LC Paper No. FC75/98-99
(These minutes have been
seen by the Administration)

Ref : CB1/F/1/2

Finance Committee of the Legislative Council
Minutes of the 10th meeting
held at the Legislative Council Chamber
on Friday, 4 December 1998, at 3:45 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 LEE Cheuk-yan
Hon Martin LEE Chu-ming, SC, JP
Hon Eric LI Ka-cheung, JP
Hon LEE Kai-ming, 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 Mrs Selina CHOW LIANG Shuk-yee, JP
Hon MA Fung-kwok
Hon James TO Kun-sun
Hon CHEUNG Man-kwong
Hon Ambrose CHEUNG Wing-sum, JP
Hon HUI Cheung-ching
Hon CHAN Kwok-keung
Hon Bernard CHAN
Hon CHAN Wing-chan
Dr Hon LEONG Che-hung, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon LEUNG Yiu-chung
Hon Gary CHENG Kai-nam
Hon SIN Chung-kai
Hon WONG Yung-kan
Hon Jasper TSANG Yok-sing, JP
Dr Hon YEUNG Sum
Hon YEUNG Yiu-chung
Hon LAU Kong-wah
Hon Mrs Miriam LAU Kin-yee, JP
Hon Ambrose LAU Hon-chuen, JP
Hon Emily LAU Wai-hing, JP
Hon CHOY So-yuk
Hon Andrew CHENG Kar-foo
Hon Timothy FOK Tsun-ting, JP
Hon LAW Chi-kwong, JP
Hon TAM Yiu-chung, JP
Hon FUNG Chi-kin
Dr Hon TANG Siu-tong, JP

Members absent :

Dr Hon David LI Kwok-po, JP
Hon Christine LOH
Hon CHAN Yuen-han
Hon Andrew WONG Wang-fat, JP
Dr Hon Philip WONG Yu-hong
Hon Howard YOUNG, JP
Hon LAU Chin-shek, JP
Hon LAU Wong-fat, GBS, 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

Regional Highway Engineer/Kowloon of Highways Department

Mr Jack CHAN
Deputy Secretary-General, University Grants Committee

Chief Technical Adviser/Subvented Projects of Architectural Services Department

Mr Matthew CHEUNG, JP
Deputy Secretary for Education and Manpower

Ms Esther LEUNG
Principal Assistant Secretary for Education and Manpower

Executive Director, Employees Retraining Board

Mr Stephen FISHER
Deputy Director of Administration

Principal Executive Officer of the Offices of the Chief Secretary for Administration and the Financial Secretary

Mrs Marion LAI
Secretary, Commission of Inquiry on the New Airport

Mrs Carrie WILLIS
Principal Assistant Secretary for Security

Mr David H Y TONG
Assistant Commissioner of Customs and Excise

Mr CHAN Chun-wai
Senior Superintendent of Customs and Excise Department

Mr FAN Ho-chuen
Project Manager of Electrical and Mechanical Services Department

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)50


In response to the request of Mr Edward HO, the Chairman advised that PWSC(98-99)36 be considered separately.

2 The Chairman put proposal FCR(98-99)50, with the exception of PWSC(98-99)36, to vote. The proposal was approved.

PWSC(98-99)36 124TB Pedestrian subway at junction of Kowloon
Park Drive and Salisbury Road

3 Mr Edward HO stated his objection to the proposal and stressed that the estimated consultant's fees of $5.9 million for the construction stage alone had already amounted to almost 20% of the construction cost. This was disproportionately high for a project of $30.7 million, especially when the design of the subway which was normally included as part of a project's consultancy work had already been undertaken by in-house staff. Mr HO tabled a note showing the consultancy fees for a number of recent Housing Authority projects and pointed out that the total consultancy fees only accounted for 0.6% to 1.5% of the estimated construction costs, as opposed to 19.2% for the present project.

4 Dr Raymond HO commented that as the nature of work of housing projects and civil engineering projects was very different, the level of their respective consultancy fees might not be strictly comparable. He pointed out that as civil engineering works were more dispersed, a higher cost would be incurred during the construction stage.

5 In reply to queries about the basis for computing the estimated "consultants' administration fees at construction stage" for the present project, the Regional Highway Engineer/Kowloon, Highways Department (RHE/K) confirmed that pursuant to the Administration's agreement with the consultants concerned in 1988, the fees in question would be paid according to a fee scale based on the cost of works, which was about 4.6% of the cost of works. The cost of the professional input of the consultant in the present proposal was about the same as the agreed scale of fees. Members then questioned the purpose of computing the fees by man-months as given in the Enclosure on one hand, while an agreed scale of fees was in fact in existence on the other. RHE/K stressed that the cost was only an estimate and the actual cost would be fine-tuned in the course of the consultancy. Mr Edward HO maintained his view that the cost was too high as compared with those for Housing Authority projects in which the cost for site staff employed by the consultants only accounted for about 1% of the cost of works.

6 The item was put to vote : 15 members voted for the proposal, 29 members voted against and one abstained.

Dr Raymond HO Chung-taiMr Eric LI Ka-cheung
Miss Margaret NGMr MA Fung-kwok
Mr Ambrose CHEUNG Wing-sumMr CHAN Kwok-keung
Mr CHAN Wing-chanMr CHAN Kam-lam
Dr LEONG Che-hungMr Gary CHENG Kai-nam
Mr WONG Yung-kanMr Jasper TSANG Yok-sing
Mr YEUNG Yiu-chungMr LAU Kong-wah
Mr TAM Yiu-chung
(15 members)

Mr Kenneth TING Woo-shou Mr James TIEN Pei-chun
Mr David CHU Yu-lin Miss Cyd HO Sau-lan
Mr Edward HO Sing-tin Mr Michael HO Mun-ka
Mr LEE Wing-tat Mr LEE Cheuk-yan
Mr Martin LEE Chu-ming Mr LEE Kai-ming
Mr Fred LI Wah-ming Dr LUI Ming-wah
Prof NG Ching-fai Mrs Selina CHOW LIANG Shuk-yee
Mr CHEUNG Man-kwong Mr HUI Cheung-ching
Mr Bernard CHAN Mrs Sophie LEUNG LAU Yau-fun
Mr LEUNG Yiu-chung Mr SIN Chung-kai
Dr YEUNG Sum Mrs Miriam LAU Kin-yee
Miss Emily LAU Wai-hing Miss CHOY So-yuk
Mr Andrew CHENG Kar-foo Mr SZETO Wah
Mr LAW Chi-kwong Mr FUNG Chi-kin
Dr TANG Siu-tong
(29 members)

Mr NG Leung-sing
(1 member)

7 The Committee rejected the proposal.

Item No. 2 - FCR(98-99)51

New Capital Account Subhead "Grant to Employees Retraining Board"

8 Mr TAM Yiu-chung declared his interest as he was the Chairman of the Employees Retraining Board (ERB). Mr HO Sai-chu and Mr LEE Cheuk-yan also declared their interest as members of the ERB. Mr CHAN Kwok-keung declared his interest as a member of the Clothing Industry Training Authority.

9 Mr SIN Chung-kai questioned why the Manpower Panel had not been briefed on the proposal before its submission to the Finance Committee. In reply, the Deputy Secretary for Education and Manpower (DS/EM) advised that apart from the policy briefing by the Secretary for Education and Manpower which included, inter alia, policy highlights on employees retraining, there were regular reports on the progress and new initiatives in employees retraining to the Manpower Panel at its monthly meetings in the context of the monthly review of the work of the Task Force on Employment. He added that the present funding proposal was part of the Administration's ongoing effort to strengthen employees retraining and did not carry any new policy implications.

10 Noting that $78 million would be spent on the special nine-month full-time Certificate of Skills Training (Service Industries) Course, Mr Andrew CHENG asked whether specialized retraining for the clothing industry would also be organized as the Labour Department had recently recommended to the Labour Advisory Board the importation of 30 general sewing machine operators. Mr LEE Cheuk-yan however doubted the need for retraining workers for the clothing industry as many workers in the clothing and garment industries were now out of job. In this connection, DS/EM confirmed that of the proposed grant of $500 million, some resources would be allocated to organize tailor-made retraining courses for particular industries or occupations including the textile and clothing industry.

11 Some members were gravely concerned about the cost-effectiveness of the Certificate of Skills Training (Service Industries) Course. They were not optimistic about the placement opportunities of the 1 000 prospective retrainees in the face of rising unemployment and queried the capability of the nine-month Course in significantly upgrading the retrainees' language ability, computer competence, practical skills and "soft skills" to enable them to stand a favourable chance in getting employment.

12 In response, DS/EM informed members that the average unit cost per retrainee for the Certificate Course was about $4,000 per month, which was lower than the prevailing unit cost of $6,000 per month for other retraining courses. He further pointed out that the nine-month Certificate Course in question was the first retraining course of its kind for which a formal certificate of competence would be issued to candidates upon successful completion of the course. It was being run on a pilot basis . He confirmed that candidates who had completed this course might apply for the posts of "Clerical Assistant" and "Supplies Assistant". At Miss Margaret NG's request, DS/EM agreed to provide further information on the value-added aspects of the course, including the qualifications/advancement achieved upon successful completion of the course. He nevertheless stressed that the main purpose of the Certificate Course was to help those with little education to improve their competitiveness in the job market. Admin.

13 In reply to the Chairman, DS/EM clarified that of the 140 000 persons who had participated in retraining offered by the ERB, about 35% were unemployed persons who had attended full-time courses. In this connection, Miss Emily LAU sought clarification on the average overall placement rate of 70% for full-time graduate retrainees and enquired about the basis for the said placement rate such as a minimum period of employment.

14 In response, the Executive Director, Employees Retraining Board (ED/ERB) said at present, there was no minimum period of stay on the job to constitute successful placement. Nevertheless, the issue of job retention was now receiving serious attention by the ERB and would be further reviewed. On the question of post-employment follow-up services, DS/EM elaborated that graduate retrainees of integrated job-oriented courses and tailor-made on-the-job retraining programmes received 12 months' post-training follow-up services provided by the relevant training body while graduate retrainees of other full-time programmes would be followed up for three months after their placement. Mr K K CHAN added that according to his knowledge, nearly all of the graduate retrainees of the tailor-made on-the-job retraining programmes had been successfully placed.

15 In view of considerable concerns expressed by members over issues related to placement of retrainees, the Chairman advised that the Administration should report the outcome of its review to the Manpower Panel in due course for further consideration. Admin.

16 Mr James TIEN cautioned that the monthly retraining allowance for full-time retrainees might eventually become a form of unemployment benefit and asked whether there were any limitations on successive participation in full-time retraining programmes. In response, DS/EM advised that to safeguard against possible abuse, an arrangement was in place whereby a retrainee could only attend one full-time programme in two years. Due to recent changes in the economic conditions, however, some flexibility was introduced and a person was allowed to attend two full-time programmes a year, subject to the ERB being satisfied with the intention and reasons submitted by the person concerned for repeated enrolment.

17 Mr James TIEN urged the Administration to secure greater involvement of employer groups in employees retraining as employers themselves were in a better position to advise which categories of trained employees would be needed. In response, DS/EM acknowledged the importance of participation by employer groups and cited the example of a four-week butcher training course currently being planned to be jointly organized by the Hong Kong Federation of Trade Unions and the Kowloon Fresh Meat Retailers' Association.

18 On the quality of retraining courses, DS/EM assured members that the ERB attached great importance to the quality of retraining courses and of the 56 training bodies providing training to ERB trainees, some relatively inactive organizations would be deleted from the list of training bodies. In this connection, Mr LEE Kai-ming supplemented that funding would only be provided to a training body if it achieved a placement rate of around 70% for its courses.

19 Noting that funding of ERB's activities would be examined under the mid-term phase of the Government's Enhanced Productivity Programme (EPP), Mr CHEUNG Man-kwong considered that a review should be conducted without delay, given that one-off grants totalling $1,100 million had already been approved since November 1992. In reply, the Deputy Secretary for the Treasury clarified that while EPP aimed at achieving a 5% productivity gain in the short term for the Government as a whole, a range of public expenditure items, including funding for retraining activities, were being examined in parallel although the way forward might not be finalized for implementation in the short term.

20 Whilst supporting the funding proposal in principle, members considered that the Administration should provide a comprehensive briefing to the Manpower Panel in the near future on the cost-effectiveness of the retraining programmes funded by the ERB, and on the use of the proposed grant of $500 million if the funding was approved. The Chairman also advised that apart from periodic reporting, it would be useful for the Administration to arrange with the Panel a visit to the training centre(s). Admin.

21 The Committee approved the proposal.

Item No. 3 - FCR(98-99)52
Subhead 111 Hire of services and professional fees

22 In reply to Miss Margaret NG and Mr YEUNG Yiu-chung about whether consideration had been given to deploying legal professionals from the Department of Justice (DoJ) to assist the Commission of Inquiry on the New Airport (the Commission) instead of engaging the service of private practitioners, the Deputy Director of Administration (DDA) advised that DoJ could not deploy its professional staff to assist the Commission without affecting its day-to-day operation. The Secretary of the Commission (Secy/Commission) supplemented that apart from staffing constraints, the engagement of legal professionals outside the Government provided the neutrality which complied with the independent status of the Commission.

23 On legal fees, Secy/Commission explained that the barristers and solicitors were hourly-rated but capped by a daily rate. She further confirmed that the total amount of $22,545,000 was already a very reliable estimate and she did not envisage a need to revert to the Finance Committee for additional funding.

24 Elaborating on the volume of work of the Commission, Secy/Commission said that in view of the scope and complexity of the inquiry in question and the requirement to submit a report to the Chief Executive six months after its appointment, the Commission had scheduled around 60 full hearing days, with six hours' hearing conducted daily. There were 21 parties to the inquiry. These 21 parties were among over 100 persons and organizations which had provided some 800 document files of information to the Commission. Each of these files contained about 500 pages. So far, 220 witnesses had submitted written statements for the Commission's detailed scrutiny. Secy/Commission further confirmed that the lawyers mainly assisted the Commission in the course of its inquiry while the report for submission to the Chief Executive would be prepared by the Commission.

25 As regards the hiring of the services of experts, Secy/Commission advised that a total of five experts were engaged. Two were local university professors and three were from the USA and Germany. Of the five experts, three were experts in information technology offering advice and assistance in the investigation into the Flight Information Display System and the cargo handling system, one was an expert in airport planning and management and one being specialized in electrical and mechanical engineering.

26 On the release of the Commission's report, Secy/Commission pointed out that the Commission was expected to conclude the hearings by the end of December 1998 and then to submit a report of findings and conclusions to the Chief Executive by the end of January 1999. It would be up to the Chief Executive to decide on its release or otherwise. Responding to Miss Cyd HO's concern about the complete coverage or otherwise of the report and whether it would be further processed by the executive Government before release, the Chairman cautioned that as the proceedings of the Commission was of a judicial nature, members should refrain from making comments which might be perceived as questioning the integrity of the work of the Commission, including its future report to the Chief Executive.

27 The Committee approved the proposal.

Item No. 4 - FCR(98-99)53

Subhead 603 Plant, vehicles and equipment

28 In response to members' questions, the Assistant Commissioner of Customs and Excise (AC/C&E) explained the functions and mode of operation of the mobile X-ray vehicle scanners (MXRVSs). The MXRVSs had been well-tried and highly effective in identifying concealed compartments and suspicious cargoes, and had in fact been recommended by the US Customs. The Project Manager, Electrical and Mechanical Services Department (PM/EMSD) added that the scanners were film and food safe. As for its effect on the drivers, since all persons would have to alight and stay away from the vehicles being scanned, they would not be subject to direct X-ray. Moreover, the radiation exposure from the MXRVSs had also been confirmed to be within acceptable limits by the Food and Drug Administration of the United States.

29 Noting that some 20 minutes would be required for the MXRVSs to scan a 40-foot container truck, some members were concerned that this might delay the flow of cross boundary vehicular traffic and cause inconvenience to the legitimate traders. In this connection, Mr James TO drew members' attention to the proposed scanners' capability of imaging a loaded vehicle without unloading and unpacking the cargoes and hence, provide useful clues to Customs Officers as to whether the vehicle under inspection was carrying suspicious articles. He considered that reducing the need for manual search would in turn expedite vehicular flow. The AC/C&E confirmed that it would take 2 to 41/2 hours to complete the search of goods in containers manually.

30 Some members referred to the fixed vehicle X-ray inspection system presently used in Huanggang and opined that the Administration should, instead of purchasing a mobile system which might be more expensive and less durable, liaise with Huanggang for the purchase of a similar fixed system. Mr Kenneth TING suggested that the Administration should consider purchasing the system being developed by Qinghua University which was modelled on the Huanggang one. In response, AC/C&E explained that the proposed mobile system was preferred to the Huanggang model because of the lack of land space at both the Man Kam To and Sha Tau Kok Control Points to accommodate a fixed system which would require considerable space. Moreover, having regard to the urgent need of the two Boundary Control Points (BCPs) for X-ray equipment to assist in the search of vehicles, the two MXRVSs were more readily available and operative than a fixed system which took a longer time to install. Members nevertheless noted that two sets of fixed systems had already been earmarked for the Lok Ma Chau Control Point for operation in 2002. In reply to members, PM/EMSD confirmed that with good maintenance, the two MXRVSs could be used for 10 to 12 years.

31 In reply to enquiries about the availability of back-up electricity power supply at the BCPs concerned, PM/EMSD confirmed that civil works would have to be carried out for installing additional facilities to provide alternative electricity power supply to the MXRVSs when they were not in scanning operation.

32 Accounting for the $6,888,000 project management fee payable to the Electrical and Mechanical Services Trading Fund (EMSTF), PM/EMSD reported that for procurement of sophisticated equipment such as the MXRVSs, EMSD staff had to conduct feasibility studies as well as detailed testing and, even after delivery, closely follow up to ensure uninterrupted operation. Moreover, the MXRVSs would have to be converted from left-hand drive to right-hand drive for use in Hong Kong and therefore, further testing, some to be conducted overseas, would be required. He added that in general, estimation of the project management fee was based on the manpower and in-house resources required in managing the project concerned. In this connection, PM/EMSD advised that the prevailing rate charged by the EMSTF was reasonable and competitive as compared with that charged by the private sector.

33 Dr TANG Siu-tong questioned the need to set aside 10% contingency on the cost items set out in paragraphs 9(a) to (e) of the paper. PM/EMSD, in reply, explained that the contingency allowance was reasonable having regard to the need for drive conversion which might give rise to unexpected costs. Moreover, additional accessories might also have to be installed to cope with space limitations of the two BCPs concerned.

34 Mr CHENG Kai-nam and Mrs Miriam LAU considered the recurrent expenditure on fuel consumption of the two MXRVSs too high. In response, PM/EMSD and AC/C&E explained that as the two MXRVSs were designed to be self-contained, they had to consume a large quantity of fuel to generate electricity to power their X-ray machines and to meet the great demand for air-conditioning arising from outdoor operation. Moreover, they had to move slowly backward and forward during the scanning process.

35 In reply to members, PM/EMSD confirmed that the $5 million set aside for repair and maintenance payable to the EMSTF was the annual recurrent maintenance cost calculated on the basis of the manpower input by EMSD in providing 24-hour repair and maintenance service for the two MXRVSs after the warranty period. The $2,500,000 set aside for the procurement of initial spares and maintenance tools was for the advance purchase of such items in anticipation of the long time required for the manufacture and delivery of such items.

36 The Committee approved the proposal.

37 The Committee was adjourned at 5:30 p.m.

Legislative Council Secretariat
23 March 1999