem basis involves the verification of the FOB (free on board) prices of the products, which is really more
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complex than the procedure of testing alcohol content as is required under the specific duty system.
Secondly, the relationship between the brewers, exporters, importers and distributors forms a complex and intricate nexus which is capable of infinite variability. They have endless methods to evade tax. For this reason, charging specific duties on alcoholic beverages is favoured by countries all around the world. Japan and Taiwan switched to the specific duty system in 1989 and 1991 respectively.
Other dutiable commodities in Hong Kong, such as methyl alcohol (alcohol not for drinking purpose), hydrocarbons, hydrocarbon oils (diesel oil and gasoline) and tobacco, are all subjected to specific duties. Cosmetics, the commodity which used to be subject to ad valorem duty, had been excluded from the list of dutiable commodities. The first registration tax of vehicles, which is not within the ambit of the Dutiable Commodities Ordinance, is levied on an ad valorem basis, but the annual licence fees of vehicles happen to come under the specific duty system.
It is beyond doubt that the Government is emphasizing “equity”, which means adhering to the “ability to pay” principle. From this point of view, the ad valorem duty system fulfils the quality of proportionality as required under this principle, and is more equitable than the specific duty system which is regressive in nature. However, we should think carefully whether we should work for the goal of making every tax item adhere to the principle of equity, or we should pursue the objective of bringing our overall revenue generally in line with this principle of equity (which means those who can pay more should proportionally pay more). The former goal is of course fair but is the latter objective not so? If we say that only the former goal is fair, then in what light are we going to view the levying of specific duties on such products as hydrocarbon oils, tobacco and methyl alcohol?
In fact, the objective of levying specific duties on the above dutiable items is “to discourage people from consuming these products by means of levying tax”. In other words, the duties are levied for the purpose of discouraging people from using gasoline, driving and smoking. Only by adopting the specific duty system can this objective be attained because the ad valorem duty system can only provide impetus for people to switch to cheaper products. We can see from the above arguments that the point of equity is totally irrelevant here.
The new ad valorem duty system has other possible shortcomings. For example, will the local brewers move northward to the Mainland because the new system favours imported beer? Dr the Honourable HUANG Chen-ya said that the San Miguel Brewery sold a piece of land to a property developer, but does he know that the San Miguel Brewery has set up a brewery plant in Guangzhou and may have the beer forwarded to Hong Kong for sale in the future? Another shortcoming lies in the possible consequence of a massive influx of smuggled expensive wines and spirits to Hong Kong since the price of
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the already expensive wines and spirits will go through the roof after the drastic tax increase. I do not want to go into the details, but just want to remind the Government and the Members that they have to rethink what sort of reforms they are now seeking. It is important to note that any reform to the tax system, just like the tax system for the first registration tax of vehicles, should not be put forward in the context of the Budget; therefore, I cannot agree with the Honourable Vincent CHENG’s arguments. If the Government is trying to avail itself of the opportunity offered by the Budget in putting forward the reform proposal by the “back door”, so to speak, I believe that the Honourable Vincent CHENG’s earlier expression of support for the Honourable Simon IP “in spirit” should actually mean support “in spirits” for Mr IP.
With these remarks, I support the Second Reading of the Bill and support the amendment to be moved by the Honourable Simon IP.
MR FRED LI (in Cantonese): Mr President, my speech will be brief since some of the arguments I intended to put forward have already been covered by Dr the Honourable HUANG Chen-ya. I also sat on the Bills Committee.
The Honourable Andrew WONG just now mentioned the San Miguel Brewery. I would like to point out to him that the brewer has another brewery plant in Yuen Long Industrial Estate, so it is not likely for them to brew beer in Guangzhou and then ship the products back to Hong Kong for sale.
Many Members have touched upon the point that a duty system should be equitable and simple. In this context, let us look at the concrete examples given to us by the Government. (I think honourable colleagues, in particular the Honourable Simon IP, would have provided us with some more convincing examples.) An example cited by the Government is that in 1993, the best selling alcoholic beverage was the so-called low priced grape wine retailing at $145 or less a bottle, which accounted for 89.3% of the total sales. Where this kind of grape wine is concerned, the proposed duty system, if endorsed, will bring down its price in the region of $15.7 to $22.1. These are the figures given by the Government. If there are Members who consider these figures falsified or unreliable, they may certainly refute these figures.
The new system calculates the duty payable on a per bottle basis. Take the more expensive red wine retailing at $300 a bottle as an example. Although its retail price is bound to go up under the new system, its sales in Hong Kong amount to only 1.3% of the total sales. Should we vote down the new system which imposes higher duty on such high priced alcoholic beverages accounting for 1.3% of the total sales just for the benefit of a particular group of consumers at the expense of other consumers? I do not know who can afford the high-priced wine, but surely the man in the street is not among them. The Honourable Howard YOUNG mentioned that alcoholic beverages might be priced at exorbitant levels in local hotels. I wonder if this has anything to do with the new duty system. Price-setting is a fairly complicated matter. If the
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duty on a particular type of wine is increased by $300 per bottle, will the hotels just mark up each bottle by $300? They may not set prices in such a way. They may increase the price by, say, $500 or even $600, so as to gratify drinkers’ vanity by making them believe that they are consuming the finest wine. It has nothing to do with our duty system, does it not? Have we taken this point into consideration? I do not think prices for alcoholic beverage charged by hotel operators in their hotels are of any meaningful relevance. For this reason, I cannot agree at all with the proposition that if tourists are to be charged heavily for the alcoholic drinks they order at hotels, then our tourism will be badly hit.
Let us now look at the figures. In fact, many alcoholic beverages will experience a reduction in the duty payable. The Honourable Vincent CHENG has just suggested that the Government may serve Jiujiang rice wine to Members of this Council. To the best of my knowledge, the Government has never served red wine pricing at $300 or more to Members of this Council. I have not had the privilege. I am not sure if there are any Members who have received this sort of courteous treatment. The Government usually entertains us with red wine retailing at $100 or so a bottle. The Financial Secretary may, in his reply later, tell us whether he will entertain Members with high-priced red wine, but I am sure that he will not serve us with Jiujiang rice wine because it is usually used as seasoning or consummed as beverage among manual workers.
I have read the representations submitted by the two local breweries as well as the information furnished by the importers. The two local breweries will pay less duty than before under the new system. The point at issue, however, is that the new system will open the door to cheaper beer from abroad to compete with the products of the two local brewers. The local breweries are not complaining about the higher duty to be levied on them to the tune of 20 or 30 cents per can or bottle, but largely about the fact that imported beer may pay even less duties. However, looking at the issue from another perspective, that is, from the consumers’ point of view, a more competitive market will bring overall benefits to the general public. I hold the view that the new duty system is more equitable in the sense that those who can afford expensive wine are required to pay more. I give my unreserved support for this principle.
Mr President, I support this new duty system and oppose the amendment to be moved by the Honourable Simon IP.
FINANCIAL SECRETARY: Mr President, I would like to begin by thanking the Honourable Peter WONG for what seems to me a very fair summary of the argument on both sides. I also listened with interest to Mr Simon IP’s views and I took them seriously and would do my best to convert him to my view. The Dutiable Commodities (Amendment) Bill 1994 seeks to give effect to two proposals announced in this year’s Budget:
- The first, of course is the ad valorem duty system for all alcoholic beverages;
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- The second, the increase in duty on hydrocarbon oils by 8.5% in line with inflation.
The second proposal, I am thankful to say, seems to be by and large non-controversial. Legislative Council Members have generally accepted that failure to maintain the real value of fuel duty would aggravate congestion on our roads. The proposed reform of our alcohol duty system has generated however much discussion ― I must say somewhat to my surprise rather more discussion than I would have expected in this Council and in the outsides. Some Members support the Administration’s initiative in introducing what we see as a fairer and simpler duty system on alcohol. Quite a few, however, I recognize, oppose it for what I hope to convince Members are less than convincing reasons. I know that a number of Members have still to make their minds up so, I hope you will bear with me if I deal with the arguments at some length.
A progressive system
As I explained in my Budget speech, the new duty system was borne out of a desire for rationalization. It is not our intention to raise additional revenue under some guise of reform, nor my engaging in any sort of moral crusade against one particular type of drink and for another, not a moral issue at all. According to district feedback, the community at large favours a progressive duty system based on the principle of affordability; in other words, those who can afford to pay more should pay more. In the context of a tax on alcohol, the nearest we can get to this principle is that the more expensive products should bear at least a proportional share of the duty. The old duty system clearly fell short of such an expectation. More expensive products in fact paid a smaller percentage of duty relative to their values than cheaper products of the same type. In short, the average consumer suffered. This anomaly in my view called for an immediate rectification.
We are dealing here mainly with a question of fairness. The general public in Hong Kong feels that duty on alcohol is reasonable, and it is fair that those who can afford the finest wines, as someone has described them, should bear a fair share of the tax. The result of the reform proposed is that the tax burden will fall more equitably on our drinking population.
Duty reduction across the board
Under the new system, a broad range of cheaper alcoholic beverages will pay less duty. Some people have claimed that certain products which are subject to tight quality control during production, such as brandy and whisky, will be hard hit. This is not so. We conducted a study to assess the impact of the new system on the best-selling product in 1993 in each broad category, for example, brandy, whisky, vodka, rum, liqueurs, Chinese type spirits, grape wines as well as beer, each of those. The results indicate that there will be duty reductions in every case, ranging from 6% to 75%. I repeat we are talking about the best-selling product in each of those categories. Overall, as another Member has
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already pointed out, over 90% of the alcoholic products sold in Hong Kong will enjoy a duty reduction.
I am pleased to see some price reductions already, reflecting the effect of the new duty system. For those traders who have been less responsive, I shall not be too critical at this stage. It is possible that they are still selling old stock. Or more likely but they may be waiting for the proposed system to be made permanently into law before making a final decision on pricing. We are, in a sense, in the transitional phrase at the moment honestly this year. However, once the new system is formally established, the Administration will keep an eye on how the market reacts. We have also been encouraging the Consumer Council to monitor price trends for these products. I believe consumer power will, once the new system has been confirmed, ensure that the prices follow duties down for the majority of products. The industry itself keeps telling us this is a very competitive industry. If it is competitive then it is going to have to react to lower prices by some, if other ones have to follow suit or lose market share.
Duty increase for selective products
It is true that a minority of products will face a duty increase under the new system. But they are mostly found at the upper end of the market which caters to consumers of luxury products. The higher duty payable for these products results from the rectification of the unfairness which I referred to earlier under the old system. It is also a reflection of the consumers’ ability to pay. Given the strong tendency of conspicuous consumption in Hong Kong, I do not envisage that the new duty system will significantly affect the sale of these expensive products.
Furthermore, these products represent minor fractions of the market. For example, in 1993 the quantity of still wine retailing at more than $145 a bottle ― which is roughly the level of wine above which there is an increase in duty ― consumed in Hong Kong took up only 10% of the total local still wine market. Of this, over 80% will face only a modest duty increase in the region of $10 to $20 a bottle. Those products with a steeper duty increase, say, previously retailing at above $180 a bottle, constitutes only 2.4% of the total still wine market in Hong Kong. The relatively bigger increases in the duty on XO brandy has been cited as another example. Yet, XO brandy, or perhaps I should say XO cognac, represents only 6% of all grades of brandy, even as a percentage of brandy, 6% and 0.08% of all alcoholic beverages, drunk in Hong Kong during 1993. These figures illustrate that these expensive drinks are reserved for the very few. With respect to the Honourable Howard YOUNG’s arguments, I find it not very likely that tourists do not drink beer and moderately priced wine and only drink or largely drink or mainly drink the cognacs and the expensive wines. I also like in passing the tourists the advantages of the duty-free shops now and in the future.
4524 HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 Impact of the new system on beer
Beer has been particularly discussed because of course there has been a degree of lobbying on the issue which is entirely the industry’s right. The two local breweries as well as some Members have expressed serious concern about the impact of the new system on that local industry. I can assure Members that such worries are not warranted. Indeed, as it happens the weighted average taxable value of local beer is in fact lower than that of imported beer, which makes it even less convincing to argue that the new system discriminates against local beer.
The Amendment Bill now before Members provides that the same valuation method and the same ad valorem duty rate apply to local and imported products without distinction. I can confirm, for the Honourable Dr HUANG, that we are always ready to have a dialogue with brewers if they think at any time this aim is not being achieved. We are not simply pursuing a detente; we are ready to discuss if problems emerge. The actual taxable values of individual products, that is to say beer products, will however vary according to their pricing strategies. This will in turn, of course, affect the amount of duty payable in dollar terms. Some cheaper imported beer will pay less duty than expensive local beer. But expensive imported products will pay more duty than cheaper types of local beer. This is, I hope, obvious. This is the essence of ad valorem duty.
The assessment of taxable values and the duty payable is a technical process, which the Customs and Excise Department carries out in accordance with our own law as well as internationally accepted valuation methods and procedures. Whether an item is taxable is to be determined by reference to law; it is not an arbitrary decision.
Since the implementation of the new system under the authority of the Public Revenue Protection Order 1994, the Administration has held a series of meetings with the two local breweries to clarify how the law will apply to local and imported beer. Regrettably, the two local breweries failed to reflect accurately our explanation in their submissions to Legislative Council Members. In essence, they have omitted certain taxable items from the dutiable basis of imported goods (for example, the sales, promotion, distribution and general administration costs incurred by the overseas manufacturer/exporter). It is thus inevitable that they have come to the wrong conclusion that the new system is unfair to them.
For beer drinkers, the new system should be good news. Except for a handful of premium imported beer in the top price range which will face a very slight duty increase, both imported and local beer will on average pay 40% to 50% less duty. And beer constitutes, I must say to my amazement, 87.5% of the total quantity of alcoholic beverages consumed in Hong Kong. In brief, the mass of consumers should benefit.
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While the new system offers an opportunity for traders to pass on lower duty to consumers through price adjustments, it is of course up to individual traders to decide how this should be done. Some will pass on more, some are less. The market will become more competitive. It is ultimately for traders to adjust their pricing strategies in order to keep their market share. From the consumers’ point of view, the more competitive the market the better.
If despite the duty reduction and the increasing market competition, the local breweries pocketed some or all of the duty reduction and pressed ahead to put up prices as they appeared to have done, naturally they would narrow their price advantage over imported products and lose their market shares in the long run or may be in the short run. The market disadvantage which they suffered as a consequence would be the result of their commercial decision and could not be blamed on the new duty system. We also note that one local brewery has adopted a consistent policy of maintaining higher prices than its competitors, so as to promote a “quality image”. This is its right. But inevitably, higher wholesale prices will increase the taxable value on which duty is payable.
The introduction of ad valorem duty on beer will also open the local market to some very competitive products which become available in Hong Kong for the first time. Indeed there are signs that this has already happened. This is because the previous specific duty imposed a threshold below which it was not worthwhile to import certain cheaper products into Hong Kong. Ad valorem duty removes this barrier, and consumers will have the chance to try out some new products at very competitive prices. This might worry some traders who built up their business under the old system. To consumers, however, this should be welcome. Similarly, a new wind of competition is set to flow through the wine industry.
The two local breweries have claimed that the Customs and Excise Department will have difficulty in administering the new ad valorem duty system. They also argued, and indeed some Members argued that ad valorem duty was out of favour elsewhere in the world. We do not of course tend to follow the rest of them all with our taxation system for which we should be thankful. But anyway on this particular point I do not think it is absolutely quite right. While the concept of ad valorem duty may be new to our breweries, it has long history in our taxation system. Previously, ad valorem duty was applied to a wide range of alcoholic beverages and our previous duty on cosmetics was also charged on a fully ad valorem basis. There is no reason why an ad valorem duty cannot be applied to beer. The Customs and Excise Department is well placed to cope with an extension of ad valorem duty to the full range of alcoholic beverages.
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To deal with one point raised by a Member, the Commissioner of Customs and Excise has in fact finalized the calculation of the taxable values of the products of local breweries. Those figures have been given to the breweries. I guess they are waiting the outcome of today’s vote before confirming their agreement to those figures. We are aware that the success of our new system hinges on its credibility. Importers and local manufacturers must understand clearly that any attempts to abuse the new system can and will be detected. We shall ensure that the Customs and Excise Department has the resources to enforce the system effectively.
On the question of overseas experience, I am aware that a large number of countries charge specific duty on alcoholic beverages. But they combine it with either a sales tax or a value-added tax which is, of course, on an ad valorem basis. And with respect to the Honourable Simon IP, I do not see why this point is irrelevant. It is relevant to the argument which is put. They do charge an ad valorem tax on these products elsewhere. It happens to have a different name.
Consistency with the GATT principles
Some Members have raised questions about the compatibility of the new system with the GATT principles, referring in particular to a GATT panel finding in relation to Japan. First, to dispel misconception about that panel’s findings, may I say the panel did not conclude that rice sake products were directly competitive or substitutable products in relation to the grape wines, distilled spirits or liquors imported from the EEC. What the panel did find was the higher internal tax in Japan on imported whisky and so on afforded protection to its domestic alcohol industry. But in our case, of course, we are not proposing anything of the sort. Our experts who deal with GATT issues on a day-to-day basis have given us clear advice, they gave it to us, of course, before I proposed the change, that the new ad valorem duty system for alcoholic beverages is entirely consistent and compatible with our obligations under the GATT. There is no discrimination according to source of origin. Nor is there any element of protection afforded to domestic production. For example, a bottle of French wine attracts the same rate of duty as a bottle from Australia or the United States. Rice wine produced in Hong Kong is taxed in the same manner as that imported from China and elsewhere.
New system will not lead to more smuggling
I appreciate Members’ anxiety to ensure that we are not creating a new encouragement of smuggling because of course we have a problem with cigarettes and tobacco. And we look at that carefully again before we propose this new system. Although the effective duty on some products under the old system was over 400%, there was no large-scale smuggling of alcohol. It is difficult to argue that the new system ― which will bring about, as I described, a reduction in duty on the great majority of products consumed in Hong Kong ― can lead to more smuggling. I accept that there will be a significant increase
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in duty payable on a minority of products. But many of that small group are products that would deteriorate significantly in the course of a smuggling operation. Consumers of such expensive products are generally wary of buying smuggled alcohol, given the deterioration during smuggling and the much greater risk of counterfeit goods. The case of cigarette smuggling does not therefore make a very good comparison. People are willing and fortunate to buy cigarettes from street stalls, canteens, small shops and the like. But I very much doubt if this is so for connoisseurs buying the best cognac or fine wine costing thousands of dollars a bottle. I would like to hear from many connoisseurs in this chamber who will be willing to do that. I am very much doubted.
Recycling of beverage containers
At the Bills Committee discussions, a Member has requested the Administration to consider imposing requirements on importers and local manufacturers of beer for the recycling of beer cans and bottles. I referred this request to the Secretary for Planning, Environment and Lands for sympathetic consideration in the context of the waste reduction study commissioned by the Environmental Protection Department. This study will examine all possible ways of minimizing and recycling waste. I understand that the results of the study will be available around July next year.
Conclusion
To conclude, there is in my view a compelling case for reform. The new system is easy to understand, fair, and will bring real benefits to consumers. The Honourable Simon IP’s proposed Committee stage amendment will, if passed, restore the old system. This would perpetuate a less fair situation whereby expensive products would continue to pay a lower percentage of duty at the expense of buyers of cheaper products. Those who support the proposed amendment would also in effect be helping those traders who prefer a less competitive market at the expense of consumers’ interests. I hope it is clear to Members that the better way forward is to agree to the new alcohol duty system and let in the fresh wind of competition and not to support the proposed amendments.
PRESIDENT: I understand that some Members have interests to declare, and I would just remind Members of the amended Standing Order 65(1) that a Member shall not vote upon any question whether in Council or in Committee in which he has a direct pecuniary interest.
MR RONALD ARCULLI: Mr President, I would like to declare that I have a direct pecuniary interest as a shareholder of a company which has an interest in wine dealing. So I shall not vote at the Second Reading (amendment), nor in Committee.
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MR MARTIN BARROW: Mr President, I declare interest as a non-executive director of a company which has a minority interest in a distributor of wines and spirits.
MR HENRY TANG: Mr President, I wish to seek clarification on whether I could vote or not. I own a large amount of grape wine which, if the government Bill were passed, will increase greatly in value. (Laughter)
PRESIDENT: A direct pecuniary interest, as I understand it, is rather narrowly defined. I do not think you will be caught by that rule.
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).
CRIMINAL PROCEDURE (AMENDMENT) BILL 1993
Resumption of debate on Second Reading which was moved on 14 July 1993 Question on Second Reading proposed.
MR RONALD ARCULLI: Mr President, the Criminal Procedure (Amendment) Bill 1993 seeks to implement certain recommendations of the Report of the Law Reform Commission of Hong Kong on Bail in criminal proceedings relating to the admission of a person to bail by a court.
At present, persons accused of criminal offences have no statutory right to bail and there are no statutory provisions regulating the courts’ discretion to grant or refuse bail. When exercising their discretion, the courts rely on common law principles. It is considered to be unsatisfactory in light of the enactment of the Hong Kong Bill of Rights Ordinance (“the BOR”). Article 5 of the BOR provides, among other things, that “no one shall be deprived of his liberty except on such grounds and in accordance with such procedures as are established by law”. It further provides that “it shall not be the general rule that persons awaiting trial shall be detained in custody”.
The Bill creates a formal right to bail and codifies the existing practice. The Bill provides that bail may be refused only where the court considers there is an unacceptable risk that the accused person will:
HONG KONG LEGISLATIVE COUNCIL ― 22 June 1994 4529 (a) fail to surrender to custody as appointed; or
(b) commit an offence while on bail; or
(c) interfere with a witness, or pervert or obstruct the course of justice.
A Bills Committee of which I was elected Chairman was set up to study the Bill. The Bills Committee has held four meetings and the Administration has participated in three of them. The Bills Committee has also received written comments from the Law Society of Hong Kong and the Hong Kong Bar Association.
The Bills Committee deliberated at great length the views of the two professional bodies and discussion mainly focused on four areas, namely, the test for refusing bail, repeated applications for bail, procedure in bail proceedings and the power to bail convicted person.
Let me first turn to section 9G(1) which deals with the test for refusing bail.
The Bill provides that bail may be refused only where the court considers there is an unacceptable risk that the accused person will:
(a) fail to surrender to custody as appointed; or
(b) commit an offence while on bail; or
(c) interfere with a witness, or pervert or obstruct the course of justice.
The “unacceptable risk” test follows the position in Australia under the Bail Acts of Victoria and Queensland, which were enacted in 1977 and 1980 respectively. The Bar Association is of view that the proposed criterion of “unacceptable risk” may result in bail applications being determined on a subjective assessment of the risks. What is “unacceptable” to one judge may be acceptable to another. The result would be inconsistency of approach in different courts. The Bar Association prefers the test of “substantial grounds for believing ..... (for instance, that the accused person will fail to surrender to custody and so forth)” as provided in the English Bail Act. Judges would then have to justify their refusal of bail by pointing to those substantial facts and matters displacing the presumption of bail. Likewise using the “unacceptable risk” test judges will still have to justify any refusal because of the presumption of bail. Both tests appear to have worked reasonably well in the two countries mentioned.
The Administration however feels that the “unacceptable risk” test is a test of common sense reaction to a risk, not based purely on an estimate of chance whilst the test of “substantial grounds for believing” that a person will or might fail to answer his bail is considered inflexible in that it does not enable the court
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to assess both the nature and the degree of risk in granting a person bail. For example, the one-in-ten chance that a suspect rapist will or might again whilst on bail commit rape might be regarded as an unacceptable risk. On the other hand whilst a higher chance of a pickpocket committing a further offence of pickpocketing whilst on bail might be regarded as an acceptable risk because he would otherwise not get bail if the court were using the “substantial ground” test as opposed to the unacceptable risk test. In contrast, the tests that speak in terms of belief, probability, possibility or likelihood fail to gauge or capture these realistic situations. The test of “substantial grounds for believing” might fail to recognize that a strong likelihood based on substantial grounds may be acceptable in some circumstances, while in others a much less strong likelihood will be unacceptable.
By a majority, the Bills Committee accepts the views of the Administration that the test should be “an unacceptable risk .....”. Two Members expressed support for the “substantial grounds for believing” test and the Honourable Simon IP will move an amendment at the Committee stage to that effect.
The second area of discussion is on section 9G(11) regarding repeated bail applications.
The Bill adopts the approach of the Bail Act 1976. The defendant is given an unrestricted right to one bail application after the hearing at which bail is refused, and thereafter a court need not hear arguments as to fact or law which it has previously heard.
The Hong Kong Bar Association is however of the view that since the Bill represents a significant reform of the law on bail with a view to affirming the right to bail on a statutory basis, it would be appropriate to rationalize the law and remove the restriction on repeated applications in accordance with the views of the Law Reform Commission.
The Administration explained that the proposed new section 9G(11) does not prevent a defendant from making repeated applications for bail. In fact, the court is obliged to consider bail on every occasion that he appears before a court in connection with proceedings for the offence without the need for any application for bail. The provision merely gives the court a discretion, in certain circumstances, not to hear an argument it has already rejected.
The Administration also clarified that a similar restriction on multiple bail applications in the High Court has operated in Hong Kong since 1979 by virtue of section 12B of the Criminal Procedure Ordinance. The existing restriction on repeated bail applications, contained in section 12B of Cap 221, was held to be consistent with the Bill of Rights in a case of the High Court. Moreover, the rule that a defendant remanded on bail must generally be brought before a court at least every eight days is contained in section 79 of the Magistrates Ordinance (Cap. 227).