LegCo Paper No. CB(1) 1518/96-97
(These minutes have been seen
by the Administration)
Ref: CB1/PS/10/95/1

LegCo Panel on Housing Subcommittee on Long Term Housing Strategy Review

Minutes of meeting held on Wednesday, 9 April 1997, at 8:30 am in Conference Room B of the Legislative Council Building

Members present :

Members attending :

Members absent :

Public officers attending :

Housing Branch
Mr Andrew R Wells: Deputy Secretary for Housing
Miss Sandy CHAN: Principal Assistant Secretary for Housing
Miss L K LAM: Chief Assistant Secretary for Housing
Planning, Environment and Lands Branch
Mr Stanley WONG: Principal Assistant Secretary for Planning, Environment and Lands (Planning)
Mr H K NG: Principal Assistant Secretary for Planning, Environment and Lands (Special Duties)
Housing Department
Ms Connie LAI: Chief Planning Officer
Lands Department
Mr I J MacNaughton: Government Land Agent
Planning Department
Mr S M LAU: Government Town Planner
Mr C M LEE: Senior Statistician

Clerk in attendance :

Mrs Vivian KAM: Assistant Secretary General 1 (Acting)

Staff in attendance :

Miss Eva LIU: Head (Research and Library Services)
Mr Jackie WU: Research Officer 1
Ms Vicky LEE: Research Officer 3
Miss Becky YU: Senior Assistant Secretary (1)3

I Chapter 3 -- Increasing flat supply

Research report on "Land supply in Hong Kong"

Research report on "Supply of flats"

Meeting with the Administration

II Any other business

I Chapter 3 -- Increasing flat supply

The Chairman welcomed representatives from the Administration and the Head (Research and Library Services) (H(RL)) of the LegCo Research and Library Services Division (RLS) and her colleagues to the meeting. He thanked H(RL) for the two research reports on "Land supply in Hong Kong" and "Supply of flats" which were very comprehensive and provided useful reference on land and housing related data. The Chairman however expressed dissatisfaction at the time taken by the Administration in responding to requests for information by staff of RLS in conducting the research studies. Some members sought clarification on the causes for delay; they were concerned that the role of the Legislature as a watchdog would be hampered in the absence of timely, accurate and reliable information. The Principal Assistant Secretary for Planning, Environment and Lands (Special Duty) (PAS for PEL/SD) explained that the Administration had arranged a series of briefings/meetings with RLS subsequent to receipt of the 49 questions forwarded by the latter at the end of 1996. He stressed that manual checking was sometimes required in obtaining the requisite information and the situation might be more complicated if such checking straddled different departments including the Planning Department, the Architectural Services Department and the Rating and Valuation Department. This explained the time taken in providing such information. Members were not convinced of the Administrations response and considered it necessary to identify the problem. At members request, H(RL) undertook to provide a chart setting out the process for obtaining information and the Administration undertook to follow-up accordingly. A member suggested that the Subcommittee should probe into the matter at a forthcoming meeting.

Research report on "Land supply in Hong Kong"

2. At the invitation of the Chairman, H(RL) briefly introduced the research report. Of the total land area of 109,500 hectares (ha) in Hong Kong, 17,500 ha or 16.5% were developed lands of which 5,800 ha were for housing development. Despite the small proportion of residential lands, about 4,300 ha which accounted for 24.6% of the total developed land area had been left vacant. Further information on the distribution and usage of these vacant development lands (VDL) had yet to be provided by the Administration. The study also found that land supplied was not equal to land disposed. Notwithstanding the average annual land supply of 1,000 ha over the past 10 years, except for the year 1995/96 where the supply reached 2,094 ha, land granted each year was limited to 50 ha in accordance with the Sino-British Joint Declaration. Lands so disposed were mainly for private development as lands granted to the Housing Authority (HA) for public rental housing (PRH) or for special requirements were not subjected to such a condition. It was envisaged that the implementation of the new land disposal programme on 1 July 1997 would have a definite effect on the land disposed. While 4,973 and 2,774 ha had been earmarked for residential use and village type development respectively on the basis of the outline zoning plans (OZP) and development permission area plans, the total gross floor area to be produced would hinge on such factors as class, location, plot ratio and height restriction in building construction.

Research report on "Supply of flats"

3. H(RL) said that the actual supply of private housing flats in six out of the 10 years up to the end of 1996 had consistently fallen short of the published estimates; supply in 1990, 1992/93 and 1995/96 even fell below the 10-year average, in particular for 1996 where flat production amounted to only 66% of the average figure. Both private property developers and professionals attributed the shortfall to such factors as the long lead time for planning applications and other administrative procedures as well as the delay in provision of infrastructural facilities. As regards public housing, the study found that there was a shortfall of 8,972 PRH and subsidized home ownership units over the second development period 1991/92 to 1995/96. The total production capacity for PRH over the period represented only 56% of that over the first development period 1985/86 to 1990/91, while the figure in 1995/96 was the lowest in the 10-year period, accounting for just 37% of the figure in 1988/89. The supply of subsidized home ownership flats also fluctuated in the two development periods. The production volume in 1994/95 was only 4,158 flats as opposed to some 20,000 flats in 1995/96. A total shortfall of some 10,000 units would be expected for the second development period. This would create pressure on the HA, the Housing Department (HD), the Housing Society (HS) as well as the construction industry. Furthermore, eligible applicants would have to wait for a long time before allocation of flats. Both HA and HS attributed the fluctuation in public housing flat supply to the unstable allocation of land by the Government, in particular in respect of formed land.

4. RLS had identified in the report seven areas in which improvements should be made to ensure a steady supply of public and private housing. These included:

Supply of land
the subject had been covered in the research report on "Land supply in Hong Kong".
Government regulations and approvals
delays in housing development might be caused by the long time required for obtaining feedback and approvals from government departments and authorities, and by different or opposite views in the areas of environmental protection, town planning, transport etc among different departments. A central co-ordinating mechanism was recommended to resolve differences in opinions amongst departments. Furthermore, as the design and planning procedures for most PRH estates were the same, the time for planning and development should be further reduced.
Infrastructural development
adequate and speedy provision of infrastructural facilities was a major factor affecting the supply of both public and private housing flats. The Administration should consider entrusting infrastructural facilities to private developers or setting up a central co-ordinating mechanism to ensure timely completion of these facilities.
Labour supply for development and construction works
as construction activity was expected to increase substantially in the public sector over the period 1998 to 2001, the Administration should monitor the trade closely and take appropriate measures to alleviate any specific supply constraints which might arise such as the supply of electricians and plasterers. Training and re-training of employees would be the two possible solutions.
Town planning policy
stringent control of density of development affected the developable floor spaces for housing. RLS would examine the subject in detail in its forthcoming research report on optimization of land uses.
Environmental regulations
environmental factor was another major cause of delay for both public and private housing. The manner for striking a balance between environmental protection and housing production required further examination.

5. In conclusion, H(RL) said that in order to increase flat supply, the Administration should consider increasing land supply, streamlining and speeding up procedures for the approval of housing projects and related land transactions, ensuring timely completion of housing related infrastructure projects, expediting urban renewal and monitoring the capacity of the construction industry. It was also worth noting that there was no inconsistency between the Administration and private developers as well as professionals on the need to review the land development and housing construction processes including aspects such as re-zoning, lease modification, resumption, town planning, environment and traffic assessments. The important point was for the Administration to fulfil its commitments so as to increase future housing supply.

6. The Chairman thanked H(RL) for her presentation and informed members that the Chinese version of the research reports was under preparation and would be forwarded to members once available.

Meeting with the Administration

7. Before commencing discussions, the Deputy Secretary for Housing (DS for H) remarked that as the Administration had only received the research reports two days ago, it would need time to respond to the findings contained therein. He suggested dedicating the current meeting for discussion on Chapter 3 of the Consultative Document (CD) on Long Term Housing Strategy Review and scheduling another meeting to exchange views on the research reports. Members did not agree with DS for H and considered it necessary to discuss the CD in parallel with the research reports as the two reports were related to the chapter and information contained in the CD was very limited. Hon Albert CHAN Wai-yip also pointed out that it was not uncommon for the Administration to table information papers for discussion at meetings.

Admin

8. Referring to Appendix I and Table 1 of the research report on "Supply of land in Hong Kong", members were surprised to learn that there were 3,300 ha and 4,300 ha VDL in 1988 and 1996 respectively. They considered it wasteful to leave these land vacant given the acute shortage of land for housing in Hong Kong. Members sought clarification on the definition of VDL and the mechanism in place for converting VDL into serviced lands. PAS for PEL/P explained that the information in the report was taken from the Hong Kong Annual Report which classified all lands in Hong Kong into developed lands and non-built up lands. VDL was one of the nine classes of developed lands which consisted of formed lands with no superstructures such as parts of the West Kowloon Reclamation and lands where public works were being undertaken. Formed lands would be disposed of to either the private or the public sector after completion of the necessary procedures including those under the Town Planning Ordinance. PAS for PEL/SD supplemented that VDL awaiting disposal would be leased for other purposes such as parking lots and greenery. Members were not convinced that the scarce land resources should be used for purposes other than housing development. They considered a need for the Administration to provide a list of VDL showing their developments throughout the period 1988 to 1996. PAS for PEL/P undertook to collate the information required but stressed that it would take time. He clarified that the conversion of VDL was a rolling process and that new VDL would be added to the pool. For example, 1,248 of the 4,300 ha VDL in 1996/97 was the land for the Chek Lap Kok Airport. Members were dissatisfied with the alleged extra time required for collating information on VDL as there must be supporting data before the figure of 4,300 ha VDL in 1996 could be compiled for publication in the Hong Kong Annual Reports.

9. Some members attributed the fluctuation in flat supply over the past years to the unstable supply of serviced land and asked if measures were in place to improve the situation. PAS for PEL/P emphasized the need to undertake the statutory planning and development process before lands could be disposed of. An outline planning study would be undertaken to ascertain the development potential of the land concerned, while an engineering feasibility study would be required to examine the various aspects of geotechnical, transport, environment, infrastructure, etc, upon endorsement of the outline planning study. Based on the land use proposals of the outline planning study, an OZP would be prepared. Site formation would be undertaken if the development complied with the OZP; otherwise, the Lands Department (LD) would clear and resume the land for disposal. Furthermore, objections from the public during the consultation period would delay the delivery of land. Over the past 10 years, lands available for housing development remained on average at 130 ha per year, except for the years 1994/95 and 1995/96 where the supply fluctuated at 193 and 94 ha respectively. PAS for PEL/P said that the Administration recognized the need to expedite the planning and development process and would conduct feasibility studies in parallel with some of the planning procedures as would be the case with the three Strategic Growth Areas in Northwest New Territories, Northeast New Territories, and Hong Kong Island South and Lamma Island with a view to shortening the lead time for production of land. PAS for PEL/SD supplemented that the Administration had limited control over supply in the private sector and that the supply of private housing flats was market driven; factors such as political and economic instability would affect the market situation.

10. As regards the criteria for selecting land for disposal within the benchmark of 50 ha per year, PAS for PEL/SD advised that these would take account of the needs of the market. For example, the Administration had allocated 35, 55 and 75 ha residential lands for disposal in 1992/93, 1993/94 and 1994/95 respectively, but one ha in 1992/93 and three ha each in 1993/94 and 1994/95 had to be retrieved due to the downturn of economy. In 1996/97, more than 50 ha had been designated for disposal but some of the lands had to be withdrawn due to non-compliance of OZP and objections by local residents; these included 37% of the total intensified development projects of which 37% were Private Sector Participation Scheme projects. In reply to a related question, PAS for PEL/SD advised that the amount of new lands disposed of over the period 1994 to 1997 were 22, 41 and 28 ha respectively.

Admin

11. The Chairman made reference to the recent remarks by the Financial Secretary that land supply would be increased by 46% to 587 ha over the next five year and sought clarification on how the target could be met as apart from new land formation, the Administration might not have control over lands provided through lease modification, land exchange and urban redevelopment. PAS for PEL/SD clarified that lands obtained from lease modification would not be included in these 587 ha as no extra lands would be provided as a result. The Government Land Agent agreed with members that the number of applications for lease modification and land exchange over the next five years for residential purpose would depend on the market situation. The Chairman considered it useful for the Administration to provide a breakdown of such lands to be provided through land formation and land exchange and to advise if possible shortfall in land supply under land exchange would be made up by land formation.

12. Referring to Table 12 of the research report on "Land supply in Hong Kong", members considered that the high proportion of unformed land (75%) allocated to HA would delay the delivery of public housing to meet demand. It was also unfair for HA to resolve land development problems such as transport and environment; the situation would be complicated in the event of difference in opinions amongst departments concerned. Members sought clarification on the means for clearing hurdles concerning planning and development before lands were allocated to HA. PAS for PEL/P reiterated that the Administration was committed to streamlining and speeding up the approval of housing projects but stressed that some procedures such as public consultation were essential as Hong Kong was moving towards a more open society. He said that the District Lands Conference and the Committee on Planning and Land Development (CPLD) comprising the Secretary for PEL and senior representatives of relevant departments would help to resolve any conflicts regarding land disposal and land supply respectively. DS for H supplemented that the Housing Project Action Team (HPAT) under the Housing Branch (HB) had employed a site specific approach to resolve difference in opinions amongst departments on flat production; it had so far assisted in the production of 130,000 units in 58 construction sites. DS for H stressed that while it was the Administrations practice to provide adequate or sufficient land to HA, such land would not necessarily need to be fully formed. It would take HA over five years from site allocation to flat completion, of which only three years were for actual construction; the preceding period was for planning and preparatory work which would proceed in parallel with completion of basic infrastructure. To allocate only "complete" sites would indeed delay rather than expedite flat production. He added that if HA considered a site at too premature a stage to be included in its Public Housing Development Programme (PHDP), then it would decline to do so. Once included in the PHDP, delivery of flats was the HAs responsibility, although HB would assist when specific site problems arose. In response to members, the Chief Planning Officer mentioned that in many cases, HD needed to carry out impact studies including environmental, traffic and sewerage prior to development on site. A long lead time was sometimes required to resolve various issues with concerned departments. In the event that such problems could not be resolved at the working level, adjudication from high level meetings like CPLD and HPAT would be sought.

Admin

13. A member was not optimistic that the estimated requirements of 85,000 and 73,000 flats for the periods 1995/96 to 2000/01 and 2001/02 to 2005/06 respectively outlined in paragraph 3.5 of the CD could be met, having regard to the unstable land supply for the periods concerned as illustrated in Appendix 20 of the research report on "Land supply in Hong Kong", in particular for the latter period. DS for H considered that a reconciliation to take account of changing circumstances might be necessary to ascertain the accuracy of the findings in the report. He reiterated that sufficient land had been allocated or identified to meet the announced production target for the first period, and that adequate land would be made available to meet the flat production requirement for the second period as reflected in the TDSR. PAS for PEL/P made reference to a press statement by the Government the day before that information in Appendix 20 was based on the draft Territorial Development Department (TDD) Development Programmes in 1996 which showed new residential land to be formed by TDD in the forecast period on the basis of the secured funding situation in September 1995. Under the Governments Resource Allocation System, the departments funding was secured for five years and rolled forward on an annual basis; this explained the relatively higher land formation target in 1996/97 to 1999/00. However, lands in 2000/01 to 2004/05 shown in the Appendix referred only to the residual amounts to be formed under projects already funded; while those to be formed under new projects would be added into the Development Programmes once funding was secured. Moreover, information on the supply of land through other means such as redevelopment, re-zoning and intensification of development density had not been included. At members request, the Administration undertook to provide as far as possible a table similar to that of Appendix 20 to show the number of flats to be produced respectively under such land production categories as land formation, re-zoning, redevelopment and intensification of development density, etc.

14. Hon Albert CHAN Wai-yip made reference to the three development projects at Green Island, Tsuen Wan Seven Street and Sham Tseng Tung Tsuen. Despite designation of the Green Island Reclamation as one of the major development areas in the 1984 Territorial Development Strategy Review (TDSR), work had not yet commenced to-date. The development of Sham Tseng Tung Tsuen had come to a halt after completion of the feasibility studies and consultation with the relevant District Board in 1986. The site of the demolished Four Seasons Building in Tsuen Wan Seven Street had been used for parking rather than for housing development upon relocation of residents to the Clague Garden Estate. Mr CHAN sought clarification on the causes for the delay and actions being undertaken in respect of the three development projects. He also enquired about the mechanism in place to avoid future recurrences. PAS for PEL/P explained that the Green Island project was identified for development in the long term. It also involved reclamation which had become a controversial issue. The Administration would take a decision on the project in the light of the results of the 1996 TDSR. He clarified that outline planning studies on the Green Island project had already been completed. As regards the Tsuen Wan Seven Street project, the Administration was still considering the financial viability of the project. PAS for PEL/P assured members that separate channels were available to deal with problems with such projects which were mainly strategic or financial in nature.

II Any other business

15. Members agreed to schedule three meetings as follows:

- Tuesday, 22 April 1997, at 4:30 pm to discuss Chapter 5 -- Encouraging wider home ownership;

- Thursday, 24 April 1997, at 12:30 pm to continue discussion with Chapter 3 -- Increasing flat supply and the two research reports on "Supply of land in Hong Kong" and "Flat supply"; and

- Tuesday, 13 May 1997, at 4:30 pm to round up discussion on the CD.

16. Hon Frederick FUNG Kin-kee said that he would not be able to attend the meeting on 22 April 1997 and Hon CHAN Yuen-han said that she would be late for the meeting on 24 April 1997.

17. Hon Albert CHAN Wai-yip suggested and the Subcommittee agreed that members should forward to the Clerk questions relating to the findings of the two research reports for onward transmission to the Administration for written response.

18. There being no other business, the meeting closed at 10:40 am.

Legislative Council Secretariat
9 May 1997

Last Updated on 20 August 1998