Information Paper for the
LegCo Panel on Trade and Industry
Members’ Bill
Travel Agents (Travel Industry Compensation Fund (Amount of Ex gratia Payments and Finance Penalty) Rules)(Amendment) Bill 1996

Introduction

This paper sets out the Administration’s comments on the above Members’ Bill which it is understood Hon Fred LI Wah-ming intends to introduce into the Legislative Council.

Background

2. We understand that Hon Fred LI Wah-ming intends to introduce a Members’ Bill into the Legislative Council to seek to increase the rate of ex gratia payment under the Travel Industry Compensation Fund (TICF) upon defaults of licensed travel agents from the existing 80% to 100% of the outbound fare paid.

3. We note that there is no consensus on the proposed increase of the rate of ex gratia payment from 80% to 100%. The arguments for and against full compensation are set out in the Annex to the Information Paper on the Review of the regulatory mechanism of the outbound travel industry, which the Administration is submitting to this Panel for the meeting on 12 November 1996. Having examined the arguments in detail, the Advisory Committee on Travel Agents and the TICF Management Board ("the Board") have accepted the recommendation that the rate of ex gratia payment under the TICF should be revised upwards to 90%. In accordance with section 32G(2)(b) of the Travel Agents Ordinance (TAO) and subject to the agreement of the Financial Secretary, the Board will specify 90% as the maximum rate payable as an ex gratia payment in respect of an outbound traveller.

Legal advice

4. According to the legal advice given to us, the specification of the amount by an Ordinance might be construed as impliedly repealing the power given to the Board under section 32G of the TAO. In enacting section 32G(2)(b) of the TAO, it is clear that the legislature has seen fit to confer on the Board the power to specify the maximum compensation. The Board must have its justification in deliberately setting such amount at 80% instead of 100% of the outbound fare. The present position in the Bill appears to be a challenge to the rationale of the Board. In the circumstances, it is submitted that the Board be consulted before the Bill is presented to the Legislative Council or when the Bill is considered by a Bills Committee.

6. Passage of the amendment Bill would be tantamount to the decision of the Board being overridden by that of the legislature on this occasion. If it is the intention of the legislature that the Board is no longer fit for such matter in the future, section 32G(2)(b) of the Ordinance should also be deleted so as to avoid any doubt arising from the question of implied repeal.

Trade and Industry Branch
4 November 1996
Ref. : L/M (33)B to TAR 2/2091/78

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