Panel on Economic Services (Minutes) 5 Jan 98

Provisional Legislative Council

PLC Paper No. CB(1) 1050
(These minutes have been
seen by the Administration)

Ref: CB1/PL/ES/1

Panel on Economic Services

Minutes of meeting held on Monday, 5 January 1998, at 10:45 am in the Chamber of the Legislative Council Building

Members present :

Hon James TIEN Pei-chun, JP (Chairman)
Dr Hon LAW Cheung-kwok (Deputy Chairman)
Hon HO Sai-chu, JP
Dr Hon David LI Kwok-po, JP
Hon Allen LEE, JP
Hon Henry WU
Hon Henry TANG Ying-yen, JP
Hon YUEN Mo
Hon CHAN Choi-hi
Hon CHAN Yuen-han
Hon CHAN Kam-lam
Hon Howard YOUNG, JP
Dr Hon Charles YEUNG Chun-kam
Hon Mrs Miriam LAU Kin-yee, JP
Hon Ambrose LAU Hon-chuen, JP
Hon Paul CHENG Ming-fun, JP
Hon LO Suk-ching
Hon TAM Yiu-chung, JP

Members attending :

Hon WONG Siu-yee
Hon LEE Kai-ming
Hon Mrs Selina CHOW, JP
Hon Andrew WONG Wang-fat, JP
Dr Hon TANG Siu-tong, JP
Hon NGAN Kam-chuen

Public officers attending :

Mr Stephen IP, JP: Secretary for Economic Services
For Item IV
Mr Geoffrey F WOODHEAD: Principal Assistant Secretary for Economic Services
Mr Anthony S K WONG: Director - General of Telecommunications
For Item V
Mr Leo KWAN: Deputy Secretary for Economic Services
Mr E A JOHNSON: Principal Assistant Secretary for Economic Services
Mrs Lessie WEI: Director of Agriculture and Fisheries
Mr CHEUNG Man-kwong: Assistant Director of Agriculture and Fisheries (Fisheries)
Dr LEUNG Siu-fai: Senior Fisheries Management Officer, Agriculture and Fisheries Department
For Item VI
Mr Leo KWAN: Deputy Secretary for Economic Services
Mr E A JOHNSON: Principal Assistant Secretary for Economic Services
Mrs Lessie WEI: Director of Agriculture and Fisheries
Dr K K LIU: Assistant Director of Agriculture and Fisheries (Agriculture & Regulatory)
Mr CHAN Ping-kwong: Assistant Director of Regional Services (Environmental Health Services)
Mr CHU Wing-wai: Assistant Director of Urban Services (Environment Health)
Miss Esther LEUNG: Principal Assistant Secretary for Education and Manpower
Mr TSANG Kin-woo: Assistant Commissioner for Labour
Mr Anthony CHENG Chok-man: Chief Social Security Officer, Social Welfare Department

Clerk in attendance :

Ms Estella CHAN: Chief Assistant Secretary (1)4

Staff in attendance :

Miss Erica WONG: Senior Assistant Secretary (Complaints)1
Mr Andy LAU: Senior Assistant Secretary (1)6

I.Confirmation of minutes and matters arising

(PLC Paper No. CB(1)581)

The minutes of the meeting on 3 November 1997 were confirmed.

II.Information papers issued since last meeting

(PLC Paper No CB(1)647-	Information paper on the import and retail prices of major fuels from November 1995 to October 1997
PLC Paper No CB(1)697 -	Information paper prepared by the Administration on a proposed environmental impact assessment study and site investigation work for the planned Pang Chau Typhoon Shelter
PLC Paper No CB(1)722 -	Information paper prepared by the Administration on the proposed strengthening of the directorate structure of the Post Office
PLC Paper No CB(1)733 -	Information paper prepared by the Administration on the proposed extension of the flight allowance for Flight Operations Inspectors in the Civil Aviation Department)

2. Members noted the information papers issued since the last meeting.

III.Date and items for discussion at the next meeting

3. Members agreed to convene the next regular meeting on 9 February 1998 at 2:30 pm.

4. The Chairman invited members to inform the Clerk after the meeting of any items which they wished to discuss at the next meeting.

IV.The impact of the acquisition of Pacific Link Telecommunications by Hong Kong Telecom on the development of the telecommunications industry

(PLC Paper No. CB(1)721(01) - Information paper prepared by the Administration)

5. At the invitation of the Chairman, the Director-General of Telecommunications (DG of T) briefed members on the salient points of the information paper.

6. Noting that the Competition Policy Advisory Group (CPAG) was tasked with the responsibility of reviewing policy issues on promotion of competition, a member enquired whether CPAG had been consulted in respect of the acquisition of Pacific Link Communications Limited by Hong Kong Telecom CSL Limited. DG of T advised that the Telecommunication Authority (TA) was the regulatory body of the telecommunications sector in Hong Kong and administered the related legislation governing the establishment and operation of all telecommunication services, and the implementation of the Government's pro-competition policy in telecommunication. Given the statutory functions of TA and taking into account the fact that CPAG had yet to be established, no prior consultation was made in this regard.

7. As regards the concern that competition in the market would be adversely affected if there was further acquisition from existing operators, DG of T advised that whilst the Administration would consider each case on its own merits, the general consideration was that it would not wish to see a reduction in competition in any one type of cellular mobile service systems through acquisition, resulting in a licensee controlling more than one systems of the same type. For example, a proposal to acquire a GSM 900 operation by another existing GSM 900 operator would not normally be approved.

8. As to whether a proposal for a GSM 900 operator such as Smartone Communications Mobile Ltd. to acquire a Personal Communications Services (PCS) system would be approved, DG of T advised that the named company had in fact been allowed to bid for a PCS licence in a previous bidding exercise. If one operator had been permitted to own one of each of the three different types of licences under the regulatory environment, another operator should also be allowed an equal opportunity to do the same.

9. In response to a member, DG of T further said that the Government would not preset the number of participants in the market but would let the market forces determine this. Notwithstanding the above, if it was considered that there was not enough competition in the market, the Telecommunication Authority could allocate new radio frequencies for more licences to achieve the policy objectives of the Government on telecommunications. The Secretary for Economic Services (SES) added that Hong Kong was one of the most open and competitive telecommunications market in the world. The acquisition would not reduce the intensity of competition in the market nor have any adverse impact on the future development of the telecommunications industry. Promotion of competition and protection of consumer interest would remain the Administration's primary considerations in deciding whether or not to approve a proposal of acquisition or merger in the future.

10. Noting that in the United Kingdom, charges would only be imposed on outgoing calls and incoming calls were connected free-of-charge for cellular mobile services, a member enquired whether such pricing structure would be more beneficial to customers. In reply, DG of T said that since the local fixed telephone services were not charged in accordance with usage, it was not feasible to waive the charges for incoming calls from cellular mobile phones. However, should there be a change in the policy on the flat-rate charging of local telephone services in future, the matter could be further examined.

11. In response to a member's question on ways to improve roaming service in the Mainland, DG of T said that after 1 July 1997, the licensing requirements imposed by the Mainland authority had been lifted. It was currently more convenient for GSM cellular phone users to use mobile phones in the Mainland by using either the roaming service or a seperate SIM card.

V.Mainland Fishermen Deckhands Scheme

(CB(1)721(02) -	Provisional Legislative Council Brief (File Ref: ESB CR2/2576/88/97)
CB(1)721(03) -	Submission from the Coalition of Hong Kong Fishing Industry
CB(1)721(04) -	Submission from the Hong Kong Fishing Vessel Owners Association Ltd
CB(1)721(05) -	Submission from the Joint Committee of Hong Kong Fishermen's Organizations
CB(1)721(06) -	Correspondence with the Agriculture & Fisheries Department on the complaint cases
CB(1)727 -	A further submission from the Joint Committee of Hong Kong Fishermen's Organizations dated 31 December 1997)

12. At the invitation of the Chairman, the Assistant Director of Agriculture and Fisheries (Fisheries) (AD of AF(F)) briefed members on the salient points of the information paper.

13. Members generally considered that the quota of the Mainland Fishermen Deckhands Scheme (the Scheme) should be further increased so as to cater for the manpower requirements in the fishing industry. They opined that since it was difficult to recruit deckhands locally and that fishermen were compelled to fish outside waters of Hong Kong as a result of the reduced fisheries resources in local waters, the Administration should take a more flexible approach to assist the fishing industry in obtaining necessary manpower to sustain their operation.

14. The Secretary for Economic Services (SES) responded that the Administration was aware that the modes of operation in the fishing industry might have been changed as a result of the reduction of fish catch in Hong Kong waters. The Administration had commissioned a study to obtain comprehensive data on fisheries resources in relation to the long term development of the fishing industry. To assist the distant water fishing fleet to unload catches in Hong Kong, the Administration had proposed to increase the maximum number of Mainland deckhands permitted to enter Hong Kong under the Scheme from 3,500 to 5,500. Furthermore, instead of only applying the Scheme to vessels "engaged in distant water fishing", the Scheme would be revised to allow fishing vessels of not less than 20 metres in length or with an engine power of not less than 200 horsepower, and which were habitually engaged in fishing outside the waters of Hong Kong for periods of three or more days at a time, to be qualified for the Scheme.

15. The Director of Agriculture and Fisheries (D of AF) added that the revised Scheme would be put into effect first in order to enable vessels of 20 to 25 metres in length and vessels with an engine power of 200-400 horesepower to gain benefits from it immediately. Meanwhile, the Administration would continue to review the manpower needs of smaller vessels and to discuss with the fishing industry to see how vessel owners could recruit the necessary manpower through the Supplementary Labour Scheme. In this regard, the Administration would maintain close contact with the industry. She further advised that the Administration had encountered difficulties in soliciting the required information from the fishing industry in the course of evaluation of the manpower needs and it would not be appropriate to put up a proposal without establishing the full justifications for the case.

16. Members queried the reasons for not allowing smaller fishing vessels, which were also engaged in fishing outside the waters of Hong Kong for periods of one to two days at a time, to be qualified for the Scheme. They opined that so long as the vessels had valid fishing vessel licences issued by both Hong Kong and the Mainland, they should be allowed to recruit deckhands under the revised Scheme. Since this kind of fishing vessels were not engaged in fishing in Hong Kong waters, the vessel owners should not be required to seek the necessary manpower through the Supplementary Labour Scheme.

17. D of AF advised that the great majority of smaller fishing vessels of less than 20 metres were engaged predominantly in fishing in Hong Kong waters despite the fact that they might from time to time engage in fishing outside the waters of Hong Kong. Under such circumstances, persons employed by such vessel owners would be regarded as imported labour as they worked wholly or predominantly in Hong Kong. Since the Scheme was not an importation of labour scheme, the legal parameters of the Scheme preclude its modification to cover imported labour.

18. As to the reasons for not using the possession of valid fishing vessel licences issued by both Hong Kong and the Mainland as a criteria of eligibility for the Scheme, AD of AF (F) explained that possession of valid fishing vessel licences issued by both Hong Kong and the Mainland did not necessarily mean that such vessels were habitually engaged in fishing outside the waters of Hong Kong, and hence, eligible for the Scheme. To use a more scientific yardstick, the eligibility criteria of the Scheme was based on the survey results that the great majority of fishing vessels of not less than 20 metres in length or with an engine power of not less than 200 horsepower were habitually engaged in fishing outside the waters of Hong Kong for periods of three or more days at a time.

19. In response to a member, the Senior Fisheries Management Officer advised that it would be difficult to assess the numbers of vessels that could be sustained by the fisheries resources in Hong Kong waters as this would vary from time to time. Whilst the majority of smaller fishing vessels were operated in Hong Kong waters, they would also be engaged in fishing outside Hong Kong waters from time to time.

20. Noting that some of the allocated quota were not taken up by the vessel owners, a member asked if this kind of unused quota could be reallocated for use by others. D of AF replied that under the new scheme, all successful applicants would be required to surrender all unused quota to the department after a lapse of three months for reallocation to other applicants.

21. After deliberation, members generally considered that in view of the changed circumstances, the Administration should pragmatically re-assess the actual needs and manpower requirements of the whole fishing industry including vessel owners, inshore fishermen, fish traders and mariculturists. They generally agreed that the Scheme should be enlarged to facilitate the continued operation of the industry. D of AF noted members concerns and undertook to carry out a comprehensive review on the manpower requirements of the whole fishing industry. Meanwhile, she would continue to liaise with the industry to see how their manpower needs could be pursued.

VI.Compensation for slaughter of chickens

22. The Administration's proposed compensation package for the slaughter of poultry and submissions from the poultry industry were tabled at the meeting for members reference.

23. At the invitation of the Chairman, SES briefed members on the circumstances leading to the proposed compensation/financial assistance package (the package). He said that since the outbreak of avian influenza, the Administration had carefully examined the situation and decided that slaughter of all chickens in local farms, all poultry in government wholesale markets and all poultry at retail outlets was necessary so as to prevent the spread of the avian influenza H5N1 in Hong Kong and to protect public health. During the three-day operation, some 1.5 million birds on farms, in wholesale markets and at retail outlets were slaughtered. In order to pay statutory compensation to owners for the birds slaughtered and offer financial assistance to affected farmers and operators in the poultry trade immediately, the Administration would put forward a financial proposal to the Finance Committee (FC) for consideration at its forthcoming meeting on 9 January 1998.

24. On the resumption of the poultry markets, SES advised that having considered the experts advice, it was considered highly desirable that a lead time of about four weeks after the slaughter of all chickens should be allowed before the markets should be resumed. This would allow sufficient time for the Administration to assess the state of avian influenza and other hygiene issues during the suspension period and introduce suitable measures for the protection of public health. Given that the Administration would only re-open the poultry markets upon confirmation of the above, it was unlikely that the poultry markets could resume operation before the Lunar New Year.

25. Members expressed gratitude to those civil servants who took part in the operation of slaughter of chickens. However, some members opined that some of the problems encountered in the operation could have been avoided if better planning was in place at the outset. SES responded that whilst the Administration recognized that there was room for improvement, the staff concerned had indeed made their utmost efforts in implementing measures to prevent the spread of the avian influenza H5N1.

26. At the invitation of the Chairman, the Deputy Secretary for Economic Services (DS for ES) briefed members on the proposed compensation package as outlined in the information paper. He said that more detailed information on the package would be incorporated in the FC paper to be submitted. SES added that some of the proposed rates would exceed the statutory compensation limit of $30 for each bird as the Administration considered it necessary to offer other forms of assistance to those directly affected by the operation. He also drew members attention to the typo errors in the Chinese version of the information paper in respect of the compensation rates for geese and ducks.

27. Some members criticised the package for having failed to protect the interest of employees of the trade. They were concerned that some employers might evade their legal responsibilities of paying their employees. Given that the whole package was intended to compensate those who directly suffered from the operation, they felt strongly that the interest of employees in the trade should not be overlooked and urged that affected employees should also be directly compensated.

28. The Administration replied that as a matter of principle, the Government considered it the responsibility of the employer to meet his obligations towards his employees. Furthermore, there was a legal responsibility on the employer to pay employees still in his employ and to pay any laid off employees all necessary payments stipulated under the Employment Ordinance and the employment contract. If an employer was insolvent, his employees should apply for compensation from the Protection of Wages on Insolvency Fund. The Comprehensive Social Security Assistance Scheme also provided a further safety net for those in need. Whilst the Administration had not made direct ex gratia payments to employees, employers in the poultry trade were expected to discharge their responsibilities towards their employees having regard to the compensation and financial assistance made available under the proposed package. The Assistant Commissioner for Labour (AC for L) added that workers could approach the Labour Department for assistance in case of dispute. The Administration would also remind employers of their legal responsibilities.

29. Some members were concerned about the compensation for part-time employees and workers on daily-rates. They sought clarification on whether such employees would be duly protected under the labour legislation as an employer-employee relationship might not be established and hence, they would not be eligible for any compensation. The members urged the Administration to set aside a separate compensation package for this group of workers. In response, D of AF said that there were around 300 workers in the wholesale markets. AC for L explained that under the Employment Ordinance, no distinction was made between part-time and full-time workers and both categories of employees were similarly protected. As regards protection under the labour legislation for workers on daily rates, AC for L advised that it would depend on individual arrangements between the workers and the employers and vary from case to case. Workers concerned could approach the Labour Department for assistance in case of dispute.

30. A member commented that a farm rate of $36 per slaughtered chicken was not sufficient to cover even the cost of rearing, not to mention profit. He queried the reasons for not providing ex gratia payments to chicken farmers and whether compensation for the destruction of equipment and facilities in farms would be provided. D of AF responded that an ex gratia element was already included in the compensation rate for farm chickens and this should be sufficient to tie the farmer over until normal income resumed. If chicken farmers required additional financial assistance to re-establish their businesses or to replace their equipment and facilities, they could apply for agricultural loans for such purposes from the Kadoorie Agricultural Aid Loan Fund at an annual interest rate of 2%.

31. Regarding the amounts of loans to be granted to poultry wholesalers under the new loan fund to be set up, SES said that in determining the amount of a loan to be granted under the proposed package, the Administration would consider the business turnover of the wholesaler applicant. The objective was to tide them over this difficult period. He further advised that the maximum amount of a loan granted per application could be in the region of a few million dollars. The Administration would provide more detailed information when the proposal was submitted to FC for consideration. As regards whether interest-free loans should be granted, SES remarked that given the prevailing interest rate in the market, the low-interest (2%) loans proposed would actually represent a substantial benefit to the affected parties.

32. As to whether a similar loan facility to that for chicken farmers and wholesalers should also be provided to retailers and transport operators, particularly those who needed assistance to repay their vehicle loans, DS for ES advised that in view of the nature of their business, the provision of ex gratia payments for poultry retailers and transport operators should be sufficient to tide them over the suspension period. Some members, however, expressed disagreement that the small amount of ex gratia payment would not be sufficient for this group of operators to cover the necessary expenses, which included salaries to workers.

33. A member opined that since the stocks of poultry held by wholesalers and retailers were usually lower than those held by chicken farmers, the proposed compensation per chicken slaughtered would disadvantage wholesalers and retailers, as the amount of compensation would not be sufficient to cover their operating costs and loss of sales during the suspension period. She therefore urged the Administration to review the compensation package to take into account the actual losses of poultry wholesalers and retailers. She also queried the basis for pitching the farm rates, the wholesale rate and the retail rate at the proposed levels.

34. In response, DS for ES explained the rationale for the rate differential. The Administration had proposed to set different rates for birds in chicken farms, wholesale markets and retail outlets respectively, and different rates for different types and sizes of poultry. The compensation rates for farm chickens, which were higher than the wholesale and retail rates, had incorporated an ex gratia element to take account of certain farm operating expenses. As for poultry wholesalers, the Administration would provide low-interest loans to those affected by the operation. Ex gratia payments on a lump sum basis would also be provided to affected poultry retailers. D of AF further advised that the wholesale and retail rates were worked out with reference to the appropriate data kept by the Agriculture and Fisheries Department and the latest price trends in the wholesale and retail markets.

35. As regards the basis for the level of ex gratia payment for poultry retailers and transport operators, DS for ES advised that the payment was worked out having regard to their individual business and operating environment and on the assumption that the poultry market could resume trading in about one month's time. Should there be a need to extend the suspension period, the Administration would consider whether further financial assistance to affected parties would be required.

36. In response to a member's question on the compensation for chicken wholesalers who operated poultry transit stations in the New Territories, D of AF replied that the same compensation rate per slaughtered chicken as for other chicken farmers would be applicable to them. As to the compensation for losses in connection with chicken feed, The Assistant Director of Agriculture and Fisheries (Agriculture & Regulatory) advised that the Administration had already taken this into account in calculating the compensation rate for chicken farmers. However, he said that as chicken feed was normally stored away from chickens, the majority of the chicken feed stocks could still be used.

37. A member queried the arrangement for lorry owners to share ex gratia payments with the drivers and helpers. She was concerned that under such an arrangement, lorry owners, being also the employers, might be required to pay their employees in addition to sharing with them the ex gratia payment. DS for ES advised that the majority of drivers and helpers in the trade were self-employed. Sharing of receipts amongst lorry owners, drivers and helpers was a common practice of the trade.

38. Members generally were concerned that the proposed compensation package, which seemed to have little regard for employees of the trade and inadequate to cover the losses of affected parties, might not be accepted by the trade. However, in view of the urgency of the matter, Members were likely to be compelled to approve the funding proposal hastily. To avoid possible disputes after the funding approval, they urged the Administration to consult the trade fully before putting a finalized proposal to FC for consideration.

39. SES responded that the Government bureaux and departments concerned had been interviewing groups of traders and poultry farmers associations who wished to air their views on the compensation package and would continue to do so in the next few days. Whilst the Administration would take into consideration views expressed by the affected groups in finalising the proposed package, it would not be possible to come up with a proposal which would be fully accepted by all parties. Albeit the Administration's intention to provide the necessary financial assistance to those affected immediately, there was also a need to exercise prudent control over the use of public monies, which had to be fully justified in each case. The Chairman suggested that in order to allay members concerns, the Administration should incorporate in the FC paper information on whether the requests put forward by the affected parties were accepted.

VII.Any other business

40. There being no other business, the meeting ended at 1:20 pm.

Provisional Legislative Council Secretariat
2 March 1998