PLC Paper No. CB(2) 826

Ref: CB2/SS/6/97

Paper for the House Committee meeting
on 9 January 1998

Report for the Subcommittee on subsidiary legislation gazetted on 5 December 1997 relating to fee increases

Purpose

1.The paper reports on the deliberations of the Subcommittee on subsidiary legislation gazetted on 5 December 1997 relating to fee increases.

The Subsidiary Legislation

2.The 14 items of subsidiary legislation are as follows -

1. Employment Ordinance (Cap. 57)
   Employment Agency (Amendment) Regulation 1997 (L.N. 576)

2. Merchant Shipping (Prevention and Control of Pollution) Ordinance (Cap. 413)
   Merchant Shipping (Prevention and Control of Pollution) (Charges for Discharge of Polluting Waste) (Amendment) Regulation 1997 (L.N. 569)

3. Waste Disposal Ordinance (Cap. 354)
   Waste Disposal (Permits and Licences) (Forms and Fees) (Amendment) Regulation 1997 (L.N. 570)
   Waste Disposal (Chemical Waste) (General) (Amendment) Regulation 1997 (L.N. 571)

   Water Pollution Control Ordinance (Cap. 358)
   Water Pollution Control (General) (Amendment) Regulation 1997 (L.N. 572)

4. Air Pollution Control Ordinance (Cap. 311)
   Air Pollution Control (Specified Processes) (Amendment) Regulation 1997 (L.N. 577)
   Air Pollution Control (Open Burning) (Amendment) Regulation 1997 (L.N. 578)
   Air Pollution Control (Asbestos) (Administration) (Amendment) Regulation 1997 (L.N. 579)

5. Ozone Layer Protection Ordinance (Cap. 403)
   Ozone Layer Protection (Fees) (Amendment) Regulation 1997 (L.N. 580)

6. Noise Control Ordinance (Cap. 400)
   Noise Control (General) (Amendment) Regulation 1997 (L.N. 581)
   Noise Control (Air Compressors) (Amendment) Regulation 1997 (L.N. 582)
   Noise Control (Hand Held Percussive Breakers) (Amendment) Regulation 1997 (L.N. 583)

7. Dumping at Sea Ordinance (Cap. 466)
   Dumping at Sea (Fees) (Amendment) Regulation 1997 (L.N. 584)

8. Road Traffic Ordinance (Cap. 374)
   Road Traffic Ordinance (Amendment of Schedule 10) Order 1997(L.N. 585)

All the increases proposed under (b) to (h) above will take effect from 16 January 1998. The increase proposed under (a) above will be effective from 17 January 1998.

The Subcommittee

3.The House Committee at its meeting on 19 December 1997 agreed to form a Subcommittee to study the 14 items of subsidiary legislation set out in paragraph 2 above. It was also agreed at the same meeting that the Chairman of the House Committee should move a resolution at the Council meeting on 7 January 1998 to extend the scrutiny period of the subsidiary legislation to 14 January 1998. The Subcommittee has noted that the notice of the resolution was given by the Chairman of the House Committee on 22 December 1997.

4.Under the chairmanship of Hon WONG Siu-yee, the Subcommittee has held one meeting with the Administration on 6 January 1998. A membership list of the Subcommittee is at Appendix.

Deliberations of the Subcommittee

General

5.The various fee increase proposals are intended to achieve different levels of cost recovery. The Administration has explained that it is Government policy that fees should in general be set at levels sufficient to recover the full cost of providing the services. Costing reviews are normally conducted every four years. Between two costing exercises, fees are revised on the basis of the movement of the Government Consumption Expenditure Deflator (GCED).

6.In cases where the fees charged are substantially below cost, the fees are revised in accordance with a phasing-in programme which is based on even increase in cost recovery rate during the phased period concerned.

Employment Agency (Amendment) Regulation 1997 (L.N. 576)

7.The Amendment Regulation seeks to increase the fees for the issue and renewal of an employment agency licence and for the issue of a duplicate licence by 7% in accordance with the movement in the GCED from 1996-97 to 1997-98.

8.The Administration has explained that under Part XII of the Employment Ordinance, any person who operates an employment agency in Hong Kong has to obtain a licence from the Commissioner for Labour. Any person who contravenes this provision in the Employment Ordinance shall be guilty of an offence and shall be liable on conviction to a maximum fine of $50,000. Some 1,130 employment agency licences were issued in 1997, but the number of licenced employment agencies varies from time to time. The fees were last revised in July 1997 to reflect the full cost of providing the services.

Merchant Shipping (Prevention and Control of Pollution) (Charges for Discharge of Polluting Waste) (Amendment) Regulation 1997 (L.N. 569).

9.The Regulation seeks to increase the charges payable to the Director of Marine for using the reception facilities at the Chemical Waste Treatment Centre (CWTC) for collecting and disposing polluting wastes from ocean-going ships.

10.The Administration has explained that under the International Convention for the Prevention of Pollution from Ships 1973 as amended by the 1978 Protocol (MARPOL Convention), port administrations are required to provide reception facilities for the disposal of wastes containing oil or noxious substances (MARPOL wastes). Initially, the CWTC provided its service free of charge in order to encourage ship operators to dispose of their MARPOL waste properly. The Merchant Shipping (Prevention and Control of Pollution) (Charges for Discharge of Polluting Waste) Regulation 1995, which came into operation on 1 August 1995, sets out the MARPOL charging scheme. The initial charges were set a level to recover 20% of the variable operating cost (VOC) of the CWTC. The charges were last revised on 20 December 1996 to achieve 25% VOC recovery for 1996-97.

11.The Administration has pointed out that the proposal to increase the VOC recovery rate to 31% for all types of MARPOL waste for 1997-98 is in line with the VOC recovery rate used for setting the new charges for the disposal of land-based chemical waste at the CWTC, which came into effect on 27 June 1997. The Administration will continue to bear 69% of the VOC of the CWTC.

12.Members are concerned about the relatively high operating cost of the CWTC. They refer to the draft report on the consultancy study on the operations of the CWTC which concludes that the overall cost of the CWTC could be reduced, and they have suggested that the departments concerned should consider adopting measures with a view to achieving a reduction in the operating cost of the CWTC. The Administration has indicated that consideration is being given to the options suggested by the consultants to reduce costs for both the taxpayer and the CWTC users. In response to members' request, the Administration has undertaken to obtain information on the operating costs of similar facilities in neighbouring ports in the region for reference purposes.

13.Members have also raised questions as to whether the proposed increase in charges will result in a decrease in the number of ocean-going ships calling on Hong Kong and utilising the CWTC's services. The Administration has pointed out that although Hong Kong's charges are higher than those in most of the ports in the region, Hong Kong remains attractive because it permits MARPOL waste to be collected whilst ships are berthed at the container terminals. The Administration is of the view that the revised charges should not pose a significant burden on the shipping community or impair the competitiveness of Hong Kong as a hub port. The Administration has also agreed to provide information regarding the decrease in the number of ships calling on Hong Kong following the increase in charges in December 1996 as well as the estimated decrease as a result of the proposed increase in charges for 1997-98.

Waste Disposal (Permits and Licences) (Forms and Fees) (Amendment) Regulation 1997 (L.N. 570)
Waste Disposal (Chemical Waste) (General) (Amendment) Regulation 1997 (L.N. 571)
Water Pollution Control (General) (Amendment) Regulation 1997 (L.N. 572)

14.The two Amendment Regulations made under the Waste Disposal Ordinance (WDO) seek to increase the fees for permits and licences for the import, export, collection and disposal of waste, registration of a waste producer and certified copy of an entry in the register. The Amendment Regulation made under the Water Pollution Control Ordinance (WPCO) seeks to increase various licence fees for discharge or deposit of sewage from industrial or commercial premises, domestic sewage treatment plants and domestic premises.

15.The Administration has explained that the proposed fee increases under the WDO and the 'subsidised fees' under the WPCO (i.e. licence fees in relation to the discharge or deposit of domestic sewage from domestic, industrial or commercial premises in rural areas) are based on the movement of the GCED of 7% from 1996-97 to 1997-98. For the other fees under the WPCO, the proposed increases are in accordance with the second phase of the cost recovery programme.

16.In response to a query raised by a member concerning the several incidents of illegal importation of toxic waste which occurred in the past year or two, the Administration has explained that in a free port like Hong Kong, it is inevitable that incidents of illegal shipment of toxic waste would occur. However, the Administration has achieved considerable success in detecting such cases and prosecuting the offenders concerned.

Air Pollution Control (Specified Processes) (Amendment) Regulation 1997 (L.N. 577)
Air Pollution Control (Open Burning) (Amendment) Regulation 1997 (L.N. 578)
Air Pollution Control (Asbestos) (Administration) (Amendment) Regulation 1997 (L.N. 579)

17.The three sets of Amendment Regulations seek to increase the fees payable for licence/permit applications and related items under the respective principal regulations.

18. The proposed increases in the specified processes licence fees are made in accordance with the second phase of the cost recovery programme. The proposed fee increases for a certified copy of an entry in the register, open burning permit and asbestos registration are based on the movement of the GCED of 7% from 1996-97 to 1997-98.

19.Members have noted that the increase in absolute terms in respect of specified processes licence fees is quite high. The Administration has explained that the validity period of the licence has been extended from two to five years so that the actual amount of increase per year will be lower. The Administration has also introduced an " one-stop-shop " service since January 1997 to provide a more efficient service to the public. All permit/licence applications relating to construction sites may be obtained at any one of the six Environmental Protection Department (EPD) Local Control Offices. The service will be extended to other designated EPD offices in early 1998. The Administration has also confirmed that the construction industry has raised no objection to the proposed increases.

Ozone Layer Protection (Fees) (Amendment) Regulation 1997 (L.N. 580)

20.This Amendment Regulation seeks to increase the licence fees for importing/exporting scheduled substances and the registration fees for importers/exporters of such substances. The proposed increase in the fee for a licence to import or export scheduled substances is based on the movement of the GCED of 7% from 1996-97 to 1997-98. The proposed increase in the registration fee for an importer or exporter is made in accordance with the last phase of the cost recovery programme.

21.Members have raised no queries on this item.

Noise Control (General) (Amendment) Regulation 1997 (L.N. 581)
Noise Control (Air Compressors) (Amendment) Regulation 1997 (L.N. 582)
Noise Control (Hand Held Percussive Breakers) (Amendment) Regulation 1997 (L.N. 583).

22.The three sets of Amendment Regulations seek to increase the fees for construction noise permits, noise emission labels (air compressors) and noise emission labels (hand held percussive breakers) to achieve cost recovery of 20%, 60% and 60% respectively in accordance with the second phase of the cost recovery programmes concerned.

23.Members have raised concern that the increase in percentage terms is high and that the EPD may have difficulty in coping with the additional workload arising from the launching of the housing programme announced by the Chief Executive and other large infrastructural projects in 1998. The Administration has explained that increase in absolute terms is relatively small.

The EPD will also have sufficient staff resources to cope with the additional workload.

Dumping at Sea (Fees) (Amendment) Regulation 1997 (L.N. 584)

24.This Amendment Regulation seeks to increase the fees payable for permits for loading/dumping spoil and other substances and for a copy of an entry in the register of permits issued. The fees were last revised in January 1997 to reflect the full cost at 1996-97 prices. The proposed fee increases are intended to reflect the movement of the GCED of 7% from 1996-97 to 1997-98.

25.Members have raised no queries on this item.

Road Traffic Ordinance (Amendment of Schedule 10) Order 1997 (L.N. 585).

26.The Order seeks to increase the fees payable for designation or renewal of designation of vehicle emission testing centres to achieve cost recovery of 80% as well as to increase the fees payable for testing of motor vehicles and supply of forms of certificate of compliance to achieve full cost recovery.

27.In response to members' enquiry, the Administration has stated that the number of testing centres does not fluctuate very much from year to year. There are currently 18 testing centres run by private companies and one operated by the Government.

Conclusion

28.Members have noted that the proposed fee increases set out in the above 14 items of subsidiary legislation are either based on the movement of the GCED of 7% from 1996-97 to 1997-98 or in accordance with the second phase of the cost recovery programmes concerned. Members are therefore of the view that the fee increase proposals should be supported.

Recommendation

29.The Subcommittee recommends that the 14 items of subsidiary legislation be supported.

Advice sought

30.Members are invited to support the recommendation of the Subcommittee.

Provisional Legislative Council Secretariat
9 January 1998

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Appendix

Subcommittee on subsidiary legislation gazetted on 5 December 1997 relating to fee increases