FINANCE COMMITTEE

Record of Meeting held on 8 March 1996 at 2:30 p.m.
in the Legislative Council Chamber

Present:

Absent:

In attendance for specific items:

Mr Y C CHENG	Principal Assistant Secretary for Health and Welfare
Mrs Patricia CHU	Assistant Director of Social Welfare
Mr Kevin HO, JP	Deputy Secretary for the Treasury (3)
Mr C H TSANG	Assistant Director of Accounting Services
Mr Raymond H C WONG	Commissioner for Narcotics
Mrs Sarah KWOK	Principal Assistant Secretary for Security (Narcotics)
Mr Augustine CHENG	Principal Assistant Secretary for Transport
Mr LEE Shu-chee, JP	Assistant Commissioner for Transport
Mr Patrick Y K FUNG	Assistant Director of Electrical and Mechanical Services
Mr Clement CHEUNG	Principal Assistant Secretary for Health and Welfare
Dr FUNG Hong	Senior Executive Manager of Hospital Authority
Mr TAM Che-cheung	Project Director of Architectural Services Department
Mr Carlson CHAN	Principal Assistant Secretary for Home Affairs
Mr T D STEPHENSON, JP	Assistant Director of Home Affairs
Mr Francis HO, JP	Deputy Secretary for Trade and Industry
Mr K K WONG	Principal Executive Officer of Trade and Industry Branch
Mrs Philomena LEUNG	Principal Assistant Secretary for the Civil Service

In attendance:

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
Mrs Constance LI	Chief Assistant Secretary (Finance Committee)
Mr Simon CHEUNG	Senior Assistant Secretary (Special Duties)

Item No. 1 - FCR(95-96)129

RECOMMENDATIONS OF THE ESTABLISHMENT SUBCOMMITTEE

The Chairman advised that in response to a Members request, paper EC(95-96)76 would be considered separately.

2. Paper FCR(95-96)129, except EC(95-96)76, was put to the vote and approved.

EC(95-96)76

3. A Member stated her opposition to the paper which proposed the creation of one post of Administrative Officer Staff Grade C to head a new co-ordination office for the Handover Ceremony. In view of the lack of information on the type and nature of the activities associated with the Handover Ceremony to justify the need for such a senior ranking post, she could not give support to the paper. The Chairman advised the Committee that it had been agreed by the Establishment Subcommittee that the matter should be followed up by the LegCo Panel on Home Affairs.

4. Paper EC(95-96)76 was voted on and approved.

Item No. 2 - FCR(95-96)130

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

5. The Committee approved this item.

Item No. 3 - FCR(95-96)131

HEAD 170 - SOCIAL WELFARE DEPARTMENT
Subhead 175 Child care centre fee assistance

6. In response to Members questions on the reason for the substantial increase in the number of fee assistance recipients in respect of day nurseries, the Assistant Director of Social Welfare (AD/SW) advised that the increase was possibly due to the stepping up of publicity of the service and a general decrease in household income. The Department had no information on what attributed to the lowering of household income, but the number of applicants for fee assistance had increased, making it necessary to seek supplementary provision for a second time in the year.

7. As for the decrease in the number of fee assistance recipients in respect of day crèches, AD/SW explained that while the reasons were not known, lower-income parents might prefer taking care of the children themselves to paying over $3,000 for keeping a child at day crèches. In response to enquiries, AD/SW clarified that a day crèche only accepted infants up to two years old, while children between ages two and six were admitted to day nurseries at a monthly fee of about $1,500 per child. The payment of fee assistance for both day nurseries and day crèches were meant for low-income families. The level of fee assistance was adjusted annually to take account of salary adjustments, inflation and other price increases.

8. As to whether the growing number of new immigrants had any impact on the number of applicants for child care centre fee assistance, AD/SW said that the Department did not have the information, but she would consider keeping such statistics for future analysis. She also agreed to provide the estimated number of applicants for child care centre fee assistance in 1996-97.

9. The Committee approved this item.

Item No. 4 - FCR(95-96)132

HEAD 188 - TREASURY
Subhead 188 Difference in exchange

10. The Committee approved this item.

Item No. 5 - FCR(95-96)134

HEAD 106 - MISCELLANEOUS SERVICES
New Capital Account Subhead Grant to Beat Drugs Fund

11. Dr Hon Edward LEONG Che-hung declared an interest as a Member of the Action Committee Against Narcotics (ACAN).

12. In response to enquiries, the Commissioner for Narcotics (C for N) advised that a conservative estimate of the annual income expected to be generated from the Fund was in the region of $17.5 million, which was about 5% return of the $350 million Fund. The Fund would be managed by a non-profit making company, the directors of which included two non-officials knowledgeable in the anti-drug field. Director of Accounting Services would advise on the investment and accounting aspects.

13. Members, while supporting that more funds should be made available to finance worthwhile anti-drug projects by non-Government agencies and organisations, queried the rationale for establishing a fund which in the end was also subject to the advice of ACAN. Some Members considered that such an arrangement only created additional administrative work, and the same effect could be achieved by simply increasing the recurrent subvention to ACAN. Besides, the establishment of the Fund might affect future bids for resources by the Narcotics Division, and non-Government organisations would have to compete with the Government for funding.

14. In response, C for N explained that allocation to ACAN, like any other recurrent government expenditure, was subject to a resource allocation process where there were many competing priorities for the limited funds available. The purpose of setting up a fund was to augment the recurrent allocation to ACAN with an additional, steady and stable source of finance for worthwhile anti-drug projects. Applications for disbursements from the Fund were expected to be project-based and non-recurrent/short-term recurrent in nature. Bids for resources to support the work of the Narcotics Division would be processed in the same way as other recurrent bids in the annual Resource Allocation Exercise. Whilst the Narcotics Division could also submit applications to the Fund for financing its projects, the C for N would have to declare an interest and all applications would first be vetted by ACAN.

15. Hon James TO, Chairman of the Panel on Security, advised the Committee that the setting up of the Fund had the support of the Panel as the Fund could help strengthen efforts to combat the drug problem.

16. Some Members expressed concern about the mode of investment to be adopted in the management of the Fund. They considered the estimated 5% annual return far too low when compared to the much higher rate of return which the Hong Kong Monetary Authority (HKMA) had achieved. They asked whether an investment subcommittee should be established or investment professionals be appointed to advise on the mode of investment.

17. In response, C for N explained that the purpose of setting up the Fund was to generate a steady and reliable source of income to finance anti-drug projects. The investment of the Fund would be handled by the Treasury and the present intention was to place the money in Hong Kong Dollar deposits and Exchange Fund Bills/Notes. He also advised Members that the mode of investment could be modified subject to the consent of either the Financial Secretary or the Secretary for the Treasury. The Deputy Secretary for the Treasury (1) added that the 5% return per year was a conservative estimate and he believed that the actual return could be higher. One of the most important considerations in managing a fund of this nature was the prospect of generating a steady stream of income to finance projects with the minimum risks. C for N assured Members that the Treasury had a lot of experience and expertise in fund management and all investment proposals would have to be approved by the Governing Committee of the company. Nevertheless, he noted Members concern and would consider seriously the suggestion of appointing an investment subcommittee or honorary advisors with investment background to assist the Board of Directors.

18. The Chairman advised that the subject could be further pursued by the Panel on Security.

19. The Committee approved this item.

Item No. 6 - FCR(95-96)135

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Transport Department
Subhead 8018ZN Replacement of traffic control and surveillance system in the Airport Tunnel

20. In reply to Members questions on the role of the Electrical and Mechanical Services Department (EMSD) in undertaking the project, the Assistant Director of Electrical and Mechanical Services (AD/EMS) said that the contractor would be responsible for carrying out all the replacement and installation work and EMSD would monitor and supervise the implementation of the whole project on behalf of the Transport Department. EMSD would not charge the Transport Department for its services and the commitment of $88.3 million was entirely for the project. AD/EMS further added that no additional engineering staff would be required to look after the project.

21. Addressing the effect on traffic flow during the installation period, AD/EMS said that the major part of the installation work would be carried out during night time and for works that needed to be done in the day time, suitable measures would be taken to ensure that normal traffic flow would not be adversely affected.

22. Regarding the life span of the new system, AD/EMS said that such a system would normally last from ten to fifteen years.

23. The Committee approved this item.

Item No. 7 - FCR(95-96)133

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Medical Subventions
New Subhead Queen Mary Hospital - Radiotherapy and Oncology Department Extension

24. In reply to a Members questions, the Senior Executive Manager of Hospital Authority said that the Radiotherapy and Oncology Department at Queen Mary Hospital (QMH) was one of the five departments in the territory providing radiotherapy and cancer drug therapy treatment to cancer patients. The other four departments were located in the Pamela Youde Nethersole Eastern Hospital, Queen Elizabeth Hospital, Prince of Wales Hospital and Tuen Mun Hospital. The main objective to construct an extension block for and to refurbish the Radiotherapy and Oncology Department at QMH was to relieve the existing acute shortage in space and to improve the conjested environment. Upon completion of the works, it was expected that patients treatment waiting time would be reduced from four to one week.

25. The Committee approved this item.

Item No. 8 - FCR(95-96)136

HEAD 63 - HOME AFFAIRS DEPARTMENT
Subhead 110 Honoraria for members of committees

26. The following Members declared an interest as Members of District Boards (DB):

Hon LAU Wong-fat	Hon Albert CHAN Wai-yip
Dr Hon HUANG Chen-ya	Hon Eric LI Ka-cheung
Hon Fred LI Wah-ming	Hon James TO Kun-sun
Hon Zachary WONG Wai-yin	Hon CHAN Kam-lam
Hon Andrew CHENG Kar-foo	Hon CHOY Kan-pui
Hon IP Kwok-him	Hon Ambrose LAU Hon-chuen
Dr Hon LAW Cheung-kwok	Hon LEUNG Yiu-chung
Hon Bruce LIU Sing-lee	Hon MOK Ying-fan
Hon TSANG Kin-shing	Dr Hon John TSE Wing-ling
Hon Lawrence YUM Sin-ling

27. In reply to Members questions on the claiming of the office rental allowance for those holding multiple membership in other tiers of representative government, the Assistant Director of Home Affairs (AD/HA) confirmed the following:

a DB member could claim up to the ceiling of $4,500 if he was operating a separate office entirely for his DB duties;
when duties of multiple membership were performed in the same office, he can only claim up to two-thirds of the allowance;
DB members who set up joint offices would have to declare the proportion of the expenses for which each member was responsible or the individual items which each would pay for; claims for more than one office could be made but the total amount claimed was also subject to the ceiling of $4,500; and
a DB member who also used his office to undertake work for his own political party should so declare and could only claim the portion which was directly related to his DB work.

28. A Member pointed out that $4,500 might be sufficient for renting a unit in a public housing estate but definitely not in districts such as Causeway Bay. He enquired whether different rates of rental allowance for different districts could be adopted. In reply, AD/HA said that the present rate was worked on the basis of an average rent across the territory. He admitted that some DB members might have an advantage over others in this regard but it was an inevitable eventuality of any system of this kind.

29. A Member asked whether the items covered by the new rental allowance could be extended to cover items such as pager and mobile telephone, apart from those stipulated in paragraph 2(a) of the paper. AD/HA said that there could be risks if the items to be covered were made completely open-ended and DB members could be allowed to make any sort of claims. However, the Administration was willing to review the matter in the future to see if any more specific items needed to be included for reimbursement purposes.

30. Regarding whether a DB member who had assigned a portion of the premises of his company for DB duties could also claim the allowance, AD/HA said that this could be considered provided that a declaration was made. Members suggested that clear guidelines should be laid down in order to avoid confusion or abuses. AD/HA advised the Committee that copies of DB members declarations and receipts would be displayed in District Offices for public inspection.

31. The Committee approved this item.

Item No. 9 - FCR(95-96)137

HEAD 96 - GOVERNMENT SECRETARIAT: OVERSEAS OFFICES
Subhead 149 General departmental expenses

32. Following clarifications, Members noted that although the rates of rent allowance payable to officers posted to work in overseas offices were in the past usually determined by reference to the rates used by the United Kingdom Diplomatic Service, the Hong Kong Government was not obliged to follow such rates. Regard would also be given to other factors such as the prevailing market rentals in each location to secure accommodation of a standard comparable to those of equivalent ranks in other foreign missions. In the present case, the rates offered by the Australian Government were adopted because the circumstances were more similar. Members therefore queried why the Government could not come up with its own rates for Singapore particularly when the first staff was posted there as early as in 1993 and approval to set up an overseas office in Singapore was given in May 1995. If the intention was to institutionalise the system, the Government should work out some objective yardsticks in determining the most appropriate rates, and the same yardsticks should apply to all other overseas offices.

33. In reply, the Deputy Secretary for Trade and Industry admitted that preparatory work for setting and formalising the new rates could have been done earlier. The Administration would review the arrangements periodically and Members views would be taken into consideration. The Chairman advised the Administration to report back to the Panel on Trade and Industry on any development of the reviews of allowances granted to those working in the overseas offices.

34. The Committee approved this item.

35. The Committee was adjourned at 4:18 p.m.

Legislative Council Secretariat
18 April 1996

Last Updated on 27 November 1998

FINANCE COMMITTEE

Record of Meeting held on 8 March 1996 at 2:30 p.m. in the Legislative Council Chamber

Record of Meeting held on 8 March 1996 at 2:30 p.m.
in the Legislative Council Chamber