LC Paper No. FC156/98-99
(These minutes have been
seen by the Administration)

Ref : CB1/F/1/2

Finance Committee of the Legislative Council

Minutes of the 15th meeting
held at the Legislative Council Chamber
on Friday, 12 March 1999, at 2:30 pm

Members present :

Hon Ronald ARCULLI, JP (Chairman)
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, JP
Hon Cyd HO Sau-lan
Hon Edward HO Sing-tin, JP
Hon Albert HO Chun-yan
Hon Michael HO Mun-ka
Dr Hon Raymond HO Chung-tai, JP
Hon LEE Wing-tat
Hon LEE Cheuk-yan
Hon Martin LEE Chu-ming, SC, JP
Hon Eric LI Ka-cheung, JP
Hon LEE Kai-ming, JP
Hon Fred LI Wah-ming
Hon NG Leung-sing
Hon Margaret NG
Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon MA Fung-kwok
Hon James TO Kun-sun
Hon CHEUNG Man-kwong
Hon Ambrose CHEUNG Wing-sum, JP
Hon HUI Cheung-ching
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
Hon SIN Chung-kai
Hon Andrew WONG Wang-fat, JP
Hon WONG Yung-kan
Hon Jasper TSANG Yok-sing, JP
Hon Howard YOUNG, JP
Dr Hon YEUNG Sum
Hon LAU Chin-shek, JP
Hon LAU Kong-wah
Hon LAU Wong-fat, GBS, JP
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 SZETO Wah
Hon Timothy FOK Tsun-ting, JP
Hon LAW Chi-kwong, JP
Hon TAM Yiu-chung, JP
Hon FUNG Chi-kin
Dr Hon TANG Siu-tong, JP

Members absent :

Dr Hon David LI Kwok-po, JP
Dr Hon LUI Ming-wah, JP
Prof Hon NG Ching-fai
Hon Christine LOH
Dr Hon Philip WONG Yu-hong
Hon YEUNG Yiu-chung

Public officers attending :

Miss Denise YUE, JP

Secretary for the Treasury

Mrs Carrie LAM, JP

Deputy Secretary for the Treasury (1)

Mr K K LAM

Principal Executive Officer (General), Finance Bureau

Ms Alice TAI

Judiciary Administrator

Mr Roger LAW

Chief Judicial Clerk

Mr Joseph Y T LAI

Deputy Secretary for Education and Manpower

Mrs Margaret CHAN

Principal Assistant Secretary for Education and Manpower

Mr M Y CHENG

Assistant Director of Education

Ms Jennifer CHAN

Principal Assistant Secretary for Health and Welfare

Mr Andy LEE

Deputy Director (Finance), Hospital Authority

Mr C F REDSTON

Principal Assistant Secretary for the Civil Service

Mr C K WONG

Assistant Director of Accounting Services

Miss Emma LAU, JP

Deputy Secretary for the Treasury (3)

Miss Annie TAM

Deputy Director of Government Supplies

Mr Philip CHAN Kwan-yee

Principal Assistant Secretary for Security

Mr P E HALLIDAY

Assistant Commissioner of Police

Mr George LEUNG

Chief Systems Manager of Hong Kong Police Force

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

Item No. 1 - FCR(98-99)77

RECOMMENDATIONS OF THE ESTABLISHMENT SUBCOMMITTEE MADE ON 10 AND 11 FEBRUARY 1999

The Committee approved the proposal.

Item No. 2 - FCR(98-99)78

RECOMMENDATIONS OF THE PUBLIC WORKS SUBCOMMITTEE MADE ON 3 AND 24 FEBRUARY 1999

2 The Committee approved the proposal.

Item No. 3 - FCR(98-99)79

HEAD 40 - EDUCATION DEPARTMENT
‥ Subhead 300 Code of Aid for primary schools ‥ Subhead 305 Code of Aid for secondary schools
‥ Subhead 320 Code of Aid for special schools

3 Members noted that subsequent to the withdrawal of the item at the Finance Committee (FC) meeting on 16 October 1998, the Administration had submitted the proposal for further discussion at the Education Panel. In this connection, Mr CHEUNG Man-kwong stated that although the proposed rates of the special recurrent Furniture and Equipment (F&E) Grant were not entirely satisfactory, Members of the Democratic Party would, on balance, support the present proposal on the understanding that the Administration had undertaken to review the needs of schools with a view to further improving the funding arrangements for F&E and that the proposed rates would only be in force for a limited period of time.

4 In response to some members' enquiries about the permissible use of the proposed recurrent F&E Grant, the Assistant Director of Education (AD/E) confirmed that the proposed Grant was to be disbursed for the purchase of new F&E items or replacement of existing items in addition to the recurrent and non-recurrent F&E subsidies presently available to schools. Regarding the use of the accumulated unspent balance of the Grant, the Deputy Secretary for Education and Manpower (DS/EM) confirmed that the proposed Grant, including its unspent balance in future, could only be used for the purchase of F&E items for the school concerned. AD/E added that the Education Department (ED) had issued to schools a list of F&E items for their reference.

5 On whether the rates of the special F&E Grant would be adjusted downwards at times of deflation, the Deputy Secretary for the Treasury (1) (DS/Tsy(1)) advised that the proposed adjustment mechanism, if approved by members, would provide for downward adjustment in the rates payable if there was a downward movement of the Consumer Price Index (A) (CPI(A)).

6 On Miss Emily LAU's concern about the cost to furnish and equip a new secondary school, which was reported to be twice as high as that for a new primary school, AD/E and DS/EM explained as follows:

1. apart from a greater number of subjects being taught at a secondary school, the nature of secondary school subjects such as integrated science and technical subjects would require more costly facilities and equipment; and
   
   
2. about $9 million and $4 million was required to meet the full F&E cost of a new 30-classroom secondary school and a new 30-classroom primary school respectively.

7 Referring to the findings of the Subcommittee on Facilities in Special Schools for Physically Handicapped Children set up under the Education Panel, Mr Andrew WONG considered the proposed grant of $3,000 per class per year for special schools grossly inadequate to meet the needs of these schools. In response, AD/E and DS/EM reiterated that the proposed F&E Grant would be in addition to the existing recurrent subsidy available to special schools ranging from about $800 to $14,000 per class per year, depending on the nature of the special schools concerned. The Hong Kong Special Schools Council had also accepted the proposed rate of Grant. DS/EM further pointed out that special schools, like all other aided schools, were at liberty to apply for a non-recurrent subsidy from the ED to meet special one-off F&E needs. In the past few years, a special school obtained, on average, a non-recurrent subsidy of about $5,000 per class each year, as compared to about $6,000 per class each year for secondary schools.

8 In reply to Mr Andrew WONG's enquiry, AD/E informed members that on average, a special school had ten classes each comprising about ten students. Mr WONG nevertheless pointed out that many of these students were wheelchair-bound and suffering from multiple disabilities. To provide for greater funding flexibility and to cater for the genuine needs of all aided schools, in particular special schools, he urged the Administration to conduct a comprehensive review of the Codes of Aid as early as practicable.

9 Mr Eric LI declared his interest as the honorary auditor of the Hong Kong Special Schools Council and said that he would abstain from voting on this item. He nevertheless shared Mr Andrew WONG's concern and call for an early review of the Codes of Aid.

10 The proposal was put to vote and approved by the Committee.

Item No. 4 - FCR(98-99)80

HEAD 177 - SUBVENTIONS: NON-DEPARTMENTAL PUBLIC BODIES ‥ Subhead 514 Hospital Authority

11 Dr LEONG Che-hung, Mr Michael HO and Mrs Sophie LEUNG declared their interest as Board Members of the Hospital Authority (HA).

12 Referring to Mr Michael HO's request earlier on for further information on fee waivers outlined in paragraph 6 of the discussion paper, the Deputy Director (Finance), Hospital Authority (DD(F)/HA) advised that in the first nine months of 1998-99, fees totalling $208 million had been waived by HA on 1.18 million Hong Kong permanent residents while the fees waived on some 550,000 recipients of Comprehensive Social Security Assistance was about $129 million. DD(F)/HA undertook to confirm the necessary information, including the HA's income trend over the years, in writing after the meeting.

Admin.

13 In response to Mr Fred LI's request for a further breakdown on the number of in-patients and out-patients whose fees were waived, fully or partially, DD(F)/HA said that the majority of the waiver cases were full waivers and he undertook to provide the supplementary information in writing. Referring to paragraph 6(b) of the paper, Mr LEE Cheuk-yan sought further information on the number of patients and the amount of fees waived.

Admin.

14 In reply, the Principal Assistant Secretary for Health and Welfare (PAS/H&W) advised that the actual and projected amount of fees waived in 1998-99 was $28 million higher than that of 1997-98, of which $11 million was attributed to in-patients and $17 million, to out-patients. The total number of patients who had their fees waived in 1997-98 and in the first nine months of 1998-99 was about 1.3 million and 1.1 million respectively.

15 Miss Emily LAU commented that the Administration should include key figures in a systematic manner in the discussion paper instead of in a piecemeal manner and only at the request of members. In this connection, the Chairman advised that the Administration should consolidate all the necessary information and details in a single paper for members' reference.	Admin.

16 Mr FUNG Chi-kin pointed out that under paragraph 5(a) of the paper, the shortfall in the revised estimated income for 1998-99 was only $115 million whereas in paragraph 6(b), the estimated total income forgone as a result of fee waivers in 1998-99 was $299 million. He considered the differential difficult to reconcile. The Chairman shared members' view that the relationship between some of the figures given in the paper were not apparent and he urged the Administration to account for how the $59 million being sought was arrived at in its supplementary paper. PAS/H&W explained that the shortfall of $115 million was due to the moratorium of fee revision in 1998-99 accounting for an estimated reduction in income of about $87 million and a lower than expected increase in medical income by about $28 million as a result of an increase in the amount of fees waived.

17 Acknowledging members' questions and concerns on fee waivers, DS/Tsy(1) assured members that the Finance Bureau, in conjunction with the Health and Welfare Bureau, would examine the issue with the HA. The Administration was also concerned about the unprecedented higher than expected amount of fees waived, despite a Government subsidy in hospital service as high as some 98%. DS/Tsy(1) undertook to report to the relevant LegCo Panel the outcome of the Administration's analysis as soon as practicable.

Admin.

18 On the HA's operational cost for 1998-99, Mr TSANG Yok-sing and Miss Emily LAU considered that the revised estimate should be lower than the original estimate of $26,022 million as a result of the fall in general prices and if so, whether the surplus amount could be used to offset the reduction in income for which supplementary provision was being sought.

19 In response, DS/Tsy(1) advised that under the existing funding arrangement agreed between the Government and HA and approved by FC, the Government provided an annual recurrent grant to HA which represented the HA's net operational cost (i.e. total operational cost less projected income, the bulk of which came from patients fees and charges.). Any excess over the projected income would reduce the subvention required whereas any shortfall in income as in the present case would be met by the Government by way of supplementary provision. DD(F)/HA added that the annual recurrent operational budget was in the form of a one-line vote subject to a cash limit which could only be increased to meet increases in personal emolument in line with civil service pay trend adjustment during the course of a financial year.

20 Regarding any unspent balance of the recurrent grant which might result from lower operating costs, DS/Tsy(1) explained that as agreed by the Government and HA and noted by FC, any unspent balance up to 5% of the HA's operating expenditure could be retained by HA in a reserve fund for uses in public hospital services as determined by the Board of the HA. DS/Tsy(1) confirmed that notwithstanding any unspent balance on the part of HA, the Government was required under the existing arrangement to meet the HA's shortfall in projected income. Commenting on the background to this arrangement, Mrs Sophie LEUNG pointed out that the major reason why the Government accepted in full the implications of HA's reduction in income was that the level of patient fees and charges was determined by the Government. On the revised estimated increase of $56 million in HA's other income for 1998-99, DD(F)/HA confirmed that this was mainly due to higher interest income derived from bank deposits.

21 Noting that staff salaries and benefits accounted for about 82% of the total operational cost of HA, Miss Emily LAU expressed her concern about the high proportion of staff cost in HA's overall expenditure. In response, DD(F)/HA said that the delivery of medical services relied on medical, nursing and allied health staff at the hospitals. The nature of the services was labour intensive. Therefore, the majority of the operational cost was on personal emolument. PAS/H&W further pointed out that unlike civil service pension and other benefits which were accounted for under separate Heads of Expenditure, the HA's expenditure on provident fund contributions and other benefits was all included under its operational cost. In this connection, DS/Tsy(1) confirmed that the proportion of HA's operating budget spent on staff cost was not particularly on the high side when compared to that of other subvented bodies although its level of salaries and related benefits, which was pitched at a level comparable to that of the civil service, was higher than that of most other subvented bodies. DS/Tsy(1) nevertheless pointed out that pursuant to the Director of Audit's recommendations, the staff costs of the HA had been trimmed down gradually.

22 As regards Miss Emily LAU's concern about the HA's Enhanced Productivity Programme (EPP), DS/Tsy(1) confirmed that out of the achieved savings of some $818 million in public funds, $250 million was attributable to savings from the medical and health sector, in which the HA was a major provider. She said that the Administration would be ready to account for the EPP of the HA at the forthcoming Special FC meetings. In this connection, Dr LEONG Che-hung informed members that the EPP of the HA had been discussed twice at the Health Services Panel and members could refer to the relevant papers for information.

23 On Dr LEONG Che-hung's and Mrs Sophie LEUNG's concerns about the extent of and reasons for non-recovery of fees, DD(F)/HA and PAS/H&W made the following points:

1. the income forgone due to non-recovery of fees was about $10 million a year, which was considerably lower than the income forgone as a result of fee waivers;
   
   
2. the amount of fees which had to be written-off in the first nine months of 1998-99 and the projected amount for the last three months of 1998-99 only accounted for 2% of HA's total medical fees collected in the corresponding period; and
   
   
3. the trend of bad debts was haphazard which stood at $4 million in 1993-94, rising to $20 million in 1997-98 but dropping to $9 million in the first nine months of 1998-99.

24 On some members' suggestion that the present proposal should be deferred pending further information to be provided by the Administration, Miss Margaret NG was of the view that if the information to be sought was material to the decision, then, the proposal should be deferred. Otherwise, she cautioned that the FC should strike a balance between seeking the complete information and making a timely decision on a funding request.

25 In reply to the Chairman, DS/Tsy(1) confirmed that the information requested by members at the meeting was important but not material to the funding proposal which had been put up strictly in accordance with the existing funding arrangement as agreed with the HA and approved by FC. She assured members that the income and expenditure of the HA were accounted for in full in its annual audited accounts. Noting that the next FC meeting to examine funding proposals would not be held until April 1999, the Secretary for the Treasury (S for Tsy) highlighted the need to deal with the funding request within the current financial year ending on 31 March 1999. She undertook to provide a consolidated paper as requested by the Chairman in about two weeks' time and to recapitulate in the paper the current funding arrangements agreed between the Government and HA.

Admin.

26 The item was put to vote. 37 members voted for the proposal, 3 members voted against and none abstained:

For:

Mr CHAN Kam-lam Mr Kenneth TING Woo-shou

Mr James TIEN Pei-chun Mr Edward HO Sing-tin

Mr Albert HO Chun-yan Mr Michael HO Mun-ka

Dr Raymond HO Chung-tai Mr LEE Wing-tat

Mr Martin LEE Chu-ming Mr Eric LI Ka-cheung

Mr LEE Kai-ming Mr Fred LI Wah-ming

Mr NG Leung-sing Miss Margaret NG

Mr MA Fung-kwok Mr James TO Kun-sun

Mr CHEUNG Man-kwong Mr Ambrose CHEUNG Wing-sum

Mr HUI Cheung-ching Mr CHAN Kwok-keung

Miss CHAN Yuen-han Mr Bernard CHAN

Mr CHAN Wing-chan Dr LEONG Che-hung

Mr Gary CHENG Kai-nam Mr SIN Chung-kai

Mr Jasper TSANG Yok-sing Dr YEUNG Sum

Mr LAU Wong-fat Mrs Miriam LAU Kin-yee

Mr Ambrose LAU Hon-chuen Mr Andrew CHENG Kar-foo

Mr SZETO Wah Mr LAW Chi-kwong

Mr TAM Yiu-chung Mr FUNG Chi-kin

Dr TANG Siu-tong

(37 members)

Against:

Miss Cyd HO Sau-lan

Mr LEE Cheuk-yan

Miss Emily LAU Wai-hing

(3 members)

27 The Committee approved the proposal.

Item No. 5 - FCR(98-99)81

HEAD 46 - GENERAL EXPENSES OF THE CIVIL SERVICE
‥ Subhead 014 Home purchase allowance
‥ Subhead 033 Home Financing Scheme
HEAD 190 - UNIVERSITY GRANTS COMMITTEE
‥ Subhead 529 Home Financing Scheme

28 Mr LAW Chi-kwong and Dr YEUNG Sum declared their interest as staff members of the University of Hong Kong currently in receipt of Home Financing Allowance (HFA).

29 Referring to the existing annual adjustment and capping mechanism of the HFA and Home Purchase Allowance (HPA), Mr LEE Wing-tat queried why the HFA and HPA would be adjusted downwards by 13.7% only, instead of by 29% as revealed in the relevant average quarterly Property Price Index. Mr Edward HO also shared similar concerns. Mr LEE further commented that given the present fall in property prices, an officer drawing a reduced allowance might be able to acquire a property which was superior in quality than at times of high property prices notwithstanding a higher level of housing allowance.

30 Addressing his concerns, the Principal Assistant Secretary for the Civil Service (PAS/CS) and DS/Tsy(1) elaborated on the proposed adjustment as follows :

1. as a result of the existing mechanism to cap the annual increase in the rates of HFA and HPA by the increase in CPI(A) in the corresponding period, the accumulated increase in HFA since 1994 was only 15.1% as compared to an accumulated increase of 67% in Property Price Indices during the same period;
   
   
2. as the past successive rises in property prices had not all led to a similar increase in the rates of allowances due to the capping mechanism, the Administration considered it too drastic on this occasion to reduce the rates of HFA and HPA by the percentage decrease in property prices; and
   
   
3. the average quarterly Property Price Index for the 12-month period ending 31 December 1998 was almost the same as that in 1994.

31 On the implications of a rise in property prices against negative inflation on the adjustments in the rates of HFA and HPA, DS/Tsy(1) acknowledged that the present arrangements as approved by FC had not catered for such a scenario and the Administration might need to consult FC in due course on the appropriate course of action.

32 In reply to Mr Howard YOUNG on whether the average quarterly Property Price Index could realistically reflect the prices of properties purchased by civil servants, PAS/CS advised that the Index could by and large reflect the buying interest of civil servants using the HFA/HPA.

33 In this connection, Mr LEE Wing-tat stated his view that capping the increase in the rates of allowances by the increase in CPI(A) was not unfair to civil servants as HFA/HPA was primarily a form of fringe benefit which was not commonly available in the private sector. He opined that the Administration had to strike a reasonable balance between providing reasonable staff benefits and spending public funds prudently. DS/Tsy(1) acknowledged Mr LEE's concern about the prudent use of public funds and reiterated that in launching the Home Financing Scheme (HFS) in October 1990 and extending it to the University Grants Committee (UGC)-funded institutions in October 1998, it was the Administration's objective to encourage home ownership with a view to reducing expenditure on housing benefits in the longer run. PAS/CS supplemented that since the introduction of the HFS, about 2 650 officers previously drawing the private tenancy allowance (PTA) had transferred to the HFS and about 1 000 officers residing in non-departmental quarters (NDQ) had joined the HFS. Given that both the PTA and NDQ were available throughout the period of service of the officers concerned, the HFS on the other hand could achieve savings for the Government because the payment of allowance was limited to 120 months.

34 On the basis for adjusting the rates of HFA/HPA, Mr James TIEN suggested that apart from making reference to the fall or rise in property prices and the CPI(A), consideration should also be given to the officer's pay increases. He remarked that as a result of his annual pay increases and the fall in property prices, an officer in receipt of a reduced amount of allowance today might still be able to purchase a property which was unaffordable a few years ago. He urged the Administration to take into account the "affordability" factor in determining the rates of allowance.

35 In response, DS/Tsy(1) informed members that the Civil Service Bureau (CSB) was conducting a comprehensive review on the terms and conditions for civil service appointments and pending completion of the review, the recruitment into permanent and pensionable posts would be frozen. DS/Tsy(1) however stressed that the HFS had been in place since 1990 and it was only fair to apply the same rules and principles in determining the level of benefits under the Scheme to serving and eligible officers who wished to join the Scheme now. She nevertheless assured members that the Administration would take note of Mr TIEN's suggestion for further consideration. S for Tsy also confirmed that all forms of allowances, including housing allowances, were currently under review by the CSB.

36 Mr LEE Cheuk-yan observed that despite a reduction in the rates of allowances, the take-up rate under the HFS might still be high if there was a higher than expected fall in property prices. He enquired whether this had been a factor leading to the proposed 13.7% reduction. In reply, DS/Tsy(1) said that this had not been a major consideration but she highlighted the importance of pitching the HFA/HPA rates at a level which was attractive enough for officers to join the Scheme. Referring to the HFS implemented in UGC-funded institutions in October 1998, she reported that despite a three-year option period, about 25% of eligible staff members had already joined the HFS, thus resulting in savings for the Government in the longer term.

37 In reply to Ms Cyd HO's enquiry about the staff quarters currently available at the Hong Kong University of Science and Technology following the implementation of the HFS, DS/Tsy(1) recapitulated that the HFS extended to the eight UGC-funded institutions upon approval of FC in October 1998 was on the same terms as those under the HFS for civil servants, except that the Government would not provide funds for downpayment loans. Pursuant to the agreement with the institutions, the Administration would be entitled to receive a percentage of the notional rental income derived from leasing out the staff quarters vacated by staff members after joining the HFS.

38 On the interest rates on Government Housing Loans, the Assistant Director of Accounting Services advised that the interest rate, which would be set at 2% below the average best lending rate of the note-issuing banks, would be reviewed monthly and adjusted when the updated rate differed from the prevailing rate by 1% point or more, or when the prevailing rate had remained stationary for six months. He also confirmed that loan recipients would be notified in writing upon revision in interest rates.

39 The Committee approved the proposal.

Item No. 6 - FCR(98-99)82

DELEGATION OF FINANCIAL POWERS

40 In reply to Mr Edward HO on the definition of "surplus stores", the Deputy Director of Government Supplies (DDGS) explained that they usually referred to obsolete but serviceable materials used by a department for a number of years. Before disposing of them, the Administration would approach all other departments and bureaux to confirm if they had need for them.

41 Some members were concerned that the proposed authorization under section 39(1) of the Public Finance Ordinance of the disposal of surplus serviceable stores by the Financial Secretary without financial limits under specified conditions might lead to reduced control over Government stores. They also questioned whether a large stock of surplus items existed. In response, S for Tsy confirmed that requests for supplying a large stock of surplus serviceable items to interested organisations without charge were rare. The last time such a request was received was for supplying the training stores and equipment previously used by the Junior Corps of the Royal Hong Kong Regiment (the Volunteers) disbanded in 1995 to the Hong Kong Adventure Corps Limited to run a youth development programme. She added that the present stores which required disposal were basically some 700 outmoded computers made redundant by the upgrading of computer facilities in Government.

42 Miss Emily LAU referred to another item on the agenda for this FC meeting, which sought a new commitment of $179,174,000 for providing office automation facilities to the Hong Kong Police Force, and questioned whether the Police had been approached on whether they would like to acquire the computers in question. She and Mr Edward HO were concerned about the need to put in place a mechanism to ensure that the resource requirements of all departments and bureaux were fairly taken care of. In response, DDGS confirmed that all Government departments including the Police had been approached, but for various reasons they had declined the offer.

43 On the serviceability of these surplus computers each likely to be sold for $15 (for Model 286) or about $200 (for Model 486), DDGS assured members that although these Model 486 computers might not be powerful enough for office use, they should be useful to students. In this regard, the Chairman reminded the Administration to check that these disposable computers were Year 2000 compliant.

44 Miss CHOY So-yuk supported the proposal which would result in effective disposal of surplus serviceable stores to eligible organizations for worthy purposes and urged the Administration to extend the scope of disposal to other serviceable items so as to provide more resources to charitable organizations and to conserve the environment.

45 Noting that the Administration would consider applications on a first-come-first-served basis, Mr Fred LI opined that to ensure fairness, organizations such as the Hong Kong Council of Social Service should be entrusted with the co-ordination work to ensure that the genuine needs of individual charitable organizations would not be overlooked.

46 Miss Margaret NG pointed out that the proposal should be supported if members could be satisfied that all Government stores would be put to their best use. In reply, DDGS reaffirmed the existence of a procedure to ensure that all government departments would be approached before surplus stores were supplied to outside organizations.

47 The Committee approved the proposal.

Item No. 7 - FCR (98-99)83

CAPITAL WORKS RESERVE FUND
HEAD 710 - COMPUTERIZATION
Hong Kong Police Force
‥ New Subhead "Office Automation for Hong Kong Police Force"

48 Responding to Mr CHAN Wing-chan's concern about the high cost for the present Office Automation (OA) project and its manpower requirement, the Assistant Commissioner of Police (AC of P) highlighted that essentially, the project was costed in terms of the number of main functions required, then broken down into tasks based on which the persons/hours required were computed and subsequently converted into the number of staff required. On Mrs Selina CHOW's enquiry about whether the hiring of contract staff for the project would be on a competitive basis, AC of P confirmed that the Information Technology Services Department would arrange for a bulk tender whereby a number of information technology (IT) services providers would be invited to bid for the contract.

49 As regards the present state of computerization in the Police Force, AC of P referred to the example of Report Rooms cited by members and confirmed that although typewriters were still being used on some occasions where the formatting and presentation could not be replicated on computer, the bulk of word processing was being done on computer.

50 As far as OA for the Police Force was concerned, AC of P informed members that the Police had put up the present request pursuant to the existing arrangement that individual departments submit their respective case for approval. On the OA system's possible interface with other state-of-the-art IT systems, AC of P advised that the Police was in the course of formulating a five-year IT strategic plan and the idea of a more integrated criminal justice system would be addressed in the plan.

51 In view of the high cost for the present project, some members expressed serious concerns about possible improvements in the direct services delivered to the public which would result from the proposed OA system. Miss Emily LAU requested information on quantifiable improvement, if any, on the Police's performance pledges. Mrs Miriam LAU asked whether services such as the issue of certificates of no criminal conviction and security personnel permits could be expedited. AC of P confirmed that as the offices providing the aforesaid services would be included in the proposed OA system, he anticipated that there would be service improvements.

52 In this connection, the Principal Assistant Secretary for Security (PAS/S) pointed out that the present proposal was primarily about OA to bring about more efficient operation within the Force and to improve communication with other policy bureaux/departments. He cited as an example of future benefit that the preparation and co-ordination of replies to Legislative Council questions could be expedited. As the project was not targeted at direct services delivered to the public, PAS/S considered it difficult to quantify at this stage the improvements in terms of the department's performance pledges.

53 Mr Edward HO pointed out that whilst the proposed OA project would result in general improvement in office efficiency, further information on the improvement in direct services to the public should also be supplied to facilitate members' consideration.

54 In response, AC of P stressed that efficiency within the Police Force would have major positive ramification on the quality of services delivered to the public. He assured members that the Police was seeking at all times to enhance the quality of its services. AC of P and PAS/S further advised that substantial investment had been made in automating frontline services under the Police's five-year IT strategic plan. Members also noted the launch of initiatives such as the pilot scheme of setting up a "model police station" at North Point Police Station, plans to provide on-line services to the public in the context of the Electronic Service Delivery Scheme, and feasibility studies on on-line retrieval of information by patrolling police officers.

55 On the tangible improvement in performance, Miss Margaret NG remarked that as far as she understood, the proposed OA project was only the groundwork and a prior requirement for achieving subsequent improvement in services delivered to the public. The Chairman also commented that improvement in services rendered to the public might result as a by-product of the proposed OA system. Upon the Chairman's request, AC of P agreed to provide further information on the items of direct/frontline services to the public which were included under the proposed OA project, the improvements which would result, as well as any additional services which could be provided as a result of the implementation of OA.

Admin.

56 On Mr Edward HO's concern about the relatively high installation cost per workstation under the project, AC of P explained that the size of the department and its many centres of activities had necessitated a large distributive network. He further informed members that of the 136 locations for the installation of Local Area Networks, 91 needed upgrading only, 24 needed a network while the remaining would require a connection. He added that the major expenses were on successive enhancements, servers and storage capacity. In reply to Mr HO's enquiry about the amount of work under the present funding proposal which might become abortive due to the re-development of the Police Headquarters at Arsenal Street, AC of P estimated that the amount was in the region of $1 million. He undertook to provide further details in writing.

Admin.

57 Noting the plan of the Police to extend Internet service and e-mail facility to managerial level officers at Superintendent rank and above, Mr Edward HO was concerned about computer utilization by senior officers at this level and whether these officers were ready and competent in transacting business electronically.

58 AC of P acknowledged the importance of wider use of computers and confirmed that a large number of senior Police officers were computer literate and they would be encouraged and reminded of the need to use IT facilities in their work. At the Chairman's request, he would try to provide more information on this aspect.	Admin.

59 On the overall Government Office Automation (GOA) programme, Mr FUNG Chi-kin enquired about the schedule of implementation and the procurement arrangements of the necessary hardware and software. The Chairman advised that Mr FUNG could raise these questions at the Information Technology and Broadcasting Panel.

60 In view of members' concerns, Mrs Selina CHOW considered that the Administration should withdraw the paper and provide further information on computerization of the Police Force to facilitate members' consideration of the present item at a future meeting. Members also noted that the Administration had issued a paper outlining computerization in the Police Force to the Security Panel in November 1998. In this connection, the Chairman suggested and members agreed that the Administration should brief the Security Panel on the present proposal and the computerization of the Police Force to facilitate re-submission of the item at the next meeting of the FC.

Admin.

61 The Administration withdrew the item.

62 The Committee was adjourned at 5:35 pm.


Legislative Council Secretariat
June 1999