1 HONG KONG LEGISLATIVE COUNCIL -- 3 June 1992 1 HONG KONG LEGISLATIVE COUNCIL -- 3 June 1992 HONG KONG LEGISLATIVE COUNCIL -- 3 June 1992 1 HONG KONG LEGISLATIVE COUNCIL -- 3 June 1992 1
OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 3 June 1992
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, C.B.E., J.P.
THE ATTORNEY GENERAL
THE HONOURABLE JAMES KERR FINDLAY, O.B.E., 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 NGAI SHIU-KIT, O.B.E., J.P. THE HONOURABLE PANG CHUN-HOI, M.B.E.
THE HONOURABLE SZETO WAH
THE HONOURABLE TAM YIU-CHUNG
THE HONOURABLE ANDREW WONG WANG-FAT, O.B.E., J.P. THE HONOURABLE LAU WONG-FAT, O.B.E., J.P.
THE HONOURABLE EDWARD HO SING-TIN, O.B.E., 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 LAM KUI-CHUN
DR THE HONOURABLE CONRAD LAM KUI-SHING THE HONOURABLE LAU CHIN-SHEK
THE HONOURABLE MISS EMILY LAU WAI-HING
THE HONOURABLE LEE WING-TAT
THE HONOURABLE GILBERT LEUNG KAM-HO
THE HONOURABLE ERIC LI KA-CHEUNG, J.P. THE HONOURABLE FRED LI WAH-MING
THE HONOURALBE MAN SAI-CHEONG
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
THE HONOURABLE ZACHARY WONG WAI-YIN
ABSENT
THE HONOURABLE DAVID LI KWOK-PO, O.B.E., J.P. PROF THE HONOURABLE FELICE LIEH MAK, O.B.E., J.P. THE HONOURABLE NG MING-YUM
IN ATTENDANCE
MR DAVID ALAN CHALLONER NENDICK, C.B.E., J.P. SECRETARY FOR MONETARY AFFAIRS
MR MICHAEL LEUNG MAN-KIN, C.B.E., J.P.
SECRETARY FOR TRANSPORT
MR JOHN CHAN CHO-CHAK, L.V.O., O.B.E., J.P.
SECRETARY FOR EDUCATION AND MANPOWER
MR MICHAEL SUEN MING-YEUNG, J.P.
SECRETARY FOR HOME AFFAIRS
MR MICHAEL SZE CHO-CHEUNG, I.S.O., J.P. SECRETARY FOR CONSTITUTIONAL AFFAIRS
MR ANTHONY GORDON EASON, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
MR IAN ROBERT STRACHAN, J.P.
SECRETARY FOR SECURITY
MR KWONG KI-CHI
SECRETARY FOR THE TREASURY
MRS ELIZABETH MARGARET BOSHER, J.P. SECRETARY FOR ECONOMIC SERVICES
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. Subsidiary Legislation L.N. No.
Statutes of the University of Hong Kong
(Amendment) (No. 3) Statutes 1992............................... 167/92
Bankruptcy (Amendment) Ordinance 1992
(39 of 1992) (Commencement) Notice 1992................... 168 (39 of 1992) (Commencement) Notice 1992................... 168/92
Corrigendum................................................................. ..... 169/92 ..... 169/92
Sessional Papers 1991-92
No. 79 -- No. 79 -- Securities and Futures Commission Securities and Futures Commission
Annual Report 1991-92
No. 80 -- No. 80 -- Regional Council Regional Council
Revised Estimates of Expenditure 1991-92 Revised Estimates of Expenditure 1991-92
Address by Member
Securities and Futures Commission Annual Report 1991-92
FINANCIAL SECRETARY: Mr Deputy President, in accordance with sections 12 and 16(2) of the Securities and Futures Commission Ordinance, I table for Members' information the Annual Report, the auditors' report and the statement of accounts of the Securities and Futures Commission for the year ending 31 March 1992.
As in previous years, much of the work of the Commission focused on refinements to the regulatory framework of our securities markets.
The most important issues included the constitutional reforms to the governing structure of the Stock Exchange of Hong Kong, the development of the new securities clearing and settlement system, and completion of the transfer of full responsibility to the Stock Exchange for all day-to-day operational and regulatory matters in
relation to listings.
Other important matters dealt with during the year included the issue of a revised Unit Trust Code and a Takeovers and Share Repurchases Code, the issue of a consultative document on financial resource requirements for securities and futures dealers, and the approval of new listing rules to permit secondary listings for companies which have a primary listing on a recognized overseas exchange, but where the majority of trading remains in Hong Kong.
Turning to more recent developments, I am pleased to say that the Hong Kong Securities Clearing Company, having received the necessary recognition from the Commission, opened its depository yesterday. Later this month, the Company will commence operating on a trade for trade basis. It is important for the Company to proceed as soon as possible to a continuous net settlement basis in which it acts as the counter party and settlement guarantor of transactions. Such a move will enable Hong Kong investors to benefit from the settlement of transactions on a fully netted and guaranteed basis. An essential precondition for this is the enactment
of the Securities (Clearing Houses) Bill which is currently being examined by Members, and I hope it will be possible for the Bill to be enacted before the end of the Session.
Mr Deputy President, the Commission has achieved much since it was established in May 1989. It is largely thanks to its efforts that we now have in place an effective and efficient regulatory framework which is fully up to the standards expected of an international financial centre. I would like to take this opportunity to pay tribute to the Commission and its staff for their professionalism and hard work.
Finally I should place on record our appreciation of Members' continuing interest and support for the Commission's work.
Oral answers to questions
Remuneration of university clinical teaching staff
1. DR HUANG 1. DR HUANG DR HUANG CHEN-YA asked (in Cantonese): As the University Medical Doctors' CHEN-YA asked (in Cantonese): As the University Medical Doctors' Association has recently pointed out that the remuneration and fringe benefits of the clinical teaching staff of the two medical schools of the University of Hong Kong and the Chinese University of Hong Kong are not comparable to those of their counterparts in the Hospital Authority, thus giving rise to problems of low morale and brain drain, will the Government inform this Council whether such problems exists; if so, what remedial action will be taken?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the basic salaries payable to clinical staff of the two medical schools are similar to those of their counterparts employed by the Hospital Authority. The fringe benefit packages enjoyed by the two groups of staff are, however, differently structured. I am advised that the Hospital Authority package is generally considered to be more flexible but that, depending on individual circumstances, some staff are likely to find the universities' package more attractive.
In response to representations from the University Medical Doctors' Association and the two universities, the Government has undertaken to consider the case for offering university clinical teachers the option to choose between remaining on their existing terms or changing over to terms similar to those of the Hospital Authority. At this stage, we are consulting the universities on the severity of the morale and
wastage problems that the absence of such an option is said to have caused, and also on the financial implications involved in offering such an option. These are important considerations because resources are necessarily limited and there are many other competing claims.
DR HUANG CHEN-YA (in Cantonese): Mr Deputy President, I am surprised to learn that the Administration is still looking into this as the University Medical Doctors' Association has already provided the Administration with a lot of information. I would just point out that the salary of a lecturer with 10 years' experience receives almost $18,000 less than his Hospital Authority counterpart who has the same length of service; and a professor is paid at least $28,000 to $30,000 less than a medical consultant. Under these circumstances, one fourth of the clinical teaching posts of the two universities fall vacant and a number of incumbents are going to quit. Will the Administration inform this Council when it would do something positive to solve the problem? Or does the Administration think that the problem is not that serious?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the Government is acting now. We are acting to find out more of the facts. The fact of the matter is that although in terms of take-home money -- I would not even say take-home pay -- the Hospital Authority staff would be getting more, the salaries are, as I said in my main reply, the same. What makes the difference is fringe benefits and it is very difficult in many cases to measure the actual difference between benefits in cash and benefits in kind. For instance, Education Allowance would be worth a great deal to someone who has three or four children but would probably be worth nothing to a single person.
MR MICHAEL HO (in Cantonese): Mr Deputy President, I would like to follow up the Secretary's reply. Irrespective of whatever differences there are in salary or fringe benefit packages between the clinical staff of the Hospital Authority and that of the two universities, the change following the establishment of the Hospital Authority has brought about wastage problems in the universities and other subvented organizations. Would the Administration give a positive answer as to the sort of programme there is to solve the problem?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, again, as I said in my main reply, the Government has undertaken to consider the case for offering university clinical teachers the option to remain on their present terms or to change over to terms similar to those of the Hospital Authority. But before deciding on whether such an option should be offered we need to establish more of the facts.
DR LEONG CHE-HUNG: Mr Deputy President, in the Secretary's main reply, financial implications were mentioned. Could the Secretary quantify and give this Council a rough figure, and tell us how such a figure would compare with the ill effects of morale and wastage problems amongst university clinical teachers?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, assuming that the option mentioned in my main reply were offered to the universities' medical clinical staff and assuming that all of them opted for changing over to Hospital Authority terms, then we would be talking about expenditure to the extent of something like $106 million a year, but of course I would not want this figure to be taken as firm because, as I also indicated, there is a likelihood that some, and probably quite a few, members of the staff involved may prefer to remain on the universities' current terms. As regards how this cost compares with the effects of low morale and wastage, this is precisely what we are trying to establish.
MR HOWARD YOUNG: Mr Deputy President, the comparison as given in the reply between university and Hospital Authority remunerations is an internal comparison and may only go part of the way in solving Dr HUANG's question on the brain drain. Having spoken to some people connected with the medical profession in the United Kingdom last week, I got the impression that remuneration enjoyed by the medical profession in Hong Kong is the envy of many people in the United Kingdom. Has the Secretary looked at the comparison vis-a-vis the possibility of attracting more people from overseas to solve the brain drain in Hong Kong and does he think that we are competitive enough in this respect?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, as a general proposition, the Government has been taking steps to try and encourage people who have special
skills which are in short supply in Hong Kong to come and work in Hong Kong. For that purpose we have, for instance, adopted much more flexible immigration policies -- but this is really outside my immediate sphere. As far as attracting more doctors to Hong Kong is concerned, this, I am afraid, is something which I do not deal with in my policy area, although as far as doctors teaching in universities are concerned, my understanding is that the universities can recruit doctors who may not be able to practise in Hong Kong but who will nevertheless be able to teach and work in the universities.
MR MAN SAI-CHEONG (in Cantonese): Mr Deputy President, would the Secretary not agree that the remunerations offered by the universities have made it difficult for them to recruit local doctors? And how many of the clinical teaching staff of the universities do not know Chinese, who come here only on one or two years' contracts?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, I cannot really answer the first question because this is actually the subject of our present consultations with the universities. On the second question, I am afraid I do not have the details; I will have to check with the universities before giving a written reply. (Annex I)
MR STEVEN POON (in Cantonese): Mr Deputy President, do the clinical medical staff of the two universities have teaching duties as well? If they do, are there differences in remuneration packages between them and other teaching staff of the universities? If yes, has the Administration looked at the differences and come to the view that they are fair?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, yes, the clinical medical staff of the medical schools do have teaching duties. As far as their salary and remuneration packages are concerned, the packages are determined in relation to the remuneration packages for government doctors and for doctors working in the Hospital Authority. They are not necessarily the same as those for teaching staff of other faculties or other disciplines in the universities.
Tin Shui Wai Estate
2. MRS ELSIE TU asked: Will the Government inform this Council: 2. MRS ELSIE TU asked: Will the Government inform this Council: (a) how many flats in the Tin Shui Wai Estate have been completed; (a) how many flats in the Tin Shui Wai Estate have been completed;
(b) how many of these are for renting to wait-listed applicants and how many are (b) how many of these are for renting to wait-listed applicants and how many are for the Home Ownership Scheme;
(c) how many of the rental flats are already occupied and what criteria have been (c) how many of the rental flats are already occupied and what criteria have been applied for processing their allocation; and
(d) how many more flats in the Estate will come on-stream this year; of these (d) how many more flats in the Estate will come on-stream this year; of these how many will be for renting, and what will be the criteria for their allocation?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, up to mid-May 1992, a total of 1 630 public housing flats in Tin Shui Wai have been completed.
All of them are for renting, with 630 to meet clearance and other operational All of them are for renting, with 630 to meet clearance and other operational requirements and the remaining 1 000 for eligible waiting list applicants.
As at mid-May, a total of 1 225 flats had been let to applicants who meet the normal rehousing eligibility criteria. 755 of them were from the General Waiting List and 470 from clearance and other categories.
Under a special allocation policy to encourage residents to move to the Tin Shui Wai rental estates, two additional categories of households are eligible to apply. The first includes households below the Home Ownership Scheme income limit of $18,000 per month. The second includes households with incomes up to twice the limit for waiting list applicants, subject to a ceiling of $22,000 per month for a household of five persons or more, together with people affected by clearances, temporary
housing area residents and waiting list applicants who have lived in Hong Kong for at least three years but less than seven years.
A total of 8 961 public rental housing flats and 1 824 HOS flats are programmed A total of 8 961 public rental housing flats and 1 824 HOS flats are programmed for completion at Tin Shui Wai by the end of the current financial year. The allocation criteria will be the same as those I have already described.
MRS ELSIE TU: Mr Deputy President, from the Secretary's reply, it appears that the waiting list has been split into three separate categories with low priority for those with the relaxed income and residence criteria. May I ask what hope these two queues have of ever being allocated flats, at least in the foreseeable future, and whether they are just being offered an empty promise?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I will try and answer that question with some more figures. By June 1993, a total of 14 000 rental flats will be completed in Tin Shui Wai; 10 000 of these flats will be for waiting list and 4 000 for other categories, for example, those affected by
clearances. Out of the 10 000 for waiting list it is estimated that 7 000 will be taken up by Priority One applicants, that is, those eligible for public housing under the normal criteria. The 3 000 remainder will be for other priorities. There is an element of being confounded by success here in that around 30 000 applications for units at Tin Shui Wai have been received, and while it is expected that
approximately 60% of these will be sustained -- in other words there will be dropouts -- it is inevitable that the normal waiting list priorities will have to be met in view of the large number of applicants.
MR FREDERICK FUNG (in Cantonese): Mr Deputy President, how many of the 13 000 applicants are on the waiting list? According to Mr EASON, 3 000 flats will be reserved for those in other priorities; if that is the case, are the 7 000 flats enough to meet the demand of those who are eligible under the normal criteria? This group of applicants should have first priority in the allocation of public housing units; will their priority be affected if 3 000 flats are set aside for people in other priorities?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I think this would require some considerably detailed analysis based on the nature of the applicants and their eligibility. At this moment, I am not able to respond to the detail that that question requires but I will undertake to try and produce the information in writing. (Annex II)
MR WONG WAI-YIN (in Cantonese): Mr Deputy President, as regards the newly completed public rental flats in Tin Shui Wai, I understand the Housing Department would ask the residents moving in whether they would be interested in buying or just in renting their flats. Does the Housing Department intend to sell the public housing flats in Tin Shui Wai? Can we have further details?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I understand that the sort of question which is put to applicants is intended to establish the extent of interest in home ownership on the part of those people who are moving into public housing and to ensure that if there is an interest on their part in home ownership, then it is brought out at the outset of the application procedure. Within the Public Housing Programme, the Housing Authority maintains a degree of flexibility as to the use of housing production in order to maintain a reasonable balance in meeting the preferences of its clients. In other words, should there be a general shift of
preference towards home ownership, then the Housing Authority will take this into account in the future planning of its construction programmes and the allocation of its stock of housing.
MR LEE WING-TAT (in Cantonese): Mr Deputy President, as far as Tin Shui Wai public housing estate is concerned, I understand that apart from having a new waiting list system, there are tenants who pay a rental lower than that of the prevailing rent. We learnt from the Tin Shui Wai development that it is quite impossible to expect all the public housing tenants to live in remote areas of New Territories. Will the Administration consider allocating more land in the West Kowloon Reclamation Area and other urban areas for the construction of public housing estates, so that there is a balanced community development?
DEPUTY PRESIDENT: It is at a tangent to the main question but do you have the answer, Secretary for Planning, Environment and Lands?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: I will attempt an answer, Mr Deputy President. I think we are well experienced in the development of new towns. We have, after all, seven or eight "under our belts" as it were, and we do know the difficulties in the initial stages of attracting people to live in them. This of course has not
stopped the successful development of new towns in some of our relatively remote areas. As far as Tin Shui Wai is concerned, I think the indications are given, from the 30 000 applications that have been received, that Tin Shui Wai is now recognized on the map by most people in Hong Kong, whereas perhaps a year or two ago they did not know where it was and that this will encourage the faster movement of population into Tin Shui Wai.
On the tangential question, I think the Housing Authority and the Government are in an almost permanent dialogue as regards the availability of suitable sites for housing, whether these be in the urban areas or the New Territories.
MRS ELSIE TU: Mr Deputy President, it appears from the Secretary's reply that this estate has become so popular that long-term residents on the waiting list are willing to move to this isolated estate. Is it because allocations to all other estates have virtually been suspended and waiting list applicants are being told that there are only casual vacancies in all other estates that applicants are therefore forced to go to Tin Shui Wai?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, I think, as I have said, the indications are that Tin Shui Wai is now a recognized location in which housing, which is suitable and is going to be provided with all the normal facilities of a new town, is being developed. As regards the extent to which the popularity of Tin Shui Wai is due to that factor or due to other factors, such as the inevitable shortage of vacancies in housing estates in other places, I should be speculating if I attempted an answer.
Illegal immigrants
3. MR GILBERT LEUNG asked (in Cantonese): Will the Government inform this Council 3. MR GILBERT LEUNG asked (in Cantonese): Will the Government inform this Council of the number of illegal immigrants arrested at or in the vicinity of their working places last year; what percentage it represents in relation to the total number of illegal immigrants arrested during the period; how it compares with the figures of the preceding year; what steps will be taken by the Administration to reinforce the interception of illegal immigrants along the border and to impose greater deterrence upon employers and illegal immigrants?
SECRETARY FOR SECURITY: Mr Deputy President, some 25 400 illegal immigrants were arrested throughout Hong Kong in 1991; 27 800 in 1990. Of those arrested in 1991, some 1 400 (just 6%) were arrested at places of work. The figure for 1990 was about 3 300 (about 12%). Our statistics distinguish only between those who are caught at places of work and those who are not. Those caught in the vicinity of a place of work are not now prosecuted unless they are engaged in criminal activities and so are not counted separately.
As regards prevention measures, the police have taken over law enforcement to intercept the entry of illegal immigrants over land. Moreover, the Director of Immigration has proposed, subject to the availability of resources, to establish a task force of about 100 officers to enhance the present operations against illegal immigration and employment. We also maintain close links with the Chinese authorities on border control. The Governor of Guangdong recently reaffirmed that the Guangdong provincial authorities would continue their vigilance against illegal imigrants trying to enter Hong Kong.
Tough new legislation aimed at those employing illegal imigrants was introduced in November 1990. The maximum penalty under section 17I of the Immigration Ordinance was increased from a $50,000 fine and one year's imprisonment to a $250,000 fine and three years' imprisonment. Additionally, a new section 38A, aimed specifically at the construction sector, imposes a maximum fine of $250,000 on main contractors where illegal imigrants are caught on sites under their control. That these measures are proving effective is evidenced by the drop in the percentage figures of those caught working.
MR GILBERT LEUNG (in Cantonese): Mr Deputy President, could the Administration inform this Council how many employers have been prosecuted since the new legislation was brought into effect in November 1990? And what is the average fine meted out?
SECRETARY FOR SECURITY: Mr Deputy President, since November 1990 when the new legislation was brought into effect 1 315 employers have been prosecuted of whom 1 116, that is, 92%, have been successfully prosecuted. There are 27 cases pending trial at present. Sentences have ranged from one month to nine months suspended
sentence. Fines have ranged between $500 and $17,500.
MRS MIRIAM LAU: Mr Deputy President, can the Secretary inform this Council whether the drop in the number of illegal immigrants arrested at work means that fewer illegal immigrants work in Hong Kong nowadays, or that illegal immigrants have become more clever in avoiding being caught at work? And if the latter is the case, does the Administration intend to do anything about that situation?
SECRETARY FOR SECURITY: Mr Deputy President, it is true that the number of illegal immigrants arrested at work is continuing to decline as a percentage of the total number of illegal immigrants being arrested. What is most interesting, in recent months in particular, is the substantial increase in the number of illegal immigrants being arrested in the act of going north, that is, across the border from Hong Kong back into China. Those being arrested are claiming that they cannot find work in Hong Kong. We believe, therefore, that this is showing some success. The actual numbers involved are: for the first four months of this year 643 were arrested in this way, compared to 216 in the same period in 1991.
To answer the second part of the question, we are continuing to carry out raids To answer the second part of the question, we are continuing to carry out raids on construction sites. In fact, the number of people arrested on construction sites in the first four months of 1992 slightly exceeds the first four months of 1991 despite the overall fall, and we are continuing to make arrests in all the other places, restaurants, factories, and so on.
MR LAU CHIN-SHEK (in Cantonese): Mr Deputy President, could the Administration inform this Council whether the cases brought against employers for employing illegal immigrants last year had increased or decreased when compared with that of the year before last, and whether the level of fine had increased or decreased? Was there any case in which an employer was sentenced to imprisonment for employing illegal immigrants?
SECRETARY FOR SECURITY: Mr Deputy President, I do not have the comparison figures that Mr LAU has referred to and would, with your indulgence, wish to give a written reply to that. (Annex III) With respect to the second part of the question, no
employer has been sent to prison.
MR RONALD ARCULLI: Mr Deputy President, would the Secretary for Security tell us what advice has been given and what measures have been taken by the Administration, and indeed the police, to assist and perhaps co-operate with the construction industry in their efforts to control these problems?
SECRETARY FOR SECURITY: Mr Deputy President, advice from Crime Prevention Offices of the Police Force and from the Immigration Department's Hot-Line is available to all principal contractors and those who operate construction sites. We have conducted a number of extensive discussions with the construction industry in order to help them in dealing with section 38A of the Ordinance. I am pleased to note that the construction industry has produced guidelines and a code of practice for their members, and individual firms have in fact developed these in much more detail. We have, from time to time, suggested new ways to help the industry to improve these codes of practice.
MRS SELINA CHOW: Mr Deputy President, obviously, extensive recruitment of illegal immigrants is taking place in China for the purpose of importing them into Hong Kong for illegal purposes. Will the Secretary inform this Council whether efforts have been made to secure the co-operation of the Chinese authorities to tackle the problem at source?
SECRETARY FOR SECURITY: Mr Deputy President, the need to get this message across to villages and townships in China is an important objective. We do this through border liaison channels and through regular meetings with Chinese officials. We have from time to time suggested to the Public Security Bureau that notices be put up on
prominent official buildings in Chinese townships to warn people not to come to Hong Kong, to tell them that there will not be an amnesty because of some special event happening in Hong Kong, and to try and defeat those who seek to organize illegal immigrants to come.
MISS EMILY LAU (in Cantonese): Mr Deputy President, would the Secretary inform this
Council whether the Administration intends to discuss with China the repatriation of convicted illegal immigrants so that they may serve their sentence in China? If yes, could the Secretary elaborate on the kind of considerations the Administration will take into account?
SECRETARY FOR SECURITY: Mr Deputy President, we are continually looking into ways to seek to deter illegal immigration. The proposal that Miss LAU refers to is an interesting one and we are actively considering it at present. We have not made a decision as to what to do, but we need to take into account the social, legal and security considerations before we would proceed with this.
MR STEPHEN CHEONG: Mr Deputy President, does the Administration agree that the principle involved in solving this problem is close co-operation between the employers and the employees and that bashing either side alone is not going to help solve this particular problem?
SECRETARY FOR SECURITY: Yes, Mr Deputy President, we agree that solving the problem of illegal immigration requires the co-operation and support of the whole community for the Government.
MR WONG WAI-YIN (in Cantonese): Mr Deputy President, the Secretary just now mentioned in his reply that more than 1 100 employers had been prosecuted. How many of them were principal contractors, or did the Government only prosecute those "subcontractors on construction sites"? Did the Crown encounter any difficulty in prosecuting the principal contractors?
SECRETARY FOR SECURITY: Mr Deputy President, of the total number who have been charged, summonses taken out under section 38A of the Immigration Ordinance, which refers to construction site controllers, numbered 29. In 11 of the cases, the defendants pleaded guilty; in four cases the defendants pleaded not guilty but were convicted after trial; in five cases the summonses were withdrawn by the Attorney General before pleas were entered; in four cases the defendants pleaded not guilty and have yet to be tried; and in five cases the defendants have not yet entered pleas. There have thus far been no acquittals.
Sentences have ranged from fines of $10,000 to $125,000. There have not, to my knowledge, been any prosecutions of subcontractors on construction sites under section 17I of the Immigration Ordinance.
MR JAMES TO (in Cantonese): Mr Deputy President, would the Government not agree that by allowing extensive media coverage of illegal immigrants living on and working at construction sites with no immediate action taken by the Administration against them may carry a misleading message to people in China that the Hong Kong Government is allowing these to happen?
SECRETARY FOR SECURITY: Mr Deputy President, the police occasionally do take the media with them on raids in order to demonstrate to the public of Hong Kong the size of the problem and the commitment of the Hong Kong Government to deal with this problem. We do not condone illegal immigration in any way; it is the Government's strong and firm intention to arrest all illegal immigrants in Hong Kong, whether at places of work or elsewhere, and we do wish to get this message across to China, both into the villages and to the Chinese authorities.
MR JIMMY McGREGOR: Mr Deputy President, can the Secretary say how many illegal immigrants were involved in the cases where prosecutions of employers have been undertaken, and whether any employer who has received a suspended sentence has been charged a second time?
SECRETARY FOR SECURITY: Mr Deputy President, as I said earlier, since November 1990 1 315 employers were prosecuted under section 17I of the Immigration Ordinance. To my knowledge, none of those given suspended sentences have been prosecuted a second time. With regard to the first part of the question, I do not know the answer to that. With your permission, Mr Deputy President, I will give a written reply.
(Annex IV)
MR NGAI SHIU-KIT (in Cantonese): Mr Deputy President, I would like to follow up the supplementary question raised by Mr McGREGOR. In the first paragraph of his reply,
the Secretary mentioned that some 53 000 illegal immigrants were arrested during 1990-91. How many of them violently put up resistance in the course of arrest? If the number was small, could the Administration explain whether it was an abuse of power or a violation of human rights to arrest an illegal immigrant with the use of handcuffs on both hands? Moreover, has the Administration ever received written representations from human rights champions or concern groups in protest against the way they were arrested?
DEPUTY PRESIDENT: That is a very wide-ranging question, Mr NGAI, and it does not seem really to come within the ambit of the main question or answer.
Personal data in computer databank
4. MR PETER WONG asked: Will the Administration inform this Council of the progress 4. MR PETER WONG asked: Will the Administration inform this Council of the progress of preparing legislation to protect the privacy of personal data held in computer databanks?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, I am the Chairman of a Working Group on Data Protection Legislation, which is tasked to prepare legislation to protect the privacy of personal data stored in computer systems. Members of my working group are mainly drawn from experts on electronic data processing, both in the private sector and within Government.
In pursuance of our terms of reference, we have examined the data protection In pursuance of our terms of reference, we have examined the data protection legislation in force in other countries and we have also assessed their applicability to Hong Kong. We are now in the process of deliberating the basic features of an appropriate approach to data protection legislation and its implementation in Hong Kong; paying particular attention to the scope and content of such legislation, as well as the arrangements for the administration and enforcement of the protection scheme.
In the interim, the working group has established a set of data protection principles and guidelines which have been issued to both the public and private sectors, inviting their adherence to the principles and compliance with the guidelines on a voluntary basis. These principles were based on those which have
been adopted in the United Kingdom under the Data Protection Act 1984.
Since March 1990, a Privacy Sub-Committee of the Law Reform Commission has been examining the protection of personal data in recorded form. Its terms of reference are much broader than those of my working group, not being restricted to automated data. The membership of the sub-committee is correspondingly broader, with only a minority being electronic data processing specialists. In order that both parties could be mutually acquainted with the path taken by the other, arrangements have been made for cross-membership and exchange of minutes. These measures minimized but not totally eliminated the potentiality of the two groups adopting different approaches to the same subject matters.
To overcome this problem, we intend to use the occasion of the publication of To overcome this problem, we intend to use the occasion of the publication of the Privacy Sub-Committee's Comprehensive Report on its findings for public consultation later this year, to collect general public feedbacks on the wider question of the protection of the privacy of personal data. We aim to gauge public attitude and expectation in respect of this matter.
The next steps will very much be guided by the public feedback which we receive. We will have to consider how best to make progress jointly with the Privacy Sub Committee of the Law Reform Commission.
MR PETER WONG: Mr Deputy President, in the fourth paragraph of the his reply the Secretary said that the sub-committee has adopted approaches different from the Government to some of the problems of privacy of information. Can the Secretary inform this Council what those differences are and why in this particular case public consultation is needed to resolve the differences?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, the differences arise from the origin of the different studies. Our study was restricted to personal data stored in computer systems, whereas the study undertaken by the Law Reform Commission Privacy Sub-Committee arises from consideration of the Bill of Rights (BOR) and hence BOR considerations are more predominant in that they cover larger aspects of the study. And so, for example, where we have confined ourselves to the information stored in computer systems and not concerned ourselves with manual records, the sub-committee has an expanded scope of work which includes manual records as well. That is just
one example of the differences.
MR VINCENT CHENG: Mr Deputy President, will the Administration consider banning the selling of name lists by commercial and private organizations to mail-shop companies that results in unwanted junk mail?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, we will certainly consider that in the context of the basic approach to the legislative framework. But I think we will not be banning the activities per se but we will be providing safeguards to ensure that basic privacy is protected.
MR MOSES CHENG: Mr Deputy President, would the Administration inform this Council what protection, by way of statutory provision or internal control, there is against information relating to individuals kept by government departments and agencies, such as the Hospital Authority, being released to other government departments or third parties?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, at the moment there is no legislation governing the sort of protection that is mentioned by the Honourable Member. But as I mentioned in my main reply, we have issued a guideline to all government departments and other public institutions urging them to come up with measures which will give appropriate protection to personal data. Now we have recently completed a survey into the protection practices in both the public and private sectors and the results are encouraging. We have found that data protection practices in both the public and private sectors are satisfactory. Specific policies and procedures are laid down by most of the organizations covered by our survey in order that personal data stored in their computer systems are protected and we are also gratified to see that in many instances there are clear guidelines to safeguard against unauthorized data access and data disclosure.
MR SIMON IP: Mr Deputy President, would the Government agree that the right to protection of private information and the right to freedom of information are competing rights and that none can meaningfully consider one without considering the
other? Granting that, if the Government is to consult later this year on the question of the right to protection of privacy, would the Government also consult on the question of freedom of information and, if thought fit, introduce legislation in relation to both?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, as I mentioned in my main reply, the scope of the work of the Privacy Sub-Committee of the Law Reform Commission is quite specific and it does not really concern itself with the freedom of information. This might be an aspect of work which is covered by the Law Reform Commission in other contexts, but when we conduct public consultation in the context of the present
exercise we will be restricting ourselves to the right of protection of personal data.
MR CHEUNG MAN-KWONG (in Cantonese): Mr Deputy President, even if the Administration cannot or has no intention to control private institutions and private companies that exchange personal data for profit making, why does the Administration not control the exchange of personal data among government departments but instead merely ask them to follow a set of data protection principles and guidelines on a voluntary basis?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, I do not think I said that we would not be monitoring or be putting under control by legislative means the activities of private institutions and private companies. I merely said that our emphasis would be on the public bodies. And in so far as the activities of the government departments are concerned, as I have said, at the moment we are considering how best to introduce legislation to cover the sort of areas which are of concern to Members, and pending the completion of our deliberation as to the best approach for a legislative framework, we have in the meantime promulgated a set of guidelines for both the private and public sectors to observe; but it is meant to be a temporary measure and that will be
superseded once we have the legislation enacted.
DEPUTY PRESIDENT: Chief Secretary, you wish to supplement?
CHIEF SECRETARY: Yes, thank you, Mr Deputy President. In answer to the question, government departments are very well aware, through this circular which has been
referred to by the Secretary for Home Affairs, that they are not allowed to pass information which is gathered for one purpose to other government departments unless they do so under strict authority. That is well understood by all government departments.
MR HOWARD YOUNG: Mr Deputy President, will the Secretary inform this Council whether the terms of reference of the working group on data protection legislation also include prevention of computer-hacking, which is a different matter as opposed to deliberately releasing information but does have a bearing on the subject? If this is not included then is the Government satisfied that this matter has been looked at or taken care of in other ways?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, I am afraid I am not personally acquainted with this concept of computer-hacking and so I have no way to decide whether it is within our terms of reference.
DEPUTY PRESIDENT: Would you like to explain the term, Mr Howard YOUNG?
MR HOWARD YOUNG: Yes, Mr Deputy President. As opposed to someone deliberately releasing information from inside, computer-hacking is where someone can gain access through technology into other people's computers without them knowing and extract information.
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, it is not specifically covered but I think the subject is covered in terms of the need to preserve confidentiality of data stored in computer systems; that is certainly within the terms of reference of our committee and we will certainly, in that context, seek ways to eliminate the opportunities for computer-hacking.
MR MAN SAI-CHEONG: Mr Deputy President, in Canada there is a Privacy Commissioner as well as an Information Commissioner and they are set up more or less at the same time. Will the Government inform us whether the subject of access to information
can be tackled along with the subject of privacy as they are so closely interrelated? Can the Secretary for Home Affairs also confirm whether or not it is the current thinking of the Government to move gradually towards more comprehensive legislation, instead of relying only on voluntary adherence to and compliance with the principles of the United Kingdom Data Protection Act 1984?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, as I have made it clear, the voluntary scheme is meant to be temporary and once we have the legislation in place there will be no need for the voluntary guidelines. With regard to the first part of the question, as I have mentioned in reply to an earlier question, we are at the moment confining ourselves to the subject of access to information and that is our prime concern.
Deposit interest rates
5. DR CONRAD LAM asked (in Cantonese): In view of the impact of the "negative int 5. DR CONRAD LAM asked (in Cantonese): In view of the impact of the "negative interest rate in real terms" on the quality of life of the general public, which is brought about by the combined effect of high inflation and low interest rate, will the Government inform this Council:
(a) what role the Government plays with regard to the (a) what role the Government plays with regard to the what role the Government plays with regard to the fixing of interest rate fixing of interest rate by the Hong Kong Association of Banks;
(b) what factors the Government will consider when deciding on whether or not (b) what factors the Government will consider when deciding on whether or not to exercise its influence on the fixing of interest rate; and
(c) what measures the Government will take to mit (c) what measures the Government will take to mit what measures the Government will take to mitigate the adverse effects of igate the adverse effects of the "negative interest rate in real terms" on the quality of life of the general public?
SECRETARY FOR MONETARY AFFAIRS: Mr Deputy President,
(a) In accordance with the Hong Kong Association of Banks Ordinance and the (a) In accordance with the Hong Kong Association of Banks Ordinance and the Association's Rules on Interest Rates and Deposit Charges, the Committee of the Association has a statutory obligation to consult the Financial Secretary on the maximum interest rates it sets on the Hong Kong dollar deposits governed by the Interest Rates Rules. This consultation is carried out between the Chairman of the
Association and the Secretary for Monetary Affairs, under delegated authority of the Financial Secretary, before weekly Committee meetings of the Association on Fridays.
(b) Government polic (b) Government polic Government policy on interest rates is centred around the monetary objective y on interest rates is centred around the monetary objective of maintaining exchange rate stability near to 7.80 under the linked exchange rate system. When it is felt appropriate to do so, the Government will take action to influence interest rates with this objective in mind. The Government will normally exert its influence, through money market operations, on interbank interest rates. But as retail deposit interest rates cannot for long be significantly out of line with interbank rates, as this would result in the banks' suffering losses or making undue profits, the Hong Kong Association of Banks need to take account of the interbank rates when setting deposit interest rates. It is through this indirect market-related process that the Government exercises its influence over deposit interest rates set by the Association.
(c) On the quality of life in Hong Kong, I would first like to point out that (c) On the quality of life in Hong Kong, I would first like to point out that the standard of living in Hong Kong has risen steadily over the years. For instance, over the period 1986 to 1991, the median household income has risen substantially by 29% in real terms, that is, averaging 5.2% annually.
As the Financial Secretary explained in his Budget speech, inflationary pressures in recent years have arisen from a structural change in Hong Kong's economy into a service-oriented economy and the Government has been tackling the inflation problem by addressing the supply side constraints such as land and labour.
Generally speaking, the level of interest rates should have little direct effect on the cost of living because the great majority of expenditure items covered by the Consumer Price Index are not sensitive to interest rate movements.
It is arguable that negative real interest rate might affect investment decisions, thereby leading to investment or over-investment in certain economic sectors such as the property sector. In order to avoid as far as possible the re-emergence of overheating in the residential property market, the Government has extended the ambit of liability to stamp duty and the banks have been adhering to a tight policy in respect of residential mortgage loans. In announcing the recent changes in deposit rates the Chairman of the Hong Kong Association of Banks made it clear that no relaxation of the present criteria for such loans was contemplated. Separately, a working group chaired by the Secretary for Planning, Environment and
Lands is looking at possibilities of addressing the question of the housing needs of the middle income group.
Lastly, latest statistics revealed that inflationary pressures have been Lastly, latest statistics revealed that inflationary pressures have been moderating and it is hoped that the rate of inflation for this year will be considerably lower than in 1991.
DR CONRAD LAM (in Cantonese): Mr Deputy President, the Secretary mentioned in the second paragraph of his reply that "when it is felt appropriate to do so, the Government will take action" to maintain exchange rate stability near to 7.80. Will the Administration inform this Council whether it has drawn a bottom line or is prepared to pay any price for achieving the above objective, for example by further reducing the interest rates or even requiring depositors to "pay" for depositing money in banks?
SECRETARY FOR MONETARY AFFAIRS: Mr Deputy President, as I said, the principal element of monetary policy is to maintain stability in the exchange rate. I believe that this is something which is in the overall interests of Hong Kong. The Financial Secretary in his last Budget speech spent some time identifying why he believed that this was a policy which should be pursued, and identified the advantages that it had. There may be certain occasions when we have to accept that the consequence of
maintaining this stability is that we have no control over interest rates. This applied at the end of 1987 and the beginning of 1988 when we had very heavy speculative pressure in favour of a revaluation of the Hong Kong dollar. We successfully resisted that and the speculators went away. I do not believe that we are faced with that sort of situation at the moment. What we are seeing is a significant inflow of money into our stock market as international investors have re-evaluated the relative
advantages of the Hong Kong stock market compared with other markets in the region, and therefore I think that it is a hypothetical question at this present time to talk in terms of negative actual interest rates.
MR CHIM PUI-CHUNG (in Cantonese): Mr Deputy President, the Secretary just now mentioned Hong Kong's interest rate system, and it is well understood that the bank deposit system is related to the public's interests and standard of living. So is it profiteering to fix the lending rte at 7% to 10% while deposit rate remains at
2% to 3%? Does the Administration have any policy against such practice?
SECRETARY FOR MONETARY AFFAIRS: Mr Deputy President, it is quite commonly stated that the margins between our deposit rates and our lending rates are excessive compared with other centres. That is in fact not the case. What must be borne in mind is that savings deposits which earn the lowest rate of interest have many of the
characteristics of current accounts in other centres. Here they earn interest, elsewhere they do not. For instance, in most centres one cannot withdraw on demand cash from a savings account and one cannot have direct debits drawn on a savings account; so it is not reasonable to compare a savings account with the interest on deposit accounts -- that is, interest paying deposit accounts -- elsewhere. We do need, though, to have a profitable banking system, and in centres where the margins between the borrowing and lending rates have been inadequate it has usually ended in problems in the banking system. So I make no excuse for saying that we benefit from having a profitable banking system.
PROF EDWARD CHEN (in Cantonese): Mr Deputy President, I have two questions to ask and the first one is a follow-up to Mr CHIM's question. Although the margins between deposit rates and lending rates in Hong Kong are not too large as compared with other centres, the interest rates of banks in Hong Kong were higher in the past year than the traditional trend, with the current margins between deposit and lending rates standing at around 5% while the traditional trend is around 3%. Has enough attention been paid by the Administration to this problem? Second, with the all-round
financial liberalization in the Asian Pacific Region and Hong Kong's promotion of free economy, is the Administration aware that the Banking Association has an interest rate agreement? Have the Secretary and the authority concerned considered revoking this agreement; if not, why not?
SECRETARY FOR MONETARY AFFAIRS: Mr Deputy President, let me deal with the second part of the question first which relates to the interest rate agreement. I think one needs to exercise very great caution in any relaxation of rules in relation to deposit rates. I think one has only got to look at economies where they have relaxed it suddenly -- the United States, the United Kingdom and, most recently, Japan -- to see that that has created problems and that it has ended in a free-for-all where people have bid up deposit rates to levels at which they cannot get a return on the money without engaging in very high risk activity. Though it may not be widely recognized, the
effects of the interest rate rules in Hong Kong are being eroded, particularly by means of banks offering swap deposits. I am quite happy to see erosion -- I do not want to see revolution -- in this area.
As far as the first part of the question is concerned, I have already said that As far as the first part of the question is concerned, I have already said that when one makes a proper comparison of the margins in Hong Kong, they are not significantly out of line with other centres. One specific area where the banks have increased their margins is in respect of residential mortgage loans. That was a response to a rapid increase in prices in that area and it was in recognition of the fact that, with that rapid increase in prices, the risks associated with that area might be larger than they would otherwise be.
DEPUTY PRESIDENT: This is the last supplementary. A number of Members are going to be disappointed but we have to move on, and I have given priority to those who have asked the least number of questions.
MR TAM YIU-CHUNG (in Cantonese): Mr Deputy President, the money of the public is gradually eroded by high inflation and low interest rates, what is the Administration advice for the public as to how to reduce such loss?
SECRETARY FOR MONETARY AFFAIRS: Mr Deputy President, I think that is almost identical to the main question to which I have already given an answer.
First-year, first-degree places
6. MR TIK CHI-YUEN asked (in Cantonese): Regarding the Government's intention to 6. MR TIK CHI-YUEN asked (in Cantonese): Regarding the Government's intention to reduce the number of places in first degree courses in the original expansion plan, will the Government inform this Council:
(a) what the new target number of places in the first year of first degree co (a) what the new target number of places in the first year of first degree courses for the academic years from 1992-93 to 1994-95 will be respectively; how the number of places to be reduced in various institutions is determined;
(b) what the expected impact of the reduction of places is on the course (b) what the expected impact of the reduction of places is on the course
arrangements and staff establishment of the institutions concerned as well as the Joint University and Polytechnic Admission System in 1992-93; what plans the Administration has to minimize as far as possible the potential negative effects; and
(c) what the amount of estimated savings resulted from the reduction of places (c) what the amount of estimated savings resulted from the reduction of places is; and whether an undertaking can be given that the savings will be used for a specified educational purpose?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the Government's current policy on tertiary education, which was decided upon in 1989, is to provide first-year, first-degree places to at least 18% of the 17-20 age group by 1994-95. On the basis
of population projections available at the time, a planning target of 15 000 first-year, first-degree places was set. The University and Polytechnic Grants Committee (UPGC) has been entrusted with the task of implementing this programme through the seven tertiary education institutions to which it provides funding.
New demographic data became available early this year, following the 1991 Census. These indicated that previous projections of the population in the 17-20 age group should be revised downwards. As a result, the Government decided that the planning target should be revised to 14 500 first-year, first-degree places by 1994-95. The UPGC and the tertiary institutions had accepted this revision to the planning target before it was announced. They are now engaged in working out the details of how the new target should be phased in over the next three academic years.
With reference to the three specific questions asked by Mr TIK, the answers are:
First, the number of first-year, first-degree places and their distribution between institutions from 1992-93 to 1994-95 are the subject of discussion between the UPGC and the institutions, in the context of the latter's academic development proposals for the 1992-95 triennium. This process is still on-going.
Secondly, because discussions are on-going, it is neither possible nor appropriate for the Government to anticipate what effect the adjustment of the planning target would have on academic planning, staffing or student enrolment. The task of accommodating the new planning targets falls on the tertiary institutions themselves. I am confident of their capability to take the necessary management decisions effectively. I am also assured that the UPGC is prepared to give the institutions
all the necessary advice and assistance and to consider sympathetically any practical constraints which may arise and which are drawn to its attention.
Thirdly, the UPGC will be examining, at its next meeting in September this year, the financial implications of the revised academic plans submitted by the institutions. Any funds which might become "surplus" to requirements as a result of this downward adjustment to student number targets would be returned to the Government. The
Government will consider the best use for these funds, taking fully into account the requirements of different sectors of education.
MR TIK CHI-YUEN (in Cantonese): Mr Deputy President, regarding the over-allocation of places to students with conditional offers in tertiary institutions, would the present move by the Administration to reduce tertiary places result in students being forced to change programmes or faculties? Under this system of conditional offers, who should bear the legal responsibility if students are forced to change programmes or faculties?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the adjustments to student numbers will obviously have some implications for the Joint University and Polytechnic Admissions System (JUPAS). But I understand from the chairman of JUPAS that consultations with institutions have indicated no great problem. On overall terms, conditional offers are made one year earlier only up to 70% of available first-year first-degree places with 30% kept for allocation after Form VII. Of course, in respect of individual programmes, I understand that there may be three or four individual programmes out of a total of more than 200 where problems could arise but alternative arrangements can be made for the students concerned.
As regards the second question, conditional offers are precisely what they are; As regards the second question, conditional offers are precisely what they are; they are conditional and therefore I do not think the question of legal responsibility would arise.
DR LEONG CHE-HUNG: Mr Deputy President, can the Administration inform this Council of the criteria according to which the number of places to be reduced in the different faculties are being worked out? Will this be in relation to future manpower projections and will the Government be conducting a manpower needs survey for
different professions in the future?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, the distribution of student number targets between institutions and between different faculties within institutions is largely a matter which is determined by the institutions in consultation with the UPGC and on which the Government relies on the UPGC's advice. Obviously, in considering these questions the UPGC will take into account such indications and projections as there may be as regards the future manpower requirements of Hong Kong. In that context, the Government and, in particular, the Education and Manpower Branch have been undertaking manpower projections and there are also various other sources of input into the Government as regards areas where increased demands for manpower are expected, and these are all fed into the planning machinery.
DR SAMUEL WONG: Mr Deputy President, could this Council be informed, when estimating the 17-20 age group population for 1994-95, what consideration has been given to the recent trend that more and more students are going overseas for their secondary and university education?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, I do need to consult the statistical experts on the precise answer but, as far as I understand, emigration is taken into account in compiling population projections.
MR HENRY TANG: Mr Deputy President, in the course of considering the reduction of the 500 first-year first-degree places -- done rather late in the year after the tertiary institutions have already committed their programmes for the next triennium -- has the Government considered whether in reneging on some of the commitments made to the institutions compensation will be paid to the institutions?
SECRETARY FOR EDUCATION AND MANPOWER: Mr Deputy President, I think all managements would occasionally have to face situations where adjustments have to be made to earlier plans in the light of changing circumstances. This process, as far as the universities are concerned, is still going on and, as I stated in my main reply, if
there are any practical constraints and any real difficulties, the UPGC has indicated that it will render all necessary advice and assistance and will consider sympathetically any such serious constraints. I really do not think the question of compensation would arise in this context.
Written answers to questions
Profits tax and salaries tax
7. MR HOWARD YOUNG asked: 7. MR HOWARD YOUNG asked:
(a) what were the ratios of revenues from profits tax to revenues from salaries (a) what were the ratios of revenues from profits tax to revenues from salaries tax in the past three years;
(b) have similar ratios been observed between operating surplus and employees (b) have similar ratios been observed between operating surplus and employees compensation in Hong Kong's GDP over the same period;
(c) if not, what are the reasons for the disparity in the two trends and is it (c) if not, what are the reasons for the disparity in the two trends and is it government policy to ensure that salary earners' contribution to tax revenue is proportionate to their income as employees as reflected in the GDP; and
(d) how does the relative contribution of profits tax and salaries tax to total (d) how does the relative contribution of profits tax and salaries tax to total direct tax in Hong Kong compare with other economies such as Singapore, Japan and the United States?
SECRETARY FOR THE TREASURY: Mr Deputy President, I will address Mr YOUNG's questions in sequence.
(a) For the 1989-90, 1990-91 and 1991-92 fiscal years, the ratios of revenues (a) For the 1989-90, 1990-91 and 1991-92 fiscal years, the ratios of revenues from profits tax to revenues from salaries tax were respectively 2.03:1, 1.62:1 and 1.45:1.
(b) The ratio of employees compensation (labour income) to the gross domestic (b) The ratio of employees compensation (labour income) to the gross domestic product (GDP) in the Hong Kong economy has been edging up in recent years, from about 50% in 1988 to 51% in 1989 and further to slightly above 53% in 1990. (The figure for 1991 is not yet available.) By contrast, the ratio of gross operating surplus
(which represents that part of the value added not pertaining to employees compensation, and thus covers company profits and depreciation of fixed assets) to GDP decreased from about 50% in 1988 to 49% in 1989 and further to slightly under 47% in 1990.
(c) These figures show that the ratios between employees compensation and GDP (c) These figures show that the ratios between employees compensation and GDP on the one hand, and between gross operating surplus and GDP on the other, are fairly stable, with a slight trend in favour of employees compensation. While the Government is concerned to ensure that salary earners do not shoulder an inequitable share of the tax burden, we cannot apply a simple formula to determine the proportions of total revenue to be paid by salary earners and corporations. For example, whereas tax is generally charged on business profits at a flat rate, for salary earners we have a progressive system of taxation with graduated rates.
In view of this progressive system and the fact that salaries have increased significantly in both money and real terms in Hong Kong in recent years, it is not surprising that the proportion of revenue contributed by salaries tax has increased.
(d) Hong Kong has a schedular system of taxation which consists of three sepa (d) Hong Kong has a schedular system of taxation which consists of three separate taxes under the Inland Revenue Ordinance, namely salaries tax, profits tax and property tax. Separate assessments are raised in respect of a person's different categories of income. Generally, income is only chargeable if it has a source in Hong Kong. This taxation system is not used in any of the other economies mentioned. It is therefore difficult to make meaningful statistical comparisons between Hong Kong and overseas administrations in the way suggested. The countries quoted in the question all have income taxes which aggregate income and bring to charge a wider range of receipts than is the case in Hong Kong. In Japan and the United States, for example, the income of residents from foreign as well as from domestic sources is brought to charge. Social security charges, sales taxes and capital gains taxes are also applicable in some cases.
Loads falling off from goods vehicles
8. DR HUANG CHEN-YA asked: Goo 8. DR HUANG CHEN-YA asked: Goo DR HUANG CHEN-YA asked: Goods falling off from vehicles while being conveyed on ds falling off from vehicles while being conveyed on such vehicles have endangered the lives of other road users. In view of this, will the Government inform this Council:
(a) what legislative provisions and monitoring mechanism are currently in place (a) what legislative provisions and monitoring mechanism are currently in place
to ensure that goods carried by vehicles on roads are properly secured; and
(b) in the past 12 months, how many prosecutions had been brought against dri (b) in the past 12 months, how many prosecutions had been brought against drivers who had failed to properly secure the loads carried by their vehicles on roads and how many of them were successful?
SECRETARY FOR TRANSPORT: Mr Deputy President,
(a) The Road Traffic (Traffic Control) Regulations (Cap. 374) require drivers (a) The Road Traffic (Traffic Control) Regulations (Cap. 374) require drivers to ensure that the loads of their goods vehicles are properly secured. Guidance on how to meet this legal requirement is provided in the Code of Practice for Loading Vehicles, which is available from the Transport Department free of charge. The police monitor compliance with the law. Contravention may attract a maximum fine of $5,000 and three months imprisonment on first conviction, and a maximum fine of $10,000 and six months imprisonment on subsequent conviction.
(b) Between May 1991 and April 1992, a total of 7 626 prosecutions were brought (b) Between May 1991 and April 1992, a total of 7 626 prosecutions were brought for failure to secure goods vehicle loads. The number of successful prosecutions is not available as proceedings in some cases are not yet complete. However, in the calender year 1991, there were 8 417 prosecutions of which 8 105 were successful, that is, 96%.
Criteria for permission to enter Hong Kong
9. MR MARTIN L 9. MR MARTIN L MR MARTIN LEE asked: Will the Government inform this Council: EE asked: Will the Government inform this Council:
(a) what criteria the Government uses in deciding not to allow individuals to (a) what criteria the Government uses in deciding not to allow individuals to enter Hong Kong;
(b) how many individuals with no criminal record have been refused entry in each (b) how many individuals with no criminal record have been refused entry in each of the past three years;
(c) whether the Government has a list of individuals who are not allowed to e (c) whether the Government has a list of individuals who are not allowed to enter Hong Kong; and
(d) whether the Government has ever discussed individual cases with the (d) whether the Government has ever discussed individual cases with the
Government of the People's Republic of China or their representatives in Hong Kong?
SECRETARY FOR SECURITY: Mr Deputy President, I will answer the four parts of this question seriatim.
(a) The immigration authorities need to decide whether a particular traveller (a) The immigration authorities need to decide whether a particular traveller is subject to immigration control and whether he or she is a bona fide traveller. Travellers may be refused entry if they do not have valid travel documents. If they need a visa to come here, they may be refused entry if they arrive without one. People with valid visas may be refused entry if we discover that false representations were employed or material facts withheld for the purpose of obtaining the visas; or if a change of circumstances since the visas were issued has removed the basis of the travellers' claims to admission. Travellers may also be refused entry on grounds of restricted returnability; on medical grounds; on grounds of criminal record; because exclusion would be conducive to the public good; or where it is likely that a traveller will become a burden on Hong Kong.
(b) The Immigration Department does no (b) The Immigration Department does no The Immigration Department does not keep separate statistics of the number t keep separate statistics of the number of individuals with no criminal record who have been refused entry. The total numbers refused entry were about 42 800 in 1989, 34 500 in 1990, and 26 400 in 1991.
(c) The Government does maintain a monitoring sys (c) The Government does maintain a monitoring sys The Government does maintain a monitoring system for identifying individuals tem for identifying individuals who are not allowed to enter Hong Kong.
(d) The Hong Kong Government does not enter into discussions on individual cases (d) The Hong Kong Government does not enter into discussions on individual cases with the Government of the People's Republic of China or its representatives in Hong Kong.
Ambulance service
10. DR CONRAD LAM asked: Will the Government inform this Council: 10. DR CONRAD LAM asked: Will the Government inform this Council:
(a) of the number of ambulance calls responded to in each district in the past (a) of the number of ambulance calls responded to in each district in the past year;
(b) of the number of ambulances and the establishment and vacancy position of (b) of the number of ambulances and the establishment and vacancy position of
ambulancemen in each district; whether there is any staff or vehicle shortage; if so, what measures are being taken by the Government to ensure that the standard of ambulance service will not be affected by the shortage of staff or ambulances;
(c) in normal circum (c) in normal circum in normal circumstances, how long an ambulance takes to reach the scene in stances, how long an ambulance takes to reach the scene in responding to a call of service; whether there are any internal guidelines stipulating the response time within which an ambulance is required to arrive at the scene; if so, what the stated response time is; and
(d) in the event of a serious accident involving casualties (such as landslides (d) in the event of a serious accident involving casualties (such as landslides at various spots), what measures the Government will take to ensure that the injured will be provided with instant ambulance service?
SECRETARY FOR SECURITY: Mr Deputy President, the number of ambulance calls responded to in each district in 1991 was as follows:
Emergency Routine Emergency Routine
District calls District calls calls removal calls removal calls removal calls Total
Hong Kong 50 469 Hong Kong 50 469 56 927 107 396 107 396
Kowloon 95 047 Kowloon 95 047 66 313 161 360 161 360
New Territories 88 695 New Territories 88 695 62 326 151 021 151 021
TOTAL 234 211 TOTAL 234 211 234 211 185 566 185 566 185 566 419 777 419 777
The Fire Services Department has 208 operational ambulances and 49 ambulances for training and maintenance reserve. The staff establishment for manning these ambulances is 2 024 and there are no vacancies at present. There is no shortage of either staff or vehicles.
The number of ambulances and the establishment in each operational district as at 1 May 1992 are listed below:
Operational Number of Operational Number of Number of Ambulanceman Ambulanceman
district ambulances district ambulances ambulances establishment establishment
Hong Kong 54 Hong Kong 54 525
Kowloon 77 Kowloon 77 750
New Territories 77 New Territories 77 749
TOTAL 208 TOTAL 208 2 024
The current standard response time to emergency calls for ambulances is 10 minutes. This standard was set by the Government in April 1987, following a consultancy study by the Health Operational Research Unit of the United Kingdom. The objective is to attend to 95% of the emergency calls within a 10-minute travel time ultimately. In 1991, 91.1% of emergency calls were met within the target time. The percentage can be improved when planned ambulance depots are opened.
Ambulances are despatched to the scene initially on the basis of information received by the Fire Services Communication Centre (FSCC). When the Officer-in-Charge of the incident arrives at the scene, he will appraise the situation and the requirement for fire services resources, including ambulances, and where necessary, request the FSCC to despatch additional ambulances to the scene.
In the event of a serious incident involving heavy casualties where more than four ambulances have been turned out or upon request of the Officer-in-Charge of the incident, a Mobile Casualty Treatment Centre (MCTC) will be despatched to the incident. The MCTC is equipped with additional ambulance aid equipment for the ambulance personnel to treat and stabilize the casualties at scene before conveying them to hospital. Should the situation so warrant, medical teams would be summoned to the scene to render medical treatment to casualties.
Death penalty abolition
11. PROF FELICE LI 11. PROF FELICE LI PROF FELICE LIEH MAK asked: At the motion debate on the subject of the death EH MAK asked: At the motion debate on the subject of the death penalty at the last Session of the Legislative Council, the majority of Members voted in favour of the abolition of the death penalty and the Secretary for Security undertook to bring forward legislation to achieve this purpose. Will the Administration inform this Council what progress has since been made and the timing for the introduction of a Bill to propose the abolition of the death penalty?
SECRETARY FOR SECURITY: Mr Deputy President, following the vote last year by the
Legislative Council in favour of the abolition of capital punishment, we have drafted the legislation necessary to achieve this.
The Government reaffirms that capital punishment should eventually be abolished in Hong Kong. However, given the current widespread public concern over law and order in the wake of recent high profile violent crimes, we believe that it would be insensitive to pursue abolition at this stage. Furthermore it would send the wrong message to criminal elements.
We will keep this issue under review and introduce the necessary legislation to abolish capital punishment at an appropriate time.
Naval base
12. DR SAMUEL WONG asked: Will the Government inform this Council: 12. DR SAMUEL WONG asked: Will the Government inform this Council:
(a) what the present posit (a) what the present posit what the present position regarding the proposed relocation of the naval base ion regarding the proposed relocation of the naval base from HMS Tamar to Stonecutters Island is;
(b) whether any target date has been set for completion of construction of a new (b) whether any target date has been set for completion of construction of a new naval base at Stonecutters Island; and
(c) whether there are any concrete (c) whether there are any concrete whether there are any concrete plans for redevelopment of the site to be plans for redevelopment of the site to be vacated by the existing naval base at HMS Tamar?
SECRETARY FOR SECURITY: Mr Deputy President, the project to relocate the naval base from HMS Tamar to the north shore of Stonecutters Island was announced in the Governor's Address to this Council in October 1989. The contract for these works under Public Works Programme item 170GG (now 7085GK) was let on 24 October 1991 and work began on site on 17 November 1991. Work is proceeding well and we anticipate completion by March 1993.
After the Royal Navy has moved from HMS Tamar the naval basin will be filled in and the land thus formed will be disposed of for commercial development.
Public clinic services
13. DR YEUNG SUM asked: Will the Government inform this 13. DR YEUNG SUM asked: Will the Government inform this DR YEUNG SUM asked: Will the Government inform this Council: Council:
(a) of the reasons for suspending the evening out-patients session in Aberdeen (a) of the reasons for suspending the evening out-patients session in Aberdeen Jockey Club Clinic on 8 May 1992 when clinic services might have been in great demand because of the rainstorm;
(b) whether other public clinics were similarly clos (b) whether other public clinics were similarly clos whether other public clinics were similarly closed on that date; and ed on that date; and
(c) of the criteria used in deciding whether public clinics should be closed (c) of the criteria used in deciding whether public clinics should be closed during rainstorms or other natural disasters?
SECRETARY FOR HEALTH AND WELFARE: Mr Deputy President, the replies to the three part question are, seriatim:
(a) The evening out-patient service at Aberdeen Jockey Club Clinic was suspended (a) The evening out-patient service at Aberdeen Jockey Club Clinic was suspended on 8 May 1992 due to extremely inclement weather and severe thunderstorm. Even during the day, attendance was barely half the usual numbers.
(b) All 19 evening general o (b) All 19 evening general o All 19 evening general out-patient clinics in the Department of Health were ut-patient clinics in the Department of Health were suspended that evening. The arrangement was announced through radio and television broadcasts and by notices at clinics.
(c) In deciding whether evening public clinics should be closed during rainsto (c) In deciding whether evening public clinics should be closed during rainsto In deciding whether evening public clinics should be closed during rainstorms or other natural disasters, the key consideration is safety of patients. As a normal practice, general out-patient clinics are closed on the hoisting of No 8 typhoon signal and in similarly inclement weather conditions. Patients requiring emergency treatment have recourse to the Accident and Emergency Department in hospitals.
Noise nuisance generated by vessels
14. MR LEE WING-TAT asked: Will the Government inform this Council: 14. MR LEE WING-TAT asked: Will the Government inform this Council:
(a) what regulatory controls there are for noise emanating from vessel (a) what regulatory controls there are for noise emanating from vessel what regulatory controls there are for noise emanating from vessels berthed s berthed close to residential areas including restrictions on the use of loud speakers; and
(b) of the statistics of complaint against noise nuisance of these vessels and (b) of the statistics of complaint against noise nuisance of these vessels and actions taken, including prosecutions, if any, over the past three years?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, sections 4 and 5 of the Noise Control Ordinance (Cap 400) control intermittent noise produced in public places, including piers and waterways. Hence, noise emanating from moving vessels, including the use of loudspeakers on these vessels, is controlled under these provisions. Because of the intermittent nature of such noise, the Royal Hong Kong Police Force is empowered to enforce these provisions. Noise from vessels berthed at commercial piers is controlled under section 13 of the Ordinance, which allows the Environmental Protection Department to issue noise abatement notices to require appropriate action to be taken by operators of the vessels to abate the noise nuisance.
Over the past three years, the Environmental Protection Department has received Over the past three years, the Environmental Protection Department has received 50 complaints where residential premises have been affected by noise associated with the operation of vessels at public cargo handling sites and commercial piers. The Marine Department has also received three more complaints associated with vessels berthing at commercial piers. Of those 53 complaints, 33 cases have been referred to the police for enforcement under sections 4 and 5 of the Noise Control Ordinance. The police initiated prosecution in three of these cases, and issued verbal warnings for the others. The remaining 20 cases have been dealt with by the Environmental Protection Department which has liaised with the vessel operators to work out measures,
such as limiting hours of operation, to mitigate the noise disturbance.
Village street lighting
15. MR WONG WAI-YIN asked: Will the Government inform this Council of the following: 15. MR WONG WAI-YIN asked: Will the Government inform this Council of the following:
(a) the number of village street lamps installed in each district of the New (a) the number of village street lamps installed in each district of the New Territories over the past three years;
(b) the number of outstanding applications for village street lamp installation (b) the number of outstanding applications for village street lamp installation
in each NT district; the earliest application date of these applications and the reasons why such applications have not yet been processed; and the estimated time required to process the existing stock of outstanding applications; and
(c) the waiting time normally required for an application to be processed; and (c) the waiting time normally required for an application to be processed; and whether the Government has any plans to shorten the waiting time?
SECRETARY FOR WORKS: Mr Deputy President,
(a) The numbers of village lighting points installed in each district of the New (a) The numbers of village lighting points installed in each district of the New Territories over the past three years are as follows:
89-90 90-91 89-90 90-91 91-92
Islands
(including Lamma) 95 (including Lamma) 95 115 161
Tsuen Wan 54 Tsuen Wan 54 19 54
Sha Tin 63 Sha Tin 63 53 51
Sai Kung 100 Sai Kung 100 33 95
Tai Po 263 Tai Po 263 198 149
North 99 North 99 120 173
Yuen Long 158 Yuen Long 158 301 290
Tuen Mun 112 Tuen Mun 112 53 197
Total 994 Total 994 892 1 170
(b) The number of outstanding applications for village street lamp installation (b) The number of outstanding applications for village street lamp installation in each NT district and the earliest application date of these applications are:
Outstanding Earliest Outstanding Earliest
District application District application application application date application date
Yuen Long 264 Yuen Long 264 March 1989 March 1989
Islands 156 Islands 156 June 1985 June 1985
North 89 North 89 November 1989 November 1989
Tai Po 51 Tai Po 51 February 1990 February 1990
Sai Kung 270 Sai Kung 270 April 1986 April 1986
Sha Tin 47 Sha Tin 47 July 1991 July 1991
Tsuen Wan 60 Tsuen Wan 60 September 1990 ber 1990
Tuen Mun 33 Tuen Mun 33 January 1990 January 1990
Kwai Tsing - Kwai Tsing - -
Total 970 Total 970
Supply and demand is the main reason for the outstanding applications from earlier years, when the annual quota was insufficient to meet all requests. Consequently, villages with larger populations or locations considered to be crime or traffic black spots have been normally accorded higher priority. Lower priority has been given to villages with envisaged problems such as lack of electricity supply and difficulty in getting landowners' consent to works. The improved annual quota of 1 000 village street lamps since 1987-88 has been sufficient, following the same priorities, to cover most new applications and to reduce the backlog. The estimated time required to process the existing stock of outstanding applications is two to three years.
(c) At present the average waiting time required for an application is two to (c) At present the average waiting time required for an application is two to three years. The situation is steadily improving as the annual quota of street lamps installed is currently greater than the number of applications being received.
Yau Ma Tei Typhoon Shelter new drainage system
16. MR GILBERT LEUNG asked: As the present design and layout of the drainage system 16. MR GILBERT LEUNG asked: As the present design and layout of the drainage system in the new Yau Ma Tei Typhoon Shelter may result in the accumulation of sewage in the shelter area as before, will the Government inform this Council:
(a) what has led to such deviation from the planning standards in the design and (a) what has led to such deviation from the planning standards in the design and layout of the above drainage system and what impact it will have on the environment;
(b) when the construction of the sewerage system for West Kowloon will be (b) when the construction of the sewerage system for West Kowloon will be completed so that sewage from that area will no longer be discharged through the stormwater drains into the shelter, how much the project will cost; and
(c) if the construc (c) if the construc if the construction of the West Kowloon sewerage system cannot be completed tion of the West Kowloon sewerage system cannot be completed in the near future, whether the Administration will consider modifying the present design and layout of the stormwater drains in the shelter so that sewage will be discharged farther away from the shore; how much such a project will cost; and how long it will take to complete?
SECRETARY FOR WORKS: Mr Deputy President, in replying to this question, I should take the opportunity to give an assurance that the design and layout of the drainage system in the new Yau Ma Tei Typhoon Shelter will not result in the accumulation of sewage in the shelter areas as before.
(a) The environmental guidelines under the Hong Kong Planning Standards and (a) The environmental guidelines under the Hong Kong Planning Standards and Guidelines is that no new sewer or stormwater drain should discharge into any new typhoon shelter, marina or boat park. This provision was included in the document so that no future boat shelter would be constructed in a manner which would result in the water within becoming extremely polluted, as is the case with most of the present shelters. The planning standards and guidelines allow a degree of flexibility in application, having regard to land use demands, local conditions, development constraints and resource availability. The decision to deviate from this guideline was taken only after careful consideration of what could be done to prevent pollutants from entering the stormwater outfall and the likely resultant water quality in the new typhoon shelter.
To prevent pollutants from entering the stormwater outfall, twelve Dry To prevent pollutants from entering the stormwater outfall, twelve Dry Weather Flow (DWF) interceptors will be constructed to divert the DWF from the storm drainage system to the foul sewerage system during dry weather. The DWF is the major pollutant carrier as it comprises, mainly, the flows from illegal connections into the storm drainage system. The DWF interceptors, while not completely preventing pollutants from entering the typhoon shelter, will reduce them to an acceptable level that will not cause serious pollution in the shelter.
The reasons for deviating from the Environmental Guideline by discharging The reasons for deviating from the Environmental Guideline by discharging the storm culverts into the typhoon shelter are:
(i) Shorter culvert lengths will reduce the head loss in the system, thereby redu (i) Shorter culvert lengths will reduce the head loss in the system, thereby reducing necessary improvements to the existing hinterland drainage network. This will greatly reduce the amount of disruption to streets and traffic.
(ii) The new design will reduce the length of necessary drainage reserves which (ii) The new design will reduce the length of necessary drainage reserves which would sterilize strips of land, 50 metres wide.
(iii) Serious problems of conflict between the (iii) Serious problems of conflict between the Serious problems of conflict between the drainage culvert and the proposed drainage culvert and the proposed Airport Railway stations at Tai Kok Tsui and the Cherry Street Flyover, will be avoided.
(iv) An estimated cost saving of $314 million due to shortening the total culvert (iv) An estimated cost saving of $314 million due to shortening the total culvert length by 1.5 kilometres and reducing the scope of necessary improvements to the hinterland drainage network.
(b) Of the twelve DWF interceptors, two will be completed in mid (b) Of the twelve DWF interceptors, two will be completed in mid -1993 and the remainder in 1995. The estimated cost of the DWF interceptor scheme is $28 million.
(c) As the DWF interceptor (c) As the DWF interceptor As the DWF interceptor scheme will be completed in the near future [see the scheme will be completed in the near future [see the reply to (b)] after which the quality of discharges into the typhoon shelter will be greatly improved, there is no plan at this stage to modify the present design and layout of the stormwater drains in the shelter area.
Liquidity adjustment facility
17. MR DAVID LI asked: What is the current status of the establishment of a Liqui 17. MR DAVID LI asked: What is the current status of the establishment of a Liquidity Adjustment Facility, and what is the projected schedule for its implementation?
SECRETARY FOR MONETARY AFFAIRS: Mr Deputy President, following consultation with the Hong Kong Association of Banks, the Liquidity Adjustment Facility will be introduced with effect from Monday 8 June 1992. All licensed banks have been notified individually by the Office of the Exchange Fund of the details of the Facility.
Hong Kong dollar bonds
18. MR DAVID LI asked: Given that the Asian Development Bank plans to issue more b 18. MR DAVID LI asked: Given that the Asian Development Bank plans to issue more bonds in Hong Kong, will this affect the territory's own efforts to raise capital for the Port and Airport Development Strategy projects?
SECRETARY FOR MONETARY AFFAIRS: Mr Deputy President, bond issues launched in Hong Kong by prestigious multilateral organizations with top credit ratings, such as the Asian Development Bank, bring significant benefits to the development of our capital markets because increased availability of top-quality debt paper enhances the
awareness and confidence of both local and overseas investors in the debt market. Obviously, a mature and well-developed debt market will facilitate fund raising activities, including those for the port and airport development projects.
In April this year, the Asian Development Bank launched a very successful issue of seven-year Hong Kong dollar bonds here. With the bonds denominated in the local currency and maturing well past 1997, the Bank's issue is a vote of confidence in Hong Kong's future and in its currency. The very enthusiastic response from the market indicates a substantial demand for first class Hong Kong dollar paper. The issue also helps to provide a benchmark for medium term money in Hong Kong. The Asian Development Bank issue should provide a useful guide for other borrowers when
considering their funding needs in this market.
Should the Asian Development Bank wish to make any further issues here it will, Should the Asian Development Bank wish to make any further issues here it will, as it did in advance of its April issue, consult us with respect to an appropriate timing, so that we can together ensure that there is no clash with the plans of other prospective issuers.
Multi-storey Buildings (Owners Incorporation) Ordinance
19. MR LEE WING-TAT asked: Will the Government inform the Council whether the 19. MR LEE WING-TAT asked: Will the Government inform the Council whether the legislative changes proposed to the Multi-storey Buildings (Owners Incorporation) Ordinance can be introduced to the Legislative Council within this Session as scheduled; and, if not, what are the reasons?
SECRETARY FOR HOME AFFAIRS: Mr Deputy President, the draft Multi-storey Buildings
(Owners Incorporation) (Amendment) Bill 1992 will be submitted to the Executive Council for consideration very soon. If appoved, it will be introduced into this Council towards the end of the current Session.
Urban squatter clearance
20. MR FRED LI asked: Will the Government inform this Council: 20. MR FRED LI asked: Will the Government inform this Council:
(a) of the reason for the Housing Authority's policy to rehouse those affected (a) of the reason for the Housing Authority's policy to rehouse those affected by squatter clearance in the urban areas in public housing units in extended urban areas, except otherwise in special circumstances; and the date of implementing such policy?
(b) with the deferred clearance of the urban temporary housing areas and the (b) with the deferred clearance of the urban temporary housing areas and the availability of vacant units in old-type urban public housing estates, whether the Housing Authority would consider allowing the flexibility of offering to the urban squatters affected by clearances (such as the residents of Ling Nam San Tsuen in Kwun Tong to be cleared by the end of June) vacant units in public housing estates or temporary housing areas in the urban areas?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Deputy President, rehousing for squatters affected by clearances is provided on the basis of the availability of reception accommodation. It is not possible to offer local rehousing in new estates to all those cleared, particularly in the main urban area.
The Housing Authority's practice since 1987 has been to use the supply of public housing in the extended urban areas, such as Tsing Yi, Tsuen Wan, Sha Tin and Tseung Kwan O, to meet some of the demand arising from clearances in Kowloon. These areas are well served by public transport and have proved to be acceptable to most
prospective tenants. In the case of Hong Kong Island, it has been possible to offer reception accommodation on the Island to meet clearance requirements. These rehousing arrangements are expected to continue in the foreseeable future.
The Housing Authority has been offering casual vacancies in public housing The Housing Authority has been offering casual vacancies in public housing estates to squatters cleared in the main urban area, but urban temporary housing areas will not be used for this purpose because they will be cleared eventually. In the
case of Ling Nam Upper Village, new reception accommodation will be available in King Lam Estate in Tseung Kwan O for all household sizes, or Tak Tin Estate in Lam Tin for three to four-person households. There will also be casual vacancies for some in various Kowloon estates.
First Reading of Bills
LINGNAM COLLEGE BILL
LANDLORD AND TENANT (CONSOLIDATION) (AMENDMENT) BILL 1992
Bills read the First time and ordered to be set down for Second Reading pursuant to Standing Order 41(3).
Second Reading of Bills
LINGNAN COLLEGE BILL
THE SECRETARY FOR EDUCATION AND MANPOWER moved the Second Reading of: "A Bill to provide for the incorporation of Lingnan College and for matters connected therewith."
He said: Mr Deputy President, I move that the Lingnan College Bill be read a Second time.
The Bill provides for the establishment, functions and governance of Lingnan The Bill provides for the establishment, functions and governance of Lingnan College as a degree awarding body.
Lingnan College in Hong Kong was founded in 1967 by a group of alumni of the former Lingnan University in China. The College was first registered as a school and became an approved post-secondary college in 1978. In 1987, a review by the United Kingdom Council for National Academic Awards concluded that the courses offered by the College were equivalent in standard to those offered by some tertiary institutions funded by the University and Polytechnic Grants Committee (UPGC).
In the context of the current tertiary expansion programme to provide first year, first-degree places for 18% of the relevant age group by 1994-
95, the UPGC has recommended that Lingnan College should be upgraded to a degree granting institution. The College has been under UPGC funding since July last year. The current plan is for the College to provide 2 000 student places, including 690 first-year, first-degree places, by 1994-95.
The Bill confers on the College a wide range of powers in connection with the establishment and running of the academic institution as a corporate body. These include the power to award degrees.
The Bill also provides the College with a new form of governance commensurate The Bill also provides the College with a new form of governance commensurate with its status as a publicly-funded tertiary institution. Two main bodies will be established, namely:
- the Board of Governors, with 40 members, as the supreme governing body of - the Board of Governors, with 40 members, as the supreme governing body of the College; and
- the Council, with 27 - the Council, with 27 the Council, with 27 members, as the executive body of the College which will members, as the executive body of the College which will be responsible for its management and operation.
The Bill further provides for the appointment by the Council of an Academic Board to review and develop academic programmes and supervise teaching, research, admissions and examinations.
The Bill regulates the financial affairs of the College which is required to submit its estimates and programmes of activities to the Chairman of the UPGC. The College is also required to submit annual reports on its finances and general activities to the Governor, who shall cause them to be laid on the table of this Council.
The upgrading of the College may be seen as a recognition of the remarkable work of its founders and successive generations of staff and students. They have been dedicated to the pursuit of academic excellence, a tradition which I am sure will be continued after the College achieves its enhanced status.
Mr Deputy President, I move that the debate on this motion be now adjourned. Question on the adjournment proposed, put and agreed to.
LANDLORD AND TENANT (CONSOLIDATION) (AMENDMENT) BILL 1992
THE SECRETARY FOR HOME AFFAIRS moved the Second Reading of: "A Bill to amend the Landlord and Tenant (Consolidation) Ordinance."
He said: Mr Deputy President, I move that the Landlord and Tenant (Consolidation) (Amendment) Bill 1992 be read the Second time.
This Bill seeks to amend the Landlord and Tenant (Consolidation) Ordinance to allow the controls on rent increases of certain categories of domestic premises to be phased out by the end of 1994. It also provides for the enhancement of the level of statutory compensation payable to tenants dispossessed by landlords who intend to rebuild their premises.
Since l941 pre-war premises have had their rents controlled under Part I of the Since l941 pre-war premises have had their rents controlled under Part I of the Ordinance by relating the permitted rent to a multiple of the rent payable in 1941. The multiplier has been increased annually since 1976 and currently stands at 48. There are some 900 such controlled premises the tenants of which are paying on average a monthly rent representing some 59% of the market rate.
Part II of the Ordinance was introduced in 1973 and it now controls rents in respect of tenancies created before l0 June 1983 in post-war premises completed before 19 June 198l with a rateable value of under $30,000. Their rents may be increased once every two years by not more than 30% or up to a specified percentage of the prevailing market rent whichever is the greater. The current specified percentage stands at 70% of the market rent and tenants on average are paying at about 6l% of the market rate. There are some 38 500 such controlled units, diminishing at a rate of about 5 000 per year through redevelopment or reoccupation by their owners.
Both forms of controls were introduced as temporary measures to protect tenants Both forms of controls were introduced as temporary measures to protect tenants from excessive rental increases at times when there were severe shortages of housing. They were always intended to be removed when the supply of and demand for housing was reasonably balanced. We believe that an indicator to reflect this balance is the rate of increase in rentals which have slowed down considerably and averaged less than l0% per year for the last few years. Restoring rents of controlled premises to market levels will also provide incentive to their landlords to undertake a more active role in refurbishing and maintaining their properties.
The Bill before Members today provides for the introduction of a series of graduated statutory rent ceilings which will enable permitted rents to be brought closer to prevailing market rents by the end of 1994 at which time rent controls will lapse.
For Part I controls which currently affect some 900 pre-war premises, it is proposed to retain and increase annually the existing rent multiplier while introducing a minimum rent expressed as a percentage of the prevailing market rate. The latter will rise from 60% in 1992 to 92.5% in 1994. As a measure to safeguard the interests of the tenants, the current practice of not allowing rent increases to be made within 12 months of the last increase will be retained.
It is proposed to adjust Part II provisions which control some 38 500 post-war premises by increasing the present minimum permitted rent of 70% of the prevailing market rent in three steps to 92.5% in 1994. Again, we will retain the current practice of only allowing rents in this category to be increased once every two years.
The total number of premises affected by the above proposals constitutes about 4% of all private residential flats and the impact of the changes on consumer price inflation will be insignificant. We do not consider that the phased decontrol of rents will affect local rental market in any significant way.
We acknowledge that the local property market can be volatile. For this reason, We acknowledge that the local property market can be volatile. For this reason, we have included in the Bill provision to adjust both the levels of increases and their time-frame so as to minimize the impact of any unforeseen circumstances resulting from adverse market forces which might require intervention. We will be monitoring the situation continuously and carefully.
Tenants who eventually lose the protection of Parts I and II of the Ordinance will continue to retain security of tenure under Part IV.
With regard to statutory compensation payable under Parts II and IV to tenants With regard to statutory compensation payable under Parts II and IV to tenants dispossessed by the redevelopment of their premises, it is accepted that the current entitlement at a rate of twice the 1983 rateable value of the property plus removal expenditure and recompense for fittings is outdated and inadequate. The Bill
proposes to amend the statutory basis for compensation to a multiple of 1.3 of the current rateable value. This will roughly double the level of statutory compensation
and allow a dispossessed tenant to rent similar accommodation for six months. Mr Deputy President, I move that the debate on this motion be now adjourned.
Question on the adjournment proposed, put and agreed to.
POST OFFICE (AMENDMENT) BILL 1992
Resumption of debate on Second Reading which was moved on 13 May 1992 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
INLAND REVENUE (AMENDMENT) (NO. 2) BILL 1992
Resumption of debate on Second Reading which was moved on 11 March 1992 Question on Second Reading proposed.
MR ANDREW WONG: Mr Deputy President, on 7 November 1990, this Council passed into law the Merchant Shipping (Registration) Bill 1990 to provide for the launching of the Hong Kong shipping register. On that occasion, the Administration announced its intention to exempt from profits tax income from the carriage of passengers and goods uplifted in Hong Kong by ocean-going ships registered on the Hong Kong shipping
register. This is now being materialized in the present Bill. At the same time, the Bill also seeks to exempt from profits tax charter hire income of all ocean going ships, irrespective of whether they are registered in Hong Kong.
A Legislative Council ad hoc group was formed to study the Bill. We have held A Legislative Council ad hoc group was formed to study the Bill. We have held three meetings, including two with the Administration, and we have considered five submissions received respectively from Johnson, Stokes & Master, Solicitors representing the Hong Kong Shipowners Association Limited, the Hong Kong Society of Accountants, the Federation of Hong Kong Industries and Shun Tak Holdings Limited.
As a result of this work, various amendments, basically technical ones, will be
moved at the Committee stage by the Administration.
As regards the principles of the Bill, the ad hoc group accepts that the combined effects of fees and charges payable by shipowners under the Hong Kong shipping register together with the provisions for the taxation of shipping profits under the Inland Revenue Ordinance would affect the attractiveness of the local register. To enable us to compete with other registers of similar standing, the ad hoc group supports the proposition that we shall no longer charge tax on profits made by owners of ships registered in Hong Kong, having regard to the initial registration fees and the annual tonnage charges we are levying under the shipping register.
As a matter of fact, of all the submissions received on the Bill, not one argued against the proposed exemptions from profits tax, effective retrospectively from 3 December 1990 (the date when the announcement was made), of ocean-going ship registered on the Hong Kong shipping register and charter hire of ocean-going ships. Queries were however raised as to when the other provisions in the Bill, in particular those provisions relating to river trade limits charter hire, domestic charter hire and dredging operation would take effect, in other words, whether or not they would be effective retrospectively. The Administration has clarified to the ad hoc group that insofar as these latter provisions are concerned, no retrospective effect is intended and they would only come into effect on the date of the Gazette notice (that is, up to the passage of the Bill). This will be made clear in the amendments to be moved by the Administration shortly during Committee stage.
What remains chargeable to tax under the Bill will now be, firstly, income from carriages shipped in Hong Kong waters, income from dredging operations in Hong Kong and charter hire income from ships operating solely or mainly within Hong Kong waters and, secondly, one half of charter hire income from operations between Hong Kong and areas within the river trade limits. The Bill thus consolidates charging provisions on shipping income and also introduces an anti-avoidance measure to draw "part boat" charters into the tax net.
As for the Bill's minor changes to the airlines profits provisions, they will now better define the basis for calculating the airlines tax liabilities. This is a welcomed move.
Mr Deputy President, with these remarks, I support the Bill subject to the amendments at the Committee stage.
SECRETARY FOR THE TREASURY: Mr Deputy President, subsequent to the introduction of the Bill into this Council on 11 March 1992, this somewhat technical piece of legislation has received considerable benefit from the advice and suggestions of the ad hoc group chaired by Mr Andrew WONG. In addition to holding two formal meetings with the Government, the group received representations from a wide number of interested parties as mentioned by Mr WONG. As a result of these discussions, various details concerning the application and operation of the new provisions were clarified. In addition, a small number of amendments, which I shall be moving later this afternoon, were agreed. I would like to place on record my appreciation for the work done by the ad hoc group.
Mr Deputy President, I commend this Bill to the Council, subject to the amendments which I shall move shortly.
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).
IMMIGRATION (AMENDMENT) BILL 1992
Resumption of debate on Second Reading which was moved on 6 May 1992 Question on Second Reading proposed.
MRS MIRIAM LAU: The Immigration (Amendment) Bill 1992 is aimed at bringing the Immigration Ordinance into consistency with the Bill of Rights Ordinance, in short, the BOR Ordinance.
The Immigration Ordinance is one of the six pieces of legislation that are being subjected to a one-year freeze period under the BOR Ordinance. The freeze period will expire on 8 June 1992. An ad hoc group was formed at the Legislative Council In-House
meeting held on the 24 April 1992 to study the Bill. With the co-operation of members and the assistance of the Administration, the ad hoc group managed to complete the scrutiny of the Bill within a very tight schedule, making it possible to resume the Second Reading of the Bill today.
In its review of the Immigration Ordinance, the Administration has not covered Part IV which deals with the requirement to carry proof of identity because this part of the Ordinance is being considered by the Law Reform Commission in the context of police powers of stop and search. The Administration informed members that the
Sub-Committee of the Law Reform Commission dealing with the matter took the view that this part would be able to withstand a BOR challenge. The majority of members of the ad hoc group expressed their support for the retention of the provisions contained in this part. One member, however, expressed his reservation. In view of the
impending expiry of the freeze period and in order not to pre-empt any recommendation of the Law Reform Commission, the ad hoc group accepts that this part of the Ordinance will not be reviewed in the current exercise.
Mr Deputy President, I now come to the Bill itself. The Bill proposes modifications to two main areas -- the power to detain and presumptions in aid of the prosecution. In regard to the first area, the ad hoc group noted that the BOR Ordinance provided savings to immigration legislation which concern persons not having the right to stay in Hong Kong. Since Vietnamese refugees, by definition, are permitted to stay in Hong Kong until resettlement, the ad hoc group agrees that modifications to sections relating to Vietnamese refugees are necessary in the context of the BOR Ordinance. The existing Immigration Ordinance gives the Government the power to detain Vietnamese refugees in refugee centres. This power infringes the BOR Ordinance as the latter provides everyone who is lawfully within Hong Kong the right to liberty of movement. Besides, with the abolition of the closed camp policy in 1988, the power to detain Vietnamese refugees has actually become defunct. The ad hoc group therefore supports these modifications relating to the removal of such power.
The ad hoc group has also obtained assurance from the Administration that for The ad hoc group has also obtained assurance from the Administration that for Vietnamese refugees who contravene any condition of stay the Government is empowered under section 13A(4) of the Ordinance to cancel or vary a Vietnamese refugee's condition of stay. The Administration has also assured the group that the power given in this section will not be used to circumvent the law in respect of those Vietnamese refugees who are alleged to have committed criminal offences. In sections 29A and
31 there is provision for a deportee to be detained indefinitely for inquiry into both his own and other people's activities. The Bill proposes modifications to the effect that such person may only be detained for inquiry into his own activities and for a maximum period of 28 days. The ad hoc group supports this modification because the current provisions may be arbitrary in the context of Article 5(1) of the BOR Ordinance which provides, amongst other things, that no one shall be subjected to arbitrary arrest or detention.
In regard to the second area of modifications, that is, those relating to In regard to the second area of modifications, that is, those relating to presumptions in aid of the prosecution, the modifications are necessary in the light of the presumption of innocence contained in the BOR Ordinance. In this respect, the ad hoc group is concerned that any modification should meet both the need to comply with the BOR Ordinance as well as the need to bring about successful prosecution. The sections being modified relate to prosecutions of those persons employing illegal immigrants and assisting entry into Hong Kong of unauthorized entrants. The current provisions in the Ordinance allow the presumption that a person is an unauthorized entrant or the owner or crew of the ship to stand until the contrary is proved. These sections are now modified to the effect that the presumption will only stand in the absence of evidence to the contrary, thus effectively reducing the standard of proof to enable the defendant to more easily rebut the presumption.
The ad hoc group considers the modifications acceptable for the purpose of The ad hoc group considers the modifications acceptable for the purpose of bringing the Ordinance in line with the BOR Ordinance and at the same time maintaining the law enforcement ability of the Administration.
In the course of examining section 37K which deals with prosecution of persons who transport unauthorized entrants by sea, the ad hoc group expressed reservation in regard to the fact that the presumption can arise without the necessity of establishing any primary facts. The ad hoc group believes that the presumption should only arise upon an allegation which is based on reasonable grounds and the Administration accepts this view. I will therefore be moving an amendment to this effect and explaining the ad hoc group's thinking on this point at the Committee stage.
Mr Deputy President, with these remarks, I support the motion. Mr Deputy President, with these remarks, I support the motion.
MR JAMES TO (in Cantonese) : Mr Deputy President, the Administration has avoided introducing an amendment to Part IVA of the Immigration (Amendment) Bill 1992, that
is, the part relating to the carrying and checking of identity cards. In overall terms, this part is most subject to criticism. In R v Fung Chi-wood, the Court of Appeal has explained that no precondition is necessary (such as a suspicion that a person is an illegal immigrant) before a law enforcement officer can demand to inspect a person's identity card. In other words, the court has clearly stated that no
precondition need to exist for the inspection of a person's identity card. That means that if a police constable just wants to know how old a person is or how well his photo is taken or just to have a chat with him or otherwise contact him, the constable can demand to inspect his identity card.
Let us look at the underlying spirit of sections 17A to 17E of Part IVA and we will know where the problem lies. This part of the Ordinance first came into effect on 30 October 1980. This part is different from other legal provisions in that it can be repealed by the Governor in Council without the need to go through the normal repeal procedures. (In the case of repeal by this Council, an amendment Bill to repeal will be necessary.) In other words, it was intended to be a temporary or short-term measure to be introduced or cancelled as and when special circumstances so warrant. What then is "special circumstances"? As a matter of fact, they were related to the problem of illegal immigration then existing in 1980 and unconnected with the then law and order situation. In fact when this part of the Ordinance went through its Second Reading debate in the Legislative Council in 1980, the then Chief Secretary said in clear and unequivocal terms, "The object of this measure is to help detect illegal immigrants..... So anyone will be a suspect if he/she fails to produce an identity card or other certification upon being stopped and searched."
If we care to read through a few more sections of the Ordinance, we will know that this provision of intercepting people to check for identity cards relates to illegal immigration.
Firstly, this Ordinance, entitled the Immigration Ordinance, is not subsidiary Firstly, this Ordinance, entitled the Immigration Ordinance, is not subsidiary legislation to another statute but has been introduced specifically for the purpose of immigration control.
Secondly, section 17D(1) provides that a person who fails to produce an identity card may be liable to arrest. Section 17D(3) provides that if an arrest is made by a police officer, but not an immigration officer, on the ground that the arrested person is found without carrying an identity card and that there is reason to suspect that he/she may be an illegal immigrant, the person arrested should be turned over
within the shortest possible time to an immigration officer for investigation as to whether or not he/she is an illegal immigrant. Construing this provision in its proper context, it is clear that the section is designed specifically for the detection of illegal immigrants rather than for maintenance of law and order or prevention of crime. If there is no reasonable cause to suspect a person to be an illegal immigrant, the power provided under this Ordinance should not be randomly exercised.
In a related development, the Administration has recently proposed amendments to section 54 of the Police Force Ordinance, which will restrict the exercise by a police officer of the power to intercept a person to check for identity documentation to circumstances where the person concerned looks suspicious to the police officer. Given the precondition of "suspicious looking", should a police officer check the identity card of a member of the public who does not look suspicious or who is not suspected to be an illegal immigrant? Members may say that the police will definitely exercise this power with reason and restraint.
In a legal sense, a law so written as to provide considerable leeway in construing and applying it, with neither inbuilt checks and balances nor restrictions as to the circumstances under which to apply it but relying solely on the discretion and restraint of the enforcement authority not to abuse it, runs counter to the spirit of the rule of law; it is a manifestation of the spirit of personality rule.
There have been numerous instances of abuse. For instance, in R v Fung Chi wood , the police officer in question testified to the court that he did not suspect the Rev FUNG to be an illegal immigrant but still required him to produce his identity card for record purpose. When asked why the identity of a person committing no
offence and not being an illegal immigrant should be put down for record, the officer told the court that he did so under the instructions of his superior officers.
Moreover, in R v Fung Chi-wood, the identity of the 19 people who participated in the lawful procession were put on record by the police. Could I ask if it is the Administration's intention, in enforcing this Ordinance, to keep track of the movements of each and every member of the public? If section 17C already sufficiently and reasonably empowers a police officer to randomly check the identity card of a person, why should the Police Force Ordinance be amended to the effect that the power to check the identity card of a person by a police officer be subject to the precondition of "suspicious looking"? In my view the Administration should take this
opportunity to amend this part of the Immigration Ordinance; it must not dodge it.
In paragraph 5 of the Legislative Council brief on the present Bill, the Administration said, "We have deliberately excluded from this amendment Bill Part IVA of the principal Ordinance which relates to the carrying of identity documentation because the relevant provisions together with others relating to the stop and search powers of the police have been referred to the Law Reform Commission. As the Law Reform Commission has yet to deliberate on these proposals, we are of the view that if we should deal with the provisions in Part IVA now we would be pre-empting the Commission's decisions. This would not be proper." I feel that this explanation is open to question.
Is the Administration meaning to tell us that it would follow and accept the recommendations of the Law Reform Commission? But if Members would care to look at the loitering law currently being considered, they would find that the Administration has chosen not to accept LRC's recommendation to have it repealed. I am of the view that if the Administration feels that the wide scope of the present Ordinance
conflicts with the Bill of Rights, it should seriously review it and take the present opportunity to amend it. I and my United Democrats colleagues urge the Administration to introduce as soon as possible a Bill to amend section 17 of the Ordinance. The United Democrats would like to reiterate that they are not asking for a total abolition of the powers to inspect identity cards; they are only asking for a restricted and reasonable exercise of such powers to give effect to the rule of law and human rights.
Regarding section 37K(1), the point which Mrs Miriam LAU mentioned a while ago and which I raised in the ad hoc group meeting is that the provision is basically of a presumptive nature. The original section provides that a person is deemed to be an illegal immigrant if he/she is alleged to be so. We have now amended it to introduce an element of reasonableness, that is to say, there must be reasonable cause to suspect the person concerned to be an illegal immigrant before the presumption can stand.
However, section 37K(2) appears to be fatally flawed. The section provides to this effect: If a police officer of the rank of Superintendent or above holds the honest belief that a person is the owner of the vessel, or the agent of the owner, or the captain or a crew member, then that person is presumed to be the owner, or the agent of the owner, or the captain or a crew member of the vessel. That is to
say, if the Superintendent honestly believes, then the person is deemed to be so.
The general principle with respect to a presumptive provision is that there must be primary facts from which, through a reasonable process of deduction, to arrive at presumed facts. In the recent case of Sin Yau Ming before the Court of Appeal, the court ruled that the principle should be one of rationality and proportionality. In other words, it would not be proper to infer, from oversimple and unreasonable primary facts, a presumed fact which could hardly, if at all, have been reasonably arrived at.
Practically speaking, even though a police officer of Superintendent rank may honestly believe it to be a fact, he is not necessarily at the scene; as a matter of fact he never is in most cases. He relies on the evidence given by police constables who were present at the scene, in other words, hearsay evidence. Indeed, even police constables at the scene might have relied on other illegal immigrants who have alleged that a person is the owner, captain or crew member of a vessel, which would, in that case, be double hearsay. The second point I would like to make is that an honest belief is not equivalent to a reasonable belief. I believe Members will understand that there indeed may be the case of an officer of Superintendent rank honestly believing something to be a fact without bothering to find out whether it is so. But is it possible that from the primary facts as found presumed facts can reasonably be inferred? This is open to question. The third point I would like to make is that the Administration has told us that there is no cause for worry because most of the cases are tried before the District Court where legal aid is available, where statements from witnesses are provided to the defence before trial and where people concerned can be summoned to give evidence any time. My answer to this is : First, not all the cases will go before the District Court; if a case should come before a magistrate's court, the defence will have no automatic right to be given witnesses' statements before trial; the defence may request for the statements but the request may be denied. Secondly, should the police officer of Superintendent rank, in considering whether he holds an honest belief, give all witnesses' statements to the defendant? If the statement givers eventually do not turn up in court to give evidence, then the statements would not be evidence and in that event it would not be necessary to give a copy of each and every statement to the defendant. Finally, on the question of manpower, the Administration has told us that it would be a waste of time and manpower if every time the constables at the scene would be required to give evidence in court. My answer to this is: First, there is no precedent for this; many other cases that occur in the streets, some perhaps very minor cases that come
before a magistrate's court, do require the constable at the scene to give evidence. Secondly, according to police statistics, there were only 70 to 80 cases last year in respect of which this section of the Ordinance was invoked; the defendants in some of these cases entered a plea of guilty. These cases were not tried all at the same time or during the same month or on the same day. Given appropriate arrangements, I double if there indeed would be manpower difficulties. I am of the view that the Administration should at least pluck up courage to amend section 37K(2) the way it is amending 37K(1), that is, the section mentioned by the Honourable Mrs Miriam LAU a while ago. The section should at least be amended to require a primary fact as a reasonable cause wherewith to infer a presumed fact. This would be a more
reasonable way of doing it. As regards other clauses in the amendment Bill, I would say they represent an improvement over the existing provisions of the principal Ordinance and there is less of a chance of violating the Bill of Rights.
As the Administration has introduced no amendment to section 17 and to the unreasonable section 37K(2) I mentioned earlier, Members from the United Democrats will abstain from voting on the present Bill.
SECRETARY FOR SECURITY: Mr Deputy President, in my very brief remarks, I would just like to, first of all, comment on Mr James TO's speech. He mentioned areas in particular where there is a dispute, that is, Part IVA of the Ordinance and section 37K(2). As to Part IVA this was discussed in great detail in the ad hoc group and I support the comments which Mrs Miriam LAU has made earlier on. It is shared by the Administration. As to section 37K(2), I believe that the amendment proposed here is reasonable. This assumption as to ownership and so on is rarely, if ever, in dispute. If the officer who made the arrest would have to give evidence in court, it would defeat the purpose of the certification system, which is, as Mr TO said, to avoid hampering operational efficiency. The officer normally makes such arrest on crew members of small vessels. Making the officer appear in Court for every case even where ownership is not in dispute would significantly impair operations.
I would like to thank Mrs Miriam LAU for her efficient chairmanship of the ad hoc group and her support for the Bill. This amendment Bill was only moved on 6 May and today we are resuming the Second Reading. I am most grateful to Members as a whole, and members of the ad hoc group in particular, for completing the consideration of this Bill so thoroughly and promptly.
With these remarks, Mr Deputy President, the Administration supports the amendment to this Bill which Mrs LAU will move in the Committee stage.
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
Council went into Committee.
POST OFFICE (AMENDMENT) BILL 1992
Clauses 1 to 7 were agreed to.
INLAND REVENUE (AMENDMENT) (NO. 2) BILL 1992
Clause 2 was agreed to.
Clauses 1 and 3
SECRETARY FOR THE TREASURY: Mr Chairman, I propose that clauses 1 and 3 be amended as set out in my name in the paper circulated to Members.
The amendment proposed to clause 1(2) is to clarify that, except for the concessions for international shipping, the new provisions will only come into operation on the date of publication of the Ordinance in the Gazette. The amendments to clause 1(3) reflect the Government's intention that any additional liability arising in respect of domestic shipping and the commencement of the anti-avoidance provisions will only become effective from the date of publication of the Ordinance.
A number of minor amendments are proposed to clause 3 in respect of section 23B of the main Ordinance. In particular, the words in brackets in subparagraph (7)(b)(i) are to be amended so that depreciation allowances will only be specifically denied in respect of that portion of the basis period during which a ship is registered on
the Hong Kong Register of Shipping and is used to produce exempt sums.
A new subsection (8A) is also to be inserted, to reflect the intention that A new subsection (8A) is also to be inserted, to reflect the intention that appropriate annual allowances will be granted in respect of a ship which is owned at the end of the basis period and has been used for the purpose of producing assessable profits during the basis period.
Finally, definitions. The definition of "relevant sums" specifies the classes Finally, definitions. The definition of "relevant sums" specifies the classes of income that are to be taken into account for the purpose of calculating a ship owner's assessable profits. It is proposed to amend paragraph (a)(iv)(A) of the definition to make it clear that it does not embrace international charter hire
attributable to the passage of ships through Hong Kong waters or moving between berths in Hong Kong.
If the defined meaning of "sea" in section 23B(11) had to be read into the definition of "relevant carriage" in the same section, it is possible that Hong Kong's local shipping operations would escape tax on their profits. As this is not our intention, the definition of "sea" is to be amended to exclude its application to "relevant carriage".
Mr Chairman, I beg to move. Mr Chairman, I beg to move.
Proposed amendments
Clause 1(2)
That clause 1(2) be amended by deleting "1991 and all subsequent years of assessment" and substituting "1992 and all subsequent years of assessment, and shall come into operation on the date of publication in the Gazette".
Clause 1(3)
That clause 1(3) be amended by deleting "paragraphs (a)(iii)" and substituting "subsection (9) of that new section and paragraphs (a)(iii) and (iv)(A)". Clause 3
That clause 3 be amended --
In new section 23B -
(a) in s (a) in subsection (7)(b) - ubsection (7)(b) -
(i) by deleting "subject to subsection (8),"; and (i) by deleting "subject to subsection (8),"; and
(ii) by deleting subparagraph (i) and substituting - (ii) by deleting subparagraph (i) and substituting -
"(i) subject to subsections (8) and (8A), in the case of any initial allowance "(i) subject to subsections (8) and (8A), in the case of any initial allowance or annual allowance, as the case may be, that may be made to that person under Part VI, that allowance shall only be made in respect of that portion of the basis period during which the ship is not a registered ship (in respect of which the definition of "exempt sums" applies) to the extent that that ship is operated in that portion of that basis period for that year of assessment for the purpose of producing
assessable profits;";
(b) in subsection (8) - (b) in subsection (8) -
(i) by adding "(in respect of which the definition of "exempt sums" applies)" (i) by adding "(in respect of which the definition of "exempt sums" applies)" before "ceases"; and
(ii) in paragraph (b) by adding "subject to subsection (8A)," at the (ii) in paragraph (b) by adding "subject to subsection (8A)," at the beginning;
(c) by adding - (c) by adding -
"(8A) For the purposes of subsections (7)(b)(i) and (8)(b) - "(8A) For the purposes of subsections (7)(b)(i) and (8)(b) -
(a) in the case of subsection (7)(b)(i), the reference to Part VI (which Part con (a) in the case of subsection (7)(b)(i), the reference to Part VI (which Part contains sections 37(2) and 37A(2) amongst others); and
(b) in the case of subsection (8)(b), the reference to sections 37(2) and 37A(2), (b) in the case of subsection (8)(b), the reference to sections 37(2) and 37A(2), shall, in both cases, be construed as if the words "at the end of the basis period" (in the first place where they appear in section 37(2), and where they appear in section 37A(2)) read "during the basis period"."; and
(d) in subsection (11) - (d) in subsection (11) -
(i) in the definition of "relevant sums" by deleting paragraph (a)(iv)(A) and (i) in the definition of "relevant sums" by deleting paragraph (a)(iv)(A) and substituting -
"(A) the operation of a ship navigating solel "(A) the operation of a ship navigating solel the operation of a ship navigating solely or mainly within the waters of Hong y or mainly within the waters of Hong Kong; or"; and
(ii) in the definition of "sea" by adding ", except in relation to relevant (ii) in the definition of "sea" by adding ", except in relation to relevant carriage," before "means".
Question on the amendments proposed, put and agreed to.
Question on clauses 1 and 3, as amended, proposed, put and agreed to.
IMMIGRATION (AMENDMENT) BILL 1992
Clauses 1 to 11 and 13 to 16 were agreed to.
Clause 12
MRS MIRIAM LAU: Mr Chairman, I move that clause 12 of the Bill be amended as set out under my name in the paper circulated to Members. Section 37K(1) reads "A person who in any proceeding under this Part is alleged to be an unauthorized entrant shall be presumed to be such until the contrary is proved." To bring the section in line with the Bill of Rights Ordinance, the Immigration (Amendment) Bill proposes
repealing the words "until the contrary is proved" and substituting it with "in the absence of evidence to the contrary". The ad hoc group supports the modification as it enables the defendant to more easily rebut the presumption. Yet the current provision is that the presumption will arise upon mere allegation. This may not be compatible with the Bill of Rights Ordinance. The ad hoc group believes that certain processes of checking or inspection would in all probability be adopted by the
Administration before the allegation is made. This is confirmed by the Administration. However the fact that there is no requirement in the legislation for the establishment of any primary facts may render the allegation arbitrary. The ad hoc group appreciates that the primary facts necessary to conclude that a person is an unauthorized entrant may vary from case to case but at least the requirement for primary facts rationally proportional to such conclusion must be demanded in the
legislation. The ad hoc group therefore proposes to amend the section to the effect that the allegation must be based on reasonable grounds and hence the proposed amendment.
Mr Chairman, I beg to move.
Proposed amendment
Clause 12
That clause 12 be amended by deleting paragraph (a) and substituting - "(a) by repealing subsection (1) and substituting - "(a) by repealing subsection (1) and substituting -
"(1) If in any proceedings under this Part a person is alleged to be, and there "(1) If in any proceedings under this Part a person is alleged to be, and there are reasonable grounds for believing that such person may be, an unauthorized entrant, that person shall be presumed to be such in the absence of evidence to the contrary."; and".
Question on the amendment proposed, put and agreed to.
Question on clause 12, as amended, proposed, put and agreed to. Council then resumed.
Third Reading of Bills
THE ATTORNEY GENERAL reported that the
POST OFFICE (AMENDMENT) BILL 1992
had passed through Committee without amendment and the
INLAND REVENUE (AMENDMENT) (NO. 2) BILL 1992 and
IMMIGRATION (AMENDMENT) BILL 1992
had pased through Committee with amendments. He 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.
Member's motions
DEPUTY PRESIDENT: In accordance with recent practice, I understand that Members have agreed to place a voluntary restraint on the length of speeches.
TELECOMMUNICATIONS POLICY
MR STEVEN POON moved the following motion:
"That in view of the expiry of the franchise of the Hong Kong Telephone Company Limited in 1995, this Council urges the Government to formulate without delay a comprehensive and long-term telecommunications policy so as to facilitate, among other things, the establishment of a second local telecommunications network in 1995, having due regard to the principles of protecting consumer interests, maintaining free and fair
competition, and protecting the good reputation of Hong Kong."
MR STEVEN POON (in Cantonese): Mr Deputy President, I move the motion standing in my name on the order paper.
In 1988, when the Government invited tender for cable television, the thinking In 1988, when the Government invited tender for cable television, the thinking then was that cable television would at the same time provide a local telecommunications network. However, the plan did not materialize and we were not able to develop further our local telecommunications network. It is indeed very disappointing now that, four years on, the Government is still unable to present a new comprehensive telecommunications policy. Meanwhile, despite the scheme of control for the Hong Kong Telephone Company ending in March last year, we have not been able to come up with a new scheme of control. The franchise of the Hong Kong Telephone Company will also expire in 1995, but the Government has yet to give specific
indication as to how it intends to deal with the local telephone service. The Government can be said to have not a clue about the issue; there is no policy to speak of. The business sector and the general public, therefore, do not have any idea about the shape of things to come in terms of telecommunications.
At present, the local telecommunications services are provided by Hong Kong Telephone Company, Hong Kong Telecom International (HKTI), a number of mobile telephone companies and paging companies.
The forerunner of HKTI was the Cable and Wireless Company. The latter had for The forerunner of HKTI was the Cable and Wireless Company. The latter had for a long time the franchise to provide international telephone and telegram services in the territory. In 1981, a new franchise agreement was signed between the Government and the Cable and Wireless Company. It will run for 25 years and expire in 2006. The old franchise was to expire in 1987, but six years before its expiration, that is, in 1981, the Government made a point of hastily signing a new franchise with the Company, which is baffling indeed. Article 18 of the franchise agreement stipulates that the appointees to managerial and executive positions should be British nationals, unless the Governor's permission is secured for exceptional arrangement. One has the feeling that the new franchise is the product of political manoeuvring. There are many people who now query whether this agreement signed 11 years ago is really in the interests of Hong Kong people; there is even a suggestion that the agreement should be rescinded.
Let us now look back on the past performance of HKTI. In terms of quality, its Let us now look back on the past performance of HKTI. In terms of quality, its International Direct Dialing service, international facsimile and related services compare favourably with comparable services offered in advanced countries and cities all over the world. HKTI has laid a Pacific submarine optical-fibre cable and is constantly seeking to improve our telephone connection with various provincial cities of China as well as every corner of the world. In terms of price, international calls made in Hong Kong are cheaper than those coming in from outside of Hong Kong. The service of HKTI is therefore satisfactory.
Under these circumstances, I think the suggestion that HKTI's franchise be terminated does not have enough grounds. Furthermore, the termination of a franchise agreement is a very serious matter. Terminating an agreement without enough grounds, for no apparent reason, will seriously tarnish the reputation of Hong Kong and the Hong Kong Government in the global scene; it will be a very unwise thing to do. I suggest that the Government should allow HKTI to continue to enjoy its franchise
rights.
Insofar as Hong Kong Telephone Company is concerned, in terms of quality, 94% of our telephones are digitalised, a percentage which is higher than that in the United Kingdom, the United States, Japan and Singapore. In terms of quantity, there are 1.5 telephone lines per household in Hong Kong, a ratio which again is higher than that in the United States, the United Kingdom and Japan. In terms of price,
residential and business lines in Hong Kong cost less to rent than that in advanced countries. The service provided by Hong Kong Telephone Company is commendable.
However, I think that it is not the best way to regulate the telecommunications industry in the form of franchise. In a free market economy, competition is after all the best and the most ideal way. In the past, the telecommunications industry was monopolized all over the world; however, with the liberalization of the industry in the United States, the United Kingdom and Japan in the 1980s, success stories are abound. I really think that there is no need for the franchise of Hong Kong Telephone Company to be renewed in 1995; we should instead introduce a second telecommunications network.
The Executive Council has been reported to have, at its meeting last Tuesday, The Executive Council has been reported to have, at its meeting last Tuesday, agreed in principle to the liberalization of the local telecommunications service in 1995. I welcome that reported agreement. But liberalization and the setting up of a second network should only form part of the telecommunications policy, rather than what that policy is all about. There is still a need for the Government to expeditiously formulate and make known to the public a comprehensive and long term telecommunications policy.
I have the following views on the telecommunications policy: I have the following views on the telecommunications policy:
(1) While the tariff for international calls is cheaper in Hong Kong than in o (1) While the tariff for international calls is cheaper in Hong Kong than in other countries, the profit margins of HKTI are very high indeed. I think such profit margins are already way above reasonable levels for a franchised company. It shows that the company has made no effort to share the benefits of lowered costs with its subscribers. I suggest that the Government should negotiate with the HKTI and
request it to immediately make large tariff cuts and to set a time table for annual tariff cut within the next five years.
(2) According to the present arrangement, the revenue from international (2) According to the present arrangement, the revenue from international telecommunications services is to be split between HKTI and Hong Kong Telephone Company, such that about 60% will go to HKTI and the remaining 40% to Hong Kong Telephone Company. This ratio should be examined in the light of the high profit margins of HKTI and the need for Hong Kong Telephone Company to apply for tariff increase. I suggest that the Government should review that ratio to see if it is reasonable, in order to alleviate the pressure of tariff increase on domestic lines.
(3) Some economists have the view that revenue from international (3) Some economists have the view that revenue from international telecommunications services is actually used to subsidize rental domestic lines. But this is hard to prove. Given the high costs of the telecommunications industry, equitable sharing is a controversial issue. I think that the issue of cross subsidy, even if it exists, is not unacceptable. For in the absence of domestic lines, we will have no use for international telephone service. The costs of the two services are hard to divide discretely from each other. Besides, we have to make sure that the low-income households find the telephone tariff is affordable.
(4) Following the (4) Following the Following the introduction of a second local telecommunications network, in introduction of a second local telecommunications network, in order to enable it to compete effectively, the Government should make sure that it can be linked up with the network of Hong Kong Telephone Company and HKTI, at a reasonable price. The public may then be able to opt for telephone lines of the second network, in a way which is not influenced by huge tariff differential.
(5) Given the limited number of subscribers the second network is expected to (5) Given the limited number of subscribers the second network is expected to have when it is newly introduced, the first network will still be in a position to control tariff. In this regard, in the initial stage of liberalization, the Government should still impose tariff control on Hong Kong Telephone Company in order to protect the interests of consumers.
(6) The Governme (6) The Governme The Government has recently announced that it has started negotiations with nt has recently announced that it has started negotiations with Hong Kong Telephone Company on a tariff control scheme which will replace the existing scheme of control. The new scheme will determine the rate of tariff increase by a formula, that is, deducting the rate of inflation by a percentage or X. I am in favour of this scheme because it will exert pressure on the company through tariff control to improve its efficiency. However, the Government should elaborate how the
percentage or X is arrived at.
(7) It is expected that the second network operator will likely choose the most (7) It is expected that the second network operator will likely choose the most
lucrative districts to launch their business. Hong Kong Telephone Company, however, is required to provide telephone service for all parts of Hong Kong, lucrative districts or not. This will not be fair to Hong Kong Telephone Company. I suggest that the second network operator should, after three years of operation, bear the same responsibility as Hong Kong Telephone Company, in terms of providing telephone service throughout the territory, including the districts in which it will operate at a loss.
(8) To liberalize the market, arrangements should be made to allow mobile (8) To liberalize the market, arrangements should be made to allow mobile telephones to connect with the HKTI network for the purpose of making an international call, without having to go through Hong Kong Telephone Company network or the second
network. This will not only save connection costs and work to the benefit of subscribers, but will also allow mobile telephone companies to have a share of some of the benefits pertaining to long distance international telecommunications service.
(9) In 1988, the Government saw fit to include telecommunications network in the (9) In 1988, the Government saw fit to include telecommunications network in the public tender for cable television. I think it was a great mistake and sounded like putting the cart before the horse. The Government should not have mixed its telecommunications policy up with its broadcasting policy; telecommunications network should not in any case be treated as being attached to an information service. I suggest that separate tenders should be invited for pay television and the second network at the same time. If it is necessary for the tender for pay television to go ahead first, then it should be specified in that tender exercise that the pay television licence will not include the right to operate other lines of telecommunications business.
(10) The Government should make an assessment of the local wireless (10) The Government should make an assessment of the local wireless telecommunications environment and formulate a long-term policy accordingly. The present situation is that mobile telephones, pagers and second generation cordless telephones are fighting for survival. The Government should keep its finger on the pulse where the future developments of science and technology is concerned such that the wireless telecommunications system will be able to further develop.
(11) The scheme of control is an indispensable part of the telecommunications (11) The scheme of control is an indispensable part of the telecommunications policy. The present arrangement is for the Economic Services Branch to formulate policy with the Post Office providing the technical support. It lacks an effective monitoring mechanism. I suggest that we follow the practice of the United Kingdom
in terms of setting up an independent Telecommunications Office charged with the monitoring of the industry, laying down principles of tariff control and putting them into implementation, and consulting the views of the public and the business sector.
Mr Deputy President, telecommunications is a complex issue. The man in the street only knows that he has to pay the telephone bill; he has no idea why he has to pay so much money in the way of rent for telephone line and IDD charges. He has not been given any detailed explanation when it comes to relevant policies. Given that telecommunications services are basically provided by a franchised company, there is not much chance the public can have access to its operation. The Government has failed for many years now to formulate a telecommunications policy. Its frequent wavering and misguided steps taken have left the impression of a government which has neither the professional expertise, the confidence, nor indeed the determination, in terms of dealing with telecommunications industry. I urge the Government to form, without delay, a comprehensive and long-term telecommunications policy and to publicize it in such a way as to highlight to the general public the various factors which have been taken into account in the policy making process, in order that they have the opportunity to monitor this basic service which costs consumers $20 billion each year.
With these remarks, I move the motion. With these remarks, I move the motion.
Question on the motion proposed.
DEPUTY PRESIDENT: With 15 Members listed to speak, I would remind Members that to carry out their agreement for voluntary restraint they should limit their speeches to not more than six and a half minutes each.
MR STEPHEN CHEONG: Mr Deputy President, I hope I will not take up the full quota because after having heard the Honourable Steven POON's speech, I feel I am speechless already because he has covered so succinctly all the areas. I would simply like to reiterate a few points.
The first and foremost point is that it is most important from a macro point of view for Hong Kong to be able to develop an efficient telecommunications service. In the light of China's open-door policy and her economic modernization programme,
we have already seen in the past few years how the economy of Hong Kong has been boosted by China's efforts. We have also seen that the Pacific rim in the past few years has developed tremendously on the economic front, which Hong Kong is also well placed to contribute to and take part in that economic development. With all these
developments going on, if we do not have an efficient and reliable communications network both within and without our territory, it would certainly hamper our future development.
To that extent it is important that the Administration formulate a policy of what the future development of telecommunications is to be like. For that, I certainly subscribe to the fact that the second network decision needs to be made very quickly, so as to foster a freer competitive spirit. Nevertheless, it has to be borne in mind by the Administration that even if it decides to allow a second network to come in, what objectives does it hope to achieve? I would venture to suggest that the
Administration should not allow any tenderer without any new technological base, managerial expertise and experience in that particular area to tender for the second network.
The second point I would like to make is to echo Mr Steven POON's point that The second point I would like to make is to echo Mr Steven POON's point that telecommunications and broadcasting do have overlapping grey areas. The Administration should know the priorities in terms of each's importance in the macro interests of Hong Kong and that any decisions to be made by the Administration based on broadcasting considerations alone should not adversely affect telecommunications development in relation to the second network. Indeed, if subscription TV were to be considered by the Government, may I make a suggestion that it would be better in the overall macro interests for Hong Kong for both matters to be considered at the same time. If the future tenderers of the second network were to be interested in the operation of subscription TV, then might I also suggest that the Administration should consider putting in conditions that would require the tenderers to commit to the development of programmes that would have a high degree of local flavour, and not just buying programmes from outside territories to be re-dubbed into Cantonese for the viewers of Hong Kong.
Mr Deputy President, it is important that telecommunications be allowed to develop efficiently, and for that particular matter I would simply like to end by paying tribute to the work that the present telecommunications operators have done for Hong Kong. For the past 10 years they have really done their best to introduce the most updated technology into Hong Kong. They have also done their best to provide
an efficient service to Hong Kong at the cheapest possible price. For that, I think Hong Kong has to say "thank you". For the reasons given by Mr POON in relation to future development, free competition and free market economic philosophy, I certainly subscribe to the idea that we should have a second network by 1995. I do not think we should drag our feet; the Government should make a decision very, very quickly.
Mr Deputy President, I support the motion.
MR MARTIN BARROW: Mr Deputy President, I agree that the Government need to formulate a long-term telecommunications policy but I would like to add a note of caution on some aspects of the motion.
Whilst increased competition in the telecommunications service industry has brought benefits to consumers here and elsewhere, we should not forget that in Hong Kong we have a very efficient and cost-effective telecommunications system which has served Hong Kong well. There should be no disagreement with the principle that a second network should connect both the existing local network and the international facilities. However the prices for such connection should take full account of the cost of building, expanding and operating the networks and of the universal obligations imposed upon the existing provider of the service throughout Hong Kong.
As Mr POON has pointed out, the second network is bound to focus its services As Mr POON has pointed out, the second network is bound to focus its services upon those customers who provide them with the highest profit. In other words, they have no incentive to build a telephone network to serve the fish farms in the Mai Po Marsh area. That is why the connection charges should be fair and reasonable but not be lower than the cost of providing the service. Otherwise the second network would in effect receive a cross-subsidy and there will be no incentive for that network to even try to provide a territory-wide competing network, always relying upon the existing network to give access to customers and never building a competing telephone network.
However, I am surprised that Mr POON thinks that it could be possible to build a competing telephone network to provide services throughout Hong Kong in the space of three years to serve 2.6 million homes and offices. Certainly, if the connection charges with the existing system are too low, then the second network will have no incentive to attempt this. I would also be concerned about the possible
inconvenience to the population during the construction period of a new network.
On the regulatory environment, I would have no objection to an office of telecommunication-type independent authority being set up in Hong Kong. But the danger is that this may show that competition in the telecommunications industry does not result in less regulation or de-regulation as is often claimed, but possibly more regulation. And I hope that in considering the way forward, the Government will avoid any tendency towards over-regulation.
In conclusion I would caution the Government not to be over enthusiastic in the application of a competitive telecommunications policy. To do so could be damaging to Hong Kong's telecommunications infrastructure which is already the envy of many developed countries in the world and would clearly be a disincentive to future
investment in the expansion and development of a public service which is crucial to Hong Kong's prosperity. Thank you.
MR LAU WAH-SUM (in Cantonese): We all know that progress comes with competition. Hong Kong is a society which has a free market economy; we always champion fair competition. We have been able to achieve prosperity and progress today, mainly because our business community has been able to operate and function in keeping with the principle of fair competition. But there are public utilities which, due to their nature of operation, have to be operated in the form of monopoly. These franchised utility companies have been able to provide satisfactory services and make their rightful contribution to society, although they have no competitors to contend with. The main reason for this is that we have an excellent scheme of control which does not only control the tariffs of these services but more significantly, specifies that the profit margins are to be based on asset value. That is an inducement for the utility companies to invest so as to catch up with the latest development in technology and equipment, which in turn improves the quality of service and efficiency. Although we have a scheme of control which is effective in terms of monitoring the utility companies, franchised rights are nevertheless incompatible with the basic principle of free market and fair competition. In the long term, franchised rights should be reduced to a minimum in order to promote fair competition and enable the public to have more choices and a selection of quality services at reasonable prices.
The franchise of Hong Kong Telephone Company will come to an end in 1995. The The franchise of Hong Kong Telephone Company will come to an end in 1995. The Government should take this opportunity to formulate a comprehensive long-term telecommunications policy. The franchise for telephone services should not be renewed, in order to pave way for the setting up of a second local telecommunications
network. This is a practicable thing to do, given that in the early 1980's, the telecommunications market in other advanced countries such as the United States, the United Kingdom and Japan, were liberalized and consumers have consequently been able to enjoy better services. The setting up of a second network will lead to fair
competition between the two networks and improved services. In order to achieve better sales results, and therefore more profits, the competitors will increase efficiency and lower tariff charges. In addition, the Government can also, as part of its comprehensive, long-term telecommunications policy, allow other telecommunications services relating to the telephone network, such as mobile telephone, direct dialing international telephone and digital communication operators, to have the freedom of choice in respect of use of the two networks. Insofar as international telecommunications is concerned, direct link to the international telecommunications network without going through the telephone network is in keeping with the principle of fair competition and reducing the financial burden of consumers.
Hong Kong Telephone Company and its sister company, Hong Kong Telecommunications International, have so far been able to provide satisfactory services. Thanks to Hong Kong being a thriving international marketplace whose demand for telecommunications services far exceeds that of any South East Asian country, Hong Kong Telecommunications Company Limited, which is the parent company of both Hong Kong Telephone Company and Hong Kong Telecommunications International, has been able to achieve phenomenal growth in recent years. Meanwhile, given that telecommunications equipment has become increasingly inexpensive leading to steadily falling operating costs, the company was able to make an after-tax profit of $5.67 billion last year. Admittedly, the profit growth was less than that of last year, but it is equivalent to 43% of its asset value, which is to say that its after-tax profits for the last two years or so have been enough to offset the entire cost of investment. That kind of return rate is very high indeed, and this trend can go on for years. But since the accounts of Hong Kong Telephone Company and Hong Kong Telecommunications International are not separated in the public release, there is no way of getting to know how much of the profit is made from the domestic telephone service and how much of it is made from the international telephone service. We can see from the documents issued by the company when it was publicly listed in 1988 that the Cable and Wireless Company (provider of international telephone service) was able to achieve an after-tax profit of $800 million in the first half of 1988 with its asset value at $1.8 billion. Put in another way, its profit for one year alone was enough to cover its entire cost of investment. It is in the light of this fact that
I agree with Mr Steven POON that the Government should work with Hong Kong Telecommunications International to work out a package deal for reduced tariff for each succeeding year. While it is acceptable that the Company should be entitled to a higher profits in the first couple of years of its operation given its huge investment in equipment, its profits should revert to a reasonable level after a period of time so that the community as a whole will be able to share the economic benefits of advanced science and technology.
Mr Deputy President, with these remarks, I support the motion.
PROF EDWARD CHEN: Mr Deputy President, the Hong Kong Government's existing telecommunications policy is out of date because it has been overtaken by events of remarkable technological change in the past two decades. The telecommunications industry moved from electro-mechanical to semi-electronic switches in the 1970s, and then to digital switching and optical fibre cabling in the 1980s. As a result, the importance of economies of scale in the industry has drastically decreased. In the old days, franchised or natural monopolies were considered essential for minimizing social costs and for ensuring the survival of the operators. Nowadays the telephone networks are providing different and separate services. The major fixed cost in telecommunications is conventionally land for housing exchange facilities. But one advantage of new technologies, among other things, is to economize on floor space. Also, new technologies reduce material cost and make possible a greater flexibility in the provision of services.
All these imply that such concepts as economies of scale, wastage, decreasing All these imply that such concepts as economies of scale, wastage, decreasing cost industry, and natural monopoly are no longer applicable to the telecommunications industry. The Government must face this reality of techno economic changes and reformulate its long-term telecommunications policy.
The disadvantages of a monopolistic market in the telecommunications industry in Hong Kong has been apparent for a long time. At least three issues can be raised in this connection. First, the IDD tariff rates have been much higher than they should be. The major cost components of long distance transmission decline by 8% to 20% a year in the 1980s, but IDD tariffs have fallen by less than 5% a year in real terms. As a result of its monopolistic power the Hong Kong Telecommunications International (HKTI) can enjoy a 60% to 70% net profit margin. If international rates were cut by 50%, HKTI could still obtain a 10% to 20% net profit margin which is normal for businesses in competitive markets. The amount of over-payment by consumers in
this case is estimated to be HK$2 billion a year. The fact that Hong Kong IDD international tariff rates are low by international standards does not preclude the possibility that our rates can be even lower.
The second problem of a monopolistic market in Hong Kong's telecommunications The second problem of a monopolistic market in Hong Kong's telecommunications industry is discrimination against the small businesses and individual consumers. This is because large businesses and multi-national corporations can bypass the normal international rates by leasing private circuits. Smaller businesses and individual consumers cannot afford to do this and they are also prevented from getting this benefit indirectly because the resale of leased circuit capacity is not permitted under the existing franchise arrangement of the Government with HKTI.
The third problem is misallocation of resources resulting from price discrimination and cross-subsidization in Hong Kong's monopolistic telecommunications industry. At present, the price differences between local and international services are not based on cost differences. For example, in the data communications service, international rates are 16 to 25 times higher than local rates, while international services cost only 1.5 to two times more to supply than local services. It is also argued that this price discrimination makes cross subsidization possible and enables Hong Kong to enjoy a very low rate for local services. But in a general equilibrium framework, this cross-subsidization distorts the allocation of resources in as much as local services are over-used and resources for providing local services are over-employed. Such resources could have been used more efficiently in other sectors of the economy. Under the present level and structure of tariffs for local services, indiscriminate users are inevitable.
Against this background, a general liberalization of the telecommunications industry in Hong Kong must be a target of government policy. The first step should be the opening up of local telephone services by introducing a second network in 1995, on the expiry of the franchise of the Hong Kong Telephone Company. Meanwhile, the Government should consider price capping to replace rate of return regulation as a means of control. The advantage of price capping in promoting efficiency is well known, and it has proven experience in the United Kingdom. In the CPI minus X formula, X should be set at no less than 4% in the first instance. This is because in one important research work it is estimated that the total factor productivity increase has been 8.6% per annum in Hong Kong's telecommunications industry in the 1980s. Assuming at least half of the benefits of the increase in efficiency should be passed on to the consumer, X should not be smaller than 4.
More importantly, and as soon as possible, HKTI should be persuaded to do two More importantly, and as soon as possible, HKTI should be persuaded to do two things, although its franchise will not expire until the year 2006. First, HKTI should lower its IDD rates considerably in view of its high net profit margin. It is not unrealistic or unreasonable to ask HKTI to lower the international rate by, say, 10% in the first year and 5% each year in the coming three-year period. Second, HKTI should allow the resale of leased circuit capacity to third parties so that smaller businesses and individual consumers can also benefit from such private networks. Resale of domestic and international circuits has been legalized in the United States since 1981, resulting in more competition and lower charges for the general public. An additional importance of this partial liberalization in international service is to reduce the possibility of the existing company practising cross-subsidization for the purpose of out-competing the second operator, if domestic service will indeed be opened up in 1995.
If a second network is to be established, the second operator must be given a If a second network is to be established, the second operator must be given a fair chance to survive. Some of us might fear that any decrease in international rates will lead to a drastic increase in local telephone charges. This fear is unwarranted. First of all, too low a price is not really desirable because it leads to misallocation of resources for the economy as a whole, and in practice the increase in local telephone charges should not be considerable. This is because the existing operator cannot afford to increase charges significantly in the face of the competition of a second operator. Moreover, experience in Japan and in the United States has shown that the demand for international telecommunications is often quite elastic. Rate reduction can lead to revenue increases rather than decreases.
With these words, I support the motion.
MR VINCENT CHENG: Mr Deputy President, I am for greater competition and I agree that the Government should formulate a telecommunications policy as soon as possible, taking into consideration technological changes and the changes in Hong Kong society.
Since some Honourable Members have already spoken or will speak eloquently on the merits of a second network, I would like to play the role of devil's advocate to remind ourselves of the practical problems that we may face if we decide to do so.
No comments yet.
Private notes are available after approval.