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After discussions, the Administration agreed to amend section 2(2) of the Sewage Charge Regulation, to reduce the discharge factor from 80% to 70%, to reflect the added financial burden on some heavy water users because of the simplification of the charging scheme. This will also help address the concern of heavy water users that sewage charges may significantly increase the operating costs of their businesses. The amendment regulation was subsequently approved by the Executive Council on 11 April 1995 and gazetted on 13 April 1995.
As I have said, Mr President, the sewage charging scheme in its present form is based on volumetric consumption. The logic of the scheme is that polluters should pay. In other words, the less water one uses, the less one pollutes the environment, the less one uses sewage services, and the less one has to pay. As a result, under the revised charging scheme, the first 12 cubic metres of water for households will be exempted from charges, 16% of domestic account holders will in fact pay nothing, 50% will pay less than $8 a month, and 85% will pay less than $18 a month. I think this is far from the straw that breaks the camel's back. This is a very modest charging scheme by any measure and is acceptable to a large majority of the community, an acceptance clearly reflected in a public opinion survey in November 1994. The survey found that an overwhelming majority of the 500 respondents (about 85%) supported the polluter pays principle. The majority also expressed a willingness to pay sewage charges of up to $30 a month, a sum which is substantially more, indeed nearly double, what 85% of households will have to pay.
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It is therefore surprising that it is now proposed to further reduce charges for households alone. This proposal breaches the Polluter Pays Principle which this Council has in the past soundly endorsed. It also ignores the fact that households as a whole contribute to about 60% of the organic pollution in Hong Kong, and that as they too contribute to pollution, they too should contribute to its solution. It ignores too the fact that we agreed with the Bills Committee to simplify the charging scheme to further reduce sewage charges for households.
But the amendment proposed is unacceptable for other reasons as well. Members will recall that, in March 1994, they approved the establishment of the Sewage Services Trading Fund under the Trading Funds Ordinance. This Ordinance requires the Trading Fund to fund itself through charges, a requirement accepted by The motion now Members during the thorough discussions on this Ordinance. proposed would result in an annual loss of some $100 million to the Trading Fund - clearly an unacceptable loss - and breach of a key objective of the Fund.
It has been suggested that recurrent subsidies could be credited to the Trading Fund by taxpayers. As was explained during the thorough discussions with Members on this Ordinance, such subsidies are outside the framework of the Sewage Services Trading Fund. Moreover, to meet the objectives of the Trading Fund, it would be necessary to recover the charges foregone by either increasing the charges on other service users, or increasing the charges significantly in subsequent years to make up for the shortfall, which would be clearly unacceptable.
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