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there will be a full range of restaurants, supermarkets, shops, welfare premises, playgrounds and sitting-out areas, plus secondary schools, primary schools and kindergartens for children.

While pressing on with the new we have not forgotten the old, and a redevelopment programme is in full swing to either convert or demolish the old Mark I and II resettlement estate blocks and replace them with self-contained premises with modern conveniences.

So far more than 10,000 families have gone from unsatisfactory old blocks into either new or converted homes.

At other estates, various environmental improvements have been carried out, covering a wide range such as the provision of sitting-out areas for the older citizen, playground equipment for the young, and the widespread planting of trees, shrubs and flowers to provide a more pleasant atmosphere for all.

EPCOM

Moving on to the subject of pollution control, I would once more like to bring the Council up-to-date on the activities of EPCOM, or the new EPCOM rather, over the last year.

EPCOM has undergone major organizational changes in 1978. This comes as a natural development of the establishment of the Environmental Protection Unit which is a central unit responsible to the Secretary for the Environment for environmental protection policy. The Unit is headed by an Environmental Protection Adviser and staffed by four Environmental Protection Officers, each specializing in one field of pollution control, i.e. water, air, noise and waste.

Following the provision of staff and resources in the EPU to deal with environmental protection policy, EPCOM and its Sub-Committees have been relieved of much of the burden on routine operational matters which it has shouldered over the past four years, so it is now able to devote its attention to major issues of policy concern. It is on this basis that the Committee has been reconstituted.

The new EPCOM works mainly through a Central Co-ordinating Committee, to which most of the discussions on normal policy matters are directed. The Central Co-ordinating Committee, on which I now serve as a member, is kept within a manageable size to allow it to function efficiently. A noticeable improvement over representation is that the three principal industrial organizations, i.e. the Chinese Manufacturers Association, the Federation of Hong Kong Industries and the Hong Kong General Chamber of Commerce, are represented at the Central Co-ordinating Committee. This will undoubtedly facilitate better consultation between Government and industry, and ensure that a balanced approach is adopted in the formulation of environmental protection policy.

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In addition to the Central Co-ordinating Committee, there is also a panel of Unofficial Members who form the other part of the full Committee. Members from this panel, which include Mrs Grace Ho and Mr Stephen Lau, together with any other Government officials who may be co-opted as appropriate, can be called upon to sit on ad hoc special working groups to be formed whenever a need arises to tackle specific problems. This replaces the former system of having standing sub-committees and gives the Committee greater flexibility in operation. The full Committee also meets from time to time whenever the need arises for the full Committee to be consulted.

The new EPCOM now functions under the Chairmanship of the Secretary for the Environment, and its full name has been retitled as 'Environmental Protection Advisory Committee' to reflect its role and activities more accurately.

The Committee has undergone a very active period since it was reconstituted in July 1978. So far, the Central Co-ordinating Committee has already met five times and, because of the public and EPCOM's concern over the environmental impact of the two new power stations, the full Committee has met four times to consider the various issues related to the power plant projects; including the choice of sites for the Hong Kong Electric Company's new power station and the vetting of the environmental impact assessment statements presented by the power companies in respect of the two new power plants.

With the progress now being made in the introduction of new environmental protection legislation and in the establishment of the organizations needed to tackle the various aspects of environmental problems, EPCOM will have a more significant role to play and it will continue to have a busy time ahead.

Finance

Our finances are in a very healthy state and although we have budgeted for a deficit of $334 million at the end of the financial year I doubt if we will achieve the expenditure on capital works anticipated when the budget was drawn up last year. However, projects in hand and about to start, as I stated earlier, represent a formidable and growing amount of capital expenditure. Inflated costs are adding to this and it is difficult to forecast how the cost of projects now out to tender and in the pipeline to start in 1978-79 will compare with estimates. Present experience in the public and private sector is producing alarming increases out of all proportion to the anticipated trend, which showed a gentle upward curve. Whereas we seem to be experiencing a sharp rise. There is no doubt the contracting industry is stretched beyond its capacity to give value for money on every job it takes on. We must be on our guard to ensure we do not go on giving out contracts without a careful scrutiny of the cost benefit to each project.