Legislative Council

LC Paper No. CB(1) 505/98-99
(These minutes have been seen
by the Administration)

Ref: CB1/PL/HG/1

Panel on Housing

Minutes of special meeting
held on Tuesday, 13 October 1998, at 2:30 pm
in the Chamber of the Legislative Council Building

Briefing by the Bureau Secretary on
the Chief Executive's Policy Address 1998

Members present :

Hon LEE Wing-tat (Chairman)
Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Hon Fred LI Wah-ming
Hon NG Leung-sing
Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon Ronald ARCULLI, JP
Hon James TO Kun-sun
Hon Christine LOH
Hon CHAN Yuen-han
Hon CHAN Kam-lam
Hon LEUNG Yiu-chung
Hon Timothy FOK Tsun-ting, JP
Hon TAM Yiu-chung, JP

Members absent :

Hon Gary CHENG Kai-nam (Deputy Chairman)
Hon Albert HO Chun-yan
Hon LEE Cheuk-yan
Hon Andrew WONG Wang-fat, JP
Dr Hon YEUNG Sum
Hon LAU Kong-wah
Hon Andrew CHENG Kar-foo

Public officers attending :

Mr Dominic S W WONG,
Secretary for Housing

Mr J A Miller,
Director of Housing

Mr Andrew R Wells,
Deputy Secretary for Housing (2)
Clerk in attendance :

Ms LEUNG Siu-kum,
Chief Assistant Secretary (1)2
Staff in attendance :

Miss Becky YU,
Senior Assistant Secretary (1)3

I Briefing by the Secretary for Housing on the Chief Executive's Policy Address 1998

At the invitation of the Chairman, the Secretary for Housing (S for H) highlighted the key result areas necessary to achieve the policy objective of ensuring better housing for all.

General policy

2. Some members raised questions on the role of the Hong Kong Government in the housing market. In view of the control of land sale by the Government which was also the largest development and landlord in Hong Kong, members questioned if there had any change to the principle of free market economy which had been advocated by Hong Kong. In reply, S for H noted that the housing sector was invariably linked to the broader economy, and that any government intervention should be kept to the minimum under the principle of free market economy. It was however an exception in the case of Hong Kong having regard to the large number of households which were still inadequately housed. This underlined the need for the Government to provide public rental housing (PRH) to those in genuine need. On the other hand, the Government was aware that the best way to ensure a better distribution of wealth was to help the lower income families to become stakeholders in the community. Therefore, a number of subsidized home ownership schemes (HOS) had been introduced.

3. As regards the private property market, the main role of the Government was to ensure stability in the property market. To this end, the Administration had introduced a number of measures to stabilize property prices, including the imposition of a nine-month moratorium on land sales. These measures had started to yield results as evidenced by the more stable property prices and steady increase in the number of property transactions over the past few months. The Chairman however cautioned that withholding of land sales would have an adverse effect on future flat supply, particularly in the private sector. To ascertain the effect of the moratorium, the Administration was requested to provide updated information on the number of private residential flats to be built in the next two years. S for H responded that as the effect of the moratorium would only appear in the years 2002 and 2003, the supply of private housing flats over the next two years would remain unchanged. Moreover, as some 30,000 vacant flats were readily available in the private sector, these would help to fill the gap in the years 2002 and 2003.

4. Since the successful implementation of the flat production programme would hinge on sufficient supply of land for housing, Mr Edward HO was disappointed that the Policy Address did not provide a definite time-table within which land sales could be resumed. S for H reiterated that the Administration had to ensure market stability when considering whether the moratorium should be lifted. He added that as the subject of land supply fell within the remit of the Planning, Environment and Lands Bureau (PELB), the Secretary for PEL would explain the issue in greater detail at his briefing on 15 October 1998.

5. As regards the effect of the present role of the Government as a developer and landlord on the overall economy of Hong Kong, S for H undertook to consult the relevant policy bureaux and revert back to the Panel in due course. Admin

Public sector housing

6. On public rental housing demand, Ms CHAN Yuen-han considered the annual provision of 20,000 PRH flats for families on the Waiting List (WL) within the next five years insufficient since more people were falling within the eligibility net for PRH as a result of the recent economic downturn. She asked if the Administration would consider increasing the production of PRH flats in order to meet the outstanding demand from both WL and other committed categories. In reply, S for H reiterated that the Administration was fully committed to helping people in genuine need by reducing the average waiting time for PRH from the current six and a half years to three years by 2005. However, in deriving the flat production ratio for PRH, the Administration had to take into account housing demand from different categories of applicants, based on the housing demand model. He assured members that all working assumptions for the model would be under regular review and adjustment in the light of changing circumstances. Furthermore, a Survey of Housing Aspirations of Households would be conducted in 1999 with a view to deriving new projections on housing demand.

7. On demand for HOS, S for H clarified that the Administration had no intention to shelve the production of HOS flats completely but would review the extent of supply and consider if providing home ownership loans was a better option in future. Ms LOH asked if the review of HOS would be based on the findings of the Survey of Housing Aspirations of Households 1997. S for H advised that reference had been drawn to the findings of the survey when formulating proposals for the Long Term Housing Strategy Review (LTHSR) consultative document. However, in view of the rapid changes in Hong Kong over the past year, the Administration would conduct another survey in 1999 to update the relevant housing information.

8. Members were of the view that any adjustment to HOS was a major policy change as this would affect the housing target of 70% home ownership by 2007. The Administration should consult the public before any adjustment since some people might still prefer HOS flats in view of the favourable mortgage terms and low down payment. In response, S for H stressed that the Administration remained committed to achieving the 70% home ownership rate by 2007 as pledged. The idea of using loans to replace HOS flats was only a possible alternative which required further exploration. He assured members that the Administration would consult all interested parties, including Panel members, the Housing Authority (HA), Housing Society (HS) and representatives of the property and banking sectors on such a major policy change.

9. Mr SZETO Wah asked if the Administration would consider building more PRH in the event of a decrease in the production of HOS flats so as to sustain the pledge for annual provision of an average of 50,000 public housing flats. In reply, the Director of Housing (D of H) clarified that the review of HOS would not affect HA's plan to build 300,000 public housing units over the next five years, viz an average of 60,000 flats per year. Nevertheless, HA would review the ratio of 1:1 between PRH and HOS, if so required. Under such circumstances, consideration would be given to transfer Harmony blocks originally scheduled for HOS to PRH. It was however not possible to change the usage of sites which had already been tendered or specifically designated for building Concord and New Cruciform HOS blocks.

10. As to whether the Administration would lower the sale prices of HOS flats in view of the recent fall in property prices in the private sector, D of H explained that as the sale prices of HOS flats were determined to reflect buyers' affordability, they were not directly linked to property prices in the private sector. Nevertheless, HA would consider adjusting the discount rates having regard to the current economic situation. The HOS Committee of HA would decide whether new rates should be applied to the next phase of HOS at its next meeting.

11. On Sandwich Class Housing (SCH) Schemes, Mr HO expressed concern that the decision to suspend the construction of SCH flats would further affect the pledge for annual provision of 50,000 public housing flats. S for H clarified that SCH was a special scheme which did not form part of the pledge. This had been used as a "safety margin" to make up any shortfall in flat supply. Messrs Ronald ARCULLI and LEUNG Yiu-chung asked if the Administration would consider using the sites left from SCH to build PRH with a view to further reducing the average waiting time, say, to three years by 2004. S for H replied that the future usage of these sites had yet to be worked out by PELB. Furthermore, as the pledge for reducing the average waiting time for PRH to three years by 2005 was considered reasonable, the Administration had no intention of reviewing the pledge at the present stage.

12. On "buy or rent" option, D of H advised that detailed arrangements for the option, including mortgage subsidies to tenants who were affected by redevelopment programmes and chose to buy new flats, were being worked out and would be submitted for consideration by HA in early 1999.

Urban renewal

13. In reply to Mr James TO's question on the feasibility of involving HA as the re-housing agent for urban renewal projects, S for H emphasized that the Administration had to be very careful in considering this issue in order not to affect the normal operation of HA. An intra-departmental working group comprising representatives of the Housing Bureau (HB), PELB and Housing Department had been set up to study the issue and related problems, such as its effect on WL applicants. HA would be consulted on the study. Mr NG Leung-sing remarked that the Administration should spell out clearly whether priority for PRH be accorded to WL applicants or households affected by urban renewal so that HA could make strategic planning such as building more PRH as and when necessary. S for H took note of Mr NG's view.

Co-ordination between Housing Bureau and Housing Authority

14. As regards the co-ordination between HB and HA, Mr CHAN Kam-lam considered that the latter should be given greater discretion to take account of its own situation in implementing housing policies set by the former. In response, S for H explained the different roles of HB and HA. HB was responsible for formulating broader Government policies on the provision of housing in the public and the private sectors while HA was statutory to plan and build public sector housing, and to determine and implement housing policies in accordance with Government's long term housing strategy. In the case of the income-cum-asset test, S for H emphasized that the policy was covered in the LTHSR consultative document which had undergone intensive public consultation in early 1997. The majority of the public had expressed support to the proposals.

II Any other business

15. There being no other business, the meeting ended at 4:00 pm.

Legislative Council Secretariat
30 November 1998