PLC Paper No. CB(1)332
Ref : CB1/SS/3/97
Paper for the House Committee meeting
on 17 October 1997
Report of the Subcommittee on subsidiary legislation gazetted on 19 September 1997
relating to fee increases
Purpose
This paper reports on the deliberations of the Subcommittee on subsidiary legislation gazetted on 19 September 1997 relating to fee increases.
The Regulations
2The subsidiary legislation are the Building (Administration) (Amendment) (No. 2) and (No. 3) Regulations 1997 and the Building (Oil Storage Installations) (Amendment) Regulation 1997.
Building (Administration) (Amendment) (No. 2) Regulation 1997
3At present, building contractors are classified into registered contractors and registered ventilation contractors. To improve the standard of contractors, the Buildings (Amendment) Ordinance 1996 provides for registration of general building contractors and specialist contractors who in turn are further classified into different categories. The Regulation prescribes a new set of fees for registration of general building contractors and specialist contractors to replace the existing fees for registration of contractors and ventilation contractors and for inspection and testing of drainage works done by them. The fees relating to registration of general building contractors and inspection and testing of drainage works will be implemented in October 1997, those relating to registration of specialist contractors in March 1998.
Building (Administration) (Amendment) (No. 3) Regulation 1997
4This Regulation increases by 14% the fees for additional inspection of completed building works or street works by an authorised person or a registered structural engineer from $2,120 to $2,420. It also revises the fees for the issue of certified copies, prints or extracts of or from any plan or microfilm or other record of any plan by 9% from $320 to $350. The new fees shall come into operation on 31 October 1997.
Building (Oil Storage Installations) (Amendment ) Regulation 1997
5This Regulation revises the fees for the grant and renewal of a licence in respect of an oil storage installation from $48,940 to $52,400, representing an increase of 7%. The new fee shall come into effect on 31 October 1997.
The Subcommittee
6A Subcommittee to study the three Amendment Regulations was formed at the House Committee on 3 October 1997. Mr Ronald ARCULLI was elected Chairman of the Subcommittee. The Subcommittee has held one meeting with the Administration. A membership list of the Subcommittee is at Appendix I.
Deliberations of the Subcommittee
7The Subcommittee has no objection to the proposed fee increases for inspection and testing of drainage works done by registered contractors under the Building (Administration) (Amendment) (No. 2) Regulation 1997, the Building (Administration) (Amendment ) (No. 3) Regulation 1997, and the Building (Oil Storage Installations) (Amendment) Regulation 1997.
8As regards the proposed new fees for registration of contractors under the Building (Administration) (Amendment) (No. 2) Regulation 1997, members reckon that it is inappropriate to make a direct comparison between these and the current fees in recognition of the fact that the former have been devised for a new registration system. Whilst both the existing and the proposed fees aim at recovering the full costs of providing the services, they are different in real terms which are attributed to different price levels covering different periods of time, more stringent requirements and procedures for processing applications under the new registration system, and different fee structures. One such example is the application fee for entry of name in the register of contractors for one year which will be markedly increased from $480 (registered contractor) or $440 (registered ventilation contractor) to $1,500. Members have accepted that this is necessary as the existing fee was set at 1994-95 price level and the new registration system will require the Building Authority to assess in conjunction with the to-be formed Contractors Registration Committee the eligibility of applicants in a more comprehensive and stringent way.
9Members have noted with concern the insignificant difference between the proposed application fee for registration as a contractor who in most cases will be a corporation and the proposed fee payable for each additional person appointed to act for the registered contractor; the former being $4,970 and the latter $4,350. The former fee covers the cost of examining both the corporation under application and the person appointed to act for it, whereas the latter fee covers that of examining the individual. In considering the suitability of a corporation for registration, the Building Authority will assess the adequacy of its management structure, the qualifications of its personnel, and its ability to have access to plant and resources. This being the case, the work involved in checking a corporation should be as much as, if not more than, that of checking an individual. However, the proposed two fees suggest that the cost of assessing a corporation is $620 ($4,970 - 4,350) and that of an individual $4,350. Members have called into question the cost apportionment. Members' concern has been taken aboard by the Administration who has agreed to review the cost apportionment one year after the new fees have come into operation. The Administration has also assured members that while the percentage of fee increases in respect of Government services will normally be adjusted annually in line with the movement of the Government Consumption Expenditure Deflator, other factors such as the current level of the fee in question and affordability of the persons affected will be taken into account. Where necessary, the Administration will propose a longer period to achieve full cost recovery.
Recommendation
10The Subcommittee recommends that the three pieces of subsidiary legislation be supported.
Advice sought
11Members are invited to support the recommendation of the Subcommittee.
Provisional Legislative Council Secretariat
14 October 1997
