OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 9 September 1998
The Council met at half-past Two o'clock

MEMBERS PRESENT:

THE PRESIDENT
THE HONOURABLE MRS RITA FAN, G.B.S., J.P.

THE HONOURABLE KENNETH TING WOO-SHOU, J.P.

THE HONOURABLE JAMES TIEN PEI-CHUN, J.P.

THE HONOURABLE DAVID CHU YU-LIN

THE HONOURABLE HO SAI-CHU, J.P.

THE HONOURABLE CYD HO SAU-LAN

THE HONOURABLE EDWARD HO SING-TIN, J.P.

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE MICHAEL HO MUN-KA

DR THE HONOURABLE RAYMOND HO CHUNG-TAI, J.P.

THE HONOURABLE LEE WING-TAT

THE HONOURABLE LEE CHEUK-YAN

THE HONOURABLE MARTIN LEE CHU-MING, S.C., J.P.

THE HONOURABLE LEE KAI-MING, J.P.

DR THE HONOURABLE DAVID LI KWOK-PO, J.P.

THE HONOURABLE FRED LI WAH-MING

DR THE HONOURABLE LUI MING-WAH, J.P.

THE HONOURABLE NG LEUNG-SING

PROF THE HONOURABLE NG CHING-FAI

THE HONOURABLE MARGARET NG

THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, J.P.

THE HONOURABLE RONALD ARCULLI, J.P.

THE HONOURABLE MA FUNG-KWOK

THE HONOURABLE JAMES TO KUN-SUN

THE HONOURABLE CHEUNG MAN-KWONG

THE HONOURABLE AMBROSE CHEUNG WING-SUM, J.P.

THE HONOURABLE HUI CHEUNG-CHING

THE HONOURABLE CHRISTINE LOH

THE HONOURABLE CHAN KWOK-KEUNG

THE HONOURABLE CHAN YUEN-HAN

THE HONOURABLE BERNARD CHAN

THE HONOURABLE CHAN WING-CHAN

THE HONOURABLE CHAN KAM-LAM

DR THE HONOURABLE LEONG CHE-HUNG, J.P.

THE HONOURABLE MRS SOPHIE LEUNG LAU YAU-FUN, J.P.

THE HONOURABLE LEUNG YIU-CHUNG

THE HONOURABLE GARY CHENG KAI-NAM

THE HONOURABLE ANDREW WONG WANG-FAT, J.P.

DR THE HONOURABLE PHILIP WONG YU-HONG

THE HONOURABLE WONG YUNG-KAN

THE HONOURABLE JASPER TSANG YOK-SING, J.P.

THE HONOURABLE HOWARD YOUNG, J.P.

DR THE HONOURABLE YEUNG SUM

THE HONOURABLE YEUNG YIU-CHUNG

THE HONOURABLE LAU CHIN-SHEK, J.P.

THE HONOURABLE LAU KONG-WAH

THE HONOURABLE LAU WONG-FAT, G.B.S., J.P.

THE HONOURABLE MRS MIRIAM LAU KIN-YEE, J.P.

THE HONOURABLE AMBROSE LAU HON-CHUEN, J.P.

THE HONOURABLE EMILY LAU WAI-HING, J.P.

THE HONOURABLE CHOY SO-YUK

THE HONOURABLE ANDREW CHENG KAR-FOO

THE HONOURABLE SZETO WAH

THE HONOURABLE TIMOTHY FOK TSUN-TING, J.P.

THE HONOURABLE LAW CHI-KWONG, J.P.

THE HONOURABLE TAM YIU-CHUNG, J.P.

MEMBERS ABSENT:

THE HONOURABLE ERIC LI KA-CHEUNG, J.P.

THE HONOURABLE SIN CHUNG-KAI

THE HONOURABLE CHIM PUI-CHUNG

PUBLIC OFFICERS ATTENDING:

THE HONOURABLE MRS ANSON CHAN, J.P.
THE CHIEF SECRETARY FOR ADMINISTRATION

THE HONOURABLE DONALD TSANG YAM-KUEN, J.P.
THE FINANCIAL SECRETARY

THE HONOURABLE ELSIE LEUNG OI-SIE, J.P.
THE SECRETARY FOR JUSTICE

MR NICHOLAS NG WING-FUI, J.P.
SECRETARY FOR TRANSPORT

MR DOMINIC WONG SHING-WAH, J.P.
SECRETARY FOR HOUSING

MRS KATHERINE FOK LO SHIU-CHING, J.P.
SECRETARY FOR HEALTH AND WELFARE

MR JOSEPH WONG WING-PING, G.B.S., J.P.
SECRETARY FOR EDUCATION AND MANPOWER

MR BOWEN LEUNG PO-WING, J.P.
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS

MRS REGINA IP LAU SUK-YEE, J.P.
SECRETARY FOR SECURITY

MR TAM WING-PONG, J.P.
SECRETARY FOR TRADE AND INDUSTRY

MRS REBECCA LAI KO WING-YEE, J.P.
SECRETARY FOR FINANCIAL SERVICES

CLERKS IN ATTENDANCE:

MR RICKY FUNG CHOI-CHEUNG, J.P., SECRETARY GENERAL

MR LAW KAM-SANG, J.P., DEPUTY SECRETARY GENERAL

MS PAULINE NG MAN-WAH, ASSISTANT SECRETARY GENERAL

MRS JUSTINA LAM CHENG BO-LING, ASSISTANT SECRETARY GENERAL

PAPERS

The following papers were laid on the table pursuant to Rule 21(2) of the Rules of Procedure:

Subsidiary Legislation	L.N. No.
Statutes of the University of Hong Kong (Amendment) Statutes 1998	299/98
Boilers and Pressure Vessels (Exemption) (Consolidation) (Amendment) Order 1998	300/98
Antiquities and Monuments (Declaration of Historical Building) Notice 1998	301/98
Tax Reserve Certificates (Rate of Interest) (No. 3) Notice 1998	302/98
Industrial Training (Clothing Industry) (Amendment) (No. 2) Ordinance 1995 (31 of 1995) (Commencement) Notice 1998	303/98
Import and Export (Registration) (Amendment) Regulation 1995 (L.N. 544 of 1995) (Commencement) Notice 1998	304/98
Hong Kong Special Administrative Region Passports (Appeal Board) Regulation (L.N. 91 of 1998) (Commencement) Notice 1998	305/98
Road Traffic (Construction and Maintenance of Vehicles) (Amendment) (No. 3) Regulation 1998	306/98
Revised Edition of the Laws (Rectification of Errors) Order 1998	307/98
Volunteer and Naval Volunteer Pensions Ordinance (Amendment of Schedules) Order 1998	308/98
Barristers Disciplinary Tribunal Proceedings (Amendment) Rules 1998	309/98

Sessional Papers

No. 19	─	Report on the Administration of the Immigration Service Welfare Fund prepared by the Director of Immigration in accordance with Regulation 10 of the Immigration Service (Welfare Fund) Regulations
No. 20	─	Hong Kong Trade Development Council Annual Report 1997/98

Report

Report of the Committee on Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region on the Procedural Arrangements for implementing Article 79(6) of the Basic Law

ADDRESS

PRESIDENT (in Cantonese): Address. Mrs Selina CHOW will address the Council on the report of the Committee on Rules of Procedure. Mrs Selina CHOW.

Report of the Committee on Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region on the Procedural Arrangements for implementing Article 79(6) of the Basic Law

MRS SELINA CHOW (in Cantonese): Madam President, on behalf of the Committee on Rules of Procedure of the Legislative Council, I would like to present its report on the procedural arrangements for implementing Article 79(6) of the Basic Law. The report has already been submitted to Honourable Members for perusal.

The Committee on Rules of Procedure was set up formally on 10 July 1998. On 15 July, it held its first meeting, during which a number of issues pending further studies were discussed.

In early August, upon the request of the House Committee, the Committee started to study the arrangements relating to the implementation of Article 79(6) of the Basic Law. Subsequently, the Committee held a total of five meetings in August, and at one of these meetings, Honourable Members not belonging to the Committee were also invited to express their views. Following deliberations, the Committee has proposed to introduce several amendments and add in a number of new provisions. I shall give a full account of the relevant details when I move a resolution to amend the Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region later on.

I wish to take this opportunity to thank members of the Committee for the time and efforts they have spent. And, on behalf of the Committee, I also wish to thank those Honourable Members who have put forward their valuable views.

Thank you, Madam President.

ORAL ANSWERS TO QUESTIONS

PRESIDENT (in Cantonese): Questions. I would like to inform Members that question time normally does not exceed one and a half hours, with each question being allocated about 15 minutes on average. When asking supplementaries, Member should be as concise as possible, should not ask more than one question, and should not make statements as this contravenes the Rules of Procedure.

First question, Mr Gary CHENG.

Construction of a Multi-storey Car park in Stanley

1. MR GARY CHENG (in Cantonese): It is learnt that the Town Planning Board has agreed to designate land in Stanley for the construction of a multi-storey car park in order to solve the problem of insufficient parking spaces in the district. Will the Government inform this Council:

(a) of the estimated earliest date at which the car park will operate; and

(b) whether there is any contingency plan for dealing with the difficulties (such as the problem of delay in the timeframe caused by land resumption procedures) which are expected to arise in the course of taking forward the construction project of the car park?

PRESIDENT (in Cantonese): Secretary for Transport.

SECRETARY FOR TRANSPORT (in Cantonese): Madam President, present indication is that the existing provision of 220 parking spaces at Stanley is adequate to meet demand during weekdays but there is an acute shortage of about 300 parking spaces during weekends and holidays. The problem is particularly serious during the summer months.

Construction of the Ma Hang public housing development is in good progress and is scheduled for completion in late 1999. It will provide an additional 116 parking spaces to the Stanley area. The Government has plans to meet the remaining shortfall by providing 200 parking spaces at a multi-storey car park at the existing Stanley bus terminus site.

This multi-storey car park project was gazetted in the draft Stanley Outline Zoning Plan (OZP) in July 1994. The project was held up because of a large number of objections received, principally on grounds of the visual and environmental impact of the project.

The Town Planning Board (TPB) gave consideration to these objections during May 1995 and November 1997. In January 1998, the amended OZP without the multi-storey car park, was gazetted as required by section 6 of the Town Planning Ordinance. However, upon the expiry of the exhibition period, 23 objections against the deletion of the multi-storey car park were received. Having reconsidered the issue, the TPB reverted its earlier decision on 12 June and decided to retain the mutli-storey car park in the OZP. In accordance with section 8 of the Town Planning Ordinance, a submission on the draft OZP including the multi-storey car park project together with all the unwithdrawn objections will be made to the Chief Executive in Council. This will be done towards the end of the year.

The original plan was for the Stanley bus terminus site to put to land sale in 1996-97 with reprovision of the public transport interchange at ground level and to build a multi-storey car park above by 1999-2000. However the latest assessment of the Lands Department is that the project may not be commercially viable. If this is the case, the multi-storey car park may have to be pursued as a government project and compete for funding. It is difficult to pinpoint an exact date for the completion of the multi-storey car park at this stage. Normally, it will take four to five years to complete a project of this scale.

To address the concern of some of the local residents on the impact of the multi-storey car park, special attention will be paid to the design of the project to ensure that it will blend in with the environment.

In case the multi-storey car park project cannot be taken forward for whatever reasons, the Government has plans to increase car park provision at alternative sites including 80 spaces at Stanley Village Road, 40 spaces at Hoi Fung Path and 25 spaces near St Stephen's College Preparatory School.

PRESIDENT (in Cantonese): Mr Gary CHENG.

MR GARY CHENG (in Cantonese): Madam President, according to the Government, relevant data has indicated that the existing provision of parking spaces is adequate to meet demand during weekdays. However, I understand that there have been a number of acute confrontations between the police and the local residents during weekdays as a result of insufficient parking spaces. Could the Government provide more accurate figures in this respect?

Moreover, tourist coaches will visit Stanley not just on holidays only. Has the present plan taken into consideration the flow of tourist coaches during weekdays and the number of residents and shops there?

PRESIDENT (in Cantonese): Secretary for Transport.

SECRETARY FOR TRANSPORT (in Cantonese): Madam President, I have indicated in my reply that the Government has plans to increase the number of parking spaces at Stanley. So, there is no point in arguing about the adequacy or otherwise of parking spaces during weekdays and holidays at this juncture. Basically, the Government does agree that more parking spaces should be provided at Stanley. Furthermore, investigation shows that some vacant parking spaces do exist during weekdays, though they may not be located in areas frequented by cars. In any case, the Government has especially planned to build a multi-storey car park at Stanley to provide car parking spaces for residents there.

PRESIDENT (in Cantonese): Mrs Miriam LAU.

MRS MIRIAM LAU (in Cantonese): Madam President, in the last paragraph of the document, it was mentioned that in case the multi-storey car park project cannot be carried forward for whatever reasons, the Government had plans to increase car park provision at alternative sites. But in the first paragraph it was mentioned that there was a shortage of 300 parking spaces. Why does the Government have to wait till the project fails to find an alternative site; why does it not find one now? Moreover, the total number of parking spaces at the alternative sites is only 145, which is far from being sufficient to cover the shortfall. How can it solve the problem?

PRESIDENT (in Cantonese): Secretary for Transport.

SECRETARY FOR TRANSPORT (in Cantonese): Madam President, the Government has begun to identify sites suitable for use as car parks in the several places I have mentioned. I also indicated in my main reply that the Government estimated there was an shortage of about 300 parking spaces during holidays. When the Ma Hang public housing estate is completed at the end of next year, 100-odd parking spaces will then be available. So, there is going to be a shortage of 200. If the multi-storey car park can be built there, it will provide an additional 200 parking spaces; as such, the figures do tally.

If however the multi-storey car park plan cannot go ahead, we will use other scattered sites, as mentioned in the last paragraph of the main reply. Of course if we can proceed with the original plan, we would not need to resort to these scattered sites; or perhaps we can delay the use of them. But we may have to use them ahead of time if indeed the multi-storey car park project falls through. Planning work for this situation is to a certain extent underway.

PRESIDENT (in Cantonese): Dr YEUNG Sum.

DR YEUNG SUM (in Cantonese): Madam President, the problem of insufficient parking spaces at Stanley is a long standing one. I do hope the Government can try its best to increase the number of parking spaces using scattered sites because the shortage is indeed acute.

Some residents object to the building of a multi-storey car park at the bus terminus site for fear that the tourist spot will be affected, since the bus terminus is near the market where traffic is already heavy there. Will the construction of a multi-storey car park aggravate the problem or even affect the tourists? I hope the Government can consider this point. What comments does the Government have about this?

PRESIDENT (in Cantonese): Secretary for Transport.

SECRETARY FOR TRANSPORT (in Cantonese): Madam President, this is exactly where the problem lies. There are people who support the idea and there are those who object to it. We must find a balance between the two opposing views. First, we need to provide sufficient car parking spaces. Second, we must not antagonize those people who have raised objections. This is the art of governance and the Government is actively working towards that goal.

PRESIDENT (in Cantonese): Mr Ronald ARCULLI.

MR RONALD ARCULLI: Madam President, when I first heard the answer given by the Secretary for Transport, my heart went out to him, because I thought this was out of "Yes, Minister". I was about to ask him whether he would be prepared to withdraw the answer and give us something sensible, but that has not been said.

He told us that the building of a car park might not be commercially viable. Perhaps, he can elaborate why it may not be commercially viable. Is it because of the land premium expected, will that be too high? Or, could there be, for instance, a combination of car park and other uses for the proposed multi-storey building?

PRESIDENT (in Cantonese): Secretary for Transport.

SECRETARY FOR TRANSPORT: Madam President, the suggestion that it may not be commercially viable comes from some of my expert advisers, but I do not necessarily subscribe to that view. And that is why I would push very hard to get my colleague, Mr LEUNG, to ensure that this site would be on the Land Sales Programme. The trouble is that we have to wait until the next financial year before we could be able to see any land sale coming forward.

Thus, you can take it from me that we will certainly try to test the market. It ultimately must be the market that determines whether it is viable or not.

PRESIDENT (in Cantonese): Mrs Selina CHOW.

MRS SELINA CHOW (in Cantonese): Madam President, the proposal for a multi-storey car park was first mooted in 1994. According to what was said in the main reply, it would take five years to complete a project of this scale from resource allocation to completion. So, altogether it takes more than 10 years. On the other hand, 400-odd residents have signed a petition for the construction of the car park, and the Secretary said he needed to strike a balance. By striking a balance did he mean he wanted to refrain from making a decision for the time being so that he would not be berated by those who support the proposal or those who are against it? I would like a clear answer from the Government to this question: Why could the Transport Bureau be so insensitive and think they could wait another five or six years before giving the matter any serious consideration when the Hong Kong Tourist Association, the Stanley Business Association and those 400-odd signatories have made an urgent request for the construction of a multi-storey car park which could well be a great help to the tourist industry?

PRESIDENT (in Cantonese): Secretary for Transport.

SECRETARY FOR TRANSPORT (in Cantonese): Madam President, the Transport Bureau considered the matter thoroughly five years ago and confirmed the need to construct the car park. That is why we have submitted the plan to the TPB and included the car park project as part of the OZP. But then arose the problem: there were objections; besides, we also needed to act according to town planning procedures. The Government would like to see the completion of the procedure so as to implement the plan and put the car park lot up for tender. If no parties were interested, the Government would need to identify resources for the construction of the car park. As far as the Transport Bureau is concerned, the car park is clearly needed and the Government will push the project ahead.

PRESIDENT (in Cantonese): Mr Howard YOUNG.

MR HOWARD YOUNG (in Cantonese): Madam President, I wish to thank Members for mentioning the tourism industry and tourist coaches but the problem lies not in the lack of 300 parking spaces but in the lack of stopping places and that such places are remote from the popular Stanley market. Will the Government inform this Council whether, upon the completion of the car park, it has plans to transform stopping places for private cars to those for coaches, which is a more realistic solution?

PRESIDENT (in Cantonese): Secretary for Transport.

SECRETARY FOR TRANSPORT (in Cantonese): Madam President, the Transport Department and the relevant departments will keep an eye on the realistic need of the area as far as motor vehicles are concerned. There are stopping places for coaches and spaces for temporary parking but the shortage of these places has become more acute with the rising popularity of Stanley. The Government will set aside appropriate new spots as stopping places for coaches, taking actual circumstances into consideration. Members will understand streets at Stanley are rather crowded and it is not easy to find places for coaches to stop and park, but the Government will continue to try and identify spots suitable for such purposes.

PRESIDENT (in Cantonese): We have spent 15 minutes on this question. Let us go to the second question. Mr Ambrose CHEUNG.

Construction of West Rail Mei Foo Station at Lai Chi Kok Park

2. MR AMBROSE CHEUNG (in Cantonese): It is learnt that the Government proposes to build the Mei Foo Station of West Rail in the Lai Chi Kok Park with the high profile construction method. The park was built after the completion of Container Terminals 5, 6 and 7 as undertaken by the Government upon its consultation with residents of the Mei Foo Sun Chuen. It serves as a buffer zone between residential premises and the infrastructural facilities concerned in the area and provides sports and recreational amenities as well. In this connection, will the Government inform this Council:

(a) why it proposes to build the Mei Foo Station of West Rail in the Lai Chi Kok Park; whether it has studied if alternative sites (such as the site to the east of the KMB's Lai Chi Kok Depot) are available;

(b) whether it has assessed the adverse impact of such a proposal on the Government's credibility in decision-making, and on the living environment as well as sports and recreational amenities of the area; if so, what the details are; if not, why not;

(c) whether reclaimed land has been reserved in West Kowloon for the construction of railway when the alignment and works of West Rail were planned; if not, why not;

(d) why it does not use the low profile construction method to build the West Rail station, in view of the fact that the residents in the area strongly opposed to the high profile construction method; and

(e) why it has refused the request of residents that financial assistance should be provided to them so that they could hire an independent consultant to assess the information supplied by the Government on the sitting and construction works of the West Rail station?

PRESIDENT (in Cantonese): Secretary for Transport.

SECRETARY FOR TRANSPORT (in Cantonese): Madam President, I am pleased to have the opportunity to explain to Honourable Members the planning of the Mei Foo Station of the West Rail, which has been the subject of much concern to Mei Foo residents. The question posed by the Honourable Ambrose CHEUNG is a multi-barrelled one involving a large number of issues. In order to address all the relevant issues adequately, my answer today will be longer than usual. Due to the very complex nature and background of the issues involved, it would be helpful if I could first give Members some information about the history of the planning of the West Rail vis-a-vis other infrastructural facilities in the area.

Background of the 150-m buffer zone

The need of the West Rail project and its conceptual alignment were first established in the first Railway Development Study (RDS-1) which was completed in March 1993. Due to the highly congested environment of Hong Kong, it was inevitable that there were a number of constraints to the development of the West Rail alignment. As regards the Mei Foo Sun Chuen area, the Airport Railway (AR) and the West Kowloon Expressway (WKE) were two such constraints. These two infrastructure projects were part of the Port and Airport Development Strategy (PADS) projects, which were already at the final stage of planning in the early 1990s. The alignments of both the AR and the WKE had been finalized around mid-1991, and the relevant road scheme of the WKE had already been authorized by the Executive Council in December 1992. Therefore the planning of the West Rail simply had to take both the AR and WKE as given constraints.

Given these constraints, the RDS-1 concluded that if the West Rail were to terminate in West Kowloon, it inevitably had to route through the then proposed Lai Chi Kok Park. In order to reduce the impact that this would have on the Park, the RDS-1 recommended that the railway should be enclosed in box structures in a landscaped hill.

As part of the effort to reduce the noise and other environmental nuisances emanating from the WKE or the reclamation for the Container terminals, in 1985 the Government designated a piece of land measuring 150 m in width in front of the Mei Foo Sun Chuen to act as buffer zone alongside the expressway. The Government reaffirmed the role of this buffer zone in 1992. It has been suggested by some objectors to the West Rail scheme that the Government, by constructing the West Rail Mei Foo Station underneath the Lai Chi Kok Park, has violated its pledge to provide the 150-m buffer zone. This is not so. I have tabled for Members' reference a drawing and an area photograph which show the relationship between the buffer zone and the West Rail scheme. In particular, I would like to invite Members to note that:

(1) The proposed West Rail Mei Foo Station will not be located within the 150-m buffer zone;

(2) A section of the railway will indeed be within the boundary of the buffer zone. However, it will be fully enclosed within a box structure covered by earth mound with proper landscaping on top. As such, no noise or other environmental nuisances will be generated; and

(3) The earth mound covering the railway will blend into the existing topography of the Park and will be designed by landscape experts, in consultation with the local residents, to ensure that the final product is pleasing and will integrate with the Lai Chi Kok Park.

That being the case, Madam President, there is simply no question of the Government not retaining the buffer zone. On the contrary, it is with the need to reduce noise and environmental nuisances firmly in mind that the more costly earth mound box structure for the West Rail was proposed.

Location of the Mei Foo Station

Let me now turn to the more specific questions posed by Mr Ambrose CHEUNG relating to the location, design and consultation process regarding the proposed Mei Foo Station.

The West Rail was one of the priority projects recommended for early implementation. The Kowloon-Canton Railway Corporation (KCRC) is the builder and operator of the railway and was asked in December 1996 to carry out studies on the implementation of the 30.5 km long electrified double-track railway system connecting West Kowloon with Northwest New Territories. The KCRC has since undertaken a series of technical studies to determine the railway alignment and the land take requirements. It has also undertaken the relevant Traffic Impact Assessment, Environmental Impact Assessment and Drainage Impact Assessment. At the same time, the Government has also commissioned an independent consultant to assess critically the KCRC's studies in order to provide the Government with an informed second opinion on the highly technical and complex studies involved.

Location of the Mei Foo Station ─ Lai Chi Kok Park versus other locations

It is strategically important in railway network development terms that the West Rail be connected to other existing railways such as the Tsuen Wan Line (TWL) of the Mass Transit Railway (MTR). The railway scheme of the West Rail proposed by the KCRC includes nine stations, of which Mei Foo is one. The Mei Foo Station is proposed to be located in part of the Lai Chi Kok Park. This location was chosen after a number of options had been carefully explored. It will enable the provision of a convenient interchange with the TWL at its Mei Foo Station. A maximum flow of 24 000 passengers per hour is estimated to interchange between the two railway systems during morning peak periods. In addition, this is the only location where all the alignment design criteria can be met, and an efficient and constructible station scheme can be developed.

As I have mentioned earlier, the KCRC has also explored the feasibility of other locations. These include:

(a) a station at Kwai Fong;

(b) a station located between Lai Wan and Lai Chi Kok Highway ─separate concourse arrangement;

(c) a station located between Lai Wan and Lai Chi Kok Highway ─combined concourse arrangement.

(d) a station at the Kowloon Motor Bus (KMB) Depot in Lai Chi Kok; and

(e) a station to the east of the KMB Depot in Lai Chi Kok;

The Kwai Fong option was not acceptable because it would produce inefficient interchange with the TWL and unsatisfactory station layout. In addition, the existing Kwai Fuk Road which is a heavily used road would need to be excavated. Very large and deep excavation would be involved resulting in great engineering difficulties and a prolonged construction period with all the adverse impact on the local environment.

The options at the KMB Depot and that located between Lai Wan and Lai Chi Kok Highway would require the railway to follow a very tight curve due to the sharp bend, I believe Honourable Members should understand that unlike motor vehicles which could do a right-angle-turn at any time, railway could only do a very moderate turn. As such, the options would not meet acceptable railway design standards and were, therefore, considered not acceptable.

As regards the option to the east of the KMB Depot, it was also considered unsuitable due to the constraints imposed by the existing MTR TWL at this location. The West Rail would have to cross under the MTR at a level as deep as 40 m below ground (equivalent to some 12 storeys) and this would greatly impair the interchange function of the station and the operation of the railway. Further, the requirement for very deep excavation is a high risk task which could induce unacceptable ground settlement and seriously affect the safe operation of the Airport Railway in close proximity.

For these reasons, both the KCRC and the Government's independent consultant have concluded that the Lai Chi Kok Park is the most appropriate location for the West Rail Mei Foo Station.

Let me now switch to the station design proposed by Mr Ambrose CHEUNG and make a comparison between the high-profile option and the low-profile option.

The KCRC has examined a couple of design options in order to evaluate the safety, engineering, transport efficiency, operational and community aspects of the future station. The design of the station at this location presents a number of engineering challenges. It is constrained by structures of existing facilities, including the Kwai Chung Road Flyover, the MTR tunnel and the Lai Chi Kok drainage culvert. None of these is new; instead, they have been existing for some time already. The two design options examined by the KCRC are the so-called "high-profile" option and the "low-profile" option. Both options will result in part of the station building rising above the existing ground level. The high-profile option will rise 12 m above ground level while the low-profile option 3 m. Although the low-profile option will have less impact in terms of visual intrusion and land uses for the Park, studies conducted by the KCRC and vetted by the Government's independent consultant confirmed that this option should not be adopted. This is mainly due to the very high engineering risks associated with its construction and the potential damage to the nearby infrastructures. Having considered the KCRC proposal and the advice of the independent consultant carefully, the Administration is of the view that the risks associated with the low-profile option are too high to be considered as an acceptable option and that it should not be pursued. Madam President, please allow me to elaborate on the rationale in greater details as the subject is of much contention among Mei Foo residents.

Low-profile option ─ unacceptable due to high risks involved

We have made a conscious decision not to adopt the low-profile option for a number of reasons. They include:

(a) The foundations of the Kwai Chung Road Flyover would have to be underpinned at high engineering risk. This would probably require closure of the Flyover, which is the main traffic artery in this part of West Kowloon;

(b) The West Rail Station would be sitting over the MTR running tunnel and would come within its 3 m protection zone, thereby incurring great risk to the operation of the TWL during the construction of West Rail;

(c) The West Rail would have to pass under the Lai Chi Kok culvert which is the main drainage carrier in that area. This would require underpinning the culvert which would be very difficult due to its size and the fact that it is underground. Alternatively, we would need to divert the culvert temporarily by opening it up, but this would cause grave environmental problems to residents living in the vicinity; and

(d) The construction period of the low-profile option would be 15 months longer than that of the high-profile option, thereby prolonging the construction impact on residents.

Costing nearly $1 billion more than the high-profile option and suffering from the abovementioned drawbacks, the low-profile option is however considered to be visually less intrusive by Mei Foo residents. This is the views reflected by the residents and will take me to the environmental issues involved with the high-profile option.

High-profile option ─ environment impact on the park and residents

The Administration recommended to adopt, for gazetting purpose, the high-profile option which involves much less engineering risks and does not have the drawbacks suffered by the low-profile option. However, we do recognize that the high-profile option will have adverse impact on the Lai Chi Kok Park facilities and on certain residential units of the Mei Foo Sun Chuen. As a result of protracted consultation with the Provisional Urban Council (PUC), the Sham Shui Po Provisional District Board and affected residents in no fewer than 60 meetings and presentations in the last three years, the KCRC has made a number of refinements to the scheme in order to address the relevant concern. These include "terracing" the earth-mounded station in order to maximize the area of flat park land. Under the "terraced" design, only about 0.7 hectare (slightly larger than a mini-soccer field) of the total 17.5 hectares of the Park area will be permanently lost to the Station. As a gesture of goodwill, the KCRC has also agreed to pay the PUC an ex-gratia benefit of $10 million for loss of flat land and has undertaken to reprovision all affected park facilities.

Measures to address environmental problems

As an integral part of its studies on the West Rail project, the KCRC has conducted a comprehensive Environmental Impact Assessment (EIA) for the scheme. The EIA concluded that with appropriate mitigation measures, environmental impacts during the construction period and operation stage could be kept within statutory requirements and standards of the Environmental Protection Department. The Advisory Council on the Environment has also endorsed these findings.

Although entirely unrelated to the West Rail (Phase I) and not a requirement in the EIA, the KCRC has also undertaken to provide the residents living near the Kwai Chung Road Flyover with noise abatement facilities such as double-glazing of windows to mitigate the noise emanating from the Flyover.

Both the Administration and the KCRC have made every effort to address the concerns of the Mei Foo residents. In this respect, the scheme has been revised as far as practicable. For instance, the design of the pedestrian link between the West Rail Mei Foo Station and the existing Mei Foo Station has been refined, resulting in a smaller raising of the ground in Mount Sterling Mount, thereby reducing the impact on the shops in the vicinity.

I can assure Members that during construction, the KCRC will ensure that all environmental standards will be strictly adhered to, and will put in place a monitoring mechanism involving the local residents. The KCRC will set up a community liaison office to provide prompt response to concerns and enquiries from residents and to offer assistance where necessary.

Funding of another independent consultant

As regards the request by some residents that the Government should employ an independent consultant on the residents' behalf to vet the KCRC's proposal, we have explained to them that the KCRC's proposal has been considered carefully by various parties. The KCRC first engaged a consultant to formulate the initial proposal which was examined and refined by the Corporation before submission to the Government. Taking into account the concerns and suggestions received during consultation, the KCRC undertook further studies to develop its design. In the course of developing the design, the KCRC's proposal was subject to further examination and refinement by government departments. In addition, the Government engaged an independent consultant to form and advise the Government of an independent view of the proposal submitted by the KCRC. No fewer than 30 design reports on findings related to the Station design by the KCRC had been vetted by the independent consultant. It is therefore considered not justifiable to spend public money to engage a further independent consultant to vet the proposal already vetted by an independent consultant. Indeed, all the views of the objectors to the railway scheme will be submitted to the Executive Council for consideration before the scheme can be authorized.

The implementation of the high priority railways is essential to sustain Hong Kong's continued economic and social development. The West Rail is needed to meet the transportation needs of the Northwest New Territories, which will have a total population of 1.4 million by the year 2011. The project will create 13 000 job opportunities in the next few years. The West Rail is under a very tight implementation programme to meet the target completion date of 2003. The project is scheduled to commence construction later this year, subject to the Executive Council's authorization of the railway scheme.

Madam President, I apologize for the length of this reply. However, given the complexity of the issues which are of great public interest, the questions deserve a comprehensive response. Otherwise, I will not be doing justice to all those who have helped improve the scheme, including members of the relevant Provisional District Board and the Provisional Urban Council and the Legislative Council.

PRESIDENT (in Cantonese): Mr Ambrose CHEUNG.

Mr Ambrose CHEUNG (in Cantonese): First of all, I should like to thank the Secretary for Transport for the ample information he has furnished this Council with. the Secretary is able to assimilate such an impressive volume of information shortly after he has taken up his post in the Transport Bureau, I really appreciate that very much. Nevertheless, I think it should be most important to grasp the principles, bearing in mind the substantial information before us. Yet it seems that the Secretary has, regrettably, failed to understand clearly the content of my question; as such, I wish to raise supplementaries regarding two basic principles.

To begin with, the buffer zone I have referred to in my question should be the buffer zone formed by Stages I, II and III of the Lai Chi Kok Park (Park); the buffer zone the Secretary pledged is but another cup of tea. The second point is related to the timetable covering the period between the RDS study and the finalized construction schedule for the West Rail. I have been following up this issue for the past 15 years, hence the information I have gathered might therefore be quite different from that provided by the Government. With regard to the two issues I have referred to just now, I wish to point out that they may well serve as a test of the credibility of the Government. In this connection, although the Government had pledged in 1985 that appropriate land resources would be reserved under the West Kowloon Reclamation to allow the West Rail to route through, the 1989-90 preliminary planning for the interface with the airport railway and the West Rail did not include any land resources for the said purpose. this should indeed be regarded as maladministration on the part of the Government. In addition, members from both the Sham Shui Po district board and the Urban Council had unanimously reflected that the high-profile option was not suitable for the Park, but the Government did not pay any respect to the views of the local residents. According to the information provided by the Secretary, the consultants of the Government and the KCRC have both concluded that if the low-profile option was technically feasible, the cost would not be a major consideration for the Government, nor would the construction have any impact on the five-year construction period of the entire West Rail project. Should that be the case, why does the Government still wish to destroy the Park ......

PRESIDENT (in Cantonese): Mr CHEUNG, the way you are raising your supplementary would lead this Council into a debate. Please do not ask questions in this manner but go to your supplementary direct.

MR AMBROSE CHEUNG (in Cantonese): I am sorry, Madam President. The supplementary I wish to raise is that given all those basic factors, why does the Government have to be so stubborn as to insist that a park rising above the ground at a level higher than a five-storey building and generating a noise level higher than the 82 dB produced by the Kwai Chung Road Flyover should be suitable for the residents concerned?

PRESIDENT (in Cantonese): Secretary for Transport.

Secretary for Transport (in Cantonese): Madam President, apart from the lengthy written text of the reply, I have also provided Honourable Members with four pictures for their reference. Let us take a look at the first picture which shows very clearly the buffer zone we have been talking about. The buffer zone in question ─ if I have not mistaken Mr Ambrose CHEUNG's meaning ─ should be the rectangular-shaped buffer zone located at Stage III of the Lai Chi Kok Park, which is facing west. Members could also see that upon the completion of the West Rail, not only would the buffer zone remain intact, it would also be beautified. That being the case, I really cannot understand why Mr Ambrose CHEUNG said the Government had violated its pledge made in 1985 to provide a 150-m buffer zone. This is not so. the yellow-shaded part in the picture is in fact the sub-surface part of the buffer zone; as for the surface, it will be covered with landscape design. So we can see that the function of the buffer zone would certainly be unaffected at all.

In regard to the second point, which is related to the design of the West Rail as well as the timetable for planning the other parts of the Western Corridor and the Airport Railway, I have given a very detailed account in my main reply; as such, I do not wish to repeat my points here. Besides, I have also given an account of both the high-profile and low-profile options to illustrate that the situation is not as what had been described by Mr Ambrose CHEUNG. A picture showing the two options has also been provided for Members' reference. In regard to the high-profile and low-profile options, we could see from this colourful picture the respective areas where deep excavation work is required or which are prone to adverse impacts. Just now Mr Ambrose CHEUNG claimed that the Government was unwilling to adopt the low-profile option although it was technically feasible. I believe Members could see that this is not the case after consulting the colourful pictures. While it is true that the low-profile option should be technically feasible, the risks involve would be too great for us to take. Would Members prefer the Government to take the risk of damaging the Kwai Chung Road Flyover, rupturing the Tsuen Wan Line, as well as opening up the existing culvert just to adopt the low-profile option? Ours is a responsible government, that is why we do not think we should require the public to bear such great risks. For these reasons, we have adopted the high-profile option.

PRESIDENT (in Cantonese): Honourable Members, this has been a lengthy question, but the reply is even longer as it has taken up a total of 26 minutes; therefore, I will not permit any further supplementaries to be raised on this question. Members who wish to follow up the matter could do so through other channels.

Third question. Mr Albert HO.

Regulating Debt Collection Activities

3. MR ALBERT HO (in Cantonese): In view of the recent increase in the number of cases of debt collection by unlawful means, will the Government inform this Council:

(a) of the number of complaints about debt recovery actions of debt collection agencies received by the police in each of the past 12 months; and of the number of prosecutions initiated in response to these complaints;

(b) whether it is aware of the number of complaints about illegal practices of harassment or intimidation by debt collection agencies received each month by the Hong Kong Monetary Authority (HKMA) during the same period, as well as the detailed breakdown of these unlawful practices by types;

(c) whether it is aware of how the HKMA ensures that banks will comply with the guidelines on debt collection practices set out in the Code of Banking Practice, and how it deals with banks not complying; and

(d) whether further measures or legislation will be introduced to regulate the debt collection activities of these agencies?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President,

(a) In the past 12 months, there was a total of 964 cases reported to the police concerning abusive debt collection activities. The monthly breakdown is attached at Annex A. Of the 964 cases, 86 cases were prosecuted involving 150 defendants.

(b) In the past 12 months, the HKMA hotline received a total of 224 complaints relating to debt collection activities. 166 of them were related to causing nuisance to the complainant, 36 to intimidation, 13 to defamation and nine to the use of violence. The monthly breakdown is attached at Annex B.

(c) The authorized institutions (which include under the Banking Ordinance licensed banks, restricted licence banks and deposit-taking companies) are not required to report to the HKMA how they conduct their debt collection activities. However, the two industry associations (that is, the Hong Kong Association of Banks and the Deposit Taking Companies Association) have introduced in July 1997 a Code of Banking Practice (the Code) for compliance by their members. The Code was endorsed by the HKMA. The Code requires, inter alia, authorized institutions to establish effective procedures to monitor the performance of their debt collection agencies and prohibit authorized institutions from passing information about the referees or third parties, other than the guarantors, to their debt collection agencies.

In February 1998, the HKMA conducted a survey on compliance with the Code including those requirements relating to debt collection activities. The situation was considered satisfactory. Out of the 204 authorized institutions surveyed, 60 of them indicated that they employ/use the services of debt collection agencies. All have specified in the relevant contracts or written instructions that the debt collection agencies must not resort to intimidation or violence.

The HKMA has set up a hotline since April 1996 to receive complaints from the public concerning improper debt collection activities of authorized institutions. This serves to alert the HKMA of authorized institutions which are not complying with the Code. Where complaints have been received, the HKMA will follow up with the authorized institutions concerned to ensure that necessary action is taken to rectify the malpractices identified.

The HKMA monitors compliance with the Code as part of its regular supervision of authorized institutions through meetings with their senior management as well as on-site examinations on the control system of the authorized institutions. In considering action to be taken in respect of a breach of the Code, the HKMA would have regard to the seriousness of the breach, whether it is deliberate or unintentional and whether it may be detrimental to the interests of depositors. If necessary, the HKMA may consider the use of the powers available under the Banking Ordinance as appropriate. These powers include the commissioning of an auditor's report on the internal systems of control of the authorized institution, the imposition of restrictions on the operations of the authorized institution and in an extreme case, the suspension or revocation of the licence of the authorized institution.

(d) There are plently of provisions under the present criminal law to deal with various illegal practices employed by debt collection agencies. For instance, debt collectors who resort to intimidation or criminal damage can be prosecuted either under the Crimes Ordinance or the Summary Offences Ordinance.

However, in view of the public concern on the issue and the recent increase in the number of cases of debt collection by illegal means, the Chief Justice and the Secretary for Justice have recently referred the topic of debt collection activities to the Law Reform Commission (LRC) for further study. The LRC will form a subcommittee to consider the adequacy of the existing law and to recommend such changes as appropriate. The Administration will consider the need for legislation to regulate debt collection activities in the light of the findings of the LRC.

Annex A

Month	Number of reported cases
August 97	40
September 97	36
October 97	25
November 97	28
December 97	49
January 98	97
February 98	108
March 98	106
April 98	100
May 98	132
June 98	93
July 98	150
Total	964

Annex B

Month	Number of complaints received
August 97	10
September 97	7
October 97	25
November 97	16
December 97	12
January 98	16
February 98	19
March 98	25
April 98	17
May 98	11
June 98	15
July 98	51
Total	224

PRESIDENT (in Cantonese): Mr Albert HO.

MR ALBERT HO (in Cantonese): Madam President, the figures supplied by the Secretary for Security today show that the situation has now become increasingly serious. In 1997, the average number of complaints received by the police every month was double-digit, but in 1998, it has become three-digit. The Administration mentions in the last paragraph of its reply that it will consider the need for legislation; I am personally very disappointed at such a reply, and I am sure that most of my colleagues in this Council will feel the same. My supplementary question is: Why has the Security Bureau not made reference to the relevant legislation of many advanced countries? In these countries, laws have been enacted to regulate illegal debt collection agencies and to criminalize irregular dunning actions. Why does the Government find it impossible to draw up a relevant policy and proceed with the work of legislation immediately? Will the Government please give us a timetable and tell us when it can complete the studies, draw up a policy and submit a relevant bill to this Council?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, Mr HO is correct. In the first seven months of this year, the police received a total of 964 complaints, representing a rise of 42.3% over the 447 cases in the whole of last year. The deterioration of the situation, I think, is probably due to the current economic downturn. As early as several months ago, the police already issued an instruction to front-line police officers, reminding them that they should handle public complaints about irregular dunning actions with particular care. And, the Security Bureau and the police are right now studying the relevant legislation of other countries. We have noticed from these studies that countries like the United Kingdom and the United States do have some laws to deal with irregular dunning practices. In the United States, for example, there is a law on unfair dunning practices. However, these practices are regulated not as criminal offences, but as civil cases instead. In the United Kingdom, on the other hand, criminal laws are applied, but no particular law has been drawn up to deal specifically with these practices.

Actually, under the existing criminal code, there are already many provisions dealing with offences like criminal damage, intimidation, false imprisonment, arson and common assault, but we will still conduct studies with the police on the adequacy of these provisions. Besides, the need for special laws on debt collection agencies and their activities and the introduction of a licensing system will also be considered. The Secretary for Justice will shortly appoint a subcommittee under the LRC to study these issues, and I think this subcommittee will consist of representatives from the Security Bureau, the police and the financial sector. We will study the above issues together with the subcommittee.

As I understand it from the Secretary for Justice, it will usually take two years for the LRC to complete a topical research project. In the next two years, we will keep up our co-operation with the police to see how we can step up our enforcement efforts and other actions against the irregular practices in question.

PRESIDENT (in Cantonese): Mr LAU Chin-shek.

MR LAU CHIN-SHEK (in Cantonese): Madam President, the figure of 900 is just the tip of an iceberg. As the Secretary rightly put it just now, the continued downturn of our economy may probably lead to more of these cases in the time ahead. Actually, the malpractices in question have created immense anxieties and frustrations among debtors ─ and also their families and colleagues. It is mentioned in paragraph (a) of the main reply that 86 cases were prosecuted involving 150 defendants. How many debt collection agencies do these 150 defendants belong to? How many banks and financial institutions were involved? Have any of these defendants been caught a second time for the same type of offences? What were the penalties imposed on them, and were the penalties sufficient to deter such offences?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, as I learn from the police, some 30 to 40 debt collection agencies are known to be active in the business. And, as shown by the statistics supplied by the police, the complaints received in the first half of this year involved the dunning activities related to the following: loan-sharking (31%); banks and financial companies (9%); and, individual creditors and business creditors (23%).

PRESIDENT (in Cantonese): Mr LAU, which part of your question has not been answered?

MR LAU CHIN-SHEK (in Cantonese): Madam President, the Secretary has not told us what penalties were imposed and whether the penalties were sufficient to deter these offences. Besides, she has not said whether all the 36 active debt collection agencies were involved in the 86 cases, nor has she clarified whether just a few of them were prosecuted.

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Since there is no offence known as illegal debt collection under the existing law, it is rather difficult for the police to compile statistics on illegal debt collection as such. As I pointed out a moment ago, from their own experience, the police know that there are 30 to 40 debt collection agencies active in the business. However, if we want to know how many of these collection agencies were involved in the cases of the 150 defendants, we will have to study all these cases one by one before we can come up with an answer. We know that when compared with other types of offences, this type of offences is undeniably more difficult to detect. As shown by the police statistics, in the past 12 months, the detection rate of this type of offences is 10.8%, which is lower than the overall detection rate of 45.7% in the first seven months of this year. One reason for this low rate of detection is that it is very difficult to catch the offenders concerned because they usually appear at midnight or during the small hours to splash paint around, chain up the gates of their targets from the outside and intimidate people, and they will usually make off immediately afterwards. Another reason is that the victims may be unwilling to tell the whole truth to the police due to one reason or another.

PRESIDENT (in Cantonese): Mr LAU Chin-shek, I hope you will keep your follow-up as concise as possible.

MR LAU CHIN-SHEK (in Cantonese): Madam President, what penalties were imposed and were they sufficient to deter such offences?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, I do not have the information required to hand.

PRESIDENT (in Cantonese): Mr James TO.

MR JAMES TO (in Cantonese): Madam President, this is the first time that the Secretary for Security answers questions on this issue in this Council. However, I have been following the matter for six years already. Actually, I hope that the Government can tell this Council one thing. Why has the Government asked the LRC to study the matter, instead of conducting the studies itself for faster progress? Is this a delaying tactic? Has the Security Branch actually directed the LRC to study this matter because it does not want to take its own actions to enact more stringent laws? Since the Secretary has said that these crimes are usually very complicated and difficult to detect, will the Government consider the possibility of classifying them as organized crimes, so that the Organized Crime and Triad Bureau can take over and detect some major cases to achieve the deterrent effect desired?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, let me first assure the Honourable James TO that we are absolutely not employing a delaying tactic by asking the LRC to conduct the relevant research. As far as I know, the decision to set up a subcommittee to study the topic of illegal debt collection was in fact made by the LRC itself several months ago. The enactment of new legislation to deal with these malpractices will involve many legal issues. As I mentioned just now, the United States does not deal with such malpractices as criminal offences, but, in the United Kingdom, they are treated as such. We will of course consider whether there is any need to introduce a licensing system for debt collection agencies. In addition, we will also consider whether it will be at all useful to enact laws directed at debt collection agencies if the debt collection activities concerned are carried out not by debt collection agencies, but by some bad elements at the service of loan-sharks. Since many legal issues are involved, we are pleased to note that the LRC has decided to set up a subcommittee to study the matter. Mr James TO has questioned whether it is possible to refer such cases to the Organized Crime and Triad Bureau for investigation. As far as I know, the relevant figures show that the involvement of triad elements in this type of offences is very small, and there is no evidence to suggest that illegal debt collection activities are controlled by any triad societies.

PRESIDENT (in Cantonese): Mr NG Leung-sing.

MR NG LEUNG-SING (in Cantonese): Madam President, part (c) of the main reply touches on how the compliance of authorized institutions with the Code is monitored. It is mentioned that in considering actions to be taken to deal with a breach of the Code, the HKMA will have regard to the seriousness of the breach, whether it may be detrimental to the interests of depositors. It is further mentioned that if necessary, the HKMA may consider the use of the powers available under the Banking Ordinance as appropriate. May I ask the Government how it is going to strike a proper balance with respect to the interests of depositors? Is there any objective criteria?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, I think this supplementary question should be referred to the Secretary for Financial Services because he will be in a better position to give a clearer and more accurate reply.

PRESIDENT (in Cantonese): Secretary for Financial Services.

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, I may well be unable to give a concrete answer to the specific question asked by the Honourable NG Leung-sing on what should be regarded as being most in line with the interests of depositors or debtors. However, as far as I know, it is stipulated very clearly in the Code that whenever an authorized institution employs an agent, namely, a debt collection agency, to collect any debt, that particular institution must always ensure that the activities of its agent must be legal, and will not produce any adverse effects on its business, reputation and conduct. As a result, if there are any adverse effects, the HKMA can request improvements from the authorized institution concerned, and penalty can be imposed. However, I should perhaps add one point here. All along, we have no doubt been receiving complaints of this nature, but every time when we carry out investigation or give advice to the authorized institutions concerned, they will usually respond very positively. That is why we have never resorted to licence cancellation as a deterrent so far.

PRESIDENT (in Cantonese): Mr Martin LEE.

MR MARTIN LEE (in Cantonese): Madam President, I refer to the statement "If necessary, the HKMA may consider the use of the powers available under the Banking Ordinance as appropriate" contained in the main reply. Will the Government please inform this Council whether the HKMA has ever considered the exercise of such powers? Specifically, has the HKMA ever exercised such powers before? If yes, how many times?

PRESIDENT (in Cantonese): Secretary for Financial Services.

SECRETARY FOR FINANCIAL SERVICES (in Cantonese): Madam President, I have in fact mentioned this point very roughly a moment ago. As I understand from the HKMA, it has no doubt been receiving complaints of this nature during the supervision process, but whenever its investigation identifies any need for improvements on the part of the authorized institutions concerned, they will usually respond very positively and make immediate improvements. As a result, the HKMA has not found it necessary to invoke its power of licence cancellation so far.

PRESIDENT (in Cantonese): The fourth question. Prof NG Ching-fai.

Freeze on Tuition Fees for Tertiary Institutions

4. PROF NG CHING-FAI (in Cantonese): It is learnt that as the Government has decided to cancel increases to tuition fees for tertiary institutions for 1998-99, the estimated amount of revenue from tuition fees received by these institutions will hence be reduced by about $130 million in total. In view of that, will the Government inform this Council whether it has any plans to apply to the Finance Committee of this Council for allocation of the amount to these tertiary institutions, in order to cover their estimated loss in tuition fees?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Mr President, in view of the current economic situation, the Government has decided that tuition fees for government-funded education programmes, including those provided by the University Grants Committee (UGC)-funded institutions, should be frozen at the 1997-98 levels. Recognizing the Government's current difficult budgetary situation, the UGC has agreed to initially absorb the resultant reduction of tuition fee income within the overall provision for the UGC-funded sector in the 1998-99 to 2000-01 triennium. Depending on the Government's and the institutions' financial situation, and the level of tuition fees for the coming two academic years, we would consider the need to seek the approval of the Finance Committee of this Council for supplementary provision for the UGC-funded institutions to meet their operating expenditure needs.

PRESIDENT (in Cantonese): Prof NG Ching-fai.

PROF NG CHING-FAI (in Cantonese): Madam President, as far as I understand it, the provision shouldered by the UGC should originally be used for developing centres of excellence. If the UGC absorbs the resultant reduction of tuition fee income by means of the funding, does it imply that the plan to expand centres of excellence will be affected? Has the Government assessed whether this will affect the overall quality of teaching staff in universities?

PRESIDENT (Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, on informing the UGC of its decision to freeze tuition fees, the Government also asked the UGC to discuss with the various tertiary institutions to see what should be done to prevent the quality of teaching and research in universities from being affected. An example is whether all or part of the spending in other areas can be cut so as to make up for the reduction of income resulted from the freezing of tuition fees. I have also pointed out clearly in the main reply that we will, depending on the financial situation of the Government, the UGC and the institutions, consider the need to seek the approval of the Finance Committee of this Council for supplementary provision to make up for their operating expenditure needs.

PRESIDENT (in Cantonese): Prof NG Ching-fai, do you want to follow up your question? Has part of your question not been answered clearly? If you do not wish to follow up your question, would you please wait for the next turn to raise your next question.

PROF NG CHING-FAI (in Cantonese): Yes, I will wait for my turn.

PRESIDENT (in Cantonese): Mr CHEUNG Man-kwong.

MR CHEUNG MAN-KWONG (in Cantonese): Madam President, the Government has given us an evasive answer in its main reply. In answering the question as to whether the Government will seek the approval of the Finance Committee of this Council for supplementary provision for the UGC-funded institutions to meet their operating expenditure needs, the Government has attached a decisive condition and, that is, it will depend on the institutions' financial situation and the level of tuition fees for the next two years. In so doing, the Government has failed to give a specific assurance in university subsidy. I hope the Government can give us a specific reply or assurance by guaranteeing in unequivocal terms that it will allocate funds to the UGC through this Council to make up for the shortfall resulted from the current freezing of tuition fees and that the UGC will subsidize all institutions with the funds to make up for the resultant shortfall in tuition fees and losses. If the Government refuses to do so, why?

PRESIDENT (Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, under the current economic difficulties, the Government feels that it can ask the UGC and various tertiary institutions to cut spending in other areas as far as possible because of the reduction in income caused by the freezing of tuition fees. Of course, the quality of teaching and research in universities cannot suffer as a result of this. The amount involved as a result of the freezing of tuition fees is about $130 million, actually representing approximately 1% of the total provision allocated to the institutions by the Government through the UGC. In other words, we hope to seek the advice of the UGC and the institutions after they have finished their discussion so that we can have a clear picture of their financial situation and know whether spending in other areas can be cut. After that, we will formulate a concrete plan to decide whether and how much we should apply to the Finance Committee of this Council for provision. At present, we only hope that the UGC and the institutions can discuss whether they can cut other expenses without affecting the quality of teaching.

PRESIDENT (in Cantonese): Miss CHOY So-yuk.

MISS CHOY SO-YUK (in Cantonese): Madam President, in replying to the question just now, the Government mentioned that it hoped the institutions could cut their spending in other areas so as to make up for the shortfall in tuition fees. Under such circumstances, can the Government guarantee that the quality of teaching in universities will not be affected?

PRESIDENT (Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, when the Government informed the UGC of its decision, it had clearly indicated that it hoped the quality of teaching or research in the institutions would not be affected. The Government has also clearly stated in its main reply that after receiving the comments from the UGC, we will, depending on the Government's and the institutions' financial situation, consider (I stress again that we will consider) the need to seek the approval of the Finance Committee of this Council for supplementary provision. We can give this now as a specific assurance.

PRESIDENT (in Cantonese): Prof NG Ching-fai.

PROF NG CHING-FAI (in Cantonese): Madam President, I would like to raise the point that certain tertiary institutions have agreed earlier to reduce their funding by 10%. Will the Secretary inform this Council whether he is confident that the Government's request for a further reduction will not affect the quality of teaching?

PRESIDENT (Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, what Prof NG mentioned just now is that various institutions have, in accordance with the recommendations of the UGC, agreed to cut 10% of their unit costs in the next three years. At the same time, the Government has agreed to return 5% of this to the institutions as provision. As far as this is concerned, we have all along pointed out in concrete terms that we have asked the UGC to discuss with the institutions to see if they can cut their spending in other areas on the premise that the quality of teaching in universities cannot suffer.

PRESIDENT (in Cantonese): Dr YEUNG Sum.

DR YEUNG SUM (in Cantonese): Madam President, I am puzzled by the reply given by the Secretary just now. First of all, the Government announced the freezing of tuition fees before asking the various universities to see if they could cut spending. If not, the Government would try to work out a solution to allocate funds. Why did the Government not do it the other way round? Why not consult the various institutions to see if they could cut spending before announcing the policy? Now it seems that the Government had invited the universities to dinner but the universities were asked to foot the bill. It is already extremely difficult for the universities to cut spending from time to time. Can the Secretary review this practice again?

PRESIDENT (Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, we are now facing economic difficulties. The Government's money is indeed the taxpayers' money. In deciding to freeze all government-funded education programmes, the Government has also asked the UGC to discuss with the institutions to consider cutting spending in other areas without affecting the quality of universities before the Government considers whether or not to apply for funding or calculates the amount of funding. Under the current situation, we consider such a request extremely reasonable.

PRESIDENT (in Cantonese): Fifth question. Mr CHAN Kam-lam.

Handling of Medical Incidents

5. MR CHAN KAM-LAM (in Cantonese): In view of the recent series of serious medical incidents involving human negligence in public hospitals managed by the Hospital Authority (HA), will the Government inform this Council whether:

(a) such incidents indicate a shortage of frontline staff in public hospitals as well as inadequacy in their sense of accountability and alertness to dangers;

(b) it is aware of any disciplinary actions taken by the hospitals concerned against their staff who are involved in the cases of negligence; if so, what the details are; if not, why not;

(c) it is aware of the basis on which the HA and public hospitals decide on the appropriate time for disclosing medical incidents and offering explanations to the patients concerned, their families and the public; and whether any review will be conducted on the appropriateness of the current practice; and

(d) it is aware of any plans which would be put in place by the HA to help improve the risk management measures adopted at present by public hospitals in connection with health care work, for the effective prevention of cases of human negligence; if so, what the details of the plans are; if not, why not?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President,

(a) In almost all cases, medical procedures performed in public hospitals are up to the required professional standard. However, I want to point out that all medical procedures carry certain intrinsic risks. In the course of treatment, some clinical staff may commit errors due to factors related to experience, professional judgment and personal or other environmental reasons. As a result, the patients concerned may not be able to receive proper treatment. This cannot be construed to indicate that all our frontline clinical staff lack alertness or the sense of accountability, and neither does this have any direct relation with the strength of manpower resources.

(b) The HA has always attached great importance to the performance and professional conduct of its staff. In cases of medical incidents in which medical staff are suspected to have breached the professional conduct or have been negligent in their duties, the HA will promptly investigate into the causes and course of the incidents, and formulate remedial measures accordingly, regardless of whether the incidents have imposed any impact on the patients. If any staff member is found to have breached his professional code or has been negligent in his duty, appropriate disciplinary actions will be taken against him. In 1997-98, the HA took disciplinary actions against 40 staff members for these reasons.

(c) When a medical incident affecting the well-being of individual patients occurs, the hospital will inform the affected patients and their families immediately. The causes and effects of the incident will be explained and appropriate medical treatments and assistance will be rendered. In deciding whether individual medical incidents should be immediately disclosed to the public, the HA will take account of the following three principles:

(1) whether the disclosure is acceptable to the patient and his families;

(2) whether the incident will affect the well-being of the general public; and

(3) whether the disclosure will alert the clinical staff and the general public to adopting appropriate preventive measures.

The above principles were drawn up by the HA in consultation with patients and community groups.

(d) Risk management in connection with health care work covers a wide scope of areas, including hospital premises, medical equipment and apparatus, hospital-used chemical and pharmaceutical products and medical procedures and so on. Since 1993-94, the HA has been progressively introducing risk management concepts and implementing risk management measures in public hospitals. A Risk Management Steering Group was set up at the HA Head Office last year to review the adequacy of risk management measures currently adopted in hospitals, to identify the areas for improvement and to devise strategies to fully implement these measures. The Steering Group has prepared a detailed checklist of the possible risks in hospitals to assist each hospital in identifying its own areas of risks. Each hospital has set up a Committee to follow up and implement risk management measures.

PRESIDENT (in Cantonese): Mr CHAN Kam-lam.

MR CHAN KAM-LAM (in Cantonese): Madam President, in part (c) of the main reply, the Secretary mentioned that the HA would take three principles into account in deciding whether or not to disclose medical incidents to the public. However, most recent medical incidents were exposed by the media. Those incidents show that hospital management is beset with problems. If no measures are taken, they will certainly have a negative impact on the well-being of the public. Will the Secretary inform this Council how many medical incidents in the year 1997-98 have not been disclosed due to those principles and what their detailed circumstances were?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I do not have detailed information on the number of undisclosed. However, if the cases have been disclosed by the media first, it is fitting for the hospitals to make suitable responses afterwards. If the hospitals make no responses, it would create further misunderstandings. The HA will decide whether to disclose medical incidents to the public immediately according to the three principles I mentioned. If the HA did not disclose a case and the media released the news, the HA would also make an appropriate response.

PRESIDENT (in Cantonese): Dr LEONG Che-hung.

DR LEONG CHE-HUNG (in Cantonese): Madam President, I believe the Government is aware that during the short seven years after the establishment of the HA, the workload of hospitals has increased tremendously. For instance, the demand for accident and emergency services and specialist out-patient service as well as the number of hospitalizations have increased by 50%. However, in the first part of the main reply, the Government said that there was no relation between the medical incidents and workload. I hope that the Government will rethink this question. Will the Government consider this question? If yes, will it consider how to reduce the workload of frontline staff?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, just now Dr LEONG raised the issues of staff shortage and the workload of individual hospitals. The HA does not see a direct correlation between this and medical incidents. However, we do know that many HA hospitals have a very heavy workload. Therefore, where appropriate and the budget permitting, we have increased funding to hospitals for the recruitment of staff. The HA is different from other government departments in that it has great flexibility and can allocate resources to meet the most urgent needs, without the need to follow the normal procedures of government departments. Therefore, I believe the HA knows where there is a more acute shortage of staff and where resources should be allocated.

PRESIDENT (in Cantonese): Mr Michael HO.

MR MICHAEL HO (in Cantonese): Madam President, in the main reply, the Secretary mentioned that these medical incidents had no relation with staff strength. However, did the Government try to find out whether there was any indirect relation between the two through its representatives on the HA? The Secretary said that the HA could allocate its own resources. But can the problem of resources be solved this way entirely?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, the reply I gave just now was based on information provided by the HA. They told me that regardless of the number of patients, medical staff would use their expertise to serve patients in a professional manner. The HA has no direct evidence to show that staff strength has a direct correlation with human negligence.

PRESIDENT (in Cantonese): Mr CHAN Wing-chan.

MR CHAN WING-CHAN (in Cantonese): Mr President, frontline staff of public hospitals have complained to me that their workload is heavier than before and that they often work till they are in a daze. Just now, in answering Members' questions, the Secretary said that these medical incidents had no direction correlation with staff strength. Does the Secretary know the meaning of the phrase "haste makes waste", that is, that staff might commit errors while they are very busy? Will the number of frontline staff be increased right away?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, the HA has always been very concerned about enhancing the professionalism of frontline medical staff and increasing their alertness. Of course, with more staff, there would be less stress in work. However, the most important thing is the alertness of staff and their knowledge of high risk medical procedures. The HA will remind staff of the correct medical procedures. Through different training methods, it will continuously introduce correct risk management measures to medical staff and make them aware of the importance of minimizing medical risks.

PRESIDENT (in Cantonese): Mr LAU Kong-wah.

MR LAU KONG-WAH (in Cantonese): Mr President, I was very surprised that in answering Mr CHAN Kam-lam's question just now, the Secretary said that she did not know the details of the medical incidents. I am very concerned about the public's right to know. The HA is obviously overly passive if it responds only after the press has reported the incident. For example, recently, at the Shatin Hospital, a medical incident had apparently occurred. Did those principles apply to that incident? Why did the Secretary only inform the Chairman of the Hospital Governing Committee of these incidents but not its other members? Did the Secretary ask the Chairman of the Hospital Governing Committee not to disclose these incidents to the public?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I did not instruct the HA to inform the Chairman of the Hospital Governing Committee, nor did I instruct the Chairman of the Hospital Governing Committee to inform its other members. This was entirely up to the HA Board.

PRESIDENT (in Cantonese): Mr LAU Kong-wah, which part of your supplementary question has not been answered?

MR LAU KONG-WAH (in Cantonese): The Secretary has not answered the first part, that is, why she only informed the Chairman of the Hospital Governing Committee but not its other members? Why did she make such a difference?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, maybe I am not too clear about this question. What did I not inform the Chairman of the Hospital Governing Committee about?

MR LAU KONG-WAH (in Cantonese): Madam President, basically they knew about the incident at the Shatin Hospital. However, they did not inform the public, but only informed the Chairman of the Committee, while other members were in the dark. Could the Secretary explain the criteria for this selective way of informing people?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): I consider the incident at the Shatin Hospital to be somewhat different. The Board has already discussed in detail when the Shatin Hospital Governing Committee was informed, when the Chairman of the Governing Committee was informed and when the Chairman of the HA was informed.

PRESIDENT (in Cantonese): Mr LAU Kong-wah.

MR LAU KONG-WAH (in Cantonese): Mr President, maybe the phrase "haste makes waste" also applies to the Secretary. She is not too clear about the whole incident. Could the Secretary give a written answer as to how, based on the three principles mentioned in part (c), they decided whom to inform and whom not to inform in this incident?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): I will give a written answer. (Annex I)

PRESIDENT (in Cantonese): Mr LAW Chi-kwong.

MR LAW CHI-KWONG (in Cantonese): Madam President, my question is very similar to the questions raised by other Members just now. However, I would like the Secretary to give a clearer answer. In part (a) of the main reply, it was mentioned that some clinical staff might commit errors due to factors related to experience, professional judgment and personal or other environmental reasons. Is work-related stress part of "other environmental reasons"? If yes, does work-related stress have anything to do with staff strength?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Work-related stress of course has something to do with staff strength. However, even if there is work-related stress, professionally trained medical staff should not commit errors as a result. This is quite clear in their profession.

PRESIDENT (in Cantonese): Mrs Sophie LEUNG.

MRS SOPHIE LEUNG (in Cantonese): Madam President, in part (d), the Secretary mentioned medical equipment and apparatus. Due to the innovations in medical equipment, apparatus and methods of treatment at present, frontline medical staff will face pressure in this area and their alertness must be greatly enhanced. Will the Secretary ask the organizations involved in training these professionals to do more in this respect?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, hospital staff receive careful instructions and training in the operation of every new or old medical apparatus. I very much agree with what the Honourable Mrs Sophie LEUNG said. The alertness of staff must be especially enhanced, since medical apparatuses nowadays are much more advanced than they were 10 or 20 years ago. While some apparatuses might be easier to operate than before, some might be more complicated. Therefore, suitable training has to be provided in many respects and staff must be reminded to operate the apparatuses according to the instructions.

PRESIDENT (in Cantonese): Miss CHOY So-yuk.

MISS CHOY SO-YUK (in Cantonese): Madam President, a lot of medical staff have told us that there is a shortage of frontline clinical staff. In fact, many people consider that even if there is no direct correlation between medical incidents and the strength of frontline clinical staff, as the Secretary said, there is an indirect relation between them. Just now the Secretary repeatedly answered that the HA considered there to be adequate staff. Does this mean that the Government believes that there is adequate staff just because the HA says so, while the views of medical staff do not count? Does the Secretary believe there is adequate staff when the HA says so?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Maybe the Honourable Member has mistaken my meaning. What the HA said was there was no evidence to show that there was a direct correlation between them. They did not tell me that there was adequate staff. On the contrary, they have always told me that there is a shortage of staff. If there is a substantial budget, we will increase their funding every year.

PRESIDENT (in Cantonese): Last question seeking an oral reply. Dr LUI Ming-wah.

Assistance to Hong Kong Businessmen Working in the Mainland

6. DR LUI MING-WAH (in Cantonese): In order to help Hong Kong manufacturers and enterprises solve problems relating to taxation and law encountered in their operations in the Mainland, will the Government inform this Council whether it will consider playing a co-ordinating role in establishing a support centre in Hong Kong, and at the same time consulting with the Central People's Government on the setting up of an organization in the Mainland to provide the relevant assistance?

PRESIDENT (in Cantonese): Secretary for Trade and Industry.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): We are aware that Hong Kong manufacturers and enterprises encounter problems relating to taxation and law, and so on, in their operations in the Mainland from time to time. In view of this, the Trade Department (TD) and Trade Development Council (TDC) have all along been maintaining close contacts with relevant authorities in the Mainland in order to collect information on law, administration and regulation in respect of business operations in the Mainland for distribution to Hong Kong businessmen. In addition, the 11 offices set up by the TDC in the Mainland can also provide information and liaison services for as well as recommend professionals to Hong Kong businessmen with a view to helping them solve problems relating to law and regulation. The TDC will, when necessary, arrange meetings for Hong Kong businessmen and Mainland officials so as to strengthen the communication between both parties in respect of the above-mentioned problems.

However, I would like to stress that Hong Kong businessmen should, as in doing business in other places overseas, solve the taxation and legal problems encountered in their operations in the Mainland according to the local legal systems and procedures. Under the principle of "one country, two systems", the assistance which the Hong Kong Special Administrative Region (SAR) Government can offer is mainly the provision of information and liaison services. The SAR Government cannot directly interfere in matters that fall within the administrative, legal and judicial jurisdiction of the Mainland. Therefore, we consider that the existing services provided by the TD and TDC in this respect are adequate. There is no need to establish a separate support centre in Hong Kong. Nevertheless, relevant government departments can assist in understanding information on the appropriate complaint channels or make referrals to relevant authorities as requested by the complainant. Besides, the Trade and Industry Bureau has already entered into dialogues with relevant mainland officials on how to improve the business environment for Hong Kong businessmen in the Mainland and to enhance the support services provided for them. The study is still underway and we will continue to follow up on this matter.

PRESIDENT (in Cantonese): Dr LUI Ming-wah.

DR LUI MING-WAH (in Cantonese): Madam President, the Secretary has given us such a high-sounding answer that it seems well-established channels are already available to help Hong Kong businessmen solve their problems relating to taxation, regulation and so on encountered in the Mainland. As far as I am concerned, in the past three years, two new regulations that came into effect immediately after enactment in the Mainland affecting manufacturers' operations had caused panic among them. One of the regulations concerned the general ledger and the other concerned the transfer of paper products from one factory to another. In both incidents, civil trade associations had to send representatives to Beijing to lodge petitions and give explanations. What assistance did the Government provide in these two incidents? Recently, the Mainland Government has been cracking down hard on smuggling and tax dodging activities by metting out heavy fines and detaining high-level executives. This has aroused great fears among the law-abiding Hong Kong businessmen again. How will the Government render assistance in this respect?

PRESIDENT (in Cantonese): Secretary for Trade and Industry.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I have already made it very clear in my main reply that since the Mainland has its own laws, under the principle of "one country, two systems", the SAR Government is not in a position to interfere in matters relating to the administration and law enforcement of the Mainland, nor is it right for it to do so.

In respect of the two recent incidents cited by Dr LUI such as the one concerning paper board factories, even the trade association of that industry also understands that in regard to these issues, factory operators have to abide strictly by the relevant customs regulations of the Mainland so as to avoid getting into trouble. Recently, they have advertised in the newspapers urging their fellow operators to strictly abide by the customs agreements. In other words, even the industry also realizes that it is most important to abide by the laws there.

As regards the question of how to understand the change in the local laws, administrative measures and the like, it is related to the assistance given in providing the information as I have mentioned before. In this regard, the local office and 11 mainland offices of the TDC will collect the suitable information as soon as possible and whoever in need can make inquiries at any of the offices.

In these two incidents, the SAR Government could only do its best to learn as much as it could from the local authorities about the relevant laws, but it had to keep its hands off any of the individual cases.

PRESIDENT (in Cantonese): Mr HO Sai-chu.

MR HO SAI-CHU (in Cantonese): I very much agree to what the Secretary has said in her reply that the SAR Government must not get involved directly in these disputes. However, has the Secretary considered providing assistance to the businessmen through the existing private bodies such as the various chambers of commerce, taking into account that these chambers of commerce have closer connections with the mainland authorities and are more familiar with the situation in the Mainland? Will the Government render assistance to such chambers of commerce to deal with these matters?

PRESIDENT (in Cantonese): Secretary for Trade and Industry.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I thank Mr HO for this question. Not only the chambers of commerce request for our assistance, but the SAR Government also hopes that the various chambers of commerce will assist their respective industries in solving their problems. In this regard, the TD and the Trade and Industry Bureau are already keeping a close contact with the various chambers of commerce in the hope that we will be able to grasp the relevant problems and the information the Government can follow up on. In respect of this, we are grateful for the assistance provided by the chambers of commerce and the relevant industries.

PRESIDENT (in Cantonese): Mr James TIEN.

MR JAMES TIEN (in Cantonese): Madam President, although I agree with the Government that under the principle of "one country, two systems", Hong Kong manufacturers and enterprises should take care of the problems in relation to their operations in the Mainland and it is inappropriate for the Government to get involved, up till now, the situation has not been particularly satisfactory if we depend solely on the help of the TD and the TDC. In regard to the example cited by Dr LUI concerning paper product factories, very often our chamber of commerce needs the Xinhua News Agency or the Hong Kong and Macau Affairs Office to intercede with the Beijing authorities to have our problems gradually solved. We do not consider that satisfactory. These matters should be taken care of through the Trade and Industry Bureau of the Hong Kong Government. In the last paragraph of the main reply, the Government said that it had entered into dialogues with relevant mainland officials on how to improve the business environment for Hong Kong businessmen in the Mainland. Do these dialogues cover all matters or is the Trade and Industry Bureau, as we have requested, holding dialogues with a particular mainland authority so that Hong Kong manufacturers and enterprises need not solve the problems they encounter in the Mainland through our chamber of commerce?

PRESIDENT (in Cantonese): Secretary for Trade and Industry.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, in the last paragraph of my reply I said that we had already entered into dialogues with relevant mainland authorities. That was only a preliminary step. At present, we have entered into a preliminary dialogue with the People's Government of the Guangdong Province and we have yet had any specific progress we can report to Members. If any progress is made, I will be glad to give a detailed report to the relevant panel of the Legislative Council.

At present, the Constitutional Affairs Bureau is the department in the SAR Government in charge of the general relations between the SAR and the Mainland. This Bureau has all along kept in close contact with its counterpart in the Mainland in regard to general matters.

PRESIDENT (in Cantonese): Miss CHOY So-yuk.

MISS CHOY SO-YUK (in Cantonese): Madam President, Hong Kong businessmen are one of the biggest investors in China, so Hong Kong businessmen must have the most dealings with the Mainland. Many business environments and regulations in the Mainland are changing every day and they vary from place to place. Under such circumstances, Hong Kong businessmen are met with many difficulties and problems daily. Will the Government reach a certain agreement with the Chinese authorities first? I am not suggesting that the Government should impose its ideas on their legislation. I am just asking, should China change its laws, whether it would allow Hong Kong businessmen a certain grace period to understand the changes first so that both parties have time to understand each other's situation instead of changing it immediately. As regards the environment for Hong Kong businessmen's operations in the Mainland, I think that the Government must discuss the overall situation with the mainland authorities. Will the Government do that?

PRESIDENT (in Cantonese): Secretary for Trade and Industry.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, I very much agree with Miss CHOY. Because of the open door policy and economic reforms, the Mainland has undertaken a host of very rapid developments and it is unavoidable that there are changes in laws and regulations. These are all related to the dissemination of information. As I have said before, the TD and TDC are very willing to give assistance and do their best to make available the information about the changes in policies on the Mainland.

Concerning the time taken by the Mainland Government to notify the various parties concerned about their law amendments, I do not consider it appropriate for the SAR Government to comment on the appropriateness of their actions. In this respect, the best way is to ask the sector, that is, those who are really doing business in China, to convey their concerns directly to the relevant authorities. I know that the sector has contacts with very high-level officials in the Chinese Government. In this regard, I consider it very inappropriate for the SAR Government to pass any comments on the judicial administration of the Mainland Government.

PRESIDENT (in Cantonese): Mr HO Sai-chu.

MR HO SAI-CHU (in Cantonese): I thank the President for allowing me to raise a second supplementary question. The Secretary mentioned in her main reply that Hong Kong businessmen should, as in doing business in other places overseas, solve the taxation and legal problems encountered in their operations in the Mainland by themselves. In fact, the Government can help in the area of arbitration. Despite the fact that it has been a year since the transition, it is still very difficult to enforce an arbitrated ruling on either side of the boundary irrespective of whether the ruling is made in Hong Kong or on the Mainland. Does the Secretary know about this situation? Can the Government see to it that the various parties involved will make their best efforts in solving these problems expediently?

PRESIDENT (in Cantonese): Secretary for Trade and Industry.

SECRETARY FOR TRADE AND INDUSTRY (in Cantonese): Madam President, arbitration involves legal matters, and I do not have this kind of information on hand. I will answer this question in writing. (Annex II)

WRITTEN ANSWERS TO QUESTIONS

Smuggling of Chilled Poultry

7. MRS SELINA CHOW (in Chinese): Will the Government inform this Council:

(a) of the total number of operations conducted by the Customs and Excise Department against the smuggling of chilled poultry into Hong Kong over the past three years;

(b) of the market value of the chilled poultry seized in the operations concerned; and

(c) whether it has estimated the market value of the chilled poultry successfully smuggled into the territory; if so, what the market value is?

SECRETARY FOR SECURITY (in Chinese): Madam President,

(a) Prior to the outbreak of the "avian flu" in December 1997, smuggling of chilled poultry was uncommon, and no specific operations against these smuggling activities were conducted from 1995 to 1997. There has since been an increase in such illegal activities and the Customs and Excise Department (C&ED) has taken various measures to combat these activities. These measures include stepping up its surveillance, patrol and checking at the road and rail boundary crossing points and at sea; strengthening its liaison and co-operation with the government departments concerned and with mainland authorities. During the period from January to July this year, the C&ED conducted 18 operations at sea and 46 on land, of which one and 12 were respectively joint operations with the Department of Health.

(b) There was no seizure of chilled poultry in 1995 and 1996. Chilled poultry worth $2,000 was seized in 1997. From January to July this year, 168 tonnes of chilled poultry worth $3.88 million have been seized.

(c) We do not have information based on which we could reliably estimate the amount and market value of the chilled poultry which could have been successfully smuggled into the territory.

Application for Building and Structural Plans

8. MR CHAN WING-CHAN (in Chinese): It is learnt that an owner of a restaurant located in the basement of a building was not issued building and structural plans after applying to the Buildings Department (BD) for such plans for three years. As a result, the Urban Services Department (USD) refused to issue a licence to the restaurant which was consequently fined more than $500,000 for operating without a licence. It was only after lodging a complaint with the Ombudsman that the restaurant owner received the plans from the BD and was subsequently granted a provisional restaurant licence by the USD. In this connection, will the Government inform this Council:

(a) of the time normally taken to apply for building and structural plans from the BD;

(b) why it took three years to issue such plans to the restaurant owner in question; whether it is related to the restaurant being located in the basement of a building;

(c) why the BD issued the plans only after the owner had lodged a complaint with the Office of the Ombudsman; and

(d) whether it has examined if the imposition of fines totalling over $500,000 on the owner for operating a restaurant without a licence is related to the delay by the BD in issuing the plans; if so, whether the BD will offer an apology and compensation for this?

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS (in Chinese): Madam President, in the absence of sufficient information, we can only believe that the question is referring to a case in San Po Kong which the Ombudsman referred to the Buildings Department (BD) in early July 1998. The BD has already investigated the complaint and replied to the Ombudsman.

If the case is the one we believe it to be, there are several inaccuracies in the question which we would like to clarify. First, an applicant for operating a restaurant in the basement of a building does not need to apply to the BD for building structural plans. Such plans are prepared by the Authorized Persons/Registered Structural Engineers of the building concerned. The applicant can view the approved plans if he wishes to verify the original design and construction of the building or to carry out other building works not shown in the plans so as to ensure that his works will comply with the Buildings Ordinance and other statutes. Normally an applicant can view the plans in six to eight weeks after submitting an application. However, the period may be longer depending on the number of cases being handled by the BD at the time or the number of applications to view the plans of the same building at the same time. In the case concerned, there had indeed been quite a number of applications to view the structural plans, building plans and structural calculations of the same building over the last two years, but all these requests were entertained.

Second, it is not true that it had taken three years for the applicant in question to obtain access to the structural plans of the building concerned. The first application to view the plans was received by the BD through the applicant's agent in April 1997. Subsequently the applicant made two more applications to view the structural plans, the latter through a different agent than the former one. These applications were entertained in October 1997 and June 1998 respectively. The applicant was also directly contacted by the BD in July 1998 and he confirmed that there was no further need for him to view the documents.

The allegation in part (c) of the question is unfounded. As explained in paragraph 3 above, the applicant's agents viewed the structural plans of the building in October 1997 and June 1998, which were both before his complaint to the Ombudsman on 16 June 1998.

The BD has checked with the USD regarding the prosecution records of the restaurant in question. A Provisional Restaurant Licence was granted to the restaurant in January 1998. Nevertheless, the premises had been operating as an unlicensed restaurant before then and there were five counts of conviction between May 1997 and January 1998. The total fine was $71,260 and not $500,000 as mentioned in the question.

Supply of Pharmaceutical Products

9. DR LEONG CHE-HUNG: Regarding the supply of pharmaceutical products during the period when the new Hong Kong International Airport was experiencing a chaotic situation in cargo handling service, will the Government inform this Council whether it knows:

(a) the number of consignments of pharmaceutical products that have been delayed and for how long;

(b) if the Hospital Authority (HA) or the Department of Health (DH) have been short of supply of pharmaceutical products during the period; and

(c) if there is any mechanism or contingency plan in place in the HA or the DH to help patients obtain pharmaceutical products which have been in short supply due to delay or loss of the consignments?

SECRETARY FOR HEALTH AND WELFARE: Madam President,

(a) We have not received any reports of major medical supplies problems arising from the new airport's recent difficulty with cargo handling. During the period in question, the DH received two requests for assistance from wholesalers, and on both occasions, the DH successfully helped the wholesalers to obtain early release of the pharmaceutical products concerned. There was only a delay of a few days. During the same period, the HA issued three testimonial letters to assist its suppliers to obtain early delivery of medical supplies from the cargo handler.

(b) Neither the HA nor the DH experienced any shortage of supply of pharmaceutical products during the period in question.

(c) It is normal practice for the HA and the DH to keep sufficient buffer stock of pharmaceutical products to avoid shortage of supply due to delay or loss of consignments. At times of shortage, arrangements will be made to share out the stock amongst different pharmacies in order to maintain continual supply to all patients. Purchases can be obtained from the local private sector, and where possible, substitutes may be used.

Listing of Government-owned Infrastructural Facilities

10. MRS MIRIAM LAU (in Chinese): Will the Government inform this Council whether it has any plan to list the Government-owned infrastructural facilities (such as road tunnels) on the stock exchange; and if so, what the details are?

SECRETARY FOR THE TREASURY (in Chinese): Madam President, there are no immediate plans on the part of the Government to pursue the listing of Government-owned infrastructural facilities in the stock market. However, in order to improve the operational management and quality of services to the community, we will continue to seek suitable opportunities to maximize the involvement of the private sector in provision of infrastructure. This could include privatization of such facilities, in part or in whole, either through listing or other appropriate ways.

The Government will pursue privatization action only when prevailing market conditions permit and after the individual merits of a particular proposal have been thoroughly considered. To the extent that a privatization proposal would require amendment to existing legislation, we would clearly wish to discuss it with this Council.

Figures on Bankruptcy Cases

11. MR ERIC LI (in Chinese): Regarding the bankruptcy cases handled by the Official Receiver's Office, will the Government inform this Council:

(a) of the respective numbers of new bankruptcy cases received as well as cases completed and not yet completed by the Office in each of the past three financial years;

(b) of the average costs borne by the Office in processing one bankruptcy case;

(c) whether an estimate has been made of the number of bankruptcy cases still outstanding at the end of this financial year; and

(d) whether the Office has any plan to expedite the processing of the outstanding cases?

SECRETARY FOR FINANCIAL SERVICES (in Chinese): Madam President,

(a) The respective total number of new insolvency cases, including bankruptcies and companies windings-up, cases completed and active outstanding cases for the past three financial years are as follows:

Year	1995-96	1996-97	1997-98
Total number of new insolvency cases	1 013	1 119	1 102
Total number of cases completed	686	784	953
Total number of active outstanding cases	2 596	2 941	3 011

(b) The Official Receiver does not keep separate statistics about the costs of cases because each insolvency case is unique. However, based on the minimum level of statutory investigation required and the standard procedures to be completed in each and every case, it is estimated that for an insolvency case with assets not exceeding $50,000, which represent 74.5% of the compulsory winding-up cases and 90% of the bankruptcy cases handled by the Official Receiver's Office, the average cost to the office is about $54,400. For cases with assets between $50,000 and $200,000, the average cost is about $138,000. The actual costs, of course, vary, depending on complexity and circumstances.

(c) The total number of outstanding active cases as at 31 March 1998 was 3 011. Based on the number of petitions presented to the court since April 1998, the Official Receiver's Office estimated that the total number of outstanding active cases by the end of the current financial year to be 3 441.

(d) Apart from constantly reviewing internal resources and procedures with a view to streamlining and speeding up the processing of cases, the Official Receiver's Office will seek to expand its existing Pilot Scheme of contracting out arrangement, which has thus far contracted out 186 summary cases to qualified private sector insolvency practitioners, into a regular contracting out scheme.

Development of Industrial Estates

12. MRS SOPHIE LEUNG (in Chinese): As the Government is actively assisting the Hong Kong Industrial Estates Corporation in developing the fourth industrial estate at Tuen Mun, will the Government inform this Council of:

(a) the present respective numbers of factory buildings in the three industrial estates at Yuen Long, Tai Po and Tseung Kwan O;

(b) the major types of industrial operations to which land has been granted for the construction of factory buildings in these three industrial estates; and among them, the number of small and medium enterprises each employing less than 50 employees; and

(c) the planned capacity of the fourth industrial estate to meet the future demand of local industries for industrial land, in terms of years?

SECRETARY FOR TRADE AND INDUSTRY (in Chinese): Madam President,

(a) The respective numbers of factory buildings in the three existing industrial estates are as follows:

	No. of factories
	In operation	Under construction	Total
Tai Po Industries Estate	78	-	78
Yuen Long Industrial Estate	41	5	46
Tseung Kwan O Industrial Estate	7	11	18
	126	16	142

(b) The major types of industrial operations which have been granted sites in these three industrial estates include food and beverages; service and support; and machinery and parts. Details are set out in the Annex. Among them, there are 10 factories each employing fewer than 50 employees.

(c) Based on the average annual disposal rate of about 7 hectares in the past, the 44 hectares of industrial land to be provided by the planned Fourth Industrial Estate would be able to meet the demand for land in the Industrial Estates for six to seven years after its opening.

Annex

Types of Industrial Operations in the Industrial Estates

	No. of factories
Types of Industrial Operations	Tai Po Industrial Estate	Yuen Long Industrial Estate	Tseung Kwan O Industrial Estate	Total
Building materials	3	6	-	9
Chemical and gases	3	3	2	8
Dyeing and finishing	-	4	-	4
Electronic parts	7	1	2	10
Food and beverages	13	2	2	17
Machinery and parts	12	1	3	16
Metal parts and products	10	4	-	14
Other manufacturing	5	4	2	11
Paper packaging and other products	4	4	-	8
Pharmaceutical	-	5	1	6
Plastic resins and plastic products	8	4	-	12
Printing and publishing	4	3	3	10
Service and support	9	5	3	17
No. of factories	78	46	18	142

Subvention to Multi-service Centres and Social Centres for the Elderly

13. MR LAW CHI-KWONG (in Chinese): In order to enhance the quality of services provided by multi-service centres and social centres for the elderly, will the Government inform this Council:

(a) whether it has any plan to provide full subvention for such centres; if so, of the estimated amount of subvention involved; and

(b) as no subvention will be provided by the Community Chest this year for newly-established multi-service centres and social centres for the elderly to make up for the shortfall between their expenditure and the government subvention, how the Government will assist these institutions?

SECRETARY FOR HEALTH AND WELFARE (in Chinese): Madam President,

(a) Social centres for the elderly (S/Es) and multi-service centres for the elderly (M/Es) were previously classified as desirable supplementary services for subvention purpose and were provided with partial subvention from the Government. Recognizing the contribution of M/Es and S/Es in providing community care services to the elderly, the Government decided in 1989 that S/Es and M/Es should in principle be fully subvented subject to availability of resources. This decision has the support of the Social Welfare Advisory Committee. As substantial additional resource is required to achieve full subvention for all the centres, its implementation has to be gradual. In 1990-91, additional resource was provided to bring up the subvention level of S/Es and the social centre component of M/Es from 70% to 80%. It is estimated that additional recurrent source of $65 million per year (at 98-99 price) will be required to bring up the subvention level of all existing M/Es and S/Es to 100%.

(b) We are aware of the Community Chest's new policy of no longer providing subvention to newly established M/Es and S/Es to make up for the shortfall in government subvention. However, it should be noted that a considerable proportion of the existing S/Es and M/Es (about one third of the M/Es and more than one half of the existing S/Es) are currently not receiving subvention from the Community Chest. We understand that these agencies raise private donation to cover the shortfall in government subvention. We will continue to keep the matter under review but, in the meantime, we will give priority in the allocation of new S/Es and M/Es to agencies which are able to raise funds to meet part of the cost of the centres.

Fishing in the Water Surrounding the New Airport

14. MR WONG YUNG-KAN (in Chinese): It is learnt that as a result of fishing in the water in the vicinity of the new airport, a number of local fishermen have recently been prosecuted for gaining unauthorized entry to a restricted area. In this connection, will the Government inform this Council:

(a) of the Ordinance under which those fishermen were prosecuted, the total number of fishermen prosecuted accordingly to date, and the penalty imposed in general by the courts on persons convicted of unauthorized entry to a restricted area;

(b) whether the water in the vicinity of the new airport is within the scope of a restricted area; if so, of the coverage of the restricted area, the date at which it was designated as a restricted area, and whether any consultation with the local fishermen had been undertaken beforehand;

(c) whether any assessment has been made of the impact on the income of local fishermen in designating the water in the vicinity of the new airport as a restricted area; and

(d) whether consideration will be given to offering compensation to those local fishermen affected by such designation; if not, why not?

SECRETARY FOR ECONOMIC SERVICES (in Chinese): Madam President,

(a) and (b)

In order to safeguard flight safety, to ensure that the transmission of air navigation signals is free from interference and that flight paths are clear of obstacles, the Government has on 4 May 1998 designated Airport Approach Areas (AAAs) and Height Restricted Areas (HRAs) to control the movement of vessels in the vicinity of the Chek Lap Kok Airport. The restricted areas are located at the Brothers Islands and Lung Kwu Chau and cover also waters around the new airport platform. (For details, please see the enclosed map.) In proposing the restricted areas, the Government has widely consulted the shipping and fishing industries. During the consultation, representatives of the fishing industry raised no objection to the designation of the restricted areas. Under Regulation 23 of the Shipping and Port Control Regulations, no vessel shall enter the AAAs and no vessel exceeding certain height limits shall enter the HRAs without the permission of the Director of Marine. Fishing activities in the HRAs are not prohibited as long as fishing vessels do not exceed the prescribed height limits. Any vessel contravening the Regulation shall be prosecuted and if convicted, may be liable to a fine at level 3 (maximum $10,000) and to imprisonment of six months. Since the designation of the restricted areas, no fishing vessels or fishermen have been prosecuted under the Regulation.

(c) and (d)

Fishermen have no legal title in respect of the waters which they habitually fish. Therefore, the question of paying compensation to them does not arise and it is not considered necessary to assess the impact of designating the restricted areas on the income of fishermen.

（留一頁貼圖）

Entry Visa Requirement of Ethnic Chinese Indonesians

15. MR CHAN YUEN-HAN (in Chinese): It is reported that quite a number of ethnic Chinese living in Indonesia have come to Hong Kong to seek refuge since rioting erupted in that country in May this year, some of them being Hong Kong residents and their family members. In this connection, will the Government inform this Council:

(a) of the number of ethnic Chinese Indonesians who have come to Hong Kong since May this year; the number of them who are Hong Kong permanent residents or holders of Hong Kong Identity Cards; whether there has been an increase in the number of ethnic Chinese Indonesians who have come to Hong Kong as compared with that in the corresponding period of last year;

(b) of the circumstances under which holders of Indonesian passports are required to have an entry visa when entering Hong Kong; of the shortest, the longest and the normal periods of time which the Immigration Department needs for processing visa applications by these people; whether the time required to process such visa applications has been shortened since May;

(c) whether the Immigration Department conducts questioning or makes special arrangements when considering whether to permit the entry of ethnic Chinese Indonesians into Hong Kong; if so, what the details are;

(d) of the respective periods of stay in Hong Kong granted to Indonesian passport holders who are exempted the visa requirement, and those who have been issued an entry visa; whether there has been an increasing trend in the number of cases involving overstaying since May; and

(e) of the conditions and procedures for applying for an extension of stay; whether the Immigration Department has received applications for an extension of stay from ethnic Chinese Indonesians so far; if so, of the respective numbers of families and persons involved; whether the Government has provided special assistance to such families; if so, what the details are?

SECRETARY FOR SECURITY (in Chinese): Madam President,

(a) The Immigration Department's statistics are compiled according to an individual's nationality but not race. As far as Indonesia is concerned, all holders of Indonesian passports are classified as Indonesian nationals irrespective of whether or not they are of the Chinese race. Therefore, we do not have statistics on the number of Indonesian visitors who are ethnic Chinese.

The number of Indonesian passport holders who came to Hong Kong as visitors between May and July in 1998 and the corresponding figures in 1997 are as follows:

	1997	1998
May	11 658	10 953	(decreased by 6.0%)
June	21 463	8 853	(decreased by 58.8%)
July	23 615	8 662	(decreased by 63.3%)

The number of Indonesian nationals holding Hong Kong Permanent Identity Cards or Hong Kong Identity Cards who visited Hong Kong during the above period are as follows:

	1997	1998
May	2 481	3 425	(increased by 38.0%)
June	3 110	3 294	(increased by 5.9%)
July	3 317	4 184	(increased by 26.1%)

(b) Under existing immigration policy, Indonesian passport holders may visit Hong Kong visa free for 14 days for sight-seeing, business or social visit. Those who wish to enter Hong Kong for employment, investment, study, training, joining relatives or residence need to apply for an appropriate visa before coming to Hong Kong.

The time required for processing a visa application depends largely on whether the sponsor is able to provide the supporting documents promptly. If the required documents are furnished promptly, visas can be issued within a short period of time. In practice, the majority of the visa applications can be processed within six weeks. The Immigration Department does not have separate statistics on the processing time for handling visa applications submitted by Indonesian passport holders.

(c) When considering applications from Indonesians to enter Hong Kong, immigration officers may, in accordance with law, ask questions to confirm the identity of the person and to establish the purpose of the visit, the intended duration of stay and whether the applicant meets the relevant policy criteria for entry. This is in line with international practice, and applies to visitors of all nationalities. There are no special clearance procedures applying to Indonesian nationals.

(d) Indonesian passport holders may visit Hong Kong visa free for 14 days, while those coming with visit visas may be allowed to stay for one month. As regards those holding visas for employment, investment, study, training, joining relatives or residence, they would normally be granted a stay of one year, depending on the purpose of coming to Hong Kong. No trends of increase in the number of Indonesian visitors overstaying have been detected.

(e) Those who entered Hong Kong as visitors and wish to stay longer may apply to the Immigration Department for an extension of stay. Applicants need to produce their valid travel documents, the reason for seeking an extension, onward/return trip air tickets and if necessary, evidence showing that adequate funds are held, and so on.

For applicants who have entered Hong Kong for employment, investment, study, training, joining relatives or residence, they should produce with their applications the following documents as appropriate: their valid travel document, Hong Kong Identity Card, current employment letter, employment contract, sponsor's documentation or school letter, and so on.

The Immigration Department will carefully consider each case on its own merits in accordance with prevailing immigration policies.

The number of Indonesian visitors applying for extension of stay is as follows:

1998	Applications Received	Cases Approved*
May	566	546
June	847	832
July	705	685

* The remaining cases were withdrawn, not pursued by applicant or under investigation.

The Immigration Department does not keep statistics on the number of families involved. Since May 1998, not a single application for extension from Indonesian nationals has been refused.

Ultra Vires Acts by Government Departments

16. MR JASPER TSANG (in Chinese): It is learnt that the Immigration Department has been issuing the Certificate of Absence of Marriage Record for nearly 20 years, without the necessary power conferred by law. In this connection, will the Government inform this Council:

(a) how and when it became aware of the ultra vires acts committed by the Department; if the act has just been identified recently, why it has failed to identify it in the past; if the act had already been identified for a long time, why it had not been disclosed until recently; and

(b) whether it has been conducting reviews on the legal basis for the exercise of powers by various government departments from time to time or at regular intervals; if not, why not; if so, whether the reviews are conducted by the respective departments concerned or under the co-ordination of one department?

THE CHIEF SECRETARY FOR ADMINISTRATION (in Chinese): Madam President,

(a) Certificates of Absence of Marriage Record (CAMR) are issued by the Registrar of Marriages under section 26 of the Marriage Ordinance (Cap. 181) and section 13 of the Marriage Reform Ordinance (Cap. 178). A CAMR certifies that there is no record of a marriage having taken place between the person named in the certificate and any other person.

A review completed by the Immigration Department in August this year revealed that there is an inconsistency between the Chinese and the English texts (please see copies of the relevant sections at Annex). Nevertheless, the wording of the CAMR is in line with the Chinese text of section 26 of the Marriage Ordinance (Cap. 181) and section 13 of the Marriage Reform Ordinance (Cap. 178), which reads "亦可發出證明書以示 名列證上的人並無結婚
紀錄".

The Government will expedite action on legislative amendments to remove the anomaly between the Chinese and English texts.

(b) The rule of law is paramount in Hong Kong. One vital aspect of the rule of law is that all actions by government officials must be lawful.

Government officials are fully aware of this and will always take appropriate action to ensure that we act in accordance with the law. If we are in any doubt as to whether it is lawful to take certain action, we will seek legal advice from the Department of Justice. If existing practices are inadequately supported legally, we will either seek to amend the law or consider another course of action.

The current system, under which bureaux and departments seek legal advice as and when it is needed, is considered to be a better system than a general review of the legal basis for the exercise of government powers. Such a review would cover vast areas of government activities and would require disproportionate resources. It would also tend to divert attention away from situations where legal advice is most needed.

In addition to responding to requests for legal advice, the Department of Justice does, from time to time, take the initiative to advise bureaux and departments. Examples of this are where advice is given on the legal implications of recent court decisions, and where general advice and guidelines are given on how administrative action in a particular area should be handled.

Annex

An extract from the Marriage Ordinance (Cap. 181)

26. Searches may be made, and certified copies granted

The Registrar may allow searches to be made amongst all certificates, licences, registers, and indexes in his possession and give a certified copy of any entry therein, and issue a certificate to the effect that there is no record of a marriage between certain persons named having taken place.

An extract from the Marriage Reform Ordinance (Cap. 178)

13. Searches may be made and certified copies granted

The Registrar may allow searches to be made amongst all certificates, registers and indices in his possession for the purposes of this Part and may give a certified copy of any entry therein, and issue a certificate that there is no record of a marriage between certain named persons having been registered under this Part.

Assistance to People Travelling Abroad

17. MR HOWARD YOUNG (in Chinese): In April this year, two Hong Kong residents travelling abroad with a tour group were injured and killed respectively in a diving accident, and compensation for them has not yet been settled. In this connection, will the Government inform this Council of:

(a) the avenues through which Hong Kong residents involved in accidents while travelling abroad can seek assistance from the Government;

(b) the mechanism or the department through which the Government provides assistance to such Hong Kong residents in liaising with the local government, or follows up the development of the case by, for example, obtaining the local government investigation report on the accident as soon as possible, or pursuing the matter with the institutions or persons concerned over the responsibility for the accident;

(c) the avenues through which Hong Kong residents who met with accidents while travelling abroad and received assistance from the local Chinese Consulate can contact the Consulate concerned after they have returned to Hong Kong to follow up the case where necessary; and

(d) the protection and assistance that Hong Kong residents travelling abroad may obtain from the Government other than by taking out insurance themselves?

SECRETARY FOR SECURITY (in Chinese): Madam President,

(a) Hong Kong residents involved in accidents abroad may seek assistance from the Government through a number of channels, including the Immigration Department, the Security Bureau, the Office of the Commissioner of the Ministry of Foreign Affairs of the People's Republic of China (MFAO) in Hong Kong or the Chinese diplomatic or consular mission (DCM) in the country/territory where the Hong Kong resident is staying. Requests put to the DCM concerned will be passed to the Hong Kong Special Administrative Region (SAR) Government for action.

For Hong Kong residents taking part in package tours involved in accidents abroad, the Hong Kong Travel Industry Council and the travel agent concerned will seek assistance from the SAR Government on their behalf.

(b) The main agency responsible for liaising with the local government in question for follow-up actions will be the local DCM. The resident in question can pursue the matter through contacting the DCM direct whilst they are staying in that country or territory. They may also contact the consulate in Hong Kong of the Government in question after coming back to Hong Kong. Should the need arise, the Immigration Department and the Security Bureau can assist in liaising with the DCM through the MFAO in Hong Kong. The Director of Administration can also assist in liaising with the consulate in Hong Kong of the Government in question.

(c) Following their return to Hong Kong, the Hong Kong resident in question may request the Immigration Department and the Security Bureau to contact the DCM in question through the MFAO for follow-up actions.

(d) Hong Kong residents travelling abroad are eligible for consular protection and services provided by DCMs. Leaflets on the services available, entitled "Guide to Consular Protection and Services Outside Chinese Territory", are available for distribution at the Information Office, branch offices and SAR passport issuing counters of the Immigration Department as well as travel agencies. A copy of the leaflet is attached at Annex.

Travellers who take part in package tours originating from Hong Kong are eligible also for protection under the "Package Tour Accident Contingency Fund Scheme". The Scheme provides emergency financial relief to victims of accidents to meet urgent expenses at the place of accident. The payment may cover expenses for medical treatment, funeral or return of the dead body to Hong Kong, and compassionate visit by two relatives. The Scheme is funded from the Travel Industry Compensation Fund which draws its funding from levies on package tour fares.

（留一頁貼圖）

Legislation Against Driving in a Negligent Manner

18. MR ANDREW CHENG (in Chinese): Will the Government inform this Council:

(a) of the circumstances under which the police will prosecute negligent motorists at present and of the legislation that they usually invoke for this purpose;

(b) of the number of motorists thus prosecuted successfully by the police, and of the highest, lowest and average penalties imposed on them by the courts in the past three years; and

(c) whether it is carrying out a review on the legislation against driving in a negligent manner; if so, what the details and the proposed schedule for revising the legislation are?

SECRETARY FOR TRANSPORT (in Chinese): Madam President,

(a) The general approach adopted by the police is to obtain as much evidence as possible in support of whichever is the most serious offence likely to have been committed in the circumstances of each case. Sections 36, 37 and 38 of the Road Traffic Ordinance (Cap. 374) covering the offences of reckless driving causing death, reckless driving and careless driving are usually invoked.

(b) The number of motorists successfully prosecuted by the police and the highest, lowest and average penalties imposed by the courts in the last three years are as follows:

		Maximum Penalty		Minimum Penalty		Average
	No. of Conviction	Fine ($)	Imprisonment (month)	Fine ($)	Imprisonment (month)	Fine ($)
1995
Reckless Driving
Causing Death	28	7,500	12	750	1	2,800
Reckless Driving	481	5,000	1	700	-	2,860
Careless Driving	23 079	5,000	-	200	-	1,228
Total	23 588
1996
Reckless Driving
Causing Death	16	10,000	4	1,000	1	3,625
Reckless Driving	504	8,000	3	1,400	-	3,580
Careless Driving	25 074	7,000	-	500	-	1,558
Total	25 594
1997
Reckless Driving
Causing Death	16	10,000	12	1,000	2	4,175
Reckless Driving	294	10,000	2	1,500	-	2,900
Careless Driving	16 968	5,000	-	200	-	1,240
Total	17 278

(c) Relevant sections of the Road Traffic Ordinance are being reviewed by an inter-departmental Working Group comprising representatives of the Transport Bureau, the Transport Department, the police and the Department of Justice. The review is to ascertain the need to update the Ordinance to meet present day needs. The review will include the need to propose legislative amendments to deter negligent driving behaviour and the adequacies or otherwise of the related penalties.

The Working Group aims to complete the review before the end of 1998. If our conclusion is that the legislation needs to be amended, we will carry out consultation with the relevant groups before deciding on whether to introduce legislative amendment.

Legislation Against Short-selling Activities

19. MR KENNETH TING (in Chinese): International speculators have recently engaged in short-selling activities in Hong Kong's financial market. In this connection, will the Government inform this Council of the countries which have laws in force prohibiting fund managers and companies with provident fund schemes or pension schemes from lending the stocks and bonds they hold in order to curb short-selling activities?

SECRETARY FOR FINANCIAL SERVICES (in Chinese): Madam President, the Securities and Futures Commission has recently conducted a study on the legislation and practices of various jurisdictions including the United Kingdom, United States, Japan, Singapore, Germany, Italy, Luxembourg, Australia, Canada and Mexico with respect to the regulation on securities lending activities by investment funds. The practices of these countries are not entirely identical.

The Australian rules are silent on the issue of securities lending whereas Canada and Mexico both prohibit fund managers from participating in any securities lending activities for the sake of investor protection. For the remaining jurisdictions, securities lending activities by fund managers are allowed subject to the requirements of investors protection and transparency of the funds. These requirements provide that the relevant information should be disclosed properly in the prospectuses; the loans should be effected through a standardized lending system and secured by adequate collateral; and the maturity and ceiling of the loans should also be specified.

Installation of Air-conditioning Systems at Markets

20. MR LAU KONG-WAH (in Chinese): The weather has been very hot recently and a number of markets managed by the Housing Authority (HA) and the Housing Society (HS) are not provided with air-conditioning systems and sufficient ventilation facilities. The very high temperature inside the markets has resulted in the meat for sale at the stalls turning bad very quickly.

In this connection, does the Government know:

(a) of the number of HA markets and HS markets which have not been provided with air-conditioning systems to date;

(b) whether the HA and the HS will consider installing air-conditioning systems at these markets; if so, what the details and the timetable for such installation are; if not, why not;

(c) of the reasons why approval has still not been granted for installing air-conditioning systems at these markets, despite the repeated requests made by the relevant market stallholders over the years; and

(d) of the criteria adopted by the HA and the HS in determining the priority of markets to be provided with air-conditioning systems?

SECRETARY FOR HOUSING (in Chinese): Madam President, since 1997, all newly built markets operated by the HA or the HS have been provided with central air-conditioning. The present position regarding the air-conditioning of markets is as follows:

	Markets operated by Housing Authority	Markets operated by Housing Society
With air-conditioning	14	1
Without air-conditioning, of which	106	4
(a) with mechanical ventilation	60	1
(b) naturally ventilated	46	3

The HA has an ongoing Shopping Centre Improvement Programme, and will consider providing air-conditioning to those markets built before 1997. At present, installation of central air-conditioning system is in progress in one market (Siu Sai Wan Estate), and is being planned for another three markets (Hin Keng, Wan Tau Tong and King Lam Estates).

The HS will consider the feasibility of providing air-conditioning to its four old markets. There is no firm programme yet.

Air-conditioning of some markets is not technically feasible or cost-effective. For example, space may not be available to accommodate equipment or ancillary devices, or the small number of stalls in a market makes it difficult for tenants to share the air-conditioning expenses.

Over the years, requests for the provision of air-conditioning in markets operated by the HA have been carefully considered. Relative priorities are determined with regard to such criteria as age of shopping centre, need for improvement and viability. Where the provision of air-conditioning to a market is found necessary and practicable, the HA will consult tenants concerned. Provided tenants are willing to bear the air-conditioning charge, installation will proceed.

The HS has not received complaints concerning ventilation in its markets so far.

BILLS

First Reading of Bill

PRESIDENT (in Cantonese): Bills: First Reading.

HUMAN REPRODUCTIVE TECHNOLOGY BILL

CLERK (in Cantonese): Human Reproductive Technology Bill.

Bill read the First time and ordered to be set down for Second Reading pursuant to Rule 53(3) of the Rules of Procedure.

Second Reading of Bills

PRESIDENT (in Cantonese): Bills: Second Reading. Secretary for Health and Welfare.

HUMAN REPRODUCTIVE TECHNOLOGY BILL

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I move that the Human Reproductive Technology Bill be read the Second time.

We propose to enact the Human Reproductive Technology Ordinance to ensure, through statutory measures, that reproductive technology will be safely practised and the rights of users and children born through reproductive technology will be protected. We established a Provisional Council on Reproductive Technology in 1995 to advise the Government on the drafting of legislation.

In view of the sensitive nature of reproductive technology, which involves various social issues, the Bill provides for the establishment of a statutory Council on Human Reproductive Technology, which will be responsible for keeping under review and monitoring the development and use of reproductive technology in Hong Kong. The Bill provides for the membership of the Council to be drawn from a wide cross-section of the community, including medical practitioners, social workers, lawyers and persons who are associated with religion. This is to enable the Council to consider wholly the medical, social, moral, ethical and legal issues arising from reproductive technology.

Upon enactment of the Ordinance, providers of reproductive technology services and persons conducting embryo research should obtain a licence issued by the Council on Human Reproductive Technology, before carrying on any relevant activities in premises specified in the licence. The carrying on of such activities without a licence is an offence. The Council will prepare a code of practice to provide detailed guidelines on reproductive technology and other relevant activities for compliance by service providers. When considering whether to renew a licence, the Council will take into account whether the person responsible has complied with the code.

The Bill prohibits sex selection through reproductive technology but parents can do so with two registered medical practitioners' written confirmation, in order to prevent severe sex-linked genetic diseases by sex selection.

In order to minimize the ethical problems arising from surrogacy arrangements, we propose to prohibit commercial surrogacy. This disallows a woman to be paid to carry another couple's child. Also prohibited will be cloning of human embryos and trading in gametes or embryos and fetal ovarian or testicular tissues.

Having taken into account the importance of a family to the upbringing of a child, we propose to limit generally the provision of reproductive technology services to persons who are married to each other. This is to allow children to be raised and taken care of by both father and mother.

The Bill also provides for the Council to maintain in a register information about donors and reproductive technology procedures performed involving donated gametes or donated embryos. Persons aged 16 and above will be able to ascertain from the Council whether they were born following a reproductive technology procedure. In order to reduce the chance of accidental incest, they may also ascertain from the Council whether the person and the person's proposed spouse might be related.

When drafting the Bill, the Provisional Council and the Government have carefully considered and examined various social issues arising from the use of reproductive technology. The aim of our proposals is to protect the rights of the users and the children born through reproductive technology. I believe the content of the Bill will be acceptable to most people.

Madam President, I beg to move.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Human Reproductive Technology Bill be read the Second time.

In accordance with Rule 54(4) of the Rules of Procedure, the debate is now adjourned and the Bill referred to the House Committee.

Resumption of Second Reading Debate on Bill

PRESIDENT (in Cantonese): This Council will resume the Second Reading debate on the Holidays (Amendment) Bill 1998.

Under Rule 21(4) of the Rules of Procedure, I have given permission for the Honourable Andrew CHENG to address this Council on the report of the Bills Committee on Holidays (Amendment) Bill 1998 which was presented by him and laid on the table of this Council on 29 July 1998. Mr Andrew CHENG.

HOLIDAYS (AMENDMENT) BILL 1998

Resumption of debate on Second Reading which was moved on 8 July 1998

MR ANDREW CHENG (in Cantonese): Madam President, I rise now to speak in my capacity as Chairman of the Bills Committee on the Holidays (Amendment) Bill 1998.

The Holidays (Amendment) Bill 1998 had its First Reading in the Legislative Council on 8 July 1998. Originally it was scheduled for resumption of debate on its Second Reading on 29 July 1998. As the timeframe for drawing up the public holiday schedule of 1999 was very tight, the Bills Committee completed the study of the Bill with high efficiency and indicated its support for the Government to resume the debate on Second Reading on 29 July 1998 when a report from the Bills Committee would have been presented to the Legislative Council. However, on 29 July the Administration suddenly deferred the debate on the Bill's Second Reading just an hour or so before the commencement of the Legislative Council meeting. It was not until last week (that is, 1 September) did the Administration formally inform the President of the Legislative Council of its request to resume the debate on Second Reading today. So I have been given permission by the President of the Legislative Council to speak on the report of the Bills Committee today.

I now report on the deliberations made by the Bills Committee in respect of the Bill.

Madam President, the Bill seeks to include Labour Day (1 May) and Buddha's Birthday (the eight day of the Fourth Lunar Month) as public holidays with effect from 1999 and abolish two of the general holidays observed in 1997 and 1998, namely, the Sino-Japanese War Victory Day (the third Monday of August) and the day following the National Day (2 October) so as to keep the total number of public holidays at 17 a year.

General holidays are holidays observed by all banks, educational institutions, offices of public organizations, and government departments. The Bills Committee has no objection to the inclusion of Labour Day and Buddha's Birthday as general holidays. However, some members have reservations about the Government's proposal to abolish the War Victory Day as general holiday. They hold that the inclusion of two additional days as general holidays does not necessarily give rise to the need to trim down the number of existing holidays, and, furthermore, that the Government has not consulted concerned organizations and educational bodies on the question of whether or not to abolish the War Victory Day as a general holiday. Some members worry that as the War Victory Day is an existing general holiday, its abolition might give the public a wrong message and the impression that following the return of sovereignty over Hong Kong, the SAR Government no longer recognizes the War Victory Day, thus running counter to the SAR Government's policy intent of working towards strengthening civic education and nationalistic sense of belonging.

Madam President, another two members support keeping the total number of general holidays at 17 a year. They have no objection to abolishing two of the general public holidays to offset the proposed two holidays. With regard to the arrangements following the abolition of the War Victory Day as a general holiday, they concur with other members in holding that the Government should hold War Victory Day memorial activities with the participation of senior government officials. All members also agree to Mr SZETO Wah's idea that the Government should designate a "National History Education Day" for schools so as to deepen the understanding of teachers and students of national history.

Madam President, the Government has responded to members' viewpoints. According to the Administration's explanation, given the fact that general holidays have effect on extensive economic activities, the Government has, before drafting the Bill, consulted principal employers' and employees' organizations, and the financial sector on which two existing general holidays should be abolished. Results of the consultation indicate that most respondents consider that the two holidays of War Victory Day and 2 October can be abolished to make room for the two proposed holidays, that is, Labour Day and Buddha's Birthday. The Administration also stresses that although with effect from 1999 the War Victory Day will cease to be a general holiday, that day will still be designated as War Victory Day and the Government will hold official ceremonies on a specified date to pay tribute to those who sacrificed their lives in the defence of Hong Kong.

Madam President, in response to the proposal put forward by certain members to retain War Victory Day as a general holiday, the Government maintains that the proposal will increase the total number of general holidays, thus running counter to established government policy. According to government information, with an annual total of 17 days, Hong Kong already has more general holidays than other countries. Furthermore, for each additional day of holiday, employers' expenditure on salaries has to go up by 0.2%, representing an economic cost of $600 million. To increase the total number of general holidays will therefore adversely affect Hong Kong's economic competitiveness. The Government also maintains that to have one additional day of general holiday will reduce government revenue from financial transactions and increase staff costs among civil servants.

Madam President, though members are unable to come to a consensus on the question as to whether or not to retain the War Victory Day as a general holiday, the Bills Committee supports the resumption of debate on Second Reading as the timeframe for drawing up the general holidays schedule of 1999 is very tight.

Madam President, I so submit.

PRESIDENT (in Cantonese): Does any Member wish to speak? Mr HO Sai-chu.

MR HO SAI-CHU (in Cantonese): Madam President, many thanks to Mr Andrew CHENG for reporting on the meetings on behalf of the Bills Committee. But I should like to add a few points. First of all, with regard to the cap of 17 days of general holidays, the Labour Advisory Board (LAB) in fact also agrees that there should be no further increase. Members of the Board include employers' representatives and employees' representatives.

Furthermore, Hong Kong's total number of general holidays already exceeds that of neighbouring places or countries. For example, South Korea, taking the second place, has 16 days ; Japan, trailing right behind, has 15 days; Australia, one of those with even fewer, has 10 days; Canada, the most popular place for our emigrating citizens several years ago, has just nine days. Comparatively, Hong Kong's total of 17 days is higher than that of other places. We therefore firmly believe that there should be no further increases. However, given the point that there is to be no further increase to the total number of days, the difficulty lies in determining which two of the holidays should be abolished as we have decided to include Labour Day and Buddha's Birthday as holidays. Under such circumstances, two other days have to be abolished, which is indeed a difficult decision to make.

Frankly speaking, I am not myself quite happy with the abolition of the two holidays. However, with no alternative available, it seems that some other measures can be used to make up for the two holidays. For example, there can be make-up arrangements for the War Victory Day. As we now designate the third Monday of August as War Victory Day, if memorial activities are to be held, it is hoped that the Government can formally do so on that day so as to mark the occasion. To people of my age in particular with all our experience of the War, the War Victory Day is especially worth commemoration as it reminds us of the importance of peace, a very significant point. I therefore hope that the Government will hold activities on that day. If it is argued that it is not too convenient to hold activities on that day as it is not a holiday, I think that we might as well consider doing so on the preceding day (Sunday). Another alternative is to actually designate that Sunday as a memorial day, just like the practice for Mother's Day and Father's Day. To have no holiday on that day is not without merit after all. The reason is that if protesters want to go to the consulate to stage protest, nobody will be available at the consulate to accept the protest letter as the consulate will be closed if that day is a holiday, which might dilute the meaning of the move. If that day is not a holiday, protesters can proceed directly to the consulate to stage protest. Someone will surely come out to accept the letter then, thus further perfecting the matter. On the other hand, the Government expresses the hope to hold memorial activities on the day of the Chung Yeung Festival. But I think these activities have nothing to do with the Chung Yeung Festival holiday. I am of the view that consideration should be given to actually holding memorial activities on that memorial day. It is more meaningful to do so. We should not do that on any other day. Chung Yeung Festival is a separate festival, not the one to mark the Sino-Japanese War Victory. I can also state on behalf of the Liberal Party that we support the Government's Amendment Bill, but oppose Mr LEUNG Yiu-chung's amendment. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Andrew CHENG.

MR ANDREW CHENG (in Cantonese): Thank you, Madam President. I deliver the following speech in my capacity as the Democratic Party's spokesman on manpower and labour policies. I am going to state our views on the Holidays (Amendment) Bill 1998.

Madam President, the Hong Kong Special Administration Region (SAR) Government tries to bring in Buddha's Birthday and Labour Day of 1 May in place of two existing holidays. In the Government's official explanation, no reason has ever been given to explain why, of all the occasions worthy of people's remembrance or celebration, Buddha's Birthday is being selected for inclusion as a new holiday.

The Democratic Party has to make it clear that we are not holding that Buddha's Birthday is not worthy of being included as a holiday in Hong Kong. On the contrary, there are many Buddhists among the people of Hong Kong. Buddha came to the world and exemplified his lofty preaching spirit by converting people with the teachings of benevolence and extending his deliverance to all lives. He indeed is worthy of respect and attention from the Chinese people in Hong Kong. However, the Democratic Party has to point out that of the two new substituting holidays, the one for Labour Day of 1 May was approved under the former Legislative Council only after tough struggles lasting more than 10 years as a result of joint efforts from all labour parties (leftists, centrists and rightists all included). Let us put such a long history of struggle in contrast against the holiday for Buddha's Birthday. The latter apparently is about to become a public holiday without any explanation from the SAR Government nor awareness of the people. The Democratic Party is of the view that the Government should account to the people the process and principles adopted in the selection of holidays, for the selection of holidays has two implied meanings.

Firstly, why is Buddha's Birthday selected for inclusion as a new holiday? We have noticed from committee discussions and papers that in the papers presented to the Executive Council by the Government only Buddha's Birthday is cited with Labour Day. For years, other religious groups, such as the Confucians and Taoists, have been trying to persuade the Government to designate their founders' birthdays as public holidays. Why did the Government just select Buddha's Birthday instead of some other special occasions that people might wish to mark or celebrate?

Secondly, after Labour Day of 1 May and Buddha's Birthday was selected, the Government only selected six holidays for possible abolition, including the War Victory Day, the day following National Day, Good Friday, the day following Good Friday, and Easter Monday. The Government consulted some consultative bodies on which two of the six days to abolish. Why did the Government select these six days? It seems that there is also no detailed explanation on this point in the papers. The Democratic Party thinks that with regard to the measures and policies in connection with the selection and designation of public holidays, the Government apparently has no specific policy to facilitate public understanding of its intention.

Let us look back on the Government's 17 days of general holidays. According to the data of 1998, religious general holidays amount to five days, taking up 29.4% of all general holidays; holidays in connection with Chinese traditions gross seven days, representing 47%; memorial general holidays number four days, constituting 23.5%; the other category consists of one day, namely, New Year Day, yielding 5.8%.

According to the amendments proposed by the Government in this Bill, in the year 1999, religious general holidays will rise from 29.4% to 35.3% whilst memorial holidays will drop from 23.5% to 11.7%. In determining the proportion of general holidays, categorized as religious, Chinese traditional, memorial and others, it seems that the Government has no clear rules or policies to inform the people. There is one point which we are most desirous to raise. To the Chinese in Hong Kong, remembrance of the Sino-Japanese War is unforgettable. It can be said that the pain is keenly felt. If the Chief Executive really wants to promote patriotism, then he should not so unmindfully let go of an opportunity for the Chinese in Hong Kong to keep the Sino-Japanese War in remembrance. Over half a century since the conclusion of the war, many Japanese Government officials are still reluctant to admit the fact of invasion against China. Their remorseless acts show no sign of making a clean break with their past wrongdoings. I believe that it is very difficult for those Chinese who had been victimized by Japanese militarism to accept the way the SAR Government treats this issue and abolishes the Sino-Japanese War Victory Day, an occasion full of patriotism-inspiring educational value, using financial impact as an excuse.

Existing holidays vary in nature and their categorized proportions are not balanced. After the amendment, general holidays observed for religious reasons will take up some 30% whilst those observed for memorial purposes will be lowered to some 10%. Such a composition is obviously unbalanced. The Democratic Party suggests that, with regard to the religious holidays left behind by the former colonial government and derived from the state religion of the previous sovereign country, the SAR Government should, after the return of sovereignty, conduct a comprehensive and thorough review with reference to public opinion so as to revise the SAR Government's general holidays schedule by way of a consultation open to the public, not a small poll confined to only 30 or so individual financial and banking bodies.

Finally, Madam President, the Democratic Party wants to comment on the way in which the Government has handled the Bill. For this Holidays (Amendment) Bill, SAR officials ventured to challenge the ruling made by the President of the Legislative Council to the effect that the amendment did not involve public funds, and resorted to a judicial review to interfere. In fact, at the end of July this year, the SAR Government should have mustered enough strength to have the current amendment carried through, yet government officials still forcibly deferred the Second Reading of the Bill, thus resulting in a delay in total disregard of the heavy blow on Hong Kong's printing industry. The economy is already down. However, each time a Bill is presented, senior government officials, in order to flaunt the power of a strong government and the supremacy of an executive-led government, tend to "take back" a Bill the moment they "put (it) in" whenever things slightly go against their "official" wishes. In July this year, the general public, the Legislative Council and the directly-hit printing industry made an appeal calling for early action on the Amendment Bill. All these went unheeded. The Democratic Party finds the over-bearing tactics used by the Government in handling this Amendment Bill most disgusting. No doubt this will cast some shadows over the relations between the executive and the legislature.

Madam President, I so submit.

PRESIDENT (in Cantonese): Dr LUI Ming-wah.

DR LUI MING-WAH (in Cantonese): Thank you, Madam President.

Late last year, the SAR Government initiated public consultation with regard to the total number of general holidays effective from the year 2000. I think that any consideration of the total number of general holidays must take account of its impact on Hong Kong's economy. Secondly, Hong Kong is an important international trade centre. If we take into consideration holidays observed by our trade partners, and match ours with theirs, there will be more benefit to our economic activities.

According to estimate, from the year 2000 onwards, for each additional day of holiday, Hong Kong will have to spend nearly $700 million on wages. Government statistics show that in 1996, our GDP was about $3.74 billion a day, excluding Sundays, with $0.25 Billion taken up by the manufacturing industry. If we observe one extra day of holiday for no good reason, commerce and industry will be very much affected.

Madam President, Mr LEUNG Yiu-chung proposes to retain the War Victory Day as a general holiday, to increase the annual total of general holidays from 17 days to 18 days. On this, I have to disagree. I do respect the significance of the War Victory Day. However, remembrance of the significant occasion can be observed in other forms or by way of other activities.

Secondly, the following is a comparison between Hong Kong and other countries in respect of the total number of general holidays: 16 days for Korea, 11 days for Singapore, 15 days for Taiwan, and just 10 to 14 days for developed countries like the United States, Japan and England. For the sake of Hong Kong's long-term economic development, it is, in my opinion, appropriate to keep the total number of holidays at 17. Any further increase in the total number of holidays will weaken Hong Kong's competitiveness.

Madam President, I so submit.

PRESIDENT (in Cantonese): Mr Albert HO.

MR ALBERT HO (in Cantonese): Thank you, Madam President. I should like to comment on the way in which the Government has dealt with the present issue of general holidays. First, the Executive Council decided to designate Buddha's Birthday and Labour Day as general holidays, and keep the total number of general holidays at 17 days. It was under these two premises that consultation with some government-selected bodies was carried out. Those consulted include financial bodies, employees and employers' organizations. Yet organizations that have particular concern for general holidays are not included, especially educational groups particularly interested in and concerned about the Sino-Japanese War Victory Day and groups set up in memory of the war of resistance against Japan. Naturally, to us, the result of that selective consultation cannot fully reflect the views held by organizations not consulted, not to mention the wishes of the general public.

Madam President, today I speak in order to say something on behalf of organizations that have, for years, promoted national history education, reminded us of the sorrowful history of China's war of resistance against Japanese invasion, and encouraged the practice of keeping in remembrance those who died for the nation. Madam President, when the Government presented this Bill, did the Chief Executive and the Government want to deliver to the people a message telling them to forget such a historically meaningful date worthy of marking? Are we asked to forget the hardship and sufferings of those eight years of resistance? Are we asked not to keep in remembrance the countless people who suffered so much in Hong Kong during those three years and eight months?

We can notice that in many places and developed countries, such as Europe, the United States and Australia, they often have one day of the year designated as a memorial day marking the close of World War II. With civilians and servicemen in unity, they pool together a force of national sentiment for their country, for the defence of national interests, and for resistance against invasion. Are the Chief Executive and the Administration of the view that we should not follow them? Turning now to Japan. On the annual memorial day of atomic bomb attacks, the Japanese Emperor, prime ministers and numerous victims will solemnly observe a period of silence together in remembrance of those killed. These incidents do deserve our thought, do not they?

Madam President, it is of even greater significance that after the recovery of sovereignty, the Chief Executive did not attend any of the memorial activities in the first year. Though invited and reminded, he just turned a blind eye to the matter, showing nothing on 15 August and other memorial days. Then there came this Bill. How do victimized Hong Kong compatriots, those who had experienced the war against Japan for three years and eight months, feel? On top of all these, it was not until this year that the Chief Executive, in the face of much criticism, at last did take part in some activities, such as participation in a memorial function held at Tsam Chuk Wan, Sai Kung, in remembrance of some killed guerrilla members of the Dong Jiang Column. We do appreciate the Chief Executive's participation. But at the same time, he wants to abolish the War Victory Day. No wonder there is criticism. Why must he do that?

Madam President, the people are getting a negative impression that the Chief Executive no longer respects the occasion and thus no memorial activity is needed. They might even feel that his actions run counter to his policy and appeal for nationalism-inspiring education. Besides this, they might even get some other messages. Yesterday I received two letters, which were sent to me by fax. Other Honourable Members probably have also received them. I want to read them out. One of them goes like this, with a heading that reads "Objection to designating Liberation Day as a public holiday". The writer says, "The Legislative Council will resume meeting on 9 September. To be placed on the agenda again is Mr LEUNG Yiu-chung's motion to redesignate that day as a public holiday in the year 2000. I object to that motion because Liberation Day marks the reoccupation of Hong Kong for colonial rule by the British following the surrender of the Japanese troops. So Liberation Day is full of colonial colour and is basically not much different from the Commonwealth Day and the Queen's Birthday. It is, therefore, reasonable and logical not to designate it as a SAR public holiday." This letter is from a citizen surnamed Chan. The heading of the second letter reads "Objection to designating War Memorial Day as a public holiday". It is also very brief. The writer opines that: "In essence, that memorial day marks the seizure of Hong Kong from England by Japan and the regaining of Hong Kong from Japan by England. The whole operation had nothing to do with China. Hong Kong was then still occupied by a foreign power. Designating that day as public holiday is tantamount to celebrating the reoccupation of Hong Kong by Britain for resumption of colonial rule. That day is a day of national disgrace. In view of the fact that some fellow countrymen were killed during the Japanese invasion, the Government should hold memorial ceremonies on the day of the Chung Yeung Festival. This is most appropriate. I swear that I have no political background whatsoever. Please support true history." This letter is from a citizen surnamed Lee. So, Madam President, you can see how distorted the message can be.

This is a memorial day long acknowledged by Hong Kong citizens. As a practice observed for years, various organizations and the Government do hold memorial activities on that day. Before the return of sovereignty, on that memorial day, the colonial governor, government officials and veterans all paid respect to those killed in the war. I think this is in fact a good tradition that is worth retention. With all the ideological and ultra-leftist thinking, one might easily attach the matter with colonial colour, and might even venture to say that those servicemen killed in the battles defending Hong Kong were fighting for the colony in a bid to reinforce colonial rule and, therefore, did not deserve to be kept in remembrance. To say so is to turn the facts upside down!

Madam President, we think the Government has sent out messages that are totally wrong. The abolition of the War Victory Day may result in extremely adverse effects. Our future generations will not be able to make good use of that day to properly understand our history so as to get well-acquainted with the patriotic spirit that our people should respect. Madam President, up to this point, I just want to say that that memorial day ought not to be abolished. It deserves to be retained as a general holiday. On top of this, the Government should make good use of the general holiday to properly organize activities for nationalism-inspiring education. The Government should, as usual, hold solemn memorial ceremonies attended by officials together with war veterans, their families and civilian organizations invited, just as in the past. Besides educational value, such an activity can pool together a sense of unity and patriotic sentiment among the people of Hong Kong. To abolish such a memorial day is to go against our proper path of promoting education in national history.

Madam President, I have to reply to another point. If we pass Mr LEUNG Yiu-chung's amendment today, the total number of general holidays will indeed be increased to 18 days. But the Government must know that it is the Government itself that has proposed to include two additional days as general holidays. The abolition of other two days might give rise to certain consequences, including those just mentioned by me. If the Government abolishes the War Victory Day, then there might be some wrong messages that run counter to certain policies that we ought to support. Under such circumstances, an increase to 18 days is what the Government should have anticipated. Should Mr LEUNG Yiu-chung's amendment be passed, then it is a consequence that they might have to face. This is my first point. The second point relates to the reasoning put forward by Dr LUI Ming-wah a moment ago. In reply, I offer only two points. Indeed, a total of 18 days of general holidays superficially does exceed those observed by some of our neighbouring countries. Please remember that in many countries, Saturday is a holiday. It is not so in the case of Hong Kong. For most organizations in Hong Kong, Saturday is a half-day working day. This is my first point. The second point is that we should not dwell on economic benefits only. In fact, national dignity and national history also deserve to be respected. So I do not think that sheer economic benefits can serve as sound justification to disparage the significance in keeping that day as a memorial day for use as a holiday for holding memorial activities.

Madam President, having said so much, I should stress that we have no intention to ask the Government to abolish other holidays. What we have been talking about today is that the spirit and meaning behind this memorial day definitely should not be cast away. These are my remarks. I call upon Honourable Members to support Mr LEUNG Yiu-chung's amendment. Thank you.

PRESIDENT (in Cantonese): Mr LEUNG Yiu-chung.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, there goes the saying: "One would not have done so had one realized the consequences." That day the Secretary for Education and Manpower forcibly withdrew the Holidays (Amendment) Bill 1998, which was set down for resumption of debate on Second Reading in the Legislative Council on 29 July. As a result, it was delayed again and again. After a delay of about a month and a half, ultimately it is still the "same old" proposal that goes on stage! However, because of the Government's delay, many printers dare not print or issue next year's calendars even though time is running out. They, for no good reason at all, incurred business losses. At the same time, primary and secondary schools also encountered difficulties in planning their school calendars and activities, thus giving rise to confusion.

In my opinion, when the Secretary later gives his reply, he must openly tell us whether or not it is true that when he ventured to adjourn the resumption of the Second Reading of the Bill that day, he was doing that notwithstanding the fact that he did foresee the inconvenience and damages to the people. If the Government really stuck to their so-called principles at the cost of people's interests, then it is necessary for the Government to compensate all those thus victimized. If on that day the Government indeed did not foresee the significance of the issue, then they ought to openly apologize to the people for "failure to make a correct assessment of the situation". As a responsible government, the Government cannot end the matter by "slanting it off the shoulders" or "patting it off one's bottom"!

Madam President, I am going to move an amendment at the Committee stage of the whole Council to the effect of keeping the War Victory Day as a general holiday. The amendment had twice been ruled by you to be of "no charging effect." But the Government still refused to accept that and insisted on adjourning the resumption of the Second Reading of the Bill. That not only is a flout to the President's ruling, but also constitutes an open challenge to the whole Legislative Council ─ the first Legislative Council of the SAR was just "unveiled", but the Government already made such disrespectful moves displaying "executive dominance". It seems that all Members of the Legislative Council are being looked upon as "opposition parties", and, furthermore, the whole Legislative Council is expected to be "yes-man" of the executive body!

"Executive-led" itself is not a legal term. In the interaction between the executive and the legislature, the key point is that the two sides should make joint efforts and base their decisions on public opinions and public interest. There is definitely no justification or need to weigh every matter to see if it is executive-led or not. Today, Hong Kong's political system still is not a democratic one. The Basic Law has, furthermore, greatly reduced the power of the legislature. But I do not think might is always right. In the future we will break through all the blocks to wage struggles against unreasonable government measures.

Honourable colleagues, the present Bill before us is the first controversial government Bill of the SAR Legislative Council. It is also the first government Bill to which a Member proposes to make amendment. The fact that I have proposed an amendment to keep the War Victory Day as a general holiday also shows that this elected Legislative Council is not the Government's "rubber stamp"; it is a bona fide legislature. When the Government presents resolutions that are against public interest, we reserve the right to make amendments so as to strive for maximum improvement. In fact Hong Kong's public opinion is very clear, with most people being in favour of keeping the War Victory Day as a general holiday. But the Government just keeps on trying to deceive itself and turns a blind eye to public opinions, insisting on abolishing the War Victory Day as a general holiday. Is this the so-called "executive-led" administration?

Later I will elaborate on my amendment at the Committee stage. But I have to point out again that my sole purpose in presenting the amendment is to, with effect from the year 2000, retain as a general holiday the War Victory Day on the third Monday of August, just as it is now; it is not meant to increase the total number of general holidays. I hope that Honourable colleagues can understand this. In fact, even if my amendment is carried, the total number of public holidays for next year will still be 17 days, and the Government can, after comprehensive public consultation, present a Bill to abolish a certain general holiday to meet policy requirements.

Finally, irrespective of the passage or otherwise of my amendment, I hope that the Government can learn from this case and cease to uphold such a domineering attitude which is pernicious to public interest.

Madam President, I so submit.

PRESIDENT (in Cantonese): Honourable Members, according to Rule 44 of the Rules of Procedure, the President's rulings on procedural issues are final. So while in the Council, Members need not and cannot comment on the President's ruling. I raise this point because I heard Mr LEUNG Yiu-chung earlier make the request that in presenting his reply, the Secretary for Education and Manpower should answer point by point the parts in the President's ruling with which he disagrees. In fact the Secretary cannot do so. Members are certainly free to express their views outside the Council. Whenever the President gives a ruling, it is only natural that some people will be in favour of it while some will go against it.

PRESIDENT (in Cantonese): Does any Member wish to speak? Mr LAU Chin-shek.

MR LAU CHIN-SHEK (in Cantonese): Thank you, Madam President. I have been wondering why Mr LEUNG Yiu-chung asked the question why the Government adjourned the resumption of debate on Second Reading. He said he just could not figure it out even though he had tried very hard. In fact the answer is very simple. How comes he does not understand it? That is to stop him from making an amendment. Why can he not understand it? To me, it can be learnt from this point that in preventing Members from making amendments, the SAR Government is even more highhanded than the Hong Kong British Government prior to the return of sovereignty. I remember that in late 1994, when the then Legislative Council passed an amendment proposed by me to improve severance pay and long-service payments, the Government, however, adopted a "lose-hit, win-take" attitude and forcibly withdrew the Employment (Amendment) Bill. As a result of that, I resigned in protest, and public opinions also voiced condemnation. It can be recalled that at that time the Government's move was already quite a flout to the legislature's collective decision. But they still observed the rules and allowed Members to present amendments, thus giving the legislature opportunities to vote on them. The executive arm of the current SAR Government, however, has gone from bad to worse, to the extent of suppressing Members' right to propose amendments, and disallowing amendments. Surely, to do so now stands no chance of success.

Someone says this is "executive dominance" on the part of the Government. In fact I think that when the SAR Government crosses swords with the Legislative Council, there are worries and fears behind their "ferocity". It is because they feel that the people will contrast a SAR Government policy that goes against public opinion and a SAR Government not elected by the people against an elected Legislative Council. So in this respect the Government always has to watch out and put up hurdles here and there. As a result, even your right to make amendments is not allowed because they are very much under the fear that your move to make amendments already constitutes a major challenge to the Government's administration. Precisely because of the lack of support of public opinion, the Government is afraid of Members' challenges by way of amendments.

The SAR's first Legislative Council is just about one month old. Yet the Government has again and again put pressure on Honourable Members. For instance, the Solicitor General said that the restriction on Members' right to make proposals as contained in the Rules of Procedure were not tight enough; the Deputy Secretary for Education and Manpower threatened to withdraw a resolution so as to force Mr LEE Cheuk-yan not to present an amendment concerning compensation for pneumoconiosis victims. Now Mr LEUNG Yiu-chung's amendment has been suppressed by the adjournment of the debate on the Holidays (Amendment) Bill. All these moves have only one purpose, namely, to completely suppress Members' right to make proposals so as to maintain the Government's so-called executive-led principle, and not to let the Legislative Council have the chance to challenge Government's authority. But here I should like to sound a warning. If such high-handed measures to maintain superficial authority are to continue, not only Members of this Council will protest vigorously, but there will also be strong reaction from the people too. I believe in a saying: "He who plays with fire will ultimately burn himself."

Madam President, I so submit.

PRESIDENT (in Cantonese): Secretary for Education and Manpower, do you wish to reply?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, I am grateful for the views expressed by Members of this Council this afternoon in the resumed debate on the Holidays (Amendment) Bill 1998, and I am pleased that quite a number of Members have expressed support for this Bill without amendment.

The Bill mainly aims at changing the list of general holidays. It seeks to replace Sino-Japanese War Victory Day and 2 October by Labour Day and the Buddha's Birthday from 1999 onwards. These changes are proposed to make possible the designation of Labour Day and the Buddha's Birthday as general holidays, given our aim to cap the number of general holidays (other than Sundays) to 17 days a year. Having consulted the major employers' and employees' organizations, the financial services sector and religious sector, we have decided to accept the majority view, that is, to replace Sino-Japanese War Victory Day and 2 October by Labour Day and the Buddha's Birthday. In order that labour holidays (statutory holidays) can be in line with general holidays as much as possible, the six days of general holidays which we suggested for consideration during the consultation exercise, are not all statutory holidays at the same time.

I shall turn now to the Committee stage amendment (CSA) to be moved by the Honourable LEUNG Yiu-chung, which would reinstate the general holiday on Sino-Japanese War Victory Day from the year 2000 onwards. If passed, the legal effect would be that the proposed amendment would increase the number of our general holidays (other than Sundays) from 17 days to 18 days a year and would, in the Administration's view, have a charging effect.

The Administration has reservations on the Legislative Council Rules of Procedure with regard to the application of certain Basic Law provisions in the operation of the Legislative Council. Without prejudice to the Administration's position on this issue, we have decided to resume the Second Reading debate of this Bill in order not to delay any further the printing and publishing of calendars and diaries for 1999 and subsequent years.

Let me explain why the Administration is firmly opposed to this CSA. There are two reasons:

(a) In respect of the number of holidays, with 17 general holidays a year (other than Sundays) Hong Kong already compares very favourably with several of our neighbouring economies, for example, Japan has 15 holidays a year, Malaysia and Singapore both have 11, Australia has 10 and Philippines nine. An additional holiday would result in an economic cost equivalent to 0.2% of the total wage bill or $700 million a year, and cannot be justified either on economic and social grounds. Indeed, it would only serve to undermine our economic competitiveness.

(b) As the Holidays Ordinance binds the Government, the CSA, if passed, would result in an additional holiday for civil servants. This could lead to loss of productivity in the Government while incurring additional expenditure such as overtime allowance.

I fully understand that some Members have expressed regret over the deletion of the general holiday on Sino-Japanese War Victory Day. Let me take this opportunity to assure Members that the Administration will take every step possible to make sure that the eight-year Sino-Japanese War as a significant chapter in the history of the Chinese nation is not forgotten.

The Chief Executive attended a ceremony on 17 August this year to commemorate the 53rd anniversary of victory of the Sino-Japanese War. The Chief Executive's attendance gave official recognition to members of the Hong Kong Independent Battalion of the Dongjiang Column who died in defence of Hong Kong.

Although from 1999 onwards the third Monday in August will no longer be a general holiday, the Government has decided that it will continue to be known as Sino-Japanese War Victory Day, so our thoughts and memories for those who gave their lives will go on.

Furthermore, to pay tribute to those who died in the defence of Hong Kong, the Government will take the lead and hold an annual official ceremony on Chung Yeung Festival starting from this year. The official ceremony will be held at the Memorial Shrine in City Hall. It will be attended by the Chief Executive, senior officials and community leaders. Representatives of veteran groups and associated community organizations will also be invited. The names of the members of the Hong Kong Independent Battalion of the Dongjiang Column will be added to the Roll of Honour kept in the Memorial Shrine inside the City Hall during the first official ceremony to be held on Chung Yeung Festival on 28 October this year.

Let me stress once again that we have taken measures to ensure that the general public and our next generation will never forget this memorable and moving history of the Sino-Japanese War Victory. The Administration is opposed to the CSA proposed by Mr LEUNG Yiu-chung, entirely on the ground of economic interest and the current number of general holidays in Hong Kong. There is no justifiable need to add an additional general holiday on these grounds. With this in mind, I urge Members to support the stance of the Government and oppose the CSA proposed by Mr LEUNG Yiu-chung.

Thank you, Madam President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the Holidays (Amendment) Bill 1998 be read the Second time. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority of the Members present. I declare the motion passed.

CLERK (in Cantonese): Holidays (Amendment) Bill 1998.

Council went into Committee.

Committee Stage

CHAIRMAN (in Cantonese): Bill: Committee stage. Council is now in Committee.

HOLIDAYS (AMENDMENT) BILL 1998

CHAIRMAN (in Cantonese): I now propose the question to you and that is: That the following clauses stand part of the Holidays (Amendment) Bill 1998.

CLERK (in Cantonese): Clauses 2, 3 and 5.

CHAIRMAN (in Cantonese): Will those in favour please raise their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(No hands raised)

CHAIRMAN (in Cantonese): I think the question is agreed by a majority from the Members who are present. I declare the motion passed.

CLERK (in Cantonese): Clauses 1 and 4.

CHAIRMAN (in Cantonese): Mr LEUNG Yiu-chung.

MR LEUNG YIU-CHUNG (in Cantonese): Madam Chairman, the purpose of my Committee stage amendments is to restore the Sino-Japanese War Victory Day (being the third Monday of August) as a general holiday with effect from the year after next, that is, the year 2000 A.D.

Madam Chairman, I wish to reiterate that the purpose of the present amendment is not to increase the number of general holidays. Rather, its purpose is just to retain the Sino-Japanese War Victory Day (formerly known as Liberation Day, which was changed to "Sino-Japanese War Victory Day" last year) which has been observed for many years. Retaining the Sino-Japanese War Victory Day is one way to show that Hong Kong people have not forgotten "the sufferings of the three years and eight months" and the "the eight years of the Chinese resistance against the Japanese invasion", as well as to underline our opposition to Japanese militarism. If the general holiday of the Sino-Japanese War Victory Day is abolished as proposed by the Government, it will convey a very bad message, which is, that the Government no longer considers that there is a need to commemorate the "Chinese people's resistance against the Japanese invasion". This obviously runs counter to the stand of tens of thousands of Hong Kong people who have, in recent years, opposed the Japanese occupation of the Diaoyu Islands and the resurgence of Japanese militarism.

From the various activities on the Sino-Japanese War Victory Day last month, it is evident that Hong Kong people, especially Chinese of the older generations, are keen on retaining the Sino-Japanese War Victory Day as a general holiday. The opinion polls have also clearly indicated that the majority of the people support the retention of the Sino-Japanese War Victory Day as a general holiday. It is very obvious that the small-scale consultation conducted by the Government early this year failed to reflect the public opinion and sentiments. As a result, it has introduced a Bill which goes against the public opinion.

In order to placate the people's opposition, the Government has proposed to commemorate the people who died in resisting the Japanese at the Chung Yeung Festival. In my view, the problem is that by abolishing the general holiday of the Sino-Japanese War Victory Day, the Special Administrative Region (SAR) Government would be sending to the people the wrong message that it wants them to forget about this period of great suffering of the Chinese people in this century. Today, the militarism of Japan still persists and its occupation of the Diaoyu Islands has yet to end, neither has the Japanese Government publicly apologized nor paid compensation for the atrocity they committed during the invasion. How can we agree at this time to abolish the general holiday of the Sino-Japanese War Victory Day?

Today, there is a realistic significance for retaining the Sino-Japanese War Victory Day as a general holiday!

"To commemorate" does not mean to stir up new hatred. Rather, it is to remember our compatriots killed during the war, and to show our care for those who are still suffering mentally and physically, our spurning of militarism and our aspiration to peace. In the two Japanese cities Hiroshima and Nagasaki which were distroyed by atomic bombs, museums have been erected to commemorate the devastation done by the atomic bombs. Each year, large-scale commemorative activities are organized. These are not an expression of a desire to "revenge" but a hope for the whole world to work together for a lasting peace.

Honourable colleagues, as I have pointed out just now, even if my amendment is passed, the number of general holidays will be maintained at 17 next year. If the Government wishes to maintain the number of general holidays at 17, I hope that it will conduct an extensive consultation to find out which general holiday should be abolished, in order to maintain the insisted number. Therefore, Madam Chairman, I reiterate that what this Council will be voting on is whether to retain the Sino-Japanese War Victory Day as a general holiday today. Madam Chairman, let me stress again that my purpose is really to retain this commemorative day, rather than to create one more general holiday.

Therefore, I hope that colleagues will cast a vote of conscience and support my amendment.

Thank you, Madam Chairman. I so submit.

CHAIRMAN (in Cantonese): Mr LEUNG Yiu-chung, please move your amendments.

MR LEUNG YIU-CHUNG (in Cantonese): Madam Chairman, I move the amendments as set out in the paper.

Proposed amendments

Clause 1 (see Annex III)

Clause 4 (see Annex III)

CHAIRMAN (in Cantonese): Does any Member wish to speak? Mr YEUNG Yiu-chung.

MR YEUNG YIU-CHUNG (in Cantonese): Madam Chairman, the Government amends the Holidays Ordinance by adding the two new general holidays of Labour Day (first of May) and Birthday of the Buddha (eighth day of the Fourth Lunar Month), while abolishing the two general holidays of the Sino-Japanese War Victory Day (third Monday of August) and 2 October (the day following National Day), in order to maintain the maximum number of annual general holidays at 17. The Democratic Alliance for the Betterment of Hong Kong (DAB) supports the addition of Labour Day and Birthday of the Buddha to the list of general holidays, but opposes the abolition of the general holiday of the Sino-Japanese War Victory Day. We think that this is an improper thing to do.

There is great significance in commemorating the victory of the Sino-Japanese War. During the eight years of the resistance, Chinese people went through tremendous hardship and paid a huge price for driving the Japanese aggressors out of China. Hong Kong people also experienced a period of three years and eight months of resistance before the Japanese aggressors were expelled.

The Sino-Japanese War victory was the first total victory that China had won in a century of national struggle against imperialism. Between the early 1840s and the mid 1940s, China was invaded by force by almost every imperialist nation in the world and fought several wars against aggression. Except for the Sino-Japanese War, every war had ended with the defeat of China and the signing of humiliating treaties surrendering its sovereign rights. With the Sino-Japanese War victory, China was able for the first time to wipe out the humiliation it had suffered for a century.

The Sino-Japanese War victory represented a miracle in war history in which a semi-colonized weak nation was able to defeat an imperialist power. It could be seen as the victory of the Chinese and Hong Kong people, the result of the united war effort of the Chinese nation and the glory of all Chinese who had participated in the resistance.

Since victory did not come easy, we should value the peace. We have to remember this piece of history. Japanese militarism still harbours the desire to conquer us. In recent years, it has repeatedly challenged China over the question of the Diaoyu Islands. Since Hong Kong has reunited with China, there is all the more reason for us to commemorate this piece of history. This commemorative day provides us with the opportunity to carry out nationalist and patriotic education and oppose the resurgence of Japanese militarism.

After the establishment of the Special Administrative Region (SAR) Government, the Sino-Japanese War Victory Day was appointed a general holiday. This has made a deep impression on the people. If this general holiday is to be abolished now, it will certainly send a wrong message to the community and make people feel that the SAR Government no longer places emphasis on the profound historic significance of the Sino-Japanese War victory. Just now, the Secretary mentioned that commemorative activities would be held during Chung Yeung Festival on the ninth day of the Ninth Lunar Month every year and a list of war heroes of the Sino-Japanese War would be complied. While the DAB approves this, it considers that the SAR Government should show care and appreciation for those participants in the resistance who are still living. Therefore, the DAB demands that this general holiday be retained and supports the amendments.

I so submit. Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): Mr James TIEN.

MR JAMES TIEN (in Cantonese): Madam Chairman, each country or each place has its reasons for choosing public holidays. As Hong Kong was a British colony, many holidays observed in foreign countries or Britain had become our holidays. Since the majority of us are Chinese, many holidays are also uniquely Chinese. However, we want to be an international financial centre. If we look at our 17 holidays, six of them are in fact international holidays: 1 January, Good Friday, the day following Good Friday, Easter Monday, Christmas Day and the day following Christmas Day. As there are 11 Chinese holidays in addition to the above, there are altogether 17 holidays. This makes Hong Kong one of the few places in the world with more holidays. As several Members have pointed out, all four English-speaking countries with which we have frequent interactions ─ the United States, Britain, Australia and Canada ─ have around 10 holidays, while we have as many as 17. Of course, we find the six international holidays necessary to tie in with business activities ─ banking, finance or business negotiations between manufacturers and foreign clients. What should we do with the rest which are Chinese holidays unique to us, such as Ching Ming, Tuen Ng, Chung Yeung and the few days we mentioned just now? We have heard members of the Democratic Party, Mr LEUNG Yiu-chung and the DAB say that they want to retain the Sino-Japanese War Victory Day as a holiday. The Liberal Party has no objection to this. However, we did not hear any of them say which holiday they thought could be abolished. Only Mr LEUNG Yiu-chung said that he did not want to create one additional holiday. Instead, he wished to maintain the number of holidays at 17. However, the last remark of the Honourable Albert HO seems to suggest that the Democratic Party wants to have one extra holiday and increase the number of holidays to 18. We are only objecting to having one additional holiday.

Even the Government has admitted that our economy today does not look as good as before. The growth rate in the second quarter as recently released by the Government is -4.8%, while the unemployment rate is rising. Under these circumstances, can the majority of our enterprises, including small and medium enterprises, afford an extra paid holiday? One day's holiday may not sound a lot. However, adding this on top of other labour benefits, maternity leave and wages, the burden is quite heavy. On the extra holiday, small and medium enterprises still have to pay rent. They have no choice but to pay rent. While they do not have to spend too much on wages, I find it inappropriate to ask them to operate one day less under the present circumstances. However, no one wishes to propose the abolition of one day's holiday on Christmas Day or another festival. If one asks the Government to consult the public, it has already done so. However, Mr LEUNG Yiu-chung thought that the Government might have consulted the chambers of commerce or trade unions only, but not the general public. I believe this case is just like the case of the car park in Stanley we discussed about in the first question, where some people support its construction while some other oppose its construction. As regards such consultations, I believe there are always people for or against something. I do not know how the Government will deal with the findings of the consultations. If Mr LEUNG Yiu-chung really wishes to maintain the number of holidays at 17, I suggest that he should propose adding the Sino-Japanese War Victory Day again next year. Before then, he can consult the public on which holiday to abolish. The business sector and the Liberal Party have no strong views as to which holiday should be abolished and we will even support the retention of the Sino-Japanese War Victory Day. The Democratic Party supports Mr LEUNG Yiu-chung's amendments today. However, contrary to what members of the Democratic Party said, Mr LEUNG said that his goal was 17 days' holidays while the Democratic Party said there should be 18. Thus, while the Democratic Party supports Mr LEUNG Yiu-chung's motion, their intention is different from his. Madam Chairman, under these circumstances, we in the Liberal Party think that we should support the Government's original motion, not Mr LEUNG Yiu-chung's amendment about making the Sino-Japanese War Victory Day a holiday.

We certainly think that we could consider retaining the Sino-Japanese War Victory Day as a holiday. However, under these circumstances, Mr LEUNG Yiu-chung had better propose to cut one holiday at the same time or do so after consulting the public on which holiday to abolish, rather than increasing the number of holidays to 18 days now and cutting one day next year. I do not think that it is possible to implement Mr LEUNG's amendment under these circumstances. I prefer implementing the proposal of adding and cutting one holiday at the same time next year.

Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): Miss Margaret NG.

MISS MARGARET NG: Madam Chairman, I support the amendments of the Honourable LEUNG Yiu-chung to retain Sino-Japanese War Victory Day as a public holiday. My reason is simple. Of all the public holidays on the calendar, this is the one unique belonging to Hong Kong's own past. As the Hong Kong Special Administrative Region is established, we welcome the new. But in welcoming the new, we must not forget the old. Many brave people died in the hills of Hong Kong bravely defending Hong Kong against Japanese invasion. They included soldiers and civilians of many races and nationalities. They are our heroes. The debt we owe them can never be repaid. Their valour and honour must for ever live on in our memories, and be commemorated publicly.

Many more Hong Kong people died of violence, deprivation and illness in the Japanese occupation of Hong Kong. These dark days have left an indelible mark on our parents' generation and our own. It has bitterness undoubtedly, but it also makes us treasure all the more our present fortunes. The moment of victory, of freedom from fear and suppression again, was an equally strong experience. It was a moment of thanksgiving and solidarity. In our spirit, we shared it with those who had laid down their lives for us. Is it too much to ask that one day be set aside to mark this part of our history? Or is it because this is so uniquely Hong Kong, that the Government is keen to substitute it with something less controversial or evocative?

I cannot agree with this strategic amnesia. I go along with Mr LEUNG Yiu-chung. Thank you.

CHAIRMAN (in Cantonese): Mr Andrew CHENG.

MR ANDREW CHENG (in Cantonese): Madam Chairman, I would like to make a brief response to Mr James TIEN's view on the Democratic Party's position which was expressed through Mr Albert HO and me just now in support of Mr LEUNG Yiu-chung's amendments.

The Democratic Party's reason for supporting the Sino-Japanese War Victory Day as a general holiday is based on our belief that it is a commemorable day for our nation. As for the possibility of having one extra general holiday if we support the amendment, the Democratic Party, from beginning to end, holds the view that it is not the responsibility of political parties in choosing which general holidays to be replaced by the two newly added ones. This is government consideration. Therefore, the spirit of the points I raised earlier when I spoke on behalf of the Democratic Party was to query that: in addition to the Labour Day of 1 May which has a sound legal base, firstly, why does the Government have to add in the Buddha's Birthday? Secondly, why does the Buddha's Birthday have to replace one of those six general holidays? The Secretary explained just now because that day is a labour holiday and this has somehow dispelled some of our doubts. However, in terms of consultation, we still think that the Government has not done enough work when it laid down the policy on this holiday.

The Liberal Party says that although the Democratic Party supports Mr LEUNG Yiu-chung's amendments, our direction seems to have departed from Mr LEUNG's intention or the spirit behind his amendments. The Democratic Party considers this an unfounded allegation as we have always believed that the responsibility of formulating the general holiday policy, such as choosing a certain holiday to be replaced by a newly added one, lies with the Government, but not us legislators. Members of the Legislative Council are only responsible for expressing the public's views on certain amendments, reflecting the voice of the community, and conveying the opinions of some people who think they should continue to enjoy certain existing general holidays which may be replaced by the Buddha's Birthday or the Labour Day.

Madam Chairman, I so submit.

CHAIRMAN (in Cantonese): Dr Philip WONG.

DR PHILIP WONG (in Cantonese): Madam Chairman, I think that the Sino-Japanese War Victory Day is worth commemorating. But I agree with Mr James TIEN that this holiday has to be deleted unless another day can be found to replace it. As I believe the Government's stance of maintaining a cap of 17 on the number of general holidays is very important to the economic development of Hong Kong, I cannot support Mr LEUNG Yiu-chung's amendment. However, it does not mean that I think this day is not commemorable. Before the Government proposes another day to replace this holiday, I hope we can commemorate this day by other means. There are a lot of ways to commemorate it, sitting at home pondering over history is one of these. It may not be necessary to take a day off.

Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): Mr James TIEN.

MR JAMES TIEN (in Cantonese): Madam Chairman, a Member may speak more than once at the Committee stage, am I right? Thank you, Madam Chairman.

Madam Chairman, with regard to what the Honourable Andrew CHENG said just now, I agree it was what he meant initially. However, I was talking about Mr Albert HO's speech which he made on behalf of the Democratic Party. From my seat here I can see the timer in the Chamber clearly. After Mr HO had spoken for 12 minutes, he mentioned the issue of 18 days and favoured the addition of one more holiday. It is not like what Mr Andrew CHENG said in his speech on behalf of the Democratic Party. Later Mr Andrew CHENG said that the decision of deleting a certain holiday should not be the legislators' responsibility. I concur with him in this point. However, while the Government said that a consultation exercise had already been carried out before it decided to delete these two holidays, Mr LEUNG Yiu-chung alleged that, in the course of the consultation exercise, since only labour unions, chambers of commerce and financial institutions were consulted, but not the public at large, so another consultation exercise has to be made. I believe it would be best for the Democratic Party to consult the people on its own because this is what they always do anyway. After the consultation exercise, they can tell the Government which holiday should be deleted. I trust they will find it very difficult too because deleting any one holiday will offend certain people. Maybe they do not want to offend those people and so they will not carry out the consultation exercise, thrusting the responsibility on the Government again. With reference to this point, I think I have not misunderstood the stance of the Democratic Party.

Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): Mr Albert HO.

MR ALBERT HO (in Cantonese): Madam Chairman, when Mr James TIEN was listening to my remarks just now, he might have missed this sentence: "Today ...... I wish to say a few words for those organizations dedicated to commemorating the war of resistance and to claiming compensation from Japan." That is what the Members belonging to the Democratic Party will mainly seek to reflect today. This is the first point. The second point is that we have decided to support Mr LEUNG Yiu-chung's motion today mainly because we wish to retain the day in question as a public holiday. Admittedly, if these amendments are carried, the number of public holidays next year will be 18, but we will not actually have 18 days of public holidays until the year 2000 and thereafter. If the Government or any Member thinks that the figure 18 is not good enough, or if they think that there are alternatives, they can of course conduct further discussions, and we certainly still have time for that. However, the point is that, when the Government made its proposal, it should have known that this would be the result if the proposal was amended.

I think ...... and of course I do appreciate the concern of those Members belonging to the industrial and commercial sector. However, as mentioned by quite a number of Members just now, I do think that the spirit and historical implications behind the commemorative day are indeed very important. That being the case, should we allow any considerations of economic value and economic efficiency to rule out the significance of its spirit and historical implications? This is the first point. The second point. If we agree that this day is important, and if we also agree that we should do something to show our concern, then should we simply "stay at home and think about the event"? I can remember that during the Bills Committee stage, some Members argued that what mattered should be the spirit itself. Actually, if we ponder over the spirit of any commemorative day as they do, there will be no need to designate any holidays for many commemorative days, and the cancellation of any one of them will not lead to any adverse effects. And, even commemorative functions can be dispensed with, because a remembrance of the spirit itself is already enough. However, we should all realize what message this kind of attitude will impart. We should all realize its negative impacts on the attitudes of this generation or the future generations. Therefore, in conclusion, I must emphasize that if these amendments are carried today, they will become effective in 2000. We do realize that the result will be an additional day of holiday. However, we all know that when the Government put forth this Bill, it had not conducted any adequate consultation, with full knowledge of the amendment when the Bill resumes Second Reading. The point is that if the Bill is amended by Members, an additional day of holiday will bound to be the result. If the Government thinks that there is any problem, it can raise the matter again next year for further discussions. However, I must emphasize that we have decided to support the amendments today because we do not think that we should cancel the holiday for this important commemorative day. We should not impart any negative message to the people, nor should we allow ourselves to show any disrespect for all those who died for us by abolishing the holiday for the commemorative day.

Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): Mrs Selina CHOW.

MRS SELINA CHOW (in Cantonese): Madam Chairman, actually, the remarks delivered by the two Democratic Party colleagues and by Mr James TIEN just now can aptly show the fundamental difference in standpoints between the Democratic Party and the Liberal Party. The Democratic Party claims that since it has to reflect the views of the organizations concerned, it will support the amendments moved by Mr LEUNG Yiu-chung today. However, I very much support the point raised by Mr James TIEN just now: if one seeks to reflect a certain view, but is reluctant to make the somewhat unpopular decision associated with it, then, to put it simply, one is just choosing to act without bothering to pay the consequent prices. As pointed out by Mr James TIEN, it is of course very important for us to designate a particular day to commemorate our historic victory over Japan in the war of resistance, but if this is tagged an economic price to be paid by society as whole, then we must weigh the pros and cons and make a choice somehow. And, even if the choice we have to make is not the most desirable and may not be accepted by all, we still have to make it because the interests of the whole community are at stake. Once we agree that we must make a choice somehow, we can then ask logically, "Why can we not commemorate the Sino-Japanese War victory on the third Sunday of August?" Even if we commemorate our victory on the third Sunday of August, the educational significance of the commemorative day and our sincerity of purpose will not be changed in the slightest bit. This will not make our future generations forget this historic victory of ours, and we can still celebrate our victory. In the case of the Mid-Autumn Festival, for example, we also do not have a holiday on the festival itself. We have our holiday on the day following the festival. Has this affected the ways in which we celebrate the Mid-Autumn Festival? Not at all. Of course, to be fair, I must say that there is indeed justification for the holiday arrangement for the Mid-Autumn Festival; since celebration activities of the festival are held at night, it will be better for us to have our holiday on the next day. However, the case of the Mid-Autumn Festival does show that we can always afford a bit of compromise and flexibility with respect to the holiday arrangements of individual events requiring commemoration. This is particularly true with the case under discussion now, because if we wish to contain the social price then we must cap the total number of holidays at 17 a year.

The Democratic Party argues that the economic price should be brushed aside, and we should have the holiday first. If Mr LEUNG Yiu-chung has really considered this matter seriously, and if he is really committed to this thing, he should have introduced an amendment of a substitution nature. In other words, he should have stated in his amendments that while he wants to retain this particular holiday, he will propose to cancel another public holiday. He really has to make a choice. Failing that, and if he just asks us to retain the holiday in question and wait until next year before we decide what to do next, he is actually telling us to do something which he himself has not considered seriously. His amendments do not give us any solution to the problem, nor do they allow us a choice. When it comes to holidays, all of us know very well that each holiday has its own significance. Some people will insist that certain holidays should be retained, and others will certainly think differently. This is in fact an inherent feature of society. As the Members of a responsible legislature, and as the members of responsible political parties, we must somehow make some choices, and in doing so, we must seek to strike the best possible balance. I believe that the government proposal today is best able to achieve the desired balance, without depriving the public of the right to commemorate such an important day, and this is precisely the reason why the Liberal Party has decided to ask Honourable Members to support it. I hope that Honourable Members will not mix up these two separate issues. They should not think that if we do not have a holiday on the day in question, we will be showing no respect for our victory over Japan, nor should they think that we are asking people to forget this very important event. We do respect the significance of the day in question. However, we also think that we should consider the economic implications and the interests of Hong Kong as a matter of priority.

Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): Secretary for Education and Manpower, do you wish to speak?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam Chairman, let me just add a few more words. First, I believe that having listened to my remarks just now, Honourable Members should now be very clear that if the amendment moved by Mr LEUNG Yiu-chung is carried, then with effect from the year 2000, the number of public holidays every year will be increased by one, from 17 days to 18 days. I have also explained why we do not think that there should be one additional general holiday; our decision is based entirely on the economic interests of Hong Kong, the number of public holidays currently enjoyed by its people and that enjoyed by other neighbouring countries comparable to Hong Kong in terms of economic and social development. When I spoke a moment ago, I also made it very clear that the Government had put in place a number of measures to ensure that our people would not forget our epic victory in the war of resistance against Japan. We will not commemorate the death of our Chinese compatriots only; we will also commemorate the heroic deeds of those belonging to other nationalities who defended Hong Kong against the Japanese invasion. One of these measures is of course the continued designation of one particular day for the purpose of commemorating our victory over Japan in the war of resistance. Besides, I can also assure Honourable Members that through the provision of nationalistic and civic education, we will make efforts to instil among our future generations, our students, a good understanding about that epic part of the Chinese people's history which relates to our final victory over Japan after eight years of bitter struggles in the war of resistance. Therefore, I hope that Honourable Members will look at this matter with a calm mind. I hope that they will support the stance of the Government and oppose the Committee stage amendments moved by Mr LEUNG Yiu-chung.

Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): Mr LEUNG Yiu-chung.

MR LEUNG YIU-CHUNG (in Cantonese): Madam Chairman, firstly I wish to mention one point. Some colleagues may ask why I want my amendments to take effect in 2000 rather than in 1999. My response to that is: When I considered the Bill, I worried that printers might have have completed printing calendars, given that it was rather late when the Government submitted the Bill for consideration. So, if I insisted that my amendments shall take effect in 1999, this might pose some difficulties for them. Therefore, I have sought to make them effective in 2000 in the hope that printers may be well-prepared.

Secondly, some colleagues asked why we must commemorate the occasion in the form of a holiday. Why did we not organize activities on a Sunday or a certain day? To this, I want to ask: Why did some people support the Government when it proposed making the Buddha's Birthday a holiday? Why did they not request the Government to designate a Sunday for remembrance of the Buddha's Birthday? I just do not understand it. If people say we can remember the Sino-Japanese War Victory Day at home and reflect upon its meaning, why can we not do the same for the Birthday of the Buddha? Can somebody enlighten me on that? Since somebody say they can celebrate certain events at home, why have they chosen the Sino-Japanese War Victory Day but not the Buddha's Birthday or other occasions for that purpose? I just do not understand.

I am not saying we should ignore the economic situation of Hong Kong ─ we all know Hong Kong is facing a number of economic problems, but if people say the occasion is important and meaningful, why do we not honour it with practical actions? Why do some people allow other holidays? But when it comes to designating the Buddha's Birthday as a general holiday, why do they speak against the Sino-Japanese War Victory Day but not other holidays, on the ground that the holiday will adversely affect the economy of Hong Kong?

I do not think we should just talk without action. When people blamed me for increasing the number of holidays to 18, why did they not blame the Government for that? It is the Government which is responsible for that. It added two holidays to the scheduled general holidays, forcing me to put forward amendments. I do not think it is fair to blame me for creating a total of 18 days as our general holidays.

My amendments clearly state that I just wanted to retain the day as a general holiday. Madam Chairman, I did not say there should be an increase in the total number of general holidays. I did not say anything for or against the increase of the number of general holidays to 18. But the spirit of my amendments is very clear. I am not sure if Members have read them. All I want is just to retain the third Monday in August as a holiday, which is originally a holiday. That is to say I do not want any changes. It is the Government that wants a change.

I think that days set down as holidays in the past were so set down because they mean some significance. Now if a day, said to be important and of historical significance, were changed or even deleted from the holidays list, I could hardly find it convincing that people were not hypocritical. What they are doing shows that they are actually acting against what they preach.

Madam Chairman, why do we need the occasion as a holiday? I think we need it to allow the public to organize commemorative activities and facilitate the preparation for and participation in these activities. The Government says activities can be organized, not on a holiday. If that is done, such activities can only be attended by officials or people who do not have to go to work. It would then be impossible for non-government organizations to organize activities. That is another reason for retaining the day as a holiday. There are also historical values and meanings already as mentioned by some colleagues, so I do not repeat them here. I hope everybody can vote for my amendments in good conscience as they say they respect the occasion.

Thank you, Madam Chairman.

CHAIRMAN (in Cantonese): I now put the question to you and that is: That the amendments moved by Mr LEUNG Yiu-chung be passed. Will those in favour please raise their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr LEUNG Yiu-chung rose to claim a division.

CHAIRMAN (in Cantonese): Mr LEUNG has claimed a division. The division bell will ring for three minutes.

CHAIRMAN (in Cantonese): Will Members please register their presence by pressing the top button and then proceed to vote?

CHAIRMAN (in Cantonese): Before I declare the voting shall stop, Members may wish to check their votes. If there are no queries, voting shall now stop.

CHAIRMAN (in Cantonese): The result will now be displayed.

Functional Constituencies:

Mr Michael HO, Mr LEE Kai-ming, Miss Margaret NG, Mr CHEUNG Man-kwong, Mr CHAN Kwok-keung, Mr CHAN Wing-chan, Mr WONG Yung-kan and Mr LAW Chi-kwong voted for the amendments.

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Dr Raymond HO, Dr LUI Ming-wah, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr Bernard CHAN, Dr LEONG Che-hung, Mrs Sophie LEUNG, Dr Philip WONG , Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU and Mr Timothy FOK voted against the amendments.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Miss CHAN Yuen-han, Mr LEUNG Yiu-chung, Mr Gary CHENG, Mr Andrew WONG, Mr Jasper TSANG, Dr YEUNG Sum, Mr LAU Chin-shek, Mr LAU Kong-wah, Miss Emily LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr CHAN Kam-lam and Mr YEUNG Yiu-chung voted for the amendments.

Mr TAM Yiu-chung, Mr David CHU, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai and Mr Ambrose LAU voted against the amendment.

THE CHAIRMAN, Mrs Rita FAN, did not cast any vote.

THE CHAIRMAN announced that among Members returned by functional constituencies, 25 were present, eight were in favour of the amendments and 17 against them; while among Members returned by geographical constituencies through direct elections and by the Election Committee, 28 were present, 21 were in favour of the amendments and six against them. Since the question was not agreed by a majority vote of each of the two groups of Members present, she therefore declared that the amendments were negatived.

CHAIRMAN (in Cantonese): As Mr LEUNG Yiu-chung's amendments to clauses 1 and 4 have been negatived, I now put the question to you and that is: That clauses 1 and 4 stand part of the Bill.

CHAIRMAN (in Cantonese): Will those in favour please raise their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr Andrew CHENG rose to claim a division.

CHAIRMAN (in Cantonese): Mr Andrew CHENG has claimed a division. The division bell will ring for three minutes.

CHAIRMAN (in Cantonese): Will Members please register their presence by pressing the top button and then proceed to vote?

CHAIRMAN (in Cantonese): Before I declare the voting shall stop, Members may wish to check their votes. If there are no queries, voting shall now stop.

CHAIRMAN (in Cantonese): The result will now be displayed.

Mr Kenneth TING, Mr James TIEN, Mr David CHU, Mr HO Sai-chu, Miss Cyd HO, Mr Edward HO, Dr Raymond HO, Mr LEE Cheuk-yan, Mr LEE Kai-ming, Dr LUI Ming-wah, Mr NG Leung-sing, Miss Margaret NG, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Miss Christine LOH, Miss CHAN Yuen-han, Mr Bernard CHAN, Mr CHAN Wing-chan, Mr CHAN Kam-lam, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr Gary CHENG, Dr Philip WONG , Mr WONG Yung-kan, Mr Jasper TSANG, Mr Howard YOUNG, Mr YEUNG Yiu-chung, Mr LAU Kong-wah, Mr LAU Wong-fat, Mrs Miriam LAU, Mr Ambrose LAU, Miss Emily LAU, Mr Timothy FOK and Mr TAM Yiu-chung voted for the motion.

Mr LEUNG Yiu-chung voted against the motion.

Mr Albert HO, Mr Michael HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Fred LI, Mr James TO, Mr CHEUNG Man-kwong, Dr YEUNG Sum, Mr LAU Chin-shek, Mr Andrew CHENG, Mr SZETO Wah and Mr LAW Chi-kwong abstained.

THE CHAIRMAN, Mrs Rita FAN, Prof NG Ching-fai, Mr CHAN Kwok-keung and Mr Andrew WONG did not cast any vote.

THE CHAIRMAN announced that there were 53 Members present, 36 were in favour of the motion, one against it and 12 abstained. Since the question was agreed by a majority vote of the Members present, she therefore declared that the motion was carried.

CLERK (in Cantonese): Schedule.

CHAIRMAN (in Cantonese): Will those in favour please raise their hands?

(Members raised their hands)

CHAIRMAN (in Cantonese): Those against please raise their hands.

(Members raised their hands)

CHAIRMAN (in Cantonese): I think the question was agreed by a majority vote of the Members present. I declare the motion passed.

CHAIRMAN (in Cantonese): Council will now resume.

Council then resumed.

Third Reading of Bill

PRESIDENT (in Cantonese): Bill: Third Reading. Secretary for Education and Manpower.

HOLIDAYS (AMENDMENT) BILL 1998

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, the

Holidays (Amendment) Bill 1998

has passed through Committee without amendment. I move that this Bill be read the Third time and do pass.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Holidays (Amendment) Bill 1998 be read the Third time and do pass.

PRESIDENT (in Cantonese): I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

PRESIDENT (in Cantonese): I think the question was agreed by a majority vote of the Members present. I declare the motion passed.

CLERK (in Cantonese): Holidays (Amendment) Bill 1998.

MEMBERS' MOTIONS

PRESIDENT (in Cantonese): Members' motions. Resolution in respect of the Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region (SAR). Mrs Selina CHOW.

RESOLUTION UNDER ARTICLE 75 OF THE BASIC LAW OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE'S REPUBLIC OF CHINA

MRS SELINA CHOW (in Cantonese): Madam President, I move the resolution under my name relating to amendments to the Rules of Procedure of the Legislative Council of the SAR. The amendments have been set out in details in the resolution.

At the request of the House Committee, the Committee on Rules of Procedure (the Committee) studied the procedural arrangements and any issues relating to the implementation of Article 79(6) of the Basic Law. Briefly, the Article states that when a Member of the Legislative Council is convicted and sentenced to imprisonment for one month or more for a criminal offence committed within or outside the SAR, and the Member is relieved of his or her duties by a motion passed by two thirds of the Members of the Legislative Council present, he or she shall be declared by the President of the Legislative Council no longer qualified for the office.

The Committee held five meetings in August, including one to which non-Committee members were invited to give their views on the issues involved.

I shall now summarize the conclusion reached by the Committee and its proposals as follows:

(a) In formulating the relevant procedural arrangements, the Committee is of the view that as far as possible, the general philosophy and principles underlying the way Council business is conducted should be maintained, and existing procedures governing motions, rules of speaking and so on should remain unchanged. Only when general rules are considered not applicable should specific rules be drawn up for incorporation into the Rules of Procedure, or suitable amendments made to existing rules, to cater for such special circumstances.

(b) As regards who may move the motion, the Committee concludes that motions under Article 79(6) of the Basic Law may be moved by either a Member or a designated public officer. The Committee does not see any need to lay down any special procedure or timeframe to trigger off the moving of the motion. So existing rules on the moving of motions should apply and there is no need for amendments.

(c) As regards the wording of the motion, the objective and effect of such a motion should be single-barrelled and unequivocal; this dictates the need for the wording of the motion to be short and precise. The Committee takes the view that the wording of the motion should be short and in a prescribed form. The offences convicted and terms of imprisonment as referred to in Article 79(6) of the Basic Law should be included. Details of the conviction and imprisonment should be set out in the form of a schedule. The Committee has come to the view that no amendment to the motion should be allowed. This is in pursuance of the principle that, given its clear objective, the motion should be simple and precise, and that the motion if amended might give rise to uncertainty over whether or not the requirements under Article 79(6) have been fulfilled. The Committee proposes that such requirements be stipulated in the Rules of Procedure in part JA, to be added.

(d) As regards notice requirement, the Committee considers that existing rules governing notice requirements should apply to such a motion and that waiver of the notice requirement should only be given by the President under exceptional circumstances.

(e) As regards the rules of speaking, the Committee is of the view that the provisions in Rule 41 (Contents of Speeches) should apply, except that subrule (7) should be amended to provide for an exception where the conduct of a Member is the subject of a particular motion. In consideration of the important nature of a motion moved under Article 79(6), the Committee is of the view that the speaking time of 15 minutes should be maintained, and that Rule 37 (Recommendations of House Committee as to Time of Speaking) should not apply. Therefore Rule 37 should be amended accordingly. Having regard to the severity of the effect of the motion, the Committee is inclined to allowing ample opportunity for the Member concerned to speak. Since there are provisions in Rules 36(5) and 38 for the President to grant exceptions, the Committee does not consider any need to change existing rules. Furthermore, the Committee has asked the Legal Adviser to provide guidelines for reference by Members when they speak on matters that may involve court cases being tried.

(f) About written statement/speech from the Member concerned. The Committee has deliberated on the appropriate manner to deal with a written statement from the Member concerned, particularly if the Member could not present the statement in person at the meeting of the Council. The Committee considers that statements of this nature could be dealt with under the item "Personal Explanations". In the event that the Member concerned cannot be physically present at a meeting for good reasons, the President may instruct that the personal explanations submitted be taken as read, and the contents thereof shall be recorded in the Official Record of Proceedings. The Committee is of the view that under no circumstances should the personal explanations be read by another Member. The Committee therefore proposes that a new Rule 28A be added to lay down the relevant provisions.

(g) On voting procedures, the Committee has studied Article 79(6) and Annex II of the Basic Law relating to voting procedures on motions. After a detailed study, the Committee is of the view that the expression "a motion passed by two-thirds of the Members of the Legislative Council present" falls within the category of provisions "otherwise provided for" as specified in Annex II. Therefore, the Committee concludes that the passage of the motion to relieve a Member of his duties under Article 79(6) requires a vote of "two-thirds of the Members of the Legislative Council present", as provided for under the Article. Hence, the voting procedures in Annex II of the Basic Law, which are reflected in Rule 46, shall not apply to a motion moved under Article 79(6), but will be applicable to procedural motions moved in the same debate, such as a motion to adjourn the debate. The Committee accordingly proposes to amend Rules 46 and 47 of the Rules of Procedure by adding clause 49B.

(h) As to whether the Member concerned could vote, the Committee has noted that remuneration received by Members of the Legislative Council may be regarded as a direct pecuniary interest and a right to remuneration. The right will not vanish even if Members are prepared to relinquish that right unilaterally. If so, Rule 84(1), which states that a Member shall not vote upon any question in which he has a direct pecuniary interest, shall apply. As Rule 84 has laid down the broad principles regarding personal pecuniary interest and at the same time has provided an effective mechanism for disallowing such a vote, the Committee does not see such a need to resort to other arrangements in this respect.

(i) About the application of Rule 32 (Motions on Previous Decisions of Council), the Committee understands that if the relevant motion is passed, the President will immediately declare the Member concerned no longer qualified for the office. Since the decision will be implemented, it cannot be rescinded. So, a motion to rescind the decision is not possible. The Committee is of the view that this will not contradict the general application of Rule 32 of the Rules of Procedure because to move a motion to rescind a certain resolution in the same Session requires permission from the President, who will inevitably consider the possibility of rescission of the relevant resolution. However, if the motion to relieve a Member of his duties is negatived, procedures to rescind resolutions already passed cannot be applied, and the same motion cannot be moved again in the same Session. The Committee understands that if there is a change in circumstances, the Council may need to debate the relevant matter again. However, under Article 79 of the Basic Law, there are other channels to achieve the same result and there is no restriction to move the same motion again in the next Session. So, the Committee is of the view that existing means to tackle the relevant matters are adequate. Since the wording of Rule 32 as it is cannot fully reflect the intended purpose, the Committee has decided to rewrite it, specifying as separate cases what will be done when a motion is passed and when it is negatived.

I would now urge Members to support my resolution to amend the Rules of Procedure.

Thank you, Madam President.

Mrs Selina CHOW moved the following resolution:

"That the Rules of Procedure of the Legislative Council of the Hong Kong Special Administrative Region be amended -

(1) in Part F -

(a) in the heading, by adding "AND PERSONAL EXPLANATIONS" after "STATEMENTS";

(b) by adding -

"28A. Personal Explanations

(1) A Member who wishes to make an explanation of personal matters shall inform the President of his wish, and provide an advance copy of the intended explanation to the President for agreement to ensure that the explanation will not provoke a debate and that the contents are appropriate. If leave is given by the President for making the explanation, the Member shall not depart from the agreed contents.

(2) No debate may arise on such an explanation but the President may in his discretion allow short questions to be put to the Member making the explanation for the purpose of elucidation.

(3) Where the explanation is made in relation to a motion moved under Part JA (Procedures for Particular Motions) and the Member is unable to attend the meeting at which it is intended to be made, the President may direct that a copy of the explanation be sent to every Member and the text of the explanation be taken as read.";

(2) in Rule 32 -

(a) by renumbering it as Rule 32(1);

(b) in subrule (1), by adding "and the question has been decided in the affirmative," after "specific question";

(c) by adding -

"(2) Where the Council has taken a decision on a specific question and the question has been decided in the negative, no further motion shall be moved in relation to that question during the current session.";

(3) in Rule 37(1), by adding "or to which Part JA (Procedures for Particular Motions) applies" after "legislative effect";

(4) in Rule 41(7) -

(a) by repealing "The" and substituting "Except where his conduct is the subject of a motion to which Part JA (Procedures for Particular Motions) applies, the";

(b) by repealing "or Members of the Executive Council" and substituting ", a Member of the Executive Council";

(c) by repealing "Members of the Legislative Council" and substituting "a Member of the Legislative Council";

(d) by repealing "their" and substituting "his";

(5) in Rule 46 -

(a) in subrule (1), by repealing "Articles 49, 52(2), 73(9), 79(6) and (7)" and substituting "Rules 49B (Relieving a Member of His Duties) and 66 (Bills Returned for Reconsideration) and Articles 52(2), 73(9) (in respect of a motion of impeachment), 79(7)";

(b) in subrule (2), by repealing "(other than the motion "That the ...... Bill returned by the Chief Executive in accordance with Article 49 of the Basic Law do pass after reconsideration" referred to in Rule 66 (Bills Returned for Reconsideration))" and substituting "(other than a motion moved under any of the excepted Rules or Articles of the Basic Law referred to in subrule (1))";

(c) by adding -

"(3) Any motion not passed shall be deemed to be decided in the negative.";

(6) in Rule 47 -

(a) in subrule (1)(b), by adding "required" before "majority";

(b) in subrule (2), by repealing "When" and substituting "Other than in relation to a motion moved under Rule 49B (Relieving a Member of His Duties) or 66 (Bills Returned for Reconsideration) or Article 52(2), 73(9) (in respect of a motion of impeachment), 79(7) or 159 of the Basic Law, when";

(c) in subrule (2)(b), by adding "a majority of" before "each of the two groups";

(7) by adding -

"PART JA

PROCEDURES FOR PARTICULAR MOTIONS

49A. Application of this Part

In any matter not provided for in this Part, the Rules in other Parts shall apply as appropriate.

49B. Relieving a Member of His Duties

(1) A motion to relieve a Member of his duties as a Member under Article 79(6) of the Basic Law shall be moved in the following form:

"That whereas (name of Member) was convicted on (date) in (court) in (place) of a criminal offence(s) and was sentenced on (date) by (court) to imprisonment for one month or more (as particularized in the Schedule to this motion), this Council relieves (name of Member) of his/her duties as a Member of the Legislative Council.".

(2) No amendment may be moved to a motion moved under subrule (1).

(3) The passage of a motion moved under subrule (1) shall require a two-thirds majority vote of the Members present.

(4) Where the Council has decided to relieve a Member of his duties, the President shall declare forthwith that the Member is no longer qualified for his office."."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the resolution moved by Mrs Selina CHOW, as set out on the Agenda, be passed.

We now proceed to a debate. Does any Member wish to speak? Miss Margaret NG.

MISS MARGARET NG: Madam President, under the Legislative Council Ordinance, a person is disqualified from standing for election if he has been convicted of an offence in Hong Kong or any other place and sentenced to imprisonment for that offence for more than three months within the last five years. If this is the standard the law requires of anybody who aspires to be a Member of the Legislative Council, then no less stringent a standard must be required of those who are already enjoying that status.

Before the establishment of the Hong Kong Special Administrative Region (SAR), by the laws then in force in Hong Kong, the same requirement applies to both the incumbent and the aspirant. A Member was automatically disqualified if he was convicted of an offence and sentenced to more than three months' imprisonment. This is not only fair and reasonable. It is indeed the minimum standard that someone who is entrusted with legislative power must meet.

After the establishment of the SAR, the disqualification of a Legislative Council Member is governed by Article 79 of the Basic Law. Under Article 79(6), a Member who has been convicted of a criminal offence within or outside the SAR and sentenced to one month's imprisonment or more may be removed from office. However, his removal is not automatic, but is subject to the decision of this Council. I understand that the Honourable Martin LEE will give the background of how this part of the Basic Law came to be drafted in this way. Whatever the background, the plain fact remains unchanged that the public has every right to expect Members of this Council to meet at least some minimum requirements and failing which, they must be removed from office. It is plain that the rules and procedure, formerly unnecessary, must be put in place as soon as possible to implement these provisions of the Basic Law. Otherwise, we will be in danger of giving the public the impression that we are eager to censure others, but are lax when it comes to regulating ourselves or each other.

As the Deputy Chairman of the Committee on Rules of Procedure, I am very glad that the proposals are now put before this Council.

Madam President, the Honourable Mrs Selina CHOW has given a full report on the deliberations of the Committee. I shall not repeat what she has said. I will just highlight the guiding principles we should observe in deciding these rules and procedure.

The first consideration is lawfulness. The rules and procedure must be compatible with the Basic Law and truly and faithfully implement Article 79(6). This means we have to first ascertain what the true interpretations of the relevant provisions are, objectively and dispassionately. This, I believe, the Committee has conscientiously done. That is why I have never felt troubled by threats of court challenges made all too frequently in the process. It is not just that, since the Committee has done a thorough job of it, with the help of Legal Advisor, I am confident that the rules as proposed will stand up to challenge in a court of law. Even more than that, we should be just as eager as anyone else to give effect to the true interpretation of the law, and I for one would welcome the court's putting us right, if we should be proved mistaken.

Secondly, we must make sure that the rules are fair, clear and responsive to the different circumstances in which Article 79(6) may be invoked. It so happens that the conviction and sentence of the Honourable CHIM Pui-chung had provided the immediate occasion for this Council to attend to this part of the rules of procedure. But the rules as proposed are far from tailor-made for that case alone. Indeed, it is clear that a conviction and sentence within Hong Kong is relatively straightforward. Things may be more complicated and uncertain when the conviction and sentence took place outside the SAR, and the rules must be sensitive enough to deal with these.

The concern has been expressed that the provision may be used as a political instrument to remove a Member, or some unjust and harsh laws abroad may result in a Member being removed. There may be cases when investigation is called for to enable this Council to make an informed decision. The present rules allowed for that. It is important, in my view, to be far-sighted and alert to contingencies without allowing ourselves to be dominated by these concerns. For example, we must not assume that our own criminal proceedings are not trustworthy, or that the Government can exploit them for political ends. If we have any grounds to suspect the erosion of the integrity of the criminal proceedings in Hong Kong, then we must tackle that problem on its own directly, immediately and forcefully, because its implications are far wider and deeper than the removal of a Member.

Thirdly, we must be scrupulous in ensuring that the rules are fair. I am satisfied that the proposal put before the Council fully meets that concern. In the question of removing a Member from his office, I consider we must keep vividly the paramount concern with public interest, which is the proper functioning of the legislature, unhampered by any taint. In this context, if there is any unavoidable conflict between public interest and the convenience of the individual Members concerned, then the balance must be tipped in favour of public interest. The public would expect us to do so.

Madam President, I support the motion.

PRESIDENT (in Cantonese): Mrs Selina CHOW, do you wish to reply?

(Mrs Selina CHOW indicated she had no wish to reply)

PRESIDENT (in Cantonese): I now put the question to you and that is: That the resolution moved by Mrs Selina CHOW, as set out on the Agenda, be passed. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively from each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections and by the Election Committee, who are present. I declare the resolution passed.

PRESIDENT (in Cantonese): Resolution under Article 79(6) of the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China. Dr LEONG Che-hung.

RESOLUTION UNDER ARTICLE 79(6) OF THE BASIC LAW OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE'S REPUBLIC OF CHINA

DR LEONG CHE-HUNG (in Cantonese): Madam President, I move that the resolution made under Article 79(6) of the Basic Law of the Hong Kong Special Administrative Region (SAR) of the People's Republic of China , as set out on the Agenda, be passed.

On 1 August this year, the Honourable CHIM Pui-chung was found guilty by the Court of First Instance of the High Court of one count of a criminal offence of conspiracy to forge in breach of the common law and section 71 of the Crimes Ordinance (Cap. 200), and was sentenced on 3 August to imprisonment for three years.

Under Article 79(6) of the Basic Law, a Member of the Legislative Council when convicted and sentenced to imprisonment for one month or more for a criminal offence committed is relieved of his or her duties by a motion passed by two thirds of the Members of the Legislative Council present. The President of the Legislative Council shall then declare that this Member of the Legislative Council is no longer qualified for the office.

Madam President, it is indeed regrettable that in less than three months after the formation of the first Legislative Council of the SAR that we have to deal with the issue of whether or not a Member of this Council, a colleague of ours, should be relieved of his duties. Like many Members present, I have worked with Mr CHIM Pui-chung for many years and we have always co-operated well. We are also good friends. But since the matter has happened, Members should therefore deal with it in an objective and proper manner, so that the interests of the public can be protected and the integrity and dignity of the Legislative Council be upheld.

The House Committee held a special meeting on 5 August to discuss whether a motion should be moved to relieve Mr CHIM of his duties in accordance with Article 79(6) of the Basic Law. In the meeting, Members heard an explanation on Article 79(6) of the Basic Law given by the Legal Adviser of the Legislative Council. The Legal Adviser stated that if a Member of the Council was convicted and sentenced to imprisonment for one month or more for a criminal offence, other Members might move a motion to relieve that Member of his or her duties. As Article 79(6) does not specify when such a motion is to be moved, Members may decide on the question of whether a motion should be moved to relieve the convicted Member of his or duties. Members may also decide when such a motion should be moved. The Legal Adviser also explained, even if the Member concerned had lodged an appeal, Members might still move a motion under Article 79(6) of the Basic Law.

In the meeting on 5 August, Members discussed on the voting method on motions under Article 79(6) and other related matters. In the end, the House Committee made the following decisions:

First, the Committee agreed to move a motion under Article 79(6) to relieve Mr CHIM of his duties as a Member. Members also decided that I should move the motion in my capacity as the Chairman of the House Committee which was more appropriate than having the motion moved by an individual Member.

Second, Members also decided that a debate would be held in today's Council meeting because such a motion debate on disqualifying a Member was of enormous importance and should not be held during the summer recess of the Council when most Members were not in Hong Kong.

Third, as for the procedural arrangements and other related matters in respect of a motion moved under Article 79(6) of the Basic Law, the House Committee agreed that these should be studied by the Committee on Rules of Procedure which would later make recommendations. These recommendations have been passed just now.

Madam President, on last Friday, that is, in the House Committee meeting held on 4 September, Members deliberated on the contents of the letter dated 1 September addressed to me by Mr CHIM through his solicitor. No Member requested that today's debate be held at a later date, nor did any Member oppose to the procedural arrangements and other matters related to the moving of a motion according to Article 79(6) of the Basic Law in this meeting.

Madam President, I heard that during the last few weeks some colleagues had contemplated the question of whether or not this motion debate should be deferred. Some colleagues thought that the matter should be deferred pending the outcome of the appeal. I think the ruling made by the High Court judge yesterday on the application for judicial review should be a good reference for these colleagues. Moreover, since a further appeal can be brought to the Court of Final Appeal, then how long do we have to wait?

Besides, some colleagues have suggested that we should wait for another month or two, so that if at that time the date for appeal is still unknown, or if the appeal proceedings have not yet begun, then we can discuss the question of disqualification. I cannot subscribe to this view and I can see no reason in doing so. If these colleagues agree to the advice given by our Legal Adviser, that is, once a sentence is passed, we have the right to invoke this mechanism even if the appeal has not begun. What other good reasons do we have to wait for yet a little while? What yardstick should we use to determine how long we shall wait and what we are waiting for?

There are many people in this Chamber who are on very good terms with Mr CHIM and are his good friends, including I myself. But today we must do official business according to official principles and we must not allow any emotions to interfere with our execution of public duty, or let personal feelings override public interest.

Madam President, I think the most important factor to consider in the question of whether to relieve Mr CHIM Pui-chung of his duties is the protection of public interest and the safeguarding of the credibility of the Legislative Council. Hong Kong has all along been so proud of its spirit of the rule of law and its excellent legal system. This is also the cornerstone of Hong Kong's prosperity. As the law-making body of the SAR, the Legislative Council is responsible for the scrutiny and passage of legislative proposals. Now that a law-maker is found guilty of a criminal offence of conspiracy to forge and has been sentenced to imprisonment for three years, if he remains in office as a Member of this Council, how can this legislature be accountable to the public? Our credibility and dignity will certainly go down the drains.

Every one of us here came to be a Member of this Council through elections. Our duty is to serve the public and Hong Kong. Apart from legislative work, the Legislative Council is responsible for overseeing the operations of the Government, and to approve public expenditure. These are all highly important responsibilities. They are also very important powers as well. Every job that we do and every decision we make are all related to public interest. Thus, the personal integrity of a Member is of vital importance. It is the basic requirement of the public on each and every person holding public office. The matter concerning Mr CHIM is precisely one where personal integrity is involved. Therefore, I cannot find a single reason whatsoever to ask the public to let Mr CHIM stay in his office any longer.

Madam President, may I also point out a practical issue. A Member who has been found guilty of a criminal offence and is serving a sentence cannot effectively and fully discharge his or her duties as a Member of this Council. This will be unfair to the sector and voters whom that particular Member represents, and it will affect the normal operations of the Council.

In conclusion, Madam President, I think that the Legislative Council should relieve Mr CHIM of his duties with immediate effect so that the integrity and dignity of the Legislative Council will not be undermined. This decision will also permit the voters of the Financial Services sector to elect expeditiously another legislator who can effectively and fully represent their interests.

With these remarks, Madam President, I beg to move.

Dr LEONG Che-hung moved the following amendment:

"That whereas the Honourable CHIM Pui-chung was convicted on 1 August 1998 in the Court of First Instance of the High Court in the Hong Kong Special Administrative Region of a criminal offence, and was sentenced on 3 August 1998 by the same Court to imprisonment for one month or more (as particularized in the Schedule), this Council relieves the Honourable CHIM Pui-chung of his duties as a Member of the Legislative Council.

SCHEDULE
Case No.	Court	Offence Convicted	Date of Conviction	Sentence	Date of Sentence
Criminal Case HCCC 133 of 1997	Court of First Instance of the High Court	Conspiracy to Forge, contrary to Common Law and section 71 of the Crimes Ordinance (Cap. 200)	1 August 1998	Imprisonment for 3 years	3 August 1998"

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the resolution moved by Dr the Honourable LEONG Che-hung, as set out on the Agenda, be passed.

We now proceed to a debate. Does any Member wish to speak? Dr YEUNG Sum.

DR YEUNG SUM (in Cantonese): Madam President, on behalf of the Democratic Party, I would like to declare the position of the Party in respect of the motion moved by Dr LEONG Che-hung. We support Dr LEONG's motion mainly based on the following two points: the first one is related to legal proceedings; the other is related to the operation and credibility of this Council.

Madam President, Article 79(6) of the Basic Law reads: "When he or she is convicted and sentenced to imprisonment for one month or more for a criminal offence committed within or outside the Region and is relieved of his or her duties by a motion passed by two-thirds of the members of the Legislative Council present". Mr CHIM Pui-chung was sentenced to imprisonment for three years on 3 August 1998. Therefore, he has contravened the Basic Law in terms of his sentence. Some Members did mention whether it was possible to postpone the motion pending the result of Mr CHIM's appeal. However, Article 79 of the Basic Law has clearly stated that there is no provision governing that the sentence shall depend on the result of an appeal. Therefore, as far as legal proceedings are concerned, I consider this condition extremely clear. In addition, it may take us two months or an even longer period to wait for the result of the appeal. This will definitely create operational problems for this Council. Worse still, the public might doubt the credibility of this Council.

Madam President, in fact, we should be able to deal with this matter expeditiously during the summer recess. But as some Members were on leave, we considered it more appropriate for all Members to discuss this serious topic when we hold a formal meeting today.

The Democratic Party supports Dr LEONG Che-hung's motion. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Ronald ARCULLI.

MR RONALD ARCULLI: Madam President, I rise to speak on behalf of the Liberal Party on the motion to relieve the Honourable CHIM Pui-chung of his duties as a Member of this Council.

Irrespective of whether any of us support or oppose the motion, it cannot give any of us any pride or pleasure in having to consider what really amounts to the expulsion of a fellow colleague from this Council. However, unpleasant it might be, the Liberal Party will not shrink from our constitutional duty as elected Members of this Council.

Madam President, Article 79 of the Basic Law is clear. What is also clear is that Mr CHIM Pui-chung has lodged his appeal against his conviction and sentence. Because of the appeal, we must not say anything in this Council which may prejudice the case. That having been said, we believe that we must explain why the Liberal Party differs from the opinions of Mr CHIM's solicitor and counsel that reference to conviction and sentence in Article 79(6) of the Basic Law does not mean conviction by the jury and sentence by the trial judge. Their contention is that it means conviction sustained after all avenues of appeal have been exhausted, and it is only then that the conviction becomes final.

Madam President, if Mr CHIM's conviction and sentence had taken place prior to the nomination or to the Legislative Council election in May, he would not have been eligible to be either nominated or elected even if an appeal was pending. If Mr CHIM's lawyer is right, it would mean that Mr CHIM would have been eligible because according to them, conviction means conviction after all avenues of appeal have been exhausted. This cannot be right.

I think colleagues so far have expressed different views and I only wish to say one thing, that is, it will have to be a fairly exceptional case for this Council not to relieve a Member of his duties if, in fact, he falls within the four squares of Article 79(6) and the reasons of the public interest, the creditability of this Council, duty to voters and all that will pertain.

Thank you.

PRESIDENT (in Cantonese): Miss Margaret NG.

MISS MARGARET NG: Madam President, I support the motion. I can believe that there are circumstances in which a decision under Article 79(6) may be very difficult. The present case, however, is not one of them.

For the reasons I have given in my speech in the earlier debate on the motion of the Honourable Mrs Selina CHOW, it is clear to me that a Member who has been convicted and sentenced to more than three months' imprisonment should be disqualified, because there must be no double standards: one for the candidate, the other for the Legislative Council Member. The Honourable CHIM Pui-chung has been sentenced to three years' imprisonment for an undoubtedly criminal offence. On the practical side, he can hardly discharge his duty as a Legislative Council Member from prison. More fundamentally, it would be a public scandal if this Council were to allow Mr CHIM to continue in his public office.

I have no wish to go into the circumstances of Mr CHIM's conviction and sentence. It is not proper for us, in this Council, to make any comment on whether the jury has come to the right verdict or the judge has passed the right sentence. Dr the Honourable LEONG Che-hung's motion today is not founded on what Mr CHIM has done to deserve conviction and sentence, but the fact that he has been convicted and sentenced. If the jury or the judge were wrong, it is for the Court of Appeal to put them right. I see no need in this debate to make any moral judgment on Mr CHIM.

Over the weeks since the possibility of today's motion was mooted, a particularly disquieting suggestion has been circulated, and that is, this Council should not take any steps to remove Mr CHIM until his appeal is determined. It is disquieting for three reasons.

First, the belief, somehow, that the conviction and sentence do not count unless they are confirmed by the Court of Appeal. This is plainly wrong and does not accord with the laws in Hong Kong. I need not argue at length on this. Madam President, Mr CHIM sought leave for judicial review of your decision to permit this debate to be put on today's Agenda for the reason that you ought to have waited for all the avenues of appeal to be exhausted. Thus he has put the matter to the test in court. The court, in refusing leave, has made the determination that such a view was wrong.

Second, the fear that should this Council disqualify Mr CHIM today and then later Mr CHIM's appeal is allowed, this Council will look very foolish. But in doing our clear duty, this sort of consideration should have no place. We are not here to confirm or reject the decision of the court by passing or rejecting the motion. The Legislative Council has to go on. A Member who is no longer fit to serve must be replaced. If afterwards he becomes fit again, that is another matter. Public duty cannot be held up in the meantime because there is this possibility.

Third, that somehow this is unfair to Mr CHIM to deprive him of his office without waiting for the outcome of the appeal. Admittedly, a public office is an interest. It carries with it remuneration, social status, prestige and perhaps other benefits. But the nature of public office is that the holder of it should serve the office, not the office serving the holder. When a person is handicapped from giving his public office what that office requires, even if it is through no fault of his own, he should vacate it so that the place can be filled by someone else. To allow the private benefit aspect to override is to treat public office as the personal property of the holder of the office.

Madam President, some Members have expressed the view that Mr CHIM should have resigned. It is certainly a matter for him. But I do not think it a bad thing at all that this debate has provided the occasion for this Council to make certain fundamental principles clear.

Thank you.

PRESIDENT (in Cantonese): Mr Gary CHENG.

MR GARY CHENG (in Cantonese): Madam President, today is the first time in the history of Hong Kong for Members of the legislature to determine whether or not another Member of the Legislative Council should be relieved of his duties. This authority is conferred by Article 79 of the Basic Law. With the vesting of this new power, there are bound to be new responsibilities.

For a Member who has committed a criminal offence, he should vacate his office in accordance with Article 79 of the Basic Law. We need to safeguard beyond question the credibility of the legislature. The members of the Democratic Alliance for the Betterment of Hong Kong (DAB) have made our stance known clearly on this matter of principle after the conviction of Mr CHIM Pui-chung.

But on the premise of making ourselves accountable to the rule of law in Hong Kong, to the Legislative Council, and to the people of Hong Kong, we shall put the exercise of such a power never before exercised through prudent and careful consideration. The Committee on Rules of Procedure of the Legislative Council, of which I am a member, held a number of meetings during the recess and deliberated on this unprecedented event from the perspectives of procedures and jurisprudence.

Colleagues of the DAB have indeed spent a lot of time to conduct a meticulous study on matters such as the procedural issues before coming to a final decision, especially when a series of important events happened only before today's meeting. These important events include the motion on the Rules of Procedure moved by the Honourable Mrs Selina CHOW which has been passed earlier. We also need to consider a few things in preparation. We need to be prepared for the scenario when the matter is not justified on legal grounds. We need to be prepared for the legal action initiated by Mr CHIM against today's meeting and the announcement on the date of hearing for Mr CHIM's appeal. We must make very careful considerations on these procedural issues if we are to make ourselves accountable to procedures and law. This is a different matter from the question of principle about a Member who has committed a criminal offence and received a sentence long enough to justify relieving him of his duties.

Therefore, we think that we have to make careful considerations if we are to make such an important decision. Madam President, after making full and careful considerations, Members of the DAB decided to support the motion moved by Dr LEONG Che-hung.

Thank you.

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): Madam President, this is indeed a very dark day for the Legislative Council because we have to vote on whether or not we should relieve a fellow Member of his duties, and this is a task which we have to perform under the Basic Law. The Frontier supports the motion of Dr LEUNG Che-hung, for we do not think that Mr CHIM Pui-chung should continue to serve as a Member of this Council. Many of our colleagues in this Council have explained why, and Dr LEONG Che-hung has also pointed out that our creditability would be at risk. Besides, the Honourable Miss Margaret NG has already put forward a number of arguments. As a result, I am not going to repeat all these points here.

In fact, some members of the public think that we are too slow in taking actions on this matter, and I believe that you, Madam President, may also have heard about these views. My office has received a lot of phone calls, in which the callers invariably asked why we have not taken any actions. I think that members of the public can probably recall that in the old days, if a Member of this Council was convicted, he would be immediately removed from office. The most recent example is the case of Mr Gilbert LEUNG, who was convicted of offering bribes in an election. Now the procedure of dealing with these matters has been changed by the Basic Law, but some members of the public may not be aware of this. Therefore, they may fail to understand why someone who is in jail can still remain a Member of this Council. I hope that through the press reports today and the explanations given by so many Members the public can realize why we have to wait until September before we take actions to deal with something which happened in early August.

Madam President, I want to raise another point. Someone has reminded me of this point by asking me whether it is good to move these two motions in one single meeting. Let me explain the rationale behind their question. The resolution just moved by Mrs Selina CHOW is on the procedural arrangements for implementing Article 79(6) of the Basic Law. For that reason, if we proceed to this motion right after the passage of Mrs Selina CHOW's motion, one can rightly ask whether this is fair to the parties involved. Actually, this point was discussed at the committee meeting. We agreed that following the passage of the procedural arrangements, it would be best for us to wait for some time before we invoke them, so that those concerned will have an opportunity to make the necessary preparations and arrangements. However, we were also aware that what we would be doing would be highly transparent, and, most of the time, Members would be fully informed of the progress. Should anyone have any comment, we would certainly know because we were not working behind closed doors. Moreover, we also believed that we should deal with this matter as soon as possible. That is why, having considered all the views, Members of this Council have decided that we should deal with Mrs Selina CHOW's motion and this motion at today's meeting. We hope to put these views on record because we do not know what will happen in the future, and we also hope that the public will understand how we have come to this decision and how we are dealing with the matter.

Finally, Madam President, I would like to point out that, personally, I am against Article 79(6) of the Basic Law which provides that if a Member is convicted by the court of a criminal offence, he or she would only be relieved of his or her duties by a motion passed by this Council; I do not support this approach. Unfortunately, however, some people have refrained from explaining the background of this particular Article. However, whatever the background is, I share Miss Margaret NG's views that what is involved is the rulings of our judicial system, and if even we ourselves have no confidence in our own judicial system, then something far more complicated than the disqualification of a Member will be involved. If we think that the rule of law prevails in Hong Kong, and if we have confidence in the Hong Kong judicial system, then these matters should not be referred to this Council. These matters will become politicized if the Legislative Council has to vote on them. I hope one day we can amend Article 79(6) of the Basic Law. We consider that these matters should not be referred to this Council. Had this really been the case, the Member concerned would have been immediately relieved of his duties when he was convicted in early August, and the community would not have spent a whole month asking why we have not dealt with the matter and not taken any actions. Nevertheless, Madam President, this matter is finally put before us anyway, and we hope that Dr LEONG Che-hung's motion will be carried. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr James TO.

MR JAMES TO (in Cantonese): Madam President, since the Honourable Miss Emily LAU has referred to Article 79(6) of the Basic Law, I would like to state my opinion.

I believe that Dr LEONG Che-hung should be referring to the Honourable Martin LEE because he was once a member of the Basic Law Drafting Committee and had taken part in drafting the Basic Law. I wish to remind Members that Article 79(6) of the Basic Law covers not only the Hong Kong Special Administrative Region (SAR), but also areas outside the SAR. In other words, if a Member is to be relieved of his duties automatically upon criminal conviction, then it would mean that we will have to trust all judicial systems outside the SAR, including their integrity, fairness of procedures, convictions and sentences, and appeal mechanisms.

I am aware that there are divergent views on this point. If we are required to trust the Hong Kong legal system only, we will have no problem, and we may even agree that a Member so convicted should be automatically relieved of his duties. However, if we are required to place our unconditional trust on the sentences passed by all judicial systems outside the SAR, then I will have some reservations.

PRESIDENT (in Cantonese): Dr LEONG Che-hung, do you wish to reply?

DR LEONG CHE-HUNG (in Cantonese): Madam President, I just wish to make a brief reply.

I have no intention here whatsoever to comment on the merits or otherwise of Article 79(6) of the Basic Law. But as the Honourable Gary CHENG has said, this new power conferred on this Council by the Basic Law must be exercised very carefully. In this regard, I would like to tell the media and the general public of Hong Kong that Honourable colleagues of the Legislative Council have deliberated several times at House Committee meetings and we are exercising this power very carefully. Finally, it was decided that I should move this resolution on behalf of the House Committee.

Miss Emily LAU said earlier that this matter should have been taken care of as soon as possible. Everyone knows that since the conviction was made during the summer recess, we had to wait until most of the Members had come back for the meeting before we could move such an important motion. I believe that the general public will understand this. But one thing that the public will absolutely not understand is the consequence of us not dealing with the conviction of Mr CHIM Pui-chung properly now.

Many colleagues have spoken in support of relieving Mr CHIM Pui-chung of his duties as a Member of the Legislative Council in accordance with Article 79(6) of the Basic Law. Under the premise of protecting public interest and preserving the credibility of the Legislative Council, I believe that we must make such a decision. Nevertheless, I still wish to add a word here that this decision is definitely not meant to negate Mr CHIM's past contribution to the financial services sector, the legislature and even the whole community of Hong Kong. I believe that Mr CHIM's efforts made in his public duty have won the recognition of myself and many others.

With these remarks, Madam President, I hope that Members will support this motion. I would also like to remind Members that this motion will only be passed by two thirds of the Members who are present. Thank you, Madam President.

PRESIDENT (in Cantonese): Before I put the question to you, I wish to draw Members' attention to Article 79(6) of the Basic Law of the Hong Kong Special Administration Region of the People's Republic of China, which stipulates that for the resolution to be passed, a two-third majority of the Members who are present is required.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the resolution moved by Dr LEONG Che-hung, as set out on the Agenda, be passed. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

Miss Emily LAU rose to claim a division.

PRESIDENT (in Cantonese): Miss Emily LAU has claimed a division. The division bell will ring for three minutes.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Members may wish to check their votes. If there are no queries, voting shall now stop.

PRESIDENT (in Cantonese): The result will now be displayed.

Mr Kenneth TING, Mr David CHU, Mr HO Sai-chu, Miss Cyd HO, Mr Edward HO, Mr Albert HO, Mr Michael HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr LEE Kai-ming, Mr Fred LI, Dr LUI Ming-wah, Mr NG Leung-sing, Prof NG Ching-fai, Miss Margaret NG, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr James TO, Mr CHEUNG Man-kwong, Mr HUI Cheung-ching, Miss Christine LOH, Mr CHAN Kwok-keung, Miss CHAN Yuen-han, Mr Bernard CHAN, Mr CHAN Wing-chan, Mr CHAN Kam-lam, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr Gary CHENG, Mr Andrew WONG, Mr WONG Yung-kan, Mr Jasper TSANG, Mr Howard YOUNG, Dr YEUNG Sum, Mr YEUNG Yiu-chung, Mr LAU Chin-shek, Mr LAU Kong-wah, Mrs Miriam LAU, Miss Emily LAU, Miss CHOY So-yuk, Mr Andrew CHENG, Mr SZETO Wah, Mr LAW Chi-kwong and Mr TAM Yiu-chung voted for the resolution.

Dr Raymond HO abstained.

THE PRESIDENT, Mrs Rita FAN, did not cast any vote.

THE PRESIDENT announced that there were 47 Members present, 45 were in favour of the resolution and one abstained. Since the question was agreed by more than two thirds of the Members present, she therefore declared that the resolution was carried.

PRESIDENT (in Cantonese): In accordance with Article 79 of the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China, I now declare that Mr CHIM Pui-chung is no longer qualified for the office of a Member of the Legislative Council.

PRESIDENT (in Cantonese): Two motions with no legal effect. I have accepted the recommendations of the House Committee as to the time limits on speeches for the motion debates. The movers of the motions will each have up to 15 minutes for their speeches including their replies, and another five minutes to speak on the amendments. The mover of an amendment will have up to 10 minutes to speak. Other Members will each have up to seven minutes for their speeches. Under Rule 37 of the Rules of Procedure, I am obliged to direct any Member speaking in excess of the specified time to discontinue.

First Motion: Attacks on the Hong Kong currency. Mr Bernard CHAN.

ATTACKS ON THE HONG KONG CURRENCY

MR ALBERT HO (in Cantonese): There are no government officials or government representatives present in the meeting. I wonder if there is a need for us to take a break to allow the representatives to attend the meeting before we start the debate.

PRESIDENT (in Cantonese): This is a good suggestion. Anyhow the meeting has been going on for a considerable period of time. The meeting is now suspended for 10 minutes. After the suspension, we will continue with the debate no matter whether government officials are present or not.

6.58 pm

Meeting suspended.

7.20 pm

Council then resumed.

PRESIDENT (in Cantonese): Mr Bernard CHAN, sorry for keep you waiting. You may speak now.

MR BERNARD CHAN: Madam President, I move the motion as set out under my name on the Agenda.

I understand our Council has grave concern about repercussions of the Government's unprecedented trading of stocks since mid-August. But today, I would not focus my speech on market intervention, or interventionism, or positive non-interventionism, but would focus on as simple as public confidence in our economy.

Our community has been badly hit by the economic turmoil, which is close to its first anniversary now. I am sure every one of us knows very well of how the devastating force has been creeping all over our society, leaving behind devalued stocks and properties, dismissed workers and middle managers, closed shops and empty restaurants. When people lost their jobs, the Government speeded up infrastructural development to boost employment. In the face of credit crunch, the Government initiated the Special Finance Scheme for Small and Medium Enterprises. When property buyers disappeared from the market, the Government launched the Home Starter Loan Scheme. After all, we see only cool responses to these rescue measures and no signs of a rebound.

I am no expert in all of the problems we are facing today. But I know the financial sector very well. And I am among the insurers and bankers who could see only a doomed fate unless rescue packages are in place. Our banking system has been under tremendous stress in the past year, having been seriously impaired by the incredibly volatile interest rates market. For most of the time, the interbank rate for three months is much higher than the prime rate. The latter is determined primarily out of political considerations and the impact of the dollar peg. In view of the rising cost of funds ─ as a result of the surging interbank and time-deposit rates ─ and the financial difficulties of the debtors, many banks are suffering a negative return on some of their new businesses.

The insurance sector could never stay easy neither. General insurers have been backing all sectors of our society. While most of their clients' business shrinks or even faces closure, insurers are among the first to suffer. Upon decreasing new insurance policies, lower premium and greater investment loss, many insurers are in fact losing money.

In the past year, our Government has played a part to alleviate the pain inflicted on to the general public. Many of our Honourable Members appealed for greater government expenses and lower taxes and rates. I just ponder if we are applying the right medicine on the right place.

Economists have identified the bubble economy and speculative attacks on our currency as major causes of our pain. Some honourable opinion leaders in society said we should endure the pain until the Hang Seng Index dived to an incredibly low level of some 3 000 or 4 000 points, by then speculators would automatically ditch us. Some of them even uphold non-interventionism as the universal doctrine of our economic policy. They said the economy will turn around if the fundamentals of our economy improve.

I am not intended to play as a prophet of doom. But the clear fact is: before our economy naturally recovers, the doomsday would have come. The banking system is our last citadel and I am in a position to say that it has been standing on the edge. A financial catastrophe is straight on the way if our community continues to lose faith in our currency and economy. Our community has proven to be ultra-sensitive and highly speculative ─ you would probably agree with me just by recollecting images of the "cake shop coupon syndrome" a few months ago. The catastrophe is not simply a matter of capital loss, but bank run and money devaluation. This is what I really hate to think of.

While the mass media are portraying the plight of dismissed workers, unobtrusively the fundamentals of our financial sector have been rotten. This motion has been submitted to the Council well before the Government injected cash into the stock and futures markets to clash with the hedge funds head-on in mid-August. The Government's action has sparked a debate over interventionism against non-interventionism, which I think is a misplaced focus.

In times of financial crisis, the key to revival is the restoration of confidence. Only if we have faith in our currency could the currency match its face value and shatter unwarranted rumors. Our relatively small market is highly susceptible to manipulation of popular sentiments. Only bold and determined moves can forcefully crush excessively negative sentiments.

I am in support of government intervention which is capable of restoring public faith in our economy. Surely it is the time for intervention, or we would lose our war and battle against speculators. Intervention taking the form of direct trading in the equity market is costly and risky, the result of which is uncertain. From day one, I have made it clear that I would prefer effective administrative measures to restore normal functioning of the market, or launching negative campaigns for the speculators who play a part in selling short the Hong Kong currency.

I am adamant that strategically timed and short-term pre-emptive strikes against speculators are necessary when the capital market is being manipulated by forces beyond the control of the market's inherent regulatory system. As global speculators are using ever-changing and combined tactics to hit their targets, we should never preclude ourselves from any single form of intervention, provided these tools are able to uphold market integrity and investor confidence.

Instead of raising an academic debate on interventionism, we should shift our attention to boosting public confidence, which I think should be our way forward.

Some economists have indicated interest in the untried and unproven dollarization scheme, which is more of a unrealistic scenario than a viable proposal. Hong Kong's economic cycle is now linked to China while its interest rates being tied to the United States. The total abolition of the Hong Kong currency cannot help relieve the difficult situation but will cause greater systematic risk in the banking industry.

The prime advantage of dollarization is psychological: the local and international communities are likely to trust the pegged rate upon the Government's legal guarantee. The Government's announced adherence to the linked exchange system by legally guaranteeing certain fixed exchange rates to all licensed banks' clearing accounts on Saturday has achieved similar psychological results.

Some opinion leaders resort to the floating or repegging of the currency as a relief to the pressure for devaluation. Obviously, it is a very dangerous suggestion. An instant crash of currency will be triggered once people realize that the 7.8 exchange rate to US$1 will not last. That implies an exchange rate of 9.8 or even 12.8 could be possible. The fragile public confidence cannot stand a slightest blow of dollar devaluation, which would probably lead us to a bottomless plunge.

Any steps towards dollarization or repegging would be seen as the Government's last resort in dealing with the financial crisis. Before we gain anything from the policy change, we would have lost out the game.

I am glad to see that recent administrative measures proposed by the Government have been positively received by the public. By implementing measures announced on Saturday, the Hong Kong Monetary Authority (HKMA) will have direct control over money supply and interest rates. Prospective speculators will be difficult to borrow a large amount of Hong Kong dollars, even from the largest banks. The HKMA will, therefore, become Hong Kong's de facto central bank. Given such a new role, the HKMA should be regulated by more stringent rules on its operations and on the declaration of personal interests. The powerful Chief Executive of the HKMA should consider complying to rules normally applicable to central bankers, such as giving up directorship of other bodies and setting up a management fund for his own properties.

We should never over-worry about the departure of foreign capital as a result of the Government's intervention. As long as our market remains one of the cleanest and well-established marketplaces in the world, with sound economic infrastructure and stable political environment, international investors would never forego any chance to generate profits.

Thank you, Madam President.

Mr Bernard CHAN moved the following motion:

"That this Council urges the Government to adopt strategic and effective measures to deter further speculative attacks on the Hong Kong currency, which have immensely harmed the local economy. The adopted measures must aim to protect the integrity of the local capital markets, while maintaining investor confidence and market stability."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That this Council urges the Government to adopt strategic and effective measures to deter further speculative attacks on the Hong Kong currency, which have immensely harmed the local economy. The adopted measures must aim to protect the integrity of the local capital markets, while maintaining investor confidence and market stability.

Members have been informed by circular on 4 September that Mr Albert HO has given notice to move an amendment to this motion. His amendment has been printed on the Agenda. In accordance with the Rules of Procedure, the motion and the amendment will now be debated together in a joint debate.

I now call upon Mr Albert HO to speak and to move his amendment. After I have proposed the question on the amendment, Members may express their views on the motion and the amendment. Mr Albert HO.

Mr Albert HO (in Cantonese): Madam President, I move that Mr Bernard CHAN's motion be amended as set out on the Agenda.

On 14 August, the Hong Kong Government announced that it would use the foreign exchange reserves to intervene in the cash and futures markets. That intervention is a historical move. This is the first government intervention we have ever had in Hong Kong, but also a rare practice for countries which uphold the free market economic system. The Democratic Party made a preliminary response to the intervention in that evening: we have much reservation about the move; the Government really should not use the foreign exchange reserves kept for the defence of the Hong Kong dollar to battle with the international speculators; in particular, it should not artificially alter the market trends as it might ultimately cause harm to the local economy.

After studying carefully the press statement of the Financial Secretary, we found out on the following day, that is, 15 August, that the major objective of the Government's intervention in the market was exactly the same as what the Financial Secretary had claimed, which was: the Government does not tolerate attempts by speculators to manipulate our interest rates by engineering extreme conditions in the money market so that they can benefit from the short position they have built up in (the futures market). In this connection, the Government has reiterated that whilst holding fast to the non-intervention policy, it would, however, intervene if speculators are dumping Hong Kong dollar to engineer interest rates fluctuations, thereby contributing significantly to the volatility of the stock and futures markets. In other words, the Government would intervene only when there is a sufficiently clear linkage between the currency play and the stock and futures market play.

The said press statement was in fact issued to explain the Government's intervention into the markets: first, there was cross-market manipulation; second, it needs to prevent speculators from creating chaos in the markets to reap profits.

However, the greatest surprise for me was the lack of crisis awareness on the part of the Government. In its Report on Financial Market Review published in April, the Financial Services Bureau has pointed out in the section on market surveillance and risk management that there was no evidence in support of the views that speculators have been reaping profits from the financial markets at large through manipulation across the securities, futures and currency markets, nor was there evidence supporting the view that speculators have been reaping profits from the cash market by attacking the Hong Kong dollar to cause interest rate hikes and the cash flow to tighten, thereby pressing investors to sell their stocks. The Bureau regarded these as rumours in the markets. So, the Government was saying in April that there was no question of our markets being manipulated. However, in just four months' time, it told all of us in August that the situation had become so grave that the Government had no choice but to intervene in the markets and take on the speculators. I was really surprised to find that our financial markets have simply nothing to defend against challenges by speculators. It is because we have been living with an unreal sense of safety that we have to bear such a grave risk now. From here we could see that the Government really does not have any sense of crisis awareness, nor has it put in any effort to promote risk management in the markets.

Secondly, we have identified many technical problems in regard to the government intervention on 14 August. According to the Government, it needs to make the speculators leave our markets with losses on one hand, and push the Hang Seng Index to 7800 points on the other; besides, it also claimed it has to force the September futures index down to 7200 points so as to attack the speculators and to prevent them from switching positions. However, because of its inability to cope with the fast-paced development, the Government has to take up all the stocks sold in bulk by international funds and local heritage funds. As such, the long-term investors were able to sell all their stocks to our Foreign Exchange Fund without showing us their gratitude; as for us, we were forced to hold "crab stock" amounting to more than $100 billion in value.

As pointed out by financial officials, government intervention should be completed as fast as possible. However, the "Chinese-styled punitive war against Vietnam" has unexpectedly turned into the "US-Vietnam war" and rendered us impossible to withdraw from the battlefield promptly. If the objective of the government intervention in the market was to uphold market order and to prevent any institutional risks instead of "punishing" the speculators, the grave technical mistake of spending more than $100 billion of our reserves in the stock market on the last day could have been prevented.

Was it necessary for the Government to intervene the market during the period between 14 to 28 August? Or should it let the market mechanism adjust itself, since there would naturally be some obstacles at certain levels that would cause the market to stabilize? This might be a little controversial, but the Democratic Party does believe that the market could adjust itself; by that we mean buyers would eventually enter the market at a certain price level and there should be no problem of "institutional risks". As a matter of fact, before it entered the market, the Government had never stressed that "the market would collapse if the Government did not intervene"; on the contrary, it had only stressed repeatedly that it needed to "drive the speculators away and stop them from reaping profits". In our opinion, the government intervention serves to demonstrate the lack of prudence on the part of the Government. The financial officials should indeed be held responsible for this unwise decision to cause our Foreign Exchange Fund to lose more than $100 billion of our foreign exchange reserves which should be used for the defence of the Hong Kong dollar. We should reserve the right to conduct a comprehensive investigation into the matter and to hold the relevant public officers responsible after the truth of the matter has been unveiled.

The Democratic Party, of course, would not indiscriminately believe in the mechanism of the market economy. As a matter of fact, the linked exchange rate itself is an act of intervention, an artificial factor created to stabilize the market. In any case, the Government should only intervene with good reasons and a sound foundation; it should never enter the market when it is unclear of its objective or principle to intervene; otherwise, it would only be making inconsistent moves and losing its foothold.

A number of ill effects have also been identified after the Government had intervened the market. Firstly, the international image of Hong Kong has been tarnished. Many investors are hesitant about investing in our markets because they do not know what the Government is going to do next. Secondly, by entering the market to intervene, the Government has changed its role from a neutral monitor into one of the investors in the market. what is more, the Securities and Futures Commission has indicated earlier on that the Government and the hong Kong Monetary Authority (HKMA) are not subject to the supervision of any laws; in other words, the laws of Hong Kong could do nothing even if the Government gets a foot in "outsider" dealings after entering the market. That being the case, how could investors have confidence in our markets? thirdly, the considerable sum of money spent in the markets has weakened the Hong Kong dollar reserves position. Lastly, whilst the management of the enormous investment may probably be a problem, "withdrawal" from the market would just be impossible in the foreseeable future.

At the present stage, the Democratic Party could only give our full support to the legislative effort made by the Government to implement the relevant measures; as regards the measures proposed by the Chief Executive of the HKMA, Mr Joseph YAM, and those by the Financial Secretary, we do believe that they should be effective to a certain extent. Nevertheless, the Democratic Party should like to remind the Government that the measures should all operate fairly and objectively in accordance with the established systems to monitor certain activities; they should never be targeted against any individuals. In addition, we also hope that the Government would not use any excuses to enter the markets again after the relevant rules and regulations have been implemented. And of course, we do believe that the Government should stop its intervention in the market so as to revive the confidence of international investors in Hong Kong.

For these reasons, we hope that Honourable Members will lend their support to my amendment to put in concerted efforts to implement the legislative measures to revive the confidence of international investors in Hong Kong. Thank you.

Mr Albert HO moved the following amendment:

"To add "expeditiously" after "That this Council urges the Government to"; to delete "strategic and effective" and substitute with "appropriate legislative and administrative"; to add "improve the existing regulatory mechanism and operating rules of the financial market, so as to limit" after "measures to"; to delete "deter further speculative"; to delete ", which have immensely harmed the local economy. The adopted measures must aim to protect" and add "and speculative activities in the market; and not to further intervene by trading in the securities and futures markets, thereby protecting"; and to delete "the local capital markets, while maintaining investor" and substitute with "Hong Kong as an international financial centre and restoring local and overseas investors'"."

THE PRESIDENT'S DEPUTY, DR LEONG CHE-HUNG, took the Chair.

DEPUTY PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment moved by Mr Albert HO be made to Mr Bernard CHAN's motion.

Does any Member wish to speak? Miss Christine LOH.

MISS CHRISTINE LOH: Mr Deputy, the issues raised today go to the heart of the financial problems facing Hong Kong. I find the original motion simplistic and prefer the amendment. How our policy-makers react and how this Council holds the Executive to account will leave an impression on how the Special Administrative Region manages autonomy. The world is watching.

Why are we having this debate? The Government's massive week-long August buying spree in the stock and futures markets shocked the financial community. I find it hard to support the Government as some of my colleagues have done. There are still too many unanswered questions and uncomfortable aspects surrounding the whole thing.

The Government acknowledges that Hong Kong's international reputation has been damaged. We are told that intervention is necessary because there has been an organized and sustained effort from unnamed overseas parties to manipulate our markets. Despite having spent a huge sum of our reserves ─ the exact amount has yet to be officially disclosed ─ these bad manipulators have apparently not yet disappeared. The Government announced a series of measures just these last few days to supposedly strengthen regulation.

What do we make of all these? Let us first look at the seven measures issued on Saturday. My first observation is that the Government realized that it was looking at a bottomless pit. Even with its considerable reserves, it could not keep supporting stock and futures prices for long. The choices were either to give up or impose controls. Imposing full exchange controls is thankfully not possible, because Article 112 of the Basic Law protects Hong Kong from going down the Malaysian path. On the other hand, throwing in the towel would require the Government to acknowledge failure, and it does not really want to do that. So, we are now being distracted from an in-depth discussion about the intervention by being thrown with these technical measures.

Mr Deputy, let me tell you why I am suspicious. At first glance, it would appear that the seven measures are an improvement over the system of management of the Hong Kong Monetary Authority (HKMA) prior to the intervention. For example, the HKMA at last commits to free convertibility; the HKMA commits to publishing more frequent financial information; the HKMA sets up the Subcommittee on Currency Board Operation; the HKMA will now distinguish between treasury transactions, management of government funds and the currency board actions; and the HKMA has dropped the liquidity adjustment facility.

However, are these measures not a tacit acknowledgement to long-standing criticisms that the HKMA lacks transparency in its financial action, lacks transparency and accountability in its governance, has conflicting roles and used the liquidity adjustment facility as a manipulative tool? Moreover, while these seven steps are in the right direction, they do not go far enough to correct the problems with the HKMA.

Let me be specific. Firstly, the market is confused when the HKMA transacts currency to meet the Government's funding requirement, because it is acting as both a currency board and a central bank. Thus, is it enough that the HKMA publishes these different activities more clearly? Surely, these functions should be split between different institutions as they are elsewhere in the world.

Secondly, setting up the new Subcommittee on Currency Board Operations is all well and good, but when governance of important decisions made by the HKMA is the issue, why let the Chief Executive of the HKMA chair that Subcommittee? Furthermore, what is the point of having half of all the members of that Subcommittee coming from the HKMA itself?

Thirdly, the HKMA still does not wish to operate a currency board system as it should, that is, as an automatic pilot system. Mr Deputy, I cannot explain this better than Prof CHEN Nai-fu from the University of Science and Technology. I recommend his analysis in the South China Morning Post last Monday to all my colleagues.

Fourthly, I just want to re-emphasize that these and other recent measures cannot substitute for a full account of the intervention last month. The sessions over the last two days at the Panel on Financial Affairs left many issues to be dealt with. A key question is whether anyone in the Government has broken the law. The Financial Secretary said that the HKMA did not need to follow the Securities (Disclosure of Interest) Ordinance because the stock it amassed was government assets. He also implied that the Securities (Insider Dealing) Ordinance was not broken, even though the HKMA traded in stocks of banks in relation to which it had privileged or price-sensitive information. We are told that those who traded stocks within the HKMA were not the same people as those who supervise the banks. Surely, Mr Deputy, can we seriously accept this cheap argument?

Furthermore, has the HKMA breached the anti-manipulation and price-fixing provisions of the Securities Ordinance? Who is going to tell us and after what sort of investigation? Is the Attorney General swinging into action or are we going to be told that the government bodies do not need to obey the law?

Mr Deputy, there are a number of issues that I still want to raise. In view of time, I will only mention them very briefly.

Firstly, I continue to wonder who are the parties causing havoc in our markets? I have an uncomfortable feeling that an impression is being created that some unspecified foreign parties are manipulating Hong Kong's market. The management of global portfolio is a very complex job. It is dangerous to divide the market players into virtuous and evil ones.

Secondly, the measures announced on Monday proposed to deal firmly with illegal short-selling activities. How should we distinguish between legitimate and illegitimate short-selling? At what point, for example, should a broker be responsible for the actions of their clients? The Government should discuss how its proposals would work with the financial community. It is only fair.

Thirdly, let us recognize a self-created problem. The Government has been promoting inconsistent land and housing policies, and it failed to see that signals there impact the financial markets since a large chunk of our stock market capitalization is related to real estate. The obvious lesson here is to formulate credible, long-term land and housing policies and to articulate them clearly and consistently, otherwise the markets will continue to read our policies and our policy-makers as, I am sorry to say, amateurs.

Market players hedge their bets. If they see economic weakness, policy confusion or official incompetence, they usually bet against it. Hong Kong's problem right now is that the markets see all three factors present. That may well be why the so-called "manipulators" have not left or exits may only be temporary. The Government should be honest and look at where it has gone wrong. And, come on, if the people who are supposed to be our policy-makers cannot do their jobs properly because they do not have the right experience, let us get new people.

Thank you.

DEPUTY PRESIDENT (in Cantonese): Mr Ronald ARCULLI.

MR RONALD ARCULLI: Mr Deputy, it is not often that the Administration acts or reacts ahead of a Members' Motion, but on this occasion they have done so. That notwithstanding, this debate is timely and it does give Members the opportunity of throwing their ideas and criticisms into the melting pot to give the Administration, the Exchanges and the market regulators more food for thought.

The Liberal Party has, since the end of last year, repeatedly and on various occasions, attempted to alert those involved, including the Administration, the Exchanges and the regulators of the double-play situation. Our plea sadly fell on deaf ears and it would be interesting to find out why they did not act sooner to avoid or reduce the risk of double plays.

This is particularly relevant as several of the measures announced by the Administration is aimed at achieving an early-warning system, but such a system is only effective if appropriate counter-measures are built in rather than introduced on an ad hoc basis.

Secondly, whilst the Liberal Party has supported the measures introduced by the Hong Kong Monetary Authority (HKMA), we have also pointed out that we will monitor several areas closely, and these include the fixing of the base rate and the discount window, as well as any action taken by the HKMA to restrict access to the discount window by banks, if the HKMA feels that it is being used to facilitate manipulation.

Thirdly, as regards the measures proposed by the Administration, some of which are subject to acceptance by various institutions, and others to the requisite legislation, we are somewhat disappointed that we do not seem to have got our acts together. For example, whilst we can understand why feelings ran high on the lack of settlement of share transactions done on 28 August at T+2, and that fell on 1 September, the point was given so much media coverage and public outcry that we must ask whether this issue was given an inordinate amount of attention. Perhaps if it was not given so much attention, more attention would have been given to other areas of weaknesses in our market. For example, why did we do away with the uptake rule in 1996 and why did it take us so long to reinstate it?

Fourthly, whilst we generally welcome the 30 measures, we do so with several caveats, and I will try to set out some of our caveats which will guide us: one, I think we should be given details and implementation timetable as soon as possible; two, we must give due consideration to the rules and practices in other markets; and three, we need far better co-ordination and exchange of information.

I shall now deal with the amendment proposed by the Honourable Albert HO. I can see where he is coming from, but cannot agree that this Council should ask the Administration not to further intervene in the securities and futures market. Whilst we do not believe that the long-term solution is to keep throwing money into these markets, we can see that need in extreme circumstances. Even if the need arises, it must be done sparingly and effectively. We do not believe it is wise to tie our own hands, nor do we believe that stating that the Hong Kong Government will not intervene will restore market stability or investors' confidence.

Mr Deputy, it is never easy to get the balance right in financial markets at the best of times. At times of turmoil and violent fluctuations, it is extremely difficult if not impossible. We believe that to take Hong Kong into the new millennium and beyond our financial services sector is the key issue. It is also quite natural to have a tug of war between those who want to promote an active market on the one hand and those who make the ground rules on the other.

On our part, the Liberal Party will strive to get the balance right. We believe that other measures that can be considered would include some of the following: adopting a three-month settlement in our Hang Seng Index futures; re-weighing or replacing the Hang Seng Index with another one that can reduce or avoid manipulating; requiring margin deposits in our futures market to be in Hong Kong dollars only, or simply increase the margin deposits in the futures market without the newly-introduced Super Margin requirement; or perhaps to amend our company law to introduce the treasury stock concept so as to prevent triggering of general offers in case a shareholder who holds 35% or more increases that level of holding due to purchases by the company.

In conclusion, I would like to reiterate our support for the action and measures taken by the HKMA and trust that the Stock Exchange and the Futures Exchange will act expeditiously and in the best interests of Hong Kong. Mr Deputy, we therefore support the motion but not the amendment.

DEPUTY PRESIDENT (in Cantonese): Mr CHAN Kam-lam.

MR CHAN KAM-LAM (in Cantonese): Mr Deputy, as the economic structure of Hong Kong lays emphasis on real estate, finance and service industries at the expense of other industries, it is easily exposed to foreign invasion and domestic trouble and is therefore susceptible to external influences. In particular, the former government has, over the past 10-odd years, deliberately established Hong Kong as an international financial centre by allowing the introduction of various derivatives. Although the Government has euphemistically described its action as aiming at enhancing investment opportunities, it has actually turned our financial market into a financial casino. In order to attract foreign capitals, the rules of the game were extremely lax. The so-called free market was actually a laissez-faire market, with the regulatory mechanism almost turned into a club for major foreign investors.

It is laughable that we always describe those who make a big impact on the market as "predators" who show no mercy at all. Every time when even common housewives and owners of newspaper stands take part in buying stocks, it implies that a financial turmoil is approaching. In fact, we all know that we cannot equate a casino resembling those in Las Vegas with a free economy market.

Since the outbreak of the financial turmoil in October last year, the three main pillars of our economy were badly hit. The real estate value has gone down by 40% to 50%. The stock market has also dropped by 60% to 70%, with some of the low-priced stocks taking a nosedive by 90%. Although the Hong Kong dollar remains pegged with the US dollar, our interest rates still stand at a high level. The reasons for that are, firstly, the collapse of our bubble economy; secondly, the adverse impact of the external political and financial situation; and thirdly, the manipulation of the financial market by "predators". The Democratic Alliance for the Betterment of Hong Kong (DAB) holds that, in order to tackle these three problems, the Government should re-adjust our economic structure, enhance our competitive edge, renew Hong Kong strengths, safeguard the healthy operation of our free and open financial market, strengthen control on our securities market, as well as resisting the intervention of "predators".

Over the past few months, international speculators spread the rumours that Renminbi will depreciate and the Hong Kong dollar will delink. Even the instability of the Russian political situation and the depreciation of the rouble, which bear little relationship with our economy, have become reasons for challenging the exchange value of the Hong Kong dollar. At a time when our economy is making self-adjustment, our market assets are being eroded by foreign speculators in an aggressive manner. The value of our stock market is now lower than its actual economic power. For a long period of time, more than 100 000 uncovered futures contracts in the market make use of the media to suppress the market. When the stock market reaches 8 000 points, the speculators will say the market is going to drop to 7 000 points. When the stock market dip to 7 000 points, they will then say it is going to drop further to 6 000 points. Will the Hang Seng Index go on dropping as they have estimated? Certainly not. The drastic downward adjustment of the Index was simply caused by human factors. The speculators simply wish to make some pessimistic remarks to shake the confidence of investors as this will facilitate their manipulation of the market.

Therefore, we consider that there was in fact no alternative for the Government but to make the decision to intervene the market in mid-August. Such a decision should be favourably received by Members.

Over the past two weeks, some people persistently criticized the Government's intervention by saying that the Government has spent more than hundreds of billions of dollars from our foreign exchange reserves, seriously undermining the image of Hong Kong as an international financial centre. We can absolutely not agree with such criticisms. Unlike the average investors or speculators, these international "predators" did not make profits from the market by normal means. On the contrary, what they did was absolutely meant to upset the market order. I believe we would have to pay enormously more than hundreds of billions of dollars if the Government refrains from taking action to maintain market order.

As a matter of fact, because of the incessant manipulation by speculators, the Hang Seng Index and the stock market have dropped to an unreasonable level, with the assets of the public suffering from dramatic depreciation. In addition, some enterprises which used to enjoy a healthy financial position might need to close down because of credit crunch. As a result, banks will suffer from more bad debts and, more importantly, they may even run into crisis. Our economy will then completely collapse.

If the Government still refrains from maintaining order and safeguarding the economy under such circumstances, I believe investors will criticize us for practising anarchism instead of praising the Hong Kong Special Administrative Region Government for adopting the non-intervention policy. As such, people slashing the Government for intervening the market are in fact defending the "predators" who are manipulating and exploiting our securities market to the erosion of our economic system. This makes us doubt whether they represent the interests of Hong Kong people or those of international speculators.

The original motion moved by Mr Bernard CHAN seeks to urge the Government to adopt effective measures to improve the operation of the market and to deter speculative attacks on the Hong Kong currency. The DAB is in full support of the motion. In addition, the Government has recently proposed the so-called "seven strokes and thirty twists". I believe this will produce a stabilizing and positive effect as far as the maintenance of market order is concerned.

Relative to the markets in New York, Tokyo and London, our securities market is still at its infancy stage of development. There is still a long way to go for the market to become mature. There are loopholes in the regulatory mechanism. In addition, the Securities and Futures Commission (SFC), the Stock Exchange of Hong Kong Limited (SEHK), the Hong Kong Futures Exchange (HKFE) and clearing corporation have been operating independently, whereas government departments responsible for financial management find it difficult to exercise control. The emergence of problems pertaining to settlement after the Government's intervention has illustrated this point all too clearly. Although the Hong Kong Securities Clearing Company Limited has taken into account time differences between Europe and the United States and stipulated in explicit terms that all transactions have to be completed in T+2 days, the rule has so far not been enforced in concrete terms. On the contrary, the settlement date is repeatedly postponed to T+4 and T+5. Obviously, such a practice has enabled "predators" to reap profits in the market through engaging in short-selling activities, thereby leading to extreme unfairness in the market.

The DAB has come to the view that the Government has taken a right direction in proposing a series of measures to reform the HKFE, the SEHK and central clearing. Requiring the HKFE to provide the SFC with information on brokers and clients holding a position in bulk and so on will increase transparency and stepping up punishment against those engaging in illegal short-selling activities in severe terms will, we believe, effectively deter speculators and stabilize the market. Nevertheless, the DAB considers that the problem will not stop there. As the financial market is constantly changing, there remains a need for the Government to closely monitor the activities of the securities market to ensure that it is running healthily.

With these remarks, Mr Deputy, the DAB supports the original motion of Mr Bernard CHAN.

DEPUTY PRESIDENT (in Cantonese): Mr Ambrose LAU.

MR AMBROSE LAU (in Cantonese): Mr Deputy, as early as October last year, when international speculators first sought to make huge profits from our stock and futures markets by attacking the Hong Kong dollar, I already moved a motion on "Review of the operating mechanism of Hong Kong's financial market" in the Provisional Legislative Council. At that time, I urged the Government to expeditiously review the operating mechanism of the local financial market, including the chain relationship among the stock, foreign exchange, and index futures markets, so as to plug the loopholes and prevent speculators from taking advantage of them. On the ways of plugging these loopholes and improving the risk management mechanisms of our financial market, my motion last year and the Hong Kong Progressive Alliance (HKPA) have made a number of recommendations, and these recommendations cover the measures which the various sectors of the community have recently urged the Government to implement. These include tightened stock lending and short selling, an electronic transaction system for the index futures market, increases in the deposits for index futures contracts, a uniform closing time for both the Hong Kong Stock Exchange and the Hong Kong Futures Exchange, a linkage of the index futures clearing system with that of spot transactions, elimination of over-the-counter transactions, and a shortening of the time for position-closing in case of selling short. However, since the Government lacked any awareness of the conspiracies of speculators in the foreign exchange, stock and index futures markets, it did not take all the recommendations made by the HKPA last year on plugging the loopholes. Instead, the Government has accepted only some of these recommendations. Had the Government accepted in good time all these recommendations, which were drawn up by the HKPA after extensive consultation last year, this time around, the Government should have been able to use some effective legislation and monitoring mechanisms to deal with the speculators. That way, it would not have to use our public money to wear out the speculators, to fight bitterly against them, under some imperfect rules which can be manipulated by them to their advantage.

However, the actions of the Government to fight against the speculators in the foreign exchange, stock and index futures markets should still be supported. The counter-offensive this time has shown the following. First, the first-person involvement of the Government has made it realize for itself the harmful consequences of the loopholes in our financial market, thus strengthening its determination to take the views of the community on plugging the loopholes. Second, the counter-offensive of the Government has demonstrated to international speculators that the financial market of Hong Kong is no longer their "cash dispenser", thus preventing them from robbing the Hong Kong people of their wealth in very much the same way as they did in the last three attacks.

Having said that, I must add that the attacks of the speculators this time are not simply a feint. Indications are that their onslaught this time is intended to drag the Government into the market and induce it to use its foreign reserves in a protracted warfare. That way, the speculators hope, the Government will eventually use up its foreign exchange reserves, the only back-up for the Hong Kong dollar. When this happens, the speculators will achieve their aim of destroying the linked exchange rate. Once their aim is achieved, the Hong Kong people will be forced to sell all their Hong Kong dollar assets, including cash, stocks and properties. When these Hong Kong dollar assets are sold crazily, a vicious devaluation of the Hong Kong dollar will result. This will then give international speculators a chance to loot the Hong Kong market, to buy up Hong Kong businesses and properties at very low prices. Such a terrifying scenario has in fact already emerged in some other Southeast Asian countries. The only difference is that international speculators have now shifted their battlefield to Hong Kong, the last remaining open economy in Asia which they have not fully conquered.

Indications are that this time around, the Hong Kong dollar is the direct and only target of the speculators. If the Government is thus induced to engage them in a protracted battle, then when our foreign exchange reserves are more or less entirely depleted, the Hong Kong dollar will be deprived of its support, and it will eventually collapse.

What is most difficult is that when we deal with international speculators, we have to cope with a double-loophole. First, the regulations governing our financial market are much too favourable to international speculators. Second, some institutions responsible for monitoring and managing the financial market have refused to enforce the relevant regulations rigidly. Worse still, they even seem to have been protecting the speculators.

Faced with this double-loophole, the Government should adopt a two-pronged approach to plug them, so as to prevent speculators from manipulating the market by taking advantage of the defects in our laws. To achieve this goal, we now propose the following eight measures on top of the "seven strokes and thirty twists" of the Government and the recommendations made by the HKPA last year:

1. Stock lending and short selling outside Hong Kong should all be declared, so as to prevent speculators from manipulating the Hong Kong market.

2. Deposits for index futures contracts should be increased according to a progressive scale; deposits for stock lending and short selling should be increased, from half of the total stock value to the full value, so as to reduce the leverage ratio between the index futures and stock markets.

3. An automatic electronic transaction system should be introduced for the index futures market as a matter of urgency to prevent dishonest dealings.

4. The clearing system for index futures should be linked to that of spot transactions, so that the latter can be used to control the former, thus ensuring that genuine investors can benefit from the intended hedging function.

5. Legislation should be enacted as soon as possible to prevent monopolization and price manipulation in the financial market.

6. Improvements should be made to the components of the Hang Seng Index, so as to prevent speculators from pulling down the Index just by dumping several blue chips.

7. Legislation should be enacted to forbid the institutions and persons concerned to lend client stocks, so as to make sure that the stocks of genuine investors will not become the ammunitions of those speculators attacking the stock market.

8. The Government should take immediate actions to plug the double-loophole of imperfect regulations and loose enforcement by the institutions concerned; effective laws should be enacted and rigid monitoring should be enforced to prevent speculators' infiltration and a consequent protracted battle which may deplete our foreign exchange reserves.

Mr Deputy, I so submit.

DEPUTY PRESIDENT (in Cantonese): Mr NG Leung-sing.

MR NG LEUNG-SING (in Cantonese): Mr Deputy, the Government's move to intervene the market in August to crack down on manipulation activities for the purpose of maintaining market stability has stirred up heated discussion in the community. It is necessary for the Government to intervene given the fact that international speculators have made preparations over a long period of time to launch systematic attacks on the Hong Kong currency with a view to manipulating the stock and futures markets for profits. We should support the Government to take intervention measures during such an extraordinary period.

This year, our economy gradually enters a recession because of the influence of various factors. With the drop in the values of the property market and the stock market, it is inevitable that the values of these assets have to make adjustment. This is something that Hong Kong must address to and bear with. If we can observe our situation in a rational manner, we will see that our economic situation is far different from some Southeast Asian countries the market economies of which have collapsed all of a sudden. Given the fact that Hong Kong's original economic fundamentals and system were generally recognised as sound, the adjustment made should therefore be gradual and orderly. But for international speculators, a sudden collapse of our economy will provide them with the greatest opportunity to fetch wealth. As our market is being manipulated and twisted, numerous investors will have their wealth snatched by speculators under an abnormal market situation. What is more, the whole market may even collapse. Faced with such a situation, we will of course find it hard to bear if the Hong Kong Special Administrative Region Government, which is keeping huge reserves, takes no action and allows the market to be manipulated and twisted.

The community has made a lot of theoretical analysis of the effectiveness of the Government's intervention. But such an important intervention should have gone beyond discussion which is purely theoretical. Its impact is not just limited to the amount of profits. Rather, it has to do with the public's confidence in the overall ability of the Government to govern. To a certain extent, this decision is important for maintaining the normal activities of our market economy. This also shows that our economic system needs to rely on our self-protection concept and ability. There is a need for relevant parties to make a more comprehensive review and assessment of this intervention.

Of course, the most effective means for the market system to prevent the invasion of speculators or prevent speculators from manipulating and twisting the market from various sides so as to maintain the order of normal economic activities is to constantly review and perfect the system. In this respect, the Government must learn the lesson, react to changes flexibly, modestly listen to the recommendations made by various sectors, particularly people in the industries and academics, consider and study the recommendations carefully, and implement them in a responsible manner. I think it is worth mentioning again that it is inevitable for the Government to, during an extraordinary period, intervene in the market to rectify certain operational imbalance in the market with a view to maintaining market stability. This is also acceptable to a modern developing economic system. Nevertheless, prudent arrangements should be made in terms of posture and overall internal communication. In this respect, the Government must further strengthen itself in order to uphold the linked exchange rate, and stabilize the confidence of investors and the overall economy of Hong Kong in a more effective manner in future.

Incidentally, the amendment requested the Government not to further intervene. I think we should consider this issue very carefully. As the Government has bought a large quantity of stocks, it will then directly or indirectly hold shares of listing companies if it stops selling the stock in the market gradually. This is something Members should consider seriously.

With these remarks, Mr Deputy, I support the original motion.

DEPUTY PRESIDENT (in Cantonese): Miss Margaret NG.

MISS MARGARET NG: Mr Deputy, I support the motion as amended by the Honourable Albert HO because I am of the strong view that the Government should not further intervene by trading in the market, and I believe we need to emphasize how vital it is to Hong Kong to safeguard its status as an international finance centre.

By intervening in the securities and futures market in the second half of August, the Government has seriously run down the reserves and might have already killed the market. Whether the market is killed will take a little time for the evidence to surface. The running down of the reserves is simple arithmetic.

According to the annual report of the Hong Kong Monetary Authority, the net asset of the Exchange Fund is $190 billion. If $120 billion has been used in the recent trading, this is already over 60% of the net asset.

The Government boasts of huge foreign currency reserves. These, we are told, amount to US$96 billion. However, some US$17.5 billion belongs to the Land Fund. A further US$30 billion or so belongs to the fiscal reserves. These two pots of money cannot be used without the Legislative Council approval. A further US$22 billion or so has to be set aside for certificates of indebtedness and Exchange Fund bills and notes. This leaves about US$26.5 billion. After spending US$15 billion in two weeks, we are left with US$11.5 billion.

I put these sums before the Financial Secretary yesterday. He agreed that the figures were correct. But he brushed aside the arithmetic. He said that the entire reserves could be used to defend the Hong Kong dollar.

But, Mr Deputy, we are not talking about defending the Hong Kong currency. We are talking about buying stocks and shares and futures, about turning liquid asset into highly illiquid securities. Is the Government telling us that, in defending the Hong Kong currency, he can use the entire Exchange Fund to trade in the stock market if he thinks fit?

In any event, US$15 billion is over 15% of the foreign currency reserves. To the extent that the money is locked in securities, this has weakened the capacity of the Exchange Fund to respond to future pressures on the Hong Kong currency.

The Government has not promised not to intervene in the same way again. It took two weeks last month to spend US$15 billion. How many more rounds can the Exchange Fund afford?

What is more, that intervention is an irrevocable act. Once done, it cannot be undone. Having seen the length to which this Government can go, how can anyone believe that it would not do it again in the future, or intervene in some equally direct way? Rome was not built in one day. But the reputation Hong Kong has built up in the past can be destroyed very quickly.

Further, the Government has compromised the credibility of Hong Kong's regulatory system. After this huge spending spree, the Government now holds substantial shares in several blue-chips companies. How is the Securities and Futures Commission (SFC) now going to regulate these companies?

Yesterday, we heard that the Government has refused to disclose its share-holding, seeking refuge in Government immunity under the law. The SFC told us that they have to accept that under the Adaptation of Laws Ordinance, the Government is not bound by the laws compelling others to disclose, because there are no express or necessarily implied provisions in these laws to bind the Government.

This is little short of scandalous. I cannot believe that this is right and I urge the SFC to look again. When the Government enters into the market to trade and as a result owns equity in listed companies, it must do so not as the Government but as any trader or investor. As such, it is not entitled to immunity. Just as under the same provision, a state organ cannot be immune when it engages in commercial activities. But even supposing the Government is immune as the true position of the law, the Government should still voluntarily disclose. Otherwise, it is giving the message to the world that in Hong Kong, the Government is above the law when it engages in market activities. The position of the SFC in the international regulatory framework will be, and indeed, may have already been, undermined.

To distract attention from intervention, the Government talks of a long list of new measures to tighten regulation. It is never wrong to keep seeking new improvements, but we must examine these measures very carefully, not only with a view to tightening them against "international speculators", but as to their overall long-term effects on Hong Kong. When all the wicked speculators are made to leave ─ if that ever happens ─ I wonder what the Hong Kong market will be left with? We can, of course, decide that it is worth purchasing protection at the expense of activity. But if so, let us choose with our eyes open.

Thank you, Mr Deputy.

DEPUTY PRESIDENT (in Cantonese): Mr Martin LEE.

MR MARTIN LEE (in Cantonese): Mr Deputy, before I comment on the Government's measures of trading in the securities and futures markets, I must state the Democratic Party's stance on the linked exchange rate first. The Democratic Party is fully in support of the determination of the Hong Kong Monetary Authority (HKMA) to defend the peg, including its efforts of plugging the loopholes which subject the peg to the attacks and to better the institutions of the financial markets of Hong Kong. Hence, the Democratic Party does support the "seven strokes" put forward by Mr Joseph YAN, the Chief Executive of the HKMA, recently to keep speculative attacks on the Hong Kong dollar at bay and to help the Government enhance the order and the transparency of the securities and futures markets. But on the other hand, the Government's turning from the regulator into the direct participant in the market, that is, from the referee into the player at the same time, has totally undermined the market principles of freedom, openness, impartiality and fairness. Worse still, as the Government has become the shareholder of a number of major listed companies, there is an obvious conflict of interests between the regulator and the shareholder. The impact of the Government's trading in the market is far-reaching and will bring about endless trouble in future. But the Government has so far failed to give the people of Hong Kong a clear and reasonable explanation. That is why the Democratic Party has found it impossible to support the Government's trading in the market.

Using the market manipulators to cover up its policy errors

When the Government began to intervene in the market on 14 August, it stressed that certain market manipulators were abusing the present mechanism and through speculating on the Hong Kong dollars and at the same time short selling securities and futures, creating instabilities in the market, and the Government had to punish them, seeing to it that they would leave the market licking their wounds.

Attending the meeting of the Panel on Financial Affairs on Monday, the Financial Secretary, Mr Donald TSANG, was asked by the Honourable Fred LI about who exactly the market manipulators were, and he answered by actually saying, "As there is no solid proof yet, we have no way to find out." If even the Financial Secretary was unsure who the market manipulators were, then who exactly were to be punished in this war? Yet, I must also stress that no matter whether there were manipulators in the market or not, the Government should not have intervened.

There is no doubt that three kinds of people are participating in the investment market. The first kind, seeing the continuous sliding of the Japanese Yen and hearing the Chinese officials say more than two months ago that the Chinese Government also had difficulty maintaining the exchange rate of the Renminbi, expect the Renminbi to devaluate. They speculated that when it happened, the Hong Kong dollar will not escape the same fate and decided to short sell the Hong Kong dollar. The second, basing on the general unfavourable factors such as the political instability of Russia, the unlikely recovery of the Japanese economy in the near future, and also the internal unfavourable factors such as the economic recession, soaring unemployment and the decline of companies' performance besetting Hong Kong, decided to short sell the stocks. The third kind short sold the index futures in the futures market on the same grounds.

When these three kinds of people dumped large quantities of Hong Kong dollars, Hong Kong stocks and index futures all at the same time, even there were no market manipulators stirring up troubles, the financial market of Hong Kong still came under enormous pressure. Therefore, no matter whether these three kinds of people went their separate ways or joined forces together to dump whatever they had in hand, logically speaking, the result would not be much different.

Officials having no foresight and keep repeating the same mistakes

As a matter of fact, these speculative activities have long existed in the foreign exchange, securities and futures markets. Since October last year when the Hong Kong dollar came under unprecedented attacks, some scholars and people in the trade already brought to the attention of the Government that the loopholes in the currency board system of Hong Kong had to be plugged and offered their advice on that. But the Government was too complacent to listen, being satisfied that the "One Stroke of Mr YAM", that is, "pushing up the interest rates as much as it likes", would be sufficient to maintain the peg.

Since the Government had not taken any measures to improve the currency board mechanism early enough and the institutions of the financial markets were far from being perfect, these three kinds of people, or the so-called market manipulators by the Government, struck again in July and August this year, and the Government was powerless to withstand their attacks and finally had to resort to the most undesirable move of intervention. Even more distressing was that after being forced to intervene in the market on 14 August, the Government took no appropriate measures immediately such as to summon an emergency Legislative Council meeting to amend the legislation to plug the loopholes prior to the month-end settlement of the August futures contracts. Had the government officials had any foresight and had they not kept repeating their mistakes but taken the actions proposed now earlier, the Government would not have to spend close to HK$100 billion to boost the stocks market on 27 and 28 August.

From this, we can see that had the "Seven Strokes of Mr YAM" been launched earlier without being put aside till the end of August, and had the institutions of the financial markets been improved earlier, the Government would not have to intervene in the market even though there were really such super-powerful market manipulators. Because our government officials have misjudged the situation and lacked a sense of crisis even in the presence of grave danger, our reputation as an international financial centre has been tarnished ─ an absolutely unnecessary price to pay.

Reviewing the market system but avoiding overdoing

The Government's high-profile, extensive intervention in the market has already seriously undermined Hong Kong's status as a financial centre. No doubt the financial markets of Hong Kong come under tremendous challenges now, but I hope that the Government will not throw itself into confusion again and undermine the cornerstone of Hong Kong's success, that is, the principle of a free economy.

The Financial Secretary has put forward a series of measures to improve the financial market and to enhance our defence against the speculators' attacks on the Hong Kong dollar. But I must remind everyone that the past measures such as relaxing the T+2 settlement time limit and lifting the "uptick" rule regarding short selling on market prices were aimed to attract financial corporations inside and outside Hong Kong to come to trade here, establishing Hong Kong as the fifth international financial centre in the world. Therefore, if the Government overdoes it in its attempt to improve the supervision of the financial markets for the purpose of driving out the so-called market manipulators, it may very likely drive out large numbers of investors as well, which will in turn turn the financial markets of Hong Kong into a ditch of dead water. In that case, we will hand over our position as an international financial centre to our neighbouring countries, especially Singapore which has been coveting our financial market.

The Democratic Party agrees that the Government should adopt appropriate and proper measures to ensure the openness and fairness of the financial market for the purpose of restoring our position as an international financial centre. At the same time, the Government must understand that this high-profile, extensive intervention has already done great harm to the position of Hong Kong as an international financial centre and it can absolutely not afford another round of self-destructive actions. I call upon the Government to get its hands off the market as soon as possible and resume its position as the referee.

With these remarks, Mr Deputy, I support Mr Albert HO's amendment.

DEPUTY PRESIDENT (in Cantonese): Miss CHOY So-yuk.

MISS CHOY SO-YUK (in Cantonese): Mr Deputy, after a series of onslaughts launched by international speculators on the Hong Kong dollar, it is very obvious that there are many loopholes in our financial market. Given that the market manipulators' action this time is no different from breaking in, setting fire to our house and robbing us of our belongings, the Hong Kong Progressive Alliance (HKPA) thinks that we should not lash the Government for spending over $100 billion to trade in the market. In the face of such a matter of life and death, how can we leave ourselves to their mercy? However, the tactic of intervention can only be resorted to temporarily rather than as a long-term solution. To prevent further international speculative attacks, the Government must get to the root of the problem, step up the regulation of the financial market, plug the loopholes, and at the same time heighten its vigilance, not letting the speculators catch us off-guard.

The "seven strokes and thirty-seven twists" announced by the Government for stepping up the regulation and enhancing the transparency of the Hong Kong exchange market, Hong Kong Stock Exchange, Hong Kong Futures Exchange (HKFE), Securities and Futures Commission and Hong Kong Securities Clearing Company indeed have positive effects on solving some of the problems in the financial system. This effect is demonstrated by the rising Hang Seng Index and the noticeable coming down of bank rates in recent days. But people also query why the Government should wait till today to launch these measures. As far as I can recall, many experts put forward similar proposals long ago, but the Government has stubbornly turned a deaf ear to their advice until recently. Although "it is not too late to mend the fold even after the sheep are lost", had the Government listened to the experts earlier, would this $100-billion intervention have been necessary? I think that the Government should learn from this experience and carefully reflect upon it.

Although the Government has won a narrow victory in this war, it can never be complacent but has to further improve the financial system. Take the trading in the HKFE as an example; I still recall that on 21st last month, big foreign speculators used the "dirty trick" of besieging the Hong Kong market and pressed the index futures substantially down one minute before the expiry of the futures contract. If such manipulation of the prices happened in a foreign market, the manipulators would have been penalized long ago. But the HKFE could have connived at the existence of this loophole all this while. That was downright puzzling. I think that the Government should follow the example of other countries and impose severe punishment on manipulators who do not play by the rules. At the same time, it should improve the rules of the game and thoroughly reform the whole system. As early as October last year, the HKPA already advised the Government to switch to using electronic trading in the futures market but until today, there has been all cry but no wool, which is utterly disappointing and mind-boggling.

Moreover, there are also many problems with the HKFE allowing the trading of index futures to be settled in foreign currencies. Since the Hong Kong dollar is the only legal tender in Hong Kong, why does the Futures Exchange not require all settlements be made in Hong Kong dollar rather than setting up other legal tenders? The genuine investors are certainly willing to use Hong Kong dollar. As only the speculators who want to manipulate the market would refuse to buy in Hong Kong dollars, why should the HKFE facilitate the transactions of these speculators? To prevent the "predators" from taking advantage of this convenience, the Government must plug this loophole.

As the villains can always outsmart the authorities, although the Government has had a narrow win this time, it must never be complacent and lower its guard. At present, many Asian economies are still struggling and the adjustment of the Hong Kong economy is underway. Besides, because of the shaky political situation in Russia, the fluctuation of the stock prices and currencies of both the United States and Japan, and in particular, because the American stock prices have kept lowering, the greenback runs every danger of devaluation. If that happens, it will directly affect the exchange rate of the Hong Kong dollar. As long as the economic situations of foreign countries have not settled down, Hong Kong will not come out of the crises. Moreover, since the Hong Kong Government is in the open while the speculators are hidden, many signs are showing that international "predators" are still waiting in the wings, poised to strike in the Hong Kong market again. During the August index futures settlement, we could see that some "predators" who were not holding many short positions continued to switch to taking long positions. These long positions of the index futures may have far exceeded the short positions that they had accumulated in the first few months of this year. Perhaps they were taking advantage of the fact that the Government would not sell its stocks in the short run to buy in large quantities of many minor Hang Sang Index stocks and push up the settlement prices of the September index futures so as to reap huge profits from it. Then they will sell out large quantities of the blue chips they are holding to create a short position of the index futures again ...... I am afraid that the struggle between the Government and the "predators" has yet to reach the final stage. The Government must keep up its guard in order to avoid vindicating what the predator Druckenmiller has said, "When you wake up one day, you will find an awful mess in front of you!"

The mandatory provident fund to be pushed out next year may also be a large loophole in the financial market. The law allows 70% of the assets of the mandatory provident fund to be invested in the foreign exchange market. This may lead to the assets of the Hong Kong mandatory provident fund being monopolized by foreign capital which will in turn be used to attack our financial market. Although the Discount Window just pushed out can increase the banks' liquidity flow to a maximum of $30 billion, making it hard for speculators to control the Hong Kong exchange market and push up the interest rates, yet the enormous assets of the mandatory provident fund will serve as a very good tool for speculators to attack the Hong Kong dollar. With predators coveting our market, we cannot afford to make a slight mistake. The Government must study this issue at once and adopt effective measures as soon as possible to prevent speculators from using our money to attack our very own market.

To protect ourselves against the speculators in the long run, the best way is to heighten our vigilance and perfect our institutions. It is much more realistic this way than to combat the speculators head-on. Should the Government intervene in the market again to drive out the villains, I am afraid that the ordinary people who have little understanding of the financial markets would be put in a big scare again.

With these remarks, Mr Deputy, I support the original motion.

DEPUTY PRESIDENT (in Cantonese): Miss Cyd HO.

MISS CYD HO (in Cantonese): Thank you, Mr Deputy. The Frontier is resolutely against the Government's intervention in the market.

The value of a place's currency is indeed reflected in the buying power of the currency, wealth creation power of that place and whether the people there have confidence in their economy. The plight of Hong Kong today is that we are having a confidence crisis. After the linked exchanged rate was fixed years ago, it has helped us through many political ups and downs which pricked everyone's nerves. Today, the question of whether or not this link can be maintained has, however, become a major factor contributory to our confidence crisis. The result is that the means of maintaining confidence has become the end and the Government is also at a loss as to what direction to take.

The linked exchange rate has been discussed many times in this Council. This rightly reflects that though Hong Kong has been going back and forth for so long, it is still unable to find a steady direction. Taking a look at the Government's performance, we can see that it has changed from being overly optimistic at the beginning, thinking that "one stroke" was enough, to agreeing to the joint request of the political parties to put forward "nine strokes" to save the market. These nine strokes range from suspension of land sales to provision of home purchase loans and intervention by trading in the stocks market. And then after buying in large quantities of stocks, it pushed out "seven strokes" again and besides those, another "thirty twists" were announced last Monday. From these strokes and twists that have dazzled our eyes, we can see the basic direction of the Government, that is, it is desperately trying everything. Deviating from the principle of free market, saving the market instead of the people and seeking to expand its executive powers by creating more discretion for itself, the Government has put itself above the law and jeopardized the spirit of the rule of law.

It is true that we are now in an unusual time and need to take emergency measures. In the Government's mind, an emergency measure seems to be spending $120 billion on stocks in the market and we, the Frontier, are strongly against it. Here I would like to point out how we can spend the $120 billion if we do not spend it this way. How can we make use of this $120 billion to help the public brave the financial turmoil, stimulate internal consumption, help revive the economic, restore the people's confidence and at the same time maintain the linked exchange rate?

If the construction cost of a public rental flat is $280,000, then $120 billion can build 480 000 such flats. As there are at present only 150 000 households on the Waiting List, that means all households will be allocated a flat. The Government can also afford to raise the income limit of the applicants, so that more households will benefit from it.

Suppose the construction of a primary school costs $0.1 billion, with $120 billion, we can build 1 200 primary schools. With this number of schools, whole-day primary schooling can be implemented immediately. This will prove to be a valuable investment in the future development of human resources in Hong Kong, guaranteed to bring back an enormous return.

Taking $10,500 as the median wage, $120 billion can provide employment for 60 000 workers for 20 months. With 60 000 people working, the demand on retail and service industries will increase. As a result, this will also keep many jobs from being washed away. I would also like to point out here that the construction of the Mass Transit Railway (MTR) Tseung Kwan O Extension will only cost $20 billion and the total asset of the MTR is only $70 billion. In bringing these figures up, I hope that Members will give consideration to this: rather than spending $120 billion to boost the market and raise a few hundred Hang Seng Index points, why not spend this money on social services, housing, policies and infrastructure. On the one hand, it will benefit the people and relieve their hardships directly and immediately, at the same time, it will also stimulate the economy, help the economy to recover sooner and attain the goal of maintaining the linked exchange rate. Why should the Government not save the people first to allow them to revive their competitiveness so that they can then all work to save the market together?

When there is an economic recession, the usual outcome is devaluation of the currency. When the currency devaluates, all people bear the consequences of the economic recession together in a fair manner. But because of the linked exchange rate, the Hong Kong dollar does not devaluate, the result being the asset prices, property prices and wages will all drop until they reach their real value, thus lowering the operation costs in Hong Kong so that we can regain our competitiveness. But the Government's present policy is to stop the property prices and the stocks prices from further declining. To achieve that, it spends huge amounts of the taxpayers' money to maintain the property and stocks prices at a certain level. In the end, only the wages are allowed to drop.

Normally, all people should bear the effect of the recession in proportion to their own wealth. But now because of the Government's policy to protect the property and stocks markets, the burden of the recession is laid upon the labouring the grassroots and the middle class who have been kicked down to the grassroots. Why should such a heavy burden be borne by these people who are having the hardest life?

In June this year, the Financial Secretary turned down sternly the political parties' request for relieving the people's hardships. During the consultation with Members in preparing for next year's budget, he also insisted that there would not be any extra public money to be injected into the expenditure on social services. But after 14 August, the Financial Secretary turned drastically from the style of the so-called prudent financial management and in two weeks, he unrestrainedly spent $120 billion of our money, all on stocks. In return, we got a large quantity of stocks that cannot be exempted from the effects of fluctuations in the market. Also in return was a host of questions about the confusion of the Government's role as well as the doubt over conflicts of interest. What is more damaging is that the Government's performance and its various tricks have left people with the impression that the financial market of Hong Kong has already lost its fair rules of the game.

The most serious consequence is that the Government has breached the spirit of the rule of law and put itself above the law, immune against regulation. All these are harmful to the position of Hong Kong as an international financial centre. Of course, if our people do not want Hong Kong to be an international financial centre and choose to create wealth by some other means or not to create wealth at all, this is one choice, our own choice. However, if Hong Kong loses the rule of law, it will be an irreparable loss for Hong Kong. I also wish to tell those colleagues who are worried about possible bank-runs that bank-runs will happen only when the people have lost their confidence in Hong Kong and the Hong Kong dollar, but one single perpetrator who is most capable of making Hong Kong people lose their confidence is the Hong Kong Government. If the financial officials are now drunk like the Showy Monk LU Zhishen, being intoxicated with the application of the "seven strokes and thirty twists" and asking the Legislative Council for further powers, would that frighten the people of Hong Kong? The Frontier is resolutely against the Government's intervention in the market again and against its taking this opportunity to abuse its powers. We support the amendment of Mr Albert HO. Thank you, Mr Deputy.

DEPUTY PRESIDENT (in Cantonese): Dr Philip WONG.

DR PHILIP WONG (in Cantonese): Mr Deputy, I support the motion moved by the Honourable Bernard CHAN. I support the series of measures adopted by the Special Administrative Region Government to prevent speculators from manipulating our financial systems. I am convinced that these measures, together with the relevant legislation due to be scrutinized and enacted by this Council, will be able to deter to a certain extent those speculators who want to manipulate the market.

In recent years, I have repeatedly pointed out that the financial, securities and futures markets of Hong Kong are plagued with loopholes. And, ever since the Hong Kong dollar was first attacked and the inter-bank rate subsequently rocketed, I have very much hoped that the Special Administrative Region (SAR) Government will put in place a package of integrated measures to plug the loopholes in the foreign exchange, stocks and futures markets. When the Government started to step in early last month, I told myself that the Government would certainly learn a good lesson and draw up a package of integrated measures which could strike at the very heart of speculators, reduce the losses of the Hong Kong people and thus maintain the stability of our community. In recent days, the mood of the market has turned optimistic, with speculators sustaining heavy losses. All this shows that the actions of the Government are extremely effective and have thus received the support of the Hong Kong people and investors in general. That is why I really think that the major operational reforms introduced by the financial authorities will certainly help Hong Kong strengthen its status as a financial centre. For that reason, we should all support the decisions of the SAR Government and all those financial officials who are fighting on the frontline.

Let me now say a few words about the effect of this package of measures. In general, the interest rates set by our banks will go up and down with inflation rates. In many countries, interest rates are often used as a tool to tackle the problem of inflation. However, under the current financial turmoil, a very unreasonable phenomenon has emerged: inflation rates are low while interest rates are high. Following the new measures introduced by the Monetary Authority, the position of our banks will become much better, and this will contribute to the lowering of the inter-bank rate. As interest rates go down, the credit pressure experienced by businesses and industries will be greatly relieved. There is still another point. In the past, bank deposits were mostly short-term ones. The new measure, however, will make depositors realize that interest rates may well drop. For that reason, depositors may choose to open long-term deposit accounts when interest rates are still high now. When this happens, the lending capacity of our banks will certainly be enhanced. Lower interests charged by banks and their willingness to lend more money will serve as a favourable factor in stabilizing the stocks and property markets, providing assistance to small and medium enterprises and arresting the sharp rise in the unemployment rate.

I am convinced that the stepping in of the Government is correct and does not amount to any act of "squandering money" as described by some. And, from the purely commercial point of view, since the price/earning ratios of Hong Kong stocks are on the low side, purchases at the current price levels will involve very small risks indeed. Besides, it should be mentioned that most of the stocks purchased by the Government are blue chips, and the performance of these blue chips this year has not been very much different from their performance last year or the year before last. For these reasons, we should support the actions of the Government. I am sure that when the Government sells these stocks in the future, the profits it can earn will be far larger than any bank interests.

Mr Deputy, I wish to raise three points.

First, we should look at the recent actions of the Government in the proper perspectives. Even in the most advanced and developed countries, their governments do often put in place some appropriate strategies to regulate the market whenever necessary; this is indeed nothing rare and special. The central banks of many different countries do very often adjust their interest rates in the light of prevailing economic conditions, and this is precisely an example showing how governments should discharge their duties. In the United States, the monitoring standards imposed by Wall Street are far more stringent than those applied in Hong Kong. If the prices of stocks go up too high, banks will be required to ask for larger deposits from their customers. In the United Kingdom, when the Pound Sterling was attacked by international speculators, the John Major Administration also used the country's foreign exchange reserves as a means of fighting back. In our neighbouring countries and places, legislative controls have been put in place to regulate speculators who want to manipulate the market. Before the sovereignty transfer of Hong Kong, despite its avowed adherence to non-intervention, the British Hong Kong Administration was already intervening in the market secretly. At that time, the British were in fact fully aware of the potential problems with the financial, securities and futures markets, and they already worked out a package of tackling measures, only they did not want to implement these measures during their rule, because they wanted to give international speculators a chance to make big money. This is in fact an open secret.

Second, the Government should conduct more publicity through the mass media, so as to enable the people of Hong Kong and investors to see the point of its actions. That way, they will be able to see a ray of hope at this time of difficulties, and their confidence in the prospects of Hong Kong will thus increase. This is indeed an "extraordinary period"; we must admit that there are indeed many defects in our financial system, and the operation of our securities and futures market is not entirely reasonable. We must further realize that we must introduce institutional reforms if we are to prevent any further attacks from international speculators. International speculators and their "hired guns" will most certainly make some noises, but we should have nothing to fear. In fact, it has been rumoured that on the first day when the Government stepped in, that "super predator" called George SOROS immediately criticized the SAR Government. His behaviour, however, has served precisely to tell us that the actions of the Government are correct. Most certainly, "super predators" of his kind have never considered the interests of Hong Kong. All they have considered so far is how best they can take advantage of our loopholes and make huge profits for themselves; in fact, through a number of tricks, they have already robbed the Hong Kong people of their hard-earned wealth which they have accumulated over the past several decades. Therefore, now that their "cash dispenser" has gone out of order, they should of course be very angry. If they really decide to pull out, nothing special will really happen, except that our financial markets will most certainly stabilize. When this happens, there will be more assurance for the overall economic interests and long-term development of Hong Kong. All this should be welcomed by genuine investors, because they will be able to make investment decisions with added confidence.

Third, during the final years of the British Hong Kong Administration, it hastily enacted several ordinances, introduced a number of derivative tools and gave some significant financial management powers to foreign experts. This has given international speculators the loopholes they want, thus sowing the seeds of the repeated attacks on the Hong Kong dollar by foreign speculators today. I hope that while the SAR Government urges the Securities and Futures Commission, the Stock Exchange, the Futures Exchange and the Hong Kong Securities Clearing Company Limited to speed up their reforms, while it seeks to improve the operational mechanisms of our market, while it tries to strengthen statutory regulation, and while it proceeds to plug the loopholes, it will also carry out a review on introducing prudent amendments to the relevant ordinances as soon as possible. I hope that it can apply the right remedies and create a market environment in which the interests of the Hong Kong people and investors are protected. Thank you.

THE PRESIDENT resumed the Chair.

PRESIDENT (in Cantonese): Mr CHEUNG Man-kwong.

MR CHEUNG MAN-KWONG (in Cantonese): Madam President, Hong Kong is facing an unprecedented economic crisis. Our foreign exchange, stock and futures markets are now subject to powerful challenges constantly. Recently, the Hong Kong Government spent more than $100 billion to shore up the market in order to punish international speculators. In doing so, the Government has violated its long-standing principle of not interfering with the stock market and the futures market. As a result, it has attracted criticisms and caused worries among people from both the mainland and overseas markets. This is because once the Government intervenes, it will turn from a body responsible for setting and monitoring the market order to a participant. As a result, there will be a serious conflict of roles and interests, and this will affect the freedom and fairness of our financial market.

The position of the Democratic Party towards the present crisis is: "to uphold the freedom of the market, to support the linked exchange rate, to perfect our rules and regulations governing the financial markets, and to oppose government intervention". The fundamental for the survival of Hong Kong as an international financial centre is a free market. And we need rules and regulations to uphold the freedom of the market. Faced with the attacks launched by international speculators, it is only proper for the Government to identify loopholes in the market and regulate them by means of rules and regulations so as to foil the manipulators' plans. However, the Government now resorts to a tit for tat response by intervening the market and shoring it up, sailing against market trends. Even if the Government manages to get rid of the international speculators and gain applause temporarily in doing so, it will, at the same time, hurt our free market deeply. This will deter long-term and genuine investors from entering the market and eventually damage our economy.

Madam President, even though it was impossible for Hong Kong to avoid this economic crisis because of the Asian financial turmoil, the economic disaster we have today should have been less serious had the Government listened to the advice of experts and academics and amended rules and regulations expeditiously by targeting at the fact that international speculators treated our foreign exchange market, stock market and futures market as the blind spot of an automatic teller machine. After all, it is always better to listen to people's advice than to be obstinate and adhere to one's own judgement. With the implementation of a "37-point" package, the Government has managed to stabilize the market temporarily. Such a direction should be favourably received by Members. However, the package must prescribe the right remedy and refrain from going beyond the proper limit, for all regulatory measures are double-bladed swords. They can be used for fighting back speculators and, at the same time, killing the good people as well. As a result of this, the financial market will lose its vitality, and capitalization will dwindle to barely with local investors drudging on. Without international capital, there will be no foreign investment. Such being the case, Hong Kong may even turn into a pool of stagnant water.

Madam President, the most important thing for the Government, the financial sector and law-makers to do is to keep calm instead of acting rashly, and to listen to all advice instead of believing in some one-sided advice. The Government needs to, on the one hand, solve our current crisis and, on the other, take into account the long-term interests of Hong Kong. As such, the Government should, according to priority, immediately implement those plans which are of a non-controversial nature. As for those which are of a controversial nature, we may need to consider them carefully before making a decision. What I am worrying is because of the exclusion sentiment stirred up by the Government, be it intentionally or unintentionally, as well as the fear harboured by the public for losing $100 billion worth of stock, we might lose our calmness and pass legislation hastily, thereby leading to far-reaching consequences. For instance, only the Stock Exchange of Hong Kong Limited (SEHK) has so far indicated that it will accept all measures proposed by Mr Donald TSANG for the purpose of restructuring the market. The Hong Kong Futures Exchange, the Securities and Futures Commission (SFC) and the Hong Kong Securities Clearing Company (HKSCC) have all expressed different degrees of worries. Of course, their worries may be related to conflicts of interests, and they may even have selfish motives. But does it mean that their worries are useless and unrelated to the market and the public interests? We must listen to their advice carefully before enacting the law.

The Government's package has given the Chief Executive an imperial sword so that he can give direct instructions to the SFC, SEHK and HKSCC. Both Mr TUNG Chee-hwa and Mr Donald TSANG emphasized that the privilege was granted under an urgent and exceptional situation. But what do an urgent and exceptional situation really mean? Is the privilege absolute? Is it essential? Is it subject to checks and balances? When the Government allows itself to violate the principle of the free market by intervening in the market or shoring it up, or making use of immunity granted under legislation related to adaptation of laws against the binding effect of the Securities Ordinance and the Securities (Disclosure of Interests) Ordinance, we should keep a wary eye on the absolute powers possessed by the Government and the Chief Executive. We should be aware that once we enact legislation to ratify the absolute power of the Chief Executive to issue instructions to the market, then unless he is willing to surrender the power automatically according to the Basic Law, we will not be able to retrieve his power by means of private bills. But who will be willing to surrender an absolute power? Who will be willing to surrender this imperial sword? Like a precious sword, power can restructure the market as well as damaging it. This Council must act carefully and prudently.

All Asian countries are now re-establishing a new financial order in the wake of the financial turmoil. Should it be closed or open? Freedom or control? Division of power or autocracy? Steady or radical? For the time being, there is no road that we must take. Hong Kong is now at a critical turning-point in establishing a new financial order. We need to act in a cooler and more prudent manner to face the unprecedented crises, difficulties and challenges.

With these remarks, Madam President, I support the amendment moved by Mr Albert HO.

PRESIDENT (in Cantonese): Prof NG Ching-fai.

PROF NG CHING-FAI (in Cantonese): Madam President, after the announcement of the "seven strokes and thirty twists" by the Hong Kong Monetary Authority last week, it seems that the topic for discussion today is somewhat out of favour. Hence I do not wish to focus on urging the Government to take measures against speculative attacks. I feel that up till today, the Government has finally put forth a series of administrative measures which have achieved certain effects. Although this period has been filled with thrills and soul-stirring incidents which have left many people badly shaken up, is the war over yet? Not quite, I am afraid. I believe it is necessary to take advantage of this time-out time of this match to sum up briefly the Government's performance in the early part of this financial war.

I personally support the Government's firm conviction to free economy and the policy to maintain the linked exchange rate at the present stage. I also support that the Government should take effective measures when necessary to inhibit international speculative cartels that reap huge profits by manipulating financial markets from looting our wealth by all possible means in order to prevent a confidence crisis or even the collapse of our market as a result of their onslaughts on the Hong Kong economy.

On account of this simple reason, I support the Government's move to defend the peg. My only regret should be the Government has failed to plug the loopholes in the financial market operation because had the Government done so, we would have paid a smaller price and the people would not have to quake and fear together with the Government all this time. I think that the Government should review the two following aspects and sum up its experience which will benefit future battles.

First of all, are there still loopholes in the financial and monetary systems of Hong Kong? Because of the boasting and influence of the Government and many people in the past, the public have generally been very proud of the position of Hong Kong as an international financial centre. But in this financial turmoil, many problems have surfaced, some involving the backwardness of our technology, and some the structure. For example, the fact that the Hong Kong Securities Clearing Company had no need to enforce the T+2 settlement requirement strictly has triggered a public outcry. What is more puzzling is that the Government has all along been oblivious of this. We demand an explanation from the Government of all this, in addition to reviewing and rectifying the overall financial structure so as to give us a more efficient and stable market infrastructure and a free and friendly policy environment.

Second, in this financial war, many media have criticized the Government for losing its sense of direction and they have even criticized the officials for failing to make sensible manoeuvres and being at a loss as to what to do. I feel that in respect of financial and monetary management and policies, it is true that the Hong Kong SAR Government lacks the guidance emanated by a set of theories suitable for Hong Kong, or it can be said as philosophical insufficiency. All along, the Government's philosophy and ideal is "positive non-intervention". But what is "positive non-intervention" exactly? It seems that fewer and fewer people are able to give a clear account of it now. In fact, it is more and more obvious that this "positive" and at the same time "non-intervening" theory is untimely, incomplete and unsystematic. The Government's intervention by trading in the market this time is indeed to save our economy from extinction but all too often, it provides a handle for criticism to those opposers of intervention who base their argument on the theory of "positive non-intervention". Therefore, I think that this is time to find out what exactly "positive non-intervention" is. Should this be the time that we at long last draw a full stop about this so-called non-interventionism? I hope that the SAR Government will be able to discuss more with the academic circles and scholars in the industry. In Hong Kong, there are many scholars belonging to different schools of finance and economics. The Government should work with them to establish the SAR's very own financial and economic theories gradually so that we will no longer lose grasp of our manoeuvres in future competitions. This is an economic construction of Hong Kong as well as a cultural construction of the SAR.

Madam President, I support Mr Bernard CHAN's motion and appreciate Mr Albert HO's efforts in drawing up the amendment. But I have reservations over the phrase "not to further intervene by trading in the securities and futures markets" in the amendment because I think that under certain circumstances, to intervene in the market is unavoidable as we cannot ask the Government to tie its own hands. Let me tell a little story here. During the Spring and Autumn era, Duke Xiang of Song was battling against Chu at the Hongshui River in Henan. Duke Xiang of Song was very particular about the rules of war. At that time, his counsellors advised him to attack the Chu army before they crossed the river but Duke Xiang did not accept this advice and insisted on not attacking "without the enemy having drummed and forming arrays", that is, they would only begin fighting after their enemy had crossed the river and had time to have their soldiers arrayed. In the end, the Chu army won a great victory over Duke Xiang's. The following year, Duke Xiang fell ill probably because of the regrets and soon died.

Therefore, I think that the financial war has made us realize that we cannot stay in a rut. In fact, analyzing this free economic system of Hong Kong, we can see that strictly speaking, with the public housing and also the Home Ownership Scheme, it is not at all free. However, why does FREEMAN still say that we are very free? Of course he has also criticized this move of Hong Kong. Yet, I believe that in the end, investors will return as long as the economy of Hong Kong is still in a fairly good shape. Therefore, I think that we must draw lesson seriously from this experience and look thoroughly into our system. We cannot pedantically insist only on "non-intervention". With these remarks, Madam President, I support Mr Bernard CHAN's original motion.

PRESIDENT (in Cantonese): Mr TAM Yiu-chung.

MR TAM YIU-CHUNG (in Cantonese): Madam President, since the outbreak of the financial turmoil in October last year, international speculators or what we call market manipulators have lashed wave after wave of attacks on the financial market of Hong Kong. They have reaped huge profits by selling out large quantities of Hong Kong dollar and then short selling stocks and index futures, in which process, they have harmed the operational order of the currency and stock markets immensely, and the economy of Hong Kong and the general public have sustained heavy losses. To stabilize the linked exchange rate system and re-establish the order of the market are the most pressing tasks for the Hong Kong SAR Government but as speculators have joined forces in these attacks, the situation is extremely tough. The attacks are just like fierce floods and counter-trained by blocking and suppressing them have proved to be futile. In ancient times, Yu trained rivers and watercourses by dredging. In the past weeks, the Government has adopted seven strokes and thirty twists to restore market order. Such tactics have basically acquired full essence of Yu's water control strategy and their effects are gradually appearing. That the SAR Government has been able to sum up its experience through practice, pool the wisdom of the public, and continue to strive for the better merits our support.

Although there are signs in the past few days that the speculators have somewhat restrained themselves for the time being, the crisis is not yet over. It depends not only on the Government's continuous efforts of bettering the system and plugging the loopholes to guarantee that the peg and stability of the financial market will be maintained, but even more on the trust and support of the people all over the territory.

In the face of wave after wave of financial turmoil in the past year, we cannot deny that our present financial system is yet to be fully able to defend itself against speculative attacks. However, "the fold can still be repaired after the sheep have escaped, and it is better to make the net than just longing for the fish". The SAR Government must step up regulation of the financial market, plug all existing loopholes and rectify its deviations with the implementation of policies in order to maintain the order of the financial market in the long run.

Drawing lesson from the previous failure, one can still mend his way in future. With the concerted efforts of all Hong Kong people and their confidence that they are able to overcome the various crises coming one after another, Hong Kong will revive its economy, save the unemployed and stand up again after the storm.

With these remarks, Madam President, I support the original motion but not the amendment.

PRESIDENT (in Cantonese): Mr HUI Cheung-ching.

MR HUI CHEUNG-CHING (in Cantonese): Madam President, the financial officials of the Hong Kong Monetary Authority and the Government have recently resorted to "seven strokes and thirty twists" to strengthen the linked exchange rate and to achieve better order and higher transparency for both the futures and stocks markets. As the representative of the import/export sector, I very much welcome all these measures.

Like the overall economy of Hong Kong, the import/export trade is very much outward in nature, and it is thus susceptible to external influences. As we all know, because of the financial turmoil, the investment environment all around the world has become very unstable, and this is especially true in places like Southeast Asia, South America and Russia, where political and financial crises have occurred one after another. In Southeast Asia, the import/export trade, which is transacted in the greenback, has suffered a sharp decline as a result. In Hong Kong, however, the exchange rate of the Hong Kong dollar has remained very stable, and the local capital market has also returned to normal. This has freed the import/export sector from any worries of foreign exchange fluctuations when placing or receiving orders; besides, this has also given more confidence to prospective buyers, thus bringing about more orders.

Many foreign brokers view that the measures put in place by the Government to curb speculators are just too harsh. They fear that such measures may weaken the uniqueness of Hong Kong as a free economy and scare off foreign investments, thus turning the financial market of Hong Kong into a pool of stagnant water. I think these worries are not entirely unjustified, but I also think that people are just making too big a fuss. The investment sector does indeed view that the "seven strokes" of the Monetary Authority are indispensable, though the sector also finds the "thirty twists" of the Government slightly contentious in comparison. Most of these measures are meant to curb illegal short selling and prevent big speculators from manipulating the cash and futures markets. Therefore, it can rightly be said that these measures are simply meant to put things back to order, and they are by no means harsh and unreasonable. I hope that the courageous and determined attempt of the Government to reform the financial market will not be thwarted by the criticisms made by those with ulterior motives. That said, I must of course point out that the Government must stop being self-opinionated as it used to be. We must all realize that no matter how sophisticated in design and perfect in theory a monitoring mechanism may be, if it is implemented half-heartedly and insincerely, the effectiveness of all the efforts made is bound to be reduced, and this will also apply to the government attempt to reform the financial markets. That is why the Government must now take actions to upgrade the quality of our financial monitoring personnel, including the management of the Stock Exchange, the Futures Exchange, the Securities and Futures Commission and the Hong Kong Securities Clearing Company Limited. Specifically, a greater number of independent people with rich practical experience in supervision of the financial markets should be added. In this way, there will be no need to ask the Chief Executive to intervene in the financial market frequently. Besides, jobbery, mutual cover-ups and the furthering of selfish interests at the expense of our overall economic interests can all be prevented.

Madam President, the recent attempt of the Government to enhance order in the financial market will no doubt lead to greater fairness and prevent manipulation by big speculators. However, despite its meticulous planning, the Government has overlooked one important area, and, as a result, we just do not know how the exchange rate will fluctuate in the time ahead. For that reason, I will support Mr Bernard CHAN's motion, which urges the Government to intervene in the financial market whenever necessary. I so submit. Thank you, Madam President.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Thank you, Madam President. Since the end of last year, the stock and exchange markets in Hong Kong and other Southeast Asian countries have been sniped by international speculators, as a result, the values of assets have depreciated and our fiscal reserves have shrunk, directly affecting our economy and undermining economic recovery.

The countries concerned have adopted defensive measures, in particular, some specific methods have recently been adopted with a good measure of variety. For instance, Malaysia adopted exchange control measures, Taiwan prohibited the trading of funds under SOROS in Taiwan while the SAR Government took anti-manipulation actions in the face of the international speculators' manipulation of the market in order to maintain the linked exchange rate.

Since the Government intervened by trading in the securities and futures markets on 14 August, scenes after scenes of the battle between officials and the "predators" have been staged. Someone has described this process as the most fierce war in the international stock market throughout history.

As regards the Government's intervention in the market, some said that it was an "anti-intervention" but people's views vary. Some people who severely oppose it said that the Government had violated the free market mechanism, seriously damaging investor confidence. However, we can see from the opinion polls that more people support the Government's intervention. These people support the Government's move for various reasons. Some people naturally clap in support of this as they can take the opportunity to sell the "crab stocks" they have on hand so that they will not be "bound crabs" any more. Nevertheless, I believe that most people support this as they are not willing to see international speculators taking money as they please in Hong Kong, regarding Hong Kong as their personal teller machines. We cannot continue to let them have their way while awaiting our doom. If the Government goes on adopting this attitude, it will make Hong Kong people even less confident in the Government and the industries more severely hit, for more enterprises will close down and more people will be laid off and become unemployed as a result. In the August battle, although the Hong Kong Government has not successfully repulsed the speculators, it at least forced them to switch to futures for settlement in September and increased their costs, and many people breathed a sigh of relief as a result.

Originally, we are still worried that the speculators' switch to futures for settlement in September will force the battle to be prolonged and drag the Hong Kong Government into a bitter struggle. It is quite unexpected that the finance and monetary officials have drawn lessons from the bitter experience and put forward several measures for substantially reforming the existing monetary system. Mr Joseph YAM, the Chief Executive of the Hong Kong Monetary Authority, introduced seven strokes while the Financial Secretary made 30 proposals for reform in a week.

The shortcomings of a linked exchange rate and the problems with the monetary control system have long been denounced by people, and the academic and monetary sectors and people from all walks of life have been asking for improvements for years. However, our appeals seem not to be as effective as the attack of speculators. This reform has led to a reorganization of our monetary system, thanks to the international speculators. Despite the many reforms made, our monetary system is still far from being perfect though. The Government should continue to review and improve the relevant mechanisms.

In addition to improving the monetary system, I think that it is time for the Government to review the regulation of the Mandatory Provident Fund (MPF) which is closely related to the monetary system in order to plug the loopholes. International speculators reaped profits in Hong Kong through many channels. They engaged in short selling shares, pushed down share prices and gained huge profits from futures. They borrowed shares from other funds, giving small interests as compensation but they could get enormous profits from futures, in other words, they make huge profits at little costs.

In accordance with the general provisions of the MPF, so long as the fund assets custodian has executed an agreement with other people, it can lend shares equal to 10% of the total fund assets. This is our existing provision.

It is estimated that the total assets of the territory-wide MPF will be some $20 billion a year in the first few years. In other words, some $2 billion worth of shares can be lent a year and some $10 billion can be lent in five years. When we scrutinised the bill, Honourable colleagues in this Chamber were already somewhat worried.

Normally, lending shares may allow members of the scheme to get a few percent more from their investments, but if the borrower uses these shares to push down share prices in its own market, the trivial gain we can get from lending them shares will be far less than our loss. The impact will be even greater for members of the scheme at the retirement age as their retirement life will be directly affected.

If speculators borrow fund shares abroad, it is too far away for us to be able to help. But since the MPF is within our reach, we should really try our best to plug these loopholes to safeguard the interests of local wage earners. As a preliminary measure, the Hong Kong Federation of Trade Unions wonders if it consideration can be made to amend the MPF Ordinance to prohibit shares lending in order to safeguard the interests of members of the scheme. As this provision directly affects the retirement protection for employees, I hope that the Government will carefully scrutinize the subsidiary legislation related to the MPF and come up with strategies to plug these loopholes.

As to the amendment proposed by Mr Albert HO, one of the points is to ask the Government not to further intervene by trading in the securities and futures markets. We do not agree to this or it may be said that we do not identify with this as the Government has already engaged in trading in the securities and futures markets and fought the battle, and it cannot give up halfway. After we have made the first step, we cannot give up fighting now and we can only fight against every stroke made by the speculators. We do not know what moves will follow as the battle is still not over yet. If we say that we will stop fighting now, we are surrendering. From the long-term point of view, Hong Kong does not have to make a pledge to the international community that Hong Kong practises non-intervention in the securities and futures markets. If Hong Kong is to develop into a stock and foreign exchange centre, it will face numerous challenges in the future. We can deal with the situation with a great many strategies and tools and intervention is but one of them. If we explicitly state that we will not intervene, we are only cutting off one of our arms. I believe that no place or country in the world will ever say that it will cut off its own arm, therefore, we do not agree to Mr HO's amendment and we support the original motion of Mr Bernard CHAN.

Madam President, I so submit.

Thank you.

PRESIDENT (in Cantonese): Mr LEUNG Yiu-chung.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, just as many people have pointed out, I think that this is definitely not a healthy practice for the Government to change from a monitor of the monetary market and formulator of the rules of the game to a participant in the game by trading in the market, using the laboriously accumulated some hundred billion dollor reserves from the taxpayers to buy a great deal of blue-chip stocks. However, the Financial Secretary asserted that if the Government did not trade in the market last month, the Hang Seng Index would drop drastically by a few thousand points and the interest rate will climb up to 50%. Certainly, it is still not known if the Government's intervention in the market can repulse the speculators but even if it is proved effective, it is only a temporary solution. As to effecting a permanent cure, it would certainly be the best if the 30 measures put forward by the Financial Secretary two days ago could really improve the monitoring and operation of the market, but a more important point is that we should consider the basic reasons why speculators can successfully attack the Hong Kong currency.

As the saying goes "things must first become rotten before worms grow on it", a slackened and regressing economy, a future which is definitely not bright and Hong Kong people's loss of confidence are the major reasons why the Hong Kong dollar and the stock market are raided. The Government has put the blame of market manipulation on speculators but I actually think that the Government has been irresponsible. It has to face up to the problem squarely and expeditiously bring about the recovery of our economy before it can really solve and defuse the financial crisis.

We certainly hope that the 30 measures proposed by the Financial Secretary can enhance monitoring and perfect the market mechanism but even so, can the problems of our financial market be solved and can we lead peaceful lives forever thereafter? Can we be assured that there will no longer be a similar phenomenon of market manipulators securing profits by crook and by hook?

Since the outbreak of the financial turmoil last October, the government officials have made one stroke, then seven strokes and then 30 twists, claiming each time that they could repulse the speculators. However, the speculators kept coming again every time and the finance officials would work to their wits' end taking remedial actions and utilizing our reserves. It is thus evident that the problem has not been solved.

As many Honourable colleagues have said, "a moral person is one foot tall but the devil is one zhang tall". As financial instruments have developed and grown in number and complexity, if Hong Kong sticks to heading towards the direction of openness and attracting international hot money, I am sure that the speculators will attack us again once there is wind of any unfavourable news about our economy.

In a word, Hong Kong has to take certain risks if we wish to become an international financial centre, and we have actually found a very big constraint as far as the development of the financial services industry is concerned. Therefore, our economy cannot attach importance to financial services alone, just like the common saying that we cannot put all our eggs in one basket. It is really true that our future cannot be totally dependent on the development of the financial industry. I reiterate a point I have raised time and again, and that is, in addition to developing the financial industry, it is more important to develop other industries. Only a balanced development of various trades and industries in Hong Kong can bring about a sound operation and steady growth of our economy. If so, Hong Kong can avoid being attacked by speculators and people will be spared the plight of living in a constant state of anxiety.

Although we read from the newspapers that the Financial Secretary's scores in opinion polls have risen to the highest point since the reunification after the government intervention in the market, I still hope that the Financial Secretary will not be carried away by the transient success and forget that he has a more important task than combating the speculators. He has to rapidly formulate long-term economic policies in the face of an adverse economic recession and enhance the development of other industries. In particular, he has to solve the unemployment and underemployment problems we are now facing. Otherwise, I believe the reputation of the Financial Secretary will drop to the latest low ebb.

Madam President, I so submit.

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): Madam President, I speak in support of Mr Albert HO's amendment.

Firstly, I find it very regrettable that the Financial Secretary is not willing to attend such an important motion debate of this Council while he attended the meeting of the Panel two days ago. I absolutely do not understand why he attended the Panel meeting but not the meeting today when Members hold a formal debate over the issue in the Chamber. Madam President, I find this very regrettable and annoying.

In fact, the Financial Secretary has admitted during the meetings held these few days that officials responsible for monetary affairs have underrated the situation. They have not only underrated the situation but also let us see that after the transfer of sovereignty, the weaknesses of government officials have been fully exposed when they deal with major incidents and crises. They are arrogant, have little talent and underrate the situation very often. They think that many things can be easily fixed. Take chicken slaughtering as an example, they thought that they could kill more than 1 million chickens in a day. They also believed that they could relocate the entire airport in a day. This time, they also think that the problem can simply be solved by throwing out billions of dollars but can they imagine that the problem will still not be solved even if they throw out more money? We do not know how many billions of dollars have been used; the Honourable Miss Cyd HO just said $120 billion but I do not know how she got the figure and I suppose she has only heard so. I believe that, you, Madam President, and fellow Members do not know the actual figure too. When will the Financial Secretary tell us the exact figure? He said that he had to wait until the speculators had left before he would disclose the relevant figure. Therefore, I was rather angry and some said that I was ferocious on that day. I asked the Financial Secretary when the speculators would leave and what would happen if they did not leave, and would they return after they had left, but he did not answer my questions. I hope that other officials will give us an answer today.

Madam President, I hope that government officials will really learn a lesson and refrain from thinking that everything can be easily fixed. For the past decade or so, our problems might have been tackled fairly easily as our economy was full of vitality. It might have given our officials a false impression that they could get anything easily. However after the transfer of sovereignty, it has been exposed time and again that they have underrated the situation. They did not know how they should tackle the situation and they had no idea what measures should be taken. Before the Government intervened the market, Mr Joseph YAM said that they had intended to punish the speculators while Mr Donald TSANG said that they were not punishing the speculators but maintaining order. Yet, the Securities and Futures Commission (SFC) should be responsible for maintaining order. I asked the Acting Chairman of the SFC why he did not deal with the case and whether he find anyone manipulating the market; but he said that there was no proof of manipulation. Mr Donald TSANG only notified the SFC on the day he took action but the SFC did not say a word. Madam President, we did not know what happened. If the market police said that there was no problem and if they did not take action, they naturally dared not speak when a high-ranking person took action and notified them. They only came out and said that they supported the Government two days ago. I told them that they were not responsible for supporting the Government but maintaining order and monitoring whether the Government had breached the law or acted in accordance with the law. They claimed that they had read the legislation on Adaptation of Laws. Madam President, after the legislation has been enacted, they no longer have to be bound by the legislation. I agree with Mr Bernard CHAN that people's confidence has been shaken after these incidents. Officials have underrated the situation again and again. Although the officials think that they have been very smart, the public are disgusted with what they have done.

I support Mr Albert HO's amendment. In fact, Miss Cyd HO has stated the stance of the Frontier and I would not repeat what she said. However, I am opposed to using money to shore up the market. The Honourable Miss CHAN Yuen-han said that the officials could not act otherwise as they had already wetted their hair, otherwise, they had to surrender. I would like to ask the Hong Kong Federation of Trade Unions (FTU) and the Democratic Alliance for the Betterment of Hong Kong (DAB) how much more money could be used to shore up the market, if money had to be thrown out as the officials had wetted their hair, how much longer did they have to throw out money? Members know very well how much reserves we have and how much can be spent. If our reserves are used on every occasion, in fact, the Government has said that it will very often refrain from using the reserves, we will be footing the bill endlessly. Many members of the FTU and the DAB have not yet spoken, I hope that they would later tell us how much longer officials have to throw out money. I do not support the Government's action and I call upon the Government to tell Hong Kong people as soon as possible how much money has been spent.

Finally, I would like to say that supervision should be enhanced. The Financial Secretary said that there were adequate legal provisions and he would attend our meetings to answer questions whenever he had time, either once every three weeks or every six weeks but I find this ridiculous. I hope that it can be specified institutionally that the executive will really be accountable to the legislature. Let us examine how accountability is realized in western countries. In western countries, officials in charge of financial affairs or other important policies are appointed by the parliament or the legislature and they have to report to the legislature regularly. Some Honourable Members may have never dreamt of securing the power to appoint important policy officials. Madam President, although we may not have thought about this before, we can start figuring this out now, otherwise, how can we realize the Basic Law provision that the executive should be accountable to the legislature? Although we may not immediately get the power to appoint important policy officials, all officials responsible for financial affairs, especially Mr Joseph YAM of the Hong Kong Monetary Authority, should at least make regular reports to the legislature, instead of speaking for 20 or 40 minutes at a meeting of the Panel. They should at least submit reports to the legislature twice a year and hold formal meetings lasting two to three hours, to clearly brief the legislature, just like what is being done in other advanced countries.

Madam President, I would like to add that the Chief Executive has said that he should be given the right to give direct orders to the two exchanges and the clearing company. Indeed the SFC has this power now, why does it have to hand over the power to the Government? Are we being told that the Government does not trust the SFC? If the SFC does not agree to the Government's action, perhaps the Government should not take such an action at all. Therefore, I think that the existing legal provisions are practical and adequate. I hope that government officials will open their ears wide and listen to the comments of the community, especially those they appointed, and that they should not take all the powers on themselves too rashly as such an act is hardly tolerable.

Madam President, I so submit.

PRESIDENT (in Cantonese): Mr Ambrose CHEUNG.

MR AMBROSE CHEUNG (in Cantonese): Madam President, my speech in support of Mr Bernard CHAN's motion will be focused on the current financial turmoil and I will also make some suggestions.

I believe that we have never encountered such an economic turmoil before, and we can describe this painful experience as a battle, a protracted battle. Looking forward, we do not know how much farther we still have to go but if we are to look forward, we certainly have to review the experience we have gained in the past one and a half years.

At the beginning of 1997, we found that the values of the currencies of some Asian countries had been attacked by speculators in various ways but our government officials were so very complacent that they had underestimated the situation and made wrong judgements. They thought that such attacks would not affect Hong Kong and they were just like a common cold with which Hong Kong would definitely not be infected. When Hong Kong was infected, they said that it was just a common cold and determined that it was just a minor illness. Even if our currency was attacked, they said, a minimal blow would be struck. However, when the storm really arrived, the officials started using medicines and adopted a method to push up the interest rate although the Financial Secretary did not admit this. (The interest rate was actually pushed up as the currency board system could cause interest rate to rise tremendously). However, the wrong medicines had been applied but the officials said after they had used the wrong medicines that the basic problem lied with our currency and it would not affect the stock or futures market. However, it has proved time and again that they were wrong.

In January this year, we found that the relevant monetary markets had basically been affected. As officials had only been discussing the matter so far, I agreed that the situation had worsened to such a state that it was essential for the Government to intervene on 14 August. I stress that intervention does not necessarily mean trading in the market. I am saying that intervention can be made in the form of revised rules of the game, administrative measures, market rules and mechanisms. I support this intervention as I believe that it will be dreadful to contemplate the consequence if this is not done.

Why has such a consequence arisen? The Financial Secretary admitted yesterday that he had made a wrong judgement but the whole world, he said, including the American specialists had made wrong judgements and nobody could thoroughly understand this turmoil. Actually, the proposed 30 measures have left out the most important stroke and it was not mentioned by the Financial Secretary, that is the deficiency or inadequacy of the policy-making mechanism. If we carefully study these 30 strokes, we will find that these strokes or at least the seven strokes of the Monetary Authority give us a message that these strokes are contingency measures which have been placed in the drawers or elsewhere in the Monetary Authority for two years and they have not been adopted. Many academics have made other suggestions and those in the financial industry have given the Government a great deal of advice in the past year, but the Government has failed to heed their advice. The Government's responses have been slower than the changes in the market situation and the Government has been adopting passive instead of active measures.

However, have no fears, for until today we can still spend much time on the battle but I sincerely hope that the Government will really review its policy-making mechanism. If all the specialists and academics in the world have underestimated this battle and this financial turmoil, the Government must then tell us how it can enhance co-operation with the academics, those in the industry, specialized personnel and specialists to formulate policies. If we are to fight the battle but if the directors and commanders are still arrogant and have little talent as described by the Honourable Miss Emily LAU, we will certainly lose the battle.

The day before yesterday, the Hang Seng Index rose by 700 points but it has slightly fallen today. However, I find that people have become more confident in the Government. Why? It is because they think that the Government is willing to take action although the Government has been slow in responding, but after all it is willing to take action. Nevertheless, the action has to be complete and we can hardly achieve any effect with piecemeal actions.

The so-called completeness mainly comprises two points. Firstly, as I just said, the Government has to review its policy making mechanism, in particular, it has to set up and strengthen a mechanism that draws on collective wisdom and absorbs all useful ideas. It should take the advice of academics, those in the industry, specialized personnel and specialists and strengthen its own policy-making mechanism. Secondly, the current situation has exposed that the regular pattern of our market attaches great importance to the monetary market. We must be aware of the features of the Hong Kong market, although it is small and can be easily controlled, profits can be reaped. This is precisely why speculators are attracted to manipulate this market. If our rules do not suit this market and there is no protective system, we will definitely be deceiving ourselves if we think that we have a free market. As the saying goes, "if your head is not big enough, do not put on such a big hat". It is evident that our supervisory mechanism has to be improved. In this incident, the Futures Exchange, the Stock Exchange, the Securities and Futures Commission and the clearing company have made different remarks. In view of their interests, the action taken by the Government has smothered their respective markets and some supervisory bodies even claimed that there were no signs of market manipulation. This precisely reveals that, in the past, the Government's co-operation, co-ordination and monitoring of these bodies as well as the relevant legislation had failed to keep up with the developing circumstances.

Finally, I would like to say that at present, the public has started to restore confidence in the Government and if the Government wishes to win this battle, it should practicably review its policy-making mechanism and the market rules and measures and comprehensively formulate a constructive system to tackle this financial turmoil.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr James TIEN.

MR JAMES TIEN (in Cantonese): Madam President, the motion moved by Mr Bernard CHAN can be traced back to Thailand almost this period last year. This is because Thailand has borrowed a lot of long-term US dollars ─ sorry, I have made a mistake. It should be a lot of short-term US dollars. As most investments need to take a long time for returns to be yielded, Thailand found it impossible to pay the debts when foreign banks asked it to do so. As a result, Thai baht depreciated drastically, followed by the currencies of Malaysia, South Korea, Indonesia, Japan and then Hong Kong. At that time, we constantly asked the Government what we should do. The Government then decided that it should defend the Hong Kong currency, which was supported by us. In lending our support, we knew we had to pay a high price to defend the Hong Kong dollar, and we also knew who should be responsible for doing it. Both the Liberal Party and the commercial sector held the view that the Government should take action instead of relying solely on the commercial sector and the general public, or solely the first stroke of YAM-one stroke ─ high interest rates. Because of the high interest rates, the commercial sector found it extremely difficult to operate their business. The small and medium enterprises also encountered operational difficulties with the vise in interest rates. As for the public in general, they had no more money to spend because of the increase in mortgage interest rates. Consequently, all business suffered from severe depression. Under such circumstances, we saw that the first quarter registered a negative growth, and the second quarter -4.8% growth, with the unemployment rate rising constantly. We should have borne all these in mind when we decided to defend our currency. Although we have consistently urged the Government to take action, it has not done anything so far. It only told us that it could not alter the rules of the game and make frequent changes in policies. A few years ago, foreign investors started to invest in Hong Kong. In order to establish Hong Kong as the financial centre of the region and to compete with Singapore, we set up a number of new markets for derivatives such as index futures to make use of foreign capital. The attitude adopted by the Government then was foreign investors were welcomed to invest in Hong Kong but they would not be allowed to withdraw their money if problems arose. Both the Liberal Party and the commercial sector told the Government that this was not going to work as foreign investors were far more powerful than us. We might think that our stock market was among the top in Southeast Asia, but there was no way for Hong Kong to compare with foreign markets. When the Hong Kong stock market closed yesterday, that is 8 September, the total market capitalization was $1,706.6 billion, an amount appearing to be quite substantial. But let us make a comparison with the United States. The largest stock in the United States at the moment is General Electric. Its market value currently stands at US$250 billion, which is equivalent to HK$2,060 billion. When the United States market closed yesterday, Microsoft, the second largest stock in the United States, had its market value stood at US$250 billion, which is equivalent to HK$1,950 billion. In other words, the market value of any United States stock is bigger than the whole stock market in Hong Kong. Foreign investors have been investing and making profits in such venues as the United States. When they come to invest in Hong Kong, we will not be able to fight against them if we only rely on the power of the commercial sector and the general public. Recently, the Government finally found that without its intervention, the commercial sector and the public would definitely "lose the battle" when the Hang Seng Index plunged to 7 000. During the period from 14 August to 25 August, the Government still failed to take any action. If it still insisted on taking no action on Monday, 31 August, the day the Russian ruble depreciated, our stock market would have performed even worse. For these reasons, the Liberal Party supported the Government's action. Of course, we still criticised that the Government had acted too late because it should have acted much earlier. We also criticised the Government for whether it was proper for it to first intervene in the market before taking this series of action, which was followed by the seven strokes taken by Mr Joseph YAM. In particular, we have been discussing with the Government two of the seven strokes for a long time. What the Government needed to do in order to defend the Hong Kong dollar was to request foreign-owned banks verbally to convert Hong Kong dollars in their clearing accounts into US dollars with the Hong Kong Government at an exchange rate of HK$7.80 or HK$7.78 to US$1. It was therefore not necessary to use that $100 billion in actual terms. At first, the Government was not willing to do so. But it finally took action last Friday. On Monday, the Financial Secretary proposed an additional 30 twists. Of these 30 twists, two points are extremely important. The first point is that the monitoring unit will make regular analysis with the Hong Kong Monetary Authority, the Securities and Futures Commission, the Hong Kong Futures Exchange and the Hong Kong Securities Clearing Company. I think this is something the Government should have done right at the beginning. How can it be possible for the so-called five different "gangs" to act independently, without anyone monitoring their operation. In that case, foreign capital can easily break them up one by one, whereas we will have to fight five battles with them. Later, we also found that the Chief Executive had no power to persuade the two exchanges and the clearing company to do anything. Therefore, if the Government is preparing to formulate these two pieces of legislation, we would like to urge it to table them to this Council expeditiously.

Madam President, regarding the rules of the game, many academics and Members have raised the point that foreign investors might not invest in Hong Kong again after the Government's intervention this time. I agree to this point in particular. What I invest in Hong Kong is local capital, but what I invest in the United States can be regarded as foreign capital. I made some money when I invested in the United States in the '70s. In the '80s, I decided not to go to the US again after losing some money there. But when the United States market prospered again in the early '90s, I went there again to invest. I believe the angle taken by investors is very simple. Their memories will not last long, whether they are foreign investors or speculators. But if we fail to protect Hong Kong today, we will not be able to make big money even if we are given the chance in future. I always say: "As long as the mountain is there, we need not fear running out of firewood". But if the mountain is gone, we will have no more firewood. If someone asks me today if it is a good price as our stock market now stands at 7 000 or 7 800, I will not dare to answer as our economy is weakening and we are having a high unemployment rate. When companies make no money, the price of their shares will of course go down. But it is most important for us to maintain normal operation. Our share prices should be determined by our economic fundamentals instead of by speculators.

Lastly, Madam President, we do not support the amendment moved by Mr Albert HO. This is not because we want the Government to go on pouring money into the market. It is only that we do not want foreign investors know we ask the Government not to intervene. We let the Government intervene in the market, but we are not asking it to do so. We should never let the "gweilo" know our hand, at least for the time being. (Laughter) Excuse me, Madam President, I support Mr Bernard CHAN's motion but oppose Mr Albert HO's amendment. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Jasper TSANG.

MR JASPER TSANG (in Cantonese): Madam President, having listened to the penetrating financial analysis made by Miss Cyd HO earlier on, my field of vision has been widened. I do not know the subject good enough to go further into her arguments but I note that Dr Philip WONG has tried to explain to her the difference between injecting $120 billion into the stock market and giving $120 billion to charity. I would like to ask a silly question. I just heard some Honourable colleagues say that it is unfair of the Government to formulate the rules of the game and trade in the market at the same time. Does it make sense for other people to take part in the game? It seems that the Government will surely win as it, as a manager, has formulated the rules of the game and made investment with the public's money. This is a very good investment indeed and the Government has not cheated us. However, I am puzzled when the Government told us that $120 billion has been used up.

Let me now turn to matters I understand. Recently, people have been comparing the operation of the stock market to playing mahjong. I know a bit about the mahjong game. I know that some people brag about their mahjong tiles when they play mahjong but people who do this very often will not be invited to take part in a mahjong game. I have lately discovered that bragging also works in the securities and futures markets with turnovers amounting to billions of dollars. One merit is that those who brag will not be driven out of the market. A typical example was that by the end of August, a day before the futures settlement date, DRUCKENMILLER, one of the prominent figures of the SOROS fund, analysed and foretold that the Hong Kong Government would certainly be defeated and he gave very sufficient reasons. I heard on a radio programme these few days that many people had naturally sold their shares after having listened to his remarks. Some Honourable Members just criticized that the Government had underestimated the situation and thought that the problem could be solved by using billions of dollars. Who would have thought that more and more shares were sold on that day, not only foreign investors but also local investors sold more and more shares, and they helped DRUCKENMILLER. The remarks of our analysts and specialists were widely reported in overseas countries to the effect that the Government would certainly lose while the foreigners would certainly win. Some newspapers in overseas countries also widely reported that our politicians had said bitterly that the Government had made a grave mistake and we could hardly be convinced that the Government would not lose.

The speculators won because some people were messing things up. (Laughter) After this battle, it seems that the speculators have gained nothing and while they withdraw from the battlefield for the time being to dress their wounds and survey the direction to be followed, they can listen in a relieved manner to Members angrily rebuking the Government why it bought shares in the market without seeking the advice of Members in advance. Before the Government buys any shares in the future, they said, it should first approach this Council and explain clearly before the press when the Government intends to enter the market, how it is going to enter the market and how it is going to buy shares. Fortunately, there are still such remarks. We are now discussing about the "seven strokes and thirty twists" and about how market order can be reinforced, but we will later find reports in the press that Members of the Legislative Council are advocating monetary control by the government in Hong Kong. No one will agree to this suggestion and it all depends on the Government's acts. Do we really wish to see monetary control by the government in Hong Kong? This will surely become materials for people's bragging. If we should pass Mr Albert HO's amendment today ...... Just as Mr James TIEN has said earlier, now that Members have made such a proposal, the press will report tomorrow that the Legislative Council has resolved that the SAR Government should no longer be allowed to enter the market. I find this somewhat contradictory and I do not quite understand this. I hope that Mr Albert HO will explain this later. While the Government is required to sell all the shares it has and leave the market as soon as possible, it is not allowed to enter the market again. How can it sell its shares then? I really do not understand this. This is not an important point but it carries a message that the motion itself does not have legal effect but I believe that the message that the legislature will not allow the SAR Government to continue to enter the market will be widely welcomed. I do not readily believe in the "conspiracy theory" and I do not think that some people are intentionally messing things up, but I think that the proposal has been made with the best intentions. After all, it is done for the benefit of Hong Kong and our financial markets. At most, we can only say that someone is messing things up out of ignorance. However, these remarks and acts will ultimately become materials for bragging and we find this regrettable.

Having said that, it does not mean that we agree that the SAR Government can continue to engage in market activities. Let me respond to the question raised by Miss Emily LAU. We do not believe that the SAR Government will keep using our Exchange Fund to gamble with speculators in the stock market. We agree to what Mr James TIEN just said, that we do not have to tell other people that we will certainly not do so in future. No national will like to see his Government fighting in a battle and I believe that no legislature will be so foolish as to pass a resolution specifying that the government will not be allowed to fight in a battle or declare a war under whatever circumstances. We hope that the current "seven strokes and thirty twists" can really reinforce the market. Among people from all sectors especially the specialists and academics ─ usual critics of the Government, nobody thinks that this should not be done. People only think that the action taken was inadequate and had been too late. It was late not necessarily because the Government and senior officials were arrogant, opinionated and conservative. It seems to me that their ways of thinking have slightly changed and they have switched to taking advice and improving. But if the action taken was late because of the problems with the policy making mechanism, and because of the contradictions among the various institutions which had denied them the ability to take concerted actions, a review should really be made. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr James TO.

MR JAMES TO (in Cantonese): Madam President, I will not respond to the impassioned speech by Mr Jasper TSANG. I only hope that the Government would listen carefully. The Government said that it would set up a company to manage the blue chips that it was holding. But in yesterday's meeting, the Securities and Futures Commission quoted the advice made by its legal adviser and indirectly quoted the advice made by the legal adviser of the Government, that is, according to existing legislation, in particular the Interpretation and General Clauses Ordinance, the Government could be exempted from the monitoring of certain securities laws, such as the Securities Ordinance, the Securities (Disclosure of Interests) Ordinance, and the Securities (Insider Dealing) Ordinance. I hope the Government can give serious considerations to this. According to the Government, if the company which will be formed to manage the blue chips are managed by professionals, the advantage is that the allegation on conflict of interest can be avoided. As the supervisory authority, the Government can also determine social policies. This will affect those blue chip companies because the Government is also a shareholder. As for the management company to be set up later, will the Government want it to be exempted from the regulation of these securities ordinances? Or if the company will not be exempted, but why then the Government or the Hong Kong Monetary Authority can enjoy exemption when they hold stocks? What kind of message will the Government give to the market when the financial turmoil is over? I hope that the Government can at least give people an impression of a fair market and that no favouritism exists.

PRESIDENT (in Cantonese): Mr LAU Kong-wah.

MR LAU KONG-WAH (in Cantonese): Madam President, I note that the speeches made by many Honourable colleagues today are somewhat different from the speeches they made before. For instance, when the Government first intervened the market, Honourable colleagues of the Democratic Party wantonly lashed the Government but they have adopted different attitudes when they speak today. The Honourable Martin LEE in particular said before that the Government had made a serious mistake but he just says today that he cannot support the Government's move. Although I am not sure why Members have adopted different attitudes, I welcome this. I wish to express my views on some remarks made by Honourable colleagues of the Frontier before and the views they have expressed today.

Mr Jasper TSANG said that Miss Emily LAU had requested that the Legislative Council be consulted before the Government should intervene the market. But I think that she is applying double standards. On the one hand, she queries if there will be a conflict of interest if the Government negotiates with the brokers before entering the market, on the other hand, she encourages the Government to discuss with Honourable colleagues before entering the market, she is applying double standards. I am surprised at the use of the expression "monetary control" as I find that the expression fails to convey the idea and is exaggerating. Miss Cyd HO said that the public has lost confidence in the Government but she was just rebuking the Government's move, without mentioning anything about the attacks made by international speculators manipulating against Hong Kong. She is denouncing the Government not the speculators, the police not the thieves, what exactly is her inclination? Is the Frontier the frontier of Hong Kong people or international speculators?

In fact, we should not discuss this issue only from the perspective of Hong Kong or the Hong Kong market today. Instead, we should rather approach the issue from the global perspective. In the '90s, international manipulators attacked the United States market in 1992, South America in 1994 and Asia in 1997. In a few years' time, such attacks have become more and more frequent. Statistics show that $1,000 billion is circulated in the foreign exchange market every day and most of the money comes from foreign exchange investors as a matter of course. We are not afraid of ordinary speculators but we are worried that they may be controllers. The Financial Secretary has described them as "market manipulators" but I think that it is more appropriate to call them "controllers". These international controllers and speculators actually have some features. Firstly, they totally neglect the sufferings brought by their moves to the life of the nationals of countries being attacked and their first feature is therefore being cold-blooded. Secondly, they will return after the attack, therefore, they love blood. Thirdly, they operate globally, they will pool together any capital and they are therefore stateless; they have no surname and they are of mixed blood. These are their features. Whoever takes charge of the global control mechanism can control the whole world, not only can they strike a blow at the financial markets, but also the economic system as a whole and many political systems.

Somebody considers that we are practising exclusionism as we do not wish these international controllers and speculators to come to Hong Kong. But he is wrong. If we were perceived as practising exclusionism just because we wish to protect the interests of local people, then are we being great if we sacrifice the interests of local people? Can we not see that Hong Kong's vitality has been sapped after Hong Kong dollar has been repeatedly attacked and Asian countries have failed one after another? Why should we build the happiness of these controllers and speculators upon the sufferings of innocent people? A free market is not a market being left alone or in an anarchistic state. The strokes of the Government have made this clear. Is there any country that has never intervened in the market? Is there any financial market of any place or country which has not been re-visited by speculators after market intervention? It is a fact that such things have never happened. Rather than saying that the Government is making an intervention, we had better say that it is making an anti-intervention.

Yesterday, Mr Donald TSANG admitted for the first time that he had underestimated the current situation and he was right. Many academics have expressed various views on this and I think that the Government should immediately face up to this global trend and establish its own think-tank for financial affairs as well as learn from its opponents. These opponents are characterized by swift and precise actions, an agile mind, and thorough understanding of the weaknesses of their opponents, while our bureaucrats are responding too slowly. Therefore, there must be a think-tank for financial affairs. These controllers and speculators are surpassingly rich and they have US$40 to US$50 billion at hand, ready for ever more frequent attacks. They are even striking a blow at our next generation, therefore, even though the market is stable today, it does not mean that it will be stable tomorrow. Even though the market is prosperous tomorrow, there may be hidden factors for future instability.

We may hold divergent views but we are facing a common enemy now. Regardless of whether one is LI Ka-shing or TSANG Cho-choi, or whether one supports having direct elections at once or the principle of gradual and orderly progress, we are facing a common enemy. Therefore, I hope that people from different groups and sectors and having different political views will have a common understanding that we must create a better future together in the face of a common enemy.

Thank you, Madam President.

PRESIDENT (in Cantonese): Does any other Member wish to speak? Miss Cyd HO.

MISS CYD HO (in Cantonese): I wish to seek a clarification.

PRESIDENT (in Cantonese): Miss Cyd HO, would you like to clarify your speech?

MISS CYD HO (in Cantonese): Mr Jasper TSANG and Mr LAU Kong-wah have just elaborated their own interpretations of the expression "monetary control". I would like to make a clarification. Since this term was not used in my speech but in theirs, I wonder if you would allow me to clarify.

PRESIDENT (in Cantonese): Miss Cyd HO, please be seated. The Honourable Members who spoke earlier did not say you had mentioned that expression. Neither have you mentioned it in your speech. If I allow you to speak, I am afraid it might lead to a small debate simply because of this expression. So, I am not prepared to let you clarify. I hope you can understand it.

PRESIDENT (in Cantonese): I now invite Mr Bernard CHAN to speak on Mr Albert HO's amendment. Mr Bernard CHAN, you have up to five minutes to speak.

MR BERNARD CHAN: The amendment seeks to preclude any future trading of stocks and futures by the Government. Although I have great reservation about the Government's costly intrusion into the equity market, I am afraid I cannot specifically dispose of this tool.

As we all know, international speculators have been using multiple tactics to attack our capital markets. I believe only an effective and flexible combination of measures will be useful in deterring attacks. We should never prohibit Government's trading in stock markets as a matter of principle, provided the action is handled with finesse, and subsequent measures are in place to remedy the downside. I support the Government's initiatives to set up a company for the management of the official stocks, so as to reduce the degree of conflict of interests.

In fact, it is not unusual for the governments of advanced countries to purchase local shares for regulatory purposes. Such deals are normally carried out not in the name of the governments. The high-profile intrusion of the Hong Kong Government into the equity market last month was indeed unusual. International investors and media have, of course, seized on this opportunity to launch a negative campaign against us.

On this question, I think we should not be trapped by pure academic talk or cunning arguments leading to nowhere. Experienced financial market professionals could all remember similar intervention actions taken by the G-7 countries at various stages of their market developments. A recent example is a joint intervention on the US dollars and Yen by the two governments on 16 June this year, in an effort to "maintain the stability of the currency while giving the Japanese Government more time to implement structural reform under their constructive policy changes." Back in January 1980, the United States authorities stepped in after the HUNT brothers have cornered the cash and future silver markets, creating a market panic. Further intervention vehicles have long been used by our trading partners. The quota system for textile imports of the United States Government and their anti-dumping laws are not new to us.

I have to point out that the genuine free market is non-existent. Free markets are named just as a matter of degree. As long as the intervention of the Government is done prudently, rarely and strategically, we should never tie up their hands on the grounds of pure theory and fantasy. It is the job of the legislature to monitor the situation whenever intervention is being done. The Government needs to assure the Hong Kong people that a professional team is recruited to properly conduct the act of intervention. The detailed use of public funds must eventually be audited and disclosed at strategic times, and at timely intervals.

Thank you.

PRESIDENT (in Cantonese): Secretary for Financial Services.

SECRETARY FOR FINANCIAL SERVICES (in Cantonese):

Introduction

Madam President, during the last couple of days in the meetings of the Legislative Council Panel on Financial Services and in the motion debate earlier, Members gave their unanimous support for the Government's firm defence of the linked exchange rate system and the measures adopted to keep market order. This is a very important message to let local and international investors know that the policy of keeping the linked exchange rate system unchanged is supported by the community and affirmed by the Legislative Council. I would like to offer my gratitude to all Honourable Members.

We agree to the view expressed by Members that strategic and effective measures should be taken to curb activities aiming at attacking the Hong Kong dollar and manipulating the market. All along and recently, the dominant factor influencing the Government when it considered every action to be taken is to preserve the confidence of local and foreign investors and the stability of the market. The Basic Law has clearly stipulated that the Government of the Hong Kong Special Administrative Region must maintain the status of Hong Kong as an international financial centre; that it should formulate monetary and financial policies to safeguard the free operation of financial business and financial markets; that no foreign exchange control policies shall be applied in the Special Administrative Region; and markets for foreign exchange, gold, securities, futures and the like shall continue. All these are principles which we must uphold.

The background behind market intervention

In the face of recurrent attacks on the Hong Kong dollar and serious manipulation of the financial markets which threatened the stability of the financial system and market order, together with exceptional circumstances of damages done to the local economy and the confidence of investors, the Government took an unusual measure on 14 August to engage directly in the activities of the stocks and futures markets, and a series of new measures were announced on 5 and 7 September.

In the last couple of days the Financial Secretary has explained to the Panel on Financial Services the considerations and aims of the Government's entry into the market. The Financial Secretary has asked me to recapitulate these to Members.

There are some conditions of Hong Kong which are very attractive to market manipulators. Just now some Members said that the Hong Kong market is particularly sensitive. These conditions include a highly transparent linked exchange rate system; the completely open balance figures in its banking system which are relatively small and can easily be manipulated; the totally open and free securities and futures markets; the media which enjoy complete freedom to report any bad news and market rumours; and the economic downturn we are experiencing these days and the loss of confidence as a result of this. The tricks of these market manipulators in Hong Kong are mainly the deployment of concerted actions in the futures and cash markets, then the spreading of unfavourable rumours and fabricated news through the free media, leading to widespread panic which results in sharp falls in the stocks and futures markets and finally, profits for the taking. Even if we have a better economic foundation, it will not be strong enough to drive these market manipulators away.

When Hong Kong was experiencing this period of economic adjustment, our colleagues had also noticed that before we entered the market, there were many external factors which made the Hong Kong dollar come under severe attacks and the market being manipulated. On 14 July, the yen and US dollar exchange rate dropped past the 145 level and the Dow Jones Index dropped past the 8 500 level. At the end of July, the market manipulators began their attack on the Hong Kong dollar and they started their frenzied dumping of the Hong Kong dollar in the international money markets. In the first week of August, the volume of Hong Kong dollar sold short reached US$2 billion and soared to US$4.2 billion in the second week. Some Members asked earlier why we said in our report in April that there was no multi-market rigging activity, but then we said just now that such a thing existed. The reason is precisely that the selling volume in last October was only US$3 billion, but the weekly increases in selling that I mentioned earlier was much more fierce. In early August, gross open positions on the futures market stood at more than 100 000 contracts for the month of August, and there were three trading days when the number of contracts rose by 10 000 contracts. Compared to October last year when the physical market was 10 times more active than July and August last this year, the gross open positions on the futures market was only 70%. Such a proportion totally defied explanation. During the first two weeks of August, there were widespread rumours that Renminbi might be devalued. Despite repeated denials by mainland officials, there were still people who took these remarks arbitrarily and added their own interpretations and helped to spread the rumour. On the other hand, the local printed media published reports on the impending break of the Hong Kong dollar peg. The market rumours and the numerous and large volume of unfavourable reports made by financial institutions on Hong Kong and the Hong Kong dollar had helped to add fuel to the fire. At the same time, there were no signs for the Japanese position to turn for the better. In such a bad time, the Government therefore decided to intervene.

Most of the Members have in their speeches supported the Government's decision to enter the market at such an emergency situation in mid-August in order to restore market order. The Financial Secretary reiterated on many occasions that he had weighed all the adverse effects of intervention on the territory and its relationship with the overseas markets. He made such a difficult decision in accordance with the duties and responsibilities vested in him by law. According to our estimates at that time, the grave effect that would ensue if we do not enter the market would be that the interest rate for the Hong Kong dollar would rocket to 50% in the third week of August and would stay at a level of 20% to 30% in the long term. The futures index would drop a further 2 000 to 3 000 points and property prices would have bear a pressure to revise downwards. The pressure on the banking and overall economic systems would be unpredictable. The final result would be, as a Member has suggested, a complete erosion of confidence among the public and a panic sale of their Hong Kong dollar assets. Therefore, even if we had to pay the cost of sacrificing a substantial part of our international reputation, we had no choice but to intervene the market. We know that we have to pay prices for the market entry decision, and so in an attempt to restore investor confidence, the Chief Executive as well as other financial and monetary officials would try their best to explain the Government's move both locally and overseas in a bid to minimize the adverse effects caused by this move to intervene.

Some Members said earlier that if we could maintain a most clean, orderly and substantial market, investors would surely come back in the long run. The objective of our market intervention is to keep market manipulators away from controlling our monetary, stocks and futures markets and take our money as they so wish. We are not afraid of the pains of economic adjustment, but we must make a staunch defence against the attacks on Hong Kong at a time when the territory is in difficult times. We have repeatedly emphasized that the aim of government intervention is not to shore up the market, nor to defend the Hang Seng Index and keep it at a certain level. We are also not penalizing or rejecting foreign investors from any particular country or place. As soon as the market riggers have gone, there is no need for us to intervene any more and we can go away in an orderly manner. In fact, after 28 August, the Hong Kong Monetary Authority (HKMA) had ceased its activities in the stocks and futures markets and the Financial Secretary said that an independent organization would be set up to manage these assets.

In order to strengthen the institutions and order in the market, and to reduce the chances of Hong Kong coming under further attacks and the need for intervention, we have proposed a series of measures. These include the seven measures aiming at strengthening the linked exchange rate and a 30-point package to tighten the regulation of the stocks and futures markets and raising transparency. I will not repeat these points here. Since the HKMA announced the 37 measures last weekend, there are initial signs that these measures can effectively bolster confidence in the Hong Kong dollar in the banking sector. As for measures aimed at the stocks and futures markets, including some administrative measures, we will implement them as soon as possible. Some of these measures can only be implemented after legislation or legislative amendments and so we will introduce amendment bills to the Legislative Council as soon as possible and we hope to get the support of the Members in passing the bills. Some Members asked why such things were done so late and were not done earlier to reduce the need for future market intervention. I can only say that the new measures proposed are in fact nothing new and have already been suggested in the Report on Financial Market Review compiled in April. We have said that we would work hard to carry out these main principles but the progress has not been so satisfactory in some respects. There are some items which need tightening especially in this usual market situation. Some Members have used a very apt expression, "to act according to the needs of the times". There is a need to consider the adverse effects of the costs to be paid. And so we hope we can apply the right remedy to suit the case and will not do it excessively. We will review and revise these measures from time to time and adopt contingent measures to curb the speculative activities of the market attackers and manipulators. We would explain any new policies that we may have formulated to the Legislative Council and the public in order to make our operations remain highly transparent and to boost the confidence of the public and the investors. We are very pleased to hear the valuable advice raised by Members earlier and also other measures and on other related areas such as the Mandatory Provident Fund and so on. We would study all these and would humbly ask the academics and people in the relevant sectors for advice. We would react to the market situation promptly and flexibly and introduce proper measures in a responsible way. I wish to thank Members again for their support of our move and the measures we adopt to maintain market order.

Before I go on, I would like to mention one of the recommendations raised, that is, on the need or otherwise to study whether the Chief Executive should be empowered to give instructions directly to the two exchanges and the Hong Kong Securities Clearing Company Limited. Some Members are worried that this might lead to excessive power in the Government in the absence of any checks. The Financial Secretary has explained that in many areas the Chief Executive has been vested with certain residual powers by virtue of the law. In other countries, including the advanced countries in the West, they do have similar mechanisms in their markets. In fact the current securities legislation also provide for similar but indirect powers. I must emphasize that this power, once given, would definitely be exercised only in very urgent situations and in the face of adversity. The operations of the Government have always been highly transparent. It must meet the requirements of law and so there is no question of the absence of any checks.

In the meeting of the Legislative Council Panel on Financial Services held yesterday and in the estimates made by a Member in her speech, it was mentioned that the Exchange Fund might be left with only a very small amount of foreign exchange for similar uses in the future. That Member was worried. There were Members who asked whether the approval of the Legislative Council would have to be sought for a move to enter the market with the money from the Land Fund.

The Financial Secretary was very concerned about apprehensions in this aspect and he asked me to make a clarification. Although the Exchange Fund has a substantial amount of liability, including currency in circulation, and the fiscal reserves, bills and bonds of the Exchange Fund which the Government has put in, but that does not mean that the foreign currency assets used to back up these Hong Kong dollar liabilities cannot be used to defend the Hong Kong dollar, or cannot be used for market activities. For under the Exchange Fund Ordinance, all the assets in the Fund can be used for the defence of the Hong Kong dollar and the maintaining of the stability and integrity of the Hong Kong financial system. As at the end of July, the assets of the Exchange Fund in foreign currency amount to US$77.3 billion. As for the figures for end August, these will be released in due course. I have to point out also that if we sell US dollar in the foreign exchange market and buy in Hong Kong dollar, this will lead to the reduction of foreign currency assets in the Exchange Fund. But if we use Hong Kong dollar to buy assets in the form of stocks in the market, then there is no compelling need to use the foreign currency assets in the Exchange Fund. The foreign currency assets in the Land Fund are a vital component of the foreign exchange reserves of the Hong Kong Special Administrative Region. As at the end of July, there were US$18.6 billion foreign currency assets and 59.6 billion Hong Kong dollar assets. The Land Fund was set up as a result of a bill passed in July last year by the Provisional Legislative Council. The bill empowers the Financial Secretary to invest and manage the Land Fund. The Financial Secretary fully understands that in his responsibility to maintain the stability of the local monetary and financial systems, he has to ensure that any investment decision and change in the investment portfolio of the assets of the Exchange Fund will be compatible with this responsibility. He will continue to manage and invest this Fund in accordance with the overall interests of Hong Kong. As for the use of the Land Fund, since the bill does not make any provisions for the use of the Fund, and since it is a part of the fiscal reserves of the Government, so if the Financial Secretary decides to use it, such as in public expenditure, he will seek prior approval from the Legislative Council.

I wish to stress again and urge Honourable Members to rest assured that the Exchange Fund and the Land Fund are able to provide sufficient resources for the Government, defend the Hong Kong dollar and maintain the stability of the financial market. The move made the HKMA in August to buy stocks from the market was a change in the investment portfolio. It was not a move to spend or waste our reserves and will not adversely affect the HKMA's ability to maintain the stability of the monetary and financial systems, including the ability to make further moves in the market, if necessary.

Just now some Members pointed out in the debate that we needed to strictly control our internal operations so as to avoid any conflict of interest. This is completely in line with the announced moves of the Government. When all market manipulators are gone, even if we enjoy immunity under the law, we shall disclose the number of shares we hold to Honourable Members as well as the public. We shall also form an independent company under the Exchange Fund to manage these investments so as to prevent any conflict of interest. If necessary, we are happy to make reports to the Panel on Financial Affairs of the Legislative Council from time to time.

Moreover, some Members mentioned that the best way to defend the Hong Kong dollar would be to raise public expenditure artificially and by a large proportion, or in other words, artificially stimulate the economy. I agree that if our economy is strong and robust, it will naturally attract the inflow of foreign capital and prop up the exchange rate of the Hong Kong dollar. But I would like to make it clear that the market entry move is only a change in investment portfolio. The assets are still our own and we have not rashly squandered away more than $100 billion in two weeks. At this time of instability in the regional and global economies, the Hong Kong economy is expected to continue to be influenced by external factors. Therefore, without departing from our principle of prudent financial management, the Government has made full use of the permitted resources in this financial year to announce a series of measures aiming at relieving the hardship of the people and to stimulate the economy.

Conclusion

As seen from the above, I must point out in conclusion that the Government does not support the amendment moved by the Honourable Albert HO, principally because the amended motion calls for the Government to stop making market entry moves in the stocks and futures markets. I have explained earlier that the Government made this move to intervene only in very exceptional circumstances. Despite the initial positive reactions of the monetary and financial markets in the last few days to the suggestions and measures put forward by the Government, given the uncertainties in the external factors, and when there is no evidence that all market manipulators are gone, we shall not rashly make a pledge at this stage to stop using any moves that may prevent these things from happening again. As a responsible Government, we must be highly vigilant and keep a close watch of market activities as some Members have asked us to do so just now. For these market riggers are still prowling around, watching intensely every move we make and are ready to seize any opportunity that may come by to make an attack. The Government is very much in need of the support and co-operation of the Legislative Council to address this problem and to reduce the chances of these market riggers in spreading rumours. So I earnestly hope that the Legislative Council can support the bills we are about to introduce to put these initiatives into practice, in order that a strong and unified message can be sent to the public and investors abroad. Thank you, Madam President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the amendment moved by Mr Albert HO be made to Mr Bernard CHAN's motion. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr Albert HO rose to claim a division.

PRESIDENT (in Cantonese): Mr Albert HO has claimed a division. The division bell will ring for three minutes.

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Before I declare that the voting shall stop, Members may wish to check their votes. Are there any queries? If not, voting shall now stop.

PRESIDENT (in Cantonese): The result will now be displayed.

Functional Constituencies:

Mr Michael HO, Miss Margaret NG, Mr CHEUNG Man-kwong and Mr LAW Chi-kwong voted for the amendment.

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Dr Raymond HO, Mr LEE Kai-ming, Dr LUI Ming-wah, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr Bernard CHAN, Mr CHAN Wing-chan, Dr LEONG Che-hung, Mrs Sophie LEUNG, Dr Philip WONG, Mr WONG Yung-kan, Mr Howard YOUNG, Mr LAU Wong-fat and Mrs Miriam LAU voted against the amendment.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Mr LEUNG Yiu-chung, Dr YEUNG Sum, Miss Emily LAU, Mr Andrew CHENG and Mr SZETO Wah voted for the amendment.

Miss CHAN Yuen-han, Mr Gary CHENG, Mr Jasper TSANG, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr David CHU, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam, Mr YEUNG Yiu-chung, Mr Ambrose LAU and Miss CHOY So-yuk voted against the amendment.

THE PRESIDENT, Mrs Rita FAN, did not cast any vote.

THE PRESIDENT announced that among Members returned by functional constituencies, 24 were present, four were in favour of the amendment and 20 against it; while among Members returned by geographical constituencies through direct elections and by the Election Committee, 28 were present, 13 were in favour of the amendment and 14 against it. Since the question was not agreed by a majority vote of each of the two groups of Members present, she therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Mr Bernard CHAN, you may now reply. You have five minutes and 14 seconds out of your original 15 minutes.

MR BERNARD CHAN: My dear colleagues, please do not get me wrong. I am not here to speak for our Government. I would also like to make it clear that we are not talking about a war between George SOROS and Donald TSANG, but a war between international speculators and us as a whole. It would be easy to openly reprimand the officials, but more importantly, we should openly reprimand those who rob our properties for their own gain. I would also like to appeal to our officials for any policy conducive to public confidence. My request is here for our Honourable colleagues, too.

We have to face the fact that we are not Singaporeans ─ my wife is ─ or Koreans, who would hand over their valuables to save the country. We Hong Kong people are the most ready to pack our belongings and flee at times of crisis. International speculators know it well, too. I think it is the time to demonstrate to the international community a united front, at least in this Council.

I am afraid you can hardly find anything objectionable in my motion. Thus, it is up to us whether we would send a loud and clear message to the international speculators, or you might want to call them manipulators, if you wish, who are probably watching over us right now, through CNN or BBC ─ you name it. Are we prepared to let them see that we are not united? Or are we ready to adopt strategic and effective measures now to entrench the integrity of the market and the investors' confidence?

Thank you, Madam President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr Bernard CHAN, as printed on the Agenda, be approved. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

Mr Gary CHENG rose to claim a division.

PRESIDENT (in Cantonese): Mr Gary CHENG has claimed a division. The division bell will ring for three minutes.

PRESIDENT (in Cantonese): Will Members please proceed to vote?

PRESIDENT (in Cantonese): Before I declare the voting shall stop, Members may wish to check their votes. Are there any queries? If not, voting shall now stop.

PRESIDENT (in Cantonese): The result will now be displayed.

Functional Constituencies:

Mr Kenneth TING, Mr James TIEN, Mr Edward HO, Mr Michael HO, Dr Raymond HO, Mr LEE Kai-ming, Dr LUI Ming-wah, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr CHEUNG Man-kwong, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr Bernard CHAN, Mr CHAN Wing-chan, Dr LEONG Che-hung, Mrs Sophie LEUNG, Dr Philip WONG, Mr WONG Yung-kan, Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU and Mr LAW Chi-kwong voted for the motion.

Miss Margaret NG voted against the motion.

Geographical Constituencies and Election Committee:

Mr Albert HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss CHAN Yuen-han, Mr Gary CHENG, Mr Jasper TSANG, Dr YEUNG Sum, Mr LAU Kong-wah, Mr Andrew CHENG, Mr SZETO Wah, Mr TAM Yiu-chung, Mr David CHU, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam, Mr YEUNG Yiu-chung, Mr Ambrose LAU and Miss CHOY So-yuk voted for the motion.

Miss Christine LOH and Mr LEUNG Yiu-chung voted against the motion.

Miss Cyd HO, Mr LEE Cheuk-yan and Miss Emily LAU abstained.

THE PRESIDENT, Mrs Rita FAN, did not cast any vote.

THE PRESIDENT announced that among Members returned by functional constituencies, 24 were present, 23 were in favour of the motion and one against it; while among Members returned by geographical constituencies through direct elections and by the Election Committee, 28 were present, 22 were in favour of the motion, two against it and three abstained. Since the question was agreed by a majority vote of each of the two groups of Members present, she therefore declared that the motion was carried.

PRESIDENT (in Cantonese): Second motion: Urban Renewal. Mr James TO.

URBAN RENEWAL

MR JAMES TO (in Cantonese): Madam President, I move the motion standing in my name on the Agenda.

This is already the fifth time that I bring up for motion debate in the legislature the issue concerning redevelopment of private premises. Following repeated debates in the legislature, the Government finally decided to establish the Urban Renewal Authority (URA) to solve the problem arising from traditional reliance on private developers to make the decisions on redevelopment solely on the basis of commercial principles. On this occasion, I shall concentrate on a problem concerning the redevelopment of private premises that is still not properly solved ─ namely, the rehousing of tenants.

At present, cash compensation from the Land Development Corporation (LDC) or rehousing in rental public housing units by the Hong Kong Housing Society (HS) is the rehousing arrangement for tenants affected by LDC redevelopment. The role of the Housing Authority (HA) is to let affected tenants already wait-listed have rehousing in public housing units one year ahead of schedule. The HA has been trying to explain why it is unable to take care of tenants affected by redevelopment of private premises. The reason is that they cannot even solve properly the housing problems of households already registered on the General Waiting List and that of tenants affected by redevelopment of public housing blocks. So on the rehousing problems of tenants of private premises they are unable to be of any assistance.

It is for several reasons that I bring up the point that the HA should actually play a role in rehousing. Firstly, with the greatest number of rental public housing units in hand, the HA can provide more units for selection and is also more flexible. Secondly, as the LDC is about to be upgraded to be the URA, its role should centre on carrying out redevelopment projects. The HA and HS ought to assist in the relevant rehousing work. Thirdly, combined with the allocation of more land in the urban area by the Government, participation by the HA can improve the feasibility of urban renewal, and make its progress more smooth. We propose that the resources of the HA, LDC and HS be pooled together for utilization. For instance, private housing units developed by the LDC should be made available for application by public housing households; on the other hand, the HA should assign some units to rehouse tenants affected by LDC redevelopment. In this way, public housing households and tenants affected by redevelopment can have more choices. Redevelopment can then progress more smoothly and housing resources can be made use of more effectively.

In January this year, the LDC announced 26 projects of urban redevelopment. According to the decision then made, they can be completed by 2005 at the earliest. The LDC has conducted some freezing surveys and it is estimated that the projects will affect some 7 000 tenants/families. There will be some 20 000 people and more than 2 800 households. Options open to residents affected by redevelopment are cash compensation, rehousing in premises built by the LDC under the requirement to pay the premium and the cost of construction, and rehousing by the HS, which is also to be responsible for the management of those rental units. According to past LDC experience, 70% of tenants will opt for cash compensation, with only 30% opting for rehousing. However, we have noted from local surveys and observation that in fact many residents long for relatively long-term residences, and worry that compensation will eventually be insufficient as the rents of old premises are always on the increase. Yet the HS's rental units have become old premises and there are not many locations for selection. So many opt for cash compensation. This is in fact compulsion in disguise. Therefore, in reality, tenants affected by redevelopment have very strong demand for rehousing in rental units. To be upgraded to the URA, the LDC is going to take up heavier social responsibility, and there are going to be more projects too. I suggest that the Government allocate more urban land for the LDC and HA to pay for part of the premium and for the HA to take up the construction and to rehouse those affected tenants. On the other hand, as a certain level of co-operation, the LDC can also set aside some redeveloped private units for purchase by HA tenants. The Government should, as far as possible, allocate urban land and ask the HA to use that for the construction of public rental housing units, not Home Ownership Scheme (HOS) units that are for sale. Someone might query, seeking to know why tenants affected by LDC redevelopment should be allocated urban public housing units as families already wait-listed by the HA for allocation of public housing cannot apply for urban public housing units. The Democratic Party has always been adamant that tenants affected by urban redevelopment should be given rehousing in their original districts. As residents have already developed a network of community ties locally, this network will be damaged if they are required to move to places further away. In the long run, it is also to the disadvantage of community development as well as community support. Furthermore, for redevelopment projects of HA public housing blocks, there has been an established policy of rehousing the people in their original districts. So residents affected by redevelopment of private premises ought to be entitled to the same treatment.

There are also advantages in enhanced HA involvement in the rehousing of tenants affected by LDC redevelopment. At present, if affected tenants opt for rehousing, locations open to their selection are very limited. The reason is that the HS's public rental units and premises set aside for the rehousing of those tenants are limited. Some are in Western District. Some new units are located at Tsueng Kwan O, Ma On Shan and West Kowloon Reclamation. As the HA has more available units than the HS, it also has more location for tenants to choose. Moreover, with regard to the HA's public rental units, there are some policies based on compassionate grounds. The HS, generally speaking, has not got corresponding policies, such as those for households in hardship and overcrowded households. In the past, we strove to get the HS to have the same policies. However, according to the HS, they, with no financial support from the Government, were unable to adopt these measures. We therefore think that there is every advantage in getting the HA involved in rehousing.

In addition, the Government some time ago announced the development plan of south-eastern Kowloon, that is, the former Kai Tak Airport site, offering a total area of 580 hectares for potential development. Out of that, 40% has been earmarked for commercial and residential uses. The Government can set aside more land for the rehousing of tenants affected by redevelopment projects in districts like To Kwa Wan, Hung Hom, Yau Ma Tei, Tsim Sha Tsui, and Mongkok, thus making it possible for those redevelopment projects to progress smoothly, and giving those tenants more reasonable rehousing.

By the way, recently there have been some reports saying that LDC redevelopment projects are also being affected by the currently poor property market and that it might be necessary to review the schedules and details of some redevelopment projects. In my understanding, the LDC will carefully analyse the development value of those redevelopment projects by, for instance, sorting out projects that are potentially more profitable as well as projects that are likely to incur losses. Some buildings are so old that environmental improvement can be effected only through redevelopment. This is exactly the Government's purpose in setting up the URA. Even though the property market is now down, developers do not necessarily have much incentive to carry out redevelopment projects to erect buildings. However, the LDC (or the future URA) definitely cannot consider commercial principles only, but must carry out redevelopment on the basis of actual needs. If projects are to incur losses or are not viable commercially, the Government should still pump in money under the premise that redevelopment can significantly improve community environment. The Government and the LDC should not put emphasis on commercial benefits only and totally disregard benefits for the entire society, which are more extensive.

Madam President, for the factors given above, the HA has more experience than the HS in dealing with rehousing problems of redevelopment projects and the Housing Department already has established policies in respect of various complicated situations arising from the rehousing problems of redevelopment projects. The Democratic Party, therefore, considers that the HA should assist in rehousing tenants affected by redevelopment. Finally, I have to declare an interest in this connection. I am a member of the managing board of the LDC. With these remarks, I beg to move.

Mr James TO moved the following motion:

"That this Council urges the Housing Authority to take part in providing assistance in rehousing the tenants affected by the redevelopment projects of the Land Development Corporation or of the Urban Renewal Authority to be established in the future."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That this Council urges the Housing Authority to take part in providing assistance in rehousing the tenants affected by the redevelopment projects of the Land Development Corporation or of the Urban Renewal Authority to be established in the future.

We shall now proceed to the debate. Does any Member wish to speak? Dr Raymond HO.

DR RAYMOND HO (in Cantonese): Madam President, over the past year, because of the Asian financial turmoil, Hong Kong's economy has been badly hit, with property prices going down sharply and attention of the society consequently focused on the salvage of the property market. The weight attached to urban redevelopment has thus been greatly reduced. However, urban redevelopment is very important to the long-term growth of Hong Kong. It should not slow down because of the performance of the economic cycle. In addition to increasing the supply of premises in redeveloped districts, urban redevelopment also ensures that Hong Kong's urban environment can be improved, and frees the urban areas from the threats of dangerous buildings.

However, to those living in districts affected by urban redevelopment, rehousing and compensation are key factors for consideration. In the past, redevelopment projects always ran into brain-searching rehousing problems. To address this, the Government has allocated three pieces of land to the LDC and the HS for the rehousing of tenants affected by redevelopment projects. During the period when those new premises are under construction, the HS will use its existing rental units to rehouse tenants affected by LDC redevelopment projects.

Early this year, the LDC announced 26 redevelopment projects to be launched. According to the estimate then, some 10 000 families will be affected; with the exclusion of landlords, unqualified persons and those opting for cash compensation, rehousing units built by the LDC in co-operation with the HS will probably be sufficient for rehousing purposes. Even given that the estimate is correct, the HA, in my opinion, can still play a role in rehousing tenants affected by redevelopment projects of the LDC or the future Urban Renewal Authority (URA).

It is estimated that the above-mentioned redevelopment projects will take seven years. However, to materialize the objective of speeding up urban redevelopment, the LDC or the future URA must look for more redevelopment items in strategic areas of redevelopment. When such time comes, it is going to be questionable whether or not rehousing units built by the LDC in co-operation with the HS will be sufficient for rehousing purposes. If rehousing problems really crop up, the progress of redevelopment projects will be affected. So we have to prepare ahead, and consider the rehousing problem of affected tenants. Surely, arrangements of the HA in this respect can play a role.

Because of dilapidation on account of ageing, buildings in urban redevelopment areas generally offer poor living conditions. For reasons of economic consideration, many tenants just have no choice. In fact, the living conditions of these tenants do require our attention. Moreover, urban redevelopment is for public good. Those affected should be given reasonable rehousing if they are qualified. With the largest public housing resources in Hong Kong, the HA is in a position to act concertedly in connection with the rehousing of residents affected by urban redevelopment so as to make it easier to solve the rehousing problems arising from acquisition and speed up the redevelopment of old districts. Given the assistance from the HA, the relevant rehousing plans definitely will be more flexible than the present arrangements, and meet the requirements of households affected. It is equally important that we should not allow the tasks of the HA, which, including the work of building public housing blocks, are already quite heavy and pressing, to get bogged down on account of having to assist in the rehousing of residents affected by urban redevelopment.

I so submit. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Gary CHENG.

MR GARY CHENG (in Cantonese): Madam President, in his first policy address, the Chief Executive stressed that urban renewal was to enable all residents in Hong Kong to have a place to live and a decent living environment. According to data published by the Government, in the next decade, the percentage of private premises over 30 years old and requiring rebuilding in all private housing will increase from 20% to 40%. The 26 urban renewal projects as announced by the LDC earlier this year, as everybody knows, are intended to deal with the existing large number of dilapidated urban buildings that do not have adequate facilities nor meet new town planning requirements.

The present arrangements are for the LDC to do the planning, land acquisition and construction, while the HS acts as its agent to handle the rehousing of residents. As a fellow Member just mentioned, the above 26 redevelopment projects will involve over 10 400 households with a total of over 40 000 people. Though the HS was allocated three pieces of land by the Administration for rehousing purposes, and while we do not doubt, nor do we intend to doubt, the sincerity of the Administration, the Democratic Alliance for Betterment of Hong Kong (DAB) is greatly unhappy that the Government has focused only on solving the difficulties in land acquisition to the neglect of the long-existing rehousing problem. The existing vacant flats of the HS reserved for rehousing purposes are definitely not sufficient to satisfy the demand arising from the increased speed of redevelopment. There are only 20 rental housing estates under the HS, far less in number than those of the Housing Authority (HA). Furthermore, the choices available are too limited, and not to mention the fact that many of such flats are either too old or at inconvenient locations.

These 40 000 people affected will need on average 4 000 flats a year. If the new rehousing units built by the HS cannot be completed on time, how can its existing units be enough for the purpose? If construction work is delayed, the object of improving the living environment of the people as set down by the Chief Executive in his first policy address would be directly jeopardized. In fact, it is believed that the HS does have its own problems. If the issue of rehousing the people displaced by redevelopment is to be really dealt with, I think that the HA should be urged to fully utilize the existing resources. In the past, the Administration seemed to have evaded involving the HA in redevelopment, the reason being that the job of the HA was to take care of society's demand for public housing. As a matter of fact, how can we regard tenants affected by redevelopment projects as foreign and exclude them from the community group that needs public housing? They also yearn for public housing, in particular tenants in old style buildings who are mostly people of the low-income group. How can the rent for a board-partitioned room be lower than that of a public housing unit?

The most popular saying naturally is that to let them have priority in allocation of public housing would amount to "queue jumping", and would be unfair to those people on the public housing waiting list. However, we must remember, those on the waiting list are also tenants of private buildings. What is more, those on the waiting list applied on their own volition, while the tenants affected by redevelopment would not necessarily have made such applications. They do so only as a result of the Government's town planning needs. So they should receive better attention. Therefore, while being also tenants living in unsatisfactory dwellings, they should naturally be rehoused as soon as possible. What is more, tenants not meeting the criteria for housing allocation, such as new immigrants, could also be accommodated in interim housing units.

The tenants affected by the redevelopment of the seven streets in Tsuen Wan recently wrote to Members of the Legislative Council to express their dissatisfaction at the LDC for using balloting in rehousing which resulted in most of them relocated to remote places. Some old people who have lived and therefore "grown roots" in the old areas would encounter great difficulties in adaptation and maintaining their original social network when forced to leave their familiar neighbourhood and friends and move to remote areas. In the face of inadequate resources of the HS, these are basically problems without any solution. What makes the matter worse is that the HS does not have singleton public housing units which are in great demand by elderly single persons in the redevelopment areas. Actually, many of the single elderly in old areas have been compelled to live together in a stressed way, resulting in the inevitable conflicts. Examples are numerous. If the HA can supply suitable singleton units, this could make up for the inadequacy of the HS. Therefore to urge the HA to actively participate in the rehousing programme of urban renewal projects will make the best use of the resources of both the HA and the HS. This would provide a satisfactory solution to the rehousing problem and would go a long way to help achieve the object of speeding up redevelopment and improving living environment.

With this remarks, I support the motion of Mr James TO on behalf of the DAB.

PRESIDENT (in Cantonese): Mr Edward HO.

MR EDWARD HO (in Cantonese): Madam President, the issue of effectively carrying out urban renewal and the consequent rehousing of affected residents was debated many times by the former Legislative Council. The position of the Liberal Party has consistently been to support speeding up the renewal of old areas through effective laws and administrative measures so as to improve the living environment of the people and to enhance the economic effectiveness of the land. At the same time, the Liberal Party also supports giving reasonable compensation to the affected tenants and same-area rehousing as far as possible.

Many Members have mentioned that the LDC would in the next seven years carry out 26 redevelopment projects in 10 districts in the territory with an estimated number of about 10 000 affected households, a total of over 38 000 people, of whom 70% are tenants. While we welcome quicker urban renewal, we must seek satisfactory rehousing for the thousands of people so affected.

Though the Administration has made available to the LCD three pieces of land for the construction of over 2 000 units for the rehousing purpose. But are these 2 000 units adequate to meet the need of the 10 000 affected families? Even if the LCD could ask for more land from the Government, can rehousing be then timely provided to this group of affected residents?

The Liberal Party thinks that as the HA is responsible for the construction and allocation of most of public housing in Hong Kong, and has been offering immediate public housing to the people eligible for public housing who are affected by government clearance operations, though not to those in temporary housing areas, why do we not give the job of rehousing the people displaced in urban renewal directly to the HA, particularly as most of the people in old areas are qualified for public housing?

To avoid undermining the chance of people waiting to get public housing, the HA must build more public housing units as soon as possible so as to increase the general speed of offering public housing. To this end, I would like to suggest the following means.

Now that the prices of private residential housing have dropped by half from their peak last year, there is very much a need to review the various housing subsidy programmes originally designed to help the citizens buy their own property. We think that the so-called sandwich families with a monthly income from $30,001 to $60,000 can once again afford to buy their own property in the current market, and with the Home Starter Loan Scheme which is similar in nature, the Sandwich Class Housing Scheme could very well be scrapped, thereby freeing the land for the construction of Home Ownership Scheme (HOS) flats, while using some of the HOS land to build public housing. When the supply of public housing is greatly increased, the HA could then assign some of its flats for the exclusive purpose of rehousing the eligible tenants affected by redevelopment, without jeopardizing the interest of those on the public housing waiting list.

However, to prevent abuse of this system, the authorities concerned should, before the announcement of any redevelopment project, carry out surveys to "freeze" household eligibility so as to ascertain the status and number of residents affected by the proposed redevelopment.

If my proposal is adopted, land would no longer be a problem because the land required is already there. But the HA could still refuse to expedite the construction of public housing on grounds of insufficient resources. Let me tell the HA this: With the collapse of the property market, and the suspension of land sale by the Government for nine months, the workload of private consulting companies such as architect and engineering firms has drastically dropped, and they should have the adequate manpower resources to take part in public housing designing work. The HA surely needs not worry.

Madam President, the rehousing issue had in the past hampered the progress of urban renewal. As the Administration has demonstrated significant determination to speed up urban renewal, a sound corresponding rehousing programme should be worked out. I hope that the HA with its public housing portfolio would take the lead, increase public housing supply so as to effectively rehouse the tenants affected by redevelopment while not undermining the interest of other citizens.

With these remarks, I support the motion.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, old buildings are everywhere in Hong Kong. Individual old areas witness serious ageing of buildings and there are few community facilities. People passing through often lament that such old areas are urban eyesores, blemishing the good name of Hong Kong. Thus they pin great hopes on urban renewal. However, residents of the old areas are more ambivalent about redevelopment. On the one hand, they hope that redevelopment would help improve their living environment; on the other however, they fear that removal would lower their standard of living. This is because the so-called urban renewal in reality only turns an old area into a battlefield where people scramble for zones of influence and interests By the reckoning of the Government and developers, the residents are in a defensive position, and their right of residence and removal compensation are in no way adequately protected. In view of such lack of protection, urban renewal has brought heavy pressure on the grassroots citizens.

At present, private developers are not required to rehouse the affected tenants. When they fail to reach an agreement with the tenants over compensation, they would even resort to using some unlawful means to force the tenants to vacate the premises. In the old areas, many residents come from the bottom stratum of society, among them many are old people, new immigrants and singletons. They earn meagre wages, or even live off comprehensive social security assistance. They might be able to manage if they rent a board-partitioned room, a bed space or a "cockloft". With the compensation they receive, they will not be able to afford the rent for a unit in the same area after the redevelopment. Apart from the individual old and feeble or handicapped people, or social security assistance recipients who might be granted compassionate public housing, all other affected residents will have to seek alternative accommodation. Most of the old area residents are needy people, without rehousing and being unable to afford the high rent of private dwelling, they cannot but move to other yet to be redeveloped old areas. As a result, their living environment changes for the worse. After certain areas in Wan Chai were redeveloped, some of the elderly people affected even have to move to bedspace apartments, other have moved farther away. Among them, some have lost the previous community support, and traffic expenses have become their heavy burden. In the past, they could still change jobs, but now, they cannot even do so. Many of the residents of the seven streets in Tsuen Wan are facing similar pressure. Some of the tenants displaced in the urban renewal projects in the old areas in Tsuen Wan, To Kwa Wan, Yau Ma Tei and Wan Chai, as I just said, will eventually have to move to bedspace apartments, or to some even worse places.

The situation I have just described shows that urban renewal is greeted with mixed feelings by the people, depending on which group they belong to. And the underprivileged in the old areas are even hurt before they see any benefits. They are unable to enjoy the improvement of living environment brought about by urban renewal, but on the contrary, they will face more unsatisfactory living conditions after removal. The improvement to the environment as claimed by the Administration in fact creates a problem. Having said that, I agree that it is also true that dilapidated ancient buildings in the old areas pose health problems to their tenants and affect the city appearance. In many old areas, there are large numbers of buildings over 40 years old. Therefore, they should be redeveloped whether it is out of consideration for the safety and health of the residents, or for public interests. We accept that old areas need to be redeveloped, but this should be done through town planning and rebuilding, redeveloping the land in old areas, so as to reduce the problems now existing in all the old areas, to expand the living space, to improve the transport network and increase community facilities.

The Federation of Trade Unions (FTU) basically agrees with the redevelopment programme, but we must first look at the underprivileged who are living in the old areas presently. Without a rehousing programme, the implementation of any redevelopment project will be very difficult. Take as an example the redevelopment of the six streets in To Kwa Wan which I am familiar with, it happened that the project was handled by the HS. But many old areas are not handled by the HS, then what can be done? For public housing estates, alternative accommodation in other estates can be arranged, but there is no such provision in urban renewal. So how can we solve the rehousing problems of the grassroots and the underprivileged? This is a point which the FTU was all along reminding the Government in the previous debates. How can the Government solve the problem of accommodation for the grassroots residents and the underprivileged when urban renewal projects are implemented? Therefore, we quite agree with the object of today's motion, that is, the HA, as the largest organization within the Government responsible for the housing needs of grassroots citizens, should be urged to take part in such projects. The LDC, the private developers and the HS alone cannot resolve the problems. Therefore, the HA should play a significant role in this respect. The Government is going to launch redevelopment projects in many districts; there will be large-scale ones in Tsuen Wan, Kwun Tong and Wan Chai. If it does not learn from previous problems experienced during the redevelopment in Tsuen Wan, Wan Chai, To Kwa Wan or Mongkok, but simply forges ahead with its existing major projects, I think that would be an irresponsible way of doing things, much to the detriment of the grassroots residents in the old areas. Therefore, we hope that, when old areas are redeveloped in the future, the Government would really improve the condition of the grassroots residents and the underprivileged living there, instead of putting them in an even poorer situation, such as moving into bedspace apartments, or worse, becoming homeless.

I very much hope that when the Government says it is prepared to change the environment in the old areas of Hong Kong, it should first restructure the whole framework for urban renewal, including placing the task of rehousing the grassroots citizens and the underprivileged in the hands of the HA.

With this remarks, Madam President, the FTU supports the motion of Mr James TO. Thank you.

PRESIDENT (in Cantonese): Miss CHOY So-yuk.

MISS CHOY SO-YUK (in Cantonese): Madam President, urban renewal is not simply pulling down old buildings and erecting new ones. There are other issues involving society and people, particularly the residents in the redevelopment areas. Most of them are low-income families, new immigrants or elderly people ─ a group in our community that needs special care. The Land Development Corporation (LDC) should launch its urban renewal projects in a spirit that emphasizes the human factor by improving the living environment of the residents. It should also honour its long-time promise that no one will be rendered homeless in urban renewal.

In the past decade, the LDC did expend huge resources to purchase property on the market or to build residential units to rehouse the residents affected. With a reducing number of redevelopment projects with commercial value, the resources available for the rehousing of affected residents have correspondingly become scarce.

The problem of ageing urban areas has reached a very serious stage. In his policy address last October, Mr TUNG Chee-hwa, the Chief Executive, pointed out that in the coming decade, the number of private buildings over 30 years old would double, from the present 20% to 40%, and most of them either were in extreme disrepair or lacked facilities. On the other hand, the redevelopment strategy study conducted by the LDC in 90 major old areas in Hong Kong has identified 500-odd priority redevelopment projects, involving about 3 800 buildings and 46 000 families. There must be a comprehensive rehousing strategy in redeveloping these old areas and taking care of the needs of the residents to be affected.

The responsibility of rehousing the residents in the redevelopment areas should not be, and cannot possibly be, placed on the LDC alone, nor is it the duty of the future Urban Renewal Authority. This is in fact a social responsibility, that should be co-ordinated, planned and shouldered by the SAR government.

I think that the rehousing of the residents affected can mainly be undertaken by the Housing Authority (HA), to be supported by the government offering favourable terms to encourage those residents who can afford it to purchase their own property. The specific way could be to subject the residents in redevelopment to a means test of family income and assets: those found eligible for public housing will be provided low-rent public housing units in the various areas in Kowloon and on Hong Kong Island; those whose family income and assets exceed the ceiling for public housing eligibility should be allowed priority in buying Home Ownership Scheme flats, in applying for Home Starter Loan Scheme loans or housing loans. The merit of this method is that it can avoid an indiscriminate approach on the one hand and effectively solve the rehousing problem of the residents of redevelopment areas on the other, without undermining the principle of equity.

The proposed approach of mainly providing public housing, to be complemented by other favourable property purchase terms, for the affected residents should also have a mechanism to prevent "queue jumping", that is, to prevent people from obtaining temporary residence in redevelopment areas with a view to securing public housing or the favourable home purchase terms. Therefore, when registering the residents of redevelopment areas, it should be limited only to families that have lived there for three years or above before the registration.

The issue of ageing old areas are getting more serious by the day, and the main cause of the slow progress in urban renewal is the difficulty in rehousing. Therefore, the SAR Government should draw up a co-ordinated plan, and formulate a long-term comprehensive strategy to solve this problem. The HA is well placed, and has the responsibility, to play a major role. Moreover, the favourable terms to be offered by the Government will, incidentally, serve to stabilize the property market to a certain extent.

With these remarks, Madam President, I support the motion of Mr James TO.

PRESIDENT (in Cantonese): Mr TAM Yiu-chung.

MR TAM YIU-CHUNG (in Cantonese): Madam President, the Democratic Alliance for Betterment of Hong Kong (DAB) moved a motion towards the end of last year to urge the Government to set up an Urban Renewal Authority at an early date and to join hands with the HA and the Housing Society (HS) to properly rehouse the tenants in redevelopment areas. Now that the old matter is talked about anew, it is evident that in the past one year, there was little progress in the effort of the Government in this respect.

Hong Kong is known as "the Pearl of the Orient". While we have many world-class magnificent buildings, we also have shockingly horrible living environment in old areas where the buildings are long in disrepair and living space crowded. Speeding up urban renewal to improve the quality of life of the residents is not only the aspiration of old area residents, but also the consensus of the community at large.

At present, the Government carries out urban renewal projects through the Land Development Corporation (LDC) in concerted effort with the HS and private developers. However, as the rehousing agent for the LDC, the HS often cannot provide sufficient number of units and choice of locations to meet the need of the affected residents who are thus left feeling quite helpless. On the question of resources, the HS cannot even meet the basic requirement of providing sufficient number of rehousing flats, not to mention for the time being the issue of local rehousing. In the redevelopment of the seven streets in Tsuen Wan, for example, there are over 1 500 affected families, excluding the number of single-member and two-member ones, and over 3 000 families according to the data compiled by residents' organizations, but the HS has only been able to offer 792 units in Kowloon and the New Territories by 1 September. Even if, as the HS estimated, only 60% of the families will opt for rehousing, the units it offers are still far from being sufficient to meet the requirement of the tenants. If 90% of the affected families opt for rehousing, as the results of the many surveys conducted by the residents' organizations have shown, it is utterly beyond the capacity of the HS.

Further, in respect of rehousing resources, the HS can only offer a pitiful number of local rehousing units. This thus impedes rehousing work. The LDC has on two occasions invited the residents to participate in a balloting to choose flats. On both occasions, only around 30 families turned out. Why was the response so unenthusiastic? There is only one reason: the number of units for local rehousing was extremely limited, only 109. With 3 000 families, irrespective of the balloting method, the results will not satisfy the residents. It is a mockery of balloting to have such a huge difference between the number of local units available and the number of affected families. As a matter of fact, the LDC did make some high-profile statements to the effect that there would only be one balloting, but that failed to attract the residents to take part. It is evident that rehousing resources are the key to the success or otherwise of the rehousing programme.

In the face of such predicaments, the Government does need to review the rehousing policy in urban renewal, and make the HA take part in offering units in more housing estates for the affected residents to choose. Only this is an effective way. The Government should also consider granting more land to the HS to build more housing estates, or ask the HA to set aside a portion of its existing public housing units for the rehousing of residents displaced by redevelopment.

Madam President, the projects to redevelop the seven streets in Tsuen Wan and the five in Kennedy Town have been delayed for 10 years. And more and more residents in old areas are constantly aspiring to improving their living environment. We hope that the Government would take positive measures to speed up the pace of redevelopment. With these remarks, I support the motion.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): Madam President, it can be said that a person's home is his or her root. When the home is demolished, the root is pulled out. Recently I have received complaints from quite a number of residents affected by clearance, and I can empathize with their worries. The residents of the seven streets in Tsuen Wan staged a petition outside this building this afternoon. They gave me a picture, and with your permission, Madam President, I hope to show it to this Council, because it is a picture drawn by some children. The picture tells that the children used to think that they had a bird nest, and they could be worry-free. But when they knew about the clearance, they used the words "calamity imminent", and then there appears the word "protest". Why do they feel calamity imminent? Because when their homes are demolished, a host of questions are bound to follow: Where will their future accommodation be? How to commute to and from work? What about the education of their children? How to arrange for taking the children to school and picking them up? What will the rental burden be? These will be the questions if they do not get local rehousing. Ultimately, they worry that they will become homeless, the bird nest dropping to the ground. I believe all this serves to express their worries. They fear that their buildings will be pulled down without satisfactory arrangements. If these worries cannot be allayed before the clearance, huge pressure would be felt by the families and the residents who, being helpless, would stand fast and fight, giving rise to scenes of police/citizen conflicts with the residents yelling, complaining while the police pulling, pushing and manhandling; all this may give people an impression that our society is in quite a chaotic state. I believe nobody will wish to witness such scenes. But if they do appear, it is only because there has not been suitable rehousing. I can only ask: Is this not government-induced rebellion? If we do not think carefully about the issue of rehousing, are we about to drive the residents to stage resistance? A case in point is the matter of the seven streets in Tsuen Wan. After many dialogues and discussions with those residents, I came to feel their indignation. I an worried that scenes of conflict might appear in the future.

Many Members just said that 10 000 families would need to be rehoused in the next seven years. Now the 800 Tsuen Wan families are not yet properly rehoused, I really cannot see how the 10 000 families can be rehoused in the future. Why have there not been any proper arrangements? The seven Tsuen Wan streets were declared a redevelopment area nine years ago and the Land Development Corporation (LDC) formally took over the development project in April 1997 and the task of rehousing was given to the Housing Society (HS). The HS claimed that local rehousing was impossible and would only offer units that would be available from time to time in various places in Kowloon and the New Territories to rehouse the affected families. Such units scatter over all places including Sai Kung, Sha Tin, Tseung Kwan O and To Kwa Wan. Less than 20% of the affected families would be able to get local rehousing. Such rehousing arrangements are often a cause of complaint, the main reason being, as far as I know, that the residents feel cheated. Therefore they are particularly angry. Firstly, why do they feel cheated? That is because the Housing Authority (HA) and the HS had many years ago promised to rehouse the residents of the seven streets in the Bo Shek Mansions and Tivoli Garden, only to change the use of the buildings later for profits. The second point that aroused the disapproval of the residents is that the LDC always claims that there are sufficient number of rehousing units. But they think such claims are all lies, all false statements. Why do they say so? That is because according to the information made available by the Planning, Environment and Lands Bureau, the total number of units at present ear-marked for rehousing purpose is only 506, most of which being small ones. There is definitely a mismatch. For four-member families, for example, there are only 45 rehousing units, which cannot possibly meet the need of the estimated 200 families in this category. Then how can rehousing be done? The need can certainly not be met. The astuteness of the LDC lies in claiming to have an adequate supply of units, all the while fully aware that the need cannot be met. I think that the corporation is playing it rough. What is its dirty trick? That is the offer by ballot of remote units to the residents, who naturally declined. The residents so declining has been taken as the solution to the issue, and the LDC can claim that there are sufficient units. The problem we are now facing is whether such a means should be used to solve a problem. That the residents have greatly disapproved of the balloting because it is only a matter of luck. What is more, the balloting was arranged for batches of residents, with the first batch having the widest range of choice, and the last batch, with little choice, could not but give up. The LDC in the aftermath then claimed that sufficient units were offered. Is this fair? We feel that the Government should intervene if the LDC, naturally with the HS playing a part, uses such dirty tricks to go through the motions of discharging its rehousing responsibility.

There are only two solutions to the problem before us: one is to ask the HA to take part, the other is to ask the Government to allocate sufficient resources to rehouse the affected tenants, to look for newly-completed units to offer them local rehousing. If such units are not available, could the HA assist these residents in obtaining the right to rehousing? The case of the seven streets is the same as the questions raised by the kai-fongs of the five streets in Western District. That is to say, the LDC has used the same "dirty trick".

Lastly, I hope that the Government would not create police/public conflicts, not to let chaos emerge in society. I believe that social instability could result from the problems I have just discussed. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Fred LI.

MR FRED LI (in Cantonese): Madam President, in my geographical constituency, Yue Man Square in the town centre of Kwun Tong is among the 26 urban renewal projects announced earlier this year by the LDC, and it is also the largest one. Today, I wish to talk about the practical issues given rise by the planned LDC redevelopment of Yue Man Square, thereby arguing for the need for the HA to take part in urban renewal projects.

The redevelopment of Yue Man Square is not a new concept. The LDC had put forward the plan to redevelop the town centre of Kwun Tong as early as in 1990. In the past eight years, the LDC tried to used various means to persuade the Government and the community to support the redevelopment plan. However, all discussions came to naught because of issues involving compensation, rehousing and land use.

Therefore, the complications involved in each redevelopment project are not what the LDC has said in public, nor are they simply "pulling down buildings, and rehousing the affected" as people think. If the redevelopment projects of the LDC could be completed with some complications, it would be highly successful, because there are normally a great many complexities.

Madam President, to understand the complexities involved in redevelopment, one has first to understand the characteristics of the population in old urban areas, such as rooftop squatter huts in old buildings, ageing population, the complicated system of sub-letting, "black households", large number of new immigrants and the high mobility of the residents. And what we are all concerned about is the issue of properly rehousing the affected residents.

Though the LDC could use registrations to "freeze" the eligible population, enabling the residents of the buildings involved to get a chance of rehousing, the mobility of the people in old buildings is beyond anybody's control. Even after the population has been "frozen", there are bound to be more "third-line sub-tenants" or "fourth-line sub-tenants", or even residents who simply install themselves on the rooftops. Some people, fully aware that they have not the least chance of getting rehousing or compensation, would still "give it a go", hoping against hope that they would eventually get a rehousing place.

It can be said that when estimating the number of rehousing units required for its 26 redevelopment projects, the LDC certainly could not have included these residents who are not qualified as people affected by redevelopment, those who we call "black households". If such "black households" eventually become homeless, the Social Welfare Department and the Housing Department would have to provide them with temporary accommodation or interim housing.

In any case, redevelopment projects of the LDC will sooner or later involve the HA, so it would be better for the HA to directly play a part to assist in urban renewal.

The advantage of involving the HA directly in urban renewal projects does not stop in handling the issue of the "black households", thus reducing unnecessary waste in manpower and administrative procedures; the most important thing is that the HA has many years' experience in rebuilding public housing blocks, clearing temporary housing and squatter huts, with a set of specific policies and rules. On the contrary, the HS does not have a corresponding policy for rebuilding and rehousing. So the HA obviously is more experienced and has greater flexibility than the HS.

What is more, as many among the residents in old areas are elderly people who have long formed fixed living habits in the area, if only the HS is to receive the affected residents, with its limited locations available for rehousing purposes, such elderly people are bound to be removed to places far away from their original neighbourhood, creating greater hardship for them in their lives and in adapting to their new environment.

The Democratic Party has all along stressed that any residents affected by redevelopment should be offered local rehousing. With housing estates in all parts of Hong Kong and with more vacant units than the HS has, the HA, if it gets involved and offers its assistance in redevelopment, will give a greater choice of rehousing units to the affected residents. It will certainly understand the need of the residents, and at least let the elderly people so affected have a chance of getting local rehousing.

I believe that with the HA helping the LDC and even participating in the future Urban Renewal Authority, public housing resources will be more effectively applied to areas of need, and the redevelopment work will at the same time be promoted. With its more than $10 billion surpluses, the HA absolutely has the capacity to bear any extra expenditure resulting from involvement in redevelopment projects.

With these remarks, Madam President, I support the motion of Mr James TO.

PRESIDENT (in Cantonese): Mrs Selina CHOW.

MRS SELINA CHOW (in Cantonese): Madam President, Mr Edward HO has earlier said that the Liberal Party supports the motion moved by Mr James TO today. That notwithstanding, there are, strictly speaking, a lot of complicated issues behind this motion. We can urge the HA to take part in rehousing the residents affected by redevelopment projects, but can the HA make its decisions alone? Or does it wish to do so alone? The answer is of course in the negative. This is basically one link in the whole body of a major policy which is urban renewal. The thing we have to sort out is, whether, in the eyes of the whole Government (not from the perspective of the HA because the issue has nothing to do with them), or even in the eyes of the Housing Bureau, urban renewal, among the numerous social policies, should be given priority; or more importantly, whether it is something judged to have to be resolved quickly. The answer is also in the negative. The reason is that this is something to be considered by the Planning, Environment and Lands Bureau (PELB). To the PELB, housing is not their concern. So what we are facing is a basic and structural problem of the Hong Kong Government. The effect of this problem on some major policies often give rise to delaying tactics, with the ball being thrown among various departments. It is today finally in the court of the HA which would look at it from its own quite subjective point of view. The HA is not to be blamed, what has redevelopment to do with the HA? It is utterly nothing of their concern.

As Mr TO's motion involves the HA, I sought its views. They said that the Land Development Corporation (LDC) and private developers when proceeding with urban renewal projects would, in line with prudent commercial principles, offer some more flexible and more favourable rehousing options for the affected residents to choose (and that is to say, this has nothing to do with the HA); and that the HA really could not spare any extra resources to assist in the rehousing of the citizens affected by urban renewal projects. Very simply put, in the HA's view, it being an agent of the Government, such extra resources should be used for the rehousing of residents displaced by government resumption of land for public development purposes; they are in no way related to the work of the LDC. This exactly highlights a very important and fundamental problem. While being parts of the same Government, two policy bureaus would push things around in the event something big arises that involves the two of them. When an even more remotely related organization (in this case, the HA) is also involved, they would think that the matter concerns them even less. At such a time, no matter how vocal our request, plea is on the Government, how do you think the HA will catch this ball? Basically, we naturally have to keep putting forth such a request. I am glad to see that the Secretary of Housing is now in this Chamber, he is certainly listening to our loud discussion of this problem. But can he convince Mr Bowen LEUNG to agree with the significance of this problem? Even if he could, can he then persuade the Executive Council to instruct the HA to handle it? It is really hard to say. Anyway, we do hope to be able to convince every party concerned. We do our best to exert our pressure, and they make their best effort.

Nevertheless, it is strange that the HA, while claiming that this matter was outside their jurisdiction, had said the following: "If the people affected by urban renewal projects are eligible applicants on the public housing waiting list and will be allocated units within the next 12 months, they could be given early public housing allocation in accordance with the advance allocation system of the HA." These words seem to bring some hope, some light down the tunnel. However, for fairness' sake, I must not mention the LDC because the LDC is not related to them. Apart from those to be undertaken by the LDC, there are many other redevelopment projects. I do not know how many ─ particularly in the present market condition, ─ how many people are still interested in redevelopment. The issue is whether the Housing Bureau needs to review if this policy suits the present economic climate. We all see the magnitude of the LDC's programmes, they are all well argued and planned. But in the face of the present market situation, how many developers would, with their commercial principles, set aside huge sums of money to rehouse the affected residents, as generous as they used to be in past? Even rehousing can be arranged, we all know the LDC mentality (Mr TO knows best), which very much prefers the residents to opt for compensation, in that way, the slate is wiped clean, and there will not be any further responsibility. In fact, the Housing Society does not have the capacity to rehouse that many affected residents. Therefore, the Government needs to conduct a thorough review of the whole policy, for the matter should not be settled by simply paying some cash compensation. That is bad for social stability. The Government should start with rehousing, build more public housing units and place the matter into the portfolio of the HA.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr LEUNG Yiu-chung.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, although I support Mr James TO's motion, I think that the theme of the motion is quite passive in that it cannot get to the root of the problem. As Mrs Selina CHOW just said, even if the HA was willing to catch the ball, it is, as we all know, under enormous constraints. Apart from the 150 000 applicants on its waiting list awaiting housing allocation, the HA is in fact unable to solve its own redevelopment problems. We have seen many of the residents affected by HA redevelopment projects incessantly requesting the HA to increase their living space allocation, or reasonably asking for some not so old units to accommodate residents of temporary housing areas or squatter huts. If we ask the HA to catch this additional ball today, we are only putting another burden on the Authority, placing huge pressure on the HA which should otherwise be solving its own problems. The problem in point is still not solved. The point is how the issue of urban renewal should be resolved. I quite agree with the view of Mrs CHOW that the issue could not be resolved by sheer pressure. If we do not consider the housing policy in its entirety, there is no way that we can solve the problem.

Now that the Secretary for Housing is with us, I wish to ask him if it has ever occurred to him that the entire housing programme of Hong Kong is in fact quite a failure. I do not see any long-term housing strategy of the Hong Kong Government aiming at solving all the problems, such as the ways to develop and the ways to handle various issues. I only see that over the matter of accommodation problems, the Government merely tackles whatever thrown in its way. There is basically no policy, and the issue is being handled in an arbitrary way. The only clear objective I have ever seen is the 70% home ownership rate promoted by the Chief Executive in his policy address. Apart from this strong and definite objective, I have seen none other. The first sentence in the booklet entitled "Long-Term Housing Strategy" says the main task is to encourage the citizens of Hong Kong to buy their own homes. I am puzzled, if the citizens have to buy their homes, why do they need encouragement from the Government? When they can afford to purchase their own homes, they definitely do not need government encouragement. The point is that they may not have the means to do so. The government objective often claims to encourage the people to buy their homes, but there are ensuing complications. The Housing Society is a case in point. It is not that it has no units available, but such units are for sale only and not rental ones. Thus those who need rental units are unable to get accommodation. The case in Tsuen Wan, as cited by Mr LEE Cheuk-yan, has most clearly demonstrated the problem. Some buildings originally designated as rental buildings were eventually sold, as a result, some citizens who thought they would get local rehousing were disappointed.

I think that another important point in solving the urban renewal problem is whether we shall maintain the objective of continuously encouraging citizens to buy their own homes, and of selling housing units non-stop. If the original intention of our objective is to let everybody have reasonable accommodation, then I would think there will be a big difference in the nature of the policy. For example, if we want to have a huge supply of rental housing, the Government will have to change the use of the land designated for buildings for sale for the construction of more rental flats. This will go a long way in helping the grassroots, particularly residents affected by urban renewal projects, according them a better chance of moving into rental units rather than, as some Members have just suggested, becoming homeless. This would also avoid turning the hopes brought by redevelopment into eventual disappointment.

On this subject today, I have no choice but to support Mr TO's motion. In my opinion, the most correct approach is to make the Government change its attitude, so that instead of encouraging the citizens to buy their own homes, emphasis can be put on the needs of grassroots citizens for a decent living environment, mainly in rental housing, and then to make available more land for construction of rental housing. Only by so doing can the problem be solved. At the same time, I feel that in order to solve these problems properly in the long term, the Government needs to establish a special organization under its direct command to handle all rehousing matters arising from redevelopment. Otherwise, I very much worry that the problems will still be pushed around and given piecemeal attention, as they now are, failing a complete solution of the housing problems currently confronting society.

Again the present question under discussion, as I mentioned earlier, my worst fear today is that now we urge the HA to take up the task and if the HA really agrees to do so, the HA might eventually fail to give equal and fair attention to all matters. A similar situation has happened in the case of Kwun Lung Lau. Some households of Kwun Lung Lau not wishing to live in the less than satisfactory units there were placed in public housing estates by the HA, thus affecting those people who are waiting for public housing units. This is my greatest worry. Naturally, I hope that when the HA agrees to assume this new task as urged by this motion, this would not happen, and instead the HA could force the Government to provide more land for public housing construction so that more people can live in rental units.

Madam President, I so submit.

PRESIDENT (in Cantonese): Mr LEE Wing-tat.

MR LEE WING-TAT (in Cantonese): Madam President, Mr James TO has already elaborated the stand of the Democratic Party in regard to urban renewal projects. I would focus on a number of points only.

First, I feel that the problem with urban renewal basically involves the amount of land resources the Government is prepared to throw in. When the Land Development Corporation (LDC) was established in the '80s, the Government only extended to it a $1 billion loan. It was only two years ago that a related plan was implemented with the Government making available land resources to help rehouse the tenants concerned. I fail to see how such an approach of sort of making profits with no investments, or making huge profits with small investments, can meet the demands of the tenants. As a matter of fact, as many Members have already mentioned, we have two systems in our society. In the case of residents of Housing Authority (HA) estates, they can get local rehousing; though the allocation is still by ballot, about 110 households have to compete for 100 units. The Housing Society (HS) does not arrange for local rehousing and only about 20 in 100 households can take part in the balloting. So luck depends on whether they happen to live in HA estates or in private buildings to be redeveloped by the LDC. In the same society, why does the Government have such an inequitable policy and why is it treating differently these two groups of people who have the same housing needs? It just defies comprehension.

Some people or the Government might think that if we ask the HA to help the LDC with the rehousing task in urban renewal projects, two problems will arise. One, this will lengthen the waiting time for those on the waiting list; two, it will result in queue jumping. I have had lengthy discussions about these problems with my colleagues in the Democratic Party, and we would propose a formula that could hopefully contain the adverse effects to the minimum. We think that the HA and the HS could use a model of combined use of rental units to handle these problems. I suggest this be done in four steps.

The first step is for the Government to estimate the number of rehousing rental units required for the future urban renewal projects, particularly those undertaken by the LDC; 10 000 rental units in the next five years for rehousing purposes, for example. The second step is for the Government to convert these 10 000 required units into land resources, and grant these resources to the HA. The third step is for the HA to construct new rental units on such land additional to those designated for applicants on the waiting list. The fourth step is for the HA to assign an equal number of old units, that is, about 10 000, along the urban periphery, such as Tsuen Wan, Sham Shui Po, Wong Tai Sin, Kwun Tong, Ma On Shan, Kwai Chung or Island Eastern District and Southern District, for urban redevelopment purposes. If this model is adopted, the HA needs only to face the problem of extra commitment in the first two to three years, which I believe is 1 000-odd units per year. Then in the fourth year with the buildings on the additional land completed, the additional units set aside can be replaced. So the problem will be solved beginning with the fourth year.

Under the circumstances, the impact on the waiting list applicants will be minimal, because 14 000 units are used every year to serve the waiting list, and probably there will be eventually a yearly quota of 20 000 units for the families on the waiting list. I find it acceptable to hold up 1 000-odd units, particularly when it happens in the first two to three years only. After the third year, those on the waiting list will no longer be affected by the plan, so there will not be any question of queue jumping. This plan will roll over, that is, an estimation will be made every year of the housing needs for the next five years arising from urban renewal, and the Government then makes the land available for the HA to construct buildings. This method is familiar to Mr LAU of the Housing Department, and I do not need to explain such a rolling plan. I hope that this approach would alleviate the helplessness and worries of Mr LEUNG Yiu-chung, because people on the waiting list will only be affected in the first two to three years.

I think that the core of the problem lies in the question whether the Housing Bureau and the Government attach the same degree of importance to the rights and interests of people affected by urban renewal as to those affected by housing estate redevelopment. If different treatments have to be maintained, there is no question of this policy. The policy and views of the chairman of the HA, as she told the press recently, have made me worry a lot. She said for instance that in the total housing unit production in the future, only one quarter would be rental ones. This will not solve the present problem, nor can it handle the additional problems. The Government has up to this day not affirmed by way of a policy that the LDC is under obligation to satisfy the rental housing needs of the residents affected by urban renewal projects. This makes me worry very much. Even if this motion is carried in this Council, we still have to wait for the Urban Renewal Authority (URA), to be established later, to handle this problem. The URA is no god. Since securing the $1 billion loan from the Government in the '80s, the LDC has undertaken only several urban renewal projects. Though several pieces of land have been allocated for related projects, I do not see any major changes. However, we have already had seven debates in the Legislative Council over this issue, and the residents have been troubled for 10-odd years, yet there is still not a definite date when the problem can finally come to an end. The people on the waiting list no doubt have to wait for a long period of time, but at least they know that in eight years they need only to queue up for three years and will be allocated public housing units. Why is there such a difference in society? I do not understand it, particularly considering that the LDC is an organization established by the Government by statute, the same as the URA to be set up later. I hope that when the URA is established, it would not be some old thing taking on a new form. The principle is in fact very simple, and that is, do we have any plan to give extra land resources to meet the housing needs of those people? Do we have a broad mind? Is the HA, with its relatively more ample resources and housing units in all the districts, willing to take up the responsibility? I am a member of the HA and I support this approach.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr NG Leung-sing.

MR NG LEUNG-SING (in Cantonese): Madam President, according to Government's Policy Paper on Hong Kong Urban Renewal, the LDC is responsible for rehousing the tenants affected by urban renewal projects who choose alternative housing, and also for paying cash compensation to those choosing to receive such. In matters of rehousing, the Housing Society (HS) will act as an executive agent of the LDC. The policy has stipulated that the HS will provide the housing units to meet the need of those affected by the redevelopment projects now being undertaken. Under these existing arrangements, the LDC has the responsibility to resolve the problem of rehousing the affected tenants, so that nobody will be made homeless by urban renewal. At present, the pace of urban renewal needs to be quickened, therefore the supply of rehousing units must also correspondingly increase in future. In this respect, I think the Government can consider making early release of land to the HS so as to increase the supply.

As to the suggestion that the HA should take part in assisting the affected tenants, I hold a different view. I believe that anything involving the distribution of housing resources under the HA must be dealt with according to the principle of fairness. There are over 100 000 households on the public housing waiting list, each of them faces its own accommodation hardships. On the other hand, the HA has made a commitment to shorten the waiting time. If the HA has to also take care of the tenants affected by redevelopment who may have incomes over the ceiling set by the HA and may demand quick rehousing, bearing in mind the limited public housing resources in Hong Kong, as Members of the Legislative Council, we must strike an overall and prudent balance between such demands and the demands of the people on the public housing waiting list. Otherwise, we might be criticized by certain sectors of the community for being unfair. The dilemma we face is that both groups are members of society.

Furthermore, urban renewal improves the overall living environment of Hong Kong, and all Hong Kong citizens will eventually be benefited, including those in old areas. In the interest of the public, it is worth our every effort to encourage the residents in the redevelopment areas to reach an agreement for reasonable rehousing or other arrangements with the parties concerned so as to avoid unnecessary haggling or delay. Delays will undermine the attempt to improve the urban environment. It is more noteworthy that prolonged bargaining might be counter-productive: a downturn in the property market might lead to less favourable terms or even loss and result in some of the residents who originally did not need to be rehoused with public resources requiring rehousing.

Madam President, I so submit.

PRESIDENT (in Cantonese): Does any Member wish to speak?

(No Member indicated to speak)

PRESIDENT (in Cantonese): Secretary for Housing.

SECRETARY FOR HOUSING (in Cantonese): Madam President, one important policy of the Government of the Special Administrative Region (SAR) is to quicken the pace of urban renewal to improve the living environment of the local residents and facilitate the rezoning of the older parts of the urban areas, as well as to provide more community facilities.

Urban renewal should in fact be the responsibility of my colleague, the Secretary for Planning, environment and Lands; however, since the motion today focuses on the role that the Housing Authority (HA) could play in regard to urban renewal, I will be speaking for the Government on the matter.

First of all, I should like to thank Honourable Members for the views they have expressed in respect of the rehousing arrangement for tenants affected by the renewal projects. In this connection, the Land Development Corporation (LDC) has completed 15 renewal projects since its establishment in 1988. Of course, some Members have found this progress too slow and indicated that the major reason behind the slow progress should be the difficulties encountered in the course of rehousing the affected tenants. It is undeniably true that the proper rehousing arrangement for the affected tenants is a very important part of the urban renewal policy as well as one of the most difficult tasks involved.

The Government set up last year a working group to conduct a comprehensive review on urban renewal. The review is now near completion. If large scale urban renewal projects are to be implemented at a quickened pace, the interests of a large number of private property owners, commercial tenants, as well as residential tenants would certainly be affected and must be taken care of, and the Government will then incur huge expenditure in terms of land and other resources.

To the HA, urban renewal is a project it has never participated in before; as such, it needs to consider the matter very cautiously. I wish to remind honourable Members that the first and foremost tasks of the HA should be:

(i) To provide rental public housing for the needy so as to help them solve their accommodation problems.

(ii) To implement the Home Ownership Scheme, Home Purchase Loan Scheme, as well as the Tenants Purchase Scheme to help members of the public to fulfil their wishes of buying their own homes.

(iii) To rebuild the old public housing estates and to rehouse the affected tenants so as to improve their living environment.

As a matter of fact, the HA has been taking care of the accommodation needs of more than half of the local population; the amount of land and other resources involved is therefore rather enormous. From the tasks I referred to just now, we could see that the responsibilities shouldered by the HA are quite heavy. What is more, the HA has to meet a number of important commitments in the next few years, since the demand for public housing is expected to be very tight then. These commitments are:

(i) To provide adequate supply of rental public housing with a view to shortening the average waiting time for public housing from six and a half years to three years.

(ii) To rehouse the tenants affected by the demolition of the old temporary housing areas and the cottage areas in the next two years.

(iii) To provide rehousing for squatters who are required to move as a result of the implementation of certain public development projects in the next five years.

In view of the aforementioned circumstances, the HA really could not afford to take part in providing assistance in rehousing the tenants affected by urban renewal projects at this stage or in the near future.

Although the HA could not take part directly in providing rehousing for the affected tenants, it could still provide assistance through the amended particulars of the "Anticipatory Rehousing Scheme". As referred to by certain Members just now, for those applicants on the Waiting List who are required to move by the redevelopment projects, if they are scheduled to be allocated public housing within the next 12 months, they will be allotted priority in rehousing. This is certainly an improvement.

As regards the question of whether or not the HA is capable of providing assistance in rehousing the tenants affected by urban renewal projects in the long run, I think this is certainly a subject we should look into carefully. Nevertheless, we must take into account the following two major principles: first, the existing work of HA should not be affected; and second, the commitments HA needs to meet in the coming few years must not be affected.

In addition, the Government should also study very carefully the various complications involved with the HA's direct participation in urban renewal projects. Perhaps I could cite a number of cases as examples now. To begin with, the HA has all along been providing rehousing for eligible tenants only, if it is to provide assistance in rehousing the tenants affected by urban renewal projects, for the sake of fairness, the affected tenants should comply with the requirements set out by the HA for public housing. Besides, the HA is now drafting rules and regulations regarding the income and means test for applicants on the Waiting List. These rules and regulations should also be applicable to the said affected tenants. But will they accept these rules and regulations?

Second, we will of course need to look for ways to avoid causing any unfairness to the applicants on the Waiting List as a result of rehousing the tenants affected by urban renewal projects. As Members have referred to the need earlier on, I am sure they should have their insights. Some Members opined that the government should not be over-worried by the issue, and raised a number of proposals to help solve the problems. However, the plain fact is that we still have to face the problem of whether we should allocate public housing to the affected tenants immediately. This is an issue which calls for serious study.

Third, tenants affected by urban renewal projects should meet the requirements for rental public housing before they could be rehoused in public housing estates. For those who do not meet the requirements, should they be provided with cash compensation in lieu of rehousing arrangement by the LDC? If that is possible, the matter could be a lot simpler.

Fourth, we would also need to estimate accurately the number of public housing units required to rehouse the said affected tenants. In this connection, I am sure Members would have their own figures, but we still need to analyse in detail the scheduled redevelopment projects, assess carefully the enormous land resources and other support facilities required to cope with the redevelopment projects, as well as to take into account the ability of the HA to shoulder a housing programme more extensive in scale. Bearing in mind the enormity of the existing housing construction programme of the HA, we need to study if we could undertake a housing programme more extensive in scale in the future.

Fifth, in most cases, the affected tenants would request for local rehousing. while this request is considered as reasonable by some Members, the HA does think otherwise. Since most of the public housing estates would in future be provided in the new town areas, it would be quite difficult, if not totally impossible, for us to satisfy all those local rehousing requests.

All in all, Madam President, the weight on the HA is in fact already very heavy. since the HA has to meet a number of important commitments in the next few years, it is indeed unable to take part in providing assistance in rehousing the tenants affected by the urban renewal projects at this juncture of time or in the near future. As for the long run, the HA needs to study in detail a number of complications and identify possible resolutions before making any decisions. The Housing Bureau and the Planning, Environment and Lands Bureau will join hands to study the issues I have referred to just now.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr James TO, you may now reply. You have five minutes and 53 seconds out of your original 15 minutes.

MR JAMES TO (in Cantonese): Madam President, I would like to first thank all the Members. I think that it is a good thing to put our heads together in this debate, and to propose good ideas. Naturally, Members have also pointed out certain problems.

Having heard the speech of the Secretary, I feel that one point stands out as very important. Many Members mentioned a macroscopic picture. In fact the HA has the largest number of rental units, which are also the largest in terms of locations and combinations. Therefore it can bring considerable benefits to the entire plan of urban renewal which, the Secretary has also said, was one of the important government policies. Then why do we not pool the strengths of the various organizations together? Details must be further studied, but that should be the direction.

Secondly, I would like to respond to the issue of queue jumping, as mentioned by some Members and also by the Secretary. I hope that everybody would rest assured. Primarily, as a matter of fact, and the Secretary has also confirmed this, the HA has allowed "jumping one year's worth of the queue", that is, to be allocated a unit one year earlier. Therefore, this is in principle not an issue of whether or not there is early allocation of public housing, nor is it a problem of jumping the queue; it is a matter of degree of queue jumping. Also, many of the people on the HA Waiting List are also old area residents affected by urban renewal. As far as we understand it, there is, strangely enough, no data to show such overlapping of status. Some Members have made inquiries with the HA, the Housing Society (HS) and the Land Development Corporation (LDC), but only to learn that all these organizations keep no such statistics. I remember that several years ago when the increase of the compensation in respect of redevelopment was discussed, certain social work bodies conducted some small-scale surveys and found that around 40% to 50% straddled the two, that is, people on the HA Waiting List were also affected by redevelopment. Therefore, there are in fact an overlapping situation, and it is not a question of a bunch of people suddenly jumping the queue.

Thirdly, redevelopment is not voluntary on the part of the affected residents. They do not choose to demolish their buildings all of a sudden. It is the LDC or the HS which launches the redevelopment projects. Just now certain Members mentioned the "freezing registration", therefore, the residents can in no way easily obtain the relevant information and go to register to prepare for queue jumping. The reality is not so. One Member made a very good suggestion about setting certain conditions for rehousing, such as a minimum period of residence in the old buildings prior to registration. This will help reduce queue jumping.

Lastly, I wish to raise the point that many who are eligible have not applied for public housing. According to the kai-fongs in the old areas, they are all qualified. Then why have they not applied? They explained that if they could live in those old buildings, they would not want to seize the resources that could better serve others. As a matter of fact, they have been qualified for 20 years. According to past experience, if they began their waiting 20 years ago, on the basis of a seven-year waiting time, they have in fact voluntarily pushed back their eligibility for 13 years. They are well qualified though they did not apply. I reckon that such cases at least constitute 20% to 30% of the total. They were well qualified 20 years ago, but they had no need to get public housing because they lived in private buildings. They therefore are 13 years late getting public housing. Now you are saying that they jump the queue, no wonder they are so agitated.

Apart from all the above, the most important concern is naturally the amount of resources we have. In this matter, all the organizations should be able to use their best resources in offering assistance, but the Government must invest the resources. At the present moment, I understand that if the two Bureau Secretaries now ask the Financial Secretary for several tens of billion of dollars to redevelop the housing estates, the latter would certainly be shocked. However, in practice, it is not the resources of the Financial Secretary that need to be used. With HA participation, you might say that it is merely a redirection of resources, and to a certain extent, only the resources of the HA will be used. I think that should be the way. The Government does have its share of responsibility, and must do something in terms of resources provision, such as land supply, particularly land in the urban area, or consider whether the land in the old airport can be used. As to the buildings produced by the LDC in the course of old area redevelopment, some will be sold, but a portion should be placed under the projects or under the Urban Renewal Authority.

Therefore, urban renewal is in fact undertaken by several organizations. In a broad sense, it is implemented with the assistance of other organizations. Why have I not extended the motion today to cover also private developers? That is because I hope to avoid a bigger controversy and also for fear that I might be mistaken for helping developers make money. In reality, we should understand the problems this way, that is, the ultimate benefit of redevelopment goes to the whole community; it belongs to all the citizens. We can also study if it is possible to make the HA take part in assisting in rehousing by way of compensation to the HA or through the collection of a small levy. I have not included these things in my motion, but we have to consider them when we make long-term plans or discuss connected issues in the long term.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr James TO be approved. Will those in favour of the motion please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

PRESIDENT (in Cantonese): I think that the question is agreed by a majority respectively from each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections and by the Election Committee, who are present. I declare the motion passed.

NEXT MEETING

PRESIDENT (in Cantonese): In accordance with the Rules of Procedure, I now adjourn the Council until 2.30 pm on Wednesday, 16 September 1998.

Adjourned accordingly at eight minutes past Midnight.

Annex I

WRITTEN ANSWER

Translation of written answer by the Secretary for Health and Welfare to Mr LAU Kong-wah's supplementary question to Question 5

The Hospital Authority (HA), in deciding whether medical incidents affecting the health of individual patients should be publicly announced, will consider the following three principles:

(1) whether the disclosure of the incident is acceptable to the patient and his family;

(2) whether the incident itself will affect the well-being of the public; and

(3) whether the disclosure of the incident will help medical staff and the public to take appropriate preventive measures.

Under normal circumstances, it is only with exceptionally strong grounds that the HA will make a public announcement of individual incidents and the particulars of patients. The HA is responsible for striking a balance among three aspects, namely, public interest, the public's right of access to information and the patient's right of privacy.

In June this year, a patient in the Shatin Hospital was inappropriately administered highly concentrated potassium. After the incident, the primary task of the Hospital was to provide the patient with the suitable treatment and to explain to the patient's family the course of the incident and the remedial measures.

After the incident, the HA has reviewed the potential risk involved in the administration of highly concentrated potassium and is studying how such risk can be reduced, for example, by attaching more obvious warning as "must be diluted" on drugs so as to enhance staff alertness.

WRITTEN ANSWER ─ Continued

The function of the Hospital Governing Committee is to supervise the management of public hospitals. The Shatin Hospital has informed the Chairman of the Committee in the first instance after the incident and intends to hold a detailed discussion on the investigation report at the upcoming meeting of the Committee. After the coverage of the incident by the media, the Shatin Hospital has advanced the date for the meeting of the Committee.

Annex II

WRITTEN ANSWER

Written answer by the Secretary for Trade and Industry to Mr HO Sai-chu's supplementary question to Question 6

The Secretary for Justice is aware that the question raised by the Honourable Member has been a matter of concern among the business and legal sectors as well as arbitration bodies. To maintain the status of Hong Kong as a financial, trade and arbitration centre, the Hong Kong Special Administrative Region (SAR) Government intends to make appropriate arrangements for the reciprocal enforcement of arbitration awards between the Mainland and the Hong Kong SAR.

To this end, the Department of Justice has started liaising with the relevant mainland authorities. The Department will propose amendments to the Arbitration Ordinance once an agreement is reached so that mainland arbitration awards can be summarily enforced in Hong Kong. We also hope that the mainland authorities would make corresponding arrangements to enable the enforcement of Hong Kong awards in the Mainland.

Annex III

HOLIDAYS (AMENDMENT) BILL 1998

COMMITTEE STAGE

Amendments to be moved by the Honourable LEUNG Yiu-chung

Clause	Amendment Proposed
1	(a) In subclause (2), by adding "(other than item (ma))" after "section 4".
	(b) By adding ─
	"(3) Item (ma) in the amendment in section 4 applies in relation to 2000 and all subsequent years.".
4	In the proposed Schedule, by adding ─
	"(ma) Sino-Japanese War Victory Day, being the third Monday in August;".