PLC Paper No. FC 156
(These minutes have been
seen by the Administration)

Ref : CB1/F/1/2

Finance Committee of the Provisional Legislative Council

Minutes of the meeting held at the Legislative Council Chamber on Friday, 20 March 1998, at 2:30 pm

Members present :

Hon Ronald ARCULLI, JP (Chairman)
Hon Henry WU (Deputy Chairman)
Hon WONG Siu-yee
Hon James TIEN Pei-chun, JP
Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Dr Hon Raymond HO Chung-tai, JP
Hon NG Leung-sing
Hon Eric LI Ka-cheung, JP
Hon LEE Kai-ming
Hon Mrs Elsie TU, GBM
Hon Mrs Selina CHOW, JP
Hon Mrs Peggy LAM, JP
Hon Henry TANG Ying-yen, JP
Hon MA Fung-kwok
Hon CHEUNG Hon-chung
Dr Hon Mrs TSO WONG Man-yin
Dr Hon LEONG Che-hung, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon MOK Ying-fan
Hon HUI Yin-fat, JP
Hon CHAN Yuen-han
Hon CHAN Wing-chan
Hon CHAN Kam-lam
Hon TSANG Yok-sing
Hon CHENG Kai-nam
Hon Frederick FUNG Kin-kee
Hon Andrew WONG Wang-fat, JP
Dr Hon Philip WONG Yu-Hong
Hon Kennedy WONG Ying-ho
Hon Howard YOUNG, JP
Dr Hon Charles YEUNG Chun-kam
Hon YEUNG Yiu-chung
Hon IP Kwok-him
Hon LAU Kong-wah
Hon Mrs Miriam LAU Kin-yee, JP
Hon Ambrose LAU Hon-chuen, JP
Hon CHOY Kan-pui, JP
Hon Paul CHENG Ming-fun, JP
Hon CHENG Yiu-tong
Dr Hon TANG Siu-tong, JP
Hon Timothy FOK Tsun-ting
Hon KAN Fook-yee
Hon NGAN Kam-chuen
Dr Hon LAW Cheung-kwok
Hon TAM Yiu-chung, JP
Hon CHOY So-yuk

Members absent :

Prof Hon NG Ching-fai
Dr Hon David LI Kwok-po, JP
Hon Allen LEE, JP
Hon NGAI Shiu-kit, JP
Hon LEUNG Chun-ying, JP
Hon CHAN Choi-hi
Hon CHIM Pui-chung
Hon Bruce LIU Sing-lee
Hon LAU Wong-fat, JP
Hon LO Suk-ching

Public officers attending :

Secretary for the Treasury

Mrs Carrie LAM, JP
Deputy Secretary for the Treasury

Miss CHEUNG Siu-hing
Deputy Secretary for Trade and Industry

Miss Elizabeth TSE
Principal Assistant Secretary for Trade and Industry

Mrs Pamela CHAN, JP
Chief Executive, Consumer Council

Mr Herman CHO
Principal Assistant Secretary for Education and Manpower

Mr TANG Wah-shing
Executive Director of the Occupational Safety and Health Council

Principal Assistant Secretary for Planning, Environment and Lands (Environment)2

Mrs Sarah KWOK
Principal Assistant Secretary for Security (B)

Mr HSU King-ping, JP
Chief Fire Officer

Mr LEUNG Siu-hong
Assistant Director of Buildings

Mr Richard LUK
Principal Assistant Secretary for Planning, Environment and Lands (Urban Renewal)

Mr Esmond LEE
Principal Assistant Secretary for Planning, Environment and Lands (Lands)

Assistant Secretary for Planning, Environment and Lands

Director of Buildings

Mr Raymond FAN
Principal Assistant Secretary for Security (C)

Mrs Judy CHING, JP
Assistant Director of Immigration

Director of Information Technology Services

Mr Stephen MAK, JP
Assistant Director of Information Technology Services

Mr Francis LEE Chun-sang
Director of Investigations, Private Sector, Independent Commission Against Corruption

Mr CHEUNG Wah-pong
Principal Investigator, Independent Commission Against Corruption

Mr WONG Wai-chiu
Chief Investigator, Independent Commission Against Corruption

Mr Daniel LAM Wing-chung
Chief Systems Manager of Information Technology Services Department

Clerk in attendance :

Ms Pauline NG
Assistant Secretary General 1

Staff in attendance :

Mrs Vivian KAM
Chief Assistant Secretary (1)5

Mr Matthew LOO
Senior Assistant Secretary (1)7

Item No. 1 - FCR(97-98)100


The Committee approved the proposal.

Item No. 2 - FCR(97-98)101


Subhead 955 Consumer Council
New item Redemption of mortgage for Head Office premises"

2. The Committee approved the proposal.

Item No. 3 - FCR(97-98)102


New Capital Account Subhead Grant to the Occupational Safety and Health Council"

3. Members were generally in support of the proposal for the Occupational Safety and Health Council to acquire its own office premises. However, as the repayment for the mortgage loan of $32 million amounted to $4.6 million per annum, members were concerned about its impact on the financial position of the Council. Some members enquired about the basis of the interest rate, and if it would be more cost effective by increasing the proposed grant of $38 million to pay up for the premises altogether since a significant proportion of the repayment would be for payment of the interest rate.

4. In response, the Principal Assistant Secretary for Education and Manpower explained that the annual repayment of $4.6 million was based on an interest rate of 12%. As this only constituted 7% of the recurrent expenditure of the Council, the repayment would not affect its financial position. Unlike subvented organisations, the Council was a financially autonomous body. The request for the $38 million grant was made by the Council after considering its own ability to repay the mortgage loan. Furthermore, the increase in the Council's share of the Employees' Compensation Insurance Levies from 1% to 2% with effect from 1 January 1998 would generate additional income for the Council.

5. In reply to a member on the injury rates in the construction and the catering industries, the Executive Director of the Occupational Safety and Health Council said that these had risen slightly in 1997 as compared with 1996. With a view to enhancing awareness of occupational safety and health of employees, the Council had drawn up safety programmes and organised seminars and exhibitions for employees in the construction industry, and produced a package consisting of a video and information pamphlets for those in the catering industry.

6. The Committee approved the proposal.

Item No. 4 - FCR(97-98)103


New Capital Account Subhead Grant to Environment and Conservation Fund"

7. A member sought elaboration on the effect of the projects funded by the Environment and Conservation Fund in strengthening environmental education and raising public awareness in environmental protection and conservation. The Principal Assistant Secretary for Planning, Environment and Lands (Environment)2 (PAS/PEL(E)2) explained that the Fund had supported projects organised by green groups and local community groups on promoting different aspects of environmental conservation works. In addition, projects reported on by the press, such as that on monitoring heavy metal in fish and which had an educational effect on the community, were also funded by the Fund. He quoted a few other examples including the Environmental Resource Centre in Tsuen Wan; the research by the Chinese University of Hong Kong on the effects of air pollution on the health of school children; and a study on promoting the production of electricity from solar energy for use in buildings. At the member's request, PAS/PEL(E)2 undertook to provide in writing details of projects supported by the Fund. Admin

8. As regards the contributions of the Fund in combating pollution in Hong Kong, PAS/PEL(E)2 advised that under the draft Waste Reduction Plan issued for consultation in 1997, a wide range of measures were proposed to reduce waste in the next 10 years and many such measures were to be implemented through projects organised by interested parties with financial support from the Fund. He confirmed that the Fund had a wide ambit, and that projects which fell within the criteria of research and educational activities, and which were aimed at promoting conservation and environmental protection, would be duly considered. There was, however, no pre-determined ratio between the number of research and community involvement projects to be supported.

9. In response to a member on the vetting procedures, PAS/PEL(E)2 explained that the Environment and Conservation Fund Committee met twice a year and applications exceeding $150,000 would be considered by the Committee. In addition, there were two subcommittees which met once every two months to vet applications. As regards the working relationship with the Environmental Campaign Committee (ECC), which was allocated $25.6illion out of the Fund's total resources of $58.2 million, PAS/PEL(E)2 said that the ECC would first work out a package of proposals. These were then vetted by the Environment and Conservation Fund Committee, and allocations were granted for worthwhile projects. The ECC was required to report to the main committee on the projects, and progress was monitored also by the Planning, Environment and Lands Bureau, and the Environmental Protection Department.

10. On other sources of support for environmental education and research activities, PAS/PEL(E)2 advised that with the exception of the Hong Kong Jockey Club, other sources were usually for funding projects of a small scale and on an individual basis. The Fund, on the other hand, supported projects of a relatively larger scale and provided certainty in terms of financial assistance. As regards the length of time for which the proposed injection of $50 million into the Fund would last, PAS/PEL(E)2 said that this would depend on the applications received, but reckoned that it might take another three years before the need for another injection arose.

11. The Committee approved the proposal.

Item No. 5 - FCR(97-98)104

New Subhead Fire Safety Improvement Loan Scheme"

12. Members were supportive of the Fire Safety Improvement Loan Scheme as it would improve the fire safety of premises. Since hundreds of buildings and premises were affected by the fire safety legislation, a member expressed concern about the phased implementation of the scheme over three years, and enquired if priority would be accorded to urgent cases.

13. In response, the Principal Assistant Secretary for Security (B) (PAS/S(B)) advised that the three-year programme had been drawn up after a public consultation exercise conducted in 1997. Owners of commercial premises were in support of the implementation schedule which would also allow sufficient time for the necessary works to be carried out. She confirmed that priority would be accorded to urgent cases. In reply to the member's further enquiry, PAS/S(B) clarified that owners could apply for loans to cover part or whole of the costs of the necessary works, depending on their respective shares if works were to be carried out in common parts of buildings. On the question of security for the loan, she advised that this could take the form of a legal charge against the affected property, or other form of security to the satisfaction of Director of Fire Services. The Chairman pointed out that it might be difficult in practice to provide security in respect of multi-ownership buildings.

14. Some members remarked that the commitment of $200 million might be insufficient, and that the Administration's assumption that only 10% of the owners of prescribed commercial premises and 20% of those of specified commercial buildings would seek financial assistance had been grossly under-estimated. They were also worried that cumbersome application procedures or financial problems confronted by owners might deter them from carrying out the necessary improvement works. They therefore sought an undertaking from the Administration that the application procedures would be as user friendly as possible in order not to hold back on the ultimate objective of safety.

15. The Secretary for the Treasury (S霡orsy) and PAS/S(B) assured members that the commitment being sought should be sufficient for three years, but stressed that the Administration would keep the implementation of the scheme under constant review and seek additional commitment if the need arose and budgetary position permitted. As for the estimates of owners seeking loans, PAS/S(B) explained that the types of premises falling within the prescribed commercial premises category included banks, supermarkets, goldsmiths and jewelry shops, off-course betting centres and shopping arcades. Of these, it was envisaged that owners of shopping arcades would be more likely to apply for the loan and hence an estimate of 10% had been arrived for the category of prescribed commercial premises. As for specified commercial buildings, reference had been made to the experience of Buildings Department in enforcing repair works to dangerous buildings, which indicated that about 10% of buildings were unable to comply with the repair orders due to financial difficulties, and the estimate of 20% for this category had been assumed to take into account the relatively higher costs to be incurred. PAS/S(B) confirmed that the application procedures would be streamlined in order to make the scheme as user friendly as possible. When issuing the fire safety directions, the Fire Services Department would send leaflets and application forms to introduce the scheme. In addition, the enforcement authorities would render technical advice and guidance to owners, and would also provide information through the Home Affairs Department's new Building Management Resource Centre.

16. In reply to the Chairman on whether a cap would be imposed on works undertaken in respect of a single building, PAS/S(B) advised that while there would not be a ceiling as such, the Administration would have regard to the works required as stated in the fire safety directions when considering the loan applications.

17. On interest rates, PAS/S(B) advised that interest would be charged at the average best lending rate quoted from time to time by the three note-issuing banks. As regards the difference in policy for using the best lending rate for the proposal under consideration and for applying the 忛o-gain, no-loss" interest rate for the ensuing proposal on the Building Safety Improvement Loan Scheme (FCR(97-98)105), S霡orsy explained that the target of the current proposal was commercial premises while that of the ensuing proposal would mainly be domestic premises.

18. In response to the Chairman on the arrangements for drawdowns and the reason for not allowing the owners to draw the funds at one go, PAS/S(B) advised that there would be a number of drawdowns for each loan. As the improvement works would be undertaken over a certain period, say 12 to 18 months, the owners would usually agree with the contractors on payment for the works by stages, and owners in turn would drawdown on the loan by stages according to the works schedule. Such an arrangement could also save interest payments by owners.

19. The Committee approved the proposal.

Item No. 6 - FCR(97-98)105

New Subhead Building Safety Improvement Loan Scheme"

20. The Committee approved the proposal.

Item No. 7 - FCR(97-98)106

Immigration Department
New Subhead Rectification of the computer systems of the Immigration Department for Year 2000 compliance"

21. As the computer systems of the Immigration Department interfaced with 12 Government bureaux, departments and other organisations, some members asked if similar proposals for Year 2000 (Y2K) compliance for other systems would be put to the Committee for consideration. They also enquired about progress on rectification work for Y2K compliance in computer systems in Government departments in general.

22. The Deputy Secretary for the Treasury envisaged that about six proposals related to rectification work, each in excess of the amount of $10 million, would need to be put to the Committee. As regards rectification of computer systems in Government departments for Y2K compliance, the Director of Information Technology Services (DITS) advised that rectification work had commenced for over one year and the Information Technology Services Department had been rendering assistance on two fronts. Firstly, the applications and the systems had been developed by Government in-house or with the assistance of contractors, and the programme codes would need to be checked for Y2K compliance. Secondly, the Department would have to ensure that the environment in which the applications would operate would also be Y2K compliant. The Information Technology Services Department had issued guidelines to departments to check on the status of the products and equipment, and introduced a monitoring system to keep track of progress on a quarterly basis. In essence, efforts were focused on the three stages of risk assessment and inventory taking, problem definition study, and actual rectification exercise. DITS added that some of the systems had been enhanced through fundings from the relevant Departmental Expenses or the Capital Works Reserve Fund.

23. In response to a member on the consequence of computer breakdowns in the Immigration Department, the Assistant Director of Information Technology Services (AD/ITS) advised that if the systems in the Department were not rectified, the consequence would be disastrous. The impact would be much more significant than that of a routine breakdown of individual hardware or software for which contingency measures were available.

24. Given that about $60,000,000 out of the total cost of $97,936,000 would go towards payment of staff costs, a member queried the justification for such a high proportion, particularly in view of the fact that significant amounts would already have been spent on the acquisition of computer hardware and software. AD/ITS advised that this was on account of the special feature of the widespread use of computers in the Immigration Department and the complexity of the systems involved. The Administration was mindful of the need for cost-effectiveness and had proposed replacement of hardware for the sub-systems and not the major systems; this explained the relatively small amount to be incurred for computer hardware. On the other hand, contract and temporary staff would be required to carry out the rectification works, while Immigration staff would have to input data, oversee the implementation of the project, conduct user acceptance tests, and continue to provide service daily without interruption. The staff resources involved would thus be considerable.

25. In addressing a member's concern on the implementation schedule and in particular for some works to be carried out in as late as November 1999 or 1獱anuary 2000, AD/ITS explained that implementation would be done in phases and that the major part of the exercise would have been completed by mid-1999. The setting of system time of the workstations on 1 January 2000 would only be a technical adjustment which would have to be made on that day. In reply to a member, S霡orsy confirmed that the computer systems would use a four-digit configuration and that similar problems would not arise with the year 3000.

26. The Committee approved the proposal.

Item No. 8 - FCR(97-98)107


Independent Commission Against Corruption
New Subhead Replacement of Commission Against Corruption Information System"

Subhead 001 Salaries

Subhead 001 Salaries

27. The Director of Investigations, Private Sector, Independent Commission Against Corruption, confirmed in response to a member's question that the existing computerised system in the Independent Commission Against Corruption would be Y2K compliant, and that it would be used until June 2000 when the new system became operational. As regards the 16 non-directorate posts, he advised that these would only be required for two years in 1998-99 and 1999-2000 for support services.

28. The Committee approved the proposal.

29. The Committee was adjourned at 4:05 pm.

Provisional Legislative Council Secretariat
10 June 1998