PLC Paper No. FC 158
(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 Monday, 30 March 1998, 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 David CHU Yu-lin
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 Henry TANG Ying-yen, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon CHAN Wing-chan
Hon CHAN Kam-lam
Hon TSANG Yok-sing
Hon CHENG Kai-nam
Hon Kennedy WONG Ying-ho
Dr Hon Charles YEUNG Chun-kam
Hon YEUNG Yiu-chung
Hon IP Kwok-him
Hon Bruce LIU Sing-lee
Hon LAU Kong-wah
Hon Ambrose LAU Hon-chuen, JP
Dr Hon TANG Siu-tong, JP
Hon Timothy FOK Tsun-ting
Hon KAN Fook-yee
Hon LO Suk-ching
Dr Hon LAW Cheung-kwok

Members absent :

Dr Hon David LI Kwok-po, JP
Hon NGAI Shiu-kit, JP
Hon MA Fung-kwok
Hon CHEUNG Hon-chung
Dr Hon Mrs TSO WONG Man-yin
Hon LEUNG Chun-ying, JP
Dr Hon LEONG Che-hung, JP
Hon MOK Ying-fan
Hon HUI Yin-fat, JP
Hon CHAN Choi-hi
Hon CHAN Yuen-han
Hon Frederick FUNG Kin-kee
Hon Andrew WONG Wang-fat, JP
Dr Hon Philip WONG Yu-hong
Hon Howard YOUNG, JP
Hon CHIM Pui-chung
Hon LAU Wong-fat, JP
Hon Mrs Miriam LAU Kin-yee, JP
Hon CHOY Kan-pui, JP
Hon Paul CHENG Ming-fun, JP
Hon CHENG Yiu-tong
Hon NGAN Kam-chuen
Hon TAM Yiu-chung, JP
Hon CHOY So-yuk

Public officers attending :

Secretary for the Treasury

Mrs Carrie LAM, JP
Deputy Secretary for the Treasury

Principal Executive Officer (General), Finance Bureau

Mrs Clarie LO
Commissioner for Narcotics

Ms L Shine
Senior Government Counsel

Business Manager, Drainage Services Department

Mr Danny TSUI
Principal Assistant Secretary for Planning, Environment and Lands

Assistant Director of Environmental Protection

Principal Assistant Secretary for Works

Deputy Director of Water Supplies

Mr John WONG
Chief Systems Manager (D)22 of Information Technology Services Department

Mr CHAN Kin-ming
Assistant Director/Administration, Independent Commission Against Corruption

Mr Daniel LAM
Chief Systems Manager (D)23 of Information Technology Services Department

Mr Philip CHAN
Principal Assistant Secretary for Security

Assistant Commissioner of Police

Mr Dennis PANG Chi-tat
Assistant Director of Information Technology Services

Mr Alex MA
Chief Systems Manager of Hong Kong Police Force

Mr Augustine CHOI Chi-wa
Commissioner for Rehabilitation

Miss Ophelia CHAN Chiu-ling
Assistant Director of Social Welfare

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)116

Subhead 700 General other non-recurrent
New item Sharing of confiscated drug trafficking proceeds with the United States Government"

The Committee approved the proposal.

Item No. 2 - FCR(97-98)118

Subhead 700 General other non-recurrent
Study on the Trade Effluent Surcharge scheme

2. As consultancy studies had previously been undertaken on the Trade Effluent Surcharge (TES) scheme, some members queried the need for another consultancy study. They enquired about the method of assessment, and if the proposed study could be undertaken by staff of the Environmental Protection Department, given its considerable resources and responsibilities for environmental protection.

3. The Principal Assistant Secretary for Planning, Environment and Lands (PAS/PEL) said in reply that when the TES scheme was introduced in 1995, the Administration had undertaken to review the scheme a year after its implementation. Consultants commissioned to conduct the review in 1996 found that the discharge factors of six existing trades were lower than the designated values, while another seven trades might be included in the scheme. Both recommendations were however subject to more indepth reviews, and a proposal had accordingly been made for a more comprehensive analysis to be conducted. PAS/PEL added that the review undertaken in 1996, which spanned over five months at a cost of $6 million, was an overall and general one which did not go into every detail on account of cost and time considerations. The intention was for detailed analysis on specific areas to be conducted at a later stage where necessary.

4. The Assistant Director of Environmental Protection (AD/EP) also explained that about 9 000 accounts were involved and a sample survey of 5% of these accounts would cover about 450 to 500 business premises. A major portion of the consultancy study cost of $14 million would be for meeting the survey expenses. The magnitude of the study did not make it possible for the task to be undertaken by staff of the Environmental Protection Department, and it was more appropriate for a study of this nature to be conducted by independent consultants who would be chosen by a selection committee.

5. As regards the method of assessment, AD/EP said that TES was charged on the Chemical Oxygen Demand value. If the discharge factors were above the normal sewage demand level of 500 mg/litre, a charge would be made in relation to the excess level. This was a well-tried and simple method in working out the discharge factors of the trades concerned. As to whether recommendations in the forthcoming study would be used as the basis on which TES rates would be charged, PAS/PEL assured the member that any revisions to the rates would be made through the legislative process and Council Members would be duly consulted.

6. Some members were dissatisfied with the need to spend $14 million for appointing consultants to re-examine the conclusions made by another group of consultants. They also expressed concern about the loss borne by the six trades, and with the nuisance caused to the trades at the time of the survey as was experienced previously.

7. In reply, PAS/PEL and AD/EP advised that the TES scheme was designed to be administratively simple with generic discharge factors being set for each trade, instead of having different discharge factors for each separate account. The intention of the study was to bring equity into the system by carrying out a review to consider whether the originally set discharge factors were still applicable for each trade. The alternative would be for an individual account holder to object to its discharge factor if it was considered incorrect.

8. On consultation with the Environmental Affairs Panel, PAS/PEL pointed out that the Administration had consulted the Panel on several occasions before, during and after the review. In its last submission to the Panel in January 1998 to report the Administration's consideration and findings of the recommendations made by the consultant, it was clearly stated under "The Way Forward" that the Administration would bid for funds to carry out the proposed study under consideration at an estimated cost of $14 million, although a detailed breakdown of the cost was not given. Nevertheless, he agreed to consult the Panel before finalising the study brief for the consultants. He supplemented that for the review in 1996, the Administration had also consulted the trades, political parties and Council Members before the consultants' brief was finalised. Admin

9. Some members considered it necessary for the proposal to be examined thoroughly, and suggested withdrawal of the item. The Deputy Secretary for the Treasury advised that in view of the undertaking by the Planning, Environment and Lands Bureau to undertake further consultation with the Environmental Affairs Panel, the Administration would withdraw the proposal.

10. The proposal was withdrawn by the Administration.

Item No. 3 - FCR(97-98)119

Water Supplies Department
New Subhead Integrated Materials and Job Records Management System"
Subhead 001 Salaries
Subhead 001 Salaries

11. Noting that an amount of $33.3 million was approved in 1995 for the development of a new computer system in the Government Supplies Department (GSD), a member enquired about the relationship between that system and the proposed system under consideration. The Chief Systems Manager (D)22 of Information Technology Services Department (CSM/ITSD) explained that the system approved in 1995 was for the general purpose of keeping track of warehouse operations, stock management and stores requisition. The system proposed for the Water Supplies Department (WSD) was a job records management system which would enhance efficiency and cost-effectiveness in the management of waterworks stores. In response to the member's further enquiry, he confirmed that the feasibility of making use of the software used in the GSD system would be explored when implementing the system for WSD in order to save resources. As to whether there were plans for transferring other accounting systems from GSD to other departments, the Secretary for the Treasury advised that no such plans were in hand.

12. A member sought clarification on the apparent contradictions in the discussion paper on the annual savings of $6.86 million arising from implementation of the proposed system, and the resultant increase in water charges by 0.1% in real terms by 1999. In response, the Principal Assistant Secretary for Works advised that reference to the increase in water charges had only been included to conform with the requirements for preparation of Finance Committee agenda items. He clarified that any increase in water charges would not be directly related to the current proposal.

13. The Deputy Director of Water Supplies advised in reply to a member that the 70 workstations proposed for the system should be sufficient for three years, and that the addition of more workstations to the system would be feasible. CSM/ITSD also confirmed that the proposed system would be Year 2000 compliant.

14. The Committee approved the proposal.

Item No. 4 - FCR(97-98)120

Independent Commission Against Corruption
New Subhead Office automation for Independent Commission Against Corruption"

15. The Committee approved the proposal.

Item No. 5 - FCR(97-98)121

Hong Kong Police Force
New Subhead Rectification of Police computer systems for Year 2000 compliance"

16. The Committee approved the proposal.

Item No. 6 - FCR(97-98)117

New Recurrent Account Subhead Mental Health Guardianship Board"

17. While supporting the establishment of the Mental Health Guardianship Board, some members questioned the proposed rates of honoraria and allowances for Board members and witnesses, and sought elaboration on the basis for the proposed rates.

18. The Commissioner for Rehabilitation (C for R) advised that the honoraria and allowances were paid in compensation for travelling expenses and part loss of Board members earnings for time spent on exercising their duties. The rates had regard to those payable to Board members and witnesses of the Mental Health Review Tribunal. C for R explained that the rates proposed for Board members were relatively higher than those for witnesses in consideration of the pre-hearing preparation work and the level of responsibilities shouldered by Board members. While the rates adopted by the Tribunal were regarded as sufficient, adjustments to the rates were made where necessary.

19. As ordinary witnesses were paid only $45 per half-day and given that they were summoned to such hearings, members considered the rate too low as it was insufficient to cover travelling expenses in some cases. They questioned the basis of setting the daily rate of $90 for an ordinary witness and $200 for a professional. On the honoraria for Board members, a member also pointed out the unfairness for different rates to be paid to members in different professions.

20. The Chairman requested the Social Welfare Department to take the opportunity to review the relative values of honoraria and allowances paid to Board members and witnesses to ensure that at least basic expenses such as travelling would be covered; the Administration should report its findings to the relevant Panel. The Assistant Director of Social Welfare undertook to conduct, in consultation with the Health and Welfare Bureau, such a review with a view to revising the rates where justified. Admin

21. The Committee approved the proposal.

22. The Committee was adjourned at 3:35 pm.

Provisional Legislative Council Secretariat
16 June 1998