FINANCE COMMITTEE

Record of Meeting held on 8 December 1995 at 2:30 p.m.
in the Legislative Council Chamber

Present:

Dr Hon YEUNG Sum (Chairman)
Hon Mrs Elizabeth WONG CHIEN Chi-lien, CBE, ISO, JP (Deputy Chairman)
Hon Allen LEE Peng-fei, CBE, JP
Hon Mrs Selina CHOW LIANG Shuk-yee, OBE, JP
Hon Martin LEE Chu-ming, QC, JP
Hon SZETO Wah
Hon Edward HO Sing-tin, OBE, JP
Hon Ronald ARCULLI, OBE, JP
Hon Mrs Miriam LAU Kin-yee, OBE, JP
Dr Hon Edward LEONG Che-hung, OBE, JP
Hon Albert CHAN Wai-yip
Hon CHEUNG Man-kwong
Hon CHIM Pui-chung
Hon Frederick FUNG Kin-kee
Hon Michael HO Mun-ka
Dr Hon HUANG Chen-ya, MBE
Hon Emily LAU Wai-hing
Hon LEE Wing-tat
Hon Eric LI Ka-cheung, JP
Hon Fred LI Wah-ming
Hon Henry TANG Ying-yen, JP
Hon James TO Kun-sun
Dr Hon Samuel WONG Ping-wai, MBE, FEng, JP
Hon Howard YOUNG, JP
Hon Zachary WONG Wai-yin
Hon Christine LOH Kung-wai
Hon James TIEN Pei-chun, OBE, JP
Hon LEE Cheuk-yan
Hon CHAN Kam-lam
Hon CHAN Wing-chan
Hon CHAN Yuen-han
Hon Andrew CHENG Kar-foo
Hon CHENG Yiu-tong
Hon Anthony CHEUNG Bing-leung
Hon Albert HO Chun-yan
Hon IP Kwok-him
Hon LAU Chin-shek
Dr Hon LAW Cheung-kwok
Hon LAW Chi-kwong
Hon LEE Kai-ming
Hon LEUNG Yiu-chung
Hon Bruce LIU Sing-lee
Hon MOK Ying-fan
Hon Margaret NG
Hon NGAN Kam-chuen
Hon SIN Chung-kai
Dr Hon John TSE Wing-ling
Hon Lawrence YUM Sin-ling

Absent:

Dr Hon David LI Kwok-po, OBE, LLD, JP
Hon NGAI Shiu-kit, OBE, JP
Hon LAU Wong-fat, OBE, JP
Dr Hon Philip WONG Yu-hong
Hon Paul CHENG Ming-fun
Hon CHEUNG Hon-chung
Hon CHOY Kan-pui, JP
Hon David CHU Yu-lin
Hon Ambrose LAU Hon-chuen, JP
Hon LO Suk-ching
Hon TSANG Kin-shing

In Attendance for specific items:

In Attendance:

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Item No. 1 - FCR(95-96)92

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Capital Subventions
Tertiary/Other
Subhead 8001EN Development of the campus of the Hong Kong Institute of Education

A Member asked why the revised cost estimate for staff quarters was higher than the original estimate while that for the student quarters was lower than the original estimate. In response, the Project Manager of the Hong Kong Institute of Education (PM/HKIEd) explained that the original figures were only rough estimates which did not include any inflation allowance. He confirmed that there had not been any modification to the scope of the project and the revised estimate, including the breakdown for the individual components, was worked out on the basis of the actual tender price for the building works.

2. Some Members noted that the increase in the project estimate for the building works was lower than it would have been if money-of-the-day (MOD) prices were used, and questioned if it was appropriate to use MOD prices in estimating project costs for the purpose of commitments. They pointed out that with the inclusion of an inflation allowance in the estimated cost which was known to all bidders, it was likely that the tender price would be inflated to provide a wide margin for profit rather than just absorbing the inflation risks. A Member expressed worry that this might bring about a higher inflation. In reply, the Secretary for the Treasury (S for Tsy) said that he did not consider the provision for inflation allowance in MOD prices would encourage inflation as the actual tender prices would be subject to competitive bidding. He pointed out that for contracts awarded on a fixed-price, lump-sum basis, an inflation factor would inevitably be included in the tender price but to what extent the bidders would allow for inflation in their bids would depend on the competitiveness of the particular tender exercise. He assured Members that should the project cost turn out to be lower than the approved project estimate based on MOD prices, the surplus could not be used by the departments at will as any change in the project scope would need to be approved by Finance Committee.

3. As to whether the cost increase was caused by a delay in the tendering process, PM/HKIEd confirmed that the tendering arrangements of the different parts of the project were on schedule. He further advised that the contract strategy had been modified to speed up the tendering of the foundation works and the main campus of this project.

4. The Committee approved the proposal.

Item No. 2 - FCR(95-96)89

HEAD 177 - SUBVENTIONS: NON-DEPARTMENTAL PUBLIC BODIES
New Recurrent Account Subhead “Equal Opportunities Commission”

5. Members were generally in support of the proposed establishment of the Equal Opportunities Commission (EOC). Responding to Members’ questions, the Deputy Secretary for Home Affairs (DS/HA) advised that the Chairperson and members of the Commission would be appointed after the necessary funding had been approved by the Committee. Arrangements would then be made for the Chairperson to discuss with the relevant Panel the work plan of the Commission. On the qualification expected of the Chairperson, DS/HA advised that the candidate should preferably have some legal background and relevant experience. As to the ranking of the various posts in the Commission, DS/HA advised that the post of the Chairperson was pitched at D8 as the responsibilities of the incumbent would be comparable to those of a policy secretary in the Government Secretariat, while the Chief Executive, which was ranked at D3, would take charge of the day-to-day management of the EOC Secretariat.

6. Some Members asked whether adequate financial provision had been made for conducting the research necessary for drafting the Code of Practice, and for launching the publicity and education campaigns which would be of particular importance at the initial stage of setting up the Commission. In response, DS/HA advised that some background research had already been carried out by the Government and that apart from the launching of publicity and education campaigns, the staff of the Commission would also play an educational role during their contacts with members of the public, including both employees and employers. The actual requirements for research and publicity would, however, be determined after the Commission was established. In response to a Member’s request, DS/HA agreed to provide further information on the calculation of the estimate for research and publicity expenses.

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7. Responding to Members’ questions, S for Tsy confirmed that the EOC’s terms and conditions for employment of staff would not be superior to those provided by Government to comparable grades in the civil service. The arrangements for the EOC staff would follow largely those for staff of the Legislative Council Secretariat, in that staff would be engaged on a contract basis and a cash allowance would be paid in lieu of the relevant benefits. The cash allowance would be determined having regard to the actual on-cost rates of comparable ranks of staff in the civil service and would be subject to regular review. Moreover, the amount of the cash allowance would be fixed throughout the contract period and the new rates, having regard to the then prevailing civil service on-cost rates, would apply at the renewal of contracts.

8. The Committee approved the proposal.

Item No. 3 - FCR(95-96)88

HEAD 44 - ENVIRONMENTAL PROTECTION DEPARTMENT
Subhead 700 General other non-recurrent

9. In response to a Member’s question on the calculation of ex-gratia payments to livestock farmers, the Principal Environmental Protection Officer (PEPO) advised that the basis of calculation would be either the number of livestock or the size of livestock structures depending on the type and number of livestock being kept in the farm. For poultry farms which only kept a small number of livestock, the ex-gratia payment would be calculated on the basis of farm size since they usually had a certain number of farm structures.

10. A Member noted that as a result of the Livestock Waste Control Programme (LWCP), more farmers might choose to cease their business. In the long-term the running expenses of the livestock waste collection service and the composting plant operation would be so high that it would make livestock farming difficult to maintain under the ‘user pays’ or ‘polluter pays’ principle. In response, the Principal Assistant Secretary for Planning, Environment and Lands advised that, at present, the collection service, which was offered free of charge, was part of the government policy to encourage farmers to dispose of livestock waste in an environmentally acceptable manner. Upon full implementation of the LWCP, the Administration would have an overall picture of livestock farmers staying in business and would then review whether the waste collection service should continue to be provided free of charge. It was also necessary to educate and assist farmers to improve their waste disposal method, for example, by giving financial assistance to those who were willing to invest in waste treatment facilities. A Member raised a question on the cost increase of the contract for the collection and disposal service. PEPO responded that the waste collection service was now operated on a limited scale through a contractor. To tie in with the phased implementation of the LWCP, the new contract would extend the service to cover Yuen Long and remaining parts of the New Territories by increasing the number of collection points from 80 to 300. The contractor would also take over the operation of the composting plant from the Environmental Protection Department (EPD).

11. The Committee approved the proposal.

Item No. 4 - FCR(95-96)90

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Education Subventions
Subhead 8011EC Noise abatement programme in schools, stage III

12. In response to a Member, the Assistant Director of Education (AD/ED) outlined the background of the noise abatement programme and the reasons for an increased project estimate in respect of Stage III of the programme. He advised that since the approval of project estimates in 1993, there had been changes in the traffic conditions resulting in different impact in terms of noise level on schools. EPD had re-assessed the noise abatement level of the affected schools. The present proposal was to provide improvement to those extra classrooms identified in this re-assessment exercise to have needs for noise abatement measures.

13. The Administration noted Members’ suggestions on the air-conditioning systems for schools, and the possibility of negotiating better contract prices with a more efficient payment schedule.

14. The Committee approved the proposal.

Item No. 5 - FCR(95-96)91

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT Education Subventions New Subhead “Noise abatement programme in schools, stage IV”

15. Members welcomed the Administration’s policy to extend the noise abatement programme to cover schools subject to a noise level in excess of 65 decibel.

16. In response to a Member’s question, AD/ED advised that it would not be practical to adopt a standard costing formula for the project as the type of related improvement works required of individual schools might vary depending on the conditions of the schools. He undertook to provide further information on why the St. Peter’s Catholic Primary School, which had already been scheduled for demolition, was included in the programme.

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17. As regards the Administration’s future plans on noise abatement in schools upon completion of Stage IV of the programme, AD/ED advised Members that the Government was committed to implementing noise abatement measures in public sector schools and would, as far as resources permit, accommodate future noise abatement requests from schools on the basis of EPD’s assessment.

18. The Committee approved the proposal.

Item No. 6 - FCR(95-96)87

HEAD 22 - AGRICULTURE AND FISHERIES DEPARTMENT
Subhead 700 General other non-recurrent

19. In response to a Member’s question, the Director of Agriculture and Fisheries (DAF) confirmed that the project estimates of $80 million did not include the recurrent staff costs. On the cost-effectiveness of the proposed project, DAF advised that artificial reefs would encourage the growth and development of a greater number and variety of marine organisms which would in turn enhance fisheries resources. The method had been experimented and applied in Japan and Taiwan and had successfully increased the fisheries resources in the areas within a short period of time. According to tests conducted jointly by the department and the Swire Institute of Marine Science of the University of Hong Kong on the experimental reef in Hoi Ha Wan, fisheries resources had increased by about three times, in number and variety, within a period of 20 months.

20. Some Members asked why consultants had to be engaged for the proposed project since Government already had information on artificial reef requirements. In response, DAF advised that as the proposed technology was new to Hong Kong, the Government did not have enough specialist information and expertise required for the project. More importantly it would be necessary for the consultants to identify suitable sites outside marine parks for deployment of artificial reefs and to develop an implementation plan including a fisheries resources management strategy. He assured Members that Government would regularly review and evaluate the performance of the consultants. On the choice of materials for the construction of artificial reefs, DAF explained that one important consideration would be the condition of the seabed and water current. He estimated that concrete reefs would represent about 50% to 60% of total reefs to be deployed in 1996-2001.

21. The Committee approved the proposal.

22. The Committee was adjourned at 4:30 p.m.

Legislative Council Secretariat
6 February 1996

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