ENG-1995-07-27 — Page 1

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6057 OFFICIAL RECORD OF PROCEEDINGS

Thursday, 27 July 1995

The Council met at Nine o’clock

PRESENT

THE PRESIDENT

THE HONOURABLE SIR JOHN SWAINE, C.B.E., LL.D., Q.C., J.P.

THE CHIEF SECRETARY

THE HONOURABLE MRS ANSON CHAN, C.B.E., J.P.

THE FINANCIAL SECRETARY

THE HONOURABLE SIR NATHANIEL WILLIAM HAMISH MACLEOD, K.B.E., J.P.

THE ATTORNEY GENERAL

THE HONOURABLE JEREMY FELL MATHEWS, C.M.G., J.P.

THE HONOURABLE ALLEN LEE PENG-FEI, C.B.E., J.P.

THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE MARTIN LEE CHU-MING, Q.C., J.P.

DR THE HONOURABLE DAVID LI KWOK-PO, O.B.E., LL.D., 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, O.B.E., J.P.

THE HONOURABLE MARTIN GILBERT BARROW, O.B.E., J.P.

THE HONOURABLE MRS PEGGY LAM, O.B.E., J.P.

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THE HONOURABLE MRS MIRIAM LAU KIN-YEE, O.B.E., J.P. THE HONOURABLE LAU WAH-SUM, O.B.E., J.P.

DR THE HONOURABLE LEONG CHE-HUNG, O.B.E., J.P. 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, O.B.E., J.P. THE HONOURABLE MOSES CHENG MO-CHI

THE HONOURABLE MARVIN CHEUNG KIN-TUNG, O.B.E., 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, O.B.E., J.P. DR THE HONOURABLE LAM KUI-CHUN

DR THE HONOURABLE CONRAD LAM KUI-SHING, J.P. THE HONOURABLE EMILY LAU WAI-HING

THE HONOURABLE LEE WING-TAT

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

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6059 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

THE HONOURABLE JAMES TIEN PEI-CHUN, O.B.E., J.P.

THE HONOURABLE ALFRED TSO SHIU-WAI

THE HONOURABLE LEE CHEUK-YAN

ABSENT

THE HONOURABLE HUI YIN-FAT, O.B.E., J.P.

IN ATTENDANCE

MR MICHAEL LEUNG MAN-KIN, C.B.E., J.P.

SECRETARY FOR EDUCATION AND MANPOWER

MR MICHAEL SUEN MING-YEUNG, C.B.E., J.P.

SECRETARY FOR HOME AFFAIRS

MR RONALD JAMES BLAKE, J.P.

SECRETARY FOR WORKS

MR JAMES SO YIU-CHO, O.B.E., J.P.

SECRETARY FOR RECREATION AND CULTURE

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MR HAIDER HATIM TYEBJEE BARMA, I.S.O., J.P. SECRETARY FOR TRANSPORT

MR NICHOLAS NG WING-FUI, J.P.

SECRETARY FOR CONSTITUTIONAL AFFAIRS

MR MICHAEL DAVID CARTLAND, J.P.

SECRETARY FOR FINANCIAL SERVICES

MR DOMINIC WONG SHING-WAH, O.B.E., J.P.

SECRETARY FOR HOUSING

MR PETER LAI HING-LING, J.P.

SECRETARY FOR SECURITY

MR BOWEN LEUNG PO-WING, J.P.

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS

MR KWONG KI-CHI, J.P.

SECRETARY FOR THE TREASURY

MRS REGINA IP LAU SUK-YEE, J.P.

SECRETARY FOR TRADE AND INDUSTRY

MRS SHELLEY LAU LEE LAI-KUEN, J.P.

SECRETARY FOR HEALTH AND WELFARE

THE CLERK TO THE LEGISLATIVE COUNCIL

MR RICKY FUNG CHOI-CHEUNG

THE DEPUTY SECRETARIES GENERAL

MR RAY CHAN YUM-MOU AND MISS PAULINE NG MAN-WAH

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6061 Second Reading of Bill

MANDATORY PROVIDENT FUND SCHEMES BILL

Resumption of debate on Second Reading which was moved on 26 July 1995 Question on adjournment proposed.

MR CHIM PUI-CHUNG (in Cantonese): Mr President, I speak to oppose the adjournment of this debate.

Undeniably, Hong Kong as an international city has not done enough in respect of retirement and provident fund. But if we did not do enough, this does not mean that we can never do anything. So today is a start and we have to come to discussions one day. I have already said that Hong Kong is, in fact, a society of equality and mutual benefits, for industrial business as well as financial sectors, and there are many opportunities open to the friends in the labour sector for making a fortune. Of course, as all have seen, many people did make use of Hong Kong’s opportunities and get rich during the post-liberation period, from 1950’s up to the present. Of course, one may even get richer later on. We should not give up our chances. Therefore, I personally think that discussions on provident fund or other mandatory provident fund schemes should be carried out as soon as possible. After a series of discussions, we would not only ask the Government for non-procrastination but also urge it to do promptly what should be done.

Mr President, these are my remarks.

MR MARTIN BARROW: Mr President, I have not intended earlier to speak at this stage of the debate which last night seemed to be descending into a political wrangle, but I do wish to make the point that I see no merit in further procrastination. I believe the Chief Secretary said a few months ago that the retirement schemes have been an issue swirling around the community for something like 35 years. It is time we got off the pot and made some decisions. I did have some reservations when the MPF proposal was first tabled, but having looked at it carefully and considered the various concessions and commitments which the Government has made, I believe we should now move forward with this framework legislation. In particular, the Government has made it very clear that there will be further rounds of consultation on the subsidiary legislation.

With these words, I oppose the motion.

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MR WONG WAI-YIN (in Cantonese): Mr President, I speak to support an adjournment of the scrutiny of this bill. Yes, as Members of the Liberal Party say, the Democratic Party opposes the mandatory provident fund schemes, but support an adjournment as well because the Democratic Party will support any way that can prevent the passing of this bill.

In fact, today’s motion to adjourn the debate on this bill, I think, offers some Members more choices in giving their votes. Indeed, it is unfair to us that such an important bill only allows so short a time for this Council’s consideration. Actually are our colleagues’ votes correct? I think some Members are struggling. The result of our voting will have an effect on the people of the territory scores of years later, therefore, some Members may feel embarrassed and hesitate to give a vote hastily when there is not enough time to consider this bill. So, an adjournment might give this Council more time to consider this bill and it would be fairer to some Members.

Mr President, I would like to make a brief response to what our colleagues said yesterday. The Honourable Mrs Selina CHOW said yesterday that the Democratic Party supported socialism. It seems that we are moving backwards, when compared with the Liberal Party’s reproval for our being communist during the consideration of the Route 3 Bill at an earlier time. They also said that we supported nationalization and so on. Sooner or later the Democratic Party would be said to be communist. The Honourable Allen LEE said violently yesterday that we do not look after the workers’ interests whereas his Liberal Party did look after the workers’ interests.

The Mandatory Provident Fund Schemes Bill now is a money-saving proposal. Everybody knows that the Government has been opposing the establishment of a central provident fund scheme on the ground that such a scheme would be effective only after scores of years, or at least 20 years or so. Similarly, mandatory provident fund schemes also take time to bring about their effects and cannot protect the existing retired elderly. Moreover, our employment rate now has reached 3.1% with some 100 000 people being unemployed. How can these unemployed workers have money to contribute to the provident funds when they have no jobs at all? Therefore, at present, we have to solve the problem of retirement protection on one hand and, of course, have to ensure that the workers get jobs in order to make contributions.

To conclude, Mr President, the Honourable James TIEN highly praised the Honourable PANG Chun-hoi yesterday for being the only one who strive for the labour welfare. Is this true? I believe this is open to public judgment. But I would be very scared if the communist will speak well of me one day.

MR STEVEN POON (in Cantonese): Mr President, I do not understand why we are still discussing an adjournment of this debate on a bill which is very important to Hong Kong. In fact, after joining this Council, I feel that the legislators are doing very little to look after our people. I cannot understand

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why I have been working in a company for scores of years where the managerial level looks after the staff very well, but many workers or even staff of smaller-scale companies are not being looked after. I really do not understand, Mr President, such jargons as “capital side” and “labour side”. I was brought up in a very poor family, worked in a company since I was young and then became one of the higher-ranking staff. I think the difference between the management and the staff lies on the fact that the management has to look after the interests of all the staff. There is no such case as the capital side suppressing or oppressing the labour side. I have not seen such cases. Having worked for more than 20 years, I did not see the capital side particularly suppressing or oppressing the labour side. What I have seen is that many managerial staff tried all means to ensure fair treatment to the staff. To me, if there is no provident fund system, I will be empty-handed when I leave the company after 27 years’ work. Of course, I am not very well-off, but at least, I can survive even if I am not paid as a Legislative Councillor.

Mr President, in the 80s, many of my colleagues emigrated and among them there were a tea lady, a rather senior staff at middle managerial rank who had gradually been promoted from the post of “boy”, and an engineer who was a university graduate upon recruitment. Many of them emigrated in the 80s and they came to my office saying, “Mr POON, I have to leave tomorrow.” Some even shed tears, but, Mr President, at least, they said to me, “Mr POON, thank you for fighting for our retirement protection scheme over the years. Now that I am emigrating I can still get some money to buy a house and live well.” Some lady workers did not emigrate but left the company after working for 30 years. They were getting old and their children might not be able to look after them, but my company would still give them a sum of money upon their retirement.

Mr President, why are we still saying today that the issue could be left dragging on endlessly? The issue has been talked about for scores of years, and Sir Sze-yuen CHUNG talked with me about it on the first day I got to know him. Why are there still some Members saying so? The Honourable James TIEN said very clearly yesterday that the Honourable TAM Yiu-chung called for an adjournment of this debate. I believe this is simply a dispute caused by personal feelings. The Democratic Party called for a postponement probably because they hoped to fight for something better which may mean more welfare for some old people. But, Mr President, we are discussing retirement protection, we are discussing situations in which one cannot get any money after many years of service. Why do we confuse this with welfare matter? I find it very hard to understand.

I have looked after many staff, though my company has a strength of only 7 000 or so, on a scale much smaller than the Hospital Authority. Every day, I have to be concerned about my staff’s living after they leave the service. I once had $6 billion at hand and that was their retirement money. I believe all of us know that the Honourable Marvin CHEUNG is a very experienced accountant. He is also a professional whom I respect very much. We have worked together and we all like to hear him speak. He does not talk much, but what he says is in-

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depth. Yet what he does not understand is that we are not talking about the details, but a fundamental principle of having mandatory provident fund schemes or nothing at all. Without such schemes, it is useless to put the things in flowery language and we cannot proceed with the details. Once we have the schemes, we can discuss further and improve. Therefore, I do not agree to let the issue drag on.

MR ANDREW WONG (in Cantonese): Mr President, I think the Honourable Steven POON need not find it hard to understand. Basically we have voluntary occupational retirement schemes and any good employer should carry out these schemes of their own accord. The major problem now is that two debates were put forward at a meeting (I cannot recall the date of the meeting) before the presentation of this bill. One was put forward by the Government on mandatory private provident funds and another one was put forward by this or the Honourable YEUNG Sum on old age pension scheme. The crux of the problem is that which of the above is more desirable and which should be carried out first. I personally think the Government made a wrong decision right from the beginning. Mr Michael LEUNG should remember that I stood up several times asking him to point out which Member was the single one who gave full support to the old age pension scheme, and Mr LEUNG refused to answer at that time. As far as this issue is concerned, I think we should not give support hastily to mandatory private provident funds because they are not very good and their effect cannot be seen very soon. Moreover, it takes a rather long time to put them into implementation and it is a piece of vague and general legislation before us. Therefore, I think the best way is to adjourn the debate.

At yesterday’s debate on the Court of Final Appeal Bill, some Members also suggested an adjournment. At that time, some Members said that we could adjourn the debate on the bill because there was no need to hurry and even if it was passed hastily, it might be amended in the next term. But in fact, we cannot amend the legislation in the next term because any changes in contravention with the Sino-British Agreement would not become legislation. But the bill on mandatory private provident funds on the other hand may be amended. If we pass the bill now and amend it later, we may be still “empty handed”. If we do not pass it now, we can discuss further and may get a better system.

Let me state my position now. I support an adjournment of the debate. At the Second Reading stage, I will oppose the Second Reading of the Bill. If I am unsuccessful, I will support, at the Committee Stage, the Honourable Marvin CHEUNG’S proposal that the date of implementation should be decided by this Council’s resolution.

MR RONALD ARCULLI: Mr President, when an adjournment was moved on the Court of Final Appeal Bill, I think one of our colleagues here reminded us that we have certainly set procedures within this Council as to how we function. And may I take this opportunity to very briefly remind Members how we use

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6065

our time and how we are accountable to the public. The House Committee decided on the recommendation of some of our Bills Committees to terminate consideration of some Bills simply because we had too much on our plate. The MPF Bill was one of the ones that we decided to give priority to. And I think on that basis, I therefore appreciate Mr WONG Wai-yin being totally honest and frank today although I wished the Democratic Party was far more forthcoming when we discussed this matter in the House Committee. He said that they would use every possible technical means or otherwise, and I understand them to mean fair means not foul to delay and to defeat this Bill. They could have done so in the House Committee. With all the support that I am hearing today for the adjournment of this debate, I just ask Members to think what did we do in the House Committee? Why did we agree to give priority? Why did we agree to set up a Bills Committee? We could have killed the Bill there and then. Why after so many hours of Member’s time and perhaps, you know, that is our duty to play politics. But think about our government officials, think about the people who actually came to this Council, to the Bills Committee to put in their views and opinions which Members took into account. We now are going to tell them that after, many many hours of work, and many years of prevaricating, this Council in its considered wise opinion this morning is going to adjourn this and put this back into the history books. Mr President, if that is the way how the Council operates, then God help Hong Kong. Thank you.

MISS EMILY LAU (in Cantonese): Mr President, I speak to support the Honourable TAM Yiu-chung’s proposal. I wish to respond to what the Honourable Ronald ARCULLI has just said. As we remember, the House Committee agreed to give priority to this bill and the Court of Final Appeal Bill. On the part of the Members who may oppose or, like me, support mandatory retirement protection, we then wished to study this bill, but we did not guarantee that we could make it passed today or yesterday. At that time, we agreed to set up a Bills Committee and did spent a lot of time to study the bill and raise many questions. I believe that as a responsible Legislative Council, if we have identified many problems, and I quite agree to and respect what the Honourable Marvin CHEUNG has said, what is wrong when we say we want more time to study the bill? How can we say to others that the bill passed by us is full of loopholes and uncertainty and that we would make it up later; and is this a good explanation?

In fact, the Government has said that the schemes would not be enforced until two or three years later. So if we support an adjournment of the debate, the Government would have more time to do the preparation work and then present a whole package to the Council. Bills on matters other than mandatory retirement protection take a long time and this bill surely takes a considerably longer time. I myself think, if the Government present a more comprehensive package to this Council in the next term, the fortunate re-elected ones among us (Mr Marvin CHEUNG will not stand for next election) will study it with other elected Members. I think this is a responsible way of doing things.

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I do not understand why Mr Ronald ARCULLI said that the House Committee’s agreement to discuss the bill meant passing of the bill after 40 discussion meetings in three weeks. I believe no Members made such commitment, and they just tried to do their best. Many Members turned up at the meeting, though some of them might be unable to attend because of a clash in meeting schedule. We found that we could not agree on many matters and the Government did not provide answers to all our questions, therefore, some Members are proposing an adjournment of the debate.

For these reasons, Mr President, I support Mr TAM Yiu-chung’s motion.

DR YEUNG SUM (in Cantonese): Mr President, I speak to support the Honourable TAM Yiu-chung’s motion. Having heard the Honourable Ronald ARCULLI’s speech at an earlier time, I think if the case was true, there would be a “norm” at the House Committee thereafter, that is, whatever bills on the priority list cannot be adjourned. Do we have such “norm”? Do we have this “consensus”? We are responsible, so we fully participate in the formulation work and conducted discussions and when we have identified problems during discussions, how can we continue to “move on”? Of course, we have to “brake”.

As all of you have seen, actually the Government is unable to answer so many questions raised by the Honourable Marvin CHEUNG, who, with his professional knowledge, found many loopholes in the Bill. If we still insist on passing the Bill despite its loopholes, are we thinking about the workers’ interests or not?

SECRETARY FOR EDUCATION AND MANPOWER: Mr President, today should be the joyous occasion for the workforce of Hong Kong. It should be the day when employees and the self-employed receive what they have been seeking for so long － the certainty of financial security upon retirement. Instead they are facing last minute uncertainty of not knowing whether debate on this Bill will be able to continue. If this is frustrating for them, then it is certainly frustrating for us and all those who have the genuine welfare of workers at heart. If they cannot understand the reasons for some Members to propose adjourning this debate, they are not alone in Hong Kong.

Members of this Council are fully aware that this Bill is essentially an enabling one. That is not to say it is a hollow shell, as claimed by some. What it does is to provide a framework for the subsidiary legislation which will set out the details of how the system will be regulated. Members will be by now quite familiar with the main provisions of this Bill. These have been described on a number of occasions since the motion debate on 8 March this year. It is fair to say that there are no surprises in the Bill. The subsidiary law will be the subject of further detailed consultation with Members of this Council and all sectors of the community over a longer timeframe. In their perhaps misguided enthusiasm to bring a debate on this Bill to a premature stop at least for the current Session,

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some Members may well have overlooked the reasons why we are here today with this particular piece of legislation. This is not simply a case, as perceived by some, of the Administration pushing forward a Bill on its own volition and for no other reason.

Let me refresh Members’ memories on the history of this subject, perhaps as far as I can, briefly. The question of how best to provide retirement protection for the workforce has been the subject of intense debate for more than a generation. The discussion has been especially concentrated in the last three years. While we have all been in agreement that employees and the self-employed deserve to be able to live in dignity and financial security during their retirement years, the best way of providing for such retirement protection has always eluded us until now.

The MPF provides a good, pragmatic answer to this question and has wide support within the community. It also addresses many of the points of criticism that arose during the public consultation exercise on the Old Age Pension Scheme (OPS). It is not true to say, as claimed by some Members that the community has had inadequate time to consider the MPF. It was the community that supported the MPF in the first place. Submissions on the OPS indicated that there was now likely to be greater public acceptance of a mandatory privately managed provident fund system, and such a system should be set up as soon as possible.

The community, Mr President, wanted reality in the shape of a real retirement protection system, not a further round of inconclusive consultation. Intensive consultation with those most directly affected by the MPF, that is, employers’ and employees’ representatives both before and after the motion debate on 8 March, reinforced our view that we are moving in accordance with the community’s wishes.

This two-stage approach which we are now taking in drawing up the necessary legislation is a positive response to public demands for the Bill to be enacted as soon as possible. This response has also met with public approval.

Some Members have indicated that they would prefer to consider the MPF Bill at a more sedate pace. Some other Members have said that the Bill should be considered together with the subsidiary legislation. They believe, therefore, that discussion should be deferred until the next Legislative Session.

Let me remind them that time is not on our side. As in many other parts of the world, the elderly in Hong Kong are living longer and forming an increasingly larger percentage of the population. For example, in 1991, life expectancy at birth was 74.9 years for males and 80.5 years for females, while life expectancy at 65 is 15.4 years for males and 19 years for females. The estimated number of persons aged 65 or above will increase from the present 560 000 to one million in the year 2016, and 1.9 million 20 years after that.

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Expenditure on Comprehensive Social Security Assistance payments to the elderly aged 60 or above continues to increase: from $1,564 million in 1993-1994 to $2,193 million in 1994-1995, and a projected level of $2,778 million in 1995-1996. Unless we make sensible advance provisions now for these people, we will be faced with a considerable and ever-growing welfare burden. We cannot afford to wait any longer.

The MPF will ensure that the workforce will have financial security in their old age and thus reduce the numbers who may potentially fall into the welfare net. Members will realize that by the year 2036, when nearly 20% of the Hong Kong Special Administration Region population will be 65 or over, the first batch of the youngest group of MPF contributors will be reaching retirement age.

One last point on the need for early enactment of the Bill. May I remind this Council that just four and a half months ago on the 8 March debate, Members voted in favour of the motion that this Council urges the Government to introduce as expeditiously as possible a mandatory privately managed occupational retirement system with provision for the preservation and portability of benefits.

In our efforts to enact the MPF Schemes Bill during the current Legislative Session, we are acting in accordance with Members’ wishes.

Some Members believe that adjourning the debate and thus allowing the Bill to lapse will provide a further chance for re-consideration of the OPS, a Central Provident Fund (CPF) or some hapless hybrid of the two. They are wrong. If this Bill lapses, there is the real possibility that the community will not have any retirement system at all. We do not intend to revisit the OPS which found little support within the community.

As for the CPF, our views remain unchanged. It is not an option for Hong Kong. It offers no freedom of choice, tends to produce low returns on investment and results in an over-concentration of funds under one authority. We hold this view both in respect of a CPF on its own and a CPF artificially put together in an uneasy relationship with any other form of retirement protection.

Those Members who yearn for a CPF must know that it cannot work without government funding which most definitely will not be forthcoming.

I would urge any Member who feels inclined to support the motion to adjourn in the hope that it may lead to a revival of the first defunct OPS or even a CPF to think again. It will not happen.

Mr President, I am surprised to hear some Members claim that this Bill is hollow, lacks substance and should not be discussed further, while others say that the debate should not proceed as the Bill is complicated and they have had

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inadequate time to examine it. I disagree with both opinions and wonder whether in fact Members are talking about the same piece of legislation!

From the outset of our consideration of the MPF, it has been our stated intention to deal with the primary legislation first, then the secondary legislation later. This is in keeping with the community’s wish to see a mandatory retirement protection fund system established as soon as possible.

As I said in this Council during the debate on 8 March and I quote: “We will also start drafting legislation and come back to this Council with the primary legislation. The timeframe: we will try to get the initial report from the consultants by the end of April and to come to this Council with the primary law before the end of this Session if Council endorses my motion this afternoon”.

Early enactment of the primary legislation will also provide adequate time for trustees and insurance and fund management industries to introduce the necessary products, and for employers and the self-employed to arrange for retirement schemes to meet their obligations.

We have always made it very clear that there would be certain necessary provisions in the primary legislation. These are reflected in the contents of the Bill to be discussed today.

Far from being an empty shell, the Bill does what it intends to do. It provides a sound framework on which we can build. It establishes the Mandatory Provident Fund Scheme Authority. It provides for a Compensation Fund and for the establishment of Residual Provident Fund Scheme. The MPF Schemes Bill tells employers, employees and the self-employed how much they need to contribute and what their future obligations will be. It is clear from the Bill, and it will be clearer still after we move a number of Committee stage amendments later on, who is covered and who is exempt. This is no empty shell, and there is definitely no reason to defer debate on such spurious grounds.

On the other hand, it is equally unreasonable to demand that debate be adjourned because the Bill appears to be too complicated and that there had been inadequate time to consider it in detail.

The main points of the primary legislation have been known for some months now. We have made it very clear that the specific components of the MPF will be dealt with in the context of discussing the subsidiary legislation. There have been many rounds of discussion both with Members of this Council and with concerned groups and individuals, on the principles and main points of the legislation.

It is patently absurd to claim as some have done, that the Bills Committee to study the MPF Schemes Bill had inadequate time and opportunity to carry out its deliberations. The Bills Committee met on 10 occasions. Some clauses were

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debated ad nauseam. In addition, there was a session to go through the Administration’s Committee stage amendments, and a meeting of a subgroup to examine the Bill clause by clause. The fact that the meetings were held within a short timeframe does not detract from the fact that the Bill was discussed in great detail and with great care － reflection, of course, of the due responsibility of Members of this Council to study it in great detail and care. In fact the only area of the Bill that was not put under the microscope were the Committee stage amendments proposed by Members of this Bills Committee.

It is clear to me, Mr President, and I hope it is clear to most Members of this Council, that this attempt to derail discussion of this most important subject on the grounds of over-complexity is nothing more than a smoke screen for those who are against the MPF and who clearly do not want the Hong Kong workforce to have a retirement protection system anytime in the near future.

I would like to take issue with Mr TAM Yiu-chung on some of the points he made at the beginning of his address yesterday night. He challenged me on the points which he made on the debate concerning the MPF as to why such points were not answered and whether my letter addressed to Members of this Council were in fact not giving enough reasons for going ahead with this Bill.

Let me take these points one by one. First he said this Bill is only a shell, a framework. There is nothing to work on. I totally disagree. The Bill is certainly a framework but it is far from empty. It reflects the necessary provisions for setting up the MPF system. The community agrees with our approach of dealing with the primary legislation first. As I said earlier on, the Bill establishes the MPF Scheme Authority, provides for a Compensation Fund and setting up of the Residual Provident Fund Scheme system. These are important and basic points to vote on. It is definitely not an empty shell with nothing to hold on.

On the second point, Mr TAM advocated that we should first study both legislation, primary and subsidiary, before voting. But as I said earlier on, the history of this subject has gone on for over 30 years. The community is aging. The community cannot wait any longer. The community agrees with our approach of dealing with the primary legislation first as this is the most effective way of starting the MPF as endorsed by this Council on 8 March as soon as possible. Time is not on our side or on the community’s side if we delay this debate any longer. As I said, the elderly in Hong Kong are growing in numbers and are living longer and we must not forget this important fact.

Mr TAM made a third point about there being far too many technical problems, that these are difficult to change unless the subsidiary legislation were voted on later on and looked at together. This is not the case. We have always made it very clear that subsidiary legislation will be made in wide consultation especially with Members of this Council. Members will be able to approve all subsidiary legislation up to the date of coming into force of section 6 of this primary Bill in its entirety. If we discover problems later, and of course we do

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not deny there could be technical problems of details of one kind or another, then there is no reason why we cannot change them later on, and there is no reason whatsoever for this particular problem later on to defer a debate on this Bill today.

Mr TAM also said that it would be misleading to say that delay will decrease benefits. This is certainly not the case. It is clearly necessary for an employee to start contributing sooner now rather than later, as it means that, by the time that he or she retires, he or she would have accrued more benefits. It is obvious the earlier benefits start, the better.

The final point made by Mr TAM that early passage is in conflict with the previous points made. I do not see why. Early passage of the Bill will give us time to set up the MPF Scheme Authority and begin discussions on the subsidiary legislation. In other words, we just cannot start anything on the MPF without the primary Bill being established as soon as possible. Insurance and the fund management industries are not likely to develop new products without the existence of the primary legislation, and this is why we must proceed with the debate on the primary Bill as soon as possible.

In conclusion, Mr President, I should like to call upon those who support deferring debate on this Bill to consider where their action may lead. They will go down in history, I am sure, if they were successful in deferring this Bill indefinitely. They will be held accountable by Hong Kong’s community and the elderly in Hong Kong for what they have done today. So think again. The reality of a retirement protection system, a real system in the form of an MPF, is clearly what the community needs. If this motion to defer the debate is carried, we will need to consider very carefully where to go next.

Mr President, the MPF Scheme Bill is a good, practical and workable means of providing our workforce with a retirement protection system which it deserves. Members of the Bills Committee have worked hard together with the Administration to produce what we believe is an effective and workable enabling Bill. To adjourn the debate at this stage would deny Members and the community in Hong Kong the chance to discuss the Bill on its merits, and to vote accordingly. Mr President, I call upon Members of this Council to vote against the motion to adjourn.

MR TAM YIU-CHUNG (in Cantonese): Thank you, Mr President, I move an adjournment not out of impromptu thoughts, nor as a sequence to the trend of yesterday’s Court of Final Appeal Bill. The fact is absolutely a different thing. I have thought very clearly before moving this motion and I did openly mention about this. I also stated the reasons for adjournment yesterday and I have heard many views. Now I would like to respond to some points.

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First, some Members were concerned that whether the adjournment of this debate would disappoint the elderly. I have engaged in union work and fought for labour interests for over 20 years. I did say in this Council on several occasions that I would pursue the greatest improvements and the quickest achievements in striving for improvements to the labour interests or labour welfare. The quickest achievement is very important. I once used the metaphor of “a horse in the hand is worth more than hundred in the bush”. But why do I not apply it to the existing Mandatory Provident Fund Schemes Bill? Let us see the actual problem. What we are discussing and have to pass today is simply a principal ordinance. I already said yesterday that the proposal would not be implemented tomorrow once we passed the Bill today and the old people would not be given protection immediately. In fact, if you think so, this may be due to a pretty misunderstanding or the Government’s misleading publicity. Actually, even if we have passed the principal ordinance, it might take two years, as the Government said, before the introduction of the subsidiary legislation to this Council in 1997. In fact, to adjourn the debate now is not － at least I am not － procrastinating, but I want to compel the Government to expedite the work. On the contrary, I am worried that the Government would slow down the work because it thought the general situation was settled after the passing of the principal ordinance. The subsidiary legislation may be introduced after 1997 and whether you like it or not is your business because the Government, under British rule, has already done its job for retirement protection. But if the principal ordinance is not passed, the Government may be forced to present the subsidiary legislation to this Council as soon as possible if it really intends to solve the problem of retirement protection. If the Government really wants to do something, it should do in this way － presenting the principal ordinance as well as the subsidiary legislation to this Council as soon as possible, and then this Council could negative or amend the Bill, which is its right or responsibility to do so.

In addition, I would also like to respond to the arguments just put forward by Mr Michael LEUNG. He thought my act would give him a blow, and they would be frustrated or those who are concerned with labour interests would be disappointed. I think this would not be the case. I already said in yesterday’s speech that anything which the Government intends to do would be done very quickly and anything which it does not intend to do would be dragged on for 20 or 30 years or even for a longer time. Mr LEUNG also admitted that the issue had been debated for 20 to 30 years. In fact, the debate was quite straightforward. Our society and labour sector called for the establishment of retirement protection but the Government kept on saying there was no need and it was unnecessary. The Government did not want to do, so it procrastinates for 20 to 30 years. It is not true that the Government has kept on saying that it will do something for 20 to 30 years and yet our society did not want to do anything. This is not the fact. You may check all the documents, information, history and records, which show that the Government did not want to do anything at all in the past 20 to 30 years. Now, the Government changes its mind. It took an initiative to move a motion on 8 March saying, “Well, we have decided to introduce a mandatory provident fund system” and then asked this Council to

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pass it. But I wish to remind the Government of a motion on old age pension which was passed by this Council, I think both motions should be mentioned and we should not just do or mention one thing. As regards the question of delegation of authority, I think it is unnecessary. As this Council has passed the motion and supported the Government in its deliberation, the Government should proceed. I think if a whole package were presented in great details at this stage, Members would certainly welcome it very much and do their utmost to study it. Mr Michael LEUNG emphasized that time was running short because of the aging of our population and we had to act promptly. But he may wish to note that what we are talking about is mandatory private provident fund schemes. Even if the schemes are to be implemented and have contributions collected tomorrow, even if there is no problem in passing the Bill, and all of you may think that there is no problem at all and TAM Yiu chung was the only Member who delays it without good reason, the benefit will still be obtained only after 20 to 30 years. We must be aware that under the provident fund system, the employers and employees make contributions which are saved up and then returned to the employees upon retirement. Therefore, the Bill cannot address to the existing needs of the elderly and the retirees or the retirees-to-be. Therefore, there will be entirely no difference if the subsidiary legislation is to be presented, studied and passed several months later. So in my opinion, something is wrong with Mr LEUNG’s arguments.

The Honourable Marvin CHEUNG is a Member whom I respect very much because he is actually an expert in retirement protection, especially in provident funds. Why do I say so? Because he and I once joined the ad hoc group (at that time it was not called Bills Committee, but a group) to study the Occupational Retirement Schemes Bill and we studied the Bill for a year. When the Government first submitted the Bill, we rejected it as a whole because its wordings were too complicated and totally incomprehensible. Later the Government submitted a second bill, then over a hundred meetings were held, and after studying it for more than a year, legislation was drafted to require all the voluntary provident funds to register before 15 October this year. Even after endorsement, the draft legislation was amended several times, and one can imagine its complexity. I wish to point out that this is a voluntary provident fund schemes ordinance to regulate the existing provident fund schemes which are run on voluntary basis. There will be greater complexity for the mandatory ones. Therefore, some Members say it is complicated. They are actually saying that it would be rather complicated to enforce legislative control if the provident fund schemes are run on a mandatory basis. As the schemes are mandatory, they are required by law. This does not mean that they can be carried out or not at one’s wish. But how are the voluntary provident fund schemes combined with the mandatory provident fund schemes? Why is it possible that two systems might appear in the same company? These are very complicated indeed and the Government has failed to resolve many other more complicated issues. This is an undeniable but understandable fact. The Government has to put forward its proposal in two to three months’ time. I also admire the Government, for it can produce certain results if it throws its whole body to work. But what it produces is not comprehensive and has failed to

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solve the problem. It just gives us a mere shell and ask us to eat it first. We said that we could not eat the mere shell first, but the Government insists that we have to “accept delivery”. I think there is nothing wrong for the Government to submit the whole package because anyway the schemes cannot be implemented immediately. The issue is as simple as that.

Two Members of the Liberal Party consistently emphasized that my motion to move an adjournment of this debate has something to do with the Preliminary Working Committee. I wish to point out that I asked the Legal Advisor, Secretary General and others of the Legislative Council on 14 July in order to understand the procedural matters. I also discussed with Mr Marvin CHEUNG of the Liberal Party. As I said, in the present circumstances, I do not wish to vote down the provident fund system in the first instance, and a better way is, I think, to give the Government more time to formulate a comprehensive bill and then submit it for our scrutiny. The meeting of the Preliminary Working Committee is held on 21 instant, therefore, my motion has nothing to do with the Preliminary Working Committee at all. Besides, I did not attend that meeting of Preliminary Working Committee’s Economic Affairs Sub-group. It was reported by the press that the Economic Sub-group supported the idea of mandatory provident fund, both in principle and in spirit. Therefore, the Preliminary Working Committee’s decision actually has nothing to do with the motion moved by me today. I have not started out from this aspect. My starting point is: how to get things done well if they are to be done? I do not want to commit ourselves very rashly when there are still so many outstanding problems. I think this is unfair to this Council and the Members. We think the Government is irresponsible so such doing.

Mr President, I do not wish to speak too much because today’s agenda is quite long. In fact, after a lapse of one night, I think all of you have made up your mind in voting on this motion. I believe it may be insignificant for me to speak anymore now. Thank you, Mr President.

Question on the adjournment put.

Voice vote taken.

THE PRESIDENT said he thought the “Ayes” had it.

Mr TAM Yiu-chung claimed a division.

PRESIDENT: Council will proceed to a division.

PRESIDENT: Would Members please proceed to vote?

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6075 PRESIDENT: Are there any queries? If not, the result will now be displayed.

Mr Martin LEE, Dr David LI, Mr SZETO Wah, Mr TAM Yiu-chung, Mr Andrew WONG, Dr LEONG Che-hung, Mr Albert CHAN, Mr Marvin CHEUNG, Mr CHEUNG Man kwong, Rev FUNG Chi-wood, Mr Frederick FUNG, Mr Michael HO, Dr HUANG Chen-ya, Dr Conrad LAM, Miss Emily LAU, Mr LEE Wing-tat, Mr Fred LI, Mr MAN Sai-cheong, Mr TIK Chi-yuen, Mr James TO, Dr YEUNG Sum, Mr WONG Wai-yin, Dr TANG Siu tong, Ms Anna WU and Mr LEE Cheuk-yan voted for the motion.

The Chief Secretary, the Attorney General, the Financial Secretary, Mr Allen LEE, Mrs Selina CHOW, Mr NGAI Shiu-kit, Mr PANG Chun-hoi, Mr LAU Wong-fat, Mr Edward HO, Mr Ronald ARCULLI, Mr Martin BARROW, Mrs Peggy LAM, Mrs Miriam LAU, Mr LAU Wah-sum, Mr Jimmy McGREGOR, Mrs Elsie TU, Mr Peter WONG, Mr Vincent CHENG, Mr Moses CHENG, Mr CHIM Pui-chung, Mr Timothy HA, Mr Simon IP, Dr LAM Kui-chun, Mr Eric LI, Mr Steven POON, Mr Henry TANG, Dr Samuel WONG, Mr Howard YOUNG, Miss Christine LOH, Mr Roger LUK and Mr James TIEN voted against the motion.

THE PRESIDENT announced that there were 25 votes in favour of the motion and 31 votes against it. He therefore declared that the motion was negatived.

Question on Second Reading proposed.

MR PETER WONG: Mr President, the public debate over the general principles of retirement protection for Hong Kong people, which has been staged over a span of at least 25 years, hopefully, is now, at an end. The Bill has gained general support from members of the Accountancy Functional Constituency who endorse its principles of assisting people to save for their old age through the Mandatory Provident Fund Scheme (MPF). However, we envisage a rough-ride ahead for the detailed implementation of the Bill in two areas － operation and monitoring.

Accountants, many of whom are directly involved in the setting up of private provident fund schemes, are quick to point out that problems will arise from the interface of old and new MPF schemes. With the requirement for new provident fund schemes to be set up for new employees, there is likely to be a two-tier MPF. Significant changes will have to be made to the existing myriad of schemes.

The portability of accrued scheme benefits is another source of frustration of employers. For one thing, the Bill does not specify how scheme benefits will be transferred, rendering uncertain the portability of benefits. More

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importantly, rapid turnover of staff will simply make the calculation of benefits a nightmare for scheme administrators. Companies will probably end up hiring more staff to deal with their provident funds. In this regard, I agree with the accusation that the scheme has significant loopholes. The accountancy profession believes that provision should be introduced to allow existing schemes to quality as MPF schemes by appropriate modification of their rules on vesting, preservation and portability.

Concern has also been expressed over the risk factor of scheme funds. Under the provisions of the Bill, there is no guarantee for a good return rate for scheme investments needed to cover inflation, administration cost and the compensation levy. A 13% return rate is considered necessary for cost recovery purpose. However, I think that such guarantee has to come from the trustees and fund managers rather than the Government. Having said that, I think it is not enough for the Government to only provide a mechanism for retirement protection － it is not enough to provide a stick without a carrot.

At the moment, small businesses in Hong Kong with fewer than 10 employees, are being put off by the high cost of running a provident fund scheme. While the proposed residual scheme will play a useful role, the Administration, of necessity, has to make the MPF Scheme attractive to small companies, of which some 250 000 are registered. For instance, incentives could be given by making employees’ contributions tax deductible, and providing employees with the choice of schemes with different investment risk profiles.

Let me now turn to the monitoring problems of the MPF Scheme. Despite a $5 billion grant for the Scheme’s setting up cost and recurrent expenditure, and another $300 million allocated for the Compensation Fund, the Scheme will have an inspection team of only 110 staff. This immediately casts doubts on the Authority’s ability to effectively enforce compliance by employers and the self-employed. We only have to look at the Occupational Retirement Schemes Ordinance － now well into the end of its two-year grace period, only half of the estimated 14 000 schemes have come forward to register. As such, it is feared that the MPF Scheme’s administration cost will increase, which will eventually have to be passed onto Scheme participants. This in turn would mean more cost for the employers and less benefits for the employees. It behoves the Administration to examine the role and strength of the Authority to ensure that a sound monitoring system is in place before launching the MPF Scheme.

Mr President, the accountancy functional constituency believes that there can be no perfect retirement protection scheme that adequately meets all the needs of different sectors of the community. We find the compulsory, decentralized, earnings-related MPF Scheme acceptable in view of the income protection it offers to the working population and the self employed. Hence we support the Bill before us with a view to facilitating the early drafting of the subsidiary legislations. We consider that the proposed residual scheme for small companies necessary for the reasons stated above and would urge the

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Government to guarantee that such a scheme will be set up. It is necessary for the Government to provide a benchmark and allow the private insurance companies to compete in a free market.

Before closing, I wish to express my concern over the MPF Scheme benefits. While the Secretary for Education and Manpower has forecasted that a worker earning $3,000 per month will, after 30 years of service, get 51% of his final salary for monthly pension, a renowned consultant (Watson Wyatt) predicted that under the Scheme about 40% of workers will receive only 30% of the median salary. We would need assurance from the Government that under the MPF Scheme, an acceptable level of benefits will be provided for employees. Further, overseas countries are now increasingly aware of the dangers of early withdrawal of lump sum benefits being squandered by the recipients. I would therefore suggest that the Government considers annuity as an alternative, or limiting lump sum payments to a percentage of benefits. This will enable recipients to have greater income security during their retirement.

Having said all that, we must not forget to keep the Scheme simple. It must be simple so that everyone understands its working. But more importantly, simplicity cuts down the amount of administration and the number of potential errors which have to be corrected. Administration costs will eat into that margin between the rate of investment return and wage inflation. It is quite a thin margin and costs due to excessive options given in the name of social equity may be counterproductive in the end.

Mr President, I wish to reiterate my call for an income safety net for the needy aged put forth in my previous addresses on retirement schemes delivered in this Council. In my view, the MPF Scheme must go hand in hand with comprehensive social security for the elderly. I hereby pledge my support for the Bill with the proviso that the Administration should provide a means-tested social security programme funded by the Government to meet the needs of Hong Kong’s growing elderly population.

MR VINCENT CHENG: Mr President, first I would like to declare an interest as Chairman of two insurance companies and that my employer has a large fund management operation with about US$32 billion and I certainly hope that this figure would double after the passage of MPF.

I am also grateful that you give me a chance to speak before Mr Marvin CHEUNG because if I hear him speak again I may change my mind again. He is the real expert in this field and unfortunately yesterday, I heard in this Council some rather unfair attack on him personally, attacking him as one who does not really know anything. But I have seen him at work and I think this remark is not worthy of this Council.

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Mr President, when I voice my support for the concept of MPF in the previous debates, I supported it on the basis that the new MPF arrangements will be similar to the present private sector arrangements which have worked so well. However, the MPF Scheme proposed by the Government is very different from the one I have preferred.

The MPF Scheme proposed is actually quite complicated, rigid and expensive. Under this Scheme, not only do members of MPF have to give up their right to use their accumulative savings during their career, they also have to wait until 65 or when bad-luck strikes. We also have to set up a huge bureaucracy to manage the programme. This goes against this society’s long-cherished principle of freedom to choose and small government. It would also absorb massive public funds which could be put to better use. There is no evidence that the private sector schemes have any problem. Indeed, all private sector schemes at present provide much better benefits than the proposed MPF. Why can the Government not follow existing arrangements and do it the simple way? This I would regard as typical bureaucratic overkill.

Furthermore, the Bill itself is so full of holes that my respective friend, Mr Marvin CHEUNG, has pointed out. I fully agree with him. However, I will give the Government the benefit of doubt and accept that they will fill the holes after further consultation in the next Legislative Session.

I have come to the conclusion to support the Bill because the Government has committed that existing schemes will be able to operate and take on new members if they meet certain conditions. Many private sector schemes provide much better benefits than that required under the MPF, so why should we force these schemes into extinction by forbidding them to take on new members?

The other feature of the MPF which I have strong negative views is preservation. Under MPF, an employee could only get his benefits when he reaches the age of 65 or retire or under some very stringent conditions. This really goes against the spirit of a free society. All private schemes in Hong Kong allow employees to take their benefits when they leave. It is administratively simple and also allows the individual to use his savings in a way he feels most appropriate. I hope that the Government would introduce flexibility and allow people to use part of their savings to invest in ways they see appropriate such as buying shares or property at certain time during their career.

My other reason for supporting the Bill is that the Administration today is in such a weak political position that I cannot really blame myself to vote against it.

Furthermore, we have debated this subject long enough and there is no chance of any consensus. We have to put an end to it and make a decision to move on, and therefore I will support the Bill.

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MR MARVIN CHEUNG: Mr President, I have on a number of previous occasions expressed my views on the various proposals, including MPF put forward by the Government, on retirement protection. I have not changed my view on these matters. Whilst I have no wish to dwell on the arguments for or against MPF again, it is evident that certain of the Members and in particular the Honourable Allen LEE have not heard what I said on previous occasions, so you will permit me to very quickly summarize the various reasons why I objected to an MPF proposal.

Firstly, the Government has failed to provide any convincing facts and figures to substantiate the nature and extent of the problem. An increase in the aging population does not automatically mean that those who are aged are in financial difficulties.

Secondly, without a clear definition of the problem, it is not possible to determine what is the cause of the problem and whether MPF or any other proposal is the appropriate remedy.

Thirdly, MPF is unnecessary for people who are employed and earn a reasonable level of income. As according to our Honourable Financial Secretary, the people of Hong Kong are the best savers in the world.

Fourthly, MPF is of little help to those who are already retired, near to retirement or have no income or low levels of income as the available benefits is directly linked to the level of earnings.

Fifthly, contrary to the Government’s assertions that funds under management will in the long term produce returns in excess of inflation thereby, as the Secretary for Education and Manpower said today, ensure financial security for people in their old ages, the truth is that there is a high risk that inflation will erode the real value of savings as evidenced by the plain fact that no fund manager is prepared to guarantee returns linked to, let alone exceed, inflation. Nobody is prepared, to even guarantee that they will produce returns, say 2% below inflation. So any thoughts that by putting money with investment mangers will protect yourself against inflation may be misplaced.

Sixthly, MPF is unworkable unless very draconian provisions are included which will have significant adverse consequences on the Hong Kong economy. Accordingly, I urge fellow Members to reject MPF and vote against the reading of this Bill.

Quite apart from my objections to MPF as a means of providing for retirement protection, I believe that Members who support the concept of MPF should nevertheless reject this Bill on the grounds that it is incomplete in all material respects.

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Let me hasten to add that my comments on the deficiencies of the Bill are in no way a criticism of the performance of the Deputy Secretary for Education and Manpower or her colleagues who have, in the extremely limited time available, done as good a job as is humanly possible in tackling this monumental task. The available time is simply not sufficient to consider all aspects of this complex legislation, to consult the relevant interested parties, to formulate detailed policies and to reflect the policy intent clearly in legislative form.

Contrary to what the Secretary for Education and Manpower has claimed that the Bill is not a hollow one, the major issues which have not been dealt with in the Bill but have been deferred to subsidiary legislation include the establishment and modus operandi of the MPF Authority, the arrangements for existing retirement schemes registered under the ORSO, the method of determining the contribution of self-employed persons, the arrangements for the portability or transferability of accrued benefits, the arrangements for the withdrawal of benefits, the establishment and modus operandi of a Compensation Fund, the arrangements to recover default contributions, the criteria for the approval of trustees, the conditions for the approval of retirement schemes as MPF schemes, and the establishment and modus operandi of a Residual Provident Fund Scheme.

Each and every one of these matters are critical for a fair evaluation of the desirability or otherwise of MPF. In the absence of any details concerning these matters, it is impossible for Members to properly assess the overall impact of the MPF proposal. The proper course of action should be deferred to discussion on the matter until all the relevant details are known. Unfortunately the motion to adjourn the debate has been defeated.

In addition, the Administration has glossed over some very important but difficult issues. I do not know if this is because the Government has failed to recognize them and has therefore failed to either address them properly or provide adequate arrangements to deal with them in the future. Alternatively, if these issues are addressed, it may be evident that the real problems on implementation of MPF will be unpalatable.

Examples of these include the ambit of the legislation. The Administration has failed to clearly articulate its legislative intent on the ambit of the legislation and to justify its policy intent in this regard. As Hong Kong is an international business and financial centre, many employers, employees and self-employed persons are not solely based in Hong Kong. The Bill fails to specify what are the relevant factors relating to an employment or self-employment in determining its applicability to the law.

Another example is the lack of definition for important terms. The Bill or the Committee stage amendments to be moved by the Government contain terms such as “persons entering Hong Kong for the purpose of being employed” and “permanently leaves Hong Kong” for which no definitions are provided. In the

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absence of definitions, it is impossible to properly interpret a number of key provisions in the Bill.

Thirdly, the Residual Provident Fund Scheme. The Bill requires all employers to secure and approve a trustee to operate an MPF and assumes that there will not be one single case where an employer will be unable to do so. A government-run Residual Provident Fund Scheme has been rejected as there is a risk that it will become in effect a Central Provident Fund. Whilst the Government has now agreed to move a Committee stage amendment to provide for the establishment of a Residual Provident Fund Scheme, there is no assurance that a private sector operator will be prepared to act in this capacity, and no provision has been made for this eventuality.

Next, investment guidelines. The Government has not made it clear how and what it seeks to achieve by investment guidelines. MPF may result in very significant resources being channelled in the hands of a very limited number of trustees and fund managers. The full impact of this phenomenon on our securities and financial markets as well as the linked exchange rate system has yet to be fully assessed. It may result in a need for very draconian measures to control the operations of these persons. Such measures may include some form of exchange control which could have major repercussions on Hong Kong as an international financial and banking centre.

Many of these issues are complex with a number of possible alternative solutions, each of which will involve some elements of cost or negative side effects. Members are asked today to consider the merits of an MPF in the absence of all the relevant facts.

Some of the provisions in the Bill which are controversial has not been fully debated. The proposed arrangements may not represent the most acceptable alternative. An example of this was the ORSO scheme. The Bill originally provides specific arrangements to deal with existing ORSO schemes. As a result of discussions during the Bills Committee and representations from certain quarters, the Government now intends to move a Committee stage amendment to delete this provision, leaving detailed arrangements to subsidiary legislation. Surely, this matter must be thoroughly debated and the final solution agreed before we adopt the MPF proposal.

Another example is the Compensation Fund. The arguments for the establishment of such a fund has to be considered in the light of the effectiveness of the vetting process and the continuing monitoring of trustees, both of which cannot be assessed in the absence of the relevant details. Some of the arrangements in the Bill are fundamentally flawed and these will render the MPF unenforceable. Examples of these are overseas retirement schemes. In the original Bill, there is an Item 8 in Part I of Schedule 1 which provides for persons from a place outside Hong Kong who are members of any retirement scheme overseas to be exempt. In the absence of an appropriate definition for the term persons from places outside Hong Kong, there does not appear to be

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anything to prevent a large percentage of the working population who are born outside Hong Kong to claim exemption under this provision by simply joining an overseas retirement scheme which only provides nominal benefits. This will surely destroy the whole basis of MPF.

Although the Government now acknowledges this problem and will move a Committee stage amendment to delete this item, no solution has been found. The matter is simply being deferred to subsidiary legislation.

Another example is early withdrawal. The Bill envisages that persons who have not reached retirement age may obtain early withdrawal of accrued benefits under MPF on permanent departure from Hong Kong. Despite raising this with the Government on numerous occasions, the Administration has refused to acknowledge this will potentially allow every single employee on terminating an employment to withdraw the accrued benefits. This is because no proof of permanent departure from Hong Kong could be expected from Chinese nationals alleging to be leaving Hong Kong to take up residence in China. Other nationals will likewise not be expected to produce any substantive proof of their alleged intention of returning to their country of origin or citizenship. With this blatant loophole, what purpose will be achieved by the implementation of this law.

Next, vetting of trustees. The Administration has asserted that the Authority will be able to ensure that only persons who satisfy very high standards will be approved as trustees of MPF, based on the experience of other regulators in Hong Kong such as the Monetary Authority or the Securities and Futures Commission. I do not share the same optimism that the proposed process of vetting will be effective in ensuring only fit and proper persons are approved without making the vetting criteria totally unreasonable.

Due to the complexity of the subject and the limited time available, it is impracticable to attempt to identify all the imperfections in the Bill and to make substantive changes thereto. I have attempted to draw to the attention of the Government and my colleagues in the Bills Committee to solve the more obvious gaps and errors in the Bill. Whilst the Administration has attempted to respond to my queries, many of the matters raised have not been properly dealt with.

The Administration are moving a number of Committee stage amendments. I have not asked for these even in respect of areas where it is clear to me that the Bill is unworkable or is otherwise flawed. It would have been impossible to deal with these properly within the time available.

For the reasons set out above, I urge Members to reject the Bill. In the event that the majority of Members support the Bill even with all its imperfections, I would urge that you should support the three amendments which have been proposed by me and endorsed by the Bills Committee and will in due course be moved by the Honourable Henry TANG.

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The amendments are necessary to ensure that the Legislative Council retains its proper power to scrutinize and, if necessary, amend or reject proposed legislation put forward by the Administration in relation to these incomplete proposals. I am grateful for the kind words expressed by Members of this Council in this debate and in the earlier debate on the adjournment about my contribution towards this piece of legislation. I hope that I have been able to offer some of my thoughts on the subject. I do respect your individual choices and your views on this matter. We would hope that collectively we can produce the right answer for the people of Hong Kong in the long term. With these remarks, I do not support the motion.

MR ERIC LI (in Cantonese): Mr President, the “warm up” debate to this Bill has been held yesterday and today, but in fact debates on this subject has been held in this Council for a number of times. Since 1991, when debates on the subject began, I have a special liking for an Mandatory Provident Fund (MPF) which has a complementary fund as its backing. That is why at the Second Reading when the principles of the Bill are debated, it is a matter of course that I should support the passage of the Bill. In yesterday’s debate on the Court of Final Appeal, many Members advised us that we had to stand by our principle, irrespective what the result would be. The Honourable Marvin CHEUNG did not give the details, but was already very clear with his stand. He would be against any retirement scheme. In fact, in the Legislative Council, there are Councillors whose stands are very clear and who would stand by their principles, and there are also Councillors like Mr Marvin CHEUNG who, with his professional knowledge, can see clearly all the details. At a time when the Legislative Council is required to give a clear stand, he is one of those rare species. I think we will miss him in the next Legislative Council.

Now the Administration has set down the menu, but we cannot do anything without any resources. The Administration is asking for a miracle when it requires officials of the Education and Manpower Branch and the Financial Branch to prepare such complex legislation and policy within two or three months. I completely agree with Mr Marvin CHEUNG in that the present Bill is riddled with blunders. I am also in agreement with the Honourable Tam Yiu-chung that we should not put the blame on the officials concerned. In fact, their being able to produce such a result shows that they have been working very hard, and after that they also have a lot of lobbying work to do. Their diligence and loyalty really move me. If a blame is to be laid, then it should be said, as the Honourable Miss Emily LAU commented during the debate on the Court of Final Appeal, that the Administration carried out political reform in 1991, but now it shows no trust of the 1995 Legislative Council. Once again it gives us a bill that has only the skeleton but not the flesh, asking us to make an important decision that has not been well thought through.

If I am to make a rational decision, Mr Marvin CHEUNG’s arguments are clear, sound and convincing, showing the sort of responsible attitude a Councillor should have. Reflecting on the efforts this Council made in the past

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four years in respect of retirement protection, we find that all those efforts were fruitless. If we were to re-consider those abandoned plans and re-implement them in all their details, it would be easier said than done. Actually, this MPF is a plan that requires the least legislative amendment. If we were to re-consider other plans, any form of social protection would remain always on the horizon, with the costs to the society even higher and the community at large suffering the most. However, unlike some Councillors, I would not say that if there is no retirement scheme, either the labour side or the employers would be at an advantage. I feel that, from the long-term perspective of Hong Kong, any scheme would only be a good scheme if it is beneficial to both the employers and the employees. I think that the MPF is a scheme beneficial to both the employers and the employees as well as the whole society. I therefore hope that the citizens would understand that the Administration and this Council are not here mumbling empty words with no concrete actions. We are determined to work for the citizens; the Executive Council and the Legislative Council would not be passing bucks, with nothing being achieved at the end.

I hope not only that this Bill can be passed, but also that all the Councillors can urge the Administration to continue with the other subsidiary legislations in the same urgency as we have seen in the past few months so that we do not have to wait for another two years to have a complete, “with flesh and bone”, retirement protection scheme. As this Bill itself still lacks specific content, even if the basic framework is passed, it will not be able to escape from the “five-finger mountain” of Mr Marvin CHEUNG. His “five-finger mountain” of course is his three amendments which will bind up the Administration tightly, leaving the next Legislative Council with the controlling power to continue supplementing the content to its full satisfaction. I do not want to spend time leveling criticisms on the details, like the Honourable Peter WONG, Mr Marvin CHEUNG and the Honourable Vincent CHENG did, which I think the Legislative Council still has the opportunity to do in the future.

I understand that Mr Marvin CHEUNG’s amendment has great constitutional significance, but I think that such a basic and simple framework should not be supported without any condition attached. I feel that it is a situation of “contingency action for a contingency”. If we are to have a plan that has legislative protection and gives protection to the Legislative Council as well, I feel that we can only support Mr Marvin CHEUNG’s amendment before we can support the Bill. However, with this sort of amendment that takes away executive-led power, I will not always support or give any support in principle. I will not treat it as setting a precedent, that is it is “an exception rather than the rule”, and then consider it selectively.

Besides explaining my stand in casting my vote, I hope that the officials concerned will not be discouraged even with all these criticisms and hindrance. I also hope that the officials would understand that though we have been debating from morn till night for a whole day, I have heard that for this particular Bill they have had many a sleepless nights. With such a high morale, I think the Administration, as an employer itself, should first take care of the

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retirement protection of the civil servants. It is not the first time I say these words. In the previous debates, I have already said twice. If the public purse is to be used to protect other private retirement protection scheme, the Administration, as an employer, should give priority to the protection of civil servants’ retirement. Now this Bill is submitted to the Legislative Council, and is about to be passed. In support its passage, I hope once again that the Administration, in particular the Financial Secretary, can propose to the Chinese side that on 1 July 1997, from the almost $100 billion of reserve accumulated from land sales, $8 billion can be put aside as a second injection into the civil servants’ retirement protection reserve. I believe that this reserve of $15 billion can only maintain civil servants’ retirement payment for more than one year but not more than two. In the debate on the Court of Final Appeal, I also mentioned that there were already legislative and judicial arrangements ready for transition, I hope that this Council can work with everyone in Hong Kong to maintain the confidence and morale of the civil servants during the transition period. If this message can be conveyed to the civil servants at this time, I believe that it will bring about some positive responses.

MR ROGER LUK (in Cantonese): Mr President, during the debate on the Governor’s Policy Speech last October, I pointed out that there must be consensus on the political, policy and procedural fronts before any legislation can be successful. At that time I cited the controversies surrounding the general retirement protection scheme as an example.

Retirement protection for the elderly can be looked at on three plains: individual, family and social. In every country, because of different political and socio-economic factors, the relative importance of each of the three will also be different. With the Chinese race, because it has been under the influence of Confucian thinking and familial ethics has been the pillar of the Chinese society, and what is more its national economy is based on agriculture, so any retirement protection for the elderly is mainly family-based. That is why “piety comes first among the five human relationships, and to show our gratitude we should repay the hardwork of our parents and be kind to our uncles and aunties so as to come to a recognition of Bodhi together”; and “the elderly can live to a natural end, the able-bodied can apply their skills, the young can grow happily, and the widower, the widow, the orphan, the childless, the disabled and the sick can all be taken care of” is the highest ideal of a harmonious society in the Chinese culture.

Hong Kong, a place where the East meets the West, inherits the Chinese culture. With the population aging and more nucleated families emerging, there is a positive need to promote individual retirement protection to supplement the traditional role of the family. The occupational retirement protection system put forth by the Administration in 1992 was a response in the form of a policy to this political consensus. At that time the Legislative Council asked the Administratioin to provide limited underwriting so that if any of the protection scheme collapsed, the interests of the beneficiaries would still be ensured. As

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the Administration refused to provide any sort of underwriting, the political parties did not give their support to the plan and turned their attention to the Central Provident Fund. To relieve the political pressure, the Administration put forth the controversial Old Age Pension Scheme. Because the society could not come to a consensus on this Scheme, the Administration naturally had to withdraw the plan and return to the 1992 proposal of mandatory occupational retirement protection system. Nevertheless, the Mandatory Provident Fund (MPF) as promoted now is different from the 1992 proposal both in its coverage and the manner of operation. The question now is whether a consensus can be reached amongst the various sectors of the society in respect of the MPF. Because the Administration first passes the primary legislation before carrying out studies for the subsidiary legislations, this unnecessarily causes much procedural disputes.

What makes the consultancy report of MPF and the Bill so controversial naturally is that the existing voluntary retirement protection is to be replaced by the proposed MPF. The thinking behind the whole plan actually was to so operate a privately managed provident fund that it could have the effects of an MPF. This is the so-called privatized central provident fund, because if a provident fund system without a standardized fixed contribution is used. especially with the transfer and retention of benefits, it would be impossible to implement. Actually, defined interests system and defined contribution plan are premised on two different bases; it would not only be impracticable, but also technically impossible to implement, if interchange between the two is allowed. The problem is this would, in a guise, stripping the citizens the right to a defined interest retirement system, but on the other hand, the retirement scheme of the civil servants is adopting the latter. So is it fair if “the magistrates are free to burn down houses, while the common people are forbidden even to light lamps”? After the scheme is proposed, those political parties which have been in support of a central provident fund all oppose the Administration’s scheme, while those which have been against become keen supporters. What a great political irony!

If the MPF is conceptually only an extension of the current voluntary system, and a lowest condition is set, I cannot think of a reason to prohibit schemes which can meet the least requirement to continue and not to allow new beneficiaries to join unconditionally. Moreover, the design, contribution and benefits of most current schemes are above the least requirements of the Bill. Any MPF therefore must have the preservation and continuation of the current occupational retirement protection scheme as its major premise. We must not forget that the number of beneficiaries under the current schemes represents 30% of the workforce. If an MPF is to be implemented, its objective should be to incorporate them rather than to replace or eliminate them.

With the current occupational retirement protection schemes, if set up by the employers, most of them will have the employers and employees as joint trustee, who will also act as the fund manager. The greatest drawback of such an arrangement is that non professionals are allowed to handle investment

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management, and that there is no countercheck measures between the trustee and the fund manager to protect the beneficiaries. If a mandatory retirement protection system is to be implemented, the trustee must be a recognized body corporate and the trustee and the fund manager must be two separate entities so that effective control can be ensured.

The Mandatory Provident Fund Scheme Authority shoulders great responsibilities. However, whatever control will be either too lax or too tight. Too lax will make the system open to abuse and too tight will make it too harsh. The critical point is to find a way to balance the protection for the beneficiaries and the investment flexibility to achieve the best return. There is a tendency for any supervisory authority to self-expand, so finding a way to prevent the Authority becoming an overstaffed bureaucracy is also an important topic. In the past 10 years, the supervisory authorities for banks and securities and futures have expanded to such a degree that many people in the trades are worried that if Hong Kong will follow the footsteps of other countries in having too much supervision.

Mr President, for many years we have been making turns on the road to having a retirement protection policy, but in the end we are still back to square one. I believe that extending the current voluntary schemes to mandatory ones will be a compromise that will best take care of the basic requirements of all parties. If attempt is made to privatize the Central Provident Fund in the hope of attending to the demands of every party, that will only render the scheme to be too cumbersome to be effective. Mr President, during the debates on the Bill, the Administration has been very receptive to the views of the Councillors. I hope that the Administration can make it clear what direction the policy will take and record it on file so that we can have a basis for making the related regulations.

The federal government of the United States of America practises division of the three powers: judicial, legislative and executive. Two of the founders of the United States had much discussion over what system the congress should adopt. Washington advocated adopting the bicameral model, while Jefferson preferred a monocameral one. When they had come to a stalemate, Washington asked Jefferson why tea cups instead of teapot were used when we had tea. Jefferson answered that so doing would cool down the tea for ease of drinking. Washington then pointed out that that was the good point of having a bicameral model. To legislate was to set limits on one’s action and freedom, and it was not any matter that we could dismiss offhandedly. Careful consideration must be given to it before adopting any action. For more than 200 years since then, the Congress of the United States has been a bicameral one.

Mr President, it is not really desirable to have the Bill legislated in stages, and such a practice should never repeat again. Moreover, the Administration has been trying to please everybody in its policy, and when it comes to the problem of the coexistence with current schemes, it is too wishy-washy, what is more it is too concerned with the transferability and retention of interests and

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overlooks the technical difficulty in practice, thus only to find itself ending up with a thankless task and making the examination of the Bill even more complicated. Actually, if it were not for individual Councillors who are experienced in the operation of retirement protection scheme and gave very strong arguments at the Bills Committee, our voting the primary Bill probably would only be a futile exercise. I hope that the Administration will learn from the lesson. Finally, I would like to restate that any protection for the retiring elderly must have the individual, family and society all working together, it would not help with only one working. Hong Kong should try to implement this from the individual level.

MR MICHAEL HO (in Cantonese): Mr President, the Democratic Party objects to the Second Reading of the Bill. We do not support such an Mandatory Provident Fund (MPF) Scheme mainly for the following reasons:

Firstly, we find that the Scheme, being not for general coverage, only covers those who are employed, without any coverage for the elderly, housewives, disabled or those suffering from chronic illness.

Secondly, the Scheme cannot provide adequate protection to those in the low income group. What these people can get after contributing for 30 or 40 years is very minimal. This Scheme actually cannot give them adequate protection for their life after retirement.

Thirdly, the administrative cost for the Scheme could be very high, which might hit those in the low-income group badly. Small already is their contribution that if it has further been eaten into by the administrative cost, they would have no idea how much they can get back on retirement.

Fourthly, the protection against investment risk and legislative monitor are fundamentally flawed. Some have said that it is difficult to give any guarantee against investment risks, which is correct, but we must not forget that the present mandatory scheme is to make every one contribute. While there is no protection against investment risks, the Administration only promises to set up a Compensation Fund for losses due to fraud or misconduct. As to how compensation is to be made, it is still a problem which the Honourable Marvin CHEUNG has also referred to just now. In countries like Australia and Chile where MPF is also implemented, there is also systems in place to protect against investment risks. Of course, this involves a lot of technical difficulties and up to now it is still a blank sheet. The Administration has not promised to carry this out.

The Democratic Party thinks that the best retirement scheme for Hong Kong should be the Central Provident Fund. To protect the elderly population in Hong Kong, we also need a comprehensive social security scheme which we hope can co-exist with the old age pension scheme. Mr President, I know that it is not an easy matter, or totally impossible, to convince our colleagues in today’s

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debate to vote against the Second Reading of the Bill, but we hope that they try to look into the matter again. Just in the short span of a few months, the Administration made up this Bill and submitted it to the Legislative Council in June. It was severely attacked in the Bills Committee by Members of this Council who understood the financial and accounting operations. They had raised many points and pointed out many flawed areas, saying that the whole Bill was still full of traps today. Risk is already very high with a private MPF Scheme, now with so much inadequacies in this Bill, the risks involved would be even higher. During the month when this Bill was considered, our colleagues in the Bills Committee had found a lot of problems and flaws. After rushing through the whole Bill in a short time, the Bills Committee made scores of amendments. I remembered the media had asked us why we had to make so many amendments. I would like to tell you that they were not too many, it is only because we did not have enough time for closer scrutiny, or else I am sure that we could find out more problems. Given only one month to consider the Bill, the Bills Committee actually could not effectively scrutinize the Bill for the flaws. I am sure that only a very rough piece of work was done during that one month given for considering the Bill. Of course, I agree too that our colleagues and the officials concerned were all very committed to their work and hardworking during the month of meetings, but having only one month to study a bill of such complexity was definitely insufficient and unsafe. If we were to pass this Bill today, I can tell you that we are not sure how many flaws there are still waiting to be found. Members of this Council have to be responsible to the citizens. If we pass a Bill without giving it careful consideration, just as the Secretary for Education and Manpower has just said, we have to be responsible. It is exactly because we have to be responsible, therefore I do not think we should perfunctorily pass a Bill of such complexity without giving it careful scrutiny. I remember that we took a year to examine the Occupational Retirement Schemes Bill. The present Bill definitely would not be anything simpler than the Occupational Retirement Schemes Bill.

The problems associated with this Bill are mainly in a number of areas. On the one hand the Administration has not made clear arrangement in a number of parts in the Bill, for example, the bridging of the MPF Scheme with the existing provident schemes. When we finally could not come to an agreement, it was agreed that it be left hollow. Matters which we could not agreed were left untouched until being dealt with in the subsidiary legislation. Other problems relating to the portability of savings, transfering mechanism, trustees and fund managers or the operation of the Compensation Fund have all not been clearly dealt with. On the other hand, government officials know very little of these schemes and the operation of the relevant provisions. Ms WILLIS and her colleagues have my sympathy in respect of this Bill because actually no civil servant has any experience in running a private MPF, and within such a short time, we have raised so many questions that they just could not cope with.

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Let us look at the problem of monitoring. Now we force people to put aside something for the future, but what if after scores of years something happened that made them lose everything? Look at the monitoring of the banks now. Hong Kong now has a very stringent system to monitor the operations of the banks. But when we have made so much contribution, which, according to the Honourable Vincent CHENG, may amount to US$32 billion, and we do not have a good system to monitor the Scheme, what would happen? I really hope that we make it clear to ourselves if our consideration given to this Bill so far is enough and safe. If we think that it is not enough, so is it a responsible act on our part to pass this Bill today? The Democratic Party thinks that this Bill is still riddled with flaws and we are not going to let it pass and we shall vote against it during the Second Reading. However, if at the Second Reading it was passed, we would, at the Committee Stage, support the amendments proposed by the Honourable Henry TANG and the Honourable LEE Cheuk-yan and some of the amendments proposed by the Administration. If a Bill riddled with so many flaws was still passed, we hope that such flaws could be reduced as far as possible. We would also vote against the amendment proposed by the Honourable James TIEN of the Liberal Party.

Mr President, I would like to respond to a few points raised by the Secretary for Education and Manpower. Firstly, the Secretary for Education and Manpower asked that why we had to propose an adjourment. I have made it very clear just now that if the Bill is not yet fully considered, it should then be adjourned. This is a responsible Legislative Council, we are here to legislate, so this is what we should do. The Secretary for Education and Manpower mentioned that many of the technical problems could be left for future discussion and amendment. Of course these can all be done until a later day, but with this Bill, there are too many technical problems and too many flaws in it. We are not expecting that every piece of legislation is hundred percent perfect, and that there is no flaw which require our amending it later. That is not what we ask for. But we clearly know that there are still so many problems with this Bill and there are many questions which we cannot answer ourselves, then there is no reason we should pass it today. This is our responsible attitude.

Finally, on behalf of the Democratic Party, I would like to express our thanks to Mr Marvin CHEUNG for all the contribution he made at the Bills Committee.

Mr President, these are my remarks, and the Democratic Party will vote against this Bill.

MRS ELSIE TU: Mr President, It has always been my belief that Hong Kong needs a provident fund, as the elderly population increases while the younger workers decrease as a result of better family planning.

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Not being an economist, I might have preferred a Central Provident Fund (CPF), as being more trustworthy with the workers’ funds. But if the economic difficulties with the CPF are insurmountable, the second best is a private mandatory provident fund. I was a member of the Bills Committee and consider that the proposals in this Bill before us today have not been well worked out. First, they offer no detailed solutions to the many issues involved, which I shall not repeat as they are certainly being repeated during this debate. These difficulties should have been ironed out before the Bill was put before us. There was plenty of time for the Government to do so as we have talked about the subject for years. Secondly, there is the problem that the Bill will not come into operation until 1997. No one needs to be reminded of the transition of sovereignty in that year, yet there has been no consultation with China. There is little point in spending time, effort and money setting up a scheme that could be scuppered in July 1997. Consultation should take place at once.

I am prepared to vote in favour of this Scheme today on the condition that no steps will be taken without thorough scrutiny of the subsidiary legislation by this Council, and with the agreement of China on a matter that could have an economic impact on the territory after 1997.

There are some who will try to delay this Scheme once again for political gain. It is an unfortunate fact that nowadays everything that comes before this Council is turned into a political power struggle. That is far from my idea of democracy, which should be people based, not party-based. Political struggle does nothing for the good of our community, and seems to be aimed at destabilizing it. The public should not be misled by the political party that will promise a better scheme for next Session, in the hope of gaining more seats on this Council. It is easy to make promises when one does not have to take the responsibility of carrying out those empty promises.

One point that is not in the Bill but which has been my theme-song for years and can be implemented this year is for the elderly who have already retired to share in our prosperity, as they were the ones who worked hardest to lay its foundation. I ask again that first priority should be given to doubling the CSSA payments made to the able-bodied but needy retired, with additional benefits for those among the elderly who are not so able bodied. It is shameful when an old person has to tell us, one person did tell me this, that he enjoys a bowl of soup at a cheap teashop, but he can no longer afford to buy one. Or when an elderly person tell us that she is waiting for an operation but cannot afford the medicine she needs to relieve her suffering while waiting for her appointment with the government doctors so as to get free treatment. Yes, such things are happening, and nothing I can say will change that as long as the Government dilly-dallies on the needs of the elderly while rushing to spend money on spectacular and prestigious projects. It is inexcusable and I ask the Government once again to remove this shame from our consciences.

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Mr President, in view of these amendments proposed by the Bills Committee and accepted by the Government, I support the Bill as primary legislation and urge the Government to push ahead speedily with subsidiary legislation, taking into account all the problems that are mentioned by Members today. Thank you.

MR WONG WAI-YIN (in Cantonese): Mr President, I think we do not have a quorum. The Chairman directed the Clerk to summon Members to the Chamber.

MR FREDERICK FUNG (in Cantonese): Mr President, there are people who still wear worn out shirts that have been patched up. Some people would say that it is a thrifty and useful habit that will help us put aside something for our later life. Some would even say it is all out of one’s “nostalgia”, which, of course, would have the appreciation of many people. However, with all the patch-up work the Administration made to the Mandatory Provident Fund (MPF), I personally and many old folks and citizens are far from happy about the Bill. No matter how hardworking those involved in the formulation of this Bill have been, it does not mean that they are doing the right thing. Now matter how many sleepless nights they have gone through, they would still have to bear the blame of those affected if the direction taken was off the mark, leaving them with no assistance whatsoever. In fact from the very beginning, the Hong Kong Association for Democracy and People’s Livelihood (ADPL) and I are opposed to the privately managed mandatory provident fund scheme, and have made representations on a number of occasions. Notwithstanding that the Administration has made amendment to a scheme with so many holes in it, ADPL and I think that it is still unacceptable.

I feel that I need to restate my stand here again. The Administration and the society has the responsibility to set up a general social security system so that the basic livelihood of every citizen in his old age can be ensured. A general social security system of course must include a central mandatory provident fund and an old age pension system. The spirit of the social security system is in its general application, with the Administration being the ultimate underwriter. However, the privately managed MPF as proposed by the Administration cannot even live up to this basic spirit.

On this point, I have to put the blame on the Administration. It has proposed and implemented an old age pension scheme, with eagerness far exceeds that for other proposals. There were even TV ads giving strong impressions to the citizens and the elderly that these were not ads but actual policies. According to what was depicted in the ad, almost every aged one would be able to apply for money the next day. This has left a very deep impression on the elderly and the retired. Though the elderly had all sorts of

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opinions and reactions at that time, they were not against the system of old age pension but opinions given in the hope of making it even better. However, for no obvious reason, the Administration made an about face turn in its action, and used this MPF to replace the Old Age Pension Scheme (OPS). How can the citizens and the elderly accept such a sudden change in such a short time? We also cannot see what assistance such a change can give us.

The OPS is to benefit the elderly, what is more, it is to let them benefit immediately, no matter if he or she is a salaried worker or housewife. On the other hand, the MPF only makes people save up for their old age when they are young. They can only have the money back 30 or 40 years later. The two systems are therefore two different unrelated matters. What unrelated means is that how can those with no job for 40 years or having not worked for 40 years, for example, one who is 40 or above, benefit from this scheme? This privately managed MPF is therefore an elderly savings plan, the effects of which can only be seen 40 years later; it is not a general social security system. The Honourable Michael HO has just raised points which I also agree to but I do not want to repeat, especially on the large resources to be used, hefty costs in implementing the system and the lack of protection against risks. It is very worrying when a salaried worker puts his hard-earned money into this privately managed MPF every month but has no protection whatsoever against risks. They may only get back very little on their retirement. With the Administration promoting the system with such aggression, and this Bill being a skeleton without any flesh on it, we are told to support the passage of this Bill even without the details. I would say solemnly that if even we ourselves have no idea what the future would be, then those who support the passage of the Bill are betraying the salaried workers and pushing them into a deep abyss. I feel that if the Councillors are voting with their conscience, they should not support this Bill.

Much patching-up opinions as well as patching-up amendments have been made on this Bill. As to these amendments, though some people have said that the system will be made better with the amendments, thinking that a little more is added to the framework, it is still something without any flesh in it. I do not find all these patching-up work meaningful. With or without the cosmetic surgery, I see no difference. Working within the confines of a legislature, I find that my such stand has created a dilemma. If I support these patching-up opinions or amendments, I would actually be falling into the trap of supporting a system which I oppose. If I oppose, my opposition would make no difference to all those opinions. If I abstain, I will be like not having declared my stand. I therefore can only press the button that shows my presence, but I will not vote. My abstention from voting is to show my protest. The only amendment proposal to which I can give my support is that of the Honourable LEE Cheuk-yan.

The Employment Ordinance permits the employers to set off the contribution for retirement schemes against the severance payment or long service payment. This ordinance is unfair to the employees as the provision for

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a severance payment and a long service payment is to ensure that the employees will be given reasonable compensation on being dismissed, and such a provision is not for retirement purpose. Being so different in nature that the two should be handled separately. Though the Administration expresses that the setting-off arrangement has been in operation for a long time, or that it is not appropriate for the Labour Advisory Board (LAB) to conduct research or make any amendment prematurely in respect of it, having been in operation for a long time does not mean that it is a proper one, nor is it a reasonable one, nor giving any labour protection. I feel that amendment can be made to it. The LAB is only a consultative, not a decision-making, body, and the Legislative Council has the power to decide on legislation. This has been mentioned a number of times by the Administration when the British and Chinese sides at odds with each other. That is why the Legislative Council comprises both employers and employees. The Legislative Council, before making any decision, can conduct consultation and discussion with the employers, and in the process, consider the opinions of the LAB. All these can be done. I therefore support the amendment motion of Mr LEE Cheuk-yan, which is to preserve the entitlement of the employees to severance payment and long service payment.

The ADPL and I think that the MPF Scheme is like a lemon which is, sour in taste and small in size. It is outright unpalatable. No matter what changes this lemon will undergo, it will not become a sweet orange. No matter how this lemon is to change, there is no way for it to make the elderly happy. No matter how this lemon is to change, it will not be sweet to those “salaried workers” above 40.

With these remarks, I support the amendment motion of Mr LEE Cheuk-yan, and, to show my protest, will not vote in respect of such patchy amendments.

MR ANDREW WONG (in Cantonese): Mr President, during the debate on the adjournment motion, I had briefly said something, which I think should be further elaborated to give full expression to what I feel.

As I just said, I would take whatever action as long as it can beat down the privately managed Mandatory Provident Fund (MPF). I think that Administration had made a wrong decision, a wrong judgement back in 1994, whereby the Old Age Pension Scheme (OPS) was abolished, thus backtracking to the pension scheme which we now have and is not much different from the scheme introduced in 1992. The situation at the moment is that the Administration seems to think that it will surely win because of the support from more than half of the Councillors, so its language becomes more threatening, hoping that it can win by a greater margin with more Councillors supporting. It even resorts to such intimidating tactics that if the MPF Scheme Bill was to be voted down, the Councillors would have to be blamed. What Mr Michael LEUNG said just now was such intimidating words; if there was no passage, there would be nothing. I hope that he can re-read the debates of 1994

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and 1995. The date which I said slipped my memory is 8 March, and the Honourable TAM Yiu-chung pointed that out just now. During the debate on 8 March, I had pointed out again and again that Mr Chris PATTEN, the Governor, and Mr Michael LEUNG had said that only one Councillor was in support of the OPS, but it was wrong and they did not respond. Just by checking the debates on the 1994 Policy Address and the relevant debates, we can see that most of the Councillors tended to support the OPS, and as long as the Administration was determined to have it, it would succeed. That was my judgment at that time, regrettably the judgment of the Administration was different from mine.

I therefore must make a comparison between the OPS and the provident fund as to which is the better. At that time, that is on 8 March 1995, I had already made myself very clear, and I remember that I had given an analogy of sour lemon or something like that, that is fishball vermicelli or wonton noodle, I said it was fish and bear paw. However, where exactly is the problem? There are still so many holes in this Bill. Mr TAM Yiu-chung said that it is an empty shell, but I would say that it is an empty pot. If one was given an empty pot, one would have to wait for 30 years to have anything to eat. If we were to vote it down, we would be blamed for caring for the young people, that is those aged 30 or 35 now, instead of the elderly. What those aged 30 or 35 then get may not be as good as the arrangement of the OPS. People now aged 20, if working till 65, may get something comparable to that of the OPS.

At that time, I said that there were two speeches, and two debates too, one on the motion of the Administration and the other on the motion of Dr the Honourable YEUNG Sum. I said that I could not support a privately managed MPF which did not give general coverage and bring immediate effect, and with little benefit, high risk, no protection, high charges and great instability. If we are to pass it today, I would not want to have anything more to say about it, you only have to refer to the Hansard of this Council, that is the Hansard of the sitting on 8 March, from page 137 to 138. If this MPF is to be implemented, and if we all agree to its implementation, I still think that we must consider its implementation with the OPS. At that time, I said that with fish and bear paw, it was not necessarily that we could not have them both together, we could have. If I were to make a choice as to which one should go first, I would choose to have the OPS first instead of the MPF. If the two were to be implemented, I would choose to have it first. If we were only to have one, I would prefer the OPS to the MPF.

At that time, Dr the Honourable LAM Kui-chun in proposing some amendments to Dr YEUNG Sum’s motion, made an analogy, saying that the OPS was like a bowl of wonton noodle, which in its gradual development would be left with only noodle but no wonton, then further down the road, only soup but no noodle, finally only an empty bowl. I then said, if it was so, the OPS was like fishball vermicelli which we could eat immediately, and if I was also given wonton noodle, I would eat it too, even though I might have nothing to eat in the future. However, a privately managed MPF only gave us an empty bowl,

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not an empty shell, which would only be filled with wonton, noodle and soup 30 years from now, so what is the point of having it?

I therefore can frankly say that I would try whatever means to beat down this Bill, so that the Administration can be forced to implement the OPS, that is, anyone reaching 65, be they rich or poor, can be benefited. The Liberal Party is capitalist, saying that this scheme is socialist, but it is not. Frankly speaking, it is a collective insurance for protecting the livelihood of the elderly, and what each old person can get is roughly equivalent to 30% of the median income then, it does not provide comprehensive protection. This does not mean that they cannot join any voluntary retirement protection scheme, rather we should encourage more employers to organize such schemes. I would not oppose completely to the implementation of a MPF later. The situation is all very simple. If the Administration is not to listen, and the other Members are not to listen, an empty-shell scheme, that will take a long time to bear any fruit, will be passed. We should therefore enact schemes that will enable people to have protection immediately, and have them implemented right away.

I have said that the idea of making contribution as put forth by the Administration in respect of the OPS is wrong and misleading. It in fact is a kind of tax. I am very happy to give 1.5% of my salary for caring the elderly only if the Administration honestly says that it is a tax. With the knowledge I have of the political system of Hong Kong, I know that the Councillors cannot propose any motion or bill that will have an implication on public finance, but the Councillors are entitled to propose introduction of new tax. It is not possible in the United Kingdom, but possible in Hong Kong. With the return of the next Legislative Council, I therefore would propose a new tax. Every one will have to pay a 1.5% tax, which will be taken from the total salary of an employee who is on the payroll of an employer. As to its use, I would say that it is for the use now under discussion but it cannot be expressedly put down for use as such, and I think every one knows that it is for this scheme. I am seriously making a promise that I will carry out this work.

Mr President, with these remarks, I am against moving the Second Reading.

MR SZETO WAH (in Cantonese): Mr President, in the debate in respect of the motion to adjourn debate on the Mandatory Provident Fund Scheme Bill yesterday, I had said a few words, yes, only a few words, not more than half a minute. Now I would like to repeat what I said. I said that earlier the Honourable James TIEN had praised the Honourable PANG Chun-hoi highly as the true labour representative ......

PRESIDENT: Mr SZETO Wah, please keep your remarks to the merits and principles of the Bill. That is what this debate is supposed to be about; not about irrelevancies, not about party politics.

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SECRETARY FOR EDUCATION AND MANPOWER: Mr President, the debate today marks the culmination of discussions that have gone on for more than a generation about how best to provide financial security for members of our workforce when they retire.

I am grateful to Member who voted against an earlier motion to adjourn discussions of this most important issue until the next Session.

The community needs to know now where it stands on the subject of retirement protection. Members deserve the opportunity to vote for the MPF Bill on its merits.

Retirement protection is an issue which both the Government and the community have taken seriously. In 1992 we proposed a community-wide retirement protection system. In 1994 we proposed an Old Age Pension Scheme. Neither met with full community support. From submissions on the Old Age Pension Scheme though, it became clear to us that what the community wanted was the early introduction of a mandatory privately managed provident fund system. Such support was underlined by many rounds of consultation within the community earlier this year, and on 8 March this year, Members indicated their clear support for the concept of what we now call the MPF Scheme by passing the motion.

After seeking independent advice as to the feasibility of our approach, we announced in May this year the main points that would be covered in the MPF legislation. The MPF Bill was introduced into this Council on 14 June. I am most grateful to the Honourable Henry TANG, Chairman of the Bills Committee, to study the MPF Bill and other Members of the Bills Committee for the time and effort they have put into scrutinizing this Bill.

Over the past few weeks, we have worked hard to reach general agreement on the provisions of the Bill. We have considered very carefully the views of Members of the Bills Committee as well as helpful suggestions and submissions received from various employers and employees groups, professional organizations and deputations received by the Bills Committee. Where possible, we have tried to accommodate many of the suggestions that have been put forward. The Committee stage amendments which I shall move later on reflect the outcome of that consideration.

I should now like to turn to the key changes we propose to make to the Bill during the Committee stage as well as to comment on those areas where we believe the Bill should remain unchanged.

It is our stated aim for the Bill to cover as many persons in the workforce as possible. At the same time, we do not want to upset participants in existing schemes, whether these are statutory in nature or schemes registered under the Occupational Retirement Scheme Ordinance (ORSO). Under Schedule 1 of the Bill therefore, any employers and employees who are contributing to an

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Occupational Retirement Scheme a sum not less than the statutory minimum MPF contribution, of which the employer’s contribution must not be less than half the statutory minimum, will be exempt from the MPF. This provision has been the cause of much debate among employer organizations. Although we believed it to be a simple solution to the question of interface, since the publication of the Bill, many employers have said that they have invested a great deal of time and resources in complying with ORSO requirements. They have asked for more flexibility in the exemption arrangements. In particular, they have expressed concern about the need for ORSO schemes to have to use the MPF definition of relevant income before they are qualified for exemption, and about our requirement that such exempt schemes will be closed to new members.

After listening to the views expressed by Members of this Council and by the various deputations, we are now prepared to take a second look at whether the exemption should be widened to meet the requirements of the genuinely generous employers.

However, in taking this second look, I must make it clear that further exemption would only be considered on condition that the fundamentals of the MPF system would not be compromised. Our policy intention is that both defined contribution and defined benefit schemes are acceptable as MPF schemes. Indeed, this Bill does not restrict the choice of the employers and employees on the types of schemes. It is acceptable for an employer to set up for the purpose of meeting the MPF obligation, a defined benefit scheme for its employees provided that the contribution in respect of each member in the scheme works out to be 10% equivalent of the relevant income of the relevant employee.

Accordingly, we will be moving an amendment to the effect that persons who are members of relevant ORSO schemes, whether defined benefit or defined contribution, can be exempt from the provisions of the MPF legislation and provided they satisfy requirements specified in regulations to be made under the Bill. We shall then be able to discuss further with the organizations concerned the details of the exemption requirements arrangements and consider further the conditions under which new members may be admitted to such schemes.

Obviously, there are regulatory issues which are specific to defined benefit schemes, such as those relating to solvency. Again the provisions in the Bill are adequate to enable detailed regulations and rules to be made for defined benefit schemes as well.

The definition of relevant income has also given rise to much discussion. Under existing ORSO schemes, contributions are usually a percentage of basic salary, and there have been proposals for the same usage to be applied to MPF schemes. However, we believe that to make such a change would not be in the best interests of the workforce. It would mean that persons whose income

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consisted of a low basic salary and the rest in commissions would lose out in terms of contributions, and eventual retirement benefits. There would also be the risk that some less scrupulous employers might re-define the employment terms of their employees so as to reduce their liability for MPF scheme contributions. This is not an area where we intend to make any changes.

Another area of exemption deals with those persons who are assigned to work in Hong Kong intermittently, but who are never really part of the Hong Kong workforce. There is no good reason for bringing such persons under the scope of the MPF. Accordingly, the Bill provides that persons from outside Hong Kong who come here to work shall be exempt from the provisions of the MPF if they leave Hong Kong permanently before the expiry of a period of 180 days. Also excluded in a separate provision are those persons who come here from overseas to work and who are already covered by a retirement scheme outside Hong Kong. This is because it might cause a person financial difficulties if he had to contribute to two schemes, one in his own country and one in Hong Kong.

We have been told, however, by some Members of this Council that these provisions do not make it sufficiently clear as to who is exempt and on which occasions. Accordingly to place the matter beyond doubt, we are replacing the subclauses which deal with this as well as the item in Schedule 1 with a more general provision which would exempt persons coming to Hong Kong from overseas for the purpose of limited duration employment or self-employment or those who come here from abroad and who are already members of a retirement scheme outside Hong Kong from the MPF, subject to rules to be made by the Authority. The rules would deal with such issues as the definition of limited duration, and whether there should be a limit on the number of days or times each year when such an exemption could be applied.

Schedule 1 of the Bill also exempts a relevant employee who has been employed under a contract of employment for a continuous period of less than 30 days. This is in recognition of the fact that if an employee is going to resign, he is more likely to do so in the period immediately after he starts a job. So there is no point in incurring the administrative work of setting up a scheme for him.

Some Members have asked whether it would be possible to extend the 30-day exemption period to 90 days on the grounds that many employees give notice during that period. We have considered this, but do not think that such a long exemption period would be appropriate. To extend this period to 90 days would lead to contribution and benefit gaps where employees had a history of moving from job to job before the three-month period was over.

We do appreciate, however, that there may well be employees who give notice at the end of the first month of employment and thus leave at the end of the second month. We shall therefore move an amendment to change the 30-day exemption period to 60 days. In the event that the employee remained in

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employment longer than that, then the employer will have to back date both months’ MPF contributions, while the employee would need to contribute only in respect of the second month’s relevant income.

A final amendment on exemption and coverage is that we have always been aware that there will be particular classes of employees or self-employed persons whom it will be administratively difficult to bring into the MPF at least in the early years. The Bill provides for such persons to be specified in Part II of Schedule 1, and there is provision for such specification to be varied, altered or repealed. That is when the administrative difficulty had been overcome, the classes of persons could then be brought under the MPF.

We believe even at this stage that it would be administratively difficult and problematic for two particular groups to be brought into the MPF at an early stage. These are self-employed hawkers and domestic employees irrespective of their place of origin. We shall therefore be moving an amendment to include both categories of worker as exempt persons under Part II of Schedule 1.

Clause 1(2) provides for the Ordinance to come into operation on a day to be appointed by the Governor by notice in the Gazette. This is a traditional legislative provision. It is all the more surprising therefore that some Members are asking for the appointment of this day to be subject to a resolution of this Council. I must say I do not see any necessity for such an unusual provision which I understand to be without precedent in Hong Kong.

Let me explain why. In practice we would not want to nor would we bring the Ordinance into effect until the relevant items of subsidiary legislation were in place. As part of this process, we would wish to see the early establishment of the MPF Scheme Authority so that it could be involved fully in the preparation of the necessary subsidiary legislation as well as in the process of approving trustees and registering schemes. Nor would we be advising the Governor to introduce clause 6 of the legislation requiring employers to arrange schemes for their employees and the self-employed to make parallel arrangements until the necessary legislation was in place.

The provision in clause 6 are unenforceable in isolation. They require subsidiary legislation to be in place. Given that Members would need to be satisfied with the specific provisions of subsidiary legislation on which they would have been consulted in any case before these could be enacted by positive resolution of this Council and on this I shall speak further in a moment, I cannot understand the reasoning behind this demand.

Some Members have pointed out that there is a precedent in the United Kingdom for the date of coming into operation of a piece of legislation to be subject to the prior approval of the legislature. That is so. The Easter Act 1928 does indeed make such provision. I shall not speculate in this Council on the

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reasons for such a provision. What I shall point out however is that the legislation itself has never been brought into effect.

I cannot understand, Mr President, how it can be in the best interests of those who will benefit from this Bill to introduce such a provision. It seems to me that it could be used to delay its coming into operation indefinitely. I have no intention of changing the existing clause 1(2) of the Bill and I urge Members not to support any amendment to do otherwise.

Even more disturbing is the suggestion that there should be a statutory provision linking the bringing into operation of the Ordinance with the implementation of related regulations and rules. This is objectionable. It introduces the element of uncertainty to the statutory power to commence that is contained in clause 1(2). If it was necessary to consider, on each occasion that it was proposed to use the power in clause 1(2)whether the related rules and regulations provided in clauses 44 and 45 had been made, we would be faced with a number of problems.

First, it may not be easy to determine whether or not clauses 44 and 45 actually provide for the making of regulations or rules in respect of a particular provision. For example, it would be difficult to relate the general powers in clauses 44(1b) and (1h) to individual provisions.

Secondly, even if this issue could be resolved, the question will remain of whether the requirement to make all necessary regulations and rules had been satisfied. For example, what the position would be if some but apparently not all regulations and rules had been made in relation to a particular provision. What would happen if a legal challenge was made on these grounds to the very essence of the MPF, that is, clause 6? Allowing for decisions based on opinion leads only to uncertainty. Our workforce deserves better than that. It is clearly unacceptable that the power to apply statutory provisions of public importance should be subject to such inherent uncertainty, and I urge Members to oppose any Committee stage amendment that might be moved to that effect.

I turn now to portability or transferability of accrued benefits. It has been our policy intention to allow persons changing jobs the choice of leaving their accrued benefits in the form of individual accounts with the trustee who runs the master trust scheme of their former employer, or to transfer their accrued benefits to the scheme run by the trustee for their new employer. No one would therefore be compelled to leave a master trust scheme run for his former employer which has been doing well and may produce a higher rate of return. Similarly no one would be forced to move to a scheme operated on behalf of the new employer which might not be doing so well. We think that this will reduce the frequency of transfers of accrued benefits.

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We believe that clause 13 of the Bill as drafted provides for that choice already. Some Members however, have contended that the clause does not reflect our policy intention. To put the matter beyond doubt, I shall move a Committee stage amendment later on.

Some Members have expressed concern that transfer costs might be significant. Now the process of transfer is straight-forward and should not incur any significant cost. However, for the better protection of accrued benefits, we can make sure that the subsidiary legislation will provide that, except for the incidental costs and expenses of remitting the money involved, no deductions shall be made against the accrued benefits under transfer.

I now turn to withdrawal of benefits. One of the provisions in clause 14 of the Bill deals with circumstances for the early withdrawal of accrued benefits from a registered scheme. These include provision for the purpose of set-off as prescribed in the Employment Ordinance, in respect of that part of the accrued benefits which are derived from a current employer’s contributions (quantified in accordance with rules made by the Authority under clause 45) at such time as the relevant employee becomes entitled to severance payments or long service payments. This is in line with our policy intent to enable the long-established set-off procedure under the Employment Ordinance in respect of schemes under ORSO to continue for MPF schemes. We have made it very clear that employers are not expected to pay twice under this new system.

Some Members I know are not in favour of retaining this policy for the MPF, and I understand one Member will move a Committee stage amendment later on with the aim of delinking contributions to MPF schemes from statutory obligations in respect of long service or severance payments.

We do, of course, realize in the longer term the interface of long service payments and severance payments with the MPF need to be examined, but it will take time to consider this important issue given its widespread implications for both employers and employees.

The Labour Advisory Board (LAB) which provides the best forum for employer and employee representatives to discuss labour matters of mutual concern will be consulted. It will be preferable therefore to await the advice of the LAB before taking our next step.

I now turn to the MPF Schemes Authority. We envisage that the MPF system will be both efficient and streamlined. The trustees who have primary responsibility for the operation of the MPF schemes will be providing their services under consistent and transparent operational rules to be provided by the MPF Schemes Authority － the MPFA. Thus neither will the service providers in the MPF system become gigantic bureaucracies, nor will the MPFA grow into a monstrous regulatory body. The monitoring of schemes and trustees will be carried out by teams of professional staff having intimate knowledge of how the market operates. We expect the MPFA to be a streamlined body. It would

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carry out random inspections and monitor the schemes’ books and accounts. The MPFA will be establishing guidelines on investments. These guidelines will lay down broad investment principles such as avoiding over-concentrations of risks and restrictions on the use of derivatives for hedging purposes only. We need to strike the right balance so that we do not over-regulate and stifle the ability of the industry to maximize investment returns. But at the same time we need to protect the interest of scheme members by ensuring that their retirement benefits are secured adequately.

I now turn to the Residual Provident Fund Scheme. Members will recall that the consultants have advised that there would be sufficient individuals and companies in the market interested in becoming approved trustees and that as such it would probably not be necessary to provide a Residual Provident Fund Scheme. The industry also agrees with the consultants. We have, nevertheless, included in the Bill a provision for these schemes to be established. However, some Members are concerned that clause 22 as drafted will not require the Authority to provide for such a scheme before the coming into operation of section 6 of the Ordinance and, as such, may not provide sufficient comfort to individuals who are unable to find a scheme in the market. To meet these legitimate concerns, even though we believe that the market will provide schemes for all who need them, we will be amending clause 22 of the Bill to require the Authority, prior to the commencement of any of the provisions of section 6, to take all necessary steps to cause to be established the Residual Provident Fund Scheme. The principal purpose of that scheme would be to provide membership as a scheme of last resort to those persons who have been unable to find a scheme themselves and where the Authority had also been unable to obtain access to a registered scheme for them. I shall move a Committee stage amendment to this effect later on.

I turn now to the important issue of approval of subsidiary legislation. We have always been committed to full consultation with Members of this Council and other interested parties in the community when drawing up the subsidiary legislation. In order to reflect this spirit of consultation, we are happy to agree that until such time as clause 6 of the Bill is brought into operation, all subsidiary legislation made under clauses 44 and 45 and notices made under clause 46 should be made by positive resolution of this Council in accordance with section 35 of Cap. 1. In the light of this amendment which I shall be moving later on, I must stress once again that I cannot see any reason whatsoever for the additional requirements for approval proposed by some Members, about which I spoke earlier.

Some Members have expressed concern that the exemptions in Schedule 1, Part I, as drafted, exempt those persons listed from all provisions of the MPF under all circumstances. This is not our intention and we shall be amending as necessary to reflect the fact that the persons described are only exempt in respect of relevant income derived from employment which is the subject of these provisions.

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Mr President, some Members have called this Bill hollow and have claimed that it is without substance. I must disagree. Even though the Bill is enabling, and although it is our intention to provide the details in a subsidiary legislation that will be the focus of wide public consultation in the months to come, the Bill itself is far from empty. On the contrary it provides a sound framework on which we can continue to build. It provides for the establishment of the MPF Schemes Authority. It provides for a Compensation Fund and the basis for a Residual Provident Fund Scheme. Employers, employees and the self-employed will know what their obligations are. It is already clear who will be covered by the MPF and who will be exempt. Mr President, the workforce of Hong Kong deserves the certainty of financial security upon retirement. The enactment of this Bill will give to the workforce what they have been seeking for so long, and so richly deserve. With these remarks, Mr president, I commend the Bill to Members.

Question on Second Reading of the Bill put.

Voice vote taken.

THE PRESIDENT said he thought the “Ayes” had it.

Mr Marvin CHEUNG and Mr Andrew WONG claimed a division.

PRESIDENT: Council will proceed to a division.

PRESIDENT: Would Members please proceed to vote?

PRESIDENT: Are there any queries? If not, the result will now be displayed.

The Chief Secretary, the Attorney General, the Financial Secretary, Mr Allen LEE, Mrs Selina CHOW, Mr NGAI Shiu-kit, Mr PANG Chun-hoi, Mr LAU Wong-fat, Mr Edward HO, Mr Ronald ARCULLI, Mr Martin BARROW, Mrs Peggy LAM, Mrs Miriam LAU, Mr LAU Wah-sum, Mr Jimmy McGREGOR, Mrs Elsie TU, Mr Peter WONG, Mr Vincent CHENG, Mr Moses CHENG, Mr CHIM Pui-chung, Mr Timothy HA, Mr Simon IP, Dr LAM Kui-chun, Mr Eric LI, Mr Steven POON, Mr Henry TANG, Dr Samuel WONG, Mr Howard YOUNG, Miss Christine LOH, Mr Roger LUK, Mr James TIEN and Mr Alfred TSO voted for the motion.

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Mr Martin LEE, Mr SZETO Wah, Mr TAM Yiu-chung, Mr Andrew WONG, Dr LEONG Che-hung, Mr Albert CHAN, Mr Marvin CHEUNG, Mr CHEUNG Man-kwong, Rev FUNG Chi-wood, Mr Frederick FUNG, Mr Michael HO, Dr HUANG Chen-ya, Dr Conrad LAM, Mr LEE Wing-tat, Mr Fred LI, Mr MAN Sai-cheong, Mr TIK Chi-yuen, Mr James TO, Dr YEUNG Sum, Mr WONG Wai-yin, Dr TANG Siu-tong, Ms Anna WU and Mr LEE Cheuk-yan voted against the motion.

Miss Emily LAU abstained.

THE PRESIDENT announced that there were 32 votes in favour of the motion and 23 votes against it. He therefore declared that the motion was carried.

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.

MANDATORY PROVIDENT FUND SCHEMES BILL

Clauses 3, 5, 7, 8, 10, 15, 17, 20, 23, 24, 27, 32 to 38, 42, 43 and 47 were agreed to. Clauses 2, 4, 9, 11, 12, 13, 16, 18, 19, 21, 22, 25, 26, 28 to 31, 39, 40 and 41

SECRETARY FOR EDUCATION AND MANPOWER: Mr Chairman, I move that the clauses specified be amended as set out under my name in the paper circulated to Members.

The definition of “accrued benefits” as drafted in the Bill refers to the “proceeds of” investments. As investment returns may be negative at times, I propose to amend the definition to the effect that the benefits will include “income or profits arising from any investments thereof, but taking into account any losses in respect thereof”. The same amendment is proposed to clause 11(2).

The amendment to the definition of “self-employed person” makes it clear that only those self-employed person whose relevant income derived in Hong Kong will be covered by the Bill.

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The amendments to the definitions of “exempt person”, “master trust scheme”, “relevant employee” and “relevant income” in clause 2 are for the purposes of verifying the meaning of those terms. The amendment to clause 4(1) is a technical one.

Some Members have expressed concern that clauses 4(3) and 4(4) as drafted in the Bill may not reflect adequately our policy intention to exclude from the MPF persons who come here from overseas to work intermittently, and those who come here from abroad to work and are already members of retirement schemes outside Hong Kong. The amended subclauses (3) and (4) should put this beyond doubt, while the new sub subclause (4) will allow the Authority to make rules to specify the circumstances in which this exemption will apply, and the new subclause (5) will specify the meaning of “limited period”.

The amendments to clauses 9, 12, 18, 19, 21, 25, 26, 28, 29, 30 and 31 are technical in nature, being mainly for the clarification of the relevant provisions in the Bill.

Clause 13 as drafted in the Bill provides for the transfer of accrued benefits from scheme to scheme when a relevant employee changes employment. Our policy intention is to cater for all possibilities, but some concern has been expressed that the clause fails to provide for all situations of changes in employment status.

To clarify our policy intention beyond doubt, I propose to amend this clause by replacing subclause (1), amending subclause (2) and adding a new subclause (3) to make it clear that employment includes self-employment and that the clause not only requires the expeditious transfer of accrued benefits but also provides flexibility for relevant persons to retain their benefits in master trust schemes upon change of employment should they wish to do so.

Clause 16 of the Bill deals with the Compensation Fund which would deal with losses arising from fraud or misfeasance. The amendment to clause 16(1) and the addition of a clause 16(1A) will provide for the MPF Scheme Authority to apply to the Court for a determination in respect of lost benefits. The Court will be able to rule whether or not the losses have occurred in the circumstances described.

In response to suggestions from Members of this Council, I am deleting clause 16(7) and instead will move amendments to Schedule 9, sections 1 and 2 to make consequential amendments to the Bankruptcy Ordinance and the Companies Ordinance, so that this particular debt becomes a preferential one.

At present, clause 22 of the Bill allows the MPF Schemes Authority to authorize a corporate trustee to be the trustee of a Residual Provident Fund Scheme if the Authority thinks it is desirable among other things to effect access

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6107 to a registered scheme for persons who are otherwise unable to obtain such membership.

Some Members have expressed concern that as drafted clause 22 will not require the Authority to set up such schemes until after section 6 was in operation and this might not provide sufficient comfort to individuals who are not able to find a scheme in the market. To allay these fears, I am amending clause 22 so that the Authority may take all necessary steps to cause a Residual Provident Fund Scheme to be established prior to the commencement of any of the provisions of section 6. The purpose of the scheme would be to provide membership as a scheme of last resort to those persons who have been unable to find a scheme themselves and where the Authority is otherwise, unable to find one for them.

In response to Members’ suggestion to enhance the secrecy provisions in the Bill in respect of reports made to the MPF Schemes Authority by self-employed persons under clause 6, I am making two amendments to clause 39 and one amendment to clause 40. Amendments to clause 41(1) are in line with Members’ helpful suggestion that the offences should refer back to the relevant requirement in the Bill. I am also taking this opportunity to include a new clause 41(1A) which says that any statement or declaration made to the MPF Schemes Authority for the purpose of clause 22, that is, the clause that deals with the Residual Provident Fund Scheme, shall not be evidence against the person making that declaration or statement.

Finally, Mr Chairman, I am moving a technical amendment to clause 41(3) by substituting the words “scheme member” and “scheme members” for “relevant employee” and “relevant employees” and adding a new clause 41(4) to provide for an offence where a trustee fails to comply with a limitation or prohibition made under section 28.

Proposed amendments

Clause 2

That clause 2 be amended －

(a) in the definition of “accrued benefits”, by deleting “proceeds of any investments thereof” and substituting “income or profits arising from any investments thereof, but taking into account any losses in respect thereof”.

(b) in the definition of “exempt person”, by deleting “specified in Schedule 1” and substituting “construed in accordance with section 4”.

(c) in paragraph (b) of the definition of “master trust scheme”, by deleting “and” and substituting “or”.

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(d) in the definition of “relevant employee”, by deleting “, but does not include an exempt person”.

(e) in the definition of “relevant income” -

(i) in paragraph (a), by adding “or payable” after “paid”;

(ii) in paragraph (b), by adding “prescribed and” after “person” in the second place where it appears.

(f) in the definition of “self-employed person”, by deleting everything after “a person” and substituting

“whose relevant income (otherwise than in the capacity as an employee) derives from his production (in whole or in part) of goods or services in Hong Kong, or his trade in goods or services in or from Hong Kong;”.

Clause 4

That clause 4(1) be amended, by adding “to the extent described therein” at the end. That clause 4 be amended, by deleting subclauses (3) and (4) and substituting －

“(3) Subject to subsections (4) and (5), any person entering Hong Kong for the purpose of being employed or self-employed -

(a) for a limited period only; or

(b) who is a member of a provident, pension, retirement or superannuation scheme (however described) of a place outside

Hong Kong.

shall be exempt from the provisions of this Ordinance.

(4) The Authority may make rules under section 45 for they purpose of this section and those rules may include provisions specifying the circumstances in which the exemption of a person referred to in subsection (3) shall apply.

(5) In this section, “limited period”（有限期間） means a period determined in accordance with the rules referred to in subsection (4).”.

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6109 Clause 9

That clause 9 be amended, in the heading by deleting “level” in the second place where it appears.

Clause 11

That clause 11(2) be amended, by adding “(but taking into account any loss arising in respect of any such investment)” after “registered scheme”.

Clause 12

That clause 12(a) and (b) be amended, by deleting “section 14” and substituting “the provisions of this Ordinance”.

Clause 13

That clause 13 be amended, by deleting subclause (1) and substituting －

“(1) Where a relevant person changes or ceases employment, then the relevant person, his former employer (if applicable), his new employer (if applicable) and the trustees of the registered schemes concerned shall, for the purpose of transferring accrued benefits to, from and between registered schemes or, alternatively, for the purpose of retaining accrued benefits within registered schemes which are master trust schemes, comply with regulations made under section 44 to achieve that purpose (as appropriate) as expeditiously as possible.”.

That clause 13(2) be amended －

(a) in paragraph (a) -

(i) by deleting “employees” in both places where it appears and substituting “persons”;

(ii) by adding “or cessation” after “changes”.

(b) in paragraph (b), by deleting “employee’s” and substituting person’s”.

6110 HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 That clause 13 be amended, by adding －

“(3) In this section -

“employment” includes self-employment;

“relevant person”（有關㆟士）means -

(a) a former relevant employee who becomes a self-employed person; (b) a former self-employed person who becomes a relevant employee; or (c) a relevant employee.”.

Clause 16

That clause 16(1) be amended －

(a) by deleting “The” and substituting “Subject to subsection (1A), the”.

(b) by adding “determined by the court on the application of the Authority” after “conduct”.

That clause 16 be amended －

(a) by adding -

“(1A) An application under subsection (1) shall only be made

to the court by the Authority -

(a) where the Authority has reasonable grounds for

believing that a loss in respect of accrued

benefits has occurred in the circumstances

described in that subsection; and

(b) in accordance with rules made by the Chief

Justice for that purpose and those rules may

include provisions as to procedure or

otherwise.”.

(b) by deleting subclause (7).

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6111 Clause 18

That clause 18(1) be amended －

(a) by adding “for the purpose of ensuring compliance with the provisions of this Ordinance and for no other purpose” after “, may”.

(b) in paragraph (b) -

(i) by adding “or any other person” after “place”;

(ii) by adding “or otherwise in that other person’s possession or under his control” after “Ordinance”.

Clause 19

That clause 19(6)(a) be amended, by adding “likely to be” before “able”. That clause 19(9)(a) be amended －

(a) in subparagraph (iii), by deleting “executive”.

(b) by deleting subparagraph (iv).

Clause 21

That clause 21 be amended, by deleting “, so far as is practicable,”.

Clause 22

That clause 22 be amended, by deleting the clause and substituting － “22. Residual Provident Fund Scheme

(1) The Authority shall, prior to the commencement of any of the provisions of section 6, take all necessary steps to cause to be established a registered scheme (being a master trust scheme), to be known as the “Residual Provident Fund Scheme”, for the principal purpose referred to in subsection (2) and shall authorize a corporate trustee to be the approved trustee thereof.

6112 HONG KONG LEGISLATIVE COUNCIL － 27 July 1995

(2) The principal purpose of the Residual Provident Fund Scheme established under subsection (1) is to provide, as a last resort only, membership of that Scheme to a relevant employee of an employer, or to a self-employed person where that employer or self-employed person, as the case may be -

(a) (i) in the case of the employer, declares in writing

to the Authority that he has not, through his

own efforts or otherwise, been able to comply

with the requirements of section 6(1); or

(ii) in the case of the self-employed person,

declares in writing to the Authority that he has

not, through his own efforts or otherwise, been

able to become a member of a registered

scheme as required under section 6(3);

(b) authorizes the Authority to assist him in obtaining

access to a registered scheme for the purpose of

compliance with the requirements referred to in

paragraph (a), as applicable;

(c) provides to the Authority all information and

assistance as may reasonably be required by the

authority for that purpose, and

in respect of that employer or self-mployed person, as the case may be, the Authority has not succeeded in obtaining access to a registered scheme which would otherwise enable compliance with the requirements referred to in paragraph (a).

(3) If, in the opinion of the Authority, it is desirable to do so, the Authority may authorize the Residual Provident Fund Scheme to have the following additional purposes -

(a) to facilitate portability or transferability of accrued

benefits to, from or between registered schemes;

(b) to provide for any unclaimed accrued benefits; and

(c) to achieve any other purposes of this Ordinance.

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6113

(4) The Authority may make rules under section 45 for the purpose of this section for the efficient and effectual operation of the Residual Provident Fund Scheme.

(5) In this section “employer”（僱主）includes a prospective employer, and “self-employed person”（自僱㆟士）includes a prospective self employed person.”.

Clause 25

That clause 25(a)(ii) be amended, by deleting “normally expected” and substituting “required”.

Clause 26

That clause 26(2) be amended －

(a) by adding -

“(da) the duty to give to the Authority any information or document in the approved trustee’s possession or under his control as

may be required by the Authority;”.

(b) in paragraph (f), by deleting “correctly”.

Clause 28

That clause 28(2) be amended, by deleting “relevant employees or other”.

Clause 29

That clause 29 be amended －

(a) by deleting subclause (3).

(b) in subclause (4), by deleting “or (3)”.

6114 HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 Clause 30

That clause 30(1) be amended, by deleting paragraph (b) and substituting －

“(b) circumstances may exist which may be prejudicial to the interests of scheme members; or”.

That clause 30 be amended, by adding －

“(10) Nothing in this section shall require disclosure to an inspector appointed under subsection (2) -

(a) by a solicitor of any privileged communication made to him in that capacity, except as respects the name and address of his

client; or

(b) by an authorized institution within the meaning of the Banking Ordinance (Cap. 155) relating to the affairs of a customer

unless -

(i) that customer is a person who the inspector has

reason to believe may be able to give

information relevant to the investigation; and

(ii) the Authority is satisfied that the disclosure is

necessary for the purposes of the investigation

and certifies in writing that this is the case.”.

Clause 31

That clause 31(1)(b) be amended, by deleting “regulations made under section 44” and substituting “section 19(8)”.

Clause 39

That clause 39(1) be amended, by adding “(including any information contained in any report referred to in section 6(5)(d))” after “information” where it first appears.

That clause 39 be amended, by adding －

“(2A) Subsection (2) shall not apply to any information contained in any report referred to in section 6(5)(d).”.

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6115 Clause 40

That clause 40 be amended, by adding －

“(2A) Subsection (1)(d) and (e) shall not apply to any information contained in any report referred to in section 6(5)(d).”.

Clause 41

That clause 41 be amended, by deleting subclause (1) and substituting － “(1) It shall be an offence for an employer without reasonable excuse - (a) to fail to comply with section 6(1);

(b) to fail to comply with section 6(1A);

(c) to fail to comply with section 6(2)(a);

(d) to fail to comply with section 6(2)(b);

(e) to fail to comply with section 6(2)(c);

(f) in the case where a relevant employee receives less than the minimum level of income in respect of his employment and

elects to contribute to a registered scheme, to fail to remit to

the approved trustee of that registered scheme the statutory

minimum contribution payable in respect of that relevant

employee;

(g) in the case where this Ordinance confers upon a relevant employee an option to contribute to a relevant scheme, to

impose upon that relevant employee, as a condition of his

employment, a requirement that he shall not exercise his

option to contribute.

(1A) Any declaration or statement made to the Authority for the purposes of section 22 shall not be evidence against the person making that declaration or statement.”.

That clause 41(3) be amended, by deleting “relevant employee” and “relevant employees” and substituting “scheme member” and “scheme members” respectively.

6116 HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 That clause 41 be amended, by adding －

“(4) It shall be an offence for an approved trustee to fail to comply with any limitations or prohibitions on the investment of the assets of registered schemes in any restricted investments referred to in section 28.”.

Question on the amendments proposed.

MR MARVIN CHEUNG: Mr Chairman, as explained in my speech in the Second Reading debate, Members of the Bills Committee and the Council did not have the chance to look at the final version of the Committee stage amendments to be moved by the Administration before the deadline date and therefore had no opportunity to check them for acceptability.

Further, although I agreed to chair a technical subgroup to conduct a clause by clause examination of the Bill, many of the Members of the Bills Committee were unable to participate due to the limited time available and their other commitments. There was in any event no time to fully examine each section of the Bill to ensure that all defects in the drafting had been identified and corrected.

Whilst many of the amendments are technical in nature, there are a number which involves important policy matter which have not been fully discussed by the Bills Committee. An example of this is the amendment to clause 2 to the definition of self employed persons. The original version of this definition leaves it totally uncertain as to who would be included in the ambit of MPF. During discussion of the Bills Committee, the Government has explained that it is their intention that MPF is meant to apply to persons who carry on a trade or business in Hong Kong and does not apply to persons whose business are carried on elsewhere.

The questions of residence and domicile are irrelevant for this purpose. Thus a self employed person living, for example, in the United States who happens to own a business in Hong Kong, will be required to contribute to a Hong Kong MPF when he has no right of abode here and have no plans to reside here. Conversely, a person who lives in Hong Kong and intends to reside in Hong Kong for the rest of his days will not be required to contribute if his business is carried on in, say, Shenzhen. What is the logic of this policy? In the haste to pass this legislation, this and other important policy issues are being brushed aside. The actual amendments to the definition introduces new uncertainties which will make the ambit of this law very much unclear. Terms such as “trade and goods or services from Hong Kong” is unique and are not to be found in other legislation such as the Inland Revenue Ordinance. As amounts involved are unlikely to be material as to justify a judicial process, we are in effect delegating powers of legislation to the Administration.

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6117

Another example is the amendment to clause 4 by the introduction of subclauses (3), (4) and (5) and the corresponding deletion of Item 8 in Part I of Schedule 1. The original Item 8 of Part I in Schedule 1, if left unchanged, would have created a loophole so large as to render the MPF proposal totally unenforceable. The amendments moved by the Secretary for Education and Manpower acknowledge the problem but defer the solution to subsidiary legislation. We do not know if the problem can be fixed and if so would the medicine be so strong as to make it unacceptable. How can we accept the MPF proposal under these circumstances? For these reasons, I will abstain from the motion relating to these amendments.

MR FREDERICK FUNG (in Cantonese): The Administration has already dumped the Old Age Pension Scheme. When the Administration first proposed this Scheme, the elderly and the Hong Kong Association for Democracy and People’s Livelihood were the first to support it. At the rally held by the elderly to show their support for the Scheme, an old person fainted and died in hospital afterwards. I feel that despite all the patching up amendments proposed by the Administration in respect of privately managed mandatory provident fund, there is no way to patch up the elderly’s expectation of the Administration. These amendments in no way can realize the hope of the elderly of the Administration. These amendments also cannot win the support of the elderly and improve the image of the Administration. These amendments cannot offer any assistance to the elderly now. I will not vote as a gesture of protest.

MR MICHAEL HO (in Cantonese): Mr Chairman, as I said during the Second Reading of the Bill, it has been considered in a very slipshod way.

When the committee considering the Bill first received the draft of the committee stage amendments, a meeting was called, during which we found a lot of problems. As to the final draft of the committee stage amendments, there was no adequate time for the committee to consider. The Democratic Party therefore feels that these amendments may in principle be able to patch up some of the holes in the original provision, but we think that they are not safe amendments. This Council and the Bills Committee actually did not have enough time to consider the final amendments. The Democratic Party therefore will abstain on the vote in respect of this series of amendments.

MR TAM YIU-CHUNG (in Cantonese): Mr Chairman, since my motion for adjournment debate was voted against, I have been very clear that the Second Reading of the Bill will pass. Outside this Chamber, I saw that the officials concerned were in a relaxed mood, clearly showing that the Second Reading of the Bill would definitely breeze through. Now we are up to the Committee stage amendments, we find that the series of amendments proposed by the Administration have serious problem amongst which are the views put forth by the Honourable Marvin CHEUNG, who in fact is an expert in this respect and is

6118 HONG KONG LEGISLATIVE COUNCIL － 27 July 1995

always consulted by the Administration. He told us that many of the problems had not been well thought through and had no best way to get around yet. I also believe that Mr Marvin CHEUNG is not playing with politics. He and I had been working together for sometime on the Occupational Retirement Schemes Ordinance, and I respected highly his opinions which I believed were very precious. I shall therefore abstain on the vote in respect of the amendments proposed by the Administration. I am worried, too, with these amendments made so hurriedly, if they had been well thought through. I hope that if the Bill is passed, the consideration given to the subsidiary legislations should be more careful as they will have extensive and far-reaching effect on three million workers.

MR HENRY TANG: Mr Chairman, I do not deny that this piece of legislation has been put together with great haste and many of the Members of the Bills Committee raised many valuable points regarding this essential piece of the legislation that has not been fully thought out. But on the other hand, I believe what the Secretary for Education and Manpower has just said has a lot of merits, that this Bill has to be put forward now. This enabling legislation is what it is said to be, enabling legislation. It put together the building blocks necessary to build on in the future. All the views that had been put into account are being put forward by the Administration in these amendments and I would support them.

DR YEUNG SUM (in Cantonese): Mr Chairman, I just want to leave a record. The Democratic Party would like to show strong opposition to the Administration’s hastily making this proposal. I only received the document saying that the Administration would make last-minute amendment in respect of domestic helpers from the Secretariat this morning. With amendment made in such a haste and the Bills Committee having no chance to consider it, we are asked to consider and pass the Bill. This is just a simple example, but it is enough to reflect that the Legislative Councillors can hardly have any counterbalancing and supervising effect on today’s whole drafting and consideration process. The Administration has pulled out stops to lobby the Councillors to pass this Bill, but to which I would like to register my regret.

MR CHIM PUI-CHUNG (in Cantonese): Mr President, as I said this morning, Hong Kong now needs a mandatory provident fund scheme. Of course, the Administration has to face the reality by treating others to meals. The situation is like the Administration treating us to meals and we are asked whether we go or not. However, it is unreasonable to ask for the menu first before deciding to go or not. That is why I can only say that the Administration has the sincerity to do something. Of course, at the meal, we may find that some of the food are not to our taste, some are too greasy. We can make some constructive amendments that are beneficial to our health.

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6119

We understand that the Old Age Pension Scheme mentioned earlier is not feasible. We believe that the industrial and commercial sector and the financial sector definitely would not deny or repudiate that the Administration can put this social security fund to good use. Our concern is for a general social atmosphere under which if I have to get the benefit, I would have to have it with dignity and my rights. However, I hope that we all understand that a balance must be struck in the society so that the industrial and commercial sector will have confidence in social development. The more they invest in Hong Kong, the more tax we can have. This not only makes the Mandatory Provident Fund (MPF) operate better, the future benefits will also meet the needs of the citizens. Of course, I represent the financial sector which also includes the insurance sector, I am a bit selfish as passing the MPF will benefit them in the future. I therefore give my support to the question under discussion with the hope of getting more votes.

Mr President, these are my remarks.

MR JAMES TIEN (in Cantonese): Mr Chairman, in respect of this Mandatory Provident Fund (MPF) Bill, the Honourable Marvin CHEUNG of course is an expert. He thinks that a lot of details are still unresolved. In respect of the primary Bill, every one has raised a few questions and the Administration has also made its stand known. For example, someone has asked if contribution has to be made to this pension fund scheme, how much? The answer is both the employers and the employees contribute 5%. Again for example, under the scheme, if an employee resigns or is dismissed, can he get back this sum immediately? For example, the Administration has already made it clear in the primary Bill that it is not possible under the so-called “Occupational Retirement Schemes Ordinance” scheme, an employee can only take back his contribution on retirement at 65. Another example, in case of bankruptcy or some problem arises in the Fund, under what circumstances could the authority supervising the MPF be responsible for compensation? All these questions which every one is so concerned about have been answered. Of course, Mr Marvin CHEUNG said that a lot of details were still unresolved. Even if the primary Bill is passed, and a different group of Councillors will take their office in the new Legislative Council in September, I feel that they will be just as diligent in monitoring the Administration to make each one of the subsidiary legislations come into effect. By that time those questions may still take some more years to resolve. By looking at the major issues, which the Administration has already raised, the industrial and commercial sector and the Liberal Party support the amendments made by the Secretary for Education and Manpower.

MR LEE CHEUK-YAN (in Cantonese): Mr President, the Honourable CHIM Pui-chung just alluded to the question of being invited to dine without looking at the menu. Now with the Mandatory Provident Fund, it is like we go out to dine but what we are given is just fish bones, which will only make us choke if we eat them. What if we die of choking? I feel very disappointed because Mr

6120 HONG KONG LEGISLATIVE COUNCIL － 27 July 1995

CHIM Pui-chung just said that more job opportunities should be created for the insurance brokers and that is one of the issues we have worries about. If too many people are selling this scheme, the employees or the employers will be made reeling around, raising the administrative cost. Finally it is the insurance brokers who reap the real benefits, not the workers. This also reflects the ontological deficiency in the election of the old functional constituency where the scope of interest is very narrow.

Thank you, Mr President.

CHAIRMAN: Let us focus on the amendments and not deal with the irrelevancies.

MR ANDREW WONG (in Cantonese): Mr President, what the Honourable LEE Cheuk-yan just said was in response to the speech of the Honourable CHIM Pui-chung, but I feel that it is not thorough enough. When you are invited to dine, you do not have to pay. And if every dish is just fish bone, you just would not eat. I therefore hope that we can make it clear to ourselves that we are not opening the public coffers and handing out money to the people, and then discussing how to distribute the money. Even if we are to distribute the money, we still have to be clear of what we are doing, not to mention that we have to pay now. I hope that Mr CHIM Pui-chung can be more careful with his words, even if it concerns interests of his constituency, he should not have gone too far.

Mr President, I will vote only in respect of the commencement of the Bill, as to others I will not vote.

Question on the amendments put.

Voice vote taken.

THE CHAIRMAN said he thought the “Ayes” had it.

MR MARVIN CHEUNG: I claim a division.

CHAIRMAN: Committee will proceed to a division.

CHAIRMAN: Would Members please proceed to vote?

CHAIRMAN: Are there any queries? If not, the result will now be displayed.

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6121

The Chief Secretary, the Attorney General, the Financial Secretary, Mr Allen LEE, Mrs Selina CHOW, Mr NGAI Shiu-kit, Mr PANG Chun-hoi, Mr Edward HO, Mr Ronald ARCULLI, Mr Martin BARROW, Mrs Peggy LAM, Mrs Miriam LAU, Mr LAU Wah-sum, Mr Jimmy McGREGOR, Mrs Elsie TU, Mr Peter WONG, Mr Vincent CHENG, Mr Moses CHENG, Mr CHIM Pui-chung, Mr Timothy HA, Dr LAM Kui-chun, Mr Eric LI, Mr Steven POON, Mr Henry TANG, Dr Samuel WONG, Mr Howard YOUNG, Miss Christine LOH, Mr Roger LUK, Mr James TIEN and Mr Alfred TSO voted for the amendments.

Mr Martin LEE, Mr SZETO Wah, Mr TAM Yiu-chung, Dr LEONG Che-hung, Mr Albert CHAN, Mr Marvin CHEUNG, Mr CHEUNG Man-kwong, Rev FUNG Chi-wood, Mr Michael HO, Dr HUANG Chen-ya, Mr Simon IP, Dr Conrad LAM, Miss Emily LAU, Mr LEE Wing-tat, Mr Fred LI, Mr MAN Sai-cheong, Mr TIK Chi-yuen, Mr James TO, Dr YEUNG Sum, Mr WONG Wai-yin, Dr TANG Siu-tong, Ms Anna WU and Mr LEE Cheuk-yan abstained.

THE CHAIRMAN announced that there were 30 votes in favour of the amendments and no vote against them. He therefore declared that the amendments were carried.

Question on clause 2, 4, 9, 11, 12, 13, 16, 18, 19, 21, 22, 25, 26, 28 to 31, 39, 40 and 41, as amended, proposed, put and agreed to.

Clause 1

MR HENRY TANG: Mr Chairman, I move that subclause 2 of clause 1 be amended as set out under my name in the paper circulated to Members. Clause 1(2) of the Bill states that “This Ordinance shall come into operation on a day to be appointed by the Governor by notice in the Gazette, and different days may be so appointed for different provisions and for different purposes”. In view of the fact that many key provisions of the MPF have not been properly dealt with in the Bill, the majority Members of the Bills Committee proposed that its provisions should only come into effect subject to the approval of the Legislative Council. The Administration argues that in practice, it will not be possible for the Ordinance to be brought into operation until the relevant pieces of subsidiary legislation are in place. Notwithstanding such argument, the Bills Committee would like to provide the Council with adequate opportunity to ensure that this will indeed be so by means of the positive approval procedure.

Mr Chairman, it is equally important for me to express not just the views of the Bills Committee as its Chairman, but also my own views. To this end, I would like to express my reservations towards this particular amendment. As the Secretary for Education and Manpower will later on submit that all subsidiary legislation made require to the approval of the Legislative Council, I

6122 HONG KONG LEGISLATIVE COUNCIL － 27 July 1995

would agree with the Administration that such positive approval procedure will be adequate in terms of protecting public interest and this amendment would therefore be excessive. Furthermore, such an amendment would set a dangerous precedent to the mechanism of our legislature. The integrity of our executive-led government and Administration must be maintained and must not be compromised. My view on this issue is that we have already taken prudent measures to ensure that there is adequate check and balance between the executive and the legislature. I would therefore urge Members of this Council to vote against the amendment.

Proposed amendment

Clause 1

That clause 1 be amended －

(a) in subclause (2), by adding “, subject to the approval of the Legislative Council,” after “to be appointed”;

(b) by adding -

“(3) Without prejudice to the generality of subsection (2) in relation to the approval of the Legislative Council, the Legislative Council may not approve the appointment of a day for the coming into operation of a particular provision or purpose of this Ordinance if, where section 44(1)(a) to (j) or 45(1)(a) to (r) provides for the making of regulations or rules in relation to that provision or purpose, it considers that such regulations or rules have not been made with the approval of the Legislative Council in accordance with this Ordinance in relation to that provision or purpose.”.

Question on the amendment proposed.

MR MICHAEL HO (in Cantonese): The Democratic Party will support the amendment. Earlier I said that the Bill had been hurriedly considered. We hope that after this amendment, the Legislative Council is better ensured to have more effective control of future legislations. The Democratic Party therefore supports the amendment.

MR MARVIN CHEUNG: Mr Chairman, I rise to support the amendment proposed by the Honourable Henry TANG which empowers the Legislative Council to control the commencement date of the MPF Scheme.

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6123

Why should the Legislative Council need to control the commencement date? To put it briefly, there are three reasons.

First, there is simply insufficient time for this Legislative Council to fully debate the MPF proposal. The MPF Bill was only introduced into the Legislative Council on 14 June. Members have just over one month’s time to scrutinize this very complex issue. In response to queries raised in the Bills Committee meetings, the Administration is proposing a whole host of amendments, notice of which was given just one week ago on the deadline date. The Bills Committee therefore had no opportunity to consider the final version of the Committee stage amendments.

Moreover, I do not believe that the proposed Committee stage amendments adequately address many of the problems left unanswered in the Bill. Without the power to control the commencement date the Legislative Council will have little influence over the Government in dealing with these outstanding but important issues. The Government has skated around all the known uncertainties and controversies but deferring decisions to subsidiary legislation. Given more time to study the implications of the Bill, further problems with many of the provisions of the Bill, are bound to be identified. The danger is that many of the problems may not be capable of being remedied by means of subsidiary legislation. With control over the commencement date of the legislation, the Legislative Council will be able to effectively ensure that these matters are properly addressed before the law is implemented.

The second reason for the amendment is that many details of the MPF Scheme have not been formulated. Some of these will be provided for by subsidiary legislation. However, some will not need subsidiary legislation. One example I have pointed out during the Bills Committee deliberation was the arrangement with the existing Occupational Retirement Scheme Ordinance (ORSO) schemes. As a result, the Government has now agreed to move an amendment to delete this specific provision concerning existing ORSO schemes and to defer consideration of this matter at a later date via subsidiary legislation.

Another example I have pointed out during Bills Committee meetings is the provisions concerning investment guidelines. The Bill provides for investment guidelines to be drawn up by the MPF Authority, but as in the case of many other provisions, does not provide any details as to the legislative intent of such a provision － how the guidelines are to be drawn up, the criteria of the exercise, and so on. However, unlike other hollow provisions which will be supported by subsidiary legislation to be drawn up in the future, there is no provision for any subsidiary legislation to govern the formulation and enforcement of investment guidelines. This means that even if all subsidiary legislation will be positively approved by the Legislative Council on a perpetual basis, hollow provisions of this kind will not be subjected to vetting by the Legislative Council when the Government finally decides on what it wants to do with these powers unless the commencement date of the Bill itself requires the approval of the Legislative Council. The simple fact is that we cannot be sure

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there are no more landmines such as these. I for one will confess that I simply did not have sufficient time to examine each part of the Bill to look for such items. I doubt if any other Member has the time to fully examine each part of the Bill for this purpose. The consequences are clear. Unless the Legislative Council retains control over the commencement date, it will not have the power to ensure that matters which are being overlooked at this stage due to the severe time constraints will be properly addressed in the future.

Thirdly, there is a need to take a complete look at the entire MPF proposal when all details are known to assess the logical coherence, their acceptability to the community, and so on. The Legislative Council needs to control the commencement date if it is to ensure that the final shape of the MPF Scheme put into operation will be feasible in practice and acceptable to the community. We cannot rule out the possibility when all the problems of the Bill are known the community may not want MPF because the price is too high.

The Administration’s reasons for rejecting this amendment are not valid and are misleading.

First, the Administration has argued that positive vetting of subsidiary legislation will provide sufficient safeguards so that this amendment is unnecessary. This is invalid on three counts.

First, under the Government’s proposal, the power of positive vetting will automatically lapse upon the Governor’s decision to announce the appointed date, and there is no guarantee that the Governor’s decision will take into full account the views of the Legislative Council regarding the status of the subsidiary legislation at that time. The Legislative Council therefore needs the control over the commencement date if the Legislative Council is genuinely serious about the need for positive vetting.

Second, as I pointed out earlier, not all provisions which are now left hollow are covered by subsidiary legislation. There is a danger that many definitive provisions in the Bill will not involve subsidiary legislation, the implications of which have not been fully understood by the Legislative Council, the community or even the Administration.

The third reason is that positive vetting alone will not provide sufficient safeguard as there may be no opportunity to view the entire scheme as a whole package when the details are known.

The second reason for the Administration’s rejection to the amendment is the alleged challenge to the constitutional principle of executive-led government. Legal advice sought by this Council has, however, confirmed the otherwise. The Government’s own legal adviser has admitted to the Bills Committee that the amendment causes no constitutional problems. Our Government will remain as executive-led as it has been. Unless the Administration is of the view that an executive-led government should also legislate on behalf of the legislature, I see

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no reason why the Administration should have complained about the Legislative Council attempt simply to do its job properly.

The purpose of the amendment is to restore to the future Legislative Council the opportunity to properly scrutinize important provisions of the MPF which this Council is deprived of by the hasty manner in which the Administration has pushed through the legislative process today.

The third reason for the Administration’s rejection is that there is no precedent. As admitted by the Secretary for Education and Manpower during a debate earlier this morning, there is precedent in United Kingdom law.

With the above remarks, I urge Members to reject the amendment moved by the Secretary for Education and Manpower in due course and to support the amendment proposed by the Bills Committee to allow the Legislative Council to approve the commencement date of the Bill. Thank you.

DR YEUNG SUM (in Cantonese): Mr Chairman, and my colleagues, you have just voted in favour of the Bill so that it could pass the Second Reading. This actually is a matter of course. However, I would like to tell you that the Administration went about very slovenly with the Bill. This is a description of the fact, not a moral judgment. If the monitoring and check and balance functions of the Legislative Council are to be maintained, you should consider supporting as far as possible the amendment that is presently proposed because so doing will bring such functions of the Legislative Council into full play, and I am saying this from the constitutional point of view.

Furthermore, the Honourable Henry TANG has earlier mentioned that so doing will compromise our executive-led government, but in practice this would not be the case. Under the current constitutional system, all proposed policy and bills must be presented by the Administration, and Private Members’ Bill is only an exception. The executive power always reside with the Administration and we cannot make any change to it. What we are looking at now is a jig-saw puzzle, and the question in fact is very simple: the date all the pieces of the puzzle are placed before us is the commence date of the Bill. However, at the moment apart from the bits and pieces, we do not have this puzzle. We are not asking a lot from the Administration. We just ask the Administration to give us all the puzzles so that we can have a clear idea of what the whole picture is like. When every one is satisfied, then that is the commencement date. I think that I am making a very reasonable demand, and I hope that those Members who earlier showed support of the Bill can also support this proposal.

MR ROGER LUK (in Cantonese): Mr Chairman, I said just now that there are three planes to an old age protection scheme, which are the individual, the family and the society. What Hong Kong lacks is that of the individual and this Bill comes in rightly to fill up that gap. The Honourable Marvin CHEUNG has

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already reminded us again and again that there are still a lot of technical problems with the Bill that we may still do not know. If we are to decide on filling this gap for the workforce in Hong Kong by setting up an individual retirement protection scheme, we need to be ascertained on three aspects whether this Bill is feasible: firstly, if we have consensus on the policy direction; secondly, if the technical provisions are all in order; thirdly, if we can achieve the legislative goal.

With the framework as given by the Bill, I think no one Member can be certain of anything. Under such a situation, the Legislative Council needs to reserve the power to reconsider the whole Bill and to have the power to decide on the commencement date. Mr Marvin CHEUNG reiterated just now that there is no constitutional problem caused, as there are precedents overseas, but in the context of Hong Kong, this may possibly be setting a precedent. However, under very exceptional circumstances, there is really such a need. If the Legislative Council did not have control over the commencement date, I think those Members who vote for the Bill today might in future be blamed for having acted irresponsibly.

Mr Chairman, thank you.

MR LEE CHEUK-YAN (in Cantonese): Mr Chairman, I support the amendment because it will give the Legislative Council the right to press the button. We all know that the Hong Kong Confederation of Trade Unions (CTU) is against the private Mandatory Provident Fund (MPF) Scheme. If the Legislative Council is given the right to press the button, we hope that the Legislative Council will not have to press the button. Some people often ask us why we are against the MPF, and many people often said that it is better to have it than to have none at all. This is like the Honourable Andrew WONG’s saying “pee is better than sea water” in yesterday’s debate on the Court of Final Appeal Bill. I do not mean to say that MPF is like pee, which is toxic. MPF is not toxic, but it is like a punctured water bag. If we keep on pouring water into it, the provident fund of the workers will be drained away through the puncture.

I feel that the reason to give the Legislative Council “the right to press the button” is to give it the right to object. Once the MPF Scheme is passed, that would be the nail that is hammered into the coffin of the Old Age Pension Scheme. We do not want to see that the nail being hammered in, we would like to have Old Age Pension Scheme at the end.

Yesterday the Honourable Mr Allen LEE of the Liberal Party said agitatively that his party was being vilified. In fact, when the Administration supported the implementation of the Old Age Pension Scheme and the labour bodies, trade unions, the Democratic Party and the elderly were in favour of the implementation, the Liberal Party was against. This is a fact known to all, because of your voting against it, now the elderly in Hong Kong do not have an old age pension system. If you did not vote against it, what should be tabled at

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this last meeting of the current Legislative Council would be the Old Age Pension Scheme but not MPF Scheme. The Liberal Party is certainly the one to be condemned by history. It would not mend anything even with Mr LEE referring to the Honourable LAU Chin-shek.

I said repeatedly just now that I do not want the Legislative Council to press the button. Another reason is that if the Legislative Council was to press the button, we would not be able to get the Old Age Pension Scheme. If the Legislative Council left the button untouched, we would keep on fighting for it. I would like to remind you all that some people have asked what the elderly could do if the MPF Scheme was not passed. Well, even if we can only get the Old Age Pension Scheme 10 years later, it would still be better than to have MPF today. The reason is that under the MPF Scheme, those in the low-income group might not be paid a pension comparable to that of the Old Age Pension Scheme 20 to 30 years later. I have done some calculations, after 30 years, a person earning $6,000, according to the consultancy report, would get $1,560 30 years later; a person earning $8,000 would get $2,080, whereas with the Old Age Pension Scheme, they could get 30% of the median salary. So, if we leave the button untouched, and our lobby for the Old Age Pension Scheme succeeds some 10 years later, it would even be better than what we have today. If the button is pressed today, Hong Kong will never have an old age pension system, so I feel that this button should be left untouched.

Thank you, Mr Chairman.

CHAIRMAN: Your remarks should be confined to the amendments, please, Mr LEE, otherwise, there will be no end of this debate on amendments.

MR JAMES TIEN (in Cantonese): Mr Chairman, because during the Second Reading, the Honourable LEE Cheuk-yan and I were not in the Chamber, and that was the Secretary for Education and Manpower’s turn to speak, so my content of my speech seems to be still in the Second Reading stage. Mr Chairman, as you ask Mr LEE Cheuk-yan not to dwell on those questions and concentrate instead on the amendment, I would talk mainly on that question and not on others.

Mr Chairman, the amendment is basically similar in meaning to the Honourable TAM Yiu-chung’s earlier proposal to adjourn the debate of the Bill. The Honourable Marvin CHEUNG and I were both on the Bills Committee and were of the same mind with him, but it was only raised by the Honourable Henry TANG during consideration of the Bill. What exactly is the problem if the Legislative Council is to pass the Bill and has the right to press the button? This has the same objective as adjourning the debate on the Bill till after December. If it was not adjourned, we would have Second and Third Reading today. In the next session of the Legislative Council, there would still be opportunity to discuss the so called hollows of every provision and the traps of

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the subsidiary legislation. The Administration actually has also made concession. At first the Bill was to be negatively passed. According to the Gazette of the 28th, if nothing special arose, the Bill would come into effect. Now the Administration has proposed amendment, requiring positive vetting for the Bill. This means that we can all the same set up a Bills Committee to examine the subsidiary legislations in detail. Should Members of the democratic camp, independent Members or Members of the Liberal Party have any views, they can raise them at that stage. We can still use half a year, a year, a year and a half or two years for examination, and it can still be done. At that time, we can make ourselves completely satisfied before the Administration can put them into operation. I cannot imagine that the Administration can pass a subsidiary legislation today and put it into force, and a month later pass another and put it into force. Subsidiary legislations must be passed in general before the Administration can put them into force. The conclusion is thus whether the Legislative Council is to activate the bell for the passage of a subsidiary legislation or to pass the all the subsidiary legislations together for the subsidiary legislations to come into force, even if the Administration has the permission of the Executive Council. If the right to activate the bell is to return to the Legislative Council, then it will be a waste of effort with this debate, because at that time we shall have to raise our hands again. Even if the subsidiary legislations are passed now, they may be rejected by an activation of the bell.

Mr Chairman, on this basis, the Liberal Party will vote against the amendment made by Mr Henry TANG as the Chairman of the Bills Committee.

MR ALLEN LEE (in Cantonese): Mr Chairman, I seek your permission to respond to the remarks the Honourable LEE Cheuk-yan made just now.

CHAIRMAN: Since it was totally irrelevant, I do not think you need to reply; nor would your reply be relevant, Mr LEE.

MR FREDERICK FUNG (in Cantonese): Mr Chairman, I support the motion for the amendment.

I said just now that I was against the Mandatory Provident Fund Scheme, therefore any proposal to oppose, stop or postpone this Bill will have my support. This Bill not only stops the bringing into force of the Old Age Pension Scheme, but also makes the Central Provident Fund inoperable. The Administration is actually trying to use this to strike down all other feasible old age retirement protection systems. However, I would like to make one thing clear: just now the Honourable LEE Cheuk-yan referred to Old Age Pension Scheme, actually at the very beginning, only three small parties clearly and openly supported the Administration.

HONG KONG LEGISLATIVE COUNCIL － 27 July 1995 6129 MR PANG CHUN-HOI (in Cantonese): Mr Chairman, I vote against this amendment.

Now we are all squabbling over whether we should pass this Bill, but we are having the Second Reading debate. Even if it is passed in the Second or Third Reading, you can still vote it down. As long as you have the confidence to come back, you can vote it down. Not only is that the old age pension can be drawn by your children, but your living expenses now can also be obtained from the Administration. You have the ability to raise any objection in the Legislative Council. However, things should not go that way, do not think that you are different from others just because you are a Legislative Council Member? People have eyes to see.

These are my remarks.

MR JIMMY McGREGOR: Mr Chairman, I am simply to correct some of the information and admonition just in the last few minutes and I oppose the amendment, and in doing so I want to draw your attention to the fact that I think Mr TAM Yiu-chung, Mr Federick FUNG and myself were the three people embarrassed with the three organizations strongly supporting the old age pension, Mr Chairman. I think, it seems strange to me now they listen to Mr LEE Cheuk-yan, making the claim that his party and himself were strongly supporting old age pension at the time when the Hansard records were showing very clearly who supported it and who did not. So, Mr Chairman, in regard to the question that while I support old age pension at this stage, this Council very resoundingly spoke strongly against it and voted against it, the Government was forced to withdraw it. So, at this stage, I do not think anybody should start claiming credit for having all these pensions approved. Mr Chairman, on that basis, I disagree with the amendment and I will vote against it.

MR CHIM PUI-CHUNG (in Cantonese): Mr Chairman, I rise to oppose the amendment. It is unreasonable to give others the power but retain it at the same time. Should any problem arise in the future, we shall have discussion then.

Earlier, the Honourable LEE Cheuk-yan posed himself as the saviour. On behalf of my constituency, I will not allow him to attack my views. Like the Honourable Andrew WONG, I am also speaking on behalf of my constituency, not his. Please remember, I have my rights.

MR ANDREW WONG (in Cantonese): Mr Chairman, I think agitated feelings should be suppressed. We all speak with good intentions, hoping that some plan can be devised in respect of retirement protection in Hong Kong so that the elderly can lived happily and peacefully in their old age. We have been procrastinating on this matter for 30 years, and I hope that there can be an early solution.

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Even though it so happens that I think that the old age pension is better and that Mandatory Provident Fund (MPF) Scheme is not so good, there is no point in attacking others as capitalist, socialist, only thinking of the rich or exploiting the poor. In the heated exchanges, many of the issues are confused. Obviously when the Honourable Frederick FUNG mentioned the support of the three small parties, he was jeering at the Democratic Party. Earlier, the Honourable MacGREGOR referred to the Honourable LEE Cheuk-yan and the party he belongs to, but Mr LEE Cheuk-yan actually is not a member of the Democratic Party. A lot of things thus get confused. Mr Frederick FUNG referred to the three small parties, but he forgot to mention that the one to which Mr MacGREGOR belonged has already switched allegiance. It is clear that many of the things have not been clearly made out.

I would like to make it clear that my stand is crystal clear and would try every means to stop this Bill. If not possible, I would try to bring it down with an unofficial member’s bill in the next session of the Legislative Council. In such a case, another unofficial member’s bill would be drafted, for example, to raise the tax. This might pose a problem, but if it could be drafted tactfully, the President would not see it as incurring expenditure on or using public funds.

Giving his views, the Honourable Marvin CHEUNG was completely against any form of mandatory retirement scheme. He therefore was against the Old Age Pension Scheme, and was also against the MPF Scheme. He is in principle against all schemes. The arguments they put forth however were not completely on this matter, and they just pointed out that the Bill was hollow in content. Hollow it may be, but still we have to pass it despite the little time we were given. Can the subsidiary legislations have the approval of the Members before the Legislative Council passes a resolution for their implementation, and can the commencement date be set by the Members?

Passing a resolution on the commencement date may also imply using the public funds. A resolution therefore must be proposed by the Administration, and if the Administration does not propose it, we would not be happy. If the Administration does propose it, and we are not happy with its content, not approving of its implementation may satisfy those Members like me, who try all means to stop the Administration, and those Members like Mr Marvin CHEUNG who think that the Bill must be generally perfect, and the content must not be too sloppy and hollow.

Other Members put forth such argument as executive-led. I think that under our constitutional system, a lot of things are to be initiated by the Administration, and these things should have priority over others. There are things, like public expenditure, which can only be raised by the Administration. Having an executive-led system does not mean that we can only eat what the administrative authority cooks. This is not executive-led, it is executive hegemony.

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I hope that we can make it clear to ourselves and I fully support the views put forth by Mr Marvin CHEUNG. My objectives may not be the same as his, but I fully support the reasons he gave.

Thank you, Mr Chairman.

MRS SELINA CHOW (in Cantonese): Mr Chairman, I want to take this opportunity to correct the wrong information given by the Honourable LEE Cheuk-yan earlier, and this is not his first time. The old age pension he raised in the Legislative Council is only glossing over the actual matter, and actually would lead Hong Kong down the road of welfarism. He said that the Liberal Party was against this, against that, but I would like to remind him that it was the Legislative Council which cast the against vote. I hope that he will respect the Legislative Council and the democratic process. The reason for the Legislative Council to vote against something is because there are views from within and without. On this matter, of course, there are greatly diverse views and a lot of controversies. I hope to make it clear that do not level any attack only on the Liberal Party. If every time he says anything that will mislead, I would make clarification each time too.

The Liberal Party supports a two-prong approach and absolutely takes care of the needs of the elderly and would strengthen the assistance given to them. These are the things we have been lobbying for. However, we also advocate that the youngsters and those people with a job now have to prepare themselves for their old age, hence the establishment of a mandatory provident fund. The employers should also make contribution like these people, so that the whole society will support and make preparation for the elderly now and in the future.

I hope that the Members will not aim their attack at the Liberal Party. If they are of a different view from others, they can state the matter clearly but do not try to mislead and confuse the issues. I also hope that they will not use it to attack other parties, this is not the right way to go about things. We should bring an open and objective mind to any discussion, which should not be turned into a forum for attacking others.

Thank you, Mr President.

MRS ELSIE TU: Mr Chairman, when this amendment was first suggested in the Bills Committee, I had the impression that the purpose of it was to try to make sure that the Legislature Council would see that the Bill would put through in an orderly fashion and would not be neglected. Now, after hearing some Members speaking, it seems clear to me that their purpose is sabotages, and their side, I could never support. If we sabotage this Bill, there will be no OPS in any case because if the OPS is going to be brought forward by a private bill, there will be charging effect and I do not think it will go through. So it is either this Bill

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or nothing, and if we do not want the OPS, we would not have anything at all, then I am very much surprised and very disgusted. We have to support this Bill and make sure that there is something for the elderly, otherwise there is going to be nothing. I am against this amendment.

MR HOWARD YOUNG (in Cantonese): Mr Chairman, while commenting on the amendment, many Members mention the stand of various political parties or organization. I would like to look at the matter from another angle.

I am an employee, and ever since I began working, I have never been an employer. I am lucky that I am among 30% of the people working for a conscientious employer that have set up provident fund early in the day. Among my friends are white collar and blue collar workers, and I have heard from none of them that they are not satisfied with this system, some even welcome it. But I also understand that many employees in Hong Kong do not have the protection of any provident fund. I feel that in our society today, this one third of the workforce (mainly white collar, with some blue collar) also hope that the other employees would also have the same sort of protection.

I think that if this amendment is carried, it will go against the objective of the Bill, therefore we should not accept this amendment.

SECRETARY FOR EDUCATION AND MANPOWER: Mr Chairman, the Bills Committee’s Committee stage amendment is based on the fallacious assumption that the Administration does not know what it is doing and would act in an arbitrary manner in bringing into operation the provisions of the Bill. Such doubts or fears are totally unfounded and are unworthy of Members. It is unthinkable that the Administration would act in a way which is contrary to the public interest.

Furthermore, it would not be possible in practice for the Ordinance to be brought into effect until relevant items of subsidiary legislation are in place. As part of this process, we wish to see the early establishment of the MPF Schemes Authority so that it can be fully involved in the preparation of necessary subsidiary legislation.

Some Members have suggested that this additional resolution requirement is necessary as they do not know the shape of the subsidiary legislation to come and they have no confidence that the MPF system in its entirety will actually work. May I remind them that we receive detailed expert advice from consultants on the technical aspects of the MPF Scheme. May I also remind them that there are similar retirement systems operating abroad successfully.

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Furthermore, as I said earlier in my speech, the Governor would not exercise his powers under section 6 of the Ordinance until everything is in place. Subsidiary legislation would be enacted only by resolution of this Council. Given that Members would need to be fully satisfied with the subsidiary legislation before it could be enacted, I see neither logic nor purpose in requiring the effective date of operation to be subject to an additional resolution of this Council, unless it is an attempt to undermine the executive-led nature of this Government.

Mr Chairman, the Official Members will oppose this amendment and I urge Members to do likewise.

Question on the amendment put.

Voice vote taken.

THE CHAIRMAN said he thought the “Noes” had it.

MR MARVIN CHEUNG: Mr Chairman, I claim a division.

CHAIRMAN: Committee will proceed to a division.

CHAIRMAN: Would Members please proceed to vote?

CHAIRMAN: Are there any queries? If not, the result will now be displayed.

Mr Martin LEE, Mr SZETO Wah, Mr Andrew WONG, Dr LEONG Che-hung, Mr Albert CHAN, Mr Marvin CHEUNG, Mr CHEUNG Man-kwong, Rev FUNG Chi-wood, Mr Frederick FUNG, Mr Michael HO, Dr HUANG Chen-ya, Mr Simon IP, Dr Conrad LAM, Miss Emily LAU, Mr LEE Wing-tat, Mr Eric LI, Mr Fred LI, Mr MAN Sai-cheong, Mr TIK Chi-yuen, Mr James TO, Dr YEUNG Sum, Mr WONG Wai-yin, Dr TANG Siu-tong, Miss Christine LOH, Mr Roger LUK, Ms Anna WU and Mr LEE Cheuk-yan voted for the amendment.

The Chief Secretary, the Attorney General, the Financial Secretary, Mr Allen LEE, Mrs Selina CHOW, Mr NGAI Shiu-kit, Mr PANG Chun-hoi, Mr TAM Yiu-chung, Mr Edward HO, Mr Ronald ARCULLI, Mr Martin BARROW, Mrs Peggy LAM, Mrs Miriam LAU, Mr LAU Wah-sum, Mr Jimmy McGREGOR, Mrs Elsie TU, Mr Peter WONG, Mr Moses CHENG, Mr CHIM Pui-chung, Mr Timothy HA, Dr LAM Kui-chun, Mr Steven POON, Mr Henry TANG, Dr

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Samuel WONG, Mr Howard YOUNG, Mr James TIEN and Mr Alfred TSO voted against the amendment.

THE CHAIRMAN announced that there were 27 votes in favour of the amendment and 27 votes against it. In accordance with convention, the Chairman voted for the “Noes” and declared that the amendment was negatived.

12.55 pm

CHAIRMAN: We shall now break for lunch. I will be grateful if Members did return after 45 minutes and I now suspend the sitting.

2.07 pm

CHAIRMAN: I am sorry that there has been a delay but I have a request from Mr Michael HO for leave to move an amendment to Part II of Schedule 1 which would effectively reinstate the amendment which the Secretary for Education and Manpower was going to move to Part II of Schedule 1. Members were informed earlier this morning by the tabling of a notice that the Secretary for Education and Manpower had obtained my leave to put in a fresh amendment to Part II of Schedule 1. In view of that short notice, I thought it proper that Mr Michael HO should have leave to move the amendment which was originally on the Order Paper. The script is being rewritten and I hope that the position will be clear when we come to this part of the Committee stage amendments and I will explain further when we get to that portion of the proceedings.

We are turning now to clause 1. As Mr Henry TANG’s amendment to subclause (2) of clause 1 has not been agreed, I will not call upon Mr TANG to move the addition of subclause (3) to clause 1, as it is inconsistent with the decision already taken.

Question on clause 1 standing part of the Bill put and agreed to.

Clause 6

SECRETARY FOR EDUCATION AND MANPOWER: Mr Chairman, I move the amendment to subclause (1) of clause 6, the addition of subclause 1(A) to clause 6, the amendments to subclauses (2), (3) and (6) of clause 6 as set out under my name in the paper circulated to Members.

To clarify our policy intention that it shall be a requirement for all employers and self-employed persons to secure a retirement scheme for their employees or themselves respectively both on and after the appointed day, I am

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moving an amendment to clause 6(1), and consequential amendments to clauses 6(2) and 6(3)

In response to Members’ views that the word “irrevocable” was too restrictive in clause 6(1), I am moving an amendment to delete it.

Members will be aware that Schedule 1 of the Bill as drafted now exempts from the MPF a relevant employee who has been employed under a contract of employment for a continuous period of 30 days. Some Members have suggested that this period should be extended because the probation period of many jobs often exceeds the first 30 days, or employees may work for 30 days then give 30 days’ notice. I agree that the 30-day exemption period can be changed to 60 days. An appropriate amendment will be moved later on to Schedule 1.

The new clause 6(1A) will provide that if the employee remains in a job longer than 60 days, the employer will have to backdate contributions for the entire period, whereas the employee will only pay in respect of the last 30 days. I am also moving related consequential amendments to clauses 6(1) and 6(6).

Three other technical amendments are also being moved in respect of clauses 6(2) and 6(3) to link the contribution amount to the minimum and/or maximum income levels as stated in the Schedules.

Proposed amemdment

Clause 6

That clause 6(1) be amended －

(a) by deleting “Every employer shall, on or before the appointed day,” and substituting “Subject to subsection (1A), every employer shall”.

(b) by deleting “irrevocable”.

(c) by deleting “30” and substituting “60”.

That clause 6 be amended, by adding －

“(1A) Where the relevant employee of an employer referred to in subsection (1) has been in the employ of that employer for a period of 60 days or more -

(a) the employer shall contribute to the registered scheme in accordance with this section for the whole period of the employment of that relevant employee, including the first 60 days of that employment; and

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(b) the relevant employee’s contribution shall apply to the whole period of the employment of that relevant employee, excluding the first 30 days of that employment.”.

That clause 6(2) be amended －

(a) by deleting “, on or after the appointed day”.

(b) in paragraph (a), by adding “subject to section 9,” before “contribute”. (c) in paragraph (b), by adding “subject to sections 8 and 9,” before “deduct”.

That clause 6(3) be amended, by deleting everything before. “contribute” and substituting －

“(3) Subject to sections 8 and 9, every self-employed person shall become a member of a registered scheme and shall”.

That clause 6(6) be amended, by adding “(1A),” after “(1),”.

Question on the amendment proposed, put and agreed to.

CHAIRMAN: Both the Secretary for Education and Manpower and Mr Henry TANG have given notice to move an amendment to subclause (7) of clause 6. I will call upon the Secretary to move his amendment first in accordance with Standing Order 25(4).

SECRETARY FOR EDUCATION AND MANPOWER: Mr Chairman, I move that subclause (7) of clause 6 be amended as set out under my name in the paper circulated to Members.

Subsequent to the amendments made to clauses 6(1), 6(2) and 6(3) which have brought into effect that the MPF is a requirement for all employers and self-employed persons, both on and after the appointed day, subclause (7) becomes superfluous. Furthermore there is already reference to the day the Ordinance comes into operation in clause 1(2). I therefore propose to delete this subclause.