Legislative Council Finance Committee
LegCo Paper No. FC 76/96-97
(These minutes have been
seen by the Administration)
Ref : CB1/F/1/2

Minutes of the proceedings of the meeting

held on Friday, 31 January 1997 at 2:30 pm in the Legislative Council Chamber

Members present :

    Dr Hon YEUNG Sum (Chairman)
    Hon CHAN Kam-lam (Deputy Chairman)
    Hon SZETO Wah
    Hon Edward S T HO, OBE, JP
    Hon Ronald ARCULLI, OBE, JP
    Hon Mrs Miriam LAU Kin-yee, OBE, JP
    Dr Hon LEONG Che-hung, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon CHEUNG Man-kwong
    Hon CHIM Pui-chung
    Hon Michael HO Mun-ka
    Dr Hon HUANG Chen-ya, MBE
    Hon LEE Wing-tat
    Hon Fred LI Wah-ming
    Hon Henry TANG Ying-yen, JP
    Dr Hon Samuel WONG Ping-wai, OBE, FEng, JP
    Hon Zachary WONG Wai-yin
    Hon James TIEN Pei-chun, OBE, JP
    Hon CHAN Wing-chan
    Hon CHAN Yuen-han
    Hon Andrew CHENG Kar-foo
    Dr Hon Anthony CHEUNG Bing-leung
    Hon CHEUNG Hon-chung
    Hon CHOY Kan-pui, JP
    Hon Albert HO Chun-yan
    Hon IP Kwok-him
    Dr Hon LAW Cheung-kwok
    Hon LAW Chi-kwong
    Hon LEUNG Yiu-chung
    Hon Bruce LIU Sing-lee
    Hon MOK Ying-fan
    Hon Margaret NG
    Hon NGAN Kam-chuen
    Hon TSANG Kin-shing
    Dr Hon John TSE Wing-ling
    Hon Mrs Elizabeth WONG, CBE, ISO, JP
    Hon Lawrence YUM Sin-ling

Members absent :

    Hon Allen LEE, CBE, JP
    Hon Mrs Selina CHOW, OBE, JP
    Hon Martin LEE, QC, JP
    Dr Hon David K P LI, OBE, LLD (Cantab), JP
    Hon NGAI Shiu-kit, OBE, JP
    Hon LAU Wong-fat, OBE, JP
    Hon Frederick FUNG Kin-kee
    Hon Emily LAU Wai-hing
    Hon Eric LI Ka-cheung, OBE, JP
    Hon James TO Kun-sun
    Dr Hon Philip WONG Yu-hong
    Hon Howard YOUNG, JP
    Hon Christine LOH Kung-wai
    Hon LEE Cheuk-yan
    Hon Paul CHENG Ming-fun
    Hon CHENG Yiu-tong
    Hon David CHU Yu-lin
    Hon LAU Chin-shek
    Hon Ambrose LAU Hon-chuen, JP
    Hon LEE Kai-ming
    Hon LO Suk-ching
    Hon SIN Chung-kai
Public officers attending :
    Mr K C KWONG
    JP Secretary for the Treasury
    Mr Kevin HO, JP
    Deputy Secretary for the Treasury (1)
    Mr Alan SIU
    Principal Assistant Secretary for the Treasury
    Mr Y Y CHU
    Assistant Commissioner of Inland Revenue
    Mr Trevor KEEN
    Principal Assistant Secretary for Planning, Environment and Lands
    Chief Estate Surveyor of Lands Department
    Mr C Y LEE
    Chief Housing Manager of Housing Department
    Mr T S WONG
    Senior Housing Manager of Housing Department
    Ms Alice TAI
    JP Judiciary Administrator
    Mr Nicholas YEK
    Deputy Judiciary Administrator
    Mr Alan DIXEY
    Chief Systems Manager of Information Technology Services Department
    Mr K L HUI
    Senior Systems Manager of Information Technology Services Department
    Miss Sally WONG
    Principal Assistant Secretary for Security
    Mr Nicholas BRADLEY
    Senior Crown Counsel of Legal Department
    Mr Spencer FOO
    Assistant Commissioner of Police
    Superintendent of Royal Hong Kong Police Force
    Mrs Carrie LAM
    Deputy Secretary for the Treasury (3)
    Mr S F CHING
    Assistant Director of Accounting Services (Computer)
    Mr Alan CALDER
    Assistant Director of Accounting Services (Accounting Services)
    Mr Benjamin TANG
    JP Deputy Secretary for Broadcasting, Culture and Sport
    Mr Raymond TAM
    Principal Assistant Secretary for Broadcasting, Culture and Sport
    Mrs Vivien P Y LEUNG
    Chief Executive Officer of Broadcasting, Culture and Sport Branch
Clerk in attendance :
    Miss Pauline NG
    Assistant Secretary General 1

Staff in attendance :

    Mrs Constance LI
    Chief Assistant Secretary (Finance Committee)
    Mr Andy LAU
    Senior Assistant Secretary (Finance Committee)

Item No. 1 - FCR(96-97)95


The Committee approved the proposal.

Item No. 2 - FCR(96-97)96


Subhead 189 Interest on tax reserve certificates

2. In reply to a member, the Principal Assistant Secretary for the Treasury advised that for appeal or objection cases, the Commissioner of Inland Revenue (CIR) was empowered, under section 71(2) of the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong), to require a taxpayer to purchase Tax Reserve Certificates (TRC) as security of the payment of tax held over in dispute. If the final decision in respect of the appeal was in favour of the taxpayer, CIR would refund the TRC purchased together with the interest earned. As regards cases where the taxpayer disagreed with the amount of provisional tax assessed, there was already a machinery in place whereby the taxpayer could apply for hold-over of the provisional tax, in whole or in part.

3. The Committee approved the proposal.

Item No. 3 - FCR(96-97)97


Subhead 121 Contract maintenance

4. The Committee approved the proposal.

Item No. 4 - FCR(96-97)99



" New Subhead "Provision of digital audio recording and transcription services in the Supreme Court"

5. The Committee approved the proposal.

Item No. 5 - FCR(96-97)98


Subhead 284 Compensation

6. Members expressed mixed feelings towards the proposed payment of $28 million as settlement out-of-court to the families of Vietnamese migrants (VM) who died in the Shek Kong Incident in 1992 and to those who sustained injuries in the incident. They considered that Hong Kong people had paid a high price for upholding the principles of humanity and justice on the VM issues, by paying for the maintenance of the VMs, also for legal aid expenses for litigation and compensations in relation to the Shek Kong Incident. In view of the large amount of compensations proposed, they sought clarification from the Administration on the justification of and the alternatives to the proposal.

7. In response, the Principal Assistant Secretary for Security (PAS/S) advised that the proposal was made in the best interest of the Hong Kong Government and that of the taxpayers, considering the significant litigation costs likely to be incurred and the consequences if the claims could not be settled. She assured members that the Government had carefully evaluated each of the 118 claims and the chance of success if proceeding to trial. On the advice of the Attorney General and two independent counsel, the Government proposed to settle out-of-court in respect of the claims by 118 VMs. This would be the most cost-effective and efficient means to settle the claims.

8. On the amount of compensation, PAS/S advised that a reduced amount of $28 million was agreed, after lengthy negotiations, on a without-prejudice basis with the counsel representing the 118 VMs. The Senior Crown Counsel of the Legal Department clarified that the amounts were calculated by reference to the Laws of Hong Kong and were considered reasonable having regard to the circumstances of individual cases. Although the claimants could in theory still pursue their cases after receiving payment, the legal aid counsel would assess whether there were reasonable grounds to pursue the cases. At the request of a member, the Administration undertook to provide further information on the payment arrangements for the 118 claimants. As there were still eight VMs who had not pursued their claims after leaving Hong Kong, a member suggested that a time limit should be set for any further claims to be lodged with the Government. PAS/S agreed to examine the feasibility of applying a time limit to the eight outstanding cases.Admin

9. Some members asked about measures which the Government would take to prevent recurrence of the incident. In reply, PAS/S advised that the Government would ensure reasonable care be taken of the safety of VMs in detention centres. Apart from the provision of more manpower to reinforce the management of VMs in detention centres, enhanced safety measures had also been implemented to separate VMs coming from different regions and groups so as to reduce conflicts. Strengthened fences and gates had also been erected for better security. At the request of members, PAS/S undertook to provide further information on the improved safety measures in detention centres in general.Admin

10. Replying to a member, PAS/S clarified that since the British Government was not involved in the management of the VM detention centres in Hong Kong, they had no responsibility towards the payment of compensation to the claimants. With regard to the litigation costs, PAS/S explained that as the incident occurred in Hong Kong, the claims would be dealt with by the courts of Hong Kong, and legal aid would be available to the claimants irrespective of their country of origin. On the question of whether the present proposal would set a precedent for similar cases in future, PAS/S advised that each case would have to be considered on its own merits.

11. On the consequences if the proposed compensation was not approved by the Finance Committee, PAS/S advised that litigation would have to proceed in such circumstances, and the estimated legal and related costs to be borne by the Hong Kong Government would be in the region of $20 million or more. If the outcome was in favour of the claimants, the Government would have to pay compensation in addition to the litigation costs.

12. In response to a member’s question on the circumstances and criteria for compensation to be awarded under Section 18A of the Public Finance Ordinance, the Secretary for the Treasury referred members to his replies to the Legislative Council at the sitting on 15 May 1996.

13. As the subject had been discussed at length, the Chairman put the proposal to vote. Mr CHIM Pui-chung objected to the proposal. Mr MOK Ying-fan and Mr Bruce LIU Sing-lee abstained. The majority voted for the proposal.

14. The proposal was approved.

Item No. 6 - FCR(96-97)100




" New Subhead "LAFIS Departmental Reporting System"

15. Members enquired about the benefits or savings which the proposed LAFIS sub-system would bring about. In response, the Deputy Secretary for the Treasury (3) (DS/Tsy(3)) advised that the proposed system aimed at improving the efficiency and effectiveness of the departmental financial information and reporting system. Instead of relying on the Treasury for regular financial reports, departments would be able to make on-line enquiries in a more efficient manner to ascertain the expenditure position in respect of individual heads and subheads under their management. This would improve the quality and accuracy of financial analysis and monitoring in departments.

16. As regards cost savings, DS/Tsy(3) clarified that the notional staff savings of an average of 0.3 Clerical Officer II in each department were unlikely to result in actual deletion of posts. However, the manpower released would be used to further improve the services of the departments concerned. In addition, about four million pages of paper could be saved in the Treasury. She confirmed that the reduction in paper consumption in the Treasury would definitely arise as the Treasury would no longer be printing regular financial enquiry reports for departments. However, the departments installed with the facilities might consequently use more paper in printing the information from their end. She said that based on the experience of the pilot scheme carried out in three departments, the increase in paper consumption was very small.

17. The Committee approved the proposal.

Item No. 7 - FCR(96-97)101


" New Capital Account Subhead "Grant to the Sir David Trench Fund for Recreation"

18. Members generally welcomed the proposal to establish an Arts and Sport Development Fund. Noting that the Fund would mainly be used to subsidize initiatives and activities of the Hong Kong Arts Development Council (ADC) and Hong Kong Sports Development Board (SDB), a member asked whether small organisations other than ADC and SDB could also seek grants from the Fund. In response, the Deputy Secretary for Broadcasting, Culture and Sport advised that the Fund was set up primarily to assist ADC and SDB to fulfill their statutory roles to promote and foster Hong Kong’s cultural and sporting development. Since many small organisations already received annual subsidies for recurrent expenditure through ADC and SDB, the Government would consult the latter in considering applications for grants from these small organisations. The arrangement was to allow flexibility for disbursement of monies from the Fund to worthwhile projects not included in the strategic plans of ADC or SDB. Details of the funding mechanism would be subject to further discussion with ADC and SDB.

19. The Committee approved the proposal.

20. The Committee was adjourned at 4:00 pm.

Legislative Council Secretariat
27 February 1997

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