LC Paper No. FC31/98-99
(These minutes have been
seen by the Administration)

Ref : CB1/F/1/2

Finance Committee of the Legislative Council
Minutes of the fifth meeting
held at the Legislative Council Chamber
on Friday, 18 September 1998, at 2:30 pm

Members present :

Hon Ronald ARCULLI, JP (Chairman)
Hon CHAN Kam-lam (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Hon James TIEN Pei-chun, JP
Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Cyd HO Sau-lan
Hon Edward HO Sing-tin, JP
Hon Albert HO Chun-yan
Hon Michael HO Mun-ka
Dr Hon Raymond HO Chung-tai, JP
Hon LEE Wing-tat
Hon Martin LEE Chu-ming, SC, JP
Hon Eric LI Ka-cheung, JP
Hon Fred LI Wah-ming
Dr Hon LUI Ming-wah, JP
Hon NG Leung-sing
Prof Hon NG Ching-fai
Hon Margaret NG
Hon MA Fung-kwok
Hon James TO Kun-sun
Hon CHEUNG Man-kwong
Hon HUI Cheung-ching
Hon CHAN Kwok-keung
Hon CHAN Yuen-han
Hon Bernard CHAN
Hon CHAN Wing-chan
Hon LEUNG Yiu-chung
Hon Gary CHENG Kai-nam
Hon SIN Chung-kai
Hon Andrew WONG Wang-fat, JP
Hon WONG Yung-kan
Hon Jasper TSANG Yok-sing, JP
Hon Howard YOUNG, JP
Dr Hon YEUNG Sum
Hon LAU Chin-shek, JP
Hon LAU Kong-wah
Hon Mrs Miriam LAU Kin-yee, JP
Hon Ambrose LAU Hon-chuen, JP
Hon Andrew CHENG Kar-foo
Hon LAW Chi-kwong, JP
Hon TAM Yiu-chung, JP

Members absent :

Hon LEE Cheuk-yan
Hon LEE Kai-ming, JP
Dr Hon David LI Kwok-po, JP
Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon Ambrose CHEUNG Wing-sum, JP
Hon Christine LOH
Dr Hon LEONG Che-hung, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Dr Hon Philip WONG Yu-hong
Hon YEUNG Yiu-chung
Hon LAU Wong-fat, GBS, JP
Hon Emily LAU Wai-hing, JP
Hon CHOY So-yuk
Hon Timothy FOK Tsun-ting, JP

Public officers attending :

Miss Denise YUE, JP
Secretary for the Treasury

Mrs Carrie LAM, JP
Deputy Secretary for the Treasury

Principal Executive Officer (General), Finance Bureau

Mr Joseph Y T LAI
Deputy Secretary for Education and Manpower (3)

Ms Ellen CHOY
Principal Assistant Secretary for Education and Manpower (2)

Ms Susanna CHEUNG
Assistant Director of Education

Miss Angelina FUNG
Principal Assistant Secretary for Education and Manpower (1)

Secretary-General, University Grants Committee

Mr Matthew K C CHEUNG, JP
Deputy Secretary for Education and Manpower (1)

Mr Stephen FISHER
Deputy Director of Administration

Miss Leonia TAI
Assistant Director of Administration

Clerk in attendance :

Ms Pauline NG
Assistant Secretary General 1

Staff in attendance :

Miss Polly YEUNG
Chief Assistant Secretary (1)3

Ms Sarah YUEN
Senior Assistant Secretary (1)4

Item No. 1 - FCR(98-99)27


The Committee approved the proposal.

Item No. 2 - FCR(98-99)28

‥ Subhead 700 General other non-recurrent
New item "One-off grant to aided secondary schools and special schools for installation of air-conditioners in the preparation rooms of laboratories"

2. In response to a member's question on whether a one-off grant should be provided for Government secondary schools to carry out the necessary works on their own as in the case of aided secondary schools, the Deputy Secretary for Education and Manpower (3) (DS/EM(3)) confirmed that it was the Administration's long-term objective to implement school-based management in all aided and Government secondary schools. However, pending the finalisation of some procedural arrangements, the service of the Architectural Services Department had been engaged for Government schools on this occasion. He did not anticipate that the installation work would take a long time since only 37 Government secondary schools were involved. The Administration would nevertheless consider providing more flexibility to schools where practicable.

3. On a member's enquiry about any plans for installing air-conditioners in special schools, DS/EM(3) advised that the Administration was actively considering the subject and would make an announcement once a decision was made.

4. The Committee approved the proposal.

Item No. 3 - FCR(98-99)29

‥ Subhead 700 General other non-recurrent
New item "Year 2000 compliance work for the University Grants Committee-funded institutions"

5. A member enquired whether it would be more cost-effective for the eight University Grants Committee (UGC)-funded institutions to engage a single consultant/contractor to deal with common Year 2000 (Y2K) issues. In response, the Secretary-General, UGC (SG/UGC) advised that the Joint Universities Computer Centre was in fact co-ordinating the provision of manpower support and related services to facilitate the sharing of resources and to avoid duplication of work.

6. As regards the disparities in funding requirements among the eight institutions, SG/UGC explained that this was due to factors such as the different circumstances of individual institutions, their different stages of development and the level of sophistication of the equipment in question. Members noted that in the case of the Hong Kong Baptist University, the proposed funding requirement for hardware and software was considerably lower because part of its equipment had been newly installed or updated through some other funding. SG/UGC nevertheless assured members that the proposed funding requirements for the institutions had been examined by the Information Technology and Broadcasting Bureau (ITBB) and the Information Technology Services Department and were considered broadly reasonable.

7. On the intended use of the proposed funding, SG/UGC confirmed that the new commitment of $56.26 million was the additional funding required for UGC-funded institutions to carry out Y2K compliance work on their centrally managed Information Technology (IT) systems and applications. He added that the said amount accounted for less than 50% of the overall funding required for tackling the Y2K problem. With regard to non-centrally managed IT systems and applications, both the Administration and the UGC would expect the institutions to carry out the necessary checking and rectification works out of their own recurrent grants.

8. Responding to concerns about the progress of Y2K compliance in UGC-funded institutions, SG/UGC advised that the institutions ranged from being 30% to 70% - Y2K compliant and that according to the institutions, all their centrally managed systems and applications were scheduled to be fully Y2K compliant well before the end of 1999. In this regard, members noted that the institutions were asked from time to time to provide updates on their Y2K compliance to the UGC although no formal monitoring requirements were in place.

9. On whether there would be further funding requests for Y2K projects, the Deputy Secretary for the Treasury (DS/Tsy) advised that the present funding proposal would likely be the last of its kind which required the approval of the Finance Committee (FC). There might be a few departmental rectification projects within the Administration costing less than $10 million each for which approval of the FC would not be required. In reply to a member's enquiry about the wider issue of Y2K compliance in the Government and related non-government organizations, DS/Tsy informed members that the ITBB had undertaken to submit periodic reports on the subject to the Information Technology and Broadcasting Panel.

10. The Committee approved the proposal.

Item No. 4 - FCR(98-99)30

‥ Subhead 492 Grants to UGC-funded institutions
New Recurrent Account Subhead "Home Financing Scheme"
New Recurrent Account Subhead "Housing-related expenses other than Home Financing Scheme"

11. Professor NG Ching-fai declared interest as a staff member of the Hong Kong Baptist University.

12. Mr CHEUNG Man-kwong stated the Democratic Party (DP)'s support for the proposed Home Financing Scheme (HFS) for eligible staff of UGC-funded institutions. However, the DP raised the following concerns for the Administration's consideration:

  1. UGC-funded institution should develop effective measures to safeguard against the possibility of double housing benefits received by their employees;

  2. if, despite reasonable efforts by the institution concerned, a vacated public-funded quarter could not be rented or sold, the Government should consider waiving its entitlement to receiving 70% of the notional rental income in respect of the quarter;

  3. the permitted use of the entire Home Financing Allowance (HFA) for rental purpose for a maximum of 10 years only (i.e. the entitlement period for HFA) should be carefully reviewed in the light of the institutions' need to recruit internationally renowned scholars who might stay in Hong Kong for more than 10 years; and

  4. the long-term savings derived from the Government's reduced expenditure on housing benefits should eventually bring about a reduction in tuition fees.

13. Whilst confirming the Liberal Party's support for the proposal, Mr James TIEN was concerned that fluctuation in property prices over the past year might affect the mortgage plans of prospective recipients of the HFA and enquired whether the rates of allowance would be adjusted in the light of changes in property prices.

14. In response, DS/Tsy recapitulated that the proposed HFS for UGC-funded institutions was largely similar to the HFS for the civil service. She pointed out that in October 1994, the FC had approved the delegation of authority to the Secretary for the Treasury to approve annual revisions in the HFA for civil servants starting from 1 April 1995 according to movements of property prices on a year-on-year basis but capped by the increase in the Consumer Price Index (A) during the same period. Members noted that the rates of HFA had been increased by some 16% since 1994 and the annual revisions approved so far had been upward adjustments. In reply to a member, DS/Tsy said that the revised rates effective on 1 April each year might not closely reflect the prevailing property prices due to a time lag between the reference period for reviewing price movements and the effective date of the revised rates.

15. In this connection, DS/Tsy further explained that in view of the rapid fall in property prices in the past year or so, downward adjustments in the HFA rates were possible. The Administration would need to review the year-on-year property price movements under the prevailing adjustment mechanism and had therefore made it clear to the UGC-funded institutions that the rates of HFA payable under the HFS for the institutions would be subject to upward or downward adjustments as those applicable to the civil service.

16. On the question of a recipient's entitlement upon a variation in the HFA rates, DS/Tsy clarified that under existing rules in the civil service, a HFA recipient would remain on the scale of rates prevailing on the date he first drew the allowance. Any subsequent revision of the rates would only apply to officers who first joined the HFS after the revision came into effect.

17. The Committee approved the proposal.

Item No. 5 - FCR(98-99)31

‥ Subhead 990 Payment to the Disaster Relief Fund

18. Regarding a member's concern about the use of funds disbursed under the Disaster Relief Fund (DRF) for administrative purposes, the Deputy Director of Administration assured members that after a grant had been made under the DRF, the Administration would remind the non-government organization (NGO) concerned in writing that the administrative costs in relation to a relief programme must not exceed 5% of the amount of the grant. This was to ensure that a substantial portion of the grant would be used for relief purposes. Upon completion of the relief programme, the NGO would be required to submit an evaluation report on the programme, as well as the audited accounts in respect of the use of funds.

19. The Committee approved the proposal.

20. The Committee was adjourned at 3:15 pm.

Legislative Council Secretariat
22 October 1998