LegCo Paper No. CB(1) 1830/96-97
(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 Tuesday, 13 May 1997, at 10:30 am in Conference Room B of the Legislative Council Building

Members present

    Hon LEE Wing-tat (Chairman)
    Hon Albert CHAN Wai-yip
    Hon Frederick FUNG Kin-kee
    Hon LEUNG Yiu-chung

Member attending:

    Hon CHAN Kam-lam (Non-Subcommittee Member)

Members absent :

    Hon Mrs Selina CHOW, OBE, JP
    Hon Ronald ARCULLI, OBE, JP
    Hon CHAN Yuen-han

Public officers in attendance :

    Housing Branch

    Mr Andrew Wells,
    Deputy Secretary for Housing

    Miss Sandy CHAN,
    Principal Assistant Secretary for Housing

    Miss L K LAM,
    Chief Assistant Secretary for Housing

    Housing Department

    Mr H T FUNG,
    Assistant Director (Applications & Home Ownership)

    Planning Department

    Mr S M LAU,
    Government Town Planner

    Mr John LEE,
    Senior Statistician

Clerk in attendance :
    Mrs Vivian KAM,
    Assistant Secretary General 1 (Acting)

Staff in attendance :

    Mr George CHAN,
    Senior Assistant Secretary (1)3

I.Confirmation of minutes

(LegCo Papers No. CB(1) 1518 and 1519/96-97)

The minutes of the meetings held on 9 and 24 April 1997 were confirmed.

II.Overall discussion of the Consultative Document on the Long Term Housing Strategy Review

(LegCo Paper No. CB(1) 1517/96-97(01) -- Concerns raised by members on the Consultative Document;

LegCo Paper No. CB(1) 1517/96-97(02) -- Response from the Administration)

The Subcommittee’s views

The Deputy Secretary for Housing (DS for H) thanked members for their opinions expressed in previous meetings of the Subcommittee, which would be studied together with those collected from other sectors of the community. He said that since the release of the Consultative Document (CD) in January 1997, there had been extensive consultation and a multitude of opinions were received from various parties. The consultation period would end on 31 May 1997 and a report on views collated would be published within the year when final decisions on the recommendations had been taken.

2.He summarized his impression of the views of the Subcommittee and the Administration’s preliminary response as follows:

  1. Increasing flat supply -- The proposals had general support although members were not fully confident of the Administration’s ability in achieving some targets. The Administration would make every effort to accomplish the goals, and the Financial Secretary had formed a high-level committee to tackle problems of land and housing supply.

  2. Housing demand -- Members considered that the Housing Demand Model (HDM) was a practical and useful instrument but required constant updating to ensure its accuracy. The Administration would consider members’ comments and continue to improve and update the HDM.

  3. Maximizing the contribution of the private sector -- The proposals were supported in the main, but there were different views on the modes of joint ventures. The Administration would take this up with the Housing Authority (HA), the Housing Society and other relevant parties before launching a pilot scheme.

  4. Encouraging wider home ownership -- There was popular support for the principles although members expressed concern on the implementation details including in particular the sale prices of flats to sitting tenants. The Administration would ensure that the principles of affordability and fairness would be upheld in determining the sale prices, and stressed that Public Rental Housing (PRH) tenants would not be coerced to buy the flats.

  5. Rental for PRH flats -- All supported the principle of affordability and agreed that PRH rents should not be too high. Members were concerned about the two median rent-to-income ratio levels of 15% and 18.5%. The Administration would ensure that such views would be carefully studied.

3. The Chairman pointed out that while the Subcommittee had discussed recommendations in the CD, no conclusive resolutions had been made especially on the controversial issues. DS for H agreed with the Chairman that in summing up members’ views the Administration should be objective and refer to the minutes of the Subcommittee’s meetings for members’ views and also to written submissions received.

4. Hon CHAN Kam-lam was of the view that, although the CD was consultative in nature, it contained certain commitments of the Administration. An example was in Chapter 5 regarding the target of completing a total of 175,000 subsidized flats for sale by 2001. He asked for the present position of the pledge. The Assistant Director of Housing(Applications and Home Ownership) (AD of H(AHO)) agreed to provide the requisite information after the meeting in respect of both subsidized flats for sale and PRH together with a breakdown of the regions and stages of development as appropriate. He said that the Public Housing Development Programme was a long-term and on-going programme with periodical reviews on its progress. DS for H added that the numerical targets had been largely set in the Governor’s Policy Address in 1995. Admin

Administration’s response

5. Members then discussed the Administration’s answers to members’ questions as circulated vide LegCo Paper No. CB(1) 1517/96-97(02).

Chapter 3 : Increasing Land Supply

Vacant Development Land (VDL) and Capital Works Reserve Fund (CWRF) (Questions 1, 2, 3 and 7)

6. Noting the Administration’s data on VDL, the Chairman pointed out that 78 out of a total of 224 ha of development land had remained vacant since 1994 (Category 3). This represented a significant percentage. The Government Town Planner (GTP) advised that the area comprised a number of scattered lots and some could not yet be developed owing to the lack of transport and infrastructural facilities. An example was Telegraph Bay where development would depend on the construction of the planned Route 7. In response to a members’ suggestion for involving developers to speed up the provision of infrastructure, DS for H said that this would be considered by the task force headed by the Financial Secretary. Admin

7. Members noted that the area of vacant land without infrastructure was 367 ha, constituting 27% of the total area of vacant land, and asked if the $8 billion under the CWRF could be used to help reduce the percentage. GTP pointed out that not all of the 367 ha of vacant land was for residential purpose; some were earmarked for other purposes such as recreation, school and other community facilities, the development of which was pending population growth and other priorities controlled by user departments. DS for H added that the $8 billion CWRF had been fully committed to some 63 projects and more funding might be necessary. As regards a member’s enquiry about a breakdown of the 367 ha of vacant land for residential purpose and the trend, GTP said that this would have to be compiled manually and would be a very time-consuming task; situation would however improve with the impending launching of a geographical information system in the Planning Department. The department would nevertheless make an effort to detect a trend. DS for H took note of members’ wish for a mechanism to alert the Administration of land which had remained vacant for excessively long periods.

Vacant development land under Temporary Use (TOU) (Question 4)

8. Members expressed concern over the large number of sites used as Temporary Housing Areas (THAs) for over seven years. GTP pointed out that there might be factors inhibiting temporarily the use of such sites for long term purposes. He assured members that the usage of such sites was being monitored closely by the Planning Department.

Housing Demand Model (HDM) (Question 5)

9. The Chairman expressed concern about housing demands vis-a-vis the up-to-date population and legal immigrants. GTP advised that the HDM was based on a population forecast of 7.3 million in 2006; data from the 1996 Population By-census indicated a forecast of 7.38 million, and the difference of 1% was relatively insignificant. The Housing Aspirations Survey being undertaken would include legal immigrants arriving over the last few years. The Chairman saw a need to cater for the group of immigrants who would comprise 50% of the population growth and have a significant impact on housing demand. GTP said that the survey was based on a sufficiently large survey field of 12,000 randomly selected households and should be reasonably representative and indicative of a trend. The Territorial Development Strategy Review (TDSR) had used two population scenarios, one of which was as high as 8.1 million; the Planning Department had continued to use this figure in view of uncertain factors in the long term. The department was also vigilant of the need for timely and efficient implementation of proposals to meet mid-term targets, with a view to long-term adjustments in due course. He assured members that the HDM would be re-run in July or August 1997 to update housing demands. Admin

Safety margin in HDM (Question 6)

10. The Chairman was concerned that the hybrid option in the HDM would adversely affect the safety margin. He preferred a more accurate forecast of demand on a scientific basis, with the shortfall identified and properly explained, rather than a convergent moderation between demand and production, as slippages in planning would entail enormous remedial efforts. GTP advised that it was necessary to have regard to the HDM, the amount of land which could realistically be produced, and the outcome of the TDSR. He took note of members’ concern for increasing the safety margin. Admin

Chapter 4 : Maximizing the Contribution of the Private Sector

The new concept of joint ventures (Question 1)

11. Hon LEUNG Yiu-chung was concerned with the generally high prices of flats under joint venture developments and enquired if some form of control in setting the sale prices was possible. The Chairman urged the Administration to exercise flexibility in negotiations with private developers over premium and related issues, and avoid delays due to relatively insignificant differences.

12. DS for H said that unlike private housing, the Government would set price restrictions for Home Ownership Schemes (HOS) and other subsidized housing projects. The joint ventures were intended mainly to assist in raising the quality standard of PSPS projects. Admin

Chapter 5 : Encouraging wider Ownership

Compensation for one and two-person households under the Comprehensive Redevelopment Programme (CRP) (Question 2)

13. Commenting on the Administration’s reply on mortgage subsidy, Hon CHAN Kam-lam clarified that he was referring to one and two-person households under CRP who might be encouraged to opt out and make their own housing arrangements, such as returning to their native towns in China, if the financial compensation would be suitably enhanced. AD of H (AHO) affirmed that this was under active consideration as the level of such incentives had not been reviewed for a long time. Admin

Sandwich Class Housing (SCH) (Question 3)

14. With reference to the target SCH production of 30,000 flats by 2003, the Administration noted the Chairman’s request for refining the HDM in due course to assess demands for SCH flats. Admin

Sale of PRH flats to tenants (Question 4)

15. Hon LEUNG Yiu-chung sought additional information about such factors as replacement cost, depreciation and the relative value in determining the sale prices of PRH flats. DS for H advised that the Administration was awaiting HA’s reply, and stressed that there was no intention of forcing tenants to buy against their wishes. Admin

Chapter 6 : Providing Rental Housing for Those in Need

Waiting time for PRH (Question 3)

16. The Chairman expressed disappointment at the lack of new commitments in shortening the waiting time for PRH. Long-term strategy was expected to offer solutions to those in genuine need, and yet new commitments were not forthcoming.

17. DS for H said in response that the pledge of reducing the waiting period to below five years was already a heavy commitment. New commitments at the present stage were impractical as the PRH waiting time depended on the position of many proposals in the CD. The Chairman hoped that the Administration could make updated assessments by the end of the year when the consultation and its report would have been completed. Admin

18. Hon LEUNG Yiu-chung felt that significant effects of proposals in the CD on the PRH waiting time were not evident. Rather, improvement could only come by through large increases in the supply of land and housing. On the basis of a number of complaints received, he also expressed concern about PRH flats being left vacant. DS for H advised that proposals in the CD had a realistic bearing on the PRH waiting time, notably those concerning clearance policy, expanded home ownership, and improvement in the HDM. As regards vacant flats, DS for H advised that the Administration was also concerned with this problem and had announced measures in the 1996 Policy Commitments to tackle the issue. AD of H (AHO) added that there was a need to keep a small and reasonable number of vacant PRH flats to accommodate people affected by on-going clearance and redevelopment programmes. The vacancy situation was closely monitored by Housing Department. However, PRH tenants still showed a tendency of waiting for PRH in the urban areas rather than the New Territories, and for new as opposed to refurbished flats. Hon LEUNG Yiu-chung urged the Administration to consider from the policy aspect measures for promoting the acceptability of flats by prospective tenants. Admin

19. Hon CHAN Kam-lam remarked that recommendations in the CD encompassed several covert policy changes and asked if these might escape HA’s attention in becoming new policies. DS for H confirmed that, in discussions with HA over the last few months, HA had been made aware of the proposed changes and problems. HA was studying the recommendations and a response was awaited. AD of H (AHO) added that mechanisms were in place to ensure that HA was fully consulted of the recommendations in the CD.

Median rent-to-income ratio of PRH households (Question 4)

20. About the median rent-to-income ratio of PRH households, identified at 8% according to the 1996 Population By-census, Hon LEUNG Yiu-chung pointed out that it represented as high as 23% for the lowest-income sector, involving more than 30,000 households. DS for H said that, in addition to the provision of temporary rent assistance to tenants in financial hardship, HA would ensure that rents would be affordable as a matter of principle. He also highlighted the fact that rentals would in no case exceed 25% of the tenants’ income. Admin

Consultation report

21. Having completed discussions on the Administration’s response to concerns raised, members enquired about the timing for publishing the report and expressed the hope for it to contain details of all opinions received and considered in order to increase transparency. DS for H assured members that all opinions received would be sorted, analyzed and qualitatively evaluated. Treatment of opinions would be fair and open, and efforts would be made to forestall possible criticism of biases and misinterpretation. The report would be submitted to the Executive Council which would decide the timing for publishing the report. He took note of the Chairman’s suggestion for the Administration to publish first the results of the consultation, to be followed by a report on the Administration’s decision.

22. The Chairman said that the Subcommittee had concluded deliberations and expressed his appreciation of the Administration’s contributions during meetings of the Subcommittee. He advised that a verbal report would be made to the Housing Panel at its next meeting.

23. The meeting ended at 12:20 pm.

Legislative Council Secretariat

11 June 1997

Last Updated on 20 August 1998