Ref : CB2/BC/23/98

Members Present :

Hon Andrew WONG Wang-fat, JP (Chairman)
Hon Kenneth TING Woo-shou, JP
Hon LEE Wing-tat
Hon Fred LI Wah-ming
Hon CHAN Wing-chan
Hon CHAN Kam-lam
Hon Jasper TSANG Yok-sing, JP
Hon Howard YOUNG, JP
Hon YEUNG Yiu-chung
Dr Hon TANG Siu-tong, JP
Hon CHOY So-yuk

Members Absent :

Hon HO Sai-chu, JP
Hon Cyd HO Sau-lan
Hon Ronald ARCULLI, JP
Hon James TO Kun-sun
Hon Ambrose CHEUNG Wing-sum, JP
Hon FUNG Chi-kin

Public Officers Attending :

Mrs Maureen CHAN
Deputy Secretary for Constitutional Affairs

Mr Peter CHEUNG
Deputy Secretary for Home Affairs
Mr John LEUNG
Principal Assistant Secretary for Constitutional Affairs

Mrs Lesley WONG
Principal Assistant Secretary for the Treasury
(Management Accounting)

Miss Doris NG
Assistant Director of Urban Services (Finance)

Mr Johnny WOO
Assistant Director of Urban Services (Leisure Management)

Ms Agnes TANG
Assistant Director of Regional Services
(Culture & Entertainment) (Acting)

Mr K T LAI
Assistant Director of Regional Services
(Environmental Health Policy)

Mr Paul CHEUNG
Senior Staff Officer of Urban Services (Leisure Policy)

Mrs N DISSANAYAKE
Senior Assistant Law Draftsman (Department of Justice)

Miss Selina LAU
Government Counsel (Department of Justice)

Clerk in Attendance :

Mrs Constance LI
Chief Assistant Secretary (2) 2

Staff in Attendance :

Mr LEE Yu-sung
Senior Assistant Legal Adviser

Miss Connie FUNG
Assistant Legal Adviser 3

Miss Flora TAI
Senior Assistant Secretary (2) 2

I. Confirmation of minutes of meeting
[LC Paper No. CB(2)2209/98-99]

The minutes of the meeting held on 13 May 1999 were confirmed.

II. Meeting with the Administration

Fee-setting mechanism
[Paper Nos. CB(2)2085/98-99(01) and CB(2)2204/98-99(01)]

2. At the invitation of the Chairman, Deputy Secretary for Constitutional Affairs (DS(CA)) briefed members on the following papers -

1. the Administration's paper describing the existing mechanisms for setting and revising fees and charges of the two Provisional Municipal Councils (PMCs) and the proposed fees and charges provisions in the Bill [Paper No. CB(2)2085/98-99(01)]; and

2. the Secretary for Constitutional Affairs's letter dated 3 June 1999 responding to members' concerns and suggestions at the meeting on 25 May 1999 [Paper No. CB(2)2204/98-99(01)].

Monitoring of fee-setting by the Legislative Council

3. Mr LI Wah-ming reiterated his concern that, if all fees and charges for leisure and cultural services were to be determined by the Government after the abolition of PMCs, the public or the elected council(s) could no longer monitor the setting of these fees and charges. Despite the Administration's undertaking at previous meetings that the established pricing policies would continue after re-organization, Mr LI was worried that the existing subsidies for leisure and cultural services might be reduced in future.

4. DS(CA) responded that although the Bill proposed that the fees and charges for leisure and cultural services would be determined by the Director of Leisure and Cultural Services subject only to the approval of the Financial Secretary, the public and elected council(s) could still comment on and monitor the general pricing principles and subsidy levels. Deputy Secretary for Home Affairs (DS(HA)) also assured members that under the new structure, the District Councils could give views on the fees and charges at district level, while the relevant Panel of Legislative Council (LegCo) would be consulted on any major changes to the pricing principles. In this regard, Mr LI Wah-ming expressed doubts that individual District Councils could influence the setting of fees and charges, since standard rates were set for most admission fees and hire charges for leisure facilities on a regional or territory-wide basis. DS(HA) clarified that the future fee-setting mechanism would be very flexible, and differential rates would be charged for usage at peak and non-peak hours in order to maximise usage. He said that flexibility was necessary especially if the management of venues and facilities was to be contracted out.

5. With regard to Mr LI's enquiry about the commercial charges of PMCs, DS(CA) informed members that paragraph 3 in Appendix I of the Administration's paper gave examples of those charges which were set at market rates by tender, auction, contract or commercial negotiation. Such services were not subsidized and the commercial revenue so obtained by PMCs was not regarded as fees and charges.

6. Responding to Mr LEE Wing-tat, DS(CA) said that the Administration had considered the proposal that LegCo should have the authority to determine the subsidy levels of the fees and charges for cultural and leisure services. However, there were a number of practical difficulties if the general pricing principles were to be prescribed by law, in view of the enormous volume of fees involved and the need to adjust the fees within a very short period of time. The practical difficulties for specifying the subsidy levels in law had been listed in the letter dated 3 June 1999 [Paper No. CB(2)2204/98-99(01)]. DS(HA) also pointed out that it would defeat the purpose of the reorganization which aimed at streamlining the structure and providing flexibility in setting fees and charges. He assured members that there would be transparency in the formulation of the pricing policy and price-setting mechanism.

7. In response to members, DS(HA) reiterated that the Administration would not insist on full-cost recovery in the setting of fees for cultural and leisure services; in fact many of these were subsidized by revenue from commercial charges. He said that it would be difficult to prescribe a subsidy level by legislative means in view of the complex fee structure of leisure services. He added that tying fees and charges to subsidy levels would discourage management incentives in cost control and proactive marketing, and that flexibility in fee-setting was necessary for improving and providing more services to the public.

8. The Chairman then inquired about the present arrangement for delegation of fee setting powers in PMCs. DS(CA) responded that the Provisional Regional Council (PRC) had delegated to the directorate officers of Regional Services Department the power to set admission fees for cultural and arts performances and hire charges for civic centres. However, as Provisional Urban Council (PUC) had not made similar delegation, the Urban Services Department had to seek the approval of the relevant Select Committees of PUC for the annual revision of fees and charges. Assistant Director of Urban Services (Leisure Management) added that those admission fees for sports and recreational facilities were also determined by the relevant Select Committees of PUC and PRC, based on a number of criteria including operating costs, users' affordability, usage rate, inflation rate and changing market situations. As the calculation was based on past participation rates, there would be variations in the actual subsidy levels depending on the take-up rates. The subsidy levels were therefore often the end result of the exercise.

9. Mr LEE Wing-tat disagreed with the Administration's argument that the subsidy level was the end result of the fee setting exercise. He pointed out that the respective Select Committee of PMCs did take into account the previous subsidy levels when determining the future fees and charges. He then clarified his proposal for the future fee-setting mechanism for cultural and leisure services. He explained that while LegCo would not be involved in the approval of individual fees, it should be empowered to determine the pricing principles or the subsidy levels which would form the basis for the determination of actual fees by the delegated authority. Some flexibility could be allowed, which would be prescribed in the legislation, for the actual fees to be set within a range of subsidy level. He stressed that the purpose of his proposal was to strike a balance between over-monitoring by LegCo and absence of control over government officials in the determination of fees and charges.

10. DS(HA) acknowledged members' concern about enhancing accountability of government officials and transparency of the fee-setting mechanism. He reiterated that there would be difficulties to specify the subsidy levels in the legislation. He said that once the subsidy levels were prescribed by law, the Administration would have to adhere to them closely, and it would be meaningless to set subsidy levels based on a very broad range. In this connection, Mr LI Wah-ming suggested that LegCo could set a ceiling for fee increases, such as capping the increase at a level equivalent to "Consumer Price Index (CPI) minus a prescribed figure", in order to prevent the Administration from imposing a sharp increase in fees and charges for leisure and cultural services. DS(HA) remarked that the CPI model might be even more inflexible. He added that a higher subsidy level would not necessarily improve the quality of service. Mr LI disagreed with the Administration, pointing out that his proposal would still allow flexibility for individual items of fees, and would enhance productivity in the long run.

11. Mr Howard YOUNG said that he would prefer a model which could enable the relevant LegCo Panel to monitor future fee increases and changes in subsidy levels for leisure and cultural services. However, he would be willing to consider Mr LEE Wing-tat's proposal, if it was feasible to stipulate in law the flexibility allowed for reduction of subsidy levels and variation of fee levels to match with socio-economic changes, for example, increases in the potential users' disposable income. Mr YOUNG reminded members that an increase in subsidy level would mean a decrease in fee, and that the scrutiny model would be different from the existing mechanism of vetting fee increases.

12. DS(CA) reiterated that the Administration had undertaken to preserve previous subsidy levels and would welcome monitoring by LegCo and the public in the setting of fees and charges. She said that the Administration would consider the feasibility of devising a mechanism to facilitate LegCo monitoring of the setting of fees for leisure and cultural services. She also undertook to set out the proposed broad principles of future fee-setting policies to facilitate further discussion. Referring to DS(CA)'s comments, the Chairman remarked that the previous subsidy levels might no longer be justified after streamlining the structure and rationalizing the operations. He therefore urged the Administration to accord priority to streamlining the structure and operations for the provision of municipal services.

Adm

(Post-meeting note : The Administration has provided a written response vide Paper No. CB(2)2374/98-99(01).)

13. Mr CHAN Wing-chan asked whether non-profit-making organizations would continue to enjoy fee reduction and waivers for hire of venues. Acting Assistant Director of Regional Services (Culture & Entertainment) explained that non-profit making organziations could apply for fee reductions for hire of venue. The applications would be considered having regard to the nature of the activities, the financial position of the activities and the performance of the organizations. The percentage of fee reduction ranged from 20% to 90%. For programmes which were organized jointly with the PMC, the organizations could also use the venue and ticketing service free-of-charge. On the future arrangements after the abolition of PMCs, DS(HA) said that the new Department of Leisure and Cultural Services would be responsible for promoting and delivering culture and leisure services, and non-profit making organizations could hold activities jointly with the new Department or local bodies, e.g. District Sports Associations, at district level.

14. Mr LI Wah-ming pointed out that PUC at present subsidized a number of cultural, recreation and leisure activities organized by local, non-profit-making organizations, and that PUC members also actively participated in these activities. With the proposed dissolution of PMCs, he asked whether the Administration had considered how to ensure the same level of participation by Government in the organization of such activities. DS(HA) replied that the Task Force in the Home Affairs Bureau was examining details on the provision of leisure and cultural services and would formulate proposals on the concrete arrangements.

15. At the request of Mr LEE Wing-tat, DS(CA) agreed to provide an enlarged version of the schedule of admission fees and hire charges of public swimming pools on A3 size paper for members' easy reference.

(Post-meeting note : The enlarged schedule was issued to members vide LC Paper No. CB(2)2434/98-99.)

Delegation of statutory powers to public officers
[Paper Nos. CB(2)2088/98-99(01) and Appendix III to CB(2)2204/98-99(01)]

16. Mr LEE Wing-tat said that the table on delegation of powers at Annex A [Appendix III to CB(2)2204/98-99(01)] was too general, and he requested more specific information on the categories of officers who were given delegated powers under Cap. 132. The Chairman advised the Administration to provide a more detailed comparison table on the delegation and authorization arrangements, specifying the categories of authorized officers, for the powers and functions under various provisions of the Public Health and Municipal Services Ordinance (Cap. 132). DS(CA) undertook to provide the information before the next meeting.

Adm

(Post-meeting note : The Administration has provided the comparison table vide Appendix III to Paper No. CB(2)2387/98-99(01).)

III. Clause-by-clause examination

17. The Bills Committee then proceeded to clause-by-clause examination from clause 7.

Clause 7 - Repeal, amendment and renaming of enactments

18. DS(CA) said that clause 7 set out the statutory amendments necessary to transfer the functions exercised by the PMCs. Details of these amendments to the Public Health and Municipal Services Ordinance (Cap. 132), the Municipal Services Appeals Boards Ordinance (Cap. 220), the Dutiable Commodities Ordinance (Cap. 109), the Places of Public Entertainment Ordinance (Cap. 172) and a number of ordinances and subsidiary legislation were set out in Schedules 1 to 7 of the Bill. DS(CA) highlighted that the proposed rating arrangements were covered by amendments to the Rating Ordinance (Cap. 116) in Schedule 7.

19. In response to Mr LEE Wing-tat's enquiry, Senior Assistant Legal Adviser (SALA) explained that Schedule 1 provided for the substitution of title for subsidiary legislation adopted for future use; Schedule 2 provided for the repeal of subsidiary legislation which was not adopted, and served as a table showing the new subsidiary legislation which would replace the repealed ones; Schedule 3 set out the proposed amendments to Cap. 132 and its subsidiary legislation. Mr LEE referred to the new titles in Schedule 1 and asked about the reasons for changing "by-laws" to "regulation". SALA explained that the terms "by-laws" were used for the subsidiary legislation made by the two municipal councils, while "regulation" was normally used for other general subsidiary legislation. He said that the terms "order" or "notice" were also used for some subsidiary legislation, and the legal effect would be the same despite the different terminology. In this regard, Senior Assistant Law Draftsman (SALD) added that it was the convention to use "by-laws" for subsidiary legislation made by statutory corporations and "regulations" referred to those made by the government.

20. Mr LEE Wing-tat asked about the general principle to align various by-laws of the two PMCs in Schedule 1. DS(CA) replied that in general, the Administration proposed to adopt the more comprehensive and stringent version, with necessary adjustments to reconcile the differences between the by-laws of the two PMCs. She said that, for example, those commercial bathhouses within the geographical jurisdiction of the PRC were at present not subject to any regulation. However, these would be brought under regulation of the proposed Commercial Bathhouses Regulation which was based on the Urban Council By-law. Commercial bathhouses in the PRC area would be given a two-year grace period to comply with the licensing requirement. DS(CA) added that certain provisions such as controls of laundries and dry cleaning establishments, which were either obsolete or already covered by other enactments, would be deleted. She drew members' attention to Annex C to the Legislative Council Brief on the Bill (File Ref.: C4/17/7) on the reasons for these deletions.

Clause 8 - Savings and transitional provisions for matters arising under section 7

21. DS(CA) said that clause 8 contained detailed transitional and savings provisions which were necessary on account of the amendments made under clause 7. She then briefed members on subclauses (1) to (2)(d) in detail.

22. In response to Mr LI Wah-ming's enquiry about the transitional arrangements for appeals now awaiting hearings, DS(CA) explained that the existing appeal cases would continue to be heard by the Review Committees of PMCs before their abolition. The Licensing Appeals Board to be set up on 1 January 2000 would then replace the existing PMC Review Committees to hold hearings on the those outstanding and new review applications. She confirmed that the existing two-tier appeal mechanism would be preserved. Mr Howard YOUNG suggested and the Chairman agreed that the Administration should consider setting a cut-off date after which the PMC Review Committees would not hold hearings on appeal cases, and arrangements could be made for the pending cases to be heard by the Licensing Appeals Board from 1 January 2000. DS(CA) undertook to consider the necessary administrative arrangements for a smooth transition.

Adm

IV. Dates of future meetings

23. Members noted that the next meeting would be held on Friday, 25 June 1999 at 8:30 am. Members also agreed to re-schedule the subsequent meeting from 2 July 1999 to 6 July 1999 at 2:30 pm.

24. In view of the voluminous provisions in the Bill, members also decided to hold additional meetings in July and September 1999. Members agreed that subsequent regular meetings would be held every Tuesday at 10:45 am and every Friday at 8:30 am commencing from 20 July 1999.

25. The meeting ended at 10:35 am.

Legislative Council Secretariat