HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3087 OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 28 April 1993
The Council met at half-past Two o'clock
PRESENT
THE PRESIDENT
THE HONOURABLE JOHN JOSEPH SWAINE, C.B.E., LL.D., 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 JEREMY FELL MATHEWS, C.M.G., J.P.
THE HONOURABLE ALLEN LEE PENG-FEI, C.B.E., J.P.
THE HONOURABLE STEPHEN CHEONG KAM-CHUEN, C.B.E., J.P. THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE HUI YIN-FAT, O.B.E., J.P.
THE HONOURABLE MARTIN LEE CHU-MING, Q.C., J.P.
THE HONOURABLE DAVID LI KWOK-PO, O.B.E., J.P.
THE HONOURABLE NGAI SHIU-KIT, O.B.E., J.P.
THE HONOURABLE PANG CHUN-HOI, M.B.E.
THE HONOURABLE SZETO WAH
THE HONOURABLE TAM YIU-CHUNG
THE HONOURABLE ANDREW WONG WANG-FAT, O.B.E., J.P.
THE HONOURABLE LAU WONG-FAT, O.B.E., J.P.
THE HONOURABLE EDWARD HO SING-TIN, O.B.E., J.P.
THE HONOURABLE RONALD JOSEPH ARCULLI, J.P.
3088 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 THE HONOURABLE MARTIN GILBERT BARROW, O.B.E., J.P. THE HONOURABLE MRS PEGGY LAM, O.B.E., J.P.
THE HONOURABLE MRS MIRIAM LAU KIN-YEE, O.B.E., J.P. DR THE HONOURABLE LEONG CHE-HUNG, O.B.E. 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, O.B.E., J.P. THE HONOURABLE ALBERT CHAN WAI-YIP
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 EMILY LAU WAI-HING
THE HONOURABLE LEE WING-TAT
THE HONOURABLE GILBERT LEUNG KAM-HO
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3089 THE HONOURABLE ERIC LI KA-CHEUNG, J.P.
THE HONOURABLE FRED LI WAH-MING
THE HONOURABLE 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, J.P.
THE HONOURABLE ZACHARY WONG WAI-YIN
DR THE HONOURABLE TANG SIU-TONG, J.P.
THE HONOURABLE CHRISTINE LOH KUNG-WAI
THE HONOURABLE ROGER LUK KOON-HOO
THE HONOURABLE ANNA WU HUNG-YUK
ABSENT
THE HONOURABLE LAU WAH-SUM, O.B.E., J.P.
IN ATTENDANCE
THE HONOURABLE MRS ANSON CHAN, C.B.E., J.P.
SECRETARY FOR THE CIVIL SERVICE
MR YEUNG KAI-YIN, C.B.E., J.P.
SECRETARY FOR THE TREASURY
MR ALISTAIR PETER ASPREY, O.B.E., A.E., J.P.
SECRETARY FOR SECURITY
3090 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
MRS ELIZABETH WONG CHIEN CHI-LIEN, I.S.O., J.P. SECRETARY FOR HEALTH AND WELFARE
MR RONALD JAMES BLAKE, J.P.
SECRETARY FOR WORKS
MR ANTHONY GORDON EASON, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
MR GORDON SIU KWING-CHUE, J.P.
SECRETARY FOR ECONOMIC SERVICES
THE CLERK TO THE LEGISLATIVE COUNCIL
MR CLETUS LAU KWOK-HONG
THE DEPUTY CLERK TO THE LEGISLATIVE COUNCIL MR PATRICK CHAN NIM-TAK
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3091 Papers
The following papers were laid on the table pursuant to Standing Order 14(2): Subject
Subsidiary Legislation L.N. No.
Import and Export (General) (Amendment)
Regulation 1993 ...................................................................................... 111/93
Import and Export (Fees) (Amendment)
Regulation 1993 ...................................................................................... 112/93
Admission and Registration (Amendment)
Rules 1993............................................................................................... 121/93
Commercial Bathhouses (Urban Council)
(Amendment) Bylaw 1993 ...................................................................... 122/93
Food Business (Urban Council) (Amendment)
Bylaw 1993 ............................................................................................. 123/93
Frozen Confections (Urban Council)
(Amendment) Bylaw 1993 ...................................................................... 124/93
Funeral Parlour (Urban Council) (Amendment)
Bylaw 1993 ............................................................................................. 125/93 Milk (Urban Council) (Amendment) Bylaw 1993 .......................................... 126/93
Offensive Trades (Urban Council) (Amendment)
Bylaw 1993 ............................................................................................. 127/93
Public Swimming Pools (Urban Council)
(Amendment) Bylaw 1993 ...................................................................... 128/93
Swimming Pools (Urban Council) (Amendment)
Bylaw 1993 ............................................................................................. 129/93
Undertakers of Burials (Urban Council)
(Amendment) Bylaw 1993 ...................................................................... 130/93
Dutiable Commodities (Liquor Licences)
(Specification of Fees) (Urban Council Area)
Notice...................................................................................................... 131/93
3092 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
Places of Public Entertainment (Licences)
(Specification of Fees) (Urban Council Area)
Notice...................................................................................................... 132/93
Forests and Countryside (Amendment)
Ordinance 1993 (14 of 1993)
(Commencement) Notice 1993................................................................ 133/93
Sessional Papers 1992-93
No.73 — Report of Changes to the approved Estimates
of Expenditure approved during the third quarter of 1992-93
Public Finance Ordinance: Section 8
No.74 — Hong Kong Council for Academic Accreditation
Annual Report 1991-92
No.75 — Report of the Special Meetings of the Finance Committee on the Draft Estimates of Expenditure 1993-94
No.76 — A Report of the Director of Audit on the results of
value for money audits
March 1993
Director of Audit's Report No.20
Addresses
Report of Changes to the approved Estimates of Expenditure approved during the third quarter of 1992-93
Public Finance Ordinance: Section 8
SECRETARY FOR THE TREASURY: Mr President, in accordance with section 8(8)(b) of the Public Finance Ordinance, I now table for Members' information a summary of all changes made to the approved Estimates of Expenditure for the third quarter of the financial year 1992-93.
Supplementary provision of $4,208.9 million was approved. This included $2,300 million for a one-off grant to the Lotteries Fund for the implementation of improvements in the social welfare programme and $988.3 million for additional expenditure on pensions. The supplementary provision was fully offset, either by savings under the same or other Heads of Expenditure, or by the deletion of funds under the Additional Commitments subheads.
During the period, non-recurrent commitments were increased by $4.8 million, new non-recurrent commitments of $3,069.9 million were approved, and approved non-recurrent commitments of $40.1 million were revolted.
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3093
In the same period, a net decrease of 604 posts was approved. This was mainly attributable to the deletion of posts as a result of civil servants having opted for service with the Hospital Authority.
Items in the summary have been approved either by Finance Committee or under delegated authority. The latter have been reported to the Finance Committee in accordance with section 8(8)(a) of the Public Finance Ordinance.
Hong Kong Council for Academic Accreditation Annual Report 1991-92
MR RONALD ARCULLI: Mr President, I have pleasure in presenting some of the main features and highlights of the Hong Kong Council of Academic Accreditation Second Annual Report.
Perhaps I could remind you, Mr President, of the Hong Kong Council of Academic Accreditation's main role, mainly to validate degree programmes and review general academic standards of Hong Kong's six non-university tertiary institutions. In addition, the Hong Kong Council of Academic Accreditation monitors and disseminates information on the development of higher education, quality assurance and academic standards at home and abroad. It also maintains working links with accreditation bodies throughout the world. The Hong Kong Council of Academic Accreditation is also an advisory body and in this connection its advice was sought by the Government, other organizations and individuals throughout the year on many occasions and on many various matters including the status and comparability of overseas institutions and their qualifications.
The Hong Kong Council of Academic Accreditation's 1991-92 accreditation programme was heavily influenced by Hong Kong's tertiary education expansion which continued unabated during the year. The Hong Kong Council of Academic Accreditation carried out 46 programmes and one institutional review during the year, an increase of 50%. The consequence of the increased number of reviews is that a greater number of conditions need monitoring. Furthermore, the successful institutional reviews of the new degree awarding institutions, the Open Learning Institute and Lingnan College during the previous year, and the Academy for the Performing Arts during the year have necessitated considerable liaison and consultation in relation to their plans to introduce degree courses. In order to meet its commitment without prejudicing standards, an additional Registrar was appointed and the accreditation programme was given priority over the Hong Kong Council of Academic Accreditation's other activities.
As the institutions increasingly take more responsibility for monitoring and evaluating their own standards and the introduction of new and revised courses eases off, the accreditation programme should make less of a demand and the Hong Kong Council of Academic Accreditation will be able to
3094 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
concentrate more on its other activities and duties. During the year discussions were held with the Baptist College, the City Polytechnic and the Hong Kong Polytechnic about their development towards institutional accreditation following which the three institutions submitted formal applications for accreditation to the University and Polytechnic Grants Committee.
An important aspect of the Hong Kong Council of Academic Accreditation relates to its international dimension and one aspect of this, to support its work, is the maintenance of an international register of around 800 specialist consultants. Of particular note, with regard to international links, significant progress was made during the year in establishing these with the People's Republic of China. Following an accreditation seminar and meeting with People's Republic of China educationists and the State Education Commission and officials concerned with higher education in Shanghai during April, arrangements were made for a Hong Kong Council of Academic Accreditation delegation to visit key institutions and persons in the People's Republic of China. In addition it was agreed to hold a follow-up seminar in Hong Kong during 1993.
The Hong Kong Council of Academic Accreditation administers and produces the newsletter of the International Conference on Quality Assurance in Higher Education which now numbers 34 member organizations in 22 countries and has planned a conference in Montreal during 1993. During the year the Hong Kong Council of Academic Accreditation established or published two newsletters, a handbook and edited and prepared a hard text called Quality Assurance in Higher Education, published by Falmer Press containing papers and reports from the Hong Kong Council of Academic Accreditation 1991 International Conference.
Finally, Mr President, I should like to report on the Hong Kong Council of Academic Accreditation's financial position for the year ending March 1992. The Hong Kong Council of Academic Accreditation is non-profit making and tax exempt. It is funded through charging fees approved by the Government for accreditation and related services. Surpluses as appropriate are carried forward and used towards meeting the costs of accreditation in the following year. The income and expenditure account for the year showed an excess of income over expenditure of $2.12 million.
Thank you, Mr President.
Oral answers to questions
Privileged treatment for foreign nationals in the public service
1. MS ANNA WU asked: In view of the last sentence of Part IV of Annex I of the Joint Declaration which reads, "Hong Kong's previous system of recruitment, employment, assessment, discipline, training and management for
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3095
the public service (including special bodies for appointment, pay and conditions of service) shall, save for any provisions providing privileged treatment for foreign nationals, be maintained", will the Government inform this Council of the provisions providing privileged treatment for foreign nationals which are still in existence, the number of foreign nationals who are receiving privileged treatment, the nature of posts they are in and the steps the Government intends to take in this regard?
SECRETARY FOR THE CIVIL SERVICE: Mr President, as we explained within the Civil Service at the time, the provisions of Part IV of Annex I of the Joint Declaration, quoted by the Honourable Member, mentioning "privileged treatment of foreign nationals" referred to the policy of filling a proportion of posts in the Administrative Service and the officer ranks of the Royal Hong Kong Police with British United Kingdom officers and the requirement that all local Administrative Officers be naturalized as British Dependent Territory Citizens before confirmation.
This policy was discontinued in 1984. All grades and positions in the Civil Service have since then been open to all qualified applicants.
MS ANNA WU: Mr President, can the Secretary give us details on any differentials that exist in terms of employment, including perquisites between expatriate and local officers or between different classes of officers depending on source of recruitment and what is the Secretary's rationalization for not calling such differentials "privileged treatment"?
SECRETARY FOR THE CIVIL SERVICE: Mr President, conditions of service of civil servants do not relate to race or nationality and are not granted on that basis. Civil servants are appointed either on local or overseas terms of service, depending largely on their country of origin. With reference to privileged treatment and the definition of what constitutes privileged treatment, I have already answered it in my principal reply.
MR CHEUNG MAN-KWONG (in Cantonese): Mr President, what is the definition of "expatriate officers"? Will the Administration consider putting in place an appropriate mechanism so that expatriate officers who have resided in Hong Kong for seven years or more and have obtained the right of abode in Hong Kong may, without affecting the localization process, be employed as local officers and therefore cease to receive privileged treatment?
PRESIDENT: Do you have the answer, Secretary?
3096 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
SECRETARY FOR THE CIVIL SERVICE: Mr President, as I have already explained, conditions of service do not relate to race or nationality. So from that point of view, expatriate versus local officers is not a material consideration. As regards localization policy, I have nothing to add to the replies that have already been given in answer to previous questions before this Council.
PRESIDENT: No further questions? Next question. Mr Peter WONG. Mr Peter WONG is not here. Mr Martin BARROW.
Voluntary return programme for Vietnamese migrants
2. MR MARTIN BARROW asked: Will the Government inform this Council what steps are being taken to speed up the voluntary return programme of Vietnamese migrants?
SECRETARY FOR SECURITY: Mr President, the Voluntary Repatriation Programme is run by the United Nations High Commissioner for Refugees (UNHCR). Over 28 000 Vietnamese migrants have already returned home under this programme, including an average of 1 000 per month since our agreement of October 1991 with the Vietnamese Government on orderly repatriation. In recent months, the UNHCR have stepped up their efforts to promote voluntary repatriation. Measures being taken include surveys to identify the specific needs of the camp population for information on Vietnam, photograph exhibitions on Vietnam, screening of Vietnamese television programmes, dissemination of bimonthly bulletins in Vietnamese on developments in Vietnam, and regular reports on UNHCR's monitoring of those who have already returned to Vietnam. The UNHCR has also organized visits to the camps by consular officials to provide information on investment programmes in Vietnam.
Further initiatives are planned by UNHCR for the coming months, including establishing information centres in each detention centre, production of additional videos showing the conditions facing returnees to Vietnam, and the distribution of additional Vietnamese language newspapers and magazines in the camps.
For our part, we will do all we can to facilitate and supplement the UNHCR's efforts in promoting voluntary repatriation. We have recently converted a section of the Whitehead Detention Centre into a Voluntary Repatriation Centre with a capacity of more than 2 500 at any one time. We are now converting another section of Whitehead Detention Centre into a further Voluntary Repatriation Centre with a similar capacity.
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3097
MR MARTIN BARROW: Mr President, given that the root cause of the situation is the state of the Vietnamese economy, is the Secretary aware of the impact of the Hong Kong aid programme and is the Hong Kong Government pressing the United Kingdom to step up its aid to Vietnam?
SECRETARY FOR SECURITY: Mr President, I believe that the Hong Kong aid programme has been successful at a local level in Vietnam and we will be offering to brief Members on this programme at a forthcoming Security Panel meeting. I believe also that perhaps the major aid programme in Vietnam at the present time is the European Community programme to which the United Kingdom Government is a major contributor.
MR TAM YIU-CHUNG (in Cantonese): Mr President, will the Governor be asked to urge the United States Administration, during his visit to the United States, to provide more financial assistance to Vietnam so as to speed up the Voluntary Repatriation Programme in Hong Kong?
SECRETARY FOR SECURITY: Mr President, I think that at the moment with the United States trade embargo there is actually no financial assistance from the United States to Vietnam. It is certainly our wish and also the policy of the United Kingdom Government that both the United States trade embargo on Vietnam and the ban on the access of the Vietnamese Government to international funding through the International Monetary Fund and the World Bank should be lifted.
MR WONG WAI-YIN (in Cantonese): Mr President, in his reply the Secretary mentioned that at present about 1 000 Vietnamese migrants were repatriated every month. I visited Vietnam last year and according to the Vietnamese Government, they could take back more than 1 000 returning migrants a month. Will the Secretary inform this Council whether the Government is having problems in repatriating over 1 000 Vietnamese migrants a month, and if so, what these problems are?
SECRETARY FOR SECURITY: Mr President, the 1 000 I mentioned was an average since October 1991. We have in fact, I think, reached in any one month almost 1 500 and I am sure that at least that number is sustainable and, perhaps, even more than that. But it does of course depend on the number of volunteers coming forward. I think it should also be made clear that when the Vietnamese Government refers to its capacity to take returning migrants I think it must be referring to its capacity to take back migrants from the region as a whole. Hong Kong is certainly the major source of returning migrants to Vietnam but not the only source. I think that on average we probably send back some two thirds of those who actually return to Vietnam.
3098 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
MR JIMMY McGREGOR: Mr President, can the Secretary say, on the basis of the best and worst scenario and in relation to the present rate of return of Vietnamese to Vietnam, how many, if any, Vietnamese will remain in the camps in 1997?
SECRETARY FOR SECURITY: Mr President, it is very difficult to guess or predict the answer to a question like that. But my best guess at the moment would be that on present trend the present population of Vietnamese migrants which is approximately 40 000 should have returned to Vietnam in about three years from now.
MR CHIM PUI-CHUNG (in Cantonese): Mr President, since the liberation of Vietnam on 30 April 1975, a lot of Vietnamese fled the country for the free world. Over the past decade or so, Vietnam had achieved some economic success and Vietnamese refugees in the United States, Canada and Australia kept returning to rebuild the country or help develop trade and other businesses. But arrivals who stay here are called "Vietnamese migrants", in other words, they are non-political refugees. Does the Government have plans to produce videos or conduct publicity activities to bring home to these migrants the message that the Vietnamese economy has improved, so as to encourage them to return as early as possible to help in the reconstruction of their country? This can on the one hand allow returnees to strive for their own economic success and on the other reduce the burden on the people of Hong Kong.
SECRETARY FOR SECURITY: Mr President, I think that perhaps the main theme of the publicity material, which is produced by the UNHCR and made available in the camps in the form of films and also briefings, bulletins, newspapers and so forth, is to seek to explain that Vietnam has changed in recent years and, in particular, that the Vietnamese economy is now doing well and is set to grow further in the future. That, I think, is one of the main themes of the UNHCR publicity and it is intended that we should continue with that.
MR HENRY TANG: Mr President, will the Secretary inform this Council who is paying for the voluntary repatriation of the refugees and also, if it were the UNHCR, whether they would owe us more money than they did one year ago?
SECRETARY FOR SECURITY: Mr President, so far as voluntary repatriation is concerned, both the costs of the flights and the reintegration assistance in Vietnam are paid and always have been paid entirely by UNHCR. They do not owe us any money for that. The money they owe us is for care and maintenance of migrants in our camps in Hong Kong.
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3099 Capital works slippage
3. MISS CHRISTINE LOH asked: In the light of the Government's expressed determination to control underspending due to slippage in capital works programmes, will it inform this Council:
(a) of any mechanisms in place to determine, at any given time, whether the staffing levels for specific projects are appropriate, and whether there is a need for employing consultants or other experts; and
(b) what measures are taken to ensure that the directorate staff are promptly informed of problems requiring rectification?
SECRETARY FOR WORKS: Mr President,
(a) Works Directors are responsible for the implementation of projects under their control. Accordingly, they are responsible for deciding the appropriate staffing levels which they determine using various methods ranging from empirical approaches based on past experience and comparison with similar current projects to more resource based systems such as the Staff Resource Planning System used by Architectural Services Department. The directors are also responsible for recommending whether consultants should be employed. Their recommendations will then go through formal consultant selection procedures and are subject to the approval of the relevant Consultant Selection Boards.
(b) Works Directors are responsible for the front line monitoring of projects under their control. They are kept informed of the progress of their projects by their project staff via upward reporting procedures and at both formal and informal works progress meetings held at various levels within their departments. Problems giving rise to potential and actual deviations from estimates and from target upgrading, start or completion dates are discussed and resolved by the directorate level staff with assistance from Secretariat branches where appropriate.
In turn, the Works Branch constantly monitors the overall expenditure situation as well as progress on all significant Category A projects, those projects in progress, and Category B projects, those projects under planning. The Public Works Progress Committee (PWPC) has been recently revamped to include participation by the relevant Policy Secretaries. We expect programme, interface or resource problems which cannot be solved at the departmental level to be resolved at the PWPC.
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MISS CHRISTINE LOH: Mr President, obviously the existing system has not been working very well which is why we have problems and the Administration has to make changes. Also the Administration has to deal with an entrenched culture amongst government staff. How will the Administration convince them that under the new system workloads will be properly planned and, secondly, how will the new system reward those who do a good job, for example, by finding legitimate ways to cut cost and how will it deal with those who do not perform their duties efficiently?
SECRETARY FOR WORKS: Mr President, as the Honourable Member said, it is true that the present system does lack the ability in certain ways to deal with the problems government-wide. As has been made clear, it is not only within the works group of departments; it is a government-wide issue and this is the reason why we are now looking through the whole system by way of the consultancy on structure and procedures and information management which is currently in place. As far as the culture is concerned, it is my experience in dealing with the works departments and the staff within the works departments that, as professionals, they are more than anxious to make sure that projects for which they are accountable at the different levels are carried forward effectively, providing they can see that their efforts are not being frustrated by problems outside of their direct control. And it is with some sense of professional pride that they all like to see their efforts rewarded by success at the end of the day. It is obviously not possible to seek to promote rewards in the same sense as, perhaps, could be applied in the commercial sector. Nevertheless we are taking commercial advice, we are taking outside advice through our consultancy and we will bring in, wherever possible, means to encourage and also to apportion responsibility in such a way that the staff concerned at the different levels do their utmost to make sure that within their areas their particular problems are dealt with effectively. Where there are logjams in the system, where there are frustrations, these are the hitches in the system that we intend to flush out by way of our Public Works Progress Committee looking down, from policy level, through the various procedures that are in place now and which we intend to strengthen through the consultancy which is just beginning.
MR RONALD ARCULLI: Mr President, will the Secretary inform this Council on two aspects as far as the underspending is concerned, namely, what proportion of it is due to delay in commencement of a project and, secondly, what proportion of it is due to the delay in settling of final account on the conclusion of a project?
SECRETARY FOR WORKS: Mr President, I have given previously a fairly detailed breakdown of the reasons for the delay, which I would be very happy to supply again to the Honourable Member together with any additional information which may be of use to him. May I just say today that one of the
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3101
key problems that we are finding is the interface between Category A and Category B in bringing forward projects. And this is an area which is receiving our careful observation because it is quite true that projects which we predict 12 months in advance to come forward into a year's annual expenditure forecast are not coming forward and indeed in terms of number we are finding only 50% of new projects coming forward as we expect them to come forward. However, may I say that in terms of value the percentage is much higher than we can expect, perhaps 70% or 80% by value of work to come forward within each year as new projects. But it is an area of concern that we are looking at. As far as final accounts are concerned, I do not think this is a problem. Final accounts traditionally can take some time for settlement, but in terms of the year's annual expenditure I do not see this at the moment as a problem of significance in causing underexpenditure on a year to year basis.
MR ALBERT CHAN (in Cantonese): Mr President, the new system and new measures outlined by the Secretary just now are believed to be able to partly improve the situation of project delays, but as far as I understand, one of the reasons why projects were delayed is objections raised by the public following the gazettal of the projects. As far as my district is concerned, some projects have been delayed for as long as one to two years. For example, the 3/2 Road project in Tsuen Wan has been delayed for more than three years due to objection by the residents there. In this connection, does the Administration have any new measures to resolve this kind of problem in order to avoid delays of projects?
SECRETARY FOR WORKS: Mr President, to bring a typical project through the public works system from concept through to completion can take upwards of seven years, five years of which before we actually get to tender. During that period of five years there is need to consult in a number of areas, particularly where land issues are involved; and together with my colleagues, the Secretary for Planning, Environment and Lands, and the Director of Buildings and Lands, we are addressing problems in this area. And, as the Honourable Member has suggested, we can find that land issues can take upwards of three years in themselves to resolve. Part of the resolution is to make sure that these problems are either anticipated in advance and that the Policy Secretary responsible for the programme is aware of the possible programme delay so that he may adjust the scope of project to find a solution to land problems, or, alternatively, the Secretary himself knowing that there is this land delay may wish the departments concerned to bring forward other projects to ensure that the annual expenditure or forecast expenditure is kept up.
3102 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 Registration of British Dependent Territories Citizens as British Nationals (Overseas)
4. MR MAN SAI-CHEONG asked (in Cantonese): The Government is proposing a phased programme for registering, by age groups, British Dependent Territories Citizens (BDTCs) as British Nationals (Overseas) [BN(O)s] and issuing them with BN(O) passports commencing the middle of this year. Those who do not apply within the specified time and fail to give valid reasons for their late application will lose their eligibility. Will the Government inform this Council:
(a) whether this arrangement is consistent with the spirit of the Bill of Rights since citizens would be deprived of their right to hold BDTC passports until the 30 June 1997;
(b) whether it has taken into consideration that this arrangement would be unfair to some age groups, especially those aged 18 to 30; and
(c) whether consideration will be given to scrapping the proposal and adopting other methods to facilitate the application for BN(O) status and passports nearer 1996- 97?
SECRETARY FOR SECURITY: Mr President,
(a) There is no inconsistency with the Bill of Rights. A phased programme will not deprive British Dependent Territories Citizens (BDTCs) of any of their rights. It seeks simply to ensure that those BDTCs who wish to register as British Nationals (Overseas) [BN(O)s] before 30 June 1997 and to obtain BN(O) passports before that same date are given the opportunity to do so. They will, however, retain BDTC status and all the rights of that status until 30 June 1997.
(b) It is in practice impossible for the Immigration Department to register and issue new passports to all or most BDTCs who are likely to wish to retain BN(O) citizenship after 30 June 1997, unless that is done in accordance with a phased programme over a period of years. To achieve this, some form of queuing is essential. I do not agree that this is unfair to some age groups. It is the fairest way of guaranteeing that anyone who wants to obtain a BN(O) passport will actually be able do so, before 30 June 1997.
(c) We considered a number of other options before we decided to adopt the phased programme.
We considered simply intensifying publicity and setting up special conversion centres. We believe that these measures would not be
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3103
effective, as there are some two and a half million persons who either have passports that expire on or very near to 30 June 1997 or who have no passports at all at present.
We considered differential fees. Again, we decided that this also would have little effect on the great majority who do not need to obtain or renew their passports until close to 30 June 1997.
We considered separating the registration from the issuing of passports. However, this is not possible, because the United Kingdom Memorandum has linked the retention of BN(O) status after 30 June 1997 to the holding of a BN(O) passport on that date. All BN(O)s, therefore must hold or be included in a BN(O) passport issued before that date. Separating registration from issuing the passport would give rise to severe practical and logistical problems. To ensure that all passports were issued in time, we would have to have two phased programmes, one for registration and one for the issuing of passports. This would be confusing, especially in the period when the two phased programmes overlapped. It would also be much more costly.
We also considered allowing both the BDTC and the BN(O) passports to be held simultaneously. However, the British Government will not agree to this on security grounds. Doubling the number of passports in circulation would give rise to a much greater chance of theft, forgery, tampering and other abuses. Any inadvertent use of the not-yet-valid BN(O) passport would also confuse immigration authorities in other countries and could affect the status and acceptability of the BN(O) passport.
I believe that a phased programme as proposed is the only practicable means by which every BDTC can be given a chance to apply for the BN(O) status and passport before the 30 June 1997.
MR MAN SAI-CHEONG (in Cantonese): Mr President, will the Government take some substantive actions immediately, if it has not yet done so, to ensure that Hong Kong travellers holding BN(O) or BDTC passports will be given equal treatment and that neither of them will be discriminated against by immigration authorities of other countries when it comes to travelling on these passports and getting visa free access? If this has been done, we would not have heard of a recent news report that a Hong Kong BN(O) passport holder in Germany was asked to get his visa for entry to Canada, while the same did not apply to Hong Kong people travelling on BDTC passports.
SECRETARY FOR SECURITY: Mr President, I think when the BN(O) passport was introduced in 1987, we did make great efforts to ensure that its
3104 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
purpose and status was explained to the immigration authorities of other countries and that it was equally acceptable as a BDTC passport. In general, those efforts have been very successful and I have certainly not heard recently of anybody travelling on a BN(O) passport having difficulty in doing so. There is only one minor discrimination between the two passports at present and that is that Austria does not allow visa free access to BN(O) passports as it does to BDTC passports. We will be taking that up with the Austrian authorities. But in all other respects the two passports are identical and are accepted as equivalent. And I believe that the acceptability of the BN(O) passport is shown very clearly by the fact that of those who do now apply to obtain a passport for the first time or to renew a BDTC passport, over 80% in fact opt for the BN(O) passport.
MR ANDREW WONG: Mr President, I am heartened by the Secretary's answer in that it is the British Government, not the Hong Kong Government, which is opposed to the concurrent holding of BDTC and BN(O) passports option and that the opposition is on security grounds only and not on other grounds. Now will the Secretary kindly convey to Her Majesty's Government the following simple solution to the security problem and endeavour to convince Her Majesty's Government to adopt it, the solution being: for those who wish to hold on to a BDTC passport until 30 June 1997, a BN(O) passport could be issued valid as from 1 July 1997 but to be kept in the safe custody of the British authorities and to be released to the persons concerned upon request after 1 July 1997?
SECRETARY FOR SECURITY: Mr President, that suggestion has been made before and it has been considered. But as I have explained in my main answer, the application and the acquisition of the BN(O) status is linked to the application for a passport and both those things must be completed before 30 June 1997.
MR ANDREW WONG: Mr President, I do not think the Secretary really understood my question. It was upon application for a BN(O) passport that the passport be kept in the safe custody of the British authorities. The passport has been issued. Will the Secretary answer the question in this light?
SECRETARY FOR SECURITY: I think the passport, Mr President, is issued when it is issued to the bearer.
MR HOWARD YOUNG (in Cantonese): Mr President, it was confirmed last week that at least one country (that is, Mexico) has now taken substantive action to make the BN(O) passport superior in status than that of the BDTC passport. With this, we could say that the acceptability of these two types of passport is
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more or less the same now. As to the case of Austria mentioned by the Secretary just now, can tripartite efforts be made by the Hong Kong Government, the British Government and the local tourist industry to persuade the Austrian Government to give equal treatment to BN(O) passport holders?
SECRETARY FOR SECURITY: Mr President, yes, it is certainly our intention to take this up with the Austrian Government and to seek equal treatment for both passports.
MISS EMILY LAU: Mr President, on the 19th of this month, the Secretary briefed the Nationality Subcommittee on this issue and afterwards the Government indicated that it was willing to resubmit this proposal of a phased programme to the Executive Council. Mr President, would the Secretary tell us whether this has already been done, and if so, what the response of the Executive Council is?
SECRETARY FOR SECURITY: Mr President, no, I have not yet done so. But we are intending to put the Legislative Council's concerns on this matter back to the Executive Council very shortly.
DR CONRAD LAM (in Cantonese): Mr President, at a meeting of a Legislative Council panel several years ago, government officials told us that should the public feel dissatisfied after having tried the BN(O) passport for some time, they were free to apply to revert to BDTC passport again. Technically speaking, how long would that process take if the public elect to do so? Will the deadline be 1996 or 1997?
SECRETARY FOR SECURITY: Mr President, I assume that the question refers to someone who obtains a BN(O) passport and then wishes to give it up. I do not know how long that would take. I shall have to give an answer to that in writing. (Annex I)
PRESIDENT: Yes, Dr Conrad LAM.
DR CONRAD LAM (in Cantonese): Mr President, I would like to clarify a point in my question. I did not mean giving up the BN(O) passport; rather I meant converting a BN(O) passport into a BDTC passport.
SECRETARY FOR SECURITY: Yes, as I say, Mr President, I will have to give an answer to that in writing. I do not know the details of the procedure.
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MR JAMES TO (in Cantonese): Mr President, in paragraph (a) of his reply, the Secretary said the purpose of the phased programme in fact was to ensure that BDTCs would have the opportunity to become BN(O)s if they wished to do so. Given that both passports may be subject to a lot of differential treatment we cannot foresee (which one fares better remains to be seen), how could the Secretary ensure that a BDTC passport holder has the right to hold on to that passport up to 30 June 1997? May we say that the Administration is depriving the public of this right merely for the sake of administrative convenience?
SECRETARY FOR SECURITY: Mr President, as I hope I have explained in my main answer, we are not taking away any rights. What we are seeking to do is to make sure that we have an orderly queue for up to as many as 3.5 million people to obtain the BN(O) status and the passport that goes with that status before 30 June 1997. I am afraid I do not accept the basis of the question that there is uncertainty as to the status of BDTC and BN(O) passports. We are very certain as to what the acceptability of those passports is and we are certain that, with one very minor exception, the acceptability is equal between the two.
MRS SELINA CHOW: Mr President, would the Secretary not agree that the phased programme indeed does remove the eligibility of BDTCs to register as BN(O)s if they fail to do so within the specified time? That eligibility being one to which they are entitled until 30 June 1997 if there were no phased programme, would the Secretary agree not to introduce the phased programme until other options have been tried or until Members of this Council are satisfied that for practical reasons it is the best way to guarantee the issuance of BN(O) passports to all those who are entitled?
SECRETARY FOR SECURITY: Mr President, if I could take perhaps the second part of that question first. The problem with trying other options is that if we were to do so and they did not achieve the desired result — and it is our firm belief that they will not achieve the desired result — it would then be too late to institute a proper phased programme as we propose. We need in fact almost all of the four years in order to do this programme in an orderly way, and simply delaying it for two years is not going to achieve any worthwhile result. It has been made public that it has always been the intention to have a phased programme for application for BN(O) status and for the application for a BN(O) passport. I think as long ago as 1985, when the legislation was introduced into the United Kingdom Parliament, this was said and it is indeed clearly set out in the Act of that time. The eligibility to apply right up to 30 June 1997 is in practice an illusion. We cannot have 3.5 million people applying in the last few days or few weeks or few months. Their applications could not be dealt with. They would therefore lose the right if we were to simply let things drift on without taking action to ensure that people applied in an orderly way.
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DR LEONG CHE-HUNG: Mr President, since such a phased programme the Secretary has informed us of would mean a decision by the United Kingdom Government in which Hong Kong people played no part, could the Administration tell this Council why such a decision was taken and passed on to Her Majesty's Government without first informing and/or consulting the people of Hong Kong and this Council?
SECRETARY FOR SECURITY: Mr President, we have sought to publicize this. We publicized it first, I think, in about January this year. We gave further publicity to it in the context of the Estimates when we applied for the resources to implement it and I answered questions on that at that time before the Finance Committee. It is, as one would say, a matter finally for the United Kingdom Government. They are the United Kingdom Government passports; it is a form of British nationality and we had to clear the details of the proposal with the United Kingdom before we were in a position to brief in detail either Members of this Council or members of the public.
DR LEONG CHE-HUNG: Mr President, could the Secretary inform this Council whether the decision was passed on to Her Majesty's Government before it was given publicity in Hong Kong or whether it was the other way round?
SECRETARY FOR SECURITY: Mr President, I am not sure that I can quite remember. Certainly in January we had put proposals at that stage to the United Kingdom Government at the time we announced them in Hong Kong. I cannot quite honestly remember the full sequence of events as to whether we had had a final decision on that at that time from the United Kingdom Government.
DR LEONG CHE-HUNG: Mr President, could Council be given a reply in writing? SECRETARY FOR SECURITY: Yes, Mr President, certainly. (Annex II)
MR CHEUNG MAN-KWONG (in Cantonese): Mr President, when Hong Kong residents fail to renew their identity cards within the specified time, technically speaking, the Administration could still arrange to have them renewed and that right in no circumstances will be removed. Why is there such a technical arrangement this time for the issuing of BDTC passports? That would mean people failing to renew their passports within the specified time will have their rights taken away. Can we call this double standard?
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SECRETARY FOR SECURITY: Mr President, I think that the issue of identity card is actually a rather different matter from the issue of passport and the acquisition of this BN(O) status. We feel that it is necessary to require people, unless they have good reason to the contrary, to comply with a phased programme otherwise we may end up with a situation where people simply delay and we find ourselves in the same position as we would be if we did nothing, in other words, we may have hundreds of thousands or even millions of people applying in the last few months and we would simply not be able to deal with those applications before 30 June 1997.
MR RONALD ARCULLI: Mr President, in answer to one of the questions the Secretary said that a Hong Kong BDTC's right to apply for BN(O) is in practice an illusion, taking the date as at 30 June 1997. And he said also that if they did not apply by that date they would lose their entitlement to BN(O). Can the Secretary please tell me whether that is his interpretation of the United Kingdom Memorandum referred to in his main answer, because it is certainly not, in my view, in the 1986 Order in Council which is the law, as I understand it, that governs the nationality issue?
SECRETARY FOR SECURITY: Mr President, I think I can say that it is not just my personal interpretation of that Memorandum; it is the interpretation of both the Hong Kong Government and the British Government. We are very clear and we always have been since 1984 that the requirement was that both the registration as a BN(O) and the application for a passport had to be completed before 30 June 1997.
MR RONALD ARCULLI: Mr President, the Secretary has not really answered the second part of my question which is: In what law does it state that if one does not apply before 30 June 1997, one will actually lose the right, because it is certainly not in the 1986 Order in Council?
SECRETARY FOR SECURITY: Mr President, it is our interpretation of the undertaking we have committed ourselves to under the Memorandum attached to the Joint Declaration. It will become law if the United Kingdom Government passes the Order in Council that we are proposing and discussing with them.
Post Office's target return
5. MR FRED LI asked (in Cantonese): Regarding the Post Office's target return of 16.7% on turnover set for achievement by 1996-97, will the Government inform this Council:
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(a) why it considers a return rate of 16.7% reasonable; the factors considered when setting the target; and, based on the existing turnover, the rate of increase to be imposed on postal charges in order to achieve the above target; and
(b) the criteria used in setting the levels of different postal charges?
SECRETARY FOR ECONOMIC SERVICES: Mr President, as regards the first part of the question on the rate of return, given the labour intensive nature of the Post Office's operation, a target return based on turnover provides a more meaningful indicator of performance than, for example, average net fixed assets. The figure of 16.7% was set to ensure a fair return to General Revenue on the substantial investment made by the tax paying public in postal operations; in that sense it was broadly comparable to the levels of return set for other public utilities.
The 16.7% target is now being re-examined in the wider context of the review of rates of return for public utilities to be conducted by the Secretary for the Treasury. One factor to be taken into account will be the separation of telecommunications licensing and regulation from postal operations.
As regards the criteria used in setting the levels of different postage charges, the overall philosophy is that, subject to broader social policy objectives and considerations, each service should as far as possible recover its costs.
There are the more basic postal services such as inland and surface mail and what one might term premium services, for example, speedpost. The question of whether and, if so, over what time frame, this cross-subsidy should be phased out is now being examined as part of an evaluation of the option of moving the Post Office to trading fund status. In particular we will be attempting to identify more precisely which groups of postal users are currently the beneficiaries of cross-subsidies, and whether in line with our broader policy goals this situation should continue.
MR FRED LI (in Cantonese): Mr President, the Post Office had an average return of 8% in the past 10 years, which is quite a good return already. Why was the target for the next four years set at 16.7%, which is more than double that of the 8% for the past 10 years?
SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Mr President, the average return for the Post Office in the past 10 years did fluctuate, sometimes over 10% and sometimes less. What Mr LI has mentioned just now is just an average. The figure 16.7% is the basis used within the Government to calculate the rate of return so that it would be fair to both the payers of such services and
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the taxpayers. As for details of how such a figure is arrived at, may I defer to the Secretary for the Treasury for a more detailed reply, either orally or in writing.
SECRETARY FOR THE TREASURY: Mr President, I believe that we could be in danger of talking about two very different sets of figures. The figure of 8% as the rate of return that Mr LI mentioned a short while ago was until 1989, I believe, based on a return on average net fixed assets (ANFA). The figure of 16.7% is return on turnover and this change from the basis of ANFA to that of turnover was decided upon, I believe, in 1989 because it became clear at that time to the Operating Accounts Committee that it was the wrong basis for seeking a rate of return on, one of the reasons being, for example, that the asset base of the Post Office had been grossly undervalued. The figure of 16.7% again is a target figure. There is an underlying rationale for this and I am sure it will be the subject of discussion in the motion debate later this afternoon.
MR MARVIN CHEUNG: Mr President, in the first paragraph of his reply the Secretary says that the figure of 16.7% was set to ensure a fair return to general revenue on the substantial investment made. Could the Secretary please enlighten us as to what the relationship is between the level of the substantial investment made and the turnover of the postal services and whether a similar criteria, that is the criteria based on turnover, is being applied to the other public utilities which he says are broadly similar in nature?
SECRETARY FOR ECONOMIC SERVICES: Mr President, the measurement of the rate of return on the basis of the different indicators, for example, return on turnover or return on average net fixed assets, is based on the different ways in which income, profit and expenditure are related to one another. The general trend is to find the most meaningful comparison to measure the performance of the Post Office in terms of the profit it makes, having regard to what is invested in terms of fixed assets and operating costs. My colleague, the Secretary for the Treasury, has just said that during different times in the past we used different indicators to measure the performance of the Post Office having regard to its ability to make a reasonable profit. I hope I have answered the question Mr CHEUNG asked.
MR MARVIN CHEUNG: Mr President, I was asking the Secretary to enlighten us as to what the relationship is between turnover and the level of investment, which he claims is a valid basis for comparing one to the other? I do not think he has sufficiently enlightened us.
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SECRETARY FOR ECONOMIC SERVICES: May I ask, Mr President, the Secretary for the Treasury to take up that part of the question?
SECRETARY FOR THE TREASURY: Put very simply, Mr President, the answer is this. Of the five government utility type operations that we have at the moment, four of them are very capital intensive and therefore the rate of return we are using on these four operations is a return on average net fixed assets. In the case of the Post Office, a relatively labour intensive rather than a capital intensive operation, we used until 1989 to adopt average net fixed assets as the rate of return, but in that year we changed the basis to a return based on turnover. And as I mentioned earlier, this was partly because it became very clear to the Operating Accounts Committee that the asset base of the Post Office was grossly undervalued. What the Operating Accounts Committee faced in the year 1989 was the difficult question of how the rates of return based on turnover should be determined. The Accounts Committee went into a great deal of research, including points of law, and it came to the view that as a target it would be right and proper to aim for a rate of return of 16.7%. The underlying philosophy for this figure is a very simple one. In the course of its research into charging based on turnover, the Accounts Committee found that there were precedents in countries with a common law base to the effect that where the government provides a service but the charging of fees for that service is not supported by primary legislation, then the government would be entitled to charge for that service to recover costs and to make a modest return over and above costs — and the courts in the cases that we have found have mentioned a figure of, say, 20%. Now if one bases 20% on turnover, in other words if one has a numerator of 20% and a denominator of 120%, this will work out at roughly 16.7%. And as my colleague quite rightly says, this is the sort of basis that a review of rates of return could usefully address.
PRESIDENT: We are running out of time and as there is a motion debate on this very topic I am going to pass to the final question. Mr Peter WONG.
Green Paper on fee charging for hospital and health care services
6. MR PETER WONG asked: In the light of the statement by the Secretary for Health and Welfare in this Council on 29 April 1992 that a Green Paper on fee charging for hospital and health care services would soon be published for public consultation, will the Administration inform this Council when the Green Paper will be published?
SECRETARY FOR HEALTH AND WELFARE: Mr President, a document on long-term strategy and health care reform, drawing from the expertise and experience of relevant health care reforms both locally and in other countries, is
3112 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
being finalized and translated. The document is expected to be ready by mid-year for extensive public consultation.
MR PETER WONG: Mr President, would the Secretary inform this Council of the reasons for the delay in the publication of this consultation paper which was promised for the end of 1992 in her statement of 29 April 1992?
SECRETARY FOR HEALTH AND WELFARE: Mr President, looking back to the statement I made in 1992 and with the beauty of hindsight, I am surprised that I was so precise about timing at the time. In the Oxford Dictionary the word "soon" is defined as, I quote, "not long after a specified time". The time I specified was 1993, and I do not think I even did that. I did that subsequently. So I am confident I am still within the original time frame and the meaning of the word "soon", and in so saying I think criticism about delay, in ignorance of the monumental effort that has gone into the work done by so many experts behind the scene, is to do them injustice and to do the document incomplete understanding.
DR LEONG CHE-HUNG: Mr President, will the Secretary inform this Council of her timetable for implementing the strategy of this document, once it has passed through public consultation? And I do hope she can be precise too in this estimation.
SECRETARY FOR HEALTH AND WELFARE: Mr President, much depends on the voice of the people. In charting the way forward, our emphasis is on removing remediable flaws, rationalizing the financial structure of public health services and facilitating interface between the public and private sectors. We believe these complex issues to be the key issues for resolution and long-term solution to many of the existing system shortcomings. We have focused on many options; so the exact timetable for implementation would depend on the outcome of consultation. Here we put consumers first. I think consumers, being placed as the most important people in our health care system, we have got to defer to their view after consultation.
DR LAM KUI-CHUN: Mr President, the basis for fee charging for public health service is to increase public revenue for health expenditure. In view of the huge government surplus accumulated over the last two years, what is the point for considering further increases in public revenue at present?
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SECRETARY FOR HEALTH AND WELFARE: Mr President, may I respectfully suggest that the object of the document which will be for extensive public consultation is not to raise fees. If it was for that, we would not need the Green Paper; we could raise fees even under the existing system. I would like to restate that over the last two decades health care in Hong Kong has evolved to be of a high standard and at a low cost to users. The evolution is a continuing process. New goals are set, old boundaries are redrawn. The 1974 Medical White Paper, the 1985 Scott Report and the 1990 Primary Health Care Report have all contributed to the impetus for change and to recent milestones including the setting up of the Hospital Authority and the Academy of Medicine. I think the document which will be placed before this Council will take stock of the current practices and fashion a possible response to community needs and future challenges based on the good foundation that we have now.
Written answers to questions
Image boosting for Hong Kong
7. MR HOWARD YOUNG asked: Will the Government inform this Council whether there are plans to improve traffic conditions in the area along Harbour Road and Convention Avenue and to alleviate the problem of sea water pollution nearby in order to boost the image of Hong Kong among overseas visitors?
SECRETARY FOR TRANSPORT: Mr President, eastbound traffic in Harbour Road is affected by on-street loading and unloading activities near the Harbour Centre. To alleviate this problem, a new lay-by will be provided outside the Harbour Centre. Work will commence in June for completion in August 1993.
To serve longer-term traffic needs, provision has been included in plans for the future Central and Wan Chai Reclamation for an underground Central and Wan Chai Bypass running parallel to Gloucester Road, and linked to the Island Eastern Corridor.
With regard to sea water pollution in the area, the Central, Western and Wan Chai West Sewerage Master Plan Study has recommended a programme of improvements to eliminate the improper discharge of sewage and polluted water from storm drains and to replace or repair sewers. Detailed design of the recommended works will start shortly. A second study for Wan Chai East and North Point will be completed by the end of this year.
Amendments to the Water Pollution Control Ordinance, introduced into this Council in December 1992, will complement these sewerage master plans by strengthening the requirement for all private lots and buildings to make proper connections to the sewerage system.
3114 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 Waterborne passenger and freight traffic between Hong Kong and Guangdong
8. DR HUANG CHEN-YA asked (in Chinese): In view of the increase in the number of passengers travelling by sea and the amount of cargoes being similarly transported between Hong Kong and Guangdong, will the Government inform this Council:
(a) of the current statistics relating to such activities and the forecast for the next three years; and
(b) whether there are any development plans to enhance the capacity of the vessels and berthing facilities to meet future needs?
SECRETARY FOR TRANSPORT: Mr President, the Government does not keep statistics on the shipment of cargo between Hong Kong and China on a province-by-province basis. We do however maintain data on cargo movement between Hong Kong and ports in the Pearl River Delta, known as the river trade.
During 1992, some 17 million tonnes of river trade cargo was handled in Hong Kong, an increase of about 1% over 1991. We expect a growth rate of between 6% and 10% per annum over the next three years. To meet longer-term demand, the Port and Airport Development Strategy recommended the establishment of a River Trade Terminal in Tuen Mun Area 38, for which expressions of interests from the private sector are currently being examined by the Government.
As regards passenger traffic, 5.2 million people travelled to and from the Pearl River Delta ports (excluding Macau) in 1992, an increase of about 24% over 1991. A growth rate of about 16% per annum is estimated over the next three years.
We are not aware of any concrete plans by the ferry service operators to enhance the capacity of their vessels, although it is known that in general terms they are expecting to replace smaller vessels with larger ones in due course. For the time being the capacity of vessels is considered adequate.
Based on present forecasts, the existing ferry terminals should be able to cope with demand for the time being. New pier facilities will be needed in the longer term, and the Director of Marine will shortly begin a review to determine when and where these will be required.
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3115 Appointment of an expatriate as the Secretary for Financial Services
9. MISS EMILY LAU asked: On 10 March 1993, the Secretary for the Civil Service reassured this Council that all Policy Secretaries or future principal official posts would be filled by local officers in advance of 1997. Will the Administration inform this Council whether the recent appointment of an expatriate officer to the post of Secretary for Financial Services may result in his being directed to retire before 1997 under the terms of the Compensation Scheme, and if so, how much compensation it will have to pay to the officer concerned?
SECRETARY FOR THE CIVIL SERVICE: Mr President, the Administration has given an assurance that all future principal official posts will be filled by qualified local officers in good time before 1997. In order to do this we are developing a pool of qualified local officers from whom future principal officials can be selected. This will necessitate the compulsory premature retirement or supersession of a number of overseas permanent and pensionable officers over the next few years.
Apart from compulsory retirement or dismissal on disciplinary grounds, it is not possible to remove a permanent and pensionable officer before normal retirement age. The Limited Compensation Scheme was approved, funded and introduced in 1987 to provide a mechanism to prematurely retire or supersede about 100 overseas officers, mainly in the administrative service and the Police Force, where necessary, on grounds of localization or constitutional change. The Limited Compensation Scheme was approved by Executive Council and Finance Committee after consultation with the Chinese and the staff associations concerned.
In these circumstances any overseas permanent and pensionable officer holding a substantive rank at Administrative Officer Staff Grade A, irrespective of any current appointment as an acting Secretary and whether he is subsequently promoted to Secretary level or remains in his present substantive rank, is likely, at some stage before 1997, either to be directed to retire or to be superseded under the provisions of the Limited Compensation Scheme. The compensation payable in each case would be determined in accordance with the detailed provisions of the Scheme. The maximum compensation payable is 4.76 times the annual salary of a non-directorate officer on Master Pay Scale salary point 45. This currently stands at $2.7 million. All eligible officers, including directorate officers, cannot receive compensation above this limit.
3116 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 Grammar, technical and prevocational schools
10. MR LAU CHIN-SHEK asked (in Chinese): Will the Government inform this Council whether consideration will be given to abolishing the present three-pronged system of grammar, technical and prevocational schools at junior secondary level of our nine-year compulsory education, so as to avoid an early streaming of students and to allow all junior secondary school students to receive the same balanced education?
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, it is the Government's policy to provide different types of schools to cater for the requirements of different students. While all schools teach a common core of subjects, including the Chinese and English languages, mathematics, science, music and physical education at the junior secondary level, the proportion of the curriculum content devoted to practical and technical subjects ranges from 20% in grammar schools to 30% in technical schools and 45% in prevocational schools. The core subjects ensure that the education provided is reasonably balanced, while the range of practical and technical subjects meets the diverse needs of young people in terms of their interests, aptitudes and career aspirations. Enrolment in a particular type of school at Secondary One is mainly a result of parental choice.
The Government considers it desirable to offer different types of balanced education to Hong Kong students. Indeed, with the support of the community, the Government is working towards expanding the range of schools by adding skills opportunity schools and practical schools, following the recommendations made in Education Commission Report No.4.
Incineration method for handling domestic and industrial waste
11. DR SAMUEL WONG asked: Will the Government inform this Council:
(a) how the recently talked-about high temperature incineration method for handling domestic and industrial waste would compare with the current practice of exclusively using landfill for waste treatment in terms of land use, cost, environmental impact, energy generation and so on; and
(b) whether the electricity generated in the incineration process could be put onto the supply grid of the power companies in Hong Kong?
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3117 SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President,
(a) In terms of land use, by virtue of the nature of the activity, the amount of land occupied by a landfill is generally greater than is required for the site of an incinerator. Land used for landfilling can be put to other beneficial uses after its operating life; but so too can an incinerator site if it is decommissioned.
The overall unit cost of the new strategic landfills is estimated at $97 per tonne of refuse. This includes the cost of construction, operation, maintenance and site restoration. For incineration, the estimated overall cost, including capital depreciation, operation and maintenance, is $345 per tonne. Assuming that surplus electricity generated could be sold at rates similar to those which apply, for example, in Macau and Singapore, the unit incineration cost could be reduced to $291 per tonne. These estimates relate to modern landfills and incinerators which have all the necessary environmental control facilities.
The main environmental impact of landfilling is the emission of landfill gas and leachate, whereas for incineration it is aerial emissions including particulate matters, carbon monoxide, sulphur dioxide, nitrogen oxides, heavy metals and possibly dioxin. Whichever method is used for waste disposal, control systems to meet acceptable environmental standards are required.
The energy potential of a landfill in terms of landfill gas generation is about 150 m3 per tonne of refuse. When this energy is converted to electricity based on a conversion efficiency of 10%, the amount of electricity generated will be 85 kWh per tonne. Overseas experience in incineration shows that the electricity generated from an incinerator is in the range of 150 to 550 kWh depending on the nature and characteristics of the waste intake. If a modern incinerator similar to the one in Macau is used in Hong Kong, it will generate electricity amounting to 220 kWh per tonne of waste incinerated.
While the two methods of waste disposal can be compared in this way, they should not be regarded as mutually exclusive. Landfill capacity will continue to be required for non-combustible waste and residues left by incinerators. At the same time, incineration as a means of waste reduction and disposing of special wastes will continue to be considered with other alternatives as modern technology develops and circumstances change.
3118 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
(b) Technically speaking, electricity generated in the incineration process can be fed into the supply grid but the amount will be very small in comparison with the generating capacity of the power companies and the demand. The feasibility of using this potential source will be looked into by the Government in consultation with the power companies.
Capital works programmes
12. MR RONALD ARCULLI asked: Noting that capital works programmes are important in maintaining and improving facilities and infrastructure for the social and economic development of Hong Kong and that the Government plans to spend some $78 billion on such programmes, excluding those related to the Airport Core Programme, in the five years ending 1996-97, will the Government inform this Council of the details of the programmes such as the names of projects, the timing of their construction, the estimated yearly expenditure; and the action the Government will take to prevent any delay in these projects?
SECRETARY FOR WORKS: Mr President, projects in the capital works programme are listed in the publication entitled Public Works Sub-Committee — Papers considered between January and December 1992 issued by Finance Branch in February 1993, a copy of which was sent to all Public Works Sub-Committee (PWSC) and Finance Committee (FC) members in March 1993. The project title and cashflow of all Category A projects (that is, projects in progress) and Category B projects (that is, those due to start within the next five years) are listed in the said publication. All these projects together make up the $78 billion worth of projects announced by the Governor in October 1992. Information on the timing of construction of all Public Works Programme (PWP) projects is available in the works departments in a manual format which cannot be collated by computerized means at this stage. A consultancy has recently been approved by Finance Committee to redress this deficiency among other issues.
As regards the prevention of delays to PWP projects, a detailed briefing on measures to tackle underspending was held on 8 April 1993 for PWSC members. I attach material distributed at that briefing which included a note on the initiatives taken by Works Branch in 1992-93 and new initiatives planned for 1993-94 to improve the Government's performance on the Public Works Programme.
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 FUNDING OF PUBLIC WORKS
1970s - Public Works funded from annual non-recurrent vo
Problems:
no cash-flow certainty beyond next financial year; theoretically pbe halted in mid contract. •
longer term planning for future projects complicated because oover funding.•
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
Early 1980s - CWRF created, resources allocated o"project start" basis.
Annual review undertaken of projects to start in following fionly. Those projects most ready to start given higher priority. •
FC approval sought to funding commitment for complete pready to start. •
Problems remained over planning for projects to start beyofinancial year because of uncertainty as to whether; once desigfunds would be available to start works.•
3120
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
1987 - 5 Year Resource Allocation System introdu
provides for planning of public works expenditure on five-year ba•
growth is determined by forecast trend performance of Hong Kon•
financial planning tool - projects still require to go via PWSupgrading to Cat. A. •
rolling five-year programme, updated on annual basis to include accommodated by economic growth.•
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
1987 - 5 Year Resource Allocation System introduced. (C• RAE carried out in October/November - projects to start in nyear included in Draft Estimates as Category B or new items -permits detailed design to proceed up to the point of being retender:
LegCo Members consulted as part of 1992 RAE leading to finEstimates. New projects such as - •
Route 3 Country Park Section 🖉
North District hospital 🖉
Tuen Mun Highway climbing lanes 🖉
Projects upgraded to Cat. A by FC when ready for tender:•
3122
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
3124
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
3126
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3127 Expenditure on Public Works Projects
1991-92 1992-93
1. Original provision $18,956M $19,739M 2. Revised estimate $14,005M $14,826M 3. Actual outturn $11,557M $14,701M 4. Under-expenditure
A. vs Original provision $7,399M $5,038M Less: Real savings 769M 1,341M
Net underspending $6,630M $3,697M or 35% or 19%
B. vs Revised estimate: Net underspending $2,448M $125M or 17% or 1%
* Provisional figure subject to further adjustments.
P&R Division
Works Branch
7 April 1993
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
3128
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
3130
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 Initiatives to Tackle Under-expenditure
Revamped Public Works Progress Committee to strengthen among policy secretaries ✂
Commissioning a consultancy to work closely with Governreview public works procedures, practices and systems, whmonitored by a steering group chaired by Financial Secretary, sector individuals as members ✂
Entrusting projects to private sector, adopting design and buildand using turnkey contracts ✂
Ensuring timely expenditure forecasting ✂
P&R Division
Works Branch
29/3/93
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
Initiatives to Tackle Under-expenditure
(Cont'd)
Analyzed key reasons for underspending by projects (e.g., inaccestimates) ✂
Held discussions with concerned departments to identify iopportunities ✂
Took initial steps to upgrade information systems and manage(e.g., LAFIS system) ✂
Communicated, within Government and externally, the nature anthe underspending problem; made a commitment to improve ✂
P&R Division
Works Branch
29/3/93
3132
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
3134 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
Speaking note of S for W. Mr. James Blake
for the PWSC briefing on 8.4.93
Charts:
I. Expenditure on Public Works Projects
• Under Expenditure - At the time of preparing the draft estimates, under-expenditure for public works projects (excluding land acquisition) was estimated to be $4.9 billion. Excluding real savings of $1.3 billion, net underspending is $3.6 billion caused by programme changes ($1.6 billion), delay to ongoing projects ($0.9 billion) and startup delay ($1.1 billion). Actual total under-expenditure for 1992-93 is expected to be around $5.0 billion, about the same as forecast.
• We are not complacent but note improvement and a better performance when compared with 1991-92. In % terms, 1992-93 underspending is 19%, down from the 35% of 1991-92. Revised estimates for 1992-93 have been much improved with the actual outturn almost spot on; as opposed to the 17% deviation between actual outturn and revised estimate in 1991-92.
II. Project Cost Profile - 1992-93
• This explains broadly the PWPC and Works Branch monitoring system set up in April 1992. We monitor major projects (20% in number of all projects) representing over 70% of total expenditure. The chart excludes land acquisition and PADS projects.
III. Causes of Under-expenditure 1992-93
• All works departments and EPD were asked to give a detailed analysis of reasons for underspending. This chart illustrates key factors:-
• Savings (26%)
• Lower tender prices and unused contingencies
• Programme changes (33%)
• Change in policy requirements arising from new political, social or economic changes causing re-scheduled policy priorities.
• Startup delay (23%)
• Unable to adhere to scheduled startup dates because of statutory or administrative delays, and/or design and physical problems arising from site/foundation problems.
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3135 - 2 -
• Ongoing projects delay (18%)
• slow progress of works on the part of contractors caused e.g. by bad weather hindering the progress of works.
IV. Government Projects Implementation Programme
& V.
• These 2 charts give an indication to Members of the work required to be done before commencement of Construction for a typical major Government project and a typical minor Government project. The sequence of events are not exaggerated. In fact, a number of parallel actions are illustrated.
• Major project - The sober conclusion is that with EIAs and consultation with DBs and all necessary engineering work, it can take more than 7 years to complete the whole process from an initial idea to turning the key for a major project.
• Even for a minor project where consultants are not required, it can take upwards of 3 to 4 years to implement and complete the works.
VI. Initiatives to Tackle Under-expenditure
• I shall ask Miss Elaine Chung, my Deputy Secretary, to explain what we have done and are doing to tackle under-expenditure.
Works Branch
7 April 1993
3136 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
Speaking note of DS(P&R), Miss Elaine Chung
for the PWSC briefing on 8.4.93
• The improvements you have seen did not happen by sheer chance. Works Branch and Works Group of departments worked hard to improve their performance in 1992/93.
• We have found some of the weaknesses and bottle necks in coordination, reporting and management which have undermined the PWP both before and after construction commencement.
• We took a number of initiatives to turn the situation in 91/92 around, with some success. For example, we have:
• Analysed key reasons for underspending by project.
• Tackled immediately the more significant reasons (e.g. unrealistic budget estimating).
• Held discussions to underline the accountability of concerned departments for their performance including the identification of improvement opportunities.
• Taken initial steps to upgrade information systems and management reports (e.g. LAFIS system)(Ledger Accounting Financial Information System).
• Improved reporting relationships and system to speed up the provision of reliable information as compared to forecast e.g. financial reports are available within 1 week after end of work while previously we had to wait 1 month.
• Standardise monitoring reports on projects e.g. quarterly reports given to PWSC members.
• Told Works departments and DEP to include expenditure on contingency sums only if they could identify such need in 93/94 so that public works estimates do not represent optimistic ambitions. In line with this change, an additional commitments item of $2.8 billion has been provided for in the Capital Works Reserve Fund estimates for 93/94.
• Set up the PWPC in April 1992 and instituted a system of vetting progress of major projects to the point where we are ask to take remedial action if there is a delay of 3 months or more to consider e.g. acceleration of contracts and to resolve interdepartmental issues. The results are very encouraging. About 75% of the projects which PWPC monitors are expected to finish on time or ahead of original schedule and nearly 90% are expected to be within budget.
• Communicated, within Government and externally, the nature and
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3137 - 2 -
urgency of the underspending problem, and made a commitment to improvement. Seminars were held for directorate staff and chiefs.
• These initiatives must be complemented by a more fundamental assessment of the underlying causes of underspending and a comprehensive programme, including an enhanced information system, for improvement. We have articulated a desire "to change the man, not just his clothes". We have expressed the need for a quantum increase in capability and capacity to deliver public works.
• We have revamped the Public Works Progress Committee. This Committee still be chaired by Secretary for Works but with Secretary for the Treasury, Secretary for Transport, Secretary for Planning, Environment and Lands and Secretary for Economic Services as members. With this high-level membership, I expect that problems of interface, priorities and resources which often beset the implementation of works can be speedily resolved. The existing committee of works directors and other representatives will continue to meet as a sub-committee of the new PWPC.
• The S for W has a new and expanded role, authority as well as responsibility for the implementation of the effective & efficient implementation of the PWP having regard to the resources available.
• A lot more work will need to be done, including the need to address sensitively the question of whether the present allocation of role and responsibilities for the planning, management and implementation of the PWP are the most appropriate. A paper has been issued for F.C. on 16th April seeking funding approval to commission a consortium of consultancy firms to work closely with Government staff to review Public Works procedures, practice and systems. The consultants will be steered by a Steering Group chaired by the Financial Secretary with S for W, S for Tsy., SPEL, S for T, SES and a number of private sector individuals as members. A Working Group will also be set up in Works Branch. This issue is closely tied up with the direction of the Government's overall Public Sector Reform Programme which is seeking to modify and clarify the roles of Branches and their Departments. The sort of issues to be explored will include:
• Diagnostic issues e.g. the underlying strategy and organisational impediments to effective project execution, and benchmarking of Hong Kong's approach to public works against best-practice engineering and construction organisation in the public and private sectors. It may be appropriate to adopt some of the financial and other disciplines employed by the private sector to ensure levels of efficiency and service that the taxpayer is entitled to expect.
• Ways to improve the ability of the whole Government to let new projects as scheduled. Here we feel that the Government system collectively is
3138 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 - 3 -
at fault.
• Recommended changes in management systems, including practices and decision-making procedures at each stage of the project (e.g. conceptualisation, approval, design, tendering and construction).
• Proposed changes in organisational structure, including revised roles and responsibilities, and new working relationships to improve interdepartmental coordination.
• Definition of skills to be strengthened, and the number and qualifications of staff required.
• Specification and full prototyping of a management information system for use at different levels of Government.
• Timely expenditure forcasting.
• Earlier commitment of resources to better estimates of projects costs and matters such as environmental issues, land requirements, etc. early in the planning process. This will lead to better programme monitoring.
• The consultants will also explore further opportunities for private sector involvement such as more design and build contracts, turnkey projects etc.
To conclude, we are pulling out all the stops to avoid the recurrence of underspending. The Public Works Programme is a team effort. All the staff of the works departments, Finance Branch and other policy Secretaries are part of that team and we are united in our determination to improve Government's performance. I am confident that in the coming financial year there will be further significant improvements.
Programme & Resources Division
Works Branch
8 April 1993
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3139 Appointments to the Housing Authority
13. MR LEE WING-TAT asked (in Chinese): Will the Government inform this Council: (a) of the criteria adopted in appointing members to the Housing Authority;
(b) whether consideration will be given to appointing more grassroots representatives and elected Members to the Housing Authority; and
(c) whether it is aware of the criteria adopted by the Housing Authority in appointing members to its subcommittees, and if so, what the details are?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President,
(a) Under the Housing Ordinance the Governor can appoint four official members, including the Director of Housing, and an unspecified number of non-official members to the Housing Authority. The official members are appointed with regard to the relevance of their work to housing and related matters. As regards non-official members, factors such as the appointees' backgrounds, expertise, likely contributions to the Authority's deliberations and the balance of views which will accordingly be available to the Authority are all taken into account. The objective is to strike a balance between the broader interests of the whole community and the narrower interests of the occupants of Authority estates, as well as between the various specialisms and expertise of the membership.
(b) In recent years, more members from representative bodies and political groups have been appointed to the Authority. Of the 18 non-official members serving on the Authority at present, about 40% are from the elected membership of the Legislative Council, the municipal councils and district boards. This compares with about 30% in 1989. Some serving members are themselves public housing tenants. The need to appoint members who can reflect a full range of views from the community will continue to be taken into account in future.
(c) The Administration is aware of the criteria that the Authority adopts when it appoints its committees and subcommittees members. At present, the Authority has nine standing committees and one ad hoc committee, covering such areas as estate management, home ownership, building design and maintenance, finance, commercial properties and tenancy appeals. The criteria adopted in appointing
3140 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
members to each of these committees are similar to those for the full Authority, but with emphasis on the particular needs of individual committees in discharging their functions.
Primary One places
14. MR WONG WAI-YIN asked (in Chinese): As Primary One Admission District 73 in Yuen Long had insufficient primary one places for allocation in the past few years, some students were allocated places in schools outside their own districts. Will the Government inform this Council:
(a) how places in the five Primary One Admission Districts in Yuen Long will be distributed for the 1993-94 academic year, including the number of students to be allocated school places through the central allocation system and the number of school places available for allocation; and
(b) whether there will be any shortage of school places in Primary One Admission District 73 in Yuen Long in the next academic year; if so, what the estimated shortfall is and what measures will be taken to minimize the inconvenience caused to parents and students studying in schools outside their own districts?
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the answers to Mr WONG's questions are as follows:
(a) In line with the territory-wide practice, up to 65% of Primary One places in Yuen Long are first allocated by schools at their discretion. The balance of at least 35% is allocated centrally by the Education Department. The distribution of places within the five Primary One Admission (POA) Districts in Yuen Long for the 1993-94 school year is:
ABCDEF
POA
District
Total
capacity for places
Discretionary places
allocated
Capacity for central
allocation (B-C)
Demand for centrally
allocated places
Shortfall (D-E)
D72 2 249 363 1 886 373 nil D73 1 881 1 124 757 998 241 D74 1 615 622 993 282 nil D75 368 95 273 80 nil D76 285 126 159 44 nil
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3141
(b) The above table shows a potential shortfall of 241 centrally allocated places in POA District 73. The Education Department will ask schools within this district to consider operating additional Primary One classes. Other measures include allocating places in adjacent or nearby POA Districts and encouraging schools to operate their own school bus service in appropriate cases.
Unauthorized conversion of agricultural land
15. MR JIMMY McGREGOR asked: With the construction of the new airport, will be Government inform this Council what measures are being taken to prevent unauthorized conversion of the agricultural land on Lantau Island for commercial or industrial use?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, there are at present no apparent signs of unauthorized conversion of agricultural land on Lantau Island for commercial or industrial use. The construction of the new airport and other projects on the island may well generate demand for such uses. Statutory plans, outline development plans and layout plans are therefore being prepared to provide planning control and guidelines for future development. These should help prevent unauthorized and incompatible land uses in the areas covered.
As regards the central and southern parts of Lantau, most of the areas are either covered by statutory plans or are within country park boundaries. Land use can therefore be largely controlled.
The situation is being monitored and appropriate action, such as the preparation of Development Permission Area plans or lease enforcement, will be taken if necessary.
Food premises in the shopping centres of public housing and HOS estates
16. REV FUNG CHI-WOOD asked (in Chinese): At present, a newly completed public housing estate or Home Ownership Scheme (HOS) estate is normally provided with only one Chinese restaurant and one fast food shop in its shopping centre. Owing to the high prices charged by these restaurants, residents of such estates have no other choice but to patronize the fast food shops where the service standard and the varieties and quality of food are inferior to those outside these estates. Will the Government inform this Council:
3142 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
(a) whether its existing policy on provision of food premises in the shopping centres of public housing estates and HOS estates would lead to monopoly of business;
(b) what measures are adopted by the departments concerned to improve the above situation; and
(c) whether consideration would be given to introducing competition, such as bringing in cafes, in order to provide the local residents with more choices?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr President, the Housing Authority's letting strategy for its commercial centres is to provide residents and shoppers with a range of choices by having a good mix of trades. This includes catering outlets. The physical provision will however depend on such factors as local demand, the location and size of the estate.
There are very few newly completed commercial centres in public housing estates which are provided with only one Chinese restaurant and one fast food shop unless the catchment is small. For example, six out of seven commercial centres completed in 1992-93 have more than two catering outlets of different types. Prices charged by Chinese restaurant operators in public housing estates are generally lower, not higher, than comparable establishments in the private sector. As regards the service, variety and quality of food provided by fast food shops in public housing estates, it would be too sweeping to say that they are inferior. Most establishments belong to major chain operations with respectable records.
As regards the three specific questions, the answers are as follows:
(a) Food premises in the Housing Authority's shopping centres, like other trades, are let out by negotiation or tender. There is thus very little chance of a monopoly of business. This is borne out by letting records.
(b) The current letting situation is satisfactory. The Housing Authority has an open mind, however, and welcomes feedback from operators and patrons alike in reviewing the adequacy and quality of service provided by food premises on its estates.
(c) In a typical estate, some 40% of commercial space is leased to food caterers of one kind or another, including restaurants, fast food and take-away outlets, congee/noodle shops and food courts. There is competition already in these shopping centres, but if there is a strong demand for any particular type of food or catering
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3143
establishment, good business sense dictates that the Housing Authority will consider accommodating it.
Finally, residents always have the choice of home-cooking if they find the commercial choices not to their taste.
Rehabilitation centres
17. MR HUI YIN-FAT asked (in Chinese): As the recent setting up of rehabilitation centres for the disabled by the Government have time and again faced objections from residents within their districts, will the Government inform this Council:
(a) what factors are taken into consideration in deciding to set up social welfare units within a district;
(b) when allocating units for rehabilitation centres for the mentally handicapped and people with records of mental illness, whether consideration is given to other special factors, such as objections from the neighbouring residents and, if so, the rationale behind such consideration; and
(c) what administrative guidelines are now in place to specify the stand and measures that the Government should take when faced with opposition from residents?
SECRETARY FOR HEALTH AND WELFARE: Mr President, in deciding to set up a social welfare facility in a certain district, the Government has regard to local needs for the service concerned, the availability of suitable premises, related community facilities, transport, and, where applicable, access for disabled persons.
We consult relevant district boards on the setting up of all welfare facilities, including those for children and youth, elderly, mentally handicapped and ex-mentally ill persons. Should there be any queries about, or objection to, a project from district residents, we will be happy to meet and discuss with them ways to accommodate their views and allay their fears. For instance, we might give special consideration to modifying the physical configuration of a service unit.
The Administration's established policy on the integration of disabled persons into the community was set out in the first White Paper on Rehabilitation, published in 1977. This policy was reaffirmed by last year's Green Paper on Rehabilitation, a subject of extensive consultation in the territory.
3144 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
In handling any public objection, district staff of Social Welfare Department will alert their headquarters in the first instance. If necessary and in conjunction with the non governmental organization running the service, they will approach and discuss with concerned resident groups their grounds of objection. They will further explain to them the nature of the service and seek their views on ways to allay their fears. Staff of the Social Welfare Department (SWD) will also get in touch with the relevant district board and upon its advice, area committee/mutual aid committee, where appropriate, with a view to explaining the Administration's policy on rehabilitation and clarifying queries on the project.
Enhanced public education programmes will also be organized to dispel concerned residents' misconceptions about disabled persons. Throughout this process, staff of SWD will liaise closely with the relevant District Officer of City and New Territories Administration and staff of Housing Department to assess and monitor closely local views.
Drug rehabilitation activities
18. MR CHEUNG MAN-KWONG asked (in Chinese): In relation to the drug addiction treatment activities organized by recognized non-profit-making religious bodies, will the Government inform this Council:
(a) of the existing ways to subsidize these activities; and
(b) whether consideration will be given to assisting such activities by means of cash subsidies, if not, why not?
SECRETARY FOR SECURITY: Mr President,
(a) The Government assists non-profit-making religious bodies by making land and accommodation available at concessionary terms for drug detoxification and rehabilitation centres, for example by reimbursement of the rent for accommodation for such centres in public housing estates.
(b) There are two publicly funded voluntary drug treatment programmes for opiate drug abusers: the out-patient methadone treatment programme operated by the Department of Health and the in-patient treatment and rehabilitation programmes operated by the Society for the Aid and Rehabilitation of Drug Abusers. There is also a counselling service for abusers of psychotropic substances operated by the Hong Kong Christian Service, which has been receiving a government subvention for this purpose since March this year. All three publicly funded voluntary drug treatment and counselling programmes have an open-door admission policy. The
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3145
provision is currently adequate to meet demand. We have no plans to extend cash subsidies to organizations offering treatment based on religion.
Employees retraining
19. MR PANG CHUN-HOI asked (in Chinese): With regard to the progress of employees retraining, will the Government inform this Council of:
(a) the number of staff to be deployed by the Labour Department to monitor the proposed On-the-Job Training Scheme to be launched by the Employees Retraining Board; and the guidelines to be drawn up with employers to ensure that workers can really receive effective on-the-job training and will not be exploited; and
(b) the latest employment rates in respect of graduates of various training courses under the Employees Retraining Scheme; the number of graduates who have secured jobs relevant to their retraining courses, and the number of those whose jobs have no relevance to the courses?
SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the answers to Mr PANG's questions are as follows:
(a) All 18 placement officers of the 10 district offices of the Local Employment Service (LES) will help monitor the proposed On-the-Job Training Scheme to be launched by the Employees Retraining Board. To ensure that workers receive effective on-the-job training and will not be exploited, the Employees Retraining Board requires every firm participating in the scheme to submit a training programme and to appoint a supervisor to look after the retrainees. The firm must also meet certain additional requirements before it is admitted into the scheme, for example, its employment size must be over 20 persons and the wages offered to retrainees must be in line with market rates. Potential abuse of the scheme will be avoided or minimized by careful selection of employers. In the first phase of the scheme which is about to be launched in May, it is the intention of the Board to confine participation to well-established and reputable firms. Employers found to be abusing the scheme will be suspended or disqualified from the scheme.
(b) As at 16 April 1993, 431 retrainees had completed retraining Courses. Of these:
3146 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
(i) 169 did not require the job placement services of the Labour Department and no information is available on the nature of the jobs they have presumably secured;
(ii) the remaining 262 were provided with job placement services by the Labour Department and other training bodies. Of these:
(1) 110 were successfully placed, mostly in jobs directly relevant to their retraining;
(2) 94 eventually secured, by themselves, jobs which might or might not be directly relevant to their retraining; and
(3) 58 were still awaiting placement.
Visitors from Taiwan
20. MR HENRY TANG asked: Will the Government provide the following information in respect of visitors from Taiwan in the past three years:
(a) the total number of visitors and their estimated total spending in Hong Kong;
(b) the number and growth rate of visitors who, on arrival at the airport, were transferred to flights for China; and
(c) the number and growth rate of visitors who stayed for less than 24 hours in Hong Kong?
SECRETARY FOR SECURITY: Mr President,
(a) The number of visitors from Taiwan and their estimated expenditure in Hong Kong in each of the past three years were as follows:
1990 1991 1992
No. of visitors 1 344 641 1 298 039 1 640 032
% increase/decrease compared with the previous year
+18.7% -3.5% +26.3%
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3147
1990 1991 1992
Total expenditure (HK$m) 7,264 7,033 11,811
% increase/decrease compared with the previous year
+30.7% -3.2% +67.9%
(b) The numbers of passengers from Taiwan who, on arrival at the airport, transferred to flights for China were as follows:
Year No. of passengers % increase/increase
1990 405 083 +30% 1991 509 962 +26% 1992 686 216 +35%
(c) The number and growth rate of visitors from Taiwan who stayed for less than 24 hours in Hong Kong are as follows:
Arrive and
depart
within the same day
% Increasel
decrease Overnight
% Increasel
decrease Total
% Increasel decrease
1990 234 556 +126.8% 573 119 +18.8% 807 675 +37.9% 1991 340 434 +45.1% 408 003 -28.8% 748 437 -7.3% 1992 523 260 +53.7% 456 774 +12% 980 034 +30.9%
First Reading of Bills
JUDICIAL OFFICERS (TENURE OF OFFICE) BILL
INTERPRETATION AND GENERAL CLAUSES (AMENDMENT) BILL 1993
Bills read the First time and ordered to be set down for Second Reading pursuant to Standing Order 41(3).
Second Reading of Bills
JUDICIAL OFFICERS (TENURE OF OFFICE) BILL
THE CHIEF SECRETARY moved the Second Reading of: "A Bill to provide procedures for discipline of judicial officers of certain courts and tribunals."
3148 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993
He said: Mr President, I move that the Judicial Officers (Tenure of Office) Bill be read a Second time. The Bill provides for the procedures for the discipline and removal of judicial officers other than judges.
At present, judicial officers other than judges, along with other public officers, are subject to the provisions under Article XVI of the Letters Patent for their discipline and removal from office. The procedures for such purposes are set out in the Colonial Regulations and Disciplinary Proceedings (Colonial Regulations) Regulations. These officers include the Registrar, Deputy and Assistant Registrars of the Supreme Court, Magistrates, Presiding Officers of the Labour Tribunal, Members of the Lands Tribunal, Adjudicators of the Small Claims Tribunal and Coroners.
To underline the independence of these judicial officers from the Civil Service, it is considered that separate provisions for their discipline and removal should be embodied in legislation providing for their tenure of office, rather than in the Colonial Regulations and the Disciplinary Proceedings (Colonial Regulations) Regulations. The Bill, which I now move, is intended to achieve this objective.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
INTERPRETATION AND GENERAL CLAUSES (AMENDMENT) BILL 1993
THE SECRETARY FOR THE TREASURY moved the Second Reading of: "A Bill to amend the Interpretation and General Clauses Ordinance."
He said: Mr President, I move that the Interpretation and General Clauses (Amendment) Bill 1993 be read the Second time.
The Government collects over 5 000 fees and charges, about half of which are stipulated in subsidiary legislation made by the Governor in Council. Our policy is to review fees annually to ensure that the levels are, with certain specific exceptions, at least sufficient to recover the costs incurred by the Government in providing the services of facilities concerned.
Every revision of fees now effected by subsidiary legislation must be submitted to the Governor in Council for approval. The purpose of the Bill now before Honourable Members is to reduce the number of routine fee revisions put before the Executive Council, as part of a wider exercise designed to allow Executive Council Members more time to focus on broader policy and strategic issues.
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The Bill provides that, where under any Ordinance subsidiary legislation has been made by the Governor in Council setting a fee or charge, regulations may subsequently be made by the Financial Secretary varying the level of that fee or charge.
The Bill will not affect cases in which levels of fees and charges are directly approved by this Council. Subsidiary legislation made by the Financial Secretary under the provisions of this amendment will continue to be tabled at the Legislative Council as at present. The Legislative Council's power to monitor and challenge fee proposals will thus in no way be eroded.
Bill referred to the House Committee pursuant to Standing Order 42(3A).
OZONE LAYER PROTECTION (AMENDMENT) BILL 1993
Resumption of debate on Second Reading which was moved on 3 February 1993 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
Committee stage of Bill
Council went into Committee.
OZONE LAYER PROTECTION (AMENDMENT) BILL 1993
Clauses 1, 2 and 4 to 6 were agreed to.
Clause 3
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Mr Chairman, it is a very good illustration of the comprehensiveness of our environmental programmes that last week in these Chambers I introduced the Sewage Tunnels Bill and today I am dealing with protection of the ozone layer. I make no apology for taking Members from those depths to these heights.
I move that clause 3(1)(a) be amended as set out in the paper circulated to Members.
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Clause 3(1)(a) of the Bill gives the Authority further powers in the right of entry and inspection of premises, other than domestic premises, for the purposes of the Ordinance. Clause 3(1)(a) is amended now to define more clearly and precisely the type of "refrigeration equipment" to come under control of the Ordinance.
This amendment has been discussed and agreed by the House Committee. Thank you, Mr Chairman.
Proposed amendment
Clause 3
That clause 3(1)(a) be amended, by deleting the proposed subparagraph (ii) and substituting —
"(ii) any premises (other than domestic premises) in which there is a machine or machinery designed to cool or freeze anything or to function as a heat pump;".
Question on the amendment proposed, put and agreed to.
Question on clause 3, as amended, proposed, put and agreed to.
Council then resumed.
Third Reading of Bill
THE ATTORNEY GENERAL reported that the
OZONE LAYER PROTECTION (AMENDMENT) BILL 1993
had passed through Committee with amendment. He moved the Third Reading of the Bill. Question on the Third Reading of the Bill proposed, put and agreed to. Bill read the Third time and passed.
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3151 Members' motions
PRESIDENT: I have accepted the recommendations of the House Committee as to time limits on speeches and Members were informed by circular on 26 April. The mover of the motion will have 15 minutes for his speech including his reply. Other Members will have seven minutes for their speeches. Under Standing Order 27A, I am required to direct any Member speaking in excess of the specified time to discontinue his speech.
FINANCIAL ARRANGEMENTS BETWEEN THE HOUSING AUTHORITY AND GOVERNMENT
MR FREDERICK FUNG moved the following motion:
"That this Council urges the Government to revise its existing financial arrangements with the Hong Kong Housing Authority, including the waiving of payment of interest and dividends and a reduction in the current excessive land development charges in order to allow the Authority to have more resources to introduce environmental improvement measures in public housing estates; and to increase the supply of land for public housing, so that the Authority can build more public housing units to meet the pressing demand of the public."
MR FREDERICK FUNG (in Cantonese): Mr President, honourable colleagues, the topic I raise today is "financial arrangements between the Housing Authority and the Government". Problems about public housing have worsened in the past few years. It is necessary for the Government to come to grips with them. I believe that Members are all aware that in recent years demonstrations have been held one after another in front of the Housing Authority headquarters. They are a gesture of the public housing residents' dissatisfaction with the way the Housing Authority formulates its policy and allocates resources. As far as I know, the Housing Authority is under enormous constraint in finding solutions for these problems. One of the major constraints is the financial arrangements between the Housing Authority and the Government, which makes it impossible to bring housing benefits to the lower class as soon as possible.
Under the financial arrangements, the Government injected $26.283 billion in non recoverable permanent capital (see note 1) into the Housing Authority. However, the Authority is required to pay to the Government in cash interest set at 5% per annum on the permanent capital and, before the interest, 50% of the profits arising from non-domestic units (such as commercial units, car parks, factory buildings). As regards land value, the Housing Authority need not pay any land premium for its public rental housing. But it has to pay the land cost of its Home Ownership Scheme (HOS), and the value of land calculated at market rate at the time of allocation, less the land cost recovered by the Government, is carried to the account of the Housing Authority.
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The interest and dividends paid to the Government by the Housing Authority during the 13-year period from 1988 to 2001 will amount to $31.2 billion. This heavy financial burden has to be shouldered by public housing tenants. This amount will exceed by $5.2 billion the $26.28 billion the Government lent upfront in 1988. If my proposal that the Housing Authority repay the permanent capital free of interest over 40 years and stop paying dividends to the Government was put into practice with effect from 1994, there would be a usable saving of $17.7567 billion (see note 2) in the next seven years which would not have happened under the original arrangements. Spent on public housing development, the money would be enough for building 68 000-odd units to accommodate about 270 000 people. It is believed this would shorten the waiting time for public housing for approximately 180 000 Waiting List families (the Housing Authority's recent estimate put the figure at 70 000-plus families) and 60 000-plus families affected by clearance.
Another point concerns the inclusion of the market land value of HOS in the accounts of the Housing Authority. The high land price policy pursued by the Government has resulted in a much higher deficit in the Housing Authority's books. This gives the Housing Authority the ground for rent increases — usually tenants are issued with a statement outlining the deficit of the Housing Authority when there is a rent increase — while leaving the poor management and undesirable living environment of public housing estates unimproved. Let me give an example. Over the past year, residents of Tuen Mun, which has recently been plagued by the problem of a rapist on the prowl, have repeatedly demanded that security of public housing estates in the area should be stepped up by recruiting more caretakers, installing closed-circuit television in lifts, erecting more iron gates and so on. And throughout the past 10 years or so, public housing tenants have urged for improvement to the so-called "three joss sticks" type of drying racks. Having been in use for 30 years, this type of drying racks pose a danger to women and the elderly when they hang out the laundry. The Housing Authority has discussed the above security and safety problems on many occasions. However, it has all along taken no action to
On the land cost of HOS, the arrangements made by the Government are also unfair. At present, the Government receives 35% of the building cost of each project from the Housing Authority as site formation cost. It is estimated that the Housing Authority has turned over a total of $4.4 billion to the Government in the past five years. The problem is that, according to the information provided by the Housing Department to the Government, land cost usually accounts for 12% of the building cost. Thus the Government is again making profit, charging three times the land cost here.
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The Government always defends these arrangements, saying that the resources it has invested need to yield a return. I, together with the Hong Kong Association for Democracy and People's Livelihood, disagree with this point. There are two reasons: firstly, since the Government stresses investment and return, why does it not charge independent public corporations, like the Hospital Authority and the Provisional Airport Authority, interest? Why does it employ double standards in its policies? Secondly, when the Government offered the permanent capital, why did it stipulate that the Housing Authority should not repay the principal by yearly instalments but had to pay interest indefinitely, whereas other public organizations, such as the Land Development Corporation and the Kowloon-Canton Railway Corporation, could be allowed to repay the principal by instalments? Why could the Housing Authority not do the same? If the existing practice continues, the total amount of interest paid by the Housing Authority may one day exceed the Government's permanent capital of $26.283 billion. Then the Housing Authority will in turn be "subsidizing" the Government. Is it appropriate to have such practice?
Many people think that it is fitting and proper for the Government to obtain a return on its investment. However, we have to realize that this is not in line with the spirit of the public housing policy. The purpose of the policy is to provide rehousing for those who cannot afford decent and suitable housing in the private market, and to provide rehousing and compensation for those affected by clearance. However, the existence of these financial arrangements, the implementation of the Long Term Housing Strategy and the pegging of HOS prices to market prices all show that the Government has increasingly treated public housing as a profit-making item. As a result, public housing tenants and people who wish to acquire property have to suffer the consequences of escalating public housing rental and property prices. The exceedingly low qualifying income limits set for public housing and the inadequate supply of such housing has made it difficult for Waiting List families, who have a limited income, to be allocated a unit. Such being the case, members of the public naturally have to voice their grievances to the Housing Authority. The public housing policy has lost the function of stabilizing society which it is supposed to have. So far from fulfilling such a function, it has become the source of social problems.
The Housing Department, on behalf of the Housing Authority, is formally discussing the relevant arrangements with the Finance Branch. It is therefore timely for me to move the present motion now. I hope my proposal will bring about changes in two stages. In the first stage, the Government should abolish the practice of requiring the Housing Authority to pay dividends before interest. In the five years since the implementation of the financial arrangements, the Housing Authority has paid $0.29 billion extra (see note 3) to the Government is accordance with the practice. Going through the agreement on the financial arrangements, I could not find any provision stipulating that the Housing Authority is bound to do so. Therefore, the existing practice can be phased out within this financial year and replaced by an alternative practice of paying interest before dividends. The alternative method is fair, because from the
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accounting point of view, the profit after payment of interest is the real net profit. In the second stage, the financial arrangements should be altered completely. The Housing Authority will not have to pay interest. Instead, it will repay the permanent capital over a period of 40 years. The requirement of paying dividends to the Government will be cancelled and the land value of HOS will not be carried to the account at market rate. Furthermore, the excessive price charged for land formation will be reduced. In consideration of the fact that land formation only takes up 12% of the building cost, the Government should be realistic and charge the Housing Authority 12%, not 35% of the building cost. The Housing Authority may use the money to construct more public housing units as well as to upgrade the living environment and management of public housing for the benefit of the lower class.
In view of the sandwich class housing problem — the sandwich class means those with income exceeding the HOS income limit but who cannot afford housing in the private sector — the Housing Authority has dramatically raised the income limits for Waiting List and HOS applicants. The adjustment has resulted in a larger number of people being eligible for public housing (see note 4). From 1990 to 1993, the number of families eligible for rental public housing jumped from 81 500 to 121 000, and the number for HOS jumped from 79 000 to 83 500, reflecting an increase of 48% and 5% respectively. We must not forget that while there is an annual supply of 30 000-odd units in new and old rental estates, there are 16 000 units being demolished each year. In other words, not many units are left for allocation to Waiting List applicants. Hence the waiting time for public housing is prolonged. The factor giving rise to this situation is the limited supply of land for public housing development.
The lack of funds to build more public housing units is only one of the problems faced by the Housing Authority. Another problem which plagues it all the time is land supply. By the year 2001, there will be a shortfall of about 50 hectares of land for the Housing Authority's public housing programmes. However, according to the information supplied to us by the Planning Department, there will be a surplus in land supply for private housing. The surplus is expected to be around 20 hectares by the year 2001. Therefore, it can be seen that the Government does not care much about the implementation of the housing policy. Indeed if the Government is prepared to somewhat change the ratio for different types of land use, the public housing production target can be met earlier. The land use planning I have just referred to is permanent in nature and is presently in an embryonic stage (see note 5). I believe it is possible to raise public housing production if the Government is willing to allocate more land for such purpose. It will help the matter if funds can be made available at the same time.
In conclusion, I hope that the Government will understand that the primary purpose of abolishing the financial arrangements is to allow the Housing Authority to have more capital funds for use with flexibility. The move will also enable the Housing Authority to employ its own resources to boost public housing production and upgrade the living environment. As a
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result, the Housing Authority will no longer be under the constraint of the heavy financial burden and inadequate supply of land. I stress again that my motion does not request the Government to inject additional funds into the Housing Authority. Instead, it requests the Government not to take away too much money from the Housing Authority.
Mr President, I so submit.
Note 1: Permanent capital includes: (i) About $13.488 billion from the Development Loan Fund which is used up but not yet repaid by the Housing Authority; (ii) around $2.795 billion from the HOS Loan Fund; (iii) $10 billion injected by the Government during the five financial years from 1989 to 1994.
Note 2: There will be a saving of $17.7567 billion in the next seven years if, starting from 1994, the permanent capital is to be repaid over 40 years and dividends need not be paid to the Government. The following shows how this figure is arrived at:
(A) Dividends and interest on permanent capital estimated to be payable from 1994 to 2001: $21.2367 billion.
(B) Permanent capital less interest paid on the capital from 1988 to 1994: $26.249 billion - $6.3604 billion = $19.8886 billion
(C) Suppose the permanent capital is to be repaid over 40 years: $19.8886 billion ÷ 40 = $0.497 billion
(D) The total amount repaid from 1994 to 2001: $0.497 billion x 7 = $3.48 billion (E) (A) - (D) = $21.2367 billion - $3.48 billion = $17.7567 billion
Note 3: The practice of paying dividends before interest has cost the Housing Authority an extra $0.29 billion over the years.
1988-89 : $0.054 billion
1989-90 : $0.066 billion
1990-91 : $0.076 billion
1991-92 : $0.092 billion
Total : $0.29 billion
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Note 4: More people have become eligible for rental public housing and HOS. The following shows the change in the number of eligible families:
Rental Public Housing HOS
1990 81 500 79 000 1991 95 400 83 300 1992 114 100 80 800 1993 121 000 83 500
Increase rate (comparing the 1993 figure with the 1990 figure)
48.46% 5.69%
Note 5: According to information, there is no chance for ordinary applicants for public housing to be allocated a unit in the urban areas. The waiting time is around seven years for units in Sha Tin, around three years for Tai Po and two years for Tuen Mun. The waiting time may vary, depending on various factors, the major ones being the financial ability of the Housing Authority and the supply of land.
If Kai Tak Airport can be relocated according to the original schedule, it will release 230 hectares of land for use after 1997. Of the 428 hectares of land to be obtained from West Kowloon Reclamation, 15 hectares will be for public housing development, 38 hectares for purely private residential development and 14 hectares for commercial/residential development. It is not impossible to change this ratio since the planning for much of the area is in an embryonic stage.
Question on the motion proposed.
MR HUI YIN-FAT (in Cantonese): Mr President, in respect of the existing financial arrangements between the Housing Authority and the Government, the latter's commitment and contribution towards supporting the Authority's programme of construction of low cost housing for low income families is reflected in the supply by the latter of premium free land. This notwithstanding, I still think that the Government's financial commitment is insufficient, so much so that the progress of the Authority's programme of construction of public housing is adversely affected. Since many aspects of the existing financial arrangements are indeed unreasonable and given that these arrangements have been in place for five years, I therefore agree that it is time we reviewed these arrangements with a view to ensuring that the Authority will have sufficient funds to accomplish the housing programme set out under the Long Term Housing Strategy that stretches as far into the future as 2001.
HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 3157 I think that the existing financial arrangements are unfair on three fronts: (1) Payment of interest
The Government has already injected a total of $26.283 billion into the Housing Authority as permanent capital within five consecutive financial years beginning in 1988. The principal purpose of this injection is to help the Authority become financially independent, while maintaining sufficient rolling funds to cope with the large volume of housing construction every year. However, the Authority has to pay to the Treasury yearly interest on the permanent capital, amounting to 5% of the Authority's income and expenditure account balance. This is undoubtedly a heavy financial burden. In the Authority's budget this year, for example, the $1.3 billion interest payable to the Government accounts for 4.3% of the Authority's total expenditure of $30 billion. This figure is not to be taken lightly as it is a major factor contributing to the Authority's going from black to red in its books relating to the management of public housing. The average public housing tenant can hardly accept these deficits as reasons for rent increases. Little wonder then that every rent increase proposed by the Authority was met with strong opposition from tenants, who claimed it was fleecing the public for the benefit of the Government. The Authority is chafing under this and yet unable to say it.
In order not to defeat the original purpose of the Government's injection of capital into the Authority, and to reduce the conflict between the Authority and tenants over rents, I think that the Authority should refrain from paying interest to the Government. Even so, the Authority will do no more than just about break even as far as its accounts for management and maintenance of public housing are concerned.
(2) Accounting arrangements
According to the existing Inland Revenue Ordinance, a company may put interest payable on loans on the expenditure side of its account in order to render it tax deductible. However, the Housing Authority is required by the Government to pay an interest of 5% based on its income and expenditure account balance in respect of rental units. In other words, the interest paid cannot be put under the heading of expenditure. This extremely unreasonable accounting arrangement reflects the might and high handedness of the Government. It will affect not only the surplus of the Authority, but even further increase its deficit. I think that even if the Authority is obliged to pay in a certain respect, the payment should be put under the heading of operating expenditure so as to rationalize the accounting arrangements.
3158 HONG KONG LEGISLATIVE COUNCIL — 28 April 1993 (3) Land development costs
Although the Housing Authority is provided with premium free land by the Government for the construction of public housing, it has to pay land cost at prevailing market value as far as HOS developments are concerned. The amount payable is 35% of the building construction costs. However, investigations conducted by the Housing Department revealed that the general cost of land developed by the Department would account for 12% to 15% of the building construction costs. Hence it is evident that the Government is intent on fleecing the public. I think that unless the Government can provide reasonable explanations to this Council, this land cost expenditure must be revised immediately.
Surpluses from non-domestic operations, such as commercial complexes and car parks, are equally shared between the Government and the Authority. While this arrangement cannot be faulted in that the commercial tenants concerned will be discouraged from thinking that the rents they pay are being used by the Authority to subsidize public housing domestic tenants, so doing will enable the Authority to honour its moral commitment to the Government. However, the dividends should be shared equally with the Government only after a deduction of all operating costs including the interest payment.
In order for the Housing Authority to accomplish on schedule the objectives of the housing programme set out under the Long Term Housing Strategy, it is imperative that sufficient funds be made available. But the key lies in ensuring a sufficient supply of land. Therefore, as a member of the Housing Authority, I urge the Government to undertake to provide an additional 50 hectares of land to the Authority, in order to meet the demands for public housing in future and to accomplish the objectives of the Long Term Housing Strategy.
Mr President, I have however reservations about the proposal to abolish dividend sharing between the Authority and the Government. With these remarks and in the light of my holding more or less similar views to those of the Honourable Frederick FUNG as regards abolishing the interest payment and improving the accounting arrangements, I nevertheless support the motion.
MR TAM YIU-CHUNG (in Cantonese): Mr President, housing is the number one headache for the great majority of Hong Kong people nowadays. Some people have to labour and toil throughout their lives for housing. Some have to wait for years. Solving the housing problem is seen as the key to improving the general public's quality of living.
I am a member of the Legislative Council Housing Panel. When panel members reflect tenants' demands to Housing Department officials at meetings, the latter will normally take shelter behind the shield of limited resources. Of course, resources are always limited. But could we work for an appropriate
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level of expansion on the basis of the limited resources? The motion today is precisely a way of solving the problem.
With property prices remaining at a high level, demands for rental public housing and Home Ownership Scheme (HOS) flats must be increasing day by day. Added to this is the lack of solution to problems such as clearance of squatters, bedspace lodgers, sandwich class housing, temporary housing areas and redevelopment of old areas. Hence a more comprehensive and more dynamic housing strategy is undoubtedly needed whereas sufficient financial support is also essential.
The current relationship between the Government and the Housing Authority is essentially one of "contracting". The Government set up the Housing Authority and injected funds and allocated lands for the latter's operations, and then take a certain portion of funds derived from the Authority's operations annually as part of government revenue. There is nothing wrong in principle with this arrangement from the angle of boosting of government revenue. For we all know very well that from the macro social point of view, other items of social infrastructure such as education, health care, environmental protection and social welfare also need massive investments. However, the taking by the Government of large sums of money from the Authority's funds at a time when the housing needs of hundreds of thousands of people are still to be met is open to question. Is the Government trying to slow down the pace of building public housing? Will it not be distorting the objective and even the strategy of the public housing programme once profit-making becomes one of the aims of the programme? Is the current "principal-contractor" financial relationship between the Government and the Housing Authority adversely affecting the Authority's growth? I hope the Government will examine all these questions.
It is obvious that the housing construction programme occupies a very prominent position in the overall programme of social construction. To ensure that housing construction will take on a greater speed to reduce the heavy housing burden on the general public and to relieve the elderly and singletons of their housing predicaments is very clearly the responsibility of the Housing Authority. The Authority therefore undoubtedly needs sufficient resources and land supply, while the availability of funds is equally important. It is hardly convincing if one is to say that the speed with which housing estates are built is constrained only by the shortage of land supply.
At present, the annual interest payment of 5% on the permanent capital injected by the Government, the dividend payment of 50% of net disposable surplus from non-domestic operations and the payment of 35% of building cost for each new housing project as costs for land development all add up as a heavy burden on the Authority. The Authority has to pay such a large sum of expenditure before it can save sufficient money for development purposes. As a result of this, the scale of housing construction will very likely "shrink", even if the objective of housing construction is not distorted. The more than
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$10 billion surplus accumulated by the Authority over the last two years can be construed as the product of a conservative scale of housing construction. Any greater scale of construction, if needed, will certainly result in a tighter financial regime for the Authority. Hence, it is quite fair to deduce from this that the "contracting" terms set by the Government for the Authority are too harsh, so much so that the Authority has to resort to all available means of making profit, thus distracting itself from increasing the speed of housing construction.
As I have pointed out earlier, the Housing Authority has upon its shoulders the task of catering for the housing needs of a variety of people such as singletons, the elderly, sandwich class and people affected by clearance and redevelopment. This has led to a diversification of the Authority's responsibilities as well as its objectives. With the diversification of its objectives, the Authority need to develop, and development needs resources and more flexible financial powers. The current financial arrangements fail to guarantee sufficient financing for the Authority, nor financial autonomy. Therefore, I hope that the Government will review this question and come up with some improvement.
With these remarks, Mr President, I support the motion.
MR ANDREW WONG (in Cantonese): Mr President, I rise to support Mr Frederick FUNG's motion.
First of all, some history. The Government and the Housing Authority came to some new financial arrangements in 1988, by which the outstanding loans of $13.5 billion to the Housing Authority from the Government were written off and turned into a permanent capital injection by the Government into the Housing Authority. A further commitment was made on the part of the Government to have another permanent capital injection of $10 billion. And it was honoured before the end of 1993-94. To judge whether the seemingly reasonable new financial arrangements are really reasonable or not, we have to look at the following:
First, is the capital injection sufficient? Is the $20-odd billion permanent capital injection sufficient? Is the sum large enough to meet the community's demand for public housing? Is it sufficient for the Housing Authority to redevelop the old public housing estates and construct new ones as expeditiously as possible? I am not going to make a detailed financial analysis but would like to point out that the $2 billion (approximately one twelfth of the previous total capital injection) made available in the 1993-94 Budget for the sandwich class housing scheme can benefit merely up to 3 000 families over the next two to three years. Mr President, Honourable Members, the $20 billion permanent capital made by the Government over the years is really too meagre.
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Second, is the money a capital injection or a loan? Under the new financial arrangements, the Housing Authority is not required to repay the permanent government capital but an interest at 5% per annum is payable to the Government. Like any reasonable man, I cannot help asking whether the money is a real capital injection or merely a loan. If it is a capital injection, it is a defensible move to ask the Housing Authority to pay the dividends to the Government. As to whether such a dividend payment is a reasonable arrangement, I would go back to it later. But if it is a loan, why should dividends be paid to the Government? It means that the Government is drawing both the interest and the dividends, does it not? Incidentally, I would like to point out that interest is not payable to the Government in the cases of Mass Transit Railway Corporation (MTRC) and Kowloon Canton Railway Corporation (KCRC). This is simply making fish of one and flesh of the other, that is to favour the two railway corporations and be prejudiced against the public housing tenants. I would like to urge the Government to immediately scrap the present arrangement of requesting the Housing Authority to make interest payment.
Third, high interest rate. The Housing Authority paid a total of $3.85 billion as interest to the Government over the four years from 1988-89 to 1991-92. For the year 1991-92 alone, the interest amounted to as high as $1.23 billion. Mr President, Honourable Members, you must be aware that the Government not only draws interest on the newly injected $10 billion permanent capital, but on the $20-odd billion of so-called permanent capital. What does it mean? Now the Government writes off the original $10-odd billion loans and turns it into permanent capital, a fine-sounding name, but then charge a 5% interest on it. Does the Government really write off the outstanding loan? Or does the Government still regard it a loan? Such kind of false pretences cannot fool people for long.
Fourth, it is inequitable both to charge interest and to share dividends on the part of the Government. At present, according to the present accounting arrangements of the Housing Authority, its operating profits before deduction of interest is used as the base to compute the dividends payable to the Government. Any businessman will know that interest is part of the operating cost and the amount of dividends should be determined after deducting all the operating cost. I have some basic knowledge about this though I have never run a business myself. I hesitate to speculate if there is a secret agreement between the Government and the Housing Authority. But such being the case, the arrangement of charging interest and sharing dividends at the same time is indeed a swindle, by which the Government managed to swell the public coffers to the extent of $0.29 billion over the four years from 1988-89 to 1991-92. I hope that this is an unintentionally mistake and would like to urge the Government to return the $0.29 billion to the Housing Authority at once.
Fifth, the arrangement about the dividend payment leads to some disputes and misunderstanding. The arrangement between the Government and the Housing Authority for the dividend payment only applies to non-domestic
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accounts of the housing estates and the Home Ownership Scheme, that is, commercial facilities such as shopping complex, markets and car parks. Therefore, as a matter of principle, it is not an unreasonable arrangement. Of course the permanent capital should be exempted from interest payment so as to avoid double charging. Still, the dividend payment arrangement does give rise to many unwarranted disputes and misunderstandings. The biggest misunderstanding is that many public housing tenants do not realize that the dividend arrangement does not apply to domestic accounts. The biggest contentious point is that under the 50-50 dividend sharing arrangement, half of the surplus goes to the Government. Why not allow the revenue from non-domestic accounts to serve as buffer fund for domestic accounts and development and construction accounts? Mr President, Honourable Members, allow me to put forward a brand new arrangement here. I propose to abolish the dividend sharing arrangement and that all the surplus should go to the Housing Authority. In case the accrued surplus is in excess of the required expenditure of the Housing Authority in the coming few years, the Financial Secretary should have the discretion to transfer the excessive amount to a specific head under the Housing Authority's capital investment fund accounts. And the money will be returned to the Housing Authority if needs arise. The same can also apply to MTRC and KCRC. Such an arrangement will undoubtedly reduce the flexibility of the capital investment fund and the general revenue accounts. Yet, the flexibility would not be lost completely. Moreover, the profit and loss statement of each public utility company can be seen at a glance. I am not an accountant. And I have to leave it to the experts to put the idea into practice.
Mr President, the Governor Mr Chris PATTEN told us at the 22 April meeting in this Council that the Executive Council did not accept the Housing Authority's proposal with regard to the selling of public rental housing to sitting tenants because the Executive Council did not believe that the proposal was imaginative enough, nor likely to make the sort of impact that we would like to see. Such remarks are really something. I dare not be self-complacent. But I truly believe that the two proposals, that is, waiving of interest on the permanent capital and surplus set aside for Housing Authority, I put forward today are not only in accordance with the principle of equity but also imaginative. By the same token, the proposal on the sale of public housing I put forward to this Council on 6 May last year is also fair and imaginative. It would work.
Mr President, Hong Kong's housing policy looks fine apparently but is rife with problems in reality. I would like to urge the Government, the Executive Council and Honourable Members to keep an open mind and work together to create a Hong Kong where everyone can own his house.
Mr President, Mr Frederick FUNG's motion is a starting point leading us to such a brave new Hong Kong. I support the motion.
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MR EDWARD HO: Mr President, the existing financial arrangements between the Government and the Housing Authority were put in place on 1 April 1988 when the Housing Authority was reorganized. The features of the arrangements are well known and some of them are the subject of Mr FUNG's motion and I therefore will not repeat them. However, there is one feature of the existing financial arrangements which is of special importance in the context of this debate: there is a proviso that "Government will continue to provide the Authority with the funds it requires to meet the housing programme as set out in the Long Term Housing Strategy approved by the Governor in Council".
Thus in establishing the existing financial arrangements, there is an explicit undertaking from the Government that the Authority would never be without the necessary fund to meet its programme under the Long Term Housing Strategy. If the Government were to honour that commitment, and we would expect no less from the Government, then Mr FUNG's worry, as implied in his motion, that without retaining the payment of interest and dividends to the Government the Authority would not have enough resources to satisfy its objectives to meet the housing demand of the public, is groundless.
It is well recognized that the Housing Authority has done a remarkably good job in that it has provided homes for nearly 3 million people and it has met its interim target set out in the Long Term Housing Strategy. It should however be recognized that the strategy was set to complete its target in the year 2001 and housing problem in Hong Kong cannot be solved overnight. It has never been expected that at this time, in the middle of the Strategy Period, housing problem in Hong Kong would have been solved. Certainly much more has to be done before that can be achieved.
The financial arrangements were determined in such a way that the Housing Authority could be largely financially autonomous. This it has done remarkably well. Over the past five years, it has paid to the Government, by way of dividends arising from profits from non-domestic operations and the 5% interest on the permanent government capital in the Authority, a sum of $7.8 billion. In other words, it has repaid the Government a large portion of the $10 billion of funding that has been injected to the Authority.
In the same period of time, some 200 000 units of public housing have been built. Although I have not accounted for the Government's subsidy in terms of premium free land for rental housing, this is no mean achievement. In addition, the Housing Authority has, as at 31 March 1993, a cash balance of some $9.7 billion. Thus, through prudent financial management, the Housing Authority is in a very healthy financial situation. Barring unforeseen circumstances such as rocketing tender prices, this healthy financial position will remain in the coming years. It is difficult therefore to argue that it should waive payments of interests and dividends to the Government at this time.
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Interests and dividends and land development charges paid to the Government from the Housing Authority would go into general revenue. They would form part of the public money to be used for the provision of other services to the public or the building of infrastructure for the community. Reduction of this revenue would mean possible cutbacks in other social services and infrastructure, or increasing revenue from other sources such as taxation, or fees and charges. As long as the continued payment of interests and dividends would not jeopardize public housing programme, it would be difficult to justify the risk of those undesirable consequences.
Contrary to what Mr FUNG implied, public housing programme is not constrained by the lack of financial resources at this time. It is a concern though that it may be constrained by the lack of supply of land and infrastructure if the Government were not to commit resources to the provision of these facilities in the coming few years. The latest projection was that there could be up to a lack of 50 hectares of land for public housing and we urge the Government to address this problem positively and urgently.
The public, in particular public housing tenants, should also be aware that the financial situation of the Housing Authority does not affect public rental levels or home ownership sale prices. These are determined by affordability. This fact should be well understood by Mr FUNG who is a member of the Housing Authority. Thus, if there is more money in the Housing Authority, it should not mean that rent will come down. Neither would it mean that if the Housing Authority is short of fund, then rent or Home Ownership Scheme (HOS) flat prices should go up. We must ensure that the Authority's finance and rent levels and sale prices are completely independent considerations.
Although we do not support Mr FUNG's motion, we do consider that housing policy should be reviewed from time to time and, as a result of these reviews, financial arrangements between the Authority and the Government may well be required. In particular, we urge the Housing Authority to review its policy regarding sale of flats to housing tenants. We consider that home ownership should be the ultimate objective and would be the fundamental solution to housing problem. The Liberal Party would be putting forward its proposal for sale of public housing to sitting and potential tenants to the Government and to the Housing Authority in the near future.
In conclusion, Mr President, we consider that it is vital for social stability in Hong Kong that housing demand is met through imaginative solutions and that the Government should continue to honour its commitments to accomplish that objective; but we also view housing as one of the many social services that have to be provided to those in need in our community, and public resources should aim at achieving a balance of priorities in meeting different social and economic needs. For the reasons given above, I and my colleagues in the Liberal Party cannot support Mr Frederick FUNG's motion.
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REV FUNG CHI-WOOD (in Cantonese): Mr President, my speech will be focussed on the self-financing and self-sufficiency spirit of the existing financial arrangements of the Housing Authority. I think the spirit is neither practical nor reasonable.
First of all, the so-called self-financing policy of the Housing Authority is in fact not really self-financing. Actually what is meant by self-financing? It is stated in Section 4 of the Housing Ordinance that the policy of the Housing Authority shall be directed to "ensuring that the revenue accruing to it from its estates shall be sufficient to meet its recurrent expenditure on its estates". Honourable Members should bear an important point in mind. In fact, the Housing Authority makes use of its estates' operating surplus to cover the deficit incurred in the construction of estates. Yet, the construction cost of the public housing estates is capital expenditure. We know that even capitalist has to put up capitals if he wants to reap huge profits. However, the present situation is that the Government, as the proprietor of the public housing estates, even with the authority to sell Home Ownership Scheme (HOS) units, asks the public housing tenants to bear the full construction costs. This is indeed very unreasonable. Furthermore, we should not lose sight of the fact that the Housing Authority generates an overwhelmingly large proportion of its revenue from the lower stratum of the community. To achieve self-sufficiency, the Housing Authority indeed is allocating social resources in the way that one sector of low income people are subsidizing another sector of low income people. Because of the self-financing policy, the prices of HOS flats are maintained at a high level while the rents have kept on rising on the pretext that the Housing Authority is unable to shoulder the cost.
If the Housing Authority is really self-financing, there is no reason for the Government to request the Housing Authority to pay a huge sum of money each year. At present the Housing Authority is paying the Government an interest at a rate as high as 5% per annum. This is certainly too much in consideration of the fact that one can only get an interest of 1.5% with money deposited in a bank of about 3.75% for a three-year fixed deposit. However, when the Government deposits money in the Housing Authority, it can enjoy a full guarantee of an annual interest of 5%. At present the Housing Authority runs a surplus of over $5 billion, $1.23 billion of which is the sum that the Government had promised to subsidize the Housing Authority before 1 April 1994 so as to honour its commitment to make an injection of $10 billion. Still, the problem is, though the Housing Authority has already run a surplus, its additional revenue of $1.23 billion, even if earning a fixed deposit interest, is still insufficient to cover the annual interest of 5% to be paid to the Government. I wonder if the Government has so much a surplus for the year 1992-93 that the Housing Authority has no choice but to accept the public funding of $1.23 billion.
From 1 April 1988 to 31 March 1993, the Government injected a permanent capital of $26.283 billion in total into the Housing Authority for both the domestic and non-domestic housing units. It is estimated that there will be a
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total return of $31.6 billion from this investment by the year 2001, that is to say, after recouping the capital there will still be a surplus of $5.4 billion. It is believed that the amount to be turned over to the Government in the 21st century will be even greater. Yet, the Government has never explained why it has to charge an interest of 5% instead of 4% or 3%. It merely kept on saying that it was an arrangement made in 1988 with the endorsement of the Legislative Council. Nevertheless, the Government has to understand that the present Legislative Council has the obligation to correct any previous wrong decision.
Obviously, the Government is more interested in getting profit return than subsidizing the Housing Authority as it treats its interest-free loan to the Housing Authority as an investment. In fact, the Government has gradually changed from the role of a subsidizer to a beneficiary in the context of the Housing Authority.
Secondly, I would like to point out that the Housing Authority is self-financing but has no say in some aspects of its own finances.
If the Housing Authority has a surplus larger than what it is required to hand over to the Government, the Financial Secretary may, after consulting the Housing Authority, ask the latter to turn the excessive amount to the Treasury. Like the interest and dividends paid by the Housing Authority to the Government each year, the use and appropriation of this amount is entirely left in the hands of the Government instead of the Housing Authority.
Such financial arrangements, which commenced in 1988, are, according to the Government, meant for assisting the Housing Authority in standing on its own feet financially. In fact, two criteria must be satisfied before this target could be achieved. The first criterion is that the Housing Authority must be left alone in terms of the handling of its finances. As I said just now, the Housing Authority is not given a free hand to dispose its surplus. It has no final say in handling its own finances. The second criterion is the possession of sufficient funds, which was definitely not the case of the Housing Authority in 1988. In this connection, we should waive the requirement that the Housing Authority should make a payment of interest and dividends to the Government so as to solve the public's long-term demand for public housing and HOS flats. Otherwise, it is very difficult for the Housing Authority to enjoy financial autonomy.
With these remarks, I support the motion.
MISS EMILY LAU (in Cantonese): Mr President, I rise to speak in support of the Honourable Frederick FUNG's motion which calls upon the Government to revise its financial arrangements with the Housing Authority, so that the Authority will have sufficient resources to look after the housing needs of the lower and middle income families.
No comments yet.
Private notes are available after approval.