FCR(1999-2000)19

For discussion
on 11 June 1999

CAPITAL WORKS RESERVE FUND
HEAD 701 - LAND ACQUISITION

HEAD 91 - LANDS DEPARTMENT
Subhead 221 Clearance of Government land - ex-gratia allowances
Ex-gratia allowances for slipways arising from clearances

Members are invited to approve a change to the basis on which ex-gratia allowances in respect of slipways affected by clearances are calculated and to note the financial implications arising from the change.

PROBLEM

The present basis for calculating ex-gratia allowances (EGAs) in respect of slipways affected by clearances does not take account of the portion of the slipway beneath the low water mark. Such an approach has been challenged by prospective clearees and unless redressed, will be an impediment to clearances.

PROPOSAL

2. We propose that, with immediate effect, the basis on which EGAs are calculated in respect of slipways affected by clearances should be revised to take account of the portion of the slipways beneath the low water mark. We further propose that the calculation of such EGAs payable in individual cases should be based on the existing rate for the above-water portion of slipways and a ratio of 1:1 in respect of the length of the portion of the slipways above and below the low water mark.

JUSTIFICATION

3. Arising from a clearance of shipyards to be carried out in North Tsing Yi, we have received representations from affected shipyard operators that the current basis of calculating EGAs for slipways subject to clearances is inequitable. This has led to difficulties in securing the agreement of the operators to move to a new location. We have therefore reconsidered the basis on which such EGAs should be calculated.

4. The existing rationale behind calculating EGAs for slipways is based on the premise that only the above-water areas could be counted as working areas. While it is noted that only the above-water portion of a slipway is actually used in transporting a boat from the water to the land, the above-water portion cannot function without the underwater portion. Since a slipway is part of the essential infrastructure of a shipyard without which the shipyard cannot operate, we consider that it would be logical and equitable to calculate EGAs on the basis of the entire structure. We therefore propose that the underwater portion of a slipway should be taken into account in calculating EGAs for shipyards subject to clearances.

5. The areas of slipways under the low water mark can vary from shipyard to shipyard. Marine Department has advised that the ratio between the length of the above and underwater portions of a slipway during a low tide situation is generally about 1:1, and that this ratio would be a reasonable basis for calculating the relevant EGAs. We accordingly propose that, for administrative simplicity, EGAs for slipways should be calculated on the basis that the underwater portion is of the same length as the above-water portion measured from the low water mark, and will attract the same rates.

FINANCIAL IMPLICATIONS

6. It is difficult to quantify precisely the financial implications arising from the proposed change as these will depend on the number of shipyards to be cleared in future and the dimensions of the slipways involved.

7. As an indication of the potential order of costs involved, the amount of additional EGAs payable for the underwater portion of the slipways in the clearance exercise mentioned in paragraph 3 above will be around $4.2 million under the current proposal.

8. EGAs for slipways subject to clearances will be paid from the Capital Works Reserve Fund Head 701 Land Acquisition in the case of clearances relating to projects in the Public Works Programme and from the General Revenue Account Head 91 Lands Department Subhead 221 Clearance of Government land - ex-gratia allowances for non-development clearances.

BACKGROUND INFORMATION

9. On 16 October 1973, the Finance Committee (FC) of the Legislative Council approved a proposal to pay EGAs in respect of the covered areas of industrial undertakings affected by clearances.

10. On 8 December 1976, having considered that some industrial undertakings such as shipyards operated mainly in the open, the FC agreed that EGAs should also be paid in respect of open areas including slipways. Though slipways are uncovered areas the relevant EGA was set at the same level as that for covered areas to reflect slipway construction costs. However, the areas which qualified for EGAs were restricted to the areas of the slipways above the low water mark. The rationale at the time was that only that above-water portion of a slipway would qualify as working area and should therefore be eligible for ex-gratia payment.

11. On 28 July 1982, the FC approved a proposal to limit the rate of EGA in respect of slipways at half of that for covered working areas on the ground that slipways fell somewhere between covered and open working areas. The current rate of EGAs for areas of slipways above the low water mark is $740 per square metre.

Planning, Environment and Lands Bureau
June 1999