1 HONG KONG LEGISLATIVE COUNCIL -- 27 November 1991 HONG KONG LEGISLATIVE COUNCIL -- 27 November 1991 1
OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 27 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 JEREMY FELL MATHEWS, C.M.G., J.P. THE HONOURABLE ALLEN LEE PENG-FEI, C.B.E., J.P. THE HONOURABLE STEPHEN CHEONG KAM-CHUEN, C.B.E., J.P. THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE 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 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 MARTIN GILBERT BARROW, O.B.E., 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 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
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 SZETO WAH
DR THE HONOURABLE LAM KUI-CHUN
PROF THE HONOURABLE FELICE LIEH MAK, O.B.E., J.P.
IN ATTENDANCE
MR GRAHAM BARNES, C.B.E., J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
MRS ANSON CHAN, J.P.
SECRETARY FOR ECONOMIC SERVICES
MR YEUNG KAI-YIN, J.P.
SECRETARY FOR THE TREASURY
MR JOHN CHAN CHO-CHAK, L.V.O., O.B.E., J.P. SECRETARY FOR EDUCATION AND MANPOWER
MRS ELIZABETH WONG CHIEN CHI-LIEN, I.S.O., J.P. SECRETARY FOR HEALTH AND WELFARE
MR JAMES SO YIU-CHO, O.B.E., J.P.
SECRETARY FOR RECREATION AND CULTURE
MR JOSEPH YAM CHI-KWONG, J.P.
SECRETARY FOR MONETARY AFFAIRS
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.
Designation of Libraries (Urban Council Area)
(No. 4) Order 1991.................................................. 415/91
Designation of Museums (Hong Kong Museum of
Art) Order 1991...................................................... 416/91
Public Health and Municipal Services (Civic
Centres) (Amendment of Thirteenth Schedule)
(No. 2) Order 1991.................................................. 417/91
Specification of Public Office........................................... 418/91
Waste Disposal (Amendment) Ordinance 1991
(Commencement) Notice 1991................................... 419/91
Sessional Papers 1991-92
No. 21 -- Report of changes to the approved Estimates of
Expenditure approved during the First Quarter of 1991-92
Public Finance Ordinance : Section 8
No. 22 -- Ocean Park Corporation Annual Report 1990-91
No. 23 -- Hong Kong Sports Institute (Jubilee Sports Centre) Annual Report 1990-91
Addresses by Members
Report of changes to the approved Estimates of Expenditure approved during the First Quarter of 1991-92
Public Finance Ordinance : Section 8
SECRETARY FOR THE TREASURY: Mr Deputy President, in accordance with section 8(8)(b) of the Public Finance Ordinance, I now table for Members' information a summary of all changes made to the approved estimates of expenditure for the first quarter of the financial year 1991-92.
Supplementary provision of $154.4 million was approved. It was fully offset either by savings under the same or other heads of expenditure or by the deletion of funds under the Additional Commitments subheads.
During the period, non-recurrent commitments were increased by $555.1 million, new non-recurrent commitments of $142.0 million were approved and approved non recurrent commitments of $68.2 million were revoted.
In the same period, a net decrease of 812 posts was approved.
Items in the summary have been approved either by Finance Committee or under delegated authority. The latter has been reported to the Finance Committee in accordance with section 8(8)(a) of the Public Finance Ordinance.
Ocean Park Corporation Annual Report 1990-91
MR RONALD ARCULLI: Mr Deputy President, tabled before the Council is the Ocean Park Corporation's Annual Report for 1990-91.
In the past financial year to 3 June 1991, Ocean Park (including Water World and Middle Kingdom) welcomed some 2.4 million visitors. This total represents an annual increase of 11% and is a record for the Park since it opened in 1977.
Operating income for Ocean Park rose by 25% this past year to another record of $242 million. Net operating surplus amounted to $46 million, a 9% increase, again, the highest ever.
These excellent results are all the more remarkable, when we take into account the destabilizing global events of the past year, most notably the Middle East crisis and its subsequent detrimental effects on Hong Kong tourism.
Unfortunately, as revenues and profits increased, so also did operating expenses rise -- by 19%, to $153 million. This unusual increase is mainly attributable to the full-year operation of Middle Kingdom, compared with only six months in its previous first year.
However, financial viability has not been the Park's sole objective, but merely a means of achieving its broader corporate goals. In the spirit of accomplishing these objectives, the year 1990-91 saw the development of various educational pursuits, as well as increased commitment to scientific research.
The most exciting new attraction was undoubtedly the $39 million Shark Aquarium, opened nearly a year ago in December 1990. The Merry-Go-Round was introduced for younger visitors and live entertainment expanded too. The success of such attractions has assured the management of Ocean Park that the provision of top quality family entertainment is the direction of the future.
Ocean Park's most ambitious project of 1991 will open in December when the 70-metre Ocean Park Tower is completed. The facility is the first of its kind in Southeast Asia.
Uppermost in the minds of the Park's directors has been to supply these outstanding facilities at affordable prices. In May this year, the Park announced a combined admission charge of $140 for Ocean Park and the Middle Kingdom, previously two separate attractions.
To further emphasize the added value and to reinforce the Park's position as a family entertainment venue, a new admission policy has been introduced, permitting children under 12 years and senior citizens aged 60 or above free entry. The Park will continue to review the situation to ensure that a portion of its operating surplus is directly passed on to visitors.
Finally, in relation to the Ocean Park Trust Fund, I am happy to report that the Fund has had a successful year. The year-end value of Ocean Park's investment portfolio of the Ocean Park Trust Fund rose to a total of $211 million.
In summary, this has been an all round successful year for Ocean Park and the Park looks forward to another successful year in 1991-92 as we begin a major five-year expansion plan.
Oral answers to questions
Land Development Corporation
1. MR FREDERICK FUNG asked (in Cantonese): Will the Government inform this Council:
(a) what criteria and procedures are adopted by the Land Development Corporation for formulating plans of urban renewal;
(b) secondly, whether landowners and tenants affected by the redevelopment projects of the Land Development Corporation would be fairly compensated and properly rehoused; and
(c) thirdly, whether the Government and the Land Development Corporation have
plans to review and reform existing principles, polices and arrangements?
(d) fourthly, some owners would like me to reflect the following point. They would like me to show you this, that is, you have given the LDC a very important and powerful sword -- has this been abused? Thank you.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I have notice of the first three parts of that question but not the last and I am not going to attempt, at this stage, to answer the last part. The answers, seriatim, are as follows:
(a) Before it launched its overall plan for urban renewal, the Land Development Corporation commissioned a series of Studies on Urban Development Opportunities to look into the adequacy of community and infrastructure facilities, the socio-economic characteristics, the building conditions, and the land ownership pattern within
various study areas in Hong Kong. The studies enabled the Corporation to prepare its plans for urban renewal schemes. But in any case, almost all the areas which the Land Development Corporation proposes to develop have for many years been subject to statutory outline zoning plans defining the proposed land uses of the area
including community facilities and open space.
Although the Town Planning Board redesignated many of these areas as Comprehensive Development Areas to prevent individual developers who might frustrate the Board's urban renewal schemes, it made it very clear that the Corporation would be required to provide specified community facilities and open space in its subsequent submissions to the Board. Within these requirements the Corporation plans its own schemes, taking account of the nature and potential of the area, the local community and the financial viability of the different uses, and taking advice from the local planning office. Its detailed proposals must go through Town Planning Ordinance procedures, including consultation with district boards and public objection procedures.
(b) The second question: in passing the Land Development Corporation Ordinance in 1989, it was one of the main concerns of Members of this Council and of the Administration to ensure that the Ordinance gave adequate protection to owners/tenants affected as well as providing a reasonable framework for the Corporation to attract private enterprise to join in its schemes. For this reason there are a number of requirements for reference to the Government included in the
procedure, which are aimed at ensuring that the rights of owners/tenants have adequate protection. The stipulations on compensation are quite clear.
If the Corporation has not, in the view of the Administration, offered reasonable terms, the Administration will not put an application for resumption to the Governor in Council. "Reasonable terms" essentially means similar offers to those which the Government itself would make in the context of a resumption, which, broadly speaking, are required by the Ordinance to reflect the market value of the property. Again as a prerequisite to agreeing a resumption the Secretary must be satisfied that the Corporation has provided appropriate housing to those living in the area. This can take different forms, varying from simple cash payments to the provision of flats on a rental basis to those people who cannot afford to buy a flat of their own. The Land Development Corporation does not have the advantage enjoyed by the Housing Society and the Housing Authority of a substantial pool of low-priced or low-rental or temporary housing to assist in its clearances, but it has made considerable efforts to buy and adapt flats to assist those most in need.
(c) The third part: the Government and the Land Development Corporation think that after several adjustments of the offers made they are generally about fair and about right. I agree however that the Corporation and Government should take stock of the situation after some of the clearances have been completed to ensure that they continue to be so.
DEPUTY PRESIDENT: Mr FUNG, there was a fourth part to your question as to which notice is required under Standing Order 17. You have not given notice but if it is a question which you think you can ask as a supplementary question, then put it in that way and I will, exceptionally, allow you to ask your normal supplementary question. Do you want to re-phrase the fourth part of your original question as a supplementary
question? It has got to comply with the rules as to supplementary questions.
MR FREDERICK FUNG (in Cantonese): That relates to the second and third parts of the question. But I still have a supplementary question to ask.
DEPUTY PRESIDENT: Yes, I did say that I would allow you, exceptionally, to go on to your normal supplementary questions, if you want to pursue your fourth question on
the original question, provided you can do it as a supplementary.
MR FREDERICK FUNG (in Cantonese): Yes, Mr Deputy President. In relation to the second part of the question, I have a supplementary on compensation. According to the LDC, there were five options for compensating flat owners. May I know whether they will be entirely at the discretion of the LDC, or flat owners will be allowed to select one of the five options? As regards the third part of the question, there have been a lot of conflicts between the LDC and the flat owners in previous clearances.
Although the Administration has no intention of conducting an early review now, I would like to ask, in view of these conflicts, whether representatives of flat owners will be included on the LDC and whether an arbitration body will be set up to facilitate the future urban redevelopment? I would like to put my fourth question as a
supplementary: Would the LDC abuse the Crown Lands Resumption Ordinance?
DEPUTY PRESIDENT: Could you deal with the first two supplementaries, Secretary, and defer the last one.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, the LDC, in making offers of compensation to persons affected, is acting as a private party, and landowners who receive these offers are also in the same position as if a developer were offering compensation. So it is perfectly free and proper that the LDC should offer compensation in different forms, and it is also perfectly proper that the owners should choose between them or reject all of them.
I now turn to the second question which is about conflicts with landowners. The LDC membership is appointed by the Governor for a certain term. It obviously would not be appropriate for particular landowners affected to be appointed ad hoc to deal with the particular clearance in which they are involved. Clearly, the Governor has to consider the membership every time it comes up for appointment in the light of the needs of the Corporation and in the light of the interests which the Corporation is meant to protect.
DEPUTY PRESIDENT: Mr FUNG, would you rephrase your last supplementary which goes back to the fourth part of your original question?
MR FREDERICK FUNG (in Cantonese): The Administration has not replied to the second part of my supplementary which is about the setting up of an arbitration body. If I am to rephrase that part, it will read: At present, the LDC is empowered to invoke the Crown Lands Resumption Ordinance, will it be possible that such a power could be abused?
DEPUTY PRESIDENT: In so far as you are asking the Secretary to answer a question as to whether the LDC would abuse the Ordinance, the immediate objection I see to that question is that you are asking for an opinion. And there may well be other reasons why that question should not be put; so I am going to rule that question out of order, Mr FUNG.
MR FREDERICK FUNG (in Cantonese): I will rephrase it again. Under what circumstances can the LDC invoke the Crown Lands Resumption Ordinance?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, under the Land Development Corporation Ordinance it is provided that the LDC may request that resumption powers are taken out but it is not their decision as to whether such powers should be invoked or not. First of all, they must satisfy the Secretary for Planning, Environment and Lands that the offers they have made are fair and reasonable both in respect of compensation and of housing. And also, the Secretary will satisfy himself that the circumstances are such as to conform with the general requirements of the project being for a public purpose. Now so far for the Secretary. The Secretary then takes the resumption to the Governor in Council and the Governor in Council takes its own view as to whether a project is a public purpose for the purposes of the Crown Land Resumption Ordinance and that is a decision which is reserved entirely for the Governor in Council.
MR FREDERICK FUNG (in Cantonese): The third part of my question is whether the existing policies and principles have been reviewed. I raise that point in view of the fact that there were a lot of disagreements and disputes between the LDC and flat owners and even petitions and so on in recent clearances, which leads to the question of
whether an arbitration body is needed.
DEPUTY PRESIDENT: In what context do you ask whether the Government would set up an arbitration body? To arbitrate in what circumstances, Mr FUNG, and between whom?
MR FREDERICK FUNG (in Cantonese): Mr Deputy President, I think the Administration has not answered the question on the establishment of an arbitration body?
DEPUTY PRESIDENT: Secretary, this involves changes to the Ordinance.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I think I can give some kind of answer to that question. As I said earlier in answer to a supplementary, at the stage when the LDC is making offers to the owners it is acting as a developer and the owners are at liberty to refuse it. They could, I suppose, as between two willing parties, agree to arbitration; there is nothing to prevent them doing that. But should the owners of the property be dissatisfied with the price offered, all they really have to do is to reject LDC's offer and then the matter is in the hands of the Government as to whether to recommend a resumption to the Governor in Council and subsequently in the hands of the Governor in Council as to whether a resumption is to be approved. And at that stage, if a resumption is approved, then it becomes the Government's responsibility to make an offer of compensation to the owners and that of course is subject to the adjudication of the Lands Tribunal. So in the end an owner can always get a judicial adjudication in respect of the compensation to be paid.
MR MARTIN LEE: Mr Deputy President, bearing in mind that under the present practice individual flat owners are always bought out by the LDC acting usually in conjunction with a large land developer, and that the flat owners are paid compensation in case of a resumption by taking into account the market value of their flat but not the redevelopment potential of their flat, will consideration be given in future to
encourage, or at least to allow, these individual flat owners to participate as small shareholders in the redevelopment scheme, if they so wish, so that they will get more equitable treatment?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, this is not a new idea and there is nothing in the Land Development Corporation Ordinance which prevents the Corporation from joining existing owners into a scheme. Indeed on occasions, owners of free-standing lots have been invited to join in LDC developments. But the Corporation's schemes inevitably take several years to reach fruition, bearing in mind all the acquisitions and the procedures involved, which is a very long time for a small owner to wait. Up till now the Corporation has not thought that the advantages which it could confer were worth the additional complications of having numbers of small owners as additional partners in a development scheme.
MR MAN SAI-CHEONG (in Cantonese): Mr Deputy President, the Government resumes land for redevelopment through the Land Development Corporation. May I ask whether the resumption exercises are adequately monitored by the Government or will they be open to abuse by the LDC? Are there any criticisms from the community in relation to the resumption exercises and are there a lot of disputes arising from them? Will this Council suggest better ways of monitoring the resumption exercises?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, in my main answer I mentioned one of the ways in which we monitor the LDC in its clearance activities in that we have to be satisfied of the fairness and reasonableness of the compensation and housing offers before agreeing to the resumption. And indeed, there have been considerable adjustments to the offers and arrangements for clearance and rehousing as a result of the Government's intervention. As regards the second point raised by Mr MAN, beyond the usual recourse of any owners or any members of the public to Legislative Councillors, at present I would not see any particular need for the
Legislative Council to become directly involved. That function which the Legislative Councillors have, which goes for all citizens in all circumstances, is undoubtedly useful in itself and does help to put appropriate pressures on the Government, and through the Government, on the Corporation.
MR CHIM PUI-CHUNG (in Cantonese): Mr Deputy President, having heard what have been said so far, I would like to ask the following questions: First, will the Government agree that there are some deficiencies in the Land Development Corporation which have
been the cause for so many objections from the community? Second, it has just been mentioned that the Governor in Council will agree to resumption provided that very reasonable prices are offered. As in the case of Li Chit Street in Wan Chai, the Corporation initially offered $960,000 for the resumption of a flat. However, after some tenants voiced their objections, the Corporation offered $1.2 million for a flat of the same size. The difference was an increase of 27%. In other words, the
Corporation will offer higher prices if they are put under pressure. Will the Government admit to this? Third, will the Government consider putting under auction those pieces of land which have not been successfully resumed, so that they can be sold at more reasonable prices?
DEPUTY PRESIDENT: There are three questions there; one of these deals with a specific case. Are you able to deal with that part of it this afternoon?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I think I can probably deal with most of it. Urban renewal is a complex process and involves some trauma as is always the case throughout the world, even where the urban renewal areas are in poorer condition, more like slums than they actually are in Hong Kong. The LDC is feeling its way and it is not surprising that in the course of its early
clearances it has had to adjust some of the offers, in some cases in response to the Government, and in other cases in response to the refusals of the owners to accept the offer. But I think that Members should not read into a situation, where a number of the owners reject the offers and where offers have to be revised, as one which is in any way out of order. I believe that when people in the urban area have seen more of the LDC in action, and when the LDC has more experience -- with the adjustment of offers it has made in the course of the five renewal schemes which it has already started -- things probably will go reasonably smoothly. Of course, even at that stage,
there will be differences of opinion over values but I think that Mr CHIM's strictures on the Corporation may not be strictly fair and they may not at this stage be anything to seriously worry about.
MR MARTIN BARROW: Mr Deputy President, may I first of all congratulate the LDC on the redevelopment of the Western Market which was opened by His Excellency the Governor this morning. Notwithstanding the concerns that have been expressed by Members this afternoon, could the Secretary confirm that in further urban renewal
plans preservation of Hong Kong's heritage will be taken into account for the benefit of the community as a whole and the tourism industry in particular?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: I will be happy to confirm that. It is one of the particular principles of the Metroplan which was published last week that much more attention should be given to conservation of our heritage.
MR JAMES TO (in Cantonese): Mr Deputy President, the LDC mentions in its annual report that there are five methods of compensation. One of these is owners' participation as shareholders in redevelopment projects, another is flat for flat exchanges whereby owners are offered redeveloped flats on the original site. May I know if any offer in this manner has ever been made in the past and whether such a method will be adopted in the future? Have any feasibility studies been carried out in this respect?
Furthermore, is the Secretary aware that the LDC has to provide appropriate housing arrangements for residents affected by the redevelopment projects?
DEPUTY PRESIDENT: Is it a point of order, Mr McGREGOR?
MR JIMMY McGREGOR: Yes, Mr Deputy President. These are questions which should be asked in single form. This point has been made many times, Mr Deputy President, and what I query is, if individual Members ask five or six or eight or 10 questions at one time, then the same number of Councillors will not be able to ask a single question, and I ask whether you could rule on that issue.
DEPUTY PRESIDENT: I can rule in so far as Standing Order 18(1)(d) states that a question shall not contain independent questions or be so complex that it cannot reasonably be answered as a single question. Now I do not think Mr TO has transgressed so far, but I would caution that you keep your questions short, Mr TO, bearing in mind that your question should not contain independent questions and it should not be so complex that it cannot be answered as a single question.
MR JAMES TO (in Cantonese): I will take that into consideration, Mr Deputy President.
The second part of my question refers to the reply of the Secretary in which he mentioned that the LDC had to provide appropriate housing arrangements for affected residents. Regarding this point in law, I wish to ask the Secretary if he is aware that the law only states that "an assessment should be made as to the appropriate housing arrangements for residents", and not that appropriate rehousing should be provided. If it is put in that manner, may I know if the wording is appropriate? If not, should it be amended?
DEPUTY PRESIDENT: Do you wish any part of the question put again, Mr Secretary?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I do find the situation a bit confused by the extreme complexity of the first part of Mr TO's question, and the intervention and subsequent resumption. And I think I could reply to the second part which was a rather simpler one. I will look at the issue of the wording of the Ordinance and ensure that it is appropriate to the situation. And if Mr TO could possibly phrase the nub of the first part of his question -- I remember the general context of it though -- to enumerate the actual things to which he wants an answer, that would be a great help to me.
DEPUTY PRESIDENT: Can you put it again please, Mr TO?
MR JAMES TO (in Cantonese): Put it simply, compensation can be in two ways -- one is LDC joining the owners into the scheme as shareholders, the other is a flat for flat exchanges. I would like to know if any feasibility studies have been carried out; if not, whether they had ever been proposed in the past; and if they had been proposed, whether they will be carried out in the future?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, of course what we are talking about is the LDC rather than the Government as such. As to whether they have any formal feasibility studies, these matters have been considered in the past. And I think I would prefer to let Mr TO have written information of the details at a later date, if I may. (Annex I)
Control of costs of medical services
2. MR MICHAEL HO asked (in Cantonese): In view of the current high inflation rate, will the Administration inform this Council:
(a) of the specific measures, if any, to control the rise in the cost of medical services in respect of the public sector and to avoid increasing the financial burden of the public in this respect;
(b) whether the fees and charges for medical services in respect of the public sector will be reviewed and, if so, the criteria on which the review will be made; and
(c) when the fees and charges for medical and health services in respect of the public sector will be revised again?
SECRETARY FOR HEALTH AND WELFARE: Mr Deputy President, I shall answer the three-part question seriatim:
(a) With advances in medical technology and rising public aspirations for more and better services, the cost for medical services is escalating the world over. The rise in the cost of medical services is not simply a matter of inflation. Hong Kong is no exception. However, Government is committed to improving the services to meet community needs. We are, of course, conscious of the need to contain cost and to maximize deployment of resources. This is particularly important bearing in mind that government expenditure on medical services is paid for from the public purse: that is to say shouldered by the public either through fees and charges or through general taxation (from different pockets of the same purse).
On specific measures to control cost of medical services, the establishment of the Hospital Authority is a major step in this direction. The objective behind its establishment is to improve cost-effectiveness in the better utilization of resources and to enhance operational efficiency through hospital management reforms.
It is well recognized that hospitalization is expensive. From the community health point of view, it is more cost-effective to keep people healthy and well and,
therefore, out of hospitals. In this light, Government is committed to improving primary health care and ambulatory care services.
In primary health services, we also aim to contain cost and ensure maximum cost-effectiveness. This is particularly relevant since primary health care is also participatory care. Our emphasis is on prevention, on health education and on promotion of self-care. The aim is to make for a healthy lifestyle and a healthier community as a whole.
Furthermore, it has been our practice to conduct value-for-money studies and to review, on an on-going basis, the effectiveness and efficiency of services delivered. Through these, we have streamlined procedures, eliminated outdated practices and introduced new ways of delivering services.
Health service delivery is labour-intensive. We have, as far as practicable, started to introduce automation and provide lay support to assist professional staff, so as to achieve the best value for money from our health care workforce.
Thus, a good deal has been done to control the rise in the cost of medical services. We will continue to explore other possibilities and implement further measures as practicable. Our objective is always to provide high-quality patient care in the most cost-effective way.
(b) As regards fees and charges for medical services, these are reviewed annually. Under existing policy, fees and charges at public hospitals and clinics are set at levels which reflect several considerations, including the fact that public sector hospital and clinic services are heavily subsidized. While charges should be
generally affordable, patients are expected to make some contribution towards the cost of the services. This notwithstanding, nobody should be prevented, through lack of means, from obtaining adequate medical treatment.
In the light of escalating cost and various calls for review of the existing policy, we will be re-examining our fees and waiver arrangements. Our aim would be to achieve a more equitable distribution of responsibility between users and the general tax-payers, to allow greater choice for patients and to facilitate more
cost-effective use of resources. It is worth noting here that the daily fee for in-patient treatment in general wards only recovers less than 3% of the total cost to the taxpayer.
As regards the final part of the question:
(c) No decision has been made on the timing of any future revision of fees and charges for medical and health services.
MR MICHAEL HO (in Cantonese): Mr Deputy President, in the first paragraph of part (b) in the main reply, it was mentioned that charges should be "generally affordable" and that patients were expected to pay more for medical services. Will the Administration inform this Council whether affordability of the community could be used as a criterion to determine the scale of increase for medical fees and charges, and how this "affordability" can be assessed?
SECRETARY FOR HEALTH AND WELFARE: Mr Deputy President, against the background of escalating costs and rising public aspirations, it is necessary to review and rationalize our current fees and waiver arrangements to meet changing community needs and local circumstances. I understand and acknowledge that fees and charges have always been complex, emotional, and they have philosophical dimensions. It goes beyond the question of simple calculation, or science, or economics. This is particularly so as it is difficult -- internationally it has been recognized to be difficult -- to measure the value of and the return on investment on health. At this stage, I have no preconceived idea as to what approach should be adopted to assess the affordability of the community, or the future determination of the rationale for fee review. Our concern is primarily with the continued accessibility of medical services to those who need treatment, also with a concept of equity in distribution of responsibility and flexibility of choice for patients. All options will be examined and all factors taken into consideration in this connection. I will also take into consideration a broad spectrum of views on what is meant by "affordability".
DR LEONG CHE-HUNG: Mr Deputy President, taking into consideration that costs of medical treatment are met from the public purse, will the Administration consider indicating to patients on discharge, or when they have completed their treatment in a clinic, the actual costs incurred during their treatment? If so, what sort of ways will the Administration use to tell patients; and if not, why not?
SECRETARY FOR HEALTH AND WELFARE: Mr Deputy President, this is a very interesting question which I will refer to the Hospital Authority. At the present moment the cost of medical treatment is not reflected in the charges. But in many countries overseas people do get information on the costs of the medical treatment and I think it could be one of the methods of billing but this is a procedural mechanism in fact. I will refer the question to the Hospital Authority.
DR LEONG CHE-HUNG: Mr Deputy President, could the Secretary answer the second part of my question which is: What about those patients who are treated in a clinic which belongs to the Department of Health?
SECRETARY FOR HEALTH AND WELFARE: I will give it some thought too. Thank you very much.
DR HUANG CHEN-YA (in Cantonese): Mr Deputy President, first of all, I would like to congratulate the Secretary on her eloquence. Also I am glad to hear that she has a good habit of reviewing the cost effectiveness and efficiency of medical services in Hong Kong in order to see if they are good value for money. I should therefore like to ask what areas are being looked into in respect of the surveys conducted by the Government at the moment? Is there any survey on, for example, the wastage of resources and the harm being done to the health of the community as a result of lacking a neurological rehabilitation unit in the territory?
DEPUTY PRESIDENT: Have you got the question, Secretary?
SECRETARY FOR HEALTH AND WELFARE: I think the question, Mr Deputy President, is outside my personal experience; and the complexity is out of my depth.
DEPUTY PRESIDENT: Dr HUANG, do you want to have your question replied to in writing?
DR HUANG CHEN-YA: Yes, I would like to have it in writing as to the areas that the Department of Health is looking into regarding measurements of cost effectiveness and efficiency. Thank you, Mr Deputy President.
SECRETARY FOR HEALTH AND WELFARE: Mr Deputy President, I think I now understand the question. May I attempt to answer the question of value for money and where the areas are where costing can be undertaken. I would like to take this opportunity to say that in medical services it is easy to add up costs but less so to measure cost
effectiveness, because on the question of value for money, theoretically cost effectiveness is measured by comparing the output with the amount of input. This would mean, for clinical treatments, a comparison of expenditure between units, and the success rate of treatments given; even less still, to assess value for money, the same approach cannot be readily applied in preventive medicine where the outcome is not immediately apparent and may at times be obscured by other extraneous factors. So the concept of unit costs and value for money has been challenging the minds of better people than myself and I would in due course attempt to answer in writing more philosophically and with more scientific calculation on the comparison of unit costs and how to achieve cost effectiveness. (Annex II)
DEPUTY PRESIDENT: You have got to make this short, Dr HUANG. It is not another question, is it?
DR HUANG CHEN-YA: No, Mr Deputy President, it is just a very short follow-up and it is simply to ask whether Government can consider consulting health economists and epidemiologists as to how to conduct these surveys that the Secretary finds difficulty with?
SECRETARY FOR HEALTH AND WELFARE: In fact, Mr Deputy President, as regards health economics, the whole subject is very new. Internationally, there are not many specialists around. One can always proclaim to be a self-appointed specialist, and there are many self-appointed specialists in Hong Kong. I hope I have the advantage of seeking their advice, in Hong Kong, at some later stage.
MR PETER WONG: Mr Deputy President, will the Administration inform this Council whether it has any policy on the amount of GDP that should be spent on health care, and in particular what is being spent and will be spent on automation in the health care sector?
SECRETARY FOR HEALTH AND WELFARE: Mr Deputy President, the manner of funding medical services in Hong Kong is quite different from that of other countries. We fund through annual exercises, through the estimates and by the amount of money allocated to it, rather than by a predetermined percentage of the GDP.
Protection of Wages on Insolvency Fund
3. MR TAM YIU-CHUNG asked (in Cantonese): According to the Annual Report of the Protection of Wages on Insolvency Fund Board for 1990-91, about 33% of the applications for ex-gratia payments for arrears of wages and 51% of the applications for payments for wages in lieu of notice involved amounts exceeding the respective maximum coverage of $8,000 and $2,000 respectively. Will Government inform this Council whether there are any plans to review the existing maximum coverage for these two types of payment?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the Protection of Wages on Insolvency Fund came into operation in April 1985. Since then three reviews have been conducted in 1986, 1988 and 1990, and have resulted in progressive extensions of the coverage of the Fund. Specifically, the Fund, which originally covered
arrears of wages only, was extended in 1987 to cover seven days' wages in lieu of notice up to $2,000, and in 1989, to severance payment up to $4,000; in 1991, the maximum coverage of severance payment was increased to $8,000 plus 50% of any entitlement in excess of $8,000.
The maximum levels of payment from the Protection of Wages on Insolvency Fund will continue to be reviewed periodically. The next review is due to be conducted in July 1992.
MR TAM YIU-CHUNG (in Cantonese): Mr Deputy President, I agree that successive
improvements have been made to the Protection of Wages on Insolvency Fund since it first came into operation. But regarding arrears of wages and wages in lieu of notice, I raised before this Council in May 1986 the question of further improvement to the maximum payments. Yet I gather from the second part of the Secretary's reply that the Administration does not see the urgency in the matter. Is the Secretary aware that the present upper limit on payment of arrears of wages was based on the 1977 figure of $2,000 an average worker could earn a month which is very much lower than the going rate of wages? Is it inadequate or unfair to the employee who applies for a payment that exceeds the limit?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, I shall certainly look into Mr TAM's points. One other relevant factor is that the limits on maximum payments for wages in arrears and wages in lieu of notice are also related to the limits stipulated in the Companies Ordinance and the Bankruptcy Ordinance on preferential debts in a liquidation or bankruptcy proceeding.
MR PANG CHUN-HOI (in Cantonese): Mr Deputy President, despite the three extensions of coverage as mentioned in the Secretary's reply, the relevant payment under the Protection of Wages on Insolvency Fund is still based on the figure of $2,000. So the present method of calculating employees' compensation and long service payment is in fact out-of-date. What the Secretary meant is that a review will be made every two years, in which case the next review will be in July next year. But in view of the fact that the going rate of wages is way above the basis on which payments are calculated, will the Administration consider conducting the next review at an earlier date?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the latest improvement to the Protection of Wages on Insolvency Fund only came into effect recently and I think it would be fair to allow time for the effect of the latest improvement to be observed before we launch into the next review. As regards the question as to why these limits have not been increased in the past, they have been looked at in the context of the previous reviews and it was the conclusion of the successive reviews that perhaps greater priority should be accorded to the other improvements which have been introduced.
MR LAU CHIN-SHEK (in Cantonese): Mr Deputy President, the severance or long service payment is the largest sum of compensation an employee can get in his lifetime. Will the Administration inform this Council, in reviewing the Protection of Wages on Insolvency Fund, whether due regard would be given to the fact that the present rate of severance or long service payment up to $6,000 is out of step with reality? Also, will consideration be given to the fact that applications for payments of wage arrears
normally increase after the New Year? In order to protect the interests of the employees, the Administration should not wait until July 1992 to carry out another review. Would the Administration conduct an earlier review on the levels of severance and long service payments and on the overall situation in relation to arrears of wages?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, I shall certainly consider the suggestion made by Mr LAU.
MR PETER WONG: Mr Deputy President, will the Secretary please inform this Council, what the rationale is for arriving at the seven days' wages in lieu of notice and the various levels of payment, and whether that rationale is still relevant today?
SECRETARY FOR EDUCATION AND MANPOWER: Basically, Mr Deputy President, the Protection of Wages on Insolvency Fund is a kind of insurance policy which would enable workers, who have claims to make in a situation where an employer is involved in bankruptcy proceedings, to obtain a quick and easy form of payment. Now as I said earlier, the maximum rates of payment for arrears of wages and wages in lieu of notice are related to the maximum limits under the Companies Ordinance and the Bankruptcy Ordinance on preferential debts in bankruptcy and liquidation proceedings. This is the basic rationale on the basis of which the limits were originally established. Of course, when we review the operation of the fund, we will look into whether the various limits stipulated continue to reflect current circumstances and continue to be sufficient to cover present-day needs.
One point I would wish to make, of course, is that normally in any liquidation or bankruptcy proceeding there is a finite amount of money available for distribution to creditors, and an upward adjustment in the preferential limit could affect the
interests of the lower-paid workers as against the interests of the higher-paid workers.
Written answers to questions
Secondary school places in Tuen Mun
4. MR NG MING-YUM asked: Will Government inform this Council:
(a) of the provision of and demand for secondary school places in Tuen Mun in the past decade;
(b) of the number of Government and subsidized secondary schools in Tuen Mun at present; the number of schools with floating classes and the manner in which these floating classes are distributed;
(c) of the estimated demand of secondary school places in Tuen Mun in the next decade;
(d) of the number of new secondary school premises to be built in Tuen Mun in each of the next 10 years and the total number of school places to be provided by these schools;
(e) of the measures that will be taken to ensure that there will not be an imbalance in the provision of and demand for secondary school places in Tuen Mun in the next decade;
(f) of the way in which surplus school places may be put to better use; and
(g) of the remedial measures that will be taken to ensure an adequate provision of school places?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the answers are as follows -
(a) The provision of secondary school places and the demand for Secondary I places
in Tuen Mun are given below. The demand figures are actual Secondary School Places Allocation figures.
Provision of
Demand for Provision of sec sch places
Year S1 places S1 places (S1-S7)
1982 2 043 3 624 15 364
1983 2 859 3 624 17 229
1984 3 877 3 904 18 417
1985 4 760 4 094 18 930
1986 6 223 4 778 20 310
1987 6 867 5 918 22 920
1988 7 634 6 989 26 880
1989 8 611 7 825 31 200
1990 9 078 8 019 34 700
1991 9 224 8 239 36 700
(b) At present there are two government secondary schools and 30 aided secondary schools in Tuen Mun. All of them have or will have floating classes. The existing practice is that an old standard-design secondary school (with 24 classrooms and 12 special rooms) can operate a maximum of 30 classes (including up to six floating classes) while a new standard-design secondary school (with 26 classrooms and 14 special rooms) can operate a maximum of 30 classes (including up to four floating classes), if the need arises.
(c) It is not possible to give the estimated demand for secondary school places in Tuen Mun in the next decade, since demand figures are calculated for the territory as a whole and not for individual districts. The Government's policy is to provide secondary school places up to the approved targets on a territory-wide basis.
(d) At present, the Government plans to build six more secondary schools in Tuen Mun in the next decade. The total number of places provided by these schools will be 6 960. The details are as follows -
Public Works
Programme Expected year School places
Project No. Area of completion provided
83 ES Area 2B 1992-93 1 160
" Area 2B 1992-93 1 160
(Priv Arch) Area 31A 1993 1 160
57 ES Area 16 1996-97 1 160
" Area 16 1996-97 1 160
62 ES Area 31A 1996-97 1 160
(e) The school building programme is closely monitored to ensure that the total number of school places in the territory as a whole is adequate to meet the demand of all districts at all times. Every effort is made to minimize district imbalances by siting new schools in areas where they are needed or by adjusting the school nets for the allocation of secondary school places. However, it is not possible to achieve a complete balance of supply and demand in each individual district due to frequent demographic changes.
(f) Floating classes will be reduced.
(g) In addition to the above, one of the measures being taken by the Education Department to cope with high demand is to advise schools to operate more lower form classes at the initial stage by adopting the 8-8-8-4-4 class structure. Other measures may include advanced opening of new schools in borrowed or shared premises.
Maltreatment of imported workers
5. MISS EMILY LAU asked: Regarding recent media report on alleged wage deduction and unreasonable dismissal of 18 imported workers from China, will the Government inform this Council:
(i) whether the incident is now being investigated and if so, when the investigation will be completed; whether this Council will be informed of the findings of such investigation;
(ii) what measures will be taken to assist foreign workers whose wages have been deducted, in particular those who have left Hong Kong after the dismissal, to claim their wages in arrears;
(iii) of the number of complaint cases concerning wage deduction since the implementation of the labour importation schemes; the number of successful prosecution cases and the average and the highest amount of fines imposed; and
(iv) what short-term and long-term measures will be taken to ensure that foreign workers are adequately protected by local labour legislation?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the answers to Miss LAU's questions are as follows:
(1) As regards the specific case involving 18 imported workers who alleged that their wages had been underpaid and that they had been unreasonably dismissed, four of the workers have decided to take their case to the Labour Tribunal for adjudication while the remainder have decided not to pursue their claims. The Labour Tribunal hearing is scheduled for 11 December 1991. The Labour Department is taking separate action to investigate whether the employer concerned has contravened the Employment Ordinance. It is not possible at this stage to predict how long these investigations will take. They are, however, being undertaken as a matter of urgency. Once the results are available I shall inform the Council in writing. (Annex III)
(2) The Labour Department intervenes by asking the employer concerned to pay back any outstanding wages. Should there be any dispute between the employer and the worker about any deduction or underpayment, the case will be referred to the Labour Tribunal for adjudication. The Department provides assistance to the workers
concerned in applying for extensions of stay so as to enable them to pursue their claims. The Department also assists workers who have been dismissed as a result of their complaints to find alternative employment.
(3) The Labour Department has detected 334 suspected items of wage underpayment and deduction (up to end-October 1991) during inspections including complaints received from foreign workers. Fifty-three items have been substantiated and the rest are either unsubstantiated or still under investigation. Up to 22 November 1991, one employer has been convicted for underpayment of wages and was fined $1,000 for
each of the two summonses. Prosecution action has been initiated against four other employers and is being considered against nine other employers. In addition, two other cases have been referred to the Labour Tribunal which are still pending.
(4) As regards measures to ensure that foreign workers are protected under local labour legislation, the Labour Department has already stepped up its enforcement action. A total of 1 540 inspections (covering 60% of imported workers) were made to places of employment and living quarters of the imported workers in September and October 1991. The Labour Inspectors have been distributing to individual workers information regarding their rights and entitlements, including the wages prescribed in their employment contracts. Employers have been advised in writing and in person that wages should be paid directly into the bank accounts of imported workers.
In addition, at the time of application for visa extension for imported workers (upon completion of one year's service), the Director of Immigration will require employers to certify that wages as stipulated in the employment contracts are being paid. Provision of false information is liable to a maximum fine of $50,000 or 14 years imprisonment under the Immigration Ordinance.
In future, the contract of employment will contain a specific clause requiring payment of wages to the worker's bank account. We intend to propose legislative amendments to increase substantially the penalties for offences relating to unlawful deduction and underpayment of wages.
Arms in Vietnamese boat people detention centres
6. MR LAU WONG-FAT asked: Will Government inform this Council how it is possible that Vietnamese boat people in detention centres can have access to and make weapons continuously; whether measures have been taken by the Administration to deal with the problem; and whether there is legislation to prevent boat people from producing or being in possession of such weapons; and if so, whether prosecution has ever been initiated against them in this connection?
SECRETARY FOR SECURITY: Mr Deputy President, past experience shows that weapons are made within the centres and not obtained from outside. They are manufactured from metal or other hard fixtures and fittings in the centres, such as railings from the bunk beds, electrical wire tubing, water pipes, window frames and window bars. The work is carried out mostly at night. Given the size of the camps and the overcrowded
conditions, camp managements do all they can to prevent these activities.
Weapons are produced primarily because of the factional rivalries in the detention centres. We try as far as possible to take into account places of origin and to keep different regional groups apart in an attempt to minimize these factional rivalries. However, disputes also often arise between different local groups or simply between gangs from within the same area.
We are also trying to reduce the raw materials available for production of weapons. Whenever major fittings or installations are replaced in the centres, non-metal components, such as fibre glass or plastic, are used as far as practicable. It is, however, impossible to eliminate all metal or other hard materials from the centres.
Regular weapons searches are conducted in each centre, and special operations with police reinforcements are carried out from time to time.
Production and possession of offensive weapons in detention centres is punishable under the Summary Offences Ordinance, and under the Immigration (Vietnamese Boat People) (Detention Centre) Rules 1989 made under the Immigration Ordinance.
As dormitories in the centres are congested, with bunks and the personal belongings of Vietnamese migrants, it is sometimes difficult to identify the owners of any weapons discovered. Nevertheless, whenever sufficient evidence is available to support a prosecution, charges are brought against the offenders. A check of court and police records indicates that, between January 1989 and June 1991, 233 Vietnamese migrants were charged with possession of offensive weapons under section 17 of the Summary Offences Ordinance. 143 were convicted. Sentences imposed ranged from 14 days to 18 months.
Criminals carrying firearms at the time of an offence
7. MR JIMMY McGREGOR asked: Given the increasing use of dangerous weapons and firearms by criminals in Hong Kong, will the Government consider establishing a statutory minimum sentence of 10 years imprisonment for any person found guilty of having in his possession at the time of an offence any firearm whether or not the firearm was used in the commission of a criminal act?
SECRETARY FOR SECURITY: Mr Deputy President, we have no plans to propose a minimum sentence for these offences.
The maximum penalty for possession of firearms without a licence is a fine of $100,000 and imprisonment for 14 years; for robbery it is life imprisonment; and for carrying firearms or imitation firearms with intent to commit an arrestable offence, it is also life imprisonment.
The present maximum penalties are, by any standards, severe and we believe they are adequate. The Attorney General is empowered to seek a review of the sentence in a particular case if he considers that it is manifestly inadequate or wrong in principle.
Crime rate in Tsuen Wan and Kwai Tsing Districts
8. MR LEE WING-TAT asked: Regarding the law and order situation in Tsuen Wan and Kwai Tsing Districts, will Government inform this Council of the following:
(i) the quarterly total crime figures in these two districts during the past year with a breakdown showing the different categories of these crimes;
(ii) the measures to be taken by the police to curb the increase of various crimes which were on an upward trend in the past year;
(iii) whether there is a shortage of police officers in these two districts and, if so, how serious the shortage is; and
(iv) how the local residents can obtain crime data on these two districts?
SECRETARY FOR SECURITY: Mr Deputy President, a comparison of total crime statistics in the first three quarters of 1991 with the same period in 1990 shows a rise of 18.6% in Tsuen Wan District and 12.4% in Kwai Chung District. Detailed crime statistics are at Annexes A and B.
The police are taking various measures to combat increasing crime in these two
districts . They have strengthened policing at street level and stepped up investigation work. Policing in the streets by officers of the districts is augmented by patrols by the Police Tactical Unit and Emergency Unit. In September this year, an extra Police Tactical Unit company of 160 men was deployed to the New Territories Region to provide additional coverage.
The establishment and strength of disciplined staff in the Tsuen Wan Police District are 590 and 515, and in the Kwai Chung Police District 522 and 425 respectively. Vacancies are mostly in the uniformed branch. CID units are generally at full strength. Overall, the police at present have an establishment of 24 288 Junior Police Officers with 23 329 officers in post. Every effort is being made by the District Commanders to ensure that the maximum manpower is deployed to operational duties and to maintain the police presence on the ground. The Police Tactical Unit and Emergency Units are kept at full strength.
There are established channels of communication through which members of the community are informed of the crime situation in the district in which they live. These include the District Board, District Fight Crime Committee, and Area Committees, all of which are attended by police officers. Individual members of the public who are concerned about any particular category of crime may obtain the information they require from the Police Community Relations Officer in each district.
Annex A
Total Crime in Tsuen Wan District
1990 1991
Reported Reported
1st quarter 1 178 1 417
2nd quarter 1 274 1 580
3rd quarter 1 534 1 728
4th quarter 1 570
Annual total 5 551 (4 725)
Crime Statistics for Tsuen Wan District
1990 1991 Changes Changes
(1-3/Q) (1-3/Q) (Nos.) (%)
Rape 2 4 +2 +100
Indecent assault 41 37 -4 -9.8
Murder & manslaughter 6 4 -2 -33.3
Wounding 85 54 -31 -36.5
Serious assaults 225 259 +34 +15.1
Robbery with firearms 2 0 -2 -100
Robbery with PLOs 14 28 +14 +100
Other robberies 368 542 +174 +47.3
Blackmail 57 21 -36 -63.2
Burglary 732 799 +77 +10.7
Theft from vehicle 262 272 +20 +7.9
Taking conveyance 342 381 +39 +11.4
without authority
Quarterly Statistics of Tsuen Wan District for the years 1990 and 1991
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter
(1990) (1990) (1990) (1990) (1991) (1991) (1991)
Rape 0 115121
Indecent assault 7 19 15 20 11 10 16
Murder and 1 1 4 4112
manslaughter
Wounding 20 19 46 21 19 17 18
Serious assaults 70 77 78 53 65 95 99
Robbery with 1 0 11000
firearms
Robbery with 4 7 3 6 14 7 7
pistol like objects
Other robberies 103 122 143 154 150 165 227
Blackmail 18 18 21 15 8 7 6
Burglary 212 215 295 335 275 259 265
Theft from 82 75 95 78 91 79 102
vehicle
Taking conveyance 86 134 122 112 117 127 137 without authority
Annex B
Total Crime in Kwai Chung District
1990 1991
Reported Reported
1st quarter 801 985
2nd quarter 867 952
3rd quarter 1 026 1 093
4th quarter 1 002
Annual Total 3 696 (3 030)
Crime Statistics for Kwai Chung District
1990 1991 Changes Changes
(1-3/Q) (1-3/Q) (Nos.) (%)
Rape 2 5 +3 +150
Indecent assault 32 37 +5 +15.6 Murder & manslaughter 9 2 -7 -77.8 Wounding 43 49 +6 +14
Serious assaults 195 218 +23 +11.8 Robbery with firearms 0000 Robbery with PLOs 3 8 +5 +166.7 Other robberies 266 340 +74 +27.8
Blackmail 13 28 +15 +115.4
Burglary 480 557 +77 +16
Theft from vehicle 159 182 +23 +14.5 Taking conveyance 204 252 +48 +23.5 without authority
Quarterly Statistics of Kwai Chung District for the years 1990 and 1991
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter
(1990) (1990) (1990) (1990) (1991) (1991) (1991)
Rape 1101500
Indecent assault 7 9 16 11 5 21 11
Murder and 3 152110
manslaughter
Wounding 10 15 18 15 13 21 15
Serious assaults 47 62 86 76 58 72 88
Robbery with 0 000000
firearms
Robbery with 1 205251
pistol like objects
Other robberies 69 79 118 90 86 122 132
Blackmail 3 5 5 10 13 4 11
Burglary 118 171 191 174 177 177 203
Theft from 64 52 43 36 59 56 67
vehicle
Taking conveyance 61 75 68 85 59 83 110
without authority
Death certificates issued by China for Hong Kong residents
9. MR LEE WING-TAT asked: Regarding the death certificates issued by the different levels of government administration in China in respect of Hong Kong citizens who unfortunately passed away in mainland China, will Government inform this Council -
(i) whether such certificates are recognized by the Hong Kong Government;
(ii) what assistance it will provide to the citizens who have difficulties in obtaining such certificates in respect of their friends or relatives who have passed away whilst in mainland China; and
(iii) whether standing channels have been established between the Hong Kong Government and the different levels of government administration in China to handle the above problems; if so, how long does it normally take to solve the problems; if not, what the reasons are?
SECRETARY FOR SECURITY: Mr Deputy President, we recognize death certificates issued by the relevant Chinese authorities in respect of Hong Kong residents who die in China.
Registration of deaths which occur in China is a matter for the Chinese Government. Our advice to persons who encounter difficulties in obtaining such certificates for their friends or relatives is to approach the local branch of the New China News Agency.
The Director of Immigration has not come across any cases where problems have been encountered in obtaining death certificates in respect of Hong Kong residents who die in China. For that reason, we have not established any special channels of communication on this matter with the Chinese authorities. However, if we do receive any requests for assistance, we would be prepared to take up the matter with the NCNA.
Completion dates for residential developments
10. MR FREDERICK FUNG asked: Will Government inform this Council whether in approving projects for residential development, a time limit is imposed on the completion of the projects?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, where land is granted by the Government for residential, or indeed other, development, a time limit for completion of the development is imposed under the building covenant contained in the conditions of the grant. A typical covenant for residential development would be 36 months. For particularly large and more complicated development, it might be longer and might be phased.
Extension of franchise for China Light & Power
11. MR FRED LI asked: Will the Government inform this Council
(a) whether it has consulted any groups or individuals prior to reaching agreement in principle with the China Light & Power Company Limited and its associated companies on extension of the franchise for another 15 years and on the terms of the profit control scheme, and if so, which groups or individuals have been consulted; and
(b) what is the reason for entering into an agreement with the companies just a few days before the Legislative Council debate on the control schemes and franchise agreements with public utility and transport companies, without giving consideration to the views that might be expressed by Members in the debate?
SECRETARY FOR ECONOMIC SERVICES: Mr Deputy President, I should first make clear that the China Light & Power Company Limited (CLP) does not have a franchise or any exclusive rights from Government to supply electricity. The present Scheme of Control Agreement (SCA) between Government and CLP, Exxon and their associated generating companies (the Companies), which expires on 30 September 1993, is a voluntary agreement on mutually agreed terms. Without this voluntary agreement Government would have no right to examine the expansion plans of the Companies or to approve their tariffs.
As regards (a) the negotiations leading up to the agreement in principle with the Companies on the extension of the SCA for a further 15 years from 1993 were conducted in confidence and no specific consultation was held with groups or individuals. However, the Agreement has been published in English and Chinese since 1982 and, over the years, the Government has taken careful note of the views expressed on its terms by the public, in the media and following from presentations given to interested parties, such as OMELCO and the Consumer Council.
While there has been little, if any, adverse comment on electricity tariff levels or the reliability of supply, concerns have been expressed on the rate of permitted return, on the potential scope for the Companies to over-build capacity in order to earn more profit and on the effect of electricity production on the environment.
All these concerns were taken fully into account by the Administration during
the course of the extensive and protracted negotiations with the Companies and, as a result, a number of changes to the terms of the new SCA have been agreed to strengthen the Government's ability to monitor the performance of the Companies.
As regards (b) negotiations with the Companies on the renewal of the SCA commenced in January 1991. There was some urgency in completing the negotiations because the Companies will shortly need to begin raising finance for the construction of the proposed new power station at Black Point, the first units of which will be needed sometime between 1996 and 1998. Some potential investors have made clear that they consider agreement on the terms of the new SCA to be a prerequisite to major loan finance for the project.
Negotiations were concluded in September following which the revised terms of the new SCA were approved in principle by the Executive Council in October. Arrangements were made for a full briefing of OMELCO Members as soon as possible after the establishment of the Economic Services and Public Utilities Panel. This briefing took place on 11 November.
In accordance with arrangements which have been agreed in the JLG, to keep the Chinese Government informed of major franchises which extend beyond 1997, the Chinese side have been given an opportunity to express their views on the new agreement before it is finalized.
As I said during the Legislative Council debate on schemes of control and franchise arrangements, which took place on 13 November, the Government has seriously taken into account the views of the public before reaching agreement in principle with the Companies. The Government is satisfied that the terms of the new SCA provide for an appropriate balance between the interests of consumers and shareholders.
PADS projects consultancy
12. MR EDWARD HO asked: Will Government inform this Council whether in awarding consultancy contracts to foreign firms for the Port and Airport Development Strategy projects, due consideration would be given to (a) the local working experience of such firms, (b) the feasibility of requiring firms which do not have local working experience to associate themselves with local firms, and (c) the possibility that such local association would enable technology transfer to professionals in Hong
Kong?
SECRETARY FOR WORKS: Mr Deputy President,
(a) when Government considers employing a firm of engineering consultants, local or overseas, to carry out public works projects including those under the Airport Core Programme, a qualitative appraisal and assessment is made as to the bidding firms' capabilities and suitability to carry out the specific project. The assessment based on information provided by the bidder takes into account, inter alia, the following:
(i) previous experience in the type of project envisaged, both in Hong Kong and elsewhere;
(ii) its general performance record;
(iii) its capabilities for the size of project envisaged;
(iv) the strength of its local personnel, and in particular local partners; and
(v) its experience with Hong Kong Government as the client.
Overseas firms which are employed to carry out work for Government are required to establish and maintain, for the duration of their engagement, an office in Hong Kong under the direction of a Project Director who has to have sufficient authority and adequate qualified professional, technical and administrative staff of sufficient size to ensure progress to the satisfaction of Government.
(b) There is no requirement which compels firms without local working experience to associate with local firms, if they are to work on government projects. Such associations do occur naturally however, to meet the requirements of individual consultancy briefs.
(c) When foreign consultants work in Hong Kong they normally employ local professionals. Also government professional staff in their consultant management capacity have close involvement with these firms. These together with the frequent practice of local and foreign firms coming together in consortia, or local firms
engaging foreign specialist firms as sub-consultants, provide the close associations which result in technology transfer from foreign firms to local professionals.
Motion
TELEPHONE ORDINANCE
THE SECRETARY FOR ECONOMIC SERVICES moved the following motion: "That the Schedule to the Telephone Ordinance be amended -
(a) in Part V -
(i) by adding after item 25 -
"26. Surcharge for duplex $216
ringing feature per annum
(see Note 9)"; and
(ii) by adding after Note 8 -
"9. The duplex ringing feature provides 2 directory numbers (with different ringing tones) on a single direct exchange line."; and
(b) in Part VI by adding after item 5(c) -
"(d) Alteration of the terminating $90".
number schedule
She said: Mr Deputy President, I move the motion standing in my name on the Order Paper.
Under section 26(1) of the Telephone Ordinance (Chapter 269) the Hong Kong Telephone Company may levy charges not exceeding those specified in the Schedule to the Ordinance. Section 26(2) of the Ordinance gives this Council the power to approve amendments, including additions, to the Schedule, by means of a resolution.
The Telephone Company wishes to offer two new services not listed at the Schedule, namely: Duplex Ringing Feature and Daytime Manager Alteration.
The Duplex Ringing Feature will provide two directory numbers with different ringing tones on one telephone line. This will allow subscribers to use a single line for a telephone and a facsimile machine, with separate numbers. Alternatively the different ringing tones for the different numbers could be used to distinguish domestic from business calls, or calls to different users of the same telephone. The company proposes to charge an extra $216 annually per line for this optional feature. This works out at an extra $18 per month.
The Telephone Company currently runs a service called International Toll-Free Service. This service allows people outside Hong Kong to call local subscribers free of charge on international toll-free numbers in response, for example, to a business promotion. The call charges are paid for by the local subscribers. As part of the service, the company provides, free of charge, a "daytime manager" service. This enables local subscribers to route incoming toll-free calls to different telephones at different times of the day. The company now wishes to provide for alterations to the original call routing at a cost of $90 per alteration.
The resolution before this Council seeks to add the charges for these new services to the Schedule to the Telephone Ordinance. I have examined the proposed charges, and consider them to be a reasonable reflection of the cost of providing the services.
Mr Deputy President, I beg to move.
Question on the motion proposed, put and agreed to.
First Reading of Bills
INLAND REVENUE (AMENDMENT) (NO. 5) BILL 1991
BROADCASTING AUTHORITY (AMENDMENT) BILL 1991
COPYRIGHT (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
INLAND REVENUE (AMENDMENT) (NO. 5) BILL 1991
THE SECRETARY FOR THE TREASURY moved the Second Reading of: "A Bill to amend the Inland Revenue Ordinance."
He said: Mr Deputy President, I move that the Inland Revenue (Amendment) (No. 5) Bill 1991 be read the Second time. The Bill is designed to limit the scope for tax avoidance or minimization in two important but unrelated areas.
The first part of the Bill seeks to prevent exploitation for tax avoidance purposes of section 16E of the Inland Revenue Ordinance. This section was designed to encourage the upgrading of technology in Hong Kong, by allowing capital expenditure incurred on the purchase of patent rights, or rights to any trademark or design to be deducted for tax purposes. However, it has become clear that it is often used for transactions which are completely unconnected with the upgrading of technology.
In his speech concluding the Budget debate on 17 April 1991, the Financial Secretary announced the Government's intention to close this avoidance loophole by introducing legislation to define more strictly the type of expenditure which would qualify for deduction. To delay action until the enactment of legislation would have put large sums of revenue at risk. He therefore indicated that, subject to their being passed by the Legislative Council, the proposed amendments would apply to transactions entered into on or after 18 April 1991. Clause 2 of the Bill now before Members would amend section 16E of the Inland Revenue Ordinance accordingly.
The second part of the Bill deals with leveraged leasing. In 1986, legislation was introduced to restrict depreciation allowances for tax purposes where a ship or aircraft had been acquired through a leveraged lease transaction, and the user of the ship or aircraft was not a Hong Kong operator. Since 1986, however, many
instances have been encountered where a foreign operator of a ship or aircraft would be able to enjoy an allowance for depreciation under the law as it now stands. The
amount of tax leakage involved has been substantial.
Clauses 3 and 4 of the Bill would amend the Ordinance by denying depreciation allowances to all foreign operators of ships and aircraft. Moreover, the share of any partner's loss from such a partnership that can be set off against his other income would be restricted to the amount he actually had at risk in the partnership. As the Financial Secretary informed this Council on 14 November 1990, these provisions would generally apply to transactions entered into on or after 15 November 1990. Public knowledge of this timing has pre-empted a mass of transactions, with massive revenue loss implications, following the Financial Secretary's announcement.
The tax avoidance and minimization that this Bill seeks to prevent would, if not stopped, continue to result in the loss or deferral of tax revenues estimated at hundreds of millions of dollars a year. This loss, if not stopped, would certainly have to be made up elsewhere.
Mr Deputy President, I move that the debate on this motion be now adjourned. Question on the adjournment proposed, put and agreed to.
BROADCASTING AUTHORITY (AMENDMENT) BILL 1991
THE SECRETARY FOR RECREATION AND CULTURE moved the Second Reading of: "A Bill to amend the Broadcasting Authority Ordinance."
He said: Mr Deputy President, I move the Second Reading of the Broadcasting Authority (Amendment) Bill 1991. The Bill is to empower the Broadcasting Authority to regulate the non-technical aspects of HutchVision's satellite television uplink and downlink licence.
On 18 December 1990, the Governor in Council approved the award of a satellite uplink and downlink licence to HutchVision Hong Kong Limited. On 15 October 1991, the Governor in Council further advised that HutchVision's licence should be amended to allow HutchVision to carry sound services.
Under the existing legislation, the Broadcasting Authority (BA) does not have the power to regulate directly satellite television and satellite radio services.
This means that the sole authority for HutchVision's licence has been the Telecommunications Authority (TA) who, in respect of the non-technical aspects such as programme content and advertising standards, is obliged only to consult the BA and no others. This is not in line with the existing arrangement for the regulation of sound broadcasting and off-air television broadcasting under which the BA and the TA are the authorities for non-technical aspects and technical aspects respectively. It is therefore necessary to amend the Broadcasting Authority Ordinance so that the BA can regulate the non-technical aspects of HutchVision's service.
Clause 2 of the Bill is intended to bring within the purview of the Broadcasting Authority satellite sound and television broadcasting services. It amends the definition of "broadcasting" to include satellite television and satellite sound services received by the public whether or not encrypted and whether or not a fee is charged, in addition to terrestrial television and radio services.
Clause 3 of the Bill provides the Broadcasting Authority with the power to administer the provisions of licences for satellite TV and satellite sound services in respect of programming, advertising and all other provisions of such licences that confer a function on the Broadcasting Authority, and to ensure standards with regard to programme content.
Clause 4 adds new sections 9A, 9B, 9C and 9D to the Ordinance to give the Broadcasting Authority the power to issue Codes of Practice, make directions to satellite licensees, impose financial penalties and provide an avenue of appeal by the licensees.
Clause 5 provides for the Broadcasting Authority's Complaints Committee to consider complaints in respect of satellite TV and sound services.
Mr Deputy President, I move that the debate on this motion be now adjourned. Question on the adjournment proposed, put and agreed to.
COPYRIGHT (AMENDMENT) BILL 1991
THE SECRETARY FOR RECREATION AND CULTURE moved the Second Reading of: "A Bill to amend the Copyright Ordinance."
He said: Mr Deputy President, I move the Second reading of the Copyright (Amendment) Bill 1991. The Bill proposes to add a provision to section 3 of the Ordinance to state that the place from which a satellite broadcast is made is, for the purpose of that section, the place from which the signals carrying the broadcast are transmitted to the satellite.
All licensed broadcasters in Hong Kong are listed in the Schedule to the Copyright Ordinance (Chapter 39) except HutchVision Hong Kong Limited, the holder of a satellite television uplink and downlink licence which was granted in December 1990. A listing in the Schedule affords copyright protection in Hong Kong to broadcasts made from a place in Hong Kong by listed broadcasters. It is appropriate to extend this
protection to HutchVision which has already commenced broadcasting.
In view of this, the Administration will recommend to the Governor that HutchVision be added to the list of broadcasters in the Schedule by means of a notice published in the Gazette. It is, however, also necessary to amend the Copyright Ordinance to clarify that the place from which a satellite broadcast is made is the place from which the signals carrying the broadcast are transmitted to the satellite. This is because, without such an amendment, it could be argued that the satellite broadcast is not made from the uplink point -- which in HutchVision's case is Hong Kong -- but from the satellite itself. Since broadcasting and telecommunications satellite are normally situated about 36 000 km above the equator, it could be argued that a broadcast originating at a satellite does not originate from a place in Hong Kong and, hence, satellite broadcasts would not enjoy copyright protection. 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
Resumption of debate on Second Reading which was moved on 13 November 1991 Question on Second Reading proposed.
MR LAU WAH-SUM: Mr Deputy President, an ad hoc group was formed by the Legislative Council In-House on 8 November 1991 to study the Bill. Within a short period of one
week the group has held three meetings, including one jointly with the representatives of the Administration, the Securities and Futures Commission (SFC) and the Stock Exchange. The group has also considered two submissions received from the Exchange and the Hong Kong Stockbrokers Association respectively.
The Bill has two main purposes.
The first one is to give the Exchange a statutory duty to maintain a fair and orderly market and to act in the public interest. Relevant provisions are contained in the proposed section 27A of the Bill. The group is satisfied with these provisions and would recommend to Members of this Council that they be supported.
The second purpose of the Bill is to restrict the use of proxy voting in the Exchange's Council elections. Relevant provisions are contained in the proposed section 10, subsections (3) to (6) of the Bill. Indeed, these were the provisions which have formed the centre of discussion of the group.
At the very beginning, the group has one big question in mind, that is: "what is the appropriate level of restrictions that would effectively prevent the proxy appointment system from being abused?"
In making its search for the answer, the group has carefully considered the following four proposals:
(a) the proposal as contained in the Bill which was endorsed by the Executive Council on 22 October 1991;
(b) the revised voluntary reform package endorsed by the Exchange's Council at its EGM held on 30 October 1991;
(c) the proposed amendments to the Bill made by the Exchange in its submission to the group. It is understood that part of these proposed amendments, that is, that connected with the proposed section 10(5)(a), was previously agreed by the SFC and the Executive Committee of the Exchange on 4 November 1991; and
(d) the proposal advanced by the Hong Kong Stockbrokers Association in its submission to the group on 14 November 1991.
The group in general feel that the circumstances under which an individual member of the Exchange can appoint a proxy as proposed by the Bill are too restrictive when compared with those applicable to a corporate member and that the Bill in this respect should be amended.
As to how the Bill should be amended, all members of the group agree with the principle that the Exchange, being a self-regulatory body, should be entrusted with the responsibilities to self-regulate its business, including the appointment of proxy in the Exchange's Council elections, and that while entrusting these
responsibilities to the Exchange, some sort of safeguard should be in place.
There are, however, no unanimous views regarding the details of the necessary amendments. A few members of the group consider that the proposals as contained in the Exchange's revised voluntary package can adequately provide the necessary checks and balances to prevent the abuse of proxy appointment system and should therefore be adopted in the Bill as far as possible.
Most members of the group, however, feel that if the proposals contained in the Exchange's submission concerning the amendments to section 10(5)(a) and (b) and the Stockbrokers Association's submission concerning the amendment to section 10(6) are suitably incorporated into the Bill, they would represent a fair and appropriate level of the restrictions required.
After much discussion, the group has, by simple majority, agreed that the following proposed amendments should be made to the Bill:
(a) regarding a new section 10(5):
(i) subsection (5)(a) restricting the appointment of proxy to the circumstances of a member being ill, away from Hong Kong or has other good reasons be amended to read as "is unable to attend and vote in person due to any reason which is acceptable to the Committee of the Exchange Company";
(ii) subsection (5)(b) requiring a member appointing a proxy to make a statutory declaration for his absence and the reasons therefor if so required to do so by the Exchange be deleted; and
(b) regarding a new section 10, subsection (6), the authority for approving proxy
instrument should be entrusted to the Exchange Council and not to the SFC as proposed.
To keep my speech short, I will leave it to my honourable colleague, Mr CHIM Pui-chung, to explain these proposed amendments in detail when he moves the amendments at the Committee stage.
Mr Deputy President, in a few minutes' time, Members would have to say either "aye" or "no" to the proposed amendments. If the "ayes" have it, it will be a clear indication that this Council has placed its trust in the Stock Exchange as a self-regulator. I sincerely hope that the Exchange would strive to ensure that proxy voting of its Council election in future will be administered in the most proper and fairest manner.
With these remarks, I support the motion.
MR RONALD ARCULLI: Mr Deputy President, this Council is asked today to consider amendments to the Stock Exchange Unification Ordinance. Members will no doubt hope that this marks the end of a long and sometimes tortuous search for a durable solution to some key issues that have plagued our stock exchange. This search, at times, has attracted unwanted or perhaps even undesirable publicity. In a search for a properly but not overly regulated financial market, there have been some fairly fundamental changes. No doubt in arriving at such changes, sensitivities and concerns of the financial market would include its users as well as members of the stock exchange.
I shall only therefore speak on the issue of proxies, and in this respect criticism could be levelled against the Administration for not adopting the voluntary package which had the hundred percent backing of the members of the stock exchange at their meeting on 30 October this year. At that meeting, members resolved, amongst other items, that an individual member should be entitled to nominate as his proxy his authorized clerk or sales representative, for meetings where the election of members of the committee of the stock exchange is to take place. The Bill as it stands, does not conform to the voluntary package.
The relevant amendments to be proposed by the Honourable CHIM Pui-chung do bring it a little closer to the voluntary package. In the amendment to be proposed there is however, a requirement that an individual member is unable to attend and vote before he is allowed to appoint a proxy. The SFC was not prepared to agree to the formula
under the voluntary package but has agreed, perhaps reluctantly, to the amendment to be proposed. The committee of the stock exchange, after some hiccup, also agreed to the amendment to be proposed but would have preferred, as I understand it, the formula in the voluntary package.
What has happened is that the committee has been caught up by a timing issue. In other words, the stock exchange needs the new provision to be in place now, so that the stock exchange can get on with the business of elections. We therefore now have a formula that does not conform to the voluntary package, but is agreed to in the circumstances that I have outlined, between the SFC and the committee. This is not an entirely satisfactory solution and calls for an explanation from the
Administration.
Secondly, the Administration has informed the ad hoc group scrutinizing the Bill that the Administration will take a neutral stance. Again, I believe that the Administration should explain to this Council why it has chosen to adopt that course of action.
MR PETER WONG: Mr Deputy President, I commend to fellow Members the Stock Exchange Unification (Amendment) Bill 1991, and with some reluctance, the amendments to be moved by the Honourable CHIM Pui-chung. The Bill is the culmination of over five years of work in which I participated, first as a member of the defunct Securities Commission, and now the Securities and Futures Commission.
Relations between the stock exchange and the Commission have never been easy, and I sincerely hope that everyone will put past events behind them. Incidentally, as I have just retired from the Commission, what I have to say does not necessarily reflect its current thinking.
My commendation to the amendments, with reluctance, is since it is a dilution of what would otherwise have been a legitimate check on the unfettered discretion of the Stock Exchange Council over the admission of proxies to re-elect itself. However, there was the question of time constraint and my very real fear that if this compromise was not adopted we would be put back to square one, resulting in the Commission enforcing a solution. Even though fully justified in many people's eyes, that would not be welcomed or observed in spirit by the Exchange. But time will not stand still, Hong Kong must progress as a major financial centre for
the trading of stocks and shares, and we must be prepared to meet the new challenges ahead. I call upon both the Exchange and the Commission to accept the changes now being put through as a working compromise of all the conflicting demands. The Exchange now has the powers, and I hope, the will to self-regulate. It must now demonstrate to one and all that it will discharge its obligations fairly and impartially of a statutory monopoly, in the public interest. I am sure that the Commission, in its turn, will do everything possible to achieve mutual co-operation. The two must learn to work in harmony and trust. This Council, and I certainly, Mr Deputy President, will be watching. The first indication would be the publication by the Exchange of fair guidelines on the acceptance of proxies. Mr Deputy President, with these words, I support the Bill as amended.
MR CHIM PUI-CHUNG (in Cantonese): Mr Deputy President, this year marks the centenary of Hong Kong's securities industry, a time- honoured industry in comparison with other trades in Hong Kong. From the first establishment of the Hong Kong Stock Exchange to the setting up of the Far East Exchange in 1969, the Kam Ngan Stock Exchange in 1971 and the Kowloon Stock Exchange in 1972, the number of stockbrokers has grown from the initial few dozens to a peak of over 900. Despite the great number of
stockbrokers and a series of crises that Hong Kong has gone through since the institution of the Hang Seng Index more than 20 years ago -- the riots in 1967, the nosedive of the Hang Seng Index from 1774 points to 150 points in 1974, the jitters over Hong Kong's future leading to a plunge of the Hang Seng Index from 1810 points to 690 points in 1982, the world stock market crash in 1987, the Tiananmen incident in 1989 and the Gulf war in 1990 -- these brokers have never wavered from their steadfast devotion to duty. Out of the 900 or so brokers in the industry, only less than 1% got into trouble of one sort or another despite the financial crises. The result was that the Government emerged from the crises almost wholly unscathed. As to the loss relating to the Hong Kong Futures Exchange in 1987, I would say that this was due to decision errors by the government officials concerned; this is a point that should best be left to history to judge. Stockbrokers have been working diligently -- though perhaps unknown to the public -- contributing much to Hong Kong's status as a financial centre. At the most conservative estimate their contribution to the public coffers should be in the order of tens and even hundreds of billions dollars. Many listed companies, thanks to the efforts of stockbrokers, have achieved remarkable success. The government officials concerned, particularly those from the Securities and Futures Commission (SFC), have not only failed to appreciate the stockbroker's efforts; worse still they have chosen to make a case out of some
unrepresentative incidents just to undermine the reputation and status of the stockbrokers. This is indeed discouraging and will undoubtedly deal a blow to the sense of belonging of the local stockbrokers. In the end it will do no good to the economy of Hong Kong. I hope that the officials concerned will understand this.
Since the unification of the exchanges in 1986, the Stock Exchange of Hong Kong has been operating strictly in accordance with the company law of Hong Kong. There may unavoidably be instances of man-made errors; but it should not be that all the members are to blame. This is particularly the case in respect of the Hong Kong-based stockbrokers representing local or overseas Chinese interests who have all along been giving full support to the Government's correct policies and leadership. In addition to safeguarding the interests of investors, they have contributed to the development of Hong Kong as one of the world financial centres and the internationalization of the local stock exchange. More to it, they have been in support of the Exchange's reorganization though in no way will they accept any irresponsible allegations from the SFC. They find it hard to share the SFC's view expressed to the Exchange Council, that the interests of the major market users should be widely represented on the Exchange Council. This view of the SFC implies that Hong Kong may virtually be under the control of those who pay the highest tax. I do hope that the SFC, in recommending an amendment to legislation, will also agree with those advocating amendment that the Bill of Rights, the company law and the spirit of the Sino-British Joint
Declaration should also be factors for consideration. That is to say, instead of intervening in the administration of the Exchange, more emphasis should be laid on maintaining dialogue and co-ordination between the various parties concerned. I would therefore like to take this opportunity to express before this Council the views of most of our stockbrokers. May I also hope that we will stand by each other and work towards the goal of a better future for Hong Kong.
MR JAMES TO (in Cantonese): Mr Deputy President, the past practice of voting by proxy adopted by the Stock Exchange Council has long been criticized as a potential area of abuse. It is because proxy voting is liable to lead to vote-rigging. The small stockbroker find himself under pressure to appoint a proxy to vote on his behalf or to wheeldeal in such a way as to come close to committing a criminal act. The
Securities Review Committee ......
MR CHIM PUI-CHUNG (in Cantonese): Mr Deputy President, I take exception to Mr James
TO's "vote-rigging" talk which is absolutely unfounded.
DEPUTY PRESIDENT: Mr TO, would you just repeat that part of your speech?
MR JAMES TO (in Cantonese): I only said it was liable to lead to that; it could lead to that.
DEPUTY PRESIDENT: I do not think Mr TO has said anything which is contrary to Standing Orders, Mr CHIM. Please continue, Mr TO.
MR JAMES TO (in Cantonese) : The Securities Review Committee in its 1988 report on the workings of the Stock Exchange pointed out that the principal loophole relates to collected data on instances of abuse of proxy voting. The review committee was of the view that elections to the Exchange Council are of great importance and members should be personally present to vote. It was therefore recommended that voting by proxy be abolished. The Honourable LAU Wah-sum, who was then a member of the review committee, supported the recommendation.
The Securities and Futures Commission made an analysis of the voting conducted by the Stock Exchange Council in 1989 and 1990. The findings were as follows:
In the 1989 election, total number of votes cast was 510 of which 28% (142) were cast personally by members. In other words, 72% (368) of the votes were cast through proxy. Of the total number of proxy votes, three individual members acting as proxies accounted for 42%.
In the 1990 election, a total of 494 votes (fewer votes this time) were cast of which 16% (78) were cast by members personally and 84% (416) were cast through proxy. Three individual members acting as proxies accounted for 52%, that is to say, more than half of the proxy votes cast.
As a matter of fact, all elected candidates got elected on an overwhelming block vote, which of course included almost all proxy votes. Candidates who lost the elections won very few votes.
Furthermore, it is learnt from information obtained from the Government that the stockbroking community has the following complaints:
(a) In the 1989 and 1990 elections to the Stock Exchange Council, some stockbrokers were under considerable pressure to appoint proxies to vote for some candidates (a point to note is that some stockbrokers have to rely on other stockbrokers for business);
(b) One of the complaints alleged that at least one individual member who exercised most of the proxy votes had, at the nomination stage, openly predicted who among the candidates would win and who would not. This caused some potential candidates to hold back and eventually they did not stand for election;
(c) One member who had exercised proxy votes influenced or attempted to influence the way elected candidates in the Exchange Council transacted business.
The Law Reform Committee on Company Law has been studying the proposal to abolish the proxy voting system of the Stock Exchange. Although the Law Reform Committee is not in favour of abolishing the system entirely, it has agreed that proxy voting should be allowed only if it is made subject to strict limitations and that preventive measures should be in place to reduce the chance of abuse. Furthermore, the said committee has recommended that proxy voting should be allowed only where a member is ill, out of the territory or unable to vote personally on other valid grounds; that when a member appoints a proxy he must produce a statutory declaration setting out adequate and valid reasons for his absence; that the proxy must be a registered employee of the member; that one proxy can represent only one member, that is to say, one other member, in voting. The Stock Exchange's amended voluntary reform package imposes restrictions on the appointment of proxies; it lays down that no one shall be appointed proxy for two or more members simultaneously and the proxy must be a partner or an employee of the member concerned.
In fact, the voluntary reform package passed by the Stock Exchange Council on 3 October is also in favour of restricting the right to appoint proxies by laying down that one member can only appoint one proxy who must be a registered member of the Stock Exchange. The voluntary reform package was to have been submitted to an extraordinary general meeting on 30 October for scrutiny and endorsement. If the court had not, on a point of legal technicality, declared the meeting to be null and
void the rule restricting the appointment of proxy would have been part of the articles/memorandum of association of the Stock Exchange already.
Then the Stock Exchange reached an agreement with the Securities and Futures Commission just before the Exchange's appeal against the SFC's issuance of a statutory reform package was due to be heard before the Governor in Council. At that time the Stock Exchange Council promised to fully support the proposal to restrict the
appointment of proxies. It was on such basis that the Executive Council accepted the proposal and the legislative process was set in motion to have the proposal enacted as law. If I have misunderstood the basis on which the Executive Council has endorsed the proposal, would the Executive Council Members seated in this Chamber please
correct me?
But before long, a Stock Exchange representative who appeared before the Legislative Council ad hoc group seemed to have disowned the agreement they had earlier supported.
I understand that today the Honourable CHIM Pui-chung will be moving a motion to amend clause 2 of the Bill. Mr Deputy President, I support the amendment Bill as presented by the Government and laid before Members here now. As regards the amendment to be moved by Mr CHlM, I do not think I should give my views on it at this Second Reading stage. I shall therefore reserve my comments until the Committee stage when I shall argue point by point against the amendment to be moved by Mr CHIM. Thank you.
SECRETARY FOR MONETARY AFFAIRS: Mr Deputy President, the Stock Exchange Unification (Amendment) Bill 1991 in front of Members was prepared by the Administration and approved by the Executive Council on 22 October 1991 for introduction into this Council. The approval was given before, and I repeat, before the Stock Exchange's voluntary reform package was considered at its EGM held on 30 October. The Bill was drafted at a time when the Securities and Futures Commission (SFC) and the Stock Exchange were still in the midst of a difficult negotiation concerning reform. In the event, certain provisions in the Bill were subsequently considered by some to be a little restrictive, having regard to the spirit of self-regulation.
The Honourable CHIM Pui-chung will move amendments to ease some of the restrictions. The amendments have been agreed by the ad hoc group of this Council,
formed to study the Bill and chaired by the Honourable LAU Wah-sum. The Administration is happy to see the level of confidence and trust that this Council is prepared to place on the Stock Exchange. In the spirit of finding a commonsense solution to reform, the SFC has also advised, and the Administration is satisfied, that the amendments would not, and I repeat, not unacceptably erode the effectiveness of the Bill in achieving its purpose, which is to prevent the abuse of proxy voting and to ensure that the Council of the Stock Exchange will be elected in a fair manner.
The Bill as amended forms an integral part of the voluntary reform package of the Stock Exchange. All of us want this package as a whole to be a success.
To alleviate the concern of those Members who still feel uncomfortable and prefer the more restrictive approach, the SFC will continuously monitor whether or not the Stock Exchange administers the system in a fair and responsible manner.
It is very much the hope of the Administration that the enactment of this Bill will mark the end of a period of turbulence and the beginning of a new chapter for the Stock Exchange in its development into a fully self-regulatory body of a status commensurate with the level of confidence and trust by this Council and by members of the public. The Stock Exchange should be given an opportunity to get on with it.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
EMPLOYMENT (AMENDMENT) (LONG SERVICE PAYMENT) BILL 1991
Resumption of debate on Second Reading which was moved on 23 October 1991 Question on Second Reading proposed.
MRS MIRIAM LAU: Mr Deputy President, the Employment (Amendment) (Long Service Payment) Bill 1991 seeks to further improve the Long Service Payment Scheme introduced in 1985 in two areas. First, it seeks to standardize the rates of payment over a two-year period. Secondly, it enables workers below the age of 45 to be entitled to 50% of
the lump sum payment upon completion of five years' service, their entitlements to be increased progressively in line with their length of service. The Bill was introduced into the Legislative Council on 17 October 1991. Anticipating that great concern would be shown by workers and their representatives to this Bill and the principles behind it, an ad hoc group was formed to study the Bill.
In the course of examining this Bill, the ad hoc group received four representations and met with three interested groups. They all considered the proposals contained in the Bill to be inadequate and made a number of suggestions for further improvement. The ad hoc group discussed the various suggestions with the Administration. The Administration pointed out that while some of the suggestions deserved further consideration, it would be necessary to refer them back to the Labour Advisory Board for deliberation and advice. This was accepted by the ad hoc group. As a result, two new proposals were put to the Administration with the request that they be urgently considered by the Labour Advisory Board. These were the proposals to lower the retirement age from 65 to 60; and to standardize the rates of payments for all workers immediately instead of over a two-year period. The Labour Advisory Board considered these proposals at their meeting held on 15 November 1991.
Subsequent to the Labour Advisory Board meeting, the Administration agreed to accept the proposal to standardize the rates of payment for all workers, whatever their age, in one go. The ad hoc group was informed that although three of the employers members present at that Labour Advisory Board meeting objected to the proposal, two other employers members present were persuaded to support the same together with the employee members. However as regards the other proposal of whether the retirement age should be lowered to 60, there were widely divergent views amongst members of the Labour Advisory Board, and the Administration was therefore unable to accept this proposal for inclusion in the Bill.
Apart from the above proposals, the question of the Bill taking retrospective effect was also raised. The Administration expressed strong reservations and explained that dating back legislation which affected people's rights and obligations would set a very undesirable precedent. It would also create uncertainty amongst members of the public as to whether or not in future new laws or regulations would be applied with retrospective effect and what sort of criteria would be used to gauge necessity for retrospectivity.
Having considered the representations received, the clarifications provided by the Administration and the fact that the majority of the interested groups agreed that the early passage of the Bill was desirable despite a general feeling that further improvements should be pursued, the ad hoc group concluded that the Bill should not be delayed. After all, there are many workers who would benefit from the improvements proposed by the Bill even in its present form and their interests should not be ignored. The ad hoc group however felt that other proposals to further improve the Long Service Payment Scheme deserve further examination by the Labour Advisory Board and has urged the Administration to seriously consider such proposals. In regard to the additional improvement of standardization of the rates of payment in one go instead of over a two-year period, I will later on at the Committee stage move an amendment to delete the transitional provision under clause 5 of the Bill.
On behalf of the ad hoc group, I would like to take this opportunity to thank the members of the Labour Advisory Board for their co-operation in further discussing the improvements to the Long Service Payment Scheme as requested by the ad hoc group at short notice. I would also like to thank the Administration for assuring Members that the provisions of the Long Service Payment Scheme would continue to be reviewed so that our hard working and deserving workers who have made great contributions to the growth and development of Hong Kong's economy would get even better protection hopefully in the not too distant future.
Mr Deputy President, with these remarks, I support the Bill.
MR TAM YIU-CHUNG (in Cantonese): Mr Deputy President, six years have passed since the enactment of the legislation on the long service payment scheme in 1985. During all these years, the Ordinance was only reviewed once in 1988 and three years have passed before the legislation is reviewed again today. It seems that each review of the legislation takes a long time.
If we compare the amendments of the two revisions to the proposals all along advocated by the labour sector, we will realize the difficulties confronted in improving the protection of the workers.
I remember that when the legislation of the long service payment scheme was enacted in the Legislative Council in 1985, I pointed out that the provisions on the years of service and the reduced rate of payment are discriminating against young
workers and are most unreasonable. When the amendment Bill was passed in the Legislative Council in 1988, I once again made the above critrisms. I further pointed out that the qualifying age for long service payment on resignation should be lowered from 65 to 60. Several years have lapsed before these discriminatory provisions are finally amended in this revision. However, the revision is incomprehensive and sloppy. The complicated discounting provisions relating long service payment to the age of the workers still remains. Why does the Government not make things simple by stipulating that all workers, regardless of age, are eligible to receive full long service payments if they have worked for five years. As regards the lowering of the qualifying age from 65 to 60, no improvements have been made in this revision, much to my disappointment and regret. To elderly workers, the long service payment is the only money they can live on after retirement. It is like a quilted coat in a severe winter, however thinly quilted the coat may be. However, extension of the scope of protection to this group of elderly workers is totally ignored in this review. This is really disappointing. I urge the Government to conduct a review as soon as possible, so as to lower the qualifying age for long service payment on resignation from 65 to 60 and to change the qualifying years of service from 10 to five. To those who worry that such amendments will lead to the resignation of a great number of elderly workers, I can only say : "You are really ignorant of the suffering of the mass." To a worker over 60, resignation is tantamount to unemployment. Would there be workers who dare to take such a risk?
Apart from these, the labour sector has all along made other reasonable demands, such as improving the provisions concerning the eligibility of employees who resign on grounds of ill-health so as to give genuine protection to ill-health workers, and scrap the limitation on the long service payment to not more than the total income of the worker over the past 12 months and so on. These demands have not been reviewed in this revision. I hope the Government will respond to these demands in the next revision.
Recently, many workers have successively complained to me of being dismissed after the Bill was Gazetted. These workers should have been included within the scope of benefits by the Bill. In fact, how many workers have been similarly dismissed within the five-month period after the publication of the Bill in the Gazette?
Actually, a simple measure is sufficient to stop unscrupulous employers from evading their responsibility, that is, allowing the Bill to have a retrospective effect from the date of Gazette. Regrettably, this little request is rejected.
Although I am dissatisfied with the amendments of the legislation, improvements have nevertheless been made even though they still fall short of the requests from the labour sector. As "half a loaf is better than no bread ", I will still support the amendment motion proposed by the Honourable Mrs Miriam LAU. However, I hope that the Government would, as soon as possible, conduct another review on the long service payment legislation, especially on those provisions concerning the protection of elderly workers. I hope we do not have to wait for another three years for another revision.
Mr Deputy President, with these remarks, I support the motion.
MR LAU CHIN-SHEK (in Cantonese): Mr Deputy President, the Employment (Long Service Payment) Ordinance caused major controversies from the moment it was put through the legislative stages up to and during its implementation. It also incurred the strong criticism and discontent of the labour circles. The truth is that the law merely provides that an employee with a long service record as defined should, upon the termination of his employment, receive a prescribed amount of compensation. The reason for making that law was that, heretofore, when the employment of an employee with a long service record was unjustifiably or unjustly terminated, or when an old employee retired, he had had no protection whatsoever. What all this meant was that the Government, in order to reject labour's demand for a Central Provident Fund, took the conciliatory step of doing something that was not quite as good: it used long service payment as a means of countering the sustained workers' protests during the 1970s and the early 1980s. As of today, the Employment Ordinance provides that an employer may, by giving seven days' or one month's notice or by paying an amount in lieu of notice, terminate the employment of an employee at any time without any
explanation. Though the Employment (Long Service Payment) Ordinance provides that an employee with a long service record is entitled to payment, this provision is clearly discriminatory against employees below the age of 40. Also, the Ordinance defines long service as 10 years. This is very harsh given the simple reality in Hong Kong, which is that very few employees meet this long service definition. Also, in order to qualify for long service payment, an employee's employment must be
terminated by his employer. He will not qualify if he quits on his own, the only exception being where he is 65 and having been on the job for 10 years or where he is ill and certified by a doctor as permanently incapacitated from the job in question. Because of the various restrictions, very few employees really qualify for the
benefit.
I feel that the Employment (Amendment) (Long Service Payment) Bill going through the Second and Third Readings before this Council today still fails to correct the shortcomings of the parent Ordinance. This Council's ad hoc group on the Bill made the suggestions that younger workers should receive compensation on a pro rata basis depending on their age and years of service and that the retirement age should be lowered from 65 to 60. These suggestions were put to the Labour Advisory Board to discuss and review. In the end, they were adopted only in part. The rest was opposed by the employers side of the Labour Advisory Board. As a result, the Bill totally omits even such scant protection and financial compensation as may be made available to old workers about to reach the retirement age. Undoubtedly, the Bill is to be commended for changing the definition of long service from 10 years to five years. However, for pro-rating the long service payment for workers under the age of 40, the Bill provides for the use of ratios that are overly complex and that may result in new discrimination. The Bill fails to treat younger workers on an equal footing. Because the Ordinance provides that an employee should receive his long service
payment only at the time of termination of his employment, the initiative is in the hands of the employer, who is thus provided with an escape from his responsibility for paying compensation: by terminating the employment of an employee one day short of his reaching the required age, the employer reduces long service payment by nearly half. In fact, to justify discrimination against younger workers, the Government and employers argue that it is easy for younger workers to find new jobs and that employers, who have provided training, are the losers when employees quit. I think, however, that such arguments are contrary to the spirit of the Employment (Long
Service Payment) Ordinance. One must realize that a younger worker will have spent the most precious years of his youth on the particular job and, upon termination, will lose the advantages of skill and seniority. Also, many jobs, particularly jobs in the manufacturing trades, are paid at a piece rate and require little training time. In these jobs, the pay is based on the amount of work done. If one looks at the related labour laws all over the world, one will see that age is never a criterion. This is why we are having this ludicrous and ridiculous situation where the amended criterion is worse, relative to the original criterion.
The Bill is silent on a matter of general concern to employees, namely, the matter of an improvement that will make long service compensation payable to a voluntary quitter who is 60 and has been on the job for five years instead of being 65 and having been on the job for 10 years. This omission is the most condemned and criticized by the labour circles. In Hong Kong's neighbouring countries or territories, 60 is
the retirement age. I really do not understand why people in a reputedly prosperous and progressive place like Hong Kong must wait until they are 65 before they can retire. More ironically, we in this Council only last week paid tribute to the social contributions of the elderly. In the views that they expressed, many Members seemed to forget this question: As they retire, is there a financial commitment made to the elderly, who worked to make Hong Kong prosperous? In fact, we are merely indulging in wishful thinking when we regard long service payment as a substitute for pension. For a long time, it has been quite sad for Hong Kong to fail to provide retirement protection. As we indulge here in talks about the problems of old people, have we asked ourselves what services that we provide to the old people will really benefit them? In fact, the Government, too, often fails to plan for the elderly. Only when it was evident that a Central Provident Fund could no longer be put off did the Government decide to set up compulsory provident funds. But it will still take some time before the relevant scheme can provide retirement protection to the elderly. Meanwhile, long service payment remains to be old workers' treasure chest upon retirement. The idea that old workers who meet the definition of long service should receive long service payment is approved by the labour circles and also by this Council's ad hoc group on retirement protection. Unfortunately, the provisions of the Bill have not been changed accordingly. The greatest obstruction was the opposition of the employers side in the Labour Advisory Board. I regret that the structure of the Labour Advisory Board is such that it can influence legislation to the extent of affecting its improvement. One is even more indignant at the Labour Department for failing in its duty. In the debate on the present Bill, the Labour Department should not have played a neutral role but should have fought for the better protection of employees. In many instances, the Labour Department failed to make an effort to improve the Bill. Such an attitude clearly favoured management at the expense of labour.
Mr Deputy President, some of the original provisions of the Employment (Amendment) (Long Service Payment) Bill have been improved. The new provision allowing employees below the age of 36 to receive full compensation was a change made as suggested, after discussions were held by the ad hoc group. Such a development was rare in the history of legislative deliberations. However, over some controversial issues, provisions detrimental to employee interests have been retained. I am the most unhappy with this. I think that the only feasible thing to do is to remit the Bill to the Labour Advisory Board for further consultation and revision so that old workers may gain more practical protection and will not have too many worries when they retire.
Therefore, I will continue my effort in this area. I can only abstain from voting
on the present Bill. Members of the United Democrats of Hong Kong will abstain in sympathy. This is to show that I do not fully accept the Bill and that I want to say sorry to those employees who are affected by the failure to lower the required age from 65 to 60. Thank you, Mr Deputy President.
MR STEVEN POON (in Cantonese): Mr Deputy President, labour welfare has always been the focus of debate between employers and employees. Labour unions and employer organizations have expressed a lot of views on this controversial issue and there are points worthy of our sympathy in the arguments of both sides.
As accumulation of social wealth continues, there should be proportionally more attention given to labour welfare. This is not only an inevitable outcome of the development of society, but is also a key factor of maintaining social stability.
I started my career as a small employee. During the past 26 years, I have worked in a personnel department as a supervisor and I have worked as a general manager. I am myself an employee and have also discharged the duties of an employer.
I believe that to care for the livelihood of dismissed employees is very important when we consider labour welfare. The objective of the Employment (Long Service Payment) Ordinance is to grant employees the right to receive a sum of long service payment if they are dismissed not because of misconduct and if they have to retire because of age, provided that they have worked for a minimum number of years. It must be stated that if an employee resigns voluntarily or changes job to work for other employers, he will not be entitled to any long service payment unless he retires because of old age. In fact, the long service payment should be renamed as the "Long Service Dismissal Payment". With constraints in the form of the length of service, the monthly salary on the part of the employee and the retirement age, the Employment (Long Service Payment) Ordinance only provides employees with the most basic protection. We should be as generous as possible when considering the content of the Ordinance.
I agree to the direction of amendment of the Employment (Amendment) (Long Service Payment) Bill as tabled. But I believe that the degree of amendment should be improved appropriately.
I am of the view that the Bill should seek to abolish all constraints and discounts
imposed on young employees. It is indeed outdated to include age requirement in the conditions. A long service has nothing to do with age.
Under the existing legislation, provisions pertaining to the right to long service payment include 65 years of age in the case of old age retirement and completion of 10 years' service. In all comparatively well-established enterprises, the retirement age of employees is set at 60. Even in China, the retirement age is generally set at the same. I therefore view that the requirement should be amended. Meanwhile, as the definition of long service payment is basically made in the light of five years' service, the requirement of 10 years' service for retiring employees should be amended accordingly.
I hope that employers can understand, support and accept the above views. I call on the Government and the Labour Advisory Board to continue their discussions on matters including the above suggestions, so as to make the Employment (Long Service Payment) Ordinance more equitable and to make it take care of dismissed or retiring old employees in a more reasonable manner.
I am dissatisfied that the Bill is tabled for enactment after five months since it was Gazetted. Concerning such sensitive issues, as Mr TAM Yiu-chung has pointed out, the Government should give consideration to the possibility of shirking responsibility by some vicious employers, and try to avoid having similar arrangements in future.
I support the amended motion of Mrs Miriam LAU.
MR HENRY TANG: Mr Deputy President, in 1985, when the long service payment scheme was established by the Labour Advisory Board by consensus, the consensus was that younger workers will receive only partial payment of the long service payment due to the training costs that the employers will have to bear since certain industries have to have a very long training period, such as up to one year for certain electronic industries. And the second reason for the partial payment for younger workers is the ease of employment. It is quite obvious that someone who is in his/her early twenties or thirties would be much easier to find alternative employment either in the same industry or in another industry, compared to someone who is in his/her forties or fifties.
I am disappointed to hear today that a consensus that had been reached in 1985 was criticized in 1988 and is now being criticized in 1991. Furthermore, I am disappointed to hear certain of my most respected colleagues criticizing the composition of the Labour Advisory Board. The Labour Advisory Board consists of six employer members as well as six employee members -- the six employee members, five of whom are by election, one of whom is appointed; and the six employer members, five of whom represent employer organizations, one of whom is appointed; the Chairman of the Labour Advisory Board being the Commissioner of Labour. How come they are not qualified to adjudicate or to deliberate on labour issues, since that is an equally divided board?
I understand that since the 65 or 60 years of age for retirement issue was discussed in the Labour Advisory Board only as recently as two weeks ago, and the reducing of retirement age from 65 to 60 has undue implications to the comprehensive retirement scheme that is due to be considered, it is in principle already agreed by the Executive Council and I see no reason to amend that particular course right now, considering that it is already agreed by the Executive Council and is due to become part and parcel of Hong Kong's retirement scheme.
On that basis, Mr Deputy President, I support the amendment proposed by Mrs Miriam LAU.
MR HOWARD YOUNG (in Cantonese): Mr Deputy President, I had joined the ad hoc group chaired by Mrs Miriam LAU to study the Bill before today's discussion. When we received some labour organizations, I knew that the amendments proposed this time would fail to meet all the demands of the labour sector. I am looking at the issue from two perspectives. I come from the tourism functional constituency and my constituents are mainly employers. But I myself am an employee. Therefore, I think the issue should be viewed from the perspective of balance of interests between the two parties. First of all, I regret that the Labour Advisory Board did not support the proposal of reducing the retirement age from 65 to 60. Take my trade as an example. Given that it is a new industry, should one care to ask any employer or employee in the trade, they will respond and say they will be surprised beyond bounds if they will have to wait until they are 65 before they can collect long service payment or enjoy retirement protection. Two factors must be taken into account in view of Hong Kong's actual situation: firstly, many industries are really facing shortage of labour. So I think reasonable protection must be offered to employees so as to boost
their morale. This will make them work harder for the enterprises or companies they work with. On the other hand, as mentioned in last week's debate, we must admit that the age profile of the Hong Kong population is changing. Such being the case, there will be a greater number of elderly workers in the future. Therefore, there will be a greater need to protect and take care of the interests of those who have
contributed to our society. In spirit, I support the Long Service Payment (Amendment) Bill. But I do hope that the Government, employers, the labour sector and employees will not take it that these amendments will solve the problem once and for all and that it will be a long time before further amendments will be necessary. These
amendments are only the first step. I also hope that in the near future, the Labour Advisory Board and people from different walks of life can seriously discuss how to enable those employees who have rendered long service to their employers to get the retirement protection they deserve when they reach 60 instead of 65.
Mr Deputy President, I support the Bill.
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, it is clear from what has just been said that the proposals in this Bill, as well as the Long Service Payment Scheme generally, are of great concern to both employers and employees. Not surprisingly, although there is a large measure of consensus on the basic principles and underlying spirit of the Scheme, there are differing views on the extent to which the benefits under the Scheme should be improved and the pace at which such improvements should be made. These differences can best be resolved through patient discussion and consultation. Indeed, the Bill now in front of the Council has emerged after extensive consultation with, and within, the Labour Advisory Board.
I am grateful to Mrs Miriam LAU, and the ad hoc group of which she was Convenor, for their careful and constructive scrutiny of the Bill. The Administration has, at the request of the ad hoc group, sought further advice from the Labour Advisory Board on two specific proposals related to the Bill. As a result of these further consultations -- and I join Mrs LAU in thanking the Labour Advisory Board for their readiness to discuss the issues at short notice -- the Administration was able to agree to accept the proposal to standardize the rates of payment immediately rather than over a two-year period. The Administration therefore supports the amendment which Mrs LAU will later move at Committee stage.
As regards the other proposal to lower the retirement age from 65 to 60, we have
concluded that further discussion is required given the wider implications of the proposal for our framework of labour legislation and for the overall manpower supply situation. There is already provision under existing legislation for retirement on health grounds.
A number of other proposals have been put forward both in the ad hoc group and in today's debate. I have taken careful note of them and will examine them in consultation with the Labour Advisory Board. In the meantime, I fully support the ad hoc group's conclusion that the early passage of this Bill, including the amendment to be moved by Mrs LAU at Committee stage, is desirable and important.
Thank you, Mr Deputy President.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
Committee stage of Bills
STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1991
Clauses 1 and 3 were agreed to.
Clause 2
MR CHIM PUI-CHUNG (in Cantonese): Mr Deputy President, I move that clause 2 be amended as set out under my name in the paper circulated to Members.
A total of three amendments to clause 2 are proposed. I shall explain them seriatim.
First, concerning the proposed amendment to the new section 10(4)(c). As drafted, the wording of this section casts doubt as to the number of proxies needed to be appointed by a Stock Exchange member with one vote covering more than one seat in the Stock Exchange Council. The proposed amendment to this section will clarify the position by clearly stating that such member need appoint only one proxy.
Secondly, concerning the proposed amendment to the new section 10(5). According to this section, appointment of a proxy by an individual member would be allowed only if he is ill, away from Hong Kong or has other good cause. Additionally, a member appointing a proxy may have to make a statutory declaration for his absence and the reasons therefor if so required by the Stock Exchange. The Stock Exchange and the Hong Kong Stockbrokers Association consider that when compared with the requirements for proxy appointment in respect of a corporate member, those for individual members appeared to be somewhat restrictive. The new section 10(5), if amended as proposed, would allow an individual member to appoint a proxy if he is unable to attend for reason acceptable to the Stock Exchange Council. A statutory declaration for his absence is no longer required. It is considered that such amendment will still
provide sufficient safeguards against possible abuse of the proxy system without being too restrictive.
Finally, the proposed amendment to the new section 10(6). According to this section, the Securities and Futures Commission (SFC) would be the statutory authority to approve the form of the proxy instrument used. The proposed amendment seeks to replace the SFC with the Stock Exchange Council as the approving authority for the proxy form. It is felt that the Stock Exchange has now acquired a more material place as a self-regulator, and that it should be entrusted gradually with more
self-regulatory work whenever possible.
Mr Deputy President, I beg to move.
Proposed amendment
Clause 2
That clause 2 be amended by --
(a) in proposed section 10(4)(c), by adding "by another member" after "appointed". (b) by deleting proposed section 10(5) and substituting -
"(5) A member who is an individual shall not be entitled to appoint another person to be a proxy under subsection (4) unless he is unable to attend and vote in person due to any reason which is acceptable to the Committee.".
(c) in proposed section 10(6), by deleting "Commission" and substituting "Committee".
Question on the amendment proposed.
MR STEVEN POON (in Cantonese): First of all, I would like to declare interest as a member of the Exchange Council.
Stockbrokers have never agreed to the proposed cancellation of the proxy system. The Bill tabled today and the amendments proposed by the Honourable CHIM Pui-chung were arrived at after the Securities and Futures Commission and the Stock Exchange had had a lengthy discussion on the issue. But a very important matter of principle is involved: why is it that a corporate member is allowed to appoint a member of its staff to be its proxy, but an individual member is not allowed to appoint his own staffer who has been registered with the Exchange to be his proxy? This bears on the principles of fairness and democracy. The views of the Honourable James TO which I have just heard are contrary to the principles of fairness and democracy. The amendments proposed by Mr CHIM Pui-chung already impose a number of restrictions on individual members who have to submit reasons acceptable to the Exchange before they are allowed to appoint their proxies. However, corporate members need not do this. I resent these restrictions imposed upon individual members. The Honourable Ronald ARCULLI has also mentioned this point. I find it hard to agree with Mr James TO that the proxy system be cancelled.
Mr Deputy President, should the interests of stockbrokers be affected, their consent must be sought first. The amendments proposed by Mr CHIM Pui-chung represent the views of different sectors and I would like to urge Members to support his motion for amendment. Thank you.
MR JAMES TO (in Cantonese): Mr Deputy President, first, in response to the Honourable Steven POON's query as to why a corporate member shall be entitled to appoint a proxy while an individual member shall not, I would suggest that if some sort of restriction is considered necessary it would be in accord with the principle of fairness for the Honourable Steven POON, or perhaps even the Honourable CHIM Pui-chung, to propose an amendment to the effect that every member, be it a company or an individual, shall
be subject to such restriction rather than advocating a relaxation of control as has been done by Mr Steven POON. Secondly, I have not mentioned any blanket cancellation of the proxy appointment system; I only said that this was suggested in the 1988 report of the Securities Review Committee -- a widely represented committee with members including some of our honourable colleagues. Thirdly, Mr Steven POON said a while ago that this package represented a compromise arrangement between various parties or bodies and the Government. But the question arises as to why the amendment before this Council today should be moved by Mr CHIM Pui-chung but not the Secretary for Monetary Affairs. I came across a letter the other day and discovered that the
Secretary for Monetary Affairs would prefer to remain neutral in this particular case as it had appeared to the Secretary that the proposed cancellation of the requirement for a statutory declaration (which an individual member would have to make to give reasons for his absence if he wanted to use the proxy vote) had in fact exceeded the arrangement agreed earlier on by the Securities and Futures Commission (SFC) and the Stock Exchange. But as the Honourable Ronald ARCULLI has said, we still hope that the Secretary will explain his neutrality and tell us the appropriate arrangement that he has in mind.
Turning to the amendment motion by Mr CHIM Pui-chung, the amendment proposes that the reason an individual member gives in appointing a proxy should be acceptable to the Executive Committee of the Stock Exchange. The point in altering the much criticized proxy voting system is to ensure that the system will not be subject to abuse. To this effect it is stated in the Bill that an individual member shall be restricted to the use of proxy voting unless his absence is due to some good cause and, if so required, the member may have to make a statutory declaration to give reason for his absence. With this amendment which we have before this Council Mr CHIM Pui-chung intends to leave it to the Executive Committee of the Exchange to decide what will constitute a good cause. But members of the Executive Committee are all, if not directly, interested parties; in such case the proposed arrangement would make the system even more susceptible to abuse. In the most extreme circumstance, members of the Executive Committee (Council) of the Stock Exchange may even arbitrarily approve their supporters to use the proxy vote while denying their opponents the same right. The problem lies in leaving it to the Exchange Council to decide what cause will constitute a good cause. Some Executive Committee members may be very lenient in this respect to the extent that almost all who are unable to attend and vote will be allowed to appoint other persons as proxies.
Moreover, the cancellation of the requirement of making a statutory declaration
will mean that members need not provide even a basic reason for using the proxy vote. As I said a while ago, this might explain why the Secretary for Monetary Affairs preferred to wash his hands of the case and refused to take upon himself the responsibility which the mover of this amendment might have to bear. Some members of the Stock Exchange worry that the amendment may infringe and impose unjustified restrictions on the right to use the proxy vote in the future. Perhaps I should point out that Mr CHIM Pui-chung's amendment relates to acceptance of the reason for absence by the Exchange Council. The original proposal in the Bill, however, requires that good cause which may include, among others, ill health or absence from Hong Kong, be given before appointment of proxy is allowed. Some members may be worried about the requirement for making a statutory declaration. But if one would care to take a good look at the original proposal in the Bill, one would discover that the statutory declaration needs only be made at the request of the Stock Exchange; how would abuse or shocking cases arise under this proposed arrangement? Mr CHIM Pui-chung also pointed out that the present Bill would seem to be unfair to individual members. I have made my point on this. I believe that, instead of relaxing control, the restrictions as contained in the reform package should be extended to corporate members if the proposed arrangement is considered inequitable. So may I suggest that even if in the end my views are rejected and Mr CHIM Pui-chung's amendment is carried, consideration will still be given to this point that I have mentioned? Further, I should like to clarify the two points raised by the Honourable LAU Wah-sum a few moments ago. First, Mr LAU said that it is not the intention of the Bill to vest the SFC with the power to interpret as to what constitutes a good cause. But allow me to urge Honourable Members to study the Bill again. The Bill does not contain any words to that effect. Instead it only says that "other good cause" is required to account for a member's absence; and it is the court's ruling, not the SFC's interpretation, which will be sought if a controversial case arises. Second, according to Mr LAU, any support a Member gives to the ad hoc group's recommendation, that is to say, Mr CHIM Pui-chung's amendment, will be construed as a vote of support for self-regulation by the Stock Exchange. I am all for a self-regulatory stock exchange; but nowhere in the Bill do I see any indication of conferring on the SFC any unwarranted monitoring power. So if reasonable restrictions on the proxy appointment system are considered necessary, I fail to understand why on the one hand a member's absence should be justified with good cause while on the other hand the already lax requirement of producing a statutory declaration at the request of the Stock Exchange should be further relaxed. This, I should say, would not appear to be a balanced approach.
With these remarks, I am opposed to the Honourable CHIM Pui-chung's proposed amendment to clause 2 of the Bill.
DEPUTY PRESIDENT: Mr CHIM, you have the right to reply, but before you do so, does any Member wish to speak on the clause 2 amendments? Mr CHIM, yes, you may reply.
MR CHIM PUI-CHUNG (in Cantonese): As regards what the Honourable James TO said, could I ask whether he was representing himself or the United Democrats of Hong Kong? It is understood that there are two types of members in the Exchange, namely, corporate members and individual members. Corporate members have the right to use the proxy vote but individual members are placed at an unfair disadvantage in this respect. The goals the United Democrats of Hong Kong are striving for are human rights, freedom and democracy. But what Mr TO has been advocating already amounts to exploitation of the rights and privileges of the individual members of the Exchange. This in itself is against the cherished spirit of the United Democrats. This is an instance of freedom being pitted against freedom and democracy against democracy. This kind of spirit and attitude is irresponsible. I do hope Members concerned will assess and scrurtinze this Bill. Thank you.
DEPUTY PRESIDENT: What is your point, Mr TO?
MR JAMES TO (in Cantonese): Mr Deputy President, since Mr CHIM has raised a query with me as regards the people or organization I represent, could I say a few words in response to that?
DEPUTY PRESIDENT: It is not a point that you have to answer, Mr TO. Question on the amendment put.
Voice votes taken.
Mr James TO claimed a division. The Deputy President ordered the Council to divide under Standing Order 36(4).
DEPUTY PRESIDENT: Council will proceed to a division. The division bell will ring for three minutes and the division will be held immediately afterwards. As we are in session, I would remind Members to maintain order, please.
DEPUTY PRESIDENT: The voting system has now been activated. There is going to be a change in the way in which the system is used because of the queries we had last time we used the system. The system was tested and retested and found to be in perfect working order. But it is, of course, essential that Members have complete confidence in the integrity of the system. So what I propose to do is to take Members through every single step of the voting procedure and to proceed to the next step only when I am satisfied that you are satisfied, and it will only be at the end of the day when you are all satisfied that the display will flash and I will announce the result.
There is no countdown, incidentally. We shall take as long as this needs to get it right.
The system has been activated and your "Present" light on the panel should be flashing, just that one light. If any Member's "Present" light is not flashing, please rise and we will see to it.
FINANCIAL SECRETARY: Mr Deputy President, I have already pressed my voting button; I have registered my presence and voted.
DEPUTY PRESIDENT: Thank you, Mr MACLEOD. So every "Present" light is now flashing. Press the "Present" button if you want to be registered as present.
MR TAM YIU-CHUNG (in Cantonese): All the lights except the "Present" light are flashing.
MR PANG CHUN-HOI (in Cantonese): That is also the case with me.
DEPUTY PRESIDENT: Order, please.
DEPUTY PRESIDENT: Some of you are one step ahead of me. When you press the "Present" button, the "Present" light goes out and the other three lights come on, that is, the light for "Yes", "No" and "Abstain". I suggest you bear with me and we start again and take it step by step. Let us start again. I would ask Members, please, not to vote prematurely. We have got to get it right. We cannot have queries after the result has been displayed. So bear with me and let us take it step by step. Your "Present" light should now be flashing. If your "Present" light is not flashing, please rise or indicate that something is wrong. All right. Now press the "Present" button if you want to be registered as present. The light above your "Present" button should have gone out and the lights for "Yes", "No" and "Abstain" should be flashing. If that is not the case, please rise or indicate that this is not the case.
The next step now is to press the button for the way you wish to vote, "Yes", "No" or "Abstain". If you do not press any of these buttons, as I think you are entitled to do, you will be recorded in the printout as "Present" but with no vote recorded. So please now vote the way you wish to, "Yes", "No" or "Abstain" or press no button at all. Now if you have voted, that light will be on, but the others will be out. If that is not the case, please indicate to me or rise. If you have voted in error, you can still correct it now by pressing the button for the way you wish to vote. I will now ask the Clerk to activate the display and once that is done, it will be too late for queries, please.
The Chief Secretary, the Attorney General, the Financial Secretary, Mr Allen LEE, Mrs Selina CHOW, Mrs Rita FAN, Mr NGAI Shiu-kit, Mr PANG Chun-hoi, Mr TAM Yiu-chung, Mr Andrew WONG, Mr LAU Wong-fat, Mr Edward HO, Mr Ronald ARCULLI, Mr Martin BARROW, Mrs Peggy LAM, Mrs Miriam LAU, Mr LAU Wah-sum, Mr Peter WONG, Mr Vincent CHENG, Mr Moses CHENG, Mr Marvin CHEUNG, Mr CHIM Pui-chung, Mr Frederick FUNG, Mr HA Wing ho, Mr Simon IP, Mr Gilbert LEUNG, Mr Eric LI, Mr Steven POON, Mr Henry TANG and Mr Howard YOUNG voted for the amendment.
Mr HUI Yin-fat, Mr Martin LEE, Mr Albert CHAN, Mr CHEUNG Man-kwong, Rev FUNG Chi-wood, Mr Michael HO, Dr HUANG Chen-ya, Dr Conrad LAM, Mr LEE Wing-tat, Mr MAN Sai-cheong, Mr NG Ming-yum, Mr James TO, Dr Samuel WONG and Dr YEUNG Sum voted against the
amendment.
Dr C H LEONG, Mr Jimmy McGREGOR, Mrs Elsie TU, Prof Edward CHEN, Miss Emily LAU, Mr Fred LI, Mr TIK Chi-yuen and Dr Philip WONG abstained.
THE DEPUTY PRESIDENT announced that there were 30 votes for the amendment, 14 votes against it and eight abstentions. He declared that the amendment was carried.
Question on clause 2 , as amended, proposed, put and agreed to.
EMPLOYMENT (AMENDMENT) (LONG SERVICE PAYMENT) BILL 1991
Clauses 1 to 4 were agreed to.
Clause 5
MRS MIRIAM LAU: Mr Deputy President, I move that clause 5 of the Bill be deleted.
One of the objectives of the Bill was to standardize the rates of payment so that all eligible employees, irrespective of age would be able to get the full amount of their entitlement based on length of service. However, for reasons which most of our ad hoc group members found difficult to accept, the original proposal was to achieve such standardization over a two-year period in relation to workers under the age of 36 whereas other over that age would be entitled to the full amount immediately. It was felt by these members that if the intention was to standardize the rates for all eligible employees, then no one should be unfairly discriminated. Accordingly it is proposed that the transitional provision under clause 5 of the Bill, which delays the achievement of standardization for workers under the age of 36, should be deleted.
Mr Deputy President, I beg to move.
Proposed amendment
Clause 5
That clause 5 be amended by deleting clause 5.
Question on the amendment proposed, put and agreed to.
Question on clause 5, as amended, proposed, put and agreed to. Council then resumed.
Third Reading of Bills
THE ATTORNEY GENERAL reported that the
STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1991 and
EMPLOYMENT (AMENDMENT) (LONG SERVICE PAYMENT) BILL 1991
had passed through Committee with amendments and moved the Third Reading of the Bills Question on the Third Reading of the Bills proposed, put and agreed to. Bills read the Third Time and passed.
5.05 pm
DEPUTY PRESIDENT: It is just after 5 o'clock. I propose to take a 20-minute break before we get to the Member's motion.
5.25 pm
DEPUTY PRESIDENT: Council will resume.
Member's motion
SALE OF PUBLIC HOUSING FLATS TO SITTING TENANTS
MR LEE WING-TAT moved the following motion:
"That this Council urges the Housing Authority to widely consult the public in reviewing the objective, pricing, maintenance, management, and other aspects in connection with the sale of public housing units to sitting tenants."
MR LEE WING-TAT (in Cantonese): Mr Deputy President, I move the motion standing in my name on the Order Paper.
The Sale of Public Housing Flats to Sitting Tenants Scheme had its origin at the first meeting of the Housing Authority's relevant ad hoc group in August 1989. It came to an end with the expiration on 21 October 1991 of the deadline for the submission of applications. As is generally known, the Scheme, which took two years to prepare, has been a complete failure. 6 900 flats in 11 buildings were offered for sale by the Housing Authority. The number of interested sitting tenants was a mere 510, equalling 7.4% of the number of flats offered for sale. It appears on the surface that the selling prices of the public housing flats are quite attractive in light of the sustained high prices in the private sector housing, and this is what is puzzling to people in general and the Housing Authority in particular. What is more, in the calculations of the Housing Department, a sitting tenant can, with the use of only 40% of his income, turn himself into a property owner and, in addition, free himself of the pain of having to pay double the rent should he become well-off 10 years after moving into his public housing flat. That should be quite attractive. Where, then, is the problem? I do not intend to begin by talking about such matters as pricing and maintenance. Instead, I hope to review the basic causes of the failure of the Sale of Public Housing Flats to Sitting Tenants Scheme on the basis of an examination of some fundamental changes made in the housing policy in the course of the past few years.
Some time ago, during the policy debate, I talked about the question of the long-term housing strategy. I would like now to go into this a little more deeply. The Government in 1987 published a paper on the long-term housing strategy. No public consultation was held in the course of the preparation of that paper. The paper said in its preamble, "While the basic aim of ensuring that adequate housing at an affordable price or rent is available to all households must be maintained, the opportunities for assisted home purchase should also be increased." According to the strategy, the trend was to shift gradually to private developers as the principal
suppliers for satisfying housing needs during the period from 1988 until the early 21st century, and opportunities for home ownership were to be greatly increased. A Home Purchase Loan Scheme thus came into being. Now, beginning as soon as the year 1992-1993, the Housing Authority will achieve a one-to-one ratio between public
housing flats to let and housing flats for sale. Also, as disclosed in the Housing Authority's annual report, the number of flats to let will decline sharply from 33 900 in 1990 to 15 300 in the year 2000. The Sale of Public Housing Flats to Sitting Tenants Scheme was in line with some of the requirements of this long-term housing strategy.
One unclear area in the long-term housing strategy concerns what role the Government will play while encouraging tenants to acquire properties. Is the Government's first and foremost aspiration to assist the general public in acquiring properties? Or is the Government to help tenants in acquiring properties on one hand and, on the other, to make a profit as well as giving indirect assistance to property development by private developers? When there is a conflict between these goals, how will it choose?
A year after the announcement of the strategy, that is, in 1988, the Government announced a reorganization of the Housing Authority, and a set of new financial arrangements between the Government and the Housing Authority was passed. Under these new arrangements, the $27 billion that the Government has infused and will infuse up to 1992 into the Housing Authority will become the Government's permanent investment in the Housing Authority, and the Housing Authority will each year remit an amount equal to 5% of this permanent investment as interest to the Government. What is more, the Housing Authority will have to remit to the Government half of its profit from non-residential flats (including shopping spaces, industrial spaces and parking spaces). During the year 1990-1991, the Housing Authority had to remit $1.9 billion to the Government. Note that the amount is $1.9 billion. From these financial arrangements, one can see the Government's gradually declining commitment to housing. This explains why the measures considered or implemented by the Housing Authority in recent years were all intended to reduce financial commitment to the public and to increase its income from tenants or buyers of public housing. The Housing Authority has not only increased the supply of Home Ownership Scheme housing and put forth the Sale of Public Housing Flats to Sitting Tenants Scheme but also made a linkage between these two kinds of housing for sale and housing in the private sector. This is a formal indication that the Housing Authority is gradually lightening its responsibility for public housing, using public housing as a means
of earning profit for the Central Government, and using a linkage policy to prevent prices in the private housing sector from being affected by public housing. The recent price surge in the property market is more than a matter of land supply. I think it is also a portent of the failure of the long-term housing strategy.
I feel that, in order to see the real significance of the Sale of Public Housing Flats to Sitting Tenants Scheme, one must look at the two policy points mentioned above. The objectives and specific measures of the Sale of Public Housing Flats to Sitting Tenants Scheme provide a tangible indication that the Government and the Housing Authority are reducing their commitment to housing and are gradually
commercializing housing. The terms of reference of the ad hoc group on the Sale of Public Housing Flats to Sitting Tenants Scheme are: "To consider the feasibility of selecting appropriate rental flats from the existing Housing Authority estates and selling them in different phases to the qualified sitting tenants, having full regard for the social, economic and financial impact." The report does not list an objective for the Scheme apart from these terms of reference. If the ad hoc group's terms of reference are an indication of the objective of the Scheme, then it is a very blurred objective. Is the acquisition of properties by public housing tenants to be the first and foremost consideration of the Housing Authority? Or is the
Housing Authority's primary objective to make a lot of money? When there is conflict between the two, how should the Housing Authority choose? If one looks more deeply into the matter, the Housing Authority can easily hide its real money-making objective by setting such a blurred objective. This is why, when the tenants heard about the Scheme towards the end of 1989 and began entertaining some hope, they little thought that it was going to be just another dream of acquisition of properties.
A basic cause of the failure of the Sale of Public Housing Flats to Sitting Tenants Scheme was the Housing Authority's linking the selling price to the market price. It offered public housing for sale in the way that merchandise was put on sale at a discount. The selling price of public housing was set at 55% of the market price. Upon the completion of the entire Scheme, the profit was to be $2 billion. Let me repeat: The profit was to be $2 billion. That profit would not be much less than the profit from the Home Ownership Scheme. The result of the linkage policy was to put the selling price far above the level that public housing tenants could afford. Because of the recent price surge in the private sector housing, the linkage policy caused the selling prices of public housing flats to rise sharply. People simply could not afford them. The Scheme was to fail sooner or later. The Housing
Department announced some time ago that the average household income of tenants moving
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