For discussion FCR(96-97)44
on 12 July 1996

Item for Finance Committee

Head 118 - Planning Department
Subhead 700 General other non-recurrent

Members are invited to approve a commitment of $41.7 million for a consultancy study on sustainable development for Hong Kong.



PROBLEM

We need to examine whether and how the concept of sustainability should apply to Hong Kong so that we may incorporate the relevant considerations in our strategic planning and policy making processes.

PROPOSAL

2. We propose to engage consultants to carry out a study on sustainable development to enable the Government to take major decisions in planning and development on a more interactive and corporate basis.

JUSTIFICATION

3. Economic, social and environmental policies, plans and programmes related to resource availability interact with and sustain our complex society. At present, we tend to deal with each of these broad fields on their own. A focus on any one sector such as housing, environmental protection or transport would not, by itself, be sufficient to safeguard the quality of life we want for ourselves and our future generations.

4. The 1996 Territorial Development Strategy Review concludes that, given sufficient resources for land production and infrastructure provision, there is likely to be spatial capacity to meet the needs of a 2011 population of 7.5 to 8.1 million. The strategic environmental assessment conducted as part of the Review, however, casts doubt on whether we can achieve sustainable development in the long term on the basis of current policies and technology. It raises questions about the extent to which Hong Kong can continue to expand its hub functions which are essential generators of economic growth. While such hub functions generate resources to support social, environmental, infrastructure and other development-related programmes, they can be a source of pressure on the environment, our ecological assets and other aspects of our urban-based life style.

5. A fundamental issue therefore is how we can maintain an acceptable environmental quality and safeguard our natural resource base while continuing to grow and develop to satisfy our social and economic needs. We need to develop sustainability indicators to reflect not only changes in the environmental situation as the economy continues to grow, but also what corresponding changes there would be on the economy as a result of policies and actions with regard to environmental protection.

6. The proposed study will therefore -

  1. define sustainability in Hong Kong;
  2. identify a set of values that reflects the beliefs and concepts important to the society;
  3. develop sustainability indicators taking public views into account;
  4. take stock of our current economic, social, environmental and ecological baseline conditions;
  5. develop a sustainable development system for policy formulation and implementation taking into account public views;
  6. propose education and awareness strategies to increase public understanding of the sustainability concept; and
  7. advise on the scope of further action required to implement any new system.

We intend to develop greater community understanding of the relevance of sustainable development to the continued well-being of our society as part of the study.

7. We do not have the necessary experience and expertise to undertake the task in-house. We therefore need to engage consultants to do the study.

financial implications

8. The Director of Planning estimates that the consultants will take 30 months to complete the study at a non-recurrent cost of $41.7 million. The cost breakdown is as follows -


$’000

(a) Consultancy fees for -

(i)

development of sustainability indicators, criteria, and working assumptions

2,215

(ii)

review of regional development trends and cross-border issues

797

(iii)

environmental and ecological baseline study (including geographical information system development and training)

15,666

(iv)

baseline assessments of economic, social and other relevant aspects

1,957

(v)

review of current policies/ institutional systems

1,080

(vi)

formulation and testing of sustainable development system

2,471

(vii)

refinement of system and identification of future institutional and study requirements

1,081

(viii)

public awareness and consultation exercises

3,403

Total consultancy fees

28,670

(b)

Consultant’s out-of-pocket expenses

(i)

computer facilities

900

(ii)

printing

1,427

(iii)

exhibition and video

975

Total Consultant’s out-of-pocket expenses

3,302

(c)

Contingencies (10% of (a) and (b) above)

3,197

(d)

Inflation related allowance

6,524

Total

41,693

Say

41,700

9. As regards paragraph 8(a), a detailed explanation of the total cost of the consultancy fees, estimated at $28.67 million is at Enclosure 1.

10. As regards paragraph 8(b)(i), the expenditure is for the purchase of computer hardware and software for setting up a geographical information system in the Planning, Environmental Protection and Agriculture and Fisheries Departments. We need the system for data input, updating, manipulation and output with respect to the stock-taking of environmental and ecological baseline conditions mentioned in paragraph 8(a)(iii) above.

11. As regards paragraph 8(b)(ii), the expenditure is for the printing of a total of about 40 000 copies of two consultation digests and 50 reports at various stages of the consultancy (some in both English and Chinese versions).

12. As regards paragraph 8(b)(iii), the expenditure is for two public exhibitions and production of videos associated with the public awareness and consultation exercises mentioned in paragraph 8(a)(viii).

13. As regards paragraph 8(d), the expenditure is for inflation allowance of 7.4% per year to cater for general price increases. The computation of the inflation cost is at Enclosure 2.

14. The Director of Planning advises that the cash flow of the study will be as follows -

$ million

1996-97

6.0

1997-98

20.0

1998-99

8.0

1999-2000

7.7

Total

41.7

15. We estimate the annually recurrent expenditure for maintaining the geographical information system as follows -

$'000
Planning Department34
Environmental Protection Department34
Agriculture and Fisheries Department34
Total102

16. Subject to Members’ approval of the proposal, we will approve under delegated authority the necessary supplementary provision of $6 million in 1996-97 to meet this year’s expenditure and offset it by deleting an equivalent amount under Head 106 Miscellaneous Services Subhead 789 Additional commitments.

ENVIRONMENTAL IMPLICATIONS

17. The study is an important step towards environmental sustainability. It will examine how we should define and apply environmental sustainability in Hong Kong, taking into account economic and social factors, and what systems or institutional mechanisms would be necessary to help to achieve it. It will include environmental and ecological baseline studies to assess the environmental and ecological conditions, and provide essential information for implementing environmental sustainability.

Background information

18. There were extensive discussions on the subject of sustainable development at the 1992 Earth Summit in Rio de Janeiro. Agenda 21 and the Rio Declaration agreed at the Earth Summit provide a blueprint for communities in promoting sustainable development. Many governments around the world have started to incorporate sustainability principles into their policy and planning framework.

19. We announced plans in the Second Review of progress on the 1989 White Paper “Pollution of Hong Kong - a time to act” in 1993 and the 1994 Policy Address to consider how to incorporate the Agenda 21 sustainable development principles into the policy and planning framework. The Third Review of the White Paper published on 25 March 1996 outlines the Government92's further views on the concept and our intention to carry out a study on sustainable development.

20. We briefed the Environmental Affairs Panel of the Legislative Council and sought its views on the study brief on 3 July 1996. We also consulted the Advisory Council on the Environment on the same date.

Planning, Environment and Lands Branch
July 1996


Enclosure 1 to FCR(96-97)44

Breakdown of the consultancy fees on the study on sustainable development

Consultants’ staff costs

Estimated
man
months

Average MPS salary point

Estimated
fee
$’000

(a)

Development of sustainability indicators, criteria, and working assumptions

Professional

Technical

12

7

40

16

1,852

363

(b)

Review of regional development trends and cross-border issues

Professional

Technical

5

5

33

13

573

224

(c)

Environmental and ecological baseline study (including geographical information system development and training)

Professional

Technical

100

94

33

13

11,463

4,203

(d)

Baseline assessments of economic, social and other relevant aspects

Professional

Technical

10

8

40

16

1,543

414

(e)

Review of current policies/ institutional systems

Professional

7

40

1,080

(f)

Formulation and testing of sustainable development system

Professional

Technical

14

6

40

16

2,160

311

(g)

Refinement of system and identification of future institutional and study requirements

Professional

Technical

6

3

40

16

926

155

(h)

Public awareness and consultation exercises

Professional

Technical

15

21

40

16

2,315

1,088

Total

28,670

Notes

(1) A multiplier of 3 is applied to the average Master Pay Scale (MPS) point to arrive at the full staff costs including the consultants’ overheads and profit. The staff will be employed in the consultants’ offices.

(2) Average MPS points 40 ($51,440 per month) and 16 ($17,270 per month) are adopted for professional and technical grades respectively, except for items (b) and (c). It is expected that these two tasks would involve the employment of professional and technical staff at lower average salary costs; hence average MPS points 33 ($38,210 per month) and 13 ($14,905 per month) are adopted respectively.

(3) The average monthly salary costs are based on the rates at 1 April 1995.

(4) The figures given above are based on estimates prepared by Director of Planning. We will only know the actual man months and fees required when we have selected the consultants through the usual competitive lump sum fee bidding system.


Enclosure 2 to FCR(96-97)44

Inflation-related Allowance

To cater for general price increases and salary adjustments, we have included in the project cost an inflation-related allowance of 7.4% per year on a compound basis. The inflation-related allowance is estimated as follows -


$ million


1996-97

1997-98

1998-99

1999-2000

Total

Expenditure including contingencies (at 1 April 1995 prices)

5.59

17.34

6.46

5.78

35.17

Inflation allowance

0.41

2.66

1.54

1.91

6.52

Total expenditure

6.00

20.00

8.00

7.69

41.69


Last Updated on 2 December 1998