REPORT OF THE

PUBLIC ACCOUNTS COMMITTEE

ON

REPORT NO. 42 OF THE DIRECTOR OF AUDIT

ON

THE RESULTS OF

VALUE FOR MONEY AUDITS

AND

SUPPLEMENTAL REPORT OF THE

PUBLIC ACCOUNTS COMMITTEE

ON

REPORT NO. 41 OF THE DIRECTOR OF AUDIT

ON

THE RESULTS OF

VALUE FOR MONEY AUDITS

June 2004

P.A.C. Report No. 42



CONTENTS
Page

I.Introduction

1The Establishment of the Committee1

2Membership of the Committee1

II.Procedure

1The Committee's Procedure2 - 3

2 - 3The Committee's Report3

4The Government's Response3

III.Committee Proceedings

1Consideration of the Director of Audit's Report4

2Meetings4

3 - 4Arrangement of the Report4

5Acknowledgements4

IV.Chapter

Supplemental report on the Director of Audit's Report No. 41

1.The acquisition and clearance of shipyard sites5 - 27

Report on the Director of Audit's Report No. 42

2.Funding of projects under the Applied Research Fund28 - 51

3.Harbour Area Treatment Scheme Stage I52 - 79

4.Hong Kong Harbour Fest80 - 123

5.Provision of aquatic recreational and sports facilities124 - 134

6.Training, employment and residential services for people with disabilities135 - 151

SIGNATURES OF THE CHAIRMAN, DEPUTY CHAIRMAN AND MEMBERS OF THE COMMITTEE152

CHAPTERS IN THE DIRECTOR OF AUDIT'S REPORT NOS. 41 AND 42 DEALT WITH IN THE PUBLIC ACCOUNTS COMMITTEE'S REPORT

153

APPENDIX 1Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region154 - 155

APPENDIX 2Paper presented to the Provisional Legislative Council by the Chairman of the Public Accounts Committee at the meeting on 11 February 1998 on Scope of Government Audit in the Hong Kong Special Administrative Region - 'Value for Money Audits'

156 - 158

APPENDIX 3Witnesses who appeared before the Committee159 - 160

APPENDIX 4Introductory remarks by the Chairman of the Public Accounts Committee, Dr Hon Eric LI Ka-cheung, GBS, JP, at the first public hearing of the Committee on Monday, 3 May 2004161 - 162

Appendices relating to Chapter 1: "The acquisition and clearance of shipyard sites"

APPENDIX 5Letter of 8 December 2003 from the Secretary for Housing, Planning and Lands163 - 164

APPENDIX 6Letter of 5 January 2004 from the Director of Lands165 - 174

APPENDIX 7Letter of 27 May 2004 from the Director of Lands175 - 188

APPENDIX 8Letter of 9 December 2003 from the Director of Civil Engineering189 - 192

APPENDIX 9Letter of 31 December 2003 from the Director of Civil Engineering193 - 196

APPENDIX 10Letter of 10 February 2004 from the Director of Civil Engineering197 - 244

APPENDIX 11Letter of 9 December 2003 from the Director of Environmental Protection245 - 247

APPENDIX 12Letter of 31 December 2003 from the Director of Environmental Protection248 - 249

APPENDIX 13Letter of 30 December 2003 from the Director of Civil Engineering250 - 270

APPENDIX 14Letter of 30 December 2003 from the Secretary for Financial Services and the Treasury271 - 273

Appendices relating to Chapter 2: "Funding of projects under the Applied Research Fund"

APPENDIX 15Letter of 19 May 2004 from the Commissioner for Innovation and Technology274 - 308

APPENDIX 16Letter of 7 May 2004 from the Commissioner for Innovation and Technology309 - 321

APPENDIX 17Letter of 17 May 2004 from the Secretary for Financial Services and the Treasury322 - 349

Appendices relating to Chapter 3: "Harbour Area Treatment Scheme Stage I"

APPENDIX 18Letter of 13 May 2004 from the Director of Drainage Services350 - 351

APPENDIX 19Letter of 15 May 2004 from the Secretary for Financial Services and the Treasury352 - 355

APPENDIX 20Letter of 22 May 2004 from the Director of Audit356 - 357

APPENDIX 21Letter of 18 May 2004 from the Secretary for the Environment, Transport and Works358 - 364

APPENDIX 22Letter of 18 May 2004 from the Director of Environmental Protection365 - 366

APPENDIX 23Letter of 27 May 2004 from the Director of Leisure and Cultural Services367 - 375

APPENDIX 24Letter of 5 June 2004 from the Director of Audit376 - 378

Appendices relating to Chapter 4: "Hong Kong Harbour Fest"

APPENDIX 25Opening statement by the Director-General of Investment Promotion at the public hearing on 7 May 2004379 - 380

APPENDIX 26Economic Relaunch Working Group - Extract of the minutes of meeting held on 2 July 2003381 - 382

APPENDIX 27Economic Relaunch Working Group - Extract of the minutes of meeting held on 12 July 2003383 - 384

APPENDIX 28Economic Relaunch Working Group - Extract of the minutes of meeting held on 2 August 2003385 - 386

APPENDIX 29Economic Relaunch Working Group - Extract of the minutes of meeting held on 20 August 2003387 - 388

APPENDIX 30Economic Relaunch Working Group - Minutes of meeting held on 31 October 2003389 - 393

APPENDIX 31Letter of 10 May 2004 from the Director of Audit394 - 395

APPENDIX 32Miscellaneous Subventions - Guidelines on the Management and Control of Government Subventions396 - 426

APPENDIX 33Financial Circular No. 1/2004 dated 23 February 2004427 - 438

APPENDIX 34Financial Circular No. 14/84 dated 23 June 1984439 - 440

APPENDIX 35Letter of 20 May 2004 from the Director of Audit441 - 442

APPENDIX 36Letter of 17 May 2004 from the Director-General of Investment Promotion443 - 445

APPENDIX 37Memorandum of Understanding dated 31 July 2003446 - 447

APPENDIX 38Memorandum of Understanding dated 29 August 2003448 - 449

APPENDIX 39Memorandum of Understanding dated 3 October 2003450 - 451

APPENDIX 40Agreement dated 10 October 2003 between the Hong Kong Government and the American Chamber of Commerce in Hong Kong in relation to Hong Kong Harbour Fest 2003452 - 472

APPENDIX 41Letter of 6 May 2004 from the Deputy Principal Government Counsel (Commercial) I473 - 474

APPENDIX 42Letter of 21 May 2004 from the Director-General of Investment Promotion475 - 477

APPENDIX 43Letter of 27 May 2004 from the Associate Director-General of Investment Promotion478 - 481

APPENDIX 44Letter of 21 May 2004 from the Director-General of Investment Promotion482 - 483

APPENDIX 45Letter of 20 May 2004 from the Chairman of the American Chamber of Commerce in Hong Kong484 - 485

APPENDIX 46Letter of 15 June 2004 from the Director-General of Investment Promotion486 - 487

APPENDIX 47Letter of 6 May 2004 from the Director-General of Investment Promotion488 - 490

APPENDIX 48Letter of 27 May 2004 from the Director-General of Investment Promotion491 - 492

Appendices relating to Chapter 5: "Provision of aquatic recreational and sports facilities"

APPENDIX 49Letter of 18 May 2004 from the Director of Leisure and Cultural Services493 - 497

Appendices relating to Chapter 6: "Training, employment and residential services for people with disabilities"

APPENDIX 50Letter of 21 May 2004 from the Secretary for the Civil Service498 - 499

APPENDIX 51Letter of 15 June 2004 from the Secretary for Health, Welfare and Food500 - 501

APPENDIX 52Letter of 17 May 2004 from the Director of Social Welfare502 - 505