LC Paper No. FC88/98-99
(These minutes have been
seen by the Administration)

Ref : CB1/F/1/2

Finance Committee of the Legislative Council

Minutes of the ninth meeting
held at the Legislative Council Chamber
on Friday, 27 November 1998, 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
Prof Hon NG Ching-fai
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 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 SZETO Wah
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
Hon Christine LOH
Dr Hon Philip WONG Yu-hong
Hon LAU Wong-fat, GBS, JP
Hon Timothy FOK Tsun-ting, JP

Public officers attending :

Miss Denise YUE, JP
Secretary for the Treasury

Mrs Carrie LAM, JP
Deputy Secretary for the Treasury

Mr K K LAM
Principal Executive Officer (General), Finance Bureau

Mr K C KWONG, GBS, JP
Secretary for Information Technology and Broadcasting

Miss Joanna CHOI
Principal Assistant Secretary for Information Technology and Broadcasting

Mr Eddy CHAN, JP
Commissioner for Television and Entertainment Licensing

Mr Eric JOHNSON
Principal Assistant Secretary for Economic Services

Mr C Y LAM, JP
Assistant Director, Hong Kong Observatory

Ms Ellen CHOY
Principal Assistant Secretary for Education and Manpower

Dr K K CHAN
Chief Executive, Curriculum Development Institute of Education Department

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)46

RECOMMENDATIONS OF THE ESTABLISHMENT SUBCOMMITTEE MADE ON 4 NOVEMBER 1998

The Committee approved the proposal.

Item No. 2 - FCR(98-99)47

HEAD 180 - TELEVISION AND ENTERTAINMENT LICENSING AUTHORITY
New Capital Account Commitment "Film Development Fund"

2. Mrs Selina CHOW and Mr MA Fung-kwok declared their interest as members of the Film Services Advisory Committee (FSAC).

3. Some Members of the Democratic Party (DP) considered that the Administration had not provided sufficient justification for the proposed $100 million Film Development Fund (the Fund), referring in particular to the lack of detailed information on the six goals listed in the discussion paper which future funded projects should seek to achieve. Whilst agreeing in principle that greater assistance should be given to the local film industry, they queried the effectiveness of the Fund in promoting the healthy and long-term development of the industry.

4. In response, the Secretary for Information Technology and Broadcasting (S/ITB) pointed out that although the setting up of the Fund might not automatically enhance the development of the local film industry, the provision of funding support to worthwhile projects would improve the quality of local productions which would ultimately benefit the industry. As regards the six goals listed in the discussion paper, he advised that projects which could achieve any of these goals would be considered for funding support. However, as each application for funds had to be considered on its own merits, it would not be appropriate for him to state at this stage whether a certain project would be funded in the absence of specific project details.

5. S/ITB further stressed that the Administration had no pre-conceived ideas of the types of projects eligible for funding. Nevertheless, he informed members that the industry had suggested the setting up of a seed money under the Fund to encourage the production of more creative and diversified films. The Commissioner for Television and Entertainment Licensing (C for T&EL) added that some practitioners had indicated interest in seeking funds to upgrade their skills in the creation of special effects using pyrotechnics.

6. On the disbursement of the Fund, S/ITB confirmed that whilst it was proposed that the $100 million Fund would operate over a period of five years, flexibility would be exercised in its disbursement to enable all deserving projects in a year to benefit from the Fund. On whether a loan, instead of a grant, would be made from the Fund, S/ITB advised that the former was possible as the form of subsidy would be determined with reference to the nature of the project in question. He added that the Film Services Office (FSO) would closely monitor the progress and results of funded projects.

7. Mr LEE Cheuk-yan was concerned about the rampant problem of copyright piracy which was detrimental to the local film industry. He opined that unless copyright piracy was combated, the Fund might have little effect in boosting the local film industry. In response, S/ITB advised that the relevant legislation on copyright had been amended in recent years to plug possible loopholes and the Administration had also stepped up enforcement actions. Notwithstanding these efforts, he reiterated the need to provide further support to the local film industry, such as in upgrading the professional and technological capabilities of the industry.

8. Noting the sharp fall in box office receipts in the past few years, Miss Emily LAU questioned the reasons for the substantial reduction in investment in the local film industry and sought further information on this aspect. C for T&EL in reply said that there were no previous statistics on the amount of investment in the local film industry and he was not therefore able to speculate on the reasons for the substantial reduction. S/ITB further stressed that willingness to invest in the industry and the profit-earning capability of the industry were inter-related. While capital raising and related financial arrangements were basically a commercial matter, S/ITB re-affirmed the Government's commitment to providing a favourable environment conducive to the healthy development of the local film industry which would in turn attract investments.

9. Noting members' concerns, Mrs Selina CHOW pointed out that the Fund deserved support as it was the first major step taken by the Administration after years of urging by the local film industry for greater support and assistance. The industry and the relevant Panel in the former Legislative Council (LegCo) had advocated the establishment of a Film Commission which had been rejected by the Administration. On the question of investment, Mrs CHOW reckoned that 10 years ago, some 100 local films were produced a year but the present-day figure had dropped to about 50 to 60. She stressed that the local film industry was beset with problems which warranted greater support. Nevertheless, she acknowledged the importance of the industry's input in ensuring that the Fund would be properly and effectively utilised for the benefit of the industry and reiterated the need for extensive consultation with the industry so as to understand their needs.

10. Dr YEUNG Sum, Mr SZETO Wah and Miss Emily LAU were of the view that the Administration should withdraw the item and re-submit it after consulting the local film industry. Miss Emily LAU said that she would not support the proposal in its present form as it was unclear as to how the Fund could achieve its objectives.

11. In response, S/ITB advised that in finalising the present proposal, the Administration had already consulted the film industry, academics, cinema operators, the relevant LegCo Panel, as well as the FSAC. He pointed out that in response to the industry's concern about the phased disbursement of funds over a five-year period, the Administration had agreed to exercise due flexibility. S/ITB further confirmed that the only substantive suggestion which had not been accepted by the Administration was the provision of direct financial support for the commercial production of films as such a move was not compatible with the objective of the Fund. As far as participation of the industry was concerned, he advised that the proposed vetting committee to vet applicant projects would be chaired by himself and comprise non-official members closely associated with the industry. He urged members to vote in support of the proposal and reiterated that upon funding approval, the Administration would hold seminars and briefings for the industry on the purposes and operation of the Fund.

12. As to whether the present proposal was an unprecedented move to assist a particular industry or sector, the Secretary for the Treasury (S for Tsy) advised that there were also other funds set up for a designated purpose and cited the Quality Education Fund (QEF), the Beat Drugs Fund and the Applied Research Fund. Other funds to provide financial support for commercial and industrial activities included the special finance scheme for small and medium enterprises, the Services Support Fund and the Industry Support Fund. S/ITB further referred to the International Events Fund and the Tourism Development Fund which were similar to the present proposal as they also aimed at assisting a single industry.

13. Dr YEUNG Sum stated that Members of the DP would abstain from voting.

14. The item was put to vote: 33 members voted for the proposal, 3 members against and 12 abstained.

For:

Mr Kenneth TING Woo-shouMr James TIEN Pei-chun
Mr David CHU Yu-linMr HO Sai-chu
Mr Edward HO Sing-tinDr Raymond HO Chung-tai
Mr Eric LI Ka-cheungMr LEE Kai-ming
Mr NG Leung-singProf NG Ching-fai
Mrs Selina CHOW LIANG Shuk-yeeMr MA Fung-kwok
Mr HUI Cheung-chingMr CHAN Kwok-keung
Miss CHAN Yuen-hanMr Bernard CHAN
Mr CHAN Wing-chanMr CHAN Kam-lam
Dr LEONG Che-hungMrs Sophie LEUNG LAU Yau-fun
Mr LEUNG Yiu-chungMr Gary CHENG Kai-nam
Mr Andrew WONG Wang-fatMr WONG Yung-kan
Mr Jasper TSANG Yok-singMr Howard YOUNG
Mr YEUNG Yiu-chungMr LAU Kong-wah
Mr Ambrose LAU Hon-chuenMiss CHOY So-yuk
Mr TAM Yiu-chungMr FUNG Chi-kin
Dr TANG Siu-tong
(33 members)

Against:

Miss Cyd HO Sau-lan
Mr LEE Cheuk-yan
Miss Emily LAU Wai-hing
(3 members)

Abstentions:
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 Ambrose CHEUNG Wing-sumMr SIN Chung-kai
Dr YEUNG SumMr LAU Chin-shek
Mr SZETO WahMr LAW Chi-kwong
(12 members)


15. The Committee approved the proposal.

Item No. 3 - FCR(98-99)48

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Hong Kong Observatory
‥ New Subhead "Ground reception system for meteorological data from the Multi-Functional Transport Satellite"

16. The Committee approved the proposal.

Item No. 4 - FCR(98-99)49

HEAD 40 - EDUCATION DEPARTMENT
‥ Subhead 700 General other non-recurrent
New item "Study on strategies to cope with individual differences in academic abilities of primary school pupils"

17. Whilst acknowledging the need for the proposed study, Mr CHEUNG Man-kwong queried the provision of $880,000 in the estimated cost for office accommodation for the consultant which would likely be a local tertiary institution already publicly funded. He added that he had raised the same query in connection with the application of funds under the QEF, for which a 15% charge was added for similar purposes.

18. In reply, the Principal Assistant Secretary for Education and Manpower (PAS/EM) advised that the $880,000 was to cover certain operating expenses which would not have been required if not for the consultancy study. She stressed that the figure was only an estimate and the actual charge, if any, would be known when the tender result through competitive bidding was available. As regards the arrangement under the QEF, she clarified that an amount based on the actual expenses, instead of a fixed percentage, could be included in the total estimated cost of a project to cover office accommodation and/or related operating expenses.

19. Members noted that while tenders would be invited from local tertiary institutions, the successful bidder might not necessarily be one of these institutions and the provision for office accommodation would then be applicable. As to whether the $880,000 commitment should be forfeited if a University Grants Committee (UGC)-funded institution was awarded the tender, the Deputy Secretary for the Treasury (DS/Tsy) remarked that as the commissioning of the consultancy study would primarily be a contractual matter between the Education Department (ED) and the institution concerned, it might not be appropriate to impose such a condition in their contract. She nevertheless added that ED would be at liberty to agree or negotiate some other arrangements with the institution on how these expenses should be provided for.

20. Addressing concerns about possible double benefits being received by tertiary institutions (in terms of receiving Government subventions for its activities and charging a Government project for overheads), DS/Tsy explained that in determining the level of triennial funding for the UGC-funded institutions, the Government took into account the income generated by the institutions other than that from tuition fees. The subvention provided was net of such income derived from say consultancy services rendered by the institutions and rental from their campus accommodation. In the current triennium, such other income was assumed to have accounted for about 4.6% of the overall operating costs of the UGC-funded institutions. DS/Tsy further advised that under the current funding principles, where a subvented institution provided services which were not within its funding remits, then, the institution concerned should seek to recover the full costs incurred, including administrative overheads. In this connection, PAS/EM assured members that the Administration would screen the funding requirements of each proposal carefully to ensure that there was no duplication of resources upon the consultancy being awarded to a UGC-funded institution.

21. In reply to Mr CHEUNG Man-kwong's query on the financial assistance to the ten primary schools participating in the trial scheme, PAS/EM confirmed that the non-recurrent grant of a total of $1.5 million was to cover overhead costs which might be incurred by these primary schools in the three-year period under study.

22. Referring to the daily honorarium of $5,000 for 46 days at senior lecturer level in computing the staff cost for the consultancy services, Mr James TIEN raised concern about double remuneration being payable to the responsible lecturer and asked whether the fees would be received by the lecturer or the institution concerned.

23. In response, PAS/EM reiterated that the said figure was an estimate worked out in accordance with current practice for budget purposes only. The actual cost and the recipient could only be ascertained after the tender bids had been received.

24. Noting members' queries and concerns, Professor NG Ching-fai pointed out that the 15% charge was an established practice among local tertiary institutions to cover administrative overheads when undertaking consultancy services. This level of charge was considered reasonable when compared to that of 40% charged by universities in the USA. As for payment of honorarium, Professor NG said that such fees were usually payable to the tertiary institution and not to the academic staff. He further advised that universities regarded the undertaking of consultancy services a form of community service, as well as an opportunity to earn additional resources for their own development.

25. Several members questioned the effectiveness of the proposed consultancy study and the possible strategies to cope with individual differences in academic abilities among primary school pupils of the same educational level. Mr Edward HO was concerned that in an attempt to reduce disparity, the measures might have the effect of lowering the standard of the well-performers.

26. In response, the Chief Executive, Curriculum Development Institute (CE/CDI) explained that the Administration was aware of the problem arising from individual differences in academic abilities and a series of measures including remedial teaching and students counselling were in place to address the problem. The main objective of the consultancy study was to reinforce ongoing measures and to identify new strategies for broader application. She further confirmed that the strategies should ultimately seek to improve the academic performance of pupils at the lower end of the attainment spectrum to bring them on par with well-performers.

27. Miss Emily LAU, Miss Margaret NG and Mr LEUNG Yiu-chung did not see the need for commissioning the proposed consultancy study. They considered a reduction in the teacher to student ratio or the class size a more direct and effective strategy to cope with differences in learning abilities in a class. Miss LAU further cautioned against using the consultancy study to shelve possible plans to reduce the class size.

28. In response, PAS/EM stressed that the proposed study to be conducted on ten primary schools to try out different strategies over a three-year period was a recommendation arising from the Review of 9-year Compulsory Education which had been undertaken independently by the Board of Education. She further assured members that the Administration was making continuous effort to provide schools with more teachers and to improve the teacher to students ratio. In this connection, CE/CDI pointed out that presently, there was no conclusive educational research to prove that a small class size would necessarily result in more effective teaching. She further highlighted the need for Hong Kong to devise suitable strategies to suit its unique circumstances and constraints and pointed out that western educationists had indicated interest to learn more about how Asian education systems were able to cope with a relatively large number of students in a class.

29. In response to Miss Cyd HO Sau-lan's question on the criteria for selecting the ten primary schools for the study, CE/CDI explained that the criteria were two-tiered. Firstly, schools with a high standard deviation in their pupils' scores in the Hong Kong Attainment Tests would be identified and secondly, the schools would be invited to confirm their intention to participate in the study, together with an indication on the extent of the problem identified and their level of concern. ED would also select schools which were representative of a particular type of schools (such as rural schools) so as to facilitate application of effective strategies among schools of similar background in future. CE/CDI further advised that the effectiveness of the chosen strategy or strategies would be assessed initially by observing the progress of the pupils and changes in their performance over the three-year period under study.

30. Whilst indicating support for the proposal, Mr YEUNG Yiu-chung and Mr SZETO Wah were concerned about the Administration's readiness to implement the recommendations of the consultancy study, in particular whether necessary resources would be provided for effective implementation.

31. In response, PAS/EM re-affirmed that the Administration would take a serious view of the study and its recommendations. However, she said that it was too early at this stage to confirm whether certain strategies would be implemented. On resources for implementing new measures, S for Tsy advised that where additional resources were required, the Secretary for Education and Manpower would need to bid for them through the established resource allocation mechanism. At the present stage, the Administration was not in a position to make any firm commitment on resource allocation for those initiatives.

32. The item was put to vote: 43 members voted for the proposal, 5 members against and none abstained.

For:
Mr Kenneth TING Woo-shouMr James TIEN Pei-chun
Mr David CHU Yu-linMr HO Sai-chu
Mr Edward HO Sing-tinMr 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
Mr NG Leung-singProf NG Ching-fai
Mrs Selina CHOW LIANG Shuk-yeeMr James TO Kun-sun
Mr CHEUNG Man-kwongMr Ambrose CHEUNG Wing-sum
Mr HUI Cheung-chingMr CHAN Kwok-keung
Miss CHAN Yuen-hanMr Bernard CHAN
Mr CHAN Wing-chanMr CHAN Kam-lam
Dr LEONG Che-hungMrs Sophie LEUNG LAU Yau-fun
Mr SIN Chung-kaiMr Andrew WONG Wang-fat
Mr WONG Yung-kanMr Jasper TSANG Yok-sing
Mr Howard YOUNGDr YEUNG Sum
Mr YEUNG Yiu-chungMr LAU Chin-shek
Mrs Miriam LAU Kin-yeeMr Ambrose LAU Hon-chuen
Miss CHOY So-yukMr Andrew CHENG Kar-foo
Mr SZETO WahMr LAW Chi-kwong
Mr TAM Yiu-chungMr FUNG Chi-kin
Dr TANG Siu-tong
(43 members)

Against:
Miss Cyd HO Sau-lan
Mr LEE Cheuk-yan
Miss Margaret NG
Mr LEUNG Yiu-chung
Miss Emily LAU Wai-hing
(5 members)


33. The Committee approved the proposal.

34. The Committee was adjourned at 4:00 pm.



Legislative Council Secretariat
April 1999