Council Meeting (Hansard) 15 July 98

OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 15 July 1998
The Council met at half-past Two o'clock

MEMBERS PRESENT:

THE PRESIDENT
THE HONOURABLE MRS RITA FAN, G.B.S., J.P.

THE HONOURABLE KENNETH TING WOO-SHOU, J.P.

THE HONOURABLE JAMES TIEN PEI-CHUN, J.P.

THE HONOURABLE DAVID CHU YU-LIN

THE HONOURABLE HO SAI-CHU, J.P.

THE HONOURABLE CYD HO SAU-LAN

THE HONOURABLE EDWARD HO SING-TIN, J.P.

THE HONOURABLE ALBERT HO CHUN-YAN

THE HONOURABLE MICHAEL HO MUN-KA

DR THE HONOURABLE RAYMOND HO CHUNG-TAI, J.P.

THE HONOURABLE LEE WING-TAT

THE HONOURABLE LEE CHEUK-YAN

THE HONOURABLE MARTIN LEE CHU-MING, S.C., J.P.

THE HONOURABLE ERIC LI KA-CHEUNG, J.P.

THE HONOURABLE LEE KAI-MING, J.P.

THE HONOURABLE FRED LI WAH-MING

THE HONOURABLE NG LEUNG-SING

PROF THE HONOURABLE NG CHING-FAI

THE HONOURABLE MARGARET NG

THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, J.P.

THE HONOURABLE RONALD ARCULLI, J.P.

THE HONOURABLE MA FUNG-KWOK

THE HONOURABLE JAMES TO KUN-SUN

THE HONOURABLE CHEUNG MAN-KWONG

THE HONOURABLE AMBROSE CHEUNG WING-SUM, J.P.

THE HONOURABLE HUI CHEUNG-CHING

THE HONOURABLE CHRISTINE LOH

THE HONOURABLE CHAN KWOK-KEUNG

THE HONOURABLE CHAN YUEN-HAN

THE HONOURABLE BERNARD CHAN

THE HONOURABLE CHAN WING-CHAN

THE HONOURABLE CHAN KAM-LAM

DR THE HONOURABLE LEONG CHE-HUNG, J.P.

THE HONOURABLE MRS SOPHIE LEUNG LAU YAU-FUN, J.P.

THE HONOURABLE LEUNG YIU-CHUNG

THE HONOURABLE GARY CHENG KAI-NAM

THE HONOURABLE SIN CHUNG-KAI

THE HONOURABLE ANDREW WONG WANG-FAT, J.P.

DR THE HONOURABLE PHILIP WONG YU-HONG

THE HONOURABLE WONG YUNG-KAN

THE HONOURABLE JASPER TSANG YOK-SING, J.P.

THE HONOURABLE HOWARD YOUNG, J.P.

DR THE HONOURABLE YEUNG SUM

THE HONOURABLE YEUNG YIU-CHUNG

THE HONOURABLE CHIM PUI-CHUNG

THE HONOURABLE LAU CHIN-SHEK, J.P.

THE HONOURABLE LAU KONG-WAH

THE HONOURABLE LAU WONG-FAT, G.B.S., J.P.

THE HONOURABLE MRS MIRIAM LAU KIN-YEE, J.P.

THE HONOURABLE AMBROSE LAU HON-CHUEN, J.P.

THE HONOURABLE EMILY LAU WAI-HING, J.P.

DR THE HONOURABLE TANG SIU-TONG, J.P.

THE HONOURABLE CHOY SO-YUK

THE HONOURABLE ANDREW CHENG KAR-FOO

THE HONOURABLE SZETO WAH

THE HONOURABLE TIMOTHY FOK TSUN-TING, J.P.

THE HONOURABLE LAW CHI-KWONG, J.P.

THE HONOURABLE TAM YIU-CHUNG, J.P.

MEMBERS ABSENT:

DR THE HONOURABLE DAVID LI KWOK-PO, J.P.

DR THE HONOURABLE LUI MING-WAH, J.P.

PUBLIC OFFICERS ATTENDING:

THE HONOURABLE MRS ANSON CHAN, J.P.

THE CHIEF SECRETARY FOR ADMINISTRATION

THE HONOURABLE DONALD TSANG YAM-KUEN, J.P.

THE FINANCIAL SECRETARY

MR I G M WINGFIELD, J.P.

THE SECRETARY FOR JUSTICE

MR MICHAEL SUEN MING-YEUNG, J.P.

SECRETARY FOR CONSTITUTIONAL AFFAIRS

MR CHAU TAK-HAY, J.P.

SECRETARY FOR TRADE AND INDUSTRY

MR NICHOLAS NG WING-FUI, J.P.

SECRETARY FOR TRANSPORT

MRS KATHERINE FOK LO SHIU-CHING, J.P.

SECRETARY FOR HEALTH AND WELFARE

MR PETER LAI HING-LING, J.P.

SECRETARY FOR SECURITY

MR BOWEN LEUNG PO-WING, J.P.

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS

MISS DENISE YUE CHUNG-YEE, J.P.

SECRETARY FOR THE TREASURY

MR STEPHEN IP SHU-KWAN, J.P.

SECRETARY FOR ECONOMIC SERVICES

MR BENEDICT KWONG HON-SANG, J.P.

SECRETARY FOR WORKS

MR DAVID LAN HONG-TSUNG, J.P.

SECRETARY FOR HOME AFFAIRS

MR MATTHEW CHEUNG KIN-CHUNG, J.P.

SECRETARY FOR EDUCATION AND MANPOWER

CLERKS IN ATTENDANCE:

MR RICKY FUNG CHOI-CHEUNG, J.P., SECRETARY GENERAL

MR LAW KAM-SANG, J.P., DEPUTY SECRETARY GENERAL

MR RAY CHAN YUM-MOU, ASSISTANT SECRETARY GENERAL

PAPERS

The following papers were laid on the table pursuant to Rule 21(2) of the Rules of Procedure:

Subsidiary Legislation	L.N. No.
Director of Intellectual Property (Establishment) Ordinance (Amendment of Schedule 1) Order 1998	272/98

Public Health and Municipal Services Ordinance (Public Pleasure Grounds) (Amendment of Fourth Schedule) (No. 2) Order 1998	273/98

High Court Suitors' Funds (Amendment) Rules 1998	274/98

Rules of the High Court (Amendment) (No. 2) Rules 1998	275/98

Hire Car Permits (Limitation on Numbers) (Amendment) Notice 1998	276/98

Road Traffic (Safety Equipment) (Amendment) Regulation 1998 (L.N. 114 of 1998) (Commencement) Notice 1998	277/98

Hong Kong Airport (Control of Obstructions) (Repeal) Order 1998 (L.N. 116 of 1998) (Commencement) Notice 1998	278/98

Dangerous Drugs (Amendment) (No. 2) Ordinance 1994 (63 of 1994) (Commencement) Notice 1997 ─ Corrigendum	279/98

Dangerous Drugs (Amendment) (No. 2) Ordinance 1994 (63 of 1994) (Commencement) Notice 1998	280/98

Sessional Papers

No. 5

─

Report of changes to the approved Estimates of

Expenditure approved during the final quarter of 1997-98

(Public Finance Ordinance: Section 8)

No. 6

─

Sir Robert Black Trust Fund Annual Report

for the year 1 April 1997 to 31 March 1998

ORAL ANSWERS TO QUESTIONS

PRESIDENT (in Cantonese): Questions. There will be a total of seven oral questions asked at this meeting, as I have permitted an additional urgent question relating to a matter of public importance. The question time will therefore exceed the normal one and a half hours. The average time allocated to each question is still about 15 minutes. Supplementaries should be as concise as possible so that more supplementaries may be asked by Members. Members should not make statements when asking supplementaries, as this contravenes Rule 26(5) of the Rules of Procedure.

Urgent question. Mr James TIEN.

Question permitted by the President under Rule 24(4) of the Rules of Procedure

Air Freight Services

MR JAMES TIEN (in Cantonese): Madam President, I should like to first thank you for giving me permission to ask this question. Since the new airport at Chek Lap Kok came into operation on 6 July, Hong Kong's air freight services for the import and export of goods has suffered serious setbacks. Suffering from enormous financial losses, many firms have resorted to employing the air freight facilities at airports situated in neighbouring areas. The Hong Kong Air Cargo Terminals Limited (HACTL) recently announced that the suspension of air freight handling would be extended to 11.59 pm on 18 July. In this connection, will the Government inform this Council whether it knows if HACTL is in a definite position to provide normal and efficient air freight services on 19 July, so that business firms can prevent further losses by having enough time for making early preparations?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, the Government is very concerned that, due to software and mechanical problems at Super Terminal One, the Hong Kong Air Cargo Terminals Limited (HACTL) had to suspend the handling of air cargo on all aircraft except certain items such as inward perishables until 11.59 pm on 18 July. This arrangement is to allow HACTL to rectify its software and mechanical problems so that Super Terminal One can operate effectively.

Both the Government and the Airport Authority have been in close contact with HACTL in the last few days. Assistance has also been provided to HACTL for the transfer of cargo in Super Terminal One by road and sea transport to Terminal 2 at Kai Tak for storage and distribution. This was to clear the space for various rectification work to be conducted.

We understand that HACTL has completed the transfer of the cargo and started the various rectification work. The company is assessing whether it can resume operation on 19 July. We hope to discuss with HACTL later today when it can resume normal operation and then make an announcement.

PRESIDENT (in Cantonese): Mr James TIEN.

MR JAMES TIEN (in Cantonese): Madam President, at first HACTL said it had to wait till the 18th before it can resume normal operation. The Secretary's reply also indicated the company was assessing whether it could resume operation on the 19th and that the Administration hoped to discuss with HACTL later today when it could resume normal operation and then make an announcement. It appears therefore the company cannot resume normal operation on the 18th. If it cannot resume normal operation on the 19th, will the Government have other contingency plans in place, such as re-opening Kai Tak for use by the 20 or 30 flights involved, bearing in mind we are facing numerous problems in import and export; and imported parts are very important to industry in Hong Kong and in neighbouring countries?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, first of all I wish to clarify we did not say whether or not HACTL could resume operation on the 19th. I believe there will be more details later today. Of course, just like everybody else, I hope HACTL can resume operation as soon as possible. I hope everyone can be a bit more patient. There may be results after several hours. But if as the Honourable Member said HACTL could not resume normal operation, the Government will consider, as it has been considering, other contingency plans.

First, I would like to respond to the Honourable Member's supplementary question about the possibility of re-opening Kai Tak for dealing with air cargoes. This suggestion has already been raised and the Government has considered it. The conclusion was that the suggestion was not workable. The Director of Civil Aviation has considered the matter carefully and is very much concerned about it. An important consideration is safety. If Kai Tak and Chek Lap Kok operate at the same time, there will be conflicts in fightpaths as the latter operates round-the-clock. In terms of air traffic control, dealing with the operation of two airports may pose safety problems. For these reasons, the suggestion has been ruled out by the Director of Civil Aviation.

Other than this suggestion, the Government has studied a number of issues with the relevant professions, airlines, and shipping agents. For example, a contingency measure is to convert the forwarding centres in the new airport, which are designed for packaging, into a processing area for air cargoes, thanks to the joint efforts made by the Airport Authority (AA) and the Customs and Excise Department. Furthermore, I believe everyone knows now Cathay Pacific Airways today started to use the Macau Airport for cargo freight. In fact, the Government has considered the possibility of using neighbouring airports for diverting air cargoes, as a contingency measure. But in the end it is up to the airlines, shipping agents and shippers to decide whether or not to use these airports. To give airlines and shipping agents a choice, the Government needs to arrange with neighbouring airports so that they can achieve diversion at a low cost and expeditiously. For some airlines, this is to a certain extent an attractive arrangement and provides another alternative for them.

I trust Members are aware that I had a meeting at Shenzhen with the deputy director of the Hong Kong and Macau Affairs Office, CHEN Zuo'er, the Civil Aviation General Administration of China, the customs department, authorities of the Central People's Government and the Shenzhen Municipal Government. I had to leave in the middle of the meeting as I had to return to Hong Kong to answer Members' questions. I can tell Members the meeting was very useful. We have reached a consensus in certain areas. The Central Government has given us complete accommodation in respect of customs clearance, flight application and transport. It will also open a 24-hour special passage way so that cargoes can reach Hong Kong in four to five hours after unloading from a freighter. The price remains normal, without any additional charges. Details are still being discussed at the Shenzhen meeting. What I am trying to say is that the Government has been considering all possible contingency measures to help operators in the trade, airlines and co-operate with the AA. We will try anything workable.

PRESIDENT (in Cantonese): Honourable Members, 11 Members have indicated their wish to raise supplementary questions and I will make sure they have a chance to speak. But after they have asked their questions we will go to the next question. Mr HUI Cheung-ching.

MR HUI CHEUNG-CHING (in Cantonese): Madam President, at the House Committee last Thursday I asked about who should be responsible for the heavy losses for the import/export trade due to the temporary halting of airfreight. But no one was willing to answer that question. Will the Government inform this Council against whom the parties who suffer from losses can file claims?

PRESIDENT (in Cantonese): Mr HUI, you can only raise one supplementary question. Is that your question?

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I think Mr HUI's supplementary question is asking about which party should be liable if claims are filed. This is a very complicated legal issue. I think Members may be aware that this involves commercial contracts. Air freight involves a number of parties such as shippers, airlines, insurance companies, shipping agents, cargo terminals and so on. The legal advice the Government has been given is that because the Government is not a party to the contract I cannot answer Members' questions about legal liability today. As each case is different, I think each party may have to seek legal opinion from each of their own lawyers.

PRESIDENT (in Cantonese): Mr LAU Kong-wah.

MR LAU KONG-WAH (in Cantonese): Madam President, the Secretary said he was discussing about the question of diversion with the Central Government. Does that mean or is that equivalent to announcing that Hong Kong needs a considerable period of time to cope with the problem? As regards software failure, will the Government inform this Council whether it has intervened in helping HACTL to conduct its urgent repairs?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I think there are two parts to the supplementary question. The first part relates to whether it takes a long time to solve the problem. As I said, I hope everybody can be patient. HACTL will soon be briefing Members about the results of its discussions and assessment. Please do not at this moment ask about the time needed to resume operation.

The second part relates to software failures. I am not an expert in computers but I understand HACTL has been in operation for some 20 years. It has had a very good track record in the past. It holds a leading position in the world in terms of computer software. The computer system is a unique system it has developed on its own. This is classified information in a commercial environment. So, neither the Government nor software experts can help. For HACTL, the most important thing is to quickly repair their software, which is of paramount importance for business and many other reasons. Indeed, HACTL is doing all it can to make the repairs.

PRESIDENT (in Cantonese): Mr Fred LI.

MR FRED LI (in Cantonese): Madam President, with your leave, I can bet with the Secretary that normal operation will not be resumed on the 19th of this month. I have had wind that HACTL's software and operating equipment was only installed two to three weeks before 6 July. There was no time for a normal tests and it just could not operate normally on 6 July. Irrespective of whether it is a commercial secret, can the Secretary confirm that the total standstill on 6 July was caused by the lack of normal tests on the computer systems?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, with Secretary LAN in attendance, I dare not make a bet with the Honourable Member as I am afraid it is an offence in law. (Laughter). In any case, we will soon know the answer.

As regards the system tests, HACTL knew the new airport would start to operate on 6 July several months before that day. When they signed the contract they understood that they must try their best to start operation in April. As a company with a good track record, they are very familiar with their computer systems. It is utterly inconceivable to say that they did not do any testing beforehand, given the large amount of money and the commercial interest of HACTL at stake. HACTL indicated to the Government and the AA that it was ready for operation. Since such a large amount of money is involved I think it is unlikely that there was no testing beforehand. Before the actual operation, HACTL indicated over and over again they were ready.

PRESIDENT (in Cantonese): Mr Ambrose LAU.

MR AMBROSE LAU (in Cantonese): Madam President, is the Government aware of the fact that HACTL has some standards in choosing which client or cargo to deal with first to minimize the losses caused to the economy and the people of Hong Kong? If there are such standards, what are they?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I do not really understand the Honourable Member's supplementary question. Does he want to know what goods are more important so that they need to be shipped by air? Despite the failure, there are still perishables such as fresh fish and vegetables, necessities and medicine among the imported goods. We must wait and see if HACTL can resume operation on 19 July. It is now 15 July. To request HACTL to prioritize their handling of cargoes is not the best way out. What is best is to do all they can make the repairs to ensure operation can be resumed on 19 July.

PRESIDENT (in Cantonese): Mrs Selina CHOW.

MRS SELINA CHOW (in Cantonese): Madam President, the Government announced on 10 July that HACTL could resume operation on 19 July but is now saying it has to assess whether resumption can be effected on that day. I think the people of Hong Kong and others have lost faith in these announcements. The Secretary has mentioned Huangtian Airport and other contingency plans. Will the Secretary inform this Council when the Government can finally say for sure the exact date for the contingency plans to start operation to cope with the problem confronting us?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): First of all, I must clarify that it was not the Government which made the announcement about resumption of operation on the 19th. It was made by HACTL, and the Government was disappointed about that too.

The Honourable Member's supplementary question is about when contingency measures can start to operate. As I said, the Central People's Government has been trying its best to accommodate. If a flight has to land at Huangtian Airport, only two days' advance application is required. This is swift. The Customs department has been working hard to ensure that once applications are received from airlines they can immediately operate. In Macau, the government is also ready to lend its best support. For instance, Cathay Pacific Airways wanted to use the Macau Airport for cargo freight and the government there gave its support. Today a flight arrived from Macau. In addition, we have taken steps in the past few days to let people in the trade and the airlines use the Airport Freight Forwarding Centre (belonging to Sun Hung Kai) to handle their goods immediately.

PRESIDENT (in Cantonese): Mrs Miriam LAU.

MRS MIRIAM LAU (in Cantonese): Madam President, the reply said that both the Government and the AA have been in close contact with HACTL in the last few days. Is the Secretary aware of the fact that despite the contact between the Government and HACTL, HACTL and the Asia Airfreight Terminal Company Limited have not contacted people in the trade affected. Those affected include the airfreight business, shippers, and forwarding agents. Other than waiting, these people can do nothing. They cannot account for what has happened before their clients. There has been no communication and no co-ordination. Has the Government any idea on how to improve? If full resumption of operation is not possible on the 19th, such communication will be all the more important.

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I believe the Honourable Member must have put in a lot of efforts in the matter and is very clear about how very closely the Government, despite its very busy schedule, has been in contact with the people in the trade, the airlines, the Airport Freight Forwarding Centre and HACTL. For example, yesterday, there was a meeting with the transport trade. I trust the Honourable Member was there; so were officers from the Economic Services Bureau. Therefore, I must take exception to the comment that there has not been any liaison between the Government and the people in the trade, but I do agree that the liaison can be strengthened. The AA has done a lot of work. Every day, the AA and the Government are holding many meetings with the relevant airlines. I agree the liaison can be formalized. For instance, we can set up formal channels of communication and the Government and the AA are looking into the possibilities in this respect.

PRESIDENT (in Cantonese): Mrs Miriam LAU.

MRS MIRIAM LAU (in Cantonese): I think the Secretary has totally missed my point. I did not question about whether government officers are present at the meetings. Rather I meant there was no communication, I mean close communication, between the two major air cargo terminals and the people in the trade, telling them how much throughput there can be and what arrangements are in place. Communication of this sort is lacking entirely. The Government is trying very hard. The Secretary said I was trying very hard. Indeed the Secretary is also trying very hard. Trying hard cannot solve the problem. There must be communication between the terminals and the people in the trade, which is now absent. Does the Government have any methods to facilitate such communication?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): I said already it was not true there was no liaison between HACTL and people in the trade. I believe there are arrangements and contacts with various airlines. I trust the Honourable Members feels there should be stronger liaison between the terminals and the people in the trade to promote better communication. As I said, we would do our best to help foster better communication.

PRESIDENT (in Cantonese): Mr Gary CHENG.

MR GARY CHENG (in Cantonese): Diversion may indeed ameliorate the present problem but it also tells the world the limited value of the new airport. This is a point that must be considered. Will the Government inform us why the focus of attention is not on ways to solve the problem with the air cargo terminal? Can the Government intervene? The Secretary said HACTL was first class and an expert in this field, with more than 20 years of experience. In view of what has transpired, all these descriptions have to be reversed. The company has an 80% share of the airfreight market in Hong Kong. Why can we not focus on solving the problem? Why are we waiting for the company to undermine our worth?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I think the Honourable Member may have misinterpreted my words. We do agree diversion is not a true cure, which I think we all know very clearly. What is most important and basic is that HACTL needs to solve its own software and mechanical problems. We entirely agree that diversion cannot solve our problem in the long run. We are only saying diversion is a contingency measure, a stand-by arrangement, so that in the event that HACTL cannot operate, we need not sit back and wait. What can we do then? At least we can divert the goods as much as we can. But HACTL needs to solve the problem. In fact, we have been trying hard. As I said, after this meeting, I will return to the meeting with HACTL. I think we can only have slightly over 10 hours for work every day.

PRESIDENT (in Cantonese): Mr CHAN Wing-chan.

MR CHAN WING-CHAN (in Cantonese): Madam President, the software and mechanical problems at HACTL has brought air freight to a standstill and has caused enormous financial losses. Will the Government inform this Council whether the relevant departments lacked a sense of crisis so that they had failed to make proper prediction on what might emerge and were not fully prepared? What mechanisms does the Government have in monitoring HACTL so that it will not make mistakes again?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I think the most important thing is contingency measures. Without these and when HACTL cannot resume operation immediately, I think Members may criticize the Government for lacking a sense of crisis. Indeed, ever since we saw operational problems at HACTL, we have done many things which I have repeated many times and I do not intend to repeat them again in order not to waste Members' time. We have been working hard with the AA and there has been very close liaison with the airlines. Although the air cargo terminal could not provide full service, we have processed almost 1 700 tonnes of cargoes yesterday, which is about one third of the usual 5 000 tonnes. Of course this is far from being satisfactory, but this is the result of our efforts after all. We have been trying to do our best and doing all we could.

PRESIDENT (in Cantonese): Mr CHAN Wing-chan.

MR CHAN WING-CHAN (in Cantonese): Madam President, the Secretary has not answered my supplementary question. How will the Government monitor HACTL so that it can avoid making mistakes again?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, the first thing is of course to repair the software. In addition, as HACTL has been granted a franchise by the AA, the AA is very much concerned about the matter. There are services HACTL is obliged to provide. At the moment, the AA is looking into the matter and reviewing the position to see how it can ensure that the company can resume operation and provide the contractual services.

PRESIDENT (in Cantonese): Miss CHOY So-yuk.

MISS CHOY SO-YUK (in Cantonese): Madam President, HACTL said it would take only two days to resume operation but then it said it had to wait till the 19th of this month to do so. If the company later announces that it cannot resume normal operation on the 19th, it will again be making promises it cannot keep. The Secretary has mentioned a number of contingency measures. May I ask him whether the Government will consider taking over the company?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): Madam President, I think we will consider all possible contingency measures. As I said, it is the company which is most familiar with the operation of the company. We are talking about a computer system which is almost identical but one which has been expanded. We are not talking about a completely new system. Given the 20 years of operational experience it has, if it cannot repair the system, then I think normal operation cannot be resumed at once even if the Government takes over. Government take-over is not a solution. But if the company cannot continue its operation, we will certainly consider other measures and other solutions.

PRESIDENT (in Cantonese): Dr Raymond HO.

DR RAYMOND HO (in Cantonese): Madam President, the airport was scheduled to open in April. As the Airport Railway was not ready, the opening date was postponed to July. Air freight is also a very important area. Why was that not taken into consideration then so that if freight services were not ready the opening of the new airport should be delayed? The Secretary spent eight and a half minutes to talk about all sorts of contingency measures. Why were the measures not employed as soon as we knew the airport was not ready? Has the Government not started thinking about contingency measures until now?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese):I think the Honourable Member will know that if HACTL knew it was not ready it would not have agreed to start its operation at all. I have pointed out many times that a company, for its own interest, will not agree to start its operation if it is not ready. In fact I have reiterated time and again the company had openly, as well as in writing, indicated they were ready for business.

PRESIDENT (in Cantonese): Mr Howard YOUNG.

MR HOWARD YOUNG (in Cantonese): Madam President, I think what confuses importers and exporters is the unpredictability of the matter, in addition to the time when HACTL can resume full operation. Everybody is expecting the company to break good news today. Can the Government inform this Council what the worst case scenario is? It is said that goods for export will have to be dealt with at Chek Lap Kok and those for import at Kai Tak. Would that happen? Is that the worst that can happen?

PRESIDENT (in Cantonese): Secretary for Economic Services.

SECRETARY FOR ECONOMIC SERVICES (in Cantonese): The worst case scenario is certainly a total failure of the company to operate, to repair the computer and to make any improvements at all. There are several levels to this. The position could be as I said a total failure to resume operation. Or it could be a gradual recovery, or it could be as pointed out by the Honourable Member that some goods need to be dealt with at Chek Lap Kok and some at Kai Tak and then operation goes back to normal after some time. But let us not make any assumptions now. It is about time I went back to the meeting with the company and others again. Members would all be informed of the results soon.

PRESIDENT (in Cantonese): Honourable Members, there are still some Members who would like to raise supplementary questions. But we have spent over 26 minutes on this question, and I believe you have had sufficient time to ask questions on the matter. Next question. Mr Fred LI.

Community Services of Rural Areas

1. MR FRED LI (in Cantonese): Some villages in Northern New Territories are plagued by the problem of flooding every year, and the villagers have to ask the police for rescue in case of emergencies. In this connection, will the Government inform this Council:

(a) whether it is aware of any social service agencies providing, on their own initiative, support services to the stranded villagers when serious flooding occurs; if such support service is not available, what the reasons are;

(b) whether it has any plan to enhance the provision of community services to these rural areas in the coming year; if not, why not; and

(c) whether it will consider setting up Neighbourhood Level Community Development Projects (NLCDP) teams to serve these rural areas by redeploying the resources saved from the authority's upcoming move to disband several NLCDP teams; if not, why not?

PRESIDENT (in Cantonese): Secretary for Home Affairs.

SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President,

(a) When a natural disaster such as serious flooding occurs, the first consideration is the protection of the lives of citizens and their properties. It is the duty of relevant government departments, including the Hong Kong Police Force, Fire Services Department, Home Affairs Department and Social Welfare Department (SWD), to provide immediate emergency relief to the residents affected by the flooding. Depending on the needs of the situation, the Government will also set up a District Emergency Co-ordination Centre to co-ordinate the emergency relief work in the affected district. For example, when flooding occurred recently in Northern New Territories, the North District Office of the Home Affairs Department maintained close contact with the Tai Po and North District Social Welfare Office of the SWD so as to provide effective emergency social support service to the residents affected by the flooding. The Director of Home Affairs and other government officials also attended the scene of flooding immediately and assisted in co-ordinating remedial action, including following up with the Housing Department and SWD the issue of housing for residents affected by the flooding. At the same time, the Home Affairs Department made available temporary shelter to the residents who were rendered homeless for the time being and the emergency relief team of the SWD worked round the clock to provide the affected villagers with immediate relief, such as the provision of emergency relief articles, hot meals, clothing and so on. On relatively long-term remedial work, the SWD would, depending on individual needs, refer the affected residents to apply for Comprehensive Social Security Assistance payments, compassionate rehousing and so on. When carrying out such work, social workers from the SWD would pay home visits to the villagers affected to assess and provide the necessary welfare services.

(b) The provision of the above-mentioned social support service is geared to emergency situations such as flooding. Apart from this, according to information provided by the SWD, the Government has set up in North District various welfare service facilities. The main services operated by the SWD include: two family service centres, one social security field unit, six youth centres, three NLCDP teams, two outreaching teams, one multi-service centre for the elderly, three home help teams, family life education unit and so on.

Taking into account the existing social services and the needs of development in the district, the Government plans to create, in the 1998-99 financial year, one home help team, one outreaching team, one integrated team and one day care centre for the elderly in North District to meet district needs and to continue to improve the quality of services provided. Moreover, to achieve its goal of bringing its services to remote areas, the SWD will continue to place emphasis on adopting an active outreaching approach to provide residents of remote villages in North District with various services. For example, the SWD and subvented non-government welfare service organizations will continue to play a direct role in organizing various activities in rural areas, including group activities, visits, seminars, recreational activities and so on. With regard to Sha Tau Kok Village with a relatively dense population, project teams will be sent there twice weekly to serve the local residents. Social networking of the elderly will continue to be carried out and volunteers will continue to pay regular visits to the elderly living alone in rural areas. Upon the issue of warnings of a cold spell or storm warnings, these volunteers will ring up their elderly clients living in rural areas to ask about their situation and advise them to take proper safety measures and make use of relevant community resources.

In North District, the SWD and North District Office will continue to foster a close and cordial relationship at the district level with various rural committees and to provide briefings about various welfare services to them and pass on to rural residents information on welfare services through the relationship network built up by the villagers with residents in remote areas.

(c) The above reply in (b) already demonstrates that the Government has provided these areas with a range of services. New services will be introduced this year to meet district needs. Furthermore, the Government has decided that there is no need to expand the service to NLCDP teams to other rural areas, bearing in mind that in the past 20 years, we have seen a significant expansion and improvement in social welfare services and facilities, and that with the full implementation of the district administration scheme, there are now sufficient channels for residents to reflect their needs on community services and facilities for the relevant government departments and service units to deal with and follow up. The Executive Council also endorsed the Government's policy in this area when it discussed the scheme of NLCDP teams at the end of 1995. Moreover, as mentioned above, when there is an emergency situation of flooding at the district level, various government departments will take actions accordingly and provide residents with the necessary emergency relief services. In view of the foregoing considerations, the Government has no intention of setting up new NLCDP teams in the aforesaid rural areas.

PRESIDENT (in Cantonese): Mr Fred LI.

MR FRED LI (in Cantonese): Madam President, I would like to raise a direct and sharp supplementary question because the NLCDP has been a bone of contention for many years. Is it because of political reasons that the Government has refused to subsidize these social worker teams for fear that residents will be organized to fight for their interests, thus giving rise to confrontation with the Government? Does the Government actually take this stance?

PRESIDENT (in Cantonese): Secretary for Home Affairs.

SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President, the answer is simply "no". In answering Mr LI's question, I have already explained it very clearly. The neighbourhood service was implemented since the 1970s. Social welfare services at that time could hardly compare with those provided today. With the expansion of new towns and even the urban areas over the past 20-odd years, the situation has changed considerably. Our consideration and decision are entirely based on the actual situation, without reference whatsoever to the political context.

PRESIDENT (in Cantonese): Mr LAW Chi-kwong.

MR LAW CHI-KWONG (in Cantonese): Madam President, in paragraph (b) of his reply, the Secretary listed out a number of new services. But none of these services aims at helping residents organize themselves in order to solve the problems they face at the district level. In paragraph (c) of his main reply, the Secretary also denied the need of setting up NLCDP teams referred to by Mr Fred LI. Is the Government of the view that residents should not be organized to solve problems by themselves together, and these services are, therefore, not necessary?

PRESIDENT (in Cantonese): Secretary for Home Affairs.

SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President, when people have problems which need to be solved, the responsibility of the Government is to try various means to help them, whether the help is organized or not, or through direct channels or an intermediary. The NLCDP teams, as mentioned by Mr Fred LI, will still be run by the Government. Before the Government has come to any decision, any speculation is unnecessary.

PRESIDENT (in Cantonese): Dr Philip WONG.

DR PHILIP WONG (in Cantonese): Madam President, to provide a long-term solution for the flooding problem, we must have a comprehensive sewerage system to diverge stormwater. Does the Government have a set of concrete designs for sewers? If so, when will the designs be finalized? Can the Secretary for Planning, Environment and Lands or the Secretary for Works answer this supplementary question?

PRESIDENT (in Cantonese): Secretary for Works.

SECRETARY FOR WORKS (in Cantonese): Madam President, the Government is now undertaking a number of projects to solve the flooding problem. To provide a long-term solution to the flooding problem in North District, I believe we have to rely mainly on river training programmes, the most important of which is the training of Shenzhen River. The Shenzhen River Regulation Project is divided into three phases the first of which has been completed. We can see that the low-lying area near Lo Wu has experienced improvement in terms of flooding. The second phase of the project, which has been started, is divided into two parts. It is hoped that the first part can be completed by the end of this year and the entire phase by 2000. The third phase of the project deals with the upper reaches of Shenzhen River and is now at the design stage. According to our plan, it will be completed in 2004. Other major river training projects which will help alleviate the flooding problem in North District include the training of Ng Tung River and Sheung Yue River. This works project will commence in the next six to eight months, and according to the present progress of works, it will be completed by 2002.

Apart from these, the river training work in Area 30B of Sheung Shui is now in progress and will be completed in early 2002. Upon the completion of all these major river training works, there will be significant improvement to the flooding problem in North District. As for other individual villages, we will put a village flood protection scheme in place and this will mainly include the building of embankments surrounding relatively low-lying areas and the setting up of a pumping system. There are two such schemes in Sheung Shui Tsuen and Tsung Pak Long of North District, with a third being in Tai Tau Leng. The one in Sheung Shui Tsuen has been completed in 1991 while those in Tsung Pak Long and Tai Tau Leng will be completed by the end of this year.

PRESIDENT (in Cantonese): Mr TAM Yiu-chung.

MR TAM YIU-CHUNG (in Cantonese): Madam President, the Secretary for Works just said that a lot of work has been done to prevent flooding. Large-scale projects certainly take a long time in order to solve the flooding problem once and for all. But in the meantime, the Home Affairs Bureau can undertake some minor improvement works. Will additional private contractors be hired to design and undertake these minor projects under the Rural Planning and Improvement Strategy in order to speed up the progress of work and prevent residents from suffering from flooding any longer? Another question is about river desilting. On many occasions, flooding is caused by blocking of river courses by garbage. I would like to hear the Secretary's answer to these two supplementary questions.

PRESIDENT (in Cantonese): Which Secretary would like to answer these supplementary questions? Secretary for Works.

SECRETARY FOR WORKS (in Cantonese): Madam President, under minor rural improvement projects and strategies, a number of drainage projects, large and small, are now in progress. As a general practice, we will commission many consultancy firms in the private sector to undertake these projects of a relatively minor nature. Concerning desilting, the Drainage Services Department will conduct regular inspections of sewers and river courses. Clearing work will be conducted when necessary. In the past, many river courses passing through private plots were silted up as a result of the lack of maintenance. The Government, therefore, promulgated the Land Drainage Ordinance in 1994 which seeks to improve the management of these major water courses. Under the Ordinance, the Drainage Services Department is also empowered to gain access to private lands to carry out drainage works and remove obstacles from major channels.

Five Drainage Authority Areas have been gazetted. These include the following major drainage basins in the New Territories. They are all prone to flooding. The first one is the Ng Tung River Drainage Basin; the second one is the Kam Tin and Ngau Tam Mei Drainage Basin in Yuen Long; the third one is the Tin Shui Wai Drainage Basin; the fourth one is the River Ganges Drainage Basin and the fifth one is the San Tin Drainage Basin. Approval has been obtained for the first four areas. But for the fifth one, that is, the San Tin Drainage Basin, we are now considering revising the scope of the area as some objections have been lodged. Since the gazettal of the Authority Areas, the Drainage Services Department has been able to conduct clearing works on these major river courses more effectively as well as enhancing the river capacity, so as to reduce the frequency and seriousness of flooding in the neighbouring areas.

PRESIDENT (in Cantonese): There are four Members who would like to raise supplementary questions. But as we have spent considerable time on the urgent question, I suggest that Members follow up the matter through other channels. Next question. Miss CHOY So-yuk.

Foreign Domestic Helpers Overstaying in Hong Kong

2. MISS CHOY SO-YUK (in Cantonese): It is learnt that tens of thousands of foreign domestic helpers (FDHs) are overstaying in Hong Kong. In this connection, will the Government inform this Council:

(a) of the number of FDHs who are currently overstaying in Hong Kong;

(b) of the number of cases in which overstaying FDHs were discovered, in each of the past three years and, among them, the numbers which are discovered as a result of on-the-street stop and search operations;

(c) of the measures it has adopted to combat the problem of FDHs overstaying in Hong Kong; and the effects of these measures; and

(d) whether it will consider imposing heavier penalties on the overstaying FDHs in order to achieve a deterrent effect?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President,

(a) As at 31 May 1998, our record shows that there were 4 982 FDHs overstaying in Hong Kong. This figure refers to FDHs whose contracts have been prematurely terminated. We do not keep statistics on the number of FDHs who overstayed after their contract had run its course. From experience, the number of such overstayers was not high.

(b) The total number of FDH overstayers investigated by the Immigration Department in the past years are:

1995	1996	1997	1998 (Jan-May)

2 056	1 858	1 584	317

Among them, the number of FDH overstayers arrested by police on patrol are as follows:

1995	1996	1997	1998 (Jan-May)

107	334	114	37

Most of the overstayers were discovered during anti-illegal worker operations, at immigration control points or when the FDHs surrendered themselves.

(c) The major purpose of FDHs overstaying in Hong Kong is to take up illegal employment. We have introduced different measures to tackle the problem of overstaying and illegal employment of FDHs. These include:

(i) the procedures for entry visa application have been tightened up with a view to ensuring that dishonest applications can be screened out at the outset;

(ii) FDHs and their employers are served with notices or letters to remind them of the requirement to report to the Immigration Department within seven days of their contract termination;

(iii) publicity has been stepped up to spread the message that hiring illegal workers is a criminal offence;

(iv) members of the public have been encouraged to report illegal employment by using the Immigration Department Hotline or Fax line;

(v) "W" prefix identity cards have been issued to FDHs applying for a new or replacement identity card to facilitate prospective employers and law enforcement officers in determining their employability;

(vi) to facilitate the prosecution of employers of contract workers, legislative amendment was made on 25 October 1996 to redefine lawfully employable persons and to require employers to inspect the travel document of job seekers who are not holders of Hong Kong permanent identity cards;

(vii) enforcement action has been stepped up against FDHs taking up or employers offering part-time work and other unauthorized work; and

(viii) the level of penalties imposed on illegal workers and employers is closely monitored. Cases where the sentence is manifestly inadequate will be identified for seeking a review by the court.

(d) FDHs who have overstayed are prosecuted for breach of condition of stay under section 41 of the Immigration Ordinance which carries a maximum penalty of a $50,000 fine and imprisonment for two years. The maximum fine was increased from $5,000 to the present level in January 1996. The present penalties are generally considered adequate, and there are no plans at this stage to raise them further. However, we will keep this under review.

PRESIDENT (in Cantonese): Miss CHOY So-yuk.

MISS CHOY SO-YUK (in Cantonese): Madam President, in point (ii) of part (c) of the main reply it was said the Government would like FDH employers to report to the Immigration Department immediately after contract termination. Will the Secretary inform this Council what effective measures will be taken on receipt of the reports to ensure FDHs return immediately to their place of origin? I mean "immediately", rather then having to wait till they are discovered at immigration checkpoints when they are leaving Hong Kong.

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, when a FDH is dismissed or has his or her contract terminated, for both the employer and the FDH are required by law to inform the Immigration Department. Basing on the report, the Immigration Department will then make suitable entries on the computer and the relevant documents to facilitate law enforcement and investigation work. For example, during patrols or stop-and-search operations, the police may check with colleagues in the Immigration Department to ascertain if someone is staying illegally or is overstaying. Furthermore, the Immigration Department will of courses discharge its own duties. It has a task force to deal with illegal workers. The task force is there not only to curb illegal employment of FDHs. It also works in conjunction with other departments, including the police and the Labour Department from time to time in carrying out large-scale raids on illegal workers.

PRESIDENT (in Cantonese): Dr TANG Siu-tong.

DR TANG SIU-TONG (in Cantonese): Madam President, in part (d) of the reply, the Government mentioned that FDHs prosecuted for overstaying are liable to a maximum penalty of a $50,000 fine and imprisonment for two years. Will the Government inform this Council of the number of FDHs who were convicted and the maximum penalty imposed? If they were fined but were not able to pay for the fine, will they be imprisoned or extradited?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, in the past few years, there was an upward trend in general for penalties. I do not mean maximum penalties. As I have explained quite clearly in the main reply, the maximum fine was increased from $5,000 to $ 50,000 in 1996. Of course the penalty for each case must be decided by the court, not the executive authorities. According to the statistics we have on hand, there is a rising trend in penalties imposed in the past three years on FDHs. For example, the proportion of FDHs sentenced for imprisonment or given suspended sentences rose from 56.8% in 1995 to 80.7% in 1996 and then to 88.7% in 1997, while that for immediate imprisonment rose from 1.5% in 1995 to 10.3% in 1996 and then to 22.8% in 1997. So, there is a rising trend in the sentence meted out.

PRESIDENT (in Cantonese): Dr TANG Siu-tong.

DR TANG SIU-TONG (in Cantonese): Madam President, it appears the Secretary has not answered my question. In the past three years, how many FDHs have been prosecuted and sentenced? The Secretary did not say whether they are mainland Chinese or Filipinos. I would like to have figures for this.

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): I am sorry, Madam President, I have missed that part. First of all, the figures I cited were all for FDHs. In the past three years the numbers prosecuted and sentenced were 1 642 in 1995, 1 488 in 1996 and 1 214 in 1997.

PRESIDENT (in Cantonese): Mr CHAN Kwok-keung.

MR CHAN KWOK-KEUNG(in Cantonese): Madam President, I have received a complaint from a transport labour union saying that some employers employ FDHs as drivers and even use private cars for transportation of goods. Will the Secretary inform this Council how the Government can distinguish between family drivers and goods vehicle drivers? Has the Government made any prosecutions?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, if in the course of law enforcement or through other channels it has come to our knowledge that FDHs are assigned work not legally compatible with that expected of FDHs we will conduct investigations. With sufficient evidence we will make prosecutions. If employers are found aiding and abetting FHDs in contravening the conditions of stay, such as making them do work not intended for FDHs, we will prosecute and we did. Usually, a fine of $1,000 to $10,000 is imposed and a suspended sentence of one month to nine months is handed down.

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung.

MR YEUNG YIU-CHUNG(in Cantonese): Madam President, in part (a) of the main reply, the Secretary said the Government did not keep statistics of FHDs who overstayed after their contract had run its course. I do not understand why the Immigration Department does not have the figure. Does the Government consider the data unimportant and so it does not keep any figures?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, the data are not regarded as unimportant. In fact our computer data and records can indeed show the position of FDH overstayers. The problem is, due to the antiquity of the computer recording system of the Immigration Department, we cannot use the system to retrieve data for statistics on how many FDHs are overstaying. We will consider making improvements in this respect. The computer system at the Immigration Department has been in use for more than 10 years and is rather old. We have started to look into the introduction of new systems which will enable us to retrieve the required statistics more efficiently.

PRESIDENT (in Cantonese): Mr Michael HO.

MR MICHAEL HO (in Cantonese): Madam President, FDHs in Hong Kong overstay and become black market labour. This is just a small part of the entire problem of black market labour. Will the Government inform this Council what the percentage of the rest of black market labour is, other than the FDHs who overstay and become black market labour, which the Government has information about? Can the existing penalties and measures mentioned, designed to combat black market FDHs, cope with the problem of other black market labour?

PRESIDENT (in Cantonese): Mr HO, your supplementary question is beyond the scope of the main question, which is about FDHs. Yours is about black market labour. Can you try to shape your supplementary question in another way so that it relates to the subject?

MR MICHAEL HO (in Cantonese): Madam President, my question is related to the main question. FDHs in Hong Kong who overstay represent a certain percentage of black market labour. The rest of the black market labour accounts for the rest. So we can see them as two fractions making up the entire black market labour.

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, I will try my best to answer. In the main reply and my answers to the supplementary questions of some other Members, I mentioned that the penalties and criminal charges against FDH overstayers working illegally were effective to a certain extent in curbing black market labour. Indeed, another type of black market labour consists of illegal immigrants from Vietnam and mainland China. They are charged for illegally stay in Hong Kong. In fact we have been very much concerned about black market labour. We have been trying very hard in the battle against black market labour. The Honourable Michael HO asked if we had information about the position. In answer to that, I can cite an example for illustration. In 1997, we arrested a total of 3 992 illegal workers of whom 718 were FDHs.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, in his answer to the Honourable Miss CHOY So-yuk's question, the Secretary said the Government did not keep statistics on the number of FDHs who overstayed after their contract had run its course. My view differs from that of the Honourable Michael Ho a bit. I think female FDHs overstaying in Hong Kong abound. They are taking up work such as part-time domestic helpers. This affects the local people. Now the Secretary said the Government did not keep statistics on the number of such FDHs. About the 160 000 to 170 000 FDHs, why does the Government keep statistics on those whose contracts were prematurely terminated but not those who overstayed, bearing in mind they are already in Hong Kong? We can see a number of FDHs working in markets, in hair saloons. How will the Government solve the problem? The Government mentioned it has a list of measures as solutions, such as issuing "W" prefixed identity cards but they are still working illegally as part-time domestic helpers and even drivers. It is now very difficult for Hong Kong people to find jobs but there are so many black market labourers. How will the Government solve the problem?

PRESIDENT (in Cantonese): Secretary for Security.

SECRETARY FOR SECURITY (in Cantonese): Madam President, I have explained in the main reply what we are doing to eliminate black market labour. I cannot say we are doing a perfect job on all fronts. But I believe we are getting results in our past actions evident in the number of arrests or prosecutions. The Honourable Member said FDH overstayers abound in Hong Kong. Of course, we need to see if they account for a large proportion of the black market labour. Judging from the number of arrests, they do not represent a vast majority of the illegal workers detected and arrested.

PRESIDENT (in Cantonese): There are still several Members who would like to ask supplementary questions. But due to the time constraints, I hope they can follow up at the relevant panel. Next question. Mr Andrew CHENG.

Labour Disputes due to Weather Warning Signals

3. MR ANDREW CHENG (in Cantonese): Will the Government inform this Council:

(a) of the respective government departments the staff members of which are required, and those who are not required, to report for duty when tropical cyclone warning signal No. 8 is hoisted or a rainstorm black warning is issued by the Hong Kong Observatory; as well as the reasons for requiring or not requiring these staff members to report for duty;

(b) of the total number of labour dispute cases received by the Labour Department in the past three years arising from the question of whether employees had to report for duty when those signals were in force; as well as a detailed breakdown of the cases by nature (such as reduction of salary, dismissal) and their respective numbers;

(c) of the total number of casualties and fatalities when either signal was hoisted in the past three years, and their causes; and

(d) whether there is any plan to introduce legislation stipulating that employees in general shall not be required to report for duty when either signal is hoisted; if so, what the proposed legislative timetable is; if not, why not?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President,

(a) As a general rule, if the tropical cyclone warning signal No. 8 is hoisted or the rainstorm black warning is issued before the morning office working hours, with the exception of staff who are required to perform specific or emergency duties during tropical cyclone/rainstorm warnings, other government staff should stay at home and need not report for duty while the warning is current. However, they are required to report for duty as soon as the warning is lowered and weather and transport conditions permit. As a general rule, they are not required to report for duty if the warning is cancelled within two hours of the close of business.

(b) The Labour Department does not keep statistics on the number of labour dispute cases specifically arising from the hoisting of tropical cyclone warning signal No. 8 or the issuance of rainstorm black warning. As far as the issuance of rainstorm black warning on 9 June this year ─ by the Hong Kong Observatory is concerned, some 171 enquiries were received through the two telephone hotlines provided by the Labour Department. In addition, the Labour Relations Division of the Labour Department has received five claims against dismissal under the Employment Ordinance alleged to be related to the issuance of the rainstorm black warning on that day. Of these, three have been settled, one has been referred to the Labour Tribunal for adjudication and the last one is awaiting further conciliation by the Labour Department.

(c) There were no duty related fatalities cases, when either signal was hoisted in the past three years (1995 to July this year). However, we have received a total of 18 injuries reports under section 5(4)(f) of the Employees' Compensation Ordinance (ECO) when tropical cyclone warning signal No. 8 or above was hoisted (13 cases in 1995 and 5 in 1997). Claims under this section relate to compensation payable to an employee if the employee sustains an injury or fatality while travelling between his place of residence and workplace. We have not received any injuries report under the ECO when rainstorm black warning was issued during the past three years.

(d) We have no plan to introduce legislation stipulating that employees in general shall not be required to report for duty when either the tropical cyclone warning signal No. 8 or the rainstorm black warning is hoisted. The Administration considers that statutory regulation of work and pay arrangements in times of rainstorms or tropical cyclone is not practicable because of three basic reasons:

(i) the diversified nature and requirements of jobs in different trades and industries;

(ii) the need to maintain essential services (for example, medical care and emergency rescue) and the need for some industries (for example, hotel) to provide services in adverse weather conditions; and

(iii) the difficulty of determining which industries or trades should be covered by legislation and which should not.

Nevertheless, to avoid unnecessary misunderstanding and to forestall unnecessary confusion or dispute, employers are advised to reach prior agreements with their employees with regard to work arrangements and contingency measures in times of tropical cyclones and rainstorms. Depending on the job nature and requirements of individual industry, the agreement on work arrangements in times of tropical cyclones and rainstorms should basically cover four main aspects, namely:

- Rules regarding report for duty;

- Rules regarding release from work;

- Rules regarding resumption of work; and

- Wages calculation.

In drawing up agreements, the employers are strongly advised to adopt a flexible approach and pay due consideration to employees' safety in workplace as well as their journey to and from work. This is extremely important and to this end, the Labour Department has published a Code of Practice which provides some guidelines for the reference of employers and employees and samples of tropical cyclone and rainstorm work arrangements. The Code of Practice is distributed in all branch offices of the Labour Relations Services and main offices of the Labour Department and is put on the Labour Department Internet Homepage. It is regularly revised to ensure that clear and practical guidelines are available to employers and employees.

PRESIDENT (in Cantonese): Mr Andrew CHENG.

MR ANDREW CHENG (in Cantonese): Madam President, I do not understand why the Government said that introducing legislation was impracticable or that one had to adopt a flexible approach. Will the Government reconsider introducing legislation stipulating that employers may not deduct the salary of employees or dismiss them when they do not report for duty when the rainstorm black warning or tropical cyclone warning signal No. 8 is hoisted, and that employees may be paid an additional allowance for reporting for duty under special circumstances when either signal is hoisted? Actually, the Government can list the public service organizations that will be exempted in the schedule to the principal legislation. It can carry out consultations as to which organizations should be exempted. Has the Government considered that with the introduction of such legislation, the number of labour dispute cases could be reduced?

PRESIDENT (in Cantonese): Mr Andrew CHENG has raised a number of questions, which I have allowed because they are related. Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, the thrust of this supplementary question is whether the Government can introduce legislation. I have explained very clearly in my main reply that introducing legislation is impracticable due to many fundamental reasons. For instance, there are many different trades and industries and different kinds of jobs in Hong Kong. There are different departments playing different roles even in the same organization. Therefore, it is impossible to regulate them with one set of legislation. In our view, the practicable way is to draw up a Code of Practice. What I have in my hand is the Code of Practice, which contains very clear examples, such as one on work arrangements. If employers and employees have reached prior agreements, there would not be any problem. The Government is a very good example. The Government has very clear circulars and internal procedures, so that there would not be any problem during times of tropical cyclones or rainstorms. We call on employers to make early preparations and talk to their employees. The Labour Department can also provide them with related services and has published relevant pamphlets. Labour Focus, a quarterly newsletter of the Labour Department, is mailed regularly to 100 000 establishments in Hong Kong with five or more employees. In the latest issue of Labour Focus, we will explain in detail how to draw up the relevant arrangements, such as prior arrangements and arrangements in writing, so as to avoid labour disputes. We consider that this is the real solution to the problem.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): Mr President, the Secretary said that there was a Code of Practice. Would the Secretary admit that on 9 June, when the rainstorm black warning was issued, there was a total mess. There were no prior agreements between employers and employees. Many employees had their wages or leave deducted afterwards. While employees do not know what protection they are entitled to, employers have no idea whether they can deduct the pay and leave of employees? Would the Secretary admit that there was a lot of confusion on that day? If he would not admit it, he is too ignorant of the people's sentiment.

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, I have to make this very clear. Since its introduction in 1992, the rainstorm black warning has been issued on only six occasions. Therefore, many people may not have got used to it yet. As for typhoons, we are accustomed to them since childhood. Therefore, we know very well under what circumstances we need not go to school and work. The Government admits that the rainstorm black warning has certainly caused confusion. However, it was not as bad as Mr LEE suggested. While 181 enquiries were received through the two telephone hotlines we provided, only five claims were received. In my view, the major task of the Government is to enhance publicity and education. Thus, I said just now that we would widely publicize the Code of Practice. Also, we will publicize this pamphlet in the near future. Labour Department staff responsible for labour relations will also hold talks and put up posters at different establishments. We consider that the real solution lies in publicity so that the public would know what to do when the same thing happens again.

PRESIDENT (in Cantonese): Mr LAU Chin-shek.

MR LAU CHIN-SHEK (in Cantonese): Madam President, the Government has always stressed that there is no need to legislate and that these matters should be settled between employers and employees themselves. How many companies or factories have made such agreements and how many employers have asked the Labour Department to provide assistance in this respect? If employers and employees enquire of how the wages should be calculated, what advice would the Labour Department give?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, we have no figures on those companies and organizations which have made such agreements, since this is purely a matter of their internal administration and management. However, we call on all companies to fulfil their responsibility as employers and reach an early agreement in advance in order to avoid dispute and unnecessary confusion. This is extremely important. If employers who need assistance come to the Labour Department for help, the Department would be happy to help and tell them how to draw up a comprehensive agreement.

PRESIDENT (in Cantonese): Mr LAU Chin-shek, do you think your supplementary question has not been answered?

MR LAU CHIN-SHEK (in Cantonese): Part two of my question was asking whether any companies have asked the Labour Department to provide assistance. Part three asked if anyone enquired about how wages should be calculated, would the Government tell him? The Secretary said 100 000 pamphlets had been distributed. If the Government wants to know whether they have made such agreements, it just needs to add one question in the pamphlet and ask them to respond to the question whether they have made such agreements. Will the Government do this?

PRESIDENT (in Cantonese): Your last question is a new question and not a follow-up question. However, you can raise it later. Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, Mr LAU asked whether we knew how many employers had sought the assistance of the Labour Department. I have made it very clear in the main reply. During the month when the two telephone hotlines were provided, 181 enquiries were received, of which 91 were made by employers, meaning that there were more enquiries from employers than from employees. This has already answered Mr LAU's question, that is, some employers did seek the assistance of the Labour Department. Second, the Code of Practice which I mentioned several times is very useful. Actually, the method for calculating wages is briefly dealt with in one of the pages of this Code. If an employer and his employees reach an agreement, the agreement should set out in detail the method for calculating wages under different circumstances, for example, under what circumstances the employees would receive an allowance for reporting for duty during typhoons or rainstorms, under what circumstances they can claim travelling allowances and whether employees not required to report for duty will receive their full pay when typhoon and rainstorm signals are hoisted. This will answer the question asked by Mr LAU Chin-shek just now. After the meeting, I can give a copy of the Code of Practice to each Member for reference.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, the Secretary still fails to see the point. The arrangements after the hoisting of the typhoon signal No. 8 were adopted through common practice. It was only after numerous accidental deaths that the employers of each trade and industry drew up a Code of Practice for employers and employees. Now, we have the rainstorm black warning system. Actually, during the two days after the rainstorm black warning was issued on 9 June, the Hong Kong Federation of Trade Unions (HKFTU) received nearly 200 enquiries, mostly from employees. This is far more than the number of enquiries received by the Government. As I see it, the problem now is not that employers are reluctant, but it is the Government which is being reluctant. A few years ago, someone died in Cheung Shan Estate on the way to work in heavy rain. Compensation was paid and the Government amended the relevant legislation. This shows that the Government has always put such problems under due care. However, it refuses to deal with it further now. I would like to ask the Secretary whether it is going to take another death in a rainstorm before the Government agrees to make the stipulations in legislation.

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, I would like to clarify one point. We have not introduced any legislation on whether one has to report for duty after the issuance of typhoon or rainstorm warnings. We should be clearly aware that these are two different types of warnings. However, we deal with them in the same way. We do not think that introducing legislation is practicable and I have explained the reasons clearly in my main reply. As to Miss CHAN's question asking if we would only act after an accident has occurred, it is certainly not true. We have made this decision based on reason. I have explained it very clearly in the main reply that there are four basic reasons which make it impracticable to introduce legislation.

PRESIDENT (in Cantonese): Miss CHAN, which part of your question has not been answered by the Secretary?

MISS CHAN YUEN-HAN (in Cantonese): I asked the Secretary whether the Government would only act when someone died. He answered that there is no legislative control even for typhoon signal No. 8. What I know is after someone died during the hoisting of the typhoon signal No. 8, a common practice was established. My question was whether the Government would act only after someone died. The Secretary has not understood my question!

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, I understand Miss CHAN's question very well. She was saying that the Code of Practice for the hoisting of typhoon signal No. 8 was established because someone had died. However, the present Code about rainstorm was implemented not after any fatality. This Code has existed for several years. We have added more information to the Code of Practice for typhoons to make it more complete so that it has become the Code of Practice for rainstorms and typhoons. I just wish to make this point.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, the Secretary has really not understood my question. There is no legislation that makes stipulations on what to do after the typhoon signal No. 8 is hoisted. It was only after several fatalities during typhoons that each trade and industry has established some common practices. These common practices have taken 20 years to establish. Does the Government wish to make the same mistakes about rainstorm warnings, and let the community establish some common practices after numerous accidental deaths? I do not think the Government has understood our question. Of course, I know that there is no legislation on what to do after the hoisting of typhoon signal No. 8. It was only after numerous major accidents that each trade and industry has established some common practices. What I want to ask is whether the Government wish to make the same mistake and let the Code of Practice be established 20 years from now. I would like to know the Government's stance.

PRESIDENT (in Cantonese): I understand your question and I know that the Secretary thinks that he understands your question very well. I think we are now in a situation where views differ. You may not be satisfied with the Secretary's answer. However, I believe this is not something that should be dealt with during question time. This matter should be followed up in the panels. Mr LEE Wing-tat.

PRESIDENT (in Cantonese): Mr LEE Wing-tat.

MR LEE WING-TAT (in Cantonese): Madam President, if many employers and employees have reached agreements, I believe there will be announcements. Therefore, in the absence of such I assume that very few employers and employees have reached agreements. I would like to ask a question since I am not too familiar with these matters. If there is no agreement between an employer and his employees, when a worker gets up in the morning and, knowing that a rainstorm black warning has been issued, does not report for duty, will he receive his wages? As far as I know, due to the lack of agreements with their employers, many workers report for duty despite the rainstorm warning since they worry that their wages, attendance bonus or other income might be deducted. I would like to ask the Secretary whether they should receive their pay.

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, this depends on the actual circumstances, whether the worker receives daily wages or a monthly salary. This is very important. Therefore, we cannot generalize and say whether a worker should receive his wages, since the nature of work of different people varies. It depends on the actual circumstances. If this problem really arises, the Labour Department can help them conciliate and look into the matter. The Labour Department has set up hotlines and many people have made enquiries, asking the Labour Department to explain under what circumstances should wages be paid or when they should not be paid. We can hardly generalize and say that wages must be paid under certain circumstances, since many factors are involved. It depends on the nature of work or some other factors.

PRESIDENT (in Cantonese): Mr LEE Wing-tat.

MR LEE WING-TAT (in Cantonese): Madam President, the question I asked was very short and very simple. It asked for some facts, that is, if there is no agreement between employer and employee, and if the employee does not report for duty after a rainstorm black warning has been issued in the morning, will he receive wages? It was such a simple question, and yet the Secretary had to give such a long answer. I really do not understand what he was trying to do. He mentioned daily wages and monthly salary. Madam President, in that case, will employees receiving daily wages be paid and will employees receiving a monthly salary be paid? Honourable colleagues all shook their heads at the Secretary's reply. My question was not a long-winded one. I was only talking about facts. If there is no agreement between employer and employee and a rainstorm black warning signal has been issued early in the morning, will employees receiving daily wages be paid and will those receiving a monthly salary be paid, if they do not report for duty?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Actually, Madam President, as I said, employers and employees should have reached prior agreements. If there is no agreement ......

MR LEE WING-TAT: Point of order.

PRESIDENT (in Cantonese): Mr LEE, you have a point of order? What is your point of order?

MR LEE WING-TAT (in Cantonese): This is a point of order. I have said that there is no agreement between them. I stated three facts: that there is no agreement, that a rainstorm black warning signal has been issued in early morning, and I asked the Secretary whether an employee receiving daily wages will be paid if he does not report for duty, and whether an employee receiving a monthly salary will be paid if he does not report for duty.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Under normal circumstances, if an employee receiving a monthly salary does not report for duty after a rainstorm black warning signal has been issued, he should receive his pay. However, I have to add that this depends on the circumstances of his work. Since there are some circumstances that we do not know about, we cannot make this assumption. I can only say that under normal circumstances, if an employee cannot report for duty and there is no transport means after a rainstorm black warning has been issued, he should receive his pay. Nevertheless, I have to stress that this depends on actual cases.

PRESIDENT (in Cantonese): Honourable Members, obviously several Members are very much concerned about this question. Therefore, I suggest that you follow this up in the relevant panel. Next question, Mr LEUNG Yiu-chung.

Shortening the Waiting Time for Places in Subvented Homes for the Elderly

4. MR LEUNG YIU-CHUNG (in Cantonese): As quite a large number of elderly persons are waiting for places in various kinds of subvented homes for the elderly, will the Government inform this Council:

(a) of the respective numbers of eligible elderly persons who are currently on the waiting lists for places in care and attention homes, homes for the elderly and hostels for the elderly;

(b) whether it has assessed the amount of additional financial and manpower resources required every year in order to help the elderly persons in need to be admitted immediately to relevant homes for the elderly; if so, what the results are;

(c) whether it has plans to allocate additional resources so that the elderly persons in need can be admitted to relevant homes within a short period of time; and

(d) of its comprehensive plan to shorten the waiting time for places in subvented homes for the elderly?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, as at the end of June 1998, the number of elderly persons on the waiting list for care and attention homes, homes for the aged and hostels for the elderly were about 19 000, 7 000 and 290 respectively. In view of the large number of elderly persons waiting for places in care and attention homes, we have carried out a survey on the eligibility of the elderly persons on the waiting list for these homes. The findings show that about 10 500 elderly persons (55%) meet the existing eligibility criteria for admission to care and attention homes.

In consideration of the huge demand of the elderly for services of care and attention homes, the Government pledged, in the policy address last year, to allocate substantial resources to increase the supply of residential care places. An additional 3 300 places in subvented residential care homes and 1 400 places in subvented nursing homes will be provided between 1998 and 2002. Besides, the number of bought places in private residential care homes will be increased by 2 400 from 1998 to 2001. The capital expenditure of the first two programmes will amount to several billion dollars. Upon the full implementation of the three programmes, the Government's annual recurrent expenditure on residential care services will go up from $1 billion last year to $1.7 billion, and the number of additional staff needed will be around 3 000.

In addition to the aforesaid programmes, we are further examining various short-term or longer-term measures. For example, the Social Welfare Department is now liaising with residential care homes on enhancing the utilization rate of the existing places, beyond the present 95%, with a view to increasing the supply of places within a short period of time. Recently, we have announced a programme to purchase, at higher prices, 2 400 additional places from private residential care homes within the next three years. We will closely monitor the market response. If the response is favourable and if resources also permit, we will consider increasing the number of places to be bought beyond 2 400 places. In the meantime, we are conducting an assessment on the demand of elderly people on services of care and attention homes, and mapping out a strategy to address the shortfall of places.

Apart from increasing the number of residential care places, we will also review the existing referral, assessment and allocation arrangements for residential care services to ensure that the limited resources available will be targetted at elderly persons with genuine need. On the other hand, it has always been the Government's policy to encourage the elderly to live at their home, until such time when their health has deteriorated and their care needs can be met neither by their families nor by community care, residential care services will be arranged for them. In this connection, we are exploring means of improving domiciliary and community care services to enable the majority of elderly persons to remain at home.

Lastly, I would like to reiterate that whenever an elderly person has an urgent need to be admitted to a residential care home in a short time, special arrangement can be made by the Social Welfare Department to arrange placements, the waiting time of which will be reduced substantially to a few months.

PRESIDENT (in Cantonese): Mr LEUNG Yiu-chung.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, even the Secretary herself has admitted that a very large number of elderly persons are waiting for places in residential care homes. However, the Secretary just told us in her reply that only about 7 000 places would be provided in the next three years, a number being a far cry from the number of people with genuine need. Although the Secretary said that the Government would closely monitor the future market development and might consider increasing the number of bought private places, we all know that many of the private homes are not up to standard. In this connection, will the Secretary inform us whether the Government is inclined to buying places from private residential homes instead of investing in the construction of more subvented residential care homes in the future? If so, what will be the Government's development in this aspect since the places in private residential care homes are also insufficient?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I would like to give a detailed explanation. Our future development will be in many directions. First of all, we will continue to invest in the construction of subvented residential care homes, all of which will be run by non-governmental organizations. We will keep on looking for suitable sites and making land grants to build such homes in every district. Besides, we will continue to buy places from suitable private residential care homes. These places are of different standards and their prices vary according to their quality, space, nursing manpower and location (being situated in urban or rural areas). We will also think of other ways to provide more places. In my main reply, I have also mentioned that an additional 8 000 places will be made available in the next three years. We will continue to fight for more resources in order to achieve developments in many directions.

PRESIDENT (in Cantonese): Mr LAW Chi-kwong.

MR LAW CHI-KWONG (in Cantonese): In the third paragraph of the main reply, the Secretary mentioned that more places would be bought from private residential care homes. But as far as I know, only less than 10% of the existing 400-odd private residential care homes are licensed. Will the Government continue to purchase places from private residential care homes which are not yet up to standard?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): With regard to the licensing of care and attention homes, we will not purchase places from private ones at higher prices if they are not yet licensed. We will require them to obtain a licence within six months before we buy places at that rate. The transitional period will be quite long. Since licensing requires a series of procedures, it took many subvented residential care homes quite some time to get their licences. We have certain funds which can assist in the maintenance and refurbishment of these care and attention homes. We have already received a lot of such applications and they are being processed at the moment. We hope that the quality of subvented and private residential homes will both be improved as a result.

PRESIDENT (in Cantonese): Mr TAM Yiu-chung.

MR TAM YIU-CHUNG (in Cantonese): In the first paragraph of the main reply, the Secretary said that a survey had been carried out on the eligibility of the elderly persons on the waiting list for care and attention homes, and the findings showed that 45% of them did not meet the existing eligibility criteria for admission. Does it demonstrate that these applicants are not clear about the criteria for admission to care and attention homes and that is why they have filed the applications? If this is the case, will "being in the wrong line" influence their admission to homes for the aged? What measures does the Government have in place to tackle such problems?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, this has indeed been the case in the past because many elderly persons or their families did not know which kind of residential care homes they should apply for. However, after the Social Welfare Department's recent study of the actual situation of the waiting list, we have already explained to every applicant in detail about the kind of residential care homes suitable for him. Therefore, the so-called cases of "mismatch" should diminish in the future.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): Madam President, the Secretary said just now that the Government had considered purchasing 2 400 additional places at higher prices. How does the Government set such prices? How much higher are these prices when they are compared with the previous ones? Is it because the Government has to prescribe the wage level of local staff working in private residential care homes so it must pay higher prices? What is the whole policy like?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): When we make the decision on which and how many places to purchase, we will consider the quality of services provided by the residential care homes, that includes: Is there enough space? Are the elderly being taken care of by the appropriate persons? Are the nursing staff sufficient? Is there a proper management? The price we pay also varies according to the location of the residential care homes as rents in urban and rural areas differ. Besides, because residential care homes have to take care of many elderly persons, we encourage all of them to look for appropriate staff members, especially local ones, during recruitments so as to facilitate communication and nursing in various aspects. We have set several prices before, but now since residential care homes in general have to pay more for salaries which are one of the major items of their expenditure, we propose to purchase places from them at higher prices.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): I think the Secretary has not answered my question. Does the Government offer higher prices because it has prescribed a higher wage level?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): A private institution decides on its own about the levels of wages it pays. But we would try our best to encourage these institutions to recruit the appropriate persons to provide services.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, according to the Government's data, among the elderly persons on the waiting list for subvented residential care homes last year, 44% were living in private ones. In the light of the Government's present policy, the elderly Comprehensive Social Security Assistance (CSSA) recipients are entitled to allowances if they live in such private residential care homes. However, for those elderly persons who do not receive CSSA and live in private residential care homes, it would be very expensive. In the face of our ageing population, what policies does the Government have to help these people? What is the Government going to do when the problem of insufficient places in subvented residential care homes remain unsolved for a long time, and when the charges of private ones are so high? What policies does the Government have in place to assist those elderly persons who do not receive CSSA and have to continue living in private residential care homes because they cannot move into subvented ones for the moment?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, if the family of an elderly person living in a private residential care home without receiving CSSA encounters financial problem and is unable to afford the fees, we can arrange for the elderly person to move into a less costly residential care home. But if he has problems, we hope he will apply for CSSA and the fees will then be taken care of by the CSSA.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Just now the Secretary has already answered some of my questions. However, it seems that this is not the case when the problem is tackled in reality. When the family of an elderly person living in a private residential care home encounters financial problems but is not eligible for CSSA, it will be very difficult for that elderly person to obtain help from the Government and be referred to a less expensive residential care home. I would like the Secretary to give us a reconfirmation.

PRESIDENT (in Cantonese): I think this question is not directly related to the question you raised earlier. This should be another supplementary question. I will let you wait in line and you may ask again if time allows. Mr Fred LI.

MR FRED LI (in Cantonese): Madam President, the Secretary said that, as at the end of June 1998, 10 500 elderly persons were found eligible for admission to care and attention homes. However, she pointed out in her reply that, within the next three years, 1 400 additional places in subvented nursing homes will be provided and 2 400 additional places will be purchased from private residential care homes, the total of the two will amount to 3 800 places. While 10 500 elderly persons are waiting today, the number will increase every year. Can the Government undertake to shorten the elderly's waiting time for admission to care and attention homes from two or three years to one or two years as it has undertaken to do so for applicants of public housing? I want to see some kind of pledge here. Does the Government intend to do this?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): As for undertaking to shorten the waiting time, it will be relatively difficult in our plans. This is a problem different from that of public housing, while a lot of people have to live in public housing, the elderly have many choices and may not have to move into care and attention homes, for some of them would prefer to live at their own homes. In our plans, what we can do is to provide more places and shorten the Waiting List as much as possible. I can furnish Members with some information right now. If an applicant on the waiting list for bought places in private residential care homes does not have any preference for any particular district, he just needs to wait for a few months before he can obtain admission. However, if he wants to wait for places in residential care homes in a specified district, it will depend on the availability of suitable places in that particular district. He may have to wait for 20-odd months or even more. Choosing a residential care home for an elderly person is not as simple as just moving him in, we also have to see whether the residential care home is convenient for his family to visit, and whether other services are available to meet his needs.

PRESIDENT (in Cantonese): Mr CHAN Kwok-keung.

MR CHAN KWOK-KEUNG (in Cantonese): Madam President, at present, many elderly singletons need to be taken care of by their children, but the laws on community care services have not stipulated that the children of these elderly singletons can live with them in their public housing units for the sake of giving them care and attention. Has the Government considered arranging for the children to live with their singleton parents in order to take care of them?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, according to the information provided by the Housing Department, we have a scheme which encourages family members of the elderly to live with them. If they apply for public housing together, they will enjoy priority on the Waiting List and may be allocated public housing units earlier.

PRESIDENT (in Cantonese): Mr CHAN Kwok-keung, has the Secretary not answered your question?

MR CHAN KWOK-KEUNG (in Cantonese): The Secretary has not answered my question. What I mean are those elderly singletons who are already living in public housing and whose children are not allowed to live with them.

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): I do not understand in which circumstances the children are not allowed to live with them. But if they are on the Waiting List for public housing at present, they will enjoy a priority. If the above-mentioned cases do exist, I can follow up with the Housing Department.

PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Madam President, thank you for allowing me to ask another question. In fact, although many families are in financial straits right now, they may not necessarily qualify for CSSA. Just now the Secretary said that if they encountered difficulties, they might resort to the Government for help. However, Madam Secretary, there are lots of practical difficulties. As the Honourable CHAN Kwok-keung said earlier, if I, CHAN Yuen-han, live in a public housing unit and I want my son CHAN Kwok-keung to take care of me, but his name is not on the household register, then according to the existing government policy, he is not allowed to move in. This has already become a social problem. In this connection, I would like to ask the Secretary: Is the Government going to introduce some reforms in this aspect? For example, regarding elderly persons from families which are not qualified for CSSA, how will the Government help them in admission into private residential care homes and assist them financially, so that the families can overcome their difficulties? Or how will it deal with cases in which elderly singletons want to apply for the addition of their children's or grand children's names to the household register? Is the Government going to review these policies?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): This mainly involves two issues. The first issue is, to follow up with Miss CHAN's original question, how the Government can assist the families which are not qualified for CSSA. We have other funds for social welfare purposes which may be of help to them, and we may file an application for them. But if a person really encounters financial difficulties, the best way is still to apply for CSSA if he is qualified. As for the second issue about whether children can be allowed to live with their singleton parents, I have already undertaken that I will follow up with the Housing Department.

PRESIDENT (in Cantonese): Next question. Mr Michael HO.

Assistance to HA in Solving the Problem of "Millennium Bug"

5. MR MICHAEL HO (in Cantonese): First, I have to declare an interest. I am a member of the Hospital Authority (HA).

It is learnt that the Hospital Authority applied to the Government in June this year for a provision of $416 million to replace the medical equipment in public hospitals that may fail to work due to the "millennium bug", and it was hoped that the provision will be granted in July. In this connection, will the Government inform this Council:

(a) whether the provision sought is being included in this year's budget; if not, why not;

(b) how the departments concerned will vet the funding request in respect of the equipment and what the progress is;

(d) whether it knows if the HA, when purchasing the equipment, had requested the suppliers to provide equipment that is year-2000 compliant; and

(e) how the departments concerned will provide technical assistance to the HA in solving the problem of the "millennium bug"?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President,

(a) The HA learnt in mid-1997 that some of the medical equipment with built-in computer systems would possibly be affected by the "millennium bug" and would fail to function properly in the year 2000. However, due to the lack of detailed information at that time, the HA could not seek provision from the Government in time for making rectification in 1998-99. As a result, only $17 million has been specifically made available in this year's provision for the HA to upgrade its administrative computer systems to clear the "millennium bug" effect.

(b) At the end of last year, the HA enquired of medical equipment suppliers about the "millennium bug" problem and arranged testings for equipment with the assistance of the Electrical and Mechanical Services Department (EMSD). A project team led by a Deputy Director of the HA with representatives from all HA departments concerned and the EMSD, has been formed within the HA to follow up the matter.

The $416 million mentioned at the HA Board meeting of last month was the estimated amount required for solving the "millennium bug" problem based on some preliminary evaluations conducted by the HA. The Health and Welfare Bureau (HWB) is now liaising with the HA to examine the funding request. The HWB will consult other professional departments such as the EMSD and the Information Technology Services Department (ITSD) before making a final decision.

(c) As the required budget for resolving the "millennium bug" problem has yet to be finalized, we have no plan at present to submit a funding request to the Finance Committee of the Legislative Council in July. In the Government's annual subvention to the HA, there are two block vote items earmarked for replacing medical equipment and developing computer systems respectively. About $370 million has been appropriated for these two items this year. In view of the urgency of the "millennium bug" problem, we will ask the HA to reassess the priority for purchasing equipment and developing computer systems, with a view to making the most of the HA's existing resources to solve the problem.

(d) Having learnt of the effect of the "millennium bug" on medical equipment, the HA has, starting from late 1997, stipulated in its tendering documents and purchase contracts that medical equipment suppliers should guarantee their products to be year-2000 compliant. No such clauses were included in the purchase contracts signed earlier.

(e) The HA has engaged the EMSD to help tackle the problem of "millennium bug" in the affected medical equipment. The work includes conducting assessments and tests to see if the equipment is affected by the "millennium bug", working out solutions, drawing up estimates and implementing improvement measures. The Office of the Telecommunications Authority and the ITSD will also offer professional advice to the HA on the effect of the "millennium bug" on communications equipment and computer systems.

PRESIDENT (in Cantonese): Mr Michael HO.

MR MICHAEL HO (in Cantonese): Madam President, having listened to the Government's main reply, it appears that the HA needs not apply to the Legislative Council for the over $400 million provision anymore. Paragraph (c) of the Government's main reply mentioned that over $300 million had been appropriated this year for the HA to purchase equipment and computer systems. Madam President, if the over $300 million is used to solve the "millennium bug" problem, it will be used for more or less the same purpose as before, that is, to purchase new equipment. Apart from the over $300 million, the HA might use the funding for recruiting staff to solve the "millennium bug" problem. It might try to solve the problem by reducing the number of doctors and nurses to be recruited. This might affect our medical services. As the controlling officer for medical funding, will the Secretary for Health and Welfare inform this Council how effective supervision can be executed to ensure that the HA will not use the funding for recruiting staff to solve the "millennium bug" problem? Given the present mode of one-off allocation to the HA, does it mean that this Council will be unable to play a monitoring role?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, as I said just now, the HA set up a project team at the end of 1997 to deal with the "millennium bug" problem. The team consists of the staff from many different government departments and other hospital departments. It is responsible for assessing the problem and the risks, finding solutions, working out contingency plans and liaising with various organizations. The project team has to report its progress regularly to the Planning Committee under the HA Board. The work of the Committee, chaired by the Chairman of HA, includes the formulation of policies and the setting of standards for hospital services. Lastly, the HA Board meeting monitors all the work under the HA. We believe we have a very sound mechanism to monitor at different levels the allocation and utilization of funds to tackle the year-2000 problem, as well as the strategies to solve the problem.

PRESIDENT (in Cantonese): Mr Michael HO.

MR MICHAEL HO (in Cantonese): Madam President, my question was not about how the HA monitors the work. My question was: How would the Secretary for Health and Welfare as the controlling officer for medical funding account to the Legislative Council that she can ensure that the HA will not use the funding for recruiting staff to solve the "millennium bug" problem?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, on each management level that I referred to just now, there are representatives from the HWB. We are also members of the Board of HA and we are assisted by other government departments.

PRESIDENT (in Cantonese): Dr LEONG Che-hung.

DR LEONG CHE-HUNG (in Cantonese): Madam President, first of all, I have to declare an interest too. I am a member of the HA Board. However, I might not necessarily agree with the HA's failure to apply for a provision from the HWB or the Government in time.

I would like to put the question asked by the Honourable Michael HO in another way. In its reply, the Government said that the HA could use other funds. However, those funds might not be sufficient. As we all know, a person's life depends very much on medical equipment. Under these circumstances, if there are insufficient funds to replace equipment or purchase new and proper equipment, patients cannot be diagnosed or treated with new medical equipment. Who is going to be responsible for this in the end? The Government does not think it is responsible. Or should this be the responsibility of the HA? Does the Government think that the HA does not need so much money, that is, it can solve the problem with less money?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, we are still discussing the amount that HA would actually need to deal with the "millennium bug" problem. If the HA needs additional funds to purchase some newer equipment and does not have adequate funds, we do not dismiss the possibility of submitting a funding request to the Finance Committee of the Legislative Council if we consider there is an urgent need for the equipment.

PRESIDENT (in Cantonese): Mr SIN Chung-kai.

MR SIN CHUNG-KAI (in Cantonese): Madam President, paragraph (a) of the main reply mentioned that in mid-1997, it was learnt that some of the medical equipment with built-in computer systems would be affected by the "millennium bug" and that provision had been made for the year 1998-99 for making rectification. Paragraph (d) of the main reply stated that only starting from late 1997 had stipulation been made in procurement contracts that the products of suppliers must be year-2000 compliant". It seems that the HA was already aware of the "millennium bug" problem in mid-1997. Why has it only stipulated that this clause applies to all products from the end of the year? During those six months, how much new medical equipment was purchased by the HA? In the technological field, the "millennium bug" problem has long been discovered. Why did the HA only include this clause in procurement contracts as late as mid-1997?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, just now Mr SIN asked how much medical equipment was purchased by the HA between mid-1997 and the end of 1997 without this special clause. With regard to this, I have to obtain the exact figures from the HA. Actually, the HA has only included the year-2000 compliance clause in procurement contracts since the end of last year.

PRESIDENT (in Cantonese): Mr CHAN Kam-lam.

MR CHAN KAM-LAM (in Cantonese): Madam President, the "millennium bug" problem of computers has been discussed for a long time among government departments. The Provisional Legislative Council appropriated huge amounts to various government departments to make rectification. From the Secretary's reply, I got the impression that the HA seemed to have reacted rather more slowly than others in dealing with the "millennium bug" problem. In paragraph (c) of her main reply, the Secretary mentioned that the $370 million provision this year could be used to solve the "millennium bug" problem. Will this cause delay in the provision of some new services or in the improvement of computer systems next year or some time in the future?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, the HA has not yet provided detailed information to me indicating that the need to tackle the "millennium bug" problem has affected the funding for purchasing other medical equipment. If there is such information, we will examine it at the earliest opportunity and submit a funding request to the Legislative Council if necessary.

PRESIDENT (in Cantonese): Mrs Sophie LEUNG.

MRS SOPHIE LEUNG (in Cantonese): Madam President, I would like the Secretary to clarify to us. As far as I know, the "millennium bug" problem we are talking about is not the "millennium bug" problem of ordinary computers, but that of medical equipment with computer parts. I would like the Secretary to clarify this question. As far as I know (I do not know whether this is correct), much of our equipment is made in the United States or Europe. However, as the largest manufacturer, the United States did not realize the seriousness of the "millennium bug" problem which affects the computer parts of medical equipment until the end of last year. Many manufacturers still do not know how to solve this. In view of this, in June this year, a special group of the United States Congress held a special hearing to discuss how to tackle the "millennium bug" problem in the computer parts of medical equipment. Would the Secretary confirm whether this is true?

PRESIDENT (in Cantonese): Secretary for Health and Welfare.

SECRETARY FOR HEALTH AND WELFARE (in Cantonese): Madam President, I am not well briefed on the situation in the United States. However, in Hong Kong, it is true that HA has had trouble obtaining information from suppliers time and again. Many suppliers could not say whether their products have this problem. Perhaps I can give an example to show how, according to information provided by the HA, our patients will be affected if the built-in computers of medical equipment are affected. Before a cancer patient undergoes radiotherapy, the built-in computer of the radiotherapy equipment will work out a treatment programme based on the age of the patient, the size and nature of the tumour and calculate the radiotherapy dosage for each treatment session. The date of birth of the patient is input into the computer to indicate his age. Under the influence of the "millennium bug", the computer will not be able to work properly. It will not be able to calculate the correct dosage and work out a treatment programme for the patient. The HA now knows that these machines will be affected by the "millennium bug" and is therefore trying to rectify it.

PRESIDENT (in Cantonese): Honourable Members, four more Members would like to ask supplementary questions in relation to this question. However, we have spent more than two hours on question time. Therefore, we will now proceed to the sixth question asked by the Honourable CHEUNG Man-kwong.

Class Sizes in Primary and Secondary Schools

6. MR CHEUNG MAN-KWONG (in Cantonese): The authorities have decided that, starting from the next school year, the size of each class in primary schools be increased by two students, and the plan of reducing the class size in secondary schools by five students be shelved. In this regard, will the Government inform this Council whether:

(a) it has evaluated the impacts of the increase in class size in primary schools on teaching quality; if so, what the findings are;

(b) it will examine and lay down the ideal class sizes for primary and secondary schools;

(c) it will consider not implementing that decision and, instead, setting the target for reducing the class sizes in primary and secondary schools; if not, why not; and

(d) it will consider constructing schools on the sites which are left vacant as a result of the freezing of land sales, so as to speed up the implementation of whole-day schooling at the primary level, and to achieve the ideal size target in all classes?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, I would like to respond as follows:

(a) Quality education is determined by a wide range of factors, including quality of teachers, teaching environment, school management, suitability of the curriculum, school culture, class size, and support given to schools and so on. The Government and the education sector both agree that whole-day primary schooling allows schools to arrange the curricula more flexibly, provides more time and scope for extra-curricular activities, provide more time for teachers to counsel students on homework, emotional or behaviour problems and so on. These are of great benefits to teaching and learning. On this basis, in order to speed up the implementation of whole-day primary schooling, our assessment is that it is acceptable to slightly adjust class size after taking all feasible measures.

(b) We agree to the class size as recommended in the Education Commission Report No. 5, that is, 35 pupils for each conventional class and 30 pupils for each Activity Approach class in primary schools; and 35 students for each class in secondary schools.

(c) The Government, the education sector and the general public all recognize that whole-day primary schooling will bring great benefits to the enhancement of learning effectiveness. However, the implementation of whole-day primary schooling requires a large number of additional classrooms and new schools. The major difficulty confronted by the Government is the shortage of school sites, particularly in the crowded urban area.

In order to implement whole-day primary schooling as soon as possible, the Government has adopted all possible measures to increase the supply of classrooms. These measures include accelerating the School Building Programme to build more than 70 new primary schools between now and August 2002, actively identifying more sites for building new schools, designing primary schools of smaller sizes and extending the planning area for new schools to make better use of land resources, utilizing vacant classrooms in existing schools as far as practicable, and adding classrooms to existing schools. But despite all the above measures, we still need to adjust the class size slightly. Last year, the Government decided to add two pupils to each class in primary schools and to temporarily suspend the reduction of class size in secondary schools, the objective of which is to pool together the land resources to speed up the implementation of whole-day primary schooling, so as to allow more students to benefit from whole-day schooling as soon as possible. On the basis of the above, the Chief Executive announced in his policy address last year that the Government would raise the percentage of students in whole-day primary schools from the previous target of 40% to 60% by the commencement of the 2002-03 school year.

At primary level, the adjustment of class size will be phased in, beginning with Primary One in the 1998-99 school year. Primary Two to Primary Six will not be affected in the coming school year.

The Government has carefully considered proposals made by some educational bodies to defer the adjustment of class size in schools for one year. Our assessment is that any postponement will only produce cumulative effects, creating greater difficulties for the full implementation of whole-day schooling. In order to fully implement whole-day primary schooling as soon as possible, the Government has no plan to suspend the decision to adjust the class size in schools.

I wish to point out that the slight adjustment of class size is complemented by a wide range of enhanced measures to support schools and teachers. In the past two years, we have announced a series of new measures to strengthen our support to schools and teacher, including the provision of 860 additional clerical staff to primary and secondary schools, speeding up the creation of graduate posts in primary schools, and providing secondary schools and primary schools with 880 and 650 additional teachers respectively in the next four school years. Above all, we will continue to bid for more resources to provide our teachers with a better ideal teaching environment.

(d) Sites being withheld due to the temporary freeze in the sale of land have already been planned for different uses. To change them into school sites will affect the land supply for other uses, for instance, the supply of housing sites. The Government must therefore act with prudence. Nevertheless, we will build schools on the land reserved for educational purposes as soon as possible and will continue to co-operate with the departments concerned to identify more sites for schools so as to achieve, as soon as possible, full implementation of whole-day primary schooling and more desirable class sizes in primary and secondary schools.

PRESIDENT (in Cantonese): Mr CHEUNG Man-kwong.

MR CHEUNG MAN-KWONG (in Cantonese): Madam President, it is good to implement whole-day primary schooling, but if we have to do so at the price of increasing the average class size in primary schools, then we would be turning a good thing into a bad one. Why is it that the Government always chooses to do a bad thing after it has done something good? Though the Government maintains that this policy is desirable, 30 000 teachers and principals have recently signed up to oppose this unpopular education policy. Will the Government please carry through its good deed, and drop the idea of increasing the average primary school class size in the coming year, at least in school nets where there are surpluses of school places?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, as I have already pointed out very clearly in my main reply, this decision was made after a careful consideration and assessment of all relevant factors. We are of the view that the price is worth paying, because from the wider perspective, a faster pace of introducing whole-day primary schooling will be beneficial to Hong Kong in the long run. We think that this is only a short-term sacrifice and as such, it is worth paying. Members should bear in mind that with the small adjustment of adding of two pupils in each class, we are prepared to introduce a wide range of, I repeat, a wide range of, measures to provide more support to teachers and schools. Our decision has been made with the primary objective to improve our education environment. Moreover, I would like to emphasize that there is in fact a consensus in the whole community on the need to implement whole-day primary schooling. We are just speeding up the pace of introducing whole-day primary schooling in response to the long-standing aspirations of members of the public and the various sectors of the community. That is why the Government is not going to go back on this decision.

PRESIDENT (in Cantonese): Mr Jasper TSANG.

MR JASPER TSANG (in Cantonese): Madam President, according to the Secretary, an addition of two pupils to each class is only a slight adjustment, but if we take a class of 30 or 35 students as the basis of calculation, we will see that the rate of increase is actually as high as over 5%. Does the Government have any plans to increase the number of teachers in step with the increase in average class size, so that the ratio of teachers to students will not turn for the worse?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, when we made the decision, we did not give any thought to this. The reason is that under the current circumstances, we do not think that the quality of education will be much affected even if we add two pupils to each class, for this is only a slight adjustment. Though there will be an increase of 5%, the situation will still be acceptable in practice.

PRESIDENT (in Cantonese): Mr SZETO Wah.

MR SZETO WAH (in Cantonese): Madam President, according to the Secretary, some sites have already been earmarked for housing development, but due to the property slump, land sales have been frozen. In view of this, can we construct schools on these sites first, and allocate other sites for housing development when the property market recovers?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, the freeze in land sales is only a temporary measure which will be maintained up to the end of the current financial year. And, as I have explained in detail in my main reply, a lot of these sites have already been planned for other purposes. Therefore, I think the right way to tackle this matter at the moment is to focus our attention on utilizing those sites which are already reserved for educational purposes, so as to speed up school building.

PRESIDENT (in Cantonese): Dr YEUNG Sum.

DR YEUNG SUM (in Cantonese): Madam President, we support whole-day primary schooling, but we object to the approach adopted by the Government. May I ask the Secretary whether the Government knows that there are more than 2 000 vacant classrooms in Hong Kong? Does the Government think that it is indeed ridiculous to allow these 2 000-odd classrooms to remain vacant on the one hand, and to increase the size of each class by two pupils on the other? Will the Government promise this Council that before making full use of these vacant classrooms, it will not hastily increase the average class size by two pupils? Thank you, Madam President.

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, it is true that some time ago, some organizations did accuse the Government of leaving a lot of classrooms vacant, but when the Government subsequently met with these organizations, the matter was clarified and a press release was issued. Now, I would like to explain once again that these 2 000-odd classrooms are included in our plan, and this means that plans have already been made for the utilization of these 2 000 classrooms, and we will go ahead with this decision. Of course, we may not be able to utilize some classrooms situated in the remote parts of the New Territories, but the number of such classrooms is minimal. If Dr the Honourable YEUNG Sum is interested, I can provide him with the relevant data after the meeting. I would like to reiterate that we have clarified the situation with the organizations concerned, and we have issued press releases on the matter accordingly.

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): Madam President, I feel very indignant and disappointed at the Government's decision to implement whole-day primary schooling at the expense of the average class size. I believe that many parents and teachers will find this decision totally unacceptable. Madam President, does the Government know how many students there are in each class in international schools? Should we fight for more resources as best as we can, so as to enable our own children to benefit also from a better teacher-student ratio?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, we cannot compare our local schools with international schools. Our point is that we should adopt a gradual and orderly improvement approach within the parameters of the existing resources allocation policy of the Government. We all know that fees are charged by international schools; in contrast, what we are dealing with is universal education. Much as we would like to raise our standards, we have to adopt a gradual approach and take one step at a time.

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung.

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, the Secretary just mentioned that in order to implement whole-day primary schooling, the average class size in primary schools will be increased by two pupils. He added that this will lead to gains as well as losses. That being the case, why should secondary schools be affected? Originally, it was proposed that the average class size in secondary schools would be reduced by five students. Why has the Government decided to shelve this plan? What measures will the Government take to ensure that the quality of our secondary education will not be affected?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, what we have done is just a temporary freeze in the class size reduction of secondary schools. The existing situation in secondary schools will remain as it is without any deterioration. We have only deferred the plan.

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung.

MR YEUNG YIU-CHUNG (in Cantonese): I think the Secretary has not answered my question. Since the Secretary said that both gains and losses are involved, then why would secondary schools be affected?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, if we are to go ahead with or advance the plan of reducing the average class size in secondary schools, then naturally more school premises would have to be built and a greater demand for land will be generated. The Government will have difficulties in sparing 10 sites for building schools at a time when we have such an acute shortage of land. Our emphasis for the time being is to implement whole-day primary schooling first, and we should take the necessary moves to achieve this very objective. After we have attained the goal of whole-day primary schooling, we will then resume our work on improving our secondary schools.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): I am very disappointed at a remark made by the Secretary, and that is, "the price is ....... worth paying". I would like to remind the Secretary that it is not him but the parents and children who have to pay the price if two pupils are added to each class. The reply by the Secretary has given me an impression that this issue will drag on indefinitely, because he said that the adjustment of class size will be phased in, beginning with Primary One in the school year of 1998-1999 and gradually extended to Primary Two to Six; there really seems to be no end to this matter. I would like to know when the increase in class size by two pupils will end? When will the number of pupils in each class be reverted to 35, and then gradually reduced? I would like to know whether the Government has an overall adjustment plan?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, the Chief Executive clearly mentioned in his policy address last October that a clear timetable for the implementation of whole-day primary schooling will be laid down in the policy address of this year, which means that the policy address this October will provide Members with a clear timetable.

MR LEE CHEUK-YAN (in Cantonese): I am sorry, Madam President, I did not ask the Secretary for a timetable on whole-day primary schooling. I have asked the Secretary whether the adjustment of class size will be here to stay with 37 pupils in each class forever? Thank you, Madam President.

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, after the plan on whole-day primary schooling has been completed, we will start to make the necessary adjustments. In the second part of my reply to the Honourable CHEUNG Man-kwong's question, I have indicated that a class of 35 pupils would be an ideal size, and that remains our ultimate goal.

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): Madam President, I would like to pursue my point on international schools. May I ask the Secretary whether the standard class size in international schools is an ideal, and whether it is a goal that we should try to achieve? Hong Kong is so affluent today, but how much longer do we have to wait before the Government is willing to put our resources into providing an acceptable class size for our pupils?

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, as revealed by the findings of many international research projects on education, it is a foregone conclusion that the smaller the student-teacher ratio is, the more time a teacher will be able to spend on each student. However, at present we have to consider the objective context of Hong Kong, and progress gradually towards this target as far as our resources permit. First of all, we have to attain the objectives laid down in the Education Commission Report No. 5, and we will consider what next steps to take only after this goal has been achieved. I think it is essential that we should adopt a down-to-earth approach in improving the quality of our education.

MISS EMILY LAU (in Cantonese): Madam President, the Secretary has not answered my question. I said that we now have sufficient resources. If we still cannot do it now, when can we do so?

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, I repeat that fees are charged by international schools. If parents think that the standards of international schools are higher and they can afford the fees, then they are always free to send their children to international schools. However, is it necessary for our whole local school system to adopt the standards of international schools? I think this is open to question because enormous resources are involved.

PRESIDENT (in Cantonese): Mr Andrew WONG.

MR ANDREW WONG (in Cantonese): Madam President, I think that the goal of quality education cannot be achieved simply by providing more computers, implementing whole-day primary schooling, or introducing a primary school graduate teacher policy. Rather, I think that a reduction of class size will serve the purpose. Having thus stated my view, I would like to ask a specific question: In regard to the 2 000 vacant classrooms, the Secretary said that plans have been made to utilize them. However, what uses will they be put to? Why is it impossible to employ more teachers, and then use these classrooms to ease the overcrowded conditions in each class? I really cannot understand why it is impossible to do so? I know that the Secretary has got a lot of data on hand, but he does not have to give us any data. He only has to tell us how most of these 2 000 classrooms will be used? Will these classrooms be left vacant? Will these classrooms be used as educational resource centres or offices? I would just like to seek clarification on this point.

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, we have drawn up a schedule for the utilization of these classrooms, and we will put these classrooms into good use when the number of classes is increased or when class reorganization takes place. Since the procedures involved are very complicated, and we are running out of time now, we will submit a paper to the Education Panel to explain our plan for these 2 000 classrooms in greater detail if the Honourable Andrew WONG or other Members are interested.

PRESIDENT (in Cantonese): Mr Andrew WONG, which part of your supplementary question has not been answered?

MR ANDREW WONG (in Cantonese): I just want him to give us a brief answer on how these 2 000 classrooms will be used.

PRESIDENT (in Cantonese): Secretary for Education and Manpower.

SECRETARY FOR EDUCATION AND MANPOWER (in Cantonese): Madam President, these 2 000 classrooms will be used as classrooms. (Laughter)

MR ANDREW WONG (in Cantonese): Then why are they left vacant at present?

PRESIDENT (in Cantonese): Honourable Members, we have spent more than two hours on question time today and this is indeed a record. If Members want to make any comments on the question time, or if they think that we have spent too much time on that, I should be happy to discuss with them after the meeting.

WRITTEN ANSWERS TO QUESTIONS

Industrial Support Fund

7. MR LEE KAI-MING (in Chinese): Regarding the Government's pledge to inject $274 million into the Industrial Support Fund (the Fund), will the Government inform this Council, as at the end of June this year:

(a) of the total number of organizations which have applied for funding from the Fund and, among them, the number which have been granted funds;

(b) of the total amount of funds granted; and

SECRETARY FOR TRADE AND INDUSTRY (in Chinese): Madam President, the Government has already injected $274 million into the Industrial Support Fund in 1998-99.

(a) Thirty-three organizations have so far applied and been considered for funding from the Industrial Support Fund in 1998-99. Funds will be allocated shortly to 20 of these 33 organizations on the advice of the Industry and Technology Development Council.

(b) Given that projects normally take more than a year to complete, the Industrial Support Fund provides for the spread of financial commitments over the length of period required by individual projects. In this connection, the total financial commitments for the new projects approved so far in 1998-99 amount to $187 million, of which $90 million will have to be incurred in the current financial year. The remaining commitments of $97 million will be allocated to the organizations concerned over the next three years. A second round of applications is being invited by the Industry Department for the uncommitted funds under the Industrial Support Fund.

(c) The average allocation for the successful organizations is $9.3 million. However this average should be read in the context of the actual allocations, which range from $0.3 million to $43 million.

Suspension of Trading of Listed Companies

8. MR SIN CHUNG-KAI (in Chinese): Will the Government inform this Council:

(a) of the listed companies which are being suspended from trading by order of the Securities and Futures Commission (SFC) or the Stock Exchange of Hong Kong Limited (SEHK), together with the reasons and the commencement dates for their suspension; and

(b) how it will protect the interests of shareholders of the companies concerned during their suspension of trading?

SECRETARY FOR FINANCIAL SERVICES (in Chinese): Madam President,

(a) Suspension of stock trading may be initiated by the issuer of the stock or by the SFC and the SEHK under Rule 9 of the Listing Rules. From the beginning of 1998, there have been a total of 118 suspensions, of which only one suspension was initiated by the SFC and another three by the SEHK. The remaining 114, or 97%, were in fact requested by the issuers of the stock.

As of 10 July 1998, there were a total of 17 shares being suspended from trading on the SEHK. A list of these companies with the date and reason of suspension is at Annex. Most of the suspensions would normally resume trading within one to two days after proper disclosure of information. Where suspension has lasted for more than three months, details of the cases in question would be put on the Prolonged Suspension Status Report published by the SEHK on a monthly basis for public information and market transparency.

(b) As a matter of general principle, to protect the general investing public and to ensure the integrity of securities markets, their operators and regulators have a duty to ensure that the marketplace is fair and in order, and that trading thereon is undertaken on a fully informed basis. Where trading in a particular stock fails to meet such requirements, a standard practice adopted by markets all over the world is to suspend trading in the stock to protect the interests of investors. In Hong Kong, the SFC and SEHK have statutory responsibilities for the market and co-ordinate closely on the policy of suspension.

The SFC and SEHK have clear criteria under which the trading of a stock should be suspended. These criteria, which have been presented in the form of an information paper to the Financial Affairs Panel of the Provisional Legislative Council at its meeting on 11 September 1997, and repeated again in our reply to a question raised at the sitting of the Provisional Legislative Council on 4 March 1998, include:

(i) Material corporate activities whereby price-sensitive information cannot be disclosed in a timely fashion, for example, company is subject to an offer, contemplating a rights issue, arranging a placement, having substantial changes in the nature, control or structure of the company. In general terms, such suspensions rarely last longer than a couple of days.

(ii) Fundamental concerns about the company's suitability for continued listing and/or trading, for example, the company is going into receivership or liquidation, has no operations or business, is experiencing financial or cash flow difficulties or is involved in material litigations or investigations. Under these circumstances, the suspension would only be lifted if such concerns have been satisfactorily addressed. As it takes time to resolve such concerns, it is quite common for these companies to be suspended for a longer period of time.

(iii) Unexplained unusual movements in the price or trading volume of the company's listed securities. This may be caused by the uneven dissemination or leakage of price-sensitive information in the market or because the market in the stock is being deliberately manipulated. The stock will normally not remain suspended pending completion of the investigation by the SFC where deemed necessary even where insider trading or market manipulation is suspected. However, where the SFC is not satisfied that the market in the stock will be fair and orderly if the stock is allowed to resume trading, discussions will be held with the parties concerned to find a way of resolving the matter to enable the stock to resume trading.

The objective of suspension is to ensure a fair, orderly and fully informed market to preserve the integrity of the market and to protect the investing public. This can protect more investors from entering into trade without fair access to market information which is essential to their investment. In carrying out such duties, both the SEHK and the SFC are also keenly aware of the need for and the desirability of maintaining a continuous market. Every effort is therefore made to strike a proper balance between the two opposing requirements and to keep the duration of suspension to the minimum required.

Following a recent review of the practice relating to suspension due to the listed companies' financial difficulties, the SEHK announced a policy on resumption of trading in securities of listed companies on 25 February 1998 to further enhance the transparency and certainty of the suspension regime. Under the new policy, as long as adequate and appropriate disclosure on the latest financial position is made and that there is no price-sensitive information that has not been disclosed, trading in the listed companies' securities may be resumed.

Annex

Temporary Suspension

Company	Date of Suspension	Requested by	Reason for Suspension

GKC Holding Limited	3 July 1998	Company	Serious liquidity problem and possible change in control

Dragonfield Holdings Limited	10 July 1998	- ditto -	Pending release of a placing announcement

Rhine Holdings Limited	10 July 1998	- ditto -	Dispute on legal title of property

Theme International Holdings Limited	10 July 1998	- ditto -	Major subsidiary in judicial management





Temporary Suspension due to enquiry into unusual trading movement by the Securities and Futures Commission (SFC)
Company	Date of Suspension	Requested by	Reason for Suspension

Kwong Hing International Holdings (Bermuda) Limited	16 April 1998	Company	Enquiries into unusual share trading of the company

Leading Spirit (Holdings) Company Limited	19 May 1998	SFC	Investigation into trading of securities of the company

Leading Spirit Conrowa Electric Company Limited	19 May 1998	SFC	- ditto -


Prolonged Suspension

Company	Date of Suspension	Requested by	Reason for Suspension

Mandarin Resource Corporation Limited	17 November 1986	Company	Provisional liquidators were appointed for the company.

Chintex Oil and Gas Company Limited	1 September 1989	- ditto -	The company does not have operation or business.

Englong International Limited	15 May 1996	- ditto -	The company has cash flow difficulties and fails to release its results for the year ended 31 December 1997.

Best Wide Group Limited	19 September 1996	- ditto -	The business operation and financial position of the company need to be further clarified.
Prolonged Suspension

Company	Date of Suspension	Requested by	Reason for Suspension

Kosonic International Holdings Limited	23 October 1996	- ditto -	The liquidity problems of the company lead to substantial cessation in production operation.

Siu Fung Ceramics Holdings Limited	28 October 1996	- ditto -	Debt restructuring is in progress. The Listing Committee ruled in May 1998 that the company should resume trading as soon as possible. The company refused to carry out the Committee's decision.¹

Swank International Manufacturing Company Limited	18 March 1997	- ditto -	Two out of three non-executive directors tendered resignation in relation to the content of a draft investigation report prepared by an independent accounting firm in respect of certain allegations.

Yaohan Hong Kong Corporation Limited	18 September 1997	- ditto -	The company is undergoing liquidation.

Prolonged Suspension

Company	Date of Suspension	Requested by	Reason for Suspension

S. Megga International Holdings Limited	27 November 1997	- ditto -	Debt restructuring is in progress. The Listing Committee ruled in May 1998 that the company should resume trading as soon as possible. The company refused to carry out the Committee' decision.

Peregrine Investments Holdings Limited	7 January 1998	- ditto -	The company is undergoing liquidation.

Gas-fired Power Plant

9. MISS CHRISTINE LOH: Regarding the new gas-fired power plant proposed to be built by the Hong Kong Electric Company Limited (HEC) on Lamma Island, will the Government inform this Council:

(a) of the forecast growth in maximum demand in HEC's service area and whether it will adjust these figures in the light of the recent economic downturn;

(b) of the Demand Side Management (DSM) programmes proposed by HEC and how HEC's estimated savings in demand of 0.1% compare to the best international practice;

(c) of the precise projected average net tariff increase for electricity following the construction of HEC's new power plant;

(d) whether the grid interconnection of one of China Light and Power Company Limited's (CLP's) 312 MW Black Point gas turbine units, at a cost of $468 million, could be expanded to other CLP units, thus precluding the need for a new power plant on Lamma Island;

(e) as the granting of approval for a new HEC power plant is conditional upon its being a gas-fired power plant, whether it has received any commitment from HEC that a Liquefied Natural Gas (LNG) terminal will be constructed in Shenzhen; and

(f) whether it has considered the alternative of building a new power plant in the Mainland, next to the LNG terminal, and making the power available to HEC through full interconnection with CLP, so as to preclude the need to construct a gas-fired power plant on Lamma Island?

SECRETARY FOR ECONOMIC SERVICES: Madam President,

(a) Both the HEC's forecast and the Administration's preliminary forecast of maximum demand in the HEC's service area are shown in the following table:

	HEC's Max. Demand Projection (MW)	The Administration's Max. Demand Projection (MW)

1998	2 331	2 330
1999	2 453	2 436
2000	2 573	2 559
2001	2 687	2 673
2002	2 805	2 737
2003	2 927	2 826
2004	3 032	2 897
2005	3 133	2 980
2006	3 254	3 088
2007	3 354	3 167
2008	3 456	3 258

These forecasts were prepared in January 1998. The Administration's consultants commissioned to examine the HEC's proposed Financial Plan for 1998-2003 are now working on their independent projection of maximum demand and will take into account all relevant factors including the recent economic downturn.

(b) The HEC's proposed DSM programmes for the first three years will focus on giving rebates for the purchase of energy efficient lighting, air-conditioners and refrigerators, and educational and informational programmes to promote DSM. The Administration is discussing with the HEC its proposed programmes and will urge the company to do as much as possible.

It should be noted that Hong Kong is at its initial stage of implementing full-scale DSM programmes. Besides, certain programmes, such as the curtailable rate programmes, which have been successful in other economies, may not be suitable to the Hong Kong situation. Further studies and experience are required to ascertain the feasibility of such programmes in Hong Kong. It would, therefore, be rather difficult to make any meaningful comparison as regards DSM savings achievable at this stage with other economies which have implemented DSM for more than a decade.

(c) The Administration, with the assistance of consultants, is studying the HEC's proposed Financial Plan for 1998-2003, which includes the proposal for additional generating capacity and the overall tariff levels for the period. We expect to submit the Financial Plan to Executive Council for consideration by the end of this year and the precise tariff implications will not be known until then.

(d) The firm transfer of power from the CLP to the HEC for the period 2003-2005 (that is, when the HEC's need for new capacity happens to coincide with the CLP's short-term excess capacity situation) would require an additional interconnector costing some $468 million. Clearly, it would not be economical to install an interconnector for such a short period. Nevertheless, the Administration has commissioned a consultancy study to assess the costs and benefits to consumers of increasing the interconnection capacity between the CLP and the HEC as a long-term arrangement. The study will also assess the potential for promoting competition in the electricity supply sector between power companies from sources within and outside Hong Kong. The study is expected to be completed by the end of this year.

(e) No approval has been granted to the HEC for any additional generating capacity. The Executive Council has only decided that the Hong Kong Electric Company Limited should be invited, without any commitment on the part of the Government, to proceed with detailed site investigation and environmental impact assessment studies of an extension of Lamma Power Station for the possible construction of additional electricity generating facilities, with natural gas as the preferred fuel option. We have invited the HEC to continue discussions with the potential supplier of natural gas in Shenzhen and report to the Administration on progress of the project.

(f) Electricity supply in Hong Kong is provided by the private sector. The power companies, including the HEC, have the obligation to ensure a reliable supply of electricity to consumers. It is primarily a matter for the power companies to initiate action and make proposal to the Administration on the means of fulfilling this obligation, including the choice of location of power plants.

Middle-class Unemployed People

10. MR YEUNG YIU-CHUNG (in Chinese): Will the Government inform this Council of:

(a) the number of unemployed people among the middle class in the past three years and the proportion of these people to the total number of the unemployed in each of the years; and

(b) the total number of middle-class people who have applied for the Comprehensive Social Security Assistance (CSSA) since the Asian financial turmoil and, among them, the number of those whose applications have been approved?

SECRETARY FOR EDUCATION AND MANPOWER (in Chinese): Madam President,

(a) Unemployment statistics are compiled on the basis of data obtained from the General Household Survey (GHS). The data so collected does not contain any information on previous employment earnings of the unemployed. Moreover, there is no standard definition or description of the category of middle, upper or lower class. Unemployment statistics in respect of the "middle class" are therefore not available.

Nevertheless, unemployment statistics in respect of those unemployed persons with a previous job in the occupations of "managers and administrators", "professionals" and "associate professionals" for the period of February to April for each of the year of 1996, 1997 and 1998 are at Annex for Members' reference.

(b) According to the records maintained by the Social Welfare Department, about 8 400 applications for CSSA were received and 5 600 approved between October 1997 and June 1998. The applications are classified according to the nature of the cases such as old age, unemployment, disability. We do not classify cases into "middle class" or otherwise.

Annex

Unemployed persons with a previous job^@by Previous occupation

	1996 February - April				1997 February - April				1998 February - April
Previous occupation	No. ('000)	%	Rate^# (%)	No. ('000)		%	Rate^# (%)	No. ('000)		%	Rate^# (%)
Managers and administrators	2.9	3.3	1.0	3.1		4.6	1.2	3.3		2.9	1.4
Professionals	0.9	1.1	0.6	1.0		1.5	0.6	1.1		0.9	0.7
Associate Professionals	7.8	8.9	2.0	6.5		9.5	1.3	12.6		11.0	2.5

Notes:

@ Not including re-entrants into the labour force for whom information on previous occupation is not available.

# Unemployment rate in respect of the specified previous occupation group. Regarding unemployment rates by occupation, since in deriving both the numerator and the denominator, unemployed persons are classified according to their previous occupation which may not necessarily be the one which he/she will enter, and there is no information on previous occupation in respect of first-time job-seekers and re-entrants into the labour force, such rates are not strictly comparable to the overall unemployment rate and should be interpreted with caution.

Development of Information Technology

11. MR SIN CHUNG-KAI: In view of the advent of the information era and the advancement of technology, will the Government inform this Council of the measures it has taken to enhance the co-ordination and collaboration between the academic sector and the information technology industry, so as to speed up the development of information technology in Hong Kong?

SECRETARY FOR INFORMATION TECHNOLOGY AND BROADCASTING: Madam President, currently institutions funded by the University Grants Committee (UGC) maintain close contact with the information technology (IT) industry over research activities. Some institutions have also established independent private bodies to facilitate technology transfer and commercialization of the results of research on technological developments, including IT.

To enhance collaboration between the academic sector and the IT industry, government funding support is made available through the Industrial Support Fund and the Research Grants Council (RGC) under the aegis of the UGC.

Through the Industrial Support Fund administered by the Industry Department, the Government has financed a number of projects involving collaborative efforts between the academic sector and the IT industry. One example is the Cyberspace Centre established by the Hong Kong University of Science and Technology to promote and facilitate the use of the Internet among software developers. The Centre has produced publications on Internet security and initiated an Internet Business Consortium for the promotion of business application of Internet. Another example is the Electronics News Media and Publishing Consortium set up by the Chinese University of Hong Kong for the local news media industry to promote greater use of electronic publishing.

Through the RGC, funds are provided for research projects with the potential of social or economic application. Since 1991, the RGC has allocated about $160 million to support 344 research projects and five large-scale initiatives in computer science and IT. The RGC also supports the establishment of Co-operative Research Centres (CRCs) to promote technology transfer between tertiary institutions and the industry. An example is the CRC set up by the City University of Hong Kong for the development of open systems technology in Hong Kong.

With the recent establishment of the Information Technology and Broadcasting Bureau, we shall continue to work closely with industry and academia to explore ways to facilitate the commercialization of the results of research on leading edge IT.

Introduction of the "Octopus" System to Public Transport

12. MR ANDREW CHENG (in Chinese): Will the Government inform this Council:

(a) of the respective schedules laid down by public transport operators in the territory regarding the introduction of the "Octopus" system to the various modes of transport which they operate;

(b) of the progress of the relevant installation works to date, and whether the relevant targets can be met; if not, why not; and

(c) whether it will request bus companies to expeditiously and fully install the "Octopus" system, so as to facilitate commuters?

SECRETARY FOR TRANSPORT (in Chinese): Madam President, in September 1997, the Octopus ticketing system was introduced for use by passengers travelling on the Kowloon-Canton Railway East Rail and Light Rail, the Mass Transit Railway, cross-harbour routes run by the Kowloon Motor Bus Company (1993) Limited (KMB), Citybus Limited (Citybus) and the Hongkong and Yaumati Ferry Company Limited (HYF)'s Central to Peng Chau service. As at June 1998, Octopus equipment has been installed in 520 KMB buses and 168 Citybus buses. Some of these buses are deployed to non-cross-harbour routes and express services to the new airport.

For commuters' convenience, bus companies have taken the initiative to speed up the installation of Octopus equipment in their fleet. The KMB will install Octopus equipment for its entire bus fleet, comprising almost 4 000 vehicles, in the coming two to three years. The Citybus plans to complete the installation programme for its entire fleet of more than 740 buses by the end of this year. The New World First Bus Services Limited intends to install Octopus equipment in its more-than-700 bus fleet within the first two years of operation.

The HYF also plans to extend the use of the Octopus to other outlying islands routes by the end of 1998. Other transport operators have also indicated interest in joining the Octopus system.

Inadequate Loading Capacity of Manhole-covers in Public Housing Estates

13. DR TANG SIU-TONG (in Chinese): It is reported that a fire engine on a duty trip was recently trapped in the emergency vehicular access of a public housing estate because the cover of a manhole on the access was unable to withstand the heavy weight of the engine and cracked. In this regard, will the Government inform this Council:

(a) whether the Fire Services Department knows about the inadequate loading capacity of manhole-covers in general in the public housing estates in Hong Kong; if so, when it knew about this;

(b) of the public housing estates in the territory which have a similar problem with manhold-covers;

(c) of the number of similar incidents in each of the past three years and of the locations at which those incidents took place; and

(d) whether it has any plan to resolve the above problem; if so, what the details are?

SECRETARY FOR HOUSING (in Chinese): Madam President, in the past three years, there were two incidents where a fire engine got bogged down in manhole in the emergency vehicular access of a public housing estate. The first one occurred in Ho Man Tin Estate on 10 February 1998. The second one occurred in Tsui Lam Estate on 26 June 1998.

After the first incident, the Housing Department has conducted a territory-wide survey which was completed in June this year. The survey showed that the loading capacity of the manhole covers in the emergency vehicular accesses was inadequate in a number of estates, including Siu Sai Wan, Wong Chuk Hang, Lung Tin, Nam Cheong, So Uk, Un Chau Street, Lek Yuen, Pok Hong, Wo Che and Sha Kok. The Fire Services Department was alerted to the problem since then.

The manhole covers identified not to have adequate loading capacity are located within emergency vehicular access routes which were not originally designed and constructed for such purpose. These routes were only designated as such after the fire accident at Yue Wan Estate which happened a few years ago.

The Housing Department has started the replacement of all substandard manhole covers belonging to the Housing Authority. The works will be completed by the end of this year. Regarding those manhole covers owned by the public utility companies, these companies are being notified and requested to replace the covers as quickly as possible.

As an interim measure, all substandard manhole covers which have yet to be replaced will be marked on site for easy identification and covered with metal plates.

Lok Ma Chau Crossing

14. MR TAM YIU-CHUNG (in Chinese): Will the Government inform this Council:

(a) of the progress in extending the operating hours of the Lok Ma Chau Crossing for travellers;

(b) of the measures to enhance the provision of the shuttle bus service at the Lok Ma Chau Crossing on Sundays and public holidays; and

(c) whether it will consider designating public bus or public light bus routes from Tsuen Wan and Tsing Yi to Lok Ma Chau, so that it will be more convenient for residents of Tsuen Wan and Tsing Yi to use the Lok Ma Chau Crossing?

SECRETARY FOR TRANSPORT (in Chinese): Madam President,

(a) Currently, the Lok Ma Chau ─ Huanggang Boundary Crossing is already open to goods vehicles 24 hours daily. But it is only open to buses and private cars from 7 am to 9 pm daily. We have put forward proposals to the Mainland side for extending the operating hours for other types of vehicles. The matter is being pursued.

(b) The Lok Ma Chau ─ Huanggang shuttle bus service is available from 7.30 am to 8.30 pm daily, at a 15-minute frequency. Depending on passenger demand, the operating frequency of this shuttle service can be strengthened, from every 10 to 15 minutes to one departure every 3.5 minutes.

(c) At present, five direct cross-boundary coach services have been authorized to operate from Tsuen Wan/Tsing Yi to Shenzhen via the Lok Ma Chau Crossing. In addition, seven franchised bus routes are linking up Tsuen Wan/Tsing Yi with various Kowloon-Canton Railway East Rail stations, where passengers can interchange to cross the boundary at Lo Wu. Overall, the level of public transport services now provided can cope with passenger demand and at this stage, we have no plan to introduce a new public bus or public light bus service from Tsuen Wan/Tsing Yi to Lok Ma Chau. The Transport Department will nevertheless monitor the situation and make adjustments to service levels in accordance with changes in demand.

Repair Works for Slopes Within School Boundaries

15. MR CHEUNG MAN-KWONG (in Chinese): With regard to the repair works for slopes situated within school boundaries or in their vicinity, will the Government inform this Council:

(a) of the number of such slopes for which it has issued Dangerous Hillside Orders; of the schools being affected;

(b) whether it has specified in the Orders the potential hazards of those slopes and the deadlines for the maintenance works to be carried out; and the progress of those repair works;

(c) whether it knows the problems which those schools encounter in handling the slope maintenance works, such as finding suitable contractors, the schools' lack of requisite expertise in following up the repair works and so on; and

(d) whether, in view of the high costs of slope repair works, it will provide financial assistance to the affected private schools and schools under the Direct Subsidy Scheme for completing the works as soon as possible, so as to safeguard the safety of both teachers and students, as well as the public?

SECRETARY FOR EDUCATION AND MANPOWER (in Chinese): Madam President,

(a) Since December 1994, the Geotechnical Engineering Office (GEO) has recommended the Buildings Department (BD) to serve Dangerous Hillside Orders (DHOs) in respect of 233 substandard private slopes affecting schools. The BD has accordingly issued DHOs to 89 schools which are affected by 142 substandard private slopes. The 89 affected schools are listed in the Annex. The BD is in the process of verifying the ownership of the remaining 91 slopes in order to serve DHOs.

(b) A DHO issued by the BD sets out the potential threats posed by the slope concerned. It also specifies the period within which the owners shall submit surveying and analysis reports, as well as a proposal for repair works. Generally speaking, the owner must submit the relevant documents within seven months from the date of receiving the DHO. After the BD has approved the proposal for repair works, the owner must complete the repair works as soon as possible. Up to now, repair works on five substandard slopes have been completed, and surveying and repair works at different stages on the other 137 slopes are also underway.

(c) On receiving a DHO, a school will simultaneously receive a set of guidelines on how to appoint a qualified geotechnical consultant to co-ordinate the repair works. A qualified geotechnical consultant could assist the school in selecting a suitable contractor and follow up on the repair works. Since August 1996, the Education Department also issued administration circulars to schools to provide guidelines on the procedure of conducting slope repair works and the relevant documents to be prepared.

In order to provide more effective assistance to schools to handle slope repair works, the Government set up an inter-departmental working group last year, with the Education Department responsible for co-ordinating the relevant procedures and providing schools with information and assistance. Since February this year, the GEO after advising the BD to issue a DHO to a school, also immediately writes to the school concerned, providing it with a list of qualified geotechnical consultants and the necessary guidelines to enable the schools to carry out slope repair as soon as possible. As far as we know, the schools have not encountered any particular difficulties in dealing with slope repairs.

(d) The Government will pay for all the costs of slope repair works carried out by aided schools. The costs of slope upgrading works carried out by private schools are borne by the owners of the slopes. The Government, however, also provide subsidies for bought place schools and caput schools to carry out repairs and maintenance, including slope repairs. The subsidies will be reimbursed to the schools by instalments over a period of three years. Private schools under the Direct Subsidy Scheme can apply to the Government for an interest free loan to cover slope repairs. Since slopes near schools would pose a threat to the safety of teachers and students, the Government will review, from time to time, whether the assistance provided to schools for them to carry out repair works is adequate.

Annex

List of Aided Schools which have been served with Dangerous Hillside Orders (15 December 1994 to 24 June 1998)

	School Name	School Address

1.	Aberdeen Technical School	1 Wong Chuk Hang Road
2.	Caritas Lok Kan School	1-6 Sau Wa Fong
3.	Caritas Magdalene School	1-6 Sau Wa Fong
4.	Caritas Magdalene School (Canossian School)	1 Star Street
5.	St. Francis Canossian School	1-6 Sau Wa Fong
6.	Caritas St. Paul Prevocational School	Lung Tsai Tsuen, Cheung Chau
7.	Cheung Chau Public School	School Road
8.	Cheung Chuk Shan College	Cloud View Road
9.	Chiu Sheung School	79B Pok Fu Lam Road
10.	Chong Gene Hang College	Cheung Man Road
11.	CMA Prevocational School	298 Nam Cheong Street
12.	Cognitio College	4 Sui Man Road, Chai Wan
13.	Concordia Lutheran School	12 Tai Hang Tung Road
14.	Confucius Hall Primary School	77 Caroline Hill Road, Causeway Bay
15.	Diocesan Boys' School	131 Argyle Street
16.	DMHC Siu Ming Catholic Secondary School	Kwai Hop Street, Kwai Chung
17.	The Methodist Lee Wai Lee College	22-24 Kwai Yip Street
18.	Good Hope School	303 Clear Water Bay Road
19.	Heep Yunn School	1 Farm Road
	School Name	School Address

20.	Holy Family Canossian College	33 Inverness Road
21.	Ki Laap School	1 Star Street
22.	Kei Oi School	15 Kwong Lee Road
23.	Kowloon Women's Welfare Club Li Ping Memorial School	33 Wylie Road
24.	Kung Lee College	17 Tai Hang Drive, Causeway Bay
25.	Lutheran Middle School	50, 50A, 52 Waterloo Road
26.	Maryknoll Convent School	130 Waterloo Road and 5 Ho Tung Road
27.	Marymount Secondary School	123 Blue Pool Road
28.	Meng Tak Primary School	Cheung Man Road, Chai Wan
29.	Nam Wah Catholic Secondary School	5 Wing Mong Street
30.	Ning Po College	7 Kung Lok Road
31.	Po Kok Girls' Middle School	11 Shan Kwong Road
32.	Po Leung Kuk Pershing Tsang Primary School	66 Leighton Road and 2 Link Road
33.	Pooi To Middle School	19 Grampian Road
34.	Precious Blood Girls' Middle School	74-80 Sing Woo Road
35.	Pui Ching Middle School	Pui Ching Road
36.	Pui Tak Canossian College	200 Peel Rise
37.	Ramondi College	4 Robinson Road
38.	Rosaryhill School	41B Stubbs Road
39.	Salesian School	16 Chai Wan Road
40.	Salesians of Don Bosco St. Louis School	179 Third Street
41.	SKH Kei Yan Primary School	Glenealy Road
42.	SKH Lam Woo Memorial Secondary School	397 and 399 Kwai Shing Circuit, Kwai Chung
43.	SKH Yan Laap Primary School	397 and 399 Kwai Shing Circuit, Kwai Chung
44.	SKH St. James' Primary School	98A-110 Kennedy Road
45.	SKH Stanley Village Primary School	5 Carmel Road
46.	St. Anthony's School	69A Pokfulam Road
47.	St. Clare's Girls' School	50 Mount Davis Road
48.	St. John The Baptist School	29 Yee On Street
49.	St. Joseph's Primary School	Wood Road
50.	St. Mary's Canossian College	158-162 Austin Road
	School Name	School Address

51.	St. Paul's Co-educational College	33 MacDonnell, Road
52.	St. Paul's Secondary School	Ventris Road, Happy Valley
53.	St. Stephen's College	22 Tung Tau Wan Road
54.	St. Stephen's Girls' College	37 Park Road
55.	Sung Tsun Secondary School Primary Section	21-32 Po Tung Road, Sai Kung
56.	Tang King Po School	16 Tin Kwong Road
57.	The Building Contractors' Association School	62 Tin Hau Temple Road
58.	TWGHs Lee Ching Dea Memorial College	18 Cloud View Road
59.	True Light Girls' College	54A Waterlood Road
60.	True Light Middle School	50 Tai Hang Road
61.	Tung Wah Group of Hospitals Lee Sai Chow Memorial Primary School	122A Hollywood Road
62.	Wah Yan College (Kowloon)	56 Waterloo Road
63.	Wah Yan College (Hong Kong)	281 Queen's Road East
64.	Wong Siu Chi Middle School	Kwong Fuk Road, Tai Po
65.	Ying Wa Girls' School	76 Robinson Road


List of Private Schools which have been served with Dangerous Hillside Orders (15 December 1994 to 24 June 1998)

	School Name	School Address

1.	Aplichau Baptist Primary School	30 San Shi Street, Aplichau
2.	Buddhist Chi Hong Kindergarten	San Tin Village, Sha Tin
3.	Caritas St. Francis Kindergarten	Caine Road
4.	Chan Shu Kui Memorial School	Tat Chee Avenue
5.	Epworth Village Methodist Church Kindergarten	100 Chai Wan Road
6.	Glenealy Junior School	3 and 5 Old Peak Road
7.	Hon Wah Middle School	15 To Li Terrace
8.	Hong Kong International School	6-8 South Bay Close
9.	Hop Yat Church Kindergarten	2 Bonham Road
10.	Island School	18-20 Borrett Road
	School Name	School Address

11.	Jockey Club Primary School	Blue Pool Road
12.	Kiangsu Chekiang College	39-57 Kin Wah Street and 30 Ching Wah Street
13.	Kowloon Junior School	20 Perth Street
14.	Kowloon Rhenish School	2A Dianthus Road, Sham Shui Po
15.	Lok Man Cannan Kindergarten	120-160 Kau Pui Lung Road
16.	Mu Kuang English School	53 and 55 Kung Lok Road
17.	North Point Methodist Church Kindergarten	11 Cheung Hong Street
18.	Precious Blood Kindergarten	2 Green Lane, Hong Kong
19.	Rhenish Mission School	8 Honiton Road and 18 Babington Path
20.	Sheng Kung Hui Kindergarten/Kei Yan Primary School	1 and 1B Lower Albert Road
21.	SKH Kindergarten (Mount Butler)	Clementi Road
22.	Tai Po Tung Kwun School	Kam Shan Road, Tai Po
23.	The Yau Yat Chuen School	2 and 4 Marigold Road
24.	Wanchai Church Primary School	21-23A Kennedy Road

Piling Work for the Northwest Passenger Concourse at New Airport

16. MISS EMILY LAU: In view of the reports about inadequate piling work for the Northwest Passenger Concourse at the new airport at Chek Lap Kok, will the Executive Authorities inform this Council:

(a) of the investigations that have been conducted to ascertain the severity of the problem;

(b) of the findings of such investigations and the recommendations made; and

SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Madam President,

(a) Whilst the Northwest Concourse Extension to the Passenger Terminal Building of the airport at Chek Lap Kok is under investigation by the Buildings Authority (BA), this does not imply that the foundation works of the project are problematic or unsafe. The investigation aims to clear any doubts about the adequacy of the foundations arising from allegations of irregularities in piling works undertaken by the same contractors in other construction projects. In this regard, the Registered Structural Engineer (RSE) of the project has started core-drilling tests on the completed bored piles at the site. The RSE has been keeping the BA informed of the progress of the core-drilling tests;

(b) The core-drilling tests are on-going. The BA will carefully consider the outcome of the tests when it is submitted by the RSE. If there are deficiencies in the foundations, the BA will ask the RSE to carry out remedial measures. The BA will also monitor the implementation of such remedial measures; and

(c) The superstructure of the Northwest Concourse Extension to the Passenger Terminal Building is still under construction and rests on foundations separate from those supporting the existing Passenger Terminal Building. The safety and normal operations of the airport have not been affected.

Loan to the Thai Government

17. MR LEE KAI-MING (in Chinese): When the Asian financial turmoil started last year, the Government supported the financial package organized by the International Monetary Fund to rescue the Thai baht by providing a loan of US$1 billion. In this connection, will the Government inform this Council:

(a) how interest on the loan is calculated;

(b) when the loan is expected to be fully recovered, and whether it knows if the Thai Government has formulated a schedule for repayment of the loan by instalments; and

SECRETARY FOR FINANCIAL SERVICES (in Chinese): Madam President,

(a) Hong Kong's participation in the financing package for Thailand is in the form of a US dollar/Thai baht swap facility, that is, Thailand borrows US dollars from Hong Kong by using Thai bahts as collateral with a contractual obligation to buy back the Thai bahts in US dollars in future as repayment plus interest, for an amount not exceeding the aggregate of US$1 billion. Under this facility, the Bank of Thailand (BoT) is entitled to purchase US dollars from the Hong Kong Monetary Authority (HKMA), in accordance with a drawdown schedule. Each swap transaction with HKMA is in parallel with and proportional to purchases of US dollar swaps by BoT as fiscal agent for Thailand from the International Monetary Fund (IMF) under the terms of the IMF Stand-by Agreement for Thailand.

The total duration of each swap transaction is for five years, with interest rate reset on renewal of the swap at six-monthly intervals. The US dollar interest rate used in computation of the forward rate is the six-month London Interbank Offer Rate (LIBOR) Fixing Rate for US dollar.

(b) Each disbursement to BoT under the swap agreement is to be fully repaid within five years of its initial drawing, with repayments commencing three and a half years from the date of each initial drawdown and being made in four equal instalments by reducing the amount of the swap renewal on rollover dates.

(c) The Exchange Fund Ordinance empowers the Financial Secretary to use the Exchange Fund for the strategic purposes specified in the Ordinance, in particular those concerned with the currency's exchange value. Decisions on using the Fund for these strategic purposes are for the Financial Secretary alone.

Loans of this nature, aimed at stabilizing financial markets in the region and limiting the contagion effect of currency volatility in the region on the exchange value of the currency of Hong Kong, fall under the category of strategic use of the Exchange Fund. Nevertheless, the Financial Secretary has consulted the Exchange Fund Advisory Committee (EFAC) on the general policy of participating in multilateral facilities to stabilize financial markets and limit contagion impact on Hong Kong. Wherever practicable and appropriate, the Financial Secretary would also consult the EFAC on individual cases of such loans. In any event, the EFAC is kept fully informed of the progress of such loans.

The current mechanism has proven to be effective and flexible, with adequate accountability for the use of the Exchange Fund. Given the strategic and urgent nature of such decisions, it is considered that the current mechanism is appropriate.

Vacant Commercial Units and Market Stalls in Public Housing Estates

18. MR LEE WING-TAT (in Chinese): Will the Government inform this Council:

(a) of the respective average vacancy rates in the shopping centres and markets in public housing estates in Hong Kong, and the vacancy rate in each of such shopping centres and markets;

(b) how the Housing Department will re-invite tenders for the tenancy of the vacant units; and

(c) whether the Housing Department will set upset prices for individual units when re-inviting tenders for the tenancy of the units; if so, how such upset prices are set?

SECRETARY FOR HOUSING (in Chinese): Madam President, as at 30 June 1998, the average vacancy rate for shops in public housing estates, home ownership courts and shopping centres was 4.3%. The average vacancy rate for market stalls in public housing estates was 8.4%. The vacancy rates in individual shopping centres and markets are at Annex.

When commercial premises become vacant, they are put to open tender as soon as possible. The invitation of open tender will be advertised in leading newspapers and through the Internet. If the invitation of tenders has failed to attract acceptable bids, the invitation will be advertised again in three months' time. Those shops classified as being difficult to let will be offered for lease through open instant tender and walk-in application. From time to time, some commercial premises may be disposed of through restricted tenders among eligible commercial tenants involved in the Comprehensive Redevelopment Programme.

The Housing Department will set upset rents only for those commercial premises of which tenders are invited through open instant tender, walk-in application and restricted tender.

In setting the upset rents of commercial premises, the Housing Department will consider a number of factors, including the physical characteristics, locations and levels of business activity of the premises, the nature of and competition in the designated trade, estate population, vacancy rates of commercial premises in the estates, and recent tendered rents and renewal rents achieved for similar trades in comparable estates.

Annex

Vacancy of Shops in Public Housing Estates,

Home Ownership Courts and Shopping Centres

as at 30 June 1998

Vacancy	Estate	Estate

Under 5%	Butterfly Estate	On Yam Estate
	Chai Wan Estate	Pak Tin Estate
	Cheung Fat Estate	Ping Shek Estate
	Cheung Hang Estate	Ping Tin Estate
	Cheung Hong Estate	Po Hei Court
	Cheung Kwai Estate	Po Lam Estate
	Cheung On Estate	Pok Hong Estate
	Cheung Sha Wan Estate	Sai Wan Estate
	Cheung Wo Court	Sam Shing Estate
	Ching Lai Court	San Fat Estate
	Ching Wah Court	Sau Mau Ping Estate (1)
	Choi Fai Estate	Sau Mau Ping Estate (2)
	Choi Wan Estate (1)	Sau Mau Ping Estate (3)
	Chuk Yuen North Estate	Sha Kok Estate
	Chuk Yuen South Estate	Shatin Pass Estate
	Chun Shing Factory	Shek Kip Mei Estate
	Chung Nga Court	Shek Lei Estate (1)
	Chung On Estate	Shek Lei Estate (2)
	Fu Heng Estate	Shek Pai Wan Estate
	Fu Shan Estate	Shek Yam East Estate
	Fu Shin Estate	Shek Yam Estate
	Fu Tung Estate	Shun Lee Estate
	Fuk Loi Estate	Shun On Estate
	Fung Wah Estate	Shun Tin Estate
	Hau Tak Estate (1)	Siu Hong Court
	Hing Man Estate	Siu Lun Court
	Hing Wah Estate (2)	Siu Sai Wan Estate
	Hiu Lai Court	Sun Chui Estate
	Ho Man Tin Estate	Tai Hang Tung Estate
	Hoi Tai Factory	Tai Hing Estate

Vacancy	Estate	Estate

	Hong Tin Court	Tai Ping Estate
	Hung Hom Estate	Tai Wo Shopping Mall
	Jordan Valley Factory	Tai Yuen Estate
	Ka Fuk Estate	Tak Tin Estate
	Kai Yip Estate	Tin King Estate
	Kam Ying Court	Tin Ma Court
	Kin Sang Estate	Tin Ping Estate
	King Lam Estate	Tin Shui Estate (1)
	Ko Chun Court	Tin Shui Estate (2)
	Kwai Chung Estate	Tin Tsz Estate
	Kwai Hing Estate	Tin Yiu Estate (1)
	Kwai On Factory	Tin Yiu Estate (2)
	Kwai Shing East Estate	Tsing Yi Estate
	Kwai Shing West Estate	Tsui Lam Estate
	Kwong Tin Estate	Tsui Ping South Estate
	Kwong Yuen Estate	Tsui Wan Estate
	Lai Kok Estate	Tsui Yiu Court
	Lai On Estate	Tsz Ching Estate
	Lai Yiu Estate	Tsz Wan Shan Shopping Centre
	Lam Tin Estate (1)	Tung Tau Estate (1)
	Lam Tin Estate (2)	Tung Tau Estate (2)
	Lee On Estate	Un Chau Street Estate
	Lei Cheng Uk Estate	Upper Ngau Tau Kok Estate
	Lei Muk Shue Estate (1)	Upper Wong Tai Sin Estate
	Lei Muk Shue Estate (2)	Valley Road Estate
	Lei Tung Estate	Wah Fu Estate (1)
	Lek Yuen Estate	Wah Kwai Estate
	Lok Fu Estate	Wah Ming Estate
	Lok Fu Shopping Centre	Wah Sum Estate
	Lok Wah North Estate	Wan Tau Tong Estate
	Lok Wah South Estate	Wang Tau Hom Estate
	Lower Ngau Tau Kok Estate (1)	Wo Che Estate
	Lower Ngau Tau Kok Estate (2)	Wo Lok Estate
	Lower Wong Tai Sin Estate (1)	Wong Chuk Hang Estate
	Lower Wong Tai Sin Estate (2)	Wong Tai Sin Shopping Centre
	Lung Hang Estate	Wu King Estate

Vacancy	Estate	Estate

	Lung Poon Court	Yan Ming Court
	Lung Tin Estate	Yan Shing Court
	Ma Hang Estate	Yau Oi Estate
	Mei Chung Court	Yin Lai Court
	Model Housing Estate	Yiu On Estate
	Nam Cheong Estate	Yiu Tung Estate
	Nam Shan Estate	Yue Wan Estate
	Oi Man Estate	Yuen Long Estate
	On Kay Court	Yuet Lai Court
	On Ting Estate

5.1%-10%	Ap Lei Chau Esate	Lai King Estate
	Cheung Ching Estate	Ma Tau Wai Estate
	Cheung Fat Shopping Centre	Mei Lam Estate
	Cheung Wah Estate	Ming Tak Estate
	Choi Ha Estate	North Point Estte
	Choi Hung Estate	Shan King Estate
	Choi Yuen Estate	Siu Hei Court
	Chun Shek Estate	Sui Wo Court
	Fung Tak Estate	Tai Wo Hau Estate
	Heng On Estate	Tin Wan Shopping Centre
	Hin Keng Estate	Wan Tsui Estate
	Hing Tung Estate	Yue Tin Court

10.1%-20%	Cheung Shan Estate	Mei Tung Estate
	Hau Tak Estate (2)	Shek Wai Kok Estate
	Hing Tin Estate	Shui Pin Wai Estate
	Ko Yee Estate	So Uk Estate
	Kwai Fong Estate	Tsui Ping North Estate
	Kwong Fuk Estate	Wah Fu Estate (2)
	Long Ping Estate

20.1%-30%	Chak On Estate	Leung King Estate

Above 30%	Ngan Wan Estate	Sun Tin Wai Estate


Vacancy of Market Stalls in Public Housing Estates
(as at 30 June 1998)

Vacancy	Estate	Estate

Under 5%	Ap Lei Chau Estate	Mei Tung Estate
	Cheung Fat Shopping Centre	Pok Hong Estate
	Cheung Sha Wan Estate	San Fat Estate
	Cheung Wah Estate	Sau Mau Ping Estate (2)
	Choi Wan Estate (1)	Sau Mau Ping Estate (3)
	Chuk Yuen South Estate	Sha Kok Estate
	Chung On Estate	Sheung Tak Estate
	Fu Heng Estate	Shun On Estate
	Fu Shan Estate	Shun Tin Estate
	Fu Tung Estate	Siu Sai Wan Estate
	Fuk Loi Estate	So Uk Estate
	Fung Tak Estate	Sui Wo Court
	Hau Tak Estate (2)	Tai Hang Tung Estate
	Hing Tung Estate	Tai Wo Hau Estate
	Ho Man Tin Estate	Tak Tin Estate
	Jordan Valley Factory	Tin Ma Court
	Ka Fuk Estate	Tin Shui Estate (2)
	Kai Yip Estate	Tsui Ping North Estate
	Kin Sang Estate	Tsz Wan Shan Shopping Centre
	King Lam Estate	Tung Tau Estate (2)
	Kwai Fong Estate	Un Chau Street Estate
	Kwai Hing Estate	Upper Ngau Tau Kok Estate
	Kwai Shing East Estate	Upper Wong Tai Sin Estate
	Kwong Tin Estate	Valley Road Estate
	Kwong Yuen Estate	Wah Kwai Estate
	Lei Muk Shue Estate (1)	Wah Ming Estate
	Lek Yuen Estate	Wang Tau Hom Estate
	Leung King Estate	Wong Chuk Hang Estate
	Lok Fu Shopping Centre	Yau Tong Estate
	Lok Wah South Estate	Yiu On Estate
	Lung Poon Court	Yue Wan Estate



Vacancy	Estate	Estate

5.1%-10%	Heng On Estate	Siu Hong Court
	Hing Tin Estate	Tin Yiu Estate (1)
	Lai King Estate	Tsing Yi Estate
	Lee On Estate	Tsui Lam Estate
	Lei Muk Shue Estate (2)	Wan Tsui Estate
	Pak Tin Estate	Wo Che Estate
	Shek Kip Mei Estate	Yau Oi Estate
	Shek Lei Estate (1)

10.1%-20%	Butterfly Estate	On Ting Estate
	Cheung Ching Estate	Po Lam Estate
	Choi Hung Estate	Sam Shing Estate
	Fu Shin Estate	Shan King Estate
	Hin Keng Estate	Shun Lee Estate
	Kwong Fuk Estate	Tai Hing Estate
	Lai Kok Estate	Tai Wo Shopping Mall
	Lung Hang Estate	Tai Yuen Estate
	Nam Shan Estate	Wong Tai Sin Shopping Centre
	Oi Man Estate

20.1%-30%	Chak On Estate	Long Ping Estate
	Cheung Hong Estate	Mei Lam Estate
	Cheung Shan Estate	Ping Shek Estate
	Chun Shek Estate	Shek Wai Kok Estate
	Hing Man Estate	Sun Tin Wai Estate
	Kwai Shing West Estate	Wah Fu Estate (1)
	Lai Yiu Estate	Wan Tau Tong Estate
	Lei Tung Estate

Above 30%	Cheung Hang Estate	Siu Hei Court
	Choi Yuen Estate	Sun Chui Estate
	Hing Wah Estate (2)	Tin Ping Estate
	On Yam Estate	Wah Fu Estate (2)

Safety on Construction Site

19. MISS EMILY LAU: Will the Executive Authorities inform this Council:

(a) of the total number of fatalities and casualties relating to the construction of the new airport at Chek Lap Kok and the connecting road network, and where and when such accidents occurred;

(b) how the accident rates in these constructions compare to the overall construction site accident rate in Hong Kong and to international standards; and

SECRETARY FOR EDUCATION AND MANPOWER: Madam President,

(a) Since the commencement of the 10 Airport Core Programme (ACP) projects in 1993, there were a total of 49 fatalities. As regards injuries, 7 423 cases were reported up to the end of May 1998. The dates and locations of the fatal accidents are at Appendix I, but in the time available, we regret that we are unable to provide a breakdown of all the injury cases by their dates of occurrence and locations.

(b) Compared to the local construction accident rate, the performance of the ACP is better even though the operating environment of the latter in terms of scheduling, project complexity, construction method and working conditions are much more difficult. The following two tables show their respective performance by fatal and non-fatal accident rates:

	Fatal Accident Rate (per 1 000 workers per year)
Year	ACP	Construction Industry

1993	1.01	1.40
1994	0.63	0.85
1995	0.67	0.95
1996	0.38	0.68
1997	0.19	0.50
	Non-fatal Accident Rate (per 1 000 workers per year)
Year	ACP	Construction Industry

1993	105	293
1994	92	274
1995	62	232
1996	64	219
1997	59	227

There are no international "standards" as such for construction accident rates since each country is expected to try its best to reduce the toll to zero.

(c) The Government has taken a three-pronged approach to improve construction site safety, that is, by legislation, enforcement and promotion.

On the legislation front, we amended the Factories and Industrial Undertakings Ordinance to empower the Commissioner for Labour to issue suspension notice and improvement notice and increase the penalties for breaching the general duties provisions in 1996 and 1997 respectively. We will be proposing new and amendment legislation in the current legislative session to require basic safety training for all those who work in the construction industry, to tighten up the safety requirements for those working at height and in confined spaces, to introduce safety management and audit system for construction and high-risk industries, pre-employment and periodic medical examination of workers engaged in tunnelling operations, compressed air work and so on. In the latter part of 1999, we will make legislative proposals to enhance the professional status and responsibilities of safety officers and the certification of those operating earth moving equipment and forklift trucks.

On enforcement, we intend to pay 31 500 visits to public and private construction sites this year. Routine inspections are supplemented by special campaigns to target at areas of particular concern. Safety campaigns already mounted in the last three months include those on heavy equipment and machinery, lifting appliances, work-at-height, dangerous places and so on.

Between January and June this year, a total of 1 005 prosecutions have been initiated, and 586 improvement notices and 100 suspension notices issued against breaches of safety laws on construction sites.

In the coming months, extra efforts will be made to ensure work-at-height safety, hearing protection, and wearing of safety footwear. To reinforce the message that sub-contractors and workers also have a part to play in ensuring safety, legal action against them will be stepped up whenever appropriate. Our priority is to tackle those engaged in renovation work and private sector sites with poor accident record.

On promotion, our focus will complement the enforcement priority areas to bring home the message with equal vigour.

Safety and health information, in the form of guidebooks, newsletters, bulletins, codes of practices, and leaflets on various subjects, are published regularly to help those in the construction industry. Two issues of the Construction Site Safety Newsletter have been published, with 45 000 copies distributed for each issue. More recently, a pamphlet on safety aspects involving fitting-out works have been sent to some 6 000 contractors engaged in such works.

Training on law related courses are run free of charge by the Labour Department for those working in construction industry. In 1997, a total of 428 courses and 280 talks were held with 17 624 and 15 353 participants respectively. For the first six months of 1998, 293 courses and 132 talks have been conducted with 8 721 and 5 828 participants respectively.

The Administration will continue to work with the Occupational Safety and Health Council, major contractors, trade bodies and workers unions and professional bodies in a bid to improve our safety record on construction sites.

Appendix I

Summary of Fatal accidents in ACP Projects
Date of Occurrence	No. of deaths	Location of Occurrence
15 November 1991	1	Construction of Yau Ma Tei Typhoon Shelter Phase I
13 April 1993	2	Lantau Fixed Crossing - Tsing Ma Bridge

6 May 1993	1	Temporary Water Supply to North Lantau - Construction of Tai Tung Shan Service Reservoir

10 July 1993	1	West Kowloon Reclamation Northern Area Phase I

20 August 1993	1	Chek Lap Kok

30 September 1993	1	Chek Lap Kok

20 September 1993	1	New Airport at Chek Lap Kok - Site Preparation

20 September 1993	1	North Lantau Expressway - Tai Ho Section

9 November 1993	1	North Lantau Expressway - Yam O Section

8 April 1994	1	Western Harbour Crossing, Casting Yard in Shek O

18 April 1994	1	North Lantau Expressway - Tung Chung Section

23 April 1994	1	Yau Ma Tei Typhoon Shelter, Reclamation and Reprovisioning of Waterfront Facilities


Date of Occurrence	No. of deaths	Location of Occurrence

26 April 1994	1	New Airport at Chek Lap Kok - Site Preparation

16 June 1994	1	Route 3 Project - Kwai Chung Viaduct

5 October 1994	1	North Lantau Expressway - Yam O Section

6 October 1994	1	New Airport at Chek Lap Kok, Passenger Terminal Foundations

13 December 1994	1	New Airport at Chek Lap Kok - Site Preparation

24 February 1995	2	Route 3 Project - Kwai Chung Viaduct

5 May 1995	1	West Kowloon Expressway - South Section

1 June 1995	1	Western Harbour Crossing, Sai Ying Pun Cut-and-cover Tunnel

15 June 1995	1	Rambler Channel Bridge and Associated Roadworks

24 June 1995	1	Subway Construction at Connaught Road Central Outside Exchange Square

7 July 1995	1	Route 3 Project - Kwai Chung Viaduct

26 July 1995	1	Central Reclamation, Phase I - Engineering Works

1 September 1995	1	Western Harbour Crossing

16 September 1995	1	Lantau Fixed Crossing - Kap Shui Mun Bridge and Ma Wan Viaduct


Date of Occurrence	No. of deaths	Location of Occurrence

23 December 1995	1	Lantau Fixed Crossing - Lantau Toll Plaza Roadworks

9 January 1996	1	Lantau Fixed Crossing - Tsing Ma Bridge

25 May 1996	1	The New Airport at Chek Lap Kok

6 June 1996	6	Rambler Channel Bridge - Lantau and Airport Railway

7 August 1996	1	Route 3 Project - Kwai Chung Viaduct

17 September 1996	1	The New Airport at Chek Lap Kok

9 October 1996	1	Lantau and Airport Railway, Tsing Yi Station

18 October 1996	1	Chek Lap Kok Aviation Fuel Service Facility

31 March 1997	1	Construction Site of Air Mail Centre at Chek Lap Kok New Airport

18 April 1997	1	Passenger Terminal Building at Chek Lap Kok

28 April 1997	1	Construction of Ground Transportation Centre at Chek Lap Kok

26 May 1997	1	Supply of Equipment and Provision of Maintenance Services in Chek Lap Kok

13 August 1997	1	Construction of Ground Transportation Centre at Chek Lap Kok

22 October 1997	1	Environmental Control System, Lantau and Airport Railway
Date of Occurrence	No. of deaths	Location of Occurrence

16 May 1998	1	Base Maintenance Facility at Chek Lap Kok New Airport

23 June 1998	1	A Building at Chek Lap Kok New Airport

Total	49

Industrial Casualties Relating to Airport Core Programme Projects

20. MR LEE WING-TAT (in Chinese): Regarding the industrial casualties relating to the construction of the new airport and the 10 Airport Core Programme projects, will the Government inform this Council:

(a) of the casualty toll from the commencement to the completion of the project;

(b) whether penalties have been imposed on the contractors who have made mistakes on their part resulting in casualties among workers; and

SECRETARY FOR WORKS (in Chinese): Madam President,

(a) The accident statistics up to end May 1998 of the 10 Airport Core Programme (ACP) projects are at Annex. The accident rate of ACP contracts has consistently been lower than that of the construction industry average in Hong Kong. For instance, the non-fatal accident rate of ACP contracts in 1997 was 59 reportable accidents per thousand workers per year, against the corresponding rate of 227 for the construction industry as a whole.

(b) All fatal and serious accidents are investigated by the Labour Department. Legal action is taken against contractors who have committed an offence under the Factories and Industrial Undertakings Ordinance and its subsidiary regulations. Insofar as the ACP is concerned, a total of 64 summonses have been laid by the Labour Department as a result of investigating the 49 fatal cases, whereas a total of 117 summonses have been issued as a result of investigating other serious accidents which occurred on ACP sites.

Annex

ACP Accident Statistics up to 31 May 1998
	No. of	No. of non-fatal	Accident rate (per thousand workers per year)
Period	Fatalities	reportable accidents	Fatal	Non-fatal
Before 1993	1
1993	8	828	1.01(1.40)	105(294)
1994	8	1 169	0.63(0.85)	92(274)
1995	13	1 256	0.67(0.95)	62(233)
1996	11	1 860	0.38(0.68)	64(220)
1997	6	1 867	0.19(0.50)	59(227)
1998	1	443	0.09	42
TOTAL	48(49*)

Notes:

(a) A non-fatal reportable accident refers to an accident which results in temporary incapacity for a period exceeding three days.

(b) The accident rates of the construction industry as a whole are enclosed in brackets.

* A fatal accident happened on 23 June 1998 at Chek Lap Kok, the total number of fatalities is 49 as at end of June 1998.

BILLS

First Reading of Bills

PRESIDENT (in Cantonese): Bills. First Reading.

EVIDENCE (AMENDMENT) BILL 1998

SUPPLEMENTARY APPROPRIATION (1997-98) BILL 1998

CLERK (in Cantonese): Evidence (Amendment) Bill 1998

Supplementary Appropriation (1997-98) Bill 1998.

Bills read the First time and ordered to be set down for Second Reading pursuant to Rule 53(3) of the Rules of Procedure.

Second Reading of Bills

PRESIDENT (in Cantonese): Bills: Second Reading. Secretary for Justice.

EVIDENCE (AMENDMENT) BILL 1998

SECRETARY FOR JUSTICE: Madam President, I move that the Evidence (Amendment) Bill 1998 be read a Second time.

The purpose of the Bill is to improve the existing law and procedures in respect of hearsay evidence in civil proceedings by abolishing the rule against the admission of such evidence and introducing a simpler system for its admission.

The Bill follows the recommendations contained in a report by the Law Reform Commission published in July 1996.

Evidence is described as being hearsay where a witness proposes to testify to a particular fact on the basis of what he has been told by another, whether that communication was made to him directly or indirectly. Historically, such evidence was treated with caution. At common law, it is inadmissible as evidence of any fact asserted subject to a number of exceptions. These exceptions were developed by judges to cover circumstances where long experience suggested that there was good reason to rely upon such evidence.

In Hong Kong, the common law rule and its exceptions were replaced by a statutory system contained in Part IV of the Evidence Ordinance, which was based on the English Civil Evidence Act 1968. The statutory system, nevertheless, preserves certain long established rules governing the admissibility of hearsay evidence formerly admissible at common law, in a fashion that retains the existing case law and allows it to develop.

The categories of hearsay statement described in the Ordinance are not made unconditionally admissible. Parties wishing to adduce such a statement have to comply with the procedural requirements specified in Order 38 of the Rules of the High Court, which were based on the English Rules of the Supreme Court. These requirements include, for example, the giving of a notice of intention to adduce hearsay evidence by a party who wishes to do so, not later than 21 days before application is made to set down for trial; and the giving of a counter-notice by the opposing party if he wishes the maker of the hearsay statement to attend court.

The present rule has been criticized as unduly complex and wasteful of resources and time. The overwhelming majority of those who responded to the Commission's consultation paper supported the abolition of the present rule.

There has been similar criticism of the hearsay rule in many common law jurisdictions and a number of them have effectively abolished the rule. In England, the hearsay rule in civil proceedings was abolished by the Civil Evidence Act 1995 upon which our Bill is largely based. Similar reform has also been effected in Scotland by virtue of the Civil Evidence (Scotland) Act 1988, under which the hearsay rule as well as the requirement for prior notification of hearsay evidence were abolished.

The Law Reform Commission noted that the modern trend of civil litigation is to place all relevant evidence before the court and to let the court decide the weight to be attached to it. They considered that relevant evidence should not be excluded solely on the ground that it is hearsay. Hearsay is something that should go to weight and not admissibility. The Commission recommended that in civil proceedings, whether held with or without a jury, evidence containing hearsay of whatever degree should be admissible. At the same time, safeguards should be provided in order to avoid possible abuses of the relaxation of the hearsay rule.

The Law Reform Commission further recommended that the present hearsay notice and counter-notice requirements be removed. The issue as to whether such a notice should be given should be left to informal arrangement between the parties. The Commission considered that the present judicial case management system, and the requirement that parties exchange pre-trial witness statements, would help to ensure that questions concerning hearsay evidence are dealt with before trial and would minimize the risk of surprise at trial even if hearsay notices were dispensed with. In addition, the court has power to take account of a failure to give informal notification of an intention to adduce hearsay evidence through its control of proceedings and costs.

The Law Reform Commission also noted that there are problems with the existing law regarding the admissibility of copy documents and business records. Firstly, under the existing law, it is unclear whether a hearsay statement contained in a document can be proved in civil proceedings by the production of a copy produced from a copy of that document. In the business world today, it is common to use copy documents and even copies of copies. The Law Reform Commission, therefore, recommended that a statement contained in a document should be capable of being proved in civil proceedings, either by the production of that document, or by the production of a copy of that document, authenticated in such manner as the court might approve. It should be immaterial how many removes there are between a copy and the original.

Secondly, the present rules governing the admissibility of business records, including computer records, are out-dated and cumbersome and do not meet the requirements of a modern automated office. The present rules are based on the assumption that there is a person who supplied the information contained in the record. Problems may arise when it is sought to prove the absence of an entry from the records, since there cannot be a supplier of non-existent information. The Commission recommended that the present system be replaced by a simpler regime and that computer records of a business should be admissible in civil proceedings in the same way as other business records. In addition, the Commission suggested that the absence of an entry should be capable of being formally proved by the oral evidence or affidavit of an officer of the business or public body to which the records belong.

The Administration accepts the Law Reform Commission's recommendations. The proposed system would improve the efficiency of civil proceedings and dispense with time-consuming and costly procedural requirements.

I now turn to the Bill. Clause 2 repeals Part IV of the Evidence Ordinance. It abolishes the common law rule against hearsay evidence in civil proceedings and provides safeguards against possible abuses of that abolition. It also provides for the admissibility of a copy of a document regardless of how many removes there are between the copy and the original. In addition, it introduces a simpler system for the admission of business records and provides a wide definition of "records" that covers records in any form. This will allow computer records of a business to be admissible in civil proceedings in the same way as other business records.

Clauses 3, 4, 5 and 6 make consequential amendments to the Evidence Ordinance and other enactments, including the Rules of the High Court.

Madam President, the Bill would improve the law of evidence in civil proceedings. It will rid our law of a number of defects and artificial requirements and will achieve a useful saving of time and costs for parties to civil proceedings. I commend the Bill to the Council.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Evidence (Amendment) Bill 1998 be read the second time.

In accordance with Rule 54(4) of the Rules of Procedure, the debate is now adjourned and the bill referred to the House Committee.

PRESIDENT (in Cantonese): Secretary for the Treasury.

SUPPLEMENTARY APPROPRIATION (1997-98) BILL 1998

SECRETARY FOR THE TREASURY (in Cantonese): Madam President, I move that the Supplementary Appropriation (1997-98) Bill 1998 be read the Second time.

Section 9 of the Public Finance Ordinance states that "If at the close of account for any financial year it is found that expenditure charged to any head is in excess of the sum appropriated for that head by an Appropriation Ordinance, the excess shall be included in a Supplementary Appropriation Bill which shall be introduced into the Legislative Council as soon as practicable after the close of the financial year to which the excess expenditure relates".

The expenditure accounts for the financial year 1997-98 have been finalized by the Director of Accounting Services. The expenditure charged to 40 heads out of a total of 90 heads is in excess of the sum originally appropriated for those heads in the Appropriation Ordinance 1997. In each head, the excess expenditure reflects supplementary provision approved by the Finance Committee or under powers delegated by it. The Supplementary Appropriation (1997-98) Bill 1998 seeks final legislative authority for the amount of supplementary provision approved during the year in respect of particular heads of expenditure by the Finance Committee or under powers delegated by it.

The total supplementary appropriation required in respect of the 40 heads of expenditure is $10,731.9 million. In addition to the normal increases resulting from the annual pay adjustment and the inflation related adjustments to the Comprehensive Social Security Assistance and Social Security Allowance schemes, the supplementary appropriation is largely attributable to two payments for which no provision was made in the original estimates. These were the payment of $5 billion to set up the Quality Education Fund and the first instalment of the compensation payable to Hong Kong Telecom International of $3.35 billion for the early surrender of its telecommunications licence.

Despite these two exceptional un-budgeted payments total expenditure from the General Revenue Account was only $1,503.3 million greater than the amount originally included in the Appropriation Ordinance 1997 as a result of savings in various heads of expenditure and the provision made for additional commitments in the original estimates for the year. Thank you, Madam President.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Supplementary Appropriation (1997-98) Bill 1998 be read the second time.

In accordance with the Rules of Procedure, the debate is now adjourned and the bill referred to the House Committee.

MEMBERS' MOTIONS

PRESIDENT (in Cantonese): Two motions with no legal effect. I have accepted the recommendations of the House Committee as to the time limits on speeches for the motion debates. The movers of the motions will each have up to 15 minutes for their speeches including their replies, and another five minutes to speak on the amendments. The movers of amendments will each have up to 10 minutes to speak. Other Members will each have up to seven minutes for their speeches. Under Rule 37 of the Rules of Procedure, I am obliged to direct any Member speaking in excess of the specified time to discontinue.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President. Before you give approval for the Honourable Andrew CHENG to move his motion, I hope that you can clarify whether Mr CHENG's motion is in breach of the Basic Law. I very much detest the numerous restrictions imposed on us by the Basic Law. But in answering questions from Members, the Solicitor General, Mr Daniel FUNG, clearly pointed out if motions moved by Members relate to public expenditure or political structure, be they binding or not, written consent from the Chief Executive is required before they can be moved. So, I hope you, Madam President, can state clearly whether Mr CHENG's motion should be bound by Article 74 and paragraph (10) of Article 48 of the Basic Law. If it should, has he obtained the Chief Executive's consent?

PRESIDENT (in Cantonese): Mr LEUNG has raised a point of order with me. I gave approval to Mr CHENG in accordance with the powers and functions stated in paragraph (6) of Article 73 of the Basic Law to be exercised by the Legislative Council of the Hong Kong Special Administrative Region. The powers and functions stated include: To debate any issue concerning public interests. Under that provision, I think we can carry on with a debate on the motion, which has no legal effect.

First motion. Direct elections. Mr Andrew CHENG.

DIRECT ELECTIONS

MR ANDREW CHENG (in Cantonese): Madam President, I move the motion which has been printed on the Agenda.

A government and a parliamentary assembly must be open, honest and democratic in order to bring real and lasting prosperity to a state. The series of maladministration by the Hong Kong Special Administrative Region (SAR) during the past year and the presence of the Provisional Legislative Council which was practically a rubber stamp ......

PRESIDENT (in Cantonese): Mr CHENG, you cannot put that article on the table.

MR ANDREW CHENG (in Cantonese): ...... are manifestations of a government without supervision by a democratic parliamentary assembly. That teaches me a good lesson about the significance of democracy to a nation and to progress in a community.

As we all know, the Democratic Party never falters in its quest for democracy. We insist that democracy and people's livelihood are not mutually exclusive. To the contrary, they are complementary. Only when we have representatives elected by the people under a democratic system can they discharge their responsibility of supervising and checking on the policies formulated by the Government, thereby making the policies reflect better the aspirations and needs of the people, and thus making them more compatible with public interests.

After the financial turmoil, there was a downturn in the economy of Hong Kong. Political parties and political groups joined hands to force the Government to face squarely the reality. They made all sorts of proposals to alleviate the plight of the people. The Legislative Council formed a select committee to conduct a hearing on the troubles at the new airport. All these have shown the close link between a democratic system and people's livelihood.

Madam President, as I come to talk about the pace of democraticization, I recall that in past motion debates in the former Legislative Council most colleagues supported direct elections in principle. But they had differences as to the timing of implementing direct elections. Some advocated that all 60 seats should be returned by direct elections in 1995, while some said the people were not ready yet and consultation was required before making any decisions, coming up short of a concrete timetable.

Madam President, in his speech marking the anniversary of the reunification, President JIANG said Hong Kong people could be the masters of their own affairs. If one holds an attitude of wait-and-see, one is only being uncertain about democracy and is procrastinating.

The first Legislative Council election of the SAR took place in May. On election day, over 1.4 million voters, that is, over half of the qualified voters braved torrential rain under a rainstorm red warning to turn out at their designated polling stations. They hoped to use their votes to elect a popularly-elected representative to the Legislative Council. This obviously shows that the general public were exercising their right to demand for democracy by action. This also shows the people's acceptance towards democracy. They were mentally ready for it.

Madam President, let me recap some developments in the history of our fight for democracy. The idea of a system of popular elections was hatched in the seventies when representative government was put on the agenda and the time goes back to those days when MacLEHOSE, YOUDE and WILSON were governors. Direct elections were introduced into the district boards in 1982, the Urban Council in 1983 and the Regional Council in 1986. In 1987, the Government conducted a territory-wide consultation on the introduction of directly elected seats into the Legislative Council. The result of that exercise was that 368 431 people wrote and submitted signatures to the Government to demand for such seats in the Legislative Council. Among them, 265 078 people supported direct elections for the Legislative Council in as early as 1988. But the Government then bowed to pressure from the Chinese Government and deleted 223 886 signature petitions. So, the result was altered, showing an opposition by the majority against direct elections in 1988. As a result, the idea of direct elections in 1988 was put aside. However, a subsequent opinion poll conducted by the South China Morning Post indicated that over 68% of the opinionated interviewees supported an immediate introduction of directly elected seats into the Legislative Council. Madam President, I must stress that was in 1988.

Despite the efforts of the Government to alter the consultation results, demands for democracy by the people continued. Eventually, 18 seats were returned by direct elections to the Legislative Council in 1991.

After the June 4 incident in 1989, the Chinese Government tried very hard to stall the pace of democratic development in Hong Kong, resulting in a very conservative finalized draft of the Basic Law. Later, Mr Martin LEE, Chairman of the Democratic Party will speak in considerable detail on what took place in the formulation of provisions for the pace of democratic development within the Basic Law.

From what took place, we can be dead certain the timetable for democratic development hinges on the political determination of the Government. Of course voices in the Legislative Council cannot be ignored. At least, it is a place where demands of the people are reflected. Directly elected Members of the Council, in particular, are mandated to reflect public opinions.

In addition, Madam President, following the elections this year, an opinion survey conducted by Apple Daily on 600-odd respondents showed that 50% and 60% of them were respectively of the view that all Members of the Legislative Council should be directly elected in 2000 and the Chief Executive should be directly elected in 2002. Nearly 50% of them agreed that the Basic Law should be amended to quicken the pace of democraticization. The Democratic Party also conducted a similar telephone survey between 9 and 11 July. 758 people were contacted, and over 60% of them agreed that all Members of the Legislative Council should be directly elected in 2000. Over 65% of them were for a directly elected Chief Executive in 2002. Taking into consideration of the opinions of those who were more conservative, over 70% of the interviewees agreed that all Members of the Legislative Council should be directly elected by 2004 the latest. Nearly 80% of them were in favour of returning the Chief Executive for the third term of office by means of direct elections by 2007 the latest.

We can see clearly from the above opinion surveys that the public in general support a "one-man, one-vote" election for both the Legislative Council and the Chief Executive at the earliest opportunity. They are fully set mentally for direct elections. Survey results have shown that the people of Hong Kong are more minded now to have a directly elected Chief Executive than directly elected Legislative Council Members. This may be due to the fact that the performance and conduct of our Chief Executive and the Executive Council he appointed have very much disappointed them. The Convenor of the Executive Council, Mr S Y CHUNG, recently criticized the investigations proposed by the Legislative Council and the Ombudsman into the new airport troubles as being overlapping. He also said popularly-elected Legislative Council Members are too inexperienced to carry out investigations. I will not speculate on the suitability or otherwise of Mr CHUNG as an Executive Council Member simply because of his literary mastery ─ Council Members are not Mr Know All anyway─ but popularly-elected Council Members are there to monitor the Government. Voters may choose not to vote for them again if they do not deliver. Unfortunately, not having been baptized any popular election at all, Mr CHUNG glaringly criticized popularly-elected Members and remained as secured as ever in his present position. He never apologized to the people for the maladministration of the Government in the past year. This is the kind of absurd behaviour one can expect from a government without supervision by the people, nor a popular mandate.

Madam President, today we can see an advertisement entitled "poor leadership, bad for Hong Kong and its people". It may trigger off an "anti-TUNG" wave. It was rumoured that the wave had been initiated by a group of businessmen. If that was true, that would be most sarcastic for the Hong Kong establishment. Several years ago, Mr TUNG, the Chief Executive, was fully supported by the major land developers. He rose to power, thanks to a handful of people. Would he be forced to step down, just because he has lost favour with a handful of people? Are the real leaders of Hong Kong the businessmen who back him up? Madam President, we expect the leader of the SAR to be selected by a democratic mechanism, the transfer of power decided by "one-man, one-vote", and the overall performance of the Government assessed by the people. All these should not be manipulated by a handful of people with vested interests.

Madam President, to realize direct elections for the Legislative Council in 2000, and for the Chief Executive in 2002, we must amend the Basic Law as soon as possible. Such an amendment would inevitably involve very complicated legal procedures, including the very tedious issue of the right to introduce bills. Dr YEUNG Sum, Vice-Chairman of the Democratic Party, will later explain the complexity of this issue and make suggestions on how to simplify the technicalities with the right to introduce bills.

As amending the Basic Law involves very complicated constitutional issues, the Democratic Party agrees that it is necessary to set up a constitutional convention to start looking into the matter as soon as possible. But the premise is we must identify with the public demand for direct elections for all Members of the Legislative Council in 2000, and for the Chief Executive in 2002. Only when we progress towards this target, will there be real meaning in the study and consultation for the issue. In the light of the above reasons, the Democratic Party agrees to the amendment by the Honourable Miss Christine LOH and opposes that by the Honourable Gary CHENG to delete the references to "direct elections".

Madam President, I wish to reiterate that I am proposing the present motion debate for direct elections on behalf of the Democratic Party with the hope that the first Legislative Council of the SAR can correctly reflect public opinion and pass on their quest for democracy to the Government.

With these remarks, Madam President, I beg to move.

Mr Andrew CHENG moved the following motion:

"That this Council is of the view that all Members of the Second Legislative Council of the Hong Kong Special Administrative Region should be directly elected in the year 2000, and that the Chief Executive for the second term of office should be directly elected in the year 2002."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That this Council is of the view that all Members of the Second Legislative Council of the Hong Kong Special Administrative Region should be directly elected in the year 2000, and that the Chief Executive for the second term of office should be directly elected in the year 2002.

PRESIDENT (in Cantonese): Members have been informed by circular on 9 July that Mr Gary CHENG and Miss Christine LOH have separately given notice to move amendments to this motion. Their amendments have been printed on the Agenda. In accordance with the Rules of Procedure, the motion and the two amendments will now be debated together in a joint debate.

In accordance with Rule 34(5) of the Rules of Procedure, I will call upon Mr Gary CHENG to speak first, to be followed by Miss Christine LOH; but no amendments are to be moved at this stage. Members may express their views on the motion and the amendments. Mr Gary GHENG.

MR GARY CHENG (in Cantonese): Thank you, Madam President.

I have to state on the outset the stand of the Democratic Alliance for the Betterment of Hong Kong (DAB) on the direct election of Members of the Legislative Council and the Chief Executive. In the platform of the DAB, we have clearly stated that the political system development in Hong Kong should be reviewed before 2007 in order to achieve the aim of electing all Members of the Legislative Council for the following term by universal suffrage according to the principle of proportional representation, as well as the election of the Chief Executive for the following term of office by universal suffrage. As for the time of implementation before 2007, the DAB holds a liberal attitude. We stated this stand repeatedly during the latest Legislative Council election. Today, the DAB honours its commitment made during the election and urges the Government to expeditiously conduct a comprehensive and in-depth review of the political structure and to consult the public extensively, so as to determine whether or not to advance the implementation of direct election of all Members of the Legislative Council and the Chief Executive.

I have proposed an amendment to the Honourable Andrew CHENG's motion for the following reasons: first, in regard to the review of the political structure and the development of the democratic system, we should not only stress the electoral system but we should also include the reform and study of the interactions between the various parts of the political structure. Actually, since the drafting of the Basic Law in the '80s, whenever Hong Kong people argued about the pace of democraticization in Hong Kong, they often focused on the number of directly elected seats, neglecting other equally important parts such as the relationship between the executive and the legislature, the changing role of the Government and the role of government officials. These issues have become more and more urgent. However, the Government has not yet made any preparations for reform and adjustment, while there is insufficient public awareness and discussion of these issues. If we say that the ordinary citizens do not know anything about the relationship between the executive and the legislature, it precisely shows that not enough preparations have been made in this respect and more government efforts are called for. Under these circumstances, the discussion about democratic government often focuses on one point and overlooks other issues. Therefore, my amendment to Mr Andrew CHENG's motion today should not be seen as putting obstacles in the way of speeding up the implementation of direct elections or slowing down the pace of democraticization. Rather, we are urging the Government to face up to the present situation and look forward to the future to pave the way for really speeding up the pace of democratic development in future.

The Basic Law was finalized in the late '80s, promulgated and put into force in 1990. The section on political structure has indeed aroused much controversy and the present system is very much a result of compromise. Now, the Hong Kong Government should consult the public extensively on their views on direct election and the overall political structure, so that we could have a comprehensive and in-depth discussion under the new historical conditions. Just now, Mr Andrew CHENG mentioned the high voter turnout rate in the last Legislative Council election. Actually, according to the results of different surveys, there were various factors accounting for the high voter turnout rate. Some people consider that it has reflected the people's aspirations for democracy. Others have come to the view that a low voter turnout rate would indicate that people are not interested in politics. There are some others who think that the high voter turnout rate has demonstrated that people are dissatisfied with the performance of the Government in respect of economic affairs, and yet some others consider that priority should be given to people's livelihood and our economy. For instance, a veteran political commentator once said that a low voter turnout rate would mean that people were showing their dissatisfaction with the Government passively, whereas a high voter turnout rate would mean that people were voicing their dissatisfaction with the Government actively. In his view, political parties should put aside the questions of direct election and democracy now and solve the problems of people's livelihood first. When a veteran political commentator holds such a view, what criterion could we adopt? Therefore, the DAB has reason to propose that systematic and extensive consultations should be made before arrangements are made for accelerating the pace of democratic development.

As for the form and method of the review and consultation, we have reservations about hold a referendum. The reason is the same as that for which I have sought to amend Mr CHENG's motion today, that is, it would force people to make an oversimplified and incomplete choice about the development of our political system. While we must admit that a simple and quick opinion poll is an important channel of public consultation, it is by no means the only way and channel. We still advocate encouraging people to actively participate in discussions through different channels.

Members of the DAB also have reservations about the amendment proposed by Miss Christine LOH. It is because the question that whether full direct elections will be implemented in 2000 can and should be made a subject of the review of and consultation on the political structure, it should not be made the premise for such. Also, the constitutional convention proposed by Miss LOH should not be the only channel and form of discussion.

Moreover, we also hold reservations about the feasibility of implementing full direct elections in 2000. If they were implemented in 2000, the contents of the annex of the Basic Law must then be amended by the National People's Congress and the Basic Law must be drawn up anew. However, the first Legislative Council has just been formed and it has just started operating. It should be given enough time and leeway to operate according to the Basic Law and hold discussions and conduct a review on this basis.

Madam President, the pace of democratic political development in Hong Kong has been a matter of controversy for a long time. The attitude of the Government certainly has a decisive effect. Actually, people have continued to discuss about whether the pace of democraticization should be quickened over the years. While some people has certainly asked for a quicker pace, others have voiced for a gradual and orderly progress on the basis of the Basic Law. Different from the past, Hong Kong has now entered an era of being a Special Administrative Region (SAR) in which "Hong Kong people rule Hong Kong", and it is no longer caught between the Sino-British squabbles. With its actions, the Central Government has convinced Hong Kong people that the principle of "one country, two systems" is practicable. It is time for the SAR Government to step forward to review and decide together with the people the pace of our democratic progress. The Government is also responsible for coming up with feasible proposals to deal with issues such as the operation of the Government, the relationship between the executive and the legislature and the role of government officials, in order to tie in with the condition of our political structure when full direct elections are implemented. All these should be consolidated through a comprehensive and in-depth review of our political structure and extensive public consultations. I urge Honourable colleagues to support my amendment.

I so submit.

PRESIDENT (in Cantonese): Miss Christine LOH.

MISS CHRISTINE LOH (in Cantonese): Madam President, I would like to explain why I seek to amend Mr Andrew CHENG's motion today. First of all, as Mr Andrew CHENG also admitted just now, his motion has basically given us a chance to look at the pace and timetable of democraticization. While I agree to the timetable, I feel that something is lacking here, that is, a systematic process.

Just now, we heard the speeches of the Honourable Gary CHENG and Mr Andrew CHENG. Are Hong Kong people ready for full direct elections and real democracy? There is still much controversy about this in Hong Kong. Those who oppose to full direct elections in 2000 say that some public surveys have shown that views are divergent on this. The question is, if we really want to resolve this question, how do we go about it? I believe we need a systematic and open process in order to reach a final decision on this.

Our Secretary for Constitutional Affairs, Mr Michael SUEN, is here today. I know that a month or two ago, Mr Michael SUEN wrote a letter to the host of the "Letter to Hong Kong" programme of Radio Television Hong Kong, in which he asked whether Hong Kong people were really mature enough to have democracy. He compared Hong Kong people to French red wine. Can we search our hearts and say that Hong Kong people are mature enough for the implementation of a genuine democratic system now? My answer is definitely yes, but I do not know what others will answer. Compared with the people of other countries that have real democratic systems, are Hong Kong people not as mature as they are? Madam President, I believe that Hong Kong people are certainly ready for a real democratic system today.

The second point I would like to make is my view on Mr Gary CHENG's amendment and why I do not agree to it. It is because the focus of his amendment is basically remains on the Government's consultation mechanism. Mr Andrew CHENG briefly recounted the history and cited a series of consultations made by the Government in the '80s and the many problems that had arisen. Let me recount one incident which remains fresh in my memory. The consultation document in 1987 misrepresented Hong Kong people's wish to hold the first full direct elections in 1988. I will never forget this. Even if we do not look back at the consultations on the political structure by way of White Papers and Green Papers but rather look at some consultation documents published in recent years, we may realize that the Government's consultation process and framework are quite questionable.

Members may recall that in 1993, the Government published a Green Paper on whether there was a need to legislate against sexual discrimination. One year afterwards, the Government changed its tune completely. Do Members still remember? In that Green Paper, the Government seemed to indicate that the problem of sexual discrimination was not serious. Then why was the Government willing to legislate in 1995?

Second, two years ago, the Government published a consultation document on racial discrimination. What about this document? Recently, we learned from the press that the problem of racial discrimination did exist in Hong Kong. However, the document basically merely asked whether the majority of people practised racial discrimination, without asking about the actual experience of the minority who were discriminated against. Recent examples also show that the framework and mode of government consultations are really problematic. At the end of this month, we will debate the reform of district administration. Members may have read the document and know where the problem lies. The problem is that sometimes the Government has a certain view and it will lead us towards a certain direction, without giving us other choices. I think this is the problem with many consultations conducted by the Government. I do not agree to Mr Gary CHENG's amendment since he puts too much emphasis on the deficiencies of the Government's consultation structure which have existed all along.

Madam President, the third point, I would like to talk about my amendment. In my view, we should have a constitutional convention indeed. The definition of a constitutional convention might seem rigid. Actually, it can be quite flexible. My office should have sent a reference document to Members already about the models of constitutional conventions that have been formed in some other countries in recent years. Members can refer to it. If Members have read it, they would know that there were frameworks similar to a constitutional convention in South Africa and Taiwan in 1996, and in Australia in 1998. Obviously we can do this in a selective way. What are the advantages? I have to stress one very important point, and that is, the process must be open. Thus, it is very different from what Mr Gary CHENG said. With the Government's consultation mechanism, people are sometimes given a chance to express their views. However, there is no public forum for them to do so. In my view, the characteristic of a constitutional convention is its openness. Precisely because it is open, the largest number of people can be encouraged to participate in this process.

My fourth point is that a parliamentary assembly must play an important role. In a democratic country, what does a parliamentary assembly represent? It represents public opinion. Therefore, in any constitutional convention, the parliamentary assembly must be actively involved. However, it must not be limited to political figures only. People from different sectors should be able to participate in it in an open and systematic manner. This is in my opinion the ideal way. Members might recall that there was a process similar to a constitutional convention in Hong Kong, that is, the drafting process of the Basic Law. Today, we all know that the flaws of that process lie in its lack of openness and the representativeness of its participants. However, Hong Kong is no longer a colony. According to the Basic Law, Hong Kong will develop into a full democracy ultimately. Nevertheless, how should this be achieved? If we are going to have another constitutional convention in Hong Kong, we cannot repeat the relatively closed, not open and not very representative drafting process of the Basic Law Drafting Committee.

Lastly, I would like to talk about the question of timing. When can we begin? If we admit that Hong Kong people are mature enough to discuss about a democratic structure and a democratic political system, why should we not begin now? Madam President, the last point I would like to stress is that the Basic Law has given us a political mission to develop democracy in Hong Kong. Anyone who assumes the office of the Chief Executive has a duty to develop democracy. Whoever serving as Chief Executive cannot say that the development of democracy can be postponed. Some Members question that two years might be too fast. Just now, Mr Gary CHENG said that the process might be very complicated. Many people need to be consulted and much expertise and time would be required. That is, according to him. If so, why do we not begin today?

I would also like to talk about the target of having all Members of the Legislative Council directly elected in the year 2000. If the Provisional Legislative Council was so efficient that it could come up with a most complicated law on election in 1998 in such a short time, why can we not work out an ideal political structure in a few months or a year, so that the National People's Congress can amend the Basic Law in March 2000 if necessary? This is entirely up to us. If we have the goal and the determination, I believe that it can certainly be done.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr James TIEN.

MR JAMES TIEN: Madam President, I speak today not just for myself but also on behalf of the members of the General Committee of the Hong Kong General Chamber of Commerce.

The Chamber represents nearly 4 000 corporate members who together employ close to half of the workforce in Hong Kong. It is, therefore, a highly representative body of the local business community.

The first and biggest difficulty that the Chamber has with this motion is that it has at its core an attempt to overturn the timetable for democratic change laid down in the Basic Law, effectively the constitutional base of the Hong Kong Special Administrative Region (SAR).

No attempt at constitutional change can afford to be taken lightly. This is the case with any constitution in any political entity anywhere in the world.

The second issue is one of timing. This debate should not be taking place at a time when the Hong Kong economy is in its worst economic recession in 23 years since 1975.

The importance of democratically representative government cannot be denied ─ and indeed is what the timetable for democratic development set down in the Basic Law is all about. But surely, there are more pressing issues to be debated at this time of economic downturn than one which seeks to replace the certainty of democratic development laid down in the Basic Law with something else.

It seems to be a very odd and, perhaps, insensitive approach to debate this issue ─ when the people of Hong Kong are concerned most immediately about their economic future and that of their families, and whether they will have a job tomorrow, or whether they will be able to afford to buy a house.

Madam President, the Basic Law is the mini-constitution of the SAR ─ the form in which our political entity is organized, the basis of the system of laws and customs of the SAR. To change the constitution of any political entity is not something that should be taken lightly.

This is reflected in the fact that wherever you look around the world, constitutional changes require far more than simple majorities in legislatures, and often require several hurdles to be overcome before they are instituted.

It is also why our own constitution, the Basic Law, has similar provisions. The pace of democratic change is also clearly laid down in the Basic Law, in Articles 45 and 68 of that document and in Annex I and Annex II of that same law. These provisions should not be too readily tampered with.

These provisions are clearly meant to protect the Basic Law ─ reinforcing the view that any attempt at change should not be taken lightly.

If the Basic Law is to be changed to alter the pace of democratic development in the SAR, what will be the next challenge to the provisions of the Basic Law, and who will seek to make them.

Changes now to our constitution would set a precedent that could result in some unfortunate and unintended consequences in terms of other provisions of the Basic Law. What will be the next demand for change in our constitution?

Madam President, some people have argued that the outcome of the election on 24 May provided support for the view that the pace of democratic development needs to be changed. But is this really the case? They have argued that all these Hong Kong people voted to send a signal that they wanted the system changed.

The Chamber would argue that, to the contrary, they may well have voted to show their confidence in the existing system ─ irrespective of whom they voted for when they actually marked their ballot papers.

The election on 24 May was not a referendum on the pace of democracy in Hong Kong; nor was it a vote on the provisions of the Basic Law relating to the development of democracy in the SAR. It was a vote for this Legislative Council.

As a result of this election, we have a representative Legislative Council, in which this debate is being held today. Is that not a good result? Is that not a result that has already produced a coalition of forces on the issue of the economic health of the SAR which has already brought some changes in the economic policies of the executive-led government?

Certainly, no one should minimize the significant influence which this present Legislative Council has on the Government and its policies and in representing the people ─ all the people ─ of Hong Kong. Is that not a good outcome?

It also brings me back to my point that given the present adverse economic circumstances, we should be spending more time on issues of economics and the livelihood of Hong Kong people.

Putting aside the provisions of the Basic Law, the Chamber would like to make a point that at time of great economic uncertainty, it is not the time to consider major political changes.

For support for this view, we need to look no further than the experience of the Asian region during the economic and financial crisis of the past 12 months.

Of all these economies hit by the crisis, it is only those with the greatest level of political stability which were able to cope with its impact the best. We should be thankful that the return of Hong Kong sovereignty to the Mainland went so smoothly. Imagine what would have occurred locally if the last year had been one of political uncertainty and economic uncertainty brought on by the Asian economic crisis. We need to look no further than Indonesia ─ an extreme case to be sure, and Japan to see what the combination of political and economic uncertainties can bring in developing and developed countries.

With these remarks, Madam President, the Hong Kong General Chamber of Commerce and the Liberal Party oppose the motion.

PRESIDENT (in Cantonese): Dr LEONG Che-hung.

DR LEONG CHE-HUNG: Madam President, since the Honourable Miss Christine LOH started off with the Letter to Hong Kong, I would also like to take this point up and quote my own Letter to Hong Kong which I presented through a radio programme on 5th of last October. I said, "Many will argue that the pace of democracy, which will ultimately lead to total universal suffrage for the legislature and the Chief Executive, has been well outlined in the Basic Law. Yet let us not overlook two important elements. The Basic Law was drafted in the mid-eighties and promulgated in 1990, some seven years ago. Much has changed in the maturity and understanding of politics in Hong Kong. Much has also changed in the political development of the Central Chinese Government. Secondly, whilst the pace of democratization as outlined in the Basic Law might well be the mainstream preference of Hong Kong people then, it could be different today.

"If the concept of Hong Kong people ruling Hong Kong is anything to go by, if the promise that Hong Kong people can be the master of their own destiny is to be realized, then it is up to the Special Administrative Region Government to sound out to the populace on the way ahead, and to seek changes of the Basic Law to put the people's wishes into practice. By now, the Central Government should have realized that it is the wish of the majority of Hong Kong people only to be master of our own house under the motherland and that there is no fear of Hong Kong being a centre for dissidents nor a continuum of colonial effigy."

Madam President, that was my stand and that still remains my stand today. I, therefore, will call upon the Administration to seek wide consultation and to conduct a referendum in this direction.

Let People Decide on Democratization Pace

Madam President, I doubt if there are any Honourable Members in this Chamber who would not like to see universal suffrage to our legislature and our Chief Executive in spite of the fact that some of us, including myself, have not been so elected. I am sure, too, that a high percentage of us here would like to see the pace of democratization even faster than is depicted in the Basic Law. Yet, in an issue as important as this, in an issue that concerns everybody in Hong Kong, in an environment where public opinions is paramount, should the pace of democratization not be determined by the public via a referendum than just by this Council? Let me hasten to add that I am in no way doubting the representativeness of Members of this Council, but it is to make a good thing even better.

Yet, is a faster pace of democratization the be-all and end-all to make a better Hong Kong? Would a 60-Member Legislative Council returned via direct election and a Chief Executive through the same process help avoid the medical blunders, the mess seen in the saga of the avian flu, the perhaps next to desirable Hong Kong economic crisis or the shameful status of our newest airport?

Madam President, Hong Kong had and still has a peculiar political institution. In the bygone colonial days of the 1970s, the Governor was appointed; the Governor then appointed the Executive Council and the whole Administration. Similarly, the legislature were also appointed. Life, if I could say, was "simple", it was one big family. Regrettably, there were no checks and balances and the population had no say. The Civil Service remained completely apolitical, and so it should be.

With the introduction of election to the legislature, "complication" begins. The whole Executive Administration was still appointed whilst the legislature was elected and, therefore, carried the people's mandate. The Civil Service, though still claimed apolitical, actually took on a political role. Policy Secretaries had to lobby legislators who represent the populace.

Problems of Executives with No Mandate

Yes, the Administration appears more transparent and the Government must be more accountable, or so it seems. Checks and balances could be said to have been installed. Regrettably, the system itself has not changed. The Civil Service, through the Policy Secretaries, determine policies which they themselves execute after approval from the Chief Executive and the Executive Council. Regrettably, both parties ─ the Civil Service and the Executive Council ─ are appointees and, therefore, do not carry the people's mandate. Bearing no political appointment, our civil servants are often hampered from developing their political sensitivity, often a time acting over-cautiously without daring to make timely decisions until it is too late.

Examples abound. In the health care system, for example, the Government knows fully well that the existing system of heavily subsidized medical care for all, irrespective of people's affordability, will lead to a situation in which a finite resource has been used to cope with infinite and insatiable needs. The Government fully realizes that it will not work. Yet, to introduce a concept of "those who can pay, pay, and those who can pay more, pay more" is a political decision, which will champion on a long-term basis, and that the Government is not willing to take. Instead, the Government starts moving in circles and now comes back to a 360 degree turn, to hire consultants to study some projects that had been studied before ─ now that the health care system is almost facing a crisis.

Take another example. For years, the Government should have realized that there should be some sort of retirement schemes and that the ever enlarging elderly population cannot simply rely on social security assistance. Legislators and the public have called for the establishment of a Central Provident Fund. Yet to take this on board would be a political decision that would take decades to show effect, far beyond the length of service of any Administrative Officers in their posts. As a result, procrastination became the order of the day. And to project an image that something was being done, the Government in its wisdom tossed and turned for years between Community-wide Retirement Protection Scheme and the Mandatory Provident Fund Scheme until it was almost too late, and the latter was ultimately forced out of the bag. Many years of valuable time for contribution has thus been lost.

Need for Political Appointments to Ministerial Posts

In short, Madam President, I put it to this Council and the public that there needs to be a wider constitutional change than just introducing universal suffrage to this Council and the Chief Executive. I call for the establishment of a constitutional system whereby either the Policy Secretaries are politically appointed or, better still, elected Members of this legislature be appointed to the Executive Council and given a portfolio ─ official or otherwise. Such a move would mean that Executive Council Members are political and accountable to the public. The beauty of this, of course, is that the civil servants remain completely apolitical.

Relationship between Executive Authority and Legislature

Madam President, there is one other essential issue, that is, a proper and workable relationship between this Council and the executive authority must be established and it is of paramount importance.

In conclusion, Madam President, as the saying goes, Rome was not built in one day. By the same token, I would also like to say that the maturation of the Hong Kong Special Administrative Region is not built on one aspect of constitutional reform. May I appeal to the Administration to let all three important areas work together and for this elected Council and the public to work for a better future.

Thank you.

PRESIDENT (in Cantonese): Dr YEUNG Sum.

DR YEUNG SUM (in Cantonese): Madam President, there are usually two approaches when we discuss the question of whether or not Hong Kong should have its Chief Executive and legislature returned by universal suffrage expeditiously. One approach is from the viewpoint of values and the other from the conditions.

In fact, from the viewpoint of values, the majority of Hong Kong people are obviously in support of electing of the Chief Executive and the legislature by universal suffrage as soon as possible. As for conditions, Hong Kong is actually mature enough, and it is well qualified in terms of its economic development, independence of the judicial system as well as social stability. Not only does it meet the necessary requirements, it possesses the full conditions to realize an expeditious returning of the Chief Executive and the legislature by universal suffrage as well.

The Chief Executive appears to have put particular stress on some "Asian Values", an expression that he often mentions. Generally speaking, Asian values comprise the following:

(1) attaching importance to social stability;

(2) emphasizing economic development; and

(3) emphasizing social order.

In addition, "Asian Values" hold that there are no common standards to define democracy or human rights, both being alien cultures, and culture varies from one country to another. As a result, each country should determine its standards for democracy and human rights in the light of its own situation. Hence, China and Hong Kong are no exceptions.

The Democratic Party, however, does not subscribe to these so-called Asian values. We believe that everyone is born equal and that the worth of each individual should be taken seriously. Human rights and democracy know no territorial boundaries.

Democracy is a political system which respects an individual's worth. By means of the democratic system, the power of a government will come from the people, and the government will be elected by the people. As a result, the executive authority is responsible to and accountable to the legislature. With the checks and balances imposed on the Government, both the rights and privileges of the people are protected.

Let us now take a look at our Chief Executive. Basically speaking, he is not elected through universal suffrage. Instead, he is appointed by the Central Government and a small group of people. Appointed personally by the Chief Executive, Members of the Executive Council can exercise political powers. But strangely enough, they do not need to bear any political responsibilities. Therefore, this small circle is in fact enjoying political free lunches. They enjoy the privileges but are free from the strings tied to them. The well-being of the people of Hong Kong are controlled and even manipulated by the Chief Executive and this small group of politically privileged people.

The Basic Law, promulgated in 1990, is a very conservative constitutional document because the Central Government's political culture basically did not accept the system of democratic elections. They were also afraid that the Hong Kong Special Administrative Region (SAR) might reform mainland China by peaceful means. So, they have set up hurdles everywhere. We can all see that Members have to be divided into two groups to vote on motions in the Legislative Council, and it is also very difficult to propose a private Member's Bill. The pace of democratization is also very conservative. According to the Basic Law, we can raise some motions or political reviews in 2007 to see if we can return the legislature and the Chief Executive by universal suffrage. However, there are something which we must not forget. Firstly, if we have to pass a motion on universal suffrage, it must have the consent of two thirds of the Members in the legislature. But since the legislature is not returned by universal suffrage, we will normally encounter difficulty in passing the motions because of the two-thirds requirements. Secondly, the Chief Executive's consent has to be obtained. Even if we can obtain his consent, the motion will have to be reported to the Standing Committee of the National People's Congress for the record. Unless major political changes take place in mainland China in the next decade to bring about open politics, we will still encounter tremendous difficulties in returning the Chief Executive and the legislature by universal suffrage even after 10 years' time. The Democratic Party has recently conducted a public opinion poll regarding the best way to amend the Basic Law. Over 60% of the respondents supported that the Government should decide whether or not to return the next legislature and the Chief Executive by universal suffrage through referendum. This is the latest opinion poll. Thus, Members can make reference to these public opinions.

The Democratic Party opines that the Basic Law should be amended as soon as practicable. We also consider that the next legislature should be returned by universal suffrage, whereas the Chief Executive should be returned by a "one-man one-vote" universal suffrage. This will enable our Government and the executive authority to be fully responsible to the legislature, and make it necessary for the Government to respect public opinions and the interests of the general public. We must emphasize that we well conditioned to elect our next legislature and the Chief Executive through universal suffrage.

The Democratic Party believes that a democratic SAR enjoying freedom, rule of law and protection of human rights should be put in place. The Government as well as the executive authority should also be responsible to the legislature. Such a system is important to the people of Hong Kong. It is also extremely important to the overall development of mainland China.

I speak in support of Mr Andrew CHENG's motion.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Eric LI.

MR ERIC LI (in Cantonese): Madam President, many people tend to take it for granted that Legislative Council Members returned by functional constituencies will necessarily oppose the introduction of full-scale direct elections. If Honourable Members should really think that way, I would say that they are indeed very cocksure.

Undoubtedly, when Honourable Members returned by functional constituencies consider this issue, they will lay more stress on the practical implications; they will consider how much time and what procedures are required to amend the Basic Law, and they will therefore ask whether the whole thing can at all be completed during the very short time before 2000. Besides, they will consider the consequences of amending the Basic Law. Specifically, they will ask whether this will lead to many more requests for amendments from those who are not satisfied with the Basic Law.

I think professionals will all consider the following questions. If full-scale direct elections are to be introduced and all functional constituency Members of this Council are to be replaced by directly elected Members, can the Members returned by direct elections at this stage grasp or reflect those technical issues which are relatively more sophisticated? Can these directly elected Members handle issues relating to the social functions and responsibilities of professionals and indeed safeguard these very functions and responsibilities in a fair manner? Professionals are likely to be sceptical, and may thus continue to hold in reservations any quickening of the pace of democratization.

The attitude of professionals towards direct elections can in fact be discerned from past records. In 1987, the accounting sector conducted a full-scale survey; and the findings indicated that 73% of the members of the Hong Kong Society of Accountants wanted to have directly elected elements in the legislature, but at the same time, 99% of these members also hoped that the accountancy functional constituency could be retained. These findings show that at the time of the survey, while the accountancy sector was unequivocal in its democratic aspirations, it was nonetheless sceptical about the idea of replacing professional functional constituency elections with direct elections.

A year later, in 1988, I was given the opportunity to assist the Basic Law Sub-group of the Hong Kong Society of Accountants in drafting the proposals of the accountancy sector on the future developments of our political reforms. At that time, I advised that eventually in the future, both the legislature and the Chief Executive should be returned by direct elections. As we all know now, the drafters of the Basic Law subsequently changed their stand, and this advice of mine was finally written into the Basic Law. At that time, I reasoned that in view of the ever-increasing civic-mindedness of our community, the Basic Law should provide for an objective and measurable mechanism which could enable us to introduce full-scale direct elections as soon as the moment was right. This is my tentative proposal at that time: In any territory-wide direct election, if the turnout rate can reach the trigger point of 50%, full-scale direct elections can be introduced for the following term of the legislature.

Unfortunately, my proposal was rejected by my pro-democracy colleagues in this Council, who viewed that such a trigger point was simply unattainable. However, very much unexpectedly, 10 years later, in 1998, our turnout rate has really attained the 53% mark. Had the Basic Law Drafting Committee accepted the proposal of the accountancy sector years back, we would not have to conduct any motion debate on this issue now.

Many of the political figures involved in the drafting of the Basic Law years back all underestimated the civic-mindedness of the Hong Kong people, and they failed to foresee that it could be raised to such a high level within a matter of 10 years only. However, I personally think that this rise in civic-mindedness is indeed very encouraging. It is very much a pity that the Basic Law drafters eventually decided to drop the idea of a more objective "trigger point" and adopt a fixed and therefore relatively inflexible timetable instead. Personally, I still believe in the adoption of an objective mechanism, and I also recognize the positive political implications of the high turnout rate in the recent election. However, if we want to re-open the case now, we will inevitably have to amend the Basic Law, which is now so widely accepted by the community at large, including the accountancy sector. What is more, such a move will also lead to many complicated problems and create immense anxieties.

I am now a representative of the accountancy sector on this Council. That is why when it comes to some important issues, I no longer enjoy the privilege of speaking whatever I like, and I am not supposed to advocate any changes lightly. Instead, I must reflect and represent the views of the accountancy sector, not least because the motion requires the sector to give up its own functional constituency seat, which has been playing such an important role. This is indeed a very significant issue which I must handle in the most cautious and professional manner. When I made the aforesaid proposal a decade or so ago, there were only some 4 000 accountants in Hong Kong, but there are as many as 14 000 now. Besides, an amendment of the Basic Law will involve many complicated technicalities, and as far as I can notice, accountants will generally prefer stability and the rule of law more than anything else. That being the case, I believe that any attempt to amend the Basic Law at this stage will probably be deemed unnecessary by some accountants.

For all those reasons which I have just given, I think that I really should conduct an in-depth and extensive consultation exercise on this issue before I can reach any conclusion which is both objective and professionally sound. I know only too well that the abolition or otherwise of functional constituencies in our political system is an issue which we must tackle before 2007. I also know that if we are to grasp the views of the functional sectors, we should make some early preparations ─ and, the earlier, the better, I must add. When I commented on the Chief Executive's policy address last year, I advised that we should draw up a tentative blueprint for our political development and work out the procedures and timetable as soon as possible. I said at that time that we should start as soon as possible because reforms of this nature would usually take more than 10 years to complete, and that, I must say, is a long time.

For that reason, I have already approached the Hong Kong Society of Accountants, and arrangements have been made for me to publish an article in the next issue of the Society's bimonthly newsletter. In this article, I will announce to all accountants in Hong Kong that I will conduct a comprehensive and in-depth consultation exercise to gauge the views of the accountancy sector on this issue. Therefore, at this stage, I would think that the amendment proposed by Mr Gary CHENG should be preferred, because it can best enable the various functional sectors to conduct open and systematic consultations without any pre-determined conditions before we make the best possible decision. I also call upon Honourable Members belonging to other functional sectors to make early preparations, so as to discharge their responsibilities towards the community and their constituents.

Before the emergence of any definite survey findings which can convince me that the status quo should be changed, I will vote on this issue according to the principle of according priority to the maintenance of the status quo.

With these remarks, Madam President, I support the amendment by Mr Gary CHENG.

PRESIDENT (in Cantonese): Mr Bernard CHAN.

MR BERNARD CHAN: Madam President, I rise to support the Honourable CHENG Kai-nam's amendment to the motion on direct elections. The question before us is whether to implement universal suffrage in two years' time, or to leave it open for all the people of Hong Kong.

I am speaking in a capacity as a newcomer from the maiden insurance functional constituency, which comprises one of the smallest electorates of less than 200 eligible voters. To some of our Honourable Members, this tiny figure is nothing ─ when compared to the hundreds of thousands of votes they obtained from geographical polls. I can also imagine how embarrassing it will be if I present to a visitor from the West, that I am representing a constituency of 193 insurers.

But I know that is not a true account of my capacity. I have been representing a vital but unobtrusive industry, which backs our economy and individual security. Insurance is our last resort in the wake of misfortune and we exist to justify your claims. Our Council and the public at large will see how an insurer will contribute to the perfection of bills and discussions held in this Council. In the forthcoming subcommittee on employees' compensation, for the first time a legislator from the insurance sector will speak for the industry, which plays an integral part by footing employees' claims. I am convinced that Members from various functional constituencies have made, and will continue to make, tremendous contribution in the legislative process.

Despite the considerable input I am prepared to give, I am not speaking to justify the limited franchise of the insurance constituency, nor are the 50 000-strong insurance practitioners satisfied with their lack of rights to vote. The Government may consider an extension of the franchise to more insurance practitioners or any other proposals to enhance the degree of representation in the constituency. I am sure similar proposals to other functional constituencies would be well received by the public.

History has told us that the call for political reform is particularly forceful when the government falls far behind people's expectations. I feel deeply frustrated ─ as most of us do ─ towards malpractice and negligence that our Government exhibits in the operation of the new airport. I share the view that our political structure has to be overhauled so as to eliminate any possible grave mistakes. And, I have been very much impressed by the good job our directly elected Members have done and wish their proportion in this Council could gradually be increased. But as we all know, direct election is not a solution to all the problems we are facing and we should not fantasize about the magic of democracy, especially when it is introduced hastily.

We are all here to be accountable to our electors ─ and in a broader sense ─ to be accountable to all the people of Hong Kong. Their concerns, delights, hopes and sorrows have become ours. A comprehensive and, the most important of all, genuine consultation over their views of political reform is a must.

Madam President, I shall support Mr CHENG's amendment. Thank you.

PRESIDENT (in Cantonese): Mr Martin LEE.

MR MARTIN LEE (in Cantonese): Madam President, I was formerly a member of the Basic Law Drafting Committee and so was the Honourable SZETO Wah. In the wake of the June 4 Incident, we ceased all our work on the Committee. The Rev Peter KWONG and Mr Louis CHA also resigned from the Committee. At that time, another member of the Committee rang me up, asking for my advice as to whether he should resign or not. I did not encourage him to do so. Later, he signed a letter jointly with a group of Committee members. At that time, there were only 18 Committee members in Hong Kong. Eleven of them jointly petitioned the Central Government by letter, calling for the speeding up of the pace of democratization as well as objecting to the proposal of dividing the Legislative Council in votes ─ the proposal of division was raised by Mr LO Tak-shing and this was subsequently incorporated into the Basic Law. Should we not feel ashamed for seeing so many people in this Council oppose speeding up the pace of democratization when even members of the Drafting Committee at that time were bold enough to make such a historic demand?

Madam President, on 4 April 1990, precisely 10 months after the June 4 Incident, the Basic Law was formally promulgated. At that time, the Chinese leadership had virtually no idea as to whether they would be able to uphold their position. It was therefore perfectly understandable that they had adopted such a high-handed approach towards Hong Kong of which we disapproved. Now you could see that the Chinese leaders were so open-minded when they met with President CLINTON. The whole of China could listen to the debates between them. Fundamentally, that period was totally different from nowadays. As such, it is now the best opportunity for speeding up the pace of democratization, and it is also the best time for amending the Basic Law.

I have heard government officials say this before ─ indeed Mr James TIEN said the same thing just now: Do not amend the Basic Law for we have no idea as to what further amendments will come out of this. In fact, they have virtually no confidence in the Chinese leaders, thinking that the Chinese leaders will behave so badly. If you are to propose amending the Basic Law, they will not only turn down your proposal, but also turn the "good" thing into "bad" thing. As the Bible goes, "Which of you, if his son asks for bread, will give him a stone? Or if he asks for a fish, will give him a snake?" Why should we view that the Chinese leaders will behave in such a bad manner? For these reasons, I hope that they can seriously think about it. We should have confidence in the Chinese leaders. If our proposal of amending the Basic Law is reasonable, there will be no ground, as far as we can see, for them to object.

In fact, I have talked to the Chief Executive in connection with the amendment of the Basic Law. I asked him whether the Government would take the lead to speed up the pace of democratization in the review to be held in 2006. I further asked him whether he could give me a promise. His reply was in the negative. I said even if he could not do that and even if he had to conduct a review by that time, he could still, by and large, give consent to speeding up the pace of democratization. As such, I further asked whether the Government would move a bill to quicken democratization and then lobbied Members in this Council for support. His reply was again in the negative. In that case, we should all understand that if he has no intention to do that, the situation will be unfavourable. This is because such amendments are related to our political system. Consequently, these bills can only be tabled by the Government instead of by an individual Member. We cannot do anything if the Chief Executive refuses to present the bill. Later I talked to the Chief Executive again and I told him we could not do anything if he refused to present the bill and that was the reason why it would make no difference no matter he agreed or not. Maybe the Chief Executive would present the bill on Beijing's instruction, and the bill would then be passed with a two-third majority in this Council. But if you were the Chief Executive at that time, would you agree? Nevertheless, he was still unwilling to give me a promise. We can see that each step the Chief Executive made was meant to be an obstacle to democratization.

As far as I can recall, Mr Michael SUEN did say that democratic development was like brewing a bottle of red wine and we have to do it slowly. As we are all aware, the best brewers of red wine is the French. I left France only yesterday, the country's national day as well as its revolutionary day, that is, the "Bastille Day". Revolution broke out in France in 1789 and it was only after the Revolution that France began to have democracy and heads chopped off bodies. Of course, we do not want to see people having their heads chopped off. After 209 years, a "head" in France made the international headlines when France won the World Cup with two headers by ZIDANE and another kick by PETIT.

Therefore, Madam President, whether you like red wine, take part in revolutions, watch the World Cup or not, you should support democracy. I therefore support the motion moved by Mr Andrew CHENG.

PRESIDENT (in Cantonese): Mr NG Leung-sing.

MR NG LEUNG-SING (in Cantonese): Madam President, the motion under discussion today involves the very significant issue of amending the Basic Law. The Basic Law has already laid down explicit provisions on the method of formation for the second and third terms of the Legislative Council, and it has also specified very clearly how the Chief Executive will be elected in the future. Consequently, are there really any strong reasons for which people must insist on introducing drastic changes to our constitutional framework two years later? This is indeed a question which Honourable Members should have started to consider seriously since the very moment when they took their oaths to uphold the Basic Law ─ if they are at all concerned about the interests of the Hong Kong Special Administrative Region.

It is only one year into the formal implementation of the Basic Law. Over the past year, the political system of Hong Kong has formally entered the stage of "Hong Kong people ruling Hong Kong with a high degree of autonomy". We the people of Hong Kong have taken part in electing a Hong Kong resident as the Chief Executive, and this never happened to us in the past 100 years or so when Hong Kong was not yet reunited with the motherland. This is a political right brought to us immediately by the democratization process laid down in the Basic Law in accordance with the principles of "one country, two systems" and "Hong Kong people ruling Hong Kong"; this is a political right which we had never enjoyed under the rule of the British Hong Kong Administration. Following the reunification, those political institutions of Hong Kong which are embodied in the Basic Law have all been retained smoothly, and our rule of law, freedoms and rights of the individual are all protected as promised. What we enjoyed before 1997, we still enjoy them now. This is an incontestable fact well admitted by both the Hong Kong people and the international community. Under the principle of "Hong Kong people ruling Hong Kong", the Central Government has kept entirely clear of interfering with our policies, and, more than that, the Central Government has even rendered its support to the SAR Government over some individual matters of governance. The assistance offered by the Central Government in respect of the new airport cargo terminal is but one of the examples. The anxieties and feelings of uncertainty which were so prevalent in the community before the handover of sovereignty have all disappeared since the Basic Law came into effect a year ago. What we have today is a stable political situation, brought about by a series of epoch-making constitutional reforms and by a Basic Law which has started to gain the gradual acceptance and recognition of the people.

Madam President, some of my colleagues in this Council are still not very satisfied with the methods of forming the Legislative Council and electing the Chief Executive; they argue that these methods are sufficiently democratic. However, if we look at the matter objectively and sensibly, we must admit that the Basic Law has in fact envisaged the prospects of popular elections based on universal suffrage. That being the case, the advancement or otherwise of constitutional reforms will only make a difference in terms of pace ─ that is, a difference between a hasty approach and one that is gradual and orderly. Whether or not the Basic Law is democratic in nature is not the question at stake. Under the existing statutory electoral systems, functional constituency elections and Election Committee elections are all indirect elections designed to allow members of different trades and industries to reflect their views and opinions. To the various types of electors, all of us present here today are legislators duly elected in accordance with the law, and as such, we are all fully capable of balancing and representing the rights and interests of the different trades and walks of life in the community. This capability is precisely what is required to create the kind of stable social environment conducive to the implementation of major constitutional reforms following the transfer of sovereignty. The political stability which Hong Kong has enjoyed since the reunification a year ago is precisely attributable to the fact that the interests of the different walks of life in the community have been adequately reflected and kept in a good balance. That is why it is most unrealistic and unfair for anyone to gainsay the significance of functional constituency and Election Committee elections. Hasty attempts to press ahead with our democratization process may well produce very negative impacts on Hong Kong as a highly efficient and internationally competitive centre of commerce; the community at large should really assess these impacts very carefully.

Madam President, the Basic Law is a constitutional document which lays down the basic institutions and systems of Hong Kong. It is only one year into its implementation, and so far, it has worked effectively. That being the case, if we now introduce drastic amendments to it for the sole reason of advancing the adoption of "one person, one vote" elections, what messages will we in fact be sending to the international community and investors? Investors may think that Hong Kong will make endless attempts to amend the Basic Law, and they will thus find it difficult to assess and project the resultant changes in our political environment. They may come to the conclusion that all the provisions of the Basic Law are nothing but interim measures which can be altered at will. They may think that the supreme status of the Basic Law as the constitution of Hong Kong no longer exists. Worse still, the Hong Kong people's painstaking efforts of achieving a smooth handover and the stable operation of our social and political institutions may all become fruitless. Once again, we will be plunged into a never-ending political debate on the amendment of the Basic Law, thus distracting all of us from the work of revitalizing our economy. For the interests of all our citizens and Hong Kong as a whole, I would urge my colleagues in this Council to think carefully about this matter.

Right now, because of the effects of external factors, Hong Kong is undergoing a difficult period of economic recession which is likely to last for quite some time, and all trades and industries are facing immense hardship. As representatives of the people, Honourable Members of this Council should all focus their resources and energy on alleviating the people's hardship. They should forget about their differences in the spirit of partnership and create a harmonious atmosphere, so as to bring about the economic recovery of Hong Kong. That said, we should of course continue to monitor and assist the Administration in its work. In fact, the political framework prescribed in the Basic Law can already serve to guarantee a stable social environment, which will enable us to deal with our existing economic difficulties. This we should all treasure. It will be most inappropriate and irresponsible for people to advocate any major changes to our political system at this very moment, not least because such proposals will certainly affect the progress of our economic recovery adversely.

Madam Principal (Laughter)...... Madam President, I so submit.

PRESIDENT (in Cantonese): Miss Margaret NG.

MISS MARGARET NG: Madam President, I support the motion of the Honourable Andrew CHENG and the amendment of the Honourable Miss Christine LOH. I have no doubt that the people of Hong Kong are ready for a fully and directly elected Legislative Council. They will use their votes sensibly and rationally, choosing the candidates who, in their view, are best suited to further the public interest. Indeed, they will be better able to do so than under the present system.

It is no secret that many people voted for those who have shown their readiness to criticize the Government forcefully, who are not afraid to voice the views of ordinary citizens. Their stance on specific issues are, by comparison, of secondary importance. This is because in a very restricted democracy, priority must go to extending that democracy and making it as effective as possible. After all, in electing the Legislative Council, we are only electing an opposition. What is the point of electing an opposition, if opposition can be safely ignored?

But once the objective of a wholly elected legislature is achieved, people will inevitably scrutinize much more closely the policies that the competing parties and candidates stand for. They may not choose whoever is most outspoken, but the person or party whose policy platform they believe will work best for Hong Kong. Or, if they continue to choose someone outspoken, it will not be for the outspokenness alone. It will be because they believe that person or party has the required quality to bring about the policy platform they support.

If the Government's policies appear best for Hong Kong, then the party or candidate who pledge to further these policies will win the most seats. The Government does not necessarily lose out. The system of Government with a Legislative Council elected by universal suffrage may well be more moderate and balanced, and not more "confrontational", as some people fear.

The official stance of the Hong Kong Special Administrative Region (SAR) and of the Central Government is that we should democratize gradually. I think to have universal suffrage for the Legislative Council in the year 2000 is gradual enough. We do not have to take 150 years all over again, as we do not have to re-invent the wheel. The right question to ask is not how many years or centuries other people have taken to get to democracy, but whether, in all the circumstances, as a study of the facts show, the people of Hong Kong is ready now to move to that stage.

When the Basic Law was drafted, between 1985 and 1990, Hong Kong has never had any experience in direct election on a suffrage of all adult Hong Kong residents. It was reasonable that some people had reservations. Now, more than a decade and many elections later, Hong Kong people have proved time and time again they can, and do, vote rationally. Moreover, time has proved that no increase of democratization has brought on any instability to Hong Kong. If any community can handle democracy, we have amply shown that we are such a community.

Madam President, I am fully aware I was elected by a functional constituency. I do not believe that my constituents will stand in the way of democracy, knowing that this is the best way forward. Indeed, if I stand in the way of democracy, I am sure I will be gladly sacrificed. My stance on this issue has always been clear. The fact that I am nevertheless elected is surely a strong indication of the attitude of the legal profession. The rule of law and democracy stand together. This is especially true for the SAR under "one country, two systems".

A Legislative Council to be elected by universal suffrage by the year 2000 is fully compatible with Article 68 of the Basic Law which specifies it as the "ultimate aim". The timetable is set out in an Annex, precisely because a change of the details of implementation, including the pace, may become desirable in the light of experience.

Such a change is an important and a joyful step for Hong Kong. There is merit in encouraging the active participation of the widest public under the umbrella of a constitutional convention. But it should not be left to the Government to decide. We all know the weaknesses of a so-called public consultation under this Government. For this reason, I support Miss LOH's amendment but not the amendment of the Honourable CHENG Kai-nam.

One Member says that the Basic Law should not be slightly changed. I agree. But the procedure for amendment is provided in Article 159 of the Basic Law. It poses a straight requirement that makes sure no amendment is slightly passed. But if the requirement is met, it follows that the change is justified.

Another Member refers to the rule of law. The rule of law does not mean that any law cannot be changed. It means it can be changed only after due process. The due process is already set down in Article 159. We can embark upon this course with assurance and self-confidence.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Ronald ARCULLI.

MR RONALD ARCULLI: Madam President, I would not be surprised if this debate is seen as the beginning of an election campaign for the Legislative Council Election in the year 2000.

In as much as the motion if implemented would require amendments to the Basic Law, it may be useful to remind ourselves some of the many principles which we as a community treasure and which are enshrined in the Basic Law. To begin, and I will quote Article 5:

"The socialist system and policies shall not be practised in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years."

Secondly, except for those laws that contravened the Basic Law, our laws remain in place as have all the freedoms we enjoy, including those under the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights and international labour conventions as applied to Hong Kong. We also have executive and legislative powers as well as an independent judiciary. We enjoy a high degree of autonomy and basically, Hong Kong has enjoyed a through-train with one exception, this Council.

This Council now has a say over the appointment of the judges of the Court of Final Appeal and the Chief Judge. There are also provisions giving us the right to impeach the Chief Executive or force his resignation.

Madam President, I am sure I have over-simplified the position with my very brief reference to all the fundamental rights that all of us enjoy and, perhaps, take for granted.

Against this background, I shall now deal with the motion moved by the Honourable Andrew CHENG. Is accelerating democracy as simple as he maintains? I confess I find it difficult to believe that the Democratic Party is content with simply increasing the number of Members returned by direct elections from 24 in the second term to 60 for the second and subsequent terms. Is the Democratic Party saying they are content with proportional representation voting? Is the Democratic Party saying they are content with Article 74 and all the difficulties we have highlighted recently? Is the Democratic Party content with the Chief Executive being directly elected but remain subject to appointment by the Central People's Government? Will our principal officials continue to be appointed by the Central People's Government? Is the Democratic Party content with the Executive Council being appointed rather than elected like this Council? Does the Democratic Party, like the Liberal Party, believes in the ministerial system? Is the Democratic Party content with the provisions dealing with the dissolution of this Council or the impeachment or resignation of the Chief Executive? Is the Democratic Party content with the Legislative Council being in opposition rather than being in government?

Madam President, I ask all these questions because what is being proposed in the motion is over-simplified. The community needs much more time to discuss changes to our constitutional position. Therefore, the sensible course is to get discussion on the way.

The Liberal Party has long advocated for a ministerial system which we believe is the key to an open, responsible and accountable government. Right now, we are supposed to have a Civil Service that is politically neutral, and as past and present Executive Councils did not and do not sell agreed policies of the Administration, our poor Policy Secretaries take on this job voluntarily or otherwise. However, if there is a change of policy, they will be flipping back and forth. This is neither right nor fair. On the other hand, if we have a ministerial system in the Executive Council, then Executive Council Members will have a portfolio for which they will have responsibility and accountability. A ministerial system is absolutely vital if our Chief Executive and this Council are elected under universal suffrage. We cannot envisage how it would work without such a system. Indeed, perhaps we should implement a ministerial system now. No doubt someone will say that we cannot do so because of the Basic Law. And I am quite sure the Secretary for Constitutional Affairs will give us an answer.

The Liberal Party sees many issues that require detailed and careful examination and sees no objection whatsoever for Hong Kong to start this long and arduous journey.

As for my own constituents, they believe it is not good for Hong Kong to depart from the Basic Law nor should any amendment of the Basic Law be undertaken lightly. Their position is simple, the Basic Law provides for gradual democratic development over a 10-year period. Right now, we have very tough battles to fight with our economy and unemployment. Let us not distract ourselves from these two issues that worry the community the most. I confess they have a very strong case.

For the reasons that we have stated, my Liberal Party's colleagues will support the amendment proposed by the Honourable CHENG Kai-nam.

Thank you.

PRESIDENT (in Cantonese): Mr LAU Chin-shek.

MR LAU CHIN-SHEK (in Cantonese): Madam President, it is an indisputable fact that almost everyone wishes to achieve the aim and has reached a consensus that the legislature and government should be directly elected. However, today, we are still discussing whether the next Legislative Council or the Chief Executive for the next term should be directly elected. I wonder if people elsewhere consider Hong Kong people as inferior to, slower and more stupid than people in their countries. I think that this is really a great irony.

After the end of the colonial era, Hong Kong people are still unable to choose their own government through voting. I still find this extremely regrettable today.

Some Members wonder what standards we should conform to since the public opinion is divided. This is I think nothing more than a paradox. In my view, there is only one standard, and that is, equal political rights of people. We can definitely not allow some people to have two or more votes, or even more than 10 votes. There is only one standard and that is, "one man, one vote" for the election of the Legislative Council and the Chief Executive by universal suffrage in an open and fair manner.

Others say that at present, people care about whether they have a job, whether they still have one tomorrow and whether they have money to make their mortgage repayment. This argument is just harping on the same string of the "meal ticket" and "we want the meal ticket, not the vote", setting democracy apart from people's livelihood. Why is it that some people have not a job today, or even if they have a job today, they worry that they will not have it tomorrow? Why is it that some people want to buy a flat but have no money or confidence? Actually, the reason is that we are living under an undemocratic system, and a minority of those with vested interests are deciding the fate of everyone in Hong Kong. In my opinion, everyone should have a job and work with dignity; everyone should be able to feed themselves and do so with dignity. Democracy and people's livelihood are inseparable from each other.

Someone suggests that we should conduct extensive consultations. However, as Miss Christine LOH has pointed out, in 1987, the British Hong Kong Government manipulated divided public opinion to reject the implementation of direct elections in 1988. I think Hong Kong people should ask the political parties that are proposing extensive consultations this question: What result must these extensive consultations yield before they will support advancing the implementation of direct elections? If 80% people are in favour, will they support it? Will they support it if 70% people are in favour? Furthermore, what questions must be resolved before they will support it? Otherwise, they would repeat the same line they said during the colonial era: Since the opinions of Hong Kong people are highly divided, full direct elections should not be implemented. This is just "old wine in a new bottle".

Today, Mr TUNG Chee-hwa is a Chief Executive who has no mandate and who is not elected by the people. During the economic downturn, nothing he says sounds right to people. As the common saying goes, "he bites on his tongue whenever he speaks". Actually, he should ponder over why the South Koreans are willing to offer their money to support their government and why, when there was a run on a bakery in Hong Kong, people said that they would rather give the cakes to the dogs if they could not eat them all. I hope that the Chief Executive will think about this carefully.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr CHIM Pui-chung.

MR CHIM PUI-CHUNG (in Cantonese): Madam President, I would like to put forward a few points on the subject matter of this motion debate.

First, I represent the financial services sector. As we all know, there has been a seat for this sector in the Legislative Council since 1991. And, now, there is even a seat for the insurance sector. In other words, there are all together two seats, and their significance and representativeness are quite obvious. The seat which I hold in this Council belongs not to me, but to the financial services sector. Although I have been elected by the financial services sector to sit on this Council, I cannot consent to the abolition of this seat on its behalf. The reason is that the sector itself should make its own decision, and I am in no position to do so on its behalf. It is undeniable that this sector does have an important role to play, and that it also serves a representative function in the existing political framework of Hong Kong. Therefore, I will definitely oppose the motion on behalf of the sector.

Second, as far as I am personally concerned, I am actually neutral on the development of our political structure. For me, the timing for holding full-scale direct elections is simply not a matter of any significance at all. If I am interested, and if I have confidence in my ability to win, I will definitely face the challenge. If not, I will simply refrain from taking part. There will not be any problem for me because to me, personal interests do not mean anything.

Third, on the question of whether or not the people are sophisticated enough. I personally think that the people of Hong Kong are definitely sophisticated enough. However, this does not mean that their choices are always absolutely correct, because much will have to depend on the changing circumstances.

The main problem underlying our discussions today is not so much the timing of full-scale direct elections, but the motive behind such an advocacy. Once full-scale direct elections are introduced, those elected will naturally want their party to become the ruling party; this is a secret motive which the advocates of full-scale direct elections dare not disclose. Once some people manage to become the majority in this Council, or once they manage to do so after aligning with their allies, it is only natural that they would want their party to become the ruling party. When this happens, problems will arise.

We must remain cool-headed and consider whether Hong Kong is going independent. No, Hong Kong is not, because it still comes under the Central Government. Will the Central Government allow people to do so now? Will it allow people to cherish such a hope, the aim of which is but so very obvious? Of course not. Talks and discussions on this may well be tolerated, but there is absolutely no possibility that this hope can ever be put into practice. I am not saying that the Basic Law cannot be amended. However, we must remember that the Basic Law was finalized only after the many people involved had meticulously considered all relevant issues and factors, and, for our process of democratization, the Basic Law has even laid down a detailed timetable. There must be a rationale behind this; if not, people may well advocate that it should be amended tomorrow, or the day after tomorrow, or even at any time which we deem fit. There is a clear provision in the Basic Law that in the year 2004, Members returned by functional constituencies and Members returned by direct elections will share the seats in this Council on a 50%-50% basis. By then, we will be able to know whether the voting results of such an electoral system are conducive to the good operation of Hong Kong as a whole.

We must remember that Hong Kong is a Special Administrative Region of China, and as such, it must accord with the steps of the Central Government. We are indeed very pleased to note that China is now making progress in many aspects. From the press, we learn that in some towns of China, the town heads are returned by elections, and some cities may follow suit sometime later. Maybe, a decade or so later, they may hold elections to return all the representatives at various levels. Therefore, the people of Hong Kong do not need to be so nervous, and they need not think that following the steps of the Central Government is always so bad. In fact, everything can change.

I would like to give a piece of advice to the Democratic Party today. They want to have full-scale direct elections in 2000. However, I must point out that four incumbent Members belonging to the Democratic Party are returned through the functional constituencies. Therefore, if the Democratic Party really wants to hold full-scale direct elections, it must first make sure that these four Members will all refrain from running in any functional constituency elections in 2000. That way, the Democratic Party can show that its words do indeed accord with their deeds.

Second, I want to say a few words on the Honourable Martin LEE's remarks a moment ago. I guess he has been the only person so far to have stated clearly that he wants Mr TUNG Chee-hwa to stay as the Chief Executive after his current term of office, because he questioned Mr TUNG what he would do in 2007. In effect, such a question implies that Mr LEE assumes that Mr TUNG will still be the Chief Executive by then. Well, even Mrs Anson CHAN, the Chief Secretary for Administration, is reluctant to say something like this for it is probable that she wants to be elected the second Chief Executive. But then, our Honourable Martin LEE has become the first person to support Mr TUNG's continuation of office in 2002 and even in 2006. And, he even wants Mr TUNG to finalize everything following the review in 2007. If I had been authorized to represent Mr TUNG, I would have thanked Mr LEE for giving recognition to Mr TUNG's work on behalf of the whole community. Mr LEE's question really shows that he recognizes the achievements of Mr TUNG in governing Hong Kong.

No doubt, we must bear in mind that we are just holding a motion debate today; the outcome of our discussions will not be legally-binding, nor will it lead to any practical results. However, I am still convinced that the Legislative Council and the Chief Executive of Hong Kong will eventually be returned by full-scale direct elections. And, it is possible that a ministerial system may eventually emerge.

Many a time I do not share the views of the Liberal Party. However, I think that when we discuss the existing political framework of Hong Kong, we must note that the promise of "no change for a period of 50 years" refers to our capitalistic system and our way of life, instead of our governmental structure. We have to understand that our existing governmental framework is in fact the legacy of 150 years of colonial rule. The colonial mentality will simply have to be eliminated. Hong Kong is no longer a colony. Hong Kong is now a Special Administrative Region, and a Special Administrative Region is different from a colony. Therefore, a ministerial system does merit our consideration. Our Bureau Secretaries and the three top-level Secretaries should note that a ministerial system entails accountability. Recently, many political, social, economic and financial troubles have occurred in Hong Kong. From these troubles, we do indeed notice that bureaucratic red-tape, mutual cover-ups and the use of "officialese" are found among our Bureau Secretaries, and our "career civil servants" have shown that they actually lack the type of professionalism required. For these reasons, I would like to call upon my colleagues in this Council to explore the problem, with a view to reaching a consensus.

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): Madam President, on behalf of the Frontier, I rise to speak in support of the motion moved by Mr Andrew CHENG.

At 5 am on 30 June 1994, my private Members' Bill on the introduction of full-scale direct elections for the Legislative Council was defeated by just one vote in this Chamber. Today, Mr CHENG will not be as "lucky" as I was, because it is almost certain that his motion will be defeated by more than just one vote, thanks to the intervention of the Central Government. Some of my colleagues in this Council have just asserted that there is no intervention from the Central Government, but I think their words are nothing but nonsense; there can be no bigger intervention than the efforts made by the Central Government to shape our electoral system.

Madam President, as you are also aware, nearly all the opinion polls conducted over the years have indicated to us that most of the respondents actually want our legislature and Chief Executive to be returned by full-scale direct elections. Some colleagues have asked whether there are any significant reasons for the advocacy on full-scale direct elections. Well, the only significant reason is that we want to be the master of our own house, and this desire is in marked contrast to the mentality revealed by the Honourable NG Leung-sing when he addressed you, Madam President, as "Madam Principal". I really do not know whether this is really just a slip of the tongue. To me, the "Principal" should be a government which is elected by all of us. However, even such a government cannot be called the "Principal" in the strictest sense; instead, all of us, the people, should be called the Principal, because the duties of a government are to serve the people. Very much unfortunately, however, some Members of this Council are returned by inner-circle elections. As admitted by the Honourable Bernard CHAN himself, for example, he is elected by just about 190 people. In the case of some others, the electorate is even as small as 20 to 30 people. This is really ridiculous. A moment ago, the Honourable James TIEN described this Council as a highly representative legislature. I really find his remark very absurd. How can Members of his kind claim any representativeness? Only the 20 of us, who are returned by direct elections, can claim to be representative of the people. All other Members, including you, Madam President, are elected by a handful of people. That being the case, how can you claim to be representatives of the people? The time has really come for we the people of Hong Kong to take charge of our future. For that reason, I support Mr Andrew CHENG's motion. I agree to his proposal that there should be full-scale direct elections for the next term of the Legislative Council (Some even argue that full-scale direct elections should have been held ages ago). We all support the introduction of full-scale direct elections ......

PRESIDENT (in Cantonese): Mr CHIM Pui-chung, do you have any question?

MR CHIM PUI-CHUNG (in Cantonese): Madam President, a point of order. All of us have been elected under the electoral system for this Council. Therefore, how can it be said that some of us do not have any legitimate representativeness? I hope that Miss Emily LAU could give us an explanation. The number of people whom a Member represents is quite a separate issue. And, it must be admitted that all of us, the 60 Members of this Council, have been elected in accordance with the law. This legislature should never allow anyone to negate the legitimate status of its Members.

PRESIDENT (in Cantonese): Miss Emily LAU, Mr CHIM Pui-chung has requested you to make a clarification on the remarks you have just delivered. You may choose to do so, or you may not. It is all up to you.

MISS EMILY LAU (in Cantonese): Madam President, I am of course prepared to make a clarification, not only to Mr CHIM Pui-chung, but to the whole world as well. All elections should be governed by the standards of popular participation and equality. Actually, a number of international covenants on human rights are currently applied in Hong Kong. However, we have so far failed to institute any genuinely popular and equal elections in Hong Kong. And, such elections will become possible only when our Government, our executive authority, sees it necessary to project a good image by properly discharging its obligations under these international covenants. Hence, I am sorry to say that in the eyes of the Hong Kong people, Members returned by inner-circle elections are really not that representative. These Members can of course argue that they have been elected in accordance with the law. However, it must be pointed out that the law which they refer to is actually one that is tailor-made for them by the Provisional Legislative Council. For the 6 million people in Hong Kong, they can hardly draw comfort from this. Even the Democratic Alliance for the Betterment of Hong Kong (DAB) knows that many Hong Kong people want to adopt a system of "one person, one vote", under which they can elect their own government (that is, the executive and the legislature). However, the DAB has still refused to support Mr Andrew CHENG's motion.

Madam President, five days after the recent Legislative Council election, on 29 May ......

PRESIDENT (in Cantonese): Mr CHIM Pui-chung.

MR CHIM PUI-CHUNG (in Cantonese): Madam President, a point of order. I do not think that this should be the time for Miss Emily LAU to deliver her election platform; she has been elected anyway. I now want to make a proposal. Miss Emily LAU should be required to substantiate her insulting claim that with the exception of the 20 directly elected Members, the remaining 40 Members of this Council are all returned by inner-circle elections, and that for this reason, these 40 Members are not favoured by members of the public. I also request that this Council should vote on her claim. I think the 40 Members in question should really object to her insulting remarks. I now formally move a motion on that.

PRESIDENT (in Cantonese): Mr CHIM Pui-chung, I am sorry that in accordance with the Rules of Procedure, you are not permitted to move a motion without giving the requisite notice.

MISS EMILY LAU (in Cantonese): Madam President, I was up to the point that five days after the election, on 29 May, the Honourable Jasper TSANG and I were both invited to a forum held by the University of Hong Kong. At this forum, I expressed the hope that the people of Hong Kong could be given a chance to discuss the issue of our constitutional reforms, and I supported the idea of calling a constitutional convention, during which a vote could be put on the timing of full-scale direct elections for the Legislative Council and other related issues. I also said that a referendum should be held to let the people of Hong Kong decide their own future. I was delighted to hear from Mr TSANG that he too supported such an idea. The media reporters present at the forum were also taken by surprise when they heard Mr TSANG say that in addition to supporting the idea of calling a constitutional convention to discuss the possibility of a referendum and our constitutional reforms, he in fact agreed that a referendum should be held. His words delighted me, and I do not think that the DAB has since changed its position. However, I really fail to understand why Mr Gary CHENG has moved an amendment to the motion. If the DAB really holds an open attitude towards direct elections, it should not rule out the possibility of introducing full-scale direct elections for the next term of the Legislative Council. And, if it really does not rule out such a possibility, why has it found it impossible to support Mr Andrew CHENG's motion? That is why I hope that our DAB colleagues in this Council can give me an explanation when they speak on the motion later on.

Mr James TIEN also remarked that now is not the proper time we discussed these constitutional issues because the people of Hong Kong are concerned only about their employment and housing problems. In this connection, we all know very well that we have in fact spent a lot of time on discussing our economic problems. However, I cannot accept the argument advanced by Mr TIEN on behalf of the General Chamber of Commerce and the Liberal Party: Do not talk about becoming the master of your own house. Just remain as slaves for ever, and you will be well-fed and given dwelling places ......

PRESIDENT (in Cantonese): Mr James TIEN.

MR JAMES TIEN (in Cantonese): Madam President, I wish to seek an elucidation. Miss Emily LAU, where in my remarks did I use the term "slaves"? Was she referring to my remarks in Chinese, or in English?

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): I did not say that he had actually used the term "slaves". I simply said that he had asked us not to discuss the issue. And, if we really do not talk about becoming the master of our own house, can I therefore infer that we will all become "slaves"? I cannot accept Mr TIEN's argument. Madam President, we are no doubt faced with many economic problems now, but the people's confidence in the Administration is also an important issue. Last night, Mr TIEN and I appeared in the television programme "News Forum". When Mr WONG yuk-man asked Mr TIEN whether he had any confidence in the Government, he replied that he had no alternative but to say "yes" in front of the camera. Madam President, his reply indicates precisely the point that economic and political developments should simply not be treated as two different issues. We do not want any Members of this Council to mislead the people of Hong Kong by saying that as long as they are well-fed (being well-fed is of course a concern of the Honourable LEE Cheuk-yan) ...... We in the Frontier are also concerned about the political rights of Hong Kong people. Therefore, Madam President, I will support Mr Andrew CHENG's motion, and I will also support Miss Christine LOH's proposal on calling a constitutional convention to discuss the matter. This may not be the only way, but our bottomline is that full-scale direct elections must be introduced as soon as possible, starting from the next term of the Legislative Council. If any Members move any amendments to alter the timetable we want, we will most definitely oppose them. We in the Frontier must reiterate that we do hope to communicate extensively with people from all walks of life in the community on this issue. I understand that the amendment of the Basic Law will require a consensus among the people of Hong Kong. However, I do hope that we can all put aside our personal interests, and this applies especially to those Members returned by functional constituencies who spoke just now. Of course, this may well be a trap for all of us. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr NG Leung-sing.

MR NG LEUNG-SING (in Cantonese): Madam President, as to the conjecture just made by the Honourable Miss Emily LAU concerning why I just said "Madam Principal" instead of "Madam President", there is actually only a divergence in pronunciation but she has made her own interpretation and I hope that she can withdraw it.

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): I will not withdraw it. I do think so and I believe that I have expressed the views of many people.

(A hubbub in the public gallery)

PRESIDENT (in Cantonese): People in the public gallery, please be quiet and do not make so much noise, otherwise, our proceedings will be affected.

Mr CHAN Kam-lam, do you have a point of order?

MR CHAN KAM-LAM (in Cantonese): Madam President, a point of order. According to Rule 41 of the Rules of Procedure, Miss Emily LAU just said that other Members should put aside their personal interests. I would like to ask Miss Emily LAU, what are our so-called personal interests?

PRESIDENT (in Cantonese): Miss Emily LAU.

MISS EMILY LAU (in Cantonese): Madam President, I said personal interests because some Members are elected by an inner circle and they will certainly not leave the circle, I wonder if they will step forward and take part in a "one man, one vote" direct election. These are personal interests, precisely "political free lunches"!

PRESIDENT (in Cantonese): Mr CHAN Kam-lam.

MR CHAN KAM-LAM (in Cantonese): Madam President, Rule 41(4) of the Rules of Procedure states that "it shall be out of order to use offensive and insulting language about Members of the Council". I hope Miss Emily LAU would understand it. In fact, she is also well-versed in the Rules of Procedure. I hope she will withdraw the remarks she just made.

PRESIDENT (in Cantonese): Miss LAU, will you withdraw your remarks at Mr CHAN's request?

MISS EMILY LAU (in Cantonese): Madam President, I will not withdraw them. I have said time and again over the years that they are elected by an inner circle, why should I have to withdraw now?

PRESIDENT (in Cantonese): Mr Andrew WONG.

MR ANDREW WONG (in Cantonese): Madam President, when a Member raises a point of order, such as alleging that another Member has said something in violation of Rule 41(4) or (5) of the Rules of Procedure, the President should give a ruling instead of asking the Member concerned if he will withdraw what he has said. Otherwise, the request will turn into a small debate.

PRESIDENT (in Cantonese): I think Mr Andrew WONG meant to ask me to give a ruling. I will give a ruling later. The meeting will now be suspended for 10 minutes.

6.50 pm

Meeting suspended.

7.23 pm

Council then resumed.

PRESIDENT (in Cantonese): Members may ask why it takes so long before the Council is resumed. It is because I have just listened to the taped proceedings and I have listened a couple of times to the proceedings beginning from the juncture when Mr CHIM Pui-chung sought elucidation. After listening very carefully to each and every sentence, I conclude that Miss Emily LAU has not violated Rule 41 (4) and (5) of the Rules of procedure. I believe Members expect an explanation from me. When Miss Emily LAU spoke, she said that she hoped that Members could set aside their personal interests. This is her hope and when she elucidated what personal interests were, she expressed her own views, and this does not constitute imputing improper motives to another Member.

As to Mr Andrew WONG's remark that the President should rule as this has already turned into a mini-debate, in fact, if I do not allow Mr CHAN Kam-lam to seek elucidation or Miss Emily LAU to elucidate, how will I know what Members wish to say? Until Mr WONG asked the President to making a ruling, no Member has asked of me the same. As the President, I should allow Members to solve problems with mutual respect, instead of giving a ruling on every occasion. However, when it is necessary, the President will give a ruling in a neutral, impartial and objective manner as far as possible. Mr Andrew WONG.

MR ANDREW WONG (in Cantonese): Madam President, a point of order. Is the President saying that I have wrongly raised a point of order?

PRESIDENT (in Cantonese): Mr Andrew WONG, I will be wrong if I did not allow you to raise a point of order. You raised a point of order that this was a mini-debate and you asked me to give a ruling. I have given a ruling upon your request. Mr NG Leung-sing.

MR NG LEUNG-SING (in Cantonese): Madam President, a point of order. You have just made an explicit explanation and I definitely obey your ruling. However, on the basis of Miss LAU's speech, I find that she has made a conjecture of what I have said. I hope that you will say whether Miss Emily LAU has made an incorrect conjecture of what I have said? Thank you, Madam President.

PRESIDENT (in Cantonese): According to the Rules of Procedure, the President does not have to decide whether she favours a certain viewpoint. As I am the President, I cannot make such a choice or decision. However, if a Member thinks that what he said has been misinterpreted or that he cannot agree to the subjective viewpoint or conjecture made by another Member, he can make an interruption as provided for in the Rules of Procedure. Therefore, Mr NG Leung-sing, when you raised a point of order, I had also allowed you to elucidate on what Miss Emily LAU had said. Mr LEE Wing-tat.

MR LEE WING-TAT (in Cantonese): Madam President, I do not intend to deal with matters arising between Honourable colleagues but I just want to ask a question about the ruling method. I would like to know more as I am not sure what should be done. It appears to me that the President has just said that if similar incidents happen in the future, and some Honourable colleagues are suspected of violating the Rules of Procedure, for instance, imputing improper motives to another Member or using insulting language, they should first solve these problems through discussion. I surely respect this preliminary view of the President but I find that this will give rise to a lengthy debate. For example, when Ronaldo blames Zidane for handball, the referee cannot allow them to debate in the field whether Zidane committed handball during the match or the penalty kick. Otherwise, their debate may last through the 90 minutes. I would like to ask the President, if similar incidents happen in the future, how long will you allow them to debate? Now this is going to become a precedent and if Honourable colleagues raise a point of order this way in the future, they will make reference to this precedent. If an Honourable colleague thinks that I have violated a certain rule and as I do not agree to the charge, I debate with him, then another debate will arise. Madam President, will this be the case?

PRESIDENT (in Cantonese): Mr LEE Wing-tat, you have raised a good question but you are also prolonging this debate by a few minutes in so doing, therefore, if you have any questions about my ruling, I suggest that you should discuss it with me after this meeting. Mr Andrew WONG.

MR ANDREW WONG (in Cantonese): Madam President, a point of order. I just asked if I had wrongly raised a point of order and you said that I was right. However, you went on to explain why you had allowed Members to confront one another. I think that it is not right. As regards the point of order just raised by Mr LEE Wing-tat, when similar incidents happen in the future, should Members first elucidate the matter mutually or refrain from elucidation and wait for the President to give a ruling?

PRESIDENT (in Cantonese): Dr Philip WONG.

DR PHILIP WONG (in Cantonese): As far as I can recall, it appears that according to the Rules of Procedure, Members are not allowed to debate with the President. I do not know if I am right.

PRESIDENT (in Cantonese): I repeat what I have just said. I have given a ruling and if Members have queries, please discuss them with me after this meeting as we have to continue with our debate now. Mr Ambrose LAU.

MR AMBROSE LAU (in Cantonese): Madam President, thank you for letting me speak. As regards the formation of the Legislative Council and the selection of the Chief Executive, explicit provisions have been set out in Annexes I and II of the Basic Law. If the second Legislative Council is to be directly elected in the year 2000 and the Chief Executive for the second term of office is to be directly elected in the year 2002, the Basic Law has to be amended.

Now that the Hong Kong Special Administrative Region has just been established and the Basic Law implemented for one year, is it appropriate to amend the Basic Law?

Madam President, that the drafting and formulation of the Basic Law has taken four years and eight months indicates that the Basic Law is formulated in an extremely prudent way, pooling together the intelligence and painstaking efforts of Hong Kong people. Therefore, amendments to the Basic Law should not be rashly proposed.

In most countries and regions in the world, their constitutional laws feature stability, predominance and authority, and people avoid making amendments as far as possible after they have been promulgated.

The Basic Law is the constitutional law of Hong Kong and it upholds and serves as the foundation of the Hong Kong legal system. Any rash amendment will undermine the stability of the Basic Law. The confidence of Hong Kong people and the international community in our social and legal institutions is linked to a very large extent with their confidence in the stability of the Basic Law. If a precedent that the Basic Law can be lightly amended is formed, not only will the stability of the Basic Law be undermined but also the confidence of Hong Kong people and that of the international community in Hong Kong.

Madam President, the Basic Law safeguards our most fundamental and broadest interests for the longest period. We should therefore try our best to safeguard the stability of the Basic Law especially when Hong Kong is struck by the Asian financial turmoil and is in extreme economic difficulties. When unemployment surges, people are in plight and enterprises are closing down, we as Members of the Legislative Council should take the interests of the whole into account, and regard revitalizing our economy and alleviating the hardship of people's livelihood as the pre-eminent task instead of putting forward some highly controversial political questions.

As I just said, the formulation of the Basic Law has gone through a very long brewing and consultation process and it embodies a consensus in the highest degree reached by the community. Various interest groups will take the opportunity to put forward various proposed amendments that benefited individual groups and classes but not the overall interests of the community as a whole. If we rashly propose amendments to the Basic Law or carry out a review and consultation now, we will certainly arouse social disputes and unrest, diverting and depleting the vigour and strength of the community for overcoming the economic difficulties. This is actually causing one disaster after another when there is an economic slump and people are in great plight.

When we judge whether the pace of democratic development as set out in the Basic Law is reasonable, we cannot forget that Hong Kong has never had a democratically elected governor under the colonial rule and there has not been a democratically elected Legislative Council Member for some 140 years. Neither can we overlook the fact that advanced western countries have gone through a slow process of democratic development, characterized by an adherence to the principle of gradual and orderly progress.

For example, Britain instituted the electoral system in 1688 after the "Glorious Revolution" and practised "one man, one vote" beginning only in 1949. The constitution of the United States was passed in 1787 and provisions were made for an electoral system, but we can say from a legal perspective that the elections of United States presidents have so far been indirect not direct. In France, feudalism was overthrown after the 1789 Revolution and legislators were elected by a general election but the system was abolished in 1797, and the Third Republic established a general election system in 1875 after undergoing a number of changes. The Japanese electoral law was promulgated in 1889 but universal suffrage was only realized in 1945 after the amendment to the electoral law was approved. It can be seen from the above examples that the advanced western countries and Japan have made gradual and orderly democratic progress. In comparison, the democratic development of the Hong Kong Special Administrative Region over 10 years as set out in the Basic Law is obviously much faster. With reference made to the history of various countries in the world, especially the election history of western countries with relatively stable political systems, the principle of gradual and orderly democratic progress and the specific provisions of the Basic Law are extremely reasonable. Without special reasons, they should not be lightly amended.

Madam President, the democratic development of those countries in the world that have relatively stable political systems has a long history, on the contrary, the so-called rapid democratic progress upheld by certain countries resulted in division, chaos and social upheaval. Take for example the decolonization of some countries which have been colonies, their rapid democratisation have left behind serious problems such as social upheaval and people living in dire poverty for decades. Therefore, in view of the positive and negative experience of countries in the world, the principle of gradual and orderly progress and democratic development over 10 years as set out in the Basic Law are extremely reasonable and conducive to maintaining our social stability as well as ultimately achieving the objective of selecting the Chief Executive and forming the Legislative Council by universal suffrage.

Madam President, I so submit.

PRESIDENT (in Cantonese): Mr YEUNG Yiu-chung.

MR YEUNG YIU-CHUNG (in Cantonese): Madam President, the ultimate aim of the development of a democratic political system in Hong Kong is the formation of the Legislative Council and selection of the Chief Executive by full-scale direct elections. Explicit provisions have been made in Articles 68 and 45 of the Basic Law to this effect and the Democratic Alliance for the Betterment of Hong Kong (DAB) will give its full support. However, Mr Andrew CHENG's motion has scheduled the realization of such an aim two years later. This I think is open to question.

The DAB is of the view that such a substantial political system reform requires consultation, studies and exploration over a sufficient period. At present, the views of the public as to whether the pace of full direct elections should be quickened and the rate of the eventually quickened pace are still not explicit. As it is trendy to cite the results of opinion polls, we are now citing the results of some opinion polls. The result of an opinion poll on the reasons why electors voted at new and old direct elections shows that only 2.7% and 2.6% of people respectively voted to promote democratic development or support direct elections. Moreover, the bimonthly opinion poll conducted by the Constitutional Affairs Bureau shows that only 3% of the people on average are concerned with democracy and the highest percentage obtained is only 5%. Besides, the percentage has remained virtually the same in the opinion polls done over 10-odd years. The DAB agrees that more and more people will ask for a faster pace of democraticization but we think that it is essential for extensive consultations and studies to be carried out before a decision on the pace of democratic progress is made.

Madam President, democracy is a process, and we cannot just focus on its form and overlooks its substantive contents. Just now Miss Emily LAU classified Honourable Members into different grades but I definitely cannot agree to this. She thinks that she is more honourable than the remaining 40 Members returned by functional constituencies. I would like to ask: On what basis can she say that she is more honourable? Does she have two votes? Actually, the right of every Member in this legislature ......

PRESIDENT (in Cantonese): Miss Emily LAU, a point of order?

MISS EMILY LAU (in Cantonese): A point of order. Why has someone put words into my mouth?

PRESIDENT (in Cantonese): Mr YEUNG, please continue.

MR YEUNG YIU-CHUNG (in Cantonese): Every Member in this legislature has equal rights. In fact, the mode of election in Hong Kong includes geographical direct elections, and direct and indirect functional constituency elections which are both democratic elections. An 800-member Election Committee is representative as its 800 members come from 38 sectors and are elected by some 200 000 electors. How can it be called "an inner circle"? I believe that the development of democracy in Hong Kong will become increasingly better. In an opinion poll, 78% of the interviewees indicated that they had voted to prove that Hong Kong people enjoy democratic and autonomous rights.

Somebody regards a high turnout rate as people's demand for full direct elections. It is extremely farfetched to draw an inference on this basis that people are asking for a quicker pace of democratic development. Another opinion poll shows that 88% of the voters went to the polling station to discharge their obligations as Hong Kong citizens only.

Before the election, these people strongly criticized the electoral system as unfair and undemocratic and they expected that there would be a low turnout rate. It is really surprising that they could be so capricious.

Somebody says that democracy is the greatest concern of people, in fact, a number of opinion polls have shown that more people are concerned with economic and employment problems now, far more than problems such as housing, political system development, medical and health and the elderly.

The DAB is of the view that advancing the time for the realization of full direct elections from 2007 to 2000 without extensive consultation and seeking consensus is a hasty approach.

The Basic Law must be amended if full direct elections were to be held but the procedures for amending the Basic Law must be approved at a meeting of the National People's Congress, studied and proposed by the Basic Law Committee. Moreover, the amendments to the electoral system by the Government, voter registration and demarcation of constituencies will take time and it is not feasible for the Legislative Council to be fully directly elected two years later.

As to when the Chief Executive will be directly elected, it is even harder to determine. According to the Basic Law, any proposal to amend the method for selecting the Chief Executive has to be approved by the National People's Congress. The discussion and approval of any motion proposed in this connection take time, and it is technically not feasible to ask for the Chief Executive for the second term of office to be directly elected in 2002.

Hong Kong is a society that upholds the rule of law and respect must be given to its own "mini-constitution" which cannot be lightly amended in a rash manner without being tested and proved by time and without adequate consultation and study.

For the above reasons, the DAB has sought to amend Mr Andrew CHENG's motion in a rational and practical manner. We think that we should not arrive at a conclusion or work out a timetable before the relevant consultation and review has any outcome. I call upon Honourable colleagues to support the amendment of Mr Gary CHENG.

I so submit. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Albert HO.

MR ALBERT HO (in Cantonese): Madam President, I am going to speak on the amendment proposed by Mr Gary CHENG. In fact, I do not expect that the Democratic Alliance for Betterment of Hong Kong (DAB) will support the motion moved by the Democratic Party through Mr Andrew CHENG. However, I think that the amendment moved by Mr Gary CHENG is somewhat ─ you know what I mean. I clearly recall that during the election this year, as reported in the newspapers, Mr Gary CHENG said at an election forum on 5 March that he supported pacing up the political reform. If the public thought that it was suitable, he would not oppose the idea of having a fully directly elected Legislative Council in 2000. The reporters present were really smart and they remembered what the platform of the DAB just referred to by the Honourable Jasper TSANG was. They immediately asked Mr Gary CHENG whether this had gone against the platform of the DAB. As reported, Mr CHENG's answer was in the negative and he insisted that the Basic Law would not be amended before the handover. But after the establishment of the Special Administrative Region (SAR) Government, if Hong Kong people found it appropriate, they could fight for it, so he said. He also said that the DAB had not boldly set out these pledges as it would like to leave some leeway so that they could fight for it in the Legislative Council in future. I have at least read such reports in two newspapers and both reports are very explicit. If any information in the reports is untrue or misleading, I hope that Mr Gary CHENG or Mr Jasper TSANG will elucidate later. However, I am sure that if what I just said is correct, Mr Gary CHENG obviously wanted the voters to have misled expectations of him then.

I can hardly say that what he has presented so prudently just now has gone against the pledges made during the election, but he has obviously left some leeway for a change in position. He said that it was dependent on whether the public found it suitable. Therefore, he now says that we have to consult the public to see whether they agree. On the whole, his remarks then revealed his position and he wished to give the public an impression that he would support democracy and fight for democracy only with their support. However, is his amendment consistent with his preaches? I must point out frankly that the amendment does not tally with what he remarks at all. The amendment obviously does not involve a democratic course or democratic commitment and it has not made a judgement as to whether Hong Kong should carry out a democratic political reform soon and the so-called in-depth and extensive public consultation is actually used to evade the problem and avoid making commitments.

Madam President, we all know that the motion today does not have any legally binding effect and it only shows the mover's attitude and position. We like democracy and we would like to recommend it to all Hong Kong people. We urge the Government to ask the Central Government to make amendments to the Basic Law at an early date to meet the needs of social development in step with the aspirations of the people. Mr Gary CHENG and the DAB fail to support this position and they can hardly absolve themselves of the blame. Our so-called criticism targets at whether they have impeded democratic development. I think that it is not hard for people to judge as they have really impeded democratic development.

I remember that when we had a debate here last week, Mr Jasper TSANG responded to what the Honourable CHIM Pui-chung said about industrial development in Hong Kong. According to Mr CHIM, Hong Kong does not have the conditions that Taiwan has for developing industries. Mr TSANG was speaking plausibly in a majestic tone as Chairman of the DAB. He struck the table and asked why we could not do what Taiwan could. Why could we not achieve what others could? Today, we ask Mr TSANG, Mr Gary CHENG and our friends from the DAB in the same manner, why can foreigners and many advanced countries do so while we cannot? Is Hong Kong more backward or foolish or do Hong Kong people lack this ability? Why do we have to be inferior people who are not able to achieve democracy? I hope that Mr Jasper TSANG or Mr Gary CHENG will respond to this later.

In fact, many points presented in our debate today are repetitions of the arguments made in the early '80s. Regrettably, there has been no progress at all and the points made by many Honourable Members are not in any way better than those made then. If for a decade or so, they have studied social development, learnt from foreign experience, got to know more about democracy, and gave up protecting the interests of their inner circle (borrowing from Miss Emily LAU) in an open-minded way, they can easily see the advantages of democracy. Actually, they opposed direct elections in 1988 for the same reasons, and they asked why only the question of direct elections in 1988 was discussed but not the relationship between the executive and the legislature. When we debated the relationship between the executive and legislature, they asked how it would dovetail with the Basic Law. These were empty talks as the draft had been finalized.

The turnout rate was more than 50%, a high rate of participation by Hong Kong people in the last election. Many Hong Kong people support pacing up the progress of democratic development while some people do not agree as just mentioned by Mr Gary CHENG. We must not forget that they opposed in the '80s because Hong Kong people were apolitical and the turnout rate was only 20% to 30% then. Now that there is a higher than 50% turnout rate, Mr CHENG still says that some people do not agree to pacing up the progress.

As regards conducting a referendum, we all know that many countries in the world often use a constitutional method and give people different choices after discussions. What is wrong with that? These are actually excuses for deferring democratic development.

Lastly, Madam President, I only wish that the DAB, Mr Jasper TSANG or Mr Gary CHENG will answer my questions. Do they support in principle full direct elections in 2000? Secondly, will they fight for public acceptance of this pace of democraticization and strive to make the Central Government support amendments to the Basic Law?

PRESIDENT (in Cantonese): Mr HO, time is up. Please sit down. Dr Philip WONG.

DR PHILIP WONG (in Cantonese): Madam President, I do not think that I will lose out to those democrats among Honourable colleagues in pursuing democracy which should be pursued by all Hong Kong people. However, having listened to the debate taken part by so many Honourable colleagues, it seems to me that nobody has touched upon a crucial question. If there are full direct elections in Hong Kong, will foreign power penetrates into our political structure and put the ideal of "Hong Kong people ruling Hong Kong" at risk? I believe that Hong Kong people will certainly agree that this is a crucial question. Now that we are opposed to the interference by the Central Government with the operation of the Special Administrative Region Government, we have stronger reasons to oppose the interference by economically powerful countries other than the Central Government with the operation of the Government. Therefore, I will base my support or otherwise on whether direct election will allow foreigners to penetrate into our political structure regardless of whether direct elections will be realized in the year 2007 or at any other time. Thank you.

PRESIDENT (in Cantonese): Miss Cyd HO.

MISS CYD HO (in Cantonese): Thank you, Madam President. I would like to say something immediately in response to the worries of Dr Philip WONG. He fears that after full direct elections have been put in place, foreign forces will penetrate into our political structure. If he has such a fear, then full direct elections should be put in place earlier as we have a 6.3 million population, how can the popular support of so many people be bought at one go? On the contrary, forces outside Hong Kong will easily penetrate a small group election.

A lot of words have been distorted in Hong Kong, the most seriously distorted word being "democracy". A voting process taken part by 200 people can be called an election (excuse me, the Honourable Bernard CHAN), similarly so for 400 people or 800 people and one taken part by 1.37 million people in New Territories East can also be called an election. However, there is an objective definition of democratic election. According to the International Covenant on Human Rights, it refers to the participation by the general public in public policy making through regular elections under a popular and fair electoral system. Our motherland is going to accede to this Covenant and this definition is not fabricated by me. Therefore, I urge Honourable Members to stop saying that representativeness has been distorted.

I am very astonished to hear Mr Gary CHENG, a directly elected Member who has got many votes (at least 24% of the votes in Hong Kong Island East), say today that "conducting a referendum is taking a part for the whole". How can he regard the votes as taking a part for the whole after he has got the votes himself? Is he kicking down the ladder?

Madam President, full direct elections must be implemented in Hong Kong as soon as possible but different democrats in Hong Kong define democracy differently, and the major difference lies in the "timetable" and "the electorate base". Many people say that democracy must follow gradual and orderly progress. I have to say that the real meaning behind "gradual and orderly progress" is that Hong Kong is denied democracy now. If people support making gradual and orderly progress until the review in 2007, they in fact support having no democracy in Hong Kong until 2007. In fact, we cannot distinguish between democratic spirits yesterday, today and tomorrow. As I just said, there is an objective criterion for democracy and gradual and orderly progress is only applicable to those who have power today. As they have to let go of their power and share their power with the general public, they have to make psychological adjustments in a gradual and orderly way and they really have to adjust slowly. Some other people say that if people do not understand the relationship between the executive and legislature, they should not talk about full direct elections before they have clarified the relationship. This is reversing cause and result, and if people do not clearly understand the relationship between the executive and legislature today, as Mr Gary CHENG has put it, the Government has the responsibility of pushing the work forward. Honourable Members should not forget that people bearing the standard of "democracy" in this Chamber have the responsibility of pushing the work forward instead of putting forward a difficult problem, when we discuss about full direct elections today, that people should not ask for full direct elections as they do not understand. As we call ourselves democrats, we should help push the work forward instead of erecting many hurdles once we touch upon the issue of full direct elections.

I am grateful to Mr Ronald ARCULLI for making many brilliant points. Apart from the relationship between the executive and legislature, he has also discussed the ministerial system, presidential system, Rules of Procedure and power of the Legislative Council. But I think that had this motion today not been proposed by an elected Member, Mr ARCULLI would not have made such brilliant points.

I support the Honourable Christine LOH's amendment, urging the Government to set up a constitutional convention to extensively collect public opinions in a fair and open manner. However, I hope that the Government will sincerely push this forward instead of saying that it has to wait until 2007. Likewise, people who call themselves democrats should also set this demand on themselves.

We have to make preparations for democracy and we should not allow ourselves to become a hurdle. I wish to tell the Government that it cannot impede some events, and amending the Basic Law is a pressing task. Recently, as the executive and legislature have given different interpretations to the provisions of the Basic Law, problems with the Rules of Procedure of the Legislative Council have arisen. We cannot evade this and we have better look squarely at this problem and conduct discussions immediately. I would like to tell those who oppose amending the Basic Law that legislation has to be amended in step with the changes in our society to meet social needs. If we think that something is wrong, do we have to choose and stick to something wrong? We should rectify it instead.

Madam President, I have mixed feelings today. In 1994, the motion on full direct elections was not approved as the votes against the motion outnumbered those for the motion by one. However, the former Meeting Point members and I will vote in support of full direct elections today. Nevertheless, I am very unhappy today as I see a group of people waving the flag of "democracy" voting against a motion specifying a timetable. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Gary CHENG, a point of order?

MR GARY CHENG (in Cantonese): I wish to elucidate.

PRESIDENT (in Cantonese): Fine, please go on.

MR GARY CHENG (in Cantonese): The Honourable Miss Cyd HO just mentioned my attitude towards referendum, I have to say explicitly that from the time of the election till now, I have not indicated that I agree to holding a referendum.

PRESIDENT (in Cantonese): Mr LEUNG Yiu-chung.

MR LEUNG YIU-CHUNG (in Cantonese): Madam President, many Honourable Members have just said that it would be too fast if the next Legislative Council has to be returned by full direct elections and the Chief Executive of the Special Administrative Region has to be directly elected in 2002. The major reason is that this is a really great change and wide-ranging problems are involved. According to them, it will be very risky to do so before detailed consultation, discussion and preparation have been made. Madam President, I would like to point out that many people fought for full direct elections in 1988 and some people said at that time that the adoption of direct elections involved material changes and the issue had to be discussed in an unhurried manner. However, we have been discussing the issue for 10 years and 10 years have passed since then, how long will the discussions last? What tempo will not be considered as fast?

We need only make reference to history to find that we did not ask for direction elections in 1988 only. I clearly recall that during the Sino-British negotiations, Dr S Y CHUNG said "Hong Kong must have democracy if it wants a promising future". In other words, we have started discussing about democracy a decade or two ago. It is a pity that many Members have not looked squarely at this fact, and they have probably turned a blind eye to the fact that people began to discuss about democracy long ago. We should not say that other people have not discussed about the issue as we ourselves have not discussed it or that other people do not agree as we ourselves do not agree. We are not facing the problems that really exist in a practical way if we do so.

I would like to ask a question. If it is too early for us to discuss about full direct elections in 2000 and direct election of the Chief Executive in 2002, would Members tell me what tempo is not fast and what is the opportune time for full direct elections? A few Members have just said that we can refer to the Basic Law for the best timing as it has been clearly set out in the Basic Law. But how was the Basic Law formulated? What are the objectives of the formulation of the Basic Law? I think that many Honourable colleagues here know that the Basic Law was formulated as a tool for the Central Government to control public opinions in Hong Kong, our political system development and the whole process of democratic development. If they say that we need to use the Basic Law as the basis, they are only being submissive and using this as an excuse as they really do not want to give up this system under which some people have vested interests. It will only safeguard the interests of a small group of people.

Why are we fearful of full direct elections? How does it resemble scourges that jeopardise the whole community? Why are we so frightened at the mention of the words "direct elections"? In 1995, 20 seats of the Legislative Council were directly elected from nine functional constituencies in disguised form. From 1995 to 1997, had the Hong Kong Government been thrown into confusion or the social conditions been terrifying? In fact, Madam President, I believe that Members have witnessed and many people agree that public opinions were reflected by some Members of this Council at that time. As compared with the situation in Hong Kong in 1997-98 from the establishment of the Provisional Legislative Council till now, there was less social upheaval, social discontent and people were less restless at that time. I do not think that increasing the number of directly elected seats will be terrifying or cause social upheaval or jeopardise our society.

Viewing this from an opposite angle, if there was no democracy from 1995 to 1997, the problem of people's livelihood could hardly be solved. It is not tenable for us to say that "democracy comes after people's livelihood". Is any government like that? What facts have convinced Members that it should be so? It is best for us to consider the facts.

Madam President, when we asked government officials questions concerning the airport a few days ago, what did you see? Did you see government officials just looking at one another and none of them answered? Why could they not face the problem, step forward and admit their mistakes? They should not just say that the situation was so bad for we were in bad luck. How could they act like that? Madam President, the principal reason is that there is no system under which the Government has to be accountable. As the Chief Executive is not elected by Hong Kong people, he does not have to be accountable to the public. With the Chief Executive having been elected by a small group of people, in what areas does he have to be fully accountable to the general public? Under the existing electoral system, I wonder how we can drive the Government to be accountable to the public.

Madam President, I would like to ask Honourable colleagues representing the functional constituencies this question, do they wholeheartedly and sincerely wish to serve their voters? If that is true, why can they not aim higher, take part in popular elections and serve even more people? As they say that they will wholeheartedly and sincerely serve their voters, why are they only serving a small group of people? Madam President, in my opinion, if we really care about the interests of Hong Kong people, we should not force our views upon them but we have to get a clear idea that everyone wants Members of this Council to be more representative. Therefore, I hope that Members will free themselves from worries and stop clinging to this system under which some people have vested interests.

In addition, I think that the arguments for the amendments proposed by Mr Gary CHENG and Miss Christine LOH are superficially high-sounding but such a government-led consultation mechanism is actually only a tool used by those in power to juggle with the popular will. If Members are not forgetful, as pointed out by many Members just now, when we discussed about direct elections in 1988, the Government superficially said that it had to collect people's views but it finally only distorted the popular will to protect the secret agreement between China and Britain. Therefore, I do not think that we can depend on such a mechanism. Unless a referendum is conducted on the issue, any so-called mechanism of public consultation will only be a tool used by the Government, especially those in power, to stifle public opinions.

Madam President, I so submit in support of the original motion.

PRESIDENT (in Cantonese): Mr Ambrose CHEUNG.

MR AMBROSE CHEUNG (in Cantonese): Madam President, I wish to talk about the following: first, democracy and direct elections; second, amendments to the Basic Law; third, timetable and consultation; fourth, my response to the speeches made by Members in the meeting.

First, about democracy and direct elections. I believe all of us can see that there was a very strong public aspiration for democracy in the last Legislative Council election. I support direct elections and their implementation as soon as possible.

Second, about the Basic Law. In fact, I hope in this debate today there will be more Members to speak on amending the Basic Law to carry out direct elections. Some Members have already touched on direct elections but most Members are evading the issue. As we all know, under the Basic Law Hong Kong is practising a system of a very limited form of the separation of powers but each branch is subject to checks and balances. It is a system in which the executive is responsible to the legislature, in other words, it is an executive-led system. Under such circumstances, it is difficult for any big party in the Legislative Council to get a majority. In the future Legislative Council formed by direct elections, if a party manages to get a majority, the same group will elect the Chief Executive, then what will the constitutional model be like? How will the executive and the government go about to operate? I think we can be more active in this issue, that is, if any group wishes to propose direct elections, then it should also state its version of governance, its version of constitutional structure and its version of a legislature-led system, so that the public can vote on the issue of whether or not they will support direct elections after they have understood these systems. When after the public is given more information on these constitutional systems as time goes by, the authorities may carry out a consultation exercise. Such kind of consultation at a later stage would be more reliable and the public will understand the implications behind the debate on the various forms of election.

I also want to talk about the timetable. I do not object to holding direct elections in the year 2000. My only reservation is that whether this can be done. I am aware that it is an immense and very complicated constitutional procedure to amend the Basic Law. I am more inclined to observing the whole process (the entire discussion on the constitutional convention as Miss Christine LOH has said), and to formulate a more rational and practical timetable after that discussion is over. Today some people have proposed the year 2000, some proposed 2002, I have reservations on all of these dates because I hope a timetable can be formulated after the entire discussion is over.

I also wish to respond to some views expressed by some Members. It is my first time to be elected to the Legislative Council, and so I can be said to be a "novice" here. I heard a few terms, the first is "representativeness" and the second is "small circle". As for the question of whether there is representativeness or not, my opinion is, even if only one person is represented, he has a certain degree of representativeness. My representativeness is that of one person. To be more straightforward, there are different kinds of representativeness. I was returned through the Urban Council. The 32 Members who were returned by direct elections had the support of 100 000 to 110 000 voters behind their back. And the nine Members who were returned through the district boards were also directly elected. But does that mean that I am not representative enough? I do not think so. There is only a difference as to how we represent. One more example. If we take a plane, there are three kinds of seats: first class, business class and economy class. If we talk about human rights and equality, how would a first class passenger feel towards an economy class passenger? Will he consider the other passenger as his equal or will he reject him as an inferior? Those in the first class can be called the small circle for they are small in number, and there are many people in the economy class and they are the ordinary people. So what does that imply? They are all passengers who have the right to board a plane for they have all paid their fares, so they are equal. It is all right if you classify Members according to how they represent, for some are returned by direct elections and some are from different functional constituencies. But it would not be correct if you say that certain people are not representative. People may have different opinions on this.

After the Legislative Council election was over, I talked with some members of the public. I got a message, and that was, out of the 6 million people of Hong Kong, I heard no one single voice saying that apart from the 20 directly elected Members, those other 40 Members were all unsatisfactory or unacceptable. A strong message I got was: the people of Hong Kong would very much like to see all the 60 Members work together in the Council for the good of the people ─ the six parties, the Frontier and the group all joining hands. We have a beginning. The Council is open and ready for work. And the expectation of the people is that Members will work together as one. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Jasper TSANG.

MR JASPER TSANG (in Cantonese): Madam President, I wish to tell the Honourable LEUNG Yiu-chung with my own experience that I am not afraid of direct elections as if they were scourges. But on the other hand, I notice that when Mr LEUNG Yiu-chung ran for the 1995 election, he chose the functional constituency although at that time there were already 20 directly elected seats from geographical constituencies. And it can be seen at that time he did not possess the kind of enthusiasm for direct elections, without the boldness and forthrightness he called upon our colleagues to support direct elections just now.

Geographical constituencies for the last Legislative Council election have been enlarged, and I trust that Mr LEUNG would feel happy about it because he would have more voters to serve. But it is unfortunate that he is not enthusiastic enough to switch to a new constituency and serve the voters there.

Just now Dr the Honourable YEUNG Sum used the expression "having the powers but not the strings tied to them" to describe Members of the Executive Council. This is in no way a new term, for the same expression was used to describe Members of the Legislative Council, and those Members were not officially appointed Members but Members elected in 1995. I have with me some newspaper clippings from the Express, Ming Pao and the Hong Kong Economic Journal in October 1995. These are not "pro-China" newspapers, and the following expressions are found in the articles: Members returned by popular elections (expressly referring to Members returned by popular elections and direct elections) were using government funds to buy personal favours, the rise of welfarism, Legislative Council Members exerting pressure on the Government but in fact trying to please voters and so failed to solve the economic problems at that time.

In the last Legislative Council election, there were quite some media criticisms on the calibre of the candidates. Such criticisms were not directed against the so-called "small circle" candidates but against the candidates of geographical constituencies. Even the elected Members were criticized of being mediocre. Has not the slightest improvement ever been made since then? Yes, we have. We have made a great deal of improvement. In this past period of time since 1991, we have experienced a number of elections, and there have been definitely a lot of improvements both in the way the media and the public looked at these elections.

A moment ago Miss Margaret NG said that since the number of seats to be returned by direct elections was relatively small, so the voters would tend to vote for those more outspoken candidates and would rather not base their decisions on the actual platforms and views of the candidates. When direct elections actually take place, the voters will pay more attention to the stances and platforms of the candidates, for the voters would realize that they are not voting for the opposition. Why? Why do voters not vote for the opposition when all the 60 seats in the Legislative Council are to be returned by direct elections? I guess, if I am wrong, then Miss Margaret NG please correct me on this, she thinks that with this transformation ......

PRESIDENT (in Cantonese): Do you wish to make an elucidation?

MISS MARGARET NG (in Cantonese): Yes, I wish to make an elucidation in order not to waste Mr TSANG's time.

Maybe I have not made myself clear in my speech. I did not say that when there were direct elections for the Legislative Council, the public would not vote for the opposition. They would still vote for the opposition. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr TSANG, please continue.

MR JASPER TSANG (in Cantonese): Thank you, Madam President. But I am still not very clear on this, maybe I shall ask Miss NG about that later.

As far as I heard, I feel that when universal suffrage takes place, there will be other constitutional changes as well. If the existing functions of the Legislative Council remain, and if the relationship between the Legislative Council and the executive authorities remains unchanged, then the worries about the opposition would still remain, no matter how many Members are returned through universal suffrage. So the Democratic Alliance for the Betterment of Hong Kong (DAB) does not think that the people of Hong Kong are not prepared for universal suffrage. Although the Democratic Party thinks that the DAB is of the view that the Hong Kong people are very backward, foolish, second-class and inferior, the DAB thinks that the Hong Kong people are very advanced, smart and prudent. They are prepared to take part in a universal suffrage and are prepared to decide when they are going to have one. They are well-prepared to elect more and more Members through direct elections and to study the kinds of constitutional changes that should come along when there is an increasing number of Members returned through universal suffrage. They are also very smart and know what questions should be given the priority at what time for solution. They are in no way foolish and second-class. They are not so ignorant as to know only that Hong Kong should follow the system which a certain foreign country is using. We respect very much and have confidence in the choice of the Hong Kong people. Therefore we cannot accept what the Honourable Albert HO has just said, that is, to set the time for universal suffrage first before trying to get the approval from the people. Why do we not listen to what the public have to say? Since we have confidence in the people of Hong Kong and think that they are well-prepared and intelligent, then why do we not conduct an in-depth and comprehensive consultation?

I fail to see why Miss Christine LOH has to introduce an amendment, for since it has been determined that the Chief Executive and Members of the Legislative Council are to be elected by universal suffrage in 2000, and according to the speeches of colleagues from the Democratic Party, it looks as if everything is settled, then why is there a need to set up a constitutional convention? What kind of issues does she want to discuss? She also asked about the necessary percentage of people agreeing before something is deemed as agreed. This seems to be a true or false question. All we need to decide is whether there will be a universal suffrage in 2000, and what is the percentage of people agreeing to this. Then we shall put this into practice.

I would also like to respond to some remarks made by Miss Emily LAU. We have never changed our views. If the constitutional convention can really discuss things in an in-depth and thorough manner, then it is an excellent way to bring out different kinds of opinions and to enable the public to make a choice. So I indicated my support for it on 29 May. This is a very important form in the amendment by Mr Gary CHENG.

I have more or less replied to the questions raised by Honourable colleagues. From what I have said just now, it is clear that though we may dispute over a lot of issues, the only way is to support Mr CHENG's amendment. Thank you.

PRESIDENT (in Cantonese): Mr SZETO Wah.

MR SZETO WAH (in Cantonese): Madam President, just now Mr Gary CHENG quoted the remark of a certain political commentator which runs like this: a low turnout rate signifies a passive discontent on the part of the people against the Government; a high turnout rate signifies an active discontent against the Government. Why did he have to quote such a remark? Does he want to show his appreciation and recognition for it? Does he think that this is a reactionary remark? For no matter what the turnout rate is, and be it active or passive, it is still an expression of discontent. Of course the Government does not like to see any discontent among the people, then the best way is to do away with elections. When there is no election, there will be no discontent among the people.

In all the kinds of elections we have, only direct elections place an emphasis on the turnout rate, and only it can truly be regarded as elections. It is in direct elections that we find the kind of active or passive discontent that this political commentator talked about. It is impossible to do away with direct elections, and when this cannot be done, they have to be restrained. To do away with direct elections is to do away with discontent; and to impose restraint on direct elections is to restrain discontent, making direct elections a kind of specimen windowdressing.

The amendment introduced by Mr CHENG on behalf of the Democratic Alliance for the Betterment of Hong Kong (DAB) is to restrain direct elections by means of procrastination. Any remark made by a political commentator bears no significance because the remark would only have a transitory effect, but if it comes from the mouth of a leader of a political party, it should be condemned.

The most comprehensive, extensive and impartial opinion survey and consultation is a referendum. Will the DAB dare to meet this challenge and agree to a referendum? A moment ago the Honourable Jasper TSANG said that the people of Hong Kong were sophisticated and smart, they knew when and how to hold direct elections. If this is the case, then why did Mr CHENG say that they had always been against decision by referendum? If they are against decision by referendum, does it mean that they think that the people are not that intelligent and sophisticated?

Dr the Honourable Philip WONG said that once direct elections were introduced, foreign influence would seep into Hong Kong. What a scary remark to make. In fact, those candidates who run in direct elections are not allowed to hold foreign passports or have right of abode in a foreign country. This is a small trick put in place to prevent foreign influence from seeping into Hong Kong. I have no idea whether those who were once citizens of foreign countries or whose children are still foreign citizens can be considered as keeping some sort of links with foreign countries, or exercising a certain kind of foreign influence. I believe the first step to keep foreign influence out of Hong Kong is to amend the Basic Law so that this Council can no longer have 12 Members who possess foreign passports or right of abode.

Lastly, I do not think one person can say that he is representative because he is representing one person. A person who represents himself does not have any representativeness at all. When we sometimes say we are representing ourselves, this is really a perfunctory remark to make. For who else are we representing but ourselves? So I cannot agree to the statement that one person can have representativeness.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): Madam President, in the speeches made by Members just now, one of the reasons put forward against democracy, as the Honourable NG Leung-sing has put it, is to put aside all disputes and work out some solutions for the economy. I think this remark is an insult to the wisdom of the Hong Kong people, telling them that they need not care about democracy and all they need to do is to make the economy robust again. However, the people of Hong Kong has learned a good lesson from the new airport fiasco. I think the people of Hong Kong all want to know who made the decision to open the airport on 6 July.

Mr CHUNG Sze-yuen said that we should not try to find out who should be held responsible for the airport fiasco, and all we should do was to remedy the situation at once. This is tantamount to saying that we should forget about talking democracy and only talk about economic issues. It will only cause confusion, as simple as that. If we want to discuss economic issues, the ultimate question we have to ask is how to restore people's confidence in the economic system. The biggest economic problem we face now is that the people of Hong Kong have lost their confidence in the SAR Government. The loss of confidence is a big economic problem. How are we going to restore lost confidence? The answer lies in democratic elections. Such elections will make the people feel that they are part of the Government and they can take part in monitoring the Government and electing their representatives. The people will know that they help to form the Government through elections and the Government ought to be responsive to public opinion. It will not act like the present Government which is like hiding inside a room and failing to see the real situation outside and insensitive to the upsurge of public outrage, or like hiding in an ivory tower and failing to see the storm of anger in the people. Anger in itself poses a serious obstacle to economic recovery. I hope my friends who know anything about economic theories will pause a little while and think, if we want to see a unified society, democracy is a very important political institution to achieve such unity.

The second kind of argument is a tendency to invoke the Basic Law indiscriminately, saying that it is terribly difficult to amend. That is like looking at the Basic Law as if it is a kind of magic spell which, when chanted, will put democracy in Hong Kong in chains and fetters. Those who say such things, as the Honourable Albert HO said, have made little advancement and remained very much their old self.

The motion debate makes me feel very pessimistic about elections in 2007. If there are no direct elections come 2007, then the 60 Members in the Council will hold a debate again to discuss whether there will be elections in future and whether there will be democracy. I think the remarks made on that day will be quite similar to those made today. For at that time some people will stand up and say that the people of Hong Kong are still unprepared for democracy and an extensive consultation exercise is needed. When the consultation exercise is over, some people will raise objections while some will agree. In the end, they will say no consensus has been reached.

It does not really matter whether we talk about the year 2007 or now. The real question is about the conflict between small circle elections and big circle universal suffrage. We are now bargaining with the tiger for its skin, as it were, for we want those with vested interests to lay their interests aside. We want them to lay aside their right to board the first class compartment. Just now the Honourable Ambrose CHEUNG made a comparison with travelling by an aeroplane. Now we have a lot of people flying first class, but they do not board the plane by an election by the people, but by "one dollar one vote". All you need is money to fly first class. This is a shortcut, to fly first class without going through elections. This is "one dollar one vote". This is how it is like. We now demand those in the first class ......

PRESIDENT(in Cantonese): Mr LEE, is your the expression "one dollar one vote" referring to acts of any Member in this Council?

MR LEE CHEUK-YAN (in Cantonese): I am not referring to any Member in this Council, this is only an analogy. I was saying that we were elected by "one person, one vote", but in some circumstances, those with billions could win in small circles. This is what I meant by "one dollar one vote". I did not mean that bribery was involved.

I think the question is: there are far too many first class seats, we now ask those in the first class to return to the economy class, put aside their vested interests and let the people hold an election again. Can this be called bargaining with the tiger for its skin?

Just now Mr CHIM Pui-chung said he would definitely object to the original motion on behalf of the sector he was representing. How explicit was it a statement saying that he and his sector are unwilling to put aside their vested interests.

Lastly, may I remind Members that there is only a thin line between fame and notoriety down the ages. When President Mandela of South Africa was awarded the Nobel prize for peace, the co-winner of the prize was the last white President of South Africa. I was furious at that time and I queried why this man could have been awarded the Nobel prize for peace. But then I pondered, if in 2007, our 10 friends from the functional constituencies would vote for universal suffrage and put aside their vested interests, I think each one of them would deserve a Nobel prize. For they choose self-annihilation and forsake their powers. If each one of us cherish an ideal to really serve the people, then we are bound to confront the ultimate question of choosing fame or notoriety down the ages. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Andrew WONG.

MR ANDREW WONG (in Cantonese): Madam President, just now I have listened to some impassioned speeches made by a party leader and a party whip, I cannot help but recalling your flattery on me. Somehow it appears that I might need to think it over again, and I begin to doubt whether I am that eloquent or persuasive with my speeches.

In fact I conducted a training session with officers of the Immigration Department yesterday. I talked for two and a half hours on this particular topic and I can also talk for two and a half hours here but obviously I cannot do so because this would certainly be out of order. But indeed I wish to talk for two and a half hours.

(Other Members present were talking among themselves)

PRESIDENT (in Cantonese): Please keep quiet when a Member is speaking. Mr WONG, please continue.

MR ANDREW WONG (in Cantonese): I admire the courage of the Honourable Andrew CHENG, but I am not that appreciative of his style. He should have come out like a plaintive proponent in the same way during the debate on 29 June about the election of the President, knowing clearly that public opinion was on his side but nevertheless moved his motion as if he was destined to lose. That would be a more correct attitude.

Clearly, we see that those who oppose this motion are the Members from the Democratic Alliance for the Betterment of Hong Kong (DAB). In all the constituencies, there are four Members who will support his motion against one Member from the DAB. This is the situation in New Territories West, New Territories East, Kowloon East, and Kowloon West. In Hong Kong Island it is three against one. In the 20 seats available, there are only five seats supporting the motion, that is a 25% support. A comprehensive consultation can be carried out. Of course, the idea of a consultation is definitely correct, but it misses one important point (although I do not quite like the contents of this motion, being not completely in agreement with it, at least it affirms one point), and that is, the need for a fixed timetable. If we could agree on that, the situation might come out quite differently.

Just now Mr Andrew CHENG mentioned many historical issues. The Honourable Ambrose LAU also mentioned the history of foreign countries. So I also wish to talk a little bit on history. I would like to remind Members that Hong Kong has a long history of elections. In 1881 Hong Kong set up a Sanitary Board and the Board held its first election in 1888. Please note that it was in 1888, not 1998. In 1935, the Sanitary Board became the Urban Council. It was dissolved in 1941 during the Japanese Occupation and was not resumed at the time of the Victory in 1945. In 1952, direct elections resumed, and all elections were on a direct basis, hence the general misconception that direct elections began in Hong Kong only in 1952. But actually it was in 1888 that elections were first held here. In 1981 the White Paper on District Administration in Hong Kong was published. In 1982, popular and equal district board elections were held. In 1983, the Urban Council elections were held in a similar popular and equal fashion. If we use wine brewing as an analogy, 1982 is the best year (laughter). If a popular and equal election started to brew since 1982, the wine now is a vintage. If it is left for two more years till 2000, it will even be better. I believe this is totally true and justified.

I do not like this motion, for I think many other Members have made very sensible remarks as well, for example, Mr Ronald ARCULLI and Dr LEONG Che-hung. And Mr Gary CHENG spoke on other related institutional issues, especially on how the ministerial system was going to fit in with things. I think I can support returning the Chief Executive by direct election in 2002, but it will become an American presidential system if the matching institutions do not fit in beforehand. I do not tend to support this kind of system. For this reason, I can support this motion as well as Miss Christine LOH's amendment, that is, to set up a constitutional convention so that we can sit down and discuss the details.

If the constitutional convention considers that it is too hasty to introduce direct elections in 2000, then the elections can be held later. If it is thought that circumstances do not allow direct elections to be held in 2000 for all of the 60 seats (because it is not possible to amend the Basic Law, nor can the direct elections be held in 2002 even if the convention put forth such a proposal because the Basic Law cannot be amended. Because even if we agree, no one can propose any amendments if the Chief Executive or the National People's Congress refuses to give assent to them). Nevertheless, we can still reach some sort of consensus, that is, we must democratize our constitutional system as soon as possible. I wish to harp on an old tune of mine.

Come to consider this. If the 30 seats of functional constituencies cannot be returned through direct elections, can we change the system into five functional constituencies each with six seats, that is, six seats for the industrial sector, six for the commercial sector, six for the cultural and educational sector, six for the labour sector, and six for the personal and social services sector. Then candidates from these sectors can run in the elections, and the right to vote will be given to the people. In so doing, then in the year 2000, 54 seats (because 24 seats will be returned through direct elections in geographical constituencies) out of the 60 seats will be returned through popular and equal elections. You can discuss this proposal as well. However, it is most unfortunate that we are using a stonewalling tactic, putting everything to consultation among Members and the public. This will pose a lot of obstacles.

Please do not forget that in 1989 ( I must remind you that it was not after the 4 June Incident but in 24 May), the Unofficial Members of the Executive and Legislative Councils reached a consensus. A proposal coming out of this consensus specified that one third of the seats would be returned through direct elections in 1991, and this would be advanced to half of the seats in 1995, two thirds in 1999 and finally, fully returned by direct elections in 2003. A timetable was fixed in this way. But unfortunately this timetable was brushed aside when the Basic Law was promulgated in 1990. A make-do timetable was to conduct a review and ultimately to implement universal suffrage in 2003 and 2007 respectively, but this is already far too distant into the future.

I hope Members, having listened to this account of history, will realize that if a council is not formed by election by the people and if administration is not made by a government supported by that council, that is when the administration is conducted by a small group of people (such a small group is really regarded as a small circle in the eyes of the people), the people will not show any appreciation if the administration is good. They will just think that it is the duty of the government. If the administration is bad, a great disturbance will surely be caused. Some colleagues have earlier referred to the example of Indonesia. This is a good example of administration by a small circle. The ruling party there is referred to as a "syndicate". This kind of administration will cause a lot of problems. Of course, the financial turmoil was not caused entirely by internal factors, but once any kind of economic recession or turmoil sets in, a great disturbance will naturally happen, leading to social instability. Therefore, I support both the motion moved by Mr Andrew CHENG and the amendment by Miss Christine LOH.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Andrew WONG, your time is up. Does any other Member wish to speak?

I now call upon Mr Andrew CHENG to speak on the two amendments. Mr CHENG, you have five minutes.

MR ANDREW CHENG (in Cantonese): Madam President, actually I would very much like to respond to Mr Andrew WONG's remark on my style. But I know I can only present my views on the amendments, so I can only respond to Mr Andrew WONG's remark later.

Madam President, I speak mainly to respond to the amendment introduced by Mr Gary CHENG, for we also support the amendment introduced by Miss Christine LOH.

Madam President, we often hear the Chief Executive, Mr TUNG Chee-hwa, making his favourite remark that the pace of democracy should be gradual and orderly, that it should follow the Basic Law and act by the book. Today, the message given by the Honourable Members of the Democratic Alliance for the Betterment of Hong Kong (DAB) is fully in tune with Mr TUNG Chee-hwa's idea of a gradual and orderly progress. Today, many of the Honourable colleagues used the new airport as an analogy. And so I want to use the new airport and the idea of a gradual and orderly progress to speak on the progress of democracy in Hong Kong and to see whether Mr TUNG's idea is correct.

When most of the Hong Kong people are demanding that the Chief Executive and the Legislative Council be returned by direct elections, our Chief Executive and the Honourable colleagues of the DAB, and most of the conservative colleagues of this Council are all for gradual and orderly progress. They resist the setting up of a democratic mechanism. But when most of the Hong Kong people were having doubts as to whether the new airport could operate as scheduled, the authorities had acted in such a flamboyant way, shattering all the records by relocating the airport within one day. Why could the relocation of the airport not be done in a gradual and orderly manner? On the issue of a democratic political system, the people of Hong Kong have a strong conviction and the decades of opinion surveys have shown that the people strongly hope that the Legislative Council can be formed and the Chief Executive returned by means of the "one man, one vote" method, why then the Government is setting up such a stumbling block?

Colleagues from the DAB mentioned in their speeches that public opinion was still undefined in this respect, and so it is not appropriate to change the political system or the electoral system within two years. In 1991 we adopted the "double-seat double-vote" system; in 1995 we used the "single-seat single-vote" system; and in 1998 we implemented the system of proportional representation. The people of Hong Kong have weathered all kinds of trials and hardships and they will not be daunted by any electoral system. I would like to ask all of you, how many months did it take to enact legislation on proportional representation? Is the legislation not a success as well? Today is 15 July 1998, and there is more than a year to the year 2000. Why is it that public consultation will still have to be conducted when it is said that there was not enough time and it would be difficult to master the election mechanism? Yet the Honourable Jasper TSANG said that the people of Hong Kong were smart. Since the people are smart and intelligent, why can we not use the method of referendum and let the people express their views on the "one man, one vote" method?

There are two words in the amendment proposed by Mr Gary CHENG that strike me as very ear-piercing and bone-chilling. He said we should conduct "a comprehensive and in-depth review of the constitutional structure and to consult the public extensively". The two words in question are "in-depth" and "extensively". Madam President, how can a review be "in-depth" and how can public consultation be done "extensively"? How can the DAB be satisfied? What we in the Democratic Party are worrying is that these two words imply a stonewalling tactic, a make-do proposal and a course of action that will drag the feet of democratizing the political system of Hong Kong.

Madam President, 10 years have passed since the people strove for direct elections in 1988, and it will almost be another 10 years come 2007. Ten years in the past and 10 years in the future, how many 10 years do we have in our lives? A government can affect our lives with every tick of the clock; and every policy of the Hong Kong Government will have a bearing on the future of Hong Kong. Why do we have to wait for 10 more years? Why can we not use the "one man, one vote" method to elect Members of the Legislative Council and the Chief Executive right now?

With these remarks, Madam President, I oppose the amendment.

PRESIDENT (in Cantonese): Secretary for Constitutional Affairs.

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, first of all, I would like to thank Members for expressing their views in various aspects on the motion debate today. I have been listening attentively to the speeches delivered by each Member.

On 24 May, the people of Hong Kong made history again. On the day the first Legislative Council election of the Hong Kong Special Administrative Region (SAR) was held, nearly 1.49 million voters, braving wind and rain, went to cast their votes. As a result, the turnout rate reached as high as 53%, far exceeding the records of all previous elections.

After the election, people from various sectors put forward different explanations for such a high turnout rate. A majority of people considered that this reflected the increasing sense of civil responsibility of the public. Such a view has in fact been clearly reflected in the repeated public opinion surveys conducted by third parties in the wake of the election. However, opinions differed as to whether or not this illustrated the Hong Kong people's aspiration for speeding up the pace of democratization. Also, the Government has reservations towards such a viewpoint. Nevertheless, the Government should in no way be interpreted as identifying with the views that Hong Kong people have no aspiration towards democratization or they are not politically mature.

Coincidentally, both the Honourable Miss Christine LOH and the Honourable Martin LEE mentioned the "Letter to Hong Kong" written by me. I consider it relatively arbitrary for them to make the conclusion that I have some negative views towards democracy. I wonder if they have read my letter. During the recess, I asked Mr Martin LEE if he had read it and he honestly said that he had not. What he read was the newspaper extract only.

The last Legislative Council election is the first important as well as the greatly successful step taken by the SAR in developing our democratic political system in accordance with the Basic Law. Our ultimate goal is clear and precise and that is, we have to fully implement universal suffrage as specified in the Basic Law.

I have to point out in unequivocal terms that Hong Kong has in fact put universal suffrage in place, whereas our laws have already safeguarded the political rights of the public. With the progressive increase in the number of Members elected by universal suffrage, I just could not agree with the accusation that the existing political system of Hong Kong is not democratic. According to the Basic Law, in the second term of the Legislative Council election to be held in 2000 and the third term of the Legislative Council election to be held in 2004, the number of directly-elected seats will be increased, with the ultimate aim that all seats in the Legislative Council will be returned by universal suffrage. Whether there is democracy or not has never been the focus of debate. The focus of debate is rather the speed of achieving full universal suffrage. Just like the question on the debate today, our question is whether we should instantly increase the number of directly-elected seats to 60, and whether the Chief Executive should be elected by one-man-one-vote universal suffrage. In my opinion, in discussing whether we should implement direct elections fully, we should at the same time consider other important issues brought about by speeding up the pace of democratization. Otherwise, our discussion will tend to be one-sided and incomplete. In fact, a few Members have mentioned this point of argument. I will give a more detailed explanation later.

So far, discussions relating to the development of our political system have been focusing too much on the number of directly-elected seats and whether or not we should elect all Members of the Legislative Council and the Chief Executive by universal suffrage immediately. We should understand that democracy is not determined solely by the number of directly-elected seats or the speed of development. Equally important is our consideration of the co-ordination of the whole political system. For instance: How should we deal with the relationship between the executive and the legislature properly? How to sustain the normal operation of the Government? How to transform the demands of the community and the aspirations of the public into proper public policies? In addition, we must take into account our economic and social conditions as well as maintaining the confidence of investors, both locally and overseas, in the future of Hong Kong.

We should first of all take a close look at the blueprint of the future development of the political system of the SAR as outlined by the Basic Law. The number of geographical seats in the Legislative Council will see a gradual increase in the next few years: the number of directly-elected seats will increase from 20 to 24 for the second term in 2000, and 30 for the third term in 2004. Article 68 of the Basic Law has clearly provided that Members of the Legislative Council will ultimately be elected by universal suffrage. Annex II has also clearly specified the formation of the Legislative Council and the procedures for voting on bills and motions in the Legislative Council after 2007. If there is a need to amend the provisions of this Annex, such amendment must be made with the endorsement of a two-thirds majority of all Members of the Legislative Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People's Congress for the record. Therefore, we do have a mechanism and schedule in place.

Article 45 of the Basic Law has also clearly stipulated that the method for selecting the Chief Executive shall be specified "in the light of the actual situation in the Hong Kong Special Administration Region and in accordance with the principle of gradual and orderly progress. The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures". Annex I has also provided for a mechanism by stipulating that if there is a need to amend the method for selecting the Chief Executives for the terms subsequent to the year 2007, such amendments must be made with the endorsement of a two-thirds majority of all Members of the Legislative Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People's Congress for approval.

The original motion today demands that all Members of the Legislative Council and the Chief Executive should be directly elected in the year 2000 and 2002. However, in view of the numerous problem involved, it is indeed impossible to solve all the problems in time. Therefore, the motion can be regarded as unrealistic. Why do I say this? To start with, views towards the original motion differ greatly, both inside and outside this Council, and we are still a long way from reaching a consensus. In addition, discussion on how to deal with the relationship between the executive and the legislature, which has a far-reaching effect, has yet to be commenced, not to mention reaching a consensus that fits the operation of Hong Kong. The second issue is if we assume a consensus can be reached, the Basic Law must be amended prior to implementation and this will involve considerations and discussions in relation to the maintenance of the Basic Law as far as constitutional stability is concerned. The third issue is very practical and that is the Constitutional Affairs Bureau has already embarked on the preparation work in respect of the second Legislative Council election to be held in 2000. Unless a consensus can be reached in respect of these two major issues, it will be impossible for us to put the relevant arrangements into practice.

It is impossible for the development of our political system to rely solely on fighting for direct elections at the expense of other relevant considerations. Let us imagine: If all the seats of the Legislative Council are to be returned by direct elections, it will be highly probable that this Council will, sooner or later, give rise to a majority party, thus posing challenges to the political system, which is executive-led as provided for in the Basic Law. I believe no one can guarantee the majority party, if such a majority party does exist, will always support the motions moved by the Government. If the majority party always raises objection, what impact will it have on the effective operation of the Government? What influence will it exert on the community as a whole? If the Chief Executive, by the same token, is to be directly elected by all people, what should the Government do to deal with the relationship between the Chief Executive and the Legislative Council? Furthermore, other important issues, such as the relationship between the Chief Executive and the civil service system, the system of appointing major government officials, political party politics and so on, necessitate our in-depth study and careful consideration as well as making consequential arrangements afterwards.

Insofar as this issue is concerned, the Constitutional Affairs Bureau is obliged to take up its responsibilities, and we will definitely undertake various relevant analysis and studies. A more obvious starting point is to make reference to the arrangements and experiences of other countries or regions with a view to formulating a political model that fits Hong Kong better. We will definitely study different parliamentary systems and presidential systems. For instance, under the British parliamentary system, the executive organ overlaps with the legislature, and all powers actually concentrate on the majority party in the parliament. This is in obvious contravention of the political system provided for in the Basic Law. As regards the American presidential system, the executive, legislative and judicial powers are separated but the President has no power to dissolve the Congress. If we adopt the same system, we will violate such Basic Law provisions as empowering the Chief Executive to dissolve the Legislative Council. Therefore, we must study carefully by listing the merits and demerits of various systems and, most importantly, make sure if there is any contravention of the provisions of the Basic Law and, if so, whether or not we have the solutions and what the solutions are. As the problems involved are complicated and consideration has to be given to a number of levels, it is expected that the time taken for making the necessary preparations will not be less than the time taken for mapping out any major policies. In other words, the time needed will be relatively long. What we are talking about is in terms of years rather than months. It might take a few years, and consequently it will go far beyond the year 2000 or even 2002.

The stability of the Basic Law, as the most important constitutional document within our legal system, is extremely important. Any countries or places must conduct extensive consultation and repeated discussion on any amendment to the constitution. By the same token, we must make in-depth and detailed consideration in respect of any proposals of amending the Basic Law so as to allow people from various sectors to conduct comprehensive discussion with a view to reaching a consensus. If we easily speak of amending the Basic Law one year after its implementation, it will definitely pose challenges to the stability of the Basic Law. Once the door of amending the Basic Law was opened, it might lead to other demands which have not been adequately debated or which lack extensive support. This will do Hong Kong no good as far as its political stability and economic development are concerned. The amendment of the Basic Law has already been provided for under Article 159 of the Law itself. This illustrates that we can amend the Basic Law. We are not saying that we cannot amend the Law. But we must bear in mind that the goal of amending it is to, just as I have said very clearly, safeguard the stability of this constitutional document.

I must stress again that the Government has never said that it is impossible for the pace of democratization to be speeded up and that the Basic Law is not to be amended. Both Annexes I and II to the Basic Law have provided for a mechanism for electing the Chief Executive and all seats of the Legislative Council by universal suffrage. Article 159 of the Basic Law has also provided for a mechanism for amending the Law. In our opinion, the crux of the problem rather lies in: Is it an opportune moment? Is the whole society fully prepared for it? Has the whole society reached a consensus on such a proposal, which has a far-reaching effect, as to whether or not the Basic Law should be amended?

Such a consensus should cover the model of the whole political system of Hong Kong, including the election of the Chief Executive and the Legislative Council as well as other relevant issues I just mentioned. In respect of the proposal put forward by Mr Gary CHENG, the Government will, in due course, propose feasible options regarding how to achieve the goal of electing all Members of the Legislative Council after conducting an in-depth review of our political system, as well as consulting the public extensively. We hope, through in-depth and comprehensive discussion, people from various sectors of the community can reach a consensus on this important issue and subsequently, in accordance with the mechanism provided for in the Basic Law, decide on the democratic progress after 2007. At the moment, we are unable to provide Members with a timetable as a lot of work has not yet commenced. But as I pointed out earlier, the work is going to be very complicated and the time needed will be relatively long.

As for the amendment moved by Miss Christine LOH regarding the setting up of a constitutional convention to discuss relevant issues, we have not, at this stage, decided on the specific manner of discussing the development of our political system as well as the way to conduct consultation. As far as the constitutional convention is concerned, the information I have gathered is that different countries or regions, such as Australia, South Africa, Scotland and Northern Ireland, adopted different manners in holding such conventions. But constitutional conventions normally need to take a longer time for detailed planning and preparations. Now let us cite Australia alone as an example. Since a certain organization proposed the setting up of the Australian Republic in 1991, the Government has set up committees to study relevant issues and make preparations for a constitutional convention, including setting agenda and debating procedures for the convention, as well as selecting members by means of appointment and election. After years of preparations, the constitutional convention formally convened its meeting early this year, that is, seven years after its first day of preparation. As far as we understand it, the earliest possible time for the constitutional convention, after indicating whether or not it tends to establish the republic, to decide by means of referendum, will be end 1999. And after that, it still needs to undergo the procedure of amending the constitution. From this we can see that any preparatory work relating to the amendment of the constitution, that is to say the process from consultation, tabling to implementation, will require a longer time. It is impossible to finish all the work within a few years. In any case, we will actively study a set of appropriate pattern for public consultation and advice. We will definitely make detailed planning before carrying out all these work in a progressive manner.

In the next few years, we will have more elections, including the district organization election to be held in the coming year, the Legislative Council elections to be held in 2000 and 2004, as well as the second term of the Chief Executive election to be held in 2002. We will keep on promoting civic education, urging more members of the public to register as voters as well as strengthening publicity to encourage more voters to cast their votes, exercise their political rights and familiarize them with the relevant procedures. We hope that, after these few years, the public will have a better understanding of elections and our political system. At the same time, we will have more experience in respect of the operation of the relationship between the executive and the legislature. We will, in due course, be better qualified to decide on how to implement universal suffrage in a comprehensive manner as well as handling such important issues as sorting out the relationship between the executive and legislative organs.

Thus we can see that the Constitutional Affairs Bureau will, in the next few years, have a busy schedule in the scopes of election and development of our political system. Of course, we will endeavour to study and consider various arrangements for dealing with the executive and legislative organs for public discussion. But given the current circumstances, it is unrealistic to expect, just as I said earlier, that a well thought-out package can be put forward before the 2000 election as suggested in the original motion. Lastly, I think all Members will agree with my views that the first Legislative Council election has laid a good foundation for us to develop a democratic political system step by step. This will enable us to, after gaining the consensus of the community, use the quickest way and the shortest time to achieve the ultimate goal of electing the Chief Executive and all Members of the Legislative Council by universal suffrage in accordance with the relevant provisions of the Basic Law.

Today's motion debate is a very good start for discussing these important issues. Just as I said earlier, I have listened to the views expressed by Members very attentively, and I will consider these views seriously. At the same time, the Government will keep on trying its very best to, in accordance with the blueprint of the Basic Law, develop democracy in a resolute manner. Moreover, the Government will encourage the public to actively take part in the various election activities to be held in the coming few years. This will enable the whole community to accumulate experiences so as to make adequate preparations for the discussion to be held in connection with the future political system and to lay a firm foundation for universal suffrage to be held in future.

Thank you, Madam President.

PRESIDENT (in Cantonese): Mr Andrew WONG.

MR ANDREW WONG (in Cantonese): I wish to seek an elucidation in accordance with Rule 39(b) of the Rules of Procedure. The Secretary for Constitutional Affairs just now mentioned the violation of the Basic Law and encroaching the executive-led institution provided for in the Basic Law. Can he tell us where in the Basic Law we can find the word "executive-led"?

PRESIDENT (in Cantonese): Secretary, would you like to elucidate?

SECRETARY FOR CONSTITUTIONAL AFFAIRS (in Cantonese): Madam President, I do not think I need to elucidate this for many people are making the same remarks. (Laughter)

PRESIDENT (in Cantonese): Mr Andrew WONG, do you still have a point of order?

MR ANDREW WONG (in Cantonese): Does he have to say like what other people are saying?

PRESIDENT (in Cantonese): Mr WONG, you sought an elucidation from the Secretary and he has made it. It would be another matter if you do not agree with what he has said.

MR ANDREW WONG (in Cantonese): I wish to seek a further elucidation from the Secretary.

PRESIDENT (in Cantonese): But the Secretary has already done so, I do not think he needs to make a further one.

I now call upon Mr Gary CHENG to move his amendment to the motion.

MR GARY CHENG (in Cantonese): Madam President, I move that Mr Andrew CHENG's motion be amended, as set out on the Agenda.

Mr Gary CHENG moved the following amendment:

"To delete "is of the view that all Members of the Second Legislative Council" and substitute with "urges the Government"; and delete "should be directly elected in the year 2000, and that the Chief Executive for the second term of office should be directly elected in the year 2002" and substitute with "to expeditiously conduct a comprehensive and in-depth review of the constitutional structure and to consult the public extensively, so as to determine whether or not to advance the implementation of direct elections of all Members of the Legislative Council and the Chief Executive"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment moved by Mr Gary CHENG be made to Mr Andrew CHENG's motion.

I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

PRESIDENT (in Cantonese): I think it is more appropriate to proceed to a division. The division bell will ring for three minutes.

(The division bell did not ring)

PRESIDENT (in Cantonese): We have a technical problem here. Would the staff concerned please ring the bell?

MR ANDREW WONG (in Cantonese): Shall we start anew?

PRESIDENT (in Cantonese): We shall not start for the time being. We shall wait for the bell to ring before we start again, because those Members who are not in the Chamber will not be able to know that a division is to be held since they do not hear the bell.

(The division bell rang for three minutes)

PRESIDENT (in Cantonese): Members may now proceed to vote. Please register your presence by pressing the "Present" button and then cast your vote.

PRESIDENT (in Cantonese): Are there any queries? If not, voting shall now stop.

PRESIDENT (in Cantonese): The result will now be displayed.

Functional Constituencies:

Mr Kenneth TING, Mr James TIEN, Dr Raymond HO, Mr Eric LI, Mr LEE Kai-ming, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr Ambrose CHEUNG, Mr CHAN Kwok-keung, Mr CHAN Wing-chan, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr WONG Yung-kan, Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU and Mr Timothy FOK voted for the amendment.

Mr Michael HO, Miss Margaret NG, Mr CHEUNG Man-kwong, Mr HUI Cheung-ching, Mr SIN Chung-kai, Dr Philip WONG, Dr TANG Siu-tong and Mr LAW Chi-kwong voted against the amendment.

Mr Bernard CHAN did not cast his vote.

Geographical Constituencies and Election Committee:

Miss CHAN Yuen-han, Mr Gary CHENG, Mr Jasper TSANG, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam and Mr YEUNG Yiu-chung voted for the amendment.

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Mr LEUNG Yiu-chung, Mr Andrew WONG, Dr YEUNG Sum, Mr LAU Chin-shek, Miss Emily LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr David CHU and Mr Ambrose LAU voted against the amendment.

THE PRESIDENT, Mrs Rita FAN, did not cast her vote.

THE PRESIDENT announced that among Members returned by functional constituencies, 26 were present, 17 were in favour of the amendment and eight against it; while among Members returned by geographical constituencies through direct elections and by the Election Committee, 29 were present, 11 were in favour of the amendment and 17 against it. Since the question was not agreed by a majority vote of each of the two groups of Members present, she therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Now that we have dealt with Mr Gary CHENG's amendment, Miss Christine LOH, you may move your amendment.

MISS CHRISTINE LOH: Madam President, I move that the Honourable Andrew CHENG's motion be amended, as set out on the Agenda.

Miss Christine LOH moved the following amendment:

"To add "; and to this end, this Council urges the Chief Executive to set up forthwith a constitutional convention in which relevant constitutional issues can be discussed expeditiously and in an open and organized manner" after "and that the Chief Executive for the second term of office should be directly elected in the year 2002"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment moved by Miss Christine LOH be made to Mr Andrew CHENG's motion.

I now put the question to you as stated. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT(in Cantonese): Those against please raise their hands.

(Members raised their hands)

MISS CHRISTINE LOH (in Cantonese): Madam President, I wish to claim a division.

PRESIDENT (in Cantonese): Miss Christine LOH has claimed a division. The division bell will ring for three minutes.

PRESIDENT (in Cantonese): Members may now proceed to vote.

PRESIDENT (in Cantonese): Before I declare that the voting shall stop, do Members have any queries? If not, voting shall now stop.

PRESIDENT (in Cantonese): The result will now be displayed.

Functional Constituencies:

Mr Michael HO, Miss Margaret NG, Mr CHEUNG Man-kwong, Mr SIN Chung-kai and Mr LAW Chi-kwong voted for the amendment.

Mr Kenneth TING, Mr James TIEN, Dr Raymond HO, Mr Eric LI, Mr LEE Kai-ming, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr Bernard CHAN, Mr CHAN Wing-chan, Dr LEONG Che-hung, Mrs Sophie LEUNG, Dr Philip WONG, Mr WONG Yung-kan, Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU,

Dr TANG Siu-tong and Mr Timothy FOK voted against the amendment.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Mr Andrew WONG, Dr YEUNG Sum, Mr LAU Chin-shek, Ms Emily LAU, Mr Andrew CHENG and Mr SZETO Wah voted for the amendment.

Miss CHAN Yuen-han, Mr LEUNG Yiu-chung, Mr Gary CHENG, Mr Jasper TSANG, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr David CHU, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam, Mr YEUNG Yiu-chung, Mr Ambrose LAU and Miss CHOY So-yuk voted against the amendment.

THE PRESIDENT, Mrs Rita FAN, did not cast her vote.

THE PRESIDENT announced that among Members returned by functional constituencies, 26 were present, five were in favour of the amendment and 21 against it; while among Members returned by geographical constituencies through direct elections and by the Election Committee, 30 were present, 14 were in favour of the amendment and 15 against it. Since the question was not agreed by a majority vote of each of the two groups of Members present, she therefore declared that the amendment was negatived.

PRESIDENT (in Cantonese): Mr Andrew CHENG, you are now entitled to reply and you have three minutes 40 seconds out of your original 15 minutes.

MR ANDREW CHENG (in Cantonese): Madam President, it is precisely because of the shortage of time that I wish to respond briefly to some of the views expressed by a few of the Honourable colleagues on my motion.

First, about Mr Andrew WONG's remarks on my style, I think it may be due to the fact that we have had more than a dozen debates in the election forums that Mr WONG said just now outside the Chamber that it did not seem like my style that I had read from a prepared speech. This is his view on my reading from a prepared script in moving my motion. Also he said that I should have adopted a "plaintive" attitude, but I think as legislators, we should express our views in a debate in a fair and unbiased manner, while also avoid being too arrogant or humble.

Madam President, in the speeches made in the debate as a whole, Honourable colleagues often said that the economic problem was a very important issue and we had to concentrate our efforts and tackle it. In the face of economic hardship, would there not be a need for the people to choose a democratic system and elect legislators whom they think fit? It is also precisely because we think that the present government is powerless in solving the existing problems that we should overthrow that government in a democratic manner, using the means of a peaceful evolution and relying on a democratic election system, just like any other democratic country.

Also, some Members think that my motion is overly simple and straightforward, failing to probe into complicated issues such as how to amend the Basic Law. That I have moved this motion is meant only to let colleagues make their political stances known and to vote on the motion. When such a simple motion could be made so complicated by us, would it not rack our brains all the more if it was a more complicated one?

Although some Members heard the Honourable NG Leung-sing say the word "principal", I heard him say "My Lord!" (Laughter). He said that when we had sworn to uphold the Basic Law, we should respect and uphold it. I heard the words "My Lord!" I am a Catholic, and when I hold the Bible and say that I would uphold the Basic Law, it would certainly mean that I would do so. But the Basic Law is not the Bible, it is not sacrosanct. Should there be a strong voice in society demanding that certain undemocratic mechanisms in the Basic Law be amended, then as legislators we ought to make that voice of the people heard. Today's debate centres around the issue of whether or not the Basic Law should be amended. The Democratic Party is of the view that the undemocratic mechanisms in the Basic Law should be amended as soon as possible, so that we can use the "one man, one vote" method to elect the Legislative Council Members and the Chief Executive in the years 2000 and 2002.

With these remarks, Madam President, I hope Honourable colleagues can give serious thoughts to it. I also hope that our wish of the Legislative Council taking a giant step forward for the cause of democracy in Hong Kong can be put on record.

Thank you.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr Andrew CHENG, as set out on the Agenda, be approved. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

PRESIDENT (in Cantonese): Does any Member wish to claim a division?

MR ANDREW CHENG (in Cantonese): Madam President, I wish to claim a division.

PRESIDENT (in Cantonese): Mr Andrew CHENG has claimed a division. The division bell will ring for three minutes.

PRESIDENT (in Cantonese): Members may now proceed to vote.

PRESIDENT (in Cantonese): Before I declare that the voting shall stop, Members may wish to check their votes. Are there any queries? If not, voting shall now stop.

PRESIDENT (in Cantonese): The result will now be displayed.

Functional Constituencies:

Mr Michael HO, Miss Margaret NG, Mr CHEUNG Man-kwong, Mr SIN Chung-kai and Mr LAW Chi-kwong voted for the motion.

Mr Kenneth TING, Mr James TIEN, Dr Raymond HO, Mr Eric LI, Mr LEE Kai-ming, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr Ambrose CHEUNG, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr CHAN Wing-chan, Dr LEONG Che-hung, Mrs Sophie LEUNG, Dr Philip WONG, Mr WONG Yung-kan, Mr Howard YOUNG, Mr LAU Wong-fat, Mrs Miriam LAU, Dr TANG Siu-tong and Mr Timothy FOK voted against the motion.

Geographical Constituencies and Election Committee:

Miss CHAN Yuen-han, Mr Gary CHENG, Mr Jasper TSANG, Mr LAU Kong-wah, Mr TAM Yiu-chung, Mr David CHU, Mr HO Sai-chu, Mr NG Leung-sing, Prof NG Ching-fai, Mr MA Fung-kwok, Mr CHAN Kam-lam, Mr YEUNG Yiu-chung, Mr Ambrose LAU and Miss CHOY So-yuk voted against the motion.　

THE PRESIDENT, Mrs Rita FAN, did not cast her vote.

PRESIDENT (in Cantonese): Are there any queries? Mr LEE Cheuk-yan.

MR LEE CHEUK-YAN (in Cantonese): Madam President, the result of the division for Geographical Constituencies and Election Committee shows that the motion should not be negatived. It has been approved in one group and not in another.

PRESIDENT (in Cantonese): Mr LEE Cheuk-yan, the situation is quite different. The Rules of Procedure provides that the passage of a motion shall require a majority vote of the Members present. Among Members returned by geographical constituencies through direct elections and by the Election Committee, 30 were present, 15 were in favour of the motion, so there was not a majority vote in favour of the motion. Are there any other queries? If not, the result will now be declared.

THE PRESIDENT announced that among Members returned by functional constituencies, 25 were present, five were in favour of the motion and 20 against it; while among Members returned by geographical constituencies through direct elections and by the Election Committee, 30 were present, 15 were in favour of the motion and 14 against it. Since the question was not agreed by a majority vote of each of the two groups of Members present, she therefore declared that the motion was negatived.

PRESIDENT (in Cantonese): Second motion: Rescuing the service industry. The Honourable Miss CHOY So-yuk.

RESCUING THE SERVICE INDUSTRY

MISS CHOY SO-YUK (in Cantonese): Madam President, I move the motion which has been printed on the Agenda.

Some may find it strange that I should move this motion on "rescuing the service industry" today as the Government is already spending much money and making great efforts in promoting the service industry. That has even indirectly led to the rapid decline of the local industry and people's constant complaints. In that case, why then should I still bother to bring this up for discussion?

There is no doubt that the Government attaches great importance to the service industry but this is only in terms of macro economic development. Many examples have demonstrated that the Government has for a long time given inadequate attention to the actual operation of the many sectors of the industry, leading to a host of problems which are one of the contributory causes for this economic downturn of Hong Kong. That is exactly my motive for proposing this motion debate today.

There is no denying that the Hong Kong economy has been built upon an overly narrow base relying 90% on the service industry. The Government must spare no effort to develop our industries and to diversify as far as possible the industrial framework of Hong Kong in order to prevent "making one single mistake and blowing up the whole plan". Nevertheless, there is one premise for the diversification, and that is, we have to strengthen and develop the very own advantage of Hong Kong, the service industry. If we cannot even maintain the advantages that we already have, how can we create another one?

It is obvious that the Asian financial turmoil has triggered off the downturn of the service industry in Hong Kong. But the fact remains that its effects can spread so quickly and so widely is actually due to the long standing disregard of the Government which has led to many flaws in the legislation and policies on various trades.

No example is hotter than the freight transport industry. Had the Government not turned a blind eye to the abnormal situation in which the Hong Kong Air Cargo Terminals Limited monopolizes 80% of the local air cargo service, Hong Kong would not be losing $1.8 billion a day now and the importers/exporters would not have plunged into this dire crisis of the century.

Another example which has also aroused considerable concern is the problem of the sub-contraction of construction works. There are reports in the newspapers today that in the construction field, it is very common that works are sub-contracted out time and time again. After the contractor, subcontractor and the sub-subcontractor have extracted part of the benefits, they would subcontract the works out again to the fourth and fifth subcontractors. Up to this stage, there is no way that these end-of-the-line subcontractors can make a profit without resorting to poor workmanship and using inferior materials. Many in the industry opine that if the Government can change its usual practice of merging small projects into large projects, and instead, breaking down big projects into smaller ones and having them contracted out to more companies, the problem of subcontracting out over and over again can at least be alleviated.

There is another problem facing the engineering and construction sector which is hardly noticeable to outsiders but has a far-reaching impact on the economy of Hong Kong. It is the transfer of technology. Although Hong Kong has the Cross Harbour Tunnel, Tsing Ma Bridge, the Mass Transit Railway, Kowloon-Canton Railway, Light Rail Transit, Airport Railway and the most advanced new airport in the world, no local companies and experts know how to construct these colossal infrastructural projects. Hence, Hong Kong is not able to bid for similar projects overseas to export its own technology and experience. The reason for this is that in the tendering or contract system for the large infrastructural projects of the Government and quasi-government organizations, foreign contractors undertaking the projects are not required to transfer the technology to local companies and experts.

The legal and other professions also encounter similar problems. All along, only the very large legal firms from overseas have been able to meet the selection requirements of the legal contracts for massive projects of the Government and semi-governmental organizations. At present, there is no mechanism to help local legal firms to gain experience from and learn about the relevant legal problems. In addition, had the Government given regard to the need of the legal sector and not insisted on abolishing the fixed scaled charges, individual legal firms would not have to resort to providing perfunctory services after taking on cases the charges of which could hardly cover the costs. Nor would there have been firms that were even forced to lay off their staff or close down. Had the Government not overlooked the saturation between the supply and demand, there would not have been over 400 fresh law school graduates entering the market every year, resulting in lawyers failing to land a job and the wastage of expensive training resources.

During the Asian financial turmoil, speculators jumped at the right opportunity and manipulated the local stock market, creating great fluctuations, and then extorted the people's hard-earned money. This is exactly the result of the inadequate supervision on the part of the Government. Moreover, the Government's introduction of too many complicated derivative tools over a very short time and bowing to foreign investors at the expense of local investors' interests have also facilitated the speculators' attack. Besides, the Government's over-strictness and frequent arbitrary suspension of the second and third liners have also dampened the investors' desire to invest, a major cause for the present daily turnover of less than 10% of the peak transactions.

I wish to talk about several other economic lifelines of Hong Kong, including the hotel and tourist industries as well as the wholesale and retail industries. The reasons contributing to our loss of the reputation as "the shoppers' paradise" are many but the principal reasons must be, thanks to the British Hong Kong Government, the evil policies of high land prices, high rents and high inflation. Of course, if the Government and the Hong Kong Tourist Association can maintain better communication with the business sector and take more practical actions, the ability of the tourist industry in rising to meet emergencies could be enhanced.

Regarding the trade effluent surcharge, the catering trade does support the "user pays" principle. But given that 90% of the eating establishments are unable to reach the standard of fat content in their discharge, they could only grin and bear it. On the other hand, the Government has only resorted to pressurizing the operators by frequently meting out fines of hundreds of thousands of dollars without giving them any assistance or education on how to meet the environmental protection requirements. Nor has it sought to discuss with the industry about setting a fair and reasonable charging system. This no doubt adds an even heavier burden to the catering industry. In the end, if the eating establishments do not fold up, they can only shift the ever rising operation costs onto the consumers, further reducing the competitiveness and room of survival for the whole industry.

Next I will come to the exhibition industry in which I have been involved with for years. The exhibition industry earned $5.5 billion in foreign exchange for Hong Kong last year, excluding the extra profits earned by the tourist and transport industries. Unfortunately, the exhibition industry is still not a popular business in Hong Kong. In the Trade Development Council, there is not even a member who is remotely related to this industry, let alone a representative of it. This is exactly an example of the prolonged disregard of the Government. The Government not only neglects it but even hinders its development. The first hindrance is the high rent. The rent charged by the Government-owned Convention and Exhibition Centre in Wan Chai is the highest in the world, which is two and a half times of that of Singapore and three or four times of that of the Mainland. The second is that when the Trade Development Council sees the success of private companies in hosting exhibitions, it uses its enormous resources and position as a quasi-governmental body to scramble for the related projects and businesses with the private companies.

Lastly, I wish to stress that as long as the relevant government officials can forsake their bureaucratic attitude of closing their eyes to problems and immediately probe into the problems encountered by the various industries, try to understand their difficulties, formulate effective measures to plug the loopholes in the existing policies and legislation, the Government will be able to revive the service industry soon without spending large sums of money. I hope that colleagues in the Legislative Council can join hands to support my motion, send out a strong message, loud and clear, to the Government, urging it to correct its past mistakes, rescue and continue to improve the development of the service industry so as to more effectively help the various sectors to grow in a healthy way.

Madam President, I so submit.

Miss CHOY So-yuk moved the following motion:

"That, despite the fact that the service industry is an important economic pillar of Hong Kong, prolonged disregard on the part of the Hong Kong Government has resulted in numerous flaws in the legislation and policies on many trades, leading to an increasing reduction of its competitiveness internationally, which is aggravated by the exacerbated plight of a considerable number of main service trades in the wake of the Asian financial turmoil, this Council urges the Government to face up to this problem by consulting various trades and industries to seek their views and adopt effective and targeted policies and measures immediately, in order to improve the business environment of the service industry and relieve its plight, as well as facilitate expeditiously its development into a high value-added industry, and raise its service quality and competitiveness, thereby reinforcing Hong Kong's position as an international service centre."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That , despite the fact that the service industry is an important economic pillar of Hong Kong, prolonged disregard on the part of the Hong Kong Government has resulted in numerous flaws in the legislation and policies on many trades, leading to an increasing reduction of its competitiveness internationally, which is aggravated by the exacerbated plight of a considerable number of main service trades in the wake of the Asian financial turmoil, this Council urges the Government to face up to this problem by consulting various trades and industries to seek their views and adopt effective and targeted policies and measures immediately, in order to improve the business environment of the service industry and relieve its plight, as well as facilitate expeditiously its development into a high value-added industry, and raise its service quality and competitiveness, thereby reinforcing Hong Kong's position as an international service centre.

PRESIDENT (in Cantonese): Members have been informed by circular on 10 July that the Honourable SIN Chung-kai has given notice to move an amendment to this motion. His amendment has been printed on the Agenda. In accordance with the Rules of Procedure, the motion and the amendment will now be debated together in a joint debate.

I now call upon Mr SIN Chung-kai to speak and to move his amendment. After I have proposed the question on the amendment, Members may express their views on the motion and the amendment. Mr SIN Chung-kai.

MR SIN CHUNG-KAI (in Cantonese): Madam President, I move that the Honourable Miss CHOY So-yuk's motion be amended as set out on the Agenda.

The aim of my moving this amendment today is mainly to express my resentment against the way with which the government officials of the Hong Kong Special Administrative Region (SAR) have handled the financial matters and call on the SAR officials not to repeat the same mistakes. After the establishment of the SAR, the economy of Hong Kong has been struck by numerous disasters: the Hong Kong dollar being repeatedly speculated against, a number of securities companies having problems with their operation or closing down because of loopholes in their management, department stores closing one after another, runs on banks, bakeries and video stores, and also the fiasco of the air cargo service of the new airport. Many of the present economic difficulties confronting Hong Kong are of course caused by external factors, but many are also the result of human errors. Therefore, we hope that the SAR Government officials can really learn from these painful lessons and avoid repeating the same mistakes in future.

In the face of such severe challenges and our economy being exposed to attacks on all sides, the Chief Executive and the high-ranking officials have only resorted to three tactics ─ to sing praises, then sing praises again, and finally go back on their own words. For example, the Chief Executive has repeatedly stressed that the foundation of the Hong Kong economy is sound, and among all the Southeast Asian economies, Hong Kong will recover the soonest, but finally he has to admit that Hong Kong has to undergo a rather long and painful period before it will recover, hopefully in 1999. Also, the financial officials have repeatedly ensured the people that the financial system in Hong Kong is sound but then securities companies come collapsing one after another.

Today, I ask the officials not to fool the people again with these three tactics. The public demands the officials to be practical and realistic, and to grasp the opportunity to draw up appropriate policies, rather than making up white lies to stall on time, and only changing their tone and even the policy when they have to face the music ultimately. The government officials think that they will do Hong Kong good by singing praises to it but the result is just the opposite as in so doing they only serve to dampen the confidence of the people and foreign investors in the governance of the SAR officials. I think that the officials should not repeat the mistakes and therefore I have to highlight this point in the motion debate and hope that colleagues of this Council will lend their support to it.

Later on the Honourable CHEUNG Man-kwong will give a detailed account of the serious consequences of the officials' self-conflicting remarks and inconsistent policies; the Honourable Albert HO will talk about the maladies of the Government's policy on the financial services; and I will concentrate on the Government's role in the service industry and the general trend in the integration of the information technology and the service industry in the future.

I propose to delete the term "the prolonged disregard of the Government" as proposed by Miss CHOY So-yuk mainly because I do not think that it is necessary. Firstly, Miss CHOY So-yuk only needs to go through the past records of this Council concerning its motion debates on the Government's industrial policy and she will find that many colleagues in this Council have expressed their concern over the Government's prolonged disregard of the industry. In other words, the Government has neither taken special care of nor neglected certain industries or sectors. It has just not intervened with any of them. Therefore, our focus should not be on the Government's disregard of the service industry; rather, it is whether we agree to the Government's non-intervention policy. Secondly, Miss CHOY So-yuk's reference to "disregard" in the motion has an implication that the service industry has not been given "special regard". Citing these examples, Miss CHOY advocates that there is a need to reduce the external competition and to protect the local industries ─ a point which the Democratic Party thinks must be handled with extreme caution. I wonder if Miss CHOY considers that only by building up a wall of protectionism can the survival of local industries be helped?

The Democratic Party thinks that the development of the various industries should be led by the industrial and commercial sector and carried forward by the market. The most important role of the Government is to ensure an open market with fair competition. But now many activities in the service industry are found to have breached the principle of fair competition. The Consumer Council has given many examples of this in its reports. For example, the two giant supermarket chains account for 70% of the market share, greatly reducing the survival space of the smaller ones. The interest rate agreement of the banks protects the interests of big banks. Moreover, the standardized charges of the container ports and the standardized prices of the textbooks imposed by the Educational Booksellers' Association are all examples of contravention of the fair competition principle. They have all stifled the chance of small and medium enterprises of entering the market and competing with others. Therefore, the Democratic Party calls upon the Government to reconsider legislating on fair competition in order to ensure fair competition, enhance the efficiency and competitiveness of the enterprises and also allow more enterprises to enter the market.

In addition, the Democratic Party also supports that the Government should provide technical support to the service industry and facilitate its development into a high value-added industry. For example, the Government can provide small and medium enterprises with a tax concession for scientific research, encourage enterprises to buy advanced equipment and help them develop a World Wide Web for the promotion of their business.

Tying the information technology in with the commercial services will become the new operation model for the next century. The International Data estimates that the value of electronic commercial transactions in the United States will increase from US$310 million in 1995 to US$95 billion by the year 2000, an increase of 300 folds. A report in the United States also points out that 1 000 American and Canadian companies, 35% of which being big enterprises and 20% medium enterprises, already have their own World Wide Web sites; 51% big enterprises and 25% medium enterprises are already using the Internet and 57% enterprises indicate that the Internet is helpful to their business.

Taking the financial service as an example, the integration of the financial service with information technology, coupled with the change in clients' demands, will provide unlimited room for the expansion of electronic transactions. At present, the Discount Brokers in the United States accounts for 30% of the market share in securities trading. A survey estimates that by the year 2002, over 50% of the transactions will be done by part-time brokers and it must also be noted that 30% of the transactions will be carried out by Online or Web brokers. Recently, Australia has made an important stride towards electronic business by introducing the membership of financial service on the Internet for the buying and selling of stocks listed on the Australian Stocks Exchange. These companies can provide all investment information to the investors via the Internet and the investors can design their own investment portfolio and then make transactions through the same channel. Stocks transactions on the Internet are also covered by the indemnification fund of the Australian Stocks Exchange.

A survey in the United States has found that most of the users of electronic financial service have received tertiary education and their income far exceeds the median wage. At the same time, they are fully confident of their ability to manage their own investments. The middle class and new generation of Hong Kong will certainly become the new users of this service. Coupled with the Hong Kong people's strong desire to make their own investments, this will certainly be a great potential market. In the face of this new challenge, is the financial and securities sector rigorously getting ready and equipping themselves well enough to become one of the providers of transaction services on the Internet; or will they be complacent and make every effort to maintain the monopoly of the Stocks Exchange of Hong Kong (HKSE) and obstruct the new development trend of the market in order to protect their own interests? Regrettably, in the "Positioning for a New Era", the strategic plan published by the HKSE recently, electronic transaction is not listed as a major challenge in the next five years. This is an obvious indication of its underestimation of the present situation and disregard of foreign competition. Is this not just a plan of the HKSE to protect and maintain the interests of its own members? This will only reinforce the notoriety of the HKSE as a "members' club" and damage the position of Hong Kong as a financial centre.

Madam President, another important advantage that the information technology can offer to the financial service is that it increases the transparency and speeds up the dissemination of information, making the market operate more effectively. It is a shame that the Securities and Futures Commission (SFC) and the HKSE have failed to make good use of information technology. Taking a look at the web sites of the New York Stock Exchange, the Securities and Exchange Commission of the United States and the Australian Stocks Exchange, one will immediately see the great difference between theirs and ours and which is better. Little can be found on the web sites of the HKSE and SFC as regards the basic information, notices and penalties of the listed companies and stock brokers. It has been three years since I was returned as a Legislative Council Member in 1995 and during which time, the HKSE and SFC have indicated every year that they will set up an investment centre for the investors, but until today this is still considered as a long-term project of the two organizations. Not even a basic database on the Internet is established, how can they protect the investors? This is very disappointing. I reiterate, to sustain the position of Hong Kong as an international financial centre, the Government must maintain an open, fair and competitive market and make every effort to prepare the financial sector for the new challenges.

Lastly, in respect of the SAR government officials' self-conflicting ways of dealing with matters, the people will see with their eyes, feel bitter in their hearts and have all kinds of feelings. Therefore, if colleagues of this Council support my amendment, it implies that they will be giving the people the chance to voice their heart-felt feelings: "We are not satisfied with the performance of the Chief Executive and the various officials. We ask them to please draw lesson from their bitter experience and restore the reputation of Hong Kong as an international financial, trade and service centre."

Thank you, Madam President.

Mr SIN Chung-kai moved the following amendment:

"To delete "prolonged disregard on the part of the Hong Kong Government has resulted in"; to insert "exist" before "in the legislation and policies on many trades,"; to delete "as well as" from "as well as facilitate expeditiously its development into a high value-added industry,"; to insert "promote better use of information technology by the industry, enhance productivity and" before "facilitate expeditiously its development into a high value-added industry,"; to delete "expeditiously" from "facilitate expeditiously its development into a high value-added industry"; to delete "and" from "and raise its service quality and competitiveness" and substitute with "so as to"; to add "; at the same time, with regard to the financial services sector, this Council expresses disappointment that officials of the Hong Kong Special Administrative Region Government have made self-conflicting remarks and inconsistent financial policies, and urges the Government to learn the lesson and avoid making the same mistakes" after "raise its service quality and competitiveness"; to delete "reinforcing" and substitute with "restoring"; and to add "financial, trade and" after "Hong Kong's position as an international"."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the amendment moved by Mr SIN Chung-kai be made to Miss CHOY So-yuk's motion. Does any Member wish to speak on the motion and the amendment? Mr NG Leung-sing.

THE PRESIDENT'S DEPUTY, DR LEONG CHE-HUNG, took the Chair.

MR NG LEUNG-SING (in Cantonese): Mr Deputy, as the whole Southeast Asian is suffering from an economic recession, none of the industries of Hong Kong can be spared being affected by this external factor. The service industry, which has developed into an underpinning of the Hong Kong economy in recent years, has suffered the heaviest blow, creating great adverse effects on the overall economic performance of Hong Kong and the people's employment. In assessing the overall downturn of the service industry at present, we can come to a very obvious conclusion and, that is, external factors are of course the main cause that has brought down the service industry in Hong Kong, but the fact that we have relied too much on the service industry, resulting in the structural imbalance among our industries, is another contributory cause for our plight today and the vicious cycle of the service industry in Hong Kong.

Over a long time, since the Hong Kong Government has adhered to the so-called free market and positive non-intervention principle in respect to the industrial policy, it has overlooked its role in leading the industries of Hong Kong to constantly adjust themselves and upgrade their structure. Because of a simple "positive non-intervention" notion, the Hong Kong Government has not managed the industries properly or given them any realistic guidance regarding their structural development. According to the statistics, close to 80% of the workforce in Hong Kong engage in trades related to the financial services and numerous households live on jobs provided by the service industry. The service industry itself is highly dependent, lacks the independent impetus to develop on its own, only follows the manufacturing and other industries to rise and fall as they do, and is very sensitive to the conditions of the neighbouring economies. Under such circumstances, it can be said that the sluggishness of our service industry is exactly an unavoidable price of our industrial policy.

Long existing alongside the free and unrestrained industrial policy, as some Members have also mentioned, is the high land price policy which has given rise to high rents and high wages. Moreover, a granting of mortgage loans to the property market the prices of which have remaining on the high has rendered the financial institutions unable to formulate policies and measures promptly and effectively to cut down on their operation costs. Thus the service industry has been gradually losing its competitiveness in the international community because of the exorbitant costs. Therefore, to a certain extent, the financial crisis in Southeast Asia has only served to expose the very own problems of Hong Kong fully and more strongly. The bursting of the bubble economy of Hong Kong is only a matter of time.

Moreover, I have no intention to pass a generalized comment on all government officials, but in the face of a sudden change in the economic environment, certain Policy Secretaries have frequently been seen as being flustered and reacting too slowly in dealing with practical problems. Not only have they failed to alleviate the hardships of the problem-stricken service industry, but also caused the industry to suffer even more hardships and heavier losses because of their constantly flip-flopping policies. Since last year, mishaps such as the avian flu, red tide and the great fiasco of the opening of the new airport have fully exposed the shortcomings of the various government departments in terms of their administrative co-ordination and ability to deal with emergencies which have dealt heavy blows to the local tourist, retail and catering industries as well as all sectors of the service industry.

Therefore, I think that the difficulties confronting our service industry today can be attributed not only to the external factors, but also the many flaws in the Government's long-term policies and its handling of the practical problems. The Government should look into these squarely and conduct a review. Hence, in the long run, the Government must conduct a comprehensive review on the industrial policy and find remedies for the present difficulties encountered by the service industry. The Government must comprehensively and seriously contact the operators in the various sectors and scholars in respective fields, listen to their views, seriously consider and study the points they put forward. The Government should also deal with the sudden outbreak of incidents promptly and swiftly and try to be more vigilant of things that might happen so as to equip itself and be prepared for possible troubles. In addition, the Government should also enhance its accountability and distinguish clearly the powers and responsibilities, mete out rewards and punishments properly and eliminate bureaucratic practices. Only by this can the people's confidence in the Government's administrative and governing abilities be strengthened, and can the Government provide real help to the service industry and other industries during the economic downturn.

With these remarks, Mr Deputy, I support the original motion.

DEPUTY PRESIDENT (in Cantonese): Miss CHAN Yuen-han.

MISS CHAN YUEN-HAN (in Cantonese): Mr Deputy, today's discussion is on the service industry. Of course, I have a different standpoint on the service industry from that the original motion. I think that the service industry is accounting for a bigger and bigger proportion in the local economy, but is this proportion reasonable? Mr NG Leung-sing has brought forward some questions just now. Since I am going to move a motion on the economic restructuring of Hong Kong next week, I do not want to discuss this right now.

I would like to focus on the service industry which seems to be enjoying great success. As mentioned by the motion proposer just now and Mr NG Leung-sing, the service industry is developing more and more rapidly, accounting for a bigger and bigger proportion of our economy and employing more and more people. It seems to be enjoying great success, but in reality, a very big problem had been lurking in the whole service industry and emerged even before the financial turmoil. In fact, the service industry has developed for over a decade in Hong Kong now and a host of problems have emerged in recent years. Several years ago, realizing the problems with the service industry, the Government established the Task Force on Services Promotion chaired by the Financial Secretary.

As regards this problem, I do not want to touch on too wide a scope. I will just concentrate on the retail industry, one sector of the service industry that has been hit the hardest by the real estate industry of Hong Kong. Others such as the catering and hotel industries have also been affected. Actually, these industries represent a rather large proportion in the service industry. In fact, in the last eight or 10 years, they have subject to more and more pressures because of the high rents in Hong Kong, and many problems have thus arisen.

I do not want to talk about this year as there is the financial turmoil. In the past few years, when problems arose in the retail industry in the service sector, many retail business owners came to me and told me that they had great difficulties maintaining their business. At that time, I asked them what their greatest problem was. According to the Government, the biggest problem was the wages but in fact, it is the rents rather than the wages that troubled them the most. High rents had already troubled the business operators greatly even before this year. The situation now is different from that in the 1970s and 1980s when the market was saturated. In the mid-1980s, Japanese capital was injected into Hong Kong, saturating the whole service industry and driving out a number of medium-scale department stores. But at that time, these department stores were driven out because of their inferior services or management skills. To those who chose to back out then, it was an honourable withdrawal because they managed to wrap up their business when it was still profitable. It was only that their management skills could not catch up with others and they chose to back out of the competition.

Nevertheless, for the companies that were closed in 1994 or 1995, they did not close down their business because their operation was inferior to others, or society did not need them; rather, they were tempted by some other things. If they continued with their operation in the service industry, they could not make enough to cover their rents, no matter how good their business was. On the contrary, if they did not use their property for retailing purposes and sold it and earned interest from it, they would end up much better-off than continuing with their business in the service industry. This was a peculiar phenomenon. It was just like our manufacturing industry during the 1970s and 1980s. At that time, the manufacturing industry received no support from the Government, but at the same time, our neighbouring regions, including the Mainland which launched the reform and open door policy, offered another attractive option. Land price was an important factor that influenced the operators' decision to move their production activities out of Hong Kong.

Our service industry also experienced this in the 1990s. The companies did not close down their business because they could not match up to others in respect of their competitive skills; rather, that was because real estate was a more profitable business than retailing. In fact, this was an important signal. We could see that companies which owned their own property were lured by the prosperous real estate market to wrap up their business while those that did not have their own property, such as the Japanese companies, had to operate under great difficulties. Amidst these difficulties, there was another undercurrent. During the early '90s, the service industry was supposed to be very prosperous. But as early as 1992 and 1993, about one third of the workers in this industry had a negative growth in their wages. By 1994 and 1995, one half of the workers had a negative growth in their wages and recently, 60% or 70% workers have had their wages reduced. This happened even before the financial turmoil. What has gone wrong? When I asked the operators in this industry, they said that they had no money to increase the wages of the workers and the reason was that the rents were too high.

I brought this point up in this Chamber in 1995, 1996 and 1997 and I still raise the same point here. In 1995, the rent of the Matsuzakaya Department Store in Tsim Sha Tsui was raised from $6 million to $13 million and the rent of Chung Kiu Chinese Products Emporium was hiked from $3 million to $6 million. This is an abnormal phenomenon. I think that under such circumstances, their business would still collapse even without help from the financial turmoil. It was only a matter of time that it collapsed. The collapse was not due to the benign elimination resulted from the different approaches that these companies took in the competition and management, but instead, there was a malignant tumour there. A few years ago, all operators in this industry had already started to find a solution to this problem and study how they could continue to operate.

Therefore, if our Government continues to turn a blind eye to this problem that concerns the whole service industry, even if there were no financial turmoil in the Asia Pacific Region, the problem will remain unsolved. The Government listened to many views of those in the industry several years ago and established the Task Force on Services Promotion. But I would like to ask what the Task Force has done. What has the Financial Secretary done? I find that ......

FINANCIAL SECRETARY (in Cantonese): Under Rule 17 of the Rules of Procedure, we have not had a quorum here since this motion debate began.

MISS CHAN YUEN-HAN (in Cantonese): Sorry, Mr Deputy, I could not hear him.

DEPUTY PRESIDENT (in Cantonese): The Financial Secretary said that a quorum was lacking. Would the Clerk please make a head count?

DEPUTY PRESIDENT (in Cantonese): Would the Clerk please ring the bell to summon Members back to this Chamber?

DEPUTY PRESIDENT (in Cantonese): As we have a quorum now, we will continue with the business that we have just left. Miss CHAN Yuen-han, please continue.

MISS CHAN YUEN-HAN (in Cantonese): Mr Deputy, I wish to know how much more time I still have.

DEPUTY PRESIDENT (in Cantonese): The timer in the Chamber indicates how much time left for you.

MISS CHAN YUEN-HAN (in Cantonese): Mr Deputy, what has the Task Force on Services Promotion chaired by the Financial Secretary done in these one or two years? Regrettably, many friends in the industry think that the Government did not seem to have helped them find an early solution to their problems in the face of these difficulties. Of course, it is not exactly the case that the Government has done nothing. For example, the Government has provided some language training and so on which I think is necessary. Some non-governmental bodies such as trade unions of the retail industry also provide such necessary courses as Japanese and English courses. Nevertheless, the Government has not targeted at their greatest difficulty, that is, the rental problem which has led to the collapse of many companies and the unemployment of many workers. The Government has not looked squarely at this problem. Therefore, I hope ......

DEPUTY PRESIDENT (in Cantonese): Miss CHAN, your time is up. I have given you 15 more seconds already. Mrs Selina CHOW.

MRS SELINA CHOW (in Cantonese): Mr Deputy, Hong Kong has enjoyed great economic success. All along, the lifeline and impetus for creating wealth have stemmed from the hard work of the small and medium enterprises and their will to strive for the better. According to the statistics of the Census and Statistics Department, there were only 290 000 small and medium enterprises in mid-September 1997, accounting for 99% of all enterprises in Hong Kong and among them over 250 000 are employing one to nine workers. 90% of them are in the service industry. These small and medium enterprises not only promote the trade, consumption, employment in Hong Kong, but other related industries as well. Under the present economic recession, the small and medium enterprises are suffering the heaviest blow. In December 1997, the number of small and medium enterprises plummeted from 290 000 in September to 280 000 ......

FINANCIAL SECRETARY (in Cantonese): Mr Deputy, I have to report to you that we are again short of a quorum. It appears Members are not interested in this topic.

DEPUTY PRESIDENT (in Cantonese): Mrs Selina CHOW, please sit down first. I have to ask the Clerk to make a head count.

DEPUTY PRESIDENT (in Cantonese): As there is not a quorum present, would the Clerk please ring the bell to summon Members to this Chamber to attend the meeting.

DEPUTY PRESIDENT (in Cantonese): As there is a quorum present now, we will continue with the business we have just left. Mrs Selina CHOW, please continue.

MRS SELINA CHOW (in Cantonese): Mr Deputy, would you give me 10 more seconds? (Laughter) The number of small and medium enterprises plummeted from 290 000 in September to 280 000 in December 1997 and by March this year, the number even dropped to 270 000. The number of the unemployed is also on the rise. From this we can see that if the Government still takes no action to rescue the small and medium enterprises, 99% of the operators and employees of the enterprises as well as the related trades will all come under a great threat and the economy of Hong Kong will also run the risk of losing the impetus. On the contrary, if the Government could implement some genuinely effective measures, it will not only revive these industries but will also stimulate the trade, consumption and increase the employment opportunities, renew the survival conditions of the small and medium enterprise on the whole. It will even improve the people's livelihood and restore our economic vitality. This is a very good investment.

However, does the Government know what to do to effectively help the operators of these small and medium enterprises? Is it the case that the Government has no idea whatsoever as to what kind of assistance these small businesses need but has to adopt some measures just for the sake of doing something? For instance, during the past few months, the Government has kept talking about the provision of loans to small businesses, but how many of them have successfully obtained these loans? Also, concerning the Credit Guarantee Scheme that is established especially for assisting the exporters, as far as I know, only two applications have been approved so far. After the outbreak of the avian flu, the Government has also set aside money to provide loans for the chicken mongers but this has become a big laughing stock. According to those in the trade, nothing can be done even if they go to work in the Agriculture and Fisheries Department every day because to apply for a loan they need many forms of guarantee, and then they need to go to the law firm, to the bank, to the Agriculture and Fisheries Department, so on and so forth. The application procedures are just too complicated. So far, there have been very few, if not none, applications for loans amounting over $150 000 which require a security. Now, we hear that the Government is going to allocate $2 billion to rescue the small and medium enterprises but can we be optimistic about the situation? I am not optimistic at all but I hope that I am wrong. In this connection, the Liberal Party has widely consulted three parties concerned. First, we have discussed with the Government and asked what exactly it has in mind. Second, we have held detailed discussions with the banks. Third, it is also the most important. We have consulted the operators of many small and medium businesses through our connection with the various sectors or functional bodies and we will submit a proposal on the views gathered to the Government soon in the hope that the Government will really consider these views. But I am not too optimistic about this for the Government has a rather "peculiar" attitude towards public opinion, with the Financial Secretary, in particular. Many a time the Financial Secretary accepts public opinion with grudges. Just like he promised to give a rebate of rates but made it clear that it was against his principle, making it sound like that the public opinion always forced him to go against his principles.

Not long ago, we discussed the issue of public housing rent reduction in this Chamber. All of us, including six parties, one group and the Frontier, and all tenants of the Housing Authority (HA) all requested for a 30% rent reduction across the board. I believe that everyone knows the answer of the HA and this answer will bring about many sequelae. Now, the tenants who get a 60% reduction will of course be very happy but others who think that they should get the same reduction will certainly appeal to the HA. And then those who think that everyone should get the average reduction of 34% will also go after the HA. Hence, no one would be satisfied. However, if the Government is willing to accept the public opinion, which is to have a uniform rent reduction across the board, it is utterly not a violation of its principle. As a matter of fact, the Government has frozen the rents before and it has been a universal rent freeze. From this we can see that the Government can make a uniform reduction, but not you. The Financial Secretary may say that this has nothing to do with him as it is solely the decision of the HA. But please do not forget that when we asked the Government to reduce the rent of all its tenants across the board, the Government said that the tenants were not paying rents but they were only paying fees and therefore they have to abide by the "users pay" principle and cannot get a reduction. The Government still holds a patriarchal attitude and takes no heed of the plight of the operators of small enterprises. It is totally the "they do not feel the pain as they are not pinched by the needle" mentality. The Government keeps talking about improving the business environment, but how is it going to do so? Has the Government reviewed its policies? The Government often draws up the policy only when it is necessary to respond to pressure. It has to understand that not interfering with the free market does not necessarily mean to get rid of the regulation and set it loose. For example, the Government does not regulate the safety standard of the parallel imports of cosmetic products. In respect of the non-staple food, it only regulates the market operators under the Agriculture and Fisheries Department but turns a blind eye to activities of "constantly shifting the bases" and "getting in by the backdoor". Again, the training programme for the service sector only stresses on the training of techniques but pays no attention to the other aspects such as the culture, courtesy and communication skills. The Government draws up more and more laws targeted at the employers but never takes a close look at the situations of the various industries. Whatever party that has a louder voice and exerts a higher pressure, the Government would bend towards it. The Government only imposes strict restrictions on those responsible businessmen who make long-term investments but indulges the unscrupulous merchants and lets the bad elements run wild. In respect of the administration, the Government never consults the relevant industries but relies on its layman imagination and academic theories to draw up the regulatory regime. If things continue this way, the small and medium enterprises will never be able to bounce back. I hope that the Government will understand the sufferings of these businesses.

Today, we ......

DEPUTY PRESIDENT (in Cantonese): Mrs Selina CHOW, your time is up. Please stop. I have already given you 15 more seconds. Dr Raymond HO.

DR RAYMOND HO (in Cantonese): Mr Deputy, everybody knows that we have had an unstable economy for a few years and there has been a 90-degree change in our business environment. Also under the impact of the recent Asian financial turmoil, many industries in Hong Kong have kept shrinking and everyday there is news about enterprises and department stores closing down, companies laying off staff or cutting their wages. The Government must look squarely at the severity of the problems and engage in serious negotiations with various industries to help them tide over difficulties.

The service industry has always been a pillar of the Hong Kong economy, for a very long period of time in the past, tourism and the hotel, retail, catering and financial industries were very prosperous. In the current economic slump, the service industry has been the hardest hit. According to the latest information of the Government, the earnings of the service industry have evidently dropped in the first quarter this year and the business earnings of the most seriously affected property industry have rapidly dropped by 32% and the gains of the hotel and financial industries have respectively dropped by 28% and 24% as compared with their performance during the same period last year.

The service industry certainly includes engineering consultants. The Financial Secretary has led an engineering delegation to visit foreign countries in the hope that we can open up a new prospect for engineering technology export. The situation in Hong Kong remains to be improved. The scale of the consultancy contracts with the Government and public bodies is often too large, as a result, they only benefit a few foreign companies. However, some smaller scale projects encounter difficulties as there is an inadequate amount of work.

I must also respond to the remark just made by Miss CHOY So-yuk that the subcontractor system adopted by the construction industry leads to shoddy work and the use of inferior materials. The subcontractor system is only a flexible system that allows a construction company to easily control the operational costs of the company and shoddy work and the use of inferior materials is not commonly found in the construction industry, and the problem is only caused by a few construction companies that do not exercise self-discipline.

The only way to put an end to the decline of the service industry is that the Government must help those in the industries pull out of the existing business environment as soon as possible. In the short run, the Government should carry out serious discussions with those in the industries and listen to their views. As regards tourism, Hong Kong was attractive to a certain extent in the past in respect of shopping and sightseeing which directly benefited such industries as the hotel industry and the retail industry, boosting consumption in return. However, as Hong Kong has become less attractive as a shopping paradise, and our scenic spots are losing their novelty, foreign tourists prefer visiting other countries for shopping and sightseeing.

The plight of the tourist industry can in fact be described as a portrayal of the service industries in Hong Kong. The service industries can hardly be revived by the efforts made by the industries alone and the Government must adopt effective policies aimed at solving the problem. For instance, it can build some new tourist spots depicting the cultural features of the East. However, the most important point is that the Government must listen to the views of those in the industries as they know their needs and difficulties the best.

In the long run, the Government has to drive those in the industries to make proper use of information technology and advance towards high value-addedness, and increase productivity on this basis so that they will not lag behind the international community and our competitiveness can be maintained. As our business environment has become so much worse, the industries must face the reality and keep up with the pace of global development for survival, if they wish. In other words, they have to make proper use of information technology and advance towards high value-addedness. In this regard, the Government must give them full support, for instance, by offering the practitioners training courses, or extending low-interest loans or subsidies to those in the industries for the development of information technology and high value-added industries.

Undeniably, to revive the service industries within a short period of time is not easy but I strongly believe that the service industries will overcome their difficulties and Hong Kong will be able to maintain its position as an international service centre with the concerted efforts of the Government and those in the industries.

Mr Deputy, I so submit. Thank you.

DEPUTY PRESIDENT (in Cantonese): Mr CHEUNG Man-kwong.

Mr CHEUNG Man-kwong (in Cantonese): Mr Deputy, in just one year after the reunification, the reputation of both the Government of the Special Administrative Region (SAR) and Mr TUNG Chee-hwa has fallen to a record low. Yesterday, a group of aggrieved local citizens posted on the newspapers the following message to condemn the Government: "Incapable leader serves to bring us disaster". In addition, it has been speculated that some members of the commercial circle were organizing a "Down with Tung Fund" to overthrow Mr TUNG Chee-hwa. Across the territory, from the press to radio programmes and from the man in the street to the wealthiest businessmen, all are condemning the SAR Government under the leadership of Mr TUNG Chee-hwa. Behind these condemnations are the disappointment, greviances, sorrow, anger or even desperation that the people of Hong Kong have had since the reunification. Never had anyone imagined that a vibrant city of hope would be dragged into an abyss of sorrow by the incessant mistakes committed by certain people. What is more, as it has already costed our economy thousands of billions of dollars, many people have lost their life-long savings and fruits of hardwork. As Hong Kong is now in an economic slump, businesses are doing very badly and the rate of unemployment always on the increase; besides, the foreign exchange market, the stock market, as well as the property market are all suffering from a heavy blow. Hong Kong has entered an unprecedented era of hardship which nobody knows where the end lies. In the midst of this continous economic recession and in the face of the various mistakes committed by the Government led by Mr TUNG Chee-hwa, the people of Hong Kong do have every reason to ask this question: "Should anybody be held responsible? Should any government department be held responsible?" This is a question which must be answered.

Mr Deputy, in regard to the financial turmoil sweeping through the past year, the Democratic Party holds the opinion that the performances of the government officials responsible for the economic affairs of Hong Kong are all below standard. At the beginning of the crisis, they were indiscriminately optimistic and took everything lightly like an onlooker, totally unaware of the seriousness of the situation. They did not have the least sense of crisis. Neither did they have the vigilance that the financial markets in Asia or even all over the world were closely linked to each other, and that the turmoil could spread and extend to other places. Little did they know that a spark could consume a vast piece of grassland. As such, Mr TUNG Chee-hwa predicted that the economy of Hong Kong could revive promptly while Mr Donald TSANG estimated that the financial turmoil could be settled by Christmas last year. Mr Joseph YAM was the one with the best humour, as he claimed that Hong Kong was the quiet oasis amidst the financial turmoil. However, no crisis could be turned around simply by people's optimistic thoughts. Like a blind man riding a blind horse near a deep pond at midnight, these people would sooner or later find Hong Kong trapped in hazard and could not get out. The financial turmoil eventually extended from Thailand, Indonesia, Korea and Japan to Hong Kong, dealing heavy blows to our economy one after another. As a result, our economy was badly hurt. Like soap bubbles blown away by the wind, the wealth of Hong Kong simply vanished without any traits. It was until the people of Hong Kong have become really very angry and started protesting on the streets that the Government under the leadership of Mr TUNG Chee-hwa had finally waken up and hastily put forward a couple of measures to restrain the situation from running out of hand. However, the economy of Hong Kong has been badly hurt, the delayed prescription could not help anymore. Although our economy has stopped deteriorating, it could not yet revive. The golden days of Hong Kong have all gone after the reunification. Today, as we look back on the regional financial turmoil and the inappropriate moves made by the SAR government officials responsible for financial affairs, as we thought of how they have ignored the crisis in their self-complacency and arrogance, all we could do is feeling deeply frustrated and pulling long sighs.

Mr Deputy, the financial turmoil has also exposed the fact that the officials of the SAR Government are always eating their words and changing their minds. Let us take Mr TUNG Chee-hwa as an example. In regard to the question of whether members of the community should or should not enter the property market, he had changed his mind again and again until everybody was confused. Another example is the land sale policy. In just one year's time, the policy has already changed three times, from selling in large amount, to selling with flexibility, and then to freezing the sale of land eventually. Other incidents such as the change between not accepting any deficit budget to accepting a budgetary deficit, the withdrawal of the most expensive land lot at the Tamar naval base from auction sale, as well as the decision of Mr Anthony Neoh to reduce the maximum amount of compensation from $200,000 to $150,000 in the case of the CA Pacific Securities limited all served to reveal that the officials of the SAR Government were undecided and inconsistent when formulating policies. If the people of Hong Kong believed in what the officials said in the first half of the year and made important investments, they would regret greatly in the second half of the year. Mr Deputy, the people would only support those who are trustworthy. Have the officials of the SAR Government ever felt ashamed of what they had said? Have they ever felt guilty in front of those who had believed in their words and made the wrong investment? Have they ever thought of holding themselves responsible for their indiscriminate optimistic views and erroneous policies? As a government official will be giving us his explanations today, I just hope he could apologise to the public for the mistakes they have made in the past year in handling the financial turmoil and for the resulting losses they have brought to the people of Hong Kong.

With these remarks, Mr Deputy, I support the amendment moved by Mr SIN Chung-kai.

Deputy President (in Cantonese): Mr Howard YOUNG.

Mr Howard YOUNG (in Cantonese): Mr Deputy, following the economic restructuring of Hong Kong, the services sector has replaced industries as the pillar of the local economy. In the face of the regional financial turmoil, the services sector was therefore the hardest hit. In particular, the turnover of the tourism industry, retail business and entertainment industry has reduced remarkably, imposing much hardship on those in the trade. Yet this rigorous challenge, I am afraid, might linger on for some time. With the difficult times ahead, it is necessary for the Government to actively adopt effective and targeted measures to help the services sector ride out the storm.

Tourism is one of the most important service industries. In December last year, I moved a motion on "strengthening tourism industry". At that time, Members proposed many short-term, mid-term, as well as long-term measures to help strengthen the tourism industry. As regards the Government, it has in the past six months adopted to some extent the proposals made by Members and introduced a number of targeted measures which I believe would be helpful to the tourism industry; examples of such measures include: reduction in air passenger departure tax, simplified entry procedures for tourists from Taiwan, allocation of additional sites for use as flea markets and so on. In regard to the mid-to-long-term measures proposed at that time, such as extending the opening hours of control points in both Shenzhen and Hong Kong, implementing the proposal to organize the Hong Kong Expo in 2001 and so on, the Government so far has not responded to the proposals comprehensively, otherwise the many Members speaking before me would not have referred to the industry anyway. In 1997, the number of employees engaged in the tourism industry was 366 000, amounting to 11.4% of our working population. Over the same period, the contribution of the industry to the GDP was 6%, slightly less than that in 1996 by two percentage points. The Government should highly recognize the significant impact the tourism industry has on the local economy and reconsider those mid-to-long-term measures which have been proposed but have yet to be implemented.

Another component of the services sector that should not be overlooked is the exhibition industry. In 1997, more than 190 000 foreign visitors came to Hong Kong just to attend the exhibitions, accounting for 1.9% of the total number of tourists visiting Hong Kong last year. We should not underestimate the consumption power of these visitors. It has been estimated by certain members of the trade that these visitors could bring us foreign exchange earnings of more than $5 billion. Developing our exhibition industry will pull along the local tourism industry, retail business, as well as other service industries for greater development.

As a window of southern China and a regional financial centre, Hong Kong is blessed with financial as well as geographical advantages. Many businessmen from the West prefer to conduct exhibitions in Hong Kong, with a view to attracting buyers from mainland China as well as from other Asian countries, thereby paving their way to the markets in China. Regrettably, as pointed out by some members of the trade and Miss CHOY So-yuk, the competitive edge of the exhibition facilities in Hong Kong has been dulled gradually due to the following reasons: 1. exorbitant charges; 2. the number of businessmen and buyers from the Mainland restricted by the visa quota; 3. Hong Kong lacks the exhibition facilities required to display large machinery.

Let me take Singapore as an example. The rental charges for exhibition facilities in Singapore are less than ours by 50% on average; besides, Singapore will soon have a new exhibition centre which is over 100 000 sq m in area, or about double the size of the Hong Kong Convention and Exhibition Centre. Therefore, the competitive edge of Hong Kong in this respect would be significantly weakened.

On the other hand, the fact that Hong Kong is very close to the Mainland has attracted many overseas businessmen who wish to enter the China market to organize exhibitions in the territory. Yet regrettably, both the Hong Kong Government and the mainland authorities impose visa quota restrictions on visitors from the Mainland, and the approval procedures on both sides of the boundary only serve to reduce mainland businessmen's interest in Hong Kong, and hence the number of them actually visiting the territory. In an effort to open up the China market, many foreign businessmen have shifted to the Mainland to hold exhibitions, and thereby further weakened the development of our exhibition industry. The relevant government departments should therefore adopt flexible measures to tackle the situation, such as permitting mainland businessmen visa-free entry into Hong Kong for a specified period just to participate in the exhibitions concerned or setting another quota for exhibition participants. Besides, negotiations should also be made with mainland authorities to find out means to speed up the approval processes.

the Hong Kong Convention and Exhibition Centre, the International Tradmart at Kowloon Bay and the Hong Kong Exhibition Hall are the three large-scale exhibition facilities which Hong Kong has at present, yet neither one of them is spacious enough to display heavy machinery such as tower crane or other mechanical devices commonly used in construction sites. Hong Kong is still unable to provide any exhibition facilities in this respect. As such, the Government should consider providing exhibition sites in the open air. Unlike the world-class Hong Kong Convention and Exhibition Centre, these exhibition sites do not need to be very sophisticated; instead, they could even be located in the rural area. Apart from holding heavy machinery exhibitions, these sites could also be used as popular exhibition facilities.

The services sector has already become an economic pillar for Hong Kong and accounted for 84.4% of the GDP in 1996; therefore, the well-being of the sector would have a direct bearing on the livelihood of the people. In the face of the regional financial turmoil, it is necessary for the Government to face up to the various hardships encountered by the service industries and provide the sector with long-term support of various kinds. I wish to raise one more point here. Apart from lending my support to the motion, I had earlier on thought that the wording of the proposed amendment was quite acceptable and could therefore be supported as well. At first, I could not understand why the amendment had proposed to delete certain words from the original motion, such as that on the issue of prolonged disregard referred by Miss CHOY. However, having listened to the explanation given by Mr SIN Chung-kai just now, I feel that although some of the ideas contained in the amendment seem to be very similar to that of the motion, they are in fact contradictory to the latter. For this reason, although we do not object to the amendment, I do hope that if in the future there are similar cases in which new topics are being introduced by a proposed amendment, a separate motion debate would be conducted for the new topics, so that we could have sufficient time to express our views.

I so submit.

DEPUTY President (in Cantonese): Mr CHAN Wing-chan.

Mr CHAN Wing-chan (in Cantonese): Mr Deputy, the economy of Hong Kong is now in a stage of re-adjustment. The re-adjustment is necessitated by not only the impact of the regional financial turmoil but also by the consequences of the prolonged unitary development of our economic structure.

As we all know, the prosperous development of the manufacturing industries in the '70s and '80s was an important factor behind the taking-off of our economy. However, since China implemented its reform and open door policies, our manufacturers have been attracted one after another to set up plants in the mainland, thereby causing our local manufacturing industries to shrink gradually. The contribution to GDP by the manufacturing sector which stood at 24% in 1980 has since then been reducing continuously to 7% in 1996, and as regards the number of people engaged in the sector, the figure has dropped from 920 000 in 1986 to 340 000 in 1996.

As the manufacturing sector was losing its importance in Hong Kong, the services sector began to rise up to take its place, thereby creating another period of prosperity for our economy. As indicated by certain data, the contribution to GDP by the service sector has risen from 68% in 1980 to 84% in 1996 while a large proportion of the working population are engaged in various kinds of service industries. Jobs in the fields of financial services, insurance, real estate property and telecommunication were the most popular ones among all. However, the community at large could not realize until now that the so-called prosperity was but an illusion perpetuated by the bubble economy, a kind of false prosperity no better than the rootless flowers or paper gold. Under the attack of the regional financial turmoil, all those colourful and beautiful dreams simply vanished into thin air. While the home owners found their properties tremendously diminishing in value and the value of shares reducing to not much better than waste paper, flat owners who failed to secure mortgage loans for their flats were lamenting in pain; as a result, the once prospering service sector has all of a sudden become the most severely-afflicted area. Within the service sector, fields such as retailing and wholesaling, restaurants and catering, hotels, transportation, tourism, financial services, insurance, real estate property and so on are all at stake. With an unemployed population of 140 000, "wage earners" could not but panic. Mr Deputy, owing to its "passer-by" mentality, the past colonial government had never addressed the crux of the problem. For this reason, a crisis is doomed to break out sooner or later; and today, it has finally broken out. I hereby urge the Government of the Special Administrative Region (SAR) to attach more importance to the issue, in particular the harmful effects of the bubble economy.

Hardships confronting the service industry

The past few months have not only seen hundreds of restaurants and eating establishments closing down but also the deteriorating situation of the retailing industry. While the Wing On Department Store has resorted three times to layoffs and the Matsuzakaya Department Store has closed down, the Daimaru Department Store which has been operating in Hong Kong for 38 years will also be closing down by the end of the year. As a result of the layoff exercises adopted by several companies, close to 1 000 persons have become unemployed. I could still recall that more than 2 000 employees were laid off when the Yaohan Department Store liquidated last year. At that time, the Labour Department claimed that several thousands of posts had been reserved for the ex-employees of the Yaohan Department Store. However, the reality was that all those posts were either part-time jobs or low-pay jobs. As a result, many of these ex-employees were unable to find a job and forced to remain at home to take care of their children. As regards the telecommunication industry, keen competition has caused many firms to relocate their operations to the Mainland or Macau. In this connection, a telecommunication enterprise has recently laid off more than 150 employees.

Provision of Support

The Government should attach great importance to the aforementioned hardships confronting the service sector. As a matter of fact, the series of heavy blows dealt to the service sector are closely related to the unitary development of the local economic structure. With the relocation of the manufacturing industries, many investors simply concentrate their investment on such quick-money trades as financial services and real estate, thereby causing the internal structure of the economy to tilt exceedingly in one direction. So, when the financial turmoil came storming over, the industries concerned were the first ones under attack and the first ones to suffer.

For these reasons, in addition to providing the service sector with the necessary support to ride out the current storm, the Government should also take the initiative to understand the difficulties and needs of the sector. One very simple example is the request for a 30% rent reduction made by the commercial tenants of the Housing Authority in the light of the high rent levels in April. The Housing Authority has been making use of excuses such as the need to conduct necessary surveys or assessments to delay the provision of any concrete replies. Another example is the problems facing those trades which have a high water consumption rate like hotels, restaurants and food premises. These industries have for years been asking the Government to reduce the trade effluent surcharge rate so as to alleviate their burden, but the Government has all along turned a deaf ear to their requests, disregarding the fact that the surcharge would impose additional hardships on the industries which are already facing many operating difficulties. I can assure the Government that the majority of the thousands of restaurants and food premises in Hong Kong are providing the community with good food and services at reasonable prices. They are in fact contributing to the prosperity of Hong Kong. More importantly, these restaurants and food premises could help to resolve the unemployment problem by providing job opportunities for those people who are of comparatively lower levels of education or skills. I hope that the government officials would respond to my speech and propose measures to save the service industry. In my opinion, the first and foremost task for the Government is to reduce the rent levels and the trade effluent surcharge rates, so as to help the relevant trades of the sector to alleviate their burden, thereby helping them ride out the storm.

With these remarks, Mr Deputy, I support the original motion.

THE PRESIDENT resumed the Chair.

PRESIDENT (in Cantonese): Mr James TIEN.

MR JAMES TIEN: Madam President, the Honourable Miss CHOY So-yuk is indeed very right to say that the service industries form an important economic pillar of Hong Kong. Like that of other sectors, they have recently been hit by the Asian economic turmoil. A number of service industries have been particularly hard hit, especially the retail and tourism sectors.

One should remember that the service industries are extremely diverse. The Government classifies them into 15 groups, including wholesale/retail, import/export, restaurants, hotels, transport, storage, communications, banking, non-banking financing, insurance, real estate, business services, film entertainment, tourism, and computer and information. They all face different challenges and there is no single programme or campaign that can take us out of the present difficulties.

The main pillars of the services industries are trading, financial services, property and tourism. They have all been hit by the downturn, but not equally. Our financial and trading sectors are by and large all right, although the plight of the property and tourism sectors are obvious to all. Thankfully, some industries are still booming, such as some sectors related to communications, insurance and some business services.

While some sectors may benefit from some form of government assistance, such as the $2 billion fund to ease credit for small and medium enterprises, other service industries may prefer to have the Government to intervene less, through further deregulation and liberalization, as a way out of the economic recession.

What is important is to restore confidence of our own industries as well as foreign investors, and to show that Hong Kong still has that can-do, never-say-die spirit.

But I do want to mention one problem which many of my constituents have reflected to me. That is the problem of declining service quality, especially of front-line service staff. We may be in economically difficult times, but it is all the more important for our service workers to be polite, courteous and sincere; in short, to provide a better service. Miss CHOY So-yuk suggests that our service industries should become high value-added. For front-line services, high value means good quality.

Madam President, the financial sector is key to the status of Hong Kong as an international service centre. Although we have come out remarkably well from the Asian crisis compared to our Asian neighbours, it will not be honest to say that our image has not been tarnished. After all, the standard by which we are compared to is that of London and New York rather than that of Kuala Lumpur or Bangkok. The critical issue now is to restore investor confidence. For the international investor, confidence depends on two things, namely, the quality of our financial sector and the performance of our Government. On the financial sector itself, I believe international investors are still convinced that we have first-class services in banking, capital raising, fund management and so on. On government performance, the most important quality investors are looking for is consistency. You cannot have a government that looks inconsistent, and yet inspires confidence. Hence, I support the Honourable SIN Chung-kai's call for consistency in government policy on the financial sector.

The Hong Kong General Chamber of Commerce has long recognized the importance of the service sector. That is why we established the Hong Kong Coalition of Service Industries (HKCSI) which has consistently been calling for more attention to be paid to the service sector. We were encouraged, therefore, by the formation of the Business and Services Promotion Unit by the Financial Secretary last year to co-ordinate government efforts in the promotion of the service sector. The Chamber has also played an active role in activities to enhance the capacity of the service sector, such as through the Hong Kong Awards for Services initiated by the HKCSI. Right now, there is a 15-point "Action agenda" for 98-99 to which we look forward for some positive results.

While there is no quick solution to the complex problems that we are facing now, more government support ─ not necessarily in the form of intervention, but an open attitude and a willingness to co-operate ─ will obviously be most helpful.

I, therefore, join my colleagues here in urging the Government to step up its effort in promoting the service sector by consulting and co-operating with various industries with a view to adopting measures to improve the business environment and hence, the competitiveness of the service industries of Hong Kong.

Madam President, with these remarks, the Liberal Party and I support both the original motion of Miss CHOY So-yuk and the amendment moved by Mr SIN Chung-kai.

PRESIDENT (in Cantonese): Mr CHIM Pui-chung.

Mr CHIM Pui-chung (in Cantonese): Madam President, it is an undeniable fact that Hong Kong has now concentrated on developing its service industries. Hong Kong is a free community where any trades or businesses could be encountering hardships at any time; as such, no businesses should shift the responsibility to the Government when problems arise. In other words, I do not agree that the Government should provide assistance for any service industries or any industrial or commercial businesses, notwithstanding its responsibility to provide guidance. The role of the Government is to offer guidance, not assistance. My reason is very simple. Will those businesses share their handsome profits with the Government or the general public during their prime times? Certainly not. So, it is unjust, unfair and unreasonable for them to call for "help" and wait for others to support them in an economic downturn. I find this approach unacceptable. Nevertheless, I do think it is the responsibility of the Government to address the hardships that would be confronting the various sectors in the future and guide them to do what they should. As representative of the financial services sector, I would naturally be speaking for my sector in that direction.

Just now I heard the newly appointed economic affairs spokesman of the Democratic Party, Mr CHEUNG Man-kwong, criticize the Government harshly. I was very happy to hear that because the remarks made by Mr CHEUNG were just the same as what I would like to say to condemn the Government. If I condemned the Government too often, others would say that I am "insane". However, the Democratic Party is now criticizing the Government in such a harsh manner, people should therefore understand that what I have been saying are right. I did not instruct Mr CHEUNG to condemn the Government; he made all those criticisms on his own account.

Madam President, the financial services sector is the sector which the Hong Kong Government, especially the Government of the Special Administrative Region (SAR), prides on. It is the hope of the SAR Government that Hong Kong would become the financial centre of Asia (Japan aside); as such, it would pay any price in order to attract those so-called international institutions and investment agencies to Hong Kong. However, the cruel fact is that the devastating effect of the 1988 worldwide financial turmoil is still roaming about in Hong Kong. This is by no means the sole responsibility of the Financial Secretary, as he might also be misled by other parties concerned. On the other hand, his responsibility is by no means light either, as he is the final decision maker who has caused the financial services sector to be under the control of foreign investors in many aspects.

I do not oppose to inviting foreign investors to help Hong Kong develop its financial services industry. However, we must understand that since their arrival to Hong Kong, these foreign investors have been exploiting the futures market to take advantage of our average investors and small investors, thereby creating rigorous challenge to the financial services sector. Yet the Government is still like a "dumb fool", knowing nothing about what has happened. As a result, the general investors could go nowhere to air their grievances. Certainly, it is not very polite to call others a "dumb fool", but I could not find any better terms now. (Laughter) Small investors came to me to air their grievances. But I have also been unfairly treated, how could I be their representative? For these reasons, I am very happy to see that the Democratic Party has finally waken up. Perhaps it is because they cannot gather capital on the political front that they have to turn to the economic and financial fronts for support. Comrades, keep it up!

The current financial turmoil in Asia is in fact an organized international operation targeted at Asia as a whole, but nobody seems to be aware of that. Quite a long time ago I have already pointed out that Hong Kong would become a "bizarre colony" after the transition in 1997. By that I mean other people would make use of financial activities to control us. This is beyond the comprehension of the men in the street, but not mine. However, when I explain it to others, nobody believes me. What can I do? Everyday, those foreign investors will be selling short at the futures market and then make use of a few exceptional strong quality stocks as their hedging tool.

We need to know what is the edge of our financial services. The answer is: the cash market. What advantage could the cash market bring us? The cash market is a place where capital could be raised. in particular, the strong and large-scale industrial and commercial institutions in China could send representatives to our cash market to raise capital, thereby enabling international capital to invest in China via Hong Kong. However, some of the large-scale broker's firms and funds have now been put under control while too many derivatives are being exploited. Derivatives have in effect become blood suckers. The general investors simply do not know how to tackle them. In the circumstances, the local investors will be adversely affected.

I very much hope that under the leadership of the Financial Secretary, the Secretary for Financial Services will immediately conduct a study with the Securities and Futures Commission (SFC) to find out why CHIM Pui-chung is always crying at the top of his voice. He is right sometimes. If they consider that my views are wrong after they have completed the study, they could just ignore me. So, why do they not conduct any study?

On 23 October last year, Mr Joseph YAM fought hard to defend the linked exchange rate. There is nothing wrong with the spirit of the action. There are times when the linked exchange rate is absolutely indispensable to Hong Kong, be it in the past, at present or in the future. My view may well be quite different from many people in this respect. Nevertheless, the important point is we should find out new ways to tackle the problem instead of relying solely on high interest rates. We must let the people of Hong Kong and the concerned parties understand that the linked exchange rate could safeguard their interests rather than infringing upon.

Secondly, high interest rates should be targeted against speculators but not foreign banks. There is now a very dangerous mentality looming among the foreign banks, as they believe that interest rates in Hong Kong have become out of control, thereby making it impossible for them to function properly in the interbank market. As such, a total of six foreign banks and institutions have already withdrawn their representative offices from Hong Kong. While their withdrawal may be attributable to some other reasons as well, the fact remains that they have already withdrawn from Hong Kong.

Thirdly, we need to understand that the Government should set a good example. In my opinion, services industries, in particular the financial services industry which includes banking and stock exchange, is a very important sector of the community. The financial services-related trades is capable of stimulating other services trades. Government officials, in particular the Financial Secretary, might not necessarily be coming from the financial services circle; but the senior officers under his leadership must be capable of tackling with the practicle matters in the field. The SFC comprises 10 directors. The Government should not have appointed as many as eight lawyers to the board. We should pool efforts to create a better future for ourselves.

PRESIDENT (in Cantonese): Mr Albert HO.

MR ALBERT HO (in Cantonese): Madam President, I rise to speak for the amendment moved by Mr SIN Chung-kai. The Democratic Party is disappointed by and deeply regrets the poor performances of the Financial Services Bureau, the Securities and Futures Commission (SFC), as well as the Stock Exchange of Hong Kong Limited (SEHK), in particular their failure to monitor properly and effectively the securities and futures markets or to safeguard the interests of investors. Therefore, we have proposed this amendment today.

Madam President, the existing supervisory system for the financial markets, in particular that for the securities market, was formulated in 1988. Over the past 10 years, the securities market has developed tremendously. Not only has its volume and value of transactions increased substantially, the market itself has also become more and more internationalized. However, the Government has not made any corresponding measures to cater for the changes in the business environment, nor has it adjusted the regulatory mechanism in the light of such changes. As a result, when the financial turmoil arrived and securities firms wound up one after another, the Government was taken by surprise and could not but adopt inappropriate or self-conflicting measures. Let me explain with the following examples.

First, despite the significant changes taken place in the market, the capitalization and operating fund required of these securities firms have all along been disproportionate to the volume of transactions they handle. In other words, the SFC should have required these firms to increase their capitalization with a view to minimizing the risks. Yet regrettably, it has not done so. The relevant measure was mentioned for the first time in the consultation paper submitted by the SFC recently.

Second, according to the rules governing the compensation fund of the SEHK, the maximum amount of compensation for each broker's firm is $8 million. This amount was set out in 1992. After the case of the CA Pacific Securities Limited had broken out, the Government was under a lot of public pressure. To prevent the problem of confidence collapse from developing into a system crisis, the Government therefore proposed to allocate more resources to the compensation fund, thereby raising the maximum amount of compensation. At the beginning, the Chairman of the SFC had time and again pointed out to the public that the maximum amount of compensation that each claimant could receive would be $200,000. However, the Government later decided to limit the maximum amount of compensation to $150,000. Most of the claimants were therefore very disappointed and their confidence in the Government was also adversely affected by these inconsistent measures. What is more, the Government needs to have some laws with retrospective effect to endorse the proposed increase in the aforementioned maximum amount of compensation. In the circumstances, Honourable colleagues of the Council could not but approved such laws with retrospective effect. Nevertheless, we must point out here that this is a very unsatisfactory way of tackling the issue, nor should such kind of precedents be made frequently.

Third, as we all know, the major cause leading to the series of winding-up cases, in particular the case of the CA Pacific Securities Limited and the several cases after it, is that many securities firms always resorted to misleading their clients into investing in margin trading and then use the stock certificates concerned to make mortgage arrangement with finance companies which are related to the securities firms. The finance companies would then use the stock certificates to make re-mortgage arrangements or illegal secondary mortgage arrangements without notifying the clients concerned or obtaining the clients' approval. In this way, the finance companies could have additional cash to loan to their clients as high risk investment. Such kinds of abnormal, unreasonable and unhealthy practices have in fact been existing in the market for a long time, and the Government should have been aware of that. As early as in 1992, and the Committee on Banking Regulations and Supervisory Practices instructed and advised member bankers in writing not to accept questionable stock certificates for these types of finance companies for re-mortgage or secondary mortgage arrangements. I wish to know if the Financial Services Bureau or the SFC has ever taken any similar actions in this respect? Recently, after the winding up of the CA Pacific Securities Limited, the Financial Secretary made a response to the press in regard to the issue. He pointed out to the press that those finance companies which were linked to the relevant securities firms had all along been outside the ambit of the SFC or the Hong Kong Monetary Authority, thereby forming a grey area in the law. In fact, the Government has intended to put these finance companies under supervision, but due to the objection from the securities circle, no concrete action has ever been taken. As we all know, shortly after the case of the CA Pacific Securities Limited, several other finance companies such as Forluxe, Ming Fung and so on also wound up one after another. It was not until then that the Government demonstrated determination to put these finance companies under supervision. Yet regrettably, it is too late to introduce any supervision now, as nothing other than remedial measures could be of use at this stage.

Fourth, the conduct of the SEHK members has all along been under criticism. Mr Anthony NEOH, the Chairman of the SFC, had referred to the SEHK as a private club before he left the office. From this comment we could imagine the manner in which the SEHK conducts its business. The Government has now proposed to conduct a review of the terms of reference of the SEHK, as well as to consider establishing a securities insurance fund to replace the compensation fund. These are positive measures. The regrettable point is that the Government has waited too long to make such proposals, thus rendering them a little too late.

All in all, the manner in which the Government has been dealing with the supervision of the securities market could be described as "slow to realize the problem", "unable to realize the problem", "unaware of the existence of the problem", and "unwilling to resolve the problem". Let us look at some figures. The number of claims for compensation made between 1993-97 was only 170, yet by June 1988, the figure has risen to 7 407. As regards the amount of compensation applied for, the figure has risen from less than $0.2 billion to $5,353 billion over the same period. Just these figures alone could be shocking enough.

PRESIDENT (in Cantonese): Mr Albert HO, your speaking time is up.

MR ALBERT HO (in Cantonese): I therefore hope that the Government would address this amendment squarely. Thank you, Madam President.

PRESIDENT (in Cantonese): Mr CHAN Kam-lam.

Mr CHAN Kam-lam (in Cantonese): Madam President, it is an undeniable fact that the service industry has gradually replaced the traditional industries as one of the underpinnings of Hong Kong the economy. Today, over 80% of our GDP is accounted for by the service industry while some 80% of our working population are employed by the sector. Even if we do not discuss at this stage the question of whether this is a healthy phenomenon, we could still see that the Government has never adopted an especially positive attitude towards the service industry. Due to the long existing active non-intervention policy adopted by the Government, the competitiveness of many sectors have been weakening internationally. As such, not only the service industry has suffered a lot in the financial turmoil, the economy of Hong Kong as a whole has also been badly affected.

Last year, the Government Task Force On Services Promotion established in 1995 published its final Report and made a number of recommendations for the 14 leading service industries in Hong Kong. In the view of the Government, the first and foremost job among all is the completion of the new airport at Chek Lap Kok. Very regrettably, however, we are tasting the bitter fruits instead of enjoying the advantages brought about by the new airport which has now been completed and in use. The various administrative mistakes and inaccurate estimations have created unprecedented grave confusions in Hong Kong in the past few days, thereby creating disastrous impacts on our tourism industry, air freight industry, as well as import and export trades.

According to the figures published recently by the Government, many trades in the service sector have suffered different degrees of reduction in revenue in the first quarter of the year. The hardest hit trades in particular were real estate, hotels, as well as financial services. This is obviously a result of both the influences of the external economic factors and the significant decrease in the number of tourists visiting Hong Kong. As regards the transportation industry, the degree of reduction recorded in both the passenger and cargo freight services have amounted to 13%. If the cargo terminal at the new airport could not resume normal operation shortly, the second quarter of the year would certainly witness a more serious drop in revenue.

The Hong Kong Air Cargo Terminals Limited (HACTL) which provides more than 80% of the cargo freight services has suspended operation for 10 days. Although the Macau Airport and the Huangtian Airport have helped to process part of the cargo backlog, the grave losses caused to our economy would still be astronomical. In the light of this incident, we have come to the view that since the air freight services industry has a direct impact on both the local economy and the livelihood of the people of Hong Kong, the Government and the Airport Authority should reconsider introducing more competition into the industry; besides, they should also seriously consider advancing the issuance of a third franchise.

In regard to other haulage trades, although the port and container terminal facilities in Hong Kong are still comparatively more efficient than that of the mainland harbours in the vicinity and are equipped with better infrastructural packaging, the container handling fees we charge are the highest in Asia, more than 200% of that of the port in Yantian. In addition, problems such as the lack of sufficient port back-up land, the long standing traffic congestion along the approach roads to the container terminals, the grave insufficient supply of parking spaces for container trucks and so on are also undermining the competitiveness of our haulage trade. Therefore, the Government should face these problems squarely and tackle them with long-term strategies like enlarging the port back-up areas and extending the opening hours of the control points at Man Kam To and Sha Tau Kok, so as to reduce the cost of transporting goods by land. Besides, the various kinds of taxes levied by the different mainland provinces and cities on container trucks plying across the boundary have already been imposing a heavy burden on the sector; as a long-term measure to sustain the competitiveness of our haulage trades, the Hong Kong Government should therefore actively negotiate with the mainland authorities to find out ways to waive or reduce those charges.

As to the amendment moved by Mr SIN Chung-kai from the Democratic Party, we do agree with him that the government officials responsible for financial or manpower matters have, to a certain extent, repeatedly made "self-conflicting remarks" in the past year. Nevertheless, we think that in a grave situation like the existing financial turmoil, and due to the failure to gauge the circumstances accurately or the need to cater for the various requests made by the people, it would be quite natural of the Government to adopt inconsistent policies so as to make flexible adjustments.

Mr CHEUNG Man-kwong has referred to the financial policies made by government officials as being inconsistent. Although we do share part of his views, we could not agree completely with the remarks or criticisms he made just now. Despite its initial strong objection to rates concessions, the Government has in the end made flexible adjustments to waive the rates charges for the third quarter of the year. Although the government policy in this respect is inconsistent, this is in fact a move made by the Government to adjust to the wishes of the people.

As regards the land sale policy which has been adjusted time and again over the past year, we believe that the adjustments are made to take account of both the flat prices and the economic needs of the community as a whole. We do welcome adjustment of this kind.

Although we cannot make a deficit budget, the Government has finally said that we could not but accept a budgeted deficit under certain circumstances. In our opinion, the government policies may perhaps be inconsistent at times, but we are glad to see that the Government is ready to make adjustments in the light of the changes taking place around us.

Madam President, we believe that the Government should give serious thoughts to long-term policies, in addition to drawing lessons from the grave economic crisis.

Concerning the amendment moved by Mr SIN Chung-kai, although we agree with his ideas to a certain extent, we cannot identify ourselves with his view which roundly concludes that the existing problems have been a result of the inconsistent economic policies adopted by the Government. For this reason, we will only support the original motion but not the amendment moved by Mr SIN Chung-kai.

Thank you, Madam President.

PRESIDENT (in Cantonese): Does any other Member wish to speak?

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): I now invite Miss CHOY So-yuk to speak on Mr SIN Chung-kai's amendment. Miss CHOY So-yuk, you have up to five minutes to speak.

MISS CHOY SO-YUK (in Cantonese): Madam President, I agree very much with what the Honourable Howard YOUNG has said just now. The amendment moved by Mr SIN Chung-kai will only serve to alter completely the focus of my motion, thereby rendering the motion poles apart from its original theme. I cannot help but feel that the amendment is another pair of shoes. As I said earlier, instances of prolonged disregard on the part of the Government could be found in all aspects of the service industry, I should therefore find it hard to accept Mr SIN's proposal to delete the phrase "prolonged disregard on the part of the Hong Kong Government has resulted in" from the text of my motion.

Had the Government addressed the various flaws and made efforts to rectify them, the productivity and international competitiveness of our service industry would not have dropped incessantly as the bubble economy went on to expand, nor would Hong Kong be lagging more than a dozen years behind Taiwan and Singapore in the development of high value-added industries. Had the Government had the vision and ability to move the cause, the thousands or even tens of thousands small and medium firms in the service industry would not be unable to make use of such simple information technology helps as the Internet. Had the Government not overlooked the operation and needs of the financial sector, the consequences of the winding up of CA Pacific Securities Limited and Peregrine Investments Holdings would not be so serious, nor would the innocent investors have to lose everything.

Moreover, as the proposed amendment made no mention of the prolonged disregard on the part of the Government, people might be misled into thinking that the unfavourable conditions confronting the service industry did not appear until recently and should therefore have nothing to do with the erroneous policies made by the British Hong Kong Government. Madam President, it is not my intention to speak in defence of the Government of the Special Administrative Region, nor is it my wish to evade the mistakes it has made, but the major purpose of my motion is to lay emphasis on the fact that as early as in the days under the British Hong Kong Government, long before the outbreak of the regional financial turmoil, the various operation-related problems existing in the service industry had already been disregarded by the Government.

Finally, the term "service industry" which I refer to in my motion does not confine to one single trade but covers all businesses within the service sector, including information technology, retailing and wholesaling, financial services, tourism industry, restaurant and catering services and so on. I am grateful to the Honourable James TIEN for giving some 20 examples of the trades in the sector just now. I hope that the Government would have a more far-sighted vision than before in formulating the relevant policies. Yet regrettably, it seems that Mr SIN has not looked seriously into the real purpose of my motion and tried to separate and put emphasis on information technology and financial services only, thereby narrowing down the scope of the motion tremendously. Besides, unless Mr SIN believes that other service industries are not as important as information technology or financial services, he falls suspicious of amending for amendment's sake and making unnecessary supplements. For these reasons, I urge Honourable Members, in particular colleagues affiliated with the Liberal Party, to support my original motion. I hope that they would, as referred to by Mr Howard YOUNG just now, suggest Mr SIN move a separate motion in the light of his proposed amendment. Madam President, I so submit.

PRESIDENT (in Cantonese): Financial Secretary.

FINANCIAL SECRETARY (in Cantonese): Madam President, in the wake of the Asian financial turmoil, the community has focused its attention on the economic trends in the short term and the question of when the economy will recover. The Government has implemented resolute measures to relieve the difficulties brought by the economic downturn. The direction of Hong Kong's long-term economic development is a subject that merits our concern all the more during this period of adjustment. In last week's motion debate, I explained in detail the Government's work in implementing our long-term industrial policy. Today, I am delighted to have the opportunity to listen to Members' views on the other aspect concerning the various service industries. However, these views cover a wide range as well as many specific aspects of public policy, including policy details concerning sub-contracting arrangements, legal fees, government fees and charges, the manufacturing industry, support for the small- and medium-sized enterprises and so on. We would record all these valuable views and carefully examine them with our colleagues.

It is not possible for me to respond to each and every point in the short reply but we will certainly report to Members later in small groups and on other occasions. Today I would like to discuss from a broad perspective the challenges faced by the service industries.

The most crucial aspect of our work is how to ensure Hong Kong will emerge more competitive after recovering from the economic downturn and that the services sector will play a key role in furthering Hong Kong's economic growth. Let me now reply to the motion moved by the Honourable Miss CHOY So-yuk and the amendment proposed by the Honourable SIN Chung-kai.

Government's Strengthening Support to the Service Industry

Driven by market forces, our economy has undergone a remarkable transformation over the past 20 years. In 1986 the services sector accounted for only 69% of the GDP. The share quickly rose to 84% in 1996. Over the same period, the share of the services sector in total employment has also increased from 55% to 79%.

In recent years, the Government has been strengthening its support for the service industries. I pay particular attention to the role played by the service industries in Hong Kong's long-term economic development and am committed to promoting Hong Kong as a world-class service centre.

In August 1995, I spearheaded the establishment of the Government Task Force on Services Promotion. Comprising the relevant Policy Secretaries, the Task Force conducted a comprehensive review of the approach of their policy directions to the services sector, to ensure that the right policies and programmes are in place to facilitate its growth and development and to identify new approaches to help the services sector realize its full potential.

In March 1997, the Final Report of the Task Force was published. It gave an account of the progress of work of the various government bodies with respect to the 14 leading service industries and the eight-point framework, and provided a clear picture of the future policy directions. In December 1997, we updated the progress of work set out in the Final Report and this was published in a Provisional Legislative Council brief.

Following the strategy set out in the Final Report, the respective Policy Bureaux have now shouldered the task of promoting individual service industries within their purview. The Business and Services Promotion Unit (BSPU) was established in May 1997 to perform a supporting, advisory and co-ordinating role. To ensure that the subject receives the attention and support it merits, the Unit is in my office and its head reports directly to me.

As pointed out by Miss CHOY So-yuk, the Government should consult the industries and solicit their views in formulating policies. Hence, in April 1997 after the winding-up of the Task Force, I set up a permanent Services Promotion Strategy Group, comprising top businessmen, leading academics, and the relevant Policy Secretaries. I chair regular meetings of the Group to discuss ideas for services promotion and to consider proposals by the Government. The Group aims to spearhead services promotion initiatives from a broad perspective, and to strengthen the Government's consultation efforts.

I share Members' view that the service sector is an important economic pillar for Hong Kong. To let Members have a more thorough understanding, I will describe our work in more specific terms.

Specific Services Promotion Initiatives

In formulating initiatives for services promotion, the Government understands very well that it is not its task to dictate business decisions or to second-guess markets. The Government's role is to keep bureaucratic interference to a minimum and to provide the maximum level of support for business consistent with Hong Kong's long-established and successful free market economic philosophy.

With this principle in mind, we have adopted a two-pronged approach. First of all, the relevant government bodies take forward their policies and programmes with a view to promoting services and implement the 125 initiatives contained in the Final Report to the fullest. From time to time, they review their plans and legislation in the light of the current situation, gather views from the industries and the public through the various advisory committees and other channels, and develop and implement new initiatives as necessary. Such consultative work takes place every day.

Take tourism as an example. To counter the recent drop in the number of visitors to Hong Kong, the Economic Services Bureau (ESB), the Hong Kong Tourist Association and the industry formed a special task force on tourism last year to advise on the promotion of the long-term development of Hong Kong's tourism. We are adopting effective and targeted initiatives to boost the number of visitors to Hong Kong and to stimulate their spending. These include further facilitating the entry of visitors from the Mainland and Taiwan, setting up of a $100-million "International Events Fund", construction of a cable-car project in Lantau and leasing the former Tamar site as a temporary performance venue to the Tourist Association under a short-term tenancy. The Tourist Association is also launching the "Be a Good Host" campaign to enhance the quality of service of our service providers. Most of these measures are implemented after we have considered carefully the views and suggestions of the industries.

Take the shipping industry as another example. In order to promote the development of this industry, the former Port Development Board was reconstituted into the Hong Kong Port and Maritime Board on 1 June this year. Members of the Board include people well known in the port and shipping community and experienced shipowners. The main function of the Board is to co-ordinate and bring together the resources of the Government and the maritime sector to promote Hong Kong as an international shipping centre. The Board provides a forum for the shipping industry to channel their views to the Government, which helps strengthening the liaison between the Government and the shipping sector. In response to suggestions from the industry, we are also implementing a series of measures to help local shipping companies to lower their operating costs and increase their international competitiveness. These include lowering the costs for shipowners for registering their vessels in Hong Kong, simplifying ship inspection procedures and reducing local shipping companies' overseas tax burden.

Apart from supporting individual service industries, government bodies also implement other broader promotional strategies, such as promoting inward investment, enhancing productivity, providing an infrastructure of support, investing in education and training and so on. The following are some examples.

Regarding the promotion of inward investment in the services sector, the Investment Promotion Units attached to the seven overseas Economic and Trade Offices of the Industry Department actively identify new opportunities for inward investment. The staff of these units are also committed to promoting Hong Kong as the base for regional headquarters and offices of overseas companies.

As for enhancement of productivity, the government-funded Hong Kong Productivity Council set up the Service and Business Branch in May 1996 to co-ordinate the support services for the services sector. In order to enhance the productivity of local enterprises, the Council is developing a management information system and providing training and advisory services for the business sector. It has also set up the Business Enhancement Services Division, Small to Medium Size Enterprises Centre and Service Quality Centre.

The Government has all along been committed to providing infrastructural support to enterprises. The Services Support Fund administrated by the Industry Department provides financial assistance to projects that are beneficial to the development of Hong Kong's service industries. Since its establishment in July 1996, the Fund has received government funding totalling $100 million and has committed funds for 27 projects, including projects for such service sectors as computer and related services, wholesale and retail business and other professional services. The Industry Department is now processing applications of 78 new projects.

As for education and training, the Education and Manpower Bureau provides the services sector with suitable human resources through their placement services, vocational training and employees retraining programmes. In fact, most of the vacancies offered by the Labour Department are from service industries. Many of the training programmes on practical skills provided by the Vocational Training Council are service-related and an overwhelming majority of the training programmes of the Employees Retraining Board cater for the needs of the services sector. This September the Vocational Training Council and the Employees Retraining Board will, in addition to their existing courses, offer a nine-month Certificate of Skills Training (Service Industries) Course. The course aims to help the unemployed increase their employment opportunities through training while upgrading the quality of human resources for the service industries. The organizers are now consulting the relevant chambers and industry practitioners on the course contents, to ensure the course meets the need of the industries.

The other aspect of our two-pronged approach is the Action Agenda for Services Promotion drawn up by the BSPU each year. The Action Agenda is first discussed by the business sector and the Government and then submitted to the Services Promotion Strategy Group for consideration. Its objective is to set a broad direction for the overall services promotion strategy and to support the on-going efforts of other government bodies in this respect. I will give some examples of the work in progress under each of the four aims of the Action Agenda.

Aim No.1: to spearhead strategic thinking about the future development of our service economy

In January this year, the Government, in conjunction with the University of Hong Kong and the Hong Kong Coalition of Service Industries, organized the first tripartite forum, inviting members from the academic circle, the business sector and the Government to exchange views on the development of the services sector. Many of the views have facilitated our formulation of new action plans. In view of the good response, we will organize the second tripartite forum early next year. Also, we are now setting up an international advisory committee, inviting overseas academics, businessmen, researchers and so on to advise on the promotion and internationalization of our service economy.

Aim No.2: to strengthen the institutional support of the services sector

Well-established institutions and infrastructure are particularly important to the development of the services sector in a free market. For example, we are studying the case for and the feasibility of a business park in order to meet the present and future land infrastructure needs of the service and other industries. We are also conducting a study on manpower and training requirements of the tourist industry. Another manpower study on the information technology industry will start shortly. We are also planning to conduct a review on the Government's efforts to promote inward investment with recommendations on improvement measures. We implement these initiatives after taking into account the views and suggestions from the industries gathered through our daily contacts with them. In pressing ahead with these efforts, we will continue to consult the relevant parties, and to hold in-depth discussions with them as necessary. This will ensure our work is beneficial to the various industries.

Aim No.3: to implement priority projects targeted at specific industries, supplementing and complementing the on-going work of various bureaux and departments

To complement the ESB's efforts in promoting the shipping industry, the BSPU will work with the Bureau to appoint consultants to examine the strengths and weaknesses of Hong Kong's shipping industry vis-a-vis its competitors and to recommend a strategy and action programme to promote Hong Kong as an international shipping centre.

In an effort to revive tourism, the ESB is now assisting the tourist industry in moving towards high value-added development. This includes a study to examine the case for additional convention and exhibition facilities in Hong Kong in order to attract those overseas businessmen who spend more than ordinary visitors. In conducting the study, we frequently approach the concerned parties to solicit their views. The Information Services Department is considering setting up a special team within the Government to help bureaux and departments organize international conferences in Hong Kong.

On this point of international conferences, I wish to respond to the opinions put forward by Miss CHOY So-yuk and Mr Howard YOUNG with regard to the development of Hong Kong's exhibition industry. The Government has all along been highly supportive of the industry. In the early 1980s and in 1993, we provided the land and resources for the construction of the world-class Hong Kong Convention and Exhibition Centre (CEC). The extension to the CEC was constructed with government funding of over $4.5 billion. The Government will continue to work with the Trade Development Council (TDC) in promoting Hong Kong as Asia's trade fair capital, while the TDC will keep working closely with various trade fair organizers. In fact, over three quarters of the exhibitions held at the CEC each year are organized by our local trade fair organizers. On CEC's charges, I wish to point out that the Government does not look for a direct return on its capital, but must ensure that the CEC operates on prudent commercial principles and generate a reasonable level of income to provide sufficient resources for the TDC's work.

Aim No.4: to enhance international recognition and local understanding of Hong Kong's service economy and to foster public support for it

To enhance international investors' understanding of and confidence in Hong Kong, we have developed a series of publicity programmes highlighting the business friendly environment of Hong Kong. At the same time, we will seek to explain to the general public the relationship between our services sector and our economy as a whole, especially the importance of providing quality services in strengthening competitiveness, so as to help them prepare themselves and rise up to the new challenges brought about by the services sector.

I agree a lot to Mr James TIEN's views that quality service is of critical importance to the promotion of high value-added economic activities. We have to rely on people to provide quality service. Our publicity programmes therefore focus on changing the minds of people with a view to improving people's attitude in delivering services.

Looking forward to the future and developing new opportunities

Most of the above measures are very forward-looking and will ensure that the service industries in Hong Kong can keep abreast of time. However, we also understand that international business has entered an era of increasingly open, free and borderless competition, and therefore, we must be prepared to continuously consider new ideas in positioning Hong Kong in our future development. Meanwhile, the regional financial turmoil has exposed some of the weaknesses of our economy. We not only have to strengthen and reinforce our major economic pillars such as finance, property development, tourism, shipping, industry and trade, but also have to actively pursue new initiatives including:

- stimulating high value-added industries and businesses;

- promoting the application of information technology (IT); and

- strengthening economic co-operation with the Mainland.

First, in stimulating high value-added development in industries and businesses, the promotion of innovation and technological development is especially important. Therefore, the Chief Executive appointed in March this year 14 distinguished figures to the "Chief Executive's Commission on Innovation and Technology". The objectives of the Commission are to promote product and process innovation among manufacturing and service industries, as well as to encourage and support high value-added industries and businesses in Hong Kong. To pursue its work, the Commission has undertaken a consultation exercise to collect views of the industries and the public.

Second, as regards the promotion of the use of IT, the Government has set up the Information Technology and Broadcasting Bureau recently to co-ordinate IT and telecommunications policies and to encourage the development of IT and telecommunications services in the public and private sectors. In order to strengthen Hong Kong's competitiveness in the Information Age, we will:

- continue with our liberalization process in telecommunications and remove obstacles in our regulatory framework, such as to facilitate interconnection between local fixed and mobile networks, and enhance Hong Kong's position as a regional communication hub;

- develop an open, common interface information infrastructure, accessible throughout Hong Kong, for the delivery of public services;

- promote the development of electronic commerce through commissioning pilot projects in the private sector that make innovative use of this developing infrastructure; and

- work in partnership with the private sector to promote awareness in, and the use of, IT in the community.

I very much agree to Mr SIN Chung-kai's views that the use of IT is of paramount importance in future economic development. We have a good example on the financial services sector. The Financial Services Bureau pays particular attention to this aspect and is now studying a report and considering the development of a financial information infrastructure. This work will be of great importance to the further development of our financial services sector and we will carefully consider Mr SIN's views.

As for tax incentives, one of the various tax concessions we proposed in the 1998-99 Budget is to allow an immediate 100% write-off for new expenditure on computer hardware and software. This is an important item in our package of tax concessions which will encourage the business community to invest in IT, thereby enhancing their efficiency and competitiveness.

Third, the Mainland's huge potential for economic growth together with our increasingly close relations with the Mainland after the reunification injects new energy into our economy. The Government understands that the local business community wishes to take full advantage of the growth of the Mainland's services sector. We are now supporting the Trade Development Council to conduct studies on a number of services sectors including infrastructure development, financial services, IT and telecommunications, advertising and market research, entertainment industry and so on.

Creation of a business friendly environment

Members have also mentioned the need to foster a business friendly environment. I fully agree with this. Hong Kong is renowned for its rule of law, clean government, free flow of information, and a level playing field. Our taxation system is the most favourable in the world for doing business. Hong Kong is also the freest economy in the world. We do not exercise control over trade and there is no restraint on investment. Besides, we constantly introduce new initiatives. For example, in the 1998-99 Budget we have introduced a number of tax concessions to help business.

To further improve the business environment, I adopt "Helping Business" as the mainstay of the Government's thinking, and charge the Business and Services Promotion Unit, which reports directly to me, with the responsibility for the Programme. The Unit works closely with the private sector to cut red tape, reduce cost of compliance, study the case for transferring certain services out of the public sector to the private sector and improve government services. Many of the initiatives in the "Helping Business" Programme originated from opinions from the business sector.

Furthermore, we are committed to promoting Hong Kong's competitive edge so as to enhance economic efficiency and facilitate free trade. The Competition Policy Advisory Group, which is chaired by me, has promulgated a "Statement on Competition Policy" in May this year to provide a comprehensive, transparent and over-arching competition policy framework.

These initiatives are our reply to the great importance we attached to the existence of a level playing field and to the competition report released by the Consumer Council. Some Members have just raised queries about some alleged anti-competitive practices. The Competition Policy Advisory Group will look into the queries. Where necessary, we will take appropriate measures to rectify the situation.

A number of international organizations have ranked Hong Kong as one of the most competitive economies in the world. For instance, our economy is ranked second in the world by the World Economic Forum and third by the International Institute for Management Development in Switzerland. I am sure that, under the leadership of the business community and with government support, Hong Kong will maintain its competitive edge.

Resolute Economic and Financial Policies

Now, I would like to respond to the comments by Mr SIN Chung-kai and other Members on our recent economic and financial policies.

First of all, Mr CHIM Pui-chung has raised various questions relating to the influence of the futures market on the normal operation of the cash market. In fact these questions have been answered in detail in the "Report on Financial Market Management" released by the Financial Services Bureau in response to the financial turmoil last October. Today I would not reply to these questions in detail one by one. I believe the Report has already responded to the views of Mr CHIM. But if Mr CHIM did have a different opinion, we would be happy to continue to examine the issues.

In order to relieve the plight brought about by the economic downturn, the Government has introduced a series of measures relating to taxation, finance and economy in the Budget in February, at the end of May and in late June. I wish to point out that the Hong Kong Special Administrative Region Government has all along acted firmly and consistently, and has been responsive to the needs of the community. As I reiterated in last week's motion debate, in drawing up every measure, we are guided by three principles. First, we must uphold the principle of prudent financial management which we have always adhered to; second, we need to maintain the interest and confidence of investors and international organizations in investing in Hong Kong as a means to secure and increase local employment opportunities; third, we need to ensure that the measures will not have any adverse effect on the linked exchange rate system.

Let me reiterate that our latest initiatives do not in any way depart from the Government's long-standing policy of non-interference with the operations of the market. We are just responding to market conditions. Our aim is to facilitate economic adjustment, not to tamper with normal market activities. Take the case of temporary suspension of our land sales programme. As the property market is undergoing a major correction rarely seen before in terms of both scale and speed and to forestall a collapse of the property market, the Government has made this decision which will have a stabilizing effect on the market. Adjustment to the property market will continue to take its natural course. Adherence to the free market system is crucial to maintaining investors' confidence.

MRS SELINA CHOW (in Cantonese): A quorum is absent.

PRESIDENT (in Cantonese): Would the Clerk ring the bell to summon Members to return to the Chamber to attend the meeting.

PRESIDENT (in Cantonese): We have a quorum now. Financial Secretary, please continue.

FINANCIAL SECRETARY (in Cantonese): Madam President, inevitably, implementation of the relief package will result in a deficit of $21.4 billion in the Budget for the current financial year. But this does not signify the loosening of our established fiscal discipline. In fact, the deficit represents just 1.5% of the GDP for the year. Moreover, with last year's surplus of $80.9 billion, Hong Kong's overall financial position is still very strong.

I would like to take this opportunity to point out that an integral part of our prudent fiscal management policy is the "user pays" principle. Implementation of this principle requires collection of sewage charges and trade effluent surcharge. Notwithstanding such charges, we are still heavily subsidizing the polluters, up to 40% of the cost. In fact sewage charges and trade effluent surcharge only account for 0.3% to 1.8% of the total operating cost.

I stress again that we will continue to staunchly stand by the linked exchange rate system.

Conclusion

Hong Kong has enjoyed economic growth for 36 consecutive years. In the face of the current rigorous challenge, I hope the community can on the one hand understand that the huge appreciation of certain assets in the past few years has led to some bubble elements in the economy which badly needs adjustment. The financial turmoil has accelerated and intensified this process of adjustment. This adjustment is, however, necessary in the long-term economic interests of Hong Kong. What we can do is to try our best to alleviate the pains during this period of adjustment. On the other hand, the community should remain adaptive and pragmatic and be confident that with our sound fundamental establishment in the past decades, Hong Kong will be the first to recover in the region and will regain a new life.

In dealing with the present urgencies, the Government has not interrupted its on-going work. We are proceeding with the permanent and systematic programmes of supporting the long-term economic development of Hong Kong. And one of the important aspects of the programmes is services promotion.

Lastly, I am very glad to have listened to Members' valuable opinions today. I fully agree with the views that while the Government must strongly support the services sector, we should not neglect the manufacturing industries. Furthermore, in implementing economic and financial policies, we must abide by the important principles. With regard to the criticisms that government officials are too rigid in sticking to established rules, I must respond by saying that as a responsible Government, we must have the courage to persevere in what is good and implement in a just manner the policies that are in the overall and long-term interests of Hong Kong.

Thank you, Madam President.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the amendment moved by Mr SIN Chung-kai be made to Miss CHOY So-yuk's motion. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(Members raised their hands)

PRESIDENT (in Cantonese): Does any Members wish to claim a division?

MR ANDREW WONG (in Cantonese): I wish to claim a division.

PRESIDENT (in Cantonese): Mr Andrew WONG has claimed a division. The division bell will ring for three minutes.

PRESIDENT (in Cantonese): Members may now proceed to vote.

PRESIDENT (in Cantonese): Before I declare the voting shall stop, Members may wish to check their votes. Are there any queries? If not, voting shall now stop.

PRESIDENT (in Cantonese): The result will now be displayed.

Functional Constituencies:

Mr James TIEN, Mr Michael HO, Mrs Selina CHOW, Mr CHEUNG Man-kwong, Mr Ambrose CHEUNG, Mr Bernard CHAN, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr SIN Chung-kai, Mr Howard YOUNG, Mr CHIM Pui-chung, Mrs Miriam LAU and Mr LAW Chi-kwong voted for the amendment.

Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Mr CHAN Wing-chan and WONG Yung-kan voted against the amendment.

Dr Raymond HO and Mr LEE Kai-ming abstained.

Geographical Constituencies and Election Committee:

Miss Cyd HO, Mr Albert HO, Mr LEE Wing-tat, Mr Martin LEE, Mr Fred LI, Mr James TO, Miss Christine LOH, Mr Andrew WONG, Dr YEUNG Sum, Miss Emily LAU, Mr Andrew CHENG, Mr SZETO Wah, Mr HO Sai-chu and Mr MA Fung-kwok voted for the amendment.

Mr Gary CHENG, Mr Jasper TSANG, Mr LAU Kong-wah, Mr David CHU, Mr CHAN Kam-lam, Mr Ambrose LAU and Miss CHOY So-yuk voted against the amendment.

THE PRESIDENT, Mrs Rita FAN, and Prof NG Ching-fai did not cast any vote.

THE PRESIDENT announced that among Members returned by functional constituencies, 19 were present, 13 were in favour of the amendment, four against it and two abstaining; while among Members returned by geographical constituencies through direct elections and by the Election Committee, 23 were present, 14 were in favour of the amendment and seven against it. Since the question was agreed by a majority vote of each of the two groups of Members present, she therefore declared that the amendment was carried.

PRESIDENT (in Cantonese): Miss CHOY So-yuk, you may now reply and you have six minutes 35 seconds.

MISS CHOY SO-YUK (in Cantonese): Madam President, I would like to respond to several issues. Just now, Mr SIN Chung-kai remarked that my motion harbours a mentality of protectionism. I consider that this is absolutely like forcibly putting a big hat on me. Earlier, nearly 10 Members made a number of demands to the Government. Some of them asked the Government, for instance, to increase the voice of the various industries in its consultative framework, and to reduce the monopoly of the business sector. Can I then say that all these are protectionism? Are the requests for the Government to establish a reasonable charging mechanism, to streamline procedure, to help small and medium enterprises protectionism as well? Are the demands for the Government to alter the high land price policy, to upgrade the quality of services personnel, to revive the tourist industry, to develop new service industries and so on protectionism as well?

Just now, the Financial Secretary has spoken for 20 minutes. I am very grateful for him for devoting so much time to deliver his speech. But what he said are precisely the issues I am worrying. He has spent most of the time on explaining how the Government is going to help the service industries from a broad perspective, and he insisted that the Government had done a lot of work. It is precisely due to this reason that I pointed out right at the beginning that the Government had indeed, from a broad perspective, made an effort to help the industries and had done a lot of work. But actually, the industries have met with numerous problems and loopholes. People working in the service industries often said that they had talked to the Government many times but it had failed to listen. They did talk to the Government repeatedly long ago.

Just now, I listened to the speech delivered by the Financial Secretary. What he said is still the same old stuff: constantly inviting international experts and consultancies to give advice and forming various kinds of committees. He also pointed out that those committees will comprise people of the industries, such as leaders of the business sector and well-known figures. But I wish to point out that this may be a loophole. Maybe the small groups and advisory organs mentioned by the Secretary comprise only of leaders and well-known figures, while lacking the majority of small and medium enterprises, whereas the service industries are dominated by small and medium enterprises. Let me cite the legal profession alone as an example. Solicitors' firms composed of less than 10 lawyers account for 90% of the entire profession. Will you say that these committees lack representatives from the small and medium enterprises? Do these committees lack of people from the middle and lower classes, the public in general, whereas representatives from the business sector are too many? I do not object to the incorporation of well-known figures from the business sector or leaders into these mechanisms. I only wish to point out that this may lead to loopholes. I hope that the Government can really understand the original motion I have moved today. Although Members have endorsed the amendment moved by the Honourable SIN Chung-kai, I still hope that Members or the Government can attach importance to the dozens or hundreds of trades and industries we mentioned. These trades are all small enterprises. No one listened to them even though they have voiced out. Here the Government allows you to busy yourself and there the Government allows the small and medium enterprises to do what they like.

In addition, I would like to respond again to whether the proportion of the service industries in our economy is too large. I admit that this point holds. I have already said in my earlier speech that the proportion might be too large, and as a result our production structure might need an adjustment. Given the present economic depression, I can understand people's mentality of contemplating changes. But as the saying goes: "Hot rice needs to be eaten slowly." It is precisely because of our present situation that there is a greater need for us to keep calm to figure out which method can enable us to develop and revive our economy in a more rapid and effective manner. It is essential for one, be it a company or a community, to consider where one's edge lies. By the same token, we need to consider what our economic edge is. Our economic edge is our service industries. Our edge is the large group of people working in the service industries.

At present, our aim is to examine how we can help the service industries to revive and to enable each industry to have the space to develop. Furthermore, we should be able to directly or indirectly export our services personnel or service industries. Many people even suggested that we should open a cookery school in Hong Kong, just like the running of hotel management schools in Switzerland. As a "gourmets' paradise", Hong Kong should be able to do it! There are numerous direct or indirect channels for us to develop our service industries. My focal point is still the same and that is, I hope our Government should rather listen to the difficulties and problems encountered by those unsung heroes who have been struggling in the service industries for almost 20 years than listen to the advice given by various experts ─ though I agree with the views that we should also listen to the views of the experts.

I would like to urge the Government to gain a better understanding of the various trades and industries. I hope that our Government can truly serve the public and help the various trades and industries to revive. Thank you.

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Miss CHOY So-yuk, as amended by Mr SIN Chung-kai, be passed. Will those in favour please raise their hands?

(Members raised their hands)

PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority respectively from each of the two groups of Members, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections and by the Election Committee, who are present. I declare the motion as amended passed.

NEXT MEETING

PRESIDENT (in Cantonese): In accordance with the Rules of Procedure, I now adjourn the Council until 2.30 pm on Wednesday, 22 July 1998.

Adjourned accordingly at ten minutes to Midnight.

¹ The Listing Rules of the SEHK at present do not empower the Exchange to discipline a company refusing to carry out the decision of the Listing Committee to resume the trading of its shares. The Exchange is now preparing to amend the Listing Rules to empower the Listing Committee to order a company to resume its trading at a time specified by it. Those failing to comply would be subject to disciplinary actions.

OFFICIAL RECORD OF PROCEEDINGS Wednesday, 15 July 1998 The Council met at half-past Two o'clock

OFFICIAL RECORD OF PROCEEDINGS
Wednesday, 15 July 1998
The Council met at half-past Two o'clock