ENG-1980-12-17 — Page 1

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 269

OFFICIAL REPORT OF PROCEEDINGS

Wednesday, 17 December 1980

The Council met at half past two o’clock

PRESENT

HIS EXCELLENCY THE GOVERNOR (PRESIDENT)

SIR CRAWFORD MURRAY MACLEHOSE, G.B.E., K.C.M.G., K.C.V.O.

THE HONOURABLE THE CHIEF SECRETARY

SIR JACK CATER, K.B.E., J.P.

THE HONOURABLE THE FINANCIAL SECRETARY

SIR CHARLES PHILIP HADDON-CAVE, K.B.E., C.M.G., J.P.

THE HONOURABLE THE ATTORNEY GENERAL

MR. JOHN CALVERT GRIFFITHS, Q.C.

THE HONOURABLE THE SECRETARY FOR HOME AFFAIRS

MR. DENIS CAMPBELL BRAY, C.M.G., C.V.O., J.P.

THE HONOURABLE DAVID AKERS-JONES, C.M.G., J.P.

SECRETARY FOR THE NEW TERRITORIES

THE HONOURABLE LEWIS MERVYN DAVIES, C.M.G., O.B.E., J.P.

SECRETARY FOR SECURITY

THE HONOURABLE DAVID WYLIE MCDONALD, C.M.G., J.P.

DIRECTOR OF PUBLIC WORKS

THE HONOURABLE ALAN JAMES SCOTT, J.P.

SECRETARY FOR INFORMATION

THE HONOURABLE DEREK JOHN CLAREMONT JONES, C.M.G., J.P. SECRETARY FOR THE ENVIRONMENT

DR. THE HONOURABLE THONG KAH-LEONG, C.B.E., J.P.

DIRECTOR OF MEDICAL AND HEALTH SERVICES

THE HONOURABLE ERIC PETER HO, J.P.

SECRETARY FOR SOCIAL SERVICES

THE HONOURABLE JOHN MARTIN ROWLANDS, C.B.E., J.P.

SECRETARY FOR THE CIVIL SERVICE

THE HONOURABLE JAMES NEIL HENDERSON, J.P.

COMMISSIONER FOR LABOUR

THE HONOURABLE GERALD PAUL NAZARETH, O.B.E.

LAW DRAFTSMAN

THE HONOURABLE WILLIAM DORWARD, O.B.E., J.P.

DIRECTOR OF TRADE, INDUSTRY AND CUSTOMS

THE HONOURABLE JOHN MORRISON RIDDELL-SWAN, J.P.

DIRECTOR OF AGRICULTURE AND FISHERIES

270 HONG KONG LEGISLATIVE COUNCIL―17 December 1980

THE HONOURABLE DONALD LIAO POON-HUAI, O.B.E., J.P.

SECRETARY FOR HOUSING

THE HONOURABLE GRAHAM BARNES, J.P.

DIRECTOR OF HOME AFFAIRS

THE HONOURABLE SELWYN EUGENE ALLEYNE, J.P.

DIRECTOR OF SOCIAL WELFARE

THE HONOURABLE COLVYN HUGH HAYE, J.P.

DIRECTOR OF EDUCATION

THE HONOURABLE PIERS JACOBS, J.P.

SECRETARY FOR ECONOMIC SERVICES (Acting)

THE HONOURABLE OSWALD VICTOR CHEUNG, C.B.E., Q.C., J.P.

THE HONOURABLE ROGERIO HYNDMAN LOBO, C.B.E., J.P.

THE HONOURABLE LI FOOK-WO, C.B.E., J.P.

DR. THE HONOURABLE HARRY FANG SIN-YANG, C.B.E., J.P.

THE HONOURABLE FRANCIS YUAN-HAO TIEN, O.B.E., J.P.

THE HONOURABLE ALEX WU SHU-CHIH, O.B.E., J.P.

THE REVD. THE HONOURABLE JOYCE MARY BENNETT, O.B.E., J.P. THE HONOURABLE LYDIA DUNN, O.B.E., J.P.

DR. THE HONOURABLE HENRY HU HUNG-LICK, O.B.E., J.P.

THE REVD. THE HONOURABLE PATRICK TERENCE MCGOVERN, O.B.E., S.J., J.P. THE HONOURABLE PETER C. WONG, O.B.E., J.P.

THE HONOURABLE WONG LAM, O.B.E., J.P.

DR. THE HONOURABLE RAYSON LISUNG HUANG, C.B.E., J.P.

THE HONOURABLE CHARLES YEUNG SIU-CHO, J.P.

DR. THE HONOURABLE HO KAM-FAI, J.P.

THE HONOURABLE ALLEN LEE PENG-FEI, J.P.

THE HONOURABLE DAVID KENNEDY NEWBIGGING, J.P.

THE HONOURABLE ANDREW SO KWOK-WING, J.P.

THE HONOURABLE HU FA-KUANG, J.P.

THE HONOURABLE WILLIAM CHARLES LANGDON BROWN, J.P.

THE HONOURABLE CHAN KAM-CHUEN, J.P.

THE HONOURABLE STEPHEN CHEONG KAM-CHUEN

ABSENT

THE HONOURABLE KENNETH WALLIS JOSEPH TOPLEY, C.M.G., J.P. CHAIRMAN, COMMITTEE TO REVIEW POST-SECONDARY AND TECHNICAL EDUCATION

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 271

THE HONOURABLE LO TAK-SHING, O.B.E., J.P.

THE HONOURABLE CHEN SHOU-LUM, O.B.E., J.P.

THE HONOURABLE WONG PO-YAN, O.B.E., J.P.

THE HONOURABLE JOHN JOSEPH SWAINE, O.B.E., Q.C., J.P.

IN ATTENDANCE

THE CLERK TO THE LEGISLATIVE COUNCIL

MRS. LORNA LEUNG TSUI LAI-MAN

Affirmation

Mr. Piers JACOBS made the Affirmation of Allegiance and assumed his seat as a Member of the Council.

HIS EXCELLENCY THE PRESIDENT:―I should like to welcome Mr. JACOBS to this Council.

Papers

The following papers were laid pursuant to Standing Order No. 14(2):― Subject L.N. No. Subsidiary Legislation:

District Court Ordinance.

District Court Suitors’ Funds (Amendment) Rules 1980.............................. 342

Labour Tribunal Ordinance.

Labour Tribunal (Suitors’ Funds) (Amendment) Rules 1980....................... 343

Small Claims Tribunal Ordinance.

Small Claims Tribunal (Suitors’ Funds) (Amendment) Rules 1980............. 344

Supreme Court Ordinance.

Supreme Court Suitors’ Funds (Amendment) Rules 1980............................ 345

Monetary Statistics Ordinance 1980.

Monetary Statistics Ordinance 1980 (Commencement) Notice 1980........... 346

Money Lenders Ordinance 1980.

Money Lenders Ordinance 1980 (Commencement) Notice 1980................. 347

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Subject L.N. No.

Public Revenue Protection Ordinance.

Public Revenue Protection (Interest Tax) (No. 2) Order 1980 ..................... 348

Inland Revenue Ordinance.

Inland Revenue (Interest Tax) (Exemption) (Amendment) (No. 11) Notice 1980.............................................................................................................. 349

Ferries Ordinance.

Excluded Ferries (Ma On Shan and Ma Liu Shui) (Amendment) Regulations 1980.......................................................................................... 350

Ferries Ordinance.

Excluded Ferries (Passenger Ferry Service Across Tsau Wan) (Amendment) Regulations 1980................................................................... 351

Ferries Ordinance.

Excluded Ferries (Passenger Ferry Service between Hong Kong Central District and Mei Foo Sun Chuen) (Amendment) Regulations 1980 ............. 352

Road Traffic Ordinance.

Road Traffic (Driving Licences) (Amendment) Regulations 1980............... 353

Summary Offences Ordinance.

Summary Offences Ordinance (Exemption from Section 13) (No. 21) Order 1980 ................................................................................................... 354

Legal Practitioners Ordinance.

Solicitors (General) Costs (Amendment) (No. 2) Rules 1980 ...................... 356

Interpretation and General Clauses Ordinance.

Specification of Public Office ...................................................................... 357 Sessional Papers 1980-81:

No. 21―Hong Kong Housing Authority―Accounts and Balance Sheet for the year ended 31 March 1980.

No. 22―Grantham Scholarships Fund―Income and Expenditure Account with Balance Sheet and Certificate of the Director of Audit for the year ended 31 August 1980.

No. 23―Supplementary provision for the quarter ended 30 June 1980.

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No. 24―Report of the Brewin Trust Fund Committee on the Administration of the Fund for the year ended 30 June 1980.

No. 25―The Accounts of the Lotteries Fund for 1979-80.

No. 26―The Hong Kong Industrial Estates Corporation―Annual Report 1979-80.

Oral answers to questions

Provision of cooked food stalls in new towns

1. MR. WU asked:―As more and more industrial undertakings are moving to the new towns, will Government state whether sufficient space has been provided for cooked food stalls to avoid chaotic lunch time conditions and unsightly aftermath as found in older industrial areas?

SECRETARY FOR THE NEW TERRITORIES:―Sir, as part of the overall programme for the development of the new towns, cooked food stalls are being built in factory areas. The scale of the present provision is governed by standards which have been carefully worked out by the Government departments concerned.

So far 220 cooked food stalls have been provided in ten cooked food centres in the industrial parts of the new towns, and there are currently 18 items in the Public Works Programme for the construction of more cooked food centres, in keeping with the pace of new town development.

MR. WU:―Sir, I understand the standard adopted by Government is 0.6 hectare per 100,000 workers for cooked food stalls. Is that standard met in this programme?

SECRETARY FOR THE NEW TERRITORIES:―Yes, Sir.

MR. WU:―Sir, will Government assure this Council and Hong Kong industry that the provision of space for cooked food stalls is in gear with the rapid increase in factory space coming on stream in the new towns?

SECRETARY FOR THE NEW TERRITORIES:―Yes, Sir, our aim is to maintain balanced development and to keep the programme of cooked food stalls and cooked food centres moving ahead with the development of factories in factory areas.

274 HONG KONG LEGISLATIVE COUNCIL―17 December 1980 Traffic offences by buses

2. MR. OSWALD CHEUNG asked:―How many prosecutions have been taken out by the Police over the last 11 months against drivers of (a) franchised buses, (b) private buses, for disobeying traffic signals, speeding, and failing to give precedence to pedestrians over zebra-crossings?

SECRETARY FOR SECURITY:―Sir, these offences are mainly dealt with by means of fixed penalty tickets and, unfortunately, it is not possible to tell from the records how many of them have involved buses, franchised or otherwise.

Summonses are taken out in a relatively few cases, such as when a driver fails to produce his driving licence or when an offence is disclosed as a result of an accident. And in the first 11 months of this year, summonses were issued in respect of 30 franchised and 11 private buses for speeding, and of six franchised and two private buses for disobeying traffic signals. No bus driver was prosecuted for failing to give precedence to pedestrians at zebra-crossings.

But perhaps it would be helpful to add that a wide range of road traffic offences are dealt with outside the fixed penalties scheme. A more meaningful illustration of Police action against poor bus driving is given by the number of prosecutions for the offences of dangerous driving and careless driving. In the first 11 months of this year the numbers were:

(a) for dangerous driving, 32 cases involving franchised buses; and

(b) for careless driving, 634 cases involving franchised buses and 42 cases involving private buses.

MR. OSWALD CHEUNG:―Sir, how is it that Government kept careful records of the number of prosecutions of buses for overcrowding? Is it that Government regards the overcrowding of buses as being more dangerous than speeding or failing to give access to pedestrians over crossings or crossing traffic lights?

SECRETARY FOR SECURITY:―Sir, the answer to this is that the fixed penalty ticket is a computerized programme and the enquiry, the question, from Mr. CHEUNG has revealed the fact that the computer only keeps statistics in respect of motor cycles and other vehicles. It does not distinguish, unfortunately, in respect of franchised or private buses.

MR. OSWALD CHEUNG:―Sir, will the honourable Member draw the attention of the Police that the offences mentioned in my question are extremely prevalent, they are extremely dangerous for pedestrians and the drivers of other vehicles?

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SECRETARY FOR SECURITY:―Certainly, I would be very glad to do that, Sir. To put the facts clearly, there were in fact 28,977 cases of speeding against which action was taken in the first nine months of this year for vehicles generally; 19,726 in respect of disobeying traffic signals for vehicles generally, and 2,637 in respect of failing to observe zebra-crossings.

MR. PETER C. WONG:―Sir, would the Secretary consider 32 cases for dangerous driving and 634 cases for careless driving as alarming?

SECRETARY FOR SECURITY:―Sir, I am really not competent to give an expression of opinion on that point.

Stubbs Road/Wong Nai Chung Gap Road flyover

3. MR. OSWALD CHEUNG asked:―Will Government given an estimate of the total cost of construction of the flyover from Stubbs Road to Wong Nai Chung Gap Road, and of its probable date of completion?

DIRECTOR OF PUBLIC WORKS:―Sir, the approved estimated cost of the project is $116 million although, as Finance Committee was advised in September, some additional slope protection works in the Lower Stubbs Road area could add to the final cost. The extent of the additional works has not yet been determined but it is thought that the extra cost involved could be of the order of $10 million bringing the overall cost to $126 million.

This figure is, of course, much higher than the estimate of $61 million approved at the tender stage of the project. The additional costs are due to fluctuations in the costs of materials and labour amounting of $26.8 million, slope protection and modified foundation works which together account for a further $34.5 million, and increased consultants’ fees and site staff costs of 3.7 million.

Sir, the project is expected to be completed in July next year, that is thirteen months later than the original contract completion date. The extended construction period is due entirely to the adverse ground conditions in the area. These adverse conditions were not discovered when limited site investigations were carried out some years ago but because it was considered essential to put the project works in hand as quickly as possible it was agreed that further site studies and any foundation modifications required should be made during the construction period. As a result of that decision works started more than a year earlier than would normally be the case for projects of this scale and complexity.

However, subsequent site investigations indicated that the protection works required to ensure slope stability were very much more extensive than had

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been anticipated with consequential increases in both the scope of the project and the contractor’s works period.

The extension of the construction period does not, however, mean that benefits will not be achieved until after completion in July. It is intended that sections of the scheme will be brought into use in advance of that date. The first stage, which is the widened section of Wong Nai Chung Gap Road will be opened to traffic in January. The widened section of Lower Stubbs Road will be available in May and the main junction flyover in June.

Keep Hong Kong Clean Campaign

4. MR. YEUNG asked:―Will Government make a statement on the future programmes and activities of the Clean Hong Kong Campaign and Government’s intending financial commitment for such programmes?

SECRETARY FOR THE ENVIRONMENT:―Sir, as Your Excellency indicated in your opening address to the present session of this Council on 1 October last the Government and the Urban Council intend to start a new Keep Hong Kong Clean Campaign in October 1981 to cover both the Urban Area and the New Territories.

A high level Steering Group to oversee the campaign as a whole, and comprising senior officials and prominent members of the community, is being established under the chairmanship of the Chief Secretary. Within the Urban Area, the Urban Council will continue to carry the major responsibility through its ‘Keep Hong Kong Clean Campaign Committee’, and separate committees are being set up to conduct the campaign in the New Territories.

A post of Co-ordinator of the Campaign has recently been filled and the overall strategy and an outline of programmes and activities is now being drawn up. When this has been done and the financial implications have been examined I understand that the Chief Secretary will make a definitive statement along the lines requested in this question.

Surrender of identity cards by emigrants

5. DR. HO asked:―Will Government consider requiring the compulsory surrender of identity cards from residents who are leaving Hong Kong for permanent settlement overseas?

SECRETARY FOR SECURITY:―Sir, legal provision already exists whereby Hong Kong residents may be required to surrender their identity cards upon leaving the territory for settlement abroad. Through the co-operation of the consular representatives of some foreign governments and some Commonwealth

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 277

governments, the Director of Immigration writes to those who have been issued with immigrant visas for the countries concerned and requests the return of the card. In this way over 7,000 identity cards have been surrendered to the Immigration Department so far this year.

There are, however, difficulties in enforcing this provision absolutely. Some emigration takes place without the prior knowledge of the Immigration Department, either because the issue of immigrant visas by the countries concerned is not notified to the Department, or because Hong Kong residents who have entered other countries as visitors or students have subsequently obtained permission to remain there permanently. There are also cases where persons who have settled abroad maintain close links with Hong Kong and return here regularly.

In these circumstances there will always be some Hong Kong identity cards left in the hands of persons settled abroad. The important thing is to prevent these from being misused by others and steps are being taken in this direction.

DR. HO:―Sir, will Government take stricter measures to ensure the surrender of I.D. cards because syndicates in America and in Europe are being formed for purchasing I.D. cards from Hong Kong emigrants for the purpose of re-selling them to illegal residents in Hong Kong?

SECRETARY FOR SECURITY:―Sir, I am aware of the report that identity cards may be misused in this way. As I have explained, however, it is not very easy to take cards in the case of someone who is not leaving Hong Kong permanently or someone who says he is leaving temporarily and then turns out to be leaving permanently. We will be, and are, taking what steps we can to tighten up on this provision; and we will certainly bear in mind what the honourable Member has said, and also the reports which we are receiving from overseas through the press.

Fringe benefits for married female civil servants

6. REVD. JOYCE M. BENNETT asked:―Will Government state the reasons for not accepting in full the recommendation of the Standing Commission on Civil Service Salaries and Conditions of Service to grant married female civil servants the same eligibility for fringe benefits as their male counterparts?

SECRETARY FOR THE CIVIL SERVICE:―Sir, there are two main reasons why the Government has felt unable to accept in full the recommendations of the Standing Commission as regards fringe benefits for married women officers in the civil service.

The first reason is that the Government considers it undesirable for the civil service to move too far ahead of private sector practice.

278 HONG KONG LEGISLATIVE COUNCIL―17 December 1980

The second reason is that the Government sees objection to the taxpayer subsidizing the private sector, as could happen where the husband of a woman civil servant works for a private employer.

I should like to emphasize that, while the Government’s recent decision does not go as far as the Standing Commission recommended, it does nonetheless represent a very substantial improvement in the provision of fringe benefits for married women officers.

Detailed rules of eligibility using the new criteria are now being drawn up and will, I hope, cover compassionate and other exceptional cases.

REVD. JOYCE M. BENNETT:―Sir, has the Government considered that it is possible for the Government to set its mind to the problem to overcome the objection in paragraph 3 of this answer in the same way business firms in the private sector overcome this problem?

SECRETARY FOR THE CIVIL SERVICE:―Sir, the Government has set its mind to this question and I have nothing to add to paragraph 3. The Government does see objection to the taxpayer subsidizing the private sector and I am not aware of cases where the private sector subsidizes the public sector.

REVD. JOYCE M. BENNETT:―Is it not possible that there are husband and wife working for two private firms and the private firms overcome this problem. My question is, can the Government not also overcome this problem?

SECRETARY FOR THE CIVIL SERVICE:―Sir, Miss BENNETT is referring to a question which is not referred to at all in my answer. She is referring to the question of double benefits. I deliberately did not wish to complicate my answer by referring to that, but indeed the Government did in fact take a decision that we should try to find some way of avoiding double benefits. We are still studying the best way of doing that.

REVD. JOYCE M. BENNETT:―Sir, has the Government recognized that many women in Hong Kong are the providers of their families?

SECRETARY FOR THE CIVIL SERVICE:―Sir, where a woman is the provider for her family, in the sense that perhaps her husband is disabled, where she looks after the family because the husband lives apart, perhaps overseas, or where she looks after the family following divorce, then we do hope to draw up rules which will ensure that she does receive benefits on compassionate grounds, for her children as well as herself.

REVD. JOYCE M. BENNETT:―And one final question, does paragraph 4 of this answer imply that women are once more being asked to be patient, and in the future the principle of real equal pay for equal work will be accepted?

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SECRETARY FOR THE CIVIL SERVICE:―Sir, the Government has long ago accepted the principle of equal pay for equal work and we are here talking about fringe benefits, which the Government does not treat as a part of the pay package. But having said that, the answer to Miss BENNETT is that certainly this is not a final position and that, as Hong Kong moves forward and community views change, the Government will certainly review this whole question.

MISS DUNN:―Sir, I must ask the Secretary for the Civil Service for clarification on his second reason again. As a corollary to the second reason offered by the Secretary for the Civil Service, does it not mean that the private sector in fact does subsidize the Government in cases where the wives of male civil servants work for private employers?

SECRETARY FOR THE CIVIL SERVICE:―Sir, as one would expect, I have to answer ‘touché’ to Miss DUNN on that one. I think one way of looking at it in that case is that: Yes, the answer to her question is that that does arise.

MISS DUNN:―Thank you. I have a further question as well. Thank you for that answer. Does the Government accept as a general principle that pay and benefits as a package should be based on the job and not the sex, nor the marital status of the person doing the job?

SECRETARY FOR THE CIVIL SERVICE:―Sir, we are trying very hard to move in that direction. And as many Members are aware, we are in the process of trying to formulate the rules to give effect to this new policy. We may have to look afresh at the precise way we define the benefit, and we may find ourselves relating it more closely to the status of the employment.

MR. YEUNG:―Sir, the answer given to the Council by the Secretary for the Civil Service seems to have the unfortunate effect in that it is an encouragement to a single female civil servant, before she gets married, to remain single and cohabit with a man who is not in the civil service rather than get married properly. May I have a comment from the Secretary for the Civil Service?

SECRETARY FOR THE CIVIL SERVICE:―Sir, I have nothing to add to Mr. YEUNG’s comment (laughter).

Improvements in bus services

7. MR. CHAN KAM-CHUEN asked: ― Will Government inform this Council of the improvements the bus companies undertook to implement following the last round of bus fare increase and to what extent these have been met?

280 HONG KONG LEGISLATIVE COUNCIL―17 December 1980

SECRETARY FOR THE ENVIRONMENT:―Sir, before the fare increases granted to the two main franchised bus companies on 3 February 1980 considerable dissatisfaction was being expressed by the public with the standard of service provided by the companies. The Government therefore negotiated with the companies a programme of improvements. These were incorporated in formal Agreements which were signed at about the time of the fare increases.

The Agreements cover five main areas which encompass all aspects of bus services in Hong Kong conditions. Specifically they provide for:

First:Plans for the purchase of new buses and spare parts related to route development programmes to be agreed with the Transport Department and updated annually.

Secondly: Improved facilities for the maintenance and servicing of buses.

Thirdly: Better working conditions and wages for drivers, mechanics and other employees and the recruitment of more staff to man and maintain the new buses.

Fourthly: The provision of more depot facilities for the parking, servicing and repairing of buses.

And fifthly and finally, to review and introduce improvements in the management structures of the companies.

These arrangements are designed to ensure, not only that adequate plans for the future expansion of services are drawn up, but that they are also constantly monitored and reviewed against agreed yardsticks, so that enough well-maintained buses are put into service to improve frequencies and to introduce new routes to meet additional demand as required. By their very nature, however, the arrangements can only be fully implemented over a period of years, as it takes time to order and accept delivery of new buses, to build additional depot and other facilities, to recruit and train new staff and to improve management structures.

Both companies have taken the Agreements seriously, although they differ in some respects in the rate at which the various objectives are being met. The Kowloon Motor Bus Company have, in general, reacted quickly and they have taken effective steps to meet their obligations under the Agreement. In particular, they have placed orders for new buses on time and in sufficient numbers to meet the route development programme to the satisfaction of the Transport Department. Adequate additional staff have been recruited and trained; maintenance and servicing arrangements are being improved; new depot facilities are being planned and management arrangements have been streamlined. Recent monitoring exercises have confirmed that this company is able to meet its scheduled daily commitment of buses in full, although this is making big demands on the company’s manpower and its maintenance facilities. The requirements for new routes to the new towns

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and housing estates and for Mass Transit feeder services are also stretching K.M.B.’s resources to the limit.

The China Motor Bus Company, for its part, has placed orders for new buses sufficient to meet its target fleet size. But, in some other areas of the Agreement, progress has not been as rapid as could have been hoped. Nevertheless, significant progress is being made towards the objectives of improved maintenance, better wages and working conditions for staff and the provision of additional depot space. Some improvements have also been made in management, although further strengthening of the company’s management structure would appear to be required.

As a result, C.M.B. is only able to meet about 92% of its daily scheduled commitment of buses, although the situation in this respect is getting better and should improve further next year.

There is no doubt that, as a result of the Agreements, both companies now have more new and better maintained buses in operation and the orders they have in hand will ensure that bus availability will continue to improve. Over the past year K.M.B. has increased its fleet size by more than 200 buses, after allowing for scrapping, and C.M.B. by over 100 buses. K.M.B. should add a further 400 buses or so by the end of 1981 and C.M.B. a further 120.

This means that, overall, excessive overcrowding on many routes has been reduced, although the position is still not satisfactory. Further improvements are, however, in the pipeline as I have already explained and they should become more apparent in the course of 1981.

Sir, I cannot conclude without pointing out that at least a part of the improvements in service that both companies have introduced so far have been nullified by the effects of growing road congestion. This has slowed down, and in some cases seriously slowed down, the speed of buses, particularly in the peak hours when commuter demand is heavy. The hope is that the gradual introduction of bus-only lanes on some of the more congested routes will help to speed up services again and I would emphasize that it is the Government’s serious intention to introduce more public transport priority measures of this nature.

A final point is that the purchase of new buses to improve services is proving to be costly. And when this is added to higher wages and higher prices for fuel, spare parts and depot facilities, the overall cost of operating buses has increased very considerably over the past year and significantly more so than in previous years.

Publicity on squatter clearances

8. MISS DUNN asked:―Is the Government satisfied that every effort is made by the departments concerned, including G.I.S. and R.T.H.K., to

282 HONG KONG LEGISLATIVE COUNCIL―17 December 1980

explain to those immediately concerned and to the public at large, the reasons for clearances of squatters on Crown land required for development?

SECRETARY FOR HOUSING:―Sir, at any given time the Housing Department is involved at various stages in approximately 80 clearance operations on Crown land which is required for development purposes. In all cases, considerable efforts are made to explain fully to all those immediately concerned, the appropriate reprovisioning and cash entitlements and the reasons for the clearances. The fact that so few of the many clearances being undertaken come to the notice of the general public is an indication of the effective communication which exists between the Department and those affected.

Inevitably, from time to time, public interest is aroused in respect of particular clearances. In these cases all the Government departments concerned, including G.I.S. and R.T.H.K., make every effort by means of press releases, radio and television interviews, press conferences, briefings, and so on, to explain publicly the background to these clearances and the arrangements for reprovisioning and compensation.

Taking into account all the circumstances involved, I am satisfied that all reasonable efforts are made to explain the position both to those concerned and to the public at large.

MISS DUNN:―Sir, in the Government’s opinion, does the general public fully understand that clearances are necessary in the wider community interest?

SECRETARY FOR HOUSING:―Sir, the usual careful and painstaking explanation may not succeed in some cases, particularly if they are advised by those who are themselves ill informed. And it is also inevitable that in some cases some sections of the media tend to highlight the more contentious issues, but I am satisfied that in most cases the careful and painstaking explanations do result in smooth clearances.

REVD. JOYCE M. BENNETT:―Sir, is any effort made to explain these reasons at an early stage to social work agencies which may be in touch with the people living or working in those areas?

SECRETARY FOR HOUSING:―Sir, in any single clearance we could have, take the recent Tai Wor Ping case, up to ten press releases, which are very carefully drawn up, and there are ratio interviews and T.V. interviews as well. I think the social workers themselves, if they choose to understand, enough information is given well ahead of clearances.

MR. PETER C. WONG:―Sir, in such an important matter as pulling down people’s homes, is Government satisfied merely, to quote the Secretary’s words, with ‘reasonable efforts’?

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 283 SECRETARY FOR HOUSING:―I don’t think we can go, Sir, any more than reasonable effort.

Explosion at South Industrial Building

9. MR. CHAN KAM-CHUEN asked:―Will Government make a statement on the outcome of the investigation into the cause of the explosion in the transformer room of South Industrial Building in Kwai Chung on 18.9.80?

SECRETARY FOR SECURITY:―Sir, the investigation into the explosion at the South Industrial Building has not yet been completed. The Fire Services Department and the Police have completed their parts of the investigation but further technical input is awaited from the China Light and Power Company before the full report can be compiled. Information from the power company is expected early in January.

As the incident has resulted in, most unhappily, one death and 23 injuries, the full report, when available, will be submitted to the Coroner for examination with a view to deciding whether an inquest should be held.

The result of the investigation will not be made public until the time of the inquest, if one is to be held. If, on the other hand, the Coroner decides not to hold an inquest, details of the report will be released when that decision is reached and a statement will then be made.

MR. CHAN KAM-CHUEN:―In the meantime, what public assistance or compensation are available to the injured and the dependants of the deceased?

SECRETARY FOR SECURITY:―I am afraid, Sir, I shall need notice of that question. I will enquire into it and advise the honourable Member of what the position is.

(THE FOLLOWING WRITTEN REPLY WAS PROVIDE SUBSEQUENTLY).

There is no general Government scheme of compensation for victims of accidents, except traffic accidents. However, under the Workmen’s Compensation Ordinance (Cap. 228) a workman injured in an incident in the course of his employment, and incapacitated for at least three consecutive days from earning full wages, is entitled to compensation from the employer. In cases of fatal injury, dependents of workmen are entitled to compensation. In addition the Social Welfare Department manages a number of trust funds, including the Emergency Relief Fund, from which emergency payments to victims of natural disasters or accidents, or to dependents of such victims, can be made in hardship cases upon referral from the Police, Labour Department etc., or upon application by the victims or dependents.

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As stated in the original reply, this particular incident resulted in one death and 23 injuries. Of the latter, only one was seriously injured and required hospitalization; the other 22 all received minor injuries and were discharged immediately after treatment.

The name of the deceased is CHAN Tin-fook and that of the seriously injured is YU Yuen-sum. At the time of the incident, both Mr. CHAN and Mr. YU were loading drums of diesel into the cargo lift on the ground floor of the building on behalf of a company called Ham Kee Hong (which is not an occupant of South Industrial Building). Mr. Yu in fact, is the son of Ham Kee Hong’s proprietor.

Mr. CHAN, the deceased, has three dependents: a mother, a wife and a son. Following his death, they were given a one-off grant of $13,000 from the Emergency Relief Fund managed by the Director of Social Welfare, as well as $622 per month since September from the Public Assistance Scheme. They have also made a claim for workmen’s compensation, under the Workmen’s Compensation Ordinance (Cap. 228), against the proprietor of Ham Kee Hong of which they claim Mr. CHAN was an employee. The alleged employer has, however, denied responsibility for workmen’s compensation on the grounds that Mr. CHAN was not his employee but was in fact a selfemployed person operating a transportation and delivery service in partnership with the alleged employer’s son, Mr. YU Yuen-sum, and using Ham Kee Hong as a base. Mr. CHAN’s dependents have sought legal aid to press their claim for workmen’s compensation and this is being considered by the Legal Aid Department.

There is a possibility that Mr. CHAN’s dependents may be able to claim common law damages if and when the Coroner finds that a third party should be held responsible for the exposion. This must, however, await the outcome of the inquest.

In the case of Mr. YU Yuen-sum, no assistance or compensation has been requested or claimed and the question has, therefore, not arisen. Similarly, no compensation is payable to the other 22 injured persons.

MR. CHAN KAM-CHUEN:―Sir, is the scope of this report only limited to the fact finding, or will it also contain recommendations for prevention of recurrence of a similar or more tragic case if this should happen during rush hours in the factory area?

SECRETARY FOR SECURITY:―Sir, the report will, in the main, of course, be related to this incident. The wider implications will be considered in the light of that report. I am advised that as things stand at present the transformer is the responsibility of the owner, who was the China Light and Power Company, and that he has a responsibility for ensuring that safe equipment is installed, and in doing so he abides by certain specifications which apply. This particular transformer was examined a fortnight before the incident and was found at that time to be in good working order. Obviously,

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something developed subsequently and this is the matter which is now being examined. As to the wider implications, we are, and will be, looking at these in the light of this particular report.

Salary scales for Education Officer, Senior Master and Vice-Principals

10. REVD. JOYCE M. BENNETT asked:―Since the 5th Report of the Standing Commission on Civil Service Salaries and Conditions of Service has combined the ranks of Education Officer and Senior Master, will Government say whether it proposes to recognize

financially the additional responsibilities of Vice-Principals in Government and aided secondary schools?

DIRECTOR OF EDUCATION:―Sir, Senior Masters and Mistresses in Government schools and Vice-Principals in aided schools will continue to be recognized financially as they are now on the Master Pay Scale up to point 43. But the Standing Commission has recommended, and the Government has accepted, that the previous distinction between Senior Master/Mistress and Education Officer Scales be removed because functional differences between the two ranks are not thought to warrant separate scales. In broadbanding the two scales from 36 to 40 and 41 to 43, to points 38 to 43, there has been a levelling upwards of the Education Officer scale which should be welcome to staff as added recognition of other responsibilities, and welcome to management who ought to find the improved scale justification for the freer allocation of duties. I welcome it for the career incentives it supplies and the wider choice it affords in the selection of Principals.

REVD. JOYCE M. BENNETT:―Sir, does the Government not recognize that the Vice Principal post is a good training ground for future Principals, and that if the duties are spread amongst 12 to 14 people, there are less incentives?

DIRECTOR OF EDUCATION:―Sir, we do recognize that this is a useful training ground for future Principals; there is no suggestion that Vice-Principals cease doing what they are doing or be paid any less for doing it. This can be a domestic arrangement within the schools and it is not suggested that the duties of the Vice-Principal be distributed amongst ten or more.

REVD. JOYCE M. BENNETT:―Sir, is the Government aware that this sudden decision to abolish the incentive for Vice-Principal posts is giving schools in the aided sector, where Vice-Principals are of considerable importance, some very real problems?

DIRECTOR OF EDUCATION:―It could well be, Sir, that there are some problems in the aided section but there are only 150 of these officers against 871 Education Officers who will be gaining and, as I remarked earlier, the 150 will not suffer materially or financially. There is no reason why they should

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not be reassured that their very obvious work in the school is, in fact, still highly regarded by management.

REVD. JOYCE M. BENNETT:―Does the problem arise then because not sufficient concern has been expressed for the aided sector which is tied to the Government ranks here?

DIRECTOR OF EDUCATION:―Sir, the Standing Commission did in fact canvass opinions very widely and representations were received from the aided sector. This was no sudden decision. It was a very carefully considered decision, a recommendation from the Standing Commission which the Government has been happy to accept.

REVD. JOYCE M. BENNETT:―One final question, can the Government give an assurance that in future new grades once created will not be abolished after only a few years, as is the case of the S. M. grade in aided schools?

DIRECTOR OF EDUCATION:―Sir, as I have tried to point out, this was not so much the abolition of a grade as the allocation of a new pay scale to a junior rank, with no diminution of the salary or of the prospects of the Senior Master or Mistress or Vice-Principal. The Standing Commission is, of course, a standing commission and in their report No. 5, it did say that it is open to fresh argumentation, and indeed new argument, which will, of course, be the substance of future reports. I think Miss BENNETT can be reassured that this will hold.

Criteria in assessment of public utility charges

11. MR. TIEN asked:―Will Government make a statement on the criteria governing the allowance of increases in public utility charges, with particular regard to electricity charges and the interests of industry?

SECRETARY FOR ECONOMIC SERVICES:―Sir, in assessing increases in public utility charges, the Government takes into account the following inter-related criteria:―

First: The public should get, as far as is practicable, the best possible service at the lowest possible price.

Second: Tariffs, together with contributions from shareholders, must be such as to enable the utility company to remain financially viable, thus ensuring the company’s ability to continue to meet demand in the future.

Third: The public utility company should not make excessive profits.

These criteria were applied in the case of the tariff increases recently announced by the two power companies.

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The Government took into consideration the effect of the increases on industry, although for most companies, power charges form only a small part of their production costs.

The concern of the Government and of the power companies to minimize the effect on industry of increased power charges is evidenced by the establishment, by both companies, of departments which will advise large consumers, free of charge, as to how they can reduce their energy costs.

MR. STEPHEN CHEONG:―Will Government elaborate in a written statement to this Council how the present round of electricity rate increases has been arrived at?

SECRETARY FOR ECONOMIC SERVICES:―Certainly, Sir.

MR. ALLEN LEE:―Will Government consider introducing an advisory stage into the arrangements for processing applications for tariff increases by the power companies?

SECRETARY FOR ECONOMIC SERVICES:―Yes, Sir, the possiblity of introducing some consultative or advisory mechanism is under consideration.

Delays in completion of Home Ownership Schemes

12. MR. F. K. HU asked:―Will Government inform this Council:

(a) of the original and rescheduled completion dates for the Home Ownership Estates at Chai Wan, Homantin and Kwai Chung;

(b) if there has been slippage what are the reasons for this; and

(c) what measures are being taken to ensure such projects are completed on time in the future?

SECRETARY FOR HOUSING:―Sir, may I have your permission to answer this question and Question 13 by Miss Dunn together?

HIS EXCELLENCY THE PRESIDENT:―Yes.

13. MISS DUNN asked:―What recourse is available to successful purchasers of flats under the Home Ownership Scheme who are not given possession on the due date owing to delays in completion?

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SECRETARY FOR HOUSING:―Sir, the original and rescheduled completion dates for the three Home Ownership Schemes referred to by Mr. HU are as follows:

Shan Tsui Court at Chai Wan was originally scheduled for completion in June 1979. It is now expected that the four blocks in the scheme will be completed between February and April 1981.

Chun Man Court at Homantin was originally scheduled for completion in September 1979. Six of the twelve blocks in the scheme have been completed and occupied, and we expect completion of the remaining six within two months.

Yuet Lai Court at Kwai Chung should have been completed in May 1979. Two of the blocks have been completed, and completion of the remaining two blocks is expected by early February 1981.

The reasons for the slippage on these three contracts are largely physical and financial. At both Shan Tsui Court and Chun Man Court unforeseen site difficulties and foundation problems were encountered, and at Yuet Lai Court there were site access problems. Added to these physical problems was the general shortage of skilled labour and building materials, which affected the industry generally during the periods of these contracts. These difficulties were compounded by increases in labour and material costs since the award of the contracts which were not fully covered by price escalation clauses in the contracts, and therefore resulted in financial problems for the main contractor.

It is worth noting that these projects are only three of the sixty-five major foundation and building contracts currently being undertaken by the Housing Department, and the outstanding work represents just over 2% of the 97,000 or so flats which will be produced under these contracts. Despite the magnitude of the public housing programme, serious delays such as these are exceptional. Re-entry on the contracts was considered when it became apparent that the contractor could not complete the work in time, but this course was not pursued since it would have resulted in even greater delays in completion of the flats. Instead the department and its consultant architects are closely monitoring the performance of the main contractor and are making every effort to ensure that the outstanding work is completed as soon as possible.

Turning now to Miss DUNN’s question as to the recourse available to purchasers who are not given possession on the due date owing to such delays in construction.

As flats under the Home Ownership Scheme are sold at cost, there is no provision under the conditions of sale for any form of compensation in these circumstances. The purchasers can, if they wish, rescind the Agreement for Sale and Purchase and claim a refund of the deposit already paid,

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but I realize that this is cold comfort to home buyers in this position. The purchaser may derive some satisfaction from the knowledge that their flats were bought at prices considerably below current market levels.

To prevent, so far as is possible, any similar disappointment with regard to later stages of the Home Ownership Scheme, flats will not in future be sold until much closer to the expected completion dates. In this way it will be possible to give successful purchasers a far more reliable estimate of when their flats will be ready.

MR. F. K. HU:―Sir, the Secretary for Housing mentioned that one of the reasons for the slippage is financial; can I be advised what measures will be taken in future to reduce the risk of engaging a main contractor which may create financial problems?

SECRETARY FOR HOUSING:―Sir, I can assure the Council that major contracts of this nature are only awarded to major contractors. Unfortunately, in this case the contractor tendered very low and obtained three contracts in one go. We will certainly try to avoid this situation.

MISS DUNN:―Sir, is it implied that because the flats are sold at cost that the Government is under no obligation to honour normal contractual obligations?

SECRETARY FOR HOUSING:―Sir, flats are sold at cost will further strengthen the fact that in the conditions of sale there are no provisions for compensation under these circumstances.

MR. PETER C. WONG:―Sir, the Secretary said to prevent disappointment resulting from delay in completion, the flats in future will not be sold until much closer to the completion date. Does that not mean that the purchase price will be higher?

SECRETARY FOR HOUSING:―Not necessarily so, Sir.

MR. CHAN KAM-CHUEN: ― Sir, does this slippage mean any financial loss to the Government?

SECRETARY FOR HOUSING:―Yes, Sir.

MR. PETER C. WONG:―Sir, the Secretary said ‘not necessarily so’; but would he agree that it would be likely so?

SECRETARY FOR HOUSING:―The sale prices of the Home Ownership Scheme are decided when contracts are let and when land prices and various other costs are known, and these prices are fixed at the time when the Home

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Ownership Committee recommends the sale prices so it does really not have any bearing on the actual completion date. All we are trying to prevent is actual sale to the public.

Statement

Annual Report of The Hong Kong Industrial Estates Corporation for the year ended 31 March 1980

MR. F. W. LI:―Sir, I have much pleasure in tabling today the Annual Report of The Hong Kong Industrial Estates Corporation for the year ended 31 March 1980.

The year under review covers the affairs of the Corporation in its third full year of existence. The main events have been the commencement of manufacturing operations at Tai Po Industrial Estate, and the grant of a new loan from the Development Loan Fund for the construction of a standard factory block, also at the Estate in Tai Po, on which work has now commenced. By the end of this year, it is expected that a total of ten grantees will have completed their factories and started operation.

Land formation and the construction of roads and drains at Tai Po have proceeded satisfactorily and Stage II of the Estate is expected to be completed on schedule by the end of this year. This will bring the total area of formed and serviced industrial sites at Tai Po to 45 hectares, of which currently about half has already been leased or earmarked for leasing.

At Yuen Long, the construction programme has unfortunately fallen behind because of a shortage of suitable fill material. This has arisen from a combination of unforeseen ‘Fung Shui’ objections from local residents, and from rock conditions in the designated borrow area being different from what was anticipated. Despite efforts to identify and establish alternative sources of fill to enable the project to proceed, these have been continually frustrated by protests from villagers in the areas concerned. As a result the project has made minimal progress in the last six months, and instead of the planned 20 hectares of industrial sites only five hectares are at present available.

The escalation in construction costs, coupled with the extra costs incurred due to the delays at Yuen Long, required the Corporation after a thorough review to increase the land premium to $700 per square metre with effect from 1 July 1980. This represents an increase of 18% over the previous rate fixed in December 1978. In relation to current land prices in Hong Kong, this increased premium is not excessive. However, the effects of continuing inflation and potentially higher costs at Yuen Long will undoubtedly have to be reflected by appropriate future increases in the premium.

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The planned extension of the Estate at Tai Po by further reclamation to form a third stage will partially compensate for the delay experienced at Yuen Long, but the estimated cost of forming the additional 20 hectares will again make further increases in the land premium inevitable.

Local and overseas investors are almost equally represented by the 32 sites which so far have been granted or earmarked, and together they are committed to a total minimum investment of about $1,000 million and a minimum annual sales value of $2,000 million.

In addition to commencing work on the Standard Factory block at Tai Po the Corporation has also let contracts for the development of the Estate Centre, which in addition to the Estate Centre Building will include a bus terminus, food stalls and a refuse collection point. The Building will be developed in phases, and will provide commercial and office accommodation for both public and private enterprises wishing to provide the range of services required by industrialists on the Estate.

Although the number of applications for the sites being received by the Corporation in recent months has decreased, the number approved has generally remained consistent with those approved in earlier years. Having regard, however, to the area of fully serviced land now available at Tai Po and Yuen Long, the Corporation would wish to see a significant increase in the number of sites being granted. The effect of the uncertainty in the economies of Hong Kong’s overseas markets is clearly seen in the hesitancy of local manufacturers to embark on substantial new investments at the present time, but from the many general enquiries received there is equally clear evidence that investors continue to regard Hong Kong as the logical venue to service the vast potential market in China and elsewhere in South East Asia.

I would conclude, Sir, by reiterating the closing remarks in my statement to this Council in October last year. The industrial estates, by making land available to industries offering new high technology processes and new products for this region’s vast emerging market, provide the best means by which prudent investors can enjoy the many other advantages which Hong Kong has got to offer. These estates remain the most tangible and valuable asset for the promotion of industrial diversification and investment, and a guarantee of the future overall economic well-being of Hong Kong.

Government business

Motions

EXCHANGE FUND ORDINANCE

HIS EXCELLENCY THE GOVERNOR moved the following motion:―Under section 3(5) of the Exchange Fund Ordinance, with the approval of the

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Secretary of State, that the aggregate amount of borrowings under section 3(3) of the said Ordinance shall not at any one time exceed twenty thousand million dollars.

THE FINANCIAL SECRETARY:―Sir, the bulk of the Government’s accumulated fiscal reserves, the General Revenue Balance, are invested by the Treasury with the Exchange Fund, against the issue by the Fund of interest-bearing certificates. Section 3(4) of the Exchange Fund Ordinance limits the amount the Fund may borrow from any source; and under section 3(5) this limit may be altered by the Legislative Council, by resolution proposed by the Governor with the approval of the Secretary of State.

Sir, the Government’s fiscal reserves are held with the Exchange Fund to avoid the necessity of these reserves having to bear exchange risks. Furthermore, to the extent that these reserves represent part of the Exchange Fund’s holdings of Hong Kong dollars, they play a part in the exercise of leverage on the liquidity ratios of the banking system. The mechanism for doing this is provided by section 4A of the Exchange Fund Ordinance, that is to say, when the Exchange Fund holds balances with banks in Hong Kong on demand, at call or at short notice those banks have to hold 100% liquid assets against those balances. In this way, increases in those balances do not contribute to the process of credit creation.

Exchange Fund debt certificates issued to the Treasury have continued to rise throughout the current financial year. On 1 April 1980 they amounted to $8,517 million; on 30 September they amounted to $10,609 million; and on 30 November they amounted to $14,127 million. Present indications are that the approved borrowing limit on the Exchange Fund of $15,000 million may be reached in January next year. This limit was fixed by a resolution by this Council on 9 July this year.

In moving the motion to make that resolution, I said the relatively high increase from $10,000 million to $15,000 million was to reduce the number of times it would be necessary to introduce a similar motion into this Council. At that time, I did not expect the limit would have to be raised again during the calendar year but, Sir, largely because of higher than expected revenue from land sales, the Treasury’s cash flow has somewhat exceeded my expectations (laughter).

Sir, I support the motion.

Question put and agreed to.

INLAND REVENUE ORDINANCE

THE FINANCIAL SECRETARY moved the following motion:―That the Inland Revenue (Amendment) Rules 1980, made by the Board of Inland Revenue on 24 November 1980, be approved.

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 293 He said:―Sir, I move the first motion standing in my name in the Order Paper.

Upon the recent enactment of the Inland Revenue (Amendment) (No. 4) Ordinance 1980, which introduced a ‘pooling’ system for the purpose of granting depreciation allowances for machinery and plant, a consequential amendment to the Inland Revenue Rules had to be made to include reference to the new section 39B(3): this section provides that the annual allowance on machinery and plant under the pooling system shall be calculated at the rates of depreciation prescribed by the Board of Inland Revenue and shall be computed on the reducing value of each class of machinery and plant.

An appropriate amendment to the Inland Revenue Rules was indeed made by the Board of Inland Revenue on 24 November last and now requires the approval of this Council in accordance with section 85(4) of the Inland Revenue Ordinance.

Sir, I beg to move.

Question put and agreed to.

HONG KONG AND YAUMATI FERRY COMPANY (SERVICES) ORDINANCE

THE SECRETARY FOR THE ENVIRONMENT moved the following motion:―With the consent of the Company, that the Schedule to the Ordinance be amended―

(a) in paragraph 2 by deleting ‘1980’ and substituting the following― ’1981’;

(b) in paragraph 4(1)―

(i) by deleting ‘$76,900’ in both places where it occurs and substituting in each place the following―

’$73,900’; and

(ii) by deleting item (f);

(c) in paragraph 6(6) by deleting ‘and 1980’ and substituting the following― ‘, 1980 and 1981’;

(d) in paragraph 7(2) by deleting ‘and 1980’ and substituting the following― ‘, 1980 and 1981’;

(e) in paragraph 22A by deleting ‘1980’ and substituting the following― ‘1981’;

(f) in Appendix I under the heading ‘FERRY RUNS’―

(i) by deleting item (e); and

(ii) in item (s) by deleting ‘Wilmer Street Ferry Pier’ and substituting the following―

‘Jubilee Street Ferry Pier’; and

(g) in Appendix I under the heading ‘FERRY PIERS AND FRONTAGES’ by deleting item (f).

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He said:―Sir, I rise to move the first motion standing in my name on the Order Paper. It provides, under section 5 of the Hong Kong and Yaumati Ferry Company (Services) Ordinance (Chapter 266) and by amending the Schedule to the Ordinance, for the extension of existing concessions and for the deletion of Wilmer Street Pier and of services operating to and from that pier. The amendments proposed have the consent of the Company.

The Government is preparing a new draft Ferry Services Bill under which it is intended that franchises should be granted to major ferry operators, including the Hong Kong and Yaumati Ferry Company, and licences issued to minor operators. The new arrangements, which cover every aspect of the Company’s ferry operations, are, however, both detailed and complicated and the negotiations are taking longer than was anticipated. Because of this it is not expected that the new arrangements can be introduced before the end of 1981 and it is therefore necessary to extend the existing provisions for a further year.

It is also proposed that the Schedule to the Ordinance should be amended by the deletion of Wilmer Street Ferry Pier and the rent of $3,000 per month payable for the use of that pier. The pier was severely damaged by Typhoon Hope in August 1979 and, since it is shortly due for demolition to make way for the Western reclamation, it was agreed that expensive repairs should not be undertaken for its remaining life. As a consequence, the Wilmer Street/Sham Shui Po service has been cancelled. The opportunity is also being taken to confirm a change in services to Lamma Island, which are now operated from the Jubilee Street instead of the Wilmer Street Pier.

Sir, I beg to move.

(Mr. Alex Wu declared an interest and abstained from voting on the motion.) Question put and agreed to.

‘STAR’ FERRY COMPANY (SERVICES) ORDINANCE

THE SECRETARY FOR THE ENVIRONMENT moved the following motion:―With the consent of the Company, that the Schedule to the Ordinance be amended―

(a) in paragraph 5(6) by deleting ‘and 31 December 1980’ and substituting the following ―

‘,31 December 1980 and 31 December 1981’;

(b) in paragraph 13(2) by deleting ‘and 31 December 1980’ and substituting the following ―

‘,31 December 1980 and 31 December 1981’; and

(c) in paragraph 19A by deleting ‘1980’ and substituting the following― ‘1981’.

He said:―Sir, I move the second motion standing in my name on the Order Paper. It provides, under section 5 of the ‘Star’ Ferry Company

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(Services) Ordinance (Chapter 274), for the extension of existing concessions by amending the Schedule to the Ordinance. The amendments proposed have the consent of the Company.

The new draft Ferry Services Bill will also replace this Ordinance and it will provide for a new franchise for the ‘Star’ Ferry. The interim arrangements I have referred to in relation to the Hong Kong and Yaumati Ferry Company are also required for the ‘Star’ Ferry Company and they have been accepted by that Company. The proposed amendments to the Schedule to the Ordinance will accordingly extend the existing concessions to the ‘Star’ Ferry Company for one year to 31 December 1981, and waive royalty payments and advertising revenue due to the Government for that year.

Sir, I beg to move.

Question put and agreed to.

PHARMACY AND POISONS ORDINANCE

THE DIRECTOR OF MEDICAL AND HEALTH SERVICES moved the following motion:―That the following regulations, made by the Pharmacy and Poisons Board on 24 November 1980, be approved―

(a) the Pharmacy and Poisons (Amendment) Regulations 1980; and

(b) the Poisons List (Amendment) Regulations 1980.

He said:―Sir, I move the resolution standing in my name on the Order Paper in respect of the Pharmacy and Poisons (Amendment) Regulations 1980 and the Poisons List (Amendment) Regulations 1980.

Honourable Members will recall that the Pharmacy and Poisons (Amendment) Regulations 1978 and the Poisons List (Amendment) Regulations 1978 were approved by this Council on 21 June 1978 and thereafter the principal Regulations together with the amendment Regulations were brought into operation with effect from 1 July 1978.

Since the implementation of these Regulations, the Pharmacy and Poisons Board has received, and acted upon, useful requests and suggestions from relevant sources as to the need for further amendments to be made to the principal Ordinance and its subsidiary legislation. These proposals have all been carefully considered by the Board during the course of numerous meetings and resulting from those deliberations, the Pharmacy and Poisons (Amendment) Bill was proposed and approved by this Council on 23 July 1980.

Honourable Members will also recall that the major objectives of the Amendment Bill were:―

(a) to enable the Pharmacy and Poisons Board to establish executive committees to deal with licensing and related matters;

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(b) to introduce a new procedure for appeals against decisions of the Board or its executive committees;

(c) to provide for the registration of importers and exporters of all pharmaceutical products; and

(d) to ensure that poisons may only be exported by permitted dealers in poisons.

The Pharmacy and Poisons (Amendment) Regulations 1980 and the Poisons List (Amendment) Regulations 1980 are in consequence the necessary, resultant amendments to the subsidiary legislation.

I shall not take up honourable Members’ time unnecessarily in going into all the amendments in great detail but should like to mention the more important areas which are: ―

Firstly to make provision:

(a) for the establishment of executive committees of the Board;

(b) for appeals against decisions of such committees;

(c) for registration of importers and exporters; and

(d) for other related matters;

Secondly to update the First, Second and Third Schedules of the Pharmacy and Poisons Regulations thereby:

(a) providing for the application to certain substances of the restrictions relating to poisons;

(b) providing for exemption of certain substances from such restrictions; and (c) making additions and deletions to the list of substances that may be sold by retail only upon prescription; and

Thirdly to provide for consequential additions to the Poisons List.

Sir, I beg to move.

Question put and agreed to.

LEGAL PRACTITIONERS ORDINANCE

THE LAW DRAFTSMAN moved the following motion:―That section 26AA of the Legal Practitioners Ordinance shall expire on 31 March 1981.

He said:―Sir, I move the motion standing in my name on the Order Paper.

A fortnight ago, at the last meeting of this Council, I moved the second reading of the Legal Practitioners (Amendment) (No. 2) Bill 1980, which for convenience I shall refer to as the No. 2 Bill. In doing so I explained the results of the Law Society of England ceasing to hold its qualifying examinations in Hong Kong. Members will recall that an early consequence was the

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enactment by this Council, in April 1979, of section 26AA to restrict the enrolment of non law graduate students. That section was to expire on 31 December 1979 unless extended by this Council. Last December it was extended until the 31 December this year, when it will expire.

If it expires before the No. 2 Bill is enacted, there will be nothing to prevent non graduates from enrolling as students and thereby creating the very difficulties that section 26AA and the No. 2 Bill are intended to prevent.

The adjourned debate on the second reading of the No. 2 Bill has been deferred at the request of Unofficial Members to afford them more time to study its implications. That means that the No. 2 Bill will now not be enacted by the 31st of this month and it is necessary, therefore, as a temporary holding measure, to extend the life of section 26AA for a short while. The resolution that is the subject of this motion seeks to do so until 31 March 1981.

Sir, I beg to move.

Question put and agreed to.

Motion (in Committee)

SUPPLEMENTARY PROVISION FOR THE QUARTER ENDED 30 JUNE 1980

Council went into Committee, pursuant to Standing Order 58(2), to consider the motion standing in the name of the Financial Secretary.

THE FINANCIAL SECRETARY moved the following motion:―That this Council approves the proposals set out in Paper No. 23.

He said:―Sir, I move the second motion standing in my name in the Order Paper.

The schedule of supplementary provision for the first quarter of the financial year 1980-81 covers a total amount of $122 million. Of this sum, $106 million was required for expenditure on public works projects, and this was a result of more rapid progress on a number of existing projects and the upgrading of nine projects to Category A of the Public Works Programme.

The supplementary provision covered by the Schedule has not resulted in a net increase in expenditure, since offsetting savings have been found either under other heads of expenditure, or by the freezing of funds under Head 54 Miscellaneous Services Subheads 100 and 260 Additional commitments.

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The Finance Committee has approved all the items in the Schedule. The purpose of this motion is simply to seek the covering authority of this Council.

Sir, I beg to move.

Question put and agreed to.

Council then resumed.

THE FINANCIAL SECRETARY reported that the motion had been agreed to in Committee without amendment.

Question agreed by the whole Council pursuant to Standing Order 58(4).

First reading of bills

LEGAL PRACTITIONERS (AMENDMENT) (NO. 3) BILL 1980 LEGAL PRACTITIONERS (AMENDMENT) BILL 1981

INTERPRETATION AND GENERAL CLAUSES (AMENDMENT) BILL 1981 REVISED EDITION OF THE LAWS (AMENDMENT) BILL 1981

FIRE AND MARINE INSURANCE COMPANIES DEPOSIT (AMENDMENT) BILL 1981

LIFE INSURANCE COMPANIES (AMENDMENT) BILL 1981

Bills read the first time and ordered to be set down for second reading pursuant to Standing Order 41(3).

Second reading of bills

LEGAL PRACTIONERS (AMENDMENT) BILL 1981

THE ATTORNEY GENERAL moved the second reading of:―‘A bill to amend the Legal Practitioners Ordinance’.

He said:―Sir, I move that the Legal Practitioners (Amendment) Bill 1981 be read the second time.

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This Bill is concerned with the admission of barristers to the Hong Kong Bar. As the law now stands, admission to the Bar is limited to English and Northern Ireland barristers, Scots Advocates, people holding the Hong Kong University Law degree and the Post Graduate Certificate in Laws (the P.C.LL. as it is called), and to Chinese residents and Hong Kong belongers who have obtained the P.C.LL. I should explain that this latter category caters for Hong Kong people who have obtained law degrees from overseas universities but who return to Hong Kong to take the P.C.LL. at the Hong Kong University. In recent years admitted into this category are foreign people from Singapore, from Canada, from New Zealand and from a number of other countries in the Commonwealth; some of Chinese nationals, others not.

It is now considered that the last category should be widened so as to include Commonwealth citizens or citizens of the Republic of Ireland who have been ordinarily resident in Hong Kong for at least seven years and who have obtained the Post Graduate Certificate of Laws.

It seems to me hard to justify the exclusion of these people from the chance to be admitted to the Hong Kong Bar. P.C.LL. holders from Commonwealth countries and the Republic of Ireland can be admitted as solicitors and it seems to be anomalous, to me at any rate, that they should not be able to be admitted as barristers.

They are people who will have demonstrated their close connection with Hong Kong and their identification of the association with it by living here for at least seven years, and by undertaking also the demanding university course leading to the P.C.LL. examination. They are likely, in my view, to be people of maturity and breadth of experience whose presence at the Hong Kong Bar will, in no small measure, contribute to the public interest.

There may be some apprehension, Sir, that the amendment might open the flood gates and that Hong Kong will act as a sort of Mecca to aspiring barristers in all parts of the Commonwealth. In my view, this will not happen. First, there is the hurdle of seven years’ residence, and that obstacle seems to me likely to deter most birds of passage. Secondly, there is the requirement to obtain the P.C.LL., and this in turn depends on admission to that course by the Hong Kong University. The policy adopted by the University is to find places first for their own graduates, and only thereafter to fill vacant places with graduates from universities outside Hong Kong so that no local candidate, no suitable local candidate, will be deprived of a position on the course by virtue of this widening. And secondly, the University applies high standards to entrance to P.C.LL. course; in view of the hard course that it is, it is exceedingly unlikely that anyone with a poor degree from a university outside Hong Kong will gain admission to that course in any event.

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Sir, it may be asked why we should change our law in this way without some reciprocal arrangement being introduced for Hong Kong people who wish to be admitted correspondingly in Commonwealth countries. I like to assure honourable Members that I intend, over the next period of months, to pursue the question of reciprocity with other Commonwealth countries. One has to bear in mind that if a Hong Kong student were to take a law degree and professional examinations in an overseas country, he might well be entitled to practise as a lawyer in that country. But just as in Hong Kong, admission as a lawyer does not automatically give the right to practise in view of the immigration controls which we apply here, and which of course some other countries also apply in the like field.

Sir, I move that the debate on this motion be now adjourned.

Motion made. That the debate on the second reading of the Bill be adjourned―THE ATTORNEY GENERAL.

Question put and agreed to.

LEGAL PRACTITIONERS (AMENDMENT) (NO. 3) BILL 1980

THE LAW DRAFTSMAN moved the second reading of:―‘A bill to amend the Legal Practitioners Ordinance’.

He said:―Sir, I move that the Legal Practitioners (Amendment) (No. 3) Bill 1980 be read the second time.

The Law Society of Hong Kong resolved in July this year to implement as soon as practicable a compulsory professional indemnity insurance scheme. Such a scheme will not only be of advantage to solicitors, who will be able to secure insurance at favourable rates and upon advantageous terms; it will also be of significant benefit to the public in ensuring that persons who sustain loss or damage through the default of their solicitors will not fail, within the limits that I will explain in a moment, to obtain compensation because their solicitors may not have sufficient funds. Compulsory professional insurance of the sort proposed is not unusual and already exists for instance in the United Kingdom, Canada and some of the States in Australia.

The Hong Kong scheme turns on a master insurance policy negotiated by the Law Society through an international firm of insurance brokers and is underwritten by several reputable insurance companies. The scheme is to be funded by annual premiums paid by all solicitors in private practice, and is similar in concept to schemes in England and Australia. All civil liability in connection with a solicitor’s practice will be covered to the following limits. For a sole practitioner, up to $350,000 for each claim. In the case of partners, up to $240,000 for each partner in respect of each claim; and for assistant

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solicitors or consultants up to $125,000 in respect of each claim. As is not unusual in indemnity insurance, each solicitor will himself have to meet between $5,000 and $20,000 of each claim, depending upon whether he is a consultant, assistant, partner or sole practitioner; but this is hardly likely to affect the value of the scheme. In the case of firms of solicitors, insurance cover will be the aggregate of the individual sums in respect of which each partner is insured. So that a firm of four partners will have, even at the minimum level, professional indemnity cover of almost $1 million.

Nevertheless in today’s inflationary times, these limits may seem a little low. On the other hand they do represent a significant and useful beginning and, of course, they are merely minimum requirements. No solicitor is precluded from taking out additional cover. On the contrary the scheme itself provides for topping-up or additional cover at the same concessionary rates and favourable terms. The Law Society is aware of the need for realistic levels of insurance cover and is reviewing the amounts I mentioned. But such a review and the negotiations and consultations that any increase would entail, must of necessity take time. And even if the time required is not very great, it could result, as I will explain, in the scheme coming into operation in 1982 instead of 1981. Furthermore, enactment of this Bill and introduction of the scheme will not delay any increase in the minimum insurance cover when new amounts are worked out. On the contrary with the legislation and scheme already in operation it should be a simple and far more expeditious matter of merely amending the amounts in the master policy. Clearly, therefore, it would not be right to delay the Bill merely to enable a review of the minimum amounts to be carried out prior to enactment.

Needless to say, statutory provision is required to make professional indemnity insurance compulsory. It is proposed to spell out the details of the scheme and the requirement to take out insurance, in professional indemnity rules to be made by the Council of the Law Society with the approval of the Chief Justice. Clause 4 of the Bill confers upon the Council of the Law Society the necessary power to make such rules. When they are made the rules will, of course, be laid before this Council in the normal way.

Clauses 2 and 3 of the Bill make compliance with such rules or exemption from them a condition precedent to qualification to act as a solicitor, and to the issue of a practising certificate, without which a solicitor may not practise.

In legal and practical term therefore, professional indemnity insurance will become compulsory by reference to the issue of practising certificates. These certificates become renewable on 1 January each year. For this reason if the proposal for compulsory professional indemnity insurance is to become a reality early in 1981 instead of 1982, it is essential that this Bill be passed today. I hope, therefore, that with the support of Members the remaining stages of the Bill can be completed this afternoon.

Sir, I beg to move.

302 HONG KONG LEGISLATIVE COUNCIL―17 December 1980 Question put and agreed to.

Bill read the second time.

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

INTERPRETATION AND GENERAL CLAUSES (AMENDMENT) BILL 1981

THE LAW DRAFTSMAN moved the second reading of:―‘A bill to amend the Interpretation and General Clauses Ordinance’.

He said:―Sir, I move that the Interpretation and General Clauses (Amendment) Bill 1981 be read the second time.

Under the Interpretation and General Clauses Ordinance, rules, regulations, orders and other types of subsidiary legislation made under ordinances have to be published in the Gazette and cannot, without special provision, come into operation prior to such publication. Section 34 of the Interpretation and General Clauses Ordinance requires all subsidiary legislation to be laid on the table of this Council at the first sitting following publication in the Gazette. With publication on Fridays, subsidiary legislation is in practice laid five or 12 days after publication. Section 34 also empowers this Council at the next sitting following that at which subsidiary legislation is laid, to repeal or amend that subsidiary legislation. Unofficial Members have pointed out that the normal interval of two weeks between sittings does not always afford them sufficient time to study subsidiary legislation. In particular, during the debate on the second reading of the Water Pollution Control Bill earlier this year, Miss DUNN stressed the danger of Members not having sufficient time to study regulations under that measure. And in the course of the debate on the second reading of the Supplementary Medical Professions Bill, Dr. FANG and Dr. HO Kam-fai similarly stressed the need for ample time to study the regulations to be made for para-medical professions.

Clause 2 of the Bill accordingly amends section 34 of the Interpretation and General Clauses Ordinance to provide that this Council may amend or repeal subsidiary legislation at the first sitting held not less than 27 days after it is laid. This, Sir, will effectively provide Members with at least four weeks for consideration of subsidiary legislation.

There are two other provisions in our laws similar to section 34. One is section 98A of the Interpretation and General Clauses Ordinance. This empowers the Attorney General by order published in the Gazette to rectify clerical and printing errors in any ordinance, and it provides in

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effect a similar period of two weeks for annulment by this Council of such orders. Clause 3 of the Bill therefore amends section 98A in a similar manner to provide for a period of at least four weeks.

The other provision is section 18(2) of the Revised Edition of the Laws Ordinance 1965. But this has for legal reasons to be dealt with in a separate bill, and it is accordingly the subject of the next bill on the Order Paper.

Sir, I move that the debate on this motion be adjourned.

Motion made. That the debate on the second reading of the Bill be adjourned―THE LAW DRAFTSMAN.

Question put and agreed to.

REVISED EDITION OF THE LAWS (AMENDMENT) BILL 1981

THE LAW DRAFTSMAN moved the second reading of:―‘A bill to amend the Revised Edition of the Laws Ordinance 1965’.

He said:―Sir, I move that the Revised Edition of the Laws (Amendment) Bill 1981 be read the second time.

Section 18(2) of the Revised Edition of the Laws Ordinance 1965 empowers the Attorney General by order published in the Gazette to rectify any clerical or printing error which appears in the revised edition of any ordinance. It requires every such order to be laid on the table of this Council and in practice affords honourable Members two weeks within which to study it for purposes of annulment. For the reasons I have just given in moving the second reading of the Interpretation and General Clauses (Amendment) Bill 1981, clause 2 of this Bill seeks to extend that period to at least four weeks.

Sir, I move that the debate on this motion be adjourned.

Motion made. That the debate on the second reading of the Bill be adjourned.―THE LAW DRAFTSMAN.

Question put and agreed to.

FIRE AND MARINE INSURANCE COMPANIES DEPOSIT (AMENDMENT) BILL 1981

THE SECRETARY FOR ECONOMIC SERVICES moved the second reading of:―‘A bill to amend the Fire and Marine Insurance Companies Deposit Ordinance’.

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He said:―Sir, I move that the Fire and Marine Insurance Companies Deposit (Amendment) Bill 1981 be read the second time.

The purpose of this Bill is to amend the principal Ordinance so as to require insurance companies wishing to carry on fire and marine insurance business to obtain the authority of the Registrar of Companies to do so. The Bill imposes as a condition of authorization a test as to solvency and a capital requirement.

Insurance is an area in which some degree of Government intervention is appropriate. This is because a policy holder is rarely in a position to assess the financial capability of the company which offers him cover. A contract of insurance usually provides for payment by the insurance company of a sum substantially in excess of the premiums paid by the policy holder, and payment by the company will be made at some future or uncertain date. In many cases insurance is effected to cover the policy holder against calamity, and an insurance company’s failure to meet its liabilities can be disastrous for individual policy holders. It is therefore essential that members of the public should be able to rely upon the financial stability of insurance companies with whom they deal.

In Hong Kong we have lagged behind other insurance centres in providing a legislative framework for the regulation of the insurance industry. Generally, such regulation applies to all classes of insurance business. But in Hong Kong we have so far regulated only fire, marine, life and motor vehicle business. Furthermore, the financial requirements which we impose, and the information we require for the purpose of regulation, do not bear comparison with those of many other insurance authorities. In consequence, the Hong Kong policy holder receives less protection than he might reasonably expect, and the Hong Kong market itself may suffer by reason of a lack of confidence in standards adopted by some companies carrying on insurance business here.

You will recollect, Sir, that at the opening session of this Council you mentioned the Government’s proposed comprehensive insurance legislation. The comprehensive Bill will establish financial standards, which will in their turn be backed by increased powers of intervention designed to enable the insurance authority to take appropriate action if it appears that an insurance company is in difficulties or is likely to become so.

In putting together proposals for the comprehensive legislation the Government has consulted a working group comprising representatives of the industry and chaired by the Registrar General. A first draft Bill was circulated and commented upon by the working group. And those comments have been considered, and where appropriate taken into account in a second draft Bill, which is in the course of preparation. The subject is complex and the insurance industry will naturally wish to examine the second draft comprehensive bill with great care. I therefore hesitate, Sir, at this moment in time, to give an exact date for bringing forward the

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comprehensive measure. Even if the industry greets our proposals with acclamation―and this is not the usual response from those who are about to be regulated―and we make swift progress, it will still not be possible to bring the whole of the legislation into effect overnight.

Accordingly, Sir, it is the view of the Government and, I believe, of the majority of the industry, that there should be some move now towards improving the existing ordinances. This present Bill and the Life Insurance Companies (Amendment) Bill, the next bill on the Order Paper, are interim measures and as such are not a complete answer to the problem. But I believe that they will together bring about a considerable improvement in the Government’s position in relation to the insurance industry and will thus be of value to policy holders.

I turn now, Sir, to the Bill itself. The only clause upon which I shall comment is clause 5, which introduces a new section 3A into the principal Ordinance. This new section provides that no person shall carry on fire or marine business unless he is authorized to do so by the Registrar of Companies. The conditions of authorization are set out in the section and comprise a solvency test and capital requirement.

The first condition of authorization is the solvency test. This will affect all companies carrying on fire and marine business irrespective of the date on which they came or come into the market. The new section provides that the value of the assets of an insurer applying for authorization shall exceed the amount of its liabilities by at least $2 million, or if the insurer carries on the business of life insurance in addition to fire and marine business, $4 million. The effect of this is to provide a cushion of $2 million or $4 million as appropriate, which will give a measure of security to the policy holder in the event of a depletion of the insurer’s capital through losses, an inaccurate assessment of assets or liabilities or any fluctuation in their value. In order that this measure be kept as simple as possible a fixed solvency margin is proposed, rather than a margin which is adjusted according to the premium income of the insurer. Although it is accepted that a fixed margin militates against smaller insurers, the sum involved should not impose an unreasonable burden having regard to the necessity for maintaining a paid up capital of at least $5 million.

It will be noted, Sir, that the paid up capital requirement of $5 million, the second condition of authorization, is the same as that imposed by the Insurance Companies (Capital Requirements) Ordinance 1978 on new companies, that is to say companies coming into the market afresh on or after 1 February 1978. There is, however, a difference between the capital requirement in that Ordinance and the requirement introduced by the present Bill. For companies affected by the Insurance Companies (Capital Requirements) Ordinance it is provided that the capital will be paid up in cash, and this requirement is preserved for new companies by virtue of subsection (8) of the new section 3A. Existing companies, and by this I mean companies

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in the market prior to 1 February 1978, will be caught by the present measure, and will have to maintain a paid up capital of $5 million, but that capital need not be provided in cash. This is considered equitable in the case of companies which have been in business for some time.

A company applying for authorization will need to satisfy the Registrar that it meets these new financial standards, both as to solvency and capital. So, the Registrar is introducing a more sophisticated authorization procedure. Only those companies which are able to demonstrate their ability to meet the standards proposed will be admitted to the market. Should a company subsequently fail to maintain these standards the Bill provides for revocation of the authorization.

Sir, although this Bill is very much an interim measure, it nevertheless represents a significant step forward. Policy holders should have greater protection, and even though there may be a few companies which are unwilling or unable to provide the modest amount of capital now envisaged, any marginal reduction in the number of companies in the market will not affect the consumer and will do nothing to damage the standing of the industry as a whole. Indeed, I hope that the strength and international reputation of Hong Kong’s insurance industry will be enhanced.

I now move, Sir, that the debate on this motion be adjourned.

Motion made. That the debate on the second reading of the Bill be adjourned―THE SECRETARY FOR ECONOMIC SERVICES.

Question put and agreed to.

LIFE INSURANCE COMPANIES (AMENDMENT) BILL 1981

THE SECRETARY FOR ECONOMIC SERVICES moved the second reading of:―‘A bill to amend the Life Insurance Companies Ordinance’.

He said:―Sir, I move that the Life Insurance Companies (Amendment) Bill 1981 be read the second time.

The concept of this Bill is the same as that of the Fire and Marine Insurance Companies Deposit (Amendment) Bill: that is to say, it provides for the authorization of a company wishing to carry on life insurance, subject to compliance with conditions as to solvency and capital. The need for this condition in respect of life companies is perhaps even greater than for companies carrying on general business. Whereas a policy holder may require protection for only a relatively short time in respect of fire, marine or other general risks, the relationship between a policy holder and a life insurance company often extend over several decades.

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Apart from the conditions for authorization, Sir, this Bill contains certain provisions which specifically relate to life insurance.

Under the principal Ordinance, actuarial valuations are required every five years. Since life insurance business is founded firmly upon actuarial principles, such valuations are vital to an accurate assessment of a company’s position. But experience has shown that a five year period is too long, and accordingly it is now proposed that such valuations be deposited with the Registrar every other year, and clause 4 of the Bill so provides.

It is proposed that the Registrar of Companies be empowered to present a petition for the winding-up of a life company which he considers to be insolvent within the terms of section 22(1) of the principal Ordinance. Under this subsection a life insurance company may be wound up by the court if the company is proved to be insolvent after taking into account bases of mortality and interest, and the value of its contingent and prospective liabilities. At present, only a policy holder or share holder may present a petition under this subsection. Thus, the amendment is considered necessary because the complexities of life business are such that it is probable that the Registrar will be in possession of sufficient information to present a petition some time before the true state of the company is realized by policy holders or share holders. The Registrar already has power under section 22(2) of the principal Ordinance the petition for the winding-up of a life insurance company, but this power can only be exercised on the basis of the company failing to meet a very simple and rudimentary test of solvency. It is considered that this power is not wide enough, and requires to be supplemented by the proposed new power, which should enable the Registrar to take action at a sufficiently early date.

Clause 7 of the Bill replaces the existing section 23 of the Ordinance, which enables the court to reduce the amount of the contracts as an alternative to a winding-up order, with a new section extending the provision to cases where a company has had its authorization revoked. The power, as extended by clause 7 is essential because if in future, a company ceases to be authorized under the new section 2A(5), it will no longer be able to receive renewal premiums in respect of existing policies. Then it would be necessary for the court to order that the contracts be reduced and converted into paid-up policies.

Before concluding, Sir, there is one matter which I should mention. Members will have noticed that we have not brought forward any measure to amend the Motor Vehicles Insurance (Third Party Risk) Ordinance. This is because companies carrying on motor vehicle insurance business are already required to be authorized on the basis of a test as to financial stability. If the present measures are enacted the Registrar General will issue a circular informing companies carrying on motor vehicle insurance business that the minimum requirement as to financial stability will include the standard of solvency and capitalization contained in the new legislation.

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Finally, Sir, I would like to express my gratitude to the industry’s representatives on the working group on insurance legislation for their help and guidance generously given during the consultations which led to the introduction of these Bills. Without that help and guidance we would undoubtedly not have made as much progress as we have.

Sir, I now move that the debate on this motion be adjourned.

Motion made. That the debate on the second reading of the Bill be adjourned―THE SECRETARY FOR ECONOMIC SERVICES.

Question put and agreed to.

HONG KONG ASSOCIATION OF BANKS BILL 1980

Resumption of debate on second reading (3 December 1980)

Question proposed.

MR. F. W. LI:―Sir, as a director of a licensed bank, I should like to declare an interest in this Bill.

Although this Bill has not attracted much public interest except within the banking community, I believe it would be fair to say the Bill is an important piece of legislation which will help to ensure the orderly conduct of business in the financial markets of Hong Kong. It therefore has the full support of all the Unofficial Members.

Hong Kong has made enormous advances in the post-war period, and there has been a minimum of Government intervention in our financial markets. I would agree that, generally speaking, this laissez faire approach is still appropriate to our circumstances. However, the number of licensed banks has increased from 74 in 1977 to the present total of 115. It is therefore also appropriate for the banking industry to be better co-ordinated in the best interests of the banks themselves and of the commuity as a whole. This improved co-ordination will be effected through the incorporation of the new Hong Kong Association of Banks, to which every licensed bank operating in Hong Kong is to belong.

This Association will take over the functions of the Exchange Banks’ Association, which has hitherto, among other things, administered the interest rate agreement currently followed by the E.B.A. member banks. While that agreement has in general operated well over the years, there is some room for improvement. The E.B.A. is not a statutory body, and so its membership is open to licensed banks on a voluntary basis. Although the agreement is in theory binding on all members, there is in practice

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very little that the E.B.A. can do if a breach should occur. Interest rates could therefore be disrupted merely because a few banks decline to cooperate. By the same token other E.B.A. rules, such as those on uniform bank charges, can be applied throughout the banking industry only if there is voluntary acceptance by all its members. It is obvious that for its rules to be more effective, membership in the new Association must be mandatory for all licensed banks operating in Hong Kong.

I agree, Sir, that the Committee of the new Association should be composed of 12 members, nine of whom are to be elected. This compares favourably with the membership of the Committee of the Exchange Banks’ Association, which has only eight members, including the three continuing members. I further agree that it is appropriate for the Committee to be given powers to enforce compliance with its rules. The proposed Consultative Council will have 23 members, 20 of whom are to be elected on a regional basis. It is to provide a forum in which the considered views of all licensed banks may be heard in the running of their trade association. As the function of that Council is to advise the Committee on any matter relating to the business of banking, groups of banks from different regions will be able to participate in the formulation of the Association’s policies through the Council’s advice to the Committee. The addition of a Consultative Council is indeed a welcome innovation.

Sir, the Unofficial Members appreciate that reservations have been expressed on the clause providing for the offices of Chairman and Vice-Chairman of the Committee of the new Association to alternate between The Chartered Bank and The Hongkong and Shanghai Banking Corporation. Since these two banking institutions are by law the only note-issuing banks in Hong Kong it is both sensible and logical for the chairmanship to be held in rotation between them, for periods of two years each.

With these remarks, Sir, I support the motion.

MR. BROWN:―Sir, earlier in this debate the Financial Secretary paid tribute to the Exchange Banks’ Association for the way in which it co-operated in the drafting of this Bill.

As the current Chairman of the E.B.A. I speak as an interested party, and in thanking the Financial Secretary for his kind words I would like to record that this co-operation was given willingly because the Association itself recognized that the time had come for change.

Hong Kong’s financial market today is a very different place from that in 1897, when the Association was first formed, and indeed also very different from that in 1965 when the existing constitution was adopted. The E.B.A., therefore, sees the incorporation of the Hong Kong Association of Banks as a necessary move to enable the banking industry’s trade association

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to continue its functions in the interests of its now wider membership, and the public at large.

Following on the gazetting of this Bill the E.B.A. invited all licensed banks to submit comments and very few did so. This could perhaps be mistaken for indifference, or apathy, but from discussions with a fair cross-section of the banking community I believe the lack of comment indicates general support for the way in which Bill is drafted.

Without wishing to overstate the role of the E.B.A. in this matter, feel it fair comment that the Bill’s acceptance by most bankers reflects the co-operation, mentioned earlier, between the Association and the concerned Government officials. The interests of all banks were considered at the drafting stages and it is self evident from the provisions of the Bill that Government has reinforced its policy of non-discrimination between licensed banks incorporated in Hong Kong and those incorporated outside Hong Kong.

Notwithstanding the foregoing the picture would not be complete without reference to some critical comments made by a minority of the banking community. Such criticism covers a number of technical points, all of which have been adequately answered by the Financial Secretary earlier in this debate, and other matters which perhaps can be summarized into two main areas of concern.

First, there is unease that the Committee of the Association―which is of course made up of bankers―can make and enforce rules relating to the conduct of the banking business. Some see this as an opportunity for one group of banks, i.e. those on the Committee, to frame rules to their competitive advantage against another group, i.e. those not on the Committee. This same concern has in fact been expressed regarding the constitution of the existing E.B.A., and for this reason the Bill before us specifically involves Government in the rule making and enforcement processes. The affairs of the new association will be very much in the public eye and this―when added to the need for liaison and consultation with Government makes it unrealistic to believe that decisions would be, or indeed could be made other than in the common interest.

Second, there is some disappointment that the Consultative Council has not been given more power. It is true that the Bill does not require the Committee to act on matters referred to it by the Council, but nevertheless the Council’s voice will be a powerful one. The Council’s membership of 23 banks―out of a total association membership of 113 (probably 115 by the time the Council comes into being) represents a significant percentage of the total membership. If a matter of importance was referred by this very representative body to the Committee it is unlikely that the latter would be able to ignore it without good reasons. And this is the more so bearing in mind that the Committee itself will consist of 12 members

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of which five of the elected members will be provided by banks incorporated outside Hong Kong.

Sir, one frequently hears Hong Kong described as being a unique place. More important than being unique, however, is being successful, and it is self evident from the growth record of our economy that in our institutional arrangements we have found a successful, unique, formula. I am pleased that the incorporation of the Hong Kong Association of Banks moves us forward to meet changing circumstances without compromising those basic policies on which our financial markets have depended for their stability.

Looking to the future I believe, and I feel confident that most bankers share my belief, that the new association of banks will provide a better vehicle than the existing E.B.A. to discharge the important role accorded the banking industry in the management of our monetary system. It is for this reason, Sir, that I support the motion.

THE FINANCIAL SECRETARY:―Sir, both Mr. LI and Mr. BROWN, in supporting this Bill, have laid emphasis on the size and scope and changing nature of the banking scene in Hong Kong today. Their speeches reflect the general view of bankers and Government officials, that the time has come to re-define the role of the Bank’s Association and recast its constitution.

In so doing, I believe we have evolved an arrangement which will, together with other institutional arrangements which we have effected in recent years, enable us to preserve, even in this turbulent world, that tradition of competitive freedom which has been the mainspring of the growth rate and diversification of our economy.

Furthermore, I envisage that the three-tier structure of the new Association― Committee, Consultative Council and annual meeting―will enable all licensed banks actively to participate in the affairs of Association. This, in itself, should ensure both that the market is an orderly one and, at the same time, that the scope for competition between banks is not unnecessarily restricted; and I would stress that, within certain limits, it is no part of the Government’s thinking that the innovative spirit should be cramped.

The Government looks forward to a continuing dialogue with the new Association―its Committee and its secretariat. For its part, the Government will respect the market place and I believe the Association will too; but the Government will have to express a certain view, from time to time, of where the broader public interest lies and I have no doubt that the Association will respond appropriately.

Sir, I beg to move.

(Mr. NEWBIGGING declared an interest.)

312 HONG KONG LEGISLATIVE COUNCIL―17 December 1980 Question put and agreed to.

Bill read the second time.

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

SUPPLEMENTARY APPROPRIATION (1979-80) BILL 1980 Resumption of debate on second reading (3 December 1980)

Question proposed.

Question put and agreed to.

Bill read the second time.

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

BUILDINGS (AMENDMENT) BILL 1980

Resumption of debate on second reading (3 December 1980)

Question proposed.

Question put and agreed to.

Bill read the second time.

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

TELEVISION (AMENDMENT) BILL 1980

Resumption of debate on second reading (3 December 1980)

Question proposed.

(Mr. TIEN, Miss DUNN, Mr. NEWBIGGING and Mr. BROWN declared an interest.) Question put and agreed to.

Bill read the second time.

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 313 Bill committed to a committee of the whole Council pursuant to Standing Order 43(1).

PUBLIC OFFICERS (ASSIGNMENT OF EMOLUMENTS) BILL 1980 Resumption of debate on second reading (3 December 1980)

Question proposed.

MR. F. W. LI:―Sir, when moving the second reading of the Bill, the Secretary for the Civil Service recounted the many recent developments which have been introduced within Government to overhaul the internal management of the civil service. The members of my Working Group are glad to have been able to contribute towards this general effort.

Sir, I would like to touch on the Refinancing Scheme to which the present Bill relates. First of all, I would like to voice my support and that of my Unofficial colleagues to the scheme and the Bill before Council. The Refinancing Scheme, in offering an opportunity to civil servants, male and female, to relieve themselves of the burden of their existing debts, will go a long way towards assisting those in financial difficulties to turn a new leaf. This scheme, together with the other arrangements mentioned by the Secretary for the Civil Service when he introduced the Bill, will no doubt help to enhance the integrity and efficiency of the civil service.

The Refinancing Scheme is a bold venture to provide a practical solution to a practical problem. As such, I regard it as a social experiment which flows naturally from the recently introduced Money Lenders Ordinance 1980. Whilst the object of that Ordinance is to free the community from the greed and avarice of loan sharks, this Bill, so essential to the successful operation of the Refinancing Scheme, will help civil servants in financial difficulties to rid themselves of debts which are subject to excessive interest rates and possible control by unscrupulous money lenders. Both pieces of legislation will thus be providing Government with the machinery to tackle the social problem of indebtedness in the community at large and within the civil service.

Sir, on the Bill itself I have nothing else to add, but I do have two comments to make on the Refinancing Scheme. I would firstly like to stress that the scheme will not be financed from public funds. The capital required to refinance the debts of civil servants will come from a number of banks and deposit-taking companies participating in the scheme. They will be charging interest at an appropriate commercial rate. The part Government will play in promoting this scheme is confined to the establishment of a Civil Servants’

314 HONG KONG LEGISLATIVE COUNCIL―17 December 1980

Finance Advisory Office which is to assist civil servants to apply for refinancing loans and generally to give advice on personal financial problems.

Secondly, I would like to stress that my Working Group has recommended that any information made available by civil servants to the Civil Servants’ Finance Advisory Office should be kept strictly confidential, as in transactions between a banker and his clients. I have been assured by the Secretary for the Civil Service that, when the scheme is introduced, every effort and care would be made to maintain confidentiality. Civil servants need therefore have no fear that information given by them to the Finance Advisory Office in connection with their indebtedness would be passed back to their departments or the Secretariat to the detriment of their careers. As the success of the Refinancing Scheme depends very much on the trust which civil servants place on the Advisory Office’s ability to maintain strict confidentiality, I hope this point will be made very clear to civil servants when the scheme is announced.

Sir, my Unofficial colleagues and I feel that this Bill and the Refinancing Scheme, which the Bill helps to launch, are a step in the right direction towards a better-managed and upright civil service, and that both should be introduced without delay. I therefore support the motion before Council.

Question put and agreed to.

Bill read the second time.

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

Committee stage of bills

Council went into Committee.

HONG KONG ASSOCIATION OF BANKS BILL 1980

Clauses 1 to 3 were agreed to.

Clause 4

THE FINANCIAL SECRETARY:―Sir, I move that clause 4 be amended as set out in the paper circulated to Members.

Subclause (i) of clause 4 states that one of the objects of the Association is to provide or procure facilities for the clearing of cheques and other

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 315

instruments. These facilities are supplied by the Hong Kong Bankers’ Clearing House, and this subclause will facilitate the establishment of closer links between the clearing house and all licensed banks, whose transactions, and those of their customers, are settled through the clearing house. However, the subclause as presently drafted does not cover the electronic as opposed to the paper clearing, that is, the processing of direct debit and credit items which are presented by banks to the clearing house on magnetic tape or discette, and not in the form of a written instrument. It is, therefore, necessary to add a further phase to the subclause as set out in the paper circulated to Members.

Proposed Amendment

Clause 4

That clause 4(i) be amended by adding after ‘other instruments’ the following― ‘, and for the processing of banking transactions presented by members’.

The amendment was agreed to.

Clause 4, as amended, was agreed to.

Clauses 5 and 6 were agreed to.

Clause 7

THE FINANCIAL SECRETARY:―Sir, I move that clause 7 be amended as set out in the paper circulated to Members.

Subclause (1) of clause 7 provides for membership of the Association to consist of, and to be limited to, licensed banks. As I mentioned when moving the second reading the Attorney General is now of the view that the wording of this subclause is unsatisfactory, because it clashes with clause 21(1)(d). Subclause (1) of clause 7 states that every licensed bank shall be a member of the Association. But clause 21(1)(d) provides that the Committee may, with the approval of the Governor in Council, expel a member from the Association. If that were to happen―and let me emphasize, Sir, that I very much hope it will never have to happen―if that were to happen, the Committee would have created an unlawful situation, because the member who had been expelled would be in breach of subclause (1) of clause 7. It is, therefore, necessary to amend subclause (1) of clause 7 to provide that membership shall continue unless a member is expelled from the Association (laughter).

316 HONG KONG LEGISLATIVE COUNCIL―17 December 1980 Proposed Amendment

Clause 7

That clause 7 be amended by deleting subclause (1) and substituting the following― ‘(1) Every licensed bank which is so required by a condition attached to its licence shall become a member of the Association and shall, subject to this section, remain a member of the Association unless expelled under section 21(1)(d); and membership of the Association shall be restricted to licensed banks.’.

The amendment was agreed to.

Clause 7, as amended, was agreed to.

Clause 8 was agreed to.

Clause 9

THE FINANCIAL SECRETARY:―Sir, I move that clause 9 be amended as set out in the paper circulated to Members.

Subclause (1)(b) of clause 9 and the Schedule provide for the election of members to the Consultative Council on a geographical basis, so as to provide adequate representation for all the licensed banks in Hong Kong, whatever their country of incorporation. The subclause as drafted refers to members incorporated or having their principal place of business in various regions of the world. The phrase ‘principal place of business’ was intended to accommodate three small banks which are unincorporated partnerships organized under Hong Kong law, and are licensed under section 42 of the Banking Ordinance. It has, however, been pointed out that there is one licensed bank whose principal place of business is not the country in which it is incorporated. To avoid any doubt or confusion, an amendment is proposed to subclause (1)(b) of this clause and to the heading of the second column of the Schedule, to provide that the electoral region for a member shall be its principal place of business only in the case of an unincorporated member (laughter).

Proposed Amendment

Clause 9

That clause 9(1)(b) be amended by deleting ‘having their principal place of business’ and substituting the following―

‘, in the case of unincorporated members, having their principal place of business,’.

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 317 The amendment was agreed to.

Clause 9, as amended, was agreed to.

Clauses 10 and 11 were agreed to.

Clause 12

THE FINANCIAL SECRETARY:―Sir, I move that clause 12 be amended as set out in the paper circulated to Members.

Subclause (1)(a) of clause 12 provides that the Committee of the Association may make rules as to the maximum rates of interest or return which may be paid or granted by members in respect of Hong Kong dollar deposits, or specified instruments. It has been suggested that the phrase ‘interest or return’ might not cover a sum earned by a customer by way of discount or redemption premium on a non-interest-bearing instrument. It is clearly appropriate that if the use of such an instrument, or of other devices designed to attract deposits, were to grow, the Committee should have the power to ensure that the provisions of the interest rate agreement were not being circumvented. So it is proposed to add the words ‘discount or other benefit’ to the scope of the rules which the Committee may make in respect of the interest rate agreement.

Subclause (1)(e) of clause 12 empowers the Committee to make rules as to any other charges relating to the provision of any banking service. This power was intended to cover such matters as charges on documentary letters of credit, or charges for handling import or export bills. It has, however, been pointed out that this subclause could be interpreted as empowering the Committee to make a rule as to the rate of interest which could be charged by member banks on their loans or advances to their customers. This is, of course, very far from our intention, and an addition is, therefore, proposed to exclude the possibility of the Committee making such a rule.

Proposed Amendment

Clause 12

That clause 12(1) be amended―

(a) in paragraph (a) by deleting ‘or return’ and substituting the following― ‘, return, discount or other benefit’; and

(b) in paragraph (e) by adding, after ‘banking service’ the following― ‘, not being charges by way of interest or return payable on loans or advances granted by members’.

The amendment was agreed to.

318 HONG KONG LEGISLATIVE COUNCIL―17 December 1980 Clause 12, as amended, was agreed to.

Clauses 13 to 24 were agreed to.

Schedule

THE FINANCIAL SECRETARY:―Sir, I move that the Schedule be amended as set out in the paper circulated to Members for reasons I explained when explaining the amendment to clause 9.

Proposed Amendment

Schedule

That the Schedule be amended in the heading to the second column by deleting ‘having their principal place of business in’ and substituting the following― ‘, in the case of unincorporated members, having their principal place of business in,’.

The amendment was agreed to.

The Schedule, as amended, was agreed to.

BUILDINGS (AMENDMENT) BILL 1980

Clauses 1 to 17 were agreed to.

TELEVISION (AMENDMENT) BILL 1980

Clauses 1 to 8 were agreed to.

PUBLIC OFFICERS (ASSIGNMENT OF EMOLUMENTS) BILL 1980 Clauses 1 to 10 were agreed to.

LEGAL PRACTITIONERS (AMENDMENT) (NO. 3) BILL 1980 Clause 1

THE LAW DRAFTSMAN:―Sir, I move that clause 1 be amended as set out in the paper circulated to Members.

HONG KONG LEGISLATIVE COUNCIL―17 December 1980 319

The Legal Practitioner Amendment (No. 2) Bill 1980 has been deferred to 1981. In consequence the number of this Bill has to be amended.

Proposed Amendment

Clause 1

That clause 1 be amended by deleting ‘(No. 3)’ and substituting the following― ‘(No. 2)’.

The amendment was agreed to.

Clause 1, as amended, was agreed to.

Clauses 2 to 4 were agreed to.

Council then resumed.

Third reading of bills

THE ATTORNEY GENERAL reported that the

BUILDINGS (AMENDMENT) BILL

TELEVISION (AMENDMENT) BILL

PUBLIC OFFICERS (ASSIGNMENT OF EMOLUMENTS) BILL

had passed through Committee without amendment, that the

HONG KONG ASSOCIATION OF BANKS BILL

LEGAL PRACTITIONERS (AMENDMENT) (NO. 3) BILL

(enacted as Legal Practitioners (Amendment) (No. 2) Ordinance) had passed through Committee with amendment, and that the

SUPPLEMENTARY APPROPRIATION (1979-80) BILL

having been read the second time was not subject to committee stage proceedings in accordance with Standing Order 59 and moved the third reading of each of the Bills.

320 HONG KONG LEGISLATIVE COUNCIL―17 December 1980 Question put on each Bill and agreed to.

Bills read the third time and passed.

Adjournment and next sitting

HIS EXCELLENCY THE PRESIDENT:―Before I adjourn the Council, may I wish all Members a very happy Christmas and 1981. In accordance with Standing Orders I now adjourn the Council until 2.30 p.m. on Wednesday, 7 January 1981.

Adjourned accordingly at thiry-seven minutes past four o’clock.