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PROVISIONAL URBAN COUNCIL
even passed the motion of increasing the number of posts of the Department in order to create job opportunities.
Today, Mr. CHIANG has moved that the rental of the shops, such as food kiosks, in the Council's recreational, cultural and entertainment venues and museums be reduced across the board by 30%. We support the motive behind but the idea of reduction of rent across the board was queried by Members at the last meeting of the Standing Committee. Members have also received a copy of the letter addressed to Mr. CHIANG from the Director of Urban Services giving two major reasons for her disagreement to the proposal. The first one is that revenue will be reduced. The second one, and the most important principle, is that reduction of rent across the board will violate the principle of equity.
The amendment I have moved as well as the Democratic Party's view are aimed at bridging the gap between Members and providing a fair principle for rental reduction which would enable the Council to implement the measure as soon as possible to benefit the shop-operators affected.
The information provided by the Department has been distributed to Members, from which we can see the types of rental paid by the operators in the venues under the Council. According to the information provided, there are 98 shops in the above venues which have entered into contracts with the Council. For 1997/98, the rent paid amounted to some $64,000,000. If the rent was reduced across the board by 30% as recommended in the original motion, the Council would lose some $19,000,000 in this source of revenue in future. The amended motion moved by me and the Democratic Party is targeted at commercial tenants paying the basic rent. There are 83 of them and the rent payable by them amount to $21,000,000. The financial implication arising from the rent reduction of 30% for those paying the basic rent would only be some $7m or below. Based on the average annual rent of $21,000,000 payable by them, the monthly rental paid by these 83 shops, or more than 80% of the total number of shops, is in the order of $20,000. It can be seen from this figure that those commercial tenants paying the basic rent are exactly the small businessmen defined by us.
The fact is that all along, the categories paying the highest rent cover those commercial tenants paying the basic rent and rent pegged to the turnover. Members may find that my submission has already clearly stated that our proposal for rental reduction will only apply to the first category, that is, the category paying an annual rental of some $21,000,000. The rest are tenants whose rental is pegged to their turnover. The reason that our proposal for a 30% rental reduction should be targeted only at those commercial tenants paying the basic rent is to ensure that the Council could accommodate the loss in revenue. The most important reason, however, is that the other contracts are already subject to a mechanism, whereby their rent is pegged to the turnover, and therefore, at a time when there is an economic downturn, there is already
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