FINANCE COMMITTEE

Record of Meeting held on 2 February 1996 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 Allen LEE Peng-fei, CBE, JP
    Hon Mrs Selina CHOW LIANG Shuk-yee, OBE, JP
    Hon Martin LEE Chu-ming, QC, JP
    Hon NGAI Shiu-kit, OBE, JP
    Hon SZETO Wah
    Hon LAU Wong-fat, OBE, JP
    Hon Edward HO Sing-tin, OBE, JP
    Hon Mrs Miriam LAU Kin-yee, OBE, JP
    Dr Hon Edward LEONG Che-hung, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon CHEUNG Man-kwong
    Hon CHIM Pui-chung
    Hon Frederick FUNG Kin-kee
    Hon Michael HO Mun-ka
    Dr Hon HUANG Chen-ya, MBE
    Hon Emily LAU Wai-hing
    Hon LEE Wing-tat
    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 Christine LOH Kung-wai
    Hon James TIEN Pei-chun, OBE, JP
    Hon LEE Cheuk-yan
    Hon CHAN Kam-lam
    Hon CHAN Wing-chan
    Hon Andrew CHENG Kar-foo
    Hon CHENG Yiu-tong
    Dr Hon Anthony CHEUNG Bing-leung
    Hon CHEUNG Hon-chung
    Hon David CHU Yu-lin
    Hon Albert HO Chun-yan
    Hon IP Kwok-him
    Hon LAU Chin-shek
    Hon Ambrose LAU Hon-chuen, JP
    Dr Hon LAW Cheung-kwok
    Hon LAW Chi-kwong
    Hon LEE Kai-ming
    Hon LEUNG Yiu-chung
    Hon Bruce LIU Sing-lee
    Hon MOK Ying-fan
    Hon Margaret NG
    Hon NGAN Kam-chuen
    Hon SIN Chung-kai
    Hon TSANG Kin-shing
    Dr Hon John TSE Wing-ling

Absent:

    Dr Hon David LI Kwok-po, OBE, LLD, JP
    Hon Ronald ARCULLI, OBE, JP
    Hon Henry TANG Ying-yen, JP
    Hon CHAN Yuen-han
    Hon Paul CHENG Ming-fun
    Hon CHOY Kan-pui, JP
    Hon LO Suk-ching
    Hon Lawrence YUM Sin-ling

In attendance for specific items:

Mr H S KWONG, JP Secretary for Works
Mr Billy LAM, JP Director, New Airport Projects Co-ordination Office
Mr Bernard LAM, JP Director of Civil Engineering
Mr H K WONG Project Manager, New Airport Projects Co-ordination Office
Mr M J T ROWSE Deputy Secretary for the Treasury (2)
Mr Leo KWAN, JP Deputy Secretary for Economic Services
Ms Susan A LUKE Principal Assistant Secretary for Economic Services
Mr Mike STONE, JP Deputy Secretary for the Civil Service
Mr Dick SIEGEL, JP Director of Civil Aviation
Dr Henry TOWNSEND Chief Executive Officer, Airport Authority
Ms Sophia KAO Human Resources Director, Airport Authority
Mrs E M BOSHER, JP Director of Administration, Airport Authority
Mr John COLLIER, JP Deputy Secretary for Works
Dr A W MALONE, JP Principal Government Geotechnical Engineer of Civil Engineering Department
Mr Herbert LEUNG Government Land Agent of Lands Department

In attendance:

Mr K C KWONG, JP Secretary for the Treasury
Mr Alan LAI, JP Deputy Secretary for the Treasury (1)
Mrs Lilian WONG Principal Executive Officer (LegCo Unit), Finance Branch
Miss Pauline NG Clerk to the Finance Committee
Mr Andy LAU Chief Assistant Secretary (Finance Committee)
Mr Simon CHEUNG Senior Assistant Secretary (Special Duties)


Item No. 1 - FCR(95-96)114

RECOMMENDATIONS OF THE PUBLIC WORKS SUBCOMMITTEE ON NON-AIRPORT CORE PROGRAMME

The Committee approved this item.

Item No. 2 - FCR(95-96)115

CAPITAL WORKS RESERVE FUND
HEAD 702 - PORT AND AIRPORT DEVELOPMENT
AIR AND SEA COMMUNICATIONS - SUPPORT
8AG - New Airport Works Project Management Phase IV

2. Dr Philip WONG Yu-hong declared an interest as a Member of the Airport Authority (AA).

3. Members noted that this proposal was submitted to the Finance Committee (FC) for consideration on 19 January 1996 (vide FCR(95-96)112) and was voted down because of Members’ queries on the progress and extent of technology transfer and the calculation of consultancy fees. Additional information in this respect had been included in this paper.

4. In response to a Member’s question on what other benefits the Government could acquire apart from those mentioned in paragraph 7 of the paper, the Director, New Airport Projects Co-ordination Office (D/NAPCO) said that the process in the commissioning of the new airport would be another important aspect of knowledge which Government officers could learn from the consultants. Staff from NAPCO and other departments would benefit from the technology transfer. The completion of a major infrastructure project within a short span of time was in itself a very valuable experience which could be applied to future large-scale projects in Hong Kong.

5. D/NAPCO added that the overnight transfer of an airport from Kai Tak to Chek Lap Kok was a new experience for Hong Kong and several of the consultants had extensive experience and expertise in this area. The task was unprecedented in Hong Kong and NAPCO needed their expertise and support in completing the work.

6. A Member asked whether Hong Kong could rely on the acquired knowledge and experience in tackling similar projects in future, such as the building of the second runway, without relying on outside consultants. The Secretary for Works (S for W) explained that outside consultants were normally engaged when Government did not have the requisite knowledge and expertise or the necessary manpower to implement a project. Whether Government would need to hire consultants to assist in completing future major projects would depend on the nature of the projects and the completion time-frame. Nevertheless, the knowledge and experience gained in managing the Airport Core Programme (ACP) would definitely be of great help to the management of other construction works such as the building of the western corridor railway.

7. Members noted that the salaries for the professionals and supporting staff in this proposal were much higher than those set out in paper FCR(95-96)117 which would also be considered by the Committee at this meeting. In the present proposal, apart from salaries which were several times higher than those performing comparable jobs elsewhere, provisions were also made for other payments, such as office set-up, overheads and profits. It would appear from the information papers FCRI(95-96)6 and FCRI(95-96)8 issued to Members in 1995 on the “Estimation of Consultancy Fees” that when the multiplying factor of 2.52 was applied, all overhead expenses would have already been covered. The estimated consultancy fees in the present paper were therefore questionable and excessively high.

8. D/NAPCO explained that the consultants engaged for the ACP were international experts renowned for the construction and commissioning of airports, and the fees payable for their service were inevitably higher than those in some other consultancies. A package approach was adopted in engaging these consultants and their supporting staff, and their employment had gone through tendering procedures. Apart from serving as consultants, these professionals also worked as part of the integrated team in NAPCO with other government officers. All in all, the employment of the consultants was good value for money having regard to the nature of their employment. The Secretary for the Treasury (S for Tsy) added that the $298 million was in money of the day prices and an inflation allowance had been included in estimating the consultancy fees apart from applying a multiplying factor.

9. In response to a Member, S for Tsy and S for W assured Members that consultants would only be employed on a need basis and a balance would be maintained in engaging outside consultants and employing government staff. Project management teams similar to that of the NAPCO would be set up when building the western corridor railway and the Mass Transit Railway Tseung Kwan O extension. D/NAPCO affirmed that the ACP was progressing very well and stringent cost control had been implemented effectively. He would personally ensure that high calibre and well qualified management consultants would be engaged to continue to provide management consultancy for Phase IV of the ACP.

10. Members voted on the proposal and a division was claimed. The result was: 29 Members voted for the proposal; 18 against and 1 abstained.

Ayes:

Hon Allen LEE Peng-fei Hon Mrs Selina CHOW LIANG Shuk-yee
Hon NGAI Shiu-kit Hon LAU Wong-fat
Hon Edward HO Sing-tin Hon Mrs Miriam LAU Kin-yee
Hon CHIM Pui-chung Hon Frederick FUNG Kin-kee
Hon Emily LAU Wai-hing Dr Hon Samuel WONG Ping-wai
Dr Hon Philip WONG Yu-hong Hon Howard YOUNG
Hon Christine LOH Kung-wai Hon James TIEN Pei-chun
Hon CHAN Kam-lam Hon CHAN Wing-chan
Hon CHENG Yiu-tong Hon CHEUNG Hon-chung
Hon David CHU Yu-lin Hon IP Kwok-him
Hon Ambrose LAU Hon-chuen Dr Hon LAW Cheung-kwok
Hon LEE Kai-ming Hon LEUNG Yiu-chung
Hon Bruce LIU Sing-lee Hon MOK Ying-fan
Hon Margaret NG Hon NGAN Kam-chuen
Hon Mrs Elizabeth WONG CHIEN Chi-lien

(29 Members)

Nos:

Hon Martin LEE Chu-ming Hon SZETO Wah
Dr Hon Edward LEONG Che-hung Hon Albert CHAN Wai-yip
Hon CHEUNG Man-kwong Hon Michael HO Mun-ka
Dr Hon HUANG Chen-ya Hon LEE Wing-tat
Hon Fred LI Wah-ming Hon James TO Kun-sun
Hon Zachary WONG Wai-yin Hon Andrew CHENG Kar-foo
Dr Hon Anthony CHEUNG Bing-leung Hon Albert HO Chun-yan
Hon LAW Chi-kwong Hon SIN Chung-kai
Hon TSANG Kin-shing Dr Hon John TSE Wing-ling

(18 Members)

Abstention:

Hon Eric LI Ka-cheung

(1 Member)

11. The Committee approved this item.

Item No. 3 - FCR(95-96)116

HEAD 28 - CIVIL AVIATION DEPARTMENT
Subhead 700 General other non-recurrent

New item “Ex-gratia payments to staff in Airport Management Division upon abolition of offices”

12. Dr Philip WONG Yu-hong declared an interest as a Member of the AA.

13. Members noted that this item was a resubmission for a commitment of $19.2 million for ex-gratia payments to staff in the Airport Management Division (AMD) upon abolition of offices on the closure of the Kai Tak Airport in April 1998. This item was discussed at the FC meeting on 5 January 1996 and was voted down. The Administration subsequently briefed the LegCo Panel on Public Service on 22 January 1996.

14. A Member stated that there should be consistency of approach and standards in tackling redundancy cases with particular reference to Hospital Authority staff who were denied abolition-of-office terms and were not given any ex-gratia payment. In reply to her questions, the Deputy Secretary for the Civil Service (DS/CS) said that in the case of the Hospital Authority, there was no question of abolition of office. When determining the arrangements, Government would have to look at the circumstances of each case. For example, the extent of the cutting back of activities, resulting in reduction of existing posts or complete taking-over by outside bodies could be different, and different arrangements would have to be adopted. In the case of wholly funded subvented bodies such as the Hong Kong Institute of Education, Vocational Training Council and the Hospital Authority, terms such as mixed service pension or continued employment under civil service terms could be used. But for privatisation exercises where the organisation would operate on prudent commercial principles, it would no longer be appropriate for civil service terms to continue to apply. Under the circumstances, the posts would have to be deleted, and abolition of office terms would have to be offered to the affected staff.

15. Members of the Liberal Party pointed out that Members’ concern was more on the need to grant the ex-gratia payment if further employment was guaranteed. The current paper had provided more information in this respect, but Members were yet to be convinced if the proposed level of compensation was appropriate. A Member suggested that those joining the AA would actually be doing the same jobs. If ex-gratia payment were to be granted just because staff had to work in a new environment or workplace, there might be implications on the private sector which would seize it as an opportunity to seek compensation in similar situations. Another Member asked if the proposed ex-gratia payment for those who would be further employed by AA could be reduced to three months’ salary.

16. In response, the Administration explained that in the present case, the posts in AMD would be deleted and the abolition-of-office terms would have to apply. All staff should therefore be entitled to the same abolition-of-office terms, and those who would be joining the AA should not be penalised. The proposed abolition of office terms had in fact been used since 1991. The terms were therefore not tailored for the AMD staff. The current staffing arrangements were proposed after lengthy discussion between the Administration and the AA, and in consultation with the AMD staff. The smooth opening of the new airport was very important to Hong Kong’s economy and the Administration had to ensure that the AMD staff would continue to serve the Kai Tak Airport up to April 1998 and the AA would be able to absorb as many local experienced staff as possible to run the new airport. The Administration also reiterated that it was not the first time that this type of ex-gratia payment was granted, but there was no indication that workers in the private sector had asked for the same arrangements to apply to the private sector.

17. As to whether civil service terms were far too favourable and a review on the current policy on the abolition of office was necessary, DS/CS explained that he had already briefed the LegCo Panel on Public Service on the subject. The Civil Service Branch had always kept the civil service pay package under vigilant review. Besides, the Standing Commission on Civil Service Salaries and Conditions of Service also carried out a survey on civil service benefits each year to ensure that the civil service pay package was comparable with that of the private sector.

18. Members of the Democratic Party stressed that when the subject was discussed at the Public Service Panel, Members had considered that there should be a clear policy on abolition of office, particularly on the circumstances in which the policy would apply. They also stressed that the AMD staffing arrangements should not be taken as a precedent for other cases.

19. The item was put to vote and a division was claimed. The result was: 37 Members voted for the proposal, six against and one abstained.

Ayes:

Hon Martin LEE Chu-ming Hon SZETO Wah
Hon Albert CHAN Wai-yip Hon CHEUNG Man-kwong
Hon Frederick FUNG Kin-kee Hon Michael HO Mun-ka
Dr Hon HUANG Chen-ya Hon Emily LAU Wai-hing
Hon LEE Wing-tat Hon Fred LI Wah-ming
Hon James TO Kun-sun Dr Hon Samuel WONG Ping-wai
Dr Hon Philip WONG Yu-hong Hon Zachary WONG Wai-yin
Hon Christine LOH Kung-wai Hon LEE Cheuk-yan
Hon CHAN Kam-lam Hon CHAN Wing-chan
Hon Andrew CHENG Kar-foo Hon CHENG Yiu-tong
Dr Hon Anthony CHEUNG Bing-leung Hon CHEUNG Hon-chung
Hon CHOY Kan-pui Hon David CHU Yu-lin
Hon IP Kwok-him Hon LAU Chin-shek
Hon Ambrose LAU Hon-chuen Dr Hon LAW Cheung-kwok
Hon LAW Chi-kwong Hon LEE Kai-ming
Hon LEUNG Yiu-chung Hon Bruce LIU Sing-lee
Hon MOK Ying-fan Hon Margaret NG
Hon NGAN Kam-chuen Dr Hon John TSE Wing-ling
Hon Mrs Elizabeth WONG CHIEN Chi-lien

(37 Members)

Nos:

Hon Allen LEE Peng-fei Hon Mrs Selina CHOW LIANG Shuk-yee
Hon LAU Wong-fat Hon Edward HO Sing-tin
Dr Hon Edward LEONG Che-hung Hon James TIEN Pei-chun

(6 Members)

Abstention:

Hon Eric LI Ka-cheung

(1 Member)

20. The Committee approved this item.

Item No. 4 - FCR(95-96)117

HEAD 43 - CIVIL ENGINEERING DEPARTMENT
Subhead 700 General other non-recurrent
New item “Statutory control of the geotechnical aspects of private slopes and developments”

21. Members questioned the adoption of different multiplying factors in calculating the consultancy fees in FCR(95-96)117 and in FCR(95-96)118. In reply, the Deputy Secretary for Works explained that a factor of 2.5 was used in the former proposal as the consultant would be accommodated in Government offices during the consultancy. In the latter case, the consultant would have to work in their own offices and a factor of 3.0 was used. The Administration was aware that different formulae had been used in estimating consultancy fees. In order that a uniform standard would be used, a circular would soon be issued to require that a factor of 2.1 should be used for site staff, 2.5 for consultants working in government offices and 3.0 for those working in their own offices. The multiplying factor should be applied to the mid-point salaries of the comparable ranks in the civil service.

22. Members pointed out that the explanation given by the Administration was not consistent with the information provided in the earlier Information Notes on consultancy fees and asked if the standard factor of 2.5 could be used for both papers. Members agreed that in the event that the outcome of the tender exercise for FCR(95-96)118 indicated that the 2.5 factor was unrealistic and a larger factor should apply, a separate submission could be put to FC for supplementary commitment. In response, S for Tsy agreed to use the factor of 2.5 for both papers, and to adjust the commitment for FCR(95-96)118 accordingly. He also advised Members that a paper on this subject would be presented to the relevant LegCo committee and copied to Members of the FC.

xx

23. The Committee approved proposal FCR(95-96)117.

Item No. 5 - FCR(95-96)118

HEAD 43 - CIVIL ENGINEERING DEPARTMENT
Subhead 700 General other non-recurrent
Systematic identification of maintenance responsibility of slopes in the territory”

24. In view of the discussions under the preceding item, S for Tsy revised the commitment being sought in the paper from the original $70.8 million to $59 million to take account of the reduction in the consultancy fees estimate on using a multiplying factor of 2.5.

25. The Committee approved this item.

Item No. 6 - FCR(95-96)119

MEMBERSHIP OF ESTABLISHMENT SUBCOMMITTEE AND PUBLIC WORKS SUBCOMMITTEE

26. The Committee approved this proposal.

27. The Committee was adjourned at 4:55 p.m.

Legislative Council Secretariat
26 March 1996


Last Updated on 27 November 1998