LC Paper No. FC11/99-00
(These minutes have been
seen by the Administration)

Ref : CB1/F/1/2

Finance Committee of the Legislative Council

Minutes of the 21st meeting
held at the Legislative Council Chamber
on Friday, 2 July 1999, at 2:30 pm

Members present :

Hon CHAN Kam-lam (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Hon James TIEN Pei-chun, JP
Hon David CHU Yu-lin
Hon HO Sai-chu, SBS, JP
Hon Cyd HO Sau-lan
Hon Edward HO Sing-tin, SBS, JP
Hon Albert HO Chun-yan
Hon Michael HO Mun-ka
Ir Dr Hon Raymond HO Chung-tai, JP
Hon LEE Wing-tat
Hon Martin LEE Chu-ming, SC, JP
Hon Eric LI Ka-cheung, JP
Hon LEE Kai-ming, SBS, JP
Hon Fred LI Wah-ming, JP
Dr Hon LUI Ming-wah, JP
Hon NG Leung-sing
Hon MA Fung-kwok
Hon James TO Kun-sun
Hon CHEUNG Man-kwong
Hon Ambrose CHEUNG Wing-sum, JP
Hon HUI Cheung-ching
Hon Christine LOH
Hon CHAN Kwok-keung
Hon CHAN Yuen-han
Hon Bernard CHAN
Hon CHAN Wing-chan
Dr Hon LEONG Che-hung, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon LEUNG Yiu-chung
Hon Gary CHENG Kai-nam, JP
Hon SIN Chung-kai
Dr Hon Philip WONG Yu-hong
Hon WONG Yung-kan
Hon Jasper TSANG Yok-sing, JP
Hon Howard YOUNG, JP
Dr Hon YEUNG Sum
Hon YEUNG Yiu-chung
Hon LAU Chin-shek, JP
Hon LAU Kong-wah
Hon Mrs Miriam LAU Kin-yee, JP
Hon Ambrose LAU Hon-chuen, JP
Hon Emily LAU Wai-hing, JP
Hon CHOY So-yuk
Hon Andrew CHENG Kar-foo
Hon LAW Chi-kwong, JP
Hon TAM Yiu-chung, GBS, JP
Dr Hon TANG Siu-tong, JP

Members absent:

Hon Ronald ARCULLI, JP (Chairman)
Hon LEE Cheuk-yan
Dr Hon David LI Kwok-po, JP
Prof Hon NG Ching-fai
Hon Margaret NG
Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon Andrew WONG Wang-fat, JP
Hon LAU Wong-fat, GBS, JP
Hon Timothy FOK Tsun-ting, SBS, JP
Hon FUNG Chi-kin

Public officers attending:

Miss Denise YUE, JP
Secretary for the Treasury

Mrs Carrie LAM, JP
Deputy Secretary for the Treasury (1)

Principal Executive Officer (General), Finance Bureau

Mrs Rita LAU, JP
Secretary for Information Technology and Broadcasting

Deputy Secretary for Information Technology and Broadcasting

Mr Kevin HO, JP
Deputy Secretary for Transport

Principal Government Engineer/Railway Development, Highways Department

Deputy Secretary for Home Affairs (1)

Mr John WAN
Principal Assistant Secretary for Home Affairs

Project Manager, Architectural Services Department

Ms Rosanna LAW
Assistant Director of Administration (2)

Director of Legal Aid

Ms Lolly CHIU, JP
Policy and Administration Co-ordinator, Legal Aid Department

Mr Thomas KWONG
Assistant Principal Legal Aid Counsel

Mr Alex MA
Assistant Director of Information Technology Services

Mr FOK Kam-hung
Chief Systems Manager, Information Technology Services Department

Mr Martin M GLASS, JP
Deputy Secretary for the Treasury (2)

Mr James BLAKE, JP
Senior Director, Capital Projects, Kowloon-Canton Railway Corporation

Mr Samuel LAI
Director, Finance, Kowloon-Canton Railway Corporation

Director, East Rail Extensions, Kowloon-Canton Railway Corporation

Mr David TSUI, JP
Deputy Secretary for Home Affairs (2)

Mr Augustine CHENG, JP
Deputy Director of Home Affairs

Ms Miranda CHIU,JP
Deputy Director of Administration

Mr Jacky LUM
Assistant Director of Administration (3)

Clerk in attendance:

Ms Pauline NG
Assistant Secretary General 1

Staff in attendance:

Miss Polly YEUNG
Chief Assistant Secretary (1)3

Ms Sarah YUEN
Senior Assistant Secretary (1)4

As Mr Ronald ARCULLI, Chairman of Finance Committee (FC) was not in Hong Kong, Mr CHAN Kam-lam, Deputy Chairman, chaired the meeting.

Item No. 1 - FCR(1999-2000)27


2. As members of the Establishment Subcommittee (ESC) had requested that item EC(1999-2000)15 be considered separately, the Chairman put FCR(1999-2000)27, except item EC(1999-2000)15, to vote. The proposal was approved.

EC(1999-2000)15 Proposed creation of two supernumerary posts of one Administrative Officer Staff Grade B (D3) and one Chief Engineer (D1) for a period of three years and increase in the establishment ceiling from $25,746,000 by $3,166,560 to $28,912,560 in 1999-2000 for the creation of five non-directorate posts in the Information Technology and Broadcasting Bureau of Government Secretariat to oversee the Cyberport development

3. Miss Emily LAU said that Members of the Frontier had grave reservation on the proposal. Noting that the Government would review the continued requirement of the proposed posts of the Cyberport Division in 2001, Miss LAU questioned whether the proposed three-year period for the supernumerary posts could be shortened.

4. In reply, the Deputy Secretary for Information Technology and Broadcasting (DSITB) advised that vetting and approval of the design and specifications of the Cyberport would take some two years to complete. To allow sufficient time for the smooth transfer of functions from the Cyberport Division to the future Cyberport Company, the proposed three-year period for the proposed posts was necessary. DSITB undertook to review the position in 2001. Admin

5. Referring to the experience with the construction of the new Airport at Chek Lap Kok, Miss Emily LAU questioned whether the Government had full authority in monitoring construction and the overall programme. The Secretary for Information Technology and Broadcasting (SITB) and DSITB assured members that all the design and specifications of the Cyberport had to be approved by the Government. The Pacific Century Group (PCG) was also required under its agreement with the Administration to provide the necessary information to facilitate effective monitoring by the Government. The Administration did not envisage any serious problem in its monitoring role as the site in question was Government-owned and PCG was only given permission to carry out works on the site.

6. In reply to Miss Emily LAU, SITB confirmed that further details on the Cyberport Company would be provided to the Panel on Information Technology and Broadcasting when available. As regards objections to the Cyberport development received by the Town Planning Board, DSITB said that as the deadline for lodging objections was 30 June 1999, the Administration was not yet in possession of the full details of the objections received. Nevertheless, relevant information would be provided to the Panel at a later stage. Admin


7. The item was put to vote. 35 members voted for the item, two voted against and one abstained:

Mr Kenneth TING Woo-shouMr HO Sai-chu
Mr Edward HO Sing-tinMr Michael HO Mun-ka
Dr Raymond HO Chung-taiMr LEE Wing-tat
Mr LEE Kai-mingMr Fred LI Wah-ming
Mr NG Leung-singMr MA Fung-kwok
Mr CHEUNG Man-kwongMr Ambrose CHEUNG Wing-sum
Mr HUI Cheung-chingMr CHAN Kwok-keung
Miss CHAN Yuen-hanMr CHAN Wing-chan
Dr LEONG Che-hungMrs Sophie LEUNG LAU Yau-fun
Mr Gary CHENG Kai-namMr SIN Chung-kai
Dr Philip WONG Yu-hongMr WONG Yung-kan
Mr Jasper TSANG Yok-singMr Howard YOUNG
Dr YEUNG SumMr YEUNG Yiu-chung
Mr LAU Chin-shekMr LAU Kong-wah
Mr Ambrose LAU Hon-chuenMiss CHOY So-yuk
Mr Andrew CHENG Kar-fooMr SZETO Wah
Mr LAW Chi-kwongMr TAM Yiu-chung
Dr TANG Siu-tong
(35 members)

Miss Cyd HO Sau-lan
Miss Emily LAU Wai-hing
(2 members)
Mr Eric LI Ka-cheung
(1 member)

8. The Committee approved the item.

Item No. 2 - FCR(1999-2000)28


9. As members of the Public Works Subcommittee (PWSC) had requested that items PWSC(1999-2000)42, 43, and 56 be considered separately, the Chairman put FCR(1999-2000)28, except items PWSC(1999-2000)42, 43 and 56, to vote. The proposal was approved.

PWSC(1999-2000)42 37TR West Rail (phase 1) - essential public infrastructure works for the Yuen Long section

10. Miss Emily LAU pointed out that members of the PWSC had noticed that the statutory environmental impact assessment (EIA) procedures and public consultation for the present item, as well as the next item, had not yet been completed. She queried the appropriateness of putting up a funding proposal to FC without completing all necessary procedures so long as the Administration considered the project urgent.

11. In response, the Deputy Secretary for Transport (DS for T) referred to discussions at the PWSC meeting and re-affirmed that it was the Administration's usual practice to complete all statutory procedures and public consultation before submitting a funding proposal for members' consideration. Referring to the exceptional arrangements for the two items under consideration, DS for T and the Principal Government Engineer/Railway Development, Highways Department (PGE/RD) informed members that only some 20% of the essential public infrastructure works (EPIW) for the Yuen Long and Tuen Mun sections under the West Rail (Phase 1) constituted designated projects under the EIA Ordinance (Cap. 499). Moreover, there was a need for the EPIW in order to tie in with the main works of the West Rail (Phase 1) for which Kowloon-Canton Railway Corporation (KCRC) would enter into an agreement with its contractor in July 1999.

12. On the time-frame of the public consultation process of the EIA report, PGE/RD confirmed that upon confirmation of the Environmental Protection Department (EPD), the relevant EIA report had been released for public consultation on 25 June 1999. The Yuen Long and Tuen Mun Provisional District Boards had been/would be consulted on the EIA report on 24 June 1999 and 6 July 1999 respectively. EPD would consider public views during the one-month consultation period and where necessary, would attach conditions to the relevant Environmental Permits. On whether there was a need to seek additional funding to implement environmental mitigation measures required under the Environmental Permits, PGE/RD advised that such expenses could be catered for by the contingency allowance provided under the respective funding proposal.

13. Miss Emily LAU did not consider the Administration's explanation acceptable and stressed her concern about the need to comply with all necessary procedures before putting up a funding request.

14. Mr LEE Wing-tat and Mr Albert HO considered that whilst the West Rail should be constructed without delay, they sought assurance that relevant works must not commence before completion of the statutory EIA requirements. In response, DS for T confirmed that KCRC would not commence any works on designated projects prior to the issue of the Environmental Permits. PGE/RD supplemented that all the EIA procedures in respect of the main works of the Yuen Long and Tuen Mun sections had been completed. The only outstanding procedure was the public consultation and issue of Environmental Permits in respect of the related EPIW. Pursuant to Mr LEE Wing-tat's request, DS for T agreed to report to FC in writing the decision of the Advisory Council on Environment (ACE) on the EIA report already released for public consultation. Admin

15. Mr TAM Yiu-chung considered the present proposal acceptable but urged the Administration to keep members informed of the progress in EIA procedures.

16. The item was put to vote. 37 members voted for the item, three voted against and none abstained:

Mr Kenneth TING Woo-shouMr David CHU Yu-lin
Mr HO Sai-chuMr Edward HO Sing-tin
Mr Albert HO Chun-yanMr Michael HO Mun-ka
Dr Raymond HO Chung-taiMr LEE Wing-tat
Mr Martin LEE Chu-mingMr Eric LI Ka-cheung
Mr LEE Kai-mingMr Fred LI Wah-ming
Dr LUI Ming-wahMr NG Leung-sing
Mr MA Fung-kwokMr James TO Kun-sun
Mr CHEUNG Man-kwongMr HUI Cheung-ching
Mr CHAN Wing-chan Dr LEONG Che-hung
Mrs Sophie LEUNG LAU Yau-funMr Gary CHENG Kai-nam
Mr SIN Chung-kaiDr Philip WONG Yu-hong
Mr WONG Yung-kanMr Jasper TSANG Yok-sing
Mr YEUNG Yiu-chungMr LAU Kong-wah
Mr Ambrose LAU Hon-chuenMiss CHOY So-yuk
Mr Andrew CHENG Kar-fooMr SZETO Wah
Mr LAW Chi-kwongMr TAM Yiu-chung
Dr TANG Siu-tong
(37 members)

Miss Cyd HO Sau-lan
Mr LEUNG Yiu-chung
Miss Emily LAU Wai-hing
(3 members)

17. The Committee approved the item.

PWSC(1999-2000)43 38TR West Rail (phase 1) - essential public infrastructure works for the Tuen Mun section

18. Miss Emily LAU stated that she would object to the proposal for the reasons given under item PWSC(1999-2000)42.

19. The item was put to vote. 39 members voted for the proposal, three voted against and none abstained:

Mr Kenneth TING Woo-shouMr David CHU Yu-lin
Mr HO Sai-chuMr Edward HO Sing-tin
Mr Albert HO Chun-yanMr Michael HO Mun-ka
Dr Raymond HO Chung-taiMr LEE Wing-tat
Mr Martin LEE Chu-mingMr Eric LI Ka-cheung
Mr LEE Kai-mingMr Fred LI Wah-ming
Dr LUI Ming-wahMr NG Leung-sing
Mr MA Fung-kwokMr James TO Kun-sun
Mr CHEUNG Man-kwongMr Ambrose CHEUNG Wing-sum
Mr HUI Cheung-chingMr CHAN Wing-chan
Dr LEONG Che-hungMrs Sophie LEUNG LAU Yau-fun
Mr Gary CHENG Kai-namMr SIN Chung-kai
Dr Philip WONG Yu-hongMr WONG Yung-kan
Mr Jasper TSANG Yok-singMr Howard YOUNG
Dr YEUNG SumMr YEUNG Yiu-chung
Mr LAU Chin-shekMr LAU Kong-wah
Mr Ambrose LAU Hon-chuenMiss CHOY So-yuk
Mr Andrew CHENG Kar-fooMr SZETO Wah
Mr LAW Chi-kwongMr TAM Yiu-chung
Dr TANG Siu-tong
(39 members)

Miss Cyd HO Sau-lan
Mr LEUNG Yiu-chung
Miss Emily LAU Wai-hing
(3 members)

20. The Committee approved the item.

PWSC(1999-2000)56 173SC Centre for Youth Development

21. On the availability of venues in various districts for holding meetings/seminars, Miss Emily LAU referred to recent discussion at the Panel on Home Affairs and queried whether it was cost-effective to build a costly youth centre while some community halls were under-utilized.

22. In response, the Deputy Secretary for Home Affairs (1) (DSHA(1)) pointed out that the primary purpose of community halls was not for holding conferences/seminars and that the Chai Wan community hall had high utilization rate. DSHA(1) also referred to information provided to the Panel and PWSC and highlighted the multi-purpose nature of the Centre for Youth Development (CYD) which also provided facilities for exhibitions, performance rehearsals, use of information technology (IT) and a youth hostel.

23. Mr Fred LI reiterated the objection of Members of the Democratic Party (DP) to the present proposal. He cautioned that the Administration should not seek to optimize the proposed budget of some $850 million for the CYD while proceeding at the same time to close some youth centres as announced earlier on. Mr CHEUNG Man-kwong shared Mr LI's view.

24. The item was put to vote. 28 members voted for the item, 16 voted against and none abstained:

Mr Kenneth TING Woo-shouMr David CHU Yu-lin
Mr HO Sai-chuMr Edward HO Sing-tin
Dr Raymond HO Chung-taiMr Eric LI Ka-cheung
Mr LEE Kai-mingDr LUI Ming-wah
Mr NG Leung-singMr MA Fung-kwok
Mr Ambrose CHEUNG Wing-sumMr HUI Cheung-ching
Mr CHAN Kwok-keungMr CHAN Wing-chan
Dr LEONG Che-hungMrs Sophie LEUNG LAU Yau-fun
Mr Gary CHENG Kai-namDr Philip WONG Yu-hong
Mr WONG Yung-kanMr Jasper TSANG Yok-sing
Mr Howard YOUNGMr YEUNG Yiu-chung
Mr LAU Kong-wahMrs Miriam LAU Kin-yee
Mr Ambrose LAU Hon-chuenMiss CHOY So-yuk
Mr TAM Yiu-chungDr TANG Siu-tong
(28 members)

Miss Cyd HO Sau-lanMr Albert HO Chun-yan
Mr Michael HO Mun-kaMr LEE Wing-tat
Mr Martin LEE Chu-mingMr Fred LI Wah-ming
Mr James TO Kun-sunMr CHEUNG Man-kwong
Mr LEUNG Yiu-chungMr SIN Chung-kai
Dr YEUNG SumMr LAU Chin-shek
Miss Emily LAU Wai-hingMr Andrew CHENG Kar-foo
Mr SZETO WahMr LAW Chi-kwong
(16 members)

25. The Committee approved the item.

Item No. 3 - FCR(1999-2000)29

Legal Aid Department
‥ Subhead A009YP Implementation of information systems strategy study

26. In response to Mr NG Leung-sing's enquiry about the shortcomings of the existing computer systems and how they would be disposed of, the Director of Legal Aid (DLA) said that the existing systems were first developed some ten years ago and were no longer capable of handling the current workload. Apart from unsatisfactory response speed, there was also a lack of integration among major systems. DLA and the Assistant Director of Information Technology Services (AD/ITS) further confirmed that upon installation of the new computer systems, all the software of the existing systems would be replaced while some of the existing hardware equipment might be retained for use of the new systems. DLA added that it would be very costly to maintain the existing systems which were too outdated to allow any meaningful enhancement.

27. On the reduction in target processing time in processing legal aid applications, DLA advised that at present, the Legal Aid Department (LAD) had pledged to complete processing 80% of its legal aid applications in three months. With electronic calculation of applicants' assets when conducting means tests, auto-generation of documents and more speedy search of records, the processing time could be shortened by two weeks. Regarding Miss Emily LAU's concern about further improvement, DLA assured members that the department would try its best to further reduce the processing time.

28. Noting the anticipated reduction of 16 posts of Law Clerk, Mr Andrew CHENG questioned the viability of computerising the work currently performed by Law Clerks such as interviewing legal aid applicants.

29. In response, DLA explained that the project did not seek to take over Law Clerks' duties by the use of computers. Instead, the integrated information system would facilitate the work of Law Clerks such as enabling them to respond to enquiries more speedily with case information available on-line and to process applications more quickly without having to locate files. The Assistant Principal Legal Aid Counsel supplemented that the future system would also enable data sharing between the Application and Processing Division and the Litigation Division of LAD. DLA thus pointed out that as a result of productivity gains achieved by the proposed system, the number of Law Clerk posts could be reduced eventually.

30. Miss Emily LAU queried the justification for creating a supernumerary Assistant Principal Legal Aid Counsel (DL1) post as the Project Director and asked whether it was a common practice to create a directorate post to monitor computer projects. In response, DLA advised that in April 2000 a full-time post would be required for 15 months to oversee and co-ordinate the implementation of the Information Systems Strategy. Given the importance and scope of the project and the need to be conversant with the operation of the LAD, DLA considered that it was appropriate to pitch the Project Director post at DL1 level. The Deputy Secretary for the Treasury (1) (DS/Tsy(1)) confirmed that in case of major IT strategies, there was a need to designate departmental staff to follow up and co-ordinate project implementation and the ranking of the post would be decided by the departments(s) concerned. She recalled that a directorate post had been created in the Immigration Department to oversee implementation of the IT strategy in the department.

31. Concerning creation of the proposed DL1 post, DS/Tsy(1) assured members that the relevant proposal would be put to the ESC in accordance with the usual procedure in due course. The Administration would need to provide sufficient justification in the future ESC paper so as to enlist members' support. In case the request was rejected by ESC, the Administration would have to re-examine its case. In this connection, Miss Emily LAU requested the Administration to seriously consider well in advance whether a directorate post was necessary for this project. The Administration took note of her view. Admin

32. In response to Mr James TIEN's query on the future savings in staff costs net less the cost of creating the DL1 post, DLA clarified that following implementation of the Information Systems Strategy, 36 posts on the establishment of LAD would be deleted. DS/Tsy(1) added that the one-off cost for creating the DL1 post had been included under the non-recurrent staff costs of $7.5 million while the savings on staff costs were recurrent.

33. Mr LUI Ming-wah sought information on serviceable lifespan and maintenance costs of the proposed system. Whilst expressing general support for computerisation projects, Mr Edward HO referred to the net cumulative savings of $55,786,000 by 2006-07 and questioned whether the estimate was realistic having regard to the serviceable lifespan and maintenance/enhancement costs.

34. In response, AD/ITS confirmed that the proposed systems could support the business needs of LAD in the next five years. Subject to there being no significant increase in LAD's workload or changes in its nature of work, the estimated non-recurrent and recurrent costs as detailed in the discussion paper should be sufficient for the proposed systems.

35. The Committee approved the proposal.

Item No. 4 - FCR(1999-2000)30

‥ New Subhead "Ma On Shan to Tai Wai Rail Link and Kowloon-Canton Railway Extension from Hung Hom to Tsim Sha Tsui"

36. Whilst supporting the provision of mass transit systems to Ma On Shan (MOS), some members opined that instead of terminating the MOS extension at Tai Wai, consideration should be given to linking MOS with urban Kowloon direct. In response, DS for T explained that the Ma On Shan to Tai Wai Rail Link (MOS Rail) was one of the priority railway projects recommended in the 1994 Railway Development Strategy. According to studies conducted by the Administration and KCRC, with the enhancement of its carrying capacity and improved designs at Tai Wai Station, the East Rail should be able to meet Kowloon-bound passenger demand until around 2011 and there was no immediate need for additional rail links to urban Kowloon.

37. Mr Andrew CHENG drew the Administration's attention to MOS residents' strong demand for an additional Kowloon link by highlighting the results of the DP's recent survey which indicated that only 36% of the residents would support the project in the absence of any commitment for a Kowloon extension. Miss CHOY So-yuk also recapitulated the majority view of the Sha Tin Provisional District Board members expressed at their meeting with Legislative Council (LegCo) Members on 24 June 1999 that they would only support the project if there was an extension to Kowloon. Miss Emily LAU further highlighted MOS residents' worry that if they accepted the MOS Rail in its present form, their hope for its further extension to Kowloon might vanish in the face of keen competition from other districts for rail links.

38. In response, DS for T assured members that the priority of the rail connection between Tai Wai and urban Kowloon was being considered in the context of the Second Railway Development Study (RDS2). This extension, as pointed out by the Secretary for Transport recently, stood a very good chance of being implemented as one of the priority items. As the results of the RDS2 would not be ready until the end of 1999, he was not able to give a firm commitment on the rail extension to urban Kowloon. Considering the lead time for public consultation and analysis of the recommended alignments and options, any plan for the Kowloon extension would not be ready before early 2001.

39. DS for T further explained that it was inappropriate to require RDS2 consultants to examine the construction of the MOS Kowloon extension as a branch of the East Kowloon Rail as this would pre-empt the consultants' professional recommendation on other viable options.

40. Mr Andrew CHENG pointed out that Tai Wai Station was already operating at full capacity during peak hours. Overloading of trains at peak hours would be aggravated should Tai Wai become the MOS Rail's interchange station. Mr CHENG questioned the accuracy of the figures provided by KCRC to the Panel on Transport on peak hour load factors between Tai Wai and Kowloon Tong. The figures suggested that the station's average passenger loading between 8:00 a.m. to 9:00 a.m. from January to April 1999 had been below 60% of the passenger carrying capacity.

41. In response, the Director, East Rail Extensions, KCRC stressed that basically, passengers had no difficulty in boarding the train at Tai Wai during the peak hour of 8:00 a.m. to 9:00 a.m. KCRC already had plans to run six additional Kowloon-bound trains from Fo Tan hourly during peak time to relieve the passenger load at Tai Wai. The design capacity of the expanded Tai Wai Station would be able to cope with even further increases in passenger flow resulting from any future MOS extension to Kowloon.

42. On the progress of the detailed EIA Study being conducted by KCRC, the Senior Director, Capital Projects, KCRC (SD/CP of KCRC) reported that the draft EIA report was being studied by the Government. Comments received would be incorporated into the EIA report for submission to EPD no later than mid August 1999 and then to ACE for endorsement. It was estimated that the finalised EIA report would be available at the end of 1999. At Mr TSANG Yok-sing's request for earlier release of the EIA report, SD/CP of KCRC advised that KCRC would have no objection but this was a matter for the EPD to decide. Admin

43. In reply to Mrs Miriam LAU's concern about measures to mitigate noise pollution created by the MOS Rail, especially at its viaduct section, SD/CP of KCRC assured members that under the Multi-Plenum Noise Attenuation approach, noise would be trapped immediately after it left the interface between the wheels and the track. To reduce vibration noise, floating slab tracks would be put in to prevent vibration from moving through the structure. In addition, any noise that might escape would be further contained by noise barriers. Mrs Miriam LAU however pointed out that although the level of train noise could be controlled within the established standards, such noise could still be a nuisance if made continuously.

44. Dr Raymond HO relayed MOS residents' concern about the possible cut in transport services upon the commissioning of the MOS Rail. In response, DS for T stressed that while existing services would be subject to on-going reviews and rationalization to avoid wasteful competition, they would not be cut arbitrarily in favour of rail development. In response to Mrs Miriam LAU, he further confirmed that MOS's existing transport infrastructure would be unable to serve its population in 2011 as it would then have doubled and the MOS Rail was in fact a forward-looking project in preparation for this population growth.

45. Addressing Mr LEUNG Yiu-chung's concern about the handling of objections to the project, DS for T emphasized that all objections would be dealt with in accordance with statutory requirements and approved policies. The relevant Government departments and KCRC would explain to every objector the design, construction and operation of the railway. To minimize nuisance to residents, slight alterations would be made where practicable. However, where land acquisition and compensation issues were involved, they would be handled according to existing policies. Members noted that the procedures for handling objections to railway projects had been fully debated on when members passed the Railways Bill. An independent panel had also been commissioned to monitor the handling of objections and to make reports to the Executive Council.

46. On Mr LEUNG Yiu-chung's request for a summary of the objections and how they were handled, PGE/RD said that the Administration would try to provide the information having regard to confidentiality and other legal concerns. He also reported that the 67 objections were mainly concerned with the environmental impacts, the possibility to build the railway underground instead of the viaduct design in its MOS segment and any further extension to Kowloon. The Administration also received 43 submissions in support of the MOS Rail. Admin

47. Elaborating on the minimum Debt Service Coverage ratio of 1.25 referred to in paragraph 9 of the discussion paper, the Director, Finance, KCRC (D/F of KCRC) explained that the ratio had been determined on the advice of KCRC's financial consultants. According to this ratio, KCRC would have to maintain a cash flow amounting to more than 25% of its debts and interest payable every year in future to ensure that it would be able to repay its debts. He confirmed that this ratio was comparable to that of Mass Transit Railway Corporation and other similar organizations.

48. Members were concerned about the projection of MOS Rail's internal rate of return (IRR) which was based on the projection of the daily passenger traffic at 290 000. Mr Andrew CHENG pointed out that this projection was too optimistic as it would amount to nearly 70% of MOS residents. According to DP's earlier survey, only 32.9% of MOS residents had indicated that they would ride on MOS Rail if it terminated at Tai Wai. Mr CHENG was concerned that if the estimated IRR could not be attained, there would be pressure for increases in train fares.

49. DS for T clarified that the above passenger traffic projection referred to journeys taken instead of the number of residents using the service. D/F of KCRC further explained that the estimated IRR was arrived at after comparing the revenue stream over a 30-year period of the project's operational life with the cost estimates. While there might be discrepancy in the passenger traffic projection and hence the revenue, the cost estimates should be quite accurate in the light of East Rail's operational experience. Moreover, the MOS Rail should be able to offer highly competitive service having regard to significant reduction in travelling time.

50. At Dr Raymond HO's request for separate presentation of the IRRs of the MOS Rail and the Kowloon-Canton Railway Extension from Hung Hom to Tsim Sha Tsui (the Tsim Sha Tsui extension), and for details on the basis for calculating the IRR of the MOS Rail, D/F of KCRC explained that the operations of the two rail projects were inter-dependent. For example, without the support of the Tsim Sha Tsui extension, Kowloon Tong would not be able to cope with the interchange loading from the MOS Rail. Since their operations and incomes were inter-related, their IRRs could not be calculated and presented separately.

51. On the financing aspects, D/F of KCRC advised that both the local and international financial markets would be tapped to benefit from the longer maturity periods of foreign note programmes. In addition to launching a $10 billion Hong Kong Monetary Authority note issuance programme, a US$1.5 billion medium term note programme would also be introduced. In addition, KCRC would also consider raising capital through export credit and local bank/consortium loans. He also pointed out that the 10% interest rate, being one for a long-term Hong Kong dollar loan, was reasonable. In reply to Mr Edward HO, DS for T further confirmed that any property development profits in excess of the estimated profits of $4.3 billion would be distributed to the Government in full by means of extraordinary dividends, unless they were required to finance other railway projects approved by the Administration.

52. Mr Eric LI urged that KCRC should service its capital in the most cost-effective manner so that the proposed Government equity injection into it would be kept within the limits of $8.5 billion. He enquired about the feasibility of a lower Government equity in case of a lower tender outturn price. Noting that a substantial sum of up to $50 billion had been set aside for railway development, Mr LI further enquired about the proportion originally earmarked for construction of the MOS Rail and the Tsim Sha Tsui extension. In his view, the said information should be provided in similar proposals in future and a progress report on the use of the $50 billion should be provided to the relevant Panel regularly to facilitate monitoring by members. The Administration took note of his view. Admin

53. Where Government's equity injection was concerned, the Deputy Secretary for the Treasury (2) (DS/Tsy(2)) emphasized it was Government's established principle to minimize its equity injection and that railway corporations should operate according to prudent commercial principles and maximize their source of funding from commercial borrowings. As such, efforts had already been made to optimize the debt equity structure of the financing of this project. Having regard to various considerations including the maximum total debt to total capital ratio of 32%, the minimum Debt Service Coverage ratio of 1.25, KCRC's current and planned commitments, its borrowing programme, the equity injection into the West Rail project, etc., the Government considered its equity injection of $8.5 billion towards the total project cost of $16.3 billion an optimal injection. The Secretary for the Treasury (S for Tsy) supplemented that in preparing the interim budget estimates for 1998-99, the sum reserved for equity injection into KCRC was substantially greater than the $8.5 billion presently proposed for two reasons. Firstly, the Government had not taken into account at that time the profits derived from property development. Secondly, KCRC was able to control the costs of the West Rail successfully, thus reducing the financing requirement.

54. On behalf of Members of the Democratic Alliance for Betterment of Hong Kong (DAB), Mr TSANG Yok-sing supported the early construction of the MOS Rail, but pointed out that it should extend to urban Kowloon. In the absence of information on the results of the relevant EIA Study and the basis for the project's IRR, he requested the Administration to defer the paper pending availability of such information and a firm commitment from KCRC to extend the MOS Rail to urban Kowloon as its second phase.

55. At Mr LAU Kong-wah's request for the financial report of the project, SD/CP of KCRC and DS/Tsy(2) confirmed that they would have no objection to releasing details of the financial report. Mr LAU stated that he wished to see the report in full and not just excerpts. He said that he also considered it inappropriate to decide on the funding proposal before the relevant financial report, EIA report and the results of RDS2 were available. He said that Members of DAB would vote against the proposal if the Government would not withdraw it. Admin

56. Mr Andrew CHENG reiterated the position of Members of DP as stated at the relevant Transport Panel meeting that they found the proposal unacceptable if the MOS Rail would not extend to Kowloon.

57. Miss Emily LAU stated her full support for the development of rail systems for better environmental protection but urged the Administration to provide an undertaking in principle to extend the MOS Rail to Kowloon in consideration of residents' aspirations. She also considered it inappropriate to proceed with the project before consultation on the relevant EIA report was conducted and objections handled.

58. DS for T emphasized in response that the present funding request was not for immediate implementation of the project per se but for enabling the Government to make an equity injection into KCRC to send the correct signal to the financial market of the Government's continued support of KCRC so as to enable it to raise the proposed debt cost-effectively. He assured members that the project would not proceed before the recommended mitigation measures identified in the approved EIA report were implemented and before the objections were handled. Moreover, authorization from the Executive Council would also be required.

59. Pointing out that there was no immediate need for the funding and that deferring decision on the proposal would not affect the progress of the MOS Rail, Miss CHOY So-yuk urged the Administration to withdraw the proposal until residents' concerns about noise pollution were addressed and there were concrete plans for the Kowloon extension.

60. Mr LEUNG Yiu-chung objected to the proposal for fear that if it was approved, the Administration would not handle the objections seriously but would implement the project without due regard for the residents' views. He said that similar experience had been encountered in the case of the West Rail.

61. On behalf of Members of Liberal Party (LP), Mrs Miriam LAU expressed support for the construction of the MOS Rail. Whilst agreeing that the MOS Rail should be further extended to Kowloon in due course, Members of LP considered the construction of the rail link between MOS and Tai Wai as the first phase acceptable. However, as the first part of the equity injection would not take place until early in the financial year 2000-01, Mrs LAU questioned the immediate need to approve the proposal at this meeting. In response, D/F of KCRC explained that KCRC was currently making financing arrangements for the West Rail, and it was necessary to confirm the financing details of other known large-scale projects to eliminate any uncertainty over the Corporation's financial position and to strengthen lenders' confidence in providing loans to it at competitive rates.

62. Dr Raymond HO stated his support for approval of the proposal at this meeting, pointing out that there was little room for altering the alignment of this first phase. As the population in MOS would have doubled in 2011 and the physical condition of MOS was not conducive to further development of bus transport, Dr HO considered that there was a genuine need for the MOS Rail. Moreover, early approval for an equity injection into KCRC would strengthen its ability to raise finance at a corporate level.

63. From the commercial operation point of view, Mr NG Leung-sing supported early approval of the proposal so that financing arrangement could be made early to take advantage of the currently lower interest rates for borrowings.

64. Mr Eric LI also stated his support for the funding proposal notwithstanding his concern about the cost-effectiveness of the project's financing arrangement.

65. DS for T said that while there was support in principle for the construction of the MOS Rail, he also noted some members' reservation on the immediate need for approving the funding and their suggestion to defer the proposal for further consideration. Having considered members' concern about the availability of all necessary information, including completion of the EIA Study and implementation of the necessary environmental mitigation measures, as well as the urgency or otherwise of FC's approval of the proposed equity injection, DS for T agreed that consideration of the present proposal could be deferred.

66. DS/Tsy(1) withdrew the proposal.

Item No. 5 - FCR(1999-2000)31

‥ Subhead 110 Honoraria for members of committees

67. The following members declared interest as serving members of Provisional District Boards (PDB):

Mr CHAN Kam-lam
Mr SIN Chung-kai
Mr LAU Kong-wah
Mr Andrew CHENG Kar-foo

68. In response to Mr CHAN Wing-chan's enquiry on the level of the proposed accountable allowance payable to members of District Councils (DCs), the Deputy Secretary for Home Affairs (2) (DSHA(2)) confirmed that the limit of $10,000 per month was the maximum amount payable irrespective of the number of offices rented or staff employed by the DC member concerned. He further advised that when the office rental allowance (ORA) was replaced by the proposed accountable allowance, S for Tsy would continue to have the delegated authority to approve revisions of the honorarium and ORA as under the present arrangement.

69. Mr Fred LI considered that as the proposed allowance was accountable, it might be more appropriate to call it "reimbursement for office and staff expenses", similar to the reimbursement of similar expenses to LegCo Members. He also sought clarification on the basis of pitching the maximum level of allowance at $10,000, in particular the expenses expected to be spent on employing staff and the level of staffing support to be provided to DC members.

70. In response, DSHA(2) pointed out that in view of the inadequacy of the existing ORA of $4,990, the Administration had proposed to double the amount of the allowance. He acknowledged that there was no formula for the proposed monthly allowance of $10,000 which would mainly serve to support the operating expenses of DC members. At present, about 68% of PDB members were employing assistants on a full-time or part-time basis and 75% of PDB members had set up offices in their districts. According to information available to the Administration, the monthly salary of a full-time assistant to a PDB member was in the range of $5,000 to $10,000 while that for a part-time assistant was from $1,000 to $5,000.

71. Miss CHOY So-yuk reported that the present proposal had been briefly discussed at a meeting of the Panel on Home Affairs. She said that although the proposed increase might not be adequate, she had no alternative but to support the proposal as otherwise, DC members would not be eligible for any increase in allowance. Miss CHOY urged the Government to consider allocating an office to every DC member so that DC members could use the bulk of their accountable allowance to employ assistants.

72. Noting that the monthly honorarium of $18,870 currently payable to PDB members was also meant to meet earnings forgone due to the time spent on work of PDBs, Mr TSANG Yok-sing was concerned about the adequacy of the honorarium in encouraging people of suitable calibre to quit their jobs and serve as full-time DC members. He also questioned the amount of time DC members were expected to spend on DC-related work.

73. In response, DSHA(2) stressed that DC membership was essentially a form of community service which was open to all interested persons and that the honorarium mainly served to help meet earnings forgone. For members' information, the Deputy Director of Home Affairs (DD/HA) advised that of the 469 serving PDB members, about 20% were full-time members, some of whom were retirees, and about 50% also used part of their monthly honorarium to employ assistants.

74. Miss Emily LAU pointed out that as meetings were usually held during office hours, this arrangement would pose further difficulty to persons in employment and discourage them from serving as full-time DC members. In response, DD/HA confirmed that under the existing Standing Orders, each PDB/DC would determine its own meeting hours. The secretariat of the relevant PDB/DC would provide the necessary support to service meetings held during or outside normal office hours. The Administration also assured members that where PDB/DC members decided to hold meetings outside normal office hours, the Administration would provide all the necessary secretariat support.

75. The Committee approved the proposal.

Item No. 6 - FCR(1999-2000)32

‥ Subhead 366 Remuneration and reimbursements for Members of the Legislative Council
‥ Subhead 872 Setting up and winding up expenses for Members of the Legislative Council

76. The Chairman declared that all members had the same pecuniary interest in the matter.

77. On the proposal to merge the reimbursement for "office and staff expenses" with that for "district office expenses" making available a total of $103,360 per month to each LegCo Member as "accountable expenses reimbursement for office operation", Miss Emily LAU sought clarification on whether the Administration considered it no longer justified to put a cap on the rental component of the expenses and if so, a LegCo Member would be at liberty to spend a sizable portion of the $103,360 per month on renting expensive office premises.

78. In reply, the Deputy Director of Administration (DD of Admin) confirmed that within the overall limit of $103,360, there would be no cap on rental expenses. The main reason for merging the two types of expenses reimbursement was to provide maximum flexibility to LegCo Members in the use of resources and henceforth, they would be able to decide the amount to be spent on office premises or on staff according to their own needs.

79. As Chairman of the Subcommittee on Review of Operating Expenses for Members of the Legislative Council, Miss Emily LAU said that LegCo Members welcomed the proposed "information technology (IT) and communication equipment expenses reimbursement" of up to $100,000. However, as she understood, many Members had not yet fully utilized the reimbursement for setting-up expenses (now proposed to be merged to make up a total of $150,000). In order that the LegCo Secretariat could draw up guidelines for Members to claim reimbursements, Miss LAU sought confirmation on whether a Member who wished to draw reimbursement under the proposed "IT and communication equipment expenses reimbursement" must first exhaust the remaining setting-up expenses.

80. In reply, DD of Admin confirmed that as the setting-up expenses were meant for office-related purposes such as renovation and procurement/ upgrading of equipment, including IT and communication equipment, Members were required to first fully utilize these expenses before drawing reimbursement for "IT and communication equipment expenses." Under these circumstances, even if the $150,000 setting-up allowance had been fully utilized, with part of it being spent on the purchase of IT equipment, Members could not claim reimbursements for setting-up purposes under the "IT and communication equipment expenses".

81. The Committee approved the proposal.

82. The Committee was adjourned at 5:00 pm.

Legislative Council Secretariat
October 1999