2. Four meetings had been scheduled for the Subcommittee to consider recommendations in the Consultative Document on Long Term Housing Strategy Review:

- Monday, 24 February 1997, at 8:30 am;

- Monday, 10 March 1997, at 8:30 am;

- Monday, 24 March 1997 at 8:30 am; and

- Wednesday, 9 April 1997 at 8:30 am.

Non-Subcommittee members who were interested in the subject were welcomed to join in the discussion. As to whether deputations would be invited to present their views on the Consultative Document, the Chairman advised that this would be decided at the meeting on 24 February 1997.

(Post-meeting note: At the instruction of the Chairman, the meeting originally scheduled for 24 February 1997 was re-scheduled to Thursday, 20 February 1997, at 8:30 am while the meeting on 10 March 1996 would commence at 4:30 pm instead of 8:30 am.)

II. Date of next meeting and items for discussion

3. The next regular meeting would be held on Monday, 3 March 1997, at 10:45 am to discuss the following:

- Public housing tenancies for divorcees; and

- Policy on markets in public rental housing estates.

III.Enhancement of the Sandwich Class Housing Loan Scheme

(LegCo Paper No. CB(1) 806/96-07(01))

4. At the invitation of the Chairman, the Deputy Secretary for Housing (DS for H) highlighted salient points in the information paper. He explained that the Sandwich Class Housing Loan Scheme (SCHLS) was introduced in July 1993 to meet demand for home ownership from Sandwich Class families, pending the construction of sufficient flats under the Sandwich Class Housing (SCH) Main Scheme. Over 4,000 families had so far purchased flats in the private sector under the SCHLS and the grant of $2 billion approved in July 1993 would also be exhausted. While the Administration was committed to building 24,000 flats by the year 2001 and a further 6,000 SCH flats by 2003, it was envisaged that demand for this category of subsidized home ownership would for the time being continue to exceed supply. Taking into account the lead time for construction, the Administration proposed injecting a further $1.38 billion into SCHLS in order to assist a further 3,000 Sandwich Class families to acquire their own homes in the short term. Subject to approval by the Finance Committee of the Legislative Council, the Hong Kong Housing Society (HKHS) would commence Phase I of the extended loan scheme in late 1997.

5. While acknowledging the need to help Sandwich Class families, some members were worried that the proposed injection of extra funding into SCHLS might push up property prices in the private sector and aggravate the burden of mortgage repayments. The long-term solution to the problem would be for the Administration to build adequate and affordable SCH flats to cope with demand. Members also considered a need for the Administration to draw up a production plan for SCH projects over, say, the next ten years so that prospective home purchasers would have a better understanding of the situation; this would also help to curb speculation in the property market. DS for H recognized the need for building more SCH flats and said that the Government would work to provide an appropriate balance between private and public rental housing, as well as SCH and Home Ownership Scheme (HOS) flats. He added that his Branch was working closely with the Planning Department to identify sufficient land to meet identified housing demand as explained in the 1996 Territorial Development Strategy Review (TDSR) and the Long Term Housing Strategy Consultative Documents. As regards the proposed 10-year production plan, DS for H assured members that this would be considered in the context of TDSR.

Admin

6. In response to members, the Director (Estate Management) (D(EM)) of HKHS advised that according to past experience, the majority of beneficiaries under SCHLS were those with monthly income between $35,000 to $45,000. Over 98% of these families had purchased flats in the secondary market whereas 70% of these properties fell within the size range of 400 to 600 square feet worth about $1.5 to $2.5 million. Members considered that the construction of 30,000 SCH flats by the year 2003 would not be able to meet the demand of the 60,000 to 80,000 Sandwich Class families, and pressed for emphasis to be focused on providing more land to meet the increased housing demand, regardless of the size of lots. At members request, DS for H undertook to provide information on the size of lots of development projects under SCH Schemes both for existing schemes and for forthcoming projects. He also took note of a members view that SCH flats did not have to be provided in large estates and that relatively small lots should also be utilized.

7. As regards the re-mortgage of SCH flats, D(EM) of HKHS advised that over 30 re-financing applications had been approved since the subject was last discussed by the Panel in November 1996, and that a number of banking institutions had informed HKHS of their intention to review their existing policy with a view to effecting the re-mortgage arrangements of SCH flats. She supplemented that legal advice was being sought on the means for improving provisions in the legal documents of SCH Schemes to cope with different circumstances. The important point was to maintain the spirit of the loan scheme and the interest of the Government. In reply to a related question, DS for H advised that beneficiaries under SCHLS were allowed to purchase HOS flats in the secondary market.

8. In response to members, DS for H advised that funding requests for the proposal would be submitted to the Finance Committee for endorsement in the latter half of February 1997. The provisional intention was for the new loan scheme to be implemented in four stages over a period of two years.

IV.Contracting out of management of public housing estates

(LegCo Paper No. CB(1) 806/96-97(02))

9. In referring to Annex A of the information paper, members expressed doubts on the reliability of the findings of the survey in sizing up the effectiveness of property management agents (PMAs) as the three selected public rental housing (PRH) estates under the pilot scheme were new estates and problems such as maintenance would only appear at a much later stage. They emphasized the need for the Administration to conduct satisfaction surveys on PRH estates managed by the Housing Department (HD), in particular the new estates, so as to compare the performance of PMAs. Some members were of the view that the property management market in Hong Kong was not highly competitive, and that the concentrated market structure would lead to monopoly in the event of full-scale implementation of the scheme to cover all PRH estates. They were worried that HD would lose its bargaining power, and that tenants in agency-managed estates would have to pay a higher rent than those in HD-managed estates as in the case of privatized carparks in PRH estates.	Admin
10. The Assistant Director/Applications and Home Ownership Scheme (AD/A & HOS) took note of members views. He advised that private contractors had been employed to provide cleansing and security guard services in PRH estates for many years whereas PMAs had been engaged in the management of HOS estates for the last ten years. The response of residents as well as Housing Managers (HMs) had so far been satisfactory. The pilot scheme to contract out the management services of selected PRH estates was introduced as a means to contain staff growth in HD and enhance service quality. In view of the satisfactory performance of PMAs, as evidenced also in a similar satisfaction poll carried out by an interest group, the Housing Authority (HA) had approved extension of the scheme to six new PRH estates due for completion on or before March 1998. Further expansion of the scheme would be considered taking into account the results of a review to be conducted next year, the performance and capacity of PMAs, acceptability of tenants, and feedback from estate staff, etc. AD/A & HOS assured members that PMAs would be carefully assessed before they were invited to tender for contracts. He also undertook to consider extending the scheme to some older estates as suggested by some members. As regards the availability of PMAs, AD/A & HOS advised that policy consideration was being given to increase the choice of PMAs in the market so as to maintain a fair chance of competition among contractors. He also clarified that the managers remuneration paid to contractors had no bearings on the level of rents since these would be borne by HD.	HD
11. Some members attributed the difference in service quality between HD and PMAs to the shortage of manpower in the former, and suggested that the Administration should review the effectiveness of HD in the management of PRH estates having regard to the comparatively higher efficiency of PMAs in the pilot scheme. AD/A & HOS emphasized that HD had sufficient manpower in managing PRH estates, and that extra manpower would be deployed if circumstances so required. He supplemented that the higher efficiency of PMAs was attributed mainly to such factors as greater flexibility in staff deployment and simpler command structure. An example would be the deployment of additional PMA staff to ensure effective control of dog keeping in the three selected rental estates. To facilitate a better understanding of the operation of PMAs, members considered it useful for the Administration to provide information on the amount of savings and staffing establishment in individual estates managed by PMAs. As regards the relatively high dissatisfaction rate concerning maintenance at the two agency-managed PRH estates, AD/A & HOS explained that it was not uncommon for tenants of new PRH flats to report construction defects during the initial occupation period for necessary follow-up action by the building contractors; this should have no bearings on the quality of PMAs.	HD

12. A member expressed concern that the quality of services of PMAs would be compromised if only the lowest tender was accepted as in the case of cleansing contracts, and sought clarification on how HD could ensure the performance of PMAs. AD/A & HOS advised that PMAs would be required to submit weekly management reports to HD for monitoring purpose. Furthermore, the Estate Management Advisory Committees (EMACs) which comprised Housing Managers (HMs) of individual estates, representatives from such residents associations as Mutual Aid Committees and commercial tenants associations, as well as elected District Board (DB) members would serve as a useful channel through which views on the performance of service contractors could be obtained. In reply to a related question, AD/A & HOS assured members that HMs would maintain frequent contact with tenants and local DB members to collect their views on PMAs in the event of non-availability of EMACs during the initial occupation period of new PRH estates. At members request, the Administration undertook to provide data on the tender prices and performance of cleansing contractors in PRH estates in the past three years.

13. As regards the effect of the contracting out on staff of HD, AD/A & HOS acknowledged that with the appointment of PMAs, the role of estate staff would change from direct management to monitoring of performance. He however pointed out that about two-thirds of HD estate staff would remain in agency-managed PRH estates for the administration of housing policies and enforcement of housing regulations. This would also allay some members worries on HDs ability to resume management of PRH estates in the event of industrial actions of PMAs.

14. Before concluding, the Chairman remarked that while privatization was not desirable from a social point of view, he was in support of the Administrations move in contracting out estate management services in PRH estates to PMAs having regard to the unsatisfactory performance of HD in this respect. Notwithstanding this, the Chairman urged the Administration to take account of public opinions and feedback from HD staff in assessing the feasibility of privatization of estate management in PRH estates.

V.Policy on cottage areas

(LegCo Paper No. CB(1) 619/96-97 and 806/96-97(03) - (05))

15. Before commencing discussion, Hon Frederick FUNG Kin-kee briefed members on the background of cottage areas (CAs). He said that under the Emergency (Resettlement Area) Ordinance enacted in 1952, the Urban Council was authorized to designate certain areas as CAs for the construction of cottages by approved building contractors according to standard layout plans and design. Apart from Government-built cottages, there were cottages erected by voluntary agencies. These were then sold to natural disaster victims of squatter areas who were in possession of Temporary Identity Cards. In the wake of the Shek Kip Mei fire and the establishment of the Resettlement Department in 1954, fire victims were resettled either in multi-storey estates or CAs whereas the latter had also been used to re-house tenants of PRH estates due for redevelopment. Having regard to the unique nature of CAs, residents concerned were under the impression that the status of CAs should be higher than that of squatter areas upon clearance, and that they should be accorded similar treatment as PRH tenants affected by the Comprehensive Redevelopment Programme (CRP). Nevertheless, CA residents were required to pay a permit fee for occupation of cottages. Mr FUNG emphasized a need for the Administration to recognize the status of CA residents, and to consider identifying reception estates for these residents in the event of clearance of such areas. He also expressed disappointment at the absence of specific policies on CAs in the Consultative Document of the Long Term Housing Strategy (LTHS) Review.

Admin

16. While acknowledging the unique status of CAs, DS for H stressed that residents concerned were only temporary residents who did not hold any legal title to their land, nor were they tenants of HA. Their occupation permits (OPs) were subject to three months notice of termination. DS for H noted that, subject to public opinion collated during the consultation period of the Consultative Document, the HA would be invited to draw up a clearance programme for the remaining CAs. Meanwhile, subject to the availability of housing resources, HD would continue to make available PRH flats for application by CA residents. The Assistant Director/Operations & Redevelopment (AD/O & R) supplemented that CA residents who were eligible for PRH had already been accorded second priority Green Form status in purchasing Home Ownership Scheme (HOS) flats, and that the question of whether a higher priority should be given would have to be determined in the context of the LTHS Review. He also pointed out that as CA residents were only required to pay a permit fee for OPs, they should not be treated in the same way as those PRH tenants affected by CRP to whom first priority in local re-housing would be given in accordance with provisions in their tenancy agreements. AD/O & R nevertheless undertook to consider identifying reception estates for CA residents in the event of clearance as suggested by the member.

Admin

17. Some members considered that apart from the Domestic Removal Allowances, special ex gratia allowances for clearance should be granted to CA residents as in the case of the Tiu Keng Leng (TKL) CA, albeit not to the same extent. This suggestion was made on the basis that superstructures in CAs were legal structures erected at residents own expenses. Others however expressed reservations on the proposal having regard to the impact on other squatter and roof-top dwellers. DS for H emphasized that the payment of special ex gratia allowances to clearees of TKL CA was made in recognition of its unique historical background. The Government had made it clear that such an arrangement could not be taken as a precedent for other CAs. Furthermore, it would be unfair to the 70,660 former clearees if sitting CA residents were to be granted such special ex gratia allowances as proposed by some members.

18. As regards the safety of Mount Davis CA, AD/O & R advised that the Term Consultant of HD had been instructed to carry out an immediate inspection of the affected area and its surroundings after the landslide in August 1995. Since then, regular inspections on the slopes and sewers were conducted by HD to ensure timely maintenance, in particular before rainy seasons. AD/O & R supplemented that some 70 and 60 affected residents of So Kon Po and Mount Davis CAs respectively had been re-housed as a result of geotechnical problems.

19. In reply to members, AD/O & R acknowledged the need to improve security and living conditions in CAs, and advised that efforts such as stepping up of patrol by HD estate staff, blocking or demolition of vacated cottages had been made. While appreciating a members suggestion of moving tenants to vacant cottages to ensure effective management, AD/O & R advised that this would be subject to the acceptance of tenants concerned. He also undertook to follow-up on cases where electricity was cut off in some vacated parts of CAs. AD/O & R supplemented that CA residents were encouraged to register on HAs general waiting list (WL) in order to increase their chances of early re-housing in PRH flats. At members request, AD/O & R undertook to provide information on the number of CA residents who at the same time were applicants on the WL.

20. As regards the time-table for demolition of the remaining five CAs including the one owned by the Government in Fo Tan, AD/O & R advised that a comprehensive plan had yet to be worked out subject to the availability of housing resources.

21. Before concluding, the Chairman remarked that members could further examine the subject of CAs at forthcoming meetings of the Subcommittee on LTHS Review.

VI.Any other business

22. There being no other business, the meeting closed at 1:00 pm.

Legislative Council Secretariat
7 March 1997

Last Updated on 20 August 1998