1 HONG KONG LEGISLATIVE COUNCIL -- 13 November 1991 HONG KONG LEGISLATIVE COUNCIL -- 13 November 1991 1
OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 13 November 1991
The Council met at half-past Two o'clock
PRESENT
THE DEPUTY PRESIDENT
THE HONOURABLE JOHN JOSEPH SWAINE, C.B.E., Q.C., J.P.
THE CHIEF SECRETARY
THE HONOURABLE SIR DAVID ROBERT FORD, K.B.E., L.V.O., J.P.
THE FINANCIAL SECRETARY
THE HONOURABLE NATHANIEL WILLIAM HAMISH MACLEOD, J.P.
THE ATTORNEY GENERAL
THE HONOURABLE JAMES KERR FINDLAY, O.B.E., Q.C., 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 MRS RITA FAN HSU LAI-TAI, O.B.E., J.P. THE HONOURABLE HUI YIN-FAT, 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 SZETO WAH
THE HONOURABLE TAM YIU-CHUNG
THE HONOURABLE ANDREW WONG WANG-FAT, O.B.E., J.P. THE HONOURABLE LAU WONG-FAT, O.B.E., J.P.
THE HONOURABLE EDWARD HO SING-TIN, J.P.
THE HONOURABLE RONALD JOSEPH ARCULLI, J.P.
THE HONOURABLE MRS PEGGY LAM, M.B.E., J.P.
THE HONOURABLE MRS MIRIAM LAU KIN-YEE, J.P. THE HONOURABLE LAU WAH-SUM, O.B.E., J.P.
DR THE HONOURABLE LEONG CHE-HUNG
THE HONOURABLE JAMES DAVID MCGREGOR, O.B.E., I.S.O., J.P. THE HONOURABLE MRS ELSIE TU, C.B.E.
THE HONOURABLE PETER WONG HONG-YUEN, J.P.
THE HONOURABLE ALBERT CHAN WAI-YIP
PROF THE HONOURABLE EDWARD CHEN KWAN-YIU THE HONOURABLE VINCENT CHENG HOI-CHUEN THE HONOURABLE MOSES CHENG MO-CHI
THE HONOURABLE MARVIN CHEUNG KIN-TUNG, J.P. THE HONOURABLE CHEUNG MAN-KWONG
THE HONOURABLE CHIM PUI-CHUNG
REV THE HONOURABLE FUNG CHI-WOOD
THE HONOURABLE FREDERICK FUNG KIN-KEE THE HONOURABLE TIMOTHY HA WING-HO, M.B.E., J.P. THE HONOURABLE MICHAEL HO MUN-KA
DR THE HONOURABLE HUANG CHEN-YA
THE HONOURABLE SIMON IP SIK-ON, J.P. DR THE HONOURABLE LAM KUI-CHUN
DR THE HONOURABLE CONRAD LAM KUI-SHING THE HONOURABLE LAU CHIN-SHEK
THE HONOURABLE MISS EMILY LAU WAI-HING THE HONOURABLE LEE WING-TAT
THE HONOURABLE GILBERT LEUNG KAM-HO
THE HONOURABLE ERIC LI KA-CHEUNG, J.P.
THE HONOURABLE FRED LI WAH-MING
PROF THE HONOURABLE FELICE LIEH MAK, O.B.E., J.P. THE HONOURALBE MAN SAI-CHEONG
THE HONOURABLE NG MING-YUM
THE HONOURABLE STEVEN POON KWOK-LIM
THE HONOURABLE HENRY TANG YING-YEN, J.P. THE HONOURABLE TIK CHI-YUEN
THE HONOURABLE JAMES TO KUN-SUN
DR THE HONOURABLE SAMUEL WONG PING-WAI, M.B.E., J.P. DR THE HONOURABLE PHILIP WONG YU-HONG
DR THE HONOURABLE YEUNG SUM
THE HONOURABLE HOWARD YOUNG
ABSENT
THE HONOURABLE MARTIN GILBERT BARROW, O.B.E., J.P.
IN ATTENDANCE
MR GRAHAM BARNES, C.B.E., J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
MR DAVID ALAN CHALLONER NENDICK, C.B.E., J.P. SECRETARY FOR MONETARY AFFAIRS
MRS ANSON CHAN, J.P.
SECRETARY FOR ECONOMIC SERVICES
MR MICHAEL LEUNG MAN-KIN, J.P. SECRETARY FOR TRANSPORT
MR RONALD JAMES BLAKE
SECRETARY FOR WORKS
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.
Employees' Compensation Ordinance (Amendment
of Second Schedule) Order 1991................................ 397/91
Employment of Children (Amendment) Regulations
1990 (Commencement) Notice 1991.................................. 402/91
Factories and Industrial Undertakings
(Amendment) Ordinance 1990
(Commencement) Notice 1991................................... 403/91
Rules of the Supreme Court (Amendment)
(No. 3) Rules 1991................................................... 404/91
Pleasure Grounds (Regional Council) (Amendment)
(No. 4) Bylaws 1991................................................. 405/91
Sessional Paper 1991-92
No. 17 -- Hong Kong Industrial Estates Corporation
Annual Report 1990-1991
Address by Member
Hong Kong Industrial Estates Corporation Annual Report 1990-1991
MR STEPHEN CHEONG: Mr Deputy President, I am pleased to report that 7.5 hectares of land was granted in the financial year 1990-91 to eight companies, from the Industrial Estates Corporation. This was in line with the Corporation's forecast. Assuming that this trend continues, our remaining land bank of 28 hectares is likely to be granted in full by the end of 1994. In early 1994, however, the first phase of the Tseung Kwan O Industrial Estate is expected to come on stream with 18 hectares of fully-serviced industrial land ready for use. The rest of that estate providing another 50 hectares is expected to be available in 1996. Thus, the Corporation is ensuring a continuous supply of land for industrial use into the next century.
In view of the changing characteristics of industry in Hong Kong, the Board of the Corporation reviewed and broadened its selection criteria during the year. The criteria now allow for specialized and sophisticated supporting services such as research and development, technical centres and prototype design to be accommodated, without necessarily being linked to production facilities on the estates, but these services must be of a nature that cannot be accommodated in multi-storey industrial buildings in Hong Kong.
Mr Deputy President, the land leases of the companies already on the estates are being extended to the year 2047. Up to now, 33 subleases have been processed and it is hoped to be able to deal with the remaining 73 over the next one and a half years.
New factories are being built. Sixteen of these came into operation during the
year under review and four since. The workforce on the two estates in Tai Po and Yuen Long now numbers more than 17 000.
Work on the new estate at Tseung Kwan O is progressing well. The contract for the reclamation was awarded to the China State Construction Engineering Corporation/Van Oord ACZ B.V. Joint Venture on 2 August 1991, at a sum of HK$507 million. Dredging for the seawalls and other preliminary work started on 19 August 1991. An 8 000 cubic metre dredger has arrived in Hong Kong and is being prepared to extract marine sand from an area of sea bed in the Tathong Channel to provide fill for this large reclamation. Early possession of almost all areas on Fat Tong Chau (Junk Island) needed for the Estate has been given to the Corporation. The Board and executives of the Corporation with assistance from the Project Manager/South East New Territories will be monitoring the progress of work to ensure that the land in the first stage will be available in early 1994.
Finally Mr Deputy President, allow me to draw Members' attention to the current healthy state of the financial position of the Industrial Estates Corporation. With hard work and a little bit of luck the Board and the Corporation's executives have completely turned around the Corporation in less than seven years.
I would like to take this opportunity to thank everybody concerned, especially the executives of the Corporation.
DEPUTY PRESIDENT: We proceed now to questions. We do have a long agenda for today with 30 speakers for the motion debate. I therefore propose to limit question time to 30 minutes with 10 minutes for each question.
Oral answers to questions
Quality of public housing units
1. MR LEE WING-TAT asked (in Cantonese): In view of the complaints about building defects and substandard workmanship of newly completed flats in Public Housing Estates and Home Ownership Schemes, will Government inform this Council:
(a) what quality standards are adopted for public sector housing and whether these will be reviewed and improved; and
(b) what measures and mechanisms are there to ensure that the prescribed quality standards are achieved; and that problems identified within the Defects Liability Period are properly rectified?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, both structural and quality standards are included in the conditions of contract for the construction of Public Housing Estates and Home Ownership Schemes. The structural standards are very similar to, if not more stringent than, the statutory requirements set out in the Buildings Ordinance and its regulations. They include specifications on items ranging from the materials to be used for the construction of the buildings, the wind effects which must be designed for and fire resisting materials. Quality standards apply to all materials including finishings and fittings.
The Housing Authority has, on an on-going basis, reviewed and sought to improve the building standards and related procedures on the quality of its building projects. To this end, a number of measures aimed at improving the level of construction workmanship have been adopted in recent years. These include that:
(a) It established a separate list of approved building contractors to provide for more direct control in April 1990.
(b) It required listed contractors to obtain registration under the International Standards Organizations quality code 9000 by April 1993 if they wish to continue to work for the Authority after that date, and it is funding a consultancy to advise the industry on the best way to achieve registration.
(c) Thirdly, it has established a comprehensive and objective system for the assessment of contractors' performance which relates directly to the contractors' eligibility to tender in the future.
(d) And lastly, it maintains a continuous dialogue with the construction industry to develop ways to improve working conditions and practices within the industry.
Mr Deputy President, all the measures I have outlined are aimed at ensuring that the prescribed building standards are actually achieved. The Housing Authority has also further tightened up site supervision. Buildings will not be certified complete nor taken over unless the Housing Department is fully satisfied that the standards are complied with. All defects identified within the 12-month maintenance period will be dealt with under the terms of the contracts.
MR LEE WING-TAT (in Cantonese): Will the Administration inform this Council of the system we have to supervise the works of the public housing projects? In view of the residents' severe criticism of the quality of the public housing estates, will the Administration consider reviewing and improving the system; and will appropriate penalties be meted out to contractors for substandard housing estates?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, in respect of Home Ownership and public rental housing, the developer is the Hong Kong Housing Authority, not the Hong Kong Government. But I understand that the Authority's contracts are supervised by professional and technical staff -- full-time teams supervising each contract. Certainly the standard of supervision is quite up to that of well supervised site projects in Hong Kong.
To answer the question as to whether supervision will be improved, I understand that the Authority considers that their supervisory teams are up to standard and, generally speaking, that the supervision for these very big contracts, with many, many flats, is up to standard.
MRS SELINA CHOW: Mr Deputy President, given that some of the complaints that have arisen are levelled against substandard quality PSPS flats, will Government please inform this Council what remedial and preventive measures are adopted to address this problem?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, the Housing Authority's involvement in PSPS is less direct in that the contractor is under the direct supervision of the developer and the works contract is let by the developer. I understand that the Housing Authority's position is very much one of monitoring
the developer's contractor and ensuring, on behalf of the land authority, that the developer has in fact fulfilled the terms of the lease which he has tendered for and won, and later on, following the occupation, of acting as an intermediary between the new owners and the developer.
MR EDWARD HO: Mr Deputy President, will the Secretary inform this Council how many residential units the Housing Authority has built in the last three years, how many complaints they have received in the last three years, and how many they have rectified?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I do not have those statistics. The only statistic which comes closest to what Mr HO is asking for is that they do about 200 000 repairs each year in public rental estates and Home Ownership Scheme estates.
MR ALBERT CHAN (in Cantonese): As far as public housing is concerned, complaints by the public have been centred around water seepage and concrete spalling. But it always takes a very long time for the Housing Department to complete the repairs. Would the Administration inform this Council whether time limits for different
repairs will be imposed as a safeguard against delays by the Housing Department staff?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I am not aware of any proposal to impose time limits on the Housing Authority but I am aware of steps being taken by the Authority itself, under the encouragement of its members, to improve its own performance. And they have, for instance, recently taken steps to ensure that funding problems do not hold up repairs, the responsibility for which may be in doubt.
MR FREDERICK FUNG (in Cantonese): Mr Deputy President, whenever repairs of HOS estates had to be carried out time and again, the chairman of the Housing Authority maintained that the problem was due to shortage of manpower in the supervision of the works of the building projects. As a matter of fact, this has always been the
problem of many new HOS estates. The Secretary for Planning, Environment and Lands mentioned a while ago that four or five measures had been adopted to deal with the problem, but none of them appeared to be relevant in the context of the manpower shortage problem the chairman of the Housing Authority has been referring to. To put it in another way, the measures might just be empty talks if they are there with nobody to carry them out. May I ask how the Administration is going to deal with this?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I understand that the shortage of manpower, to which the chairman of the Housing Authority must have been referring, is not necessarily permanent and it is only relative. The fact that there is some shortage of manpower does not mean to say that a great deal of attention is not being paid to repairs by the Authority.
MRS PEGGY LAM (in Cantonese): Mr Deputy President, will the Administration inform this Council whether it will consider making contractors liable for damages if residents are injured as a result of defects due to the substandard quality of the housing estates?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, that is a very difficult question to answer in the general terms in which it is expressed. All I can say is that there are disciplinary arrangements for contractors who do not fulfil their obligations, and if it was established that one was not doing so, I am certain that the Authority would be taking the appropriate disciplinary action.
REV FUNG CHI-WOOD (in Cantonese): Mr Deputy President, in inviting tenders for the construction of public housing estates, the Housing Authority normally will award the contract to the lowest tender - what we call "the lowest bid has it." Contractors after all are after profit; so it is often the case that contractors will compromise quality in asking for a lower price. Does the Housing Authority have any other
criteria in selecting the contractors so as to avoid always awarding the contract to the lowest tender?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I understand that the tenders in the Housing Authority are awarded after proper examination of the details and by reference to a tender committee. This is a totally normal method of awarding contracts in Hong Kong which is adopted by the Government, by the Housing Authority and by most people in the private sector; so I have no reason to believe that the award of contracts or the results of the award of contracts have the effects which the Rev FUNG has suggested.
Residential development in north Lantau
2. DR SAMUEL WONG asked: Will Government inform this Council what plans there are to make land available for residential development in north Lantau along the proposed new road to the Chek Lap Kok Airport?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, residential development in north Lantau will be centred in the two valleys of Tung Chung and Tai Ho. It cannot be sited along the actual shoreline because these areas are mostly affected by the Noise Exposure Forecast (NEF) 25 relating to the Chek Lap Kok Airport and also to traffic noise along the highway.
Tung Chung is planned for an eventual population of about 160 000 of which 20 000 should be provided for by 1997. The housing to be provided in that first stage is being planned to be of maximum assistance in the commissioning of the airport, which will need some of its workforce to be housed locally even before it opens. Tai Ho development will not be started substantially until about 2004, with about 50 000 people planned to be provided for before 2011 and some 100 000 thereafter.
DR SAMUEL WONG: Mr Deputy President, on the assumption that the railway to Chek Lap Kok Airport will be built in time, will Government initiate as many as possible above-station residential developments?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, the railway station developments at present come into the centre of Tung Chung; the centre around the railway is seen as being at least partially needed for commercial purposes,
probably connected with the eventual development of the airport, and also for residential purposes. So in fact the nexus around the Tung Chung development will be provided with a lot of residential premises because it is recognized that there will be a lot of people who will want to go into town as well as working in the airport area.
MR RONALD ARCULLI: Mr Deputy President, in terms of the first phase of the housing to be provided in Tung Chung, would the Secretary for Planning, Environment and Lands inform this Council of the timescale and the numbers that he is thinking of in relation to the reference he made in his answer to "providing maximum assistance in the
commissioning of the airport"?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, if Mr ARCULLI means how many of the 30 000 are going to be people and their families connected with the airport, our ideas are only very vague; in fact we are, even at this time, working on asking the big users of the airport how many people they are actually going to need. But we visualize at this fairly early stage of planning that something like housing for families of between 20 000 and 30 000 will be necessary for the early stages of the airport and it will increase thereafter.
MR HOWARD YOUNG: Mr Deputy President, the 20 000 mentioned in the reply, by my reckoning, equates to about 4 000 households which in fact are far less than the number of people related to running the current airport, let alone commissioning. So has the Government given any thought as to what measures can be taken to try to ensure that people who are related to the airport get some sort of priority in acquiring the housing facilities, rather than let them fall prey to property speculation or whatever?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, certainly thought will be given to ensure that this housing is used for the benefit of the airport.
MR GILBERT LEUNG (in Cantonese): Mr Deputy President, according to the information provided by the Secretary, Tung Chung will be home to 160 000 people. Will the
Administration inform this Council how many of these 160 000 people will be living in private residential developments and how many will be living in public housing units and Home Ownership Scheme flats?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, as I mentioned in my reply, the 160 000 is a very long-term target; it goes right into the next century. At present, I think we are visualizing numbers of something like 40 000 or 50 000 in public housing but that could well change and I would not wish to be held to that figure later.
MR EDWARD HO: Mr Deputy President, my question has been partly asked but on the other hand I would like to ask: when the public housing tenants move into north Lantau, will adequate community facilities be provided?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, we will try and ensure that adequate public facilities are provided.
MRS SELINA CHOW: Mr Deputy President, in fact Mr Gilbert LEUNG has asked part of my question, but could the Secretary advise how many of the 20 000 who are supposed to be moving in by 1997, will be housed in private developments and how many in public housing; in other words, what is the planned proportion?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I cannot provide the figure at this stage actually, but it is about half and half at present.
MR LEE WING-TAT (in Cantonese): Mr Deputy President, at present Tung Chung is a low density residential area with a fishing village, a country park, some heritage features and sound ecological environs. Will the Administration inform this Council whether or not such an environment will be preserved in future developments?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, it is inevitable
the valley is to be urbanized. On the other hand, some of the villages will be retained in their present position and certainly the landmarks and heritage features of the village also; there is no reason for them to be moved. But of course it is not going to be rural anymore; it is going to be a town.
MR ALBERT CHAN (in Cantonese): Mr Deputy President, the Secretary mentioned in his reply the areas affected by airport noise. Will the Administration inform this Council whether it intends to release information on this in the near future? Moreover, the two studies undertaken by the two consultancies in the past came to almost entirely different conclusions as regards the areas that would be affected by airport noise. Will the Administration engage another independent consultancy to carry out a third assessment?
DEPUTY PRESIDENT: It is beginning to be a bit remote from residential development. Can you answer that, Secretary for Planning, Environment and Lands?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, the answer to the first part of the question is certainly yes, the Government will. I was under the impression that the public was aware of the noise affected areas, the NEF 25, to which I referred in my main answer.
The answer to the second part is probably no, because I do not think such discrepancy as there is -- and I believe the discrepancies have been reconciled in any case -- is significant.
Pipe burst in Choi Hung
3. MRS RITA FAN asked: In connection with a recent incident involving the bursting of a water pipe in Choi Hung area, will Government inform this Council :
(a) what are the standard procedures for handling such emergencies and the response time;
(b) what is the estimated quantity of water lost; and
(c) whether the cause of the incident has been identified and whether any party is to be held responsible?
SECRETARY FOR WORKS: Mr Deputy President,
(a) Reports of water main bursts are telephoned, usually by the police but sometimes by the general public, to the Technical Complaints Centre of the Water Supplies Department. They are referred to the Duty Officer at the nearest Depot, and for the Choi Hung incident this was the Kowloon Argyle Street Depot. The Duty Officer sends one of the 24-hour emergency turncock gangs to the burst location to turn off the necessary valves. This stops the water flow and enables the burst to be repaired. The time to reach the site depends upon traffic conditions, but is typically half an hour in urban areas. Because the water mains are normally in a network system, several valves have to be turned off, some of which may be some distance from the actual burst location. For large diameter mains, and where there are problems of flooding, exceptionally longer time may be necessary to locate and close all of the valves to stop the flow. For the Choi Hung incident the report was received at the Technical Complaints Centre, the first gang arrived at the burst location some 50 minutes later. It then took two hours in difficult flooded conditions to locate and turn off seven valves in the network.
Answering the second part, Mr Deputy President,
(b) A best estimate of the quantity of water lost at Choi Hung is 18 000 cu m which is approximately 0.72% of the daily consumption.
And for the last part,
(c) I understand that this burst was due to a contractor working on a Highways Department road intersection contract, who damaged the water main with a backhoe digger whilst excavating for an overhead sign foundation. Action is now underway to recover the costs of repair works, the Water Supplies Department staff costs and the cost of water from the contractor.
MRS RITA FAN: Mr Deputy President, although the loss of water in this particular
instance is estimated to be only at 0.72% of the daily consumption, this is still a significant waste in our present situation of water shortage. Will the Administration look into ways and means of turning off the appropriate valves in the network quicker, for example, by sending out different teams to different locations to close the valves simultaneously?
SECRETARY FOR WORKS: Mr Deputy President, this is in fact the case now. Each incident, when it is received, is reviewed by an Assistant Waterworks Inspector who, if necessary, on being apprised of the magnitude of the burst, will send additional turncock gangs. At Choi Hung, a second gang was sent out.
MR VINCENT CHENG: Mr Deputy President, will the Secretary inform this Council whether the Government will consider imposing fines to deter such negligence?
SECRETARY FOR WORKS: Negligence, Mr Deputy President, is difficult to prove and I cannot give a direct answer. I would say that in every incident involving an identified cause -- and part of the problem is to identify the actual cause -- full recovery of cost is sought on each occasion.
MR HUI YIN-FAT: Mr Deputy President, with reference to paragraph (c) of the Secretary's reply, could the Administration inform this Council how many incidents of bursting of water pipes have occurred in the past three years, and in how many cases has the Administration been successful in recovering the cost of repairs and that of water wastage?
SECRETARY FOR WORKS: Mr Deputy President, I can only respond to a certain part of Mr HUI's question. I can say that the incidence of bursts over the last three years has been approximately 1 000 per year. Of these, approximately 40% are usually identifiable with activities in a particular area, in other words, roadworks of some sort or other. In those instances the contractor involved would be responsible for making good the costs that I have referred to earlier.
As regards the actual amounts that have been recovered, in terms of both money
and number of incidents, I do not have those figures available today. DEPUTY PRESIDENT: Would you be able to compile these and supply them in writing? SECRETARY FOR WORKS: Yes, I will, Mr Deputy President. (Annex I)
DR LAM KUI-CHUN: Mr Deputy President, from the answer given by the Secretary for Works, occurrence of bursting of water pipes appears to be quite frequent. Would the Secretary for Works inform this Council:
(1) of the commonest causes of such bursts in the last three to five years; (2) of the frequency of their occurrence;
(3) of the measures taken to minimize their recurrence?
SECRETARY FOR WORKS: Mr Deputy President, of the causes, approximately 40% are due, as I said earlier, to works in the immediate vicinity. Of the remaining 60%, some 40% of those can be in fact traced back to works which have been completed in the area and there may be some latent problem which has caused the mains in the area to subside. Some of the causes, approximately 10%, are related to vibration from traffic. Some 7% are eventually found to be due to some deterioration of the materials -- the water mains or the fittings themselves. We have established a working group between Water Supplies Department and Highways Department to actually analyse the statistical records which are available of such incidents, and we expect to receive a report on this by February, which will then determine if there are any further improvements that can be made to the present control systems to reduce the incidence of such bursts.
MRS ELSIE TU: Mr Deputy President, actually my question has been answered but would the Secretary confirm that there were three similar bursts in Kwun Tong in four days -- that is to say the same district? And such being a regular feature in Kwun Tong, would the Secretary advise what is being done about it? I think it needs
investigation.
SECRETARY FOR WORKS: Mr Deputy President, I do not have information as to three bursts in four consecutive days, if that is the particular situation. There are, certainly, major roadworks in that area and I can only look into this and give a response.
DR CONRAD LAM (in Cantonese): Mr Deputy President, this incident of water main burst caused floodings in certain areas of the Choi Hung MTR station. In fact, a person was drowned under similar circumstances at the same MTR station last year. Will the Administration inform this Council what measures it will take to prevent Choi Hung MTR station from flooding caused by bursts or other factors? Besides, are the
frequent floodings in Choi Hung MTR station due to flaws in its structural design?
SECRETARY FOR WORKS: Mr Deputy President, I will attempt an answer to this. The problem with Choi Hung MTR Station relates to the Choi Hung subway which was constructed some considerable time ago. The geometry of that subway is such that to suit the levels of the road and the access the subway is lowest at its middle point. This means that if there is any heavy rainfall, or water as from a burst, the subway does itself fill up very quickly. There are of course sumps and pumps which are regularly maintained to remove water from the subway. But if the water which is coming in exceeds a certain rate, then of course the design of the pumps is such that the subway itself is likely to flood, as has happened. The MTR Station itself is protected against this by way of flood-gates and the problem relates specifically to the subway and not to the MTR Station.
MR NG MING-YUM (in Cantonese): Mr Deputy President, will the Administration inform this Council whether consideration has been given to further improving the contingency measures currently adopted to deal with such emergencies? If yes, what are the details of the improvements?
SECRETARY FOR WORKS: Mr Deputy President, as I mentioned, a working group has been established and they will be looking into improvements in the measures available to us at the moment.
DR SAMUEL WONG (in Cantonese): Mr Deputy President, it took the 24 hour emergency turncock gang 50 minutes to arrive at the burst location; was such a delay due to shortage in resources and manpower? In normal circumstances, how many 24 hour emergency turncock gangs are there in each region of the Water Supplies Department? Does the Department have sufficient resources to carry out preventive maintenance, like regular checks on leakage and regular replacement of old and worn-out water mains?
SECRETARY FOR WORKS: The manpower resources available at this particular depot on a Sunday -- it was a Sunday at the time of this incident -- are 13 which represents four turncock gangs. At this particular incident the turncock gangs were already out and had to be redirected to this burst -- initially one gang, followed up very quickly by a second gang. Again, the availability of works staff on these occasions will be monitored by the works group who will be going back over the statistics which are available to determine whether the numbers are adequate.
The question of monitoring and checking on the existing system is very much under review. As I mentioned earlier, the number of bursts which can be traced to deterioration of the existing system is quite small, something of the order of 7%. We will obviously look into this as part of the working group's terms of reference to determine if there are any improvements in that area as well.
Written answers to questions
Right of abode for foreign nationals in Hong Kong
4. MISS EMILY LAU asked: On 12 December 1990 the Secretary for Security informed this Council that Government was then considering how to legislate to give the right of abode to foreign nationals who have ordinarily resided in Hong Kong for a continuous period of seven years or more and who have taken Hong Kong as their place of permanent residence. Will Government inform this Council of the reasons why no such
legislative proposals have yet been published; and when they will be? SECRETARY FOR SECURITY: Mr Deputy President, Article 24 of the Basic Law sets out
the classes of persons who will be permanent residents of the Hong Kong Special Administrative Region (HKSAR) and who will accordingly be entitled to right of abode in the HKSAR.
Under this Article of the Basic Law, persons not of Chinese nationality shall be permanent residents of the HKSAR if they have entered Hong Kong with valid travel documents, have ordinarily resided in Hong Kong for a continuous period of not less than seven years and have taken Hong Kong as their place of permanent residence before or after the establishment of the HKSAR.
We wish to introduce an amendment as soon as we can to give the right of abode in Hong Kong to this class of residents. For this purpose, we need to agree certain matters with the Chinese, for example, the mechanism and requirements involved in taking Hong Kong as one's place of permanent residence. We are discussing these matters with the Chinese in the Joint Liaison Group, and will prepare the necessary legislation after these discussions have been completed.
We have considered how to align the Immigration Ordinance with the Basic Law, and have raised this in the Joint Liaison Group as part of a package of proposals on right of abode. We hope that these proposals will soon be discussed. If we get a positive response, we will introduce the necessary legislation as quickly as
possible.
Bill of Rights' bearing on the Immigration Ordinance
5. MISS EMILY LAU asked: Under the Immigration Ordinance, permanent residents include, among others, persons of Chinese race who have at any time been ordinarily resident in Hong Kong for a continuous period of not less than seven years. Has Government reviewed this provision in the context of the Bill of Rights' protection against racial discrimination; and, if so, what action does it propose to take? SECRETARY FOR SECURITY: Mr Deputy President, the First Schedule to the Immigration Ordinance sets out the criteria for determining permanent residence status. We have reviewed this provision recently.
The reference to "Chinese race" was introduced in 1971 in order to enhance the civil and political rights of a major section of Hong Kong's population, namely those who had come from China and had made Hong Kong their home. This could only be achieved
at the time by using the racial criterion to identify this class of persons. Since its introduction, this special measure has achieved its objectives. The advice we have received is that it is consistent with the Bill of Rights and with our obligations under the United Nations International Convention on the Elimination of All Forms of Racial Discrimination. However, the existing provisions will lapse in 1997, and we will take steps before then to align the Immigration Ordinance with the Basic Law, which confers right of abode on the basis of nationality and citizenship rather than on the basis of race.
Advisory Committee on Private Building Management
6. MR FRED LI asked: Will the Government inform this Council whether there are plans to dissolve or suspend the Advisory Committee on Private Building Management and if so, what are the reasons; and are there plans to dissolve the Building Management Co-ordination Teams in the various District Offices?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, the Advisory Committee on Private Building Management was first appointed by the Chief Secretary in November 1988. Its main functions were to review the effectiveness of existing policies on the management of private buildings and to recommend appropriate measures to improve their
management.
Over the last three years, the Advisory Committee had completed the examination of the major policy areas on building management. This included the White Bill on unfair deeds of mutual covenant on which the Advisory Committee tendered advice to the Government last month. At the same time, measures on publicity and promotional activities had been drawn up, with a programme of events extending well into next year. In view of this, no further appointments were made to the Advisory Committee upon the expiry of its second term in October 1991. The tasks ahead are for the Government to take follow-up actions to improve the legislative and administrative frameworks for building management.
Members of the Advisory Committee were mostly drawn from the relevant professional organizations. If there are matters on which the Government wishes to be advised, those organizations and other interested bodies will be consulted, as has been the case in the past.
As regards the district Building Management Co-ordination Teams, I should like to say that there are no plans to dissolve them or to reduce their number.
Pollution of streams and rivers
7. MR NG MING-YUM asked: Will Government inform this Council:
(a) what changes have taken place in the water quality of the rivers and streams in Yuen Long in each of the past 10 years;
(b) whether the rivers and streams have been polluted during the past decade; and if so, what is the degree of and reason for the pollution;
(c) what measures have been taken and what resources have been used to improve the water quality of the rivers and streams;
(d) what measures and resources are and will be employed now and in the foreseeable future to improve the water quality of the rivers and streams; and
(e) whether consideration would be given to taking further steps to improve the water quality of the rivers and streams at source; and if so, what are they?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS:
(a) The Environmental Protection Department has been monitoring the water quality of Yuen Long Creek and Kam Tin River since 1984. According to the department's water quality index for watercourses in Hong Kong, the water quality of the rivers has been "very bad" since 1984.
(b) These monitoring results confirm that the rivers are seriously polluted. The major cause of pollution is livestock waste, although industrial discharges and domestic sewage add to the problem. In addition, tidal currents intruding from inner Deep Bay prevent the rivers from dispensing polluted waters into the sea. These currents also cause suspended material to precipitate and accumulate on the river bed.
(c) Legal measures are centred on the Livestock Waste Control Scheme under the Waste Disposal Ordinance, whereby the Yuen Long Environs became part of the livestock waste control areas on 1 June 1991. Since then some 70% of the active livestock farms in these areas have indicated that they wish to cease business and apply for an ex gratia allowance. In addition, under the Water Pollution Control Ordinance, the Deep Bay Water Control Zone, which covers the catchment of the rivers in question, was declared in December 1990. Full enforcement action under this Ordinance began on 1 June 1991 when all domestic and industrial discharges into the rivers were brought under control.
Practicable measures include an inflatable dam, together with a pumping station and some low flow channels which are being built in and near Yuen Long Nullah and which will be completed in May 1992. These arrangements -- at a cost of $135 million -- will keep the polluted waters of the Kam Tin River from entering Yuen Long town and will exclude polluted tidal water from Deep Bay. In addition, certain sections of the rivers have been dredged occasionally, resulting in some temporary improvement. The northwest New Territories sewerage scheme, also under construction at a cost of $1.25 billion, will provide essential sewage treatment and disposal facilities for the northwest New Territories via new sewerage in Yuen Long development areas and Tin Shui Wai new town; this sewerage scheme is scheduled to begin operation by the end of 1992.
(d) Now and in the foreseeable future, the most effective measures to improve water quality of the rivers and streams are implementation of the livestock waste control scheme in the Yuen Long Environs, and full enforcement under the Water Pollution Control Ordinance. In addition, two major flood protection projects for improving the main drainage channels in Kam Tin and San Tin catchments under the Rural Planning and Improvement Scheme will start in the coming five years; these projects, at an estimated cost of $1.3 billion, will have a positive effect on water quality by improving the alignments of the existing streamcourses.
(e) Further steps to improve water quality of the rivers will centre on a sewerage masterplan study, which covers the area in question, and which is now in its final stage. This study will review the adequacy of existing sewerage and advise on the capacity and engineering arrangements for new sewers. Construction works would then follow, subject to funds being available. These measures, together with the full implementation of the Livestock Waste Control Scheme, the Water Pollution Control Ordinance and the major flood protection projects, will improve the water quality
of the rivers.
Control of container terminals
8. MR LEE WING-TAT asked: Regarding the land use of container terminals, will Government inform this Council:
(i) whether the ratio between a container terminal and its container handling area is specified in the contract covering the land use of a terminal, and if so, what this ratio is;
(ii) how it monitors the terminal operators to ensure that specified container handling areas are not used for other purposes; whether warnings and prosecutions have occurred in the course of monitoring, and if so, what the details are; and
(iii) whether consideration will be given to increasing the ratio of container handling areas in drawing up new land use contracts for container terminals (namely, Container Terminals 7, 8 and 9) so as to avoid traffic congestion caused by container trucks queuing up for unloading activities?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: The answers, seriatim, are follows:
(i) A container terminal, which normally comprises more than one berth, is controlled by a set of lease conditions. These conditions specify the preparation of a concept or master plan to Government's satisfaction covering the layout of the whole terminal including the vehicle parking and waiting areas to be provided by the developer as well as all buildings on site.
There is no specified ratio between a container terminal and its container handling area. However, more vehicle parking and queuing areas within the terminals than were provided in earlier terminals is required in the lease terms of Terminal 8 and will also be required in future sales. Thus in Terminal 8 sold in March 1991 and the planned Terminal 9, the ratio of the total terminal area to the number of berths has been increased from about 11 hectares to about 15 hectares per berth.
(ii) Monitoring is done through lease enforcement and not through prosecution.
All the terminals at Kwai Chung are operating within the terms of their lease conditions and hence no lease enforcement measures have proved necessary.
(iii) The traffic problem should be helped by the increased provision of total terminal area per berth for the newer terminals. In addition, steps are in hand to find additional "off terminal" land to make up for the shortfall of queuing and parking areas at the older terminals.
Golf course in country park
9. MR TIK CHI-YUEN asked: On the proposal to use some parts of the Pat Sin Leng Country Park for the construction of a golf course and private residential buildings, will Government inform this Council:
(a) what principles and factors will be taken into consideration when the Government decides on whether or not to accept such an application from the developer; and
(b) what benefits, or losses, will the proposed project bring to the Government and members of the public, and what environmental impact will there be on the surroundings?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, the background note annexed to this reply gives background information on this application. The following are answers to the questions.
(a) When the Country Parks Board and the Country Parks Authority considered the proposal the following factors were taken into account:
(i) the existing level of recreational use of the area;
(ii) the compatibility of the proposed development with the park plans; (iii) the possible environmental impact of the proposed development; (iv) the public right-of-way;
(v) the public use of the golf course; and
(vi) the facilities to be provided for public enjoyment and the possible benefits to the general public.
As the proposal will involve land exchange, approval from the Lands Authority will be required. A recommendation in principle was given by the District Land Conference in July 1990 subject to further comments from government department. The case will be resubmitted to the District Land Conference for approval of final land grant and special conditions before submission for final approval to Executive Council. The proposal will be considered on the basis of its recreational value, public benefits, landscaping, conservation of traditional villages, and circumstantial impact.
Before submission of the proposal to Executive Council, the Tai Po Rural Committee will be invited to give final endorsement of the arrangements for the reprovisioning of the Cheung Uk and Li Uk Villages. The Tai Po District Board will also be consulted on the proposal. In view of the area of land involved the agreement of the Land Commission to the inclusion of the grant in the land sales programme will be required.
(b) The Country Parks Board and the Authority considered that the public would benefit in the following aspects from the proposed development:
(i) the public right-of-way would be maintained so that the public could gain access to the country parks area nearby;
(ii) the proposed development would improve the current substandard public access and parking facilities and would enhance usage of the area (the existing level of recreational use of the area is low and there are no facilities);
(iii) the development would provide more public recreational facilities in the area such as picnic sites, shelters, a visitor centre and toilets;
(iv) the proposed golf course would not become an exclusive facility for private enjoyment and there would be reasonable provisions for public use;
(v) the proposed golf course would remain open and green with good landscaping planting;
(vi) the existing village woodland and fung shui woods would be preserved as far as possible; a group of existing village buildings with significant historical and architectural value would be preserved by the developer; and
(vii) the villagers of Cheung Uk and Li Uk would be provided with new village housing properly served with sewage facilities;
(viii) the risk of hill fire in the area would be reduced.
The proposed development would inevitably affect the existing landform and the vegetation cover. This will be carefully monitored to ensure that as far as possible, the existing woodland and the village settlements will be preserved and the final landscape will remain open, green and compatible with the surrounding area. In fact, the developer is required under the conditions of approval by the Country Parks Authority to conduct an environmental impact assessment before the development takes place and to implement a comprehensive landscaping scheme, both to the satisfaction of Government.
Annex
Background Note on Proposed Sha Lo Tung Golf Course
The proposal to construct a golf course at Sha Lo Tung was first made in 1979. It has been revised a number of times since then. In its latest form the proposal would involve the construction of an 18-hole golf course (of about 61 hectares), a residential development comprising 66 low density houses and 200 apartments (on an area of about 18 hectares) and 160 village houses (on an area of about 7 hectares).
Apart from a very small area (about 0.75 hectares), all the building development would be outside the Pat Sin Leng Country Park boundaries. About half of the proposed golf course area (about 31 hectares) would fall within the current boundaries of the Country Park.
The proposal was considered carefully by the Country Parks Board on a number of occasions over the past few years. Various factors were taken into account, including the existing level of recreational use of the area, the possible environmental impact of the proposal, the public right-of-way, the public use of the
golf course and the facilities to be provided for public enjoyment. The possible benefits to the general public were a most important factor. Changes were made to the proposal in the light of the Board's comments. In March last year, the Board concluded that, on balance, the proposed development was in the public interest, subject to the following conditions:
(a) the public right-of-way through the area would not be disrupted;
(b) the golf course would not become an exclusive facility for private enjoyment; it must be opened for public use. The developer shall enter into a commitment with Government to make reasonable provisions for public use of golf course;
(c) the improvement of public access and provision of public parking facilities in the area;
(d) the provision of public recreational facilities, including footpaths, toilets, shelters, picnic sites and a visitor centre;
(e) a group of existing village houses would be preserved in their original style and traditional Hakka character;
(f) a full environmental impact assessment should be conducted before the development takes place and adverse ecological and landscape impact should be kept to the minimum;
(g) the village fung-shui woodland would be preserved and a comprehensive landscaping scheme would be implemented to the satisfaction of Government; and
(h) the establishment of a performance bond to ensure the provision of the above public facilities.
In granting its approval, the Country Parks Board was satisfied that the proposal would not degrade the country park area, which would remain open and green, and that the public would gain from the proposed development as there would be more public recreational facilities, better access and a reduced fire risk.
The villagers affected by the proposal are aware of the details and have supported
it. The rural committee is soon to be consulted on the village relocation proposal, and the district board will be briefed in detail.
"Advised" school drop-outs
10. MR TIK CHI-YUEN asked: As some schools have advised students with poor conduct or academic performance to drop out of the schools voluntarily, will Government inform this Council:
(a) in the past five years, how many students were affected and how many parents approached the authorities concerned to lodge complaints or seek assistance;
(b) whether the approach adopted by those schools goes against the provisions or the spirit of the Codes of Aid for Schools; and
(c) whether the Government will implement appropriate measures to prevent the recurrence of similar incidents, and what assistance will be given to those students who have dropped out of school?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the answers to the questions posed are as follows:
(a) The Education Department (ED) keeps statistics on the numbers of students dropping out from schools, on the basis of information reported by school authorities. Figures for the past five years are as follows:
School Year No. of drop-outs
1986-87 601
1987-88 794
1988-89 1 351
1989-90 1 212
1990-91 1 058
There are no separate statistics showing how many students with poor conduct or academic performance have been advised by their schools to leave voluntarily. No such cases have been reported by schools to the Department. However, parents have occasionally sought the assistance of the Department in placing their children in other schools following such incidents. Statistics for the 1989-90 and 1990-91
school years, based on what information is available from District Education Officers, are now being compiled and will be sent to Mr TIK in writing as soon as possible.
(b) The approach adopted by schools in advising students to drop out of school does not itself constitute formal expulsion and therefore does not contravene the Code of Aid. However, the practice is incompatible with the spirit of the Code. According to the Code, pupils should not be expelled solely on the ground that
they are academically weak. They may be considered for expulsion only on grounds of non-payment of gazetted fees or a grave breach of school discipline, after reasonable measures to enlist the co-operation of parents have proved unsuccessful. No secondary school pupil should be expelled without proper warning to parents and the Director of Education should be kept informed of all such cases at the warning stage. Moreover, the expulsion of any pupil aged under 15 years requires the approval of the Director.
(c) The ED has set up an ad hoc group to investigate the recently reported cases of schools advising pupils to leave as an alternative to direct expulsion and to formulate proposals to prevent the recurrence of similar incidents. The outcome is expected to be available soon. The ED already assists in placing drop-out pupils who are within the age of compulsory education either in their own school or in another appropriate school. For pupils beyond the age of compulsory education, the
Department provides information to them on schools with vacant places to which they may apply for admission.
Motion
BUILDINGS ORDINANCE
THE SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS moved the following motion:
"That the Fourth Schedule to the Buildings Ordinance be amended by adding after item 6 -
"7. Drainage Services Department."."
He said: Mr Deputy President, I rise to move the motion standing in my name on the Order Paper. This motion is necessitated by the formation of the Drainage Services Department on 1 September 1989.
Upon the setting up of the Drainage Services Department, the duties and powers of the Building Authority previously delegated to officers of the Civil Engineering Department are now exercised by officers of the Drainage Services Department. It is therefore necessary to formally delegate such duties and powers to the officers of the Drainage Services Department. The details are set out in the motion.
Mr Deputy President, I beg to move.
Question on the motion proposed, put and agreed to.
First Reading of Bills
INSURANCE COMPANIES (AMENDMENT) BILL 1991
STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1991
Bills read the First time and ordered to be set down for Second Reading pursuant to Standing Order 41(3).
Second Reading of Bills
INSURANCE COMPANIES (AMENDMENT) BILL 1991
THE SECRETARY FOR MONETARY AFFAIRS moved the Second Reading of: "A Bill to amend the Insurance Companies Ordinance."
He said: Mr Deputy President, I move that the Insurance Companies (Amendment) Bill
1991 be read a Second time.
This is a composite Bill seeking to refine existing provisions of the Insurance Companies Ordinance in four areas: first, to allow authorization and annual fees to be prescribed in subsidiary legislation; secondly, to relieve general insurers from the requirement to deposit trade sensitive documents with the Registrar of Companies; thirdly, to extend the grounds upon which the Insurance Authority may take
interventionary action; and fourthly, to remove preferential treatment for United Kingdom insurers.
Authorization and annual fee
Let me first deal with fees. Section 13(1) of the Ordinance sets out the fee to be paid by an insurer upon authorization and annually thereafter. Section 59(b) provides that the Governor in Council may make regulations to amend section 13(1). This is an indirect and cumbersome way of amending the level of fees. We propose, therefore, that the Ordinance should be amended so that references to the level of fee are removed to subsidiary legislation while the principal legislation stipulates only the requirement for the payment of fees.
Documents deposited with Registrar of Companies
Regarding the deposit of documents with the Registrar of Companies, an insurer is required under the Ordinance to submit to the Insurance Authority accounts, statements and other information prescribed in the Third Schedule. He is also required to deposit a copy of such documents with the Registrar of Companies for public inspection.
The Third Schedule was amended in December last year to require general insurers to submit to the Insurance Authority an additional annual return on their Hong Kong business. The general insurers have subsequently requested that the new return, containing trade-sensitive data, should not be deposited with the Registrar of
Companies, although they have no objection to such information being released by the Insurance Authority on an aggregate basis. We see no objection to this request and propose that the Ordinance be so amended.
Interventionary powers
I now turn to the interventionary actions of the Insurance Authority. The Ordinance sets out the interventionary powers of the Insurance Authority and the various grounds on which different powers are exercisable. Under section 34, as read with section 26(3), the Insurance Authority may exercise his power to obtain information and documents on the ground that he considers it to be in the general interests of policy holders to do so. However, other powers of intervention under sections 27 to 33 and 35 can only be exercised on more restrictive grounds -- for example, on grounds that the insurer has furnished misleading information to the Insurance Authority; or that it is desirable for the protection of policy holders against the risk that an insurer may be unable to meet its liabilities.
These more restrictive grounds mean that the Insurance Authority can only exercise his interventionary powers reactively. We consider this to be unsatisfactory. Experience has proved that the longer it takes the Insurance Authority to be able to react to a situation, the less effective his supervision becomes. To provide better protection to policy holders, we propose that the grounds for intervention in the general interests of policy holders should also be regarded as a ground on which powers in sections 28 to 30, 32 to 33 and 35 are exercisable. These relate to requirements about investments, maintenance of assets in Hong Kong, custody of assets, actuarial investigations, early submission of financial information and power to impose requirements for protecting the policy holders.
We propose, however, that the powers set out in sections 27 and 31 relating to restrictions in writing new business and limiting premium income should not be affected by the new provision. We consider that they should remain to be exercised only in very limited circumstances.
Exemption for United Kingdom insurers
Finally, the Bill aims to remove redundant exemption provisions for United Kingdom insurers. At present, United Kingdom insurers are exempted from complying with the authorization requirements in section 8 and the requirement to submit financial information prescribed in the Third Schedule. The Ordinance only requires them to submit to the Insurance Authority the returns which they submit to the Department of Trade and Industry in the United Kingdom.
However, following an amendment to section 8 of the Ordinance in 1987, the Insurance Authority has been given discretionary power to refuse to authorize an insurer, including a United Kingdom insurer, even though the applicant has complied
with the general authorization requirements under section 8. Since then, the Insurance Authority has in fact been applying the same authorization criteria to all applicants, including United Kingdom insurers. Thus the exemption for United Kingdom insurers has become redundant.
The exemption from submitting financial information in the format required under the Third Schedule is also redundant as any insurers which have difficulty in meeting the requirements may apply for modifications under the Ordinance. In practice, this enables the Insurance Authority to permit, where appropriate, modification of
requirements to any overseas insurer on the lines of that available to United Kingdom insurers under section 52. It is therefore no longer necessary to retain section 52.
Mr Deputy President, I move that the debate on this motion be now adjourned. Question on the adjournment proposed, put and agreed to.
STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1991
THE SECRETARY FOR MONETARY AFFAIRS moved the Second Reading of: "A Bill to amend the Stock Exchanges Unification Ordinance."
He said: Mr Deputy President, I move the Stock Exchanges Unification (Amendment) Bill 1991 be read the Second time.
The Bill seeks to modify proxy voting to the effect that a member of the Stock Exchange of Hong Kong may only appoint a proxy while he is unable to attend and vote in person for good cause, and that a person may not be appointed by more than one member to vote at the election of the Council meeting of the Stock Exchange. It is also proposed that a proxy will have to be an employee or partner registered under the Securities Ordinance. The purpose of these amendments is to prevent abuse of proxy voting and to ensure that the Council of the Stock Exchange will be elected in a fair manner.
The Bill also seeks to impart a primary duty on the Stock Exchange to act in the public interest and, in particular, the interests of the investing public. The purpose is to ensure that the Exchange, as a quasi public sector institution with an exclusive right to raise a statutory transaction levy to finance its operations,
will have a responsibility to act in the public interest even though it owes a fiduciary duty to its shareholders. The Bill also provides immunity against civil liability to the Stock Exchange when exercising its public interest duty in good faith.
Mr Deputy President, I move that the debate on this motion be now adjourned. Question on the adjournment proposed, put and agreed to.
HOUSING (AMENDMENT) BILL 1991
Resumption of debate on Second Reading which was moved on 17 October 1991 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
Committee stage of Bill
HOUSING (AMENDMENT) BILL 1991
Clauses 1 and 2 were agreed to.
Council then resumed.
Third Reading of Bill
THE ATTORNEY GENERAL reported that the
HOUSING (AMENDMENT) BILL 1991
had passed through Committee without amendment and moved the Third Reading of the Bill.
Question on the Third Reading of the Bill proposed, put and agreed to. Bill read the Third time and passed.
Member's motion
CONTROL SCHEMES AND FRANCHISE AGREEMENTS WITH PUBLIC UTILITY AND PUBLIC TRANSPORT COMPANIES
MR LAU CHIN-SHEK moved the following motion:
"That this Council urges the Government to consult this Council and the public on profit control schemes and franchise agreements with public utility and public transport companies before entering into such schemes and renewing such franchise agreements with the companies."
MR LAU CHIN-SHEK (in Cantonese): Mr Deputy President, I beg to move the motion standing in my name on the Order Paper.
This year's policy address has made reference to the importation of labour as a means to combat inflation while overlooking the real "culprits" behind inflation, one of them being hefty price increases by the public utilities.
To bring the people's voice into the system of policy making
Public discontent about public utility charges and quality of service has long existed. Ever since the Star Ferry fare increase in 1966, there have been a number of social actions in protest against poor service or unreasonable fare increases by the public utilities. In 1983, the Coalition for Monitoring Public Utilities was formed as civic organizations decided to join hands in monitoring the Government and public utility companies. In recent years, protests against public utility price increases and anti-price hike movements were always linked together. This shows that price increases by public utilities which affect the lives of the grassroots are one of the major factors in triggering off a price spiral and in fuelling inflation. Regrettably, we can tell from history that Government and public utility companies always turn a deaf ear to the grievances of the people and even act against their wishes.
As an elected Member of the Legislative Council and spokesman of the Coalition for Monitoring Public Utilities for years, I feel obliged to bring the people's voice into the system of policy making, and into this Council. I hope that my honourable colleagues, government officials and the public utility companies will try to better understand the opinions of the public and take the initiative to consult the public before making any decisions which affect the livelihood of the people. As a body representative of public opinion, the Legislative Council should strive to reflect the wishes of the grassroots and fulfil its role of monitoring the Administration. For this reason, I have decided to move my motion in this Council.
I think the present situation concerning public utilities in Hong Kong can be described in this way: monitoring by the Government is ineffective and safeguard for the public is inadequate. I shall identify the problems we now have and suggest ways to solve them in my speech below.
Four categories of public utility companies
Generally speaking, the term "public utilities" refers to the various kinds of public transport and public utility services which have a direct bearing on people's livelihood. They operate in different ways and are subjected to different modes of profit control and government monitoring. It is therefore necessary to divide them into different categories before further examining the issue.
Public utility companies can roughly be divided into four categories according to their franchise and scheme of control arrangements as well as the degree of government involvement:
(1) Government departments such as the Water Supplies Department;
(2) Public corporations such as the MTR and KCR (including Light Rail Transit) which are administratively autonomous;
(3) The seven franchised or quasi-franchised private companies subjected to profit control schemes, namely the KMB, CMB, CLP, HEC, HK Telephone, HK Airport Terminal Services and HK Air Cargo Terminals;
(4) Other privately run public utilities such as ferries, minibuses, taxis and
Town Gas.
Since the public utility companies have different modes of operation and profit control, it may not be possible to treat them as the same. Today, I will therefore only talk about the third category, that is, public utility companies subjected to Profit Control Schemes, with emphasis on the relationship between schemes of control agreements and the public. In fact, the operation of the other three types of public utilities, the MTR and KCR in particular, leaves much to be desired. I will move another motion debate on monitoring the two railway corporations in the near future.
Price spiral
I believe the public are most discontented with the drastic public utility fare and charge increases in recent years, particularly the alarmingly hectic increases in public transport fares. Taking the two bus companies as an example, the percentage of fare increases in the past six years has far exceeded the inflation rate for the same period. In March this year, the KMB and CMB put up their fares by 14.7% and 19.5% respectively, which aggravated the already serious inflation problem. To make things worse, the other public transport companies also followed the example of the bus companies, dealing yet another blow to the people's livelihood. Although the Government announced in May this year that all public sector fees and charges would be frozen for nine months and appealed to the public utilities not to further increase prices this year, I understand that the public utility companies are well prepared for another round of fare and charge increases early next year. Given this chain reaction of price increases, how can the general public possibly maintain their living standards?
Besides price increases, the quality of service provided by the public utility companies is another cause for concern. Take bus service as an example. Insufficient runs, non-compliance with the service schedule and inadequate routes have long been the subject of public complaints, but little improvement has ever been made. The internal management of many public utility companies also leaves a lot to be desired. For instance, two years ago, mismanagement at the CMB resulted in an industrial action by CMB staff over the issue of retirement benefits, which affected members of the public as well.
At present, public utility companies are either franchised or quasi-franchised. Patronage is thus guaranteed even though the quality of service may not be up to the
standard. There is practically no need to improve service in order to generate more income. This is very unfair to consumers. It is also to be regretted that there is no independent body to deal with public complaints against the quality of service of utility companies. Even the Consumer Council is not empowered to deal with
complaints against public utilities such as the bus companies, the power companies, the Hong Kong Telephone and the Air Cargo Terminals and so on. In these circumstances, what can the citizens expect to do?
Schemes of control -- the root of the problem
The general public are always bemused by the fact that these so-called monopolies and near-monopolies which claim to serve our society can keep increasing their tariffs and that they are allowed to continue their operation with enormous profits although the services provided are of an inferior quality. In fact, all these can be
attributed to the Government's "schemes of control agreements" with these companies, which guarantee the effective period of their franchises and profit levels.
Recently, the Administration has pointed out in a briefing note issued to the OMELCO Panel on Economic Services and Public Utilities that with regard to utility services, the Administration seeks to achieve the following objectives:
(1) to ensure that consumers get a reliable service and one which can meet the demands placed upon it by the community;
(2) to ensure that consumers get this service at a reasonable price;
(3) to ensure that the shareholders of the companies providing the service get a reasonable return on their investment which will encourage them to continue to invest and which will enable the companies to compete successfully in the market with other forms of investment when funds are needed;
(4) to ensure that the financial well-being of the companies is maintained and that financial difficulties, which could lead to the collapse of the company and so the utility are avoided;
(5) and to achieve these objectives without any direct financial contribution
from public funds and with minimum interference.
The Administration has claimed that in order to achieve these objectives, it has entered into "schemes of control" agreements with some of the utility companies. The briefing note also points out that the schemes of control are in essence an agreed basis for determining a reasonable level of profit that the shareholders of a company can earn from the provision of the utility service. Reasonable profit is measured as a percentage of the long-term investment in the companies.
However, we should ask whether the objectives stated by the Administration have been achieved.
The method of calculating returns
Firstly, we should look at the method of calculating returns as outlined by the schemes of control. At present, "permitted returns" of several major public utility companies which are subjected to the "schemes of control" agreements are calculated as follows:
(1) China Motor Bus Company Limited and Kowloon Motor Bus Company Limited (1933): 15% and 16% of the average net fixed asset of the respective company;
(2) China Light and Power Company Limited: 13.5% of the average net fixed asset of the company plus 1.5% of shareholders' investment made after 30 September 1978 for acquiring fixed assets;
(3) Hong Kong Electric Company Limited: 13.5% of the average net fixed asset of the company plus 1.5% of shareholders' additional investment made after 1 January 1979 for acquiring fixed assets; and
(4) Hong Kong Telephone Company Limited: 16% of shareholders' capital. The problems of permitted returns
The "permitted rate of returns" has definitely ensured the profits of the utility companies, which are generated from tariffs levied on the consumers. When the companies think they are not making enough profits, they can, as a matter of course, apply for tariff increases, which directly accelerate inflation and affect the
people's living.
The profit margin of a commercial organization should in the first place be determined by factors such as turnover, quality of service, competitiveness and cost control. Yet, companies entering into the "schemes of control" agreements with the Government can be virtually assured of enormous profits without running into any risks. In fact, they simply need not think about providing service at a reasonable price. It has long been a bone of contention as to whether the companies can get the "permitted returns" indiscriminately or whether it should be regarded as just the maximum profit a company can get. The Administration has said that "permitted returns" means maximum profit and there is no guarantee that the companies can obtain this level of profit each year. However, the public utility companies often consider it as "guaranteed profits", thus turning "profit control" into "profit assurance"!
Moreover, the current basis for calculating permitted returns is open to question. If permitted profit is measured as a percentage of a company's net fixed asset, the company can continuously expand its asset base in order to reap huge profits. Nevertheless, certain expansion programmes may not necessarily be cost effective or in the interests of the consumers. In the meantime, the company can secure external loans as a means of raising funds to expand its asset base. This may lead to distorted commercial decisions while profits are continuously guaranteed for the company!
The Administration has said that the first 8% interest on borrowings made by the public utility companies will be charged to shareholders, that is, not deductible as operating expenses, with only the rest charged to consumers. It is intended that this arrangement will encourage shareholders to invest more. However, under the prevailing "permitted rate of returns" which is fixed at a level as high as 13.5% to 16% of net fixed assets, shareholders can still reap the remaining "guaranteed profits" even though they have to pay 8% interest on their loans.
In the meantime, the permitted rate of returns has also protected the companies concerned in that the consumers have to pay for the losses brought about by maladministration or mismanagement on the part of the companies. Take the power companies as an example. Because the companies are assured of "permitted returns", the compensation for any losses incurred as a result of electricity failure due to the companies' negligence will ultimately have to be shared by the consumers. In this way, the schemes of control have enabled the public utility companies to operate under no investment risks whatsoever and without the need to take the consequences
of maladministration while there is absolute guarantee of profit. However, have these companies ever fulfilled their social obligations to provide reasonable services or have they deferred tariff increases when the people are living in destitution?
The Administration has entered into a "scheme of control" agreement with the China Light and Power Company Limited, which has announced its major development plans such as the $60 billion power station to be built at Black Point, and so on. As the new "scheme of control" agreement still uses net fixed asset as the basis for calculating "permitted returns", we can imagine that the CLP's "permitted returns" will increase sharply while tariffs will also have to be increased accordingly in the coming years. Even if there is only a 1% error margin in the company's forecast of electricity consumption, we can see that the consumers will have to make up for the huge profit discrepancies.
Using net fixed asset as the basis of calculation was originally intended to encourage the franchised companies to make huge investments during the initial stage of development in order to cope with demand. However, as things have changed after a decade or two, an overall review into whether there is still need for this
profit-assuring mechanism is now necessary. Take the two bus companies as an example. While buses used to be the major mode of transport to the people of Hong Kong, the off-street mass transit carriers such as the MTR and the KCR have replaced the buses and become the major mode of transport today. According to the "White Paper on
Transport Policy in Hong Kong", rail travel is forecast to double between 1986 and 2001 while the growth of passenger journeys on buses will be less than 20% over the same period. In addition, according to the information paper issued to the OMELCO Standing Panel on Transport, KMB's patronage has been declining since 1987 and the Transport Department considers as too optimistic the CMB's forecast of an annual 0.5% growth in patronage for the next few years. We can thus imagine that KMB and CMB do not need to launch any major development programmes at all. Then should net fixed asset continue to be used as the basis for calculating "permitted returns", thus forcing the citizens to continue to bear with the hefty increase in bus fares each year?
All in all, there are four major problems concerning the existing schemes of control:
(1) The companies' investments may become too large;
(2) The companies will pay no attention to cost and expenditure control;
(3) No incentive will be provided to encourage the companies to upgrade service and cost-effectiveness;
(4) Most important of all, the rate of returns is obviously too high since the companies are operating under no risks. This means the public are paying too much!
The role of the Government
Though it is incumbent upon the Government to lay down the criteria for granting franchises, approve reasonable fee-charging, monitor the quality of service, supervise development plans and formulate reasonable "profit control schemes" and so on, the Government's track record on public utility issues has been very disappointing.
Firstly, on the question of determining "permitted returns", there is no indication that the Government has come up with any new suggestions to give better protection to the consumers. Take for instance the two bus companies' method of calculating permitted returns on the basis of net fixed assets. This has for years been criticized by community organizations as undesirable, but the Government appears to have turned a blind eye to it and has no intention to make any changes at all. Now that the Government has in principle concluded an agreement with the China Light and Power Company on extending CLP's franchise, it is to be regretted that the much criticized method of calculating "permitted returns" is allowed to stand. Turning to the Telephone Company, it has already proposed to the Government to change profit control to "price control" for quite some time, but government officials have yet to openly comment on the issue or offer counter proposals. This can thus be seen that the Government has no plan to initiate a review of the said scheme of "permitted returns".
Secondly, the question of fee-charging. The Government has stressed time and again that the best interests of consumers will be taken into account when determining public utility fares and charges. But what we have seen is just the opposite. Since 1984, the percentage increase in bus fares has always exceeded that of the Consumer Price Index; the increase in telephone charges between 1981 and 1987 was also ahead of the CPI increase over the same period. Despite the persistently high inflation
rate in recent years, the Government has granted applications for fare and fee increases all the same. May I ask whether the Government has effectively kept prices at a reasonable level to safeguard the interests of the public?
Let us take another look at Government's role of monitoring the relevant companies' quality of service and development plans. In fact, Government's policy has always been to minimize its interference with providers of public utility facilities in the private sector and to encourage the public utility companies to be directly accountable to the consumers as far as possible. Under these circumstances, we can imagine that there is practically very little the Government can do. As a matter of fact, the Government has simply failed to perform its duty of monitoring the utility companies by bringing about improvements to situations such as inferior bus service and frequent disruptions to power supply. There is even much less the Government can do in monitoring the companies' development plans. We simply do not see what principles the Government may have in responding to, and reasonably restricting their development in the interest of consumers. Recently, the Government has encouraged public transport and public utility companies to set up passenger and consumer liaison committees to effect direct supervision from the consumers. While it is good to establish more supervisory channels, we should at the same time closely monitor the effectiveness of such machinery which is not independent of the companies concerned. Also, the Government must not be made to think that it can thus shirk its supervisory responsibility.
As a matter of fact, government officials are playing a part in the public transport companies' boards of directors such as the two bus companies. Therefore, we see no reason why the Government should shirk responsibility. In fact, what have government officials sitting on the two bus companies' boards of directors done in recent years to safeguard public interests with regard to the bus companies' management, services, fares and other issues? If the Government is not really prepared to do anything, I suggest that this Council appoint some Honourable Members to perform supervisory duties on behalf of the public.
On the question of granting franchises and implementing profit control, it appears that the Government has done virtually nothing to brief the public on the criteria involved and periodic review programmes (except when the franchise is about to expire). Recently, I received a letter from a member of the public in which dissatisfaction was expressed over the gas company's charge increase. It was also felt that the gas company should be included in the "Scheme of Control" so as to
safeguard public interests. In this connexion, the Government should keep under constant review and make known its new stand on public utility companies' franchises. To sum up, under the existing "Schemes of Control", the utility companies are simply treating with indifference the opinions of consumers because their profits are already guaranteed. Therefore, the Government has a decisive role to play in monitoring the performance of these companies. I hope the Government will thoroughly fulfil the task of monitoring public utilities on the major premise of safeguarding public interests and will no longer shirk responsibility.
On the question of supervision, I have the following suggestions to make for your consideration.
(1) Liaison between Government departments and the relevant OMELCO panels should be reinforced and government officials sitting on the two bus companies' boards of directors should report to the OMELCO panels on a regular basis;
(2) The relevant OMELCO panels should be fully consulted on public utility fare and charge increases;
(3) The powers of the Consumer Council should be widened so that it can deal with complaints against franchised public utility companies;
(4) Franchised companies should be asked to submit annually development plans for the next three to five years, so that OMELCO panels may give their views on the development plans.
Some proposals
There is no doubt that the present "profit control schemes" cannot effectively safeguard the interests of the public. On the contrary, they have enabled certain companies to raise charges unreasonably without regard to administrative efficiency and performance. Therefore, it is imperative that we should thoroughly review the schemes of control and make necessary amendments in order to safeguard the livelihood of the people, instead of asking the citizens to continuously guarantee the profits of these companies. I propose that a Legislative Council select committee be set up to conduct a comprehensive review of the schemes of control agreements with
franchised companies, so as to provide the Government with a point of reference when considering the renewal of schemes of control agreements with public utility
companies. I would also like to put forward for comment and discussion in this Council a few proposals which I think are worthy of further examination.
One viable alternative for determining "permitted returns" is to use a certain percentage (say 10%) of share-holders' capital as the basis of calculation. When determining this percentage, reference can be made to the profit margin for risk-free investments. No price increase will be allowed unless the profit margin falls below that percentage, and the upper limit of the profit margin should not exceed a certain percentage of net fixed assets. The second alternative is to set the profit margin at a level equivalent to the aggregate of a certain percentage of a company's net fixed asset and a percentage of shareholders' capital, with respective percentage rates being determined according to the different categories of companies. The third alternative is to replace "profit control" with "price control", with price increases fixed at a percentage below the inflation rate.
The three proposals given above are only some possible alternatives. Moreover, different public utility companies may have to adopt different methods of calculating "permitted returns". This shows there is a need to establish a select committee to study the matter. It is equally important that we should carefully consider ways to monitor the public utilities more effectively. In this regard, the Government, consumers, monitoring and statutory consultative bodies and this Council should all have a part to play in order to make the public utility companies truly accountable to the public.
Public consultation
Lastly, I would like to reiterate the main aim of this motion, that is, to urge the Government to consult this Council and the public on profit control schemes and franchise agreements with public utility and public transport companies before entering into such schemes and renewing such franchise agreements with the companies. The new franchise agreement for the CLP is at present under negotiation while negotiations with the other franchised utilities will also begin shortly. If we want the public and this Council to have a role to play, it is time to make such a request.
Hong Kong is gradually moving towards a democratic system of Government, and ensuring the safeguard of basic civil rights is very important in this democratization process. In dealing with matters like the extension of public utility franchise agreements which directly affects the lives of the people, it is necessary for the
Administration to honour the people's right to know and be consulted. Similarly, as a body representative of public opinion, the Legislative Council should also be consulted. In fact, earlier this year, both the OMELCO Panel on Economic Services and Public Utilities and the Consumer Council had pledged their support for public consultation on public utility franchise agreements. And I hope that my honourable colleagues will support my motion today.
Some people may ask whether technical problems will arise in the course of public consultation, such as how to effectively assess public opinion and how to handle business and financial secrets and other confidential or sensitive information involved when franchise agreements are being negotiated. However, as the Hong Kong Government is experienced in public consultation, I am confident that Honourable Members of this Council will not doubt the feasibility of public consultation only because there may be technical problems. I propose that for each franchise agreement there should be a period of public consultation for one to two months. A Legislative Council select committee should be responsible for collecting and collating public views (public hearings should be held if necessary) which will form the basis for its discussions and debates. Finally, a report should be submitted, together with the views of the public, to the Administration for consideration. To facilitate the consultation process, it will be necessary to lay down for public comment certain criteria for extending franchise agreements in respect of a company's development plans, rate of price increase, quality of service, profit margin, quality of management and profit control arrangements. The Government should therefore prepare a consultative document, setting out the principles governing the franchise agreement, Government's evaluation of the company's past performance and future development plans of the company (including investment programmes, fixed asset growth, service improvement projects and fee-charging and so on), so as to enable this Council and the public to make assessment effectively.
It is also important that the Administration should earnestly consult this Council on the renewal of franchise agreements with public utility companies. Following the direct elections in September this year, it is believed the community will cherish the aspiration that the new Legislative Council will act as a body representative of public opinion to monitor government policies. In order to effectively achieve these aims, there must be channels for this Council to be fully consulted before any major government decision is made. I am therefore confident that Honourable Members will support my motion. In the past, this Council has probably not taken the initiative to strengthen this monitoring role. But since our
society is moving forward all the time, when the people's call for participation in policy making has become louder and louder, is it possible that this Council, as a body representative of public opinion, can stand stock-still? I recall that even the content of schemes of control agreements was kept confidential in the past. But it was eventually made public in 1984 under public pressure. This shows that the confidentiality of business or financial secrets is only relative, bearing in mind that public utilities directly affect the everyday life of the people.
To conclude, it is both necessary and practicable for Government to consult this Council and members of the public on the renewal of public utility franchise agreements. May I appeal to honourable colleagues to cast an affirmative vote on my motion.
Mr Deputy President, with these remarks, I beg to move.
DEPUTY PRESIDENT: I have received notice from Mr Stephen CHEONG to move an amendment to the motion. His amendment has been printed on the Order Paper.
Question on the motion proposed.
DEPUTY PRESIDENT: Mr Stephen CHEONG, you have given notice to move an amendment to the motion. You may now speak to the question and also move your amendment now.
MR STEPHEN CHEONG moved the following amendment to Mr LAU Chin-shek's motion:
That Mr LAU Chin-shek's motion be amended by deleting the word "consult" and insert in its place the phrase "seriously take account of the views of".
MR STEPHEN CHEONG (in Cantonese): Mr Deputy President, I rise to move an amendment to the motion before us so that it would read as follows: "That this Council urges the Government to seriously take account of the views of this Council and the public on Profit Control Schemes and franchise agreements with public utility and public transport companies before entering into such schemes and reviewing such franchise agreements with the companies."
The public always have the impression from media coverage that whenever an amendment motion is moved in the Legislative Council, it is done because one Member disagrees with another Member's motion. Some may think that the Member moving the amendment does so just for amendment's sake rather than for the anticipated actual effect. Some may even believe that an amendment motion itself is some sort of political tactics. Very few people believe in the spirit of making such amendments which, like proposing amendments to a Bill in its Second Reading, is to seek a more thorough expression of the substance in the motion so that it could be put into full effect and be monitored by this Council more effectively. It seems that it has become a common practice to speculate and infer from a negative perspective. If this continues to prevail, I believe our society will be held down in quite negative situation, which we do not want to see.
I support the spirit behind the Honourable LAU Chin-shek's motion, as public utilities and public transport are of immediate concern to the citizens of Hong Kong as well as to every Member of this Council. As a matter of fact, in November nine years ago, a majority of Members of this Council stood on the same front with various pressure groups and business associations. They unanimously requested the
Government to set up a body to monitor and review the schemes of control. I would like therefore to take the opportunity to make it clear that this amendment motion is moved for the sake of pooling our ideas rather than showing our difference in stances.
Indeed, the difference lies only in a few words used in the original and my amendment motions. Whereas the former considers that the Government should "consult" this Council and the public, mine urges the Government to "seriously take account of the views" of this Council and the public. The wording of my amendment has been reported as being rather moderate. However, some careful thought should reveal that, in effect, its demand on the Government is more thorough.
I recall that in March 1986, the Honourable TAM Yiu-chung raised a question in this Council, asking the Government whether a body involving representatives from the public should be set up to monitor the profit control arrangements on public utility companies. The then Financial Secretary claimed that the existing
arrangements under which the Executive Council represents the public to monitor public utilities were considered appropriate and sufficient. He further added that the Economic Services and Public Utilities Panel as well as the Transport Panel of OMELCO would be able to reflect that interest of the public. I believe those who
have served on various advisory boards are well aware of how the Government would openly conduct public consultation, and there is no need for me to describe this in detail. Some people think that public consultation can be widened to the perspective of referendum. However, it can be envisaged that a government which sees the
importance of efficiency will not put every issue to referendum in the process of making policies. Hence, what actual effect can we expect if this Council only demand for "public consultation" today while the Government has already made it clear that such consultation has been carried out?
On the contrary, I request the Government to "seriously take account of" the views of this Council and the public. The Government has to account for its decision to this Council and the public if my amendment motion is endorsed. In other words, if the Government does not adopt the recommendations put forth by Members of this Council on the schemes of control, or takes any decision which contradicts public interest, it will have to give this Council a clear explanation as a responsible government should do. Only through this process of monitoring and holding the Government
accountable can the Legislative Council perform its function properly.
It is bearing this in mind that I move the amendment motion, in the hope that this Council could enhance its role in monitoring the schemes of control without altering the spirit of the original motion.
In view of the time limit, I would only make two proposals regarding the schemes of control.
I support the underlying principle of drawing up schemes of control. However, as the Government will have to re-negotiate with the relevant public utility or public transport companies on their agreements some time later, I urge the Government to seriously take account of the current social and economic conditions and to take great care in formulating the terms of the agreements. I think the Government should take note of the following two points:
(1) It should be specified in the agreements with public utility or public transport companies that their development funds must be used for developing facilities to meet public needs and that on no account should it be drawn on to top up shortfalls in permitted profits. Actually, cases of setting aside the funds for non-development purposes do exist, and if the Government does not face the issue squarely, the spirit of setting up the development funds would be violated, thus
jeopardizing the interest of the public.
(2) Inasmuch as the difference in operation, investment, management and technology aspects among various public utility and public transport companies, the Government should formulate the terms and specify the permitted rates of returns with reference to individual company's own features in order to strike a balance between the interests of the investors and the public.
Moreover, the Government should publish in full the method of calculating the rates of permitted returns and make known the rationales behind such calculations. For example, such information should include the capital invested for facility development, and the data on the returns which the investors may gain from the beginning of investment all the way until total depreciation of such facilities.
Nine years ago when a debate on the schemes of control was held in this Council, a majority of Members who rose to speak requested the Government to set up a body to study and further review the schemes of control, and to seriously take account of the public's views to ensure a right balance between the interests of the public and the investors. Regrettably, I have to reiterate this point today, nine years after our request.
Before I conclude, I hope my colleagues could read between the lines to get what I mean and consider supporting my amendment motion. I would also like you to offer more ideas on this subject in order that this Council could do a proper job for the public on the subject of schemes of control.
With these remarks, I beg to move my amendment.
Question on Mr Stephen CHEONG's amendment proposed.
DEPUTY PRESIDENT: May I remind Members that a Member who now speaks to Mr Stephen CHEONG's amendment is considered to be speaking to both the original question and the amendment. Therefore he or she cannot speak again to the original question after the amendment has been disposed of. However, a Member who does not wish to speak to the amendment now may speak either to the motion or to the motion as amended after the amendment has been considered. The following Members have indicated that they will speak in this debate: Mr HUI Yin-fat, Mr Martin LEE, Mr TAM Yiu-chung, Mr Andrew
WONG, Mr LAU Wong-fat, Dr C H LEONG, Prof Felice LIEH MAK, Mrs Miriam LAU, Mr Jimmy McGREGOR, Mr Peter WONG, Mr Albert CHAN, Prof Edward CHEN, Mr Vincent CHENG, Mr CHEUNG Man-kwong, Mr CHIM Pui-chung, Mr FUNG Kin-kee, Dr C Y HUANG , Mr LAU Chin-shek (but only to the amendment), Mr LEE Wing-tat, Mr Gilbert LEUNG, Mr Fred LI, Mr MAN
Sai-cheong, Mr NG Ming-yum, Mr Steven POON, Mr TIK Chi-yuen, Mr James TO, Mr Samuel WONG, Mr YEUNG Sum, Mr Howard YOUNG and Mr SZETO Wah. Two public officers will also take part in this debate and they are the Secretary for Economic Services and the Secretary for Transport. Are there any other Members who wish to speak in this
debate?
The Financial Secretary.
I would remind Members of the 15-minute rule under Standing Order 27 which does not, however, apply to public officers. The buzzer will sound after 13 minutes and again when the 15 minutes are up. The system has been slightly adjusted so that the buzzer, I hope, will be less intrusive than on the earlier occasion. We have also, for Members' convenience, installed the clock above the Chair which shows the second hand.
MR HUI YIN-FAT (in Cantonese): Mr Deputy President, if we look at places where capitalism is being pursued, I believe there is no other place like Hong Kong where privately run public utility and public transport companies can operate in a unique investment environment to secure an impressive profit growth each year even under the threat of persistently high inflation and global economic retrogression. Of course, the so-called "unique investment environment" is related to Government's policies. While the Government has granted monopolies to these companies under the pretext of reducing the drain on resources caused by competition, the Profit Control Schemes to which the utility companies are subjected for being granted such monopolies has become the best guarantee for the companies to get the permitted returns each year owing to a lack of supervision on the part of the Government. Even if they are not properly run, the boards of directors concerned, especially public listed companies, need not be held responsible for any losses incurred.
I have no intention to use this debate to press for a complete overhaul of our unique investment environment which is at present to the advantage of the public utility companies' operation. In fact, after many years of operation, certain companies which are well managed or sharp-sighted in their investment plans are indeed
capable of providing service at a stable price, or even at a price level which is the lowest in Asia. However, as the franchise agreements and schemes of control with public utility companies have been signed or renewed for quite some time while Hong Kong's economic and political scenes have undergone many important changes since, I think it is now an opportune time for the Government to negotiate franchise
agreements with different categories of public utility companies beyond 1997, so as to ensure that all companies granted franchises to secure reasonable profits will make improvement in aspects such as management and resource utilization, and will provide the public with high quality services. Bearing this fundamental requirement in mind, I really see no reason why the Government should choose not to consult this Council and the public before entering into agreement with the utility companies. Because of the time constraint, I shall only concentrate on the public transport companies.
Nowadays, in advanced communities like Hong Kong where people are increasingly conscious of human rights, convenient modes of public transport have become not only the basic needs of all to make a living, but also the prerequisite for everyone -- whether able-bodied or disabled -- to live independently, maintain his own social life and vindicate human dignity. Unfortunately, the vast majority of Hong Kong's public transport companies which now operate as monopolies or near-monopolies are unconcerned with these basic needs. They have no plan at all to improve facilities with a view to rendering them more accessible to the blind, the deaf, the physically and mentally handicapped, or people who have difficulty getting about owing to long ailment. Instead, they are trying to give all sorts of excuses to shift
responsibility onto others, like the argument that improved facilities will increase operational costs. A classic example of such ludicrousness can be provided by the Mass Transit Railway Corporation which has in the past declined to provide facilities for disabled persons on the pretext that mass transit is not suitable for them. It is much to my regret that unreasonable and irresponsible excuses like this should be used.
As a matter of fact, public transport companies in Europe and the United States are still offering concessionary fares and improved facilities to elderly and disabled persons as one way of promoting the companies' image even though they have to operate under keen competition with no guarantee for reasonable profits. In my opinion, public transport companies in Hong Kong must no longer resort to economic considerations as an excuse for shirking responsibility.
Past experience shows that an ageing community, with an increasing number of people having difficulty getting about, will place great demands on our public transport. I sincerely hope the public transport companies will be more far-sighted when planning their investments. In fact, while it will not cost much in improving the basic facilities for disabled persons, any increase in future patronage will more than offset the additional funds required for such investment. Moreover, if disabled persons can travel by themselves, like making follow-up visits to hospital, this will reduce the demand for ambulance and Rehabus services, and thus cut down on public spendings to a certain extent. With Hong Kong about to face the enormous calls on our social services as a result of an ageing population, a Government truly accountable to its people must take into full account and attach great importance to the following four points when negotiating the extension of franchises with the relevant companies.
(1) The concept of making public transport more accessible to those having difficulty getting about is more than just the provision of safety facilities by service providers. As a first step, the public transport companies must take into consideration the disabled persons' requirements for travelling to and from home when making designs. Take the Kowloon-Canton Railway Corporation as an example. Though it may well be said that the KCRC has more or less catered to the disabled persons' special needs by making the platforms accessible to them, very few physically handicapped people can make use of the train services because of the lack of feeder transport services to ferry them from home and because feeder transport services, if there are any, are very expensive. However, in a society where importance is attached to human rights and equality, there is really no reason why they should pay more for similar services available to other people.
(2) As there will be increasing demand for services from an ageing population, the Government should follow the example of the United States by requiring all public transport companies, through legislative means, to provide facilities for disabled persons when purchasing new cars or replacing old ones after a specified date, and to convert existing facilities before a certain date.
(3) Hong Kong now operates a Rehabus service comprising 41 buses for 600 000 disabled persons. Obviously enough, this service appears to be grossly inadequate. Should there be insurmountable technical problems in converting existing facilities, the expenses involved should be used to operate a Rehabus service on scheduled routes and fares similar to those of the main routes should be charged. According to a report
released after a meeting of transport ministers in 19 European countries this year, public transport companies in Sweden have successfully introduced a form of "intermediary" which caters not only to the needs of disabled persons, but also other passengers as well.
(4) Viewed from both economic and social obligation considerations, all public transport companies should have a duty to offer half-priced concessionary fares to the elderly. This is not only a recognition of their past contribution in Hong Kong, but also a fundamental development towards building up a "caring society" as promised by the Government.
On the other hand, I am concerned that there are no independent units within the relevant companies to deal with public complaints and that their operations fall outside the jurisdiction of OMELCO, the Office of the Commissioner for Administrative Complaints or even the Consumer Council when public aspirations for better service from the public utility and public transport companies are soaring. In my opinion, the appointment of official representatives to the companies' boards of management alone cannot bring the monitoring role into full play. Nor can it give the companies' operations greater transparency. For this reason, the Government should consider the requirement that all companies granted franchises or legitimately operating as monopolies must appoint public opinion representatives to their boards of management, such as elected councillors of the three-tier Government structure and
representatives from the Consumer Council. Of course, the most ideal arrangement is that all public utility and public transport companies, irrespective of their modes of operation, should be monitored by independent advisory bodies whose terms of reference include advising on how to improve services and receiving complaints from the public. Since the Government is or will be negotiating the renewal of franchises with the relevant companies, the establishment of such advisory bodies has become a matter of great urgency. If not, it may be difficult to take public opinion into full account during the course of negotiations.
Finally, I must sincerely advise that the times of profit assurance for franchised companies will soon be past. Nowadays, institutional investors can no longer make big profits with a small capital, especially when the public are urging the Government to beef up supervision and more attention is being paid to consumer rights. In future, the utility companies' way of securing profits must be built on better management and more efficient allocation of resources, stepped-up public relations work, as well as long-term investment plans.
With these remarks, Mr Deputy President, I support the Honourable LAU Chin-shek's motion.
MR MARTIN LEE: Mr Deputy president, I am afraid that the amendment moved by the Honourable Stephen CHEONG is both illogical and contrary to the clear position taken by the OMELCO Panel chaired by the Honourable Stephen CHEONG himself only three months ago. The adoption of the Honourable Stephen CHEONG's amendment would serve only to endorse the highly unsatisfactory status quo in relation to public franchises. It would also demonstrate that this Council is not prepared to defend the interest of the public on this vital issue.
The Honourable Stephen CHEONG's amendment is illogical because on the one hand, it asks the Administration to take into account the views of this Council and the public, but on the other hand, it relieves the Administration of any obligation to even find out what those views are in the first place. For, how is the Administration supposed to consider public views under the Honourable Stephen CHEONG's amendment when the public does not have any chance to understand or examine the issues involved or make its views known? In formulating his amendment, the Honourable Stephen CHEONG could easily have added the words "seriously take into account the views of" to the present motion, without removing the requirement that the Administration consult with this Council and the public. Yet, he has chosen instead to delete any mention of consultation from the motion. If the Honourable Stephen CHEONG would amend his own proposed amendment so as to add the new clause without deleting the reference to consultation, then the United Democrats of Hong Kong would be very happy to support him.
The Honourable Stephen CHEONG's opposition to consultation is quite surprising given the fact that the Honourable Stephen CHEONG himself had requested such consultation from the Administration only a few months ago. In a meeting of the OMELCO Economic Services and Public Utilities Panel at the end of July, the Secretary for Economic Services Mrs Anson CHAN told the Panel that the Administration was then negotiating with China Light and Power regarding an extension of that company's franchise. At that time, Panel members felt strongly that the Administration should not grant an extension to the franchise holder until it had thoroughly reviewed the scheme of control system and consulted this Council.
Writing on behalf of the Panel, the Honourable Stephen CHEONG stated: "The Administration should consider the need to carry out an in-depth overall review of the concept of schemes of control regulating public utilities companies..... It is certainly advantageous if the public and the Legislature can be consulted while negotiations are going on with certain public utility companies regarding the end of their current schemes of control agreements. In any case, it would be desirable for the Legislative Council to be given the opportunity to comment before final decision is reached by the Executive Council."
I am afraid now, however, that the Honourable Stephen CHEONG has totally changed his position. Just three months after he himself had requested the Administration to consult the public and this Council -- and I am using his very own words -- the Honourable Stephen CHEONG is now seeking to absolve the Administration of any duty to conduct such a consultation. On Monday, he even ridiculed the use of the word consult in the present motion as being "too general" and used this as the pretext for moving his amendment today. I wonder what has caused the Honourable Stephen CHEONG to change his position in the intervening three months? I would have been more than happy to give the Honourable Stephen CHEONG an opportunity to intervene now so as to explain what has caused him to change his mind. But unfortunately, he is not here.
The fact that the Honourable Stephen CHEONG has now renounced even his own limited demands of three months ago demonstrates the pointlessness of his current amendment. The Honourable Stephen CHEONG would change the motion to urge the Administration "to take into account" the views of the public and this Council, but the Administration of course has always contended that it is doing precisely that. Take the current case of China Light and Power. Many Members in this Council are deeply unhappy that the Administration, without consulting this Council in any way, has extended this franchise for another 15 years on terms that seem on their face to be unduly
advantageous to the company, which recorded an astounding $3.2 billion profit last year. Indeed, even the Honourable Stephen CHEONG himself said publicly that the guaranteed annual profit of the Company of up to 15% was too high, a view he had expressed at the OMELCO Panel meeting three months ago.
If the Honourable LAU Chin-shek's motion were to be passed today, this Council would be making clear that a public review must be undertaken before the Administration entered into further franchise agreements or extensions. Yet, the adoption of the Honourable Stephen CHEONG's amendment would mean that the
Administration would not have to change its current practice at all. It could simply continue with the business as usual and continue in effect to ignore this Council and the public in reaching further agreements with other franchisees.
I turn now to the reason why it is so important that the Administration in fact have a full consultation on the scheme of control system before it enters into further franchise agreements or extensions. The current system is highly complex and confusing, as the Managing Director of the Hong Kong Telephone Co. Ltd. himself had stated in a letter to this Council. There are also many inconsistencies in the various schemes. For example, while orders by the Executive Council regarding fare rises for ferry services are required to be brought before this Council in the form of subsidiary legislation, no such requirement applies to Executive Council decisions on fare rises for bus services. Likewise, rate increases for telephone services must be approved by this Council through a resolution, but the Legislative Council has absolutely no say over rates charged by the electricity companies. Such inconsistencies are a result of a series of diverse Ordinances that were drafted in a patchwork, ad hoc fashion. Up to this point, there has never been a systematic review of the different schemes, with a view to formulating a more logical and consistent regulatory framework.
It is precisely because of these complexities and inconsistencies that there is a need for a thorough public consultation -- such as in the form of a green paper. Without such a consultation, in which the Administration would make clear to the public the often secret details of the schemes of control agreements, the public simply does not have the ability to formulate clear, well-reasoned views on these complex issues. We currently have a highly imbalanced situation in which company representatives, who have all the facts pertinent to their franchise readily at hand, talk in confidence to the Administration about their franchise, while the public and consumer groups are denied the information to present the case for the consumers. Confronted with only one source of information and saddled by the policies of their predecessors on individual franchises, it is no wonder that our policy Secretaries have displayed such inertia towards any possible change to the current schemes.
Because of this lack of public access to critical information, the Consumer Council in August wrote two letters to the Secretary for Economic Services to request a systematic review before any franchise agreements were signed or extended. After a delay of over a month, the Council finally got a reply from the Deputy Secretary who said that the Government wished to give a single reply to the questions raised
and that the Council would "expect to receive this reply fairly shortly." Yet, as of today, the Consumer Council has still not received a reply!
In a paper to this Council on public utility companies, the Administration states that "The Government believes that the companies themselves should be directly accountable to the consumers as far as possible." Yet, at the same time, the Administration refuses to amend the Consumer Council Ordinance to allow that Council to monitor the franchised companies, and for three months it has refused to reply to that Council's request regarding consultation on the schemes of control. Furthermore, despite repeated requests by the Consumer Council, most public utility companies refuse to establish any independent monitoring body of consumers.
Mr Deputy President, this Council has likewise been similarly frustrated from properly carrying out its supervisory role. This is now my seventh year in this Council; and each time I enquired over the years about fare increases for public utilities that struck me as unduly large, I was always given the answer that there was nothing the Administration could do because it was bound by contract with the relevant franchised company. The Administration has always said that we have to wait until the franchise expires and then we could see about new negotiations. Yet, now, on the very eve of this debate about the franchise agreements, the Administration has seen fit to conclude a remarkable new 15-year agreement with China Light and Power, -- without even bothering to consult this Council! The timing of the deal, serving as it does to frustrate any attempt by this Council to offer its views on the franchise, shows the Administration's utter contempt for our views and reaffirms the need for the public consultation called for in the Honourable LAU Chin-shek's original motion.
Mr Deputy President, I have every reason to believe that the Administration is behind the Honourable Stephen CHEONG's motion to amend so as to absolve itself of its responsibility to consult the public and this Council on this vital issue. And I would be happy to stand corrected if the three government officials in this Council were to prove me wrong by voting against the amendment.
Given the amount of public money at stake, the importance of this issue to the public, and the highly unsatisfactory arrangements at present, a public review is long overdue. This request for a public review, moreover, should be seen in the context of the numerous public consultations that have recently been and will continue to be carried out on a diverse range of topics, including the Hospital Authority,
primary health care, social welfare, the Bill of Rights, and the new Organized Crime Bill, and so on. My colleagues from the United Democrats of Hong Kong will discuss the areas that we hope the review will cover as well as why the subject of public franchises is so important to Hong Kong. When Members realize the lack of information currently available on the subject, I hope that they will support the Honourable LAU Chin-shek's motion so that the Administration will prepare a comprehensive
consultative document as soon as possible.
If Honourable Members wish this Administration to do nothing about this very important issue, they should vote for the amendment. If they do wish the Administration to do something before it is too late, they should vote against the amendment and support the original motion.
DEPUTY PRESIDENT: I would just point out that under Standing Order 31 a Member shall not impute improper motives to another Member. So in relation to Mr CHEONG's proposed amendment, it would not be in order to question his motives.
MR TAM YIU-CHUNG (in Cantonese): Mr Deputy President, the people of Hong Kong have all along been very concerned about the quality of services provided by public utility and public transport companies and whether the price level for such services is reasonable. The hefty increase of charges by public utility companies has also been one of the major causes for high inflation in recent years. As a matter of fact, it is time that the Government should reconsider a review of its policy on public utilities.
The public utilities and transport services in Hong Kong are monopolized by several consortia, the quality of service they provide and the charges they impose directly affect the livelihood of the public at large. Nevertheless the monitoring of these public utility companies is done behind closed doors. On important issues such as the renewal of franchise for a company and the approval for revision of charges, the public are not only denied their chance as consumers to take part in the decision but they are also not given the right to be kept informed of what has happened. While they are made to bear the heavy charges and to accept unsatisfactory services, such an arrangement is very unfair.
At present the control mechanism of the Government on public utilities are full
of defects. For example, the Transport Advisory Committee, which is not accountable to the public, operates with a very low degree of transparency. The public are always on the receiving end whenever there is a price increase. The profit control scheme cannot check the price level of public utilities, instead it facilitates price
increase for those companies which are guaranteed a profit margin. The price increase does not bring about any significant improvement in service.
Without doubt the hefty increase of charges by public utility companies adds to the burden of the lower income group. There has been public outcry against it. Since the Governor has, in his policy address, set the "protection of disadvantaged members of society" as one of the objectives, why is the Government still reluctant to review its policy on the monitoring of public utilities? As a matter of fact, debates have been held more than once in this Council to urge the Government to improve its
monitoring system. During the motion debate on the Green Paper on Transport Policy in Hong Kong on 12 July 1989, I had already suggested the establishment of a sound and open monitoring system and the setting up of a committee comprising members of the community to formulate standards in monitoring public corporations, to enter into annual operating agreements with these corporations and to evaluate the operation of these corporations regularly. I also urged the Government to speed up the review on policy relating to public utilities and to solicit public opinions on the
recommendations and contents of the review. However, the Government has paid no heed to my proposals.
In March this year when the Government gave approval to the two bus companies to raise fares to a level above the inflation rate, I again urged the Government to review and amend "the Profit Control Scheme Applied to Franchised Bus Companies". I had the hope that the Government would conduct a substantive review on the scheme before the expiry of the franchises as a precondition for renewal of the franchises. However, to my great disappointment, the Government still evaded the question on various pretexts and the two bus companies raised their fares just the same, pushing the inflation rate to a new high.
Recently, the Government has reached an agreement with China Light and Power Company without consulting this Council and the public. The franchise of the Company has been renewed for a 15-year period and the permitted rate of returns is fixed at 13.5% - 15% of its net fixed assets. The company can now use tens of billions of dollars to expand its generating facilities. An increase in electricity charges in future is thus foreseeable. Such practice of manoeuvring behind closed doors and
taking pre-emptive actions without prior consultation will surely lead to public discontent and concern. The income group will be laden with heavier burdens.
Mr Deputy President, in order to "protect the disadvantaged members of society", the Government should no longer evade the fact that public utility companies are reaping huge profits, nor should it ignore the discontent of the public for not being able to be involved in monitoring these companies. With the opening up of our
political system and a heightened civic awareness, the public, as consumers, naturally demand to be informed in greater detail on matters such as the franchise and profits of public utility companies and to have a say in the monitoring work. Thus, I now propose again that the Government should review its policies on public utilities and publish consultative documents to solicit views of this Council and the public before entering into agreements with the companies on Profit Control Schemes and extending their franchises. The Government should also set up a committee, comprising members of the community, which is accountable to the public to review the quality of services provided by public utility companies on a regular basis and to assess whether their fares and charges are justified.
I believe that in formulating policies on public utilities, if the Government allows public involvement throughout the process of policy making by way of open consultation, the public can have a better understanding on the merits and demerits of these policies as well as the options available for consideration, and unnecessary conjectures and misunderstanding can then be avoided. If the Government works behind closed doors when formulating policies which have far reaching effects on people's livelihood and refuses to allow the public to exercise their right to know and right of involvement, more conjectures and discontents will arise and the image of the Government will be tarnished as well.
In view of the above reasons, if I have to choose between the two motions, I consider the wording of the Honourable LAU Chin-shek's motion to be more in line with my view.
Mr Deputy President, with these remarks, I support the Honourable LAU Chin-shek's motion.
DEPUTY PRESIDENT: A number of Members, I understand, have urgent commitments elsewhere. I shall therefore call upon Mr Andrew WONG.
MR ANDREW WONG (in Cantonese): Mr Deputy President, I rise to speak in support of the amendment proposed by the Honourable Stephen CHEONG to the motion moved by the Honourable LAU Chin-shek. Should Mr CHEONG's amendment be defeated I nevertheless could, albeit with some reservation, support Mr LAU's original motion.
Mr Deputy President, that I have at the very outset stated in unequivocal terms how I would vote is because I shall be away from half past five this afternoon to attend a function which I cannot, without transgressing the bounds of civility, decline and which will probably keep me from returning to this Chamber later to vote.
Mr Deputy President, the spirit of Mr LAU's motion, as I see it, lies in its assertion that the Administration must extensively consult the public and this Council in respect of the profit control schemes for franchised companies. I fully support this. The profit control schemes which the Administration has relied on to control the profits of franchised companies have degenerated into some sort of profit guarantee schemes and, in a climate of high permitted returns, have further degenerated into a sort of profiteering guarantee schemes.
Mr Deputy President, Mr LAU's motion is worded thus: "That this Council urges the Government to consult this Council and the public on profit control schemes and franchise agreements with public utility and public transport companies before entering into such schemes and renewing such franchise agreements with the companies." Mark these words: there are two things in respect of which the motion urges for open consultation with this Council and the public. First, the profit control schemes for the companies concerned; and second, the franchise agreements with individual companies in respect of the rates of permitted returns and the scope of control. Therefore, though the spirit of Mr LAU's motion is commendable, the motion, once passed and implemented, will give rise to two major problems. What I am worried about is not the profit control schemes because, in legislating for such schemes, not only will this Council have been consulted but also the legislation will be subject to passing by this Council who will have the power to enact and amend as seen fit. What I am worried about is the contents of the franchise agreements for individual companies.
Mr Deputy President, the first problem relates to practicability. Agreements are signed after negotiations have been concluded. In the course of negotiation with
public utility companies, how can the Administration "openly" consult this Council and the public? It should be noted that Mr LAU is urging for open consultation. Commonsense tells us that this will not be possible. Even granted that the Administration had no power to negotiate and to sign agreements and that such power was instead vested in this Council, this Council would certainly hold discussions behind closed doors and assume collective responsibility to keep any information relating to the proceedings secret. Furthermore, does open consultation with this Council and the public include divulging the private, sensitive commercial secrets of the public utility companies concerned?
Mr Deputy President, the second problem relates to a question of constitutional significance. As I said a moment ago, this Council could take back from the Administration the power to negotiate for and sign franchise agreements with public utility companies and have such power placed within the competence of this Council to exercise. Should this happen, the legislative and executive powers would come merged and this Council would become the Administration or a super-administration and the current Administration would be relegated to the position of an implementing organ only. I believe Mr LAU cherishes no such intention. If, before the signing of an agreement, this Council must be openly consulted and then it falls to the Administration to make the final decision, then the majority view of this Council will exert enormous pressure on the Administration. A situation will emerge where this Council will possess power but with no responsibility and the Administration will be laden with responsibilities but possess no power. All credit will go to this Council if a correct decision is made and all blame will go to the Administration if a wrong decision is made. Will this be the democratic system that we are intent on building?
Mr Deputy President, Mr CHEONG's amendment seeks to delete "consult" and substitute "seriously take account of". This happens to solve the two problems that I perceive will arise. The "seriously take account of" wording as proposed by Mr CHEONG not only carries the connotation that the Administration must consult (because there cannot be "seriously take account of" without prior consultation) but it also further points out clearly the need for the Administration to follow the views of
this Council and the public. This Council can any time resolve to set up an investigating committee to question the Administration as to whether it has acted properly in the exercise of the power conferred on it by this Council to negotiate for and sign the agreements concerned. Such being the case, dare the Administration act arbitrarily or irresponsibly?
Mr Deputy President, at the beginning of my speech, I already said that I supported the spirit of Mr LAU's motion because the profit control schemes had degenerated into profit guarantee schemes or profiteering guarantee schemes. The pressing task before us now is to conduct a comprehensive review to find out whether the control of franchised companies through profit control schemes is valid and effective in all cases or whether it is ineffective against some companies. Take for instance public bus services. If there is still the need for control, should the rate of permitted returns be based on net fixed assets or shareholders' equity or a certain mix of the two? Should the permitted returns be as high as 15% to 16%? These are the real focal issues. I call on the Administration here to get on with the review as soon as possible. I also call on Honourable Members of this Council to turn to themselves for a solution and let this Council do it.
Mr Deputy President, I support the motion.
PROF FELICE LIEH MAK: Mr Deputy President, the Government adheres to a policy of minimal interference in the management of public utilities and transport companies because to a certain extent it recognizes the ability of the private sector to provide utility and transport services to the public. The Government's primary responsibility in this respect is to ensure reasonable prices and quality service for the consumer, without jeopardizing the financial security of the companies.
In this role the Government walks a difficult tightrope as it balances the needs of the community with the financial success of the company. This motion debate is really an attempt to decide which side, the consumer or the company, deserves our concern. The consumer wants better service and lower costs. The company wants
better profits. We are the arbitrators who must balance the needs of both sides.
I encourage Members to consider that these two sides are not necessarily opposed to each other. Good and efficient management, committed to the interests of the consumer, can provide quality service and satisfy the needs of both parties. Our discussion today on this debate, rather than passing judgement for or against the consumer and the companies, should instead focus on the gains for both in achieving better management and better accountability.
To ensure the efficient running of the public utility companies and the transport
companies their management schemes should no longer be hidden from public scrutiny. The public demand quality services at the right price and have the right to consider and suggest improvements in the operation of the company. If there is public dissatisfaction, their voices should be heard. The structure of the companies should be made more transparent to the public and provide consumers with an opportunity to consider improvements in management and in services.
This however must not mean that the companies will be controlled or managed by the Government or the people. The Government should continue to negotiate schemes of control and franchises that seek minimal interference in the business. The concerned companies should continue to be independent but however must be responsive to the reasonable demands of the consumers.
Our utilities and franchised companies are currently providing very reasonable costs with very adequate service in some areas not in all. If we look at territories other than Hong Kong and look independently at utilities and transport services we find that there is a lot to be said about them. If we look at cheaper and more
efficient services many of these are invariably subsidized at the cost of the taxpayer. Hong Kong's favourable comparison is a tribute to our current system of public utilities and transport services management that is run by private companies but under government control and some degree of protection. There is room for improvement in this formula. In recent years there have been complaints about the quality and the price of services. Some of our companies no longer value innovative management and as a result are mismanaged. The goal of increasing profits has replaced accountability to the public as a priority in the consideration. The inefficiency and complacency of a monopolistic organization is revealing itself.
The Government unfortunately has lost its ability to adequately monitor these companies. They have assumed a high level of organizational competence in the companies and this is not always a wise approach. The public has suffered from those assumptions. The Government has limited expertise to advise them on these matters. They are always out-done and out-manoeuvred by these large companies. Therefore, it is essential for these companies to make that move and if not they will be forced to make this move that they should make the schemes more transparent to the Government and to the public. This will reveal potential mismanagement and ensure the companies' responsiveness to Government and public monitoring.
The appropriate channel for public monitoring must be wisely considered and
understandably this is the point of debate here. There are many possible means for gathering public opinion, but some of them are more efficient and accurate than others.
Public surveys and opinion polls have become popular sources of information. Interviewing a large number of people and compiling their statements may seem to be a reliable source of public opinion. I encourage Members to consider the accuracy and the cost effectiveness of this public consultation. As the polls that predicted a 60% to 70% turnout for September's elections revealed, surveys are not able to predict the future or reliably gauge public sentiments.
The opinion survey attempts to converge the views of a great number of people into a few categories and then generalizing the attitudes of the population as a whole. But opinions are too varied, ambiguous and complicated to be reduced into four or five degrees of agreement and disagreement on a particular question. The interviews and results are biased by the questions and the interviewer's personal attitudes. The intensity of the respondent's answers cannot be properly monitored.
Public surveys stumble when confronted by ignorance. If we take this matter to the public, how many will have the necessary information to express an intelligent opinion or the expertise to do so even if the facts are presented in the simplest manner. We perform a disservice to this debate by assuming the public's
understanding of the complexity of this matter, and thus conducting an opinion poll to guide us. But we should make available to those who do have interest or expertise in this matter an opportunity to express their opinions. We should listen very closely to those who have sought an opportunity to voice their sentiments, instead of those who have responded to an interviewer's questions.
Opportunities for expressing opinions on this subject need to be created. The suggestion of consumer consultative committees extending the power of the Consumer Council is a good one. The companies should set up these avenues for public consultation themselves or else, as said earlier, they will be forced to do so. This will allow concerned members of the community to come and voice their opinions and complaints. In addition, citizens can make their feelings known to their elected representative so that the views of the public can be conveyed into this Council. These means of public consultation are more valuable than opinion surveys and would cost less.
As to consulting this Council, being a new Member I hesitate to be so critical, but let us be realistic. How many Members do have the expertise to understand the financial intricacies of the scheme of control, or indeed will take the time to do so? The Administration's briefing in the various meetings on this matter was
attended by more than half of the panel members, and even less stayed until the end. To truly understand the schemes, this Council will need to employ financial consultants, who in fact will be duplicating the Administration's work. This will add onto the cost of consultation but not necessarily accuracy or legitimacy.
As we search for the proper balance between the consumer and the companies, we must be careful not to allow the ruin of a successful system under the banner of reform. This debate considers not only the proper amount of public control over utilities, but also larger concerns about the generation of profits and the redistribution of wealth. There are greater evils than our present system, and we should be careful not to implement excessive reforms that will ultimately result in higher prices and bad services from our companies.
We do not want state controlled and managed utilities and transport systems. Traditionally, this situation has resulted in the breakdown of services as well as high prices. Too much public intervention into the management of the utility and transport companies is no better. The companies' survival is often sacrificed at the expense of low fares. Services become unreliable when company after company fails to provide the services at impossible costs.
The attempt to deregulate public utilities and transport systems will also fail. The deregulation of airlines in the United States in the 1980s resulted in poor service and unnecessary confusion. New companies gained their experience in the business at the expense of the customers.
Our present system of minimal interference is sound. But as we consider the renegotiation of long-term contracts, we must address the growing dangers of poor management and the lack of accountability in our public utility and transport companies. Some adjustments to our system today will prevent increasing dissatisfaction and hasty reform in the future that might place the companies entirely in the hands of the people.
The subject of today's debate is not the struggle between impoverished people and greedy monopolists. We are not lifting a burden of unfair prices off the
shoulders of our people. Our task is not to redistribute the wealth of the community. Instead, we should try to perfect an already proven system. We should reaffirm the condition that has formed the basis of our economy: the opportunity to create wealth without interference. Let us modify our current system slightly but not jeopardize the rewards for industry.
Mr Deputy President, with these remarks, I support the Honourable Stephen CHEONG's amendment.
DR LEONG CHE-HUNG: Mr Deputy President, I thank you for letting me jump the queue and apologize to my colleagues for taking this manoeuvre.
Five weeks ago the Governor, Sir David WILSON, in his policy address, called for a co-operative partnership between this Council, the Executive Council and the Administration.
Five weeks later, this Monday, Government took the liberty to inform the Omelco Economic Services and Public Utilities Panel that it has already made a decision to renew the scheme of control agreement with China Light and Power Company Limited.
We do not even have the pleasure of Government to brief the full Council on this in the Legislative Council In-House meeting or a special in-house meeting!
Is it the first concrete example of Government to realize a "co-operative partnership"? Or has this partnership unilaterally turned sour.
Mr Deputy President, many people, including myself, are harbouring a suspicion that Government has been too soft and too lenient to public utility and public transport companies.
Time is ripe for an overall review
Most schemes of control were initiated decades back. They are now clearly wide off the mark.
At that time, a few decades ago Hong Kong was but a premature baby. Essential public services had to be taken good care of to ensure that, firstly, the people here
could receive efficient and reliable services at reasonable cost, and secondly, the companies could receive a reasonable return and be encouraged to continue to make necessary investments to meet growing demand and improvement in service standards.
Under those circumstances, profit control schemes and franchise agreements are essential "vitamins" to help these companies to stand up on their feet and grow up healthily.
But time flies. They have now grown up and in good shape. Do they still need these vitamins? Or are we producing some degree of "morbid obesity" in the central public services at the expense of the public at large.
Mr Deputy President, these schemes may be justified in the past. But now they should be put under the microscope. Furthermore, guaranteed profits do not necessarily mean better services. China Motor Bus Company is an example. For numerous times they have been criticized for providing an inadequate service to commuters on the Hong Kong Island.
Consideration should therefore be given to whether the public interest has been duly protected, whether benefits could be derived from increased competition, what safeguards in financial and technical monitoring procedures of the companies and what cost efficiency and technological advancement should be made and achieved and whether sufficient channels have been established for the public to monitor the performances of these companies.
Public must be consulted
Mr Deputy President, I strongly object to the argument put forth in a letter by Mr G L CREW, managing director of Hong Kong Telephone Company Limited to this Council that and I quote: "It is difficult and time-consuming to present a clear picture to the public, to gain an informed response".
The letter went on to say that "it is inevitable that such consultation will provoke responses from vested interests, which may not have the best interests of Hong Kong in general as their prime motivation."
I appreciate the trust Mr CREW in the same letter has put on the Legislative Council which he said is well placed to represent public viewpoints and can handle
complex subjects by experts. But what is wrong with getting public opinion?
Besides, it is always dangerous to leave things to the self-proclaimed experts or technocrats with the laymen -- the members of the public -- being cast outside the doors.
Let the franchised companies be reminded that the public are the very people who pay for the services. They have the full right to be consulted and be assured that every dollar and cent they paid is well spent. Their views should therefore be fully heard, not by proxies or by technocrat overlords, but by themselves.
It is for this reason, Mr Deputy President, that I do not and cannot support the amendment put forward by the Honourable Stephen CHEONG which has deliberately struck off the word "consult". To "seriously take account of the views of this Council and the public" as he suggested is simply not enough.
No blackmail please
Mr Deputy President, it is totally absurd to hear arguments that protected schemes are needed as "the price for meeting challenges" in face of future economic uncertainty and the 1997 jitters. I do not agree. It simply is a blackmail.
The future of Hong Kong is a challenge for everyone who calls Hong Kong his home. There should not be any advantages bestowed on a few privileged investors at the expense of the majority. Having said that, Mr Deputy President, I do not mean that these companies should run in the red and suffer financial losses. But certainly the protection shields should be lifted.
These shields, which guaranteed recognizable profits, are the culprit for spiralling of fees and charges in public utilities and services, and adding fuel to the flames of increasing inflation.
I tend to agree with the suggestion made by the Consumer Council in September that the time is ripe to conduct an overall objective review of the mechanism of the schemes of control governing these companies.
Indeed, Mr Deputy President, the Omelco Economic Services and Public Utilities Panel has, in the last Legislative Council Session, made similar calls. The panel went further to suggest that a white paper should be put forth to solicit views of
the public. I support this call and consumers from all walks of life should be involved in the consultation process.
A Legislative Council select committee should be set up
Moreover, Mr Deputy President, in sounding a chord of unison with the Honourable Andrew WONG, I also call for the setting up of a select committee under this Council to review the overall control schemes and the franchises. This committee can summon witnesses and government officials and can call for public hearing. Recommendations will be made to this Council and then to Government. This, Mr Deputy President, is a way to effect a co-operative partnership and I expect the official to reply in this particular direction.
As the renewal of these agreements and control schemes will obviously straddle 1997 and have long-term implications to Hong Kong people, Government should not rush to make decisions.
A new and flexible profits control called for
I would like to stress here on the urgent need to review the current mechanism over profits which observes only one principle of net average fixed assets.
The problem with this principle is that the return profit is calculated after deduction of all operating costs. This means that the companies would have no incentive to control their cost: they can allow their cost to rise and then simply raise the prices to achieve the same level of profit as guaranteed by the control schemes.
Public utilities in Britain are regulated under a very different scheme. Instead of guaranteeing the company a rate of return the scheme fixes the prices the company may charge and leave the company to seek greater efficiencies and earn greater profits.
Let us take the Hong Kong Telecom's counterpart in Britain as an example. British Telecom (BT) for example has been granted price increases less than the rate of inflation for some years. Yet its service to customers has improved and it now, despite lower prices in real terms, makes enormous increase in profits, in the order of something like HK$35 billion per year! Both BT's shareholders and its customers
have benefited under this scheme.
The Hong Kong Democratic Foundation, Mr Deputy President, has for a long time urged that some Retail Price Index (RPI) formula be adopted for setting prices. A formula such as RPI-minus five, that is allowing prices to rise by 5% less than the inflation rate, would probably be appropriate for Hong Kong Telephone for example and some other utilities.
Government should also consider the Omelco Economic Services and Public Utilities Panel's call for a more flexible mix of control mechanisms over profits than just fix to one criterion of net average fixed assets. Such recommendation is called for as it was the product of collective wisdom of our colleagues after in-depth discussion with the Administration on this matter.
After all, all these public utilities agreements will have direct bearing on Hong Kong people. They should not be considered in a piecemeal approach. An overall rationale ought to be established so that these agreements should be made with both the interests of the consumers and the companies taken full care of.
Mr Deputy President, it is pointless for Government to pay lip service to advocating partnership while in reality it rubs off the part to be played by this Council in the public. If Government is to stick to its foregone decision and approaches to make decision then it is really pointless to carry on with this debate in this Council and I would rather suggest Mr LAU to withdraw his motion to save time and embarrassment that may likely incur the Government.
With these remarks, Mr Deputy President, I cannot accept the amendment by the Honourable Stephen CHEONG and I support Mr LAU's original motion.
MR LAU WONG-FAT (in Cantonese): Mr Deputy President, the present development of Hong Kong has reached a stage which necessitates the perseverance of transparency by the Government in the process of decision making. The principle should be applicable to the control of the operation of public utility companies and public transport companies. Such control is directly related to everyone and it has significant
impacts on people's standard of living.
Concerning the franchise issue, I am of the view that a comprehensive review
should be conducted by the Government now. Franchise came into existence years ago as a result of investment projects involving huge capital. It was necessary at that time to give assurance and protection, in the form of franchise, to investors who had made major promises, bearing in mind that Hong Kong was only a fishing village with a small population and its industry and trade were on a very small scale. But is it still necessary to give protection and assurance to investment on electricity and transport systems when Hong Kong has developed into a famous international
financial and commercial centre? That is a question that many people want to ask, I believe.
The normal practice of classifying franchise arrangements as confidential by the Government has caused worries. It is claimed that over the past two decades the level of tariffs has been far below inflation rate. It is also argued that why should we bother to have a review or change when the current system is operating with efficiency? However, I opine that all data given may be totally misleading unless the relevant franchise agreements are disclosed.
Mr Deputy President, I would like to pose the following questions:
(1) What are the criteria, rules, and regulations regarding profit control on investment and restrictions on other relevant business?
(2) What are the land arrangements for major franchised developments? What is the amount of underlying subsidies involved if the provision of land is made at discount prices?
(3) What arrangements will be made by the Government when franchised companies no longer apply the original development purposes to the land provided? Do franchised companies have the exclusive right to redevelop the land?
I fully understand the complexity of the operation of large public utility companies. But to a large extent, the future of Hong Kong has to rely on a healthy and efficient infrastructure. I hope a fair, balanced, and reasonable system which provides no room for the existence of monopoly will be established in Hong Kong.
Mr Deputy President, as government administration is becoming more open, there is a genuine need to enhance transparency in mapping out the profit control schemes and in renewing the franchises for public utility companies and public transport
companies. Meanwhile, public views should be taken into account seriously. It is obvious that the profit control schemes for public utility companies and public transport companies are very complicated issues involving a variety of technical and specific knowledge as well as classified commercial information. In this regard, the Government should strike a balance among the enhancement of transparency, the consideration of public opinion, and the caution of not obstructing the achievement of reasonable agreements with relevant companies. I do not see any contradiction between the original motion and the amended motion as far as the spirit is concerned. Yet, I support the latter because its wording obviously suits the actual situation more and is favourable to the Government in reaching the balance.
Mr Deputy President, I support the motion.
MRS MIRIAM LAU: Mr Deputy President, public utilities and public transport are basic and essential services which affect the daily life of the ordinary citizen. It is clearly the responsibility of a good government to ensure not only that such services provided to the community are adequate and reliable but also that the prices charged therefor are reasonable. Hitherto the Administration has sought to fulfil these two objectives through profit control schemes and franchise agreements with the various utility companies and transport operators.
When first introduced in 1975, the profit control scheme was a measure clearly intended to safeguard the interests of users of public utilities and transport services. However, this shield for the protection of consumers is now viewed, rightly or wrongly, by many to be a sword for advancement of the cause for price increases. The criticisms in this regard are particularly acute in the case of public transport services. Many of such criticisms could have been averted if the Administration had been more ready to explain in detail the basis upon which the approvals for fare hikes were granted, and the operators had been more open about information and data supporting their case for fare adjustments. But in my view the root of the problem lies in the fact that the scheme of control agreements themselves contain terms which are not exactly unequivocal or water tight and such ambiguities have given rise to many controversies. In the adjournment debate on Franchised Public Transport Services in Hong Kong in this Council on the 13 March this year, I have outlined some of those controversies and I shall not repeat them today. Suffice it for me to say that misunderstandings over the true meaning of permitted return, the rationale behind the pegging of permitted return to net fixed assets, the control over asset expansion, the control over quality of performance, the role
and function of the Development Fund and so on are all matters which require elucidation or improvement as the case may require. To my mind the controversies which have arisen cannot be removed unless the ambiguities are expunged from the agreements. Since many of the scheme of control agreements are coming up for renewal, the Administration must seize this opportunity to review existing schemes and to address whatever inadequacies there may be to ensure that such inadequacies are not carried forward into the new agreements.
Mr Deputy President, since the users of public utilities and transport are members of the public, they are certainly entitled to voice their views as to what they feel should be the proper framework for the operation and control of such services. The Administration certainly cannot ignore such views when negotiating renewal of the scheme of control agreements. However, it must be appreciated that our utility and transport services are not state-operated; therefore the matter is not one
exclusively for the Administration to decide. As much as we would like it, it is not just what the public wants that dictate, for it must take two sides to make a contract. The private operators themselves must be sufficiently enthused by the opportunity to receive reasonable returns on the investment before they would be prepared to strike a deal. The public naturally wants maximum control and low charges;
the operators, being commercial enterprises, understandly want flexibility of operation and profits. The Administration must therefore strike a right balance between the conflicting interests of the service provider and the service recipient to find an arrangement which would on the one hand be commercially viable and on the other hand capable of reasonably meeting public expectations. In this balancing exercise, the Administration must never lose sight of the fact that the ultimate objective is to ensure the continued provision of proper and efficient services to the community at reasonable cost. That is what our community requires and that must be the crux of public interest. The task is by no means an easy one but provided the Administration is prepared to listen to and seriously consider the views of both sides, to understand and address the concerns expressed by both sides and to explain and justify the rationale behind the ultimate decision made, I am sure that fair and reasonable franchising arrangements acceptable to all can be arrived at.
The Honourable LAU Chin-shek's motion calls on the Government to consult this Council and the public on the profit control schemes and franchise agreements before they are made. Whilst I can support this spirit behind the motion, I have reservations about the practicability of the move called for. In my profession, I see contracts being negotiated and concluded almost every day. Negotiation of any
contract is usually a lengthy and complicated process, necessitating the adoption of strategy, skill and care and a great deal of give and take on both sides. There is no way that one party can force its way through because the other party always has the option of backing down. How then does public consultation fit into this process? When and how often should the public be consulted? Should they be
consulted before an offer is made? Should they be consulted again after a counter-offer is received? Bearing in mind that there are bound to be umpteen offers and counter-offers along the process, some of which may require quick responses, can we afford to hold up the negotiations from time to time to await the outcome of public consultations which in any event may or may not be conclusive?
Mr Deputy President, I agree that the views of this Council and public opinion are both very important on this very important subject. But in the past such views have been expressed many a time through debates and questions in this Council, through contacts with the Administration via the Omelco panels, through deputations turning up at our Omelco Complaints Office and through the media. I believe that the
Administration closely monitors those views and is well aware of the same. If the views already expressed have not been sufficient, I have no doubt that the new Members of this Council, particularly those who are directly elected, will not hesitate to point this out and make up for the deficiency. Honourable colleagues who spoke before me have clearly indicated their intention to make full use of this forum for expression of their views and I am sure that those speaking after me would do likewise.
As I see it, the problem is not the lack of expression of views or the lack of forum for expression of views. The problem lies in how much weight the Administration attaches to such views. It is important that the Administration hears the views of the public but what is more important is that the Administration is prepared to fully and seriously consider and bear these views in mind when negotiating the new
franchising arrangements. This is what we should urge the Administration to do. In this regard, I find that the Honourable Stephen CHEONG's proposed amendment more adequately addresses the real concern underlying the original motion. Hence I support the same.
MR JIMMY McGREGOR: Mr Deputy President, I have only a few comments on this motion. I understand the concern expressed in this Council and more widely in Hong Kong from time to time that franchises and monopolies granted by the Government to private sector companies shall not become licences to print money and that the services being
provided shall be efficient and cost-effective. There have been examples of the failure of the Government to enforce the requirement for operational efficiency. There have also been complaints that some of the companies granted a franchise or some other form of protected operation have taken profits which were unreasonably high and which therefore exploited their privileged position. In recent years there has been great pressure on the Government to rectify any past errors of judgment and to improve the efficiency of the companies concerned, particularly where franchises are to be considered for renewal.
The Government has in my view reacted well to these calls and, certainly during the last three or four years, has tried to introduce competition where this has seemed fair and equitable. I believe these efforts have been quite successful. Even the threat of competition can sometimes work wonders. Certain transport companies seem to have greatly improved their services as a result of competitive pressure.
I am therefore all for competition if this will improve the services provided to the Hong Kong community by these companies. However, I do think that, generally speaking, we get good value for our money, compared to other similar territories and cities around the world. It also seems the case that our utilities are comparatively efficient and one or two of them are up among the most efficient in the world. I do not personally include China Motor Bus in this category.
In regard to the motion now under consideration, I must say that I am doubtful about the value of public consultation over the renewal of franchises and schemes of control. These are complicated arrangements requiring very detailed examination of technical, economic and operational aspects of each of the utilities concerned. Public concurrence with proposals for renewal of profit making franchises and schemes of control would be well nigh impossible, given the normal and natural desire of the general public to have the services provided at the least possible cost. There would be endless argument and, in the end, the Government would still have to decide what to do.
I can see a case for this Council being involved in the approval of extensions to franchises and schemes of control but, even here, where is the expertise that will permit accurate assessment of proposals? It is not unlike our trying to understand what is happening with the financing for the airport. Even the best accountant cannot say whether the assessed costs are reasonable or not since much of the relevant
information is of a highly specialized technological nature and will eventually in
No comments yet.
Private notes are available after approval.