Provisional Legislative Council

PLC Paper No. FC 12
(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 Wednesday, 23 July 1997, at 8:30 am

Members present:

The Honourable ARCULLI, Ronald (Chairman)
Hon Henry WU (Deputy Chairman)
Hon WONG Siu-yee
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
Prof Hon NG Ching-fai
Dr Hon David LI Kwok-po, JP
Hon LEE Kai-ming
Hon Mrs Elsie TU, GBM
Hon Mrs Selina CHOW, JP
Hon Mrs Peggy LAM, JP
Hon NGAI Shiu-kit, JP
Hon MA Fung-kwok
Hon CHEUNG Hon-chung
Dr Hon Mrs TSO WONG Man-yin
Dr Hon LEONG Che-hung, JP
Hon HUI Yin-fat, JP
Hon CHAN Choi-hi
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
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 CHENG Yiu-tong
Dr Hon TANG Siu-tong, JP
Hon KAN Fook-yee
Hon NGAN Kam-chuen
Hon LO Suk-ching
Dr Hon LAW Cheung-kwok
Hon TAM Yiu-chung, JP
Hon CHOY So-yuk

Members absent :

Hon James TIEN Pei-chun, JP
Hon Eric LI Ka-cheung, JP
Hon Allen LEE, JP
Hon Henry TANG Ying-yen, JP
Hon LEUNG Chun-ying, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon MOK Ying-fan
Hon Andrew WONG Wang-fat, JP
Hon CHIM Pui-chung
Hon Bruce LIU Sing-lee
Hon LAU Wong-fat, JP
Hon CHOY Kan-pui, JP
Hon Paul CHENG Ming-fun, JP
Hon Timothy FOK Tsun-ting

Public officers attending :


Secretary for the Treasury

Mr Kevin HO, JP

Deputy Secretary for the Treasury

Mr Paul TANG, JP

Director of Administration

Mr Philip YUNG

Clerk to the Executive Council

Mrs Fanny LAW, JP

Director, Chief Executive's Office

Mr Raymond TAM

Deputy Private Secretary to Chief Executive

Mrs Stella AU YEUNG

Principal Executive Officer of Chief Executive's Office

Ms Eva TSO

Chief Executive Officer of Chief Executive's Office

Ms Pauline NG

Assistant Secretary General (1), Provisional Legislative Council

Mrs Sarah KWOK

Principal Assistant Secretary for Security

Mr Patrick CHAN

Principal Assistant Secretary for Security


Assistant Commissioner of Correctional Services

Mr Sunny LEUNG

Senior Superintendent of Correctional Services Department

Miss Cindy LAW

Principal Assistant Secretary for Transport


Deputy Commissioner for Transport

Mr Anthony LOO

Chief Engineer of Transport Department


Assistant Director of Environmental Protection

Ms Michelle LI

Principal Assistant Secretary for Education

Mr LAU Kwok-choi

Principal Assistant Secretary for Works

Mr KWAN Pak-lam

Deputy Director of Architectural Services

Mrs Brenda FUNG

Secretary-General, University Grants Committee

Miss Nora W K TONG

Assistant Secretary-General, University Grants Committee

Clerk in attendance :

Ms Pauline NG Clerk to the Finance Committee

Staff in attendance :

Mrs Constance LI

 Chief Assistant Secretary (1)5

Ms Anita SIT

 Senior Assistant Secretary (1)8

Item No. 1 - FCR(97-98)23


The Committee approved the proposal to set up the Establishment Subcommittee (ESC) and Public Works Subcommittee (PWSC) under the Finance Committee with effect from 23 July 1997. The procedures for ESC and PWSC were also endorsed.

Item No. 2 - FCR(97-98)24


2.The Committee approved the proposal to change the titles of some Heads and Subheads of expenditure and of some Controlling Officers in the 1997-98 Estimates of Expenditure with effect from 1 July 1997.

Item No. 3 - FCR(97-98)25

‧Subhead 305 Code of Aid for secondary schools
‧Subhead 350 Refund of rents and rates to kindergartens, private schools and study rooms

‧Subhead 514 Hospital Authority
‧Subhead 496 Refund of rates - UGC-funded institutions

3.Mrs Elsie TU declared interest as the supervisor of a non-profit-making private school.

4.Responding to a member's question as to whether subvented organisations should be exempted from paying Government Rent, the Secretary for the Treasury (S for Tsy) advised that subvented organisations which were lease holders had the legal obligation to pay Government Rent under the Government Rent (Assessment and Collection) Ordinance. He confirmed that all subvented organisations, including those in the social welfare sector, which received refund of rates from the Government would be eligible to apply for refund of Government Rent. The proposal did not include all Sub-heads covering subvented organisations as the amounts of supplementary provisions required for some Subheads were within the limits which could be approved by S for Tsy under the delegated authority.

5.At a member's request, the Administration undertook to provide further information on the definition of non-profit-making kindergartens.Admin

6.The Committee approved the proposal.

Item No. 4 - FCR(97-98)26

‧Subhead 220 Honoraria for Members of the Executive Council
‧Subhead 366 Remuneration and reimbursements for Members of the Provisional Legislative Council
‧Subhead 872 Setting up and winding up allowances for Members of the Provisional Legislative Council

7.The Chairman declared on behalf of all members that they had the same pecuniary interest in the subject, and that all members could speak and vote on the proposal. Mr TAM Yiu-chung also declared interest as an Executive Council (ExCo) Member.

8.Members sought clarification on the following arrangements in the proposal -

  1. the rationale for ExCo Members to receive only a monthly honorarium but no allowances for staff and operating expenses, and the effective date for paying such honoraria;

  2. the rationale for Members of the Provisional Legislative Council (PLC) who also served on the previous Legislative Council (LegCo) to receive a reduced remuneration package for the period 25 January to 30 June 1997;

  3. whether Members of the PLC could claim reimbursement for staff and operating expenses from the date they were elected to the PLC rather than the date of the first PLC meeting on 25 January 1997;

  4. the calculation of severance payments reimbursable under the winding up allowances for the staff employed by Members who were at the same time PLC and LegCo Members before 1 July upon cessation of office; and

  5. the reasons for seeking supplementary provisions.

9.The Administration responded as follows -

  1. The remuneration package was recommended by the Independent Commission on Remuneration for Members of the Executive Council and Legislature of the Hong Kong Special Administrative Region (the Independent Commission) appointed by the Chief Executive on 11 March 1997. The recommendation was made on the basis of the existing remuneration system with regard to the different modes of operation for Members of the ExCo and the legislature. As ExCo business was confidential which Members had to attend to personally and logistic support was provided by the ExCo Secretariat, a lump sum honorarium without separate allowances for staff costs was considered appropriate. Such honoraria were payable from the date the ExCo of the Hong Kong Special Administrative Region (HKSAR) began to meet. For the two ExCo Members who joined the ExCo of HKSAR from 1 July 1997 notwithstanding that their appointment were announced earlier, their honoraria would be payable from 1 July 1997.

  2. In recommending the remuneration package for ExCo/PLC Members, the Independent Commission had taken into account the volume and nature of business performed by Members of the different bodies and those who had multiple memberships. The Independent Commission considered that Members who also sat on the former LegCo were already receiving honoraria for performing their LegCo duties during the period from 25 January to 30 June 1997, the honoraria for recompensing their work in PLC should be given at a reduced rate.

  3. The effective date for the remuneration package for PLC Member would take retrospective effect from 25 January 1997 when the PLC met for the first time. The Administration noted that the PLC Secretariat had issued guidelines in March 1997 for reimbursement of expenses incurred on or after 1 March 1997. Subject to the Finance Committee's approval of the proposal, PLC Secretariat would promulgate separate guidelines for reimbursement of expenses incurred by PLC Members between 25 January and 1 March 1997 in their official capacity.

  4. The Independent Commission had not deliberated on the winding up allowances for PLC Members upon cessation of office. The post-July package for PLC Members, including winding up allowances, should be the same as that enjoyed by Members of the former LegCo. As regards severance payments to Members' staff, these should base on the employment contracts of these staff and provisions in the Employment Ordinance.

  5. The provisions in the 1997-98 Estimates of Expenditure did not provide for the expenses of the ExCo and PLC of the HKSAR for the period before 1 July 1997. Supplementary provisions would therefore be required to allow for the payment of the honoraria and allowances which had not yet been paid to Members before 1 July.

10.While members did not object to the amounts recommended for the remuneration package for ExCo/PLC Members, some members expressed strong objection to the rationale for adopting different rates of honoraria for PLC Members for service before 1 July 1997. Mrs Selina CHOW, in particular, pointed out that all PLC Members were performing the same functions and those who also sat on the former LegCo should not be given a lower rate simply because of the dual membership. She stressed that Members were not concerned so much about the actual amount of honoraria, but the arrangement seemed to suggest that Members with dual membership were not performing the full functions of a PLC Member.

11.Some members also pointed out that Members had been making claims according to the instructions issued by the PLC Secretariat. In view of the new remuneration package which allowed Members to seek reimbursement for expenses before 1 March 1997, there might be a need to look into the detailed arrangements to remove grey areas or inconsistencies. The Chairman advised that since members' concern were mainly on principles and logistical arrangements, these issues could be taken up by the House Committee.

12.The Chairman then put the proposal to the vote. The Committee approved the proposal. Mrs Selina CHOW abstained.

Item No. 5 - FCR(97-98)27

‧Subhead 700 General other non-recurrent
Reimbursement of funds to the Central People's Government

13.In response to members' questions on the expenses of $73.61 million paid out of an advance from the Central People's Government (CPG) at paragraph 4 of the paper, the Administration provided the following information -

  1. Salaries and allowances for the Chief Executive's Office

    The provision of $4.377 million was to cover the salaries and allowances for the Chief Executive (CE), the Secretary for Justice, and the law drafting and translation officers for the period 16 December 1996 to 30 June 1997. The salaries and allowances for the CE and the Secretary for Justice were identical to that of the former Governor and the former Attorney General. As regards the level of remuneration for the legal personnel, it was based on that for comparable ranks in the civil service having regard to the seniority and experience of the officers concerned.

  2. Hiring of service from the Office of Tung Chee Hwa

    Before the setting up of CE's Office at Asia Pacific Finance Tower on 13 February 1997, not much assistance had been provided to Mr Tung by the Hong Kong Government. Mr Tung had to rely on the support of staff from the Office of Tung Chee Hwa in the period immediately following his election as CE. Furthermore, in view of Mr Tung's business background, extensive social links, the international attention on the CE and for the sake of continuity and accountability to the electorate, it was necessary in the circumstance at the time to hire the services of Mr Tung's Office to assist Mr Tung in his public relations activities and to follow up on issues raised at Mr Tung's election meetings. An independent evaluation had been conducted on the scope and charges of the service contract, which were considered reasonable. The service contract would be extended up to 31 August 1997 as Mr Tung had yet to finalise the structure and staffing of the CE's Office for approval by the Finance Committee.

  3. Hiring of legal and public relations services for CE's Office

    In view of the pressure of law drafting work during the period from April to June 1997 when a total of 13 Bills were processed by the CE's Office, services had to be procured from a legal firm to assist in the law drafting work at a total cost of $400,000. Public relations consultancy service had also been engaged to prepare CE for media interviews and to give regular analysis to the CE on US media responses on Hong Kong transitional issues.

  4. Allowance for PLC Members

    A total amount of $5 million had been claimed by PLC Members to meet operating expenses relating to their official capacity up to 30 June 1997, and the expenditure was met by an advance from the CPG funds. The same amount had been excluded from the total supplementary provisions sought under FCR(97-98)26. Hence, there was no duplication in provision.

  5. Inauguration events of the Government of HKSAR

The expenses for the handover ceremony and inauguration events were budgetted separately. While the expenses of the Handover Ceremony on 30 June 1997 were met by the Hong Kong Government with a $233 million provision approved by the Finance Committee in October 1996, the CPG was responsible for all expenses relating to the Inauguration Ceremony at 1:30 am on 1 July 1997. Expenses on the celebration ceremony at 10 am and the cocktail reception at 4 pm had to be met by the Government of HKSAR. On the breakdown of expenses for the celebration ceremony under this item, programme production including artists' fees and expenses on costumes, lighting and visual effects would cost about $10.2 million, while the technical costs for stage set-up would be around $5.7 million. The Administration undertook to provide a more detailed breakdown on the expenses incurred for this item on 1 July 1997, after the final accounts were available.Admin

14.On the question of whether any income had been derived from commercial sponsorships or advertising on the occasion, the Administration advised that the events did not generate any income.

15.The Committee noted that the Government of HKSAR would pay back to CPG the interest of $0.9 million earned through the bank deposit of the advance from CPG.

16.The Committee approved the proposal.

Item No. 6 - FCR(97-98)29

‧ Subhead 700 General other non-recurrent
‧ Subhead 015 Public and judicial service pension benefits and compensation

17.Considering that the Administration should have anticipated the temporary nature of the posts for the management of Vietnamese Migrants (VM), a member questioned the decision of employing such staff on pensionable terms, instead of contract terms, resulting in the need for paying pensions and ex-gratia payments for relatively short services. The Administration explained that these staff were at first employed on month-to-month terms in 1982, but in view of the increasing VM population and serious staff wastage in the subsequent years, the Correctional Services Department had, in consultation with the Civil Service Branch, decided to employ these staff on permanent terms in order to retain and maintain adequate staffing for the management of VMs. The Department had ceased recruiting more staff for VM management since 1992 upon implementation of the Orderly Repatriation Programme and Voluntary Repatriation Programme. Responding to members' questions, the Administration advised that the employment package for these staff were based on practical considerations at the time, and the Security Panel of the Legislative Council had been briefed on the management and staffing problems of VM Detention Centres in the past. Arrangements had been made to absorb 201 redundant staff within the civil service. To date, about 79 of them had submitted applications for other civil service posts.

18.In reply to a member, the Administration confirmed that the enhanced pension benefits were based on Civil Service Regulations and were consistent with other staff redundancy exercises in the past. At a member's request, the Administration undertook to provide information comparing the severance costs for officers employed on contract terms and on pensionable terms.Admin

19.A member asked whether the staff redundancy costs should be reimbursed by the United Nations High Commission for Refugees (UNHCR). The Administration responded that according to the Statement of Understanding reached in 1988 with the UNHCR, the latter was only responsible for the expenditure on the care and maintenance of the Vietnamese refugees and migrants. The amount advanced by the Hong Kong Government towards the care and maintenance of VM since 1989 totalled about $1,320 million, and the amount reimbursed by the UNHCR totalled $162 million. As such, the administrative and staffing costs for VM management had to be borne by the Government of Hong Kong. At a member's request, the Administration undertook to provide a breakdown on the annual administrative and staffing expenses incurred by the Government on VM management. Admin

20.The Committee approved the proposal.

Item No. 7 - FCR(97-98)30

‧ Subhead 700 General other non-recurrent
Third Comprehensive Transport Study

21.Members generally supported the commissioning of a study to update on transport forecasts, and considered that there was an urgent need for such information to tally with the recent housing plans announced by the Chief Executive.

22.In response to a member's question on the emphasis of the development strategy of ferry services in the study, the Chief Engineer of Transport Department (CE/TD) advised that the Government recognised the importance of ferry services, and the Third Comprehensive Transport Study (CTS-3) would cover the adequacy of ferry services both within Hong Kong waters and across the border.

23.On the question of whether any policy presumptions such as electronic road pricing (ERP) had been set for the study, CE/TD responded that as the feasibility of ERP was still under examination in a separate study, no presumptions had been set for CTS-3. However, CTS-3 would take into account findings of relevant studies which might have impact on the future transport demands. In this connection, Mrs Miriam LAU, Chairman of the Transport Panel, remarked that while no presumptions on ERP should be set for CTS-3, the study should make recommendations on both scenarios to address the traffic congestion problem with or without ERP. In this respect, CE/TD advised that the Feasibility Study on ERP would take into account the initial findings of CTS-3 in developing the final ERP strategy and thereby assess the traffic conditions under the CTS-3 recommended transport network if ERP were implemented.

24.On a member's suggestion of extending the planning horizon of CTS-3 to beyond 2011, CE/TD advised that there were practical difficulties in making transport forecasts beyond 2011 in the absence of detailed planning information on land uses and sub-regional population forecasts. The Department therefore intended to provide broad indicators of long term traffic demands up to 2016 based on the overall projected territorial population at that time. However, CE/TD indicated that the Department was discussing with Planning Department regarding the possible provision of detailed land use projections and would, as far as possible, formulate the transport strategy up to 2016 in CTS-3.

25.As regards the environmental assessment in CTS-3, the Assistant Director of Environmental Protection confirmed that the study would assess the overall environmental impacts, including air quality and noise pollution, arising from implementation of the transport recommendations.

26.A member remarked that due to the time lapse between the previous transport studies and implementation of recommendations, some of the transport forecasts had been out-dated and additional studies had to be carried out to provide remedies. Responding to members' concern about the timeframe for implementation of recommendations in previous transport studies and the proposed CTS-3, the Deputy Commissioner for Transport (DC for T) advised that a number of the previous recommendations had already been implemented, and these included -


Aberdeen Tunnel
Island Eastern Corridor
Airport Tunnel
Shing Mun Tunnel
Eastern Harbour Crossing


A number of sections of Route 3

CTS-2 Update

Hung Hom Bypass (being implemented)
Widening of Tolo Highway (being implemented)

On this point, some members pointed out that attention should also be paid to those recommendations which had not been implemented.

27.On the timeframe for implementation, CE/TD advised that while the previous CTSs took longer time (30 to 36 months) to complete, most CTS recommendations were in fact implemented on schedule. As CTS-3 would be completed within a shorter timeframe (18 months), its transport forecasts should be much more up-to-date. He also assured members that the Government would implement the CTS-3 proposals as soon as possible on completion of the study.

28.With regard to the extent of public consultation, DC for T advised that the Administration would consult the Transport Advisory Committee, the Transport Panel and the Environmental Affairs Panel, and Provisional District Boards concerned. On the monitoring of the CTS-3 , CE/TD advised that an inter-departmental working group would be set up to coordinate and monitor the execution and progress of the study.

29.DC for T noted some members' comments that to avoid future interface problem, the study should take into account longer-term transport needs across the border, and other related on-going studies on port development related activities, new town developments and railway projects.

30.In reply to members, CE/TD confirmed that the proposed consultancy study would be awarded by open tender.

31.The Committee approved the proposal.

Item No. 8 - FCR(97-98)28

Capital Subventions
‧ Subhead 8001EN Development of the campus of the Hong Kong Institute of Education

32.Noting that the project slippage was largely caused by operational problems of the original contractor, a member enquired about the system for awarding the original contract. Another member asked if the problem was due to acceptance of an unreasonably low tender price for the project. In response, the Deputy Director of Architectural Services (DD/AS) advised that the original contract was awarded through normal tender procedures, based on the list of authorised contractors who had undergone pre-qualification checks as to their financial position and experience. It was difficult to foresee whether any contractor would have subsequent operational or financial problems. He further advised that while the lowest tender was accepted in the original contract, the price difference of $30 million (6%) between the lowest and the second lowest bids were in fact insignificant.

33.On the possibility of claiming damages from the original contractor to offset part of the additional costs arising from re-tendering the project, DD/AS advised that the Government would lodge a claim of about $80 million from the original contractor. However, as the company had applied for liquidation, there might be difficulties for the Government to claim back all damages. Nonetheless, the Government had not paid for any uncompleted works; there was a retention money deducted from each payment and the original contractor still had a surety bond of $4 million with the Government.

34.A member asked whether the original contingency provision would be adequate to meet the additional costs arising from re-tendering of uncompleted works. DD/AS advised that the contingency position would be adequate to meet the increased costs for those completed works. Apart from the construction of the sports centre which was pending resolution of objections to the access road, he did not envisage that extra provisions would be required in addition to the $240 million supplementary provision under request. In response to another member, the Principal Assistant Secretary for Education and Manpower clarified that the Government had gazetted the works on the Sports Centre access road in January 1996, and had since taken various measures to address the concerns and objections raised by affected parties. The Government hoped to conclude the issue and recommend to the Executive Council within a month, so that re-tendering could start as soon as possible to avoid causing further delay to the project.

35.With regard to the high project estimates for the uncompleted works, DD/AS explained that higher costs would be inevitable for re-tenders as the contractors would have to take into account the hidden liabilities for the partially completed work arising from the previous contracts. Furthermore, additional money had been spent to secure the site for safety and protection of Government properties during the void period. To avoid further delay of the project, the Government had invited the eight contractors who had taken part in the previous tender to bid for the uncompleted works. The Committee noted that three bids had been received and the Government would soon arrive at a negotiated contract with the successful tenderer. The arrangement was to save the time and costs for going through open tender procedures.

36.The Committee approved the proposal.

37.The Committee was adjourned at 11:30 am.

Provisional Legislative Council Secretariat
12 August 1997

[ Agenda |    Minutes |    Papers ]