1 HONG KONG LEGISLATIVE COUNCIL -- 17 July 1991 HONG KONG LEGISLATIVE COUNCIL -- 17 July 1991 1
OFFICIAL REPORT OF PROCEEDINGS
Wednesday, 17 July 1991
The Council met at half-past Two o'clock
PRESENT
HIS EXCELLENCY THE GOVERNOR (PRESIDENT)
SIR DAVID CLIVE WILSON, G.C.M.G.
THE CHIEF SECRETARY
THE HONOURABLE SIR DAVID ROBERT FORD, K.B.E., L.V.O., J.P.
THE FINANCIAL SECRETARY
THE HONOURABLE SIR PIERS JACOBS, K.B.E., J.P.
THE ATTORNEY GENERAL
THE HONOURABLE JEREMY FELL MATHEWS, C.M.G., J.P. THE HONOURABLE ALLEN LEE PENG-FEI, C.B.E., J.P. THE HONOURABLE STEPHEN CHEONG KAM-CHUEN, C.B.E., J.P. THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE MARIA TAM WAI-CHU, C.B.E., J.P. DR THE HONOURABLE HENRIETTA IP MAN-HING, O.B.E., J.P.
THE HONOURABLE CHAN YING-LUN, O.B.E., J.P.
THE HONOURABLE MRS RITA FAN HSU LAI-TAI, O.B.E., J.P. THE HONOURABLE PETER POON WING-CHEUNG, O.B.E., J.P. THE HONOURABLE CHENG HON-KWAN, O.B.E., J.P.
THE HONOURABLE CHUNG PUI-LAM, O.B.E., J.P.
THE HONOURABLE HO SAI-CHU, O.B.E., J.P.
THE HONOURABLE MARTIN LEE CHU-MING, Q.C., J.P. THE HONOURABLE DAVID LI KWOK-PO, O.B.E., J.P.
THE HONOURABLE NGAI SHIU-KIT, O.B.E., J.P.
THE HONOURABLE PANG CHUN-HOI, M.B.E.
THE HONOURABLE POON CHI-FAI, J.P.
PROF. THE HONOURABLE POON CHUNG-KWONG, J.P.
THE HONOURABLE SZETO WAH
THE HONOURABLE TAI CHIN-WAH, J.P.
THE HONOURABLE MRS ROSANNA TAM WONG YICK-MING, O.B.E., J.P. THE HONOURABLE TAM YIU-CHUNG
DR THE HONOURABLE DANIEL TSE, C.B.E., J.P.
THE HONOURABLE ANDREW WONG WANG-FAT, O.B.E., J.P. THE HONOURABLE LAU WONG-FAT, O.B.E., J.P.
THE HONOURABLE GRAHAM BARNES, C.B.E., J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
THE HONOURABLE MICHAEL LEUNG MAN-KIN, J.P.
SECRETARY FOR TRANSPORT
THE HONOURABLE EDWARD HO SING-TIN, J.P.
THE HONOURABLE RONALD JOSEPH ARCULLI, J.P.
THE HONOURABLE MARTIN GILBERT BARROW, O.B.E. THE HONOURABLE PAUL CHENG MING-FUN
THE HONOURABLE DAVID CHEUNG CHI-KONG, J.P.
THE HONOURABLE RONALD CHOW MEI-TAK
THE HONOURABLE MRS NELLIE FONG WONG KUT-MAN, J.P. THE HONOURABLE MRS PEGGY LAM, M.B.E., J.P.
THE HONOURABLE DANIEL LAM WAI-KEUNG, J.P.
THE HONOURABLE MRS MIRIAM LAU KIN-YEE
THE HONOURABLE LAU WAH-SUM, O.B.E., J.P.
DR THE HONOURABLE LEONG CHE-HUNG
THE HONOURABLE LEUNG WAI-TUNG, J.P.
THE HONOURABLE JAMES DAVID McGREGOR, O.B.E., I.S.O., J.P. THE HONOURABLE KINGSLEY SIT HO-YIN
THE HONOURABLE MRS SO CHAU YIM-PING, J.P.
THE HONOURABLE JAMES TIEN PEI-CHUN, J.P.
THE HONOURABLE MRS ELSIE TU, C.B.E.
THE HONOURABLE PETER WONG HONG-YUEN, J.P.
THE HONOURABLE MRS ANSON CHAN, J.P.
SECRETARY FOR ECONOMIC SERVICES
THE HONOURABLE MRS ELIZABETH WONG CHIEN CHI-LIEN, I.S.O., J.P. SECRETARY FOR HEALTH AND WELFARE
THE HONOURABLE ALISTAIR PETER ASPREY, O.B.E., A.E., J.P. SECRETARY FOR SECURITY
THE HONOURABLE JOHN CHAN CHO-CHAK, L.V.O., O.B.E., J.P. SECRETARY FOR EDUCATION AND MANPOWER
THE HONOURABLE ALBERT LAM CHI-CHIU, J.P.
SECRETARY FOR HOME AFFAIRS
ABSENT
THE HONOURABLE CHEUNG YAN-LUNG, C.B.E., J.P.
THE HONOURABLE HUI YIN-FAT, O.B.E., J.P.
THE HONOURABLE MICHAEL CHENG TAK-KIN, J.P.
IN ATTENDANCE
THE CLERK TO THE LEGISLATIVE COUNCIL
MR LAW KAM-SANG
Papers
The following papers were laid on the table pursuant to Standing Order 14(2): Subject
Subsidiary Legislation L.N. No.
Fixed Penalty (Traffic Contraventions)
(Amendment) (No. 2) Regulations 1991......................... 249/91
Registration of Persons (Amendment) (No. 2) Regulations 1991......................................................... 250/91
Road Tunnels (Government) (Amendment) Regulations 1991......................................................... 251/91
Road Traffic (Parking) (Amendment) Regulations
1991......................................................... 252/91
Commodities Trading (Amendment of Schedule 1) Order 1991................................................................. 253/91
Frontier Closed Area (Amendment) Order 1991.................... 259/91
Public Health and Municipal Services (Public Pleasure Grounds) (Amendment of Fourth
Schedule) (No. 5) Order 1991....................................... 260/91
Public Order Curfew (Amendment) Order 1991.................... 261/91 Public Swimming Pools (Designation) (No. 2) Order
1991................................................................. 262/91
Registration of Persons (Invalidation of Old Identity Cards) (No. 2) Order 1991............................... 263/91
Continuing Legal Education Rules 1991................................ 264/91
Museums (Regional Council) (Amendment) By-Laws 1991............................................................. 265/91
Pleasure Grounds (Regional Council) (Amendment) (No. 2) Bylaws 1991............................... 266/91
Slaughterhouses (Regional Council) (Amendment) Bylaws 1991................................................................ 267/91
Securities (Disclosure of Interests) Ordinance (Commencement) Notice 1991...................................... 268/91
Securities (Insider Dealing) Ordinance 1990 (Commencement) Notice 1991...................................... 269/91
Sessional Paper 1990-91
No. 89 -- Customs and Excise Service Welfare Fund Income and Expenditure Account with Balance Sheet and Certificate of the Director of Audit for the year ended 31 March 1991
No. 90 -- Report on the Administration of the Immigration Service Welfare Fund from 1 April 1990 to 31 March 1991 prepared by the Director of Immigration
No. 91 -- Sir David Trench Fund for Recreation Trustee's Report 1990-91
No. 92 -- The Third Annual Report of The Commissioner for Administrative Complaints Hong Kong June 1991
No. 93 -- Hong Kong Broadcasting Authority 1988-1990
No. 94 -- Hong Kong Trade Development Council Annual Report and Accounts 90-91 No. 95 -- Provisional Airport Authority Annual Report 1990
Address by Member
Provisional Airport Authority Annual Report 1990
FINANCIAL SECRETARY: Sir, in accordance with section 10 of the Provisional Airport Authority Ordinance, the Annual Report and Accounts of the Provisional Airport Authority for the year ending 31 March 1991 are tabled today.
Members have, over the past year and more particularly in recent weeks, probably heard more than enough about the airport project. Nevertheless, I thought it would be remiss of me not to signal this event with a few remarks.
The report covers the period from the establishment of the Provisional Authority in April last year to the end of March this year. Given the earlier uncertainty surrounding the future of the airport project, especially towards the end of that period, the Authority did not have an easy start in life. Its Chief Executive Officer, Mr Richard ALLEN, arrived only in March this year. During its first year the
Authority has relied heavily on government staff seconded to it and on the Airport Master Plan consultants who were steered on behalf of the Board of the Provisional Authority by the Director of Civil Aviation. Since his arrival, Mr ALLEN has begun rapidly to create a separate identity for the Authority within the constraints imposed by the uncertainty prevailing prior to the initialling of the Memorandum of
Understanding.
Despite these earlier uncertainties, the Authority has had a productive year. In particular, it has determined the overall engineering approach to the formation of the airport platform which, at 1 270 hectares, is about the size of the Kowloon peninsula. It has also determined the length and distance between the two parallel runways. These are fundamental decisions determining the shape of the airport.
Meanwhile, work has commenced on site since February this year with the Provisional Authority's first construction contract to form 30 hectares of land for an advance
works area on north Chek Lap Kok.
Now that the way ahead is clear, the Authority can look forward to a far more active second year. Subject to the approval by the Finance Committee of this Council for the additional funding currently being sought for the Authority, the next 12 months should see the development of its organization and staffing, together with an intensification of construction activity, as the main contract for formation of the airport site gets underway.
Meanwhile, work on drafting the Airport Authority Bill is in full swing. The Bill will be put to the Council for consideration in the coming Session.
Sir, notwithstanding the earlier problems now happily behind us, as Chairman of the Provisional Airport Authority, I am happy to be able to assure Members of this Council that the Board of the Provisional Authority and all others associated with the airport project have shown great dedication and enthusiasm. I am convinced that the Authority will succeed in developing a new airport ideally suited to our long-term strategic needs and one that will play a vital role in securing our continued
prosperity.
Oral answers to questions
Control of animal wastes
1. MR ANDREW WONG asked: Will the Government make a statement on its intended policy on the control of animal wastes through the issuance of licences?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, livestock keeping has for many years been one of the main sources of pollution of the beaches and streams of the territory, but until a few years ago, little was done officially either to discourage the polluting discharge of waste or to encourage waste treatment to discharges from livestock farms.
In 1988 a scheme was established which involved banning livestock keepers with compensation from some areas and buying out those who wished to abandon it voluntarily to others. Where livestock breeders remained they were obliged to comply with the
Waste Disposal Ordinance. This has resulted in a considerable number of pig and poultry breeders leaving the industry and significant improvements in water quality in the water catchments and the beaches affected by them. This policy with some modification will continue until all areas of the territory have been brought within that control net. Nevertheless pig and poultry farming is expected to continue, and it is important in the interests of the environment that there should be an adequate system of control. The Government feels that this can best be done by a licensing system under which proper waste treatment facilities are required and consistently monitored.
The Livestock Keeping Licence would contain conditions which require the licensee to observe all the requirements of the Animals and Birds Ordinance, the Waste Disposal Ordinance, and the Water Pollution Control Ordinance. The Director of Agriculture and Fisheries would be the licensing authority. The licence would be issued to any pig or poultry farm which is equipped with a waste disposal method acceptable under a code of practice or conditions specified is a certificate issued by Director of Environmental Protection. Methods involving discharges would require two licences: the Livestock Keeping Licence and a discharge licence under the Water Pollution
Control Ordinance. Farms operating without a proper system could be prosecuted for operating without a licence and persistent breaches of the licensing conditions would result in cancellation of the licence. The proposed licensing system will provide more effective control on pollution caused by indiscriminate discharge of livestock wastes to the environment as well as allow for a more systematic development of the livestock keeping industry in Hong Kong.
MR ANDREW WONG: Sir, if licensing control is the best means of controlling animal wastes in the interests of environmental protection, why was this approach and policy not adopted back in 1988-89, and will the Secretary confess that the Government did make a mistake and should be eating its humble pie now?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, I do not think the Government has any reason to be ashamed or eat humble pie over its policy so far. In 1988 when the policy, which I have described, of buying out pig breeders and livestock breeders was initiated, there were many hundreds, even thousands of pigsties and poultry sties in the New Territories. To render all these little farms operating under totally unlicensable conditions into a state in which they could comply with all the
Ordinances was certainly beyond the resources which the Government could put into it. So there was no question, in my view, of a full licensing system prior to an attempt to reduce the number of underprovided-for poultry and pig farms in the New Territories. So the order was: get the problem down to a reasonable size, and for those who are prepared to do it properly, license them. There are resources required for that but they are not nearly so great as they would have been had we started with that system in 1988.
MR LAU WONG-FAT (in Cantonese): Sir, will the Government inform this Council why it is bent on controlling the livestock breeders through the issuance of licences even when its trial schemes cannot provide an effective and practicable way to deal with animal wastes thus far?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, the trial schemes have shown very clearly that the "pig on litter" system can be very effective and should be economic in New Territories circumstances. I would expect that the majority of farms to be licensed in the future will be dealing with their waste through that system.
MR LAM (in Cantonese): Sir, if the number of farmers applying for capital grants remains low, will the Government consider raising the amount of these grants?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, the amounts of capital grants have borne a relationship with the expected capital expenditure. This would be under regular revision but I do not think the issue of the number is going to be the more important one.
MR TAI: Sir, given that the number of pig breeders and poultry farmers has decreased over the last decade -- especially the last three or four years after the enactment of the Waste Disposal Ordinance -- could the Secretary explain why the problem of animal waste pollution still exists in such an unmitigated form and whether the
Environmental Protection Department has been in contact with the farmers and breeders over this?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Of necessity, such a large scale scheme, Sir, must be taken step by step, which means area by area. As Members will recall, the Prohibited Area Scheme was concluded well over a year ago and since then the Environmental Protection Department and many other departments involved have been working progressively into the New Territories. They have yet to complete all the New Territories. It must be remembered that even when they have completed there are still farms left over and there will still be a considerable pollution problem left in the New Territories. We believe that the way in which this will be reduced will be by progressive licensing schemes as well.
MR ANDREW WONG: Sir, would the Secretary care to comment on a very rough estimation on my part, that is, considering that ex-gratia payments to farmers who opt to go out of business are in the region of $400 per sq m, whereas capital grants are in the region of $120 per sq m, 80% of the poultry farmers and pig breeders would go out of business thereby making it impossible for local poultry farmers and pig
breeders to set an indicator as to what the fair price ought to be on pigs and poultry?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, I understand that the Economic Services Branch, one of whose concerns is with food supply, does not feel that the industry will be so reduced that it will provide no effective stimulus and competition in the markets in Hong Kong.
MR PETER WONG: Sir, will the Secretary inform this Council to what extent farm waste now is contributing to the poor water quality in and around Hong Kong waters?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, this is a reducing problem because of the action which is being taken about it. But in the northern part of the New Territories where the bulk of the pig population remains, this is still a very substantial problem. I cannot really take it as a percentage of the territorial whole but up in those areas it is a very substantial part of it.
MR LAU WONG-FAT (in Cantonese): Sir, will the Government inform this Council why it
should on the one hand maintain that the duck breeders need no control because they are not causing pollution and thus the Government has no intention of compensating farmers who are forced to go out of business while on the other hand claim that those duck farmers who cause pollution to the environment will be prosecuted?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, the ex-gratia scheme which we have described for pigs and poultry is of course aimed at preventing pollution. If there was not the pollution prevention element in it there would not be such a scheme. The pollution is very serious. The Administration considered and the Finance
Committee of this Council agreed that public money should be used to encourage farmers, who could not provide adequate waste facilities, to go out of the business. In the case of duck farmers, they have naturally, in their organization, a very effective built-in waste system in the ponds and the fish which live in them. So there is really little justification for spending public money to buy out the farmers. In the case of duck farmers who are on land, we have said we will consider the possibility of extending the ex-gratia system to them. They are the most likely of the duck farmers to cause substantial pollution and to fall foul of the Water Pollution Control
Ordinance and become possibly subject to fines. So we are, as I have said, looking at the possibility of giving them an out option also.
Day activity centres for the mentally handicapped
2. MR ARCULLI asked: Will the Administration inform this Council :
(a) what are the existing criteria for admission to Day Activity Centres and whether such criteria place the severely mentally handicapped at a disadvantage when they seek admission when compared to those who are low or moderately mentally handicapped;
(b) whether there is a shortfall in the number of places available to mentally handicapped in Day Activity Centres and, if so, the extent of such shortfall; and
(c) what measures it is proposing to take for the severely mentally handicapped after they leave rehabilitation school at the age of 16 so as to improve the existing sad and tragic position as they are otherwise either left at home or sent to Macau or China?
SECRETARY FOR HEALTH AND WELFARE: Sir, the objective of Day Activity Centres (DAC) is to help mentally handicapped persons become more independent in their daily living and prepare them for sheltered or supported employment where possible.
Admission criteria for DACs include essentially two points:
(a) First of all, as DACs cater for mentally handicapped persons, aged 15 and above, who lack the ability to benefit from vocational training and sheltered or open employment, the applicant should have potential to learn and be able to receive and follow simple instructions.
(b) However, DACs do not accept people who are bed-ridden or require infirmary care or other forms of medical care.
It is clear that the criteria do not discriminate against severely mentally handicapped persons. All applicants meeting the criteria are treated equally when they seek admission. To facilitate the placement of pupils, including the severely handicapped pupils, from special schools into various post-school services for disabled adults, the placement procedures have recently been reviewed and streamlined. In addition, a set of standardized admission criteria and guidelines for adult services has been adopted by all non-governmental organizations.
I am very sad to say that there is a shortfall of 2 176 DAC places. Provision of an additional 1 000 places by 1994-95 is planned.
In view of the fact that time is required to overcome the shortage of DAC places, the Social Welfare Department has introduced home-based training programmes as an interim measure for mentally handicapped persons awaiting placement so that they can receive training in self-care and other maintenance or supportive services in their own homes. The aims of the programmes are to minimize the adverse effect of school leavers staying idly at home and to maintain and develop the skills which they acquired from special education to facilitate their future placement.
MR ARCULLI: Sir, bearing in mind that complaints of discrimination have been received from mothers of severely mentally handicapped persons regarding admission into DACs
will the Secretary for Health and Welfare please elaborate on several points referred to in the third paragraph of her reply, namely:
-- when the review was carried out;
-- how the placement procedures were streamlined; and
-- how the Administration will ensure that the set of standardized admission criteria and guidelines used by all non-governmental organizations will be observed?
SECRETARY FOR HEALTH AND WELFARE: Sir, I think I should perhaps elaborate on my main answer with some statistical facts to indicate that there is indeed no discrimination. From the 10 DACs of the Social Welfare Department, data indicate that 42% of the trainees are severely mentally handicapped; 29% are low or moderately mentally
handicapped; and the remainder 29% are persons with multiple handicaps. So statistics themselves speak for the non-discrimination. With regard to the last part of the question, the criteria were formulated and endorsed by an ad hoc group on the placement of special school leavers in June last year, chaired by the Commissioner for
Rehabilitation and with representatives from the Hong Kong Council of Social Service and concerned departments. Indeed, from the experience of streamlining, the admission standards for various post-school services have been worked out and agreed by all service agencies. Therefore it is very evident that some of the agencies now can no longer confine their services to specific groups of disabled persons and they do share a common objective.
MR BARROW: Sir, could the Secretary advise how many beds are available in special wards for those whose handicaps make day care inappropriate, and whether there are any additional facilities being planned in order to help reduce the tragic cases referred to by Mr ARCULLI?
SECRETARY FOR HEALTH AND WELFARE: Sir, I do not have, offhand, the precise figures but I doubt very much whether there is any DAC in hospital as designed because DACs are not part of the hospital setup. Indeed, as I implied in my main reply, people who require hospital care are not admitted to DACs.
MRS LAU: Sir, in relation to the existing DACs, can the Secretary inform this Council whether the Administration would consider specifying a fixed ratio between the low or moderately mentally handicapped and the severely mentally handicapped, so as to ensure that those who are severely mentally handicapped will not be unfairly
discriminated against?
SECRETARY FOR HEALTH AND WELFARE: Sir, I think the application of a ratio itself has an implication for discrimination. The shortage of places in DACs, as I see it, is attributable to several factors. First of all, there is a real shortage of places, particularly because the development of new DACs requires co-ordination with
different departments and takes considerable lead time to plan and to implement. Another factor is the reliance in the past and, also now, on some outdated policy objectives and standard models of provision. We have three stages of provisions on a progressive basis: the DAC where trainees should theoretically progress to
Sheltered Workshop (SW) and thereafter to supported employment and open employment. But there is hardly any mobility; people are stuck there. The discharge rate is 5% on an average for DAC and 12% for SW. So we need a much more innovative approach towards the types of services and employment, and this indeed is being addressed through the Green Paper Committee and through various other sub-committees. We need to invent and implement innovative new services so that we can actually help the parents to look after the trainees in home surroundings, not specifically in centres. And we need to create a much better environment for DAC trainees to be properly trained, perhaps to move upwards to SW, and SW trainees to move upwards to open employment or self-employment. So these are being positively explored by the Green Paper
Working Group and by members of the non-government organizations.
HIS EXCELLENCY THE PRESIDENT: Could I encourage Members to ask short supplementaries, and encourage shortish answers too, please.
MRS TAM (in Cantonese): Sir, will the Government inform this Council whether the admission criteria for the four DACs scheduled to be put into service next year are the same as those currently adopted by DACs for mentally handicapped in general; and whether consideration will be given to handling the severely, moderately and low mentally handicapped persons separately?
SECRETARY FOR HEALTH AND WELFARE: Sir, yes to all the three parts of the Honourable Mrs Rosanna TAM's question.
HIS EXCELLENCY THE PRESIDENT: That was indeed short.
MR PETER WONG: Sir, there is a real fear by parents of handicapped children that the existing shortfall, as well as emigration of qualified workers, will mean that the handicapped children will have to fend for themselves in the years to come. Will the Administration confirm that it is fully committed to ensuring that both facilities and suitably qualified staff will be available to look after this very unfortunate part of our society?
SECRETARY FOR HEALTH AND WELFARE: Yes, Sir.
DR IP: Sir, will Government inform this Council whether all those who are on the waiting list for DACs are now receiving the home-based training programme which is an interim measure? If not, can home-based training programmes be increased such that all those on the waiting list for DACs could be accorded a temporary facility?
SECRETARY FOR HEALTH AND WELFARE: My answer to this question, Sir, is no. We have only four teams at the moment serving 80 clients. It is a multi-disciplinary team which we only brought into being last year. A fifth team will be in service by October 1991 covering in effect all the five regions of the territory. But I feel that the home-based training programme has potential for major development and Members will recall that way back in 1987 we introduced a higher disability allowance in order to help the parents look after those who need special care at home, particularly those who have children or adults at home who are disabled.
MR EDWARD HO: Sir, I have difficulty in understanding the Secretary's very short "Yes" reply to Mr Peter WONG on Government's commitment. Her information in the main reply
was that there is a shortfall now of 2 176 DAC places and an additional 1 070 places would only be available in 1994-95. My question is: what will be the demand then in 1994-95, and also when will the full demand be met?
SECRETARY FOR HEALTH AND WELFARE: The full demand will be met progressively, Sir. The shortfall is calculated by means of identifying those who are already on the waiting list plus 30% to allow for those who may or may not have reported to us. So the commitment that the Government has entered into is a genuine one because we are addressing the problem from various angles. We are addressing the problem from the static provision of services such as the current model of DAC, SW and various others, plus also new ideas for implementation. And I would have liked to share, with your indulgence, Sir, some of the new ideas which would perhaps better allow me to answer Mr HO's question.
For example, in the DACs, we are training some of the staff and re-training some of the teachers there in order to teach them a skill which will enable the trainees to move up to a different training level. And we are also introducing direct paramedical support service in the DACs thereby improving service for facilitating mobility of trainees from DACs outwards to SWs and thence outwards to other forms of employment or indeed, self-employment. For SWs also, we are introducing in conjunction with the Technical Education and Industrial Training Department some pilot projects to help people to better establish themselves in terms of working in an environment which will be very conducive to self-help and also supported employment. These are but a few examples of the sort of thinking we are undertaking in order to improve the situation.
Additionally, we are introducing new forms of care and attention services for the mentally handicapped because they may not benefit from training and yet they are not requiring medical care. So we are attacking the problem from a multi-faceted angle, Sir. We are fully committed to helping the parents to look after their
disabled children at their homes.
MRS LAM (in Cantonese): Sir, part of my question has been asked by my colleagues, but regarding the remaining 1 100 mentally handicapped persons, could the Secretary inform us whether there is any plan by the Government to provide them all with DAC places by a specific year?
SECRETARY FOR HEALTH AND WELFARE: I am afraid, Sir, I cannot give an answer as to whether the services could be fully provided at a specified time. All I can say, Sir, is that we will do our very best within the resources available. By resources I mean financial resources and also manpower resources.
MR ARCULLI: Sir, the Secretary for Health and Welfare has given us the statistic of 42% regarding the admission into DACs for the severely mentally handicapped. Can the Secretary also give us figures regarding the demand in that particular sector as compared to the other two, namely, the moderately and the multiple-handicapped, so as to see whether the 42% is in fact proportionate to the demand in that particular sector?
SECRETARY FOR HEALTH AND WELFARE: Sir, according to the statistics available in Hong Kong under the Rehabilitation Programme Plan, the number of severely mentally handicapped persons are 3 932; the moderately handicapped persons are 23 362; and the mildly handicapped persons are 87 608. If there were discrimination, Sir, it would be in favour of the severely mentally handicapped.
Structural safety for buildings on newly reclaimed land
3. MR LAM asked (in Cantonese): In view of the land subsidence occurring in recent years around the buildings in the Tai Po Industrial Estate and the Lung Tin Estate in Tai O which were built on newly reclaimed land, will the Administration inform this Council:
(1) whether the huge cracks recently discovered on the walls of certain units in On Ning Gardens in Tseung Kwan O have been caused by the subsidence of the newly reclaimed land; and
(2) whether proper surveying procedures are in place to ensure that newly reclaimed land is sufficiently stable before approval is given for commencement of construction works upon the land?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, when a building is built on reclaimed land, the developer and his architect must design for a certain degree of settlement, which is likely to continue for some years after completion of the building. The cracks which have occurred in some ground floor slabs and partitions in three blocks in On Ning Gardens, which is a Private Sector Participation Scheme estate, are not in the structural parts of the building. They are due to a slightly greater settlement under the slabs than anticipated. Since in the structural design the foundation rests on piles driven through to the bed rock there is no question about the structural stability of the blocks as a whole. I understand that remedial works on the affected slabs and partitions are being carried out by the developer.
Sir, we are very experienced in reclamation projects in Hong Kong and staff of the Civil Engineering Services Department and the Territory Development Department monitor both the placing of reclamation fill and the subsequent settlement very carefully and with highly professional methods.
MR LAM (in Cantonese): Can the Secretary inform this Council whether subsiding buildings built on newly reclaimed land are structurally dangerous?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: No, Sir. When a building, as I said, is built on reclaimed land, it has to be designed for a certain degree of settlement and even for a certain degree of settlement after the completion of the building. And the foundations of the building must also comply with the building construction regulations and these drawings for foundations are carefully checked by the Building Authority. So almost all multi-storey buildings are normally supported on piles driven into solid rock.
MR McGREGOR: Sir, could the Secretary say who will pay for the remedial work required on buildings, particularly private sector buildings, built on reclaimed land where the damage is not the fault of the constructor or developer?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, that is something of a hypothetical question and the question of fault in these issues is always the one
which is most argued about at this stage. I think that the issue would have to be settled under the terms of the land lease and that would have to be construed to decide what the responsibilities were.
MR CHENG HON-KWAN: Sir, will the Secretary inform this Council whether or not the cracks in On Ning Gardens which are said to be due to the slightly greater settlement are in fact the result of inadequate design by the architect?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, if I were to answer that question, I might well impute a degree of fault to a party, which would be inadvisable. But it is certainly the responsibility of the developer and his architect to ensure that the buildings are built safely and that would have regard doubtless to subsidence and settlement of the ground on which the building stands.
MRS LAM (in Cantonese): Sir, can the Government inform this Council whether there exists a policy to the effect that buildings shall only be built on reclaimed land a certain number of years after the land has been reclaimed?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, in a modern reclamation in Hong Kong, we now generally take steps to accelerate the rate of settlement and, in fact, settlement in an average reclamation, approximately half the final settlement, takes place by the first five months and normally possession of the land is given
approximately 30 months after the beginning of filling, so that although there is no regulation, that is the practice. But each reclamation is looked at on its own merits because reclamations do have different characteristics of settlement including the amount of bottom mud that has been left under the fill and also the amount of artificial drainage conduits which have actually been placed in that bottom mud.
MR ANDREW WONG: Sir, would the Secretary inform this Council whether or not the built-up parts of the Tai Po Industrial Estate and the built-up parts of the Tseung Kwan O reclamation are still sinking, and if so, by how many inches or centimeters or millimeters per year?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, I have some material on that. I understand that parts of the Tseung Kwan O reclamation are certainly still settling because many parts of it have been reclaimed fairly recently. In the case of Tai Po Industrial Estate, it will be continuing to settle down over very many years still, but the degree of settlement will be extremely small and I do not think it could be measured in inches. We would be measuring the degree of settlement in millimeters at this stage.
MR McGREGOR: Sir, I find a little difficulty in understanding the question of government responsibility in a reclamation which the Government itself has constructed and on which buildings are piled through to bedrock. The Government approves the plans for the building and therefore the standards which apply. Why is it therefore that the Government does not accept responsibility where settlement causes damage to the buildings? And is there a system by which the developer can appeal to the Government for compensation?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, I emphasize that the Government had approved the foundations and the structure of the building under the Building Construction Regulations and that is the main concern. The main concern of the Building Authority is safety and the Buildings Ordinance in its subtitles says it is about health and safety. The cracks in the buildings which we have been referring to through settlement are cracks which have appeared in non-structural parts of buildings on the ground floor and, in the case of On Ning Estate, on commercial premises, not even residential premises. Under the Buildings Ordinance the Government is not responsible for the failure of buildings which have been approved by it and constructed by the developer because the Government's responsibilities are largely tied up with the approval of plans and the inspections cannot cover the full range of the monitoring which must be exercised by the Authorized Person. So, to put it briefly, responsibilities derived from the Buildings Ordinance and the Government's responsibilities would not extend to covering against superficial failures of building material of this kind.
MR LAM (in Cantonese): Can the Government inform this Council whether further survey will be undertaken on the other parts of the new Tseung Kwan O Reclamation before launching other projects?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, I think that the method of watching settlement in Tseung Kwan O is totally conventional and totally professional and I see no reason for further survey.
Written answers to questions
Sewage treatment facilities
4. MR PETER WONG asked: Will the Administration inform this Council:
(i) of the priority in resource allocation given to the sewage treatment facilities so that there will be no further slippage in the timetable for declaration of Water Control Zones as set out in the 1989 White Paper on pollution?
(ii) of the proposed costings of the Chemical Waste Treatment Plant at Tsing Yi and how these costs will be recovered?
(iii) whether and what understanding has been reached with the industry and chemical producers/importers to ensure that both the costings and the proposed method of recovering the costs will be acceptable to them?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, the implementation of legislation and the provision of facilities for sewage disposal must go hand in hand, as the question implies. However it is not the timing of the provision of funds for sewage disposal facilities which determines the pace of implementing water control zones. Rather, it is the sufficiency of enforcement staff in the Environmental Protection Department (EPD) and the difficulty in estimating how long each programme of
enforcement will take. Enforcement is an activity that needs a great deal of labour, because every factory must be visited, samples must be taken and analyzed, and advice and warnings given. These are all jobs that can be done only by specialist technical staff. Everything possible is being done to find ways to reduce the labour demand, and the simplifications in the control system that were introduced in December 1990, have helped. The Environmental Protection Department has had an increase in staff that is generous in relative terms -- but it is still not enough to implement the
controls as fast as was earlier planned.
Nevertheless, the Government still gives very high priority to the provision of sewage disposal facilities. Approximately $l.7 billion is now allocated for sewerage improvements. This year, a further commitment of funds will be sought for repair and refurbishment of sewers and the construction of the first phase of the strategic sewage disposal scheme. We will do our best to maintain the programme as set out in the 1991 Review of the White Paper on Pollution.
Sir, concerning the Chemical Waste Treatment Centre (CWTC), its capital cost will be repaid over five years, starting in 1992-93. Five equal instalments of $260 million will be paid annually to repay the $1.3 billion cost at money of the day prices (present value $731 million at 1990 prices).
As to recurrent costs, the operation fees paid to the contractor for the collection and treatment of chemical wastes for an operating period of 15 years will depend on the type and quantity of waste received and will be calculated on a tendered schedule of rates which will be adjusted annually having regard to the Consumer Price Index. The operating costs are expected to average about $313 million annually over 15 years.
The Government's policy is to recover the full costs of the development and operation of the new facilities and is seeking to generate around $340 million per annum in revenue for this purpose. The sum is calculated on the basis of recovering the full capital cost of the treatment facilities over a period of 15 years together with estimated operating costs over the same period. The method that Government proposes to recover these costs is a broad based ad valorem levy of approximately 0.75% on chemical imports, a charge on locally manufactured chemicals to ensure compliance with GATT requirements, and a charge on Marpol wastes. These latter two charges have not yet been estimated.
Lastly, Sir, full details of the proposal to recover the costs of the CWTC were included in a consultative document released to industry last month. As part of the consultative arrangements, staff from the Planning, Environment and Lands Branch and the EPD have now completed briefing key industrial groups on the consultative document.
I cannot presently say that our proposed method of recovering costs is acceptable to industry, because additional costs are never easy to accept, but we are expecting industry to submit their written views by the 1 August. On the basis of these views,
the Administration will consider what further action, if any, it needs to take on its proposals for the recovery of costs before making a submission to the Governor in Council.
Contracting out of health care services for civil servants
5. DR LEONG asked: Will the Administration inform this Council whether it has any plans to contract out the provision of health care services for civil servants to private practitioners? If so, what are the plans and how will they be implemented?
CHIEF SECRETARY: Sir, the Administration did consider the possibility of contracting out the provision of health care services for civil servants in an overall review of medical facilities for civil servants conducted in 1989. However, this would require substantial additional resources, which were not available at the time, nor is it likely that they will be available in the near future. The establishment of the Hospital Authority, the Report of the Working Group on Primary Health Care and the deliberations of the Medical Insurance Study Group have added new dimensions to the provision of health care services in Hong Kong. The Administration will review its position in respect of civil servants in the light of these new developments.
Old age pension scheme
6. MR McGREGOR asked: Will the Government begin the process of evaluating the possibility of establishing an old age pension scheme in Hong Kong for all qualified citizens of 65 years of age to replace the present restrictive old age allowance system and can the Government advise on the time scale for completion of such a study?
SECRETARY FOR HEALTH AND WELFARE: The overall objective of social security in Hong Kong is to provide for the basic and particular needs of vulnerable groups in the community, including the elderly, who are in need of financial or material assistance.
Contributory old age pension schemes would be similar to a central provident fund scheme or other compulsory retirement schemes, the motion for which was defeated in this Council last week. The Administration's position was reflected in the speeches from the Secretary for Health and Welfare and the Secretary for Education and
Manpower.
Old Age Allowance and Public Assistance are non-contributory social security payments. The former provides a flat-rate allowance to those aged 65 and above to meet special needs arising from old age, while the latter helps those persons, including elderly persons, who do not have sufficient resources to maintain a basic standard of living.
In October 1987, proposals were announced in this Council for a package of improvements to the main social security schemes, including the phased extension of the Old Age Allowance to persons in the 65-69 age group. One element of this proposed package was that all new applicants for the Old Age Allowance should be required to declare that their income and assets did not exceed specified levels. However, following consideration of public views, the Government decided that it would not be appropriate to proceed with the income and asset declaration for new applicants aged over 70, while retaining it for those between 65 and 69. At present, there is still an unresolved debate as to whether to extend this requirement of an income and asset declaration to persons aged 70 and over.
The Government will continuously review the needs of the elderly people. Every effort will be made to improve and expand the current provision of assistance and services for the elderly within the resources available and guided by the accepted principles detailed in the White Paper on Social Welfare into the 1990s and Beyond.
Dangerous signboards
7. MRS LAM asked: In view of the recent cases of falling sign-boards endangering the safety of pedestrians, will Government inform this Council:
(a) what the progress is of the survey conducted by the Buildings Ordinance Office for the purpose of identifying dangerous sign-boards; and
(b) whether there are any plans to expedite the demolition of dangerous sign-boards so as to prevent similar dangerous incidents from recurring?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: By October 1989, a dedicated team in the Buildings and Lands Department had completed the tasks of seeking out dangerous
sign-boards and carrying out surveys on sign-boards in densely populated urban areas. Since then, the work of identifying dangerous sign-boards has been carried out as part of the survey on buildings. Detailed inspections of all pre-war buildings have been completed. The emphasis is now on inspections of post-war buildings in a suspect condition that are without any management organization. Demolition Orders are
issued wherever dangerous sign-boards are found. From October 1989 to 30 June 1991, a total of 393 such orders were made.
Government policy is to ensure that sign-boards which may pose a threat to public safety are removed either by the owners themselves or, where necessary, by Government. There are sufficient legal powers for the necessary action to be carried out speedily.
Inter-citizen rights
8. MR McGREGOR asked: With the exclusion of inter-citizen rights from the Hong Kong Bill of Rights Bill, will the Government now introduce legislation specifically to prevent any form of discrimination against individuals by private citizens and organizations, whether on the basis or race, creed, colour or sex?
CHIEF SECRETARY: Sir, as I have informed this Council in concluding the Second Reading debate on the Hong Kong Bill of Rights Bill 1991 on 5 June 1991, the Administration has already started consideration of the question of anti discrimination legislation for Hong Kong. However, the legal, social and economic implications of detailed anti-discrimination legislation are complex and they need to be carefully studied before a mature decision can be taken. We would wish to reach an informed policy position on the basis of detailed studies.
Flight safety standards for the new airport
9. MR POON CHI-FAI asked: In view of the public concern over flight safety standards formulated for the new airport following the consultancy studies which have cost hundreds of millions of dollars of public funds, will Government inform this Council:
(a) the reason for not adhering to safety standards in the control of obstructions as applicable to international airports in the planning of the new airport; and
(b) whether any explanation has been given in the consultancy reports for not abiding by the internationally accepted standards?
SECRETARY FOR ECONOMIC SERVICES: Sir, if there is indeed public concern over safety standards adopted in planning the new airport, I welcome this opportunity to clarify the position in this regard. No factor is more important than safety in planning and operating an airport and it is on this fundamental premise that the planning of Chek Lap Kok and the operation of Kai Tak is based.
The new airport is being planned to operate in full compliance with internationally recognized safety standards. The world authority on aviation safety standards and practices is the International Civil Aviation Organization (the ICAO).
Under the relevant ICAO technical guidelines, the hills immediately to the south of the new airport could constitute an obstacle if flight operations were to take place in that area. But with excellent access to the north, east and west of the airport there is no need for any flight operations to take place there; the high ground involved does not, therefore, constitute any threat to the safe operation of the airport. Some minor terrain removal might be necessary from high ground much further away and to the east of the airport on North Lantau and in the Tai Lam Chung Country Park. This will be carried out if the airport master planners recommend that it is necessary in order to comply fully with the relevant international safety guidelines.
Contingency measures for mass transit breakdowns
10. MRS LAM asked: In view of the recent KCR services breakdown and the chaos thus caused to the traffic along the railway line, as well as the failure to arrange alternative means of transport to provide prompt and effective back-up service, will Government inform this Council whether contingency measures are in place for the Transport Department to cope with any mass transit services breakdowns and accidents of various degrees that may occur in different locations and circumstances, in order to minimize the impact of such incidents on the public?
SECRETARY FOR TRANSPORT: Sir, I would like to assure the Council that the Transport
Department does have contingency measures to cope with mass transit breakdowns and accidents in order to minimize their impact on the travelling public. These measures include procedures for rapid dissemination of information during emergencies, strategies to deal with different emergency situations, and co-ordination of alternative transport to relieve passenger congestion at potential problem locations.
Under the current emergency procedures, a major transport operator who has a breakdown or an accident expected to cause service disruption for over 20 minutes is required to notify immediately the police, Information Services Department, other major operators, and the Transport Department. The purpose of such notification is to ensure that, as soon as practicable, the travelling public is informed at the first opportunity, crowd control measures are in place, and any necessary relief transport services are provided without delay. Upon such notification, the Emergency
Transport Control Unit in the Transport Department is immediately activated as required. In addition, Transport Department Duty Officers equipped with pagers and mobile telephones are on standby 24 hours a day to co-ordinate emergency measures.
Following a review of recent major incidents, it is apparent that there is room for improvement in the efficiency of communication of individual transport operators. This has been taken up urgently. One of the improvements being pursued is the installation of multi-fax systems to facilitate simultaneous dissemination of information to all parties concerned in response to emergencies.
The Transport Department has also developed a variety of contingency strategies to meet a number of different emergency situations, such as railway breakdowns and tunnel closures, and is now refining them with the police and the transport operators. Because the circumstances of transport emergencies are complex, varied and rapidly changing, these plans are meant to provide only the broad framework for an immediate response. Decisions as to the exact contingency measures to be implemented on the spot will have to be flexible in the light of circumstances of each particular
incident.
Any incident affecting a breakdown of mass transit usually involves a rapid build-up of passengers at points of disruption as was evident in the recent Kowloon-Canton Railway services breakdown. The Transport Department has identified a number of potential problem locations, including railway stations, and is developing detailed operational plans for passenger management at these locations
in consultation with the police and the transport operators.
Finally, the Transport Department is closely monitoring and reviewing contingency procedures in the light of experience. However, it should be noted that, while contingency measures help reduce or minimize the adverse impact of transport emergencies on the public, some delays and inconvenience caused by breakdowns and accidents in the mass transit services are inevitable. Hong Kong's public transport systems are fully utilized during the peak periods. Peak hour flows on the KCR are about 50 000 and on the Mass Transit Railway 72 000 in one direction. It would not therefore be realistic to expect passengers displaced from a mass transit service to be provided with immediate and complete relief by other transport modes.
Additional resources for whole-day primary schools
11. MR DAVID CHEUNG asked: As a token of encouragement to primary schools already in whole-day operation, will Government inform this Council whether it will consider giving additional resources to these schools by:
(a) increasing the class-teacher ratio from 1:1.2 to 1:1.4; and (b) providing one additional clerical staff?
SECRETARY FOR EDUCATION AND MANPOWER: Sir, the proposal to increase the class-teacher ratio to 1:1.4 is part of the package of recommendations made by the Education Commission in its Fourth Report, to encourage whole-day schooling for upper primary classes (mixed mode operation). Taking into account public comments on mixed mode and the Education Commission's further thoughts on the subject, the Government is now formulating proposals for consideration by the Executive Council. Until a decision is reached in this regard, we do not intend to revise the class-teacher ratio for existing whole-day primary schools.
However, under existing policy, encouragement is given to whole-day schools in the form of an enhancement grant of $950 per class per annum and a one-off subsidy, up to a maximum of $20,700 per school, for the purchase of additional classroom furniture. These measures will be reviewed, and other forms of encouragement may be added, when the long-term policy for whole-day schooling is decided.
As regards the second part of the question, there is no clear correlation between whole-day operation and increased clerical work in schools. There have been suggestions, however, that the present workload of clerical staff in schools is too heavy. The Government is therefore considering means of addressing the problem. One possibility under examination is the provision of a micro-computer for each school so that some of the school administration work can be computerized. We believe that this will be more cost effective in the long run than providing additional manpower. This study on enhancing the productivity of clerical staff covers all types of schools and is not confined to whole-day primary schools.
Self-claimed environment protection products
12. MRS TU asked: Will the Government inform this Council:
(a) what attempts the Environmental Protection Department made to verify the credentials of a product between the time of its first public advertisement and the time the Department issued a statement refuting that product's ability to reduce exhaust emissions and enable all petrol engine vehicles to operate on unleaded petrol;
(b) what hard scientific evidence did the Department have to substantiate its refutations against the product;
(c) knowing that other similar products making similar claims were also in the local market, why did the Department refute the claims of only one of these products; and
(d) in refuting the claims made for the product, was one of the Department's objectives to protect the launch of unleaded petrol?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: I think the question refers to a television advertisement of a product which appeared in early February this year in which the Government's green booklet The Motorists Guide to Unleaded Petrol was prominently displayed. The advertisement made claims that the product could reduce polluting emissions by 60% and enable all petrol engined vehicles to switch to the use of unleaded petrol without any problems.
The Environmental Protection Department is not of course in the business of
testing or recommending products. However, the Department made a preliminary assessment of the product based on the knowledge of its professional staff of the physical and chemical processes involved in petrol engine combustion, and concluded that to the best of their knowledge, there was no hard scientific evidence to back-up the claims made for this product.
The Environmental Protection Department also checked the status of a document bearing the letterhead of the Royal Aerospace Establishment (RAE), Farnborough, United Kingdom, which was offered by the firm in question to substantiate its claims. Advice received from the United Kingdom Ministry of Defence's (MOD) Defence Research Establishment on the status of this document stated that:
"The assessment did not constitute an official trial and was not conducted on a sound scientific basis. The results quoted represent the observations of non-scientific personnel and their findings have no formal recognition with RAE or MOD."
The advice further stated that the MOD have advised the companies in the United Kingdom which market the product that they would require positive independent scientific proof of the device's effectiveness before considering making any further purchases.
As to parts (c) and (d) of the question, Sir, the Department did not comment on the claims made for this specific product. Rather the comments related to the claims made for this type of product generally. The Government was, and remains concerned that motorists, already perhaps a little anxious and confused when faced with a change, would be misled into believing that their vehicle needed this special device, whereas in reality 70% of vehicles need no adjustment to run perfectly well on ULP and another 17% only require some small adjustment. The Department was concerned that the
confusion caused by the promoters of the device, who sought to link it in the advertisement with the Government's unleaded petrol programme, would lead to motorists being unjustifiably conservative and continuing to run leaded petrol for the wrong reasons. Sir, changes are always difficult to implement, and the change to unleaded petrol is no exception. I believe that the EPD acted correctly in trying to reduce the confusion that surrounded this product.
Fax machines for government and aided schools
13. MR DAVID CHEUNG asked: Will Government inform this Council whether it will
consider adding a fax machine to the standard equipment list for government and aided schools with effect from September 1991?
SECRETARY FOR EDUCATION AND MANPOWER: Sir, the Government has decided in principle to add a fax machine to the standard equipment list for schools and is examining the feasibility of implementing this decision in September 1992 through a reallocation of resources. In the meantime, if any school is able to identify savings from within its School and Class Grant, the Director of Education will not object to its purchasing a fax machine, the limitation of the standard equipment list notwithstanding.
NICAM system
14. MR HO SAI-CHU asked: Is the Government aware that the sudden announcement in February this year that the two television stations could broadcast programmes in NICAM system with effect from 1 July this year has dealt a severe blow on the visual equipment trade in that stock of products not fitted with NICAM functions is left unsold whereas products fitted with such functions cannot be made available in
sufficient quantity to meet market demand? What measures will be taken by Government to prevent the recurrence of similar problems in other trades in future, such as by consulting the relevant trade associations before making any announcement?
SECRETARY FOR HOME AFFAIRS: Sir, prior to the announcement in February this year of the introduction of NICAM broadcasts, the visual equipment trade was made aware of the plan to introduce the NICAM technology on many occasions. For example, in May 1985, a demonstration of the technology was given by the two television
broadcasters for the press, sales agents and manufacturers of television sets. In December 1986, the specification for the equipment was distributed by Television Broadcasts Limited (TVB) to sales agents and manufacturers. In May 1987, a technical seminar was organized jointly by TVB and the Radio Association of Hong Kong (which represents the trade). In June 1988, the Post Office contacted the Radio Association of Hong Kong and consulted them on the technical aspects of introducing NICAM
broadcast. In May 1989, the Post Office wrote to all known suppliers of television equipment, and consulted them about the price and availability of NICAM-compatible television sets. In February 1990, TVB held a press conference and announced their plan for test transmissions. With all these consultations and publicity, it can hardly
be said that the trade was caught by surprise by the February 1991 announcement.
The timing for the introduction of NICAM broadcast was carefully considered by the Broadcasting Authority. The question of equipment supply was given due consideration before a decision was taken to allow formal introduction of NICAM on l July, more than four months after the first announcement was made. For such a versatile market as we have in Hong Kong, this is a reasonable period for the trade to respond to any new demand, and adjust accordingly.
The Government considers that adequate consultation has been made with the trade before NICAM technology was introduced into the broadcasting system. The present system of consultation is considered adequate.
As regards the last question, the Government believes that it is really a matter of commercial judgement for each trade to decide what the market demand for new equipment may be when the new technology is introduced. In a free economy, these matters are best left to commercial decisions.
Inflation
15. MR TAI asked: Will the Administration inform this Council:
(a) whether and to what extent the various measures recently taken by Government to control inflation are effective; and
(b) given Government's policy on the linked exchange rate, how the upward revision of interest rate by 1% has affected the public coffer?
FINANCIAL SECRETARY: Sir, in my speech to the Legislative Council during the motion debate on inflation on 29 May 1991, I referred to the need to take steps to curb inflationary expectations. An important element in that was for the Government to take a lead thus altering the perception that the rise in the rate of inflation was inexorable. Clearly it is in the interests of the community as a whole if those in a position to do so can resist the temptation to raise prices in the expectation of further inflation. Accordingly, while it is our normal policy to revise fees and charges annually, I announced on 29 May that we would place a moratorium on fee
revisions until the end of February 1992. So far the proposed revision of 2 249 fees and charges has been held up.
While the inflationary impact of the original proposals would not have been great even if they had gone ahead, it is clear that by imposing the moratorium a clear example has been set to both the public and private sectors. In this connection, I am gratified to see that this lead has already gained the support of the Housing Authority.
As regards the second part of the question: the increase in interest rates by 1% has benefitted the Government's general revenue deposits in the Exchange Fund by a marginal increase in interest earnings.
Inter-modal co-ordination policy
16. MR CHAN asked: Will Government inform this Council whether the Transport Department's inter-modal co-ordination policy can be implemented with flexibility in the light of different circumstances, so as to enable residents in Siu Sai Wan to have access to more efficient and competitive franchised bus and green minibus services leading to the Chai Wan MTR station?
SECRETARY FOR TRANSPORT: Sir, six franchised bus routes now serving Siu Sai Wan pass close to the Chai Wan MTR Station en route. They provide a capacity for over 4 000 passengers an hour at an average waiting time of six minutes during the morning peak. This is considered adequate to meet the travelling needs of the 16 000 residents now living in Siu Sai Wan.
As part of a planned service improvement programme, a dedicated China Motor Bus service between Siu Sai Wan and the Chai Wan MTR Station will shortly be introduced during the morning peak. This is expected to reduce the average waiting time of passengers bound for the Chai Wan MTR Station to five minutes.
The need to complement existing CMB services with green minibus routes is being kept in view. The Transport Department intends to invite tenders later this year for a green minibus service linking Siu Sai Wan with the Chai Wan MTR Station between midnight and 6:00 a.m.
The Department will continue to monitor closely the adequacy of public transport services for Siu Sai Wan residents. There are plans to further enhance services in early 1993 when the next major intake of population is expected.
Under the Government's inter-modal co-ordination policy, priority is given to efficient mass carriers. Such a policy has always been applied flexibly to meet changing circumstances, including shifts in passenger demand, the utilization and financial viability of various modes, as well as traffic patterns.
Land resumption
17. MR MARTIN LEE asked: Will Government inform this Council:
(i) under what circumstances the Government will invoke the Crown Lands Resumption Ordinance to resume lands that need to be recovered for the redevelopment projects of the Land Development Corporation;
(ii) what compensation the Government will offer to those owners and tenants affected by such land resumption exercises;
(iii) for what reasons the tenants on the third floor of No. 189, Queen's Road East have not been awarded as much compensation as their counterparts in the same land resumption exercise in which the property at Nos. 189-193, Queen's Road East was resumed by the Government under the Crown Lands Resumption Ordinance; and
(iv) what measures the Government will take to rectify such unfair arrangements?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, section 15 of the Land Development Corporation Ordinance provides that the Secretary for Planning, Environment and Lands may recommend to the Governor in Council the resumption of land under the Crown Lands Resumption Ordinance in respect of the Land Development Corporation's redevelopment projects. The section also provides that the Secretary should not so recommend
unless, amongst other things, he is satisfied that the Corporation has taken all reasonable steps to otherwise acquire the land, including negotiating for the
purchase of the property on terms that are fair and reasonable. In practice, the Secretary is advised by the Director of Buildings and Lands, who will assess in detail the terms offered by the Corporation to acquire the properties, having regard to the market value of the property interest concerned and the total package of compensation and allowances in other government clearances. Upon receiving the Director's advice, the Secretary may also consult any person not being a public officer whom he considers may assist him in forming an opinion on whether the offer made by the Corporation were fair and reasonable. A recommendation to the Governor in Council to resume land for the Land Development Corporation will only be made when the provisions of the Land Development Corporation Ordinance are fully complied with.
Government will offer compensation to the owners and tenants affected by such resumptions in accordance with the provisions of the Crown Lands Resumption Ordinance, under which there is a right of application to the Lands Tribunal if the offer is not agreed. In addition, ex-gratia allowances such as removal allowances will be payable to those eligible. Rehousing will be offered where appropriate in accordance with the Corporation's eligibility criteria and terms as agreed by the Secretary for Planning, Environment and Lands.
The owner of the third floor of 189 Queen's Road East has agreed to surrender the premises and some others at nos. 187-193 Queen's Road to Government with vacant possession as part of an agreed land exchange to Government. No resumption is involved and hence the Government has no relationship with the tenants of these premises. Any arrangements for compensation are matters between the tenants and the present owner of the premises. Government's resumption included only those property interests not included in the agreement for surrender. The owners and tenants affected in the latter case were offered compensation and rehousing where appropriate in accordance with Government policy.
The relationship between the owner and tenants of the third floor of 189 Queen's Road is subject to the provisions of the Landlord and Tenant (Consolidation) Ordinance and normal commercial practice. Government has little cause to intervene.
Motions
PUBLIC FINANCE ORDINANCE
THE FINANCIAL SECRETARY moved the following motion:
"That with effect from 1 August 1991 the resolution made and passed by this Council on 29 January 1986 and published as Legal Notice No. 20 of 1986 be amended in paragraph (6) by repealing "$40,000,000" and substituting "$80,000,000"."
He said: I rise to move the resolution standing in my name on the Order Paper. The purpose of this resolution is to seek approval for raising the statutory limit of indebtedness for the Correctional Services Industries Special Suspense Account in order to accommodate an increased volume of business.
The Correctional Services Department operates a number of industries to keep inmates purposefully occupied. The goods and services provided are supplied to government departments at the cost of materials used and to semi-government and non-government organizations at market prices decided at the discretion of the Commissioner of Correctional Services.
On 29 January 1986, by a resolution of this Council, a Special Suspense Account was established under section 30(1) of the Public Finance Ordinance for the operation of the Correctional Services Industries. Under the accounting arrangements, all payments for the purchase of materials for the industries are debited to the Account and all payments made by client departments and organizations (excluding recoveries above the cost of materials used) for the goods and services supplied by the industries are credited to the Account. The difference between the debit and credit entries represents the stock balance, or the level of indebtedness. Under Clause 6 of the original resolution which established the Account, the maximum ceiling (the statutory limit) of indebtedness may not exceed $40 million or such lesser sum as the Financial Secretary may determine (the administrative limit).
Owing to the steady growth in the volume of business conducted by the Correctional Services Industries over the years, the level of indebtedness reached $36.5 million as at 1 October 1990. Business continues to increase, and revision of the limit is needed in order to permit the growth to continue in an orderly fashion. Having regard to inflation since 1986 when the present level of indebtedness was set, and the 100% increase in business volume, it is proposed to increase the statutory limit of
indebtedness from $40 million to $80 million with effect from 1 August 1991. The revised statutory limit is based on the Correctional Services Department's projected needs over the next five years. A prudent administrative limit, within the revised
statutory limit, will continue to be set from time to time.
Sir, I beg to move.
Question on the motion proposed, put and agreed to.
DUTIABLE COMMODITIES ORDINANCE
THE SECRETARY FOR HEALTH AND WELFARE moved the following motion:
"That with effect from 1 September 1991 Part III of the Schedule to the Dutiable Commodities Ordinance be amended by adding after paragraph 3 -
"4. Subject to such conditions as the Commissioner may impose for the protection of the revenue, duty payable on hydrocarbon oil for use by a disabled person as defined in regulation 2 of the Road Traffic (Driving Licences) Regulations (Cap. 374 sub. leg.) in a private car, or an invalid carriage, owned and driven by him shall be waived, such waiver to be subject to a limit of 200 litres per month for each such person."."
She said: Sir, I move the motion standing in my name on the Order Paper in respect of the Dutiable Commodities Ordinance.
Under section 4(2) of the Ordinance, this Council may by resolution amend the Schedule to the Ordinance "to increase, decrease, recast, abolish, vary, waive or remit whether generally or particularly any duty imposed therein to any extent whatever".
Part III of the Schedule to the Ordinance sets out the rates and the manner in which duty shall be assessed, payable and refunded in respect of hydrocarbon oil. The proposed amendment to the Schedule seeks to provide that no duty shall be payable on fuel for use in private cars owned and driven by disabled persons, subject to a monthly limit of 200 litres for each disabled person. This is to enhance the mobility of disabled drivers which has been hampered by the increasing cost of fuel. The amendment will come into effect on 1 September 1991 to allow time for instituting the necessary administrative arrangements.
Sir, I beg to move.
Question on the motion proposed, put and agreed to.
LANDLORD AND TENANT (CONSOLIDATION) ORDINANCE
THE SECRETARY FOR HOME AFFAIRS moved the following motion:
"That the Landlord and Tenant (Consolidation) Ordinance be amended in Section 74B(1) by repealing "18 December 1991" and substituting "31 December 1994"."
He said: Sir, I move the motion standing in my name on the Order Paper.
Amending legislation has been passed by this Council each year since 1981 with a view to bringing controlled rents progressively closer to prevailing market rates and eventually allow for decontrol. Indeed, the Government remains committed to phasing out rent controls provided that this can be achieved without adverse social consequences.
Part II of the Landlord and Tenant (Consolidation) Ordinance which controls rent increases of certain post-war premises will expire at midnight on 18 December 1991. It provides security of tenure and controls increases in rent in respect of domestic premises completed before 19 June 1981, tenancies created before 10 June 1983, and tenancies of premises with a rateable value of less than $30,000 in 1983. As at 1 January 1991, there were about 43 000 units protected by Part II. This number is diminishing at the rate of about 5 000 units a year as they are repossessed by their owners, let out at market rental rates, or demolished for redevelopment.
As at 1 January 1991, tenants of Part II controlled premises were paying an average rent of $2,565 per month. This represents 62% of the prevailing market rent. Rents are reviewed every two years and, if Part II controls were allowed to lapse on 18 December 1991, tenants of the affected tenancies could be faced with average increases of over 60% in 1992 and 1993. Such increases are considered excessive and socially unacceptable. It is therefore proposed that the life of Part II of the Ordinance should be extended by three years.
In pursuit of Government's commitment to eventual decontrol, great care has been taken to determine an appropriate period for extending Part II. Tentatively, proposals are being formulated to adjust the relevant control mechanism so as to allow Part II rents to rise to within 10% of the prevailing market rents by the end of 1994.
Sir, I beg to move.
HIS EXCELLENCY THE PRESIDENT: There are a number of Members who have already told the Clerk that they have an interest to declare. I will ask the Clerk to read out the names of those Members. If there are in addition to that list any other Members who wish to declare an interest, perhaps they could indicate that after that list has been read out.
CLERK: Mrs Selina CHOW as a director of a company which is a landlord; Miss Maria TAM as a landlady; Dr Henrietta IP as a director of a company which is a landlord; Mrs Rita FAN as a landlady; Mr CHUNG Pui-lam as a landlord and a tenant; Mr HO Sai-chu as a director of a company which is a landlord; Mr TAI Chi-wah as a tenant, a landlord and a director of a company which is a landlord; Mr LAU Wong-fat as a landlord and a director of a company which is a landlord; Mr Ronald ARCULLI as a director and shareholder of a property company; Mr Martin BARROW as a director of a company which is a landlord; Mr Paul CHENG as a director of a company which is a landlord and a tenant; Mrs Peggy LAM as a tenant, a landlady and a director of a company which is a landlord; Mr LAM Wai-keung as a landlord; Mr W S LAU as a director of a company which is a landlord; Dr C H LEONG as a landlord; Mrs SO as a landlord and a director of a company which is a landlord; Mr James TIEN as a landlord and a director of a company which is a landlord.
MISS TAM: Sir, I am a landlady but the company of which I am a director owns a business premises which it operates on, not domestic premises.
MR CHEONG: Sir, I am a director of several companies which are landlords and I myself am a tenant.
MR PETER POON: I am a landlord and I am a director of a company which is a landlord. MR CHENG HON-KWAN: I am a director of a company which is a landlord.
MR NGAI: I am a director of a property company.
MR LI: I am a director of a number of companies which are landlords. HIS EXCELLENCY THE PRESIDENT: Does that leave anyone else? Yes, Mr Kingsley SIT.
MR SIT (in Cantonese): I am a landlord and a tenant.
Question on the motion proposed, put and agreed to.
Second Reading of Bills
BANKING (AMENDMENT) (NO. 2) BILL 1991
Resumption of debate on Second Reading which was moved on 8 May 1991 Question on the Second Reading proposed.
MR ARCULLI: Sir, despite the complexity of this Bill, I shall be brief and would only draw to the attention of this Council the essential points and major amendments of special interest to the banking industry. The ad hoc group set up to examine this Bill held seven meetings altogether. I shall only deal with five of these points. The first deals with the restrictions on and sale of shares. Under section 70B(3) of this Bill, where a person acquires or continues to retain shares despite objection by the Commissioner, restrictions on these shares which include, inter alia, the right to transfer shares may be imposed by the Commissioner. Such power has caused concern. The ad hoc group has noted that since the Commissioner's restriction order is not appealable, the person concerned cannot dispose of his shares even if he has a genuine need to do so while the restriction order is still in force.
The ad hoc group felt that this was unfair and has successfully sought amendments to allow the person concerned to apply to the High Court for an order to sell his shares after he has made a request to the Commissioner to do so and such request has either been refused, or not dealt with within one month.
The second point involves the power of the Commissioner. The banking industry was of the view that the new discretionary powers given to the Commissioner by the Bill to regulate risk concentrations was a bit wide. To allay the concern, the Administration has agreed to issue, in consultation with the industry, guidelines to explain how the Commissioner will exercise such powers. Although the ad hoc group is satisfied with this arrangement, I urge the Commissioner to ensure that he would exercise such powers with great care, or it might convey a wrong message.
The third point is to deal with the preservation of secrecy. Section 79A of the Bill requires an authorized institution to observe the provisions of Part XV of the Ordinance on a consolidated or unconsolidated basis or both.
The concern is that a subsidiary disclosing customer information to its parent institution in compliance with the consolidation requirements might breach its duty of confidentiality to its customers.
The Administration has agreed to amend the Bill to protect such subsidiaries from claims by customers where the disclosure of customer information to its parent authorized institution is made pursuant to section 79A.
The fourth point deals with limitation on advances by authorized institutions. The Administration has agreed to a suggestion put forward by the ad hoc group on behalf of the industry that provisions be made in section 81(4) to empower the Commissioner to exempt the financial exposure of an authorized institution to its holding company and one or more of its subsidiaries.
A further exemption will now be introduced in section 81(4) so that where an authorized institution is a subsidiary of the holding company referred to in section 81(1)(c), the Commissioner shall have the discretion to exempt exposure made to its holding and sister companies within the terms of that subsection, subject to any conditions which he may consider appropriate to attach thereto.
The fifth and the last one concerns the underwriting of securities by authorized institutions.
Section 81(6)(i) seeks to provide a proper framework for the control of an authorized institution's risk arising from such activities while shares or debt
securities acquired under an underwriting or subunderwriting contract can be exempted from the limit of 25% of an authorized institution's capital base for a specified period. Such period is to be reduced to seven days from three months as it currently is. The banking industry considered such a cut unrealistic but the Honourable
Financial Secretary already addressed this point on 8 May this year when introducing this Bill. I shall therefore not repeat what he said. The banking industry also expressed the view that section 81(6)(i) could mean that the exemption period would run from the moment the commitment to underwrite was signed with the issuer. In response, the Administration has assured the ad hoc group that the seven-day exemption period would be counted from the time when an authorized institution actually acquires the securities. Appropriate amendments will be made to the Bill at the Committee stage to clarify the position.
Sir, lastly, further amendment to the Bill will be made today to clarify the definitions of the terms "associates" and "net debit balance" which the ad hoc group and the Hong Kong Society of Accountants have questioned. I would leave this to my honourable colleague, the Honourable David LI, to elaborate. Sir, with these remarks,
I support the Bill.
MR LI: Sir, the Bill before us is the product of close scrutiny by Members of the Financial Constituency.
The Hong Kong Association of Banks, the Hong Kong Deposit-taking Companies Association, and the Legislative Council ad hoc group formed to study the Bill have had many useful exchanges on the subject. As a result of the ongoing dialogue with the Administration, numerous amendments to the Bill have been agreed, and are now being formalized today.
However, a number of items remain to be of concern to the Financial Constituency and must be the subject of continuing discussion.
The amendments to the Banking Ordinance before this Council today institute further supervisions and regulation of the financial industry. In agreeing to these amendments, members of the industry look to the supervisors and the regulators themselves, and most directly to the Office of the Commissioner for complete fairness.
Such fairness should be shown in all dealings, regardless of the place of origin of any institution. All guidelines should be equitably enforced with the widest
degree of understanding and consultation. Most important of all, there should be full and detailed written explanations for the exercise of any discretion by the Commissioner. There is no explicit requirement for the Commissioner to give reasons for the exercise of his discretion under the Guidelines which accompany the Bill. But he has undertaken to give reasons for such exercise, and we welcome such
undertaking.
The events of recent days demonstrate clearly both the need for good regulations and for good regulators. They reflect the importance of ensuring both equitable use of authority, and authorities equal to the task of exercising such wide powers responsibly.
Sir, with these remarks, I support the motion.
MR SIT (in Cantonese): I suppose Members will agree with what I shall be saying. It is to serve a three-fold purpose that the Government enacts legislation to monitor the operation of the banking industry. The purpose is: (i) to ensure the proper functioning of banks; (ii) to penalize those who engage in malfeasance in the course of banking activities; and (iii) to protect the interests of depositors. I shall make two points with regard to the proposed amendment before us today. First, clause 4 of the present Bill revises the functions of the Banking Commissioner by deleting "banking supervisory authorities" and substituting "financial services supervisory authorities". In other words, if the amendment Bill is passed today the functions of the Commissioner will be expanded. Why is there a need to expand the functions of the present banking supervisory authorities by revesting them in the financial services supervisory authorities? Is it because some problems have arisen over the present functions of the Banking Commissioner? If yes, who shall be held responsible for these problems?
Clause 27 of the present Bill seeks to amend the limitation on advances by authorized institutions. In other words, is the public to assume that advances by banks to clients and associate banks have been subject to inadequate limitation or supervision? If yes, who shall be held responsible for it?
Having canvassed the above two points, I have a question to ask. Will the approval of the Governor in Council be needed before the Banking Commissioner can order the closure of an operating bank which he has hitherto found to be functioning
properly, financially sound and trouble-free? If no, will it be necessary to amend the relevant provisions of the law in this respect? The BCCI is a case in point. I hope the Government will respond to this as soon as possible to allay the worries of the depositors. Thank you, Sir.
FINANCIAL SECRETARY: Sir, I am grateful to Mr ARCULLI and members of the ad hoc group for their careful scrutiny of and support of the Bill. The discussions have in fact continued over a period of time. In the light of discussions with the ad hoc group and submissions from the banking sector and the accounting profession, we have agreed to make a number of amendments to the Bill. A few technical amendments will also be effected to improve the provisions. I shall explain at the Committee stage the reasons for the amendments that I shall be moving. All the amendments have been agreed with the ad hoc group and some of them will be moved by Mr ARCULLI and some by Mr David LI.
Sir, in answer to Mr ARCULLI, the additional discretions conferred on the Commissioner of Banking for the purpose of regulating risk concentrations are essential for making the banking sector operate within a more flexible regime. I wish to assure Mr ARCULLI and Mr LI however that such discretions will be exercised with the greatest care to ensure the health of our banking system. The guidelines to be issued after the enactment of the Bill are intended to explain how the Commissioner will exercise such discretions. The Commissioner will no doubt ensure that these guidelines are equitably enforced.
Sir, I have noted Mr Kingsley SIT's remarks. I can understand his motivation for making them in the light of recent events. Regulation is a constantly developing area. As I said at the outset of this speech, the discussions leading to this Bill have been taking place over a period of time. It is certainly necessary to examine what happens in the banking sector from time to time so that we can consider what further improvements to our systems are needed, if at all.
Sir, I beg to move.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
FINANCIAL SECRETARY: Sir, I move that Standing Order 11 be suspended to enable me to make a statement.
Question proposed, put and agreed to.
FINANCIAL SECRETARY: Sir, following upon the statement that I made in this Council last week regarding Bank of Credit and Commerce Hong Kong Limited, the Commissioner of Banking this morning made a report to the Governor in Council of the circumstances of the Bank, and its subsidiary deposit-taking company, BCCI Finance International Limited (which I shall refer to hereafter together as "the Institutions"). After considering the report and taking the advice of Members of the Executive Council, the Governor in Council has directed me to petition the High Court for the winding up of the Institutions.
Sir, in all these circumstances surrounding this unhappy affair, and after the most careful consideration it was decided that this was not a suitable case for use of the Exchange Fund to rescue the bank. Furthermore, a decision to open the bank without satisfactory financial support would not have worked. Those depositors
first in the queue to get their money out would have benefitted at the cost of the less fortunate who might have got nothing. Only an orderly liquidation would ensure fairness to all.
We are taking this step because we believe it to be in the ultimate interests of depositors. Their interests remain our prime concern. We had hoped that, over the period since the BCCI group's problems first became known, a suitable purchaser would be found. Regrettably, despite considerable efforts over the last week or so, this has not happened. Petitioning for liquidation does not preclude the eventual sale of the institutions, but I do not see any immediate prospect of this.
Clearly liquidation will take some time. However, in order to provide some immediate relief to depositors, I will be approaching the Finance Committee of the Legislative Council on Friday this week for the authority to discuss arrangements with the liquidator to pay off depositors up to 25% of their deposits, subject to a limit. Shortly thereafter we will announce detailed arrangements to implement this
proposal. It is, of course, our intention that relief should be made available in the shortest possible time.
Lastly, Sir, it is a matter of the greatest regret that these institutions, despite perfectly adequate supervision in Hong Kong, should have been put in jeopardy by events outside Hong Kong over which we have no control. Elsewhere, branches and subsidiaries have closed and proceedings have been taken or in contemplation leading to liquidation. Although this provides scant consolation, we are not alone in the problems from which we are suffering.
TRADE DESCRIPTIONS (AMENDMENT) BILL 1991
Resumption of debate on Second Reading which was moved on 1 May 1991 Question on the Second Reading proposed.
MR TIEN: Sir, before I address this Council on this controversial Bill, may I first of all declare my interest. I am the vice-chairman of the Textile Council whose membership includes the Knitwear Manufacturing Association. I am also the director of a garment manufacturing company but it is not involved in the production of any knitwear.
Sir, the Trade Descriptions (Amendment) Bill 1991, as we understand, is intended to address a problem which has been imposed on Hong Kong since 1985 by the United States unilaterally changing their origin rules for certain categories of piece knitted knitwear. The change has, in effect, put an additional constraint on Hong Kong knitwear export to the United States by requiring compliance with two different origin rules, that is, it has to be knitted in Hong Kong under the United States rules and linked-and-looped in Hong Kong under the Hong Kong rules. The amendment proposed in the Bill will remove this constraint by allowing the linking-and-looping of certain knitwear to be done outside Hong Kong as a means to reduce the cost of production and keep our knitwear industry internationally competitive.
Since its publication in the Gazette on 26 April 1991, the Bill has attracted much attention from various sectors, notably the manufacturers, the labour unions and the workers concerned. A Legislative Council ad hoc group comprising 12 members has since been set up to examine the Bill. During the past two and a half months,
the group has met on seven occasions, two of which with the Administration and two with various interested parties including representatives of major manufacturers' associations as well as labour union representatives and employees in the trade. Major issues considered and discussed include whether the Bill is justifiable in terms of public interest; whether it would encourage malpractices detrimental to Hong
Kong's good trading reputation; how far it would affect our local workforce; and what should be done to protect the interest of the affected workers.
The ad hoc group's view on the Bill, I must say, is divergent. Whilst it is generally accepted that the Bill will directly benefit the knitwear trade, some members feel quite strongly that the benefit may be negligible if we take into account its impact on local employment and the possible abuses and control problems brought by the changes in the law. They also argue that the industry is performing rather well even though it has to comply with two different origin requirements, and there is no indication whatsoever that the industry is losing its competitive edge since the change of United States origin rules in 1985, as reflected in our relatively high quota usage rate throughout these years. This view is not shared by some other members as well as the Administration who have made two related points in response: first, although the net resultant saving in terms of unit cost may not be significant, the aggregated saving is substantial given the total value which amounts to some $4.8 billion per annum; and second, the Bill is aimed at providing the flexibility of outward processing arrangements. Whether or not the manufacturers would make use of this flexibility is entirely a business decision depending on individual circumstances.
As regards the impact on local employment once the law comes into effect, some Members of the ad hoc group are concerned with the labour unions' estimation that some 9 500 to 25 000 employees would become redundant or under-employed. They are not convinced that the measures proposed by the Administration or the manufacturers could help solve the workers' problems and they share the worry expressed by many workers that they will not be qualified for long service payment or severance payment from their employers in the unfortunate event that they be dismissed or laid-off. Neither would it be easy for such workers to undergo retraining or to change job without suffering from a reduction of take-home pay. On the other hand, some members feel that the size of the problem has been exaggerated. They tend to agree with the Administration's assessment that only around 2 000 workers may be affected. This is based on the fact that of the total 22 million dozens of knitwear exports to Hong Kong's major markets involving the work of 7 500 linking workers, about 20%, that
is, 4.2 million dozens of knitwear or 15 000 workers will be affected by the Bill. Coupled with a general shortfall of workers in the knitwear industry and the Administration's assurance to assist in re-employment and retraining for the affected workers, it is believed that it will not be too difficult for any displaced workers, who are largely in their 20s and early or mid-30s, to change to other employers or to switch to other areas of employment. In any event, members who are in support of the Bill are delighted to note subsequently that two major manufacturers associations have vowed not to retrench any linking workers should the Bill be enacted.
The ad hoc group is also concerned whether the Bill will encourage abuse and malpractice, thus creating control and enforcement difficulties for our trade and customs officials. In this connection, members have been assured by the Administration that a special control scheme has been devised to guard against abuse, and that all necessary efforts will be made to keep the situation under control.
There has been a proposal that the Administration, the manufacturers and the labour unions concerned should join together to continue to lobby the United States Government with a view to reverting to the old origin rules. Having tried many years without success, the Administration is not optimistic that anything could be achieved. Myself and my honourable colleague, Mr Stephen CHEONG, have recently had an
opportunity to raise the matter with the United States chief textile negotiator on his visit to Hong Kong a few weeks ago. Again, the message we got was disappointing.
Sir, it is an undeniable fact that our manufacturing industry is facing fierce competition from our neighbouring countries. With the rising production costs in Hong Kong, I think it is vital and necessary for the Administration to do everything possible to remove any obstacle which may lead to a trimming of the competitiveness of our industry. The viability of our industry is not only important in the interest of the manufacturers, but also to the many workers concerned as well as to the
community as a whole. My experiences convince me that the labour shortage situation in the textiles industry is not going to diminish quickly as less and less young people are interested in joining the manufacturing sector and because Hong Kong is moving towards a service-oriented economy. With this in mind, I do not believe that the immediate impact of the Bill on our labour force would be as detrimental as some members may advocate. On the contrary, I feel quite optimistic about the future of our skilled workers. The two major manufacturers associations which have formally undertaken not to retrench any linking workers have a strong membership representing
about 80%, and I repeat, 80%, of the total production of knitwears in Hong Kong. This fact should not be taken lightly.
Sir, I would also like to take this opportunity to personally assure all the linking and looping workers in the industry that these rice bowls which were handed to me while I was outside this building will not only be unbroken but will continue to be filled with rice. In the unlikely event that the contrary turns out to be the case, I agree to work closely on behalf of the affected workers to seek reasonable compensation from the two manufacturing associations.
Sir, I have carefully considered the different views expressed by my colleagues in the ad hoc group. For the reasons that I have just explained, and subject to a minor amendment on the effective date to be moved later by the Administration, I support the Bill.
MR CHEONG: Sir, before I address the issues, may I declare interest as the honorary president of two knitwear manufacturers associations and also director of a number of companies that are engaged directly in the manufacture of knitwear. Under those circumstances I will therefore abstain from voting on this particular Bill.
Sir, this particular Bill needs not have been brought to this Council at all, but for the fact that we feel it is only right to do so. Because the net effect of this particular Bill is just one thing: -- the protection of the label of "Made in Hong Kong". Under the current Trade Descriptions Ordinance and origin rules, no garment or sweater that has been made in Hong Kong, that is not looped or linked in Hong Kong can lawfully carry the label of "Made in Hong Kong". But even if we adopt the origin rules of the United States, the garments manufactured out of Hong Kong and knitted in Hong Kong but assembled in China or linked in China can lawfully, under this Ordinance, carry the label of "Knitted in Hong Kong, assembled in China", and that label is also acceptable to the United States customs. Nevertheless, in our view, under the auspices of the Textile Advisory Board, we have done so much to promote the name "Made in Hong Kong", which carries quality product image, that we do not want to really dilute this particular image by not facing up to the issues squarely. So basically, even if this Bill were not to be brought to this Council for amendment today, the manufacturers can still knit the parts in Hong Kong, move their linking operations across China or wherever, and just carry the label of "Knitted in Hong Kong", but assembled either China or Malaysia, and it will be able to go into United
States under the United States origin rules. So their concerns on that score are the same.
Sir, on this particular issue, the Administration and the Textile Advisory Board have acted responsibly for the past six years in trying to negotiate and come to an agreement with the United States Government, who unilaterally -- and I repeat unilaterally -- altered the rules of origin which are quite different from what the rest of the world is adopting. They have unilaterally altered the rules of origin because they have bowed to protectionist pressures from their knitwear manufacturers and because it was erroneously thought that if they required any knitted parts to be knitted in Hong Kong, then the Hong Kong knitwear industry would be finished. But it was not to be. In accordance with the universal practice that confers origin which the EEC and Hong Kong have adopted, the change of shape is in the linking and assembly process. The Americans simply have unilaterally abolished that particular practice and gone for a country of origin requirement that relates to the knitting part. We even went as far as going to the Textile Surveillance Board of the multi-lateral forum of GATT for a ruling as to whether Hong Kong or the United States was right. In the end the ruling said that Hong Kong was right but after that particular ruling and, after repeated negotiations with the United States, they still stuck to their guns. They maintain that as they are the sovereign custom territory they can, through their own customs practices, decide unilaterally on whatever country-of-origin conferring process. This is the situation Hong Kong industry and Hong Kong are facing today and it is after spending six years on this particular subject with no avail that the Textile Advisory Board has advised the Administration that in order to protect the quality image of "Made in Hong Kong" products, the Trade Descriptions Ordinance need to be amended accordingly to enable manufacturers who adopt the United States country of origin rules to sew onto their products "Made in Hong Kong".
I would simply like to emphasize, Sir, again the point that if this Bill is not amended, it will not affect really the survivability of manufacturers because they can be left to do their own things whether they are competitive or not; they have to make their own decision. But why are we doing it? In my view, the main thing is to protect and to enhance the image of the label "Made in Hong Kong".
Sir, I shall abstain from voting.
MR CHAN: Sir, I am opposed to this Bill. I believe it is unnecessary and it will
remove jobs from Hong Kong for no good reason.
At present, linking and looping is carried out in Hong Kong because the "Hong Kong origin" rules recognize linking and looping as the final origin conferring process. The Americans require the knitted panels to be made in Hong Kong but permit linking and looping to be done in China whilst still recognizing the finished garment to be of Hong Kong origin for quota purposes. There is thus no need, for origin or marking reasons, to allow linking and looping to be done in China unless we have no labour to do the job or unless the cost of doing the work in Hong Kong is prohibitive.
Neither is true. The cost advantage of sending the goods to China is very small and perhaps only between 1% and 2% of the cost of the product. We do have labour to do the job. Several thousand workers' job are at risk.
It is also the fact that, despite the change in United States origin rules being made in 1985, the knitting trade and industry have been able to export a very high percentage of the knitted goods quota for the United States whilst still doing the linking and looping in Hong Kong. This performance does not suggest that the industry is uncompetitive.
I feel that this legislation is a mistake in that it reduces jobs for Hong Kong workers whilst providing only a small cost advantage to our knitwear industry. Sir, I shall vote against the Bill.
MR MARTIN LEE: Sir, the present Bill has attracted a great deal of controversy and acrimony since its introduction. The strong feelings aroused by the Bill have made it difficult for this Council to get an accurate reading of the economic factors involved. For this reason, several members of the ad hoc group including myself wished to delay the Bill until the new Session of this Council, thereby giving the labour unions, the business sector, and the Administration more time to make their cases clearer and produce firmer evidence to support them. The Administration,
however, has refused to do so. In the lack of compelling evidence demonstrating the necessity to pass this Bill today and in the face of the evidence of serious job losses, I must vote against this Bill.
A major reason for the strong reaction to the Bill from the labour sector was the failure of the Administration to consult labour representatives and to give their
opinions the same weight as those of the business sector. Before introducing this Bill, the Administration consulted at length with representatives of the manufacturers affected. Yet, despite the fact that this Bill would have a serious impact on workers, the Administration made absolutely no effort to consult or inform representatives of the labour unions. It seems remarkable that the Administration refused even to consult its own Labour Advisory Board, which was established precisely for the purpose of consultation on issues such as this which have substantial impact on workers. Sir, what is the purpose of having a Labour Advisory Board if the Government is not even willing to solicit its advice on such a matter?
Because of the way in which the Administration ignored them before introducing the Bill, labour unions in Hong Kong quite naturally reacted with suspicion and distrust towards the Bill. If the Bill will bring economic benefits for Hong Kong as a whole, does it not make better sense to deal with the concerns of labour directly during the policy formulation process rather than working behind their back and then springing a finished plan upon them?
As for the content of the Bill, representatives of the manufacturers have argued that the Bill is vital for local manufacturers to remain competitive in the United States market. Clearly, it is the interests of everyone in Hong Kong to ensure that our industries are as competitive as possible internationally. Competitiveness in our industries means not only profits for the industrialists but, just as important, jobs for our workers. I recognize, moreover, that this Bill attempts to respond to a change initiated by the United States Government that demands a different standard in regard to country of origin from that required in Europe.
Throughout the meetings of the ad hoc group, however, the Administration did not present compelling evidence of the need for this Bill. All indications showed that any savings in labour costs from moving the linking and looping jobs across the border would account to only 1% to 2% of total costs. Given more time perhaps the
Administration would be able to make a more convincing case of the economic necessity of the Bill.
The labour unions, on the other hand, have stated that many thousands of workers would lose their jobs as a result of the Bill. Estimates of job losses vary widely between 2 000 claimed by manufacturers to over 9 000 claimed by the unions. Unfortunately, we in the ad hoc group were never presented with enough hard evidence to bear out the assertions of either side. Even in the best case scenario, however,
the loss of jobs is quite substantial, and the workers who will lose their jobs will not receive adequate compensation or re-adjustment assistance from the manufacturers under their current proposal.
In order to calm the workers' fear of unemployment, the manufacturers have recently offered to guarantee that no workers will lose their jobs on account of this Bill. While this offer is certainly a positive step, I am afraid that the guarantee in its present form is legally unenforceable, and it is therefore of little comfort to the workers.
For all of these reasons, I urge the Administration to withdraw the Bill. From the beginning, the Administration has appeared to wish to rush through with the Bill against all opposition, even going so far as to set originally a 1 July date for the commencement of this Bill. Rather than pursue such tactics, the Administration
should urge the parties involved to work out a solution among themselves, for both the workers and the manufacturers have the same interest in preserving the competitiveness of our industries. If the two parties are unable to reach a compromise, then the Government should undertake a far more detailed analysis of the economic necessity of this Bill and then re-submit it to this Council.
Sir, for these reasons, I oppose this Bill.
MR NGAI (in Cantonese): Sir, the Trade Descriptions (Amendment) Bill 1991 aims at rectifying certain unfair operational requirements faced by the local textile industry. The problem at root may be traced to the rules introduced by the United States in 1985 regarding the place of origin of certain goods. The local textile industry has lost its competitive edge since then as manufacturers are compelled to observe two different sets of rules in their production. The fundamental spirit of this amendment Bill is based on, may I take the liberty to point out here, the consideration that restrictions created by certain provisions in the legislation should not be allowed to become self-imposed fetters that undermine the competitiveness of our textile industry, because in a free market economy, many manufacturers are already making use of the privilege available to them to relocate certain processes in production anywhere they like to enhance their competitiveness.
As we all know, various design and production processes of our garment and textile industries have moved towards value-added products and computerization in face of
protectionist measures from overseas. It is believed that employers and employees share a common wish that our industries should move away as soon as possible from labour-intensive operations. In fact, if the two sets of rules that appear in the Trade Descriptions Ordinance are to be retained, our textile industry will eventually lose its competitive edge. When the market becomes sluggish, the market force may even deal a heavier blow on those labour-intensive processes, so much so that the survival of the textile industry may be threatened. We may end up worse than what we may be under the amendment Bill.
Sir, in view of the above argument, I disagree to any myopic protective measures which may hinder the stride of our industrial development. I support the passage of this amendment Bill. At the same time, employers have already told us that substantive action will be taken to safeguard the interests of affected workers. According to estimates, the total number of workers to be affected by this amendment Bill will be around 2 000 to 3 000 or less. Since the linking-and-looping process still suffers from labour shortage, massive dismissal and unemployment resulted therefrom are unlikely. I believe the employers concerned are in a position to make provision and guarantee for the proper placement of the affected workers.
Sir, with these remarks, I support the amendments.
MR PANG (in Cantonese): Sir, do pardon me for bringing into this Chamber some props which were in fact given to me a while ago by the convener of our ad hoc group. Many Members may have come across bowls of this kind, though some may not. It may even be beyond their imagination that bowls so plain, so rough and so dirty could ever be used as rice bowls. But these are what our workers have been using. They may be strange to some of our Honourable Members who were, if I may say so, born with a silver spoon in their mouth. They may be familiar with golden rice bowls which cannot be broken but not rice bowls which can be smashed to pieces. Just before I entered this building, I was given a hammer, another piece of props. We can hit the bowl with the hammer like this. Well, it does not work; the hammer is fake.
HIS EXCELLENCY THE PRESIDENT: Mr PANG, one moment please. Can I just point out to Members that nobody may bring a weapon into this Chamber. (Laughter) I cannot say that an inflatable hammer is a weapon but could I encourage Members to rely on arguments rather than ingenious or photogenic props? Please go on, Mr PANG.
MR PANG (in Cantonese): Sir, I did not purposely bring this to the Chamber. It was given to me by people outside the Council building.
Sir, although there is a lack of natural resources, Hong Kong has achieved the prosperity and progress it now has today mainly, as we all know, because of its dependence on the diligent and co-operative labouring workers. All along, we have taken pride in seeing products marked with "Made in Hong Kong" label being marketed to Europe, the United States and other countries in the world. The hard-won good reputation it has established in the international trade market has made every citizen of Hong Kong feel honoured. Indeed, this reputation has not been achieved easily. Workers at the grassroot level have sacrificed their youth, toiling and working quietly to cater for the requirements of their employers and Hong Kong's trading partners. They have upgraded the qualities of products continually to meet market demand, ensuring that the exported products have all been completed in Hong Kong before the Government can permit marking of "Made in Hong Kong" label, a sign which has won confidence from importing countries.
Textiles made in Hong Kong, especially knitwears, are well known to the world. The Government and capitalists should treasure the honour and achievement.
We have been complaining that trade protectionism adopted by the European countries and United States has jeopardized the fundamental principle and spirit of free trade. Our labour sector has also explained to its international counterparts from time to time that a whole lot of workers in Hong Kong have depended on processing industries, in the hope that they may understand and sympathize with us. Also, we have often persuaded international union leaders in the same trades that they and their governments should have confidence in the strict provisions under the existing Trade Descriptions Ordinance as far as our products marked with "Made in Hong Kong" label are concerned, and have guaranteed that the products have been made by workers in Hong Kong.
Sir, we are hastily resuming debate upon the Second Reading of the Trade Descriptions (Amendment) Bill today. The major amendment proposed is to empower the Director-General of Trade to issue origin licences in respect of two different processes, thus permitting knitwears made through processes conducted outside Hong Kong to be marked with "Made in Hong Kong" label. In so doing, this may cause confusion in the issuing of origin-conferring licences for local knitwears exported
to the United States and European Common Community. The amendment is so incredible and most unusual. Its motive and purpose have not only shocked the labour sector but also aroused great discontent. Moreover, it will certainly provide importing countries with an excuse to further enhance their trade protectionism. This can actually be described as, to quote Chairman Mao Zedong, "lifting up a rock to let it drop on one's own feet". There will be serious consequences to this and the loss will surely outweigh the gain.
The only reason for supporting the Bill is that by relocating production outside Hong Kong, capitalists may gain additional profits from a saving of 1% to 2% of the total production cost. According to the information provided by the Administration to the ad hoc group, it is also admitted that upon implementation of the amendment, 2 000 to 3 000 out of 7 000 linking-and-looping workers in the trade may face the problem of losing their jobs. Some Members guaranteed that workers would not be displaced. Some said that they had the assurance from the manufacturers that no workers would be retrenched as a result. But are we going to believe it? Which is better and which would we prefer, legislative protection or guarantee by capitalists? As a chain reaction, some 20 000 workers for the production processes subsequent to the linking process may also be affected.
Sir, workers began to stage a hunger strike outside the Legislative Council building last night, and leaders of all trade unions in Hong Kong, including our elected labour consultants and labour representatives, also have a sit-in today. We must realize that workers have their own dignity. They are not begging for mercy, for not breaking their rice bowls, from Members of this Council. What they really want is to safeguard the overall interest of Hong Kong and to look after the interests of the capitalists and the public. They hope that all Members here today can face the facts and be reasonable. May I heartily call upon my colleagues to adopt an attitude of making themselves responsible for the society, and for the sake of their conscience, to consider carefully whether it is worthwhile to support this amendment Bill which serves only the interest of a small group of knitwear manufacturers.
We keep on saying, "We do it for the benefit of our trade, our commerce, our enterprise and our industry." But when production is relocated and moved outside Hong Kong, could we insist on saying that that particular industry is our industry? Are industries in the mainland China, Japan, Malaysia and Taiwan our industries? Yes we do business with them; but their industries are not ours. We will be lying if we say so. Moreover, given that the factories are not in Hong Kong, production is
done and workers are employed outside Hong Kong, in what way will Hong Kong benefit from this industry? Sir, could I urge Members in this Council to think clearly over this amendment. We always complain that protectionism is unreasonable and that importing countries are taking double standard. But will it be another instance of double standard if we amend the Ordinance in this way? Why should we, by way of amending the Ordinance, adopt two different sets of rules regarding the production of knitwear products?
Finally, I earnestly request the Administration to withdraw the proposed amendment Bill. Otherwise, I request Official Members and those Members who have an interest to abstain from voting. Thank you.
MR SZETO (in Cantonese): Sir, the sitting today is the last one of the year. There was a proposal that the passage of the amendment Bill should be postponed. But the idea was vetoed. Why? Maybe they are clear that the amendment Bill is sure to get passed in this last meeting, but it will not be so if passage is left till next Session with directly elected members.
The amendment Bill openly sets its axe to the interests of the labour sector. Yet it is sure to be passed. The case tells us whose interests this Council as a whole represents and takes care of. Friends of the labour sector, as the majority of the populace, are you willing to have the same state of affairs for ever? Are you willing to have Bills that openly do harm to you to get passed one after another without any exception in the new Session? If you want to bring about changes to the existing state of affairs, apart from being united and giving support to the unions, you have to treasure your vote for a directly elected member on 15 September 1991, and make the directly elected members represent your interests. The election on 15 September 1991 is another mode of struggle to vindicate your interests. It is more important than petition, demonstration, hunger strike and so on, and worth our greater support.
Some give the assurance that none of the linking and looping workers will be dismissed as a result of the passage of the Bill. But how to ensure this? Could another piece of legislation be passed for this purpose? What crocodile tears! All breeds of crocodiles are alike in one aspect: they prey. According to official
information, relocation of the linking and looping process will only cut production cost by 2%. For this 2%, employers break the rice bowls of 9 500 linking and looping
workers. It means direct harm to the interests of more than 20 000 knitwear workers and the opportunity for them to seek employment will be threatened. Could you be convinced that this kind of employers will honour their words to maintain the workers at the expense of his profits? If one does believe in such promises, he might as well accept that there are cats which do not catch mice. The Clothing Industry Workers General Union stated in a letter to Legislative Council Members, "We knitwear workers are paid on a job basis rather than on a monthly basis. We are only paid when there is work for us. We shall be forced to resign, even if we are not dismissed, in the face of reduced wages or under provision of work. Such being the case, employers may save the severance pay as well. Though it is guaranteed that none will be
dismissed as a result of the legislation, what can we do if they dismiss us by other excuses?" Listen to the response of the labour sector to the so-called assurance!
Sir, though I gather that the Bill is sure to get passed today, I still want to register my strong and outright opposition against it. Those of us who oppose the Bill may only comprise a minority, but it is a dignified isolation and we belong to a dignified minority.
Sir, with these remarks, I oppose the motion.
MR TAM (in Cantonese): Sir, I think most of us would not deny that the present prosperity and wealth of Hong Kong are, to a large extent, brought about by our hard-working workers. However, workers in Hong Kong not only cannot enjoy the benefits of economic success, they are also devoid of their entitled job security. In times of economic recession or when unfavourable conditions arise, they are very often the first ones to be sacrificed. The Second Reading of the Trade Descriptions (Amendment) Bill today is a good proof!
According to the Government, the Bill is proposed to save the unpromising knitwear trade. It is hoped that the amendments will lower the cost of production, thus enabling local manufacturers to compete with knitwear traders of South Korea and Taiwan. However, the information published by the Trade Department shows that the quota utilization rate of local knitwear exports to the United States last year was higher than those of Taiwan and South Korea and so on. For example, for item 445/446 sweater, the quota utilization rate was as high as 96.82%, and for item 845(1) blend fabric, the rate even stood at 101.3%, very much higher than those of South Korea and Taiwan. Since Hong Kong can attain such a high quota utilization rate, why then
should the Government insist that the prospect of the knitwear trade is unpromising and break the "rice-bowl" of workers?
More important still, the Bill allows manufacturers to have part of the linking-and-looping process be done outside Hong Kong. This provision will definitely threaten the livelihood of some 9 000 linking-and-looping workers. Since the linking-and-looping process can be relocated to Mainland China, other post production processes can be relocated as well. Hence, the numerous workers engaged in other post-linking-and-looping production processes, such as hand-stitching, cutting-and-sewing, inspecting, mending, laundering-and-pressing and packaging may be affected by the Bill as well. The number of workers affected may well exceed 20 000. Although some traders claim that they would not dismiss one single worker because of this Bill, yet how can the Government stop them if they use other excuses to dismiss the workers? What protections can workers secure? Furthermore, even if workers are not dismissed, manufacturers can render them into a plight of taking the "intravenous drip" (that is, being underemployed). Would workers be more miserable then? It should be noted that many linking-and-looping workers have worked in the trade for 10 to 20 years and are about 30 to 40 years old. It is not easy for them to change a profession. So the Bill will definitely drive them to desperation!
Furthermore, although the relocation of part of the production process can cut the production cost by 3.5%, the actual savings will be about 1% only after offsetting additional expenses on transport, insurance, licensing and administrative cost. Should we be so cruel as to deal a blow against the livelihood of 40 000 workers just to help manufacturers save an iota of money.
Dear colleagues, the labour sector has reacted strongly against this Bill since its introduction into the Legislative Council in late April. Various petitions, demonstrations and gatherings have been organized to reflect their worries and discontent about the Bill. At this moment, there are many infuriate workers gathering outside this building to protest against the Bill. If the Bill is passed today, the disastrous effects resulted can hardly be assessed. The labour relation and social stability will surely be disrupted.
With the economy of Hong Kong being at a low ebb and a surging unemployment rate of 2.4%, should we break the rice bowls of workers for the profits of knitwear manufacturers? We should consider this issue seriously and should not pass this unpopular Bill!
Sir, with these remarks, I strongly oppose the Trade Descriptions (Amendment) Bill 1991.
MR PAUL CHENG: Sir, just to be absolutely sure, I would like to declare an interest as a director of a company which is a buying agent for a wide range of apparel including knitwear.
Sir, forward-looking, competitive advantage, building for the future, meeting the needs for a prosperous Hong Kong. These are important concepts. The Trade Descriptions (Amendment) Bill 1991 provides a unique opportunity to take action that supports these vital concepts. Action that contributes to Hong Kong's strength as an important world community trading centre.
In today's climate, we must be very intentional in how we go about supporting Hong Kong as a vibrant business hub for Asia. The passage of this Trade Descriptions (Amendment) Bill enables us to take positive action. Action that contributes to positive growth for the future.
Passage of this Bill appropriately addresses one of the focuses of the ad hoc group which studies this Bill. Focus was given to the fundamental question of whether or not the Bill is justifiable in the public interest as a whole. It is. By amending the principal Ordinance to allow the Director-General of Trade to specify the place of manufacture or production of certain goods, we are providing for long-term
implications that affect both the competitiveness of the industry and the Hong Kong economy.
Although recent years have seen Hong Kong shifting its traditional manufacturing base to a stronger service industry sector, we must also take care of those manufacturing industries which provide for the most viable economic sectors. Our garment industry is just such an economic sector given its halo effect on the service industry from shipping to financial services.
I recognize that concern has been expressed for the possibility of malpractices with the implementation of the proposed amendments. Those who argue against the Bill on this basis have concluded that such malpractices are detrimental to Hong Kong's traditionally good trading reputation.
Let us recognize this for what it is. A possibility -- not a given. The upside of what this legislation offers far outweighs this possible outcome. Given that we are fully cognizant of the possibility of malpractices, we can, and should provide appropriate monitoring through the auspices of our Trade Office.
In fact, I would argue on the other side of those addressing this focus. I believe by being flexible and responsive to a change in rules of origin by only one of our primary trading partners in this industry (the United States), we are stepping up to the challenge of being a credible and effective member of the global economic community. The Honourable Ronald ARCULLI has asked me to indicate that he concurs with these views.
With these remarks, Sir, I support the Bill.
MRS FONG: Sir, the Bill before us is controversial. Its passage could result in the elimination of a number of jobs for Hong Kong workers. On the surface this seems that, but we have to consider this issue more carefully. The fact is that if we do not take this step the jobs will be lost anyway and many more could be lost with them. As legislators it is our duty to consider voices from those being affected and to assess their arguments in the light of the overall interests of the community.
For many years we have seen Hong Kong industries moving to the mainland to secure lower labour and land costs. In fact, many of Hong Kong's exporters have only been able to continue to compete in the international market because of their ability to produce goods at lower cost in the mainland. This relocation of production has in fact been a flight from higher cost just as much as it has been a flight to lower cost. The high cost in turn has been brought about by changes in Hong Kong's economy. It has been the effect of the move of Hong Kong's business sector towards higher added value activities.
Hong Kong's survival depends on its ability to compete internationally. For its manufacturing sector to survive it must be able to export goods at competitive prices. In this regard, we cannot tie the hands of our industries and then expect the prices to be competitive. The Bill is just about such a case of hand-tying. It applies to the origin rules of Hong Kong and the United States and to the fact that the respective rules are out of step with that of Hong Kong, being more restrictive on its exporters
than the United States is on its importers.
If we allow the existing rules to continue our goods will soon not be competitive in the United States market, which is our biggest export market for knitwear. This is a fact and it will not just be the linking jobs that will be lost. There will be a real threat to knitting jobs and to the entire industry.
As legislators it is our duty to look at the whole picture and to support what is best for Hong Kong. In my view, unless there are compelling circumstances, we should not and could not impose tougher requirements on our exporters than the importing countries. I therefore believe that the law must be changed.
Having said this, I fully recognize that we should look after the workers who may be affected or displaced because of changes in the legislation. I understand that the two main manufacturers' associations have committed not to retrench any linking workers because of this change in legislation. Further, if retrenchment
happens the affected workers will be fully compensated. I also understand that there should be no lack of alternative jobs because of the shortage of workers in the industry.
Sir, Hong Kong industries are going through a period of change and Hong Kong is moving from a manufacturing based to a financial and service based economy. Everyone in Hong Kong must also adapt and be willing to make changes as a part of this process.
With these remarks, Sir, I support the passage of the Bill.
MR CHOW (in Cantonese): Sir, I am opposed to the amendment Bill. First of all, I do not understand the real motive behind the Government in moving this Bill. Even if this Bill is passed, the production cost would only be reduced by 1% to 2%. Since the wages for linking and looping only account for 3% to 4% of the total production cost, even though the manufacturers relocate this process up northwards, they can only save a quarter to two-thirds of the cost for linking and looping. The benefit is not as great as some people imagine. On the contrary, the 2 000-odd linking and looping workers together with the 20 000 or so workers in the related field such as stitching, darning, laundering, inspecting and packaging will be deeply affected. As they will lose their jobs because of the passage of this amendment Bill, I feel that this amendment Bill will save a little only to lose a lot.
Some Members feel that most of the workers who become redundant are between 20 to 30 years old and can change job easily. In fact, most of the female workers are over 30 years old, and it is difficult for them to change jobs. Besides, linking and looping are special skills. It is really a waste of social resources if they are forced to change jobs.
Concerning the proposed arrangements to be undertaken by the Labour Department, these are only window dressing arrangements. I believe most of the employers will not dismiss linking workers because they do not want to pay the long service payment and severance pay. They will continue operating but underprovide the workers with work. In so doing, they can reduce cost on the one hand, and be exempted from long service payment and severance pay on the other hand. This underprovision of jobs will make workers leave the employment of their own accord.
Meanwhile, this Bill may give rise to fraudulence and malpractices and there will also be difficulties in implementation. This is really a proposal resulting in high cost and low effectiveness. It is learnt that manufacturers have come out with a set of arrangements to address the problems faced by the workers after the passage of the Bill. Under such circumstances, why do the Government not defer the passage of the Bill and let employers and employees sit down to discuss the new arrangements before any decision is made? Is this more constructive in satisfying both sides?
Sir, according to the unemployment figures released by the Census and Statistics Department yesterday, the unemployment rate has risen to 2.4%. In addition, there was a double digit inflation rate, workers from the lower and middle income group are really hard hit. The Government should not hit them further at this stage. It should not chime in with the mentality of the manufacturers to exploit local workers. When this Council debated the motion on Central Provident Fund last Wednesday, workers petitioning outside handed me a piggy bank before I entered the building.
Unfortunately this piggy had been sold down the river. Today I was given a rice bowl outside this building. People in the East eat from rice bowls. They are not weapons. But if they are broken, the broken pieces will turn into weapons and they can cut fingers. The blood shed will be the blood of the workers who belong to the lower stratum of our society.
Sir, I am opposed to the Bill.
MISS LEUNG (in Cantonese): Sir, I find it really hard to support the Trade Descriptions (Amendment) Bill 1991 at this point in time. Being almost at the bottom of the pecking order of this Council, so to speak, I must say that many of the views which I would like to put forth have already been covered by other Members before me. Despite this fact, there are a couple of points, mainly about the security of the affected workers, which I would like to raise again.
Firstly, in my view one of the basic principles a legislator must observe is that any draft legislation which may lead to laying off of workers should not be passed into law even if in the end only one person will be affected or displaced. If, upon passage of a Bill, some workers were dismissed or left underemployed, they should first be duly compensated or given retraining or re-employment. The enactment of the Trade Descriptions (Amendment) Bill 1991 will inevitably lead to some production processes in the knitwear industry being relocated outside Hong Kong. As a result, many knitting workers may be displaced or left underemployed and, as a number of Members have pointed out, their livelihood will be affected. Perhaps Members might like to ask at this point what the labour sector is worrying about given the guarantee against undesirable impact on local employment and, in particular, the assurance by the Honourable James TIEN regarding reasonable compensation to the workers in the unlikely event of mass dismissal. As to the guarantee against any undesirable impact of the Bill, the ad hoc group has been given to understand that the Government is going to be one of the two parties which will act as guarantors. The Government has assured the ad hoc group that the following measures will be taken to help the affected workers:
(1) The Labour Department will closely monitor the matter so as to ensure that affected workers will be duly compensated according to the Employment Ordinance;
(2) The Local Employment Service of the Labour Department and the service centre established under the manufacturers associations will provide the necessary employment counselling services;
(3) Retraining programmes will be offered by the Clothing Industry Training Authority and the Vocational Training Council.
These guarantees and measures may, at first sight, appear to be sound and adequate in safeguarding the interest of the workers; but many Members, including myself, doubt
very much if they can be of any substantial help. As the turnover of workers in the knitwear industry is high, the number of workers eligible for long service or severance payment will be small though many may in fact have been dismissed or displaced because of this Bill. Moreover, in the case of some affected workers, the chance of switching to other areas of employment will be slim having regard to age and education constraints.
Turning to the other guarantee, as many Members mentioned in this debate, the manufacturers associations have vowed that the interest of the workers will be taken care of and this commitment was reaffirmed by the Honourable James TIEN in his speech a few moments ago. Nevertheless, I have received a number of representations outside this Council building and, to follow the Honourable SZETO Wah's example, I would like to read out one of these here in this Chamber today. The representation is from the Clothing Industry Workers General Union and a paragraph of it reads as follows:
The manufacturers associations have undertaken not to retrench any linking or looping workers should the Trade Descriptions (Amendment) Bill 1991 be enacted. Such being the case, Councillors may wonder what in fact the union has been worrying about given that guarantee has been offered to guard against layoffs. But Honourable
Members might have forgotten that knitting workers do not earn a fixed monthly income. Instead, they are paid on piece-rated basis which means that they will be paid less if sufficient work is not available and they will be left underemployed. In this case, employers will not need to dismiss the workers before insufficient work, which means a decline in pay, will force them to leave the employment. Employers may even spare themselves the severance payment as workers are leaving of their own accord. Moreover, since the assurance is given in such a way that no workers will be displaced because of this Bill, workers will find it hard to bargain if, for some other reasons or excuses held by the employers, they are dismissed unfairly. Furthermore, would Honourable Members agree to accept a guarantee which does not have any legal effect at all?
I share the views of the general union in this respect as, once this Bill passes into law, some manufacturers will certainly move their linking and looping production outside Hong Kong. That is to say, linking and looping workers will most probably not be provided with sufficient jobs because of reduction in local production.
Without doubt, as many Members pointed out in this debate, other follow-up production processes including trimming, pressing or hand-ironing, labelling and packaging will go with the linking and looping operations to be relocated outside Hong Kong,
resulting in further displacement of workers in the trade.
Yet we must be aware that the guarantee by the manufacturers associations does not apply to those other workers who may be indirectly affected because of this Bill. So it can be seen that, apart from its soothing effect, the no-retrenchment guarantee serves no other purpose in concrete terms. As it has no binding effect on the
employers, the guarantee is legally unenforceable and may, in my view, be only an empty promise.
Sir, I see no justification for any urgent passage of the Bill because of the lack of consultation before the Bill was published in the Gazette and the subsequent failure on the part of the Government to establish a dialogue between the labour and the business sectors. I would therefore like to urge the Government that proper arrangements be made to ensure that a solution acceptable to both parties will be identified so as to protect the interest of the affected workers.
Sir, with these remarks, I oppose the motion.
4.51 pm
HIS EXCELLENCY THE PRESIDENT: I still have the names of five Members who wish to speak in this debate. Time is getting on. I think Members might appreciate a short break before we continue.
5.23 pm
HIS EXCELLENCY THE PRESIDENT: Council will resume.
MR McGREGOR: Sir, as the convenor and other members of the ad hoc group who studied this Bill are aware, I had difficulty with it from the outset. My worries were threefold. I was concerned that the cost advantage of having linking and looping done in China was hardly worth the effort. The Government provides at an average ex-factory cost proportion of 3.3% for linking and looping in Hong Kong. The transfer of this work to China might therefore save 2% or so of the ex-factory cost of the products. This in turn would translate into an even smaller proportionate saving
within the final CIF USA landed price. My second worry was that the government control system used in Hong Kong to ensure that Hong Kong origin products are properly
marked might be put into difficulty when factories were producing knitted goods for the United States market and the European markets at the same time, but with different origin rules. My third concern related of course to the workers engaged in linking and looping in Hong Kong who might lose their jobs. In discussion with the industry I have been assured that the average cost of linking and looping in Hong Kong is much higher than 3.3% of the ex-factory cost. It is said to be nearer 10%. If that is so, then there will be a significant saving in having the work done in China. The Government has assured the ad hoc group that effective control procedures can be put into place to ensure against any origin malpractice. I believe that this can be done. Finally, the trade union representatives inside and outside this Council present a rather confused picture on the number of workers actually engaged in this work in the industry. The government estimates of the job at risk is, I think, about 2 500. The industry estimate is about the same, but the unions provide estimates ranging from 7 000 to 25 000 workers. The knitting industry claims that most displaced
workers can easily find other jobs and that the industry will help them to do so. I am aware of course that there is still a labour shortage in most sectors of the economy. In all these circumstances, and although I am frankly uneasy about doing so, I support the Bill.
MR SIT (in Cantonese): This is the final sitting of the Legislative Council and I will be speaking on the Trade Descriptions (Amendment) Bill 1991 on this very special day as after then the Legislative Council will go into summer recess to be followed by its dissolution later on. During the past three years as a legislator, I often had the chance to meet the public at the OMELCO Complaints Division in Swire House. Right opposite to my seat in the reception room, there hangs a plaque presented to the OMELCO from members of the public. On it is the inscription: To make laws to benefit the public. In other words, it is the people's hope that laws passed in this Council will be beneficial to the public. But have we lived up to their expectations? 17 July 1991 will be memorable in the sense that it is the day the Legislative Council held its final sitting and the Government decided to wind up the Bank of Credit and Commerce with more than 40 000 depositors failing to get their money back from the bank; it is also the day the Trade Descriptions (Amendment) Bill 1991.....
HIS EXCELLENCY THE PRESIDENT: Mr SIT, your remarks should be devoted to the subject of the Trade Descriptions (Amendment) Bill, please.
MR SIT (in Cantonese): Yes, I am speaking on the motion. Just a few moments ago, I heard some Members who spoke in this debate assure the labour sector that there was nothing to be worried about as guarantees had been given by the manufacturers associations that no linking or looping workers would be displaced or laid-off because of this Bill. But now we have the closure of a bank despite the Banking Commissioner's guarantee; so I really wonder how many people would still care to believe in such promises and commitments. Some people may say that it is in the interest of our industries for the Bill to be passed into law. Surely I would not attempt to deny this. But as we all know, the benefits brought about by the passage of this Bill will go only to the capitalists and employers. We do hope that the employers can make profits but, at the same time, let us not forget the interests of the workers. Should they also be taken care of; and, if so, how? The Trade Descriptions (Amendment) Bill 1991, if passed, will only provide the capitalists with legal backing so that they can use Hong Kong's quota for export of products manufactured outside the
territory. That is to say, manufacturers are allowed to reap profits where profits are not due. In the end, what will the workers get? Perhaps they will not even be able to adequately feed themselves, let alone their families. Of course, the number of workers to be affected may be small. Even if it is going to be 20 000, it will still be a small fraction of our working population. But is it because the number is scant that we can afford to neglect these workers? As far as I know, the Labour Advisory Board has not been consulted on this Bill before its introduction to this Council. Could I ask why a Bill of such importance to both the employers and the employees has not been passed to the Board for advice? Why is it that direct dialogue between the business and the labour sectors has not been established to allow both parties to have a better understanding of the problem about which they are concerned? What are the justifications for passing this Bill into law at this point in time and in such a hurry?
Members of this Council may or may not be aware of the hard lot of our working class. They live from hand to mouth. So, in addition to protecting the interests of the capitalists, I earnestly hope that this Council can take into account the difficulties these affected workers may be facing. What social security benefits will they be entitled to if they lose their jobs, bearing in mind that Hong Kong lacks a system of social security? Although mendicancy, an offence under the law, may not necessarily lead to prosecution, yet are we going to let the unemployed workers become beggars? Perhaps they may apply for public assistance, in which case they should register their names with the Honourable Mrs Elizabeth WONG. I believe that the
present Bill, if passed, will inevitably lead to social unrest. With the recent incident still fresh in memory, the passage of this Bill will further undermine the Government's authority and dampen the expectations the public has of the Legislative Council. In view of the lack of thorough consultation, I am opposed to any urgent passage of the Trade Descriptions (Amendment) Bill 1991. Thank you, Sir.
MRS TU: Sir, during this debate I have been impressed with the fact that the strongest supporters of this Bill are manufacturers while its opponents are not all workers union leaders but mainly professionals and others with no vested interests. Sir, in view of the strong opposition both within and without this Chamber may I suggest that this Bill be delayed for further consultation. At this point in time, I am not sufficiently convinced to support it.
MR ALLEN LEE (in Cantonese): Sir, at first I do not intend to speak on this motion regarding the Trade Descriptions (Amendment) Bill 1991. But after listening to several of my honourable colleagues' speeches, particularly the one by the Honourable SZETO Wah to whom I pay full respect, I feel obliged, as Senior Member of this Council,
to openly express my views on this Bill which has in fact been examined by the Legislative Council In-House and the relevant ad hoc group.
Even before this Bill was first introduced to this Council, I knew already that this was going to be a very controversial Bill and anticipated that the bone of contention lay in the conflict of interest among the workers, the employers and the investors. As we all know, export of knitwear products is subject to quota requirements of other importing countries. Hong Kong is not in any position to determine its quota; instead we strive for them. As to the production process, under what conditions will a piece of knitwear be considered as "Made in Hong Kong"? This again is not determined by us but depends solely on the origin rules laid down by other countries. In the case of the United States, basically, a product will be considered to be made in Hong Kong even if the linking and looping process is done outside the territory; but in the case of the European countries the same rule does not apply. Under such circumstances, manufacturers normally would keep their production in Hong Kong. The amendment Bill before us has been thoroughly discussed by the ad hoc group though views expressed have been diverse. This division of views, reflected clearly in the report submitted to this Council by the ad hoc group, was the result of the different interests members of the ad hoc group represented.
Why should I rise to speak then? The Honourable SZETO Wah implied in his speech a while ago that the decision not to defer this Bill seemed to have been made by Members in the In-House meeting. But in view of the controversy arising from this Bill, I am inclined to believe that, instead of further delay, this Bill should be introduced today to allow Members to express their views here in this Council. In fact, the Trade Descriptions (Amendment) Bill 1991 had already been examined and discussed thoroughly before its introduction to this Council. The Honourable SZETO Wah seemed to suggest that some people might worry about the passage of this Bill if it were not put before this Council and passed into law today as the possibility of having the same motion carried in the next Session when the Legislative Council would become more politicized because of the presence of directly elected Members would be remote. Mr SZETO further urged the workers to cast their votes on 15 September to elect those Members who would truly represent their interests. As a matter of fact, I consider myself to be a forerunner among Members of this Council in upholding democracy. In the early Eighties, I told an audience at the University of Hong Kong that we should work towards a democratic government. But democracy and vote-courting are two
different things. The people of Hong Kong should elect their representatives to sit on the Legislative Council. The present attempt to politicize the passage of this Bill is regrettable and, I should say, it casts doubt on the integrity of the Honourable SZETO Wah to whom, as I said before, I pay full respect. As a matter of fact, Mr SZETO should have said, "It's Allen LEE, not some people, who insisted in the In-House meeting that this Bill would remain controversial even if it were delayed for another ten years." To put it in this way, I should say, would be more acceptable to me.
Workers contributed much to the prosperity and stability of Hong Kong today. Factory operators, including myself, have been fully aware of their contribution and that accounts for the improvement of living standards of the workers and the people of Hong Kong as a whole. Why should I say so? My 25 years of experience in factory operation tells me that prosperity has been brought about by way of co-operation, communication and mutual understanding between the business and the labour sectors. Without the much needed capital, how are factory operators going to maintain operation to provide jobs for the workers? What will happen if an employer fails to balance his accounts? Capitalists are always depicted as vampires, exploiting workers to the full. In my view, this will only antagonize the workers in such a way as to prevent further co-operation between the employers and the employees and will, strictly
speaking, be a contempt to this time-honoured mutual co-operation upon which our
success has so long been hinged. It is for this reason that I consider this Bill a controversial one. Mr LEE Cheuk-yan, a union leader who is particularly concerned about the Trade Descriptions (Amendment) Bill 1991, phoned to discuss with me possible solutions to the present problem. He believed that I, having involved in labour matters for so long, should be in a good position to offer help. Because of his call, I contacted a number of manufacturers and asked them of any possible measures which would prevent displacement or layoffs of workers. The rice bowl the Honourable PANG Chun-hoi showed to this Council is by no means strange to me. Over 20 years ago, I already came across rice bowls more broken than that one. I admit that the
well-being and livelihood of workers should be the prime factor for consideration upon passage of this Bill. So, apart from consulting the workers representatives, I also held meetings with manufacturers and more than 200 factory operators and made them offer assurances that no workers would be retrenched upon enactment of this Bill. Many Members asked what if the manufacturers failed to fulfil their promise, bearing in mind that the so-called guarantee, given verbally, would have no legal effect at all. But one must not forget that this Council is here to monitor the matter. Should there be a failure in keeping the promise, this Council can always amend the Ordinance to straighten out the mess arising therefrom. I would say that it would be most tragic for the people of Hong Kong if every matter, social or otherwise, were handled with suspicion and mistrust. It is co-operation, communication and mutual understanding which constitute the working spirit of Hong Kong and which I always advocate. In no way should polarization be encouraged in that the employers and the employees will be divided into two opposing camps. During the last 25 years in Hong Kong, I have never come across any instance of antagonistic working relations between the business and the labour sectors; nor would I like to encounter one in the future. I have seen factory operators wind up business but, with the help and support from the workers, resume operation at a later stage. This should in fact be the essence of today's debate.
I hope Members will consider the call which I gave in the In-House meeting and which I am going to repeat now. Never shall we allow an arbitrary division of employers and employees to widen into two opposing camps; mutual co-operation is what we seek and strive for. In this connection, I support the motion on this Bill, not because I operate factories myself or I am in the knitwear industry, but because I would like to see in this Bill a reaffirmation of the real spirit of Hong Kong. I would request that it be put on record in the Hansard that should any rice bowl be broken, this Council will take action to have it dealt with.
HIS EXCELLENCY THE PRESIDENT: Mr SZETO, are you rising to raise a point which needs elucidating?
MR SZETO (in Cantonese): Yes, Sir.
HIS EXCELLENCY THE PRESIDENT: Mr SZETO, you may speak again, if you want to, in response to something which another Member of the Council has said about your own speech and you wish to correct that point. But you cannot speak again on a substantive or a new point. If you wish to correct some point which you think another Member speaking has misunderstood, please do so.
MR SZETO (in Cantonese): Sir, I should like to ask the Honourable Allen LEE to clarify one point relating to the speech he made a moment ago. As chairman of the In-House meeting on the day in question, could Mr LEE clarify whether the decision to proceed with or defer the present Bill was taken after putting the matter to the vote?
HIS EXCELLENCY THE PRESIDENT: Mr SZETO, I am afraid you would have to rephrase that slightly differently because you are putting Mr LEE in a difficult position: he cannot reply. If you would like to make a comment on that particular point which you think needs clarifying, then you may do so.
MR SZETO (in Cantonese): As far as I can recall, the decision whether to defer the passage of the present Bill was taken without putting it to the vote. Normally, a matter of this kind would call for a vote. But then Mr LEE in taking a decision had this to say: "There is going to be enormous controversy over this one way or the other -- be it deferred or proceeded with. We must get it passed at this meeting."
HIS EXCELLENCY THE PRESIDENT: Mr LEE, you too may correct a point if there has been a misunderstanding. But this must not become a ping pong match between two sides of the Council.
MR ALLEN LEE (in Cantonese): Sir, I cannot see the need for correction. I said earlier that I had taken the decision to have the present Bill laid before the Legislative Council for debate because the members of the ad hoc group were deadlocked over a four to four stalemate.
I stated my stand a moment ago which is that the present Bill be put to the vote before this Council.
HIS EXCELLENCY THE PRESIDENT: Thank you.
FINANCIAL SECRETARY: Sir, I am grateful to Mr James TIEN and members of the ad hoc group for their meticulous consideration of the Bill. I am also grateful for the many views expressed by Members this afternoon. If I would just restate the intention of the Bill. Sir, the Bill is intended, among other things, to enable us to implement a special licensing scheme to remove an unnecessary double requirement on the knitwear industry. That is to say, in respect of certain piece knitted garments for export to the United States, only the panel knitting process as against linking and looping as well, must be done in Hong Kong.
Before I address the concerns raised in the debate this afternoon, I would like to explain the basic principle behind the Bill, namely, that no sector of Hong Kong's economy should be subjected to regulation beyond what is necessary. This principle has been the bedrock of Hong Kong's success because it ensures that our economy is competitive. Most importantly, it has allowed us to maximize the economic benefits and comparative advantages of our geographical location so that we can concentrate our limited resources on whatever we do best in Hong Kong while other activities can move elsewhere.
The arrangements in this Bill fall squarely within this principle. They address a practical problem. Our knitwear industry currently has to meet both the United States requirements for knitting and the Hong Kong requirements for linking and looping in order to export relevant knitwear to the United States with a Hong Kong origin label. Each of these requirements is substantial. Taken together, they constitute an unnecessary regulatory burden on the industry. Our exports must comply with United States rules in order to gain entry into the United States because the
United States can determine origin requirements for goods imported into its territory. We have therefore concluded that it is both unnecessary and unfair to continue to require the industry to meet our rule as well.
Some Members have asked why the change is necessary now, in view of our high rate of utilization of knitwear quota for the United States. Hong Kong faces severe competition from China, South Korea and Taiwan as well as from other emerging suppliers. At a time when the United States market is facing uncertain prospects, average Hong Kong prices of sweaters are 10 to 20% higher than those of our major competitors. Exports to the United States in volume over the last three years declined by more than 10%, although it must be recognized that half of that decline may be attributable to the adverse effects of United States anti-dumping duties on man made fibre sweaters. Taking all these factors into account, the Administration has concluded that we should act now to maintain Hong Kong's competitiveness.
Sir, let me emphasize that in reaching this conclusion we have taken careful account of the possible impact of these proposals on local employment. It is difficult to estimate precisely the numbers involved but our best estimate is that about 2 500 linkers may be affected. That is why we have emphasized in our discussions with representatives of the industry the importance of dealing fairly with any problems which might arise from the new arrangements. We have asked them to consider re-deployment and special arrangements to ensure that any problems including allegations of unfair treatment can be dealt with. I believe the industry is fully apprised of the need to deal reasonably with these issues and, in particular, with any hardship cases that may arise. I understand that the two main knitwear associations have undertaken to Members not to retrench any linking workers if the Bill is passed. I also understand that the associations have also decided to set up a service centre to help resolve any labour problems. The Clothing Industry Training Authority will help meet any training demands and we will also contact the Vocational Training Council for assistance if the need arises. The Labour Department too stands ready to render assistance to workers.
Sir, some Members have expressed concern that workers who are engaged in manufacturing processes that come after linking and looping may also be affected by the proposed changes. Such manufacturing processes can of course already be performed elsewhere and some manufacturers are already following this option. It is difficult to estimate with accuracy how many additional jobs might now be affected as manufacturers move the linking and looping process elsewhere. Our best
information on 1989 data is that the workforce at the operative level engaged in manufacturing processes that follow linking and looping is some 13 000. The knitwear affected by the proposed changes comprises some 18% of Hong Kong's knitwear access to restrained markets. On this basis, the number of additional workers who might be affected by the change should not exceed some 2 000 or 2 500 but because of the nature of the work we believe that most will be able to find a new job without much difficulty, given that there are some 14 000 reported vacancies in the clothing
industry.
Members have also asked whether we should press the United States to change their rules. I am afraid that this is not a practicable proposition. In fact, we have endeavoured on many occasions since 1985 to persuade the United States to revert to the old rules. We have even taken up the issue with the Textile Surveillance Board in Geneva which ruled in our favour. Mr James TIEN and Mr Stephen CHEONG raised this question again with the United States chief textile negotiator on his trip to Hong Kong a few weeks ago. We did the same in Washington earlier this month but we have been unable to persuade them to revert to the old rules. In the end, we have to turn to the present proposals to address the problem once and for all.
Sir, a number of Members have expressed concern about the integrity of our export control scheme. This is an important question. Hong Kong has always taken seriously our obligations to enforce our textiles agreement. To this end we have put in place a textile export control scheme which is widely recognized by our trading partners as one of the most effective in the world. This control system is backed up by
vigorous enforcement by the Customs and Excise Department. The Administration recognizes that the changes introduced by the Bill will require special control arrangements to maintain the integrity of our control system. We intend to introduce a special licensing and control scheme designed to enforce different requirements relating to different markets. The new scheme will be modelled on existing arrangements. The Trade Department and Customs and Excise Department will closely monitor this special control scheme and introduce improvements as necessary.
Some Members have expressed concern at the apparent lack of consultation with the labour side, I regard this as an important point. The Bill is primarily concerned with trade arrangements; thus labour consultation was not made prior to the introduction of the Bill. Nevertheless, since the Bill was gazetted on 26 April 1991 we have received and noted comments from many quarters including views in no small measure from the labour side. If the Bill is passed, we trust that the labour side
will feel able to work with the industry, and I am sure they will be able to work with the industry to help to identify any problems which may arise and any measures to address those problems. Certainly, Sir, the Administration will do everything it can to facilitate this process.
Lastly, Sir, our overseas knitwear market is an extremely competitive one. The knitwear industry like any other sector in Hong Kong should be allowed and required to adjust to market forces. Otherwise it will lose out for want of maintaining its competitive edge. In the long run, that could only lead to damage to the industry and consequential damage to its workforce and loss of jobs. The Bill before us will ensure that the industry is not unduly fettered as it competes in the United States market.
Sir, I beg to move.
Question on the Second Reading of the Bill put.
Voice votes taken.
The President stated that he thought that the Ayes had it.
MR MARTIN LEE: May I have a division please?
HIS EXCELLENCY THE PRESIDENT: I am prepared to give a division. The Clerk will read out the names of Members of the Council. Members should say "aye" if they support the motion, "no" if they oppose the motion or they may abstain from voting.
The Chief Secretary, the Attorney General, the Financial Secretary, Mr Allen LEE, Mrs Selina CHOW, Miss Maria TAM, Mrs Rita FAN, Mr CHENG Hon-kwan, the Secretary for Home Affairs, Mr CHUNG Pui-lam, Mr HO Sai-chu, the Secretary for Planning, Environment and Lands, Mr NGAI Shiu-kit, the Secretary for Transport, Prof. POON Chung-kwong, the Secretary for Security, Mrs Rosanna TAM, Dr Daniel TSE, Mr Andrew WONG, the
Secretary for Economic Services, Mr Edward HO, Mr Ronald ARCULLI, Mr Martin BARROW, Mr Paul CHENG, the Secretary for Health and Welfare, Mr David CHEUNG, Mrs Nellie FONG, Mrs Peggy LAM, Mrs Miriam LAU, the Secretary for Education and Manpower, Mr W.S. LAU,
Mr J.D. McGREGOR, Mrs SO CHAU Yim-ping, Mr James TIEN and Mr Peter WONG voted for the motion.
Mr CHAN Ying-lun, Mr Martin LEE, Mr PANG Chun-hoi, Mr SZETO Wah, Mr TAI Chin-wah, Mr TAM Yiu-chung, Mr Ronald CHOW, Mr Daniel LAM, Dr C.H. LEONG, Miss LEUNG Wai-tung, Mr Kingsley SIT and Mrs Elsie TU voted against the motion.
Mr David LI abstained.
The President announced that there were 35 votes for the motion, 12 votes against it and one abstention. He declared that the motion on the Second Reading of the Bill was carried.
Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
SUPPLEMENTARY APPROPRIATION (1990-91) BILL 1991
Resumption of debate on Second Reading which was moved on 3 July 1991 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
OFFICIAL SOLICITOR BILL 1991
Resumption of debate on Second Reading which was moved on 24 April 1991 Question on the Second Reading proposed.
MR PETER WONG: Sir, the Official Solicitor Bill 1991 is thankfully a less controversial Bill and was introduced into the Legislative Council on 24 April 1991. The purpose of the Bill is to create a statutory post of "Official Solicitor", to appoint the Director of Legal Aid as the first incumbent of the post and to provide for his powers and duties.
In view of the legal profession's concern, an Legislative Council ad hoc group was formed to study the Bill. The ad hoc group has held a total of five meetings, including two meetings with the Hong Kong Bar Association and one meeting with the Administration.
The ad hoc group welcomes the creation of the Official Solicitor because at present there is no single public officer whose duty is to protect the interests in litigation of people under legal disability. The present arrangement that the duties associated with the Official Solicitor are performed by several public officers such as the Registrar General, the Registrar, Supreme Court, the Crown Solicitor and so on is obviously unsatisfactory. Hence, the creation of the statutory post of Official Solicitor is a big improvement over present arrangements.
However, while studying the Bill, the ad hoc group is concerned about two main issues. The first one is the possible conflict of interests between the office of the Director of Legal Aid and that of the Official Solicitor which in fact are occupied by the same person. The second issue is the use of and in the Chinese text
of the Bill for "barrister" and "solicitor" respectively.
6.00 pm
HIS EXCELLENCY THE PRESIDENT: Mr WONG, I must interrupt you. It is now six o'clock and under Standing Order 8(2) the Council should adjourn.
CHIEF SECRETARY: Sir, with your consent, I move that Standing Order 8(2) should be suspended so as to allow the Council's business this afternoon to be concluded.
Question proposed, put and agreed to.
HIS EXCELLENCY THE PRESIDENT: Mr WONG, please continue.
MR PETER WONG: Thank you, Sir. Here, I am pleased to say that through the co operation of the Administration, these two issues have been satisfactorily resolved.
On the first issue, it was acknowledged that it would have been preferred if the office of the Official Solicitor was totally separate and independent. However, this was not practical because of the small amount of work expected. The Director of Legal Aid has assured the ad hoc group that special arrangements will be made to separate the activities of the Office of Official Solicitor from that of the Director of Legal Aid. Only officers assisting the Director in his capacity as Official Solicitor would have access to the Official Solicitor's case files. Similarly, departmental files of other parties to the same proceedings would not be available to officers assisting the Director as Official Solicitor. In addition, a report on the operation of the Official Solicitor Office with special reference to the issue of conflict of interest will be prepared on an annual basis for the information of Members of this Council. Furthermore, a review on the scheme will be conducted in three years' time to assess whether a separate office should be established.
As regards the second issue, the Hong Kong Bar Association strongly objected to the adoption of the term in the Chinese text as an equivalent for "barrister". As all the other issues concerning the Bill have been resolved and in order not to hold up the passage of the Bill, the Administration has agreed that a more neutral term that is "legal practitioner" should be used to replace the two terms "barrister" and "solicitor". By so doing, the conflict over the choice of Chinese terminology for the two terms in question is thereby avoided.
Finally, I would like to thank my colleagues for their contribution, particularly their expert advice, during the scrutiny of the Bill. I said "expert", because all the members of the ad hoc group are either solicitors or barristers and I am the only layman in the group. My special thanks also go to the Administration for their
understanding.
Sir, with these remarks, I support the Bill.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1). SURVEYORS REGISTRATION BILL 1991
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