2. Secretary for the Civil Service (SCS) advised that the Administration was still examining possible options to provide continuity of authority for the appointment, removal and discipline of civil servants. In order to allow sufficient time for the Administration to update information on this subject, members agreed to defer discussion to the next meeting.

II. Implications of the Recent Court of Appeal Judgment on the Localization of the Civil Service

(LegCo Paper No. CB(2) 709/96-97(01)

LegCo Paper No. CB(2) 701/96-97(01) - Court of Appeal Judgment)

3. Deputy Secretary (Civil Service) 1 (DS(CS)1) referred members to the information paper (LegCo Paper CB(2) 709/96-97(01)) which summarized the Court of Appeal judgment handed down on 22 November 1996 on the appeal by the Association of Expatriate Civil Servants (AECS) and cross appeal by the Government on various government measures to implement the localization policy in the civil service. He emphasized that despite certain aspects of the implementation were ruled to be unlawful, the Court had held that there was nothing unlawful about the localization policy itself. The Government was still firmly committed to the policy. Another aspect upheld by the Court was the opening up arrangement introduced since December 1994 which required that, when any officer employed on agreement terms (whether overseas or local terms) sought an extension to his agreement, his position would be "opened up" for competition.

4. Regarding the Chinese language issue, DS(CS)1 clarified that the Court did not find the imposition of a language requirement on transferees to be unlawful per se. According to the Court, the problem with it was that the way the requirement was phrased in the various Civil Service Circulars was too all-encompassing, to the extent that the requirement seemed to bind each and every officer, irrespective of the nature of work of the post. In deed, the Court held that the policy intent as clarified by the Administration was lawful, i.e. that some form of Chinese language assessment would be taken into account in appointing an officer to a post if officers in that post were normally expected to act in any post or posts which required proficiency in spoken Chinese. The Judge had also said that provided the Governments decision was never applied in any sense other than the one intended, as stated above, then no actual application for transfer would in fact had been dealt with unlawfully.

5. Mr CHEUNG Man-kwong enquired how the courts ruling would affect the implementation of Article 9 of the Basic Law, under which the Government was to enforce a bi-literate, tri-lingual policy which stressed the equal importance of both Chinese and English. DS(CS)1 said that, with retrospect, the Administration had made a technical error, as above mentioned, in having made an across-the-board statement which gave rise to the meaning that if any post in a rank required the use of Chinese, then every officer within the rank had to be able to communicate in Chinese. That was not proportional to the original policy intent and did not correctly reflect what the Administration had been doing to implement the policy. Mr CHEUNG Man-kwong maintained that, as a matter of principle, the bi-lingual policy had to be applied to all civil servants employed on local terms. DS(CS)1 responded that the policy was welcomed by the community as large since it was introduced in 1995. The Administration would continue to implement that policy.

6. Referring to members queries on the impact of the various measures being ruled unlawful on the localization policy, DS(CS)1 said that the Administration had sought legal advice before taking measures to implement the policy, and in fact the Court had come to the view that most of the measures were lawful. The localization policy was a gradual process which had been in place since the 1950s. It had to be re-examined in the light of the Bill of Rights, and adjustments were needed. The court ruling provided a direction of how best the Administration could take matters forward. DS(CS)1 further stated that although some aspects of the localization policy were ruled unlawful, those matters were in general technical parts of how the Government had implemented the policy, rather than the overall policy itself, which still remained intact. Apart from the language requirement, the requirement for transferees to take all accrued leave before transfer, for example, was a technical point which was not key to the localization policy. The demotion scheme, on the other hand, was a time-limited exercise which had already lapsed. As regards restriction on promotion for the demotees, the restriction had been lifted since 1 January 1996. However, the promotion restriction was still in place for the level transferees. DS(CS)1 remarked that this was an area which had to be further examined.

7. Referring to members query of whether the Administration would appeal against the Courts judgment, DS(CS)1 said that the Administration had yet to make a decision. The deadline for lodging an appeal would fall on 21 December 1996. DS(CS)1 pointed out that as it was also open for AECS to make an appeal in respect of those areas upheld by the Court, it would not be appropriate for the Administration to reveal what it intended to do at this point in time. The Administration nevertheless was prepared to brief members on any decisions taken after the deadline had passed.

8. Mr Allen LEE Peng-fei said that the localization policy was an important government policy which had the full support of the Legislative Council (LegCo). The policy had been implemented for well over 10 years apparently without any problems being envisaged. Now that certain measures were found to be unlawful, Members of LegCo would expect the Government to appeal, or the Government would have to justify to the public the action it had taken in the past in implementing the policy, and to account for the consequences brought about by the court ruling. Ms Emily LAU Wai-hing and Mr Michael HO Mun-ka said that the Administration had to consider carefully whether there were sufficient grounds for an appeal to be made. Mr CHEUNG Man-kwong opined that as the localization policy itself was held to be lawful, any decisions by the Administration should be taken with a view to safeguarding the continual implementation of the policy, and rectifying technical errors. He added that any proposals to compensate officers affected by the localization policy would need to be submitted to LegCo for scrutiny.

9. Members were of the view that as a result of the Courts ruling, the message was put across that there were things seriously wrong with the localization policy. This had clearly caused concern to the public and the civil servants. Members were also concerned that even technical problems would hamper the implementation of the localization policy. In order to restore confidence, members urged the Administration to conduct a thorough overall review of the localization policy and to act on areas where problems occurred. Members considered that if the Administration eventually decided not to appeal against the Courts decisions, members should be given a full explanation at the earliest opportunity. Members agreed to hold a special meeting on 23 December 1996 at 10:45 am for the Administration to brief members on its decision.

(Post-meeting note: The Administration subsequently decided against lodging an appeal and briefed members on the reasons for its decision at a special meeting of the Panel on 23 December 1996)

III. Secondment of Civil Servants to Public-funded Organizations

(LegCo Paper No. CB(2) 709/96-97(02))

10. Elaborating on the information paper, DS(CS)1 advised that the matter of secondment was discussed at a recent Establishment Subcommittee meeting when Members raised questions on the policy concerning secondment of senior civil servants to public-funded organizations. Currently, those organizations included the following bodies:

Airport Authority (AA)
Hong Kong Export Credit Insurance Corporation (HKECIC)
Secretariat of the Pacific Economic Co-operation Council (PECC)
Secretariat of Asia-Pacific Economic Co-operation (APEC)
Foreign and Commonwealth Affairs Office (FCO)
Society for the Aid and Rehabilitation of Drug Abusers (SARDA)
Employees Retraining Board (ERB)

11. DS(CS)1 explained that the guiding principle governing the secondment to outside organizations was that it should be in the public interest and it would enhance the quality of public administration. For some of the cases involved, the Government had endeavoured to assist the organizations concerned which had experienced recruitment difficulties (such as HKECIC, SARDA and ERB), or which needed special government expertise (as in the case of AA). The other secondments were basically to establish an effective link with the individual organizations with which the Government had a close working relationship or to fulfill Hong Kongs obligations as a member economy of international or regional bodies. DS(CS)1 stated that the secondments were also beneficial to the Government. They gave the Administration a higher profile and provided the secondees with valuable experience. He said that the secondments were usually of a normal posting duration. The system of performance appraisal of the secondees was the same as that applied in the civil service. He further said that, in view of the limited number of the secondees, the secondment arrangements should in no way affect the effective functioning of the civil service.

12. Mr CHEUNG Man-kwong questioned the long-standing secondments of senior officers to HKECIC and SARDA, where in both cases the secondments had been in place for more than 10 years. He said that prolonged secondments might not be beneficial to the organizations concerned, as secondees would lack a long-term commitment to the organizations. DS(CS)1 replied that in HKECIC, officers at senior levels had been leaving rather regularly. As to SARDA, despite the organization had tried to recruit several times, it still failed to find a suitable candidate. DS(CS)a said that it was fortunate to have found officers within the civil service, who possessed the experience of managing small organizations such as funds, to fill the posts, since the organizations might be unable to get suitable people from outside. He remarked that it would not be appropriate to set an arbitrary date as to when the secondments should stop since it would affect the interests of the organizations. The Administration would take necessary measures, such as reviewing the terms and conditions of the posts to see if they were sufficiently attractive. DS(CS)1 added that it was not sure whether having a person in post for a long time would bring about commitments. There were also arguments that short-term appointments would generate new ideas for the benefit of the organization. He concluded that the Administration had considered that the present arrangements had been working well.

13. In response to Mr CHEUNG Yiu-tongs question, DS(CS)1 advised that the duration for a secondment normally varied between two to four years. There was not a particular set time. He added that he was not aware of any civil servants retiring while on secondment.

14. Mr Michael HO Mun-ka opined that secondment was not a long-term remedy for the succession problem. The Administration should identify the crux of the problem by looking into areas such as the nature of the jobs and whether there were shortcomings relating to the policy, structure and management of the organizations. Referring to the Executive Director post in SARDA, Mr HO relayed that there were opinions suggesting that a secondee without the expert knowledge and experience in dealing with dangerous drugs and narcotics would not be well-equipped for the job. A non-civil servant specialized in the field, or alternatively an experienced officer from the Department of Health, could be more suitable. DS(CS)1 undertook to convey the message to the relevant policy branch for consideration and explain more on this subject at the next meeting.

Adm

15. The Chairman questioned whether it was possible to put secondment posts which had been in existence for unduly long into the permanent civil service establishment. DS(CS)1 replied that the organizations might have a view on this as it could be seen to be imposing a civil servant on them. He agreed to reflect on this as a possible option and discuss with the relevant branches responsible for the secondments.

Adm

IV. Prevention of Double Housing Benefits in the Civil Service

(LegCo Paper No. CB(2) 709/96-97(03))

16. Deputy Secretary (Civil Service) 2 (DS(CS)2) briefed members on the various types of housing benefits which were covered by the prevention of double benefits rule as set out in the Civil Service Regulations - CSR809. Basically, a civil servant or his spouse could not receive more than one housing benefit at any one time, irrespective of whether the benefit was provided by the Government, a public-funded body or a private sector employer. Various monitoring measures were in force, such as declaration by the officers on their housing situation and any subsequent changes in the circumstances which might affect their entitlement, the requirement on the approving authority to check the records with the Housing Authority and the Housing Department regarding public housing, random visits to the housing units and checks on the information available to ensure compliance, and acting on complaints etc. Departments with departmental quarters were working closely with other parts of the Government, particularly the Treasury and the Housing Department, to ensure that officers conformed with the rules. These rules were promulgated on a six-monthly basis in a Civil Service Circular and regularly in the Civil Service Newsletter as well as in the various provisions applicable to the Home Purchase Scheme (HPS) and the Home Finance Scheme (HFS). Penalties also existed within the monitoring system, which included disqualification from all forms of civil service housing benefits, refund of any payment in the form of allowance or loan and separate disciplinary and legal proceedings.

17. Ms Emily LAU Wai-hing said that the existing monitoring measures were not sufficient, as indicated by the recent report by the Director of Audit examined by the Public Accounts Committee, which revealed a large number of breaches, particularly in the disciplinary services. She requested for information in respect of action taken on these cases. DS(CS)2 said that the level of penalty varied among cases. Recent cases included one officer found to be in receipt of a low interest housing loan from a private sector employer. He was given a written warning and was required to pay the value of the loan. Another officer involved in a co-operative building scheme who also occupied a departmental quarter concurrently received a severe reprimand and a reduction in salary. There was another officer who occupied a non-departmental quarter and at the same time received an accommodation allowance from her husbands employer. That officer was required to repay nearly $800,000 worth of the value of the allowance and the Administration was considering further action to be taken. All these officers would lose their housing benefits. The breaches would also exert impact on their careers. As to the cases alleged by the Director of Audit, DS(CS)2 informed that some of the departments had completed their investigations. A report would be prepared on each individual case, which would be submitted to Heads of Department to decide on further action, if necessary. DS(CS)2 added that , out of the cases involving the Police Force, some 460 cases were related to authorized occupants of public housing. In other words, these were technical breaches where the officers concerned were on the list of public housing but they were not the registered persons for the units. For these cases, those officers who were occupying departmental quarters had been given a period of three months to rectify the records with the Housing Department. DS(CS)2 further remarked that an inter-departmental working group involving the Housing Department had been set up to consider ways to improve the monitoring mechanism. DS(CS)2 undertook to provide more detailed statistics in writing concerning the number of civil servants in breach of the prevention of double housing benefits rules, and the levels of penalty imposed.

Adm

18. In response to further questions from Ms Emily LAU Wai-hing, DS(CS)2 said that the Administration had liaised with private sector employers, where necessary, for the enforcement of the prevention of double housing benefits rules. In one of the above examples mentioned, the Administration had approached the private employer to determine exactly how much the housing allowance payable by that employer should be considered as constituting a breach of the rules. As to the total number of civil servants who were entitled to housing benefits, DS(CS)2 said that it was difficult to state the absolute figure. Out of some 9 650 officers who had joined the HFS, some 1 830 had already exhausted the benefits. The corresponding figures for the HPS were 27 020 and 14 610 respectively. On the other hand, some of those officers who left the scheme might also have left the service. In addition, there was a yearly allocation of 1 500 to 1 900 places for the civil service public housing quota. DS(CS)2 undertook to provide some supplementary statistics after the meeting.

Adm

19. Mr CHEUNG Man-kwong expressed that an effective monitoring system should carry with it stringent measures such as regular reporting and declaration of housing benefits, checking and inspections as well as substantial punishment of deliberate offenders. He stressed that all civil servants, irrespective of their ranks and grades, should be subject to the same degree of scrutiny. He requested the Administration to provide a detailed account of the levels of penalty imposed on non-compliance cases and whether or not there had been cases of Heads of Department in breach of the rules. DS(CS)2 responded that the existing monitoring mechanism had already incorporated those measures. He informed members that investigations had confirmed that, out of the some 1 300 cases identified by the Director of Audit, a significant proportion of the cases were not deliberate breaches. The Administration had in deed recognized that housing was in important form of benefit and it had taken steps to improve the monitoring system. The role of the inter-departmental working group, for instance, was to ensure first and foremost that there was proper communication between departments. Another objective was to examine how best the reporting and checking mechanism could be carried forward in the standard procedure. He maintained that there was not a huge number of deliberate cases of non-compliance. As agreed, he would provide relevant information on these cases.

Adm

20. Mr Michael HO Mun-ka enquired of the measures undertaken to ensure that all civil servants, most importantly officers at the management level who did the vetting and approved applications, fully understood the complicated rules and procedures. DS(CS)2 replied that the prevention of double housing benefits rules as they applied in each type of housing benefits were fairly simple and standard. All civil servants were regularly reminded of the rules through the usual mechanisms as described earlier. In addition, the Administration was trying to promote and simplify the relevant CSR so that civil servants would be in a better position to understand the rules. He said that the Administration was sensitive to the different needs of the various groups within the civil service. A seminar was organized recently which specifically targeted at officers applying for civil service public housing quota, on which occasions they were briefed on matters which affected their interests. In response to a further question by Mr HO, DS(CS)2 said that there was a separate form (the "GF551") on which officers were required to declare, on application for a civil service housing benefit, whether there were other housing benefits which they and their spouses received. The form stated clearly that in case the officers spouse was receiving other housing benefits, the officer had to choose between either benefits. The information facilitated the Administration to investigate cases of non-compliance, and where necessary make clarification with the private sector organizations providing the benefits.

21. In reply to Ms Emily LAUs query, DS(CS)2 said that most of the approving officers were experienced officers conversant with the rules. It was unlikely that they had dealt with the applications improperly. He held that where there were officers trying to circumvent the rules or intentionally provide incorrect information, the approving officers should not be held responsible.

22. Referring to Mr CHENG Yiu-tongs question on whether there should be a "self-confession" mechanism for officers inadvertently breaching the rules, DS(CS)2 said that those officers could certainly report their case to the respective Heads of Department, or to the Civil Service Branch or the Treasury. The Administration might take a sympathetic view, depending on the merits of the case.

23. Mr Michael HO Mun-ka pointed out that departmental quarters could be categorized into specific "post-tied" quarters and quarters allocated by Heads of Department to their staff for operational purpose. He suggested that these quarters should be clearly differentiated from each other and listed out by each department. He enquired if Heads of Department had the authority to swap the use of the two types of departmental quarters. The Administration undertook to respond in writing.

Adm

V. Transition of the Civil Service

24. Members enquired of the options available to the Government to provide assistance to the Chief Executive (CE) Designate. SCS said that while the Administration had given some initial thinking on the possible arrangements, they had yet to be finalized, pending a discussion with the CE Designate. In order not to affect the stability of the civil service, the Administration did not go for a secondment en masse of principal officers including the Policy Secretaries, nor a large number of civil servants being moved. SCS stressed that the level and number of officers who would be deployed would have to be agreed with the CE Designate at a later stage.

25. In reply to Mr CHEUNG Man-kwongs question, SCS said that it was an important point well taken by both the Administration and the Chinese side that the Hong Kong Government was responsible for the administration of Hong Kong, which included the implementation of the existing policies, before 1 July 1997. The CE of the Hong Kong Special Administration Region (SAR) would exercise his authority as the executive head of the SAR with effect from 1 July 1997. SCS maintained that there was no question of a split of loyalty of the civil service and an undermining of the power of governance of the Administration.

26. Dr Anthony CHEUNG Bing-leung enquired if the CE Office would be within the establishment of the civil service. SCS said that in general, when civil servants were on secondment to an outside organization, those posts did not fall within the civil service establishment. He stated that the actual organization and operation of the CE Office had yet be decided and therefore he could not give an answer at this stage.

27. Mr CHEUNG Man-kwong asked whether the Administration would accept a small-scale secondment of civil servants as the baseline in providing support to the CE. SCS responded that the Administration would be adopting an open-minded attitude when discussing the arrangements with the CE Designate. The basic guideline was that any arrangements would not adversely affect the effective operation of the civil service. SCS asserted that there was no baseline in place as suggested by Mr CHEUNG. He undertook to report progress to the Panel in due course.

Adm

28. Ms Emily LAU Wai-hing informed members that the issue of civil servants on secondment to the CE Office had been discussed at a recent meeting of the Panel on Constitutional Affairs, where members expressed worries that even a small scale secondment of Policy Secretaries would disrupt the efficient functioning of the Administration. She said that the Administration should inform LegCo immediately of any impending arrangements. SCS agreed.

Adm

29. Referring to Mr CHAN Wing-chans enquiry, SCS said that the Administration would not normally query into a civil servants status of citizenship or right to permanent residence abroad as these were personal issues. As laid down in the Basic Law, a pre-condition for appointment to the 27 principal officers posts was that the appointees should not be holders of a foreign passport. SCS said that civil servants should be well aware of the requirement. He added that appointment of principal civil servants after the handover was a matter for the CE.

Adm

VI. Close of Meeting

30. The meeting closed at 10:50 am.

LegCo Secretariat
23 January 1997

* -- Other Commitments

Last Updated on 21 August 1998

LegCo Panel on Public Service

Minutes of Meeting held on Wednesday, 18 December 1996 at 8:30 am in Conference Room A of the Legislative Council Building

I. Date of Next Meeting and Items for Discussion

II. Implications of the Recent Court of Appeal Judgment on the Localization of the Civil Service

III. Secondment of Civil Servants to Public-funded Organizations

IV. Prevention of Double Housing Benefits in the Civil Service

V. Transition of the Civil Service

VI. Close of Meeting

Minutes of Meeting held on Wednesday, 18 December 1996 at 8:30 am
in Conference Room A of the Legislative Council Building