PLC Paper No. FC 76
(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, 28 November 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 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
Dr Hon Mrs TSO WONG Man-yin
Dr Hon LEONG Che-hung, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon CHAN Choi-hi
Hon CHAN Yuen-han
Hon CHAN Wing-chan
Hon CHAN Kam-lam
Hon TSANG Yok-sing
Hon CHENG Kai-nam
Hon Andrew WONG Wang-fat, JP
Hon Howard YOUNG, JP
Dr Hon Charles YEUNG Chun-kam
Hon YEUNG Yiu-chung
Hon IP Kwok-him
Hon CHIM Pui-chung
Hon LAU Kong-wah
Hon LAU Wong-fat, JP
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 TAM Yiu-chung, JP
Hon CHOY So-yuk

Members absent :

Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Dr Hon David LI Kwok-po, JP
Hon CHEUNG Hon-chung
Hon LEUNG Chun-ying, JP
Hon MOK Ying-fan
Hon HUI Yin-fat, JP
Hon Frederick FUNG Kin-kee
Dr Hon Philip WONG Yu-hong
Hon Kennedy WONG Ying-ho
Hon Bruce LIU Sing-lee
Hon Paul CHENG Ming-fun, JP
Hon Timothy FOK Tsun-ting
Dr Hon LAW Cheung-kwok

Public officers attending :

Secretary for the Treasury

Mrs Carrie LAM, JP
Deputy Secretary for the Treasury

Principal Executive Officer (General), Finance Bureau

Mr Stephen FISHER
Deputy Director of Administration

Mr Daniel MAK
Principal Executive Officer of the Offices of the Chief Secretary for Administration and the Financial Secretary

Mr Raymond TAM
Deputy Private Secretary to Chief Executive

Ms Miranda CHIU
Principal Assistant Secretary for Health and Welfare

Mrs Louise WONG, JP
Deputy Director of Social Welfare

Assistant Director of Social Welfare (Social Security)

Assistant Director of Social Welfare (Finance)

Mr WU Shu-wing
Chief Social Security Officer of Social Welfare Department

Mr Stephen MAK, JP
Assistant Director of Information Technology Services

Mr Raymond WONG, JP
Deputy Secretary for Security

Mrs Carrie WILLIS
Principal Assistant Secretary for Security

Mr Brian BUTT
Controllor, Government Flying Service

Mr Esmond LEE
Principal Assistant Secretary for Planning, Environment and Lands

Chief Estate Surveyor of Lands Department

Mr Tony LUI
Principal Land Executive of Lands Department

Ms Ellen CHOY
Principal Assistant Secretary for Education and Manpower

Controllor, Student Financial Assistance Agency

Mr Alfred WONG
Ex-Controllor, Student Financial Assistance Agency

Clerk in attendance :

Ms Pauline NG
Assistant Secretary General 1

Staff in attendance :

Mrs Vivian KAM
Chief Assistant Secretary (1)5

Mr Matthew LOO
Senior Assistant Secretary (1)7

Item No. 1 - FCR(97-98)64


The Committee approved the proposal.

Item No. 2 - FCR(97-98)65


2.The Committee approved the proposal.

Item No. 3 - FCR(97-98)66

Subhead 149 General departmental expenses

3.A member noted that part of the expenses incurred by the Protocol Division was in connection with the IMF/World Bank 1997 Annual Meeting, and asked if there was any overlap between such expenses and those associated with the Annual Meeting for which separate provisions had been approved by the Committee. The Deputy Director of Administration (DD/Adm) assured members that there was no overlap in this respect. Expenditure incurred by the Protocol Division was mainly for the hiring of vehicles for use by staff of the Division in undertaking preparatory work in connection with the series of major events, as well as for overtime allowances for drivers and other miscellaneous expenses.

4.As regards the need for spending $1,467,000 for the relocation of the Local Area Network for offices of the Chief Secretary for Administration, the Financial Secretary and the Administration Wing, DD/Adm explained that these involved the relocation of computer networks from the Main Wing to the West Wing of the Central Government Offices. As these were personalised networks which could not be left behind for use by the incoming officers, their relocation together with the users' offices was necessary.

5.The Committee approved the proposal.

Item No. 4 - FCR(97-98)67

Social Welfare Department
New Subhead " Implementation of Information Systems Strategy Phase I "
Subhead 001 Salaries
Subhead 001 Salaries

6.A member noted that the existing Social Security Payment System (SSPS) was only put into operation in 1994. He enquired the reasons for not incorporating the improvements proposed in the new Computerised Social Security System (CSSS) when the SSPS was planned.

7.The Deputy Director of Social Welfare (DD/SW) advised that the SSPS implemented in 1994 was designed in 1992. Its main purpose was for providing social security payment functions, and in this respect the system had fulfilled its purpose. Pursuant to a feasibility study however, the Administration had identified the need for improving both customer service and management information. The processing of customers' request for service could be expedited through improvements to the collation and processing of data. The CSSS would also facilitate better management of information to ensure effective monitoring of the social security schemes and to support policy reviews in response to changes.

8.The Assistant Director of Information Technology Services (AD/ITS) confirmed in reply to a member that the new CSSS system would have a life span of at least five years. The system was one of the seven application systems outlined by consultants consequent upon an Information Systems Strategy Study completed in July 1997. While the consultants had provided the broad framework for the seven application systems, details relating to the development of these systems including the cost would only be available upon conclusion of the feasibility studies. Plans were in hand for conducting feasibility studies on two other systems, namely the Client Information System and Technical Infrastructure, listed in the discussion paper. DD/SW confirmed that irrespective of the outcome of these studies, the CSSS could be implemented independently. As regards the cost-benefit analysis of CSSS, DD/SW advised that the question of whether or not the system would break even would depend on the number of applications to be processed in future and hence the possible staff cost that could be avoided using the CSSS.

9.In reply to a member on the scope of service to be provided by contractors on system development, AD/ITS advised that as CSSS was a major system with workstations to be set up in a large number of social security field offices, the design and writing of computer programmes would be required on many functions. The service of contractors would be needed to carry out such tasks.

10.Addressing a member's concern on the possibility of the system becoming outdated by the time it was ready for operation in two and a half years' time, AD/ITS assured the Committee that both the hardware and the software for the system would be acquired in stages when the actual need arose in order to keep up with the latest technology. In this connection, a member pointed out that the annual maintenance costs from 2005 onwards of about $10 million for hardware and $5 million for software were exceedingly high as these represented 23% and 21% respectively of the capital costs for the hardware and software. AD/ITS explained that while a special discount would be allowed for the maintenance of some equipment for the first four years, full year maintenance costs would be charged as from 2005. He added that maintenance of over 1 200 computers at over 40 locations would be involved, and that the costs would include also licence fees for the software. On the use of portable computers for processing off-site cases, AD/ITS confirmed that such computers would have functions for preserving the confidentiality of data and that the principles in the Personal Data (Privacy) Ordinance would be strictly applied in the new system.

11.Some members raised concern on the manpower resources for the system. As opposed to a common belief that computerisation would result in a reduction of staff, the Administration had proposed the creation of additional posts many of which were at senior levels for the Social Welfare Department (SWD) and the Information Technology Services Department (ITSD).

12.With regard to posts in SWD, DD/SW explained that nine posts would be needed for a period of three years for setting up an SWD Project Team while another 38 posts, to be offset by the deletion of 10 posts as a result of cessation of SSPS, would be required for the administration, user help-desk function and user-training of CSSS. As an indication of the manpower resources involved, she pointed out that over 20 SWD staff would be needed in the Central Casefile Depository to maintain all paper case files to be transferred there. DD/SW on the other hand drew attention to the fact that an estimated 100 posts would be deleted in SWD and ITSD from 2001-02 onwards as a result of the reduction in staff resources in administering the social security schemes. The Assistant Director of Social Welfare (Social Security) supplemented that the Department had over 1 200 staff in the social security stream, some of whom were experienced in information technology and were multi-functional in the social security system. Posts to be deleted were clerical and typist grades staff who could be redeployed either within SWD or elsewhere in the civil service.

13.As for posts in ITSD, AD/ITS affirmed that the requirements were comparable to those for projects of similar scales. He assured members that there were major differences in the division of responsibilities between staff of the two departments, and that there would not be any overlap of responsibilities.

14.With regard to the proposal for in-house staff to work overtime to undertake the conversion work, members questioned if this was the most appropriate arrangement. They enquired if means other than overtime had been explored in order to reduce costs, and if the employment of temporary staff to take over the routine work had been considered so as to relieve the pressure on existing staff. DD/SW said in response that as the conversion work called for staff who possessed the requisite knowledge and were experienced with existing procedures, the employment of temporary staff would not be feasible. The Chief Social Security Officer of Social Welfare Department added that such duties had to be discharged by existing staff having regard to the need to preserve confidentiality of data.

15.The Committee approved the proposal.

Item No. 5 - FCR(97-98)68

Subhead 603 Plant, vehicles and equipment

16.Given that the existing helicopter fleet of six Sikorsky S76 and three S70 Blackhawks had only been in service for between two and seven years, a member queried the need for spending $728.5 million for replacing the entire fleet.

17.The Deputy Secretary for Security (DS/S) admitted that the S70 Blackhawks, purchased in 1992 and 1995 respectively, had relatively short service. However, replacement of the S70 Blackhawks as well as the smaller S76 helicopters was considered necessary on the basis of the findings of a review conducted by the Controller, Government Flying Service (C/GFS). In the review, C/GFS concluded that there was a need to double the area of coverage for search and rescue operations off-shore in the South China Sea, to increase the number of survivors who could be rescued per trip, and to provide modern equipment to support operations. The existing fleet, which was purchased mainly to provide support to Police and fire fighting operations, could not cope with these requirements. The operating range of the S76 was only 100 nautical miles and the average on-scene time was 15 minutes; safe operations onto hospitals and roof tops were also not possible. The S70 Blackhawks on the other hand lacked the advanced technology and floating airbags required for offshore rescue and night operations.

18.Members noted that S70 Blackhawks cost $100 million each. A member took the view that these helicopters would depreciate in value significantly in the first few years of service, and it would not be cost-effective to replace these helicopters at the present stage. A member enquired if partial replacement of the fleet was feasible in order to save resources. DS/S said in reply that partial replacement as well as modification of the helicopters had been considered, but the Administration had concluded that replacement of the entire fleet would be more cost-effective. It was estimated that $360 million could be recovered from the resale of the entire fleet. Besides, the Director of Civil Aviation had advised that for safety reasons, pilots should not be assigned to operate more than two types of aircraft simultaneously.

19.The Chairman drew member's attention to information contained in a previous paper submitted to the Finance Committee of the then Legislative Council in December 1994. According to the paper which proposed the purchase of a S70 Blackhawk, S70 had a radius of action of 520 kilometres and could stay airborne for significantly longer periods particularly during sea rescue missions. The Chairman asked why the Administration came up with a conclusion, after hardly three years, that S70 were not suitable for off-shore operations. A member also asked why the Administration needed to double the area of coverage for search and rescue operations off-shore. C/GFS advised that 520 kilometres were approximately equivalent to 350 nautical miles. S70 Blackhawks were only capable of flying 520 kilometres one-way and were therefore not able to meet the requirement of 200 nautical miles after the area coverage was doubled.

20.In view of the lack of details on the need to double the area coverage for search and rescue operations and the urgency to replace the entire helicopter fleet, members considered it necessary for the proposal to be first discussed by the Security Panel. The Deputy Secretary for the Treasury (DS/Tsy) agreed to withdraw the proposal and arrange for discussion by the Security Panel. She added however that Finance Bureau was given to understand that a request had in fact been put to the Chairman of the Security Panel for discussion of this subject at the Panel meeting on 20 November 1997, but the request was declined on grounds of a heavy agenda for the meeting. In response, the Chairman advised that, in fairness to panels, sufficient notice should be given to the panels if any items needed to be discussed. Panels usually scheduled their meetings and the items for discussion well in advance and it was not always possible to slot in last-minute items.Admin

21.The item was withdrawn by the Administration.

Item No. 6 - FCR(97-98)69

New Subhead " Pilot scheme on contracting out certain land resumption work in the New Territories'

22.A member raised objection to the proposal for engaging consultants to undertake land resumption work in the New Territories. He pointed out that land resumption work required professional and local knowledge, and cast doubt on the consultants' competence and experience in dealing with such complicated issues as grave removal and " fung shui " . Apart from legal, planning and surveying expertise, the consultants would also need to request private landowners to produce proof on land rights and this would infringe on the landowners' privacy. Such duties should more appropriately be carried out by civil servants. As the pilot scheme would only be completed in May 2000 whereupon an assessment would be conducted by the Administration, the member also questioned the effectiveness of the scheme in alleviating the workload of the Lands Department in resuming the projected 4 000 hectares of land required.

23.The member made reference to the Resumption Working Group of the Secretary of Planning, Environment and Lands - Heung Yee Kuk Liaison Meeting, which was formed over ten years ago. The Working Group served as the consultative forum for land resumption matters in the New Territories, and the member was surprised that the proposal, which sought to delegate the authority on land resumption to private firms and represented a major policy change, was not referred to the Working Group for discussion beforehand.

24.In response, the Chief Estate Surveyor of Lands Department (CES/LD) explained that the proposal arose from the time-consuming process in land resumption, and the aim was to farm out those elements which were not sensitive. The consultants would only act as advisers, and the only functions to be contracted out were certain aspects of the preparatory work currently undertaken by the Lands Department. He clarified that functions carried out by staff of the Regional Services Department on grave removal and those by the Highways and the Agriculture and Fisheries Departments relating to the resumption process would not be contracted out. In addition, sensitive documents such as those on compensation matters would continue to be signed by staff of the District Land Offices.

25.As regards consultation with the Working Group, CES/LD advised that the scope of the Working Group covered resumption policy and rates of compensation. As the proposal entailed the transfer of a limited amount of land acquisition work to an outside organisation under the direct supervision of the Lands Department, no change in policy was involved and consultation was hence not undertaken.

26.The member referred to the discussion on the subject at the meeting of the Planning, Lands and Works Panel on 20 May 1997, and enquired about the outcome of members' concern relating to possible complaints against consultants. The Principal Assistant Secretary for Planning, Environment and Lands advised that Panel members' concern at the time was primarily with the relationship between the Government, affected landowners and the consultants. The Administration had confirmed in paragraph 5 of the discussion paper that the relationship between the Government and affected landowners would not change, and that the powers and obligations of the consultants had been clearly defined.

27.Some members echoed their reservations about the proposal. They did not agree with the need for land resumption work, which had all along been undertaken by the Government, to be contracted out. They saw a need for the principles of the proposal and the work process to be discussed both by the Working Group and the Planning, Lands and Works Panel. DS/Tsy agreed to withdraw the proposal and arrange for its re-submission after discussion at the Planning, Lands and Works Panel. She also drew to members' attention that it had always been the practice for the relevant bureaux to consult the appropriate panels on funding submissions involving significant changes or financial implications. Despite the deferral of this and the earlier paper, she assured members that there was no intention on the part of the Administration to bypass this requirement. Admin

28.The item was withdrawn by the Administration.

Item No. 7 - FCR(97-98)70

Subhead 153 Textbooks and stationery grants

29.As the proposal sought to expand the ambit of the School Textbook Assistance Scheme to Secondary 4 to 7 students in public sector schools, members expressed concern about students in the private schools who might equally be in need of such assistance and asked if similar provisions ought to be made available to them. The Principal Assistant Secretary for Education and Manpower (PAS/E&M) said that, with the exception of the Student Travel Scheme which had a different historical background, the principle behind assistance schemes was to provide financial assistance to students in public sector schools. As regards schools under the Direct Subsidy Scheme (DSS), textbook assistance was included in the average subsidy for such schools.

30.Members were dissatisfied with the response. They pointed out that many private schools were either bought places schools or under DSS, and many students from relatively poor families were studying in these schools. It would be unfair for these students to be deprived of such benefits. A member remarked that in the case of students in DSS schools, the subsidy went to the schools instead of the students.

31.PAS/E&M clarified that students in bought place schools were also eligible for the textbook assistance. As regards DSS schools, she responded that the Administration did undertake consultation with schools under DSS with a view to introducing further improvements to the scheme. A review was under way on the policy on private schools, as pledged by the Chief Executive in his 1997 Policy Address. DSS would be looked at in the context of the review. At that juncture, the Ex-Controller, Student Financial Assistance Agency (Ex-C/SFAA) clarified that students in both bought places schools and in aided schools were eligible for the School Textbook Assistance Scheme.

32.The Chairman requested the Administration to report the findings of the review to the Education Panel upon its completion. A member enquired if the review could be completed in time so that students in DSS schools could obtain the textbook assistance from the 1998/99 school year. PAS/E&M explained that the review and planning process would take time, and hence it might not be possible for changes, if any, to take effect from the 1998/99 school year.

33.On the criteria for deciding an applicant's eligibility for a full grant or a half grant, the Controller, Student Financial Assistance Agency (C/SFAA) said that the level of the grant to be awarded was determined on the basis of a points system which took into account the income and size of the applicant's family. As regards the date for disbursing the grants in 1998, C/SFAA advised that applications would be submitted through schools in September 1998 and eligible applicants would receive their grants in December 1998. He nevertheless undertook to consider, at a member's request, the possibility of accelerating the process, including advancing the date for applications. The Chairman suggested that the Education Panel should also follow-up on this issue.

34.As the level of grant for secondary school students was set at 80% of the average cost of textbooks on the basis that students could sell the books at the end of a school year, a member enquired if some students who managed to sell the books at prices exceeding 20% of original prices of the textbooks might actually profit from such sales. Ex-C/SFAA said in response that the situation would vary but the Administration's proposal was made on the basis of a survey, conducted in the summer preceding the start of the school year, of the actual cost of the textbooks. As regards whether or not textbooks would become more expensive as a result of the policy on mother tongue teaching, PAS/E&M said that a survey would be conducted in 1998, and if there were changes in the price of textbooks, the level of grant might be adjusted.

35.In response to questions, PAS/E&M said that the ratio of students in private and public sector schools, at both primary and secondary levels, who were in receipt of the textbook assistance was about 10% to 90%. About 50% of Secondary 4 to 7 students in public sector schools were estimated to be eligible for the textbook assistance. At a member's request, PAS/E&M undertook to provide in writing the number of Secondary 4 to 7 students in private schools who could not benefit from the textbook assistance.Admin

36.The Committee approved the proposal.

37.The Committee was adjourned at 4:05 pm.

Provisional Legislative Council Secretariat
30 December 1997