FINANCE COMMITTEE

Record of Meeting held on 1 December 1995 at 2:30 p.m.
in the Legislative Council Chamber

Present:

    Dr Hon YEUNG Sum (Chairman)
    Hon Mrs Elizabeth WONG CHIEN Chi-lien, CBE, ISO, JP (Deputy Chairman)
    Hon Mrs Selina CHOW LIANG Shuk-yee, OBE, JP
    Hon Martin LEE Chu-ming, QC, JP
    Dr Hon David LI Kwok-po, OBE, LLD, JP
    Hon Edward HO Sing-tin, OBE, JP
    Hon Ronald ARCULLI, OBE, JP
    Hon Mrs Miriam LAU Kin-yee, OBE, JP
    Dr Hon Edward LEONG Che-hung, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon CHIM Pui-chung
    Hon Michael HO Mun-ka
    Dr Hon HUANG Chen-ya, MBE
    Hon Emily LAU Wai-hing
    Hon Eric LI Ka-cheung, JP
    Hon Fred LI Wah-ming
    Hon James TO Kun-sun
    Dr Hon Samuel WONG Ping-wai, MBE, FEng, JP
    Dr Hon Philip WONG Yu-hong
    Hon Howard YOUNG, JP
    Hon Zachary WONG Wai-yin
    Hon James TIEN Pei-chun, OBE, JP
    Hon CHAN Kam-lam
    Hon CHAN Wing-chan
    Hon CHAN Yuen-han
    Hon CHENG Yiu-tong
    Hon Anthony CHEUNG Bing-leung
    Hon CHOY Kan-pui, JP
    Hon Albert HO Chun-yan
    Hon Ambrose LAU Hon-chuen, JP
    Dr Hon LAW Cheung-kwok
    Hon LAW Chi-kwong
    Hon LEUNG Yiu-chung
    Hon Bruce LIU Sing-lee
    Hon LO Suk-ching
    Hon MOK Ying-fan
    Hon Margaret NG
    Hon NGAN Kam-chuen

Absent:

    Hon Allen LEE Peng-fei, CBE, JP
    Hon NGAI Shiu-kit, OBE, JP
    Hon SZETO Wah
    Hon LAU Wong-fat, OBE, JP
    Hon CHEUNG Man-kwong
    Hon Frederick FUNG Kin-kee
    Hon LEE Wing-tat
    Hon Henry TANG Ying-yen, JP
    Hon Christine LOH Kung-wai
    Hon LEE Cheuk-yan
    Hon Andrew CHENG Kar-foo
    Hon Paul CHENG Ming-fun
    Hon CHEUNG Hon-chung
    Hon David CHU Yu-lin
    Hon IP Kwok-him
    Hon LAU Chin-shek
    Hon LEE Kai-ming
    Hon SIN Chung-kai
    Hon TSANG Kin-shing
    Dr Hon John TSE Wing-ling
    Hon Lawrence YUM Sin-ling

In Attendance for specific items:

Mr Ian WINGFIELD, JPCrown Solicitor
Mr Peter NGUYEN, QC, JPDirector of Public Prosecutions
Mr Peter H K CHEUNG, JPChambers Manager, Legal Department
Ms Alice TAI, JPJudiciary Administrator
Mr Francis HO, JPDeputy Secretary for Trade and Industry
Mr Ian WOTHERSPOONGovernment Property Administrator
Mr David WEBBPrincipal Assistant Secretary for the Treasury
Ms Lorna WONGPrincipal Assistant Secretary for Health and Welfare
Dr S P MAKAssistant Director of Health
Dr FUNG HongSenior Executive Manager of Hospital Authority
Mr Paul WONGAssistant Director of Social Welfare (Subventions)
Mr Carlos LEUNGAssistant Director of Social Welfare (Youth and Rehabilitation)
Mr S H PAU, JPDirector of Architectural Services
Mr J COLLIER, JPDeputy Secretary for Works
Dr A W MALONE, JPPrincipal Government Geotechnical Engineer of Civil Engineering Department

In Attendance:

Mr Alan LAI, JPSecretary for the Treasury
Mrs Carrie LAMDeputy Secretary for the Treasury
Mrs Lilian WONGPrincipal Executive Officer (LegCo Unit), Finance Branch
Miss Pauline NGClerk to the Finance Committee
Mrs Constance LIChief Assistant Secretary (Finance Committee)


Item No. 1 - FCR(95-96)82

HEAD 92 - LEGAL DEPARTMENT
" Subhead 234 Court costs


Members noted that the amount of supplementary provision required should be $21.8 million instead of $22.8 million, as item (t) had been inadvertently included in Enclosure 1 to FCR(95-96)82.

2. A Member questioned the rationale for including $32.6 million in the Estimates for 1995-96 when the actual expenditure in 1994-95 was already $50 million. In reply, the Chambers Manager, Legal Department (CM/LD) explained that it was very difficult to forecast precisely the provision required to meet court costs. The estimate of $32.6 million, which was consistent with the estimates included in previous years, was included for earmarking funds for the purpose. The Deputy Secretary for the Treasury (DS/Tsy) added that in view of the difficulty to predict the outcome of litigation, provision to meet court fees was put under a subhead which was non-cash limited. Supplementary provision would be sought when it was clear that the approved provision in the Estimates was not enough to meet the actual expenditure.

3. In response to a Member, the Crown Solicitor advised that all court cases listed in Part II of Enclosure I had been finalised but awaiting the actual order of taxation. He further advised that the costs payable were subject to negotiation between the two parties, only failing that would the bill be 'taxed'. The assessment of court costs was not based on a 'cost-recovery' principle, and in most cases the costs recovered represented only 70% to 75% of the litigant's costs.

4. Referring to the monitoring system on the institution of legal proceedings, the Director of Public Prosecutions assured Members that the decision to prosecute was based on the advice of at least three counsel and the client department, and every lost case was reviewed by him personally.

5. On a Member's enquiry about the amounts of court costs recovered in the current financial year, CM/LD agreed to provide the information in writing. xx

6. The Committee approved the proposal.

Item No. 2 - FCR(95-96)83

HEAD 80 - JUDICIARY
" Subhead 111 Hire of services and professional fees


7. In response to questions, the Judiciary Administrator (JA) explained that in calculating the additional expenditure of $4 million, they took into account the actual man-months of service provided by the deputy judges and temporary magistrates in past years. The daily rates of honoraria had not been adjusted since 1987, and the proposed revision was only to preserve the real value of the honoraria in accordance with the Composite Consumer Price Index. The adjustments would also reduce the gap between the honoraria and the briefing out fees offered by the Legal and Legal Aid Departments. In reply to a Member, JA confirmed that there was no retrospectivity in the proposed increase.

8. Some Members questioned the need to delegate to the Secretary for the Treasury (S for Tsy) the authority to approve future annual adjustments of the honoraria for these temporary appointments. They were of the view that adjustment of rates should be made according to the market trends. In response, S for Tsy advised that the proposed annual adjustment mechanism was meant to retain the real value of the rates. The Administration would seek the approval of the Finance Committee if any real increases were to be introduced or any changes to the adjustment mechanism made. He further explained that the proposed delegation of authority to S for Tsy was in line with the normal practice to weed out routine submissions to the Finance Committee. However, in view of the reservations expressed by some Members, the Administration agreed that the two items of the proposal could be put to voting separately.

9. The Committee voted on and approved item (a) of the proposal regarding the increases in the daily honoraria for the temporary judicial posts with effect from 2 January 1996.

10. The Committee then voted on item (b) proposing the delegation to S for Tsy the authority to approve future annual adjustments to the honoraria in accordance with the movement in the Composite Consumer Price Index. A division was called. Owing to the mal-functioning of the electronic voting system and with the agreement of the Committee, the Chairman instructed that Members should vote by a show of hands and names were not to be recorded. The results were that 25 Members voted for the proposal, six Members voted against and four abstained. Item (b) of the proposal was approved.

Item No. 3 - FCR(95-96)84

CAPITAL WORKS RESERVE FUND
HEAD 703 - BUILDINGS
Government Offices - Intra-governmental services
" Subhead 3002GA Purchase and fitting out of office accommodation for
the Hong Kong Economic and Trade Offices in Tokyo,
Geneva and New York


11. In response to questions, the Deputy Secretary for Trade and Industry (DS/TI) advised that as the Canton of Geneva did not make land available for sale directly to foreign entities, the Hong Kong Government had to acquire the land and building together from a developer. On the possibility of redeveloping the site should the need arise, the Government Property Administrator (GPA) advised that it would be subject to negotiation between the two governments, as the site had been designated for diplomatic use. In reply to a Member, DS/TI clarified that the proposed site had made it possible to build a slightly larger office within the approved budget to allow for future expansion. The fitting out of the Geneva Office would follow government standards, while maintaining the respectable image commensurate with the representational status of a government office. GPA added that independent architects had been consulted on the proposed plan. As regards the contract price, DS/TI confirmed that it would be on a fixed-price, lump-sum basis, and the actual price would be determined at the time of concluding the purchase agreement.

12. As to whether the slump property market in New York and Tokyo would result in savings to allow for the purchase of larger office premises in these cities, DS/TI advised that the Government would not acquire an office larger than its functional requirements simply to maximise the financial provision.

13. The Committee approved the proposal.

Item No. 4 - FCR(95-96)85

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Medical Subventions
" New Subhead "Yan Chai Hospital Multi-Services Complex"


14. Mr James TIEN declared an interest as the Chairman of the Yan Chai Hospital Advisory Board.

15. A Member questioned the rationale of meeting the construction cost of the multi-services complex of Yan Chai Hospital which was a beneficiary organisation of the Lotteries Fund. In response, the Assistant Director of Social Welfare (AD/SW) explained that only the non-recurrent costs of the welfare and rehabilitation services as well as the nursing homes in the complex would be financed by the Lotteries Fund. He confirmed that the Social Welfare Advisory Committee had raised no objection to the proposed funding, and there were sufficient funds to finance all the agreed projects.

16. On the policy of naming of donors, AD/SW advised that for naming of welfare capital projects, a donor should donate at least 20% of the costs. In the present proposal, the Yan Chai Board would donate about $32.8 million towards the welfare facilities which would cost about $114 million. The Senior Executive Manager of the Hospital Authority advised that Hospital Authority did not consider naming to be an issue in this project as it would treat every hospital under its management the same.

17. On the inclusion of specific inflation allowances in the estimated project cost, a Member expressed concern that the forecast of inflation rates might have impact on the actual tender price. In reply, DS/Tsy explained that for projects to be constructed over a period of several years, it was necessary to allow for inflation, lest Members' approval might have to be sought from time to time for revising the project estimate to cover price increases. Hence the use of money-of-the-day (MOD) prices for project estimate purpose. The inclusion of an inflation allowance in the project estimate would not have any implications on the actual tender price which would be subject to a competitive bidding process. Since the contract would be awarded on a fixed price lump sum basis, the contractor had to include the inflation element in the bidding price. Responding to a Member's comment on the possible drop in bidding prices when the major part of the airport-related projects had been completed, the Director of Architectural Services (D Arch S) said that the Government had an ongoing capital works programme. In any case, as explained by DS/Tsy, the provision for inflation allowance in calculating the MOD price of a project was no more than for project estimate purpose. It would have no impact on the outturn tender prices.

18. In response to a Member who referred to an earlier undertaking of the Administration to provide the running totals of planned provision of welfare services as against the various pledged targets, the Principal Assistant Secretary for Health and Welfare undertook to provide a breakdown on the progress of provision of welfare facilities against the targets pledged by the Governor since his 1992 Policy Address, and to include all such information in future submissions on welfare projects. D Arch S also agreed to provide Members with the information on areas allocated for different facilities and the administration office under this project. xx

xx

19. The Committee approved the item.

Item No. 5 - FCR(95-96)86

HEAD 43 - CIVIL ENGINEERING DEPARTMENT
" Subhead 700 General other non-recurrent


20. In response to a Member, DS/Tsy clarified that the proposed commitment for engaging consultants would not lead to a reduction of the department's provision for slope improvement projects funded under the Capital Works Reserve Fund.

21. Some Members noted that the Integrated Approach was new in Hong Kong and it appeared to have suggested in the paper that the consultants ought to have staff working overseas who could be mobilised quickly in response to demand in a very wet year. Members questioned the chance for any transfer of technology to local workers and raised doubt on the Government's ability to supervise the work of the consultants.

22. In reply, the Principal Government Geotechnical Engineer of Civil Engineering Department (PGGE/CED) advised that in undertaking this project, the consultants were expected to draw on local experts and those from other parts of the world. Quite a number of overseas firms in this field had long established themselves in Hong Kong and they engaged considerable local staff. The transfer of technology was therefore not a problem in the circumstances. To increase competitiveness, the Government would consider awarding the contracts on a yearly basis. As for the monitoring of performance, PGGE/CED advised that the department would closely monitor the work of the consultants and report, when necessary, to the Technical Review Board which comprised international experts.

23. On the effectiveness of the new approach, PGGE/CED advised that the department had in fact conducted a pilot study based on the Integrated Approach and the results were encouraging.

24. The Committee approved the item. Miss Emily LAU abstained.

25. The Committee was adjourned at 4:30 p.m.

Legislative Council Secretariat
29 December 1995