Provisional Legislative Council

PLC Paper No. CB(1) 147
(These minutes have been
seen by the Administration)

Ref : CB1/PL/HG/1

Panel on Housing

Minutes of meeting held on Thursday, 24 July 1997, at 12:40 pm in the Chamber of the Legislative Council Building

Members present :

Hon CHAN Yuen-han (Chairman)
Hon WONG Siu-yee
Hon Edward HO Sing-tin, JP
Hon Mrs Selina CHOW, JP
Hon CHEUNG Hon-chung
Hon LEUNG Chun-ying, JP
Hon HUI Yin-fat, JP
Hon CHAN Kam-lam
Hon Kennedy WONG Ying-ho
Dr Hon Charles YEUNG Chun-kam
Hon LAU Kong-wah
Dr Hon TANG Siu-tong, JP
Hon Timothy FOK Tsun-ting

Members absent :

Hon Frederick FUNG Kin-kee (Deputy Chairman)
Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Ronald ARCULLI, JP
Hon CHAN Choi-hi
Hon CHENG Kai-nam
Hon Andrew WONG Wang-fat, JP
Hon Bruce LIU Sing-lee
Hon CHOY Kan-pui, JP
Hon TAM Yiu-chung, JP

Public officers attending :

For Items II and III

Housing Bureau

Mr Andrew Wells, Deputy Secretary for Housing

Ms L K LAM, Principal Assistant Secretary (Housing Strategy) (Acting)

For Item II

Planning, Environment and Lands Bureau

Mr Patrick LAU, Deputy Secretary for Planning, Environment and Lands (Lands and Planning)

Mr Francis NG, Principal Assistant Secretary for Planning, Environment and Lands (Special Duty)

Lands Department

Mr Iain MacNaughton, Government Land Agent/Headquarters (Acting)

Planning Department

Mr Sit Ming LAU, Assistant Director of Planning (Housing and Land Supply)

Clerk in attendance :

Mrs Vivian KAM,
Chief Assistant Secretary (1)2

Staff in attendance :

Mr Matthew LOO,
Senior Assistant Secretary (1)4 (Atg)

The Chairman welcomed members and representatives from the Administration to the meeting.

I.Date of next meeting and items for discussion

2.The next meeting would be held on 19 August 1997 at 2:30 pm and members were invited to suggest items for discussion to the Panel Clerk.

(Post-meeting note: A notice to members was issued on 28 July 1997 and a letter was also issued on 25 July 1997 inviting the Administration to suggest items for discussion.)

II.Pledge for annual provision of 85,000 flats

3.The Chairman advised that the item had been put on the agenda as the housing production target of 85,000 per year announced by the Chief Executive was of wide public concern.

4.At the Chairman ' s invitation, the Deputy Secretary for Housing (DS for H) briefed members on the Administration ' s housing targets and projections as follows:

  1. in the Consultative Document on Long Term Housing Strategy Review (LTHSR) issued in January 1997, reference had been made to an annual housing need of 80,000. This was not a housing target but a projection of the annual housing demand over the 11-year period from 1995-96 to 2005-06 made on the basis of a housing demand model prepared by the Planning Department. The model would be updated regularly in response to changes;

  2. the Chief Executive had announced a policy objective of an annual provision of 85,000 flats, which represented a minimum goal rather than an average target. The objective was higher than the projected demand of 80,000 and would allow for a safety margin. Relevant Government departments would be requested to expedite actions in order to meet the policy objective; and

  3. the Financial Secretary (FS) had referred to a production target of 100,000 flats. This projection was made on the basis of land available for disposal between 1997 and 2002, and represented the total number of flats to be produced by the Housing Authority (HA), Housing Society and private developers.

Private Sector Participation Schemes

5.Hon Mrs Selina CHOW requested the Administration to set out the above in writing and provide an analysis on how the annual target could be realistically achieved including for example the amount of land to be provided and efforts to be made for overcoming difficulties caused by requirements of different Government departments. She also enquired about the usefulness of the Private Sector Participation Scheme (PSPS) in solving housing problems in Hong Kong, and means for improving the quality of such schemes. Admin

6.DS for H undertook to liaise with the Provisional Legislative Council (PLC) Secretariat and provide the details in writing. As regards the PSPS, its annual production rate in the past was 10,000 flats and a similar target would be maintained in the future. He acknowledged that complaints had been received on the quality and management of such schemes, but advised that these were gradually improving. In the Consultative Document on LTHSR, the Administration had proposed improvements to the quantity and quality of such schemes including mixed developments by private developers and the HA. Many views had been received on recommendations in the Consultative Document among which was support for the proposal concerned.

Production target

7.Expressing the lack of confidence in the Administration's capability of achieving the target in view of previous discussions on the subject, Hon CHAN Kam-lam requested the Administration to provide details of the annual production target for the ten-year period taking into account the availability of land supply, manpower and other resources. DS for H re-iterated that the policy objective of providing 85,000 flats a year had regard to the area of land disposed in previous years. Although the target for the coming two years could not be met on account of the area of land disposed in recent years, the Administration was confident that the target from the third year onwards could be met and even exceeded. The Deputy Secretary for Planning, Environment and Lands (DS for PEL) explained that the land disposal programme comprised two parts. Firstly, the Administration would have regard to the area of land that could be sold for private development in the coming two years, and would also work out with the HA and the Housing Department (HD) on land available for public housing during the period. Secondly, the Administration would look at land which would be available in the following three years. On this basis, the Administration was able to announce specific sites which would be available for disposal in the first two years, but any specific projections beyond that might be misleading.Admin

8.In the light of the Administration ' s comments, Hon CHAN Kam-lam further asked for the number of flats which would be produced in 1997/98 and 1998/99, and information on land banks in the hands of private developers, adding that such information should be available. He also requested the Housing Bureau (HB) to, upon availability of data requested at the current meeting and details regarding land disposal requested by members in the joint-meeting of the Housing and the Planning, Lands and Works Panels just held, confirm that land so provided would tie in with the Bureau's housing production target.Admin

9.Hon LAU Kong-wah was dissatisfied with the non-availability of information on the objective of 85,000 flats as there must be some basis before the Chief Executive made his pledge. He expressed concern on the hoarding of land and flats by developers, and made reference to a statement made by a former Executive Council Member on there being enough land in the hands of major developers to provide 25,000 units for a million people. He asked for details of the estimate, the vacancy rate of flats completed but not put for sale on the market, and the means for expediting the construction of flats. The Chairman advised that the Administration should provide in writing the quantity and current position of land pending development.Admin

10.DS for H said that he did not know about the basis of the statement quoted but would consult the Lands Department and provide a response. He advised that some private lands held by developers in the New Territories were not yet ready for development for various reasons such as the need to acquire certain small areas of land in order to make up a comprehensive project. The vacancy rate of flats was currently 3.7% or 30,000 flats, and was similar to the average vacancy rate of 4% in the past ten years. While acknowledging that this was of concern to the HB, DS for H pointed out that the vacancy rate was not particularly high when compared with other international cities. The Principal Assistant Secretary for Planning, Environment and Lands (PAS for PEL) supplemented that the majority of such land were farmland lacking in transport and infrastructure facilities. The compilation of data on such land would pose difficulties as developers sometimes used different subsidiaries to register different lots of land.Admin

11.Hon WONG Siu-yee shared similar views as Hon LAU Kong-wah on the basis for the pledge of 85,000 flats. He sought assurance from the Administration on the effectiveness of the 85,000 flats in reducing soaring property prices. In response, DS for H said that the Administration was confident that the pledge would help to stabilize property prices, while the long term solution would be sufficient supply of land. He added that it would be inappropriate for the Administration to specify the "correct" price level for properties. As regards the basis of the housing target, he said that the Consultative Document on LTHSR had made reference to the projected demand for public and private sector flats in the next ten years.

12.Hon Edward HO remarked that the Chief Executive appeared determined to achieve the flat production target, and officials were apparently toeing the party line. He appreciated the fact that Government departments might be confronted by difficulties and urged officials to state frankly their positions and difficulties as it would otherwise not be possible for PLC Members to co-ordinate Government plans.

13.Hon HUI Yin-fat also said that he had no confidence in the pledge of 85,000 flats. Apart from the Administration 's acknowledgement on its inability to produce 85,000 flats in the first two years of the ten-year period, Hon HUI Yin-fat 's experience while he was a HA member showed that about 20% of HA's production target could not be met. Furthermore, the PSPS was dependent on participation of private developers who in his view would rather turn to the lucrative construction business in the private sector. He enquired about measures that could be taken to change such situations, and saw a need for the Administration to put in place mechanisms for monitoring and minimizing slippages in construction.

14.In response, DS for H said that the HA had reduced the lead time for construction of flats from 62 months previously to the current period of 58 months; the Steering Committee on Land Supply for Housing would examine the possibility of a further reduction. He added that the Administration was already aiming at fast-tracking and was monitoring progress of individual construction sites and looking at the causes of delays if any.

15.At the request of Dr Hon Charles YEUNG, DS for H undertook to provide data on the target for the production of public rental housing (PRH), subsidized housing and private sector flats in the coming years; as well as details of the housing demand model of 80,000 prepared by the Planning Department. Dr Hon Charles YEUNG emphasized that the target should be shown on an annual basis rather than a total figure in order to provide a clear picture; DS for H affirmed that the information would be supplied.Admin


16.Quoting past re-organization exercises of the Government in splitting up policy branches and departments for specializing in certain policy areas, Hon Kennedy WONG expressed concern at the need for the FS to co-ordinate Government ' s efforts in the provision of housing, and at the FS relinquishing chairmanship of the Steering Committee to the Secretary for Housing (S for H) in 1998. He enquired about the official who should be held responsible in the event of non-delivery of the Administration ' s pledge. DS for H dismissed this as an hypothetical question and reassured members that the target would be met.Admin

III.Rent increase for residential units in public rental housing estates

17.The Chairman informed the meeting that at the HA meeting held on the same morning, HA had heeded the Administration ' s advice and decided against increasing rent for residential units of 84 PRH estates for the time being. DS for H clarified that HA had made the decision as an independent body with no input from the Administration.

Administration ' s position

18.At the Chairman's invitation, DS for H briefed members on the latest position of the Administration on the subject. The Housing (Amendment) (No. 3) Bill 1996 passed by the Legislative Council had three major components: HA could only increase rent once every three years; the rate of increase could not exceed 10% of the median rent-to-income ratio (MRIR); and the effective date for implementation of the amended legislation was to be decided by S for H. As the Administration envisaged difficulties in implementation of the legislation, S for H had requested the HA Chairman and the Director of Housing to conduct an assessment on the practical and financial difficulties envisaged in implementing the legislation, and to provide an assessment at the end of a three-month period by 30 September 1997 to enable final decisions to be made by the S for H. If considered necessary, S for H would approach the Executive Council and the PLC for further advice.

Effective date

19.Hon CHAN Kam-lam pointed out that the intention behind the proposal for the S for H to gazette the effective date was in consideration of possible unfair rent increase for tenants of certain PRH estates. It was unfortunate that S for H should be taking advantage of the loophole to review implementation of the legislation. He highlighted the fact that the piece of legislation had already been passed and it was incumbent upon the Administration to implement the law. The concept and principles of the MRIR had been spelt out in the Consultative Document on LTHSR and HA also had a set formula on its calculation. The difficulties referred to were not insurmountable and HB should not use this as an excuse to delay implementation. He requested HA and HB to report progress to PLC Members by late September 1997 and urged the HA not to increase rent for PRH estates before the outcome was known.Admin

20.DS for H explained that the Administration had stated its position and difficulties when the Bill was debated in the Legislative Council. The Administration had now requested HA to carry out a fair and open assessment. In response to Hon CHAN Kam-lam on whether S for H had informed the Governor, the Right Hon Christopher Patten, of the difficulties before he signed the piece of legislation, DS for H replied that S for H had not done so as he was as yet uncertain about the extent of difficulties involved. At Hon CHAN Kam-lam's request, DS for H agreed to provide the basis and formula for calculation of MRIR used by the HA.Admin

21.Also on the effective date of the amended legislation, Hon CHEUNG Hon-chung said that it was aimed at enabling the Administration to make plans to resolve technical problems. He warned that the Administration had no power to review the content of the law as it would otherwise be over-stepping its role. With a view to seeking assurance that the review was not on the policy directive, Hon CHEUNG Hon-chung asked for the content of the review. DS for H said that he had no knowledge of the content of the review but affirmed that the purpose of the review was on the feasibility of implementing the law. He understood that HA would release the content of the review.

Legislative spirit

22.Both the Chairman and Hon WONG Siu-yee reiterated the importance of the spirit for legislating and the obligation of the Administration in implementing legislation which had been scrutinized and passed by legislators without further delay. The Chairman also referred to the letter tabled at the meeting from the Deputy Chairman, Hon Frederick FUNG who was unable to attend the meeting, who expressed similar views. DS for H said that the Administration respected the legislative spirit and had no intention to cause delays.

Concluding remarks

23.In conclusion, the Chairman reiterated the Panel ' s request for the HA not to increase rent for residential units of PRH estates before the issue raised was resolved.

24.There being no other business, the meeting adjourned at 1:45 pm.

Provisional Legislative Council Secretariat
14 August 1997