Provisional Legislative Council

PLC Paper No. CB(2) 1126
(These minutes have been
seen by the Administration)

Ref : CB2/BC/7/97

Bills Committee on
Housing (Amendment) Bill 1998

Meeting on 6 February 1998 at 4:30 pm in Conference Room A of the Legislative Council Building

Members Present :

Hon CHAN Kam-lam (Chairman)
Hon HO Sai-chu, JP
Hon NG Leung-sing
Hon CHAN Yuen-han
Hon Andrew WONG Wang-fat, JP
Hon Bruce LIU Sing-lee

Members Absent :

Hon WONG Siu-yee
Dr Hon Raymond HO Chung-tai, JP
Hon Mrs Selina CHOW, JP
Hon Frederick FUNG Kin-kee
Hon CHOY Kan-pui, JP
Dr Hon TANG Siu-tong, JP

Public Officers Attending:

Miss Sandy CHAN
Principal Assistant Secretary for Housing (2)

Deputy Director of Housing (Management)(Ag)

Mr Simon LEE
Assistant Directorof Housing/Legal Advice

Mr Louie WONG
Government Counsel

Clerk in attendance :

Ms Doris CHAN
Chief Assistant Secretary (2)4

Staff in attendance :

Mr Arthur CHEUNG
Assistant Legal Adviser 5
Mr Stanley MA
Senior Assistant Secretary (2)7

Nominated by Miss CHAN Yuen-han and seconded by Mr NG Leung-sing and Mr Andrew WONG, Mr CHAN Kam-lam was elected Chairman of the Committee.

2. Members agreed to accept Mr Bruce LIU’s late application for membership of the Committee on ground of indisposition.

I. Meeting with the Administration

3. Principal Assistant Secretary for Housing (2) (PASH) said that the Housing (Amendment) Ordinance 1997 (No.108 of 1997) (the Amendment Ordinance) was passed by the former Legislative Council on 28 June 1997 and would come into operation on a day to be appointed by the Secretary for Housing by notice in the Gazette. The Housing Authority (HA) had conducted a detailed assessment on the implications of the Amendment Ordinance and had identified that the Amendment Ordinance would create, apart from significant revenue foregone, three major operational difficulties in its implementation, namely;

  1. the flexibility in varying rents according to the financial circumstances of individual households;

  2. the inclusion of households residing in cottage areas and interim housing in the calculation of the median rent to income ratio (MRIR); and

  3. the determination of the overall MRIR.

4. PASH pointed out that the Bill sought to resolve the above difficulties by-

  1. excluding from the scope of the Amendment Ordinance license fees charged in respect of cottage areas and interim housing;

  2. disapplying the restrictions as regards better-off tenants and tenants receiving rent assistance; and

  3. providing clearly that the calculation of the MRIR should be determined in accordance with a procedure to be established by the Housing Authority.

5. PASH stressed that in proposing the technical amendments, the Administration had considered the comments made by members of PLC and followed the spirit of the Amendment Ordinance which required that rent adjustment made by the HA should be implemented no more frequently than once very three years and no rent adjustment should cause the overall MRIR of households living in the HA’s public rental estates to exceed 10%.

6. Mr Bruce LIU commented on the lack of clarity of the term "class of land in an estate* in section 16(1A) of the Amendment Ordinance and Mr Andrew WONG suggested to re-draft the section to improve the drafting. While acknowledging that re-drafting was an alternative way of dealing with the matter, the Administration explained that in proposing the exceptions as in the new sections 16(1B) and 16(1C) to address the operational problems, the Administration tried to retain the original wording in order to ensure that there was no misunderstanding of the Administration’s intention. Members accepted the Administration’s explanation.

7. Regarding Mr LIU’s enquiry on the effective date of operation, PASH said that the Acting Deputy Secretary of Housing had in his speech on presentation of the Bill to the PLC on 14 January 1998 undertaken to implement the Amendment Ordinance as soon as possible after the technical amendments proposed in the Bill had been approved.

8. Referring to section 16(1A)(a) which required that any variation of rent in respect of any class of land in an estate for residential purposes could only be implemented three years after the last variation, Mr LIU enquired about adjustment of rents for tenants who filled casual vacancies of public rental flats. Assistant Director/Legal Advice (AD/LA) replied that in conformity with the spirit of the Amendment Ordinance, rents of these flats would remain unchanged for three years after they were assigned to new occupants. He added that the computer programme of the Housing Department was able to identify these tenants. The Chairman commented that such a policy would give rise to the existence of different rents for similar public rental flats in public estates. AD/LA responded that under the Amendment Ordinance, such a situation would have to be allowed to exist.

9. As far as the technical amendments were concerned, the Chairman pointed out that the Amendment Ordinance did not specify a clear definition of MRIR and a methodology of its assessment and that the current sample survey adopted by the Housing Department in calculating MRIR would not be able to meet the statutory requirement as specified in section 16(1A)(b) of the Amendment Ordinance. In strict compliance of the Amendment Ordinance, the HA would have to conduct comprehensive income survey of all households residing in its estates. In view of the enormous efforts involved and that the time lag between data collection and the review exercise might affect the accuracy of a MRIR so calculated, members accepted the proposed section 16(1D) which empowered the HA to maintain its practice of determining the MRIR by means of sample surveys.

10. Regarding the proposed exemption of better-off tenants and beneficiaries under the Rent Assistance Scheme from the three-year restriction on rent review cycle, the Chairman pointed out that retaining the existing biennial review cycle might be strongly opposed by better-off tenants affected on grounds of inconsistent policy and deviating from the spirit of the Amendment Ordinance. The Administration responded that under the existing housing subsidy policy, public rental housing tenants who had lived in public housing estate for 10 years or more and whose income exceeded the Waiting List Income Limit (WLIL) were required to pay additional rent. They might apply for reversion to normal rent when their incomes fell below the WLIL. Given a rigid definition of "variation of rent* in the Amendment Ordinance, the HA would not be able to require the better-off tenants to pay additional rent under the policy before the three-year period expired. Similarly, the HA could not allow tenants to revert to normal rent when their incomes had dropped below the WLIL until the three-year period of rent review restriction had expired. Without the flexibility in varying rents according to the financial circumstances of individual households, some public housing resources would be unnecessarily expended on people who did not have a genuine need for such resources. Members raised no objection to providing the HA with such flexibility in adjustments of rents for these tenants but stressed that the triennial review cycle for the basic rent should also be applied to the flats occupied by these tenants. In response, the Administration undertook to refer the matter to the HA for policy consideration to make sure that there would be no conflict with the spirit of the Amendment Ordinance.

II. Clause-by-clause examination

11. In response to Mr LIU’s enquiry about the difference between a licence and a permit as used in the proposed section 16(1B), AD/LA confirmed that both terms had been used and carried the same legal meaning in the context of occupation of cottage areas and interim housing.

12. Members finished clause-by-clause examination of the Bill and agreed to report the Bills Committee's deliberations to the House Committee on 13 February 1998.

13. The meeting ended at 5:16 pm.

Provisional Legislative Council Secretariat
3 March 1998