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HONG KONG URBAN COUNCIL
DR. THE HONOURABLE KIM Y. S. CHAN (in Cantonese):—Mr. Chairman, the subject of privatization of government services has been an issue of great interest. To the public body, the merits of privatization are obvious. It will free the relevant public services of government intervention in day-to-day management. The company will be permitted to access financial markets to raise the necessary funding for its future capital investments. Naturally, it will also be free to cut costs and vary the standard of its service according to the needs of its customers. Furthermore, it will be able to devise and implement its own incentive scheme to attract and retain staff and management with rewards commensurate with profits and performance. Indeed, the Urban Council only has to look at its abattoirs which have involved heavy expenditures resulting in subsidies from our rate revenue. On the other hand, the private abattoirs in the New Territories are able to operate profitably and satisfactorily.
Although I am a regular advocate of privatization of public services, I feel that it is opportune to reiterate that privatization will not only benefit the public body but also the community at large, its customers, and staff. The community will benefit through a reduction of subsidies to the privatized services which are subject to the viability of the business, since there will be no rigidity on the supply of services or the establishment of staff when demand for services slackens. Customers will benefit from higher standards through the more efficient provision of public services together with the opportunity to own shares in the privatized enterprise. Benefit will also accrue to employees by employee shareholdings and hence, employees can identify with the business they serve. Through an appropriate remuneration system, employees will enjoy greater job satisfaction and better motivation by working effectively and efficiently for the privatized enterprise which they serve. Thus, Hong Kong as a whole will benefit from being more efficient with a slimmer civil service together with an appropriate standard of operation which meets the needs of its customers.
For the Urban Council, privatization of some of the cleansing services has proved to be a success. Members may recall that the Urban Council delegation to the United Kingdom in 1983 reported that a local authority was able to achieve substantial savings through privatization and the delegation recommended to this council to study the concept of privatization to enable its application to Hong Kong. The Council then embarked on an experiment of privatization for our services. Preliminary results indicated that privatization does achieve savings. Such savings certainly justify our continued effort to experiment further. In particular, more services must be identified for privatization and new ideas should be generated to involve staff in the process of privatization. Moreover, staff working in the new privatized organization should continue to be motivated. I venture to suggest that a scheme of investment participation be considered for our staff who will switch from working in a public organization to a private enterprise by virtue of the process of privatization.
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Schemes permitting the participation of staff such as share option schemes are common in the commercial sector. In some companies, staff may be given the opportunity to purchase shares in the company which they serve, as an incentive in return for their long service or good work. With share participation, staff will benefit from the efficient operation of the company. Indeed, if the company makes more profits as a result of staff efforts, every shareholder, including the staff, benefits. Hence, in our process of privatization, the Urban Council should discuss with the prospective commercial operators the possibility of permitting staff to acquire shareholdings in the company as part of job switching and pension compensation in return for their past service. The share option scheme may include an underwritten pricing mechanism whereby the new operators or even the public could have a chance to acquire the shares from the staff. Naturally, if the future operator is a listed company, this will be even better since some staff may want to liquidate their shareholdings at the time when the organization turns private, while others may choose to maintain their investments in the company which they continue to serve.
Admittedly, negotiations for privatization will be a long and complicated process as unforeseen issues and circumstances may arise. But I am sure that share option schemes will be attractive and equitable to staff when changing their working environment from a public body to a private enterprise. Above all, this will encompass an element of motivation which will enhance the interest of the company in its continuing operations and future service to our community.
Mr. Chairman, I support the motion.
MR. STEPHEN M. L. LAU (in Cantonese):—Mr. Chairman, same as last year, I would like to speak briefly on the work of the Entertainment Select Committee.
Stadia
The Hong Kong Coliseum and the Queen Elizabeth Stadium continue to be two important UC venues for pop shows, sport events, and cultural performances which have brought a considerable income to the Urban Council. In 85/86, the usage rate of the H.K. Coliseum was 64 per cent (233 shows) and the Q.E. Stadium 47 per cent (173 shows). Total revenue amounted to $37.84 million, exceeding that of $20.59 million in 84/85 by almost 100 per cent. It is mainly due to the popularity of pop concerts during the year which often drew full houses. The revenue from the Q.E. Stadium was less satisfactory. At the same time, like the other indoor games halls, most of the facilities inside the Stadium, especially in its additional venues, have to install an air-conditioning system. Therefore, the subsidies for the Stadium amounted to 68 per cent of the revenue.
Since April 1985, the administration of the Coliseum and the Stadium has been centralized to ensure the standard is raised and manpower fully utilized.
As regards future development, the Council will continue to review and improve the facilities and management efficiency of the Coliseum and the
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