LC Paper No. FC 34
(These minutes have been
seen by the Administration)

Ref : CB1/F/1/2

Finance Committee of the Provisional Legislative Council

Minutes of the meeting
held at the Legislative Council Chamber
on Friday, 19 September 1997, at 2:30 pm

Members present:

Hon Ronald ARCULLI, JP (Chairman)
Hon Henry WU (Deputy Chairman)
Hon WONG Siu-yee
Hon James TIEN Pei-chun, JP
Hon HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Dr Hon Raymond HO Chung-tai, JP
Hon NG Leung-sing
Prof Hon NG Ching-fai
Hon Eric LI Ka-cheung, JP
Hon LEE Kai-ming
Hon Allen LEE, JP
Hon Mrs Elsie TU, GBM
Hon Mrs Selina CHOW, JP
Hon Mrs Peggy LAM, JP
Hon NGAI Shiu-kit, JP
Hon Henry TANG Ying-yen, JP
Hon MA Fung-kwok
Hon CHEUNG Hon-chung
Dr Hon Mrs TSO WONG Man-yin
Dr Hon LEONG Che-hung, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon MOK Ying-fan
Hon CHAN Choi-hi
Hon CHAN Yuen-han
Hon CHAN Wing-chan
Hon CHAN Kam-lam
Hon TSANG Yok-sing
Hon Frederick FUNG Kin-kee
Hon Andrew WONG Wang-fat, JP
Dr Hon Philip WONG Yu-hong
Hon Kennedy WONG Ying-ho
Hon Howard YOUNG, JP
Dr Hon Charles YEUNG Chun-kam
Hon YEUNG Yiu-chung
Hon IP Kwok-him
Hon Bruce LIU Sing-lee
Hon LAU Kong-wah
Hon Mrs Miriam LAU Kin-yee, JP
Hon Ambrose LAU Hon-chuen, JP
Hon CHOY Kan-pui, JP
Hon CHENG Yiu-tong
Dr Hon TANG Siu-tong, JP
Hon KAN Fook-yee
Hon NGAN Kam-chuen
Hon LO Suk-ching
Hon CHOY So-yuk

Members absent :

Hon David CHU Yu-lin
Dr Hon David LI Kwok-po, JP
Hon LEUNG Chun-ying, JP
Hon HUI Yin-fat, JP
Hon CHENG Kai-nam
Hon CHIM Pui-chung
Hon LAU Wong-fat, JP
Hon Paul CHENG Ming-fun, JP
Hon Timothy FOK Tsun-ting
Dr Hon LAW Cheung-kwok
Hon TAM Yiu-chung, JP

Public officers attending :

Mrs Carrie LAM, JP
Deputy Secretary for the Treasury

Mr Stanley WONG
Principal Assistant Secretary for Planning, Environment and Lands

Mr Jimmy LEUNG
Chief Town Planner of Planning Department

Mr Rafael HUI, JP
Secretary for Financial Services

Mr Andrew L T SHENG
Deputy Chief Executive of Hong Kong Monetary Authority

Mr James H LAU, Jr, JP
Executive Director (External) of Hong Kong Monetary Authority

Mr Joshua LAW, JP
Private Secretary to Chief Executive

Mrs Helen WAN
Chief Executive Officer of Chief Executive's Office

Clerk in attendance :

Ms Pauline NG
Clerk to the Finance Committee

Staff in attendance :

Mrs Vivian KAM
Chief Assistant Secretary (1)5

Ms Anita SIT
Senior Assistant Secretary (1)8

Item No. 1 - FCR(97-98)31


The Committee approved the proposal.

Item No. 2 - FCR(97-98)32

Subhead 700 General other non-recurrent
Consultancy study on Stage Two Investigations of the Feasibility Study for Additional Cross-border Links

2.The Committee approved the proposal.

Item No. 3 - FCR(97-98)33

New Non-recurrent Account Subhead "Contribution to the Sixth Replenishment of the Asian Development Fund"

3.The Secretary for Financial Services confirmed in response to a member that the proposed contribution to the Asian Development Fund was not connected with Hong Kong's contribution in August 1997 towards the financial package organized by the International Monetary Fund to assist Thailand.

4.The Committee approved the proposal.

Item No. 4 - FCR(97-98)34

Subhead 001 Salaries
New Subhead 108 Remuneration for special appointments

5.Referring to the proposal for increasing the non-accountable entertainment allowance for the Chief Executive (CE) by 20%, members raised questions on the basis for the increase. Some members pointed out that the reason as quoted in the paper that it was due to the CE being "a local and was elected" was unacceptable. This gave the impression that the CE was using the entertainment allowance for his own electioneering activities. In response, the Private Secretary to CE (PS to CE) explained that the entertainment allowance was not in any way used for electioneering purposes. Unlike the former Governor, who was sent here from the UK, the CE was a local who was faced with greater expectation from the local community for direct dialogue and communication. This called for more social functions to be organized for a wider network of contacts. These functions were normally held in the Government House or CE's own residence. Besides, the serving of Chinese cuisine which had been more frequently used was sometimes more costly than western foods. In response to a question, PS to CE confirmed that the CE was required to pay taxes on his emoluments as well as duties on alcoholic beverages for which the former Governor was given exemption.

6.On the frequency of entertainment as compared to that of the former Governor, PS to CE said that the number of social functions hosted by the former Governor averaged at 11 per month during the six months before the handover, while a monthly average of 18 social functions were hosted by the CE since he was elected to the post in December 1996. This represented an increase of 63%. PS to CE added that the proposal of increasing the CE's entertainment allowance by 20% was based on a recommendation of the Independent Commission on Remuneration for Members of the Executive Council and the Legislature of the Hong Kong Special Administrative Region. Relevant factors were considered and the recommendation was endorsed by the Executive Council at its meeting in June 1997.

7.Some members expressed reservations about the proposal in view of the absence of substantial information to justify the 20% increase. A member asked the Administration to furnish any further information to illustrate that the CE had actually incurred expenditure exceeding the current allowance. He stressed that while the Commission had to rely on estimates to determine the rate, there should be sufficient information from actual experience in the past few months to indicate whether the 20% was the appropriate level of increase. Another member also asked if the Independent Commission's report could be released to members of the Committee so that members could have a better understanding of the rationale behind the recommendation.

8.At this point, the Chairman pointed out that the proposal being considered by the Committee was related to a non-accountable allowance for which no records of expenses were required. He also reminded members that the report of the Independent Commission contained not only information on the CE's allowances, but also information relating to the remuneration for Members of the Provisional Legislative Council and the Executive Council. Release of the report might require the consent of the Commission. PS to CE confirmed that it was not appropriate for him to release the report. He would nevertheless consult the relevant authority to see if more information could be provided on the factors which the Commission had taken into consideration in arriving at its recommendation on the rate of the allowance.Admin

9.In connection with the proposal for the creation of a new Recurrent Account Subhead for special appointments in the CE's Office, the Deputy Secretary for the Treasury (DS/Tsy) confirmed that the end-of-contract gratuities payable to the four appointees on non-civil service terms had not been included in the financial commitments indicated in paragraph 9 of the paper. The necessary provision would be sought in the context of the Estimates for the year when the gratuities were to be paid. As regards the costs for the two special assistants to the former Governor, PS to CE undertook to provide the information in writing.Admin

10.Mr IP Kwok-him requested that in view of the lack of quantitative means to support the increase in CE's non-accountable entertainment allowance and pending additional information to be furnished by the Administration, the item be deferred or separate voting be taken on the two proposals in the paper. In response, DS/Tsy reiterated that the allowance in question was non-accountable in nature and the additional information to be provided would not be able to meet the member's requirement for quantifiable justifications for the proposed increase in the allowance. As such, she considered that there was no need to defer the item and maintained that the paper should be voted on as one proposal.

11.The Chairman declared that the item would be put to the vote as it stood. Mr IP Kwok-him said that members from the Democratic Alliance for the Betterment of Hong Kong would abstain from voting.

12.The Chairman put the item to the vote and the Committee approved the proposal.

13.The Committee was adjourned at 3:10 pm.

Provisional Legislative Council Secretariat
7 October 1997