LegCo Paper No. CB(1)2103/95-96
(These minutes have been seen by the Administration)
Ref : CB1/PL/PLW

LegCo Panel on Planning, Lands and Works

Minutes of Meeting
held on Tuesday, 25 June 1996 at 10:45 a.m.
in Conference Room B of the Legislative Council Building

Members Present :

    Hon Edward HO Sing-tin, OBE, JP (Chairman)
    Hon Albert CHAN Wai-yip (Deputy Chairman)
    Hon CHIM Pui-chung
    Hon James TO Kun-sun
    Dr Hon Samuel WONG Ping-wai, MBE, FEng, JP
    Hon NGAN Kam-chuen
    Hon SIN Chung-kai
    Hon TSANG Kin-shing

Members Absent :

    Hon LAU Wong-fat, OBE, JP
    Hon Ronald ARCULLI, OBE, JP
    Dr Hon Philip WONG Yu-hong
    Hon CHOY Kan-pui, JP

Public Officers Attending :

For Item III
Mr Peter Berry
Principal Assistant Secretary for Works
Mr CHAN Wing-sang
Assistant Director of Water Supplies/Administration & Planning

For Item IV, V and VI
Mr Esmond LEE
Acting Principal Assistant Secretary for Planning, Environment and Lands (Lands)

For Item IV
Mr LAU Kai-hung
Assistant Director of Housing

For Item V
Mr CHAN Chi-chiu
Assistant Secretary for Planning, Environment & Lands (Lands 4)

Staff in Attendance :

Miss Odelia LEUNG
Mrs Mary TANG

I. Confirmation of minutes of meeting

(LegCo Paper No. CB(1)1688/95-96)

The minutes of the meeting held on 24 April 1996 were confirmed.

II. Date of next meeting and items for discussion

2. It was agreed that a joint meeting with LegCo Panels on Environmental Affairs, Transport and Housing would be held on 16 July 1996 at 10:45 am to discuss the Territorial Development Strategy Review. The regular Panel meeting would be held after the joint meeting to discuss "Ex gratia Allowance for Loss of Crops" and "Design Manual - Barrier Free Access 1996".

III. Provision of Sea Water for Flushing Purposes

(Appendix II to LegCo Paper No. CB(1)1649/95-96)

3. A member pointed out that a few large residential developments in Hong Kong were still using fresh water for flushing purposes. He queried whether there was any timetable for the provision of sea water for flushing purposes throughout the territory.

4. In reply, Mr CHAN Wing-sang made the following points :

  1. Sea water flushing supply systems were installed in most new town developments. Projects for the extension of sea water flushing systems to Tai Po New Town and Tseung Kwan O New Town were being implemented and programmed for completion in July 1996 and early 1998 respectively. Another project for providing sea water flushing supply to Pokfulam and Wah Fu Estate was scheduled for completion in early 1999.
  2. It was expected that by the end of the nineties, the percentage of population using sea water for flushing purposes would increase to 90% approximately. The remaining 10% of the present population lay outside the already planned sea water flushing supply zones. These areas included the Peak, South Hong Kong Island, Yuen Long, Sheung Shui, Fanling, Sai Kung and the outlying islands. It was presently uneconomical to provide sea water to these areas for flushing in view of their remoteness from suitable source of sea water or their small population, but reviews would be made from time to time to consider if any changes were necessary.

IV. Ex gratia Domestic Removal Allowance

(LegCo Paper No. CB(1)1692/95-96)

5. Mr LAU Kai-hung briefly explained the Administration’s proposal on adjustment of the ex gratia domestic removal allowance as detailed in the paper. Mr LAU highlighted that the allowance was payable to families compulsorily cleared into public housing to help them meet the initial cost of moving. The rates of allowance were set according to the type of accommodation offered and the family size. The rates comprised three elements, namely telephone removal, domestic removal and minimum basic fitting-out. The Administration, after reviewing the existing formulae, proposed that the rates should be adjusted in line with changes in the Tender Price Index (TPI) applicable to Housing Department’s building projects in the corresponding period. The proposal would involve an additional financial commitment of $8.7 million and would be put to the Finance Committee for approval before the end of the current session.

6. Members generally considered the proposed level of removal allowance too low. Based on the prevailing market rates, the allowance could hardly cover the minimum basic fitting-out, which, according to the Administration, should include wall painting, partitioning and floor tiling/skirting.

7. In response, Mr LAU explained that the allowance was an ex gratia payment to enable clearees to meet the initial cost of moving. It should not be regarded as compensation, bearing in mind that the provision of public housing was already a heavy subsidy from the Government. It should be noted that the present proposed adjustment was much higher than the inflation over the same period using Consumer Price Index (A).

8. Regarding the basis for calculating the new rates of allowance, Mr Esmond LEE stated that the existing formulae for calculating the element for minimum basic fitting-out were based on the tender prices submitted by decoration contractors approved by the Housing Department (HD) for new public housing estates. However, since November 1994, HD had ceased to ask the contractors to submit such tender prices, leaving it up to individual tenants to negotiate with the contractors the prices of the works. Under these circumstances, the existing formulae were reviewed and the conclusion was that the best alternative would be to adjust the element of allowance for minimum basic fitting-out in line with changes in the TPI applicable to HD’s building projects in the corresponding period. It was considered that an index-based approach would provide a more objective basis for calculating the allowances. At members’ request, the Administration agreed to provide the tender prices submitted by HD’s approved decoration contractors in the second quarter of 1994, on which the existing rates were based.


(Post-meeting note : A list of Housing Department’s approved decoration contractors was provided by the Administration and circulated to members vide LegCo Paper No. CB(1)1812/95-96)

9. A member pointed out that the tender prices quoted for the fitting out of a large number of similar units would be much cheaper than those quoted for individual units. It was hence unfair to apply the TPI to individual units. In response, Mr LAU stated that the TPI should be applicable to individual units. The computation of the rates of allowance had also taken into account the inflation over the same period using the Consumer Price Index (A).

10. Members supported in principle the provision for ex gratia removal allowance to families compulsorily cleared into public housing. They had no objection to use the TPI as an objective criterion for revising the allowances in future. However, the base figures of the allowance for minimum basic fitting out should be reviewed to bring them in line with the prevailing market costs for fitting-out, otherwise the payment could not serve the intended purpose of meeting the initial cost of moving. These base figures should also be considered as a lump-sum payment rather than as individual fitting-out items to save subsequent arguments on whether the prices were obtainable in the market. Members also suggested that the Administration, in reviewing the base figures, should consider the huge price-range for basic fitting-out works. The Administration noted members’ suggestions.

V. New Arrangement for Property Resumption Allowance - Home Purchase Allowance

(Appendix IV to LegCo Paper No. CB(1)1649/95-96)

11. Mr Esmond LEE briefly took members through the proposed changes to the eligibility for Home Purchase Allowance (HPA) payable to owners of domestic premises affected by resumption.

12. Regarding the background to the new arrangement, Mr LEE explained that HPA was an ex gratia allowance payable to owners of domestic premises upon resumption by Government on top of the full market value statutory compensation. The original intention of the allowance was to ensure that affected owners would not be forced out of home ownership as a result of resumption. Currently, HPA was paid to all owners of domestic premises regardless of whether the premises were vacant, let or occupied by the owners. Furthermore, there were no restrictions to payment regarding the duration of ownership prior to resumption. Nor was a single owner owning more than one flat prevented from receiving more than one HPA payments . The policy was applicable in the 1980s when most of the premises under resumption were self-occupied. Recent evidence indicated that the current policy had become the subject of abuse. In the resumption of properties within a Comprehensive Development Area at Ma Tau Kok, five premises were purchased after the gazetting of the resumption notice, apparently for the purpose of benefiting from substantial HPA payments. The current policy of paying HPA to all owners had resulted in multiple payments of HPA to single owners who owned more than one property. To discourage abuse by speculators, there was a need to restrict HPA to owner-occupiers who were in genuine need of a replacement flat to live in, on the basis of one payment per eligible owner.

13. On the appeal mechanism, Mr LEE explained that owners who disagreed with the Director of Land’s decision on their eligibility for HPA could appeal to the Secretary for Planning, Environment and Lands within three months of such a decision. The Administration would consider members’ suggestion to set up an independent body to handle appeals.


14. Members deliberated on the proposed arrangement under the HPA scheme. Some members were of the view that the new arrangement would discourage private developers from participating in urban redevelopment. It would also be unfair to owners of premises with title problems as they might not be eligible for payment under the scheme. Aˆmember pointed out that under the existing practice, the Land Development Corporation (LDC), in offering compensation for resumption of land, would not take into account whether or not the premises were occupied by owners. There would be certainty of compensation should owners surrender their properties voluntarily to the LDC. Should they disagree with the LDC’s terms and their premises be resumed by the Government, they might not be eligible for compensation since the new arrangement would restrict HPA payments to owner-occupiers. The proposed HPA arrangement would also discourage owners from letting out their units. Members urged the Administration to conduct a comprehensive review on the land resumption policy instead of solving the problem on a piecemeal basis. Members opined that in reviewing the policy, consideration should be given to sharing with owners the profits generated from urban renewal.

15. In response, Mr LEE stressed that the principle of HPA payments was to ensure that affected owners would not be forced out of home ownership as a result of resumption. Unlike owner occupiers, investment owners did not need a replacement flat for residence upon resumption. The proposed new arrangement aimed at tightening up the criteria for HPA payments. The Administration intended to seek endorsement on the new arrangement from the Finance Committee within the current LegCo session. The Administration noted the points raised by members on the land resumption policy.

VI. New Territories Land Exchange Entitlements (Redemption) Bill

16. Mr Esmond LEE informed members that the Bill was gazetted on 24 May 1996 and introduced into LegCo on 5 June 1996.

17. Regarding the present situation of the New Territories land exchange entitlements, Mr LEE explained that the issue of Letters A/B had been stopped in 1983 because of increasing difficulties in meeting the commitments which then stood at about 138 hectares of equivalent building land. Over the years, much of the outstanding commitments had been bought up by major property developers. At present, 6.75 hectares of entitlements were outstanding. Of these, 4.68 hectares of equivalent building land, representing about 70% of the total outstanding commitments, were held by four developers. The ownership of the remaining 2.07 hectares of building land was likely to be untraceable, e.g. where Letters A/B belonged to persons who had died intestate and the estates remained unclaimed or where persons had emigrated.

18. Mr LEE further explained that sufficient land would be made available in the 1996-97 Land Disposal Programme to cover the outstanding commitments. However, as there was no way of knowing when the "untraceable" Letters A/B might surface and it was not feasible for the Government to continue to provide land to redeem the residual untraceable commitments, the best way to deal with the situation was by fixing through legislation the value of the remaining Letters A/B at a given date and ensuring that sufficient funds were set aside to enable that value plus interest be payable on redemption.

19. As to public consultation, Mr LEE stated that no formal public consultation had been carried out, as most of the outstanding commitments were held by four major developers. So far, no objection had been raised by these developers to the proposed Bill.

20. At the request of members, the Administration agreed to provide a breakdown on the land used in the past to redeem Letters A/B.


21. The meeting closed at 12:10 p.m.

LegCo Secretariat
24 September 1996

Last Updated on 21 Aug, 1998